No, 12942
I N THE SUPREME COURT OF THE STATE OF M N A A
OTN
1975
M N A A LAND TITLE ASSOCIATION,
OTN
a Montana n o n p r o f i t c o r p o r a t i o n ,
P l a i n t i f f and Respondent,
FIRST AMERICAN TITLE AND ESCROW OF
BILLINGS,, e t a l . ,
Defendants and A p p e l l a n t s ,
Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t ,
Honorable Robert H, Wilson, Judge p r e s i d i n g .
Counsel o f Record:
For Appellants :
Anderson, Syrmnes, Forbes, P e e t e and Brown,
B i l l i n g s , Montana
Benjamin N , Forbes argued, B i l l i n g s , Montana
For Respondent :
Crowley, Kilbourne, Haughey, Hanson and G a l l a g h e r ,
B i l l i n g s , Montana
Septhen H. F o s t e r a r g u e d , B i l l i n g s , Montana
Submitted: June 1 8 , 1975
Mr. Chief Justice James T. Harrison delivered the Opinion
of the Court.
This is an appeal by defendants from a judgment entered
in the district court, Yellowstone County, on December 16, 1974;
which permanently enjoined defendants from issuing title insur-
ance policies as to property in this state, subject to certain
exceptions. The injunction was suspended during the pendency
of this appeal.
The facts were stipulated and in brief are: (1) Plain-
tiff Montana Land Title Association is a nonprofit Montana cor-
poration. (2) Defendant First American Title and Escrow of
Billings is a limited partnership. (3) Defendant First America
Title Insurance is a California corporation doing business in
the state of Montana. (4) That defendants are issuing and under-
writing title insurance policies without written evidence of the
condition of title certified by one holding a certificate of
authority issued under section 66-2111, R.C.M. 1947. (5) Such
policies are not issued through a licensed title insurance agent
as required by section 40-4601, R.C.M. 1947.
Section 40-4601 provides, so far as pertinent here:
"No title insurance policy as to property in this
state shall be issued by any insurer unless based
upon evidence of the condition of title certified
in writing as of the date of the policy by some
person, firm, or corporation holding a certificate
of authority issued under section 66-2111, to
engage in the title abstracting business in the
county in which the property is located; except,
that this provision shall not apply as to title
insurance policies issued upon the basis of an
opinion of an attorney, duly authorized to prac-
tice law in this state, as to the condition of
the title following a review by such attorney of
pertinent title records or abstracts, and issued
through a licensed title insurance agent who was
so licensed and was regularly procuring title
insurance policies issued upon such basis up to
the effective date of this code."
Only two issues are raised on appeal. First, defendants
contend the district court did not have jurisdiction by reason
of the failure of plaintiff to exhaust or pursue the admin-
istrative remedies provided by sections 40-2720 through 2725,
R.C.M. 1947. It will not be necessary to discuss this issue
in view of our holding on the second issue.
That issue is, whether section 40-4601, R.C.M. 1947, is
constitutional under the Montana Constitution or the Fourteenth
Amendment of the United States Constitution.
Section 40-4601 in essence states that title insurance
companies may issue title insurance policies on the basis of a
legal opinion of a duly licensed Montana attorney if they were
doing so regularly on July 1, 1961, the effective date of the
Act, but title insurance companies who were not doing so reg-
ularly on said date cannot issue title insurance policies based
upon the opinion of a duly licensed attorney in the state of
Montana. In other words, some licensed title insurance agents
may issue title insurance based upon the opinion of a duly
authorized Montana attorney, but others may not. It is defend-
ants' contention that such discrimination violates the Fourteenth
Amendment to the Constitution of the United States which states
that no state shall "deny to any person within its jurisdiction
the equal protection of the laws."
Article 11, Section 17, 1972 Montana Constitution, is
the counterpart of the Fourteenth Amendment to the United States
Constitution, and states that "No person shall be deprived of
life, liberty or property without due process of law."
The constitutional guarantee of equal protection of the
laws requires that all persons shall be treated alike under like
circumstances and conditions, both in the privileges conferred
and in the liabilities imposed.
This Court early adhered to this guarantee, as expressed
in State v. Cudahy Packing Co. 33 Mont. 179, 186, 82 P. 833, in
these words:
" * * * 'the equal protection of the laws is a
pledge of the protection of equal laws,' herein de-
claring, in substance, that not only must the law
as enacted furnish equal protection to all, but
also that the legislature, in enacting any law,
must so adjust its provision that it will operate
equally upon the individuals constituting the class
of citizens whose conduct it is intended to control."
Plaintiff relies heavily on State ex rel. Freeman v.
Abstracters Board of Examiners, 99 Mont. 564, 580, 45 P.2d
668 (1935) which upheld section 66-2112, R.C.M. 1947, requiring
abstracters to have abstract books or indices, but permitted
the issuance of a temporary license for a period of one year
only to abstracters who, on the effective date of the Act, were
in the process of preparing abstract books or indices. The
Court rejected the contention that the statute was arbitrary
and discriminatory, and in its opinion made this comment:
"As to those in business and then holding a certi-
ficate issued under the old law, they are entitled
to a certificate for one year from the expiration
of the current certificate, at the end of which they
must comply with the requirements of the Act or go
out of business, or those who are making an honest
effort to perfect a plant are permitted a temporary
certificate on showing that they have their books
half completed; this certificate may be renewed
once, and once only. This, it would seem, con-
stitutes a reasonable classification, if it may be
called classification. The constitutional provisions
against discrimination do 'not forbid statutes and
statutory changes to have a beqinninq, and thus to
discriminate between the rights of an earlier and
later time.' All things must have a period of adjust-
ment, and such classification is not 'arbitrary
classification.' (Sperry & Hutchinson Co. v. Rhodes,
220 U.S. 502, 31 Sup.Ct. 490, 491, 55 L.Ed. 561;
Williams v. Walsh, 222 U.S. 415, 421, 32 Sup.Ct.
137, 56 L.Ed 253.)" (Emphasis ours.)
Defendants contend that this is what happens here, in
that the statute involved here has no period of adjustment pro-
vided for whatsoever, and title insurance agents issuing policies
on the basis of legal opinions on the date of enactment of the
Act can presumably forever continue to do so, whereas, all other
title insurance agents must build and have certified an abstract
plant. They assert such unequal treatment is violative of the
Fourteenth Amendment since it creates a tremendous burden of
time and expense on title insurance agents writing policies
subsequent to the date of the Act as compared to title insurance
agents who were and still are allowed to write title insurance
policies on the basis of a legal opinion, without any abstract
plant whatsoever.
Admitting there may be classifications provided for by
the laws, but one of the essential requirements is that they
shall not be capricious or arbitrary, be reasonable and have a
rational basis.
Equal protection of the laws means subjection to equal
laws applying alike to all in the same situation. While reason-
able classification is permitted without doing violence to the
equal protection of the laws, such classification must be based
upon some real and substantial distinction bearing a reasonable
and just relation to the things in respect to which such classi-
fication is imposed; such classification cannot be arbitrarily
made without any substantial basis. Arbitrary selection cannot
be justified by calling it classification. See: State v. Safe-
way Stores, Inc., 106 Mont. 182, 76 P.2d 81; Southern R. Co. v.
Greene, 216 U.S. 400, 30 Sup.Ct. 287, 54 L.Ed 536; Atchison T.
& S. F. R. Co. v. Vosburg, 238 U.S. 56, 35 Sup.Ct. 675, 59 L.Ed
1199; Colgate v. Harvey, 296 U.S. 404, 56 Sup.Ct. 252, 80 L.Ed
299, 102 A.L.R. 54; Hartford S.B.I. & Ins. Co. v. Harrison, 301
U.S. 459, 57 Sup.Ct. 838, 81 L.Ed 857; Royster Guano Co. v.
Virginia, 253 U.S. 412, 40 Sup.Ct. 560, 64 L.Ed 989; Mallinckrodt
Chemical Works v. Missouri ex rel. Jones, 238 U.S. 41, 35 Sup.
Ct. 671, 59 L.Ed 1192, 1198.
We have many times discussed equal protection of the
laws and reasonable classification and we observe no need to
quote from such opinions here. As illustrative cases we refer
to these: Brackman v. Kruse, 122 Mont. 91, 199 P.2d 971;
Garden Spot Market v. State Board of Equalization, 141 Mont.
382, 378 P.2d 220; State ex rel. Bennett v. Stow, 144 Mont. 599,
399 P.2d 221; State ex rel. Schultz-Lindsay v. Board of Equal-
ization, 145 Mont. 380, 403 P.2d 635; Great Falls National
Bank v. McCormick, 152 Mont. 319, 448 P.2d 991; and cases therein
cited.
In our view section 40-4601, R.C.M. 1947, discriminates
in favor of those agents who were writing title insurance on the
basis of legal opinions on July 1, 1961, and against those licensed
agents who later attempted to do so and thereby is in violation
of the guarantee of equal protection of the laws and unconsti-
tutional.
The judgment is reversed and the cause remanded to the
district court which is directed to enter judgment for defend-
ants.
Chief Justice
We concur:
I
2
3
-' Justices