                                   No. 12535

          I N THE SUPREME COURT O THE STATE O M N A A
                                 F           F OTN

                                      1973



ALBERT SCHWEND, CHARLES SCHWEND,
LESLIE SCHWEND and MARVIN SCHWEND,

                          P l a i n t i f f s and Respondents,



N L JONES, e t a l . ,
 OA

                          Defendants and A p p e l l a n t s .



Appeal from:      D i s t r i c t Court o f t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
                  Honorable C. B. Sande, Judge p r e s i d i n g .

Counsel o f Record:

    For Appellants :

            Berger , Anderson, S i n c l a i r a.nd Murphy, B i l l i n g s ,
             Montana
            James J. S i n c l a i r a r g u e d , B i l l i n g s , Montana

    F o r Respondents:

            Ayers and A l t e r o w i t z , Red Lodge, Montana
            A r t h u r Ayers a r g u e d , Red Lodge, Montana



                                                   Submitted:          September 1 2 , 1973

                                                      Decided :OCT 2         4 1973
          OCT 2 4 1973
Filed :
Mr. Justice Frank I. Haswell delivered the Opinion of the Court.

           This is an action seeking a declaratory judgment deter-
mining ownership of water rights between the purchasers and the
seller of farm land under a contract for deed.     The district
court of Carbon County, the Hon. C. B. Sande, district judge,
sitting without a jury, entered judgment for the purchasers. The
seller appeals from that judgment.
           Plaintiffs and respondents are the contract purchasers,
Albert, Charles, Leslie and Marvin Schwend.     Defendant and appel-
lant is Nola Jones, the contract seller.     The other defendant,
Lincoln Ditch Company, a corporation, is not a party to this
appeal.
           In 1965 appellant and respondents entered into a written
farm lease covering about 180 acres of land in Carbon County,
Montana.    The farm lease contained an option to purchase.    A
dispute arose between appellant and respondents resulting in a
lawsuit in the district court of Carbon County, # 7 0 5 4 , entitled
Nola Jones, plaintiff v. Albert Schwend et al., defendants.
Following trial without jury, the Hon. Charles Luedke, district
judge, entered findings of fact, conclusions of law and a decree.
These provided, inter alia, that the farm lease and option agree-
ment was valid; that the Schwends were entitled to immediate
possession of the property, specific performance of the option,
and a written contract for deed covering approximately 180 acres
of farm land and "the hereditaments and the appurtenances there-
unto belonging."    A written contract for deed was executed by

the parties and approved by the court which described the land
but did not refer to hereditaments, appurtenances or water rights.
          Subsequently respondents Schwend moved to amend the con-
tract for deed in two particulars:     (1) to include a description
of a 14 acre tract meant to be described and included but which
was o m i t t e d due t o a s c r i v e n e r ' s e r r o r ;      (2) t o include certain

w a t e r r i g h t s evidenced by s h a r e s of s t o c k i n t h r e e s e p a r a t e d i t c h
companies.          Judge Luedke g r a n t e d t h e f i r s t motion nunc p r o t u n c ,

b u t d e n i e d t h e motion f o r i n c l u s i o n of t h e w a t e r r i g h t s and
w a t e r s t o c k i n t h e s a l e , s t a t i n g i n a memorandum accompanying

the ruling:

             "With r e s p e c t t o t h e w a t e r s t o c k , however, no
             i s s u e a r o s e d u r i n g t h e c o u r s e of t h e t r i a l a s
             t o w a t e r and no e v i d e n c e was o f f e r e d c o n c e r n i n g
             water r i g h t s o r water stock. Consequently,
             n o t h i n g was i n c l u d e d i n t h e C o u r t ' s F i n d i n g s
             and C o n c l u s i o n s e x c e p t t h a t t h e l a n d Defendants
             were e n t i t l e d t o p u r c h a s e c a r r i e d w i t h it ' h e r e d i t -
             aments and t h e a p p u r t e n a n c e s t h e r e u n t o b e l o n g i n g . '
             T h i s would i n c l u d e w a t e r r i g h t s and w a t e r s t o c k
             which a r e a p p u r t e n a n t t o t h e l a n d , b u t whether any
             s p e c i f i c r i g h t t o water i s o r i s not appurtenant
             t o any s p e c i f i c l a n d i s a q u e s t i o n of f a c t .
              ( C i t a t i o n ) With no e v i d e n c e h a v i n g been o f f e r e d ,
             t h e C o u r t c o u l d n o t a t t h e t i m e o f t r i a l make any
             f i n d i n g c o n c e r n i n g w a t e r and w a t e r r i g h t s and i t
             c a n n o t d o s o now."

             N a p p e a l was t a k e n i n c a u s e # 7 0 5 4 .
              o
             T h e r e a f t e r r e s p o n d e n t s Schwend f i l e d a n o t h e r s u i t i n t h e

d i s t r i c t c o u r t o f Carbon County, b e i n g c a u s e # 7 3 8 4 e n t i t l e d A l b e r t

Schwend e t a l l p l a i n t i f f s v . L i n c o l n D i t c h Company, a c o r p o r a t i o n ,

and Nola J o n e s , d e f e n d a n t s .      T h i s was a n a c t i o n by t h e c o n t r a c t

p u r c h a s e r s t o e s t a b l i s h t h e i r b e n e f i c i a l ownership of t h e w a t e r
r i g h t s and w a t e r s t o c k under t h e c o n t r a c t f o r deed.             The b a s i s of
p l a i n t i f f s ' c l a i m f o r r e l i e f w a s t h a t s u c h w a t e r r i g h t s were
a p p u r t e n a n t t o t h e l a n d and a s t h e r e were no r e s e r v a t i o n s i n t h e

c o n t r a c t f o r deed, t h e water r i g h t s passed w i t h t h e land.                     Defefid-
a n t s f i l e d s u b s t a n t i a l l y a g e n e r a l d e n i a l and p l e a d e d a s a n a f f i r m -
a t i v e d e f e n s e t h a t t h e c o m p l a i n t s h o u l d be d i s m i s s e d a s res j u d i c a t a .
             The f o l l o w i n g s t i p u l a t i o n s of f a c b i n t e r a l i a , w e r e made
by t h e r e s p e c t i v e p a r t i e s i n # 7 3 8 4 :    (1) t h a t Nola J o n e s was

r e g i s t e r e d owner of t h e w a t e r s t o c k ;      (2) t h a t t h e water r i g h t s

r e p r e s e n t e d by t h e s t o c k w e r e b e n e f i c i a l l y used upon t h e l a n d s
in question; (3) that aside from collateral estoppel, the only
issue is whether the contract for deed conveyed the water rights
evidenced by the stock.
        Following trial without a jury, Judge Sande entered a
decree that the shares of stock of Nola Jones in the ditch com-
panies are included in the property sold and purchased under the
contract for deed between appellant and respondents, and that
respondents are beneficial owners thereof.    Nola Jones appeals
from this decree.
        Two issues are assigned for review:    (1) Were the water
rights owned by Nola Jones, which were evidenced by the shares
of stock     the ditch companies, sold under contract for deed?
(2) Does collateral estoppel bar plaintiffs1 claim for relief in
the second suit (#7384)?
        Directing our attention     the first issue,    hold that
the water rights of Nola Jones were appurtenant to the land sold
under contract for deed.   In cause #7384, it was stipulated:
        " .* * * the water rights represented by the water
        stocks * * * were beneficially used on the lands
        which are the subject of the contract for deed * *   *."
Section 67-211, R.C.M. 1947 states:
        "A thing is deemed to be incidental or appurten-
        ant to land when it is by right used with the
        land for its benefit * * *."
The findings of the court in #7054 specifically provide for the
                                           the
sale of the land and "the hereditaments and/appurtenances there-
unto belonging" and the decree orders specific performance of the
option to purchase in conformity with the findings.
       As the water rights were appurtenant to the land sold,
we hold that the contract for deed effectively conveyed beneficial
ownership in the water rights evidenced by the shares of stock
in the ditch companies in the absence of an express reservation or
exception.   Maclay v. Missoula Irr. Dist., 90 Mont. 344, 3 P.2d 286.
Section 67-1523, R.C.M. 1947 reads:
        "The transfer of a thing transfers also all
        its incidents, unless expressly excepted * *     *."
Under both Montana codes and at common law whoever grants a
thing tacitly grants that without which the grant would be of
no avail   --   a grant of the principal thing carries with it a
grant of the incident. Yellowstone V. Co. v. Asso. Mtg. Investors,
            84 1
88 Mont. 73,/290 P. 255, 70 A.L.R. 1002. If the water rights
are appurtenant to the land, the fact that such water rights
are evidenced by shares of stock in a ditch company does not
change the rule.     Yellowstone V. Co. v. Asso. Mtg. Investorst supra;

45 Am Jur 2d, Irrigation, S 48.     The controlling principle was
succinctly expressed in Yellowstone Valley:
           " * * * The owner of land with an appurtenant
       water right may, by appropriate conveyance, convey
       the land to one person and the water right to
       another. But, if he conveys the land without
       reservation, he also conveys the appurtenance
       and whatever is incidental to the land. He there-
       fore conveys the appurtenant water rights, unless
       he expressly reserves them. * * * "
       Passing on to the second issue, the seller Jones contends
that the second suit (#7384) is barred as the issue of water
rights is res judicata, having been decided adversely to the pur-
chasers in the first suit (#7054).      She contends that the decree

in the first suit (#7054) collaterally estops an adjudication of
water rights in the second suit (#7384).
        In our view appellant's position lacks merit.      Section
          R.C.M. 1947,
93-1001-23/provides:
        "That only is deemed to have been adjudged in
        a former judgment which appears upon its face to
        have been so adjudged, or which was actually and
        necessarily included therein or necessary thereto."
"As far as subsequent proceedings under a different cause of
action are concerned, the doctrine of res judicata is held not
to apply to issues raised in the previous case which were not
passed on by the court or jury in deciding it."      46 Am Jur 2d,
Judgments,   §   419, and cases listed in footnote 3.   Here the
district court in the first case (#7054) refused to adjudicate
water rights as such issue was beyond the scope of the contro-
versy presented to it, so the decree in the second case e 7 3 8 4 )
adjudicating this issue was the first judicial determination
thereof.
        For the foregoing reasons, the judgment of the district
court is affirmed.


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                                  Justice
