author: JUSTICE HUNT

text:
    FRANCES WOODS, Plaintiff and Appellant, v. CITY OF BILLINGS, Defendant and Respondent.
    No. 90-453.
    Submitted on briefs Jan. 31, 1991.
    Decided May 8, 1991.
    248 Mont. 254.
    811 P.2d 534.

      Michael G. Eiselein, Lynaugh, Fitzgerald, Eiselein & Eakin, Billings, for plaintiff and appellant.
    Martha Sheehy, Moulton, Bellingham, Longo & Mather, Billings, for defendant and respondent.
   JUSTICE HUNT

delivered the opinion of the Court.

Plaintiff and appellant, Frances Woods, appeals from an order of the District Court of the Thirteenth Judicial District, Yellowstone County, granting summary judgment to defendant and respondent, City of Billings. We reverse.

The dispositive issue on appeal is whether the City of Billings is immune from suits arising out of the alleged negligent omissions of employees of the City’s executive branch under the charter form of government.

On August 4, 1989, plaintiff filed a negligence action against the City, alleging that she sustained injuries when she tripped on a cracked, crumbled, and partially eroded sidewalk located at 709 North 23d Street in Billings. She contended that the City had a duty to maintain the sidewalk in a reasonably safe condition and that the City’s failure to do so caused her injuries.

The City moved to dismiss the complaint, or, in the alternative, for summary judgment, asserting that it was immune from suit. The District Court granted the summary judgment motion. Plaintiff appeals.

A governmental entity is immune from suits for acts or omissions of (1) its legislative body; or (2) a member, officer, or agent of the legislative body. Section 2-9-111, MCA, which governs immunity, provides:

“(1) As used in this section:
“(a) the term ‘governmental entity5 includes the state, counties, municipalities, and school districts;
“(b) the term ‘legislative body5 includes the legislature vested with legislative power by Article V of The Constitution of the State of Montana and any local governmental entity given legislative powers by statute, including school boards.
“(2) A governmental entity is immune from suit for an act or omission of its legislative body or a member, officer, or agent thereof.
“(3) A member, officer, or agent of a legislative body is immune from suit for damages arising from the lawful discharge of an official duty associated with the introduction or consideration of legislation or action by the legislative body.
“(4) The immunity provided for in this section does not extend to any tort committed by the use of a motor vehicle, aircraft, or other means of transportation.”

Municipalities are included in the definition of “governmental entity” in subsection (l)(a) of the statute. Therefore, neither party disputes that the City of Billings, a municipality, is a governmental entity. Plaintiff argues, however, that the immunity granted the City under § 2-9-111, MCA, does not apply in this case because the City Charter establishes distinct branches of City government and the acts that caused her damages do not implicate the City’s legislative body or legislative powers. For the reasons stated below, we agree.

The power to maintain and repair sidewalks is given to city councils by statute. Section 7-14-4122, MCA, provides in pertinent part:

“(1) The city or town council has power to regulate and provide for the construction or repair of sidewalks, foot pavements, curbs, gutters, or any combination thereof.
“(2) If the owner of any lot fails to comply with the provisions of the ordinance within such time as may be prescribed thereby, the council may contract for the construction and repair of such sidewalks, pavements, curbs, gutters, or any combination thereof and the city or town may pay for the same.”

This statute was enacted prior to the adoption of the 1972 Constitution of the State of Montana. The 1972 constitution authorized the city charter form of government. Mont. Const, art. XI, § 5(1). Pursuant to this constitutional authorization, the legislature enacted §§ 7-3-701 through -709, MCA, which outline the framework for charter forms of government. The statutes provide that a local government unit with the charter form of government possesses self-governing powers. Section 7-3-702, MCA. They further provide that provisions in the charter “establishing executive, legislative, and administrative structure and organization are superior to statutory provisions.” Section 7-3-701(2), MCA (emphasis added).

In 1976, the City of Billings adopted a governmental charter. As we noted in Irion v. Peterson, [247 Mont. 459,] 807 P.2d. 714, 716, 48 St.Rep. 258, 260 (Mont. 1991), the Charter creates distinct legislative and executive branches of the City government. It establishes an elected legislative branch consisting of the City Council and the Mayor. City of Billings Charter art. Ill, § 3.01. It also establishes a separate executive branch headed by the City Administrator, who is appointed by the City Council. Charter art. IV, § 4.01.

The executive branch possesses no legislative authority. Instead, the City Administrator, among other things, enforces ordinances and manages city agencies and departments. Specifically, the Administrator retains the following powers and duties:

“A. carry out policies established by the City Council;
“B. perform the duties required by law, ordinance, resolution, or this charter;
“C. enforce laws, ordinances and resolutions;
“D. administer the affairs of the city;
“E. direct, organize, establish, supervise, and administer all departments, agencies, and offices of the city;
“F. appoint, suspend, and remove all employees of the local government;
“G. prepare and present the city budget to the Council for its approval and administer the budget adopted by the council;
“H. report publicly to the Council at least quarterly on the financial conditions of the city;
“I. recommend measures to the Council;
“J. report to the Council as the Council may require;
“K. attend council meetings and take part in the discussion, but shall have no vote;
“L. appoint with the approval of the City Council a qualified acting administrator to exercise the powers and perform the duties of the Administrator dining temporary absences.”

Charter art. IV, § 4.03 (emphasis added).

The City has enacted an ordinance that requires it to cause sidewalk repairs to be made or to repair defective sidewalks itself:

“Whenever the public’s convenience or safety requires any sidewalk, in case of injury or defect, to be repaired by the owner or her agent, the City shall, if the same is not immediately repaired by the owner or his agent after three (3) days notice, served upon such owner or agent, ... proceed to repair the same.”

Billings Code § 13.08.140.

Although § 7-14-4122(2), MCA, gives the City Council the authority to repair sidewalks, the charter vests the City Administrator with the power to enforce ordinances. Charter art. IV, § 4.03(C). The Charter also compels the City Administrator to direct the appropriate department, agency, or office to perform the duties required by the ordinance. Charter art. IV, § 4.03(B) and (E). The charter’s delegation of the responsibility for sidewalk repairs to the City Administrator is superior to the statute’s ability to grant the power for such repairs to the City Council. Section 7-3-701(2), MCA. Consequently, the responsibility for sidewalk repair lies with the executive branch and does not implicate any act or omission of the City’s legislative body.

The City Administrator, as head of the executive branch, is not an agent of the City Council. Irion, 807 P.2d at 717, 48 St.Rep. at 260. Furthermore, the City Administrator, rather than the City Council, possesses the power to supervise and administer all departments, agencies, and offices of the City, and to appoint, suspend, and remove all City employees. Charter art. IV, § 4.03(E) and (F). The Charter explicitly prohibits the legislative branch from interfering in the City’s administrative affairs:

“Except for the purposes of inquiries and investigations, the Council, its members and the Mayor shall deal with the city officers and employees who are subject to the direction and supervision of the City Administrator solely through the City Administrator. Neither the Council, its members, nor the Mayor shall give orders to any city officer or employee either publicly or privately.”

Charter art. Ill, § 3.08.

Thus, the city employees are agents of the executive branch of government and any acts or omissions of these employees do not involve the City’s legislative branch.

In conclusion, although § 7-14-4122, McA, gives city councils the power to regulate and repair sidewalks, the statute is inapplicable where, as here, the city has adopted a charter that provides for separate branches of government and delegates different responsibilities to each branch. The charter of the City of Billings vests the executive branch with the power to enforce the ordinance pertaining to sidewalk repair. Charter art. IV, § 4.03(C). Any negligent acts or omissions connected with the maintenance of sidewalks therefore must be attributed to the executive branch of the City government. Neither the city’s legislative body nor its agents are implicated by the executive’s failure to repair the sidewalks. Accordingly, the City is not immune from suit for the negligent maintenance of the city sidewalk as alleged in this case.

Reversed and remanded for further proceedings consistent with this Opinion.

CHIEF JUSTICE TURNAGE and JUSTICES TRIEWEILER, HARRISON, WEBER and McDONOUGH concur.


source: Caselaw Access Project

author: JUSTICE GRAY JUSTICE TRIEWEILER

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. NORMAN E. SCHOFFNER, Defendant and Appellant.
    No. 89-386.
    Submitted on briefs Mar. 21, 1991.
    Decided May 16, 1991.
    248 Mont. 260 .
    811 P.2d 548.

      Allen Beck, Billings, for defendant-appellant.
    Norman E. Schoffner, pro se.
    Marc Racicot, Atty. Gen., James Yellowtail, Asst. Atty. Gen., Helena, Dennis Paxinos, Yellowstone County Atty., Brent Brooks, Deputy County Atty., Billings, for plaintiff-respondent.
   JUSTICE GRAY

delivered the Opinion of the Court.

The defendant, Norman E. Schoffner, appeals his conviction of burglary following a jury trial in the District Court of the Thirteenth Judicial District, Yellowstone County. We affirm.

As a preliminary matter, we note that after the notice of appeal was filed in this case, the defendant’s court appointed appellate counsel filed a motion to withdraw as counsel on the basis of lack of meritorious appealable issues. Counsel’s motion was accompanied by an “Anders” brief which referred to possible arguments in support of the appeal, as required by Anders v. California (1967), 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493. This Court’s examination of the record, required by Anders, resulted in its conclusion that counsel’s evaluation of the case was sound; therefore, we granted counsel leave to withdraw and allowed the defendant to proceed with the appeal pro se. The defendant filed his pro se brief with this Court on January 22, 1991, to which the State subsequently responded. We now consider the issues raised by the defendant.

1. Was the defendant’s arrest supported by probable cause?
2. Did the show-up identification conducted immediately after the defendant’s arrest, but prior to the initiation of adversarial judicial proceedings, violate defendant’s Sixth and Fourteenth Amendment right to counsel?
3. Was the show-up identification impermissibly suggestive so as to violate the defendant’s due process rights?
4. Was the defendant denied effective assistance of counsel?

Our review of the record reveals that the defendant’s first three issues were not raised during any stage of the proceedings in the trial court. It is the law of this State that, absent statutorily prescribed circumstances not material to the case now before us, a defendant cannot appeal issues which were not raised with the trial court. Section 46-20-104(2), MCA; § 46-20-701, MCA. However, in light of the procedure required by the United States Supreme Court in Anders, we will address these issues on the merits.

The factual background of this appeal is as follows: At approximately 5:00 a.m. on October 3, 1988, Greg Straw, Susan Ware, and Audrey Marlenee were in Straw’s second floor apartment located in Billings, Montana. All three heard the sound of breaking glass and went to the apartment’s front windows to determine the cause. All three saw a black man they later described as wearing a white coat and red-colored pants, crawl through a broken window in to the laundromat directly across the street. Greg Straw immediately called the police to report the incident. The eyewitnesses observed the man rummage through the drawers and cabinets inside the laundromat for a few minutes, crawl back outside the broken window and walk away. During this time Mr. Straw was on the telephone with the police dispatcher and relayed the foregoing information, giving a “blow by blow” account of the burglary as it occurred.

Police Officer Allan Bentz was given a description of the suspect and dispatched to the scene. Officer Bentz observed the defendant, who was dressed similarly to the description of the suspect, approximately one block from the scene of the burglary. Officer Bentz stopped the defendant, and advised him of the reason for the stop. As a precaution, the officer patted him down for weapons and discovered that the defendant had a large quantity of change in his pants pocket. The defendant was then arrested and read his Miranda rights. At the request of an officer at the scene of the crime, Officer Bentz then transported the defendant to the laundromat in his patrol car. At the laundromat, the defendant was made to stand beside the patrol car. The eyewitnesses positively identified the defendant as the person they observed inside the laundromat. The defendant was then taken to City Hall for booking. At City Hall, a large quantity of change, three $20 bills and one $5 bill were taken from the defendant’s pockets. One of the $20 bills was a 1934 issue with distinctive coloring.

Officer Craig Wrzesinski interviewed the owner of the laundromat, Wilma Imel, as to the property taken and had her fill out a stolen property report form. She had discovered that at least $5 in change had been taken along with $60 to $80 in $20 bills. She described one $20 bill as being a 1934 issue which was unusually dark in color.

On October 5, 1988, the defendant was charged by information with the offense of burglary. On October 6, 1988, the State notified the defendant that it intended to seek designation of the defendant as a persistent felony offender on the basis of two previous felony convictions.

Trial began on January 9, 1989. At trial, both Mr. Straw and Ms. Ware described their identification of the defendant at the scene of the crime following his arrest. In addition, both identified the defendant again in the courtroom as the person they had observed committing the burglary. The third eyewitness, Ms. Marlenee, did not testify. On January 10,1989, the jury found the defendant guilty of burglary. The District Court subsequently sentenced the defendant to fifteen years on the burglary conviction and to another ten years as a persistent felony offender, with the sentences to be served consecutively.

I.

The defendant contends that he was illegally arrested because his arrest was not supported by probable cause. We disagree.

The probable cause requirement is satisfied at the time of the arrest if the facts and circumstances within the officer’s personal knowledge, or imparted to the officer by a reliable source, are sufficient to warrant a reasonable person to believe that the suspect has committed an offense. State v. Lee (1988), 232 Mont. 105, 109, 754 P.2d 512, 515; State v. Ellinger (1986), 223 Mont. 349, 352, 725 P.2d 1201, 1202. In this case, one of the eyewitnesses, Mr. Straw, gave the police dispatcher an ongoing account of the crime as it occurred, including a description of the perpetrator. The dispatcher relayed this information in a broadcast to patrol officers. Officer Bentz testified that he observed the defendant within one block of the laundromat. The defendant was dressed similarly to the broadcast description of the suspect and was the only person in the area. After stopping the defendant, Officer Bentz patted him down for weapons and discovered that the defendant had a large quantity of coins in his pants pocket. Given these facts and circumstances, there is no question that probable cause existed to believe the defendant committed the offense of burglary. Thus, we find no merit in the defendant’s contention.

II.

The defendant claims that his constitutional rights were violated when he was subjected to the post-arrest show-up without the presence of counsel. The United States Supreme Court has stated that a person’s Sixth and Fourteenth Amendment right to counsel attaches only “at or after the initiation of adversary judicial criminal proceedings — whether by way of formal charge, preliminary hearing, indictment, information, or arraignment.” Kirby v. Illinois (1972), 406 U.S. 682, 689, 92 S.Ct. 1877, 1881, 32 L.Ed.2d 411, 417; see also State v. Lara (1978), 179 Mont. 201, 587 P.2d 930. In addition, the United States Supreme Court noted in Kirby that although Miranda v. Arizona (1966), 384 U.S. 436, 86 S.Ct. 1602, 16 L.Ed.2d 694, extended the right to counsel, it did so only in the limited context of custodial interrogations and has no applicability to identification procedures conducted before the initiation of adversarial judicial proceedings. Kirby, 406 U.S. at 687, 92 S.Ct. at 1881, 32 L.Ed.2d at 416. Because no adversarial judicial proceedings had been initiated against the defendant at the time he was subjected to the identification procedure, his right to counsel had not yet attached.

III.

The defendant next contends that the show-up identification procedure violated his due process rights. He argues that the suggestive nature of the procedure tainted the in-court identifications made by Mr. Straw and Ms. Ware. In determining whether an in-court identification based on a pretrial identification is admissible, the test we must use is two-pronged. First, we must determine whether the pretrial identification procedure was impermissibly suggestive; and second, if impermissibly suggestive, did the procedure have such a tendency to give rise to a substantial likelihood of irreparable misidentification that to allow the witness to make an in-court identification would violate due process, under the totality of the circumstances. Neil v. Biggers (1972), 409 U.S. 188, 198, 93 S.Ct. 375, 381, 34 L.Ed.2d 401, 410-11; Lara, 587 P.2d at 932.

The procedure used to identify the defendant was undoubtedly suggestive. The defendant was brought to the scene of the crime and made to stand alone near uniformed police officers and a patrol car. This Court recognized the suggestive nature of this type of identification procedure in State v. Rudolph (1989), 238 Mont. 135, 141, 777 P.2d 296, 300, stating that:

“Indeed, a ‘show-up’ identification requiring a ‘yes or no’ answer is a far less desirable situation than positively picking out a person from an anonymous line-up. Biggers, supra; State v. Lara, supra; State v. Campbell (1985), 219 Mont. 194, 711 P.2d 1357, cert. denied, 475 U.S. 1127, 106 S.Ct. 1654, 90 L.Ed.2d 197. As we cautioned in Campbell, ‘[l]aw enforcement agencies [are] ill advised to rely solely on one-to-one show-ups in identifying suspects with a crime.’ Campbell, 711 P.2d at 1362.”

Under the second prong of the test, we must determine whether, ■under the totality of the circumstances, the identification procedure gave rise to a substantial likelihood of irreparable misidentification. Biggers sets forth five factors to be considered in evaluating the likelihood of misidentification. These factors are:

“[T]he opportunity of the witness to view the criminal at the time of the crime, the witness’ degree of attention, the accuracy of the witness’ prior description of the criminal, the level of certainty demonstrated by the witness at the confrontation, and the length of time between the crime and the confrontation.”

Biggers, 409 U.S. at 199-200, 93 S.Ct. at 382, 34 L.Ed.2d at 411.

Both Mr. Straw and Ms. Ware had ample opportunity to view the defendant during the burglary. Both testified that they observed the defendant in the laundromat for several minutes and that the inside of the laundromat was well lit. Mr. Straw and Ms. Ware were more than casual or passing observers of the burglary. At the sound of breaking glass, both went to the apartment window overlooking the laundromat and watched with concern the commission of the burglary. Mr. Straw gave a “blow by blow”, account of the burglary as it occurred. The descriptions given to the police by both witnesses were accurate regarding the perpetrator’s race, gender, size, and the color of his jacket. Both testified that during the pretrial identification the light outside the laundromat was sufficient to permit a clear observation of the defendant and both were quite certain that the defendant was the person who was inside the laundromat. The record also reveals that less than ten minutes passed between the crime and the confrontation and that the defendant was stopped approximately one block from the laundromat.

The defendant points to discrepancies between the descriptions given and his actual attire and argues that the witnesses were at least in error, if not perjurious. He argues that the color of his pants was closer to purple than to red, as described by the witnesses, and that he was wearing a baseball cap which neither witness described initially. Such variations in detail affect the weight rather than the admissibility of the pretrial identification. State v. Rudolph (1989), 238 Mont. 135, 142, 777 P.2d 296, 300.

Considering the totality of the circumstances, we hold that, although suggestive, the identification procedure did not create a substantial likelihood of misidentification.

IV.

The defendant maintains that he received ineffective assistance of counsel in that trial counsel (1) failed to meet with him often enough to prepare an adequate defense; (2) stated that the defendant had no chance of acquittal and suggested a plea bargain; (3) failed to contact and interview potential witnesses whose testimony was essential to giving credibility to the defendant’s assertion of innocence; (4) failed to object to the prosecution’s motion to reschedule the trial date; (5) failed to object to the testimony of Wilma Imel whom the defendant contends was never endorsed as a witness prior to trial; (6) failed to ensure that Audrey Marlenee, an eyewitness, testified at trial; and (7) failed to challenge the discrepancies between statements made by witnesses Straw, Ware, and Imel to police on the date of the offense and their testimony at trial.

In State v. Coates (1990), 241 Mont. 331, 337, 786 P.2d 1182, 1185, this Court made the following observation regarding claims of ineffective assistance of counsel:

“In evaluating ineffective assistance of counsel claims, this Court utilizes a two-part test set forth in Strickland v. Washington (1984), 466 U.S. 668, 104 S.Ct. 2052, 80 L.Ed.2d 674. First, counsel’s performance must be deficient. To assess deficient performance, this Court employs the ‘reasonably effective assistance’ test of whether a defendant’s counsel acted within the range of competence demanded of attorneys in criminal cases. (Citation omitted.)” State v. Elliott (1986), 221 Mont. 174, 178, 717 P.2d 572, 575. Second, counsel’s deficient performance must have so prejudiced the defendant as to deprive the defendant of a fair trial. State v. Leavens (1986), 222 Mont. 473, 475, 723 P.2d 236, 237. The standard for evaluating prejudice is whether a reasonable probability exists that but for counsel’s deficient performance, the trial’s outcome would have been different. Leavens, 723 P.2d at 237. However, in evaluating a defense counsel’s performance, this Court will not second guess trial tactics and strategy. State v. Lavalley (1983), 203 Mont. 393, 397, 661 P.2d 869, 872.”

Our review of the defendant’s allegations in the context of a direct appeal must be confined to the record. Section 46-20-701, MCA; State v. Black (Mont. 1990), [245 Mont. 39,] 798 P.2d 530, 532, 47 St.Rep. 1677, 1679. The defendant’s first three claims require consideration of factual matters outside the record; thus, they are inappropriate in the context of a direct appeal. Black, 798 P.2d at 533.

The defendant’s fourth claim alleges that counsel failed to object to the prosecution’s motion to reschedule the trial date. The record shows that the District Court continued the December 12,1988 trial date due to the absence of a State witness. The granting of the continuance was within the discretion of the District Court and the defendant has failed to show how he was prejudiced by the delay.

The fifth claim alleges counsel should have objected to the testimony of Wilma Imel because she was not endorsed as a witness prior to trial. This allegation is factually unfounded. A review of the record indicates Imel was endorsed as a State witness by stipulation on December 28, 1988.

The defendant next alleges counsel failed to ensure that Audrey Marlenee, an eyewitness, testified at trial. Although she did not testify at trial she did give a statement to police on the date of the offense, identifying the defendant as the perpetrator of the burglary. Her testimony could reasonably have been expected to be merely cumulative to that of the other eyewitnesses. The defendant has failed to show how the absence of this witness prejudiced his defense or affected the outcome of the trial.

The defendant’s last claim alleges that counsel failed to challenge the discrepancies between statements given to police by witnesses Straw, Ware and Imel, and their testimony at trial. A review of the transcript reveals that counsel did not cross-examine Mrs. Imel. The statements given to police by Mr. Straw and Ms. Ware did not mention that the defendant was removed from the patrol car at the scene by the arresting officers and neither described the perpetrator of the crime as wearing a cap, although the defendant was wearing one when arrested. Contrary to the defendant’s contention, however, counsel made a concerted effort to illustrate the discrepancies when cross-examining Mr. Straw and Ms. Ware. The defendant has failed to show counsel’s performance was deficient in this regard.

Affirmed.

JUSTICES HARRISON, WEBER and McDONOUGH concur.

JUSTICE TRIEWEILER

concurring in part and dissenting in part:

I concur with the majority’s disposition of the first three issues raised by the defendant.

I dissent from that part of the majority’s decision which refuses to consider the first three bases upon which appellant contends that he received ineffective assistance of counsel. The majority’s rationale for not considering these allegations is that to do so would require consideration of factual matters outside the record. That is correct. There cannot logically be any record of an attorney’s failure to meet with his client and prepare an adequate defense; or of conversations between defendant and bis counsel; or of counsel’s failure to contact potential witnesses.

However, it is not a reasonable use of this Court’s resources to refuse to consider those issues in this appeal and invite a petition for post-conviction relief to consider the same issues.

The majority cited State v. Black, [245 Mont. 39,] 798 P.2d 530, 532, 47 St.Rep. 1677, 1679 (Mont. 1990), as authority for its refusal to consider matters which are not part of the record. However, the action taken in this case is not consistent with what this Court did in State v. Black. In that case, even though defendant raised ineffective assistance of counsel on direct appeal, that appeal was treated as a petition for post-conviction relief for purposes of dealing with that issue, and remanded to the District Court for an evidentiary hearing to allow the defendant to develop the necessary record with which to argue inadequacy of counsel. That defendant’s appeal from the adverse finding of the trial court was then consolidated with the remaining issues on appeal. The following quote from State v. Black is illustrative of what was done in that case:

“In this case, although defendant originally raised the issue of ineffective assistance of counsel on direct appeal, the resolution of such issue required consideration of factual matters not contained in the record thereby making it an inappropriate issue for direct appeal. Section 46-20-701, MCA; State v. Elliott, 221 Mont. 174, 178, 717 P.2d 572, 575 (1986). Because defendant’s filing failed to meet the requirements of a direct appeal, we appropriately treated such filing as a petition for post-conviction relief, as provided in §§ 46-21-101 to 203, MCA. We then remanded defendant’s claim to the District Court so that an evidentiary hearing could be held that would allow defendant to present those factual matters necessary to his claim. See State v. Laverdure, 212 Mont. 31, 33, 685 P.2d 375, 376 (1984).”

State v. Black, 798 P.2d at 532.

I would follow the same procedure followed in the Black decision in order to avoid duplications of proceedings in this case.


author: JUSTICE WEBER

text:
    JERRY STAHL, Petitioner and Appellant, v. RAMSEY CONSTRUCTION CO., Employer, and STATE COMPENSATION MUTUAL INSURANCE FUND, Insurer, Defendant and Respondent.
    No. 90-181.
    Submitted on briefs Mar. 28, 1991.
    Decided May 16, 1991.
    248 Mont. 271.
    811 P.2d 546.

      Lloyd E. Hartford, Billings, for petitioner and appellant.
    Laurence Hubbard, State Comp. Mut. Ins. Fund, Helena, for insurer, defendant and respondent.
   JUSTICE WEBER

delivered the Opinion of the Court.

Claimant, Jerry Stahl, appeals from an order of the Workers’ Compensation Court granting summary judgment to State Compensation Mutual Insurance Fund (State Fund). We affirm.

The issues are:

1. Is State Fund entitled to offset auxiliary social security disability benefits paid to Mr. Stahl’s minor child when the benefits are paid directly to the minor child’s mother?
2. Is State Fund entitled to offset a portion of Mr. Stahl’s retroactive social security disability benefits which are paid to his attorney as an authorized attorneys fee for legal services rendered in obtaining those benefits?
3. Should State Fund be required to bear an equal share of costs and attorneys fees incurred by Mr. Stahl to establish his social security claim?

In 1985, Mr. Stahl suffered a compensable injury to his back and began receiving workers’ compensation benefits. Subsequently he filed an application for social security disability benefits. The social security claim was denied, and Mr. Stahl retained legal counsel to pursue his claim. Following litigation, the Social Security Administration determined that Mr. Stahl was entitled to retroactive social security disability benefits in the amount of $31,744.00 with $23,800.03 paid directly to him and $7,943.97 withheld for direct payment of attorneys fees. Mr. Stahl’s minor son was determined to be entitled to retroactive benefits in the amount of $16,656.00 with $12,668.00 paid directly to the minor child’s mother and $3,968.00 withheld for direct payment of attorneys fees.

State Fund determined that it was entitled under § 39-71-01, MCA, to an offset against the retroactive social security payments as well as future weekly social security benefits. Mr. Stahl challenges State Fund’s right to offset for the auxiliary benefits that go directly to his minor child’s mother, and to the portion of the retroactive benefits that go directly to the attorney who litigated the social security claim. In addition, Mr. Stahl asserts that since State Fund receives an offset benefit from the litigation against Social Security, State Fund should be required to help pay for the costs of litigation.

I.

Is State Fund entitled to offset auxiliary social security disability benefits paid to Mr. Stahl’s minor child when the benefits are paid directly to the minor child’s mother?

Section 39-71-701(2), MCA, provides:

“In cases where it is determined that periodic disability benefits granted by the Social Security Act are payable because of the injury, the weekly benefits payable under this section are reduced, but not below zero, by an amount equal, as nearly as practical, to one-half the federal periodic benefits for such week, which amount is to be calculated from the date of the disability social security entitlement.” (Emphasis added.)

Mr. Stahl argues that since the social security disability benefits for his child go directly to the child’s mother, he receives no economic benefit from those payments. He cites McClanathan v. Smith (1980), 186 Mont. 56, 606 P.2d 507, for the proposition that because he does not personally receive the funds there is no duplication of benefits and therefore no basis for the offset. Mr. Stahl acknowledges that McClanathan affirms the insurer’s right to offset auxiliary benefits; however he attempts to distinguish McClanathan because the opinion does not directly address whether § 39-71-701(2), MCA, entitles the State Fund to take an offset where auxiliary benefits are payable to the dependent at a different address than the claimant’s.

Section 39-71-701(2), MCA, does not distinguish between primary and auxiliary benefits. The statute applies to all benefits “payable because of the injury”. In McClanathan, the claimant’s dependents also lived with someone other than the claimant. Mr. Stahl cannot reasonably argue that he receives no economic benefit from auxiliary benefits that go to a dependent for whom he is legally responsible. We hold that the State Fund is entitled to offset auxiliary social security disability benefits paid to Mr. Stahl’s minor child when the benefits are paid directly to the minor child’s mother, even though they reside at a different address.

II.

Is State Fund entitled to offset a portion of Mr. Stahl’s retroactive social security disability benefits which are paid to his attorney as an authorized attorney's fee for legal services rendered in obtaining those benefits?

Mr. Stahl asserts that he received no economic benefit from the amount of the retroactive social security disability benefits that go directly to the attorney because he did not personally receive those funds. This argument is without merit. Mr. Stahl cannot reasonably assert that he received no economic benefit from the services of the attorney in his litigation against Social Security.

Mr. Stahl also asserts that by allowing State Fund to offset the portion of the retroactive social security disability benefits that were paid directly to the attorney, it unfairly placed on him the entire burden of attorney’s fees and costs for the social security claim because State Fund was also benefited by the right to an offset.

Section 39-71-701(2), MCA, specifically gives the State Fund the right to offset an amount equal to one half the benefits “payable because of the injury” without consideration of attorney’s fees or costs of collection. In the absence of statutory or contractual authority for the claimant’s position, we conclude there is no basis to deny the State Fund’s right to offset that portion of the social security benefits that are paid to the attorney.

Under the Summary Judgment Order of the Workers’ Compensation Court the retroactive primary social security benefits in the amount of $31,744.00 payable to Mr. Stahl will be divided as follows: $15,872.00 as offset to State Fund, $7,943.97 directly to the attorney, and $7,928.03 to Mr. Stahl. The retroactive auxiliary social security benefits in the amounts of $16,656.00 payable to Mr. Stahl’s son will be divided as follows: $8,328.00 as offset to State Fund, $ 3,968.00 directly to the attorney, and $4,360.00 to Mr. Stahl’s son. On its face such division does not seem entirely fair. However, it is the legislature which determines what portion of social security benefits are to go to the claimant as compared to the State Fund. While it may be argued it is unfair to the claimant, the statute clearly establishes the division of the funds.

We hold that under § 39-71-701(2), MCA, the State Fund is entitled to offset a portion of Mr. Stahl’s retroactive social security benefits which are paid to his attorney as an authorized attorney’s fee for legal services rendered in obtaining those benefits.

III.

Should the State Fruid be required to bear an equal share of costs and attorney’s fees incurred by Mr. Stahl to establish his social security claim?

This issue is an alternative argument to Issue II. Absent statutory or contractual authority to support Mr. Stahl’s claim, this issue fails for the same reasons discussed under Issue II.

Affirmed.

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


author: JUSTICE McDONOUGH JUSTICE TRIEWEILER

text:
    JAMES S. BUCK, Plaintiff and Appellant, v. BILLINGS MONTANA CHEVROLET, INC., a Delaware corp.; FRONTIER CHEVROLET CO., a Montana corp.; F. S. ENTERPRISES, INC., a South Dakota Corp.; FRANK STINSON; and DENNIS MENHOLT, Defendants and Respondents.
    No. 90-250.
    Submitted Mar. 21, 1991.
    Decided May 16, 1991.
    248 Mont. 276.
    811 P.2d 537.

      Kenneth D. Tolliver argued, Wright, Tolliver & Guthals, Billings, for plaintiff and appellant.
    Sidney R. Thomas, Martha Sheehy argued, Moulton, Bellingham, Longo & Mather, Peter T. Stanley, Bill McNamer argued, McNamer & Thompson, Rockwood Brown argued, Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for defendants and respondents.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Plaintiff, James S. Buck, appeals from an order granting summary judgment in favor of defendants Billings Montana Chevrolet, Frontier Chevrolet, F. S. Enterprises, Inc., Frank Stinson and Dennis Menholt. The District Court of the Thirteenth Judicial District, Yellowstone County, held that the reasons asserted by defendants for Buck’s discharge constituted a legitimate business reason under the Wrongful Discharge from Employment Act, Sections 39-2-701 et seq., MCA. It therefore granted summary judgment and dismissed Buck’s lawsuit. We affirm in part and reverse in part.

The issues presented for our review are:

1. Whether a new owner (controlling shareholder and new officers) of a business may properly terminate a long term employee who was general manager of the business before the control of the new business was sold to the new owner;
2. Whether the District Court properly granted summary judgment on the issue of fraud;
3. Whether an issue of fact exists as to the employee’s discharge violating written personnel policies of Billings Montana Chevrolet;
4. Whether The District Court properly dismissed Frontier Chevrolet, F. S. Enterprises, Frank Stinson and Dennis Menholt from the lawsuit.

James Buck (Buck) was an employee, since 1973, of a corporation which was named Frontier Chevrolet Company (Frontier Chevrolet) and is now named Billings Montana Chevrolet, Inc., in Billings, Montana. The controlling shareholder of Frontier Chevrolet was Andy Anderson, who was Buck’s father-in-law and president of the company. By all accounts, Buck was a competent, faithful employee who had risen through the ranks to become general manager of the business. His expertise was recognized throughout the automobile industry. Mr. Buck was elected President of the Billings Automobile Association, the only non-dealer to ever hold the position and was preapproved by General Motors to be a dealer. Apparently, Mr. Buck had dreams of purchasing the dealership, but he did not have sufficient resources.

Frank Stinson is a controlling shareholder of F. S. Enterprises, Inc., which owns and controls a number of automobile dealerships. In 1986 he began looking for another automobile dealership on behalf of F. S. Enterprises, and, as a result became interested in purchasing the Frontier Chevrolet Company. Apparently, Mr. Stinson through F. S. Enterprises had a tradition of buying dealerships and having his long term loyal employees placed in a position of management at the newly purchased business. These employees would eventually purchase the dealership from F. S. Enterprises. This arrangement was a method utilized by Stinson, through his companies, to reward his faithful employees.

After several months of negotiations, a contract for the purchase of the stock of Frontier Chevrolet was agreed to. During these negotiations Andy Anderson died. However, Mr. Buck and his wife continued to negotiate the purchase. The final contract required the officers and directors of Frontier Chevrolet to resign. The contract did not, however, require any employee to resign. Although Mr. Buck was the general manager of the dealership, he was not an officer or director.

Sale of the stock of Frontier Chevrolet was completed on August 7, 1987. Consistent with Frank Stinson’s and F. S. Enterprise’s policy of management, Frontier Chevrolet, acting through its new officers, filled the position of executive manager of the dealership with one of Stinson’s long-term employees, Dennis Menholt. The next day, Mr. Buck showed up for work and was told that he was no longer general manager because Menholt would be running the business, and it would not work out with both of them there. After some negotiations, he was offered the position of Fleet and Lease Manager, which he refused.

Mr. Buck’s employment with his father-in-law’s company was without a contract or specified term.

I.

Following F.S. Enterprises’ purchase of the stock of Frontier Chevrolet, and the change of officers, Jim Buck was terminated. The defendants maintain that Buck was terminated in compliance with a long standing policy of F. S. Enterprises and Frank Stinson, which placed long term employees in charge of the new dealership. The defendants also maintain that this arrangement would save money, because the two positions formerly held by Buck and his father-in-law, were consolidated into one position held by Dennis Menholt. Buck has not brought forth any facts to contest these reasons. He does, however, maintain that the first reason, which was primary justification for his discharge, is not adequate the under Montana’s Wrongful Discharge from Employment Act. See §§ 39-2-901, MCA, et seq. According to pertinent parts of the Wrongful Discharge Act, a discharge is only wrongful if the discharge was not for good cause and the employee had completed the employer’s probationary period of employment. See § 39-2-904(2), MCA.

Buck was not a probationary employee. Therefore, in order to establish a claim for wrongful discharge under § 39-2-904(2), MCA, he must prove that his termination was not for good cause. Good cause is defined as:

“... reasonable job related grounds for dismissal based on a failure to satisfactorily perform job duties, disruption of the employer’s operation or other legitimate business reason. Section 39-2-903(5).”

All parties agree that there was no failure on Buck’s part to satisfactorily perform his job duties. Nor is there any allegation that he disrupted the employer’s operation. Instead the defendants maintain that his dismissal was justified by “reasonable job related grounds ... based upon [a] legitimate business reason.” We must therefore determine whether under these uncontested facts F. S. Enterprise’s policy (which became Frontier Chevrolet’s policy) to replace Buck with its own man constituted a legitimate business reason under the Act.

A review of the legislative history of the Wrongful Discharge from Employment Act is of little assistance. Initially good cause was defined as a legitimate business reason. However, further changes eliminated this term and defined good cause as:

“reasonable job related grounds for dismissal based upon a failure to satisfactorily perform job duties or disruption of employment operations.”

This wording appears to have been set forth to include some specificity to misconduct charges for the protection of the employee. However, this limited language had a major omission because there was no allowance for discharge based upon legitimate economic reasons such as a lack of work or ehmination of the job. To remedy this situation, the term legitimate business reason was added to the definition. It was thought that this term was broad enough to cover all of the various kinds of termination of employment. The term would advance the employee’s interest in job security by requiring that the employer in fact have a legitimate reason for discharge. At the same time, the employer’s interest in management discretion would be protected by allowing businesses to make employment decisions for business reasons.

Perhaps because this term was added in an effort to broaden the definition of good cause, the legislature has not provided any concrete guidance to aid the judiciary in interpreting its meaning. We have, therefore, thoroughly reviewed prior case law from this jurisdiction, our sister jurisdictions, arbitration cases from the National Labor Relations Board, and law from foreign jurisdictions in an effort to arrive at a precise meaning of the term “legitimate business reason.” This review has been of little assistance. All attempts to more specifically define this term or like terms have resulted in definitions that are as general as the term itself. We are therefore forced to fill in the gap left by the legislature and to define and apply the term in an equitable fashion that most nearly effectuates the intent of the legislature.

A legitimate business reason is a reason that is neither false, whimsical, arbitrary or capricious, and it must have some logical relationship to the needs of the business. In applying this definition, one must take into account the right of an employer to exercise discretion over who it will employ and keep in employment. Of equal importance to this right, however, is the legitimate interests of the employee to secure employment.

We apply this definition to the issue presented by this case. As stated earlier, Jim Buck was an exemplary employee who worked in his father-in-law’s business for almost fifteen years. During that period of time he rose through the ranks to become general manager of the dealership. While holding this position, Buck was responsible for managing the business in his father-in-law’s absence.

In 1987, the business was sold to F. S. Enterprises. Frank Stinson, controlling shareholder, had a long term policy which was executed by F. S. Enterprises, of buying dealerships and placing long term faithful employees in the position of manager. The employee would then be given the chance to buy the business. According to deposition testimony, Stinson preferred this arrangement because he found the dealerships were run most efficiently and competently when the manager had a vested financial interest. In accordance with this system, Dennis Menholt was placed in charge of Billings Montana Chevrolet.

In the past, we have noted that it is inappropriate for courts to become involved in the day-to-day employment decisions of business. See e.g. Hobbs v. Pacific Hide and Fur (1989), 236 Mont. 503, 771 P.2d 125. In cases such as this one, it is particularly important that this philosophy is followed. F. S. Enterprises made a large investment when it purchased the dealership from Buck’s father-in-law. Because he lived in Louisiana, Stinson, through F. S. Enterprises and ultimately through the Frontier Chevrolet Company, desired to place a long term employee, in whom he held great trust, to manage that investment. As a matter of his policy, and the corporate policy of the company he controlled, such an arrangement was preferred because it allowed the placement of a person who conceivably held the same business values and philosophies as himself, in charge of the newly acquired business. It also gave him an opportunity to reward long term employees.

It would be against common sense and rationality for this Court to hold that such reasons or grounds do not constitute a legitimate business reason and are not related to the job involved. The net result of such a holding would be to force a new owner of a business to retain someone who it did not know or perhaps even trust to manage a large dollar investment.

In this case, Buck has not argued these reasons for replacing him were false. Instead, he has steadfastly maintained that these motivations were not justified by the Wrongful Discharge from Employment Act. Because Buck has not come forward with any evidence showing bad faith or falsehood, we hold summary judgment was properly awarded.

We caution, however, that this holding is confined only to those employees who occupy sensitive managerial or confidential positions. An owner under these circumstances may not hold the right to terminate employees who hold duties which do not require the exercise of broad discretion. A company’s interest in protecting its investment and in running its business as it sees fit is not as strong when applied to lower echelon employees, and may therefore be outweighed by their interest in continued, secure employment. See e.g. Pugh v. See’s Candies Inc. (1981), 116 Cal.App.3d 311, 171 Cal.Rptr. 917, 928. Under the uncontested material facts of this case, the company’s decision to replace Jim Buck with Dennis Menholt as executive manager of Frontier Chevrolet Company was for legitimate business reasons. The decision was not false, whimsical, arbitrary nor capricious and it had a logical relationship to the needs of the business.

II.

Buck maintains in a conclusory fashion that the defendants engaged in actual fraud at the time of his discharge by justifying it with false reasons. He argues that he was initially told he was terminated for economic reasons, because his former job of general manager was ehminated. He further argues that later another reason was given when the defendants stated Buck was discharged in order to make room for Dennis Menholt. He argues the original reasons were false and therefore constituted fraud. According to his argument, this “fraud” entitles him to recover punitive damages under § 39-2-905(2), MCA.

This section states:

“The employee may recover punitive damages otherwise allowed by law if it is established by clear and convincing evidence that the employer engaged in actual fraud or actual malice in the discharge of the employee in violation of 39-2-904(1).”

Section 39-2-904(1) states:

“A discharge is wrongful only if ... it was in violation for the employee’s refusal to violate public policy or for reporting a violation of public policy.”

Through a constrained interpretation of these provisions, Buck argues that they should be read together to allow him to proceed to the jury on the issue of punitive damages. Buck maintains that the alleged false reasons given for his discharge constituted a violation of public policy and are therefore actionable under § 39-2-905(2), MCA. We disagree.

Even if everything he says is true, this section does not provide Buck with a legitimate claim. The clear language of these provisions states that punitive damages are only allowed if an employer engages in actual fraud or actual malice in discharging an employee who reports or refuses to engage in violations of public policy. There is no evidence Buck reported or refused to violate public policy and he is therefore precluded from obtaining punitive damages under the Act. Summary judgment on this issue is affirmed.

III.

Section 39-2-904(3), MCA, states that a discharge is wrongful if “the employer violated the express provisions of its own written personnel policy.” Buck maintains that his employment was governed by provisions of a written company employment manual which assured his continued employment if his job performance and economic circumstances remained satisfactory. Because neither of these conditions were present at the time of his discharge, Buck maintains the employment policies were violated and that he has a valid cause of action under § 39- 2-904(3), MCA.

Defendants Billings Montana Chevrolet, Franks Stinson and Dennis Menholt, argue this issue was not presented at the District Court level and therefore should not be heard on appeal. Wyman v. DuBray Land Realty (1988), 231 Mont. 294, 752 P.2d 196. However, after reviewing the record, we note the issue was raised in prejudgment motions and orders. We therefore hold there is sufficient reference to this argument at the District Court level to allow this Court to review its merits.

The employee handbook contained numerous references to a policy on the part of the dealership to provide job security. In particular, one section stated:

“Our dealership is still growing. You are thus assured of steady employment as long as you are producing for us. We expect each of our employees to be maximum producers, always doing their part in accomplishing our business objectives.”

Buck maintains that because there is no evidence he failed to produce for the dealership and because it was not in financial trouble, he was dismissed in violation of the terms of the employee handbook. We note, however, that Dennis Menholt offered Buck a position of fleet manager after the dealership changed hands.

Buck maintains that he did not accept this position because he did not think it was a genuine offer and would actually result in a later dismissal. He felt Menholt offered him this position in an effort to appease him so that a lawsuit could be avoided. If these facts are true, it is possible Buck may have a cause of action under § 39-2-904(3), MCA.

The issue was not specifically addressed in the order granting summary judgment. However, because the case was completely dismissed, we reverse the grant of summary judgment as it applied to this issue and remand for further proceedings to determine the effect of language of the handbook and then whether the offer was made in good faith.

IV.

In order to fully understand the final issue of this appeal, it is necessary to fully comprehend the relationships between the different defendants. The original corporation which was owned by Buck’s father-in-law was named Frontier Chevrolet Company (Frontier-Delaware). It was a Delaware corporation and its stock was sold to F. S. Enterprises, which is controlled and operated by Frank Stinson, on August 7, 1987. On August 8, 1987, Frontier-Delaware terminated James Buck.

In December of 1987, Frontier-Delaware changed its name to Billings Montana Chevrolet, Inc., a Delaware corporation. Later in this same month, the duties and assets of Billings Montana Chevrolet were split between itself and a new corporation (Frontier-Montana). Frontier- Montana performed the operating functions of the dealership. Billings Montana Chevrolet, on the other hand, retained the majority of all inventory, property and assets. It is also the principal shareholder of Frontier-Montana.

This corporate scheme developed so that Dennis Menholt could become an approved dealer under GM guidelines. Apparently, before one can become a dealer, one must retain a certain percentage of ownership in the dealership. By splitting the assets of Billings Montana Chevrolet, Dennis Menholt was able to afford the costs of purchasing the required interest in the operating dealership.

The District Court dismissed Frontier-Montana, Frank Stinson and Dennis Menholt from the lawsuit by order of summary judgment on February 6,1990. F. S. Enterprises had previously been dismissed through stipulation of the parties. On March 1, 1990, Billings Montana Chevrolet (formerly Frontier-Delaware) was granted summary judgment on the grounds that Buck’s dismissal was justified by a legitimate business reason. Buck has contested the dismissal of Frank Stinson, Dennis Menholt, Frontier-Montana and F. S. Enterprises, Inc. on appeal. In this portion of the opinion we address the propriety of the dismissal by the District Court of these four defendants.

Buck maintains that the District Court improperly dismissed Frontier-Montana. He argues that Frontier-Montana is a mere successor corporation to Billings Montana Chevrolet, and as such is liable for any obligations owed by Billings Montana Chevrolet, which arose before the split of assets. A successor corporation can be liable for the debts of its predecessor, if it is merely a continuation or reincarnation of the first corporation. 19 Am.Jur.2d Corporations § 2711. Generally, however, before a corporation can be deemed a successor, certain showings must be made. For example, it is generally required that the plaintiff establish that insufficient consideration ran from the new company to the old and that only one corporation existed at the completion of the transfer. 19 Am.Jur.2d Corporations § 2711.

The facts here do not support the conclusion that Frontier Montana is a successor corporation to Billings Montana Chevrolet. According to the record Billings Montana Chevrolet sold some assets to Frontier-Montana. However, Billings Montana Chevrolet has actively remained in business and holds equipment and real property received from the sale of Frontier-Delaware. There is no evidence that there was fraud in the sale of the corporate assets from Billings Montana Chevrolet to Frontier Montana or lack of consideration that would justify a finding that it was a successor corporation. The District Court properly dismissed Frontier Montana from the lawsuit.

Buck next argues that it was inconsistent for the lower court to dismiss Stinson and Menholt from the lawsuit and at the same time take their interests into consideration in determining that he was dismissed for a legitimate business reason. This argument suffers from several inherent weaknesses. First, a corporation, in and of itself, being an inanimate object, is incapable of formulating its own interests and policies. Rather its interests are formulated by the officers, directors and employees who carry out corporate business. With limited exceptions, these persons are generally immune from lawsuits arising out of corporate affairs.

Second, the Wrongful Discharge from Employment Act provides the exclusive remedy for wrongful termination. Meech v. Hillhaven West, Inc. (1989), 238 Mont. 21, 776 P.2d 488. All remedies provided by the Act run against the employer. The Act does not envision lawsuits against corporate employees, officers or shareholders. In this case there is no question that Buck’s employer was Billings Montana Chevrolet. It was not the employees or shareholders of that corporation. Therefore, as mere shareholders or officers of Billings Montana Chevrolet, Stinson and Menholt were properly dismissed from the lawsuit.

Despite the fact that he agreed to dismissal in the record at the District Court level, Buck now attempts to argue that F. S. Enterprises was improperly dismissed. His argument on this issue closely parallels that set forth above relative to Stinson and Menholt. However, we need not consider the merits of this contention because Buck’s appeal of this issue is barred by his acquiescence to the dismissal of F. S. Enterprises in the District Court.

Counsel for F. S. Enterprises, however, has moved this Court to award sanctions against Buck to reimburse it for costs and attorney fees associated with the appeal. Given the fact that in the record Buck previously conceded the propriety of the dismissal which was then granted by the District Court, we hold that the motion is well taken. Upon remand the District Court shall determine the costs and attorney fees associated with this appeal and award F. S. Enterprises appropriate reimbursement. See e.g. Rookhuizen v. Blains Mobile Home Court (1989), 236 Mont. 7, 767 P.2d 1331.

Conclusion

This case is reversed and remanded for further proceedings in accordance with this opinion concerning the issues of Buck’s dismissal in contravention of the written personnel manual of Billings Montana Chevrolet. Summary judgment dismissing Frontier Chevrolet Company, a Montana Corporation, Frank Stinson and Dennis Menholt is affirmed. The appeal of F. S. Enterprises’ dismissal is dismissed and upon remand appropriate attorney fees and costs shall be assessed against Buck and his attorneys.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON and WEBER concur.

HONORABLE DIANE G. BARZ did not participate in this decision.

JUSTICE TRIEWEILER

concurs in part and dissents in part.

I concur with those parts of the majority opinion which affirm summary judgment for the defendants on the issue of fraud; affirm the dismissal of defendants, other than Billings Montana Chevrolet, Inc.; and remand this case to the District Court for further consideration of plaintiff’s claim that he was discharged in violation of the employer’s written personnel policies.

I dissent from that part of the majority opinion which holds that as a matter of law plaintiff’s employer has “reasonable job related grounds for dismissal based upon ... legitimate business reasons.”

The constitutionality of the Wrongful Discharge From Employment Act was challenged in this Court in Meech v. Hillhaven West, Inc., 238 Mont. 21, 776 P.2d 488 (1989). In that case, an employee contended that the Act violated the Equal Protection Clauses of the Montana and Federal Constitutions by discriminating against a class of claimants without a rational basis, and that the Act violated prior case law by abrogating causes of action without providing a reasonable substitute.

In upholding the constitutionality of the Act, and in finding that adequate substitutes were provided for those rights that were lost, this Court concluded that even though damages were limited by the Act, greater job security was provided to employees by the “good cause” requirement that now exists under the Act for termination of an employee. In balancing the rights of employers and employees to determine whether there was a rational basis for the Act, this Court concluded that the “good cause” protection of the Act was a significant factor. We stated:

“Under the Act, employers benefit because their potential liability is made more certain. Meanwhile, employees’ control over the manner in which they are discharged remains, in part, as a result of the Act’s ‘good employees’ cause’ requirement. The Act, in making this trade, is in no sense irrational. Therefore, classifications in the Act satisfy the requirements of the rational basis test.”

Meech, 776 P.2d at 505.

With its decision in this case, the majority now begins the erosion of that same “good cause” requirement which was previously found to be the quid pro quo for rights which have been taken away from employees under the Act.

Good cause, as it pertains to this case, is defined in § 39-2-903(5), MCA, as "... reasonable job-related grounds for dismissal based on ... legitimate business reason.” It is not sufficient that a termination of employment be for a “legitimate business reason” unless that reason is reasonably related to the job that the employee performs.

If “legitimate business reason” by and of itself is sufficient to establish good cause, then the good cause requirement in the Wrongful Termination Act has been rendered meaningless and employees in the State of Montana receive nothing in return for the rights they gave up under the Wrongful Discharge From Employment Act, § 39-2-901, et seq., MCA.

The majority discusses the business interests of Frank Stinson at length, but fails to establish that the plaintiff’s replacement as general manager of Billings Montana Chevrolet, Inc., was in anyway job related.

The plaintiff was hired by the Billings auto dealership in 1973 as a salesman. He advanced through the ranks of employment and eventually served as the new truck manager, the new car sales manager, and general manager. He was general manager for nine years prior to his discharge. During that time the dealership operated successfully and profitably.

As pointed out by the majority, he was the only nondealer ever elected president of the Billings Automobile Dealers Association. He frequently ran the dealership during the absence of its owner.

There was no evidence in this record to indicate that plaintiff’s replacement as general manager of the auto dealership was in any way related to his performance of that job.

Furthermore, there was no indication in this record that it was the employer’s “legitimate business reason” for which the plaintiff was terminated. Plaintiff’s employer was Billings Montana Chevrolet, Inc. It apparently operated successfully under plaintiff’s management.

James Buck was terminated because of the business interests of Frank Stinson.

Mr. Stinson and his corporation, F. S. Enterprises, Inc., owned and operated a number of auto dealerships around the country. The person with whom he replaced the plaintiff was a successful sales manager of one of his other dealerships in South Dakota, and consistent with his business practice in those other dealerships, he promised that person an opportunity to take over operation and eventually acquire ownership of the next dealership he purchased. The decision by Stinson to make Dennis Menholt the general manager of his next dealership was made before he ever looked at Frontier Chevrolet, and before he ever met James S. Buck. It was made prior to the time that he and the corporation that he owned purchased the shares of the Billings dealership. Therefore, it had nothing to do with legitimate business reasons of the company which employed the plaintiff.

It is logically inconsistent to dismiss Frank Stinson and the corporation which purchased the shares of Billings Montana Chevrolet, Inc., because they were not technically the plaintiff’s employer, but then to consider Frank Stinson’s business interests as justification for termination of the plaintiff.

Under the undisputed facts, and based on the laws set forth in the Act, a strong argument could be made that plaintiff was entitled to summary judgment because the undisputed facts established that plaintiff was not terminated by Stinson for any job related reason, or for any legitimate business reason of the company for which he worked. However, the plaintiff was at least entitled to a jury trial to determine whether under these facts, and according to the statutory definition of “good cause” plaintiff was properly terminated.

The majority opinion proceeds from the premise that the role of courts is to protect people from juries. I believe on the contrary, that juries exist, and are provided for in both the federal and state constitutions, to protect people from arbitrary decisions of courts.

For that reason, I would remand this case to the District Court for a jury trial to determine whether plaintiff was terminated from his employment for “good cause” and I dissent from the majority opinion which grants summary judgment to the defendant on that issue.

JUSTICE HUNT joins in the foregoing concurrence and dissent of Justice Trieweiler.


text:
    STATE OF MONTANA, Plaintiff and Respondent, v. LEO F. STAAT, Defendant and Applicant.
    No. 91-119.
    April 4, 1991.
    248 Mont. 291.
    811 P.2d 1261.
   MEMORANDUM OPINION AND ORDER

A petition for a writ of supervisory control in this matter was filed after defendant Leo F. Staat’s appeal bond was revoked based upon the results of a court-ordered polygraph examination and he was ordered to begin serving a jail sentence. On March 27, 1991, this Court exercised its power of supervisory control and ordered that Staat be released from custody and that his bond pending appeal be reinstated. That order further provided that the Court would later issue an order articulating its reasoning concerning § 37-62-302, MCA, and polygraph examination results in court proceedings.

This Court recognizes that, as the State points out, some courts have allowed polygraph evidence in criminal proceedings in limited circumstances, such as by stipulation of the parties. See, e.g., United States v. Oliver (8th Cir. 1975) 525 F.2d 731. However, this Court “has long abhorred the use of lie detector evidence.” State v. McPherson (1989), 236 Mont. 484, 491, 771 P.2d 120, 124. We consistently have held such evidence inadmissible in criminal trials. State v. Hollywood (1960), 138 Mont. 561, 358 P.2d 437; State v. Bashor (1980), 188 Mont. 397, 614 P.2d 470, and cases cited therein. We have also held such evidence inadmissible in a probation revocation proceeding, because “[w]e do not believe these tests to be sufficiently trustworthy that one could be jailed or imprisoned solely as the result of a polygraph examination.” State v. Fogarty (1980), 187 Mont. 393, 417, 610 P.2d 140, 154. (In State v. Burke (1988), 235 Mont. 165, 766 P.2d 254, Fogarty was overruled on another issue.) In the thirty-two cases since 1960 in which this Court has mentioned or discussed polygraph examinations, the results thereof have never been specifically approved for introduction into evidence over objection.

This Court has on one occasion declined to reverse a criminal conviction where polygraph evidence was included in a presentence report. McPherson, 771 P.2d 120. In that case, the defendant had submitted the polygraph evidence, and this Court stated that he “invited the error and cannot now complain that it was in the record.” McPherson, 771 P.2d at 125.

The Montana legislature has prohibited polygraph examination results from being introduced in evidence. This is the public policy of Montana with which we agree. Section 37-62-302, MCA, enacted in 1983, provides:

“Results of a polygraph examination or other test given by an examiner may not be introduced or admitted as evidence in a court of law.”

The mandatory language of prohibition in the above statute rules out admission of polygraph evidence by stipulation of the parties.

In light of the lack of trustworthiness of the results of polygraph tests, we conclude that application of the above statute should not be limited to those court proceedings in which the rules of evidence govern, but should extend to every proceeding in Montana courts of law. This is critical in situations such as the one presented here, where the rules of evidence do not apply but where allowing the court to consider the results of a polygraph examination may deprive a person of his or her liberty based upon that evidence.

To the extent that it is inconsistent with this order, McPherson is overruled. Further, any other statements of this Court in prior cases that may by inference have approved polygraph examination results in court proceedings are superseded by this order.

We take this opportunity to clarify the following simple rule of law for the benefit of the bench and bar of Montana: Polygraph evidence shall not be allowed in any proceeding in a court of law in Montana. The only acceptable lie detection methods in Montana court proceedings reside with the court in bench trials, the jury injury trials, and the skill of counsel in cross-examination in all trials.

The Clerk is directed to provide copies of this Memorandum Opinion and Order to the State Reporter and to West Publishing, with our request that it be published in the State Reporter and in the Pacific Digest.

DATED this 4th day of April, 1991.

s/ J. A. Turnage. Chief Justice

s/ Terrv Trieweiler. Justice

s/ Karla M. Gray. Justice

s/ William E. Hunt. Justice

s/ John Conway Harrison. Justice

s/ R. C. McDonough. Justice

s/ Fred J. Weber. Justice


text:
    LEONARD CRAIG SEMENZA, Plaintiff and Appellant, v. CHANNING J. HARTELIUS and HARTELIUS & FERGUSON, Defendants and Respondents.
    No. 91.115.
    April 16, 1991.
    248 Mont. 294.
    811 P.2d 1262.
    Leonard Craig Semenza, pro se.
    Cresap S. McCracken, Great Falls, for defendants and respondents.
   OPINION AND ORDER

On December 20, 1990 the District Court of the Eighth Judicial District, Cascade County, entered judgment in favor of defendants/respondents. Notice of entry of judgment was promptly given pursuant to Rule 77(d) M.R.Civ.R On December 31, 1990 plaintiff/appellant timely filed a motion to amend the judgment. Although not specifically mentioned in the motion, it is assumed that it was made in accordance with Rule 59(g), M.R.Civ.P.

While this motion was pending, plaintiff/appellant filed on January 23, 1991, a notice of appeal in accordance with Rule 5(a)(4), M.R.App.P. On January 25, 1991, the District Court granted plaintiff/appellant’s motion to amend by vacating its order directing entry of judgment.

Defendants/respondents maintain that the filing of the notice of appeal served to deprive the District Court of jurisdiction over the case. According to their argument a District Court loses jurisdiction when a notice of appeal is filed. Therefore, the District Court was without jurisdiction to grant plaintiff/appellant’s motion to amend and its order vacating its entry of judgment is null and of no effect. We disagree.

According to Rule 59(g), M.R.Civ.R, a motion thereunder shall be determined by the District Court within 45 days. If the court fails to rule within this time period, the motion is deemed denied.

Rule 5(a)(1), M.R.App.P., requires the notice of appeal in civil cases, to be filed within 30 days of judgment. However, if a motion under Rule 59(g), M.R.CivR, is timely filed, the time for appeal shall run from the entry of an order granting or denying the motion, or, if applicable, from the time the motion is deemed deified at the end of the 45 day period. If a notice of appeal is filed before the motion is disposed of, the notice of appeal shall have no effect. Rule 5(a)(4), M.R.App.P.

This plain language of Rule 5(a)(4), M.R.App.P., mandates the conclusion that the District Court had jurisdiction to vacate its order of December 20, 1990 granting judgment in favor of defendants/respondents. The plaintiff/appellant filed his motion to amend the judgment on December 31, 1990. He then filed a notice of appeal on January 23,1991. This notice was filed before the expiration of the 45 day period established in Rule 59, M.R.Civ.R, and before the District Court ruled on the motion to amend within the 45 day period. It is therefore clear from the language of Rule 5, M.R.App.P., that the notice of appeal was of no effect and the District Court retained jurisdiction to vacate its order of dismissal.

IT IS ORDERED;

1. This appeal is dismissed;

2. The Clerk of the Supreme Court shall remit the file to the Clerk of the District Court;

3. Plaintiff/appellant’s $75.00 fee for appeal shall be retained.

DATED this 16 day of April, 1991.

s/ William E. Hunt. Sr, Acting Chief Justice

s/ John Conwav Harrison. Justice

s/ Karla M. Gray. Justice

s/ Terry Trieweiler. Justice

s/ Fred J. Weber. Justice

s/ R. C. McDonough. Justice


author: JUSTICE HARRISON

text:
    UNITED GRAIN CORPORATION, Petitioner and Appellant, v. THE DEPARTMENT OF REVENUE of the State of Montana, and the STATE TAX APPEAL BOARD of the State of Montana, Respondent and Cross-Appellant.
    No. 90-441.
    Submitted on briefs Apr. 11, 1991.
    Decided May 20, 1991.
    248 Mont. 297.
    811 P.2d 555.

      Terry B. Cosgrove, Luxan & Murfitt, Helena, for petitioner and appellant.
    David L. Nielsen, Legal Counsel, Dept, of Revenue, Helena, for respondent and cross-appellant.
   JUSTICE HARRISON

delivered the Opinion of the Court.

The taxpayer, United Grain Corporation (United), appeals, and the Department of Revenue (DOR) cross-appeals an order of the First Judicial District Court, Lewis and Clark County, which reclassified certain property owned by United and which affirmed a prior valuation of said property. The District Court’s holding reversed in part, remanded in part, and affirmed in part a prior decision of the State Tax Appeal Board (STAB). We affirm the District Court’s order.

United raises the following issue on appeal:

(1) Whether DOR has properly determined the market value of United’s grain elevators.

DOR raises the following issues on appeal:

(2) Whether the District Court erred in holding that the machinery in United’s elevators is taxable as class four property rather than class eight property.
(3) Whether the District Court erred in ordering STAB to recalculate the value of the elevators based on the findings of the District Court regarding the rating of the facilities.

FACTS

This appeal resulted from a dispute over DOR’s tax assessment of three grain elevators owned by United. These elevators are all located in eastern Montana; one is in Macon, one is in Sprole, and the other is in Kershaw. United appealed DOR’s 1986, 1987, and 1988 valuations of the elevators to the County Tax Appeal Board of the appropriate counties. United then appealed each county board’s decision to STAB. The separate appeals were consolidated and tried before STAB. STAB issued three separate decisions with separate findings of fact and conclusions of law. United then appealed STAB’s orders to the District Court. United moved to consolidate; the District Court granted the motion on September 13, 1989.

On June 21, 1990, the District Court issued its order on United’s appeal. First, the District Court reversed STAB’s conclusion of law I and concluded that United’s grain elevator machinery should be classified as class four rather than class eight. STAB’s conclusion of law I states: “The Board finds that the machinery and equipment is properly classified by the DOR as class eight personal property, based on its use in moving raw material through an industrial distribution process.” The District Court held that the machinery was not used in a manufacturing process, and, therefore, concluded that it could not be properly classified as class eight. From this decision, DOR appeals.

Second, the court reversed and remanded STAB’s valuation of the machinery which is part of the Macon and Kershaw elevators, and held that STAB’s finding of fact III was clearly erroneous and prejudiced United. The District Court held the following:

“The appraiser [for DOR] also rated the elevator [Kershaw] as excellent because he assumed that the elevator was capable of loading out 30,000 bushels of grain per hour.
“[N]o evidence substantiates accepting DOR’s figure incorporating Kershaw’s alleged 30,000 bushel per hour capacity. This is clearly erroneous and substantially affects the rights of United Grain.
“[T]he value of what STAB terms ‘personal property should be adjusted to reflect that Macon [and Kershaw] has only a 15,000 bushel per hour capacity and not a 30,000 bushel capacity. The Court will not pursue this calculation in either the Kershaw or Macon case but leaves it to STAB to perform the mathematical gymnastics.”

From this decision, DOR appeals.

Third, the court affirmed STAB in all other respects, including STAB’s adoption of DOR’s valuation method. From this particular decision, United appeals, arguing that its proposed “income” method should have been used to value its elevators rather than the “cost replacement” method proposed by DOR. Additional facts will be discussed as necessary.

STANDARD OF REVIEW

This Court has interpreted § 2-4-704, MCA, the standard for judicial review of an administrative ruling, to mean that an agency’s findings of fact are subject to a “clearly erroneous” standard while an agency’s conclusions of law are subject to the broader “correct interpretation” standard. Steer, Inc. v. Department of Revenue (Mont. 1990), [245 Mont. 470,] 803 P.2d 601, 603, 47 St.Rep. 2199, 2200. Under the “correct interpretation” standard as applied to conclusions of law, our standard of review will be merely to determine if the agency’s interpretation of the law is correct. Steer 803 P.2d at 603.

I.

The first issue for review is whether DOR’s valuation of United’s elevators was proper. United contends that DOR erred in using the cost replacement method to evaluate United’s three elevators, and asserts that the income method should have been used:

‘We will not evaluate the advantages and disadvantages of a particular assessment method as applied to a taxpayer. ‘Tax appeal boards are particularly suited for settling disputes over the appropriate valuation of a given piece of property or a particular improvement, and the judiciary cannot properly interfere with that function.’ (Citations omitted) Assessment formulations are within the expertise of the State Tax Appeal Board and we will not overturn their decisions unless there is a clear showing of an abuse of discretion.”

Northwest Land v. State Tax Appeal Board (1983), 203 Mont. 313, 317, 661 P.2d 44, 47. DOR has determined that the cost replacement method is the most appropriate method of measuring the value of hard assets and has promulgated rules to that effect. We have reviewed the entire record and find that United has not overcome its burden to show clear abuse in DOR’s application of the cost replacement method to determine the market value of the elevators. Therefore, we hold that the District Court properly affirmed STAB’s valuation of United’s elevators based on the cost replacement method.

II.

The second issue is whether the District Court erred in holding that the machinery used in conjunction with United’s elevators is taxable as class four, rather than class eight, property.

All taxable property in Montana is classified under Title 15, Chapter 6, Part 1, MCA, according to its use and type, for the purpose of determining the taxable value of the property. Section 15-6-138, MCA, provides:

“(1) Class eight property includes:

“(c) all manufacturing machinery, fixtures, equipment, tools that are not exempt under 15-6-201(l)(r), and supplies except those included in class five.”

On the other hand, § 15-6-134, MCA, together with ARM 42.22.1303, requires that if the machinery is used in a storage facility it is properly classified as class four.

The machinery that moves the grain in and out of the elevator storage bins is at the heart of this dispute. This machinery is used to carry grain from the trucks into the storage bins and out again. It is much like a conveyor belt with buckets which carries the grain from one place and dumps it off at another. The machinery is designed specifically for a particular elevator.

United argues that the machinery is part and parcel of the storage facilities and, therefore, an improvement to the land pursuant to ARM 42.22.1303 and classified as class four. Furthermore, United argues that the machinery is not involved in a manufacturing process and, therefore, cannot be classified as class eight. DOR, on the other hand, contends that the machinery should be within class eight, arguing that it is part of a manufacturing process.

The fact that the grain elevators are used as storage facilities is not contested by either party. What is contested is whether the conveyor belts and other machinery, which are used to merely transport the grain into and out of the storage facilities, are involved in a manufacturing process. We think not.

The outcome here depends upon the definition of the word “manufacturing” in § 15-6-138, MCA. Manufacturing machinery is that “used to transform raw or finished materials into something possessing a new nature or name and adapted to a new use.” ARM 42.22.1305. Therefore, the question is whether or not the subject machinery fits within the above definition of the word “manufacturing.”

Regarding the machinery of the Sprole elevator, the record shows that United used this facility for the sole purpose of storing its crop. No other activity went on at this elevator. Grain was merely dumped into this elevator for storage until it was finally sold on the market at a later date. The simple movement of grain from the truck to a storage bin does not constitute manufacturing. Manufacturing property requires more than mere movement of grain from one place to another; there must be a transformation. ARM 42.22.1305. Such an activity does not occur at the Sprole elevator. Therefore, STAB’s conclusion that this machinery belongs to class eight is incorrect. As such, we hold that the District Court properly reversed STAB’s decision in this regard.

Considering the Macon and Kershaw elevators, the grain at these elevators is stored, as well as mixed, occasionally, in order to obtain a grain of a particular protein content. DOR contends that this mixing is enough to constitute manufacturing. We disagree, and hold otherwise.

A review of case law indicates that whether a process constitutes “manufacturing” turns upon whether the end product of the disputed process is “significantly changed” from the original substance. Reynolds Metal Co. v. State Tax Commission (1965), 65 Wash.2d 882, 400 P.2d 310, 314; Bornstein Sea Foods, Inc. v. State Tax Commission (1962), 60 Wash.2d 169, 373 P.2d 483,486. The statutes do not define “manufacturing” but the administrative regulations define “manufacturing property” as that “used to transform raw or finished materials into something possessing a new nature or name and adopted to a new use.” ARM 42.22.1305. Furthermore, Webster defines “transform” as “to change in composition or structure” or “to change in character or condition.” Webster’s New Collegiate Dictionary (1977).

The District Court concluded that:

“No transformation takes place at the Macon and Kershaw elevators. The grain is not cleaned, aerated, or milled. Occasionally, grains of differing protein content may be mixed to create a grain of a desired content but the grain is not mixed with other chemicals or incorporated into some other material. The product that goes into the storage bins is virtually identical to the product that comes out. There is no new name, nature, or use. While some type of processing may go on at the elevators, ‘manufacturing’ as it is defined in ARM 42.22.1305 does not. Therefore, it is the opinion of this Court that the disputed property cannot be placed in class eight as manufacturing property. Rather it is part and parcel of the storage facilities and belongs in class four as an improvement to land.”

Mixing grains of varying protein contents does not produce an end product that is “significantly changed.” We, therefore, agree with the District Court’s reasoning and holding as set out above. The Macon and Kershaw elevators are storage tanks and the occasional mixing of the grain does not turn these facilities, or the respective machinery, into manufacturing property.

In the alternative, DOR argues that the machinery should be class eight property under the catch-all provision of § 15-6-138(l)(g), MCA (1985). Section 15-6-138, MCA (1985) states:

“(1) Class eight property includes:

“(g) all other machinery except that specifically included in another class.”

DOR argues that the District Court erred because it did not consider this provision when classifying the machinery. To the contrary, the District Court specifically held that the machinery “is part and parcel of the storage facilities and belongs in class four as an improvement to land.” As such, the District Court concluded that the machinery is “specifically included in another class” and, therefore, does not fall within the catch-all provision of § 15-6-138(l)(g), MCA (1985). We have adopted the District Court’s holding and, therefore, conclude that the machinery is specifically included in class four as an improvement to land.

III.

The last issue raised by DOR is whether the District Court erred in ordering STAB to recalculate the value of the elevators based on the findings of the District Court regarding the rating of the facilities.

With regard to the elevators at Kershaw and Macon, the department’s appraiser, Gary Spaulding, rated the elevators as excellent. The record shows that the appraiser based this “excellent” rating on his mistaken belief that these elevators, together with their machinery, could unload grain into freight cars at a rate of 30,000 bushels per hour. Apparently the appraiser assumed that because there were two legs that each could run 15,000 bushels per hour, the facility had a 30,000 bushel per hour capacity. United contends that its elevators can only load at a rate of 15,000 bushels per hour. At 15,000 bushels, the equipment would be rated as “good” rather than “excellent” and its value would drop.

At the STAB hearing, Bill Rittal of Great Falls, Montana, supervisor for United, testified that the capacity was rated at 15,000 bushels per hour, even though the elevators had two legs each of which where capable of handling 15,000 bushels per hour. He explained that even though the legs can run simultaneously, only one is capable of moving grain at any particular time because the conveyor from the two adjacent tanks can only run into one leg at a time. He testified that without major design changes neither the Macon nor the Kershaw elevator has the capacity to load 30,000 bushels per hour.

DOR admits in its brief that the elevators have a load capacity of less than 15,000 bushels per hour:

“Even though the maximum capacity might be 15,000 rather than 30,000, there is still the ability of the elevator to load out two-52 car trains in a 24 hour period.”

Although it is not obvious at first glance, simple arithmetic establishes the fact that an elevator which can load out two 52-car trains in a 24-hour period can load out at a rate of approximately 14,000 bushels per hour. This fact is illustrated by Mr. Rittal’s testimony at the STAB hearing as follows:

“There are elevators with more than two legs in them and they don’t take the combination of those legs ... testimony was given yesterday that it takes 12 hours to load a 52 car unit train. There’s 172,000 bushel in a 52 car unit train. If it takes 12 hours, that computes out to about a little over 14,000 bushel per hour. That is what our houses are rated at...”

The foregoing evidence was ignored by STAB in its findings and conclusions. Further, no evidence substantiates accepting DOR’s figure which incorporates this alleged 30,000 bushel per hour capacity. We, therefore, conclude that STAB’s finding in this regard is clearly erroneous. Since this finding directly impacts on the amount of taxes United owes, we also conclude that the erroneous finding substantially affects the rights of United. Therefore, we hold that this finding, according to Rule 52(a), M.R.Civ.P, was properly set aside by the District Court in favor of its own finding, which is supported by substantial, credible evidence, that the subject elevators have a load capacity of 15,000 bushels per hour. Furthermore, we hold that the District Court properly remanded this case to STAB with instructions that the value of what STAB terms “personal property” should be properly adjusted, in every respect, to reflect its findings that the Macon and Kershaw elevators have a load capacity of only 15,000, rather than 30,000, bushels per hour. We have reviewed the entire record on appeal and find no error. The District Court is hereby affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES GRAY, HUNT and McDonough concur.

       The court refers to STAB’s finding of fact III and resulting order which incorporates DOR’s appraisal of United’s “personal property” at $205,689 for 1986, $216,169 for 1987 and at $181,102 for 1988.

       The “legs” of the elevator function much like a conveyor belt; they transport grain into and out of each particular storage bin.


text:
    IN RE THE MARRIAGE OF ELVIN FITZHUGH, Petitioner and Appellant, v. TENLEY FITZHUGH, Respondent and Respondent.
    No. 90-311.
    Submitted on briefs Apr. 18, 1991.
    Decided May 20, 1991.
    248 Mont. 306.
    811 P.2d 1273.
    Leonard J. Haxby, Butte, for petitioner and appellant.
    Brad L. Belke, Butte, for respondent and respondent.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Petitioner, Elvin Fitzhugh, appeals the District Court’s determination of visitation rights as decreed by the Second Judicial District Court, Silver Bow County. We affirm.

The sole issue presented for review is whether the District Court’s grant of visitation rights to Mr. Fitzhugh was reasonable.

Elvin Fitzhugh and Tenley Fitzhugh were married on June 23,1979, in Billings, Montana. They have one child, Lauren Ann, born April 20, 1986. The parties separated in November of 1988. Thereafter, Mrs. Fitzhugh moved, with Lauren, to Billings where they lived with her parents. Mr. Fitzhugh remained in Butte. On January 31, 1989, Mr. Fitzhugh filed a petition for dissolution of marriage in the District Court of the Second Judicial District. The initial temporary custody hearing was held by the District Court on March 27, 1989. At that time the court awarded, on a temporary basis, the physical custody of Lauren to Mrs. Fitzhugh. The second and final hearing was held on February 22, 1990.

The testimony heard at trial conflicted. Each party testified as to his or her superior parental skills and ability and each introduced character witnesses to support his or her claims. After hearing testimony, the District Court entered its findings of fact, conclusions of law and decree on April 18, 1990. Finding of fact No. 6 reads, in part, as follows.

“The Court heard evidence from all of the parties that the child is healthy and bright with a positive and affectionate attitude. The child has lived with the Respondent [Mrs. Fitzhugh] during the past year ... and the child has appeared to do very well in this environment. The child’s involvement with her grandparents, her church, her other family members in Billings and her extracurricular activities are clear and convincing evidence that she is prospering in her present environment and has adjusted extremely well to her present custodial environment.

“The evidence presented by the Petitioner [Mr. Fitzhugh] is not persuasive because the social worker had no contact with the Respondent or the child’s grandparents. It was also clear to the Court from the testimony of the social worker that certain information which was supplied to him by the Petitioner was inaccurate.”

Based on its findings and conclusions, the District Court granted the parties joint custody of their minor daughter and granted Mr. Fitzhugh reasonable visitation rights. From this decree, regarding visitation rights, Mr. Fitzhugh appeals.

On appeal, Mr. Fitzhugh contends that the District Court erred by restricting visitation, arguing that there is no evidence to establish that such visitation would endanger his child’s health. Mr. Fitzhugh grounds his argument on § 40-4- 217(1), MCA which provides:

“A parent not granted custody of the child is entitled to reasonable visitation rights unless the court finds, after a hearing, that visitation would endanger seriously the child’s physical, mental, moral, or emotional health.”

From this statute, Mr. Fitzhugh concludes that the District Court erred by restricting his visitation rights with his minor daughter because the trial transcript is devoid of testimony tending to establish that visitation would endanger the child’s physical, mental, moral, or emotional health. Following this line of reasoning, Mr. Fitzhugh argues that § 40-4-217(1), MCA, entitles him to unrestricted visitation rights. To the contrary, upon a showing that visitation will not endanger the child’s health, § 40-4-217(1), MCA, requires that the court grant the non-custodial parent reasonable visitation rights. In the case of In re the Marriage of Tonne (1987), 226 Mont. 1, 8, 733 P.2d 1280, 1285, this Court affirmed the lower court’s decree which awarded joint custody to the parents while limiting the father’s visitation rights to alternate weekends and holidays, an alternate week night, Father’s Day, and three nonconsecutive weeks in the summer. See also In Re Marriage of Alt (1985), 218 Mont. 327, 708 P.2d 258. In the case at bar the District Court did not find, nor did any evidence tend to suggest, that visitation with Mr. Fitzhugh would endanger the child’s health in any way. Therefore, the test is whether Mr. Fitzhugh was granted reasonable visitation rights.

The District Court granted Mr. Fitzhugh visitation as follows:

“A. From the date of this decree until the child enters preschool in the Fall of 1990 the Petitioner shall have [the] following visitation rights:

“(i) one (1) seven day period of visitation each month;
“B. From the date the child enters pre-school the Petitioner shall have the following visitation schedule:
“(i) the second and fourth weekends of each month, from 5:00 p.m. on Friday until 6:00 p.m. on Sunday;
“(ii) thirty (30) days summer visitation, beginning in the summer of 1991;
“(iii) alternate holiday visitation as follows:
“(a) during odd numbered years Christmas, Memorial Day, July 4th, and Labor Day;
“(b) during even numbered years Christmas Eve, New Years, Easter and Thanksgiving.”

The record clearly shows that under the provisions of § 40-4-212, MCA, the District Court considered the wishes of the child; the wishes of the parents; the interaction and interrelationship of the child with her parents; the child’s adjustment to her home, school, and community; and the child’s adjustment to her grandparents’ home in determining the best interests of the child concerning custody and visitation. The court also considered the fact that Lauren is a young child, and she might react adversely to long and regular trips from Billings to Butte. Therefore, pursuant to the above schedule, the decree essentially provides Mr. Fitzhugh with liberal visitation comprised of alternating weekends and holidays and one month in the summer.

In light of the findings, we conclude that the court’s visitation schedule is reasonable. Furthermore, the court’s visitation schedule accords with In Re Marriage of Alt (1985), 218 Mont. 327, 332, 708 P.2d 258, 261, where we held that visitation on alternate weekends, alternate holidays, one evening per week, and two weeks in the summer was reasonable. We find no error. The District Court is hereby affirmed.

JUSTICES HUNT, McDONOUGH, TRIEWEILER and WEBER concur.

       Technically, this statute does not apply to these facts since the District Court awarded joint custody which provides: