CASTILLO v KUNNEMAN

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No. 80-465 IN THE SUPREME COURT OF THE STATE OF MONTANA MANUEL CASTILLO, JR., and DEBORAH J. CASTILLO, and GARRY A. COTANT, SHARYL COTANT, Plaintiffs and Appellants, VS. DELBERT B. KUNNEMANN, Defendant and Respondent. Appeal from: District Court of the Sixth Judicial District, In and for the County of Park Honorable Jack D. Shanstrom, Judge presiding. Counsel of Record: For Appellants: Berg, Coil, Stokes & Tollefsen, Eozernan, Montana Ben E. Berg, Jr. argued, Bozeman, Montana For Respondent: Loble and Pauly, Helena, Montana Lester Loble I1 argued, Helena, Montana Wellcome and Frost, Bozeman, Montana A1 Frost argued, Bozeman, Montana Swandal, Douglass & Swandal, Livingston, Montana For Amicus Curiae: Donald D. MacIntyre, D.N.R., Helena, Montana Submitted: Decided: FileNAP, . 3 - 1982 November 30, 1981 Hht 3 f4$2 J u s t i c e Frank B. Morrison, J r . , d e l i v e r e d t h e Opinion o f t h e Court. Mr. A p p e l l a n t s , Manuel and Deborah C a s t i l l o and G a r r y and S h a r y l C o t a n t , a p p e a l from a n o r d e r o f t h e S i x t h J u d i c i a l D i s t r i c t C o u r t , P a r k County, e n t e r e d on O c t o b e r 8 , 1980. The o r d e r d e n i e d a p p e l l a n t s ' r e q u e s t f o r a n i n j u n c t i o n p r e v e n t i n g r e s p o n d e n t , D e l b e r t Kunnemann from d i v e r t i n g c e r t a i n water. On September 29, 1981, t h i s C o u r t i s s u e d a n opinion r e v e r s i n g t h e D i s t r i c t Court, holding i n favor of a p p e l l a n t s C a s t i l l o and C o t a n t . was d u l y f i l e d . A p e t i t i o n f o r rehearing W e r e v e r s e our o r i g i n a l p o s i t i o n and, with modification, a f f i r m t h e D i s t r i c t Court. I n 1 9 7 6 , D e l b e r t Kunnemann owned a 1 , 2 7 5 - a c r e r a n c h l o c a t e d i n t h e S h i e l d s V a l l e y , P a r k County, Montana. Kunnemann owned two w a t e r r i g h t s on t h e S h i e l d s R i v e r from which h e drew w a t e r t o i r r i g a t e h i s r a n c h . Kunnemann's w a t e r r i g h t s stemmed from a n a p p r o p r i a t i o n o f 240 m i n e r ' s i n c h e s made by a T h i r z a G r a n n i s o n J u n e 1, 1880, and from a n a p p r o p r i a t i o n o f 450 m i n e r ' s i n c h e s made by a J o h n McNiven on August 1 4 , 1893. Two main d i t c h e s , named a f t e r t h e r e s p e c t i v e o r i g i n a l w a t e r r i g h t s a p p r o p r i a t o r s , G r a n n i s and McNiven, w e r e u s e d t o t r a n s p o r t t h e w a t e r from t h e S h i e l d s R i v e r t o Kunnemann's property. On December 30, 1 9 7 6 , Kunnemann s o l d a 230-acre p a r c e l of h i s ranch t o J a k e Franks. The w a r r a n t y d e e d c o n v e y i n g t h i s p a r c e l t o Franks contained t h e following w a t e r r i g h t grant: " T o g e t h e r w i t h 230 m i n e r ' s i n c h e s o f t h e waters of t h e Shields River appropriated by J o h n McNiven and b e a r i n g a p p r o p r i a t i o n d a t e o f t h e 1 4 t h day o f A u g u s t , 1 8 9 3 , and related ditch rights." J a c k F r a n k s s u b d i v i d e d t h e 230-acre p a r c e l i n t o t w e l v e s m a l l e r t r a c t s of l a n d . The C a s t i l l o s p u r c h a s e d a 20-acre t r a c t from F r a n k s on March 4 , 1977. The c o n t r a c t f o r deed between Franks and C a s t i l l o s d i d n o t c o n t a i n a s p e c i f i c water r i g h t g r a n t b u t r a t h e r the following general g r a n t : " T o g e t h e r w i t h t h e t e n e m e n t s , h e r e d i t a m e n t s and a p p u r t e n a n c e s thereunto belonging." The C o t a n t s p u r c h a s e d a 9.114-acre t r a c t from F r a n k s on November 8 , 1979. The w a r r a n t y deed g i v e n by F r a n k s t o t h e C o t a n t s c o n t a i n e d t h i s language: " T o g e t h e r w i t h a l l and s i n g u l a r t h e t e n e m e n t s , h e r e d i t a m e n t s , a p p u r t e n a n c e s , w a t e r r i g h t s and w a t e r d i t c h e s , i f a n y , thereunto belonging." The f o l l o w i n g diagram d e p i c t s t h e l o c a t i o n of t h e p r o p e r t y r e t a i n e d by D e l b e r t Kunnemann, t h e F r a n k s s u b d i v i s i o n , t h e C a s t i l l o and C o t a n t p r o p e r t i e s , and t h e G r a n n i s and McNiven d i t c h e s : (See Drawing on Next Page) Kunnemann Property No i n t e r c o n n e c t i n g l a t e r a l d i t c h e s e x i s t between t h e ~ c ~ i v e in c h and t h e C a s t i l l o and C o t a n t p r o p e r t i e s . d t When J a k e F r a n k s s o l d t h e s u b d i v i s i o n t r a c t s between t h e McNiven d i t c h and t h e C a s t i l l o and C o t a n t p r o p e r t i e s , he d i d n o t r e s e r v e any easements t h r o u g h which l a t e r a l d i t c h e s c o u l d b e b u i l t t o t r a n s p o r t w a t e r from t h e McNiven d i t c h t o t h e C a s t i l l o and C o t a n t p r o p e r t i e s . During t h e 1977 and 1978 i r r i g a t i n g s e a s o n s , Kunnemann a l l o w e d C a s t i l l o t o t a k e w a t e r from t h e G r a n n i s d i t c h t o i r r i g a t e hay c r o p s . I n 1980, Kunnemann blocked t h e G r a n n i s d i t c h n o r t h of t h e C a s t i l l o p r o p e r t y , t h u s d i v e r t i n g a l l of t h e w a t e r f l o w i n g i n t h e G r a n n i s d i t c h o n t o Kunnemannls land. A s a r e s u l t of Kunnemannls d i v e r s i o n of t h e G r a n n i s d i t c h , C a s t i l l o s and C o t a n t s f i l e d a c o m p l a i n t on J u l y 1 4 , 1980. They s o u g h t t o e n j o i n Kunnemann from i n t e r f e r i n g w i t h t h e f l o w of w a t e r i n t h e G r a n n i s d i t c h . The D i s t r i c t C o u r t e n t e r e d a r e s t r a i n i n g o r d e r on J u l y 2 2 , 1980, p r e v e n t i n g Kunnemann from d i v e r t i n g t h e G r a n n i s d i t c h water. A show c a u s e h e a r i n g on t h e c o m p l a i n t was s e t f o r August 5, 1980. On August 5 , 1980, t h e p l a i n t i f f s , C a s t i l l o s and C o t a n t s , and t h e d e f e n d a n t , Kunnemann, a p p e a r e d w i t h c o u n s e l and presented testimony. Following h e a r i n g , t h e D i s t r i c t C o u r t i s s u e d f i n d i n g s of f a c t and c o n c l u s i o n s of law on September 9, 1980. The D i s t r i c t C o u r t found t h a t t h e C a s t i l l o s , C o t a n t s and t h e i r p r e d e c e s s o r i n i n t e r e s t , J a k e F r a n k s , n e v e r had p o s s e s s i o n of t h e G r a n n i s d i t c h o r G r a n n i s w a t e r r i g h t s . The c o u r t found t h a t J a c k Franks c o u l d n o t convey t h e ~ r a n n i s d i t c h o r water r i g h t s a s appurtenant t o t h e C a s t i l l o o r C o t a n t p r o p e r t y b e c a u s e such r i g h t s had n e v e r been l e g a l l y attached a s appurtenant. s e c t i o n 85-2-403, MCA, The c o u r t f u r t h e r found t h a t imposes no d u t y on t h e s e l l e r of r e a l p r o p e r t y and a p p u r t e n a n t w a t e r r i g h t s t o f i l e a n o t i c e of such s a l e o r t r a n s f e r w i t h t h e Department of N a t u r a l R e s o u r c e s . Based on t h e s e f i n d i n g s t h e D i s t r i c t C o u r t d i s s o l v e d t h e r e s t r a i n i n g o r d e r g r a n t e d pending t h e o r d e r t o show c a u s e and d e n i e d t h e p l a i n t i f f s ' motion f o r an i n j u n c t i o n . On September 1 8 , 1980, C a s t i l l o s and C o t a n t s f i l e d a motion t o amend p u r s u a n t t o Rule 59 ( g ) , M.R.Civ.P. On October 8 , 1980, t h e D i s t r i c t C o u r t e n t e r e d a n o r d e r denying t h e motion. C a s t i l l o s and C o t a n t s a p p e a l from t h i s o r d e r . Dispositive issues i n t h i s case are: 1. When Kunnemann deeded t o F r a n k s and e x p r e s s l y g r a n t e d t h e McNiven r i g h t s , d i d Kunnemann i m p l i e d l y r e s e r v e t h e Grannis r i g h t s ? 2. I f Kunnemann e f f e c t i v e l y r e s e r v e d t h e G r a n n i s r i g h t s and s e v e r e d them from t h e l a n d t o which t h e y had been a p p u r t e n a n t , d i d e x i s t i n g law r e q u i r e him t o o b t a i n a p p r o v a l of t h e Department of N a t u r a l Resources p u r s u a n t t o t h e p r o v i s i o n s of t h e Montana S u r f a c e and Groundwater A c t , s e c t i o n s 85-2-101, 3. e t seq., M A C? What e f f e c t d o e s f a i l u r e t o a p p l y t o t h e Department of N a t u r a l Resources f o r p e r m i s s i o n t o s e v e r have upon a conveyance? P l a i n t i f f s i n t r o d u c e d a d e c r e e e n t e r e d by t h e S i x t h J u d i c i a l D i s t r i c t C o u r t i n c i v i l c a s e no. 2717, Henwood v . Hobson, which a d j u d i c a t e d w a t e r r i g h t s of T h i r z a G r a n n i s on t h e Shields River. This decree determined t h a t t h e a p p r o p r i a t i o n of 240 m i n e r ' s i n c h e s made by T h i r z a G r a n n i s on J u n e 1, 1880, was a p p u r t e n a n t t o t h e f o l l o w i n g l a n d : "The S o u t h h a l f of S e c t i o n Nine, a l s o a l l of S e c t i o n S e v e n t e e n , Township One S o u t h , Range Ten E a s t . " The t r a c t of l a n d which C a s t i l l o p u r c h a s e d from t h e F r a n k s ' s u b d i v i s i o n l i e s i n t h e s o u t h h a l f of t h i s p a r t i c u l a r s e c t i o n n i n e . A d d i t i o n a l l y , Kunnemann t e s t i f i e d t h a t t h e l a n d which C a s t i l l o u l t i m a t e l y p u r c h a s e d had t r a d i t i o n a l l y been i r r i g a t e d by w a t e r from t h e G r a n n i s d i t c h . T h i s t e s t i m o n y was c o n f i r m e d by Dan D i n s d a l e , s o n o f t h e p r e d e c e s s o r i n i n t e r e s t of D e l b e r t Kunnemann, and by A l b e r t P a l m e r , a h i r e d hand who had i r r i g a t e d t h e p r o p e r t y . Both men s t a t e d t h a t o n l y w a t e r from t h e G r a n n i s d i t c h had been u s e d t o i r r i g a t e t h e l a n d which C a s t i l l o s u b s e q u e n t l y p u r c h a s e d . I n L e n s i n g v . Day and Hansen S e c u r i t y Co. Mont. 382, 384, 215 P . . . ( 1 9 2 3 ) , 67 999, 1000, t h i s C o u r t s t a t e d t h a t ". a w a t e r r i g h t a c q u i r e d by a p p r o p r i a t i o n , and u s e d f o r a b e n e f i c i a l and n e c e s s a r y p u r p o s e i n c o n n e c t i o n w i t h a g i v e n t r a c t of land, i s an appurtenance. . ." S e c t i o n 70-17- 1 0 1 ( 1 1 ) , MCA, e s t a b l i s h e s t h a t d i t c h e s a r e a n e a s e m e n t which may a t t a c h t o l a n d . ". . . S e c t i o n 70-15-105, MCA, p r o v i d e s t h a t a t h i n g i s deemed t o b e i n c i d e n t a l o r a p p u r t e n a n t t o l a n d when it i s by r i g h t u s e d w i t h t h e l a n d f o r i t s b e n e f i t . . ." I t i s c l e a r t h a t b o t h by d e c r e e and b e n e f i c i a l u s e , and t h e Grannis water - d i t c h r i g h t s w e r e appurtenant t o C a s t i l l o ' s land. However, e v i d e n c e c o n c e r n i n g w h e t h e r t h e G r a n n i s w a t e r and d i t c h r i g h t s w e r e a p p u r t e n a n t t o t h e C o t a n t p r o p e r t y i s not so clear. No d e c r e e was a d m i t t e d which d e c l a r e d s u c h r i g h t s appurtenant t o t h e Cotant property. Kunnemann d i d t e s t i f y t h a t h e u s e d t h e G r a n n i s d i t c h and G r a n n i s w a t e r t o i r r i g a t e t h e l a n d s s o u t h of t h e C a s t i l l o p r o p e r t y . Cotants p u r c h a s e d a 9.114-acre t r a c t of l a n d which b o r d e r s t h e C a s t i l l o p r o p e r t y immediately on t h e s o u t h . A a e r i a l photo n of t h e a r e a showed t h a t t h e G r a n n i s d i t c h r u n s d i r e c t l y through t h e Cotant property. Due t o t h e p r o x i m i t y of t h e C o t a n t p r o p e r t y t o t h a t owned by C a s t i l l o s , t h e e v i d e n c e s u p p o r t s a f i n d i n g t h a t t h e C o t a n t p r o p e r t y would have been i r r i g a t e d a t t h e same t i m e t h e C a s t i l l o p r o p e r t y was i r r i g a t e d . W f i n d t h e G r a n n i s r i g h t s t o be a p p u r t e n a n t t o b o t h t r a c t s . e Kunnemann conveyed t h e McNiven w a t e r r i g h t t o g e t h e r with r e l a t e d d i t c h r i g h t s . W hold t h a t r e l a t e d d i t c h e r i g h t s r e f e r t o t h e "McNiven d i t c h . " S i n c e Kunnemann h e l d two w a t e r and d i t c h r i g h t s , namely t h e G r a n n i s r i g h t s and t h e McNiven r i g h t s , t h e q u e s t i o n becomes whether conveyance of t h e McNiven r i g h t s i m p l i e d l y r e s e r v e d t h e G r a n n i s r i g h t s . W e now h o l d t h a t s u c h a n i m p l i e d r e s e r v a t i o n was e f f e c t u a t e d by t h e conveyance i n q u e s t i o n . S e c t i o n 28-3-702, MCA, provides a s follows: " A l l t h i n g s t h a t i n law o r u s a g e a r e c o n s i d e r ed a s i n c i d e n t a l t o a c o n t r a c t o r a s n e c e s s a r y t o c a r r y it i n t o e f f e c t a r e i m p l i e d t h e r e f r o m u n l e s s some of them a r e e x p r e s s l y mentioned t h e r e i n , i n which c a s e a l l o t h e r t h i n g s of t h e same c l a s s a r e c o n s i d e r e d t o be e x c l u d e d . " Under t h e p r o v i s i o n s of t h e above-quoted statute, the w a t e r r i g h t n o t s p e c i f i c a l l y mentioned would be e x c l u d e d . Furthermore, such an i n t e r p r e t a t i o n e f f e c t u a t e s t h e i n t e n t of t h e p a r t i e s . I n Lensing v . Day and Hansen S e c u r i t y Co., s u p r a , t h i s c o u r t s a i d a t pp. 384-385: " I n a conveyance of a w a t e r r i g h t o r any o t h e r p r o p e r t y , it i s t h e i n t e n t i o n of t h e p a r t i e s , s o f a r as t h e same h a s been l a w f u l l y e x p r e s s e d , which must c o n t r o l t h e c o u r t s i n a c o n s t r u c t i o n of t h e i n s t r u m e n t by which t h e p r o p e r t y i s conThe g e n e r a l r u l e s of c o n s t r u c t i o n o f veyed. l e g a l documents a p p l y t o t h e i n s t r u m e n t now under c o n s i d e r a t i o n . The f a c t t h a t a w a t e r r i g h t i s i n v o l v e d does n o t add t o o r i n any way change t h o s e r u l e s . " ~ p p l y i n g e l l e s t a b l i s h e d r u l e s o f c o n s t r u c t i o n , and w t h e p r o v i s i o n s of s e c t i o n 28-3-702, q u o t e d above, w e MCA, now h o l d t h a t r e s p o n d e n t Kunnemann e f f e c t i v e l y r e s e r v e d h i s G r a n n i s w a t e r r i g h t and t h e r e l a t e d G r a n n i s d i t c h r i g h t . The n e x t i s s u e f o r r e s o l u t i o n i s whether t h e Montana S u r f a c e and Groundwater A c t , s e c t i o n s 85-2-101, MCA, et seq., a p p l i e s t o water r i g h t s perfected p r i o r t o t h e e f f e c t i v e d a t e of t h e Act. D i t c h r i g h t s a r e c l e a r l y n o t governed by the applicable statutes. designed t o The Act i s comprehensive l e g i s l a t i o n ". . . p r o v i d e for the administration, control, and r e g u l a t i o n of w a t e r r i g h t s and e s t a b l i s h a s y s t e m of c e n t r a l i z e d r e c o r d s of - w a t e r r i g h t s . " all 1 0 1 ( 2 ) , MCA, (emphasis added) . S e c t i o n 85-2- Under t h i s A c t , an a d j u d i c a - t i o n p r o c e s s of a l l w a t e r r i g h t s e x i s t i n g p r i o r t o J u l y 1, 1973 was i n s t i t u t e d . MCA. S e c t i o n s 85-2-211 t h r o u g h 85-2-243, A d d i t i o n a l l y , a p p r o p r i a t i o n s of w a t e r r i g h t s a f t e r J u l y 1, 1973 c o u l d o n l y be made t h r o u g h a n a p p l i c a t i o n and p e r m i t p r o c e d u r e governed by t h e Department of N a t u r a l Resources and C o n s e r v a t i o n . S e c t i o n s 85-2-301 t h r o u g h 85-2- 317, MCA. P r i o r t o 1973, Montana c a s e law c o n s i s t e n t l y h e l d t h a t a w a t e r r i g h t c o u l d be t r a n s f e r r e d and d i s p o s e d of a p a r t from t h e l a n d t o which it was a p p u r t e n a n t . However, s u c h t r a n s f e r could n o t adversely a f f e c t o t h e r vested r i g h t s . See S h e r l o c k v. Greaves ( 1 9 3 8 ) , 106 Mont. 206, 76 P.2d 87; Lensing v . Day and Hansen S e c u r i t y Co., supra. The S u r f a c e and Groundwater Act made such t r a n s f e r s u b j e c t t o review a s follows: " ( 3 ) Without o b t a i n i n g p r i o r a p p r o v a l from -not t h e d e p a r t m e n t , a n a p p r o p r i a t o r may al o rt of s e v e r -l-r = p a- - -a n a p p r o p r i a t i o n from t h e l a it i s r i g h t ---- n d t o which - - a p p u r t e n The d e p a r t m e n t s h a l l approve t h e ant, - ... proposed change i f i t d e t e r m i n e s t h a t t h e proposed change w i l l n o t a d v e r s e l y a f f e c t t h e r i g h t s of o t h e r persons. I f t h e department d e t e r m i n e s t h a t t h e proposed change might a d v e r s e l y a f f e c t t h e r i g h t s o f o t h e r p e r s o n s , n o t i c e of t h e proposed change s h a l l If be g i v e n i n a c c o r d a n c e w i t h 85-2-307. t h e d e p a r t m e n t t h e n d e t e r m i n e s t h a t an o b j e c t i o n f i l e d by a p e r s o n whose r i g h t s may be a f f e c t e d s t a t e s a v a l i d o b j e c t i o n t o t h e proposed change, t h e d e p a r t m e n t s h a l l h o l d a h e a r i n g t h e r e o n p r i o r t o i t s a p p r o v a l o r deni a l o f t h e proposed change. Objections s h a l l meet t h e r e q u i r e m e n t s o f 85-2-308 ( 2 ) and h e a r i n g s s h a l l be h e l d i n a c c o r d a n c e w i t h 85-2-309." S e c t i o n 85-2-403, MCA. (emphasis a d d e d . ) Respondent c o n t e n d s t h a t t h i s p r o v i s i o n was n o t i n t e n d e d t o govern w a t e r r i g h t s p e r f e c t e d b e f o r e t h e J u l y 1, 1973, effective date. However, s e c t i o n 85-2-403(3) does n o t c o n t a i n s p e c i f i c l a n g u a g e which p r e c l u d e s i t s a p p l i c a t i o n t o w a t e r r i g h t s p e r f e c t e d p r i o r t o J u l y 1, 1973. Other p r o v i s i o n s c o n t a i n e d i n t h e S u r f a c e and Groundwater Act - c o n t a i n such do p r e c l u s i v e language. For example, s e c t i o n 85-2-404, MCA, r e g a r d i n g abandonment of w a t e r r i g h t s s t a t e s : " ( 1 ) I f a n a p p r o p r i a t o r c e a s e s t o u s e a11 o r a p a r t of h i s a p p r o p r i a t i o n r i g h t w i t h t h e i n t e n t i o n of wholly o r p a r t i a l l y abandoning t h e r i g h t o r i f h e c e a s e s u s i n g h i s appropriation r i g h t according t o i t s t e r m s and c o n d i t i o n s w i t h t h e i n t e n t i o n of n o t complying w i t h t h o s e t e r m s and c o n d i t i o n s , t h e a p p r o p r i a t i o n r i g h t s h a l l , t o t h a t ext e n t , b e deemed c o n s i d e r e d abandoned and s h a l l immediately e x p i r e . " ( 2 ) I f an appropriator ceases t o use a l l o r p a r t of h i s a p p r o p r i a t i o n r i g h t o r c e a s e s using h i s appropriation r i g h t according t o i t s terms and c o n d i t i o n s f o r a p e r i o d of 1 0 s u c c e s s i v e y e a r s and t h e r e was w a t e r a v a i l a b l e f o r h i s u s e , t h e r e s h a l l be a prima f a c i e presumption t h a t t h e a p p r o p r i a t o r has abandoned h i s r i g h t i n whole o r f o r t h e p a r t n o t used. does n o " ( 3 ) T h i s s e c t i o n --t a p p l y t o e x i s t t h e y have been i n g r i g h t s u n t i l ---d e t e r m i n e d i n a c c o r d a n c e w i t h p a r t - of - c h a p t e r . " 2 - this (emphasis a d d e d . ) I t i s c l e a r t h a t t h e l e g i s l a t u r e p r e c l u d e d a p p l i c a t i o n of t h e S u r f a c e and Groundwater Act s t a t u t e s where i t deemed such a c t i o n n e c e s s a r y . A c c o r d i n g l y , it was t h e l e g i s l a t u r e ' s a p p a r e n t i n t e n t n o t t o p r e c l u d e a p p l i c a t i o n of s e c t i o n 85-24 0 3 ( 3 ) , MCA, t o w a t e r r i g h t s e x i s t i n g p r i o r t o J u l y 1, 1973, by v i r t u e of t h e f a c t t h a t language p r e c l u d i n g s u c h a p p l i c a t i o n was n o t i n c l u d e d i n t h e s t a t u t e . On r e h e a r i n g , Kunnemann c o n t e n d s t h a t a p p l i c a t i o n o f s e c t i o n 85-2-403(3), MCA, of t h e S u r f a c e and Groundwater Act t o w a t e r r i g h t s p e r f e c t e d b e f o r e t h e Act would v i o l a t e t h e Montana C o n s t i t u t i o n . A r t i c l e I X , S e c t i o n 3, p r o v i d e s : " (1) A l l e x i s t i n g r i g h t s t o t h e u s e of any w a t e r s f o r any u s e f u l o r b e n e f i c i a l p u r p o s e a r e h e r e b y r e c o g n i z e d and confirmed." The s u b j e c t p r o v i s i o n of t h e Act d o e s n o t d e s t r o y t h e r i g h t t o use water, thus v i o l a t i n g the c o n s t i t u t i o n a l provision. R a t h e r , t h e Act e s t a b l i s h e s a p r o c e d u r e f o r review. The Department of N a t u r a l R e s o u r c e s , under t h e A c t , c a n o n l y deny t r a n s f e r i f o t h e r v e s t e d r i g h t s would be i n j u r e d . law h a s n o t been changed. The The Department h a s simply been g i v e n a r e v i e w t o d e t e r m i n e t h e same i s s u e t h a t c o u l d p r e v i o u s l y have been d e t e r m i n e d o n l y by a D i s t r i c t C o u r t . I n commenting upon t h e new p r o v i s i o n , Montana's n o t e d w a t e r law a u t h o r i t y , A l b e r t S t o n e s a i d : "The 1973 Water - A c t , R.C.M., Use s e c t i o n 89892, c o n t i n u e s t h e p o l i c y of t h e r e p e a l e d s e c t i o n 89-803, o n l y a d d i n g t h a t any change must have t h e a p p r o v a l of t h e Department of N a t u r a l Resources and C o n s e r v a t i o n . So t h e c a s e law developed under t h e p r i o r code s e c t i o n s h o u l d remain a p p l i c a b l e t o t h e new section." S e l e c t e d A s p e c t s of Montana Water Law, p . 40. W s e e nothing u n c o n s t i t u t i o n a l about applying t h e e mandated p r o c e d u r e t o r i g h t s p e r f e c t e d p r i o r t o t h e e f f e c t i v e d a t e of t h e Act. T h e r e f o r e , we h o l d t h a t t h e owner of a w a t e r r i g h t e x i s t i n g p r i o r t o J u l y 1, 1973, must s e e k t h e a p p r o v a l of t h e Department of N a t u r a l Resources and C o n s e r v a t i o n b e f o r e s e v e r i n g t h a t r i g h t from l a n d t o which i t i s a p p u r t e n a n t . The r e s u l t o f o u r d e t e r m i n a t i o n i n v o l v i n g t h e f i r s t two i s s u e s i s , t h a t ownership of t h e G r a n n i s w a t e r r i g h t and d i t c h r i g h t was r e s e r v e d by r e s p o n d e n t Kunnemann. However, t h e w a t e r r i g h t h a s remained a p p u r t e n a n t t o t h e l a n d conveyed by Kunnemann t o F r a n k s and s o t h e r i g h t r e s e r v e d i s q u a l i f i e d . Kunnemann must a p p l y t o t h e Department of N a t u r a l Resources f o r p e r m i s s i o n t o s e v e r from t h e l a n d conveyed, t h e w a t e r r i g h t which Kunnemann owns. The same r a t i o n a l e a p p l i e s t o t h e McNiven w a t e r r i g h t . The conveyance p a s s e d t i t l e , b u t t h e r i g h t t o u s e w i l l be d e l a y e d u n t i l a p p r o p r i a t e a p p r o v a l i s g r a n t e d by t h e Department of N a t u r a l Resources. The r e s u l t o f t h i s o p i n i o n i s t o h o l d t h a t : (1) t h e Montana S u r f a c e and Groundwater A c t , e x c e p t where i t i n d i c a t e s a contrary i n t e n t , a p p l i e s t o water r i g h t s perfected p r i o r t o t h e e f f e c t i v e d a t e of t h e A c t , and ( 2 ) f a i l u r e t o comply w i t h t h e terms of t h e Act d o e s n o t r e n d e r a conveyance o r r e s e r v a t i o n v o i d , b u t suspends a b i l i t y t o u s e t h e r i g h t u n t i l t h e s t a t u t o r i l y mandated p e r m i s s i o n i s g r a n t e d by t h e Department of N a t u r a l Resources. Judgment i n f a v o r of Kunn W e Concur: d. J u s t i c e s John C . part: Sheehy and Fred J. Weber d i s s e n t i n g i n W a g r e e w i t h t h e r e s o l u t i o n of t h e f i r s t i s s u e by e t h e m a j o r i t y , t h a t Kunnemann i m p l i e d l y r e s e r v e d h i s G r a n n i s w a t e r r i g h t and conveyed no r i g h t t o F r a n k s o r h i s s u c c e s s o r s t o t a k e i r r i g a t i o n w a t e r o n t o t h e deeded l a n d s through t h e G r a n n i s d i t c h a s i t r u n s t h r o u g h t h e nondeeded p r o p e r t y r e t a i n e d by Kunnemann. W e d i s a g r e e w i t h t h e c o n c l u s i o n of t h e m a j o r i t y t h a t a p p r o v a l of t h e Department o f N a t u r a l Resources i s n e c e s s a r y t o e f f e c t u a t e t h e t r a n s f e r by Kunnemann t o F r a n k s o r t h a t any r i g h t t o Kunnemann t o u s e t h e r e m a i n i n g w a t e r i s " s e v e r e d " and must have Department of N a t u r a l Resources a p p r o v a l . A r e v i e w of b a s i c Montana w a t e r l a w i s u s e f u l t o demon- s t r a t e our position. W e b e g i n w i t h a reminder t h a t a w a t e r r i g h t and a d i t c h r i g h t a r e separate e n t i t i e s , c a p a b l e of s e p a r a t e ownership. Kunnemann c a n own a d i t c h r i g h t w i t h o u t a water r i g h t , o r a water r i g h t without a d i t c h r i g h t . v. Missoula I r r . D i s t r i c t ( 1 9 3 1 ) , 90 Mont. ; 344, mw-ky BWS~~F- P.2d Connolly v . H a r r e l ( 1 9 3 6 ) , 102 Mont. 295, 57 P.2d 781; McDonnell v. H u f f i n e ( 1 9 3 1 ) , 4 4 Mont. 4 1 1 , 1 2 0 P.2d 792. In t h i s c a s e , Kunnemann s o l d t o F r a n k s t h a t p a r t o f t h e G r a n n i s d i t c h t h a t was p a r t and p a r c e l of t h e d e c i d e d p r o p e r t y . He r e s e r v e d t o h i m s e l f t h e Grannis w a t e r r i g h t which p r o v i d e d w a t e r t o t h a t p o r t i o n of t h e G r a n n i s d i t c h . H e had a p e r f e c t l e g a l r i g h t t o do s o , s i n c e Kunnemann c a n own a w a t e r r i g h t without a d i t c h r i g h t . B e f o r e t h e deed t o F r a n k s , Kunnemann, of c o u r s e , owned a l l of t h e r e a l property involved here. H e owned a w a t e r r i g h t t o 2 4 0 m i n e r ' s i n c h e s i n t h e G r a n n i s d i t c h and 450 m i n e r ' s i n c h e s i n t h e McNiven d i t c h . The d i t c h e s on h i s l a n d s w e r e p a r t and p a r c e l of h i s ownership. The d i t c h e s w e r e n o t " a p p u r t e n a n t " b e c a u s e t h e y were p a r t of t h e r e a l e s t a t e t h a t Kunnemann owned. T h i s was e x p l a i n e d i n Smith v. Denniff ( 1 9 0 0 ) , 2 4 Mont. 2 1 , 23, 2 4 , P. a s follows: "2. S e c t i o n 1078 of t h e C i v i l Code d e f i n e s an 'appurtenance' a s follows: 'A thing is deemed t o b e i n c i d e n t a l o r a p p u r t e n a n t t o l a n d when i t i s by r i g h t used w i t h t h e l a n d f o r i t s b e n e f i t , a s i n t h e c a s e of a way, o r w a t e r c o u r s e , o r of a p a s s a g e f o r l i g h t , a i r o r h e a t from o r a c r o s s t h e l a n d of a n o t h e r . ' A 'water c o u r s e from o r a c r o s s t h e l a n d of a n o t h e r ' i s a n easement, and by r e f e r e n c e t o s e c t i o n 1250 of t h e C i v i l Code i t i s p l a i n t h a t i n t h e c o n t e m p l a t i o n of t h e Code a n a p p u r t e n a n c e t o l a n d i s i n any and e v e r y c a s e an easement. For example: A. owns a p a r c e l o f l a n d , t o i r r i g a t e which he h a s l a w f u l l y a p p r o p r i a t e d and by r i g h t is using, water. The d i t c h t h r o u g h which t h e w a t e r i s conveyed i s a l s o owned by him, and i s p a r t l y upon h i s l a n d and p a r t l y upon t h e l a n d of B. The w a t e r r i g h t i s a n a p p u r t e n a n t t o A . ' s l a n d , and t h a t p a r t o f t h e d i t c h which i s upon B . ' s l a n d i s a n easement of A. t h e r e i n , and i s a l s o a p p u r t e n a n t t o t h e l a n d of A . , b u t t h a t p a r t of t h e d i t c h which i s upon A . ' s l a n d i s n o t a p p u r t e n a n t t h e r e t o , b u t i s p a r t and p a r c e l o f t h e land i t s e l f . " Hence, i t i s c l e a r t h a t t h e p o r t i o n of t h e G r a n n i s d i t c h t h a t l i e s upon t h e l a n d s s o l d t o F r a n k s i s n o t " a p p u r t e n a n t " t o t h a t l a n d , b u t i s p a r t and p a r c e l of t h e l a n d conveyed, F r a n k s r e c e i v e d no d i t c h r i g h t i n t h e G r a n n i s d i t c h as a n " a p p u r t e n a n c e , " b e c a u s e F r a n k s g o t no r i g h t t o convey i r r i g a t i o n w a t e r o v e r t h e r e m a i n i n g Kunnemann's l a n d t h r o u g h t h e G r a n n i s d i t c h on t h a t l a n d . A d i t c h r i g h t on t h e l a n d of a n o t h e r i s a n easement on t h e l a n d of t h e o t h e r , and an easement c a n n o t be c r e a t e d , g r a n t e d o r t r a n s f e r r e d e x c e p t by o p e r a t i o n o f law, by a n i n s t r u m e n t i n w r i t i n g , by p r e s c r i p t i o n o r eminent domain. The e f f e c t o f t h e deed from Kunnemann t o F r a n k s was t o convey t o F r a n k s 230 m i n e r ' s i n c h e s o f w a t e r i n t h e McNiven d i t c h , and t h e r i g h t t o t a k e w a t e r t o t h e deeded l a n d s t h r o u g h t h e McNiven d i t c h o v e r t h e remaining Kunnemann lands. By t h e deed, F r a n k s r e c e i v e d 230 m i n e r ' s i n c h e s of McNiven w a t e r f o r m e r l y owned by Kunnemann, and a NcNiven d i t c h r i g h t o v e r t h e r e m a i n i n g Kunnemann l a n d s a s a n a p p u r t e n a n c e t o t h e l a n d s purchased by F r a n k s . C a s t i l l o and C o t a n t are s u c c e s s o r s t o a p a r t of t h e r i g h t s deeded by Kunnemann t o F r a n k s . They have no o t h e r c l a i m upon Kunnemann, o r upon h i s remaining w a t e r o r ditch rights. They c a n n o t g e t w a t e r t h r o u g h t h e G r a n n i s d i t c h u n l e s s t h e y a c q u i r e (1) a w a t e r r i g h t which c a n be d i v e r t e d a t t h e G r a n n i s d i v e r s i o n , and ( 2 ) a n easement o v e r Kunnemann's r e m a i n i n g l a n d s t o c a r r y t h e w a t e r t h r o u g h t h e G r a n n i s d i t c h o v e r Kunnemann's r e m a i n i n g l a n d s t o t h e l a n d s owned by C o t a n t and C a s t i l l o . A f u r t h e r r e s u l t of t h e deed t o F r a n k s by Kunnemann i s t h a t F r a n k s g o t t h a t p o r t i o n of t h e G r a n n i s d i t c h which was l o c a t e d upon t h e deeded l a n d s , b u t no w a t e r r i g h t b e c a u s e t h e G r a n n i s w a t e r r i g h t was r e s e r v e d t o Kunnemann. When C a s t i l l o and C o t a n t c l a i m e d w a t e r t h r o u g h t h e G r a n n i s d i t c h , t h e y w e r e c l a i m i n g w a t e r f o r which n e i t h e r t h e y n o r t h e i r p r e d e c e s s o r F r a n k s had a w a t e r r i g h t . m u lac! See ?4e4%kq-13. M i s s o u l a I r r . D i s t r i c t , s u p r a , f o r a r e v e r s e of t h i s s i t u a t i o n . C a s t i l l o and C o t a n t have no w a t e r r i g h t i n t h e G r a n n i s d i t c h which i s a p p u r t e n a n t t o t h e l a n d s t h e y now own. Kunnemann owned " e x i s t i n g r i g h t s , " t h a t i s w a t e r and d i t c h r i g h t s which e x i s t e d p r i o r t o J u l y 1, 1973. W e disagree t h a t t h e owner o f a n e x i s t i n g r i g h t may n o t t r a n s f e r a w a t e r o r d i t c h r i g h t u n l e s s t h e Department of N a t u r a l Resources approves. I n a r r i v i n g a t the opposite conclusion, t h e m a j o r i t y r e l y upon a p o r t i o n of s e c t i o n 85-2-403, w e a g a i n q u o t e f o r t h e r e a d e r ' s convenience. MCA, which " (1) The right to use water under a permit or certificate of water right shall pass with a conveyance of the land or transfer by operation of law, unless specifically exempted therefrom. All transfers of interest and appropriation rights shall be without loss of priority. "(2) The person receiving the appropriation interest shall file with the Department notice of the transfer on a form prescribed by the Department. "(3) Without obtaining prior approval from the Department, an appropriator may not sever all or any part of an appropriation right . . ." We contend that the foregoing statute applies only to water rights received under a permit or a certificate of authority. It was not intended to apply to existing rights, especially since existing rights were confirmed by 1972 Montana Constitution, Art. IX, § 3. The anomaly of the majority relying on section 85-2-403, MCA is that the majority hold in this case directly opposite to the provisions of section 85-2-403(1). Under that subsection no implied reservations are recognized. If that subsection applied Kunnemann's rights to water from the Grannis ditch would have passed by the deed to Franks because they were not "specifically exempted therefrom. " We are buttressed in our contention that section 85-2-403 does not apply to existing rights because in the same part of the code, in section 85-2-401, MCA, it is provided that priority of appropriations for existing rights are to be determined by water courts. Prior to July 1, 1973, an owner of a water right could change the place of diversion, or place of use of his water right, except only to the extent he may injure others by such change. Section 89-803, R.C.M. 1947. These incidents of ownership of water rights were confirmed by 1972 Montana Constitution, Art. IX, § provision has no meaning. 3, or the constitutional The majority takes away these incidents unless the Department of Natural Resources gives approval. Not only has the majority misconceived the intent of the constitutional provision and the statutes adopted thereafter, but they have placed in doubt the rights of hundreds of water users in this state who have conveyed or received conveyances of existing rights since July 1, 1973. Such a result is not necessary here, especially since the process of adjudicating all water claims is now in full swing before the water courts, when and where all rights to the use and ownership of water will be determined. Under our view of the law here, there is no conflict with the state constitution, and we need not discuss such an issue. We would affirm the District Court - in toto,

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