author: CHIEF JUSTICE TURNAGE JUSTICE HUNT

text:
    EBI/ORION GROUP (Connecticut Indemnity), Petitioner and Respondent, v. MICHAEL S. BLYTHE, Respondent, Claimant and Appellant.
    No. 97-347.
    Submitted on Briefs February 18, 1998.
    Decided April 28, 1998.
    1998 MT 90.
    55 St.Rep. 359.
    957 P.2d 1134.
    288 Mont. 356.

      For Appellant: Richard R. Buley, Tipp and Buley, Missoula.
    For Respondents: Charles E. McNeil, Garlington, Lohn and Robinson, Missoula; Steven S. Carey, Carey, Meismer and McKeon, Missoula.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

¶1 Michael S. Blythe appeals from the judgment of the Workers’ Compensation Court that he is not disabled and is not entitled to compensation or benefits for his January 1989 industrial accident. We affirm.

¶2 The issues are:

¶3 1. Whether the Workers’ Compensation Court erred by not giving the most weight to the opinion of the treating physician.

¶4 2. Whether the court erred in finding that Blythe feigned his illness.

¶5 On January 29, 1989, during his employment as a respiratory therapist, Blythe was stuck with a needle containing blood contaminated with theAIDS virus (HIV) and Hepatitis B. The uncontroverted medical testimony was that if Blythe had been infected with HIV, he would have tested positive for the virus within three to six months after the needle stick. Fortunately, Blythe has consistently tested negative for HIV.

¶6 EBI/Orion Group (EBI) was the insurer for Blythe’s employer, Missoula Community Medical Center (the hospital). Immediately after the needle stick, EBI accepted liability and began paying Blythe temporary total disability benefits under a reservation of rights. In January 1992, Blythe brought a district court action against the hospital and Radiometer America, Inc., the manufacturer of the needle with which he was stuck. That case resulted in this Court’s decision in Blythe v. Radiometer America, Inc. (1993), 262 Mont. 464, 866 P.2d 218, that an injury and accident had occurred and that the Workers’ Compensation Act provided the exclusive remedy.

¶7 In 1994, EBI petitioned the Workers’ Compensation Court to determine whether Blythe suffered any psychological condition caused by the physical injury in the workplace and whether he suffers from a resulting permanent disability. Blythe counterclaimed, alleging a causal connection and permanent total disability. He contends that he suffers from a schizoaffective disorder caused by the stress of worrying about contracting AIDS from the needle stick injury.

¶8 After a three-day trial in July 1995, the Workers’ Compensation Court entered findings, conclusions, and a judgment that Blythe had fabricated and feigned mental illness and was not disabled. Blythe appealed. This Court reversed on grounds that an independent medical examination of Blythe conducted at the request of EBI was performed by a clinical psychologist who was not licensed to practice in Montana and therefore was not authorized to perform an independent medical examination under the applicable statutes. EBI/Orion Group v. Blythe (1997), 281 Mont. 50, 931 P.2d 38 (Blythe I). We remanded to allow the Workers’ Compensation Court to reconsider the evidence without the testimony from that expert witness.

¶9 After reviewing the remaining record, the Workers’ Compensation Court again determined that Blythe is not disabled on account of his January 1989 work injury and is not entitled to further benefits from EBI. Blythe appeals.

Issue 1

¶10 Did the Workers’ Compensation Court err by not giving the most weight to the opinion of the treating physician?

¶11 Dr. William Stratford, a Missoula, Montana board certified psychiatrist, treated Blythe from October of 1989 through the time of trial. Dr. Stratford diagnosed Blythe as suffering from a schizoaffective disorder or schizoaffective schizophrenia, which he treated with counseling and various psychotropic medications. At trial, Dr. Stratford testified extensively on Blythe’s behalf. In Dr. Stratford’s opinion, Blythe is not malingering mental illness. Dr. Stratford farther opined that Blythe’s mental illness was precipitated by the needle stick incident and is totally disabling.

¶12 In remanding this case, this Court stated that the Workers’ Compensation Court was to “reweigh[] ... the evidence as to malingering; contrasting the testimony of Blythe’s experts, including Dr. Stratford, with the testimony of EBI/Orion’s remaining expert, Dr. Faust.” Blythe I, 281 Mont. at 57, 931 P.2d at 42. Blythe points out that this Court has often held that, as a general rule, the opinion of a treating physician is accorded greater weight than the opinions of other expert witnesses. E.g., Blythe I, 281 Mont. at 57, 931 P.2d at 42. That remains the general rule.

¶13 However, this Court has also held that

a treating physician’s opinion is not conclusive. To presume otherwise would quash the role of the fact finder in questions of an alleged injury. The Workers’ Compensation Court, as the finder of fact, is in the best position to assess witnesses’ credibility and testimony.

Kloepfer v. Lumbermen’s Mut. Cas. Co. (1996), 276 Mont. 495, 498, 916 P.2d 1310, 1312. It is the function of a finder of fact to weigh the credibility of both non-medical and medical evidence. See Burns v. Plum Creek Timber Co. (1994), 268 Mont. 82, 885 P.2d 508.

¶14 On remand, the Workers’ Compensation Court described its function as not limited to merely reweighing the testimony of Dr. Stratford against that of EBI’s remaining expert witness, Dr. Faust. The court determined that its task also included consideration of Blythe’s credibility, since Dr. Stratford’s opinions rested largely on what Blythe had told him. The court reasoned:

While Dr. Stratford genuinely believed the claimant, his belief is not binding on this Court, otherwise the fact-finding function vested in the Court would be usurped by a physician whose principal duty is to his patient and who does not have the full benefit of all of the evidence presented in a courtroom.

We agree. The District Court’s interpretation of the law is consistent with Kloepfer and with longstanding precedent concerning the function of a finder of fact.

¶15 We therefore hold that the Workers’ Compensation Court did not err in its weighing of Dr. Stratford’s opinion that Blythe was not malingering against the other evidence presented.

Issue 2

¶16 Did the court err in finding that Blythe feigned his illness?

¶17 The court’s findings on this matter appeared at the end of its extensive and detailed findings of fact. The relevant findings were:

92. Numerous facts support a conclusion that claimant is malingering and untruthful concerning his mental state. The number and nature of the atypical features of claimant’s alleged mental disorder were extraordinary. The evidence presented to the Court showed that claimant falsely answered psychological tests in a deliberate effort to “fake bad” and that he is knowledgeable concerning psychological matters and capable of fabricating and feigning psychiatric symptoms. From virtually the moment of the needle stick, he has been intent on pursuing legal action on account of his injury. His reports to Dr. Stratford concerning his activities were sometimes incomplete or exaggerated. In the Court’s assessment, his explanations at trial were smoothly delivered but often incredible and unbelievable.
93. After reviewing and carefully considering all of the evidence in this case, I find that claimant’s mental illness is malingered. I further find that he is not suffering from a schizoaffective disorder or any other psychotic diagnosis. While he may well have some depression, that is a life-long problem and a personality characteristic which is not attributable to the industrial accident.
94.1 find that claimant is able to work as a respiratory therapist and that his case for disability was fabricated.

This Court reviews findings of fact by the Workers’ Compensation Court to determine whether they are supported by substantial credible evidence. Best v. State Compensation Ins. Fund (1996), 276 Mont. 302, 306, 916 P.2d 108, 110.

¶ 18 Blythe testified at trial as to the circumstances of the needle stick and his condition following the incident. He read from diaries which he had regularly kept since that time, and which were introduced into evidence. Blythe stated that, as a result of the needle stick, he had initially suffered anxiety attacks and depression. He testified that he later experienced auditory, visual, gustatory, tactile, and olfactory hallucinations. Blythe continued working at the hospital for approximately two years after the needle stick, but did not return to work after a March 1991 confrontation with his supervisor.

¶19 Blythe also testified as to his educational background, which included bachelors’ degrees in psychology and sociology, associate of science and medical science degrees, and two associate of arts degrees. Blythe’s college credits included the study of mental disorders. At the hearing, he testified that he was working on two liberal arts degrees and had been accepted into graduate school for a guidance and counseling program.

¶20 Dr. Stratford admitted that Blythe’s highly irregular scores on the validity scales of two versions of the MMPI personality test indicated a strong possibility that he was faking or malingering. While admitting that it was possible that Blythe was in fact malingering, Dr. Stratford nevertheless explained those scores as a result of Blythe’s idiosyncratic way of analyzing matters. He characterized Blythe as a “very unusual character” with “nitpicking qualities.”

¶21 EBI presented expert witness Dr. David Faust, a clinical psychologist and professor of psychology at the University of Rhode Island. Dr. Stratford acknowledged that Dr.Faust was a nationally-known expert on neuropsychology. Dr. Faust had reviewed the results of Blythe’s psychological tests and other materials and had observed Blythe’s trial testimony. In Dr. Faust’s view, although Blythe had been “a troubled person for a long period of time,” he was not unable to work and did not suffer from a serious schizophrenic-type disorder. Dr. Faust based his opinion not only on Blythe’s atypical MMPI validity scores, but also on the atypical symptoms of mental illness presented by Blythe, including late age at onset, delay in onset after the traumatic incident, and the reported combination of types of hallucinations. Dr. Faust also described numerous inconsistencies and implausibilities which he observed in Blythe’s statements in the records he reviewed and at trial. Dr. Faust testified that, in his opinion, Blythe was malingering a mental disorder. He commented, in fact, that he had “never seen a case in which the evidence [of malingering] seemed so overwhelming” as in this case.

¶22 Blythe asserts that Dr. Faust violated the standards of his profession by rendering an opinion without having personally conducted an examination of him. Dr. Faust testified as to this matter. He stated that the ethical guides are often ambiguous, as in this instance where two ethical considerations were in conflict: one, that the professional should use the best available scientific tools; and the other, that the professional should do a personal examination of the subject. Dr. Faust testified that the necessary psychological tests had been done and he was able to evaluate the results of those tests as to Blythe. He further testified that he considered doing a personal interview, but given that all the relevant tests had been done and the results were available to him, and given also that the literature did not support doing an unstructured interview with Blythe as a means which would increase the accuracy of his judgment, he decided to follow the ethical guideline of using the best available scientific tools (the results of tests which were already available to him).

¶23 Blythe also presented testimony from an expert witness who examined him at Dr. Stratford’s request in 1992, Missoula licensed clinical psychologist Dr. Herman Walters. Dr. Walters testified that there are four situations in which one should be particularly attuned to the possibility of malingering: when the psychological examination takes place in a medical/legal setting; when the symptom picture presented seems to be substantially beyond what is available by way of objective data; when the individual does not seem to be complying with and participating in treatment; and when the individual has a diagnosis of antisocial personality disorder. On cross-examination, Dr. Walters admitted that malingering was a possibility in this case because at least two of the four situations — medical/legal setting and symptoms beyond what is available by objective data — and possibly a third — noncompliance in and nonparticipation with treatment— were present.

¶24 Blythe also argues that the court did not adequately consider the possibility that, although he was malingering, he was also suffering from mental illness which made it impossible for him to work. Dr. Faust addressed that issue rather extensively in his testimony. He opined that it would be very difficult for someone with a serious mental disorder to produce the kinds of test results Blythe obtained on the MMPI’s, and that Blythe’s activities were inconsistent with someone as mentally ill as his MMPI scores indicated. Further, Dr. Faust stated that the symptoms Blythe reported did not match up with his behavior in a number of respects:

For example, if a person is constantly hearing voices, constantly seeing things, having all of these delusions, I mean, this is not a subtle thing. This person cannot be at work a year and a half tending to life and death matters.

¶25 The Workers’ Compensation Court set forth other evidence supporting a finding that Blythe was malingering. The testimony of Blythe’s friends and co-workers conflicted as to whether changes in his behavior after the needle stick supported his claimed mental disorder. Several co-workers testified that there had been no change in Blythe’s behavior and that he had always been intellectual, antisocial, and cynical, with “a fatalistic negative attitude.” The court noted that Blythe’s diary entries beginning within two days after the needle stick incident demonstrated his anger at the hospital and preoccupation with filing a lawsuit — “The element of secondary gain was ... fully present.” Class notes taken by Blythe in a class on AIDS after the needle stick referred in several places to the possibility of litigation and a large settlement in his case. The court further noted that the acknowledged deterioration in Blythe’s job performance after the needle stick could be explained by his demonstrated anger and hostility toward the hospital and his supervisor.

¶26 Evidence from witnesses including Blythe himself established that Blythe’s statements to Dr. Stratford about a post-needle stick decline in his educational pursuits were exaggerated — there had not been a dramatic decline, as Blythe had led Dr. Stratford to believe. As to symptoms of mental illness, the court found that Blythe did not make any notations in his meticulous diary that he was suffering from hallucinations until just before he first saw Dr. Stratford in October 1989, whereas he told Dr. Stratford that he had been hallucinating for months, since thirty days after the needle stick. Blythe’s diary further contained numerous notations supporting the Workers’ Compensation Court’s finding that he had a “preoccupation with launching a lawsuit” to recover damages as a result of the needle stick.

¶27 The Workers’ Compensation Court made extensive findings on these and other factors which led it to determine that Blythe’s mental illness was malingered. After reviewing the record, we conclude that substantial credible evidence supports the Workers’ Compensation Court’s findings that Blythe feigned his illness.

¶28 We affirm the decision of the Workers’ Compensation Court.

JUSTICES NELSON, GRAY and LEAPHART concur.

JUSTICE HUNT

dissenting.

¶29 I dissent. The medical testimony in this case was given primarily by Dr. William Stratford, a Missoula, Montana, board-certified psychiatrist, and by Dr. David Faust, on behalf of the insurance company. Dr. Stratford treated the claimant from October 1989, through the time of the trial, a period of about six years, and found that claimant suffered from a schizoaffective disorder, or schizoaffective schizophrenia. Dr. Stratford treated him with counseling and various psychotropic medications. Dr. Stratford testified that in his opinion claimant was not malingering, and that his mental illness was precipitated by the needle stick incident and that it was totally disabling. The record shows that the claimant could work prior to the needle incident and thereafter became totally disabled. The claimant was paid compensation for the total disability.

¶30 Dr. David Faust testified on behalf of EBI/Orion Group and based his testimony on the records he reviewed. He did not at any time examine the claimant but explained to the court that he could give an expert opinion based on the claimant’s test results and Dr. Stratford’s records of treatment. Dr. Faust admitted he had never directly expressed an opinion that an individual is malingering before this case, but was prepared to do so here because he had never seen a case of such “overwhelming” evidence of malingering. Dr. Faust was in the courtroom and observed the claimant during the proceedings. The only time he observed the claimant outside of the courtroom was during a recess when he saw the claimant lighting a cigarette for another person. Dr. Faust thought claimant’s conduct during this act was more like his normal self rather than the act he was putting on in the courtroom. There is no explanation of the difference in conduct.

¶31 While I agree with the majority opinion that a treating physician’s opinion is not always conclusive it must still be given the weight it deserves. But, I believe that in this case, the treating physician who treated the claimant for a period of six years and testified that claimant was injured as claimed and is presently totally disabled, is far more credible and believable than any other evidence produced to show that claimant was not disabled.

¶32 I do not agree with the majority opinion that there is substantial credible evidence to support the finding that Blythe feigned his illness. From my examination of the record, I conclude that the evidence is otherwise and, for that reason, I would reverse the judgment of the Workers’ Compensation Court.


source: Caselaw Access Project

author: JUSTICE NELSON

license: Public Domain

text:
    AMERICAN FEDERAL SAVINGS AND LOAN ASSOCIATION, n/k/a AMERICAN FEDERAL SAVINGS BANK, Plaintiff/Appellant, v. MADISON VALLEY PROPERTIES INC., and VALLEY BANK OF HELENA, Defendants/Respondents.
    No. 97-368.
    Submitted on Briefs April 2, 1998.
    Decided April 30, 1998.
    1998 MT 93.
    55 St.Rep. 366.
    958 P.2d 57.
    288 Mont. 365.

      For Appellant: Jock O. Anderson, Gough, Shanahan, Johnson & Waterman, Helena.
    For Respondent: Lance Lovell, Josephson & Fredricks, Big Timber (Madison Valley Properties); R. J. “Jim” Sewell, Jr., Smith Law Firm, Helena (Valley Bank).
   JUSTICE NELSON

delivered the Opinion of the Court.

¶1 This is an appeal by American Federal Savings Bank (American) from the District Court’s April 4, 1997 Order on Motion for Summary Judgment entered against American and in favor of Madison Valley Properties, Inc. (Madison). Madison also cross-appeals from one of the court’s rulings on its cross-motion for summary judgment. We reverse the trial court’s decision as to the issue on appeal; we affirm as to the issue on cross-appeal; and we remand for further proceedings and entry of a judgment consistent with this opinion. Finally, we dismiss with prejudice as moot American’s appeal of the summary judgment rendered in favor of Valley Bank of Helena (Valley Bank).

Background

¶2 The dispositive facts are not in dispute. David Gauvin (David) operated a Helena excavation business. In January 1991, American loaned David and his then wife, Marlene, nearly $32,000 evidenced by a promissory note and secured by a 1989 Caterpillar backhoe (the collateral or the backhoe). American properly perfected its security interest in the collateral in February 1991, by the filing of a financing statement with the Secretary of State. David and Marlene divorced in 1992.

¶3 In the spring of 1994, David was inj nred and his loan, then paid down to under $14,000, went into default. Following his accident, David advertised his business equipment, including the backhoe, for sale. On July 5, 1994, representatives of Madison came to Helena, inspected the equipment, and agreed to purchase some of it, including the backhoe, for a total price of $35,000. As a deposit, Madison left a check for $5,000 payable to David and to David’s girlfriend, Debra White (Debra), with Debra. Debra was acting on David’s behalf, apparently as his attorney in fact. Madison’s representatives then returned home. On that same day Debra called American and asked for and was given a current pay-off figure for David’s loan. Debra also advised American’s employee, Jo Ann Jones (Jo Ann), that David would be selling the backhoe and paying off the loan.

¶4 On July 7,1994, a representative of Madison returned to Helena and delivered to David and Debra a $30,000 check for the balance of the purchase price. The check was payable to both David and Debra. Madison had actual knowledge of American’s perfected lien in David’s equipment, and though instructed to obtain lien releases at the time of payment, Madison’s representative failed to do so. Upon taking delivery of the $30,000 check, David and Debra drove from Helena to Bozeman where they cashed the check at a local bank. The proceeds were paid to thém in the form of $10,000 in cash to David and a $20,000 cashier’s check payable to Debra.

¶5 The following day, July 8, David went to Valley Bank in Helena and presented the $20,000 cashier’s check showing his and Debra’s endorsements. He then negotiated this check and purchased from the proceeds a Valley Bank cashier’s check payable to American for $13,703.31. This check was in the amount of and designated as the pay-off for his American loan.

¶6 That same day, the Valley Bank cashier’s check was delivered to American by means and person(s) undetermined. In any event, the check for the loan pay-off was on the desk of loan officer Della Ranard (Della) when she returned from lunch. On finding the check, Della stamped “PAID” on the promissory note; executed a lien release to be sent to the Secretary of State; placed the note and lien release in envelopes for mailing; and deposited the envelopes with the enclosed documents in American’s outgoing mail basket.

¶7 Later on July 8, however, Della received a call from Valley Bank. Valley Bank advised Della that Debra had notified the Bank that the $20,000 check from the Bozeman bank payable to her which David used to purchase the Valley Bank cashier’s check payable to American was stolen and that her endorsement was forged by David. Valley Bank requested Della to stop the pay-off of David’s loan. This Della did. She then retrieved the note marked “PAID” and the lien release from the outgoing mail basket and wrote “Stamped in error” next to the “PAID” stamp on the note and thereafter regarded the note as still unpaid. Subsequently, Valley Bank called again, and, at its request, Della returned the Valley Bank cashier’s check to that institution.

¶8 On July 15, David and Debra went to Valley Bank. The District Court found that at that time Valley Bank learned that the original $20,000 check had not been stolen from Debra nor had her signature been forged. In any event, Debra requested and obtained the return of her $20,000 check, and the two left the Bank for parts unknown. American’s loan was not repaid and its lien on the collateral purchased by Madison was not released (except to the extent that it was replaced by a cash bond filed by Madison as part of this litigation which cash bond has now been paid over to Madison as a result of the trial court’s decision).

¶9 Subsequently, American sued David and Marlene to recover on the note. American also sued Madison to recover possession of the collateral. Debra was added as a defendant in an amended complaint. Madison counter-claimed seeking to quiet its title to the collateral it purchased from David as against American’s perfected security interest. Subsequently, by a second amended complaint, American joined Valley Bank as a defendant on the theory that, if American lost its rights in the collateral as against Madison, then American should be indemnified by Valley Bank.

¶10 Following discovery, American and Madison filed cross-motions for summary judgment. After briefing and a hearing, the District Court ruled in favor of Madison and against American holding that Madison had superior rights in the collateral but that American had not agreed to David’s sale of the collateral in a manner inconsistent with its security agreement. American timely appealed and Madison cross-appealed. American also appealed the court’s summary judgment in favor of Valley Bank.

Issues

¶11 In American’s appeal we address the issue of which party— American or Madison — has superior rights to the collateral in dispute. By way of its cross-appeal, Madison raises the issue of whether American waived its rights under its written security agreement by acquiescing to David’s sale of the collateral in a manner inconsistent with the terms of the security agreement. We will address each of these issues in turn. We also summarily dispose of American’s appeal against Valley Bank.

Standard of Review

¶12 This case is on appeal from the trial court’s decision on cross-motions for summary judgment filed by American and by Madison. Our standard of review in appeals from a district court’s summary judgment ruling is de novo; we apply the same criteria and evaluation as the district court based on Rule 56, M.R.Civ.P. The initial burden is on the movant to demonstrate that there exist no genuine issues of material fact. That having been accomplished, the burden then shifts to the non-moving party to show, by more than mere denial and speculation, that genuine issues of material fact do exist. If the court concludes that there are no genuine issues of material fact, then it must determine whether the moving party is entitled to judgment as a matter of law. Our review of the court’s legal conclusions is plenary. Montana Public Emp. Assoc. v. Dept. of Transportation, 1998 MT 17, ¶ 8, 287 Mont. 229, ¶ 8, 954 P.2d 21, ¶ 8 (citations omitted). In the case at bar, since the facts are not disputed, we need only determine whether the District Court’s application of the law to these facts is correct.

Discussion

¶13 The ultimate question to be answered in every commercial transaction gone bad is: ‘Who is to bear the loss; who will be the ‘stuckee’?” In the instant case, the trial court determined that party to be American. In so ruling, the court reasoned that American had not in any way consented to David’s sale of the collateral as contemplated by § 30-9-306(2), MCA, when it cooperated in giving Debra a loan pay-off figure. Nonetheless, the District Court held that American’s perfected lien along with the underlying debt was discharged pursuant to § 30-3-310(1), MCA, when American took the Valley Bank cashier’s check. The court agreed with Madison’s argument that American had no obligation to return the Valley Bank cashier’s check and that, in doing so, American waived its absolute right to insist that Valley Bank honor the check and to payment.

¶14 Subject to exceptions not applicable here, the parties do not dispute that, as between a holder of a perfected security interest in collateral (here, American) and a purchaser of that collateral (Madison), the security interest follows the collateral and any identifiable proceeds therefrom notwithstanding sale, exchange or other disposition, unless the disposition was authorized by the secured party in the security agreement or otherwise. Section 30-9-306(2), MCA. Therefore, unless American lost its lien, its security interest takes priority notwithstanding Madison’s purchase of the collateral. It is this question of which party has superior rights in the collateral that we first address.

I.

¶15 Which party — American or Madison — has superior rights in the collateral?

¶16 Commercial paper is a vital component of the economy of this and other nations and is the means by which commerce is transacted. Accordingly, rules governing the issuance, utilization, honoring and dishonoring of commercial paper have developed over time and have been uniformly accepted and applied. Our present rules find their origins in the Law Merchant of England. Previously codified as the Uniform Sales Act and Uniform Negotiable Instruments Law, Montana, like other states, has now enacted these and other commercial laws through its adoption of the Uniform Commercial Code (UCC). The transactions here at issue are governed by these laws and in particular by the laws pertaining to negotiable instruments codified in Title 30, Chapter 3 of the Montana Code Annotated.

¶17 “Checks” are negotiable instruments and encompass drafts, cashier’s checks and teller’s checks. Section 30-3-104(1) and (6), MCA. A cashier’s check is a draft with respect to which the drawer and drawee are the same bank or branches of the same bank. Section 30-3-104(7), MCA. Acceptance of a draft is the drawee’s signed agreement to honor the draft as presented. Section 30-3-410(1), MCA.

¶18 Citing Kaufman v. Chase Manhattan Bank, N.A. (S.D.N.Y. 1973), 370 F. Supp. 276, 279, and other authorities, Madison argues that a cashier’s check is the equivalent of cash because the issuing bank stands behind the check and pledges its resources to the payment of the amount of the check on presentation. According to Madison, a bank may not dishonor such an instrument, for to do so would be inconsistent with the issuing bank’s representations and would undermine public confidence in the bank and its checks and thus deprive the cashier’s check of its essential utility as a “cash equivalent”. Accordingly, Madison contends that Valley Bank’s cashier’s check was good as against all the world and was impervious to dishonor. Thus, Madison contends that American had the right and obligation to hold the cashier’s check, to refuse Valley Bank’s request to return the instrument, to insist that the check be paid according to its terms, and to apply the proceeds of the check in discharge of David’s loan and lien. According to Madison and the trial court, the fact that American “gratuitously” returned the check to Valley Bank, did not obviate American’s obligation to discharge David’s loan and to release its lien on the collateral.

¶19 Given Madison’s arguments and the trial court’s reasoning along these lines, it is appropriate that we begin our analysis by expressing our disagreement with Madison’s basic premise — that an issuing bank may not dishonor its cashier’s check. While it is true that cashier’s checks may be considered as “cash equivalents” in the minds of the public and in commercial trade, and while various courts and commentators have taken the view, typically on public policy grounds, that an issuing bank may not assert its own defenses against or dishonor its cashier’s check, this rule is neither as universal nor as absolute as Madison suggests. (See, for example, Stringfellow v. First American Nat. Bank (Tenn. 1994), 878 S.W.2d 940. Although the appellate court ultimately sides with Madison’s approach, the appellate court discusses the differing lines of authority and the arguments for each.)

¶20 Importantly, “nothing in the U.C.C. suggests that cashier’s checks should be treated differently from other instruments subject to Articles 3 and 4 [Title 30, chapters 3 and 4, MCA].” Farmers & Merchants State Bank v. Western Bank (9th Cir. 1987), 841 F.2d 1433, 1440. See also Equitable Trust Co. v. G & M Const. Corp. (D. Md. 1982), 544 F. Supp. 736, 746; Santos v. First Nat’l State Bank of N.J. (N.J. Super.Ct.App.Div. 1982), 451 A.2d 401, 406.

¶21 Thus, and despite the “cash equivalent” approach, other courts have acknowledged that in limited circumstances an issuing bank may dishonor its cashier’s check. See, for example, the following and the cases cited therein: Farmers & Merchants State Bank, 841 F.2d at 1438-41; Godat v. Mercantile Bank of Northwest Cty. (Mo.Ct.App. E.D. 1994), 884 S.W. 2d 1, 3-4; Rezapolvi v. First Nat. Bank of Maryland (Md. 1983), 459 A.2d 183, 188-89. Appropriate to our later discussion in this opinion, the Maryland Court of Appeals in Rezapolvi stated:

Despite the language in some opinions suggesting that a bank may never dishonor its cashier’s check, courts have recognized that a bank may do so under very limited conditions. These are where the holder has dealt with the bank in connection with the transaction or is not a holder in due course, and where the cashier’s check was obtained by fraud upon the bank or under certain circumstances, where there was no consideration given to the bank for the instrument.

Rezapolvi, 459 A.2d at 188-89.

¶22 Accordingly, contrary to Madison’s basic argument, depending upon the status of the funds used to purchase the Valley Bank cashier’s check and American’s status — i.e., whether it was or was not a holder in due course under the UCC as regards this transaction — American was not in the unassailable position that Madison argues it was. Indeed, the fact that the aborted loan pay-off at issue here was initiated by the delivery of a cashier’s check does not, in and of itself, dispose of this case. Rather, it is necessary that we look to other provisions of Montana’s UCC as those are applicable to the case sub judice.

¶23 Underlying the District Court’s decision and Madison’s arguments is the premise that American initially took the Valley Bank cashier’s check for value, in good faith and without notice of any defect or defense with the result that the subsequent notice of the stolen nature of the funds used to purchase the instrument did not defeat American’s ability to negotiate the Valley Bank cashier’s check free of defenses. The trial court and Madison reason that American’s return of the check instead of presenting it for payment was a gratuitous act. Thus, the debt was still deemed discharged and the lien released.

¶24 For this approach to be legally supportable, however, it must first be established that American was a holder in due course — a concept not addressed in the trial court’s decision. That is, if American enjoyed holder-in-due-course status before it returned the check to Valley Bank, then Madison and the trial court are correct. American could have presented the check to Valley Bank for payment free of defenses and it should have insisted that Valley Bank pay the check. Section 30-3-305, MCA.

¶25 If American was not a holder in due course, then § 30-3-306, MCA, comes into play. This section provides:

A person taking an instrument, other than a person having rights of a holder in due course, is subject to a claim of a property or possessory right in the instrument or its proceeds, including a claim to rescind a negotiation and to recover the instrument or its proceeds. A person having rights of a holder in due course takes free of the claim to the instrument.

Thus, since David stole the funds he used to purchase the Valley Bank cashier’s check delivered to American, American’s claim to the check was subject to Debra’s ownership interest in the funds stolen to purchase it. Furthermore, American’s claim to the check was subject to Valley Bank’s ability to refuse payment and assert Debra’s ownership interest as a defense, subject only to joining Debra in the lawsuit to also personally assert her claim of theft. Section 30-3-305(3), MCA. See also Official Comment No. 4 to 1991 Amendment of § 30-3-305, MCA. Accordingly, whether American was a holder in due course of the Valley Bank cashier’s check is critical.

¶26 Under § 30-3-302(1), MCA, a holder in due course is one who holds an instrument if:

(a) the instrument when issued or negotiated to the holder does not bear such apparent evidence of forgery or alteration or is not otherwise so irregular or incomplete as to call into question its authenticity; and
(b) the holder took the instrument:
(i) for value;
(ii) in good faith;
(iii) without notice that it is overdue or has been dishonored or that there is an uncured default with respect to payment of another instrument issued as part of the same series;
(iv) without notice that the instrument contains an unauthorized signature or has been altered;
(v) without notice of any claim to the instrument stated in 30-3-306; and
(vi) without notice that any party to the instrument has any defense or claim in recoupment stated in 30-3-305(1).

The elements of this statute being in the conjunctive, all must be present; the failure to meet any one of the requirements defeats the holder-in-due-course status. Farmers & Merchants State Bank, 841 F.2d at 1443; Godat, 884 S.W.2d at 5.

¶27 In short, unless American could have demonstrated that it had already taken the instrument in good faith and for value at the time it was notified that the funds used to purchase the Valley Bank check were stolen, then it was not a holder in due course and, as pointed out above, American’s claim to the check would have been subject to Debra’s property interest in the check (§ 30-3-306, MCA) and to Valley Bank’s ability to dishonor the instrument (§ 30-3-305(3), MCA, and Rezapolvi, 459 A.2d at 188-89). It follows, then, that we must determine whether, on the facts here, American satisfied the statutory requirements for obtaining holder-in-due-course status. We conclude that it did not.

¶28 While American initially received the Valley Bank check in good faith and without notice of the underlying theft, once American was advised of the theft it could not go forward in “good faith” and “without notice” of Debra’s adverse claim and Valley Bank’s defenses. “Good faith” means “honesty in fact and the observance of reasonable commercial standards of fair dealing.” Section 30-3-102(1)(d), MCA.

Although fair dealing is a broad term that must be defined in context, it is clear that it is concerned with the fairness of conduct rather than the care with which an act is performed.

Uniform Commercial Code § 3-103 cmt. 4, 2 U.L.A. 24 (1990). We would be hard-pressed to conclude that honesty in fact and fairness of conduct would allow a financial institution to negotiate an instrument once having been notified that the instrument was stolen or was purchased with stolen funds.

¶29 As to notice, “[njotice, knowledge or a notice or notification received by an organization is effective for a particular transaction from the time when it is brought to the attention of the individual conducting that transaction. ...” Section 30-1-201(27), MCA. “To be effective, notice must be received at such time and in such manner as to give a reasonable opportunity to act on it.” Section 30-3-302(6), MCA. There is no dispute that American was notified of the theft of funds used to purchase the Valley Bank check prior to the note marked “PAID” and the lien release leaving American’s business premises. At the time it received notice, American still had time and was fully capable of reversing the administrative steps it had taken to process the loan pay-off. Thus, the notice of the theft given American by Valley Bank was an effective notice that American could not simply ignore.

¶30 Given the timing of the delivery of the Valley Bank cashier’s check to American followed by American’s processing of the loan pay-off and the subsequent notice of the stolen nature of the funds, the crucial inquiry then becomes: Had American taken the instrument “for value” by the time notice was received? If American took the cashier’s check for value prior to Valley Bank’s notice, then all of the § 30-3-302(1), MCA, elements would have been satisfied and American would have enjoyed the status of a holder in due course. To the contrary, if, at the time of Valley Bank’s notification, American had not yet given value for the check — if American had not yet irrevocably changed its position — then the statutory elements would not have been satisfied (and could not thereafter be satisfied) and American would not be a holder in due course.

¶31 “Value” is defined in § 30-3-303, MCA. This statute, in pertinent part, provides:

(1) An instrument is issued or transferred for value if:
(a) the instrument is issued or transferred for a promise of performance, to the extent that the promise has been performed;
(b) the transferee acquires a security interest or other lien in the instrument other than a lien obtained by judicial proceedings;
(c) the instrument is issued or transferred as payment of, or as security for, an existing obligation of any person, whether or not the obligation is due;
(d) the instrument is issued or transferred in exchange for a negotiable instrument; or
(e) the instrument is issued or transferred in exchange for the incurring of an irrevocable obligation to a third party by the person taking the instrument.

¶32 American argues that the applicable provision of this statute is subsection (l)(a); Madison contends that subsection (l)(c) controls. We conclude that it is unnecessary that we decide which subsection is appropriate, for under either American did not give value or irrevocably change its position before receiving Valley Bank’s notice.

¶33 As noted by the court in Godat:

“One can only take ‘for value’ by giving in return something ‘of value’ to the one from whom the instrument is taken.” “Good faith” is in large part a subjective test but “for value” is objective. Plaintiff’s position essentially eliminates the objective “for value” requirement by substituting therefore a subjective belief that value is being given. The premise of the “holder in due course” doctrine is to protect those persons who part with something of value in reliance on the negotiability of a check or other instrument. Persons who give up nothing of value do not need the protection of the doctrine because they put nothing at risk and give up nothing.

Godat, 884 S.W.2d at 6 (citing Blue Cross Health Services v. Sauer (Mo.Ct.App. 1990), 800 S.W.2d 72).

¶34 That was American’s situation here. When it first received the Valley Bank cashier’s check, American had no notice or knowledge of the stolen nature of the funds. Neither had it parted with value, however. American’s stamping the note “PAID,” its executing the lien release, and its placing these documents in the outgoing mail basket, were merely internal administrative actions which, up until the point in time that the documents were placed into the possession of the post office for delivery, did not irrevocably commit American to the pay-off. To that point, American was just as capable of administratively reversing the steps it had taken to process the loan pay-off as it was in performing those steps in the first place. The note had not actually been returned “paid” nor had American’s lien actually been released. American had not irrevocably changed its position. At the point it received notice from Valley Bank, nothing which American had accomplished in processing the loan pay-off had any effect on American’s secured position. Objectively, at that point, American had given up nothing; it had put nothing at risk. American had not given value — even assuming that it subjectively believed that value was being given when it commenced the loan pay-off process. Godat, 884 S.W.2d at 6.

¶35 Putting this within the framework of § 30-3-303(1)(a), MCA, American effectively agreed that it would discharge the note and release the lien on David’s equipment in exchange for payment of his debt. American was in the process of performing its end of this bargain when it was notified by Valley Bank of the underlying stolen nature of the funds which had been transferred to American. If (1)(a) is the applicable subsection, after notification American would be a holder in due course only to the extent that it had actually performed, i.e., to the extent that it had actually discharged the note and released the collateral lien. See Hawkland & Lawrence UCC Series § 3-303:02 (1994).

The holder is, in essence, required to mitigate the damages of the party having the defense. Discovering a defense to the instrument he bargained for will usually permit the holder to suspend the remainder of his counter-performance. Not being required to perform, the holder is not given holder in due course status and is, thus, not permitted to increase the obligor’s loss by rendering an excused performance. The holder is not usually harmed by his suspension of performance. Since a negotiable instrument is simply a promise to pay money, the holder will not be deprived, as in the case of a contract to purchase goods, of some needed commodity.

Hawkland & Lawrence UCC Series § 3-303:02 (1994). Since American was fully capable of administratively undoing the loan pay-off and retaining its secured position, it was required to suspend performance. Had it proceeded in the face of Valley Bank’s notice, American could not have claimed holder-in-due-course status.

¶36 Similarly, in the context of § 30-3-303(1)(c), MCA, the result is the same on these facts. While the Valley Bank check was issued to American in payment of David’s antecedent obligation, American had not given value because it had not actually released its security interest in the collateral; it had not irrevocably committed itself to the transaction; it had not put its secured position at risk. Again, while it had taken certain internal administrative steps toward discharging the note and releasing the lien, those could all be administratively rescinded and, in fact, were rescinded. Having not irrevocably released its security interest, American had not taken the Valley Bank cashier’s check for value by the time it received notice. See Hawkland & Lawrence UCC Series § 3-303:06 (1994).

¶37 In short, under either § 30-3-303(l)(a) or (l)(c), MCA, American did not give value and was, therefore, not a holder in due course. It took the cashier’s check subject to Debra’s possessory and property interest and subject to Valley Bank’s defenses.

¶38 As regards the trial court’s reliance on § 30-3-310(1), MCA, we conclude that the court erred by not first determining whether American was a holder in due course of the cashier’s check. Section 30-3-310(1), MCA, provides, in pertinent part:

Unless otherwise agreed, if a ... cashier’s check ... is taken for an obligation, the obligation is discharged to the same extent discharge would result if an amount of money equal to the amount of the instrument were taken in payment of the obligation.

Madison maintains that, under this law of “absolute payment,” the payee/obligee (here, American) who takes a cashier’s check no longer has recourse against the remitter/obligor (David) because the obligation is discharged with the result that the payee/obligee (American) has recourse only on the instrument against the issuing bank (here, Valley Bank).

¶39 As a general proposition, we do not disagree. If, in fact, American “took” the Valley Bank cashier’s check for David’s obligation, then, clearly, under § 30-3-310(1), MCA, David’s obligation is discharged and Madison must prevail as against American. This, however, begs the question: Did American “take” the Valley Bank cashier’s check under the facts of this case? For the reasons set forth above, we determine that it did not.

¶40 Moreover, both parties and the trial court rely on Transamerica Insurance Company v. Long (W.D. Pa. 1970), 318 F.Supp. 156, in support of their respective positions. We do not find this case at odds with our decision here. While the court ruled that cashier’s checks are like money and that title passes with delivery, the court also made it clear that if the recipient takes stolen funds with knowledge of the theft — with mala fides, in the words of the court — then the holder’s title will be defeated. Transamerica, 318 F.Supp. at 160. Again, in the case at bar, before American “took” the cashier’s check it had received notice of the stolen nature of the funds used to purchase the Valley Bank cashier’s check. Under such circumstances its title would be defective.

¶41 Finally, our discussion would not be complete without also observing that this case seemingly proves the adage that “no good deed goes unpunished.” In spite of doing what most would agree was honest, responsible, fair and morally correct, American’s reward for “doing the right thing” was the loss of its security interest and any real ability to obtain payment for the loan it made to David. American was determined to be the “stuckee” despite its being the least blameworthy of all of the participants in this unfortunate case.

¶42 Of the players, Madison was in the best position to protect itself. It had constructive and actual knowledge of American’s security interest. Yet, it delivered two checks payable to David and Debra without taking any of the commercially reasonable steps to protect its purchase that are common in these sorts of transactions. Madison could have insisted on the lien release before payment; it could have withheld part of the payment pending the lien release; it could have confirmed the pay-off amount and paid part of the proceeds directly to American; it could have made payment jointly to American to the extent of its security interest; it could have gone with David to American and witnessed the pay-off and obtained a release; or it could have escrowed the payment until the lien release was obtained. Madison did none of these things. Instead, it merely relied on David’s bald assurance that American’s lien would be released.

¶43 Likewise, Valley Bank could have verified that Debra’s endorsement on the Bozeman bank’s check used to purchase the $20,000 cashier’s check was valid. It did not. Then, of course, there are the real culprits, David and Debra, whose scam left Madison, American and Valley Bank all holding the bag.

¶44 In a shoot-out using the weapons of the UCC, there is no guarantee that the survivor will be the party wearing the white hat. Fortunately however, on the facts of this case, the proper application of the code produces not only the correct legal result, but also the one most justifiable from a good public policy, common sense and basic fairness point of view.

¶45 We hold that the District Court’s decision on summary judgment awarding superior rights in the collateral to Madison was in error and must be reversed.

II.

¶46 Did American waive its rights under its written security agreement by acquiescing to David’s sale of the collateral in a manner inconsistent with the terms of the security agreement.

¶47 By way of cross appeal, Madison argues that the District Court erred in not ruling that American waived its rights under its written security agreement and, thus, extinguished its lien by “authorizing” David’s sale of the collateral. Specifically, on July 5, 1994, Debra called American to advise that the loan would be paid off and to obtain the pay-off figure. Jo Ann testified that she answered “good, I’ll tell Della,” when Debra stated that they (presumably David and Debra) were selling off the loader and expected to pay off the loan by Thursday, July 7th. Madison contends that in her July 5, 1994 conversation with Debra, Jo Ann, with knowledge of the troubled history of the loan, with knowledge of American’s security interest, and with knowledge that the security agreement forbade sale of the collateral without written consent, nonetheless acquiesced in the disposal of the collateral without contemporaneously imposing commercially reasonable restrictions on the sale. Moreover, Madison maintains that a secured party authorizes its debtors’ sale of the collateral when it accepts the proceeds from the sale.

¶48 The District Court concluded that American did not in any way consent to the sale and to the extinguishment of its security interest as contemplated by § 30-9-306(2), MCA, by merely cooperating in giving Debra a pay-off figure. We agree with the trial court on this issue.

¶49 Section 30-9-306(2), MCA, provides:

Except where this chapter otherwise provides, a security interest continues in collateral notwithstanding sale, exchange, or other disposition thereof unless the disposition was authorized by the secured party in the security agreement or otherwise, and also continues in any identifiable proceeds including collections received by the debtor.
[T]he theory of subsection 9-306(2) and the other cutoff provisions in the [UCC] is that, if the secured party authorizes the sale, he or she should not legitimately be able to continue to look to the collateral as security. Further, a buyer under such circumstances is justified in believing that the collateral will not be looked to. However, when both the secured party and the buyer of the collateral expect the secured party to continue to look to the collateral as security, neither of those justifications exist. In 1990, the Permanent Editorial Board approved PEB Commentary No. 3 and supplemented the second paragraph of official Comment 3 to Section 9-306; both the Commentary and the supplemented Comment confirm the Editorial Board’s position that a transferee will not acquire the collateral free and clear of the security interest if the secured party authorizes the disposition subject to his or her security interest.

Hawkland, Lord & Lewis UCC Series § 9-306:2 (1997).

¶50 In the case at bar, we cannot conclude that despite whatever knowledge of the history of David’s loan she had at the time, Jo Ann’s comment “good, I’ll tell Della,” in the context in which it was made, could have been construed by anyone as American’s authorization or acquiescence that the loader could be sold free of American’s perfected security interest. In fact, the evidence is overwhelmingly to the contrary. The record gives every indication that Debra, David, Madison and American all understood that David’s loan would be paid from the proceeds of the sale of the equipment to Madison and that the disposition of the collateral was subject to American’s security interest. There is no factual basis in the record here to conclude otherwise.

¶51 Madison also argues that American waived its rights under the security agreement. It is well established, however, that waiver is the voluntary, intentional relinquishment of a known right and will be declared only when the waiving party clearly manifests such an intention. McGregor v. Mommer (1986), 220 Mont. 98, 110, 714 P.2d 536, 543 (citations omitted). The presence of voluntariness and requisite intent are necessarily questions of fact. McGregor, 220 Mont at 110, 714 P.2d at 544. Again, there is no evidence in the record on appeal that American waived its rights under the security agreement. Indeed, the evidence is to the contrary. The trial court’s finding that American did not consent to or authorize the sale of the collateral free of its security interest is supported by substantial evidence and must be upheld.

¶52 Finally, we find no merit to Madison’s argument that American accepted the proceeds from the sale of the collateral and, thus, discharged David’s obligation. As pointed out above, American did not accept the Valley Bank cashier’s check, but, in fact, returned it to Valley Bank. American has never received any of the proceeds of the sale of the collateral.

¶53 We reject Madison’s arguments on its cross appeal and affirm on this issue.

III.

¶54 The judgment against Valley Bank.

¶55 The District Court also rendered summary judgment in favor of Valley Bank and against American on American’s claim of indemnity. While American also appealed from this summary judgment, given our decision as to Issues I and II, this appeal is moot and is properly dismissed with prejudice.

Conclusion

¶56 In summary, we hold that American retained its perfected security interest in the collateral and that its rights are superior to those of Madison. Accordingly, we reverse the District Court’s contrary decision and remand for further proceedings, including the assessment of attorney fees pursuant to § 30-9-511, MCA, and costs against Madison, and for entry of a judgment consistent with this opinion. The appeal against Valley Bank is dismissed with prejudice.

CHIEF JUSTICE TURNAGE, JUSTICES REGNIER, GRAY, HUNT and LEAPHART concur.

      . Whether the $20,000 check was or was not stolen and forged is not relevant to our decision. It is undisputed that at the time American received notification by Valley Bank and returned the check on July 8, both Valley Bank and American were operating on Debra’s statement earlier that same day that the $20,000 check was stolen and forged. That she changed her story seven days later, does not alter the facts on July 8, and it is on those facts that we decide this case.


author: CHIEF JUSTICE TURNAGE

text:
    DALE A. SMITH, Petitioner and Appellant, v. STATE OF MONTANA, DRIVER’S IMPROVEMENT BUREAU, Respondent and Respondent.
    No. 97-189.
    Submitted on Briefs February 18, 1998.
    Decided April 30, 1998.
    1998 MT 94.
    55 St.Rep. 375.
    958 P.2d 677.
    288 Mont. 383.

      For Appellant: Matthew P. Robinson, Bozeman.
    For Respondents: Honorable Joseph P. Mazurek, Attorney General; Micheál Wellenstein, Assistant Attorney General, Helena; Susan Wordal, City Attorney, Bozeman.
   CHIEF JUSTICE TURNAGE

delivered the Opinion of the Court.

¶1 Dale A. Smith was stopped on suspicion of driving under the influence of alcohol (DUI) on December 14,1996. When he refused to submit to a preliminary alcohol screening test (PAST), his Montana driver’s license was suspended pursuant to § 61-8-409, MCA (1995). The Eighteenth Judicial District Court, Gallatin County, upheld the suspension of Smith’s license. Smith appeals.

¶2 The issue is whether a conflict exists among Montana’s implied consent statutes rendering them unconstitutionally vague. In his appellate brief, Smith also argues that the District Court erred in concluding that he was properly advised of the consequences of his refusal to take the PAST. Because Smith did not argue this issue before the District Court, we will not review it on appeal. See State v. Woods (1997), 283 Mont. 359, 372, 942 P.2d 88, 96-97.

¶3 Two City of Bozeman, Montana, police officers observed Smith’s vehicle being driven on a city street without headlights at 1:15 a.m. on December 14, 1996. The officers made a traffic stop, advising Smith, the driver, of the reason. They detected a strong odor of an alcoholic beverage on Smith’s breath. Smith admitted that he had been drinking, and he did not do well on field sobriety maneuvers.

¶4 One of the officers read Smith a warning card which stated:

Your physical test results indicate to me that your ability to operate a motor vehicle safely may have been impaired by the alcohol that you have consumed.
Under Montana Law, I have the right to ask you to take a preliminary breath test to estimate your alcohol concentration level.
You may refuse to take this test. However, if you do, your driver’s license will be suspended for six months. If you have refused to take a similar test in the past 5 years, your driver’s license will be revoked for one year.
I will use the results of this test and the other physical tests to help me decide whether or not you should be arrested for driving (or being in actual physical control of a motor vehicle) while under the influence of alcohol (or drugs).
Will you take a preliminary breath test?

Smith refused to submit to the PAST.

¶5 Smith was arrested and transported to the Gallatin County Detention Center, where he was read the Montana Implied Consent Advisory form and agreed to take the breath test. The result showed a blood alcohol concentration of .158 percent. Smith was then informed that his license was suspended as a result of his refusal to provide a sample for the PAST. He began to argue that he had not been advised, whereupon one of the officers retrieved the advisory card and showed it to him. Smith then acknowledged that the information had been read to him and asked, “Why didn’t you slap me and make me listen to you?”

¶6 Smith petitioned the District Court for review of his license suspension on grounds that the PAST statute, § 61-8-409, MCA (1995), and the implied consent statute, § 61-8-403, MCA (1995), are vague because they are irreconcilable when read together and therefore void. After a hearing, the District Court ruled that § 61-8-409, MCA (1995), is clear and does not conflict with § 61-8-403, MCA (1995). The court ordered Smith’s driver’s license suspended for six months from the date of original seizure, excluding the time in which the license was restored pending the appeal of the suspension. Smith’s driving privileges have been reinstated throughout these proceedings.

Discussion

¶7 Does a conflict among Montana’s implied consent statutes render them unconstitutionally vague?

¶8 As Smith points out, Montana’s “traditional” implied consent law is invoked only after a motorist has been arrested for DUI. See § 61-8-402, MCA (1995). The 1995 Montana Legislature enacted an additional implied consent law providing for the use of pre-arrest PASTs for persons suspected of driving under the influence. This law, codified at § 61-8-409, MCA (1995), requires motorists, upon particularized suspicion, to submit to a portable breath testing device which, if refused, mandates suspension or revocation of the person’s driver’s license just as is provided for a post-arrest breath test refusal.

¶9 Section 61-8-409, MCA (1995), provides:

Preliminary alcohol screening test. (1) A person who operates or is in actual physical control of a vehicle upon ways of this state open to the public is considered to have given consent to a preliminary alcohol screening test of the person’s breath, for the purpose of estimating the person’s alcohol concentration, upon the request of a peace officer who has a particularized suspicion that the person was driving or in actual physical control of a vehicle upon ways of this state open to the public while under the influence of alcohol or in violation of 61-8-410.
(2) The results of a screening test may be used for determining whether probable cause exists to believe a person has violated 61-8-401, 61-8-406, or 61-8-410.
(3) The person’s obligation to submit to a test under 61-8-402 is not satisfied by the person submitting to a preliminary alcohol screening test pursuant to this section.
(4) The peace officer shall inform the person of the right to refuse the test and that the refusal to submit to the preliminary alcohol screening test will result in the suspension or revocation for up to 1 year of that person’s driver’s license.
(5) If the person refuses to submit to a test under this section, a test will not be given. However, the refusal is sufficient cause to suspend or revoke the person’s driver’s license as provided in 61-8-402.
(6) A hearing as provided for in 61-8-403 must be available. The issues in the hearing must be limited to determining whether a peace officer had a particularized suspicion that the person was driving or in actual physical control of a vehicle upon ways of this state open to the public while under the influence of alcohol or in violation of 61-8-410 and whether the person refused to submit to the test.
(7) The provisions of61-8-402 (2) through (7) that do not conflict with this section are applicable to refusals under this section. If a person refuses a test requested under 61-8-402 and this section for the same incident, the department may not consider each a separate refusal for purposes of suspension or revocation under 61-8-402.
(8) A test may not be conducted or requested under this section unless both the peace officer and the instrument used to conduct the preliminary alcohol screening test have been certified by the department pursuant to rules adopted under the authority of 61-8-405(6).

¶10 Smith’s unconstitutionality argument relates to the hearing requirements under the statute. Section 61-8-409(6), MCA (1995), states that “[a] hearing as provided for in 61-8-403 must be available.” Smith points out that a hearing under § 61-8-403, MCA (1995), may include review of whether the person was placed under arrest. But § 61-8-409(6), MCA (1995), limits the issues at the hearing to whether the peace officer had a particularized suspicion to stop the person and whether the person refused to submit to the test.

¶11 We begin with a presumption that statutes are constitutional. Monroe v. State (1994), 265 Mont. 1, 3, 873 P.2d 230, 231. Statutes which impose penalties, however, either criminal or civil, must be clear and explicit, and where such statutes are so vague and uncertain in their terms as to convey no meaning, the courts must declare the penal provisions void. Missoula High School, Etc. v. Superintendent (1981), 196 Mont. 106, 112, 637 P.2d 1188, 1192. A statute may be unconstitutionally vague in two ways: on its face or as applied in a particular situation. State v. Martel (1995), 273 Mont. 143, 149, 902 P.2d 14, 18. Smith claims that § 61-8-409, MCA (1995), is vague on its face and as applied to him. Both claims are based on the perceived inconsistencies mentioned above as to the breadth of hearings on license suspension.

¶12 A statute is void if it fails to give a person of ordinary intelligence fair notice that his contemplated conduct is forbidden. State v. Brogan (1995), 272 Mont. 156, 168, 900 P.2d 284, 291. If the challenged statute is reasonably clear in its application to the conduct of the person bringing the challenge, the statute cannot be stricken on its face for vagueness. State v. Nye (1997), 283 Mont. 505, 514, 943 P.2d 96, 102. Although Smith has cited a number of cases involving vagueness challenges to statutes, he has cited no cases on point as to the type of statutory challenge he makes in this case.

¶13 Section 61-8-409, MCA (1995), clearly and distinctly provides that a person who operates a vehicle upon public ways of the state of Montana is deemed to have given consent to a PAST and that refusal to submit to the PAST will result in the suspension or revocation of that person’s driver’s license for up to one year. We see nothing unclear in that portion of the statute. The instructions given for the PAST clearly stated, ‘You may refuse to take this test. However, if you do, your driver’s license will be suspended for six months.”

¶14 Section 61-8-409(3), MCA (1995), clearly differentiates between a PAST and a test under § 61-8-402, MCA (1995): “The person’s obligation to submit to a test under 61-8-402 is not satisfied by the person submitting to a preliminary alcohol screening test pursuant to this section.” The PAST under § 61-8-409, MCA (1995), is for the limited purpose of estimating a driver’s alcohol concentration and is not substantive evidence of the amount of alcohol present in the driver’s body. State v. Strizich (1997), [286 Mont. 1], 952 P.2d 1365, _. That purpose is different from the purpose of the blood or breath tests under § 61-8-402, MCA (1995): “for the purpose of determining any measured amount or detected presence of alcohol or drugs in the person’s body.” The former assists the peace officer in determining whether there is probable cause to support an arrest, while the latter can be used as substantive evidence in a criminal prosecution to support a conviction of DUI. The issues at hearings on suspensions and revocations under the two statutes are necessarily different; appropriately, the arrest requirement is not present in the instance of a PAST, because that test is administered, based upon particularized suspicion, prior to arrest to help the officer determine if an arrest is warranted.

¶15 Inasmuch as the issues which may be considered at a hearing under subsection (4) of § 61-8-403, MCA (1995), differ from the provisions of § 61-8-409(6), MCA (1995), we rely on the rule of statutory construction that the specific prevails over the general. A particular statutory intent controls over a general one which is inconsistent with it. Section 1-2-102, MCA. Further, when two statutes deal with a subject, one in general and comprehensive terms and the other in minute and more definite terms, the more definite statute will prevail to the extent of any opposition between them. In re Marriage of Jones (1987), 226 Mont. 14, 16, 736 P.2d 94, 95.

¶16 Section 61-8-403, MCA (1995), may fairly be described as a general statute concerning appeals of suspensions and revocations of driver’s licenses under the implied consent laws. While the issues to be considered at a license suspension or revocation hearing are laid out in subsection (4), the statute also deals with other matters relating to such appeals. Subsection (1) sets forth when and where a petition to challenge a license suspension or revocation must be filed. Subsection (2) provides for notice to the state and representation of the state at the hearing. Subsection (3) allows a stay of the suspension or revocation pending the hearing. Subsection (5) states that the right of appeal does not apply when the driver’s license has been seized, suspended, or revoked under tribal law.

¶ 17 Section 61-8-409, MCA (1995), is the specific statute on PASTs, including hearings on license suspension or revocation based upon refusal to submit to a PAST. Section 61-8-409(6), MCA (1995), specifies the issues which may be discussed at a hearing on suspension or revocation of a driver’s license when the suspension or revocation is based upon refusal to submit to a PAST prior to arrest.

¶18 We conclude that Smith has not established a conflict among Montana’s implied consent statutes which renders them unconstitutionally vague either on their face or as applied to him. We therefore affirm the judgment of the District Court upholding the suspension of Smith’s Montana driver’s license.

JUSTICES NELSON, HUNT, LEAPHART and TRIEWEILER concur.


author: JUSTICE HUNT

text:
    GERAMY RANTA, Petitioner, v. STATE OF MONTANA, and MIKE MAHONEY, Warden, Montana State Prison, Respondent.
    No. 97-216.
    Heard October 1, 1997.
    Submitted October 30, 1997.
    Decided April 30, 1998.
    1998 MT 95.
    55 St.Rep. 378.
    958 P.2d 670.
    288 Mont. 391.

      For Appellant: Jeffrey T. Renz, Peter Fashing, Legal Intern, Tara Javid, Legal Intern, School of Law Defender Project, Missoula.
    For Respondent: Joseph P. Mazurek, Attorney General, Jennifer Anders, Assistant Attorney General, Helena; Dennis Paxinos, Yellowstone County Attorney, Billings.
   JUSTICE HUNT

delivered the Opinion and Order of the Court.

¶1 This case comes to the Court on petitioner Geramy Ranta’s petition for post-conviction relief. Ranta challenges the decisions and judgments of the Sentence Review Division of the Montana Supreme Court affirming and increasing his sentences in cause numbers DC 94-639, DC 94-543, and DC 95-278 as unconstitutional on the grounds that the State failed to appoint counsel to represent him in his sentence review. Ranta requests that his original sentences be reinstated. We grant Ranta the relief he requests, but we do so in the context of an extraordinary writ as opposed to granting post-conviction relief.

¶2 Ranta raises the following issues:

¶3 1. Was Ranta denied his right to counsel in violation of Article II, Section 24 of the Montana Constitution and the Sixth and Fourteenth Amendments to the United States Constitution when the Sentence Review Division failed to appoint counsel to represent him during the sentence review process?

¶4 2. Was Ranta denied due process of the law in violation of Article II, Section 17 of the Montana Constitution and the Fourteenth Amendment to the United States Constitution when the Sentence Review Division failed to appoint counsel to represent him during the sentence review process?

¶5 3. Was Ranta denied equal protection of the law in violation of the Fourteenth Amendment to the United States Constitution when the Sentence Review Division failed to appoint counsel to represent him during the sentence review process?

¶6 4. Is Rule 14 of the Rules of the Sentence Review Division authorized by its enabling legislation and unconstitutional?

¶7 Because we determine the first issue to be dispositive, we do not address the remaining issues.

FACTUAL AND PROCEDURAL BACKGROUND

¶8 In 1995 Ranta pled guilty to and was convicted in three separate criminal prosecutions in Yellowstone County: DC 94-639 (criminal mischief), DC 94-543 (burglary and misdemeanor theft), and DC 95-278 (theft). The court sentenced him as follows: in cause number DC 94-639, his sentence was five years; in cause number DC 94-543, his sentence was five years for the offense of burglary and six months for the offense of misdemeanor theft to run concurrently with his sentence for burglary; and in cause number DC 95-278, his sentence was two years. All sentences in the three separate causes were to run consecutively with each other.

¶9 Ranta applied for sentence review before the Sentence Review Division in all three cases, and subsequently appeared at a hearing before the review division on March 8, 1996, seeking reductions in the sentences. At that hearing, the State was represented by the deputy county attorney for Yellowstone County. Ranta, however, who had previously been determined indigent by the District Court, did not have the assistance of counsel. The review division did not inform him that he had a right to be represented by counsel and did not appoint counsel to represent him at the hearing. Instead, it advised him that by appearing at the hearing without retained counsel, he waived any right to an attorney. The review division also advised him that it had the authority to affirm, reduce, or increase his sentences.

¶10 Subsequently, the review division affirmed the sentences imposed in cause numbers DC 94-639 and DC 94-543, and amended the judgment in DC 95-278 by increasing Ranta’s sentence from two years to ten years, to run consecutive to the sentences imposed in the other cases.

JURISDICTION

¶11 Ranta has challenged the decisions of the Sentence Review Division on constitutional grounds by filing a petition for post-conviction relief pursuant to § 46-21-101, MCA. In State v. Torres (1996), 277 Mont. 514, 516, 922 P.2d 1180, 1181, this Court held that a petition for post-conviction relief pursuant to § 46-21-101, MCA, or a petition for other extraordinary writ was the proper procedural mechanism for challenging a decision of the Sentence Review Division. Our conclusion that a petition for post-conviction relief was an appropriate mechanism was based in pairt upon the language of the post-conviction relief statute which provided that in certain circumstances a person could “petition the court that imposed the sentence or the supreme court to vacate, set aside, or correct the sentence. ...” Section 46-21-101(1), MCA (1995). However, that provision of the post-conviction relief statute was amended, effective April 24, 1997. The amendments deleted all provisions that allowed a person to file such a petition directly with this Court. Section 46-21-101(1) MCA (1997). Thus, Torres is no longer controlling to the extent that it holds that filing a petition for post-conviction relief with this Court is a proper mechanism by which to challenge a decision of the Sentence Review Division.

¶12 The proper basis on which this Court is now authorized to address Ranta’s request is solely through a petition for extraordinary relief. Because the Sentence Review Division functions as an arm of this Court, this Court has the supervisory authority to ensure that it complies with statutes and rules governing its operations as well as the Montana Constitution and the United States Constitution. Section 46-18-901(1), MCA; Art. VII, Sec. 2, Mont.Const. Additionally, Rule 17(a), M.R.App.P., codifies this Court’s power to “hear and determine such original and remedial writs as may be necessary or proper to the complete exercise of its jurisdiction.” It is on that basis that we are authorized to review the decision of the Sentence Review Division. We thus accept Ranta’s petition for post-conviction relief as a petition for extraordinary relief pursuant to Rule 17, M.R.App.P. His petition is not being considered as a petition for post-conviction relief.

DISCUSSION

¶13 Was Ranta denied his right to counsel in violation of Article II, Section 24 of the Montana Constitution and the Sixth and Fourteenth Amendments to the United States Constitution when the Sentence Review Division failed to appoint counsel to represent him during the sentence review process?

¶14 When a defendant files an application for review of his sentence before the review division, the review division has the power to affirm, reduce, or increase the sentence originally imposed by the district court. Specifically, § 46-18-904 (1), MCA, states:

[T]he review division shall review the judgment so far as it relates to the sentence imposed, either increasing or decreasing the penalty, and any other sentence imposed on the person at the same time and may order such different sentence or sentences to be imposed as could have been imposed at the time of the imposition of the sentence under review or may decide that the sentence under review should stand.

¶15 During the review process, however, the review division will not appoint counsel to represent indigent defendants. Rule 14 of the Sentence Review Division Rules, which was recently amended effective January 1, 1995, provides in part:

The defendant is not entitled to counsel at the expense of the State of Montana. ... BY REQUESTING A REVIEW OF HIS OR HER SENTENCE BY THE SENTENCE REVIEW DIVISION, AND PROCEEDING WITHOUT AN ATTORNEY, THE DEFENDANT WAIVES THE RIGHT TO BE REPRESENTED BY AN ATTORNEY, AND HIS OR HER SENTENCE MAY BE INCREASED, DECREASED, OR LEFT UNCHANGED BY THE DIVISION.

(Emphasis in original.)

¶16 Ranta appeared at the hearing before the review division, without the assistance of counsel. He contends that he was constitutionally entitled to representation of counsel during the review process because (1) he faced the potential for an increase in sentence, and (2) the lack of counsel to present his case on his behalf prejudiced his attempt to move the review division’s discretion to reduce the sentence. Regardless of which way the issue is analyzed, Ranta argues that potential substantial prejudice was present in the absence of counsel.

¶17 The Sixth Amendment to the United States Constitution and Article II, Section 24 of the Montana Constitution guarantee a criminal defendant the right to counsel in criminal proceedings. This right to counsel arises at every critical stage of the proceedings against him. United States v. Wadsworth (9th Cir. 1987), 830 F.2d 1500, 1510 (citation omitted); State v. Finley (1996), 276 Mont. 126, 144, 915 P.2d 208, 220. Pursuant to Montana’s constitution, this Court has defined a “critical stage” as “ ‘any step of the proceeding where there is potential for substantial prejudice to the defendant.’ ” Finley, 276 Mont. at 144-45, 915 P.2d at 220 (citing State v. Robbins (1985), 218 Mont. 107, 111, 708 P.2d 227, 231). In Robbins, we stated that a defendant may question the court’s failure to appoint counsel “where potential substantial prejudice inheres in the absence of counsel.” Robbins, 218 Mont. at 111, 708 P.2d at 230 (citations omitted).

¶18 This Court has not yet addressed whether sentence review is a critical stage of the proceedings. However, the United States Supreme Court has held that the original sentencing itself is a “critical stage” (Townsend v. Burke (1948), 334 U.S. 736, 740-41, 68 S.Ct. 1252, 1255, 92 L.Ed. 1690, 1693-94), and other state courts have concluded that like the original sentencing, sentence review is also a critical stage. For example, in Consiglio v. Warden, State Prison (Conn. 1966), 220 A.2d 269, 272, the Connecticut Supreme Court held that a hearing before the sentence review division, like the original imposition of sentence, constitutes a critical stage of the proceedings. Just as in Montana, a criminal defendant in Connecticut may apply for a sentence review by the review division. Upon application, the review division is empowered to affirm, reduce, or increase the original sentence. Consiglio, 220 A.2d at 271. The Connecticut Supreme Court likened the process to a limited appeal, but concluded that the entire procedure was sufficiently a part of the original trial, such that the defendant was entitled under the federal constitution to “ ‘the guiding hand of counsel’ ” at that hearing. Consiglio, 220 A.2d at 272 (citing Powell v. State of Alabama, 287 U.S. 45, 69, 53 S.Ct. 55, 77 L.Ed. 158) and n. 1.

¶19 It is of particular significance that in 1967, after the Connecticut Supreme Court had decided the Consiglio case, the Montana State Legislature adopted our sentence review statute from the General Statutes of Connecticut, §§ 51-194 to 51-196. See Commission Comments to Mont. Code Ann. §§ 46-18-901 to 904. In State v. Wilson (1977), 174 Mont. 195, 199, 569 P.2d 922, 924, we stated:

Montana follows the rule of statutory construction where, in borrowing a statute from another state, the legislature borrows the construction placed upon it by the highest court of the state from which it is borrowed. While this Court will consider the construction placed on the borrowed statute, such construction is not binding upon this Court.

(Internal citations omitted); State v. Murphy (1977), 174 Mont. 307, 311, 570 P.2d 1103, 1105 (same). Although the Connecticut Supreme Court was not engaging in statutory construction in Consiglio, but was instead interpreting whether sentence review was a critical stage pursuant to the United States Constitution, we nonetheless find Consiglio to be particularly persuasive.

¶20 Other state courts have similarly concluded that sentence review is a critical stage of the proceedings against a defendant. In Petition of Croteau (Mass. 1968), 234 N.E.2d 737, Croteau had appealed his sentence to the Appellate Division of the Superior Court for the review of sentences, whose jurisdiction was limited solely to reviewing sentences imposed. Like Montana’s review division, that body was empowered to affirm, reduce, or increase the sentence. Croteau, 234 N.E.2d at 738. After a hearing at which Croteau was without counsel, the review division increased his sentence. Croteau, 234 N.E.2d at 738. Like the Consiglio court, the Massachusetts Supreme Judicial Court concluded that pursuant to the Sixth Amendment to the United States Constitution, the review of sentences is a critical stage of the proceedings at which the defendant must be afforded the assistance of counsel, notwithstanding the fact that an appeal for sentence review is optional. Croteau, 234 N.E.2d at 738. The defendant is entitled to counsel to assist him both in deciding whether to appeal and in appearing and presenting his case to the division. Gavin v. Commonwealth (Mass. 1975), 327 N.E.2d 707, 708. Because Croteau was denied his right, he was entitled to be returned to the position he was in before he filed his appeal. Croteau, 234 N.E.2d at 738-39.

¶21 The Supreme Judicial Court of Maine has taken a similar position. The Maine statute also has a system of sentence review that is similar to the procedure followed in Massachusetts, Connecticut and thus Montana. See Stack v. State (Me. 1985), 492 A.2d 599, 601-02 (noting that the Maine and Connecticut statutes were patterned after the Massachusetts sentence review procedure). The court stated:

We agree with the view adopted in Massachusetts and Connecticut that a criminal defendant is entitled to the assistance of counsel throughout the sentence review procedure, including the time when an appeal of sentence is to be filed. ... [W]e conclude that sentence review before the Appellate Division, like the original sentencing itself, is a critical stage of a criminal proceeding, and a defendant is therefore constitutionally entitled to counsel ... in filing an appeal to that body.

Stack, 492 A.2d at 602.

¶22 Although the foregoing cases were analyzed under the United States Constitution, we find them persuasive in analyzing the issue under our own state constitution. We agree with the view that sentence review is a critical stage of the proceedings against a defendant. Like the original sentencing itself, the potential substantial prejudice at the sentence review is not only present, but is enormous. Indeed, in at least one case before Montana’s Sentence Review Division, the dissenting district court judge presiding on the review division wanted the review division to consider imposing the death penalty for the defendant. See State v. Heit (S.R.D. 1993), 263 Mont. 46, 46 (J. Warner, dissenting) (“Judge Warner would have seriously considered the death penalty for this Defendant.”) If facing the potential for further loss of liberty or even one’s life does not constitute potential substantial prejudice, it would be difficult to ever find a circumstance that constitutes a critical stage of the proceedings pursuant to the Montana State Constitution.

¶23 The State does not dispute that the sentence review process is “critical” or that the potential for further loss of liberty constitutes potential substantial prejudice. What it does dispute is whether the Sixth Amendment to the United States Constitution and Article II, Section 24 of the Montana Constitution is the proper framework for analyzing this issue. Citing Douglas v. California (1963), 372 U.S. 353, 83 S.Ct. 814, 9 L.Ed.2d 811, and Ross v. Moffitt (1974), 417 U.S. 600, 94 S.Ct. 2437, 41 L.Ed.2d 341, it argues that the right to counsel guaranteed by the Sixth Amendment and Montana’s counterpart attach only to critical stages of a “criminal prosecution,” which ends at sentencing. It maintains that post-trial proceedings such as a sentence review are not part of the prosecution. It distinguishes Consiglio on the basis that according to the procedure in Connecticut, the review division may substitute its discretion for the discretion of the trial court in imposing a sentence, and in effect conducts a de novo hearing. Consiglio, 220 A.2d at 272. In contrast, the review division under Montana’s procedure may not substitute its discretion for the district court’s. Instead, the sentence imposed by the district court is presumed correct, and the review division will not modify it unless it is clearly inadequate or excessive. Section 46-18-904(3), MCA, and Rule 17, Sentence Review Division Rules. The State reasons that the process in Consiglio is thus a part of the original sentencing procedure and criminal prosecution to which the Sixth Amendment attaches while the process in Montana more closely resembles an appeal.

¶24 Because it reasons that Montana’s sentence review is an appellate process and is not a part of the “criminal prosecution,” the State argues that Ranta’s claim to a right to counsel should be analyzed solely pursuant to the due process clauses of Article II, Section 17 of the Montana Constitution and the Fourteenth Amendment to the United States Constitution and pursuant to the equal protection clause of the Fourteenth Amendment to the United States Constitution, which are the second and third issues Ranta raises. When conducting an analysis pursuant to that constitutional framework, the relevant question is not whether sentence review is a “critical stage,” but instead is whether an application for sentence review constitutes a first appeal granted as a matter of right or whether the sentence review proceeding may result in a significant loss of liberty such that under the particularized facts, the State must provide counsel to ensure effectiveness of the hearing rights guaranteed by due process. See generally, Douglas v. California (1963), 372 U.S. 353, 83 S.Ct. 814, 9 L.Ed.2d 811; Ross v. Moffitt (1974), 417 U.S. 600, 94 S.Ct. 2437, 41 L.Ed.2d 341; Evitts v. Lucey (1985), 469 U.S. 387, 105 S.Ct. 830, 83 L.Ed.2d 821; Gagnon v. Scarpelli (1973), 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656.

¶25 Even were we to accept the State’s analysis insofar as it pertains to the federal constitution, we have repeatedly emphasized that where constitutional provisions are at issue, we refuse to “march lock-step” with the United States Supreme Court, even where the applicable state constitutional provisions are nearly identical to the United States Constitution. State v. Johnson (1986), 221 Mont. 503, 512, 719 P.2d 1248, 1254-55 (holding that the right to counsel afforded by Article II, Section 24 of Montana’s constitution is broader than the right afforded by the Fifth Amendment to the federal constitution). This Court has not established any bright line in the sequence of the proceedings against a criminal defendant to which the right to counsel guaranteed by Article II, Section 24 of the Montana Constitution attaches. Instead, this Court has focused on the potential implication or result that any proceeding has against the defendant. We have held that right to counsel attaches at any “critical stage,” which is defined solely as “ ‘any step of the proceeding where there is potential for substantial prejudice to the defendant.’ ” Finley, 276 Mont. at 144-45, 915 P.2d at 220 (citing Robbins, 218 Mont. at 112, 708 P.2d at 231,). As we have elaborated and the State does not dispute, the potential for an increase in sentence constitutes a “potential for substantial prejudice.” We thus conclude that sentence review is a critical stage of the proceedings.

¶26 We do not agree with the State’s analysis in any event. The State is correct in noting that in Douglas and Ross, the United States Supreme Court analyzed an indigent defendant’s right to counsel on appeal from a conviction pursuant to the due process and equal protection clauses of the Fourteenth Amendment, rather than pursuant to the Sixth Amendment. Douglas, 372 U.S. at 357-58, 83 S.Ct. at 816-17, 9 L.Ed.2d at 814-15 (holding that pursuant to the equal protection clause, an indigent defendant is entitled to counsel on his first appeal provided as a matter of right); Ross, 417 U.S. at 610, 612, 94 S.Ct. at 2443, 2445, 41 L.Ed.2d at 351, 352 (holding that neither the equal protection clause nor the due process clause required the appointment of counsel to an indigent defendant for discretionary state appeals and for application for review in the Supreme Court.) In Ross, the Supreme Court stated that “significant differences” existed between the trial stage of a criminal proceeding, to which the indigent’s right to counsel is fundamental and binding by virtue of the Sixth and Fourteenth Amendments, and the appellate stage. Ross, 417 U.S. at 610, 94 S.Ct. at 2443-44, 41 L.Ed.2d at 351. At the trial stage, the defendant’s attorney acts as a shield to protect him against the State, whereas on appeal, the attorney acts as a sword to upset the determination of guilt. Ross, 417 U.S. at 610-11, 94 S.Ct at 2444, 41 L.Ed.2d at 351. The Supreme Court’s analysis in those cases suggests that an appeal from a conviction is not part of the criminal prosecution to which the Sixth Amendment right to counsel attaches.

¶27 However, sentence review procedure is unique. It does not fit neatly into the category of either only an appeal or only a part of the sentencing procedure. Instead, it has aspects of both. It functions as an appellate process because it is the only opportunity a criminal defendant has to challenge an otherwise lawful sentence on equitable grounds. See State v. Simtob (1969), 154 Mont. 286, 288, 462 P.2d 873, 874. In conducting its review, the Sentence Review Division functions as an arm of this Court. Section 46-18-901, MCA. Were the legislature to abolish the review division, the function of reviewing sentences on equitable grounds would thus simply return to this Court. Additionally, like decisions issued directly by this Court, the decisions of the review division are final, cannot be appealed, and are reported in the Montana Reports. Section 46-18-905, MCA. Finally, an attorney appearing before the review division acts as sword in presenting the defendant’s case, telling his story, and seeking a reduction of a sentence.

¶28 On the other hand, the sentence review process also has aspects that liken it to the sentencing procedure conducted by the district court. It has the authority to impose any sentence that “could have been imposed” by the district court in the first instance, including increasing the sentence, a power that even this Court does not have on appellate review. Section 46-18-904(1), MCA. Moreover, in conducting its review, the review division is not limited to reviewing only those documents that were on record before the district court. Rather, it can “require the production of presentence reports and any other records, documents or exhibits relevant to such review proceedings.” Section 46-18-904(2), MCA (emphasis added). The very fact that the review division is empowered to set a sentence likens it to the sentencing procedure to which the Sixth Amendment right to counsel attaches. See, e.g., Mempa v. Rhay (1967), 389 U.S. 128, 135-37, 88 S.Ct. 254, 257-58, 19 L.Ed.2d 336, 341-42 (Sixth Amendment right to counsel attached to post-trial probation revocation proceeding where the court also set sentencing).

¶29 Additionally, the emphasis that the State has placed upon the distinction between the sentence review process addressed in the Consiglio decision and the process used in Montana is misplaced. The only difference is the standard of review: the review division in Connecticut conducts a de novo standard of review, whereas the review division in Montana presumes that the sentence imposed by the district court is correct. However, the review procedure followed in Montana is similar to that used in Connecticut in that it does not act simply as a reviewing body. It also has the power to impose any sentence that “could have been imposed” by the district court in the first instance, including increasing the sentence. Section 46-18-904(1), MCA. Thus, to the extent the review division has the power to impose any sentence that could have been imposed by the district court, including increasing sentences, we conclude, like the Consiglio court, that sentence review is sufficiently a part of the sentencing procedure to render it a critical stage of the proceedings.

¶30 The State next insists that the right to counsel should be afforded only at the initial stages of the sentence review procedure to assist the defendant in deciding whether or not to file an application for review. Again, we disagree. Counsel is necessary to marshal the facts, introduce evidence of any mitigating circumstances, and fend off the efforts of the State seeking to affirm or even increase the sentence. Counsel can also develop legal arguments which the review division may rectify by an equitable remedy. See, e.g., State v. Hammer (S.R.D. 1991), 251 Mont. 44 (dropping sentence for persistent felon because it was incorrectly calculated); State v. Gardipee (S.R.D. 1990), 246 Mont. 36 (dropping dangerous designation because it was an ex post facto application of statute). In general, the assistance of counsel is necessary to aid and assist the defendant in presenting his case during all stages of the review process.

¶31 Finally, Ranta argues that his appearance at the hearing before the review division did not constitute a valid waiver of his right to his attorney, despite the fact that the review division informed him that pursuant to Rule 14 of the Sentence Review Division Rules, his very appearance did, in fact, constitute such a waiver. At oral argument, the State conceded that it was not taking the position that Ranta had waived his constitutional rights. It is well-settled that a criminal defendant may waive the right to counsel, only when the court ascertains that the waiver is made knowingly, voluntarily, and intelligently. Section 46-8-102, MCA; State v. Craig (1995), 274 Mont. 140, 151, 906 P.2d 683, 690. No evidence indicates that Ranta’s “waiver” by appearing at the hearing was made knowingly, voluntarily or intelligently. Additionally, Ranta could not have waived a right which the review division has insisted he never enjoyed at all. We thus conclude, that Ranta did not waive his constitutional right to be assisted by counsel.

¶32 We hold that Ranta was denied his constitutional right to counsel in violation of Article II, Section 24 of the Montana Constitution during the sentence review procedure, and that as a result he suffered substantial prejudice. To the extent that Rule 14 of the Sentence Review Division states that an indigent criminal defendant does not have the right to the assistance of appointed counsel, that rule is thus unconstitutional. At this time we need not decide whether the appeal to the review division constitutes a first appeal provided as a matter of right or whether the due process or equal protection clauses also guarantee criminal defendants the right to counsel during the review process. We additionally need not decide whether Rule 14 of the Rules of the Sentence Review Division is authorized by its enabling legislation.

¶3 3 In future cases, it is the duty of the review division to inform a defendant of the right to have counsel represent him both in deciding whether to file an application for review and in appearing and presenting his case to the review division.

¶34 IT IS HEREBY ORDERED:

¶35 1. Ranta’s petition for post-conviction relief is accepted as a petition for extraordinary relief pursuant to Rule 17, M.R.App.P.

¶36 2. The decisions and judgments of the Sentence Review Division in cause numbers DC 94-639, DC 94-543, and DC 95-278 are vacated.

¶37 3. The original sentences in the above-referenced cause numbers are reinstated.

¶38 4. The Clerk is directed to mail a copy of this order to Ranta personally, to all counsel of record, and to the Yellowstone County Attorney.

¶39 DATED this 30th day of April, 1998.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, REGNIER, NELSON, LEAPHART and TRIEWEILER concur.