97-236
No. 97-236
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
THE DUCK INN, INC.,
Plaintiff and Appellant,
v.
MONTANA STATE UNIVERSITY-NORTHERN,
Defendant and Respondent.
APPEAL FROM: District Court of the Twelfth Judicial District,
In and for the County of Hill,
The Honorable John Warner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Chris R. Young; Young & Brown, Havre, Montana
For Respondent:
LeRoy H. Schramm, Chief Legal Counsel, Montana
University System, Helena, Montana
Submitted on Briefs: October 9, 1997
Decided: December 9, 1997
Filed:
__________________________________________
Clerk
Justice Karla M. Gray delivered the Opinion of the Court.
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The Duck Inn, Inc. (Duck Inn) appeals from the judgment entered by the Twelfth
Judicial District Court, Hill County, on its order granting summary judgment to
Montana
State University - Northern (Northern) and dismissing the Duck Inn's complaint. We
affirm.
The issues on appeal are:
1. Did the District Court err in concluding that Northern's conduct in renting
its
facilities to private persons and organizations is authorized by õ 20-25-302, MCA
(1993)?
2. Did the District Court err in concluding that õ 20-25-302, MCA (1993), does
not violate the Montana Constitution?
BACKGROUND
The Duck Inn is a Montana corporation with its principal place of business in
Havre, Montana. As part of its business, the Duck Inn provides facilities, food and
beverages to the general public for the purpose of hosting parties, reunions,
conventions
and receptions.
Northern is a tax-supported unit of the Montana university system; its buildings
and property belong to the State of Montana. Northern is funded via taxes and
general
fund appropriations, student fees and tuition, fees charged to users of campus
services
and facilities, federal grants, bond proceeds, interest income and private gifts.
Northern regularly rents its facilities to private persons and organizations for
parties, reunions, conventions and receptions. Its campus food service provider has
the
exclusive right, pursuant to contract, to cater food service for all such gatherings
on
Northern's campus and, in return, Northern receives 10% of the gross revenues
realized
from the catering. In addition, Northern receives 100% of the revenues received as
payment for the rental of campus facilities. Northern applies these revenues to
supplement the operating funds available for maintenance of the rented facilities
and to
pay off the bond issues to which the revenues have been pledged.
In 1994, the Duck Inn filed a complaint for declaratory judgment and application
for preliminary injunction against Northern. The complaint alleged that Northern's
leasing of its facilities to private persons and organizations for various events
placed
Northern in direct competition with the Duck Inn's business and violated Montana
statutes. It also alleged that, if Northern's leasing activities did not exceed
statutory
authority, the applicable statute violated the Montana Constitution. The Duck Inn
sought
a declaratory judgment prohibiting Northern's leasing activities and an order to show
cause why its application for a preliminary injunction should not be granted.
After a hearing, the District Court denied the Duck Inn's request for a
preliminary
injunction. It determined that, while the Duck Inn had shown that Northern did
compete
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with the Duck Inn's business, it was not clear that such competition was prohibited
by
statute or the Montana Constitution.
Northern subsequently moved to dismiss the complaint on the basis that it failed
to state a claim upon which relief could be granted. After full briefing by the
parties, the
District Court concluded that Northern's practice of renting its facilities did not
violate
either õ 20-25-302, MCA (1993), or the Montana Constitution, but observed that the
record indicated that Northern might not have followed its own policies regarding
the use
of facilities. On that basis, the District Court denied Northern's motion to
dismiss and
granted the Duck Inn leave to amend the complaint to seek damages and injunctive
relief
based on alleged violations of Northern's policies. Thereafter, the Duck Inn filed a
notice of appeal of the District Court's order and, on November 7, 1995, this Court
dismissed the appeal without prejudice because no final judgment had been entered.
The Duck Inn subsequently filed an amended complaint generally alleging, in
addition to the bases asserted in the original complaint, that Northern's leasing
activities
violated its own policies. The parties filed cross motions for summary judgment and
the
District Court ultimately granted Northern's motion relating to the alleged
violation of
policies on the basis that no genuine issue of material fact existed as to whether
Northern
violated its current policies relating to the rental of campus facilities. The court
incorporated its earlier decision that Northern's leasing practices did not violate
either
Montana statute or the Montana Constitution into its order on summary judgment and
ordered the dismissal of the Duck Inn's complaint. Judgment was entered accordingly
and the Duck Inn appeals.
STANDARD OF REVIEW
We observe at the outset that the Duck Inn does not appeal from the District
Court's determination that no genuine issue of material fact existed with regard to
whether Northern's rental practices violated its own policies. The Duck Inn's
appeal is
limited to that portion of the District Court's order on summary judgment which
incorporated its earlier legal conclusions that Northern's leasing activities did
not violate
õ 20-25-302, MCA (1993), or the Montana Constitution. Under such a circumstance, we
need only determine whether the district court correctly interpreted the law. See
Ash
Grove Cement Co. v. Jefferson County (Mont. 1997), 943 P.2d 85, 89, 54 St.Rep. 756,
759 (citation omitted).
DISCUSSION
1. Did the District Court err in concluding that Northern's conduct in
renting its
facilities to private persons and organizations is authorized by õ 20-25-302, MCA
(1993)?
Section 20-25-302, MCA (1993), provides, in pertinent part, that the regents of
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the Montana university system may
(5) rent the facilities to other public or private persons, firms, and
corporations for such uses, at such times, for such periods, and at such
rates as in the regents' judgment will be consistent with the full use thereof
for academic purposes and will add to the revenues available for capital
costs and debt service[.]
The only portion of the statute which is at issue here is the meaning of the phrase
"consistent with." "In interpreting a statute, we look first to the plain meaning
of the
words it contains." Werre v. David (1996), 275 Mont. 376, 385, 913 P.2d 625, 631
(citation omitted). Moreover, in the search for plain meaning, we give words their
usual
and ordinary meaning. Werre, 913 P.2d at 631 (citations omitted).
Merriam Webster's Collegiate Dictionary 247 (10th ed. 1993) defines
consistent as "free from variation or contradiction;" "compatible." The American
Heritage Dictionary 402 (3rd ed. 1992), also defines consistent as "compatible."
Applying this definition to õ 20-25-302(5), MCA (1993), we conclude that the statute
expressly authorizes Northern to rent its facilities to any person or entity for any
use, at
any time, which is compatible with--and does not contradict--the full use of the
facilities
for academic purposes and which also adds to the revenues available for capital
costs and
debt service. There is no showing on the record before us that Northern's rentals
are
incompatible with, or contradict, the full use of the facilities for academic
purposes.
Furthermore, it is agreed that Northern receives revenues from the rentals which add
to
revenues available for capital costs or debt service.
The Duck Inn contends that the phrase "consistent with" means "directly related
to" Northern's academic purposes. It provides no authority for such a definition,
however. An appellant bears the burden of establishing error by the trial court and
Rule
23, M.R.App.P., requires an appellant to cite to authority for the position being
advanced
on appeal. The Duck Inn having failed to do so, it cannot establish error with
regard to
the District Court's definition of "consistent" as, among other things, "compatible,
not
contradictory" and the court's corresponding conclusion that õ 20-25-302, MCA (1993),
authorizes Northern's leasing activities.
The Duck Inn also asserts, although obliquely, that it is unwise and unfair for
tax-
supported institutions such as Northern to rent their facilities in direct
competition with
private sector businesses. Many people would agree with the Duck Inn's assertion.
As
a general rule, however, the public policy of the State of Montana is set by the
Montana
Legislature through its enactment of statutes, and this Court may not concern itself
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with
the wisdom of such statutes. See, e.g., Gryczan v. State (Mont. 1997), 942 P.2d 112,
125, 54 St.Rep. 699, 708; Estate of Strever v. Cline (1996), 278 Mont. 165, 180, 924
P.2d 666, 675; Young v. Board of Trustees, Etc. (1931), 90 Mont. 576, 584, 4 P.2d
725, 728.
We also observe that the Duck Inn effectively concedes that õ 20-25-302, MCA
(1993), authorizes Northern's rentals by arguing that the statute authorizes such
rentals
"only if its administrative rules allowing such conduct are strictly confined within
the
applicable legislative guidelines, and only if its conduct strictly adheres to both
the letter
and spirit of the policies and procedures adopted by the Board of Regents and
Northern."
While it cannot be gainsaid that administrative regulations or, as here, campus
policies
cannot authorize conduct not within the purview of the statute (see, e.g., Bick v.
State,
Dept. of Justice (1986), 224 Mont. 455, 457, 730 P.2d 418, 420), the Duck Inn did not
challenge the policies under which Northern rents its facilities on the basis that
they are
too expansive or, indeed, at all. It merely contended in the District Court that
Northern
was violating its own policies. The District Court determined otherwise and, as
noted
above, the Duck Inn has not appealed that determination.
Finally, the Duck Inn argues that several of the cases relied on by Northern in
the
District Court are factually distinguishable from the present case and do not support
Northern's position here. We agree that the cases are, to a large extent, factually
distinguishable in that they address the leasing out of different public facilities
by different
governmental units under different statutes than that at issue here. See, e.g.,
Colwell v.
City of Great Falls (1945), 117 Mont. 126, 157 P.2d 1013, overruled by Prezeau v.
City
of Whitefish (1982), 198 Mont. 416, 646 P.2d 1186; Young, 4 P.2d 725. In this
regard,
we need observe only that the cases noted by the Duck Inn were neither necessary to,
nor
the basis for, the District Court's decision that Northern's leasing activities are
authorized
by õ 20-25-302, MCA (1993). Likewise, those cases have no relevance to, or bearing
on, the conclusion we reached above under "plain meaning" principles of statutory
construction.
We hold that the District Court did not err in concluding that õ 20-25-302, MCA
(1993), authorizes Northern to rent its facilities to private persons and
organizations so
long as the rentals are compatible with the full use of the facilities for academic
purposes
and add to the revenues available for capital costs or debt service.
2. Did the District Court err in concluding that õ 20-25-302, MCA (1993), does
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not violate the Montana Constitution?
The Duck Inn advances two challenges to the District Court's conclusion that õ
20-
25-302, MCA (1993), does not violate the Montana Constitution. First, it contends
that
the statute constitutes an unconstitutional delegation of legislative authority to an
administrative agency. Second, it argues that the leasing of facilities on
Northern's
campus constitutes a use of tax-supported facilities for a private purpose--
competition with
private enterprise--which infringes on the constitutional requirement that taxes may
be
levied only for public purposes. We address these arguments in turn.
Article V, Section 1 of the Montana Constitution provides that "[t]he
legislative
power is vested in a legislature consisting of a senate and a house of
representatives."
The Duck Inn relies on White v. State (1988), 233 Mont. 81, 759 P.2d 971, and Douglas
v. Judge (1977), 174 Mont. 32, 568 P.2d 530, in arguing that õ 20-25-302, MCA (1993),
constitutes an unconstitutional delegation of legislative power because it fails to
prescribe
a policy, standard or rule for implementing the powers delegated to an administrative
agency.
It is true that White and Douglas set forth the general standard against which
legislative delegations of power are measured in Montana. In Douglas, where a
delegation of power to the Board of Natural Resources and Conservation was at issue,
we stated that, in delegating powers to an administrative body,
"the legislature must ordinarily prescribe a policy, standard, or rule for
their guidance and must not vest them with an arbitrary and uncontrolled
discretion with regard thereto. . . ."
Douglas, 568 P.2d at 533-34 (citations omitted). We reiterated that standard in
White in
the context of a challenge to the delegation of legislative power to the Science and
Technology Development Board. White, 759 P.2d at 975.
Applying the principles set forth in Douglas and White to the present case, it
is
clear that õ 20-25-302, MCA (1993), is not an unconstitutional delegation of
legislative
authority to the board of regents. The policy underlying the statute is set forth
in the
statute; that policy is to increase revenues available for the capital costs of, and
debt
service on, campus facilities. The implicit, but clear, rationale behind the
statute is to
minimize the tax support necessary to fund units of the Montana university system by
leasing campus facilities. Likewise, õ 20-25-302, MCA (1993), expressly constrains
the
leasing of such facilities by mandating that the leasing must be consistent with
full use
of the facilities for the academic purposes for which they were established. Here,
this
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constraint on the board of regents is the "standard" or "guide" required by Douglas
for
a proper legislative delegation of power.
The Duck Inn contends, in this regard, that the "regents' discretion" language
contained in õ 20-25-302, MCA (1993), provides insufficient limits on the legislative
delegation of power. It provides no legal authority for its position, however, and
we
conclude that the regents' discretion is sufficiently limited by the statutory
requirements
that the leasing be consistent with the full use of the facilities for academic
purposes and
produce revenues for capital costs or debt service.
Moreover, the regents have authority over the Montana university system which
is independent of that delegated by the legislature. Article X, Section 9 of the
Montana
Constitution expressly creates the board of regents as a constitutional entity and
vests the
government and control of the Montana university system therein. Indeed, the regents
are given "full power, responsibility, and authority to supervise, coordinate,
manage and
control the Montana university system . . . ." Art. X, Sec. 9, Mont. Const. Under a
similar circumstance involving independent authority, the United States Supreme Court
has held that limitations on legislative delegation are "less stringent in cases
where the
entity exercising the delegated authority itself possesses independent authority
over the
subject matter." United States v. Mazurie (1975), 419 U.S. 544, 556-57, 95 S.Ct.
710,
717, 42 L.Ed.2d 706, 716 (citation omitted). We adopt the Supreme Court's reasoning
with regard to legislative delegations of power to the board of regents in Montana.
The Duck Inn's second constitutional argument is that õ 20-25-302, MCA (1993),
permits the use of tax revenues of the State of Montana for private purposes in
violation
of Article VIII, Section 1 of the Montana Constitution, which provides that "[t]axes
shall
be levied . . . for public purposes." It relies on Hollow v. State (1986), 222
Mont. 478,
723 P.2d 227, and cases from other jurisdictions in support of its argument, and
expressly urges this Court to adopt the rationale and holding set forth in White
Eagle Oil
& Refining Co. v. Gunderson (S.D. 1925), 205 N.W. 614.
We begin with the constitutional provision itself, which necessitates a
determination of whether the present case directly implicates the use of taxes
levied for
a public purpose for a private use. We conclude that it does not.
The Duck Inn does not challenge the levy of any tax--or a statute authorizing
such
a levy--in this proceeding. Moreover, nothing in the record before us suggests that
this
case involves tax monies levied for the proper public purpose of higher education
being
expended directly for Northern's leasing activities or the private gatherings held
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pursuant
thereto. To the contrary, as discussed above, the purpose of õ 20-25-302, MCA
(1993),
is to relieve or contain, to at least a minimal extent, the tax burden associated
with
university-level funding requirements. Thus, to the extent Article VIII, Section 1
applies
here at all, õ 20-25-302, MCA (1993), and Northern's leasing activities thereunder
appear
to have "public purposes" as that term is used in Article VIII, Section 1 of the
Montana
Constitution.
In this regard, the Duck Inn's reliance on Hollow is misplaced. There,
legislation
permitted the Montana Economic Development Board to use coal severance tax revenues
from the in-state investment fund to satisfy guaranties of private debts or
obligations.
Hollow, 723 P.2d at 232. We held that the use of tax monies to satisfy private
debts or
obligations violated the requirement of Article VIII, Section 1 of the Montana
Constitution that tax monies be used for public purposes. Hollow, 723 P.2d at 232.
In
the present case, no tax monies are being spent to satisfy private debts or for any
other
private purpose. Tax monies being used as a partial funding source for Northern
continue to be used for that purpose, and Northern's leasing activities only enhance
revenues available for capital costs and debt service which might otherwise require
supplementation by the taxpayers. Thus, Hollow is inapplicable here.
We turn next to White Eagle Oil, the 1925 South Dakota case on which the Duck
Inn urges us to rely in holding Northern's leasing activities unconstitutional under
Article
VIII, Section 1 of the Montana Constitution. There, a statute authorized the state
to use
highway funds obtained from gasoline taxes for the purpose of buying gasoline, oil
and
lubricants and selling them at retail. As the state began such activities, the
plaintiffs--
retail gas distributors--brought an action challenging the constitutionality of the
statute
authorizing use of gas tax funds for the stated purpose. White Eagle Oil, 205 N.W.
at
615-16. The plaintiffs contended that the statute violated the South Dakota
Constitution's
provision that taxes could be levied for public purposes only; the state contended
that the
statute was within its police power and, therefore, that the use of gas taxes
permitted
therein was a public purpose. White Eagle Oil, 205 N.W. at 618, 620. The South
Dakota Supreme Court assumed arguendo that the statute was an exercise of the police
power and, therefore, that the statutorily authorized use of gas taxes was a public
purpose, effectively rejecting the plaintiffs' constitutional argument. It observed,
however, that the law authorizing the levy of the gas tax specified that those taxes
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were
appropriated for the construction and repair of highways; on that basis, the court
invalidated the statute under a constitutional provision which prohibited the
diversion of
funds levied for a specific purpose to another purpose. White Eagle Oil, 205 N.W. at
620.
White Eagle Oil is of no assistance to the Duck Inn. The South Dakota Supreme
Court rejected the plaintiffs' constitutional argument--which was similar to that
advanced
by the Duck Inn here under the Montana Constitution--and held the statute
unconstitutional for reasons not at issue in the present case. White Eagle Oil has
no
application here.
Finally, we briefly address the other authorities from sister jurisdictions on
which
the Duck Inn relies, none of which supports its position in this case. In Wheelon v.
South Dakota Land Settlement Board (S.D. 1921), 181 N.W. 359, 360-62, a statute
authorizing the levy of taxes for the purpose of state loans to settlers was held
constitutional as a "public purpose." Similarly, in Albritton v. City of Winona
(Miss.
1938), 178 So. 799, 803-810, a depression-era tax to be levied for the purchase of
land,
construction of certain manufacturing enterprises and lease of the enterprises to a
private
firm or individual fit to operate the enterprises was upheld against a variety of
constitutional challenges as promoting the public welfare.
The final case on which the Duck Inn relies is City of Cleveland v. Ruple (Ohio
1936), 200 N.E. 507. There, the city used public funds for the construction and
operation of an underground facility to be used for public exhibitions and vehicle
parking
in conjunction with public events at its nearby civic center. City of Cleveland, 200
N.E.
at 508-509. In its first 1« years of operation, the facility was used for public
purposes
for a total of three months; it was operated as a parking garage in competition with
private business the remainder of the time. The receiver for a nearby private
parking
garage sued to enjoin the city from using the facility in the above-described manner
and
the Ohio Supreme Court held that it could be operated as a garage "so far as in
doing so
there is involved a public function." City of Cleveland, 200 N.E. at 509, 511. It
is this
holding on which the Duck Inn relies.
The facts in City of Cleveland are clearly distinguishable from those presently
before us. There, the "public" function of the facility was essentially incidental
to the
private use being made of it, in that the facility was operated for public purposes
only
17% of the time. Indeed, the Ohio court distinguished City of Cleveland from the
many
cases holding "that public buildings may be temporarily let for a consideration, but
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in our
judgment the present case does not present a situation of that character." City of
Cleveland, 200 N.E. at 511. The case before this Court does present a situation
where
Northern temporarily leases its facilities and the leasing is incidental to use of
the
facilities for the public purposes for which they were funded. The record reflects,
in
fact, that less than 5% of the activities in the Northern facilities at issue are of
a private
social nature under leases with Northern. Thus, City of Cleveland is readily
distinguishable on the facts and, therefore, on the law.
We hold that the District Court did not err in concluding that õ 20-25-302, MCA
(1993), and Northern's leasing activities thereunder, do not violate the Montana
Constitution. Affirmed.
/S/ KARLA M. GRAY
We concur:
/S/ JAMES C. NELSON
/S/ WILLIAM E. HUNT, SR.
/S/ TERRY N. TRIEWEILER
/S/ W. WILLIAM LEAPHART
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