Bailey v. State

• Decision Date: 16 May 1979
• Docket Number: No. 9579,9579
• Parties: Patricia M. BAILEY, Appellant, v. STATE of Nevada, Roland D. Westergard, State Engineer, John Does 1 through 5, Respondents.
• Court: Nevada Supreme Court

Page 734

594 P.2d 734

95 Nev. 378

Patricia M. BAILEY, Appellant, v. STATE of Nevada, Roland D. Westergard, State Engineer, John

Does 1 through 5, Respondents.

No. 9579.

Supreme Court of Nevada.

May 16, 1979.

Edgar A. Hollingsworth, Reno, for appellant.

Richard H. Bryan, Atty. Gen., and Harry Wright Swainston, Deputy Atty. Gen., Carson City, for respondents.

OPINION

MOWBRAY, Chief Justice:

Appellant, Patricia M. Bailey, challenged, in district court, the State Engineer's cancellation of a permit appropriating underground water (No. 22532), and the Engineer's denial of Bailey's reapplication for the same water right (No. 25905).

The district court disallowed Bailey's challenge to the dismissal of the original permit, No. 22532, but the court did direct the State Engineer to grant, in part, her new application, No. 25905, by appropriating water for the cultivation of 80 acres.

Bailey has appealed, claiming that the court erred in (1) denying her challenge to the dismissal of permit No. 22532, because Bailey claims she had no notice of the cancellation of the original permit, and (2) failing to grant Bailey, under her new permit No. 25905, appropriate water for the cultivation of 160 acres in addition to the 80 acres allowed by the court.

We agree that under the circumstances presented, permit No. 22532 should not have been cancelled, and we hold that Bailey is entitled to an appropriate award covering the 160 acres. We reverse and remand for that purpose.

THE FACTS

The Division of Water Resources issued Patricia M. Bailey No. 22532 on February 22, 1966. The permit provided for the appropriation of underground water for use on Bailey's Desert Land Entry Acreage in Hualapai Flat, Nevada. As a condition of the granting of the permit, Bailey was required to begin work on or before August 22, 1966, complete work on or before August 22, 1967, and apply the water to beneficial use on or before August 22, 1970. She was further required to submit proof of compliance with each condition within 30 days after each due date.

Bailey and her husband had difficulty locating a productive well, drilling three dry holes. She was granted a one year extension for completion of work, to August 22, 1968. The 200 foot well was completed during that year, and the water applied to the irrigation of some 80 of appellant's 311 acres. A year later the depth of the well was deepened to 400 feet. By the fall of 1970, Bailey and her husband had cleared and cultivated an additional 160 acres and they had planted a crop in anticipation of irrigating the following spring. While the Baileys were working on the land, the State Engineer attempted to notify Bailey at her residential address in Sparks, Nevada, that as no proof of beneficial use had been filed by September 22, 1970, her permit was being held for cancellation unless such proof was received within 30 days.

The trial court found that:

On September 22, 1970, a Notice was mailed by Certified Mail to Appellant (Bailey) at her correct address, pursuant The reason given for the denial of Bailey's new application was that the proposed point of diversion was within an area of concentrated development in the Hualapai Flat area, where water levels had been lowering within the past three years, and that the granting of the permit would "tend to impair the value of existing rights." The office engineer who advised Bailey's husband to file a new application testified that when he did so, he was aware that no new permits were being issued in that area.

to NRS 533.410. The envelope containing the Notice was received in the Sparks, Nevada(,) Post Office and Appellant was sent two notices of its arrival. It was returned by the Sparks Post Office marked "Unclaimed" and received in Respondent's (State Engineer's) office on October 12, 1970. Appellant did not actually receive it. On October 28, 1970(,) the permit was cancelled. No notice of cancellation was sent to Appellant. Appellant, through her husband, learned of the cancellation shortly before January 11, 1971. Appellant's husband inquired of personnel in Respondent's office as to what could be done about the cancellation. Appellant's husband was told that a new application could be filed. Appellant chose to accept this "advice", and filed a new application No. 25905 on January 11, 1971, for the same water rights as applied for under the previous permit. On April 22, 1971, the Respondent denied said application 25905.

The district court dismissed Bailey's appeal of the cancellation of permit No. 22532; however, the court honored her subsequent application by granting her equitable relief to the extent of three acre feet per year for the 80 acres to which the water had previously been applied. The court concluded that there had been a lack of diligence in developing and applying water to the additional 160 acres, and denied equitable relief as to that portion of the application.

APPEAL OF CANCELLATION OF PERMIT NO. 22532

Bailey suggests that the State Engineer's cancellation of permit No. 22532, in the absence of actual receipt of the notice sent by certified mail, constituted a violation of her due process rights. We disagree. Bailey was notified at the outset that her permit was conditioned upon compliance with the deadlines set out in the State Engineer's endorsement of her application. The State Engineer fully complied with the directive of NRS 533.410 that an additional notice be sent by certified or registered mail, after expiration of the deadline, to the effect that failure to submit proof of beneficial use or request an extension within 30 days would result in cancellation. Such means of notice is reasonably calculated, under the circumstances, to reach the permittee. That it failed to do so in the case at hand cannot be attributed to any neglect of duty on the part of the State Engineer. See Mullane v. Central Hanover Tr. Co., 339 U.S. 306, 318-20, 70 S.Ct. 652, 94 L.Ed. 865 (1950); Compare Schroeder v. City of New York, 371 U.S. 208, 83 S.Ct. 279, 9 L.Ed.2d 255 (1962) (water rights; publication and posting in vicinity of property inadequate notice). We note that the supreme courts of Oregon and Utah have reached the same conclusion with regard to similar due process claims by water appropriation permittees who failed to receive actual notice through certified or registered mail of their failure to comply with the conditions of their permits. Green v. Wheeler, 254 Or. 424, 458 P.2d 938 (1969), Cert. denied 397 U.S. 990, 90 S.Ct. 1123, 25 L.Ed.2d 397 (1970); Mosbey Irrigation Company v. Criddle, 11 Utah 2d 41, 354 P.2d 848 (1960).

However, we have also ruled that a determination that the State Engineer has correctly cancelled a permit, under his statutory mandate, "does not, however, affect the power of the district court to grant equitable relief to the permittee when warranted." State Engineer v. American Nat'l Ins. Co., 88 Nev. 424, 426, 498 P.2d 1329, 1330 (1972). We do not believe that it was the intent of the Legislature to preclude judicial review of an order or decision of which the aggrieved party had no actual We also note that, although the state water law does not specifically require the State Engineer to serve notice of a final decision or order, the Administrative Procedure Act does so require. NRS 233B.125. ¹ That Act, by its very terms, is designed "to establish minimum procedural requirements for the regulation-making and adjudication procedure of all agencies of the executive department of the state government" unless expressly exempted, and is "intended to supplement statutes applicable to specific agencies." NRS 233B.020(1) and (2).

knowledge until after expiration of the 30 day period, such as in the instant case.

In the instant case, it is undisputed that there was no attempt to inform Bailey of the final decision cancelling her permit, and that she had no actual knowledge of the cancellation until shortly before January 11, 1971. At that time, her husband was informed by the representative of the State Engineer that his only recourse was to apply for a new permit. This action was followed, even though the representative knew such permits were not being favorably considered.

In Donoghue v. Tonopah Oriental Mining Co., 45 Nev. 110, 198 P. 553 (1921), we refused to enforce literal compliance with the terms of a statute regulating certain mining claims where the claimant, through his representatives, had relied in good faith upon the advice of local government officials as to the proper procedures to follow in order to maintain a claim in good standing. Here, the office of the State Engineer has been charged with the statutory duty of administering the complex system of water rights within the state. We believe that lay members of the public are entitled to rely upon its advice as to the procedures to be followed under the state water law. As we concluded in Donoghue, we believe that the legislative intent would not be served by rigid application of the terms of the statute to the appellant. Cf. Rosenbloom v. United States, 355 U.S. 80, 78 S.Ct. 202, 2 L.Ed.2d 110 (1957); Fallen v. United States, 378 U.S. 139, 84 S.Ct. 1689, 12 L.Ed.2d 760 (1964); Carter v. United States, 168 F.2d 310 (10th Cir. 1948); Commercial Credit Corp. v. United States, 175 F.2d 905, 906-7 (8th Cir. 1949); State v. Delaney, 56 Haw. 444, 540 P.2d 61 (1975).

We conclude that the trial court erred in its holding that it was precluded from considering Bailey's appeal of the cancellation of permit No. 22532, and we hold that under the principles of American National Insurance appropriate equitable relief should have been granted with respect to that permit.

EQUITABLE RELIEF

Bailey also suggests that the court erred in limiting the equitable relief granted, predicated on the new permit, to the 80 acres already under cultivation.

In State Engineer v. American Nat'l Ins. Co., supra, we upheld the granting of equitable...