author: MR. JUSTICE McDONOUGH MR. JUSTICE SHEEHY,

text:
    ROBERT L. WHITE and Barbara M. White, Plaintiffs, v. The STATE OF MONTANA; Montana Science and Technology Development Board, et al. Defendants.
    No. 87-557.
    Submitted May 17, 1988.
    Decided July 21, 1988.
    759 P.2d 971.

      Patrick F. Hooks argued, Hooks & Budewitz, Townsend, for plaintiffs.
    Mike Greely, Atty. Gen., Patricia Schaeffer, Asst. Atty. Gen., Helena, James H. Goetz argued, Bozeman, C. Brooke Dormiré, New York City, for defendants.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

The plaintiffs seek an invocation of this Court’s original jurisdiction for a declaratory judgment pursuant to Sections 27-8-101, et seq, MCA. The plaintiffs are residents, citizens, electors and taxpayers of Montana. The parties are seeking to determine the validity of House Bill No. 700, which was enacted by the Fiftieth Legislative Assembly and signed into law by the Governor on April 13, 1987.

Plaintiffs present ten issues for consideration by this Court:

1. Whether the Supreme Court has original jurisdiction.

2. Whether the plaintiffs have the requisite standing to maintain this action.

3. Whether HB 700 violates Article V, Section 11, paragraph (5) of the 1972 Constitution.

4. Whether HB 700 violates Article V, Section 11, paragraph (3) of the 1972 Constitution.

5. Whether HB 700 violates Article VIII, Section 1 of the 1972 Constitution.

6. Whether HB 700 unconstitutionally delegates legislative powers to the Montana Science and Technology Development Board.

7. Whether HB 700 fails to provide strict accountability required by Article VIII, Section 12 and thus also violates Article VIII, Section 13 of the 1972 Constitution.

8. Whether HB 700 violates Article IX, Section 5 of the 1972 Constitution.

9. Whether HB 700 contains a valid statutory appropriation.

10. Whether Section 27 of HB 700, the severability clause, can be applied.

We find and declare that House Bill 700, also referred to as the “Science and Technology Development Board Seed Capital Bond Act”, is unconstitutional for the reasons set forth below.

I.

House Bill 700 was enacted by the legislature in 1987, and has been codified in large part at Sections 90-3-401 through 90-3-420, MCA. When discussing the sections of HB 700 at issue here, we will also cite the appropriate sections of Montana Code Annotated. Section 2 of HB 700 expresses the Act’s purpose:

“The legislature finds and declares that:

“(1) it is the policy of the state of Montana to promote the health, safety, and general welfare of all the people of the state;

“(2) such policy will be furthered through strengthening and diversifying the state’s economy by facilitating a public-private sector partnership to encourage scientific and technological development within the state in order to keep pace with a changing economic structure and to create new jobs and expand business opportunities; and

“(3) such strengthening and diversification will be fostered by assisting in the acceleration of development of technology in the state through the making of technology investments.”

Section 90-3-402, MCA. House Bill 700 was enacted to expand the powers of the Montana Science and Technology Development Board (the Board), which was created by the legislature in 1985 “to strengthen and diversify Montana’s economy by establishing a public-private sector partnership to encourage scientific and technological development within the state in order to keep pace with a transforming economic structure and to create new jobs and expand small business opportunities.” Section 90-3-101, MCA. House Bill 700 provides the Board with bonding authority to raise money for certain types of “technology investments”; seed capital projects, start-up capital projects and expansion capital projects. Section 15 of the Act provides that the Board shall make at least 20 percent of the “Technology Development Account”, funded from bond sales, available for investment in certified Montana capital companies that make technology investments. Section 90-3-415, MCA.

The proceeds received by the Board as the return on its technology investments are to be placed in the “Technology Investment Program Debt Service Fund” to repay the bonds. Section 90-3-404, MCA. Security for bond obligations is provided by the Coal Severance Tax Permanent Trust Fund. Section 90-3-416, MCA.

On November 19, 1987 the Board adopted a resolution that bonds should be issued in accordance with the provisions of HB 700. The Board has been advised that without a Supreme Court ruling that the Act is constitutional, bond counsel cannot render an unqualified opinion that the bonds would be a valid and binding obligation upon the state, and without such an opinion the bonds cannot be successfully marketed.

II.

The defendants concede issues 1 and 2. They concede that plaintiffs, as taxpayers, have standing under the rule articulated in Grossman v. State (Mont. 1984), 209 Mont. 427, 682 P.2d 1319, 41 St.Rep. 804. They also concede that this is an appropriate case for the exercise of this Court’s original jurisdiction. The three major factors necessary for a valid exercise of our original jurisdiction are: (1) where constitutional issues of major statewide importance are involved, (2) where the questions involved are purely legal questions of statutory or constitutional construction, and (3) where urgency and emergency factors exist making the normal appeal process inadequate. State ex rel. Greely v. Water Court (Mont. 1984), [214 Mont. 143,] 691 P.2d 833, 41 St.Rep. 2373. We hold that all of these factors have been established.

III.

The plaintiffs contend that HB 700 violates Article V, Section 11, paragraph (5) of the Montana Constitution, which provides:

“No appropriation shall be made for religious, charitable, industrial, educational or benevolent reasons to any private individual, private association or private corporation not under control of the state.”

Plaintiffs argue that this section invalidates the technology investments provided for by HB 700 because those investments ultimately benefit private individuals not under control of the state. They rely primarily on Hollow v. State (Mont. 1986), [222 Mont. 478,] 723 P.2d 227, 43 St.Rep. 1435; and Hill v. Rae (1916), 52 Mont. 378, 158 P. 826, as providing support for their argument. Plaintiffs assert that none of the Montana capital companies or the other various companies or individuals that receive investments are under the control of the state.

Defendants maintain this Court has made it clear that as long as appropriations go directly to a state agency, there is no violation of Art. V, Section 11(5), even though the state funds ultimately benefit private persons. Defendants cite Grossman and Huber v. Groff (1976), 171 Mont. 442, 558 P.2d 1124 as their authority. Defendants argue that in this case the appropriations are made to a public agency, the Montana Science and Technology Development Board, which is under the control of the state.

In order to gain perspective on this issue, we will examine the authorities cited by both parties in chronological order. While plaintiffs cite Hill as being dispositive, it was decided in 1916 and was therefore based on the 1889 constitution. Our consideration of this issue is guided sufficiently by the cases decided post-1972.

Huber was decided in 1976, and concerned legislation enabling the state Board of Housing to sell bonds to help provide housing for low-income individuals and families. The proceeds from bond sales were to be used in two programs: (1) to loan money to private lenders on the condition that they in turn lend it to low-income individuals or families, or (2) to purchase mortgages on the condition that the money had been loaned to low-income individuals or families. We held that the Housing Board was a public corporation, deriving its powers directly from the legislature and following duties prescribed by the legislature. Article V, Section 11(5) was therefore held inapplicable.

Our 1984 decision in Grossman upheld legislation providing that proceeds from the sale of coal severance tax revenue bonds would be loaned to local government entities to finance water development projects. We cited our decision in Huber, and held that appropriations to public entities were constitutional even though the money might ultimately benefit private individuals or businesses through its use by the state agency. The state funds involved in Grossman ultimately benefited private companies and cooperatives that leased new or improved hydroelectric facilities.

However, we established a limit to this principle two years later in Hollow. Hollow involved the use of bond proceeds by the Montana Economic Development Board to fund economic development projects. The Development Board was authorized to establish a project guaranty program, under which it could make commitments to guaranty payments on loans, leases or other credit arrangements required for funded projects in return for a fee. The Board further was authorized to make loans from the Montana in-state investment fund, made up in part of funds from coal severance taxes, to its capital reserve account (securing the bonds issued) and its guaranty fund (securing the loans and other credit arrangements). We held that the use of state tax revenues to secure the private obligations of project participants and the bonds providing funds for the benefit of their businesses violated Art. V, Section 11(5), as well as Art. VIII, Section 1 and Art. VIII, Section 13(1) of the Montana Constitution. We distinguished Huber in that the legislation in Huber specifically did not pledge the credit of the state to secure the bonds being issued. The Hollow legislation in eifect directly pledged the credit of the state to secure the bonds and guaranties being used to benefit private business ventures.

House Bill 700 establishes a program similar to that in Hollow. The Science and Technology Development Board is empowered to funnel bond proceeds into private business ventures through technology investments. Defendants rightly argue that the Board is a public corporation, as were the boards in the above cases. Therefore, funds initially appropriated for the Board’s use would not be appropriated to “any private individual, private association, or private corporation not under control of the state” in violation of Art. V, Section 11(5). However, the significance of this argument would diminish greatly once bonds were issued.

Section 16 of H.B. 700 outlines the Board's financing subsequent to its initial appropriation:

“Transfer of portion of coal severance tax permanent trust fund.

“(l)(a) There must be deposited into the technology investment program debt service fund from the coal severance tax permanent trust fund maintained pursuant to 17-6-203 such amounts, not to exceed $38 million, as are necessary from time to time, after application of all other money in the technology investment program debt service fund, to pay principle of and premium, if any, and interest on obligations when due.

“(b) The chairman of the board shall advise the state treasurer prior to the date on which any payment is due of the amount needed to be transferred.

“(3) The legislature shall provide for the continued assessment, levy, collection, and deposit into the coal severance tax permanent trust fund so there is sufficient money to make the deposits into the technology investment program debt service fund under this section.”

Section 90-3-416, MCA. Section 16(3) thus ultimately requires the legislature to make up the difference between the return received by the Board on the investment of bond proceeds and the obligations arising from the bonds. By providing that the legislature shall deposit coal severance tax funds into the Board’s debt service fund and assess taxes in order to continue such deposits as needed, Section 16(3) in effect pledges the credit of the state to secure the bonds issued by the Board, the proceeds of which are to be used for the benefit of private businesses. As we said in Hollow, “What we do not and cannot condone is the direct use of tax monies by legislative provision which in effect directly pledges the credit of the state to secure the bonds involved in this case.” 723 P.2d at 232. We hold, therefore, that Section 16(3) of HB 700 violates Art. V, Section 11(5) of the Montana Constitution, and is therefore void.

IV.

Plaintiffs assert that HB 700 unconstitutionally delegates legislative power to the Board, violating Article V, Section 1 of the Montana Constitution which provides:

“The legislative power is vested in a legislature consisting of a senate and a house of representatives ...”

The plaintiffs’ position is that HB 700 grants the Board too much discretion. They argue that the powers granted to the Board are not circumscribed sufficiently; i.e., there are no standards or rules from the legislature to guide the Board in making technology investments. Plaintiffs cite Douglas v. Judge (1977), 174 Mont. 32, 568 P.2d 530, as an example of a similar act that was held unconstitutional. Douglas applied the test articulated in Bacus v. Lake County (1960), 138 Mont. 69, 354 P.2d 1056:

“The law-making power may not be granted to an administrative body to be exercised under the guise of administrative discretion. Accordingly, in delegating powers to an administrative body with respect to the administration of statutes, the legislature must ordinarily prescribe a policy, standard, or rule for their guidance and must not vest them with an arbitrary and uncontrolled discretion with regard thereto, and a statute or ordinance which is deficient in this respect is invalid.”

Douglas, 568 P.2d at 533-34.

The defendants assert that HB 700 delegates administrative authority to the Board, not legislative power. Defendants cite Huber for the standard that determines whether legislation results in an unconstitutional delegation of legislative power:

“. . . Concerning adequate standards and guides in delegation of legislative power, this court has stated the rule as follows: If the legislature fails to prescribe with reasonable clarity the limits of power delegated to an administrative agency, or if those limits are too broad, its attempt to delegate is a nullity.

“On the other hand a statute is complete and validly delegates administrative authority when nothing with respect to a determination of what is the law is left to the administrative agency, and its provisions are sufficiently clear, definite, and certain to enable the agency to know its rights and obligations.”

Huber, 558 P.2d at 1132. Defendants claim that HB 700 meets this standard. They point out that the legislation lays down the policy for the Act and prescribes standards to be followed such as the ten criteria set forth at Section 90-3-413(1), MCA. They distinguish Douglas, where the Board of Natural Resources and Conservation was authorized to make loans to farmers and ranchers “for any worthwhile project. . . .” Douglas, 568 P.2d at 534. Defendants say HB 700 stands in sharp contrast to the legislation in Douglas and does not grant the same unguided discretion.

The constitutional tests applied in Douglas and Huber were similar in their purpose of preventing the delegation of unbridled authority to an administrative board. Defendants are correct, however, in their assertion that the very lax legislation in Douglas was quite different from that in Huber. In Huber, the plaintiff asserted that the legislature was too vague in defining “persons and families of lower income” when granting the power to assist those persons in obtaining housing. The contested definition read as follows:

“ ‘Persons and families of lower income’ means persons and families, with insufficient personal or family income who require assistance under this act, as determined by the board, taking into consideration:

“(a) the amount of the total personal and family income available for housing needs;

“(b) the size of the family;

“(c) the eligibility of persons and families under federal housing assistance of any type based on lower income or a functional or physical disability;

“(d) the ability of persons and families to compete successfully in the normal housing market and to pay the amount at which private enterprise is providing decent, safe, and sanitary housing;

“(e) the availabiltiy and cost of housing in particular areas; and

“(f) needs of particular persons or families due to age or physical handicaps.”

Huber, 558 P.2d at 1132. This definition provided an objective standard for the Board to follow when exercising its power. The size of the family, total income available for housing, availability and cost of housing and ability to enter the housing market at the “going rate” were all objective criteria requiring only observation and arithmetical calculation.

The considerations to be used by the Science and Technology Development Board in making technology investments are set forth in Section 13 of HB 700:

“(1) Technology investments may be made from money in the technology development account only upon a favorable determination by the board of:

“(a) the relevance of the proposed technology development project to the purposes of this part;

“(b) the prospects for collaboration on the project between public and private sectors of the state’s economy in mineral technology, agricultural technology, forestry technology, biotechnology, microelectronics and computer sciences, energy technology, information sciences, and materials science;

“(c) the prospects for achieving commercial success in general and for creating significant numbers of new jobs in the state in particular;

“(d) the quality of the specific product and business development methodology proposed;

“(e) the suitability of any proposed milestone for evaluating progress of technology development project results; and

“(f) the availability of matching funds required under 90-3-301(2).

“(2) In this evaluation process, the board shall consider the investment’s:

“(a) job creation potential;

“(b) potential benefit for existing industry;

“(c) potential for creating new industry; and

“(d) involvement of existing institutional research strength or whether it involves a newly targeted technology area with development potential.”

Section 90-3-413, MCA. These considerations do not rise to the level of the objective criteria offered in Huber. They are more akin to general policy considerations underlying the entire technology investment program.

For example, “the prospects for achieving commercial success in general and for creating significant numbers of new jobs in the state in particular” are considerations at the heart of the legislature’s decision to empower the Board to sell bonds. They are not objective criteria guiding the investment of bond proceeds. In Huber, the legislation at issue went beyond simply directing that individuals and families of lower income should receive housing assistance. The objective guidelines listed above were supplied to guide the administration of that project. Likewise in Grossman, the legislation directed that the feasibility of hydroelectric projects should be considered, and then went on to list objective standards (e.g. estimated costs of necessary improvements, debt servicing requirements and ability of customers to lease improved facilities) by which to judge feasibility. In the case at bar, HB 700 does not set forth the law under which the Board would function. No legislatively defined “policy, standard or rule” is effectively given. Douglas, 568 P.2d at 533.

House Bill 700 also fails to “prescribe with reasonable clarity the limits of power delegated” to the Board. Huber, 558 P.2d at 1132. The statement of purpose in Section 2 asserts that “strengthening and diversification” of Montana’s economy “will be fostered . . . through the making of technology investments.” Section 90-3-402, MCA. The linchpin of the legislation is thus the grant of authority to the Board to make technology investments. Yet the term “technology investment” is not well defined in HB 700. Section 90-3-102, MCA, lists definitions to be used throughout Chapter 3 of Title 90, which includes HB 700. Reference to that section, however, is not illuminating. Technology investment is defined only as “an award of funds for a technology development project.” On the basis of this definition, the form that such an award might take is left almost entirely to the imagination of the Board. As the plaintiffs point out, the guidelines laid out by HB 700 do not prohibit the Board from holding private corporate capital stock, an arrangement which could violate Art. VIII, Section 13(1) of the Montana Constitution.

Another area where definition is lacking is the terms on which technology investments are to be made. When making an “award of funds,” the Board is required to negotiate a “return-on-investment agreement.” However, return on investment appears to be as murky a concept as technology investment. Section 23 of HB 700 states that the Board shall enter into return-on-investment agreements requiring payment of “a return that [the Board] considers commensurate with the risk of its original investment.” Section 90-3-302, MCA. As with the criteria for investment discussed above, the Board is left to define a policy that should have been contained in HB 700.

Defendants note that the Board has adopted rules that provide controls over the technology investment program, and assert that this Court recognized in Huber that such rules are what defendants characterize as “important indications that the legislation at issue will not be arbitrarily implemented”. Even so, our focus remains the authority delegated by the legislature, and whether limits on that authority are clearly prescribed. In Huber, we noted a rule promulgated by the Housing Board showing its ability to place a figure on the income limit for “persons and families of lower income” pursuant to the objective criteria present in that case. However, constitutional law does not allow for an administrative board to legislate the limits of its own power, which the Board in the present case has been required to do in order to give some meaning to the vague terms of HB 700.

Sections 12, 13, 14, 15, and 22 of HB 700 delineate the operations of the Board and the powers it may exercise. Through vagueness or incorporation of inadequately defined operative terms, all of these sections delegate legislative authority to the Board. They violate Art. V, Section 1 of the Montana Constitution, and are therefore void.

V.

Plaintiffs assert that the title of the Act violates Article V, Section 11(3) of the Montana Constitution, which requires that

“[e]ach bill, except general appropriation bills and bills for the codification and general revision of the laws, shall contain only one subject, clearly expressed in its title. If any subject is embraced in any act and is not expressed in the title, only so much of the act not so expressed is void.”

The plaintiffs argue the title to HB 700 is vague. They assert it is not specific about the details concerning the money committed from the coal severance tax permanent trust fund and it does not mention the Montana capital companies.

The defendants state that the test for compliance with this provision of the Montana Constitution is simply whether the title is of such character as to mislead the public [or members of the legislature] as to the subject embraced!

Montana Automobile Association v. Greely (Mont. 1981), 632 P.2d 300, 311. They argue the title gives fair and accurate notice of the subject of the Act to interested parties, and the title need not provide details regarding every aspect of the legislation in order to pass constitutional muster. State v. Driscoll (1936), 101 Mont. 348, 54 P.2d 571.

The full title of HB 700 is as follows:

“An Act providing authority to the Montana Science and Technology Development Board to issue science and technology development seed capital fund bonds to finance technology investments; creating necessary funds and accounts; making statutory appropriations of certain money; authorizing transfer of a portion of the coal severance tax permanent trust fund; providing for audits of the board; amending Sections 17-7-502, 90-3-203, 90-3-302, and 90-3-304, MCA; and providing an immediate effective date.”

At no point does this title mention the fact that Section 16(3) of the Act pledges the credit of the State of Montana to secure the bonds to be issued. This would be a subject of importance to legislators preparing to vote on HB 700. As Section 16(3) contains a subject of importance not embraced in the title of HB 700, it violates Art. V, Section 11(3) of the Montana Constitution, and is therefore void.

VI.

Both parties note the presence of Section 27 in HB 700, which provides for severability:

“If a part of this act is invalid, all valid parts that are severable from the invalid part remain in effect. If a part of this act is invalid in one or more of its applications, the part remains in effect in all valid applications that are severable from the invalid applications.” In Greely, we reviewed Montana case law dealing with severability. The essential principle of severability is that a statute is not entirely voided by inclusion of one or more unconstitutional sections, unless those sections are “necessary to the integrity of the statute or [were] the inducement to its enactment.” Greely, 632 P.2d at 310, citing Hill. Our invalidation of Sections 12, 13, 14, 15, 16(3) and 22 of HB 700 removes the legislative grant of authority to the Board for making technology investments. Those portions of HB 700 remaining are thus rendered meaningless. Accordingly, we declare House Bill 700 to be void in its entirety, as it suffers from constitutional defect in its core provisions. For this reason, it will be unnecessary for us to proceed to the remaining issues posed by the plaintiffs.

This opinion shall constitute a declaratory judgment in favor of the Whites to the effect that:

1. House Bill 700 pledges the credit of the state to secure bonds issued by the Montana Science and Technology Development Board, the proceeds of which would be used for the benefit of private businesses, in violation of Article V, Section 11, paragraph (5) of the Montana Constitution.

2. House Bill 700 delegates legislative power to the Montana Science and Technology Development Board in violation of Article V, Section 1 of the Montana Constitution.

3. The title of House Bill 700 fails to mention the pledge of the credit of the state to secure bonds issued by the Montana Science and Technology Development Board found in Section 16(3) of the Act, in violation of Article V, Section 11, paragraph (3) of the Montana Constitution.

4. As a result of these constitutional defects, House Bill 700 is invalid in toto.

This opinion, without the filing of further instruments or orders, shall constitute such a declaratory judgment.

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

MR. JUSTICE SHEEHY,

concurring:

I concur wholly with the foregoing opinion. It may help to demonstrate the unconstitutional use of state funds for private purposes if we examine some of the investments that are permitted by the law or committed by the Board.

The legislature in 1983 authorized the formation of qualified “Montana Capital Companies” Section 90-8-101 et seq., MCA. These companies are authorized to acquire capital from investors, who in turn, if the Capital Company were certified under the Act as qualified, are entitled to a credit upon their state income taxes up to 50 percent of their investment. Under the law, Section 90-3-415, MCA, the Board is required to make at least 20 percent of the technology development account available for investment in certified Montana Capital Companies. At the time the proposed law was pending before the legislature, the legislators were told that there were three such qualified Capital Investment Companies in Montana of which one is active. It was proposed that each of these companies would receive approximately one million dollars from the bond issue for capital investment. Thus the investment made by the private investors in the way of contributions to capital in the Capital Investment Company would be leveraged by the sum of one million dollars from money generated originally by coal taxes.

From another aspect, the program developed by the Board four types of investment to which the bond issue funds may be applied, (1) research capability development; (2) applied technology research; (3) technical assistance and technology transfer; (4) and seed capital investment. These programs, except technical assistance and technology transfer, require at least a dollar-for-dollar match with non-state appropriated funds.

Among other commitments, the Board had committed for the period between November 1, 1986 and December 1, 1987 the following “investments” under technology transfer:

RECIPIENT LOCATION DESCRIPTION AMOUNT

Montana Ambassadors Helena, MT Proposal to U.S. West $50,000

Montana Helena, MT Montana Venture $ 7,500

Ambassadors Capital Forum

Montana Helena, MT Transfer of $50,600

Wool Sheep Management

Growers Technology

Clearly, each of the foregoing commitments is the use of state monies for private purposes, because there is no provision for reimbursement nor a dollar for dollar match. However well intended the objectives may have been, these uses of state monies through private agencies clearly offend the Montana Constitution.


source: Caselaw Access Project

author: MR. JUSTICE WEBER

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. DAVID L. LOWERY, Defendant and Appellant.
    No. 87-570.
    Submitted on Briefs June 9, 1988.
    Decided July 21, 1988.
    Rehearing Denied Aug. 23, 1988.
    759 P.2d 158.

      Terry G. Sehestedt, Missoula, for defendant and appellant.
    Mike Greely, Atty. Gen., Helena, John W. Robinson, Co. Atty., Peggy Tonon, Deputy Co. Atty., Hamilton, for plaintiff and respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

The District Court for the Fourth Judicial District, Ravalli County, found Mr. Lowery guilty of one count of disorderly conduct under Section 45-8-101, MCA. Mr. Lowery appeals. We affirm.

The issues are:

1. Was it unlawful to prosecute Mr. Lowery for resisting a police officer’s attempt to remove him from the town council meeting at which he had exercised his right to speak?

2. Is a disturbance which affects eight people a sufficient breach of the peace to constitute disorderly conduct?

Mr. Lowery was a city judge at Darby, Montana, at the time of this incident. He supported a non-partisan initiative which the town council had refused to put on the ballot at the previous November election. He attended the council’s January 12, 1987, meeting with the purpose of raising the question of why the initiative had not been placed on the ballot. Others present at the council meeting were the council members, the town clerk, a police officer, and a local newspaper reporter.

About 45 minutes into the council meeting, Mr. Lowery was recognized and allowed to speak. Mr. Lowery and several council members discussed Mr. Lowery’s concerns for a few minutes. One council member testified that he told Mr. Lowery that the council would ask for a court ruling on his question. Then the discussion between Mr. Lowery and that council member escalated in volume and emotion, with Mr. Lowery complaining about irregularities in the council meeting. The council member asked the police officer to escort Mr. Lowery out of the meeting. The officer attempted to do so, Mr. Lowery resisted, and a scuffle ensued in which a chair was broken. Finally, the sheriff was called and Mr. Lowery was taken out of the room.

Mr. Lowery was charged in justice court with three counts of disorderly conduct. Count One was for fighting with the police officer. Count Two was for making loud or unusual noises at the town council meeting. Count Three was for disrupting a public meeting. The charges were tried to a jury in justice court. The justice of the peace dismissed Count Two, but the jury found Mr. Lowery guilty of Counts One and Three. Mr. Lowery appealed to district court, where he received a trial de novo.

Mr. Lowery waived a jury trial at the district court level. The District Court dismissed Count Three and found Mr. Lowery guilty of Count One. Mr. Lowery was sentenced to ten days in jail, with the sentence suspended for six months contingent on payment of $250 in costs, a $10 surcharge, and $10 in medical expenses for the police officer. Mr. Lowery appeals the judgment.

I

Was it unlawful to prosecute Mr. Lowery for resisting a police officer’s attempt to remove him from the town council meeting at which he had exercised his right to speak?

Mr. Lowery maintains that since he was exercising his right to free speech at the town council meeting, he cannot be charged with disturbing the peace for resisting the police officer’s efforts to remove him from the meeting. He bases his argument on this Court’s opinion in State v. Ytterdahl (Mont. 1986), [222 Mont. 258,] 721 P.2d 757, 43 St.Rep. 1245. There, this Court held that Mr. Ytterdahl’s actions of “hollering and screaming” at commissioners at a Mussel-shell County Commission meeting and stomping out and slamming the door, did not constitute disorderly conduct under Section 45-8-101(1)(g), MCA. That section prohibits disturbing the peace by “disturbing or disrupting any lawful assembly or public meeting.” This Court held that under the circumstances of that case, Mr. Ytterdahl’s right to free speech outweighed the State’s interest in preserving the peace. Ytterdahl, 721 P.2d at 760.

Mr. Lowery was convicted of Count One of the charges against him. That count read:

“On or about January 12, 1987 in Ravalli County, Montana, the Defendant DAVID L. LOWERY knowingly disturbed the peace by quarreling, challenging to fight or fighting, by fighting with the Darby Town Marshall Larry Rose at a Darby council meeting[.]” Count One clearly relates to Section 45-8-101(1)(a), MCA: “A person commits the offense of disorderly conduct if he knowingly disturbs the peace by quarreling, challenging to fight, or fighting.” Mr. Lowery’s reliance upon Ytterdahl, then, is misplaced because that case involved prosecution under a different subsection of the statute.

Mr. Lowery argues that his forcible removal from the council meeting was a physical censorship and that it is the police officer who should be charged with disturbing the peace, not he. This assertion is without legal support. The decision of a presiding officer to have a citizen physically removed from a public meeting for disrupting the meeting cannot lawfully be challenged by forcible resistance. Gigler v. City of Klamath Falls (1975), 21 Or. App. 753, 537 P.2d 121; State v. Smith (N.J. 1966), 218 A.2d 147, cert. denied, 385 U.S. 838, 87 S.Ct. 85, 17 L.Ed.2d 71. After reviewing the facts in the transcript, we conclude that Mr. Lowery’s actions in physically resisting removal from the council meeting do not fit within the concept of speech protected under the Constitution. We further conclude that there is sufficient evidence in the record from which the lower court could find that Mr. Lowery violated the prohibition against fighting in Section 45-8-101(l)(a), MCA. We hold that it was not unlawful to prosecute Mr. Lowery under Count One of the complaint.

II

Is a disturbance which affects eight people a sufficient breach of the peace to constitute disorderly conduct?

Mr. Lowery failed to raise this specific argument in district court. The State argues that for that reason, the argument should not be considered on appeal. See Section 46-20-701(1), MCA. Nevertheless, because Mr. Lowery made the general argument below that his actions did not violate the criminal statutes, we will address the issue raised.

The criminal law commission comments to Section 45-8-101, MCA, state that, for a charge of breach of the peace, “[i]t is not sufficient that a single person or a very few persons have grounds for complaint.” However, in City of Billings v. Batten (Mont. 1985), [218 Mont. 64,] 705 P.2d 1120, 42 St.Rep. 1398, defendant was convicted of Using “fighting words” toward his neighbor in the presence of the neighbor’s family and several passers-by and within the hearing of other neighbors. The total number of persons present was about ten. In City of Whitefish v. O'Shaughnessy (Mont. 1985), [216 Mont. 433,] 704 P.2d 1021, 42 St.Rep. 928, defendant was convicted of using “fighting words” in the presence of two friends and a police officer. We hold that the circumstances presented here involve a disturbance to a sufficient number of persons to justify prosecution under Section 45-8-101(l)(a), MCA.

Affirmed.

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


author: MR. JUSTICE GULBRANDSON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. DENNIS FLOYD HAMMER, Defendant and Appellant.
    No. 87-435.
    Submitted on Briefs June 2, 1988.
    Decided July 25, 1988.
    759 P.2d 979.

      Benjamin R. Anciaux, Poison, for defendant and appellant.
    Mike Greely, Atty. Gen., Robert F.W. Smith, Asst. Atty. Gen., Helena, Larry Nistler, Co. Atty., Poison, for plaintiff and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Dennis Floyd Hammer (Hammer) appeals his conviction in Lake County District Court of felony assault and misdemeanor assault. We affirm.

On December 31, 1986, New Year’s Eve, Joseph Shanklin (Shanklin) of Poison, Montana, went to the Model Bar in Poison to celebrate the new year with some of his friends. Shanklin met Carol Hammer while at the bar. Carol Hammer related to Shanklin that she was having some problems with her “boyfriend” who had recently beaten her and that she was afraid she would be beaten again. Unknown to Shanklin at the time, Carol Hammer’s “boyfriend” was actually her common law husband, Dennis Floyd Hammer. Shanklin assured Carol that he would not let her boyfriend beat her up again if he appeared at the bar.

Dennis Hammer later arrived intoxicated at the bar, approached Shanklin and Carol, and demanded that Shanklin leave. Shanklin refused to leave and Hammer suggested they “step outside”. The two men exited the bar and argued but neither man threatened or touched the other. Shanklin re-entered the bar and Hammer did not follow him. Carol Hammer appeared relieved to Shanklin that her husband had not returned and asked Shanklin to remain nearby in case Hammer came back.

Shanklin later agreed to Carol’s request that he walk her home after the bar closed. At the suggestion of the bartender, Carol and Shanklin accepted a ride to Carol’s trailer home from an unidentified bar patron. Shanklin was concerned for Carol’s safety and thought it was a good idea that he accompany her home for her protection. Upon arriving at her trailer, Carol invited Shanklin in.

Shanklin and Carol talked for about twenty to thirty minutes while Shanklin drank a beer. Dennis Hammer soon returned home, unlocked the trailer door with his key, and entered the trailer to find Carol and Shanklin sitting at a table. Shanklin was surprised that Hammer had a key and was still unaware that Hammer was Carol’s husband. Hammer demanded that Shanklin leave and, when Shanklin hesitated, Hammer picked up a large butcher knife from a kitchen counter. Hammer waved and slashed the knife at Shanklin while Carol screamed for Hammer to put the knife down. Shanklin eventually backed up to the trailer door, reached back, opened the door, and proceeded to back out of the trailer. As Shanklin backed out of the trailer, Hammer lunged forward with the knife. Shanklin tried to block the knife with his arm and received a deep cut to the bone on one of his hands.

Shanklin ran to the trailer next door and told one of the neighbors to call the police because he believed that Hammer would kill Carol. The neighbor called the police and Shanklin returned to the Hammer’s trailer to see if Carol was all right. The trailer was quiet which led Shanklin to believe that Carol had been hurt. Shanklin entered the trailer and looked down a hallway to see Carol lying on a bed. Immediately thereafter, Shanklin heard the sound of a gun cock and saw Hammer round the corner of the bedroom door with a rifle in his hand. Shanklin again backed his way to the door and saw Hammer point the rifle in the direction of Shanklin’s head. As he exited the trailer, Shanklin heard the gun discharge. The rifle shot entered the middle of the front door which was open inward into the trailer home and exited into a nearby television set.

Shanklin was headed for the neighbor’s trailer for the second time when the first law enforcement officers arrived. Poison Police officers and Lake County Deputy Sheriffs were appraised of the situation by Shanklin. Shanklin told the law enforcement officers that he believed that Carol Hammer was in extreme danger because Dennis Hammer had beaten her and had assaulted Shanklin with a knife and a rifle. Shanklin also informed the officers that Hammer was intoxicated. Law enforcement officers surrounded the trailer and used a bullhorn for approximately one hour with no response from the trailer. From Shanklin’s explanation and the silence from the trailer, law enforcement officials feared that Carol Hammer was being held hostage or was injured. Approximately one and a half hours after they arrived on the scene, the officers forcibly entered the trailer.

The officers found Dennis and Carol Hammer sitting on the bed in a small bedroom. Hammer physically resisted when he was informed that he was under arrest. Carol also interfered with the arrest. During the commotion associated with Hammer’s arrest, the officers noticed a bloody knife on a nearby dresser. The officers also noticed a Winchester .30-.30 lever action rifle in plain view just inside an open bedroom closet. Both the knife and the rifle were within close proximity of the bed and Hammer. The officers picked up the rifle while Hammer was still in the bedroom.

Law enforcement officers gathered evidence at the scene of the incident without first procuring a search warrant. Evidence gathered included the rifle, the knife, unspent .30-.30 cartridges, blood spots, bullet fragments in the exploded television set, and a bullet hole in the front door, among other items. After receiving medical treatment for his knife wound, Shanklin was transported to the Lake County Sheriff’s office where he identified Hammer has his assailant.

On January 14, 1987, Hammer was charged by information with two counts of felony assault in violation of Sections 45-5-202(2)(a) and (2)(b), MCA. Hammer pled not guilty and, on March 16, 1987, moved to suppress all evidence in the State’s possession procured during Hammer’s arrest at his trailer home. The District Court heard arguments and denied the motion on June 3, 1987. Prior to trial, the State moved in limine to exclude any evidence of alleged criminal acts committed by Shanklin several months after the incident in question. The District Court made the following ruling from the bench:

“[T]here shall be no inquiry into the charges [against Shanklin] after this incident unless the character of the witness Shanklin is brought before the jury in any form. If anybody says ‘this is a good guy’ or ‘he’s obviously credible’ or if any comments are made by counsel or through questions from the State that ‘this is an outstanding, honest citizen,’ anything of that nature, that will open the door and I’ll permit the defendant on cross-examination to delve into criminal matters that happened after the incident.

“In the absence of some evidence of any kind of good character on the part of the witness Shanklin then the defendant will be prohibited on cross from going into the criminal record that occurred after this transaction.” (Additions ours.)

A jury trial was held on June 18 and 19, 1987, with the jury finding Hammer guilty of misdemeanor assault with a knife and felony assault with a rifle. On July 22, 1987, Hammer was sentenced to ten years imprisonment for felony assault, six months for misdemeanor assault, five years for the use of a dangerous weapon, and ten years additional imprisonment as a persistent felony offender. The two assault sentences are to be served concurrently with the five and ten year additional sentences to be served consecutively. Hammer was also designated a dangerous offender for purposes of parole eligibility. It is from the convictions and sentences that Hammer appeals and raises the following issues:

1. Did the District Court err in denying Hammer’s motion to suppress evidence?

2. Did the District Court err in granting the State’s motion in limine to exclude evidence concerning the victim’s conduct several months after the accident?

3. Is there substantial evidence to support the verdict?

In his first issue, Hammer contends that the evidence obtained in this matter should be suppressed because there was no probable cause or exigent circumstances to justify his arrest without an arrest warrant. Without a valid arrest, Hammer argues, there can be no valid warrantless search. Sections 46-5-101, -102, MCA. The State relies on Section 46-6-401 (l)(d), MCA, to argue that law enforcement officers had “reasonable grounds” to believe that Hammer was committing an offense or had committed an offense and that “existing circumstances” required his immediate warrantless arrest. Section 46-6-401(l)(d), MCA, provides as follows:

“(1) a peace officer may make an arrest when:

“(d) he believes on reasonable grounds that the person is committing an offense or that the person has committed an offense and the existing circumstances require his immediate arrest.”

The terms “reasonable grounds” in the above statute are synonymous with probable cause. State v. Hamilton (1980), 185 Mont. 522, 528, 605 P.2d 1121, 1125, cert.denied, 447 U.S. 924, 100 S.Ct. 3017, 65 L.Ed.2d 1117. Hammer agrees that the above statute is applicable but asserts that the law enforcement officers lacked probable cause to arrest. There was no probable cause, Hammer suggests, because the crime occurred before the officers arrived and the scene of the crime was quiet after their arrival. Hammer asserts that probable cause to justify a warrantless arrest would have existed only if the officers witnessed the offense. We disagree.

Shanklin communicated the following facts, among others, to law enforcement officers at the scene of the crime: (1) the man in the trailer (Hammer) stabbed and shot at Shanklin; (2) the man in the trailer was intoxicated; (3) Carol Hammer was recently beaten by the man in the trailer; (4) Carol Hammer was terrified of the man in the trailer and she believed he would beat her again; (5) Shanklin believed that Carol Hammer was in danger and was being held against her will. The officers personally observed Shanklin’s injured hand and his excited and fearful demeanor. In addition, the officers received no response in their attempts to hail the occupants of the trailer with the bullhorn.

The State contends that Shanklin’s report of the events of that morning, along with the officers’ observations, form the basis for probable cause that an offense had been committed. The State characterizes Shanklin as a “citizen informant” to argue that it was reasonable for the officers to act upon his report. This Court recognizes the distinction between a mere informant and a citizen informant. State v. Flynn (1978), 176 Mont. 441, 578 P.2d 1165; State v. Leistiko (1978), 176 Mont. 434, 439, 578 P.2d 1161. In Leistiko we adopted the following relevant language from People v. Smith (Cal. 1976), 553 P.2d 557, 560:

“A ‘citizen-informant’ is a citizen who purports to be the victim of or to have been the witness of a crime who is motivated by good citizenship and acts openly in aid of law enforcement ... It is reasonable for police officers to act upon the reports of such an observer of criminal activity . . .”

Leistiko, 578 P.2d at 1164. Shanklin, as a victim and citizen informant, told the officers that a crime had been committed and that another crime was likely in progress. From Shanklin’s report and their own observations, law enforcement officials reasonably believed that Carol Hammer was injured and/or was being held hostage by Hammer. An officer may arrest without a warrant where the facts and circumstances within that officer’s personal knowledge at the time of defendant’s arrest would justify a man of reasonable caution to believe that an offense had been or was being committed. State v. Petko (1978), 177 Mont. 229, 233, 581 P.2d 425, 427-428 (citing State v. Lenon (1977), 174 Mont. 264, 570 P.2d 901). The facts of this case support the State’s assertions that the officers had sufficient probable cause under Section 46-6-401(l)(d), MCA, to justify a warrantless arrest.

Hammer next contends that exigent circumstances must have existed to justify his warrantless arrest at night in his home. Any exigencies, Hammer contends, were negated by the officers’ hour and a half delay in making the arrest. According to Hammer, the officers should have obtained an arrest warrant while they waited.

The State urges this Court not to take a “hypertechnical” view of the situation presented to the officers in this case. The events occurred between the hours of 3:00 a.m. and 5:00 a.m. on January 1, 1987, a holiday. Law enforcement officials in this matter, as previously discussed, reasonably believed that a crime had been committed and that another crime might be in progress. The officers showed constraint and caution in a possible hostage situation for the safety of the occupants of the trailer and for their own safety. We recognize that the circumstances of a possible hostage situation such as presented here give rise to ongoing exigencies.

The situation was not defused and the officers were not out of danger, as Hammer contends, merely because time had passed by. One person, Shanklin, was stabbed and shot at and the officers reasonably believed that another, Carol Hammer, had been beaten once and was in danger of being harmed again. In addition, the officers were faced with the ongoing exigency of the possible destruction of evidence. It was impractical and imprudent for any law enforcement officers to leave the scene and an immediate warrantless arrest was appropriate under the existing circumstances. Section 46-6-401(l)(d), MCA. We hold that the District Court did not err in denying Hammer’s motion to suppress for lack of probable cause to make a warrantless arrest.

In its discussion of exigent circumstances, the State notes Welsh v. Wisconsin (1984), 466 U.S. 740, 104 S.Ct. 2091, 80 L.Ed.2d 732, and State v. Ellinger (Mont. 1986), [223 Mont. 349,] 725 P.2d 1201, 43 St.Rep. 1778, and recognizes that it has a heavy burden under the Fourth Amendment to the United States Constitution to justify warrantless felony arrests in a suspect’s home. The State cites Welsh for the proposition that “an important factor to be considered when determining whether any exigency exists, is the gravity of the underlying offense for which the arrest is being made.” Welsh, 466 U.S. at 753, 104 S.Ct. at 2099, 80 L.Ed.2d at 744. The underlying suspected offenses in this case were felony assaults and kidnapping which the State correctly identifies as offenses which enhance the exigencies involved.

Hammer’s second argument for suppression of evidence is that the officers conducted an impermissible warrantless search. The State seeks to justify the search as an incidence to a lawful arrest and under the “plain view” doctrine. The controlling statutes on this issue, Sections 46-5-101 and 46-5-102, MCA, provide as follows in pertinent part:

“46-5-101. Searches and seizures — when authorized. A search of a person, object, or place may be made and instruments, articles, or things may be seized in accordance with the provisions of this chapter when the search is made:

“(1) as an incident to a lawful arrest;

“46-5-102. Scope of search incident to arrest. When a lawful arrest is effected, a peace officer may reasonably search the person arrested and the area within such person’s immediate presence for the purpose of:

“(1) protecting the officer from attack;

“(4) discovering and seizing any persons, instruments, articles or things which may have been used in the commission of or which may constitute evidence of the offense.”

In the instant case the officers were presented with a rifle, a large knife, and two people struggling against arrest in the confines of a small trailer home bedroom. Carol Hammer was not arrested and, given her actions in resisting Dennis Hammer’s arrest, it was incumbent upon the officers to preserve evidence before they departed from the scene. In construing Section 95-702, R.C.M. (1947), the predecessor statute to Section 46-5-102, MCA, this Court adopted the following language from Chimel v. California (1969), 395 U.S. 752, 89 S.Ct. 2034, 23 L.Ed.2d 685:

“[I]t is reasonable for a peace officer pursuant to a lawful arrest to make a warrantless search of the area within the arrested person’s “immediate control” construing that phrase to mean the area within which he might gain possession of a weapon or destructible evidence.”

State v. Cripps (1978), 177 Mont. 410, 421, 582 P.2d 312, 318 (citing Chimel, 395 U.S. at 762-63, 89 S.Ct. at 2040, 23 L.Ed.2d at 694). Hammer contends that the weapons were not within Dennis or Carol Hammer’s immediate control. We disagree. The small confines of the trailer home bedroom and the resistance to arrest dictate that the evidence seized from the bedroom was within the immediate presence or control of Hammer. Pursuant to Section 46-5-102(1) and (4), MCA, the officers were authorized to seize the rifle, the knife and other items without a warrant to protect themselves from attack and to preserve evidence “which may have been used in the commission of or which may constitute evidence of the offense.”

The State also claims that the “plain view” doctrine justifies a warrantless search in this case. We need not address the State’s argument in this regard in light of our determination that the warrant-less search and seizure was justified on other grounds.

Hammer’s second issue questions the District Court’s exclusion of evidence regarding pending or resolved criminal charges existing against Shanklin for offenses allegedly committed sometime after the incident in question. Hammer sought to introduce this evidence to impeach Shanklin’s credibility as a witness. Hammer argued at the lower court that such evidence was relevant and that any prejudice associated with the evidence did not outweigh probative value. The District Court ruled in the State’s favor and excluded the evidence on the grounds that Rules 608 and 609, M.R.Evid., prohibit any inquiry into Shanklin’s criminal record unless the State alluded to Shanklin’s good character, truthfulness, or veracity.

Evidentiary rulings concerning the admissibility of evidence are within the District Court’s discretion. Cooper v. Rosston (Mont. 1988), [232 Mont. 186,] 756 P.2d 1125, 45 St.Rep. 978, 981; State v. Breitenstein (1979), 180 Mont. 503, 509, 591 P.2d 233, 236. We will not disturb a district court’s ruling on the admissibility of evidence absent a showing of an abuse of discretion. Cooper, 756 P.2d at 1128, 45 St.Rep. at 981. The presumption that a witness speaks the truth and is credible can be rebutted by evidence of a “witness’s character for truth, honesty, and integrity . . .” Section 26-1-302(5), MCA. In Cooper we noted that evidence bearing on the issue of a witness’s credibility, in order to be admissible, must be more probative than prejudicial. Cooper, 756 P.2d at 1130, 45 St.Rep. at 982. The District Court must balance prejudice and probative value pursuant to Rules 401 and 403, M.R.Civ.P. Cooper, 756 P.2d at 1130, 45 St.Rep. at 981-982.

While we are convinced that criminal behavior is not synonymous with impeccable credibility, the fact remains that the District Court must still balance prejudice and probative value. The evidence in question concerned events that transpired several months after Hammer’s assault on Shanklin. Shanklin’s alleged criminal conduct does not evidence a propensity for violence which might support Hammer’s implication that Shanklin was the aggressor in this case. On the contrary, Shanklin was charged with unlawful transactions with minors, minor traffic offenses, and misdemeanor possession of dangerous drugs and drug paraphernalia. Other than the issue of Shanklin’s credibility as a witness, the evidence in question does not tend to make any fact at issue in this action more or less probable than that fact would be without the evidence. Rule 401, M.R.Evid. Hammer has failed in his burden to show any abuse in the District Court’s discretion that the evidence in question was more prejudicial than probative.

Hammer’s final argument is that there is no substantial evidence to support his conviction and that the District Court should have granted his motion to dismiss at the close of the State’s case. The standard of review in substantial evidence issues is “whether the evidence, when viewed in a light most favorable to the State, is sufficient for a rational trier of fact to have found the essential elements of the crime beyond a reasonable doubt.” State v. Crazy Boy (Mont. 1988), [232 Mont. 398,] 757 P.2d 341, 45 St.Rep. 1145, 1146. As was the case in Crazy Boy, we have reviewed the record of this case and conclude that there is substantial evidence which satisfies the standard of review.

Hammer was convicted of misdemeanor assault and felony assault pursuant to Section 45-5-201(1)(a), and Section 45-5-202(2)(b), MCA. Section 45-5-201(1)(a), MCA, provides that a “person commits the offense of assault if he . . . purposely or knowingly causes bodily injury to another . . .” “A person commits the offense of felony assault if he purposely or knowingly causes . . . reasonable apprehension of serious bodily injury in another by the use of a weapon.” Section 45-5-202(2) (b), MCA. Hammer contends that Shanklin’s testimony could not form the basis for a finding of guilt because the testimony was inconsistent and because, as asserted in the previous issue, Shanklin’s credibility was questionable.

The alleged inconsistencies related to Shanklin’s recollection of how Hammer held the rifle and of Shanklin’s position in the trailer home when Hammer shot at him. The State notes that Hammer’s counsel emphasized to the jury, in cross-examination and closing argument, these alleged inconsistencies in Shanklin’s testimony. The jury in this case was instructed that it was to “decide the issues of fact resulting from the charge or charges filed . . .” against Hammer. The jury was also correctly instructed that it is the sole judge of a witness’ credibility pursuant to Section 26-1-302, MCA. Finally, the jury was instructed that it may determine the weight to be given to a witness’ testimony by considering, among other things, “[t]he extent to which each witness is either supported or contradicted by other evidence in the case or may have previously said or done something inconsistent with his testimony in Court.” From the facts and law presented in this case, the jury determined that Dennis Hammer was guilty of the offenses charged. From our review of the record it is apparent that a reasonable trier of fact could have concluded that Hammer was guilty of felony and misdemeanor assault.

Affirmed.

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


author: MR. JUSTICE McDONOUGH

text:
    LORRAINE C. FRIGON, Plaintiff and Appellant, v. MORRISON-MAIERLE, INC.; William G. Enright and Larry W. Larsen, Defendants and Respondents.
    No. 87-349.
    Submitted on Briefs May 26, 1988.
    Decided Aug. 1, 1988.
    760 P.2d 57.

      Nye & Meyer; Joan Meyer Nye, Billings, for plaintiff and appellant.

      Crowley, Haughey, Hanson, Toole & Dietrich, Sharon Novak, Billings, for defendants and respondents.
   MR. JUSTICE McDONOUGH

delivered the Opinion of the Court.

Appellant Lorraine C. Frigon appeals from the judgment and order of the District Court of the Thirteenth Judicial District, Yellowstone County, granting summary judgment in favor of respondents Morrison-Maierle, Inc., William G. Enright and Larry W. Larsen. We affirm.

Appellant frames nine issues for consideration by this Court:

1. “Is a cause of action for breach of the employer’s covenant of good faith and fair dealing limited to wrongful termination, where Employer breached its own handbook requirements as to performance and related salary reviews.”

2. “Does the record present genuine issues of material facts as to whether Frigon has a cause of action for wrongful discharge on a constructive discharge theory.”

3. “Does the record present genuine issues of material fact sufficient to present Frigon’s cause of action for defamation.”

4. “Does the record present genuine issues of material fact as to whether a privilege exists to prevent a claim for defamation in this case.”

5. “Does the record present genuine issues of material fact sufficient to present a cause of action for negligent infliction of emotional distress on the part of any Defendant.”

6. “Does the record present genuine issues of material fact sufficient to present a cause of action for intentional infliction of emotional distress on the part of any Defendant.”

7. “Is Frigon’s claim for negligent or intentional infliction of emotional distress barred by the exclusivity provisions of Montana Workers Compensation Law?”

8. “Did the Court err in ordering Defendants their costs on summary judgment, where Defendants recovered no damages and did not ask for costs in their Motion for Summary Judgment.”

9. “Did the Court err in awarding Defendant as a cost on summary judgment the expense of Defendants taking Frigon’s deposition.”

Appellant was hired by respondent Morrison-Maierle as a part-time secretary/receptionist in January of 1984, and paid $5.50 per hour. Her immediate supervisors were respondents Enright and Larsen. The “Employee’s Handbook” produced by Morrison-Maierle and given to appellant soon after she was hired stated a policy of conducting employee performance reviews and annual salary reviews. These reviews were to be conducted by the employee’s immediate supervisor. When she was hired, appellant was informed that she would receive her first salary review in six months. In April of 1984, appellant became a full-time employee, and in July of 1984 she received a 29 cent per hour raise as part of a general annual office raise. Appellant was told by Enright that she was still due a merit raise, but he didn’t have time to do a performance evaluation on her.

In October of 1984 at appellant’s request, she was given a performance evaluation by respondent Larry Larsen, during which she was told that her work was satisfactory with the exception of some complaints about her filing things in the wrong place.

In November of 1984, Philip Green became branch manager of the office, and appellant’s supervisor. Appellant requested an annual salary review in January of 1985, but the record does not show that such a review was ever conducted. On July 15, 1985, appellant met with Green for a performance review. During this meeting, appellant was informed that while Green had recommended she receive a merit raise, the Helena office (headquarters of Morrison-Maierle) had denied the raise on the basis of prior negative comments about appellant’s job performance made to company officials in Helena by Enright and Larsen.

Appellant testified in deposition that Green had characterized the negative comments as “tremendous trifles” or “tremendous trivials”. Green indicated that he would personally re-evaluate appellant’s performance in three months, and if warranted, recommend a merit raise. He expressed his desire to work with appellant to resolve the problems in her working relationship with Enright and Larsen. He also said, however, that if the choice were his, he would look for another job rather than continue working with Enright and Larsen, who he said, “literally don’t like the way you squeeze the toothpaste.” Appellant testified that her response was that she would not let the two men bother her, to which Green said, “Good for you.”

Appellant requested that the negative comments be put into writing. The two men were at first reluctant to do so, but on July 25, 1985, she received a memorandum written by Enright and Larsen containing a list of ten criticisms. Appellant prepared a written response to these criticisms, which she gave to Green on Friday, July 26. On Monday, July 29, appellant tendered her resignation, and on December 11, 1985, initiated this lawsuit, alleging breach of implied covenant of good faith and fair dealing, constructive discharge, slander and negligent or intentional infliction of emotional distress. Respondents filed a motion for summary judgment on February 25, 1987, which the District Court granted. This appeal followed.

The standard for review of the grant or denial of a summary judgment motion is the same as that used by the trial court. Dare v. Montana Petroleum Marketing Co. (Mont. 1984), [212 Mont. 274,] 687 P.2d 1015, 41 St.Rep. 1735. In order for summary judgment to issue, the movant must show there is “no genuine issue as to all facts considered material in light of the substantive principles entitling the movant to a judgment as a matter of law.” Cereck v. Albertson's, Inc. (1981), 195 Mont. 409, 411, 637 P.2d 509, 511. “If the movant has met this burden, it then shifts to the non-moving party to demonstrate a genuine issue of material fact. Mere denial or speculation will not suffice, the non-moving party must show facts sufficient to raise a genuine issue.” Gamble Robinson Co. v. Carousel Properties (Mont. 1984), [212 Mont. 305,] 688 P.2d 283, 287, 41 St.Rep. 1757, 1761.

I.

Appellant contends the respondents breached their covenant of good faith and fair dealing with her by refusing to give her performance and salary reviews when required by the Employee’s Handbook, and by denying her a merit raise on the basis of negative and at least partially false comments made by her former supervisors, to which she had little or no opportunity to respond. Appellant disputes the District Court’s holding that a cause of action for breach of a covenant of good faith and fair dealing did not lie because appellant voluntarily resigned. According to appellant, our decisions in Dare and Gates v. Life of Montana Insurance Co. (1982) 196 Mont. 178, 638 P.2d 1063, establish breach of the covenant of good faith and fair dealing as a tort separate from wrongful discharge, thereby obviating the need for termination in order for this cause of action to lie. Appellant further argues that our decision in Drinkwalter v. Shipton Supply Co. (Mont. 1987), [225 Mont. 380,] 732 P.2d 1335, 44 St.Rep. 318, establishes that such a covenant can be breached “on-the-job” through sexual harassment.

All of the decisions of this Court involving a covenant of good faith and fair dealing have been limited to instances of express employee termination or constructive discharge. The appellant is correct in her assertion that breach of a covenant of good faith and fair dealing is a separate tort from wrongful discharge. The latter is premised on acts by the employer in violation of public policy, while the former is broader, and does not require a public policy violation. Dare, 687 P.2d at 1019-20. However, both Dare and Gates involved employee terminations. Breach of the covenant of good faith and fair dealing was established as a tort separate from wrongful discharge, but applicable only in cases of employee termination.

Our holding in Drinkwalter also fails to support appellant’s argument. Our holding in that case simply stated the plaintiff could plead established common-law causes of action in addition to distinct and different statutory causes of action such as the plaintiff’s sexual discrimination claim under the state Human Rights Act. Drinkwalter, 732 P.2d at 1338. The fact remains that the covenant of good faith and fair dealing is applicable only in cases of employee termination in this state.

The record contains the letter in which appellant voluntarily resigned from her job. There was thus no express termination. On these facts, there is no genuine issue of material fact as to appellant’s claim for breach of the covenant of good faith and fair dealing. As we will discuss below, appellant has failed to set forth sufficient facts to establish constructive discharge. Appellant’s argument therefore amounts to “mere denial or speculation” which is insufficient under our test in Gamble to avoid summary judgment. The District Court’s decision to grant summary judgment on appellant’s claim of breach of the covenant of good faith and fair dealing was therefore correct, and we affirm the court on this issue.

II.

Appellant next argues that she presented genuine issues of material fact as to her claim of constructive discharge. She argues that she was forced to resign because “the employer had deliberately accepted Enright and Larsen’s criticisms over the recommendations of her supervisor, contrary to its own policies.” Appellant points to comments by Green and former Morrison-Maierle secretary Phyllis Swindell that they would leave rather than continuing to work with Enright and Larsen as further evidence of appellant’s reasonable belief that she was being forced to resign.

Appellant’s brief states the test in Montana for constructive discharge as “whether sufficient words or actions by the employer ‘would logically lead a prudent person to believe his tenure had been terminated.’ ” Hannifin v. Retail Clerks Int'l Ass'n (1973), 162 Mont. 170, 178, 511 P.2d 982, 987. She also notes, “A determination of constructive discharge depends on the totality of circumstances, and must be supported by more than an employee’s suggestive [sic] judgment that working conditions are intolerable,” and cites Snell v. Montana Dakota Utilities Co. (1982), 198 Mont. 56, 643 P.2d 841. There is room to dispute this characterization. Hannifin did not deal with constructive discharge, nor has that doctrine been recognized beyond discrimination cases such as Snell, where a high burden of proof was placed on the plaintiff.

Even assuming that appellant correctly states the test for constructive discharge in Montana, the facts do not support her argument. Appellant relies on the fact that she was denied a raise due to negative comments by Enright and Larsen. Looking at the “totality of the circumstances,” this was far from a situation that would lead a “prudent person to believe [her] tenure had been terminated.” She was denied a raise, but was never told that she was going to be fired. On the contrary, appellant testified in deposition that Green stated he wanted appellant to stay at her job, he would personally re-evaluate her in three months and if warranted recommend a raise, and he wanted all of the parties concerned to sit down and work out any differences (a suggestion initially made by Larsen). Green’s statement that if he were in appellant’s position, he would contemplate quitting does not rise to the level of intimating to appellant that she was being terminated. The appellant was instead laboring under her own subjective judgment that working conditions at MorrisonMaierle had become intolerable.

The appellant fails to raise a genuine issue of material fact as to her claim of constructive discharge. The District Court was correct in granting summary judgment, and we affirm the court’s order on this issue.

HI.

Appellant next presses her argument that she was defamed by respondents Enright and Larsen. According to appellant, the oral remarks of Enright and Larsen amounted to slander, and when those criticisms were reduced to writing, they were libelous.

The memorandum written by Enright and Larsen at appellant’s request contained the following ten criticisms of her job performance:

“1. Correspondence filing — copies not made or copies lost or copies placed in wrong file. Correspondence filed in wrong file, have had to send out to get copies from clients so we could have in our files.

“2. Reading file not always complete — every piece of correspondence should be filed for reading.

“3. Telephone questions pretaining [sic] to specific projects are to and should be referred to the project manager.

“4. Phone is a business phone — not to be abused.

“5. Does not realize importance of position: prompt and accurate measures should be taken concerning typing, packaging or mailing items requested as soon as possible.

“6. Lacking confidence in what she does.

“7. Can not or does not want to be creative — rely on others.

“8. Does not understand or remember content of correspondence.

“9. Repetitious tasks not undertaken without repeted [sic] help.

“10. Loss of a $100,000 check because of mis-address, after very specific instructions.”

The Montana legislature has defined defamation by statute as follows:

“Libel Defined. Libel is a false and unprivileged publication by writing, printing, picture, effigy, or other fixed representation to the eye which exposes any person to hatred, contempt, ridicule, or obloquy or which causes him to be shunned or avoided or which has a tendency to injure him in his occupation.” Section 27-1-802(3), MCA.

“Slander defined. Slander is a false and unprivileged publication other than libel which:

“(3) tends directly to injure him in respect to his office, profession, trade, or business, either by imputing to him general disqualification in those respects which the office or other occupation peculiarly requires or by imputing something with reference to his office, profession, trade, or business that has a natural tendency to lessen its profit.” Section 27-1-803, MCA.

Appellant argues that the comments made by Enright and Larsen tended to injure her in her occupation, as they called into question her competence, and tended to injure her financially, as they prevented her from obtaining a raise. .

The test applied by this Court in defamation cases is stringent. In Wainman v. Bowler (1978), 176 Mont. 91, 576 p.2d 268, we stated:

“Defamatory words to be actionable . . . must be of such a nature that the court can presume as a matter of law that they will tend to disgrace and degrade [the plaintiff] or cause him to be shunned and avoided. It is not sufficient, standing alone, that the language is unpleasant and annoys or irks him, and subjects him to jests or banter, so as to affect his feelings.”

Wainman, 576 P.2d at 271. (Emphasis supplied.) The comments made by Enright and Larsen were directed at areas of appellant’s job performance they felt were in need of improvement. The fact that these comments were not initially relayed to appellant may not have been good business practice, but there is no evidence to support a holding that they disgraced or degraded appellant as a matter of law. According to appellant’s own testimony, her supervisor characterized the comments as trivial and proposed a re-evaluation in a short time. If we were to accept appellant’s argument, every time an employee was denied a raise on the basis of dissatisfaction with elements of their job performance, the employer could be subjected to a defamation suit.

Furthermore, a basic tenet of the law of defamation is that an expression of opinion is generally not actionable. 50 Am. Jur. 2d, Libel and Slander, Section 14; see, e.g. Janklow v. Newsweek, Inc., 759 F.2d 644 (8th Cir. 1985). There is nothing in the comments to show a factual allegation that appellant was generally disqualified for her job. If that were the case, presumably Enright and Larsen would have taken steps to have appellant terminated. Instead, appellant’s deposition testimony shows that Larsen wished to sit down with Enright, Green and appellant and work out the problem. The facts relied on by appellant to show defamation instead reflect opinions rendered in the context of the evaluation of her performance on the job.

Appellant’s allegation that the District Court made an improper finding of fact in ruling that the comments quoted above were not defamation is incorrect. As we have held previously, facts are not found on summary judgment, as Rule 56, M.R.Civ.P., requires that there be no issue of material fact in order for summary judgment to issue. Major v. North Valley Hospital (1988) [233 Mont. 25,] 759 P.2d 153 at 155, citing Boise Cascade Corp. v. First Security Bank of Anaconda (1979], 183 Mont. 378, 600 P.2d 173. The evidence in this case does not raise a genuine issue of material fact regarding any possible defamation of appellant. Upon reviewing that evidence, the District Court correctly concluded that summary judgment would be proper on this issue, and we affirm that decision. Having so held, it will not be necessary for us to proceed further and consider the issue of privilege framed by appellant.

IV.

Appellant next contends that she set forth facts sufficient to establish a cause of action for negligent or intentional infliction of emotional distress. As to negligent infliction of emotional distress, appellant asserts this Court recognized that negligence can be a proper basis for recovery in a wrongful discharge case in Crenshaw v. Bozeman Deaconess Hospital (Mont. 1984), [213 Mont. 488,] 693 P.2d 487, 41 St.Rep. 2251. Appellant contends that the record contains genuine issues of material fact on this issue, in that “Enright and Larsen had to be either negligent or intentionally malicious in making statements about Frigon” when the mistakes complained of were attributable to others, including Enright and Larsen themselves. She also states that Morrison-Maierle was negligent in failing to determine whether the criticisms were warranted.

Appellant and respondents note that this Court has recognized the tort of negligent infliction of emotional distress in only limited situations, and cite Versland v. Caron Transport (1983), 206 Mont. 313, 671 P.2d 583, as their example. In Versland, we enunciated a three-part test for this tort:

“1. The shock must result from a direct emotional impact upon the plaintiff from the sensory and contemporaneous perception of [an] accident, as contrasted with learning of the accident from others after its occurrence.

“2. The plaintiff and the victim must be closely related, as contrasted with an absence of any relationship or the presence of only a distant relationship.

“3. Either death or serious physical injury of the victim must have occurred as a result of the defendant’s negligence.”

Versland, 671 P.2d at 588. Appellant does not meet this test, nor is her argument based on the Crenshaw case convincing. In Crenshaw, we held that an action for negligence could lie in a case of wrongful discharge. As discussed above, appellant has not presented facts sufficient to establish a cause of action for wrongful discharge.

Appellant’s claim of intentional infliction of emotional distress is premised on our decision in Gates and the Restatement (Second) of Torts. Appellant notes that in Gates, we addressed the plaintiffs claim for intentional infliction of emotional distress, although we did not uphold it. The opinion in Gates cited Kelly v. Lowney & Williams, Inc. (1942), 113 Mont. 385, 126 P.2d 486 (recognizing “recovery for damages for personal injuries occasioned by fright or mental shock though there be no physical contact”).

Emotional distress under Montana law has been and remains primarily an element of damages rather than a distinct cause of action. See, e.g. Gurnsey v. Conklin Co., Inc., (Mont. 1988), [230 Mont. 42,] 751 P.2d 151, 45 St.Rep. 1. Appellant, however, argues that our holding in Gates opened the door for such a cause of action, and urges that we apply the following elements to this case:

“One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, such bodily harm.”

Restatement (Second) of Torts Section 46 (1965).

Appellant asserts that “Enright and Larsen intentionally and/or recklessly made false, negative statements about [appellant]”. She argues that the only remaining question is thus whether the conduct of the two men was “extreme and outrageous”. Appellant asserts that a material question of fact exists as to that conduct, citing her testimony that Green characterized the comments as trivial and yet expressed hesitance about giving appellant the written memorandum because of its harshness.

Appellant does not present a case that merits recognition by this Court of intentional infliction of emotional distress as a cause of action. Comment “d” to Section 46 of the Restatement explains the nature of the conduct necessary to impose liability:

‘‘Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.”

Restatement (Second) of Torts, Section 46, Comment d (1965). In Johnson v. Supersave Markets, Inc. (Mont. 1984), [211 Mont. 465,] 686 P.2d 209, 41 St.Rep. 1495, this Court enunciated a test for compensation of intentional infliction of emotional distress. In the context of an action for unlawful arrest or imprisonment, we held that such an element of damages would only be proper if the tortious conduct complained of resulted in “a substantial invasion of a legaily protected interest and caused a significant impact upon the person of the plaintiff.” Johnson, 686 P.2d at 213 (Emphasis in original.).

There is no evidence in the record of this case which would support a claim for intentional infliction of emotional distress. The comments made by Enright and Larsen, and the failure of Morrison-Maierle to give appellant a raise are hardly instances of conduct that goes “beyond all possible bounds of decency.” Nor has appellant presented facts showing a substantial invasion of her legally protected interests. The law has yet to protect a person’s interest in receiving a merit raise.

The District Court correctly granted summary judgment on this issue, and we affirm that decision. Having so held, it is not necessary for us to proceed to the issue involving Montana Workers’ Compensation law framed by appellant.

Y.

Finally, appellant asserts that respondents were not entitled to costs in this case. She asserts that the District Court erred in awarding costs in that it did not follow Montana statutes on the subject:

“25-10-101. When costs allowed, of course, to plaintiff. Costs are allowed, of course, to the plaintiff upon a judgment in his favor in the following cases:

“(3) in an action for the recovery of money or damages, exclusive of interest, when the plaintiff recovers over $50;

“25-10-102. When costs allowed, of course, to defendant. Costs must be allowed, of course, to the defendant upon a judgment in his favor in the actions mentioned in 25-10-101.”

Sections 25-10-101 and 25-10-102, MCA. Appellant argues that under these statutes, respondents would be entitled to costs only if the judgment of the District Court awarded them a recovery of at least $50. No damages were awarded by the court, and appellant therefore asserts that no costs should have been allowed.

The prevailing party is generally entitled to costs. See, e.g. Carroceta v. Todd (1980), 189 Mont. 172, 615 P.2d 225. While the particular situation presented by this case is rarely before this Court, we are guided by our decision in Marcus v. Bowman (1940), 110 Mont. 412, 101 P.2d 68. In Marcus, we upheld an award of costs to a defendant whose counter-claim had been dismissed, but who prevailed on the merits of the plaintiff’s claim. The defendant was awarded nothing by the court as a recovery, but we upheld the award of costs to defendant as the prevailing party.

Appellant asserts that in particular, the District Court erred in allowing the cost of taking her deposition as part of the costs awarded to respondents. She asserts that the deposition was taken solely for the convenience of respondents, and was therefore not includable in the costs awarded under our decision in MorrisonMaierle v. Selsco (1980), 186 Mont. 180, 606 P.2d 1085. However, our decision in Roy v. Neibauer (Mont. 1981), [191 Mont. 224,] 623 P.2d 555, 38 St.Rep. 173 specifically held that depositions necessary for disposing of litigation by summary judgment were includable as costs. In this case, the briefs of both appellant and respondents before the District Court relied heavily on testimony taken from appellant’s deposition in arguing for and against summary judgment. The memorandum of the District Court also referred to information from that testimony. Appellant’s deposition was therefore necessary for disposal of this litigation by summary judgment, and was properly included by the District Court in the award of costs. We affirm the ruling of the District Court on this issue.

Our review of the record in this case shows that appellant failed to present facts sufficient to raise a genuine issue of material fact concerning any of her alleged causes of action. The District Court was therefore correct in granting respondents’ motion for summary judgment.

We affirm the judgment of the District Court.

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