No. 8 6 - 5 4 8
IN THE SUPREME COURT OF THE STATE OF MONTANA
1987
THE CITY OF MISSOULA, a Montana Municipal Corporation,
MOUNTAIN WATER COMPANY, a Montana Corporation,
Defendant/Respondent,
WARREN A. BACHE; LA MARR BALDWIN; JACQUELINE D. BECK; LINDA D DUNN;
DENNIS L. FALK; SHARON R. FRASER, GARY L. FREY; GEORGETTE GERLACH;
et al,
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula
The Honorable Robert M. Holter, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
MULRONEY, DELANEY & SCOTT; Dexter L. Delaney,
Missoula Montana
Jim Nugent, City Attorney, Missoula, Montana
For Respondent:
GARLINGTON, LOHN & ROBINSON; Sherman V. Lohn and
Susan P. Roy, Co-Counsel, Missoula, Montana
GOUGH, SHANAHAN, JOHNSON & WATERMAN; William
Coldiron, Helena, Montana
Submitted: April 10, 1 9 8 7
Decided: September 18, 1987
Filed: SEP 1 8 1987
Clerk
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
This is an eminent domain proceeding for the acquisition
of defendant's water distribution business. The Fourth
Judicial District Court, Missoula County, held that the City
of Missoula (City) failed to prove by a preponderance of the
evidence that its acquisition of the business through eminent
domain was necessary. The City appealed. We affirm in part,
reverse in part, and remand for reconsideration.
The issue appealed is whether the trial court erred in
determining what laws are applicable for establishing the
City's burden of proof and in weighing the evidence.
Mountain Water Company (Mountain Water) is a Montana
corporation, which owns and operates a Missoula water system.
The system also provides water for some 4,000 customers
outside the city limits of Missoula. Park Water Company of
California is the sole owner of Mountain Water. Park Water
Company, in turn, is nearly wholly owned by Henry (Sam)
Wheeler, also of California. Park Water Company at its
California headquarters, in conjunction with the local staff
of Mountain Water, manages the Mountain Water system.
Mountain Water acquired the Missoula water system from
Montana Power Company in 1979. The Missoula City Council was
also interested in buying the water system at that time.
However, because of the built-in delays associated with
municipal financing, the City was unable to fund the purchase
before the sale was made to Mountain Water. Shortly after
Mountain Water acquired the water system, the City passed an
ordinance authorizing the City Administration to acquire the
water system by purchase or condemnation under 5 s 7-13-4403
and 4404, MCA.
At the time of Mountain Water's purchase of the system,
customers were supplied by surface water from Rattlesnake
Creek and water from several wells. The wells supplied
approximately 55% of the annual needs, and Rattlesnake Creek
supplied the remaining 45%. In 1983, Rattlesnake Creek
became infested with giardia. Mountain Water immediately
shifted over to the sole use of well water to supply its
customers. The City contends that Mountain Water had been
forewarned of the danger as much as two years before the
outbreak, but that Mountain Water refused to take any preven-
tative action. Mountain Plater responds that it was as re-
sponsible as possible, having available as its only
preventative measure the installation of a filtration system
that would have cost between 4 and 5 million dollars, without
any guarantee of 100% effectiveness . Mountain Water states
that the State Board of Health gave it an unsolicited commen-
dation for its speed in shifting users from Rattlesnake Creek
to well water.
Rattlesnake Creek water continues to go unused. Moun-
tain Water has developed additional wells and is currently
100% dependent upon wells for its supply of water. Mountain
Water has not relinquished its water rights in Rattlesnake
Creek, because the water serves as an emergency source.
In the spring of 1984, the City attempted to negotiate
the purchase of Mountain Water. Those negotiations were
unsuccessful. In June of the same year, the City adopted a
resolution reaffirming its 1979 ordinance and its interest in
acquiring the water system. Then, in late 1984, the City
brought this condemnation proceeding against Mountain Water.
The employees of Mountain Water were allowed to intervene in
the action. The question of public ownership of the water
system was also submitted to the citizens of Missoula as a
ballot initiative in September 1985. The electorate support-
ed acquisition and the initiative passed.
In March 1986, a 4-day trial was conducted before the
District Court sitting without a jury. All parties presented
testimony and documentary evidence on the economic and other
effects of a transfer of the water system from private to
public ownership. In August 1986, the court issued its
opinion and judgment holding that the City had failed to
prove that the condemnation was necessary.
Did the trial court err in determining what laws are
applicable for establishing the City's burden of proof and in
weighing the evidence?
The City argued below, and again asserts here, that its
ordinance and resolution authorizing the acquisition of the
water system conclusively establish the necessity of its
acquisition of the system. It maintains that S 7-5-4106,
MCA, is controlling. That statute provides:
The city or town council has power to condemn
private property for opening, establishing, widen-
ing, or altering any street, alley, park, sewer, or
waterway in the city or town and for establishing,
constructing, and maintaining any sewer, waterway,
or drain ditch outside of the corporate limits of
the municipality or for any other municipal and
public use. The ordinance authorizing the taking
- private property for any - -use is conclusive
of such -
- - - necessity - - taking and must conform
as to the of the
to and the proceedings thereunder had as provided
in Title 70, chapters 30 and 31, concerning eminent
Mountain Water argued, and the District Court held, that the
controlling statutes are those in Title 7, Chapter 13, Part
44, entitled "Water Supply and Regulation." Their position
is that the City ordinance does not establish a conclusive
presumption of necessity.
For several reasons, we affirm the District Court's
conclusion on which statutes govern. First, the arrangement
of these code sections as enacted in 1895 supports the Dis-
trict Court's conclusion. The predecessors of both
S 7-5-4106, MCA, and S $ 7-13-4402 through 4404, MCA, origi-
nally were numbered paragraphs under Political Code § 4800,
Codes of Montana 1895. This is how they appeared:
The city or town council has power:
64. To contract an indebtedness on behalf of
the city or town upon the credit thereof, by bor-
rowing money or issuing bonds for the following
purposes, to-wit: Erecting public buildings,
sewers, bridges, water works, supplying the city or
town with water by contract, the purchase of fire
apparatus, the construction or purchase of canals
or ditches for supplying the city or town with
water . . . provided, that no money must be bor-
rowed or bonds issued for any purpose hereinbefore
set forth in this Section, until the proposition
has been submitted to the vote of the taxpayers
affected thereby of the city or town and the major-
ity vote cast in favor thereof; and, further pro-
vided, that an additional indebtedness may be
incurred, when necessary, to ... procure a water
supply for the said city or town which shall own or
control said water supply and devote the revenue
derived therefrom to the payment of the debt as
follows: ... Provided, that whenever a franchise
has been granted to, or a contract made with, any
person or persons, corporation or corporations, and
such person or persons, corporation or corpora-
tions, in pursuance thereof and in good faith, have
established and maintained a system of water sup-
ply, the city or town granting such franchise, or
entering into such contract, before taking any
action for the procurement of a water supply to be
owned or controlled by such city or town, shall, by
the passage of an ordinance, give notice to such
person or persons, corporation or corporations,
that it desires to purchase the plant and franchise
of such person or persons, corporation or corpora-
tions, it shall have the right to so purchase the
said plant upon such terms as the parties may
agree; in case they cannot agree then the said city
or town may proceed to acquire the same under the
laws relating to the taking of private property for
public use; provided, that no city or town, having
a water supply furnished by private parties, under
a contract or franchise, entered into or granted by
the city or town, shall proceed to the erection or
construction of a water plant to be operated by it,
but in case the city or town shall desire to own
and operate its water supply, it shall acquire the
plant and supply already in operation therein as
herein provided.
75. To condemn private property for opening,
establishing, widening or altering any street,
alley, park, sewer, waterway, in the town or city,
or for any other public use, and the ordinance
authorizing the taking of private property for any
such use is conclusive as to the necessity of the
taking, and must conform to and the proceedings
thereunder had, as provided in Title VII., Part
III., of the Code of Civil Procedure concerning
eminent domain.
79. To adopt, enter into, and carry out means
for securing a supply of water for the use of a
city or town or its inhabitants.
The detailed provisions on water system acquisition in para-
graph 64 address 3 different aspects of acquisition of a
water supply: issuance of bonds for purchase, negotiations
with a franchiser for purchase, and a requirement that an
existing water franchise be purchased rather than a new plant
constructed. Many of those provisions are now found at
S S 7-13-4403 and 4404, MCA. Paragraph 75 is now 5 7-5-4106,
MCA. Paragraph 79 is now S 7-13-4402, MCA. There is nothing
to indicate that paragraph 75 should govern over the detailed
provisions on water system acquisition in paragraphs 64 and
79. The reference to streets, alleys, parks, sewers, and
waterways in paragraph 75 is primarily a list of "ways", or
uses requiring condemnation of strips of land. A water
system is not within the type of items listed. Further, an
acknowledged rule of statutory construction states that
special statutes will prevail over general statutes. Taylor
v. Dept. of Fish, Wildlife & Parks (Mont. 1983), 666 P.2d
1228, 1231, 40 St.Rep. 1112, 1116. Paragraph 75 could be
applied to water distribution systems only through its catch-
all mention of "any other public use." On the other hand,
paragraphs 64 and 79 are concerned specifically with city
water supply and regulation, including acquisition of a
private water supply system through eminent domain.
In 1902, this Court considered a case in which the City
of Helena sought to condemn portions of several water rights
for use as a city water supply. In that case, City of Helena
v. Rogan (1902), 26 Mont. 452, 68 P. 798, this Court said,
Another question presented is this: Can water
already appropriated to a public use be condemned
in eminent domain proceedings for any other use,
whether the other use is a more necessary public
use or not? Section 2214 of the Code of Civil
Procedure provides that: "Before property can be
taken it must appear: ... (3) If already appro-
priated to some public use, that the public use to
which it is to be applied is a more necessary
public use." It must so appear in the complaint.
The use of water to irrigate a farm under the
water-right law is a public use. Section 15, art.
3, Const.; Ellinghouse v. Taylor, 19Mont. 462, 48
Pac. 757. The law permits the condemnation of a
water right by a city, as we have seen. Therefore
the position taken by respondents, to wit, that
water which is being used for any beneficial use
cannot be taken for any other use, whether the
other use is a more necessary public use or not, is
not tenable. Whether the use of water by the city
is necessary- that is, whether the city needs a
water supply- is for the city, and for the city
alone, through its council, to say. Whether it is
necessary to condemn the water right in order to
supply the city is to be alleged, and is a judicial
question to be determined by the court. That it is
a more necessary use than that of the ranchman is
to be alleged, and by the court judicially deter-
mined. If it were not, then not only could a city
condemn and take the water from a ranchman owning
and irrigating 160 acres of land, but could, on its
own allegation of superior necessity, condemn and
take the water from another and a neighboring city,
and leave it dry. And here again we may, in pass-
ing, say that the necessity for a complete descrip-
tion of the property to be taken is necessary, to
the end that the court may see that the proposed
use is superior in point of necessity to the
present public use.
Rogan, 68 P. at 802. The predecessor of S 7-5-4106, MCA, was
neither applied nor even mentioned. The questions of neces-
sity and "more necessary use" were questions for judicial
determination.
For all of the above reasons, we affirm the District
Court's conclusion that the City ordinance does not establish
a conclusive presumption that the taking is necessary. The
controlling statutes in this case are S S 7-13-4401 through
4406, MCA, and those parts of Title 70 incorporated therein
by reference. We therefore continue our analysis under those
statutes.
Under 5 7-13-4403, MCA, the City properly exercised its
right of offering to purchase the water system. Where, as
here, there is no agreement to purchase, S 7-13-4404, MCA,
provides that the City "shall proceed to acquire the plant or
water supply under the laws relating to the taking of private
property for public use." Section 70-30-111, MCA, sets forth
the standard of proof and the facts which must be found
before private property may be taken for a public use:
Before property can be taken, the plaintiff must
show by a preponderance of the evidence that the
public interest requires the taking based on the
following findings:
(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;
(3) if already appropriated to some public
use, that the public use to which it is to be
applied is a more necessary public use;
(4) that an effort to obtain the interest
sought to be condemned was made by submission of a
written offer and that such offer was rejected.
In this case, the requirement under part (1) is met by
S 7-13-4402, MCA, which authorizes a municipal water system.
The requirement of part (4) has been met by the submission of
a written offer for the system and the rejection of that
offer.
The District Court must determine, under part (2),
whether it is "necessary" that the water system be taken by
the City. This Court has defined "necessary" under this
statute as a reasonable, requisite, and proper means to
accomplish the improvement. State etc. v. Standley Bros.
(Mont. 1985), 699 P.2d 60, 62, 42 St.Rep. 563, 565-66. We
recognize that two questions are involved: 1) Is it neces-
sary that the City have its own water system? and, 2) Must
the City take Mountain Water's property in order to have its
own system? Unlike the typical case involving condemnation
of land for a highway, the first question here is not whether
it is necessary to have the improvement, but whether it is
necessary to have the improvement operated by the City
instead of by private industry.
Under part (3), the District Court must determine wheth-
er the proposed use is "more necessary" than the present use.
That the water already has been appropriated to a public use
cannot be disputed given the broad interpretation of 'appro-
priation to a public use' in the eminent domain statutes.
See S § 70-30-102 and 203, MCA. In State ex rel. Smart v.
City of Big Timber ( 1 9 7 4 ) , 165 Mont. 328, 528 P.2d 688, this
Court determined that it was "more necessary" that city-owned
property between a sidewalk and the boundary of a schoolyard
be condemned for the purpose of erecting a fence than that
the property continue in the existing public use. In doing
so, the Court weighed the benefits to be derived from erect-
ing the fence against the impairments to the existing use of
the land. While not dispositive in the present case, Smart
illustrates the broad range of considerations in determining
whether a proposed public use is more necessary than the
present use.
The District Court made detailed findings listing its
reasons for concluding the City did not prove it was neces-
sary that it acquire the water system. The court's first
finding considers the effects on Mountain Water employees of
a takeover by the City. The undisputed record shows that the
City would make reductions in the number of personnel and
also reductions in the pay scale of the remaining employees
in order that the employees would be paid salaries comparable
to other City employees. We do not agree with the District
Court conclusion that the "City's calloused plan for Mountain
Water's twenty-six employees, standing alone, is enough to
defeat a finding of public necessity." We hold that the
effect on Mountain Water employees is one factor to be
considered in determining whether the acquisition is neces-
sary, but that factor alone is not dispositive.
The City submitted evidence to the District Court on the
feasibility and cost of constructing a plant for treatment of
Rattlesnake Creek water. It contended that Mountain Water
was remiss in failing to construct such a plant after the
giardia outbreak. The District Court found that use of
Rattlesnake Creek water is not necessary. After reviewing
the record, we conclude that substantial evidence supports
the District Court's finding. This evidence includes an
admission that a treatment plant which is 100% effective
against giardia is not technically feasible, and evidence
that there is an abundance of well water available from
Missoula's underground aquifer. We conclude that the City's
evidence on construction of a water treatment plant is there-
fore irrelevant to the issue of whether the taking of the
Mountain Water system by the City is necessary.
We also do not agree with the conclusion of the District
Court that the "prejudicial issues" of profit and out-of-
state ownership "demeans the whole process. " We do not find
any legal basis for excluding these facts from consideration
on the issue of necessity. We conclude these issues are
pertinent to the determination of whether the public interest
requires the taking under S 70-30-111, MCA, as it has been
broadly drafted and defined. In the absence of a declared
policy by the Legislature giving greater or lesser weight to
public ownership as compared to private ownership of a water
system, these issues must be considered and weighed by the
trial court on remand.
We conclude that the court's remaining findings are
supported by the evidence and are appropriate for considera-
tion in evaluating whether City operation of the water system
is a "necessary" use of the system. These include findings
on public savings, on rates and charges, on cooperation
between Mountain Water and the City, and on the effect of
having Mountain Water's home office in Missoula.
The District Court essentially disregarded the City
ordinance and resolution and the vote of the citizens of
Missoula on the acquisition of the water system. Apparently
it concluded that so long as Mountain Water is running an
economical system which is not charging an excessive rate and
is furnishing adequate service, there can be no basis for
acquisition by the City. The failure of the District Court
to consider the vote of the people and the vote of the
Missoula City Council makes the issue of necessity solely a
matter of economics. Some may consider that to be wise
social policy, but that conclusion is not warranted by our
statutes. Since S 70-30-111, MCA, gives the district court
the power to determine whether a condemnation is necessary,
the votes of the people and the city council cannot be con-
sidered as finally dispositive of the issue of necessity.
However, we hold that upon remand the public interest as
expressed in these votes must be considered and weighed with
the other factors in determining whether City acquisition of
the water system is necessary. In considering the weight to
be given to the votes, the court properly may consider that
users outside the City could not vote or express their opin-
ion, if those are the facts. The court may also compare the
number and identity of voters with the number and identity of
the water users.
Unfortunately S 70-30-111, MCA, does not set forth all
of the issues which are appropriate for consideration on the
necessity of taking. A significant argument may be made as
to the importance of the City obtaining ownership of the
water rights themselves, in order that the City may assure
its inhabitants of long range access to water. It presently
appears that the access to such a water source is at least to
some extent dependent upon Mountain Water. On remand this
element also should be considered and such additional evi-
dence and briefing required as is found to be necessary by
the District Court.
Unfortunately there are no statutory guidelines to
assist the District Court in weighing the various factors
which it must consider. We do point out that the City has
the burden to prove by a preponderance of the evidence that
the condemnation is necessary, under § 70-30-111, MCA.
We reverse the judgment of the District Court and remand
for reconsideration of all relevant factors, including the
vote hv the ~ e o n l e and the Citv's resolution and c
We Concur: A
District ~ u d s eA.B. Martin
sitting for Justice Frank B .
f.Torrison, Jr.
Mr. Justice John C. Sheehy, dissenting:
I dissent and would affirm the District Court which
found that the City of Missoula had not carried the necessary
burden of proof in this cause.
I do agree with the majority that the statutes which
apply to the acquisition of a private water supply system by
a municipality and which apply in this case, are § §
7-13-4403, 7-13-4404, MCA, and by reference in 5 7-13-4404,
also the statutes relating to eminent domain. The contention
of the city, that under 5 7-5-4106, its ordinance authorizing
the taking of the private water system of Mountain Water
Company was conclusive is properly refuted in this cause.
The question of necessity in this case remains for
determination by a court under eminent domain procedures.
The statutes authorizing a city to operate a water supply
system do not grant to a city council or commission the
frightening power to take by itself conclusive action in
condemning the property of another. I say frightening
because city utilities may levy charges without regulation by
the Public Service Commission, and may raise those charges up
to 12% per year. Section 69-7-101, MCA.
I part from the majority in their determination of how
the condemnation statutes are to be applied to this type of
attempted condemnation, and from their determination that the
District Court erred in considering the factors upon which it
did rely that no necessity was shown here.
First, 5 7-13-4404, MCA, requires that when a
municipality is unable to acquire a private water supply
system by offering to purchase the same, then it may proceed
to acquire the plant or water supply "under the laws relating
to the taking of private property for public use."
The majority say that public ownership versus private
ownership is a factor of necessity to be considered in this
case. Where the majority stray into error is their implicit
assumption that the City of Missoula, as a governmental
entity, stands in a better position as a condemnor for
purposes of public use than Mountain Water Company, a private
corporation. No such distinction is made in our statutes.
Instead, in providing for eminent domain procedures, S
70-30-102, MCA, enumerates what a public use is, and that the
right of eminent domain may be exercised in behalf of such
public uses. Any entity, governmental, corporate, or
private, which devotes property to a duty described as a
"public use" under 70-30-102, has the further right tc?
become a plaintiff in an eminent domain proceedings to
acquire property for such public use. Thus, S 70-30-203,
MCA, provides that the plaintiff may be a corporation,
association, commission, or person in charge of the public
use for which the property is sought. The right of Mountain
Water to condemn property when necessary is equal to the
right of the City to condemn. This case is not the stage on
which to debate public ownership versus private ownership of
property. Public ownership of Missoula's water supply system
cannot be a factor of necessity, because all condemnors,
whether public or private, stand on equal footing before the
law in condemnation proceedings.
"Public use" includes flumes, ditches or pipes
conducting water, heat or gas for the use of the inhabitants
of any county, city or town. Section 70-30-102(3), MCA. The
property that Mountain Water Company devotes to such public
use is already "appropriated" to such use, though it may
never have been acquired through condemnation proceedings.
Under our statues, if property is already appropriated to
public use, whether or not it originated in such use by
condemnation, such property is not thereby insulated from
further condemnation. Though already appropriated to some
public use, the property may be condemned if the public use
to which it is to be applied after condemnation is a more
necessary public use. Section 70-30-111, MCA.
As between the City of Missoula and Mountain Water
Company, therefore, as entities using or proposing to use
property for a public use, there is no distinction as to
powers. Each has an equal right of condemnation, and if one
desires to acquire property of the other that is already
devoted to a public use, it must show by a preponderance of
the evidence that the public interest requires a taking based
on a finding that the "public use to which it is to be
applied is a more necessary public use." Section
70-30-111 ( 3 ) , MCA.
Thus, in this case, the burden of proof rested on the
City of Missoula in its proceeding before the District Court,
to establish by a preponderance of the evidence the fact
question of greater necessity. That necessity is a fact
issue to be proven has long been the rule in this state.
State ex rel. Livingston v. District Court (1931), 90 Mont.
191, 196, 300 P. 916, 918.
When there are before the court two entities devoting or
proposing to devote the same private property to a public
use, if the property is already devoted to a public use, the
question of fact on necessity becomes, is the proposed use
more necessary than its present public use? Section
70-30-111(3), MCA, is not limited to a situation where the
condemnor proposes to devote the property to a different
public use. A proposal to utilize the property for the same
public use must still be found to be more necessary. That
point was decided in Butte-Anaconda Pacific Railway Company
v. Montana Union Railway (1895), 16 Mont. 484, 41 P. 248.
Before a court issues its preliminary condemnation
order, the public interest in the taking is a factor for the
court to determine as well as whether the condemnor, in this
case, has proved that the taking is a more necessary public
use. Section 70-30-206(2), MCA, provides:
If the court finds and concludes from the evidence
presented that .the public interest requires the
-
takinq of such Interest in real property - that
and
the plaintiff has met his burden of proof under
70-30-111, it must forthwith make and enter a
preliminary condemnation order . . . (Emphasis
added. )
If the findings of the District Court here are
considered in the light of the proper construction of the
condemnation statutes where the City is proposing to take
over a private water supply system, it is clear that the
findings and conclusions of the District Court in this case
support its denial of a condemnation order. Unless the
findings of fact of the District Court are clearly erroneous,
we cannot set aside or ignore them. Rule 52 (a), M.R.Civ.P.
Those facts include the following:
Three private water companies presently supply water to
Missoula, of which Mountain Water is one. Mountain Water
serves 16,201 customers of which 4,481 live outside the city
limits.
The court found that Mountain Water employs 26 people to
operate its Missoula system and the smaller Superior,
Montana, system. The city proposed to eliminate 6 of the
present top jobs and replace them with city employees. The
remaining 20 employees of Mountain Water would suffer drastic
salary reductions because their pay scales would be based on
city employees' pay schedules and not that of the private
employer Mountain Water. The city claimed a total savings of
$280,639 per year because of the reduction of pay of 20
people for a total savings of $117,656 and the replacement of
6 people by present city employees for a savings of $162,983.
The court found this proposal to be "personally and publicly
catastrophic" explaining that some would leave their jobs,
the key jobs would have the greatest cuts in pay and it was
impractical to expect the city to accomplish, without cost to
the city, the jobs of Mountain Water manager and other staff
heads. The court further found that there was no evidence
that public employment makes a public worker more efficient;
and that Mountain Water's present ratio between water
connections and employees is lower than most similar water
supply systems in Montana. He found loyalty in the present
Mountain Water employees to their employer and satisfaction
with their present working arrangements. If a complete
disruption in the present management of the water system, the
elimination of 6 management jobs, and drastic reductions in
pay to the remaining 20 employees do not affect the public
interest in Missoula in a dispositive way, public interest
must have become a fiction to this Court.
The city claimed that during the first five years of its
operation of the water system, water subscribers would enjoy
savings of $3.5 million. The District Court found that the
purported savings were based upon an unsupported assumption
that the city could purchase Mountain Water Company for $11
million. The owner valued his property at $19 million. The
city appointed no appraiser and offered during the hearing no
appraisal of the fair market value of the Mountain Water
system. The District Court found that the city could not
guarantee that future city administrations would not increase
water rates during the next five years because the city's
other assumptions were understated.
The city claimed that Rattlesnake Creek water was
necessary to the operation, and that if it obtained the
property, it would immediately install a filter plant for the
elimination of giardia cysts. The cost of an adequate filter
plant would be $4-5 million. However, the court found that
such plants do not assure complete elimination of giardia
cysts, and that well water, now produced by Mountain Water
Company, was a better alternative to the cyst problem. The
District Court also rejected the city's claim that
Rattlesnake Creek water had to be utilized to assure that the
Missoula aquifer was not depleted. The court found that the
aquifer under the Missoula valley was one of the best in the
United States and is continually recharged.
Hence the city raised the issue of the Rattlesnake Creek
water as a matter of necessity. The District Court is
completely supported in the record that if such water should
be used, a filtration plant would not safeguard against
giardia cysts and its cost was not justified. The city
having failed to prove its own issue, the majority now find
that it was irrelevant anyhow, and send the case back with
the implicit direction to try something else. I leave it to
others to explain that determination. Perhaps we will
continue to reverse this case until the city gets it right.
This Court held in City of Helena v. DeWolfe (1973), 162
Mont. 57, 508 P.2d 122, that a claimed future need which is
highly speculative will not support necessity and that the
"necessity" for the taking must be shown as a reasonable need
with foreseeable ability to complete the project.
The city claimed that it could eliminate Mountain
Water's $350,000 annual home office expense (its home office
is in California). This purported savings was rejected by
the District Court which found that the Mountain Water home
office supports the Missoula operation by providing planning,
finances, consultation, engineering and management for which
the city would have to find a substitute.
The city claimed it could operate Mountain Plater with
$500,000 in yearly capital improvements. Mountain Water
projects approximately $1.5 million each year for such
improvements. The District Court found that Mountain Water
projections of $500,000 for capital improvements was
unrealistic.
If the city were granted condemnation, it would be
required to finance the purchase by incurring bonded
indebtedness. The city claimed its cost of finance would be
cheaper for it than for Mountain Water. Again the District
Court determined that if the fair market value of Mountain
Water supply system fixed by the condemnation jury were
between $11 million and $19 million, the entire economic
projections of the city became untenable and any purported
savings a myth. The majority opinion does not discuss this
facet of the city's case but it is clear that the court's
negative findings on the projected savings and operation were
irrefutable.
The city claimed a reduction in the rates to the water
users would result because the plant and property under a
governmental entity would not be taxed. However, the
District Court rejected this claim saying that the savings in
property taxes would simply be shifted to other property tax
payers, some of whom live outside the city in the county of
Missoula. Moreover the District Court found that equity and
debt financing used by Mountain Water were equally
advantageous to water users.
There are a number of other findings, but the foregoing
suffice to show the District Court carefully considered the
public interest in the matter and determined under the facts
shown, the city had failed - prove by a preponderance of the
to
evidence that - taking was necessary. The District Court
the
did not specifically refer to the term "more necessary" but
its conclusion that the taking was not necessary under the
facts more than supports the conclusion that the taking was
not "more necessary. "
Finally this Court goes afield on a factor relating to
necessity that is demonstrably improper. The majority
contends that the fact that the city electors voted to take
over the water supply system, or that the city council so
acted, is a factor proving necessity. There is no statutory
basis for such position. Section 7-13-4403, MCA, provides
that the passage of the ordinance by the city council is
simply notice to the owner of the water supply system that
the city desires - purchase the water supply system. There
to
is no provision in the statutes for a vote by the electors on
whether a water system should be acquired by a city. The
action of Missoula in submitting the matter to the voters was
simply gratuitous. The majority opinion is silent as to any
factor or facet of the necessity issue that would be proved
or disproved by a vote of the city council or the city
electors. The vote is irrelevant unless this Court is of the
opinion that necessity is determined by majority vote.
Every salient factor found by the District Court which
really relates to a "more necessary use" issue is approved in
the majority opinion as supported by the evidence. They
approved the findings on "public savings, on rates and
charges, on cooperation between Mountain Water and the city,
and on the effect of having Mountain Water's home office in
Missoula." The majority agree that the District Court was
correct with respect to Rattlesnake Creek water use. These
(except for the effect on employees) are the only factors
which relate to whether the city's proposed condemnation is
"more necessary." On retrial the District Court must take
these factors as already concluded. There is not much room
left for the District Court to weigh the votes of the city
and the council, out-of-state ownership, and whether a profit
is sinful, as matters of public interest.
I am in the dark about the meaning of the majority
relating to water rights. If the reference includes
Rattlesnake Creek water rights held by Mountain Water, those
rights have no place in this case in light of the majority
finding of irrelevance. Only property "used and useful" to
the operation can properly be condemned.
Whether considered by the viewpoint of "necessary," or
"more necessary," the city's case does not hold water. We
should affirm the District Court.
&.,%A%
Justice
3
4 I r
Hon. Robert W. Holmstrom, District Judge, sitting for ~ u s t i c e ~ " n t ,
'
Dissenting.
I dissent. I would reverse the District Court and direct the
District Court to issue a preliminary condemnation order.
I am of the opinion that the City is entitled to the conclusive
presumption of necessity contained in $7-5-4106, MCA, My opinion is
based upon the nature and attributes of the power of eminent domain and
upon the statutory history.
The power of eminent domain is an inherent attribute of the state's
sovereignty. Butte, Anaconda & Pacific Ry.Company v. The Montana Union
Ry. Company, 16 Mont. 504, 536, 41 St.Rep. 232 (1895). The Legislature
alone has the ability to delegate the power o f eminent domain, State
Highway Commission v. Crossen-Nissen Co., 145 Mont. 251, 400 P.2d 283
(1965), and has done so freely, granting the power to private corpor-
ations, such as railroads; to quasi corporate bodies, such as cemetery
associations; to the executive branch of government, through administra-
tive agencies such as the highway department; and to local government.
The Legislature has also granted to certain condemnors presumptions
of necessity; the presumption varies in proportion to the degree of
popular control exercised by the people of Montana over a particular
condemnor. Thus, private entities, over which the public exercises no
control, are granted no presumption of necessity. They are required, in
the exercise of the power, to prove necessity pursuant to $70-30-111,
MCA.
The State Highway Department is an administrative agency of state
government. The Governor guides departmental policy by appointing its
director. The Governor is elected by the people, the people thus indir-
ectly exercise control over the department's actions. Accordingly, the
Legislature has granted the department a disputable presumption of nec-
essity, so that the department's order, pursuant to $60-4-104, NCA, when
presented at the necessity hearing, establishes a prima facie case of
the public necessity of the proposed highway or improvement.
Finally, cities and towns are granted a conclusive presumption of
necessity, whereby the city ordinance authorizing the taking of private
property establishes necessity. The ordinance is passed by the local
legislative body, popularly elected by the citizens of the city or town,
and over which those citizens exercise direct control through the ballot
box. Recalling that "all political power is vested in and derived from
the people" (Article 1 1 , $1, Montana Constitution), the grant of a con-
clusive presumption to an ordinance passed by the city council is neither
unexpected nor shocking.
The majority seeks to buttress its conclusion that $$7-13-4402,
through 4404, MCA, control this action by citing the relative arrangement
of the statute in the Code of 1895. This argument, however, ignores the
fact that the predecessor to $7-5-4106 was a feature of Montana law from
territorial times, prior to when the sections which would become $$7-13-
4403 and 4404 were first enacted in 1895. The Legislature is presumed,
when enacting new legislation, to act with full knowledge of existing
law. Thiel v. Taurus Drilling Limited, 1980-11, Mont. , 710
P.2d 3 3 , 4 2 St-Rep. 1520, (1985). A law passed with that knowledge is
presumed not to abrogate an existing law, unless the two are absolutely
repugnant to each other. London Guaranty & Accident Co., Ltd. v. Indus-
trial Accident Board, 8 2 Mont. 304, 310, 266 P.d 1103 (1928). This
Court is obliged to harmonize statutes relating to the same subject,
giving effect to each. Crist v . Segna, Mont. , 6 2 2 P.2d 1028,
3 8 St.Rep. 150 (1981). The application of these rules of statutory
construction dictate the conclusion that the Legislature intended the
conclusive presumption of necessity found in what is now $7-5-4106, MCA,
to apply to actions brought by a city to acquire a water supply system.
The majority also justifies its rejection of the application of
$7-5-4106, MCA, because the statute does not specifically refer to a
water supply system. The language contained therein "any other municipal
and public use" is "catch-all" language commonly used by legislators in ,,,
Montana and elsewhere because of the impossibility of predicting, with
perfect clarity, all the factual variations to which a law applies.
This language evidences the Legislature's intention that the provisions
of the statute, including the conclusive presumption of necessity, are
to apply to actions other than those seeking to acquire property for the
specific purposes mentioned therein. The majority refuses to attach any
purpose to the language "any other municipal and public use" and restricts
the application of the statute to those purposes specifically mentioned
therein. In effect, the majo'rity states that if the city wishes to
condemn a street or alley, it is entitled to a conclusive presumption
of necessity, but if it desires to acquire a water distribution system
under the street, it has no presumption.
The majority fails to recognize the distinction between
"necessity" and "necessary" as those terms are used in eminent domain
proceedings. "Necessity" as used in eminent domain proceedings gener-
ally refers to the need for the improvement itself. I n $70-30-111,
MCA, necessity is described as the "public interest". "Necessary" as
used in (2) of $70-30-111, MCA, has been defined as a "reasonable,
requisite and proper means to accomplish the improvement." State ex
rel. Department of Highways v . Standley Bros., 699 P.2d 6 0 , 4 2 St-Rep.
563 (1985). There should be no question but what the water supply
system owned by Mountain Water is reasonable, requisite and proper to
accomplish the improvement, that is, the ownership by the City of the
water supply system. The Legislature, when it granted authority to the
City to acquire a water supply system owned by another entity, made a
determination in accordance with (3) of $70-30-113, M C A , that the owner-
ship of the water supply system by the City was a more necessary public
use than the ownership of the water supply system by Mountain Water.
sitting for Justice William E . Hunt