No. 85-274
I N T H E SUPREME COURT O F T H E S T A T E O F MONTANA
1986
D & F S A N I T A T I O N S E R V I C E , B I G SKY
HAUL ALVAY and YELLOWSTONE S A N I T A T I O N
SERVICE,
P l a i n t i f f s and A p p e l l a n t s ,
C I T Y OF B I L L I N G S ,
D e f e n d a n t and R e s p o n d e n t .
A P P E A L FROM: D i s t r i c t C o u r t 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 ,
I n and f o r t h e C o u n t y o f Y e l l o w s t o n e ,
T h e H o n o r a b l e D i a n e G . B a r z , Judge p r e s i d i n g .
COUNSEL O F RECORD:
For A p p e l l a n t :
Alexander & Baucus; G a r y M. Z a d i c k argued, G r e a t
Falls, Montana
For R e s p o n d e n t :
Peterson, Sch.ofield & Leckie; K e n n e t h P e t e r s o n argued,
B i l l i n g s , Montana
Submitted: October 25, 1985
Decided: January 1 6 , 1 9 8 6
Filed: JAN 1 6 1986
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Clerk
Mr. Justice John C. Sheehy d.elivered the Opinion of the
Court.
Plaintiff garbage haulers brought this action for
damages and injunctive relief against defendant City of
Billings in the District Court of the Thirteenth Judicial
District, Yellowstone County. The District Court denied the
injunction. The parties stipulated to the facts and
submitted th.e issues to the District Court. The District
Court ruled for the City. Both parties stipulated to entry
of judgment in the City's favor. The District Court
dismissed the complaint with prejudice in accordance with the
stipulation. Plaintiffs appeal and defendant cross-appeals
from the judgment. We affirm.
There are two issues on cross-appeal and three issues on
appeal. We begin with the two issues on cross-appeal since
they are logically prior. Is section 7-2-4736, MCA,
constitutional? And how should it be interpreted? There are
three issues raised by appellants on appeal. What is the
plain meaning of section 7-2-4736, MCA? Did the District
Court erroneously assume the residents who receive service
from private garbage haulers had to pay twice for garbage
service? Has the 1egisl.ature by enacting section 7-2-4736,
MCA pre-empted the field of garbage regulation?
The parties stipulated to the facts in this case.
Plaintiffs are Montana corporations authorized by the Public
Service Commission to collect garbage in and outside the
Billings city limits. They brought this action for damages
and an injunction against the City of Billings for violating
section 7-2-4736, MCA. Section 7-2-4736, MCA, states:
PRESERVATION OF EXISTING GARBAGE OR SOLID WASTE
SERVICE IN THE EVENT OF ANNEXATION. A municipality
that annexes or incorporates additional area
receiving garbage and solid waste disposal service
by a motor carrier authorized by the public service
comission to conduct such service may not provide
competitive or similar garbage and solid waste
disposal service to the area for 5 years following
annexation except upon a proper showing to the
public service commission that the existing carrier
is unable or refuses to provide adequate service to
the annexed or incorporated area, and after the
expiration of 5 years, the municipality may provide
such service only if a majority of the residents of
the annexed or incorporated area request in writing
to the municipality that such service be provided
by the municipality. If a proper showing is made
that the existing carrier is unable or refuses to
provide adequate service to the annexed or
incorporated area or if a majority of the residents
request service from the municipality, the
municipality may assume sole jurisdiction for the
garbage and solid waste disposal service to the
entire annexed or incorporated area.
The City of Billings has provided garbage service to
annexed areas on the following basis:
a) when totally undeveloped, vacant lands are
annexed, the City provides all subsequent garbage
services;
b) when developed lands are annexed that are
receiving no garbage services, the City provides
all subsequent garbage services;
c) when developed lands are annexed on which some
persons are receiving private garbage services,
those persons cannot receive City garbage service
for 5 years, but the City provides garbage
collection services to all subsequent residents in
the area.
The garbage collected by the plaintiffs, is taken to the
city landfill. City customers of the plaintiffs are assessed
a disposal fee by the City. County customers are assessed a
fee by the county, which is remitted to the City.
The first issue raised on cross-appeal is the
constitutiona.lity of section 7-2-4736, PICA. Respondent
c0ntend.s section 7-2-4736, MCA is unconstitutional because it
violates 1972 Mont. Const., Art. 11, 5 31, which prohibits
laws making irrevocable grants of franchises; the equal
protection cla-use of 1972 Mont. Const., Art. 11, S 4; and
1972 Mont. Const., Art. V, 12 which prohibits the
legislature from passing special or local laws.
We begin with respondent's first contention that section
7-2-4736, MCA violates 1972 Mont. Const., Art. XI, S 31.
That section states: "No ex post facto law nor any law
impairing the obligation of contracts, or making any
irrevocable grant of special privileges, franchises, or
immunities, shall be passed by the legislature." Respondent
contends a franchise is granted where a special privilege is
conferred by government upon an individual or association
which does not belong to citizens generally. Respondent
contends that a grant of an excl-usive right for a definite
period of time falls within the commonly established
definition of a franchise, and that section 7-2-4736, MCA
grants a franchise and special privilege to the appellants to
collect garbage within a portion of the City.
Appellants contend the statute does not grant an
irrevocable privilege or franchise but that the privilege
created in the appellants can be terminated.
We defined a franchise as a "special privilege conferred
by the government on an individual which does not belong to
the citizens generally. " Glodt v. City of Missoula (1948),
121 Mont. 178, 183, 190 P.2d 545, 548. Section 7-2-4736, MCA
confers a special privilege or franchise upon the private
garbage haulers. However, we agree with the District Court
that the franchise granted is not irrevocable. The privilege
can be terminated by either a showing that the private
carrier is unable or refused to provide adequate service; or
by written request of a majority of residents after a set
period of time. Thus even if section 7-2-4736, MCA does
grant a franchise, it is not an irrevocable one within the
meaning of 1972 Mont. Const., Art. 11, S 31. We hold section
7-2-4736 is constitutional under 1972 Mont. Const., Art. 11,
S 31.
Respondent next contends section 7-2-4736, MCA violates
the equal protection clause of the Montana Constitution which
states: "No person shall be denied the equal protection of
the laws." 1972 Mont. Const., Art. 11, $ 4. Respondent
makes an allegation that the law places a greater tax on
annexed taxpayers as opposed to unannexed taxpayers." A
privilege conferred upon one class is a discrimination in
favor of that class and against all others." Hill v. Rae
(1916), 52 Mont. 378, 382, 158 P. 826, 828. But the mere
fact it is discriminatory is not necessarily unlawful. The
greater part of all legislation is discriminatory in some
manner. -
Id. An analysis of whether a privilege viol-ates
equal protection requires a determination as to whether the
classification is legally permissible and if the
classification is reasonable. -
Id.
This statute is not subject to strict scrutiny because
it does not burden a fundamental right or constitute
invidious discrimination against a suspect classification.
The test here is whether the classification is rationally
related to a legitimate governmental interest. Tipco Corp.,
Inc. v. City of Billings (1982), 197 Mont. 339, 345, 642 P.2d
1074, 1078.
The legislature sought to protect the investments of
motor carriers in enacting section 7-2-4736, MCA. Generally,
prior to annexation, land areas are sparsely populated. They
do not represent the most attractive business to private
carriers. Yet the need for garbage disposal services is not
met by the City. Therefore the legislature sought to make
unannexed areas a more attractive business proposal by
allowing the private carriers time to recoup their
investments after annexation. This is a legitimate
governmental objective. The classification of people in
annexed areas using private garbage services prior to
annexation bears a rational relation to the governmental
purpose of encouraging private garbage service in unannexed
areas. We hold this statute does not violate equal
protection.
Finally, respondent contends section 7-2-4736, MCA
violates 1972 Mont. Const., Art. V, S 12 which states: "The
legislature shall not pass a special or local act when a
general act is, or can be made, applicable. " A general law
need not be a law which operates on all persons. "The word
'general' comes from the Latin 'genus' and relates to the
whole kind, class or order; hence a law which affects a class
of persons less than all may be a general law." Leuthold v.
Brandjord (1935), 100 Mont. 96, 105, 47 P.2d 41, 45. Special-
laws are laws made for individual cases, or for less than a
class; local laws are special as to place. Such laws are
prohibited in order to prevent a diversity of laws on the
same subject. -
Id. The test for a special law is: "Does it
operate equally upon all of a group of objects which, having
regard to the purpose of the legislature, are distinguished
by characteristics sufficiently marked and important to make
them a class by themselves?" State ex rel. Redman v. Meyers
11922), 65 Mont. 124, 128, 210 P. 1064, 1066. We have
already determined the legislative purpose to encourage
private garbage service to unannexed areas is a sufficiently
important governmental interest to justify the
classification. Section 7-2-4736, MCA is not a special or
local law. This statute is a general law which does not
violate 1972 Mont. Const., Art. V, S 12. We find section
7-2-4736, MCA to be constitutional.
The next issue raised on cross-appeal and on appeal is
the interpretation of section 7-2-4736, MCA. Appellants
contend the plain meaning of section 7-2-4736, MCA is to
prohibit all competitive garbage service by a city in an
annexed area for a period of five years after annexation.
They argue the statute refers to "annexed area" but does not
differentiate between old and new customers as the City does.
Therefore they argue all new residents of an annexed area
must use private garbage services for a period of five years
after annexation.
Respondent contends the language of the statute and the
intent of the legislature is to preserve existing garbage
services, but not to force subsequent residents in annexed
areas to use private garbage services. Therefore, the City
has been providing garbage services to subsequent residents
in annexed areas. Respondent also contends that where a
statute grants a franchise to a corporation the words of
grant must be construed against the grantee.
We hold the District Court was correct in interpreting
the statute to mean that the private garbage carriers may
continue to provide services to those customers it had prior
to annexation only. We hold the City is correct in its
interpretation for three reasons. First, the purpose of the
statute is to allow the private garbage haulers to recoup
their investment for providing an essential service. The
investment in providing services prior to annexation is only
as great as the need for services at that time and therefore
section 7-2-4736, MCA should be limited to existing customers
at the time of annexation. Second, section 7-2-4736, MCA
grants a franchise to the private garbage haulers. In the
grant of a franchise by the government the grantee takes only
what is clearly given by the grant, and nothing by
implication. Sheridan County Elec. Co-op v. ~ontana-Dakota
Utilities Co. (I-954), 128 Mont. 84, 87, 270 ~ . 2 d742, 743.
Thus the statute must be interpreted to refer only to
customers existing 2t the time of annexation. Third, if a
governmental grant of a. franchise is susceptible to two
meanings, the meaning which works the least harm to the
public must he adopted. City of Helena v. Helena Light and
~ y .Co. (1922), 63 Mont. 108, 115, 207 P. 337, 339. The
interpretation restricting the scope of the statute to
existing services works the least harm to the public and must
be adopted.
The second issue on appeal is whether the District Court
erred in assuming the residents who receive private garbage
service had to pay twice for garbage services? As part of
its "least harm to the publ-ic" analysis, the District Court
found that if the statute were limited to existing residents
at the time of annexation, only they would have to pay twice
(once as a taxpayer, and once to the private carrier).
The stipulation of fact entered by the parties states,
"That the waste collected by the Plaintiffs is
taken to the City operated. landfill where it is
disposed of by the City. City customers of the
Plaintj.ffls are assessed a disposal fee by the
City. County area customers of the Plaintiffs pay
a solid waste fee which is assessed by the County
and then the County remits to the City. Roll-off
boxes containing construction or demolition
material taken by the Plaintiffs to the City
landfill are assessed a fee based upon cubic
yardage and the fee is collected from the carrier."
From this stipulation of fact it is unclear whether or not
the City taxpayers pay twice for ga-rbage service. Thus it is
impossible for us to determine if the District Court was in
error, but even if in error, it was harmless. An error in
the court's findings of fact will not lead to reversal unless
a correction of the error might lead to a different judgment.
Grogan v. Valley Trading Co. (1904), 30 Mont. 229, 237, 76 P.
211., 214. In this case, the finding of fact of the District
Court is harmless error. Stanford v. Coram (1902), 26 Mont.
285, 67 P. 1005.
The third issue on appeal is whether the legislature by
enacting section 7-2-4736, MCA has pre-empted the field of
garbage regulation. The appellants contend the legislature
has evidenced its intent to pre-empt municipali-ties from
collecting garbage by authorizing the PSC to grant
certificates of operating authority to garbage carriers.
Appellant argues municipalitj-es have only such power as is
granted by the legislature, and if the legislature chooses to
pre-empt a field, the city is powerless to act. Appe1-l-ants
contend that local regulation wa.s not intended by the
legislature since no statutory authority exists for the
regulation of garbage as Billings does.
Prior to the 1972 Montana Constitution, it
. was
fundamental that cities were subordinate political
subdivisions of the State. State ex rel. Great Falls Housing
Authority v. Great Fa.lls (1940), 110 Mont.. 31-8, 100 P.2d 915.
Cities had only those powers expressly given to them by the
legislature. State ex rel. City of Libby v. Haswell (1966),
147 Mont. 492, 494-95, 414 P.2d 652, 653; City of Bozeman v.
Ramsey (1961), 139 Mont. 148, 156, 362 P.2d 206, 210; City of
Billings v. Herold (1956), 130 Mont. 138, 140-41, 296 P.2d
263, 264; State ex rel. Wiley v. District Court (1945), 118
Mont. 50, 54, 164 P.2d 358, 360. Thus if the state
legislature deemed a subject to be a matter of statewide
concern, it could enact laws on the subject and. pre-empt
local governments from the field. Haswell, 147 Mont. at 496,
414 P.2d at 654; Ramsey, 139 Mont. at 163, 362 P.2d at 214;
Herold, 130 Mont. at 141, 296 P.2d at 269-70; ~ i l e y ,118
Mont. at 54, 164 P.2d at 361.
However, the 1972 Montana Constitution changed the role
and power of local governments in Montana. The new
Constitution provides local governments with the option of
adopting a sel-f-government charter or retaining general
government powers. If a local government adopts a charter,
the local government may exercise any power not prohibited by
the Constitution, law or the charter. 1972 Mont. Const.,
Art. XI, § 6. This section grants local governments, which
formerly had. only such powers granted to them, the authority
to share powers with the state government. " [Tlhe 'shared
powers' concept does not leave the local unit free from stete
control; it does, however, change the basic assumption
concerning the power of local government. At present, that
[sic] assumption is that local government lacks power unless
it has been specifically granted. Under the shared powers
concept, the assumption is that local government possesses
the power, unless it has been specifically denied." 1972
Mont. Const., Con. Committee Notes (1972), Vol. 11, pp.
796-97. (Emphasis in original. 1 Hence, if a local
government did, adopt self-government powers under the 1972
Constitution, then Haswell, Ramsey, Herold, and Wiley would
no longer apply. If a local government choose to retain
general government powers, the local government would have
only the powers given to it by the legislature and those
cases would still be applicable.
We take judicial notice under Rule 202 (b)( 2 ) , M. R. Evid.,
that Billings voters adopted a self-government charter on
November 14, 1976. With the adoption of the charter, the
City of Billings assumed self-government powers. The City
may exercise any power or provide any service except those
specifically prohibited by the constituti.on, law, or the
charter. Section 7-1-102, MCA. Because of this we expressly
overrule statements in City of Billings v. Weatherwax (Mont.
1981), 530 P.2d 1216, 38 St.Rep. 1034, that municipalities
have only such power as is granted them by the legislature.
This was the law under the 1889 Constitution. It is not the
law under the 1972 Constitution. Under the new Constitution,
the City of Billings has all. powers save those expressly
prohibited.
The only way the doctrine of pre-emption by the state
can co-exist with self-government powers of a municipality is
if there is an express prohibition by statute which forbids
local governments with self-government powers from acting in
a certain area. The doctrine of implied pre-emption, by
definition, cannot apply to local governments with
self-government powers. Tipco Corp. Inc. v. City of Billings
(1982), 197 Mont. 339, 642 P.2d 1074. We look then to the
statutes to determine if there has been an express
prohibition against local governments regulating garbage.
The powers specificall-ydenied to local governments are
enumerated in section 7-1-111 MCA. Billings Firefighters
Local 521 v. Billings (Mont. 19851, 694 P.2d 1335, 42 St.Rep.
112. "A local government unit with self-government powers is
prohibited the exercise of the following: ... (4) any
power that prohibits the grant or denial of a certificate of
public convenience and necessity." Garbage disposal service
operators are required to get a certificate of public
convenience and necessity issued by the PSC prior to doing
business. Section 69-12-314, MCA. The certificate grants
the carriers the right to operate their business upon the
public streets. Barney v. Board of Railroad Comm'rs (1932),
93 Mont. 115, 138, 17 P.2d 82, 88.
The decision of the voter of the City of Billings, that
the City should provide garbage pick-up services for its
residents in no way prohibits the grant or denial of a
certificate of public necessity. The City has not refused to
allow garbage service companies to operate despite their
certificate, nor has the City allowed garbage service
companies to operate without a certificate. The City is
simply exercising its self-government powers to provide a
service for its residents and taxing them for that service.
This is clearly within the self-government powers of Billings
and does not conflict with state law.
We affirm the judgment of the District Court.
We Concur:
I
Chief J u s w