State Ex Rel. Martinez v. City of Las Vegas

OPINION

{1} In Cartwright v. Public Service Co. of New Mexico, 66 N.M. 64, 79-85, 343 P.2d 654, 664-69 (1958), this Court adopted the pueblo rights doctrine. Under this doctrine, municipalities that are the successors-in-interest to colonization pueblos established by antecedent sovereigns possess a pueblo water right. This water right entitles a municipality to take as much water from an adjacent water course as necessary for municipal purposes and permits expansion of the right to accommodate increased municipal needs due to population increases. Upon reexamination, we conclude that the pueblo rights doctrine is inconsistent with New Mexico’s system of prior appropriation. As a result, we overrule Cartwright. We conclude that municipal water rights must be determined by prior appropriation based on beneficial use regardless of a colonization grant from preceding sovereigns.

{2} The present case arose as a subfile proceeding in the course of a general adjudication of water rights in the Pecos River system. The State Engineer sought a declaration of the water rights of the City of Las Vegas on the Gallinas River. Specifically, the State Engineer challenged the existence of pueblo water rights in New Mexico. In the alternative to arguing that New Mexico should no longer recognize pueblo water rights in general, the State Engineer challenged the City’s specific entitlement to a pueblo water right and disputed the application of the City’s pueblo water right to groundwater, reservoirs, industrial uses, and water distribution outside the city limits. On the basis of stare decisis, the district court declined to rule on the State Engineer’s general challenge to the pueblo water rights doctrine, as well as the City’s entitlement to a pueblo water right. However, the court found in favor of the State Engineer on the parameters of the City’s pueblo right. On appeal, the Court of Appeals determined that this Court, if presented with the opportunity, would overrule our prior cases establishing the pueblo water rights doctrine, and the Court therefore declined to follow this established precedent. State ex rel. Martinez v. City of Las Vegas, 118 N.M. 257, 265, 880 P.2d 868, 876 (Ct.App.1994). The Court of Appeals concluded that the City had no pueblo water right. Id. We granted the City’s petition for writ of certiorari to the Court of Appeals. Although we conclude that stare decisis requires the Court of Appeals to follow this Court’s cases, we independently determine that the pueblo rights doctrine is flawed and that the cases recognizing this doctrine must be overruled. However, we also conclude that reliance interests and concerns for the proper administration of justice require a' limited prospective application of our overruling of prior case law to the City.

I. Facts and Procedural Background

A. Early Developments

{3} The pueblo of Nuestra Señora de Las Dolores de Las Vegas was established on the Gallinas River by a colonization grant from the Republic of Mexico on March 23, 1835. See Maese v. Herman, 183 U.S. 572, 573-76, 22 S.Ct. 91, 46 L.Ed. 335 (1902). After settlement, the Town of Las Vegas became a part of the United States with the Treaty of Guadalupe Hidalgo in 1848. See Treaty of Peace Between the United States and Mexico, Feb. 2, 1848, U.S.-Mex., 9 Stat. 922. Congress confirmed the grant to the Town in 1860, and the Town received a patent from the United States government in 1903. In addition, the Legislature established a board of trustees that would have the power of “control and management of the tract of land known as the Las Vegas land grant.” NMSA 1978, § 49-6-2 (1909). The Legislature established the board as a separate legal entity from the Town of Las Vegas, see City of Las Vegas v. Oman, 110 N.M. 425, 428, 796 P.2d 1121,1124 (Ct.App.1990), which had only the authority specifically delegated by statute. Among other things, the Legislature authorized the board “to lease, sell or mortgage any part or parts of said tract of land,” without prejudice to any vested rights to land within the grant. NMSA 1978, §§ 49-6-9 (1903), -10 (1909).

{4} Separately from the settlement under the 1835 colonization grant, a settlement on the east side of the Gallinas was established in 1841. This settlement, known as the City of Las Vegas, expanded dramatically after the arrival of the railroad in 1879. In 1880, San Miguel County issued a fifty-year franchise to Agua Pura Co. to provide municipal water to the inhabitants of the two settlements. See Cartwright v. Pub. Serv. Co. of N.M., 66 N.M. 64, 72, 343 P.2d 654, 659-60 (1958). In 1970, a consolidation of the two separate settlements, the Town of Las Vegas and the City of Las Vegas, formed the current City of Las Vegas.

{5} Water rights on the Gallinas have been the subject of a number of judicial and administrative proceedings. While these proceedings are described in greater detail in Oman, 110 N.M. at 428-29, 796 P.2d at 1124-25, we will review some of the more important developments. In 1921, the district court of San Miguel County entered a decree, known as the Gallinas Decree, in a consolidated suit brought by various water users. The decree adjudicated a water right to the land grant board based on a permit issued by the State Engineer with a priority date of 1909. Agua Pura Co. was not a party to the Gallinas Decree. In 1933, in an attempt to adjudicate all surface water rights on the Gallinas, the federal district court entered a decree which is known as the Hope Decree. Among other water rights, the Hope Decree adjudicated the right of New Mexico Power Co., the successor of Agua Pura Co., to 2600 acre feet per year with an 1881 priority.

B. The Cartwright Litigation

{6} In 1955, a number of water users on the Gallinas filed an action in district court against Public Service Co. of New Mexico (PNM), the successor to New Mexico Power Co., claiming that PNM had trespassed on their senior water rights as adjudicated in the Hope Decree. Cartwright, 66 N.M. at 66, 343 P.2d at 655. The water users sought an injunction and damages. Id. The Town intervened in the action and claimed as an affirmative defense that PNM lawfully appropriated water under a pueblo water right belonging to the Town by virtue of the 1835 colonization grant. Id. at 67, 343 P.2d at 656. The district court found in favor of the Town and PNM on the basis of this affirmative defense. Id. at 68, 343 P.2d at 657. The court recognized the existence of the pueblo rights doctrine in New Mexico. Id. The court further found that the Town of Las Vegas and City of Las Vegas were the successors to the Mexican colonization grant. Id. at 67-68, 343 P.2d at 656. The court concluded that the Town possessed a pueblo water right with a priority date of 1835 and that PNM’s right to divert water pursuant to the Town’s pueblo water right was prior and paramount to the rights of the water users who had initiated the claim. Id. at 70-71, 343 P.2d at 658-59.

{7} On appeal, this Court addressed three issues: (1) whether the Hope Decree was res judicata as to PNM and the Town for purposes of precluding their reliance on the pueblo rights doctrine; (2) whether the trial court correctly found that the Town possessed a valid and superior claim to the colonization grant; and (3) whether the pueblo rights doctrine, as recognized by the courts of California, applies in New Mexico. Id at 71-72, 343 P.2d at 659. We determined that the Hope Decree was not res judicata with respect to the Town or the City of Las Vegas because neither had been a party to the federal action. Id. at 76, 343 P.2d at 662. We also determined that there was substantial evidence in the record to support the district court’s determination of the validity of the 1835 community colonization grant by the government of Mexico, as well as the court’s recognition of the Town’s superior claim to the grant, consistent with the opinion of the United States Supreme Court in Maese, 183 U.S. at 580-81, 22 S.Ct. 91. Cartwright, 66 N.M. at 78-79, 343 P.2d at 664. The remainder of our opinion in Cartwright focused on the controversial question of whether New Mexico should recognize the pueblo lights doctrine. Id. at 79-85, 343 P.2d at 664-69.

{8} As reviewed by this Court in Cartwright, the pueblo rights doctrine recognizes the right of the inhabitants of Mexican or Spanish colonization pueblos to use as much of an adjoining river or stream as is necessary for municipal purposes. Id. at 82, 343 P.2d at 666-67. The doctrine contemplates the expansion of the pueblo’s right to use water in response to increases in size and population, and if necessary, the right can encompass the entire flow of the adjoining water course. Id. We noted in Cartwright that the doctrine had been recognized by the Supreme Court of California in a series of cases dating from 1860. Id. at 84, 343 P.2d at 667-68; see Hart v. Burnett, 15 Cal. 530 (1860) (discussing pueblo rights in relation to land); see also Lux v. Haggin, 69 Cal. 255, 10 P. 674, 714-15 (1886) (analogizing the principles from Hart to water rights).

{9} We attributed the historical basis of the doctrine to the Plan of Pitic. Cartwright, 66 N.M. at 81, 343 P.2d at 665-66. Prepared under the commandant-general of the internal provinces of the viceroyalty of New Spain, the Plan of Pitic served as the organizational design for the town of Pitic when it was founded in 1783. As ordered by the King of Spain, the Plan served as a model for the settlement of pueblos across the internal provinces, including New Mexico. Cartwright, 66 N.M. at 84, 343 P.2d at 668. The Plan conformed to the general principles established in the 1680 compilation of the laws governing New Spain, the Recopilación de Leyes de los Reynos de las Indias, which continued to be followed by the government of the Republic of Mexico, after independence, at the time of the Las Vegas grant in 1835. We observed in Cartwright that the Plan of Pitic “gave the settlement preferred rights to all available water.” Id.

{10} In discussing the applicability of the pueblo rights doctrine in New Mexico, we recognized that this State applies the doctrine of prior appropriation based on beneficial use, as derived from the civil law system of Spain and Mexico prior to the Treaty of Guadalupe Hidalgo. Cartwright, 66 N.M. at 80, 343 P.2d at 665. However, in response to an argument that the pueblo rights doctrine conflicts with New Mexico’s system of prior appropriation, we explained that the pueblo rights doctrine is premised on the notion that colonization pueblos “were largely, if indeed, not always, established before there was any settlement of the surrounding area.” Id. at 79-80, 343 P.2d at 665. As a result, we concluded that the paramount and superior nature of pueblo water rights conforms to the system of prior appropriation. Id. at 80, 343 P.2d at 665. “There were no questions of priority of use when a colonization pueblo was established because there were no such users.” Id. at 85, 343 P.2d at 668. In addition, we concluded that the expanding nature of pueblo rights did not violate the principle of beneficial use.

Water formed the life blood of the community or settlement, not only in its origin but as it grew and expanded. A group of fifty families at the founding of a colony found it no more so than when their number was multiplied to hundreds or even thousands in an orderly, progressive growth.

And just as in the case of a private user, so long as he [or she] proceeds with due dispatch to reduce to beneficial use the larger area to which his [or her] permit entitles him [or her], enjoys a priority for the whole, so by analogy and under the rationale of the Pueblo Rights doctrine, the settlers who founded a colonization pueblo, in the process of growth and expansion, carried with them the torch of priority, so long as there was available water to supply the life blood of the expanded community. Id. at 85, 343 P.2d at 668. Accordingly, the pueblo rights doctrine represented “the elevation of the public good over the claim of a private right.” Id. at 85, 343 P.2d at 669. Based on our determination that the pueblo rights doctrine was not inconsistent with the doctrine of prior appropriation and beneficial use, we concluded that “the reasons which brought the Supreme Court of California to uphold and enforce the Pueblo Rights doctrine apply with as much force in New Mexico as they do in California.” Id. at 85, 343 P.2d at 668.

{11} The dissenting opinion in Cartwright serves to highlight the most controversial aspects of the majority opinion. The dissent contains five primary criticisms of the majority opinion: (1) the actual language of the Plan of Pitic, as opposed to its interpretation by California courts, supports communal sharing of water inside and outside the pueblo’s border rather than a paramount and superior right belonging exclusively to the pueblo; (2) the circumstances leading to the adoption of the pueblo rights doctrine in California, specifically a statutory basis for the doctrine and a communal theory of water law, do not exist in New Mexico; (3) the Treaty of Guadalupe Hidalgo does not protect a pueblo right as interpreted by the majority; (4) the premise of the pueblo rights doctrine that the pueblo precedes all other users on the stream does not apply to Las Vegas; and (5) the pueblo rights doctrine violates the fundamental principle of beneficial use. Cartwright, 66 N.M. at 94-105, 343 P.2d at 674-82 (Federici, D.J., dissenting). In response to a motion for rehearing, the dissent elaborated on the latter three of these reasons for disagreeing with the majority opinion. Id. at 106-19, 343 P.2d at 683-92. We discuss these points in greater detail below in the context of the State Engineer’s arguments to this Court.

{12} Following our decision in Cartwright, the same plaintiffs filed a second claim for damages against PNM. Cartwright v. Pub. Serv. Co. of N.M., 68 N.M. 418, 419, 362 P.2d 796, 796-97 (1961). The plaintiffs alleged that the colonization grant from Mexico belonged to the Town of Las Vegas Grant, meaning the board of trustees established by the Legislature, rather than to the Town of Las Vegas. Id. at 419, 362 P.2d at 797. We held this claim to be res judicata based on our opinion in the first Cartwright. “[T]he ownership of the waters of the Gallinas River and its tributaries was the ultimate question to be determined in the first case, and ownership thereof was adjudicated as belonging to the City and Town of Las Vegas as successors to the original Mexican Pueblo.” Id. at 420, 362 P.2d at 798.

C. Present Developments

{13} Water rights adjudication on the Gallinas culminated in the present action. During the course of a general adjudication of the Pecos River stream system, the State Engineer filed a supplemental complaint in 1985 requiring the City of Las Vegas to declare its asserted rights to the use of water in the system, which includes the Gallinas as a tributary of the Pecos River. Oman, 110 N.M. at 431, 796 P.2d at 1127. In a subfile adjudication between the City and the State, the City asserted its pueblo water right under Cartwright, as well as additional water rights that include the City’s interest as successor to the 1881 priority right recognized by the Hope Decree as belonging to New Mexico Power Co. The State Engineer challenged the validity of the pueblo rights doctrine, the legitimacy of the City’s claim to be the successor to the 1835 colonization grant, and, in the alternative, the application of the City’s pueblo water right to groundwater, reservoirs, industrial uses, uses outside the city limits, and return flows from waste treatment facilities. After the district court denied cross motions for summary judgment by the State Engineer and the City, the Court of Appeals addressed a number of issues on interlocutory appeal. Oman, 110 N.M. at 427, 796 P.2d at 1123.

{14} In Oman, the Court of Appeals determined that neither Cartwright nor other judicial proceedings involving water rights on the Gallinas operated as res judicata with respect to the State Engineer’s challenge of the City’s entitlement to a pueblo water right. Oman, 110 N.M. at 432-33, 796 P.2d at 1128-29. Similarly, the Court determined that the Gallinas Decree did not, by operation of res judicata, preclude the City’s assertion of a pueblo water right. Id. at 435-36, 796 P.2d at 1131-32. In addition, the Court recognized that stare decisis required that both the Court of Appeals and the district court adhere to the pronouncements made by this Court in Cartwright. Oman, 110 N.M. at 433, 435, 796 P.2d at 1129, 1131. However, the Court of Appeals noted that Cartwright “announced only general principles” and that factual questions, such as the types of municipal uses of water subsumed within the pueblo rights doctrine, remained unresolved. Oman, 110 N.M. at 433-34, 796 P.2d at 1129-30. Recognizing the controversial nature of the pueblo rights doctrine, id. at 434, 796 P.2d at 1130, the Court of Appeals also determined that the district court could “on remand permit an adequate record to be developed so that ultimately the [S]upreme [C]ourt will be in a position to overrule Cartwright I if it chooses to do so.” Id. at 435, 796 P.2d at 1131. The Court of Appeals affirmed the district court’s denial of the motions for summary judgment and remanded the ease to the district court for further proceedings. Id. at 436, 796 P.2d at 1132.

{15} On remand, the district court established a bifurcated procedure. For the question of the continued validity of the pueblo rights doctrine in New Mexico, the court allowed a tender of proof by the parties. The court allowed a similar tender on the question of the proper successor to the 1835 colonization grant. However, based on the binding precedent of Cartwright, the court did not make any findings with respect to the tender and did not rule on either of these issues. The court formally refused the tender but accepted it into the record for this Court’s ultimate review. For the remaining issues, which focused on the scope of the City’s pueblo right, the court conducted a trial on the merits. The court found after the trial that the City’s pueblo water right has a priority of March 23, 1835, and, based on a stipulation entered into by the parties, includes the right to an unquantified amount of water reasonably necessary to meet the City’s present and future needs. The court further found that the pueblo right applies to ordinary municipal purposes within the city limits and does not extend to industrial uses, groundwater, except as contemplated by the doctrine adopted in Templeton v. Pecos Valley Artesian Conservancy District, 65 N.M. 59, 67-68, 332 P.2d 465, 470-71 (1958), reservoirs, or return flows from waste water treatment facilities. The district court noted that its judgment resolved all issues regarding the City’s pueblo water right and expressly determined that there was no just reason for delay in entering final judgment as to this claim. See Rule 1-054(B)(1) NMRA 2003 (“[T]he court may enter a final judgment as to one or more but fewer than all of the claims only upon an express determination that there is no just reason for delay.”); State ex rel. State Eng’r v. Parker Townsend Ranch Co., 118 N.M. 780, 782, 887 P.2d 1247, 1249 (1994) (“[Sjhould a subfile order reserve for future determination some issues contested by the state and the applicant, such as priority date, then under [Rule 1-054(B)(1) ] the trial court would be required to make an express determination that there is no just reason for delay in order to make the subfile order final and appealable.”). Following the district court’s denial of the City’s motion for new trial, both parties appealed.

II. The Court of Appeals’ Opinion and Stare Decisis

{16} In its docketing statement in the Court of Appeals, the City challenged each of the district court’s findings limiting the scope of its pueblo water right. The City also challenged the admission of testimony by the State’s expert witnesses and the district court’s determination that there was no just reason for delay in entering final judgment.

{17} The State Engineer asserted in its appeal that the district court abused its discretion in denying the State’s motion to withdraw from the stipulation with the City that the pueblo water right should be quantified as the amount of water reasonably necessary to satisfy the present and future needs of the City. The State Engineer also attacked the underlying validity of the pueblo rights doctrine. However, the State Engineer did not request that the Court of Appeals hold the pueblo rights doctrine to be invalid. On the contrary, the State Engineer recognized that, “[ujnder the doctrine of stare decisis and the holding in Alexander v. Delgado, 84 N.M. 717, 507 P.2d 778 (1973), the district court and [the Court of Appeals] [are] bound to recognize the pueblo water right doctrine and neither court may overrule the opinion in the Cartwright case.” As a result, the State Engineer requested only that the Court of Appeals determine whether reasonable grounds existed for overruling Cartwright, without actually overruling the case, in the event that this Court decided to reevaluate the pueblo rights doctrine. In response to the City’s motion to strike this portion of the State Engineer’s docketing statement, the State Engineer requested that the Court of Appeals certify the appeal to this Court as an issue of substantial public interest. See NMSA 1978, § 34-5-14(0) (1972). The Court of Appeals denied this request.

{18} Despite the posture presented by the State Engineer, the Court of Appeals chose to address the doctrine of stare decisis and the validity of the pueblo rights doctrine in New Mexico. The Court of Appeals concluded that it could decline to follow Supreme Court authority if, in its determination, this Court would overrule its own precedent when given the opportunity. State ex rel. Martinez, 118 N.M. at 259, 880 P.2d at 870. The Court determined that State v. Wilson, 116 N.M. 793, 795, 867 P.2d 1175, 1177 (1994), in which we recognized the authority of the Court of Appeals to question uniform jury instructions that had not yet been addressed by this Court, modified the rule that the Court of Appeals must follow Supreme Court precedent, as that rule had been previously stated in Alexander, 84 N.M. at 718, 507 P.2d at 779. State ex rel. Martinez, 118 N.M. at 258-59, 880 P.2d at 869-70. The Court of Appeals appears to have interpreted language in Wilson discussing the history of the legal doctrine at issue in Alexander as limiting the application of the Alexander rule to issues decided by a line of Supreme Court authority. See State ex rel. Martinez, 118 N.M. at 259, 880 P.2d at 870 (focusing on “the recurring opportunities our Supreme Court had to reconsider the legal doctrine in Alexander ”). In addition, the Court of Appeals relied on Indianapolis Airport Authority v. American Airlines, Inc., 733 F.2d 1262, 1272 (7th Cir.1984), disapproved on other grounds by Nw. Airlines, Inc. v. County of Kent, Mich., 510 U.S. 355, 371, 114 S.Ct. 855, 127 L.Ed.2d 183 (1994), in which the Seventh Circuit indicated that federal intermediate appellate courts had the authority to decline to follow precedent from the United States Supreme Court under limited circumstances. State ex rel. Martinez, 118 N.M. at 259, 880 P.2d at 870.

{19} Based on this analysis, the Court of Appeals declined to follow Cartwright because it had not been reaffirmed by this Court since it was decided in 1958 and because it had been uniformly criticized by scholars. State ex rel. Martinez, 118 N.M. at 259-60, 880 P.2d at 870-71. As a result, the Court of Appeals held that the City had no pueblo water right, id. at 265, 880 P.2d at 876, thereby making it unnecessary to address the City’s claims on appeal. We then granted the City’s petition for writ of certiorari to the Court of Appeals. However, at the parties request, we stayed the matter pending settlement negotiations and the adjudication of the City’s other water rights. We address this case now on resubmission after a settlement could not be reached and the City’s other water rights have been adjudicated.

{20} We take this opportunity to clarify that Wilson modified Alexander only to the extent that Alexander and its progeny prevented the Court of Appeals from reviewing uniform jury instructions that have not previously been ruled upon by this Court. We modified Alexander in this limited context “[i]n deference to and in recognition of the vital role the Court of Appeals serves in the New Mexico judiciary.” Aguilera v. Palm Harbor Homes, Inc., 2002-NMSC-029, ¶ 6, 132 N.M. 715, 54 P.3d 993. Outside this context, however, and as we recently noted in Aguilera, 2002-NMSC-029, ¶6, 132 N.M. 715, 54 P.3d 993, Wilson stands for the proposition that “[t]he Court of Appeals .