author:
MR. JUSTICE HUNT MR. JUSTICE MORRISON,
      MR. JUSTICE GULBRANDSON,

text:
    ROSE N. BUCKMAN, Claimant and Appellant, v. MONTANA DEACONESS HOSPITAL, Employer and State Compensation Insurance Fund, Defendant and Respondent.
    No. 85-530.
    Submitted July 24, 1986.
    Decided Dec. 12, 1986.
    730 P.2d 380.

      Lloyd E. Hartford argued, Billings, for claimant and appellant.
    Hughes, Kellner, Sullivan & Alke, Mike McCarter argued, Helena, for defendant and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Rose Buckman appeals the judgment of the Workers’ Compensation Court denying her a conversion of her bi-weekly Workers’ Compensation benefits to a lump-sum payment. Buckman’s employer, Montana Deaconess Hospital and its insurer, the State Compensation Insurance Fund appealed a portion of the same judgment wherein the trial court concluded that insurers could not discount lump-sum conversions awarded for injuries which occurred prior to April 15, 1985.

We affirm the Workers’ Compensation Court in part, reverse in part, and remand for proceedings pursuant to this opinion.

The issues presented to us concern constitutional challenges to the 1985 legislative amendment to Section 39-71-741, MCA, first presented to the legislature as S.B. 281. Specifically, we are asked to decide:

1. Whether the procedure outlined in Section 39-71-741(2), MCA (1985), to guide the Workers’ Compensation judge in determining whether lump-sum conversion of biweekly payments for permanent total injury will be awarded, as applied to conversions for injuries occurring before April 15, 1985, is constitutionally prohibited.

2. Whether the prospective application of the procedure outlined in Section 39-71-741(2), MCA (1985), violates the equal protection guarantees of the Montana and United States Constitutions.

3. Whether the directions contained in Section 39-71-741(1), MCA (1985), to discount to present value all conversions of lump sums as applied to conversions for injuries occurring prior to April 15, 1985, are constitutionally prohibited.

4. Whether the Workers’ Compensation Court erred in denying Buckman a lump-sum conversion of her biweekly benefits.

In September, 1985, the Workers’ Compensation Court entered its findings of fact and conclusions of law and judgment determining that the appellant Buckman, was permanently totally disabled and that she was entitled to disability benefits. The Court denied her request for a lump-sum conversion based upon her failure to meet the requirements set out in Section 39-71-741(2), MCA. The court said the amendments found in Section 39-71-741(2), MCA were procedural in nature and could therefore be applied in Buckman’s case without offense to either constitution. Buckman had challenged the constitutionality of Section 39-71-741, MCA, as applied to her case on the grounds that her injury predated the effective date of the amendments. The Workers’ Compensation Court, relying on its earlier opinion in Stelling v. Rivercrest Ranches, Inc., WCC No. 8412-2757 (1985), concluded that the discounting provision, found in Section 39-71-741(1), MCA, if applied retroactively to Buckman’s award, would violate the contract clauses of both the United States and Montana Constitutions. Buckman appeals the judgment as it concerns Section 39-71-741(2), MCA, and the Hospital and State Fund appeal the judgment as it concerns Section 39-71-741(1), MCA.

For the reasons stated below, we hold that: As to the first issue the application of Section 39-71-741(2), MCA is constitutionally prohibited as applied to injuries that occurred prior to April 15,1985. As to the second issue we hold that the prospective application of the procedure does not violate the equal protection guarantees of the Montana and United States Constitutions. As to the third issue, we hold that discounting to present value conversions of lump-sums for injuries that occurred prior to April 15, 1985 is constitutionally prohibited. Finally, as to the lump-sum conversion of claimant’s biweekly benefits we remand for a determination of whether claimant is entitled to a conversion of her benefits in light of our construction of Section 39-71-741, MCA.

As to the first issue, Buckman challenges the retroactive application of the procedure contained in Section 39-71-741(2), MCA. That statute as amended states that it “must be used by the division and workers’ compensation judge in determining whether a lump-sum conversion of permanent total biweekly payments will be approved or awarded . . .” Before discussing any constitutional questions, it is important that we consider the statutes which are to be applied to an injured worker with regard to lump-sum conversions or to normal benefits.

Workers’ compensation benefits are determined by the statutes in effect as of the date of injury. Trusty v. Consolidated Freight-ways (Mont. 1984), [210 Mont. 148,] 681 P.2d 1085, 41 St.Rep. 973; Iverson v. Argonaut Insurance Co. (Mont. 1982), 198 Mont. 340, 645 P.2d 1366.

In Trusty, we held that the standards for computations of benefits for the claimant are fixed by the statutes in effect as of the date of injury and concluded that the legislature could not enact a statute reducing the benefits to an injured worker by reason of social security benefits paid. We further stated:

“The statute in effect on the date of injury determines the benefits to be received . . . (Citations omitted). That sets the contractual rights and debts of the parties. In the instant case, once the 100% offset statute was found constitutionally unenforceable, that portion of the statute became void. This Court cannot come back and change the statute to a 50% offset. Once we found the statute constitutionally unenforceable, then no offset remains in effect.

We hold that the benefits due to the appellant under his Workers’ Compensation award shall not be reduced by an offset for Social Security benefits.”

681 P.2d at 1088, 41 St.Rep. at 976.

The reasoning of the foregoing cases properly controls in the present case where we are involved with an application for a lump-sum conversion of permanent biweekly payments. We specifically hold that where an injured worker seeks a lump-sum conversion of biweekly benefits, the statutes in effect at the time of injury set the standards for either the award or refusal of a lump-sum conversion.

We therefore conclude that the amendments made in 1985 to Section 39-71-741(2), MCA, cannot be applied in considering the Buckman application for a lump-sum conversion. We note this is consistent with the 1985 amendments as there is no provision in those amendments stating that any portion should be applied retroactively, with a single exception of the discount provision.

The second issue is whether the prospective application of the procedure set out in Section 39-71-741(2), MCA violates the equal protection guarantees of the Montana and United States Constitutions. We hold that it does not.

After careful consideration of the language of the procedure set out in Section 39-71-741(2) and (3) and after reference to the legislative history we are convinced that those subsections merely codify, in detailed form, the prior case law which allowed a conversion of biweekly benefits when it was in the best interests of the claimant.

During the hearings leading to the enactment of S.B. 281 there was considerable discussion of more specific statutory language concerning the award of lump sums. The record of the February 14, 1985 meeting of the senate subcommittee is representative of the intent of the legislature when considering the specific language. Senator Haifey asked the administrator of the Workers’ Compensation Division whether “if what he is talking about is language based on the experience of the last couple of years, under which lump sum payments are called for . . . Mr. Blewett replied yes.”

Our estimate that the legislative intent was to codify existing law, rather than altering the law, is borne out by examination of the procedure contained in Section 39-71-741(2) and (3).

Subsection 2 directs the Workers’ Compensation Court to award conversions “only if the worker or his beneficiary demonstrates that his ability to sustain himself financially is more probable with a whole or partial lump-sum conversion than the biweekly payments and his other available resources.” The statute then goes on to lay out separate criteria to indicate what is meant by “sustain himself financially.” We note here that the criteria in subsection 2(a), that the difference between the discounted value of a conversion and the future value of biweekly benefits cannot be the only grounds for a conversion, directly codifies the prior law of Kent v. Sievert (1971), 158 Mont. 79, 489 P.2d 104. The language contained in Subsection 2(b) states that the improvement of a claimant’s financial position should not be the basis of an award unless it can be awarded at the price of an annuity. This would cost the insurer the same as if it had purchased an annuity under the option contained in Section 39-71-2207, MCA, and merely states the same rule as our holdings in Kent and in LaVe v. School Dist. #2 (Mont. 1986), [220 Mont. 52,] 713 P.2d 546, 43 St.Rep. 165.

Similarly, case law has required claimants to submit financial plans when outstanding or delinquent debt is the basis for a conversion request. Kuehn v. National Farmers Union Property and Cas. Co. (1974), 164 Mont. 303, 521 P.2d 921. Furthermore where the court has found the outstanding debt was not so significant as to necessitate a lump-sum conversion, it has been denied. Ruple v. Bob Peterson Logging Co. (Mont. 1984), [209 Mont. 276,] 679 P.2d 1252, 41 St.Rep. 704. This prior law is directly reflected in the language of Section 39-71-741(2)(c).

Subsection 2(d) of that same statute likewise codifies prior case law requiring that a claimant show the worthiness of her business venture plan and the adequacy of her business acumen. See Bundtrock v. Duff Chevrolet (1982), 199 Mont. 128, 647 P.2d 856; Krause v. Sears, Roebuck and Co. (1982), 197 Mont. 102, 641 P.2d 458.

Finally, Section 39-71-741(3) allows the division to order “financial, medical, vocational, rehabilitation, educational or other evaluative studies to determine whether a lump-sum conversion is in the best interest of the worker or his beneficiary.” These tests reflect the historical ways in which a claimant could assert that a conversion was in her best interests other than by showing strict financial necessity. Prior case law has held a conversion to be in the best interests of a claimant where medical considerations required that the claimant and his family move to a different climate. Polich v. Whalen’s O.K. Tire Warehouse (1983), 203 Mont. 280, 661 P.2d 38. Prior case law has held it to be in the best interest of the claimant where diagnosed mental instability made the award of a lump sum necessary to relieve the claimant’s abnormal anxiety. Legowik v. Montgomery Ward and Co. (1971), 157 Mont. 436, 486 P.2d 867.

The legislative use of the term “best interest” further convinces us that Section 39-71-741(3), MCA, reflects the intent of the legislature to make explicit in the statutory language the previously used best interest test for the conversion of biweekly benefits.

Subsection 3 itself does not mandate conversion of benefits. However, when read in combination with Subsection 5, giving the Workers’ Compensation Court jurisdiction to make the final determination, the combination convinces us that Subsection 3 provides an alternative method to qualify for a lump-sum award when strictly financial considerations do not mandate a conversion. This interpretation is buttressed by a May 7, 1985, policy statement from the Division of Workers’ Compensation.

In summary, we construe the language of the statute to represent no change from the law existing prior to April 15, 1985, and to represent no significant change from the requirements placed on the permanently partially disabled by case law. Therefore because no rights have been burdened, nor any classification of claimants treated dissimilarly, we can find no violation of equal protection in the prospective application of the procedure set out in Section 39-71-741, MCA.

As to the third issue, Buckman challenged the amended Section 39-71-741(1), MCA, as applied to her case, as a violation of her “rights under the Montana and United States Constitutions, including but not limited to her right to equal protection of the laws and due process of law.” The Workers’ Compensation Court held the discounting provision violated the state and federal constitutional prohibitions against impairments of contracts and sustained the procedural criteria against the same impairment of contract test. Consequently the lower court did not reach the due process or equal protection issues.

In Montana we have repeatedly recognized that the state constitution provides protection of rights separate from the protection afforded by the federal constitution. State v. Johnson (Mont. 1986), [221 Mont. 503,] 719 P.2d 1248, 1254-55, 43 St.Rep. 1010, 1016-18; Pfost v. State (Mont. 1985), [219 Mont. 206,] 713 P.2d 495, 500-1, 42 St.Rep. 1957, 1963-64; Madison v. Yunker (1978), 180 Mont. 54, 60, 589 P.2d 126, 129.

Because the federal constitution establishes the floor and not the apex of constitutional rights, state action may violate our Montana Constitution, but not violate any federal constitutional guarantee. Therefore, pursuant to the wisdom in the rule that we will not search to reach any issue not necessary to dispose of the case, we will not reach a federal constitutional challenge unless and until the case may not be resolved on adequate and independent state grounds.

We now turn our attention to the contract clause challenge before us. In the past we have generally interpreted the contract clauses found in Art. II, Section 31, 1972 Mont. Const, and Art. I, Section 10(1), United States Constitution as interchangeable guarantees against legislation impairing the obligation of contracts. Neel v. First Federal Savings and Loan Assoc. (Mont. 1984), 675 P.2d 96, 103, 41 St.Rep. 18, 25. Consistent with our intention to initially examine state grounds in an effort to resolve the issue, we turn to prior Montana contract clause case law for independent interpretation of our own prohibition of impairment of contract. Federal cases cited are relied on for their analytical persuasiveness but in no way mandate our decision.

The Montana Constitution states, “No ex post facto law nor any law impairing the obligation of contracts, or making any irrevocable grant of special privileges, franchises, or immunities, shall be passed by the legislature.” Art. II, Section 31, 1972 Mont. Const. We have construed the two contract clauses interchangeably, and have cited United States Supreme Court opinions to test the validity of Montana legislation under both contract clauses. Neel, 675 P.2d at 103, 41 St.Rep. at 25.

The basis for Workers’ Compensation is a contract of hire either express or implied. Section 39-71-117, MCA; Section 39-71-118, MCA; 1C Larson Workmen’s Compensation Law Section 47.10 (1986). This Court, as well as courts of other states have held that Workers’ Compensation is' based on contract theory. Estate of Baker (1977), 222 Kan. 127, 563 P.2d 431; Harris v. National Truck Service (1975), 56 Ala.App. 350, 321 So.2d 690; Spengler v. Employer’s Commercial Union and Insurance Co. (1974), 131 Ga.App. 443, 206 S.E.2d 693; Gaston v. San Ore Construction Co. (1970), 206 Kan. 254, 477 P.2d 956; Nadeau v. Power Plant Engineering Co. (1959), 216 Or. 12, 337 P.2d 313; Morgan v. Industrial Accident Board (1956), 130 Mont. 272, 300 P.2d 954.

This Court has assumed for a number of years that the Workers’ Compensation statutes in effect on the date of injury set the contractual rights between the parties. Trusty, 681 P.2d at 1085, 41 St.Rep. at 973. This is consistent with the provisions of the Workers’ Compensation Act that the term employee or worker means “each person in this state . . . who is in the service of an employer . . . under the appointment or contract of hire, express or implied, oral or written.” Section 39-71-118, MCA.

We approve the holding of the Kansas Supreme Court in Estate of Baker (Kan. 1977), 563 P.2d at 436:

“The liability of an employer to an injured or deceased employee arises out of the contract between them; the terms of the workmen’s compensation statute are embodied in the contract. The substantive rights between the parties are determined by the law in effect on the date of the injury. (Citation omitted.) However, the rights under the contract vest when the cause of action accrues, and the cause of action accrues on the date of injury or death.” (Citations omitted.)

We conclude that his analysis is clearly applicable to this case where there is an application for conversion of biweekly benefits to a lump-sum payment. We hold that the liability of Montana Deaconess Hospital, employer, to Buckman, employee, arises out of the contract between them, and that the Workers’ Compensation statutes in effect on the date of the Buckman injury are a part of that contract.

The question becomes whether the statute at issue in this case constitutes an impairment of the obligation of contract. We first turn to the three-tiered analysis set down by the United States Supreme Court in Energy Reserves Group, Inc. v. Kansas Power and Light Co. (1983), 459 U.S. 400, 103 S.Ct. 697, 74 L.Ed.2d 569, and followed by this Court in Neel, 675 P.2d at 96, 41 St.Rep. at 18. The threshold inquiry is “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” Neel, 675 P.2d at 104, 41 St.Rep. at 27. Next, we must look to whether the state in justification, has a significant and legitimate public purpose for the regulations. Finally, we must inquire whether the adjustment of the rights and responsibilities of the contracting parties are based on reasonable conditions and of a character appropriate to the public purpose justifying adoption of the legislation. Energy Reserves, 459 U.S. at 411-13, 103 S.Ct. at 704-5, 74 L.Ed.2d at 580-81. Neel, 675 P.2d at 104-5, 41 St.Rep. at 27-8.

Several factors are used to evaluate the impairment of a contract. Total destruction of the contract is not necessary for a finding of substantial impairment. The severity of the impairment increases the level of scrutiny to which the legislation is subjected. However, state regulation that restricts a party to gains it reasonably expects from a contract does not substantially impair the contract. In determining impairment, we are to consider the extent to which the industry has been regulated in the past. Energy Reserves, 459 U.S. at 411, 103 S.Ct. at 704, 74 L.Ed.2d at 580. In analyzing these factors, the Workers’ Compensation Court stated:

“Admittedly, workers’ compensation is a closely regulated industry. However, the impairment to the claimant’s contractual rights is severe. An increased level of scrutiny is required. A claimant, able to establish the required condition precedent, that it is in his best interests to be awarded a lump sum advance, is severely impacted by the discount provision and annuity provision in Senate Bill 281. This is a substantial restriction not anticipated under the parties’ [sic] contract.”

We agree that the discounting provision as retroactively applied substantially impairs the rights of claimants which vested at the time of injury by altering the remedy to which the claimant is entitled.

The second tier of the analysis is if the state in justification has a significant and legitimate public purpose behind the regulation. In this case, because the state is a party to this contract a heightened level of scrutiny attaches:

“The Contract Clause is not an absolute bar to subsequent modification of a State’s own financial obligations. As with laws impairing the obligations of private contracts, an impairment may be constitutional if it is reasonable and necessary to serve an important public purpose. In applying this standard, however, complete deference to a legislative assessment of reasonableness and necessity is not appropriate because the State’s self-interest is at stake.”

United States Trust Co. of New York v. New Jersey (1977), 431 U.S. 1, 25-6, 97 S.Ct. 1505, 1519, 52 L.Ed.2d 92, 111-12.

The defendants advance as the purpose for enactment of Section 39-71-741, MCA, to “head off threatened premium increases, hold down employers’ cost of doing business, and promote the Montana economy.” We certainly agree with the legitimacy of these purposes and share the legislative concerns in promoting Montana’s economy. However, those concerns in and of themselves are not sufficient to solve the issues before us in the present case. Clearly the discount provisions of the section may be applied to injuries occurring after the effective date of the Act. Such application will undoubtedly result in the type of savings desired by the legislature. However, our concerns must be directed to those who were injured prior to April, 1985, such as Rose Buckman. The record does not contain any significant evidence bearing on the cost to the state which may result if the discount provisions are not applied to workers injured prior to April, 1985. Under those circumstances, we conclude that the state has failed to prove a significant public interest which requires the application of the discount to workers such as Buckman. The general statement of the reason in itself is not sufficient to justify the severity of the impairment of contract as in this case. We therefore hold that the retroactive application of Section 39-71-741, MCA, violates the contact clause of the 1972 Montana Constitution. We affirm the judgment of the Workers’ Compensation Court on this issue. Because we have decided the statute is unconstitutional and a violation of the contract clause, we do not reach the due process or equal protection issues.

Finally, Buckman contends that the trial court erred in denying her a conversion. In light of our construction of Section 39-71-741, MCA, we remand the case for determination of whether claimant is entitled to a conversion of her benefits to a lump sum.

Affirmed in part, reversed in part and remanded for proceedings pursuant to this opinion.

MR. JUSTICES HARRISON, WEBER and SHEEHY concur.

MR. JUSTICE MORRISON,

specially concurring:

I concur in the majority opinion although, in my judgment, the legislature intended to change the “best interest” test by enactment of Section 39-71-741, MCA. Nevertheless, I concur in the majority holding that the retroactive features of this legislation are unconstitutional. The statutes covering workers’ compensation are a part of the employment contract. The statutes in effect at the time of injury control. Any attempt to change these rights after they vest constitutes an abridgment of contract obligations and is unconstitutional as the majority finds.

The prospective application of Section 39-71-741, MCA, is affected by the Court’s holding that the statute, reduced to its essence, involves no more than the “best interest” test. The Workers’ Compensation Court has been proceeding under the assumption that the statute changed the former test and the legislative history indicates that was the intent of the legislature. As noted in the majority opinion the purpose advanced in support of the statute was to “head off threatened premium increases, hold down employers’ costs of doing business, and promote the Montana economy.” To me this indicates that the legislature intended to change eligibility requirements for a lump sum settlement.

The effect of the majority holding will finally realize what the legislature stated its goal to be but totally failed to accomplish. The result of the legislature enacting the subject statute has been to increase the cost of delivering benefits to the worker and has contributed to the financial crisis facing the state insurance fund. Prior to enactment of 39-71-741, MCA, and the bureaucratic regulations promulgated by the division, the worker simply had to show that it was in the best interest of the injured worker to receive a lump sum payment rather than a structured settlement. The worker’s petition, prepared without assistance of a lawyer, could easily satisfy this burden. The new statute is so complicated that an injured worker has to hire a “Philadelphia lawyer” in every case in which the worker desires to achieve a lump sum payment. Furthermore, the retained counsel must employ a battery of costly expert witnesses to satisfy the requirements of the statute. The result has been increased litigation, greatly increased litigation expenses, and delay in payment of benefits. This increasingly expensive system combined with low premiums charged by the State Fund has produced a very serious financial crisis for the State of Montana.

From a monetary standpoint, it should make no difference to the State Compensation Insurance Fund whether payments are made in a lump sum or paid in a structured settlement. Lump sums are reduced to present value at an interest factor that renders the means of payment financially irrelevant to the fund itself.

The workers’ compensation system must be returned to a simple compensation system where injured workers can be compensated without litigation expenses. Litigation can never be eliminated entirely and where legitimate disputes need legal counsel they should go forward and be presented to the Workers’ Compensation Court. However, the “garden variety” workers’ compensation case should not be subjected to the complicated and tortured scheme set forth in Section 39-71-741, MCA.

In my opinion this statute should be repealed and a simple “best interest” test reestablished so that injured workers can be compensated without the necessity of costly litigation. Perhaps the holding of the majority neuters the statute and repeal is unnecessary. If that is the result of the majority opinion a giant step forward has been taken to preserve the future fiscal integrity of the State Compensation Insurance Fund.

MR. JUSTICE GULBRANDSON,

dissenting.

I respectfully dissent.

I would affirm the Workers’ Compensation Court ruling that the amendments found in Section 39-71-741, MCA, are procedural in nature and could be applied in this case even though claimant’s injury pre-dated the amendments.

I would reverse the holding of the Workers’ Compensation Court that the discounting provision in Section 39-71-741, MCA, if applied retroactively to Buckman’s award, would violate the contract clauses of both the United States and Montana Constitutions.

Those of us who feel that present Workers’ Compensation benefits are inadequate may find the majority opinion to be an insurmountable obstacle in the event the legislature, in a better economic climate, should attempt to increase benefits for previously injured workers. The Nevada Supreme Court in K-Mart Corporation v. State Industrial Insurance System (1985), 101 Nev. 12, 693 P.2d 562, upheld an increase of benefits to workers injured prior to statute amendments and specifically ruled that such an amendment was not an unconstitutional impairment of a contract. The majority opinion effectively rules out the possibility of future relief for previously injured workers in Montana.

The Constitutionality of Senate Bill 281 “is prima facie presumed, and every intendment in its favor will be made unless its unconstitutionality appears beyond a reasonable doubt.” T & W Chevrolet v. Darvial (1982), 196 Mont. 287, 641 P.2d 1386, 1370.

In my view, the laws relating to lump sum conversions are unrelated to the enforcement of the bargained for promises of the parties and therefore should not be construed as a part of a contract subject to Contract Clause scrutiny.

However, even if said laws are subjected to Contract Clause scrutiny, I would hold that Section 39-71-741(1), MCA, is constitutional.

This Court in Raisler v. Burlington Northern (Mont. 1985), [219 Mont. 254,] 717 P.2d 535, 543, 42 St.Rep. 1997, 2007, in its consideration of Contract Clause scrutiny, stated:

“This subject was discussed at length in Neel v. First Federal Sav. and Loan Assoc. (Mont. 1984), [207 Mont. 376,] 675 P.2d 96, 41 St.Rep. 18. Both Article II, Section 31, Mont. Const, and Article 1, Section 10, U.S. Const, prohibit the impairment of contracts. This Court pointed out in Neel that the two contract clauses have been construed interchangeably and set forth the test to be applied:
“The Supreme Court in Energy Reserves, noted that an examination of the legislation for validity under the contract clause requires a three step analysis. The threshold inquiry is ‘whether the state law has in fact, operated as a substantial impairment of the contractual relationship.’ If there is no substantial impairment of the contractual relationship, the inquiry is ended. Second, if the legislation substantially impairs the contractual rights, ‘[t]he state, in justification, must have a significant and legitimate public purpose behind the regulation.’ Third the adjustment of rights and responsibilities of contracting parties must be based ‘[u]pon reasonable conditions’ and be ‘[o]f a character appropriate to the public purpose justifying the legislation’s adoption.’ ”

Past practices before the Workers’ Compensation Court show that lump sum “conversions” were intended to approximate biweekly benefits. An injured worker, at the time of injury, could at most, have anticipated a possibility of receiving a lump sum approximating biweekly benefits.

Statutes which alter contract remedies are not generally construed to impair the obligation of a contract where the reasonable expectations of the parties are not significantly reduced.

Even if Senate Bill 281 is deemed to have substantially impaired the contract, it is still constitutional if it has a “significant and legitimate public purpose” and I would so hold.

The third prong of Contract Clause analysis involves a determination of whether the adjustment of “the rights and responsibilities of the contracting parties is based upon reasonable conditions and is of character appropriate to the public purpose justifying the legislation’s adoption.” Energy Reserves Group, Inc. v. Kansas Power & Light (1983), 459 U.S. 400, 103 S.Ct. 697, 709, 74 L.Ed.2d 569.

The adjustment of rights between the parties here is minimal. Lump sum conversions have always been the exception and injured workers have not had a reasonable expectation of receiving undiscounted conversions in lieu of biweekly benefits, except in very limited circumstances showing extraordinary need, and even then, subject to the discretion of the Workers’ Compensation Court.

MR. CHIEF JUSTICE TURNAGE, concurs in the dissent of MR. JUSTICE GULBRANDSON.


source: Caselaw Access Project

author: MR. JUSTICE WEBER

license: Public Domain

text:
    In re the Matter of the SUSPENSION OF THE DRIVING PRIVILEGES of CRAIG F. ORMAN.
    No. 86-376.
    Submitted on Briefs Oct. 30, 1986.
    Decided Dec. 12, 1986.
    Rehearing Denied Feb. 19, 1987.
    731 P.2d 893.
    Mike Greely, Atty. Gen., Helena, A. Michael Salvagni, Co. Atty., Duke R. Wolf, Deputy Co. Atty., Bozeman, for appellant.
    Steven D. Nelson, Bozeman, for respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Craig Orman was arrested for driving under the influence of alcohol. At the time of his arrest he refused to submit to a breath test to determine the level of his intoxication. The Department of Justice suspended Mr. Orman’s driver’s license for one year because the breath test refusal was his second such refusal in Montana within the past five years. The District Court for the Eighteenth Judicial District, Gallatin County, granted Mr. Orman’s petition to reinstate his driving privileges because the police officer involved may have unintentionally misled Mr. Orman regarding Montana’s implied consent law. We affirm.

The issue in this case is whether the District Court erred in reinstating Mr. Orman’s driving privileges.

In February 1986, Craig Orman, a Washington resident, was arrested by a Bozeman police officer for suspicion of driving while under the influence of alcohol and transported to the Gallatin County Detention Center (Center.) Once at the Center, the police officer handed Mr. Orman a copy of the Montana implied consent law advisory form (form). While the police officer read the form to him, Mr. Orman, sitting across the table from the officer, read the same form. Mr. Orman then reread the form silently and said that he was not going to take the test. Apparently to clear up any confusion that might exist, the police officer then re-advised Mr. Orman that he would lose his driver’s license for ninety days if he refused to take the test. All of the above proceedings at the Center were videotaped.

The police officer was aware that Mr. Orman had been previously arrested for a D.U.I. However, the officer was not aware that Mr. Orman had previously refused to take a blood or breathalyzer test. Because Mr. Orman’s refusal in this case was his second such refusal in Montana within the last five years, the Motor Vehicle Division of the Department of Justice sent a one year license suspension letter to him in accordance with Sec. 61-8-403, MCA.

The District Court reinstated Mr. Orman’s driver’s license stating:

“[D]ue to serious ramifications of a second refusal, the Court believes that the police should advise people that if any advise (sic) is given then it should include the second as well as the first refusal. The tape in this case showed that the statement of the officers indicated the license would only be suspended for ninety (90) days. This prohibited the Defendant from exercising intelligent judgment. For this reason, the Court reinstates driving privileges.”

The Gallatin County Attorney’s office appealed the decision on behalf of the Department of Justice, Motor Vehicle Division.

I

Did the District Court err in reinstating Mr. Orman’s driving privileges?

Sections 61-8-401 to 408, MCA, are the principle statutes controlling the driving of a motor vehicle while under the influence of alcohol or drugs. Mr. Orman argues that his conduct did not rise to the level of a refusal to submit to the breathalyzer test, and analogizes his conduct to the conduct of a person who consents to a search of his person or property, contending that a refusal should be found only where there was a knowing and voluntary refusal. This argument does not consider the nature of the motor vehicle statutes in question. Section 61-8-402, MCA, in substance provides that any person who operates a vehicle upon the roads of this state shall be deemed to have given consent to a chemical test of his breath for the purpose of determining the alcoholic content of his blood if arrested by a police officer for driving under the influence of alcohol. The section further provides that a person is deemed not to have withdrawn the consent even though he is unconscious or is otherwise in a condition rendering him incapable of refusal. As an example, if a person is so grievously under the influence of alcohol that he is incapable of expressing his refusal to take the blood alcohol test or a breath test, the state still has the right under the statute to take such a test. We therefore conclude that the cases pertaining to the voluntariness of a consent search or the knowing commitment of an offense are not of assistance.

Section 61-8-403, MCA, controls the appeal from the suspension of a license to the district court and in part limits the issues to be considered by the court as follows:

“ . . . the court shall take testimony and examine into the facts of the case, except that the issues shall be limited to whether a peace officer had reasonable grounds to believe the person had been driving or was in actual physical control of a vehicle upon ways of this state open to the public, while under the influence of alcohol, whether the person was placed under arrest, and whether such person refused to submit to the test. The court shall thereupon determine whether the petitioner is entitled to a license or is subject to suspension as heretofore provided.”

The District Court correctly identified the key issue as whether Mr. Orman refused to submit to the breathalyzer test.

We have reviewed the videotape prepared at the Center, which covers the police procedure with Mr. Orman. The officer carefully read the State of Montana implied consent law advisory form which covers the essential elements of Sec. 61-8-402, MCA, and which specifically provides as follows with regard to the suspension of the license and driving privilege:

“3. You are advised that:
“(b) Upon receipt of the sworn statement, the Motor Vehicle Division shall suspend your driver’s license and driving privilege for 90 days upon a first refusal; or shall revoke your license and driving privilege for one (1) year upon a second or subsequent refusal within a five (5) year period. In either case, no provisional or probationary license may be issued.”

The tape shows that the officer carefully read that provision to Mr. Orman. In addition, the tape shows that Mr. Orman reread the form to himself over the course of several minutes. After completing that rereading, Mr. Orman stated that he was not going to take the breathalyzer test. Up to that point the procedure taken by the police officer was meticulously careful and complete and would clearly afford a basis to conclude that Mr. Orman’s license should be revoked for one year upon his second refusal to take the breathalyzer test within the previous five years. However, there were additional statements made which caused the District Court to reach a different conclusion.

In substance the officer next advised Mr. Orman that he would have to charge him with driving under the influence and that his license would be suspended for ninety days. Next, after giving the Miranda warning, the officer asked Mr. Orman a number of questions. Mr. Orman specifically stated that he thought he was under the influence of alcohol. The tape further demonstrates that the police officer ran Mr. Orman through the same tests at the Center as were given at the time of initial arrest. The tests confirm the conclusion of Mr. Orman that he appeared to be under the influence of alcohol. In the course of this questioning and testing, the officer indicated several more times that he was required to charge Mr. Or-man with driving under the influence and that his license would be suspended for ninety days. We do emphasize that there was no intent on the part of the officer to mislead Mr. Orman. The officer did not know that Mr. Orman had previously refused a breathalyzer test within the past five years. A review of the evidence clearly demonstrates that even a person not under the influence of alcohol would reasonably have concluded that his license was going to be suspended for only ninety days. We do not find it reasonable to separate this knowledge from the initial statement by Mr. Orman that he would not submit to the breathalyzer test. While we do not choose to set forth any rule controlling the information to be given by an officer at the time of such an arrest, we conclude in this specific set of circumstances, that Mr. Orman’s refusal to submit to the breathalyzer test contained a condition of a ninety day driver’s license suspension.

We affirm the order of the District Court reinstating Mr. Orman’s driving privileges, noting that the record demonstrates that his driving privileges had been suspended for more than ninety days prior to the reinstatement by the District Court.

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


author: MR. JUSTICE HARRISON MR. JUSTICE MORRISON,

text:
    In the Matter of the PETITION OF STANLEY W. JOHNSON, to Perpetuate the Testimony of Wil Clark.
    No. 86-427.
    Submitted on Briefs Oct. 30, 1986.
    Decided Dec. 12, 1986.
    728 P.2d 1354.
    Robert L. Johnson, Lewistown, for appellant.
    Herndon, Harper & Munro, Rodney T. Hartman, Billings, for respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This appeal arises from the Eighth Judicial District in and for the County of Cascade. The District Court denied appellant’s petition to perpetuate the testimony of a witness. We affirm.

Appellant, Stanley Johnson, was injured in an automobile accident on November 11, 1985, allegedly due to the negligence of one Ross Butcher. Mr. Butcher is insured by National Farmers Union Property and Casualty Company (National). The claims adjuster for National who is handling appellant’s claim is Wil Clark.

The underlying personal injury action has yet to be resolved. Appellant has not filed a complaint and the claim has not been settled, though offers and counter-offers have apparently been exchanged. Once this personal injury issue has been resolved, and liability affixed, appellant then intends to pursue a bad faith action against National. But because he fears that the underlying determination of liability “may take years,” appellant seeks to preserve the testimony of Wil Clark for use in the bad faith action.

To this end, appellant filed a petition to perpetuate the testimony through deposition of Mr. Clark pursuant to Rule 27, M.R.Civ.P. He further sought a subpoena duces tecum to require Mr. Clark to bring his claim file with him to the deposition.

The District Court denied the petition on the ground that it was prohibited under this Court’s recent decision of Fode v. Farmers Insurance Exchange (Mont. 1986), [221 Mont. 282,] 719 P.2d 414, 43 St.Rep. 814. We agree.

In Fode, we held that all proceedings in a bad faith insurance case, alleging violations of the code which require a showing that issues of liability be reasonably clear, must be suspended until the liability issues have been determined. The bad faith case may be filed, but no discovery may be engaged. Fode, 719 P.2d at 417.

Initially, we note that before a petition such as the one at issue may be filed, Rule 27(a) requires a petitioner to show that he is unable to bring his action or cause it to be brought. This rule states:

“A person who desires to perpetuate [the testimony of another] . . . may file a verified petition in the district court . . . The petition . . . shall show: 1, that the petitioner expects to be a party to an action . . . but is presently unable to bring it or cause it to be brought, . . .”

Appellant has failed to satisfy this element. As noted, Fode allows a party to file a bad faith action before the liability issues are resolved. So long as appellant is entitled to file a complaint, he is able to bring an action.

Moreover, consistent with our opinion in Fode, we require that such a petitioner make a proper showing to the district court that the testimony sought to be perpetuated is separate and distinct from the testimony likely to be sought in discovery of a contemplated bad faith action.

We hold that the District Court’s denial of appellant’s petition was not in error.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES GULBRANDSON and HUNT concur.

MR. JUSTICE MORRISON,

specially concurring.

I concur in the result because of the facts here at issue. Petitioner seeks to perpetuate testimony because the bad faith issues must be held in abeyance pending resolution of the underlying tort case. This is not sufficient allegation to spring the Court’s discretion under Rule 27(a).

However, we should not prevent the taking of a deposition to perpetuate testimony under the appropriate circumstances. If a bad faith action is being held in abeyance, and critical witness testimony will be otherwise lost, the court should be able to authorize perpetuation of testimony under Rule 27(a). In other words if a witness has a terminal illness or is going to move to a foreign country while the bad faith issues are being held in abeyance, the petitioner should be able to prevent an injustice by taking those person’s depositions.

I concur in the result but feel these explanatory remarks are necessary.


author: MR. CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. WAYNE EUGENE SUNDAY, and International Fidelity Insurance Company, Defendants and Appellants.
    No. 86-149.
    Submitted Sept. 4, 1986.
    Decided Dec. 16, 1986.
    729 P.2d 1319.

      H.L. Garnaas, Garnaas, Hall & Pinsoneault, Missoula, for defendants and appellants.
    Mike Greely, Atty. Gen., Clay R. Smith, Asst. Atty. Gen., Helena, Claude L. Burlingame, Co. Atty., Thompson Falls, Montana, for plaintiff and respondent.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Wayne Sunday and the International Fidelity Insurance Company appeal from an order of the District Court of the Twentieth Judicial District, in and for the County of Sanders, entering judgment on a forfeited bail bond. For the reasons stated below, we affirm that judgment.

Wayne Sunday, defendant and appellant, was charged in Sanders County, State of Montana, with the crime of felony theft. On December 5, 1984, Judge Beitz set bond in the amount of $2000 with an appearance set for December 11. International Fidelity Insurance Company (Surety) issued a surety bond for $2000 through its agent, Sullivan & Hunt Agency (Agent) of Missoula, Montana. The court approved the bond and released Sunday. He subsequently appeared in District Court and pled not guilty to the charge.

On May 14, 1985, Sunday appeared for an omnibus hearing. He was represented by Brian Smith. Subsequently, the court set the trial date for August 15. However, Sunday did not appear on that date, and Smith moved for a continuance. The court granted the motion and a new trial date was set for September 26. On that date, Sunday again failed to appear. The court granted Smith’s motion for a continuance. The new trial date was set for October 22, 1985. When Sunday failed to appear at that time, the court declared the bond forfeited and issued a bench warrant for his arrest.

On January 7, 1986, the Clerk of the District Court sent notice of the forfeiture to the Agent. The order forfeiting bond was signed by Judge McNeil on January 6. Upon receiving notice of forfeiture, the Agent, on behalf of the Surety, immediately began trying to locate Sunday. After an extensive search crossing state lines and even employing the assistance of the Internal Revenue Service, Sunday could not be located.

On February 18, the State moved for entry of judgment on the forfeiture. The Surety subsequently moved for discharge of the forfeiture. On February 25, the court denied the Surety’s motion and granted judgment to the State on the forfeited bond for $2000.

Two issues are presented for our consideration:

1. Where a defendant does not appear in court for a scheduled appearance, must the court declare a forfeiture of his bond immediately or lose jurisdiction to declare a forfeiture thereafter?

2. Where a court does not mail notice of the order of forfeiture to the surety until seventy-seven days after the declaration of forfeiture, does it lose jurisdiction to enter judgment on the forfeiture thereafter?

I

Appellants first contend that the District Court was required to declare the bond forfeited on the date of defendant’s first non-appearance. Since the court did not declare a forfeiture on that date, it lost jurisdiction to do so at anytime afterwards.

The controlling statute on this issue is Section 46-9-503, MCA. Section (1) provides:

“If the accused does not comply with the conditions of the bail bond, the court having jurisdiction shall enter an order declaring the bail to be forfeited.”

There is nothing in this statute that requires a court to declare a forfeiture immediately upon a defendant’s first non-appearance. Furthermore, there is no provision which releases a surety from the ultimate liability on a bond prior to the conditions of bail being performed and the defendant being discharged. See Section 46-9-502, MCA. To require a court to declare forfeiture immediately upon a breach of a condition of bail would unnecessarily straightjacket the court by a rule neither mandated by statute nor required by policy.

Federal Rule of Criminal Procedure 46(e)(1) is substantially the same as Montana’s Section 46-9-503(1). That rule states: “If there is a breach of condition of a bond, the district court shall declare a forfeiture of the bail.” In United States v. Navarrete-Martinez (10th Cir. 1985), 776 F.2d 887, the court was faced with the same argument being raised by appellants here. In summarily dismissing the surety’s contention, the court held:

“Nothing in the rule, however, requires the trial court to declare a forfeiture immediately upon the defendant’s failure to appear. Therefore this argument is without merit.”

Navarrete-Martinez, 776 F.2d at 888. See also Appearance Bond Surety v. United States (8th Cir. 1980), 622 F.2d 334.

Rather than being prejudiced by the court’s action, as appellants contend, the Surety was actually helped. Had the court declared forfeiture immediately, the Surety would have been absolutely liable on the bond with only thirty days within which to locate Sunday. However, because the court continued the trial date, the Surety had more time to look for defendant. Likewise, the State was benefited because the Surety had more incentive to locate defendant prior to forfeiture than it had afterwards. Thus, the public interest in obtaining the appearance of the defendant was better served.

We hold that the District Court had jurisdiction to declare forfeiture of the bond when it did so.

II

The court declared the bond forfeited on October 22, 1985. However, it waited until January 7, 1986, to forward notice of the forfeiture to the Agent — a delay of seventy-seven days. Appellants contend that this delay violated the requirements of Section 46-9-503, MCA, because notice was not mailed “forthwith” and that the court lost jurisdiction to enter judgment on the forfeiture because the proper procedure was not followed. Appellants further contend that the Surety was prevented from producing defendant after his first non-appearance because it was not notified of such non-appearance by the court.

Section 46-9-503 is the controlling statute on this issue also. It provides in relevant part:

“(2) If such forfeiture is declared by a district court, notice of such order of forfeiture shall be mailed forthwith by the clerk of the court to the accused and his sureties at their last known address.
“(3) If at any time within 30 days after the forfeiture the defendant or his bail appear and satisfactorily excuse his negligence or failure to comply with the conditions of the bail, the court, in its discretion, may direct the forfeiture of the bail to be discharged upon such terms as may be just.
“(4) If such forfeiture is declared by a district court and if the forfeiture is not discharged as provided in this section, the court shall enter judgment for the state against the accused and his sureties for the amount of the bail and costs of the proceedings.”

At the outset, it should be noted that there is a distinction between forfeiture and judgment on the forfeiture. Once forfeiture of the bond is declared by the court, the surety becomes liable for payment on the bond unless, within thirty days from such declaration, the surety or the defendant appear and satisfactorily excuse the defendant’s failure to comply with the conditions of bail. At that point, the surety cannot be compelled by the State to pay the bond. However, once judgment is entered on the forfeiture, it becomes binding on the surety, and the State can seek execution of its judgment. This distinction is important when considering whether the requirements of due process have been met.

Section 46-9-503 requires only that notice of forfeiture be mailed to an accused and his surety. It does not require a court to notify the surety of a defendant’s non-appearance. Since the Surety assumed the duty of ensuring Sunday’s appearance, it was presumed to know of his whereabouts. Therefore, it was not necessary for the court to notify the Surety of Sunday’s non-appearance. See United States v. Roher (5th Cir. 1983), 706 F.2d 725; United States v. Craft (11th Cir. 1985), 763 F.2d 402. Appellants’ contention on this point is without merit.

Appellants are correct, however, in their assertion that the court did not mail notice of the order of forfeiture “forthwith,” as required by the statute. Upon declaring the bond forfeited, the proper procedure would have been for the court to mail notice of the order to appellants without delay. Had that been the case, the Surety or the defendant would have had thirty days to appear and excuse defendant’s breach. Nevertheless, even though the court did not send notice to appellants when it should have, it did not lose jurisdiction to enter judgment on the forfeiture. As long as the requirements of the statute and the mandates of due process were met, the judgment against appellants was valid.

Notice of forfeiture was mailed to appellants on January 7, 1986. On February 25, 1986, the court entered judgment on the forfeiture for the State. Thus, a period of more than thirty days elapsed between notice of forfeiture and judgment on the forfeiture. This procedure substantially met the requirements of Section 46-9-503 as well as the requirements of due process. As in the first issue, the Surety was not prejudiced by the court’s action; rather, it was benefited. It had an extra three months within which to locate defendant and discharge the forfeiture before the judgment was entered. Any error that resulted accrued to appellant’s advantage.

The judgment is affirmed.

MR. JUSTICES MORRISON, WEBER, GULBRANDSON and HUNT concur.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. EDWARD LEE FOREST, Defendant and Appellant.
    No. 86-119.
    Submitted on Briefs July 13, 1986.
    Decided Dec. 16, 1986.
    729 P.2d 1317.
    Ian Christopherson, Missoula, for defendant and appellant.
    Mike Greely, Atty. Gen., Helena, Robert L. Deschamps, III, Co. Atty., Missoula, for plaintiff and respondent.
   MR. CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

On October 21, 1985, a motion for order of commitment was filed in the District Court of the Fourth Judicial District, Missoula County, seeking to compel Edward Lee Forest to serve the remainder of his jail sentence. Forest filed a brief opposing the motion in which he attacked the validity of the original sentence imposed on him. The District Court granted the motion and ordered Forest to serve the remainder of his sentence. Forest appeals from that order.

An information was filed in the District Court against Edward Forest on May 26, 1983, alleging in Count I that he violated Section 61-8-401, MCA, driving a motor vehicle under the influence of alcohol, a third offense, and in Count II that he violated Section 61-5-102, MCA, operating a motor vehicle without a valid driver’s license. On August 15, 1983, a second information was filed alleging that Forest again violated Sections 61-8-401 and 61-5-102, MCA. He initially pled not guilty to all four counts, but on December 28 he withdrew his not guilty pleas and pled guilty to each count. Sentencing occurred in April 30, 1984.

In its judgment in Missoula County Cause No. 6373 (assigned from the information filed on May 26), the court sentenced Forest to one year in the county jail with all but three months of the sentence suspended on Count I and to six months in the county jail with all but fifteen days of the sentence suspended on Count II. The same sentence was entered in Missoula County Cause No. 6441 (assigned from the information filed on August 15). The sentences were to run consecutive with each other and with the sentences in each cause. Forest did not appeal from these judgments.

Forest was released from jail on September 18, 1984, after serving 142 days of his sentence; however, his release was subject to several conditions. Subsequently, the deputy county attorney filed a petition for revocation of probation, and at the hearing on the matter, Forest admitted the allegations of the petition. Under an order dated April 15, 1985, and entered in both causes, the court revoked Forest’s prior suspended sentence and ordered him to serve nine months and five days in the county jail. The terms and conditions of probation on the original sentence of April 30, 1984, were continued in full force and effect. No appeal was taken from this judgment either.

In July 1985, Forest was temporarily released from custody in order to attend a thirty-day alcohol rehabilitation and treatment program. He successfully completed the program, but he failed to return to serve the balance of his jail term. The deputy county attorney filed a motion for an order of commitment on October 21, 1985, requesting that Forest be ordered to serve the remainder of his jail sentence. By memorandum and order dated January 20, 1986, the District Court granted the motion for commitment.

In its order, the court stated that the judgment of April 30, 1984, is the basis of the court’s authority over Forest. That judgment extended jurisdiction over him until April 30, 1987. Therefore, the conditions of probation imposed by the original sentence were to remain in effect until April 1987. Forest timely filed a notice of appeal from this order.

During the pendency of this appeal, Forest served the balance of his jail sentence. By order of the District Court, he was released from incarceration on October 8, 1986.

Defendant raises three issues in his appeal:

1. Did the District Court err by failing to give defendant credit for the time he had already served prior to revocation of his sentence?

2. Was the order of January 20, 1986, committing defendant to serve the balance of the sentence imposed under the April 1985 judgment, invalid for the reason that defendant had already completed the sentence imposed on him by the April 1984 judgment?

3. Did the District Court err by attempting to assert jurisdiction over defendant until April 1987?

It is unnecessary for us to decide the first two issues because they have been rendered moot. Defendant does not contest the correctness of the underlying judgments. Rather, the gist of his argument is that he should not have been compelled by the January 20 order to serve any further jail time because the court did not properly credit him with the time previously served and because he had already served the remainder of the original sentence imposed. Since defendant has now completed the balance of the sentence imposed by the April 1985 judgment and has been released from incarceration, any discussion on these two issues would be purely academic. It is well settled that this Court will decide issues only when they have some practical effect on a party; we will not decide questions that have mere theoretical significance.

Defendant contends in his third issue that the District Court erred in asserting jurisdiction over him until April 30, 1987. It is likewise unnecessary for us to consider this issue because, in the State’s response to defendant’s answer to motion to dismiss for mootness, filed October 30, 1986, the State concedes that it will not seek to enforce the conditions of probation imposed on defendant under the court’s original order for the period between October 8, 1986, and April 30, 1987. Therefore, this issue is also moot.

Remanded to the District Court with instructions to release defendant from its probation jurisdiction effective October 8,1986, the date of his release from custody.

MR. JUSTICES HUNT, SHEEHY, GULBRANDSON and MORRISON concur.