Salt Lake City v. Silver Fork Pipeline Corp.

• Decision Date: 07 January 2000
• Docket Number: No. 980203.,980203.
• Citation: 2000 UT 3,5 P.3d 1206
• Parties: SALT LAKE CITY, a municipal corporation, Plaintiff and Appellee, v. SILVER FORK PIPELINE CORPORATION, a Utah corporation, Defendant and Appellant.
• Court: Utah Supreme Court

5 P.3d 1206

2000 UT 3

SALT LAKE CITY, a municipal corporation, Plaintiff and Appellee, v. SILVER FORK PIPELINE CORPORATION, a Utah corporation, Defendant and Appellant.

No. 980203.

Supreme Court of Utah.

January 7, 2000.

Rehearing Denied February 25, 2000.

Roger F. Cutler, Ray L. Montgomery, Christopher E. Bramhall, Joseph Novak, Max D. Wheeler, Rodney R. Parker, Salt Lake City, for plaintiff.

Benjamin T. Wilson, James L. Warlaumont, Jeffrey W. Appel, Salt Lake City, for defendant.

STEWART, Justice:

¶ 1 Silver Fork Pipeline Corporation (hereinafter "SFPC") appeals the trial court's decision to quiet title in Salt Lake City to nearly .5 cubic feet per second ("c.f.s.") of water flowing in Big Cottonwood Creek (the "creek") that SFPC had been diverting at the Kentucky-Utah Mine (the "mine"). SFPC also appeals the court's dismissal of its counterclaim seeking reimbursement of amounts it paid Salt Lake to purchase water from the mine. We affirm.

I. THE MORSE DECREE ADJUDICATION OF BIG COTTONWOOD CREEK

¶ 2 Big Cottonwood Canyon lies southeast of Salt Lake City. Big Cottonwood Creek flows in a westerly direction down the center of the canyon. Much of the water from rain and snow falling in the Big Cottonwood Drainage Area flows down the mountain slopes, above and below ground, until it discharges into the creek. By 1894, Salt Lake and its predecessors in interest had fully appropriated the water flowing in the creek near the mouth of the canyon by diversion and beneficial use. Nevertheless, in 1907, longstanding disputes over water rights in the creek came to a head. District Judge C.W. Morse resolved these disputes in The Progress Co. v. Salt Lake City, Civil No. 8921 (the "Morse Decree"), aff'd, 53 Utah 556, 173 P. 705 (1918), an adjudication lasting between 1907 and 1914, in which he allocated rights to most of the waters in the Big Cottonwood Drainage Area. Progress was not a general adjudication, and neither SFPC nor any of its predecessors in interest participated therein.

¶ 3 The Morse Decree awarded rights of use to all water flowing in Big Cottonwood Creek¹ in sixtieths under three categories depending on the time of year and volume of water.² For our purposes, we need note only that between 1920 and 1984, Salt Lake acquired most of the shares of the creek through purchase and exchange agreements. At the time of this trial, Salt Lake's water rights to the creek ranged between 90.42% and 99.23%.³

II. EARLY HISTORY OF THE SILVER FORK AREA AND THE KENTUCKY-UTAH MINE

¶ 4 Silver Fork is a community in Big Cottonwood Canyon that lies south of Big Cottonwood Creek. Historically, individuals employed in grazing, timber, and mining resided in the Silver Fork area. The actual population of Silver Fork and other communities in the canyon during any specific period is unclear.

¶ 5 There are many mines in Big Cottonwood Canyon, two of which are relevant to this case: the Woodlawn Mine and the Kentucky-Utah Mine. Excavation of the Woodlawn Mine started around 1900. In 1915, miners began excavating the Kentucky-Utah Mine and continued to dig intermittently until 1943. The Kentucky-Utah Mine lies entirely within the Big Cottonwood Drainage Area. Owners excavated the Kentucky-Utah Mine to extract minerals and drain water encountered in other nearby mines, including the Woodlawn Mine.

¶ 6 The Kentucky-Utah Mine intercepts underground percolating water through seepages and cracks in its tunnel walls. This water is collected approximately 1,000 feet inside the tunnel and diverted to its portal. The portal of the mine is located approximately one-quarter to one-half mile south of, and approximately 500 vertical feet above, Big Cottonwood Creek. The portal is also within several hundred feet of the Silver Fork area and approximately 12 miles from the mouth of the canyon.

¶ 7 Evidence at trial indicated the mine did not collect a substantial amount of underground water until well into its excavation, likely after 1930. It is not evident when, during its nearly thirty-year excavation, the mine produced the nearly .5 c.f.s. of water claimed by both Salt Lake and SFPC. Nor does the record disclose how much water collected in the mine, if any, originates from other mines such as the Woodlawn.

III. ORIGIN OF THE SILVER FORK PIPELINE CORPORATION AND ITS USE OF WATER FROM THE KENTUCKY-UTAH MINE

¶ 8 As grazing, timber, and mining in the canyon waned, Silver Fork eventually became a community for summer and year-round residents unrelated to any of these industries. As early as 1935, these residents permissively used water on demand emanating from the mine. In June 1935, Jesse Hulse and Ernest Nielson obtained title to approximately eighty acres of land in the Silver Fork area, northwest of the portal of the Kentucky-Utah Mine. They subsequently developed and sold this property to other persons for building summer homes and cabins.

¶ 9 Initially, Hulse and Nielson obtained water for their cabins by dipping it from a nearby creek, likely either Big Cottonwood Creek or Silver Fork Creek. In 1940, Hulse obtained authorization from the U.S. Forest Service to construct a ditch across approximately 400 feet of Forest Service land from the portal of the Kentucky-Utah Mine to his cabin. Hulse then obtained permission from owners of the mine to use their water and began digging the ditch. Beginning in 1941, all water emanating from the mine, except during winter months, was diverted through the ditch to Silver Fork.

¶ 10 In August 1945, Hulse and Neilson entered a contract with Salt Lake entitled "Application for Water" in which Hulse and Nielson agreed to construct and maintain the ditches through which they diverted water from the mine. Salt Lake agreed to sell water flowing in the ditch in exchange for $2 per cabin each year. Hulse and Neilson also agreed to replace the ditch with a pipeline and to return water not used for domestic and culinary purposes to the creek.

¶ 11 In 1950, Hulse formed the Silver Fork Pipeline Corporation, a non-profit corporation organized to construct, operate, and maintain the diversion works extending from within the mine to the subdivision on the former Hulse-Nielson property. Shares in the corporation are owned by individuals who own property in the Silver Fork area.⁴ In that same year, SFPC contracted to pay Salt Lake $5 every year for each cabin located in the Silver Fork area which used water from the mine. By its terms, this agreement superseded the contract between Salt Lake and Hulse and Nielson.

¶ 12 In 1963, Salt Lake and SFPC amended this agreement in order to increase the water usage rate to $15 per year for each cabin. In 1965, Jesse Hulse relinquished all right, title, and claim in his improvements to the watercourse he constructed across Forest Service land to SFPC and canceled the permit issued to him in 1940. The Forest Service subsequently issued SFPC a permit authorizing the maintenance and use of the same watercourse between the mine and the Silver Fork area.

IV. EVENTS PRECIPITATING THE PRESENT DISPUTE

¶ 13 In the spring of 1991, the state engineer sent a letter to SFPC indicating that if it could not provide evidence of a right to the water it diverted from the mine, legal action would ensue to prevent Silver Fork residents from diverting the water. On April 1, 1991, SFPC filed an underground water claim, or "diligence claim," and a change application claiming that it owned title to the right to use approximately .5 c.f.s. of water intercepted in the mine.

¶ 14 On December 10, 1991, and June 22, 1992, Salt Lake filed with the engineer an "Application for Temporary Change of Water," and an "Application for Permanent Change of Water," respectively. These applications requested permission to change its point of diversion from one of its ditches near the mouth of the canyon to the portal of the mine. The engineer stayed any action on both SFPC's claim and Salt Lake's applications pending resolution of this dispute.

¶ 15 Since 1991, SFPC has continued to pay Salt Lake for the water it diverted from the mine pursuant to its agreement. Since that time, however, SFPC has paid Salt Lake "under protest," claiming that it is the rightful owner of waters emanating from the mine.

V. PROCEEDINGS BEFORE THE TRIAL COURT

¶ 16 Salt Lake filed suit against SFPC in district court seeking to quiet title in itself to all water intercepted in the mine. Salt Lake claimed title to this water as part of its appropriation of virtually all rights to water flowing in Big Cottonwood Creek adjudicated in the Morse Decree. SFPC claimed title to use waters intercepted in the mine by virtue of its 1991 diligence claim and by adverse possession. SFPC also filed a countersuit seeking reimbursement of all money it had paid under its purchase agreements with Salt Lake for use of water from the mine.

¶ 17 After a bench trial, the court quieted title in Salt Lake to all water intercepted in the mine based on several findings: (1) Salt Lake holds rights to use nearly all water flowing in the creek at the mouth of Big Cottonwood Canyon, (2) water intercepted in the mine was naturally tributary to the creek above Salt Lake's points of diversion, and (3) interception of this water by SFPC substantially interferes with Salt Lake's water rights at the mouth of the canyon. With respect to the other claims, the court concluded that the evidence did not support. SFPC's diligence claim, and that SFPC failed to prove the elements of adverse possession. Having quieted title in Salt Lake, the court then dismissed with prejudice SFPC's claim for reimbursement of money it paid to purchase the water.

¶ 18 A quiet title action requires the application of a rule of law to decide ownership of the property in question. See Oates v. Chavez, 749 P.2d 658, 659 (Utah 1988). The validity of adverse possession, see Olwell v. Clark, 658 P.2d 585, 586 (Utah 1982), and diligence claims also requires the application of rules of...