author: CHIEF JUSTICE TURNAGE

text:
    ASSOCIATED STUDENTS OF THE UNIVERSITY OF MONTANA, JIM SEARS, ERIC HUMMEL, and JOHN MADDEN, Plaintiffs and Appellants, v. THE CITY OF MISSOULA, Defendant and Respondent.
    No. 93-277.
    Submitted on Briefs September 17, 1993.
    Decided October 21, 1993.
    50 St.Rep. 1301.
    261 Mont. 231.
    862 P.2d 380.

      For Plaintiffs and Appellants: Noel K Larrivee, Larrivee Law Offices, Missoula, and Bruce Barrett, ASUM Legal Services, Missoula.
    For Defendant and Respondent: Jim Nugent, Missoula City Attorney, Missoula.
    For Amici Curiae: Phyllis A. Bock, Bozeman (Associated Students of Montana State University); Michael C. Riley, Dillon, (Western Montana College).
   CHIEF JUSTICE TURNAGE

delivered Opinion of the Court.

The Associated Students of the University of Montana, Jim Sears, Eric Hummel and John Madden seek injunctive and declaratory relief from two Missoula city ordinances which regulate parking in the residential areas adjacent to the University of Montana. They appeal from an order of the Fourth Judicial District Court, Missoula County, declaring the ordinances valid and ruling in favor of the City of Missoula. We affirm the District Court.

The issues are:

1. Whether the City of Missoula has authority to regulate and restrict parking in a certain residential district.

2. Whether a city ordinance which regulates and restricts parking in a residential district violates the Equal Protection Clauses of the United States and Montana Constitutions.

Prior to and during 1983, various residents of the neighborhood adjacent to the University of Montana (University) campus in Missoula asked the City for an ordinance relieving them of commuter motor vehicle traffic and parking problems. The University had experienced and is experiencing substantial growth in its enrollment, which adversely affected the quality of living in the residential neighborhood because of increased traffic and parking difficulties. The Missoula City Council (City) and its committees investigated and studied the situation for approximately three years (from January of 1983 through June of 1986) before passing city ordinance 2480, which created a procedure for establishing specific on-street parking restrictions. The February 3, 1986 ordinance enables the City to enact a residential parking permit program, outlines the reasons for creating the program, enumerates the program guidelines and explains application procedures. It amended Title 10, Chapter 10.22 (Stopping, Standing, Parking) of the Missoula Municipal Code, by adding sections 10.22.250 through 10.22.290.

Using these laws, on June 2,1986, the City next enacted ordinance 2505, which set up an on-street parking permit program to be used in residential areas adjacent to the University. Ordinance 2505 added section 10.22.300 to the Missoula Municipal Code, stating that commuter parking on the sides of some streets is prohibited between the hours of 8:00 a.m. and 5:00 p.m., Monday through Friday. Exceptions include parking on holidays, parking for vehicles with permits, and parking for emergency or service vehicles. The City established a $10 fine for each violation of the ordinance.

Under provisions of the ordinance, University area residential homeowners may purchase a parking permit for $10 and two guest passes a year for $5 each. Nonresidents may not purchase these permits.

On May 12,1992, appellants sought an injunction prohibiting the City from enforcing the residential University parking district law and effectively requesting the court to declare the ordinances void. The Associated Students of the University of Montana (ASUM) is an unincorporated association of students enrolled at the University; Jim Sears is a residential parking district resident; Eric Hummel is a student of the University; and John Madden is a faculty member of the University. Together, they asserted that the ordinances were created without requisite authority, that the parking permit program is an arbitrary, discriminatory and unreasonable misuse of the municipality’s police powers, and that the parking program violates the Equal Protection Clauses of the United States and Montana Constitutions.

The District Court issued an opinion and order on April 5, 1993, upholding the ordinances. This appeal alleges that the court’s opinion and order is erroneous.

The standard of review for this Court is set forth in Steer, Inc. v. Dep’t of Revenue (1990), 245 Mont. 470, 803 P.2d 601. We review a district court’s findings of fact for clear error, and we determine whether its conclusions of law are correct. Steer, 803 P.2d at 603.

I

Did the City of Missoula have authority to regulate and restrict parking in a certain residential district?

Clearly, the laws of our state set forth authority for municipalities to establish parking plans such as the one at issue here. Pursuant and in addition to its general police powers, a municipality is free to enact ordinances which are not repugnant to established law. See generally § 7-5-4101, MCA (police powers), and § 61-12-101(14), MCA (traffic and vehicle regulation). As the United States Supreme Court stated in Village of Belle Terre v. Boraas (1974), 416 U.S. 1, 9, 94 S.Ct. 1536, 1541, 39 L.Ed.2d 797, 804,

[t]he police power is not confined to elimination of filth, stench, and unhealthy places. It is ample to lay out zones where family values, youth values, and the blessings of quiet seclusion and clean air make the area a sanctuaiy for people.

Specifically, our legislature has provided in § 7-14-4102, MCA, that city or town councils may “regulate and prevent the use or obstruction of streets ....” Section 61-12-101, MCA, analogously authorizes municipalities to reasonably “regulate the standing or parking of vehicles” and enact ordinances regulating “traffic, pedestrians, vehicles, and operators thereof....” The Montana Constitution supports a liberal construction of these and other powers granted to local municipalities by the legislature. See Art. XI, § 4(2), Mont.Const.; Tipco Corp., Inc. v. City of Billings (1982), 197 Mont. 339, 642 P.2d 1074.

Here, the City properly enacted both its enabling legislation, ordinance 2480, and the University residential parking district restrictions, ordinance 2505. Appellants go to great lengths to point out the origin of public street use in Montana and other places, continuing back to common law. This exhaustive history is irrelevant where our legislature has granted municipalities the statutory authority to create parking restrictions, and where our constitution grants this authority to municipalities. Art. XI, § 4(2), Mont.Const.; §§ 1-1-108,1-2-103, MCA. The constitutional and statutory language being clear and unambiguous, we conclude the District Court did not err in ruling the City has appropriate authority to enact parking district restrictions.

II

Do city ordinances which regulate and restrict parking in a residential district violate the Equal Protection Clauses of the United States and Montana Constitutions?

City ordinances, like statutes, are presumed to be valid. [W]hen considering the constitutionality of a statute, the constitutionality is presumed and anyone attacking the validity of a statute has a heavy burden of proving the invalidity. [Citations omitted.]
In establishing this test, Montana is in accord with every jurisdiction in the United States. [Citations omitted.]

In the Matter of Kujath (1976), 169 Mont. 128, 130, 545 P.2d 662, 663-64; see also State v. Lorash (1989), 238 Mont. 345, 777 P.2d 884. As the appellants and the City agree, the equal protection challenge in this case involves neither suspect classes, quasi-suspect classes, nor fundamental rights. Accordingly, the appropriate standard of review is whether the resident and non-resident distinction is rationally related to a legitimate government objective. See Tipco, 642 P.2d at 1078. To satisfy the equal protection rational relationship test, challengers must prove that the legislative facts on which the classification is based could not reasonably be conceived to be true by the governmental decision maker. See Minn. v. Clover Leaf Creamery Co. (1981), 449 U.S. 456, 101 S.Ct. 715, 66 L.Ed.2d 659.

The instant issue is similar to the issue presented to the United States Supreme Court in County Board of Arlington County, Virginia v. Richards (1977), 434 U.S. 5, 98 S.Ct. 24, 54 L.Ed.2d 4. Richards involved a Virginia county zoning ordinance which provided for parking restrictions and permits in designated residential areas. Persons without a permit were prohibited from parking in the designated residential areas from 8:00 a.m. to 5:00 p.m. on weekdays.

Commuters who regularly parked in the residential areas filed suit against the county, alleging that the zoning ordinance was an unconstitutional denial of equal protection of the law. The Virginia Supreme Court held that the resident and nonresident classification was “invidious discrimination” while expressly noting that the ordinance “may relieve the [parking] problems” to which it was directed. On appeal, the United States Supreme Court rejected the conclusion that the resident and nonresident classifications resulted in invidious discrimination. The Court stated

[t]o reduce air pollution and other environmental effects of automobile commuting, a community reasonably may restrict on-street parking available to commuters, thus encouraging reliance on car pools and mass transportation. The same goal is served by assuring convenient parking to residents who leave their cars at home during the day. A community may also decide that restrictions on the flow of outside traffic into particular residential areas would enhance the quality of life there by reducing noise, traffic hazards, and litter. By definition, discrimination against nonresidents would inhere in such restrictions. [Citations omitted.]
The Constitution does not outlaw these social and environmental objectives, nor does it presume distinctions between residents and nonresidents of a local neighborhood to be invidious. The Equal Protection Clause requires only that the distinction drawn by an ordinance like Arlington’s rationally promote the regulation’s objectives. [Citations omitted.]

Richards, 434 U.S. at 7, 98 S.Ct. at 26.

When determining the constitutionality of state law, other state courts, like Virginia’s, have erroneously applied an equal protection standard more stringent than that sanctioned by the United States Supreme Court. See Idaho Dep’t of Employment v. Smith (1977), 434 U.S. 100, 98 S.Ct. 327, 54 L.Ed.2d 324; Richardson v. Ramirez (1974), 418 U.S. 24, 94 S.Ct. 2655, 41 L.Ed.2d 551; and Lehnhousen v. Lake Shore Auto Parts (1973), 410 U.S. 356, 93 S.Ct. 1001, 35 L.Ed.2d 351. In each of those cases the United States Supreme Court reversed the state court, concluding that the correctly applied legal standard upheld the constitutionality of the subject state law.

The City of Missoula has a legitimate interest in preserving the tranquility among University commuters and area residents. See Memphis v. Green (1981), 451 U.S. 100, 127, 101 S.Ct. 1584, 1600, 67 L.Ed.2d 769, 790 (“[t]he residential interest in comparative tranquility is ... unquestionably legitimate”). It also has a legitimate interest in assuring homeowners ample parking space for themselves and their guests. In addition, the City of Missoula has an interest in reducing noise, traffic hazards, and litter in its residential areas.

Furthering its interests, the City enacted ordinance 2480, which states as its objective adequate parking for University area residents. The record before us includes historical evidence behind the ordinances in question. Where, as here, an ordinance is lacking in purpose or clarity, it is helpful to analyze the legislative history when determining correct interpretation. See § 1-2-102, MCA. The minutes and testimony from the June 2, 1986 Missoula City Council meeting reveal several safety concerns, among them: safety of children; driveway and garage blockage; and poor visibility around corners because of parked cars.

These concerns lead us to conclude the resident and nonresident distinction in ordinances 2480 and 2505 rationally relates to the City’s legitimate government interests, e.g., its objective interest in providing convenient parking for University area residents and its implicit interests in promoting tranquility among commuters and residents, reducing noise, reducing traffic hazards, and reducing litter. We therefore affirm the District Court.

JUSTICES HARRISON, HUNT, TRIEWEILER, NELSON and WEBER concur.

JUSTICE GRAY did not participate in this decision.


source: Caselaw Access Project

author: JUSTICE GRAY

license: Public Domain

text:
    DeTIENNE ASSOCIATES LIMITED PARTNERSHIP and PARK PLAZA HOTEL INC., and FARMERS UNION MUTUAL INSURANCE COMPANY, Plaintiffs, Respondents, and Cross-Appellants, v. MONTANA RAIL LINK, INC., Defendant and Appellant and Cross-Respondent.
    No. 93-349.
    Dated October 4, 1993.
    50 St.Rep. 1138.
    261 Mont. 238.
    862 P.2d 1106.
    For Defendant and Appellant: Edward A. Murphy, Datsopoulos, MacDonald & Lind, P.C., Missoula.
    For Plaintiffs and Respondents: Robert F. James, James, Gray & McCafferty, Great Falls; Patrick E. Melby, Luxan & Murfitt, Helena.
   JUSTICE GRAY

delivered the Opinion of the court.

OPINION AND ORDER

This matter is before us on Respondents’ Motion to Dismiss the appeal filed by Appellant Montana Rail Link, Inc. (MRL). The facts necessary for a determination of the motion are not disputed. The parties argue differing interpretations of our cases and of the appropriate interplay between Rules 6(e) and 6(a) of the Montana Rules of Civil Procedure.

Respondents (hereafter Park Plaza) prevailed in the underlying action and served a Notice of Entry of Judgment by mail on April 6, 1993. MRL filed its Motion for a New Trial and Motion to Amend the Findings of Fact, Conclusions of Law and Judgment (hereafter motion to amend) on April 20,1993,14 days after the date on which the Notice of Entry of Judgment was served by mail. The District Court denied MRL’s motion within the applicable 45-day period and MRL filed its Notice of Appeal within 30 days thereafter.

Rules 6(e) and 6(a), M.R.Civ.P., provide as follows:

Rule 6(e). Additional time after service by mail. Whenever a party has the right or is required to do some act or take some proceedings within a prescribed period after the service of a notice or other paper upon the party and the notice or paper is served upon the party by mail, 3 days shall be added to the prescribed period.
Rule 6(a). Computation. In computing any period of time prescribed or allowed by these rules, by order of court, or by any applicable statute, the day of the act, event, or default after which the designated period of time begins to run is not to be included. The last day of the period so computed is to be included, unless it is a Saturday, Sunday or a legal holiday, or, when the act to be done is the filing of a paper in court, a day on which weather or other conditions have made the office of the clerk of the district court inaccessible, in which event the period runs until the end of the next day which is not one of the aforementioned days. When the period of time prescribed or allowed is less than 11 days, intermediate Saturdays, Sundays and holidays shall be excluded in the computation. A half holiday shall be considered as other days and not as a holiday.

Park Plaza contends that MRL’s Notice of Appeal is untimely because its motion to amend was untimely. It reasons that the 3 days allowed for service by mail under Rule 6(e) must be added to the prescribed 10-day period allowed for serving a motion to amend pursuant to Rule 59(g), M.R.Civ.R, making a total period of 13 days. Thus, argues Park Plaza, MRL could not exclude intermediate Saturdays, Sundays and holidays pursuant to Rule 6(a) in computing the time for filing its motion to amend because the “prescribed period” in which MRL had to act exceeded the 11 days specified in Rule 6(a). Under Park Plaza’s approach, MRL had until close of business on April 19,1993, to file its Rule 59 motions; thus, the April 20 filing was untimely.

MRL argues that the 3 days allowed by Rule 6(e) when service is made by mail runs from the time of mailing the notice of entry of judgment. At the expiration of the 3 days, the 10-day prescribed period for Rule 59 motions begins to run. Thus, the “prescribed period” in which its motions were due is less than 11 days, and Ride 6(a) allows the exclusion of intermediate Saturdays, Sundays and holidays. Under this approach, MRL’s motion to amend was timely.

We note that both parties cite cases which purport to support their position. Our review of those cases, and others, persuades us that clarification is appropriate and necessary on the interplay between Rules 6(e) and 6(a), M.R.CivP., in order that appeal rights are not ultimately lost through misinterpretation of the Rules and our cases.

Park Plaza relies on a literal reading of Rule 6(e), M.R.Civ.P., O’Connell v. Heisdorf (1982), 202 Mont. 89, 656 P.2d 199, and Searight v. Cimino (1988), 230 Mont. 96, 748 P.2d 948, in support of its position that MRL had a total of 13 days to file its motion to amend and, therefore, that MRL could not utilize the exclusion for intermediate Saturdays, Sundays and holidays permitted by Rule 6(a) when the prescribed period for action is less than 11 days. We note that O’Connell and Searight are inapposite here. No Rule 6(a) issue was raised in O’Connell, perhaps because the Rule at that time allowed application of the exclusion when the prescribed period was less than 7 days; thus, no question arose as to the applicability of the exclusion since the “prescribed period” at issue was 10 days. Searight is equally inapplicable here. In Searight, the only Rule 6(a) issue concerned the ability to add 1 additional day under the first portion of Rule 6(a) because the 10-day plus 3-day time periods expired on a Sunday. In addition, as in O’Connell, Rule 6(a) had not been amended when Searight was decided.

MRL’s reliance on State v. Helehan (1977), 171 Mont. 473, 559 P.2d 817, and Wilson v. Wilson (1982), 198 Mont. 147, 645 P.2d 393, in support of its position also is misplaced. As discussed above with regard to Searight, the only Rule 6(a) application in Helehan did not concern that portion of Rule 6(a) which allows exclusion of intermediate Saturdays, Sundays and holidays under certain circumstances. In Wilson, no issue regarding Rule 6(a) existed. Finally, we note that like O’Connell and Searight, the cases relied on by MRL were decided prior to the November 1, 1988, amendment to Rule 6(a). It is the interplay between the amended version of Rule 6(a), which allows exclusion of intermediate Saturdays, Sundays and holidays where the “prescribed period” is less than 11 days, and Rules 6(e) and 59(g) that is squarely before us now.

Later cases, not cited by either party, bear more directly on our decision here. In Karell v. American Cancer Soc. (1989), 239 Mont. 168, 779 P.2d 506, the prevailing party had 5 days after notice of the decision of the district court in which to file a memorandum of costs. The court mailed its decision to the parties. In computing whether the memorandum of costs was timely, we excluded the day on which the notice was mailed, pursuant to Rule 6(a), and began the 5-day period on the following day; because that prescribed period was less than 11 days, we excluded intermediate Saturdays, Sundays and holidays. We then added 3 days for service of the notice by mail pursuant to Rule 6(e). The memorandum of costs was timely filed under that computation of time.

In In re Marriage of Schmitz (1992), 255 Mont. 159, 841 P.2d 496, we addressed the precise issue raised by Park Plaza here, namely whether a notice of appeal was untimely because of an untimely Rule 59 post-trial motion. There, the respondent argued that adding 3 days for service by mail under Rule 6(e) to the 10 days provided for in Rule 59 resulted in a “prescribed period” of 13 days, thus precluding application of the Rule 6(a) exclusion for intermediate Saturdays, Sundays and holidays. We rejected the argument, concluding that the “prescribed period” referenced in Rule 6(a) was the 10-day period allowed for filing a motion under Rule 59, not the combined 13 days which resulted from adding 3 days for service by mail. Schmitz, 841 P.2d at 498-99. Perhaps unfortunately, we used “combined total” language in actually performing the computation of time although we clearly excluded the intermediate days pursuant to Rule 6(a) in accordance with our clear holding that the “prescribed period” was the Rule 59 10-day period.

We reach the same result here as we reached in Schmitz regarding the appropriate integration of Rules 6(a) and 6(e) of the Montana Rules of Civil Procedure, observing that this is the alternative preferred by Wright and Miller in addressing the issue with regard to the identical Federal Rules of Civil Procedure. Indeed, we have thoroughly studied the three alternative resolutions of this question discussed by Wright & Miller, Federal Practice and Procedure'. Civil 2d § 1171, and determine that the course we chose in Schmitz was correct, notwithstanding our somewhat confusing language regarding combined total of days. The first alternative, adding the 3 days to the original 10 days for a total of 13 days, is inconsistent with the intent of Rule 6(a) in allowing exclusion of intermediate Saturdays, Sundays and holidays when the “prescribed period” is less than 11 days. While it comports with a literal reading of Rule 6(e), it simultaneously undermines the purpose underlying that Rule, which is to avoid diminution in the number of working days available to a party to take action when a notice is served by mail. We reject this alternative.

The second available method of integrating Rules 6(a) and 6(e) is to compute two separate time spans of 10 days and 3 days, and exclude intermediate weekends and holidays from each. This approach applies the literal terms of Rule 6(a) to the computation of both periods in a consistent manner and solves the diminution of time problem caused under the first alternative discussed above. However, it also can lead to an unjustified lengthening of the time permitted for action by a party served with a notice by mail. We conclude that it is important to protect parties served by mail, but no justification exists for favoring them by adopting this alternative.

We adopt the third alternative presented by Wright and Miller. Where service of notice is made by mail, the 3 days allowed under Rule 6(e) are counted first in order to represent, as they are intended to do, transmission time in the mail. The 10 days within which action is to be taken under Rule 59 are then counted and, pursuant to Rule 6(a), intermediate Saturdays, Sundays and holidays are excluded because the “prescribed period” referenced in Rule 6(a) is the 10-day Rule 59 period which is less than 11 days.

We conclude that this methodology for computing time when a party is served notice by mail most closely achieves and integrates the purposes of Rules 6(e) and 6(a), M.R.Civ.P.

For the reasons stated herein, the Motion to Dismiss is DENIED.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT, NELSON, TRIEWEILER and WEBER concur.


author: JUSTICE NELSON

text:
    STELLA HISLOP, personal representative of the estate of COLIN B. HISLOP, Plaintiff, Appellant, and Cross-Respondent, v. RICHARD C. CADY, Defendant, Respondent, and Cross-Appellant.
    No. 93-296.
    Submitted on Briefs September 16, 1993.
    Decided October 21, 1993.
    50 St.Rep. 1304.
    261 Mont. 243.
    862 P.2d 388.

      For Appellant: Russell K. Jones, Spokane, Washington.
    For Respondent: Kenneth E. O’Brien, Hash, O’Brien & Bartlett, Kalispell.
   JUSTICE NELSON

delivered the Opinion of the Court.

Stella Hislop (Hislop) appeals from a judgment entered upon a jury verdict in the Eleventh Judicial District Court, Flathead County, in favor of Richard C. Cady (Cady). Cady appeals the District Comb’s denial of a motion for summary judgment, a pre-trial motion for a ruling that decedent’s heirs were not entitled to damages, and certain jury instructions. We affirm.

Because we affirm, the issues raised by Cady on his cross-appeal are moot. Therefore, we state the issues on appeal as follows:

1. Did the District Court err in failing to instruct the jury that Cady was negligent per se?

2. Did the District Court err in allowing the investigating police officer to testify that Cady did not receive a citation?

3. Did the District Court err in allowing the investigating police officer to testify as to his opinion regarding the cause of the accident?

4. Did the District Court err in allowing testimony that the decedent was in a bar prior to his death?

On July 5, 1989, at approximately 9:30 p.m., the decedent Colin Hislop (Colin) met his brother, James Hislop (Jim), at the Packer’s Roost, a restaurant and lounge/casino on U.S. Highway 2 near Co-ram, Montana. Between 11:00 and 11:30 p.m., Colin left Packer’s Roost to return to the Flying Eagle Ranch (ranch). Colin was driving a pickup loaded with hay. Shortly thereafter, Jim left the Packer’s Roost to return to the ranch and noticed hay on the roadway. Jim drove to the ranch and picked Colin up to return to retrieve the hay from the roadway.

The roadway in the area consists of four lanes of traffic, two headed east and two headed west. The east and west-bound lanes are separated by a median strip approximately three feet wide.

Initially, Jim parked his pickup near the fog line on the right side of the road heading west. The men picked up the hay that was scattered in the west-bound lanes of traffic. Jim then drove across the highway into the passing lane for east-bound traffic and parked his vehicle in the passing lane. After Jim parked, Cohn raked the hay into piles and Jim loaded the hay into the truck. Jim got into the pickup and backed it up to where Colin was standing. Colin was standing in the passing lane for west- bound traffic, approximately three feet from the median strip, and was wearing blue jeans, a blue t-shirt, and a baseball cap.

Cady was traveling west in the passing lane of the roadway. Jim’s pickup headlights were on and were shining down the road, slightly to the left because of a curve in the roadway. Colin was standing behind the headlights’beam, and the headlights prevented Cady from seeing Colin until he passed the b eadlights of the pickup. At that point Colin was less than twenty feet from Cady’s vehicle. Cady struck Colin, who landed in the median of the roadway. Colin was killed instantly.

Ken Sorely, a deputy of the Flathead County Sheriff’s Office, was the first officer to arrive at the accident scene. He noted that Jim’s pickup headlights were on, but no emergency flashers were on and there were no flares in the vicinity of the accident. Two members of the Coram volunteer fire department also noted the absence of any emergency flashers and flares, as did Highway Patrol Officer Cliff Crick.

Officer Crick investigated the accident and took measurements and witness statements. Officer Crick concluded that there was no action or inaction by Cady that caused the accident. At trial, Officer Crick testified that, in his opinion, “the cause [of the accident] was a pedestrian in dark clothes behind a set of headlights [who] was not visible to oncoming traffic.”

Hislop, the wife and personal representative of Colin’s estate, instituted a wrongful death action against Cady. The case was tried before a jury and the jury returned a special verdict finding that Cady was negligent, apparently based on Cady’s testimony that he was driving five miles over the speed limit, but that Cady’s negligence was not a cause of Colin’s death. The District Court entered judgment on the verdict. Both parties filed a notice of appeal.

Our standard of review relating to discretionary trial court rulings, such as the giving of jury instructions and the admission of evidence at trial, is whether the trial court abused its discretion. Steer, Inc. v. Dep’t of Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 604.

I — NEGLIGENCE PER SE INSTRUCTION

Hislop contends that the District Court erred in failing to instruct the jury that Cady was negligent per se for violating § 61-8-361, MCA. This statute provides:

The driver of a motor vehicle traveling through defiles or canyons or on mountain highways shall hold such motor vehicle under control and as near the right-hand edge of the highway as reasonably possible.

In this case, Cady was traveling in the left-hand (passing) lane of a four-lane roadway. Hislop asserts that, because the highway where the accident occurred is located in a mountainous region, Cady was negligent per se for driving in the passing lane.

To establish negligence per se, a plaintiff must prove:

1. The defendant violated a particular statute;
2. The statute was enacted to protect a specific class of persons;
3. The plaintiff is a member of that class;
4. The plaintiff’s injury is the sort the statute was enacted to prevent; and
5. The statute was intended to regulate a member of defendant’s class.

VanLuchene v. State (1990), 244 Mont. 397, 401, 797 P.2d 932, 935. The threshold element required to establish negligence per se is that the defendant violated a particular statute. Here, Hislop contends that Cady violated § 61-8-361, MCA, by driving in the passing lane and not keeping his vehicle near the right-hand edge of the roadway. We disagree.

We cannot conclude that § 61-8-361, MCA, applies to a four-lane roadway, regardless of whether such roadway is located in a mountainous region. If the statute did apply, a driver could never utilize the left-hand lane of a four lane roadway, nor could a driver ever pass another vehicle. Such reasoning contravenes common sense. The purpose of multi-lane roadways is to facilitate the movement of traffic, and if all vehicles are required to drive on the right-hand side of the road, that purpose is frustrated. Section 61-8-361, MCA, applies to winding, two-lane mountain roads where head-on collisions are a particular danger.

The appropriate governing statute in this case is § 61-8-328, MCA, which provides, in pertinent part:

Whenever any roadway has been divided into two or more clearly marked lanes for traffic the followingrules, in addition to all others consistent herewith, shall apply: (1) A vehicle shall be driven as nearly as practicable entirely within a single lane and shall not be moved from such lane until the driver has first ascertained that such movement can be made with safety. ...

This statute specifically deals with multi-lane roadways and governed Cady’s conduct here, to the exclusion of § 61-8-361, MCA, which, we hold, does not apply to four-lane roadways.

Finally, Hislop argues that, had Cady been driving in the right-hand lane pursuant to § 61-8-361, MCA, he could have avoided hitting Colin. Even accepting that argument, it was purely fortuitous that Cady hit Colin in the passing lane; a few minutes prior to the accident, Colin was standing in the right-hand lane, the lane Hislop argues Cady should have occupied.

We hold that Cady did not violate § 61-8-361, MCA, as a matter of law. Because Hislop has failed to meet the threshold requirement necessary to establish negligence per se, we decline to address the remaining elements. We conclude that the District Court did not abuse its discretion in refusing to give a negligence per se instruction.

II — TESTIMONY REGARDING CITATION

Hislop contends that the District Court erred in allowing Officer Crick to testify that Cady did not receive a citation for a violation of § 61-8-361, MCA. The relevant testimony is as follows:

[By attorney O’Brien]: Officer Crick, have you ever issued a citation to anyone on that statute [§ 61-8-361, MCA] while driving down a four-lane highway?
[By Crick]: No, I haven’t.
[By attorney Jones]: Objection. It’s irrelevant.
[By District Judge]: No. Overruled. You may answer.
[By Crick]: No, I haven’t.

We agree that the issue of whether Officer Crick had ever cited anyone for a violation of this statute is irrelevant. However, as stated above, Cady did not violate § 61-8-361, MCA, as a matter of law. Therefore, we hold that the District Court’s ruling amounts to harmless error.

Ill — OFFICER’S OPINION TESTIMONY

Hislop next contends that the District Court erred in allowing Officer Crick to testify as to his opinion regarding the cause of the accident. We have previously ruled on this identical issue and have allowed such testimony.

In Hart-Anderson v. Hauck (1989), 239 Mont. 444, 781 P.2d 1116, a police officer who investigated an accident was asked his opinion as to the cause of the accident. The defendant objected on the basis of lack of foundation. We held that a police officer with years of experience in investigating accidents can testify as to his opinion regarding the cause of the accident. Hart-Anderson, 781 P.2d at 1118-19.

The purpose of the police officer’s testimony is to assist the trier of fact on the issue of causation. In Hart-Anderson, the police officer had extensive experience in accident investigation and an adequate foundation was presented for his testimony. In addition, defense counsel cross-examined the police officer as to the basis of his opinion. Hart-Anderson, 781 P.2d at 1119. We held that the jury is free to decide the weight to give the police officer’s testimony as to the cause of the accident. Hart-Anderson, 781 P.2d at 1119.

As in Hart-Anderson, the record here shows that Officer Crick had extensive experience in investigation and was properly qualified through training and experience to testify as to his opinion regarding the cause of the accident. Officer Crick has been employed as a highway patrol officer for eighteen years, has received literally hundreds of hours of training in accident investigation and reconstruction, and has investigated hundreds of accidents. In addition, Hislop’s counsel had the opportunity to thoroughly cross-examine Officer Crick on the basis of his opinion. Officer Cricks testimony assisted the trier of fact on the issue of causation, and the jury was free to give his testimony any credence they felt appropriate. At trial, Hislop objected to Officer Cricks testimony, contending that such testimony invaded the province of the jury. As stated above, a police officer, properly qualified by training and experience in accident investigation, may be allowed to testify regarding his opinion of the cause of an accident. Because the jury was free to determine what, if any, weight to accord to his testimony, we hold that Officer Crick’s testimony did not invade the province of the jury.

On appeal, Hislop claims that Officer Crick was not properly qualified. We note, however, that, at trial, Hislop failed to object as to lack of foundation, contending only that the testimony invaded the province of the jury. It is well settled that we will not address an issue raised for the first time on appeal. Story v. City of Bozeman (Mont. 1993), 856 P.2d 202, 208, 50 St. Rep. 761, 763.

IV — TESTIMONY REGARDING ALCOHOL

Finally, Hislop claims that the District Court erred in allowing testimony that Colin was in the Packer’s Roost prior to his death. We disagree.

Prior to trial, Hislop moved to suppress evidence of alcohol consumption by Colin. The District Court granted the motion, ruling that the evidence had no probative value and was potentially prejudicial.

At trial, testimony was introduced that Colin had been in the Packer’s Roost immediately prior to his death. However, there was no testimony given at any time during the trial that Colin had consumed any alcohol prior to his death. In addition, the District Court instructed the jury that use of alcohol was not an issue in the case and was not to be considered in making a decision.

Here, the jury found that Cady was negligent but that his negligence was not the cause of Colin’s death. Therefore, the jury did not consider any alcohol consumption on the part of Colin, as the issue of comparative negligence never arose. Hislop, herself, acknowledges in her brief that “[presumably the jury followed the trial court’s instruction” regarding alcohol use. Therefore, we hold that Hislop’s contention that the District Court erred in allowing testimony that Colin was in the Packer’s Roost prior to his death is without merit.

Affirmed.

JUSTICES GRAY, TRIEWEILER, HUNT and WEBER concur.


author: JUSTICE HUNT

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. KENNETH SUISTE, Defendant and Appellant.
    No. 93-002.
    Submitted on Briefs May 13, 1993.
    Decided October 26, 1993.
    50 St.Rep. 1309.
    261 Mont. 251.
    862 P.2d 399.

      For Defendant and Appellant: Billy B. Miller, Miller & Cook, Great Falls.
    For Plaintiff and Respondent: Joseph P. Mazurek, Attorney General, Barbara C. Harris, Assistant Attorney General, Helena; Patrick L. Paul, Cascade County Attorney, Deborah Kim Christopher, Deputy Cascade Comity Attorney, Great Falls.
   JUSTICE HUNT

delivered the Opinion of the Court.

Defendant Kenneth Suiste appeals from an order of the Eighth Judicial District Court, Cascade County, revoking his suspended sentence for sexual intercourse without consent and designating him as a dangerous offender without the possibility of parole.

We reverse and remand.

Defendant raises two issues on appeal.

1. Did the District Court err by designating defendant a dangerous offender pursuant to § 46-18-404(4), MCA (enacted in 1989), when the original crime occurred in 1979?

2. Did the District Court err when it determined defendant to be ineligible for parole?

In 1979, the Cascade County Attorney’s Office charged Suiste with sexual intercourse without consent. The District Court imposed a ten-year suspended sentence on the condition that Suiste obey all rules and regulations of adult probation and parole services. Suiste committed a series of sexual related offenses in Washington, California, and Idaho, and spent time incarcerated in each of those states.

In 1982, Suiste was arrested in Flagstaff, Arizona. In January 1983, the Cascade County Attorney’s Office issued a bench warrant charging Suiste with violating the terms of his suspended sentence. Arizona authorities extradited Suiste to Cascade County, where authorities placed him in jail. After a six month incarceration, the court dismissed Suiste’s parole violation and he was released from jail.

In February 1984, Suiste was arrested and convicted of providing alcohol to a minor in Cascade County. He received a $500 fine and a six-month suspended sentence. In 1985, authorities arrested and charged Suiste with assault. He was placed in jail, but released after he posted a $2000 bail bond. Later, he failed to appear and bail was forfeited.

In 1985, the Cascade County Attorney’s Office filed a petition to revoke Suiste’s suspended sentence. Because he was incarcerated in California for homicide, Suiste did not enter the jurisdiction of the Eighth Judicial District Court until November 1992.

On November 23, 1992, the District Court held a revocation of sentence hearing. After the hearing, the District Court revoked the suspended sentence, designated Suiste a dangerous offender, and stated that he was ineligible for parole. Suiste appeals from the order.

Did the District Court err by designating Suiste a dangerous offender pursuant to § 46-18-404(4), MCA (enacted in 1989), when the original crime occurred in 1979?

Article I, Section 10, of the United States Constitution and Article II, Section 31, of the Montana Constitution prohibit the legislature from passing ex post facto laws. This Court has stated that:

[A]ny statute which punishes as a crime an act previously committed, which was innocent when done; which makes more burdensome the punishment for a crime, after its commission, or which deprives one charged with crime of any defense available according to law at the time when the act was committed, is prohibited as ex post facto.

State v. Leistiko (1992), 256 Mont. 32, 36, 844 P.2d 97, 99-100 (quoting Beazell v. Ohio (1925), 269 U.S. 167, 169-70, 46 S. Ct. 68, 68, 70 L. Ed 216-17). Banning ex post facto legislation served two purposes: (1) it entitled people to a fair warning of what conduct is punishable; and (2) it prevented federal and state governments from passing arbitrary and potentially vindictive laws. Leistiko, 844 P.2d at 100.

To determine whether a statute violates the ban on ex post facto legislation, we use a two-part test. First, the law must be retrospective in nature; that is, if it “changes the legal consequences of actions committed before its effective date.” Leistiko, 844 P.2d at 100 (citing Miller v. Florida (1987), 482 U.S. 423, 430, 107 S. Ct. 2446, 2451, 96 L. Ed. 2d 351, 360-61). Second, it must disadvantage the offender affected by it, which is to say, that the law must be more burdensome than the previous law. Leistiko, 844 P.2d at 100, (citing Dobbert v. Florida (1977), 432 U.S. 282, 294, 97 S. Ct. 2290, 2299, 53 L. Ed. 2d 344, 357).

Suiste argues that at the time he was sentenced in 1979, § 46-18-404, MCA, did not authorize the District Court to designate him a dangerous offender when he was already designated non-dangerous. At the time of the revocation hearing, § 46-18-404(4) MCA, did authorize the District Court to designate him as a dangerous offender. Suiste maintains that the effect of the designation is to increase his punishment, therefore, the statute violates the ban on ex post facto legislation.

The original statute under which Suiste was sentenced was § 46-18-404, MCA (1978). The statute provided that:

(1)The sentencing court shall designate an offender a nondangerous offender for purposes of parole eligibility for parole under part 2 of chapter 23 if:
(a) during the 5 years preceding the commission of the offense for which the offender is being sentenced, the offender was neither convicted of nor incarcerated for an offense committed in this state or any other jurisdiction for which a sentence to a term of imprisonment in excess of 1 year could have been imposed; or
(b) the court has determined, based on any presentence report and the evidence presented at the trial and the sentencing hearing, that the offender does not represent a substantial danger to other persons or society.
(2) A conviction or incarceration may not be considered under subsection (l)(a) if:
(a) the offender was less than 18 years of age at the time of the commission of the present offense; or
(b) the offender has been pardoned for the previous offense on the grounds ofinnocence or the convictionfor such offense has been set aside in a postconviction hearing.

Prior to the time of Suiste’s revocation, the Legislature added two more subsections to the statute. Those subsections gave the district courts additional guidance and authority when designating a convicted individual dangerous or nondangerous:

(3) If the court determines that an offender is a dangerous offender, it shall make that determination as part of the sentenced imposed and shall state the determination in the judgment. Except as provided in subsection (4), if the sentence and judgment do not contain a determination that the offender is a dangerous offender, the offender is considered to have been designated as a nondangerous offender for purposes of eligibility for parole.
(4) If an offender is given a probationary sentence that is subsequently revoked, the court may make the determination of whether the offender is a dangerous or nondangerous offender at the time of the revocation proceeding.

Section 46-18-404 MCA, (1991).

Subsection 4 gives the District Court authority to make a determination of dangerous status at the revocation hearing. On the other hand, subsection 4 did not exist at the time of Suiste’s sentencing in 1979. A designation as a dangerous offender would mean that Suiste must serve one-half of his sentence, minus good time. Section 46-23-201(2), MCA. We have held that when an offender is not expressly designated nondangerous he must serve one-half of his sentence, minus good time. Rose v. McCormick (1992), 253 Mont. 347, 349, 834 P.2d 1377, 1378. Suiste was not expressly designated nondangerous at the time of his sentencing. In Rose, we also stated that the statute in effect at the time the offender was sentenced is the applicable sentencing statute. See also, State v. Gone (1978), 179 Mont. 271, 280, 587 P.2d 1291, 1297. We hold that, like the offender in Rose, Suiste is entitled to sentencing under the applicable statute at the time of his original sentencing. We reverse the revocation order and remand for sentencing under the statute in effect at the time of Suiste’s original sentencing.

As a result of our holding on issue one, we need not discuss issue two.

We reverse and remand for proceedings not inconsistent with this opinion.

CHIEF JUSTICE TURNAGE, JUSTICES TRIEWEILER, GRAY and HARRISON concur.


author: Justice Hunt

text:
    SHEILA STORDALEN, Petitioner and Appellant, v. RICCI’S FOOD FARM, Employer, and STATE COMPENSATION MUTUAL INSURANCE FUND, Defendant and Respondent.
    No. 93-044.
    Submitted on Briefs April 30, 1993.
    Decided October 26, 1993.
    50 St.Rep. 1311.
    261 Mont. 256.
    862 P.2d 393.

      For Petitioner and Appellant: Don Edgar Burris, Billings.
    For Defendant and Respondent: Michael P. Heringer, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings.
   Justice Hunt

delivered the Opinion of the Court.

This is an appeal from a decision of the Workers’ Compensation Court denying appellant Sheila Stordalen a penalty pursuant to § 39-71-2907, MCA, and denying her attorney fees pursuant to § 39-71-612, MCA, after the Workers’ Compensation Court found that respondent State Compensation Mutual Insurance Fund acted unreasonably when it denied liability for a neurological consultation.

We reverse and remand to the Workers’ Compensation Court.

Stordalen initially raised four issues on appeal. However, we determine the following issue to be dispositive:

Did the Workers’ Compensation Court err when it failed to impose a 20 percent penalty pursuant to § 39-71-2907, MCA, and attorney fees pursuant to § 39-71-612, MCA, after it found that the State Fund acted unreasonably in denying liability for a neurological consultation?

A hearing was held in this matter on May 13, 1992. On December 28,1992, the hearing examiner issued proposed findings of fact, conclusions of law, and order which were adopted by the Workers’ Compensation Court. Stordalen appeals the findings of the Workers’ Compensation Court.

Did the Workers’ Compensation Court err when it failed to impose a 20 percent penalty pursuant to § 39-71-2907, MCA, and attorney fees pursuant to § 39-71-612, MCA, after it found that the State Fund acted unreasonably in denying liability for a neurological consultation?

Our standard of review is that findings of the Workers’ Compensation Court will not be overturned if there is substantial evidence in the record to support them. Plooster v. Pierce Packing Co. (1993), 256 Mont. 287, 291, 846 P.2d 976, 978. However, when reviewing the Workers’ Compensation Court’s conclusions of law, our review is plenary. We determine if the Workers’ Compensation Court’s determination as to the law is correct. Martelli v. Anaconda-Deer Lodge County (1993), [258 Mont. 166], 852 P.2d 579, 580, 50 St. Rep. 479, 480.

Section 39-71-2907(1), MCA (1989), provides for an increase in award when the State Fund acts unreasonably by refusing to pay benefits.

When payment of compensation has been unreasonably delayed or refused by an insurer, either prior or subsequent to the issuance of an order by the workers’ compensation judge granting a claimant compensation benefits, the full amount of the compensation benefits due a claimant between the time compensation benefits were delayed or refused and the date of the order granting a claimant compensation benefits may be increased by the workers’ compensation judge by 20%. The question of unreasonable delay or refusal shall be determined by the workers’ compensation judge, and such a finding constitutes good cause to rescind, alter, or amend any order, decision, or award previously made in the cause for the purpose of making the increase provided herein.

Section 39-71-612, MCA, allows the Workers’ Compensation Court to award attorney fees if it finds that the State Fund acted unreasonably. A determination of what is unreasonable is a question of fact. Metzger v. Chemetron Corp. (1984), 212 Mont. 351, 358, 687 P.2d 1033, 1037.

We have held that when an insurer acts unreasonably by denying benefits to which a claimant is legally entitled, the court should impose the statutory penalty. Plooster, 846 P.2d at 978. In Plooster, the Workers’ Compensation Court found that the State Fund acted unreasonably when it ignored the opinion of claimant’s treating physician and refused to pay for medicine which the doctor had prescribed. Plooster, 846 P.2d at 978. However, after making that determination, the Workers’ Compensation Court denied claimant’s entitlement to a statutory penalty. Plooster, 846 P.2d at 978. We reversed the Workers’ Compensation Court and stated that the claimant was entitled to a penalty. Plooster, 846 P.2d at 978.

In Chapman v. Research Cottrell (1991), 248 Mont. 353, 357, 811 P.2d 1283, 1285, this Court held that when an insurer denies a claimant’s request to change treating physicians, the decision must be reasonable. Here, the request is not for a change of treating physicians, but to seek consultation of a medical expert. A claimant must obtain authorization from the State Fund for a referral to a medical expert for consultation. 24.29.1403(3), ARM (repealed eff. 4/1/93).

In this instance, the State Fund denied Stordalen’s request for a consultation with Dr. Nelson for the following reasons: (1) a neurologist was not indicated on the file; (2) the claimant lives in Livingston, while Dr. Nelson’s practice is in Billings; and (3) billing factors. The Workers’ Compensation Court found that none of the above-stated reasons justified denying Stordalen’s request to be examined by a physician of her choice. The court concluded that the State Fund unreasonably denied Stordalen’s request for consultation with a physician of her choice and found the State Fund liable for her neurological examination. The Workers’ Compensation Court determined that Stordalen was not entitled to a penally pursuant to § 39-71-2907, MCA. The State Fund did not appeal this ruling.

We hold that the Workers’ Compensation Court should impose the penally and attorney fees because it found that the State Fund acted unreasonably in denying Stordalen’s request for a consultive examination.

We reverse and remand to the Workers’ Compensation Court for a determination of penalty and attorney fees.

JUSTICES HARRISON, TRIEWEILER, GRAY and WEBER concur.


text:
    JAMES TALCOTT CONSTRUCTION, INC., a Montana corporation, Plaintiff and Appellant, v. P & D LAND ENTERPRISES, a joint venture consisting of NDI, INC., a Montana corporation; STERLING INVESTMENTS, INC., a Montana corporation; and BVL/WHITEFISH, a California corporation; DAN L. AVERILL; NDI, INC.; STERLING INVESTMENTS, INC.; BVL/WHITEFISH; EDSEL J. AUCOIN and D’ANNE L. AUCOIN; J. STEPHENS ALLAN and MARJORIE J. ALLAN; P & D ENTERPRISES; JAMES R. OLSON, as Trustee for the JOMAR RETIREMENT TRUST; KENNETH W. SUTTON; ELLEN W. WEEKS; DONALD J. CORVAN and ELAINE CORVAN; EDWARD W. COLLINS and DORIS A. COLLINS; LAWRENCE F. ROONEY and ROSALIA ROONEY; ROBERT J. KIMBALL; WILLIAM H. KIMBALL, JR.; WILLIAM R. CONNORS and KIM M. CONNORS; MARK POAD; TODD ERICKSON and RENEE ERICKSON; AVECO PROPERTIES, INC.; ADRIENNE J. BELL; DOROTHY R. CHIANELLI and GERALD W. CHIANELLI, as Co-Trustees of the DOROTHY R. CHIANELLI TRUST, Defendants and Respondents.
    No. 93-201.
    Submitted on Briefs September 9, 1993.
    Decided October 26, 1993.
    50 St.Rep. 1313.
    261 Mont. 260.
    862 P.2d 395.

      For Appellant: JackL. Lewis and William J. Jacobsen, Jardine, Stephenson, Blewett & Weaver, P.C., Great Falls.
    For Respondents: Daniel W. Hileman, Murray & Kaufman, P.C., and Randall Ogle, Ogle & Worm, Kalispell.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

James Talcott Construction, Inc. (Talcott), appeals from an order of the District Court for the Eleventh Judicial District, Flathead County, approving a letter of credit as a surety bond. We reverse and remand for further proceedings consistent with this Opinion.

The issue is whether the letter of credit constitutes a surety bond within the meaning of § 71-3-551, MCA.

Talcott brought this action to foreclose upon a construction lien upon certain condominium units in Flathead County, Montana. The lien, which Talcott filed in July 1992, was for construction work on the condominiums between August 1991 and May 1992. Respondent P & D Land Enterprises (P & D) was the contracting owner of the condominiums. As co-trustees of the Dorothy R. Chianelli Trust, respondents Dorothy R. Chianelli and Gerald W. Chianelli (the Chianellis) had purchased a condominium unit before Talcott filed its construction lien.

Ten days after this action was filed, P & D provided the District Court with an “Irrevocable Standby Letter of Credit” issued by the Mountain Bank of Whitefish, as a bond in lieu of Talcott’s lien. The District Court approved and accepted the letter of credit, which was addressed to the Clerk of District Court. It stated:

RE: Irrevocable Standby Letter of Credit #MB772
Account of: P & D Land Enterprises, A Montana Joint Venture dba Whitefish Lake Lodge
Amount of: $121,057.94
Expiration: October 6, 1995
Dear Sir:
Mountain Bank hereby establishes a Standby Irrevocable Letter of Credit for the sum not exceeding a total of One Hundred Twenty-One Thousand Fifty-Seven and 94/100 ($121,057.94) Dollars for the account of P & D Land Enterprises, a Montana Joint Venture dba Whitefish Lake Lodge. This Letter of Credit is issued as a bond in lieu of lien #9219810350 filed by James Talcott Construction on 7/15/92, instrument #9219810350 in the amount of $143,912.81, and amendment lien #9227509510 filed 10/1/92, instrument #9227509510 in the amount of $80,705.29.
Upon notification by Clerk of District Court that a final judgement has been extended in favor of the lienor against this bond or if this Letter of Credit is not renewed 30 days prior to expiration, Mountain Bank, the issuer of this Letter of Credit unconditionally promises to pay the amount of the judgement together with any interest cost, attorney fees and other sums which such claimant would be entitled to cover upon the foreclosure of a lien against the principal sum up to the amount of $121,057.94.
Draws on this Letter of Credit shall be made by the Clerk of District Court, Flathead County, and will refer to Standby Letter of Credit #MB772, and be presented along with supporting documents to the office of Mountain Bank, 306 Spokane Ave., Whitefish, Montana on or before October 6,1995.
This Letter of Credit is subject to the Montana Uniform Commercial Code and the Uniform Custom and Practice for Documentary Credits (1983 Revision) International Chamber of Commerce Document #400.
Mountain Bank

Talcott filed objections to the irrevocable letter of credit as a bond. It argued that the letter of credit was not timely submitted to the District Court and that it was not a bond within the meaning of § 71-3-551, MCA.

After a hearing, the District Court ruled that the letter of credit was timely and met the requirements of § 71-3-551, MCA. The court entered an order approving the letter of credit. Talcott appeals.

Before filing its response brief on appeal, P & D moved to dismiss this appeal on grounds that Talcott failed to comply with Rules 9(b) and 10(a), M.R.App.P, concerning transmittal of the transcript. This Court denied that motion by order dated June 15,1993.

In their response briefs, both respondents again contend that this appeal should be dismissed, arguing that no appealable order has been entered pursuant to Rule 1, M.R.App.P. That rule provides, in relevant part:

(b) In civil cases a party aggrieved may appeal from a judgment or order, except when expressly made final by law, in the following cases:
(2) From an order ... dissolving or refusing to dissolve an attachment[.]

Rule 1(b)(2), M.R.App.P.

Respondents argue that this provision applies only to writs of attachment. However, by its plain terms, the rule speaks of “attachments,” not “writs of attachment.” Title 71, Chapter 3, Part 5 clearly creates and provides for the “attachment” of construction liens. For example, § 71-3-535(1), MCA, provides the circumstances under which a lien “attaches.” Section 71-3-541(2), MCA, provides that “[Construction hens attaching at different times have priority in the order of attachment,” and § 71-3-542(1), (2), and (4), MCA, provides for the relative priority of interests attaching to real property before or after a construction lien “attaches.” We conclude that an “attachment” exists under Rule 1(b)(2), M.R.App.P., through a perfected construction lien as well as through a writ of attachment.

In reaching this conclusion, we respect the significance of a lien as a property right. The right to retain a lien until the debt secured thereby is paid is a substantive property right. Security-First Nat. Bank v. Rindge Land & Navigation Co. (9th Cir. 1936), 85 F.2d 557, 561, reh. den. 86 F.2d 3, cert. den. 299 U.S. 613, 57 S.Ct. 315, 81 L.Ed. 452, reh. den. 300 U.S. 686, 57 S.Ct. 430, 81 L.Ed. 888. Therefore, the discharge of a lien amounts to deprivation of a substantive property right. Section 71-3-552, MCA, provides that, upon the filing of a bond, a lien against real property “shall forthwith be discharged and released in full and the bond shall be substituted for such lien.”

We conclude that the discharge of the lien through the substitution of the letter of credit is a proper basis for appeal to this Court under Rule 1(b)(2), M.R.App.P. We therefore deny the respondents’ second motion to dismiss this appeal.

Does the letter of credit constitute a surety bond within the meaning of § 71-3-551, MCA?

Section 71-3-551, MCA, provides:

Substitution of bond allowed — filing — amount — condition. (1) Whenever a construction lien has been filed upon real property or any improvements thereon, the contracting owner of any interest in such property, whether legal or beneficial, may, at any time before the lien claimant has commenced an action to foreclose such lien, file a bond with the clerk of the district court in the county in which such property is situated ....
(2) Such bond shall be in an amount 11/2 times the amount of the hen and shall be either in cash or written by a corporate surety company. If written by a corporate surety, such bond shall be approved by a judge of the district court with which such bond is filed.
(3) The bond shall be conditioned that if the hen claimant shall be finally adjudged to be entitled to recover upon the claim upon which his hen is based, the principal or his sureties shall pay to such claimant the amount of bis judgment, together with any interest, costs, attorneys’ fees, and other sums which such claimant would be entitled to recover upon the foreclosure of a hen against the principal.

Talcott argues that the bond filed in this case does not meet the requirements of § 71-3-551, MCA, in that it was filed too late, it was not written by a corporate surety company, and it imposes conditions of notification, payment, and other conditions not authorized by the statute.

The District Court ruled that the bond was timely filed, reasoning that it was approved before any defendant was served with process. The court also reasoned that, because a bond “may” be filed at any time before the hen claimant has commenced an action to foreclose the hen, the statutory provision is not mandatory. Respondents argue that there is no time requirement under the statute.

We disagree. Section 71-3-551, MCA, is elective onlyin that abond need not be filed at all, in which case the existing lien will remain in effect. The word “may” relates to the phrase “file a bond.” Nothing in the statute authorizes a bond to be filed after the lien claimant has commenced an action to foreclose the lien. The logical purpose for the statutory filing deadline is to eliminate wasted costs and effort of commencing foreclosure actions only later rendered moot by the filing of a bond.

In this case, the letter of credit was filed ten days after the complaint was filed in the foreclosure action. We hold that the District Court erred in ruling that the bond was timely filed.

The District Court also ruled that Mountain Bank meets the statutory definition of a corporate surety company found at § 33-26-101, MCA:

any corporation with a paid-up capital of not less than $100,000, incorporated under the laws of this state for the purpose of making, guaranteeing, or becoming a surety upon bonds or undertakings required or authorized by law[.]

We again disagree. The articles of incorporation of Mountain Bank, which Talcott filed in the District Court as an exhibit, show that Mountain Bank was incorporated for the purpose of conducting the business of banking, not for “making, guaranteeing, or becoming a surety upon bonds or undertakings required or authorized by law.” We hold that the District Court erred in ruling that Mountain Bank is a corporate surety company as defined at § 33-26-101, MCA.

The District Corut did not specifically address the other restrictions on the face of the bond which are questioned by Talcott. Those include: that it is governed by the Montana Uniform Commercial Code and the Uniform Custom and Practice for Documentary Credits (1983 Revision) International Chamber of Commerce Document #400; that it is expressly conditioned to expire on October 6, 1995; and that it is payable only upon the clerk of court doing certain enumerated things. In contrast, the statutory conditions of a lien release bond are set forth at § 71-3-551(3), MCA. That statute requires the principal or his surety to immediately pay a construction lien claimant any judgment the claimant receives. The statute further requires that a lien release bond remains effective until such judgment is satisfied or set aside. We hold that the letter of credit in this case imposes conditions not authorized by § 71-3-551, MCA.

In conclusion, the letter of credit from Mountain Bank was untimely filed, was not written by a corporate surety company as defined at § 33-26-101, MCA, and imposes conditions not authorized by § 71-3-551, MCA. We therefore reverse the District Court’s order accepting the letter of credit as a bond and remand this matter for further proceedings consistent with this Opinion.

JUSTICES HARRISON, TRIEWEILER, NELSON and HUNT concur.


author: JUSTICE TRIEWEILER

text:
    SAM E. McDONALD, Plaintiff and Respondent, v. JACK ANDERSON (deceased), HELEN Y. ANDERSON, Defendant and Appellant.
    No. 92-615.
    Submitted on Briefs April 15, 1993.
    Decided October 29, 1993.
    50 St.Rep. 1317.
    261 Mont. 268.
    862 P.2d 402.

      For Defendant and Appellant: John J. Cavan, Cavan, Smith & Cavan, Billings.
    For Respondent: W. Scott Green, Attorney at Law, Billings.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Defendant Helen Anderson appeals from a decision of the District Court for the Thirteenth Judicial District, in Yellowstone County, which granted summary judgment to plaintiff Sam McDonald. The District Court concluded that defendant Jack Anderson fraudulently conveyed property to his spouse, Helen. The court issued an order to set aside the fraudulently transferred property and allow Sam McDonald to enforce a prior judgment. We affirm.

The sole issue on appeal is whether the District Court erred when it granted summary judgment to McDonald.

In June 1978, Jack and Helen Anderson purchased a residence in Billings by contract for deed. In November 1984, Jack Anderson (Anderson), Sam McDonald, and a third party formed a partnership named Airport Metra Inn Partnership. The purpose of the partnership was to own and operate a motel and restaurant complex known as the Airport Metra Inn. Each partner owned 33 and 1/3 percent of the partnership. The partnership purchased the Airport Metra Inn on contract for deed from John Q. Hammond, and pursuant to the contract, the partners were obligated to make balloon payments to Hammond.

On September 10, 1986, Anderson conveyed all of his personal property and his contract interest in his residence to his spouse, Helen. The value of the transferred property was $100,000; of that amount, $25,000 represented the value of his personal property. Anderson did not receive any consideration from his spouse in exchange for the property that he conveyed to her. Anderson did not transfer his partnership interest to Helen.

In the months preceding September 1986, the partners were involved in discussions and negotiations for the sale of the Airport Metra Inn. At the time of Anderson’s property conveyance, the partnership owed substantial back taxes which had been assessed to the Airport Metra Inn, and balloon payments on the Hammond contract were imminent.

On December 15,1986, approximately three months after Anderson’s property conveyance to his wife, the partnership sold the Airport Metra Inn to Terrence Liu for $1,525,000. On December 31,1986, the partnership borrowed $580,000 from the First Security Bank of Livingston to pay the back taxes on the Airport Metra Inn and to make the balloon payments on the Hammond contract. The parties do not dispute that the back taxes and balloon payments had to be paid before the Liu contract could be performed.

All three partners signed the Livingston Bank note which stated that they were jointly and severally liable on the note as partners and individual guarantors. Because the payments on the Liu contract were insufficient to service the underlying debt obligation of the partnership to the Livingston Bank, McDonald paid the deficiency with his own funds.

Anderson did not make his share of the payments on the bank note and McDonald paid Anderson’s share. In May 1988, McDonald filed a lawsuit against Anderson for contribution of his obligation under the $580,000 note. McDonald subsequently filed a motion for summary judgment. On August 8, 1989, the District Court granted summary judgment in favor of McDonald and ordered Anderson to pay contribution to McDonald for those bank loan installments which were made by McDonald.

On December 15, 1989, Jack and Helen Anderson executed a Declaration of Homestead on their residence.

On January 10, 1990, the District Court entered a judgment in McDonald’s favor for $15,081.81 at a rate of 10 percent per annum. In April 1990, pursuant to a writ of execution, $513.82 was collected from Anderson’s bank account pursuant to the judgment.

On August 14, 1990, Anderson appeared at a judgment debtor examination before the Honorable Pedro Hernandez, a Justice of the Peace. At the hearing, McDonald’s attorney questioned Anderson about his financial situation to ascertain whether he had any assets from which McDonald could collect his judgment. Anderson testified that he transferred his assets to his wife on September 10, 1986. He explained that this transfer included all of his interest in his house, car, clothes, insurance policies, and other personal property. Anderson testified that every month he received a social security retirement check and an army retirement check and that he gifted this income to his spouse. He explained that his spouse used the gifted checks to pay for his health insurance, life insurance, and day-to-day living needs; and that his wife paid for these expenses as a gift to him.

On September 25,1990, McDonald filed this action. He alleged that Anderson conveyed his property to his spouse on September 10,1986, to avoid liabilities that he owed to his creditors. McDonald requested the court to set aside the property transfer in order to allow him to enforce his January 10, 1990, judgment. Both parties filed motions for summary judgment in which they contended that there were no issues of material fact.

Anderson died on December 2,1990, and Helen was substituted as a defendant. In April 1991, Helen sold the Anderson residence. On June 10, 1991, Helen and McDonald entered into a substitution of security agreement. They placed in escrow a contract for the sale of Anderson’s home from which McDonald’s judgment could be collected.

On September 23, 1992, the District Court granted summary judgment in favor of McDonald and ordered Anderson’s property transfer to his spouse to be set aside as a fraudulent conveyance. The court relied on the Uniform Fraudulent Conveyance Act (UFCA), which was the law in effect at the time of Anderson’s property transfer. The court determined that §§ 31-2-311, -313, -314, and -315, MCA, of the UFCA were applicable and that the elements of each statute were satisfied. The court concluded that § 31-2-313, MCA, which pertains to a conveyance made by a person about to incur debts, was the most applicable statute based on several findings.

The court found that Anderson was a partner and the hotel manager of the Airport Metra Inn at the time of the property transfer in September 1986; and therefore, he was aware of the partnership’s financial status, its valuation, its outstanding contract obligations (with Hammond and Liu), its current liabilities (back taxes and balloon payments), and its potential liabilities (the bank loan with the Livingston Bank in December 1986). For the court, the timing of the property transfer, and the fact that Anderson had knowledge about the partnership’s liabilities, cast doubt on a transfer already suspect because it was a conveyance to a spouse, made without consideration. Moreover, it involved property over which Anderson gave up no control, possession, or beneficial use. The court concluded that Anderson fraudulently transferred his property for the purpose of avoiding present and future creditors. From that decision, Anderson appeals.

The purpose of summaiy judgment is to encourage judicial economy through the ehmination of any unnecessaiy trial. However, summary judgment is never to be a substitute for trial if there is an issue of material fact. Reaves v. Reinbold (1980), 189 Mont. 284, 288, 615 P.2d 896, 898. Summary judgment is proper only when no genuine issues of material fact exist and the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.R

The party seeking summaiy judgment has the burden of demonstrating a complete absence of any genuine factual issues. D’Agostino v. Swanson (1990), 240 Mont. 435, 442, 784 P.2d 919, 924; Cereck v. Albertson’s, Inc. (1981), 195 Mont. 409, 411, 637 P.2d 509, 511. The burden then shifts to the nonmoving party who must show the existence of a genuine issue in order to prevail. O’Bagy v. First Interstate Bank of Missoula (1990), 241 Mont. 44, 46, 785 P.2d 190, 191. To meet this burden, the nonmoving party must offer substantial evidence, not mere speculation and conclusory statements. First Sec. Bank of Bozeman v. Jones (1990), 243 Mont. 301, 303, 794 P.2d 679, 681. All reasonable inferences that may be drawn from the offered proof must be resolved in favor of the party opposing summary judgment. Payne Realty and Housing, Inc. v. First Security Bank of Livingston (1992), 256 Mont. 19, 24-25, 844 P.2d 90, 93.

The Uniform Fraudulent Conveyance Act (UFCA) was the substantive law in effect in 1986, the time when Anderson transferred his assets. The Montana Legislature repealed the UFCA in 1991 and enacted the Uniform Fraudulent Transfer Act (UFTA). However, because the UFTA does not expressly state that it is retroactive, we will apply the UFCA, which was the law in effect at the time of the conveyance at issue. Towe Antique Ford Foundation v. I.R.S. (D. Mont. 1992) 791 F. Supp. 1450, 1457-58.

We conclude that, at least with regard to § 31-2-315, MCA (1985), the District Court correctly concluded that plaintiff was entitled to judgment as a matter of law. That section of the UFCA provides that:

Certain transfers presumed fraudulent. Every transfer of personal property, other than a thing in action, and every lien thereon, other than a mortgage, when allowed by law, made by a person having at the time the possession or control of the property, not accompanied by an immediate delivery and followed by an actual and continued change of possession of the things transferred is conclusively presumed to be fraudulent and therefore void against:
(1) those who are his creditors while he remains in possession;
(2) the successors in interest of such creditors;
(3) any persons on whom his estate devolves in trust for the benefit of others than himself; and
(4) purchasers or encumbrancers in good faith subsequent to the transfer. [Emphasis added].

According to § 31-2-315, MCA (1985), and the undisputed facts, at least some of Anderson’s personal property was conveyed fraudulently.

Section 31-2-301(3), MCA, provides that a “creditor” is “a person having any claim, whether matured or unmatured, liquidated or unliquidated, absolute, fixed, or contingent.” McDonald obtained a judgment against Anderson on January 10,1990, for $15,081.81. At the time of the judgment debtor hearing in August 1990, only $513.82 had been collected from Anderson’s bank account pursuant to McDonald’s judgment. Therefore, McDonald was a creditor of Anderson’s at the time of the judgment debtor hearing.

At the hearing, Anderson testified that he transferred all of his personal property to Helen, including his clothes, insurance policies, and income checks. However, the evidence is clear that despite the transfer, Anderson continued to retain possession or control of such property. Anderson testified that the clothes he wore at the judgment debtor hearing were owned by his wife. Yet despite her ownership of the clothes, he continued to wear them.

Anderson testified that his health insurance and life insurance policies covered him, but that his wife owned them. He testified that he gifted his monthly income checks to his wife, and that she spent this income on his health insurance, life insurance, and day-to-day living expenses. It is clear that although Anderson transferred his insurance policies and money to Helen, he still held control and possession of these items of personal property. His wife used his income checks to pay for his living expenses and to make payments for him on his insurance policies.

The record reveals that after McDonald obtained a judgment against Anderson, Anderson remained in possession of the personal property he claimed he transferred.

Based on the facts and the clear meaning of § 31-2-315, MCA, we conclude that the District Court did not err when it determined, as a matter of law, that Anderson’s transfer of his personal property to his wife was fraudulent regarding creditors, including McDonald. Therefore, the District Court did not err when it declared the transfer of these items of personal property invalid.

Prior to the District Court’s judgment, the parties stipulated that certain property owned by Helen Anderson could be set aside to satisfy any judgment obtained by McDonald. Therefore, we need not consider with greater particularity the items of personalty retained by Anderson, nor the value of the individual items.

The judgment of the District Court is affirmed.

JUSTICES HARRISON, HUNT, GRAY and WEBER concur.


text:
    CLIFFORD BROWN, Petitioner and Appellant, v. RICHARD A. MURPHY, INC., Employer, and STATE COMPENSATION MUTUAL INSURANCE FUND, Defendant and Respondent.
    No. 92-623.
    Submitted on Briefs April 30, 1993.
    Decided November 2, 1993.
    50 St.Rep. 1330.
    261 Mont. 275.
    862 P.2d 406.

      For Petitioner and Appellant: John Houtz, Attorney at Law, Forsyth.
    For Defendant and Respondent: Charles G. Adams, Legal Counsel, State Compensation Mutual Insurance Fund, Helena.
   JUSTICE TRIEWEILER

delivered the Opinion of the Court.

Clifford Brown appeals from a decision of the Workers’ Compensation Court in which his request to rescind a compromise settlement that the parties had agreed upon was denied. The court concluded that Brown was not entitled to reopen the settlement agreement and that the insurer was not required to provide him with additional benefits.

We reverse.

The dispositive issue on appeal is whether the Workers’ Compensation Court erred when it concluded that there were no grounds to allow rescission of the compromise settlement agreement.

Claimant Clifford Brown was injured during the course of his employment on two separate occasions-Februaiy 21,1978, and December 2,1985, while employed by Richard A. Murphy, Inc. The State Compensation Mutual Insurance Fund accepted liability and paid various benefits.

Following the 1985 injury, the State Fund notified Brown that it elected not to participate in the cost of a possible third-party claim for damages, but that, pursuant to § 39-71-414(2)(c), MCA (1983), it retained a 50 percent subrogation interest in any recovery.

Brown did pursue a third-party claim in California and subsequently settled that claim for $55,000, which was less than policy limits.

In March 1990, following that settlement, Brown’s counsel approached the State Fund about settling the workers’ compensation claims. At this time, Brown’s entitlement to permanent partial disability benefits had not been determined by either agreement or adjudication, and there had been no determination of the State Fund’s subrogation interest, if any, in the third-party settlement. However, based on the settlement amount and the attorney fees and costs associated with the settlement, the State Fund determined that the maximum subrogation interest it was entitled to was $18,666.67.

The parties eventually compromised Brown’s claim, as well as the State Fund’s subrogation interest. The State Fund agreed to pay to Brown $30,000 of “new money” and, as part of the compromise, the State Fund waived any subrogation interest in the third-party settlement. The petition for full and final compromise settlement which was submitted to the Department of Labor and Industry stated that Brown agreed to accept $33,662.50, of which $3,662.50 had already been paid, as a full and final compromise of his claim. Additionally, the State Fund stated that it waived its subrogation interest in the amount of $17,382.78. There is no explanation for the seventeen thousand dollar figure, as opposed to the $18,666.67 which the State Fund had previously calculated as its maximum subrogation interest. This agreement was signed by Brown on April 7,1990, and the State Fund on May 1,1990.

The department approved this compromise agreement on May 10, 1990, but altered some of the terms. The final order approving the compromise settlement stated that Brown was to receive in settlement of his claims the amount of $52,329.17, less $18,666.67 which “is subrogation due the State Fund.” After deducting the amount previously paid to Brown, he was to receive a net settlement of $30,000. The language added by the department, while not materially altering the agreement, clarified that the settlement agreement took into account the subrogation interest that the State Fund believed it was entitled to receive.

Prior to the issuance of this order, however, the State Fund initiated a second agreement entitled “Compromise Settlement of Insurer’s Subrogation Interest” which Brown signed on April 30, 1990. This agreement purported to settle a controversy regarding the State Fund’s subrogation interest and stated that the insurer agreed to accept as its subrogation interest “the sum of zero dollars.” This agreement was approved by the Department of Labor on June 29, 1990.

On June 7, 1990, one month after the Department of Labor’s approval of the settlement agreement, but prior to its approval of the subrogation “waiver,” this Court issued its decision in Zacher v. American Insurance Company (1990), 243 Mont. 226, 794 P.2d 335. Zacher construed the 1983 subrogation provision of the Workers’ Compensation Act, which the parties agree is the controlling statute in this case. Applying the theory of equitable limitation on legal subrogation, this Court held that an insurer has no subrogation rights until a claimant has been made whole for his entire loss and any costs of recovery, including attorney fees. Zacher, 794 P.2d at 338.

Approximately a year later, on April 10,1991, Larry Thomas, the supervising claims examiner for the State Fund, responded to an inquiry from Brown’s attorney in which the terms of the settlement agreement were clarified. Thomas explained that Brown’s case had been settled for $52,329.17, and from this the State Fund deducted its subrogation interest of $18,666.67, and the amounts already paid out in partial benefits. This left a net settlement of $30,000 which had been paid to Brown.

On September 3,1991, Brown submitted a claim to the State Fund to recoup the $18,666.67 subrogation interest which Brown claimed was deducted and withheld by the State Fund in the compromise settlement. He asserted that he had to pay his attorney fees from the third-party recovery, and therefore, had not been made whole, which is a prerequisite for subrogation according to the decision in Zacher.

The State Fund denied Brown’s claim on the basis that it had expressly waived any subrogation interest in Brown’s third-party settlement and that there was nothing for it to refund.

Brown then petitioned the Workers’ Compensation Court in December 1991, alleging that a subrogation interest in the amount of $18,666.67 hadbeen “deducted” from the compromise settlement, and that, pursuant to the Zacher decision, this amount should be returned to him. Brown contended that the settlement agreement should be set aside on the basis that the parties were mutually mistaken regarding the State Fund’s right to a subrogation interest in Brown’s third-party recovery when they entered into the agreement. Brown also added a claim for attorney fees alleging that the State Fund had acted unreasonably when it refused to pay his claim.

The Workers’ Compensation Court entered its judgment on December 11, 1992, in which the court accepted the hearing examiner’s findings of fact, conclusions of law, and proposed judgment. The court determined that Brown was not entitled to reopen the May 10,1990, settlement agreement and was not entitled to further compensation or attorney fees. From this judgment, Brown appeals.

Did the Workers’ Compensation Court err when it concluded that there were no grounds to allow rescission of the compromise settlement agreement?

Brown contends that the Workers’ Compensation Court erred when it did not allow rescission of the settlement agreement and did not order the State Fund to reimburse Brown for the subrogation interest it retained. He argues on appeal that the Zacher decision controls the issue of whether the State Fund was entitled to a subrogation interest. He claims that he was not made whole in the third-party settlement, and therefore, the State Fund had no subrogation rights. However, based on the language contained in the settlement agreement, he asserts that money was deducted from the amount for which his claim was settled based on the State Fund’s subrogation claim.

The arguments raised before this Court focus on two grounds for rescission — mutual mistake of fact and unilateral mistake of law. Brown contends that he is entitled to rescind the settlement agreement on the grounds of unilateral mistake of law because he was operating under a misapprehension of the law regarding the right to subrogation, and the State Fund was aware of his misapprehension. He claims that the State Fund knew of the impending decision in Zacher which would forbid a subrogation interest in this instance, and that is why the second agreement, which purported to waive any interest in the third-party settlement, was proffered by the State Fund. He also claims there was a mutual mistake of fact because, at the time the agreement was made, both parties were mistaken about the State Fund’s right to subrogation.

The State Fund counters by claiming that the settlement agreement was an enforceable contract resulting from a compromise by both parties and the court correctly found no grounds for rescission. The State Fund insists that it waived its right to subrogation in the final agreement and this agreement, therefore, is not in conflict with Zaeher. Furthermore, it contends that because Brown settled his third-party lawsuit for less than policy limits he was “made whole” and Brown has not demonstrated that Zaeher would have changed the outcome of the compromise settlement. The State Fund contends that since Brown failed to prove the requirements for unilateral mistake of law or mistake of fact, the court had substantial evidence to conclude that Brown was not entitled to reopen the settlement and its conclusions should not be disturbed.

Factual findings by the Workers’ Compensation Court are reviewed to determine whether they are supported by substantial evidence. Francetich v. St. Comp. Mut. Ins. Fund (1992), 252 Mont. 215, 827 P.2d 1279. In this instance, the Workers’ Compensation Court did not directly address the allegations of mistake of fact, but found that Brown had failed to submit evidence of a unilateral mistake of law to justify reopening the agreement. With respect to an alleged unilateral mistake of law, we agree with the court’s findings that there was no evidence of fraud, nor that Brown was unilaterally operating under a misapprehension of the law and the State Fund was aware of his misapprehension. There is no evidence that the State Fund knew of the outcome of the Zaeher decision prior to the time that it was issued by this Court, and then allowed Brown to proceed with negotiations knowing that he misunderstood the status of the law with respect to subrogation rights.

Also, after considering Brown’s arguments regarding mistake of fact, we conclude the evidence is similarly lacking on this point. Brown argues that the parties were mistaken about who had the right to the $18,666.67 subrogation interest. This was not a mistake of fact, however. Whether or not the State Fund was entitled to a subrogation interest in that amount is a question of law which, pursuant to Zaeher, depends on the claimant’s status after a third-party settlement.

We conclude that the controlling issue in this case, which Brown raised before the Worker’s Compensation Corut, is whether the parties consented to the compromise agreement while laboring under a mutual mistake of law.

This Court has made clear that the law of contracts applies in construing and determining the validity and enforceability of a settlement agreement. Wolfe v. St. Comp. Mut. Ins. Fund (1992), 251 Mont. 217, 824 P.2d 240. Section 28-2-1711, MCA, provides that a party to a contract may rescind the contract if “the consent of the party rescinding or of any party jointly contracting with him was given by mistake,” and § 28-2-408, MCA, clarifies that “[m]istake may be either of fact or law.” Section 28-2-410, MCA, defines “mistake of law” and provides that a mutual mistake of law arises from:

(1) a misapprehension of the law by all parties, all supposing that they knew and understood it and all making substantially the same mistake as to the law.

It is evident from the record before us that both parties to the contract were mistaken about the law regarding subrogation, each supposing that they knew and understood it and substantially making the same mistake. Because Brown, as the party seeking to rescind the agreement, consented to the agreement based on a mutual mistake of law, we hold that he is entitled to rescind the settlement agreement.

The Workers’ Compensation Court did not directly address the allegation of mutual mistake of law in its findings and conclusions, other than to say that neither party had submitted authority for reopening a contract based on a mistake of law. It did conclude, however, “that at the time of negotiations and approval, two experienced counsel were both aware of the law in affect and negotiated the agreement based on their correct and mutual understanding of the law at that time.” We agree that the parties entered into the settlement agreement based on a mutual understanding of the law in existence. We disagree that the parties’ mutual understanding of the law was correct.

The evidence demonstrates that the bargaining process was based on the parties’ belief that the State Fund had a subrogation right, even though the extent of that right had not been finally determined. From the face of the various documents, it is apparent that the $30,000 settlement amount was arrived at after considering the State Fund’s maximum subrogation interest in the amount of $18,666.67. Furthermore, even though the final document purports to state that a subrogation interest was waived, the clarification memo from the State Fund’s claims examiner a year later makes clear that the agreement was premised on an offset for the maximum subrogation interest against a settlement figure of $52,329.17. Our conclusion that the settlement agreement was premised on an understanding that the law entitled the State Fund to a subrogation interest in the third-party settlement is further confirmed by the testimony of both the claims examiner for the State Fund and the attorney representing Brown in the settlement negotiations. Even though the State Fund claims that it “waived” its interest because it did not receive a portion of the third-party settlement, it is clear from the evidence presented that the subrogation interest was considered in the negotiation process.

When this Court decided Zacher in 1990, that decision did not change the law regarding subrogation rights. That decision construed the 1983 statute, which is the statute the parties considered during settlement negotiations. The applicable provision of the 1983 Workers’ Compensation Act provides that an insurer is entitled to subrogation for all compensation and benefits paid to an injured worker if a third-party action results in a judgment in the claimant’s favor. Section 39-71-414, MCA (1983). However, the statute is silent on the issue of whether this subrogation right can be asserted even if a claimant is not fully compensated for his injuries. In Zacher, 794 P.2d at 338, we addressed that question, and held that an insurer has no right to subrogation until a claimant has been made whole for his entire loss and any costs of recovery, including attorney fees. This decision did not change the law; it merely clarified that, pursuant to the 1983 law, the right to subrogation was subject to the theory of equitable limitation on legal subrogation. When Brown and the State Fund were negotiating a settlement agreement, they were mutually mistaken regarding the law. Neither party understood that the State Fund’s right to subrogation was limited as described by our decision in Zacher.

In McFarland v. Stillwater County (1940), 109 Mont. 544, 98 P.2d 321, this Court recognized that a mutual mistake of law entitled a plaintiff to recovery. Also, in Hicks v. Stillwater County (1929), 84 Mont. 38, 274 P. 296, we held that a plaintiff was entitled to relief and that rescission of a contract was warranted because there had been a mutual mistake of law with regard to the compensation due a county employee. In this case, we similarly conclude that Brown is entitled to relief because the parties’ consent to the settlement contract was based on a mutual mistake of law regarding subrogation rights. Therefore, we conclude that the court erred in holding that there were no grounds which would allow Brown to rescind the contract.

Brown urges this Court, as he did the Workers’ Compensation Court, to order the State Fund to refund to him $18,666.67 because that was the amount “withheld” in the settlement agreement as its subrogation interest. Brown is entitled to rescind the settlement agreement on the basis that consent to this agreement was based on a mutual mistake of law. However, he is not entitled to the reimbursement of a subrogation interest that has not been finally determined. If the contract is rescinded, it is rescinded in its entirety, leaving the issues of Brown’s entitlement to benefits and the State Fund’s subrogation interest, if any, to be determined.

Brown also appealed from the court’s denial of his request for attorney fees. Whether or not he is entitled to attorney fees under § 39-71-611, MCA(1983), depends on a determination by the Workers’ Compensation Court of the benefits to which Brown is entitled following rescission of his settlement agreement. That issue will have to be resolved by farther proceedings.

We reverse the judgment of the Workers’ Compensation Court in regard to its conclusion that Brown was not entitled to rescind the contract, and remand for further proceedings consistent with this opinion.

CHIEF JUSTICE TURNAGE, JUSTICES HARRISON, HUNT and WEBER concur.