Teton Co-Op Canal Co. v. Teton Co-Op Reservoir Co., 365 P.3d 442

Teton Co-Operative Canal Company (Teton Canal) filed an April 18, 1890 notice claiming 3,000 inches from the Teton River "for gathering said water in a reservoir"; an April 29, 1891 notice claimed 10,000 inches for "irrigating, reservoirs and other purposes."
An 1892 GLO plat shows two canals: the Glendora Canal (matching the 1890 diversion point) running to Glendora Reservoir, and the Eureka Canal (matching the 1891 diversion point) running to the Eureka site about two miles upstream.
The 1891 notice claims (including rights tied to the Eureka Canal) were extinguished by a 1908 Perry decree; the Perry court preserved only the 1890-based 3,000-inch right.
Teton Canal and the State Water Conservation Board built Eureka Reservoir in 1936–37; Teton Canal later claimed Eureka storage under a 1982 statement of existing rights listing an April 18, 1890 priority date for Eureka storage.
The Water Court treated Eureka off‑stream storage as part of the 1890 notice; Teton Reservoir objected, arguing the Eureka storage was tied to the nullified 1891 claim, and that Teton Canal lacked diligence to relate the 1936–37 works back to 1890.
The Montana Supreme Court reversed: it held the record shows Glendora (not Eureka) was the reservoir contemplated by the 1890 notice, the Eureka works arose from the 1891/1921/1936 efforts, and Teton Canal failed to proceed with reasonable diligence to relate 1930s construction back to 1890.

Issue	Plaintiff's Argument (Teton Canal)	Defendant's Argument (Teton Reservoir)	Held
Whether off‑stream storage at Eureka is included in the April 18, 1890 notice	1890 notice and later conduct show intent to include Eureka; diversion point could be moved and storage consolidated under 1890 claim	Eureka storage was claimed under the 1891 notice (extinguished by Perry) and not part of 1890	Court: No — Eureka was not within the 1890 notice; 1891/1921/1936 filings govern Eureka
Whether Teton Canal developed the 1890 diversion point	The company’s predecessors built and used diversion works that support relation back	Objector argued 1890 diversion was not developed at the described point	Court: 1890 diversion was developed at Glendora (not Eureka); Water Court’s contrary finding was clearly erroneous
Whether Teton Canal exercised reasonable diligence to perfect Eureka storage so as to relate back to 1890	Even if diversion could be shifted, company pursued reservoir development efforts across decades justifying relation back	Teton Canal did not steadily prosecute reservoir construction; meaningful efforts only in mid‑1930s	Court: No reasonable diligence before mid‑1930s; cannot relate 1936–37 completion to 1890
Appropriate priority date for Eureka Reservoir	(No alternative date argued on appeal)	Eureka should receive a junior priority based on the 1936 Declaration or later filings	Court: Remanded to Water Court to assign a new (later) priority date consistent with findings

Intake Water Co. v. Mont. Dep’t of Natural Res. & Conserv., 171 Mont. 416, 558 P.2d 1110 (discusses relation‑back and the diligence standard under the 1885 appropriation statute)
Bailey v. Tintinger, 45 Mont. 154, 122 P. 575 (approach to intent and requirements for completed appropriation)
Power v. Switzer, 21 Mont. 523, 55 P. 32 (importance of claimant’s intent in water appropriations)
Wheat v. Cameron, 64 Mont. 494, 210 P. 761 (intent at time of appropriation assessed by acts and circumstances)