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9aa8ddb8-e077-4a66-9a4e-32b5f5c66c45

MASSE v DEPT OF HIGHWAYS

N/A

82-255

Montana

Montana Supreme Court

IN THE SUPREME COURT OF THE STATE OF MONTANA - DANIEL MASSE and JUSTINE MASSE, husband and wife, Plaintiffs and Respondents, - THE STATE OF MONTANA DEPARTMENT OF HIGHWAYS, Defendant and Appellant. - O R D E R The Court has fully considered petition for rehearing filed by the State of Montana Department of Highways, and being fully advised finds that a correction should be made in the opinion originally issued. The opinion entitled Masse v. State of Montana Department of Highways published at 40 St.Rep. 730 should be corrected so that the fifth paragraph on page 733 of the opinion reads as follows: "The cause of action is one for negligence. The applicable statute of li-mitations is three years. Section 27-2-204 (1) , MCA. The statute of limitations commences to run when the cause accrues or, at the latest, on the date of discovery. Thompson v. Nebraska Mobile Homes Corp. (1982), Mont. --I , 647 P.2d 334, 338, 39 St.Rep. 3.094, 1100. On remand, findings should be made regarding the date the Masses discovered facts which would give rise to a cause of action against the Department of Highways. Then, a conclusion should be drawn as to whether or not the original complaint was filed within three year-s of the date of discovery of facts which did, or through the exercise of reasonable care should have, apprised the Masses of the accrual of a cause of action against the Department of Highways." As amended the opinion is approved and the petition for a rehearing is denied. Chief Justice Y I \ !do. 82--255 I N THE SUPREPIE COURT O F T H E STATE O F F I O 1 J T A N A 1983 DANIEL l V 1 A S S F AND JUSTINE ,RIASSF, Husband b Wife, P l a i n t i f f and Respons-ent, TI-IE STATE OF M O T J T A T 4 A , DEPF_RT.'?IENT O F E i I GPIFZAY S , Derendant and Appellant. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Mlssoula, The Honorable John S, Henson, Judge p r e s i d i n g . Counsel of Record: For Appellant: Reate Galda, Dept. of ETighways, FTelena, Montana For Respondent: Terry ?q?allace, Flissoula, Montana - - - - - - - - - - - --- Submitted on B r ~ e f s : March 3 , 1 9 9 3 Decided: Clay 1 9 , 1983 F i l e d : MAY 1 9 1983 - --- Clerk Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. An amended judgment was issued by the Fourth Judicial District Court on April 2, 1982, establishing the common boundary line between property owned by the Masses and a right-of-way belonging to the Montana Department of Highways. It also found that a negligent act by the Department of Highways proximately caused uncertainty regarding Masses' property line and awarded Masses $28,368.56 in damages, plus interest thereon at the rate of ten percent (10%) per annum. The Montana Department of Highways now appeals that amended judgment. We reverse and remand for a new trial. Daniel and Justine Masse were owners of real property located in Section 22, Township 12 North, Range 17 West, M.P.M. in Missoula County near Clinton, Montana. An interstate highway project, Clinton - East and West, was built in that area from 1970 to 1972 by Washington Construction, a contractor for the Department of Highways. During construction of the interstate, The Department of Highways' project manager and his crew staked locations along newly acquired right-of-way for later placement of right-of-way monuments by Washington Construction. The Department acquired new right-of-way from Masses' neighbor to the east, John Stitt, but acquired no new right-of-way from the Masses. Nevertheless, in October of 1972, a right-of-way monument was placed at the site of a stake on the Masse property at the section line between Sections 21 and 22. It was placed approximately three feet inside the existing fence bordering the Masses' property. In March of 1973, the Masses entered into an agreement with a real estate broker, Arthur J. Rapp, to sell their property. The survey firm of Ainsworth and Associates was hired in July of 1973 to resurvey the Masse property. Ignoring other survey monuments on the property, the survey crew utilized a right-of-way monument on the Stitt-Masse property boundary line and the right-of-way monument on the section line between sections 21 and 22 to conduct their survey. The crew determined that the Masse property encroached upon the Department of Highway's right-of-way. Specifically, the right-of-way boundary went across the porch of the Masses' business, Poor Henry's Bar. The listing agreement was voluntarily cancelled by both parties upon discovery of the encroachment. Mr. Rapp testified at trial that there had been prospective buyers of the Masse property and that he had been confident that he would find a ready, willing and able buyer. No exact fair market value for the property was given. Mrs. Masse testified that an $85,000 cash sale of the property was lost because of the boundary uncertainty. She also testified that the interest rate at that time was seven or eight percent. Mr. Masse testified that the property was offered for sale at $125,000 and that he had received several informal offers to buy. He believes he could have sold the property at that time had it not been for the boundary dispute. After completion of the Ainsworth survey, Mr. Ilasse traveled to Helena to discuss the boundary problem with representatives of the Department of Highways. The right-of-way monument on the section line between Sections 21 and 22 on the Masse property, was removed by the Department of Highways on August 7, 1973. Mr. Masse contends that the removal of the monument increased the confusion over his boundary line. Pursuant to an agreement between the Masses and the Department of Highways, Charles W. Hegman, project manager and land surveyor with the Department of Highways, resurveyed the highway right-of-way in the spring of 1975. The survey was filed in February of 1976 as Certificate of Survey No. 777. That survey showed no property belonging to the Masses encroaching upon the highway right-of-way. The right-of-way line was three feet south of the porch of Poor Henry's Bar. Although the Department of Highways apparently considers Certificate of Survey No. 777 to accurately represent the highway right-of-way, the State of Montana has refused to acknowledge that line as the boundary between the highway right-of-way and Masses' property. Another survey was conducted by Mr. Hegman in 1981 at the request of the Department of Highways. The Masses' boundary line was determined to lie approximately 3% feet north of the highway right-of-way. The Masses sold part of their property in December 1976 for $142,111. The sale was based on the 1973 Ainsworth survey and subject to the pending right-of-way dispute. Masses filed a complaint against the Department of Highways on October 19, 1977, alleging that the Department and its agents "illegally confiscated, claimed and used property of the Plaintiffs." The complaint requested compensation for loss of interest on frustrated sales, loss of the value of land illegally confiscated, loss due to illegal and continuing trespass, and other expenses. Trial was held before a district judge on February 17 and 18, October 5 and 19, and December 1, 1981. At the close of their case-in-chief, October 19, 1981, Masses moved for leave to amend the pleadings to conform to the evidence. The Department of Highways responded by raising statutes of limitations and sovereign immunity defenses. The motion to amend the pleadings was granted and the cause of action became one in negligence. Forty-four findings of fact and eleven conclusions of law were issued by the trial court on January 8, 1982. Pursuant to a motion to amend by the Department of Highways, amended findings of fact, conclusions of law and judgment for Masses were entered April 2, 1982. The amended judgment established the boundary line shown in Certificate of Survey No. 777 as the correct boundary line between the Masses' property and the Department of Highways' right-of-way. The Department of Highways was found to have negligently and erroneously placed a right-of-way monument on the section line between Section 2 1 and 22 on Masses1 property. That negligent act was found to be the proximate cause of the uncertainty of Masses' boundary line. The uncertainty in the boundary line was found to be the proximate cause of lost sales of Masses' property. Masses were awarded compensation representing their lost interest payments on a potential 1 9 7 3 contract for sale of their property and expenses accrued in resolving the boundary dispute. The Department of Highways raises the following issues in this appeal of the judgment: 1. The District Court erred in finding the defendant liable for damages. A. The plaintiffs' causes of action sounding in tort are barred by the statute of limitations and sovereign immunity. B. The remaining causes of action are unsupported by the evidence. 2. The District Court's findings of fact and conclu- sions of law are not supported by the evidence. 3. The evidence does not support the damages awarded by the District Court. We reverse and remand for a new trial on the statute of limitations defense and the damages issue. The Department of Highways raised a statute of limitations defense at trial. The trial court did not address the defense when it was raised or in its findings of fact and conclusions of law. We are unable to determine why the trial court considered the statute of limitations not to have run prior to the filing of the original complaint on October 19, 1977. The cause of action is one for negligence. The applicable statute of limitations is three years. Section 27-2-204 (1) , MCA. The statute of limitations commences to run when the cause accrues or, at the latest, on the date of discovery of the cause of action. Thompson v. Nebraska Mont . Mobile Homes Corp. (1982), - 1 - , 647 P.2d 334, 338, 39 St.Rep. 1094, 1100. On remand, findings should be made regarding the date the Masses discovered they had a cause of action against the Department of Highways. Then, a conclusion should be drawn as to whether or not the original complaint was filed within three years of the date of discovery. The Department of Highways alleges that seventeen findings of fact and nine conclusions of law are not supported by the evidence. "The function of this Court is to determine whether there is sufficient evidence to support the district court's findings and those findings will not be set aside unless there is a clear preponderance of evidence against them. l1 Kearns v. McIntyre Construction Co. (1977) , 173 Mont. 239, 249, 567 P.2d 433, 438. We have reviewed the record and have found either harmless error or sufficient evidence to support each of the findings except the one pertaining to damages. There was insufficient evidence in the record to support the District Court's finding that Masses lost a $125,000 contract sale of their property because of the boundary dispute. On remand, Masses must show that they had a prospective buyer who would have purchased their property for a specified price but for the boundary dispute or otherwise present damage testimony which supports the trial court's findings. Finally, the District Court improperly awarded Masses interest on this judgment. Section 2-9-317, MCA. Reversed and remanded for ne We concur: Chief Justice /

May 19, 1983

0dae5676-ca7a-4f75-9a8e-c7de98eccaf8

STATE v PAISLEY

N/A

83-010

Montana

Montana Supreme Court

No. 83-10 I N T H E SUPREME COURT O F T H E STATE O F M O N T A N A 1983 STATE O F M O N T A N A , P l a i n t i f f and Appellant, -vs- Ja'4ES E. PAISLEY, Defendant and Respondent. Appeal from: D i s t r i c t Court of t h e Eleventh J u d i c i a l D i s t r i c t , I n and f o r t h e County of Flathead, The Honorable James B. Wheelis, Judge p r e s i d i n g . Counsel of Record: For Appellant: Hon. Mike Greely, Attorney General, Helena, Montana Ted 0. Lynpus, County Attorney, K a l i s p e l l , >lontana For Respondent: Keller & G i l m e r , K a l i s p e l l , Montana Submitted! on B r i e f s : !;larch 2 5 , 1983 Decided: May 1 9 , 1983 File": MAY 1 9 1983 . - p - p - p p - p - - - ----- Clerk Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. Defendant was arrested on January 17, 1982, and charged by information with one count of sexual intercourse without consent. An amended information was filed March 19, 1982, charging defendant with one count of sexual intercourse without consent, a felony, one count of sexual assault, a felony and one count of sexual assault, a misdemeanor. All of the charges stem from defendant's actions toward three female patients in his Flathead County, Montana, dental off ice. After his arrest and the filing of the additional charges, defendant's dental business decreased substantially. On April 6, 1982, defense counsel mailed letters to over seven hundred of defendant's patients clarifying defendant's position regarding the charges. Defendant's dental business once again increased. Defendant's trial on the misdemeanor charge began in justice court in Flathead County, Montana on September 27, 1982, and lasted for three days. A verdict of guilty was returned on September 30, 1982. Ralispell's Daily Inter Lake newspaper gave the trial and its result front page coverage on all four days. The Missoulian also extensively covered the trial. The felony charges against defendant were scheduled to be tried in the Eleventh Judicial District Court, Flathead County. On October 15, 1982, defendant made a motion for change of place of trial. A hearing on the motion was held November 15, 1982. The motion was granted at the close of the hearing. Pursuant to section 46-20-103, MCA, the State now appeals the order granting the change of venue. We affirm. Defendant's motion was supported by his defense counsel's affidavit stating facts in support of the prejudice alleged; by copies of the newspaper accounts of the September trial in justice court; and by a written report of criminologist Dr. Richard Vandiver's survey of the opinions of Flathead County's registered voters regarding the guilt of this defendant. The State filed a motion in opposition on November 5, 1982, containing four responses to defendant's motion: 1. Defense counsel acted inappropriately in sending the letters to defendant's clients. The letters attracted the attention of the news media. Defendant should not now be able to benefit from his own wrong. 2. The news media covered defendant's trial in a fair and objective manner. The publicity did not affect defendant's chances of receiving a fair trial in Flathead County. 3. The criminologist's survey indicated that a majority of the respondents believed they could decide the case solely on the basis of the evidence presented at trial. 4. The District Court should reserve ruling on defendant's motion until voir dire of a Flathead County jury panel. At the November 15, 1982 hearing on the motion for change of venue, defendant testified regarding the impact of his reported conviction upon his dental practice. The State called no witnesses, offered no evidence and conducted no cross-examination. Absent abuse of discretion, the District Court's ruling on a motion for change of venue will be affirmed. State ex rel. Coburn v. Bennett (1982) , Mont. , I 655, P.2d 502, 506, 39 St.Rep. 2300, 2306. To grant such a motion, there must be "reasonable grounds to believe that the prejudice alleged actually exists and that by reason of the prejudice there is a reasonable apprehension that the accused cannot receive a fair and impartial trial." State v. Link (1981), Mont . - 1 - , 640 P.2d 366, 368, 38 St.Rep. 982, 985, quoting People v. Berry (1967) , 37 Ill. 2d 329, 226 N.E.2d 591, 593. When prejudicial pretrial publicity is alleged, the publicity must be inflammatory and create a reasonable apprehension that a fair trial is not possible before the motion will be granted. State v. Ritchson (1982) , Mont . f - , 647 P.2d 830, 832, 39 St.Rep. 1201, 1203-04. the written report his survey , Dr. Vandiver concluded: "The results of this survey do not overwhelmingly indicate either the liklihood or improbability of Mr. Paisley receiving a fair jury trial in Flathead County. It is obvious that the publicity given the case by the local media has been widespread and effective . . . "It was not clear that people's opinions are set regarding guilt or innocence nor does there appear to be a strong perception of agreement in the community about the case. Thus while it might be possible for Mr. Paisley to receive a fair jury trial in Flathead County the liklihood of that will undoubtedly be affected by the extent and nature of further publicity in this case." The survey was conducted prior to defendant's trial in justice court. The trial was given extensive coverage by the media. Regarding the guilty verdict, The Daily Inter Lake reported that the justice court judge told the defendant: "The evidence presents you as being guilty of more than the particular offense charged. " The paper also stated: " [The judge] said he was amending the formal charge to include misdemeanor charges against Paisley that could have resulted from the incidents detailed in the testimony of the witnesses." Those witnesses are the alleged victims of the pending felony charges. The extent of the further publicity was great. It's nature was inflammatory. Clearly, the District Court judge did not abuse his discretion in granting defendant's motion for change of venue. Finally, in State ex rel. Coburn v. Bennett, Mont . stated : "Not every venue case requires that voir dire be employed to determine whether prejudice still 'exists and that by reason of the prejudice there is a reasonable apprehension that the accused cannot receive a fair and impartial trial. ' While the determination of whether widespread prejudice prohibits selection of an impartial jury is usually made during voir dire, each case must turn on its special facts. United States v. Engleman (E.D. Mo. 1980), 489 F.Supp. 48." The District Court's ruling on defendant's motion was within the bounds of properly exercised discretion. Affirmed. We concur: 1 respectfully dissent on the basis t h / t h e change of venue order is premature. I & - (

May 19, 1983

eb419eae-94f7-4e27-b101-8fea08976cb7

AUDIT SERVICES INC v HARVEY BRO

N/A

82-373

Montana

Montana Supreme Court

NO. 82-373 I N THE SUPREME COURT OF THE STATE OF MONTANA 1983 AUDIT SERVICES, INC., a N o n t a n a C o r p o r a t i o n , P l a i n t i f f and A p p e l l a n t , HARVEY BROS. CONSTRUCTION, a M o n t a n a C o r p o r a t i o n , D e f e n d a n t and ~ e s ~ o n d 6 r k . A p p e a l f r o m : D i s t r i c t C o u r t of t h e F i f t h J u d i c i a l D i s t r i c t , I n and for the C o u n t y of B e a v e r h e a d H o n o r a b l e Frank B l a i r , Judge p r e s i d - i n a . C o u n s e l of P.ecord: For A p p e l l a n t : C u r e & B o r e r , G r e a t Falls, M o n t a n a F o r R e s p o n d e n t : C h r i s t i n e C. P a r k e r , D i l l o n , M o n t a n a S u b m i t t e d on briefs- A p r i l 15, 1983 Decided June 3 0 , 1 9 8 3 Filed: JUN 3 0 1983 C l e r k Mr. J u s t i c e L . C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. T h i s appeal stems from t h e judgment of t h e D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t , Beaverhead County, which d e c l a r e d t h e compliance agreements e n t e r e d i n t o between t h e c a r p e n t e r s and l a b o r e r s unions and Harvey B r o t h e r s C o n s t r u c t i o n (HBC) v o i d , and concluded t h a t they could be r e s c i n d e d . P l a i n t i f f , Audit S e r v i c e s I n c . , commenced t h i s a c t i o n t o c o l l e c t d e l i n q u e n t c o n t r i b u t i o n s , damages, and f e e s a l l e g e d l y owed by d e f e n d a n t t o p l a i n t i f f ' s a s s i g n o r s , t h e Montana C a r p e n t e r s and Laborers T r u s t Funds. A n o n j u r y t r i a l was h e l d on A p r i l 20, 1982, a f t e r which t h e c o u r t h e l d i n f a v o r of d e f e n d a n t , HBC. The d e f e n d a n t is engaged i n t h e c o n s t r u c t i o n b u s i n e s s . I t employs c a r p e n t e r s and l a b o r e r s . Beginning i n 1967, t h e defen- d a n t e n t e r e d i n t o a s e r i e s of compliance agreements w i t h l o c a l c a r p e n t e r and l a b o r e r unions. The compliance agreements incor- p o r a t e d by r e f e r e n c e c o l l e c t i v e b a r g a i n i n g agreements, and pur- s u a n t t o t h e terms of t h e c o l l e c t i v e b a r g a i n i n g agreements, d e f e n d a n t was r e q u i r e d t o make s p e c i f i e d c o n t r i b u t i o n s t o t h e Montana C a r p e n t e r s and Laborers T r u s t Funds. These agreements were renewed through t h e y e a r s . I n 1975, d e f e n d a n t n o t i f i e d t h e l a b o r unions t h a t it intended t o withdraw from t h e l a b o r agreements. Withdrawal was t o be e f f e c t i v e a t t h e e x p i r a t i o n of t h e e x i s t i n g agreements. The e x i s t i n g agreements were t h e 1975-1977 agreement with t h e carpen- t e r s union, and t h e 1974-1976 agreement w i t h t h e l a b o r e r s union. I n 1979, d e f e n d a n t ' s p a y r o l l r e c o r d s were a u d i t e d on behalf of t h e C a r p e n t e r s and t h e Laborers T r u s t Funds. The a u d i t d i s c l o s e d t h a t $9,969 was owed f o r d e l i n q u e n t c o n t r i b u t i o n s . Defendant r e f used t o pay t h e s e d e l i n q u e n c i e s , along w i t h o t h e r p e n a l t i e s , i n t e r e s t and c o s t s due under t h e agreements when b i l l e d . The unions t h e r e a f t e r assigned t h e i r c l a i m s t o p l a i n t i f f who t h e n commenced t h i s a c t i o n . Defendant, by amendment t o t h e answer, a l l e g e d t h a t t h e agreements were void a s having been obtained by d u r e s s , menace, and f r a u d . Furthermore, d e f e n d a n t claimed t h a t t h e a u d i t con- cerned r e c o r d s of ACE C o n s t r u c t i o n , a p a r t n e r s h i p owned and o p e r a t e d by t h e owners of defendant; and s i n c e ACE was not a p a r t y t o t h e agreements, it could not be l i a b l e f o r t h e payments. The p l a i n t i f f contends t h a t t h e r e c o r d s a u d i t e d were t h e p r o p e r r e c o r d s based on t h e testimony of Mr. Howard Sands, t h e a c c o u n t a n t who conducted t h e a u d i t . H e s t a t e d t h a t a l l t h e per- s o n s , wages and hours appearing on t h e a u d i t a l s o appeared on t h e q u a r t e r l y r e p o r t d e a l i n g w i t h unemployment c o n t r i b u t i o n s , f i l e d w i t h t h e Employment S e c u r i t i e s D i v i s i o n of t h e S t a t e of Montana under t h e name of Harvey B r o t h e r s C o n s t r u c t i o n . H e f u r t h e r s t a t e d t h a t some of h i s i n f o r m a t i o n was taken from t h e i n d i v i d u a l p a y r o l l r e c o r d s which r e c a p a man's wages by week, month, and y e a r . Three i s s u e s a r e p r e s e n t e d f o r our review. They a r e a s f o l l o w s : 1. Is t h e r e any c r e d i b l e evidence t o s u p p o r t t h e f i n d i n g s of f a c t and c o n c l u s i o n s of law upon which t h e D i s t r i c t Court based i t s judgment? 2. R e g a r d l e s s of t h e e v i d e n t i a r y f o u n d a t i o n f o r t h e judgment, is it c o n s i s t e n t w i t h t h e governing p r i n c i p l e s of f e d e r a l l a b o r law by which t h i s c a s e was supposed t o be decided? 3. Did t h e D i s t r i c t Court abuse its d i s c r e t i o n by allowing t h e d e f e n d a n t l e a v e t o amend its answer s h o r t l y b e f o r e t r i a l ? W e b e l i e v e t h a t t h e second i s s u e is d i s p o s i t i v e . I n a c a s e brought t o e n f o r c e a c o n t r a c t between an employer and a l a b o r o r g a n i z a t i o n , which f a l l s under s e c t i o n 3 0 1 ( a ) of t h e Labor Management R e l a t i o n s A c t (29 USC 1 8 5 ( a ) ) , it should be noted t h a t t h e s t a t e c o u r t s have c o n c u r r e n t j u r i s d i c t i o n w i t h t h e f e d e r a l c o u r t s . Audit S e r v i c e s I n c . , v. Clark B r o t h e r s C o n t r a c t o r s ( 1 9 8 2 ) , - Mont* ---- , 645 P.2d 953, 955, 39 St.Rep. 928, (and c a s e s c i t e d t h e r e i n ) ; Audit S e r v i c e s v. S t e w a r t and J a n e s ( 1 9 8 1 ) , Mont. , 622 P.2d 217, 219, 38 St.Rep. 41, (and c a s e s c i t e d t h e r e i n ) ; Lowe v. O'Conner ( 1 9 7 3 ) , 163 Mont. 100, 515 P.2d 677, 678. However, i n e x e r c i s i n g t h a t j u r i s d i c t i o n , t h e s t a t e c o u r t s must a p p l y f e d e r a l s u b s t a n t i v e law. Audit S e r v i c e s v. Clark B r o t h e r s C o n t r a c t o r s , s u p r a ; Audit S e r v i c e s v. S t e w a r t and J a n e s , s u p r a ; Lowe v. O'Conner, s u p r a . The a p p l i c a t i o n of t h e f e d e r a l law t o t h i s c a s e w a r r a n t s r e v e r s a l of t h e D i s t r i c t C o u r t ' s judgment. The f e d e r a l law on t h i s p o i n t is most c o g e n t l y set o u t by t h e n i n t h c i r c u i t c o u r t of a p p e a l s i n Todd v. McNef f ( 9 t h C i r . 1 9 8 2 ) , 667 F.2d 800. I n t h a t c a s e t h e c i r c u i t c o u r t of a p p e a l s was d e a l i n g w i t h a s e c t i o n 8 ( f ) , NLRA, (29 USC 1 5 8 ( f ) 1, p r e - h i r e agreement, which i n e s s e n c e is what we have h e r e a s t h e r e was never any showing t h a t t h e unions i n q u e s t i o n r e p r e s e n t e d a m a j o r i t y of t h e HBC employees. The Todd c o u r t c l e a r l y set o u t t h e r a t i o n a l e f o r allowing t h e s e t y p e s of agreements i n t h e c o n s t r u c t i o n i n d u s t r y where it s t a t e d : "The l a b o r c o n t r a c t i n t h i s case is one under S e c t i o n 8 ( f ) of t h e N a t i o n a l Labor R e l a t i o n s A c t (29 U.S.C. S 1 5 8 [ £ ] ) . T h i s s e c t i o n is an e x c e p t i o n t o t h e g e n e r a l l a b o r p o l i c y t h a t an employer can o n l y e n t e r i n t o a c o l l e c t i v e b a r g a i n i n g r e l a t i o n s h i p w i t h a union t h a t r e p r e s e n t s a m a j o r i t y of t h e employer's employees. A s jobs begin and end, c o n s t r u c - t i o n workers f r e q u e n t l y change employers. Due t o t h i s , Congress h a s s e e n f i t t o a l l o w so- c a l l e d ' p r e - h i r e ' agreements i n t h a t i n d u s t r y . These agreements may be signed b e f o r e t h e union r e p r e s e n t s a m a j o r i t y of t h e employer's employees, and may c o n t i n u e i n d u r a t i o n through more than one of t h e employer's j o b s , even i f t h e employer goes through a h i g h employee t u r n o v e r . These agreements a l l o w t h e employees some of t h e wage and b e n e f i t advan- t a g e s of union r e p r e s e n t a t i o n , a s well a s r e l a t i v e wage s t a b i l i t y . The employer is a s s u r e d a q u a l i f i e d pool of workers t o choose from when it needs them, p r o t e c t i o n a g a i n s t l a b o r u n r e s t d u r i n g t h e p e r i o d of t h e c o n t r a c t , and p r e d i c t a b l e l a b o r c o s t s , an i n v a l u a b l e t o o l i n t h e bidding p r o c e s s . " 667 F.2d a t 801, 802. The Todd c o u r t went on t o s t a t e t h a t a s a m a t t e r of p o l i c y and based on t h e United S t a t e s Supreme C o u r t ' s mandate i n NLRB v. Local No. 103, I r o n Workers (Higdon C o n s t r u c t i o n Co.) (19781, 434 U.S. 335, 98 S.Ct. 651, 54 L.Ed.2d 586, t h a t s e c t i o n 8 ( f ) (29 USC 1 5 8 ( f ) ) c o n t r a c t s " a r e v o i d a b l e by t h e employer u n t i l t h e union a t t a i n s m a j o r i t y s u p p o r t . " However, t h e y a l s o made it c l e a r t h a t such c o n t r a c t s a r e e n f o r c e a b l e under s e c t i o n 301, L M R A (29 USC 1 8 5 ( a ) ) u n t i l t h e employer r e p u d i a t e s them. Todd v. McNef f , 667 F.2d a t 803, 804. T h i s remedy of r e p u d i a t i o n a p p l i e s even i f t h e c o n t r a c t s were c o e r c e d , a s was a l l e g e d i n t h e c a s e p r e s e n t l y b e f o r e u s , ( e . , t h r e a t s t o p i c k e t and of v i o l e n c e ) . Todd v. McNeff, 667 F.2d a t 804. Here we s e e no evidence of r e p u d i a t i o n . A s a m a t t e r of f a c t i f HBC d i d a n y t h i n g , it r a t i f i e d t h e s e agreements w i t h t h e car- p e n t e r s and l a b o r e r s . W e have p r e v i o u s l y d e f i n e d r a t i f i c a t i o n i n A u d i t S e r v i c e s , I n c . v . F r a n c i s T i n d a l l C o n s t r u c t i o n ( 1 9 7 9 ) , 183 Mont. 474, 600 P.2d 811, where we s t a t e d : " ' " R a t i f i c a t i o n " is defined t o be t h e c o n f i r - mation of a p r e v i o u s a c t done e i t h e r by t h e p a r t y himself o r by a n o t h e r . ( C i t i n g a u t h o r i t y . ) And a c o n f i r m a t i o n n e c e s s a r i l y supposes knowledge of t h e t h i n g r a t i f i e d ( C i t i n g a u t h o r i t y . ) It f o l l o w s t h a t t o c o n s t i t u t e a r a t i f i c a t i o n t h e r e must be an a c c e p t a n c e of t h e r e s u l t s of t h e a c t w i t h an i n t e n t t o r a t i f y and w i t h f u l l knowledge of a l l t h e m a t e r i a l c i r c u m s t a n c e s . ' Koerner v. Northern Pac. Ry. Co. ( 1 9 1 9 ) , 56 Mont. 511, 520, 186 P. 337, 340." 600 P.2d a t 813. W e went on i n T i n d a l l t o s t a t e t h a t " [ i l t is t h e m a n i f e s t a t i o n of t h e r a t i f y i n g p a r t y which c o n t r o l s . The r e s p o n d e n t ' s outward e x p r e s s i o n s and a c t i o n s judge of h i s i n t e n t i o n . . . " 600 P.2d a t 813. H B C ' s outward e x p r e s s i o n s and a c t i o n s c l e a r l y show t h e i r i n t e n t i o n h e r e . E a r n e s t Harvey a d m i t s t h a t they signed t h e agreements w i t h t h e two unions. The testimony of a c c o u n t a n t Howard Sands, who conducted t h i s a u d i t of HBC a s w e l l a s a pre- v i o u s one which covered from 1973 t o J u l y 1, 1975, shows t h a t HBC v o l u n t a r i l y c o n t r i b u t e d thousands of d o l l a r s t o t h e r e s p e c t i v e t r u s t s between 1973 and 1975. These c o n t r i b u t i o n s were made i n s p i t e of t h e Harvey's c l a i m s t h a t they were coerced i n t o e n t e r i n g t h e agreements by t h r e a t s of v i o l e n c e and t h e t h r e a t of being p i c k e t e d . Such v o l u n t a r y payments over a p e r i o d of t i m e w i t h no e f f o r t s t o r e s c i n d have been h e l d t o r e s u l t i n r a t i f i c a t i o n of c o l l e c t i v e b a r g a i n i n g agreements. A u d i t S e r v i c e s v. F r a n c i s T i n d a l l C o n s t r u c t i o n , s u p r a . ( S e e a l s o P i o v. ~ e 1 l . y ( 1 9 7 6 ) , 275 O r . 585, 552 P.2d 1301, where it was s t a t e d : ". . . t h a t an employer who h a s made c o n t r i b u - t i o n s t o a t r u s t fund e s t a b l i s h e d under t h e terms of a c o l l e c t i v e b a r g a i n i n g agreement over a s u b s t a n t i a l p e r i o d of time may n o t , when l a t e r sued by t h e union t o e n f o r c e such a n agreement, contend a t t h a t time t h a t t h e agreement is unenforceable by r e a s o n of d u r e s s . " 552 P.2d a t 1306, 1307. ( S e e a l s o , C a r r v. S e t t l e C o n s t r u c t i o n , I n c . ( 1 9 7 4 ) , 1 1 Wash.App. 336, 522 P.2d 849, where employer h e l d t o be estopped from denying c o l l e c t i v e b a r g a i n i n g agreement where he had o p e r a t e d under its terms f o r 1 5 y e a r s . ) F i n a l l y , t h e l e t t e r s s e n t by HBC t o t h e l a b o r e r s and carpen- ters unions withdrawing from t h e agreements a r e f u r t h e r and more c o n c l u s i v e e v i d e n c e t h a t HBC intended t o be bound, under t h e t e r m s of t h o s e agreements, u n t i l t h e agreements e x p i r e d . Those l e t t e r s i n p e r t i n e n t p a r t read a s f o l l o w s : "Gentlemen: " T h i s is t o a d v i s e you t h a t t h i s firm h a s e l e c t e d t o withdraw from any Compliance Agreements t o which it is s i g n a t o r w i t h your o r g a n i z a t i o n . " T h i s e l e c t i o n is e f f e c t i v e upon t h e expira- t i o n of t h e e x i s t i n g agreement o r agreements, and t h i s n o t i c e is given p u r s u a n t t o t h e withdrawal r i g h t s granted t h e r e u n d e r ." A l l t h e above s e t o u t a c t i o n s tend t o show t h a t HBC had knowledge of a l l t h e m a t e r i a l f a c t s and t h a t it confirmed t h e agreements, t h u s , meeting t h e d e f i n i t i o n of r a t i f i c a t i o n from t h e T i n d a l l c a s e s e t o u t above. The f a c t t h a t HBC d i d not r e p o r t any hours worked t o t h e car- p e n t e r s from J u l y 1, 1975, t o A p r i l 30, 1977, o r t o t h e l a b o r e r s from J u l y 1, 1975 t o A p r i l 30, 1976, makes no d i f f e r e n c e . T h i s was made c l e a r by t h e n i n t h c i r c u i t i n t h e Todd c a s e where they s t a t e d noncompliance under some c i r c u m s t a n c e s may be s u f f i c i e n t t o r e p u d i a t e but is n o t s u f f i c i e n t under a l l c i r c u m s t a n c e s . 667 F.2d a t 804. J u s t a s t h e noncompliance t h e r e f e l l s h o r t of repu- d i a t i o n , it a l s o does s o h e r e , i n l i g h t of a l l t h e above- d i s c u s s e d c i r c u m s t a n c e s showing r a t i f i c a t i o n , e s p e c i a l l y t h e l e t t e r s of withdrawal. Those l e t t e r s made it clear t h a t HBC i n t e n d e d t o a b i d e by t h e terms of t h e agreements e n t e r e d i n t o w i t h t h e two unions u n t i l t h e y e x p i r e d . For t h e foregoing r e a s o n , we b e l i e v e t h a t t h e D i s t r i c t Court e r r e d and t h e c a s e w i l l have t o be r e t r i e d . A s t h i s c a s e r e q u i r e s r e v e r s a l and remand f o r r e t r i a l , we would l i k e t o c l a r i f y two p o i n t s . F i r s t , we would l i k e t o b r i e f l y d i s c u s s t h e argument p u t f o r t h by t h e Harvey's t h a t t h e p a y r o l l r e c o r d s a u d i t e d were those of ACE C o n s t r u c t i o n and not HBC. T h i s may be of l i t t l e s i g n i f i c a n c e i f t h e two e n t i t i e s on r e t r i a l a r e found t o be a l t e r egos. T h i s concept is c l e a r l y defined i n J M Tanaka C o n s t r u c t i o n v. NLRB ( 9 t h C i r . 1 9 8 2 ) , 675 F.2d 1029. The Tanaka c o u r t set o u t t h e f o u r f a c t o r s t o be used i n determining i f e n t i t i e s a r e a l t e r egos where t h e y s t a t e d : " I n determining whether two b u s i n e s s e s a r e a l t e r e g o s , a c o u r t must c o n s i d e r t h e f o l l o w i n g f a c t o r s : (1) c e n t r a l i z e d c o n t r o l of l a b o r r e l a t i o n s , ( 2 ) common management, ( 3 ) i n t e r r e l a t i o n of o p e r a t i o n s , and ( 4 ) common ownership and f i n a n c i a l c o n t r o l . Radio Union v . Broadcast S e r v i c e , 380 U.S. 255, 256, 85 S.Ct. 876, 877, 1 3 L.Ed.2d 789, ( 1 9 6 5 ) ; NLRB v . Lantz, 607 F.2d a t 295; NLRB v. Don Burgess C o n s t r u c t i o n Corp., 596 F.2d 378, 384 ( 9 t h C i r . 1 9 7 9 ) . " 675 F.2d a t 1033. A l l of t h e s e f a c t o r s need not be p r e s e n t . J M Tanaka C o n s t r u c t i o n v . NLRB, s u p r a . The o t h e r p o i n t is t h e argument t h a t t h e agreements were o r a l l y l i m i t e d i n scope t o two c o n s t r u c t i o n p r o j e c t s . T h i s argu- ment cannot s t a n d a s 29 USC S e c t i o n 1 8 6 ( c ) ( 5 ) ( B ) r e q u i r e s t h e d e t a i l e d b a s i s on which payments are t o be made t o t h e t r u s t t o be s p e c i f i e d i n a w r i t t e n agreement between t h e employer and employees. Thus, t h e b u s i n e s s a g e n t and employer cannot set down a n agreement i n t h e c o n t r a c t and t h e n d e p a r t from its e s s e n c e and make t h e f i n a l agreement o r a l l y . To a l l o w such o r a l modifica- t i o n s t o s t a n d would d e f e a t t h e p r o t e c t i o n s provided t h e t r u s t b e n e f i c i a r i e s by 29 USC 1 8 6 ( c ) ( 5 ) . Waggoner v. D a l l a i r e ( 9 t h C i r . 1 9 8 1 ) , 649 F.2d 1362. For t h e foregoing r e a s o n s , t h i s c a s e is reversed and remanded f o r f u r t h e r proceedings t o be nion. W e concur:

June 30, 1983

7c22c670-81fa-4659-b015-402cf7210e5a

RUSSEL STOVER CANDIES INC v DEPT

N/A

80-375

Montana

Montana Supreme Court

No. 80-375 IN THE SUPRE??E COURT OF THE STATE O F Pl0NTATJ.A 1983 RUSSELL STOVE2 CANDIES, I N C . , Respondent and Appellant, DEPART'MENT O F KEVENUF: OF TI-IE STATE O F F I O T J T A E J A , Appellant and Respondent. Appeal f r o n : The D i s t r i c t Court of t h e F i r s t J u d i c i a l D i s t r i c t , I n and f o r t h e County of Lewis E Clark., The Honorable P e t e r Neloy, Judge p r e s i d i n g * Counsel of Record: For Appellant: Ward A. Shanahan: Gough, Shanahan, Johnson & Vaterman, Helena, Montana Terry E. Cosgrove; Luxan & Y u r f i t t , .Eel-ena, Yontana Michael Rieley, Dept. of Revenue, ITelena, Xontana Submitted: March 31, 1983 Decided: May 1 9 , 1983 F l l e d : MAY 1 9 1983 &_ .- . - Clerk Mr. Chief J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e Court. The Department of Revenue (DOR) appealed t h e L e w i s and Clark County District Court judgment r e v e r s i n g t h e S t a t e Tax Appeal Board 's (STAB) d e t e r m i n a t i o n t h a t t h e Montana d i v i - s i o n s of t h e Ward Paper Box Co. (Ward), a p p e l l a n t , now R u s s e l l S t o v e r Candies, I n c . , were t a x a b l e a s p a r t o f a u n i t a r y b u s i n e s s . The D i s t r i c t Court h e l d t h a t a s s e s s m e n t of income t a x e s based on a p p r o p r i a t i o n of income was t h u s improper. T h i s Court r e v e r s e d t h e D i s t r i c t Court d e c i s i o n . R u s s e l l S t o v e r appealed t o t h e United S t a t e s Supreme C o u r t which v a c a t e d our judgment and remanded t h e c a s e t o t h i s Court f o r r e c o n s i d e r a t i o n i n l i g h t of two United S t a t e s Supreme Court c a s e s d e c i d e d subsequent t o our d e c i s i o n . W e a f f i r m our p r e v i o u s d e c i s i o n . The f a c t s a r e w e l l s t a t e d i n our i n i t i a l o p i n i o n , Ward Paper Box Co. v. DOR ( 1 9 8 1 ) , Mont. , 638 P.2d 1053, 38 St.Rep. 4147. However, t h e y w i l l be b r i e f l y set o u t h e r e . Ward f i l e d Montana c o r p o r a t i o n l i c e n s e t a x r e t u r n s f o r 1971 through 1975 based on t h e s e g r e g a t e d income from its Montana o p e r a t i o n s a l o n e . DOR a u d i t e d Ward's r e c o r d s , determined t h a t Ward was a u n i t a r y b u s i n e s s n o t e n t i t l e d t o s e p a r a t e a c c o u n t i n g of its Montana o p e r a t i o n s and income, and a s s e s s e d a d d i t i o n a l c o r p o r a t i o n l i c e n s e t a x e s a g a i n s t Ward by u s e of a t h r e e - f a c t o r formula which a p p o r t i o n e d t o Montana p a r t of Ward's t o t a l income. Ward p r o t e s t e d t h i s assessment t o STAB which a f f irmed t h e assessment by DOR. Ward f i l e d a p e t i t i o n f o r review i n t h e D i s t r i c t Court of L e w i s and C l a r k County. On August 4, 1980, t h e D i s t r i c t Court r e v e r s e d t h e STAB d e c i s i o n . DOR appealed t o t h i s Court from t h e judgment of t h e D i s t r i c t Court . Ward was a Missouri c o r p o r a t i o n q u a l i f i e d and doing b u s i n e s s i n Montana, m a i n t a i n i n g its p r i n c i p a l p l a c e of b u s i n e s s i n Kansas C i t y , Kansas. A l l of i t s common s t o c k was owned by Louis Ward d u r i n g t h e p e r i o d i n q u e s t i o n . Ward's a c t i v i t i e s c o n s i s t e d of seven d i v i s i o n s ; t h e d i v i - s i o n s l o c a t e d o u t s i d e Montana were involved i n manufacture, s a l e and d i s t r i b u t i o n of paper boxes and paper box p r o d u c t s i n t h e S t a t e s of Kansas, M i s s o u r i , Colorado, South C a r o l i n a and V i r g i n i a . The Montana d i v i s i o n s c o n s i s t e d of two c a t t l e ranches, one i n Meagher County and one i n Powell County. For t h e y e a r s 1971 through 1975, Ward used t h e s e p a r - a t e a c c o u n t i n g method f o r f i l i n g its Montana t a x r e t u r n s and i n each y e a r p a i d t h e minimum c o r p o r a t i o n l i c e n s e t a x o f $50. During t h o s e y e a r s t h e o p e r a t i n g c o s t s and d e p r e c i a - t i o n expenses of t h e Montana d i v i s i o n s exceeded t h e income earned by t h o s e d i v i s i o n s . During t h e same t i m e p e r i o d , Ward f i l e d t a x r e t u r n s under t h e u n i t a r y apportionment method i n t h e o t h e r s t a t e s i n which it was o p e r a t i n g , and t h e Montana ranch d i v i s i o n s were i n c l u d e d a s p a r t of its t o t a l u n i t a r y b u s i n e s s . I n t h o s e s t a t e s t h e l o s s e s s u s t a i n e d by t h e ranch d i v i s i o n s w e r e u s e d t o o f f s e t income e a r n e d by t h e p a p e r box d i v i s i o n s . The f a c t s r e g a r d i n g Ward's o p e r a t i o n s d u r i n g t h e y e a r s i n q u e s t i o n a r e f o r t h e most p a r t u n c o n t e s t e d . The home o f f i c e i n Kansas C i t y provided a d m i n i s t r a t i v e s e r v i c e s f o r a l l d i v i s i o n s of Ward's o p e r a t i o n which i n c l u d e d p r e p a r i n g f e d e r a l and s t a t e r e p o r t s , h i r i n g t h e a c c o u n t a n t s t o p r e p a r e t a x r e t u r n s , keeping t h e books, p r e p a r i n g f i n a n c i a l s t a t e - ments and b a l a n c i n g checkbooks. Each of t h e d i v i s i o n s was charged an a r b i t r a r y f i g u r e of $60 p e r month f o r t h e home o f f i c e s e r v i c e s . T h i s f i g u r e was n o t based on t h e amount of t i m e a c t u a l l y s p e n t on each d i v i s i o n by home o f f i c e person- n e l . Ward's d i v i s i o n s d i d n o t exchange equipment o r person- n e l and d i d n o t p u r c h a s e p r o d u c t s j o i n t l y . There was no j o i n t a d v e r t i s i n g program among t h e v a r i o u s d i v i s i o n s and no common salesmen. There were two a c c o u n t s maintained f o r each d i v i s i o n , an expense bank account and a p a y r o l l account. Each d i v i s i o n ' s expense bank a c c o u n t was m a i n t a i n e d i n a bank i n Kansas C i t y . Any monies g e n e r a t e d by a d i v i s i o n were d e p o s i t e d i n t h a t d i v i s i o n ' s s e p a r a t e expense account. If t h e d i v i s i o n d i d n o t immediately need t h e f u n d s , t h e y would be t r a n s f e r r e d from t h e s e p a r a t e d i v i s i o n expense a c c o u n t i n t o a g e n e r a l account and would be u t i l i z e d wherever needed by any of t h e s e p a r a t e d i v i s i o n s . The p r e s i d e n t of t h e company would make t h e d e c i s i o n a s t o t h e t r a n s f e r . Excess funds would be i n v e s t e d , i f n o t needed by any of t h e d i v i - s i o n s . A p o r t i o n of t h e s h o r t - t e r m investment income was a t t r i b u t a b l e t o funds g e n e r a t e d i n Montana, y e t t h e p o r t i o n a t t r i b u t a b l e t o funds earned i n Montana could n o t be s p e c i - f i c a l l y i d e n t i f i e d o r s e g r e g a t e d . I f e i t h e r of t h e Montana ranch d i v i s i o n s d i d n o t g e n e r a t e enough income t o meet expenses, a d d i t i o n a l f u n d s would be t r a n s f e r r e d from Ward's g e n e r a l account t o t h e ranch d i v i s i o n ' s expense bank account. The p a y r o l l a c c o u n t f o r e a c h r a n c h d i v i s i o n was maintained i n a Montana bank and checks could be w r i t t e n on t h e account by t h e ranch manager. However, t h e home o f f i c e p e r s o n n e l maintained t h e r e c o r d s , balanced t h e books and made t h e d e p o s i t s . There was some c e n t r a l management of t h e c o r p o r a t i o n . From t h e evidence p r e s e n t e d a t t h e h e a r i n g , STAB found t h a t t h e home o f f i c e made a l l of t h e d e c i s i o n s r e g a r d i n g t h e f i n a n c i a l a f f a i r s of t h e c o r p o r a t i o n and t h a t major d e c i - s i o n s r e g a r d i n g t h e r a n c h e s , s u c h a s t h e p u r c h a s e o f equipment and t h e buying and s e l l i n g of c a t t l e , r e q u i r e d t h e a p p r o v a l o f t h e chairman of t h e board o r t h e p r e s i d e n t o f t h e c o r p o r a t i o n . W e r e v e r s e d t h e d e c i s i o n o f t h e D i s t r i c t Court and h e l d t h a t t h e ranch d i v i s i o n s were p a r t o f Ward's u n i t a r y b u s i n e s s . Our d e c i s i o n was founded upon t h e s t a t u t o r y d e f i n i t i o n of a u n i t a r y b u s i n e s s . S e c t i o n 15-31-301(2), PICA, d e f i n e s t h e u n i t a r y b u s i n e s s p r i n c i p l e . I t r e a d s : " ( 2 ) A c o r p o r a t i o n engaged i n a u n i t a r y b u s i n e s s w i t h i n and w i t h o u t Montana must a p p o r t i o n its b u s i n e s s income a s provided f o r under 15-31-305. A b u s i n e s s is uni- t a r y when t h e o p e r a t i o n of t h e b u s i n e s s w i t h i n t h e s t a t e is dependent upon o r c o n t r i b u t o r y t o t h e o p e r a t i o n o f t h e b u s i n e s s o u t s i d e t h e s t a t e o r i f t h e u n i t s of t h e b u s i n e s s w i t h i n and w i t h o u t t h e s t a t e a r e c l o s e l y a l l i e d and n o t c a p a b l e o f s e p a r a t e m a i n t e n a n c e a s independent b u s i n e s s e s . " T h i s r u l e a p p l i e d throughout t h e e n t i r e p e r i o d of t h e d i s p u t e , f i r s t a s an a d m i n i s t r a t i v e r e g u l a t i o n and t h e n a s t h e above s t a t u t e i n which t h a t regulat'ion was c o d i f i e d . W e concluded from t h e f a c t s of t h e c a s e t h a t Ward's o p e r a t i o n w i t h i n Montana was dependent upon and c o n t r i b u t i n g t o i t s o p e r a t i o n o u t s i d e Montana. Thus, t a x i n g a p p o r t i o n e d income of Ward's o v e r a l l o p e r a t i o n was n o t v i o l a t i v e of t h e due process clause. After our decision, Russell Stover Candies, Inc., acquired all interest in Ward. It then appealed to the United States Supreme Court. The United States Supreme Court vacated tne judgment and remanded the cause to this Court for further considera- tion in light of two United States Supreme Court cases: F.W. Woolworth Co. v . Taxation and Revenue Dept., New Mexico (1982), 458 U.S. I - S.Ct. , 73 L.Ed.2d 819, 50 USLW 4457, and ASARCO, Inc. v. Idaho State Tax Commission (1982), 458 U.S. - I - S.Ct. , 73 L.Ed.2d 787, 50 USLW 4962. We affirm our initial decision. In both of the above cases, taxpayer corporations were appealing state court decisions allowing revenue departments to include income earned through investment subsidiaries in the total "business income" to be apportioned for taxing purposes. The Supreme Court determined that the subsidi- aries were separate and discrete businesses and income from such entities could not increase the income of the parent corporation that was to be apportioned. Taxing such income was a violation of the due process clause as no relationship exists between income produced by subsidiaries and the value of transacting business within the state. Mobil Oil Corp. v. Commissioner of Taxes (1980), 445 U.S. 425, 100 S.Ct. 1223, 63 L.Ed.2d 510; Ploorman Mfg. Co. v. Bair (1978), 437 U.S. 267, 98 S.Ct. 2340, 57 L.Ed.2d 197. In ASARCO, Idaho tried to levy corporate income taxes on the corporation based on income, increased by dividends, interest and stock sales from ASARCO's major interests in f i v e f o r e i g n s u b s i d i a r i e s . The S t a t e Supreme Court approved t h i s p r a c t i c e , and ASARCO appealed t o t h e United S t a t e s Supreme Court. The Court a p p l i e d t h e u n i t a r y b u s i n e s s p r i n c i p l e , b e s t e x p l a i n e d i n Mobil O i l , s u p r a . It found t h a t t h e s u b s i d i - a r i e s i n q u e s t i o n were s e p a r a t e b u s i n e s s e n t i t i e s . ASARCO had a m a j o r i t y i n t e r e s t i n Southern Peru Copper C o r p o r a t i o n , b u t due t o a management agreement, it could n o t assume c o n t r o l of t h e s u b s i d i a r y . F u r t h e r , Southern Peru d i d n o t seek d i r e c t i o n from ASARCO. The m a j o r i t y o f M I M Holdings, Ltd., i n A u s t r a l i a was owned by ASARCO, b u t no c o n t r o l was a s s e r t e d nor d i d it e l e c t any board members, a p p o i n t any o f f i c e r s o r h i r e any s t a f f . I n two o t h e r s u b s i - d i a r i e s , ASARCO o n l y h e l d m i n o r i t y i n t e r e s t s , and t h e c o u r t h e l d t h e y were autonomous o p e r a t i o n s . F i n a l l y , t h e Mexican s u b s i d i a r y was once wholly owned by ASARCO b u t a Mexican law f o r c e d it t o d i v e s t 51 p e r c e n t of its ownership. Idaho urged t h e Court t o expand t h e u n i t a r y b u s i n e s s p r i n c i p l e t o i n c l u d e any income r e c e i v e d by a p a r e n t c o r p o r - a t i o n t h a t would add t o t h e g e n e r a l c a p i t a l of t h a t corpora- t i o n . The Court r e f u s e d t h i s i n t e r p r e t a t i o n because it would r e s u l t i n t a x i n g r e t u r n s on any c o r p o r a t e investment a s " b u s i n e s s income," even though r e c e i v e d from a t o t a l l y independent e n t i t y . The same g e n e r a l q u e s t i o n was r a i s e d i n Woolworth. The taxpayer c o r p o r a t i o n owned f o u r f o r e i g n s u b s i d i a r i e s . New Mexico a p p o r t i o n e d W o o l w o r t h ' s income f o r t a x i n g purposes and i n c l u d e d i n such income d i v i d e n d s p a i d by sub- s i d i a r ies. The c o r p o r a t i o n appealed t h e New Mexico Supreme C o u r t ' s a p p r o v a l of t h i s a c t i o n . As in ASARCO, the United States Supreme Court applied the unitary business principle and found the subsidiaries to be separate business entities. It determined that the potential to control is insufficient to find a unitary business. Moreover, mere financial advantage achieved from dividends does not warrant a finding that a subsidiary is part of a unitary business. The Court concluded that the contribution to income did not result from functional integration nor centraliza- tion of management. Functional integration was absent since the subsidiaries did all their own purchasing, staffing and training. Further, there was no centralized management. The subsidiaries had separate and distinct management personnel and training systems for such personnel. They made their own management decisions and determined their own policies. Each subsidiary catered to local needs and tastes. Each subsidiary was considered autonomous and thus a separate and discrete business. There are certain factors that distinguish the present case from the cases decided by the United States Supreme Court . First of all, in ASARCO and Woolworth, the questioned income was derived from foreign investments in the form of subsidiaries. Here, the ranch divisions were active operations of Ward. Secondly, in form, each subsidi- ary is a separate and distinct business. Each had separate directors, officers and staff. On the other hand, the ranch divisions were formally part of the Ward corporation. They were subject to Ward's policies and directives and had to operate under the auspices of the board and officers. Third, and most important, there is a striking difference between t h e p r e s e n t c a s e and t h e United S t a t e s Supreme Court c a s e s regarding t h e independence of t h e b u s i n e s s e n t i t i e s . I n applying t h e s t a n d a r d u t i l i z e d by t h e Supreme Court v i e must a f f i r m our i n i t i a l d e c i s i o n . To a s c e r t a i n whether t h e s u b s i d l a r l e s were p a r t of a u n i t a r y b u s i n e s s , t h e Supreme Court had t o determine whether t h e r e was f u n c t i o n a l l n t e g r a t l o n and c e n t r a l i z e d management i n t h e r e l a t i o n s h i p between t h e p a r e n t and s u b s i d i a r y . I n o t h e r words, t h e Court focused on t h e r e l a t i v e independence of t h e s u b s i d i a r y . I n t h e c a s e a t b a r , w e f i n d t h a t t h e ranch d i v i s i o n s had v e r y l i t t l e independence from t h e o v e r a l l Ward o p e r a t i o n . The ranch d i v i s i o n s and Ward were f u n c t i o n a l l y i n t e g r a t e d . Even though a s p e c l f i c p r o d u c t d i d n o t e v o l v e from such i n t e g r a - t l o n , f u n c t i o n a l i n t e g r a t i o n e x i s t e d w i t h r e s p e c t t o t h e o p e r a t i o n of t h e d i v i s i o n . There was a l s o a l a r g e amount of c e n t r a l i z e d management. S i n c e t h e ranch d i v i s i o n s a r e n o t s e p a r a t e and d i s c r e t e b u s i n e s s e n t i t i e s b u t p a r t of a u n l t a r y b u s i n e s s , t h e S t a t e was c o r r e c t i n t a x i n g Ward, based on a p p r o p r i a t i o n of Ward's t o t a l income. The Nontana d i v i s i o n s d i d n o t have t h e c a p a c i t y t o o p e r a t e independent of Ward. The r a n c h e s depended upon t h e o u t - o f - s t a t e o p e r a t i o n f o r a c t u a l s e r v i c e s i n c l u d i n g p r e p a r a t i o n of f e d e r a l and s t a t e r e p o r t s , t a x r e t u r n s and financial s t a t e m e n t s and h i r i n g a c c o u n t a n t s t o perform such s e r v i c e s . The home o f f i c e a l s o k e p t a l l r e c o r d s and books and provided f i n a n c i n g when funds i n t h e ranch d i v i s i o n expense account were i n s u f f i c i e n t . F u r t h e r , t h e d i r e c t o r s and o f f i c e r s c o n t r o l l e d - a l l d i v i s i o n s of Ward, i n c l u d i n g t h e ranch divisions. They approved o r made - a l l major d e c i s i o n s with r e s p e c t t o ranching a c t i v i t y such a s buying equipment and buying arid s e l l r n g c a c t l e . I f such d e c i s i o n s were n o t made, t h e ranches simply would s t a n d i d l e . F u r t h e r , w e b e l i e v e t h a t Ward a d m i t t e d c h a t r h e ranches were p a r t of a u n i t a r y b u s i n e s s by u t i l i z i n g t h e u n l t a r y b u s i n e s s approach when f i l i n g c o r p o r a t i o n income t a x forms i n t h e o t h e r s t a t e s where it o p e r a t e d . I t c o n s i d e r e d t h e r a n c h e s p a r t of i t s u n i t a r y b u s l n e s s t o set o f f income earned i n t h o s e s t a t e s w i t h l o s s e s i n c u r r e d i n Montana. However, t o m i n i m i z e t a x a s s e s s m e n t i n Montana, Ward a s s e r t e d t h a t it was a s e p a r a t e e n t i t y . W e a l s o conclude t h a t t h e s t a n d a r d u t i l i z e d by t h e Unlced S t a t e s Supreme Court t o d e t e r m i n e i f t h e s u b s i d i a r i e s I n q u e s t i o n were p a r t of a u n i t a r y b u s i n e s s is c o n s i s t e n t wltn t h e s t a n d a r d c o d i f i e d i n s e c t i o n 15-31-381(2), MCA. A s previously d i s c u s s e d , t h e Court focused upon t h e indepen- dence of t h e e n t i t y and whether it was c a p a b l e of s e p a r a t e maintenance. Our s t a t u t e a l s o keys upon t h e dependence upon t h e " o u t of s t a t e " o p e r a t i o n and whether t h e e n t i t y is cdpable of s e p a r a t e maintenance a s an independent b u s i n e s s . R u s s e l l S t o v e r a l s o q u e s t i o n s t h e c o n s t i t u t i o n a l i t y of t h e formula used t o a p p o r t i o n t o t n e s t a t e income t o be taxed. W e do n o t c o n s i d e r t h i s i s s u e f o r t h e f o l l o w i n g r e a s o n s . F i r s t of a l l , t h i s q u e s t i o n was n o t r a i s e d i n t h e l n i t i a l a p p e a l t o t h i s Court. Second, t h e United S t a t e s Supreme C o u r t d i d n o t a d d r e s s t h i s i s s u e i n i t s remand o r d e r . F i n a l l y , n e i t h e r p a r t y a d e q u a t e l y b r i e f e d t h i s I s s u e . I n f a c t , t n e a p p e l l a n t mentions it f o r t h e s o l e purpose t o i n s u r e t h a t it is n o t deemed waived. Affirmed. ~~wuL.4, %wW.QJq Chief J u s t i c e

May 19, 1983

aa985a81-bb9e-497b-a4a2-c4dda17aa8f8

RIDENOUR v EQUITY SUPPLY CO

N/A

82-320

Montana

Montana Supreme Court

NO. 82-320 IN THE SUPREME COURT OF THE STATE OF MONTANA 1983 DAREL R. RIDENOUR, Claimant and Respondent, EQUITY SUPPLY COMPANY, and GLACIER GENERAL ASSURANCE COMPANY, Defendants and Appellants. Appeal from: Workers' Compensation Court Tim Reardon, Judge presidina, Counsel of Record: For Appellants: Garlington, Lohn & Robinson, Missoula, Montana For Respondent: James E. Vidal, Kalispell, Montana - Decided. June 30, 1983 wed. JUN 3 0 1983 . .. . - --- Clerk Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e C o u r t . I n t h i s c a s e we a r e asked t o review an o r d e r g r a n t i n g workers' compensation b e n e f i t s to respondent, Dare1 R. Ridenour. A p p e l l a n t s c l a i m t h a t b e n e f i t s should have been awarded under t h e Occupational D i s e a s e A c t r a t h e r t h a n t h e Workers' Compensation A c t . W e f i n d t h a t b e n e f i t s were p r o p e r l y awarded, t h e r e f o r e we a f f i r m . Claimant had worked f o r Equity Supply Company f o r about twelve y e a r s . He worked p r i m a r i l y w i t h i n t h e f e r t i l i z e r depart- ment, b u t he a l s o worked a s a handyman. Claimant had smoked c i g a r e t t e s s i n c e 1944. Smoking, combined w i t h twelve y e a r s of work i n a d u s t y environment had r e s u l t e d i n Chronic O b s t r u c t i v e Pulmonary Disease (COPD) . COPD is a medical term d e s c r i b i n g a spectrum of lung d i s e a s e s , i n c l u d i n g asthma, b r o n c h i t i s , and emphysema. With t h e COPD, c l a i m a n t was a b l e t o perform h i s j o b , a l t h o u g h a t times he experienced s h o r t n e s s of b r e a t h . P r i o r t o t h e i n j u r y d a t e , c l a i m a n t had v i s i t e d a f a m i l y p h y s i c i a n . Claimant complained of t i r e d n e s s and s h o r t n e s s of b r e a t h . The d o c t o r noted t h a t h i s b r e a t h sounds were q u i t e d i s t a n t , which c o u l d be a r e s u l t of COPD which can be secondary t o a smoking h i s t o r y . On December 1 8 , 1978, c l a i m a n t was asked t o r e p a i r a mecha- nism on t o p of a g r a i n b i n . Upon r e c e i v i n g i n s t r u c t i o n s , he ascended on a m a n - l i f t i n t h e g r a i n e l e v a t o r s e c t i o n . H e l e f t t h e m a n - l i f t and proceeded through a s m a l l shed and on t o an e i g h t y - f o o t catwalk. When he reached t h e r e p a i r s i t e he decided h e needed a d d i t i o n a l t o o l s . H e went back a c r o s s t h e catwalk i n o r d e r t o t a k e t h e m a n - l i f t t o t h e ground l e v e l . He e n t e r e d t h e shed and was overcome by a high c o n c e n t r a t i o n of g r a i n d u s t pro- duced by an unloading o p e r a t i o n which was t a k i n g p l a c e below. H e c o u l d h a r d l y s e e b u t he made h i s way t o t h e m a n - l i f t and descended t o t h e main f l o o r . A s he proceeded down, he experienced extreme b r e a t h i n g d i f f i c u l t i e s . The c l a i m a n t was immediately taken t o a p h y s i c i a n . The t r e a t i n g p h y s i c i a n p r e s c r i b e d e p i n e p h r i n e t o r e l i e v e b r o n c h i a l spasm, and diagnosed Ridenour 's c o n d i t i o n as a c u t e a s t h m a t i c b r o n c h i t i s . A f t e r t h i s i n c i d e n t , c l a i m a n t could not perform h i s u s u a l job. H e attempted t o perform l e s s demanding c h o r e s , y e t was u n s u c c e s s f u l . H e f i n a l l y ceased employment on May 2 0 , 1 9 7 9 . The medical evidence c o n s i s t s p r i m a r i l y of testimony from t h r e e p h y s i c i a n s ; D r . Maloney, a f a m i l y p r a c t i t i o n e r , and two pulmonary s p e c i a l i s t s , Dr. Power and Dr. Schimke. Dr. Maloney had seen respondent p r i o r t o and immediately a f t e r t h e i n c i d e n t on December 18. Dr. Maloney t e s t i f i e d t h a t t h e s i n g l e g r a i n d u s t i n h a l a t i o n of December 1 8 would not have caused r e s p o n d e n t ' s COPD. I n o t h e r words, t h e r e was c l e a r l y a p r e - e x i s t i n g con- d i t i o n . Dr. Maloney i n d i c a t e d t h a t even i f t h e i n h a l a t i o n i n c i - d e n t had n o t o c c u r r e d , it was probable t h a t respondent, i f he c o n t i n u e d t o smoke and work i n t h e same environment, would even- t u a l l y become d i s a b l e d a s a r e s u l t of h i s COPD. However, t h e time frame could n o t be p r e d i c t e d , he may have made it t o r e t i r e - ment age. D r . Schimke t e s t i f i e d t h a t r e s p o n d e n t ' s c h e s t x-rays i n d i - c a t e d t h e development of emphysema f o r a t l e a s t t e n t o f i f t e e n y e a r s p r i o r t o examination and t h a t t h e r e was no new d i s e a s e t r a c e a b l e t o t h e i n c i d e n t on December 18. H e d e s c r i b e d t h e inha- l a t i o n a s a " s e v e r e b u t temporary i l l n e s s and d i s a b i l i t y " however, t h e one e p i s o d e "may have r e s u l t e d i n more asthma and more b o n c h i t i s , which could f l a r e up more r e a d i l y i n t h e ensuing months and y e a r s . " Dr. Power agreed t h a t t h e r e was a pre- e x i s t i n g c o n d i t i o n t h a t could not have been caused by t h e s i n g l e i n h a l a t i o n of g r a i n d u s t . He d e s c r i b e d t h e i n c i d e n t a s a t r i g g e r i n g mechanism. According t o D r . Power, people w i t h t h i s kind of c o n d i t i o n e x p e r i e n c e r e d u c t i o n i n lung f u n c t i o n over a p e r i o d of time without being keenly aware t h a t they have a major problem o t h e r t h a n s h o r t n e s s of b r e a t h . Then an i n c i d e n t o c c u r s "which is r e a l l y t h e l a s t s t r a w t h a t kind of breaks t h e c a m e l ' s back" t h a t c a u s e s d i s a b i l i t y . R i d e n o u r ' s c l a i m f o r b e n e f i t s was t r e a t e d a s a c l a i m under t h e Occupational Disease A c t . The D i v i s i o n of Workers' Compensation computed R i d e n o u r ' s b e n e f i t s t o be $3.93 p e r week. On May 26, 1981, Ridenour r e f i l e d h i s c l a i m t o i n d i c a t e h i s d e s i r e t o seek b e n e f i t s under t h e Workers' Compensation A c t f o r t o t a l d i s a b i l i t y due t o an a c c i d e n t . A hearing was h e l d i n t h e Workers' Compensation Court on J u l y 1 6 , 1981, Judge Hunt pre- s i d i n g . P r i o r t o d e c i s i o n , Judge Hunt l e f t t h e bench. The newly-appointed judge, Timothy Reardon, d i s q u a l i f i e d h i m s e l f . J u r i s d i c t i o n was assumed by D i s t r i c t Judge Gordon B e n n e t t who a p p o i n t e d Roger Tippy a s a h e a r i n g s examiner. Mr. Tippy reviewed t h e record and e n t e r e d f i n d i n g s of f a c t and c o n c l u s i o n s of law and judgment; r u l i n g t h a t c l a i m a n t was e n t i t l e d t o permanent t o t a l d i s a b i l i t y b e n e f i t s under t h e Workers' Compensation A c t a t t h e r a t e of $145.33 p e r week. T h e r e a f t e r , Judge B e n n e t t adopted i n f u l l , and w i t h o u t e x c e p t i o n , t h e f i n d i n g s and c o n c l u s i o n s of t h e h e a r i n g s examiner. The i n s u r e r and employer t h e n brought t h i s appeal. W e a r e asked t o a d d r e s s two i s s u e s ; f i r s t , whether it was e r r o r t o a l l o w e l e c t i o n by t h e c l a i m a n t between t h e p r o v i s i o n s of t h e Occupational D i s e a s e A c t and t h e Workers' Compensation A c t , and second, whether it was e r r o r t o conclude t h a t c l a i m a n t suf- f e r e d an i n j u r y a s d e f i n e d i n s e c t i o n 39-71-119, MCA. W e a d d r e s s t h e s e i s s u e s i n t u r n . The f o c u s of a p p e l l a n t s ' argument i n r e l a t i o n t o t h e f i r s t i s s u e is t h a t c l a i m a n t s u f f e r e d from a n o c c u p a t i o n a l d i s e a s e , t h e r e f o r e , h i s e x c l u s i v e remedy o c c u r s under t h e Occupational D i s e a s e A c t . A p p e l l a n t s c i t e t h e d e f i n i t i o n of o c c u p a t i o n a l d i s e a s e found i n s e c t i o n 39-72-102(11), MCA, " 'Occupational d i s e a s e ' means a l l d i s e a s e s a r i s i n g o u t of o r c o n t r a c t e d from and i n t h e course of employment." A p p e l l a n t s a l s o c i t e t h e s t a t u t o r y c a u s a t i o n s e c t i o n which r e f i n e s " a r i s i n g o u t of . employment; " s e c t i o n 39-72-408, MCA: "Proximate c a u s a t i o n . Occupational d i s e a s e s s h a l l be deemed t o a r i s e o u t of t h e employment o n l y i f : " ( 1 ) t h e r e is a d i r e c t c a u s a l c o n n e c t i o n be- tween t h e c o n d i t i o n s under which t h e work is performed and t h e o c c u p a t i o n a l d i s e a s e ; " ( 2 ) t h e d i s e a s e can be s e e n t o have followed as a n a t u r a l i n c i d e n t of t h e work a s a r e s u l t of t h e exposure occasioned by t h e n a t u r e of t h e employment; " ( 3 ) t h e d i s e a s e can be f a i r l y t r a c e d t o t h e employment a s t h e proximate cause; " ( 4 ) t h e d i s e a s e does not come from a hazard t o which workmen would have been e q u a l l y exposed o u t s i d e of t h e employment; " ( 5 ) t h e d i s e a s e is i n c i d e n t a l t o t h e c h a r a c t e r of t h e b u s i n e s s and not independent of t h e r e l a t i o n of employer and employee." A p p e l l a n t s argue t h a t c l a i m a n t ' s c o n d i t i o n f i t s t h e above s t a t u t o r y d e f i n i t i o n s , t h e r e f o r e c l a i m a n t ' s remedy can o n l y be w i t h t h e Occupational Disease A c t , a s s p e c i f i e d i n s e c t i o n 39-72-305, MCA, "The r i g h t t o recover compensation p u r s u a n t t o t h e p r o v i s i o n s of t h i s c h a p t e r f o r o c c u p a t i o n a l d i s e a s e s . . . is t h e e x c l u s i v e remedy t h e r e f o r a g a i n s t an employer . . ." W e d i s a g r e e . W e hold t h a t a l t h o u g h c l a i m a n t may have had a compensable d i s e a s e under t h e Occupational D i s e a s e A c t , t h a t s t a t u s d i d n o t p r e c l u d e e l i g i b i l i t y under t h e Workers' Compensation A c t . I n o t h e r words, a p a r t i c u l a r c l a i m a n t could meet t h e r e q u i r e m e n t s of both a c t s , t h u s he would be allowed t o choose h i s remedy. To a l l o w an e l e c t i o n between t h e two a c t s d o e s n o t v i o l a t e t h e e x c l u s i v e remedy language of s e c t i o n 39-72-305, MCA. The l e g i s l a t u r e o n l y intended t h a t an employee n o t have a common law a c t i o n a g a i n s t h i s employer. A p p e l l a n t s c i t e t h r e e c a s e s i n s u p p o r t of t h e i r p o s i t i o n . The e a r l i e s t case is Summer v. V i c t o r Chemical Works ( 9 t h C i r . 1 9 6 1 ) , 298 F.2d 66. I n Summer t h e employee i n s t i t u t e d an a c t i o n f o r p e r s o n a l i n j u r i e s i n s t a t e c o u r t which was l a t e r t r a n s f e r r e d t o f e d e r a l c o u r t . The F e d e r a l D i s t r i c t Court dismissed t h e a c t i o n on t h e ground t h a t t h e employee's d i s a b i l i t y was t h e r e s u l t of an a c c i d e n t , t h u s h i s remedy was under t h e Montana Workers' Compensation A c t . Upon review, t h e n i n t h c i r c u i t c o u r t o f a p p e a l s h e l d t h a t an employee who a l l e g e d l y s u f f e r e d a n i n d u s t r i a l a c c i d e n t could m a i n t a i n an a c t i o n a g a i n s t h i s employer who had n o t e l e c t e d t o be covered by t h e Occupational D i s e a s e A c t . The c o u r t r e l i e d upon a s e c t i o n of t h e a c t which s p e c i f i - c a l l y p r o h i b i t e d common law a c t i o n s a g a i n s t employers, e x c e p t i n t h o s e c a s e s where employees were not e l i g i b l e f o r b e n e f i t s under t h e A c t o r i n those c a s e s where employees r e j e c t e d coverage of t h e Act. T h i s s e c t i o n was repealed i n 1979. Summer d e a l t w i t h a d i f f e r e n t s t a t u t o r y scheme, and while t h e c a s e may be h e l p f u l , it is c e r t a i n l y not c o n t r o l l i n g . I n f a c t , t h e c a s e s t a n d s f o r l i b e r a l s e l e c t i o n of remedies; a philosophy not b e n e f i c i a l t o a p p e l l a n t s . Next, we a r e c i t e d t o Anaconda Co. v. D i s t r i c t Court ( 1 9 7 3 ) , 161 Mont. 318, 506, P.2d 8 1 , where t h e c l a i m a n t brought an a c t i o n a g a i n s t h i s employer f o r i n j u r i e s s u f f e r e d i n an underground mine. The D i s t r i c t Court allowed t h e a c t i o n t o proceed, c o n t r a r y t o t h e employer's a s s e r t i o n t h a t t h e l a w s u i t was barred by t h e p r o v i s i o n s of t h e Workers ' Compensation Act and t h e Occupational D i s e a s e A c t . The employer t h e n p e t i t i o n e d t h i s Court f o r a w r i t o f s u p e r v i s o r y c o n t r o l . T h i s Court g r a n t e d t h e w r i t and d i r e c t e d t h e D i s t r i c t Court t o o r d e r summary judgment i n f a v o r of t h e employer. I t is c l e a r t h a t t h e c l a i m a n t brought h i s p e r s o n a l i n j u r y a c t i o n a f t e r h i s c l a i m f o r o c c u p a t i o n a l d i s e a s e b e n e f i t s had been r e j e c t e d . I n o r d e r i n g summary judgment f o r t h e employer, w e c i t e d s e c t i o n 92-1308, RCM, 1947, (now s e c t i o n 39-32-305, amended) which p r e c l u d e s a common law a c t i o n a g a i n s t a n employer, even where a c l a i m a n t has f a i l e d t o prove e n t i t l e - ment t o o c c u p a t i o n a l d i s e a s e b e n e f i t s . F i n a l l y , a p p e l l a n t s c i t e Dayton v. Boeing Company ( D . Mont. 1 9 7 5 ) , 389 F.Supp. 433, where t h e c l a i m a n t sought damages f o r i n j u r i e s s u s t a i n e d by exposure t o e l e c t r o m a g n e t i c p u l s e s and l a s e r r a d i a t i o n . The Montana Federal D i s t r i c t Court, r e l y i n g on t h i s C o u r t ' s holding i n Anaconda, r u l e d t h a t an employee who suf- f e r s a d i s e a s e t h a t is covered by t h e Occupational D i s e a s e A c t h a s no common law remedy a g a i n s t h i s employer. A p p e l l a n t s ' r e l i a n c e on t h e s e t h r e e c a s e s i s misplaced. I n a l l of t h e s e c a s e s , t h e e x c l u s i v e remedy q u e s t i o n is r a i s e d i n t h e c o n t e x t of a p e r s o n a l i n j u r y a c t i o n . The q u e s t i o n i n t h e s e c a s e s was whether o r not a damage a c t i o n could be maintained i n view of t h e remedies provided through t h e Workers' Compensation and Occupational D i s e a s e A c t s . I n t h e c a s e b e f o r e u s now, t h a t is not t h e q u e s t i o n . I t is obvious t o us t h a t t h e language of s e c t i o n 39-72-305, MCA, was o n l y meant t o p r o h i b i t p e r s o n a l i n j u r y a c t i o n s a g a i n s t employers. The l e g i s l a t u r e d i d n o t i n t e n d t o p r e v e n t a c h o i c e between s t a t u t o r y remedies. T h i s i n t e r p r e t a t i o n is supported i n s e v e r a l s e c t i o n s of both a c t s . W e must read a l l of t h e s e sec- t i o n s t o g e t h e r t o d i s c e r n l e g i s l a t i v e i n t e n t . A s we s a i d i n Home B u i l d i n g and Loan A s s o c i a t i o n of Helena v. F u l t o n ( 1 9 6 2 ) , 1 4 1 Mont. 113, 115, 375 P.2d 312, 313, " s t a t u t e s must be read and c o n s i d e r e d i n t h e i r e n t i r e t y and t h e l e g i s l a t i v e i n t e n t may n o t b e gained from t h e wording of any p a r t i c u l a r s e c t i o n o r s e n t e n c e , b u t o n l y from a c o n s i d e r a t i o n of t h e whole." F i r s t , s e c t i o n 39-72-305, MCA, t h e v e r y s e c t i o n on which a p p e l l a n t s ' argument is based, d i s t i n g u i s h e s between t h e remedy provided i n t h e Occupational Disease Act and t h e remedy a f f o r d e d t h r o u g h a damage a c t i o n . S u b s e c t i o n (1) makes it c l e a r t h a t t h e r i g h t t o recover compensation a g a i n s t p r o p e r l y i n s u r e d employers is provided w i t h i n t h e A c t . S u b s e c t i o n ( 2 ) t h e n a d o p t s provi- s i o n s of t h e Workers' Compensation A c t r e l a t i n g t o uninsured employers. One of t h o s e adopted p r o v i s i o n s d e a l s w i t h t h e r i g h t o f an employee t o e l e c t between h i s remedies, i n c l u d i n g t h e r i g h t t o b r i n g a damage a c t i o n a g a i n s t h i s employer. S e c t i o n 39-71-508, MCA. Another s e c t i o n w i t h i n t h e Occupational D i s e a s e A c t s u p p o r t s o u r i n t e r p r e t a t i o n . S e c t i o n 39-72-709, MCA, s t a t e s : " [c] ompen- s a t i o n payable p u r s u a n t t o t h e terms of t h i s c h a p t e r t o t h e c l a i m a n t , h i s b e n e f i c i a r i e s , o r dependents s h a l l be diminished by t h e amount of any compensation paid o r t o be paid him o r them under t h e Workers' Compensation A c t of Montana o r any o t h e r workers ' compensation a c t ." The l e g i s l a t u r e recognized t h a t a p a r t i c u l a r c o n d i t i o n could be compensable under e i t h e r a c t , and i n such s i t u a t i o n s , double b e n e f i t s w i l l not be allowed. W e o f f e r one f u r t h e r example found i n t h e Workers' Compensa- t i o n A c t . S e c t i o n 39-71-119 ( 2 ) , MCA, d e f i n e s i n j u r y a s , " c a r d i o v a s c u l a r o r pulmonary o r r e s p i r a t o r y d i s e a s e s c o n t r a c t e d by a paid f i r e f i g h t e r . . . Nothing h e r e i n s h a l l c o n s t r u e d t o e x c l u d e a x o t h e r workinq person who s u f f e r s g c a r d i o v a s c u l a r , pulmonary, or r e s p i r a t o r y d i s e a s e w h i l e i d t & c o u r s e a n d scope i o f his employment." (emphasis added) The l e g i s l a t u r e , i n pro- v i d i n g t h a t c e r t a i n d i s e a s e s of paid f i r e f i g h t e r s be compensable under t h e Workers' Compensation A c t , recognized t h a t non- f i r e f i g h t e r s w i t h c a r d i o v a s c u l a r , pulmonary o r r e s p i r a t o r y d i s e a s e s might w e l l be e n t i t l e d t o b e n e f i t s under t h e Workers' Compensation A c t r a t h e r t h a n t h e Occupational Disease A c t . I n o t h e r words, t h e l e g i s l a t u r e r e a l i z e d t h a t t h e s e k i n d s of d i s e a s e s , while normally considered under t h e Occupational D i s e a s e A c t , could be compensable a s i n j u r i e s under t h e def i n i - t i o n of s u b s e c t i o n (1) of 39-71-119, MCA. T h i s is j u s t such a c a s e and w e now c o n s i d e r whether t h e c o u r t e r r e d by concluding t h a t c l a i m a n t s u f f e r e d an i n j u r y . An i n j u r y is d e f i n e d a s a " t a n g i b l e happening of a t r a u m a t i c n a t u r e from an unexpected cause o r unusual s t r a i n r e s u l t i n g i n e i t h e r e x t e r n a l o r i n t e r n a l p h y s i c a l harm and such p h y s i c a l con- d i t i o n a s a r e s u l t therefrom and e x c l u d i n g d i s e a s e - n o t t r a c e a b l e t o i n j u r y . . . - " S e c t i o n 39-71-119 ( l ) , MCA. (emphasis added ) A p p e l l a n t s v e r y c a p a b l y d i s c u s s c a s e law i n r e l a t i o n t o t h e e x c l u s i o n of d i s e a s e s not t r a c e a b l e t o i n j u r y . W e a r e asked t o pay p a r t i c u l a r a t t e n t i o n t o L a F o r e s t v. Safeway S t o r e s , I n c . ( 1 9 6 6 ) , 147 Mont. 431, 414 P.2d 200, which supposedly c o n t a i n s t h e g u i d i n g p r i n c i p l e s f o r r e s o l u t i o n of t h i s i s s u e . I n L a F o r e s t we r e v e r s e d an o r d e r awarding workers' compen- s a t i o n b e n e f i t s because t h e medical e v i d e n c e showed t h a t c l a i m a n t ' s b u r s i t i s e x i s t e d b e f o r e , and was not caused by t h e a l l e g e d a c c i d e n t . A p p e l l a n t s contend t h a t t h e same s i t u a t i o n e x i s t s i n t h i s c a s e , t h e r e f o r e t h e c l a i m a n t is not e n t i t l e d t o w o r k e r s ' compensation b e n e f i t s . Although t h e same f a c t u a l s i t u a t i o n may e x i s t (Mr. Ridenour's COPD e x i s t e d long b e f o r e t h e d a t e of t h e a c c i d e n t , and no new d i s e a s e was caused by t h e massive i n h a l a t i o n ) it does not f o l l o w t h a t workers' compensation b e n e f i t s a r e precluded. I n L a F o r e s t we were not asked t o a d d r e s s t h e a g g r a v a t i o n o r a c c e l e r a t i o n f a c t o r , while i n t h i s c a s e it is t h e c e n t r a l i s s u e . For many y e a r s it h a s been t h e r u l e i n Montana t h a t t h e employer t a k e s h i s employee a s he f i n d s him, and a s we s a i d i n Gaffney v. Ind. Acc. Board ( 1 9 5 5 ) , 129 Mont. 394, 401, 287 P.2d 256, 259, " [ t j h e f a c t t h a t an employee was s u f f e r i n g from a pre- e x i s t i n g d i s e a s e o r d i s a b i l i t y does not p r e c l u d e compensation i f t h e d i s e a s e o r d i s a b i l i t y was aggravated o r a c c e l e r a t e d by an i n d u s t r i a l i n j u r y which a r o s e o u t of and i n t h e c o u r s e of t h e employment . ' I Consequently, t h e q u e s t i o n h e r e is whether o r not Mr. R i d e n o u r ' s COPD was aggravated o r a c c e l e r a t e d by t h e inhala- t i o n i n c i d e n t on December 1 8 , 1978. A p p e l l a n t s d i s c u s s s e v e r a l c a s e s d e a l i n g w i t h a g g r a v a t i o n and a c c e l e r a t i o n of p r e - e x i s t i n g c o n d i t i o n s and c a u t i o n u s t o keep i n mind t h a t i n t h i s c a s e , we a r e d e a l i n g w i t h " a p r e - e x i s t i n g , d e f i n e d and c e r t i f i e d o c c u p a t i o n a l d i s e a s e . " I t appears we a r e b e i n g asked t o d i s t i n g u i s h between a p r e - e x i s t i n g c o n d i t i o n and a p r e - e x i s t i n g d i s e a s e . However, t h e r e is no such d i s t i n c t i o n i n t h e a p p l i c a t i o n of t h e a g g r a v a t i o n and a c c e l e r a t i o n r u l e . An employer a c c e p t s h i s employee w i t h a l l of h i s i n j u r i e s and d i s e a s e s . W e have recognized t h a t d i s e a s e s a r e s u b j e c t t o aggra- v a t i o n o r a c c e l e r a t i o n . I n Wight v. Hughes Livestock Co., I n c . , (1981) I Mont. --- , 634 P.2d 1189, 38 St.Rep. 1632, we were asked t o review a f i n d i n g of t h e Compensation Court which implied t h a t c l a i m a n t ' s s p i n a l d i s e a s e was aggravated by an i n d u s t r i a l a c c i d e n t . W e af f i r m e d , making no d i s t i n c t i o n between d i s e a s e s and i n j u r i e s . A p p e l l a n t s ' c a u t i o n , t h a t we a r e d e a l i n g w i t h " a pre- e x i s t i n g , d e f i n e d and c e r t i f i e d o c c u p a t i o n a l d i s e a s e ," s u r f a c e s a g a i n i n d i s c u s s i o n of Greger v. United P r e s t r e s s , I n c . ( 1 9 7 8 ) , 180 Mont. 348, 590 P.2d 1121. I n Greger t h e c e n t r a l i s s u e was t h e same a s i n t h i s c a s e ; whether c l a i m a n t ' s c o n d i t i o n was com- p e n s a b l e under t h e Occupational D i s e a s e A c t o r t h e Workers' Compensation A c t . Mr. Greger had worked r e g u l a r l y w i t h c o n c r e t e . H e l e a r n e d t h a t he was a l l e r g i c t o chromium and n i c k e l which a r e a d d i t i v e s t o t h e cement mixture. H e developed c o n t a c t der- m a t i t i s . The t r e a t i n g p h y s i c i a n t e s t i f i e d t h a t c l a i m a n t s u f f e r e d b o t h an i n j u r y and an o c c u p a t i o n a l d i s e a s e . However, t h e i n s u r e r had t r e a t e d t h e c l a i m a s one f o r o c c u p a t i o n a l d i s e a s e and paid b e n e f i t s f o r o n l y t h a t p e r i o d of time i n which c l a i m a n t was t o t a l l y d i s a b l e d . The Workers' Compensation Court h e l d f o r t h e i n s u r e r and we a f f i r m e d . A p p e l l a n t s c o r r e c t l y argue t h a t our holding i n Greqer was based i n p a r t on t h e f a c t t h a t each s t a t u t o r y element of occupa- t i o n a l d i s e a s e was s a t i s f i e d . T h e r e f o r e , according t o a p p e l l a n t s , s i n c e Mr. R i d e n o u r ' s c o n d i t i o n met t h e same s t a t u t o r y e l e m e n t s , t h e same holding should apply. However, a p p e l l a n t s m i s i n t e r p r e t our reasoning. Our holding d i d n o t p r o h i b i t e l i g i - b i l i t y under t h e Workers' Compensation A c t simply because c l a i m a n t ' s c o n d i t i o n f i t t h e d e f i n i t i o n of o c c u p a t i o n a l d i s e a s e . I n Greger t h e r e was not an i n j u r y . Claimant was exposed t o t h e cement a d d i t i v e s over a p e r i o d of time. There was never "a t a n g i b l e happening of a t r a u m a t i c n a t u r e ." W e h e l d t h a t a l l e r g i e s which a r e aggravated by work e x p e r i e n c e r e s u l t i n occu- p a t i o n a l d i s e a s e ; n o t i n g t h a t t h e "purpose of t h e o c c u p a t i o n a l d i s e a s e a c t is t o compensate workers who c o n t r a c t a d i s e a s e o r have i n e r t d i s e a s e s when no ' a c c i d e n t ' is i n v o l v e d , o r a s i n Montana, where t h e r e is no ' i n j u r y ' . . ." G r e q e r , 180 Mont. a t 354, 590 P.2d a t 1124. W e have c a r e f u l l y reviewed t h e e v i d e n c e i n t h i s c a s e and conclude t h a t t h e c o u r t p r o p e r l y r u l e d t h a t Mr. Ridenour s u f f e r e d a n i n j u r y . Our f u n c t i o n i n reviewing t h e s e d e c i s i o n s is o n l y t o d e t e r m i n e whether s u b s t a n t i a l evidence e x i s t s t o s u p p o r t t h e f i n d i n g s and c o n c l u s i o n s , and w e cannot impose our judgment a s t o t h e weight of t h e e v i d e n c e . V i e t s v. Sweet G r a s s County ( 1 9 7 8 ) , 1 7 8 Mont. 337, 583 P.2d 1070. There is no doubt t h a t c l a i m a n t met h i s e v i d e n t i a r y h u r d l e . Af f irmed. W e concur: ~ d 9 0 . ~ 4 Chief J u s t i c e

June 30, 1983

f4f72596-4d20-4b36-a492-d7e189146bb8

BAILEY v DEPT OF HEALTH ENV SC

N/A

82-172

Montana

Montana Supreme Court

N O . 82-172 I N THE SUPREME COURT OF THE STATE OF M O N T A N A 1 9 8 3 ALBERT C . BAILEY, P l a i n t i f f and A p p e l l a n t , V S . MONTANA DEPARTMENT OF HEALTH A N D ENVIRONMENTAL SCIENCES, e t a l . , D e f e n d a n t s a n d R e s p o n d e n t s . Appeal from: D i s t r i c t C o u r t o f t h e F o u r t h J u d i c i a l D i s t r i c t , I n and f o r t h e County o f M i s s o u l a H o n o r a b l e D o u g l a s H a r k i n , J u d g e p r e s i d i n g . C o u n s e l o f R e c o r d : F o r A p p e l l a n t : D a t s o p o u l o s , MacDonald & L i n d , M i s s o u l a , Montana R i c h a r d A . Reep, M i s s o u l a , Montana F o r R e s p o n d e n t s : R o b e r t L . Deschamps, 111, C o u n t y A t t o r n e y , M i s s o u l a , Montana M i c h a e l S c h e s t e d t , Deputy County A t t o r n e y , M i s s o u l a , Montana F r a n k C r o w l e y , H e l e n a , Montana S u b m i t t e d on b r i e f s : F e b r u a r y 2 4 , 1 9 8 3 D e c i d e d : June 2, 1 9 8 3 F i l e d : JUNZ 1983 C l e r k Mr. Justice Daniel J. Shea delivered the Opinion of the Court. Plaintiff Albert Bailey, appeals a Missoula County District Court order denying his application for a writ of mandamus. The trial court ruled that Bailey had not proved he had been given a "blanket approval" to build a trailer park in 1 9 6 8 or in any later years, that he had not exhausted his administrative remedies, and finally, that in any event the five-year statute of limitations (section 27-2-215 MCA) had run on his right to bring a mandamus action. In his appeal Bailey claims that the court was not bound by the statute of limitations in a mandamus action because mandamus is based on equitable considerations; that the court abused its discretion by refusing to apply the doctrine of equitable estoppel against the county and state; that the county took his property without due process of law and denied him equal protection of the law (this issue is raised for the first time on appeal); and finally that the court abused its discretion because Bailey had proved he was entitled to the writ by showing that he was given "blanket approval" in 1 9 6 8 to build a trailer park according to the plans he had then submitted. We affirm. Substantial evidence supports the finding that "blanket approval" was not granted in 1 9 6 8 or during any later years to build the entire trailer park contemplated by Bailey. The trial court further held, and we agree, that Bailey had not exhausted his administrative remedies: he did not proceed through the administrative hierarchy after he was notified that his plans would not be approved. We need not reach the statute of limitations issue, nor the constitutional issues raised for the first time on appeal. In 1968, with the intention of building a trailer park, Bailey purchased two parcels of land in Lolo, Montana. Before Bailey's hank would finance the purchase of the land, Bailey was required to receive assurances from county health officials (acting also as agents of the state) that the plan was suitable for a trailer park. The main controversy in this suit is whether a "blanket approval" for the 1968 plans and all future development was obtained, or whether Bailey was merely assured that his plans were feasible and had conceptual merit. The trial court found in favor of the county and state on this issue. Later, in 1968 Bailey drafted a master plan for his proposed development then covering 11 acres. It included provisions for 96 trailer spaces. He submitted his plan to the County Health Department and they allegedly assisted him in directing the construction of utility and sewage lines. Bailey then began construction on the trailer park, and in September of 1968, he completed construction of 29 spaces and obtained a license to operate the trailer park. After completion of this first phase of the trailer park, Bailey filed two more applications for permits to expand the trailer park. The first, in 1971, was granted after some difficulties, and Bailey added another 30 trailer spaces. The second application for an expansion permit, in 1972, was denied. After this denial of the second request for an expansion permit Bailey made no more formal applications to expand his trailer park but talked intermittently with state and county officials between 1972 and 1975. During these discussions with state and county officials, Bailey was repeatedly told he must submit new plans to demonstrate that any expansion project complied with current health laws and regulations. At one point Bailey tried to rely on the 1968 plans already submitted, only to find that the health officials had lost the plans. Bailey spent three days in government files looking for the plans and finally found them. He did not, however, ever submit any plans that the health officials considered sufficient to determine if a permit should be granted for the second proposed expansion of the trailer park. Furthermore, in 1973, and especially in 1974, Bailey was unequivocally informed that the 1968 plans on file could not be used as a basis for his application for a second expansion permit. Bailey took no action to appeal these decisions through administrative channels. In the fall of 1979, Bailey filed a pro se application - for a writ of mandamus and asked the trial court to issue a peremptory writ compelling the health departments and officials to issue a permit for the expansion of his trailer park. After an evidentiary hearing, the trial court held that Bailey did not prove that the health officials in 1968 had approved not only his present plans but his future plans not yet formulated. The court further held that Bailey had failed to exhaust his administrative remedies by failing to appeal the administrative decisions through the administrative hierarchy, and finally, that the statute of limitations had run on Bailey's claim. Bailey could not hope to prevail unless he proved that the county health officials granted him "blanket approval" of his entire project when he presented his plans in 1968. Absent such evidence Bailey would remain subject to submitting additional plans and obtaining additional approvals. The trial court found that the county health officials did not give "blanket approval" in 1968. Not only does substantial evidence support this finding, Bailey has not specifically challenged this finding as an issue on appeal. Nor does the record support Bailey's repeated contentions that he received blanket approval in 1968 for all present and future plans for trailer park expansion. Bailey concedes that he was required to apply for an expansion permit at each stage of the construction. He further concedes that at least by 1974 the state had denied his requests for expansion permits based on the information it then had to evaluate. If the health departments had granted blanket approval in 1968 for all future expansions, Bailey's later applications for expansions were idle gestures. Because Bailey continued to apply for permits for each phase of construction, he clearly recognized his own duty to present the necessary information to the health departments and the concomitant duties of the health departments to evaluate the material presented. The health departments were required to make informed decisions on each phase, as to whether Bailey's proposed construction complied with health laws. Bailey's application for additional permits demonstrates his knowledge that the health departments must approve all his plans. The health departments were unable to do this when Bailey failed to provide the necessary information. We further affirm the trial court on the ground that Bailey did not exhaust his administrative remedies once he knew that the health officials refused to grant the permits absent his submission of, and their approval of, his updated plans. In 1973 and again in 1974, Bailey was unequivocally informed that the permits could not issue without the resubmission of his plans showing compliance with updated health regulations. Bailey refused to submit additional plans and failed to take action within the agency hierarchy to contest the decisions. Bailey could not sit on his rights and refuse to appeal within the administrative framework, and, six years later commence an action in District Court for the relief that an agency could have provided had Bailey set the gears in motion. The order of the District Court is affirmed. We concur: Chief Justice /

June 2, 1983

7449fae8-53db-49fd-abe2-a93aa858ad08

MARRIAGE OF CARR

N/A

83-002

Montana

Montana Supreme Court

NO. 83-02 IN THE SUPREME COURT OF THE STATE OF MONTANA 1983 IN RE THE briARRIAGE OF WILLIAM RONALD CARR, Petitioner and Appellant, DENISE DEAN CARR, Respondent and Respondent. APPEAL FROM: District Court of the Fourth Judicial District, In and for the County of Missoula, The Honorable James B. Wheelis, Judge presiding. COUNSEL OF RECORD: For Appellant: Tipp, iloven, Skjelset & Frizzell, Missoula, Montana For Respondent: Mulroney, Delaney & Dalby; Mars P, Scott, Missoula, Nontana - - - Submitted on Briefs: May 12, 1983 Decided: August A , 1983 Filed: AUG 4 1 9 8 3 , - . - - - - - . - Clerk Mr. Justice John C. Sheehy delivered the Opinion of the Court. Appellant, William Ronald Carr, husband in a marital dissolution proceeding, appeals from an order amending the judgment entered by the District Court of the Fourth Judicial District, Missoula County. William and Denise were married on January 26, 1963. They have two children; one is a minor, the other is emancipated but living in the family home. The major assets of the marriage include the family home, an investment a.ccount worth over $20,000, William's United States Forest Service retirement pension, and a refund from their 1981 federal and state withholding taxes. Pursuant to the terms of the property settlement agreement William received personal property valued at $3,395; $9,035 from the investment account, one-half of the 1981 tax return valued at $1,010.50; and exclusive right to the retirement pension. Denise received furniture and household goods valued at $7,265; $10,345 from the investment account; and one-half of the 1981 tax refund. The parties further agreed that Denise would retain possession of and maintain the family home until the minor child turns eighteen, or Denise moves from the home or remarries. William is responsible for the monthly mortgage installments, insurance, and taxes on the home. Upon termination of Denise's right to use the home, William will be reimbursed for all principal paid by him from January 1, 1982, with the remainder of the net proceeds to be divided equally between the parties. William is employed by the United States Forest Service and has a net monthly income of $1,980.42. He also sells Provida Food Supplements Dehydrated. and Skin Care Products. He is in good health and his job is secure. Denise was a mother and homemaker for the nineteen years of their marriage. She has no vocational skills, but is currently employed by Teleprompter in Missoula where she earns $3.50 an hour. Her net monthly income, calculated from her 1981 W-2 form, is $696.75. She has high blood pressure, one kidney, and is in need of medical attention. On July 9, 1982, the District Court entered findings of fact and conclusions of law; judgment followed September 8, 1982. The District Court awarded Denise $80 per month maintenance and $200 per month for each minor child. The District Court further ordered William to pay all attorn.ey fees . William moved the District Court to amend its judgment and findings of fact and conclusions of law to reduce the maintenance and child support payments, and eliminate his responsibility for Denise's attorney fees. The District Court reduced only the maintenance payment from $180 per month to $100 per month. Responsibility for the attorney fees was not altered. It is from this amended judgment that William appeals. The issues are: 1. Did the District Court err in awarding maintenance to Denise? 2. Did the District Court err in ordering William to pay Denise's attorney fee? The guidelines for an award of maintenance are set forth in 40-4-203, MCA. The parties were married for nineteen years. During that time Denise was a wife, mother, and a homemaker. She did not acquire the skills or experience necessary to meet the standard of living established during the marriage. It is also clear that her physical health is in doubt. William is able to provide Denise with maintenance while maintaining his established standard of living. Furthermore, both children are living with Denise, but William is only required to pay support for one child. After two days of hearings, the District Court found that Denise required and William could pay $180 per month for maintenance. The District Court later amended that finding and reduced the required payment to $100 per month. The standard of review of the District Court is set forth in Rule 52(a), M.R.Civ.P., as follows: "Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses." We have held that his Court's function is to review the lower court's findings in light of the record and to make certain the findings are not clearly erroneous. Peckenpaugh v. Peckenpaugh (19821, Mont . , 655 P.2d 144, 39 St.Rep. 2132, LeProwse v. LeProwse (1982), Mont. I 646 P.2d 526, 39 St.Rep. 1053; Jensen v. Jensen (1981), Mont . , 629 P.2d 765, 38 St.Rep. 1109. In light of the factors previously stated, we find no clear error by the District Court in requiring the maintenance payments. The second issue is whether the District Court erred in ordering William to pay Denise's attorney fees. Section 40-4-110, MCA, provides: "Costs--attorney's fees. The court from time to time, after considerins the financial resources of both.parties, may orde; a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding under chapters 1 and 4 of this title and for attorney's fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in his name." This Court has held: "Traditionally, a showing of necessity has been a condition precedent to the exercise of the court's discretion to award attorney fees. Whitman v. Whitman (1974), 164 Mont. 124, 519 P.2d 966. But the lower court's discretion in the matter will not be disturbed if substantial evidence is found in the record to support the award." Kaasa v. Kaasa (19791, Mont . , 591 P.2d 1110, 1114, 36 St.Rep. 425, 430. "Here, the trial court was well aware of the parties' financial situations. It did not abuse its discretion in making an award of reasonable attorney fees, based on necessity. Houtchens v. Houtchens (1979), Mont. , 592 P.2d 158, 36 St.Rep. 501, 505.'Tailey v. Bailey (1979), Mont . 1 603 P.2d 259, 261, 36 St.Rep. 2162. In the present case the District Court was provided ample evidence to determine the financial situa.tion of the parties. William has greater earning potential, a much larger salary, a secure pension, and is in good health. Denise, on the other hand, is of doubtful health, does not have an established retirement pension, and does not have as much earning potential as William. Based on these factors the District Court did not abuse its discretion in awarding Denise attorney fees. The judgment of the District Court is a£ firmed. The cause is remanded for a determination of reasonable attorney fees. We concur: / Justices

August 4, 1983

5463ae43-a8e0-4574-a080-b4ffef7f602e

MARRIAGE OF PARENTEAU

N/A

82-437

Montana

Montana Supreme Court

No. 82-437 IN T I - I E SUPREME COURT OF THE STATE OF M O ? S I T A I ? A 1983 IN RE THE MARRIAGE OF LOUISE I. PARENTEAU, Petitioner and Respondent, -vs- MITCHEL J . PARENTEAU Respondent and Appellant. Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone, The Honorable William J. Speare, Judge presiding. Counsel of Record: For Appellant: Jerrold L. Nye, Billings, l4ontana For Respondent: Robert W. Holmstrom, Rillings, Montana Submitted on Briefs: February 3, 1983 Decided: May 31, 1983 Filed: MAY 3 1. 1983 Mr. Justice Fred J. Weber delivered the Opinion of the Court. Mitchel Parenteau (respondent) appeals from the division of marital property by the Thirteenth Judicial District Court, Yellowstone County, in its order granting Louise Parenteau's (petitioner's) petition for dissolution of the pa-rties' second marriage to each other. We affirm the District Court, but remand for modification of the judgment. Respondent raises the following issues for review: 1. Whether it was an abuse of discretion for the District Court to adopt verbatim the findings of fact and conclusions of law of petitioner. 2. Whether the award by the District Court to petitioner of the entire equity in the marital home is supported by the facts at trial and the applicable law. 3. Whether the valuation of personal property awarded to the respondent is supported by the evidence. 4. Whether the respondent is entitled to reimbursement of his contribution during the second marriage to pay off a certain loan taken by petitioner to pay his equity in the marital home from the first divorce of the parties. 5. Failure of the District Court to find and award property divided before trial by stipulation of the parties. The parties were first married in 1959 and divorced in 1976; they remarried each other in 1978 and divorced in 1982. There were no children of either marriage. The family home comprised the bulk of marital assets in 1976 and in 1982. In the 1976 dissolution, the court determined that the marital assets should be equally divided. Respondent was awarded savings and miscellaneous sports equipment, tools, vehicles, basement furniture, and an organ, much of which he brought into his remarriage to petitioner. Petitioner was awarded household goods and furnishings, a vehicle, a stereo and records, in addition to the family home. She brought many of these assets to her remarriage to respondent. Under the provisions of the 1976 decree, petitioner was required to pay respondent $9,950 (one-half the difference in value of assets awarded) in order to obtain ownership of the home. In 1976, she mortgaged the home, and took out an $11,000 loan from the Yellowstone Bank in Laurel. She then paid respondent $9,950, obtaining in return a quitclaim of his interest in the home. In 1978, petitioner still owed the bank $9,268. In 1978, petitioner took out a $20,000 real estate loan from the Yellowstone Bank. Of this amount, $9,268 went to pay off the 1976 loan, and $10,700 was loaned to respondent for payment of a property settlement in his divorce from another woman. In October of 1978, $10,936 from respondent's sale of certain property in Laurel was applied to the $20,000 real estate loan in satisfaction of petitioner's $10,700 loan to him. Shortly after they remarried, the parties legally established joint ownership of their checking account, the house in Laurel previously in petitioner's name, and a two-and-one-half acre parcel with several buildings on it, in the Swan Valley, known as "the Condon property, " previously in respondent's name. The parties disagree as to their purpose in creating joint ownership in the real property. According to petitioner, it was a matter of convenience; according to respondent, they intended that each should have a 50% interest in both properties. During the marriage, respondent made some improvements on the Laurel home, painting and installing new appliances and carpeting; costs for this work came from the parties' joint checking account. For a time the Parenteaus planned to sell the Laurel home and move to the Condon property. With this in mind, they borrowed $22,000 from the bank in May of 1979, paid off the $6,989 owing on the $20,000 real estate loan, and applied the remaining $15,011 to remodeling buildings on the Condon property and upgrading that property. Certain of the costs were paid from the joint checking account. In October of 1980, after the Parenteaus decided to remain in the Laurel home, they sold their Condon property for $19,550. Respondent claims that the property, which was debt-free, had been appraised at $40,000 a few years earlier. (The Parenteaus recognized the loss on their joint tax return.) $9,427 from the sale of the Condon property was applied to the $22,000 bank loan made in 1979; the remainder was spent on a trip to Australia, a vehicle subsequently awarded to the husband, and various expenses paid from the joint checking account. During the marriage, all income and virtually all expenditures, including loan payments, passed through the Parenteaus' joint checking account. Respondent's monthly retirement income of $894.82 (plus $419.25 for petitioner) and petitioner's monthly retirement income amounting to $969.73 (plus $350.05 for respondent) after petitioner's retirement in 1980, were deposited in the joint checking account. In 1982, the parties were again divorced. Trial was held June 1, 1982. At that time, the balance owing on the 1979 real estate loan for $22,000, was about $5,000. Findings of fact and conclusions of law were entered September 10, 1982; judgment was entered September 13, 1982. The District Court found the marital assets amounted to $83,000.00, and divided them as follows: "TO THE WIFE: Assets: "House $57,500.00 1976 Buick 2,175.00 Lowrv Organ 2,000.00 Piano 1,000.00 Stereo 200.00 New television 500.00 Miscellaneous household furniture and household goods 1,900.00 Miscellaneous appliances 500.00 Record collection 350.00 [Microwave oven] [150.00] Collection of National Geographic magazines and antiques received from wife's parents No Value Total Assets $66,275.00 Liabilities: Yellowstone Bank, mortgage on home $ 5,000.00 Net worth of wife $61,275.00 TO THE HUSBAND: 1980 Chevrolet pickup $ 5,650.00 Colorado pickup camper 1,200.00 17 Ft. Larson inboard/outboard boat, trailer and 120 hp Mercury motor 4,000.00 14 Ft. Aluminum boat, trailer and motor 1,500.00 Miscellaneous boating equipment consisting of depth finder, skis life jackets, fishing tackle, et cetera Camera equipment Guns Miscellaneous tools, drills, grinders, lathes, saws, welders, et cetera Metal detector 400.00 Basement furniture consisting of couch, chair and stove 100.00 Net worth of husband $21,725.00" The District Court listed the total value of assets awarded petitioner as $66,275, but awarded her specific assets totaling only $66,125 in value. Because the only marital asset not awarded to either party was the microwa-ve oven valued at $150, we assume that item was meant to be awarded to petitioner. Respondent maintains that the District Court's virtually verbatim adoption of petitioner's proposed findings of fact and conclusions of law amounts to an abuse of discretion. Respondent concedes that where the adopted findings and conclusions are supported by the evidence, they will not be disturbed on appeal. This Court has repeatedly stated its position that findings and conclusions which are sufficiently comprehensive and pertinent to the issues to provide a basis for decision, and which are supported by the evidence, i.e., are not "clearly erroneous" in light of the evidence, will not be overturned simply because the trial court relied upon proposed findings and conclusions submitted by counsel. Kowis v. Kowis (1983), Mont . , 658 P.2d 1084, 1088, 40 St.Rep. 149, 154; In re Marriage of Hunter (1982), Mont. , 639 P.2d 489, 495, 39 St.Rep. 59, 67; In re Marriage of Jensen (19811, Mont . , 631 P.2d 700, 703-04, 38 St.Rep. 1109, 1113. Because the remaining questions raised by petitioner are primarily challenges to the sufficiency of evidence to support valuations and awards of assets, this first question may be resolved by a resolution of the remaining issues. Respondent argues that the District Court abused its discretion in awarding petitioner the entire equity in the family home. He asserts first that Finding of Fact No. VI is "not supported by the clear evidence at trial," and the District Court's conclusion therein establishes no equitable right in petitioner to the entire equity in the Laurel home. Finding of fact No. VI states: "That during the parties' marriage the title to the family home was transferred to their joint names and the Condon property was placed in their joint names; respondent claims that the title to the property was so transferred in connection with an oral antenuptial agreement that they were to each own a 50 per cent interest in the property, however, the petitioner denies that there was any such aareement and has testified that it was done . , merely to keep peace in the family; the Court finds that there - - was no valid antenuptial arrangement agreement and that the transfer was done merely for --- -- - convenience sake." (Emphasis supplied.) In dissolutions of marriage, the award of marital property is not controlled by the name on the title or the source of the asset. Section 40-4-202, MCA establishes the authority of the court to "finally equitably apportion between the parties the property and assets belonging to either or both, however and wherever acquired and whether the title thereto is in the name of the husband or wife or both." See Morse v. Morse (1977), 174 Mont. 541, 571 ~ . 2 d 1147. (Property quitclaimed to husband by wife before dissolution held to be part of marital estate. Vacated on other grounds. 1 Since the age, income, needs, and opportunities for future acquisition of capital by the parties appear to be fairly equal, the most important factor of those listed in section 40-4-202, MCA, and obviously that weighing most heavily in the court's award of assets, is the relative contribution of each spouse to the marital estate. In Finding of Fact No. X, the District Court stated: "The major asset of the parties is the family home which was owned by the wife at the time of the marriage ; that during the marriage her contributions in the form of money to the joint living expenses of the parties exceeded that of the respondent by an amount in excess of $12,000.00 and i . n addition thereto she performed the household duties of cooking, cleaning house, washing, et cetera; that the respondent's contributions in addition to his retirement benefits as herein specified consisted of the proceeds from the sale of the Condon property; however, said proceeds were less than the monies borrowed upon the family home used to complete the improvements on the Condon property and in addition thereto the respondent performed certain minor maintenance upon the family home; having i n mind the assets that each brought -- into the marrlage and the contributions of each to -- -- --- the maintenance of those assets and the acquisition -- of additional assets,eCourt finds the assets of - - the parties should be divided as follows: [List of - property awarded, see infra. 1 " (Emphasis - supplied.) There is ample evidence on the record to support these findings by the trial court. But respondent argues that because his substantial contributions to the joint checking account helped pay off a series of mortgages against the Laurel home, and because his remodeling efforts enhanced the value of that home, it was an abuse of discretion for the District Court to award the entire equity in the Laurel home to petitioner. We do not agree. After the contribution of each party is weighed, any equity the respondent might have in the Laurel home is so insignificant that it does not warrant a reversal. The record supports the District Court's finding. At the time the parties remarried, the petitioner was sole owner of the house, having paid off respondent's equity two years earlier. Thus, petitioner contributed the Laurel house to the marital estate. She also contributed over $12,000 more in her work and retirement earnings than did respondent over the four years of the second marriage. It is true that the $19,550 received for the Condon property was deposited in the joint checking account; but much of that money was spent on the parties' trip to Australia and the purchase of the 1980 pickup and camper awarded to respondent. Furthermore, $15,000 of the $22,000 borrowed against the Laurel home was spent on improving the Condon property. Approximately $5,000 remained for petitioner to pay after the 1982 dissolution. "The standards governing review of a district court's property distribution . are well-settled in Montana. The District Court has far-reaching discretion in making property divisions. Torma v. Torma (1982), Mon t . I 645 P.2d 395, 399, 39 St.Rep. 839, 843; Zell v. Zell (1977), 174 Mont. 216, 220, 570 P.2d 33, 35. "The reviewing court does not substitute its judgment for that of the trial court, and will not alter a judgment unless it finds an abuse of discretion, i.e., that the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice. Torma, 645 P.2d at 399, 39 St.Rep. at 843; Zell, 174 Mont. at 220, 570 P.2d at 35; Creon v. Creon (1981), Mont. , 635 P.2d 1308, 1309, 38 St.Rep. 1828,1830." "[Wlhile a district court, in its discretion, may equally divide the marital assets, section 40-4-202, MCA, does not mandate equal distribution. Martens v. Martens (1981), Mont . , 637 P.2d 523, 526, 38 St.Rep. 2135, 2138; In re Marriage of Aanenson (1979), Mont. , 598 P.2d 1120, 1123, 36 St.Rep. 1525, 1 5 2 8 - Kowis v. Kowis Here, the assets brought to the marriage by petitioner were substantially greater than those contributed by the respondent, and included in the family home; petitioner's contributions during the marriage exceeded respondent's. We find no "substantial injustice" in the award of the entire equity in the Laurel home to petitioner. Respondent next argues that the District Court overvalued certain of the assets awarded him, relying on an unsupported and biased estimation of values submitted by petitioner. He asserts that a pickup camper purchased for $700 was valued at $1,200; that a boat and trailer purchased for $500-600 was valued at $1,500; that another boat and motor valued at $4,000 in 1976 and. only slightly improved was again valued at $4,000; and that tools valued in 1976 at $2,000 and including, in addition, a $275 table saw and "some minor hand tools," were valued in 1982 at $6,100. We note that petitioner testified at some length concerning how she arrived at the figures she did in evaluating the worth of marital assets. The transcript contains the following statements by petitioner: "(2. Now, you've indicated that the value placed for the home is based upon an appraisal, is that correct? A. That's right. "Q. And are the other values which are shown for the vehicles and other items of property your estimation of their value? A. Well, they're my estimation of the value, but in quite a few of them, I did make inquiries; and vehicles, I went to Frontier Chevrolet and got their blue book prices, what they were worth, and I did the same with the boats. I went to Montana Marina and talked to a man there and described them as best I could, and he gave me prices on those, what he thought they would be worth. "Q. Would the same thing be true relative to the guns and tools and the -- A. Yes. The guns, I had a gunsmith look at those, and he had his books -- He had three or four books there, and he looked each one up. "Q. So after having done that, then would I be correct in my understanding that you believe the values which are shown on Petitioner's proposed Exhibit 4, then, is your estimation of the value of the various items of personal property? A. Yes, it is. [Tr. at 12-13] "Q. Did you have somebody else out and and look at [the tools] ? A. No. I made a list of them and - - - - - - - took it to someone else and talked to them, and - - - -- - - - someone -- that knew about tools. I suppose he would have come up if I would have asked him to. [Tr. at 381 "Q. Did you use the blue book values when you came up with that $4,000? [Valuation of Larson boat] A. No, I didn't. I talked to one of the men in the shop, and from my description, he gave me -- And he asked some questions, and I answered them the best I could; and he gave me that, and that sounded like a good estimate to me but he didn't use a book, no. [Tr. at 441" Respondent testified that, although he had not had items appraised, he considered them to have certain values because of purchase price, deterioration or improvement. The standard of review in considering a District Court's resolution of disputed facts was stated in Cameron v. Cameron (1978), 179 Mont. 219, 227, 587 P.2d 939, 944: "Although conflicts may exist in the evidence presented, it is the duty of the trial judge to resolve such conflicts. His findings will not be disturbed on appeal where they are based on substantial though conflicting evidence, unless there is a clear preponderance of evidence against such findings. [Olson v. Westfork Properties, Inc. (1976), 171 Mont. 154, 557 P.2d 821, 823, 33 St.Rep. 11331 : Butte Teachers' Union - v. Board - of Education of School District No. 1, Silver Bow County (1977), Mont., 567 P.2d 51, 53, 34 St.Rep. 726; Rule 52 (a) , M.R.Civ.P. " We do not find a clear preponderance of evidence against those valuations submitted by petitioner. Therefore we will not disturb the District Court's adoption of those values. Respondent maintains that the District Court erred in including in the marital estate certain items of "personal property," such as his guns, tools, boats, and petitioner's household goods, which were brought into the marriage by each party, and whose value was altered little by contributions of either during the marriage. Respondent relies upon this Court's decision in In Re Marriage of Brown (1978), 179 Mont. 417, 587 P.2d 361, and In Re Marriage of Herron (1980), Mont . , 608 P.2d 97, 37 St.Rep. 387. Brown held that where the homemaking contributions of the non-acquiring spouse (wife) were substantial, the award to her of $25,000 of an estate valued at $350,000 or more was inequitable, even though the property was inherited solely by the husband. Herron held that to the extent that the value of marital property acquired by one spouse was not enhanced by contributions of the other spouse, the trial court should not have equally divided those items. Nothing more. The cases do not suggest that the District Court must, on pain of reversal, exclude such property from the marital estate. Rather, the cases relied upon by respondent stand for the proposition stated in Herron that " [ilf none of the value of the property is a product of contribution from the marital effort, the District Court can justifiably find that the non-acquiring spouse has no interest in the property." 608 P.2d at 101, 37 St. Rep at 392. This finding would affect the award of the property, but not its inclusion in the marital estate. As section 40-4-202, MCA, indicates, the equitable distribution of the parties' property in a dissolution proceeding includes "the property and assets belonging to either or both, however and whenever acquired." Furthermore, the District Court did award respondent the - guns, tools and boats, and awarded petitioner the household goods, with the exception of certain basement furniture. We find no error here. Respondent next asserts that he is entitled to reimbursement of $4,630 for his contribution, during the second marriage, to retiring the 1976 loan permitting petitioner to purchase his equity in the Laurel home. He argues that effectively he "has been required to pay his own 1976 divorce settlement." We do not agree. In the first place, the parties owed no financial obligation to each other when they remarried; respondent's equity in the house had been purchased by petitioner in 1976 pursuant to the terms of the first divorce decree. It is true that respondent contributed his retirement income and the proceeds from the sale of the Condon property to the joint checking account, and that payments made on successive refinancing loans against the Laurel home came from that joint account. But what respondent urges here is nothing more nor less than recognition by this Court of respondent's equity in the Laurel home. We have already rejected that argument, finding sufficient evidence to support the District Court's findings that petitioner's significantly greater contribution to the marital estate supports an award to her of full equity in the Laurel home. Finally, respondent claims that because the District Court failed to expressly recognize a stipulation by the parties, he is unable to obtain certain property to which he is entitled. The transcript contains the following statements: " [Counsel for Petitioner] : [Plrior to this time, we've stipulated that [respondent] may have the stove and refrigerator in the basement, as well as the refrigerator in the shop. That's not in issue that I know of. We are prepared to stipulate to it on the record. [Counsel for respondent]: Fine. " The findings and judgment make no reference to this stipulation, but do award respondent basement furniture consisting of couch, chair and stove. It is clear from the transcript that the stipulation included the "refrigerator in the basement as well as the refrigerator in the shop." To the extent that the record indicates agreement by the parties to divide property, the findings and judgment should be amended to include that agreement. We affirm the District Court, but remand for amendment of the findings and judgment as to the final issue onlv. We concur: / Justice Mr. Justice Daniel J. Shea specially concurring: I join in the result but adhere to my opinion that findings and conclusions adopted verbatim by a judge without any supporting indication that the case was independently considered and decided, are, among other things, in violation of Canon 19 of the Canons of Jud.icia1 Ethics. Beyond this, however, a judge owes it to his profession,to the parties, to the lawyers, and to the public, to provide the ind.icia that he rather than the lawyer, has done the necessary work leading to a decision. Verbatim parroting of findings and conclusions, with nothing more, hardly fulfills these duties.

May 31, 1983

a50ad531-1034-4194-9650-30c606465d18

EDWARDS v WALTERS

N/A

82-380

Montana

Montana Supreme Court

No. 82-380 I N T H E SUPREP4E COURT O F T H E STATE O F MONTANA 1983 JAMES E. E D W A R D S AND G E R A L D A. STERNAD, P l a i n t i f f s and Respondents, JAMES B. WALTERS AND ALICE E. FLAGER a s County Treasurer of ?ladison County, Montana, Defendants and Appellants. Appeal from: District Court of t h e F i f t h J u d i c i a l D i s t r i c t , I n and f o r t h e County of I'ladison, The Honorable Frank B l a i r , Judge p r e s i d i n g . Counsel of Record: For Appellants: Jenkins Law Firm; Kelly A. Jenkins argued, Helena, Montana For Respondents: Chester Lloyd Jones argued, V i r g i n i a C i t y , Montana ( C o n s t i t u t i o n a l Question) Hon. PIike Greely , Attorney General, Helena, Yontana Submitted: A p r i l 1 9 , 1983 Decided: June 1 4 , 1983 Clerk Mr. Justice John C. Sheehy delivered the Opinion of the Court. Defendant (Walters) appeals from a summary judgment in the Fifth Judicial District, Madison County; finding void a tax deed to Walters in 1981; declaring plaintiffs (~dwards and Sternad) entitled to redeem and have title to the property sold to Walters; and barring Walters from asserting any claim to the property. Edwards and Sternad are the alleged successors to J & J Enterprises, the partnership taxed on Lot 52 of the Shining Mountain Unit I11 Subdivision. The taxes on the property were delinquent. The County Treasurer of Madison County issued a certificate of tax sale on July 19, 1978. (This certificate was eventually assigned to Walters on May 6, Walters posted the property, advertised in - The Madisonian, the local newspaper and alleges that he sent a certified letter to J & J at its last known address, all more than 60 days prior to his application for tax deed. The property description set out in the complaint is: "Lot No. 52 of the Shining Mountains (Unit I11 Sub- division, the plat of which is of record in the office of the Recorder of Madison County, Montana, in Book 4 of Plats, pages 58-63." The published notice provides: "Notice is hereby given that the undersigned will on the 19th day of July, apply to the county treasurer of Madison County for a tax deed to the following described property, to wit: "Clay Sub-lot 3, 35-4SlW "Amount, $115.20 "S.M. Unit 3, Lot 52, "Amount due, $330.35 " (s) James Walters "(Pub. May 7, 14, 1981) jw" The affidavit of proof of service of notice, required to be submitted to the county treasurer, stated in part: "Notice of Application for Tax Deed on the following described property, to-wit: "Shining Mountains Unit 3, 35, Twsp 45, Rg.lW was served on J & J Enterprises, record owner of said land, by placing a copy of said Notice in a certified letter addressed with the last known mailing address . . . on which date was sixty (60) or more days prior to the date of application for the Tax Deed on said property; 11 . . . Walters did not file a return receipt with the county treasurer to show that a certified letter had been received by Edwards and Sternad. In their complaint, Edwards and Sternad assert that Edwards spoke with Walters on the telephone and that in this conversation Edwards informed Walters that he intended to pay the taxes owing. They further assert that Walters assured them that he would not pursue the tax deed proceedings. Edwards and Sternad did not pay the taxes, they say, in reliance upon Walter's statement. On August 25, 1981, Walters paid $227.95 for taxes then due and received a tax deed to the property. Walters filed notices and affidavits of his claim to tax title. On May 5, 1982, Edwards and Sternad tendered payment of $305.77 for the overdue taxes. On May 7, 1982, the County Treasurer refused the payment. The money was then deposited with the Clerk of Court. On May 10, 1982, Edwards and Sternad filed a complaint against Walters and the Madison County Treasurer. The Treasurer was later dropped from the action. In their complaint Edwards and Sternad allege that the time for redemption of the property had not expired because: (1) the tax deed was wrongfully issued and inadequately noticed, and (2) Edwards and Sternad relied on Walter's statement that he would not seek the tax deed. Edwards and Sternad moved for summary judgment alleging errors in Walter's tax deed application procedure. They also assert that the tax deed curative statute, section 15-18-203, MCA, permits a taking notwithstanding the procedural defects in Edward's application, and so is unconstitutional. Walters failed to file affidavits or a brief in opposition to the motion for summary judgment. The District Court, after hearing arguments of counsel, granted the motion on August 25, 1982. ISSUES 1. Whether the District Court correctly granted summary judgment in favor of Edwards and Sternad upon finding no genuine issue of material fact. 2. Whether the errors and omissions in the tax deed proceeding were sufficient to deny the County Treasurer jurisdiction to issue the tax deed. 3 . Whether the curative statute providing for alternative notice, section 15-18-403, MCA, effectively allows a deprivation of property without due process of law. I. SUMMARY JUDGMENT PROCEDURE. Walters argues the District Court improperly granted summary judgment in this case because, he asserts, there are material questions of fact present in this case. He asserts that Edwards and Sternad are alleged in the complaint to be the current owners and that J & J Enterprises was the only record claimant of adverse interest to Walters for the period involved; but neither Edwards, Sternad or J & J Enterprises is alleged in the complaint as having been one entitled to notice by mail or publication pursuant to sections 15-18-202 (2) , (3) MCA. Section 15-18-202(2), MCA, provides: "Notice of any owner, mortgagee or assignee of mortgagee shall be given by registered or certified letter addressed to such mortgagee or assignee at the post office address of said owner, mortgagee or assignee as disclosed by the mortgage record . . ." J & J Enterprises was the record owner of the property. In his Affidavit of Service of Notice of Application for tax deed Walters claims he sent notice to J & J Enterprises, who was required to receive notice pursuant to the statute. Furthermore, Walters published notice pursuant to section 15-18-202 (3) which provides for notice to unknown owners. These statutes do not require that persons show they are entitled to notice but require notice be provided the record owner; which was done in this case and not contested by Edwards and Sternad. Furthermore, Walters did not file any documents in the District Court to support his contention that there were material questions of fact. Rule 56(e), M.R.Civ.P. provides in part: " . . .When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials in his pleadings." Summary judgment is appropriate when the moving party shows a complete absence of genuine issue of material fact; and when the defendants fail to come forward with evidence of genuine issue of material fact. Willson v. Taylor (1981), Mont . , 634 P.2d 1180, 1184, 38 St.Rep. 1606. - - J & J Enterprises was the owner of record of the real property prior to the issuance of the tax deed. This fact was alleged in the complaint and admitted by Walters in his answer. Edwards and Sternad assert in their complaint that they are the successors in interest to J & J Enterprises. Walters denies this allegation for lack of knowledge but Walters failed to come forward with his own affidavits in dispute of Edward and Sternad's averments. For these reasons, summary judgment was properly granted. 11. ERRORS AND OMISSIONS IN THE TAX DEED PROCEEDINGS. Edwards and Sternad contend the errors in the published notice are: (1) an overstatement of the amount necessary to redeem the property by over $100.00; (2) failure of the notice to give a complete date as to time for redemption (no year); and (3) an incomplete and vague description of the property. They further contend the errors in the Affidavit of Service of Notice of Application for Tax Deed, required to be filed pursuant to section 15-18-204, MCA, are: (1) an insufficient date upon which the certified letter of notice was mailed (no date appeared on the affidavit); (2) an overly broad description which fails to adequately identify the property; (3) no support of proof of service of notice as required by section 15-18-202(1), MCA; and, (4) fails to demonstrate that the information required in a mailed notice was in fact included in the notice as required under section 15-18-202 (1) , MCA. They assert that the documents filed and notice provided by Walters were so fatally defective as to deny the county treasurer jurisdiction to issue the tax deed. Section 15-18-202, MCA, provides: "Notice of application for tax deed. (1) The purchaser of property sold for delinquent taxes or his assignee must, at least 6 0 days previous to the expiration of the time for redemption or at least 60 days before he applies for a deed, serve upon the owner of the property purchased, if known, and upon the person occupying the property, if the said property is occupied, and if the records in the office of the county clerk and recorder show an unreleased mortgage or mortgages upon the property purchased upon the mortgagee or mortgagees named in said mortgage or mortgages or if assigned, upon the assignee or assignees of said mortgage or mortgages, a written notice stating that said property or a portion thereof has been sold for --- delinquent taxes, giving the date of sale, the - - - amount of property sold, the amount for which it - - was s o l z the amount due, and the time when the -- - --- right o f redemption will expire or when the purchaser will apply for a tax deed. The owner of the property - - or the mortgagee or the assignee of said mortgaqee has the ri g ht o f redemption indefinitely, until such notice has been given and -- the deed applied for, upon the payment of fees, -- - - percentages, penalties, and costs required & - law. " (2) Notice - of any owner, mortgagee, or assignee of mortgagee shall be given % registered - or certified letter addressed to such mortgagee or assignee at the post office address of said owner, mortgagee, or assignee as disclosed by the mortgage records in the office of the county clerk and recorder. In case of unoccupied property or a mining claim, such notice must be by registered or certified mail deposited in the post office, addressed to any known owner residing in or outside of said county, with the postage thereon prepaid, at least 60 days before the expiration of the time for redemption or at least 6 0 days before the purchaser applies for such tax deed, in addition to notice to the mortgagee or assignee of mortgagee in the manner and as hereby is provided. "3. In all cases where the post office address of the owner, mortgagee, or assignee is unknown, the applicant shall publish once a week for 2 successive weeks in a newspaper published in the county where the property is situated a notice substantially in the following form: "Notice of Application for Tax Deed "Notice is hereby qiven that the undersiqned will on the day- of , 1 9 , appiy to the county treasurer of county for a tax deed t o the following described property, to wit: " (Describe property) " (Amount due $ Date (Applicant) " (4) The first publication of such notice must be made at least 60 days before the date of redemption or application for said deed. "(5) In all cases due proof of service of notice - in whatever manner given, supported the affidavit required by law, must be filed immediately with the clerk and recorder of the county in which the property is situated and be kept as a permanent file in his office, and such -- proof o f notice when so filed shall be prima facie evidence -- of the sufficiency of the notice." -- Section 15-18-204, MCA, provides: "Affidavit of notice. No deed of the property sold ---- at a delinquent tax sale shall be issued by the - - -- - county treasurer to the purchaser of the property - . . untilthe proof of service of notice of application for tax deed hasbeen f ilerwith the-county clerk ----- and recorder as required -15q8-202. - Such purchaser is entitled to receive the sum of $3 for the service of said notice and the making of said affidavit required by 15-18-202, which sum of $3 must be paid by the redemptioner at the same time and in the samemanner as other costs, percentages, penalties, and fees are paid." When Walters filed his affidavit of proof of service of notice as required by section 15-18-204, MCA, he neglected to state when a certified letter containing the notice was mailed. It merely stated that it was mailed "on which date was sixty (60) or more days prior to the date of application for a Tax Deed on said property." No supporting documents showing due proof of service of notice were filed with the affidavit. This Court has held that: "The requirements of the statutory law must be fully met in order to cut off the right of redemption and where, as here, the record shows a glaring omission to comply with those requirements, the right of redemption is not cut off. The affidavit filed with the county treasurer must be explicit. The county treasurer has no authority to indulge in any presumption with regard thereto. Nothing can be read into it that does not plainly appear therein. The provisions of the statute are mandatory and absolute and any failure to comply with statutory requirements relative to the affidavit of service will void the tax deed subsequently issued." Lowrey v. Garfield County (1949), 122 Mont. 571, 583, 208 P.2d 478, 485. The statute requires that proof of service of notice of application for tax deed be filed in accordance with section 15-18-202, MCA, which was not done in this case. From the record before us it is apparent that the treasurer of Madison County could not have known from the document filed that notice was properly given or given at all. The affidavit is also alleged to contain a faulty property description by omission of the lot number, therefore rendering it insufficient. The affidavit sets out the description as: Shining Mountains, Unit 3, 35, Twsp 4s1 Rg 1W. This court has determined that when the property description is too vague to adequately identify the land in question; the description is fatally defective. Yetter v. Gallatin County (1982) , Mont . , 645 P.2d 941, 39 St.Rep. 905, 907. Walters also published notice of application for tax deed in The Madisonian on May 7 and 14, 1981. In this notice, the taxes declared to be due were overstated by over $100.00, the notice failed to give the year of the application for tax deed. It also contained a vague property description by designating Shining Mountain as S.M. Such a description would not necessarily put one entitled to notice on inquiry and is therefore vague. For validation of his notice procedures Walters relies on section 15-18-205(2), MCA. It provides: "(2) A tax deed executed in the form as provided -------- in this section, when duly acknowledged and proved, -- is prima facie evidence that: - "(a) the property was assessed as required by law; "(b) the property was equalized as required by law; "(c) the taxes were levied in accordance with law; "(dl the taxes were not paid; " (e) notice of tax sale was given and published ---- and property sold at the proper time and place as --- -- - prescribed - law; "(f) the property was not redeemed, and the proper notice of application for deed has been served or posted as required by law; "(g) the person who executed the deed was the proper officer; "(h) where the real estate was sold to pay taxes on personal property, the real estate belonged to the person laible to pay the tax." The errors in the notices and affidavit and Walters' failure to file proof of mailing of a certified letter to J & J Enterprises establish that the necessary proof of notice to establish a prima facie showing of proper notice was lacking. Therefore, the presumption does not become effective. Walters is thereby precluded from using the statute to enforce the tax deed. The effect of these errors and omissions is to deny the county treasurer jurisdiction to issue the tax deed. This Court has stated that: "'The law by its terms, gives to the notice the dignity of process of law, and to deprive him of his property, without giving this notice, is to deprive him of his property without due process of law. The giving of this notice is just as much a prerequisite to the issuance of a tax deed that will bar the right of redemption as the service of a summons is a prerequisite to the entry of a valid judgment.'. . . "Notice . . . is analogous to process in the courts; and it is well known that a judgment, even so solemn a document as it is, is absolutely void unless the defendant has been served with process . . . provided by law. Otherwise he is deprived of his property without due process of law. And a judgment is equally void, where it recites on its face that the defendant has been served with regular process, as any other void judgment, when the judgment roll or the proceedings disclose that the defendant has not been served with process. A judgment of this character is void, absolutely void, and can be stricken down at any time. Lowrey 122 Mont. at 581, 208 P.2d at 484. "The filing of an affidavit which meets with the statutory requirements is jurisdictional. Without such affidavit the treasurer is wholly lacking in power and authority to issue the deed.. . . The statute requiring what notice shall be given and the filing of the affidavit are a limitation upon the power of the county treasurer to issue a tax deed and render void any deed issued by him unless and until the statutory requirements have been fully complied with. His authority to execute the deed must be shown in and appear upon the face of the affidavit. The giving of the notice is jurisdictional and unless the requirement of the law in respect to such notice is complied with and that fact established by the affidavit filed with the county treasurer the tax deed may not legally issue.. . . The legislature may not do away with due process and notice and it is powerless to enact valid legislation exempting a tax deed from attack for failure to comply with the requirements of a jurisdictional nature constituting the necessary prerequisites to the validity of the tax deed." Id at 580, 208 P.2d at 484. The defects in the affidavit of notice of service given to the county treasurer and the defects of the published notice are of such a nature as to preclude the county treasurer from issuing the tax deed for lack of jurisdiction. Walters attempts to argue that actual notice on the part of Edwards and Sternad precludes them from arguing lack of proper notice. When discussing the predecessor to section 15-18-202, MCA, this Court stated: "Some contention is made that actual knowledge of the proceedings by the plaintiff bars him from relief. The record does not disclose that the plaintiff had the knowledge required to be given him by section 2209; and, furthermore, it is the notice given by the applicant, as required by the statute, which is controlling. Therefore there is no merit in this contention." Kerr v. Small (1941), 112 Mont. 490, 494, 117 P.2d 271, 273. Walters is therefore precluded from asserting actual knowledge of Edwards and Sternad as a defense to improper notice procedures under the tax deed statutes. From the foregoing it is apparent that the tax deed issued by the county treasurer is void. Since the deed itself is void we need not address the constitutionality of section 15-18-403, MCA. The summary judgment of the District Court is affirmed in all respects. Q A - Q . % / Justice We Concur: ' b , 4 . ~ 4 Chief Justice I ustices

June 14, 1983

7bae4501-8891-4e62-b6f5-6273085a835c

GUARDIANSHIP OF NELSON

N/A

82-466

Montana

Montana Supreme Court

May 12, 1983

79f466c5-39e9-4c29-949d-7085b67d1343

STATE v GREENWALT

N/A

82-160

Montana

Montana Supreme Court

NO. 82-160 I N T H E SUPREPIE C O U R T OF T H E STATE OF M O N T A N A 1983 STATE OF M O N T A N A , P l a i n t i f f and A p p e l l a n t , DOUG G R E E N W A L T and ROY GREENWALT, Defendants and Respondents. Appeal from: D i s t r i c t Court of 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 , I n and For t h e County of Big Horn Honorable Nat Allen, Judge presidinq. Counsel of Record: For Appellant: Hon. Mike Greely, Attorney General, Helena, Pqontana James M. Scheier, I n t e r n , O f f i c e OF Attorney General argued, Helena, Montana James Seykora, County Attorney, argued, Hardin, llontana For Respondents: Moses Law Firm, B i l l i n q s , Montana Michael Moses argued, B i l l i n g s , Montana -- Submitted: March 2 4 , 1983 Decided. May 26, 1983 F i l e d - Play 26, 1.953 P 3 Mr. Justice Fred J. Weber delivered the Opinion of the Court. Doug Greenwalt and Roy Greenwalt , defendants and respondents, were charged with the crime of theft, a felony. A jury trial was held on September 22-25, 1981, in the Thirteenth Judicial District Court, Big Horn County. On September 24, 1981, the District Court dismissed that part of the information involving the theft of a calf belonging to Nelvett Siemion, an enrolled member of the Crow Tribe. On September 25, 1981, the State, having presented all its evidence, rested, whereupon defendants moved to dismiss the remaining charges for insufficient evidence. The District Court granted defendants' motion, and the jury was dismissed. The State appeals. We affirm the District Court's dismissal of the charge relating to the theft of the Siemion calf. We dismiss that portion of the appeal arising from the dismissal by the District Court of the remaining charges. The following issues are dispositive: I.) Whether double jeopardy prohibitions mandate the dismissal of the State's appeal. 2.) Whether the District Court erred in dismissing the charges relating to the theft of the Siemion calf. On Sunday, November 9, 1980, at approximately 6:00 p.m., as John Siemion Jr., was working on his ranch in Big Horn County, he saw and heard a pickup truck and horse trailer traveling south on nearby Rotten Grass Road. The pickup's lights were on and John was able to see that it was light- colored and had wrap-around tail lights. Approximately five minutes later, John Siemion observed the same pickup and horse trailer traveling back up the same road, heading north. The next morning, Monday, November 10, John Siemion was driving south on Rotten Grass Road. He came across two cows which were running back and forth along a fence in his pasture at Rotten Grass Creek. He noticed that the cows were bawling and that they had tight bags with their udders protruding, indicating that they were lactating. Their appearance and behavior indicated to John Siemion that the cows had been nursing calves and were trying to get out of the pasture to find their missing calves. The cows were branded with the Soap Creek Cattle Company (Soap Creek) brand belonging to P. R. Krone. John Siemion opened a gate and let the cows into an adjacent pasture which belonged to Soap Creek. John Siemion drove further on the road and came across three more cows, whose appearance and behavior was similar to that of the first two cows. Two of these three cows bore Soap Creek's brand and the other bore a brand registered to his sister-in-law, Nelvett Siemion, an enrolled member of the Crow Tribe. There were two spots on the road in which there was horse manure and cattle hoofprints. These appeared to be the spots where the cattle were unloaded from the horse trailer. John Siemion's mother notified Soap Creek, Nelvett Siemion, and and the sheriff's office. That afternoon George Siemion, John Siemion's brother, went to see Doug Greenwalt to discuss the possibility of buying hay from him. While he was at the Greenwalts', George Siemion noticed a light-colored pickup with tires containing an unusual tread design, which was subsequently found to match the design of the tracks left on the road where the cows had been unloaded. He also noticed some weanling calves in the Greenwalt corral. That evening George Siemion notified the Department of Livestock Inspector, Ron Reed. On Tuesday morning, November 11, Inspector Reed met with two sheriff's deputies. They drove to Rotten Grass Creek to examine the area and to see the five cows, then drove to Doug Greenwalt's residence. Doug Greenwalt was driving a tractor when the men arrived. Inspector Reed informed Doug Greenwalt of the five cows that had been unloaded on Rotten Grass Road and mentioned that the tread of the tires on the Greenwalt truck matched those tracks found at Rotten Grass Creek. Inspector Reed asked several times whether he could bring the five cows over to Greenwalts' corral to see if any of the cows and calves would "mother-up" (the instinctive pairing between a cow and her calf would indicate their relationship). Doug Greenwalt motioned for Inspector Reed to join him in the cab of the tractor. He then told Reed that he and his father, Roy Greenwalt, had hauled the five cows up to Rotten Grass Creek and that they had intended to keep the calves, fatten them up, and sell them as payment for the ten or twelve years that Soap Creek cows had been grazing on Greenwalt pastures. Doug Greenwalt removed four of the calves from the corral of about 250 weanling calves, but was unable to locate the fifth. Most Greenwalt calves had ear tags, while the four calves he found did not. The following day, Wednesday, November 12, the five cows were brought to the Greenwalts ' . The four calves mothered up almost immediately; the fifth cow was placed in the weanlings' corral, where a calf mothered up within a few minutes. The cows and calves were removed from the Greenwalts' by Inspector Reed. Doug Greenwalt and Roy Greenwalt were charged with theft of the five calves. During the presentation of the State's case, the District Court granted defendantshotion to dismiss that part of the information charging the Greenwalts with the theft of the calf belonging to Nelvett Siemion, on the grounds that the State lacked authority to prosecute a non-Indian for a crime committed on the reservation against an Indian. At the close of the State's case, the defendants moved for dismissal of the remaining charges on the grounds that there was insufficient evidence to establish that they had exerted "unauthorized control" over the calves. This argument was based upon section 81-4-217, MCA, which provides, in pertinent part: "Retention of trespassing stock. (1) If an animal breaks into an enclosure surrounded by a legal fence or is wrongfully on the premises of another, the owner or occupant of the enclosure or premises may take into his possession the trespassing animal and keep the animal until all damages, together with reasonable charges for keeping and feeding the animal, are paid. The person who takes the animal into his possession shall, within 72 hours after he takes possession, give written notice to the owner or person in charge of the animal, stating that he has taken the animal . . ." Greenwalts were charged with the offense of theft, a felony as defined in section 45-6-301(1)(a), MCA, which provides, in applicable part: "A person commits the offense of theft when he pur~osely or knowingly obtains or exerts unauthorized control over property o f t h e owner and : (a) has the purpose of depriving the owner of the property." The District Court granted defendants' motion and dismissed the remaining charges, as allowed under section 46-16-403, MCA. The State appeals. Defendants maintain that this Court's consideration of the State's appeal would violate their rights against double jeopardy under Article 11, section 25 of the Montana Constitution and under the Fifth Amendment of the United States Constitution. They argue that the appeal must be dismissed. The right of the State to appeal in criminal cases is narrowly limited by section 46-20-103, MCA, which states in pertinent part: "(1) Except as otherwise specifically authorized, the state may not appeal in a criminal case. (2) The state may appeal from any court order or judgment the substantial effect - of which results in 2 - - (a) dismissing a case; (Emphasis supplied.) - - It is true that in form, the District Court's action was a dismissal. But, where, after jeopardy attaches, the substantive effect of the court's action is acquittal, the State has no right of appeal. State v. Hagerud (1977), 174 Mont. 361, 570 P.2d 1131. As this Court noted in State v . Cool (1977), 174 Mont. 99, 101, 568 P.2d 567, 568: "The United States Supreme Court in United States v. Ball, 163 U.S. 662, 16 S.Ct. 1192, 41 L.Ed. 300 -- and Fong Foo v. United States, 369 U.S. 141, 82 S.Ct. 6 7 1 7 7 L.~d.zd 629, emphasized that what constitutes an acquittal is not to be controlled by the form of the judge's action. Rather, this Court must determine whether the ruling of the judge, whatever its label, actually represents a resolution, correct or not, of some or all of the factual elements of the offense charged." When a defendant has been acquitted at trial, he may not be retried on the same offense, even if the legal rulings underlying the acquittal were erroneous. Sanabria v. United States (1978), 437 U.S. 54, 98 S.Ct. 2170, 57 L.Ed.2d 43; Fong Foo v. Uni.ted States (1962), 369 U.S. 141, 82 S.Ct. 671, 7 L.Ed.2d 629. The judgment of acquittal not only bars further prosecution but bars appellate review of the alleged error by the trial court. Sanabria, supra; United States v . art in Linen Supply Co. (1977), 430 U.S. 564, 97 S.Ct. 1349, 51 L.Ed.2d 642. It does not matter whether the judgment of acquittal is based upon a jury verdict of not guilty or a ruling by the court that the evidence is insufficient to convict; the judgment may not be appealed. United States v. Scott (1978), 437 U.S. 82, 98 S.Ct. 2187, 57 L.Ed.2d 65. In State - v. Cool, supra, the trial judge granted defendant's motion for directed verdict of acquittal for insufficient evidence at the close of all evidence, and dismissed the case. The State appealed, and this Court granted defendant's motion to dismiss the appeal on double jeopardy grounds, relying on a statute (R.C.M. 1947 S95-2403) with provisions similar to those in 46-20-103, MCA. The Court stated: "Here the state contends the state of Montana has a statutory right to appeal under section 95-2403(b) (1). It argues the district court's ruling was in fact a dismissal. Defendant argues this was a motion for acquittal and such a motion does not constitute a dismissal of the case as contemplated in section 95-2403(b) (1). "We find no merit in the state's argument in relation to section 95-2403(b) (I), because subsection (b) (1) simply does not apply to the instant fact situation, no matter how the state tortures the language used by the district court. The court very clearly and with precision informed the state in reference to the evidence: 'I am just saying that it's insufficient.' There can be no question from the record before this Court that the district court's dismissal was an acquittal in substance as well as form." 174 Mont. at 101, 568 P.2d at 568. In the case at bar, defendants' motion to dismiss for insufficient evidence was based on their assertion that because of the 72-hour notice rule in section 81-4-217, MCA, the State could not prove a necessary element of the crime-- unauthorized control--regardless of the other evidence it presented. The court replied: "Well it seems to me that it would be silly to let it go to the jury. I would just have to take the verdict away if they would find them guilty. I would have to set it aside. It would never stand UP "Well, let's go in and dismiss the jury." The record contains no order of dismissal, nor does the transcript include the court's statements to the jury upon dismissing them. We find the District Court's dismissal for insufficient evidence was, in substance, an acquittal, a resolution of certain factual elements of the offense charged, and, as such is not appealable. Defendants argue that this conclusion also should be dispositive of the charges relating to the theft of the Siemion calf, since the circumstances surrounding the charges are identical. We do not agree. The Siemion theft charges had been dismissed on other grounds the day before the above charges were dismissed. We decline to extend the District Court's ruling to cover the Siemion theft. 11. The District Court dismissed the charges arising from the alleged theft of the calf belonging to Nelvett Siemion on defendants' motion, ruling that the State lacked authority to prosecute non-Indians for crimes committed on the reservation against Indians. There is no dispute about the facts that Greenwalts are non-Indians, Nelvett Siemion is an enrolled member of the Crow tribe, and the alleged theft occurred on the Crow reservation. We note that double jeopardy prohibitions are not applicable here, where the dismissal was based upon a jurisdictional question rather than a resolution of factual elements of the offense. Numerous United States Supreme Court decisions have distinguished between those dismissals based upon failure of proof, i.e., insufficient evidence, which are conclusive under the double jeopardy cla.use, and those dismissals unrelated to a defendant's guilt or innocence, which do not necessarily preclude appeal by the state or further prosecution. Scott, supra; United States v. Dinitz (1976), 424 U.S. 600, 96 S.Ct. 1075, 47 L.Ed.2d 267, (contains an excellent history and elaboration of the distinction) ; United States v. Sanford (1976), 429 U.S. 14, 97 S.Ct. 20, 50 L.Ed.2d 17. The State makes a valiant argument in support of the State's assertion of concurrent jurisdiction with the federal government over crimes on the reservation committed by non-Indians against Indians. The State points out that tribal courts lack jurisdiction to prosecute non-Indians for crimes committed on the reservation; Oliphant v. Suquamish Indian Tribe (1978), 435 U.S. 191, 98 S.Ct. 1011, 55 L.Ed.2d 209, and that federal authorities decline to prosecute the great majority of those offenses. U.S. COMM'N ON CIVIL RIGHTS, INDIAN TRIBES--A CONTINUING QUEST FOR SURVIVAL 154-55 (1981). The State maintains that while the states are authorized to prosecute non-Indians for crimes against non-Indians on the reservation, see United States v . Antelope (1977), 430 U.S. 641, 97 S.Ct. 1395, 51 L.Ed.2d 701, Indian citizens of the state have little protection against non-Indian criminals on the reservation under the existing circumstances. Finally, the State argues that, dicta aside, there are no specific holdings that the State lacks authority to assert concurrent jurisdiction. We appreciate the State's arguments, but find that the great weight of authority supports the District Court's ruling. In Williams v . United States (1946), 327 U . S . 711, 714, 66 S.Ct. 778, 780, 90 L.Ed 962, 964, the United States Supreme Court stated: "While the laws and courts of the State of Arizona may have jurisdiction over offenses committed on this reservation between persons who are not Indians, the laws and courts of the United States, rather than those of Arizona, have jurisdiction over offenses committed there, as in this case, by one who is not an Indian against one who is an Indian. " The 1982 edition of FELIX S. COHEN'S HANDBOOK OF FEDERAL INDIAN LAW, states at page 353, relying upon Williams: "Criminal offenses by non-Indians against Indians or their property are subject to the Indian Country Crimes Act [18 U.S.C. 5131. The Supreme Court has stated that federal court jurisdiction under this Act is exclusive of state court jurisdiction." See, AMERICAN INDIAN LAWYER TRAINING PROGRAM, INC., JUSTICE - IN INDIAN COUNTRY (1980) 32, and MANUAL OF INDIAN CRIMINAL JURISDICTION (1978 Supp.) 73a; Getches, Rosenfelt and Wilkinson, FEDERAL INDIAN LAW (19791, 388 ("c. Crimes by a Non-Indian Against an Indian: State courts cannot have jurisdiction.") This Court has addressed the matter in dicta in State v. Youpee (1936), 103 Mont. 86, 94, 61 P.2d 832, 835: "We think the general rule well expressed in 21 Corpus Juris, Sections 128 and 130, pages 538 and 539, where it says: 'It is usually held that a state court has no jurisdiction over crimes committed by or against Indians within a reservation, such jurisdiction being in the ~nitea States or the tribal courts; but there are a few decisions, most of them early ones, to the contrary.'" (Emphasis in original.) As noted above, the Oliphant decision in 1978 established that tribal authorities may not prosecute non-Indians. In 1971, the United States Supreme Court discussed the steps necessary to establish state jurisdiction in civil and criminal matters. Kennerly v . District Court of Ninth J.D. of Montana (1971), 400 U.S. 423, 91 S.Ct. 480, 27 ~ . ~ d . 2 d 507. The case arose in Montana, from the Blackfeet tribal council's attempt in 1967 to vest the State with concurrent jurisdiction over civil matters, absent the "affirmative legislative action" by the State as required before 1968 and absent the tribal consent required--thereafter under 25 U.S.C. 51321-26. The Court stated: "Section 406 of the Act, 25 U.S.C. S1326 (1964 ed., Supp. V) , then provides: "'State jurisdiction required pursuant to this subchapter with respect to criminal offenses or civil causes of action, or with respect to both, shall be applicable in Indian country only where the enrolled Indians within the affected area of such Indian country accept such jurisdiction by a majority vote of the adult Indians voting at a special election held for that purpose. The Secretary of the Interior shall call such special election under such rules and regulations as he may prescribe, when requested to do so by the tribal council or other governing body, or by 20 per centum of such enrolled adults.' "We think the meaning of these provisions is clear: the tribal consent that is prerequisite to the assumption of state jurisdiction under the provisions of Title IV of the [Civil Rights Act of 19681 must be manifested by majority vote of the enrolled Indians within the affected area of Indian country. Legislative action by the Tribal Council does not comport with the explicit requirements of the Act." 400 U.S. at 428-29, 91 S.Ct. at 483, 27 L.Ed.2d at 512. See also State ex re1 Flammond v. Flammond (1980) Mont . , 621 P.2d 471, 37 St. Rep. 1991. (A civil action; contains a discussion of the requirement of State or tribal action before the State can assert jurisdiction.) No such tribal consent to the assumption of criminal jurisdiction by the State has been granted by the Crow tribe. It is not for this Court or the State to usurp the function of the tribe. We hold, therefore, that the District Court properly dismissed those charges arising from the alleged theft of the Siemion calf. We affirm the District Court's dismissal of the charge relating to the theft of the Siemion calf. We dismiss that portion of the appeal arising from the dismissal by the District Court of the remaining charges. We concur: 3 ~ ~ 8 . Wd Chief Justice Mr. J u s t i c e John Conway H a r r i s o n d i s s e n t i n g . M y d i s s e n t is d i r e c t e d t o t h e second i s s u e and t h a t is whether t h e D i s t r i c t Court e r r e d i n d i s m i s s i n g charges r e l a t i n g t o t h e t h e f t of t h e Siemion c a l f . A s p r e v i o u s l y noted i n t h e o p i n i o n of t h e m a j o r i t y , N e l v e t t Siemion is an e n r o l l e d member of t h e Crow T r i b e . Not o n l y is she an e n r o l l e d member of t h e Crow T r i b e , b u t she is a c i t i z e n of t h e S t a t e of Montana, and a s a c i t i z e n of t h e S t a t e of Montana, s h e is e n t i t l e d t o a l l C o n s t i t u t i o n a l r i g h t s o t h e r c i t i z e n s enjoy. T h i s Court, i n t h e c a s e of S t a t e ex r e l . Kennerly v. D i s t r i c t Court ( 1 9 7 0 ) , 154 Mont. 488, 466 P.2d 85, i n a m a t t e r concerning c i v i l j u r i s d i c - t i o n , reviewed t h e problem of I n d i a n r i g h t s and t h e e f f e c t f e d e r a l and s t a t e j u r i s d i c t i o n a l problems have had upon our I n d i a n c i t i z e n s . While t h a t case i n v o l v e s a c i v i l m a t t e r , much of which was s a i d t h e r e i n , it is a p p l i c a b l e h e r e , even though t h e United S t a t e s Supreme Court reversed our d e c i s i o n on a t e c h n i c a l m a t t e r of approval of I n d i a n o r d i n a n c e s by t h e Congress. Some of what we s a i d i n E n n g r l y is c e r t a i n l y a p p l i c a b l e h e r e and it is i m p o r t a n t t h a t t h e Court c o n s i d e r t h e r i g h t of an I n d i a n c i t i z e n i n a c r i m i n a l m a t t e r such a s we have b e f o r e us. I n - Kennerly w e noted t h a t t h e j u r i s d i c t i o n problem a r i s i n g from c i v i l and c r i m i n a l l e g a l r e l a t i o n s h i p s between I n d i a n s and non-Indians, has been b e f o r e t h i s Court s i n c e s t a t e h o o d . With some 25,000 p l u s I n d i a n c i t i z e n s l i v i n g on or near one of seven I n d i a n R e s e r v a t i o n s i n t h e s t a t e , it is understandable t h a t t h e problem is n o t new; however, because of t h e d u a l i t y of t h e I n d i a n ' s l e g a l s t a t u s , each case must be considered i n l i g h t of b o t h s t a t e and f e d e r a l r e l a t i o n s h i p s . I n d i a n s , r e s i d e n t i n Montana, whether they a r e f u l l - b l o o d or p a r t i a l - b l o o d , a l l o t t e d or n o t a l l o t t e d , domicile on t h e r e s e r - v a t i o n or o f f of it, of one t r i b e or a n o t h e r , o r whatever t h e i r s t a t u s , a r e c i t i z e n s of t h e S t a t e of Montana. They a r e e n t i t l e d t o t h e p r o t e c t i o n of our laws and a r e r e s p o n s i b l e t o our laws. They a r e e n t i t l e d t o r e g i s t e r t o v o t e and many do. They a r e e n t i t l e d t o hold p u b l i c o f f i c e , and some do. They v o t e i n goodly numbers f o r o f f i c e of judge of t h e D i s t r i c t Court and f o r t h e j u s t i c e s of t h i s Court. To now h o l d , a s we do i n t h e m a j o r i t y o p i n i o n , t h a t an I n d i a n c i t i z e n , who r e s i d e s on a r e s e r v a t i o n , who h a s no p r o t e c t i o n from t h e f e d e r a l law on t h a t r e s e r v a t i o n concerning t h e s t e a l i n g of one of h i s head of c a t t l e , is not e n t i t l e d t o t h e p r o t e c t i o n of t h i s Court, is, i n m y o p i n i o n , d e p r i v i n g one of our c i t i z e n s t h e equal p r o t e c t i o n of t h e laws. A r t i c l e 11, S e c t i o n 16 of t h e 1972 C o n s t i t u t i o n p r o v i d e s : "The a d m i n i s t r a t i o n of j u s t i c e . C o u r t ' s of j u s t i c e s h a l l be open t o e v e r y p e r s o n , and speedy remedy a f f o r d e d f o r e v e r y i n j u r y of p e r s o n , p r o p e r t y , o r c h a r a c t e r . No person s h a l l be deprived of h i s f u l l l e g a l r e d r e s s f o r i n j u r y i n c u r r e d f o r employment f o r which a n o t h e r person may be l i a b l e e x c e p t a s t o f e l l o w employees and h i s immediate employer who h i r e d him i f such immediate employer pro- v i d e s coverage under Workers' Compensation laws of t h i s S t a t e . R i g h t and j u s t i c e s h a l l b e administered without s a l e , d e n i a l , o r d e l a y . " By holding a s we do, we a r e d i s e n f r a n c h i s i n g an I n d i a n citi- zen l i v i n g w i t h i n t h e e x t e r n a l boundaries of an I n d i a n r e s e r - v a t i o n . W e a r e c l o s i n g our C o u r t s t o a l a r g e number of c i t i z e n s of I n d i a n h e r i t a g e who l i v e on a r e s e r v a t i o n . W e a r e denying p r o t e c t i o n from t h e c r i m i n a l element of t h e s t a t e who go upon r e s e r v a t i o n s and d e p r i v e I n d i a n c i t i z e n s of t h e i r p r o p e r t y . Long ago, i n 1952, J u s t i c e Angstman, i n o p i n i o n Bonnet v. Seekins ( 1 9 5 2 ) , 126 Mont. 24, 243 P.2d 317, held t h a t t h e c o u r t s of t h i s S t a t e a r e open t o c i t i z e n ' s of I n d i a n e x t r a c t i o n . Today, we a r e denying one of t h o s e c i t i z e n s a r i g h t t o come t o Court i n a cri- minal m a t t e r . Equal p r o t e c t i o n of t h e laws r e q u i r e s t h a t a l l persons be t r e a t e d a l i k e under l i k e c i r c u m s t a n c e s . B i l l i n g s Associated Plumbing, Heating & Cooling C o n t r a c t o r s v. S t a t e Board of Plumbers ( 1 9 7 9 ) , Mont . --- , 602 P.2d 597, 36 St.Rep. 1996, Montana' C o n s t i t u t i o n o f f e r s g r e a t e r p r o t e c t i o n t o its c i t i z e n t h a n t h e United S t a t e s Federal C o n s t i t u t i o n and t h e s e p r o t e c t i o n s should go t o our I n d i a n c i t i z e n s a s well a s non-Indians. I would f i n d t h a t t h e r e is j u r i s d i c t i o n i n t h i s m a t t e r w i t h r e l a t i o n t o a t h e f t by a non-Indian of a c a l f of a I n d i a n c i t i z e n and would remand t h e a c t i o n t o the D i s t r i c t Court f o r t r i a l . I L L W , Justice I concur in the foregoing dissent. &k

May 26, 1983

d4a91d4c-578a-41f3-86b2-03eec488fcc1

NORTHWESTERN UNION TRUST CO v WOR

N/A

82-521

Montana

Montana Supreme Court

NO. 82-521 I N THE SUPREME C O U R T O F T H E STATE O F M O N T A N A 1983 NORTHWESTERN UNION TRUST CO., Personal Representative of t h e E s t a t e of CBRIST WORM, SR., Deceased, P l a i n t i f f and Appellant, BEN WORM AND DORIT WORhI, Defendants and Respondents. Appeal from: D i s t r i c t Court of 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 , I n and f o r t h e County of Treasure, The Honorable William J. Speare, Judge p r e s i d i n g . Counsel of Record: For Appellant: Keefer, Roybal, Hanson, Stacey & J a r u s s i ; Gene R. J a r u s s i , B i l l i n g s , Montana Bruce E. Lee, co-counsel, B i l l i n g s , Montana For Respondents: William F. Fteisburqer, Forsyth, Montana I-I. D. Euelow, M i l e s C i t y , Pilontana Submitted on B r i e f s : March 25, 1983 Decided: May 1 9 , 1983 F i l e d : MAY 1 9 1983 Clerk Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e C o u r t . Northwestern Union T r u s t Company b r o u g h t t h i s a c t i o n t o set a s i d e a recorded deed which p l a c e d t i t l e t o r e a l p r o p e r t y l o c a t e d i n T r e a s u r e County i n t o d e f e n d a n t s ' names. Judgment was e n t e r e d upon a j u r y v e r d i c t i n f a v o r of d e f e n d a n t s and t h e T r u s t Company a p p e a l s . I n t h e l a t e 1 9 4 0 1 s , C h r i s t Worm purchased two p i e c e s of pro- p e r t y i n T r e a s u r e County known a s t h e "Home P l a c e " and t h e "South P l a c e . " On December 28, 1960, C h r i s t and Helen Worm, and t h e i r s o n and daughter-in-law, Ben and D o r i t Worm, executed a $12,000 n o t e p a y a b l e t o t h e F e d e r a l Land Bank of Spokane, a f t e r r e c e i v i n g a $12,000 l o a n . I n a d d i t i o n , t h e Worms executed a F e d e r a l Farm Loan A m o r t i z a t i o n Mortgage on t h e Home P l a c e and t h e S o u t h P l a c e . The n o t e was t o be p a i d i n twenty a n n u a l i n s t a l l m e n t s of $1,046.22. On March 31, 1961, Ben and D o r i t e n t e r e d i n t o a c o n t r a c t f o r deed w i t h C h r i s t and H e l e n , t o purchase t h e Home P l a c e and t h e S o u t h P l a c e . The p u r c h a s e p r i c e on t h e c o n t r a c t was $24,000. Ben and D o r i t agreed t o pay t h e $12,000 n o t e t o t h e F e d e r a l Land Bank and a n o t h e r $12,000 t o C h r i s t and Helen d i r e c t l y w i t h 1 p e r - c e n t annual i n t e r e s t . S i m u l t a n e o u s l y w i t h t h e e x e c u t i o n of t h e c o n t r a c t , C h r i s t and Helen executed a w a r r a n t y deed f o r t h e Home P l a c e and t h e South P l a c e t o Ben and D o r i t . C h r i s t k e p t p o s s e s s i o n of t h e w a r r a n t y deed t o be d e l i v e r e d t o Ben and D o r i t upon completion of t h e c o n t r a c t . Ben t e s t i f i e d beginning i n 1961 and e v e r y y e a r t h e r e a f t e r u n t i l 1973 he p a i d C h r i s t enough money t o cover t h e F e d e r a l Land Bank mortgage and p a i d C h r i s t a t l e a s t $1,000 a n n u a l l y due on t h e c o n t r a c t . Ben a l s o p a i d C h r i s t $5,000 i n 1974 and $7,000 i n 1975. Ben t e s t i f i e d he had t h e r e f o r e p a i d o f f t h e e n t i r e c o n t r a c t w i t h t h e f i n a l payment i n 1975. I n 1965, Ben and D o r i t f i l e d a p e t i t i o n f o r bankruptcy. The p e t i t i o n d i d n o t l i s t Ben's e q u i t y i n t h e farm as an asset, nor d i d t h e p e t i t i o n list t h e n o t e payable t o t h e Federal Land Bank a s a c l a i m a g a i n s t t h e bankruptcy e s t a t e . A f t e r t h e bankruptcy, Ben, D o r i t , and t h e i r c h i l d r e n continued t o l i v e and work on t h e farm. From 1967 through 1973 Ben and/or C h r i s t o b t a i n e d annual f i n a n c i n g from t h e Midland P r o d u c t i o n C r e d i t A s s o c i a t i o n (PCA). To o b t a i n f i n a n c i n g , t h e d e b t o r must complete and s i g n a finan- c i a l s t a t e m e n t , l o a n a p p l i c a t i o n s , and s e c u r i t y agreements. I n t h o s e y e a r s Ben o b t a i n e d t h e f i n a n c i n g , he s t a t e d on t h e s e c u r i t y agreements t h a t he was o p e r a t i n g t h e farm a s a lessee. I n those y e a r s C h r i s t o b t a i n e d t h e f i n a n c i n g , he s t a t e d on t h e s e c u r i t y agreements t h a t he was o p e r a t i n g t h e farm as t h e owner. Northwestern Union introduced i n t o evidence checks showing payments t o t h e F e d e r a l Land Bank f o r t h e y e a r s 1966, 1968, 1969, 1970, 1975, 1976, and 1977. Each check is drawn upon C h r i s t ' s a c c o u n t and signed by C h r i s t . Ben t e s t i f i e d he paid c a s h t o C h r i s t who would t h e n make t h e n e c e s s a r y payments t o t h e Land Bank. I n A p r i l 1975, Ben t e s t i f i e d C h r i s t gave him t h e warranty deed s t a t i n g Ben had f u l f i l l e d h i s o b l i g a t i o n on t h e c o n t r a c t . D o r i t Worm t e s t i f i e d she was p r e s e n t when t h e deed was exchanged. Two p e r s o n s , S h i r l y Cunningham and C h a r l e s B l y t h e , t e s t i f i e d Ben had p o s s e s s i o n of t h e deed i n 1975 and showed t h e deed t o them. I n February 1977, D o r i t Worm f i l e d a p e t i t i o n f o r d i s s o l u - t i o n of her marriage t o Ben Worm. Paragraph V I I I s t a t e s t h e par- t i e s , "have accumulated no p e r s o n a l o r r e a l p r o p e r t y . " I n 1978, C h r i s t l e a s e d t h e Home P l a c e and t h e South P l a c e t o Harold Zent Farms, I n c . I n March 1980, C h r i s t l e a s e d t h e Home P l a c e and t h e South P l a c e t o Robert DeCock and James DeCock. Ben Worm was n o t a p a r t y t o t h e l e a s e s . Dawn Worm, Ben's d a u g h t e r , t e s t i f i e d Ben gave h e r t h e deed f o r s a f e k e e p i n g and t h a t she r e t u r n e d t h e deed t o Ben near t h e end of 1980 o r t h e beginning of 1981. Helen Worm t e s t i f i e d Ben found what she thought was t h e deed i n 1981 w h i l e he was h e l p i n g h e r move a m a t t r e s s i n C h r i s t ' s home. Ben recorded t h e deed a t t h e T r e a s u r e County C l e r k and R e c o r d e r ' s O f f i c e i n November 1981. C h r i s t died on November 1 4 , 1981. I n a W i l l he executed J u n e 3 , 1975, C h r i s t d e v i s e d one-third of a l l h i s r e a l p r o p e r t y t o Helen Worm; t w o - t h i r d s of t h e Home P l a c e t o James J a c o b Worm; and t w o - t h i r d s of t h e South P l a c e to Ben's c h i l d r e n , Ben C h r i s t Worm and C h r i s t i a n Willie Worm. The W i l l s t a t e s , " I am l e a v i n g t h e 'South P l a c e ' t o my son BENJAMIN'S CHILDREN a t h i s r e q u e s t so t h a t he may n o t s e l l o r encumber t h e same by r e a s o n of h i s a d m i t t e d weaknesses." Northwestern Union T r u s t Company was a p p o i n t e d p e r s o n a l r e p r e s e n t a t i v e of C h r i s t ' s e s t a t e . Northwestern Union brought t h i s a c t i o n t o s e t a s i d e t h e deed t h a t Ben recorded p l a c i n g t i t l e t o t h e Home P l a c e and t h e South P l a c e i n h i s and D o r i t ' s name. A f t e r a j u r y t r i a l i n t h e D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l District , T r e a s u r e County, t h e j u r y r e t u r n e d a v e r d i c t i n f a v o r of Ben and D o r i t Worm. Northwestern Union moved f o r a new t r i a l which t h e D i s t r i c t Court denied and t h i s appeal followed. The i s s u e s r a i s e d on appeal a r e a s f o l l o w s : 1. Whether t h e j u r y v e r d i c t was supported by s u b s t a n t i a l c r e d i b l e evidence; 2. Whether it was e r r o r t o exclude t h e video testimony of a t t o r n e y , Richard W. Anderson, who prepared t h e bankruptcy p e t i - t i o n f o r Ben and D o r i t i n 1965; 3 . Whether it was e r r o r t o i n s t r u c t t h e j u r y t h a t t h e y could f i n d t h a t C h r i s t and Helen Worm made a g i f t of t h e r e a l p r o p e r t y t o Ben and D o r i t Worm; 4 . Whether it was e r r o r t o r e f u s e t h e p l a i n t i f f ' s o f f e r e d i n s t r u c t i o n on mutual c a n c e l l a t i o n of a c o n t r a c t . W e w i l l f i r s t d e a l w i t h i s s u e number f o u r . P l a i n t i f f ' s o f f e r e d t h e f o l l o w i n g i n s t r u c t i o n on mutual c a n c e l l a t i o n of a c o n t r a c t : "You a r e i n s t r u c t e d t h a t t h e p a r t i e s t o a c o n t r a c t may t e r m i n a t e it a t any time by mutual c o n s e n t . The e f f e c t is t o r e l i e v e t h e p a r t i e s from going forward under t h e c o n t r a c t . T h i s t e r m i n a t i o n may be o r a l l y done, and t h e f a c t of its having been done may be e s t a b l i s h e d by e v i d e n c e of t h e a c t s and d e c l a r a t i o n of t h e p a r t i e s ." P l a i n t i f f ' s contend t h e District Court e r r e d i n r e f u s i n g t o g i v e t h i s i n s t r u c t i o n t o t h e jury. W e a g r e e . The r u l e of law s t a t e d i n t h e above i n s t r u c t i o n comes from Eggers v. General R e f r i g e r a t i o n Co. ( 1 9 4 9 ) , 1 2 3 Mont. 205, 219, 210 P.2d 636: "The p a r t i e s t o t h e e x e c u t o r y w r i t t e n agreement were p r i v i l e g e d t o t e r m i n a t e it a t any time by mutual c o n s e n t i n d e p e n d e n t l y of a n y e x p r e s s agreement so p r o v i d i n g and it is i m m a t e r i a l whether such t e r m i n a t i o n be charac- t e r i z e d an abandonment, c a n c e l l a t i o n , mutual r e s c i s s i o n o r waiver. The e f f e c t is t h e same -- t o r e l i e v e t h e p a r t i e s from going forward under t h e w r i t t e n i n s t r u m e n t , and t h i s may be accomplished by p a r o l , and t h e f a c t s of its having been done e s t a b l i s h e d by e v i d e n c e of t h e a c t s and d e c l a r a t i o n s of t h e p a r t i e s . " T h i s r u l e o r i g i n a t e s from K e s t e r v. Nelson ( 1 9 3 2 ) , 92 Mont. 69, 1 0 P.2d 379, and h a s s i n c e been s p e c i f i c a l l y c i t e d i n Small v. Coca-Cola B o t t l i n g Co. ( 1 9 5 8 ) , 134 Mont. 168, 328 P.2d 124, and West River Equipment Co. v. Holzworth C o n s t r u c t i o n Co. ( 1 9 5 9 ) , 134 Mont. 582, 335 P.2d 298. I n S t a n d a r d I n s u r a n c e Co. v. S t u r d e v a n t ( 1 9 7 7 ) , 1 7 3 Mont. 23, 27, 566 P.2d 52, t h i s Court s t a t e d : "Termination of a c o n t r a c t by mutual c o n s e n t is a q u e s t i o n of f a c t f o r t h e d i s t r i c t c o u r t . " And i n Murphy v. Redland, B e r t h e l s o n & S i d n e y L i v e s t o c k ( 1 9 7 8 ) , 178 Mont. 296, 306, 583 P.2d 1049, t h i s Court s t a t e d : "A c o n t r a c t may be ter- minated by t h e p a r t i e s , b u t o n l y by t h e mutual c o n s e n t of a l l t h e p a r t i e s . " P l a i n t i f f s p l e d i n t h e i r c o m p l a i n t , t h a t t h e c o n t r a c t had been t e r m i n a t e d and i n t h e i r t r i a l memorandum s t a t e d t h e c o n t r a c t w a s c a n c e l l e d by mutual c o n s e n t of t h e p a r t i e s . Helen Worm t e s t i f i e d t h e c o n t r a c t was t e r m i n a t e d by t h e mutual c o n s e n t of t h e p a r t i e s when Ben f i l e d a p e t i t i o n f o r bankruptcy i n 1965. P l a i n t i f f s i n t r o d u c e d e v i d e n c e which showed Ben d i d not claim ownership of t h e farm on t h e bankruptcy p e t i t i o n , l o a n a p p l i c a - t i o n s , l e a s e agreements and D o r i t ' s p e t i t i o n f o r d i s s o l u t i o n of m a r r i a g e . There is no q u e s t i o n p l a i n t i f f ' s c a s e r e s t e d upon t h e i s s u e of mutual c a n c e l l a t i o n of t h e c o n t r a c t . A p a r t y h a s a r i g h t t o have i n s t r u c t i o n s g i v e n which a r e a d a p t a b l e t o h i s t h e o r y of t h e c a s e . Williams v. Montana N a t i o n a l Bank of Bozeman ( 1 9 7 5 ) , 167 Mont. 24, 534 P.2d 1247, 1250. Here, r e f u s a l t o i n s t r u c t on mutual c a n c e l l a t i o n of t h e c o n t r a c t c o n s t i t u t e s r e v e r s i b l e e r r o r . D e f e n d a n t ' s argue s i n c e mutual c a n c e l l a t i o n of t h e c o n t r a c t was n o t l i s t e d a s an i s s u e i n t h e p r e t r i a l o r d e r , p l a i n t i f f s can- n o t r a i s e t h i s i s s u e on a p p e a l . Defendants r e l y on Rule 1 6 , M.R.Civ.P., claiming t h e p r e t r i a l o r d e r , "when e n t e r e d c o n t r o l s t h e subsequent c o u r s e of t h e a c t i o n , u n l e s s modified a t t h e t r i a l t o p r e v e n t m a n i f e s t i n j u s t i c e ." However, Rule 15 ( b ) , M.R.Civ. P., s t a t e s : "When i s s u e s n o t r a i s e d by t h e p l e a d i n g s a r e t r i e d by e x p r e s s o r implied c o n s e n t of t h e p a r t i e s , t h e y s h a l l be t r e a t e d i n a l l r e s p e c t s a s i f t h e y had been r a i s e d i n t h e p l e a d i n g s . Such amendment of t h e p l e a d i n g s a s may be n e c e s s a r y t o cause them t o conform t o t h e evi- dence and t o r a i s e t h e s e i s s u e s may be made upon motion of any p a r t y a t any time, even a f t e r judgment; b u t f a i l u r e t o so amend does n o t a f f e c t t h e r e s u l t of t h e t r i a l of t h e s e i s s u e s . " W e f i n d h e r e , t h e i s s u e of mutual c o n s e n t was r a i s e d a t t h e t r i a l and t h u s was an i s s u e f o r c o n s i d e r a t i o n by t h e jury. W e do n o t a g r e e w i t h d e f e n d a n t ' s p o s i t i o n t h a t t h i s i s s u e was waived a t t h e t r i a l and not reviewable by t h i s Court. I n summation, we w i l l b r i e f l y comment on i s s u e s number two and t h r e e . W e do n o t f i n d it n e c e s s a r y t o d e t e r m i n e whether it was e r r o r t o exclude t h e video testimony of Richard Anderson a s h e was i n t e n d e d a s a r e b u t t a l w i t n e s s , not l i s t e d on t h e pre- t r i a l o r d e r . On r e t r i a l , p l a i n t i f f s can t a k e t h e n e c e s s a r y a c t i o n t o p r e s e n t t h e i r evidence concerning t h e bankruptcy p e t i - t i o n and c a l l t h e proper w i t n e s s o r w i t n e s s e s . P l a i n t i f f s con- t e n d it was e r r o r f o r t h e D i s t r i c t Court t o i n s t r u c t t h e j u r y t h a t t h e y could f i n d C h r i s t had g i f t e d t h e p r o p e r t y t o Ben and D o r i t . Whether t h e r e was a g i f t was l i s t e d a s an i s s u e i n t h e p r e t r i a l o r d e r . A s s t a t e d above, a p a r t y h a s t h e r i g h t t o have i n s t r u c t i o n s given which a r e a d a p t a b l e t o h i s t h e o r y of t h e c a s e . W e f i n d no e r r o r i n t h e i n s t r u c t i o n . Judgment is r e v e r s e d and t h e c a s e is remanded f o r r e t r i a l . I J u s t i c e W e concur: 3d~A&hQq Chief J u s t i c e

May 19, 1983

3b5b9dd6-30bd-4da3-8ffc-06014b7afaf3

MCNABB v NORINE

N/A

82-296

Montana

Montana Supreme Court

No. 32-296 IN THE SUFREllE COURT OF THE STATE OF ! ' 4 0 I J T A l i A 1983 ;.lURL h. j v l c l \ J A R B b JOAN McNABB , Plaintiffs and Respondents, GOLD15 NOKIWE and ROD AIiDERSEN, doing business as TOWN COUNTRY REALTY, Defendants and Appellants. Appeal from: District Court of the Eighteenth Judicial District, In and for the county of Gallatin, The Honorable W. W. Lessley, Judge presiding. Counsel of Record: For Appellants: Landoe, Brown Law Firm; Jskn Xomner argued, Bozeman, Montana For Respondents: Morrow, Sedivy, Olson & Eck; Edmund Sedivy argued, Bozeman, Montana Submitted: January 18, 1983 Decided : June 9, 1983 Filed: 4UN 9 1 9 8 3 -. Clerk Mr. Justice John C. Sheehy delivered the Opinion of the Court. Goldie Norine and Rod Anderson appeal from a judgment of the District Court, Eighteenth Judicial District, Ga.llatin County, in favor of the plaintiffs, based on a jury verdict of $45,000 in favor of the McNabbs. We affirm as to Goldie Norine and reverse as to Rod Anderson. The issues in this case are these: 1. The legal sufficiency of a memorandum signed by Goldie Norine to establish an oral agreement to buy real property from the McNabbs. 2. The sufficiency of the evidence to support the judgment against Rod Anderson. 3. The sufficiency of the evidence to support the damages of $45,000. In the fall of 1978, Goldie Norine and Rod Anderson had been acting as real estate agents for Murl and Joan McNabb, attempting to locate farm property larger than the 15 acre place McNabbs were then living on. There is a dispute in the evidence as to the nature of the relationship between Rod Anderson and Town and Country Real Estate, the realtor firm involved in this ca.se. Both Goldie Norine and Rod Anderson claimed that Goldie was the sole proprietor during the incidents here involved. At the time of the trial, Rod Anderson admitted to being the sole owner of Town and Country Real Estate. While they were dealing with the McNabbs, the advertising for the firm, including stationery, made no distinction and from such it appeared that Goldie Norine and Rod Anderson were doing business together as Town and Country Real Estate. At any rate, Rod Anderson prepared on separate occasions two buy-sell proposals for the McNabbs to purchase a farm near Livingston, Montana, known as the Branger Place. Murl McNabb testified that he had told the realtors that he would have to sell his farm property (the Kelly Canyon place) in order to complete the purchase of another piece of real estate. In the second buy-sell agreement made out by Rod Anderson for the Branger Place, it was proposed that the McNabbs simply trade the Kelly Canyon property as a downpayment. Branger refused to accept this proposal and the deal fell through. In early 1979, Goldie Norine showed the McNabbs the Flikkema Farm, and prepared an initial buy-sell agreement dated February 7, 1979. The proposed buy-sell called for a purchase price of $300,000 with $85,000 to be paid down. The proposal included a statement "earnest monies refunded if purchaser cannot sell his property." The buy-sell was signed by the McNa.bbs but not accepted by the Flikkemas. Goldie Norine prepared a second buy-sell agreement at the request of the McNabbs, but nothing came of the second proposal. A third buy-sell agreement was prepared by the realtors, typed by Rod Anderson, whereby the purchase price to the Flikkemas was to be $300,000, with $20,000 downpayment, and $65,000 to be paid on or before June 20, 1979. This buy-sell agreement was never signed by either purchasers or sellers, but it contained the terms of a final contract for deed signed by both parties on March 5, 1979. It was admitted by Goldie Norine that the reason the downpayment monies were to be made in two payments was to allow her time to sell the Kelly Canyon property on behalf of the McNabbs. The first portion of the downpayment, $20,000, the McNabbs borrowed from First Security Bank of Bozeman. The McNabbs claimed during the trial, and under the jury verdict we must accept, that the McNabbs had made it clear to the realtors Goldie Norine and Rod Anderson that the Kelly Canyon property would have to be sold before the McNabbs could complete the purchase on the Flikkema place or any other farm. The McNabbs also testified that before the signing of the Flikkema contract for deed, Goldie Norine promised the McNabbs that if they would go ahead and buy the Flikkema place, she would either sell the Kelly Canyon property for them or buy it herself. The McNabbs claimed that based upon these promises, they signed the Flikkema contract for deed. Thereafter the realtors received a commission of $12,000 from the Flikkemas with Goldie Norine receiving one-half and Rod Anderson receiving the other half of the commission. Later a formal listing agreement was prepared by Goldie Norine authorizing Town and County Real Estate to sell the Kelly Canyon property. The listing price was set at $106,000, apparently to allow the realtors to receive a commission over and above the expected sales price. Nothing materialized, however, from the exclusive listing, and the Kelly Canyon property remained unsold. As the deadline for the $65,000 payment to Flikkemas drew near, at the request of McNabbs, Goldie Norine delivered to McNabbs a written memorandum on Town and Country Real Estate stationery stating: "I will buy Murl property for the appraised value which will run in the $90,000 approx. as soon as financing is available within the next two weeks. I s / Mrs. Goldie Norine" Goldie Norine testified that she fully intended to perform the purchase, and that she considered the memorandum a valid agreement. The formal listing of the Kelly Canyon property with Town and Country Real Estate was to expire on June 19, 1979, one day before the $65,000 payment was due on the McNabb-Flikkema contract. The listing was extended to August 1, 1979. When the realtors failed to sell the property and did not purchase it themselves, the McNabbs attempted to sell the property through a different real estate firm. On February 20, 1980, formal demand was made upon Goldie Norine to purchase the property. This demand was refused, Goldie Norine and Rod Anderson answering through their attorney. On August 5, 1980, the McNabbs sold the Kelly Canyon property for $75,000. At closing the McNabbs received all but $22,000 of the purchase price. They paid a commission of $4,500 and had other closing costs of $326. The McNabbs commenced suit against Goldie Norine and Rod Anderson, and after jury trial, the judgment of $45,000 resulted. The appellants contend that the memorandum signed by Goldie Norine is an insufficient instrument on which to establish an oral agreement to buy real property. They contend that the memorandum was not signed by Rod Anderson, that the memorandum is deficient and that its essential elements cannot be determined with reasonable certainty, i. e. , the parties to the contract, the land subject to the contract, the terms and conditions of the contract, and by and to whom the promises were made. In those contentions, they rely on Johnson v. Elliott (1950), 123 Mont. 597, 218 P.2d 703; Lewis v. Peterson (1954), 127 Mont. 474, 267 P.2d 127; and Dineen v. Sullivan (1950), 123 Mont. 195, 213 P.2d 241. McNabbs counter that here the memorandum sets forth the essential terms of the oral contract and it should be enforced. They also rely on Dineen, supra, and on Johnson v . Ogle (1947), 120 Mont. 176, 181 P.2d 789, where this Court held that par01 evidence was admissible for the purpose of explaining a memorandum. In this case, the person who signed the memorandum is Mrs. Goldie Norine. At trial, she admitted that she intended to go through with the agreement as set forth in the memorandum. While the description "Murl property" is not in itself sufficient, it is identifiable through the listing agreement given to Town and Country Real Estate in which the Kelly Canyon property was fully described. A memorandum to support a contract may involve several writings in order to determine the meaning of the parties. Hughes v. Melby (1959), 135 Mont. 415, 340 P.2d 511. The purchase price in the memorandum is set at "$90,000 approx." Mrs. Norine testified at the trial that the property was worth $90,000 to $95,000 and she accepted a buy-sell agreement for the property when it was listed for $106,000. The date of performance is fixed "as soon as financing is available within the next two weeks." Thus the memorandum appears to have in it the essential elements of a binding contract. If the material elements are stated in general terms, all the details or particulars need not be stated. Empire Steel Mfg. Co. v. Carlson (1981), - Mont. - , 622 P.2d 1016, 38 St.Rep. 101; Johnson v. ~lliott (1950), 123 Mont. 597, 218 P.2d 703. The memorandum, when read in connection with the listing agreement for the property involved contains the material elements of a contract, which is enough to satisfy the statute of frauds, section 30-11-111, MCA. Dineen, supra; Elliott, supra; Ogle, supra. Moreover, the memorandum was received in evidence during the trial in the District Court without objection and especially without contention that the memorandum did not satisfy the statute of frauds. We will ordinarily not review an issue in the Supreme Court that has not been raised in the District Court. Chadwick v. Giberson (1980), Mont . - I 618 P.2d 1213, 1215, 37 St.Rep. 1723, 1726; Davis v. Davis (1972), 159 Mont. 355, 361, 497 P.2d 315, 318. Appellants contend, however, that the lack of objection at the time of trial should not be fatal here because the legal insufficiency of the memorandum survives as an issue in the Supreme Court. We have indeed held that the Supreme Court has the duty to determine whether parties were denied substantial justice in the District Court and that we can consider, using discretion, whether the lower court deprived a party of a fair and impartial trial even if an objection was not raised there. McAlpine v. Midland Electric Co. (1981) , Mont . , 634 P.2d 1166, 38 St.Rep. 1577. In order for us to consider, however, an issue not raised before the District Court, we hold that there must be plain error, or the refusal to consider the issue must result in substantial injustice and deprive the party raising the issue of a fair trial. Halldorson v. Halldorson (1977) , 175 Mont. 170, 573 P.2d 169. We cannot, considering the circumstances of this case, so hold. It is obvious from the memorandum signed by Goldie Norine that she intended it to be an agreement between herself and the McNabbs (though she contended that it was contingent upon her obtaining the financing), and that she intended to perform the contract. It is too late to raise the statute of frauds as a defense for the first time on appeal in that situation. This brings us to the second issue, whether the verdict against Rod Anderson is supported in the evidence. Anderson contends that on its face, the memorandum was not signed by him, and since Goldie Norine referred to "1" instead of "we," the memorandum cannot be construed to include him as a purchaser of the McNabb property. He also relies on the provisions of the statute of frauds, section 30-11-111, MCA, as follows: "No agreement for the sale of real property or of any interest therein is valid unless the same, or some note or memorandum thereof. be in writ in^ and subscribed by the party to be charged -- or his agent thereunto authorized in writing; but this does not abridge the power 0 7 any court to compel the specific performance of any agreement for the sale of real property in the case of part performance thereof. " Anderson contends that not only did he not sign the memorandum but neither did any agent of his "thereunto authorized in writing." There is substantial evidence in the record connecting Anderson to the agreement to buy the McNabb property. The memorandum itself was on Town and Country Real Estate stationery, which listed him on the letterhead along with Goldie Norine without any indication that he was anything but a co-owner of the realtor firm; he received one-half of the commission on the sale of the Flikkema property to the McNabbs; he typed the buy-sell agreement which became the basis of the McNabb-Flikkema contract; he was the agent who first worked with the McNabbs when the offers were made for the Branger Place. In that state of the evidence, the jury could have believed that he was a co-owner of the realtor firm, and that Goldie Norine was acting for both when she signed the agreement to purchase the McNabb property. Yet the statutory requirement in the Statute of Frauds that the authority of an agent be in writing to bind another in an agreement for the sale of real property has been with. us since 1895, adopted from the Field Code. Before 1895, such authority was not required by statute to be in writing. Cobban v . Hecklen (1902), 27 Mont. 245, 70 P. 805. Since the requirement was made part of the Statute of Frauds, it has been the backbone of many decisions of this Court, denying claimed agencies not evidenced in writing by the party to be charged. Hartt v. Jahn (1921), 59 Mont. 173, 196 P. 153; Sunburst Oil and Gas Co. v. Neville (1927), 79 Mont. 550, 257 P. 1016; Mahoney v. Lester (1946), 118 Mont. 551, 168 P.2d 339; Schwedes v. Romain & Mudgett (1978), 179 Mont. 466, 587 P.2d 388. The claim here against Rod Anderson is of that specie. No writing exists in the evidence by which he appointed Goldie Norine to act as his agent in signing the memorandum on which the McNabbs rely. In addition, no reliance can be placed in this case on the Uniform Partnership Act to eliminate the requirement that an agent's authority be in writing signed by the party to be charged under the Statute of Frauds. The partnership, if it be one, between Goldie Norine and Rod Anderson in Town and Country Real Estate can be bound by Goldie Norine in the purchase of real estate only if she were carrying on the business of the partnership in the usual way. Section 35-10-301, MCA. Nothing by way of evidence shows the purchase of real estate was the usual way of doing business by Town and Country Real Estate. For aught that appears, Goldie's written memo was outside the usual course of the pa.rtnership business. The Statute of Frauds is applicable and Rod Anderson cannot be bound to the contract evidencedby the memo absent his authorization thereunto in writing. See Elis v . Mikelis (Cal. 1963), 32 Cal.Rptr. 415, 384 P.2d 7. We therefore hold that the evidence here does not support the verdict against Rod Anderson. The third issue is the sufficiency of the damages. We find these to be sufficiently established in the record. The McNabbs eventually sold their property for $75,000. This was $20,000 less than the approximately $95,000 that Goldie Norine agreed the property was worth, and which she stated she was willing to pay. McNabbs proved additional interest damages of $21,345.52 based on $95,000 borrowed from First Security Bank of Bozeman at the prime rate plus 1% for the period March 6, 1979 to September 19, 1979, when the Kelly Canyon property was sold. They paid a commission of $4,500 and had other closing costs of $326 in selling the Kelly Canyon property. Thus there is substantial evidence in the record showing damages in excess of $45,000, justifying the jury verdict. This case was submitted to the jury on two theories of liability, one for fraud, and the other for breach of contract. The court without objection instructed the jury as to damages for tort and for breach of contract. Under either approach, the damages found by the jury are sustainable. The judgment here is affirmed as to Goldie Norine and the cause is reversed and dismissed as to Rod Anderson. We Concur:

June 9, 1983

703a1535-abb4-4435-b3d4-1b54b40004ce

STATE v BOLT

N/A

82-457

Montana

Montana Supreme Court

NO. 82-457 I i V THE SUPREME COURT OF THE STATE O F f4O"LaTrlTJA 1983 STATE OF M O N T A N A , P l a i n t i f f and Respondent, -vs- SCOTT BOLT, Defendant and Appellant. Appeal f r o n : D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County o f Lake, The Honorable Jack L. Green, Judge p r e s i d i n g . Counsel of Record: For Ap2ellant: C h r i s t i a n , IlcCurdy G Tdold; Donald I<. Peterson, Polson, Nontana For Resgondent : !dike Greely, Attorney General, Helena, Jlontana John F r e d e r i c k , County Attorney, Polson, Montana Submitted on B r i e f s : February 10, 1.983 Decided: June 2 , 1983 - I _ Clerk Hr. J u s t i c e Frea J. Weber d e l i v e r e d t h e Opinion of t h e Court. Defendant B o l t a p p e a l s from tile o r d e r of t h e Fourth J u d i c i a l D i s t r i c t Court, Lake County, imposing a s e n t e n c e of one year i n j a i l f o r c r i m i n a l p o s s e s s i o n of dangerous d r u g s , a inisdemeanor. W e a f f i r m . The s o l e i s s u e on a p p e a l is whether, under t h e circum- s t a n c e s of t h i s c a s e , t h e d e f e n d a n t was e n t i t l e d t o a de- f e r r e d i m p o s i t i o n of s e n t e n c e under s e c t i o n 45-9-102(5), MCA. That s e c t i o n p r o v i d e s : "A person of t h e age of 21 y e a r s o r under convicted of a f i r s t v i o l a t i o n under t h i s s e c t i o n s h a l l be presumed t o be e n t i t l e d t o a d e f e r r e d i m p o s i t i o n of s e n t e n c e . " A p p e i i a n t was twenty y e a r s of age a t t h e t i m e he committed t h e d r u g - r e l a t e d misdemeanor o f f e n s e . Less t h a n one gram of h a s h i s h was found i n h i s p o s s e s s i o n d u r i n g a r o u t i n e s e a r c h f o l l o w i n g v i s i t i n g hours a t t h e Swan River Youth F o r e s t Camp, where he was s e r v i n g c o n c u r r e n t f i v e - y e a r s e n t e n c e s f o r two f e l o n i e s committed e a r l i e r i n 1982. On J u l y 13, 1982, a p p e l l a n t was charged by i n f o r m a t i o n w i t h t h e crime of p o s s e s s i o n of dangerous d r u g s , a misde- meanor, a s s p e c i f i e d i n s e c t i o n 45-9-102(1), MCA. Defense counsel was appointed, and a p p e l l a n t e n t e r e d a p l e a of g u i l t y on J u l y 21, 1982. A p r e s e n t e n c e r e p o r t d a t e d August 2, 1982, concluded t h a t "under 45-9-102 s u b s e c t i o n ( 5 ) , t h i s defendant is presumed t o be e n t i t l e d t o a d e f e r r e d imposi- t i o n of s e n t e n c e r e g a r d l e s s of t h e two p r i o r f e l o n y convic- t i o n s . I' The D i s t r i c t C o u r t J u d g e i n i t i a l l y f o l l o w e d t h e r e p o r t ' s recommendation and d e f e r r e d i m p o s i t i o n of s e n t e n c e t o r a p e r i o d of t h r e e y e a r s , commencing when s u p e r v i s i o n of appellant in prison or on parole ceased. After hearing argument on the county attorney's motion for reconsidera- tion, the court vacated the deferred imposition of sentence on August 4, 1982, and ordered appellant to serve one year imprisonment in the Lake County jail upon his release from the state prison. The court concluded that the presumption of section 45-9-102(5), MCA, was overcome by defendant's prior felony convictions for burglary and criminal mischief. Presumption is defined in Rule 301(b), Mont.R.Evid.: "A presumption is an assumption of fact that the law requires to be made from another fact or groups of facts . . ." Presumptions are classified in Rule 301(b), Mont.R.Evid., in pertinent part: "(1) Conclusive presumptions are presump- tions that are specifically declared conclusive by statute . . . "(2) All presumptions, other than conclu- sive presumptions, are disputable pre- sumptions and may be controverted. A disputable presumption may be overcome by a preponderance of evidence contrary to the presumption. Unless the presumption is overcome, the trier of fact must find the assumed fact in accordance with the presumption. " Under the statute and the foregoing definition, defendant was entitled to a presumption of deferred imposition of sentence because he was twenty years old at the commission ot his first offense involving dangerous drugs. However, that presumption in favor of deferred sen- tencing is not conclusive. It is a disputable presumption whlch may be overcome by other evidence. State v. Simtob (1969), 154 Mont. 286, 291, 462 P.2d 873, 876. The parties disagree as to the nature of evidence sufficient to overcome the presumption. Appellant contends t h a t t h e s t a t u t o r y language of s e c t i o n 45-9-102(5), MCA, " a f i r s t v i o l a t i o n under t h i s s e c t i o n f n r e s t r i c t s t h e e v i d e n c e t h a t can be c o n s i d e r e d i n r e b u t t i n g t h e presumption t o e v i d e n c e s u r r o u n d i n g t h e crime a t i s s u e o r e v i d e n c e of o t h e r o f f e n s e s i n v o l v i n g dangerous drugs. Respondent a s s e r t s t h a t t h e presumption is t o be weighed a g a i n s t a l l o t h e r e v i d e n c e r e l e v a n t t o s e n t e n c i n g , and t h a t t h e presumption remains s u b j e c t t o t h e s e n t e n c i n g p r o c e d u r e s and c r i t e r i a set f o r t h i n T i t l e 46, Chapter 1 8 , P a r t s 1 and 2, MCA. The presumption i n f a v o r of d e f e r r e d i m p o s i t i o n o f s e n t e n c e f o r young v i o l a t o r s "may be c o n t r o v e r t e d by o t h e r e v i d e n c e , b u t u n l e s s s o c o n t r a d i c t e d t h e p r e s u m p t i o n c o n t r o l s . " Campus v. S t a t e ( 1 9 7 1 ) , 157 Mont. 321, 326, 483 P.2d 275, 278, q u o t i n g Simtob, 154 Mont. a t 291, 462 P.2d a t 876. I f t h e t r i a l c o u r t f i n d s t h a t t h e presumption h a s n o t been overcome, t h e n t h e c o u r t ' s d i s c r e t i o n i n s e n t e n c i n g a young o f f e n d e r is l i m i t e d by t h e Dangerous Drug Act t o d e f e r r i n g t h e i m p o s i t i o n of s e n t e n c e . S t a t e v. D r e w ( 1 9 7 1 ) , 158 Mont. 214, 216-17, 490 P.2d 230, 232. The q u e s t i o n h e r e is whether t h e s e n t e n c i n g judge abused h i s d i s c r e t i o n i n concluding t h a t t h e s t a t u t o r y presumption was overcome by e v i d e n c e t h a t t h e young v i o l a t o r had a f e l o n y r e c o r d and was i n c a r c e r a t e d a t t h e t i m e he engaged i n t h e s u b s e q u e n t d r u g - r e l a t e d c r irninal a c t i v i t y . By e n a c t i n g s e c t i o n 45-9-102(5), MCA [ f o r m e r l y s e c t i o n 54-133(5), R.C.M. 19471 t h e L e g i s l a t u r e " i n t e n d e d t o g i v e b e n e f i t t o young v i o l a t o r s s o t h a t t h e i r f u t u r e s would n o t be d e s t r o y e d by a f e l o n y c o n v i c t i o n . " Simtob, 154 Mont. a t 294, 462 P.2d a t 877 ( H a r r i s o n , J., d i s s e n t i n g ) . T h i s bene- f i t c a n n o t be r e a l i z e d where t h e v i o l a t o r a l r e a d y h a s a f e l o n y c o n v i c t i o n r e c o r d t h a t w i l l overshadow any prospec- t i v e damage t h a t might r e s u l t from a f i r s t d r u g - r e l a t e d c o n v i c t i o n . I n Campus v. S t a t e ( 1 9 7 1 ) , 157 Mont. 321, 327, 483 P.2d 275, 279, t h i s Court enumerated f o u r s t a n d a r d s t h a t must be met i n o r d e r t o overcome t h e s t a t u t o r y presumption i n f a v o r of d e f e r r e d i m p o s i t i o n of s e n t e n c e : " F i r s t , w e i n t e r p r e t it t o mean t h a t t h e record i t s e l f must d i s c l o s e t h e e v i d e n c e , a s w e h e l d i n Simtob. Second, t h e e v i - dence may be c o n t a i n e d e i t h e r w i t h i n o r w i t h o u t t h e proof of t h e crime i t s e l f . T h i r d , t h e a g g r a v a t i n g c i r c u m s t a n c e s should be some s u b s t a n t i a l e v i d e n c e over and above t h e simple f a c t s of a prima f a c i e c a s e . F i n a l l y , it is c l e a r t h a t t h i s Court w i l l r e q u i r e h e a r i n g s and a record t o d i s c l o s e t h e a g g r a v a t i n g e v i - dence, i f t h e r e be no e x p r e s s v o l u n t a r y waiver a s i n t h i s case." F i r s t , w e i n q u i r e "whether t h e r e c o r d h e r e d i s c l o s e s any f a c t s t o overcome t h e s t a t u t o r y presumption c o n t a i n e d i n t h e Dangerous Drug A c t t h a t d e f e n d a n t is e n t i t l e d t o a d e f e r r e d i m p o s i t i o n of s e n t e n c e . " Simtob, 154 Mont. a t 291, 462 P.2d a t 876. The r e c o r d d i s c l o s e s t h a t a p p e l l a n t was a n inmate a t t h e Swan River Youth F o r e s t Camp a t t h e t i m e he engaged i n t h e i l l i c i t drug a c t i v i t y and t h a t h i s p r i o r f e l o n y c o n v i c t i o n s r e l a t e d t o two s e p a r a t e i n c i d e n t s of f o r c e d e n t r y and vandalism. N e i t h e r of t h e s e f a c t s was con- t r o v e r t e d . T h i s e v i d e n c e is d i s c l o s e d from t h e r e c o r d and is c o n t a i n e d w i t h o u t proof of t h e crime i t s e l f . Thus, t h e f i r s t two s t a n d a r d s from Campus a r e s a t i s f i e d . The n e x t i n q u i r y is whether t h e s e a g g r a v a t i n g circum- s t a n c e s c o n s t i t u t e s u b s t a n t i a l e v i d e n c e over and above t h e simple f a c t s of t h e prima f a c i e c a s e . A j u d g e ' s b e l i e f t h a t a d e f e n d a n t l a c k e d candor i n responding t o q u e s t i o n s from t h e t r i a l c o u r t is i n s u f f i c i e n t t o c l a s s i f y it as one of t h o s e a g g r a v a t i n g c i r c u m s t a n c e s n e c e s s a r y t o overcome t h e presumption f o r g i v i n g a d e f e r r e d s e n t e n c e . S t a t e v. B u r r i s ( 1 9 7 5 ) , 168 Mont. 195, 198, 542 P.2d 1223, 1225. Nor a r e a f f i d a v i t s a c c u s i n g t h e d e f e n d a n t of p r i o r d e a l i n g s i n d r u g s a d e q u a t e a g g r a v a t i n g evidence. S t a t e v. Harney ( 1 9 7 2 ) , 160 Mont. 55, 62, 499 P.2d 802, 805-06. Here, u n l i k e i n B u r r i s and Barney, t h e a g g r a v a t i n g e v i d e n c e of d e f e n d a n t ' s i n c a r - c e r a t i o n a t t h e time of t h e o f f e n s e and h i s p r i o r f e l o n y c o n v i c t i o n s c o n s t i t u t e s u b s t a n t i a l e v i d e n c e over and above t h e s i m p l e f a c t s of a prima f a c i e c a s e of p o s s e s s i o n of dangerous d r u g s . L a s t , t h e a p p e l l a n t had o p p o r t u n i t y t o r e b u t t h e a g g r a v a t i n g e v i d e n c e c o n t a i n e d i n t h e p a r o l e o f f i c e r ' s p r e - s e n t e n c e r e p o r t a t t h e s e n t e n c i n g h e a r i n g and a t t h e h e a r i n g on r e s p o n d e n t ' s motion f o r r e c o n s i d e r a t i o n . He f a i l e d t o do S O . A l l four Campus c r i t e r i a have been m e t . W e do n o t hold t h a t t h e r e b u t t i n g e v i d e n c e should be r e s t r i c t e d t o e v i d e n c e r e l a t i n g t o drug a c t i v i t i e s . N e i t h e r t h e s t a t u t o r y language nor t h e c a s e law c o n t a i n s such a r e s t r i c t i o n . T h i s is a c a s e of a c o n v i c t e d f e l o n engaging i n s u b s e q u e n t c r i m i n a l conduct d u r i n g confinement. The D i s t r i c t C o u r t d i d n o r abuse its d i s c r e t i o n i n d e t e r m i n i n g t h a t t h e s e circum- s t a n c e s w a r r a n t e d i m p o s i t i o n of s e n t e n c e . For t h e f o r e g o i n g r e a s o n s , t h e s e n t e n c e is a f f i r m e d . We concur: '[\J,A-- I 2 . / I Justice

June 2, 1983

66884431-8431-4ec7-aa92-09072e3b6696

CARLSON v CAIN

N/A

82-163

Montana

Montana Supreme Court

I N T H E S U P R E M E C O U R T O F T H E S T A T E O F MONTANA D E B R A L . C A R L S O N , V S . J E R R Y C A I N , C l a i m a n t and R e s p o n d e n t , E m p l o y e r and A p p e l l a n t , L E E E N T E R P R I S E S , d / b / a T H E B I L L I N G S G A Z E T T E , E m p l o y e r and A p p e l l a n t , a n d H A R T F O R D A C C I D E N T AND I N D E M N I T Y COMPANY, D e f e n d a n t a n d A p p e l l a n t . A p p e a l f r o m : W o r k e r s ' C o m p e n s a t i o n C o u r t H o n . T i m R e a r d o n , J u d g e p r e s i d i n g C o u n s e l of R e c o r d : F o r E m p l o y e r , D e f e n d a n t a n d A p p e l l a n t s ; M o u l t o n , B e l l i n g h a m , L o n g o & M a t h e r , B i l l i n g s , M o n t a n a R a n d y H . B e l l i n g h a m a r g u e d , B i l l i n g s , M o n t a n a F o r C l a i m a n t a n d R e s p o n d e n t : K e e f e r , R o y b a l , H a n s o n , S t a c e y & J a r u s s i , B i l l i n g s , M o n t a n a N e i l S . K e e f e r a r g u e d , B i l l i n g s , M o n t a n a F o r R e s p o n d e n t a n d C r o s s - A p p e l l a n t : A n d e r s o n , B r o w n , G e r b a s e , C e b u l l & J o n e s , B i l l i n g s , M o n t a n a S t e v e n J . H a r m a n a r g u e d , B i l l i n g s , M o n t a n a F i l e d : J U N 8 s u b m i t t e d : February 2 8 , 1 9 8 3 ~ e c i d e d : June 8 , 1 9 8 3 Mr. Justice Fred J. Weber delivered the Opinion of the Court. Employer, Lee Enterprises, d/b/a The Billings Gazette (Gazette) appeals from a decision of the Workers' Compensation Court finding claimant, Debra Carlson, entitled to receive Workers' Compensation benefits from the Gazette's insurer, following her injury in an automobile accident while delivering newspapers for her fiance, Jerry Cain. The court's decision was based on its conclusions that claimant was an employee of Cain; that Cain was an employee of the Gazette, and that he had failed to provide Workers' Compensation insurance for claimant, rendering the Gazette liable for claimant's benefits under Section 39-71-405(2), MCA . Cain cross-appeals. We affirm the Workers' Compensation Court. The following issues are presented to this Court for review: 1 . Whether Debra Carlson was an employee of Jerry Cain. 2. If Debra Carlson was an employee of Jerry Cain, whether such employment is specifically excluded under the following exceptions contained in Section 39-71-401(2) MCA: (a) Casual employment; (b) Employment of members of an employer's family dwelling in the employer's household; (c) Employment of sole proprietors or working members of a partnership; (d) Any person performing services in return for aid or sustenance only. 3. Whether Jerry Cain and Mike Cain were independent contractors of The Billings Gazette? In November 1979, claimant met Jerry Cain in Miles City. They became engaged during the Christmas season of 1979 and began living together toward the end of December 1979. Jerry Cain was married to another woman at the time; that marriage was not dissolved until February 22, 1981, because of a prolonged custody dispute. Between January of 1980 and the end of March, 1980, claimant occasionally rode with Cain while he delivered newspapers for Dave Gamble, who had carrier contracts with the Gazette. During this period, Cain, who also worked as a mechanic, made all of the house payments, paid all utilities and provided groceries for claimant and himself. He also provided claimant with the use of an automobile he owned. During this time, claimant sang in a band on weekends, earning approximately $100 per week. On March 31, 1980, when Dave Gamble's carrier contract expired, Jerry Cain and his father, Mike Cain, signed one contract with the Gazette to haul n.ewspapers from Billings to Fairview, Montana, and all drop points between, and another similar contract to deliver papers from Miles City to Baker. Mike Cain signed the contract and, several weeks later, after the bank turned down Jerry Cain's application for a loan, took out a bank loan, which Jerry Cain co-signed. All evidence indicates Mike Cain's only involvement was to help get his son started as a carrier for the Gazette. Neither the bank nor the Gazette would accept only Jerry Cain's signature. Gazette checks were made out to both Michael and Jerry Cain to insure payment on the bank loan. Mike Cain himself never profited from the contract, nor did he perform any of the work under the contract. The contracts included the following provisions: SECTION 111. RELATIONSHIP OF PARTIES 11 The parties intend that an independent contractor-employer relationship will be created by this contract. The company is interested only in the results to be achieved, and the conduct and control of the work will lie solely with the carrier. The carrier is not to be considered an agent or employee of company for any purpose, and the employees of carrier are not entitled to any of the benefits that the company provides for company employees. The company does not control the carrier in any of the details of performance of this agreement nor does it control the routes to be traveled or the hours of employment or the manner in which the duties of the carrier are performed." SECTION IV. LIABILITY ' 1 The work to be performed under this contract will be performed entirely at carrier's risk, and carrier assumes all responsibility for the condition of his equipment used in the performance of this contract. Carrier will carry, - - for the duration of this contract, public liabilit insurance - - 1 7 an amount acceptable - to company, - ant Workmen's Compensation insurance covering - his employees. Contractor agrees to indemnify company for any and all liability, loss or claims arising in any way out of the performance of this agreement." (Emphasis supplied.) The two contracts provided for Cain to be paid a total $6,470 per month. He was paid bi-monthly. After the Cains were awarded the contract, claimant began delivering papers to Baker for Jerry Cain three or four times a week. Occasionally she would make the run to Fairview instead of Baker. When claimant did not make the run, Cain had to hire someone else, whom he paid $15 for the Baker run and $30 for the Fairview run. Claimant was not paid any money for making the runs, nor did she receive anything more in the way of support than she had received prior to Cain's receiving the carrier contracts. In May, according to claimant, she discontinued singing in the band "because Cain said we could make more money running the Gazette route than I could in the band." According to Cain, the other members of the band "said they didn't need her anymore. " On June 28, 1980, Carlson suffered severe head injuries in an automobile accident; she was driving a 1979 Mazda furnished by Cain and was returning to Miles City early in the morning, after having delivered a load of newspapers to Baker. As a result of her injuries, claimant, still in her early twenties, has muscular weakness on the left side, some intellectual impairment, and severe headaches. Her throat injuries have affected her ability to sing. She is currently considered unemployable and is attending a vocational training school. She is living with her mother; Cain has married someone else. At the time claimant was injured, Cain was carrying no Workers' Compensation insurance, although the carrier contract expressly required him to do so. Claimant filed a claim against Jerry Cain with the Uninsured Employers' Fund. Following an investigation, her claim was denied under Section 39-71-401(2) (f), MCA, on the grounds that claimant was "performing a service in return for aid or sustenance only," and was thus exempted from the Workers' compensation Act. Claimant subsequently filed two petitions for hearing with the Workers' Compensation Court, one against Jerry Cain and the Uninsured Employers' Fund, the second against Lee Enterprises, d/b/a The Billings Gazette and their insurance carrier, Hartford Accident and Indemnity. The two cases were consolidated on July 9, 1981. Trial was held November 20, 1981. Claimant and the Gazette moved the court to dismiss without prejudice as to the Uninsured Employers' Fund, which was bankrupt; the motion was granted. The court ordered additional depositions, briefs, and proposed findings. The Workers' Compensation Court entered judgment for claimant on April 23, 1982, concluding that Jerry Cain was not an independent contractor, but an employee of the Gazette; that claimant was an employee of Jerry Cain under an implied contract for hire, Section 39-71-118, MCA; and that the Gazette's insurer was liable for claimant's medical expenses, and wage benefits amounting to $100 per week, under Section 39-71-405(2), and 39-71-118, MCA. The Gazette appeals. Cain cross-appeals, limiting his appeal to challenging claimant's status as his employee. We note that where, as here, both facts and legal conclusions are disputed, two standards of review are appropriate: "When presented with an issue which challenges the sufficiency of the evidence to support the court's findings or challenges the credibility of that evidence, the scope of our review is limited. "Our function in reviewing a decision of the Workers1 Compensation Court is to determine whether there is substantial evidence to support the findings and conclusions of that court. We cannot substitute our judgment for that of the trial court as to the weight of the evidence on questions of fact. Where there is substantial evidence to support the findings of the Workers' Compensation Court, this Court cannot overturn the decision. Bond v. St. Regis Paper Co. (1977), Mont., 571 P.2d 372, 34 St.Rep. 1237; Robins v . Anaconda Aluminum Co. (1978) , Mont., 575 P.2d 67, 35 St.Rep. 213. ' Stef fes v. 93 Leasing Co., Inc. [U. S .F. & G. Co. 1 (1978), Mont. 580 P.2d 450, 452, 453, 35 St.Rep. 816. "When, however, presented with an issue which raises only a question of law 'an appellate court is not bound by the findings of the trial court, but is free to draw its own conclusions from the evidence presented.' Walsh v. Eberlin (1977), 114 Ariz. 342, 560 P.2d 1249, 1251; Sapp v. Barenfeld (1949), 34 Cal.2d 515, 212 P.2d 233, 236." Sharp v. Hoerner Waldorf Corp. (1978), 178 Mont. 419, 422-23, 584 P.2d 1298, 1300. In Sharp, the facts were relatively undisputed, the question presented was one of law, and appellant "[did] not seek a reweighing of the evidence, rather a reversal for failure to apply the proper standard of law." Sharp, 178 Mont. at 423-24, 584 P.2d at 1301. That is not the case here, where certain factual questions decided by the Workers' Compensation Court are challenged on appeal. To the extent that factual determinations are questioned, we apply the Steffes test, and defer to the fact-finder where substantial evidence exists to support its determinations. As noted in Woody v. Waibel (1976) 276 Ore. 189, 554 P.2d 492, 494, N. 3: "It is true that there may be questions concerning facts surrounding the arrangements between the parties which would be relevant in determining control. In this sense, the question is one for the trier of fact. However, where there is no dispute as to what the arrangement is, the question of employee or independent contractor status is one of law for the court. l1 Both Jerry Cain and the Gazette challenge the conclusion of the Workers1 Compensation Court that claimant was Cain's employee. The court recognized that employment status can be established in part by the existence of a contract for hire, and that such a contract may be "express or implied, oral or written." Section 39-71-118, MCA. The court concluded that an implied contract for hire existed, stating: "The fact that nothing was said about pay before services were rendered by the claimant does not negate an implication that Jerry Cain was obligated to pay a reasonable amount for claimant's services performed for and accepted by Jerry Cain. In addition, claimant testified that since she and Jerry Cain were engaged she did not expect wages because she thought they were going to be married. It is the conclusion of this Court that claimant exchanged her delivery services for the use of a vehicle, room and board, and the expectation of financial security from her impending marriage. Under these circumstances a contract of hire may certainly be implied. See 1C Larson, Workmen's Compensation Law, S47.43. . ." Cain and the Gazette argue that, since Cain and claimant were already enga.ged, and Cain had paid for food and rent and furnished claimant with a car before she started driving for him, claimant was not actually paid for her work, i.e., there was no increase in benefits or expectations. They also argue that Cain exercised no control over claimant; she was not required to drive. They emphasize that the fine assessed by the State against Cain for his failure to carry Worker's Compensation Insurance for his employees did not include a penalty for his failure to insure claimant. We are not persuaded by Cain's and the Gazette's arguments, for several reasons. It is true that a "contract for hire," contemplates the worker's being paid; as Larson, Workmen's Compensation Law, Vol. lC, ~;47.00(c), p. 8-231, states: "Gratuitous servants are not employees, since the element of 'hire' is lacking; but payment may be found in anything of value such as board and lodging, and an agreement to pay is usually implied when the parties have omitted to make an express agreement on payment." While section 39-71-401 (2) (f) , MCA, exempts from coverage those persons working for aid or sustenance only unless both employer and insurer elect to cover them, we find other considerations apply in the case at bar. Here, there was no express agreement on payment between claimant and Cain, but claimant worked virtually full-time for Cain doing a portion of the work for which he received $6,470 per month. Her work saved Cain the $15 to $30 per night he would have had to pay someone else to make the run. Claimant expected to marry Cain, and to share his life; her activities helped assure that Cain's livelihood would provide future financial security for her as well. Although this is a very close decision, we find sufficient evidence to support the Workers1 Compensation Court's conclusion that, claimant reasonably expected a benefit to flow from her work beyond those benefits she already enjoyed as Cain's fiance. Appellants' argument -- that claimant received nothing more than she had before she began driving regularly for Cain -- is an argument that cuts both ways. If claimant received board, room, a car, and continued expectation of marriage merely as part of sharing Cain's home with him, she would reasonably expect to be paid considerably more than that for contributing a good share of the work for which Cain brought in almost $6,500 a month. Indeed, the record indicates that claimant did expect to - be paid something for her work. The transcript contains the following statements by claimant: [on direct] "Q. Now, did Jerry pay you any money for this work you were doing for him? A. No. "Q. What was your understanding about getting paid, if you had an understanding? A. I never really had an understanding. I just assumed he would pay me. "Q. [on cross-examination] Okay. Thank you, Debra. So you didn't really assume that he was going to pay you any money, did you? A. When I first started out, I did. "Q. When did you first start? A. Boy, March or April. "Q. Well, did that change? That obviously changed then? A . What changed? "Q. Well the fact that you thought you were going to get money? A. I still thought he might pay me something or something." The record establishes that claimant furnished valuable driving services to Cain; she reasonably expected payment beyond those benefits which were just a part of her living arrangement. Under these circumstances an implicit agreement to pay may be and properly was inferred in the absence of an express agreement on payment. Larson Vol. lC, S47.00 (c) p. 8-231. We find there is sufficient evidence here to establish a contract for hire under section 39-71-117, and 39-71-118, MCA. In Montana, the other test to determine whether employee status exists is the "control test," under which the right to control details of the individual's work is decisive. State ex rel. Ferguson v. District Court (1974) 164 Mont. 84, 88, 519 P.2d 151, 153. In Ferguson, while recognizing that the test is most frequently used to determine whether or not independent contractor status exists, we noted that it "may be used to also determine who the employer is . . ." 164 Mont. at 88, 519 P.2d at 153. Similarly, here, the test may be used to determine whether employee status existed at the time a claimant was injured. This broad overlap in the test for distinguishing between an employee and an independent contractor, and the test for determining whether employee status exists, is explained by Larson, Vol. lC, S43.20, p. "The definition of employment status almost always takes the form of distinguishing an employee from an independent contractor. The reason is simple. If one wants to get something done without doing it oneself, there are really only two ways open: to hire an employee to do it, or to contract out the work to an independent entrepreneur. The employee-independent contractor distinction is not an artificial dichotomy invented by legal minds interested in fine distinctions for their own sake. It is a fundamental fact of business life which could not be abolished by the most grandiose legislation." The four factors to be considered under the "control test" are those articulated in Sharp; supra see also Larson Vol. lC, S44.10 p. 8-19. The factors include: (1) direct evidence of right or exercise of control; (2) method of payment; (3) furnishing of equipment; and (4) right to fire. Employment status can be established on the strength of any one of the factors, Sharp 178 Mont. at 425, 584 P.2d at 1302. Appellants make much of evidence that claimant was not required to deliver papers for Cain. While that option has some bearing on the extent of direct control exercised by Cain, it does not alter the fact that when she did deliver, claimant used Cain's vehicle and was obligated to do for Cain the same work the Gazette required of Cain, work which Cain now argues (and we agree -- Issue 111) establishes him as an employee of the Gazette. What is more, Cain could have "terminated" claimant at any time, by refusing her the use of his vehicle, hiring somone else to make the run or doing it himself. On the strength of the presence of three out of four factors listed in Sharp as indicating control, we find that the Workers' Compensation Court did not err in its conclusion that claimant was an employee of Jerry Cain. The Gazette argues that, even if an employer-employee relationship existed between claimant and Cain, the exemptions under section 39-71-401 ( 2 ) (b) , (c) , (dl, and (f) , MCA, bar recovery under the Workers' Compensation Act. Section 39-71-401(2), MCA, provides, in pertinent part: "(2) Unless the employer elects coverage for these employments under this chapter and an insurer allows such an election, the Workers' Compensation Act does not apply to any of the following employments: (a) . . . (b) casual employment as defined in 39-71-116 (3) ; (c) employment of members of an employer's family dwelling in the employer's household; (d) employment of sole proprietors or working members of a partnership; (f) any person performing services in return for aid or sustenance only; We agree with the Workers' Compensation Court that none of these sub-sections applies to claimant. "Casual employment" is defined in section 39-71-116 (3) , MCA, as "employment not in the usual course of trade, business, profession or occupation of the employer." When claimant delivered papers for Cain, she was doing work which was, beyond question, in the usual course of Cain's occupation. Cain's only occupation at the time of claimant's accident was to deliver papers for the Gazette. Exemption (b) does not apply. The Workers1 Compensation Court properly rejected exemption (c), noting, "A common law marriage cannot be imputed to their relationship when Jerry Cain was at that time married to another woman and claimant was aware of it." Jerry Cain's prior marriage was not dissolved until eight months after claimant's accident. Exemption (c) does not apply The Workers1 Compensation Court also properly rejected exemption (d), because "[tlhe evidence establishes that claimant was not a sole proprietor, nor was she a member of a partnership. Her name does not appear in the Gazette contracts, the titles to the vehicles, or the checks paid by the Gazette to the contractors. There was no evidence of any kind of a partnership agreement between Jerry Cain and claimant." On review, we find the evidence supports this conclusion. We are not persuaded by the Gazette's claim that claimant and Cain were working together as "a husband and wife team, almost like a partnership. l1 Exemption (d) does not apply. Finally, we approve the trial court's conclusion that the "aid or sustenance" exemption, (f), refers to "board and room." This conclusion is consistent with that of Norman Grosfield, Montana Workers1 Compensation Manual S2.11, p . 4. ("The Division of Workers1 Compensation considers this provision as applying to individuals who work for only board and room.") As noted, infra, the evidence supports the trial court's conclusion that claimant worked for financial security in her anticipated marriage to Cain; and claimant's own testimony indicates her reasonable expectation that Cain would pay her something. As claimant points out, she was not just doing housework and cooking in exchange for room and board. She was working virtually full-time outside the home for Cain. Her reasonable expectations exceeded room and board. We hold, therefore, that the "aid and sustenance" exemption does not apply. The third argument made by the Gazette is that Jerry Cain was an independent contractor of the Gazette, within the meaning of section 39-71-120, MCA, which provides: "An 'independent contractor' is one who renders service in the course of an occupation and: ' ' ( 1 ) has been and will continue to be free from control or direction over the performance of the services, both under his contract and in fact; and " (2) is engaged in an independently established trade, occupation, profession, or business." In Sharp, supra, we considered the difference between an employee and an independent contractor. "'The test to determine whether or not an employer-employee relationship exists . . . is the so called control test. Under that test an individual is in the service of another when that other has the right to control the details of the individual's work.' State ex rel. Ferguson v. District Court (1974), 164 Mont. 84, 88, 519 P.2d 151, 153. Respondent has argued an employer must control the details of a performance before the performer is considered an employee. However, the determinative test is based on the right, not just the exercise, of control. Larson, Workmen's Compensation Law, Vol. lA, S44.10, p. 8-19; - - Ferguson, supra." Sharp, 178 Mont. at 424, 584 P.2d at 1301. The four factors used in determining right of control, are as noted, infra: (1) direct evidence of right or exercise of control; (2) method of payment; (3) furnishing of equipment; and (4) right to fire. Jerry Cain received payment every two weeks. Generally, payment by time tends to show employment, while payment by completed project tends to indicate an independent contractor. Payment by piece-work or by commission is consistent with either status. Larson, Vol. lC, 544.33, p. 8-73. Section V of the contract provided the Gazette with the right to terminate the contract upon thirty days' notice in writing. This is not particularly significant, since the employer of an independent contractor may require satisfaction in the end result, and may terminate for breach of contract when that requirement is not met. Termination at will or for failure to perform certain details unrelated to the end result would strongly support employee status, Larson, Vol lC, 544.35, p. 8-116 et seq. The papers were available at the Gazette loading dock in Billings between 11:OO p.m. and 12:OO a.m. It would generally take around forty-five minutes to load the papers into Cain's truck. Several drops were required on the trip to Sidney, a distance of 300 miles. Jerry Cain testified that Mr. Stubblefield of the Gazette told him to have the papers in Sidney no later than 6:30 a.m. Although Cain was allowed to travel any route he chose, because of the drops and time constraints, it was necessary that he took the shortest route; indeed, Cain testified that he had to drive around 65 mph to arrive at Sidney at 6:30 a.m. Cain occasionally would receive written orders from the Gazette advising him that drop points had been changed, and he was requested to honor those changes. The Gazette also showed him how to load his truck, putting the bundles for Sidney on first, since they would be the last to come off. The Gazette also furnished Cain with a telephone credit card so he could apprise the Gazette of any problems he might encounter with deliveries. At times Cain was requested to carry vending machines which dispensed Gazette papers to and from Billings for repairs. He was also requested to deliver and delivered fence posts and the tubes used by the Gazette as rural "paper boxes." Cain sometimes was required to carry letters and packages to Gazette district offices along his route. These extra services were not provided for in the contract, nor did Cain receive extra compensation for doing them. Cain was also expected to pick up messages with orders or changes from a room in the Gazette's Billings offices, when he picked up the papers. The evidence establishes that Cain rendered service as a carrier for the Gazette pursuant to two written contracts. While those contracts very adequately state that Cain was an ind.ependent contractor and that the Gazette disclaims having any control, section 39-71-120(1), MCA, provides that the independent contractor must be free from control or direction of the performance of his services -- "in fact," as well as under his contract. In other words, the mere proof that this contract designates the carrier as an independent contractor is not controlling; the carrier must be independent in fact. The Workers' Compensation Court concluded that "Jerry Cain's performance of the contract was not free from control or direction from the Gazette either under the contract or in fact." We find substantial evidence to support the findings of the Workers' Compensation Court, as to the Gazette's actual exercise of control over Cain, and on that basis affirm the court's conclusion. There are two collateral matters here which should be noted. Under the carrier contract both Mike Cain and Jerry Cain may be required to indemnify the Gazette for liability arising out of the contract's performance. If the Cains are found to be independent contractors, their potential liability to the Gazette is supported by section 39-71-405(l), MCA. If Jerry Cain is an employee of the Gazette, the Cains' potential liability must be established by the contract alone. See section 39-71-405(2), MCA. Claimant supports a finding of Cain's employee status "for humanitarian reasons," viz., Mike Cain should not be reduced - to poverty, when his participation in the contract was solely for the purpose of helping his son. Our decision, like that of the Workers' Compensation Court, must turn upon the facts, regardless of the effect upon the parties. Here, the trial court found facts establishing the Gazette's right to control the details of Cain's work. Substantial evidence supports the trial court's conclusion. On that basis, and that basis alone, we must affirm the trial court's conclusion that Jerry Cain was an employee of the Gazette. The Gazette urges this Court to find independent contractor status as a matter of policy, arguing that our finding employee status would have a devastating statewide effect upon newspapers, whose carriers would automatically become "employees" within the meaning of the Workers' Compensation Act. We do not agree. Our decision today applies only to the relationship between Jerry Cain and the Gazette; we make no sweeping statements concerning newspaper carriers in general. Had the Gazette's dealings with Jerry Cain been free of the trappings of control noted above, independent contractor status would have been found. The contract clearly and effectively establishes the intent to create an independent contractor relationship between the Gazette and its carriers; the facts of the relationship simply do not bear out that intent, as required under section We affirm the Workers' Compensation Court on all issues, and remand this case for a determination of reasonable costs and attorney's fees, pursuant to section 39-71-611, MCA. We concur: Judge, s(Stting in place16f Mr. Justice John C. Sheehy Honorable P e t e r Rapkoch , D i s t r i c t J u d g e , d i s s e n t i n g . The Workers' Compensation Court "found" t h e n e c e s s a r y f a c t u a l e l e m e n t s of employment, without any b a s i s i n t h e t r a n s c r i p t . There being no " f i n d i n g s supported by s u b s t a n t i a l evidence ," ( S t e f f e s - - - and Sharp, c i t e d by t h e m a j o r i t y ) , t h i s Court should r e v e r s e . On t h e i s s u e of t h e r e l a t i o n s h i p between t h e c l a i m a n t and J e r r y Cain, b e f o r e t h e r e can be an a n a l y s i s of t h e n a t u r e of t h a t r e l a t i o n s h i p , t h e r e must f i r s t of a l l be shown a c o n t r a c t u a l - -- r e l a t i o n s h i p . The u n i l a t e r a l , u n f u l f i l l e d , f r u s t r a t e d "assumption" of t h e c l a i m a n t t h a t she would be paid "something , I 1 o r , f o r t h a t m a t t e r , t h a t "she thought they were going t o be m a r r i e d , " a r e c e r t a i n l y n o t s u f f i c i e n t t o c r e a t e a c o n t r a c t u a l r e l a t i o n s h i p . Nor a r e they s u f f i c i e n t t o c o n s t i t u t e " e x p e c t a t i o n s " i n t h e sense t h a t something is r e a l i s t i c a l l y pro- mised and l i k e l y t o be r e c e i v e d . A s argued by Cain and t h e G a z e t t e , t h e r e was no c o n s i d e r a t i o n f o r t h e c l a i m a n t ' s s e r v i c e s . She r e c e i v e d nothing a d d i t i o n a l and she never thought of anything a d d i t i o n a l . That is m y c l e a r p e r c e p t i o n of t h e e v i d e n c e . An a t t o r n e y would n o t a d v i s e a c l i e n t i n advance t o go o u t and make a c o n t r a c t on t h a t b a s i s ; n o r , it is s u b m i t t e d , would he a d v i s e a c l i e n t t o sue f o r t h e breach of such a " c o n t r a c t . " According t o t h e e v i d e n c e , a t t h e r e l e v a n t times t h e r e were none of t h e elements of an employment c o n t r a c t , e i t h e r i n f a c t or i n t h e minds of t h e people involved, u n t i l it was s e e n t h a t t h e s e e l e m e n t s were n e c e s s a r y f o r the c a s e . They were then manufac- t u r e d o u t of whole c l o t h by o t h e r , f e r t i l e , minds. The Workers' Compensation Court appears t o have i n j e c t e d its own i d e a s of what it would have done i n t h e circumstances of t h i s c a s e , a f t e r knowing, a s we d o , what t r u l y t r a g i c t h i n g happened t o t h e c l a i m a n t . The m a j o r i t y seems t o a c q u i e s c e i n t h a t p r o c e s s . I c a n n o t . I f u r t h e r q u e s t i o n t h e m a j o r i t y ' s r e l i a n c e upon Norman G r o s f i e l d , Montana Workers' Compensation -- Manual, Sec. 2.11, p.4, t h a t "The d i v i s i o n of Workers' Compensation c o n s i d e r s t h i s provi- s i o n ( t h e "aid and sustenance" exemption of S e c t i o n 39-71-402(2), - MCA) a s applying t o i n d i v i d u a l s who work f o r o n l y room and - board." T h a t begs t h e q u e s t i o n . However, I d o b e l i e v e from the evidence t h a t t h e c l a i m a n t worked f o r "aid and s u s t e n a n c e " a t most. There is no evidence t h a t she worked " f o r f i n a n c i a l s e c u r i t y i n her a n t i c i p a t e d marriage ." The r e l a t i o n s h i p between t h e G a z e t t e and J e r r y Cain was shown by t h e evidence t o be one between p a r t i e s t o an independent c o n t r a c t . J e r r y Cain was not an employee of t h e G a z e t t e . The b a s i c test a p p l i e d by t h e m a j o r i t y is t h a t of c o n t r o l . A s t h e m a j o r i t y c o r r e c t l y i n d i c a t e s , i n applying t h i s test, one must be c a r e f u l t o d i s t i n g u i s h between t h e purpose of t h e c o n t r a c t and the r i g h t t o , or t h e a c t u a l , c o n t r o l of t h e manner o r d e t a i l s of performance of t h a t c o n t r a c t . Every c o n t r a c t , independent, employment or o t h e r w i s e , h a s a purpose. The purpose of t h e i n s t a n t c o n t r a c t was t o g e t t h e newspapers t o t h e i r appointed p l a c e s a t t h e appointed times and i n s u i t a b l e con- d i t i o n . A l l of t h e f a c t o r s s t a t e d by Mr. Cain and o t h e r s a s p o i n t s of " c o n t r o l " by t h e G a z e t t e over Mr. Cain a r e addressed p u r e l y to t h e meeting of t h e requirements, t h e purpose, of t h e c o n t r a c t . The f a c t t h a t t h e d i s t a n c e and time requirements a r e demanding v 6 and r e s t r i c t ' does not m i l i t a t e a g a i n s t an independent c o n t r a c t . The r i g h t t o c o n t r o l , which d e s t r o y s an independent c o n t r a c t and i n d i c a t e s one of employment, is t h e r i g h t t o determine which of two or more f i t t i n g ways of a c h i e v i n g t h e purpose of t h e c o n t r a c t w i l l be followed. Because of t h e n a t u r e of t h e c o n t r a c t h e r e , t h e r e was no room f o r , o r any r i g h t t o , c o n t r o l . The f u t u r e l o o k s bleak f o r independent c o n t r a c t s . I t h e r e f o r e r e s p e c t f u l l y d i s a g r e e with t h e m a j o r i t y i n t h e i r o p i n i o n t h a t t h e c l a i m a n t was an employee of J e r r y Cain and t h a t J e r r y Cain was an employee of Lee Ersterprises. p l a c e of M r . Chief J u s t i c e Frank I Haswell. -19- concur t h e foregoing d i s s e n t . YP u

June 8, 1983

165dbbf9-1313-434c-890b-ef1dcd60d673

JARUSSI v BOARD OF TRUSTEES

N/A

82-120

Montana

Montana Supreme Court

LOUIS J. !,lo. 82-120 IN THE SUPREP4E COUST OF THE SYATE I)F YOTJ?P.hJP+ 3.913 P l a i n t i f f and Respondent, THE BOARD O F TRUSTEES OF SCHOOL DIST. NO. 2 8 , LAKE COUNTY, MONT., s a i d Board c o n s i s t i n 9 of LILLIAN STROTJG, e t al., Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Lake, The Eonorable Douglas G. Harkin, Judge p r e s i d i n g . Counsel of Record: For Appellants: John F r e d e r i c k , County Attorney, Polson, Montana For Respondents: Jon E. Ellingson and Nancy 4.;. ploe, Missoula, Montana - - .- - - - - - - Submitted on B r i e f s : Plarch l r ) , 1993 Decided. May 1 9 , 1983 F i l e d : MAY191983 8 - - ----- c l e r k Mr. Chief J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e Court. A t e a c h e r recovered a judgment a g a i n s t t h e School Board f o r its v i o l a t i o n of Montana's Open Meeting Law, wrongful t e r m i n a t i o n of employment, and damages of $19,400, a t t o r n e y fees and c o s t s . The School Board a p p e a l s . P l a i n t i f f is Louie J. J a r u s s i , a nontenured h i g h s c h o o l p r i n c i p a l and t e a c h e r i n S t . I g n a t i u s , Montana. Defendant is t h e Board of T r u s t e e s of School D i s t r i c t No. 28, Lake County. J a r u s s i was f i r s t employed by t h e Board f o r t h e 1976- 77 s c h o o l y e a r . During t h e 1977-78 s c h o o l y e a r , he was employed a s a f u l l t i m e p r i n c i p a l and S p a n i s h t e a c h e r a t a s a l a r y of $18,486. The record i n d i c a t e s he was an excep- t i o n a l t e a c h e r and p r i n c i p a l . On February 1, 1978, J a r u s s i m e t w i t h t h e Board and r e q u e s t e d a s a l a r y of $21,000 f o r t h e f o l l o w i n g s c h o o l y e a r . The Board c l o s e d t h e meeting a p p a r e n t l y t o d i s c u s s J a r u s s i ' s r e q u e s t . J a r u s s i claimed he o b j e c t e d t o t h e c l o s u r e , b u t no , . such a c t i o n was recorded i n t h e minutes of t h e meeting. The Board t h e r e a f t e r r e t u r n e d t o o p e n s e s s i o n and o f f e r e d J a r u s s i $19,200, t h e o f f e r t o be a c c e p t e d by March 8. J a r u s s i immediately c o n t a c t e d l e g a l c o u n s e l t o proceed a g a i n s t t h e Board f o r improperly c l o s i n g t h e meeting. The Board's p r e s i d i n g o f f i c e r e x p r e s s e d t h e B o a r d ' s anger t o J a r u s s i over h i s complaint and i n d i c a t e d it would n o t h e l p h i s employment s i t u a t i o n . J a r u s s i claimed he v e r b a l l y a c c e p t e d t h e o f f e r of employment on March 8. The Board d i s p u t e d t h i s , and no a c c e p t a n c e is noted i n t h e minutes. The p r e l i m i n a r y budget, i n c l u d i n g a p r o v i s i o n f o r J a r u s s i ' s p o s i t i o n , was approved on March 15. The Board m e t a g a i n on March 29. P a r t of t h e meeting was a g a i n c l o s e d w i t h o u t a d e t e r m i n a t i o n t h a t t h e demand of i n d i v i d u a l p r i v a c y c l e a r l y exceeded t h e merits of p u b l i c d i s c l o s u r e . During t h e c l o s u r e of t h e meeting t h e Board unanimously decided t o withdraw its o f f e r of employment t o J a r u s s i . T h e r e a f t e r , t h e meeting was opened, and a formal m o t i o n was a p p r o v e d w i t h d r a w i n g t h e s a l a r y i n c r e a s e p r e v i o u s l y o f f e r e d J a r u s s i . The Board never o f f i c i a l l y nor s p e c i f i c a l l y e l i m i n a t e d J a r u s s i ' s p o s i t i o n a c c o r d i n g t o t h e Board's r e c o r d s . On A p r i l 7 , J a r u s s i demanded a s t a t e m e n t of termina- t i o n by t h e Board. The Board s e r v e d n o t i c e of t e r m i n a t i o n on A p r i l 21. On A p r i l 28, J a r u s s i f i l e d s u i t a g a i n s t t h e Board i n t h r e e c o u n t s : (1) f o r v i o l a t i o n of Montana's Open Meeting Law a d v e r s e l y a f f e c t i n g h i s r i g h t s and s e e k i n g t o have t h e B o a r d ' s d e c i s i o n s d e c l a r e d void; ( 2 ) f a i l u r e t o p r o p e r l y t e r m i n a t e him i n v i o l a t i o n of s t a t u t e ; and, ( 3 ) r e t a l i a t i o n a g a i n s t him f o r e x e r c i s i n g h i s r i g h t s under Montana I s Open Meeting Law by withdrawal of t h e o f f e r of employment. I n June J a r u s s i r e q u e s t e d r e l e a s e from h i s e x i s t i n g c o n t r a c t o f employment t o seek o t h e r employment. H e a c c e p t e d a p o s i t i o n i n Alaska and r e p o r t e d t o work i n J u l y . Following a j u r y t r i a l , judgment was e n t e r e d awarding J a r u s s i $16,500 f o r h i s l o s s i n s e l l i n g h i s p r o p e r t y , and $2,900 moving expenses. The judgment a l s o i n c l u d e d a d e t e r - m i n a t i o n by t h e D i s t r i c t Court w i t h o u t a j u r y t h a t t h e Board had v i o l a t e d Montana's Open Meeting Law and voided t h e d e c i s i o n of t h e Board withdrawing its p r e v i o u s o f f e r of employment to Jarussi. The judgment included an award of attorney fees and costs. Following denial of its motion for a new trial, the Board appeals. Three issues are raised on appeal: 1. Was Jarussi required to exhaust his administrative remedies before filing suit in District Court? 2. Should a new trial have been granted because ex- cessive damages were awarded under the influence of passion or prejudice? 3. Did the School Board violate Montana's Open Meet- ing Law? The Board contends that Jarussi was required to exhaust his administrative remedies by appealing the Board's decision to the county superintendent of schools before seeking judicial relief in the courts, citing section 20-3- 210, MCA, giving the county superintendent sole jurisdiction to decide this controversy. We hold that Jarussi was not required to exhaust administrative remedies within the educational apparatus before filing suit in the District Court. The District Court is expressly granted jurisdiction to void any decision in violation of Montana's Open Meeting Law. The pertinent statute provides: "Voidability. Any decision made in vio- lation of 2-3-203 [statutory implementa- tion of Montana's Open Meeting Law] may be declared void by a district court having jurisdiction. A suit to void any such decision must be commenced within 30 days of the decision." (Bracketed de- scriptive phrase added. ) Section 2-3- 213, MCA. We have previously upheld the jurisdiction of the Dis- trict Court in actions to enforce Montana's Open Meeting Law. Board of Trustees, Huntley Project School Dist. 24 v . Board of County Commissioners, Yellowstone County (1980), Mon t . , 606 P.2d 1069, 38 St.Rep. 175. Further, statutory time constraints negate exhaustion of administra- tive remedies before the county superintendent of schools and the State Superintendent of Public Instruction. Moreover, the exhaustion doctrine does not apply to constitutional issues. Davies Warehouse Co. v . Bowles (1944), 321 U.S. 144, 64 S.Ct. 474, 88 L.Ed. 635; 1 Am.Jur.2d Administrative Law, S 185 at 484-490. Here, Jarussi claims violation of his constitutional right to observe the deliberations of the School Board under the right to know provisions of the Montana Constitution, Article 11, Section 9. Constitutional questions are properly decided by a judicial body, not an administrative official, under the constitutional principle of separation of powers. Art. 111, Section 1, 1972 Mont. Const. Next, the Board contends that the jury awarded Jarussi excessive damages under the influence of passion and preju- dice. The Board argues that the jury exercised no critical judgment in its award of economic damages to Jarussi, disre- garded the disparity between his increased salary in Alaska compared to his salary in Montana, and had to "speculate wildly" concerning cost of living differences between Alaska and Montana, and that Jarussi's claim of economic losses lacked specificity. The Board points out that the jury award for loss on the sale of Jarussi's property was the midpoint in the range of Jarussi's testimony; awarded him actual costs including travel and lodging expenses for trial, all attorney fees and all court costs; that the minimal p e r i o d of d e l i b e r a t i o n and t h e unanimous v e r d i c t i n d i c a t e a p a s s i o n and p r e j u d i c e t o p u n i s h t h e Board; and t h a t t h e j u r y a p p a r e n t l y d i s r e g a r d e d t h e i n s t r u c t i o n t h a t it c o u l d n o t award damages f o r p a i n and s u f f e r i n g , l o s s of c o n s o r t i u m , mental d i s t r e s s , l o s s of r e p u t a t i o n and c o u l d o n l y award t a n g i b l e p e c u n i a r y l o s s e s . I t is i m p o r t a n t t o n o t e t h a t t h e j u r y awarded damages i n t h i s case f o r wrongful t e r m i n a t i o n of J a r u s s i ' s employ- ment, n o t f o r v i o l a t i o n of Montana's Open Meeting Law. The damage award must be r e a s o n a b l e . S e c t i o n 27-1-302, MCA. The damages must be s u p p o r t e d by s u b s t a n t i a l e v i d e n c e . Johnson v. Murray ( 1 9 8 2 ) , Mont. , 656 P.2d 170, 39 St.Rep. 2257; Bjerum v. Wieber ( 1 9 6 7 ) , 149 Mont. 375, 427 P.2d 62. The law r e q u i r e s o n l y t h a t t h e t r i e r of f a c t e x e r c i s e calm and r e a s o n a b l e judgment and t h e amount of t h e award rests of n e c e s s i t y i n t h e sound d i s c r e t i o n of t h e t r i e r of f a c t . Johnson v. Murray, s u p r a . When t h e r e is s t r o n g e v i d e n c e o f t h e f a c t of damage, d e f e n d a n t s h o u l d n o t e s c a p e l i a b i l i t y because t h e amount of damage c a n n o t be proven w i t h p r e c i - s i o n . Johnson v. Murray, s u p r a , c i t i n g Winsness v. M . J . Conoco D i s t r i b u t o r s (Utah 1 9 7 9 ) , 593 P.2d 1303. Here J a r u s s i t e s t i f i e d t h a t he l o s t between $16,000 and $17,000 when he had t o h a s t i l y s e l l most of h i s p e r s o n a l p r o p e r t y i n view of h i s move t o Alaska. H e t e s t i f i e d h e h e l d a g a r a g e sale and t h a t " t h e move c l e a n e d m e o u t . " H e k e p t a r e c o r d of s a l e s of t h e v a r i o u s i t e m s and what h e o r i g i n a l l y p a i d f o r them, which w a s n o t i n t r o d u c e d i n t o evidence. H e t e s t i f i e d t h a t h i s a c t u a l moving c o s t s were $2,902.50. T h i s t e s t i m o n y was n o t d i s p u t e d o r q u e s t i o n e d on cross-examination. No e v i d e n c e w a s p r e s e n t e d by t h e Board r e f u t i n g J a r u s s i ' s claimed damages. W e hold t h e damages awarded were supported by substan- t i a l evidence and t h e jury exercised reasonable judgment i n determining the amount of t h e award. The jury awarded $16,500 f o r l o s s e s on t h e s a l e of J a r u s s i ' s p e r s o n a l property which was w i t h i n t h e range of h i s testimony. The jury a l s o awarded $2,900 moving c o s t s which was s l i g h t l y l e s s than h i s testimony. The jury awarded c o u r t c o s t s and a t t o r n e y f e e s pursuant t o s e c t i o n 2-3-221, MCA. The j u r y a l s o awarded a c t u a l c o s t of t r a v e l and lodging expenses f o r t r i a l which was n o t included i n t h e judgment. The d i f f e r e n c e i n s a l a r y and c o s t of l i v i n g between Alaska and Montana is i r r e l e v a n t a s no items of damages encompassed t h i s d i f f e r e n c e . N o evidence was introduced by t h e Board supporting an o f f s e t on t h i s b a s i s . The v e r d i c t is c l e a r t h a t no damages were awarded f o r pain and s u f f e r - ing, l o s s of consortium, mental d i s t r e s s , l o s s of r e p u t a t i o n or noneconomic or i n t a n g i b l e damage. Where, a s h e r e , t h e amount of damages is c l e a r and uncontradicted, a s h o r t period of jury d e l i b e r a t i o n and a unanimous v e r d i c t w i l l n o t support a claim of excessive damages influenced by passion o r p r e j u d i c e . F i n a l l y , t h e Board c o n t e n d s it d i d n o t v i o l a t e Montana's Open Meeting Law. The Board argues t h a t c l o s u r e was proper under a s t a t u t o r y p r o v i s i o n p e r m i t t i n g c l o s u r e " t o d i s c u s s a s t r a t e g y t o be followed w i t h r e s p e c t t o c o l l e c t i v e bargaining." The Montana C o n s t i t u t i o n provides: "RIGHT TO KNOW. N o person s h a l l be de- prived of t h e r i g h t t o examine documents o r t o observe t h e d e l i b e r a t i o n s of a l l p u b l i c b o d i e s o r a g e n c i e s of s t a t e government and its s u b d i v i s i o n s , e x c e p t i n c a s e s i n which t h e demand of i n d i v i - d u a l p r i v a c y c l e a r l y e x c e e d s t h e m e r i t s of p u b l i c d i s c l o s u r e . " A r t . 11, S e c t i o n 9 , 1972 Mont. Const. A s t a t u t o r y implementation of t h i s c o n s t i t u t i o n a l mandate p r o v i d e s t h a t meetings of a s c h o o l board s h a l l be "open t o t h e p u b l i c . " S e c t i o n 2-3-203(1), MCA. S u b s e c t i o n ( 3 ) o f t h a t s t a t u t e p r o v i d e s t h e f o l l o w i n g e x c e p t i o n s : "However, a meeting may be c l o s e d t o d i s c u s s a s t r a t e g y t o be followed w i t h r e s p e c t t o c o l l e c t i v e b a r g a i n i n g o r liti- g a t i o n when an open meeting would have a d e t r i m e n t a l e f f e c t on t h e b a r g a i n i n g o r l i t i g a t i n g p o s i t i o n o f t h e p u b l i c agency. " There is no c l a i m o r e v i d e n c e t h a t t h e l i t i g a t i o n e x c e p t i o n i n t h e s t a t u t e a p p l i e s . The Board r e l i e s s o l e l y on t h e c o l l e c t i v e b a r g a i n i n g e x c e p t i o n . The r e s o l u t i o n of t h i s i s s u e depends on t h e c o r r e c t meaning o f t h e term " c o l l e c t i v e b a r g a i n i n g . " The a p p r o p r i a t e g u i d e t o d e t e r m i n e t h e meaning o f words and p h r a s e s is s e c t i o n 1-2-106, MCA. The s t a t u t e r e a d s : " C o n s t r u c t i o n of words and p h r a s e s . Words and p h r a s e s u s e d i n t h e s t a t u t e s o f ~ o n t a n a a r e c o n s t r u e d a c c o r d i n g t o t h e c o n t e x t and t h e approved usage of t h e language, b u t t e c h n i c a l words and p h r a s e s and such o t h e r s a s have a c q u i r e d a pecu- l i a r and a p p r o p r i a t e meaning i n law o r a r e d e f i n e d i n c h a p t e r 1, p a r t 2, a s amended, a r e t o be c o n s t r u e d a c c o r d i n g t o such p e c u l i a r and a p p r o p r i a t e meaning o r d e f i n i t i o n . " The common meaning of t h e term " c o l l e c t i v e b a r g a i n i n g " is i d e n t i c a l t o t h a t used i n t h e t e c h n i c a l , l e g a l s e n s e . The A m e r i c a n C o l l e g e D i c t i o n a r y d e f i n e s c o l l e c t i v e b a r g a i n i n g a s " t h e p r o c e s s by which wages, h o u r s , r u l e s , and working c o n d i t i o n s a r e n e g o t i a t e d and a g r e e d upon by a union with an employer for all the employees collectively whom it represents." American College ~ictionary 236 (1966). Black's defines collective bargaining as: ". . . a procedure looking toward making of collective agreements between employer and accredited representative of emplo- yees concerning wages, hours, and other conditions of employment, and requires that parties deal with each other with open and fair minds and sincerely endeavor to overcome obstacles existing between them to the end that employment relations may be stabilized and obstruc- tion to free flow of commerce prevented. . . . Negotiation between an employer and organized employees as distinguished from individuals, for the purpose of determin- ing by joint agreement the conditions of employment." Black's Law Dictionary, 238-39 (Rev. 5th ed. 1979). The "appropriate" and "peculiar" meaning of the term in the law is expressed in the National Labor Relations Act. It is contemplated in the definition of "unfair labor practice" that collective bargaining is negotiation between the employer and a representative of the employees. 29 USCA Numerous federal cases have held that collective bar- gaining has the well understood meaning in the law of settling disputes by negotiation between the employer and the representative of the employees. See e.g., United Construction Workers v. Haislip Baking Co. (4th Cir. 1955), 223 F.2d 872. " . . . Collective bargaining is an activity, presupposing that the employees shall have opportunity in absence of their employer to canvass their grievances, formulate their demands in common, and instruct an advocate who they believe will best press their suit." NLRB v . Stow Manufacturing Co. (2nd Cir. 1954), 217 F.2d 900, 904. There is no specific definition of collective bargain- i n g i n Montana law. T h e r e f o r e , w e a d o p t t h e d e f i n i t i o n brought f o r t h by t h e f o r e g o i n g a u t h o r i t y . W e af f irm t h e D i s t r i c t Court ' s c o n c l u s i o n t h a t t h e c l o s i n g of t h e meeting t o d i s c u s s J a r u s s i ' s employment s t a t u s d o e s n o t f a l l w i t h i n t h e c o l l e c t i v e b a r g a i n i n g e x c e p t i o n , t h u s voiding a c t i o n t a k e n by t h e Board r e g a r d i n g J a r u s s i . J a r u s s i was d e a l i n g w i t h t h e S c h o o l Board r e g a r d i n g h i s own f u t u r e employment. H i s a c t i o n s were n o t on behalf of anyone else and t h e Board's d e c i s i o n s would n o t a f f e c t anyone else. Hence, J a r u s s i had t h e r i g h t t o be p r e s e n t d u r i n g t h e B o a r d ' s d e l i b e r a t i o n s r e g a r d i n g h i s f u t u r e w i t h t h e School District. If w e were t o adopt t h e Board's i n t e r p r e t a t i o n of c o l l e c t i v e b a r g a i n i n g , a n o t h e r avenue would be a v a i l a b l e t o c l o s e p u b l i c meetings. T h i s undermines t h e p o l i c y of t h e Open Meeting Law and is c o n t r a r y t o t h e l e g i s l a t i v e mandate t h a t t h e open m e e t i n g p r o v i s i o n s s h o u l d be l i b e r a l l y c o n s t r u e d . Affirmed. f o Chief J u s t i c e W e concur:

May 19, 1983

1bc91156-9a31-4247-b8f2-9a629b31cbdf

GRAHAM v CLARKS FORK NAT L BANK

N/A

82-136

Montana

Montana Supreme Court

No. 82-136 I N T H E SUPREME C O U R T O F T H E STATE O F MONTANA 1983 D E A N GRAHAM, P l a i n t i f f and Appellant, -vs- CLARKS F O R K NATIONAL EANK, Defendant and Respondent. Appeal from: D i s t r i c t Court of 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 , I n and f o r t h e County of Carbon, The Honorable Charles Luedke, Judge p r e s i d i n g . Counsel of Record: For Appellant: Morrow, Sedivy, Olson & Eck; Thomas Olson, Bozeman, Montana Swandal, Douglass & Swandal; Kent R. Douglass, Livingston, Montana For Respondent: Bridger Law O f f i c e ; Joseph Mudd, E r i d g e r , Montana Moulton, Eellingham, Longo & Mather, B i l l i n g s , Plontana Submitted on E r i e f s : A p r i l 15, 1 9 8 3 Decided: May 1.9, 1983 MAY 1 9 1 9 8 3 Clerk Mr. J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e C o u r t . T h i s appeal comes from t h e D i s t r i c t Court of 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 i n and f o r t h e County of Carbon P l a i n t i f f commenced t h i s a c t i o n seeking damages f o r conversion of c a t t l e . I n 1 9 7 8 - Dean Graham purchased n i n e t e e n head of r e g i s t e r e d c a t t l e . The c a t t l e were p a s t u r e d on land owned by h i s then son- in-law, Marvin Heyd. Heyd a l s o owned c a t t l e ; secured by C l a r k s Fork N a t i o n a l Bank, Heyd could not meet h i s o b l i g a t i o n s t o t h e bank, c o n s e q u e n t l y , t h e bank took p o s s e s s i o n of Heyd's c a t t l e , and by m i s t a k e , a l s o took Graham's c a t t l e . Graham a l l e g e d t h a t , d u r i n g t h e time t h e bank had p o s s e s s i o n , h i s c a t t l e l o s t weight. Graham a l s o a l l e g e d t h a t h i s c a t t l e were improperly p a s t u r e d w i t h b u l l s owned by Heyd, and a s a r e s u l t he was forced t o abandon a program of a r t i f i c i a l insemination. Graham brought s u i t a g a i n s t t h e bank a l l e g i n g c o n v e r s i o n , s e e k i n g damages i n e x c e s s of $200,000. During t h e t r i a l t h e c o u r t r e f u s e d Graham's o f f e r e d testimony concerning t h e value of a h y p o t h e t i c a l purebred angus c a l f crop. A l s o , t h e c o u r t granted t h e bank a d i r e c t e d v e r d i c t on Graham's c l a i m of f u t u r e damages and exemplary damages. The j u r y r e t u r n e d an award of $53,475. The D i s t r i c t Court s e t a s i d e t h e j u r y award a s e x c e s s i v e and g r a n t e d a new t r i a l l i m i t e d t o t h e i s s u e of damages a r i s i n g from t h e wrongful conversion. Graham appealed t o t h i s Court. T h i s Court held t h a t (1) t h e g r a n t i n g of a new t r i a l was p r o p e r , ( 2 ) on r e t r i a l , Graham should be allowed t o o f f e r evidence of f u t u r e c a l f c r o p l o s s e s , and ( 3 ) t h e c l a i m of exemplary damage should be submitted t o t h e jury. Graham v. C l a r k s Fork N a t i o n a l Bank ( 1 9 8 1 ) , Mont . - - , 631 P.2d 718, 38 St.Rep. 1140. The case was r e t r i e d and t h e j u r y awarded Graham $2,200 a c t u a l damages p l u s c o s t s . Graham a p p e a l s a g a i n . The a p p e l l a n t has r a i s e d two i s s u e s , both of which stem from evidence which was admitted concerning Marvin Heyd's c h a r a c t e r . F i r s t , a p p e l l a n t argues t h a t admission of t h e evidence was i n c l e a r v i o l a t i o n of t h i s C o u r t ' s mandate i n our f i r s t opinion; and second, by a d m i t t i n g t h e evidence t h e D i s t r i c t Court ignored t h e law of conversion. The c o n t e s t e d evidence appears i n s e v e r a l p l a c e s throughout t h e 874 page t r a n s c r i p t . A p p e l l a n t p o i n t s t o n i n e t e e n s p e c i f i c i n s t a n c e s where evidence was allowed concerning Marvin Heyd's c h a r a c t e r ; most of which focused on h i s l a c k of f i n a n c i a l r e s p o n s i b i l i t y . A p p e l l a n t c l a i m s t h a t s i n c e Heyd was t o p a s t u r e h i s c a t t l e , and, s i n c e Heyd was h i s son-in-law, t h e c h a r a c t e r of Heyd was a s s o c i a t e d w i t h h i m s e l f . A s a r e s u l t , a p p e l l a n t c l a i m s he was denied a f a i r and i m p a r t i a l t r i a l . A p p e l l a n t admits t h a t t h e r e never was an o b j e c t i o n t o t h e admission of any of t h e c o n t e s t e d evidence. Indeed, much of t h e evidence was i l l i c i t e d while a p p e l l a n t ' s t r i a l counsel was q u e s t i o n i n g t h e v a r i o u s w i t n e s s e s . Of t h e n i n e t e e n i n s t a n c e s of a l l e g e d e r r o r , twelve were brought about by the a p p e l l a n t him- s e l f . N o n e t h e l e s s , a p p e l l a n t c l a i m s t h a t t h e i s s u e is p r o p e r l y b e f o r e t h i s Court v i a t h e " p l a i n e r r o r " d o c t r i n e d i s c u s s e d i n Halldorson v. Halldorson ( 1 9 7 7 ) , 175 Mont. 170, 573 P.2d 169, where t h i s Court held t h a t absent o b j e c t i o n a t t r i a l , t h i s Court may c o n s i d e r i s s u e s r e l a t i n g t o t h e fundamental r i g h t s of t h e p a r t i e s . The p l a i n e r r o r d o c t r i n e is not a p p l i c a b l e t o t h i s c a s e . I n Halldorson, we e l a b o r a t e d on t h e d o c t r i n e by s t a t i n g : - " a p p e l l a t e c o u r t s have a duty t o determine whether t h e p a r t i e s b e f o r e them have been denied s u b s t a n t i a l j u s t i c e by t h e t r i a l c o u r t , and when t h a t has occurred we c a n , w i t h i n our sound d i s c r e t i o n , c o n s i d e r whether t h e t r i a l c o u r t has deprived a l i t i g a n t of a f a i r and i m p a r t i a l t r i a l , even though no o b j e c t i o n was made t o t h e conduct during t h e t r i a l . " Halldorson, 175 Mont. a t 174, 573 P.2d a t 172. - W e have c a r e f u l l y reviewed t h e record and see no reason t o u p s e t t h e v e r d i c t and judgment. A p p e l l a n t was not denied s u b s t a n t i a l j u s t i c e . H e received a f a i r t r i a l , a c c o r d i n g l y , we a f f irm. W e concur: Chief J u s t i v e - Mr. Justice John C. Sheehy, dissenting: I dissent. This Court should reverse the judgment in the District Court, and remand the cause for a new trial limited strictly to the issue of damages. There have now been two district court trials of this cause. After the first trial, the District Court granted a new trial, limited strictly to the issue of damages. On appeal, we affirmed the grant of the new trial limited to the issue of damages, and specified that additional factors relating to damages should be consid-ered in the next trial. When the next trial occurred, the issues were not limited to damages. It is on that basis that the plaintiff now appeals, and on which the plaintiff ought to be sustained. When we affirmed the grant of a new trial limited to the issue of dama.ges, that holding became the law of the case. When the District Court disregarded the law of the case, and expanded the second trial to include evidence of the character of a nonparty, it abandoned the law of the case, and the District Court should be checked in that abandonment. In explaining the law of the case, this Court has held: "The rule is well established and long adhered to in this state that where, upon an appeal, the Supreme Court, in deciding a case presented states in its opinion a principle or rule of law necessary to the decision, such pronouncement becomes the law of the case, and must be adhered to throughout its subsequent progress, both in trial court and upon subsequent appeals; and this although upon its subsequent consideration the Supreme Court may be clearly of opinion that the former decision is erroneous * * * It is a final adjudication from the consequences of which this Court may not depart, nor the parties relieve themselves (citing cases) . " Carlson v. Northern Pacific Railroad Company (1930), 86 Mont. 78, 281 P. 913, 914. See also Fiscus v. Beartooth Elec. Cooperative (1979) , 180 Mont. 434, 591 P.2d 196. This is a case where the bank seized Graham's cows for another person's debts in spite of the fact that Graham's cows carried brands which established their ownership and which brands were disregarded by the bank when the cows were seized. When Graham attempted to recover his cows, the bank refused to divulge their location and turned his cows into pasture with 6 unregistered bulls. Thus the bank destroyed the breeding program that Graham had established for his herd. By expanding the second District Court trial, as it did, the District Court allowed the bank to remove the "black hat" from its head, and put it on the head of a debtor, a factor that had no relationship to the damages sustained by Graham. Contrary to what is contained in the majority opinion, the holding of this Court in Halldorson v. Halldorson (19771, 175 Mont. 170, 573 P.2d 169, commands that we return this cause for a proper trial limited to the issue of damages sustained by Graham. The verdict which the majority is affirming here is manifestly insufficient.

May 19, 1983

d1f2bc94-1c83-4458-8803-ad0abbe6e57d

STATE v STARR

N/A

82-124

Montana

Montana Supreme Court

NO. 82-124 I N THE SUPREME COURT O F THE STATE OF M O N T A N A 1.983 STATE O F MONTANA, P l a i n t i f f and Respondent, -vs- AARON STARR, a/k/a F R A N K WETCH, Defendant and A 2 p e l l a n t . Appeal from: D i s t r i c t Court of 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 , I n and f o r t h e County of Yellowstone, The Honorable C h a r l e s Luedke, Judge p r e s i d i n g . Counsel of Record: For A p p e l l a n t : O v e r f e l t Law Firm; Gary O v e r f e l t , B i l l i n g s , Montana For Respondent: Ilon. Milce Greely , A t t o r n e y G e n e r a l , Helena, Yontana Harold F. Iianser, County A t t o r n e y , B i l l i n g s , Montana - -- Submitted: March 24, 1983 Decided: May 31, 1983 F i l e d : MAY 3 1 1983 '--. - - - C l e r k Mr. Justice John C. Sheehy delivered the Opinion of the Court. Aaron Starr was convicted upon jury trial in the District Court, Thirteenth Judicial District, Yellowstone County, Montana, on one count of felony sale of dangerous drugs, and one count of felony attempt (theft). He was sentenced to 15 years at the Montana State Prison, with the last 7 1/2 years suspended. We reverse his conviction for felony sale of dangerous drugs and dismiss that count against him; we affirm his conviction for felony attempt (theft). We remand the cause to the District Court for resentencing on his conviction of felony attempt (theft) . I. THE CONVICTION FOR SALE OF DANGEROUS DRUGS Starr, sometimes known as Frank Wetch, accompanied by a man named Russell, met with Howard Pederson (an undercover agent employed by the Yellowstone County Criminal Investigation Division) on September 13, 1981. Starr offered to sell Pederson one pound of "cocaine for $30,000." Pederson declined saying he was only interested in purchasing 11 pounds of cocaine. However, Pederson performed two "field tests" on the substance offered. The first test was negative, the second test was positive. A positive test does not necessarily indicate that the substance is cocaine, since the results can be positive for several substances, including 1-idocaine, a prescription drug, not defined as a dangerous drug under section 50-32-101, MCA. Pederson told Starr that he was not interested in purchasing the substance on that date, but stated he would buy 5 kilos on a subsequent date. Starr and his wife testified that the substance offered for sa.le on September 13, 1981, was in fact lidocaine and not cocaine. The grounds on which we reverse Starr's conviction for felony criminal sale of dangerous drugs (the offer to sell of September 13, 1981) are that the evidence is not sufficient beyond a reasonable doubt to sustain his conviction under the statute defining the offense, and that error occurred in the instructions. Section 45-9-1-01, MCA, provides in part: "(1) A person commits the offense of criminal sale of dangerous drugs if he . . . offers to sell . . . any dangerous drug as defined in 50-32-101." To sustain the conviction of Starr on an offense under this sta.tute, the State was required to prove that (1) Starr (2) offered to sell (3) a defined dangerous drug. The statute, in its form at the time of this alleged offense, does not include the offer of sale of a look-alike drug such as lidocaine. The State must prove beyond a reasonable doubt every element of the crime charged. State v. Hamilton (1980), Mon t . , 605 P.2d 1121, 37 St.Rep. 70. Under the testimony of the chemist for the state crime laboratory, a witness produced by the State, it is clear that the field tests used by Pederson on September 13, 1981, to test the substance that was being offered for sale, would yield a positive blue color, whether the substance was cocaine or lidocaine: "Q. Now lidocaine obviously gives a positive blue color in a field test kit, doesn't it? A. Yes. I1Q. Are you familiar with the quality or brightness of blue the 1idoca.ine would show as compared with cocaine? A. Yes. "Q. And will you give us that? A. The experience I have is that cocaine will give a brighter blue, but a fairly strong concentration of lidocaine will give about the same precipitate as a weaker concentration of cocaine, so there is no real way by looking at the test that you can tell for sure what's there or what concentration." Tr. at 148-149. Other than the field tests, there was no proof offered by the State as to the nature of the substance that Starr was offering for sale on September 13, 1981. Such lack of proof as to the exact nature of the substance offered by Starr differentiates this case from State v. Dunn (1970), 155 Mont. 319, 332, 472 P.2d 288. In Dunn, although the State was not able to produce the substance sold by the defendant Dunn because his two recipients had swallowed the substance, their testimony as to the effect of the drugs on them and their hallucinations for a considerable period of time thereafter sufficed to prove that the substance which the defendant had sold or offered to sell was actually LSD. In this case, the State produced circumstantial evidence through the field tests administered by Pederson that the substance offered may have been cocaine; its subsequent evidence indicates also that the substance may have been lidocaine. The rule in Montana is that to justify a conviction on circumstantial evidence, the facts and circumstances must not only be entirely consistent with the theory of guilt, but must be inconsistent with any other rational theory. State v. Stoddard (1966), 147 Mont. 402, 412 P.2d 827. We therefore hold tha.t the evidence is not sufficient beyond a reasonable doubt to sustain Starrls conviction on the offer to sell da-ngerous drugs. Starr also relies in this appeal on error in the instructions regarding the charge of the criminal sa1.e of dangerous drugs. In pertinent part, the District Court instructed the jury: "Instruction no. 10: "A person commits the offense of criminal sale of dangerous drugs if he sells, barters, exchanges, gives away, or offers to sell, barter, exchange, or give away, or manufactures, prepares, cultivates, compounds or processes any dangerous drug as defined by law. "To convict the defendant of the crime of Criminal Sale of Dangerous Drugs, the State must prove beyond a reasonable doubt that the defendant sold a dangerous drug as defined by law, - - - or that the defendant --- sold what he believed - - - to be a dangerous drug.. . . (Emphasis added.) "Instruction no. 12: "If you find that the defendant offered for sale or sold* what -- he believed - - - to be a dangerous drug, you must find him guilty regardless of whether or not - the substance was in fact a dangerous drug. (Emphasis added.) "Instruction no. 17: "A dangerous drug, as defined by the Montana. Code Annotated, does not include Lidocaine." In instruction no. 9, the court instructed the jury with respect to each of the four counts with which Starr was originally charged, that "the State must prove beyond a reasonable doubt that each element of each offense was committed or perpetrated purposely or knowingly by the defenda.nt as a voluntary act." In the same instruction, instruction no. 9, the court defined the terms "purposely" and "knowingly," in the language of the respective statutes defining the same. Section 45-2-101 (58) , MCA [purposely] ; section 45-2-101 (33) , MCA [knowingly]. The defendant offered his proposed instructions no. 20 and 22 as follows: "Defendant's proposed instruction no. 20: "A person commits the offense of criminal sale of dangerous drugs if he: ' I 1 . Knowingly or purposely sells, barters, exchanges, gives away or offers to sell, barter, exchange or give away or manufactures, prepares, cultivates, compounds, or processes any dangerous drugs; and "2. Knows -- that the substance - - is a dangerous drug. "Defendant's proposed instruction no. 22: "To sustain the charge of criminal sale of dangerous drugs, the State must prove the following propositions: "1. That the Defendant purposely or knowingly sold, bartered, exchanged or gave away a dangerous drug; or "2. The Defendant offered to sell, barter, exchange or give away a dangerous drug; or l ' 3 . The Defendant manufactured, prepared, cultivated, compounded or processed any dangerous drug; and "4. The Defendant knew that the substance was in --- -- fact a dangerous drug." (Emphasis added.) - - It will be seen by the instructions given and refused as above set out that the court instructed the jury that Starr could be convicted of the crime of offering to sell dangerous drugs if he believed the substance he was offering was a dangerous drug; while, under the instructions offered by Starr, he could not be convicted of the crime of offering to sell dangerous drugs unless he knew that the substance offered was in fact a dangerous drug. Starr contends that the count charging him with offering to sell dangerous drugs required the State to prove as an element of the offense his specific intent to transfer then or in the future a dangerous drug. The State, on the other hand, contends that Starr's assertion that the substance offered for sale must in fact be a dangerous drug is a narrow reading of the statute defining "offer for sale" as a crime, a reading not compelled by the language or purpose of the statute, nor by any general policy of Montana's criminal law. Of course it is the duty of the District Court to instruct the jury on every issue or theory having support in the evidence. State v. Th0ma.s (1966), 147 Mont. 325, 413 P.2d 315. In determining whether to give an instruction, the inquiry of the District Court must only be whether any evidence exists in the record to warrant an instruction on the theory or issue submitted. See State v. Buckley (1976) , 171 Mont. 238, 242, 557 P.2d 283; State v. Taylor (1973), 163 Mont. 106, 515 P.2d 695. Conversely, when no evidence exists to support a submitted instruction, such form of instructions should not be given. An example is State v . Buckley, supra, where the District Court had withdrawn an instruction on mitigated deliberate homicide, this Court approved the withdrawal on the ground tha.t there was no evidence in the cause upon which the court could have submitted the lesser-included offense of mitigated deliberate homicide. Here, there was no evidence that Starr believed that he was in fact offering cocaine for sale. To that extent, there was instructional error in this cause, since the instruction had no foundation in the evidence. We do not agree with Starr, however, on his contention that it was the duty of the State to prove Starr's specific intent to transfer a dangerous substance then or at a subsequent time. Since Montana revamped its criminal statutes in 1973 by adopting in essence the Model Penal Code, specific intent is not an elemental concept, unless the statute defining the defense requires as an element thereof a specific purpose. (Examples of "duel intent" statutes: section 45-5-303, MCA (aggravated kidnapping); section 45-6-204, MCA (burglary) ; section 45-6-301, MCA (theft) . ) State v. Klein (1976), 169 Mont. 350, 547 P.2d 75. Section 45-9-101, MCA, defining criminal sale of dangerous drugs, has no internal requirement of mental state as an element of the crime. It is therefore subject to section 45-2-103, MCA, providing generally for mental states. That statute requires that with respect to each element described by the statute defining a . n offense, the defendant must have one of the mental states described as "purposely," "knowingly," or "negligently. " Sections 45-2-101 (33) , (37) , (58), MCA. "Negligence," or "negligently" is not a mental state applicable here to the crime of sale of dangerous drugs, but the mental states of purpose (or purposely,) or knowledge (or knowingly,) do have application. A person acts purposely with respect to a result or to conduct described by a statute defining an offense if - - - it is his conscious obiect to engage in that conduct or to cause that result. - - - - Section 45-2-101 (58) , supra. Thus a person acting purposely to sell- or to offer to sell what he believed to be a dangerous drug would have the requisite purpose to engage in the conduct or to cause the result that is defined by the statute on criminal sale of dangerous drugs. A person selling lidocaine or offering to sell lidocaine, believing it to be cocaine, would have the requisite purpose to constitute the mental state required to commit the crime of sale of dangerous drugs. In effect, we held so i . n State v. Hendricks (1970), 171 Mont. 7, 555 P.2d 743. Occasionally, this Court has referred to "specific intent" in discussing mental states since the adoption of the 1973 Criminal Code. Parties and attorneys should not be misled. It is well. to keep in mind the provisions of the Montana Criminal Code as explained by Essman, - A Primer - on Mental State - in - the Montana Criminal Code of 1973, 37 - - - "The Montana code uses only three classifications in evaluating the defendant's mental state: purposely, knowingly, and negligently. These mental state classifications are defined in relation to four objectively measurable conditions or occurrences: conduct, circumstances, facts, and result. However, all four criteria do not apply to each mental state. 'Purposely,' which means with a conscious objective, relates to conduct or result. 'Knowingly,' defined as 'awareness,' relates to conduct, circumstances, facts or result. 'Negligently,' relates only to circumstances and result. Thus, two functions are performed in analyzing the statute which describes an offense. First, determining which mental state must be proved, and second, determining to which of the four conditions or occurrences the mental states relate. " In this case, with respect to the "offer to sell" charge against the defendant, the mental state "purposely" or "knowingly" was required to be proved by the State. "Purposely" relates to conduct or result. Under that test, 9 if defendants conscious objective was to offer to sell a dangerous drug, or to result in a sale of a dangerous drug, the mental state element of the crime would have been satisfied. If Starr had in fact believed that the substance he was selling or offered to sell was cocaine, the mental state test of purpose would have been met. Starr also contended in his appeal tha.t the statute under which he was charged with offering to sell dangerous drugs is unconstitutionally vague. Starr's constitutiona.1 argument was predicated upon the refusal of the District Court to apply the holding in State v. Anderson (1972), 159 Mont. 344, 498 P.2d 295, to this case. In Anderson, where the defendant had been charged with "wilfully, unlawfully and feloniously selling a stimulant drug" this Court reversed his conviction upon the ground that a required element for the State to prove in connection with the crime was that the defends-nt, an osteopath, had knowledge that the "diet pills" which he had sold did in fact contain an ingredient of a dangerous drug. Starr contends that under Anderson, he was entitled to his offered instructions no. 20 and 22 which are set out previously. Starr argues that since knowledge under Anderson is necessary to prove an actual sale of dangerous drugs, the statute is unconstitutionally vague if under a charge of offering to sell drugs, a defendant's belief that the substances he is offering are dangerous drugs is sufficient for conviction. We have disposed of much of Starr's contenti-ons with respect to constitutionality in our previous discussion on the instructions. He relies on a California case, People v. Daniels (1975), 122 Cal.Rptr. 872, 537 P.2d 1232, where the California court in passing held that an offer for sale of dangerous drugs required a showing of a specific intent on the part of the defendant. As we have stated above, Montana, since the adoption of its Criminal Code in 1973, does not concern itself with "specific intent" unless the statute defining the offense requires the finding of a special purpose in addition to the mental states of knowingly or purposely committing the acts constituting the crime. Starr is not affected in this case under our holding here because since there was no evidence of his belief that he was selling a dangerous drug, we have found it improper for the jury to be instructed as to his belief. We do determine, however, to settle the matter, that section 45-9-101, MCA, is not unconstitutionally vague when read in conjunction with the statutes supplying the necessary mental states of purposely and knowingly. 11. THE CONVICTION FOR FELONY ATTEMPT (THEFT) Starr was convicted of attempt to commit felony theft. The theory of the State was that Starr attempt.ed to obtain $95,000 by deception on September 18, 1981, by inducing Pederson to give him money in exchange for a substance which the defendant had represented to Pederson as cocaine, but which was in fact a different substance. Following the events which we have earlier described on September 13, 1981, Starr met with Pederson and one Miller on September 16, 1981. At that time, Starr did not have 1 . 1 pounds of the substance, but Pederson had the money. Starr was allowed to see the money. He qave Pederson a sample of the material, and it was determined that the exchange would take place on September 18, 1981. On September 17, Starr flew to Lewistown, Pennsylvania, headquarters for Pharmadex Industries, where he obtained the lidocaine (called by Starr "Keystone Incense"). Starr returned to Billings on September 18, and on that date he and a friend again met Miller and Pederson for the exchange. Starr represented the substances as cocaine. Miller did a field test on each bag and told Pederson that it was positive for cocaine. An exchange took place. Pederson paid $95,000 (of which Miller took $10,000) and Pederson took the substance which was sold as cocaine. Starr was arrested shortly thereafter and taken to the Yellowstone County courthouse for initial appeara.nce. At that time he told the justice of the peace that he was not selling cocaine, but a compound of lidocaine and caffeine. Subsequent analysis of the material seized on September 18, 1-981, confirmed that it was not cocaine but rather a compound of lidocaine and fructose, a non-controlled fruit sugar. Starr contends that in this case he was selling the lidocaine for approximately $7,700 per pound. He contends that the street value of cocaine at the time was $100 per gram and the street value of the substance which he sold was between $18 to $19 per gram. Thus, Starr contends that he had exacted only a fair price for the lidocaine. He offered several instructions to the District Court, which were refused. Section 45-6-301, MCA, defines felony theft by deception: "(2) A person commits the offense of theft when he purposely or knowingly obtains by . . . deception control over property of the owner, and: "(a) ha.s the purpose of depriving the owner of the property . . . " (5) . . . A person convicted of the offense involving property exceeding $150 in value [is guilty of a felony]." "Deception" is defined in section 45-2-101(17) (a), MCA, as knowingly creating, or confirming in another an impression which is false and which the offender does not believe is true. As the State contends, there is no dispute in this case over the fact that the defendant committed theft by deception. The only real question is whether the State must prove when the defendant obtained a quantity of money in exchange for property represented to be fit for a particular purpose, and then delivered other property not fit for that purpose, that the value of the property delivered is more than $150 less than the value of the property promised. The defendant relies on State v. Lagerquist (1968), 152 Mont. 21, 445 P.2d 910. In Lagerquist, the buyer contracted with the seller to deliver a quantity of hay for a certain price. The buyer determined later that the seller had failed to deliver the agreed quantity of hay. The court found evidence that the buyer had paid about $50 more than he should have, making it a. felony under the statute then in effect. In Lagerquist, the deception involved the amount of the substance, not its identity. He was defrauded only to the extent that he received less than he bargained for. Here, the State is correct in its contention that Pederson bargained for cocaine, and received lidocaine. The defendant defrauded Pederson in the transaction by his deception for an amount in excess of $150. We find no merit therefore in Starr's contention that felony theft was not proved in this case, nor in the refusal by the District Court of instructions requested by Starr to sustain his contentions, nor in the refusal of the District Court to instruct the jury as to misdemeanor theft. 111. Accordingly, we reverse the conviction of Starr for criminal sale of dangerous drugs and dismiss that count on which he was convicted. We affirm his conviction for felony attempt (theft). We remand this cause to the District Court for resentencing as to the conviction which is here affirmed. We Concur: 9&J4 & d 4 Chief Justice \ Justices Mr. Justice Daniel J. Shea, specially concurring: I join in the decision but simply state that this case like so many coming before this Court, hardly demonstrates that the trial courts, the prosecuting attorney, and defense lawyers, are aware of all the provisions in the criminal code bearing on the issues of purposely and knowingly and the issue of causation. See my dissent in State v. Pierce (19821, - Mont . , 651 P.2d 62, 39 St.Rpe. 1205, where many of these provisions are discussed.

May 31, 1983

b1a14d1c-842c-4be4-a2f9-b3a9cdbf5ffc

MILLERS MUTUAL INS CO v STRAINER

N/A

82-379

Montana

Montana Supreme Court

No. 82-379 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 3 MILLERS MUTUAL INSURANCE COMPANY, p l a i n t i f f a n d R e s p o n d e n t , v s . ANTHONY STRAINER, D e f e n d a n t a n d A p p e l l a n t . A p p e a l f r o m : D i s t r i c t C o u r t o f t h e F i r s t J u d i c i a l D i s t r i c t , I n a n d f o r t h e C o u n t y o f L e w i s a n d C l a r k H o n o r a b l e Gordon R . B e n n e t t , J u d g e p r e s i d i n g . C o u n s e l o f R e c o d r d : F o r A p p e l l a n t : J a c q u e s , G a l l a g h e r & Murphy, H e l e n a , Montana Leo J . G a l l a g h e r a r g u e d , H e l e n a , Montana F o r R e s p o n d e n t : K e l l e r , R e y n o l d s , D r a k e , S t e r n h a g e n & J o h n s o n , H e l e n a , Montana P . K e i t h K e l l e r a r g u e d , H e l e n a , Montana F o r Amicus C u r i a e : U t i c k , G r o s f i e l d & Uda, H e l e n a , Montana F i l e d : S u b m i t t e d : March 8 , 1983 D e c i d e d : May 1 9 , 1983 MAY 1 9 1983 Mr. Justice Frank R. Morrison, Jr. delivered the Opinion of the Court. This is an appeal from a declaratory judgment entered by the District Court of the First Judicial District, State of Montana, determining that Millers Mutual Insurance Company (Respondent) had no liability for coverage or defense to Anthony Strainer (Appellant). We vacate the judgment of the District Court. On December 16, 1981, respondent brought a declaratory judgment action against appellant to determine the parties' rights, liabilities and duties under a homeowner's policy issued by respondent to appellant. Previously appellant had been named as a co-defendant with ASARCO, Inc., in a personal injury action brought by one Alfred Elwell. Respondent sought a declaration that it was not required to provide coverage or afford defense of the action because the allegations underlying the third party action were outside the scope of coverage of the issued policy. On October 18, 1979, in the ASARCO plant in East Helena, Alfred Elwell was allegedly injured when he was the object of a practical joke played by Strainer, a co-employee. Workers at the ASARCO plant are required to wear respirators in a portion of the plant. Due to complaints by the workers that the respirators were leaking, the respirators were being checked by means of a test which pumped air through a glass tube filled with a solid chemical. The forced air produced smoke which was then directed into the faces of the workers wearing respirators. After the tests were completed and without knowledge on the part of Elwell, the appellant removed a filter tube in Elwell's respirator and, according to the agreed facts, Strainer then: ". . . squirted a puff of the smoke into the respirator's air chamber. Mr. Strainer knew the dust caused people to cough, but did not know the chemical contents of the glass tube, stanic oxychoride, was [sic] dangerous and did not know the smoke would cause any injury other than momentary discomfort as a result of coughing and inserted the smoke solely as a practical joke." Elwell inhaled the smoke and allegedly was seriously injured. On October 15, 1981, Elwell filed suit against ASARCO and appellant, claiming they were liable to him for his injuries. ASARCO subsequently moved for and was granted a summary judgment based upon the exclusive remedy afforded by workers' compensation. However, the action against appellant was premised upon an intentional act and therefore fell outside the exclusive remedy provisions of workers' compensation. The issue presented here is whether an intentional act sufficient to remove a case from the exclusive remedy provisions of the Worker's Compensation Act is the kind of intentional act which denies coverage in a third party action based upon the "intentional act" exclusions of an insurance policy. If the intentional act contemplated by workers' compensation law is the same type of intentional act contemplated by the insurance policy exclusion, then the appellant must fail. Respondent presents a second but related issue. Respondent contends that Elwell's complaint, in Paragraph VI, alleges that the appellant Strainer intended Elwell's injuries and that irrespective of what the stipulated facts show, there can be no coverage where the complaint invokes the policy exclusion. Paragraph V of Elwell's complaint alleged, in pertinent part, that the appellant Strainer "maliciously, wilfully, and intentionally . . . squirted hydrogen chloride gas, or other comparble acid and abrasive gases, into [Elwell's] respirator hoses, causing [Elwell] to go into convulsions and to he permanently and seriously injured." Paragraph VI of the complaint alleged: "That [Elwell ' s] serious and totally and permanently disabling injuries were the proximate result of [Strainer's] malicious, wilfull, and intentional acts; that [Strainer] is, despite his position as safety officer at ASARCO Inc.'s East Helena Smelter, known on the job as a 'clownf and 'practical jokerf, which was known to Defendant ASARCO, Inc. both before and after the incident herein complained of, and ASARCO, Inc. failed both before and after this incident to take any measures to prevent [Strainer], its employee and agent, from causing injury to others; that since the incident complained of, ASARCO, Inc. has further ratified and approved the conduct of [Strainer] complained (Emphasis supplied) It was upon Paragraph VI, and specifically the emphasized language, that the trial court based its conclusion that the policy involved excluded coverage for damages or for defense of the third party action. The insurance policy provided for coverage for all damages appellant became legally obligated to pay "because of bodily injury or property damage . . . caused by an occurrence," but specifically excluded coverage for "bodily injury or property damage which is either expected or intended from the standpoint of the insured." For Elwell to bring a third party action, and not be barred by the exclusive remedy of workers' compensation, he must fall within the provisions of section 39-71-41.3, MCA, which provides as follows: "Liability of fellow employee for intentional and malicious acts or omissions--additional cause of action. If an employee receives an injury while performing the duties of his employment and the - injury or injuries so received & the employee are caused & the inteytional and malicious act or - - omission - of - a servant or employee of his employer, -- then the employee . . . shall, in addition to the - - right to receive compensation under the Workersf Compensation Act, have a right to prosecute any cause of action he may have for damages against the servants or employees of his employer causing the in jury. " (Emphasis added) The underlined language must be compared to the language of exclusion in the insurance policy. As previously noted the policy excluded coverage for "bodily injury or property damage which is either expected or intended from the standpoint of the insured. " The language of section 39-71-413, MCA, refers to an intentional act without regard to intending the results of the act. The exclusion in the insurance policy does not exclude intentional acts but only excludes bodily injury which is intended. Respondent relies upon Enberg v. Anaconda Company (1971), 158 Mont. 135, 489 P.2d 1036 and Great Western Sugar Co. v. District Court (1980) , Mon t . , 610 P.2d 717, 37 St.Rep. 874, for the proposition that section 39-71-413, MCA, requires intentional injury before a third party action may be brought. However, these two cases did not turn on the distinction between intentional act and intentional injury. Rather this Court determined that the conduct in question fell short of the type of intentional conduct necessary to create the third party action. In Great Western Sugar this Court concluded: " . . . the 'intentional harm' which removes an employer from the protection of the exclusivity of the Workers' Compensation Act is such harm as is maliciously and specifically directed at an employee, or class of employees, out of which such specific intentional harm the employee receives injuries as a proximate result. Any incident involving a lesser degree of intent or general degree of negligence not pointed specifically and directly at the injured employee is barred by the exclusivity clause as a basis for recovery against the employer outside the Workers' Compensation Act." Great Western Sugar, supra, 610 P.2d at 720, 37 St.Rep. at 877. The above quoted language is more supportive of appellant's position than it is of respondent's. However, we find the case of Northwestern National Casualty vs. Phalen (1979), 182 Mont. 448, 597 P.2d 720, to be more nearly on point. In the Phalen case the plaintiff alleged in Count I, that the insured and one Harry Johnson wilfully, maliciously and wrongfully assaulted him, and in Count 11, alleged that the insured "negligently, carelessly, and wrongfully assault[edl [him], and . . . negligently and carelessly cause[d] [him] personal injuries." The court interpreted the provision which excluded from coverage bodily injury which "is either expected or intended from the standpoint of the insured." The court held that where the results of the insured's intentional acts are unexpected or unintended, the policy would provide coverage. Phalen clearly established that intentional acts are not excluded under an insurance policy unless the intentional act results in injuries which would be expected or intended. A person may act intentionally without intending or expecting the consequences of that act. Respondent argues that for one to act malicously one must necessarily intend the consequences of the act. Respondent relies upon Boyer v. Kloepfer (1976), 170 Mont. 472, 554 P.2d 1116, wherein this Court equated malice with an intent to injure. However, the general definition of malice is more expansive. In Cashin v. Northern Pac. R. Co., (1934), 96 Mont. 92, 28 P.2d 862, this Court defined malice as "a wish to vex, annoy or injure another person, - or an intent to do a wrongful act." (Emphasis supplied) The Montana Supreme Court has also implied malice where the intentional acts of a defendant were committed without justifiable excuse, privilege or defense. Poeppel v. Fisher (1977), 175 Mont. 136, 572 P.2d 912. We hold that malice can be found where acts are intentional though the consequences are not. Respondent contends that Elwell's complaint pleads intentional injury and such an allegation is dispositive of this appeal. We do not agree. The language of the complaint is ambiguous. Paragraph V pleads that Strainer acted maliciously. Para.graph VI of the complaint, hereinbefore quoted, contains language which can be interpreted to mean that Strainer intended Elwell's injuries. However, the language found in Paragraph VI is belied by the stipulated facts. In the declaratory judgment action which forms the basis of this appeal the agreed facts show that the appellant Strainer intended only that Elwell would experience some coughing and discomfort and knew nothing of the dire consequences which allegedly followed. Under these circumstances facts admitted by the respondent insurance company foreclose application of the policy exclusion which only excludes expected or intended bodily injury. In summary, we hold that section 39-71-413, of the Workers' Compensation Act, permits the filing of a third party action where acts of an employee are intentional irrespective of whether the results of that act were intended. The agreed facts here stated form the basis for such a third party action. These same facts are not excluded - by insurance policy language referring to "bodily injury or property damage which is either expected or intended." We remand to the District Court with directions to enter declaratory judgment in favor of appellant affording both coverage and a defense to appellant under the terms of the subject policy. We concur:

May 19, 1983

1855129f-aff9-4e50-913a-88e42a70310b

79 RANCH INC v PITSCH

N/A

82-361

Montana

Montana Supreme Court

190. 82-361- I N T H E SUPREME COURT OF TEE STATE OF MONTANA 1983 7 9 RANCH, I N C . , a Mont. c o r p . , and HARRY V A N D E R V O O R T , P l a i n t i f f s and Respondents, -vs- REUBEN C. PITSCH, Defendant and Appellant. Appeal f r o n : D i s t r i c t Court of t h e Fourteenth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Golden Valley, The Honorable LeRoy XcRinnon, Judge p r e s i d i n g . Counsel of Records For A ~ p e l l a n t : F e l t & Nar-tin; Laurence R. I ~ l a r t i n acgued, Bj.llings, Montana For Respondents: Ask & P r a t t : Thomas M. Ask argued, !?oundup, Montana T~loulton, Bellingham, Longo & Flather; W i l l i a m Mather argued & William Forsytke argued, B i l l i n g s , Montana Submitted: A p r i l 7 , 1983 Decided: June 2 1 , 1983 F i l e d : JUN 2 1 1983 ----- Clerk Mr. J u s t i c e L . C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. P l a i n t i f f s , 79 Ranch and Harry Vandervoort, began t h i s a c t i o n i n 1977 s e e k i n g t o e n j o i n d e f e n d a n t P i t s c h from using w a t e r i n Big Coulee Creek, and seeking a d e t e r m i n a t i o n of each p a r t y ' s w a t e r r i g h t s i n t h e c r e e k . A f t e r a h e a r i n g , t h e D i s t r i c t Court e n t e r e d s c a n t f i n d i n g s and e s t a b l i s h e d t h e following water r i g h t s and p r i o r i t i e s : " ( a ) Vandervoort -- 50 i n c h e s f o r use on W$ S e c t i o n 23-6N-21E., w i t h p r i o r i t y d a t e a s of J u n e 1, 1924. " ( b ) 79 Ranch -- 45 i n c h e s f o r use on SWV~ S e c t i o n 25-5N-19E., w i t h p r i o r i t y d a t e a s of J u n e 13, 1973. " ( c ) P i t s c h -- 68 i n c h e s f o r use on S e c t i o n 35-5N-19E., w i t h p r i o r i t y d a t e a s of J u l y 1, 1976." P i t s c h and 79 Ranch appealed from t h i s judgment, b u t t h e c a s e was remanded f o r f u r t h e r f i n d i n g s by t h e D i s t r i c t Court. See, 79 Ranch, I n c . v. P i t s c h ( 1 9 8 1 ) , Mont. , 631 P.2d 690, 38 St.Rep. 1048. On remand, t h e ~ i s t r i c t Court amended its f i n d i n g s and c o n c l u s i o n s , and t h e n r e e n t e r e d t h e o r i g i n a l judgment quoted above. P i t s c h and 79 Ranch a g a i n a p p e a l . P i t s c h , 79 Ranch, and Vandervoort own land along Big Coulee Creek i n Golden V a l l e y County, Montana. P i t s c h l i v e s immediately upstream of 79 Ranch. V a n d e r v o o r t ' s ranch is about e i g h t e e n miles downstream. I n 1975, P i t s c h bought h i s land from B e r t S c h a f f . B e r t S c h a f f had decided t o begin i r r i g a t i n g h i s land i n 1973 and f i l e d a n o t i c e of a p p r o p r i a t i o n f o r 30 c u b i c f e e t per second ( c . f . s . ) of w a t e r . He ordered a s p r i n k l e r system, b u t d i d n ' t r e c e i v e a l l of t h e n e c e s s a r y p a r t s and t h e r e f o r e never i r r i g a t e d . When P i t s c h bought t h e land and water r i g h t s , he i n s t a l l e d a d i f f e r e n t s p r i n k l e r system and began i r r i g a t i n g i n J u l y 1976. 79 Ranch, o p e r a t e d by Eugene S c h a f f , a l s o f i l e d a n o t i c e of a p p r o p r i a t i o n and ordered a s p r i n k l e r system i n 1973. 79 Ranch i n s t a l l e d t h e s p r i n k l e r system, s i m i l a r t o t h e one ordered by B e r t S c h a f f , and began i r r i g a t i n g i n J u l y 1973. P i t s c h and 79 Ranch c l a i m a p o r t i o n of a water r i g h t e s t a b l i s h e d i n 1893 by t h e Montana C a t t l e Company. Montana C a t t l e Company had f i l e d a n o t i c e of a p p r o p r i a t i o n and i r r i g a t e d , by a s e r i e s of d i t c h e s , land now owned by P i t s c h and 79 Ranch. Testimony a t t r i a l i n d i c a t e d t h a t i r r i g a t i o n by Montana C a t t l e Company stopped i n 1911 o r 1913. P i t s c h a l s o c l a i m s a s e p a r a t e water r i g h t stemming from two n o t i c e s of a p p r o p r i a t i o n f i l e d by Claude H i l l , a s u c c e s s o r i n i n t e r e s t t o 1/3 of t h e Montana C a t t l e Company water r i g h t and p r e d e c e s s o r t o P i t s c h . These n o t i c e s d i d n o t comply w i t h t h e s t a t u t o r y procedures. Testimony a t t r i a l i n d i c a t e d t h a t a few a c r e s of P i t s c h ' s land was i r r i g a t e d i n t h e 1 9 2 0 ' s . No firm evi- dence was p r e s e n t e d , however, showing e x a c t l y when t h e d i t c h e s were used, how much water they c a r r i e d , and which l a n d s were i r r i g a t e d a t which times. Vandervoort t r a c e s h i s water r i g h t from four n o t i c e s of a p p r o p r i a t i o n : 1,000 m i n e r ' s inches f i l e d i n 1902, 100 miner I s i n c h e s f i l e d i n 1909, 320 m i n e r ' s i n c h e s f i l e d on J u n e 11, 1925, and 300 i n c h e s f i l e d i n 1926. The d i s p u t e h e r e a r o s e i n t h e d r y summer of 1977. 79 Ranch and Vandervoort c l a i m t h a t when P i t s c h began i r r i g a t i n g i n J u n e of 1977, t h e r e was i n s u f f i c i e n t water i n t h e creek f o r t h e i r c a t t l e and f i e l d s . N e g o t i a t i o n s f a i l e d and t h i s l a w s u i t followed. While t h e main i s s u e on appeal is whether the water r i g h t s claimed by P i t s c h and 79 Ranch were abandoned, P i t s c h h a s a l s o r a i s e d t h e following o t h e r i s s u e s on appeal : 1. Whether t h e D i s t r i c t Court e r r e d by f a i l i n g t o f i n d t h a t P i t s c h ' s predecessor i n i n t e r e s t , Claude H i l l , had acquired a water r i g h t i n t h e 1 9 2 0 ' s . 2. Whether t h e District Court e r r e d by f i n d i n g t h a t B e r t S c h a f f f a i l e d t o e x e r c i s e reasonable d i l i g e n c e . 3. Did t h e District Court e r r i n f i n d i n g t h a t V a n d e r v o o r t ' s r i g h t t o use 50 i n c h e s of water has a p r i o r i t y d a t e of J u n e 1, 1924? 4. Did t h e District Court e r r i n f i n d i n g t h a t 79 Ranch may a p p r o p r i a t e 45 i n c h e s of water under t h e J u n e 1 3 , 1973, n o t i c e of a p p r o p r i a t i o n f i l e d by Eugene Schaf f ? The D i s t r i c t Court found t h a t t h e water r i g h t s claimed by P i t s c h and 79 Ranch had been abandoned because t h e water had not been used f o r a t l e a s t f o r t y , and perhaps a s many a s s i x t y suc- c e s s i v e y e a r s . P i t s c h and 79 Ranch argue t h a t t h e mere showing of nonuse even f o r a long period of time, is not s u f f i c i e n t t o s u p p o r t a f i n d i n g of abandonment. W e d i s a g r e e . Abandonment of a water r i g h t is a q u e s t i o n of f a c t . S e c t i o n 89-802, Revised Codes of Montana, 1947, ( a p p l i c a b l e h e r e , r e p e a l e d i n 1 9 7 3 ) . Our scope of review is t h e r e f o r e l i m i t e d t o d e t e r m i n i n g whether t h e r e is s u f f i c i e n t evidence t o s u p p o r t t h e D i s t r i c t C o u r t ' s f i n d i n g s . Bagnell v. Lemery ( 1 9 8 3 ) , Mont. - , 657 P.2d 608, 40 St.Rep. 58. Forty y e a r s of nonuse is s t r o n g evidence of an i n t e n t t o abandon a water r i g h t , and, i n e f f e c t , r a i s e s a r e b u t t a b l e presumption of abandonment. Because P i t s c h and 79 Ranch have f a i l e d t o r e b u t t h i s presumption, t h e D i s t r i c t C o u r t ' s f i n d i n g must be a f f i r m e d . The a p p r o p r i a t i o n of water is based on its b e n e f i c i a l u s e . When t h e a p p r o p r i a t o r or h i s successor i n i n t e r e s t abandons o r c e a s e s t o use t h e water f o r its b e n e f i c i a l u s e , t h e water r i g h t c e a s e s . S e c t i o n 89-802, R.C.M., 1947 ( r e p e a l e d 1973 ) . T h i s fundamental p r i n c i p l e h a s long governed t h e d e t e r m i n a t i o n of water r i g h t s i n Montana. I n Power v. Switzer ( 1 8 9 8 ) , 21 Mont. 523, 55 P. 32, t h i s c o n t r o l l i n g p o l i c y of b e n e f i c i a l use was e x p l a i n e d : ". . . I t has been a mistaken i d e a i n t h e minds of many, n o t f a m i l i a r w i t h t h e c o n t r o l l i n g p r i n c i p l e s a p p l i c a b l e t o t h e use of water i n a r i d s e c t i o n s , t h a t he who h a s d i v e r t e d , o r ' c l a i m e d ' and f i l e d a claim o f , w a t e r f o r any number of g i v e n i n c h e s , h a s t h e r e b y acquired a v a l i d r i g h t , good a s a g a i n s t a l l subsequent persons. But, a s t h e s e t t l e m e n t of t h e c o u n t r y h a s advanced, t h e g r e a t value of t h e use of water has become more and more a p p a r e n t . L e g i s l a t i o n and judi- c i a l e x p o s i t i o n have, a c c o r d i n g l y , proceeded w i t h i n c r e a s i n g c a u t i o n t o r e s t r i c t a p p r o p r i a t i o n s t o s p h e r e s of u s e f u l n e s s and b e n e f i c i a l purposes. A s a r e s u l t , t h e law, c r y s t a l i z e d i n s t a t u t o r y form, is t h a t an a p p r o p r i a t i o n of a r i g h t t o t h e use of running water flowing i n t h e c r e e k s must be f o r some u s e f u l o r b e n e f i c i a l purpose, and when t h e a p p r o p r i a t o r , o r h i s successor i n i n t e r e s t , abandons and c e a s e s t o use t h e water f o r such purpose, t h e r i g h t c e a s e s . ( S e c t i o n s 1880, 1881, C i v i l Code.)" 21 Mont. a t 529. Water r i g h t s have t h e r e f o r e been l i m i t e d t o t h e amount of water a c t u a l l y p u t t o a b e n e f i c i a l u s e , d e s p i t e t h e amount of water d i v e r t e d or claimed under a n o t i c e of a p p r o p r i a t i o n . See a l s o , Conrow v. Huffine ( 1 9 1 4 ) , 48 Mont. 437, 138 P. 1094; Peck v. Simon ( 1 9 3 5 ) , 101 Mont. 1 2 , 52 P.2d 164; G a l i g e r v. McNulty ( 1 9 2 7 ) , 80 Mont. 339, 260 P. 401. I n determining t h e abandonment of a water r i g h t , t h i s Court h a s o f t e n recognized t h e r u l e t h a t mere nonuse of t h e water does n o t c o n s t i t u t e abandonment. To prove abandonment, one h a s t o prove t h e o t h e r p a r t y intended t o abandon h i s water r i g h t . Atchison v. P e t e r s o n ( 1 8 7 2 ) , 1 Mont. 561, P. Tucker v. - 1 J o n e s ( 1 8 8 8 ) , 8 Mont. 225, 19 P. 571; Thomas v. B a l l ( 1 9 2 3 ) , 66 Mont. 161, 213 P. 597; M u s s e l s h e l l V a l l e y F. & L . Co. v. Cooley ( 1 9 2 9 ) , 86 Mont. 276, 283 P. 213; S t . Onge v. Blakely ( 1 9 2 6 ) , 76 Mont. 1, 245 P. 532; Shammel v. Vogl ( 1 9 6 4 ) , 144 Mont. 354, 396 P.2d 103. N e v e r t h e l e s s , s e v e r a l Montana c a s e s have a l s o recognized t h a t nonuse, while not c o n c l u s i v e , is evidence of an i n t e n t i o n t o abandon. I n Smith v. Hope Mining Co. ( 1 8 9 6 ) , 18 Mont. 432, 45 P. 632, t h i s Court s t a t e d t h a t n i n e y e a r s of nonuse " i s c e r t a i n l y v e r y p o t e n t evidence, i f it stood a l o n e , of an i n t e n t i o n t o abandon." 18 Mont. a t 438. I n our most r e c e n t case c o n s i d e r i n g t h i s i s s u e , Holmstrom Land Co. v. Meagher Cty. Newlan Creek Water D i s t r i c t ( 1 9 8 0 ) , Mont. , 605 P.2d 1060, 37 St.Rep. 295, w e s t a t e d t h a t s e v e n t y - f i v e y e a r s of nonuse is " c l e a r e v i d e n c e " of abandonment. 605 P.2d a t 1069. Here, t h e evidence c l e a r l y shows a t l e a s t f o r t y y e a r s of con- t i n u o u s nonuse of t h e water r i g h t s claimed by P i t s c h and 79 Ranch. A s i n Smith and Holmstrom, such a long period of nonuse is s t r o n g evidence of an i n t e n t t o abandon t h e water r i g h t s . I n e f f e c t , such a long period of continuous nonuse r a i s e s t h e rebut- t a b l e presumption of an i n t e n t i o n t o abandon, and s h i f t s t h e bur- den of proof onto t h e nonuser t o e x p l a i n t h e reasons f o r nonuse. T h i s conclusion is h i g h l y c o n s i s t e n t with t h e fundamental p o l i c y t h a t a water r i g h t does not mean p o s s e s s i o n of a q u a n t i t y of w a t e r , b u t its b e n e f i c i a l u s . The Colorado Supreme Court r e c e n t l y expressed w e l l how t h e burden of proof s h i f t s onto t h e nonuser once a long p e r i o d of nonuse has been shown: "Under Colorado water law, abandonment of a water r i g h t r e q u i r e s a concurrence of nonuse and i n t e n t t o abandon. However, i n t e n t is t h e v e r y e s s e n c e of abandonment. . . . I n t e n t may be shown e i t h e r e x p r e s s l y o r by i m p l i c a t i o n , w i t h nonuse f o r a long p e r i o d of time being evidence of an i n t e n t t o abandon. . . . Nonuse a l o n e w i l l n o t e s t a b l i s h abandonment where t h e owner i n t r o d u c e s s u f f i c i e n t evidence t o show t h a t during t h e p e r i o d of nonuse t h e r e never was any i n t e n t i o n t o permanently d i s c o n t i n u e t h e use of water ." [ C i t a t i o n s omitted .I Beaver Park Water, I n c . v. C i t y of V i c t o r (1982 I C O ~ O . I 649 P.2d 300, 302. To r e b u t t h e presumption of abandonment, t h e r e must be e s t a b l i s h e d some f a c t o r c o n d i t i o n excusing long p e r i o d s of nonuse, n o t merely e x p r e s s i o n s of d e s i r e o r hope. C F & I S t e e l C o r p o r a t i o n v. P u r g a t o i r e River Water Conservation D i s t r i c t (Colo. 1 9 7 3 ) , 515 P.2d 456; Cundy v. Weber (S.Dak. 1 9 4 1 ) , 300 N.W. 17; C i t y of Anson v. A r n e t t (Tex. 1 9 5 2 ) , 250 S.w.2d 450. Here, P i t s c h argues t h a t h i s p r e d e c e s s o r s i n i n t e r e s t d i d n o t have s u f f i c i e n t funds t o i r r i g a t e . Such a broad c l a i m , u n s u p p o r t e d by more s p e c i f i c evidence, is not s u f f i c i e n t t o r e b u t t h e presumption of abandonment. I n response t o t h i s same argument, t h e Colorado Court has s t a t e d : ". . . Considering t h e l a r g e demands f o r a l l of t h e a p p r o p r i a t a b l e water i n t h i s s t a t e . . . it might be s a i d t h a t n e a r l y every abandoned water r i g h t could have its non-use j u s t i f i e d by t h e economics t h a t might p r e v a i l sometime i n t h e f u t u r e f o r use of t h i s water. . . . T h i s gleam-in-the-eye philosophy is not c o n s i s t e n t w i t h t h e p r o t e c t i o n and p r e s e r - v a t i o n of e x i s t i n g water r i g h t s . " [ C i t a t i o n s omitted] CF & I S t e e l C o r p o r a t i o n , 515 P.2d a t 458. 79 Ranch's predecessor i n i n t e r e s t , Ralph S c h a f f , s t a t e d t h a t he was a d r y land farmer and d i d n ' t know how t o i r r i g a t e . N e i t h e r B e r t Schaf f , P i t s c h ' s p r e d e c e s s o r i n i n t e r e s t , nor Eugene S c h a f f , t h e owner of 79 Ranch, knew he had a c l a i m t o an 1893 water r i g h t when he f i l e d a n o t i c e f o r a p p r o p r i a t i o n i n 1973. The P i t s c h land may have been i r r i g a t e d i n t h e 1 9 2 0 1 s , b u t no c l e a r evidence was presented showing how much and when. The D i s t r i c t C o u r t ' s f i n d i n g s of abandonment a r e t h e r e f o r e a f f i r m e d . T h i s d e t e r m i n a t i o n a p p l i e s t o t h e 1893 w a t e r r i g h t claimed by 79 Ranch, a s w e l l a s t h e 1893 and 1 9 2 0 ' s water r i g h t s claimed by P i t s c h . I t should be noted t h a t i n s e c t i o n 85-2-404, MCA, t h e l e g i s l a t u r e h a s provided t h a t t e n s u c c e s s i v e y e a r s of nonuse w h i l e water was a v a i l a b l e c r e a t e s a prima f a c i e presumption of abandonment. T h i s presumption w i l l be a p p l i e d af t e r a l l e x i s t i n g water r i g h t s have been a d j u d i c a t e d under p a r t 2 of T i t l e 85, MCA. I n our h o l d i n g , h e r e , we a r e simply recognizing t h i s g e n e r a l , modern t r e n d , and providing an approach f o r t h e d e t e r m i n a t i o n of abandonment of water r i g h t s c o n s i s t e n t w i t h t h e e x p r e s s i n t e n t of o u r l e g i s l a t u r e . On May 30, 1973, B e r t S c h a f f , P i t s c h ' s p r e d e c e s s o r i n i n t e r e s t , f i l e d a n o t i c e of a p p r o p r i a t i o n of 30 c . f . s . of w a t e r . Schaff had purchased a new s p r i n k l e r system, b u t f a i l e d t o r e c e i v e c e r t a i n n e c e s s a r y p a r t s . Under s e c t i o n 89-811, R.C. M. 1947 ( r e p e a l e d 1 9 7 3 ) , a person is r e q u i r e d t o proceed w i t h r e a s o n a b l e d i l i g e n c e t o d i v e r t t h e w a t e r . P i t s c h c l a i m s t h a t B e r t Schaf f proceeded w i t h r e a s o n a b l e d i l i g e n c e by o r d e r i n g t h e s p r i n k l e r system and t h a t f a i l u r e of d e l i v e r y r e a s o n a b l y e x p l a i n s any d e l a y . Also, Schaf f ' s n e g o t i a t i o n s f o r s a l e of h i s land postponed development of an i r r i g a t i o n system. "Reasonable d i l i g e n c e " is a q u e s t i o n of f a c t t o be determined on a case-by-case b a s i s . Montana Department of Natur a1 Resources & Conservation v. I n t a k e Water Company ( 1 9 7 6 ) , 171 Mont. 416, 558 P.2d 1110. Here, t h e D i s t r i c t Court found a lack of r e a s o n a b l e d i l i g e n c e on the p a r t of B e r t S c h a f f . Such f i n d i n g s w i l l not be d i s t u r b e d by t h i s Court u n l e s s t h e r e is a c l e a r preponderance of t h e evidence a g a i n s t them. Smith v. Krutar ( 1 9 6 9 ) , 153 Mont. 325, 457 P.2d 459. Here, t h e r e was a three-year and three-month d e l a y between t h e f i l i n g of the n o t i c e and a c t u a l d i v e r s i o n . P i t s c h a r g u e s t h e d e l a y was excusable o r r e a s o n a b l e , and t h e r e f o r e h i s claimed water r i g h t should r e l a t e back t o S c h a f f ' s f i l i n g of t h e n o t i c e of a p p r o p r i a t i o n . The t e s t is whether t h e r e was an on-going e f f o r t t o p r o s e c u t e t h e c o n s t r u c t i o n of an i r r i g a t i o n system. S e e I n t a k e Water Co., s u p r a . While t h e record shows t h a t Schaf f purchased a s p r i n k l e r system, it does not show an on-going e f f o r t t o proceed t o completion and d i v e r s i o n . The o r i g i n a l s p r i n k l e r system purchased by Schaff was n e i t h e r i n s t a l l e d nor used t o d i v e r t water. P i t s c h purchased and i n s t a l l e d a whole new system. The record t h e r e f o r e s u p p o r t s t h e D i s t r i c t C o u r t ' s c o n c l u s i o n t h a t Schaf f f a i l e d t o d i l i g e n t l y p r o s e c u t e t h e c o n s t r u c t i o n of t h e s p r i n k l e r system. P i t s c h c l a i m s t h e r e is no s u b s t a n t i a l evidence t o s u p p o r t t h e D i s t r i c t C o u r t ' s d e t e r m i n a t i o n t h a t a l l 50 i n c h e s awarded t o Vandervoort has a p r i o r i t y d a t e of 1924. P i t s c h a r g u e s t h a t t h e e v i d e n c e shows o n l y 30 i n c h e s w i t h a p r i o r i t y d a t e i n t h e 1 9 2 0 1 s , and t h e remaining 20 i n c h e s w i t h a p r i o r i t y d a t e of 1941. I n V i d a l v. Kensler ( 1 9 3 5 ) , 100 Mont. 592, 51 P.2d 235, t h i s Court s t a t e d t h a t t h e f i x i n g of an a r b i t r a r y d a t e of a p p r o p r i a t i o n is harmless e r r o r u n l e s s t h e o b j e c t i n g c l a i m a n t can show t h a t h i s water r i g h t a n t e d a t e s t h e d a t e f i x e d f o r a n o t h e r . Here, P i t s c h has not shown a water r i g h t p r i o r t o e i t h e r 1924 o r 1941 and t h e r e f o r e t h e e r r o r , i f any, i n s e t t i n g t h e 1924 p r i o r i t y d a t e is harmless. I t should be noted t h a t t h i s r u l e i n V i d a l - a p p l i e s o n l y when t h e p r i o r i t y d a t e and not t h e amount of water is challenged. P i t s c h p o i n t s o u t t h a t t h e o n l y evidence on record shows t h a t 79 Ranch has used 30 i n c h e s of water and not 45 i n c h e s a s determined by t h e D i s t r i c t Court. While 79 Ranch f i l e d a n o t i c e of a p p r o p r i a t i o n f o r more t h a n 45 i n c h e s , a water r i g h t is d e t e r - mined by t h e e x t e n t of t h e use. I r i o n v. Hyde ( 1 9 3 8 ) , 107 Mont. 84, 81 P.2d 353. S i n c e t h e o n l y evidence on t h e record shows t h a t 79 Ranch has used 30 i n c h e s of water and not 45 i n c h e s , t h e D i s t r i c t C o u r t ' s judgment must be modified a c c o r d i n g l y . I n summary, t h e D i s t r i c t C o u r t ' s judgment is affirmed w i t h r e s p e c t t o V a n d e r v o o r t ' s water r i g h t s . The judgment should be modified t o reduce 79 Ranch's water r i g h t from 45 i n c h e s t o 30 i n c h e s . W e cannot a f f i r m t h e amount of P i t s c h ' s water r i g h t and t h e p r i o r i t y d a t e s e t f o r t h a t r i g h t . The D i s t r i c t Court, a f t e r f i n d i n g a l a c k of reasonable d i l i g e n c e and t h e r e f o r e no r e l a t i o n back t o 1973, a p p a r e n t l y granted P i t s c h a "use" r i g h t a s of 1976. The Water Use Act of 1973 e m p h a t i c a l l y s t a t e d t h a t it contained t h e e x c l u s i v e procedures f o r a c q u i s i t i o n of a water r i g h t a f t e r 1973. S e c t i o n 89-880 (1) R.C.M., 1947 (now s e c t i o n 85-2-301, MCA.) Nothing on t h e record s u g g e s t s P i t s c h complied w i t h t h e p r o c e d u r e s of t h e Water Use Act. W e t h e r e f o r e acknowledge o n l y t h a t t h e water r i g h t s of Vandervoort and 79 Ranch precede any water r i g h t claimed by P i t s c h . Remanded f o r m o d i f i c a t i o n of accordance with t h e views e x p r e s s We concur: The Honorable Chan Ettien, District Judge, sitting in place of Mr. Chief Justice Frank I. Haswell. Mr. Justice Fred J. Weber respectfully dissents as follows : While I concur in the result reached by the majority opinion, I respectfully dissent from a portion of the legal conclusions upon which it is based. The majority refers to decisions of this Court which established the rule that mere non-use of water does not constitute abandonment, and that proof of intent to abandon the water right is a necessary element in proving abandonment. That rule has been stated and restated a number of times in the cases cited in the majority opinion. In Shammel v. Vogl (1964), 144 Mont. 354, 396 P.2d 103, Chief Justice Harrison pointed out that the testimony presented by the defendants in substance showed that the ditch in question was not carrying water from 1914 to 1956. He pointed out there was other evidence presented of water in the ditch. In affirming the holding of the District Court that the ditch had not been abandoned, the Court stated: "The loss of a water right or a ditch right by abandonment is a serious occurrence in Montana and other semi-arid western states. The early case of Thomas v. Ball, 66 Mont. 161, 213 P.597, stated in this connection: 'The authorities are all of one accord in holding that the party claiming - abandonment has the burden of - - rovinq his contention a preponderance of The gidence, a t h a t s t a b l i < h abandonment theevidence to that -- -- effect should be clear and definite.' 66 Mont. 161, at 168, 213 P.597, at 600. We find no error in the court's findins that the Weidman ditch riaht had not been abandoned. 4 Mere nonuser is not sufficient to establish abandonment, a n i the testimony presented by the defendants relates exclusively-to establishinq periods of nonuser. No - - evidence -of intent to abandon is ~resented." (Emphasis supplied.) l m ~ o n t . at 362, 396 P.2d at Shammel follows many preceding cases and, in particular, the leading cases of St. Onge V. Blakely (1926) 76 Mont. 1, 245 P. 532, and Thomas v. Ball (1923) 66 Mont. 161, 213 P. 597. Shammel has not been modified or overruled by this Court. As pointed out in the majority opinion, in Holmstrom Land Co. v. Meagher County Newlan Creek (1979) Mont . I 605 P.2d 1060, 1069, 36 St.Rep. 1403, 1413, this Court stated: ". . . Seventy five years of non-use is sufficient to provide 'clear evidence' of abandonment." Taking the evidence in a light most favorable to Thorson, we concluded that all but 80 miner's inches were lost through abandonment. The majority opinion here takes a significant step in holding that not only is a long period of non-use strong evidence of intent to abandon, but that continuous non-use raises the rebuttable presumption of an intention to abandon and shifts the burden of proof to the non-user to explain the reasons for non-use. As authority for that conclusion the majority then refers to Colorado decisions. Unfortunately, the majority in this case as well as the majority in Holmstrom did not analyze Shammel and the numerous earlier cases. Prior to Holmstrom the clear rule under the decisions of this Court was that a party claiming abandonment had the burden of proving his contention by a preponderance of the evidence. Mere non-user was not sufficient to establish abandonment. While Holmstrom may be explained as merely restating a previous rule that non-use is evidence of abandonment, though not conclusive, the present majority opinion proceeds well beyond that point. As stated by the majority, a long period of continuous non-use raises the rebuttable presumption of an intention to abandon and shifts the burden of proof to the non-user. While the majority expressly did not overrule Shammel that is the effect of the opinion. Long established rights to the use of water deserve more accurate analysis and treatment. As stated in Shamrnel, the loss of a water right by abandonment is a serious occurrence in Montana. I am particularly concerned as to the effect of the majority opinion on the adjudication of water rights under Chapter 2 of Title 85, MCA. Neither the majority here nor the Holmstrom opinion demonstrates a reason for such a significant change in the long-standing rule on abandonment of water rights. The Honorable J. Chan E t t i e n , District J u d g e , d i s s e n t i n g . I d i s s e n t . A t a time when t h e f i x i n g of Montana water r i g h t s is i n a t r a n s i t i o n a l s t a g e , t h e Court is o v e r t u r n i n g a r u l e which h a s been an i n t e g r a l p a r t of Montana water law f o r almost 1 0 0 y e a r s . Tucker v. J o n e s ( 1 8 8 8 ) , 8 Mont. 225, 230, 19 P. 571. T h a t r u l e is: "non-use s t a n d i n g a l o n e is not s u f f i c i e n t t o e s t a b l i s h abandonment of a water r i g h t . " Mere l a p s e of time d u r i n g which t h e r e is no use does n o t c o n s t i t u t e abandonment w i t h o u t proof of a c l e a r i n t e n t i o n t o abandon. M u s s e l s h e l l V a l l e y Farming & L i v e s t o c k Co. v . Cooley ( 1 9 2 9 ) , 86 Mont. 276, 283 P. 213; Moore v. Sherman ( 1 9 1 6 ) , 52 Mont. 542, 159 P. 966; Featherman v. Hennessy ( 1 9 1 1 ) , 42 Mont. 535, 1 1 3 P. 751; Tucker v. J o n e s , 8 Mont. a t 225. Abandonment must i n c l u d e proof of i n t e n t t o abandon. Tucker v. J o n e s , s u p r a ; McCauley v. McKeig ( 1 8 8 9 ) , 8 Mont. 389, 2 1 P. 22. There must be c o n c u r r e n c e i n r e l i n q u i s h m e n t of p o s s e s s i o n and i n t e n t t o aban- don. Thomas v. B a l l ( 1 9 2 3 ) , 66 Mont. 161, 213 P. 597. S e e a l s o , I r i o n v. Hyde ( 1 9 3 8 ) , 107 Mont. 84, 8 1 P.2d 353. The r e q u i r e m e n t of i n t e n t t o abandon is a c a r d i n a l p r i n c i p l e of Montana water law, which h a s been upheld by t h e c o u r t s and r e l i e d upon by Montana's farmers and r a n c h e r s f o r over a c e n t u r y . The 1973 Water A c t p r o v i d e s f o r a d j u d i c a t i o n of a l l water r i g h t s claimed b e f o r e J u l y 1, 1973, t o be determined under t h e s t a t u t o r y and c a s e l a w a p p l y i n g t o a p p r o p r i a t i o n and use of w a t e r r i g h t s b e f o r e t h a t d a t e . MCA 85-2-404 r e l a t i n g t o abandonment under t h e 1973 act s t a t e d t h a t : MCA-85-2-404 ". . . d o e s n o t a p p l y t o r i g h t s u n t i l t h e y have been determined i n accordance w i t h . . ." t h e w a t e r l a w i n e x i s t e n c e p r i o r t o J u l y 1, 1973. On J u l y 1, 1973, t h e r u l e was t h a t nonuser a l o n e was n o t s u f f i c i e n t t o e s t a b l i s h abandonment of a water r i g h t . To me, it is clear t h e l e g i s l a t u r e wanted t h e s t a t u s quo on p r e - J u l y 1, 1973, water law t o be maintained u n t i l w a t e r r i g h t s were e s t a b l i s h e d under t h e 1973 A c t . Overturning a 100 y e a r r u l e is n o t m a i n t a i n i n g t h e s t a t u s quo. Beginning w i t h t h e e f f e c t i v e d a t e of t h e 1973 Water A c t , t h i s w r i t e r , i n h i s p r a c t i c e of law, and I am s u r e o t h e r a t t o r n e y s i n t h e i r s , began t o be c o n s u l t e d by farm and ranch people on t h e i r w a t e r r i g h t s . It was not unusual t h a t an o l d a p p r o p r i a t i o n and i r r i g a t i o n system was p r e s e n t , b u t had n o t been i n use f o r many y e a r s , twenty, t h i r t y , f o r t y , f i f t y y e a r s o r more. I t was my a d v i c e , and I ' m s u r e t h e a d v i c e of my p r o f e s s i o n a l c o l l e a g u e s , t o f i l e a c l a i m of r i g h t based on such a p p r o p r i a t i o n . Such a d v i c e was grounded on t h e r u l e t h a t nonuse s t a n d i n g a l o n e could not c o n s t i t u t e t h e abandonment of a water r i g h t . Claims were made and f i l e d w i t h t h e water c o u r t s on t h e s t r e n g t h of t h e a n c i e n t law. Back i n t h e 1 9 6 0 1 s , t h e S t a t e Water Conservation Board made a w a t e r r e s o u r c e s u r v e y of t h e s t a t e . The survey covered t h e h i s t o r y of land and water use i n i r r i g a t e d a r e a s , maps showing i r r i g a t e d a r e a s , and water r i g h t d a t a of a p p r o p r i a t i o n and d e c r e e s f o r each county. It is common f o r t h e maps t o show a n c i e n t i r r i g a t i o n works "not i n u s e , " b u t which had had water a p p l i e d by t h o s e works t o i r r i g a t i o n . I t is my understanding t h a t such a n c i e n t i r r i g a t i o n works were mapped because of t h e l o n g s t a n d i n g r u l e a g a i n s t abandonment being determined s o l e l y by nonuse. Many o l d nonuse systems were worked i n t o c l a i m s f i l e d w i t h t h e water c o u r t a s e x i s t i n g r i g h t s . I n 1980, t h i s Court was faced w i t h Holmstrom LD. Co. v . Meagher County, e t a l . ( 1 9 8 0 ) , Mont. , 605 P.2d 1060, 36 St.Rep. 1903. The p a r t i c u l a r r i g h t i n q u e s t i o n involved an e a r l i e r conveyance of 337 i n c h e s of water s e p a r a t e and a p a r t from l a n d . The g r a n t e e s had twenty a c r e s of land s u b j e c t t o i r r i g a - t i o n and e i g h t y i n c h e s of t h e 337 i n c h conveyance a p p l i e d . The 257 i n c h balance was never used. T h i s Court found, under t h e c i r c u m s t a n c e s , t h a t t h e unusued 257 i n c h e s had been abandoned by nonuse, saying: "Seventy-f i v e y e a r s of non-use is s u f f i c i e n t t o p r o v i d e 'clear e v i d e n c e ' of abandonment." I t is w e l l a t t h i s s t a g e t o a g a i n p o i n t o u t t h a t a water r i g h t is s u b j e c t t o t r a n s f e r s e p a r a t e and detached from l a n d , as w e l l as being t r a n s f e r r e d w i t h t h e l a n d . Yellowstone V a l l e y Co. v . A s s o c i a t e d Mortgage I n v e s t o r s ( 1 9 3 0 ) , 88 Mont. 73, 290 P. 255; S t . Onge v. B l a k e l y ( 1 9 2 6 ) , 76 Mont. 1, 245 P. 532. The former is t h e c i r c u m s t a n c e of Holmstrom. A w a t e r r i g h t , t h e use of which h a s been a p p l i e d t o l a n d , becomes a p p u r t e n a n t t o t h a t l a n d . Tucker v. J o n e s , s u p r a . Nonuser of an u n a t t a c h e d r i g h t cannot become v e s t e d because it h a s n o t been a p p l i e d b e n e f i c i a l l y w i t h i n a r e a s o n a b l e time of i t s a c q u i s i t o n . For example, a water company h a s an unattached r i g h t which must be a p p l i e d b e n e f i c i a l l y w i t h i n a r e a s o n a b l e t i m e , whether it be f o r i r r i g a t i o n , d o m e s t i c , commercial o r i n d u s t r i a l u s e , o r it may be l o s t . v . T i n t i n g e r ( 1 9 1 1 ) , 4 5 Mont. 154, 177-178, 1 2 2 P. 575. I n our c a s e , b o t h t y p e s of t r a n s f e r a r e p r e s e n t . The 79 Ranch claim was by r e a s o n of Yellowstone LD. Co. I s conveyance of S e c t i o n 25 w i t h an a p p u r t e n a n t 83.33 i n c h e s of t h e Mont. Cattle Co. r i g h t . - P i t s c h claims 166.66 i n c h e s , u n a t t a c h e d , d a t e d J u n e 1, 1912, o f t h e Mont. C a t t l e a p p r o p r i a t i o n by r e a s o n of Yellowstone LD. I s conveyance of S e c t i o n 35 and 166.66 i n c h e s of t h e Mont. C a t t l e a p p r o p r i a t i o n t o Claude H i l l . Evidence i n d i c a t e d about 74.3 a c r e s was i r r i g a t e d i n t h e 1 9 2 0 ' s i n t h e n o r t h e r n p a r t of S e c t i o n 35. Thus, we have a s i t u a t i o n where about 92.3 i n c h e s of t h e Yellowstone LD. t r a n s f e r was never used f o r a p e r i o d of over s e v e n t y - f i v e y e a r s . Holmstrom f a i l s t o c o n s i d e r its e f f e c t on mining r i g h t s . L o c a t o r s of l o d e claims of t e n l o c a t e d a m i l l s i t e i n c o n j unc- t i o n w i t h t h e i r claims, and a p p r o p r i a t e d water f o r t h e o p e r a t i o n o f t h e i r m i l l . The v a g a r i e s of m i n e r a l p r i c e s have o f t e n l e f t t h e s e p r o p e r t i e s i n o p e r a b l e , though ownership was m a i n t a i n e d . T h e r e a r e p a t e n t e d and o t h e r l o d e claims which, w i t h t h e i r m i l l s i t e s , have n o t operated f o r p e r i o d s up t o f i f t y , s i x t y , o r s e v e n t y y e a r s , but have p o t e n t i a l given t h e r i g h t economic con- d i t i o n s . P l a c e r o p e r a t i o n s a p p r o p r i a t e d water t o wash g o l d o r gem b e a r i n g g r a v e l s . Many such v e n t u r e s have been down f o r long y e a r s because economic c o n d i t i o n s have not j u s t i f i e d o p e r a t i o n . I t is no argument t o say s e v e n t y - f i v e y e a r s o r so of nonuse i s abandonment, because it is obvious i n such mining s i t u a t i o n s t h e owners intend t o use t h e water r i g h t i n mining o p e r a t i o n s a t some time. The m a j o r i t y cites Smith v. Hope Min. Co. ( 1 8 9 6 ) , 18 Mont. 432, 45 P. 632, i n s u p p o r t of its p o s i t i o n . The case is t o t h e c o n t r a r y . The Hope and Algonquin companies were s i l v e r producers a t P h i l i p s b u r g , Montana, which had s e t t l e d t h e i r water r i g h t s from F r o s t Creek. With t h e demonetization of s i l v e r , t h e Algonquin m i l l s h u t down b u t was kept under maintenance and s e c u r i t y f o r n i n e y e a r s o r more. I t was argued t h a t t h e Algonquin had aban- doned its water r i g h t by t h e n i n e year nonuser. The Court prefaced its remark quoted by t h e m a j o r i t y h e r e by c i t i n g t h e accepted r u l e : " . . . mere nonuser of a water r i g h t is n o t an abandonment." Smith v. Hope Min. Co. 18 Mont. a t 439, and followed t h e m a j o r i t y q u o t e w i t h t h e s e words: " I t cannot be contended f o r a moment t h a t t h e r e was a s c i n t i l l a of evidence tending t o prove t h a t t h e Algonquin Company intended t o abandon t h e m i l l . Every a c t shows t h a t they d i d n o t so i n t e n d . They d i d n o t use t h e w a t e r , simply because t h e machinery of t h e m i l l was n o t i n motion. When it t h u s appears t h a t t h e i n t e n t i o n was c l e a r l y not t o abandon t h e p r i n c i p a l e s t a t e ( t h a t is, t h e m i l l ) , we cannot hold t h a t t h e f a c t of temporary and n e c e s s a r y nonuser of t h e appurtenance ( t h a t is, t h e w a t e r ) was any evidence whatever of an i n t e n t t o abandon t h a t appurtenance. The appurtenance was a n e c e s s i t y t o t h e m i l l , and t h e i n t e n t i o n t o abandon t h a t appurtenance must c l e a r l y appear. (See c a s e s l a s t c i t e d . ) W e t h i n k t h e c o n t r a r y c l e a r l y appears i n t h i s c a s e . I f we s u s t a i n t h e f i n d i n g of t h e d i s t r i c t c o u r t a s t o t h e abandonment, it would be holding, i n p r a c t i c a l a f f a i r s , t o t h i s e f f e c t , v i z . , t h a t i f , through t h e v i c i s s i t u d e s of mining, a company f i n d s i t s e l f o b l i g e d t o c l o s e its m i l l f o r a c o n s i d e r a b l e p e r i o d , -- a p e r i o d a s long a s t h e s t a t u t e of l i m i t a t i o n s , -- t h e n , i n o r d e r t o p r e s e r v e t h e w a t e r r i g h t a p p u r t e n a n t t o t h e m i l l , they w i l l n o t be p e r m i t t e d t o a l l o w t h e water t o remain i d l e , b u t must c o n t i n u e its use. To c o n t i n u e its use t h e y must keep t h e machinery of t h e m i l l moving. These views l e a d i n t o absur- d i t i e s . They simply demonstrate t h a t , i f a m i l l i n g o r mining company is o b l i g e d t o c l o s e its m i l l , and t h u s cease t h e use of its water r i g h t f o r a p e r i o d equal t o t h e s t a t u t e of l i m i t a t i o n s , it w i l l by such an a c t be deemed t o have abandoned t h e water r i g h t , which is an a b s o l u t e l y n e c e s s a r y appurtenance t o t h e m i l l . W e cannot s u b s c r i b e t o any such d o c t r i n e a s t h i s . " One wonders what t h e Anaconda's s i t u a t i o n w i l l be w i t h its w a t e r r i g h t appurtenance t o its s m e l t e r and c o n c e n t r a t o r a t Anaconda i f it c a r r i e s o u t its announced i n t e n t i o n t o r a z e t h o s e p r o p e r t i e s t o t h e ground. I t is s a f e t o say t h a t t h e p r e s e n t owners of t h e Hope and Algonquin p r o p e r t i e s a r e holding t h e i r lode c l a i m s and millsites, even though t h e m i l l s a r e long gone, looking t o t h e day of pro- f i t a b l e o p e r a t i o n , and s t i l l c l a i m t h e i r a p p r o p r i a t i o n s t o t h e i r m i l l s i t e s . Nor, is t h e r e p r e j u d i c e t o j u n i o r u s e r s , because use of t h e w a t e r is r i g h t f u l l y t h e i r s i f t h e s e n i o r r i g h t is not being used. I t is t h e h i s t o r y of Montana water t h a t , i f t h e r e is a use f o r it, it w i l l be used. The water w i l l be of b e n e f i t t o someone. Judge McKinnon, i n f i n d i n g abandonment of t h e Montana C a t t l e C & 1983 r i g h t must have r e l i e d on Holmstrom. There is no o t h e r b a s i s f o r such r u l i n g . To a f f i r m e f f e c t s d e s t r u c t i o n of t h e o l d r u l e . The o l d r u l e had t h e q u a l i t y of being i n black and white; t h e r e was no in- between. Everyone understood. T h i s Court has now i n t r o d u c e d c o n f u s i o n and chaos t o t h e 1973 A c t . I n t h e n e x t few y e a r s w a t e r judges a r e going t o be c o n s i d e r i n g water c l a i m s r e f l e c t i n g v a r i o u s p e r i o d s of nonuser. Under Holmstrom and t h e p r e s e n t c a s e , where is t h e c u t - o f f which s a y s a g i v e n p e r i o d c o n s t i t u t e s abandonment? W e have four water judges. Is t h i s Court going t o g i v e * d i r e c t i o n t o t h e problem of nonuser, o r , w i l l each water judge be f r e e t o e s t a b l i s h h i s own cut-off r u l e ? The o l d r u l e should be kept because it is of even a p p l i c a t i o n t o a l l , and everyone is f a m i l i a r w i t h it. Holmstrom is e a s i l y d i s t i n g u i s h a b l e . It had a detached r i g h t and its purchaser was bound w i t h i n a r e a s o n a b l e time t o a p p l y it t o i d e n t i f i a b l e land. B a i l e y v. T i n t i n g e r , s u p r a . He made no e f f o r t t o a p p l y more t h a n e i g h t y i n c h e s t o h i s land. A f a i l u r e t o a p p l y an u n a t t a c h e d water r i g h t t o use w i t h i n a r e a s o n a b l e t i m e a f t e r a c q u i s i t i o n is s u s t a i n a b l e evidence of i n t e n t t o aban- don. On t h e o t h e r hand, an extended nonuse of water t o land t o which it is a p p u r t e n a n t is not a l o n e evidence of i n t e n t t o aban- don. The p r e s e n t c a s e h a s both s i t u a t i o n s . Under t h e evidence i n t h i s c a s e , I would f i n d : (1) Under t h e o l d r u l e , t h a t t h e r e had not been abandonment of t h e one-sixth of t h e 1893 r i g h t a p p u r t e n a n t t o S e c t i o n 25-5-19 a s claimed by 79 Ranch, and t h a t it was e n t i t l e d t o o n e - s i x t h o r 83.3 i n c h e s of t h e 1893 r i g h t ; ( 2 ) t h a t 74.3 i n c h e s of t h e one-third 1893 r i g h t conveyed t o Claud H i l l thence t o P i t s c h was a p p l i e d t o t h e n o r t h e r n p a r t of S e c t i o n 35-5-19, and had n o t been abandoned; ( 3 ) t h a t 92.36 i n c h e s of t h e 1893 r i g h t conveyed t o H i l l a l o n g w i t h S e c t i o n 35 had n o t been used, and was abandoned; and ( 4 ) t h a t t h e Vandervoort r i g h t be a f f i r m e d , it being shown t h a t V a n d e r v o o r t ' s undisturbed p o s s e s s i o n and use was f o r a p e r i o d of time i n e x c e s s of t h e t i m e n e c e s s a r y t o a c q u i r e t i t l e by p r e s c r i p t i o n , s t a n d i n g a l o n e , and was s u f f i c i e n t t o v e s t r i g h t t o use of water a s of 1924. Cook v. Hudson ( 1 9 4 0 ) , 110 Mont. - : t Judqe, s i t t i n q i n p l a c e o f M r . c h i e f - ~ u s t i c e ~ ; a n k I. Mr. Justice Frank B. Morrison, Jr. specially concurs as follows : I concur in the result but would like to add these comments. My dissenting opinion filed in 79 Ranch, Inc. v. Pitsch (1981), Mont. , 631 P.2d 690, 38 St.Rep. 1048, accurately sets forth my views in this matter. However, upon remand to the District Court, findings of fact were made with respect to reasonable diligence and those findings bind me in reviewing this appeal. There is evidence in the record which would support a finding of reasonable diligence by Pitsch's predecessor-in- interest but I am unable to say that the trial court abused its discretion in finding lack of diligence. Therefore, I must vote to affirm though, had I been the trial judge, reasonable diligence would have been found and the Pitsch right therefore would date from 1973 and. would be exercised pursuant to filing.

June 21, 1983

400100e6-7136-4a3b-88b6-40fe21af304a

STATE v HOWERY

N/A

82-236

Montana

Montana Supreme Court

I N T H E S U P R E M E C O U R T O F T H E S T A T E O F MONTANA T H E S T A T E O F MONTANA, A C T I N G BY AND THROUGH THE DEPARTMENT J UN 20 1983 OF H I G H W A Y S O F T H E S T A T E O F MONTANA, CLERK EUPI?EF,~E. COURT p l a i n t i f f a n d A p p e l l a n t STATE OF K ~ O H T A N ~ V S . C L I N T O N L . and J A C Q U E L I N E J . HOWERY, H u s b a n d and W i f e , as J o i n t T e n a n t s , a n d S T A T E BANK & T R U S T COMPANY, a s M o r t g a g e e , D e f e n d a n t s a n d R e s p o n d e n t s . A p p e a l f r o m : D i s t r i c t C o u r t o f t h e F i f t h J u d i c i a l D i s t r i c t , I n a n d f o r t h e C o u n t y o f B e a v e r h e a d H o n . F r a n k E . B l a i r , J u d g e p r e s i d i n g . C o u n s e l o f R e c o r d : F o r A p p e l l a n t : W . D . H u t c h i s o n a r g u e d , H e l e n a , M o n t a n a F o r R e s p o n d e n t s : M a x H a n s e n a r g u e d , D i l l o n , M o n t a n a C o r e t t e , S m i t h , P o h l m a n & A l l e n , B u t t e , M o n t a n a K e n d r i c k A . S m i t h a r g u e d , B u t t e , M o n t a n a s u b m i t t e d : March 7 , 1 9 8 3 D e c i d e d : Juae 2 0 , 1 9 8 3 F i l e d : tJUM 2 0 1983 - C l e r k Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. The Montana Department of Highways brought this action in the Fifth Judicial District Court, Beaverhead County, for the purpose of obtaining right-of-way for a frontage road along Interstate 15. Clinton and Jacqueline Howery owned the 0.76 acre tract subject to the condemnation action. Trial on the issue of just compensation was had after the Department of Highways appealed from an award by the Highway Commission. The jury returned a verdict in favor of the Howerys in the amount of $243,475.00; $3,750.00 was awarded as damages for the property actually taken and $239,725.00, as damages to the remainder. A final judgment was entered in the amount of the verdict plus interest, costs and fees. The Department of Highways appeals from denial of their motion for a new trial, raising three issues: 1) Whether the District Court erred in admitting the testimony of the landowner concerning the effects of the frontage road on his remaining property? 2) Whether the jury's verdict of $239,725.00 as damages to the remainder was excessive, given under the influence of passion or prejudice and supported only by speculative testimony? 3) Whether the District Court erred in refusing the Highway Department's proposed instructions, numbered 20 and 22? We affirm. The Howerys purchased their property which is located about 5 miles south of Dillon, Montana, in 1974. At that time they knew that a new four lane highway, Interstate 15, was to be constructed between Highway 91 and the 3.26 acre tract that they purchased; the Highway Department previously had purchased right of way for this purpose from Howerys' predecessors in interest. Taking the proximity of the proposed interstate into account, the Howerys constructed two specially designed total containment buildings on their property in 1975. The Howerys raise hogs for market. The containment buildings are designed to eliminate pig stress, thus improving growth rate at lower feed levels, by controlling the environment during the life cycle of pigs from birth to market. Factors which cause pig stress, such as heat, noise, vibration and dust, are minimized or eliminated through building design. The proposed frontage road was to be constructed approximately 92 feet from the containment unit buildings. The primary issue during the trial was the extent to which the taking for the frontage road would damage the remainder of the Howery property. Mr. Howery testified that the increase in heat, noise, vibration and dust that would be produced by the traffic on the frontage road would render his containment unit buildings unuseable and his hog raising operation uneconomical. Therefore, using a cost approach appraisal, Mr. Howery gave his opinion that the depreciation in va-lue to the remaining land and buildings, less any salvage value of the buildings a.nd the unaffected value of their home and unimproved land, was $292,725.00; he further valued the land actually taken at $2,250.00. The Highway Department contends Mr. Howery's testimony as to depreciation in value to the remainder should have been refused. The Department asserts that the Howerys failed to establish (1) how an increase in pig stress would result from the proposed frontage road and what would be the magnitude of the increase, and (2) whether the proposed frontage road would be paved or gravel. Lacking such a proper foundation, the Department argues that Mr. Howery's testimony was inherently unreasonable. The Department's "reasonableness" argument stems from a landowner-witness rule this Court reconfirmed in State v. Marsh, (1974) 165 Mont. 198, 527 P.2d 573. Marsh clarified that in taking cases, the landowner could testify as to value so long as (1) the testimony is reasonable and (2) the value testified to is for the uses to which the landowner is putting the land. Additionally, if the landowner intended to testify as to value for other purposes, the landowner "must have 'some peculiar means of forming an intelligent and correct judgment . . . beyond what is presumed to be possessed by men generally.'" 165 Mont. at 203, 527 P.2d at The rule of Marsh is not directly applicable to the instant case. Here the State is not contesting the ability of a landowner to give his opinion as to market value before taking; what is at issue is the competence of a landowner to testify as to the causal link between the taking and any damage to remainder, and ultimately to the depreciation in market value of the remainder as a result of the taking. "As a general rule, a witness who is competent to give the value of particular real estate may give his opinion of its value immediately before particular damage to it, and its value immediately after such damage and as affected thereby, provided the witness discloses sufficient knowledge of the property in both conditions . . . If an estimate of value or the cause of damage requires special knowledge, persons uninformed as to the facts, and without learning in the scientific principles of which they speak, are not competent . . . " 27 Am.Jr.2dI Eminent Domain, S426, pp. 322-323. Nichol explains that where the issue is whether the construction of a public work causes a decrease in market value of the land remaining after a taking: "[ilt is, of course, competent for the owner to point out, either himself or by means of duly qualified expert witnesses, the particulars in which the land has been or will be damaged, such as the inconvenient size and shape in which it is left, the interference with access, the increased accumulation of surface water, the noise and dirt from the use of the public work, and the like." 5 Nichol on Eminent Domain, S23.3, pp. 23-20, 21. The witness may describe the injuries to the property and its condition, state the circumstances affecting the value of the property in its damaged state, and testify as to the value of the property before and after the injury. Nichol, supra, p. The record indicates that Mr. Howery was both informed about the facts concerning the proposed frontage road and very knowledgeable in the business of raising pigs. Mr. Howery had observed the dust associated with the unpaved extension of the frontage road already in existence approximately one mile south of his facility. Additionally he testified that in response to his inquiries about the surface of the proposed frontage road, he was given different answers: one, that the road would be paved; another, that it would be gravel. However he stated the choice of surface would not alter his opinion that the containment buildings would be rendered unusuable by the proximity of the proposed frontage road. Additionally, Mr. Howery testified that prior to taking, the only roads close to his facilities were unmaintained, private access roads which generated very little traffic. The proposed frontage road, which will pass within 92 feet of Mr. Howery's confinement facilities, links two highways and serves two saw mills. Mr. Howery further testified that sows are affected by the vibration caused by a truck passing nearby his facility and that if the noise of the truck is "awfully loud," stress may also result. He also stated increases in heat produce stress in his animals. Mr. Howery had considerable experience in the swine industry. He was reared on a ranch in Wyoming that raised pigs; since his marriage, he and his family ha.ve continued to raise pigs. His educational background includes two years in animal husbandry at Northwest Community College, Powell, Wyoming and about two years in biology at Western Montana College, Dillon, Montana. Additionally, for the past seven years, he has studied the swine industry by subscribing to and reading current national publications. And prior to initiating his total confinement operation, Mr. Howery consulted with several representatives from different building manufacturers and veterinarians associated with Ralston Purina Company in St. Louis. Moreover, Mr. Howery had practical experience with stress afflicted animals. He knew that confinement, heat, noise, dust and/or vibrations can produce stress in his pigs. He testified that stress afflicted hogs are prone to ulcers, hampered growth and even sudden death. He recognized that confinement alone may produce stress but that thus far he had managed to maintain his pigs per litter ratio, referring to pigs weaned, above the national average, with minimal loss between weaning and marketing. Mr. Howery's testimony was reinforced by Dr. Earl Pruyn, a Missoula veterinarian who was knowledgeable about pig containment units and porcine stress syndrome. Dr. Pruyn, stated that, in his opinion, the proximity of the frontage road to the Howery pig buildings would "either rapidly or slowly" make the Howery operation uneconomical. Dr. Pruyn had visited the Howery property, concluded the Howerys ran an above average, exceptionally clean operation, and was familiar with the frontage road construction proposal. He based his opinion on several facts: (1) the pigs raised by Howerys were very susceptible to porcine stress syndrome; (2) the frontage road would be located relatively close to the gestation and farrowing portion of the building, which from his experience should be protected from highways or high-use secondary roads; (3) that road such as the State proposed for construction produce noise, vibration and dust; and (4) that the road would reduce the wet areas and grasslands surrounding the confinement facility, thereby heating the air transmitted into the facility via its ventilation system and making the buildings more susceptible to vibrations produced by increased traffic. The District Court committed no error in permitting Mr. Howery to testify as to reduction in value which would result from the new road. Where a landowner-witness is informed as to the facts regarding the construction and use of a public work, and has an acquired and/or applied understanding of the technical and practical aspects of its impact on his or her property and its income producing capacity, the landowner-witness is competent to estimate before and after value as to that particular use, or the cause of damage to his remaining property. The Department of Highways next contends that the jury's verdict for depreciation in value to remainder was excessive and supported only by speculative and conjectural evidence. A two prong argument is asserted: (1) Mr. Howery failed to prove causation; and (2) Mr. Howery's opinion on depreciation in value was not based upon market data or upon mental impressions held by "respective purchasers" in the swine industry. Our discussion of issue one disposes of the department's first assertion. As to the second, the Wyoming decision relied upon by the Department, Coronado Oil Co. v. Grieves (Wyo. 1982), 642 P.2d 423, is factually distinguishable. There, the analysis of the testimony disclosed that the landowners and their appraiser did not employ a standard of fair market value but rather opined the value of the remainder to them personally. 642 P.2d at 434-35. Clearly, this wa unacceptable. Here, Mr. Howery testified that he understood the concept of market value, and lacking comparable sales to derive market value, employed an acceptable alternative approach to ascertain depreciation in market value after the taking. Furthermore, Mr. Howery's testimony was consonant with that of Mr. Roy Rodenburger, a Missoula appraiser experienced in appraisals of rural properties. Mr. Rodenburger stated that after the taking the Howery's hog operation had only a residual value of $12,000.00, representing the salvage value of the facilities. In Mr. Rodenburger's opinion, the total depreciation in market value of the hog facilities caused by the taking amounted to $235,795.00. He stated his opinion was based on his inspection of the Howery facilities, his past experience in appraising other hog operations, his discussions with Mr. Howery and Dr. Pruyn, and reproduction cost figures supplied to him by the Dillon Livestock Market Company. Thus, we conclude the jury's verdict was not based on speculative or conjectural evidence. Nor was it excessive in light of the evidence presented. We have long followed the rule in eminent domain proceedings that the jury findings will not be disturbed on appeal unless they are so obviously and palpably out of proportion to the injury done to be in excess of just compensation. State Dept. of Highways v. Schumacher (1979) 180 Mont. 329, 590 P.2d 1110, and cases cited therein. The record before us belies any such obvious and palpable error as to the jury valuation of the Howery loss. Finally the Department of Highways contends that the District Court erred in refusing its proposed jury instructions numbered 20 and 22. Proposed instruction No. 20 cautioned the jury that the Howerys could not be awarded any amount for depreciation in value to the remainder caused by the construction of the interstate. Proposed instruction No. 22 explained the manner in which state highways or county roads are legally abandoned. This instruction went to the Department's argument that two forks from the Jackson Road, were public roads, not private access routes, and that the proposed frontage road would actually reduce traffic on them. The District Court committed no error in refusing to give the proposed instructions. Instruction 20 was a negative instruction. This Court has discouraged such instructions to avoid the introduction of non-issues in a case. See Brown v. North American Mfg. (1978), 176 Mont. 98, 576 P.2d 711. Instruction 22 was within the discretion of the trial court to give. It does not appear the Department was prejudiced by its refusal. Absent a showing of prejudice, the trial court's discretion will not be disturbed. Affirmed . W e concur: M r . J u s t i c e Daniel J. Shea w i l l f i l e a s p e c i a l concurrence l a t e r .

June 20, 1983

91908ea3-8579-45f8-92d7-fc3b2f28d481

MARRIAGE OF SCHULTZ

N/A

82-403

Montana

Montana Supreme Court

No. 82-403 IN T H E SUPREIulE COURT O F TBE STATE O F MONTANA 1 9 8 3 N RE THE MARRIAGE O F EADIE W. SCWULTZ, P e t i t i o n e r and Respondnet, -vs- IjILBERT E . SCIIULTZ , Respondent and Appellant. Appeal from: D i s t r i c t Court of t h e Tenth J u d i c i a l D i s t r i c t , I n and For t h e County of Fergus, The Honorable LeRoy McKinnon, Judge p r e s i d i n g . Counsel of Record: For Appellant: William E. Berger, Lewistown, Montana For Respondent : Leonard B. McKinney, Lewistown, Montana -- p - - - - Submitted on B r i e f s : February 1 0 , 1 9 8 3 Decided: A p r i l 21, 1983 Filed: WPR 2 1 1983 Mr. Justice Daniel J. Shea delivered the Opinion of the Court. This is the second appeal brought by the husband from a decree of dissolution by the Fergus County District Court. We remanded the case the first time because the trial court failed to make a finding of the net worth of the parties before dividing the marital estate, and because the trial court had divided the property without considering the husband's contribution and inheritance. Schultz v. Schultz (1980) , - Mont . - , 613 P.2d 1022, 37 St.Rep. 1042. On remand the trial court held a second hearing and entered new findings and conclusions and a new order. The court made a specific finding of the parties net worth, and set out reasons for the property distribution. The net marital estate was valued at $103,948.50, and the trial court awarded the wife property valued at $62,517 and the husband property valued at $41,431.50. In this second appeal, the husband claims that the trial court's findings are not supported by substantial credible evidence, that the trial court again failed to consider all of the husband's contributions to the accumulation of the marital assets, and that the trial court has exceeded the bounds of good conscience. We affirm. The parties were married 24 years and had two children who are now adults. Both the husband and wife had been employed throughout most of the marriage. Both are currently employed and self-supporting. On remand, the court corrected its earlier error by making findings of fact which included a detailed inventory and valuation of the marital assets and liabilities. The principal asset was a Capp home which they bought in 1975 and had installed as a shell on a ten and one-half acre tract. The family worked on finishing the house over the next three years. The trial court found that the husband acted as an overseer and did some of the work, but that the bulk of the work was done by the wife and two sons. The second error upon which we reversed involved the trial court's failure to take into account the husband's contribution and inheritance in dividing the marital estate. This time the trial court made detailed findings of the relative contributions of both parties. We summarize those findings in the following paragraphs. During the last three years of the marriage, the husband drank to excess and was generally antagonistic and somewhat destructive. He would sit in the house and drink beer and flip the empties against the wall, making dents; he broke a glass sliding door in anger; he broke the outside light bulbs, a.llegedly because "they never turn them off;" and he drove through the closed gate and tore out fence on the side of the yard. During the separation, the husband lived on the property for a time, but let the property fall into a state of disrepair. The trial court viewed the premises after he had lived there and found that the house had been left without heat, some of the flooring had been damaged, the septic system was not working, and the yard was littered with junk and horse manure. Later, however, the wife lived on the property and repaired and maintained it. After the parties were separated, the youngest son lived with his mother from January 1979 until he reached his majority in September 1979. The husband did not contribute to the son's support, although he was able to. Over the years the wife did all of the household work. She raised a garden and poultry for the family use. During the marriage, the husband inherited approximately $6,600 from his father and borrowed another $5,000 from his mother. The wife borrowed $10,000 from her parents. The parties each have a retirement fund and agree that it remain the separate property of each. During at least the last three years of the marriage, the husband has spent a good part of his income on alcoholic beverages. Throughout the marriage, the wife's income has gone to the family benefit. Based on those findings, the trial court concluded that age, health, station, occupation, skills and employability are not of significance in this property division, and that both parties appear to have equal opportunity for future earnings. The trial court also concluded that the wife tended to be a stabilizing factor in the marriage, that the family home has more than just a commercial value to her, and that during the later years of the marriage the husband tended to dissipate the property. Based on this background, the trial court awarded property valued at $62,517 to the wife, and awarded property valued at $41,431.50 to the husband. The husband first contends that the trial court's findings are not supported by substantial credible evidence. For example, the husband has challenged the trial court's finding that the bulk of the work on the Capp home was done by the wife and sons with the husband acting as overseer. The husband does not deny that the wife and sons worked on the house. Rather, he has urged the court to find that an overseer is more important to a construction project than laborers and that his wife and children did not have the technical skills to finish the house without his supervision. The husband has not shown a clear preponderance of evidence against the finding, he merely argues that the trial court should have seen it in a different light. The finding is supported by the evidence. The husband also claims a failure of substantial credible evidence to support the trial court's finding that he drank excessively. He contends that the trial court ignored evidence he presented to show that he has held a steady job with progressions in grade and that he has no record of alcohol-related arrests. He points out that his checkbook record indicates that he spent only $804 on alcohol during the year prior to the separation, an amount he argues is not excessive. He argues that the trial court ignored his witnesses and favored his wife's witnesses. We have said before that when the trial court decides to accept the testimony of one party over the other, that determination will stand unless it is clearly erroneous. Creon v. Creon (1981) - Mont. - , 635 P.2d 1308, 38 St.Rep. 1828. The trial court's findings are supported by substantial credible evidence and we will not disturb them. The husband next contends that the trial court, in making the property distribution, failed to take into consideration the husband's contributions and inheritance. He claims that the trial court overlooked the fact that he received an inheritance of $6,600 from his father, that he had an interest in a service station before the marria.ge, that he has worked steadily throughout the marriage, and that he supervised the construction of the family home. He contends on the other hand that the wife had no inheritance, has a better and more sta-ble job, has no needs different from his, and that she made no extraordinary contribution to the marriage. The trial court clearly took the husband's contributions into account in the property distribution. Other factors which a trial court must take into account in dividing marital property are set out in section 40-4-202, MCA. The trial court considered all of these factors and incorporated them into the findings and conclusions. The reasons for making the unequal property distribution were clearly set forth. The judgment of the District Court is affirmed. We Concur: - - Chief Justice

April 20, 1983

0a08d099-5ed7-44f5-9464-3ec2ebbd7a17

STATE v MIDLAND MATERIALS CO

N/A

82-375

Montana

Montana Supreme Court

No. 8 2 - 3 7 5 IN THE SUPREME COURT O F THE STATE O F M O N T A N A 1 9 8 3 THE STATE O F MONTANA, a c t i n g b y a n d t h r o u g h i t s D e p a r t m e n t o f H i g h w a y s , P l a i n t i f f a n d R e s p o n d e n t , V S . MIDLAND MATERIALS CO., D e f e n d a n t . a n d R e s p o n d e n t , a n d TIMOTHY E . WOOD, D e f e n d a n t a n d A p p e l l a n t . A p p e a l f r o m : D i s t r i c t C o u r t 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 , I n a n d f o r t h e C o u n t y o f Y e l l o w s t o n e H o n o r a b l e D i a n e B a r z , J u d g e p r e s i d i n g . C o u n s e l o f R e c o r d : F o r A p p e l l a n t : B r u c e E . L e e , B i l l . i n g s , M o n t a n a F o r R e s p o n d e n t s : C r o w l e y , H a u g h e y , H a n s o n , T o o l e & D i e t r i c h , B i l l i n g s , M o n t a n a J a m e s R. B e c k , H e l e n a , Montana S u b m i t t e d o n b r i e f s : F e b r u a r y 2 4 , 1 9 8 3 D e c i d e d : May 1 2 , 1 9 8 3 F i l e d : -- C l e r k M r . J u s t i c e L . C. Gulbrandson d e l i v e r e d t h e Opinion of t h e Court. T h i s case stems from an i n t e r p l e a d e r a c t i o n brought by t h e Nontana Highway Department to d e t e r m i n e whether r e s p o n d e n t , Midland M a t e r i a l s Co., or a p p e l l a n t , Tim Wood, was t h e " s u c c e s s o r - i n - i n t e r e s t " t o E d i t h I . W a l t e r s , t h e former owner of p r o p e r t y known as t h e " S t a t e P i t , " under s e c t i o n 60-4-204, MCA. The District Court of t h e T h i r t e e n t h J u d i c i a l District , Yellowstone County, denied d e f e n d a n t Wood's motion f o r summary judgment and g r a n t e d t h e summary judgment motion submitted by Midland M a t e r i a l s C o . From t h a t judgment, Tim Wood a p p e a l s . The p a r t i e s s t i p u l a t e d t h e f a c t s to be a s f o l l o w s : " 1 . On December 30, 1954 E d i t h I. Walters conveyed by deed . . . to t h e S t a t e Highway Commission of Montana a t r a c t of land i n Yellowstone County, Montana ( h e r e i n a f t e r ' S t a t e P i t ' ) . "2. I n 1974 E d i t h I . Walters conveyed by w a r r a n t y deed . . . t o M. G . Long p r o p e r t y a d j a c e n t to and n o r t h and s o u t h w e s t of t h e ' S t a t e P i t 1 , e x c e p t i n g t h e ' S t a t e P i t 1 . I n 1975 M . G. Long conveyed t h e 'Midland' pro- p e r t y t o d e f e n d a n t Midland M a t e r i a l s C o . by w a r r a n t y deed . . . " 3 . On February 4, 1981 t h e Montana Department of Highways s e n t a l e t t e r to E d i t h Walters . . . " 4 . On February 6, 1981 t h e Montana Department of Highways s e n t a l e t t e r to Midland Materials Co. . . . "5. Sometime p r i o r t o J u n e 25, 1981 t h e Montana Department of Highways p u b l i s h e d a N o t i c e of S a l e of t h e ' S t a t e P i t 1 p r o p e r t y "6. On J u n e 25, 1981 t h e Montana Department o f Highways, a c t i n g p u r s u a n t t o t h e a u t h o r i t y g r a n t e d by 5 9 60-4-202 and 60-4-204, MCA, con- d u c t e d a p u b l i c a u c t i o n a t B i l l i n g s , Montana o f t h e ' S t a t e P i t 1 p r o p e r t y . The bidding a t s a i d a u c t i o n was opened by M r . J o e l Long of d e f e n d a n t Midland Materials C o . f o r $18,000.00. Defendant Timothy E. Wood t h e n b i d $18,100.00. A f t e r an u n s u c c e s s f u l c a l l f o r h i g h e r b i d s t h e a u c t i o n e e r concluded t h e sale a t t h e $18,100.00 h i g h b i d . M r . Joel Long t h e n a l l e g e d to t h o s e p r e s e n t t h a t they (Midland Materials Co.) were s u c c e s s o r s i n i n t e r e s t t o E d i t h I . Walters and would l i k e to e x e r c i s e t h e i r r i g h t to meet t h e high b i d . M r . Long was informed by a Highway Department r e p r e s e n t a t i v e to send h i s c l a i m t o t h e S t a t e by r e g i s t e r e d mail i n p r e s c r i b e d form. " 7 . On J u n e 2 7 , 1981 d e f e n d a n t Timothy E. Wood o b t a i n e d a q u i t c l a i m deed . . . of t h e ' S t a t e P i t 1 from E d i t h I . Walters whom he had f i r s t m e t and c o n t a c t e d af ter t h e p u b l i c auc- t i o n and a f t e r he had t a l k e d w i t h h i s a t t o r - ney, J e f f Essman, about Midland Materials Co. I s claim t o be t h e s u c c e s s o r i n i n t e r e s t . " 8 . Both d e f e n d a n t Midland M a t e r i a l s Co. and d e f e n d a n t Timothy E. Wood claim t o be t h e suc- c e s s o r i n i n t e r e s t of E d i t h I . Walters f o r t h e purpose of S 60-4-204, MCA, and are both pre- pared to pay t h e high bid p r i c e to t h e S t a t e Highway Commission . . . " 9 . The S t a t e of Montana, p r i o r to t h e f i l i n g of t h i s s u i t , r e j e c t e d t h e claim of Timothy E. Wood by l e t t e r d a t e d J u l y 2, 1981." Subsequent t o t h e s t i p u l a t i o n and a£ t e r judgment was e n t e r e d , Midland M a t e r i a l s submitted a check to t h e S t a t e f o r t h e f u l l p u r c h a s e p r i c e and a deed was mailed to them on August 25, 1982. The deed, a l t h o u g h signed p r i o r to August 25, was n o t mailed u n t i l t h a t d a t e . On August 24, Tim Wood had o b t a i n e d a s t a y of e x e c u t i o n b u t it was n o t s e r v e d on a p p e l l a n t s o r t h e S t a t e p r i o r to t h e i s s u i n g of t h e deed. The deed was sub- s e q u e n t l y r e c o r d e d . The i s s u e p r e s e n t e d is whether t h e District Court e r r e d i n d e t e r m i n i n g Midland Materials Co. to be t h e " s u c c e s s o r - i n - i n t e r e s t " as t h a t term is used i n s e c t i o n 60-4-204, MCA? A s t h i s c a s e is an a p p e a l from a summary judgment, we must f o l l o w t h e r u l e s as set o u t i n Darrah v. Milbank Mutual I n s u r a n c e Company ( 1 9 8 3 ) -- . -- Mont . -- .- , 658 P.2d 374, 40 St.Rep. 117. There w e s t a t e d : " I n cases i n v o l v i n g summary judgment t h e pre- t r i a l r e c o r d s must be looked a t to d e t e r m i n e whether t h e r e a r e any g e n u i n e i s s u e s of material f a c t , 56 ( c ) M.R.Civ.P., Flemmer v. Ming ( 1 9 8 0 ) r 6 2 1 P.2d 1038, 37 St.Rep. 1916, because summary j udgment is o n l y p r o p e r under Rule 5 6 ( c ) M.R.Civ.P., where t h e record d i s c l o s e s no such i s s u e s e x i s t and t h e moving p a r t y is e n t i t l e d t o judgment as a matter of l a w . Reaves v. Reinbold ( 1 9 8 0 ) r 615 P.2d 896, 898, 37 St.Rep. 1500, (and c a s e s c i t e d t h e r e i n ) . A s t h e purpose of t h e proceeding is t o d e t e r m i n e whether t h e r e a r e any material i s s u e s of f a c t i n v o l v e d , it should be remem- bered t h a t t h e formal i s s u e s p r e s e n t e d by t h e p l e a d i n g s a r e n o t c o n t r o l l i n g . Byrd v. B e n n e t t ( 1 9 8 1 ) , 6 3 1 P.2d 695, 38 St.Rep. 1083. "The moving p a r t y i n a summary judgment a c t i o n h a s t h e burden of showing t h e complete absence of material i s s u e s of f a c t . Byrd v. B e n n e t t ( 1 9 8 1 ) , 6 3 1 P.2d a t 696; Cereck v. A l b e r t s o n l s I n c . ( 1 9 8 1 ) , 637 P.2d 509, 511, 38 St.Rep. 1986, (and cases c i t e d t h e r e i n ) ; Rumph v. Dale Edwards, I n c . ( 1 9 7 9 ) , 600 P.2d 163, 36 St.Rep. 1022." 658 P.2d a t 375. I n t h i s case, t h e absence of such i s s u e s h a s been shown, d e s p i t e t h e r e being no p r i o r i n t e r p r e t a t i o n of t h e term " s u c c e s s o r - i n - i n t e r e s t , " c o n t a i n e d i n s e c t i o n 60-4-204, MCA, by t h i s Court or t h e l e g i s l a t u r e , o r any i n d i c a t i o n as to t h e l e g i s l a t i v e i n t e n t from t h e s t a t u t e as a whole. Guidance i n c o n s t r u i n g t h i s term is provided by t h e i n t e r p r e t a t i o n of t h e Montana Highway Department, t h e agency charged w i t h a d m i n i s t e r i n g t h e s t a t u t e . Montana Power Company v. C r e m e r (1979) 182 Mont. S e c t i o n 60-1-102, MCA, t h e l e g i s l a t i v e p o l i c y and i n t e n t sec- t i o n of t h e Highway Code, placed a g r e a t d e a l of t r u s t and a u t h o r i t y i n t h e hands of highway o f f i c i a l s . The p e r t i n e n t p a r t o f t h a t s e c t i o n states: " C o n s i s t e n t w i t h t h e f o r e g o i n g d e t e r m i n a t i o n and d e c l a r a t i o n s , t h e l e g i s l a t u r e i n t e n d s : " (1) to p l a c e a high d e g r e e of t r u s t i n t h e hands of t h o s e o f f i c i a l s whose d u t y it is, w i t h i n t h e l i m i t s of a v a i l a b l e f u n d s , t o p l a n , d e v e l o p , o p e r a t e , m a i n t a i n , and p r o t e c t t h e highway f a c i l i t i e s of t h i s s t a t e f o r p r e s e n t as w e l l as f o r f u t u r e use; " ( 4 ) to p r o v i d e s u f f i c i e n t l y broad a u t h o r i t y t o e n a b l e t h e highway o f f i c i a l s a t a l l l e v e l s o f government t o f u n c t i o n a d e q u a t e l y and e f f i - c i e n t l y i n a l l areas of t h e i r r e s p e c t i v e r e s p o n s i b i l i t i e s , s u b j e c t to t h e l i m i t a t i o n s o f t h e c o n s t i t u t i o n and t h e l e g i s l a t i v e man- d a t e h e r e i n a f t e r imposed ." S e c t i o n 60-1-102, MCA. Under t h i s a u t h o r i t y t h e Highway Department i n t h e p a s t h a s i n t e r p r e t e d t h e terms " s u c c e s s o r - i n - i n t e r e s t " t o mean t h e a d j a - c e n t landowner whose c h a i n of t i t l e can be t r a c e d to t h e o r i g i n a l owner of t h e e n t i r e tract. The District Court s o found i n its c o n c l u s i o n of law N o . 7. A f t e r c i t i n g s e c t i o n 60-1-102, MCA, t h e l e g i s l a t i v e p o l i c y and i n t e n t s e c t i o n of t h e Highway Code, t h e case of Castles v. S t a t e ex rel. Montana Department of Highways ( 1 9 8 0 ) ; -- - - Mont . 609 P,2d 1223, 37 St.Rep. 234, and t h e s t i p u l a t i o n e n t e r e d i n t o by a l l t h e p a r t i e s , it s t a t e d : " A l l of t h e s e f a c t o r s i n d i c a t e d t h a t t h e agency i n t e r p r e t a t i o n of 60-4-204, MCA, by t h e Montana Department of Highways s u p p o r t s t h e c o n c l u s i o n t h a t Midland M a t e r i a l s Co. is t h e ' s u c c e s s o r i n i n t e r e s t . ' " Under t h e case law, it is c l e a r t h a t , when faced w i t h problems of s t a t u t o r y c o n s t r u c t i o n , t h e c o u r t must show d e f e r e n c e and r e s p e c t t o t h e i n t e r p r e t a t i o n s g i v e n t h e s t a t u t e by t h e o f f i - c e r s and a g e n c i e s charged w i t h a d m i n i s t r a t i o n . Montana Power Co. v . Environmental P r o t e c t i o n Agency ( 9 t h C i r . 1 9 7 9 ) , 608 F.2d 334, 344, Department of Revenue v. Puget Sound Power and L i g h t ( 1 9 7 8 ) , 179 Mont. 255, 587 P.2d 1282, Northern Cheyenne T r i b e v. H a l l o w b r e a s t ( 1 9 7 6 ) , '425 U.S. 649, 48 L.Ed.2d 274, 96 S.Ct. 1793. "The p e r s u a s i v e n e s s of an a d m i n i s t r a t i v e i n t e r p r e t a t i o n of a s t a t u t e depends upon t h e thoroughness e v i d e n t i n its con- s i d e r a t i o n , t h e v a l i d i t y of its r e a s o n i n g and its c o n s i s t e n c y w i t h e a r l i e r and l a t e r pronouncements of t h e same agency. [ c i t a t i o n o m i t t e d ] " B l a c k f e e t T r i b e of I n d i a n s v. S t a t e of Montana (D.Mont. 1 9 8 1 ) , 507 F,Supp. 446, 451 ( s e e a l s o , Montana Power Company v. Environmental P r o t e c t i o n Agency, s u p r a ) . I n t h e c a s e a t b a r , t h e r e is no s u b s t a n t i a l e v i d e n c e t o show t h a t t h e i n t e r p r e t a t i o n of " s u c c e s s o r - i n - i n t e r e s t " made by t h e Highway Department h a s n o t been c o n s i s t e n t l y a p p l i e d over t h e y e a r s . I t s h o u l d a l s o be noted t h a t t h e D i s t r i c t Court found t h a t t h e i n t e r p r e t a t i o n advanced by t h e a p p e l l a n t would l e a d t o an a b s u r d r e s u l t i f adopted. I n c o n c l u s i o n of law No. 1 0 it s t a t e d : " I n t h i s c a s e ' s u c c e s s o r - i n - i n t e r e s t ' c a n o n l y r e a s o n a b l y r e f e r t o t h e p r e s e n t owner of t h e a d j a c e n t p r o p e r t y from which o r i g i n a l t r a c t of l a n d t h e Montana Department of Highways a c q u i r e d its p o r t i o n o r s t r i p . Any o t h e r i n t e r p r e t a t i o n would be u n r e a s o n a b l e as it would- l e a d t o p a r t i e s w i t h o u t an i n t e r e s t i n t h e a d j a c e n t l a n d being allowed t h e advantage o f being a b l e t o match t h e h i g h b i d a t p u b l i c a u c t i o n by o b t a i n i n g q u i t c l a i m d e e d s from o r i g i n a l owners who no l o n g e r had any owner- s h i p i n t e r e s t . " T h i s Court h a s p r e v i o u s l y h e l d t h a t when c o n s t r u i n g s t a t u t e s , t h e i n t e r p r e t a t i o n should be r e a s o n a b l e t o avoid such absurd r e s u l t s . Montana Power C o . v. Cremer, supra (and c a s e s c i t e d t h e r e i n ) . For t h e foregoing r e a s o n s , w e b e l i e v e t h e District Court was c o r r e c t i n g r a n t i n g summary judgment. / A £ f irmed . J u s t i c e W e concur: = 2 A d $ &*&a Chief J u s t i c e J u s t i c e s Mr. Justice John C. Sheehy, dissenting: I dissent from the foregoing opinion. I would hold (1) the term "successor in interest" does not include a successor in title; (2) the appeal here is not moot by virtue of the delivery of a quitclaim deed by the Highway Department to Midla.nd Materials Co. ; (3) Timothy E. Wood, by virtue of the quitclaim deed which he received from the original grantor, Edith Walters, is merely a transferee, a successor in title, and not a "successor in interest"; and (4) the quitclaim deed to Midland Materials should be held null and void, set aside, and the Highway Department ordered to follow the proper statutory procedures if it intends to sell the land in question. The majority errs in this case because it misinterprets the term "successor in interest" both on the facts here and the applicable law. First let us determine what a "successor i . n interest" is. It certainly is not a successor in title. The two terms are not synomous. "In order to be a 'successor in interest, ' a party must continue to retain the same rights as the original owner without - a change in ownership. There must be a change in form only and not in substance. --- It does not include - a transfer from one -- party to another . . . "The City endeavors to apply the terms 'successor in interest,' and 'successor in title' as having the same meaning, but cites no law to support this claim . . . I ' City of New York v. Turnpike Development Corporation (S.Ct. Kings Co. 1962) , 36 Misc.2d 704, 233 N.Y.S.2d 887. A successor in interest an owner of real property may be one who is substituted for the owner by operation of law, such as an heir, a personal representative, a trustee in bankruptcy, a purchaser at foreclosure, or any other change which is in form only and not in substance. It cannot include a transferee by deed or assignment from the owner because such a transferee or assignee is a successor in title, and not a successor in interest. Moreover, on the facts of this case, there can be no "successor in interest," because the original owner, Edith Walters, is at the time of these proceedings in existence and very much so. The Sta-te recognized that she was in existence by serving upon her a request for a waiver of her right as the original owner. The statute which applies says "The owner from whom the interest is originally acquired - - or his successor in interest shall have the o~tion to purchase theinterest by offering therecore an amount of money equal to <he highest bid received for the interest at the sale . . ." It can be discerned from the terms of the statute that an owner, and the owner's successor in interest, cannot coexist at the same time. If the owner exists, the successor does not. The successor in interest exists only if he is substituted in the place and stead of the original owner. In this case the deed from Edith Walters to Malcolm Long specifically excepted the property known as the State Pit. Malcolm Long acquired no right, title or interest in the State Pit by virtue of his deed from Edith Walters and neither did Malcolm Long ' s transferee, Midland Ma-terials Co. The majority relies on the interpretation of the term "successor in interest" by the Highway Department. Where that interpretation, a matter of law, is manifestly wrong, we should not follow such interpretation when the effect is to muddle what otherwise should be clear law. The same logic applies to the argument of Timothy Wood. He claims to be a successor in interest by virtue of a quitclaim deed obtained from Edith Walters after the purported. sale of the property had taken place. He did not thereby become a successor in interest, rather he became a successor in title. As a transferee, he is not a successor in interest. He can claim no right to meet the highest bid under section 60-4-204, MCA, as a mere transferee anymore than can Midland Materials Co. as a mere transferee. Midland Materials Co. also contends in this case that the appeal of Timothy E. Wood is moot because a quitclaim deed has been delivered by the Highway Department to Midland. Under the facts of this case, however, the judgment is not moot. On August 24, 1982, the District Court, acting ex parte, as it may under Rule 7, M.R.App.Civ.P., issued a stay order with respect to its judgment. The judgment was to the effect that Midland, upon payment of the proper money to the Highway Department would obtain a deed to the State Pit. However the deed was not delivered by the Highwa-y Department until after the date on which the District Court entered its supersedeas order. In that circumstance, the judgment is stayed and the issue is not moot for the purposes of Woods appeal. A deed takes effect only upon legal delivery. 23 Am.Jur.2d Deeds S 78. Here the delivery by the Highway Department, on August 25, 1982, was too late to avoid the effect of the supersedeas order of the District Court. The situation before us therefore should be clear: Midland Materials Co. is not a successor in interest to Edith Walters. Timothy Wood is not a successor in interest to Edith Walters. Edith Walters is no longer an owner because she has quitclaimed any interest she had in the State Pit. to Timothy Wood. It should be the object of the Highway Department in selling land which it does not need to obtain the greatest sum of money that the highest bidder would agree to pay at a pub]-ic auction. The actions of the Highway Department in this case have side-stepped that beneficial purpose. We should therefore order that the deed issued by the Highway Department in this case to Midland Materials Co. be declared null and void, and set aside, and the judgment reversed. If the Highway Department wishes in the future to sell the lands which would then have reverted to it, it must follow the statutory procedures, and be guided by our opinion in conducting the public auction.

May 12, 1983

30522bf0-057a-47cc-aba9-2abca985d613

WIGHT v HUGHES LIVESTOCK COMPANY

N/A

82-061

Montana

Montana Supreme Court

NO. 82-61 IN THE SUPREME COURT OF THE STATE OF MONTANA 1983 GENE WIGHT, Claimant and Appellant, VS . HUGHES LIVESTOCK COMPANY, INC., Employer, and MOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE COMPANY, Defendant and Respondent. Appeal from: Workers' Compensation Court Honorable Tim Reardon, Judge presiding. Counsel of Record: For Appellant: R. V. Bottomly argued, Great Falls, Montana For Respondent: Robert L. Johnson argued, Lewistown, Montana For Amicus Curiae: Milodragovich, Dale and Dye, Missoula, Montana Harold Dye argued, Missoula, Montana Robert Kelleher, Billings, Montana For Guardian Ad Litem: D. Patrick McKittrick argued, Great Falls, Montana Submitted: February 24, 1983 Decided: May 16, 1983 Filed: MAY 1 6 1983 Clerk Mr. Justice John C. Sheehy delivered the Opinion of the Court. This appeal presents the issue of the weight to be given by the Workers' Compensation iudge to contingent fee contracts between successful claimants and their attorneys, where the F70rkers1 Compensation judge fixes attorneys fees under section 39-71-611, MCA, and related statutes. The underlying cause was before us on appeal in Wight v. Hughes Livestock Company, Inc. et al. (1981), - Mont. I - 634 P.2d 1189, 38 St.Rep. 1632. We upheld the right of Wight to recover compensation benefits, deleted a 20 percent statutory penalty that the Workers' Compensation Court had levied, and remanded the cause to the Workers' Compensation judge for the purpose of fixing attorneys fees to be awarded to Wight. In May 1979, Wight had entered into a contingent fee agreement with his attorney which provided that Wight would pay 25 percent of all monies obtained on his claim by way of settlement and/or judgment. After the successful appeal to this Court, Wight and his attorney entered into a second contingent fee agreement whereby Wight agreed to pay 40 percent of any compensation received. On November 11, 1981, the claimant filed an amended petition before the Workers' Compensation Court to fix attorneys fees at $35,916.74, that figure representing 40 percent of Wight's readjusted lifetime benefits. Farm Bureau objected to the petition respecting attorneys fees, contending that the petition did not contain information as to the a.mount of time that was spent by claimant's attorney in prosecuting his client's cause, and that the attorneys fees in any event should be based on past-due benefits as opposed to lifetime benefits. Claimant responded by recomputing his attorneys fees to claim $33,022.49 and noted that both of his contingent fee agreements had been filed with the Workers' Compensation Division pursuant to section 39-71-613 (2) , MCA, and that the agreements which were in accordance with the Division's rules had been approved by the Division. On December 14, 1981, the Workers' Compensation judge issued a . n order directing the claimant to file further information regarding attorneys fees and costs, specifically requesting a "detailed statement specifying the number of hours compiled in pursuing the above entitled matter and the exact amount of costs incurred. " Claimant ' s attorney responded stating, "counsel is engaged in 100 percent of legal work and litigation on a contin.gent fee basis and keeps no records concerning hours on any case and ha.s no way to reconstruct on a fair and reasonable basis the hours involved in this extended litigation." Claimant's attorney further responded that he was relying on his 40 percent contingency fee agreement as a fair and reasonable arrangement, and requested the court to set a hearing if the court felt the evidence was insufficient to determine the fee. On December 24, 1981, the Workers' Compensation judge entered an order awarding attorneys fees, part of which reads : "Claimant's counsel is entitled to attorney fees in the amount of $8,500.00. This amount is based. on two factors: the amount of effort required in taking this case to trial and defending it on appeal; and the fact that claimant's counsel is in a difficult position to collect from his client under the contingent fee contract. Claimant' s counsel argues that this court is obligated to award attorney fees based on his contingent fee contract and on conclusion of law no. 4, which states: 'The court will fix and establish reasonable attorney fees and costs based in part upon the contract between the claimant and his attorney.' This conclusion does not state that this Court will award the entire contingent fee as an attorney fee, but that the fee will be based in part on the contingent fee contract. The $8,500.00 amount is awarded with the contingent fee in mind. "The usual method employed by this court in determining a reasonable fee is to review the number of hours spent in a case as submitted by claimant's counsel.. . . [TI his court ordered claimant's counsel to submit a statement specifying his hours spent on the case and the amount of costs incurred. Claimant's counsel respectfully declined to submit hours stating that all of his legal business is done on a contingent fee basis and that he does not keep time records. If that is the case, claimant's counsel must rely on the discretion of this court to award him a reasonable fee.'' On January 12, 1982, claimant filed for a rehearing on attorneys fees which was by the Workers' Compensation Court denied. Thereafter this appeal was taken on the issue of attorneys fees. In spite of the reduced amount of attorneys fees awarded, the Workers' Compensation Court nevertheless found the contingent fee agreement to be reasonable, but that the brunt of the attorneys fees should be borne by the claimant. The Workers' Compensation Court said: "The court would like to add that the reasonableness of the contingent fee agreement is not disputed. The question before the court was what is a reasonable fee to be assessed against the insurer. The insurer is not a party to the contingent fee agreement and is not bound by its terms. In addition, when an attorney fee is awarded by the court, that award is not intended to render invalid the contingent fee agreement. The court does expect that an attorney fee award will be applied to reduce any contingent fee liability the claimant may have incurred by reason of his contingent fee agreement. The holding in Holton v. Stoltze Land and Lumber Company, 38 St.Rep. 1835, does not require this court to assess against the insurer the entire contingent fee liability." Thus the appeal from the Workers' Compensation order fixing attorneys fees in this case places before us two important issues: (1) whether a successful claimant for Workers' Compensation benefits should be required under the statutes to pay any part of his incurred attorneys fees, and (2) how does a claimant's contingent fee contract with his attorney affect the discretion of the Workers' Compensation judge in fixing attorneys fees to be awarded to the claimant? The Net Award Concept Three statutes bear on the right of a successful claimant to recover attorneys fees against the insurer or employer. They are as follows: Section 39-71-611, MCA: "In the event an insurer denies liability for a claim for compensation or terminates compensation benefits and the claim is later adjudged compensable by the workers' compensation judge or on appeal, the insurer shall pay reasonable costs and attorneys' fees as established by the workers' compensation judge." Section 39-71-612, MCA: "(1) If an employer or insurer pays or tenders payment of compensation under chapter 71 or 72 of this title, but controversy relates to the amount of compensation due and the settlement or award is greater than the amount paid or tendered by the employer or insurer, a reasonable attorney's fee as established by the division or the workers' compensation judge if the case has gone to a hearing, based solely upon the difference between the amount settled for or awarded and the amount tendered or paid, may be awarded in addition to the amount of compensation. " (2) When an attorney's fee is awarded against an employer or insurer under this section there may be further assessed against the employer or insurer reasonable costs, fees, and mileage for necessary witnesses attending a hearing on the claimant's behalf. Both the necessity for the witness and the reasonableness of the fees must be approved by the division or the workers' compensation judge." Section 39-71-613, MCA: "(1) When an attorney represents or acts on behalf of a claimant or any other party on any workers' compensation claim, the attorney shall submit to the division a contract of employment stating specifically the terms of the fee arrangement between the attorney and the claimant. " (2) The administrator of the division may regulate the amount of the attorney's fee in any workers' compensation case. In regulating the amount of the fee, the administrator shall consider the time the attorney was required to spend on the case, the complexity of the case, and any other relevant matter the administrator may consider appropriate. " (3) If an attorney violates a provision of this section, a rule adopted under this section, or an order fixing attorney's fee under this section, he sha.11 forfeit the right to any fee which he may have collected or been entitled to collect." It will be seen from the foregoing statutes, that section 39-71-611, MCA, applies where the insurer denies completely the Workers' Compensation benefits. Section 39-71-612, MCA, applies where there has been a partial payment or partial tender of compensation to the claimant. Section 39-71-613, MCA, gives the Division of Workers' Compensation the power to require the submission to it of attorneys' employment contracts; the administrative division is given the power to regulate the amount of the attorneys fees "in any Workers1 Compensation case." Section 39-71-611, MCA, gives the Workers' Compensation judge the exclusive power to fix attorneys fees; section 39-7,--612, gives the Division or the Workers' Compensation judge the power to set fees. The "net recovery" concept was first discussed by this Court in Myers v. 4-B's Restaurant, Inc. (1977), 172 Mont. 159, 561 P.2d 1331. At issue in Myers was whether the insurer was liable for attorneys fees where the insurer had not denied compensability but claimed that the workers' disability was permanent partial, rather than permanent total. This Court stated: "[Als the purpose of the statute is to grant claimant a net recovery of compensation benefits . . . a partial d-enial of benefits . . . later adjudged payable is within [the statute.] If the statute were otherwise construed . . . its purpose and objective of affording a net recovery would be defeated." (Emphasis added.) 172 Mont. at 161, 561 P.2d at 1333. Then came the case of Smith v. Pierce Packing (1978), 177 Mont. 267, 581 P.2d 834, where we quoted at length from, a-nd approved of the net recovery language in Myers. Last came Holton v. F. H. Stoltze Land and Lumber Company (1981) , Mont . , 637 P.2d 10, 38 St.Rep. 1835. In Hol-ton, the - - Workers' Compensation judge awarded a claimant $9,000 and then directed the claimant to pay $1.,000 of his award to his attornev. This Court said: "While the Workers' Compensation judge may determine which attorney fees are reasonable, the clear meaning of the statute is to provide attorney fees above and beyond the compensation awarded to a successful claimant. Assessing a successful claimant $1,000 for attorney fees clearly reduces his net compensation and thus cannot be allowed." 637 P.2d at 14, 38 St.Rep. at 1840. We are aware that the net award concept is within the spirit and history of the Workers' Compensation Act. Montana was in the vanguard of the states to a.dopt acts providing Workers' Compensation. In Ch. 67, Laws of Montana (1909), the legislature provided for a state accident insurance and workman's compensation plan for personal in jury sustained by coal mine employees in the course of their employment. The act was to be administered by the state auditor. The concept of coal mine workers' compensation was attacked in Cunningham v. Northwestern Improvement Company (1911), 44 Mont. 180, 119 P. 554. There this Court held that a Workers' Compensa.tion law was within the police power of the state, was not cla.ss legislation because it extended only to coal miners, was within the taxing power of the state, was properly adopted for a public purpose, did not abuse the trial by jury right of the Seventh Amendment of the United States Constitution, provided due process of law, - but was repugnant to the equal protection clause of the United States Constitution because the act did not prevent separate suits by employees against their coal mine employers. The essential framework for the present Workers' Compensation Act was adopted by the legislature in Ch. 96, Laws of Montana (1915). This act was attacked on behalf of Lewis and Clark County, upon the ground that the act should not apply to it since the county's premiums would ha.ve to be raised by taxes which the county contended was not a public purpose (Lewis and Clark County v. Industrial Accident Board (1916), 52 Mont. 6, 155 P. 268). What this Court said in 1916 about the development of Workers' Compensation Acts is worth remembering: "Workingmen's Insurance and Compensation Laws are the products of the development of the social and economic idea that the industry which has always borne the burden of depreciation and destruction of the necessary machinery, shall also bear the burden of repairing the efficiency of the human machines without which the industry itself could not exist. The economic loss from vocational disease, industrial accident, invalidity, old age and unemployment was a subject of serious inquiry among the constituent German states before the days of the empire, but the credit for crystallizing the sentiment into workable laws will always remain with Bismarck. From the enactment of the sick insurance statute in Germany in 1883, and the fundamental law in 1884, the idea of compensation based only upon the risks of the business and the impairment of earning efficiency spread to other European states, and finally penetrated to this country. The federal government, thirty-one states, Alaska, Ha.waii and the canal zone now have measures for the relief of injured workmen patterned after the Germa.n insurance or English compensation plan.. . . Compensation laws proceed upon the theory tha.t the injured workingman is entitled to pecuniary relief from the distress caused by his injury, as a matter of right, unless his own willful act is the proximate cause, and that it is wholly immaterial whether the injury can be traced to the negligence of the ma.ster, the neqligence of the injured employee or a fellow-servant, or whether it results from an act of God, the public enemy, an unavoidable accident, or a mere hazard of the business which may or may not be subject to more exact classification; that his compensation shall be certain, limited by the impairment -- of his e a r n i n ~ a p a c i t ~ , proportioned- his wages, and not dependent upon the skill or - - eloquence of counsel or the whim or caprice of a - - - - - - jury; thatas between workmen of the same class who suffer like injuries, each shall receive the sa.me compensation, and - that, - too, without the economic waste incident to protracted litigation and without reference to the fact that the injury to the one may have been occa.sioned by the negligence of the master, and to the other hy reason of his own fault." (Emphasis added.) In later cases, this Court piously intoned (while turning down the claimants) that the theory of workman's compensation law is to lift the burden of industrial accidents from the injured workman and their dependents and place it on industry. Betor v. National Biscuit Company (1929), 85 Mont. 481., 280 P. 641; Kerns v. ~naconda Copper Mining Compa-ny (1930), 87 Mont. 546, 289 P. 563. It should be beyond cavil therefore that the fundamental basis of worker's compensation laws is to accommodate the public interest in placing economic 1-oss caused by employment accidents not upon the public, but upon the industry in which the accident occurred, Williams v. Industrial Accident Board (1939), 109 Mont. 235, 97 P.2d 1115; and that the principal aim of workers' compensation coverage is to provide social insurance which protects the injured workman against disability from a work-connected injury, again placing the cost of the injury on the industry employing him. Mahlum v. Broeder (1966), 1-47 Mont. 386, 412 P.2d 572. If therefore, the social purpose of Workers' Compensation Acts is to provide for the injured worker a fund which replaces his lost earnings or his lost earning capacity, the reasonable cost of effectuating such social purpose where litigation is necessary ought also be the burden of the industry. Any erosion of the workers1 right of recovery by imposing upon the worker the cost of procuring his rights erodes to that extent the social purpose. It is clear to us that it is the objective of the statutes allowing attorneys fees in compensation cases to preserve intact the eventual award recovered by the claimant for his impairment, by assessing in addition his attorneys fees and costs against the insurer or employer. It is a further purpose of the statutes to allow the Workers' Compensation Court or Division to regulate attorneys fees for successful claimants. Section 39-71-613, MCA, supra. The statutory requirement that Workers1 Compensation laws be liberally construed exists for the protection of the worker. Section 39-71-104, MCA. The concern of the legislature, the spirit of the Workers' Compensation law are one and the same: that the cost of repairing a worker's injuries or replacing his lost earning capacity shall be the burden of industry, and. not that of the injured worker. It is from that viewpoint that the Workers' Compensation Court or Division should determine the reasonableness of attorneys fees and exercise discretion in regulating the same. Effect of Approved Contingent Fee Contracts We turn now to the more difficult issue, the weight that should be accorded by the Division or the Workers' Compensation judge to a contingent fee contract which has been entered into between the successful claimant and his attorney. Where the subject of a contingent fee contract offends public policy, Montana will not enforce the contract. Keller v. Turner (1969), 153 Mont. 59, 453 P.2d 781. Otherwise, as between attorney and client, Montana will enforce a contingent fee contract according to its written terms. Gross v. Holzworth (1968), 151 Mont. 179, 440 P.2d 765. This Court is quite aware that a small segment of the Bar is available to a worker seeking an attorney to prosecute a Workers' Compensation claim. Most of the members of the bar do not engage in Workers' Compensation practice, not because those claims are undesirable, but in the sense of being outside their expertise. Workers' Compensation claims are a specialized practice, requiring training and experience if the claims are to be successfully negotiated. Rare is the worker who can afford an attorney on the basis of an hourly fee, pay as you go. More important, a claims attorney will often find it necessary to advance on behalf of the client the costs incident to prosecuting the claim, the fees for consultations with doctors, the costs of depositions, the preparation of exhibits, and the necessity of travel. The "risk factor" that an attorney faces in entering into a contingent fee contract with a Workers' Compensation claimant includes not only the loss of the value of his services, but of the costs which he may have advanced. For that reason, it has been observed: "The experience of the marketpla-ce indicates that lawyers generally will not provide legal representation on a contingent basis unless they receive a premium for taking that risk. Ordinarily, when lawyers undertake a representation on a contingency basis, they bargain for a percentage of the recovery. That percentage is sufficiently high to compensate the lawyer not only for the reasonable value of the time he or she anticipates devoting to the particular lawsuit, but also for the time devoted to other lawsuits undertaken on the same basis but unsuccessful in result. Thus, in a rough and arbitrary way, the contingent percentage fee accounts for the risk of nonrecovery." Berger, Court Awarded Attorneys' Fees : What is Reasonable? 126 Univ. Pa. Law Review 281, 324-325 (1977) ; Clark v. Sage (1981), 102 Idaho 261, 629 P.2d 656, 661. In ~cKittrick v. Gardner (4th Cir. 1967), 378 ~ . 2 d 872, 875, the Court said in a case involving a contingent fee in a social security benefits claim: "While the judge must approve the reasonableness of the fee in every case and may not unquestioningly endorse contingent fee contracts providing for a fee of not more than 25 percent of the accrued benefits, there is no prohibition against his consideration of the contingency of compensation. Availability of lawyers to such claimants is of the highest importance, and if a lawyer is to receive no compensation unless there is an award, his compensation is contingent on whether or not he has a contract that says so. Most of the disability claimants have no other resources for the payment of fees. The contingency of compensation, whether it stems from an employment contract or results from the claimants indigency, is highly relevant in the appraisal of the reasonableness of any claim. The effective lawyer will not win all of his cases, and any determina-tion of the reasonableness of his fees in those cases in which his client prevails must take account of the lawyer's risk of receiving nothing for his services. Charges on the basis of a minimal hourly rate are surely inappropriate for a lawyer who has performed creditably when payment of any fee is so uncertain." We have previously noted that section 39-71-613, MCA, granted power to the administrator of the Division of Workers' Compensation to regulate attorneys fees "in any Workers' Compensation case." Since the statute does not speak directly of contingent fees, the administrator of the Division after hearings adopted an administrative rule, section 24.29.3801, A.R.M., which provides as follows: "24.29.3801. Attorney Fee Regulation. (1) An attorney representing a claimant on a worker's compensation claim shall submit to the division, in accordance with Section 39-71-613, MCA, a contract or a copy of a contract of employment stating specifically the terms of the fee arrangement. The contract of employment shall be signed by the claimant and the attorney. "(2) An attorney representing a claimant on a workers1 compensation claim, and who plans to utilize a contingent fee system to establish the fee arrangement with the claimant may not charge a fee above the following amounts: " (a) For cases that have not gone to a hearing before the Workers' Compensation judge, twenty-five percent (25%) of the amount of compensation payments the claimant receives due to the efforts of the attorney; "(b) For cases that go to a hearing before the Workers' Compensation judge, thirty-three percent (33%) of the amount of compensation payments the claimant receives from an Order of the Workers' Compensation judge; " (c) For cases that are appealed to the Montana Supreme Court, forty percent (40%) of the amount of compensation payments the claimant receives based on the order of the Supreme Court. " ( 3 ) The amount of medical and hospital benefits received by the claimant shall not be considered in calculating the fee, unless the workers' compensation insurer has denied all liability, including medical and hospital benefits, in the claimant's case, or unless the insurer has denied the payment of certain medical and hospital costs a.nd the attorney has been successful in obtaining such benefits for the claimant. " (4) For good cause shown, the division may allow contingent fees in excess of the maximum fees as set forth in the above schedule. Such a variation from the maximum contingent fee schedule must be approved by the division before a final fee contract is entered into between the attorney and the claimant. "(5) The fee schedule set forth above does not preclude the use of other attorney fee arrangements, such as the use of a fee system based on time. When such a fee arrangement is utilized, the contract of employment shall specifically set forth the fee arrangement, such as the amount charged per hour. " (6) The contingent fee schedule set forth above is a maximum schedule, and nothing prevents an attorney from charging a contingent fee below the maximum contingent fee schedule. The division encourages attorneys to review each workers' compensation claim on a case by case basis in order to determine an appropriate fee. An attorney may also reduce the attorney's fee from what was originally established in the fee contract, without the approval of the division. " (7) The division retains its authority to regulate the attorney fee amount in any workers1 compensation case even though the contract of employment fully complies with the rules set forth above. " As a matter of legislative history, section 39-71-611, MCA, supra, originally provided that "the insurer shall pay reasonable costs and attorneys fees as established & the division." By an amendment Ch. 63, § 2, Laws of 1979, the word "divisj-on" was struck from the statute and the term "Workers' Compensation judge" inserted. Thus the a.dministrative rule above cited was adopted by the Division when it had the power to regulate not only fees on cases which had not gone to adjudication, but also fees on those cases which were adjudicated by the Workers' Compensation Court. When we turn our attention to the administrative rule promulgated by the Division, it becomes self-evident that the contingent fees included therein by the Division were considered by it to be reasonable. No other weight can be attached to the adoption of the administrative rule but that the Division had determined that the amount of such contingent fees fully protected the claimant, were consonant with the practice of attorneys in the Workers1 Compensation field, and fulfilled the Division's legislative obligation to provide for reasonable attorneys fees to successful claimants. Our sister state, Idaho, subscribes to the "net award" theory in fixing attorneys fees. Clark v. Sage (1981) , 102 Idaho 261, 629 P.2d 657, 659. Idaho had earlier held that when its industrial accident board had approved a contingent fee agreement, the successful claimant was entitled to an award o f : attorneys fees against the insurer or employer in accordance with the contingent fee agreement. Mayo v. Safeway Stores, Inc. (1969), 93 Idaho 161, 457 ~ . 2 d 400. In Clark v. Sage, supra, the case came before the Idaho Supreme Court because the industrial accident commission had withdrawn its approval of a contingent fee contract. The question before the Idaho court was what effect should be given to the contingent fee contract. The Idaho Court stated: "Nevertheless, the proposition still remains that where an employer and its surety have unreasonably refused to pay an otherwise compensable claim, an award of attorney fees from them 'should not be less than the amount that would be found reasonable if agreed upon between the claimant and his attorney as a fee to be paid by claimant.' 3 Larson on Workers' Compensation Laws, S 83.40 at 15-649 (1976) (relying on Mayo v. Safeway Stores, Inc. , supra) . Given that the claimant and his former attorney entered into a contingent fee agreement, the commission is under a duty to determine what would - be - a reasonable attorney fee on a contingenc - basis. This obligation neces~arily arises Yfrom the fact that the intent of the claimint and his former attorney was for the attorney to be paid on a contingent fee basis. (Emphasis added.)" 629 P.2d at 660. The 1da.ho court further held that in determining a reasonable attorneys fee its commission must engage in a balancing process and consider on contingent basis the following factors: " (1) The anticipated time and labor required to perform the legal service properly. "(2) The novelty and difficulty of legal issues involved in the matter. " (3) The fees customarily charged for similar legal services. "(4) The possible total recovery if successful. "(5) The time limitations imposed by the client or circumstances of the case. " (6) The nature and length of the attorney-client relationship. " (7) The experience, skill and reputation of the attorney. "(8) The ability of the client to pay for the legal services rendered. " (9) The risk of no recovery." 629 P.2d at 661. Not mentioned by the Idaho court in Clark v. Sage, supra, but surely a factor to he considered, is the market value of the lawyer's services at the time and place involved. Indeed it may be said that in every retainer contract, be it persona1 or public, hourly, fixed fee or contingent fee, each such contract is in reality based on the market value of the lawyer's services. With the added factor of the market value of the lawyer's services at the time and place involved, we adopt the factors set out by the Idaho Supreme Court to be considered by Montana's Workers' Compensation judge or the Division in determining the reasonableness of contingent fee contracts and the amount of attorneys fees to be awarded to successful claimants. It is clear to us in the instant case that the Workers' Compensation judge, in fixing a fee of $8,500 for Wight's attorney did not consider the proper factors in determining the reasonableness of the fee to be awarded. We therefore, remand this case for a hearing based on the factors which we have here approved to determine the reasonable attorneys fees that Wight is entitled to recover. In considering Wight's contingent fee contract with his attorney, the Workers' Compensation judge should accept the approved contract as having a strong presumption in its favor. If the judge does not set a fee in accordance with the contingent fee contract, he shall state with particularity his reasons in writing, based upon strong countervailing evidence, why the contingent fee contract is not followed by him, and precisely what weight he accorded to the contingent fee contract. We would direct, however, that the Workers' Compensation Court give no effect to the 40 percent contingent fee contract adopted between the claimant and his attorney after the successful appeal had taken place in this case. When the attorney entered into the first contract with his prospective client for a 25 percent contingent fee contract, no confidential relationship existed between the attorney and the worker at tha.t time, and a 25 percent contingent fee contract stands on the sa.me footing as any other contract between persons competent to contract. Renegar v. Staples (Okla. 1963), 388 P.2d 867. After the confidential relationship was established by the execution of the 25 percent contingent fee contract the attorney was bound not to use the influence which his position gave him to obtain an advantage over his client. See section 72-20-202, MCA. We do, however, accept the attorney's explanation that the second contract came about when he realized that he was charging less than other attorneys for the same kind of services, and therefore requested of his client a new contract in line with the rules promulgated by the Division. The attorney at oral argument felt that the second contract clouded the real issues in this ca.se and indeed it has so operated. We are troubled that one effect of this decision is that it may require the Workers' Compensation judge to hold evidentiary hearings on all contested attorneys fees. Since the court's time now is so severely limited and its workload so great, this additional burden would undoubtedly adversely affect the rights of other claimants to a speedy determination of their claims. To a.void such an effect, we suggest that the Workers1 Compensation Division promulgate an addition to section 24.29.3801, A.R.M., providing a system whereby an attorneys fee contract submitted to the Division for approval under section 39-71-613, MCA, shall at the same time be served by copy upon the employer or insurer, and a procedure be set out for the insurer or employer to contest before the Division the reasonableness of the provisions in the contract for an attorneys fee. The Division, in approving or disapproving such contract should be guided by the same factors herein set forth in determining a reasonable attorneys fee. When the Worker's Compensation Judge is required to fix attorneys fees under our statutes, a fee contract approved by the Division should have the same presumption in its favor and the Judge should apply the same factors and procedure for contested fee cases before him as here set out. In the rare case where an evidentiary hea.ring is necessary, the Worker's Compensation judge shall extend opportunity for hearing, and to that extent we overrule the holding in Continental Insurance Co. & Raymond Corcoran Trucking v. Horton (1980) , Mont . - , 613 P.2d 1011, 37 St.Rep. 1244. Needless, frivolous or picayunish requests for evidentiary hearings before the Workers Compensation judge shall be regarded by this court as an abuse of procedure warranting penalty or discipline. Reversed and remanded to the Workers1 Compensation Court pursuant to the instructions herein. Costs to claimant. Justice We Concur: Chief Justice /----, Justices Mr. Justice Frank B. Morrison, Jr. dissenting: I dissent in part. In my opinion the result reached by the majority is correct except for rejection of the 40 percent contingent fee contract adopted between claimant and his attorney. This contract was approved by the Division and under the rationale of the opinion should be transferred to the insurance company unless there is strong evidence rejecting that contract as being unreasonable. There was a confidential relationship existing between attorney and client but there is no indica.tion that the attorney abused tha.t relationship. In fact the majority opinion recognizes that the contingent fee contract was adjusted because it was lower than the contracts normally approved for the same or similar representation. Under the rationale that we adopt in this case, the 40 percent contingent fee contract, once approved by the Division, should be accepted by the Worker's Compensation Court as reasonable absent the requisite countervailing evidence. Here there is none. Therefore, the 40 percent contingent fee should be paid by the insurance carrier. n Mr. J u s t i c e John Conway H a r r i s o n c o n c u r r i n g i n p a r t and d i s s e n t i n g i n p a r t . I concur i n t h e m a j o r i t y ' s d e c i s i o n t o remand t h i s case t o t h e Workers' Compensation Court. However, my views a r e not i n complete accordance w i t h t h e m a j o r i t y . For t h e most p a r t , I a g r e e w i t h t h e m a j o r i t y ' s view of t h e n e t r e c o v e r y c o n c e p t , however, I would have expanded somewhat. The m a j o r i t y frames t h e q u e s t i o n of n e t recovery a s f o l l o w s : "whether a s u c c e s s f u l c l a i m a n t f o r Workers' Compensation b e n e f i t s s h o u l d be r e q u i r e d under t h e s t a t u t e s t o pay any p a r t of h i s i n c u r r e d a t t o r n e y s f e e s . " The m a j o r i t y t h o r o u g h l y d i s c u s s e d t h e n e t r e c o v e r y concept a s w e l l a s t h e u l t i m a t e purpose of Workers' Compensation l e g i s l a t i o n t o reach t h e c o n c l u s i o n t h a t : " [ i ] t is c l e a r t o us t h a t it is t h e o b j e c t i v e of t h e s t a t u t e s allowing a t t o r n e y s f e e s i n compensation c a s e s t o p r e s e r v e i n t a c t t h e even- t u a l award recovered by t h e c l a i m a n t f o r h i s impairment, by a s s e s s i n g i n a d d i t i o n h i s a t t o r n e y s f e e s and c o s t s a g a i n s t t h e i n s u r e r and employer ." I c o m p l e t e l y a g r e e , however, I would r e s p e c t f u l l y add t h e f o l l o w i n g comments. Any award of a t t o r n e y s f e e s under s e c t i o n 39-71-611, MCA, is a complete award. The c l a i m a n t ' s a t t o r n e y cannot seek f u r t h e r compensation from h i s c l i e n t based on any c o n t r a c t u a l arrange- ment. The s t a t u t e empowers t h e Workers' Compensation judge t o award " r e a s o n a b l e c o s t s and a t t o r n e y s ' f e e s ; " t h u s anything claimed beyond t h e amount set by t h e c o u r t must be deemed u n r e a s o n a b l e ; even though ( a s i n t h i s c a s e ) any e x c e s s had pre- v i o u s l y been approved by t h e Workers' Compensation D i v i s i o n . There cannot e x i s t two s t a n d a r d s of r e a s o n a b l e n e s s ; one a r i s i n g o u t of an a t t o r n e y / c l i e n t c o n t r a c t approved by t h e D i v i s i o n , and one a p p l i e d by t h e Compensation Court. M y view of t h e n e t recovery concept is a shade d i f f e r e n t from t h e m a j o r i t y ' s view. I n t h e o r y , we f u l l y agree; n e t recovery means t h a t a c l a i m a n t ' s b e n e f i t s should not be reduced by a t t o r - neys f e e s and c o s t s . Our d i f f e r e n c e must be i n how a n e t reco- v e r y comes a b o u t . and t h i s i n v o l v e s t h e d i s c r e t i o n of t h e Workers' Compensation judge. The m a j o r i t y a d d r e s s e s t h i s i s s u e by asking: "how does a c l a i m a n t ' s c o n t i n g e n t f e e c o n t r a c t w i t h h i s a t t o r n e y a f f e c t t h e d i s c r e t i o n of t h e Workers ' Compensation judge i n f i x i n g a t t o r n e y s f e e s t o be awarded t o t h e claimant?" I n answering t h i s q u e s t i o n , t h e m a j o r i t y s t a t e s : " [ i l n c o n s i d e r i n g Wight's c o n t i n g e n t f e e c o n t r a c t w i t h h i s a t t o r n e y , t h e Workers' Compensation judge should a c c e p t t h e approved c o n t r a c t a s having a s t r o n g presumption i n its f a v o r . I f t h e judge does not set a f e e i n accordance with t h e c o n t i n g e n t f e e c o n t r a c t , he s h a l l s t a t e with p a r t i c u l a r i t y h i s reasons i n w r i t i n g , based upon s t r o n g c o u n t e r v a i l i n g e v i d e n c e , why t h e c o n t i n g e n t f e e c o n t r a c t is n o t followed by him, and p r e c i s e l y t h a t weight he accorded t o t h e c o n t i n g e n t f e e c o n t r a c t . " The m a j o r i t y v e r y narrowly d e f i n e s t h e d i s c r e t i o n of t h e Workers' Compensation judge. I b e l i e v e a broader i n t e r p r e t a t i o n is c o r r e c t . There e x i s t s an important reason f o r allowing broad d i s c r e t i o n . I n t h e s e s i t u a t i o n s , b e f o r e n e g o t i a t i o n of an a t t o r n e y / c l i e n t f e e c o n t r a c t , t h e a t t o r n e y and c l a i m a n t may r e a l i z e t h a t i f t h e y a r e s u c c e s s f u l , t h e i n s u r e r w i l l be l i a b l e f o r payment of t h e f e e . Thus, t h e r e is an i n c e n t i v e t o set t h e f e e a s high a s p o s s i b l e . A s i m i l a r s i t u a t i o n h a s occurred i n eminent domain c a s e s . I n one such c a s e t h i s Court s t a t e d : "Here, s i n c e t h e s t a t e o r p o l i t i c a l sub- d i v i s i o n must pay t h e a t t o r n e y f e e s , t h e r e is even a s t r o n g e r reason t o remand t h e i n s t a n t c a s e f o r c o n s i d e r a t i o n of t h e f a c t o r s set o u t i n - Crnceyich and Tholkes. Under t h e 1889 C o n s t i t u t i o n f e e s i n condemnation c a s e s were p e r c e n t a g e contingency f e e s . I n t h e p r i v a t e agreements t h e p a r t i e s p r o t e c t e d t h e i r own i n t e r e s t s b u t where the f e e is t o be paid by t h e s t a t e t h e r e is no i n c e n t i v e f o r t h e land- owner t o b a r g a i n t o keep t h e p e r c e n t a g e r e a s o n a b l e . " Rauser v. Toston I r r . D i s t . ( 1 9 7 7 ) , 172 Mont. 530, 546, 565 P.2d 632, 641. I n workers' compensation c a s e s , f e e agreements must f i r s t be approved by t h e D i v i s i o n ; t h u s , one c o u l d argue t h a t t h e i d e a expressed i n - Rauser - is not a p p l i c a b l e . However, i n m y view, t h e D i v i s i o n ' s r u l e is not comprehensive enough to i n s u r e t h a t i n p a r t i c u l a r c a s e s t h e f e e approved w i l l be r e a s o n a b l e . An e x c e l l e n t example is t h e case b e f o r e us. The second c o n t r a c t was approved, it should not have been. I n o t h e r words, a p a r t i c u l a r agreement may conform t o t h e d i v i s i o n ' s r u l e , y e t i n some c i r - cumstances, may be unreasonable. Consequently, t h e Workers' Com- p e n s a t i o n judge must have broad d i s c r e t i o n i n making an award. Furthermore, I do not b e l i e v e it is c o r r e c t t o r e q u i r e the judge t o base h i s award on a p a r t i c u l a r method. However, i f a c l a i m a n t and h i s a t t o r n e y have e n t e r e d i n t o a c o n t i n g e n t f e e agreement, I c l e a r l y r e c o g n i z e such a f a c t d e s e r v e s s p e c i a l con- s i d e r a t i o n . Not i n a p p r o p r i a t e a t t h i s j u n c t u r e a r e the remarks of Clement F. Haynsworth, J r . , Chief Judge of the Fourth C i r c u i t , i n M c K i t t r i c k v. Gardner ( 1 9 6 7 ) , 378 F.2d 872, 875, i n a case i n v o l v i n g a c o n t i n g e n t f e e i n a s o c i a l s e c u r i t y b e n e f i t s claim: "While t h e judge must approve t h e reasonable- n e s s of t h e f e e i n every c a s e and may not u n q u e s t i o n i n g l y endorse c o n t i n g e n t f e e c o n t r a c t s p r o v i d i n g f o r a f e e of not more than twenty-f i v e p e r c e n t of t h e accrued b e n e f i t s , t h e r e is no p r o h i b i t i o n a g a i n s t h i s con- s i d e r a t i o n of t h e contingency of compensation. A v a i l a b i l i t y of lawyers t o such c l a i m a n t s is of t h e h i g h e s t importance, and i f a lawyer is t o r e c e i v e no compensation u n l e s s t h e r e is an award, h i s compensation is c o n t i n g e n t whether o r not he h a s a c o n t r a c t t h a t s a y s s o . Most of t h e d i s a b i l i t y c l a i m a n t s have no o t h e r r e s o u r c e s f o r t h e payment of f e e s . The con- t i n g e n c y of compensation, whether it stems from an employment c o n t r a c t o r r e s u l t s from t h e c l a i m a n t ' s indigency, is h i g h l y r e l e v a n t i n t h e a p p r a i s a l of t h e r e a s o n a b l e n e s s of any f e e claim. The e f f e c t i v e lawyer w i l l not win a l l of h i s c a s e s , and any d e t e r m i n a t i o n of t h e r e a s o n a b l e n e s s of h i s f e e s i n those c a s e s i n which h i s c l i e n t p r e v a i l s must t a k e account of t h e l a w y e r ' s r i s k of r e c e i v i n g nothing f o r h i s s e r v i c e s . Charges on t h e b a s i s of a minimal h o u r l y r a t e a r e s u r e l y i n a p p r o p r i a t e f o r a lawyer who h a s performed c r e d i t a b l y when payment of any f e e is so u n c e r t a i n . " F i n a l l y , I d i s a g r e e on t h e i s s u e of whether or n o t a hearing is r e q u i r e d . The m a j o r i t y s u g g e s t s t h a t e v i d e n t i a r y h e a r i n g s on a t t o r n e y f e e s w i l l be r a r e . T h i s means they a r e not r e q u i r e d . I r e a l i z e t h a t w e r e c e n t l y s t a t e d : " t h e m a t t e r of allowing a h e a r i n g concerning a t t o r n e y f e e s is . . . d i s c r e t i o n a r y . " C o n t i n e n t a l I n s . Co. v. Horton ( 1 9 8 0 ) , Mont. , , 613 P.2d 1011, 1013, 37 St.Rep. 1244, 1246. However, I would o v e r r u l e - Horton -- and hold t h a t a n e v i d e n t i a r y h e a r i n g on a t t o r n e y s f e e s is r e q u i r e d i n t h e s e s i t u a t i o n s . I would a p p l y t h e g e n e r a l r u l e ; " [ a l n award of a t t o r n e y f e e s , l i k e any o t h e r award must be based on competent evidence." Crncevich v. Georgetown Rec. Corp. ( 1 9 7 5 ) , 168 Mont. 113, 120, 541 P.2d 56, 59. I am f u l l y aware of t h e heavy workload w i t h which t h e Workers' Compensation Court is f a c e d . However, I f e e l t h a t due p r o c e s s r e q u i r e s an e v i d e n t i a r y h e a r i n g on a t t o r n e y ' s f e e s i n s e c t i o n 611 s i t u a t i o n s . The i n s u r e r should have n o t i c e and o p p o r t u n i t y t o be heard t o c o n t e s t r e q u e s t s f o r awards. A l s o , t h e c l a i m a n t should be a b l e t o j u s t i f y l a r g e r awards because of e x t r a o r d i n a r y c i r c u m s t a n c e s . Mr. Chief J u s t i c e Frank I. Haswell, c o n c u r r i n g i n p a r t and d i s s e n t i n g i n p a r t : I concur i n t h e r e s u l t reached by t h e m a j o r i t y i n t h i s c a s e . I l i k e w i s e a g r e e t h a t t h e award t o c l a i m a n t s h o u l d b e a n e t r e c o v e r y w i t h a l l a t t o r n e y f e e s t o be p a i d by t h e i n s u r e r and t h a t t h e f a c t o r s t o be c o n s i d e r e d i n awarding a t t o r n e y fees are t h o s e set f o r t h i n C l a r k v. Sage e t a l . ( 1 9 8 1 ) , 102 Idaho 261, 629 P.2d 657. M y q u a r r e l is w i t h t h e h o l d i n g of t h e m a j o r i t y t h a t t h e a d o p t i o n of a maximum c o n t i n g e n t f e e s c h e d u l e by t h e Workers1 Compensation D i v i s i o n c o n s t i t u t e s a d e t e r m i n a t i o n by t h e D i v i s i o n t h a t f e e s w i t h i n t h e maximum are r e a s o n a b l e . I would h o l d t h a t such maximum f e e s c h e d u l e c o n s t i t u t e s a d e t e r m i n a t i o n t h a t any c o n t i n g e n t fee e x c e e d i n g t h e maximum i n t h e s c h e d u l e is u n r e a s o n a b l e . P l a c i n g a l i d on a t t o r n e y f e e s does n o t c o n s t i t u t e a u t o m a t i c a p p r o v a l of e v e r y c o n t i n - g e n t f e e c o n t r a c t w i t h i n t h e maximum. The D i v i s i o n r u l e itself makes t h i s c l e a r : "The D i v i s i o n r e t a i n s its a u t h o r i t y t o r e g u l a t e t h e a t t o r n e y f e e amount i n any workers' compensation case even though t h e c o n t r a c t of employment f u l l y complies w i t h t h e r u l e s set f o r t h above." 24- 3.18(42)-5-18220(7), A.R.M. T h i s l e a v e s t h e Workers1 Compensation Judge f r e e t o d e t e r m i n e a r e a s o n a b l e a t t o r n e y f e e i n an i n d i v i d u a l case by b a l a n c i n g t h e f a c t o r s s e t f o r t h i n C l a r k v. Sage e t a l . , s u p r a . %w&J! Chief J u s t i c e .%&

May 16, 1983

5619abeb-12c7-488d-881e-5fc2b9f2d676

STATE v SMITH

N/A

82-092

Montana

Montana Supreme Court

No. 82-92 I N T H E SUPREME COURT O F T H E STATE O F M O N T A N A 1983 STATE O F M O N T A N A , P l a i n t i f f and Respondent, -vs- ROBIN CHARLES SMITH, Defendant and Appellant. APPEAL FROM: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County o f illissoula, The Honorable Douglas Harkin, Judge p r e s i d i n g . COUNSEL O F RECORD: For Appellant: P a t t e r s o n , M a r s i l l o , Tornabene & Schuyler; Charles J. Tornabene argued, Missoula, Montana Ferguson & M i t c h e l l , Missoula, Montana For Respondent: Hon. Mike Greely, Attorney General, Kelena, Montana James W. McLean argued, A s s t . Atty. General, Helena Robert L. Deschamps, County Attorney, !.lissoula, Xontana - - - - - - - - - - - - Submitted: A p r i l 21, 1983 Decided : October 6 , 1983 F i l e d : 6CT 6 - 1983 -- ----- -- - --- Clerk Mr. Justice John C. Sheehy delivered the Opinion of the Court. Following a jury trial, defendant Robin Smith was found guilty of burglary, forgery, and solicitation. The District Court of the Fourth Judicial District, Missoula County, sentenced the defendant to 40 years in the Montana State Prison, with 25 years suspended. Defendant appeals his conviction to this Court. We affirm. In Spokane, Washington, during the evening of March 6, 1981, the defendant and Cindy Clardy attended a party at the home of Penny Braun. There, Clardy stole two purses from the residence, including one belonging to Penny Braun. Clardy took the purses to obtain identification cards for cashing checks. Clardy and the defendant gave different accounts of what happened after they left the party. According to Clardy, she and the defendant then drove from Spokane for Missoula, Montana. They stopped in Idaho for the night because of headlight trouble. After reaching Missoula the next day, they drove around town looking for places from which they might steal payroll checks. After checking into a motel and eating dinner, the defendant and Clardy resumed their patrol of Missoula businesses. Some time that evening, the defendant parked the car, while Clardy waited. He returned with a number of items, including a check protector, 27 blank checks and about $430, which he brought to the car. The next day, Clardy and the defendant attempted to use the typewriter they had brought from Spoka.ne to fill out the blank checks. However, the typewriter was broken, so Clardy used an identification card belonging to Penny Braun to rent another typewriter. The rented typewriter was never returned. The forged instruments were Missoula Sheet Metal checks. Clardy and the defendant made the checks out to "Penny Braun" for approximately $200 each and the defendant signed the checks as the employee of Missoula Sheet Metal authorized to issue payroll checks. After using Penny Braun's identification cards to cash five checks at four different stores, Clardy and the defendant returned that evening to Spokane. According to the defendant, he did not go to Missoula the night of March 6, 1981, but rather stayed in Spokane with a good friend, visited his sister in Spokane the next morning, and spent that day painting his apartment. The defendant was arrested in Spokane, Washington, on April 21, 1981, and brought to trial in Missoula, Montana, on November 2, 1981. The defendant was charged with the burglary of Missoula Sheet Metal, forging the stolen checks, and solicitation for encouraging Cindy Clardy to deliver the forged checks, pursuant to sections 45-6-204, 45-6-325, and 45-4-101, MCA, respectively. The defendant raises three issues on appeal: 1. Whether the evidence of the theft of Penny Braun's purse and the rental typewriter was evidence of "other crimes," and if so, whether it was properly admitted at trial according to Rule 404 (b) , M. R.Evid. ? 2. Whether the defendant was denied his right to a speedy trial? 3. Whether the District Court erred by refusing the defendant's request that he interview two witnesses? The District Court admitted the evidence of the stolen purse and typewriter on the grounds that this evidence was "inseparably related" to the accused crimes of burglary, forgery, and solicitation. The defendant claims on appeal that evidence of the stolen purse and typewriter constituted evidence of "other crimes" and as such the procedures mandated in State v. Just (1979), Mont . , 602 P.2d 957, 36 St.Rep. 1649, should have been followed. In State v. Trombley (1980), Mont . , 620 P.2d 367, 37 St.Rep. 1871, we held that evidence of "defendant's simultaneous misconduct inseparably related to the alleged criminal act" was not evidence of other crimes and therefore, the procedural mandates of Just need not be followed. The principal question here is whether the thefts of the purse and typewriter are such "inseparably related" acts of misconduct. In Trombley, credit cards were stolen at the same time a truck was stolen. The defendant was charged solely with the theft of the truck, but at trial evidence of the defendant's use of the stolen credit cards was also admitted. On appeal, the defense claimed it was error to use this evidence of other crimes without first following the procedural requirements of Just. We concluded that the evidence of the stolen credit cards was not evidence of "other crimes" and as such, the procedural guidelines of Just need not be followed. Our reasoning in Trombley was based in part on our discussion of "other crimes" evidence in State v. Jackson (1979), 180 Mont. 195, 589 P.2d 1009. In Ja.ckson, we affirmed the admission into evidence of items that were stolen at the same time and from the same person as the items which were the basis for the theft charge. Such evidence was not considered "other crimes" evidence because it was not evidence of a "wholly independent" crime. (180 Mont. at 202, 589 P.2d at 1014.) Here, the defendant contends that the acts of stealing Penny Braun's purse and not returning the rental typewriter are not simultaneous acts of "misconduct inseparably related to the alleged criminal act." The defendant contends that these acts are "wholly independent" of the act constituting burglary, forgery, and solicitation. Therefore, defendant contends, the evidence of the stolen purse and typewriter must be considered evidence of "other crimes." Under Rule 404 (b) , M. R.Evid. , evidence of other crimes, wrongs, or acts is admissible as proof of "preparation" or "plan." Here, the purse and typewriter were needed in order to carry out the forgery and bad checks scheme, and as such were part of the "preparation" for the crime charged. The inherent prejudice of this evidence is outweighed by its great probative value in showing how the defendant was able to commit the crimes charged. See Smith v. State (1972), 152 1nd.App. 654, 284 N.E.2d 522. We hold that the provisions of Just need not be met in this case. The stealing of the purse, and the keeping of the rented typewriter were inseparably related to the common general scheme of the defendant to engage in burglary, forgery, and solicitation of crime. The other crimes evidence is explanatory of his method and purpose in committing the crimes charged against him. Defendant Smith also claims prejudice because other incidents of criminal activity were imputed to him through testimony at trial. Penny Braun testified that rocks were thrown at her windshield and that Robin Smith communicated to her threats upon her life. A motion for mistrial based on this evidence of "other crimes" was denied. Detective Dave Wiyrich, testified to the alleged offering of "hush money" by Smith to Penny Braun. He also described the search he conducted of Robin Smith's apartment as an "administrative search," implying that the defendant was a parolee and that the search was conducted by the parole department. A motion for mistrial based on this evidence was denied. Finally, Detective Wiyrich, in response to a question regarding the possible involvement of Robin Smith's brother, Tom, in this crime, indicated that Spokane authorities were also "familiar with Robin Smith." In response to additional questioning by defense counsel regarding Tom Smith's record, the prosecutor made an off-the-cuff remark that he would like to inquire of the detective about Robin Smith's record. Within a few seconds, the detective informed the jury that he did indeed have the records of both Robin and Tom Smith with him, holding up several computer sheets to the jury. Robin Smith contends that these events, the interjection by the prosecutor and the unsolicited testimony regarding the defendant's criminal record by the detective were particularly prejudicial to the defendant. His motion for mistrial on this conduct was also denied by the District Court. Robin Smith also charges that the prosecutor unfairly asked him whether he filed income tax returns or had federal taxes deducted from his check; that Tammy Craig testified that she saw Robin Smith throw a check protector into a river and that she had seen him break into places before the Missoula break-in. The State answers the additional contentions as follows: Although Penny Braun testified that rocks were thrown at her windshield, there was no hint or testimony that they were thrown by Robin Smith; the threats that Penny Braun received are not specified, nor is there indication that the defendant made the threats; however, evidence of threats would be admissible to show consciousness of guilt under State v. Shaw (19821, Mont . - , 648 P.2d 287, 39 St.Rep. 1324; the offer of money to keep quiet is again admissible as evidence of defendant's consciousness of guilt; and "administrative search" does not imply parole; the police being "familiar with" the defendant and his brother does not necessarily mean a prior criminal record; the testimony of the officer that he had a copy of the defendant's criminal record was elicited by the defense over the objection of the prosecution, and is not a basis for an appeal. We agree with the State's contentions with respect to the additional items of evidence that came up in the trial. We find no error therein which would serve to reverse defendant's conviction on those grounds. We do not condone the prosecutor's statement that he would like to inspect the criminal record of the defendant while the detective was on the stand, as the remark was overzealous. The error, however, was harmless. On the second issue, the defendant contends that his case should be dismissed because his right to a speedy trial was violated. Every defendant is guaranteed the right to a speedy trial U.S. Constitution Amendment V, S 2; Mont. Const., Art. 11, S 24. Four factors must be considered in order to determine whether a defendant's right to a speedy trial has Hon. J o h n C. Sheehy J u s t i c e , Supreme C o u r t Room 414 J u s t i c e B u i l d i n g 215 N o r t h S a n d e r s H e l e n a , Montana 59620 . CORRECTION. In prepdrlny thls ~piiiloil tor pub- lication, we noted in our verification o f titles and citations the matters listed below. Corrections have been made on our copy o f the opinion. IOale. O c t o b e r 1 9 , 1 9 8 3 Re. S t a t e v. S m i t h , N o . 82-92, O c t . 6 , 1 9 8 3 P a g e 7, l i n e 3 from b o t t o m -- Amendment V , § 2 s h o u l d read Amendment VI. - WEST PUBLISHING COMPANY Box 3 5 2 6 St. Paul, MN 55165 been violated: (1) the length of delay; (2) the reason for the delay; (3) defendant's assertion of the right; and (4) prejudice of the defendant from the delay. Barker v. Wingo (1972), 407 U.S. 514, 92 S.Ct. 2182, 33 L.Ed.2d 101. The length of the delay has been considered the "triggering mechanism" in determining whether the right of a speedy trial has been violated. If the length of the delay is not presumptively prejudicial, there is no reason to consider the other factors. Barker, 407 U.S. at 530. See also State v. Fife (1981), Mont. , 632 P.2d 712, 38 St.Rep. 1334. For purposes of determining length of delay, the clock begins to run when the defendant is arrested or when the complaint is filed. State v. Larson (1981), Mont . I 623 P.2d 954, 38 St.Rep. 213; State v. Freeman (1979), 183 Mont. 334, 599 P.2d 368. In this case, the defendant was arrested on April 21, 1981. The Missoula authorities filed a complaint against him on May 7, 1981, and asked the defendant to waive extradition proceedings. On May 18 , the defendant decided not to waive extradition and formal extradition procedures began. A governor's warrant was issued on June 15, 1981. On June 30, the defendant decided to waive formal extradition. The defendant traveled to Missoula on July 2, had his initial appearance on July 6, an information was filed on July 22, and his arraignment was held on July 29. The information was amended August 12, an omnibus hearing was held September 1, trial was initially set for October 19, but was continued to November 2. Defendant was finally brought to trial 195 days after the defendant's arrest. In Fife, supra, we presumed prejudice to the defendant from a delay of 194 days; the delay was measured from the date the remittitur was ordered, remanding the cause for a new trial and there was no plausible reason for the State's inaction. Here, the defendant did not arrive in Montana and become available for trial until July 2, 1981. Extradition proceedings went on for nearly 60 days, from May 7 until July 2. While diligent prosecution includes a timely demand for extradition of a defendant, State v. Sterling (1979), 23 Wash.App. 171, 596 P.2d 1082, extradition proceedings are a sufficient reason for delay if the State has been diligent. See for example, Balla v. State (1976), 97 Idaho 378, 544 P.2d 1148, where the Court decided that extradition tolls the calculation of the length of the delay. The State is, therefore, not responsible for the 60 days that expired while defendant pursued his right to require formal extradition. We cannot say the defendant's right to a speedy trial was prejudiced by the remaining delay of 135 days. Defendant's last contention is that he was denied the right to assist in his own defense when he was not allowed personal interviews with two witnesses called by the State on rebuttal. While the District Court had denied the defendant personal interviews, defendant's counsel were allowed to interview the witnesses. As a general rule, the State cannot deny defendant's counsel access to a material witness, State v. Gangner (1925), 73 Mont. 187, 235 P. 703. The United States Supreme Court has held that the Sixth Amendment right to counsel, includes the right of an accused to personally make his own defense. Faretta v. California (1975), 422 U.S. 806, 95 S.Ct. 2525, 45 L.Ed.2d 562. Nevertheless, most courts agree that this Sixth Amendment guarantee does not mean that the accused can make his own defense personally - and have the assistance of counsel. See State v. Tait (1980), Fla. , 387 S. 2d 338 and cases cited therein. If a defendant is adequately represented by counsel, he does not have the constitutional right to also represent himself. In State v. Armstrong (1977), 172 Mont. 296, 562 P.2d 1129, we applied this general rule to hold that a defendant represented by counsel does not have the constitutional right to address a jury either personally or through a handwritten note. Likewise, a defendant adequately represented by counsel does not have the constitutional right to interview witnesses personally. See also State v. House (1978), 295 N.C. 189, 244 S.E.2d 654; and State v. Ames (1977), 222 Kan. 88, 563 P.2d 1034. Here, the defendant was adequately represented by counsel who were allowed to interview the witnesses. His contention, therefore, must fail. The judgment of conviction,&€ the defendant is affirmed. J* ---\ We Concur: M r . J u s t i c e Daniel J. Shea, dissenting: I would reverse the conviction and order a new t r i a l . The prosecutor's ploy i n getting t h e police o f f i c e r t o waive t h e defendant's criminal record i n f r o n t of the jury was manifestly prejudicial and demands a new t r i a l . I do not see how t a c t i c s such a s t h i s can be deemed harmless e r r o r .

October 6, 1983

c49fc4b9-1357-46ec-8cb2-e317a5abe0d3

BURGETT v FLAHERTY

N/A

82-456

Montana

Montana Supreme Court

XO. 82-456 I?J THE SUPREME COURT OF TIIE STATE O F ! f O N T A T , J A 1 9 8 3 LYLE BURGETT, P l a i n t i f f and Appellant, --vs- PATRICK FLAHERTY, Defendant and Respondent. Appeal f r o n : D i s t r i c t Court of t h e F i r s t J u d i c i a l P i s t r l c t , I n and f o r t h e County of Lewis & C l a r k , The Honorable Gordon R. Bennett, Judge p r e s i d i n g . Counsel of Record: For Appellant: Brad Z. Eelke, B u t t e , Montana For Respondent: Cresap S, McCracken, Great F a l l s , Nontana Submitted on B r i e f s : February 17, l9Y3 Decided: May 1 9 , 1 9 8 3 F i l e d : MAY 1 9 4983 -- --* - Clerk Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. The First Judicial District Court entered summary judgment in favor of Patrick Flaherty in a legal malpractice action brought by Lyle Burgett. Burgett appeals. Burgett contends the District Court erred in concluding his claim for relief was barred by the statute of limitations and the doctrine of collateral estoppel. The collateral estoppel issue need not be reached as the factual allegation to which it applied, malpractice based on entry of an "illegal" dissolution decree, is properly barred by Section 27-2-206, MCA. However, because the record reveals a triable issue of fact as to when Burgett knew about the allegedly unauthorized detention of his guns by Flaherty or their loss as a result of Flaherty's alleged negliqence, we vacate the summary judgment order and remand this cause for a determination of the accrual date of Burgett's claim(s) for relief. The allegations out of which this cause of action arose regard Flaherty's representation of Burgett in a dissolution proceeding. Burgett employed Flaherty after he was served with dissolution papers on August 15, 1978. At that time Burgett was in Warm Springs State Hospital awaiting mental evaluation for a pending criminal proceeding. On August 23, 1978 Flaherty appeared on Burgett's behalf before the Fifth Judicial District Court in a show cause hearing. According to court minutes, Flaherty told the court Burgett did not contest the dissolution but would contest property and child support issues. After hearing testimony from Deanne Burgett, the District Court granted dissolution of the marriage. On October 11, 1978, the district court judge signed and filed a decree of dissolution back dated to August 23, 1978; jurisdiction over property and child support issues was retained by the court. On January 3, 1979, the parties and their respective counsel, Flaherty and Russell A. LaVigne, met regarding property and child support matters. The meeting produced a property and child support agreement which was entered into by the parties on January 26, 1979. The agreement provided, in part, that five guns owned by Burgett would be placed in Flaherty's custody to be held "in trust" for a period of one year. The agreement further provided for appraisal of their properties in Whitehall and Butte and the eventual purchase of Burgett's equity therein by Deanne. On September 21, 1979, the District Court approved the agreement between the parties. Six months later the parties stipulated to sale of the Whitehall property. This was the last document whereon Flaherty's name appeared as counsel for Burgett. In subsequent proceedings to modify the dissolution decree, Brad Belke, counsel of record herein, represented Burgett. The instant complaint, wherein Burgett claims damages for Flaherty's alleged failure to exercise due diligence and reasonable skill on behalf of his client during the rendition of his services in the dissolution matter, was filed on January 18, 1982. The malpractice action was premised on three acts, errors or omissions committed by Flaherty, including (1) that Flaherty stipulated to an "illegal" divorce decree on August 23, 1978, in violation of Section 40-4-105f3), MCA, and Burgett's express instructions to delay the dissolution proceeding pending his release from Warm Springs; (2) that Flaherty failed to return the five guns placed in his possession under the 1979 property settlement agreement, even though two court orders had been entered directing him to do so; and (3) that Flaherty attempted to purchase Burgett's property, then valued in excess of $20,000.00, from him for $500.00 and his outstanding bill. Flaherty answered, denying allegations of professional negligence, and asserted, inter alia, the affirmative defenses of statute of limitations, based on Sections 27-2-206, 207, 211, MCA, and collateral estoppel. The District Court granted summary judgment in favor of Flaherty after reviewing the pleadings, affidavits, answers to interrogatories, and admissions on record. The court concluded that Section 27-2-206, MCA, barred Burgett's asserted malpractice claim, Section 27-2-207, MCA, barred the claim for conversion of the guns, and Section 27-2-211, MCA, barred the punitive damage aspect of the malpractice claim. Additionally, the District Court concluded that Burgett's "notion of damages flowing from an illegal divorce in August, 1978" previouslv had been presented to but rejected by the district court judge who presided over the dissolution proceeding. Section 27-2-206, MCA, provides, in pertinent part, that F "An action against an attorney . . . based upon the person's alleged professional negligent act or for error or omission in the person's practice must be commenced within 3 years after the plaintiff discovers or through the use of reasonable diligence should have discovered the act, error, or omission, whichever occurs last, but in no case may the action be commenced after 10 years from the date of the act, error, or omission." Burgett argues that there is a genuine issue of fact as to when he discovered Flaherty's alleged acts of malpractice, therefore, it was improper to enter summary judgment based on Section 27-2-206, MCA. Burgett maintains that discovery of Flaherty's alleged acts, errors or omissions constituting malpractice, did not occur until November, 1980, less than three years before the complaint was filed. Evidently that was when Burgett met with his present attorney and reviewed the circumstances of his case. As a matter of law, what is critical in determining when a legal malpractice action accrues is knowledge of the facts essential to the cause of action, not knowledge of the legal theories upon which an action may be brought. McGee v. Weinberg (Cal. App. 1979) 97 Cal. App.3d 798, 159 Cal.Rptr. California's statute of limitations for legal malpractice is not identical to Section 27-2-206, MCA, but for the purpose of the discovery argument advanced by Surgett, its interpretation by the California Court of Appeals is persuasive. "The question here is whether appellant's alleged ignorance of her supposed rights against her former attorney is sufficient to toll the statute of limitations. "The statute of limitations is not tolled by belated discovery of legal theories, as distinguished from belated discovery of facts. In legal and medical malpractice cases, the courts are often confronted with such claims that the statute of limitations has been tolled. However, the Supreme Court repeatedly has explained that it is the knowledge of facts rather than discovery of legal theory, that is the test. The test is whether the plaintiff has information of circumstances sufficient to put a reasonable person on inquiry, or has the opportunity to obtain knowledge from sources open to his or her investigation. (Sanchez v. South Hoover Hospital, 18 Cal.3d 93, 101, 132 Cal.Rptr. 657, 553 P.2d. 1129.) If the plaintiff believes that someone has done something wrong because of the damages suffered by her, such a fact is sufficient to alert a plaintiff 'to the necessity for investigation and pursuit of her remedies.' (Sanchez v. South Hoover Hospital, supra, 18 Cal.3d at p. 102, 132 Cal.Rptr. at p. 663, 553 P.2d at p. 1135.)" McGee, supra, 97 Cal. App.3d at 803, 159 Ca1,Rptr. at 89-90. (Emphasis in original.) It was incumbent on Burgett to commence his legal malpractice action within 3 years after he discovered, or through use of reasonable diligence should have discovered, Flaherty's alleged professional negligent acts, errors or omissions. Because his claim for relief essentially is based on three separate acts which occurred during the course of Flaherty's representation of Burgett, each act must be addressed separately in terms of the date of its discovery. We note that Section 27-2-206, MCA does not suspend accrual until the "attorney-client" relationship has been terminated. Compare, Cal.Code.Civ.Pro. $340.6(a) (2). I. Entry of "Illegal" Dissolution Decree. If Flaherty committed a professionally negligent act in - "stipulating" to the entry of a dissolution decree within 20 days of service of process, that act occurred August 23, 1978. Without dispute the record discloses that Burgett had actual knowledge of that act sometime during the fall of that year. Burgett knew that his marriage had been dissolved, that the dissolution was granted during the August 23rd hearing at which Flaherty represented him, and that the dissolution was contrary to his wishes. Thus, more than three years before the complaint was filed, Burgett had actual knowledge of sufficient facts to put him on inquiry that Flaherty may have committed a professionally negligent act. For purposes of the summary judgment motion, any claim for damages based on the alleged "illegal" divorce decree expired prior to January 18, 1982; the precise date of accrual need not be determined because it is not a close question. 11. Five Guns. As to the second act of alleged malpractice, the unauthorized detention and/or loss of Burgett's guns by Flaherty, the record discloses insufficient evidence to determine when such act (s) were committed or discovered. Flaherty admitted that he gave three guns to one person, a fourth he sold to another, and the fifth was stolen while in the possession of a third person. The only evidence of record regarding the date of any such acts or transactions is that, to the best of Flaherty's recollection, the theft occurred within "the first third of calendar year 1979." Burgett merely admits to placing the five guns in Flaherty's possession pursuant to the January, 1979, property settlement agreement. Under Rule 56(c), M.R.Civ.P., summary judgment is only proper where the record discloses no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Reaves v. Reinbold (1980) Mont . I 615 P.2d 896, 37 St.Rep. 1500. On the basis of the record before the District Court, Flaherty was not entitled to judgment as a matter of law. Facts material to determination of the statute of limitations issue are not contained in the record. If Burgett's claim for relief is characterized as one for professional negligence, before the conclusion can be made that Section 27-2-206, MCA bars any recovery, the dates of the alleged acts, and their discovery, must be established. If Burgett's claim is characterized as one for conversion, the date critical to application of Section 27-2-207, MCA, is when Burgett demanded return of the guns and Flaherty refused his demand. Where the defendant comes into the possession of property rightfully, the statute of limitations begins to run when the defendant refuses upon demand to return the property. Interstate Mfg. Co. v. Interstate Prod-ucts (1965) 146 Mont. 449, 408 P.2d 478, and cases cited therein. 111. Attempt to Purchase Property. If Flaherty committed any act of malpractice as a result of his alleged attempt to purchase Burgett's property, the record fails to disclose with specificity when it occurred. Absent a specific date in 1979, one cannot properly conclude that any claim for relief based on such allegation is foreclosed by Section 27-2-206, MCA. The summary judgment is vacated and this cause is remanded to the District Court for further proceedings consistent with this opinion. We concur:

May 19, 1983

27c8151d-e813-464f-b8e0-9a133208a3b0

NORICK v DOVE CONSTRUCTION

N/A

82-278

Montana

Montana Supreme Court

I N THE SUPREME COURT OF THE STATE O F M O N T A N A 1983 CHARLES A . N O R I C K and GWENDALYN E . N O R I C K , P l a i n t i f f s a n d A p p e l l a n t s , DOVE COI!STRUCTION, A P a r t n e r s h i p , D e f e n d a n t and R e s p o n d e n t . Appeal f r o m : D i s t r i c t C o u r t o f t h e E l e v e n t h J u d i c i a l D i s t r i c t , I n a n d f o r t h e County o f F l a t h e a d H o n o r a b l e R o b e r t S y k e s , J u d g e p r e s i d i n g . C o u n s e l o f Record: F o r A p p e l l a n t s : Hash, J e l l i s o n , O ' B r i e n and B a r t l e t t , K a l i s p e l l , Montana James C . B a r t l e t t a r g u e d , K a l i s p e l l , Montana F o r R e s p o n d e n t : G a r l i n g t o n , Lohn and R o b i n s o n , M i s s o u l a , Montana P a u l C . Meismer a r g u e d , M i s s o u l a , Montana S u b m i t t e d : J a n u a r y 1 4 , 1 9 8 3 > ; : ; ;j'i F i l e d : :ij.& Y A i i , ,*. <J 2 Mr. Chief Justice Frank I . Haswell delivered the Opinion of the Court. Charles and Gwendalyn Norick brought suit against Dove Construction, a general partnership in which Charles Norick and Gordon Lister were general partners, for the destruction of a partially-constructed home. The Flathead County Dis- trict Court granted summary judgment in favor of Dove Con- struction. The Noricks appeal. We reverse and remand for further proceedings. In 1977 Charles Norick and Gordon Lister formed a partnership called Dove Construction. Their purpose was to build Rustic Log Homes. Norick and Lister were equal partners. The partners agreed to build log homes as personal residences for themselves. Norick alleged that the homes were to be used as showplaces for their business and that Dove Construction was the general contractor. In 1978 appellants began building their log home on some Kalispell property they owned as joint tenants. All of the money for the home came out of appellants' personal funds. Although a Rustic Homes design was employed, regular logs rather than Rustic Home logs were used to build the home. The building of the house was essentially supervised by appellant Charles Norick. At various times employees and subcontractors of the partnership and the other partner, Lister, were involved in the building of the residence. In the summer of 1978 appellants sought to borrow money to complete the house. The shell of the house had been completed, and the roof was decked but no shakes had been nailed. The wiring was installed but was not hooked up to a power source. Appellants approached Empire Federal Savings and Loan of Kalispell for a loan but were told no funds would be released without a general contractor, so Norick and Lister agreed that Dove Construction would be the general contractor. A formal agreement was signed with the lender for a $30,000 loan on October 19, 1979. The home was destroyed by fire the night of November 14, 1979. Although the exact cause of the fire is unknown, Norick speculated that it could have been caused by an overloaded extension cord or by some space heaters placed in the basement by the chimney subcontractor, Butterfield Masonry, and the District Court so held in granting summary judgment to the partnership. The subcontractor was being paid from Norick's personal funds. Because of the fire, the funds from the lender were never released. On February 25, 1980, Dove Construction was dissolved by written agreement. The construction enterprise, the Rustic Log Home dealership, various tools and equipment, and the remainder of the savings and checking account were given to Gordon Lister on dissolution. Lister was also to honor all debts and obligations incurred by the partnership. Ap- pellant was to have various tools, equipment and materials. Appellant stated that the reason for the dissolution was that the partnership was not generating income. It also appears the dissolution was amicable. On May 14, 1981, appellants filed suit against the partnership for negligence in constructing the home which resulted in the fire. Specifically, they alleged that the partnership breached its duty to supervise the chimney subcontractor and further that the partnership, as a general contractor, was liable for not building a completed project. Appellants asked for $50,000 in damages. The partnership was insured against liability for its negligence by Trans- america Insurance Corporation. Respondent partnership, through its insurance company, denied any involvement in the construction and consequently denied that it was negligent. It asserted that appellant Norick's own negligence was the cause of the fire. Moreover, respondent partnership alleged that these issues were moot because appellant Norick, as general partner, cannot main- tain an action at law against the partnership of which he was a general partner. Respondent partnership moved for summary judgment. The District Court granted the partnership's motion for summary judgment on the basis that the partnership was not involved in the construction of appellants ' home, would receive no benefit from the project, and that the partner- ship could incur no liability for the destruction of the home as the negligence of the appellant Norick caused the fire. We summarize the issues on appeal in this manner: 1. May one partner in a general partnership sue the partnership in tort for his individual property loss? 2 . May the spouse of one partner in a general part- nership sue the partnership in tort for her individual property loss? 3. Are there any genuine issues of material fact precluding summary judgment? Without resolution of the underlying factual con- flicts, we cannot say with assurance whether appellant Norick may sue the partnership in tort for his individual property loss. Procedurally, an action may be maintained against the partnership entity. A Montana statute provides: "Action aqainst business association. -------- --- When two or more persons associated in a business transact such business under a common name, whether it comprised the name of such persons or not, the associates may be sued by such common name . . ." Section 25-5-104, MCA. Substantively, there is a substantial question whether or not a partner has a right to sue the partnership. As a general rule, a partner cannot bring an action at law against the partnership of which he is a member. 60 Am.Jur.2d Partnership, B 350 at 237; 68 C.J.S. Partnership, 109 at 552. The Uniform Partnership Act, which Montana has enacted, leaves this question unresolved. However, some courts have established exceptions to this general principle. An example was recognized by the Kentucky Court of Appeals in Smith v . Hensley (Ky.Ct.App. 1961), 354 S.W.2d 744. There, plaintiff partner was allowed to bring an action at law against the partnership for negligence which caused damage to his individually-owned property which was being used in the business of the part- nership. There, the negligence was committed by a partner- ship employee and thus was imputed to the partnership from which the plaintiff partner was allowed recovery. See, Annot., 98 ALR2d 340 (1964). The reasons for allowing this exception are manifold. The court first reasoned that a partner who paid an obliga- tion of the partnership may obtain contribution from the partnership. Secondly, the court considered an individual loss suffered by a partner as an ordinary business loss and therefore that partner should be given the opportunity to recover such loss. Thirdly, if one partner negligently causes damage to the property of another partner, the latter may recover from the former so the rule should be no differ- ent if the property is used in the partnership business. Finally, when a partner allows his property to be used in conducting partnership affairs, he should not be required to assume the risk of the entire loss individually. The Smith court dealt with the problems where a part- ner, in suing his partnership, in reality is suing himself and that the alleged negligence of the partnership is imputed to all partners including the plaintiff partner by balancing such problems against a realistic approach which would ordinarily allow a partner to secure contribution or reimbursement for a loss incurred in the ordinary course of business. We hold, therefore, that the action by appellant Norick should go forward to the point of determining whether the partnership was negligent in causing the fire loss and whether Noricks' property was being used to further the business of the partnership. He should not be foreclosed by summary judgment. Directing our attention to the second issue, we hold that the spouse of one general partner may sue the partner- ship in tort for her individual property loss. Here, it appears that Gwendalyn Norick is a co-owner of real property upon which the home was being built as a joint tenant with her husband. We reject the defense of interspousal tort immunity for property damage claims by one spouse against the other. The rationale behind our holding is well articulated in following passage: " S i n c e t h e p r i m a r y o b j e c t o f t h e s e s t a t u t e s ( m a r r i e d women's a c t s and eman- c i p a t i o n a c t s ) was t o f r e e t h e wife from t h e husband's c o n t r o l of h e r p r o p e r t y , t h e c o u r t s have g e n e r a l l y agreed t h a t t h e y e n a b l e h e r t o m a i n t a i n an a c t i o n a g a i n s t him f o r any t o r t a g a i n s t h e r p r o p e r t y i n t e r e s t . Thus s h e may r e c o v e r from him f o r c o n v e r s i o n o r d e t e n t i o n of c h a t t e l s , f o r f r a u d , f o r t r e s p a s s t o l a n d , f o r w a s t e , f o r n e g l i g e n t damaqe t o p r o p e r t y , o r i n an a c t i o n of e j e c t m e n t o r unlawful d e t a i n e r . L i k e w i s e , s i n c e t h e s t a t u t e s d e s t r o y t h e u n i t y of t h e p e r s o n s and p l a c e them upon an e q u a l i t y , it is h e l d t h a t t h e husband may r e c o v e r from t h e w i f e f o r s i m i l a r t o r t s a s t o h i s p r o p e r t y . " P r o s s e r on T o r t s , S 122 a t 8 6 1 ( 4 t h Ed. 1 9 7 1 ) , a n d cases c i t e d t h e r e i n . (Emphasis added.) A l s o see, 4 1 Am.Jur.2d Husband and Wife, S S 531 and 532; Annot., 109 ALR 882 ( 1 9 3 7 ) ; cases c o l l e c t e d i n P e r s o n a l I n j u r y : A c t i o n s , Defenses, Damages, V. 4D, Husband and Wife S 5.02 ( 1 9 8 1 ) ; Karell, Toward A b o l i t i o n of I n t e r s p o u s e T o r t Immunity, 36 Mont. L. Rev. 251 ( 1 9 7 5 ) . The Restatement of T o r t s , second e d i t i o n , S 895F, h a s r e p u d i a t e d t h e d e f e n s e of i n t e r s p o u s a l t o r t immunity by pro- v i d i n g as f o l l o w s : "(1) A husband o r wife is n o t immune from t o r t l i a b i l i t y t o t h e o t h e r s o l e l y by r e a s o n of t h a t r e l a t i o n s h i p . " The c a s e s a d o p t i n g t h i s p o s i t i o n a r e c o l - l e c t e d a t Annot., 92 ALR3d 901 ( 1 9 7 9 ) . F i n a l l y , t h e r e a r e g e n u i n e i s s u e s of m a t e r i a l f a c t p r e c l u d i n g summary judgment i n t h i s c a s e . W e have a l r e a d y mentioned one, whether t h e p a r t n e r s h i p was l i a b l e f o r any n e g l i g e n c e i n c a u s i n g t h e f i r e t h a t d e s t r o y e d t h e home. O t h e r s a r e whether o r n o t Norick w a s n e g l i g e n t , whether t h e p a r t n e r s h i p was i n f a c t t h e g e n e r a l c o n t r a c t o r , and most i m p o r t a n t l y , what caused t h e f i r e . U n t i l t h e s e i s s u e s are r e s o l v e d f a c t u a l l y , no d e t e r m i n a t i o n as t o t h e c o r r e c t outcome of t h i s a c t i o n can be made. For these reasons, w e vacate the award of summary judgment to the partnership and remand t h i s cause t o the D i s t r i c t Court for further proceedings. Chief Justxce - - W e concur: Mr. Justice Frank B. Morrison, Jr. dissenting. I respectfully dissent. There is little, if any, evidence that the log house in question was being constructed by the partnership. In fact, it appears that plaintiffs were personally constructing the residence and that Dove Construction only became involved in order to facilitate a loan. The involvement of the partnership occurred at a time subsequent to any alleged negligence. However, assuming arguendo that there is evidence of the partnership's involvement, liability still would not exist in favor of Charles A. Norick. A partnership is not an entity and the members of the partnership are individually liable. The New York Court of Appeals in Caplan vs. Caplan (1935), 268 N.Y. 445, 198 N.E. 23, 25, 101 ALR 1223, 1225, said: "In the field of liability for torts it is especially apparent that a partnership cannot be regarded as an entity independent of the persons who compose it . . . " The Uniform Partnership Act, section 35-10-305, MCA, provides as follows: "Partnership liable for partners' wrongful act. Where, by any wrongful act or omission of any partner acting in the ordinary course of the business of the partnership or with the authority of his co-partners, loss or injury is caused -- to any person not being a partner in the partnership or - - any penalty is incurred, the partnership is liable therefore to the same extent as the partner so acting or omitting to act." (emphasis supplied) The genera.1 rule has wide acceptance. A partnership is not liable for an injury to a partner. A. Bromberg, Crane and Bromberg on Partnership (19681, 554, p. 314-315. Narrow exceptions to the general rule have been recognized in Smith v. Hensley cited in the majority opinion. However, the Smith case is not applicable. In the case at bar plaintiff Charles A. Norick seeks to recover against the partnership for his own negligence. No case has ever recognized such a right. Here the plaintiff seeks to recover against himself for his own negligence. The absurdity of such a position seems apparent. I would permit the case of Gwendalyn E. Norick to go forward. Because this is a property damage case interspousal immunity does not apply. However, I would abolish interspousal immunity in Montana and hold that one spouse may sue another spouse for damage resulting from negligent acts whether that damage is property damage or is in the nature of personal injury. I would affirm the District Court's summary judgment entered against plaintiff Charles A. Norick and vacate the summary judgment against Gwendalyn E. Norick remanding her case for trial in accordance with the views herein expressed. Mr. Justice Daniel J. Shea will file a dissent in part later.

May 10, 1983

11b40f53-ba3a-4bb7-b42c-19cba66d0416

STODDARD v GOOKIN

N/A

82-144

Montana

Montana Supreme Court

No. 82-144 I N THE S U P R E M E COURT O F THE STATE O F MONTANA 1983 J. L A W R E N C E STODDARD, P l a i n t i f f and Respondent, -vs- IQRVIN H. GOOKIN and S H A R O N GOOKIN, Defendants and Appellants. Appeal from: D i s t r i c t Court of the Sixteenth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Fallon, The Honorable Nat Allen, Judge presiding. Counsel of Record: For Appellants: Stephens & Cole; Robert L. Stephens, B i l l i n g s , Montana For Respondent : Gene Huntley, Baker, Montana Submitted on B r i e f s : November 2 4 , 1982 Decided: A p r i l 1 4 , 1983 Filed: Mr. Justice Daniel J. Shea delivered the Opinion of the Court. The defendants, Marvin and Sharon Gookin, appea.1 a judgment of the Fallon County District Court ordering specific performance of a land sale contract. The order requires that defendants execute a deed to plaintiff for the ranch land and that defendants also assign to plaintiff leases that defendants held for use of other land. In return, plaintiff was ordered to pay $28,000 to defendants with interest at 10 percent from date of judgment. This case comes to us for a second time. In Stoddard v. Gookin (1-981), Mont. , 625 P.2d 529, 38 St.Rep. 326, we remanded the - case for further evidence, and for a determination of when the first $15,000 payment of a total $30,000 payment was due, and whether time was of the essence. The evidence at the second trial established that the first $15,000 payment was due on November 1, 1973 and the second $15,000 payment was due after January 1, 1974. Although plaintiff did not pay the first $15,000 on November 1, 1973, he paid $2,000 on November 2 and on later occasions, before January 1, 1974, tendered the remaining payment. The tria.3 court held time was not of the essence for this payment and that plaintiff had properly tendered the $15,000. The first point of appeal is whether time was of the essence for the payment of the first $15,000, and whether plaintiff made a timely tender assuming that time was of the essence. The second point of appeal assumes that specific performance was properly granted but questions the equities of the adjudication of the rights of the parties. Defendants argue that during the time the lawsuit was pending they had possession of the land and paid off the underlying contract for the purchase of the ranch. They argue that they should be reimbursed for this amount plus the interest they paid over the course of the contract. We affirm the grant of specific performance but remand for the court to adjust the rights of the parties. The background facts are as follows. Defendants had a five year lease for ranch lands in Fallon County from the McGhees. This lease gave them an option to purchase the land for $100,000 at any time during the five-year period, by paying $10,000 down and agreeing to pay the remaining $90,000 at 7 1/2 percent interest. This option a-lso carried with it an assignment of grazing leases held by the McGhees. During the second year of the lease, defendants, although not actually wanting the land for themselves, agreed to exercise the option on behalf of the plaintiff--the plaintiff was to become the ultimate owner. Plaintiff was to provide the $10,000 downpayment, papers would be executed naming the defendants and plaintiff as undivided cotenants, and then when plaintiff paid $30,000 to the defendants, defendants would deed their interest in the property to plaintiff, and plaintiff would take over the contract payments to the McGhees. Plaintiff provided the $10,000, defendants exercised the option and all the papers were properly prepared and executed. The issues of this appeal on the merits of specific performance focus on how and when plaintiff was to make the first $15,000 payment of the total $30,000 payment he was to make to defendants. In deciding the first appeal we held that after the option had been exercised, the plaintiff and defendants, at defendants' request, agreed to an oral modification of the terms for paying the $30,000. At first the $30,000 was to be paid on November 1, 1973. However, defendants then asked that $15,000 be paid in 1973 and that the second $15,000 be paid after January 1, 1974. 625 P.2d at 532, 38 St.Rep. at 328. We then remanded the case for the trial court to determine, as a question of fact, when the first $15,000 was to be paid and whether time was of the essence. 625 P.2d at 536, 38 St.Rep. at 333. The trial court, after hearing more evidence, ruled that payment of the first $15,000 was to be on November 1, 1973, and although it was not paid on November 1, time was not of the essence on the contract and the plaintiff timely tendered the $15,000 before he was given notice of forfeiture. We affirm the trial court on this issue. Time of the essence was not made an express condition of the agreement between plaintiff and the defendants. Although the evidence establishes that the first $15,000 payment was not made on November 1, 1973, as agreed, defendants continued to act as though the agreement was still in effect. Plaintiff made a $2,000 payment on November 2, 1973, and defendants accepted it as part payment. Further, the defendants did not give plaintiff notice that he had a time limit in which to tender the balance of the $15,000, or forfeit his interest in the ranch. When plaintiff paid the $2,000 to defendants on November 2, 1973, he indicated he would have the balance within a few days, and defendants agreed. During the next several weeks defendants did, however, ask for payment on several occasions, without success. On each of these occasions plaintiff either said he would have the money in a few days or within a short time. Although it is clear that plaintiff knew defendants needed the money, he was never notified that his interest would be forfeited on a date certain if he failed to pay the balance of the first $15,000 payment. Further, before plaintiff filed his suit for specific performance on December 12, 1973, he had tendered payment to defendants at ,-east three times. On one occasion, after being called by a lawyer at defendants' request, he tendered the payment to the lawyer, but the lawyer told him either to take the money to the bank or to the defendants. In addition, on two more occasions payment was tendered directly to the defendants, but it was refused. In not setting a date certain on which plaintiff was to make the remaining payment of the first $15,000 payment, defendants could not forfeit plaintiff's interest in the contract. Because there were no forfeiture provisions in the contract, and because the defendants had granted several extensions to plaintiff, they could not forfeit the plaintiff's interest without first giving him notice of their intent. Collins v. Collins (1957), 348 Mich. 320, 83 N.W.2d 213, 68 A.L.R.2d 575. In granting the numerous extensions beyond the November 1 payment date, the defendants effectively waived strict compliance with any contract terms. Because time was not made the essence of the contract, and because defendants did not give plaintiff a date certain on which to pay the balance of the first $15,000 payment, the trial court did not abuse its discretion in determining that plaintiff did not forfeit his interest in the ranch and in granting specific performance. We next consider the question of whether the terms of the order granting specific performance are equitable. The order was a simple one. The trial court ordered the defendants to execute a warranty deed to the plaintiff for the land and. to execute assignments of leases which went with the land. The plaintiff was ordered to pay $28,000 to the defendants with interest at 10 percent per year from the date of judgment. The defendants were in possession of the land before the contract dispute when they leased the land from the McGhees, and they have been in possession of the land ever since. Within a year or so after plaintiff filed suit, he moved to California and has lived there ever since. Defendants have been in possession of the property and they have made all the contract payments for the land to the McGhees--an amount which, including interest, exceeds $107,000. In addition, they paid the property taxes, kept up insurance, made improvements on the 1-and, and made the pa.yments on grazing leases they had with Burlington Northern, Inc. It appears that the ranch operations were unable to sustain defendants' family. During this time both defendants were employed. Sharon Gookin had a secretarial job and Marvin Gookin, by using his own truck, regularly took jobs as a hauling contractor. The effect of the trial court's judgment is that by paying $30,000, plaintiff is getting property which he contracted to pay $130,000 for. In addition the land undoubtedly has appreciated in va.lue over the years and is worth much more than $130,000. On the other hand, the defendants have had the use of the land now for almost ten years. The question, of course, is whether the court's judgment, under these circumstances, is fair. Unfortunately, the record is rather barren on the relative equities of the parties. It appears that the court's judgment was based on a notice of election filed by plaintiff sometime during the trial proceedings. In the event that the court granted specific performance, plaintiff asserted a right to waive any claim he may have for rents and profits or reasonable rental value for the period. in which the defendants were in possession of the land. In exchange for this waiver he claimed he could not be compelled to pay any "interest on the balance of the purchase money due under the contract with the defendants to convey, $28,000." In granting specific performance the trial court adopted, verbatim, the proposed findings and conclusions of the plaintiff. In conclusion of law no. 15, the court declared the rights of the parties resulting from plaintiff's election. It states: "The plaintiff had the right to elect whether to claim the rents and profits or reasonable rental value of the property or, in the alternative, keep the interest on the purchase price which he owed to the defendants for the property. The plaintiff has elected to keep the interest on the purchase price by formal election introduced into evidence in this cause. " Plaintiff ' s notice of election and the trial court's conclusion of law concerning this election, are clearly confined to a waiver of rents and profits in exchange for not paying interest on the $28,000 still owed to defendants as a result of the 1973 agreement. By its terms, the notice of election did not extend to a claim of right not to have to pay the defendants the principal and interest which they pa-id pursuant to the contract for deed with the McGhees. In entering its final judgment, despite the defendants seeking to amend the findings and judgment, the trial court ignored this vital fact. We further note that the right to an election such as claimed by the plaintiff here, is not absolute. 7 A.L.R.2d 1204, § 7, 1218. The purchaser seeking specific performance is entitled to such an election only if he is without blame and if the vendor has wrongfully deprived the purchaser of possession. Cotton v. Butterfield (1905), 14 N.D. 465, 105 N.W. 236, 7 A.L.R.2d 1204, S 7, 1220. Although we do not disturb the trial court's conclusion that the plaintiff here was entitled to specific performance, he was not without fault, and the defendants undoubtedly were in good faith in defendinq the suit for specific performance. The plaintiff failed to make the payment when promised, and on several times thereafter he failed to make the payment when it was requested. In addition, by plaintiff failing to make the payment when due, the defendants lost a deposit on a trailer home they had purchased in anticipation of turning the ranch over to the plaintiff. Beyond the fact of virtually paying off the contract with the McGhees (which, together with principal and interest amounted to at least $107,000), the defendants, over the past decade, made numerous improvements on the property as well as paid taxes, etc. Nor is there any indication that the plaintiff wanted the ranch on which to personally reside. A short time after this dispute started, the defendant moved to California, and has resided there ever since. Here the defendants refused to convey only because of a misunderstanding. A misunderstanding at least in part caused by the plaintiff's failure to pay the first $15,000 when he was supposed to. Where a misunderstanding exists, the purchaser cannot avoid an accounting by the expedient of electing to waive rents and profits. See Annotation 7 A.IJ.R.~~ 1204, 7, 1220. Here the equities clearly predominate in favor of an accounting. Equity can only be accomplished by requiring a full consideration of the relative expenditures made by the parties in maintaining the status quo during the pendency of this litigation. Defendants must account for the rents and profits if any, or a reasonable rent for the ranch, during the years of their occupancy. Against these duties must be balanced what defendants were compelled to do over the years of occupancy in order to maintain possession of the property. They paid off, or almost paid off the contract to the McGhees; they paid interest on the unpaid balance; they paid the property taxes during the years of occupancy; they kept the place insured; and they made improvements. Equity cannot be accomplished in this case unless all these factors are considered in determining how much plaintiff should ultimately pay. The order stating plaintiff must pay only $28,000, strikes us as being more than a little unjust to the defendants. The judgment of the District Court ordering specific performance is affirmed but this cause is remanded for a full hearing and full consideration of the payments of the parties during the period of occupancy of the land involved. Only then can a proper money judgment be entered. The judgment of the District Court is affirmed in part, and vacated in part, and remanded for further proceedings. lile Concur: ? A Chief Justice w c a t q Justices f

April 13, 1983

63d40989-a1f6-4782-9ae8-368370038522

ACE PLUMBING HEATING INC v HE

N/A

82-434

Montana

Montana Supreme Court

No. 52-434 I N TEE SUPREME C O U R T O F THE STATE O F M O N T A N A 1983 A C E PLCJ;I.IBING & HEATING, INC. , P l a i n t i f f , a n d Respondent, HELENA FLATS SCHOOL DISTRICT 15, a p o l i t i c a l s u b d i v i s i o n o f Flathead County, and STEWART & JANES, g e n e r a l c o n t r a c t o r s , Defendants and Respondent,:, W. C. SIMONS & ASSOCIATES, Third-Party Defendant and Appellant. Appeal from: D i s t r i c t Court of t h e Eleventh J u d i c i a l D i s t r i c t , I n and f o r t h e County of F l a t h e a d , The Honorable Robert C. Sykes, Judge p r e s i d i n g . Counsel of Record: For Appellant: Warden, C h r i s t i a n s e n , Johnson & Berg; Steve Berg, K a l i s p e l l , Montana For Respondent: T,ed 0, Lympus, Couhby Atkorn&y, R a l i $ p e l l , Montqna Montana (Lane Bennett, Deputy) Thomas Q. Johnson, Helena, Montana William Evan Jones, Missoula, Montana Richard DeJana, K a l i s p e l l , Montana Submitted on B r i e f s : March 3 , 1933 Decided: Way 12, 1983 F i l e d : ;. . : , 1 ? 1983 d Mr. Justice John C. Sheehy delivered the Opinion of the Court. This is an appeal from a judgment issued by the District Court of the Eleventh Judicial. District, Flathead County, ordering in part that the third-party defendant, Simons and Associates (Simons) to pay the defendant, Helena Flats School District 15 (Helena Flats) $1,806.49 for a debt incurred in the construction of a school building. We affirm the judgment of the District Court in all respects. Helena Flats received a federal grant for expansion and remodeling of the Helena Flats elementary school. The school district contracted with Simons for architectural, planning and supervisory services. Simons provided all the contract documents and design specifications. Included within the plans and specifications and contracts for the project were requirements for a well and water system. Defendant Stewart and Janes, was selected as the general contractor. Plaintiff Ace Plumbing & Heating, Inc. (Ace) was selected by Stewart & Janes as mechanical subcontractor. Ace subcontracted the drilling of a water well to OIKeefe drilling. On August 25, 1978, Helena Flats and Simons entered into a supplemental agreement. This agreement provided that Simons was responsible for "insuring" completion of the project. This obligation included "insuring" that the contractors performed in accordance with the contract documents. This agreement also increased Simons' fee. In the summer of 1978 problems developed in the water system. Sand was being pumped into the tanks and lines rendering the water unusable for drinking purposes and damaging and clogging the fixtures. The cause of the problem was disputed by the parties. Simons claims the well was improperly drilled. He sent repeated requests to the general contractor suggesting the general contractor require the subcontractors to comply with the specifications, and provide an additional screen for the sand. The school district claimed the problem was Simons' faulty design. On February 13, 1979, the school district decided to ask Ace to correct the plumbing. Thereafter, Ace installed five extra tanks and a cut-off valve at a cost of $1,806.49. The problem was corrected. Ace sent a bill to the school district, the school district refused to pay. Ace filed this action against the school district and Stewart and Janes seeking payment. The school district filed a third-party complaint against Simons for the amount claimed by Ace. A non-jury trial was had on the third-party complaint. The District Court held against Simons and for the school district. The District Court found that the storage system, as designed, was inadequate to assure proper recycling and by reason of the recycling system, continued turbidity in the well itself caused excessive sand to permeate the entire system. The District Court further found that the school board discussed the problem with the architect and general contractor many times. The District Court concluded that by reason of the contract, Simons failed to take action that would resolve the problem and that any inadequacy in the specifications was the responsibility of the architect to the school board. The District Court ordered Simons to pay the school board the amount paid to Ace for installation of the tanks and other parts. Simons appeals. The issues presented for review are: 1. Whether it is mandatory to invoke a sta.ndardized arbitration clause in an architect's service contract. 2 . Who is responsible for payment to Ace for the subsequent modification of the water system. 3. Whether the ten percent contingency fund provided in the contract should be used to pay the debt. The first question is whether Simons can now claim that since the school district did not arbitrate they cannot now seek reimbursement for the payment to Ace. It is well settled in Montana that when there are issues of law or mixed issues of law and fact, arbitration is not mandatory without the consent of the parties involved. In this case, the underlying questions to be resolved by the District Court were: Was the architect negligent in his workmanship and inspection of the building? Does liability attach if the plans and specifications of the architect were properly followed? Who is responsible for payment to Simons? These are questions of law and mixed questions of law an.d fact. Section 28-2-708, MCA, provides: "Restraints upon legal proceedings void. Every stipulation or condition in a contract by which any party thereto is restricted from enforcing his rights under the contract by the usual proceedings in the ordinary tribunals or which limits the time within which he may thus enforce his rights is void. " This Court has held that contract provisions which require parties to submit future d.isputes as to questions of law or mixed questions of law and fact are void under this section. Palmer Steel Structures v. Westech, Inc. (1978), 178 Mont. 347, 350, 584 P.2d 152, 154. In this case, neither party consented to arbitrate the dispute. Without the consent of the parties the clause was unenforceable. Furthermore, the defense of the arbitration provision of the contract was not raised by Simons in his answer and third-party complaint. The right to raise enforcement of the arbitration clause may be waived by failure to assert it in a timely manner. If a party fails to raise the right to arbitrate in his pleadings, he waives his right. 5 Am.Jur. Arbitration and Award S 51, at 556, 557. In this case, Simons did not raise the issue of arbitration until much later in the proceedings. For these reasons Simons is precluded from claiming that the dispute should have been submitted to arbitration. The second issue is who is responsible for payment for the construction. and modification of the water system. The District Court found that: "The specifications submitted pertaining to the drilling of the well, the development of the water supply, storage and water system, were inadequate; and were not in sufficient detail compared to specifications on other matters relating to said project." There was testimony presented at trial to show that the plans and specifications were insufficient, thereby rendering the system inoperative. Tom Smith, an expert in the field of well drilling, testified that the system was installed as provided in the plans and specifications and that this system was inadequate. He further testified that he felt the problem was apparent from the outset of the project. Simons testified that the tanks and pump were installed according to the architect's design. On review, this Court must determine whether there is sufficient evidence in the record to sustain the findings of the District Court. Only when the findings of the District Court are clearly erroneous will they be set aside. Rule 52 (a) , M.R.Civ.P. ; McConnell v. Dempster (1982) , Mont . In the present case there was sufficient evidence to support the findings of the District Court that the specifications of the architect with regard to the water supply, storage and water system were inadequate. The contra.ctor is not responsible for errors or defects in the plans and is not liable, absent negligence on his part, where the owner's plans and specifications prove defective. Sandkay Construction Co. v. State Highway C~mm'n. (1965), 145 Mont. 180, 188-189, 399 P.2d 1002, 1007. In that case the State was found responsible for the defects in the plans and specifications as the owner/architect. In the present case the District Court found that: "Ordinarily the drilling of a well, development of same and establishment of water supply is not considered by contractors and the construction industry as part of any expansion, remodeling and addition project. However, it was required as such by reason of the EDA monies which included same. "By reason of said requirement, the Third-Party Defendant, W. C. Simons & Associates assumed the same responsibilities and duties as the architect for the project as it related to all other specifications, performances, etc. for construction, addition and remodeling." Simons testified that well systems are not normally included in the architect's contract but that this was one of the requirements necessary to obtain an EDA grant. William Janes, of Stewart and Janes also testified that the water well and water system not usually included in the architect's plans and specifications was included in this contract. Given the terms of the original contract, the supplemental agreement and the testimony presented there was sufficient evidence presented to uphold. the findings of the District Court that Simons was responsible for the performance of the architectural duties which were found to be deficient. When Simons directed the general contractor to remedy the problem, the plans were not sufficiently detailed to inform the general contractor of what changes were necessary. As a result, the school district was forced to hire Ace to remedy the problem in accordance with the advice of Tom Smith. Simons argues that he informed Stewart and Janes that they had to comply with state, federal and local laws requiring potable water. He argues that these laws were incorporated into the contract and were therefore binding on Stewart and Janes without further direction from him. In Sandkay, the State argued that the provisions of the "Standard Specifications" were incorporated by reference into the construction contra-ct. The "Sta-ndard Specifications" consisted of a printed book containing 502 pages. This Court agreed with the District Court: "That the provisions of the Standard Specifications . . . as part of said contract were intended by both parties and can only be construed to allow the Project Engineer to make those normal and anticipated changes in the plans and drawings required by the exigencies of ordinary and anticipated highway construction and were not intended by the parties and cannot be construed to apply to conditions which are abnormal, unanticipated and substantially different from those shown in the contract plans and drawaings, or to authorize or allow defendant to require different and more difficult excavation without additional compensation." 145 Mont. at 187. Simons argues that Sandkay does not apply in this case because the condition was not abnormal, unanticipated or substantially different from those in the contract plans and drawings. The remedy in this case was the installation of several new tanks and other parts at a cost of $1,806.49. Sand in the water system does not appear to be a normal or an anticipated condition. Installation of additional tanks and other parts does not appear to be normal or anticipated. Therefore the assertion that the rule in Sandkay does not apply is without merit. The third issue concerns the application of the EDA contingency fund. Simons argues that the 10 percent contingency fund, required as a condition to federal funding, should be used to pay for the subsequent installment of the new tanks and other parts. The owner/architect contract provides : "When a fixed limit of Construction Cost is established as a condition of this Agreement, it shall be in writing signed by the parties and shall include a bidding contingency of ten percent unless another amount is agreed upon in writing. When such a fixed limit is established, the Architect shall be permitted to determine what materials, equipment, component systems and types of construction are to be included in the Contract Documents, and to make reasonable adjustments in the scope of the Project to bring it within the fixed limit. The architect may also include in the Contract Documents alternate bids to adjust the Construction Cost to the fixed limit." Since Simon did not make the specific order to install the additional tanks and other parts and was uncooperative in his attempt to remedy the situation he cannot avail himself of the benefits of the contingency fund. The contract specifically provides that the architect may require the money in the fund be used to include contingencies. However, it was the school district that hired Ace to remedy the problem. It did so in accordance with the recommendation of Tom Smith to insure normal operation the facility. The judgment of the District Court is affirmed in all respects. ' Justice d o We Concur:

May 12, 1983

35a9c58d-d58f-42b4-8298-174960547a17

MARRIAGE OF WEST

N/A

82-243

Montana

Montana Supreme Court

No. 82-243 I N T H E SUPREME C O U R T O F THE STATE OF M O N T A N A I N RE T H E MARRIAGE OF: EARLENE C. WEST, p e t i t i o n e r and Appellant, and A R T H U R C. FJEST, Respondent and Respondent. Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Cascade Honorable H. W i l l i a m Coder, Judge p r e s i d i n q . Counsel of Record: For Appellant: Alexander a.nd Baucus, Great F a l l s , Montana Gary M. Zadick, Great Fall-s, Montana For Respondent: Marra, F7en2, Johnson and Hopkins, G r e a t F a l l s , Montana Joe Marra, Great F a l l s , Montana Submitted on b r i e f s : September 3 0 , 1982 Decided: A p r i l 2 1 , 1 9 8 3 4PR 2 3 1983 F i l e d : - Clerk Mr. Justice Daniel J. Shea delivered the Opinion of the Court. Petitioner Earlene West, appeals an order of the Cascade County District Court denying her petition for modification of a child support decree. She contends first that the evidence is insufficient to support the trial court's findings, and second, that it was error for the trial court to adopt, verbatim, the proposed findings and conclusions submitted by the attorney for Arthur C. West, the father. Because the findings and conclusions fail to focus on the issues to be considered in a case such as this, we cannot review the case on the merits and we remand for another hearing and for entry of proper findings. The findings and conclusions presented to the trial court by the father, focus entirely on the father's inability to pay increased child support. Not a mention is made as to whether the mother proved changed circumstances since the last child support order. In adopting verbatim these proposed findings and conclusions, verbatim, the trial court failed to consider the factors set forth in section 40-4-208, MCA, which sets out the factors to be considered where a petition for modification of child support has been filed. Although we need not detail the evidence here, we believe the mother presented a prima facie case of changed circumstances that could have rendered the former decree unconscionable. In adopting the father's proposed findings and conclusions verbatim the trial court simply focused on what the father wanted the trial court to focus on--the cash flow situation presented to the trial court by the father. A more accurate picture of the father's ability to pay could be obtained by an examination of the father's actual expenditures over this time period to support the life style in which he lived. This life style was somehow more plush than the evidence of actual cash-flow he presented to the trial court. Perhaps proper discovery would have revealed his actual ability to pay rather than his ability to pay based solely on the fa-ther's testimony to his cash on hand. We require trial courts to make specific and accurate findings which consider a.11 relevant factors. Duffey v. Duffey (19811, - Mont . - , 631 P.2d 697, 38 St.Rep. 1105. This case demonstrates the need for such findings. Although the ability to pay is clearly a factor in determining whether to order an increase of child support, it does not dispose of the questions of whether the mother here has proved a change of circumstances which may have rendered a previous order of support unconscionable. Here the trial court clearly failed to consider the factors set out in section 40-4-208, MCA, before concluding that the entire case could. be disposed of by a declaration that the father did not have the ability to pay increased child support. We again emphasize that we discourage the verbatim adoption of findings and conclusions presented by one of the parties to the litigation. See Sawyer-Adecor International v. Anglin (1982), Mont . , 646 P.2d 1194, 39 St.Rep. 1118; In Re Marriage of Beck (1981), - Mont. - , 631 P.2d 282, 38 St.Rep. 1054; In Re Marriage of Tomaskie (1981), - Mont . - , 625 P.2d 536, 38 St.Rep. 416. The losing party is entitled to know that he received the thoughtful consideration of the judge deciding the case rather than the partisan consideration of the attorney representing the other side of the lawsuit. The order of the District Court is vacated and the case is remanded for another evidentiary hearing and for entry of proper findings and conclusions. We Concur: Chief Justice Mr. Justice L. C. Gulbrandson specially concurring: I concur in the result but therein. Mr. Chief J u s t i c e H a s w e l l , d i s s e n t i n g : I would a f f i r m t h e D i s t r i c t C o u r t . I t is a waste of t i m e t o remand t h i s c a s e t o t h e D i s t r i c t C o u r t f o r a n o t h e r h e a r i n g and e n t r y of f i n d i n g s . The D i s t r i c t C o u r t ' s f i n d i n g s r e f l e c t t h a t t h e husband h a s no f u n d s t o pay i n c r e a s e d c h i l d s u p p o r t , owes $50,000 w i t h i n t e r e s t a t 21-1/2% on two n o t e s , t h a t h i s e x p e c t a t i o n s a r e f o r less income i n 1982 t h a n i n 1981, and t h a t much of what income he d o e s have is i n t h e form o f unmarketable e q u i t i e s i n c o n s t r u c t i o n p r o j e c t s . I n s h o r t , t h e husband is u n a b l e t o make i n c r e a s e d c h i l d s u p p o r t payments f o r l a c k of income. T h i s is a s u f f i - c i e n t b a s i s f o r denying t h e w i f e ' s p e t i t i o n f o r i n c r e a s e d c h i l d s u p p o r t under s e c t i o n 40-4-208, MCA. A f u r t h e r remand f o r a d d i t i o n a l h e a r i n g and f i n d i n g s w i l l n o t change t h i s s i m p l e f a c t . The law d o e s n o t r e q u i r e i d l e a c t s . S e c t i o n 1-3-223, MCA. 3 A 4 d t ~ w & , Chief J u s t i c e

April 20, 1983

22295cca-b7c9-4558-9399-decd788f56b0

GEBHARDT v D A DAVIDSON CO

N/A

82-420

Montana

Montana Supreme Court

No. 82-420 I N T H E SUPPSKE COURT O F T H E STATE O F MONTANA 1983 MARTIN A. GEBIIAIIDT , P l a i n t i f f and Appellant, D. A. DAVIDSON & CO., a Mont. f o r - p r o f i t corg. , Defendant and Respondent. Appeal from: D i s t r i c t Court of t h e Fourth J u d i c i a l D i s t r i c t , I n and f o r t h e County of Missoula, The Honorable James B. Wheelis, Judge p r e s i d i n g . Counsel of Record: For Appellant: 1 4 . Richard Gebhardt , Ronan, Montana For Respondent r Garlington, Lohn & Robinson; Paul C . M e i s m e r , Missoula, Montana - Submitted on B r i e f s : January 1 3 , 1983 Decided: A p r i l 1 3 , 1983 F i l e d : APR i 4 1983 Mr. Justice Frank R. Morrison, Jr. delivered the Opinion of the Court. This appeal results from an order entered by the District Court of the Fourth Judicial District, Missoula County, dismissing an action brought by Martin A. Gebhardt against D.A. Davidson & Company (DAD). Gebhardt appeals. Gebhardt's complaint alleged that DAD wrongfully converted monies Gebhardt had previously invested in a Franklin Money Fund account, by transferring such monies to a Kemper Cash Equivalency account without Gebhardt's authorization. As of the date of transfer, March 22, 1982, principal and accrued interest totalled $32,502.46. The complaint further alleged that such sum was not returned to Gebhardt's Franklin Money Fund account until April 8, 1982, after Gebhardt had protested the transfer. Gebhardt sought $1,500 in actual damages, based on Section 27-1-320, MCA, a.nd the allegation that Gebhardt had to secure the services of an attorney and expend time, effort and funds in pursuit of his wrongfully converted property. Additionally, exemplary damages of $10,000 were sought, based on an allegation that "[DAD] by fraud acquired such funds and exerted control and authority over such funds." On June 22, 1982 DAD filed a motion to dismiss, specifically alleging that (1) Gebhardt failed to properly allege conversion; (2) Gebhardt suffered no damages; and (3) the complaint failed to state a claim upon which relief could be granted. DAD'S motion was supported bv memorandum, an affidavit of Paul Eichwald, an employee of DAD, and four exhibits. Exhibit 1 was a copy of a blank new account application form, routinely completed by clients approaching DAD for investment services. The application form contains language authorizing DAD to act as broker and dealer for a client. Exhibit 2 was a copy of a blank Franklin Money Fund application. Part 5 of the application provides a place for the name and address of the dealer or advisor sponsoring the application. Exhibit 3 was a copy of a letter sent by DAD to all clients who had listed DAD as sponsor on Franklin Fund applications. The letter explained DAD's rationale behind a proposed transfer of client accounts from Franklin Money Fund to Kemper's Cash Equivalent Fund. The letter stated the transfer would occur automatically on March 22, 1982, unless the client advised DAD to the contrary. Exhibit 4 was a copy of a letter dated April 1, 1982 from Gebhardt's counsel to DAD. The letter expressed Gebhardt's dissatisfaction with DAD regarding the transfer from the Franklin Money Fund and included in pertinent part, the following statements: "Mr. Gebhardt has been a client of your firm [DAD] for many years . . . Recently, [Gebhardt] invested in Franklin Money Fund Account No. 11100024562 using one of D.A. Davidson's forms which listed Tom Schule as representative and D.A. Davidson & Co. as sponsor." Eichwald's affidavit included in pertinent part, the following attestations: (1) Eichwald was familiar with the transactions and occurrences which served as basis for Gebhardt's suit; (2) clients approaching DAD for investment services routinely complete a new account application; (3) Eichwald believed that Gebhardt completed a new account application prior to January 1, 1982 and that the original application was on file in DAD's Great Falls office; (4) clients applying for a money market investment are required to complete a Franklin Fund application form; (5) prior to January 1, 1982, Gebhardt completed a Franklin Fund application, listing DAD as sponsor; (6) on or about March 5, 1982, all clients who had listed DAD as sponsor on Franklin Fund account applications received a letter from DAD regarding the proposed transfer from Franklin Money Fund to Kemper Corporation Money Market Fund; (7) prior to March 22, 1982, Gebhardt did not request that his funds not be transferred by DAD; (8) at all times the funds of Gebhardt were listed under his name and available only for his use; (9) DAD transferred Gebhardt's funds back to the Franklin Fund as soon as practicable, pursuant to Gebhardt's request dated April 1, 1982, the transfer being completed April 8, 1982; and (10) Gebhardt did not lose any accrued interest on the transfers and in fact earned 1% to 14 percent more interest than if his funds had been left in the Franklin Fund account. Thereafter Gebhardt filed a memorandum in opposition to the motion to dismiss, and with district court approval, an amended complaint. The amended complaint attempted to elaborate on Gebhardt's allegations of fraud as a justification for exemplary damages. At no time did Gebhardt respond to DAD'S motion to dismiss by filing counteraffidavits or exhibits. On August 18, 1982, the district court heard oral argument by both counsel on the motion to dismiss. The motion was granted by order entered August 27, 1982. The court's reasons for granting the motion were that Gebhardt d-id not allege sufficient facts to show either an action in fraud or conversion, and that Gebhardt did not suffer damages. The order specifically stated: "From the date of [Gebhardt's] objection, April 1, 1982, until the date the money was transferred back into the Franklin Fund, the money was entirely within the plaintiff's control. The degree of control that [Gebhardt] retained while the money was in either fund was the same." On September 10, 1982 the district court entered judgment against Gebhardt and awarded DAD costs. Gebhardt appeals from the order dismissing his complaint. Gebhardt contends the district court erred in dismissing the complaint for failure to state a claim for relief in conversion or fraud. Gebhardt argues that it was improper for the district court to assume from facts not in evidence that (a) Gebhardt authorized DAD to invest his money, and (b) Gebhardt suffered no damage as result of the transfer. DAD argues that, according to Rule 12(b), M.R.Civ.P., the inclusion of the affidavit and exhibits in support of the motion to dismiss, expanded the district court's inquiry through operation of Rule 56, M.R.Civ.P. Under Rule 56, M.R.Civ.P., DAD asserts that the district court correctly determined that Gebhardt's complaint did not set forth a claim upon which relief could be granted. DAD maintains that it established a basis for summary judgment, e.g., there were no genuine issues of material fact and DAD was entitled to judgment as a matter of law, and it was incumbent upon Gebhardt to oppose the motion by raising or demonstrating the existence of a genuine issue of material fact, or demonstrating that the legal issue should not be determined in favor of DAD. We note that Gebhardt's complaint alleged only one count, conversion, and tha.t the fraud allegations only pertain to his prayer for exemplary damage. Accordingly, the only question before the court is whether the district court committed error in dismissing the complaint for failing to state a claim for relief based upon conversion. We reverse the district court order dismissing the complaint. Reversible error was committed when matters outside the pleadings were considered by the district court in conjunction with DAD's motion to dismiss and the district court failed to notify Gebhardt that the effect of such consideration was that DAD's motion to dismiss was converted into a motion for summary judgment. A motion to dismiss under Rule 12 (b) (6) , M.R.Civ.P., only tests whether a claim has been adquately stated in the complaint. Therefore, the court's inquiry properly is limited to the content of the complaint. 5 right & Miller, Federal Practice and Procedure, S1356, p. 592. Such motion has the effect of admitting all the well pleaded allegations of a complaint, and the general rule is that a complaint should not be dismissed unless it appears beyond reasonable doubt that the plaintiff can prove no set of facts which would entitle him to relief. Busch v. Kammerer (1982) Mont . , 649 P.2d 1339, 39 St.Rep. 1624. The essential elements of an action for conversion are the plaintiff's ownership and right of possession of the personalty, its conversion by defendant, and resulting damages. Johnson v. Clark (1957) 131 Mont. 454, 311 P.2d 772. Conversion has been defined as a distinct act of dominion wrongfully exerted over one's property in denial of, or inconsistent with, the owner's right, Interstate Mfg. Co. v. Interstate Products Co. (1965) 146 Mont. 449, 408 P.2d 478, or an unauthorized assumption of dominion over personalty in hostility to the right of the owner. Sorenson v . Jacobson (1951) 125 Mont. 148, 232 P.2d 332. In his amended complaint Gebhardt alleged he had invested approximately thirty two thousand dollars in Franklin Money Fund prior to March 22, 1982, that DAD wrongfully and without authority removed the monies from the Franklin Money Fund to the Kemper Cash Equivalent Fund, and that Gebhardt was damaged by the actions of DAD in the amount of $1,500 as he had to secure services of an attorney and expended time and effort, and funds in pursuit of his property. That is sufficient to constitute a claim for relief based upon conversion. It is apparent that the error committed by the district court was precipitated by DAD'S submission of exhibits and affidavit in support of its motion to dismiss. While it is permissible to present such materials in conjunction with a motion to dismiss, there are very definite procedural consequences which attend such action. These procedures were not adhered to in the instant case. Gehhardt was entitled to reasonable opportunity to present all materials made pertinent to such motion by Rule 56. Rule 12(b), M.R.Civ.P.; Graveley v. MacLeod (1978) 175 Mont. 338, 573 P.2d 1166; State ex rel. Dept. of Health and Environmental Sciences v. Livingston (1976) 169 Mont. 431, 548 P. 2d 155. Even though Gebhardt must be presumed to have knowledge of the automatic conversion requirements of Rule 12 (b) , since the district court has discretion as to whether or not extra-pleading materials will be excluded, it is incumbent on the district court to affirmatively notify the parties that the materials were not excluded and that the conversion was effected. It is imperative that the non-moving party appreciate the consequences of the automatic conversion, e.g., that he/she may not rest upon mere allegations in pleadings but must come forth with affidavits or other materials which specifically set forth facts which show that there is a genuine issue for trial, so that the non-moving party has a reasonable opportunity to present all material made pertinent to such motion under Rule 56. The memorandum filed by Gebhardt before hearing in the district court and the brief filed on appeal here reveal that Gebhardt at all times believed that the court was considering a motion to dismiss the complaint, based on the sufficiency of the pleadings alone, and nothing more. To ensure a party has reasonable opportunity to present pertinent materials, we require strict compliance with the requirements of Rules 12(b) and 56 in instances such as the case at bar. The district court must give the parties notice that a Ru:Le 12(b) motion is to be treated as a motion for summary judgment, and absent notice, extra-pleading materials must be excluded from the court's consideration in ruling on a motion to dismiss. The district court's order is reversed and this cause remanded for further proceeedings consistent with this opinion. We concur: M r . J u s t i c e L . C. Gulbrandson d i s s e n t i n g : I r e s p e c t f u l l y d i s s e n t . I n D. A. Davidson's memo i n s u p p o r t of motion to d i s m i s s , f i l e d June 28, 1982, w i t h t h e c l e r k of D i s t r i c t C o u r t , c o u n s e l argued t h e l e g a l e f f e c t of t h e a f f i d a v i t and e x h i b i t s p r e v i o u s l y s e r v e d on Gebhardts c o u n s e l . I n D. A. Davidson's r e p l y memo, f i l e d J u l y 29 , 1982, c o u n s e l a g a i n argued t h e l e g a l e f f e c t s of t h e a f f i d a v i t and e x h i b i t s , a n d , on page o n e , s p e c i f i c a l l y r e f e r r e d to Rule 56. On August 1 8 , 1982, a t t h e h e a r i n g on t h e motion to d i s m i s s , G e b h a r d t l s cotinsel made t h e f o l l o w i n g comment: " I f I m i g h t , on t h e summary judgment o r motion t o d i s m i s s Rule 12b, I t h i n k . . ." ( T r a n s c r i p t p. 5 , l i n e 1 2 ) , and later d e c l i n e d t h e c o u r t ' s o f f e r t o submit a d d i t i o n a l b r i e f s . I n my view, G e b h a r d t l s counsel had s u f f i c i e n t o p p o r t u n i t y to submit a l l materials he deemed a p p r o p r i a t e i n response t o D . A. Davidson's a f f i d a v i t and e x h i b i t s , and should have known t h a t t h e c o u r t was proceeding under Rule 56. Under t h e f a c t s of t h i s case I would n o t r e q u i r e t h e D i s t r i c t C o u r t t o a f f i r m a t i v e l y n o t i f y t h e p a r t i e s t h a t t h e c o n v e r s i o n to Rule 56 had been e f f e c t e d , and D i s t r i c t C o u r t .

April 12, 1983

11f006a8-1986-417f-a734-2e58118f6995

STATE v LAVALLEY

N/A

81-466

Montana

Montana Supreme Court

N O . 81-466 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 3 STATE OF MONTANA, P l a i n t i f f a n d R e s p o n d e n t , V S . DONOVAN LaVALLEY, D e f e n d a n t a n d A p p e l l a n t . A p p e a l f r o m : D i s t r i c t C o u r t o f t h e F o u r t h J u d i c i a l D i s t r i c t , I n a n d f o r t h e C o u n t y o f M i s s o u l a H o n o r a b l e D o u g l a s H a r k i n , J u d g e p r e s i d i n g . C o u n s e l o f ~ e c o r d : F o r A p p e l l a n t : I a n C h r i s t o p h e r s o n a r g u e d , M i s s o u l a , Montana F o r R e s p o n d e n t : Hon. Mike G r e e l y , A t t o r n e y G e n e r a l , H e l e n a , Montana Mark Murphy, A s s i s t a n t A t t o r n e y G e n e r a l , a r g u e d , H e l e n a , Montana R o b e r t L . Deschamps 111, C o u n t y A t t o r n e y , a r g u e d , M i s s o u l a , Montana S u b m i t t e d : February 2 8 , 1 9 8 3 , D e c i d e d : A p r i l 1 4 , 1 9 8 3 F i l e d : &* P . ; c - / , ; ,'7( <, 2 - M C l e r k M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e C o u r t . Defendant a p p e a l s from h i s c o n v i c t i o n s of d e l i b e r a t e homicide and a g g r a v a t e d kidnapping e n t e r e d i n t h e D i s t r i c t Court of t h e F o u r t h J u d i c i a l District, i n and for t h e County of Missoula. Defendant s h o t and k i l l e d W i l l i a m H o m e r Rock, 111, on A p r i l 1 0 , 1980, a t t h e N a u d i t t r e s i d e n c e , s o u t h of L o l o , Montana. The e v e n t s l e a d i n g up t o t h e s h o o t i n g a r e as f o l l o w s . Defendant m a r r i e d Penny N a u d i t t i n t h e summer of 1979. Defendant and Penny N a u d i t t had a stormy m a r r i a g e which p r e c i p i t a t e d numerous f i g h t s and s e p a r a t i o n s . I n December 1979, Penny o b t a i n e d a d i v o r c e from d e f e n d a n t i n a Missoula D i s t r i c t C o u r t . I n J a n u a r y 1980, defen- d a n t and Penny began l i v i n g t o g e t h e r a g a i n . However, t h e r e u n i o n was s h o r t - l i v e d and t h e y soon s e p a r a t e d . A f t e r being away f o r a few weeks, d e f e n d a n t r e t u r n e d to Lolo on o r a b o u t A p r i l 8 , 1980. On t h a t day d e f e n d a n t s a w Penny a t t h e Lolo p o s t o f f i c e . They t a l k e d w i t h o u t i n c i d e n t . On A p r i l 9, d e f e n d a n t and Penny had lunch t o g e t h e r a t t h e Country K i t c h e n i n Missoula. Penny t e s t i f i e d t h e meeting was o n l y to set t h i n g s s t r a i g h t s o t h e y could have a c l e a n break. She claims s h e d i d n o t i n t e n d to see d e f e n d a n t a g a i n . Defendant t e s t i f i e d t h e y had l u n c h and agreed t o meet l a t e r t h a t evening when Penny g o t o f f work. Penny t h e n went t o work a t h e r f a t h e r ' s b a r , t h e Golden Goose i n Lolo. When Penny f i n i s h e d working, she s t a y e d a t t h e Golden Goose t o d r i n k w i t h some f r i e n d s . Defendant c a l l e d t h e Golden Goose when Penny d i d n o t come t o meet him b u t s h e would n o t t a k e h i s calls. A t a p p r o x i m a t e l y 9:30 p.m., Penny c a l l e d W i l l i a m Homer Rock, 111, from t h e Golden Goose and asked him if he would l i k e to b a b y s i t h e r . Rock came to t h e Golden Goose and drank w i t h Penny u n t i l a p p r o x i m a t e l y 1:00 a . m . A t t h a t t i m e Penny and Rock l e f t t h e b a r i n s e p a r a t e v e h i c l e s , and drove to t h e N a u d i t t r e s i d e n c e where Penny was s t a y i n g . Penny's p a r e n t s , t h e N a u d i t t s , were o u t o f town and Penny claims s h e asked Rock to s t a y w i t h h e r f o r pro- t e c t i o n . When t h e y a r r i v e d a t t h e N a u d i t t ' s r e s i d e n c e , Penny and Rock smoked m a r i j u a n a , t h e n went to bed t o g e t h e r . A t a p p r o x i m a t e l y 2:00 a.m. , d e f e n d a n t decided to d r i v e to t h e N a u d i t t r e s i d e n c e t o check on Penny. When he a r r i v e d a t t h e r e s i d e n c e , he found Rock's p i c k u p t r u c k , which he d i d n o t r e c o g n i z e , parked i n t h e driveway. Defendant opened t h e hood on Rock's p i c k u p t r u c k and removed t h e d i s t r i b u t o r cap. He t e s t i f i e d he was concerned a b o u t P e n n y ' s s a f e t y and wanted t o p r e v e n t a p o s s i b l e i n t r u d e r ' s e s c a p e w h i l e d e f e n d a n t e n t e r e d t h e house through a d o w n s t a i r s window. When Penny and Rock heard d e f e n d a n t open t h e d o w n s t a i r s window, t h e y g o t o u t of bed to i n v e s t i g a t e . Penny o b t a i n e d h e r f a t h e r ' s .22 c a l i b e r p i s t o l which was s i t t i n g on t h e headboard bookcase. A s d e f e n d a n t e n t e r e d t h e house through t h e window and came up t h e s t a i r w a y , he d i s c o n n e c t e d a phone which was r i n g i n g . When he reached t h e bedroom d o o r he found Penny and Rock s t a n d i n g t o g e t h e r . Both were naked. Defendant t e s t i f i e d Rock p o i n t e d t h e gun a t him and d e f e n d a n t r e a c t e d by s t r i k i n g Rock. Defendant and Rock had a b r i e f s t r u g g l e i n t h e bedroom, and d e f e n d a n t took t h e gun from Rock. Defendant t e s t i f i e d t h e gun f i r e d d u r i n g t h e s t r u g g l e but a d m i t t e d he had o b t a i n e d p o s s e s s i o n of it. Penny t e s t i f i e d d e f e n d a n t had t a k e n t h e gun from Rock and f i r e d it as s h e and Rock backed away. The b u l l e t s t r u c k Rock i n t h e abdomen and e x i t e d j u s t below t h e main hipbone. The b u l l e t d i d n o t s t r i k e a n y major o r g a n s b u t d i d s e v e r t h e r i g h t i l i a c v e i n and c r e a t e d a l a r g e h o l e i n t h e r i g h t i l i a c a r t e r y . A t t r i a l , D r . John P f a f f t e s t i f i e d Rock d i e d from loss of blood b u t p r o b a b l y l i v e d a t l e a s t t e n to f i f t e e n minutes a f t e r t h e s h o o t i n g . A f t e r Rock w a s s h o t , d e f e n d a n t kicked Rock i n t h e head to keep him from g e t t i n g a n o t h e r gun. Defendant t h e n unplugged t h e u p s t a i r s phone and l e f t w i t h Penny. Defendant t e s t i f i e d Penny came w i l l i n g l y , Penny claims d e f e n d a n t forced h e r to go w i t h him. Penny t e s t i f i e d d e f e n d a n t forced h e r to l a y on t h e f l o o r of h i s p i c k u p t r u c k w h i l e t h e y drove toward Hamilton. She t e s t i f i e d d e f e n d a n t p u l l e d o f f t h e highway and stopped on t h e Trapper Creek Road where he proceeded to b e a t and r a p e h e r . Defendant t e s t i f i e d t h e y stopped a t Trapper Creek to t a l k and t h a t Penny wanted to make l o v e b u t he r e f u s e d . While t h e y were a t Trapper Creek, t h e pickup became s t u c k i n mud on t w o s e p a r a t e o c c a s i o n s . Each t i m e d e f e n d a n t g o t o u t of t h e t r u c k to push and Penny d r o v e . Penny d i d n o t a t t e m p t to escape on e i t h e r o c c a s i o n , b u t s h e does n o t recall why. A f t e r t h e y g o t t h e p i c k u p unstuck, d e f e n d a n t and Penny d r o v e t o Salmon, Idaho, and g o t a motel room. Defendant t e s t i f i e d he knew he was i n t r o u b l e b u t d e f e n d a n t wanted t o w a i t f o r a few d a y s u n t i l he could t a l k t o h i s lawyer. Defendant r e g i s t e r e d a t t h e motel under a f a l s e name. A f t e r r e g i s t e r i n g , Defendant and Penny went to t h e motel room to rest. A t approximately 2:00 p.m. on A p r i l 1 0 , Penny requested d e f e n d a n t t o r e t r i e v e some a s p i r i n from h i s pickup which he d i d . L a t e r t h e y proceeded to go downtown. Defendant went i n t o a c l o t h i n g s t o r e and bought c l o t h e s f o r Penny while she waited i n t h e pickup. Defendant then went to a d r u g s t o r e t o by i n s u l i n a s he is a d i a b e t i c . Again, Penny waited i n t h e pickup. A f t e r defen- d a n t f i n i s h e d shopping, t h e y purchased food a t an A & W d r i v e - i n and r e t u r n e d t o t h e motel. E a r l y i n t h e evening t h e motel manager c a l l e d and t o l d defen- d a n t someone had c o l l i d e d w i t h d e f e n d a n t ' s pickup. When defen- d a n t went o u t s i d e , he was surrounded by Salmon p o l i c e o f f i c e r s and a r r e s t e d . The Salmon p o l i c e had been a l e r t e d by t h e Missoula S h e r i f f I s o f f ice. The p o l i c e found t h e .22 p i s t o l i n t h e back of d e f e n d a n t ' s pickup i n a box of c l o t h i n g . The p o l i c e found Penny i n t h e motel room. From h e r c o n d i t i o n , it appeared she had been b e a t e n about t h e mouth and head. She a l s o had clumps of h a i r t o r n from h e r head. They sought medical t r e a t m e n t f o r both Penny and d e f e n d a n t and placed them i n t o t h e c u s t o d y of t h e Missoula County S h e r i f f s o f f ice. When d e f e n d a n t was r e t u r n e d to Missoula, t h e Missoula County A t t o r n e y ' s o f f ice f i l e d an I n f o r m a t i o n charging d e f e n d a n t w i t h d e l i b e r a t e homicide and aggravated kidnapping. A j u r y t r i a l com- menced i n District Court on A p r i l 20, 1981. During t h e pro- c e e d i n g , d e f e n d a n t f s c o u n s e l , among o t h e r t h i n g s : s t i p u l a t e d t o t h e admission of a c o l o r photograph of t h e v i c t i m ; c a l l e d s i x w i t n e s s e s which he had n o t spoken w i t h to t e s t i f y about P e n n y ' s r e p u t a t i o n , none of which had any o p i n i o n or p e r s o n a l knowledge o f P e n n y ' s r e p u t a t i o n ; d i d n o t p r e s e n t an i n s t r u c t i o n on s e l f - d e f e n s e , and o b j e c t e d t o t h e i n t r o d u c t i o n of a s e l f - d e f e n s e i n s t r u c t i o n by t h e S t a t e ; and s t a t e d to t h e j u r y d u r i n g c l o s i n g arguments t h a t t h i s was n o t a case of m i t i g a t e d d e l i b e r a t e o r n e g l i g e n t homicide and r e q u e s t e d t h e j u r y to f i n d d e f e n d a n t g u i l t y of d e l i b e r a t e homicide or a c q u i t . On A p r i l 24, 1981, t h e j u r y r e t u r n e d a v e r d i c t of g u i l t y to t h e c h a r g e s of d e l i b e r a t e homicide and aggravated kidnapping. Defendant a p p e a l s . Defendant raises s e v e r a l i s s u e s f o r review. W e f i n d one i s s u e to be d i s p o s i t i v e ; whether t h e omissions and d e f i c i e n c i e s o f d e f e n s e c o u n s e l amount to a d e n i a l of d e f e n d a n t ' s c o n s t i t u - t i o n a l r i g h t t o e f f e c t i v e a s s i s t a n c e of counsel as guaranteed by t h e S i x t h Amendment to t h e United S t a t e s C o n s t i t u t i o n and by Sec- t i o n 24, A r t i c l e I1 o f t h e Montana C o n s t i t u t i o n . W e n o t e o t h e r i n s t a n c e s of i n e p t n e s s i n t h e r e c o r d which, a l t h o u g h have less s u b s t a n t i a l n a t u r e t h a n t h e i s s u e s above, i n d i c a t e a g e n e r a l l a c k of s k i l l and p r e p a r a t i o n from t h e p a r t of t h e d e f e n s e c o u n s e l . I n e v a l u a t i n g d e f e n s e counsel 's represen- t a t i o n , it is n o t o u r f u n c t i o n to second-guess t r i a l tactics and t h e s t r a t e g y . S e e , United S t a t e s v. DeCoster (D.C. C i r c u i t ) , 487 F.2d 1197. They noted t h a t : "We . . . presume t h a t t h e trial c o u n s e l , appointed or r e t a i n e d , c o n s c i e n t i o u s l y s e e k , w i t h i n t h e l i m i t s of p r e p a r a t i o n , a b i l i t y , and knowledge of t h e l a w , and s k i l l a t t r i a l , t o accomplish a s u c c e s s f u l r e s u l t f o r h i s c l i e n t . " W e n o t e t h a t r e a s o n a b l y e f f e c t i v e counsel does n o t mean t h a t t h e d e f e n d a n t is c o n s t i t u t i o n a l l y guaranteed such a s s i s t a n c e o f c o u n s e l as w i l l n e c e s s a r i l y r e s u l t i n h i s a c q u i t t a l . S e e , StewarQ v. People ( 1 9 7 2 ) , 179 Colo. 31, 498 P.2d 933. H i s t o r i c a l l y , i n Montana and e l s e w h e r e , t h e burden h a s been heavy on one who s e e k s to r e v e r s e a judgment on t h e grounds of incompetency of c o u n s e l . I n S t a t e v. Rose ( 1 9 8 0 ) f - - . - . .- Mont . - , 608 P.2d 1074, 37 S t .Rep. 642, t h i s Court adopted t h e " r e a s o n a b l y e f f e c t i v e a s s i s t a n c e t e s t " as s t a t e d by t h e N i n t h C i r c u i t Court of Appeals i n Cooper v. F i t z h a r r i s ( N i n t h C i r . 1 9 7 8 ) , 586 F.2d 1325: " P e r s o n s accused of crime are e n t i t l e d to t h e e f f e c t i v e a s s i s t a n c e of c o u n s e l a c t i n g w i t h i n t h e range of competence demanded of a t t o r n e y s i n c r i m i n a l c a s e s . " S t a t e v. R o s e , 608 P.2d a t 1081. U n t i l t h a t case, t h e test i n t h i s S t a t e had been one which e s t a b l i s h e d t h e s t a n d a r d a s being t h a t of "bad f a i t h , sham, o r f a r c i c a l r e p r e s e n t a t i o n s . " T h i s s t a n d a r d h a s s i n c e been a p p l i e d i n S t a t e v. Kubas (1982) I --- .- Mon t . - -- , 642 P.2d 147, 39 St.Rep. 456, and F i t z p a t r i c k v. S t a t e ( 1 9 8 1 ) , -- - Mont . - ---- , 638 P.2d 1002, 38 St.Rep. 1448. Here, d e f e n d a n t b a s e s h i s claim of i n e f f e c t i v e a s s i s t a n c e of c o u n s e l upon s p e c i f i c acts and o m i s s i o n s a t t r i a l . Again, c i t i n g -- Cooper, s u p r a , t h i s Court s t a t e d i n Rose, s u p r a : "Where t h e claim of i n e f f e c t i v e a s s i s t a n c e of c o u n s e l rests upon s p e c i f i c acts and omissions of c o u n s e l a t t r i a l , as it does i n t h i s c a s e , r e l i e f w i l l be g r a n t e d o n l y i f it appears t h a t t h e d e f e n d a n t was p r e j u d i c e d by c o u n s e l 's conduct." S t a t e v. Rose, 608 P.2d 1081. G e n e r a l l y , t h e r a t i o n a l e of t h e s e e a r l y i n e f f e c t i v e n e s s of c o u n s e l cases was based s o l e l y on due p r o c e s s motions. S e e , Bazelon The D e f e c t i v e A s s i s t a n c e o f Counsel, 42 U n i v e r s i t y of - -- - - . - - - - - - - .- C i n c i n n a t i Law Review, p. 1. With t h e landmark c a s e of Gideon #Pldweqfff v . a n e w r l g h t ( 1 9 6 2 ) . 372 U.S. 335, #83 S.Ct. 792, 9 L.Ed.2d 799, however, t h e r i g h t to c o u n s e l was recognized a s s t a n d i n g on its own as one of t h e fundamental human r i g h t s e s s e n t i a l to a f a i r t r i a l . See McMann v. Richardson ( 1 9 7 0 ) , 397 U.S. 759, 90 S.Ct. 1441, 25 L.Ed.2d 763, wherein t h e c o u r t e l u c i d a t e d on and gave a renewed emphasis to t h i s r i g h t when it s t a t e d t h a t : " i f t h e r i g h t to counsel g u a r a n t e e d by t h e c o n s t i t u t i o n is to s e r v e its p u r p o s e , d e f e n d a n t s cannot be l e f t to t h e i r mercies of i n c m - p e t e n t counsel . . .'I I n a similar v e i n , M r . J u s t i c e Schaf f e r of t h e I l l i n o i s Supreme Court noted: "of a l l t h e r i g h t s t h a t an accused person h a s , t h e r i g h t to be r e p r e s e n t e d by c o u n s e l , is by f a r t h e most p e r v a s i v e , f o r it a f f e c t s h i s a b i l i t y to a s s e r t any o t h e r r i g h t s he may have." See, S c h a f f e r , -- - Federalism and S t a t e - - - - C r i m i n a l Procedure, 70 Har .Law .Rev. 1. - - -- - - Recognizing t h e c o n s t i t u t i o n a l g u a r a n t e e of a s s i s t a n c e of c o u n s e l is a g u a r a n t e e w i t h a purpose -- t h a t purpose being t o a s s u r e t h a t o u r a d v e r s a r y system of j u s t i c e is r e a l l y a d v e r s a r y and r e a l l y does j u s t i c e -- w e w i l l not paper over t h e c r a c k s i n t h e house t h a t Gideon b u i l t by h e s i t a t i n g to provide a n ample, meaningful s t a n d a r d i n c a s e s of an a l l e g e d incompetency of c r i m i n a l d e f e n s e c o u n s e l s . I n t h e p r e s e n t c a s e , w e f i n d d e f e n d a n t was p r e j u d i c e d by c o u n s e l ' s conduct. Numerous examples of p r e j u d i c i a l conduct a r e c o n t a i n e d i n t h e r e c o r d . The f i r s t example i n v o l v e s c o u n s e l ' s f a i l u r e t o i n t e r v i e w s i x c h a r a c t e r w i t n e s s e s which he c a l l e d t o t e s t i f y a t t h e t r i a l . Counsel had n o t spoken w i t h any of t h e w i t n e s s e s p r i o r t o t r i a l . Although c o u n s e l was a t t e m p t i n g t o a t t a c k t h e c h a r a c t e r of Penny N a u d i t t , none of t h e w i t n e s s e s had a n y o p i n i o n a s t o Penny N a u d i t t ' s c h a r a c t e r . Had t h e s e w i t n e s s e s been a b l e to a t t a c k Penny N a u d i t t ' s c h a r a c t e r , they might have damaged t h e S t a t e ' s c a s e . I n s t e a d , t h e i r t e s t i m o n y merely demonstrated c o u n s e l ' s l a c k of i n v e s t i g a t i o n and p r e p a r a t i o n p r i o r t o t r i a l . The n e x t example i n v o l v e s c o u n s e l ' s f a i l u r e to p r e s e n t com- p e t e n t j u r y i n s t r u c t i o n s to t h e D i s t r i c t Court. Again, t h i s d e m o n s t r a t e s a complete l a c k of p r e p a r a t i o n . A s a r e s u l t , coun- sel d i d n o t p r e s e n t to t h e j u r y any l o g i c a l d e f e n s e s to t h e c h a r g e s . I n t h i s c a s e , t h e S t a t e , i n an a t t e m p t to p r o t e c t t h e r e c o r d , introduced t h e i n s t r u c t i o n on s e l f -defense and counsel argued a g a i n s t t h a t i n s t r u c t i o n . I n a d d i t i o n , he f a i l e d to argue t h e r e were any m i t i g a t i n g c i r c u m s t a n c e s . During c l o s i n g argu- m e n t s , c o u n s e l argued d e f e n d a n t d i d n o t a c t i n s e l f - d e f e n s e : "So, implying t h a t he had the gun, he probably p u l l e d t h e t r i g g e r i n s e l f - d e f e n s e , i f you w i l l b e l i e v e t h a t garbage you w i l l b e l i e v e a n y t h i n g . You might a s w e l l c o n v i c t him." And, counsel s t a t e d t h e following about n e g l i g e n t homicide : " t h e n , i f you d o n ' t l i k e t h a t , t h e n you can go on down t o n e g l i g e n t homicide and what t h a t means, I have no i d e a . There was nobody t h a t was n e g l i g e n t t h a t n i g h t . There was no a c c i - d e n t a t a l l . There was no a c c i d e n t . " These s t a t e m e n t s by counsel l e f t t h e j u r y w i t h o n l y one o p t i o n -- c o n v i c t i o n of d e l i b e r a t e homicide. A r e a s o n a b l y com- p e t e n t a t t o r n e y a c t i n g a s a d i l i g e n t c o n s c i e n t i o u s advocate would n o t have made such errors. A s such, we f i n d d e f e n d a n t was denied h i s c o n s t i t u t i o n a l r i g h t to e f f e c t i v e a s s i s t a n c e of c o u n s e l . T h e r e f o r e , w e hold t h e c o n v i c t i o n s of d e l i b e r a t e homicide and aggravated kidnapping must be r e v e r s e d and o r d e r t h i s cause be remanded to t h e District Court f o r a new t r i a l . Reversed and remanded. 4 W e concur: ?h-e&Q&@ Chief Justice

April 13, 1983

bb964623-5c4a-4bba-8d55-3ade9f5ae6a3

ROBERTUS v CANDEE

N/A

81-319

Montana

Montana Supreme Court

No. 81-319 I N THE SUPREME COURT O F T H E STATE O F MONTANA 1983 EDWARD ROBERTUS & TIM ROBERTUS, d/b/a ROBERTUS BROTHERS, a p a r t n e r s h i p , P l a i n t i f f s and Respondents, -vs- ROBERT CANDEE Defendant and Appellant. 1 f r o m D i s t r i c t Court of t h e S i x t e e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e County o f Rosebud, The 1.Ionorable A. B. Martin, Judge p r e s i d i n g . Counsel of Record: For Appellant: John S. Forsythe, Forsyth, Montana For Respondents: Crowley, Haughey, Hanson, Toole & D i e t r i c h , B i l l i n g s , Montana Submitted on B r i e f s : June 3 0 , 1983 Decided: August 25, 1983 --- Clerk Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of the Court. Defendant Candee appeals from judgment following trial without jury in the Sixteenth Judicial Court, Rosebud County, in this action arising from the lease of Candee's ranchland by Robertus Brothers. In February of 1977, Robertuses orally agreed with Candee to lease 850 acres of broken land from Candee at $20 per acre ($17,000), to be paid for in three installments. They also agreed that Robertuses would lease about 1,250 acres of unbroken prairie land from Candee, break it and farm it at their own expense, with Candee receiving a one-quarter share of the crop, and Robertuses retaining the right to three or four crop years. The final lease payment of $8,000 on the 850-acre tract was due August 1, 1977; Robertuses did not pay it. Their crop had not been good and they alleged that the oral agreement allowed them to waive the $8,000 payment in the event of crop failure. Those crop proceeds properly went to Robertuses. In fall of 1977, a dispute arose as to the rental to be paid on the 1,250-acre tract. The parties attempted to renegotiate the lease of this tract and a possible buyback by Candee was discussed. At that time 1,000 acres had been broken, 680 acres disked, and 320 acres planted in wheat on the 1,250-acre parcel, all at the expense of the Robertus Brothers. Because of the renegotiations, the Robertus Brothers stopped planting and by the time they learned the buyback had fallen through, it was too late to plant any more wheat. In March of 1978, Candee informed Robertuses that they could no longer enter his land and terminated both lease agreements. Candee harvested and sold the wheat on the 1,250 acres, netting and keeping $26,180.59. Robertuses brought suit against Candee on the theory of unjust enrichment and quantum meruit, alleging that Candee benefited from their ground-breaking and farming due to his wrongful eviction of them from the 1,250-acre tract. Candee counterclaimed as to the unpaid $8,000 on the 850-acre tract. Evidence taken included the enhanced value of the newly-broken prairie land, the cost of production and the value of the wheat. The District Court held there were two separate oral leases, one on the 1,250-acre tract, and one on the 850-acre tract. The court held that though the lease on the 1,250-acre tract was unenforceable, Candee had been unjustly enriched in the amount of $55,000. This amount included the increased land value, a three-quarter share of the wheat crop, and/or the value of the work, seed and fertilizer supplied by Robertuses. Candee was to pay interest from March 8, 1978, the day he notified Robertuses they were not to enter his land. The court also held that Robertuses owed Candee the final $8,000 payment on the 850-acre tract. Candee appeals the $55,000 award to Robertuses. Robertuses do not cross-appeal, but ask for reversal of the $8,000 award to Candee if this Court changes the District Court's findings pursuant to Rule 14, M.R.App.Civ.P. We will modify the award. Defendant Candee raises four issues on appeal: 1. Whether plaintiffs are entitled to damages under the theory of unjust enrichment. 2 . Whether the District Court awarded a correct measure of damages. 3. Whether plaintiffs are entitled to interest prior to judgment . 4. Whether there is substantial evidence in the record to support the value of the ground-breaking work. Defendant first argues that unjust enrichment is not an applicable theory. The trial court found that in this case the Statute of Frauds precluded plaintiffs from suing on the lease. Where the labor or money of a person has been expended in a permanent improvement which enriches the property of another, under an oral agreement which cannot be enforced under the Statute of Frauds, that person is entitled to an award for the amount by which such improvements unjustly enriches the property. Smith v. Kober (Neb. 1922) , 189 N.W. 377; Restatement of the Law, Contracts 2d 5375. However, it is not necessary to reach the question of whether this agreement is within the Statute of Frauds. For, where one party repudiates a contract or breaches it by non-performance, the injured party may seek restitution of the unjust enrichment whether the Statute of Frauds applies or not. Gregory v. Peabody (Wash. 1928), 270 P 825; Restatement of the Law, Contracts 2d 5373; Epleveit v. Solberg (1946), 119 Mont. 45, 57, 169 P.2d 722, 729. By defendant's own admission, the plaintiffs were not required to farm the 1250-acre tract during any particular season. Thus the trial court was correct in concluding that the defendant breached and terminated the lease by his actions in March of 1978. There is no question that plaintiff may seek restitution for the unjust enrichment conferred upon the breaching and repudiating defendant in this case. The second issue raised by the defendant has merit. Defendant argues that the trial court improperly awarded guantum meruit damages for plaintiffs' investment in breaking ground on the 1,250-acre tract, and damages for the v-alue of - the improvement to the property. Both measures cannot properly be awarded. It is not clear, from the District Court's findings of fact and conclusions of law, how the $55,000 award was determined. However, it is apparent that the Court awarded a composite of enhanced land value, custom work, fixed costs and/or crop value. The theory of unjust enrichment requires that a person who has been unjustly enriched at the expense of another must make restitution to the other. Restatement of the Law, Restitution 1 Tulalip Shores, Inc. v. Mortland (1973), 9 Wash. App. 271, 511 P.2d 1402; 66 Am.Jur.2d Restitution and Implied Contracts ( 5 3 (1973). The measure of this equitable restitution interest is either the quantum meruit value of plaintiff's labor and materials - or the value of the enhancement to the defendant's property. Restatement of the Law, Contracts 2d S371; 12 Williston, Contracts 51480. To award both would be to give double damages. In this case the quantum meruit measure of damages would be the market rate for the custom work of ground breaking, fertilizing and planting and the cost of fertilizer and seed. Such measure was found by the trial court to be $29,479.61. The enhancement measure would be the net value of the unharvested crop ($26,180.59) together with the increased value in the 1,000 acres attributable to the ground breaking. There may be cases where the enhancement to the defendant's property will be far less than the quantum meruit value of the plaintiff's efforts. For example, where the improvement did not enhance the value of the property but did result in a pecuniary saving to the defendant, the enhancement measure would not reflect the unjust enrichment. Conversely, there may be cases where the value of the enhancement greatly exceeds the cost of the improvement, as in this case. Thus the rule has evolved that the proper measure of damages in unjust enrichment should be the greater of the two measures. Restatement of Law, Contracts 2d 5371 comment b; 12 Williston, Contracts 51480. We adopt this rule. But this rule must be tempered with the idea that it is only so much of the enrichment which is unjust that may be awarded the plaintiff. Madrid v . Spears (10th Cir. 1957), 250 F.2d 51, 54. For example, the cost of surveying a tract of land into lots may be $5,000, while the total value of the subdivided lots may be $50,000 greater than the undivided tract. The landowner is justly entitled to the majority of the increase in value for his risk, idea, decision making and development activity. He is only unjustly enriched to the extent that the unpaid surveyor contributed to or caused the increase. In this case the 1,000 acres of broken ground experienced an increase in market value of as much as $168,000, while the cost of all labor and materials used in the ground breaking was no more than $29,479.61. Part of the increase in value of the property is attributable to the property owner's risk and decision making in a real estate investment, part is attributable to other improvements to the property and part is attributable to plaintiffs' ground breaking. But it is only the latter part that the defendant is not entitled to, for which he has been unjustly enriched. It would be very difficult to determine exactly how much of the $168,000 increase is attributable to the ground breaking. However, in an activity such as ground breaking where all of the cost of the activity directly results in the improvement, the reasonable cost of the activity will give a court of equity a fair indication of the enhancement value attributable to such activity. Acc. Madrid v. Spears (10th Cir. 1957), 250 F.2d 51, 54. In this calculation we will use the figures in plaintiffs' exhibit 11, which were found by the trial court to be the cost of plaintiffs' activities. Since all of the disking and tooling with the exception of the fertilizing and seeding directly resulted in improvement to the property, the cost of the gound breaking appears to be as follows: Disking 680 ac. 3 times 2,040 ac. 320 ac. 1 time 320 2,360 ac. @ 6.23 = $14,702.80 Tool bar 320 ac 3 times 960 ac. @ 3.91 = $ 3,753.60 Based on this calculation we will assume that the value of the enhancement to the defendant's property attributable to the ground breaking activity is also $18,456.40. In addition, the plaintiffs improved defendant's property to the extent of the value of the unharvested wheat crop, which the trial court found to be $26,180.59. We conclude that the total unjust enrichment as measured by the enhancement to defendant's property is equitably valued at $44,636.99. As this amount is greater than the $29,479.61 quantum meruit measure of unjust enrichment, it is the proper award in this case. Defendant next challenges the prejudgment interest award. The applicable statute is section 27-1-211, MCA, which provides for recovery of interest where a person is "entitled to recover damages certain or capable of being made certain by calculation." In this case there was no ascertained or ascertainable amount where the plaintiff sought, in a court of equity, restitution for an unquantified measure of unjust enrichment. The trial court erred in awarding prejudgment interest . Finally defendant argues there is insufficient evidence to support the value of the ground breaking work found by the trial court. Only insofar as the value of the ground breaking work was used to approximate the enhancement in property value attributable to such work does this question remain an issue. The trial court found plaintiffs' work to be fairly valued by the plaintiffs' expert using a computer calculation based on the type of equipment used, the number of acres involved and the number of applications of the equipment to the acreage, all of which were testified to at trial. Defendant challenges the finding, contending that the foundation for the data and method was insufficient, the assumptions used in the calculation were based on conflicting evidence, and the calculation improperly includes a measure of prof it. Defendant's arguments are unpersuasive. This Court will not overturn findings of fact supported by substantial evidence. Toeckes v. Baker (1980) , Mont . , 611 P.2d 609, 37 St.Rep. 948; Morgen & Oswood Const. Co. v. Big Sky of Montana (1976), 171 Mont. 268, 275, 557 P.2d 1017, 1021. Where a trial court's findings are based upon substantial though conflicting evidence they will not be disturbed on appeal unless there is a clear preponderance of evidence against such findings. Cameron v. Cameron (1978), 179 Mont. 219, 587 P.2d 939. The trial court properly considered the plaintiffs' expert testimony and exhibits which were based on assumptions in evidence. The profit margin incorporated into the calculation is also proper since the cost of services for purposes of unjust enrichment is the market value of replacement services including the profit earned by those rendering the service. In this case, the actual cost of the labor to the plaintiff is irrelevant except as it demonstrates the replacement cost of such labor on the market. Pursuant to Rule 14 of the Montana Rules of Appellate Civil Procedure, plaintiffs ask this Court to review the trial court's award of $8,000.00 plus interest to the Defendant on the 850-acre lease. Plaintiffs did not cross-appeal this ruling and therefore the judgment cannot be reviewed. Although Rule 14 provides for review by cross-assignment of error, this does not eliminate the necessity for cross-appeal by a respondent who seeks review of rulings on matters separate and distinct from those sought to be reviewed by appellants. Johnson v. Tindall (1981), Mont . , 635 P.2d 266, 38 St.Rep. 1763; Francisco v. Francisco (1948), 120 Mont. 468, 470, 191 P.2d 317, 319. The trial court found that the 850-acre lease was separate from the 1,250-acre lease. Therefore, a challenge to the amount owing on the separate lease raises an issue which is clearly separate and distinct from the issues raised on appeal by defendant. The judgment and award in this cause is vacated and this case is remanded to the District Court with instruction to enter judgment in accordance with this opinion. W e concur: s,&~,&w 4 , Chief JusYick

August 25, 1983

195f694a-3953-445f-91fc-3e9d1ba72181

STATE v PATTERSON

N/A

82-237

Montana

Montana Supreme Court

No. 8 2 - 2 3 7 I N THE SUPREME COURT OF THE STATE OF MONTANA 1 9 8 3 STATE OF MONTANA, P l a i n t i f f a n d R e s p o n d e n t , V S . WARREN K. PATTERSON, D e f e n d a n t a n d A p p e l l a n t . A p p e a l f r o m : D i s t r i c t C o u r t 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 , I n a n d f o r t h e C o u n t y o f Y e l l o w s t o n e H o n o r a b l e R o b e r t W i l s o n , J u d g e p r e s i d i n g . C o u n s e l o f R e c o r d : F o r A p p e l l a n t : G a r y E. W i l c o x a r g u e d , B i l l i n g s , Montana F o r R e s p o n d e n t : Hon. Mike G r e e l y , A t t o r n e y G e n e r a l , H e l e n a , Montana J a m e s McLean, A s s i s t a n t A t t o r n e y G e n e r a l , a r g u e d , H e l e n a , Montana H a r o l d F . H a n s e r , C o u n t y A t t o r n e y , B i l l i n g s , Montana C h a r l e s B r a d l e y , D e p u t y C o u n t y A t t o r n e y , a r g u e d , B i l l i n g s , Montana F i l e d : S u b m i t t e d : February 2 8 , 1 9 8 3 D e c i d e d : A p r i l 2 8 , 1 9 8 3 APR 2 8 1983 -. C l e r k Mr. Justice Frank R. Morrison, Jr., delivered the Opinion of the Court. Defendant, Warren Patterson, appeals his conviction of sexual intercourse without consent following a jury trial. We reverse the conviction and remand for a new trial. The incident which gave rise to this prosecution occurred outside of Billings in the late evening/early morning hours of August 17-18, 1981. Detective Gary Hatfield of the Billings Police Department investigated the alleged offense. Warren Patterson was named as a suspect in several anonymous tips. Hatfield went to Patterson's residence on August 19, 1981, and requested Patterson to accompany him to the police station for questioning. Patterson agreed. Hatfield read the Miranda warnings to Patterson twice prior to questioning. Patterson denied being the suspect for whom Hatfield was searching. A photograph of Patterson was taken for later use in a photographic line-up and Patterson was returned home. Detective Hatfield submitted a report of his investigation on August 26, 1981. Regarding his interview of Patterson, Hatfield stated: "I asked him to come to the Police Station and he consented. I gave him his Rights and informed him of the situation. He told me that he had a lot of mental problems. That he tends to forget things yet he is certain that he was not responsible for the rape. " As a result of further investigation, Patterson was arrested September 21, 1981, and charged on September 24, 1981, with the crime of sexual intercourse without consent. An omnibus hearing was held, and the standard omnibus order was entered granting defendant "discovery of all oral, written or recorded statements made by defendant to investigating officers or to third parties and in the possession of the State." The prosecution interviewed Hatfield three times prior to trial and defense counsel interviewed him once. None of the interviews produced any information beyond that contained in the written report. After trial started, the prosecution learned that the interview by Hatfield of Patterson had been more extensive than the report indicated. Defense counsel was immediately notified of the discrepancy. Hatfield was examined in chambers and it was determined that Patterson had specifically denied being in the locations or taking the routes where the victim claimed the attack and travel took place. He also denied having had intercourse with anyone that night. Defense counsel was unaware of Patterson's denials. He had proceeded to trial with a "consent" defense. Patterson had also talked to Hatfield about his mental problems in more detail than the report indicated. He told Hatfield that he was having problems with smoking and the devil. His religious convictions were also discussed in detail. Defendant moved for a motion in limine to prevent Hatfield from testifying that Patterson had stated he was not responsible for the rape or could not have committed it as he had been having mental problems. The court denied that motion but granted a motion to restrict any testimony regarding the devil. and smoking or religious convictions. Patterson was found guilty of one count of sexual intercourse without consent. During the trial, the victim was unable to account for her activities between 1:30 a.m., when defendant allegedly left her, and 3:57 a.m., when the police received the call reporting the rape. After the trial results were published, Annette Hopkins informed defense counsel that defendant's story corresponded with an incident which had. happened to her. Late one evening in mid-August, 1981, a young girl came to Ms. Hopkins' door and asked to use the phone. She phoned someone whom Ms. Hopkins assumed to be her brother and, in essence, stated: "Leave the patio doors open and don't let dad know I'm not home." Ms. Hopkins lives in the same area in which defendant allegedly left the victim. Following his conviction, Patterson moved for a new trial based upon: (1) newly discovered evidence; and (2) the District Court having erred in allowing Hatfield's testimony since the defense was not given a summary of the complete interview prior to trial. The motion was denied. Defendant now appeals his conviction and presents this Court with two issues for our reveiw: 1. Was the defendant prejudiced by the failure of the State to supply to defense counsel a complete summary of Detective Hatfield's interview with the defendant until mid-trial? 2. Did the District Court err in refusing to grant defendant's motion for a new trial- based upon newly discovered evidence? Our resolution of issue one renders issue two moot. The law in Montana regarding the effect of suppression of evidence by the prosecution is found in State v. Craig ( 1 9 7 6 ) , 169 Mont. 150, 545 P.2d 649. "Only intentional -- or deliberate suppression - of evidence is g per se violation - - of due process sufficient-to reverse - or nullify a conviction. United states v . Keogh, 391 F. 2d 138 (2nd Cir. ) . Negligent - or passive suppression will overturn a conviction - if prejudice - can - be shown A bv - the suppression. United States v. Consolidated Laundries Corp., 291 F.2d 563 (2nd Cir.) "Generally, suppressed evidence must be material to either guilt or punishment. Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215. In order to amount to denial of due process, negligently suppressed evidence must be vital to the defense of the accused. United States ex rel. Thompson v. Dye, 221 F.2d 763 (3rd Cir.), cert. den., 350 U.S. 875, 76 S.Ct. 120, 100 L.Ed. 773. To obtain a new trial, the accused must show more than suppression; he must show the evidence was material and of some substantial use to him. United States v. Tomaiolo, 378 F.2d 26 (2nd Cir.), cert. den., 389 U.S. 886, 88 S.Ct. 159, 19 L.Ed.2d 184. The suppressed evidence must be exculpatory, i.e., would have tended to clear the accused of guilt, to vitiate a conviction. Brady; Loraine v. United States, 396 F.2d 335 (9th Cir.), cert. den., 393 U.S. 933, 89 S.Ct. 292, 21 L.Ed.2d 270; Lee v. United States, 388 F.2d 737 (9th Cir.)" State v. Craig, supra at 153, 545 P.2d at 651. (emphasis supplied.) These standards apply whether the prosecutor or the investigator is responsible for the suppression. Any prejudice suffered by the defendant remains the same in either circumstance. Barbee v. Warden, Maryland Penitentiary (4th Cir. 1964), 331 F.2d 842. Limiting the standards to suppression by the prosecutor might foster future suppression of evidence by investigating agencies. The District Court summarily denied defendant's motion for new trial. Therefore, we have no way of knowing whether or not the District Court judge found suppression of evidence, and if he did, whether that suppression was determined to be negligent or intentional. The court's failure to specifically characterize the suppression as negligent or intentional is irrevelant here because we find that Detective Hatfield suppressed evidence from defense counsel and that defendant was prejudiced by that suppression. We reach this decision because of Hatfield's suppression of Patterson's remarks about smoking and the devil. Those remarks were indicative of mental illness. Had defense counsel been aware of Patterson's remarks prior to trial, he would have had good reason to pursue an insanity defense. Therefore, that evidence was both material and exculpatory and its suppression was prejudicial to defendant. Pursuant to State v. Craig, supra, defendant's conviction is reversed and this case is remanded for a new trial. We Concur: B k 4 a @ & - Chief Jusece ,- 1 1 ; L C.. a. /viJy- 1 Justices M r . J u s t i c e L . C. Gulbrandson d i s s e n t i n g . I r e s p e c t f u l l y d i s s e n t The m a j o r i t y has s t a t e d s "We r e a c h t h i s d e c i s i o n because of H a t f i e l d ' s s u p p r e s s i o n of P a t t e r s o n ' s remarks a b o u t smoking and t h e d e v i l . Those remarks were i n d i c a t i v e of mental i l l n e s s . Had d e f e n s e c o u n s e l been aware of P a t t e r s o n s remarks p r i o r to t r i a l , he would have had good r e a s o n t o p u r s u e an i n s a n i t y d e f e n s e . T h e r e f o r e , t h a t e v i d e n c e was both material and exculpa- t o r y and its s u p p r e s s i o n was p r e j u d i c i a l to d e f e n d a n t . " D e t e c t i v e Hatf i e l d I s w r i t t e n summary, g i v e n to d e f e n s e coun- s e l , included t h e f o l l o w i n g "He t o l d me t h a t he had a lot of m e n t a l problems. That he t e n d s to f o r g e t t h i n g s y e t he is cer- t a i n he was n o t r e s p o n s i b l e f o r t h e rape ." The r e c o r d d i s c l o s e s t h a t d e f e n s e c o u n s e l m e t w i t h D e t e c t i v e H a t f i e l d , a p p r o x i m a t e l y s i x days p r i o r t o t r i a l , f o r a s h o r t p e r i o d o f t i m e . b u t t h e r e is no s u g g e s t i o n o r argument t h a t i n q u i r y was made of Hatf i e l d r e g a r d i n g s p e c i f i c s t a t e m e n t s made by t h e d e f e n d a n t concerning h i s mental problems. I n a d d i t i o n , t h e t r a n s c r i p t of p r o c e e d i n g s of J u l y 2, 1982, a t t a c h e d a s e x h i b i t 4 to d e f e n d a n t - a p p e l l a n t ' s b r i e f , i n d i c a t e t h a t t h e d e f e n d a n t was h o s p i t a l i z e d i n B i l l i n g s i n September 1979 f o r a p o s s i b l e manic d e p r e s s i v e d i s o r d e r , and i n J u n e 1981, w a s hospi- t a l i z e d i n t h e p s y c h i a t r i c u n i t . Those h o s p i t a l r e c o r d s should have been r e a d i l y a v a i l a b l e to d e f e n s e c o u n s e l , had he i n q u i r e d o f t h e d e f e n d a n t or d e f e n d a n t ' s p a r e n t s , a f t e r r e c e i p t of H a t f i e l d ' s summary. The d e f e n d a n t l i v e d w i t h h i s p a r e n t s and b o t h t e s t i f i e d a s d e f e n s e w i t n e s s e s a t t h e t i m e . Defense c o u n s e l c h o s e n o t t o pursue t h e d e f e n s e of mental d i s e a s e or d e f e c t , and d i d n o t r e q u e s t a p s y c h i a t r i c e v a l u a t i o n af t e r c o n v i c t i o n s and p r i o r to s e n t e n c i n g . Here, I would n o t f i n d a p r e j u d i c i a l s u p p r e s s i o n of exculpa- t o r y e v i d e n c e by D e t e c t i v e H a t f i e l d .

April 28, 1983