Bentley v. Director of Office State Lands

• Decision Date: 08 June 2007
• Docket Number: No. 06-131.,06-131.
• Citation: 2007 WY 94,160 P.3d 1109
• Parties: James L. and Pamela H. BENTLEY, Appellants (Plaintiffs), v. DIRECTOR OF the OFFICE OF STATE LANDS AND INVESTMENTS; Lynne Boomgaarden, in her official capacity as Director of the Office of State Lands and Investments; Board of Land Commissioners; Governor Dave Freudenthal, Secretary of State Joseph B. Meyer, Auditor Max Maxfield, Treasurer Cynthia Lummis, and Superintendent of Public Instruction Jim McBride, in their official capacities as members of the Board of Land Commissioners; Wyoming Game and Fish Commission; Wyoming Game and Fish Department; and Terry Cleveland, in his official capacity as Director of the Wyoming Game and Fish Department, Appellees (Defendants).
• Court: Wyoming Supreme Court

160 P.3d 1109

2007 WY 94

James L. and Pamela H. BENTLEY, Appellants (Plaintiffs), v. DIRECTOR OF the OFFICE OF STATE LANDS AND INVESTMENTS; Lynne Boomgaarden, in her official capacity as Director of the Office of State Lands and Investments; Board of Land Commissioners; Governor Dave Freudenthal, Secretary of State Joseph B. Meyer, Auditor Max Maxfield, Treasurer Cynthia Lummis, and Superintendent of Public Instruction Jim McBride, in their official capacities as members of the Board of Land Commissioners; Wyoming Game and Fish Commission; Wyoming Game and Fish Department; and Terry Cleveland, in his official capacity as Director of the Wyoming Game and Fish Department, Appellees (Defendants).

No. 06-131.

Supreme Court of Wyoming.

June 8, 2007.

Representing Appellants: Karen Budd-Falen and Brandon L. Jensen, Budd-Falen Law Offices, LLC, Cheyenne, Wyoming. Argument by Mr. Jensen.

Representing Appellees: Patrick J. Crank, Attorney General; Michael L. Hubbard, Deputy Attorney General; Bridget Hill, Assistant Attorney General; C. Levi Martin, Senior Assistant Attorney General; Susan K. Stipe, Senior Assistant Attorney General. Argument by Mr. Martin and Ms. Stipe.

Before VOIGT, C.J., and GOLDEN, HILL, KITE, and BURKE, JJ.

BURKE, Justice.

[¶ 1] In 1992, the State Board of Land Commissioners ("Board") began contemplating a sale of school lands in Carbon County where the Dome Rock Reservoir is located. In response to public concern that sale of the land would prevent public use of the reservoir for fishing purposes, the Board approved an easement in favor of the Wyoming Game and Fish Commission in 1993. The land was subsequently advertised for public auction subject to the easement. It was purchased by John Anselmi, who entered into an installment sales contract with the Board.

[¶ 2] In 2000, Mr. Anselmi assigned the sales contract to Appellants, James and Pamela Bentley. A short time later, the Game and Fish easement was recorded with the county clerk. In 2002, when the Bentleys made full payment under the sales contract, the State of Wyoming issued a patent conveying the land to them. The Bentleys initiated this action in 2004, seeking a declaration that the easement was void, injunctive relief, and damages. The district court upheld the validity of the easement and determined that the water rights appurtenant to the publicly auctioned land had also been transferred to Game and Fish.

[¶ 3] On appeal, the Bentleys contend that the district court erred in dismissing their claims and in granting summary judgment to Appellees. They assert the Game and Fish easement is invalid. They also claim ownership of the water rights associated with the property they acquired by assignment. We affirm.

ISSUES

[¶ 4] The Bentleys present the following issues for review:

1. Whether the Wyoming Board of Land Commissioners failed to convey a valid, and legally enforceable, easement to the Wyoming Game and Fish Commission on January 7, 1993?

2. Whether the Amortization Sales Contract conveyed immediate possession and equitable title to the Plaintiffs' successors-in-interest?

3. Whether the Patent issued to the Plaintiffs in 2002 relates back to the inception of title to the subject property, or June 3, 1993?

4. Whether the Plaintiffs purchased Section 16 without adequate notice of the easement?

5. Whether the Plaintiffs are the rightful owners of any and all water rights appurtenant to Section 16, including any water stored in the Dome Rock Reservoir (a.k.a. Indian Creek Reservoir)?

Appellees state the issues as follows:

1. Did the district court err when it dismissed appellants' causes of action relating to the Board of Land Commissioners' easement to the Wyoming Game and Fish Commission?

2. Did the district court err when it found that the water rights which were historically attached to Section 16 were severed by the easement and, therefore, conveyed to the Wyoming Game and Fish Commission?

FACTS

I. Property Ownership History

[¶ 5] The property at issue here, Section 16, Township 27 North, Range 83 West of the 6th Prime Meridian ("Section 16"), was granted to the State of Wyoming for the benefit of common schools upon admission as a state. See The Wyoming Act of Admission, ch. 664, § 4, 26 Stat. 222 (1890). In 1975, the federal government issued a land patent for Section 16 to the State of Wyoming. Dome Rock Reservoir ("reservoir"), also known as Indian Creek Reservoir, is located entirely within the boundaries of the property, and is considered a trophy fishery.

[¶ 6] In 1992, Mr. Frederick Werner proposed a sale of Section 16. At that time, the property was leased for grazing and agricultural purposes to Ralph Crow and John Anselmi. The Board gave preliminary approval of the sale at its May 7, 1992 meeting. However, after approval of the sale, the public voiced concern in opposition to the sale, fearing loss of access to the reservoir for public fishing. A public hearing was held and, as a result of comments at the hearing, the Board decided it would grant an easement to the Wyoming Game and Fish Commission ("Game and Fish") to preserve public access to the reservoir. At its public meeting on January 7, 1993, the Board approved an easement application from Game and Fish. The application for easement specifically requested:

. . . an easement to provide public vehicular road access, a parking lot, and a 50' wide fishing easement around the shoreline of Dome Rock Reservoir. The entire acreage will encompass approximately 12.30 acres. . . . The easement also grants the Wyoming Game and Fish any water rights that the Board may own in the reservoir.

The Board's approval was documented in Board Matter E-1A. Game and Fish paid the Board $26,500, the market value of the easement.

[¶ 7] The Board approved Section 16 for sale at its public meeting on April 1, 1993. The Board set the appraised value of the property at $91,000, the market value of the property after the easement to the Game and Fish, and authorized the Director of the Wyoming State Land and Farm Loan Office (now known as the Office of State Lands and Investments) to schedule, advertise, and conduct the public auction with a minimum bid of $91,000. The Notice of Sale of State Land indicated that the land was being sold subject to the Game and Fish easement, stating:

The above described land will be sold subject to any rights-of-way or easements, including approximately 12.3 acres to the Wyoming Game and Fish [Commission] for a fishing easement, access road, and parking area at Dome Rock Pond, or any previously granted interest in the land.

[¶ 8] Mr. John Anselmi purchased the property for $120,000 at a public auction held in Rawlins, Wyoming. On June 3, 1993, Mr. Anselmi and the Board executed an Amortization Sales Contract ("Sales Contract") which provided:

These lands are conveyed subject to any rights-of-way or easements of record previously granted under the laws of the State of Wyoming or reserved to the United States upon or across the above described lands.

The Amortization Sales Contract was recorded in the Office of the County Clerk for Carbon County on June 16, 1993. Mr. Anselmi assigned the Sales Contract to the Bentleys on October 12, 2000. He also provided a warranty deed to the Bentleys stating that the property was subject to "all easements, reservations, restrictions and rights-of-way of record or apparent upon the ground."

[¶ 9] On November 28, 2000, Easement No. 5382 was executed by the Governor and the Director of the Office of State Lands. The easement was recorded in the Carbon County Clerk's Office on November 29, 2000. This easement included use of the access road, parking area, and the fishing easement around the reservoir. On its face, the easement does not convey any water rights to the Game and Fish. However, it does incorporate by reference Board Matter E1-A which grants "any water rights that the Board may own in the reservoir."

[¶ 10] On May 16, 2002, the State of Wyoming, in consideration of full payment and in conformity with Wyo. Stat. Ann. § 36-9-112, issued a patent conveying the property to the Bentleys. The patent conveys the property "[s]ubject to any and all rights of way or easements of record previously granted under the laws of the State of Wyoming or reserved to the United States upon or across the above described lands." The patent also states that the conveyance is:

Subject to the legal operation and effect of a Grant of Easement dated as of January 7, 1993 by the State of Wyoming to Wyoming Game and Fish Commission, recorded on November 29, 2000 in the Carbon County Clerk's Office in Book 994, at Page 183, including the water rights described in the grant thereof and appurtenant thereto[.]

The patent was recorded in the Carbon County Clerk's Office on May 24, 2002. The public continues to use the reservoir for fishing and other recreation.

II. Water Rights

[¶ 11] The Dome Rock Reservoir is an on-channel facility along Indian Creek, entirely located within Section 16. Permit No. 6002RES, the primary permit, allowed the creation of the reservoir and provides for the storage of 65.15 acre-feet of water within the Dome Rock Reservoir. Permit No. 6002RES has a priority date of July 21, 1952 and is in good standing.

[¶ 12] Secondary permits, which granted the authority to appropriate the stored waters of the reservoir to beneficial use are Permit No. 21152 (the Indian Grove Ditch No. 3), Permit No. 21154 (the Indian Ditch), and Permit No. 21155 (the Indian Grove Ditch No. 4). These three secondary permits allocate the entire capacity of the reservoir to lands within Sections 16 and 21.¹ The Bentleys currently own all the lands in Sections 16 and 21 that benefit from the water rights preserved in the permits.²

III. Proceedings Below

[¶ 13] On September 29, 2004, the Bentleys filed their Complaint for Declaratory and Injunctive Relief, Quiet Title, and Damages for Trespass. With respect to the...