text:
    STATE OF MONTANA, Plaintiff and Respondent, v. WILLIAM JACK HALL, Defendant and Appellant.
    No. 89-331.
    Submitted May 10, 1990.
    Decided Aug. 20, 1990.
    797 P.2d 183.

      Daniel A. Boucher, Altman & Boucher, Havre, for defendant and appellant
    Marc Racicot, Atty. Gen., John Paulson, Asst. Atty. Gen., Helena, David G. Rice, Hill County Atty., Patricia Jensen, Deputy County Atty., Havre, for plaintiff and respondent.
   JUSTICE SHEEHY

delivered the Opinion of the Comb.

A jury in the Twelfth Judicial District, Hill County, found defendant William Jack Hall guilty of sexual assault. He now appeals his conviction. We affirm.

The defendant raises four issues on appeal:

1. Whether the District Court erred in denying defendant’s motion to dismiss for lack of a speedy trial.
2. Whether the District Court properly admitted defendant’s statement concerning his acts at the scene of the crime.
3. Whether the District Court properly refused defendant’s proposed jury instruction concerning eyewitness identification.
4. Whether the District Court improperly allowed expert testimony.

On July 21, 1988, six-year-old D.B. went to Havre-Hill County Public library with her mother and two brothers. After walking downstairs with the children to the children’s section so that D.B. and her brothers could choose some books to check out for themselves, D.B.’s mother went upstairs to attend a meeting.

While D.B. was looking at books in the children’s section, defendant approached D.B. and asked her to follow him into a periodical storage room. While inside the room, Hall had D.B. sit down on a chair. Hall then showed his penis to D.B. and touched D.B.’s leg with his penis. Hall asked D.B. to pull down her pants, but she refused. Defendant than reached his hand up inside D.B.’s shorts and touched her vagina and buttocks.

That evening D.B. told her mother about the incident in the library. D.B’s mother reported the incident to officer Ross Magnuson of the Havre Police Department the following day. Magnuson examined the periodical room and found three hairs and a dried substance on the floor.

On July 30,1988, Magnuson interviewed Hall. Hall initially stated that he had not been in the library for quite a while. When Magnuson informed Hall of the hair evidence found at the scene and that the police had obtained a search warrant to collect samples of his hair to compare with the evidence at the scene, Hall changed his story. He explained that he had been in the library the day before the incident, had gone into the same periodical storage room, and became aroused by a picture he had found in a magazine. Hall stated that he then masturbated in the storage room. Subsequent analysis by both the F.B.I. and Hall’s expert determined, however, that hairs found in the periodical storage room could not match Hall’s hair sample.

On August 1, 1988, the State charged Hall, by complaint, with felony sexual assault. Section 45-5-502(1), MCA. The Justice of the Peace initially set bail at $7,500. After receiving leave to file an information, on August 19, 1988, the State filed an information alleging Hall sexually assaulted D.B. On August 26, 1988, Hall was arraigned in District Court, at which time the court reduced his bail to $4,000. Hall was unable to post bail and remained incarcerated.

Subsequent to Hall’s arraignment, the District Court set the trial for October 26,1988. On October 6,1988, the State moved to continue the trial date because the results of the trace evidence had not yet been received and Hall’s expert would have insufficient time to examine the evidence. The court granted the State’s motion. Later, the District Court reset the trial for December 12, 1988. Next on December 8, 1988, the parties entered a stipulation to continue the December 12, 1988 trial date. The stipulation was based on two grounds: 1) Hall’s expert had recently suffered serious heart ailments and was temporarily unavailable and 2) the State had recently endorsed an expert witness for which there had not been any opportunity for exchange of discovery. Once again, on January 5,1989, the District Court rescheduled the trial for February 22,1989.

On January 26,1989, Hall filed a motion in limine with the District Court requesting prohibition of the use of statements by Hall to officer Magnuson. The District Court granted Hall’s motion, and ordered that the State could introduce evidence of defendant’s presence in the library but not of defendant’s acts as admitted in his statement. The District Court reasoned that evidence of those acts had little probative value, and were inflammatory and prejudicial.

Next, on February 16, 1989, Hall filed a motion to dismiss, based upon a failure to provide a speedy trial. The District Court denied Hall’s motion.

The trial commenced on February 22, 1989. At trial D.B. and her brother J.B., age nine, identified Hall as the offender. Hall chose not to testify at trial. On February 25,1989, a Hill County jury found Hall guilty as charged. Hall now appeals his conviction.

I.

Whether the District Court erred in denying defendant’s motion to dismiss for lack of a speedy trial.

The right of any defendant to a speedy trial is guaranteed by the federal and Montana Constitutions. U.S. Const., Amend. VI; Art. II, §24, Mont. Const.; State v. Fife (Mont. 1981), [_ Mont. _,] 632 P.2d 712, 714.

The United States Supreme Court in Barker v. Wingo (1972), 407 U.S. 514, 530, 92 S.Ct. 2182, 2192, 33 L.Ed.2d 101, 117, established a four-pronged balancing test to determine speedy trial claims. In Montana, when a speedy trial issue is presented to the District Court, the court must resolve the issuing by applying the balancing test of Barker. Briceno v. District Court (1977), 173 Mont. 516, 518, 568 P.2d 162, 163-64. The four factors to be evaluated and balanced are:

1) length of delay;
2) reason for delay;
3) assertion of the right by defendant; and
4) prejudice to the defendant.

Barker, 407 U.S. at 530, 92 S.Ct. at 2192, 33 L.Ed.2d at 117; Briceno, 568 P.2d at 164.

In speedy trial analysis, the length of delay acts a “triggering” mechanism and the other above enunciated factors need not be examined unless presumptive prejudicial delay is present. State v. Wombolt (1988), 231 Mont. 400, 402, 753 P.2d 330, 331; State v. Armstrong (1980), 189 Mont. 407, 424, 616 P.2d 341, 351; State v. Harvey (1979), 184 Mont. 423, 433, 603 P.2d 661, 667. If the court finds the delay to be presumptively prejudicial, the State has the burden of rebutting the presumption by providing a reasonable explanation for the delay and showing that the defendant was not prejudiced. Wombolt, 753 P.2d at 331; State v. Curtis (Mont. 1990), [241 Mont. 288,] 787 P.2d 306, 313, 47 St.Rep. 277, 283.

From the date of arrest on July 30,1988, to the trial of February 22, 1989, amounts to a delay of 207 days. The State argues that we should deduct time attributable to Hall before considering whether the delay was long enough to establish a presumption. In Curtis, 787 P.2d at 313, we expressly overruled this method of calculating the length of the delay:

“.. .The parties’ briefs exhibit some confusion concerning at what point delay attributable to the defendant should be considered. Some confusion is not surprising considering the recent case law. Some cases deduct time attributable to the defendant before determining whether the delay was long enough to establish a presumption of prejudice. Other cases did not consider such delay until after the presumption of prejudice had been established and dealt with it under the second analytical element, the reason for the delay.
“We believe that the second procedure is more appropriate. The length of delay is considered twice in speedy trial analysis. In the first instance, it acts merely as a trigger to determine whether further inquiry is warranted. If farther inquiry is warranted, the length of the delay is again considered as an inextricable component of the second element, the reason for delay. See Barker, 407 U.S. at 531, 92 S.Ct. at 2192, 33 L.Ed.2d at 117; United States v. Colombo (1st Cir. 1988), 852 F.2d 19, 24.”

In this case, the delay of 207 days is sufficient to raise a presumption of prejudice and require further inquiry. Fife, 632 P.2d at 714-15. (194 days). The State now has the burden of providing a reasonable explanation for the delay and to show that the defendant was not prejudiced by the delay. Curtis, 787 P.2d at 314; Wombolt, 753 P.2d at 331.

We next examine the reasons for the delay. Hall contends that the 207 days of delay should be credited against the State. We disagree with Hall’s contention. The District Court set Hall’s original date for October 26, 1988. On October 6, 1988, the State moved to continue the trial date because the State had not received the results of the trace evidence test. The District Court reset the trial for December 12, 1988. The State, therefore, is responsible for the delay up to December 12, 1988. Next, on December 8, 1988, the State stipulated to Hall’s motion to continue the December 12, 1988 trial date. The parties’ stipulation was based on two reasons:

1) Hall’s expert witness suffered serious heart ailments and had been unable to complete his evaluation of the physical evidence.
2) The State had recently endorsed an expert witness for which there had not been any opportunity for exchange of discovery.

The District Court granted the motion, and vacated the December 12, 1988, trial date. Later, the District Court reset the trial for February 22, 1989. While the State is responsible for the first delay of 135 days, both parties bear responsibility for the delay caused by the December 8, 1988, stipulation.

The State concedes that Hall satisfied the third element by moving to dismiss on speedy trial grounds on February 16, 1989.

The last factor relating to the right to a speedy trial is the degree of prejudice suffered by the defendant. The degree of prejudice is determined by considering the oppressiveness of the pretrial incarceration, the anxiety and concern of the defendant, and the impairment of the defense. State v. Shurtliff (1980), 187 Mont. 235, 240, 609 P.2d 303, 306.

Hall has alleged as prejudice that he was the victim of oppressive pretrial incarceration, suffered anxiety and concern, and his defense was impaired by the delay. The State’s motion on October 6, 1988, vacated the original trial date of October 26,1988. The District Court rescheduled the trial for December 12, 1988. Obviously, the State’s actions resulted in extending the incarceration of Hall prior to trial. The blame for vacating the next trial date, however, falls on Hall’s shoulders. The parties stipulated to a continuance of the December 12, 1988, trial date. The continuance allowed Hall’s expert to recover from a serious heart ailment, and allowed both parties the opportunity for exchange of discovery. In balance, therefore, we find Hall was not the victim of oppressive pretrial incarceration by the State.

Next, nothing in the record substantiates Hall’s claim of suffering from “anxiety and concern.” Even if Hall had presented some evidence of anxiety, the anxiety he suffered was not uncommon. Curtis, 787 P.2d at 316. “ A certain amount of anxiety and concern is inherent in being accused of a crime.” Curtis, 787 P.2d at 316; State v. Waters (1987), 228 Mont. 490, 494, 743 P.2d 617, 620; State v. Chavez (1984), 231 Mont. 434, 444, 691 P.2d 1365, 1371. Nor has Hall shown any factors which show his defense was impaired. Thus, we find the defendant was not prejudiced by the delay.

Of the four factors we have considered, “[n]o single factor is determinative. Each facet of the analysis is weighed in light of the surrounding facts and circumstances.” Waters, 743 P.2d at 619. Considering these four factors and the record as a whole, we find no excessive delay in bringing this case to trial. Thus, we find no violation of Hall’s right to a speedy trial.

II.

Whether the District Court properly admitted defendant’s statement concerning his acts at the scene of the crime.

When officer Magnuson confronted Hall with the fact that hairs had been recovered at the scene of the assault, Hall gave a statement to the officer in which he admitted going to the library the day before the assault, entering the periodical storage room, and masturbating. On January 26, 1989, Hall filed a motion in limine to prohibit the State from using the statement.

The District Court ruled that the State could introduce evidence of defendant’s presence in the library but not of defendant’s acts as admitted in his statement. However, the District Court noted in its order that the acts of the defendant may become relevant and admissible to rebut evidence offered by the defendant.

During the State’s direct examination of officer Magnuson, the State introduced Hall’s admission that he had been in the library periodical storage room the day before the assault. The officer properly avoided any mention of Hall’s acts while in the room. During cross examination, however, Hall’s counsel questioned officer Magnuson extensively about Hall’s statement and his reasons for focusing the investigation solely on Hall. In particular, Hall’s counsel challenged the officer’s failure to investigate other possible suspects and gather other hair samples for comparison. Following the cross-examination the State asked the District Court to reconsider its earlier ruling and permit officer Magnuson to testify fully about his reasons for suspecting Hall, which included Hall’s masturbation story. After hearing arguments from both parties, the court realized that its earlier order had prevented the officer from fully answering Hall’s counsel’s questions concerning the investigation. The court then concluded that Hall’s story was relevant to the questions raised concerning he focus of the investigation. After the court stated that it would permit redirect examination concerning the masturbation story, the court granted Hall’s counsel permission to reopen his cross-examination and bring the previously excluded story to the jury’s attention himself. The District Court then gave the following cautionary instruction to the jury concerning the evidence of masturbation.

"... ladies and gentlemen, you are instructed that any act of masturbation that may have been admitted to by the defendant is not admitted into evidence to prove that the defendant is guilty of the offense that he is charged with. You are not to infer guilt of the present charges from such evidence. Such evidence is not admitted to prove the character of the defendant. You must not allow such evidence to prejudice you against the defendant. Such evidence is admitted solely for the purpose of explaining officer Magnuson’s conduct in his investigation of this case and to aid you in any way that it may or may not bear on any issue of knowledge, identity or absence of mistake in this case ...”

Now Hall contends that the District Court’s ruling was improper because the evidence had no probative value and was obviously prejudicial and inflammatory, based upon Rule 402, M.R.Evid. (excluding irrelevant evidence) and Rule 403, M.R.Evid (allowing the exclusion of relevant evidence if its probative value is substantially outweighed by the danger of unfair prejudice.)

It is well established that the District Court has latitude of discretion in passing on the admissibility of evidence. State v. Oman (1985), 218 Mont. 260, 263, 707 P.2d 1117, 1119; State v. Gray (1983), 202 Mont. 445, 449, 659 P.2d 255, 257; State v. Pendergrass (1978), 179 Mont. 106, 112, 586 P.2d 691, 694; State v. Rollins (1967), 149 Mont. 481, 484, 428 P.2d 462, 464. The District Court’s determination of the admissibility of evidence is subject to review only for abuse of discretion. Oman, 707 P.2d at 1119; State v. Stokes (1981), 195 Mont. 321, 325, 637 P.2d 498, 500; State v. Medicine Bull (1968), 152 Mont. 34, 45, 445 P.2d 916, 922. Rule 402, M.R.Evid. states in pertinent part: “Evidence which is not relevant is not admissible.”

Also, Rule 401, M.R.Evid., defines relevant evidence:

“Relevant evidence means evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence. Relevant evidence may include evidence bearing upon the credibility of a witness or hearsay declarant.”

The Commission states this test of relevance:

“The test of relevance is whether an item of evidence will have any value, as determined by logic and experience, in proving the proposition for which it is offered . . . .”

Usually, whatever naturally and logically tends to establish a fact in issue is relevant and that which fails to qualify is not relevant. Oman, 707 P.2d at 119. Monaco v. Cecconi (1979), 180 Mont. 111, 119, 589 P.2d 156, 161. Again, the District Court has broad discretion to determine whether or not the evidence is relevant. Without a showing that the District Coxnd has abused its discretion, this Court will not overturn the District Court’s determination of relevancy. McConnel-Cherewick v. Cherewick (1983), 205 Mont. 75, 79, 666 P.2d 742, 744.

Hall’s own counsel, by challenging officer Magnuson’s failure to investigate other possible suspects and gather other hair samples during the investigation, made Hall’s masturbation story a relevant fact. The masturbation story explained the basis for the investigating officer’s focused suspicions and placed Hall at the scene of the assault. Thus, we find no evidence in the record to determine that the District Court abused its discretion in determining the offered evidence was relevant.

Next, we must determine whether the above otherwise relevant evidence is to be excluded because its probative value is outweighed by the danger of unfair prejudice. Rule 403, M.R.Evid. Under Rule 403, the determination of admissibility is within the discretion of the trial judge and will not be disturbed unless there is manifest abuse of discretion. Krueger v. General Motors Corp. (Mont. 1989), 783 P.2d 1340, 1346, 46 St.Rep. 2114, 2120; Zeke’s Distributing Co. v. Brown-Forman Corp. (Mont. 1989), [239 Mont. 272,] 779 P.2d 908, 911; 46 St.Rep. 1678, 1681. Here, the probative value of the evidence substantially outweighs the danger of unfair prejudice. Introduction of Hall’s statement to the police was necessary after the cross-examination to explain why the Havre police department focused their investigation solely on Hall and no other suspects. Furthermore, the District Court properly tempered the prejudicial effect of Hall’s testimony with a cautionary instruction to the jury. The District Court did not abuse its discretion in allowing this evidence.

III.

Whether the District Court properly refused defendant’s proposed jury instruction concerning the eyewitness identification.

The District Court rejected Hall’s proposed jury instruction no. 16 concerning eyewitness identification. Hall contends the following instruction should have been given:

“One of the most important issues in this case is the identification of the defendant as the perpetrator of the crime. The State has the burden of providing identity beyond a reasonable doubt. It is not essential that the witness himself be free from doubt as to the correctness of his statement. However, you, the jury, must be satisfied beyond a reasonable doubt of the accuracy of the identification of the defendant before you may convict him. If you are not convinced beyond a reasonable doubt that the defendant was the person who committed the crime, you must find the defendant not guilty.
“Identification testimony is an expression of belief or impression by the witness. Its value depends on the opportunity the witness had to observe the offender at the time of the offense and to make the reliable identification later.
“In appraising the identification testimony of a witness, you should consider the folio-wing:
“(1) Are you convinced that the witness had the capacity and an adequate opportunity to observe the offender?
“Whether the witness had an adequate opportunity to observe the offender at the time of the offense will be affected by such matters as how long or short a time was available, how far or close the witness was, how good were lighting conditions, whether the witness had had occasion to see or know the person in the past.
“(2) Are you satisfied that the identification made by the witness subsequent to the offense was the product of his own recollection? You may take into account both the strength of the identification, and the circumstances under which the identification was made.
“If the identification by the witness may have been influenced by the circumstances under which the defendant was presented to him for identification, you should scrutinize the identification with great care. You may also consider the length of time that lapsed between the occurrence of the crime and the next opportunity of the witness to see defendant, as a factor bearing on the reliability of the identification.
“(3) You may take into account any occasions in which the witness failed to make an identification of defendant, or made an identification that was inconsistent with his identification at trial.
“(4) Finally, you must consider the credibility of each identification witness in the same way as any other witness, consider whether he is truthful, and consider whether he had the capacity and opportunity to make a reliable observation on the matter covered in his testimony.
“I again emphasize that the burden of proof on the State extends to every element of the crime charged, and this specifically includes the burden of proving beyond a reasonable doubt the identity of the defendant as the perpetrator of the crime with which he stands charged. If, after examining the testimony, you have a reasonable doubt as to the accuracy of the identification, you must find the defendant not guilty.”

Hall cites for support — and drew the above proposed instruction from — United States v. Telfaire (D.C. Cir. 1972), 469 F.2d 552. In Telfaire, a single eyewitness was the only incriminating evidence against the defendant. In the present case, two witnesses identified Hall as the perpetrator of the assault.

Moreover, this Court in the past has not elected to adopt the Telfaire instruction on eyewitness credibility. State v. Hart (1981), 191 Mont. 375, 393-94, 625 P.2d 21, 31, cert.den. 454 U.S. 827, 102 S.Ct. 119, 70 L.Ed.2d 102. In Hart, we rejected the Telfaire instruction for the following reasons: 1) The substance of the defendant’s proposed instruction was adequately covered by other instructions; and 2) The instruction is not appropriate when there is more than a single eyewitness’ unsubstantiated testimony which identifies the offender.

The same reasoning we used in Hart, applies in this case. First of all, the District Court correctly observed that the substance of the instruction was adequately covered by other instructions. The court instructed the jury concerning the credibility of witnesses (Instructions Nos. 1 and 7), the State’s burden of proving defendant’s guilt (Instruction No. 6), the competency and credibility of child witnesses (Instruction No. 11), the effect of prior inconsistent statements on believability and weight to be given the testimony of a witness (Instruction No. 13), the elements of the crime (Instruction No. 14), and the proof required to convict defendant of sexual assault (Instruction No. 18). If the instructions, reviewed as a whole, fully and fairly present the law to the jury, the jury has been properly instructed. State v. Graves (1981), 191 Mont. 81, 93-4, 622 P.2d 203, 210-11. We determine that the jury was properly and adequately instructed on the credibility of the witnesses.

We also believe that the circumstances of this case do not mandate the allowing of Hall’s proposed instruction. “Such an instruction may be proper, if not mandatory, in certain cases. The necessity of this type of instruction is especially clear when there is only a single eyewitness’ unsubstantiated testimony which identifies the offender.” Hart, 625 P.2d at 31. In this case before us, there is more than a single eyewitness identification of Hall. Two witnesses identified Hall as the perpetrator of the crime. Accordingly, we find no error in the District Court’s refusal to give Hall’s proposed Instruction No. 16.

IV.

Whether the District Court improperly allowed expert testimony.

On February 9, 1989, the State filed a pretrial memorandum in support of the admissibility of the expected testimony of Dr. Lawrence Jarvis and Dr. Janet Hossack, two clinical psychologists who had evaluated and treated D.B. On February 22, 1989, the first day of trial, Hall’s counsel made a motion in limine to exclude the testimony of Drs. Jarvis and Hossack. The District Court denied Hall’s motion, and allowed the testimony of the doctors.

Now, Hall argues his case was unfairly prejudiced by the admission of the psychologists’ testimony concerning D.B.’s credibility. In particular, Hall complains that Dr. Hossack should not have been permitted to testify that D.B.’s account of the assault was “a consistent coherent story” or to offer an expert opinion on the ability of children to be accurate eyewitnesses. Hall also argues that Dr. Jarvis should not have been permitted to testify that he thought D.B. was telling her story “as it occurred to her” and that D.B. “could pick out that individual that offended her.”

In allowing the expert testimony of Drs. Hossack and Jarvis, the District Court relied upon our decisions in State v. French (1988), 233 Mont. 364, 760 P.2d 86; and State v. Geyman (1986), 224 Mont. 194, 729 P.2d 475. In Geyman, we held that expert testimony is admissible “for the purpose of helping the jury to assess the credibility of a child sexual assault victim.” Geyman, 729 P.2d at 479. In French, we reaffirmed Geyman and held that the District Court did not abuse its discretion by admitting a school counselor’s opinion as to whether the eight-year-old victim was telling the truth. French, 760 P.2d at 89.

Hall acknowledges our past decisions but argues that they may be distinguished from his case on the basis that in his case the identity of the offender rather than the occurrence of the offense was at issue. In support of his argument, Hall relies on our decision in State v. J.C.E. (1988), 235 Mont. 264, 270, 767 P.2d 309, 313, where we said:

“The identity of the alleged perpetrator in this case is not a question requiring an expert opinion. Whether S was the victim of incest is a question that might be clarified by an expert opinion on her physical or mental state. However, whether the evidence adduced by the State establishes J.C.E. as perpetrator requires only the common logic that is indeed well within the capacity of a lay jury.”

In J.C.E., the victim did not testify as to the identity of her assailant, instead, the State attempted to have their expert identify the defendant as perpetrator of the incest. This we found unacceptable. In this case, neither Dr. Hossack nor Dr. Jarvis attempted to identify Hall as the perpetrator of the sexual assault. D.B. herself, unlike the victim in J.C.E., identified Hall as her assailant. As the District Court properly noted, Hall’s counsel challenged D.B.’s credibility with respect to her identification of Hall, raising questions concerning her ability to identify and the possibility of undue influence. The doctors were then allowed to testify, not to the identity of the defendant, but whether D.B. was capable of identifying her offender. The ultimate issue of identity of Hall still came from D.B.’s testimony and not the testimony of the doctors. Thus, we find the District Court did not err in admitting the expert testimony in this case.

In weighing the admissibility of expert testimony in child molestation cases, the courts face an intrinsic problem in the conflict between the evidence offered and the right of a defendant to have the jury decide the guilt or innocence of the accused. The test to be applied by district courts when faced with the problem, and by this Court when it comes here, can be found in the Montana Rules of Evidence. The doctors here are experts in their fields, trained in psychology. As experts, their testimony is admissible if it will help the jury to understand the evidence, or to determine a fact in issue. Rule 702, M.R.Evid. The fact in issue in this case was the identity of the transgressor. No party disputes that the child was assaulted by somebody. A subissue of the identity issue was the ability of a child of tender age to be accurate in identification. Expert testimony on the subissue was especially valuable here, as a matter helpful to the jury to understand the evidence, and to determine a fact in issue, that is, the identity of the transgressor. The testimony here eminently qualifies under Rule 702.

We affirm.

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


source: Caselaw Access Project

author:
JUSTICE HARRISON
      JUSTICE HUNT,

license: Public Domain

text:
    JANET ROESSEL, Claimant and Appellant, v. RIVENDELL OF BILLINGS, Employer, and STATE COMPENSATION INSURANCE FUND, insurer and respondent.
    No. 90-086.
    Submitted on Briefs May 30, 1990.
    Decided Aug. 9, 1990.
    797 P.2d 174.
    Jerrold L. Nye, Nye & Meyer, Billings, for claimant and appellant.
    Richard E. Bach, State Compensation Mut. Ins. Fund, Helena, for insurer and respondent.
   JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the Workers’ Compensation Court of the State of Montana of a denial of an award of disability benefits by the State Compensation Insurance Fund to the claimant, Janet Roessel. The matter was tried before a hearings examiner, whose proposed findings of fact and conclusions of law were, for the most part, adopted by the Workers’ Compensation Court. Those findings adjudged that the claimant was not entitled to workers’ compensation benefits on the basis that the employer was not notified of the injury within thirty days of the date of the claimed injury as required by § 39-71-603, MCA. From that denial claimant appeals to this Court. We affirm.

Claimant/appellant presents five issues for review:

1. Did the employer have notice or knowledge of the claimant’s injury within 30 days as required by § 39-71-603, MCA?
2. Is the claimant entitled to extend the 30-day notice requirement of § 39-71-603, MCA, due to the latent nature of her injury?
3. Is the claimant entitled to workers’ compensation benefits as a result of her injury?
4. Is the claimant entitled to an award of her reasonable attorney’s fees?
5. Is the claimant entitled to a twenty percent increase in her workers’compensation benefits under § 39-71-2907, MCA?

Claimant’s employment with Rivendell of Billings began in March, 1987. She was employed by Rivendell as a cook and kitchen helper. While working at Rivendell sometime in the latter part of June, 1988, claimant allegedly slipped and fell in a puddle of water which had accumulated near a salad bar in the dining area. Claimant alleges that when she fell she hit her head and neck against a concrete pillar. Several co-workers witnessed her slip and fall and the lead cook and part-time supervisor knew of her fall.

At the time claimant submitted her claim with the Workers’ Compensation Court, August 1, 1988, claimant gave the date of her injury as being July 1, 1988. It was not until sometime later, after depositions were taken, that it was determined that July 1,1988 was not the proper date of the claimed injury and that the most likely date was June 24, 1988. This date was determined by reviewing Rivendell’s time records which showed that June 24, 1988 was the only date in approximately a two-week period when the various persons who testified were all working with claimant on the same shift.

At the time of trial, evidence was presented by the State Fund which refuted the claim that claimant could have injured her head and neck. The three witnesses who saw the claimant fall each testified that the claimant was facing the pillar at the time she fell and that when she was helped up, or got up, her feet were pointed toward the pillar and her head was in the opposite direction. After she arose and went about her duties she did not tell any of her co-workers that she had injured her head and neck in the fall.

Claimant did not provide actual notice to Rivendell or her supervisor that an accident had occurred until sometime in August, 1988. Testimony was given which revealed that on June 30, 1988, approximately one week after the claimant’s alleged slip and fall incident, a staff meeting was held. Claimant was present at that staff meeting and safety concerns and work-related accidents were discussed at the meeting. At that June 30, 1988 staff meeting claimant did not mention the incident of June 24, 1988 to her supervisor.

After claimant started her employment with Rivendell in March of 1987, she began having problems with her arms, and she experienced burning and numbness in her body. Claimant sought treatment for this condition in the latter part of 1987. Claimant’s co-employees and her supervisor testified that she continued to complain about her arms up until the time of the slip and fall incident in June, 1988. The record indicates that in early April, 1988, some two and one-half months prior to the accident, the claimant informed her employer that she was unable to attend a staff meeting because of a doctor’s appointment to test her arms.

On July 7, 1988, claimant sought medical treatment from Dr. Espinoza, but failed to mentioned to him any problems with headaches, bruising, or pain in her neck or back resulting from a fall. She did mention to Dr. Espinoza that she had a developing problem in coordination and pain with her right arm. Claimant was later seen by Dr. Buchanan at a local hospital emergency room, but did not mention to him that she had slipped and fallen at work striking her head or back.

The claimant called Milford Burke, her supervisor, on July 12, 1988, to tell him that she could not come to work and she has not worked since that date. Later in July, 1988, claimant twice saw Dr. R.A. Nelson. During the initial visit, the claimant denied any trauma or injuries to her head, neck or back, and never informed the doctor of the incident at work after she was informed of the findings pertaining to her X-rays. Claimant was referred by Dr. Nelson to Dr. James Johnson, a neurologist in August of 1988, and that was the first time the medical records indicate that she told the doctor of striking her head on a pillar while at work at Rivendell.

The first notice that the employer or insurer had of the claimant’s slip and fall incident was on or about August 10, 1988. This came about while claimant was awaiting surgery in a hospital and she told a fellow employee that she intended to file a claim. This was reported to her supervisor Mr. Burke. He testified that this was the first time he had heard of claimant’s slip and fall.

The claimant’s request for benefits was denied by the Workers’ Compensation Court on the basis that no notice was given by the claimant to her employer within thirty days of the claimed injury as required by § 39-71-603, MCA.

It is the claimant’s position that due to the latent nature of her injury she was prevented from properly getting notice to her employer. It is interesting to note that even though she had been instructed by Rivendell as to how and when to report any injury, there was no direct action taken by the claimant which gave notice of her injury claim to her employer. It was only through a conversation with a fellow employee just prior to her surgery, which was later reported back to the employer, that Rivendell knew of her pending claim.

Here, the proposed judgment of the Workers’ Compensation hearing examiner, which was adopted by the Workers’ Compensation Court, only determined that the appellant failed to prove that her employer had either notice or actual knowledge of the alleged accident within thirty days as required by statute.

No findings were made as to whether the claimant actually struck her head and back against the pillar at work as she contends, nor were there findings as to whether the claimant had proven that her medical problems were causally related to the fall at work. There is no question, and it is admitted that she did fall at work. However, the Workers’ Compensation Court never established that her fall was the cause of her injury and subsequent surgery.

Five issues are presented on appeal. The controlling issue is whether the employer had notice or knowledge of claimant’s injury within 30 days as required by § 39-71-603, MCA. As set forth in this opinion and under the facts in the record before us, the employer did not have notice within 30 days as required by statute and case law. We affirm the decision of the Workers’ Compensation Court.

CHIEF JUSTICE TRNAGE and JUSTICES BARZ, WEBER and McDonough concur.

JUSTICE HUNT,

dissenting:

I dissent. The majority’s failure to apply the latent injury doctrine in this case leads to absurd, unjust results.

The facts relating to notice in this case are undisputed. Claimant slipped and fell on June 24, 1988, during the course and scope of employment with Rivendell. Although her fellow employees witnessed the fall, and other employees knew of the fall, her supervisor in charge at the time was unaware of the accident. (It is important to note that the lead cook and part-time supervisor who knew of the accident was not the supervisor in charge at the time of the incident.) The supervisor did not receive notice that claimant had fallen until on or about August 10, 1988, approximately 47 days following the accident.

Claimant’s fall did not cause her any immediate pain. Indeed, she did not notice any problems with her arm or leg until approximately eight or nine days later. Because she had had difficulties with her extremities before the accident, she did not attribute the new problems to her fall at work.

Claimant promptly sought medical treatment for the progressive pain in her arm and leg. However, her physical problems were non-specific and difficult to diagnose. Upon the suggestion of one of the nurses at work, claimant made an appointment with a local neurologist. Unfortunately, the earliest appointment she could obtain entailed a two-week wait. When she finally saw the neurologist, he was unable to diagnose her ailment without using medical diagnostic procedures. It was not until the doctor received the results of the diagnostic tests on July 26, 1988, that he was able to diagnose claimant’s problems as stemming from a disc protrusion and herniation in her back.

The neurologist referred claimant to a neurosurgeon. After the neurosurgeon told her that her condition would most likely have been caused by a car accident or fall, claimant connected her injury with the slip and fall of June 24.

In Bowerman v. Employment Sec. Comm’n, 207 Mont. 314, 673 P.2d 476 (1983), we held that the one-year statute of limitations for filing written workers’ compensation claims found in § 39-71-601, MCA, should be tolled for latent injuries. We stated,

“[Sjection 39-71-601, MCA, should be interpreted, in cases of latent injury, so that the time period for notice of claim does not begin to run until the claimant, as a reasonable man, should recognize the nature, seriousness and probable, compensable character of his latent injury.”

Bowerman, 207 Mont. at 319, 673 P.2d at 479.

The same test should apply to the 30-day notice period provided in § 39-71-603, MCA, the statute the majority relies on to bar claimant’s claim in this case.

The purposes behind § 39-71-603, MCA, which requires an employee promptly to give notice of an injury to her employer, are twofold. First, early notice enables the employer to provide immediate medical diagnosis and treatment in order to minimize the seriousness of the injury. Second, early notice facilitates investigation of the facts surrounding the injury.

In the present case, the employer was not prejudiced by the delay in notice. Claimant received prompt medical attention for her injuries. Furthermore, claimant’s supervisor admitted that the delay did not hamper his investigation of the accident. Therefore, the stringent adherence to the 30-day rule serves unjustly to deny claimant benefits to which she may be entitled. Such a result is intolerable. It requires a claimant to speculate as to the seriousness of any trauma she may encounter on the workplace regardless of how trivial the incident may seem at the time.

Not all injuries manifest themselves within 30 days. In many cases, the manifestation of pain or other physical ailment may have a number of causes that may take time to sort out. Therefore, the Bowerman approach presents a much more rational answer to the problems inherent in latent injuries. It does not require a claimant to do more than is reasonable under the circumstances. It tolls the notice provisions until the claimant, -under an objective standard, recognizes the nature, seriousness and probable compensable character of her injury.

In the present case, claimant did not realize the nature, seriousness and probable compensable character of her injury until 30 days after the accident occurred. She suffered no immediate pain from the fall. When the injury began to manifest itself, it was through pain and loss of strength and coordination in the right hand and leg, non-specific types of complaints that took time to diagnose. By the time the injury was diagnosed by her neurologist, the 30-day period had expired.

The majority opinion should serve as a warning to all employees. Immediately inform your employer of all on-the-job incidents, no matter how trivial or inconsequential. Unless you notify the employer of every bump, scrape, bruise or hangnail, you may forfeit your right to compensation.

I would reverse the Workers’ Compensation Court on this issue.


author: JUSTICE WEBER

text:
    VIOLET L. SMITHERS and James J. Aker, Plaintiffs and Respondents, v. DONALD HAGERMAN and Bernide E. Hagerman, Defendants and Appellants.
    No. 89-371.
    Submitted on Briefs June 7, 1990.
    Decided Aug. 17, 1990.
    797 P.2d 177.

      Lane K. Bennett, Kalispell, for defendants and appellants.
    James C. Bartlett, Hash, O’Brien & Bartlett, Kalispell, for plaintiffs and respondents.
   JUSTICE WEBER

delivered the Opinion of the Court.

In a boundary dispute, the District Court for the Eleventh Judicial District, Flathead County, ruled in favor of plaintiffs, ordered that defendants remove their encroachments on plaintiffs’ land and awarded damages in the amount of $7,159. Defendants appeal. We affirm.

The issues for our consideration are:

1. Did the District Court err in ruling that the plaintiffs proved by a preponderance of the evidence that their southern boundary actually lies on a survey line which describes defendants’ northern boundary?
2. Did the District Court err in failing to find that a valid parol agreement was entered into by the parties setting the disputed boundary as the existing fence?
3. Did the District Court err in failing to find that plaintiffs lost the right to prevail based upon estoppel, laches and adverse possession?
4. Did the District Court err in awarding damages to plaintiffs?

This is a boundary line dispute between the owners of adjacent property in Flathead County. The properties are adjoined at the plaintiffs’ (Aker and Smithers) southern border and the defendants’ (Hagermans) northern border. In essence, the dispute involves whether an existing fence between the property represents the true property lines of the parties. Maintaining that it did not, plaintiffs demanded defendants remove all encroachments, including a garage and a septic system, which were on their property. Defendants refused to do so, maintaining that the fence truly represented the property lines. This lawsuit resulted.

The plaintiffs’ property which is north of the defendants’ property, was deeded to the plaintiffs in 1954. Neither of the plaintiffs subdivided the property. The metes and bounds description established that the south line of the tract was parallel to the south line of the section and 997.5 feet north of that south line.

In 1955 the defendants acquired a rectangular tract lying to the south of the plaintiffs’ tract. The metes and bounds description in that deed established that the north line of the defendants’ tract was parallel to the south line of the section and 997.5 feet north of the south line of the section.

Prior to 1952 plaintiff Aker’s father erected a fence near the south boundary of the plaintiffs’ property. He did not obtain a survey. He “eyeballed” the fence line. The fence has never been moved and has been maintained by the plaintiffs.

The District Court found that until 1971, plaintiff Aker believed that the fence was on the south boundary line of the plaintiffs’ tract. Up to that date he used the property north of the fence.

In 1971, Hagermans obtained a survey of their property. Mr. Marquardt, the surveyor, notified Hagermans that the north boundary of their property lay to the south of the fence. The survey also demonstrated that fact. Hagermans requested a boundary agreement with the plaintiffs which would provide that the Hagermans’ property ran up to the fence. The plaintiffs refused to enter into such an agreement.

Hagermans used the land south of the fence for their horses, one year’s oat crop, a sawmill (abandoned in the 1960’s), and for the storage of building materials. At some time prior to 1985, plaintiffs commissioned Marquardt to reflag the survey pins that had been placed for the 1971 survey. Hagermans concede that plaintiffs never falsely represented their position regarding the true boundary and that they always claimed that the property line was as shown in the 1971 survey.

In 1983 a tenant of Hagermans began building a garage which encroached upon the south line of the plaintiffs’ property as described by the Marquardt 1971 survey. Plaintiffs notified the tenant that he was improperly building on their property. The tenant passed that information on to the Hagermans. Notwithstanding that notice, the tenant completed construction of the building. Plaintiffs did not take any legal action at that time.

In 1985 Hagermans began construction of a septic system on the property south of the fence but north of the surveyed property line. Plaintiffs then filed this action demanding that Hagermans remove their encroachments.

The District Court concluded the boundary between the parties is the boundary described in Marquardt’s 1971 survey. From that decision, Hagermans appeal.

I

Did the District Court err in ruling that the plaintiffs proved by a preponderance of the evidence that their southern boundary actually lies on a survey line which describes defendants’ northern boundary?

Hagermans maintain that plaintiffs have failed to substantiate their claim because they never surveyed their property. They maintain that both parcels must be surveyed to show a common boundary.

Plaintiffs contend that a proper survey is sufficient evidence to establish a boundary line. They further argue that when an encroachment occurred, they took timely legal action.

Relying on Christie v. Papke (1982), 201 Mont. 200, 657 P.2d 88, the District Court stated that “parties having a common boundary may agree that a presumed boundary is correct”. However, it further stated that “once a true boundary is determined, the parties must conform to the true line.” Hence, the District Court concluded that once the true boundary became known in 1971, it became the true boundary with which the parties must comply. We agree.

A fence does not establish a boundary line when it does not conform to the true line, even if the property owners thought it was the true line.

‘Where two adjoining properties are divided by a fence, which both owners suppose to be on the line, such fence is a division fence, as between them, until the true line is ascertained, when they must conform to the true line. (Citations omitted.).”

Pilgrim v. Kuipers (1984), 209 Mont. 177, 182, 679 P.2d 787, 790. In the case before us, when the true line was established by the 1971 survey, instituted by the Hagermans, it then became the boundary to which the parties must conform. The law does not support Hagermans’ argument that all four corners of both parcels must be surveyed to establish the correct boundary. The survey established the boundary line without contradiction. In addition the description in the deeds to the plaintiffs and the Hagermans established the same common boundary line. We hold that the plaintiffs proved that their southern boundary actually lies on the survey line which also describes the Hagermans’ northern boundary.

II

Did the District Court err in failing to find that a valid parol agreement was entered into by the parties setting the disputed boundary as the existing fence?

The District Court determined that the parties never agreed to a fence-line boundary. Hagermans maintain that there was such an agreement. They argue that their construction up to the fence line was evidence of their reliance on the fence as the boundary. Hagermans urge this was a case of “mere acquiescence”. Plaintiffs maintain that there never was such an agreement and that the first time Hagermans and plaintiffs learned the location of the true boundary line was after the 1971 Marquardt survey.

In Christie, a fence was located at the supposed property line for 56 years. A subsequent survey showed the actual boundary to be south of the existing fence fine. Christie destroyed the original fence and built a new one along the boundary indicated by the survey. Papke then destroyed the new fence and replaced it where it was located for 56 years. Christie sued. Papke maintained that the fence became the actual boundary by implied agreement resulting from the fence location on the boundary and because Christie helped to maintain the fence. This Court concluded that more than mere acquiescence was necessary, and stated:

“[T]he parties are required to prove by clear and convincing evidence all elements of an implied agreed boundary.
“In order to establish an agreed boundary line, the evidence must show more than mere acquiescence and occupancy for the time prescribed by the statute of limitations; it must go further and show that there was uncertainty in the location of the line, that there was an agreement among the coterminous owners, express or implied, fixing the line, and that there was an actual designation of the line upon the ground and occupation in accordance therewith. (Citations omitted.).”

Christie, 657 P.2d at 89.

We agree with the trial court that Hagermans have failed to show more than mere acquiescence. We further conclude that the record does not provide clear and convincing evidence of an agreement, either express or implied. We hold that the District Court did not err in failing to find that a valid parol agreement was entered into by the parties setting the disputed boundary as the existing fence.

Ill

Did the District Court err in failing to find that plaintiffs lost the right to prevail based upon estoppel, laches and adverse possession?

Hagermans urge that as a matter of equity, either estoppel, laches or adverse possession should be applied because they relied on the fence as the boundary and because of acquiescence on the part of the plaintiffs.

Plaintiffs argue that there was no cause of action until there was an encroachment. They contend that the first encroachment was not until 1982 or 1983 when a garage was built on their land.

The District Court agreed and made the following significant findings of fact and conclusions of law:

“FINDINGS OF FACT
“18. In 1982 or 1983, a tenant of [Hagermans] began building a garage which encroached upon the boundary line as described by Marquardt’s survey. . . .
“19. In 1985 [Hagermans] began construction of a septic system on property which lay south of the fence, but north of boundary line as surveyed by Marquardt. . . .
“21. ... [Hagermans] sold property to third parties based upon the Marquardt survey.
“22. [Hagermans] did not cultivate or improve the property between the Marquardt survey line and the fence.
“CONCLUSIONS OF LAW
“5. Once the true boundary became known in 1971, [Hagermans] made only one demand for the property in dispute, which was rebuffed; they made no additional claim adverse to Plaintiffs until 1983.
“6. [Hagermans] never occupied the property prior to 1983, in such a manner to establish adverse possession or easement.
“7. The first incident of actual trespass on Plaintiffs’ land was in 1983, when [Hagermans’] tenant built a garage over the survey line. [Hagermans] again encroached on Plaintiffs’ property in 1985, when the septic system was partially built on Plaintiffs’ property. Plaintiffs brought this action for ejectment and rents. Therefore, the defenses of statutes of limitations and laches are unavailing.
“8. Plaintiff at no time falsely represented their position to [Hagermans]. [Hagermans] did not rely upon the fence as their northern boundary in the subsequent land sale to third parties. Thus [Hagermans] may not rely upon estoppel.”

For a claim of adverse possession, it must be proved that the property was claimed under color of title or by actual, visible, exclusive, hostile and continuous possession during the statutory period of five years, and the party claiming adverse possession must have paid taxes on the property for the full statutory period. Perusich v. Meier (1987), 229 Mont. 458, 747 P.2d 857. From the above findings and conclusions, it is clear that Hagermans failed to prove the elements of a claim for adverse possession.

The Hagermans also attempt to argue that they have established title by equitable estoppel and laches. We do not find it necessary to rule on any possible claim of title as a result of either equitable estoppel or laches. In Mellem v. Kalispell Laundry & Dry Cleaners (1989), 237 Mont. 439, 774 P.2d 390, this Court set out the elements of equitable estoppel:

“1. There must be conduct — acts, language, or silence — amounting to a representation or a concealment of material facts. 2. These facts must be known to the party estopped at the time of his said conduct, or at least the circumstances must be such that knowledge of them is necessarily imputed to him. 3. The truth concerning these facts must be unknown to the other party claiming the benefit of the estoppel, at the time when it was acted upon by him. 4. The conduct must be done with the intention, or at least with the expectation, that it will be acted upon by the other party, or under such circumstances that it is both natural and probable that it will be so acted upon . . . 5. The conduct must be relied upon by the other party, and, thus relying, he must be led to act upon it. 6. He must in fact act upon it in such a manner as to change his position for the worse.”

Hagermans fail to establish any facts which showed a.misrepresentation or concealment. The Hagermans did not rely on the fence line as a boundary and they sold parcels in accordance with the 1971 survey. The District Court concluded that the Hagermans failed to prove the essential elements of equitable estoppel and we agree with that determination.

Similarly, a claim of laches by the Hagermans is without merit. Laches exists where there has been an unexplainable delay of such duration or character as to render the enforcement of an asserted right inequitable. Laches is appropriate where a party is actually or presumptively aware of his rights but fails to act. A party is held to be aware of their rights where the circumstances he or she knows of are such as to put an ordinary prudent person on inquiry. See Sperry v. Montana State Univ. (Mont. 1989), [239 Mont. 25,] 778 P.2d 895, 46 St.Rep. 1482. The first encroachment of plaintiffs’ land occurred in 1983 and then again in 1985. Plaintiffs filed this action in 1986. We agree with the determination by the District Court that there was no unexplained delay of a sufficient duration to justify a finding of laches.

We hold that the District Court correctly found that the Hagermans failed to establish adverse possession, equitable estoppel or laches.

IV

Did the District Court err in awarding damages to plaintiffs?

Hagermans maintain that the District Court’s award of damage was in error. Plaintiff was the only witness to testify regarding damages. He estimated damages based upon an estimated rental value. Hagermans urge his testimony on damages was totally lacking in credibility and merit.

Plaintiffs point out that Hagermans had the opportunity to cross examine Mr. Aker. Plaintiffs maintain that in accordance with § 26-1-301, MCA, the direct evidence of one witness who is entitled to full credit is sufficient for proof of any fact. They argue that under § 26-1-302, MCA, a witness is presumed to speak the truth, and the court is the exclusive judge of the witness’ credibility. Mr. Aker was asked how much he would charge a third person to erect and maintain a portion of garage on or to place a sewage system under his property. He testified without contradiction that the rental value of the property on which the septic system lies is $30 per month. He further testified that the rental value of the property on which the garage exists is $120 per month. The District Court awarded plaintiffs damages of $7,159. Plaintiffs urge that as long as Mr. Aker’s statement of the amount he would charge for compensation is reasonable and uncontradicted, the trial judge was free to adopt the testimony as true and sufficient. We agree.

Section 27-1-318, MCA, provides:

“Wrongful occupation of real property. The detriment caused by the wrongful occupation of real property in cases not otherwise provided for in this code is deemed to be the value of the use of the property for the time of such occupation . . . and the costs, if any, of recovering the possession.”

The District Court properly considered the rental value provided by the testimony of Mr. Aker, noting that such testimony was uncontradicted. Furthermore, the District Court is the exclusive judge of the witness’ credibility. We hold that the District Court did not err in awarding damages to plaintiffs.

Affirmed.

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


author: JUSTICE SHEEHY

text:
    STEVE KOONTZ, Plaintiff and Respondent, v. SKY COUNTRY, INC., Defendant and Appellant.
    No. 90-079.
    Submitted July 15, 1990.
    Decided Aug. 17, 1990.
    795 P.2d 980.
    John P. Atkins, Bryan & Atkins, Bozeman, for defendant and appellant.
    Karl Knuchel, Livingston, for plaintiff and respondent.
   JUSTICE SHEEHY

delivered the Opinion of the Court.

Sky Country, Inc. appeals from a judgment entered in the District Court, Eighteenth Judicial District, Gallatin County, awarding Steve Koontz $3,768.66 in damages. We reverse the District Court.

The sole issue in this case is whether Koontz was entitled to $3,768.66 in “invalid trailer charges.”

Sky Country is an interstate motor carrier based in Bozeman, Montana. The company engages the services of owner/operators who lease their tractor-trailer units to Sky Country to haul freight throughout the lower 48 states. Sky Country and Steve Koontz entered into such a lease agreement in November of 1985. Koontz leased to Sky Country his Mack tractor. Sky Country provided the trailer. Koontz, under the contract, was to pay for all repairs, driver’s wages, fuel, insurance and vehicle maintenance. Koontz was to receive 75.43 percent of all profits in the venture. After each trip, Sky Country provided Koontz with settlement statements detailing gross revenues plus costs and expenses.

The parties terminated their relationship in November of 1986. Koontz brought suit in February, 1988, claiming money for unpaid fuel credits, trailer repairs, fines, over advance charges and for a trip which Koontz allegedly had not been paid. No claim for freight adjustment was ever made by Koontz.

Freight adjustments, in the words of Koontz, are made “whenever a load is short or damaged or late or something...” In more practical terms, freight adjustments come about in this manner: The driver of the tractor-trailer is paid according to the goods he delivers. If the customer is dissatisfied with the amount or quality of the goods, he withholds a portion of the payment. As Sky Country has already made its estimate of the load’s worth, it must adjust its figures. This adjusted amount is then reflected on the settlement statement provided to Koontz. The procedure is set forth in the parties’ contract as follows:

“In the event damage or shortage is noted on a delivery receipt, Contractor [Koontz] assumes complete responsibility and liability for the contents of the load. Damages and shortages are to be charged back to the Contractor. Settlements may be withheld on the involved trip until the claim has been settled in full with the shipper or consignee, as the case may be.”

While Koontz took issue at trial with freight adjustments totaling $3,768.66, he never included a claim for those charges in his complaint. The District Court took the offered evidence of the settlement statements detailing the freight adjustments under advisement. No testimony as to the validity or invalidity of the specific freight adjustments was offered at trial.

In the court’s conclusion of law No. 7, it stated that “Plaintiff’s claim for freight charges was not raised by the pleadings and therefore is barred.” However, in the court’s settling of accounts set out in conclusion of law No. 10, the court awards Koontz $3,768.66 in “invalid trailer charges.” Sky Country made a motion for clarification of the award as to the “invalid trailer charges.” The District Court denied the motion. This appeal ensued.

Sky Country contends the lower court erred in awarding Koontz $3,768.66 in damages, denominated by the court as invalid trailer charges. Sky Country points out that Koontz raised a claim in his complaint for trailer repairs charged to him amounting to $4,774.24. The court ruled that those repairs were properly charged to Koontz. The only charges disputed by Koontz that totaled $3,768.66 were for freight adjustments. Sky Country submits that the lower court mistakenly awarded Koontz, in conclusion of law No. 10, the very same freight adjustment damages it had ruled were barred in conclusion of law No. 7.

We must concur with Sky Country. It is clear from the facts and the court’s conclusions that it mislabeled the award. The amount of $3,768.66 is clearly freight adjustment, and, as such, was improperly awarded to Koontz, as (1) the contract provided that Koontz was to be responsible for such adjustments, and (2) the issue as to the validity of such charges was not properly raised in the initial or amended pleadings. Rule 15(a), M.R.Civ.P.

We reverse the judgment of the District Court as to damages awarded Koontz in the sum of $3,768.66.

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


author: JUSTICE HUNT

text:
    JAMES F. LECHNER, The Home Builders Association of Billings, Montana, inc., a Montana corporation; Kummerfeldt Construction, Inc., a Montana corporation;Darwin Johnson Construction, Inc., Montana corporation; Harley G. Hoven; Jerry T. Ray, d/b/a Jerry T. Ray Development; S. D. Helgeson, Inc., a Montana corporation; Mace Realty and Insurance, Inc., a Montana corporation; Schooner Realty and Development, Inc., a Montana corporation; Kober Construction Co., a Montana corporation; Mark Johnson; Perfect Homes, inc., a Montana corporation; Gerbase, Inc., a Montana corporation; Pierson Construction, Inc. a Montana corporation; Mora brothers, Incorporated, a Montana corporation; J. Junkert Construction, Incorporated, a Montana corporation; William Kale; Ron Williams; Daugherty Construction, Inc., a Montana corporation; Redinger and Son, Inc., a Montana corporation; Greenbriar Construction Company; Hardy Inc., Builders, a Montana corporation; Glasser Construction, Inc., a Montana corporation; Hank C. Glasser; Stan D. Helgeson; and Ray Weber, Plaintiffs and Appellants. v. THE CITY OF BILLINGS, Montana, Defendant and Respondent.
    No. 89-486.
    Submitted April 17, 1990.
    Decided Aug. 20, 1990.
    797 P.2d 191.

      Joe Gerbase, argued, Anderson, Brown, Gerbase, Cebull, Fulton, Harman & Ross, Billings, for plaintiffs and appellants.
    James L. Tillotson, argued, City Atty., Billings, for defendant and respondent.
   JUSTICE HUNT

delivered the Opinion of the Court.

Plaintiffs and appellants, property owners who reside within the City of Billings and general contractors who do business within the City of Billings, brought this declaratory judgment action, seeking to strike down a funding system for the expansion of water and sewer facilities that was adopted by the City in 1985. Following submission of the case on stipulated facts and issues, the Thirteenth Judicial District Court, Yellowstone County, ruled in favor of the City, holding that the funding system was lawful. Plaintiffs appeal. We affirm.

The following issues are raised on appeal:

1. Whether §§ 7-1-111(5) and 7-1-113(1), MCA, preempt the City of Billings from implementing new utility fees under its self-governing powers.
2. Whether Montana statutes governing municipal utilities prohibit the City of Billings from collecting and accumulating system development fees for the purpose of funding a portion of the cost of future expansion of the water and sewer systems.
3. Whether the system development fee is a sales tax, the adoption of which is prohibited by § 7-1-112(1), MCA.

In April, 1985, the City of Billings, a municipal corporation with its own governmental charter, adopted a resolution that established a new system for funding the expansion of water and sewer facilities for the general benefit of the City. The new funding system called for the assessment of “system development fees” upon customers who requested new water or wastewater services or an upgrade in existing water or wastewater services. The City implemented the funding method for the water facilities in 1985, however, it delayed implementing the funding system for the sewer facilities until 1989.

The fees are due and payable at the time the customer applies for the service; the City will not provide new or expanded water or wastewater services unless the fee is paid. The amount of the fee is based upon the size of the meter. Users of larger meters pay larger fees.

The fees are revenue-raising measures adopted to fund construction of new water and wastewater facilities needed to meet the demands placed on the existing facilities by new growth in the City. They are placed in a special fund, which is used solely for the construction of expansion-oriented, general-benefit water and wastewater facilities or for the retirement of bonds sold for such purpose. Once sufficient monies are accumulated to fund the proposed expansion facilities, bids are advertised and construction contracts awarded. The facilities built with the fees may or may not directly serve or accommodate expansion on the property from which the fees are derived.

In the stipulated facts submitted to the District Court, the parties agreed that the City used the following theory to justify the adoption of the fees:

“Existing customers should not be required to finance new capacity which does not benefit them, but instead benefits new applicants for water/wastewater service. That is, existing customers should not subsidize growth. In order to address this concept, system development fees levied on all new applicants for service were adopted, and the revenue derived would be used to fund all or portions of new capacity provided by the utility.

“Consequently, the purpose in levying system development fees on new water/wastewater applicants is to equalize the new applicant’s user charge obligations with that of existing customers. The rationale used to equalize such user charges is as follows:

“In order to serve new applicants with water/wastewater service, the City must maintain on hand a reasonable amount of water/wastewater system capacity over and above that needed to serve its current customers. This extra or reserve capacity is paid for by the City’s current water/wastewater customers through their user charges.
“As new applicants are connected to the water/wastewater system they are then allocated increments of capacity from this pool of reserve capacity. Consequently, in order to keep from emptying this pool of reserve capacity, the capacity allocated to new applicants must be timely replaced by the City. However, this reserve capacity must be replaced by the City at today’s cost, which during inflationary times, can exceed the original cost of such capacity.
“The City can recover these costs from new applicants by utilizing both user charges and system development fees. The original cost of the reserve capacity is recovered by the City from new applicants through their user charges, the same as it is recovered by the City from its current customers. The inflationary cost increment (today’s cost - original cost) is recovered by means of a one-time, lump-sum fee called a system development fee which is levied on new applicants at the time of hookup. By recovering these costs in this manner, new applicants and current customers are placed on the same rate paying footing. In other words, their user charges are equalized.”

Before the adoption of system development fees, customers of the water and sewer systems paid a portion of the construction costs of expansion facilities built to serve new growth by way of monthly rate charges. The expansion facilities did not always directly serve or accommodate the properties from which the funds were derived. Since the adoption of the system development fees, both new and existing customers continue to pay the monthly user fees. The system development fees are levied on top of these monthly charges.

In addition to monthly user charges, the City previously funded and continues to fund improvements to and expansion of water and wastewater facilities through 1) revenue bonds; 2) grants from state and federal governments; 3) interest from utility investments; 4) SIDs assessed for the areas served by specific improvements or through which specific improvements have been constructed; and 5) privately financed construction by subdividers. The system development fees provide an additional source of funds to be used for the construction of expansion-oriented, general-benefit facilities.

Appellants filed this declaratory judgment action against the City on July 16, 1985. On January 22, 1988, the parties submitted a stipulation of basic facts to the District Court. They then filed simultaneous motions for summary judgment. After briefing, the District Court issued its opinion that the system development fees were lawful. Since the District Court opinion did not dispose of all issues, no appeal could be taken. Therefore, appellants amended the complaint to eliminate any issues not disposed of by the District Court. The court then entered judgment in favor of the City. This appeal followed.

I.

Whether §§ 7-1-111(5) and 7-1-113(1), MCA, preempt the City of Billings from implementing new utility fees under its self-governing powers.

As a municipal corporation with its own governmental charter, the City of Billings is a self-governing unit that may exercise any power not prohibited by the Montana Constitution, state law or its own charter. Sec. 6, Art. XI, Mont. Const.; § 7-1-101, MCA. It may also provide any services or perform any functions not expressly prohibited by constitution, law or charter. Section 7-1-102, MCA. Its power and authority are to be liberally construed, with every reasonable doubt as to the existence of a power or authority resolved in favor of the power or authority’s existence. Section 7-1-106, MCA.

State law can preempt a self-governing municipality from acting in a certain area only by express statutory prohibition. D &F Sanitation Serv. v. City of Billings, 219 Mont. 437, 445, 713 P.2d 977, 982 (1986). Appellants argue that two statutes expressly forbid the City from regulating municipal utilities. The first, § 7-1-111(5), MCA, provides as follows:

“A local government unit with self-government powers is prohibited the exercise of the following:
“(5) any power that establishes a rate or price otherwise determined by a state agency.”

Appellants contend that this statute preempts the field of municipal utility regulation because a state agency, the Public Service Commission (PSC), possesses the power to establish utility rates. While this argument may have had some validity prior to 1981, it is no longer valid.

Before 1981, the PSC was vested with full power of supervision, regulation and control of public utilities. In 1981, however, the legislature passed House Bill 765, entitled An Act to Provide for Municipal Regulation of Municipally Owned Utilities, ch. 607, 1981 Mont. Laws 1386, which added §§ 69-7-101 through 69-7-201, MCA, to the Montana Code. In the same bill, the legislature amended § 69-3-101(1)(e), MCA, to exclude municipal utilities from the definition of “public utility.” The statute now reads as follows:

“(1) The term ‘public utility1, within the meaning of this chapter, shall embrace every corporation, both public and private, company, individual, association of individuals, their lessees, trustees, or receivers appointed by any court whatsoever, that now or hereafter may own, operate, or control any plant or equipment, any part of a plant or equipment, or any water right within the state for the production, delivery, or furnishing for or to other persons, firms, associations, or corporations, private or municipal:
“(e) except as provided in chapter 7 [governing regulation of rates and operation of utilities by municipalities], water for business, manufacturing, household use, or sewerage service, whether within the limits of municipalities, towns, and villages or elsewhere.”

(Emphasis added.)

Section 69-3-101(1)(e), MCA.

Sections 69-7-101 through -201, MCA, as adopted in H.B. 765 placed control of municipal utilities in the hands of municipalities. Section 69-7-101, MCA, provides as follows:

“A municipality has the power and authority to regulate, establish, and change, as it considers proper, rates, charges, and classifications imposed for utility services to its inhabitants and other persons served by municipal utility systems. Rates, charges, and classifications shall be reasonable and just, and, except as provided in 69-7-102, they may not be raised to yield more than a 12% increase in total annual revenues ....”

Since the passage of H.B. 765, the PSC possesses the authority to review municipal utilities only if utility rate increases yield an increase in total revenues in excess of 12 percent in one year. Section 69-7-102, MCA. Pursuant to this requirement, the municipality must annually report utility rates to the PSC and the Montana Consumer Counsel. Section 69-7-121, MCA.

Other than the review of rate increases in excess of 12 percent per year, the PSC retains no regulatory authority over municipal utilities. If a municipality “considers it advisable to regulate, establish, or change rates, charges, or classifications . . .” it, not the PSC, is required to hold public hearings. Sections 69-7-111 and -112, MCA. Any interested party may appeal the decision of the municipality regarding utility rates or rules to the district court, not the PSC. Section 69-7-113, MCA.

In sum, H.B. 765 excluded municipal utilities from the definition of the term “public utility” and took regulatory control of municipal utilities out of the hands of the PSC and placed it in the hands of municipalities. The only authority retained by the PSC in this area is the review of rate increases that yield an increase in total revenues in excess of 12 percent in any one year.

The appellants’ argument that the City is preempted from acting in the field of utility regulation by § 7-1-111(5), MCA, is without merit. Section 7-1-111(5), MCA, prohibits the City from exercising any power that establishes rates otherwise determined by a state agency. As we have demonstrated above, however, municipal utility rates are not determined by a state agency. On the contrary, unless the rates result in an increase of total revenue of 12 percent in any one year, the exclusive authority to regulate, establish and change municipal utility rates rests with the City. Therefore, § 7-1-111(5), MCA, does not preempt the City from exercising its self-governing powers in the area of municipal utilities.

The other statute that appellants contend preempts the City from acting in the area of utility regulation is § 7-1-113(1), MCA, which provides:

“(1) A local government with self-government powers is prohibited the exercise of any power in a manner inconsistent with state law or administrative regulation in any area affirmatively subjected by law to state regulation or control.” (Emphasis added.)

Appellants’ argument ignores the remainder of the statute, which in subsection (3) defines when an area is “affirmatively subjected to state control.”

“(3) An area is affirmatively subjected to state control if a state agency or officer is directed to establish administrative rules governing the matter or if enforcement of standards or requirements established by statute is vested in a state officer or agency.”

Section 7-1-113(3), MCA.

The setting of rates and charges for municipal utilities has not been affirmatively subjected to state control within the meaning of § 7-1-113, MCA. The enforcement of any standards or requirements in the area of municipal rate making is not vested in any state agency or officer. Furthermore, no statute directs the PSC or any other state agency or officer to establish administrative rules governing municipal utilities. In fact, § 69-7-201, MCA, requires the municipal utility, with the concurrence of the municipal governing body, to adopt rules for operating the utility.

The PSC itself has recognized that rule and rate-making authority over municipal utilities resides in the hands of municipalities. It has declared that its express policy is to decline jurisdiction over matters regarding municipally owned utilities unless the utility requests a rate increase that will yield an increase of over 12 percent in any one year. Sections 38.5.701 and .702, ARM.

The legislature has given the right to control municipal utilities, including the right to establish rates and charges, to municipalities. Sections 69-7-101 through 69-7-201, MCA. Section 7-1-113, MCA, does not preempt the City from exercising this right.

II.

Whether Montana statutes governing municipal utilities prohibit the City of Billings from collecting and accumulating system development fees for the purpose of funding a portion of the cost of fixture expansion of the water and sewer systems.

As noted above, a self-governing municipality such as the City of Billings may exercise any power not expressly prohibited by the Montana Constitution, statutory law or its own charter. Sec. 6, Art. XI, Mont. Const.; § 7-1-101, MCA. Furthermore, a self-governing municipality’s powers are to be liberally construed, and all reasonable doubts regarding the existence of a municipality’s power are to be resolved in favor of finding that the power exists. Section 7-1-106, MCA. Therefore, although Montana statutes do not specifically provide for the implementation of system development fees, we are compelled to liberally construe the City’s power to institute such a fee system, resolving all reasonable doubts in favor of finding the existence of the power.

Montana statutes give municipalities the authority to acquire, construct and maintain various undertakings, including the authority to establish and maintain water and sewer systems. Sections 7-7-4404 and 7-13-4301, MCA. Statutory law also allows municipalities to “prescribe and collect rates, fees, and charges for the services, facilities, and commodities furnished by such undertaking.” Section 7-7-4404, MCA. See also § 7-13-4304, MCA. The rates, fees and charges collected should produce sufficient revenue to pay bonds issued to finance the construction, improvements or extension of any undertaking and to “provide for all expenses of operation and maintenance of such undertaking, including reserves therefore.” Section 7-7-4424, MCA. Considering the above statutes, we hold that the system development fee is a reasonable extension of the City’s express statutory authority to operate and fund municipal water and sewer systems.

Appellants argue that the system development fee is unlawful because it violates certain statutes that require the fee to be equitable in proportion to the benefits received. For example, § 7-13-4304, MCA, provides:

“(1) The governing body of a municipality operating a municipal water or sewer system shall fix and establish, by ordinance or resolution, and collect rates, rentals, and charges for the services, facilities and benefits directly or indirectly afforded by the system, taking into account services provided and benefits received.
“(2) Sewer charges may take into consideration the quantity of sewage produced and its concentration and water pollution qualities in general and the cost of disposal of sewage and storm waters. The charges may be fixed on the basis of water consumption or any other equitable basis the governing body considers appropriate. The rates for charges may be fixed in advance or otherwise and shall be uniform for like services in all parts of the municipality. If the governing body determines that the sewage treatment or storm water disposal prevents pollution of sources of water supply, the sewer charges may be established as a surcharge on the water bills of water consumers or on any other equitable basis of measuring the use and benefits of the facilities and services.
“(3) An original charge for the connecting sewerline between the lot line and the sewer main may be assessed when the connecting sewerline is installed.
“(4) The water and sewer rates, charges, or rentals shall be as nearly as possible equitable in proportion to the services and benefits rendered.” (Emphasis added.)

Appellants argue that the system development fee is not equitable in proportion to the benefits received because a customer using an older utility asset ends up paying more than one using a newer asset. Appellants reach this conclusion by misinterpreting the formula used to arrive at the system development fee.

As the City points out, the system development fee system is not designed to recover the costs of facilities that already exist nor is it designed to recover the costs of replacing existing facilities. Both of these costs are paid by existing customers through their monthly user charges. Once new applicants connect to the water and sewer systems, they become existing customers and are also subject to monthly user charges. System development fees, unlike monthly user charges, are used exclusively to pay a portion of the inflationary costs of constructing new facilities needed to replace units of capacity used up by new customers hooking into the system.

Appellants also argue that the fee violates Montana law because the property owned by the new customer forced to pay the fee may not be directly benefited by the system. Once again, appellants misunderstand the purpose of the fee.

A new customer who chooses to hook up to the City’s water and sewer systems receives the benefit of the reserve capacity in those systems. Once the new customers use up the existing capacity, the City will be forced to construct additional facilities to serve new applicants. Prior to the implementation of the system development fee funding system, a portion of the cost of such expansion facilities was raised through revenue bonds. The revenue bonds were paid with money raised from monthly user charges. Thus, existing users of the systems were charged a portion of the costs of building expansion facilities that were of no direct benefit to them.

System development fees are no different in this respect than monthly user charges. In both cases, properties not directly benefited by certain improvements are paying for those improvements. The need for expansion facilities is directly related to the new users coming onto the systems. If there were no new applicants for service, there would be no need for additional facilities. System development fees are thus designed to place a greater share of the cost of meeting that need on those persons creating the need.

Furthermore, Montana law does not prohibit a municipality from establishing rates and charges for water and sewer systems simply because the benefit from the system does not directly benefit the customer charged. Section 7-13-4304, MCA, allows a municipality to establish and “collect rates, rentals, and charges for the services, facilities, and benefits directly or indirectly afforded by the system, taking into account services provided and benefits received.” As pointed out by the discussion above, new users of the City’s water and sewer systems are indirectly if not directly benefited by the construction of new facilities when the reserve capacity of existing facilities is exhausted. The system development fee is a reasonable response to the demand placed on the City’s water and sewer systems by the growth of the area.

Several other jurisdictions have upheld similar methods of funding the expansion of water and sewer systems to meet the additional demands on those systems created by new users. Meglino v. Township Comm. of Eagleswood, 103 N.J. 144, 510 A.2d 1134 (1986); Loup-Miller Constr. Co. v. City and County of Denver, 676 P.2d 1170 (Colo. 1984); Coulter v. City of Rawlins, 662 P.2d 888 (Wyo. 1983); Home Builders Ass’n of Greater Salt Lake v. Provo City, 28 Utah 2d 402, 503 P.2d 451 (Utah 1972); Hayes v. City of Albany, 7 Or. App. 277, 490 P.2d 1018 (Or. Ct. App. 1971). As noted by the Florida Supreme Court:

“Raising expansion capital by setting connection charges, which do not exceed a pro rata share of reasonably anticipated costs of expansion, is permissible where expansion is reasonably required, if use of the money collected is limited to meeting the costs of expansion. Users ‘who benefit especially, not from maintenance of the system, but by the extension of the system... should bear the cost of that extension.’” (Emphasis in original.)

Contractors and Builders Ass’n of Pinellas County v. City of Dunedin, 329 So.2d 314, 320 (Fla. 1976) (quoting Hartman v. Aurora Sanitary Dist., 23 Ill.2d 109, 177 N.E.2d 214, 218 (Ill. 1961)).

The system development fee imposed by the City of Billings meets the basic criteria outlined in the cited cases. First, the fee is based on reasonably anticipated future costs of the City. Second, the revenue generated from the fees is used solely for the purpose of funding the expansion of water and sewer facilities or for paying bonds sold for such purposes. We therefore hold that the system development fee is a reasonable exercise of the City’s self-governing powers.

III.

Whether the system development fee is a sales tax, the adoption of which is prohibited by § 7-1-112(1), MCA.

Self-governing municipalities are expressly prohibited from levying income or sales taxes without specific authorization from the legislature. Section 7-1-112(1), MCA, provides as follows:

“Alocal government with self-government powers is prohibited the exercise of the following powers unless the power is specifically delegated by law:
“(1) the power to authorize a tax on income or the sale of goods or services, except that this section shall not be construed to limit the authority of a local government to levy any other tax or establish the rate of any other tax.”

Appellants argue that the system development fee adopted by the City constitutes an unlawful sales tax and, as such, must be struck down by this Court.

In State ex rel. Malott v. Board of County Comm’rs of Cascade County, 89 Mont. 37, 83, 296 P. 1, 14 (1931), we discussed the difference between a tax and an assessment, stating:

“While the two terms (taxes and assessments) are sometimes used synonymously, there is a well recognized distinction between them. A tax is levied for the general public good, and without special regard to the benefit conferred upon the individual or property subject thereto, while a special assessment is levied to force payment for a benefit equal in value to the amount thereof. The latter (assessment) is not a tax of all the property within a district for general purposes, founded upon the benefits supposed to be derived from the organization of a government, but is a charge upon specific property for a specific purpose, founded upon the benefits supposed to be derived by the property itself.” (Parentheticals in original.)

The system development fee imposed by the city is neither a tax nor an assessment as those terms are defined in Malott. The fee is not an assessment because it is not levied to force payment for a special improvement to a specific piece of property whose value has been enhanced by that improvement. It is the occupier of the property, not the property itself, who benefits from the expansion of the City’s water and sewer systems. Nor is the fee a tax levied for the general public good. Rather, the fee is imposed for the benefit of new users of the water and sewer facilities whose use of these systems gives rise to the need for the additional water and sewer capacity.

In Montana Innkeepers Ass’n v. City of Billings, 206 Mont. 425, 671 P.2d 21 (1983), this Court struck down a hotel-motel bed tax imposed by the City, holding that such a “fee” was directly connected to the renting of rooms and was therefore a sales tax prohibited by § 7-1-112(1), MCA. The tax in Innkeepers can be distinguished from the system development fee in this case. In that case, the District Court found and appellants did not contest that the tax was not tied to any regulatory activity. The system development fee in this case, however, is directly related to the City’s authority to regulate municipal utilities.

Other jurisdictions have determined that similar fees are not taxes or assessments but are more in the nature of service fees or user charges. These jurisdictions have held that the fees are not taxes as long as 1) they are not placed in a general revenue fund; and 2) there is a reasonable relationship between the fees and the uses to which they are put. Hayes, 490 P.2d 1020; Home Builders Ass’n, 503 P.2d at 452.

In the present case, the system development fees are not held in a general revenue fund to be used on projects totally unrelated to the City’s water and sewer systems. Instead, the fees are placed in a special fund earmarked for expanding the City’s water and sewer facilities or for retiring bonds issued for that purpose. Thus, the fees are not taxes but are service charges, which the City is not prohibited from adopting by § 7-1-112(1), MCA.

Affirmed.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, SHEEHY, BARZ, McDONOUGH and WEBER concur.