State Ex Rel. Woodahl v. Straub

No. 12651

I N T E SUPREME C U T O THE STATE O M N A A
H OR F F OTN

1974

STATE ex rel. ROBERT L. W O A L
O D H,
Attorney General of t h e S t a t e of Montana,
and t h e M N A A DEPARTMENT O REVENUE,
OTN F

Relators,

HERBERT F. STRAUB, JAKE H. EHRET, KENNETH
RUSTAD, A s County Commissioners f o r F a l l o n County,
Montana, and S i l v e r Roth, A s County T r e a s u r e r of
F a l l o n County, Montana,

Respondents.

ORIGINAL PROCEEDING:

Counsel of Record :

For R e l a t o r s :

Hon. Robert L. Woodahl, Attorney General, Helena,
Montana
Dennis Lind argued, A s s i s t a n t Attorney General,
Helena, Montana
George Losleban, A s s i s t a n t Attorney Genera 1, appeared,
Helena, Montana
R . Bruce McGinnis argued, Helena , Montana

For Respondents:

A. W . S c r i b n e r argued, Helena, Montana
Denzil Young argued, Baker, Montana
S a n d a l l , Moses and Cavan, B i l l i n g s , Montana
Charles F . Moses argued and Ralph S . Wright argued,
B i l l i n g s , Montana

For I n t e r v e n o r s :

Robert Brooks, County Attorney, argued, Broadus,
Montana
C a r r o l l Blend argued, Helena, Montana

For Amici Curiae:

.
Richard J Conklin, County Attorney, argued,
White Sulphur S p r i n g s , Montana
Ralph H e r r i o t t , County Attorney, argued, Hysham, Montana

Submitted: January 14, 1974

Filed :
Mr. Justice Wesley Castles delivered the Opinion of the Court.
This is an original proceeding brought by the Attorney
General and the Montana Department of Revenue. The petition
requested assumption of jurisdiction by this Court of a complaint
which seeks a declaratory judgment under Title 93, Chapter 89,
Revised Codes of Montana, 1947. The named defendants are the
county commissioners and the county treasurer of Fallon County.
On ex parte presentation the Court accepted jurisdiction; allow-
ed the filing of the complaint; and provided for service upon the
Superintendent of Public Instruction and the Clerk and Recorder
of each county as the clerk of the Board of County Commissioners
of each county. The Court invited participation of those inter-
ested in the outcome of this proceeding.
The essential allegations of the complaint filed by the
plaintiffs are:
1. Art. X, Montana Constitution, 1972, requires the
legislature to provide a system of schools.
2. Chapter 355, Laws of Montana, 1973, amends Chapter
69 of Title 75, Revised Codes of Montana, by providing a new tax-
ing system in part for the support of public schools.
3. The tax system contained in Chapter 355 requires each
county to levy a basic 40 mill tax [for both primary and secondary
schools] on property in the county and if the funds raised by this
tax exceed the amount needed to fund the "foundation program" in
that county the excess is to be remitted to the state for deposit
in the "earmarked revenue fund, state equalization aid account".
4. This surplus is to be used in combination with other
funds deposited in the account to fully fund the "foundation pro-
gram" in those counties not fully funded by the basic levy.
5. Chapter 355 authorizes the adoption of budgets in
excess of the minimum required by the foundation program and
provides that if this budget cannot be fully funded by the
imposition of specified additional county levies the director
of the Montana Department of Revenue is to impose a statewide
property tax at such a millage as will result in full funding of
these deficiencies in the various school districts.
6. On August 6, 1973 in accordance with this authori-
zation, the Department of Revenue ordered all counties to impose
an additional mill levy of 12 mills.
7. On August 16, 1973, an action was commenced in Powder
River County seeking to have Chapter 3 5 5 declared void.
8. In October 1973, defendant Fallon County Commissioners
directed defendant Fallon County Treasurer to hold all monies
collected under authority of Chapter 3 5 5 until such time as the
constitutionality of that chapter was determined by the courts.
9. Pursuant to this direction the Fallon County Treasurer
has refused to pay over the monies, thus creating an actual con-
troversy.
10. This is an emergency situation since the first payment
of these monies was scheduled for January 31, 1974, and normal
process of law will not provide for speedy determination.
11. That only questions of law are involved.
12. That other counties have now begun to impound funds
collected under authority of the Act, further aggravating the
situation.
In this Court's order accepting jurisdiction, the matter
pending in Powder River County was stayed.
Fallon County appeared by answer, which we shall discuss
further. Powder River County, Chouteau County, Toole County,
Meagher County and the Superintendent of Public ~nstructionappeared
in various ways--intervention, amicus curiae and otherwise. This
Court has been liberal in considering all matters but, as will
appear hereinafter, the procedural problems and certain other
policy and substantive problems alluded to in various ways by
brief, motion and otherwise will not need be considered herein.
Fallon County's answer to the complaint denies all of
the legal conclusions of the complaint and then sets up these
affirmative defenses:

a) That Chapter 355 will require Fallon County to remit
substantial sums to the state for the support of school districts
located in other counties.
b) That over allchapter 355 will require 39 counties
to remit taxes which be distributed to 17 counties.
c) That Chapter 355 violates Art. X, Sec. 1, Montana
Constitution 1972, which requires the legislature to fully fund
the school system.

d) That Chapter 355 represents an unlawful delegation of
legislative authority.
e) That the tax levied discriminates against the taxpayers
of Fallon County by requiring them to pay more than is required
for the support of its local schools, violating both ~rticleXIII,
Sec. 1, Montana Constitution 1972, and the Fourteenth Amendment
to the United States Constitution.
f) That Chapter 355 fails to set forth any reasonable
standard justifying property taxation in Fallon County for support
of schools in other counties.
g) That factual issues exist which require this Court
to decline jurisdiction.
Even though, as respondents point out, factual issues do
exist this is no bar to a consideration of the validity of Chapter
355 on its face.
Plaintiffs in the Powder River County suit raise by
intervention a preliminary issue in this action. Essentially
intervenors assert that prior to July 1, 1973, the legislature
was operating under the authority of the 1889 Montana Constitu-
tion and accordingly its acts, to be valid, must conform to the
limitations contained therein even though the acts are not to
take effect until after the date the new Constitution replaces
the old.
While this Court has not heretofore considered this ques-
tion, we have no hesitation in rejecting intervenors' proposition.
While it is true that a statute, unconstitutional when it takes
effect, is not resurrected by a subsequent constitutional change,
State ex rel. Woodahl v. District Court, - t.
Mon , 511 P.2d
318, 30 St.Rep. 635, the instant situation differs in that the
statute was passed in anticipation of an already approved consti-
tutional change and was of no force or effect until after the new
Constitution took effect.
The Georgia Supreme Court in Henson v. Georgia Industrial
Realty Co., 220 Ga. 857, 142 S.E.2d 219, 223, 224, observed:
"It is the general rule in this country that a
legislature has power to enact a statute not
authorized by the existing constitution of that
State when the statute is passed in anticipation
of an amendment to its constitution authorizing
it * ?k *.''

The rule is based on the theory that the constitutionality
of the statute is to be tested at the time the statute takes effect
. ,

and not at the time of passage. Neisel v. Moran, 80 Fla. 3 7 8 , 85
S. 346; State v. Hecker, 109 Or. 520, 221 P. 808; Alabam's Freight
Co. v. Hunt, 29 Ariz. 419, 242 P. 658. We agree with this view
and hold that the test of a statute's constitutionality is to be
made at the time it takes effect and is to be made against the
constitution as it exists at the time the statute takes effect,
not at the time the statute was passed by the legislature. See:
Druggan v. Anderson, 269 U.S. 36, 46 S.Ct. 14, 70 L ed 151; In re
Opinions of the Justices, 227 Ala. 291, 149 S. 776; State v.
Smith, 335 Mo. 840, 74 S.W.2d 27; Busch v. Turner, 26 Cal.2d
817, 161 P.2d 456; Galveston Ry. Co. v. Gross, 47 Tex. 428.
All of these cases approved statutes passed by the legislature
in anticipation of constitutional change.
Holding that the 1973 legislature could enact prospective
or anticipatory legislation to become effective July 1, 1973, under
the terms of the Montana Constitution 1972, we consider the con-
stitutionality of Chapter 355 under the Montana Constitution 1972.
Respondents' memorandum of authorities considers the
issues raised by its answer under three general headings:
(1) Chapter 355 violates Article X, Sec. 1 of the Montana
Constitution 1972.

(2) Chapter 355 discriminates against the taxpayers of
Fallon County by attempting to tax them for the exclusive use and
benefit of others.

(3) That factual issues exist which would justify this
Court in declining to accept jurisdiction.
Because of the view the Court takes in this case, these
issues can best be considered against the background of a general
consideration of the state's power to levy a general property tax
for educational purposes.
It is clear that the taxes imposed by Chapter 355 are state
rather than local taxes. Provision is made in Chapter 355 for
three distinct levies. First is the basic 40 mill levy for support
of the foundation program. The language of that levy is mandatory
"It shall be the duty of the county commissioners of each county
to levy", with the clear effect that all property within the state
is levied on at the rate of 40 mills for the support of the founda-
tion program. The other two levies--the additional levy for de-
ficiency in foundation program funding and the permissive levy--
are even more clear in their uniform statewide applicability,
with the director of the Department of Revenue ordered to impose
the levies on all the property in the state. It is clear that a
tax imposed by state law and levied uniformly on all property
within a state is a state rather than a local tax.
Once it is established that Chapter 355 is a state rather
than a local tax, there remains the question of the state's power
to levy a statewide property tax with the avowed purpose of pro-
viding support for education. Here, it should be recalled that
a state constitution, such as Montana's, is a document of limi-
tation rather than of grant and accordingly a statute must contra-
vene some express or implied limitation of that constitution to
be invalid. Evers v. Hudson, 36 Mont. 135, 92 P. 462; State ex
rel. Peyton v. Cunningham, 39 Mont. 197, 103 P. 497; Billings
Sugar Co. v. Fish, 40 Mont. 256, 106 P. 565; Northern Pac. Ry. v.
Mjelde, 48 Mont. 287, 137 P. 386; State v. Dodd, 51 Mont. 100, 149
P. 481; State ex rel. Corry v. Cooney, 70 Mont. 355, 225 P. 1007;
Butte & Superior Min. Co. v. McIntyre, 71 Mont. 254, 229 P. 730;
Graham v. State Board of Examiners, 116 Mont. 584, 155 P.2d 956;
Mulholland v. Ayers, 109 Mont. 558, 99 P.2d 234; Plath v. Hi-Ball
Contractors, Inc., 139 Mont. 263, 362 P.2d 1021.
Aside from the provisions of the United States Constitu-
tion, the only limitation on the state's power to tax applicable
here is Art. VIII, Sec. 1, Montana Constitution 1972, which pro-
vides: "Taxes shall be levied by general laws for public purposes."
Since Chapter 355 requires all property be levied on at the same
rate, it is clearly a general law. State ex rel. Federal Land
Bank v. Hays, 86 Mont. 58, 282 P. 32; Stanley v. Jeffries, 86
Mont. 114, 284 P. 134. Similarly, given the express declaration
of Art. X, Sec. 1, Montana Constitution 1972, that the development
of a quality system of education is a state goal, there can be no
dispute with the proposition that a tax for the support of educa-
tion is levied for a public purpose. Thus it follows that Chap-
ter 355 is not violative of any constitutional provisions and is
a constitutionally valid exercise of the state's power to tax.
Against this background the issues raised by respondents
may be settled. The first issue that Chapter 355 violates Art. X,
Sec. 1, Montana Constitution 1972, is premised on the requirement
contained therein that the legislature provide full funding of the
basic educational system. It is respondents' position that Art.
X, Sec. 1(3), requires the legislature fund its share of the cost
of education solely from the traditional sources of foundation
program funding--oil and gas royalties, income taxes, and corpor-
ation license taxes or other traditional general fund sources.
This view is not correct. The only mandate contained in Art. X,
Sec. 1(3), Montana Constitution 1972, is that the legislature
fully fund the state's share of the cost of basic education. It

is silent as to the means the legislature may employ for this pur-
pose. By enacting Chapter 355, the legislature elected to employ
a statewide property tax. While the wisdom of that legislative
choice may be questioned, its constitutional validity may not.
That other sources of revenue may be available, such as severance,
excise and sales taxes as suggested, is true. But, the legisla-
ture has chosen property taxes to the dismay of many property owners.
As our foregoing discussion indicates, the legislature could adopt
a property tax and having done so it is free to use the proceeds
realized by the tax for any purpose, including fulfillment
of the duty to fund public education.
Respondents' second issue is that Chapter 355 discriminates
against the taxpayers of Fallon County. There are two facets to
this issue. The first is predicated on the claim that the property
tax levied by Chapter 355 on that particular part of all property
i n t h e s t a t e which i s s i t u a t e i n F a l l o n County w i l l produce f u n d s

i n e x c e s s o f t h o s e r e q u i r e d by t h a t p a r t i c u l a r p a r t of t h e p u b l i c

s c h o o l s y s t e m l o c a t e d i n F a l l o n County. It i s a s s e r t e d t h a t those

p r o v i s i o n s o f Chapter 355 which r e q u i r e t h e e x c e s s f u n d s be r e m i t t e d

t o t h e s t a t e r e s u l t i n a t a k i n g of p r o p e r t y w i t h o u t due p r o c e s s .

Reduced t o i t s s i m p l e s t t e r m s , r e s p o n d e n t s ' p o s i t i o n i s

t h a t r e v e n u e r a i s e d by a s t a t e t a x must be expended i n t h e c o u n t y

i n which t h a t revenue o r i g i n a t e s . Respondents r e a c h t h i s c o n c l u -

s i o n by f i r s t denominating t h e t a x l e v i e d by C h a p t e r 355 a s a

" l o c a l p r o p e r t y t a x " and t h e n a p p l y i n g t h e g e n e r a l l y a c c e p t e d r u l e

t h a t one d i s t r i c t c a n n o t be s u b j e c t e d t o t a x f o r t h e b e n e f i t of
another d i s t r i c t .

A s o u r p r e c e d i n g d i s c u s s i o n p o i n t s o u t , t h e t a x l e v i e d by

C h a p t e r 355 i s a s t a t e t a x l e v i e d f o r t h e b e n e f i t of t h e s t a t e a s

a whole. Viewed i n t h a t l i g h t t h e t a x d o e s n o t o f f e n d a g a i n s t t h e
r u l e r e l i e d upon by r e s p o n d e n t s s i n c e t h e t a x i n g d i s t r i c t , t h e
s t a t e , b e n e f i t s a s a whole from t h e t a x imposed.

T h a t some a r e a s d e r i v e more immediate and d i r e c t b e n e f i t s
from t h e t a x i s n o t a n o b j e c t i o n , i f t h e community a s a whole bene-

fits. S t a t e e x r e l . Henderson v . Dawson County, 87 Mont. 1 2 2 , 1 3 7 ,

286 P . 125. I n K e l l y v . C i t y of P i t t s b u r g h , 104 U.S. 7 8 , 82, 26

L ed 658, a landowner c h a l l e n g e d a t a x on t h e same g r o u n d s r e l i e d

on by r e s p o n d e n t s h e r e , t h a t b e c a u s e h e d i d n o t r e c e i v e a d i r e c t

p e r s o n a l b e n e f i t from a t a x it amounted t o a t a k i n g of p r o p e r t y

w i t h o u t due p r o c e s s . I n r e j e c t i n g t h i s c l a i m t h e United S t a t e s

Supreme Court s a i d :
" I t may be t r u e t h a t he d o e s n o t r e c e i v e t h e s a m e
amount of b e n e f i t from some o r any of t h e s e t a x e s
a s d o c i t i z e n s l i v i n g i n t h e h e a r t of t h e c i t y .
It p r o b a b l y i s t r u e * * * t h a t h i s t a x b e a r s a
very unjust r e l a t i o n t o t h e b e n e f i t s received a s
compared w i t h i t s amount. But who can a d j u s t
w i t h p r e c i s e a c c u r a c y t h e amount which e a c h
i n d i v i d u a l i n a n o r g a n i z e d c i v i l community s h a l l
c o n t r i b u t e t o s u s t a i n i t , o r can i n s u r e i n t h i s
 respect absolute equality of burdens, and fairness
in their distribution among those who must bear
them?

"Clearly, however, these are matters of detail
within the discretion, and therefore the power,
of the law-making body within whose jurisdiction
the parties live. This court cannot say in such
cases, however great the hardship or unequal the
burden, that the tax collected for such purposes
is taking the property of the taxpayer without due
process of law."
This general rule is summarized in Cooley on Taxation,
V. 1, 4th Ed., S 89, P. 214:
" * * * However, it is almost unanimously held
that it is no defense to the collection of a tax
for a special purpose that a person liable for
the tax is not benefited by the expenditure of
the proceeds of the tax or not as much benefited
as others. * * * In other words, a general tax
cannot be dissected to show that, as to certain
constituent parts, the taxpayer receives no
benefits."
This is the rule we hold applicable to the tax questioned in the
instant case. It is a general tax levied at the same rate on all
property in the state. It is for the general state purpose of
providing a statewide system of public schools. The fact Fallon
County does not receive benefits directly in the amount of its
contribution does not provide a defense to the collection of the
taxes authorized by Chapter 355.
This same conclusion has been reached by the courts of
other states when called upon to determine the validity of a uni-
form property tax whose proceeds are distributed on a prorata
basis to schools, even though there, as here, the amount contributed
by an area in taxes exceeded in some instances the amount returned
to the area for its schools. Sawyer v. Gilmore, 109 Me. 169, 83
A. 673; Raynolds v. Swope, 28 N.M. 141, 207 P. 581; Miller v. Korns,
107 Ohio St. 287, 140 N.E. 773; Board of Trustees, Etc. v. Board
of County Com'rs, 83 Ida. 172, 359 P.2d 635. Some state courts have
gone even further and held that uniform state taxation for
school support is constitutionally required. Serrano v. Priest,
96 Cal. Rptr. 601, 487 P.2d 1241; Sweetwater Co. Plan. Com. v.
Hinkle, (Wyo. 1971) 491 P.2d 1234, 1237.
The authority relied on by respondents to support the
contention that Chapter 355 is invalid as a tax levied on one
district for the benefit of another is not in point. The ~yoming
case of Tennant v. Sinclair Oil and Gas. Co. (Wyo. 1960) 355 P.2d
887, dealt with a tax which was levied only on specified school
districts as opposed to the uniform levy of Chapter 355, and which
arbitrarily awarded a part of the fund created by the tax to the
other school districts which were not subject to the tax, as opposed
to the provisions of Chapter 355 which specify that each district
is to receive its share in total proceeds on a modified prorata
basis. Our conclusion that this decision does not apply to tax such
as that levied by Chapter 355, is reinforced by the subsequent
decision of the Wyoming Court in Sweetwater in which it observed
that equalization of taxes for school purposes is constitutionally
required in that state. It then went on to state:
"We see no manner in which ad valorem taxes for
school purposes can be made equal and uniform
unless it is done on a state-wide basis. In
other words, all property owners within the state
should be required to pay the same total mill
levy for school purposes."
This is precisely what has been done by Chapter 355, each
property owner now pays the same basic mill levy for school pur-
poses. Similarly, the Nebraska case cited by respondents, Peterson
v. Hancock, 155 Neb. 801, 54 N.W.2d 85, can be distinguished on
the grounds that while the tax was levied uniformly, certain
school districts were arbitrarily denied a right to share on any
basis in the proceeds. Under Chapter 355 all school districts
and all counties share in proportion to their need.
 The second facet of respondents' claim that Chapter 3 5 5
results in discrimination against the taxpayers of Fallon County
relates to the manner in which the funds raised by Chapter 3 5 5
are distributed. Respondents assert that various facts would
reveal that some school districts are unable to provide education-
al offerings comparable to those which are provided in other dis-
tricts. For example, respondents maintained that a comparison
of curricula would demonstrate a wide disparity in the educational
opportunities offered by different schools. No doubt this is true.
No doubt other comparisons could be made which would show differences
in educational opportunity. Respondents assert that these compar-
isons would conclusively demonstrate the foundation program itself
is ill conceived in that it does not take into consideration to a
sufficient degree the differences in schools resulting from differ-
ences in the number of pupils. It is argued that the foundation
program of X dollars per pupil is itself arbitrary and lacking in
uniformity. Further, that the 7% limitation on increases in school
budgets has effectively locked those schools with substandard
programs into a position of permanent inequality of educational
opportunity.
In this case, no assertions of substandard programs are
made. The foundation program provides for accreditation and other
standards. We do not here rule on the validity of the 7% limita-
tion on budgets as provided in Chapter 3 5 5 . Without the facts of
a specific situation before us, we can only consider the constitu-
tionality of the foundation program and the budget limitations of
Chapter 355 on their face and not as applied. Certainly any
reasonable person would grant that there are imperfections in the
foundation formula, with its many
fTiables. The constitutional
test is not perfection, but rather whether when taken as a whole
it is a rational method to accomplish the goal of equal educational
opportunity for each person of the state. As the United States
Supreme Court observed in San Antonio School District v. Rodri-
guez, 411 U.S. 1, 93 S.Ct. -, 36 L ed 2d 16, 48:
"The very complexity of the problems of finan-
cing and managing a statewide public school
system suggest that 'there will be more than one
constitutionally permissible method of solving
them,' and that, within the limits of rationality,
'the legislature's efforts to tackle the problems'
should be entitled to respect. Jefferson v.
Hackney, 406 U.S. 535, 546-547, 32 L ed 2d 285,
.
92 S.Ct. 1724 (1972) "
An on the face examination of the provisions of the founda-
tion program dealing with the distribution of state educational
funds reveals that such funds are distributed basically on a per
student basis with the smaller schools receiving somewhat more
per student than the larger schools. Provision is made for budget
increases resulting from an increase in enrollment. Further, the
trustees are empowered to increase the local budget through addi-
tional levies, if approved by the district's electors. It is
difficult to visualize a method other than some system of cash
grants through which the state could meet its constitutional obli-
gation under Art. X, Sec. 1, Montana Constitution 1972, to provide
for and fund a basic educational system while leaving the actual
supervision and control of each school district in a board of
trustees as required by Art. X, Sec. 8, Montana Constitution 1972.
Accordingly, while not foreclosing a consideration of the founda-
tion program and the budget limitations of Chapter 355 as applied,
we hold that on its face the program is a rational method of pro-
viding the required basic public education.
Because of the view we have taken of the other issues in
the case, it is clear that the factual questions alluded to in
the final issue raised by respondents, while real, are not relevant.
We will not consider that issue further.
This opinion constitutes a judgment that Chapter 355 is
constitutionally valid on its face. Therefore, defendant Silver

Roth, County Treasurer of Fallon County, is ordered to remit

forthwith to the state those monies collected under authority of

Chapter 355. Each party to bear its own costs of this proceeding.

- - , --------.&--
,&, ------------
Justice

We concur: -4

Chief Justice