author: MR. JUSTICE HUNT

text:
    DONALD MacDONALD, IV., Trustee In Bankruptcy, Petitioner, v. MARK J. MERCILL and Sue A. Mercill, Debtors/Respondents.
    No. 86-225.
    Submitted on Briefs Aug. 29, 1985.
    Decided Feb. 10, 1986.
    714 P.2d 132.

      Joan B. Newman, Missoula, for petitioner.
    William R. Baldassin, Missoula, for debtors/respondents.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

This matter is before this Court upon certification by the United States District Court, District of Montana, Butte Division, the Honorable W. D. Murray, that the question upon which adjudication is sought is controlling in federal litigation. This case originated in United States Bankruptcy Court and was appealed to the United States District Court. The certified question is as follows:

“Is a backhoe and/or a flatbed trailer exempt from the bankruptcy estate of a debtor under Section 25-13-612(l)(b), MCA, where the debtor is a self-employed excavation contractor and where the debtor could not remain an excavation contractor without the backhoe and trailer but could seek employment from others as a backhoe operator without such items?”

We answer in the affirmative.

The facts are not in dispute. The parties have stipulated that the respondent, Mark Mercill, is a self-employed excavation contractor. He would not be able to continue his business as an excavation contractor without his backhoe and trailer. He does have skill in the operation of a backhoe that would permit his employment by others as an operator.

Montana has “opted out” of the federal list of exemptions contained in 11 U.S.C. Section 522(d) by enacting Section 31-2-106, MCA, which provides:

“31-2-106. Exempt property — bankruptcy proceeding. No individual may exempt from the property of the estate in any bankruptcy proceeding the property specified in 11 U.S.C. 522(d) except property exempt from execution from judgment as provided in Title 25, Chapter 13, part 6.

The relevant portion of Title 25, Chapter 13, part 6 applying in this case is Section 25-13-612(1) (b), MCA, which provides:

“25-13-612. Property necessary to carry on trade or profession.
“(1) In addition . . . there shall be exempt to all judgment debtors the following property:
“(a) . . .
“(b) to a mechanic or artisan: tools or implements necessary to carry on his trade;”

The parties agree that the respondent, debtor, is a mechanic within the meaning of this statute.

The question presented can be divided into two issues:

1) Whether a backhoe and trailer are tools or implements within Section 25-13-612(l)(b), MCA.

2) Whether such tools or implements are necessary for the debtor to carry on his trade within Section 25-13-612(1) (b), MCA.

Before reaching the issues we note two things. First, the exemption statutes in Montana were originally enacted in 1895. There have been few amendments since that time. The language contained therein is of “horse and buggy” vintage. The intent of the statutes is the same today as it was when they were enacted but it may be time for the legislature to consider bringing the statute up to date. Second, the statute applies to judgment debtors as well as bankruptcy debtors. We believe that the policies underlying exemptions from judgment debtors and bankruptcy debtors may differ, yet, because the same exemptions apply to both, our construction must be done with both in mind.

The first issue is whether a backhoe and trailer are tools or implements within the meaning of those terms as used in Section 25-13-612(l)(b), MCA. The Bankruptcy Court held that a backhoe and trailer are implements. It reasoned that “tools” and “implements” have a recognized distinction — a “tool” is more commonly defined as an instrument of manual operation as compared to an appliance moved by machinery, while an “implement” is more inclusive, being an item reasonably fitted or employed as a means of making labor more effective.

We have reviewed the law of other jurisdictions and we agree with the statement at 31 Am.Jur.2d Exemptions Section 58:

“It would serve no useful purpose to attempt an exhaustive enumeration of the many articles of property which the various courts have declared exempt, or otherwise, as tools or implements .... The number of such articles is very great and the range quite wide, extending from small and simple handtools to large, expensive, and more or less complicated machines.”

The particular code section in issue here does not define tool or implement. A dictionary defines tool as any implement used by a craftsman or laborer at his work, an instrument employed in manual labor for facilitating mechanical operations, the cutting part on various machines driven by power such as a drill or lathe, or the entire machine. New Webster’s Dictionary 1621 (College ed. 1975). A tool is an instrument of manual operation, that is, an instrument to be used and managed by the hand instead of being moved or controlled by machinery. Black’s Law Dictionary 1660 (rev. 4th ed. 1968).

A dictionary defines implement as an instrument, tool, or utensil, or an article assisting in carrying on manual labors. New Webster’s Dictionary 755 (College ed. 1975). Implements are such things as are used or employed for a trade, particularly applied to tools, utensils, instruments of labor, as the implements of trade or of farming. Black’s Law Dictionary 579 (rev. 5th ed. 1979). Section 61-1-121, MCA, on definitions of motor vehicles, defines an “implement of husbandry” as including every vehicle which is designed for agricultural purposes. Therefore, in the field of agriculture, the legislature has determined that an implement includes a vehicle. Tractors and trailers are vehicles. See Sections 61-1-109 and 61-1-111, MCA. This use of the term “implement” demonstrates that it may include a relatively large, complicated, and expensive item — a machine or a piece of equipment — in certain contexts.

It is true that the exemption statutes contain some indication that the legislature did not intend to protect a debtor’s possession of a relatively large, complicated, and expensive item such as a machine or a piece of equipment. The value of the backhoe and trailer in this case is estimated at about $37,000. It is possible that a similar fact situation could present itself in a bankruptcy exemption case where the value of “exempt” property could approach or exceed $100,000 — a bulldozer or drilling rig, for example. We also note that backhoes, bulldozers, and similar items need trailers for hauling and trailers need trucks and tractors for mobility. The statutes on property exempt from execution, Sections 25-13-601 through 25-13-617, MCA, do, in some areas, place a ceiling on the dollar value of the item exempted, e.g., mining exempt property, $1,000, Section 25-13-612(l)(e) and truck or automobile, $1,000, Section 25-13-617(1). No dollar limit is specified in Section 25-13-612(l)(b), MCA, the code section applicable here, and, absent guidance by the legislature, it would be improper for this Court to place a dollar value ceiling on the relevant exempt property.

We said in State ex rel. Bartol v. Justice of the Peace Court (1936), 102 Mont. 1, 55 P.2d 691, quoting from 2 Freeman on Executions 3d Section 226, 1212, that:

“[A] machine may be exempt from execution as a tool or implement .... The difficulty is in formulating some test by which to determine when it is exempt .... The earlier cases incline to suggest the simplicity of construction . . . Perhaps the capacity of the debtor to use it by his own personal strength or skill, without the aid or assistance of other machinery or motive power, is a better test.”

Bartol, 55 P.2d at 693-694.

But times have changed and we must leave Bartol to describe a simpler time with simpler tools and implements. Today a tool is still a powered or unpowered item designed to be used by mechanics or artisans to perform a task and is manageable in size and weight so that in its normal operation it can be maneuvered or used by the operator’s physical strength alone without the aid of independent motive powers and it is liable to be more expensive and require more skill. The definition includes common hand tools and common powered hand tools such as drills, wrenches, saws, but also includes larger industrial items that maybe mounted on a dolly or are pushed around on wheels or are stationary in normal operation such as table saws, lathes, and welders.

Implements include tools but also more. An implement is a powered or unpowered item designed to be used by a mechanic or artisan to perform a task. It may include an item that cannot be in its normal operation maneuvered by the operator’s physical strength but must be used with the aid of independent motive powers.

It is the law in this state that the exemption statutes are to be liberally construed but such construction may not disregard plain legislative mandate. Bartol, 55 P.2d at 693. Because the legislature has specified no ceiling on dollar value in the exemption of “tools or implements,” because the legislature has used the word implement to include “any vehicle,” including tractors and trailers, in “implements of husbandry,” and because a liberal construction of the definitions of “tools and implements” set forth above dictates, we hold that a backhoe and trailer are properly tools or implements within the meaning of Section 25-13-612(1) (b), MCA.

The second issue is whether a backhoe and trailer, as tools or implements, are necessary for the debtor to carry on his trade. The Bankruptcy Court held that the backhoe and trailer are necessary for the debtor to carry on his trade. It reasoned that “necessity” turns on whether there is an alternative means available to the debtor to perform his job as a mechanic. It did not agree that there were alternatives here and it also reasoned that, in this “machine” age, capital equipment of great value may be essential to one’s livelihood. It reasoned that the exemption statute was intended to apply to the wage-earner as well as the self-employed.

The parties agree that the debtor here is an excavation contractor and the backhoe and trailer are necessary to carry on that business. We believe that the requirement of necessity is met and that simply because the backhoe and trailer are not necessary to the debtors obtaining employment is not relevant. Section 25-13-612, MCA, does not provide for a contingency which says that a showing that the ability to obtain work without such items should negate the exemption. We hold that the backhoe and trailer, as tools or implements, are necessary for the debtor to carry on his trade as excavation contractor.

The certified question is answered in the affirmative.

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


source: Caselaw Access Project

author: MR. JUSTICE GULBRANDSON MR. JUSTICE MORRISON,

license: Public Domain

text:
    ZENA BISSETT, Plaintiff and Appellant, v. DMI, INC., d/b/a Empire Bar, Severo Romero, d/b/a Arcade Bar, Linda Oblander, d/b/a the Scoop, and Robert Brust, d/b/a/ Drifter’s Tavern, Defendants and Respondents.
    No. 85-250.
    Submitted Sept. 26, 1985.
    Decided Feb. 10, 1986.
    Rehearing Denied May 13, 1986.
    717 P.2d 545.

      Kelleher Law Office, Robert L. Kelleher, Jr., argued, Billings for plaintiff and appellant.
    Herndon, Harper & Munro, Rodney T. Hartman, argued, English & Lee, H. Elwood English, Crowley Law Firm, Donald Harris, Billings, for defendants and respondents.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Zena Bissett, plaintiff and appellant, appeals from a summary judgment entered for defendants in the Yellowstone County District Court. The District Court determined that the plaintiff’s complaint did not state a claim because her acts of drinking alcoholic beverages, rather than the defendants’ acts of serving them, proximately caused the accident resulting in plaintiffs injuries. We vacate and remand.

The plaintiff was born March 27, 1965, making her eighteen years old on November 2, 1983, the date of the accident giving rise to this litigation. That evening, after drinking several beers at a friend’s apartment and in a car, she and the friend went to four bars in the City of Billings, Montana. Beginning at about 5:30 p.m., they went to the Empire Bar, then to the Arcade Bar, The Scoop and lastly to the Drifter’s Tavern, arriving there at about 8:00 p.m. The plaintiff and her friend consumed drinks at each establishment. Her friend, not a minor, purchased all of the drinks.

Plaintiff suffered a blackout while at the Drifter’s Tavern. Before the blackout, her friend purchased a pitcher of beer with her standing next to him. He then left and, apparently, returned later in the evening.

They left the Drifter’s Tavern at about 11:30 p.m. Plaintiff got into her car and proceeded to drive her friend home. About one mile down the road, she drove the car off the Sixth Street overpass, sustaining serious injuries. Her blood alcohol content at the time she was admitted to the hospital that evening was between .23 and .24 percent.

Plaintiff’s amended complaint, filed on June 25, 1984, alleged that defendants, the four bars where she consumed alcoholic beverages, unlawfully furnished those beverages to her, thus proximately causing her injuries in the accident. The District Court granted defendants’ motions for summary judgment and entered a final judgment dismissing plaintiff’s complaint.

Several facts are in dispute. For instance, the Empire Bar specifically denies serving alcoholic beverages to plaintiff and, on appeal, raises the issue of whether she is in fact a minor. For the purpose of this appeal from the granting of summary judgment to defendants, we view the disputed facts in a light most favorable to plaintiff. Therefore, we assume she was present in defendants’ taverns and that they served her alcoholic beverages.

Plaintiff raises one issue:

Is a tavern operator, which serves an intoxicated minor, liable in damages for injuries later sustained by that minor in a motor vehicle accident?

Defendant, D.M.I., Inc., d/b/a Empire Bar, raises an additional issue:

Was plaintiff a minor protected by the statutes at issue?

Plaintiff argues that the defendants are negligent per se for serving an intoxicated minor in violation of Sections 16-3-301,16-6-304, and 16-6-305, MCA, of the Montana Alcoholic Beverage Code. Section 16-3-301(2), MCA, prohibits:

“. . . any licensee, his or her employee or employees, or any other person to sell, deliver, or give away or cause or permit to be sold, delivered, or given away any alcoholic beverage to:
“(a) any person under 19 years of age;
“(b) any intoxicated person or any person actually, apparently, or obviously intoxicated.”

Section 16-6-304, MCA, states:

“(1) No store manager, retail licensee, or any employee of a store manager or retail licensee may sell any alcoholic beverage or permit any alcoholic beverage to be sold to any person apparently under the influence of an alcoholic beverage.
“(2) No person may give an alcoholic beverage to a person apparently under the influence of alcohol.”

Section 16-6-305, MCA, provides, in part:

“(1) Except in the case of an alcoholic beverage given to a person under 19 years of age by his parent or guardian for beverage or medicinal purposes or administered to him by his physician or dentist for medicinal purposes or sold to him by a vendor or druggist upon the prescription of a physician, no person shall sell, give, or otherwise supply an alcoholic beverage to any person under 19 years of age or permit any person under that age to consume an alcoholic beverage.”

In Nehring v. LaCounte (Mont. 1986), [219 Mont. 463,] 712 P.2d 1329, 43 St.Rep. 93, decided after this plaintiff appealed the District Court’s ruling, this Court declined to hold that violations of Sections 16-3-301 and 16-6-304, MCA, constituted negligence per se. Nehring concerned a tavern operator’s liability to a third party injured by a patron of the bar who had been served alcoholic beverages prior to the injury-producing accident. After considering the legislative purpose of the alcoholic beverage control statutes, this Court held that they furnished a standard with which to measure negligence or due care and that a violation of those statutes is evidence of negligence rather than negligence per se. Nehring, supra. This holding in Nehring controls in the case at bar. Accordingly, we hold that a violation of the alcoholic beverage control statutes by these defendants would be evidence of a failure to use due care.

The plaintiff in this case notes the presence of a third applicable statute, Section 16-6-305, MCA. The same reasoning applies to this statute that applies to those at issue in Nehring, since it is part of the same alcoholic beverage control code. A violation would be evidence of negligence on the part of the tavern operator.

Defendants argue that plaintiff’s actions of voluntarily consuming alcoholic beverages, rather than their serving of the beverages, proximately caused the resulting damages. This Court addressed a similar argument involving injury to the imbiber on two prior occasions. In Folda v. City of Bozeman (1978), 177 Mont. 537, 582 P.2d 767, and Swartzenberger v. Billings Labor Temple Ass’n (1978), 179 Mon. 145, 586 P.2d 712, we held that the voluntary intoxication of the imbiber constituted contributory negligence which barred recovery from those who furnished the alcoholic beverages. These cases are distinguishable in that they relied on contributory negligence which has been replaced by comparative negligence. Under comparative negligence, it is for the jury to determine the degree of negligence attributable to the plaintiff and the defendants. Reed v. Little (Mont. 1984), [209 Mont. 199,] 680 P.2d 937, 41 St.Rep. 644. Neither a plaintiff’s nor a defendant’s acts has to be the sole proximate cause of the injuries. To the extent Folda, 177 Mont. 537, 582 P.2d 767, and Swartzenberger, 179 Mont. 145, 586 P.2d 712, imply that the imbiber’s act of drinking is the sole proximate cause of any resulting injuries, they are overruled.

In the discussion of contributory negligence, both cases noted that the imbibers act of drinking intervened and became the proximate cause of the resulting injuries. An intervening cause does not serve to relieve a defendant’s liability where that cause “is one which the defendant might reasonably anticipate under the circumstances.” Nehring, supra, citing Deeds v. United States (D. Mont. 1969), 306 F.Supp. 348, 361. In the case at bar, we assume for summary judgment purposes that the plaintiff was an intoxicated minor at the time of the defendants’ possible negligence. We hold, in accord with Nehring, supra, that her acts of drinking alcoholic beverages served to her and then becoming involved in an injury-producing accident, may be reasonably foreseeable events which may no longer protect a defendant from liability for negligence.

Defendant Empire Bar raises an additional issue on appeal; whether plaintiff, age eighteen years and seven months on the evening of the accident, was a minor for the purposes stated in the alcoholic beverage control statutes. Art. II, Section 14 of the Montana Constitution provides:

“A person 18 years of age or older is an adult for all purposes, except that the legislature or the people by initiative may establish an age of not more than 19 as the legal age for consuming or possessing alcoholic beverages.”

Sections 16-3-301,16-6-304, and 16-6-305, MCA, placed the legal age for consuming or possessing alcoholic beverages at 19 years of age. Plaintiff had not yet reached her nineteenth birthday on the date of the incident. We hold that plaintiff was clearly a minor within the meaning of these statutes.

We therefore vacate the judgment of the District Court and remand for further proceedings.

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

MR. JUSTICE MORRISON,

specially concurring and dissenting:

I would affirm the granting of summary judgment in favor of defendant but for different reasons than those given by the District Court. By way of special concurrence, this Opinion comments on the general subject of the liability of one who sells alcoholic beverages.

Much misinformation has been publicly disseminated with respect to this Court’s holding in Nehring v. LaCounte (Mont. 1986), [219 Mont. 263,] 712 P.2d 1329, [43] St.Rep. [93], Inadequate reporting, poorly informed editorial comments, and propaganda dispensed by lobbyists for the Montana Tavern Association have led to the confusion. Perhaps the Court’s opinion in Nehring inadequately explained the basis of liability but appellate opinions are necessarily written for those trained in the law and they assume a certain amount of legal understanding. I believe it is in the public interest to provide a basic discussion of the legal premise rendering a tavern operator liable for an automobile accident.

The majority opinion in this case sets forth the statutory provisions making it unlawful for a retail licensee to sell alcoholic beverages to any intoxicated person. The duty to refrain from selling to intoxicated persons was created by the legislature, not by the courts. If a tavern operator sells to an intoxicated person, that tavern operator violates the law. Under well-established legal principles, which have been with us since we became a State, one who acts unlawfully (negligently) and causes injury to another is liable for that harm. The only remaining question is whether the negligence in selling to an intoxicated person is one of the causes of injury to some person.

Prior to the decision in the Nehring case, the Montana court system had insulated taverns from liability by holding that the act of the drunk driver in causing the accident was an intervening act which protected the tavern owner. No real explanation for the holding was given. In fact, such a holding was contrary to basic well-established legal principles governing causation.

Where a tavern is sued by a person injured in an automobile accident, the first determination that must be made is whether the tavern violated the law by serving an intoxicated person. If the injured person can show that the tavern operator served an intoxicated person and was therefore negligent, the next question that must be answered is whether that negligence was a cause of the accident. The contention put forth on behalf of the tavern is always that the act of the drunk driver in crossing the center line (or whatever other action may have caused the accident) was an intervening act terminating the causal connection between the tavern’s negligence and the injury to the plaintiff. In determining whether the act of the drunk driver in fact cut the chain of causation thereby terminating any liability of the tavern, the courts must look to the Montana law governing whether intervening acts supersede original negligence.

The law which applies to making such a determination is well established in Montana although an exception had previously been made for tavern owners. If the intervening act (the act of the drunk driver in causing the accident) was an act which was foreseeable on the part of the one selling drinks in violation of the law then the liability of the seller would continue. If the act of the drunk driver was not foreseeable by the seller the liability for negligence in making the sale would be terminated by the intervening act of the drunk driver.

The tavern, therefore, remains liable for the original negligence in making the sale to the intoxicated person when the tavern operator, at the time of the sale, can foresee that sale of the alcoholic beverage to the intoxicated person may well result in an automobile accident. Only when the injured person can sustain this very difficult burden of proof will the tavern be liable.

The drunk driver remains liable for the plaintiff’s injuries. The drunk driver can also be prosecuted for aggravated assault or, in the event of death, for homicide. Responsibility of the driver for his or her act is not lessened under our holding in the Nehring case.

It is true that the tavern, if found to be some part of the cause, can be held liable for damages. Under the laws of contribution, the tavern owner’s insurance company can apportion the injured person’s loss between the tavern owner’s insurance company and the insurance company covering the drunk driver. This is accomplished by determining the amount of negligence each contributed, by percentage, to the plaintiffs injuries. Therefore, if the tavern was found to be 10 percent of the cause and the drunk driver 90 percent of the cause, the loss would be apportioned between the two insurance companies on that basis. However, the injured person can, if he wishes, collect 100 percent of his loss against the drunk driver, or, for that matter, against the tavern. The apportionment of the loss between the two is handled separately and, under the law of joint and several liability, has no effect upon the plaintiff. If the drunk driver is uninsured, and is without personal assets, apportionment is made between the injured person’s uninsured motorist’s coverage and the tavern owner’s liability insurance policy.

I wish to emphasize that the Supreme Court created no new duties for tavern owners in the Nehring case. The duty was created by the legislature. This Court refused to impose immunity for tavern owners and determined that their unlawful acts would be judged on the same basis as the unlawful acts of all other citizens.

I dissent to the holding in this case and would affirm the granting of summary judgment by the trial court. In the Nehring case we allowed the case to go forward and be tried to a jury because there was evidence that the acts of the tavern in serving an intoxicated person may have concurred with the acts of the drunk driver in causing the accident there in question. In the Nehring case an innocent third person was killed and the lawsuit was brought by the survivors of that innocent third person. In this case, action is being instituted by the drunk driver seeking to recover for her injuries brought about as a result of the negligence of the tavern in violating the law. While there is evidence that the tavern served the plaintiff in an intoxicated condition and that negligence may have been a contributing cause of the accident, I would find the primary cause of the accident to be the act of the drunk driver, in this case the plaintiff herself.

Under Montana law, the plaintiff cannot recover against the defendant if the plaintiff’s negligence is more than the negligence of the defendant. In this case, I would find that the injured plaintiff was, as a matter of law, more responsible for her own injuries than was the tavern which served her the alcoholic beverages.

I think this same result should follow in nearly every case where the injured person is the intoxicated driver. It is difficult for me to contemplate a fact situation where the drunk driver plaintiff would not be more responsible for his or her own injuries than the tavern that served the intoxicating beverages. Perhaps if an intoxicated person were in a totally helpless state and the tavern owner helped them to their car, turned the ignition key, and pushed them down the road, a different result would follow. Barring such an extreme fact situation, I believe the Court should find as a matter of law that the negligence of the drunk driver exceeds that of the tavern and deny recovery to the drunk driver for his or her own injuries.

MR. JUSTICE HARRISON concurs in the foregoing dissent of MR. JUSTICE MORRISON.


author: MR. JUSTICE GULBRANDSON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. GARY JOSEPH SWAN, Defendant and Appellant.
    No. 85-299.
    Submitted on Briefs Sept. 12, 1985.
    Decided Feb. 11, 1986.
    713 P.2d 1003.

      Neil M. Leitch, Missoula, for defendant and appellant.
    Mike Greely, Atty. Gen., John Paulson, Asst. Atty. Gen., Helena, Robert Deschamps, III, Co. Atty., Michael Sehestedt, Deputy Co. Atty., Missoula, for plaintiff and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

Gary Joseph Swan, the defendant, appeals the revocation of his suspended sentence. Defendant claims that he was denied due process when he was not afforded a preliminary or probable cause hearing prior to the probation revocation hearing; that he was denied due process when the State filed charges in District Court; and that Section 46-23-1013, MCA, setting forth a District Court’s action after the arrest of a probationer for a probation violation, is unconstitutional. We affirm the revocation of defendant’s probation.

On September 30, 1982, the Missoula County District Court sentenced defendant to a term of 49 Vz years in the Montana State Prison for the crime of attempted sexual intercourse without consent. The District Court suspended all but the time defendant had served under an earlier conviction which had been reversed and remanded by this Court. State v. Swan (1982), 199 Mont. 459, 649 P.2d 1297. He was then placed on probation.

A Chouteau County deputy sheriff arrested the defendant on May 17, 1984, after the defendant’s niece reported that he had forced her to have sexual intercourse with him. The District Court file does not contain any information about the subsequent proceedings in Chouteau County. Defendant states that he was charged with the offense of sexual intercourse without consent and remained in custody pending trial. Apparently, this charge was dismissed on December 3, 1984.

On November 27, 1984, a deputy county attorney for Missoula County filed a petition to revoke defendant’s probation, alleging that defendant had violated the terms of his probation by committing the offense of sexual intercourse without consent. He also filed an affidavit in support of the petition setting forth in detail the allegations against defendant. The District Court then issued a bench warrant for defendant’s arrest. The defendant was arrested and taken to Missoula County jail on November 30, 1984 and brought before the District Court and advised of his rights regarding the petition on December 3, 1984. At this time he requested that counsel be appointed. Defendant and his court appointed counsel appeared before the District Court on December 10, 1984, and again on December 12, 1984 where he denied the allegations of the petition. The case was then referred to a sentencing judge for further proceedings.

On January 3, 1985, Judge Harkin held a status conference with the parties. The District Court granted the defendant’s motion for more time to review the evidence. On January 15, 1985, defendant filed a motion to dismiss for failure to afford him due process, a motion to require the complaining witness to be present at the revocation hearing an a petition for writ of habeas corpus. The District Court held a hearing to consider the motions and petition. The court denied defendant’s request to be released, finding that defendant had been afforded a preliminary showing of probable cause at the time the court examined the State’s petition and affidavit. At that hearing, held on January 17, 1985, counsel for the defendant declined the court’s offer to hear and determine the sufficiency of the evidence indicating probable cause. The District Court then held the revocation hearing on January 29 and 30, 1985, and concluded defendant had violated his probation. His suspended sentence was revoked and he entered the State Prison to serve the balance of his sentence.

Defendant raises three issues on appeal:

(1) Whether he was denied due process when he was not afforded a preliminary or probable cause hearing prior to his probation revocation hearing.

(2) Whether he was denied due process when the State filed charges against defendant in District Court.

(3) Whether Section 46-23-1013, MCA, is unconstitutional.

In the first issue, defendant contends that he was not granted a prompt, on-site preliminary hearing on whether probable cause existed to hold him for probation revocation proceedings. He evidently reads Morrissey v. Brewer (1972), 408 U.S. 471, 92 S.Ct. 2593, 33 L.Ed.2d 484, and Gagnon v. Scarpelli (1973), 411 U.S. 778, 93 S.Ct. 1756, 36 L.Ed.2d 656, as requiring a preliminary hearing immediately after his arrest for the felony, even though no petition to revoke his probation was filed until about six months later. This approach confuses the procedural rights which arise following an arrest for an offense and those which arise following an arrest pursuant to a petition to revoke probation. The arrest and subsequent detention for the underlying offense is not at issue in this appeal and the facts relevant to that arrest and detention are not in the record. Our inquiry begins with the filing of the petition to revoke defendant’s probation on November 27, 1984, and concerns the procedural rights due after the filing of such petition.

Defendant relies heavily on Morrissey and Gagnon, supra, which set out the due process requirements generally applicable to proceedings to revoke probation or parole. The minimum due process requirements for revoking parole include:

“(a) written notice of the claimed violations of parole; (b) disclosure to the parolee of evidence against him; (c) opportunity to be heard in person and to present witnesses and documentary evidence; (d) the right to confront and cross-examine adverse witnesses (unless the hearing officer specifically finds good cause for not allowing confrontation); (e) a “neutral and detached” hearing body such as a traditional parole board, members of which need not be judicial officers or lawyers; and (f) a written statement by the factfinders as to the evidence relied on and reasons for revoking parole.

Morrissey, 408 U.S. at 489, 92 S.Ct. at 2604, 33 L.Ed.2d at 499. Gagnon, 411 U.S. at 786, 93 S.Ct. at 1761-1762, 36 L.Ed.2d at 664, extended these requirements to probation revocations; held that the state was not required to provide counsel for indigents in all probation revocation proceedings; and held that a defendant was entitled to a preliminary hearing on probable cause in addition to the final hearing on revocation. In Petition of Meidinger (1975), 168 Mont. 7, 539 P.2d 1185, this Court noted that Morrissey and Gagnon involved decisions of administrative boards rather than a judicial decision by the sentencing judge as authorized by statute. Montana’s method of probation revocation thus “provides an inherent sort of fairness which is not achieved through a solely administrative process.” Meidinger, 168 Mont. at 13, 539 P.2d at 1189. In Meidinger, we held that a preliminary hearing was not necessary to insure protection of the rights of the accused where no detention of the accused occurred. The issue of whether such a hearing is required under Montana’s method where detention has occurred was not addressed.

The purpose of the preliminary hearing is to determine whether there is probable cause to believe that the accused committed a probation violation. Owens v. Risley (Mont. 1985), [217 Mont. 35,] 702 P.2d 1, 42 St.Rep. 1000. The reason for holding this hearing in addition to the revocation hearing is due to a concern for promptness. “There is typically a substantial time lag between the arrest and the eventual determination by the parole board whether parole should be revoked.” Morrissey, 408 U.S. at 485, 92 S.Ct. at 2602, 33 L.Ed.2d at 496. The requirement that it be at or near the place of the alleged violation stems from “the possibility of any mistake or misunderstanding which might arise and the concomitant hardship resulting from returning the parolee to prison.” Chilembwe u. Wyrick (8th Cir. 1978), 574 F.2d 985, 987, cited in Owens, 702 P.2d at 2, 42 St.Rep. at 1002. Morrissey also states that due process requires an independent decision maker, not necessarily a judicial officer, notice of the place and purpose of the hearing and the alleged violations.

Montana’s system for dealing with probation violations is set forth in Sections 46-23-1012 and -1013, MCA. A defendant is taken into custody when a court issues a warrant for the arrest of the defendant for violation of conditions of probation. A warrantless arrest can occur only when the defendant is given a written statement about the circumstances of the violation. After the defendant has been detained, he is brought before the court “without unnecessary delay for a hearing on the violation charged.” Section 46-23-1013(1), MCA. No two-stage hearing process is necessary under this system because the reasons for having a preliminary hearing are absent. The revocation hearing is held promptly, before a defendant is returned to prison. The. defendant receives notice of the hearing and of the alleged violations. Finally, the hearing is held before a judge, rather than an administrative body, providing additional protection for the defendant.

There is no question here that the revocation hearing satisfies the requirements of Morrissey and Gagnon, supra. In the case at bar, the defendant was afforded the process contained in the statutes. In addition, he was represented by court appointed counsel. At his third appearance, four weeks after his transfer to Missoula County jail, defendant’s counsel declined the District Court’s offer to hear evidence concerning lack of probable cause to hold defendant on the alleged violation. The District Court also noted that the issuance of the bench warrant after an examination by an impartial judicial officer of the affidavit and petition afforded the defendant a preliminary showing of probable cause. Under these circumstances, we hold the defendant was not denied due process for the State’s failure to provide an appearance denominated as a preliminary or probable cause hearing.

In his second issue, the defendant contends that the filing of a petition and affidavit to revoke probation in District Court circumvents the process due defendant. This procedure afforded him the same judicial determination of probable cause that an unconvicted defendant receives in a criminal proceeding. There is no reason to afford a probationer any more due process than that which is guaranteed to an unconvicted defendant. We hold that the statutory procedure which was followed here, did not deny defendant due process.

Defendant challenges the constitutionality of Section 46-23-1013, MCA, for not specifically providing a preliminary hearing in his final issue. This statute sets forth the procedure to follow after the arrest of a probationer for a violation of his probation. As we held above, this statutory procedure affords due process to the defendant. Therefore, Section 46-23-1013, MCA, is not unconstitutional.

The decision of the District Court is affirmed.

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


author: MR. JUSTICE MORRISON

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. LEE TECCA, Defendant and Appellant.
    No. 85-477.
    Submitted on Briefs Jan. 9, 1986.
    Decided Feb. 11, 1986.
    Rehearing Denied March 11, 1986.
    714 P.2d 136.

      Knuchel & McGregor, Karl Knuchel, Livingston, for defendant and appellant.
    Mike Greely, Atty. Gen., Kathy Seeley, Asst. Atty. Gen., Helena, Wm. Neis Swandal, Co. Atty., Livingston, for plaintiff and respondent.
   MR. JUSTICE MORRISON

delivered the Opinion of the Court.

Defendant Lee Tecca appeals his July 30, 1985, jury conviction in the District Court of the Sixth Judicial District on one count of felony sexual assault. We affirm.

On the evening of November 8, 1984, the prosecutrix, N.L., stayed overnight with her friend, Cindy Tecca, at the Tecca residence. Defendant had recently finished a term with the Air Force and was living in the Tecca home at the time. N.L. was eleven years old and defendant 23 years old. Defendant was born of Mrs. Tecca’s previous marriage, and is a half-brother to Cindy, as well as the other Tecca children.

About 8:00 p.m. that evening, defendant brought a six-pack of beer home and took the beer downstairs where Cindy and N.L. were playing. Both girls began drinking beer. About 9:00 p.m., defendant, Cindy, and N.L. left the house to go driving. Mrs. Tecca was studying in her bedroom, and was unaware the girls were drinking and that they had left with defendant.

Defendant bought a twelve-pack of beer, which was placed in the back seat with the girls. They drove around town for about an hour and a half and then returned to the Tecca home about 10:30 p.m. By this time, N.L. and Cindy had each consumed at least four or five beers; defendant testified that he had no more than two beers during the course of the evening.

As they entered the house, defendant suggested the girls go right to sleep and not make any noise. The girls had arranged their sleeping bags on the floor in the basement earlier in the evening, and planned on sleeping there. N.L. testified that she slept for a while, but was awakened by defendant. Defendant was kneeling beside N.L and had his hand in her underpants with his finger in her vagina. Defendant asked N.L. to roll over, but she wouldn’t so he left. A light in the hallway was on, and N.L. could see that it was defendant; he was wearing only his underwear. About 20 minutes later Cindy became sick. After several trips to the bathroom, Mrs. Tecca heard the commotion and moved the girls upstairs.

N.L. did not tell her parents about the incident until a week later. An information was filed January 4, 1985, charging defendant with felony sexual assault, in violation of Section 45-5-502(3), MCA.

On April 10,1985, the prosecution filed a Notice of Intent to Introduce Evidence of Other Acts. Defense counsel responded with a motion in limine to bar introduction of prior acts evidence. A hearing was held before the district judge on May 24, 1985, and the motion in limine denied. Defense counsel moved for reconsideration of the motion in limine, and the motion was again denied on July 29, 1985, prior to commencement of trial.

Trial was held July 29, 1985. Following the testimony of N.L., testimony was given by R.T., S.W., K.W. and L.C. concerning prior acts of defendant. Prior to R.T.’s testimony about defendant’s previous acts, the trial judge instructed the jury that they were to consider such evidence only for the limited purposes of proving a common scheme or method used in the commission of the alleged offense, identity of the offender, or existence of intent. R.T., defendant’s half-sister, testified that she had moved out of the Tecca home a week prior to the incident, because on three occasions the previous month she had awakened at night to find defendant sitting next to her bed clothed in only his underwear with his hand resting on her bed. R.T. testified that similar incidents occurred the previous two times defendant was on leave, during 1982 and 1983. R.T. further testified that when she was eight (nine years ago), defendant climbed in her bed at night and touched her breasts and vagina. This occurred for nearly two years, but then stopped after defendant’s father became aware and spoke with defendant.

S.W. testified about an incident involving defendant when she visited the Tecca home about five years ago. She went to defendant’s room with Cindy, and defendant asked S.W. to remove her clothing. S.W. refused, so defendant put his arms around her from behind and unbuttoned her pants. She buttoned them back up and left. S.W. was nine years old at the time.

K.W. testified about two incidents with defendant that occurred while she was at the Tecca home. On each occasion K.W. was in defendant’s room and defendant asked her to have sex with him and he exposed himself. These incidents occurred approximately two and four years ago, when K.W. was age eight and ten, respectively.

L.C. testified that when she was twelve, about three years before, she spent the night with R.T. at the Tecca home. L.C. awoke that night to find defendant next to her bed with his hand resting on the bed, but left immediately when he realized L.C. was awake.

Jury instruction No. 16 was a limiting instruction informing the jury that the prior acts evidence was admitted to show proof of motive, opportunity, plan, knowledge, identity and absence of mistake or accident, and that such evidence was not to be used for any other purpose. After deliberation, the jury returned a verdict of guilty of sexual assault, a felony. The district judge sentenced defendant to 5 years, with 4 years, 11 months conditionally suspended. Defendant appeals his conviction and raises the following issue:

Whether the District Court erred in allowing admission of prior acts evidence?

Defendant contends that the admission of testimony relating to his prior acts was a violation of Rule 404(b), Mont.R.Evid, and did not meet the guidelines established by this Court in State v. Just (1979), 184 Mont. 262, 602 P.2d 957. Rule 404(b), Mont.R.Evid., provides:

“Other crimes, wrongs, acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show that he acted in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.”

Rule 403, Mont.R.Evid. requires the exclusion of otherwise relevant evidence: “. . .if its probative value is substantially outweighed by the danger of unfair prejudice . . .”

In State v. Just, supra, we established a four-element test to determine the admissibility of defendant’s prior acts or crimes. The four elements are:

1) The similarity of crimes or acts;

2) nearness in time;

3) tendency to establish a common scheme, plan, or system; and

4) the probative value of the evidence is not substantially outweighed by the prejudice to the defendant. 184 Mont. at 269, 602 P.2d at 961.

Applying this test to the facts of the present case, we find the trial judge was correct in allowing testimony concerning prior acts of defendant.

While the prior acts were not identical to the offense committed in this case, there is sufficient similarity to sustain admission. Each of the incidents involved young girls and occurred in the Tecca home. The testimony of S.W., K.W., and R.T., clearly shows defendant’s sexual interest in young girls. Defendant asked S.W. to remove her clothing and then unbuttoned her pants; defendant asked K.W. for sex and exposed himself to her; and defendant went to bed with R.T. for almost two years and touched her all over. Both R.T. and L.C. testified that they had been awakened in the middle of the night to find defendant next to the bed dressed only in his underwear. These incidents bear sufficient similarity to the charged offense to uphold their admission.

The prior acts of defendant testified to by these witnesses go back as far as nine years. Defendant asserts that such evidence is too remote, and violates the time limits established by this Court for admitting prior acts. See e.g., State v. Stroud (Mont. 1984), [210 Mont. 58] 683 P.2d 459; 41 St.Rep. 919 (three and a half years); State v. Hansen (1980), 187 Mont. 91, 608 P.2d 1083, (two and a half years). The trial judge agreed with the prosecutor that these acts showed a continuous pattern of conduct by defendant and therefore were admissible. In State v. Doll (Mont. 1985), [214 Mont. 390,] 692 P.2d 473, 42 St.Rep. 40 we said:

“Whether evidence of prior crimes is too remote is directed to the discretion of the district court and is a matter that goes to the credibility of the evidence rather than its admissibility, unless the remoteness is so great that the proffered evidence has no value.”

692 P.2d at 476, 42 St.Rep. at 43, 44.

We agree that an isolated incident from nine years ago is too remote; however, where there is a continuing pattern of similar conduct, the remoteness problem is alleviated. Accord, State v. Spence (1985), 146 Ariz. 142, 704 P.2d 272, 274. R.T. testified that defendant molested her for a period of nearly two years until defendant was confronted by his father. During the next four years, defendant was away in the service, yet when he was home on leave, incidents with other young girls occurred. After defendant returned home from the service, R.T. testified that on many occasions defendant entered her room at night in his underwear, and that, because of these occurrences, she moved out of the house about a week prior to the offense against N.L. This testimony shows that defendant’s deviate sexual conduct has been occurring for approximately nine years. We decline to establish an arbitrary time limit for admitting prior acts evidence where such a cut-off would exclude probative evidence.

The prior acts testimony shows defendant committed, or attempted to commit, sexual acts with young girls for a period of nine years leading up to the offense against N.L. We find the number and similarity of incidents tends to establish a common scheme or plan under the third prong of the Just test.

Finally, we find that the probative value of the prior acts evidence was not substantially outweighed by the prejudice to defendant. While defendant was likely prejudiced to a certain degree, we cannot say as a matter of law that such prejudice clearly outweighed the probative value of this evidence. The prior acts evidence established a continuing course of conduct by defendant and aided in determining opportunity, intent, and identity. The victim in this case was an 11 year-old who had consumed five beers the night of the incident. Testimony that defendant had made advances on other young girls who had been in the Tecca home tends to corroborate the story of the victim.

In State v. Just, supra, this Court set forth three procedural requirements for the admission of prior acts. The requirements are:

“(1) notice to the defendant prior to trial that evidence of other crimes, wrongs or acts will be introduced; (2) an admonition by the judge to the jury when the evidence is introduced that it is admitted solely for one or more of the accepted purposes stated in Rule 404(b); and (3) a cautionary jury instruction to the same effect, providing in unequivocal terms that the evidence is admitted for the purpose earlier stated and not to try and convict the defendant for prior wrongful conduct.”

184 Mont. at 262, 602 P.2d at 963-4.

There is no dispute that the prosecution timely filed a notice of intent to introduce such evidence. Defendant asserts the District Court failed to meet the second and third requirements. We disagree.

The trial judge delivered the following admonition to the jury before the prior acts testimony:

“Ladies and gentlemen of the jury, evidence is about to be introduced for the purpose of showing the defendant committed crimes or acts other than the one for which he is on trial. You may not consider this evidence to prove that the defendant is a person of bad character, or that he has a disposition to commit crimes. You may only consider this evidence for the limited purposes of providing a characteristic method, plan or scheme used in the commission of the offense in this case, or the identity of the person who committed the offense. You may also consider this evidence to prove existence of intent, which is an element of the crime charged. You may not consider this evidence for any other purpose that would expose the defendant to unjust double punishment.”

There were four witnesses who testified as to defendant’s prior acts. Defendant argues that the trial judge was required to deliver the admonition before each of these witnesses testified. Defendant has cited no cases in support of such a proposition, nor do we find Just requires the trial judge to deliver an admonition each time prior acts evidence is received.

Finally, defendant asserts the trial judge did not give the proper cautionary instruction to the jury concerning prior acts evidence. Court instruction No. 16 provided:

“The State has offered evidence that the defendant at another time engaged in other crimes, wrongs, or acts. That evidence was not admitted to prove the character of the defendant in order to show he acted in conformity therewith. The only purpose of admitting that evidence was to show proof or motive, opportunity, plan, knowledge, identity and absence of mistake or accident. You may not use that evidence for any other purpose. The defendant is not being tried for that other crime, wrong or act. He may not be convicted for any other offense than that charged in this case. For the jury to convict the defendant of any other offense than that charged in this case may result in unjust double punishment of the defendant.”

We find this to be a proper cautionary instruction meeting the third procedural requirement of Just.

We affirm the District Court judgment.

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


author:
MR. JUSTICE MORRISON
      MR. JUSTICE GULBRANDSON,

text:
    DALE MALQUIST, George Boharski, George Belt and Local 768, IBEW, Plaintiff and Appellant, v. HOWARD P. FOLEY, a District of Columbia Corporation; City Electric, a Montana Corporation, and R.L. Payne Company, Inc., A Montana Corporation, Defendants and Respondents.
    No. 84-499.
    Submitted Dec. 10, 1985.
    Decided Feb. 13, 1986.
    Rehearing Denied March 25, 1986.
    714 P.2d 995.

      Terry Wallace argued, Missoula, for plaintiff and appellant.
    Garlington, Lohn & Robinson, Charles E. McNeil argued, Missoula, for Foley.
    Corette, Smith, Pohlman & Allen, Lisa K. Swan argued, Butte, Milodragovich, Dale & Dye, Karl H. Boehm, Missoula, for City Elec.
    Worden, Thane & Haines, Stacey Weldele-Wade argued, Missoula, for Payne.
   MR. JUSTICE MORRISON

delivered the Opinion of the Court.

This is an appeal from an order of the Fourth Judicial District Court dismissing plaintiffs’ complaint on the basis that the action was pre-empted by federal law and the State District Court lacked subject matter jurisdiction to adjudicate the controversy. We reverse and remand for trial.

This action was instituted by plaintiffs Dale Malquist, George Boharski, George Belt and Local 768, IBEW. No issue has been raised on appeal concerning standing of Local 768, IBEW, to prosecute this tort action and therefore all plaintiffs will be treated as one.

In 1979, Champion International, of Bonner, Montana, began construction of an expansion project on a packaging plant in Missoula County, Montana. Champion hired Matthews, McCracken and Rut-land (MM&R) of Baton Rouge, Louisiana, to do the general electrical contracting work. In March of 1980, MM&R, Howard P. Foley Company, City Electric and R. L. Payne, Inc., entered into a collective bargaining agreement with Local 768 of the International Brotherhood of Electrical Workers. Pursuant to the terms of the agreement signed by the parties, all electrical contractors on the project were to hire electricians through the Union referral books. Hiring could be from no other source unless labor was not available from the Union. Malquist, Boharski and Belt all placed their names in the referral book and were hired by MM&R until that company was terminated by Champion. At this time the three plaintiffs were laid off pursuant to a reduction in force and placed their names in the referral book for future employment. Plaintiffs were referred to defendants for employment, but were refused.

In September of 1980, a meeting was held between Union officials and representatives of defendant employers. A Union business agent, Reg McMurdo, was shown a list of 20-30 names allegedly blacklisted from the project. Plaintiffs were blacklisted. Thereafter the Local filed a complaint under the collective bargaining agreement. The Labor-Management Committee deadlocked on the issue by a 6-6 vote, and the Union then dropped the complaint for the reason that the conduct complained of was not covered in the collective bargaining agreement, which only dealt with wages, hours and conditions of work.

Plaintiffs then filed claims in the State District Court for the willful and malicious blacklisting of the plaintiffs, seeking both compensatory damages and punitive damages. Two of the three defendants, R.L. Payne and City Electric, moved for summary judgment, alleging federal pre-emption. The District Court denied the motions for summary judgment, but dismissed the complaint, holding that blacklisting is arguably prohibited by the National Labor Relations Act (NLRA) and thus the State District Court lacked subject matter jurisdiction.

The issues presented on appeal are:

1. Whether plaintiffs’ claim grounded in tort is pre-empted by the National Labor Relations Act, thereby denying the State District Court subject matter jurisdiction?

2. Whether plaintiffs failed to exhaust their administrative remedies?

3. Whether the action is barred by the statute of limitations?

Respondents place heavy reliance upon San Diego Building Trades Council v. Garmon (1959), 359 U.S. 236, 79 S.Ct. 773, 3 L.Ed. 2d 775. In Garmon, supra, the United States Supreme Court established guidelines for determining respective jurisdictions of the National Labor Relations Board and the states in labor management relations. The Court said:

“When it is clear or may fairly be assumed that the activities which a State purports to regulate are protected by Section 7 of the National Labor Relations Act, or constitute an unfair labor practice under Section 8, due regard for the federal enactment requires that state jurisdiction must yield. To leave the States free to regulate conduct so plainly within the central aim of federal regulation involves too great a danger of conflict between power asserted by Congress and requirements imposed by state law.”

359 U.S. at 244, 79 S.Ct. at 779, 3 L.Ed.2d at 782.

In dismissing the complaint, the trial court placed emphasis upon the rule articulated by the Garmon court that the conduct need only be “arguably subject” to the NLRA. The language used by the Court in Garmon supports the trial court’s position:

“. . . When an activity is arguably subject to Section 7 or Section 8 of the Act, the States as well as the federal courts must defer to the exclusive competence of the National Labor Relations Board if the danger of state interference with national policy is to be averted.”

359 U.S. at 245, 79 S.Ct. at 780, 3 L.Ed.2d at 783.

Respondents acknowledge that two subsequent cases modified the Garmon approach. In Sears, Roebuck & Company v. San Diego County District Council of Carpenters (1978), 436 U.S. 180, 98 S.Ct. 1745, 56 L.Ed.2d 209, and Farmer v. United Brotherhood of Carpenters and Joiners of America, Local 25 (1977), 430 U.S. 290, 97 S.Ct. 1056, 51 L.Ed.2d 338, the Supreme Court protected the states from federal pre-emption when the states were controlling conduct traditionally subject to state jurisdiction, especially where the state had a substantial interest in regulation of the conduct at issue and the state’s interest was one that did not unduly interfere with federal regulation. The exception to federal pre-emption recognized by the United States Supreme Court has been primarily confined to a “violence” exception. Where the defendant’s conduct may well have constituted an unfair labor practice but amounted to violence, the United States Supreme Court has decided that the state’s interest in protecting its citizens from violence is sufficiently strong that the state’s tort law will be allowed to regulate and punish such conduct. Farmer, 430 U.S. at 299, 97 S.Ct. at 1063, 51 L.Ed.2d at 349-350.

We do not find respondents’ authority dispositive of the fact situation here at issue. Section 39-2-803, MCA, provides:

“Blacklisting Prohibited. If any company or corporation in this state authorizes or allows any of its agents to backlist or any person does blacklist any discharged employee or attempts by word or writing or any other means whatever to prevent any discharged employee or any employee who may have voluntarily left the company’s service from obtaining employment with another person . . . such company or corporation or person is liable in punitive damages to such employee so prevented from obtaining employment, to be recovered by him in a civil action . . .

The conduct proscribed by the state statute is “blacklisting” per se. There is no requirement that blacklisting be related to an unfair labor practice. If an employer blacklists an employee for any reason, that employer is subject to tort liability under Section 39-2-803, MCA.

In order for there to be a valid pre-emption in this case, we must find that blacklisting is protected by the NLRA. Section 7 of the NLRA, 29 U.S.C. Section 157, relates to employee rights to self-organization, to bargain collectively and to engage in concerted activities for the purpose of bargaining collectively. The applicable provisions of Section 8, specifically 29 U.S.C. Section 158(a) of the NLRA, define unfair labor practices as: restraining or coercing employees in exercise of Section 7 rights; dominating or interfering with a union; discriminating in regard to hiring and tenure to encourage or discourage membership in unions; discharging or discriminating against an employee because he has filed charges or given testimony under the NLRA; refusing to bargain collectively. Nothing in these sections refers to blacklisting and clearly blacklisting would not be investigated by the Board unless the blacklisting was done for some purpose prohibited by the NLRA. Blacklisting for any purpose is unlawful in Montana.

The District Court felt that it should not inquire into the reasons for the blacklisting because “arguably” blacklisting was subject to the NLRA’s proscriptions. In its order the District Court said:

“This court is not willing to invade the province of the Labor Board by staging an inquiry into blacklisting, this supposed list of electricians who were allegedly disapproved of and subsequently boycotted for, as yet, unknown reasons when they sought employment with the defendants.”

No one in this litigation contends that plaintiffs were blacklisted for labor-related activities. The reason for the blacklisting is unknown. Blacklisting per se is unlawful under Montana law, Section 39-2-803, MCA.

Plaintiffs argue that pre-emption is not called for because:

1. The underlying conduct, blacklisting, is not protected under the NLRA;

2. There is an overriding state interest in protecting citizens from blacklisting and it’s consequent harm. This interest has been manifested in a statute awarding punitive damages for blacklisting.

3. There is no risk that this cause of action, in tort, will affect national labor policy.

We find plaintiff’s argument compelling in light of the recent decision of the 9th Circuit Court of Appeals in Garibaldi v. Lucky Food Stores, Inc. (9th Cir. 1984), 726 F.2d 1367.

Garibaldi was employed by Lucky Food Stores as a truck driver until his discharge in October, 1980. Garibaldi filed an action in state court in California alleging he was wrongfully discharged for “whistle blowing.” The case was removed to federal court and the Federal District Court held that his discharge was pre-empted by the National Labor Relations Act. The Circuit Court of Appeals reversed and established guidelines for pre-emption which allow plaintiffs’ claims in this case to go forward.

In Garibaldi, supra, the Ninth Circuit placed great emphasis upon a balancing of state and federal interests. The court quoted from the United States Supreme Court decision in Farmer, supra, wherein the Court stated:

“Our cases indicate, however, that inflexible application of the doctrine [of pre-emption in industrial relations] is to be avoided, especially where the State has a substantial interest in regulation of the conduct at issue and the State’s interest is one that does not threaten undue interference with the federal regulatory scheme.” Garibaldi, 726 F.2d at 1373, quoting Farmer, 430 U.S. at 302, S.Ct. at 1064, 51 L.Ed.2d at 351.

The Ninth Circuit acknowledged that the United States Supreme Court carefully tailored its holding to situations where the defendant’s conduct was outrageous and “particularly abusive.” The Garibaldi court expanded the “violence” exception to embrace wrongful discharge conduct amounting only to a violation of California’s public policy. While the discharge of Garibaldi may have constituted an unfair labor practice, yet it was significant that California had a paramount interest in regulating violations of public policy within its state. The court in Garibaldi, 726 F.2d at 1374, said:

“Thus, it is clear that California’s interest in providing a cause of action for violation of public policy or a statute is the enforcement of the underlying statute or policy, not the regulation of the employment relationship.”

Certiorari to the United States Supreme Court was denied at _ U.S __, 105 S.Ct. 2319, 85 L.Ed.2d 839.

The case at bar is similar. Blacklisting per se is proscribed in Montana. The statute does not seek to regulate the relationship between the employer and the employee. Neither does the statute seek to regulate unfair labor practices treated in Section 7 or Section 8 of the NLRA, 29 U.S.C. Sections 157 and 158.

We find the rationale in Garibaldi to be persuasive and adopt it as the basis for our decision here. The court said:

“A claim grounded in state law for wrongful termination for public policy reasons poses no significant threat to the collective bargaining process; it does not alter the economic relationship between the employer and employee. The remedy is in tort, distinct from any contractual remedy an employee might have under the collective bargaining contract. It furthers the state’s interest in protecting the general public — an interest which transcends the employment relationship.” (Citation omitted.)

Garibaldi, 726 F.2d at 1375.

The act of blacklisting per se does not constitute an unfair labor practice. Blacklisting sounds in either (1) intentional infliction of mental or emotional distress or (2) tortious interference with prospective or present contractual relationships. However, in light of the provisions of Section 39-2-803, MCA, blacklisting itself constitutes tortious conduct giving rise to a civil remedy. We therefore hold that federal pre-emption does not exist.

There is not an exhaustion question in this case. Administrative remedies are in the federal system. We here have an action grounded in tort under state law. The conduct complained of is, as we have held, not subject to NLRA proscription. The tortious conduct complained of in state court has no exhaustion component.

Our holding that plaintiff’s claim constitutes a tort under state law requires the application of the three year statute of limitations applicable to tort actions in Montana, Section 27-2-204, MCA. Because no specific statute of limitations is provided under state law for blacklisting, the tort of blacklisting is covered by the general tort statute of limitations and of course the same would be true for actions grounded in intentional infliction of mental distress and tortious interference with contractual relationships. This cause was filed within two years of the incidents in question and is timely.

We reverse and remand for trial in accordance with the views herein expressed.

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

MR. JUSTICE GULBRANDSON,

dissenting:

I respectfully dissent.

The majority holds that the conduct complained of is not subject to NLRA proscription. In effect, an exception to the pre-emption requirement has been created by labeling the action as one in tort under state law. An opposite result was reached in Campbell v. McLean Trucking Company (E.D.N.Y., 1984), 592 F.Supp. 1560, 1564, where the court stated:

“A mere labeling of the conduct complained of, however, does not satisfy the requirements necessary to avoid pre-emption. The Supreme Court in [Amalgamated Ass’n of Street, Electric Railway and Motor Coach Employees of America v.] Lockridge, 403 U.S. at 292, 91 S.Ct.[1909] at 1920, said that it is the conduct and not the legal description that is important. This substance-form problem was recognized, for example, in Breitegger v. C.B.S., 43 Cal.App.3d 283, 117 Cal.Rptr. 699, 706 (1974), where an unfair labor practice within the Board’s jurisdiction was not cognizable in State court merely by labeling it an intentional tort.”

Section 8 of the NLRA clearly prohibits employment discrimination, and blacklisting is recognized as an unfair labor practice.

“Further, as indicated by [N.L.R.B. v.] Mount Desert Island Hospital [695 F.2d 634 1st Cir.1982] and contrary to plaintiff’s State tort characterization, blacklisting has long been recognized as an unfair labor practice and, thus, prohibited by the Act. See N.L.R.B. v. Waumbec Mills, 114 F.2d 226, 232-33 (1st Cir. 1940); Cone Bros. Contracting Co., 135 N.L.R.B. 108 (1962). In short, at the least, plaintiffs’ claim one is “ ‘arguably subject to . . . the Act’. . . [Citation omitted.] . . . and therefore come[s] within the primary jurisdiction of the . . . Board . . . .” Abrams v. Carrier Corp., 434 F.2d 1234, 1253 (2d Cir. 1970), cert. denied, 401 U.S. 1009, 91 S.Ct. 1253, 28 L.Ed.2d 545 (1971).” (Emphasis in original.)

Campbell, supra, 592 F.Supp. at 1563.

The majority opinion contains the following statement:

“No one in this litigation contends that plaintiffs were blacklisted for labor-related activities.”

In fact, plaintiff’s counsel, in his brief filed July 5, 1984, with the trial court, declared as follows:

“When this case was presented to the Board, plaintiffs had to raise and prove to the Board that defendants’ maintenance, circulation and other use of the blacklist was for the purpose of discriminating against plaintiffs for activities relating to self-organization, collective bargaining, concerted actions or union affiliations. 29 USC Section 158(a)(1) and (3).”

I also note that Local 768, International Brotherhood of Electrical Workers, is a party plaintiff in this action.

I agree with the trial court’s determination that the first issue to be decided is whether blacklisting occurred, and if so, for what reasons. That issue is arguably within the jurisdiction of the NLRB and that Board should be allowed to exercise its remedial authority if blacklisting activity is found. The trial court, in dismissing the cause conditionally without prejudice, clearly would entertain the plaintiffs action in tort if the NLRB found that blacklisting occurred.

I would affirm.

MR. CHIEF JUSTICE TURNAGE joins in the foregoing dissent of MR. JUSTICE GULBRANDSON.


author: MR. JUSTICE HARRISON MR. JUSTICE WEBER, MR. CHIEF JUSTICE TURNAGE,

text:
    LEWIS L. BOWEN, Claimant, v. THE ANACONDA COMPANY, Employer, Defendant and Appellant.
    No. 84-554.
    Submitted Oct. 23, 1985.
    Decided Feb. 13, 1986.
    714 P.2d 142.

      Andrew J. Utick argued, Helena, for employer, defendant and appellant.
    R. Lewis Brown argued, Butte, for respondent.
    Steve Shapiro, Helena, for amicus curiae.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from a judgment of the Workers’ Compensation Court of the State of Montana. Respondent Lewis Bowen (hereinafter Bowen) entered into a full and final compromise settlement agreement with the Anaconda Company, appellant, which purported to settle his claim for injuries sustained on October 25, 1974 and March 3, 1977, while working for the Anaconda Company. Bowen subsequently petitioned the Workers’ Compensation Court to reopen his compromise settlement with the Anaconda Company claiming that the agreement only settled his claim for injuries sustained in 1974, and did not cover his injuries sustained in 1977. The Workers’ Compensation Court agreed with Bowen and this appeal followed. We affirm.

Bowen was employed by the Anaconda Company at its copper smelter in Anaconda, Montana. While so employed, Bowen suffered two industrial accidents to his back on October 25, 1974 and on March 3, 1977. The Anaconda Company accepted liability for Bowen’s injuries and paid temporary total disability benefits and medical benefits for both accidents in accordance with Montana law.

On July 23, 1981, Bowen, without the assistance of his counsel of record, entered into a petition for full and final compromise settlement with Marilyn Nelson, Anaconda’s Workers’ Compensation adjuster, in which Bowen agreed to accept $14,175 thereby allegedly settling both his claims against the Anaconda Company. The body of the settlement agreement provided in pertinent part as follows:

“The undersigned was accidentally injured on October 25, 1974 while employed by the The Anaconda Company an employer enrolled under Compensation Plan No. I of the Montana Workers’ Compensation Act. The claim was filed and accepted by the insurer for the payment of any compensation and medical benefits due.
“The total compensation paid to date is $16,272.14.
“The total medical and hospital benefits paid to date are $7,025.61.
“A controversy exists between this claimant and insurer over the amount and duration of compensation. This controversy has been resolved by an agreement between the claimant and insurer wherein the claimant agrees to accept the sum of fourteen thousand one hundred seventy five and no/100 ($14,175.00) in a lump sum (unless such payments are otherwise directed to be paid biweekly by the Division) in a full and final compromise settlement, which represents compensation for 175 weeks. Further medical and hospital benefits are expressly hereby reserved by the claimant, unless otherwise indicated in this petition.
“The claimant hereby petitions the Division of Workers’ Compensation, with the concurrence of the above named insurer, for approval of this petition and that the case be fully and finally closed on the basis set forth above. The claimant understands that if this petition is approved, the claim is forever closed, and can never again be reopened.”

The petition for compromise settlement was then forwarded to the Division of Workers’ Compensation for approval as required by law. The division reviewed the document and discovered an ambiguity in the agreement in that while the agreement only referred to the 1974 accident date, it also stated the amounts of compensation and medical benefits paid to date on both claims, and it also reflected that the settlement was computed based upon the 1977 injury compensation rate. The record indicates the Division, after discovering the ambiguity in the settlement agreement, conducted an investigation into the matter and ascertained, to its own satisfaction, that a mistake had been made in not including both accident dates in the agreement. The Division subsequently revised the settlement agreement to also include the 1977 accident date, and issued an order approving the settlement agreement stating that both Bowen’s 1974 and 1977 injury claims were settled for $14,175. Thereafter, the Workers’ Compensation Court approved the division’s order closing both of Bowen’s claims.

On December 13,1982, Bowen filed a Petition for Hearing with the Workers’ Compensation Court in which he sought to set aside the settlement agreement described above. Bowen asked the court to set aside the settlement agreement upon the grounds that his treating physician had misled him into believing that he had sustained no serious permanent injuries as a result of the accidents, and also that he was misled by representatives of the Anaconda Company who advised him that he was not entitled to a larger settlement. On March 29, 1983, Bowen filed a second Petition for Hearing with the Workers’ Compensation Court in which he abandoned his argument set out in the first Petition for Hearing. In the second Petition for Hearing Bowen advanced a new theory that the settlement agreement only settled his claim for injuries sustained in 1974, and did not settle his claim for injuries sustained in 1977.

The case proceeded to trial and the parties filed a stipulation that the issues before the Workers’ Compensation Court should be bifurcated as follows: (1) Whether the court had jurisdiction over this matter in view of the provisions of Section 39-71-204(2) and Section 39-71-2909, MCA; and (2) Whether the settlement agreement between the parties, and the order of the Division of Workers’ Compensation approving the agreement, effectuated a compromise settlement of Bowen’s claim concerning his 1977 injury. The parties also stipulated that the court should decide these issues based upon the record made to date.

During trial Bowen argued that he never intended to settle both his claims in the settlement agreement and also, that on its face, the settlement agreement only referred to the 1974 accident date. The Anaconda Company responded by asserting that although the settlement agreement only referred to the 1974 accident date, it also included the 1977 accident because the figures on the agreement corresponded to both the 1974 and 1977 accidents. Furthermore, the Anaconda Company argued that Bowen fully intended to settle both his claims in the settlement agreement because the extrinsic evidence surrounding the settlement agreement overwhelmingly pointed to this conclusion. The Anaconda Company also vigorously argued that the Workers’ Compensation Court lacked jurisdiction over this matter.

In a detailed findings of fact, conclusions of law and judgment entered September 28, 1984, the Workers’ Compensation Court found that it had jurisdiction over this matter and that Bowen had only settled his claim for the 1974 injury in the settlement agreement. In making its decision, the lower court disregarded the order of the Division which revised the settlement agreement and closed both of Bowen’s claims. It refused to consider any of the investigation or documentation contained in the Division file. It considered the settlement agreement to be unambiguous within its four corners, thereby negating the need to consider any extrinsic or parol evidence to determine the meaning of the agreement.

The Anaconda Company presents the following issues for review:

(1) Whether the Worker’s Compensation Court lacked jurisdiction to alter, rescind or amend the order of the Division of Workers’ Compensation which revised the settlement agreement and closed both of Bowen’s claims?

(2) Whether the Worker’s Compensation Court erred in not upholding the Division’s order which revised the settlement agreement and closed both of Bowen’s claims?

(3) Whether the Worker’s Compensation Court erred in not considering the parol evidence introduced by the Anaconda Company at trial to help explain the meaning of the settlement agreement?

(4) Whether the Workers’ Compensation Court erred in not considering parol evidence offered into evidence without objection and by stipulation?

We hold the first two issues presented by the Anaconda Company to be dispositive of the instant case, and only these two issues will be discussed.

The thrust of the Anaconda Company’s argument in the instant case is that the Workers’ Compensation Court, in general, lacks jurisdiction under Montana law to rescind, alter or amend an order of the Division of Workers’ Compensation approving a compromise settlement agreement. The Anaconda Company begins this argument by pointing out that although a compromise settlement agreement is considered a contract and the law of contracts applies in the construction and enforcement of a settlement agreement, the agreement is not valid until it is approved by the Division of Workers’ Compensation. Kienas v. Peterson (Mont. 1980), 624 P.2d 1, 37 St.Rep. 1747 and Section 39-71-741, MCA.

Next, the Anaconda Company points out that after the Division has issued its order approving a settlement agreement, the order is referred to the Workers’ Compensation Court for review pursuant to Section 39-71-2908, MCA. This statute provides that the judge may disapprove the Division’s order, but does not require his approval; although as a matter of practice, the judge has issued an order indicating approvals as well as disapprovals. The Anaconda Company points out, in the case where the judge approves the Division’s order, he then loses jurisdiction to consider the agreement further, as specifically indicated in Section 39-71-204(2) and Section 39-71-2909, MCA. These statutes provide in pertinent part as follows:

“Section 39-71-204(2). [E]xcept as provided in Section 39-71-2908, the division or the workers’ compensation judge shall not have the power to rescind, alter, or amend any order approving a full and final compromise settlement of compensation.
“Section 39-71-2909. [The Workers’ Compensation] judge may not change . . . any order approving a full and final compromise settlement of compensation.”

The Anaconda Company argues that according to these rules of finality, a settlement agreement can only be reopened by the Workers’ Compensation Court upon a showing of fraud, mutual mistake of fact, or a personal incapacity of the claimant to make a binding contract. Parrent v. Midway Toyota (Mont. 1981), 626 P.2d 848, 38 St.Rep. 559; Kienas v. Peterson, supra; Williams v. Industrial Accident Board (1939), 109 Mont. 235, 97 P.2d 1115.

The Anaconda Company argues the Workers’ Compensation Court was totally without jurisdiction to rescind, alter or amend the order of the Division which determined, after a thorough investigation, that both of Bowen’s claims had been closed by the settlement agreement. The Anaconda Company argues the Workers’ Compensation Court had every opportunity to disapprove the order of the Division when the matter was referred to the court pursuant to the provisions of Section 39-71-2908, MCA. The Anaconda Company stresses that the actions of the Workers’ Compensation Court in the instant case are exactly what Section 39-71-204(2) and Section 39-71-2909, MCA, are designed to prohibit. We disagree.

In theory, the argument of the Anaconda Company is sound, but in application to the instant case the argument does not hold water. We agree that Section 39-71-204(2) and Section 39-71-2909 seem to state quite clearly that where a Workers’ Compensation judge approves or fails to disapprove a Division order pursuant to Section 39-71-2908, he then loses the authority to consider the settlement agreement further except upon a showing of fraud, mutual mistake of fact, or a personal incapacity of the claimant to make a binding contract. However, in the instant case, the Workers’ Compensation Court did not violate the provisions of the above statutes because it did not actually rescind, alter or amend the order of the Division approving the settlement agreement. We base this conclusion on the fact that the Division itself has no statutory authority to unilaterally modify a settlement agreement, as it did in the instant case. The function of the Division with respect to the disposition of settlement agreements is as follows:

“[T]he division is hereby vested with full power, authority, and jurisdiction to allow and approve compromises of claims under this chapter. All settlements and compromises of compensation provided in this chapter are void without the approval of the division. Approval of the division must be in writing. The division shall directly notify every claimant of any division order approving or denying a claimant’s settlement or compromise of a claim.” (Section 39-71-741, MCA).

Clearly, under this statute, the Division has no authority to unilaterally rescind, alter or amend the terms of a settlement agreement. It can only allow and approve or disallow a proffered settlement agreement.

In the instant case, the Division discovered an ambiguity in the settlement agreement and concluded, after a thorough investigation, that a mistake had been made in not including both the 1974 and 1977 accident dates in the agreement. The Division subsequently revised the settlement agreement to also include the 1977 accident date, and issued an order approving the agreement. Under Section 39-71-741, MCA, the Division clearly does not have the authority to modify or revise a settlement agreement. Therefore, that portion of the Division’s order which went beyond its statutory authority in expanding the settlement agreement to also include the 1977 accident date is a nullity and of no force or effect whatsoever. Consequently, the Workers’ Compensation Court did not actually rescind, alter or amend the order of the Division approving the settlement agreement because the Division’s order only validly approved Bowen’s 1974 injury claim.

Therefore, because there is no valid Division order foreclosing Bowen’s right to pursue his 1977 injury claim, the remaining issues presented by the Anaconda Company become moot and need not be discussed.

The judgment of the Workers’ Compensation Court is affirmed.

MR. JUSTICES MORRISON, SHEEHY and HUNT concur.

MR. JUSTICE WEBER,

dissenting:

I dissent from the majority opinion which affirms the Workers’ Compensation Court. I conclude that the opinion considers only a portion of the pertinent facts and law.

Both the majority opinion and the Workers’ Compensation decision emphasize that the petition for full and final compromise settlement stated “The undersigned claimant was accidentally injured on October 25, 1974 . . . .” From that statement in the petition, the Workers’ Compensation Court concluded that the wording within the four corners of the contract, was not ambiguous, and therefore no parole evidence could be admitted to show that the settlement petition covered two injuries rather than only the injury of October 25, 1974. The majority opinion then concluded that the Division’s revision of the settlement agreement to cover two dates of injury was beyond the authority of the Division and therefore that portion of the order expanding the settlement to include the 1977 accident was a nullity and of no force and effect. The majority then concluded that the order of the Division approved only claimant’s 1974 injury claim.

In addition to the foregoing facts, it is important to note that the order approving a full and final compromise settlement stated as follows:

“Lewis L. Bowen was accidentally injured on October 25, 1974 & March 3, 1977, while employed by the Anaconda Company . . .”

That order was signed on September 28, 1981 by the administrator of the Division. The order was approved by the workers’ compensation judge on September 29, 1981. Under the opinions of this Court, a full and final compromise settlement can only be reopened upon a showing of fraud, mutual mistake of fact, or personal incapacity. See Williams v. Industrial Accident Board (1939), 109 Mont. 235, 97 P.2d 1115; Kienas v. Peterson (Mont. 1980), 624 P.2d 1, 37 St.Rep. 1747. For a discussion of the distinction between rescission of a final settlement agreement and rescission of a full and final compromise settlement, see Hutchinson v. Intermountain Insurance Company (Mont. 1985), 710 P.2d 1810, 42 St.Rep. 1810.

The majority opinion concluded that the Workers’ Compensation Court did not actually rescind, alter or amend the previous order because the Division’s order only validly approved the 1974 injury claim. The majority ignores the specific provisions in the Division’s order which approved the full and final compromise settlement for both the 1974 and 1977 injuries, as did the Workers’ Compensation Court itself. Of particular significance at this point are the provisions of Section 39-71-743, MCA, which in pertinent part states:

“(4) The division has full power, authority and jurisdiction to allow and approve compromises of claims under this chapter. All settlements and compromises of compensation provided in this chapter are void without the approval of the division. Approval of the division must be in writing . . .” (Emphasis supplied.)

The only settlement approved by the Division covered both the October 25, 1974 and March 3, 1977 injuries. There is no way in which the Division and Workers’ Compensation order could be classed as an approval only of the 1974 injury. The Division has the full power and authority to approve compromises. It approved a compromise of both the 1974 and 1977 injuries. The settlement of $14,175 is specifically stated to be a settlement of the claim for both injuries. If the Division did not have authority to revise the settlement agreement as stated in the majority opinion, then there is no longer an outstanding settlement agreement. Clearly the settlement approved by both the Division and the court covered both claims and cannot be restricted to the 1974 injury. The majority is incorrect in finding that the Division validly approved the 1974 injury claim. That is not the effect of the order. Under the statute, any settlement not approved by the Division is void. The Division has not approved the settlement of $14,175 for the 1974 injury only. In the absence of such an approval, the settlement is void.

At the very most, if an appropriate theory for reopening the order of September 28, 1981 can be found, the compromise settlement would have to be set aside in full. It is totally inappropriate to call it a settlement of the 1974 injury. I would reverse the Workers’ Compensation Court.

MR. JUSTICE GULBRANDSON joins in the dissent of MR. JUSTICE WEBER.

MR. CHIEF JUSTICE TURNAGE,

concurring:

I concur in the dissent of MR. JUSTICE WEBER.


text:
    RALPH V. BELTON, Claimant and Appellant, v. CARLSON TRANSPORT, Employer, and Hartford Accident & Indemnity Co., Third Party Defendant and Respondent, and Rice Truck Line, Employer, and Transport Indemnity Company, Defendant and Respondent.
    No. 85-40.
    Submitted on Briefs Dec. 20, 1985.
    Decided Feb. 13, 1986.
    714 P.2d 148.

      Kelly & Halverson, P.C., Sheehy, Prindle & Finn, Victor Halverson, Billings, for claimant and appellant.
    Garlington, Lohn & Robinson, Larry E. Riley, Missoula, Crowley Law Firm, L. Randall Bishop, Billings, for respondents.
   MR. JUSTICE HUNT

delivered the Opinion of the Court.

The appellant, Ralph Belton, appeals the judgment of the Workers’ Compensation Court. That court ordered a recoupment of an overpayment related to a social security offset; denied a requested total lump sum conversion; granted a partial lump sum conversion; denied penalty for unreasonable payment of medical expenses; and ordered payment of medical expenses.

We affirm in part and remand with instructions.

Three issues are presented for review:

1. Whether it was error to permit recoupment of overpayments.

2. Whether it was error to deny a total lump sum conversion.

3. Whether it was error to deny penalty for insurer medical payments.

The appellant, Ralph Belton, is now 61 years old. He suffered a back injury in 1977 while working for Carlson Transport. Carlson Transport’s compensation insurer was Hartford Accident and Indemnity. Hartford accepted liability and made payments to the appellant.'

The appellant suffered injury to his back again in 1979. This time he was working for Barker Trucking. Barker was uninsured, but under contract with Rice Truck Line, insured by the respondent, Transport Indemnity.

The issue of which insurer was liable for successive injury in this case was decided in Belton v. Carlson Transport, et al. (Mont. 1983), [202 Mont. 384,] 658 P.2d 405, 40 St.Rep. 158. Pursuant to the opinion in Belton the Workers’ Compensation Court ordered the respondent, Transport Indemnity, to pay the appellant’s compensation benefits and accident-related medical costs incurred since the 1979 injury.

The issues in this case, as it is presently before this Court, developed in 1984 when the appellant petitioned for a hearing before the Workers’ Compensation Court requesting a total lump sum payment, an order requiring the respondent to pay medical costs, and a statutory penalty for insurer unreasonableness. The respondent answered, requesting a denial and a termination of benefits until an existing overpayment related to the social security offset was repaid.

The Workers’ Compensation Court denied a total lump sum conversion, but it did grant a partial lump sum advance. It ordered the respondent to pay the medical expenses, but it denied invoking the statutory penalty for insurer unreasonableness. It then ordered recoupment on behalf of the respondent for overpayment. This recoupment was to be paid from the partial lump sum advance.

The first issue is whether the Workers’ Compensation Court erred in permitting recoupment of overpayments made by the insurers, Hartford and Transport Indemnity. In addition to appellant’s biweekly compensation payments he received social security disability payments. Montana law allows an offset against compensation when an injured worker is also receiving social security disability. See, Sections 39-71-701(2) and 39-71-702(2), MCA. The insurers did not take this offset and by the time of the hearing on this matter overpayments equaled $18,461.58. Hartford had overpaid $14,630.81 of this amount and the respondent had overpaid the balance.

We hold that the insurers are entitled to the offset as found by the Workers’ Compensation Court.

The second issue is whether the Workers’ Compensation Court erred in denying a total lump sum conversion. The appellant sought a lump sum conversion because he had unpaid debts, an inefficient automobile, and costly monthly rent. One of the appellant’s theories was that an outright purchase of a house would help eliminate his financial problems. The Workers’ Compensation Court determined that it was in the appellant’s best interest to award a partial lump sum to allow discharge of debt and to purchase a fuel efficient automobile. However, it determined that the appellant did not submit substantial credible evidence that it was in his best interest to purchase a home. We agree.

The Montana Workers’ Compensation Act provides for lump sum payment. See, Section 39-71-741, MCA. The Montana Legislature has recently amended this code section. See, Act of April 15, Ch. 471, Laws of Montana (1985). The effective date of the amendment followed the hearing on this matter and the amendment does not apply in this case.

The law in effect and applicable to the case presented here is that each case for a lump sum payment stands or falls on its own merits. Utick v. Utick (1979), 181 Mont. 351, 355, 593 P.2d 739, 741. The denial of a lump sum settlement will not be reversed on appeal unless the Workers’ Compensation Court is shown to have abused its discretion. Ruple v. Peterson Logging Company (Mont. 1984), [209 Mont. 276,] 679 P.2d 1252, 1254, 41 St.Rep. 704, 706. The general rule is that payments under the compensation act are periodic. Lump sum settlements are an exception to this rule. Utick (1979), 181 Mont. 351, 354, 593 P.2d at 741. Lump sum settlements are only granted where there is “outstanding indebtedness,” “pressing need,” or where “the best interests of the claimant, his family and the general public will be served.” Willoughby v. Arthur McKee & Co. (1980), 187 Mont. 253, 257, 609 P.2d 700, 702.

The appellant here demonstrated outstanding indebtedness in the amount of over $5,000 in addition to the $18,000 due the insurers for overpayment of benefits. He also demonstrated a pressing need for a better automobile. The Workers’ Compensation Court granted a lump sum payment for the debts and the automobile but denied a total sum that would enable the appellant to purchase a house. We hold that this denial was a proper exercise of the court’s discretion.

The appellant did not introduce evidence which showed he had age or health reasons which necessitated the purchase of a home. Testimony by appellant that he wished to avoid future escalation of rent payments is not adequate to meet the burden of advancing substantial credible evidence, Dumont v. Wickens Bros. Construction Co. (1979), 183 Mont. 190, 201, 598 P.2d 1099, 1105, that there was “pressing need” for him to purchase a house. Therefore, we hold the partial lump sum advance was proper.

The third issue presented is whether the Workers’ Compensation Court erred in denying the appellant penalty for respondent’s unreasonable treatment of the medical cost payment. The respondent was obligated to pay the appellant’s medical costs but it had refused to make these payments. The Workers’ Compensation Court found that this refusal was unreasonable. The Workers’ Compensation Court determined that no statutory penalty applied, however, because the statute spoke of compensation and not medical benefits.

This Court recently addressed this issue in Carlson v. Cain (Mont. 1985), [216 Mont. 129,] 700 P.2d 607, 42 St.Rep. 695. We decided that the term “compensation benefits” within the penalty statute, Section 39-71-2907, MCA, includes medical expenses and the penalty statute applied. Cain, 700 P.2d at 612-14, 42 St.Rep. at 699-703.

In light of our recent holding in Carlson, we remand the issue of statutory penalty to the Workers’ Compensation Court for reconsideration of whether statutory penalty as provided in Section 39-71-2907, MCA, applies in this case.

Affirmed in part and remanded with instructions.

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