Crowell v. School District No. 7

NO. 90-189
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990

TERRY LYNN-CROWELL,
Plaintiff and Appellant,

SCHOOL DISTRICT NO. 7 OF GALLATIN
COUNTY, MONTANA, a political
subdivision of the State of Montana;
KEITH CHAMBERS; LOU GAPPMAYER; and
DAVE ALLEN,
Defendants and Respondent.

APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Thomas A. Olson, Judge presiding.

COUNSEL OF RECORD:
For Appellant:
Monte D. Beck; Beck Law Offices; Bozeman, Montana
For Respondent:
Gig A. Tollefsen; Berg, Lilly, Stokes, Andriolo,
Tollefsen & Schraudner; Bozeman, Montana
.. .

Submitted: October 16, 1990
JAN 2 5 1 9
93 o. Decided: January 25, 1991
Filed:
C SmlfL
d
CLERK OF SUPHERqE COURX
STATE OF M3NTANq
.
I.
, .
Clerk
Justice Fred J. Weber delivered the Opinion of the Court.

plaintiff, Terry Lynn Crowell (Ms. Crowell), brought this
negligence action against School District No. 7 of Gallatin County,
Montana (School District), and her physical education teacher, Dave
Allen (Mr. Allen) , to recover damages for her injuries sustained
during a high school gym class. The District Court for the
Eighteenth Judicial District, Gallatin County, granted defendants1
motion for summary judgment on the grounds that they were immune
from suit. From that decision, plaintiff appeals. After oral
argument we reverse and remand.
The issues for our review are:
1. Are the School District and the physical education
teacher immune from suit under 5 2-9-111, MCA?
2. If the School ~istrict
and the physical education teacher
are immune from suit, did the School District's purchase of
liability insurance waive its immunity?
On March 1, 1984, Ms. Crowell, was injured during her physical
education class while attempting to perform a gymnastics routine
taught by Mr. Allen. As part of the class, Ms. Crowell was
required to perform compulsory gymnastic exercises including
parallel bars, high bars, rings, balance beam and vault. The class
was divided into several groups of approximately six students per
group. Each group went to various stations to try different
gymnastic maneuvers.
~uring the ring exercise, Ms. Crowell was instructed to
dismountI1 or a "straddle-
attempt a maneuver called a llstraddle-cut
leg cut-off". The maneuver required that Ms. Crowell, while
hanging from the rings, rapidly swing her legs forward above her
head. Ms. Crowell did not complete the maneuver because she was
unable to generate enough momentum to propel her through the
maneuver. As her legs swung over her head, she released her grip
on the rings and fell on the mat, landing on her shoulders and neck
and was injured.
Ms. Crowell was unsupervised during the maneuver. Mr. Allen
did not spot or otherwise assist in the performance of the
maneuver. While Mr. Allen had assigned students with the duty to
spot for each other, no student actually spotted for Ms. Crowell
during the maneuver.
The School District purchased a comprehensive liability
insurance policy covering the period from July 1, 1983, through
July 1, 1986. The policy specifically covered high school
premises, teachers, and physical training instructors.
Ms. Crowell filed suit against the School District and also
the teacher, Mr. Allen. In addition the superintendent and the
principal were named as defendants but later were dismissed.
Defendants School District and Mr. Allen filed a motion for summary
judgment contending they were immune from suit under State ex rel.
Eccleston v. Montana Third Judicial Dist. Court (1989), 240 Mont.
44, 783 P.2d 363. Ms. Crowell argued that even if the School
District and its employees were immune, the purchase of
comprehensive liability insurance waived that immunity.
The District Court granted summary judgment for the defendants
concluding they were immune under Eccleston; Peterson v. Great
Falls School Dist. No. 1 and A (1989), 237 Mont. 376, 773 P.2d 316;
and Miller v. Fallon County (1989), 240 Mont. 241, 783 P.2d 419.
From that decision, Ms. Crowell appeals.

Are the School District and the physical education teacher
immune from suit under 5 2-9-111, MCA?
Ms. Crowell contends that neither defendant is part of the
"school boardl1, and as a result are not part of the legislative
body. She therefore maintains the defendants are not immune under
§ 2-9-111, MCA. Defendants maintain they are immune from suit
under Eccleston.
In pertinent part 5 2-9-111, MCA states:
2-9-111. Immunity from suit for legislative acts
and omissions. (1) As used in this section:
(a) the term "governmental entity" includes . . .
school districts;
(b) the term lllegislativebody" includes ... any
local governmental entity given legislative powers by
statute, including school boards.
(2) A governmental entity is immune from suit for
an act or omission of its legislative body or a member,
officer, or agent thereof.
(3) A member, officer, or agent of a legislative
body is immune from suit for damages arising from the
lawful discharge of an official duty associated with .
.. action by the legislative body. (Emphasis added).
Peterson was an action brought by a custodian against a school
district. In that case we stated:
Comparing the Bieber case with the facts in this case,
we find the only differences are that the governmental
entity in this case is a school board, rather than the
county commissioners, and that the party performing the
act is an agent/employee of the legislative body, rather
than a member. The statute clearlv extends immunity
coveraqe to school districts, to the school boards
 governing those school districts and to agents of those
school boards. (Emphasis added.)
...
Peterson, 773 P.2d at 318. Eccleston also involved a school
district, its school board, and custodians. In that case the
argument was made that no member, officer or agent of any
legislative body was being sued. On that issue Eccleston stated:
. .. Clearly, the relators in this case are agents of
the school board:
(2) A servant is an asent employed by a master
to perform service in his affairs whose
physical conduct in the performance of the
service is controlled or is subject to the
right to control by the master. (Emphasis
added. )
Restatement 2d of Agency, 5 2.
Eccleston, 783 P.2d at 368. Eccleston concluded that the school
board is the I1legislative body" of the school district. As a
result the school district was immune.
In determining that the janitor was immune, Eccleston
concluded that the janitor was an agent of the legislative body and
that his failure to clear ice and snow from the sidewalk arose from
the lawful discharge of his custodial duties. At that point
Eccleston had determined that the custodian was an agent of the
legislative body and that his actions arose from a lawful discharge
of an official duty, as set forth in 5 2-9-111(3), MCA. On the
question of whether the official duty was associated with action
by the legislative body, Eccleston held that the omission by the
school district was the failure to provide funding for maintenance
of the stairs and employment of custodians. Eccleston therefore
concluded that both the school district and janitor were immune
under 5 2-9-111, MCA.
In applying the foregoing holdings to the present case, we
must also consider 5 20-4-201, MCA, which covers the employment of
teachers and states in pertinent part:
(1) The Trustees of any district shall have the
authority to employ any person as a teacher . .
. Each
teacher ... shall be employed under written contract,
and each contract . .. shall be authorized by a proper
resolution of the trustees .. .
The duties on the part of a teacher are summarized in 5 20-4-301,
MCA :

(1) Any teacher under contract with a district
shall:
(a) conform to and enforce the laws, board of public
education policies, and the policies of the trustees of
the district;
(b) utilize the course of instruction prescribed by
the trustees;

Section 2-9-111(2), MCA, provides that a governmental entity,
here the School District, is immune from suit for an act or
omission of its agent. Under the foregoing statutes the physical
education teacher is an agent of the School District. As a result
we hold that the School District is immune from suit for the acts
or omissions of Mr. Allen, its agent.
Acting under the above code sections, the School District
hired Mr. Allen as a physical education teacher under contract, and
he was required to utilize the course of instruction prescribed by
the School District. Mr. Allen allegedly failed to supervise or
otherwise protect the plaintiff during his discharge of duties as
a physical education teacher under the course of instruction
prescribed by the School District. We conclude that any negligence
on the part of Mr. Allen was associated with action by the School
District in that it was the District which established programs and
curriculum, including the specific course of instruction and which
offered physical education classes as a part of such instruction.
We agree with the conclusion of the District Court that the claim
for damages arose from the lawful discharge by Mr. Allen of an
official duty associated with actions of the School District and
its legislative body. We hold that Mr. Allen, the physical
education teacher, is immune from suit under 5 2-9-111, MCA.
I1
If the School District and the physical education teacher are
immune from suit, did the School District's purchase of liability
insurance waive it's immunity?
Ms. Crowell maintains that the purchase of liability insurance
by the School District waived immunity. She maintains that the
immunity section must be viewed in light of the other sections of
the Code that provide for insurance coverage and payment of claims
against governmental entities and subdivisions. She points out
that the School District's insurance policy specifically endorsed
coverage for physical education teachers for all school related
activities. The School District and Mr. Allen maintain there is
absolute immunity under § 2-9-111, MCA.
Whether the purchase of insurance waives immunity is a
question of first impression in Montana under the 1972 Constitution
of Montana. Many other states have considered the issue. In a
footnote at the conclusion of this opinion we will list a number
of the cases on both sides of the question of waiver of immunity.
While the statutes of the different states vary in many
particulars, a majority of the states which have addressed the
issue have concluded that the purchase of liability insurance does
waive immunity to some degree. As background for our consideration
of the issue, we will review the holdings of a number of states.
In Fastow v. Burleigh County Water Resource Dist. (N.D. 1987),
415 N.W.2d 505, plaintiff was rendered a quadriplegic when he dove
into a swimming area at a recreation area owned by the water
district and leased to the park district in Burleigh County, North
Dakota. He brought suit against both districts on various claims
of negligence. Sovereign immunity was abolished in North Dakota
in 1974. The North Dakota Legislature later enacted 5 32-12.1-
03 (I), N.D.C.C. :

1. Each political subdivision shall be liable for money
damages for injuries when the injuries are proximately
caused by the neslisence or wronsful act or omission of
any employee actins within the scope of the emploveels
em~loyment or office under circumstances where the
employee would be personally liable to a claimant in
accordance with the laws of this state, or injury caused
from some condition or use of tangible property, real or
personal, under circumstances where the political
subdivision, if a private person, would be liable to the
claimant. (Emphasis added).
The underlined portions of the North Dakota statute used language
similar to that used in the Montana definition of flclaimfl 9 2-
in
9-lOl(1) , MCA. The North Dakota Court concluded under another
statute there was a waiver of the defense of governmental immunity
when the political subdivision purchased liability insurance
coverage. Because of the statutory limitations in North Dakota,
Fastow limited recovery to $250,000 per person and $500,000 per
occurrence. Fastow, 415 N.W.2d at 510.
In Kee v. State Highway Admin. (Md.Ct.Spec.App. 1986), 513
A.2d 930, the court reviewed the development of governmental
immunity in Maryland. Prior to 1981, Kee pointed out that a
Maryland case had concluded that any changes in sovereign immunity
must be made by the legislature, stating in pertinent part:
Quite apart from our prior decisions, it is desirable
and in the public interest that any change in the
doctrine of sovereign immunity should come from the
legislative branch of the state Government rather than
from the judicial branch inasmuch as there are fiscal
considerations, administrative difficulties and other
problems in balancing the rights of the State and its
agencies with new possible rights of the individual
citizens, which can far better be considered and resolved
by the legislative branch than by the judiciary of the
State.
m, 513 A.2d at 932. Kee pointed out that a result of the
doctrine was that an individual citizen was barred from
compensation even though injured by the government's wrongdoing.
In 1981, Maryland enacted statutes which allowed waiver of state
immunity to the extent and amount of insurance coverage. The
statutes also contained a limitation as to individual claims in
excess of $100,000 in aggregate claims and in excess of $500,000
per occurrence. Punitive damages were eliminated. The Maryland
court emphasized that the intent of the legislature was to insure
that injured parties have a remedy.
In North Carolina, the Court of Appeals held that although
the board of education is a governmental agency and therefore
immune from tort or negligence action, the immunity may be waived
if the local board of education uses its permissive authority and
purchases liability insurance. The court stated that the Itprimary
purpose of the statute is to encourage local school boards to waive
immunity by obtaining insurance protection while, at the same time,
giving such boards the discretion to determine whether and to what
extent to waive immunity". Beatty v. Charlotte-Mecklenburg Bd. of
Educ. (N.C.Ct.App. 1990), 394 S.E.2d 242.
In Antiporek v. Village of Hillside (Ill. 1986), 499 N.E.2d
1307, the Illinois Supreme Court emphasized that tort immunity is
intended to protect governmental funds, stating:
Tort immunity is intended to protect governmental funds,
assuring that they will be directed and used for
governmental purposes. If, however, the municipality
decides to protect individuals against its negligent
conduct by acquiring commercial insurance, the immunity
is waived since government funds are no longer in
jeopardy and immunity would inure to the benefit of
private investors who have assumed the risk of insurers.
Antiporek, 499 N.E.2d at 1308.
Oklahoma cases demonstrate a progression of change. Earlier
Oklahoma cases had concluded that as a sovereignty, Oklahoma was
immune from suit for torts of any of its officers unless it had
effectively consented to be sued. A 1972 case emphasized that the
public right of governmental immunity must not be relinquished or
conveyed away by "reference or construction. State ex rel. Depvt.
of Highways v. McKnight (Okla. 1972), 496 P.2d 775. A significant
change occurred in Schrom v. Oklahoma Indus. Dev. (Okla. 1975) , 536
P.2d 904. Schrom sued the parks department for injuries sustained.
That department had purchased liability insurance pursuant to
legislative authority. The Schrom court stated the issue as:
a department purchases liability insurance pursuant to legislative
authority, must the legislature expressly waive governmental
immunity before an action may be maintained? The Schrom court
held:
..
. legislative authority for a department to purchase
liability insurance must be construed to include a
consent to be sued and a waiver of governmental immunity
to the extent of the insurance coverage only.
We hold that where a department . . . purchases
liability insurance pursuant to Legislative authority,
the State has consented to be sued and waived its
governmental immunity to the extent of the insurance
coverage only. In reaching this conclusion, we
specifically modify, to the extent herein set forth, our
holding ... wherein we, in effect, said the right of
the sovereign state to immunity from suit is a public
right and must not be relinquished or conveyed away by
reference or construction ... (Citations omitted.)
The effect of Schrom was to reverse the earlier holding that
sovereign immunity should not be relinquished by reference or
construction.
Herweg v. Bd. of Educ. of Lawton Pub. Schools (Okla. 1983),
673 P.2d 154, contains an interesting analysis of the thinking in
Oklahoma behind the waiver of immunity when insurance is purchased.
The Herweq court stated: ,
The defense of sovereign immunity is based in part on the
risk of successful plaintiffs depleting the resources of
the State at the expense of tax revenues. Liability
insurance changes this situation. If the political
subdivision has obtained insurance coverage, there is a
fund independent of the agency's assets upon which the
insured plaintiff may draw. "Otherwise, the insurer
would reap the benefits of the premiums paid without
being obligated to pay any damages for which the
department was insured." Schrom ... 536 P.2d 904, 907
(1975).
As specifically held in Lamont, a ~olitical
subdivision such as a school district waives its immunity
to the extent of coverase. (Emphasis supplied.)
Herweq, 673 P.2d at 156.
In Kentucky, no statute expressly "waivesw immunity. However,
the Supreme Court has held that the purchase of liability insurance
impliedly waives immunity. In Green River Health Dep't. v.
Wigginton (Ky. 1989), 764 S.W.2d 475, the court reasoned that:
[Wlhere there is a statute authorizing a county or other
state agency otherwise immune to purchase liability
insurance for the protection of the public, the effect
of such statute is to permit suit against the county or
state agency to determine and measure the liability of
the insurance carrier. . . . Both statutes are
permissive. Both statutes envision expenditure of public
funds to establish a source for the payment of claims
[either to purchase liability insurance or by self-
insurance]. Neither statute contains an express waiver
of governmental immunity. Neither statute makes the
Board [agency] liable for the torts of its agents or
employees but both permit the Board [agency] to be sued
and both permit payment from funds as limited by the
statute if a judgment is obtained.
Green River Health Dep't., 764 S.W.2d at 476.
The viewpoint of the state of Oregon is set forth in Espinosa
v. Southern Pacific Transportation Co. and School District No. 40
(Or. 1981), 635 P.2d 638. In concluding that the purchase of
insurance waived immunity to the extent of the coverage, the Oregon
court stated:

We held that the purchase of insurance pursuant to this
statute waived the total immunity from liability in tort
that the district would otherwise have.
" ... we think that the legislature intended to provide
that the district's immunity would be lifted to the
extent, and only to the extent that its activities were
in fact covered by insurance as authorized by the statute

I#... [W]e hold that a school district which does not
purchase liability insurance is immune from liability;
and that its immunity is lifted only to the extent that
 it is authorized to purchase and in fact has obtained
insurance covering the activity or activities in
question."
Espinosa, 635 P.2d at 641.
In Smith Plumbing Co. v. Aetna Cas. & Sur. Co. (Ariz. 1986),
720 P.2d 499, the Arizona Supreme Court, in the course of
discussing the question of immunity with regard to White Mountain
Apache Tribe made the following statement:
. . . The Tribe may choose to waive its sovereign
immunity . . . [blecause the Tribe has the power either
to insist upon or to waive its sovereign immunity, that
immunity is considered a personal defense not available
to the Tribels surety ...
The sovereign immunity doctrine originates in social
policy designed to protect the State "from burdensome
interference with the performance of its governmental
functions . . ."
The compensated surety of a sovereign
does not perform the governmental functions that require
protection; therefore, the protections a government needs
to conduct its functions do not extend to the surety.
Furthermore, to allow a compensated surety such as Aetna
to assert its principal's sovereign immunity and so avoid
payment on a bond would be to provide a windfall to the
surety ...If Aetna were allowed this defense, it would
receive valuable consideration in the form of
compensation ..
. without assuming the risk of payment.
Smith Plumbins Co., 720 P.2d at 502
Not all the states which faced this issue have waived
immunity. In Hinchey v. Ogden, 397 S.E.2d 891 (Va. 1983), a
plaintiff sued for injuries on a state owned and operated
expressway. The Supreme Court concluded that the state did not
waive sovereign immunity when it elected to protect itself with
liability insurance. In reaching this conclusion, the court
stated:
... Selective authority in other jurisdictions for the
proposition that a state waives sovereign immunity when
 it elects to protect a governmental function with
liability insurance. Our research discloses that courts
in other states are sharply divided on the question, and
because of the diversity of constitutional and statutory
provisions among the states, it is difficult to ascertain
the majority view. See Annot. 71 A.L.R.3rd 6 (1976).
In Virginia, however, "waiver is an intentional
relinquishment of a known right" ... and there can be
no waiver of sovereisn immunity bv implication.
(Emphasis added.)
Hinchey, 307 S.E.2d at 895.
The foregoing review of other state authority demonstrates
that it is not possible to reach a specific conclusion from those
decisions. That review does demonstrate that it is essential to
carefully analyze the pertinent Montana statutes.
I11
We have concluded that it is essential to review in some
detail the legislative history in Montana as there have been
significant changes which require consideration. For convenience
we will refer to the statutes by year of enactment.
1959

Chapter 286 of the Montana Session Laws of 1959 stated in its
title that it was an act to provide a comprehensive revision,
consolidation and classification of the laws of the State of
Montana relating to insurance and to the insurance business. The
significant portion for our purposes was 1 411 of the Act,
subsequently codified as § 40-4401, R.C.M. (1947), and later
codified as 5 33-23-101, MCA. In substance that section provided
that all policies of casualty insurance covering state risks must
contain an agreement on the part of the insurer waiving all right
to raise the defense of sovereign immunity and providing that no
premium should be paid unless the policy contained such an
agreement. As later described, this provision was both amended and
ultimately repealed.

In this year, the new Montana Constitution was adopted. It
eliminated governmental immunity under ~rticle 11, Section 18,
which read:
The state, counties, cities, towns, and all other local
governmental entities shall have no immunity from suit
for injury to a person or property.
This constitutional section waived all immunity from suit on the
part of the State and its governmental entities.
1973

In 1973, the Legislature passed the ItMontana Comprehensive
State Insurance Plan and Torts Claim Actgg, 5 82-4310, R.C.M.
(1947). In brief, this Act defined "claimw in a manner similar to
the definition presently in effect in Montana. In substance a
claim was defined as meaning a claim against a governmental entity
for money damages which a person would be legally entitled to
recover if the governmental entity were a private person. It
provided that the Department of Administration would be responsible
for the acquisition and administration of all insurance of the
State. All political subdivisions were given authority to procure
insurance. Every policy of insurance was required to provide
casualty and liability limits up to Ifnot less than $1,000,000 in
any one occurrence." It also provided that political subdivisions
had authority to levy an annual property tax to pay the premium for
insurance. Every governmental entity was liable for its torts and
those of its employees acting within the scope of their employment.
Recovery against a governmental entity constituted a bar to
recovery against the employee for the same cause of action.
Governmental entities 'Ishall not be liable for punitive damages,
attorney's fees or interest on any claim.I1 In the event no
insurance had been procured, the statute required that the claim
or judgment be paid from the next appropriation of the state
instrumentality whose tortious conduct gave rise to the claim. It
also provided that the political subdivision should levy and
collect a tax in an amount necessary to pay a claim or judgment
where there was a failure to purchase insurance.

Senate Joint Resolution 64 was submitted to the qualified
electors of Montana as a proposal to amend Article 11, Section 18
of the Montana Constitution to read as follows:
Section 1 8 . S t a t e subject t o s u i t . The state,
counties, cities, towns, and all other local governmental
entities shall have no immunity from suit for injury to
a person or property, except as may be s~ecifically
provided by law by a 2/3 vote of each house of the
lesislature. (Emphasis added.)
We have underscored the addition. The referendum vote adopted the
constitutional change. As a result, in 1974 we have the stated

conclusion of the people of Montana that as to the State and other
local governmental entities, immunity could be established by a 2/3
vote of each house of the Legislature. As described in other
states, this followed a trend to reduce the unlimited liability of
the state and governmental entities.
 1976

The Legislative Subcommittee on the Judiciary made an
extensive Interim Study entitled Limitations on the Waiver of
Sovereisn Immunity, 29 (1976). That study was recognized and
reaffirmed by 5 2-9-106, MCA (1983).
The Interim Study reviewed sovereign immunity in various
states and also the statutes of various states. The Study
analyzed various methods of insurance for the State and other
governmental entities. In conclusion the Interim Study proposed
specific legislation covering aspects of immunity, and also
significant revisions in the statutes covering insurance, including
liability insurance. A majority of the statutory recommendations
were adopted by the next Legislature.
1977

The Legislature adopted Chapter 189 which granted immunity
from suit for injury to person or property in specified
circumstances. Chapter 189 contained essentiallythe same immunity
sections as presently contained in 5 5 2-9-111, -112, -113, and -
114, MCA (1989). Section 2-9-111, MCA, established that a
governmental entity is immune from suit for acts or omissions of
its legislative body, or a member, officer, or agent, and also for
such members, officers, and agents under certain defined
circumstances; but also provided that immunity did not extend to
a tort committed by use of a motor vehicle, aircraft or other means
of transportation. The following sections referred to immunity on
the part of the State and the judiciary for acts or omissions of
the judiciary; immunity on the part of the State and Governor for
certain actions; and immunity on the part of a local governmental
entity and elected executive officers for the lawful discharge of
certain duties.
In addition, the chapter provided that the State and political
subdivisions were not liable for non-economic damages, for economic
damages in excess of $300,000 for each claimant and $1,000,000 for
each occurrence; and provided the governing body of a political
subdivision may authorize payments for non-economic damages or
economic damages in excess of the above sum.
Chapter 234 also amended the above described 5 40-4401, R.C.M.
(1947). The amendment provided that all contracts of casualty
insurance covering state-owned properties or risks must contain an
agreement waiving all right to raise the defense of immunity from
suit. Section 40-4402, R.C.M. (1947), was also amended to provide
that when an insurer accepts a premium from the political
subdivision, for casualty or liability insurance, neither the
insured nor the insurer may raise the defense of immunity from
suit.
Chapter 360 made various amendments to the insurance sections.
The chapter provided that every governmental entity is subject to
liability for its torts and those of its employees except as
specifically provided by the Legislature under Article 11, Section
18 of the Constitution. The time for filing claims was also
changed to provide that a claim is subject to the limitation of
actions provided by law. Chapter 360 also provided that the State
and other governmental entities are immune from exemplary and
punitive damages. Last the chapter stated that a political
subdivision could satisfy a final judgment out of funds available
from insurance, general fund, property tax, and proceeds from the
sale of bonds. These provisions are substantially identical to the
1989 MCA and will be discussed later.
1979

By Chapter 425, the Legislature eliminated 1 40-4401, R.C.M.
(1947), in order to ttrevisecertain laws relating to casualty
insurance and immunity to make the law consistent with limits set
by statute. The statute did then enact what is now 5 20-3-331,
MCA, which provided that the trustees of any district may purchase
insurance coverage for the district, trustees and employees against
liability. If the insurance is purchased, the trustees shall pay
the insurance premium cost from the general fund.
1983

The Legislature enacted Chapter 675 which revised the limits
of recovery in tort suits against the State and local governments.
The Legislature made extensive findings which were codified in 5
2-9-106, MCA (1983). These findings stated that the Legislature
recognizes and reaffirms the report of the Subcommittee on
Judiciary, as previously mentioned, which provided that unlimited
liability of the State and local governments for civil damages
makes it increasingly difficult, if not impossible, for governments
to purchase adequate insurance coverage at reasonable costs. The
findings pointed out that the Legislature found that the
obligations imposed on governmental entities must be performed, and
these responsibilities included the confining, housing and
rehabilitation of persons convicted of criminal activity; treatment
and supervision of mental patients; planning, construction and
maintenance of highways; operation of municipal transportation
systems and airports; operation and maintenance of schools,
playgrounds and athletic facilities. The Legislature further
pointed out that there are many functions and services of
government which because of the size of governmental operations
and the inherent nature of the functions, entail a potential for
civil liability far beyond the potential for parties in the private
sector. Nonetheless, the Legislature concluded that these
functions were necessary components of modern life. The
Legislature further found that liability for damages resulting from
tortious conduct by a government or its employees is more than a
cost of doing business and has an effect upon government far
beyond a simple reduction in governmental revenues. It concluded
that unlimited liability would result in increased taxes to pay
judgments and would eventually have the effect of reallocating
State resources. The Legislature concluded that the potential
results of unlimited liability for tort damages were unacceptable
and, considering the realities of modern government and the
litigiousness of our society, there is no practical way of
completely preventing tortious injury and tort damages. The
Legislature also adopted new limits of liability of $300,000 for
each claimant and $1,000,000 for each occurrence.
 1986

By Chapter 22 of the special session of June 1986, the
Legislature provided that neither the State nor any political
subdivision is liable for tort actions for damages in excess of
$750,000 for each claim and $1,500,000 for each occurrence. It
also provided that no insurer is liable for excess damages unless
such insurer specifically agrees by written statement to provide
coverage in amounts in excess of the limitations stated in this
section.
IV
The foregoing gives some of the background of the adoption of
the various code sections pertaining to immunity, insurance and
payment of claims. We emphasize that the 1976 Interim Study of the
Legislative Subcommittee on the Judiciary reviewed immunity and
insurance and included proposed legislation covering aspects of
both immunity and revisions of the existing statutes covering
liability insurance and other types of insurance. After our
consideration of that Interim Study and the various amendments in
subsequent years, we conclude that the Montana Legislature has
consistently considered together all questions relatingto immunity
and questions relating to insurance. In some statutes there is a
constant reference to both insurance and immunity. We therefore
conclude that we must analyze together all of the 1989 Montana
Codes Annotated which pertain to both immunity and insurance for
our purposes. These code sections are contained in Title 2,
Chapter 9, MCA (1989), and are divided into Part 1 - Liability
Exposure, Part 2 - Comprehensive State Insurance Plan, and Part 3 -
Claims and Actions. We refer to the 1989 Montana Codes Annotated
unless otherwise stated.
Part 1 - Liability Exposure
Section 2-9-101, contains a definition of "claimw which has
remained essentially unchanged since enactment in 1959. In
pertinent part 5 2-9-101, provides:
(1) ttClaimnmeans any claim against a governmental
entity, for money damages only, which any person is
legally entitled to recover as damages because of
personal injury or property damage caused by a negligent
or wrongful act or omission committed by any employee of
the governmental entity while acting within the scope of
his employment, under circumstances where the
qovernmental entitv, if a private person, would be liable
to the claimant for such damages under the laws of the
state. (Emphasis added) .

(4) ttPersonalinjuryt1means any . . .
bodily injury .
.. sustained by any person and caused by an occurrence
for which the state may be held liable.
Section 2-9-102, provides that every governmental entity is
subject to liability for its torts and those of its employees
acting within the scope of their employment except as specifically
provided by the Legislature under Article 11, Section 18, of the
Montana Constitution.
Section 2-9-105, continues to provide that the State and other
governmental entities are immune from exemplary and punitive
damages.
Section 2-9-108, provides that neither the State nor any
political subdivision is liable for damages in excess of $750,000
for each claim and $1,500,000 for each occurrence. It also
contains an excess damage provision.
Section 2-9-111, as set forth in full in part I of this
opinion, provides that a governmental entity is immune from suit,
and also that an agent of a legislative body is immune from suit
under described circumstances.
Section 2-9-112, -113, and -114, set forth other immunity
provisions not pertinent here.
Part 2 - Comprehensive Insurance Plan
Section 2-9-201 and 202 in substance provide that the
Department of Administration is to provide a comprehensive
insurance plan for the State. It is authorized to purchase
policies with cost apportionment among those involved.
Section 2-9-211 provides that all political subdivisions of
the State may procure insurance separately, or jointly with other
subdivisions, and may elect to use a deductible or self insurance
plan, wholly or in part. In substance, this section grants to
school districts an unlimited authority to purchase such insurance
as the school district decides to be appropriate, both in terms of
coverage and amount, and to insure by means of either regular
insurance or some form of self insurance. In a continuing grant
of this broad discretion, .§ 2-9-212 provides that political
subdivisions, including school districts, may levy an annual
property tax necessary to fund the premiums for insurance, the
deductible insurance fund and self insurance reserve fund. We
emphasize that the foregoing grant of discretion to the school
districts is not limited by statute.
 Part 3 - Claims and Actions
Section 2-9-301 sets forth the procedure for filing claims
against the State.
Section 2-9-304 provides that the governing body of each
political subdivision, such as the board of trustees of the School
District in the present case, after conferring with its legal
counsel, may compromise and settle any claim subject to the terms
of insurance, if any. The only limitation is that a settlement
involving a self insurance reserve fund or deductible reserve fund
must be approved by the district court.
Section 2-9-305 covers immunity, defense and indemnification
of officers and employees. This section requires the public
employer to pay any judgment for damages and provides that the
employee is indemnified for such damages. It provides that
recovery against the governmental entity is a bar to recovery
against the employee. In a similar manner it provides that if the
entity acknowledges that the conduct arose out of the course and
scope of the employment, then the employee is immune from
liability.
Section 2-9-314 requires court approval of attorney's fees.
Section 2-9-316 applies to a political subdivision such as
the present School District. It provides that a final judgment
shall be satisfied out of funds that may be available from the
following:
(1) insurance;
(2) the general fund or any other funds generally
available to the governing body;
(3) a property tax, otherwise authorized by law,
 collected by a special levy ... except that such levy
may not exceed 10 mills;
(4) proceeds from the sale of bonds issued by a
county, city or school district for the purpose of
deriving revenue for the payment of the judgment
liability ... Property taxes may be levied to amortize
such bonds . . . provided the levy for payment of any
such bonds or judgments may not exceed, in the
aggregate, 10 mills annually.
The foregoing constitute the pertinent code sections as
contained in the 1989 Montana Codes Annotated which we conclude
must be construed together in order to answer the issue before us.
v
There are conflicting ideas which must be considered and
balanced on the issue of whether the purchase of liability
insurance waives the immunity of the School District. Prior to
1972 Montana had various types of immunity. In 1972 the people of
Montana, by constitutional enactment, eliminated immunity on the
part of political subdivisions. As described in the history of the
1972 Constitutional Convention, the basic thinking then was that

a person should be compensated when injured by the government, and
that such compensation should be similar to that received as a
result of injury by a private party.
While we recognize that in 1972 the citizens of Montana
expressed a desire to have unlimited liability, the same citizens
changed their viewpoint by the 1974 referendum vote which
authorized the Legislature to reinstate governmental immunity by
a 2/3 vote of the Legislature. As appears from the foregoing
history, legislation pertaining to both immunity and insurance has
been adopted at many sessions since 1972.
 We have pointed out that 5 2-9-105, MCA, granting immunity
from exemplary and punitive damages, has been carried forward
without change for many years. Section 2-9-108, MCA, provides a
limit of $750,000 for each claim. This theory has been in
existence with different limits for many years. In connection with
the limitations on the types and amounts of damages, the
Legislature has found that the government and its political
subdivisions cannot operate effectively if there is unlimited
liability. Because the Legislature has concluded that unlimited
liability would impede or cripple effectively the operation of
government, the Legislature has eliminated certain types of damages
and set a monetary limit for each claim. The Legislature has also
eliminated liability on the part of an employee where there is
responsibility on the part of the public employer.
When comparing our statutes to those of other states, we note
that the Montana Legislature has not provided that the presence of
insurance waives immunity, even though the insurance plan has been
amended many times. On the other hand, the Legislature has not
provided that authorized insurance shall not apply where immunity
is granted.
As previously mentioned, the Legislature has given broad and
largely unlimited discretion to a political subdivision such as
the present School District. This clearly suggests that the
discretion as to the insurance coverage for personal injury, as
involved in the present case, is given to the School District.
What is the impact upon the school district if the purchase
of insurance waives immunity? If there is unlimited waiver,
certainly a substantial amount of school district time could be
involved in litigation leaving too little time for normal school
district operations. This impact would be minimized if the waiver
of liability is limited to the dollar amount of insurance coverage.
At that point the handling of the claim and the settlement of the
claim or the conduct of litigation, would be handled by the
insurance carrier. Such handling of the claim should take only a
minimal amount of time for the trustees of the school district.
We come now to a critical part of the analysis. Is it
improper to refuse to pay insurance proceeds to a party injured by
the negligence ofthe school district, where insurance proceeds are
available under a previously purchased insurance policy? If such
a denial is made, then the party injured by the negligence of the
school district has been denied compensation for injury and has
been required to absorb all of the costs of such injury. If the
school district is able to deny payment, then it has abdicated any
responsibility for its own negligence. In addition, such a refusal
to use insurance proceeds allows an insurance carrier to refuse to
pay insurance benefits for which it has already received premium
payment.
As we carefully weigh the various factors, we conclude that
the purchase of liability insurance by the School District in the
present case should waive its immunity to the extent of the
insurance coverage. That conclusion leads to the next difficult
aspect of this issue.
 Even though this Court has appropriately balanced the various
factors, should this Court be the entity to declare that such a
purchase of liability insurance constitutes a waiver? Some supreme
courts have taken the position that such a waiver properly is a
matter for legislative decision.
We emphasize that Montana's statutory provisions are unique.
We conclude that the Montana Legislature has reached the following
conclusion: while a school district is granted immunity of various
types, a school district still is granted authority to purchase
insurance which may have the effect of waiver of immunity to the
extent of the insurance proceeds. We do not find it necessary to
imply a waiver, as the intention of the Legislature is clear.
That intention is reemphasized by its authorization of tax levies
sufficient to pay for insurance premiums. That intention is
consistent with the legislative theory that a claim against a
school district should be paid in a manner similar to payment
required of a private party. We conclude that the Legislature has
declared its intent to allow a school district to waive immunity
to the extent of the insurance proceeds.
Our next question relates to the intention of this School
District. The insurance policy purchased by the School District
is good evidence of its intention. The policy demonstrates an
intention on the part of the School District to provide insurance
extending coverage for the type of personal injuries involved in
the present case, and to provide by such insurance for the
settlement and payment of claims found to be properly due. If that
were not the intention of the School District, the District readily
could have excluded coverage under the policy for injuries of a
type for which immunity is granted by statute. The foregoing
conclusion is strengthened by the premium payment by the School
District which apparently is sufficient in amount to provide the
required coverage. We conclude that the School District has
expressed its intention to waive immunity to the extent of
insurance proceeds which are available.
Balancing all applicable factors, we hold that the purchase
by the School District of liability insurance waives its immunity
to the extent of the coverage granted by the pertinent insurance
pol icy.
VI
We conclude with a final observation. Our holding is based
upon our understanding ofthe intentions ofthe Montana Legislature
and of the School District here involved. In the case of a school
district, we have pointed out that the discretion is given to the
school district with regard to the type and policy limits of
insurance to be carried. As an example, following this opinion,
if any of the over 500 school districts of Montana should conclude
that they do not desire to have their insurance interpreted as we
have set forth in this opinion, such a school district has the
power given by the Legislature to change its insurance coverage,
and ultimately, even to eliminate insurance coverage.
We remand to the District Court for further proceedings
consistent with this opinion.
States waiving immunity include:
Cobbin v. City and County of Denver (Colo.App. 1987) , 735 P.2d
214; Lee v. Colorado Dept. of Health (Colo. 1986), 718 P.2d 221;
Evanston Ins. Co. v. City of Homestead (Fla. 1990), 563 So.2d 755;
Atwater v. Broward County (Fla. 1990), 556 So.2d 1161; Logue v.
Wright (Ga. 1990), 392 S.E. 2d 235; Antiporek v. Village of Hillside
(Ill. 1986), 499 N.E.2d 1307; Rodgers v. Martinsville School Corp.
(1nd.Ct.App. 1988), 521 N.E. 2d 1322; Green River Dist. Health Dept.
v. Wigginton (Ky. 1989), 764 S.W.2d 475; Kee v. State Highway
Admin. (Md.Ct.Spec.App. 1986), 513 A.2d 930; Chabot v. City of Sauk
Rapids (Minn. 1988), 422 N.W.2d 708; Winters v. Lumley (Miss.
1990), 557 So.2d 1175; Wilkes v. Missouri Highway and Trans.
Commln. (Mo. 1989), 762 S.W.2d 27; Beatty v. Charlotte-Mecklenburg
Bd. of Educ. (N.C.Ct.App. 1990), 394 S.E.2d 242; Fastow v. Burleigh
County Water Resource Dist. (N.D. 1987), 415 N.W.2d 505; Herweg v.
Board of Educ. (Okla. 1983), 673 P.2d 154; Southern Pac. Trans. Co.
v. School Dist. No. 40, McMinnville (Or. 1981), 635 P.2d 645;
Gasper v. Freidel (S.D. 1990), 450 N.W.2d 226; Pickle v. Board of
County Commlr. (Wyo. 1988), 764 P.2d 262.

States not waiving immunity include:
St. Paul Fire & Marine Ins. Co. v. Nowlin (Ala. 1988), 542
So.2d 1190; Sadler v New Castle County (Del. 1987), 524 A.2d 18;
Hinchey v. Ogden (Va. 1983), 307 S.E.2d 891.

.

Justices
Chief Justice J. A. Turnage, specially concurring:
I concur in the majority Opinion and do so because the time
has arrived for the legislature to revisit the legislation that is
found in 5 2-9-111, MCA, specifically (2), "a governmental entity
is immune from suit for an act or omission of its legislative body
or a member, officer or agent thereof."
This section was enacted in the 1977 legislative session and
has not been amended since its enactment.
The decisions mentioned in the majority Opinion, Peterson,
Miller, and Eccleston, were decided by this Court on May 16, 1989,
December 13, 1989, and January 2, 1990, respectively. There has
been no regular session of the legislature since those cases were
decided by the Court. This Court's interpretation of 5 2-9-111,
MCA, has expanded immunity of a governmental entity.
The current 1991 legislative session is the first opportunity
that people of the State of Montana have had to consider the
legislation contained in 1 2-9-111, MCA, in the light of this
Court's interpretation in the cases mentioned. If the legislature
determines that the language of the section is too broad, it has
the opportunity to enact whatever provisions it deems appropriate.
For the first time this Court has concluded that, under the
circumstances of this case, the purchase by a school district of
insurance has waived its immunity. There are undoubtedly citizens
of Montana who disagree strongly with that interpretation. As is
apparent from the majority Opinion, this problem has been
31
considered throughout the United States with different conclusions
in different states.
The dissent has leveled criticism at the majority of the Court
for doing what I believe the Court is required to do in construing
statutory provisions--follow the law. "In the construction of a
statute, the office of the judge is simply to ascertain and declare
what is in terms or in substance contained therein, not to insert
what has been omitted or to omit what has been inserted." Section
1-2-101, MCA. This is the rule of law governing statutory
construction, and it is an appropriate and proper rule. There is
no place for individual preference or desire to become the rule of
law when the Court interprets statutory language.
The result of the majority Opinion in this case is a waking
example of a result that arrives at an unintended consequence. The
majority of the Court has labored long and hard in an attempt to
limit the application of this Opinion to school districts. Rest
assured that such will not be the result of the decision. The
rationale of the Opinion most certainly will be applied to all
governmental entities, including the state and any political
subdivision as well as the school districts.
The subject of tort liability of governmental entities,
immunity from such liability and the relationship of insurance
coverage is an area of unlimited legal complexity.
If such matters are left to the judicial system, they will be
addressed by litigation on a case-by-case basis; a guaranty that
32
uncertainty and confusion will be the result. Montana's bench, bar
and citizens will be placed in the position of not knowing what the
rule of law may be in any one case until the final judgment of this
Court has been rendered.
The legislature, not the courts, is the proper forum. It has
at its disposal the adequate means to provide a deliberative
process for study and, most importantly, to provide the opportunity
for the public to participate and contribute their views at public
hearings. This is how matters of serious public policy should,
under our form of government, be resolved.
The citizens of this state are the ones that possess the power
and the authority, speaking through their legislature, to make any
corrections or amendments to existing law in the area covered by
this opinion. It is only through that process that a careful,
deliberative study of the problem can be accomplished, and the
views and recommendations of citizens heard in an appropriate open
public forum. The legislative process provides the opportunity for
Montana to fully consider, debate and arrive at whatever answer is
needed to the problem inherent in the legislation that now exists.
The legislature is the proper forum to address this problem. A
judicial resolution will only lead to further and more difficult
litiqation and uncertainty in the law.

Chief Justice
Justice John Sheehy , concurring and dissenting:

I concur with the result of Part I1 of the majority opinion
which holds that a school district insured for tort claims coverage
has waived its alleged immunity from suit. That result is to be
applauded, for it is a crawl back from the harsh holdings of this
Court in Eccleston, Peterson, and the like, which insulated sub-
governments of the state from responsibility for even the most
egregious of their torts.
At the same time, I dissent fromthe majority's reaffirmation
in Part I, that Eccleston, Peterson, and their ilk continue in
force if insurance is absent. The resolute insistence of the
majority that 5 2-9-111, MCA, must be read broadly has denied many
a tort-injured person from succor in our courts. The judicial
grant of lesislative immunity down to the scrub persons mopping up
the public halls is an elevation in status not reflected in the
scrub persons' pay. Under this holding, the king can do no wrong,
and neither can his cooks in the kitchen, nor his ring-masters in
the gym, cloaked as they are with legislative immunity.
From the reactions and comments of individual judges and
members of the Bar, if I assess them correctly, Eccleston and
Peterson, etc. are examples of judicial interpretation gone off the
rails (see for example, the articles contained in the Montana Law
Review, Constitutional Symposium '89, Vol. 51, No. 2, Summer 1990) .
It is unfortunate that the majority do not use this case to get
back on course.
The majority opinion seems to give weight to legislative
"findingsn made in the 1983 session (5 1, Ch. 675, Laws of Montana
(1983)) and eventually codified as 5 2-9-106, MCA. However, this
Court rejected those findings in Pfost v. State (1985), 219 Mont.
206, 221; 713 P.2d 495, 504. We determined that the Iffindings1'
were baseless and speculative, and constituted little more than a
plea by the legislature that it not be forced to pay its just
obligations. Eventually, the legislative "findingsf1
were repealed
(5 4, Ch. 22, Sp. Laws of Montana (June 1986)). Hence, the
findings deserve no weight in any discussion of immunity.
The majority are in a box because they have interpreted
lesislative action under 5 2-9-111, MCA, too broadly. It is as
absurd to hold that a gym teacher doing his ordinary work is acting
legislatively as it was in Eccleston, to hold that a janitor, who
failed to broom off snow from gym steps had failed to perform a
legislative function for his employer. All 5 2-9-111, MCA, was
ever intended to apply to was true legislative action.
Although I concur with the result of Part I1 of the majority
opinion that immunity is waived in this case, I must comment that
the judicial logic in finding a waiver is scant. The majority go
from one extreme to the other. Having found in 5 2-9-111, MCA, a
tree of legislative immunity extending to all branches of sub-
governments, the majority swing like Tarzan to the tree of waiver
of immunity for all insured branches of sub-governments.
The tree of waiver is rooted on rocky ground. A good district
judge in this case could not see it. The majority finds waiver
because the legislature, at the same times as it was enacting
immunity statutes around 5 2-9-111, was also enacting statutes
which allowed state sub-government to insure against their torts.
If the majority had been correct in their broad interpretation of
the extent of legislative immunity under B 2-9-111, the sub-
governments would have no need of insurance. They would be fully
insulated. It would have been far more logical to have held that
9 2-9-111 extends immunity only to true legislative action, and in
line with that, the legislature had permitted insurance on the
remaining risks so sub-governments would not have to ttreallocate
their resources." Obtaining insurance is very logical when the
immunity of sub-governments is limited to legislative action; it
is not logical if the immunity of sub-governments is total and
insurance on their risks is unnecessary. This is not the first
time I have pressed this point; I raised it in my dissent in
Eccleston [240 Mont. at 61, 7 8 3 P.2d at 373 (Sheehy, J.
dissenting) 1.
The majority have now brought us to a condition where insured
school districts are liable for their torts (including legislative
acts!) to the extent of their insurance, but uninsured school
districts are not liable at all. One might surmise that each
school district would now reject obtaining insurance, and save the
cost while enjoying immunity. Not to worry. The officials of
districts are not fools. They will obtain insurance if only to
save their own skins from an unpredictable court. For all
practical purposes, Eccleston, Peterson and company are dead.
Now the king can do no wrong except when he is insured. Long
live the insured king! We will be in good hands with all state
risks insured.
 K

Justice William E. Hunt, Sr. concurs in the foregoing dissent.