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No. 99-224
IN THE SUPREME COURT OF THE STATE OF MONTANA
2000 MT 163
300 Mont. 284
4 P.3d 26
DOROTHY JEFFERSON, and all persons
similarly situated,
Plaintiffs and Appellants,
v.
BIG HORN COUNTY and STATE OF
MONTANA,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Big Horn,
The Honorable G. Todd Baugh, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Sam S. Painter, Elk River Law Office, P.L.L.P.; Billings, Montana
For Respondents:
Brendan R. Beatty, Department of Revenue; Helena Montana
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Christine Cooke, Big Horn County Attorney; Hardin, Montana
Submitted on Briefs: October 14, 1999
Decided: June 20, 2000
Filed:
__________________________________________
Clerk
Justice Jim Regnier delivered the opinion of the Court.
¶1 The Plaintiffs appeal the order of the Thirteenth Judicial District Court, Big Horn
County, dissolving part of its previous judgment. We affirm.
¶2 This appeal raises the following issue:
¶3 Whether the doctrine of res judicata barred the District Court from vacating that portion
of its judgment which granted future tax exemptions for the Crow Tribe Members?
BACKGROUND
¶4 On January 31, 1989, Dorothy Jefferson, an enrolled member of the Crow Tribe, filed
an action on behalf of herself and all persons similarly situated against Big Horn County
and the State of Montana (hereinafter referred to collectively as "Big Horn County") for
declaratory and injunctive relief and a refund of property taxes paid, in the Thirteenth
Judicial District Court, Big Horn County. In her complaint, Jefferson challenged Big Horn
County's authority to impose and collect real property taxes on land owned in fee simple
by enrolled members of the Crow Tribe and located within the boundaries of the Crow
Reservation. Jefferson requested that the court declare Big Horn County without
jurisdiction to tax property owned by the Plaintiff class, enjoin Big Horn County from
taxing that property, and direct Big Horn County to refund all taxes collected on that
property. Pursuant to § 15-1-407, MCA, the court certified Jefferson's cause of action as a
class action. The class consisted of "all enrolled members of the Crow Tribe who own
land located within the exterior boundaries of the Crow Indian Reservation which was
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never allotted under the General Allotment Act and upon which Big Horn County levies
real property taxes." (hereinafter "Crow Tribe Members.")
¶5 On July 10, 1989, the Crow Tribe Members filed a motion for partial summary
judgment. In their brief supporting their motion, the Crow Tribe Members requested that
the court "permanently enjoin [Big Horn County] from assessing and collecting taxes."
However, pursuant to a joint motion, the action was stayed pending the decision by the
Ninth Circuit Court of Appeals in Confederated Tribes and Bands of the Yakima Nation v.
County of Yakima (9th Cir. 1990), 903 F.2d 1207. In Yakima Nation, the issue was
whether real property allotted under the Indian General Allotment Act of 1887 ("GAA"),
25 U.S.C. § 349, and owned in fee-patent by enrolled Tribe members was subject to state
ad valorem taxation pursuant to § 6 of the GAA.
¶6 In the later half of the 19th century, the federal government changed its policy of setting
aside reservation lands for the exclusive use and control of Native American tribes and
moved toward a policy of allotment. Under the allotment policy, Congress removed
significant portions of reservation land from tribal ownership and federal protection,
allotting some parcels to individual tribal members in fee simple. One of the objectives of
allotment was to assimilate Native Americans into society at large. Most of the allotments
were made pursuant to the GAA. Section 5 of the GAA provided that parcels of tribal land
would be allocated to individual Native Americans and held in trust by the United States
for a 25-year period, after which the federal government would convey title to individual
allottees. Section 6 of the GAA, as amended by the Burke Act, 25 U.S.C. § 349, provides
that once title to lands have been conveyed "all restrictions as to sale, incumbrance, or
taxation of said land shall be removed." In 1934 Congress enacted the Indian
Reorganization Act, 25 U.S.C. § 461 et seq., reflecting a dramatic shift in policy toward
Native Americans. The Reorganization Act ended the practice of making allotments to
individual tribe members. See generally Cass County, Minn. v. Leech Lake Band of
Chippewa Indians (1998), 524 U.S. 103, 106-08, 118 S. Ct. 1904, 1906-07, 141 L. Ed. 2d
90.
¶7 The Ninth Circuit in Yakima concluded that the GAA manifested Congress's
unmistakably clear intent to permit states to tax land allotted under the GAA.
Subsequently, on April 3, 1990, the District Court granted summary judgment in favor of
the Crow Tribal Members, stating:
All authority cited to this Court that governs taxation of the property in question is
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based on the General Allotment Act. Plaintiff's land is not and never has been
subject to the General Allotment Act. Therefore, defendants cannot tax plaintiff's
land because the General Allotment Act, which contains the Congressional
permission for taxation that defendants rely on, does not apply to plaintiff's land.
¶8 On August 21, 1990, Big Horn County and the Crow Tribe Members filed a Joint
Motion for Entry of Judgment requesting the court to enter their proposed judgment. On
August 28, 1990, the District Court issued an order implementing its Judgment. The
District Court required Big Horn County to refund taxes paid under protest and remove the
Crow Tribe Members from the tax rolls. The court stated that "[t]his declaratory ruling
establishes a future tax exempt status for land that is located within the Crow Reservation,
has never been subject to the General Allotment Act and is owned by an enrolled Crow
Tribe member." The District Court also stated that its order granting summary judgment in
favor of the Crow Tribe Members "established as a matter of law that Defendants may not
collect property tax on a Crow Tribe member's land within the Crow Reservation that is
not and never has been subject to the General Allotment Act."
¶9 On June 20, 1997, Big Horn County filed a Motion for Partial Vacation of Judgment
and Supporting Memorandum requesting the District Court vacate that portion of its order
establishing a future tax exempt status for the Crow Tribe Members pursuant to Rule 60
(b), M.R.Civ.P. Big Horn County claimed that subsequent federal decisions had
established that alienable land owned by enrolled members of tribes was subject to state ad
valorem taxes even if it had not been patented in fee pursuant to the GAA. The court did
not rule on the motion within 60 days and it was deemed denied under Rule 60(c), M.R.
Civ.P.
¶10 On December 12, 1997, Big Horn County filed a Motion to Dissolve Injunction
pursuant to § 27-19-401, MCA, asserting that due to a change in the applicable law, there
were insufficient grounds to continue the initial order. On October 2, 1998, Big Horn
County supplemented its motion to dissolve the injunction with a copy of the United
States Supreme Court's decision in Leech Lake. In Leech Lake, the Supreme Court rejected
the distinction drawn in post-Yakima federal appellate decisions which had held that lands
not allotted pursuant to the GAA were not subject to state ad valorem taxes. The Court
held that when Congress makes reservation lands freely alienable, it is "unmistakably
clear" that Congress intends that land to be taxable by state and local governments unless a
contrary intent is "clearly manifested." Leech Lake, 524 U.S. at 113, 118 S. Ct. at 1910.
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¶11 On December 18, 1998, the District Court granted Big Horn's motion and dissolved
that portion of its Judgment dated August 28, 1990, which had granted a future tax exempt
status to the Crow Tribe Members. The Crow Tribe Members appeal.
STANDARD OF REVIEW
¶12 Whether a district court has the authority to modify or vacate part of its previous
judgment is a question of law. We review a district court's conclusion of law to determine
whether it is correct. See Carbon County v. Union Reserve Coal Co. (1995), 271 Mont.
459, 469, 898 P.2d 680, 686.
DISCUSSION
¶13 Whether the doctrine of res judicata barred the District Court from vacating that
portion of its judgment which granted future tax exemptions for the Crow Tribe Members?
¶14 As part of its Judgment dated August 28, 1990, the District Court stated that "[t]his
declaratory ruling establishes a future tax exempt status for land that is located within the
Crow Reservation, has never been subject to the General Allotment Act and is owned by
an enrolled Crow Tribe member." The District Court also ordered Big Horn County to
refund property taxes paid under protest by Crow Tribe Members. On December 18, 1998,
the court dissolved that portion of its judgment which had established a future tax exempt
status for Plaintiffs' lands.
¶15 The Crow Tribe Members assert that the District Court was barred by the doctrine of
res judicata from dissolving a portion of its judgment. The State contends that the portion
of the judgment which had established a future tax exempt status for the Plaintiffs was a
form of injunctive relief that the District Court could modify or dissolve under Santa Rita
Oil & Gas Co. v. State Board of Equalization (1941), 112 Mont. 359, 116 P.2d 1012
(hereinafter "Santa Rita II"). The Crow Tribe Members respond that if the portion of the
judgment granting them a future tax exempt status can be characterized as injunctive
relief, the District Court could not modify it under Santa Rita II absent a change in the
controlling facts on which the injunction rested.
¶16 The judgment issued by the District Court on August 28, 1990, was specifically
granted pursuant to §§ 15-1-406, 407, and 408, MCA, provisions which outline the
declaratory judgment and alternative remedy procedures and forms of relief for aggrieved
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taxpayers. Section 15-1-406, MCA (1987), provided, in relevant part:
Alternative Remedy-Declaratory Judgment.
(1) An aggrieved taxpayer may . . . bring a declaratory judgment action in the
district court seeking a declaration that a tax levied by the state or one of its
subdivisions was illegally or unlawfully imposed or exceeded the taxing authority of
the entity imposing the tax.
Section 15-1-408 (1987), MCA, provided, in relevant part:
If the district court determines that the tax was illegally or unlawfully imposed . . .
the judgment may direct:
(1) that the revenue collected under the illegal tax be directly refunded . . .
....
(3) such other remedy as the court considers appropriate.
¶17 Plaintiffs challenged "was illegally or unlawfully imposed." Once it reached this
determination, the District Court was authorized to grant at least two remedies: a refund of
the revenue collected and "such other remedy as the court consider[ed] appropriate." § 15-
1-408, MCA (1987). This is precisely what the District Court did. It determined that the
property tax previously imposed by the State and challenged by the Plaintiffs was
unlawful. This conclusion authorized the court to award a refund of the revenue collected
and to fashion any other remedy it considered appropriate. In this regard, the District
Court "establish[ed] a future tax exempt status" for Plaintiffs' land.
¶18 "Any order which requires a person to refrain from a particular act for any period of
time, no matter what its purpose is an 'injunction.'" Sheridan County Elec. Co-op., Inc., v.
Ferguson (1951), 124 Mont. 543, 554, 227 P.2d 597, 603. What distinguishes an
injunction from other forms of relief is that it is an equitable remedy granting prospective,
as opposed to retrospective, relief. See generally 42 Am. Jur. 2d Injunctions § 1 (1969)
(observing that an injunction is a form of relief which commands or prohibits the doing of
certain acts in the future); see also State ex rel. Tillman v. District Court (1936), 101
Mont. 176, 186, 53 P.2d 107, 112 (noting that an injunction "will not lie to prevent an act
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already committed").
¶19 As authorized by § 15-1-408, MCA (1987), the District Court's judgment contained
both retrospective and prospective relief. The District Court granted retrospective relief by
directing the State to refund property taxes paid in 1988 and 1989 by Dorothy Jefferson,
the named Plaintiff, and for property taxes paid under protest in 1989 by similarly situated
taxpayers. Pursuant to its authority under § 15-1-408(3), MCA (1987), the court fashioned
prospective relief by establishing a future tax exempt status for the property of Crow Tribe
Members subject to the judgment and ordering the Big Horn County Assessor to remove
this property from its tax rolls. Although not expressly referred to as injunctive relief, this
portion of the District Court's judgment is clearly in the form of perpetual injunctive relief.
It commands the State to refrain from imposing and collecting taxes in the future on the
real property of Crow Tribe Members located within the Crow Reservation and not subject
to the GAA. We note that the Crow Tribe Members were aware of the nature of this relief
when they specifically requested in their Brief in Support of Motion for Summary
Judgment filed July 10, 1989, that the court enter an order "permanently enjoining [Big
Horn County] from assessing or collecting taxes on such property." (Emphasis added.)
¶20 The Dissent asserts that injunctive relief was "specifically precluded by" and "contrary
to the specific prohibition of injunctive relief found at § 15-1-404, MCA." Dissent, ¶¶ 36
and 37. However, § 15-1-404, MCA (1987), did not preclude injunctions. Rather, this
provision stated that "[t]he remedies hereby provided shall supersede the remedy of
injunction and all other remedies which might be invoked to prevent the collection of taxes
or licenses alleged to be irregularly levied or demanded." Section 15-1-404, MCA (1987).
More significantly, the very next statutory provision, § 15-1-405, MCA (1987), provided:
"No injunction must be granted . . . to restrain the collection of a tax . . . except:
(1) where the tax . . . sought to be enjoined is illegal or is not authorized by law . . . .
(2) where the property is exempt from taxation.
¶21 Clearly, § 15-1-404, MCA (1987), did not preclude the granting of all injunctions in
tax protest cases because the next provision permitted injunctions restraining the
collection of a tax where the tax sought to be enjoined was illegal or where the property
was exempt from taxation. The prohibition on injunctive relief contained in § 15-1-404,
MCA (1987), was limited to injunctions "to prevent the collection of taxes or licenses
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alleged to be irregularly levied or demanded." Even within this class of cases involving
taxes irregularly levied or demanded, a court could still grant an injunction "in unusual
cases" where the remedies provided under Title 15, Chapter 1, Part 4, were "deemed by
the court to be inadequate." Section 15-1-404, MCA (1987). Plaintiffs did not allege that
the property tax challenged was "irregularly levied or demanded." Rather, they alleged
that the tax was unlawfully imposed and that their property was exempt from taxation.
Section 15-1-405, MCA (1987), expressly empowered the court to grant an injunction
restraining the collection of this tax.
¶22 The Dissent also argues that "[t]he declaratory relief was sufficient to exempt the
taxpayer's property from taxation on a stand-alone basis. It was not necessary to
additionally enjoin Big Horn County or the State of Montana from prospective conduct."
Dissent, ¶ 37. The correctness of this argument hinges on the scope of a declaratory
judgment under § 15-1-406, MCA (1987).
¶23 Section 15-1-406(1), MCA (1987), provided that an aggrieved taxpayer may seek a
declaration that "a tax levied by the state . . . was illegally or unlawfully
imposed." (Emphasis added.) Significantly, the statute used the past tense. Furthermore,
subsection (2) of this statute required that a declaratory judgment action "be brought
within 90 days of the imposition of the tax;" and subsection (3) required that "[t]he taxes
that are being challenged under this section must be paid when due as a condition of
continuing the action." We think the import of these provisions is clear. A taxpayer who
brought a declaratory judgment action pursuant to these provisions was required to bring
the action within 90 days after the tax was imposed and pay the tax. If the aggrieved
taxpayer complied with these requirements, a district court was empowered to declare that
the specific tax imposition which was timely challenged and paid was unlawfully imposed.
¶24 This declaratory judgment provision did not permit a district court to declare that
taxes not yet imposed would be unlawful if and when the state imposes those taxes. A
declaratory judgment under § 15-1-406, MCA (1987), simply could not speak to the
legality of future tax impositions. Instead, it only established that the specific tax
imposition challenged was unlawful. As we noted in a previous case involving state ad
valorem property taxation:
[E]ach tax year is singular and self-contained. Each year the taxpayer inventories
and reports his assets, the Department assesses the property and sends that taxpayer
notice of the property value. . . . A separate tax is imposed for each year.
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Eagle Communications v. Flathead County (1984), 211 Mont. 195, 203, 685 P.2d 912, 916
(emphasis added). Consequently, the scope of the declaratory judgment was limited to the lawfulness of
the singular tax imposition properly challenged. In order to prevent future similar impositions, the
District Court had to order relief beyond a declaratory judgment. As noted above, § 15-1-408(3), MCA
(1987), enabled the court to grant "such other remedy" it considered appropriate. In this case, the
District Court granted prospective relief-preventing the State from collecting property taxes in the future.
¶25 In summary, § 15-1-404, MCA (1987), did not preclude the District Court from
ordering injunctive relief, nor could the court's declaratory judgment exempt the Plaintiffs'
property from future taxation without a further order of injunctive relief. Because that
portion of the District Court's Judgment which ordered a "future tax exempt status" was an
order granting prospective relief by restraining the Defendants from imposing an ad
valorem property tax on Plaintiffs' property in the future, it was injunctive relief.
Accordingly, the only remaining issue is whether the court was authorized to modify or
dissolve its injunction. In this regard, the Crow Tribe Members assert that if that portion of
the District Court's Judgment can be characterized as injunctive relief, the District Court
was without authority to modify it absent a change in the controlling facts.
¶26 A court may modify or dissolve perpetual injunctive relief based on a subsequent
change in the judicial interpretation of a law. In Santa Rita II, we stated that "[t]he latter
point hardly requires citation to authority, for obviously it is not equitable to continue to
restrain a party from actions no longer unlawful [when] the change in law has come
about . . . through an authoritative change in judicial construction by courts." 112 Mont. at
368, 116 P.2d at 1016-17
¶27 In Santa Rita Oil & Gas Co. v. State Board of Equalization (1936), 101 Mont. 268, 54
P.2d 117 (hereinafter "Santa Rita I"), we enjoined the State from levying taxes arising out
of the production and recovery of oil from land leased to the plaintiff by a Native
American who was the owner of an allotment of land under a trust patent because it
amounted to a tax on the property or an instrumentality of the federal government.
Subsequently, in Santa Rita II, the State Board of Equalization petitioned this court to
vacate the injunction on the ground that the judicial interpretation of the law upon which
the injunction was based had changed. The respondent asserted that the original decision
was res judicata and therefore could not be modified or vacated. We held that the doctrine
of res judicata did not bar a court from modifying or vacating an injunction, stating:
An injunction is merely the process by which the court enforces equity and it has not
only the power but the duty to modify or annul its injunction as equity demands. A
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final or permanent injunction is a continuing process over which the equity court
necessarily retains jurisdiction in order to do equity. And if the court of equity later
finds that the law has changed or that equity no longer justifies the continuance of
the injunction, it may and should free the defendant's hands from the fetters by
which until then its activities have been prevented, thus leaving it free to perform its
lawful duties.
Santa Rita II, 112 Mont. at 370, 116 P.2d at 1017. Observing that the United States Supreme Court
had overruled its previous decisions regarding state taxation of federal instrumentalities upon which we
had based a portion of our injunction, we granted the State's motion and vacated that part of our
injunction.
¶ 28 In Santa Rita II, we recognized the principle that a court has the inherent power to
modify or vacate an injunction when the law upon which that injunction was based has
been changed by subsequent judicial interpretation. As in Santa Rita I, the District Court
judgment granted the Crow Tribe Members injunctive relief in the form of future tax
exemptions for their real property which prevented the State from levying, assessing, and
collecting taxes. The Crow Tribe Members concede that the judicial interpretation of the
law upon which that relief was based has subsequently changed under the Supreme Court's
decision in Leech Lake. Accordingly, we conclude that the District Court did not err when
it vacated the injunctive portion of its judgment.
¶29 Affirmed.
/S/ JIM REGNIER
We Concur:
/S/ J. A. TURNAGE
/S/ KARLA M. GRAY
/S/ W. WILLIAM LEAPHART
Justice Terry N. Trieweiler dissenting.
¶30 I dissent from the majority opinion. I would reverse the judgment of the District Court.
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¶31The majority opinion is predicated on the majority's conclusion that the judgment
entered by the District Court for the Thirteenth Judicial District in Big Horn County on
August 28, 1990, was in the nature of injunctive, rather than declaratory relief, and that,
therefore, principles of res judicata did not bar reconsideration of the issues resolved by
that judgment. I disagree.
¶32As noted in the Court's original judgment:
[T]his action is brought under §§ 15-1-406 and 15-1-407(3), MCA. The procedures
of §§ 15-1-406, 15-1-407, and 15-1-408, MCA, the alternative remedy of
declaratory judgment in tax matters, control this action.
¶33 In other words, Plaintiffs' action was brought pursuant to Title 15, Chapter 1, Part 4,
which provides the method for protesting property taxes and recovering those amounts
which have been unlawfully imposed. Section 15-1-404, MCA, of that chapter specifically
provides as follows:
The remedies hereby provided shall supersede the remedy of injunction and all other
remedies which might be invoked to prevent the collection of taxes or licenses
alleged to be irregularly levied or demanded, except in unusual cases where the
remedies hereby provided are deemed by the court to be inadequate.
¶34 Section 15-1-406, MCA, pursuant to which the parties agreed relief was entered,
provides in relevant part as follows:
(1) An aggrieved taxpayer may bring a declaratory judgment action in the district
court seeking a declaration that:
....
(b) a tax authorized by the state or one of its subdivisions was illegally or unlawfully
imposed or exceeded the taxing authority of the entity imposing the tax.
....
(5) The remedy authorized by this section is the exclusive method of obtaining a
declaratory judgment concerning a tax authorized by the state or one of its
subdivisions.
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¶35 Relief was granted pursuant to § 15-1-408, MCA, which provides that:
If the district court determines that the tax was illegally or unlawfully imposed or
exceeded the taxing authority of the entity imposing the tax, the judgment may direct:
(1) that the revenue collected under the illegal tax be directly refunded to the taxpayers
who have paid the illegal tax and who have not been excluded from the action;
(2) that the revenue collected under the illegal tax be used to reduce a similar levy in the
ensuing tax year;
(3) that the assessment be changed for the taxpayer or taxpayers who brought the action as
well as for all similarly situated taxpayers; or
(4) any other remedy as the court considers appropriate.
¶36 In this case, the court granted relief pursuant to subparagraphs (1) and (4), of § 15-1-
408, MCA. It ordered that illegally collected taxes be refunded to the taxpayers who
brought the action and that they not be collected in the future. However, both forms of
relief were pursuant to the declaratory judgment action provided for in § 15-1-406, MCA.
They were not in the form of injunctive relief which is specifically precluded by § 15-1-
404, MCA. In fact, nowhere in the District Court's August 28, 1990 order is the word
"enjoin" or any of its derivative forms mentioned. The Court stated:
It is the judgment of this Court that Defendants may not collect property tax on
Plaintiffs' land within the boundaries of the Crow Reservation that has never been
allotted under the General Allotment Act and is owned by an enrolled member of
the Crow Tribe. The Court stated:
....
Section 15-1-406, MCA, states in part:
The decision of the court shall apply to all similarly situated taxpayers except those
taxpayers who are excluded under 15-1-407.
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Section 15-1-408, MCA, allows this Court to fashion a remedy to implement the
declaratory judgment.
....
(B) Removal from tax rolls.
This declaratory ruling establishes a future tax exempt status for land that is located
within the Crow Reservation, has never been subject to the General Allotment Act
and is owned by an enrolled Crow Tribe member. This land may be removed from
the tax rolls as follows:
¶37 In other words, the principal thrust of the District Court's 1990 judgment was to
provide for declaratory relief. The declaratory relief was sufficient to exempt the
taxpayer's property from taxation on a stand-alone basis. It was not necessary to
additionally enjoin Big Horn County or the State of Montana from prospective conduct.
Any incidental language to that effect was gratuitous, unnecessary, and, in fact, contrary to
the specific prohibition of injunctive relief found at § 15-1-404, MCA.
¶38 For these reasons, when federal decisional law changed from what had been in effect
at the time of the District Court's August 28, 1990 order, the only procedure available to
the State or to the county for relief from that judgment was Rule 60(b)(6), M.R.Civ.P., or
the residual clause of Rule 60(b), M.R.Civ.P. Big Horn County filed a motion for Rule 60
(b), M.R.Civ.P. relief. The District Court did not act on that motion within 60 days and it
was therefore deemed denied pursuant to Rule 60(c), M.R.Civ.P. However, neither the
county nor the State appealed from the District Court's denial of their Rule 60(b) motion.
Therefore, the District Court's denial is final.
¶39 For these reasons, I would reverse the judgment of the District Court and I dissent
from the majority opinion.
/S/ TERRY N. TRIEWEILER
Justice William E. Hunt, Sr., and Justice James C. Nelson, join in the foregoing dissenting
opinion.
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/S/ JAMES C. NELSON
/S/ WILLIAM E. HUNT, SR.
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