author: MR. JUSTICE WEBER MR. JUSTICE SHEEHY,

text:
    HELENA ELEMENTARY SCHOOL DISTRICT NO. 1 and High School District No. 1 of Lewis & Clark County; Billings Elementary School District No. 2 and High School District No. 2 of Yellowstone County; et al., Plaintiffs and Respondents, and Montana Education Association et al., Intervenors/Plaintiffs and Respondents, v. The STATE OF MONTANA; and THE MONTANA BOARD OF PUBLIC EDUCATION; and The Montana Superintendent of Public Instruction, Defendants and Appellants, and C.J. Holje, Bernt Ward and Robert Frederich on behalf of the residents and taxpayers of Sheridan County, Montana, and all others similarly situated, Intervenors/Defendants and Appellants. Hays-Lodge Pole Elementary School District No. 50 and High School District No. 50., and Blaine County; et al. and the Association of Indian Impact Schools of Montana, Intervenors/Defendants and Appellants.
    No. 88-381.
    Submitted Jan. 13, 1989.
    Decided Feb. 1, 1989.
    769 P.2d 684.

      See, 236 Mont. 44 at 60, for Supplement to and Amendment of Opinion.
    Terry G. Spear, Crowley Law Firm, Billings, for Hays-Lodge Pole School Dist. No. 50, et al.
    Beda Lovitt, Helena, for Montana Superintendent of Public Instruction.
    Benjamin Hilley, Hilley & Loring, Bigfork, for Montana Educ. Ass’n.
    Marc Racicot, Atty. Gen., Helena, Clay R. Smith, Asst. Atty. Gen., Helena, for State.
    W. William Leaphart, Helena, Loren O’Toole, Plentywood, Donald A. Garrity, Helena, for defendants and appellants.
    James H. Goetz, Goetz, Madden & Dunn, Bozeman, for plaintiffs and respondents.
    Charles E. Erdmann, Bruce W. Moerer, Dennis Lopach, Helena, for amicus curiae.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

In this action for declaratory judgment, plaintiffs challenge the constitutionality of the 1985-86 method of funding public elementary and secondary schools in the State of Montana. The District Court for the First Judicial District, Lewis and Clark County, ruled in its primary holding that the system of funding violated the 1972 Montana Constitution.

The issues upon which we decide this case and our conclusions are:

1. Does Montana’s system of funding the public schools violate the education article, Art. X, of the Montana Constitution? We con-elude that the system of funding does violate Art. X. We do not find it necessary to consider the equal protection analysis under Art. II, § 4, of the Montana Constitution.

2. Should this Court clarify the District Court’s findings regarding the accreditation standards promulgated by the Montana Board of Public Education? We conclude that some clarification is required.

3. Did the District Court err in its findings and conclusions relating to consideration in the equalization process of federal “874” funding? We affirm the holding of the District Court that Montana presently may not factor “874” revenue into the equalization formula because our system does not meet the federal definition of an equalized program. In its review of Montana’s system of funding for public schools, the Legislature may desire to review the nature and extent of “874” funding, even though it may not in any manner factor that into an equalization formula without meeting federal requirements.

4. Did the District Court err in denying plaintiffs’ attorney fees? We affirm the denial of attorney fees.

In the 1985-86 school year, there were 545 school districts in Montana with a total student enrollment of 153,869. These included 382 elementary and 163 secondary districts. Nearly 45% of Montana schools have enrollments of less than 100 students.

The six-week-long trial included extensive evidence and testimony about the complex combination of federal, state, and local sources through which Montana’s public elementary and secondary schools are funded. In addition to the General Fund, each school district uses up to nine other types of budgeted funds. These include transportation funds, teacher retirement funds, debt services funds, and building reserve funds. Some of these depend upon voted levies and all are primarily funded on a district or county level. School districts also have nonbudgeted funds including food service, traffic education, rental funds, sick leave reserves, block grants, building funds, endowment funds, and interlocal agreement funds. Expenditures from these nonbudgeted funds may only be made from cash on hand.

The General Fund, which provides 70% of school funding in Montana, includes several components. In 1949, the Montana Legislature enacted the Montana School Foundation Program. Under that program, every two years the legislature sets “Maximum General Fund Budget Without a Vote” (MGFBWV) schedules for elementary and secondary school districts in the state. Eighty per cent of the MGFBWV is funded by county and state equalization revenues. These equalization revenues are derived from levies of 45 mills on all taxable property in each county and state aid from such sources as earmarked revenues, surplus county Foundation Program revenue, and direct legislative appropriations.

The remaining 20% of the funding of the MGFBWV is through permissive mill levies of up to 6 mills for elementary districts and 4 mills for high school districts. These levies are made without a vote. If the school district is unable to obtain the MGFBWV level through permissive levies and other specified nonlevy revenue, state permissive equalization revenues are used to make up the difference.

The evidence shows that, in 1985-86, most school districts adopted budgets in excess of the MGFBWV. They utilized a third stage of funding under which monies were obtained primarily from property tax levies voted by each school district. Other revenues which were used in this third level of funding included vehicle taxes, interest income, tuition income, and federal “874” funds. By 1985-86, 35% of all General Fund budgets were obtained from this level of funding. In contrast, in 1950, the Foundation Program furnished 81.2% of all general fund revenues in Montana, leaving less than 20% of revenues to be obtained by local levies and other sources.

Plaintiffs presented voluminous evidence to support their theory that the system of funding public education in Montana is unconstitutional. The evidence established great differences in the wealth of the various school districts and, more significantly, established disparities of spending per pupil as high as 8 to 1 in comparisons between similarly-sized school districts. We affirm the following unchallenged findings of the District Court:

“214. Several Plaintiff witnesses had experience either as teachers or administrators in other Montana districts, including some relatively wealthier districts. Mr. Walt Piipo, for example, currently Superintendent at Drummond, was previously Superintendent for Geraldine schools. The two school districts are very close in size, at both the elementary and high school levels. Geraldine’s taxable valuation, however, is more than twice that of Drummond’s. The tax efforts for the elementary schools are comparable, while Geraldine levies more General Fund mills than does Drummond at the high school level. Consequently, Geraldine spends approximately $1,000 more per ANB than Drummond at the elementary level, and over $2,000 more per ANB at the high school level. Approximately 40% of Geraldine’s General Fund revenues derive from the voted levy, while at Drummond, the voted levy supplies approximately 15% of General Fund revenue. This illustrates the fact that wealthier districts are able to rely to a greater extent on the voted levy to generate revenues for the General Fund.

“215. Mr. Piipo testified unequivocally that Geraldine schools have advantages, and offer opportunities, which Drummond schools cannot afford. Geraldine has much greater budget flexibility to address educational needs and goals than does Drummond. Mr. Piipo testified that there is no question that the educational opportunities afforded students in Drummond could be improved if the district had the same amount of money as Geraldine.

“216. The fact that spending disparities result in unequal educational opportunities was established more systematically by Plaintiffs’ experts Dr. Ron Mattson, Mary Pace, and Dr. John Picton. Each of these individuals has many years’ experience in Montana public education. They comprised a “Study Team” which was commissioned by the Plaintiffs to do a comparative study of several pairs of school districts in the State. They compared three pairs of elementary districts, and three pairs of secondary districts, Schools in each pair were of similar size, with one spending considerably more per pupil than the other. In addition to analyzing the budget data for each of these districts, members of the Study Team visited all 12 districts to observe the schools first hand, and to conduct interviews with administrators and teachers.

“217. The Study Team identified clear differences between the schools in each of the pairs. They found that the better funded schools tended to offer more enriched and expanded curricula than those offered in the schools with less money. The richer schools were also better equipped in the areas of textbooks, instructional equipment, audio-visual instructional materials, and consumable supplies. With respect to buildings and facilities, the districts with more money were better able to maintain their facilities than were the poorer districts. The Study Team concluded:

“ Availability of funds clearly affect the extent and quality of the educational opportunities.

“ ‘* There is a positive correlation between the level of school funding and the level of educational opportunity.

“ The better funded districts have a greater flexibility in the reallocation of resources to programs where there is a need.

“ The differences in spending between the better funded and underfunded districts are clearly invested in educationally related programs.

“ All 12 school districts in this study exhibited a responsible and judicious use of their financial resources.’

“R. Mattson, M. Pace, and J. Picton, Does Money Make a Difference in the Quality of Education in the Montana Schools?

“218. Intervenor-Plaintiff MEA commissioned a study similar to that conducted by Plaintiffs’ Study Team. Dr. Gary Gray, an assistant professor in Eastern Montana College’s School of Education, studied educational opportunities in a number of high and low spending school districts in Montana. His methodology differed from that of the Plaintiffs’ Study Team, but he arrived at essentially the same conclusions. Dr. Gray used an extensive checklist of indicators to compare educational opportunities among school districts within two expenditure classifications, a low expenditure category and high expenditure category.

“219. Dr. Gray concluded that there are substantial differences in educational opportunities among Montana school districts, which are manifested significantly between the high versus low expenditure categories which he studied. More specifically, he found that wealthier districts offered more science classes, in labs which were typically larger, better stocked with more equipment and consumable supplies, with more storage, and generally more functional than those in poorer districts. Consequently, students in wealthier districts had more “hands on” learning experiences than students in poorer districts. Dr. Gray found the same things to be true in the home economics and industrial arts programs. Similarly, schools with more money tended to offer a wider and more enriched range of courses in the language arts, including foreign languages.

“220. In the specialty areas of physical education, music, and art, the wealthier schools offered more opportunities. Gifted and Talented Programs were much stronger in the high expenditure districts. Consistent with the situation in many Plaintiff districts, Dr. Gray found that many of the low expenditure districts could not even afford to offer a Gifted and Talented Program.

“221. With respect to computers, he found significant differences, with the high expenditure districts having more and better computers and computer labs. He also found significant differences between the two expenditure categories for library and media center services, with the high expenditure districts having larger and newer book collections, larger periodical collections, larger reference collections, larger audio-visual collections, and better special collections.

“222. With respect to facilities, high expenditure districts reported that they have not had to defer necessary maintenance or work projects due to a lack of funds, as have low expenditure districts.

“223. Wealthier districts also offer a wider range of extracurricular activities to students than low expenditure districts.

“224. In sum, the comparative evidence establishes that spending differences among similarly sized school districts in the State result in unequal educational opportunities for students. Furthermore, the comparative evidence verifies the fact that the deficiencies and problems identified by Plaintiff witnesses are part of a consistent pattern in lower-spending districts, and that such deficiencies and problems are not consistently found in relatively higher spending districts.”

[Footnotes and citations to exhibits omitted.]

The problems were compounded by the adoption of Initiative 105 in the November 1986 general election. In 1987 the Legislature adopted Senate Bill 71. See, §§ 15-10-401, - 402, -411, and -412, MCA. The District Court correctly found that the net effect was to freeze property tax levies at 1986 levels, which resulted in the locking in of any disparities and inequities.

Federal “874” funding is not presently included in the State’s computations for the funding of schools. However, plaintiffs’ experts did include “874” funds in some of their studies comparing the wealth of various school districts. Intervenor-defendant Hays-Lodge Pole Elementary School Dist., et al., (Hays-Lodge Pole) is an association of Montana public schools which receive “874” funds by reason of the attendance of Indian students on and around the 7 federal treaty reservations in Montana. Hays-Lodge Pole argued that “874” funds should remain outside of the State’s budgetary process.

The District Court concluded that education is a fundamental right under Montana’s Constitution. It concluded that, under the 1985-86 system of funding public elementary and secondary schools, disparities in per pupil spending among schools as a result of disparities in local property wealth do not even pass the rational basis test of equal protection analysis. It concluded that the concept of local control is not related to the spending disparities now present. It further concluded that the State’s budgetary difficulties do not constitute a legal defense to these inequalities.

The court also concluded that he Montana School Accreditation standards do not define the constitutional right to education. It concluded that the treatment of federal “874” funding for school with Indian enrollment exacerbates the inequalities present in the school finance system. The court ordered that the present system of school funding may remain in effect until October 1, 1989, and retained jurisdiction, but left to the Legislature the task of fashioning a constitutional funding system.

The State of Montana and defendants Holje, Ward, and Frederich appeal the District Court’s determination that the present system of school funding is unconstitutional. The Montana Board of Public Education asks this Court to clarify the comments in the District Court’s findings concerning the role of accreditation standards which the Board establishes. Hays-Lodge Pole raises five allegations of error in the District Court’s ruling that federal “874” funding should be considered for purposes of equalization. Plaintiffs cross-appeal on the denial of their request for attorney fees.

I

Does Montana’s system of funding the public schools violate the education article, Art. X, of the Montana Constitution?

Art. X, § 1, Mont. Const., provides:

“(1) It is the goal of the people to establish a system of education which will develop the full educational potential of each person. Equality of educational opportunity is guaranteed to each person of the state.

“(2) The state recognizes the distinct and unique cultural heritage of the American Indians and is committed in its educational goals to the preservation of their cultural integrity.

“(3) The legislature shall provide a basic system of free quality public elementary and secondary schools. The legislature may provide such other educational institutions, public libraries, and educational programs as it deems desirable. It shall fund and distribute in an equitable manner to the school districts the state’s share of the cost of the basic elementary and secondary school system.”

By referring to the discussion in the transcript of the 1972 Montana Constitutional Convention, the State contends the provision in subsection (1) that “[e] quality of educational opportunity is guaranteed to each person,” is an aspirational goal only. We disagree with that contention. In interpreting the Constitution, as in statutory construction, this Court must first look to the plain meaning of the words used. State ex rel. Cashmore v. Anderson (1972), 160 Mont. 175, 184, 500 P.2d 921, 926. In the first sentence of Art. X, § 1(1), the framers of the Constitution clearly stated the “goal” of the people to establish a system of education which will develop the full educational potential of each person. In the next sentence, the framers did not use the term “goal.” Instead they stated that equality of educational opportunity “is guaranteed” to each person of the state. As we review our Constitution, we do not find any other instance in which the Constitution “guarantees” a particular right. We conclude that the plain meaning of the second sentence of subsection (1) is that each person is guaranteed equality of educational opportunity. The plain meaning of that sentence is clear and unambiguous.

The State argues that the last sentence of subsection (3) limits the Legislature’s duty in connection with the guarantee of equal educational opportunity. It points out that Foundation Program funds are conceded by all parties to have been distributed in an equitable manner, and then suggests that because the State has distributed such funds in an equitable manner as required under the last sentence of subsection (3), the Legislature has met its constitutional obligations as required under Art. X, § 1.

Art. X, § 1(3), Mont. Const., requires that the Legislature shall provide a basic system of free quality education, that it may provide various types of educational institutions and programs, and that the state’s share of the cost of the basic system shall be distributed in an equitable manner. There is nothing the plain wording of subsection (3) to suggest that the clear statement of the obligations on the part of the Legislature in some manner was intended to be a limitation on the guarantee of equal educational opportunity contained in subsection (1). The guarantee provision of subsection (1) is not limited to any one branch of government. Clearly the guarantee of equal educational opportunity is binding upon all three branches of government, the legislative as well as the executive and judicial branches. We specifically conclude that the guarantee of equality of educational opportunity applies to each person of the State of Montana, and is binding upon all branches of government whether at the state, local, or school district level. We hold that the last sentence of subsection (3) is not a limiting provision on the guarantee of equal educational opportunity contained in subsection (1).

The evidence presented at the trial of this case clearly and unequivocally established large differences, unrelated to “educationally relevant factors,” in per pupil spending among the various school districts of Montana. The evidence also demonstrated that the wealthier school districts are not funding frills or unnecessary educational expenses. Plaintiffs’ expert witnesses testified that discrepancies in spending as large as the ones present in Montana translate, in their opinions, into unequal educational opportunities. There was also unrebutted testimony that Foundation Program funding falls short of even meeting the costs of complying with Montana’s minimum accreditation standards.

The State attempted to present an argument at trial that equality of educational opportunity is more appropriately measured by output, that is, by analysis of the success of students from the different school districts, rather than by input of dollars. The District Court concluded that the State had failed to submit convincing evidence on the output theory of measurement. We agree with that conclusion on the basis of this record. The District Court found similarly unpersuasive the argument that statewide fiscal difficulties in the last few years somehow excuse the disparities in the spending per pupil in the various school districts. We agree with the District Court that such fiscal difficulties in no way justify perpetuating inequities.

The State also argued that the Constitutional directive of local control of school districts, Art. X, § 8, Mont. Const., requires that spending disparities among the districts be allowed to exist. That section provides:

“School district trustees. The supervision and control of schools in each school district shall be vested in a board of trustees to be elected as provided by law.”

While Section 8 does establish that the supervision and control of schools shall be vested in the board of trustees, there is not specific reference to the concept of spending disparities. Further, as made especially apparent after the passage of Initiative 105, the spending disparities among Montana’s school districts cannot be described as the result of local control. In fact, as the District Court correctly found, the present system of funding may be said to deny to poorer school districts a significant level of local control, because they have fewer options due to fewer resources. We conclude that Art. X, § 8, Mont. Const., does not allow the type of spending disparities outlined in the above quoted findings of fact.

In 1972, when our Constitutional Convention met, approximately 65% of General Fund revenues were funded through the Foundation Program. Con.Con. Tr. 2157. The transcript of the debate on Art. X, § 1(3), Mont. Const. clearly expresses the delegates’ concern with the level of funding. See, for example, Con.Con. Tr. 1981-86, 2152-59.

We conclude that as a result of the failure to adequately fund the Foundation Program, forcing an excessive reliance on permissive and voted levies, the State has failed to provide a system of quality public education granting to each student the equality of educational opportunity guaranteed under Art. X, § 1, Mont. Const. We specifically affirm that portion of the District Court’s conclusion of Law 17 which holds that the spending disparities among the State’s school districts translate into a denial of equality of educational opportunity. We hold that the 1985-86 system of funding public elementary and secondary schools in Montana is in violation of Article X, Section 1 of the Montana Constitution.

In analyzing school funding under an equal protection analysis pursuant to the provisions of Art. II, § 4, Mont. Const. the District Court concluded that education is a fundamental right and also made numerous and extensive findings of fact and adopted a number of conclusions of law. Because we have concluded that the school funding system is unconstitutional under Art. X, § 1, Mont. Const., we do not find it necessary to consider the equal protection issue. We therefore make no decision with regard to the findings of fact and conclusions of law relating to the equal protection of the law analysis of the District Court, and in particular do not rule upon the determination by the District Court that education is a fundamental right.

Several of the parties suggested that in the event we concluded the school funding was unconstitutional, we should spell out the percentages which are required on the part of the State under the Foundation Program and for the districts under the voted levy system. We are not able to reach that type of conclusion. As previously indicated, the 1985-86 school funding involved more than 20 different funds. The control of such funds is primarily in the Legislature. Our opinion is not directed at only one element of the system of funding public schools in Montana, as we recognize that the Legislature has the power to increase or reduce various parts of these elements, and in addition to add other elements for such funding.

While this opinion discusses spending disparities so far as pupils are concerned, we do not suggest that financial considerations of that type are the sole elements of a quality education or of equal educational opportunity. There are a number of additional factors which are a significant part of the education of each person in Montana, including but not limited to such elements as individual teachers, classroom size, support of the parents of students, and the desire and motivation on the part of the student which moves him or her to seek earnestly after an education. By not discussing these elements, we do not in any way suggest they are irrelevant, for the financing of education is only one aspect of equal educational opportunity. Our opinion is intentionally limited to the elements discussed in the opinion.

II

Should this Court clarify the District Court’s findings regarding the accreditation standards promulgated by the Montana Board of Public Education?

Under Art. X, § 9(3), Mont. Const., the Montana Board of Public Education (Board) has general supervisory power over the public school system. The Board has adopted statewide accreditation standards for elementary and secondary schools. Those standards require teachers to be certified by the State, limit teachers’ class loads, outline a minimum instructional program (for example, courses required for high school graduation), and establish minimum size, maintenance, and safety standards for school facilities. The Board argues that these standards establish the instructional component of a basic system of free quality public elementary and secondary schools. It objects to the District Court’s findings No. 262 and 270, which read as follows:

“262. The testimony of superintendents, teachers, and trustees clearly establish that from a professional educators’ perspective, the minimum Accreditation Standards in no way define a quality education.”

“270. In sum, the Montana School Accreditation Standards are minimum standards only, and do not provide the basis for defining quality education.”

The Board also objects to the last sentence of the court’s conclusion No. 18:

“18 . . . Thus, the Montana School Accreditation Standards do not define either the constitutional rights of students or the constitutional responsibilities of the State of Montana for funding its public elementary and secondary schools.”

The Board moved the District Court to amend the above findings, but the motion was deemed denied after 45 days had passed, under Rule 59)d), M.R.Civ.P. None of the parties disagree with finding No. 261 of the District Court that the accreditation standards establish a minimum upon which quality education can be built.

After reviewing the Board’s argument and the transcript, we conclude that the findings and conclusion in question should be amended as requested. We therefore hold that findings of fact 262 and 270 and conclusion of law 18 shall be amended to read as follows:

“[Finding of Fact 262.] The testimony of superintendents, teachers, and trustees clearly establishes that from the professional educators’ perspective, the minimum accreditation standards do not fully define a quality education.

“[Finding of Fact 270.] In sum, the Montana School Accreditation Standards are minimum standards upon which quality education must be built.

“[Conclusion of Law 18.] Thus, the Montana School Accreditation Standards do not fully define either the constitutional rights of students or the constitutional responsibilities of the State of Montana for funding its public elementary and secondary schools.

Ill

Did the District Court err in its findings and conclusions relating to consideration in the equalization process of federal “874” funding?

Public Law 81-874 (“874”) was enacted by the United States Congress in 1950. It provides federal payments to school districts which serve children who reside on or whose parents are employed on federal property, including Indian lands, or who have a parent on active duty in the military.

Hays-Lodge Pole asserts that, contrary to the District Court’s finding, Public Law 81-874 has as one of its purposes assisting with the special problems in Indian education and is not only a federal effort to replace lost tax revenue resulting from the federal presence. It argues also that the court’s finding that, in some districts, “874” funding has been used as tax relief is irrelevant and shows only the State’s neglect of the special needs of Indian children. It contends that “874” funding is closely tied to the need on and near Indian reservations for additional school funding because of the extraordinary educational difficulties present — language barriers, poverty, unemployment, and cultural differences. It maintains that any inequity present in “874” districts will vanish when the Montana funding system is equalized without consideration of “874” funding and that the history of neglect of Indian education justifies judicial protection of the benefits provided by “874” funding. Hays-Lodge Pole argues that the District Court erred in ruling that the Legislature may consider “874” funding in equalization.

This issue is resolved by the federal statutory requirement that the United States Secretary of Education must approve of Montana’s equalization plan before “874) funding may be taken into account. 20 U.S.C.A. § 240(d) (Supp.1988). The District Court recognized this requirement in its finding No. 235, and found that Montana’s system had not secured that federal approval. We specifically affirm the District Court’s Conclusion No. 20:

“20. A state may factor P.L. 81-874 revenue into its school finance equalization system only if the system meets the federal definition of an equalized program, subject to the determination of the Secretary of Education. [See Gwinn Area Community Schools v. State of Michigan, 741 F.2d 840 (6th Cir. 1984)] Montana presently does not and may not factor P.L. 81-874 revenue into the Foundation Program equalization formula, because Montana’s system does not meet the federal definition of an equalized program.”

Art. X, § 1(2), Mont. Const., states as follows with regard to our American Indians:

“The state recognizes the distinct and unique cultural heritage of the American Indians and is committed in its educational goals to the preservation of their cultural integrity.”

That provision establishes a special burden in Montana for the education of American Indian children which must be addressed as a part of the school funding issues. We do invite the attention of the Legislature and the executive branch to Montana’s failure to meet the federal equalization requirements. As a part of the changes to be made in Montana’s school funding system, it may be appropriate to meet the federal equalization requirements in order that “874” funding may be factored into the State’s equalization formula.

IV

Did the District Court err in denying plaintiffs’ attorney fees?

Plaintiffs argue that they are entitled to recover their reasonable attorney fees under the “common fund” doctrine. This Court has described that doctrine as one which:

“. . . provides that when a party through active litigation creates, reserves or increases a fund, others sharing in the fund must bear a portion of the litigation costs including reasonable attorney fees. The doctrine is employed to spread the cost of litigation among all beneficiaries so that the active beneficiary is not forced to bear the burden alone and the “stranger” (i.e., passive) beneficiaries do not receive their benefits at not cost to themselves.”

Means v. Montana Power Co. (Mont. 1981), [191 Mont. 395,] 625 P.2d 32, 37, 38 St.Rep. 351, 355-56. See also Serrano v. Priest (Cal. 1977), 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303, 1310-11.

The District Court concluded that the common fund doctrine did not apply in this case because no common fund was created from which attorney fees and expert witness fees could be paid. In a similar manner, under the “substantial benefit” concept which has grown out of the common fund doctrine, the District Court concluded that no substantial benefit had resulted from its opinion and that no such benefit would accrue unless the Legislature acts. We conclude that the District Court properly denied attorney fees. We affirm the District Court’s denial of plaintiffs’ request for attorney fees.

V

We approve the District Court’s rationale that “in order to provide the Legislature with the opportunity to search for and present an equitable system of school funding,” the holdings in this case should not become immediately effective. We modify the reservation of jurisdiction-by the District Court to provide that this Court specifically retains jurisdiction until July 1, 1989, and on that date the holdings of this opinion shall become fully in effect for all school terms commencing after that date.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY, GULBRANDSON, HUNT and McDONOUGH concur.

MR. JUSTICE SHEEHY,

concurring:

I concur emphatically with the foregoing opinion but wish to comment respecting the entitlement of plaintiffs to attorney fees.

We cite Serrano v. Priest (1977), 20 Cal.3d 25, 141 Cal.Rptr. 315, 569 P.2d 1303, 1310-1311, to the effect that the common fund theory and the substantial benefit theory do not at this time present a basis for attorney fees. Not to be forgotten, however, is that in Serrano, the court awarded the plaintiffs attorney fees on the “private attorney general” theory. If, as we all hope, because of the efforts of the plaintiffs an equitable funding of education is eventually established, all of the requisites for an award of attorney fees on the private attorney general theory would be present in my view.

SUPPLEMENT TO AND AMENDMENT OP OPINION

The Court’s opinion in this matter was issued on February 1, 1989. Helena Elementary School Dist. v. State (Mont. 1989), [236 Mont. 44,] 769 P.2d 684, 46 St.Rep. 169. We concluded that the holdings should not become immediately effective in order to provide the Legislature with the opportunity to enact an equitable system of school financing. This Court specifically retained jurisdiction. While the Opinion was published at the Court’s request, remittitur did not issue.

The Montana Legislature was unable to enact a new law with regard to school funding during the regular 1989 session. A special session was required. On June 30 and July 17, 1989, this Court issued Orders delaying the effective date of the ruling of unconstitutionality and specifically advised that remittitur shall not issue until the specific Order of this Court. Extensive legislation with regard to the funding of Montana public schools was subsequently enacted by the Legislature and approved by the Governor.

Pursuant to the Orders of this Court, the State of Montana and the plaintiff School Districts, by motion or petition, requested clarification and modification of the Court’s February 1, 1989, Opinion. The Court has now considered the petitions, briefs, and memoranda, and the oral arguments of the parties. All parties point out that a delay in the effective date of the Opinion is appropriate because of the time necessary in which to implement the provisions of the 1989 laws, and the additional time needed in order to determine whether or not the changes meet the constitutional requirements of our February 1, 1989, Opinion. All parties have agreed that changes in capital funding budgets and other school budgets will not be presented and voted upon until the 1991 Legislative Session. We conclude that the Court possesses the equitable power to postpone the effect of its opinion to allow the legislature and the governor’s office time to implement a satisfactory system of school funding in this State. See, Lee v. State (1981), 195 Mont. 1, 10-11, 635 P.2d 1282, 1287; cert. denied, 456 U.S. 1006 (1982).

We conclude that Section V of our February 1, 1989, Opinion should be withdrawn in its entirety, such Section V stating as follows:

“V

“We approve the District Court’s rationale that ‘in order to provide the Legislature with the opportunity to search for and present an equitable system of school financing,’ the holdings in this case should not become immediately effective. We modify the reservation of jurisdiction by the District Court to provide that this Court specifically retains jurisdiction until July 1, 1989, and on that date the holdings of this opinion shall become fully in effect for all school terms commencing after that date.”

We add the following in place of the withdrawn Section V of our February 1, 1989, Opinion:

The effective date of our February 1, 1989, Opinion, as supplemented and amended herein, is hereby delayed until July 1, 1991, and on that date the holdings of this Opinion shall become fully in effect for all purposes. We hold that our February 1, 1989, Opinion as herein supplemented and amended, and including its determinations of unconstitutionality, shall not in any way affect the validity of any bond, warrant, indenture, security, or other obligation issued and negotiated for purposes authorized by law by the State of Montana, any county, or any school district prior to July 1, 1991, or use of the proceeds thereof, and further hold that this Opinion shall not have any effect upon the operations of the public schools in the State of Montana prior to July 1, 1991.

We decline to retain jurisdiction in this matter. The legislative changes in 1989 and 1991 will require new and different proof on the part of any parties challenging the same. We conclude that should such action be necessary, it can be presented in a new and separate court action.

The District Court in this cause made extensive findings of fact and conclusions which have not been specifically referred to or adopted by this Court. In order that there be no misunderstanding, we specifically hold that the findings and conclusions of law of this case are limited to those findings of fact and conclusions specifically adopted and contained in the February 1, 1989, Opinion, as herein supplemented and amended.

This Court no longer retains jurisdiction of this cause and the Clerk of this Court is hereby directed to immediately issue remitittur.

DATED this 4th day of January, 1990.

s/Fred J. Weber, Justice

s/J.A. Turnage, Chief Justice

s/John Conway Harrison, Justice

s/R.C. McDonough, Justice

s/William E. Hunt, Sr., Justice

s/Diane G. Barz, Justice

s/John C. Sheehy, Justice


source: Caselaw Access Project

author: MR. JUSTICE HUNT

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. GORDON THIEL, Defendant and Appellant.
    No. 88-43.
    Submitted on Briefs Nov. 17, 1988.
    Decided Feb. 3, 1989.
    768 P.2d 343.
    Ira Eakin, Billings, for defendant and appellant.
    Marc Racicot, Atty. Gen., Kathy Seeley, Asst. Atty. Gen., Helena, Victor G. Koch, County Atty., Phillip N. Carter, Deputy County Atty., Sidney, for plaintiff and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Gordon Thiel appeals from the judgment of the District Court, Seventh Judicial District, County of Richland. We affirm in part and reverse in part the District Court’s judgment.

Two issues are presented for our consideration:

1. Whether fundamental fairness requires that we dismiss Counts I through XXIV;

2. Whether Thiel’s constitutional rights were violated by the District Court’s refusal to allow him to examine the file of the assigned social worker.

We agree with Thiel’s position on issue one and reverse the District Court’s judgment with regard to Counts I through XXIV and dismiss those counts. We affirm the convictions on Counts XXV and XXVI.

This case commenced in 1983. At that time, Thiel was charged with two counts of sexual intercourse without consent against his stepdaughter, J.P. Plea negotiations with the county attorney ensued. The parties agreed that Thiel’s participation in a sexual offender’s treatment program would be a condition of the plea agreement. Therefore, Thiel, before entering his plea, was evaluated by a psychologist to determine whether he was amenable to treatment. During the evaluation Thiel admitted to additional instances of sexual misconduct, including the abuse of J.P.’s sibling, T.P., several times from 1980 through 1983. This information was transmitted to the county attorney and defense counsel during the course of plea, negotiations. A seven year suspended sentence was agreed upon rather than a two or three year deferred sentence as was initially discussed. The record shows that the increase in the sentence recommendation was a direct result of the new information. In May, 1984, Thiel entered into a written plea agreement with the State. Pursuant to the agreement, Thiel pleaded guilty to two counts of sexual assault against J.P. and received a seven year suspended sentence.

Later in July or August, 1984, Thiel had contact with T.P. and sexually assaulted her. She did not report the assault at the time. In February or March, 1985, the Thiel family reunited but in fall of that year T.P. moved out. Thiel assaulted J.P. sometime in early 1986. The assault was not reported until October, 1986. When both J.P. and T.P. were interviewed by authorities, T.P. reported the 1984 assault and the numerous incidents occurring from 1980 to 1983 to which Thiel had already admitted during his psychological evaluation.

In November, 1986, Thiel was charged with 26 counts of sexual intercourse without consent. Counts I through XXIV were based upon Thiel’s numerous assaults against T.P. that occurred from 1981 through 1983. Count XXV was based on the 1984 assault against T.P. and Count XXVI was based on the 1986 assault against J.P. Before trial and prior to voir dire Thiel moved to dismiss the first 24 counts, arguing they had been the subject of the earlier plea bargain agreement. The District Court denied the motion. After the State rested its case, Thiel renewed the motion to dismiss. The court took the motion under advisement. Thiel was convicted on all counts with his motion unresolved. An evidentiary hearing on Thiel’s motion was then held, after which the court issued findings of fact, conclusions of law, and an order denying the motion. The court sentenced Thiel to 20 years with all but 30 days suspended on each of Counts I through XXIV and, on Counts XXV and XXVI, the court sentenced Thiel to ten years each. It is from this conviction Thiel appeals.

Thiel first contends that the State is barred from prosecuting Counts I through XXIV because these offenses were included in the scope of the 1984 plea agreement. He argues that it is fundamentally unfair to prosecute him for offenses that were revealed and considered during plea negotiations and sentencing for the previous charges. We agree.

The facts of this case demonstrate that Thiel’s admission to a treatment program was a prerequisite to the 1984 plea bargain with the State. In order to be accepted into such a program, Thiel was required to undergo an evaluation of his amenability to treatment. An indication of his amenability was his willingness to admit his past behavior. Unless the evaluator believed that he had admitted all of his offenses, Thiel would not be accepted to the program. If rejected by the program, plea negotiations would cease, and Thiel would face a prison sentence or fine. Hence, in order to ensure the continuance of negotiations, Thiel waived his right to remain silent and underwent the evaluation.

During the evaluation, Thiel revealed several additional sexual offenses, including the assaults on T.P. This information was communicated to the county attorney as well as counsel for the defense. As a result, the sentence agreed upon by Thiel and the county attorney was set at seven years suspended rather than two or three years deferred as originally discussed. At the sentencing hearing, the State introduced copies of the psychological evaluation and a letter from the psychologist to the social worker in charge of the Thiel family case. These two documents contained references to oifenses to which Thiel admitted during the evaluation.

Thiel had few options other than to sacrifice his right to remain silent and reveal his entire past. His revelations were used to increase his sentence. Fundamental fairness forbids the State from now prosecuting him for oifenses for which he has essentially already been punished. We therefore reverse the District Court’s judgment with regard to Counts I through XXIV and dismiss those counts.

Next, Thiel attacks the validity of his conviction on Counts XXV and XXVI, claiming he was denied a fair trial because he was not allowed to review the contents of the assigned social worker’s file. Thiel argues that the District Court violated his constitutional right to confront the witnesses against him when it refused to allow him to examine the entire file.

Section 41-3-205, MCA, governs this issue and reads in pertinent part as follows:

“(1) The case records of the department of social and rehabilitation services, the department of family services and its local affiliate, the county welfare department, the county attorney, and the court concerning actions taken under this chapter and all records concerning reports of child abuse and neglect shall be kept confidential except as provided by this section. Any person who permits or encourages the unauthorized dissemination of their contents is guilty of a misdemeanor.

“(2) Records may be disclosed to a court for in camera inspection if relevant to an issue before it. The court may permit public disclosure if it finds such disclosure to be necessary for the fair resolution of an issue before it.”

The constitutionality of § 41-3-205, MCA, has not directly been determined by this Court. The United States Supreme Court, however, examined a similar statute in Pennsylvania v. Ritchie (1987), 480 U.S. 39, 107 S.Ct. 989, 94 L.Ed.2d 40. The Court concluded that the defendant’s right to confront his accusers was not violated by a Pennsylvania statute requiring that child abuse investigative files be kept confidential. The Court stated that as long as the defendant was not prevented from cross-examining the victim, his right to confront witnesses was not violated. Ritchie, 480 U.S. at 54, 107 S.Ct. at 1000.

Thiel was given wide latitude at trial to cross-examine all witnesses against him. We agree with the position of the Court in Ritchie and hold that Montana’s child abuse confidentiality statute as it applies to file review does not violate a defendant’s right to confront his accusers.

Thiel also hints that disclosure of the full file is compulsory according to law because it may contain exculpatory evidence. This, too, was considered by the United States Supreme Court in Ritchie. The Court concluded that as long as the statute allowed the trial court to review the case worker’s files in camera and to release material information from the file to the accused, the defendant’s interest in ensuring a fair trial was fully protected. Ritchie, 480 U.S. at 60, 107 S.Ct. at 1003.

The Court expressed the policy underlying this procedure:

“To allow full disclosure to defense counsel in this type of case would sacrifice unnecessarily the Commonwealth’s compelling interest in protecting its child abuse information. If the CYS records were made available to defendants, even through counsel, it could have a seriously adverse effect on Pennsylvania’s efforts to uncover and treat abuse. Child abuse is one of the most difficult crimes to detect and prosecute, in large part because there often are no witnesses except the victim. A child’s feelings of vulnerability and guilt, and his or her unwillingness to come forward are particularly acute when the abuser is a parent. It therefore is essential that the child have a state-designated person to whom he may turn, and to do so with the assurance of confidentiality. Relatives and neighbors who suspect abuse also will be more willing to come forward if they know that their identities will be protected. Recognizing this, the Commonwealth — like all other States — has made a commendable effort to assure victims and witnesses that they may speak to the CYS counselors without fear or general disclosure. The Commonwealth’s purpose would be frustrated if this confidential material had to be disclosed upon demand to a defendant charged with criminal child abuse, simply because a trial court may not recognize exculpatory evidence. Neither precedent nor common sense requires such a result.”

Ritchie, 480 U.S. at 60-61, 107 S.Ct. at 1003-04.

At trial, the District Court twice examined in camera the social worker’s file. As does the highest court in the land, so do we think that the appellant’s rights were fully protected by the District Court’s in camera study of the social worker’s file. We affirm on this issue.

We affirm Thiel’s conviction on Counts XXV and XXVI, reverse the judgment on Counts I through XXIV, and remand for proceedings in accordance with this opinion.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, SHEEHY and WEBER and the HON. A.B. MARTIN, District Judge, sitting for MR. JUSTICE GULBRANDSON and the HON. PETER L. RAPKOCH, District Judge, sitting for MR. JUSTICE McDonough concur.


text:
    JOHN F. RAMAGE and Andrew E. Wilson, Petitioners and Appellants, v. DEPARTMENT OF REVENUE of the State of Montana, Respondent and Respondent. ROSALIE WOODHALL, Petitioner and Appellant, v. DEPARTMENT OF REVENUE of the State of Montana, Respondent and Respondent.
    Nos. 88-220, 88-119.
    Submitted on Briefs Oct. 6, 1988.
    Decided Feb. 3, 1989.
    768 P.2d 864.

      Terry L. Seiffert, Billings, for Rosalie Woodhall.
    Curtis E. Larsen, Jackson, Murdo, Grant & Larsen, Helena, for John F. Ramage & Andrew E. Wilson.
    Paul Van Tricht, Helena, for respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Appellants in this consolidated action appeal from District Court orders upholding the denial of their applications for original all-alcoholic beverage licenses by the Department of Revenue of the State of Montana (DOR). We affirm.

Appellants Ramage and Wilson and appellant Woodhall raise the following issue for review:

1) Did the respective District Courts err in finding that substantial credible evidence supported DOR’s denial of their applications for liquor licenses?

Ramage and Wilson present two additional issues for our consideration:

2) In the processing of an application for a liquor license, when must DOR’s investigation of the applicant and the proposed premises be completed?

3) Does DOR have independent authority to weigh the evidence pertaining to public convenience and necessity when no protests from the public regarding the issuance of a liquor license are filed with the agency?

. On March 14, 1985, John F. Ramage and Andrew E. Wilson filed an application with DOR for a Yellowstone County quota area liquor license. Ramage and Wilson proposed to use the license for a bar called The Hanger that they planned to construct on the 8400 block of Grand Avenue, a little more than 5 miles outside the city limits of Billings. In April, 1985, in response to DOR’s request for evidence in support of public convenience and necessity, Ramage and Wilson submitted petitions signed by approximately 100 Billings area residents. The petitioners asserted their belief that the public need called for a new cocktail lounge and dance club at the proposed location of The Hanger.

Thereafter, DOR published notice of the application in the Billings Gazette. The notice, among other things, invited interested persons to file written protests against the issuance of the license. No protests were filed with DOR.

Ramage and Wilson proceeded with the remodeling of the proposed premises. Before the work was completed, however, fire destroyed the structure. The cause of the fire was unknown. After the fire, Ramage and Wilson commenced reconstruction of the building.

Meanwhile, in July, 1985, DOR received two more applications for Yellowstone County liquor licenses for establishments to be located on the 8400 block of Grand Avenue. One application was from appellant Rosalie Woodhall. Woodhall desired the license for the operation of a proposed bar called R & R Store and Lounge.

On October 18, 1985, the city of Billings annexed the area surrounding the proposed taverns. The annexation resulted in the incorporation of the sites of the proposed bars into the Billings city limits and the city liquor license quota area.

Prior to the annexation, on October 1, 1985, DOR’s License Bureau Chief issued notices to all three applicants, informing them that their applications were denied because issuance of liquor licenses for their proposed premises was not justified by public convenience and necessity. Each notice stated:

“The location of your proposed premises is in close proximity to three existing establishments licensed for the sale and service of all alcoholic beverages for consumption on the premises. The service area surrounding the proposed premises for licensing is sparsely populated and the demand for all-beverages sale and consumption does not warrant the issuance of additional all-beverage licenses at this time.”

All three applicants requested a hearing on the decision. After the hearings, the hearing examiner issued proposed findings of fact, conclusions of law and orders, denying all three applications. Appellant Woodhall and appellants Ramage and Wilson filed exceptions to the proposed orders. Oral arguments were held before the Director of DOR.

In the fall of 1986, the Director issued the final department decisions, modifying and adopting the hearing examiner’s proposed orders. The Director denied the applications because the proposed bars were not justified by public convenience and necessity and the proposed premises were inside the Billings quota area which was full.

Ramage and Wilson filed a petition for judicial review with the First Judicial District Court, Lewis and Clark County. The District Court denied the petition and affirmed DOR’s final decision.

Woodhall filed a petition for judicial review with the Thirteenth Judicial District Court, Yellowstone County. On December 12, 1986, the District Court remanded the petition for a redetermination of the public convenience and necessity issue. On April 13, 1987, the hearing examiner entered supplemental findings of fact, conclusions of law and proposed order. The hearing examiner concluded that Woodhall’s proposed R & R Store and Lounge failed to meet the statutory requirements for public convenience and necessity.

Woodhall filed exceptions to the proposed order but did not request oral argument. On July 13, 1987, the Director rejected Wood-hall’s exceptions and adopted the hearing examiner’s supplemental findings, conclusions and order.

Woodhall again submitted the case to the Yellowstone County District Court. The District Court affirmed the Department’s final decision.

Woodhall filed an appeal of the District Court order, as did Ramage and Wilson. Upon motion by DOR, the appeals were consolidated into one action.

Both District Courts upheld DOR’s denial of the appellants’ liquor license applications on the grounds that the issuance of such licenses would not be justified by public convenience and necessity. Appellants argue that their respective District Courts erred in finding that DOR’s denial was supported by substantial credible evidence.

The Montana legislature has delegated the administration of the Montana Alcoholic Beverage Code, §§ 16-1-101 through 16-1-411, MCA, to DOR. Section 16-1-301, MCA. DOR’s powers include the ability to issue liquor licenses. Section 16-1-302(8), MCA. DOR may issue a license to any person it approves as fit and proper to sell alcoholic beverages, as long as the number of licenses do not exceed quota limitations. Section 16-4-201, MCA. In addition, DOR must find that the issuance of such license is justified by public convenience and necessity. Section 16-4-203, MCA.

Public convenience and necessity is not defined in the statute books. Nor can a precise definition of the phrase be found in agency regulations. This Court has acknowledged the difficulties inherent in defining the term. In Baker Sales Barn, Inc. v. Montana Livestock Commission (1962), 140 Mont. 1, 12, 367 P.2d 775, 781, we recognized that whether an application is justified by public convenience and necessity depends on the facts of each case. Because the determination of public convenience and necessity involves such a fact-intensive inquiry, it is not necessary that DOR adopt rigid rules defining the term. “[T]he choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency.” NLRB v. Bell Aerospace Co. (1974), 416 U.S. 267, 293, 94 S.Ct. 1757, 1771, 40 L.Ed.2d 134, 153 (quoting SEC v. Chenery Corp. (1947), 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995, 2002). DOR’s use of the adjudicative process to determine whether applications for liquor licenses are warranted by public convenience and necessity is not, as and Wilson argue, an invalid exercise of rulemaking authority.

Ramage and Wilson also argue that DOR is left completely unguided by its failure to adopt rules precisely defining public convenience and necessity. This is not so. In previous administrative decisions, DOR established standards for use in public convenience and necessity determinations. In the VFW Case (1986), DOR No. 85-P-011, 10, the Director delineated these guidelines when he quoted favorably from a prior proposed order:

“[P]ublic convenience and necessity are advanced where the issuance of the license will materially promote the public’s ability to engage in the licensed activity. This determination involves an evaluation of a variety of criteria, including inter alia the business abilities and character of the applicant, the demand for services in the area to be served, the impact on existing purveyors, and any adverse impact on the area to be served. No single factor is a necessary or sufficient indicator of public convenience and necessity . . .”

Because DOR has established criteria to guide its determinations of public convenience and necessity, we need not fear arbitrary decisions subject only to the whim of the agency.

The District Courts did not err in concluding that the findings of fact made by the hearing examiner and adopted by the Director were supported by substantial credible evidence. At both hearings, DOR submitted evidence through its investigators Willems and St. John. The investigators’ testimony indicated that the proposed sites were located in rural, sparsely populated regions. Further testimony and documentary evidence established that in October, 1985, three bars already served the area surrounding the sites of appellants’ proposed premises. In addition, the records showed that since 1980 at least four bars located in the same area as the appellants’ establishments that had been originally licensed under the Yellowstone County quota area were later annexed into the city quota area. After the annexation, the licenses of these four bars were transferred to more populous areas of the city.

Judicial review of an administrative agency’s factual findings is quite narrow. A court reviewing an agency action may not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact. Section 2-4-704(2), MCA. Findings of fact will be upheld unless clearly erroneous. Facts supported by substantial credible evidence in the record are not clearly erroneous. Section 2-4-704(2) (e), MCA, construed in Billings v. Billings Firefighters Lo cal No. 521 (1982), 200 Mont. 421, 431, 651 P.2d 627, 632. The testimony and documents introduced through inspectors Willems and St. John constitute substantial credible evidence that supports DOR’s findings of fact.

Whether the substantial credible evidence established by DOR demonstrates that the issuance of liquor licenses to the appellants was not justified by public convenience and necessity is a question of law. Judicial review of legal questions is much broader than judicial review of factual issues. We will not hesitate to overturn an agency’s legal conclusion that is characterized by an abuse of discretion. Section 2-4-704(2) (f), MCA.

The records demonstrate a sparse population, the existence of other bars in the immediate area and a history of license transfers from outlying regions to the inner city. These facts indicate a lack of public demand for additional taverns in the area. Without a showing of public demand, public convenience and necessity cannot be justified. DOR’s conclusion that issuance of liquor licenses to the appellants was not warranted by public convenience and necessity was not therefore an abuse of discretion. The District Courts did not err in upholding the agency’s decision to deny the applications.

Ramage and Wilson contend that DOR abused its discretion and exceeded its statutory authority by failing to make an investigation and determination of their qualifications within 30 days of receipt of their completed application. They argue that DOR therefore is precluded from denying their application.

Montana law requires DOR to thoroughly investigate a liquor license applicant as well as the premises of the proposed bar. Section 16-4-402(2), MCA, provides:

“Upon receipt of a completed application for a license under this code, accompanied by the necessary license fee or letter of credit as provided in 16-4-501(7) (f), the department shall within 30 days make a thorough investigation of all matters pertaining thereto and shall determine whether such applicant is qualified to receive a license and his premises are suitable for the carrying on of the business and whether the requirements of this code and the rules promulgated by the department are met and complied with.”

Ramage and Wilson argue that DOR failed to comply with § 16-4-402(2), MCA, because it failed to conduct a final investigation within 30 days after the paperwork for their application had been submitted. We do not agree. Section 16-4-402(2), MCA, requires DOR to determine both that the applicant is qualified to receive a license and that the premises are suitable for carrying on the business of selling alcohol. In addition, agency regulations mandate that, before a determination of suitability can be made, a health and safety inspection of the proposed establishment must be conducted. Section 42.12.122, ARM. Such an inspection cannot take place before construction of the building is completed. Therefore, the 30-day investigative period required by § 16-4-402(2), MCA, does not begin to run until the applicant has submitted all the required paperwork and the proposed establishment has been constructed.

In the present case, Ramage and Wilson submitted the paperwork required for application in April, 1985. However, as of October 1, 1985, the date upon which the application was denied, the building proposed to house The Hanger had not been completed. Hence, DOR did not abuse its discretion by failing to issue or deny the application 30 days after the paperwork had been submitted because the proposed establishment had not been constructed by that time.

Ramage and Wilson next argue that once they submitted evidence in support of a showing of public convenience and necessity and no public protests were received, DOR was required to automatically approve their application. They maintain that DOR has no independent authority to weigh the evidence pertaining to public convenience and necessity when no protests from the public regarding the issuance of a license are filed with the department.

This argument is totally without merit. As noted previously, the legislature has delegated to DOR the power to issue liquor licenses. Section 16-1-302(8), MCA. Before a license may be issued, DOR must determine that its issuance is justified by public convenience and necessity. Section 16-4-203, MCA. In order to make this determination, DOR must independently weigh the evidence submitted by the applicants. The lack of public protest does not extinguish this duty.

Ramage and Wilson also argue that the time for determining the quota area for a liquor license application is the date is the application submitted, not the date the application is approved or denied. Because we hold that the District Courts did not err in upholding DOR’s decisions to deny the applications on the basis of public convenience and necessity, we need not examine this issue.

We affirm the District Courts.

MR. JUSTICES HARRISON, SHEEHY, McDONOUGH and GULBRANDSON concur.


author: MR. CHIEF JUSTICE TURNAGE

text:
    In re the MARRIAGE OF JOHN RANDOLPH EKLUND, Petitioner and Respondent, and JANET DENISE EKLUND, Respondent and Appellant.
    No. 88-320.
    Submitted on Briefs Jan. 5, 1989.
    Decided Feb. 3, 1989.
    768 P.2d 340.

      Janet Denise Eklund, Billings, pro se.
    Andrew Patten, Patten Law Firm, Billings, for petitioner and respondent.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Janet Eklund (wife) appears pro se appealing the dissolution decree entered by the Thirteenth Judicial District, Yellowstone County, apportioning the marital estate.

Wife raises three issues on appeal.

Did the District Court err by?

(1) denying wife’s motion to remove the judge for cause;

(2) setting over $60,000 of the marital estate to husband as a traceable gift from his parents;

(3) failing to compensate her for her contribution to the family home.

We affirm.

Janet and John Randolf Eklund (husband) lived together for three years before marrying in the spring of 1982. They were married for four years when husband filed for dissolution in July 1986. One child was born as issue of this union. The parties reached a satisfactory custody and support agreement adopted by the District Court which met all code provisions and child support guidelines. The equities of that agreement were not disputed at trial and are not at issue on appeal.

On the January 4, 1988, opening day of trial, wife’s attorney verbally moved for the district judge to remove himself for cause based on an off-the-record comment by the judge some three weeks earlier that the judge was acquainted with husband’s parents some thirteen years earlier. Wife’s motion was denied. We agree.

To remove a judge for cause, counsel must follow the procedure outlined in § 3-1-805, MCA, which provides generally that an affidavit alleging facts showing the judge’s personal bias or prejudice must be filed thirty days in advance of trial. Once this affidavit and its accompanying certificate of good faith made by counsel of record are filed, the judge shall have no more power to preside over the case, and the matter is referred to this Court. Upon that referral, the Chief Justice assigns another district judge to hear the disqualification proceeding.

None of that occurred in this case. Arguably, wife’s counsel never could have made the thirty-day deadline in this case since the alleged comment evidencing personal bias only came out three weeks prior to the scheduled hearing date. However, counsel’s failure to act immediately upon that and failure to file the counsel’s certificate of good faith is conspicuous. It appears that counsel was either trying to stall for time or to make an end run around the outlined statutory procedure — neither of which is acceptable. This motion was properly denied.

Wife next contends that it was error to set aside $60,000 of the marital estate to husband. The $60,000 was equity in the family home. We disagree.

The home was purchased by husband with funds borrowed from his parents, William and Doris Eklund, and evidenced by a promissory note. The note named only the husband as obligor and named both parents as payees. Each year for three years the parents gave husband $20,000 in gift money as evidenced by forgiveness of debt. Each year, parents wrote husband a letter noting that $20,000 of his debt had been relieved. The promissory note and letters were received in evidence at the dissolution hearing.

Parents testified at trial that although some of these letters were addressed to both husband and wife, their donative intent was only to make a gift to husband. Each parent testified that they wanted to make a separate $10,000 gift to their son each year as the maximum gift they could give without incurring tax liability, pursuant to the estate planning advice they had received. Each parent testified making similar gifts to their other children, also pursuant to their estate planning.

The District Court set aside $60,000 of the marital estate evidenced by equity in the family home to husband and made a finding that it was a traceable gift from his parents. The finding is not clearly erroneous. Based on this evidence, we find no abuse of discretion by the trial court.

Wife next contends that the Court did not adequately consider her contribution to the family home and compensate her for the same. We disagree, although at first blush the distribution of the marital estate appears unbalanced.

Wife received $5,948 of the marital assets and a cash award of $6,000, payable in thirty days. Husband received an award from the marital estate of $70,335 less the $6,000 cash payment to wife. The following calculations were considered by the District Court:

Husband: Wife:

70.335 net marital estate 5,948 net marital estate

-60,000 gift from parents +6,000 cash award

10.335

- 6,000 cash payment to wife

$4,335 total $11,948 total

It is well established that division of the marital estate need only be equitable under the circumstances of each case and need not be exactly equal. In re the Marriage of Jacobson (1979), 183 Mont. 517, 600 P.2d 1183.

The District Court took extensive testimony regarding the occupation of husband, of wife and of the condition of the family home, which they were jointly improving. Wife estimated the value of their home improvements at $10,000 and testified that the supplies used in the improvements were purchased with joint funds.

However, on cross-examination, wife admitted that this estimate was speculation because she did not purchase any of the materials, was not aware of their price, and had no background in real estate or appraisals. Husband testified that wife did one-third of the actual labor and estimated the value of their labor at far less than the wife.

We do not find this distribution to be inequitable in this case, when any alternative award for contribution to the home would be purely speculative. It is evident from the court’s findings of fact that the trial judge considered the wife’s labors in the home improvement when he distributed assets of $5,948 to her and a cash award of $6,000. The court made specific findings as to wife’s contribution in Finding VII where the court noted the improvements to the home and made a finding that wife’s contribution to the project was twenty hours of labor. This contribution has been compensated. Wife fails to convince us that it was error by trial court not to award her $10,000 for her contribution to the home improvements.

Wife had a heavy burden on this appeal. She needed to show that the findings of the judge were clearly erroneous as to each issue raised, and thus an abuse of the judge’s discretion based on the evidence of this case. In re the Marriage of Stewart (Mont. 1988), [232 Mont. 40,] 757 P.2d 765, 45 St.Rep. 850. Wife did not carry that burden, demonstrated by the foregoing evidence.

Judgment affirmed.

MR. JUSTICES WEBER, SHEEHY, GULBRANDSON and Mc-DONOUGH concur.


author: MR. JUSTICE McDONOUGH

text:
    MONTE D. LORENZ, Plaintiff and Appellant, v. The ESTATE OF LESLIE SCHILLING, Deceased, Defendant and Respondent.
    No. 88-394.
    Submitted on Briefs Dec. 16, 1988.
    Decided Feb. 7, 1989.
    768 P.2d 869

      Kathleen M. Fritsch, Glendive, for plaintiff and appellant.
    Peter 0. Maltese, Sidney, for defendant and respondent.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal involves a dispute over the condition of farm land owned by the defendant and leased by the plaintiff. Plaintiff Monte D. Lorenz appeals from the judgment of the District Court of the Seventh Judicial District, Richland County, entered after trial of the case to the court. The court ruled that Lorenz take nothing by his complaint, which the court then dismissed with prejudice. We affirm.

Lorenz frames four issues on appeal:

1. Whether Mr. Schilling had a duty to disclose his use of Tordon on the fields.

2. Whether Mr. Lorenz proved by a preponderance of the evidence that there was a breach of the duty to disclose by Mr. Schilling.

3. Whether the court’s decision was a result of passion rather than law.

4. Whether the court erred by finding Mr. Lorenz negligent for failing to test the soil for Tordon.

In November of 1983, Lorenz contacted Leslie and Terry Schilling about leasing certain farm land owned by the Schillings. The parties met to negotiate the lease, but the content of those negotiations was disputed at trial.

Both sides agree that Lorenz indicated he wished to raise sugar beets on the land during the coming year. According to the depositions of both Leslie and Terry Schilling, and Terry Schilling’s testimony at trial, Leslie Schilling indicated to Lorenz during these initial negotiations that the herbicide Tordon had been applied, to some of the land in question. According to the Schillings, it was suggested to Lorenz that he inquire as to the suitability of the Tordontreated land for raising sugar beets. Lorenz allegedly replied that he could raise sugar beets on the land as long as “Clean” — another particular brand of herbicide — had not been applied. Lorenz denies that the Schillings ever told him about the Tordon application.

After these negotiations had taken place, Lorenz obtained a Farmers’ Home Administration land lease form. In January of 1984, the parties again met, filled in the blanks of the lease form to reflect the terms they had reached earlier, and executed the lease. No mention was made of the subject of this controversy.

In the spring, Lorenz had the soil on the leased acreage tested to determine what fertilizers should be used. He then planted sugar beets in three of the fields he had leased, including two fields that had been treated with Tordon. By May, the beets in the two treated fields showed severe damage, and were replanted. In late June, the replanted fields again showed damage. Lorenz consulted with a field representative from Holly Sugar, who told him that the condition of the fields was consistent with Tordon damage. No production was had from the treated fields for that crop year. The lease was later terminated by agreement of the parties.

Lorenz filed this action in September of 1984, alleging fraudulent misrepresentation on the Schillings’ part in failing to disclose the Tordon application. After discovery and trial, the District Court issued its ruling denying any relief to Lorenz. This appeal followed.

While counsel for Lorenz frames four issues in her brief on appeal, it is not necessary for us to examine each issue separately. Both sides agree that Leslie Schilling had a duty to disclose his application of Tordon to the fields in question. The next two issues, whether Lorenz proved his case by a preponderance of the evidence and whether the court was motivated by passion rather than law, can be rephrased as a single question. Did the District Court err in finding that Schilling disclosed the Tordon application during the lease negotiations?

When reviewing a civil case tried to a court sitting without a jury, this Court will not substitute its judgment for that of the District Court functioning as trier of fact. Even when there is a conflict in the evidence, we will uphold the court’s decision where there is substantial credible evidence to support its findings of fact and conclusions of law. Eliason v. Wallace (1984), 209 Mont. 358, 680 P.2d 573.

The record shows that Lorenz, Leslie Schilling and Terry Schilling were present when the lease was negotiated. Leslie Schilling is now deceased, but testified in deposition prior to his death that he disclosed his use of Tordon to Lorenz, and suggested that Lorenz investigate the herbicide’s possible effects on sugar beets. Terry Schilling testified in deposition and at trial that her husband had indeed made that disclosure and suggestion. Over against this evidence was testimony by Lorenz that no such disclosure had been made.

The deposition testimony of Leslie Schilling, corroborated by his wife at .trial, is “substantial” in that it would convince a reasonable person that the disclosure took place. See, Eliason, 680 P.2d at 575. Counsel for Lorenz has questioned the credibility of this testimony by seeking to point out inconsistencies or lack of memory on the Schillings’ part. However, there is also evidence of a lack of motivation for the Schillings to lie to Lorenz. The terms of the lease called for payment to the Schillings based on a share of the crop harvested from their land. As Leslie Schilling pointed out in his deposition, failure of Lorenz’s crop would mean that the Schillings would not be paid.

We conclude that there is substantial, credible evidence in the record to support the District Court’s finding that Leslie Schilling disclosed his use of Tordon to Lorenz. Lorenz’s claim of fraudulent misrepresentation therefore fails.

The fourth issue presented, that the court erred in finding Lorenz negligent in failing to have necessary soil tests performed, is at best an instance of harmless error. Counsel is correct in that the issue of Lorenz’s negligence was not properly before the court. However, the court’s statement was made in the context of its holding that the damage to the beet crop did not result from misrepresentation on the Schillings’ part. No damages were awarded nor other penalty imposed.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES GULBRANDSON, SHEEHY and WEBER concur.


author: MR. JUSTICE HARRISON

text:
    EUGENE J. HONEY, Claimant and Appellant, v. STOLTZE LAND AND LUMBER COMPANY, Employer and Respondent, and Stoltze Land and Lumber Company, Defendant and Respondent.
    No. 88-492.
    Submitted on Briefs Dec. 16, 1988.
    Decided Feb. 7, 1989.
    769 P.2d 42.
    John G. Bell, Bell, Corn & Bell, P.C., Hamilton, for appellant.
    Alan L. Joscelyn, Gough, Shanahan, Johnson & Waterman, Helena, for respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This appeal arises from the decision of the Workers’ Compensation Court limiting claimant’s attorney’s fees to the contingent fee agreement without considering the time records and affidavit of his counsel. We reverse and remand for an evidentiary hearing.

On February 10, 1984, Eugene Honey sustained a compensable injury. By order dated July 29, 1988, the Workers’ Compensation Court determined claimant was entitled to 50 weeks of permanent partial disability benefits at the rate of $138.50 per week for a sum total of $6,925. The order further stated:

“4. Claimant is entitled to attorney fees and costs. Because the injury occurred in 1984, the contingency fee is the appropriate means of computing claimant’s entitlement. The standard agreement approved by the Division of Workers’ Compensation for cases being resolved by this Court allows for an award of 33 percent of the benefits received as a result of the attorney’s effort. Therefore, in the case at bar, claimant is entitled to attorney fees of 33 percent of $6,925.00 or $2,208.79 [sic], subject to the terms set forth in the Judgment number three.”

Continuing a review of the order, paragraph number 3. stated:

“3. Claimant is entitled to an award of attorney fees and reasonable costs pursuant to Section 39-71-612, MCA. The attorney for the claimant shall serve this Court and opposing counsel no later than 20 days from the date of this Order a statement of the hours he or she compiled in pursuing this matter, the costs incurred, a statement of the attorney’s customary and current hourly fee and a copy of the fee agreement as approved by the Division of Workers’ Compensation. Claimant’s counsel shall submit a proposed Order specifying the amount of attorney fees claimed. If the defendant or claimant believes the amount due the claimant’s attorney is unreasonable, then each has 30 days from the date of this Order to file a Motion for Evidentiary Hearing Regarding Reasonableness of Attorney Fees; the motion shall be accompanied by an affidavit and statement of the grounds on which either the defendant or the claimant believes the amount due the claimant’s attorney is unreasonable.”

Pursuant to the order, claimant’s attorney filed a copy of the attorney-client agreement under which the claimant agreed to pay his attorney a contingent fee. In addition, claimant’s attorney filed a sworn affidavit which established he worked on the case a total of 111.10 hours, which resulted in claimed attorney’s fees of $9,443.50, and costs of $1,335,85. The affidavit also contained detailed statements of time records converted to a monetary sum based on the attorney’s customary and current hourly rate. Finally, claimant’s attorney submitted a proposed order specifying the amount of attorney’s fees claimed. Claimant’s attorney did not, however, request an evidentiary hearing.

In response to the fee proposal, the respondent filed a letter with the Workers’ Compensation Court, objecting to any award in excess of the contingent fee agreement. By order dated August 31, 1988, the Workers’ Compensation Court found:

“[A]s part and parcel of the Judgment herein, the Court directed counsel for the claimant to prepare and file with the Court a compilation of the number of hours devoted to the prosecution of the claim and to set forth a reasonable hourly rate. This is all in accord with the ruling of the Supreme Court in [Wight v. Hughes Livestock Co., Inc. (1983), 204 Mont. 98, 664 P.2d 303] . . ., in which one of the criteria allowing the presumed reasonableness of the contingency fee is the number of hours required to prosecute the claim and granting either party an opportunity to request an evidentiary hearing to deviate from the presumed propriety of the contingent fee. Claimant complied with the directive of the Court and has filed a statement of hours wherein he claims 111 hours and a total attorney fee under that contention in excess of $10,000.00.

“Employer/insurer has responded, raising no objection to the 33 percent contingent fee, but objecting to any fee in excess of the contingent fee for the reason that no evidentiary hearing was requested wherein the Court would take evidence to deviate from the presumption of the reasonableness of the contingent fee.

“Having considered the matter, the Court finds that the claimant has not requested an evidentiary hearing so as to allow the Court to deviate from the presumed reasonableness of the contingency fee and, accordingly, finds that the contingency fee is reasonable and directs that the insurer pay attorney fees in the amount of $2,208.79 and costs as submitted.”

Claimant appeals from the foregoing order, alleging the lower court committed reversible error by fixing attorney’s fees at the amount of the contingent fee contract without an evidentiary hearing. We agree.

In Wight v. Hughes Livestock Co., Inc. (1983), 204 Mont. 98, 664 P.2d 303, this Court adopted several elements to be considered in determining the reasonableness of contingent fee contracts and the amount of attorney’s fees to be awarded.

“ ‘[I]n determining a reasonable attorneys fee . . . [the judge] must engage in a balancing process and consider on contingent basis the following factors:

“ ‘(1) The anticipated time and labor required to perform the legal service properly.

“ ‘(2) The novelty and difficulty of legal issues involved in the matter.

“ ‘(3) The fees customarily charged for similar legal services.

“ ‘(4) The possible total recovery if successful.

“ ‘(5) The time limitations imposed by the client or circumstances of the case.

“ ‘(6) The nature and length of the attorney-client relationship.

“ ‘(7) The experience, skill and reputation of the attorney.

“ ‘(8) The ability of the client to pay for the legal services rendered.

“ ‘(9) The risk of no recovery.’ . . .

“Not mentioned . . .but surely a factor to be considered, is the market value of the lawyer’s services at the time and place involved.”

Wight, 664 P.2d at 311-312, citing Clark v. Sage (1981), 102 Idaho 261, 265, 629 P.2d 657, 661. The above are more than mere suggestions, “[t]he lower court was required to consider the foregoing in its determination of the reasonableness of the contingent fee contract and the amount of attorneys fees to be awarded.” McDonald v. B.N. Transport, Inc. (1985), 216 Mont. 447, 701 P.2d 1001, 1004, 42 St.Rep. 940, 944. However, the Workers’ Compensation Judge, in fixing the fee of $2,208.79, did not consider the proper factors.

The respondent maintains that the Workers’ Compensation Court cannot vary from the contingent fee agreement in the absence of a hearing, given the strong presumption of reasonableness in favor of the approved agreement. Instead, the party wishing to depart from the contingent fee must request a hearing. Respondent argues the lower court’s order must be affirmed.

Claimant contends he was not required to request an evidentiary hearing. The lower court’s order required the claimant’s attorney to submit a proposed order for reasonable attorney fees, supported by documentation. Only in the event a party believes the amount due under the proposed order is unreasonable would an evidentiary hearing be necessary. Claimant argues the respondent’s letter objecting to any fee greater than the contingency amount was, in effect, an implied request for a hearing. Finally, claimant states the order was ambiguous, and he should be allowed a hearing before the Workers’ Compensation Court to establish an award of fees under the Wight guidelines.

Neither party presents a definitive answer to explain the absence of a request for an evidentiary hearing. Nor does such absence explain the lower court’s disregard for the documentation presented by the claimant’s attorney. Indeed, the facts demonstrate a need for an evidentiary hearing. On the one hand, the claimant’s attorney submitted an affidavit and time records establishing 110.10 hours were expended toward the case and justifying fees of nearly $10,000. Further, claimant’s attorney secured an award of $6,925 for his client.

Certainly, substantial additional evidence reflecting the Wight guidelines is necessary before the Workers’ Compensation Court may determine reasonable attorney’s fees. Therefore, we reverse the decision of the Workers’ Compensation Court and remand for an evidentiary hearing.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES SHEEHY, McDONOUGH and WEBER concur.