IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
WALTER HAMMERMEISTER, et al.,
Plaintiffs and Appellants,
NORTHERN MONTANA JOINT REFUSE DISPOSAL
DISTRICT, PONDERA COUNTY, GLACIER COUNTY,
TETON COUNTY, et a1 . ,
Defendants and Respondents.
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Pondera,
The Honorable Marc G . Buyske, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Edmund F. Sheehy, Jr.; Cannon & Sheehy, Helena,
Montana
For Respondents:
Selden S. Frisbee, Attorney at Law, Cut Bank,
Montana
Mark F . Higgins; Ugrin, Alexander, Zadick & Higgins,
Great Falls, Montana
Kevin C, Meek; Davis, Hatley, Haffeman & Tighe,
Great Fplls, Montana
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" Submitted on Briefs: September 19, 1996
Clerk
Justice W. William Leaphart delivered the Opinion of the Court.
Appellants Hammemeister, Reagan, William Mancoronal and
Elizabeth Mancoronal, et a1 . , appeal from the judgment of the Ninth
Judicial District Court, Pondera County, in which it granted
Northern Montana Joint Refuse Disposal District, Teton County,
Glacier County and Pondera County, City of Conrad, City of Valier
and Thomas C. Hammerbacker's (collectively NMJRDD) motion for
summary judgment and denied appellants' motion for summary
judgment. We affirm.
All parties agreed that there were no genuine issues of
material fact and, thus, the matter was appropriate for summary
judgment ruling under Rule 56, M.R.Civ.P. The undisputed facts as
related by the ~istrictCourt are as follows: NMJRDD was created
in 1990 following several years of discussion between interested
persons in several northern Montana counties and municipalities
regarding disposal of refuse in light of the advent of more
stringent federal regulation of land fills. The original
Resolution of Intention to create NMJRDD described a land area
larger than the district which was ultimately created. Notice of
the original Resolution of Intention was properly given according
to statute. However, no additional affirmative notice of the
reduction in size was provided by the governmental entities
creating the district. The reduction in size was the result of the
fact that, although the resolutions passed by Glacier, Teton and
Pondera Counties included the territory within Toole County, Toole
County itself did not pass a resolution to create the district and
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thus was not included in the final refuse district. Appellantsr
challenge to the formation of NMJRDD is based on the lack of
subsequent notice of the reduction in size of the district.
Following its creation, NMJRDD developed a roll-off site and
landfill site, incurred bond indebtedness, assessed and collected
fees for its services from the residents of the district, including
the appellants in this matter, and was utilized by the citizens of
the district as well as other entities on a contract basis. No
person is subject to assessment by the district whose property was
not included in the original Resolution of Intention, though
persons (who were not parties to this proceeding) whose property
was included in the original Resolution of Intention, are not part
of the district as finally created. In other words, the notice was
overly broad.
Section 7-13-212, MCA, requires that, before ordering any
proposed improvements, the commissioners shall pass a resolution
creating the refuse disposal district "in accordance with the
resolution of intention theretofore introduced and passed by the
commissioners." Appellants contend that the county commissioners
did not create a refuse disposal district in accordance with the
Resolution of Intention because the boundaries of the district were
reduced from the boundaries set forth in the notice of intent to
create.
The question presented by the cross-motions for summary
judgment is whether the initial creation of NMJRDD is subject to
challenge due to the fact that the original Resolution of Intention
to create NMJRDD described a land area larger than the district
ultimately created. In other words, does the fact that the land
area ultimately included in the NMJRDD was smaller than the area
described in the original Resolution of Intention invalidate the
NMJRDD?
DISCUSSION
The statutory procedure for creation of a joint refuse
disposal district is set forth in Title 7, Chapter 13, part 2, MCA
(1989). Pursuant to the statutory procedure, it is necessary for
the county commissioners of the counties involved to adopt a
Resolution of Intention to create a refuse disposal district. Such
resolution is required to contain, among other things, a general
description of the territory or lands of said district, giving the
boundaries thereof. Section 7-13-204 (c), MCA. The counties of
(2)
Pondera, Glacier and Teton passed resolutions of intention setting
forth the requisite information. Because the proposed boundaries
of the joint refuse disposal district included various
municipalities, it was necessary that the commissioners of each of
the three counties transmit a copy of their respective "Resolutions
of Intention" to the executive head of each of the cities or towns
within the proposed district in that particular county so that the
resolution could be considered by the city or town council.
Section 7-13-206, MCA.
Thereafter, if any of the city or town councils, by
resolution, concur in the resolution of the county commissioners,
the city or town council must transmit a "Resolution of
Concurrence" to the county commissioners. On the other hand, if an
incorporated city or town council does not concur in the
resolution, then the county commissioners have no authority to
include said city or town in the district. The commissioners can,
nonetheless, "continue to develop the district, excluding said city
or town." Section 7-13-207, MCA. Thus, the legislature, having
specifically authorized the commissioners to proceed to develop the
district after excluding any city or town which chooses to opt out,
specifically recognized that the final boundaries of the district
may well be smaller than those outlined in the initial resolution
of intention.
Section 7-13-208,MCA, then requires the commissioners to give
notice of the passage of the resolution of intention and resolution
of concurrence, if applicable, by publishing a notice describing
the general characteristics of the collection system; the proposed
fees to be charged for services; designating the time and place
where the commissioners will hear and pass upon protests made
against the operation of the proposed district; and "stating that
a description of the boundaries for the proposed district is
included in the resolution on file in the county clerk's office."
The statute does not require that the notice describe the
boundaries of the district or lands included in the district but,
rather, refers the reader of the notice to the description of the
boundaries included in the resolution on file in the county clerk's
office. These notices were required to be published and mailed to
every person firm, or corporation having real property within the
proposed district.
At any time thirty days after the date of first publication of
the notice, any owner of property liable to be assessed for said
services is entitled to make written protest against the proposed
service or against the proposed fees. The protest is required to
be in writing and delivered to the county clerk. Section 7-13-209,
MCA. Under § 7-13-210,MCA, the commission is required to conduct
a hearing and proceed to hear and pass upon all protests and "its
decision shall be final and conclusive." Pursuant to § 7-13-212,
MCA, the commissioners are deemed to have acquired jurisdiction to
order improvements immediately upon the occurrence of one of the
following: when no protests are delivered to the clerk within the
specified time limit, when less than fifty percent of the family
residential units in the proposed district protest, or when a
protest shall have been overruled.
In the present case, each of the three counties determined
that protests were filed by less than fifty percent of the family
residential units in their respective portions of the proposed
district. Accordingly, Teton, Glacier, and Pondera Counties each
adopted resolutions creating the joint district.
Did the District Court err in holding that
appellants were estopped from challenging the formation
of the refuse district some five years after its
formation?
Appellants base their challenge on the fact that the refuse
district as finally adopted, contained a smaller geographic area
than what was originally delineated in the Notice of Intention to
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Create. Appellants did not file their suit challenging the
creation of the refuse district until 1995. In light of the fact
that the district, as of the time of the challenge, had been
operating for more than five years, the District Court was correct
in relying upon Henderson v. School Dist. No. 44 (1926), 75 Mont.
154, 242 P. 979, and concluding that, given the public's reliance
on the district for five years, appellants were estopped from
challenging the creation of the refuse district.
Henderson involved an annexation of a small Fergus County
school district (#42) to an adjacent and larger district (#44).
The annexation was accomplished in 1919 by order of the county
superintendent. Validity of the annexation was not challenged
until five years later in 1925. All residents within the district,
including the plaintiffs, acquiesced in the annexation, took part
in the school elections, sent their children to its schools and
paid the taxes levied upon their property for its support and
maintenance. Henderson, 242 P. at 980. The plaintiffs in
Henderson argued that the annexation was void since there had been
no election on the issue in each of the districts, as required by
statute. The Supreme Court in Henderson found that since there had
been a good faith attempt to comply with an existing law, it could
have found that the school district was a de facto corporation and
thus not subject to collateral attack. Henderson, 242 P. at 981.
The Court chose, however, to rely on an estoppel doctrine based
upon public policy.
After a community has for years, as in the case at
bar, exercised the functions of a public corporation, its
legal existence cannot be questioned without causing
disturbance more or less serious, and if the question of
the regularity of its organization can be kept open to
collateral inquiry indefinitely, no one can ever be
secure in dealing with such entities, or be sure that
taxes levied, bonds floated, or contracts necessarily
entered into for the transaction of its business will be
valid and enforceable. The transaction of public busi-
ness might be blocked at any time at the will or whim of
a private individual and the credit of the corporation
impaired or destroyed. For these and other cogent
reasons it is held that:
"An individual may be estopped by his conduct to
attack the validity of the incorporation of a
municipality, even though, but for such estoppel, he
might do so." 28 Cyc. 175.
Thus acquiescence in the exercise of corporate
functions, and dealing with the corporation as such over
a period of years will estop all persons dealing with the
corporation from assailing its legality. [Citations
omitted.1
Henderson, 242 P. at 981-82
The plaintiffs in Henderson argued that they should not have
been subjected to estoppel by acceptance unless they had knowledge
of the relevant facts and that they were unaware of the creation of
the district until five years later, in April of 1925. Despite the
lack of an election, the Court upheld the annexation noting that
plaintiffs did more than accept the benefits; "they dealt with the
district and accepted liability as well; they paid the taxes levied
against their property for a number of years, thus recognizing the
district and acquiescing in its assumption of corporate capacity .
. . . " Henderson, 242 P. at 982. The Court then went on to point
out that the estoppel being applied was not based upon plaintiffs'
acceptance of or acquiescence in benefits, but was an estoppel
based on public policy
[Tlhe estoppel here invoked is not, therefore, strictly
an estoppel by acceptance of benefits, but rather it is
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an estoppel based upon public policy, because of the
confusion into which a judgment, at this late date, that
the organization was void, would throw public and private
rights and interests acquired through years of operation
with the acquiescence of the inhabitants, and is
therefore not dependent upon knowledge of the facts.
Henderson, 242 P. at 982 (emphasis added)
In Scilley v. Red Lodge-Rosebud Irr. Dist. et al. (1928), 83
Mont. 282, 272 P. 5 4 3 , this Court refused to invalidate the
creation of an irrigation district despite a showing that an
absentee landowner was not given notice of the inclusion of his
real property in the new irrigation district, Although that single
landowner was allowed to be excluded from the district, the Court,
relying on Henderson, stated:
[Ilf after years of such operations, the creation of a
district may be declared invalid, wholesale ruin and
disaster may follow within and without the territory
included within the supposed district; bondholders be
stripped of their security for money loaned in good
faith, and future worthy projects be subject to suspicion
and distrust. For these reasons, courts should declare
against the validity of the organization of such going
concerns only for the most cogent reasons, and when
irresistibly compelled to such a course.
Those same public policy concerns mandate a similar result in
the present case. In the five plus years since its creation, the
refuse district has developed a roll-off site and a landfill site;
it has incurred bonded indebtedness and it has assessed and
collected fees for its services from the residents of the district,
including the appellants in this matter; and it has been utilized
by the citizens of the district, as well as other entities on a
contract basis. As in Henderson, the undisputed facts indicate
that there was a good faith attempt to comply with an existing
statutory scheme for annexation. Thus, although there would be a
basis for finding a de fact0 corporation not subject to collateral
attack, we choose instead to hold that the demands of public policy
require an estoppel. It is now over five years since the district
was created. To declare that the refuse district is void at this
late stage would throw public and private rights into considerable
confusion. If districts such as this were indefinitely subject to
collateral attack, no one would ever be secure in dealing with
them, or confident that taxes, bonds or contracts entered into for
the sake of public business were valid and enforceable. "The
transaction of public business might be blocked at any time at the
will or whim of a private individual and the credit of the
corporation impaired or destroyed." Henderson, 242 P. at 981-82.
Appellants argue that the lack of a new notice setting forth
the redefined boundaries was jurisdictional. They rely on our
decision in Johnston v. City of Hardin (1919), 55 Mont. 574, 580,
179 P. 824, in support of their contention that the primary purpose
of the notice was defeated because of the difference between the
area described in the notice of intent as compared to the area
encompassed in the final district. The decision in Johnston,
however, was based upon the fact that:
It is established by this record that the resolution to
which plaintiff and other property owners were referred
for a description of the boundaries of district No. 9
describes territory none of which is in that district,
and the same thing is true with respect to district No.
10.
Johnston, 179 P. at 825. In other words, the resolution totally
failed to describe any of the territory within the district. ~ h u s ,
Johnston is clearly distinguishable from the case at bar in which
the notice of intention was overly broad; that is, it encompassed
some territory which was not ultimately part of the district.
However, all territory which was not included in the final district
was included within the notice. As set forth above, this is not a
case where an affected party did not receive notice.
The Court cited Johnston in Wood v. City of Kalispell (1957),
131 Mont. 390, 310 P.2d 1058, which involved a claim that defective
notice of intent to create a special improvement district rendered
the district void ab initio. In Wood the question was whether the
city had jurisdiction to create a special improvement district
where the notice of intention to create it was not mailed to all
property owners in the proposed district. Although notices were
mailed to some 424 property owners in the district, one owner
(Pettibone) was not mailed a notice. Wood, 310 P.2d at 1059.
Citing Scillev, 272 P. at 552, we held that service of notice
as prescribed by statute is jurisdictional and, thus, the failure
to send notice to Pettibone deprived the city of jurisdiction to
proceed as to him. Wood, 310 P.2d at 1060. As to the remaining
property owners, the city argued that under the precedent in
Scillev, the district should be void only as to the one property
owner who did not receive notice, not as to all those who did.
Wood
I 310 P.2d at 1060. This Court, however, rejected that
argument for the reason that, unlike Scillev where the challenge
arose many years after the district had been created, the challenge
in wood was brought before the city commenced work or began selling
bonds. Thus, in contrast to Scillev, there was no public reliance
as a basis for an estoppel, laches or waiver theory. Wood, 310
P.2d at 1060-61.
Wood is clearly distinguishable from the present case in a
number of particulars: In W V J , the Court held that failure to
serve notice as prescribed by statute was jurisdictional. Here,
there was no failure to serve notice as prescribed by statute.
Rather, the statute in question provided that notice must contain
a "general description of the territory or lands of said district,
giving the boundaries thereof." Section 7-13-204(2)(c), MCA.
There is no statutory requirement that the notice be reissued if
the boundaries are reduced in size. Secondly, Wood and Scillev
involved situations where a landowner was denied due process
because he/she did not receive the requisite notice. In the
present case there is no contention that there was a denial of due
process through lack of notice. On the contrary, the contention is
that notice went out to people who were ultimately not included
within the district. That is, that too many rather too few
received notice. Finally, unlike Wood where the challenge was
brought before any work commenced, appellants did not raise their
challenge to the NMJRDD until years after the district was created
and in full operation thus giving rise to questions of estoppel.
Even assuming, aryuendo, that there was a legal requirement that
the Resolution of Intention be re-noticed due to a reduction in
territory, failure to re-notice did not adversely affect any of the
landowners within the district as finally created and, thus, was
not jurisdictional.
In summary, we hold that all affected parties received due
process of law through receipt of notice of the intent to create
the district; there was no statutory requirement that the notice of
intent to create be re-noticed when the size of the district w a s
reduced; and even if there were such a requirement, since the
district has now been in operation for five plus years, the
appellants are, for public policy reasons, estopped from
challenging its creation or existence.
Af finned.
We concur:
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