Southeastern Colorado Water Conservancy Dist. v. Twin Lakes Associates, Inc.

• Decision Date: 13 March 1989
• Docket Number: No. 87SA243,87SA243
• Citation: 770 P.2d 1231
• Parties: SOUTHEASTERN COLORADO WATER CONSERVANCY DISTRICT, Complainant-Appellee, v. TWIN LAKES ASSOCIATES, INC. and Dennis O'Neill, Respondents-Appellants, and Cache Creek Mining Trust, Respondent. and Concerning the Application for Water Rights of Dennis O'Neill and Twin Lakes Associates, Inc. in Lake and Chaffee Counties Dennis O'Neill and Twin Lakes Associates, Inc., Applicants-Appellants.
• Court: Colorado Supreme Court

Page 1231

770 P.2d 1231

SOUTHEASTERN COLORADO WATER CONSERVANCY DISTRICT, Complainant-Appellee, v. TWIN LAKES ASSOCIATES, INC. and Dennis O'Neill, Respondents-Appellants and Cache Creek Mining Trust, Respondent and Concerning the Application for Water Rights of Dennis O'Neill and Twin Lakes Associates, Inc. in Lake and Chaffee Counties Dennis O'Neill and Twin Lakes Associates, Inc., Applicants-Appellants.

No. 87SA243.

Supreme Court of Colorado,

En Banc.

March 13, 1989.

Fairfield and Woods, P.C., Howard Holme, Kevin B. Pratt, Stephen H. Leonhardt, Denver, for complainant-appellee Southeastern Colorado Water Conservancy Dist.

Carlson, Hammond & Paddock, John U. Carlson, Tod J. Smith, Denver, for complainant-appellee Twin Lakes Reservoir and Canal Co. and Bd. of Water Works of Pueblo.

Peterson & Fonda, William Mattoon, Pueblo, for complainant-appellee Bd. of Water Works of Pueblo.

Anderson, Johnson & Gianunzio, Gregory L. Johnson, Mark T. Pifher, Colorado Springs, for complainant-appellee City of Colorado Springs.

Robert N. Miller, U.S. Atty., John R. Hill, Jr., Denver, for complainant-appellee U.S.

Musick and Cope, Joseph A. Cope, Boulder, for respondents-appellants, Twin Lakes Associates, Inc. and Dennis O'Neill.

No appearance for respondent Cache Creek Mining Trust.

QUINN, Chief Justice.

Twin Lakes Associates, Inc. and Dennis O'Neill appeal from a judgment determining six water rights decreed in 1912 to the Cache Creek, Arlington, and Clear Creek Ditches to have been abandoned. The water court, after concluding that the presumption of abandonment arising from an unreasonably long period of nonuse had not been rebutted, ruled all six water rights to have been abandoned, cancelled the water rights decreed in 1912 to the three ditches, and permanently enjoined any diversions from these ditches based on the cancelled water rights. We affirm the judgment of the water court.

I.

This case began on December 3, 1984, when Southeastern Colorado Water Conservancy District (Southeastern) filed a protest to the Division Engineer's 1984 abandonment list on the basis that the engineer had improperly omitted from the list six water rights decreed in 1912 to the Cache Creek, Arlington, and Clear Creek Ditches. Cache Creek Mining Trust ¹ and O'Neill, who is the president, chairman of the board of directors, principal owner, and authorized agent of Twin Lakes Associates, filed statements of opposition and a motion to dismiss. By stipulation of the parties, it was agreed that Southeastern would be permitted to file a complaint for a determination of abandonment. The water court entered an order on April 30, 1985, confirming the stipulation and ruled that Southeastern would bear the burden of proving abandonment.

Southeastern filed its complaint on May 22, 1985, for determination of abandonment with respect to the six water rights decreed in 1912 to the Clear Creek, Arlington, and Cache Creek Ditches. The complaint alleged that the six water rights had been abandoned due to periods of nonuse of ten years or more and requested that the rights be cancelled and that any further diversions based on the cancelled water rights be permanently enjoined. Twin Lakes Associates, O'Neill, and Cache Creek Mining Trust filed answers denying that the water rights had been abandoned.

On April 29, 1986, Twin Lakes Associates and O'Neill filed an application for a determination with respect to a change of water right, in which they requested a change from the original placer mining use to a variety of uses in connection with a ski area development. Statements of opposition to the change were filed by Southeastern and various other parties including Twin Lakes Reservoir and Canal Company, the Board of Water Works of Pueblo, the City of Colorado Springs, and the United States of America (hereinafter collectively referred to as Southeastern). ²

By agreement of the parties, the water court consolidated the application for a determination with respect to a change of water right with the complaint for a determination of abandonment, but separated the claims for trial and scheduled the trial of the abandonment claim first. We now summarize the evidence on the abandonment claim which was tried on several days in 1986 and 1987.

There is no challenge in this case to the present ownership interest of Twin Lakes Associates and O'Neill in the properties involving the six water rights originally decreed in 1912 to the Clear Creek, Arlington, and Cache Creek Ditches, nor is there any dispute over the original appropriation of those water rights. Twin Lakes Placers, Limited (Twin Lakes Placers), a company incorporated in Great Britain and licensed to do business in Colorado, maintained extensive placer mining holdings in Colorado in the early part of this century. In 1912 the majority of its holdings were in Chaffee and Lake Counties in the area commonly known as Cache Creek Park. The holdings of Twin Lakes Placers included seventeen placers in Chaffee County, two in Lake County, and one that straddled the boundary between the two counties. The water rights in issue were appropriated prior to the turn of the century and were decreed on March 18, 1912. The decree described the sources of the six water rights as natural streams tributary to the Arkansas River, and awarded water rights to the Cache Creek, Arlington, and Clear Creek Ditches for placer mining uses in connection with the placer mines belonging to Twin Lakes Placers in Lake and Chaffee Counties. ³

Twin Lakes Placers used the decreed water rights for large-scale hydraulic gold mining. In 1909 the cities of Pueblo and Canon City, located downstream from the mining operations, filed a complaint in the District Court of Fremont County seeking to enjoin Twin Lakes Placers from hydraulic mining. The cities claimed that the placer mines had washed away large portions of hillsides containing deposits of glacial flour, which consisted of finely ground particles that render water unfit for human consumption, and that effluent from the mines had resulted in polluting the Arkansas River. Twin Lakes Placers acknowledged in its answer that the entry of the injunctive decree sought by Pueblo and Canon City would destroy the value of its property and water rights. On June 24, 1912, the district court enjoined Twin Lakes Placers "from any activity by which placer mine tailings or debris might be discharged, placed or conveyed into the Arkansas River." Upon the entry of the injunction Twin Lakes Placers never sought a modification of the decree, as it was authorized to do, and ceased its mining operations. Its license to do business in Colorado was suspended by the Secretary of State on September 27, 1915.

In 1912 the placer parcels of Twin Lakes Placers were encumbered with statutory liens arising from unpaid property taxes. In the latter part of the year Lake and Chaffee Counties listed the placer parcels, with one exception, for tax sale, and the one remaining parcel was listed for tax sale in 1915. Twin Lakes Placers failed to redeem any of the parcels, and the properties were subsequently conveyed by tax deed to purchasers of the individual parcels.

The properties which originally benefited from the Twin Lakes Placers water rights changed hands several times after the 1912 injunction. Various documents were admitted into evidence showing numerous deeds and conveyances, leases and options, and quiet title proceedings concerning the properties. Some of these documents contained a description of water or ditch rights while others did not.

During Southeastern's case in chief several witnesses--a district ranger and a land staff officer for the United States Forest Service, a division engineer for the State of Colorado, a division manager for the Pueblo Board of Water Works, local residents and visitors, a consulting engineer, and a cultural anthropologist/archaeologist--testified concerning the use of the subject water rights in the years following the 1912 injunction. The testimony indicated that little placer mining has taken place in Cache Creek Park since the early 1920s, with some use having been made of the Clear Creek and the Arlington Ditches up until that time. Since the early 1920s these ditches and the north branch of the Cache Creek Ditch have become largely unusable due to landslides, erosion, growth of trees in the ditches, and the collapse of wooden flumes and a tunnel. With the exception of some recent repairs and improvements, there was virtually no effort to repair the deteriorating conditions over the decades. Although another branch of the Cache Creek Ditch has enjoyed occasional use in the intervening years since the 1920s, this use was sporadic and made by persons without clear claim of right to the water.

At the conclusion of Southeastern's case in chief the water judge ruled that from June 24, 1912, to the present there has been nonuse of the subject water rights as decreed on March 18, 1912. Because nonuse had been demonstrated for an unreasonable period of time, the judge ruled that a prima facie case of abandonment had been established, and that the burden of rebutting this presumption shifted to Twin Lakes Associates and O'Neill.

In an effort to rebut the presumption of abandonment, O'Neill described efforts to restore and maintain certain of the ditches and the uses to which the water rights in question had been put at various times. He testified that he had made several mining leases on the property on a royalty basis, but acknowledged that, since he had received no royalties, he changed to a straight lease payment system in 1980.

Two geological engineers testified concerning the economic suitability of the Cache Creek Park area for placer mining. They stated that gold mining has cyclical economic returns, that placer mining for gold generally was economically unfeasible in this region from about 1920 until the early 1970s, and that there has been only...