author: MR. JUSTICE GULBRANDSON MR. JUSTICE SHEEHY,

text:
    DOUG L. HAGFELDT and Annette E. Hagfeldt, Plaintiffs and Appellants, v. CITY OF BOZEMAN, Montana, Defendant and Respondent.
    No. 87-462.
    .Submitted Feb. 18, 1988.
    Decided April 25, 1988.
    757 P.2d 753.

      Ben Berg, Jr., Berg, Stokes, Tollefsen & Hayes, P.C., Bozeman, for plaintiffs and appellants.
    Sarah M. Power, Gough, Shanahan, Johnson & Waterman, Helena, for defendant and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

This is an appeal from an order of the Eighteenth Judicial District Court, Gallatin County, granting the City of Bozeman’s (City) motion for summary judgment on grounds it sufficiently complied with statutory mandate in this class action claim brought by a number of Bozeman landowners (Landowners). We affirm. -

The only issue for consideration is whether the City legally complied with the requirements of Section 76-2-402, MCA (1987), when it constructed a water tank contrary to its zoning regulations.

Both parties agree there is no question of fact and summary judgment is appropriate as a matter of law. This appeal is based on the contention that the District Court should have granted the Landowners’ motion for summary judgment rather than the City’s.

In April of 1985, the City began construction on a water tank in Josephine Park in Bozeman, Montana. This park is located in an area known as Graf’s First Subdivision, Second Filing. The surrounding neighborhood and the land on which the tank was constructed are zoned R-2, single family dwellings and other permitted and conditional uses.

The record indicates that a public hearing was held before the Bozeman City-County Planning Board to review the preliminary plat of Graf’s First Subdivision, Second Filing, on February 10, 1983. At this hearing, the public was notified that the City planned to construct the water storage facility involved in this action.

Plaintiffs are a number of landowners who live close to the area where the water tank was constructed. Landowners claim the City constructed the tank in violation of zoning regulations and because of this construction, the value of their property decreased. To support its defense, the City argues it is exempt from zoning regulations and relies on Section 76-2-402, MCA, which provides as follows:

“Whenever an agency proposes to use public land contrary to local zoning regulations, a public hearing, as defined below, shall be held.
“(1) The local board of adjustments, as provided in this chapter, shall hold a hearing within 30 days of the date the agency gives notice to the board of its intent to develop land contrary to local zoning regulations.
“(2) The board shall have no power to deny the proposed use but shall act only to allow a public forum for comment on the proposed use.”

Of further importance is the definitional section for this statute, Section 76-2-401, MCA, which provides:

“As used in 76-2-402, the following definitions apply:
“(1) ‘Agency’ means a board, bureau, commission, department, an authority, or other entity of state or local government

Landowners claim that under Section 76-2-402, the City had an obligation to hold a public meeting prior to commencement of the April, 1985 construction of the water tank. Landowners claim the language “proposes to use” and “intent to develop” shows the statute cannot be applied in a retroactive fashion.

The City attached affidavits to its memorandum in support of its motion for summary judgment showing it held a public meeting on June 24, 1985. It claims the meeting was sufficient to satisfy the statutory mandate and, nonetheless, it is exempt from any ordinance because of the legislative intent and history of Section 76-2-402, MCA. Alternatively, the City claims the action is barred under the provisions of Section 2-9-111, MCA, because it is a governmental entity “immune from suit for an act or omission of its . . . member, officer, or agent” of the legislative body.

These claims raise interesting points that have not been addressed by this Court. Landowners rely on two cases. In Rich v. City of Englewood, (Colo.App.1982), 657 P.2d 961, the Colorado Court of Appeals affirmed an injunction prohibiting the construction of a water tank that did not comply with local footage setback requirements. That decision, however, specifically points out that “an injunction is an appropriate remedy for violations of zoning ordinances.” Rich, 657 P.2d at 962. Here, it is unclear what remedy the Landowners seek. There is no prayer for damages in the complaint and injunctive relief is not sought. Further, the reasoning in Rich was questioned by the Colorado Supreme Court in the subsequent case of City of Englewood v. Rich (Colo. 1984), 686 P.2d 780, because the Englewood City Council amended its zoning ordinance expressly exempting the city from the zoning regulations thereby making the issue moot according to the court.

The second case cited by Landowners, Hunke v. Foote (Idaho 1962), 373 P.2d 322, was a proceeding by residents for a writ of mandamus to force the city to remove an electrical substation that the city constructed in violation of its zoning ordinances. The Idaho Supreme Court applied a “governmental-proprietary” function distinction and denied the city an exemption from the zoning ordinance. The court stated “[w]hen operating in its proprietary capacity a municipal corporation is subject to the same burdens, responsibilities and liabilities as a private corporation or individual acting in the same capacity.” Hunke, 373 P.2d at 323. We find the rationale of these cases insufficient to decide the issue before us.

Much has been written concerning exemption of a governmental agency from zoning ordinances although the vast majority of legal prose has dealt with two opposing governmental agencies, one of which wishes to be exempt from the other’s zoning requirements. See 2 Anderson, American Law of Zoning, Sections 12.02-12.04 (3d ed. 1986); Note, Governmental Immunity from Zoning, 22 B.C.L.Rev. 783 (1980-81); Note, Governmental Immunity From Local Zoning Ordinances, 84 Harv.L.Rev. 869 (1971). A survey of the case law in existence unfurls four basic theories by which courts of this country have addressed this issue.

The general rule is that municipalities are granted exemption from zoning ordinances in modulating degrees depending on the theory of exemption of the jurisdiction. 82 Am.Jur.2d, Zoning and Planning Sections 149, 150, 152 and 153 (1976) indicates that municipalities are exempt: (1) by express language in the ordinance itself; (2) by immunity of the sovereign from suit; (3) by the distinction between the entity exercising a governmental or proprietary function; and (4) by the doctrine of eminent domain. In application of any of these tests, as the commentators have complained, problems are rampant.

The governmental-proprietary distinction test is most prevalent, but it is not without fault.

“ ‘Governmental functions’ are those conferred or imposed upon the municipality as a local agency of limited and prescribed jurisdiction to be employed in administering the affairs of the state and promoting the public welfare . . . When a municipal corporation engages in an activity of business, rather than one of a governmental nature, such as the supply of light or water or the operation of a railroad which is generally engaged in by individuals or private corporations, it acts as such corporation and not in its sovereign capacity [proprietary].”

State ex rel. Gebhardt v. City Council of Helena (1936), 102 Mont. 27, 35-36, 55 P.2d 671, 675.

This distinction has been criticized as oversimplistic and illusory. The wisdom of the governmental-proprietary function test is subject to question. City of Temple Terrace v. Hillsborough Ass’n for Retarded Citizens (Fla. 1975), 322 So.2d 571, 577, aff’d (Fla. 1976), 332 So.2d 610; Township of Washington v. Village of Ridgewood (N.J. 1958), 141 A.2d 308. 2 Anderson, American Law of Zoning, Section 12.03, pp. 481-482 (1986) accurately shows the problem with the proprietary-governmental distinction, especially as it applies to the issue we are faced with here:

“A municipality may carry out its governmental functions without regard to zoning restrictions, but it is subject to such restrictions when it is engaged in a proprietary function. The great difficulty lies in determining which functions are governmental, and which are proprietary. The distinction is of ancient vintage, but it is neither clear nor stable. What is regarded as governmental for one purpose . . . is not necessarily so regarded for a different purpose. And a proprietary function of a municipal government of 1955 may become a governmental function in 1965 ... A North Carolina court held that erection of a water tank is a governmental function which may be carried out without regard to local zoning regulations. The same result was reached by the Supreme Court of Kansas, with some aid from a state statute. The courts of Alabama, Florida, Illinois, Michigan and Pennsylvania have described the municipal water service as a proprietary function which must be carried out consistently with the municipal zoning regulations. See McKinney v. High Point (N.C. 1953), [237 N.C. 66,] 74 S.E.2d 440; Puhr v. Kansas City (Kan. 1935), [142 Kan. 704], 51 P.2d 911; Water Works Board v. Stephens, (Ala. 1955), [262 Ala. 203,] 78 So.2d 267; Treasure Island v. Decker (Fla. [App.] 1965), 174 So.2d 756; Baltis v. Westchester (Ill. 1954), [3 Ill.2d 388,] 121 N.E.2d 495; Taber v. Benton Harbor (Mich. 1937), [280 Mich. 522,] 274 N.W. 324; Wilkinsburg-Penn Joint Water Authority v. Churchill (Pa. 1965), [417 Pa. 93], 207 A.2d 905.”

The proprietary-governmental function distinction has also been criticized as being irrelevant because the immunity concept was developed only to limit a governmental entity’s exposure in tort and has been held to be inapplicable in zoning cases. City of Fargo, Cass County v. Harwood Township (N.D. 1977), 256 N.W.2d 694; Seward County Board of Commissioners v. City of Seward (1976), 196 Neb. 266, 242 N.W.2d 849. This distinction is archaic and muddled and no creative argumentation should convince us to continue to apply the governmental-proprietary function analysis.

The City argues in this case that it is exempt from the zoning regulations under the theory of immunity pursuant to Section 2-9-111, MCA, making any “governmental entity” immune. Section 18, Article II of the Montana Constitution and Section 2-9-102, MCA, express the policy that governmental immunity is not favored in this state. Our legislature, however, has enacted Section 2-9-111, MCA, and for us to totally disregard the City’s claim that it is immune would be remiss on our part. Nonetheless, under the facts of this case and in light of Section 76-2-402, MCA, we will not determine this case solely by granting the City blanket immunity.

The common law sovereign-immunity rule has been addressed a number of times by state courts only occasionally resulting in allowances of agencies’ uses in contravention of municipal zoning ordinances. City of Richmond v. Board of Supervisors (1958), 199 Va. 679, 101 S.E.2d 641; Aviation Services, Inc. v. Board of Adjustment (1956), 20 N.J. 275, 119 A.2d 761. Generally, however, this rule has been implemented where there are two separate governmental entities, one being “superior” to the other. The test has been widely criticized because it fails to recognize that municipalities are acting as agents of the state under state enabling acts and further does not provide a feasible means to determine which agent should prevail where “there are overlapping and conflicting territorial jurisdictions.” Note, Governmental Immunity From Local Zoning Ordinances, 84 Harv.L.Rev. at 877.

Critiques such as these have prompted many courts over the last several years to question seriously the continued viability of the sovereign-immunity rule in today’s highly urbanized society. The reasoning of the court in City of Temple Terrace, supra, 322 So.2d at 578-579, is most compelling.

“The old tests were adopted at a time when state government was much smaller. The myriad of agencies now conducting the functions of the state have necessarily resulted in a diminution of centralized control. The decision of a person administering an outlying function of a state agency with respect to the site where this function should be performed is not necessarily any better than the decision of the local authorities on the subject of land use. * * *

“Our burgeoning population and the rapidly diminishing available land make it all the more important that the use of land be intelligently controlled. This can only be done by a cooperative effort between interested parties who approach their differences with an open mind and with respect for the objectives of the other.” Blackstone Park Improvement Ass’n, et al. v. State of Rhode Island (R.I. 1982), 448 A.2d 1233, 1237-1238.

Generally, even where governmental immunity is found, it should not be exercised in a fashion that is unreasonable and arbitrarily overrides all important legitimate local interests. Blackstone, supra, 448 A.2d at 1239. There are in this case important, legitimate local interests that should be considered and to blindly adopt the immunity claimed by the City would be to entirely disregard these concerns.

Further, the language of City of Temple, supra, dealt largely with the question of two governmental entities and is extremely close to the test of eminent domain. The rationale for the eminent domain test is the presumption that the legislature’s grant of such power conclusively establishes the governmental entity’s superiority where its proposed land use runs counter to local zoning provisions. Blackstone, 448 A.2d at 1238, e.g., City of Kirkwood v. City of Sunset Hills (Mo.Ct.App. 1979), 589 S.W.2d 31; Mayor of Savannah v. Collins (1954), 211 Ga. 191, 84 S.E.2d 454. This test likewise disregards the important local concerns of development in a modern society and we choose not to adopt it here.

The Blackstone court noted that all of the traditional tests are flawed because “they are overly simplistic and often lead to resolution of a multifaceted zoning-conflicts issue through the use of conclusive labels rather than through perceptive adjudication.” Blackstone, 448 A.2d at 1238; citing Brownfield v. State (1980), 630 Ohio St.2d 282, 407 N.E.2d 1365, 1367-1368, overruled on other grounds, 28 Ohio St.3d 317, 503 N.E.2d 1025, 1028; Brown v. Kansas Forestry, Fish and Game Commission (1978), 2 Kan.App.2d 102, 576 P.2d 230, 232.

The more enlightened test, adopted in Blackstone and followed by a number of jurisdictions involves the so-called “balancing-of-interest” analysis developed by the New Jersey Supreme Court and the Minnesota Supreme Court at approximately the same time. Town of Oronoco v. City of Rochester (1972), 293 Minn. 468, 197 N.W.2d 426; Rutgers State University v. Piluso (1972), 60 N.J. 142, 286 A.2d 697. The test is best laid out in Rutgers, 286 A.2d at 702 and first requires an analysis of legislative intent. The Rutgers court stated that this intent may be obscured but can be discerned from consideration of the following factors: (1) the nature and scope of the instrumentality seeking immunity; (2) the kind of function or land use involved; (3) the extent of the public interest to be served; (4) the effect local land-use regulations would have upon the enterprise concerned; and (5) the impact upon legitimate local interest.

Oronoco, supra, and Rutgers, supra, can be distinguished from the case at bar because both dealt with competing governmental entities. In Oronoco, the question was whether the city of Rochester was exempt from the zoning requirements of Oronoco in the development of a sanitary landfill to benefit the town of Rochester but located in the township of Oronoco. Rutgers involved competing governmental entities in the form of the state university which wished to alleviate a shortage of education facilities by expanding a 500-unit ceiling for student housing which was in violation of the local municipal zoning ordinance. In both cases, the courts allowed the exemption. The Rutgers court stated that in some cases the “broader public interest is so important that immunity must be granted even though the local interests may be great.” Rutgers, supra, 286 A.2d at 703. However, the court cautioned that immunity was not completely unleashed:

“Even where [immunity] is found to exist, it must not * * * be exercised in an unreasonable fashion so as to arbitrarily override all important legitimate local interests. This rule must apply to the state and its instrumentalities as well as to lesser governmental entities entitled to immunity. * * * And, at the very least, even if the proposed action of the immune governmental instrumentality does not reach the unreasonable stage for any sufficient reason, the instrumentality ought to consult with the local authorities and sympathetically listen and give every consideration to local objections, problems and suggestions in order to minimize the conflict as much as possible.” (Emphasis added.)

Rutgers, 286 A.2d at 703.

The “balancing-of-interests test,” as the Blackstone court noted, has been followed in Florida, Hawaii, Kansas, Michigan, Minnesota, North Dakota, Ohio, Pennsylvania, and South Dakota. Citing cases, Blackstone, supra, 448 A.2d at 1239. We feel that this is the most enlightened approach to this complex question. We recognize also that these courts have adopted the “balancing-of-interests test” in cases involving competing governmental entities. However, due to the existence of Section 76-2-402, MCA, and its mandate to merely provide a public forum, and the distinguishable nature of this case where we have a communities’ own citizens challenging the City for violating its own zoning ordinance, we need not apply the “balancing-of-interests test” in this case.

As suggested in Rutgers, the legislative intent of the statute in question, Section 76-2-402, MCA, will first be considered. Landowners argue that the language “whenever an agency proposes to use public land contrary to local zoning regulations,” and the fact that the board of adjustments can only act upon notice of the agency’s “intent to develop land contrary to local zoning regulations” shows the statute contemplates approval of future action. The City claims the language requires only that a public hearing be held by the local board of adjustments within thirty days of the date the agency gives notice to the board of its intent to develop the land contrary to the zoning regulations.

The City points to the affidavits attached to its motion for summary judgment showing that the board of adjustments did hold the hearing within thirty days of the date the board was given notice of the City’s intent. Additionally, the City points out, and a reading of Subsection (2) shows, the board of adjustments has no power to deny the proposed use but rather is only required to provide a public forum for comment.

The City additionally argues that the legislative intent can be gleaned from the legislative history which shows that the bill which ultimately became Section 76-2-402, MCA, was originally introduced entitled: “An act requiring land development and use by governmental agencies to conform to local zoning regulations.” The bill was finally passed entitled: “An act requiring land development and use by governmental agencies to be subject to public hearing.” Therefore, the City claims, the end result was that the legislature recognized that government agencies are not subject to zoning regulations.

We do not conclude that the intent of the legislature is clear merely by the changing of the title of the bill. However, we do affirm the ruling of the District Court in this case. The District Court properly noted that a reading of Section 76-2-402, MCA, shows that “[wjhether the use is proposed or construction underway, an analysis of Montana’s zoning law discloses that a municipality’s construction of a service facility which does not comply with the zoning ordinances is subject only to public comment and not prohibition by the Board of Adjustment.”

Whenever this Court determines legislative intent, we look first to the plain meaning of the words used in the statute. W.D. Construction, Inc. v. Bd. of County Comm. of Gallatin County (Mont. 1985), [218 Mont. 348,] 707 P.2d 1111, 1113, 42 St.Rep. 1638, 1641; Dorn v. Bd. of Trust. of Billings Sch. Dist. (1983), 203 Mont. 136, 144, 661 P.2d 426, 430. The issue presented is disposed of by the very terms of Section 76-2-402, MCA. The section requires only an opportunity for a public forum, it does not give power to the board of adjustments to disallow any governmental action. The record shows the public was allowed the opportunity to present complaints at the June 24, 1985 meeting. The hearing was held, the public was allowed to comment. No governmental violation of Section 76-2-402, MCA, occurred and therefore no governmental entity committed an act or omission giving rise to a cause of action.

We do not accept the caselaw cited by the Landowners because it turns on the antiquated and confusing proprietary-governmental function test. Further, we do not solely decide this case on the City’s claim that it is immune from the ordinance merely because of its status as a governmental entity under Section 2-9-111, MCA.

We note that the Landowners, to present the issue before the District Court regarding the City’s action in this case, could have attempted to attain injunctive relief. See, Rich, supra, 657 P.2d at 962. The actions of the City, nonetheless, were not in violation of the law as it was required only to provide notice to the board of adjustments which provided the public hearing.

We affirm.

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

MR. JUSTICE SHEEHY,

dissenting:

If the reader, having read the foregoing opinion, understands its reasoning, he or she may step to the head of the class. After giving judicial blessing to the balancing of interests tests of Oronoco and Rutgers, the opinion declines to apply them and then partly applies them; it chides the landowners for not seeking injunctive relief, and then tells them no injunctive relief was possible; it refuses to grant immunity from zoning regulations to cities, but grants it; and it sweeps away as “antiquated,” without any necessity, the distinction between proprietary and governmental functions of municipalities. It tells the cities they are subject to their own zoning regulations, and then tells them they are not. The landowners here are even deprived of a right to question any abuse of discretion by the city, a right of landowners surely should have under an action for a writ of review.

It is a farce to uphold a statute that guarantees a public hearing on an issue, but which statute also provides that the hearing is purposeless, of no account, a mere exercise in hearings. Who needs the exercise?

Moreover, the statement of facts by the majority is not clear. The first notice to landowners that the city disregarded its own zoning regulations was when the city commenced building the water tank in April, 1985. It was not until June, 1985, that the city provided the public hearing required by Section 76-2-402, MCA. A hearing after the fact is even more of a farce.

I dissent. I would reverse the summary judgment.


source: Caselaw Access Project

author: MR. JUSTICE McDONOUGH

license: Public Domain

text:
    JACK PETTY, Plaintiff and Appellant, v. FLATHEAD COUNTY BOARD OF COUNTY COMMISSIONERS, Allen Jacobson, Kenneth Krueger, and Howard Gipe, and Flathead County, Montana, a political body, Defendants and Respondents.
    No. 87-485.
    Submitted on Briefs March 11, 1988.
    Decided April 25, 1988.
    Rehearing Denied May 12, 1988.
    754 P.2d 496.

      Richard DeJana, Kalispell, for plaintiff and appellant.
    Ted O. Lympus, Co. Atty., Kalispell, Dennis Hester, Deputy Co. Atty., for defendants and respondents.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

This case involves the creation of a zoning district by the Flathead County Board of County Commissioners (Board). Appellant Jack Petty sued the Board claiming that the Board’s failure to follow the proper procedures for creating a zoning district voided the zoning district where Mr. Petty had recently purchased property. The District Court granted a motion for summary judgment made by the Board holding that the Board had substantially complied with the procedures for creating a zoning district under Sections 76-2-101 to - 112, MCA. Mr. Petty appeals the summary judgment order. We affirm.

The following facts are undisputed: The property at issue is called the Two Bridges Zoning District. Prior to the creation of the district, the Board received a valid petition from 60% of the freeholders in the area requesting that the district be created. After receipt of the petition, the Board passed a motion on March 10, 1978, creating the district and ordering a meeting of the County Zoning Commission to determine the district’s development pattern.

On March 13, 1978, and March 20, 1978, the Zoning Commission met to consider the district’s development pattern. After the second meeting the Zoning Commission scheduled a hearing for April 11, 1978, to receive public comment on proposals for the development pattern. Notice of the hearing was published in the local paper on April 3, 1978, and April 10, 1978. The record is unclear as to whether any notice of the hearing was posted in public places. At the hearing interested parties commented on the district’s boundaries and development pattern.

After the hearing the Zoning Commission made recommendations to the Board of County Commissioners, and the Board scheduled its own public hearing. Notice of the Board’s hearing was published in the local paper on May 5, 1978, and May 12, 1978. The record fails to disclose whether or not notice of this hearing was posted in public places. At the hearing the Board heard public comment on the development pattern and boundaries of the district as recommended by the Zoning Commission.

Following the hearing the Board effectuated the Zoning Commission’s recommendations by adopting Resolution No. 298. The resolution omitted acreage that had been included under the description of the district as set out in the motion creating the district.

The following are assigned as issues on appeal by Mr. Petty:

(1) For a proper exercise of the police power in the act of zoning, must the enabling legislation be strictly followed?

(2) At the time of creation of a planning and zoning district, must the area to be included in the district be defined and described?

(3) Must a specific commission be appointed for each planning district as stated in Section 76-2-101, MCA, or may a county use the same commission for each zone without separate appointment?

(4) Were the notice provisions complied with?

(5) May the adoption of a resolution by the County Commissioners creating a zone moot the failure to follow the process prescribed by the enabling legislation?

(6) Need there be a developmental pattern prepared by the Planning and Zoning Commission of each district and what is that pattern?

(7) Need a plaintiff bring an action prior to such time as his use for his land is threatened in order to avoid the doctrine of latches?

Issue I.

Mr. Petty claims generally that the District Court erred by failing to strictly construe the procedural requirements for establishing zoning districts as mandated by Sections 76-2-101 to -112, MCA. However, Mr. Petty fails to point out any specific error under his discussion of this issue.

In its memorandum the District Court concluded that the Board had “substantially complied” with the procedural requirements. The proper issue facing a district court interpreting these statutes is whether or not a board of county commissioners substantially complied with the procedural steps for creating zoning districts. Dover Ranch v. County of Yellowstone (1980), 187 Mont. 276, 284, 609 P.2d 711, 716. Thus, the District Court’s decision as to the standard for reviewing the procedures set out in the zoning statutes correctly interpreted Montana law, and we affirm on this issue.

Issue II.

Mr. Petty contends that when the Commissioners passed the motion creating the district, the district was not adequately defined and described. The subsection of the statute authorizing Flathead County’s creation of the district at issue here reads:

“76-2-101. Planning and zoning commission and district. (1) Whenever the public interest or convenience may require and upon petition of 60% of the freeholders affected thereby, the board of county commissioners is hereby authorized and empowered to order and create a planning and zoning district and to appoint a commission consisting of five members.”

To support his contention, Mr. Petty cites cases decided under another statute, Section 76-2-201, MCA. According to Mr. Petty, this statute requires the establishment of an actual jurisdictional area prior to adoption of zoning regulations. See, e.g., Allen v. Flathead County (1979), 184 Mont. 58, 601 P.2d 399. The statute reads:

“76-2-201. County zoning authorized. For the purpose of promoting the health, safety, morals, and general welfare of the people in cities and towns and counties whose governing bodies have adopted a comprehensive development plan for jurisdictional areas pursuant to chapter 1, the boards of county commissioners in such counties are authorized to adopt zoning regulations for all or parts of such jurisdictional areas in accordance with the provisions of this part.” (Emphasis added).

Sections 76-2-101 -112, MCA, the statutes at issue in this case, authorize what has been “referred to as the rural zoning law or the forty acre law, [which] gives county commissioners the power to zone in a given district which exceeds 40 acres and which has been called into existence by a petition of at least sixty percent of the freeholders within the district.” (Emphasis added). Lundberg, County Zoning in Montana, 33 Mont. L. Rev. 63, 65. In contrast, zoning under Sections 72-2-201 to -228, MCA, involves county-wide planning and zoning by county commissioners working with county planning boards. Lundberg, County Zoning in Montana, 33 Mont. L. Rev. 63, 68. Our interpretations of the procedural requirements for zoning jurisdictional areas under the county wide zoning statutes have no application to the requirements for the creation of zoning districts under the rural zoning laws in Sections 76-2-101 to -112, MCA. See Montana Wildlife Federation v. Sager (Mont. 1980), [190 Mont. 247,] 620 P.2d 1189, 1197, 37 St.Rep. 1897, 1905. And nothing in the record demonstrates noncompliance with the applicable procedure, i.e., the existence of a petition signed by 60% of the freeholders in the district to be created, which petition and the notices that follow adequately describe the district. See City of Missoula v. Missoula County (1961), 139 Mont. 256, 260, 362 P.2d 539, 541. Thus, we affirm on this issue.

Issue III.

Mr. Petty argues that the district at issue here is void because the Board failed to appoint a zoning commission at the time the district was created. The Board responds that since the Zoning Commission already existed, there was no need for an appointment.

Section 76-2-101, MCA, (set out above) requires the appointment of a zoning commission at the time the zoning district is created. Section 76-2-102, MCA, mandates that the commission consist of the three county commissioners, the county surveyor, and the county assessor.

The motion by the Board creating the district is recorded in the Commissioners’ Journal. The motion reads:

“Motion by Guay, seconded by Deist and carried to create the Two Bridges Zoning District (#32). A meeting of the Zoning Commission will be called to determine a development pattern for this area.” We hold that the Board’s motion is sufficient to satisfy the requirement that the Board appoint a zoning commission at the time the district is created. The statute mandates the zoning commission’s membership, and it is obvious from subsequent events in this case that the membership of the Flathead County Zoning Commission had notice that they were required by the motion to meet and determine a development pattern for the district. Thus, we affirm on this issue.

Issue IV.

Mr. Petty contends that the notices of the public hearings on the district’s development pattern were not publicly posted as required by Section 76-2-106, MCA. The Board responds that this issue was not raised in the lower court, and thus cannot be raised on appeal.

Mr. Petty contends that the issue was raised in his “Plaintiff’s Reply Memorandum and Rebuttal Memorandum”, filed in response to the Board’s motion for summary judgment in the lower court. The following discussion on the notices occurs in this brief:

“While visiting the Defendants facts it is useful to examine exhibit 6 ‘Notice of Hearing’ for the April 11, 1978 ‘Zoning Commission’ Meeting. This is dated March 28, 1978. (14 days before the hearing, if the date of the notice and date of hearing are included.) Further on its face the notice reflects that it wasn’t published until April 3 and 10, 1978. Section 76-2-106 MCA requires 15 days prior notice. The county again violates the law. The zone was and is void.”

Nothing in this argument refers to the requirement that the notice be posted in public places. Nothing in the District Court’s memorandum suggests that the issue was tried in the lower court. Furthermore, there is no evidence to show that the public notices were not posted, and since Mr. Petty has not proved whether or not they were posted, there can be no proof as to whether or not the posting was timely. Thus, there is no issue here for this Court to consider in regard to notice. Bowman v. Prater (Mont. 1984), [213 Mont. 459,] 692 P.2d 9, 11-12, 41 St.Rep. 2236, 2239-40.

Issue V.

Mr. Petty argues that the District Court erred in concluding that any irregularities in the initial stages of the zoning process were rendered moot by the Board’s adoption of the development pattern in Resolution No. 298, and by the passage of several years without objection. The Board responds that the District Court discussion of mootness did not form the basis for its grant of summary judgment, and thus cannot be assigned as error on appeal.

The statement objected to by Mr. Petty is in the conclusion of the lower court’s Memorandum. It reads:

“Based on the foregoing findings, the Court holds that the Two Bridges Zoning District was validly created, that the Flathead County Zoning Commission is also the Two Bridges Zoning District Commission and that the provisions of Part 1, County Planning and Zoning Commission, of Chapter 2, Planning and Zoning, of Title 76, Land Resources and Use of the Montana Code Annotated have been substantially complied with. Any inconsequential, procedural irregularities became moot upon the adoption of Resolution 298 in 1978 and the passage of several years without challenge until the filing of Plaintiff’s Complaint.”

The essential conclusion here is that the Board substantially complied with the procedures mandated by Montana law for the creation of the district at issue. The findings supporting this conclusion are that: (1) a valid petition signed by over 60% of the freeholders in the area was submitted to the Board prior to creation of the district, (2) the Zoning Commission proposed a development pattern, and (3) the public was properly noticed prior to a public meeting on the issue that the Board proposed to adopt the Zoning Commission’s development pattern. Thus, the lower court’s comments on the significance of Resolution No. 298, and the passage of time between creation of the district and the bringing of the law suit, do not form the basis for its judgment, and are not relevant to this appeal. See Sink v. School District No. 6 (1982), 199 Mont. 352, 361-62, 649 P.2d 1263, 1268. And we affirm on this issue.

Issue VI.

There are actually two issues advanced here by Mr. Petty. First, Mr. Petty contends that the Zoning Commission’s development pattern for the district violates Section 76-2-104(2), MCA, because the development pattern allowed only one use as opposed to allowing multiple uses. Mr. Petty also contends that the development pattern violates Section 76-2-104(2), MCA, because maps, plats, charts, and descriptive matter did not accompany the adoption of the development pattern by the Zoning Commission.

Section 76-2-104, MCA, states:

“Development Pattern: (1) For the purpose of furthering the health, safety, and general welfare of the people of the county, the county planning and zoning commission hereby is empowered and it shall be its duty to make and adopt a development pattern for the physical and economic development of the planning and zoning district.
“(2) Such development pattern, with the accompanying maps, plats, charts, and descriptive matter, shall show the planning and zoning commission’s recommendations for the development of the districts, within some of which it shall be lawful and within others of which it shall be unlawful to erect, construct, alter, or maintain certain buildings or to carry on certain trades, industries, or callings or within which the height and bulk of future buildings and the area of the yards, courts, and other open spaces and the future uses of the land or buildings shall be limited and future building setback lines shall be established.

Mr. Petty argues that the language in subsection 2 of this statute requires multiple districts with varying uses within each zoning district created by boards of county commissioners, and that the district at issue in this case violates that mandate by allowing only residential uses. We disagree. Subsection 1 of this statute refers in the singular to a “district” and its development pattern. Subsection 2, upon which Mr. Petty relies for his theory that multiple uses must accompany the creation of every district, refers in the plural to a development pattern for “districts.” This Court has held previously that the reference to districts in subsection 2 does not require zoning commissions to conduct a county wide survey prior to the establishment of a particular district. See Doull v. Wohlschlager (1963), 141 Mont. 354, 363, 377 P.2d 758, 763. Similarly, the use of the plural in Subsection 2 does not mandate that each district, which may be as small as 40 acres, be fractionalized into several smaller districts with different regulations for each fraction. Such an interpretation “would create an absurd result where a reasonable construction would avoid it.” McClanathan v. Smith (1980), 186 Mont. 56, 62, 606 P.2d 507, 511. Thus, we affirm on the first argument under this issue.

The second argument Mr. Petty groups under this issue is that the district is void because the Zoning Commission failed to refer expressly to maps, charts and descriptive matters forming the pattern or part thereof. The development pattern recommended a single land use classification, and the notice of the public hearing held prior to the Zoning Commission’s recommendation on the development pattern contained a legal description of the district. Under these circumstances, we agree with the District Court’s conclusion that the statutory requirement for reference to maps, charts, and descriptive matters was substantially complied with. Doull, 377 P.2d at 763.

Issue VII.

Mr. Petty contends that the District Court erred by relying on latches to find for the Board on its motion for summary judgment. As pointed out in our discussion of issue V, the essential conclusion for resolution of this case was the District Court’s finding that the Board had substantially complied with the procedures for creating districts under the 40 acre law. Thus, there is no issue which requires our determination. Affirmed.

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


author: MR. JUSTICE HUNT

text:
    In re the MARRIAGE OF GERALD E. SESSIONS, Petitioner and Appellant, and DORA F. SESSIONS, Respondent and Respondent.
    No. 87-442.
    Submitted on Briefs March 24, 1988.
    Decided April 26, 1988.
    753 P.2d 1306.

      Timothy J. O’Hare, Lewistown, for petitioner and appellant.
    Craig R. Buehler, Lewistown, for respondent and respondent.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

Petitioner appeals from a judgment of the District Court, Tenth Judicial District, County of Fergus, dissolving the marriage between the parties and distributing the marital property.

The issues are:

1. Whether the District Court abused its discretion in dividing the marital property where it adopted verbatim wife’s proposed findings of fact and conclusions of law?

2. Whether the District Court’s order of contempt and order to purge contempt was proper?

3. Whether the District Court’s subsequent order of contempt is void as a matter of law because it was entered after notice of appeal was filed?

The parties were married on November 8, 1965. Their marriage was dissolved by judgment of the District Court dated July 31, 1987. At the time of dissolution the couple had one minor child left at home. The wife was 41 years of age and the husband 44 years of age when the marriage was dissolved.

The husband has held several jobs, including that of computer terminal technician, throughout the marriage. At the time of trial he was unemployed and living outside Montana. The wife has no formal training but worked in the couple’s various business endeavors throughout the marriage. She was a cocktail waitress at the time of trial and living in the marital home.

The major marital assets were awarded to the parties as follows:

Wife Value

Family home $ -0- plus $16,000 mortgage

Jensen contract (sale of catalog store) $12,944 discounted value plus $23,366 owing on the underlying debt

Vacant lot in Idaho Car $ 4,000 plus $950.00 tax lien $ 500

Husband Value

Hackamore Supper Club $24,235

Truck $ 2,500

Life insurance policy [value not provided]

Family checking account $ 255

The rest of the assets were divided according to wife’s proposed findings and conclusions. Appellant husband initially argues that the court abused its discretion by dividing the property as it did because it adopted verbatim the wife’s proposed findings and conclusions. This contention lacks merit.

As has been reiterated by this Court several times, the standard of review for adopted findings of fact and conclusions of law is the same as for court-prepared findings. In Re Marriage of LeProwse (1982), 198 Mont. 357, 362, 646 P.2d 526, 528-29; Goodmundson v. Goodmundson (1982), 201 Mont. 535, 538, 655 P.2d 509, 511. Although we recognize the possible ethical considerations present in verbatim adoption of one party’s proposed findings the Court has consistently held that no legal error occurs where the District Court’s decision is supported by law and evidence. In re Marriage of Watson (Mont. 1987), [227 Mont. 383,] 739 P.2d 951, 954, 44 St.Rep. 1167, 1170; Parenteau v. Parenteau (1983), 204 Mont. 239, 244, 664 P.2d 900, 903; LeProwse, 646 P.2d at 529.

A review of the record shows that there was conflicting evidence given as to the value of most of the marital assets. Both parties had experts give an estimate of the value of the family home based on appraisals. Wife’s expert testified that, after making a visual inspection, the home was worth $19,000. She further testified that there was no equity position on the property. It’s not disputed that the remaining liability on the home was approximately $16,000. Husband’s expert gave an appraisal of $22,000 but did not do a visual inspection of the home because he had sold it to the Sessions some months before. When conflicting expert testimony is given the trier of fact has full discretion to give weight to the testimony as he sees fit. In re Marriage of McCormack (Mont. 1986), [223 Mont. 409,] 726 P.2d 319, 321, 43 St.Rep. 1833, 1835; In re Marriage of Williams (Mont. 1986), [220 Mont. 232,] 714 P.2d 548, 552, 43 St.Rep. 319, 325. The court chose to rely on the wife’s expert and substantial evidence supports the court’s finding here.

The husband also contends that contradictory testimony about the value of the Jensen contract shows an abuse of discretion. In 1986, the parties sold a Sears catalog store they had owned for which the balance owed to them at trial was $41,049.90 subject to an underlying mortgage of $22,366.59. The husband testified the fair market value of this contract was $18,683.31. The wife introduced a statement from a prospective purchaser that it would buy the contract for $12,944. At the same time, the wife testified that the figure given on the document was $27,944. This was apparently a misstatement which the court recognized when it adopted the $12,944 figure listed in the wife’s proposed findings. There is substantial evidence to support this value also.

The last major asset we will discuss is the parties’ interest in the Hackamore Supper Club bought by the husband and his brother in 1986. The husband disputes the value placed on his interest because he testified that, as it was a losing concern, he felt it had no value. The District Court valued the husband’s interest at $24,325 consisting of a $20,000 initial contribution and $4,325 of later contributions. The record shows that the Club was run by the parties as partners. After filing the petition for dissolution but before the trial was held, the husband transferred his interest to his brother without his wife’s approval. It was not improper for the District Court to include it as a marital asset and award it to the husband at the value stated under these circumstances.

The husband disputes the values of several other household items and vehicles. We hold that the District Court’s findings as to these items are also fully supported by substantial credible evidence and decline to discuss them further. We affirm the District Court’s property distribution.

Appellant’s second issue disputes the propriety of the District Court’s order of contempt and order requiring the husband to purge the contempt. Although contempt of court orders by the District Court are final and usually unreviewable by this Court in any manner except by writ of certiorari, Section 3-1-523, MCA, an exception is made in dissolution of marriage proceedings. In re Marriage of Smith (Mont. 1984), [212 Mont. 223,] 686 P.2d 912, 914, 41 St.Rep. 1695, 1697. We must limit our review to see whether the District Court was within its jurisdiction and whether the evidence supports the finding of the court. Smith, 686 P.2d at 912; Schneider v. Ostwald (Mont. 1980), [190 Mont. 29,] 617 P.2d 1293, 1295, 37 St.Rep. 1728, 1730.

By order dated March 9, 1987, the husband was required to pay respondent $300.00 per month for support and maintenance. Respondent also asserts that at a hearing the husband agreed to pay approximately $2,000 in household bills and appellant’s counsel was asked to draft an order to that effect. There is no record of this hearing but apparently this order was never drafted. The husband does not dispute this contention but argues the bills were already paid by the time of trial. The District Court ordered the husband to pay $2,900 for support, maintenance and bills. Testimony by the husband reveals that the support and maintenance payments and the bill payments had not been made by the time of trial. Appellant points to no contradictory evidence. We therefore affirm this order of the District Court.

Lastly, appellant asks us to void the District Court November 25, 1987 order again finding the husband in contempt for not paying the sum of $2,300. He argues that the notice of appeal dated August 31, 1987 stripped the District Court of its jurisdiction and therefore the order is void. We disagree.

Although the record is silent on this point, the respondent admits that support in the sum of $600 was paid April 27, 1987. Apparently the District Court was aware of this payment and subtracted it from its previous order to pay $2,900. There is no evidence as to any other payments.

This Court has held that a contempt proceeding is separate and independent of the civil action from which it arose. Myhre v. Myhre (1976), 168 Mont. 521, 522, 548 P.2d 1395, 1396 (per curiam). The District Court therefore is not divested of jurisdiction over a contempt matter by the filing of an appeal of the underlying civil matter. Accordingly, we affirm the decree and orders of the District Court.

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


author: MR. JUSTICE SHEEHY

text:
    FALLON COUNTY, et al., Plaintiffs and Appellants, v. STATE OF MONTANA, et al., Defendants and Respondents.
    No. 87-298.
    Submitted April 4, 1988.
    Decided April 27, 1988.
    753 P.2d 338.
    Daniel L. Schwarz, Schwarz and Schwarz, Broadus, for plaintiffs and appellants.
    R. Bruce McGinnis, Dept, of Revenue, Helena, David W. Woodgerd argued, for defendants and respondents.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

In 1985, the state legislature, through its General Appropriation Bill (H.B. 500), provided state funding for the salaries of county assessors for fiscal year 1987 at the level of 70%. The remaining 30% was to be paid by the several counties. In 1987, the state legislature continued the apportionment of the county assessors’ salaries between the state and the several counties for this biennium but reduced the state participation to 66%, with the several counties to pick up the remaining 34%.

Fallon County, 19 other counties, and one county assessor brought suit in the District Court, First Judicial District, Lewis and Clark County against the State of Montana, acting through the Governor and the Department of Revenue, challenging the apportionment between the state and counties of the salaries of the county assessors. After a hearing, and receipt of briefs, the District Court issued an order granting summary judgment in favor of the state and entered judgment thereon on June 17, 1987, dismissing Fallon County’s action on the merits, and holding that the provisions of H.B. 500 which funded only 70% of the salaries for county assessors does not violate Art. VIII, Section 3 of the 1972 Mont. Constitution. Fallon County has appealed the District Court decision to this Court and on consideration, we affirm.

The section in issue is in Art. VIII, of the state constitution. It provides in pertinent part:

“Section 3. Property tax administration. The state shall appraise, assess, and equalize the valuation of all property which is to be taxed in the manner provided by law.”

Prior to the 1972 Montana Constitution, the assessment and valuation of property for tax purposes was determined at a county level, subject to review by the former State Board of Equalization. During the Constitutional Convention of 1972, it was contended that the county system had inadequately equalized property values statewide. It was contended during the Convention that the then recent case of Serrano v. Priest (1971), 5 Cal.3d 584, 96 Cal.Rptr. 601, 487 P.2d 1241, mandated a change in Montana’s assessment, valuation and equalization system to avoid equal protection attacks on the method of state funding for elementary education. The ultimate result was the adoption of Article VIII, Section 3 above quoted.

Following the adoption of the 1972 State Constitution, the legislature, to implement the new assessment system, provided that all county assessors became agents of the Department of Revenue (DOR), and they remain state agents presently. Section 15-8-102, MCA. County assessors were omitted from the list of county officers (Section 25-605, R.C.M. (1947)), but subsequently regained county officer status in 1977. Section 7-4-2203(l)(i), MCA.

Beginning in 1973, all county assessors’ salaries were paid from state funds through the DOR. In 1985, the legislature changed this pay structure through H.B. 500 which provided for state payment of 70% of the county assessors’ salaries applying to fiscal year 1987. The 1987 legislature has continued the apportionment of such salaries in this biennium by funding an amount sufficient to pay 66% of county assessors’ salaries. The remainder is to be supplied by the several counties.

In the District Court and on appeal, Fallon County and its co-plaintiffs argue that Article VIII, Section 3 grants a right to the people to have their property assessed by the State of Montana and to have the state remain solely accountable for such assessments; that the designation of assessors as “county officials” is not sufficient to change the constitutional duty of the state to assess property and to pay for the personnel employed for that purpose; that the assessment of taxes is a duty placed on the state regardless of the form of government at the county level chosen by the people, and that though assessors may perform duties in addition to those provided for in the constitution relating to assessment, the elemental accountability for assessors lies with the DOR. Additionally, Fallon County argues that the apportionment of such salaries, because of the mills limitation applicable to levies by counties, has the effect of using up county funds that would otherwise be available for other county activities. Some of these issues are raised by Fallon County because the District Court, in its order granting summary judgment in this matter held that the office of elected county assessor is a county office, that it is a permissive office, and that the assessor has some duties which are in addition to those required relating to assessment.

When a legislative course of action expressed in statutes or budgetary laws is tested for constitutionality under the State Constitution, our review is circumscribed by certain principles. We must give the state constitutional provision a broad and liberal construction consistent with the intent of the people adopting it to serve the needs of a growing state. State ex rel. Fenner v. Keating (1917), 53 Mont. 371, 163 P. 1156. The constitutional provision should receive a reasonable and practical interpretation in accord with common sense. Cottingham v. State Board of Examiners (1958), 134 Mont. 1, 17, 328 P.2d 907, 912. The constitutionality of a legislative enactment is prima facie presumed, and every intendment in its favor will be presumed, unless its unconstitutionality appears beyond a reasonable doubt. State ex rel. Mills v. Dixon (1923), 66 Mont. 76, 84, 213 P. 227, 229. The question of constitutionality is not whether it is possible to condemn, but whether it is possible to uphold the legislative action which will not be declared invalid unless it conflicts with the constitution, in the judgment of the court, beyond a reasonable doubt. Matter of the Estate of Kujath (1976), 169 Mont. 128, 545 P.2d 662; see also Board of Regents v. Judge (1975), 168 Mont. 433, 543 P.2d 1323; Arps v. State Highway Commission (1931), 90 Mont. 152, 300 P. 549.

We held in Board of Regents v. Judge, supra, that under the state constitution, the legislative appropriative power extends to all public operating funds of state government. The constitutional limit over that power is that appropriations by the legislature shall not exceed anticipated revenue. Article VIII, Section 9.

The duties of the county assessor vis-a-vis the Department of Revenue are these:

“(1) The county assessors of the various counties of the state are agents of the department of revenue for the purpose of locating and providing the department a description of all taxable property within the county, together with other pertinent information, and for the purpose of performing such other administrative duties as are required for placing taxable property on the assessment roles. The assessors shall perform such other duties as are required by law, not in conflict with the provisions of this subsection.”

Section 15-8-102, MCA.

The office of county assessor is a permissive office, and may be elected or appointed. Section 7-4-2203, MCA. The Board of County Commissioners has the power and discretion to consolidate the office of county assessor with one or more other county officers. Section 7-4-2301, MCA. While an assessor is an agent of the state, nevertheless, under Section 7-4-2110(1), MCA, the Board of County Commissioners has the jurisdictional power to “supervise the official conduct of all county officers charged with assessing, collecting, safekeeping, management or disbursement of the public revenues.

Irrespective of the contentions of Fallon County, the dispositive question is whether the imposition by the constitution on the state of the duty to appraise, assess and equalize property valuations mandates that the state should fully fund the county assessors’ salaries. The constitutional provision itself is silent on that point. It is apparent that Article VIII, Section 3 was adopted with a conscious choice of leaving the method of implementing the state’s duties to the legislature. Even though Section 15-8-101, MCA, requires the Department of Revenue to “secure such personnel as is necessary to properly perform its duties” that section does not dictate, when read with other statutes pertaining to the county assessor that the state should completely fund county assessor salaries. Article VIII, Section 3 gives the legislature wide flexibility to implement the assessment, appraisal and valuation of property for tax purposes. Fallon County’s claim that the legislative apportionment of salaries conflicts with the Constitution is very far from approaching invalidity beyond a reasonable doubt. Matter of the Estate of Kujath, supra.

Finally, Fallon County in making its “common sense” argument, Cottingham v. State Board of Examiners, supra, contends that it is unfair for the state, which controls the assessment of property to require counties to shoulder part of the expense of the assessors. That issue is political, not constitutional, and must be addressed to the legislature itself. When the legislature acts within its constitutional power, courts are unable to contravene such power on any court-presumed grounds of fairness, absent equal protection consequences.

Accordingly, we affirm the decision of the District Court.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER and GULBRANDSON and MR. CHIEF JUSTICE HASWELL, retired, sitting for MR. JUSTICE McDONOUGH concur.


author: MR. JUSTICE HARRISON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. FAYE E. SLICE, Defendant and Appellant.
    No. 87-521.
    Submitted on Briefs March 3, 1988.
    Decided April 28, 1988.
    753 P.2d 1309.

      Larry D. Mansch, Public Defender, Missoula, for defendant and appellant.
    Mike Greely, Atty. Gen., Helena, Dorothy McCarter, Asst. Atty. Gen., Robert L. Deschamps, III, Co. Atty., Missoula, for plaintiff and respondent.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

The defendant, Faye E. Slice, was tried on sixteen criminal counts: three counts of issuing a bad check, Section 45-6-316, MCA (felonies); one count of forgery, Section 45-6-325, MCA (felony); eight counts of deceptive practices Section 45-6-317, MCA (felonies); two counts of felony theft Section 45-6-301, MCA; one count of misdemeanor theft Section 45-6-301, MCA; and one additional count of deceptive practices or in the alternative felony theft. Defendant Slice made a motion on March 13, 1987, to sever the charges filed against her pursuant to Section 46-11-404, MCA, and the motion was denied April 13, 1987. A jury trial was held starting May 14, 1987 in Missoula County, before the Honorable Douglas G. Harkin. Slice was found not guilty of two counts of deceptive practices and found guilty on the remaining fourteen counts. Taking into account concurrent sentences, Slice was sentenced to a total of forty years imprisonment in the Montana State Prison with thirty-five years suspended. Slice appeals and we affirm the decision of the District Court.

The sole issue raised on appeal is whether the trial judge erred in denying defendant’s motion to sever the charges filed against her pursuant to Section 46-11-404, MCA.

Section 46-11-404, MCA states, in pertinent part:

“(2) The court in which the case is triable, in the interests of justice and for good cause shown, may, in its discretion, order that the different offenses or counts set forth in the indictment, information, or complaint be tried separately or divided into two or more groups and each of the groups tried separately. An acquittal of one or more counts shall not be considered an acquittal of any other count.
“(4) If it appears that a defendant or the state is prejudiced by a joinder of related prosecutions or defendants in a single charge or by joinder of separate charges or defendants for trial, the court may order separate trials, grant a severance of defendants, or provide any other relief as justice may require.”

Slice argues there are three reasons why the charges should have been severed and separate trials granted. First, Slice contends that the amount of evidence presented had a cumulative effect convincing the jury she was a “bad person.” Second, Slice contends that many of the crimes were unrelated and that much of the evidence presented would not have been admissible if the charges had been severed into related groupings and a separate trial held for each grouping. Finally, Slice states she desired to testify as to some, but not all, of the charges. Since the charges were all joined, Slice did not have the option of testifying as to only some of the charged offenses.

Slice relies on State v. Campbell (1980), 189 Mont. 107, 120, 615 P.2d 190, 198, in which we recognized three potential types of prejudice that could result from the joinder of offenses. Generally, these three types of potential prejudice are reflected in Slice’s contentions which are cited above. In Campbell, we cited and relied upon State v. Orsborn (1976), 170 Mont. 480, 489, 555 P.2d 509, 514, 515, where we stated:

“First, the jury may consider [a] defendant who is subject to the multiple charges to be a bad man. The prejudice claimed is that the jury may tend to accumulate evidence against him until it finds him guilty of something. However, our examination of federal cases reveals that such a claim of prejudice rarely has been found sufficient to provide relief. (Citations omitted.) . . .
“Second, proof of guilt of one offense may be used to convict the defendant of another offense even though such proof may be inadmissible at a separate trial. However, where, as here, the alleged fact of the separate offenses was sufficiently distinct to allow the jurors to keep them separate in their minds, no prejudice will be found. (Citations omitted.)
“Third, prejudice may result where the defendant wishes to testify on his own behalf on one charge but not on the other. But we note federal courts have only considered such a claim of prejudice where the alleged offenses were totally separate as to time, place and evidence. (Citation omitted.)”

It is within the sound discretion of the trial judge to balance the prejudicial effects of joinder against the benefits of judicial economy realized from a joint trial. Absent an abuse of that discretion, we will not reverse the District Court decision. “In striking the balance between prejudice to a defendant and judicial economy, considerations of judicial economy exert strong pressure in favor of joint trials.” Campbell, 189 Mont. at 121, 615 P.2d at 198. The defendant holds the burden of demonstrating prejudice. As we stated in Campbell:

“In showing prejudice, it is not sufficient that the defendant prove some prejudice or that a better chance of acquittal exists if separate trials are held. Rather, the defendant must show the prejudice was so great as to prevent a fair trial. (Citations omitted.) Given this high standard of proof and the deference afforded to the discretion of the trial court’s judgment on balancing prejudice against judicial economy, reversal of a decision not to sever criminal charges is seldom granted. (Citations omitted.)”

189 Mont. at 121, 615 P.2d at 198.

First, we will consider whether the charges had a cumulative effect which prejudiced defendant and resulted in an unfair trial. This is rarely a sufficient reason to justify severance. State v. Bingman (Mont. 1987), [229 Mont. 101,] 745 P.2d 342, 348, 44 St.Rep. 1813, 1819. Defendant offers little evidence to achieve her burden of proof and basically relies on the bald assertion that sixteen criminal counts would simply cause the jury to view her as a “bad person.” We will not reverse the District Court decision on this unsupported allegation. Furthermore, we note that the jury acquitted Slice on two charges. Although it is difficult to infer any facts from this outcome, it indicates that the jury considered each charge separately.

Defendant Slice also claims that evidence on certain counts assisted in obtaining a conviction on unrelated charges. If she had obtained separate trials, she contends much of this sort of evidence would have been inadmissible. We stated in Orsborn that no prejudice will be found if “the alleged fact[s] of the separate offenses [are] sufficiently distinct to allow the jurors to keep them separate in their minds.” Orsborn, 170 Mont. at 489, 555 P.2d at 515.

Counsel for Slice describes the sixteen criminal counts as follows:

“Count I: Issuing a Bad Check, Felony.
“The Defendant was charged with writing checks to Mike Judd/ Diamond Hitch Outfitters, in excess of $300.00, knowing that the checks would not be honored by the Montana Bank of South Missoula. The checks were written between June 15 and June 16, 1986.
“Count II: Issuing a Bad Check, Felony.
“The Defendant was charged with writing checks to Mike Judd and to Service Typesetting, knowing that the checks would not be honored by the Montana Bank of South Missoula. The checks were written between July 15 and August 15, 1986.
“Count III: Forgery, Felony.
“The Defendant was charged with fraudulently delivering a signature card to the First Federal Savings and Loan Association on August 27, 1986. Additionally, the Defendant was charged with fraudulently delivering a falsified accountant statement to a member of a Missoula fund raising organization, on September 16, 1986.
“Count IV: Bad Check, Felony.
“The Defendant was charged with issuing checks to a number of Missoula businesses, knowing that the checks would not be honored by the First Federal Savings and Loan. The checks were written between August 28 and September 16, 1986.
“Count V: Deceptive Practices.
“The Defendant was charged with making a false statement regarding her financial situation to the Montana Bank of South Missoula, between July 19 and September 9, 1986.
“Count VI: Deceptive Practices:
“The Defendant was charged with making false statements to the public that she and her business, Reflections Photography, were selling calendars on behalf of a local charity (Heather McChesney or the Heather McChesney Fund), when all or most of the proceeds were directed to another use. This alleged offense occurred between July 16 and September 16, 1986.
“Count VII: Deceptive Practices.
“The Defendant was charged with making false or deceptive statements to numerous Missoula businesses, that advertising money would cover printing costs for calendars to be sold as a fund raiser for the March of Dimes, when all or most of the money was directed to another use. This alleged offense occurred between March 12 and July 18, 1986.
“Count VIII: Deceptive Practices.
“The Defendant was charged with making false statements to various Missoula businesses, that she would use money paid by them to organize a “Fall Wedding Spectacular”, when all the money was directed to another use. This alleged offense occurred between June 1 and September 16, 1986.
“Count IX: Deceptive Practices.
“The Defendant was charged with making false statements to several Missoula businesses that she would use money paid by them as rent money for a Missoula business building, when the money was converted to another use. This alleged offense occurred between August 24 and September 16, 1986.
“Count X: Deceptive Practices.
“The Defendant was charged with making a false statement regarding her financial situation to Bitterroot Motors, for the purpose of securing a loan to purchase an automobile. This alleged offense occurred on September 8, 1986.
“Count XI: Deceptive Practices.
“The Defendant was charged with promising to hire two individuals as photography instructors for wilderness photography classes, when only one class occurred and neither person was paid as promised. This alleged offense occurred in April, 1986.
“Count XII: Deceptive Practices.
“The Defendant was charged with falsely promising to pay two individuals a percentage of amounts collected for the Heather McChesney Fund, when the funds were diverted to another use. This alleged offense occurred between July 31 and September 16, 1986.
“Count XIII: Theft, Felony.
“The Defendant was charged with exerting unauthorized control over a check owned by the Heather McChesney Fund, between August 19 and 24, 1986.
“Count XIV: Theft, Misdemeanor.
“The Defendant was charged with exerting unauthorized control over a-$40.00 wedding deposit check, on September 11, 1986.
“Count XV: Alternative Deceptive Practices or Theft.
“The Defendant was charged with defrauding the public by obtaining March of Dimes contributions and converting them to her own use, or in the alternative exerting unauthorized control over March of Dimes contributions.
“Count XVI: Theft, Felony.
“The Defendant was charged with exerting unauthorized control over unemployment benefits, between January 11 and July 3, 1986.”

Slice fails to specifically state what evidence would have been inadmissible if separate trials had been granted and fails to demonstrate or explain why she received an unfair trial on these charges. Although this is a long list of offenses, we do not find that presenting evidence on all sixteen counts would necessarily create an unfair trial. Additionally, we note that if there had been several separate trials, much of the evidence regarding all the charges would have probably been admissible in each trial under the considerations of State v. Just (1979), 184 Mont. 262, 602 P.2d 957. The alleged offenses tend to be similar in that they involve deceitful actions regarding Slice’s business and banking actions. The offenses occurred over no more than a nine month time span, with the bulk of the activity occurring in a much shorter period. The offenses tend to establish a common scheme or plan to gain financial benefits through deceit. Finally, the probative value of the evidence is quite high, while Slice fails to demonstrate any significant prejudice. We find no abuse of discretion by the District Court.

Slice also contends she was prejudiced because she wished to testify as to some offenses but not others. In Orsborn we indicated this type of claim might have some merit if “the alleged offenses were totally separate as to time, place and evidence.” Orsborn, 170 Mont. at 489, 555 P.2d at 515. As noted above, the facts of this case do not deal with offenses which are totally separate as to time, place, and evidence.

Finally, Slice claims that the sheer volume of evidence involved in all of the counts confused the jury. Slice does not demonstrate any specific reason why she believes the jury was confused. According to the record before us, the actual trial process appears to have lasted slightly over two weeks. We see no inherent reason why the jury would be confused and defendant has failed to carry her burden of demonstrating confusion resulting in an unfair trial.

For all of the foregoing reasons, the decision of the District Court is affirmed.

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


author: MR. JUSTICE WEBER

text:
    DAN J. DONOVAN, d/b/a D.J. Donovan Construction, Plaintiff and Appellant, v. GERRY GRAFF, Defendant and Respondent.
    No. 87-270.
    Submitted on Briefs March 24, 1988.
    Decided May 3, 1988.
    753 P.2d 878.

      Dan J. Donovan, pro se.
    Jack Sands, Sands Law Firm, Billings, for defendant and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Mr. Donovan brought this suit for damages arising out of his contract to remodel Mr. Graff’s house. Mr. Graff counterclaimed, alleging breach of contract. Mr. Donovan appeals the judgment entered after a jury verdict in the District Court for the Thirteenth Judicial District, Yellowstone County. The jury found that neither party had proven its case by a preponderance of the evidence. We affirm.

The issues are:

1. Should a new trial have been granted for newly discovered evidence?

2. Is a new trial required because of prejudicial surprise?

Mr. Donovan agreed by written contract to remodel Mr. Graff’s Billings home. The contract provided that Mr. Graff would pay for materials, permit costs, and subcontractors’ costs, along with labor costs of between $4,800 and $5,800, plus $13.50 per hour for work additional to that called for in the contract.

After several weeks of work on the home, Mr. Donovan had his crew walk off the job because of a bad check Mr. Graff had given him. Mr. Donovan filed suit, alleging that he had not been paid for additional work not listed in the contract; that he had not been paid for materials, a permit, and equipment rentals; and that he had suffered emotional distress when his own checks were dishonored as a result of his reliance on depositing Mr. Graff’s check into his account. Mr. Graff counterclaimed for breach of contract, requesting as damages the cost of having the work on his house completed and to some extent redone. The three-day trial was replete with evidence and innuendoes by each side of unprofessionalism and half-truths by the other side. After hearing the evidence, the jury returned its verdict that “neither party proved their case by a preponderance of the evidence.”

One set of exhibits presented at trial by Mr. Graff was a collection of 23 photographs of the remodeling work. Mr. Donovan took the opportunity at trial to present rebuttal testimony to Mr. Graff’s witnesses’ testimony about the photographs. He did not object to their admission into evidence. However, after the verdict was rendered, he moved for a new trial, arguing that the admission of the photographs was unfair surprise. He also argued that when he was able to reflect further upon the photographs, he found inconsistencies which constituted newly discovered evidence justifying a new trial. The District Court denied the motion for new trial, and Mr. Donovan appeals.

I

Should a new trial have been granted for newly discovered evidence?

Section 25-11-102, MCA, provides that a new trial may be granted for several reasons which materially affect the substantial rights of a party. One of the reasons, set out in Subsection (4), is newly discovered evidence which is material to the party applying for new trial and which that party could not, with reasonable diligence, have discovered and produced at trial. A party moving for a new trial on the basis of newly discovered evidence must show that: 1) this evidence came to the party’s knowledge since the trial; 2) it was not through want of diligence that the evidence was not discovered earlier; 3) the evidence is so material that it would probably produce a different result upon retrial; 4) the evidence is not merely cumulative; 5) the witness whose evidence is newly discovered has signed an affidavit which supports the application; and 6) the evidence does not tend only to impeach the character or credit of a witness. Kerrigan v. Kerrigan (1943), 115 Mont. 136, 144-45, 139 P.2d 533, 535.

Mr. Donovan argues that after the trial he noticed certain discrepancies in Mr. Graff’s witnesses’ testimony about several of the photographs of Mr. Graff’s house. Mr. Donovan states that although these photographs were listed as proposed exhibits in the pretrial order, the attorney for Mr. Graff failed to produce them for Mr. Donovan’s inspection until the morning of trial. Mr. Donovan asserts that his awareness of the contradictions in Mr. Graff’s witnesses’ testimony constitutes newly discovered evidence.

Mr. Graff points out that, although Mr. Donovan knew for several months before trial that photographs of the house would be offered into evidence, he never filed a discovery request to see the photographs. We conclude that Mr. Donovan has failed to establish element (2) under the above test for newly discovered evidence. We also conclude that Mr. Donovan has not shown that the evidence is so material that it would probably produce a different result upon retrial. We therefore hold that the District Court did not err in denying the motion for a new trial on this ground.

II

Is a new trial required because of prejudicial surprise?

Section 25-11-102, MCA, provides, at subsection (3), that a new trial may be granted if there has been “accident or surprise which ordinary prudence could not have guarded against” and which materially affected the substantial rights of the moving party. For a new trial under this subsection, the moving party must show that 1) the moving party was actually surprised; 2) the facts causing the surprise had a material bearing on the case; 3) the verdict or decision resulted mainly from these facts; 4) the surprise did not result from the moving party’s inattention or negligence; 5) the moving party acted promptly and claimed relief at the earliest opportunity; 6) the moving party used every means reasonably available at the time of the surprise to remedy it; and 7) the result of a new trial without the surprise would probably be different. Ewing v. Esterholt (Mont. 1984), [210 Mont. 367,] 684 P.2d 1053, 1057, 41 St.Rep. 1095, 1098.

Mr. Donovan argues that the admission of the photographs of the house into evidence constituted prejudicial surprise. Similarly to the first issue, Mr. Donovan’s failure to request production of these photographs through the discovery process is important. We conclude that Mr. Donovan has failed to prove element (4) above, that the surprise did not result from his own inattention or negligence. After reviewing the transcript, we further conclude that Mr. Donovan has failed to prove that the verdict resulted mainly from admission of these photographs.

Affirmed.

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


text:
    K-W INDUSTRIES, A DIVISION OF ASSOCIATED TECHNOLOGIES, LTD., a corporation, Plaintiff and Appellant, v. NATIONAL SURETY CORPORATION, Defendant and Respondent.
    No. 87-290.
    Submitted Jan. 7, 1988.
    Decided May 3, 1988.
    754 P.2d 502.

      Alexander Blewett, III, Hoyt and Blewett, Great Falls, for plaintiff and appellant.
    Robert J. Phillips, Snavely and Phillips, Missoula, for defendant and respondent.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

In this case we determine that a business entity which is licensed under Montana law to transact the business of insurance, and which issues as a part of its business a contract of suretyship guaranteeing the performance of an underlying contract in Montana (1) is transacting a class of insurance business under Montana law; (2) is subject in the transaction of its business to the Montana Unfair Claims Settlement Practices Act (Section 33-18-201, et seq. MCA); and (3) is liable in a tort action for violations of Section 33-18-201, MCA, for damages beyond the express terms of the suretyship contract.

This cause is an original proceeding in this Court, based upon a question certified to us respecting Montana law by the United States Court of Appeals for the Ninth Circuit as provided in our Rule 44, Mont.R.App.P. The said Court of Appeals has pending before it an appeal from an order of the United States District Court for the District of Montana involving the identical parties above designated (Cause No. 86-3778 in said Court of Appeals.) The Court of Appeals, finding that it is presented with a question of state law that might be depositive of the case, and for which there are no clear controlling precedents in Montana judicial decisions, has certified to us for our decision the following question:

“(1) Are sureties liable under Montana law for unfair claim settlement practices?
“In responding to this question, the Montana Supreme Court shall not be bound by the manner in which the question has been phrased by this Court. Rather, the Supreme Court may reformulate the state law issue as it sees fit in light of the contentions of the parties.”

The background given to us by the Court of Appeals is that Keyes-Scanlon, Inc. (not a party to the appeal) was the general contractor responsible for building a federal water treatment plant in Montana. Pursuant to the federal Miller Act, 40 U.S.C. Sections 270a-d, Keyes-Scanlon was required to post a bond to protect the interests of all suppliers providing labor and materials. Keyes-Scanlon as principal and appellee National Surety Corporation (National) as surety executed a bond pursuant to the Act.

Appellant K-W Industries (K-W) subcontracted with Keyes-Scanlon to furnish supplies on the project. Keyes-Scanlon allegedly refused to pay for certain materials delivered by K-W and used in the construction. K-W then sought payment from National, Keyes-Scanlon’s surety, but National likewise refused payment. K-W then filed suit against National in federal court pursuant to the Miller Act, seeking compensation for services rendered. The parties eventually settled the Miller Act suit.

K-W brought this action in Montana state court, alleging>that National’s “bad faith” conduct prior to and during the Miller Act litigation constituted unfair claims settlement practices as defined by Section 33-18-201, MCA, and seeking compensatory and punitive damages under state law. National removed the action to the federal district court in Montana based on diversity jurisdiction. National then moved to dismiss the action for failure to state a claim upon which relief could be granted, arguing principally that the Miller Act provides the exclusive source of remedy for misconduct arising out the surety’s performance on a Miller bond obligation and therefore preempts any state law purporting to authorize additional remedies.

The District Court, agreeing with National that K-W failed to state a claim because Congress intended the Miller Act to preempt applicable state law in these circumstances, dismissed the action. KW timely appealed to the Court of Appeals.

On appeal, National argues that K-W failed to state a claim against it under Montana law for two independent reasons: (1) Montana law does not make sureties liable for unfair claim settlement practices; and (2) if Montana attempts to do so, that attempt is preempted by the federal Miller Act. For prudential reasons the Court of Appeals declined to address the preemption question until it is satisfied that K-W can maintain its action under Montana law. Because the application of Montana law governing unfair claim settlement practices to the conduct of sureties is an unresolved question which may be dispositive of the appeal, the issue was certified to the Montana Supreme Court by the Court of Appeals.

It is obvious from the background supplied to us by the Court of Appeals and the question certified to us, that the Court of Appeals has properly reserved unto itself the preemption issue. In the Court of Appeals, National argues that the Miller Act in this case provides an exclusive federal remedy. We expressly make no determination as to that issue, since it is completely within the ambit of the federal jurisprudence, and not within the question certified to us. We therefore approach this cause as one relating to the duties and liabilities of a licensed surety doing business in Montana, and without any regard to the Miller Act implications in the case.

We exámine this case therefore within the frame of the issues posed by National as follows:

“(1) Is National Surety an ‘insurer’ within the meaning of Section 33-1-201(6), MCA, and therefore subject to suit under Section 33-18-201, MCA, for bad faith insurance practices?
“(2) If ,the answer to question number 1 is ‘yes,’ does Section 28-11-411, MCA, nevertheless operate to exempt sureties from liability from Section 33-18-201, MCA, for bad faith insurance practices?”

Is National an “Insurer”

National concedes in brief that if this Court refers only to the statutes for determining whether National is an insurer under Montana law, there is little doubt that National surely would be designated as an insurer. This for the reason that Section 33-1-201(6), MCA, defines an “insurer” as including every person engaged as an indemnitor, surety, or contractor in the business of entering insurance. Moreover, Section 33-1-201(5), MCA, defines “insurance” as a contract whereby one undertakes to indemnify another or to pay or provide a specified or determinable amount or benefit upon determinable contingencies.

In addition, Section 33-1-211, MCA, defines “surety insurance” as including insurance guaranteeing the performance of contracts, other than insurance policies, and guaranteeing and executing bonds, undertakings, and contracts of suretyship.

However, National argues, though those statutory provisions make National an insurer, it is not necessarily subject to regulations found within Montana’s Unfair Claim Settlement Practices Act, Section 33-18-201, MCA. National argues that the statute never uses the term “insurer,” and only the term “insurance” as a word which qualifies the term “policies.” National maintains that there are distinctions between surety and insurance contracts. It contends that the first paragraph of Section 33-18-101, MCA, indicates that the purpose of the chapter is to “regulate trade practices in the business of insurance in accordance with the intent of Congress as expressed in Public Law 79-15, which was approved March 9, 1945.” Thereafter, National points to Group Life and Health Insurance v. Royal Drug Company (1979), 440 U.S. 205, 99 S.Ct. 1067, 59 L.Ed.2d 261 as holding that insurance is that business where a large number of risks are accepted, some of which involve losses, and the spreading of such risks which enables the insurer to accept each risk at a slight fraction of the possible liability upon it. National maintains that no court has ever construed the McCarran-Fergus Act so as to extend the “business of insurance” to a surety. This, National argues, because the liability of a surety is not left up to chance or hazard and is not a spreading of risk, because the nature, size and source of the possible loss to the creditor is known from the start.

On this point we find ourselves in agreement with the holding in General Insurance Company of America v. Mammoth Vista Owners Association (Cal.App. 1985), 174 Cal.App.3rd 810, 220 Cal.Rptr. 291, that by plain and explicit language, the legislature made suretyship a “class” of insurance subject to regulation under the code. Therefore, for the purpose of the insurance code, one who issues surety bonds is in “the business of insurance”, and subject to the provisions prohibiting unfair and deceptive practices. 174 Cal.App.3d at 824, 220 Cal.Rptr. at 298.

Our statutes clearly commend this result. Section 33-1-102(1), MCA, provides that no person shall transact the business of insurance in Montana “without complying with the applicable provisions of this code.” Surety insurance is one of the various kinds of insurance found in the statutes, and Section 33-1-211, MCA, defines “surety insurance” as insurance guaranteeing the performance of contracts. The word “insurer” includes surety, under Section 33-1-201(6), MCA. No insurer may transact business in Montana unless authorized by a certificate issued by the Commissioner of Insurance. Section 33-2-101, MCA.

Finally, since Section 33-18-101, MCA, provides that the purpose of the chapter regulating trade practices applies to the “business of insurance” and a surety bond, issued by a licensed insurer, is a contract issued in the course of the business of insurance, the licensed surety is therefore subject to the trade practices provisions of our codes.

Once we determine that an insurer issuing a surety bond is transacting the business of insurance in Montana, the remainder of our decision in this cause is predictable. Every insurer in Montana has an implied-in-law duty to act fairly and in good faith in handling a claim under a contract issued by the insurer. In Lipinski v. Title Insurance Company (1982), 202 Mont. 1, 15, 655 P.2d 970, 977, we said:

“Should there be any doubt, we now expressly hold that insurance companies have a duty to act in good faith with their insureds, and that this duty exists independent of the insurance contract and independent of statute. Any statements in our cases, to the extent that they may be or appear to be in conflict with this holding, are expressly overruled.”

In Weber v. Blue Cross of Montana (1982), 196 Mont. 454, 643 P.2d 198, we held that Blue Cross, though not technically an insurance company, had a duty of acting in good faith toward those for whom it provided coverage. In Nicholson v. United Pacific Insurance Company (Mont. 1985), 710 P.2d 1342, 42 St.Rep. 1822 we held that if the implied covenant is breached, the reasonable expectations of the contracting parties are not met. It is also clear in Montana that a breach of the applicable provisions of Section 33-18-201, MCA, by an insurer is conduct compensable in tort as to third parties to the insurance contract. Klaudt v. Flink (1983), 202 Mont. 247, 658 P.2d 1065.

It follows therefore that if a surety, transacting the business of insurance, violates the provisions of Section 33-18-201, MCA, the claimant, in addition to his or her contract remedies, may be compensated under tort law. Klaudt v. Flink, supra.

Are Sureties Liable Only As Expressed In The Surety Contract?

However, because National in this case is a surety, National contends that its liabilities are limited by the following statute:

“28-11-411. Extent of surety’s liability. A surety cannot be held beyond the express terms of its contract, and if such contract prescribes a penalty for its breach, he cannot in any case be liable for more than the penalty.”

We have held in other cases that Section 28-11-411, MCA, limits the liability of a surety to the express terms of its contract. Pioneer Concrete and Fuel, Inc. v. Apex Construction Company, Inc. (1983), 204 Mont. 387, 664 P.2d 938; Swanberg v. National Surety Company (1930), 86 Mont. 340, 283 P. 761. National contends that we should be now be guided by Amfac Mortgage Corporation v. Arizona Mall of Tempe (9th Cir. 1978), 583 F.2d 426. In that case Amfac had argued that a surety on a bond owed an implied duty of good faith to the obligee of the bond and that if a breach occurred when the surety failed to settle, a tort action arose. The Court of Appeals, interpreting Arizona law, denied the tort action, saying that Arizona courts would limit liability of a surety to the express terms of the surety contract. The Court of Appeals also relied on the California case of United States Leasing Corporation v. Dupont (1968), 69 Cal.2d 275, 70 Cal.Rptr. 393, 444 P.2d 65.

National contends that Section 28-11-411, MCA, is consistent with Arizona law construed by the Court of Appeals in the Amfac case and should govern here. Again, we refer to and agree with the case of General Insurance Company of America v. Mammoth Vista Owners Association, supra, where the same point was raised, the U.S. Leasing Corporation case was considered, and the California Appellate Court held:

“In holding a surety cannot be held liable beyond the express terms of its contract, the court merely stated the principle that the sureties obligation to cover losses occasioned by the breach of the principal is limited to those losses it expressly agreed to guarantee. U.S. Leasing does not hold a surety cannot be held liable in tort for its independent violation of statutory or common law duties in the handling of a claim under the bond. (Citation omitted.) Under common law, an insurer who breaches the duty of good faith and fair dealing may be held liable in tort beyond the limits of the policy. (Emphasis in original.)”

174 Cal.App.3d at 826, 220 Cal.Rptr. at 299. In accord, see Szarkowski v. Reliance Insurance Company (N.D. 1987), 404 N.W.2d 502, 505.

Accordingly we hold and determine that Section 28-11-411, MCA, does not limit the liability of a surety if the surety commits an independent tort in violation of other provisions of the insurance code.

Therefore we answer the certified question as follows:

(1) Are sureties liable under Montana law for unfair claim settlement practices?

Answer: Yes.

The original of this opinion shall be deemed to serve the office of a declaratory judgment. Costs of these proceedings to K-W Industries. The Clerk of this Court shall serve by ordinary mail upon counsel of record copies of this opinion, and shall mail upon remittitur four certified copies of this opinion to the Clerk of the United States Court of Appeals for the Ninth Circuit. The further duties of counsel of record are set forth in the order certifying the question to us.

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