NO. 94-576
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
MONTANA PUBLIC EMPLOYEE'S
ASSOCIATION, a Montana Non-
Profit Corporation, Sally
Russell Steve Warn, John
Starcevich, Pam Aldridge,
Carol Huggins, Joyce Crawford,
Kristie Milligan, and Fred
Marshall, et al.,
Plaintiffs and Appellants,
-v-
JUN%O 1995
OFFICE OF THE GOVERNOR, Governor
Stan Stephens, MONTANA DEPARTMENT
OF TRANSPORTATION, and MONTANA
DEPARTMENT OF SOCIAL AND
REHABILITATION SERVICES,
Defendants and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Carter N. Picotte, Helena, Montana
For Respondent:
Nick A. Rotering, Lyle Manley, Montana Department of
Transportation, Helena, Montana; Russ Cater, Montana
Department of Social and Rehabilitation Services,
Helena, Montana
Submitted on Briefs: March 23, 1995
Decided: June 20, 1995
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
This is an appeal from an order of the First Judicial District
Court, Lewis & Clark County, granting Respondents' motion for
summary judgment terminating Appellants' declaratory judgment
action. We affirm.
The issues on appeal are:
1. Whether the District Court erroneously determined
that the actions of Governor Stan Stephens did not
violate Article II, Section 31 of the Montana
Constitution and Article I, Section 10, of the
Constitution of the United States.
2. Whether the District Court erroneously
determined that Governor Stan Stephens did not violate
Article III, Section 1, of the Montana Constitution.
Background
Appellants filed their declaratory judgment action in District
Court on January 6, 1993. Following briefing and oral argument on
their cross motions for summary judgment, the District Court
granted Respondents' motion and denied Appellants'. In their
Complaint, Appellants contend that for a period of at least 15
years previously, the State of Montana had in place a system of
employee compensation set forth at 55 2-18-301, et seq., MCA. That
compensation system incorporated basic pay levels, or grades, and
a series of sub-levels within each grade, or steps, under which an
employee received higher compensation depending upon the amount of
time spent in employment. Appellants also contend that for many
years, it had been the practice of some state agencies, including
the respondent agencies, to subtract or take away steps when
promoting employees more than one grade level.
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By way of example, Appellants explain that when a person at
grade 12, step 6, was promoted to grade 14, the employee would be
placed in step 4, thus losing 2 steps and the compensation that
went along with the Z-step loss. While the promoted employee would
not actually suffer a reduction in compensation, he or she would
receive less of a pay increase than if the promotion included not
only the higher grade, but also no reduction in steps.
In 1991, the directors of the Departments of Transportation
and Social and Rehabilitation Services determined to reinstate the
steps lost by qualified employees. Employees were so informed by
a written announcement that included instructions for employees to
complete and return to their respective departments.
Before the lost steps could be reinstated, however, Governor
Stan Stephens issued a May 15, 1991 memorandum to all department
directors prohibiting them from reinstating steps lost to multi-
grade promotions. Accordingly, the proposed plan to reinstate the
lost steps was withdrawn by each department. Appellants contend
that the Governor acted unconstitutionally.
Discussion
Under Rule 56(c), M.R.Civ.P., summary judgment is proper only
when no material fact exists and the moving party is entitled to
judgment as a matter of law. The initial burden is on the moving
party to establish that there are no genuine issues of material
fact. Once that burden has been met, the burden then shifts to the
party opposing the motion to establish otherwise. Spain-Morrow
Ranch, Inc. v. West (1994), 264 Mont. 441, 444, 872 P.2d 330, 331-
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32. In determining the propriety of summary judgment, we will
utilize the same criteria as the district court; our review is &
m. Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849
P.2d 212, 214.
1. Whether the District Court erroneously determined
that the actions of Governor Stan Stephens did not
violate Article II, Section 31, of the Montana
Constitution and Article I, Section 10, of the
Constitution of the United States.
Appellants contend that Governor Stephens violated Article II,
Section 31, of Montana's Constitution and Article I, Section 10, of
the United States Constitution in prohibiting the step
reinstatement plan from being implemented. Both of those
constitutional provisions prohibit the respective legislative
branches of government from passing legislation that impairs
contractual obligations. In rejecting Appellants' contentions, the
District Court concluded that, here, no action was taken by the
legislature. Rather, the action taken was by the Governor, and the
subject constitutional provisions were, thus, not implicated.
Appellants, however, maintain that because the allegedly
offending acts of the Governor were authorized by 5 z-15-103, MCA,
which provides that, subject to the constitution, the governor
shall formulate and administer policies of the executive branch, in
essence, his acts were those of the legislature in impairing
Appellants' contracts.
Without agreeing or disagreeing with the District Court's
rationale, we conclude that Appellants' arguments are resolved at
a more fundamental level. In order for there to be an
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unconstitutional impairment of a contractual obligation, there must
first be a contract in existence. Matter of Yellowstone River
(1992), 253 Mont. 167, 183, 832 P.Zd 1210, 1219. In that case,
citing other Montana decisional authority, we stated:
Montana has adopted a three part test to determine
whether legislation has violated the impairment of
contracts clause. [Citations omitted]. "The threshold
inquiry is whether the state law has, in fact, operated
as a substantial impairment of the contractual
relationship." [Citations omitted]. Implicit in this
inquiry is the existence of a contract. The appellants
have failed to demonstrate the existence of any specific
contract let alone its impairment. This is fatal to
appellants' claim. (Emphasis added.)
Yellowstone River, 832 P.Zd at 1219
Similarly, Appellants in this case have failed to demonstrate
the existence of any contract under which they had a vested right
to reinstatement of the lost steps. "It is essential to the
existence of a contract that there be . . a sufficient cause or
consideration." Section 28-2-102(4), MCA. Consideration requires
that the contracting parties, each as to the other, confer some
legal benefit and/or incur some detriment as an inducement to
performance. Section 28-Z-801, MCA. See also Title 28, Chapter 2,
part 8, generally and Boise Cascade Corp. V. First Security Bank
(1979), 183 Mont. 378, 391, 600 P.2d 173, 181
Here, the Appellant employees gave nothing of value for the
department directors' gratuitous offer to reinstate the lost steps
and, the offer being gratuitous, it could be revoked at any time.
No contract is created when performance is entirely optional with
the promisor. Matter of Estate of Haggerty (1990), 246 Mont. 351,
356, 805 P.2d 1338, 1342. See also Boise Cascade Corv., 600 P.2d
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at 181.
Moreover, Appellants' prior work could not serve as
consideration for the State's offer to reinstate the lost steps,
inasmuch as, generally, past consideration is not sufficient to
support a promise. In Tindall v. Konitz Contracting, Inc. (1989),
240 Mont. 345, 783 P.2d 1376, we quoted with approval the following
statement of that principle:
'I [al promise supported by past consideration is
unenforceable because the detriment did not induce the
promise. That is, 'since the detriment had already been
incurred, it cannot be said to have been bargained for in
exchange for the promise."'
Tindall, 783 P.2d at 1379.
Accordingly, there being no consideration for the department
directors' offer, no contract was formed under which the appellant
employees gained any vested rights to the reinstatement of the lost
steps. There being no contract in existence, there were no
contract obligations which were impaired by the Governor's actions.
We hold that Governor Stephens' actions here did not violate
Article II, Section 31, of the Montana Constitution or Article I,
Section 10 of the United States Constitution.
2. Whether the District Court erroneously determined
that Governor Stan Stephens did not violate Article III,
Section 1, of the Montana Constitution.
Appellants next contend that Governor Stephens violated the
doctrine of separation of powers in that he unlawfully attempted to
obstruct the legitimate exercise of duties granted to the
Department of Administration by the legislature. Article III,
Section 1, of Montana's Constitution prohibits one branch of
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government from exercising any power properly belonging to the
other two branches.
According to Appellants, by enacting the pre-1991 provisions
of the State pay plan, iS§ 2-18-101, et seq., MCA), the
legislature, pursuant to Article VI, Section 7, of Montana's
Constitution, charged the Department of Administration as being the
executive agency solely responsible for the administration and
implementation of that plan, with rulemaking authority in
furtherance of those responsibilities. Appellants maintain that
the Department of Administration did, by adopting pay plan Rule No.
1809, vest discretion in agency heads for the treatment of steps in
the pay plan. Therefore, according to Appellants, since the
legislature allocated to the Department of Administration the power
to administer the pay plan, the Governor, as the highest executive
officer of the State, was without authority to "interfere in or
dominate the discretion and judgment of other executive branch
officers , , . [such as the department directors here1 in the
exercise of those powers conferred by law upon them, unless the
power of review or the requirement of approval is imposed by the
Legislative delegation of power." In countermanding the department
directors' offer to reinstate the lost steps, Appellants conclude
that Governor Stephens, thus, violated the doctrine of separation
of powers.
The District Court rejected Appellants' argument, concluding
that the Governor was not interfering with the Department of
Administration's delegated authority over the State pay plan, but,
rather, was simply exercising his legitimate power over other
executive agencies under §.§ Z-15-104 and 2-15-103, MCA. We agree
with the District Court.
Article VI, Section 4, of Montana's Constitution vests
executive power in the Governor. The statutory duties of executive
branch officers and agencies are generally found at 5 2-15-101, et
seq., MCA, commonly referred to as the Executive Reorganization
Act. Section 2-15-103, MCA, recognizes the constitutional status
of the governor as the State's chief executive officer and, subject
only to the constitution and other State laws, requires the
governor to formulate and administer the policies of the executive
branch with "full powers of supervision, approval, direction, and
appointment over all departments and their units." Moreover, that
statute provides that whenever a conflict arises as to the
administration of the policies of the executive branch of state
government, with exceptions not at issue here, "the governor shall
resolve the conflict, and the decision of the governor is final."
In addition, 5 2-15-201, MCA, further prescribes the powers and
duties of the governor including that "[h]e shall supervise the
official conduct of all executive and ministerial officers."
While under 5 2-18-102, MCA, and parts 2 and 3 of Title 2,
Chapter 18, MCA, the Department of Administration has broad powers
and duties to implement and administer the State classification and
pay plan as generally set forth in that Title and Chapter,
nevertheless, those statutory powers and duties must be read in
conjunction with the governor's statutorily prescribed duties of
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supervision, approval, appointment and direction over executive
agency departments and their heads while also taking into
consideration his constitutional status as chief executive officer
of the State.
Appellants' interpretation of the constitutional provisions
and statutes mentioned, treats the Governor's duties and the duties
of the Department of Administration and the heads of the executive
agencies as regards the classification and pay plan as mutually
exclusive. However, we find nothing in the above statutory scheme
that supports such an interpretation or that would have prohibited
Governor Stephens' actions in this case. Likewise, we conclude
that the doctrine of separation of powers is not violated where the
governor exercises the very sorts of powers and duties authorized
by the legislature in the statutes it enacted. Contrary to
Appellants' contentions, Governor Stephens did not exercise any
power belonging to the legislative branch; he simply executed his
statutory duty to supervise and direct the heads of two executive
departments in their making of a discretionary decision involving
the implementation of the State pay plan. As was the District
Court, we are not persuaded to a contrary conclusion by Appellants'
arguments or by any authorities cited. Accordingly, we hold that
Governor Stephens' actions here did not violate Article III,
Section 1 of the Montana Constitution.
Finally, Appellants do not cite this Court to any genuine
issues of material fact that are in dispute, and, having reviewed
the record and the briefs, we are satisfied that there are none.
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Under the undisputed facts of this case, we hold that Respondents
were entitled to judgment as a matter of law.
Accordingly, the Order of the District Court dated September
1, 1994, grant ing summary judgment to Respondents and denying
Appellants' mot ion for summary judgment is
We Concur:
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