No. 14829
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980
-- -- - -- -
JOHN V. SCHARA and MARDELL SCHARA,
Plaintiff and Respondents and
Cross-Appellants,
THE ANACONDA COMPANY, a Delaware
corporation,
Defendant and Appellant.
No. 14800
THE ANACONDA COMPANY,
Relator,
VS.
THE HON. JAMES D. FREEBOURN, DISTRICT JDUGE PRESIDING
IN THE DISTRICT COURT OF THE SECOND JUDICIAL DISTRICT et al.,
Respondents.
Appeal from: District Court of the Second Judicial District,
In and For the County of Silver Bow
Honorable Judge James D. Freebourn and Honorable
Judge Arnold H. 0lsgn presiding.
Counsel of Record:
For Appellant:
Poore Law Firm, Butte, Montana
Urban L. Roth argued, Butte, Montana
For Respondent:
McCaffery and Peterson, Butte, Montana
John L. Peterson argued, Butte, Montana
Submitted: February 28, 1980
Decided :
'APR 2 4 1980
.-
Filed: APF 2 ;
Mr, Chief Justice Frank I. Haswell delivered the Opinion of
the Court.
This is an appeal in which two actions have been consol-
idated. The first is a condemnation action brought by The Ana-
conda Company (~naconda) condemn approximately two acres of
to
land in the Columbia Gardens Addition of Butte, Montana. The
property sought to be condemned is owned by John and Mardell
Schara (Scharas), The second is an action brought by the Scharas
to enjoin Anaconda from allegedly violating the conditions of a
restrictive covenant incorporated in deeds to lots in the Colum-
bia Gardens Addition. Both actions were filed in the Silver Bow
County District Court.
In the first action, the District Court entered incom-
plee findings and was thereafter directed by this Court to complete
such findings.
In the second action, the District Court granted a manda-
tory permanent injunction enjoining Anaconda from violating the
restrictive covenant which had attached to the Scharas' property.
Anaconda moved for a stay of the injunction, but the motion was
denied by the District Court. This Court granted Anaconda a tem-
porary stay pending determination of the merits of this appeal.
Anaconda appeals from both District Court judgments, and
the Scharas cross-appeal from the judgment entered in the condem-
nation action.
John and Mardell Schara are the owners of approximately
2.2704 acres of land, Lots 51, 52 and 54 of the Columbia Gardens
Addition in Butte, Montana. On September 1, 1978, the Columbia
Gardens Addition was incorporated under the Master Zoning Plan for
Butte-Silver Bow and was zoned "M" for mining or industrial. Most
of the 26 acres and the entire mineral estate within the Addition
is owned by the Anaconda Company. The only access to the Scharas'
property and the ~dditionis Montgomery Avenue. Anaconda owns all
of the land adjacent to Montgomery Avenue on both sides, plus all
of Montgomery Avenue to the Columbia Gardens ~ddition. At the
present time, the Scharas are the sole residents of the ~ d d i -
tion. Since 1970, the Addition and its immediate neighborhood
have undergone extensive changes, most of which have been prompted
by Anaconda. The Columbia Gardens Amusement Park has been razed,
the Continental East Pit operation located 300 to 400 feet from
the Addition has commenced, an interstate highway has been con-
structed through the southeast corner of the ~ddition,the Berkeley
Pit has expanded and a power line has been constructed through
the north end of the Addition. The Anaconda Company has, upon
several occasions, attempted to acquire the Scharas' property
through negotiation and offers to purchase.
Anaconda instituted a condemnation proceeding against the
Scharas to acquire their land for the purpose of establishing a
dumping site for mining waste. In support of its claim, Anaconda
presented evidence that it wished to expand its mining operations,
that the expansion would require new techniques and expensive
equipment, that it would be economically infeasible and imprac-
tical to dump waste on any other land, and that the land was es-
sential to carrying out Anaconda's long term mining plan. Anacon-
da's testimony reveals that if the land is not acquired it would
be infeasible to expand the Berkeley Pit eastward; consequently,
mining would terminate within seven years due to exhaustion of
the pit, shortening the life of mining in Butte by 14 years. Ana-
conda's mining plan requires that Montgomery Avenue as well as the
Columbia Gardens Addition be inundated by overburden by the mid-
1980's. The Scharas presented contradictory evidence of alter-
native dumping sites which were not as economically feasible for
the mining operation but which were being contemplated by Anaconda
if the Scharas' land could not be obtained. The Scharas also
proffered testimony that Anaconda had made inconsistent statements
concerning future mining operations in its petition for the
Woodville Road closure in 1977. Anaconda had stated at that
time that with the road closure it could continue mining until
about year 2000.
In the second action, the Scharas sought to enjoin Ana-
conda from violating one of the restrictive covenants placed
upon their property. The covenant was the result of a trust
agreement signed in 1950 between North Butte Mining Company,
Anaconda's predecessor in interest, and all of the owners of
Columbia Gardens Addition, one of whom was the Scharas' prede-
cessor in interest. The trust instrument bound successors in
interest and provided:
"That in all conveyances, uses or permits there
shall be a restriction upon the use of said prem-
ises that said premises shall be for residential
use only and that no building, use or operation of
the prenises shall create or constitute a nuisance."
The District Court denied Anaconda's motion to stay the
restrictive covenant proceedings until the outcome of the condem-
nation action, and Judge Olsen entered judgment against Anaconda
on March 28, 1979. Pursuant to this judgment, a permanent injunc-
tion was issued which restrained Anaconda from using its property
within the Columbia Gardens Addition for any purpose other than
residential and from creating or maintaining a nuisance. The
injunction also commanded Anaconda to remove an electric trans-
mission line from the Addition and to repair or remove all vacated
buildings located upon its property within the Addition.
Originally the District Court, in the condemnation action,
the Honorable James D. Freebourn presiding, made the following
findings of fact and conclusions of law on April 19, 1979:
"5. At this date, plaintiff has nearly reached
the maximum depth at which ore can be economically
mined from the pit; the pit must be expanded
horizontally in one direction or another; defen-
dants' property lies east and south of the pit;
expansion to the east and south, instead of some
other direction, is compatible with the greatest
public good and least private injury;
"10. Plaintiff's past, present and continuation
of future operations have and will accrue as a
benefit to the public and to the use of the public.
Acquisition of lots 51, 52 and 54 of the Columbia
Garden Addition, on substantial and satisfactory
estimations, now in evidence, will continue plain-
tiff's operations for some 13 or more years.
"11. Plaintiff has shown, by a preponderance of
the evidence, that the use and taking of said
lots is authorized by law; that the taking of said
lots is necessary to such use; that the need of
said lots is necessary to continue plaintiff's
mining operations and such taking, at this definite
and specific location, is being acconplished in
a manner which will be most compatible with the
greatest public good and the least private injury."
However, the court took judicial notice of the permanent
injunction issued on March 30, 1979, by the Honorable Arnold H.
Olsen in favor of the Scharas and against Anaconda concerning the
violation of restrictive covenants in the Columbia Gardens Addi-
tion. As a result, Judge Freebourn refused to enter a condemna-
tion award until this Court reviewed the permanent injunction
since such an award would amount to a reversal of Judge Olsents
injunction.
Subsequently, Anaconda sought a writ from this Court to
direct Judge Freebourn to complete his findings and conclusions.
On July 11, 1979, this Court directed the District Court to enter
those conclusions. Judge Freebourn then made "amended and supple-
mental" findings of fact and conclusions of law in which he held
that Anaconda had "more than sufficient land for dumping purposes
and to continue its mining operations for some 14 or 15 years
without the need and necessity of the use of defendantst land,"
and further found that Anaconda's need for the Scharas' property
would not arise for some "14 or 15 years" in the future. The
District Court then concluded Anaconda had failed to prove its
need of the Scharas' property in the immediate future and because
of increases in land values over the last five years, the present
taking of the Schara property for "some 14 or 15 years in the
future, would deny defendants just compensation for such use."
The following issues are before us on appeal:
(1) Whether the District Court was in error by denying
Anaconda's motion to stay the restrictive covenant action until
a final determination of the condemnation action;
(2) In the alternative, whether the restrictive covenant
is unenforcealie due to the radical changes which have occurred
in the Columbia Gardens Addition since 1950;
(3) Whether the District Court abused its discretion by
not having substantial evidence upon which to base its finding
that no "necessity" will exist for Anaconda to condemn the Scharas'
property for 14 or 15 years.
The Scharas raise the following issues on cross-appeal:
(1) Whether the proposed condemnation is excessive;
(2) Whether, by reason of the Hardrock Mining Act, a
valid mining permit is an absolute condition precedent to condem-
nation for mining purposes;
(3) Whether section 70-30-102, MCA, which distinguishes
between copper mining and coal mining as a public use, is uncon-
stitutional under the Equal Protection Clause.
Looking first to Judge Olsen's denial of Anaconda's motion
to stay the covenant action pending the outcome of the condemna-
tion proceedings, the heart of this issue is the effect that a
restrictive covenant has upon a proceeding seeking a preliminary
condamation award.
Nichols on Eminent Domain discusses the issue as follows:
"5.73 Restrictive covenants.
"A rather perplexing situation arises out of the
existence of what are commonly called 'building
restrictions.' A large tract of land is often cut
up into lots and sold for residential purposes,
and each lot is sold subject to restrictions
against use for various purposes, the restriction
upon each lot being for the benefit of all other
lots in the same development or 'common plan or
scheme,' reasonable in their character, they are
enforced by courts of equity in favor of the
benefitted owner, so long as he continues to own
any part of the tract for the benefit of which the
restrictLons were created, as well as in favor
of the owner of m y one of the lots into which the
tract was divided, and against the owner of any of
the lots who attempts to disregard the restric-
tions. Such restrictions do not, however, have an
inhibitina influence w o n the riaht to exercise
2 C
the power of eminent domain . . ."
2
(Emphasis added.)
Nichols on Eminent Domain, 85.73.
This approach is consistent with Montana eminent domain
statutes. Section 70-30-103, MCA, provides that all real prop-
erty as well as all classes of private property may be taken
for public use when such taking is authorized by law, and section
70-30-104, MCA, states that "such estat.e or rights as may be
necessary up to and including a fee simple when taken . . . for
. . . a place for the deposit of debris or tailings of a mine . . ."
are " . . . subject to be taken for the public use."
In our present appeal, the restrictive covenant is at
most a part of the fee or something less than a fee. Therefore,
it is the proper subject of a condemnation proceeding. Once it
is determined that the property sought is a proper subject of
condemnation, the court must find that the taking is necessary
to the public interest and consistent with the greatest public
good and the least private injury.
We therefore conclude that a restrictive covenant action
is moot when a preliminary condemnation action involving the same
property is pending. If i-Lis found that a preliminary condem-
nation award is proper, the condemnee may seek compensation which
takes into account the value of the property pursuant to the uses
allowed. On the other hand, if the condemnor is not entitled to
a preliminary condemnation award, the covenantee may proceed with
a suit on the restrictive covenant.
The District Court was in error by not granting the motion
to stay the restrictive covenant proceeding until the propriety
of the condemnation action was finally determined.
Since we find the restrictive covenant action moot, we
need not reach the issue involving the unenforceahility of a
covenant when radical changes have occurred in the character of
a neighborhood.
Next, with regard to the propriety of the District Court's
denial of a preliminary condemnation order, it is Anaconda's con-
tention that substantial credible evidence does not exist to
support the finding of no necessity for condemnation.
Section 70-30-111, MCA, is entitled "Facts necessary to
be found before condemnation." It provides, in pertinent part,
" ... [blefore property can be taken, it must appear: (1) that
the use to which it is to be applied is a use authorized by law;
(2) that the taking is necessary to such use . . ." Section 70-
30-110, MCA, states that the proposed condemnation "must be lo-
cated in the manner which will be most compatible with the greatest
public good and the least private injury."
From the preceding statutes the key determinations to be
made are: (1) Whether the proposed use is "authorized by law,"
(2) whether "the taking is necessary", and (3) whether the location
is the "most compatible with the greatest public good and the least
private injury."
The determination involving whether the proposed use is
"authorized by law" is easily made. Section 70-30-102, MCA,
enumerates the public uses which are the proper subject of con-
dennation and therefore "authorized by law." Mining, except the
strip mining of coal, is an authorized public use within section
70-30-102 (15), MCA.
The determinations of whether the taking is necessary
and whether it is compatible with the greatest public good and
the least private injury both involve factual issues.
With regard to whether the taking is necessary, this
Court has consistently held that the necessity need not be ab-
solute. Instead the test is "reasonable, requisite, and proper
for the accomplishment of the end in view, under the particular
circumstances of the case." Montana Power Co. v. Bokma (1969),
153 Mont. 390, 398, 457 P.2d 769, 774; State Highway Commission
v. Yost Farm Co. (1963), 142 Mont. 239, 384 P.2d 277; Butte,
A. & P. Ry. Co. v. Montana U. Ry. Co. (1895), 16 Mont. 504, 41
This Court made the following statement with regard to
the determination of "necessity" and "the greatest good" and the
"least private iiljury" in Mcntaa Power Co. v. Bokma, supra.
"The taking of private property by condemnation
proceedings must be compatible with the greatest
public good and the least private injury. . . The
greatest good on the one hand and the least injury
on the other are questions of fact to be determined
in passing upon the question of necessity. . . These
questions commonly arise in connection with the
location of the proposed improvement. Since the
condemnor has the expertise and detailed knowledge
of considerations involved in determining location
of the improvement, its choice of location is given
great weight. . . Such choice will not be overturned
except on clear and convincing proof that the taking
has been excessive or arbitrary, it not being the
function of the judiciary to determine as an engineer
the best location of the proposed improvements. . .
On the other hand when the condemnor fails to con-
sider the question of the least private injury be-
tween alternate routes equal in terms of public
good, its action is arbitrary and amounts to an abuse
of discretion." (Citations omitted.) 153 Mont. at
399-400, 457 P.2d at 774-775.
According to the above approach the condemnor's (~naconda's)
choice of location is to be given great weight, it is to be over-
turned only by clear and convincing proof that the decision was
excessive or arbitrary, and an abuse of discretion will be found
if the condemnor fails to study alternatives. The record dis-
closes that Anaconda studied all alternatives and rejected them
as being economically infeasible. The District Court in its
original findings found that Anaconda had "shown, by a prepon-
derance of the evidence that the . . . taking is necessary ...
and will be most compatible with the greatest public good and
the least private injury." Mysteriously, in the court's amended
and supplemental findings of fact and conclusions of law, the
original findings remain intact, but t z foll.owi.~g
le inconsistent
finding is added:
"Plaintiff has failed to prove by a preponderance
of the evidence the need and necessity of plain-
tiff for the use for mining of defendants' land in
the immediate future and such need and necessity
will not arise for some 14 or 15 years in the future."
Normally, the entry of inconsistent findings would require
us to remand the case for further proceedings in the District
Court; however here we find no evidence to support the court's
latest findings and substantial evidence to support the initial
findings. We conclude that the findings entered by the District
Court on April 9, 1979, are correct and must be entered.
The record does disclose that mining in the present Berkeley
Pit will be completed in 1986. In order to increase the life of
future mining in Butte the Berkeley Pit must be expanded, and ac-
cording to Anaconda's long term mining plan stripping of overburden
must commence by 1983. Anaconda explains that new technology has
been developed for removing overburden, and in order to have the
equipment on line by 1983, immediate action is required. The
equipment requires a tremendous investment and Anaconda must know
the result of the condemnation action before it can be ordered.
It is further disclosed that Anaconda considered two al-
ternatives to the condemnation of the Scharas' property. One al-
ternative was backfilling the Berkeley Pit with overburden. This
alternative was rejected since the long term mining plan contem-
plates vertically mining ore deposits located beneath the deepest
portion of the Berkeley Pit. This future vertical mining plan is
not now feasible because of both a lack of technology and current
market conditions; however, it would be completely precluded if
Anaccnda backfilled the pit. The second alternative studied by
Anaconda was the establishment of a dumping site on a portion of
its own land. Testimony reveals that although this alternative
is feasible from an engineering standpoint, it is economically
infeasible to transport the waste the distance involved. his
leaves condemnation of the Scharas' land as the only feasible
alternative to continue the life of mining in Butte.
The Scharas contend that since the preceding alternatives
exist, condemnation of their land is not "necessary" nor "corn-
patible with the greatest public good and the least private injury."
We find this contention lacking in merit in light of Montana Power
Co. v. Bokma, supra.
AS a result, we find substantial credible evidence to
support the findings entered by the District Court on April 19,
1979.
The Scharas contend on cross-appeal that the amount of
property sought to be condemned is excessive. The basis for this
argument is that Anaconda has recognized in its mining plan that
a portion of the Scharas' land is within the Highway Department's
proposed right-of-way for expansion of Interstate 15 and that
Anaconda only contemplates use of the Scharas' property up to the
proposed highway right-of-way.
Again this argument centers on absolute necessity, rather
than the Montana test of necessity, "reasonable, requisite and proper
for the accomplishment of the end in view, under the particular cir-
cumstances of the case." Montana Power Co. v. Bokma, supra. Test-
imony reveals that Anaconda would not use a small portion of the
Scharas' land within the proposed highway right-of-way if the High-
way Department does acquire it. Based on this testimony we cannot
find that the proposed condemnation is excessive merely because
Anaconda points out to the District Court that the Highway Depart-
ment may have a superior claim to a small portion of the land. We
find that condemnation of the Scharas' property is reasonable,
requisite, and proper for the accomplishment of the end in
view under the peculiar circumstances of the case. The possibil-
ity that Anaconda may have to forfeit a small portion of the land
to a superior claimant at a later date does not render the taking
excessive.
The Scharas next contend on cross-appeal that since sec-
tion 70-30-111, MCA, requires the use to be "authorized by law"
before condemnation is allowed, the obtaining of a valid mining
permit is a condition precedent to condemnation. However, there
is nothing in either the Hardrock Mining Act, section 82-4-301,
MCA, et seq., or the eminent domain statutes, section 70-30-101,
MCA, et seq., to support this position. Section 70-30-102, MCA,
declares mining to be a public use and it is unquestioned that
Anaconda is allowed to engage in mining activities. To find that
"authorized by law" requires that a mining company obtain a valid
mining permit prior to condemnation would be inconsistent with
Montana statutory authority and would be contrary to the public
policy of providing expediency in eminent domain proceedings.
The Scharas' next issue on cross-appeal is that section
70-30-102(15), MCA, is unconstitutional. The statute provides,
in pertinent part:
"Public uses enumerated. Subject to the provisions
of this chapter, the right of eminent domain may
be exercised in behalf of the following public uses:
"(15) to mine and extract ores, metals, or minerals
owned by the plaintiff located beneath or upon the
surface of property where the title to said surface
vests in others. However, the use of the surface
for strip mining or open pit mining of coal (i-e.,
any mining method or process in which the strata or
overburden is removed or displaced in order to ex-
tract the coal) is not a pubiic use, and eminent
domain may not be exercised for this purpose . . ."
(Emphasis added.)
It is contended that since the statute allows the mining
of copper to be a public use and disallows the strip mining of
an
coal as a public use, there is/unconstitutional violation of the
Equal Protection Clause. However, it is well established that
the equal protection clause is very limited in cases involving
eminent domain statutes. This is especially so when the statute
merely declares the legislative determination as to what is to
be considered a public use. All that is required to survive
an equal protection challenge in this context is that there be a
"reasonable" basis for the distinction. Nichols on Eminent Domain,
The legislature has provided its basis for the distinction
between copper mining and coal mining in section 70-30-106, MCA,
which provides:
"70-30-106. Eminent domain not to be used for
coal mining in certain cases--policy. For the
following reasons the state's power of eminent
domain may not be exercised to mine and extract
coal owned by the plaintiff located beneath the
surface of property where the title to the sur-
face is vested in others:
"(1) Because of the large reserves of and the
renewed interest in coal in eastern Montana, coal
development is potentially more destructive to land
and watercourses and underground aquifers and
potentially more extensive geographically than the
forseeable development of other ores, metals, or
minerals and affects large areas of land and large
numbers of people.
" (2) In many areas of Montana set forth in (1) here-
inabove, the title to the surface is vested in an
owner other than the mineral owner, and the surface
owner is putting that surface to a productive use,
and it is the public policy of the state to encour-
age and foster such productive use by such owner,
and to permit the mineral owner to condemn the sur-
face owner is to deprive the surface owner of the
right to use his property in a productive manner as
he determines and is also contrary to public policy
as set forth in subsection (4).
"(3) The magnitude of the potential coal develop-
ment in eastern Montana will subject landowners to
undue harassment by excessive use of eminent domain.
"(4) It is the public policy of the state to encourage
and foster diversity of land ownership, and the surface
mining of coal and control of large areas of land by
the surface coal mining industry would not foster pub-
lic policy and further the public interest."
Based upon the imrnediateiy preceding legislative policy we find
a reasonable basis for the distinction between copper mining and
coal mining. We conclude that section 70-30-102(15) does not
violate the Equal Protection Clause.
The judgments of the District Court in both actions are
reversed. The restrictive covenant action is dismissed. The con-
demnation action is remanded to the District Court for entry of
judgment of condemnation in accordance with this opinion.
Chief Justice
We concur:
Mr. Justice John C. Sheehy dissenting:
At the base of this Court's decision and that of Judge
Freebourn in the condemnation action was the contention of the
Anaconda Company that unless the Schara property were acquired
by the company, the company's mining operations would be reduced
from 20 years in the Butte area to 6 to 7 years of active
life and we are told "this obviously would be disastrous for
the public good of Butte-Silver Bow, Deer Lodge Counties and
the State of Montana."
The closing threat is not new. It seems to me that I
have heard this song before. It is from an old familiar
score. We can only be sure that the decision to go or remain
be
willnot/dependent on the Schara property.
Judge Freebourn, when this Court forced him by mandate
to make final findings of fact and conclusions of law so as
to override Judge Olsen's restrictive covenant decision,
found that "for dumping purposes" and to continue its mining
operations for some 14 or 15 years, Anaconda has sufficient
land already. Therefore he saw no need for the Schara
property until some 14 or 15 years in the future and concluded
that to permit condemnation now would deny them just com-
pensation for the use of their land.
Although Rule 52, M.R.Civ.P. makes it mandatory that findings
of a District Court shall not be set aside unless clearly
erroneous, this Court through the majority opinion not only
sets Judge Freebourn's findings aside, but proceeds to make
findings of its own. There is ample support in the record that
the Anaconda company owns a considerable area of land which
could be used for dumping purposes, established in the cross-
examination of Wilbur Crisswell. Moreover, Judge Freebourn had
b e f o r e him t h e t e s t i m o n y r e g a r d i n g t h e E a s t C o n t i n e n t a l
Pit. The o l d highway l e a d i n g t o Woodville had been c l o s e d
t o p e r m i t t h e opening o f t h e E a s t C o n t i n e n t a l P i t , upon t h e
r e p r e s e n t a t i o n t h a t s u c h c l o s i n g o f t h e highway would e x t e n d
B u t t e ' s mining l i f e f o r 22 y e a r s . E a s t C o n t i n e n t a l P i t was
abandoned a f t e r 2 y e a r s .
A s a second p o i n t , I c a n n o t p e r m i t myself t o s i g n a n
o p i n i o n which f i n d s i t " r e a s o n a b l e " f o r eminent domain power
t o be g r a n t e d t o o p e n - p i t h a r d r o c k mining companies, b u t t o
b e d e n i e d t o o p e n - p i t c o a l mining companies. Every r e a s o n s t a t e d
f o r d e n y i n g eminent domain power t o t h e c o a l mining i n d u s t r y
i n s e c t i o n 70-30-106, MCA, applies with equal force t o t h e
c o p p e r mining i n d u s t r y . There i s no r e a l d i s t i n c t i o n between
an o p e n - p i t copper mine and an o p e n - p i t c o a l mine, e x c e p t
t h a t t h e l e g i s l a t u r e f a v o r e d cows o v e r p e o p l e . W e give m e r e
l i p s e r v i c e t o t h e e q u a l p r o t e c t i o n c l a u s e of t h e f e d e r a l con-
s t i t u t i o n when w e f i n d a d i s t i n c t i o n w i t h o u t a d i f f e r e n c e
i n s e c t i o n 70-30-106.
For t h e s e r e a s o n s , ' I d i s s e n t .
.......................
Justice