Tweedy v. Texas Company, Civ. No. 2738.

• Decision Date: 14 June 1968
• Docket Number: Civ. No. 2738.
• Citation: 286 F. Supp. 383
• Parties: Lottie E. TWEEDY and Samuel E. Tweedy, Plaintiffs, v. The TEXAS COMPANY, a Delaware corporation, a/k/a Texaco, Inc., Defendant.
• Court: U.S. District Court — District of Montana

286 F. Supp. 383

Lottie E. TWEEDY and Samuel E. Tweedy, Plaintiffs, v. The TEXAS COMPANY, a Delaware corporation, a/k/a Texaco, Inc., Defendant.

Civ. No. 2738.

United States District Court D. Montana, Great Falls Division.

June 14, 1968.

Crowley, Kilbourne, Haughey, Hanson & Gallagher, Billings, Mont., for plaintiffs.

Patrick L. Donovan and John F. Bayuk, Shelby, Mont., for defendant.

OPINION AND ORDER

RUSSELL E. SMITH, District Judge.

In this diversity case removed from the state court plaintiffs, citizens of Montana, seek damages in the amount of $222,182.00 from the defendant, a Delaware corporation, with its principal offices in New York. The gist of plaintiffs' complaint is that the defendant took 444,374 barrels of underground water belonging to the plaintiffs. The parties submitted the case for decision upon an agreed statement of facts.

On July 1, 1937, the Aronsons, the then owners of the land described in the complaint, all of which is located within the exterior boundaries of the Blackfeet Indian Reservation, granted to the defendant an oil and gas lease. The lease was recorded in October, 1937. It provided, in part, as follows:

"1. Lessor, in consideration of the sum of Ten and no/100 Dollars ($10.00), in hand paid, of the royalties herein provided and the agreements of lessee herein contained, hereby grants, leases and lets exclusively unto lessee, for the purpose of testing by any method for formations and prospecting and drilling for and producing oil and gas, laying pipe lines, building tanks, storing oil and building powers, (sic) stations, telephone lines and other structures (including houses for employees) thereon, to produce, save, take care of, treat and transport said products, the following described land in Glacier County, State of Montana, to-wit:

* * * * * *

"2. Subject to the other provisions herein contained, this lease shall remain in force for (a primary term) and as long thereafter as either oil or gas is or can be produced from any well on said land; * * *

* * * * * *

"6. Lessee shall have the free use of * * * water from said land, except water from lessor's wells, for all operations hereunder * * *"

On May 15, 1951, the then fee owners of the land executed a "Surface Rights Deed" in which the plaintiffs were the grantees. That deed provided, in part, as follows:

"(P)arties of the first part, * * * grant, bargain, sell and convey unto the said parties of the second part

* * * all of the surface rights in and upon the following described land (with the reservations hereinafter set forth) * * *

* * * * * *

"The parties of the first part expressly reserve unto themselves, * * * all minerals, mineral deposits, mineral oils and natural gases of every kind or nature, containd (sic) in, under or upon said land, with the right to prospect, simk (sic) wells, erect necessary structures, operate and to do anything necessary or proper for the extraction and removal of minerals, petroleum, and natural gas at any and all times, and including the right to lay pipelines, maintain needed roads, and the right of ingress and egress.

"This grant, therefore, is and shall be subject to the terms and provisions of an existing Oil and Gas Lease, of any assignment thereof or any subletting thereunder, and of any lease or leases pertaining to or affecting the the (sic) mineral rights in said land, which may hereafter be executed and entered into by the par-of the first part, their heirs or assigns.

"To have and to hold the above described land, subject to the aforesaid reservations, unto the parties of the second part, their successors or assigns, or the survivor of them. (sic) And the said parties of the first part will warrant and defend all the right, tile (sic) and interest in and to the said surface rights. * * *"

On March 1, 1963, the oil and gas lease was modified by the execution of a unitization agreement to which plaintiffs were not parties. That agreement pooled the land described in separate leases and laid the legal foundations for a secondary recovery program. That program contemplated the injection of fluid, under pressure, into the oil bearing formations and the recovery of quantities of oil and gas which would not normally be recovered by merely pumping the individual wells. Secondary recovery programs do conserve natural resources,¹ and the unitization agreements necessary in many cases to such programs are authorized by statute in Montana.² The unitization agreement here involved was approved after a hearing before the Oil and Gas Conservation Commission of the State of Montana on April 9, 1964.³

Since that time the defendant has used the underground water drawn from wells drilled upon the land described in the complaint for the pressurization of the area described in the unitization agreement which, as indicated, is larger than the area described in the lease. Plaintiffs seek damages at the rate of fifty cents per barrel for all of the water so used and base their claim entirely upon an ownership of the water existing as incident to the ownership of their land.

Plaintiffs' case fails because plaintiffs cannot establish any title in the water as such, and there is no evidence and no claim that defendant has interfered with the plaintiffs' right to use water in the satisfaction of any need for it.⁴

When the Blackfeet Indian Reservation was created, the waters of the reservation were reserved for the benefit of the reservation lands. Winters v. United States, 207 U.S. 564, 28 S.Ct. 207, 52 L.Ed. 340 (1908). The Winters case dealt only with the surface water, but the same implications which led the Supreme Court to hold that surface waters had been reserved would apply to underground waters as well. The land was arid—water would make it more useful, and whether the waters were found on the surface of the land or under it should make no difference.

The waters being reserved are governed by federal rather than state law. United States v. McIntire, 101 F.2d 650 (9 Cir. 1939). This is so even after the trust patents are issued and lands have passed out of Indian ownership. It is necessary therefore to determine the governing Federal law. The one dominant concept which emerged from the development of the water law in the West was that all rights are in the use of the water rather than in the ownership of its corpus.

The needs of the West required that the common law doctrine of riparian rights give way to the prior appropriation doctrine; the central thesis of that doctrine being that the use of water created the right to its use—a right to use it to satisfy a need and nothing more.⁵ True, the Montana doctrine of prior appropriation has been specifically rejected as the governing law on Indian reservations, but the Montana law developed, as did the law in all of the western states, in response to the needs of the land. Nothing in the Congressional language suggests that the federal law should develop differently...