## Facts

- Tim Welu and Steve Held were among the owners of a large Montana ranch that was later divided into separate parcels, with written cross-rights for different uses on the ranch.
- Welu received lifetime exclusive hunting rights across the ranch; Held (and his related entity, Twin Hearts Smiling Horses, Inc. (Twin Hearts)) held rights tied to livestock use on the parcel where the disputed equipment was installed.
- Welu proposed installing a center-pivot irrigation system to create irrigated fields (including alfalfa) that would draw and hold game for hunting.
- The parties agreed Welu would pay for purchase and installation of the irrigation system, and Twin Hearts/Held would operate and maintain the system and cover operating expenses.
- The parties’ arrangement for operation and maintenance was not limited to a particular timeframe.
- The irrigation system was installed on Twin Hearts’ land and included components integrated into the site, including buried water and electrical lines and related infrastructure.
- The system was configured for the location where it was installed and was not designed for use in multiple locations.
- After disputes arose about the system’s operation and repair, Welu sought to remove the irrigation system and treat it as his personal property.
- Twin Hearts refused to allow removal, asserting the irrigation system had become part of the real property.
- Welu sued, claiming he was entitled to remove the system and seeking relief including conversion and unjust enrichment; Twin Hearts and Held denied liability and maintained the system belonged with the land.
- Following a bench trial, the district court concluded the irrigation system was a fixture and that Welu could not remove it; Welu appealed to the Montana Supreme Court.

## Issues

1. Whether the irrigation system installed on Twin Hearts’ ranch parcel was a fixture that became part of the real property, preventing Welu from removing it.
2. Whether Twin Hearts/Held breached the parties’ agreement to operate and maintain the irrigation system.
3. Whether Welu could recover under unjust enrichment for the value of the irrigation system retained on Twin Hearts’ land.

## Decision

- The Montana Supreme Court affirmed the district court’s judgment.
- The Court held substantial evidence supported the finding that the irrigation system was annexed to the land, configured for that specific site, and objectively intended to remain with the property; it therefore constituted a fixture.
- Because the system was a fixture, Welu was not entitled to remove it as personal property.
- The Court upheld the district court’s rejection of Welu’s breach-of-contract theory, concluding the findings were supported by the record.
- The Court held unjust enrichment was not available because the parties’ rights and obligations regarding the irrigation system were governed by an enforceable contract.

## Legal Principles

- A fixture is personal property that becomes part of real property when (1) it is annexed to the realty, (2) it is appropriated to the use of the realty, and (3) the objective intent shown by the circumstances indicates it was meant to be a permanent accession to the land.
- Intent is determined from objective facts and context (including the nature of installation and whether the item is built or configured for the particular property), not merely from a party’s later statements about ownership.
- In an appeal from a bench trial, an appellate court reviews findings of fact for clear error and will affirm if supported by substantial credible evidence.
- Conversion requires proof of ownership or a right to possess the property; where the property at issue is a fixture belonging to the land, a claim premised on personal-property ownership fails.
- Restitution for unjust enrichment is generally unavailable when an enforceable contract governs the subject matter of the dispute (including claims seeking payment for benefits conferred under that contractual arrangement), consistent with Restatement (Third) of Restitution and Unjust Enrichment § 2(2).

## Conclusion

The Montana Supreme Court affirmed the judgment for Twin Hearts and Held, holding that the ranch irrigation system became a fixture based on its physical attachment, site-specific configuration, and objective indications it was meant to remain with the land; the Court also agreed there was no proven breach of the operating-and-maintenance agreement and that unjust enrichment was not a proper remedy because the parties’ relationship concerning the system was controlled by contract.


Welu v. Twin Hearts Smiling Horses, Inc., 386 P.3d 937 (2016)