Opinion
W. H. Hoover, R. H. Glover, John V. Dwyer, and J. E. Corette, Jr., all of Butte, Mont., for plaintiff.
R. V. Bottomly, Atty. Gen., of Montana, C. J. Dousman, E. G. Toomey, and W. D. Rankin, all of Helena, Mont., Frank T. Hooks, of Townsend, Mont., Burcham & Blair and E. Ben Johnson, both of Spokane, Wash., and Willard W. Gatchell, of Washington, D.C., for defendants. The following are excerpts from the lengthy report of Honorable Howard Toole, Special Master, Dealing with material facts and principles of law embodied in the report:
'The plaintiff herein is a public utility and serves power to householders, schools, municipalities, farmers, railroads, mines, smelters and other domestic, municipal, commercial and industrial users. Plaintiff has about 73,000 domestic customers, 11,000 commercial customers, 1200 municipal customers, and 1100 industrial customers. Plaintiff serves 161 communities in Montana. The demand for power fluctuates in accordance with the requirements of these customers and, when water is available, Plaintiff maintains sufficient energy on its power lines to give its customers instantaneous service.
'Plaintiff's exhibits 1, 2, 3, 5, 6, 7 and 8 (the water data books) do not show the maximum or minimum flow of the Missouri River at any given moment. The exhibits do show in separate columns the natural flow and the actual out-flow and the amount of water used through each plant in each month and also the amount of water used through the plant, the computations are in cubic feet per second. The maximum figure shown for each of these items is the average flow for the highest day during that month. The minimum figure shown for each of these items is the average flow for the lowest day during that month. The average figure shown for each of these items is the average flow for the total number of days in the month, computed daily and averaged for the month.
'Canyon Ferry has operated in July during seven of the 15 years and the average natural flow if the river at that point has been less than the average water used through the plant during July for four of the seven years.
'Hauser Lake has operated during July in each of 15 years prior to 1941. During that period the average natural flow of the river has been less than the average water used through the plant during July for ten of the 15 years.
'Holter has operated during July in each of 15 years prior to 1941. During that period the average natural flow of the river has been less than the average water used through the plant during July of each of the 15 years.
'Black Eagle has been operating, as presently constructed, during July for ten years prior to 1941. During that period the average natural flow of the river has been less than the average water used through the plant during July for six of ten years.
'Rainbow has been operating during July for eleven years prior to 1941. During that period the average natural flow of the river has been less than the average water used through the plant during July for five of the eleven years.
'Ryan has been operating during July of each year for 15 years prior to 1941. During that period the average natural flow of the river has been less than the average water used through the plant during July for each of the 15 years.
'Morony has been operating during July of each of ten out of the eleven years prior to 1941. During that period the average natural flow of the river has been less than the average water used through the plant during July for seven of the ten years.
'During the past ten years the average natural flow of water in the river has been less than the average flow of water sued through Plaintiff's hydroelectric plants in August of every year when the plants were operating excepting at the Ryan plant in August of 1938.
'It is therefore found that the average natural flow of water in cubic feet per second in the Missouri River during the months of July and August in each year is substantially less than the average natural flow of water in cubic feet per second in the Missouri River during the months of July and August in each year is substantially less than the average number of cubic feet per second of water actually beneficially used by Plaintiff during those months at each of its seven hydroelectric plants when said plants have been operating.
'It is further found that expecting during the high water months the average natural flow of water in cubic feet per second in the Missouri River is generally substantialy less than the average number of cubic feet per second of water actually beneficially used by Plaintiff through its seven hydroelectric plants.
'It is further found that by storing water in its nine reservoirs in the high water season and by letting the stored water down the river in low water season Plaintiff has been able to maintain a sufficient flow of water in the river to operate its plants throughout the year at a capacity which is high enough to substantially furnish the power demanded by its customers but it is found that during the time between 1928 and 1938 the following periods occurred during which Plaintiff was unable, because of shortage of water, to supply the demand of its customers:
"In 1928, from October 3
to November 23
1928, from December 14
to December 21
1929, from January 18
to March 8
1929, from August 9
to December 13
1935, from September 19
to December 31
1936, from January 1
to March 1
1936, from June 25
to December 31
1937, from January 1
to December 31
1938, from January 1
to February 24
'Each of the seven hydroelectric developments of Plaintiff located on the Missouri River consists of a dam extending entirely across the river and a power plant containing hydroelectric generating equipment of the capacity hereinbefore referred to. At each plant the water is diverted by diversions works through the power plant and there used to develop electrical energy for sale and delivery to Plaintiff's customers. After being used the water at each plant is returned to the Missouri River.
'Each of the seven power projects was designed and built by competent engineers and of modern design at the time when constructed. The equipment in each plant is of the best quality obtainable at the time when the plants were built and since the plants were constructed each plant has maintained in good operating condition by means of the installation of repairs and improvements of good quality and workmanship.
'The seven power projects operate at the present time at substantially the same efficiency and each uses about the same amount of water and produces substantially the same amount of energy per second foot of water as when originally constructed.
'I find that each of the seven hydroelectric plants of Plaintiff is, and has been since its construction, adequate to make a reasonable and beneficial use of the waters heretofore found to have been appropriated by Plaintiff and I further find that Plaintiff has been making a reasonable and beneficial use of such waters for more than ten years last past.
'On the 28th day of June, 1938, a Notice of Appropriation of 400 cubic feet per second of water was duly filed by the defendant, The State Water Conservation Board of the State of Montana, appropriating 400 second feet (cubic feet per second) of the waters of the Missouri River, to be diverted by means of a diversion dam and canals at a point on the Missouri River in the Northwest Quarter of the Northwest Quarter (NW1/4NW1/4) of Section Seven (7), Township Four (4) North, Range Three (3) East, in Broadwater County, Montana. The water was appropriated for use in irrigation of certain lands in the vicinity of the canals in the Missouri River watershed.
'Following the filing of the Notice of Appropriation the Water Board proceeded to let a contract for the construction of the Broadwater dam which is a concrete structure extending across the Missouri River and of a height sufficient to raise the water so that it will flow into the canals.
'The Water Board also constructed its canals. The main canal at the diversion point is of sufficient size to carry 343 cubic feet of water per second.
'The Broadwater dam and the canals were completed in time so that the water could be diverted into the main canal for the irrigating season in 1941. The Broadwater project is situated at a point on the Missouri River about 20 miles upstream from the Canyon Ferry project of the Plaintiff.
'The Broadwater project is designed to supply irrigation water for 21,000 acres of irrigable land which requires and can beneficially use 42,000 acre feet of water.
'TheHlands to be irrigated from the Broadwater project belong to the members of the defendant Broadwater-Missouri Water Users' Association, to whom the water is to be sold by the defendant Water Board. 'In an average year the defendant Water Board will use on the land an average of 137 cubic feet per second during May; an average of 171 cubic feet per second during June; an average of 205 cubic feet per second during July; an average of 137 cubic feet per second during August; and an average of 35 cubic feet per second during September.
'I find, however, that the maximum diversion at any time might be as high as the capacity of the canal which is 343 cubic feet per second.
'When filled to capacity the Broadwater reservoir holds 3000 acre feet of water but this storage is used only for the purpose of raising the water so it can be diverted into the canal and no part of the stored water is available for irrigation purposes through the canal.
'The 21,000 acres of land contemplated to be irrigated from the Broadwater project is irrigable land and 42,000 acre feet of water can be beneficially used on said lands, together with an additional 10,500 acre feet to make up loss in transmission.
'I find that the defendant Water Board has made a valid appropriation of water in the amount of 343 cubic feet per second up to a total of 52,000 acre feet as of the 28th day of June, 1938, and that actual construction of diversion works sufficient and adequate to divert that amount of water were commenced within two years and installed by the defendant Water Board on the Missouri River at the point described in these findings.
'By a written contract dated March 18, 1939, between the Ruby River Water Users' Association, the State Water Conservation Board of the State of Montana and the Broadwater-Missouri Water Users' Association, the Water Board purchased 10,000 acre feet of water per year for sale to the Broadwater-Missouri Water Users' Association through the diversion works at the Broadwater project.
'The Ruby River Water Users' Association project is a dam and storage reservoir on the Ruby River. The Ruby River is one of the tributaries of the Missouri River and the Ruby River project is 115 miles upstream from the Broadwater project. There are numerous irrigation projects between the Ruby River storage and the Broadwater project and I find that there is no evidence or proof that water released from storage at the Ruby River dam would reach the diversion at the Broadwater project.
'I find that the average natural flow of the Missouri River is not sufficient (except in the high water season which is generally in April, May and June) to operate the power plants of Plaintiff either to the capacity of the generating units or to the capacity required to satisfy the load demand made by Plaintiff's customers. The deficiency in the natural flow is made up by storing the flood waters in the reservoirs in high water season and releasing the stored waters during low water season.
'Plaintiff has no excess storage capacity and makes a reasonable and beneficial use of all waters stored by it.
'The water rights and appropriation heretofore found to belong to Plaintiff are prior in time to the water right and appropriation heretofore found to belong to the defendants and the diversion of water by defendants at the Broadwater project will substantially reduce the water available to supply the water rights of Plaintiff, and particularly so at Canyon Ferry, Hauser Lake and Holter.
'In addition to the appropriations of water made by the Plaintiff and by the defendant Water Board from the Missouri River watershed and its tributaries above Canyon Ferry there are numerous appropriations of various dates, are relative priorities of which are not disclosed in this action. It is found that the appropriations of various dates, the relative priorities of which are not disclosed in this action. It is found that the appropriations other than those of Plaintiff and defendant Water Board above Canyon Ferry are used for the irrigation of approximately 550,000 acres of land and that all of the water diverted by said appropriators is diverted above the point of diversion of the defendant Water Board at Broadwater and the Plaintiff at Canyon Ferry.
'It is found that the total number of cubic feet per second flowing in the Missouri River during an average year, and for all time prior to 1940, excepting the year 1937 when the flow was abnormally low, is in excess of the total number of cubic feet per second needed by the plaintiff for the operation of its power plants and for storage in its reservoirs and in excess of the amount needed by the defendant Water Board for diversion at the Broadwater project. The total average annual flow of the river in cubic feet per second is shown in Defendants' Exhibit M and, except for the years 1936 and 1937 this total average annual flow has been substantially in excess of the total amount of water required by the parties to this action in cubic feet per second.
'It is further found that while the average flow in the low water months, principally in July and August when defendant proposes to divert the maximum amount of water to be used by it, it is not sufficient to supply the reasonable requirements of the Plaintiff, there is a high average flow generally during the months of April, May and June and at times during the months of March and early July which accounts for the average annual flow in excess of the needs of the Plaintiff and the defendant Water Board.
'The court therefore finds that the solution to the problem of the beneficial use of the waters of the Missouri River can only be worked out by the construction of adequate storage reservoirs above the point where diversion and use of water is proposed to be made.
'In this case the Plaintiff has constructed and now maintains and operates adequate storage facilities for water to be used by it but the defendant Water Board has not constructed or acquired adequate or sufficient storage facilities to supply the water proposed to be diverted by it at the Broadwater project.
'The water rights herein decreed to Plaintiff as reservoir rights are decreed in cubic feet per second in a sufficient amount to fill the respective reservoirs of the Plaintiff to the full usable storage capacity of any reservoir at any given time and since the Plaintiff stores water in its reservoirs at all times when the flow in the river is in excess of the amount of water required by its generating plants it is found that the amount of water necessary to fill the reservoir rights fluctuates to great extent and while Plaintiff may require the full amount of the reservoir rights decreed to it when its reservoirs are drawn down to the lowers usable capacity there are times when these reservoir rights are satisfied, and the reservoirs are filled, by the use of less water than the amount herein decreed. The reservoir rights herein decreed to the Plaintiff are limited to an amount of water sufficient to fill any given reservoir to which the right is appurtenant at any time when such reservoir shall contain less water than its maximum usable storage capacity.
'From the foregoing findings of fact the court arrives at the following:
'Conclusions of Law
'The Plaintiff is the owner of the Canyon Ferry, Hauser Lake, Holter, Black Eagle, Rainbow, Volta or Ryan, and Morony developments on the Missouri River and of the water rights owned and used in connection with each of these developments.
'The Plaintiff makes a reasonable and beneficial use of each and all of the water rights set forth above at its hydroelectric developments on the Missouri River.
'Each of the Plaintiff's seven hydroelectric developments listed above has a power plant, reservoir and other facilities which are adequate to make and do make a reasonable and beneficial use of the water which they require for their operation.
'The defendant State Water Conservation Board of the State of Montana is entitled as of June 28, 1938, to the possession and use of 343 cubic feet per second of water up to a total sufficient to irrigate 21,000 acres of land lying within the Broadwater project in Broadwater Country, Montana. The total acre feet necessary for the irrigation of such land is 42,000 acre feet for delivery on the land plus 10,500 acre feet for loss in transmission, making a total of 52,500 acre feet.
'The water rights of the Plaintiff above described are prior and superior to that of the defendant above described and the parties to this action are entitled to a decree of this Court fixing their respective water rights in the amounts and as of the dates herein set out.
'Since the natural flow in the Missouri River is insufficient to supply the Plaintiff's water rights during the months when defendants propose to divert the water at the Broadwater project it is found that defendants will interfere with Plaintiff's water rights and Plaintiff will be damaged unless defendants are enjoined.
'The Plaintiff herein is entitled, under the evidence in this case, to have an injunction issue against the defendants preventing the defendants and each of them from diverting the water of the Missouri River at the Broadwater project except at times when the prior water rights hereinbefore decreed to Plaintiff have been satisfied and filled; and except further that the injunction so issued shall not prevent the defendants from storing at any time surplus water over and above Plaintiff's rights and using such stored water at the Broadwater project. 'The Plaintiff is entitled to have a decree entered herein in accordance with these findings of fact and conclusions of law.'
PRAY, District Judge.
In this cause certain matters have been submitted for final determination, consisting of the Special Master's report therein, the objections thereto by defendants, the answer of plaintiff to those objections and the motion of defendants to dismiss the case. Motions, hearings and argument have developed a large record in this cause, and much time has been devoted to the questions raised in the last stage of the proceedings, although most of them have heretofore been decided by the two judges of the above named court in ruling on the several motions presented before the appointment of the Master, which had narrowed the issues to those usually present in an action to quiet title to water rights, wherein, in Montana, one of the basic principles to be observed is that one who is 'first in time is first in right.'
When the present judge was called in to preside and had assumed jurisdiction in this cause, forty-four alleged issues were presented to him by counsel for the defendants in the nature of a motion for their inclusion as issues to be heard and determined, to which objections were interposed by plaintiff. Upon examination of these issues it was ascertained by the court that thirty-two had theretofore been denied and eliminated by Judge Baldwin in settling the pleadings and in establishing the law of the case; that ten of the issues thus presented were found to be inapplicable, and two were allowed as properly raised, and had reference to the reasonable and beneficial use of the waters appropriated. The present judge declined to disturb the rulings on the law of the case as settled by Judge Baldwin, thereby conforming to well known decisions in our own circuit and to the greater weight of authority in general.
It appears from the Master's report and the transcript of testimony that in ruling on the evidence during the hearing of said cause, the master held that prior decisions made by the judges of said court in respect to the issues to be determined, constituted a limitation which had been observed by him, and that when evidence was tendered outside of the settled issues, the Master permitted counsel to make their offers of proof, and that all so made are contained in the transcript of the proceedings, and appear to be properly recorded and available for further consideration.
Tentative findings of fact and conclusions of law were submitted to counsel by the Master under Rule 53(e)(5) of the Rules of Civil Procedure for the District Courts of the United States, 28 U.S.C.A.following section 723c, for the purpose of receiving their suggestions. Thereafter the Master prepared the final draft of his findings of fact and conclusions of law and submitted them to the court. Following his appointment, as appears from his report, the Master examined the pleadings and orders theretofore made by the judges of said court, and the briefs submitted by counsel prior to his appointment and all the files and records in the case, and likewise the exhibits-- 33 offered by plaintiff, and 24 by defendants-- and examined and considered the briefs, the proposed findings and conclusions submitted to him by counsel for the respective parties and by Messrs. Burcham & Blair as amicus curiae, and reconsidered the evidence and exhibits in the light of the suggestions made to him by counsel, and thereafter corrected his tentative findings of fact to conform to suggestions made. All of which, considered in connection with his report and the transcript, discloses on the part of the Master careful study and preparation and full appreciation of the responsibilities devolving upon him.
Counsel for defendants have urged as a principal and vital issue in briefs and oral arguments that injunctive relief sought by plaintiff and allowed by the Master should be disapproved and denied by the court. After considering everything presented on this subject by way of proof and argument the court is unable to agree with counsel in this respect. Where there is evidence of a threatened injury that is likely to occur during certain periods of each year, unless restrained, as plainly appears in this case, undoubtedly injunctive relief should not be denied. Where one has established his water right as provided by law and shows an injury being inflicted or threatened unquestionably Montana law would allow proper restraint for his protection, and especially where the prior rights of the plaintiff and the threatened injury or interference have been established by proof that is clear and convincing.
Even though the court at this time were inclined to agree with the able arguments of counsel for the defendants in respect to certain issues vital to their cause, and had concluded to adopt the basic theories of the defense, manifestly at once it would become apparent that such a change of front could not be accomplished in respect to thirty-two propositions of law settled and decided by the first judge, and could only be accomplished by the second judge in respect to ten proposals upon being convinced that error had been committed. So that the change would be difficult, were the court so disposed, in view of the law as settled and the proof accepted as controlling. To paraphrase the saying of an early Montana judge, the court may be in error but not in doubt as to the law and the facts of the case, after carefully considering them and then subsequently reconsidering them.
It is provided by Rule 53(e)(2) of the Rules of Civil Procedure for the District Courts of the United States, that 'In an action to be tried without a jury the court shall accept the master's findings of facts unless clearly erroneous. ' Before the adoption of the foregoing rule, Equity Rule 61 1/2, 28 U.S.C.A. § 723, Appendix, controlled and provided that: 'In all references to a master * * * the report of the master shall be treated as presumptively correct, but shall be subject to review by the court * * * .'
In Kimberly v. Arms, 129 U.S. 512, 525, 9 S.Ct. 355, 360, 32 L.Ed. 764, the Supreme Court said: 'We are therefore constrained to hold that the learned court below failed to give to the findings of the master the weight to which they were entitled, and that they should have been treated as so far correct and binding as not to be disturbed, unless clearly in conflict with the weight of the evidence upon which they are made. ' After quoting the general rule and the decision in Kimberly v. Arms, supra, Judge Nevin held in Re Pullmatch, D.C., 27 F.Supp. 884, 886, that: 'giving the findings of the master in the instant proceedings 'the weight to which they' are 'entitled' the court cannot say that the master's findings of fact, or any of them, in the light of all the testimony, are 'clearly erroneous', or that they are 'clearly in conflict with the weight of the evidence upon which they were made.' The court is bound, therefore, to, and it does, confirm the report of the Special Master.'
In Adams County v. Northern Pacific Railway Co., 115 F.2d 768-779, Ninth Circuit, Judge Wilbur said, in construing the rule above quoted: ' * * * The Railway Company contends that our power to review the decision of the lower court predicated upon the master's report is restricted by rule 53(e)(2) of Civil Procedure, 28 U.S.C.A.following section 723c * * * . This rule, of course, regulates the conduct of the trial judge and not that of the appellate court. It is not a new rule but a restatement of an old and well-established rule. Camden v. Stewart, 144 U.S. 104, 12 S.Ct. 585, 36 L.Ed. 363; Girard Life Ins. Annuity & Trust Co. v. Cooper, 162 U.S. 529, 16 S.Ct. 879, 40 L.Ed. 1062.'
In Arrow Distilleries v. Arrow Distilleries, 7 Cir., 117 F.2d 636-638, the court held: 'The only question of merit presented by this appeal is whether the court erred in rejecting the master's findings of fact. We think it did. Rule 53(e)(2) Federal Rules of Civil Procedure, 28 U.S.C.A.following section 723c, provides that in an action to be tried without a jury the court shall accept the master's findings of fact unless they are clearly erroneous. This rule follows the earlier ruling of the Supreme Court in Davis v. Schwartz, 155 U.S. 631, 15 S.Ct. 237, 39 L.Ed. 289. This court has followed the rule in Scavenger Service Corporation v. Courtney, 7 Cir., 85 F.2d 825; In re Mendota Bldg. Corp., 7 Cir., 92 F.2d 644; and Santa Cruz Oil Corporation v. Allbright-Nell Co., 7 Cir., 115 F.2d 604. Under this rule the court cannot reject the master's findings of fact unless they are clearly erroneous. We think they were not clearly erroneous in this case. They were not only supported by substantial evidence, but a reading of the evidence convinces us that they were supported by a preponderance thereof. The decree is reversed and the case is remanded for further proceedings not inconsistent with this opinion.'
Having reviewed the evidence, offers of proof, the issues and actually involved, and the alleged issues heretofore eliminated by both judges and sought to be revived, the conclusion seems inevitable that the report of the Master presents a fair and concise exposition of the law of the case, as heretofore established, and which appears to have been consistently applied to the facts as the Master found them to be.
After an earnest consideration of the report, the objections thereto, the answer, the motion to dismiss, arguments of counsel the authorities and statutes relied upon, the court is now of the opinion that the rule above quoted should be applied, and the report approved and adopted as the findings of fact and conclusions of law by the court, and it is so ordered.