Consolidated Home Supply Ditch & Reservoir Co. v. Town of Berthoud

896 P.2d 260, 19 Brief Times Rptr. 787, 1995 Colo. LEXIS 229, 1995 WL 262636

• Court: Supreme Court of Colorado
• Decided: May 8, 1995
• Docket: 93SA307
• Status: Published

Opinions

Justice MULLARKEY

delivered the Opinion of the Court.

The Town of Berthoud (Berthoud) filed an application in the water court to change the use of two of its water rights on the Big Thompson River, one in the amount of 8.0 cubic feet per second (e.f.s.) and the other in the amount of 4.14 e.f.s. Berthoud has historically diverted these rights through the Handy Ditch during irrigation months. In its application, Berthoud sought to obtain authorization to divert the rights through the Colorado Big Thompson Project Facilities on a year-round basis.

The water court held a four-day trial on Berthoud’s change of use application during which two of the opposing water rights holders, Home Supply Ditch and Reservoir Company (Home Supply) and Thompson Water Users Association, submitted evidence to demonstrate that Berthoud had abandoned its right to divert the 3.0 e.f.s. claim during the non-irrigation months (3.0 e.f.s. winter water right). Home Supply also challenged the priority of Berthoud’s water right.

Following the trial, the water court found that Berthoud had abandoned its 3.0 e.f.s. winter water right. The court held that Ber-thoud could divert its 3.0 e.f.s. right during irrigation months and its 4.14 e.f.s. water right via the Handy Ditch through the Colorado Big Thompson Project Facilities. The court also held that Berthoud had a first priority right for all uses.

Home Supply appeals to this court for review of the water court’s holding that Ber-thoud has the first priority right for all uses.¹ It argues that the water court incorrectly determined Berthoud’s priority date with respect to future administration of the water right and contends that its water right is senior to Berthoud’s water right. Berthoud appeals the water court’s holding on abandonment, asserting that it did not abandon its 3.0 e.f.s. winter water right. We affirm the water court’s holding recognizing Ber-thoud’s right as senior to all others and reverse the water court’s finding of abandonment.

I.

This case involves the complicated adjudications of Big Thompson River water rights in Water Division No. 4 during the late 1800’s and early 1900’s. In 1879 and 1881, adjudication acts were passed which provided for adjudication of water rights only when the rights were for irrigation purposes. See 1879 Colo.Sess.Laws 94; 1881 Colo.Sess. Laws 142. Pursuant to these acts, the Boulder District Court entered decrees on May 28, 1883, and on March 22, 1890. All water rights adjudicated in both the 1883 and 1890 general adjudication proceedings were for irrigation purposes and established the irrigation priorities for all water rights users in the Big Thompson system.

The statute authorizing the adjudication of water rights for purposes other than irrigation did not become effective until July 11, 1903. See 1903 Colo.Sess.Laws 297; Mills Stat.Ann., §§ 3803-06; Doll v. McEllen, 21 Colo.App. 7, 121 P. 149 (1912). Decrees concerning domestic uses of Big Thompson River water were entered in 1912 and 1923. After court challenges, a final decree was entered on June 29, 1916 (1916 decree), and it remains in effect today. The 1916 decree granted Berthoud “the perpetual right to take from the Big Thompson River three (3) cubic feet of water per second of time, as priority No. 1, for domestic purposes as against all the users of water from said river.” The decree also required Berthoud to build a pipeline by 1920 to carry its water from the Big Thompson River. In the interim, Berthoud was awarded 6.0 e.f.s. of “carrying” water to transport the water through the Handy Ditch.

The jurisdiction of the water court to enter what became the 1916 decree was initially challenged by several objectors in Louden Irrigating Canal and Reservoir Co. v. Berthoud, 57 Colo. 374, 140 P. 802 (1914). The opinion quotes the objectors at length and demonstrates that the parties understood that the 1916 decree gave Berthoud the first priority right for all purposes. Id. at 376, 140 P. at 803 (objectors asserted that the water court did not have jurisdiction “to make such a decree antedating all priorities from the Big Thompson River”).² This court rejected the objectors’ challenge to the jurisdiction of the water court and held that the objectors had not properly preserved their argument that the water court mistakenly interpreted the law as requiring that domestic use always be given a higher priority than irrigation use. Id. at 380, 140 P. at 804.³

The decree was again before us in Hinderlider v. Town of Berthoud, 77 Colo. 504, 238 P. 64 (1925), and both Home Supply and Berthoud were parties. This time, Berthoud contested the validity of the decree, arguing that the water court lacked the authority to decree any temporary amount of water or to fix any penalty or forfeiture for Berthoud’s failure to build a pipeline. This court found against Berthoud and upheld the validity of the decree. In so doing, Berthoud retained its 3.0 c.f.s. right but lost its 6.0 c.f.s. right to “carrying” water.

Home Supply also challenged the decree in an administrative hearing before the Office of the State Engineer, Town of Berthoud v. The Consolidated Home Supply Ditch and Reservoir Co., (State Eng. of Colo. 1944) (1944 state engineer’s decision). In the hearing, Home Supply contended, similar to its position in the present case, that since Ber-thoud’s water right was granted after the irrigation rights had been adjudicated, Ber-thoud’s right was junior to the irrigation rights. The Office of the State Engineer found that Berthoud’s water right had been administered as the number one water right for all uses on the stream since 1916 and stated that Home Supply’s request was more capable of being rectified by a proper court action. Apparently, Home Supply filed no court action and, since the 1944 State Engineer’s decision, the state engineer has continued to administer Berthoud’s water right as the number one water right on the river.

II.

In finding that Berthoud had the number one priority right, the water court held:

6. The evidence was undisputed that the above referenced water right decreed in Case No. 4862 for 3.0 cfs has been diverted as the No. 1 Priority water right on the Big Thompson River since it was decreed, and has never been curtailed. In addition, the Decree in Case No. 4862, dated June 29, 1916, the supporting Record, the Supreme Court decisions in Louden Irrigating Canal and Reservoir Co. v. Berthoud, 57 Colo. 374, 140 P. 802 (1914) and Hinderlider v. Town of Berthoud, 77 Colo. 504, 238 P. 64 (1925), and the State Engineer’s decision in 1944, In the Matter of the Town of Berthoud v., the Consolidated Home Supply Ditch and Reservoir Ditch Co., (Exhibit A-19), all provide that said water right is entitled to divert water from the Big Thompson River as the No. 1 priority.

The Court finds any ambiguity in the Decree is hereby resolved such that Ber-thoud is entitled to divert its 3.0 cfs water right from the Big Thompson River as the No. 1 Priority based upon the following: (1) the specific language of the 1916 Decree related to the Berthoud System of Water Works supersedes the general language of the Decree; (2) this conclusion is fully supported by the Record from the 1904 adjudication (leading to the entry of the 1916 decree), wherein Berthoud stipulated with the other parties to the adjudication to receive a 3.0 cfs No. 1 right in exchange for dismissing its pending transfer of 9 cfs of the No. 1 irrigation right to the Town; (3) such conclusion is further supported by the consistent administrative practice during this century (at a minimum) of administering Berthoud’s 3.0 cfs domestic right as the No. 1 right on the Big Thompson River.

This right has always been administered as being senior to the No. 1 irrigation right which has a priority date of November 10, 1861, a portion of which Applicant itself owns. This historic administrative practice shall continue.

Home Supply contends that the water court incorrectly held that the 1916 decree granted Berthoud the number one priority for all uses on the Big Thompson River. Under Home Supply’s analysis, the 1916 decree was adjudicated to give Berthoud the number one priority in the water district for domestic purposes only. As such, Home Supply contends that the water court erroneously found that Berthoud’s water right was senior to the number one irrigation right which has an appropriation date of November 10,1861, and was adjudicated on May 28, 1881. We disagree for several reasons.

First, Home Supply’s claim is precluded by res judicata. The doctrine of res judicata holds that an existing judgment is conclusive of the rights of the parties in any subsequent suit on the same claim. State Engineer v. Smith Cattle, Inc., 780 P.2d 546, 549 (Colo.1989); Pomeroy v. Waitkus, 183 Colo. 344, 350, 517 P.2d 396, 399 (1974). Res judicata constitutes an absolute bar to subsequent actions only when both the prior and subsequent suits have “identity of subject matter, identity of cause of action, and identity of capacity in the persons for which or against whom the claim is made.” Smith Cattle, Inc., 780 P.2d at 549; City of Westminster v. Church, 167 Colo. 1, 9, 445 P.2d 52, 55 (1968). When applicable, res judicata bars the later assertion of any claim which could have been raised in the earlier proceeding even if it was not actually raised. Smith Cattle, 780 P.2d at 549.

The primary issue of dispute is the interpretation of the 1916 decree granting Ber-thoud a 3.0 c.f.s. water right from the Big Thompson River. The relevant provision in the decree stated:

... the town of Berthoud shall have the perpetual right to take from the Big Thompson River three (3) cubic feet of water per second of time, as priority No. 1, for domestic purposes as against all the users of water from said river, except as against the city of Loveland, which city shall have equal priority with said town of Berthoud at all times for domestic purposes ....

Berthoud and Home Supply were parties to a 1909 stipulation which was incorporated into the disputed language of the decree. In at least one case, Hinderlider, both Berthoud and Home Supply were parties to a case involving the validity and interpretation of the 1916 decree. Although Berthoud was the party contesting the validity of the decree, Home Supply had the opportunity to challenge the priority of Berthoud’s water right under the decree. It did not raise the issue, however, and is now precluded from challenging Berthoud’s first priority water right under the 1916 decree.

Home Supply also is barred from attacking this decree by the doctrine of lach-es. Laches requires actual knowledge of existing conditions, unreasonable delay in the assertion of a claim, and intervening reliance by and prejudice to another. Manor Vail Condominium Ass’n v. Town of Vail, 199 Colo. 62, 604 P.2d 1168 (1980). In Louden, we rejected the objectors’ challenge to the decree because the objectors had actual or constructive knowledge of the 1909 stipulation for several years before the decree was entered. Louden, 57 Colo, at 380, 140 P. at 804. Home Supply, as one of the parties to the stipulation, would be barred by the same reasoning.

Further, the 1944 letter from the State Engineer included language specifically advising Home Supply to seek court redress if it so desired. Since Home Supply was a party to the action before the state engineer, it was aware of the conditions surrounding the water right and its administration. Yet it chose to wait nearly 40 years before raising the issue in court. Berthoud has relied on the priority of its water right and has had no reason to pursue any alternative means of insuring its right to take water first before all other users. Thus, laches prevents Home Supply from raising this claim.

In an effort to avoid the bar of res judicata or laches, Home Supply argues that the state engineer did not recognize Ber-thoud’s right as the first priority water right. In support, Home Supply cites a decision from the division engineer dated September 15, 1944. The division engineer stated that Berthoud’s right was junior to those rights adjudicated in 1881 and 1890. Specifically, the division engineer determined that Ber-thoud’s right was junior to Home Supply’s irrigation right. However, this letter was the basis of the appeal to the state engineer who, in turn, issued the November 30, 1944, state engineer’s decision that Berthoud’s water right should continue to be administered as the number one priority right. Home Supply’s reliance on the division engineer’s opinion has no merit.

Home Supply also argues that the state engineer has treated Berthoud’s right as the junior right in the state’s quadrennial tabulation. The statute requiring water tabulations from the state engineer specifically provides that those tabulations do not create any presumption on the priority of a water right. § 37-92-401(11), 15 C.R.S. (1990).⁴ Thus, we find that the state engineer has consistently applied Berthoud’s right as the first priority right despite the quadrennial water tabulations.

Finally, we find the interpretation of the decree by the state engineer consistent and persuasive. Assuming the meaning of a decree is ambiguous, the court may look to' the administrative interpretation of the decree by officials charged with the administration of that decree. South Adams County v. Broe Land Co., 812 P.2d 1161, 1168 (Colo.1991). While an opinion letter from an administrative agency is not binding authority, it can be used as persuasive authority. Banner Advertising v. People, 868 P.2d 1077 (Colo.1994).

The state engineer has administered the subject water right as the number one priority water right at least since the 1944 state engineer’s decision. In fact, the decision recognized Berthoud’s date of priority as November 10, 1861, and as number one for all uses.⁵ This determination was neither appealed nor challenged in court until the present case, and the state engineer has continued administering Berthoud’s water right as the number one water right.

For the foregoing reasons, we hold that Berthoud has the first priority right for all uses under the 1916 decree.

III.

The next issue we address is whether the water court properly concluded that Ber-thoud abandoned its 3.0 c.f.s. winter water right to the Big Thompson River. The water court limited Berthoud’s future diversions under the 3.0 c.f.s. right to the period from April 27 through October 31 of each year, not to exceed 159 days per year. The relevant portions of the written order read as follows:

18. The decree in Case No. 4862 recognized Applicant’s right to divert its 3.0 cfs water right on a year round basis upon construction of a pipeline. However, based on the evidence presented, this Court holds that Applicant has abandoned the right to divert water in the non-irrigation season.

* * * * * *

24. The Change of Water Rights proposed by Applicant is one contemplated by law, and if administered in accordance with this Decree, will not adversely affect any vested water in the South Platte River or its tributaries. C.R.S. § 37-92-305(3). Self-serving statements of intent by the owner of the water rights are insufficient by themselves to rebut a presumption of abandonment. Knapp v. Colo. River Water Conservation District, 131 Colo. 42, 279 P.2d 420 (1955).

25. Proceedings for a change of water right subject such right to judicial scrutiny, and it is appropriate for the Court to consider abandonment. See, § 37-92-301(5), C.R.S. Abandonment of a priority is a matter that properly may be litigated in a change case. Flasche v. Westcolo Co., 112 Colo. 387, 149 P.2d 817 (1944).

26. An unreasonably lengthy period of nonuse is sufficient to create a presumption of the owner’s intent to abandon a water right. This requires the owner to produce some evidence supporting an assertion that the owner did not intend to abandon the water right. Water Rights of Masters Inv. Co., Inc. v. Irrigationists Ass’n, 702 P.2d 268 (Colo.1985).

In its oral ruling, the water court stated in relevant part:

[I]t appears to me that the portion of the decree in the 1916 case which provided under certain conditions for a wintertime use of the 3 cfs water has been abandoned. And long since, too.

I’m inclined to think that it was the contemplation of the original decree that that right would expire in 1920 along with the extra 6 cfs.

But, even if that is not the case, it’s been clear that there is no effort to do it, and witnesses testified here today that the Town has come to the conclusion that it was impractical to build the pipeline.

And I consider that to have been a condition precedent to the right to the wintertime storage. I think that the Town has long since abandoned any intention to ever build that pipeline.

I think it has no such intention today, and I think the only thing they didn’t abandon was the hope that some way they could figure out how to get that water without building the pipeline, but I don’t think they can do that.

So I am going to find that that decree, insofar as providing for winter use of that 3 cfs, has been abandoned.

This court consistently has held that two elements are necessary to prove abandonment — intent and nonuse. Water Rights of Masters Inv. Co. Inc. v. Irrigationists Ass’n, 702 P.2d 268 (1985). Abandonment of a water right must be established by a preponderance of the evidence. People v. City of Thornton, 775 P.2d 11, 19 (Colo.1989). The requisite intent to abandon need not be proved directly but may be inferred from all the circumstances in the ease. Southeastern Colorado Water Conservancy Dist. v. Twin Lakes Assoc., Inc., 770 P.2d 1231 (Colo.1989). Continued and unexplained nonuse of a water right for a long period of time creates a rebuttable presumption of intent to abandon. Thornton, 775 P.2d at 18. By statute, this period is ten years. § 37-92-402(11), 15 C.R.S. (1990).

A presumption of abandonment may be rebutted by evidence of justifiable excuse for nonuse. Twin Lakes Assoc., 770 P.2d at 1231. Evidence that during the period of nonuse the owner never intended to discontinue the use of the water available will rebut the presumption of abandonment. Thornton, 775 P.2d at 18. Evidence of economic, financial or legal obstacles to water use may justify nonuse. Hollenbeck v. Granby Ditch & Reservoir Co., 160 Colo. 555, 420 P.2d 419 (1966). Such evidence, however, must consist of more than mere subjective declarations of the owner of the water right that it did not intend to abandon the right or that it intended to resume use of the right at some future time. Twin Lakes Assoc., 770 P.2d at 1238.⁶

The question of abandonment is a factual question to be determined by weighing all of the evidence and assessing the credibility of the witnesses. Masters Inv. Co., 702 P.2d at 272. The water court is uniquely suited to make these determinations. City and County of Denver v. Snake River Water Dist., 788 P.2d 772, 776 (Colo.1990). Findings of the water court should not be disturbed unless the evidence is “wholly insufficient” to support the decision. Thornton, 775 P.2d at 19.

Our review of the water court’s written and oral rulings convinces us that the court’s conclusion of abandonment was based on a faulty legal premise which we now reject. The water court erroneously equated Berthoud’s failure to build a pipeline with abandonment of its winter water right. In paragraph 18 of its written ruling, the water court characterized the 1916 decree as authorizing Berthoud to divert 3.0 c.f.s. “on a year round basis upon construction of a pipeline.’’ (emphasis added). In the water court’s oral ruling, it elaborated on its reasoning and stated that it considered the building of a pipeline to be a “condition precedent” to Berthoud’s winter water right. The water court recognized that Berthoud did not abandon its efforts to use the winter water without constructing a pipeline. Indeed, Ber-thoud initiated this action for a change in point of diversion because it had found an alternative way to transport the water. However, the water court found that Ber-thoud had no intention to build a pipeline as of the time of trial and that, without building the pipeline, Berthoud could not “get that water.” We reject the water court’s “condition precedent” analysis.

The effect of Berthoud’s failure to construct a pipeline according to the terms of the 1916 decree was adjudicated in the 1925 Hinderlider ease. There, we concluded that the only consequence of that failure was that Berthoud lost its additional 6.0 c.f.s. “carrying” water. We stated:

This decree, therefore, rightly interpreted, means that the diversion of the priority awarded might be temporarily made and continued through the Handy ditch until January 1, 1920, but that after such time the town must construct a pipe line from the river to its reservoirs, and for its failure to do so it must be restricted to the minimum amount of 3 cubic feet of water per second of time if it continues to use the Handy ditch as a carrier.

Hinderlider, 77 Colo. at 515, 238 P. at 68. Contrary to the water court’s ruling in this case, construction of the pipeline is not a “condition precedent” to Berthoud’s exercise of its winter water right. Under Hinderli-der, Berthoud’s 3.0 c.f.s. water right is unaffected by the fact that Berthoud has not constructed a pipeline. Thus, the water court’s conclusion that Berthoud could not retain its winter water right without building a pipeline is incorrect as a matter of law.

Given its erroneous construction of the 1916 decree, the water court apparently considered it unnecessary to make findings of fact on abandonment and it made no such findings. The critical issue in this case is whether Berthoud rebutted the presumption of abandonment raised by nonuse. The record contains various pieces of evidence which bear on Berthoud’s intent concerning its water right, including documents and oral and written testimony by several witnesses. There has been no determination of credibility and no weighing of the evidence. Given this state of the record, this court cannot perform its appellate review function. Thus, we must remand this case to the water court for it to determine whether Berthoud intended to use the winter water despite its long period of nonuse.

The judgment of the water court is affirmed in part and reversed in part, and the case is remanded to the water court with directions to make factual findings and conclusions of law on the issue of abandonment. The proceedings on remand may include reopening the evidentiary phase of the case if deemed necessary and appropriate by the water court.

LOHR, J., concurs in part and dissents in part. ERICKSON and SCOTT, JJ., join in the concurrence and dissent.

1 . Other objectors appear in this court as appel-lees with respect to the abandonment issue. Only Home Supply has appealed the priority issue.

2 . Some of the parties in the Louden case are the same as the parties in the present case.

3 . We held that:

[N]o tangible questions in this regard were presented for the consideration of the trial court.... Counsel contend that the referee and the court seem to have proceeded on the theory that appropriations of water for domestic purposes made at any period takes precedence over all appropriations for other purposes, and assert that this is not the law. If so, it was the duly of appellants to have raised the question before judgment was rendered, and they cannot be permitted to do so afterward.

Berthoud, 57 Colo, at 378, 140 P. at 804.

4 . The statute provides, in relevant part, that "the relative listing of water rights in a tabulation shall not create any presumption of seniority.” § 37-92-401(11).

5 . The state engineer recognized that Berthoud’s water right was adjudicated after the irrigation rights adjudicated in 1881 and 1890 and determined:

Also that the other priorities award in early adjudications for irrigation uses, were numbered consecutively, while the Town’s domestic priority No. 1 does not enter into that list of decrees and, consequently, was considered by the Court to be a separate decree, independent of other decrees; that the general rule that a domestic priority can not be placed ahead of priorities awarded for irrigation uses, does not apply to this particular case because of the proceedings leading up to the decree and of the terms of the aforementioned stipulation. State engineer’s holding at p. 7. Thus, the state engineer held that despite the antedating problem, Berthoud’s water right was still the first priority right. The state engineer also recognized that:

... failure on the part of any interested appropriator for 28 years to oppose the present method of administration of the water rights of .the Big Thompson river since the decree of June 29, 1916, was entered, is conclusive evidence that those who participated in the proceedings intended that the 3 second feet should be a prior right on the river and that this was the intent of the Referee and of the Court when the decree was entered and that, as a result of said long period of years of administration without serious objection on the part of other interested parties, this condition should not at this time be changed....

6 . We reject Berthoud's claim that it cannot abandon its water right because of its status as a municipality. See, e.g., City and County of Denver v. Snake River Water Dist., 788 P.2d 772 (Colo.1990) (finding abandonment of a hydroelectric water right when Denver provided no justification for nonuse of a water right); San Luis Valley Irrigation Dist. v. Alamosa, 55 Colo. 386, 135 P. 769 (1913) (holding that a municipal corporation abandoned a water right after an extended period of nonuse).