text:
    In re the MARRIAGE OF PHILLIP A. HAMILTON, Petitioner and Respondent, and DEBRA M. DANELSON, f/k/a DEBRA HAMILTON, Respondent and Appellant, and LEONARD AND BONNIE HAMILTON, Intervenors and Cross-Appellants, and CAROL A. MITCHELL, Intervenor.
    No. 91-561.
    Submitted on briefs Apr. 23, 1992.
    Decided July 9, 1992.
    49 St.Rep. 604.
    835 P.2d 702.
    254 Mont. 31.

      For Appellant: Richard A. Volinkaty, Missoula.
    For Respondent: Judith A. Loring, Stevensville.
    For Intervenors and Cross-Appellants: Richard A. Reep, Reep, Spoon & Gordon, P.C., Missoula.
    For Intervenor: Timothy Geiszler, Geiszler & Newcomer, Missoula.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Phillip A. Hamilton (Phillip) commenced dissolution of his marriage to Debra M. Danelson-Hamilton (Debra) in the Fourth Judicial District, Missoula County, Montana. The District Court entered the Final Decree of Dissolution on November 17,1989 which incorporated by reference a marital and property settlement agreement. Debra later moved to modify, reopen, or revoke the property settlement and division, child custody, support and visitation provisions of the decree. The District Court denied the motion and Debra appeals. We affirm.

The dispositive issues on appeal are as follows:

1. Did the District Court err when it denied Debra’s motion to modify, reopen or revoke the property settlement and division.

2. Did the District Court err when it denied Debra’s motion to modify child support, custody and visitation provisions of the dissolution decree.

The parties were married in Missoula, Montana, on July 30,1983. Prior to the marriage Debra obtained a college degree and was employed as a television announcer. She was not employed outside the home during the early years of the marriage but began a day-care in her home during the later stages of the marriage. Phillip worked as a musician, part-time bookkeeper and sometimes operated a recording studio business. The parties had one child, a son, Coleman.

The parties came to live in a lifestyle that they, by their own means, could not support. Accordingly, throughout the marriage both parties borrowed money and received numerous gifts from their respective families. The couple separated in approximately October of 1988 and Phillip petitioned for dissolution on December 8, 1988.

On November 6, 1989, Phillip and Debra entered into a marital and property settlement agreement with an effective date of September 18, 1989. On November 17, 1989, the District Corut entered a Final Decree of Dissolution which incorporated by reference the marital and property settlement agreement of the parties. The agreement addressed division of property, debt allocation, maintenance, child custody, child support and other related issues such as a trust fund for Coleman and tax exemption issues.

On September 17, 1990, Debra filed a motion “TO RE-OPEN, MODIFY, OR REVOKE THE PROPERTY SETTLEMENT AND DIVISION, CHILD CUSTODY AND SUPPORT, AND FOR TEMPORARY MAINTENANCE AND ATTORNEYS FEES.” The District Court denied Debra’s motion on May 15,1991. Debra now appeals on the grounds that the property division was unconscionable.

It should be noted that in addition to the above events, Leonard and Bonnie Hamilton, Phillip’s parents, became parties to this action when they intervened for grandparent visitation by petition on July 12,1989. Also, after the completion of the parties’ dissolution, Debra’s initial attorney, Carol A. Mitchell, filed a notice of attorney’s hen on May 17,1990, to secure payment of unpaid attorney’s fees.

The record discloses that this dissolution was particularly fraught with animosity and spite. The parties were uncooperative and aggravating to one another throughout the entire proceeding. It is against this unfortunate backdrop that we address the dispositive issues.

I. Modification, Revocation or Reopening of the Marital and Property Settlement Agreement.

Debra asserts that it is necessary and proper to modify, revoke, or reopen the property settlement agreement (the agreement) which was incorporated by reference in the dissolution decree. She claims that since the signing of the agreement, several events have substantially altered the valuation of the marital estate. We note, however, that each of her contentions involve a change in her own or Phillip’s financial status which took place after the dissolution. For example, although the parties borrowed from both sets of parents, a great deal of money was owed to Phillip’s parents. This debt figure was utilized in calculating the agreement. Debra alleges that Phillip’s parents waited until the agreement was signed and then forgave approximately $100,000 of debt. She also indicates that after the dissolution, Phillip’s parents made other gifts to him in the form of stock interests. Debra argues that this information was concealed from her during settlement negotiations.

Next, Debra asserts that after the agreement was signed, she learned that her father was diagnosed with cancer and that he also was going through a divorce. She states that she signed the agreement relying on the fact that her father would be in a position to help her financially.

Finally, she asserts that the May 17, 1990, action by her former attorney Carol Mitchell has severely hampered her financial condition. Ms. Mitchell intervened in the case at bar to protect her interest in Debra’s unpaid legal fees.

Debra claims that since none of these factors were known to her at the time she signed the agreement, she should now be able to revoke, modify or reopen the agreement. We disagree.

Section 40-4-208, MCA, states the basis for modification and termination of provisions for maintenance, support, and property disposition. The relevant portion regarding property disposition is as follows:

(3) The provisions as to property disposition may not be revoked or modified by a court, except:
(a) upon written consent of the parties; or
(b) if the court finds the existence of conditions that justify the reopening of a judgment under the laws of this state.

Section 40-4-208(3), MCA.

Philfip has not consented in writing to modification of the property disposition and after reviewing the record, we do not find conditions that justify reopening the judgment. In fact, the record indicates that both Debra and Phillip stipulated to the agreement which provided for property settlement and distribution. Both were represented by counsel who assisted them during a lengthy negotiation period. Further, the record indicates that the parties freely, and with full ■understanding, signed the agreement. The parties agreed to limit modification of the settlement and property division as indicated by the following language in the agreement:

j. Modification. No modification or waiver of the terms of this Agreement shall be valid unless in writing and signed by both parties.

This modification limitation is authorized by § 40-4-201(6), MCA. The District Court did not find the terms of the agreement unconscionable and neither do we.

On appeal, our standard of review in the division of marital property was recently clarified by this Court in In re Marriage of Danelson (Mont. 1992), No. 91-255, decided July 9, 1992 [49 St.Rep. 597]. In Danelson, we stated:

This Court has recently clarified that our standard of review in regard to the factual findings of the district court relating to the division of marital property is whether the district court’s findings are clearly erroneous. In re Marriage of Sacry (Mont. 1992), [253 Mont. 336, 833 P.2d 1035,] 49 St. Rep. 452. Concerning this Court’s review of conclusions of law made by a lower court we have stated that “[w]e are not bound by the lower court’s conclusions and remain free to reach our own.” Schaub v. Vita Rich Dairy (1989), 236 Mont. 389, 391, 770 P.2d 522, 523. The basis for simply determining if the lower court’s conclusions are correct is that there is no discretion in determining a question of law. The lower court either correctly or incorrectly applies the law. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601.
In adopting these standards of review in division of marital property cases, this Court is not in any way discounting the considerable discretionary power that must be exercised by district courts in these cases. The courts are obligated to fashion a distribution which is equitable to each party under the circumstances. In re Marriage of Jones (1987), 229 Mont. 128 745 P.2d 350; § 40-4-202, MCA. The courts, working in equity, must seek a fair distribution of the marital property using reasonable judgment and relying on common sense. Obtaining this equitable distribution will at times require the lower court to engage in discretionary action which cannot be accurately categorized as either a finding of fact or a conclusion of law. These discretionary judgments made by the trial court are presumed to be correct and will not be disturbed by this Court absent an abuse of discretion by the lower court. Meridian Minerals v. Nicor Minerals, Inc. (1987), 228 Mont. 274, 742 P.2d 456.

Danelson, 833 P.2d at 219-220.

Debra also alleges that in order to disadvantage her, Phillip committed fraud. She claims that the information about future debt forgiveness and stock gifts was concealed from her prior to the dissolution. The result of Phillip’s alleged fraud was Debra’s receipt of a reduced award under the agreement.

Debra relies on In re Marriage of Madden (1984), 211 Mont. 237, 683 P.2d 493, as an example of fraud due to one party’s failure to disclose financial information. In Madden, the husband and the attorney failed to disclose a balloon payment on the house awarded to the wife, and therefore the property agreement was set aside.

The case at bar is clearly distinguishable from Madden in many respects. Most importantly, both parties were represented by one attorney in Madden, and neither the husband nor the attorney informed the court about the balloon payment. In the case at bar, both parties hired independent counsel and there is no proof that relevant financial information was concealed from Debra when executing the settlement agreement.

After a review of the record, we find no evidence that Phillip concealed information from Debra or committed a fraud upon the court in any way as to his representations of assets or net worth as they relate to the marital and property settlement.

It is true that Phillip’s financial status was and is predictably better than Debra’s since his parents possess considerable wealth and as their son he may benefit from their wealth. Even so, the gifts from Phillip’s parents after dissolution do not automatically become part of the marital estate and grounds to reopen the agreement. What Debra suggests is that simply because Phillip is the recipient of a gift, she should be entitled to a portion of it. This we will not do.

Debra cites In re Marriage of Dalley (1988), 232 Mont. 235, 756 P.2d 1131, as a basis for claiming that a court can commit error by failing to consider inheritance in the marital estate. Such an interpretation of Dailey is selective and incomplete. In Dailey, we excluded the wife’s expected inheritance from the marital estate.

However, property gifted during the marriage may be excluded from the marital estate where an objecting spouse can claim no contribution to the property’s value. [Citation omitted.] It follows ... that an expectation of property where an objecting spouse can claim no contribution may be properly excluded from the marital estate.

Dalley, 232 Mont. at 242, 756 P.2d at 1135 (emphasis in original).

With regard to inheritance we previously held that property given to one spouse during marriage may be excluded from the property division calculations unless the non-acquiring spouse can demonstrate that he or she actually contributed to any related increase in the value of the property. In re Marriage of Eklund (1989), 236 Mont. 77, 80, 768 P.2d 340, 342. Under such circumstances, if a non-acquiring spouse is not entitled to a portion of the gift dining the marriage, we cannot imagine the non-acquiring spouse obtaining a portion of a gift made after the dissolution of the marriage as in the case at bar.

With regard to the ill health of Debra’s father and the resulting financial hardship she faces because of her reliance on his promised financial assistance, we fail to see how Phillip can be held responsible in any way. Similarly, the pending action by Debra’s former attorney for unpaid legal fees cannot be assigned to Phillip. In short, Debra has failed to show that the property division was unconscionable.

Debra also claims that she is entitled to relief from judgment under Rule 60(b) M.R.Civ.P. She contends that she qualifies for relief alternatively under subsection (6) of Rule 60(b) or under the final portion of the rule that gives the court authority to grant relief for fraud upon the court. We are not persuaded by her arguments. Montana’s Rule 60(b) is nearly identical to the equivalent Federal rule and we previously have said that there must be a delicate balance between the sanctity of final judgments and the court’s conscience that justice be done in light of the individual circumstances and facts. Koch v. Billings School Dist. No. 2 (Mont. 1992), [253 Mont. 261,] 833 P.2d 181, 49 St.Rep. 517, 518, [11 Ed.Law 57].

Under Rule 60(b)(6), M.R.Civ.P., there must be “extraordinary circumstances” to justify reopening of the judgment. In Koch, the plaintiff’s injury claims were initially dismissed by the district court based on governmental immunity. The unique circumstances and bizarre timing of caselaw amounted to extraordinary circumstances. The case at bar is not analogous to Koch. While the events that eroded Debra’s financial condition are unfortunate, they do not amount to the extraordinary standard necessary to grant relief from judgment under Rule 60(b)(6), M.R.Civ.R

Not only do Debra’s claims fail under subsection (6) of Rule 60(b), M.R.Civ.R, but, the claims do not amount to a fraud upon the court. Finding no basis under Rule 60(b) M.R.Civ.R, to grant Debra relief from judgment, we decline to do so.

II. Motion to Modify Child Support, Custody and Visitation.

Debra contends that the District Court erred when it denied her motion to modify child support, custody and visitation. The statutory authority for modification of child support is § 40-4-208(2)(b)(i), MCA, which states that a modification can only be made “upon a showing of changed circumstances so substantial and continuing as to make the terms unconscionable.”

Debra again contends that the debt forgiveness, stock gifts, her father’s cancer and divorce, her former attorney’s action against her for unpaid attorney’s fees, as well as the other events impinging upon her financial condition, amount to “changed circumstances” under the statute. We disagree. The District Court did not find any of the circumstances asserted by Debra to be substantial and continuing so as to make the terms unconscionable and warrant modification of child support. We hold there was substantial evidence supporting the District Court.

Finally, Debra fails to make any arguments in her brief regarding the modification of prior custody which is controlled by § 40-4-219, MCA, nor does she address the issue of visitation modification under § 40-4-217, MCA. She merely references these topics in her statement of the issues and briefly mentions them in a constitutional argument which we find moot in light of our holding here. Accordingly, we will not address them either.

After a review of the record, we find that the District Court’s division of the marital estate was not clearly erroneous. Therefore, the rulings by made by the District Court will remain undisturbed.

Affirmed.

JUSTICES HUNT, GRAY, TRIEWEILER and WEBER concur.


source: Caselaw Access Project

author: JUSTICE WEBER

license: Public Domain

text:
    JERRY G. EILER, Petitioner and Appellant, v. STATE OF MONTANA, Respondent and Respondent.
    No. 92-084.
    Submitted on briefs May 21, 1992.
    Decided July 9, 1992.
    49 St.Rep. 611.
    833 P.2d 1124.
    254 Mont. 39.

      For Appellant: Jerry G. Eiler, Pro Se, Deer Lodge.
    For Respondent: Marc Racicot, Attorney General, Carol E. Schmidt, Assistant Attorney General, Helena; and David G. Rice, Hill County Attorney, Havre.
   JUSTICE WEBER

delivered the Opinion of the Court.

The petitioner, Jerry G. Eiler, appeals the decision of the Twelfth Judicial District Court, Hill County, Montana, which denied his request for post-conviction relief. We affirm.

The issue raised for review is whether the District Court properly denied Mr. Eiler’s petition for post-conviction relief.

In 1988, following a conviction for sexual assault, petitioner appealed his case to the Montana Supreme Court. This Court affirmed his conviction and denied his petition for rehearing. The facts of the underlying case are found in State v. Eiler (1988), 234 Mont. 38, 762 P.2d 210.

In 1991, Mr. Eiler filed for post-conviction relief. The District Court denied his petition concluding that: “[A]ll of Eiler’s allegations other than ineffective assistance of counsel could have been, should have been, or were raised on direct appeal.” It further found that Mr. Eiler was not denied effective assistance of counsel. From this ruling petitioner appeals.

Did the District Court properly deny Mr. Eiler’s petition for post-conviction relief?

Here Mr. Eiler contends he is entitled to post-conviction relief, and alleges: (1) the corut improperly allowed the State to present evidence of other crimes; (2) the prosecutor knowingly used perjured testimony when a State’s witness testified he was one of Mr. Eiler’s sponsors in the Alcoholics Anonymous (AA) program; (3) Mr. Eiler was incompetent to testify on his own behalf at trial; and (4) Mr. Eiler was denied effective assistance of counsel.

The District Court determined that Mr. Eiler was procedurally barred from raising issues one through three in his petition for post-conviction relief under § 46-21-105, MCA. Section 46-21-105(2), MCA, provides:

When a petitioner has been afforded a direct appeal of the petitioner’s conviction, grounds for relief that could reasonably have been raised on direct appeal may not be raised in the original or amended petition [for post-conviction relief].

We agree with the District Court. First, Mr. Eiler did raise the issue of admitting other crimes evidence in his direct appeal. Next, Mr. Eiler could have reasonably raised issues two and three regarding his competence and the prosecutor’s alleged use of peijured testimony on direct appeal. Thus we conclude the District Court properly denied Mr. Eiler’s petition for relief on these issues.

Next, we will review the District Court’s ruling that Eiler failed to prove ineffective assistance of counsel. Mr. Eiler claims his counsel’s failure to call certain witnesses deprived him of a fair trial. In order to prove ineffective assistance of counsel Mr. Eiler must demonstrate his trial counsel’s deficient performance prejudiced the defendant and that this deficiency denied Mr. Eiler a fair trial. State v. Kolberg (1990), 241 Mont. 105, 109, 785 P.2d 702, 704.

First, Eiler claims his counsel was deficient in failing to call witnesses to impeach a State’s witness who testified he was one of Eiler’s sponsors in the AA program. Eiler also claims his counsel was deficient in failing to introduce testimony, contradicting Eiler’s own testimony, regarding whether S.A. rode on a farm tractor with Eiler where the alleged assaults occurred. Further, Eiler claims counsel was deficient in failing to call certain witnesses to testify that his victims T.M. and S.A. were not afraid of him, and T.M. had visited his residence after the alleged assaults. Finally, he contends deficiency where witnesses would testify that S.A.’s mother and the prosecutor were “out to get him.” Eiler contends these deficiencies prejudiced the defendant and denied him a fair trial.

The District Court concluded that ineffective assistance of counsel cannot be based on the above assertions. The District Court further concluded that Eiler was not entitled to an evidentiary hearing where the facts alleged, even if substantiated, were insufficient to prove ineffective assistance and did not justify granting Eiler post-conviction relief. In reviewing a district court’s denial of post-conviction relief, we will not overturn the court’s legal conclusions if the tribunal’s interpretation of the law is correct. Rath v. St. Labre Indian School (1991), 249 Mont. 433, 439, 816 P.2d 1061, 1064. Here, we agree with the lower court’s conclusion that none of the facts alleged by Eiler tend to establish ineffective assistance of counsel. Accordingly, Eiler failed to sustain the burden of proof necessary to establish ineffective assistance of counsel.

In addition, § 46-21-104(l)(c), MCA, requires supporting materials to be furnished with a petition for post-conviction relief. Section 46-21-104, MCA, states in part:

The petition for postconviction relief must have attached any affidavits, records, or other evidence supporting its allegations or state why the evidence is not attached.

Here, Eiler failed to present any affidavits, records or other evidence to establish the testimony of his proposed witnesses. Next, he presented nothing to establish the availability of such witnesses. Last, he failed to present any statement as to why affidavits, records, or other evidence were not attached. Clearly Eiler failed to meet the requirements of § 46-21-104(l)(c), MCA. See State v. McColley (1991), 247 Mont. 524, 527, 807 P.2d 1358, 1360, where we stated that a claim of ineffective assistance of counsel must be grounded on facts in the record and not on merely conclusory allegations.

Finally, in his reply brief, Eiler contends that his counsel’s failure to raise the issues of other crimes, perjured testimony and incompetency on his prior direct appeal are instances of ineffective assistance of counsel. Mr. Eiler did not present this argument to the District Court in his petition for post-conviction relief. He also failed to address those issues in his initial brief on appeal. Instead he offers this argument for the first time in his reply brief. We will not address such issues raised for the first time on appeal, and in particular will not do so where the opposing party has been denied the opportunity to respond. Sherrodd Inc. v. Morrison-Knudsen Co. (1991), 249 Mont. 282, 285, 815 P.2d 1135, 1137.

We hold that the District Court properly denied Mr. Eiler’s petition for post-conviction relief.

Affirmed.

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


author: CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. TERRY ALLEN LANGFORD, Defendant and Appellant.
    No. 92-098.
    Submitted on briefs June 11, 1992.
    Decided July 9, 1992.
    49 St.Rep. 615.
    833 P.2d 1127.
    254 Mont. 44.

      For Defendant and Appellant: Michael Donahoe, Donahoe & Yeshe Law Offices, Helena.
    For Plaintiff and Respondent: Marc Racicot, Attorney General, John Paulson, Assistant Attorney General, Helena; and Christopher G. Miller, Powell County Attorney, Deer Lodge.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

Terry Allen Langford (Langford) appeals an opinion and order dated December 12, 1991, from the Third Judicial District, Powell County, which denied as moot his motion to declare hanging a cruel and unusual method of execution. We affirm.

We rephrase the issue as follows:

Did the District Court properly deny as moot Langford’s motion to declare hanging a cruel and unusual method of execution in violation of the Eighth Amendment to the United States Constitution?

On June 4, 1991, this Court affirmed Langford’s convictions and death sentences imposed by the District Court following his guilty pleas to two counts of deliberate homicide, two counts of aggravated kidnapping, one count of aggravated burglary, one count of robbery, and one count of theft regarding the July 1988 deaths of Edward and Celene Blackwood in Ovando, Montana. State v. Langford (1991), 248 Mont. 420, 813 P.2d 936.

On July 1,1991, this Court denied Langford post-conviction relief. State v. Langford (1991), 249 Mont. 385, 819 P.2d 151. On July 3, 1991, the District Court set September 24, 1991, as his execution date.

On September 10,1991, this Court vacated Langford’s September 24,1991 execution date following Langford’s filing of a second petition for post-conviction relief. This Court denied this second petition for post-conviction relief on November 14, 1991. State v. Langford (1991), 250 Mont. 542, 822 P.2d 1092.

On November 26, 1991, the District Court set January 17, 1992, as Langford’s execution date. Langford stated to the District Court that he elected hanging as the method of execution. The District Court issued a death warrant specifying hanging as the method of execution and allowed Langford until December 10, 1991, to file any further motions pertaining to his fitness to proceed.

On December 10, 1991, Langford filed consolidated motions to declare hanging unconstitutional, to certify the qualifications of the hangman, and to vacate the execution date. Following a hearing on December 10, 1991, the District Court issued its December 12, 1991 opinion and order denying as moot his motion to declare hanging unconstitutional, granting his motion to have the hangman’s qualifications certified, and denying his motion to postpone the execution date.

On December 13, 1991, Langford petitioned for writ of habeas corpus in the United States District Court, and requested a stay of execution. On December 18, 1991, the United States District Court granted his stay of execution and allowed him additional time to file an amended petition. The amended petition, filed on January 31, 1992, included a claim that hanging is an unconstitutional method of execution.

On February 10, 1992, Langford filed a notice of appeal from the state District Court’s opinion and order denying as moot his motion to declare hanging unconstitutional. On April 1, 1992, the United States District Court stayed the habeas corpus proceeding during the pendency of his appeal to this Court.

Did the District Court properly deny as moot Langford’s motion to declare hanging a cruel and unusual method of execution in violation of the Eighth Amendment to the United States Constitution?

The District Court heard Langford’s motion on December 10,1991. Langford, his counsel, and the Powell County Attorney were present at the hearing. All parties waived the presence of a court reporter and the District Court instructed the clerk of court to take detailed minutes of the proceeding.

The minutes of the hearing and the District Court’s subsequent written order indicate that the District Court inquired about Langford’s previous decision to elect hanging as the method of execution. Langford advised the District Court that he wanted to affirm his original election to be executed by hanging. Notwithstanding Langford’s previous election to die by hanging and the statutory mandate that he make the election for lethal injection at the hearing setting the execution date, the District Court informed him that it would allow him to elect lethal injection at that time. Langford informed the District Court that he still wished to be executed by hanging. Thereafter, the District Court held that Langford’s election to be executed by hanging rendered moot his argument that hanging was a cruel and unusual method of execution.

Section 46-19-103(3), MCA, provides Langford the opportunity to elect between lethal injection and hanging as a method of execution. Clearly, Langford had ample opportunity to elect lethal injection over hanging, but chose not to do so. Accordingly, he rendered moot any claim concerning the constitutionality of hanging as a method of execution. See DeShields v. State (Del. 1987), 534 A.2d 630. We therefore decline to discuss Langford’s argument further.

In conclusion, we affirm the District Court’s opinion and order dated December 12, 1991, denying as moot Terry Allen Langford’s motion to declare hanging a cruel and unusual method of execution in violation of the Eighth Amendment to the U.S. Constitution.

JUSTICES HARRISON, HUNT, GRAY, McDONOUGH, TRIEWEILER and WEBER concur.


author: JUSTICE McDONOUGH CHIEF JUSTICE TURNAGE

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. RONALD F. TIMBLIN, Defendant and Appellant.
    No. 90-069.
    Submitted June 11, 1992.
    Decided July 13, 1992.
    49 St.Rep. 617.
    834 P.2d 927.
    254 Mont. 48.
    For Defendant and Appellant: Billy B. Miller, Miller & Cook, Great Falls.
    For Plaintiff and Respondent: Marc Racicot, Attorney General; Carol E. Schmidt, Assistant Attorney General, Helena; and Patrick L. Paul, County Attorney, Great Falls.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Ronald Timblin appeals from a judgment of the Eighth Judicial District Court, Cascade County entered after a bench trial. We reverse.

The sole issue to consider on this appeal is: whether the District Court erred in denying a continuance thereby denying Timblin’s Sixth Amendment right to compulsory process, and his Fifth Amendment rights to due process and a fair trial. These rights are applicable to the states by reason of the Fourteenth Amendment to the United States Constitution.

During the spring of 1987, Timblin’s wife filed for a divorce and Timblin moved out of the family home. On approximately August 22, 1987, Timblin picked up P.T., C.T. and K.T. (his three daughters) for a scheduled visitation. At the time, P.T. was 14 years old. P.T. later reported that Timblin forcibly raped her during the visit. She initially told no one about this incident. Two years later, in 1989, P.T. confided in her boyfriend Matthew and revealed a history of sexual abuse by her father. After consideration, on the following day, Matthew told P.T.’s mother about the abuse. On April 24, 1989 P.T.’s mother contacted the Great Falls Police Department. After an investigation, Timblin was charged with sexual intercourse without consent.

P.T. told the investigating officer that on the day of the incident at Timblin’s apartment, he called her into the bathroom to talk about C.T.’s birthday present. She stated that Timblin told C.T. and K.T., her younger sisters, to stay in the living room and watch television. P.T. reported that after the alleged rape occurred Timblin left the bathroom first. She remained in the bathroom to clean up and put cold water on her face. Later, at the request of the County Attorney, the investigating officer interviewed P.T.’s sisters, C.T. and K.T. Both C.T. and K.T. reported that Timblin called P.T. into the bedroom to talk about C.T.’s birthday present. They stated that P.T. and Timblin were in the bedroom about two minutes, and that P.T. came out of the bedroom first. Both girls stated they were in the living room watching TV at the time of the alleged rape. C.T. stated she saw P.T. and Timblin go into the bedroom but not the bathroom.

Prior to trial, the State issued subpoenas to both C.T. and K.T. Apparently, the State released the subpoenas one or two days prior to the trial. At the trial, P.T.’s story changed somewhat. Counsel for the defendant then had subpoenas issued for C.T. and K.T. but was unable to serve them. Filed affidavits made by the process server and a private investigator showed that the girls were hidden by their maternal grandmother, and/or mother thus preventing service.

The statements taken by the investigating officer had revealed some inconsistencies between the girls’ stories, and the story of the victim. However, it was not revealed to the defense until trial that P.T.’s initial story had changed. Prior to P.T.’s in-court testimony, Timblin was unaware that P.T. had made more than one statement to the investigating officer. The State did not notify Timblin about the change in P.T.’s testimony. P.T. testified at trial that her father first called her into the bedroom, then they went into the bathroom. P.T. stated that Timblin told the younger girls to take out the garbage. P.T. further testified that the girls stayed outside and played. This was not the version told by C.T. and K.T.

P.T.’s original and only typed statement was different than her trial testimony; the detective knew about her change in testimony prior to trial. The defendant was unaware of the change in the story until the trial.

During the trial, after the process server was -unsuccessful in serving the subpoenas, Timblin made a motion to compel the State to produce C.T. and K.T., and a motion to continue the trial -until the witnesses could be subpoenaed. The District Court denied Timblin’s motions. Timblin was found guilty by the court and sentenced to 35 years in the Montana State Prison, with five years suspended and without credit for time served. This appeal followed.

Our standard of review is to determine whether the trial court abused its discretion in denying the motion for a continuance. Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 803 P.2d 601.

On the second day of the two day bench trial, the District Court denied Timblin’s motion to continue until Timblin could locate and serve subpoenas on C.T. and K.T. The District Court, for purposes of the record, stated that its calendar was full. It further stated that Timblin should have subpoenaed C.T. and K.T. prior to trial. We agree with the District Court that a criminal defendant must plead and prove his or her own case, thus calling witnesses in his or her own defense. See Ferrari v. United States (9th Cir. 1957), 244 F.2d 132, 142, cert. denied sub nom Cherpakov v. United States (1957), 355 U.S. 873, 78 S.Ct. 124, 2 L.Ed.2d 78; Darneille v. U.S., 355 U.S. 873, 78 S.Ct. 125, 2 L.Ed.2d 78. In this instance, due to the lack of notice of changed testimony, a continuance would have been proper.

Timblin argues that under Schwartzmiller v. State (Idaho App. 1985), 699 P.2d 429, and Singleton v. Lefkowitz (2nd Cir. 1978), 583 F.2d 618, he was denied his rights to compulsory process, due process, and a fair trial. Schwartzmiller set forth three criteria in determining whether compulsory process has been denied:

1. The nature and extent the government conduct contributed to the unavailability of the witness;
2. The importance of the evidence to the defendant’s case; and
3. The defendant’s diligence in exercising his Sixth Amendment rights.

Schwartzmiller [699 P.2d] at 430-431.

As Schwartzmiller pointed out, each inquiry is important, but all three need not be satisfied. Schwartzmiller, [699 P.2d] at 431. In the case before us, after the change of testimony on the part of P.T., the importance of the younger girls’ testimony increased significantly. Timblin diligently had subpoenas issued for C.T. and K.T., hired an investigator to help locate them, and made the proper motions in order to accomplish service.

In Singleton the Second Circuit held that the defendant was denied his right to compulsory process when the trial court refused an adjournment to secure the presence of a witness. The court stated that denial of a defendant’s right to present a defense deprives the defendant the right to a fair trial. Singleton at 625. Additionally, due process guarantees that a criminal defendant will be treated with the fundamental fairness essential to the very concept of justice. Schwartzmiller [699 P.2d] at 430. (Citations omitted.)

We conclude that the District Court abused its discretion in denying Timblin’s motion for continuance. A reasonable continuance would have satisfied Timblin’s constitutional rights. The presence of the two girls at trial would have allowed Timblin to test the credibility of the victim. The change in P.T.’s testimony goes to her credibility. The credibility of a witness is of utmost importance between a sexual abuse victim and a denying defendant. It is often the only defense available.

For the reasons stated above, we remand to the District Court for a new trial.

JUSTICES HARRISON, TRIEWEILER, HUNT, GRAY and WEBER concur.

CHIEF JUSTICE TURNAGE

dissenting.

I respectfully dissent.

The majority opinion of the Court reverses the bench trial conviction of the defendant of sexual intercourse without consent committed upon the person of his then fourteen-year-old natural daughter, P.T., and orders a new trial for defendant.

The sole basis for the majority’s decision to reverse the conviction is the conclusion that the trial judge abused his discretion in refusing counsel’s motion for a continuance made during the trial for the purpose of allowing defendant to subpoena his two other natural daughters, C.T. and K.T. At the time of the offense, C.T. and K.T. were nine and ten years of age respectively. They were approximately ages eleven and twelve at the time of trial.

From the date of filing of the information on June 6, 1989, defendant was aware that C.T. and K.T. were the potential witnesses referred to in the information and potentially witnesses to be called at the trial. C.T. and KT. had been subpoenaed by the State but were not called to testify and had been released from subpoena prior to trial.

Defendant had the opportunity prior to trial to depose C.T. and K.T. Defendant’s counsel did notice a deposition of C.T., and thereafter her deposition was taken on October 16,1989, with defendant’s counsel present along with the deputy county attorney. The defendant, having knowledge of these potential witnesses, chose not to subpoena them for testimony on his behalf.

The State is under no obligation to call all of the witnesses that it subpoenaed. It is the duty of the defendant and his counsel to subpoena their own witnesses and prepare for the defendant’s case. The defense is not entitled to rely upon the witnesses subpoenaed by the State.

Defendant’s counsel's request for a continuance for the purpose of subpoenaing C.T. and K.T., mid-trial, was based on an inconsistency in the testimony of P.T. as to whether the offense was committed in a bathroom or a bedroom in defendant’s residence, and whether C.T. and K.T. were in the residence all the time or whether they were outside part of the time during the commission of the offense.

In my view, any direct or cross-examination of C.T. or K.T. would have been cumulative and not probative to a degree that would have created reasonable doubt or altered the decision of the court.

In bench trials, the trial judge should be more willing to consider a reasonable request for continuance. The delay would not, in all probability, be as inconvenient as it may be in a jury trial. In this case, however, the trial judge did not abuse his discretion in denying the continuance.

The overwhelming testimony submitted by the State in proof of the defendant’s guilt, which is plain from the totality of the record, leaves no room for a reversible error in the denial of the motion for continuance. At most, it was a harmless error, and I do not concede that it was error in any event.

The totality of this record, when carefully reviewed, establishes from the testimony of the victim, P.T., that defendant had committed sexual assaults upon her commencing from the time she was approximately five years of age and continuing over several years. The sexual assaults commenced with sexual fondling and escalated to acts of sexual intercourse, including oral intercourse. These acts occurred with an astounding frequency, ending on or about August 23, 1987, with the act on which defendant stands convicted.

The State made an appropriate motion under Rule 404(b), M.R.Evid., to introduce prior acts of the defendant and, after briefing and argument, the Court granted the State’s motion. The prior acts were testified to in much detail by the victim, P.T. That testimony included the fact that the defendant had signed a deferred prosecution agreement on November 20, 1987, wherein he admitted that approximately three years prior to that date, he had committed the offense of sexual assault upon the victim in this case, his daughter P.T. Pursuant to the agreement, his prosecution for that offense was deferred for two years. The agreement was entered into evidence without objection as State’s Exhibit 1.

Direct or cross-examination of C.T. and K.T. concerning an event that occurred when they were nine and ten years of age, over two years prior to trial, relating to whether or not they were present in the residence and whether the victim and the defendant were in the bedroom or the bathroom during the commission of the offense, simply does not rise to a probative value that warrants a reversal of this conviction.

I would affirm.


author: JUSTICE HARRISON JUSTICE TRIEWEILER,

text:
    DEBRA NAVE, as surviving widow of LAWRENCE E. NAVE, JR., and as Personal Representative of the Estate of LAWRENCE E. NAVE, JR., and as conservator of the Estate of BEAU NAVE, Petitioner and Appellant, v. STATE COMPENSATION MUTUAL INSURANCE FUND, Respondent, v. MARY LOU WEYER, as conservator of the Estate of Randi Marie Nave, Intervening Party.
    No. 91-451.
    Submitted on briefs Apr. 2, 1992.
    Decided July 20, 1992.
    49 St.Rep. 620.
    835 P.2d 706.
    254 Mont. 54.

      For Petitioner and Appellant: Lloyd E. Hartford, Billings.
    For Respondent: Joe C. Maynard, Crowley, Haughey, Hanson, Toole & Dietrich, Billings.
   JUSTICE HARRISON

delivered the Opinion of the Court.

Appellant Debra Nave, claimant’s widow, appeals from an order and judgment of the Montana Workers’ Compensation Court. The Workers’ Compensation Court Hearings Examiner’s findings of fact and conclusions of law stated that Mr. Nave’s (Nave) suicide was not causally related to his on-the-job injury and denied appellant’s request for attorney’s fees and a twenty percent penalty award. We affirm.

We review the following dispositive issue: Whether the Workers’ Compensation Court erred in determining that Nave’s on-the-job injury was not the proximate cause of his suicide.

Nave was a forty-two-year-old male who graduated from high school in 1964 and served in the U.S. Army. He earned college credits but did not obtain a higher education degree. During his life, he was employed in various capacities including construction, farming and driving a truck as a teamster.

At the time of trial it was unclear how many children Nave had, but it was established that he was married numerous times, twice to Debra Nave, who had children from a previous marriage. His third marriage was to Mary Lou Weyer and the couple had one child, Randi Marie Nave. Nave’s marriage to Weyer ended after less than a year. Debra and Nave re-married and the couple had a son, Beau.

On July 15,1985, while working for Byron Construction, Nave was injured on the job when, in the course of his employment, he attempted to start a water pump engine requiring him to utilize a hand crank. The engine apparently backfired and the crank handle struck him on the left side the face, which knocked him unconscious for a short period of time. Nave was evaluated at a medical facility in Broadus, Montana, and treated at the Miles City, Montana hospital. He returned to work within a few days after the accident. Nave continued to work until August 8,1985, when he voluntarily quit his position and began drawing unemployment benefits. Later, after becoming eligible for Workers’ Compensation benefits, Nave was required to repay the unemployment benefits.

As a result of his injury, Nave experienced headaches, numbness, neck and upper back pain. Nave consulted numerous doctors about his condition and also was treated by a chiropractor and via physical therapy.

Though disputed by the appellant, there was evidence that Nave was a heavy drinker prior to his injury. After the accident, Nave continued to consume large quantities of alcohol which increased over time. After receiving several DUIs, his driving privileges were taken away and he was admitted to the Sheridan, Wyoming, VAhospital for alcoholism treatment in February of 1987. He resumed drinking only days after this treatment.

In August of 1987, Nave began experiencing seizures which worsened over time. Other life events went particularly poorly for Nave such as the closure of the second-hand business he established with the help of his parents.

Eventually, Nave became more abusive to his family. Debra testified that he struck her, and that sometime during the last week of his life he apparently shot at her with a rifle as she pulled into their driveway. His drinking continued until he drank almost constantly. Finally, Debra fled the family home with the couple’s son fearing for their safety. Nave committed suicide by a self-inflicted gun shot wound on August 18, 1989.

Two days later Debra informed respondent, State Compensation Fund, of Nave’s suicide and demanded payment for survivors’ benefits. Respondent refused payment and terminated Workers’ Compensation benefits as of August 19,1989. Debra filed a petition for an emergency hearing due to financial hardship in September, 1989. The matter came before Hearings Examiner Robert J. Campbell on April 16 and 17, 1990, who issued findings of fact and conclusions of law on April 3, 1991. The court concluded that the appellant failed to establish that Mr. Nave’s injury was a substantial or significant contributing cause of his suicide. The court also determined that the appellant was not entitled to receive a twenty percent penalty under § 39-71-2907, MCA, or the award of cost and attorney’s fees under §§ 39-71-611 or -612, MCA. Debra petitioned for a rehearing on May 9, 1991, which was denied, and she now appeals to this Court.

The appellant focuses primarily on issues involving the Workers’ Compensation Court’s determination of witness’ credibility, especially as it relates to Nave’s drinking history. The parties hotly disputed whether Nave’s severe drinking problems arose before or after his on-the-job injury on July 15,1985. This issue arose since the seizures Nave experienced were related to his long term excessive alcohol consumption. The court stated that “[t]he extensive medical evidence presented from Billings neurosurgeon Dr. Neil T. Meyer, Dr. Dale M. Peterson, Louis Robinson, Dr. Donald See, and Dr. Susan English contain no evidence to relate the July 15, 1985 injury to the grand mal seizure of August 6, 1987, the increasing dependency on alcohol or the depression that would result in Mr. Nave’s suicide.”

The appellant claims that substantial credible evidence did not exist to support the findings and conclusions of the Hearings Examiner. We disagree. For example, at trial, appellant testified that during the course of her first marriage to Nave, which was prior to the injury, he drank “maybe two or three beers a couple times a week.” However, in her deposition she stated that on a day he was not working, “he possibly drank through the whole day maybe a six-pack or a little over a day of beer.” Again, appellant testified that she never discussed Nave’s drinking problem with any of his treating physicians. However, Dr. Carlson’s deposition revealed that he did have a discussion with Debra about Nave’s drinking, in which she stated that Nave began drinking more heavily after the injury. Appellant also acknowledged that in 1974 Nave had surgery and was treated for pancreatitis, but she denied this condition was related to Nave’s alcohol consumption. Dr. English, however, indicated that Nave’s pancreatitis was caused by alcohol consumption.

Appellant later testified that she really did not know how much Nave drank while working, prior to his injury:

Q. The fact of the matter is, ma’am, you really don’t know how much your husband drank before his injury, do you?
A. Not exactly how much he drank when he was working, he worked away from home.
Q. He was gone for up to six weeks at a time?
A. When he was driving over the road.
Q. And when he wasn’t driving over the road, he was home sometimes on weekends; isn’t that correct?
A. Yes.
Q. Would it be fair to say that the information you provided Dr. Carlson concerning your husband’s drinking habits was guesswork?
A. It was the best that I knew, which —

The court also detailed independent evidence of Nave’s severe alcohol problems prior to his injury. A hospital record dated June 29, 1985, approximately two weeks before his injury, indicated that Nave went to Deaconess Hospital Emergency Room for a DUI blood test after being picked up by the sheriff. The test revealed a blood alcohol content of .266 and a diagnosis of “alcohol intoxication,” even though Nave said he did not believe he was drunk.

In addition to other evidence of Nave’s severe drinking habits prior to the injury, an alcohol dependency counselor, Lynn Ramsey, also confirmed Nave’s excessive alcohol consumption. She stated in her deposition that in her evaluation of Nave, he told her that he drank in excess of a six pack of beer a day since he reached the age of twenty-one.

The appellant’s voltnninous and repetitive brief is filled with various alleged errors committed by the Workers’ Compensation Court, errors too numerous to mention here, which fall squarely into the witness’ credibility arena. We need not address them individually, except to say that the Workers’ Compensation Court is in the best position to observe the witnesses, including their demeanor and credibility. Giacoletto v. Silver Bow Pizza Parlor (1988), 231 Mont. 191, 195, 751 P.2d 1059, 1062; citing Tenderholt v. Royal Ins. Co. (1985), 218 Mont. 523, 525-526, 709 P.2d 1011, 1013. “In addition to observing the demeanor of the witness, the trier of fact can take into account the witness’ capacity to recollect events, his inconsistent statement, and other evidence contradicting the witness’ testimony.” Hartfield v. City of Billings (1990), 246 Mont. 259, 264-265, 805 P.2d 1293, 1297. We previously have said:

This Court will not substitute its judgment for that of the Workers’ Compensation Court concerning the credibility of witnesses or the weight of their testimony. When conflicting evidence is presented, the scope of review is to establish whether substantial evidence supports the lower court’s findings, not whether evidence may support contrary findings.

Smith-Carter v. Amoco Oil Co. (1991), 248 Mont. 505, 510, 813 P.2d 405, 408. The Workers’ Compensation Court can choose whether or not to believe a witness and, in the case at bar, obviously did not find the evidence and testimony of appellant’s witnesses persuasive. Instead, the court chose to give more weight to the statements of the ■witnesses who indicated that Nave’s drinking problem existed long before his on-the-job injury.

On appeal, this Court has set forth the appropriate standard of review in Workers’ Compensation cases. The Workers’ Compensation Court’s conclusions of law will be upheld if the tribunal’s interpretation of the law is correct. Grenz v. Fire and Casualty of Connecticut (1991), 250 Mont. 373, 378, 820 P.2d 742, 745; citing Steer, Inc. v. Dept. of Revenue (1990), 245 Mont. 470, 474-475, 803 P.2d 601, 603. The Workers’ Compensation Court’s findings of fact will be upheld if supported by substantial credible evidence. Nelson v. Semitool, Inc. (Mont. 1992), 829 P.2d 1, 3, 49 St.Rep. 253, 254.

Section 39-71-721, MCA(1985), sets forth compensation for injury causing death as follows:

(1) If an injured employee dies and the injury was the proximate cause of such death, then the beneficiary of the deceased, as the case may be, is entitled to the same compensation as though the death occurred immediately following the injury, but the period during which the death benefit is paid shall be reduced by the period during or for which compensation was paid for the injury. ... [Emphasis added.]

We agree with the quotation by the Workers’ Compensation Court of the following from Breen v. Industrial Accident Board (1968), 150 Mont. 463, 472-473, 436 P.2d 701, 706-707:

What is meant by “proximate cause” under the above statute [§ 39-71-721(1)]? Exactly the same thing it has meant under definitions of this court since time immemorial. The proximate cause of a person’s death is that cause which in a natural and continuous sequence, unbroken by any new and independent cause, produces his death, and without which it would not have occurred. (See McNair v. Berger, 92 Mont. 441, 15 P.2d 834, and cases cited therein; also see MJIG, Instruction No. 15.00). This, of course, does not mean that the injury must be the sole cause of death, but it does mean that the injury must be a substantial contributing cause in the sense that death would not have occurred but for such injuries. In determining the range of compensable consequences from an industrial accident, Larson states the basic rule in this manner: “When the primary injury is shown to have arisen out of, and in the course of employment, every natural consequence that flows from the injury likewise arises out of the employment, unless it is the result of an independent intervening cause attributable to claimant’s own intentional conduct.” (Larson’s Workmen’s Compensation Law, Vol. 1, § 13.00). [Emphasis added.]

In Breen, the widow’s claim for compensation was denied because the husband’s injury was not the proximate cause of his death. Mr. Breen drank a considerable amount for years, both before and after his injury. Breen, 150 Mont. at 468-469, 436 P.2d at 704. Mr. Nave’s present case is analogous to Breen. Appellant has failed to show that Mr. Nave’s injury was the proximate cause of his death.

We have carefully reviewed the extensive record and conclude there was substantial evidence to support the findings with regard to Mr. Nave’s suicide. We hold there is substantial evidence to support the judgment conclusion that appellant had failed to establish that the injury of July 15, 1985, was the proximate cause of Mr. Nave’s death, as proximate cause is defined in Breen. We therefore affirm the determination by the Workers’ Compensation Court that Mr. Nave’s on-the-job injury was not the proximate cause his suicide.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES WEBER and McDonough concur.

JUSTICE TRIEWEILER,

specially concurring.

I concur in the result of the majority opinion. However, I do not agree with all that is said therein. In particular, I do not agree with the majority’s confusing and unnecessary discussion of causation which uses “proximate cause,” “the substantial factor test,” and the “but for test” interchangeably. The three concepts are not the same. However, the distinctions among them are not relevant to the outcome of this case.


author: JUSTICE WEBER JUSTICE HUNT

text:
    MERLIN L. SORENSEN, Plaintiff and Respondent, v. THE STATE OF MONTANA, DEPARTMENT OF REVENUE, Defendant and Appellant. THE DEPARTMENT OF REVENUE, Petitioner and Appellant, v. PAUL A. WILLIAMS, JR., Respondent and Respondent.
    Nos. 91-379 and 91-569.
    Submitted May 28, 1992.
    Decided July 21, 1992.
    Rehearing Denied Aug. 13, 1992.
    49 St.Rep. 624.
    836 P.2d 29.
    254 Mont. 61.

      For Appellant: R. Bruce McGinnis, Dept, of Revenue (91-379) and Paul Van Tricht argued, Dept, of Revenue (91-569), Helena.
    For Respondent: Clinton H. Kammerer argued, Kammerer Law Offices, Missoula (91-379) and Edmund F. Sheehy argued, Cannon & Sheehy, Helena (91-569).
   JUSTICE WEBER

delivered the Opinion of the Court.

The Montana State Department of Revenue (DOR) appeals from two separate District Court rulings wherein the courts determined that the tax assessed by the DOR on Merlin L. Sorensen (Sorensen) and Paul A. Williams, Jr. (Williams) violated double jeopardy. We have combined these cases for appeal. We reverse.

The DOR assessed tax on Sorensen’s possession of cocaine after he pled guilty to criminal possession of cocaine. In a declaratory action, the Fourth Judicial District Court granted summary judgment in favor of Sorensen finding that Montana’s Dangerous Drug Tax, §§ 15-25-101, MCA et seq., is a criminal penalty and violates double jeopardy.

Likewise, after Williams pled guilty to criminal possession of marijuana, the DOR assessed tax on the marijuana Williams had in his possession. The DOR petitioned the First Judicial District Court to determine the constitutionality of Montana’s Dangerous Drug Tax. The court found the Drug Tax violated double jeopardy.

The DOR appeals these rulings and raises the following issues for our review:

1. Is Montana’s Drug Tax a multiple punishment which violates double jeopardy?

2. Is Montana’s Drug Tax Act unconstitutional on its face?

Both Sorensen and Williams pled guilty to possession of dangerous drugs and received sentences and fines under Montana’s criminal code. Subsequently, the DOR assessed tax under Montana’s Dangerous Drug Tax Act, §§ 15-25-101, MCA et seq. In both cases, the District Courts held Montana’s Drug Tax violated double jeopardy.

I

Is Montana’s Drug Tax a multiple punishment which violates double jeopardy?

The Drug Tax clearly violates double jeopardy if it is a criminal penalty. Double jeopardy protects citizens from a second prosecution for the same offense after acquittal; a second prosecution for the same offense after conviction; and multiple punishments for the same offense. North Carolina v. Pearce (1969), 395 U.S. 711, 717, 89 S.Ct. 2089, 23 L.Ed.2d 656.

Next, the Drug Tax may violate double jeopardy if it is an excessive civil sanction. United States v. Halper (1989), 490 U.S. 735, 109 S.Ct. 1892, 104 L.Ed.2d 487. In Halper, the Court stated that civil as well as criminal sanctions may constitute punishment and violate double jeopardy when the sanction, as applied to the individual, serves the goals of punishment rather than the remedial purposes of compensating the government for its loss. Halper at 448, 109 S.Ct. at 1901-1902, 104 L.Ed.2d at 501-502.

The DOR contends that double jeopardy does not attach to Montana’s Drug Tax because the tax is an excise tax for raising revenue, not a criminal penalty or civil sanction. Appellees contend Montana’s Drug Tax is a criminal penalty, and thus, violates double jeopardy.

In United States v. Ward (1980), 448 U.S. 242, 100 S.Ct. 2636, 65 L.Ed.2d 742, the Court held that a federal fine imposed for failure to notify officials of an oil spill was a civil sanction, not a criminal penalty, and did not violate double jeopardy. First, the Court determined that Congress intended to establish a civil penalty. Next, using criteria established in Kennedy v. Mendosa (1963), 372 U.S. 144, 83 S.Ct. 554, 9 L.Ed.2d 644, it determined that the penalty was not so punitive in purpose or effect that the civil remedy was transformed into a criminal penalty. The Kennedy factors include whether the sanction: involves an affirmative disability or restraint, has historically been regarded as a punishment, requires a finding of scienter, promotes retribution and deterrence, applies to criminal behavior, has an alternate purpose, and is excessive in relation to the alternate purpose. Kennedy at 168-169, 83 S.Ct. at 567-568, 9 L.Ed.2d at 661.

The Supreme Court in Ward determined that Congress intended to establish a civil penalty. Ward at 250-251, 100 S.Ct. at 2642, 65 L.Ed.2d at 750-751. Similarly, here the Montana Legislature clearly intended to create a tax not a criminal sanction. In Chapter 563, Montana Session Laws 1987, the following descriptive paragraphs precede the wording of the “Dangerous Drug Tax Act” itself:

WHEREAS, dangerous drugs are commodities having considerable value, and the existence in Montana of a large and profitable dangerous drug industry and expensive trade in dangerous drugs is irrefutable; and
WHEREAS, the state does not endorse the manufacturing of or trading in dangerous drugs and does not consider the use of such drugs to be acceptable, but it recognizes the economic impact upon the state of the manufacturing and selling of dangerous drugs; and
WHEREAS, it is appropriate that some of the revenue generated by this tax be devoted to continuing investigative efforts directed toward the identification, arrest, and prosecution of individuals involved in conducting illegal continuing criminal enterprises that affect the distribution of dangerous drugs in Montana.
THEREFORE, the Legislature of the State of Montana does not wish to give credence to the notion that the manufacturing, selling, and use of dangerous drugs is legal or otherwise proper, but finds it appropriate in view of the economic impact of such drugs to tax those who profit from drug-related offenses and to dispose of the tax proceeds through providing additional anticrime initiatives without burdening law abiding taxpayers.

The intention of the Montana Legislature to enact a revenue producing tax on drugs is clear. Thus, we conclude Montana’s Dangerous Drug Tax Act satisfies the first tier of the Ward analysis.

Next, we analyze the tax under the Kennedy factors to determine whether the tax is so punitive in either purpose or effect as to negate the intention to create a tax. First, the tax does not impose any affirmative disability or restraint upon the taxpayer. The taxpayer is required to pay an assessment based on the quantity of drugs in his possession, and is not subject to incarceration or any other restraint of his liberty or privileges.

Next, the tax has a remedial purpose other than promoting retribution and deterrence. Section 15-25-122, MCA, earmarks the use of the tax funds collected to defray the costs of drug abuse. The tax collected is used for such things as youth evaluations, chemical aftercare, chemical abuse assessments and juvenile detention facilities. The tax collected is based on the quantity of drugs possessed or stored by the taxpayer, and is not excessive in relation to the remedial purposes addressed in § 15-25-122, MCA.

Next, several state courts as well as federal courts have upheld the legitimacy of a tax on the transfer or possession of dangerous drugs. In United States v. Sanchez (1950), 340 U.S. 42, 71 S.Ct. 108, 95 L.Ed 47, the Court determined that taxes on illegal activities are not necessarily penal or unconstitutional. “Atax does not cease to be valid merely because it regulates, discourages or deters the activities taxed, even though the revenue raised by the tax is negligible.” Sanchez at 44, 71 S.Ct. at 110, 95 L.Ed. 49. Similarly, in State v. Berberich (Kan. 1991), 811 P.2d 1192, and Harris v. State, Department of Revenue (Fla.App 1. Dist. 1990), 563 So.2d 97, both courts upheld the validity of their state marijuana taxes as legitimate exercises of taxing power, not improper penalties or fines. Thus, we conclude a tax on dangerous drugs has not been historically regarded as a punishment.

Finally, the tax is based on possession and storage of dangerous drugs. Where possession gives rise to the tax, we conclude that the Act does not involve a finding of scienter.

Respondents argue that the scienter factor is not material where the crime, criminal possession of dangerous drugs under Title 45, MCA, similarly requires no scienter. Respondents claim double jeopardy is violated under the Act because the taxpayer is subject to both a criminal penalty and a tax for the same conduct. We disagree.

In Helvering v. Mitchell (1938), 303 U.S. 391, 399, 58 S.Ct. 630, 633, 82 L.Ed. 917, 922, the Court allowed both a civil and criminal penalty for the same act or omission. It held that double jeopardy did not attach to a tax fraud penalty where Congress had created a civil procedure for collecting the penalty and the amount of the penalty was remedial. Helvering at 401-404, 58 S.Ct. 634-636, 82 L.Ed. 923-925. Here, as in Helvering, the tax is remedial and collected through a separate administrative procedure. Thus, although the conduct of possessing dangerous drugs subjects the taxpayers to both a criminal penalty and a tax, we conclude that it is not so punitive in purpose or effect that it negates the legislative intent to create a civil sanction.

Williams contends Montana’s Dangerous Drug Tax is derived from the taxpayer’s criminal conviction. Thus, it is a criminal penalty and violates double jeopardy. Williams emphasizes that the tax is not imposed on persons in legal possession of drugs. Next he points out the tax may be collected as part of the fine imposed in a criminal conviction, or recovered from forfeited property. Finally, unlike other compliance based tax reporting, Title 15, MCA, does not provide for taxpayer compliance prior to arrest. Rather, under § 15-25-113, MCA, law enforcement officers are required to report to the DOR the names of persons subject to the tax. We do not find merit in these contentions.

Here, the assessment of the drug tax does not rest on a criminal conviction. As previously discussed, both civil and criminal penalties may attach to the same act or omission. Helvering, 303 U.S. 399, 58 S.Ct. at 633, 82 L.Ed. 922. Further, we do not conclude that the method of reporting the tax due on the possession of dangerous drugs or the method of collecting the amount of tax authorized by statute or administrative rules transforms this tax into a criminal penalty.

We conclude Montana’s Dangerous Drug Tax is not derived from a criminal conviction.

Both respondents contend Montana’s Dangerous Drug Tax is a criminal penalty. However, in the alternative, if this Court finds the tax is not a criminal penalty, they contend it violates double jeopardy under Halper. In Halper the Court held that a civil sanction violates double jeopardy when it serves the goals of punishment rather than the remedial purposes of compensating the government for its loss. Halper 490 U.S. at 448, 109 S.Ct. 1901-1902, 104 L.Ed.2d at 501-502. In that case, Halper, a medical service manager submitted sixty-five inflated claims to medicare demanding a $12 payment on each claim, when the company was actually entitled to $3 per claim. Halper received a $2000 penalty for each false claim totalling $130,000. The Court concluded that the tremendous disparity between the government’s damages of $585 and the civil penalty of $130,000 served the goals of punishment and violated double jeopardy. Halper, 490 U.S. at 452, 109 S.Ct. at 1904, 104 L.Ed.2d at 504.

We do not find Halper controlling. The court in Halper limited its ruling to similar cases. It stated: “What we announce now is a rule for the rare case, where a fixed-penalty provision subjects a prolific but small-gauge offender to a sanction overwhelmingly disproportionate to the damages he has caused.” Halper at 449, 109 S.Ct. at 1902, 104 L.Ed.2d at 502. Halper involved a civil sanction and a fixed penalty per offense which was not based on remedial costs. As mentioned, the penalty was $2000 for each event regardless of how small the dollar amount was in terms of cost to the government. In contrast, the Montana Dangerous Drug Tax is an excise tax based on the quantity of drugs in the taxpayer’s possession.

We note that both District Courts held the tax was excessive and punitive, not remedial, because the DOR failed to provide a summation of the costs of prosecution and societal costs of drug use. However, unlike the civil sanction in Halper where such proof may be required, a tax requires no proof of remedial costs on the part of the state. Commonwealth Edison Co. v. State of Montana (1980), 189 Mont. 191, 615 P.2d 847. In Commonwealth this Court held that the state is not required to defend the validity of an excise tax by offering a summation of the costs of governmental benefits. Commonwealth 189 Mont. at 207, 615 P.2d at 855-856.

Finally, respondents contend the tax was excessive. Sorensen was assessed a tax of $200 per gram, or $4,216 for his possession of 21.08 grams of cocaine. Similarly, Williams was assessed a tax of $100 per ounce, or $1,260 for his possession of 12.6 ounces of marijuana. We do not conclude that this tax is excessive. It is neither a fixed penalty as in Halper, nor is the amount of tax so grossly disproportionate as to transform this tax into a criminal penalty which violates double jeopardy. We also note that the foregoing rates of tax on various drugs are comparable to those in other states and also comparable to the amounts in effect for many years during the effective period of the Federal Drug Tax Act which has now been repealed.

We hold that Montana’s Dangerous Drug Tax is not a multiple punishment and does not violates double jeopardy.

II

Is Montana’s Drug Tax Act unconstitutional on its face?

The court in Williams held that Montana’s Dangerous Drug Tax Act, on its face, violated the double jeopardy clause of the Fifth Amendment to the United States Constitution. We disagree. As stated previously, the tax is not a criminal penalty and does not rest on a criminal conviction. Further, under the Halper analysis the tax does not serve the goals of punishment. Neither is the tax excessive or grossly disproportionate to the harm suffered by the government. Finally, the reporting procedures outlined in § 15-25-113, MCA, do not relate the tax to a criminal conviction. Rather, they protect the taxpayer’s Fifth Amendment right against self-incrimination.

We hold Montana’s Dangerous Drug Tax Act is constitutional on its face.

Reversed.

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

JUSTICE HUNT

dissenting.

I dissent. Once again the majority uses the club of the “drug crisis” to crack the shield of the Bill of Rights. Montana’s Drug Tax Act clearly violates a constitutional right against double jeopardy through the use of multiple punishments.

As the United States Supreme Court stated in Halper, the labels of “criminal” and “civil” are not of “paramount importance.” United States v. Halper (1989), 490 U.S. 438, 447, 109 S. Ct. 1892, 1901, 104 L. Ed. 2d 487, 501. To determine whether a civil penalty amounts to a criminal penalty “requires a particular assessment of the penalty imposed and the purposes that the penalty may fairly be said to serve.” Halper, 490 U.S. at 448.

In Halper, the United States Supreme Court held that:

[UJnder the Double Jeopardy Clause a defendant who already has been punished in a criminal prosecution may not be subjected to an additional civil sanction to the extent that the second sanction may not be fairly characterized as remedial, hut only as a deterrent or retribution.

Halper, 490 U.S. at 448-49. Both Williams and Sorensen were previously convicted and punished before the DOR assessed the tax. Clearly, the facts of this case fit the mandate of Halper because the Montana Drug Tax is a civil sanction which violates double jeopardy by serving the goals of punishment rather than the remedial purpose of compensating the government for its loss.

Not only does the tax serve the goals of punishment, it fails to bear any rational relationship to the goal of restoring to the State its losses incurred when enforcing its drug laws, particularly when considering the excessive criminal fines imposed by § 45-9-101 through -127, MCA. In addition, the DOR failed to provide any evidence which would establish the societal cost of prosecuting these cases. Indeed, the majority bestows upon the DOR an unfettered license to impose an arbitrary, unequal, and unfair tax.

Although there is evidence that the legislature intended to create a civil penalty, the purpose and effect of the statute is still punishment and deterrence. The Montana Drug Tax Act has previously been litigated in the federal system. As United States Bankruptcy Court Judge for the District of Montana, John L. Peterson, ruled:

The punitive nature of the tax is evident here, because drug tax laws have historically been regarded as penal in nature, the Montana Act promotes the traditional aims of punishment — retribution and deterrence, the tax applies to behavior which is already a crime, the tax allows for sanctions by restraint of Debtors’ property, the tax requires a finding of illegal possession of dangerous drugs and therefore a finding of scienter, the tax will promote elimination of illegal drug possession, and the tax appears excessive in relation to the alternate purpose assigned, especially in the absence of any record developed by the State as to societal costs. Finally, the tax follows arrest for possession of illegal drugs and the tax report is made by law enforcement officers, not the taxpayer, who may or may not sign the report. All these aspects of the Drug Tax Act lead to the inescapable conclusion that it has deterrence and punishment as its purpose.

Drummond, Trustee et al. v. Department of Revenue (1990), 8 MBR 288. The Federal District Court affirmed the holding and reasoning of Judge Peterson. In re Kurth Ranch (D. Mont. April 23, 1991), No. CV-90-084-GF.

The majority attempts to hide behind the veil of facts of these cases to justify that the tax imposed is reasonable and not excessive. In Judge Peterson’s case, the DOR attempted to impose a tax assessment in excess of $800,000 on the bankrupt estate of the Kurths. The DOR levied a tax on drugs that were not even defined in the statute. Nor did the DOR provide any rational explanation regarding how it determined the value of the drugs seized. Judge Peterson correctly found that tax to be so grossly disproportionate as to transform it into a criminal penalty. He recognized quite clearly, as did State District Court Judge John S. Henson in Sorensen, State District Court Judge Jeffrey D. Sherlock, in Williams, and Federal District Court Judge Paul G. Hatfield, in affirming Judge Peterson, that a criminal penalty by any other name is still a criminal penalty.

For these reasons I would hold that the Montana Drug Tax Act is unconstitutional on its face and would affirm the lower court’s decision.

JUSTICE TRIEWEILER concurs in the foregoing dissent of JUSTICE HUNT.


author: JUSTICE HUNT

text:
    LAURIE L. SMITH, Claimant and Appellant, v. UNITED PARCEL SERVICE, Employer, and LIBERTY MUTUAL INSURANCE CO., Insurer and Respondent.
    No. 91-104.
    Submitted May 28, 1992.
    Decided July 21, 1992.
    49 St.Rep. 629.
    835 P.2d 717.
    254 Mont. 71.

      For Claimant and Appellant: Kenneth H. Grenfell argued, Grenfell & Ogg, Missoula.
    For Insurer and Respondent: Larry W. Jones, argued Garlington, Lohn & Robinson, Missoula.
   JUSTICE HUNT

delivered the opinion of the Court.

Appellant Laurie L. Smith appeals the judgment of the Workers’ Compensation Court which held that her 1986 back injury, sustained in the course and scope of her employment at UPS, was not the proximate cause of her current permanent partial disability. The court held that appellant’s current disability resulted from a separate injury occurring in July 1989, and denied her permanent partial disability benefits for her current disability under § 39-71-703, MCA (1985).

We affirm.

Appellant raises various issues for this Court to consider. However, we find the following issues to be dispositive:

1. Did the Workers’ Compensation Court err when it adopted respondent’s proposed findings of fact and conclusions of law almost verbatim?

2. Was there substantial credible evidence to support the Workers’ Compensation Court’s findings of fact that claimant’s injury was not proximately caused by an industrial accident which occurred at UPS?

Prior to her injury, appellant worked for UPS as a preloader and part-time driver. On March 24, 1986, she injured her back when lifting a package. On April 11, 1986, she returned to work in a light-duty capacity, and later in the month she worked again as a preloader. In July 1986, she left UPS because she continued to have back problems and decided to attend college at Portland State.

While at Portland State, appellant played women’s basketball, worked 20 hours per week at a pizza parlor, and carried a full credit load of classes. Appellant testified that she continued to have back problems during this period. However, she never reported any back problems when undergoing a required physical examination for Portland State basketball players. She quit basketball because of either a hamstring pull or continued back problems. After ending her basketball career, appellant increased her work hours at the pizza parlor.

Appellant returned to Missoula in July 1987. She continued her interests in athletics by playing soccer and running. Although appellant enjoyed these endeavors, she would occasionally have flair-ups of back pain which would result in the suspension of her activities until the pain subsided.

She began working for Gallagher Cedar Products bundling cedar shakes in July 1987. On her application for employment, appellant stated that she did not have a physical disability which would restrict her ability to perform her job. Initially, she began performing light-duty work, but in August 1987 she started heavy cedar shake bundling. It was at this time that appellant began to experience increasing back pain. She then filed a workers’ compensation claim through Gallagher Cedar Products. The State Fund awarded her temporary total disability benefits and medical benefits.

Because appellant was concerned about reinjuring her back, she left Gallagher Cedar Products and became a manager at Torrey’s Home Cooking in Missoula. She also started to experience back pain while working in this position, which led her to forego her athletic activities until the pain subsided. She then filed a workers’ compensation claim relating to her reinjury at Torrey’s restaurant and received ten weeks of temporary total disability benefits.

At the time of trial, appellant had been working for Azimuth, Inc., a geotechnical service company, where she had done surveying and claim staking for approximately one and one-half years. Her duties include hiking on hilly terrain, digging holes for survey monuments, and carrying a pack frame that weighs about 25 to 30 pounds.

The location and type of symptoms the appellant now claims are disabling, are the same symptoms in the same body areas as those affected after her injury at Gallagher Cedar Products. Appellant asserts that because of her condition she can no longer play college basketball, work at a pizza parlor, or work at Torre/s Home Cooking or Gallagher Cedar Products. Appellant filed a workers’ compensation claim against UPS alleging that her initial injury from her industrial accident at UPS was the proximate cause of her disabling condition.

On May 8, 1990, trial was held. The record was left open for the taking of post-trial depositions. The Workers’ Compensation Court ordered counsel, pursuant to stipulation by the parties, to simultaneously submit by mail proposed findings of fact and conclusions of law and supporting briefs on November 15, 1990. Defense counsel was granted a motion for an additional day to file. The Workers’ Compensation Court ordered the parties to serve reply briefs no later than November 30, 1990. The court granted respondent’s motion to allow parties to file reply briefs no later than December 5, 1990.

On February 11, 1991, the court issued its findings of fact and conclusions of law in favor of respondent. In the order, the court refused to consider appellant’s proposed findings of fact and conclusions of law and supporting brief because they were not timely filed. Appellant appeals the findings of the Workers’ Compensation Court.

I.

Did the Workers’. Compensation Court err when it adopted respondent’s proposed findings of fact and conclusions of law almost verbatim?

Appellant asserts that she was prejudiced when the Workers’ Compensation Court adopted respondent’s proposed findings of fact and conclusions of law verbatim because appellant did not timely file her proposed findings of fact and conclusions of law.

The Workers’ Compensation Court did adopt appellant’s employment history almost verbatim from respondent’s proposed findings of fact and conclusions of law. However, the Workers’ Compensation Court independently adopted its own conclusions regarding the medical testimonies of Dr. Walter H. Peschel and Dr. Robert J. Seim, an orthopedic specialist. We hold that the Workers’ Compensation Court did not abuse its discretion in not considering appellant’s untimely proposed findings of facts and conclusions of law.

II.

Was there substantial credible evidence to support the Workers’ Compensation Court’s findings of fact that claimant’s injury was not proximately caused by an industrial accident which occurred at UPS?

We will uphold the Workers’ Compensation Court’s findings if they are supported by substantial credible evidence. Tenderholt v. Travel Lodge International (1983), 218 Mont. 523, 526, 709 P.2d 1011, 1013. Even though conflicting evidence may exist in the record, it is the Workers’ Compensation Court’s, and not this Court’s, duty to resolve such conflicts. Olson v. Westfork Properties, Inc. (1976), 171 Mont. 154, 157, 557 P.2d 821, 823.

Dr. Seim, appellant’s treating physician, testified that in his opinion, she would have had to have been asymptomatic for at least 12 months before he could conclude that her back problems resulted from the second employer. He also opined that she reached maximum medical improvement in the months after her first injury at UPS. In addition, appellant testified that she had no serious back problems while attending Portland State. She continued a full range of activities which included varsity basketball, a full college credit load, and working part-time.

Appellant contends that there was no evidence that a second injury occurred at Gallagher Cedar Products. The record reflects that appellant signed a claim for compensation which stated that she hurt her back when she picked up a bundle of cedar shakes to put on a stack of bundles. Because of this claim, she received temporary total disability and medical benefits from the State Fund. In response to a question on the application for employment form for Gallagher Cedar Products, appellant stated that she did not have any physical condition which would limit her ability to perform her job. We hold that there was substantial credible evidence to support the Workers’ Compensation Court’s conclusion that appellant’s back injury was not proximately caused by her industrial accident at UPS.

We affirm.

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


author: JUSTICE McDONOUGH

text:
    MOUNTAIN WATER COMPANY, A Montana corporation, Plaintiff and Respondent, v. MONTANA DEPARTMENT OF PUBLIC SERVICE REGULATION, MONTANA PUBLIC SERVICE COMMISSION, and MONTANA CONSUMER COUNSEL, Defendants and Appellants.
    No. 91-446.
    Submitted on briefs May 7, 1992.
    Decided July 21, 1992.
    As Modified on Denial of Rehearing Aug. 13, 1992.
    49 St.Rep. 632.
    835 P.2d 4.
    254 Mont. 76.

      For Defendants and Appellants: Robin A. McHugh, Special Assistant Attorney General, Public Service Commission; and Mary Wright, Staff Attorney, Special Assistant Attorney General, Montana Consumer Counsel, Helena.
    For Plaintiff and Respondent: John Alke, Hughes, Kellner, Sullivan and Alke, Helena.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

Montana Department of Public Service Regulation, Montana Public Service Commission, and Montana Consumer Counsel appeal from an order of the First Judicial District, Lewis and Clark County, in favor of Mountain Water Company. We reverse.

We frame the following issue for appeal:

Whether the Public Service Commission’s refusal to authorize recovery through prospective rate setting of past period § 69-4-511, MCA, expenses did not justly compensate Mountain Water Company, in violation of the Fifth and Fourteenth Amendments to the United States Constitution, and of Article II, Section 29 of the Montana Constitution?

In 1987, the Montana Legislature passed, and the Governor signed into law, Senate Bill No. 28. The law became effective on October 1, 1987, and was codified under § 69-4-511, MCA. The bill mandated that the private water service provider be responsible for the cost of maintaining water service pipelines from the main to the owner’s property line. Under the statute, the property owner is responsible for the cost of the pipe and other supplies used in the service line. Prior to 1987, the property owner bore the entire cost of the pipe and of maintaining the line.

On October 1, 1987, the day the law went into effect, Mountain Water Company (MWC) filed a complaint against the Montana Public Service Commission (PSC) in United States District Court, seeking to have § 69-4-511, MCA, declared unconstitutional. The United States District Court held that § 69-4-511, MCA, was not unconstitutional. Specifically, it held § 69-4-511, MCA, did not constitute a prohibited taking.

On appeal, the Ninth Circuit held that the statute did not violate the Fifth Amendment and that any taking of MWC’s private property by the statute is for a public use. Further, the court stated that MWC may seek just compensation for its property taken through rate setting before the PSC. Mountain Water v. Montana Dept. of Public Serv. Reg. (9th Cir. 1990), 919 F.2d 593, 601.

On June 29, 1989, MWC filed an application with the PSC to increase its rates, in part to recover previous expenditures it had been compelled to provide for its customers under § 69-4-511, MCA. MWC proposed to capitalize § 69-4-511, MCA, expenses incurred between January 1, 1988 and June 30, 1989. Recovery was sought through a two-year amortization. The PSC denied MWC recovery for the previous expenditures. However, with respect to ongoing § 69-4-511, MCA, expenses, the PSC authorized recovery through rates of annual § 69-4-511, MCA, expenses. MWC appealed the PSC’s order. The District Court held that the PSC’s refusal to allow recovery of back expenses incurred during 1988 and 1989 failed to justly compensate MWC for the taking. This appeal followed.

The issue before us is a question of law. In reviewing conclusions of law, our standard of review will be merely to determine if the District Court’s interpretation of the law is correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603.

I

The Ninth Circuit held that § 69-4-511, MCA, expenses were a taking for public use requiring just compensation, which could be sought through rate-making. We must determine whether PSC’s denial of recovery for previous expenditures denied MWC just compensation.

The PSC is an administrative agency charged, through powers granted by the Montana Legislature, with regulating public utilities pursuant to the provisions of §§ 69-3-101, MCA et seq. The rates set by the PSC through its rate-making policies must be at a level that allows a just compensation for any regulations imposed which impair the property interests of the utility company. West Ohio Gas Co. v. Public Utilities Commission of Ohio (1935), 294 U.S. 63, 55 S.Ct. 316, 79 L.Ed. 761. MWC argues that the PSC is bound by judicial estoppel. The PSC admitted during the course of the federal litigation that § 69-4-511, MCA, was a taking and that MWC would be compensated through rate-making.

However, in making that admission the PSC did not waive application of the policies involved in rate-making. In Montana, public utility rates are set to match utility costs during the period that rates are in effect. The utility, the Montana Consumer Counsel, the PSC, or other persons with standing may seek a rate change when the financial information indicates a mismatch. See § 69-3-301, MCAet seq. MWC was aware that the Montana Legislature passed § 69-4-511, MCA. Prior to the law taking effect on October 1, 1987, MWC could have applied to the PSC to cover the utility costs for 1988 and 1989 under § 69-4-511, MCA.

The PSC argues that its refusal to authorize recovery in rates of prior period expenses is in line with public utility law and utility regulation in Montana. Rate-making is a legislative activity and is therefore prospective only in its effect. State ex rel. Billings v. Billings Gas Co. (1918), 55 Mont. 102, 110, 173 P. 799, 801; Billings Utility Co. v. Public Service Commission (1921), 62 Mont. 21, 33, 203 P. 366, _. Historically, utility companies do not receive retroactive rate increases.

MWC cites City of Helena v. Montana Dept. of PSR (1981), 194 Mont. 173, 182-183, 634 P.2d 192, 198, as support for its position. We stated “It is clearly the law that utilities may not set their rates so as to amortize past deficits.” Galveston Elec. Co. v. Galveston (1922), 258 U.S. 388, 395, 42 S.Ct. 351, 354, 66 L.Ed. 678, 683, was cited as the foundation for the rule. The city of Helena had sought to distinguish Galveston and its progeny because the cases involved private utilities, not municipal utilities. We held that the PSC was not required to treat the two differently in considering past losses suffered even though in dicta we said a municipality’s improvements can be funded differently. This rule against retroactive rate-making clearly applies to MWC, a private company.

The District Court agreed that “utilities may not set their rates so as to amortize past deficits” but held that a prohibition against allowing recovery of unanticipated expenses was not absolute. Montana Consumer Counsel v. PSC and MPC (1975), 168 Mont. 180, 541 P.2d 770. In Montana Consumer Counsel we upheld the PSC’s decision authorizing Montana Power Company to increase its charges for natural gas services due to an increase in the cost of natural gas. However, the rate order in question encompassed present and prospective rate changes. Montana Consumer Counsel at 188, 541 P.2d at 774. The rate charges were not retroactive.

For the reasons set forth above, we conclude that the District Court erred in concluding MWC was not justly compensated by PSC’s denial to retroactively allow recovery of § 69-4-511, MCA expenses.

We reverse.

JUSTICES HARRISON, HUNT, TRIEWEILER and GRAY concur.