Montana Consumer Finance Ass'n v. State Ex Rel. Bullock

August 17 2010

OP 10-0366, OP 10-0371

IN THE SUPREME COURT OF THE STATE OF MONTANA

2010 MT 185

____________________

MONTANA CONSUMER FINANCE ASSOCIATION,

Petitioner,

v.

STATE OF MONTANA, by and through STEVE BULLOCK, OPINION
in his capacity as the Attorney General, and LINDA McCULLOCH,
in her capacity as Secretary of State. AND

Respondent. ORDER

____________________

BERNARD J. HARRINGTON, Individually, and
as Treasurer for Coalition for Consumer Choice
Against I-164, a Political Committee,

Petitioner,

v.

STATE OF MONTANA, by and through STEVE BULLOCK,
in his capacity as the Attorney General, and LINDA McCULLOCH,
in her capacity as Secretary of State,

Respondent.
____________________

¶1 Petitioner Bernard J. Harrington in his individual capacity and as representative of

the Coalition for Consumer Choice Against I-164 (Harrington) and Petitioner Montana

Consumer Finance Association (MCFA) (Collectively “Petitioners”) invoke this Court’s

original jurisdiction to challenge the Attorney General’s legal sufficiency determination

and ballot statements for Initiative No. 164 (I-164). We review the following issue:
¶2 Do the Attorney General’s ballot and fiscal statements comply with § 13-27-312,

MCA?

FACTUAL AND PROCEDURAL BACKGROUND

¶3 I-164 seeks to cap interest rates for certain loans at an annual interest rate of 36

percent. Petitioners challenge the ballot statements and Attorney General’s legal

sufficiency determination for I-164 under § 13-27-316, MCA. Section 13-27-316, MCA,

constitutes the “exclusive remedy” for such challenges. I-164 would affect interest rates

on certain lenders. Section 1 proposes a finding that some lenders are charging

Montanans more than 400% interest annually. Section 2 would repeal exemptions on

interest rate limits and usury provisions for deferred deposit lenders, title lenders, and

consumer loan licensees. Section 3 would provide for penalties for violation of the

initiative under the Consumer Protection Act. Section 4 caps the finance charge on retail

installment contracts at 36% annually. Section 5 caps the interest rates for pawnbrokers.

Section 6 limits fees for deferred deposit loans to 36% annually and provides for

allocation of attorneys fees. Section 7 caps the interest rate at 36% for title loans.

Section 8 limits interest rates to 36% for “consumer loans,” a statutory term that excludes

deferred deposit, title, mortgage backed loans, and loans by “regulated lenders.” Section

9 provides that the statutory amendments would take effect on January 1, 2011.

¶4 The Attorney General found that the proponents’ proposed ballot statement did not

specify the type of loans subject to the limits and contained “potentially argumentative

and misleading detail about federal legislation concerning military personnel and their

2
families.” The Attorney General determined that the statements did not comply with the

requirements of § 13-27-312, MCA, and redrafted the ballot statement. The Attorney

General requested a fiscal note from the Budget Director. The fiscal note estimated a

reduction in licensing and examination revenue of $189,900 per year, totaling $526,800

over the three year analysis period, and no impact to the General Fund. The Attorney

General drafted the fiscal statement in accordance with the finding that there would be a

fiscal impact if I-164 were to become law. Section 13-27-312(3), MCA.

¶5 The Attorney General’s amended ballot statement reads as follows:

Statement of Purpose
Under Montana law, deferred deposit (payday) lenders may charge fees
equaling one-fourth of the loan, which is the same as an annual interest rate
of 300 percent for a 31 day loan or 650 percent for a 14-day loan. Title
lenders may charge interest equaling one-fourth of the loan, which is the
same as an annual interest rate of 300 percent for a 30 day loan. I-164
reduces the interest, fees, and charges that payday, title, and retail
installment lenders may charge to an annual interest rate of 36 percent. It
prohibits businesses from structuring other transactions to avoid the rate
limit.
Fiscal Statement
I-164 reduces the licenses and examination fee revenue paid to the State
because certain lenders may not renew their licenses.

[] FOR reducing the annual interest, fees, and charges payday, title, and
retail installment lenders may charge on loans to 36 percent.

[] AGAINST reducing the annual interest, fees, and charges payday, title,
and retail installment lenders may charge on loans to 36 percent.

¶6 The Secretary of State certified I-164 in accordance with § 13-27-308, MCA, on

July 19, 2010. Petitioners filed suit under § 13-27-316, MCA. Section 13-27-316(5),

MCA, endows this Court with original jurisdiction to hear challenges to ballot statements

3
and constitutes the “exclusive remedy” for such challenges. Both Harrington and MCFA

challenged the ballot statements for failure to comply with the substantive requirements

of § 13-27-312, MCA. Harrington argued that the statements of purpose and implication

failed to “express a true and impartial explanation of the proposed measure in plain,

easily understood language.” Harrington also challenged the fiscal statement under § 5-

4-205, MCA. MCFA claims that the ballot statement for I-164 does not meet the

requirements of § 13-27-312(4), MCA, because it fails to specifically mention “consumer

loan licensees” in the statement of purpose. MCFA contends that, due to this omission,

the statement does not constitute a “true and impartial explanation of the proposed ballot

issue.” Section 13-27-312(4), MCA. MCFA argues that voters would be misled and thus

precluded from casting an informed ballot. Harrington requested that this Court adopt an

alternative ballot statement that Harrington provided. MCFA requested that this Court

overturn the Attorney General’s legal sufficiency determination and, alternatively, that

we strike the term “consumer loan licensee” from the text of the initiative. Nearly two

weeks after filing his initial petition, Harrington filed with this Court a motion for referral

to district court for development of the factual record under § 3-2-202, MCA.

JURISDICTION AND VENUE

¶7 This Court possesses original jurisdiction to review ballot statements for initiative

measures and the Attorney General’s legal sufficiency determination in actions brought

pursuant to § 13-27-316, MCA. Section 13-27-316, MCA, constitutes the sole remedy

for such challenges.

4
 DISCUSSION

¶8 Do the Attorney General’s ballot and fiscal statements comply with § 13-27-312,

MCA?

¶9 We must address as a threshold matter Harrington’s motion for referral to the

district court pursuant to § 3-2-202, MCA. Harrington did not raise issues of fact in his

initial petition, and no issues of fact exist to preclude this Court from deciding

Harrington’s petition. More importantly, § 3-2-202, MCA, does not apply to

Harrington’s petition. Section 3-2-202(3)(b), MCA, requires that the parties to a

proceeding under Subsection (3)(a) must “certify the absence of factual issues or stipulate

to and file any factual record necessary” to this Court’s consideration of the challenge.

That provision applies to the petitioner’s ballot statements for initiated measures and the

Attorney General’s ballot statements for referred measures. Section 3-2-202(3)(a), MCA.

Harrington’s petition challenges the Attorney General’s ballot statement for an initiated

measure and therefore does not fall into either of the categories specified by § 3-2-202(a),

MCA. Harrington’s petition likewise does not come within the ambit of the statute as a

challenge under § 13-12-316, MCA, to the Attorney General’s legal sufficiency

determination. The legal sufficiency determination applies only to “the statutory and

constitutional requirements governing submission of the proposed issue to the electors.”

Section 13-27-312(7), MCA. “Legal Sufficiency” does not encompass “consideration of

the substantive legality of the issue if approved by the voters.” Id. Harrington’s petition

raises only substantive legal arguments concerning the legality of the ballot statements

5
and underlying initiative. We therefore deny Harrington’s motion for referral and

proceed to analyze both petitioners’ claims under §§ 13-27-312 and -316, MCA.

¶10 Ballot statements must “express the true and impartial explanation of the proposed

ballot issue in plain, easily understood language and may not be arguments or so written

as to create prejudice for or against the issue.” Section 13-27-312(4), MCA. We have

refused to overturn the Attorney General’s version of a ballot statement, provided that the

statement meets the statutory requirements. Citizens Right to Recall v. State, 2006 MT

192, ¶ 10, 333 Mont. 153, 142 P.3d 764. This practice reflects the rule followed in other

jurisdictions that courts “do not sit as some kind of literary editorial board.” Shulte v.

Long, 687 N.W.2d 495, 498 (S.D. 2004). Courts thus will not “invalidate a summary

simply because they believe a better one could be written.” Burgess v. Miller, 654 P.2d

273, 276, n. 7 (Alaska 1982).

¶11 The Attorney General’s ballot statement meets the requirements of the statute so

long as it employs “ordinary plain language, explains the general purpose of the issues

submitted in language that is true and impartial, and [is] not argumentative or likely to

create prejudice either for or against the issue.” Stop Over Spending Mont. v. State, 2006

MT 178, ¶ 12, 333 Mont. 42, 139 P.3d 788. We review the Attorney General’s ballot

statements solely for compliance with § 13-27-312, MCA. Citizens Right to Recall, ¶ 13.

The statute does not grant petitioners “the right to the ballot statements of their

choosing.” Id.

6
¶12 The Attorney General determined that “the application of a 36% annual interest

rate to consumer loans is more straightforward and, based on the public comments

received, less salient than the core payday, title, and retail installment issues.” The

process of producing a 100 word purpose statement that constitutes a “true and impartial

explanation” of the measure “involves a degree of discretion entrusted to the Attorney

General by the Legislature that we will not overturn absent noncompliance with the

statute.” Citizens Right to Recall, ¶ 18. We acknowledge that the statutory 100 word

limit on statements of purpose will inevitably lead to the omission of some provisions

that Petitioners would like to include. Citizens Right to Recall, ¶ 18. A complete

description of every part of the measure cannot be included. Stop Over Spending Mont.,

¶ 17.

¶13 Petitioners argue that the Attorney General’s statements of purpose and

implication do not constitute a “true and impartial explanation” of what the measure

would do because they identify specifically “deferred deposit lenders,” “title lenders,”

and “retail installment lenders,” but not “consumer loan licensees.” Section 13-27-

312(4), MCA. MCFA requests that we remedy this fault by striking the term “consumer

loan licensees” from the body of the measure. Section 13-27-316, MCA, does not give

this Court the authority to modify the text of a ballot initiative. The statute does provide,

however, that “if this court decides that the ballot statements do not meet the

requirements of 13-27-312, it may . . . certify to the secretary of state a statement that the

court determines will meet the requirements of 13-27-312, MCA.” Section 13-27-

7
316(3)(c)(ii), MCA. We determine therefore that adding the term “consumer loan

licensees” to the statements of purpose and implication and making other minor additions

and stylistic changes will be the most effective remedy for the omission of which MCFA

complains. The amended ballot statement shall read as follows:

Statement of Purpose
Under Montana law, deferred deposit (payday) lenders may charge fees
equaling one-fourth of the loan, which, as an annual interest rate could
range from 300 percent to 650 percent. Title lenders may charge similar
interest rates. I-164 reduces the interest, fees, and charges that payday
lenders, title lenders, retail installment lenders, and consumer loan licensees
may charge to an annual interest rate of 36 percent. It prohibits businesses
from structuring other transactions to avoid the rate limit. It also revises
statutes applicable to pawn brokers and junk dealers.
Fiscal Statement
I-164 reduces the licenses and examination fee revenue paid to the State
because certain lenders may not renew their licenses.

[] FOR reducing the annual interest, fees, and charges payday, title, and
retail installment lenders and consumer loan licensees may charge on loans
to 36 percent.

[] AGAINST reducing the annual interest, fees, and charges payday, title,
and retail installment lenders and consumer loan licensees may charge on
loans to 36 percent.

¶14 Harrington next claims that the Attorney General’s fiscal statement does not

comply with the requirements of § 13-27-312, MCA, and that the fiscal statement is

argumentative and creates prejudice. The statute requires that the Attorney General shall

prepare a fiscal statement if the fiscal note indicates a fiscal impact. Section 13-27-

312(3), MCA. The statement must be used on the petition and ballot. Id. The statute

does not stipulate what information must be included in the fiscal statement. The

Attorney General acted within his discretion in formulating the fiscal statement at issue

8
here. The Attorney General’s fiscal statement accurately provides that I-164 will reduce

the license and examination fee revenue paid to the state “because certain lenders may

not renew their licenses.”

¶15 Harrington claims also that the Attorney General failed to formulate the fiscal note

and fiscal statement in accordance with the statutory provisions because the Budget

Director failed to consult with the Department of Revenue. The Attorney General must

order a fiscal note that estimates the effect on revenue if the proposed initiative will affect

the State’s revenue, expenditures, or fiscal liability. Id. The fiscal note must estimate,

where possible, the dollar amount of the increase or decrease in revenue or expenditures,

costs, and long term financial effects. Section 5-4-205, MCA. The fiscal note serves as

an objective analysis of the financial impacts of the legislation and may not comment or

express an opinion upon the merits of the proposed legislation. Id. The Attorney General

must prepare a fiscal statement if the fiscal note indicates that a fiscal impact will occur

as a result of the proposed legislation. The Attorney General’s fiscal statement must be

included on the petition and on the ballot if the issue is placed on the ballot. Section 13-

27-312(3), MCA.

¶16 The thrust of Harrington’s argument appears to be that the Department of Revenue

constitutes an agency “affected by the ballot issue,” and therefore should have been

consulted by the Budget Director pursuant to § 13-27-312(3), MCA. The Budget

Director consulted with the Division of Banking and Finance in the Department of

Administration. The fiscal note complies with the requirements of § 5-4-205, MCA, and

9
the statute requires nothing more. Harrington requests that we include language as to the

exact amount of revenue estimated to be lost and the volume of such loans processed in

the state each year. This information falls outside the statutory requirements under these

circumstances. The fact that the Attorney General failed to include this information in

the fiscal statement “does not prevent a voter from casting ‘an intelligent and informed

ballot.’” Citizens Right to Recall, ¶ 18.

¶17 Petitioners’ arguments as to prejudice are similarly unavailing. Ballot statements

must “eschew advocacy – argument – for or against the proposal’s adoption.” Id., ¶ 20

(citing Fairness and Acct. in Ins. Reform v. Greene, 886 P.2d 1338 (Ariz. 1994)).

Petitioners fail to point to specific provisions in either the statement of implication or the

fiscal statement that violate this requirement.

¶18 Resolution of these matters has been unnecessarily complicated by the language of

the revised statutes at issue. The intent of § 13-27-316, MCA, is to provide – via an

original proceeding in this Court – the “sole remedy” for challenges to ballot statements

or the Attorney General’s opinion as to legal sufficiency. The statute’s confused and

internally contradictory language, however, threatens to frustrate the will of voters who

have expressed their intent that a measure appear on the ballot. Section 13-27-316,

MCA, applies to statements that have been approved by the Attorney General. Such

statements, of necessity, have already been circulated for voter signatures. In particular,

§ 13-27-316(2), MCA, contemplates challenges to ballot statements “approved by the

attorney general.” The statute then requires, however, that statements revised by this

10
Court and certified to the secretary of state must be placed “on the petition for circulation

and on the official ballot.” Section 13-27-316(3)(c)(ii), MCA (emphasis added).

Statements that have been approved by the Attorney General have of necessity already

completed the circulation process. Compliance with all provisions of subsection (3)(c)(ii)

is thus rendered impossible in cases such as the present when a party brings a challenge

under § 13-27-316, MCA, mere weeks before the statement would be placed on the

ballot. Notwithstanding this and other internal inconsistencies, we have attempted to

apply the statute in accordance with the obvious legislative intent and with due

consideration for the expressed will of Montana’s voters.

¶19 We decline Petitioners’ request to overrule the Attorney General’s legal

sufficiency determination for I-164, or to tamper with the text of the initiative itself.

Citizens Right to Recall, ¶ 29. The Attorney General acted within his considerable

discretion in drafting the ballot statements and fiscal statement for I-164. We determine,

however, that MCFA’s complaint as to the omission of the term “consumer loan

licensees” from the statement of purpose is valid. We therefore certify to the Secretary of

State the ballot statement set forth at ¶ 13, which we have determined will meet the

requirements of § 13-27-312, MCA.

DATED this 17th day of August, 2010.

/S/ BRIAN MORRIS

11
We Concur:

/S/ W. WILLIAM LEAPHART
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT

Justice Brian Morris specially concurs.

¶20 Winston Churchill observed in a speech before the House of Commons in 1947

that “[d]emocracy is the worst form of government except for all of those other forms

that have been tried from time to time.” Direct democracy removes the filter of the

voters’ elected representatives and takes the audacious step of posing questions directly

to the voters. Montana voters originally adopted the initiative process in 1906 as part of

the incomplete effort to cast aside the “copper collar” that bedeviled Montana politics for

much of the 20th century.

¶21 Montana’s 1972 Constitutional Convention considered carefully the issue of

whether to continue this experiment in direct democracy. The delegates opted to include

in the Constitution an express right of the people to amend the Constitution or enact laws

through the initiative process. Mont. Const., art. III, Sec. 4. This considered decision by

the delegates to the 1972 Constitutional Convention followed more than 65 years of

12
experience with the initiative system in place. The people’s right to constitutional and

statutory initiatives represents “a unique and important retained power.” State ex rel.

Montana Sch. Bd. v. Waltermire, 224 Mont. 296, 299, 729 P.2d 1297, 1299 (1986). Its

inclusion in the Constitution “emphasizes the degree of control the people desired to

retain” over changes to the Constitution or statutes. Id.

¶22 The initiative process allows citizens to put before voters issues that their elected

representatives either have chosen not to address, or more likely, have been unable to

resolve. These issues range from the enlightened, such as Constitutional Amendment 3,

commonly known as the coal severance tax trust fund; to the controversial, Constitutional

Amendment 64, the term limits initiative, Initiative 143, restricting trophy hunting on

game farms, Initiative 122, protection of water quality from metal mines, and Initiative

125, prohibiting corporate contributions to ballot issue campaigns; to the banal,

Constitutional Amendment 25, a provision that added the public retirement system to the

State’s unified investment program. The initiative process relies on the wisdom of the

voters to separate sound policy proposals from the fad of the month-type proposals. For

better or worse, the right to amend the Constitution or enact laws by initiative has served

the people of Montana for more than a century.

¶23 The Dissent oozes with hostility toward this initiative process. The Dissent

editorializes about the knowledge, or lack thereof, that “most voters” possess with respect

to a policy proposal. ¶ 65, n.4. The Dissent fails to inform where it gains its insights into

13
the minds of “most voters.” I believe these questions best left to pollsters and political

scientists.

¶24 This same lack of confidence in the knowledge of the voters animates the

Dissent’s “bait-and-switch fraud” argument. The Dissent suggests that this Court’s minor

revisions to the Attorney General’s ballot statement could lead to certain voters

unwittingly signing a petition in support of an initiative that they otherwise would not

support. This argument ignores the fact that the law requires all petitions for signatures

to include a statement of purpose, statements of implication, fiscal impact statement, if

required, and a complete copy of the proposed initiative. Sections 13-27-202 and -312,

MCA.

¶25 The statement of purpose represents only a summary of the proposed initiative.

Interested voters have the opportunity to read the entire petition, if they choose, before

deciding whether to sign the petition. The legislature empowered the Court to amend the

ballot statement to reflect more accurately the initiative’s intent. The legislature did not

authorize the Court to amend the language of the proposed initiative itself. The Court has

not changed one jot of the language of the proposed initiative. This safeguard protects

against any effort to “mislead the voters” – whether that effort be made by the Attorney

General, the initiative proponents, or any other party that the Dissent assumes may seek

to dupe the unwary citizenry.

¶26 The Dissent next suggests that the Court favors a party to this dispute. ¶ 67, n.5.

The Dissent implies that the Court has disregarded its constitutional oath of office by

14
taking sides in a case. Mont. Const., art. III, Sec. 3. I take seriously my responsibility to

decide cases without bias or partiality to any party. Canons of Jud. Ethics, Rule 2.2. I

am sure that my colleagues do the same. In fact, this Court scrupulously has avoided

taking sides in this dispute. The Court simply has sought to provide a remedy to this

dispute in a manner that complies with the statutory scheme developed by the legislature.

The legislative remedy allows this Court the ability to revise the Attorney General’s

statement of purpose to reflect more accurately the intent of the proposed initiative.

Section 13-27-316(3)(c)(ii), MCA.

¶27 The Court has elected to pursue this remedy. In choosing an appropriate remedy,

the Court must be guided by principle that “initiative and referendum provisions of the

Constitution should be broadly construed to maintain the maximum power in the people.”

Nicholson v. Cooney, 265 Mont. 406, 411, 877 P.2d 486, 488 (1994); Chouteau County v.

Grossman, 172 Mont. 373, 378, 563 P.2d 1125, 1128 (1977). The maximum power in

the people requires that the people be given the opportunity to vote on an initiative when

the requisite number of voters have signed petitions to qualify a measure for the ballot

and the proponents of the measure have complied with the statutory scheme put in place

by the legislature.

¶28 The Dissent snickers over the Court’s use of the term “statutory scheme” to

describe the system enacted by the 2007 Legislature to address the process by which an

initiative may qualify for the ballot and by which a party may challenge that process.

The snickering infers that the statutes enacted to address this process represent some sort

15
of con game designed to trap unwary voters. The Dissent suggests that proponents of

initiatives could avoid these traps for the unwary by getting their acts together early in the

process. The Dissent proposes that initiative proponents could gather sufficient

signatures months in advance of the deadline, obtain all of the necessary clearances from

the Secretary of State and the Attorney General, defend the matter before this Court, and

then, if the Court decided to revise slightly the ballot statement, collect the thousands of

signatures all over again before the statutory deadline. This proposal would gut the

people’s constitutional right to initiative. The fact that Montana voters face only a

handful of proposed constitutional and statutory initiatives at each election cycle reflects

the difficulty of qualifying a proposed initiative for the ballot. The Dissent’s proposal

would eliminate even these handfuls of proposals from consideration by the people.

¶29 The Dissent finally blithely recommends that the people demand that their elected

representatives regulate interest rates if “such a public hullabaloo” actually exists over

these interest rates. ¶ 73. The people of Montana ensured that they would not be without

power to address issues of policy – whether accompanied by a “public hullabaloo” or

simply supported by a group of concerned people – when they adopted the initiative

system. The delegates to the 1972 Constitutional Convention confirmed the wisdom of

this approach. The people need not rely on their elected representatives to enact a law

that would restrict interest rates charged by certain lenders. Article II, Section 3 of our

Constitution enshrines that right. I would not undermine this power. I support the

16
Court’s remedy to revise the Attorney General’s ballot statement for I-164 to reflect more

accurately the Initiative’s intent.

/S/ BRIAN MORRIS

Justice W. William Leaphart joins in the foregoing special concurrence.

/S/ W. WILLIAM LEAPHART

Justice James C. Nelson, dissenting.

I. Overview

¶30 “ ‘[T]here are few evils which can be afflicted by strict
adherence to the law so great as that which is done by an
habitual disregard, by any department of the government, of a
plain requirement of that instrument from which it derives its
authority, and which ought, therefore, to be scrupulously
observed and obeyed.’ ”1

1
State ex rel. Montana Citizens v. Waltermire, 227 Mont. 85, 93, 738 P.2d 1255,
1260 (1987) (quoting State ex rel. Woods v. Tooker, 15 Mont. 8, 13, 37 P. 840, 842
(1894)).
17
¶31 The only action that this Court is statutorily authorized to take in the present cases

is clear. “If, upon review, the attorney general or the supreme court revises the petition

form or ballot statements, any petitions signed prior to the revision are void.” Section

13-27-316(4), MCA (emphasis added). Here, the Court has revised the ballot statements.

Accordingly, “any petitions signed prior to the revision are void.” Section 13-27-316(4),

MCA. And without valid petitions, the ballot issue may not appear on the ballot. See

§§ 13-27-307, -308, MCA; see also e.g. § 13-27-316(3)(c)(iii), MCA. That is the holding

we are required to reach.

¶32 Regardless that this result may seem harsh to some, it is the result mandated under

the initiative procedures adopted by the people through their elected representatives.

This Court is required to scrupulously observe and obey those procedures. We are not at

liberty to rewrite them, nor is it our prerogative to disregard them. And there is no

“obvious legislative intent” justifying what the Court has done here.

¶33 In this regard, it should be noted that the timetable laid out by the Legislature is

not as “impossible” as the Court majority would have us believe. That timetable

proceeds as follows:

1. A proponent of a ballot issue first submits the proposed issue to the Secretary
of State, together with draft ballot statements (the statement of purpose, fiscal
statement, and statements of implication). Section 13-27-202(1), MCA. The
Secretary of State forwards a copy of the proposed issue and statements to the
Legislative Services Division and, thereafter, to the Attorney General. Section
13-27-202(1), (4), MCA. The Legislative Services Division is given 14 days
to complete its review, § 13-27-202(2)(b), MCA, and the Attorney General is
given 30 days to complete his review, § 13-27-312(8)(a), MCA.

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 2. Once approved, the proponent may circulate petitions for the purpose of
signature gathering starting one year before the deadline for filing the signed
petitions with county election officials. Section 13-27-202(1), (5)(b), MCA.
Signed petitions may be submitted to county election officials as early as nine
months, but no later than four weeks, before the deadline for filing the petitions
with the Secretary of State. Section 13-27-301(1), MCA. The deadline for
filing the petitions with the Secretary of State is the third Friday of the fourth
month prior to the election (here, July 16, 2010). Section 13-27-104, MCA.
Thus, the proponent of a ballot issue for the November 2, 2010 ballot could
theoretically start circulating petitions as of June 16, 2009, and submitting
signed petitions to county election officials as of October 16, 2009, but no later
than June 16, 2010.2

3. County election officials are required to verify names and signatures within
four weeks after receiving the sheets or sections of a petition. Section
13-27-303(1), MCA. The petitions are then forwarded to the Secretary of
State. Section 13-27-304, MCA.

4. Once a sufficient number of signatures have been filed with the Secretary of
State, he or she must “immediately” certify to the Governor that the completed
petition has been officially filed. Section 13-27-308, MCA. That occurred in
the present case on July 19, 2010.
5. An opponent then has ten days in which to file a challenge to the ballot
statements or the legal sufficiency of the petitions. Section 13-27-316(2),
MCA. This Court must give the case “precedence” and render a decision “as
soon as possible.” Section 13-27-316(3)(c)(i), MCA.

¶34 If we determine that the petitions are not legally sufficient, then the proponent may

start over using legally sufficient petitions. Section 13-27-316(3)(c)(iii), MCA. Of

course, the proponent remains subject to the deadline on submitting the petitions. But it

is not necessarily “impossible” to comply with the foregoing timetable. To be sure, it

may be “impossible” to resubmit the ballot issue if the proponents did not commence the

2
Here, the I-164 proponents first submitted the proposed ballot issue and draft
ballot statements to the Secretary of State on February 23, 2010. The Legislative
Services Division completed its review on March 5, the Attorney General completed his
review on April 22, and the Secretary of State authorized the proponents to commence
signature gathering on April 23.
19
initiative process soon enough or if they delayed in submitting the signed petitions to the

county election officials. Under those circumstances, there may not be sufficient time to

recirculate new petitions if the signed ones are determined to be void. But that is the

reality of election deadlines, and it is the risk of which the proponents are on notice when

they start the process late. If time runs out, the fault can hardly be placed on the courts.

More to the point, it is not justification for this Court to flout unambiguous statutory

directives in a proactive effort to rescue the proponents from their own lack of diligence

or inability to obtain signatures and submit petitions in a timely manner.

¶35 Nevertheless, this Court has determined to save I-164 from the doom to which it

unquestionably is destined under the statutory scheme. To that end, the Court employs a

“cafeteria-style” approach to statutory application, picking and choosing only that

statutory language which serves to achieve its goal and rejecting or simply ignoring those

provisions which get in the way. I cannot agree with this brand of decision-making.

Absent our overruling the statutes based on constitutional authority, we are required to

apply them as written. See § 1-2-101, MCA. Doing so here, I would hold as follows:

1. If this Court has jurisdiction over the present ballot challenges, that jurisdiction
is set forth in § 3-2-202, MCA, and the parties were required to make the
certification or stipulation mandated by § 3-2-202(3)(b)(i), MCA.

2. On the merits of MCFA’s challenge, the ballot statements contained on the
circulated and signed petitions are void.

3. This Court has no authority to place statements on the November ballots that
are different from the statements on the circulated petitions.

I address these points in turn below.

20
 II. Jurisdiction

A. Article VII, Section 2

¶36 Jurisdiction is the power and authority of a court to hear and decide the case or

matter before it. State v. Martz, 2008 MT 382, ¶ 21, 347 Mont. 47, 196 P.3d 1239. This

power and authority is conferred on courts only by the Constitution or statutes adopted

pursuant to the Constitution. Martz, ¶ 21.

¶37 Because jurisdiction involves the fundamental power and authority of a court to

determine and hear an issue, a court may address the question of its jurisdiction sua

sponte. See Stanley v. Lemire, 2006 MT 304, ¶¶ 30-32, 334 Mont. 489, 148 P.3d 643. In

fact, courts have an “independent obligation” to determine whether jurisdiction exists,

even in the absence of a challenge from any party, and a court which in fact lacks

jurisdiction cannot acquire it by consent of the parties. Stanley, ¶¶ 31-32.

¶38 Article VII, Section 2 of the Montana Constitution delineates the parameters of

this Court’s jurisdiction. It states as follows:

(1) The supreme court has appellate jurisdiction and may issue, hear,
and determine writs appropriate thereto. It has original jurisdiction to issue,
hear, and determine writs of habeas corpus and such other writs as may be
provided by law.
(2) It has general supervisory control over all other courts.
(3) It may make rules governing appellate procedure, practice and
procedure for all other courts, admission to the bar and the conduct of its
members. Rules of procedure shall be subject to disapproval by the
legislature in either of the two sessions following promulgation.
(4) Supreme court process shall extend to all parts of the state.

¶39 Nowhere in Article VII, Section 2, is there authority for this Court to entertain an

original proceeding concerning a ballot challenge. Our original jurisdiction is limited.

21
We have original jurisdiction “to issue, hear, and determine writs of habeas corpus and

such other writs as may be provided by law.” The present proceeding does not involve a

writ. Hence, there being no constitutional source for this Court to exercise original

jurisdiction over a non-writ proceeding, the statutes granting us such jurisdiction are,

necessarily, null and void. Stanley, ¶ 52 (“Jurisdiction is conferred on the courts only by

the Constitution or statutes adopted pursuant to the Constitution.” (emphasis added)).

We must dismiss these cases sua sponte.

B. Section 3-2-202(3), MCA

i. The Law

¶40 The Court nevertheless proceeds on the premise that it has jurisdiction over this

proceeding. The statutes governing this Court’s jurisdiction are set out in Title 3,

chapter 2, part 2, MCA (which is titled “Supreme Court Jurisdiction”). The jurisdictional

provisions specific to review of ballot statements are contained in § 3-2-202(3), MCA,

which provides as follows:

(a) The supreme court has original jurisdiction to review the
petitioner’s ballot statements for initiated measures and the attorney
general’s ballot statements for referred measures and the attorney general’s
legal sufficiency determination in an action brought pursuant to 13-27-316.
(b)(i) In an original proceeding under subsection (3)(a), the
petitioner and the attorney general shall certify the absence of factual issues
or shall stipulate to and file any factual record necessary to the supreme
court’s consideration of the petitioner’s ballot statements or the attorney
general’s legal sufficiency determination.
(ii) If the parties to an original proceeding under subsection (3)(a)
fail to make the certification or stipulation required by subsection (3)(b)(i),
the supreme court shall refer the proceeding to the district court in the
county of residence of the lead petitioner for development of a factual
record and an order that addresses the issues provided in 13-27-316(3). . . .

22
¶41 Beginning with subsection (3)(a), this Court “has original jurisdiction to review

[1] the petitioner’s ballot statements for initiated measures and [2] the attorney general’s

ballot statements for referred measures and [3] the attorney general’s legal sufficiency

determination in an action brought pursuant to 13-27-316.” This case falls into the third

category: a challenge to “the attorney general’s legal sufficiency determination in an

action brought pursuant to 13-27-316.” MCFA’s and Harrington’s petitions state that

they are brought under § 13-27-316, MCA, and the petitions specifically challenge the

Attorney General’s legal sufficiency determination for I-164.

¶42 Next, there is no dispute that the parties have failed to make the certification or

stipulation required by subsection (3)(b)(i)—i.e., they have not certified the absence of

factual issues or stipulated to and filed any factual record. The Attorney General asserts

that the development of a factual record in district court would be “minimal,” and the

Court opines that “no issues of fact exist to preclude this Court from” rendering a

decision. But that is beside the point. The statute states that the petitioner and the

Attorney General “shall certify the absence of factual issues or shall stipulate to and file

any factual record necessary to the supreme court’s consideration of . . . the attorney

general’s legal sufficiency determination.” Section 3-2-202(3)(b)(i), MCA. The statute

does not say that the certification or stipulation need be filed only if the Attorney General

believes the development of a factual record in district court would be more than

“minimal” or if this Court happens to perceive some factual issues. Rather, it says that

the certification or stipulation “shall” be filed. Period.

23
¶43 Lastly, when the parties fail to abide by this requirement, as is the case here, this

Court’s only course of action is statutorily mandated:

If the parties to an original proceeding under subsection (3)(a) fail to
make the certification or stipulation required by subsection (3)(b)(i), the
supreme court shall refer the proceeding to the district court in the county
of residence of the lead petitioner for development of a factual record and
an order that addresses the issues provided in 13-27-316(3).

Section 3-2-202(3)(b)(ii), MCA (emphasis added). Honoring this unambiguous statutory

mandate, we are required to refer this proceeding to a district court for the purposes stated

in § 3-2-303(3)(b)(ii), MCA.

ii. The Court’s Workaround

¶44 As a practical matter, if this proceeding were referred to a district court, there

would not be time to resolve MCFA’s and Harrington’s challenges before the Secretary

of State’s August 19, 2010 deadline for certifying the candidates and ballot issues for the

November 2 ballot. See § 13-12-201(1), MCA. To get around this problem, the Court

declares that § 3-2-202, MCA, does not apply to these cases.

¶45 The first obvious problem with this approach is that if § 3-2-202, MCA, does not

apply to these cases, then we do not have jurisdiction. As noted, § 3-2-202(3), MCA, is

the statute which purports to confer “original jurisdiction” on this Court to review ballot

statements. No other provision does so. The Court asserts that § 13-27-316(5), MCA,

“endows” this Court with “original jurisdiction” to hear challenges to ballot statements,

but this is pure fantasy. Section 13-27-316(5), MCA, states:

An original proceeding in the supreme court under this section is the
exclusive remedy for a challenge to the petitioner’s ballot statements, as

24
 approved by the attorney general, or the attorney general’s legal sufficiency
determination. A ballot issue may not be invalidated under this section
after the secretary of state has certified the ballot under 13-12-201.

It is self-evident that this is not an affirmative “endowment” of jurisdiction. Rather, it is

a reference to the “original proceeding” which is established by the grant of “original

jurisdiction” in § 3-2-202(3), MCA.

¶46 The second problem with the Court’s approach is that it involves a blatant

remaking of Harrington’s and MCFA’s challenges. Again, this Court “has original

jurisdiction to review [1] the petitioner’s ballot statements for initiated measures and [2]

the attorney general’s ballot statements for referred measures and [3] the attorney

general’s legal sufficiency determination in an action brought pursuant to 13-27-316.”

Section 3-2-202(3)(a), MCA. Focusing on the third category, the question becomes

whether Harrington and MCFA challenge the Attorney General’s “legal sufficiency”

determination and whether their action is brought pursuant to § 13-27-316, MCA.

Section 13-27-316(2), MCA, states:

If the opponents of a ballot issue believe that the petitioner ballot
statements approved by the attorney general do not satisfy the requirements
of 13-27-312 or believe that the attorney general was incorrect in
determining that the petition was legally sufficient, they may, within 10
days of the date of certification to the governor that the completed petition
has been officially filed, file an original proceeding in the supreme court
challenging the adequacy of the statement or the attorney general’s
determination and requesting the court to alter the statement or overrule the
attorney general’s determination concerning the legal sufficiency of the
petition. . . .

25
¶47 The Court concedes that Harrington and MCFA “challenge the ballot statements

and Attorney General’s legal sufficiency determination for I-164 under § 13-27-316,

MCA.” In this regard, “legal sufficiency” is defined as follows:

As used in this part, “legal sufficiency” means that the petition complies
with statutory and constitutional requirements governing submission of the
proposed issue to the electors. Review of the petition for legal sufficiency
does not include consideration of the substantive legality of the issue if
approved by the voters.

Section 13-27-312(7), MCA (emphasis added). One of the so-called “statutory . . .

requirements governing submission of the proposed issue to the electors” is set forth in

subsection (4) of the same statute: “The ballot statements must express the true and

impartial explanation of the proposed ballot issue in plain, easily understood language

and may not be arguments or written so as to create prejudice for or against the issue.”

Section 13-27-312(4), MCA. The Attorney General is specifically instructed to ensure

that this “statutory requirement” is met. See § 13-27-312(1), MCA (“[T]he attorney

general . . . shall determine whether the ballot statements comply with the requirements

of this section.”). Here, Harrington and MCFA challenge the Attorney General’s

determination that I-164’s statement of purpose, fiscal statement, and statements of

implication are legally sufficient under § 13-27-312(4), MCA. Thus, Harrington and

MCFA do, in fact, challenge the Attorney General’s determination that the petition

complies with the “requirements governing submission of the proposed issue to the

electors.”

26
¶48 According to the Court, however, Harrington and MCFA raise an improper

challenge to the “substantive legality” of I-164, rather than to the Attorney General’s

determination of legal sufficiency. This is an outright fabrication. Indeed, the Court

cannot point to a single sentence in MCFA’s petition or Harrington’s petition challenging

the “substantive legality” of I-164. They do not contend that I-164, if approved by the

voters, would constitute a taking of property without just compensation. They do not

contend that I-164, if approved by the voters, would violate the Equal Protection Clause.

They do not contend that I-164, if approved by the voters, would deprive lenders of

property without due process of law. They do not contend that I-164, if approved by the

voters, would constitute unconstitutional special legislation. In short, neither MCFA nor

Harrington lodges any challenge whatsoever to “the substantive legality of [I-164] if

approved by the voters.” Section 13-27-312(7), MCA.

¶49 Rather, their petitions clearly and unmistakably challenge the Attorney General’s

determination that the ballot statements comply with the statutory requirements

governing submission of I-164 to the electors. The first sentence of MCFA’s Summary

of Argument states:

MCFA contends that I-164’s ballot statements do not meet the
requirements of section 13-27-312, MCA. As a result, the statements do
not meet the statutory requirements for submitting the proposed issue to the
electors.

And the first sentence of MCFA’s analysis beginning on page 6 of its petition states:

MCFA initiated this original proceeding pursuant to section
13-27-316, MCA, for the purpose of challenging the adequacy of I-164’s
ballot statements.

27
MCFA then goes on, over four pages, to explain why, in its view, the ballot statements do

not satisfy § 13-27-312(4), MCA. Finally, at the conclusion of its argument, MCFA asks

this Court to

find that I-164 ballot statements do not meet the requirements of section
13-27-312, MCA, and consequently do not meet the statutory requirements
for submitting the proposed issue to the electors, and overrule any
determination that the ballot issue is legally sufficient.

Harrington’s petition is to the same effect. He states:

This is an action for judgment arising from the manner in which the
Office of the Attorney General of the State of Montana, erroneously
prepared and approved statements and made a legal sufficiency
determination for a ballot initiative, I-164 . . . .

Harrington further asserts that the statement of purpose, fiscal statement, and statements

of implication approved by the Attorney General do not meet the requirements of

§ 13-27-312(4), MCA—i.e., they do not “express the true and impartial explanation of

the proposed ballot issue in plain, easily understood language,” and they are “written so

as to create prejudice for . . . the issue.” Harrington then goes on to propose alternate

ballot statements, something he would not have to bother with if he were truly raising a

challenge to the “substantive legality” of the measure as the Court claims. See

§ 13-27-316(3)(b), MCA (“If the proceeding requests modification of ballot statements,

an action brought under this section must state how the petitioner’s ballot statements

approved by the attorney general do not satisfy the requirements of 13-27-312 and must

propose alternate ballot statements that satisfy the requirements of 13-27-312.” (emphasis

added)).

28
¶50 Even the Court concedes elsewhere in its Order that MCFA and Harrington

“invoke this Court’s original jurisdiction to challenge the Attorney General’s legal

sufficiency determination and ballot statements for Initiative No. 164” and that MCFA

and Harrington “challenge the ballot statements and Attorney General’s legal sufficiency

determination for I-164 under § 13-27-316, MCA.” Indeed, if their challenges were to

the substantive legality of I-164, and not to the Attorney General’s determination under

§ 13-27-312(7), MCA, that “the petition complies with statutory and constitutional

requirements governing submission of the proposed issue to the electors,” then there

would be no need to rewrite the ballot statements, as the Court does.

¶51 Accordingly, these cases fall squarely within the third category of § 3-2-202(3)(a),

MCA. Yet, the parties have failed to make the certification or stipulation required by

§ 3-2-202(3)(b)(i), MCA. Consequently, this Court is required to refer this proceeding to

a district court. The Court’s refusal to do so only demonstrates that it is willing to ignore

statutory mandates and to distort Petitioners’ arguments in order to reach a desired result.

III. The Merits of MCFA’s Challenge

¶52 I agree with the Court’s implicit conclusion that the statement of purpose and

statements of implication adopted by the Attorney General do not “express the true and

impartial explanation of the proposed ballot issue in plain, easily understood language.”

Section 13-27-312(4), MCA. I reach this conclusion for the reasons argued by MCFA,

which I explain below.

29
¶53 Initially, however, I note the Attorney General’s threshold argument that MCFA’s

petition is deficient because MCFA has not proposed alternate ballot statements. This

argument is totally without merit. For one thing, alternate ballot statements are required

only if the challenger “requests modification of ballot statements” in the action before

this Court. Section 13-27-316(3)(b), MCA. And here, MCFA does not request

modification of the ballot statements. Rather, MCFA seeks to invalidate the I-164

petitions and I-164 itself on the ground that the ballot statements contained on the

petitions were deficient. Thus, MCFA was not required to propose alternate statements.

¶54 Furthermore, if the language of the I-164 petitions is in fact invalid, no proposed

alternate language could save them now. The petitions have already been circulated and

signed. Those who signed the petitions have already read the deficient statement of

purpose and deficient statements of implication. It is too late to recirculate the petitions.

See §§ 13-12-201(1), 13-27-104, MCA. The Attorney General fails to explain what

possible purpose could be served at this point by proposing alternate language. And there

is no statutory requirement that an opponent do so under the present circumstances.

¶55 Turning then to the merits of the issue, the fundamental problem with the language

of the petitions is quite apparent; and it is perplexing, therefore, that the Attorney General

did not recognize and remedy this problem, prior to the petitions’ being circulated, in his

review of the proposed language and his consultation with parties on both sides of the

issue. See § 13-27-312(1), (2), MCA. I-164 changes the law with respect to five

categories of lenders/businesses. Specifically, the initiative applies to:

30
 1. So-called “retail installment lenders” (the term used in I-164’s statement of
purpose). Such entities are regulated under Title 31, chapter 1, part 2, MCA
(the Montana Retail Installment Sales Act). They include “a person who sells
goods or furnishes services to a retail buyer in a written retail installment
contract or written retail installment transaction.” Section 31-1-202(1)(p),
MCA. Sections 3 and 4 of I-164 amend §§ 31-1-203 and -241, MCA,
respectively, to limit the permissible finance charge retail installment lenders
may charge to 36% per annum.

2. Pawnbrokers, who are regulated under Title 31, chapter 1, part 4, MCA.
Section 5 of I-164 amends § 31-1-401, MCA, to prohibit pawnbrokers from
engaging in certain financial activities (such as cashing or advancing money
for a postdated or deferred presentment check in exchange for a fee or finance
charge), unless the pawnbroker is licensed as a consumer loan licensee,
deferred deposit loan licensee, or title loan licensee. Thus, if I-164 passed,
pawnbrokers would be subject to the same 36% interest rate cap to which these
other entities are subject.

3. Deferred deposit (payday) lenders, who are regulated under Title 31, chapter
1, part 7, MCA (the Montana Deferred Deposit Loan Act). Sections 2 and 6 of
I-164 amend §§ 31-1-112 and -722, MCA, respectively, to limit the
permissible finance charge deferred deposit lenders may charge to 36% per
annum.

4. Title lenders, who are regulated under Title 31, chapter 1, part 8, MCA (the
Montana Title Loan Act). Sections 2 and 7 of I-164 amend §§ 31-1-112 and
-817, MCA, respectively, to limit the permissible finance charge title lenders
may charge to 36% per annum.

5. Consumer loan licensees, who are regulated under Title 32, chapter 5, MCA
(the Montana Consumer Loan Act). Such entities are licensed to offer or
extend credit to an individual primarily for personal, family, or household
purposes. See § 32-5-102(2)(a), MCA. They do not include deferred deposit
lenders, title lenders, and certain other regulated lenders such as banks and
credit unions. See §§ 32-5-102(2)(b), -103(5), MCA. Sections 2 and 8 of
I-164 amend §§ 31-1-112 and 32-5-301, MCA, respectively, to limit the
permissible finance charge consumer loan licensees may charge to 36% per
annum.

¶56 Two of these affected entities are not disclosed to voters in the statement of

purpose and the statements of implication adopted by the Attorney General and presented

31
on the face of the petitions (one of which is included as an exhibit at the end of this

Dissent). The Attorney General’s statement of purpose, fiscal note, and statements of

implication inform voters that I-164 does the following (with emphases added):

Under Montana law, deferred deposit (payday) lenders may charge fees
equaling one-fourth of the loan, which is the same as an annual interest rate
of 300 percent for a 31-day loan or 650 percent for a 14-day loan. Title
lenders may charge interest equaling one-fourth of the loan, which is the
same as an annual interest rate of 300 percent for a 30-day loan. I-164
reduces the interest, fees, and charges that payday, title, and retail
installment lenders may charge to an annual interest rate of 36 percent. It
prohibits businesses from structuring other transactions to avoid the rate
limit.

I-164 reduces the license and examination fee revenue paid to the State
because certain lenders may not renew their licenses.

[ ] FOR reducing the annual interest, fees, and charges payday, title, and
retail installment lenders may charge on loans to 36 percent.

[ ] AGAINST reducing the annual interest, fees, and charges payday, title,
and retail installment lenders may charge on loans to 36 percent.

Deferred deposit (payday) lenders, title lenders, and retail installment lenders are

identified. But, as MCFA correctly points out, the statement of purpose and the

statements of implication make no mention whatsoever of consumer loan licensees or

pawnbrokers, even though these entities are covered and affected by the initiative.

Voters are not told that I-164 reduces the interest, fees, and charges that consumer loan

licensees may charge to an annual interest rate of 36 percent. In this regard, it must be

recalled that the statutory scheme clearly distinguishes consumer loans from deferred

deposit loans, title loans, and retail installment transactions. See §§ 31-1-202(1)(m)-(o),

32-5-102(2), MCA.

32
¶57 The Attorney General is required by law to review a proposed ballot issue for legal

sufficiency—i.e., whether the petition “complies with statutory and constitutional

requirements governing submission of the proposed issue to the electors.” Section

13-27-312(1), (7), MCA. Among other statutory requirements, perhaps the most basic is

that the statement of purpose and the statements of implication “must express the true and

impartial explanation of the proposed ballot issue in plain, easily understood language.”

Section 13-27-312(4), MCA. Although the summary preceding an initiative need not

contain a complete catalog or index of all provisions within the initiative, the statement of

purpose must “provide fair notice of the content of the proposed amendment so that the

voter will not be misled as to its purpose, and can cast an intelligent and informed ballot.”

Citizens Right to Recall v. McGrath, 2006 MT 192, ¶ 16, 333 Mont. 153, 142 P.3d 764

(internal quotation marks omitted).

¶58 Here, MCFA contends, and I agree, that the statement of purpose adopted by the

Attorney General “not only fails to specifically mention Montana consumer loan

licensees, but does not even provide a clue that this licensee is a subject of the initiative.”

The statement of purpose identifies “payday, title, and retail installment lenders” only. It

does not identify any other type of lender, and there is no language that could reasonably

be understood to include consumer loan licensees and pawnbrokers within I-164’s scope.

¶59 Consequently, the statement of purpose and the statements of implication on the

face of the I-164 petitions submitted to voters for signatures are deficient and invalid.

They do not “express the true and impartial explanation of the proposed ballot issue in

33
plain, easily understood language.” Section 13-27-312(4), MCA. Nor do they provide

fair notice of the content of the proposed initiative, so that the voter will not be misled as

to its purpose and can make an intelligent decision of whether to sign the petition.

Citizens Right to Recall, ¶ 16. They are, in fact, misleading in their suggestion that I-164

applies only to “payday, title, and retail installment lenders,” when it actually applies to

pawnbrokers and consumer loan licensees as well. Cf. Sawyer Stores v. Mitchell, 103

Mont. 148, 163-64, 62 P.2d 342, 349-50 (1936).

¶60 The Attorney General argues, first, that there is a “scarce” 100-word limit on a

statement of purpose, see § 13-27-312(2)(a), as if to suggest that some of the parties who

will be affected by a proposed ballot initiative may be omitted or ignored in order to

satisfy this word limit. This contention is not even remotely persuasive. A statement of

purpose is supposed to be a “true” explanation of the proposed ballot issue. Section

13-27-312(4), MCA. When the Attorney General provides a discrete list of three specific

entities to which I-164 specifically applies (“payday, title, and retail installment

lenders”), the logical inference is that these entities are the only entities covered by the

initiative. A person of average intelligence and common sense is not going to assume

that there may be some unknown quantity of other entities which are covered by the

initiative but which the Attorney General did not bother to mention. The notion that a

statement of purpose is “true” when it purports to list the parties affected by the initiative,

but actually omits two of those affected parties, is utterly implausible, and the Court

properly rejects it.

34
¶61 The Attorney General next argues that the statement of purpose “indicate[s] that

other ‘businesses’ are subject to the initiative as well” because the term “businesses” is

used in the last sentence of the statement of purpose, which states: “[I-164] prohibits

businesses from structuring other transactions to avoid the rate limit.” This contention is

truly bizarre for two reasons. First, it is not clear what the term “businesses” even means

here. Is it a reference to the “businesses” mentioned in the preceding sentence (“payday,

title, and retail installment lenders”)? Or is it a reference to all “businesses”? If the

latter, then the term “businesses” is misleading because I-164 does not actually impose

the 36 percent rate limit on all businesses. To the contrary, there are various businesses

which, like consumer loan licensees, deferred deposit loan licensees, and title loan

licensees, are considered “regulated lenders,” but which are not covered by I-164. These

include banks, building and loan associations, savings and loan associations, trust

companies, credit unions, credit associations, residential mortgage lender licensees,

development corporations, bank holding companies, and mutual or stock insurance

companies. Section 31-1-111(1), MCA. These “businesses” are exempt from all

limitations on the rate of interest that they may charge and are also exempt from the

operation and effect of all usury statutes. See § 31-1-112(1), MCA. While Ben Bernanke

might have an idea of what the term “businesses” means in the last sentence of the

Attorney General’s statement of purpose, the average voter presented with an I-164

petition certainly would not.

35
¶62 Second, the Attorney General concedes that one of the reasons he rewrote the

proponents’ statement of purpose in the first place was because the statement “did not

specify the type of loans subject to the limits.” The proponents’ statement of purpose

read (with emphasis added):

Initiative [164] limits the annual interest, fees and charges certain lenders,
including payday and car title lenders, may charge on loans to 36 percent
because some lenders charge annual rates of more than 400 percent. It
extends to all Montanans the same interest rate limit provided to military
personnel and their families. It imposes restrictions to prevent lenders from
avoiding the rate limits. Loans in violation of the 36 percent annual rate
violate the Montana Unfair Trade Practices and Consumer Protection Act.

Yet, the word “businesses” selected by the Attorney General likewise does not specify

the type of loans subject to the limits. It is no more informative than the word “certain

lenders” selected by the proponents. In fact, it is less informative because “certain

lenders” is obviously narrower than “businesses.” The proponents’ proposed statement

of purpose at least had the virtue of letting voters know that there were other lenders

besides “payday and car title lenders” that were affected by I-164. The Attorney

General’s statement of purpose, on the other hand, refers to “payday, title, and retail

installment lenders” and in no way indicates that there are two other regulated lenders

that are affected by the initiative.

¶63 Next, the Attorney General argues, in conclusory fashion, that voters would not

understand, or might misconstrue, what “consumer loan licensees” are. First of all,

however, this is not a valid justification for omitting these entities from the statement of

purpose. Consumer loan licensees are one of five specific entities targeted by the

36
initiative, and they therefore should be mentioned in the statement of purpose along with

the three targeted entities that are mentioned. Moreover, while the Attorney General

criticizes Harrington for not presenting any evidence in support of his arguments, the

Attorney General himself presents no evidence that voters would be confused by the term

“providers of consumer loans” or that voters understand this term any less than they

understand the terms “retail installment lenders,” “deferred deposit (payday) lenders,”

and “title lenders.” The Attorney General’s argument, rather, is based entirely on sheer

conjecture.3 Finally, and even more to the point, to the extent that voters actually would

be confused by the statement of purpose and the statements of implication as written, it is

the Attorney General’s statutory obligation to reject those statements outright,

§§ 13-27-202(4), -312(1), MCA, and to rewrite the language so that voters will not be

confused, § 13-27-312(8)(b), MCA. Simply leaving voters in the dark is not a lawful

option.

¶64 It is ironic that in rejecting Harrington’s assertion that the statement of purpose

should name the types of regulated lenders that are excluded from I-164’s application, the

Attorney General suggests that what voters actually “care about” are the entities that are

affected by I-164, not the ones that are not affected by the initiative. Yet, two affected

entities (pawnbrokers and consumer loan licensees) are not even mentioned.

3
Not only that, the Attorney General’s arguments are internally inconsistent. In
one paragraph, the Attorney General states that he left consumer loan licensees out of the
statement of purpose because “the application of a 36% annual interest rate to consumer
loans is more straightforward.” Yet, in the very next paragraph, the Attorney General
asserts that “consumer lender” is “a technical term” that voters might misconstrue.
37
¶65 As a final matter, although not explicitly cited by MCFA, it is important to

acknowledge another facet of I-164 that is not mentioned in the Attorney General’s

statement of purpose. Again, § 13-27-312(4), MCA, read together with Citizens Right to

Recall, ¶ 16, requires that the statement of purpose and the statements of implication be

written so as not to mislead voters as to the initiative’s purpose. They must be written

with the goal of “fair notice”—i.e., to truthfully inform, so that voters can make an

intelligent decision. Unfortunately, as with I-143, it appears that I-164 is yet another

“carefully crafted” initiative to put out of business certain lawfully operating businesses

which are licensed and regulated by the State. See Kafka v. Montana Dept. of FWP, 2008

MT 460, ¶¶ 114-116, 348 Mont. 80, 201 P.3d 8 (Nelson, Rice, & Swandal, JJ.,

dissenting). With I-143, it was alternative livestock ranchers (game farmers). With

I-164, it is certain types of regulated lenders (payday and title lenders in particular).

Through the simple expedient of statutorily reducing the price for which t h e

businessperson can sell his or her product or service—here the interest rate such lenders

may charge—the public can, without paying just compensation for the taking (see Kafka,

¶¶ 54, 64, 83, 94 (Opinion of the Court)), simply render a business unprofitable.4

4
It is unlikely, also, that most voters appreciate that payday and title lenders exist,
if at all, because most people with lower incomes—whose only “asset” is their car or
minimum-wage paycheck—have no legitimate source of reasonably priced, short-term
credit when there are more bills than money at the end of the month or when presented
with an unexpected financial emergency. They borrow at exorbitant rates of interest
because there is no other alternative. I doubt, too, that most voters understand that other
“regulated lenders,” including banks, building and loan associations, savings and loan
associations, trust companies, credit unions, credit associations, residential mortgage
lender licensees, development corporations, bank holding companies, and mutual or stock
38
¶66 For the foregoing reasons, the language of the I-164 petitions is invalid. Because

we cannot go back and “fix” that language, see § 13-27-316(3)(c)(ii), MCA, as the

petitions have already been presented to and signed by registered voters, the legally

correct course of action is to grant MCFA’s requested remedy of declaring the petitions

void and ordering that I-164 may not appear on the ballot, see § 13-27-316(3)(c)(iii),

MCA.

IV. The Court’s New Ballot Statements

¶67 As noted at the outset, this Court has no authority to place statements on the

November ballots that are different from the statements on the circulated petitions.

Granted, this Court has been given authority to rewrite the ballot statements.5 See

§ 13-27-316(3)(c)(ii), MCA (“If the court decides that the ballot statements do not meet

the requirements of 13-27-312, it may . . . certify to the secretary of state a statement that

the court determines will meet the requirements of 13-27-312.”). But “[a] statement . . .

certified by the court must be placed on the petition for circulation and on the official

ballot.” Section 13-27-316(3)(c)(ii), MCA (emphasis added). Moreover, “[i]f . . . the

insurance companies (see § 31-1-111(1), MCA)—some of the same folks that lapped up
billions in taxpayer-funded bailouts and bonuses—are exempt from all limitations on the
rate of interest that they may charge and are exempt from the operation and effect of all
usury statutes (see § 31-1-112(1), MCA).
5
As an aside, I find it untenable that this Court possesses such authority. This
Court is, or at least should be, in the business of judging conflicts and disputes over
language. It should not be in the business of rewriting disputed language so that the
favored party—here, the Attorney General—wins the dispute. That the statute even
permits such a perverse result violates the most fundamental principles of fairness and
impartiality that presumably govern all courts and judges.
39
supreme court revises the petition form or ballot statements, any petitions signed prior to

the revision are void.” Section 13-27-316(4), MCA.

¶68 Even as a purely intuitive matter, it seems patently obvious that the statement of

purpose, fiscal statement, and statements of implication contained on the petitions

circulated to voters must be the same (at least in substance) as the statement of purpose,

fiscal statement, and statements of implication on the ballot provided at the election.

Circulating petitions that say one thing and then providing election ballots that say

something else undermines the initiative process and misleads the voters. Indeed, it is

bait-and-switch fraud and akin to obtaining illegal petition signatures. See § 13-27-317,

MCA (requiring the ballot issue to be decertified under such circumstances). This is why

when this Court revises the petition form or ballot statements, “any petitions signed prior

to the revision are void.” Section 13-27-316(4), MCA. And without valid petitions, the

ballot issue may not appear on the ballot. See §§ 13-27-307, -308, MCA; see also e.g.

§ 13-27-316(3)(c)(iii), MCA.

¶69 That this Court would so blatantly disregard the law so that a ballot measure can

appear on the ballot, notwithstanding the fact that the petitions upon which the measure is

premised are void, should be of grave concern to the very people the Court purports to be

protecting: the voters. In this connection, there is an undercurrent in the Attorney

General’s arguments and in the Court’s decision in these cases that invalidating I-164

would disenfranchise voters. This proposition is utterly unavailing. Those who signed

the petitions were not properly advised of I-164’s purpose and the implications of a vote

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for or against the initiative. At this point in time, no one has “voted” on I-164, and no

one is being “disenfranchised”—i.e., deprived of the right to vote. See Black’s Law

Dictionary 480 (Bryan A. Garner ed., 7th ed., West 1999). Indeed, if this sort of

argument had any merit, we could never declare an initiative invalid, for to do so would

“disenfranchise” voters. That, of course, is nonsense, since we do, on occasion, declare

initiatives which violate the law or the constitution invalid, both before and after voters

have voted. See e.g. State ex rel. Montana Citizens v. Waltermire, 227 Mont. 85, 738

P.2d 1255 (1987); Marshall v. State ex rel. Cooney, 1999 MT 33, 293 Mont. 274, 975

P.2d 325; Montanans For Justice v. State ex rel. McGrath, 2006 MT 277, 334 Mont. 237,

146 P.3d 759; Citizens Against CI-97 v. State, 2006 MT 278, 334 Mont. 265, 147 P.3d

174. The lesson from these cases, and others like them, is that no one has the right to

vote on a ballot measure that is placed before them in violation of the law or the

Constitution. Unfortunately, this is a lesson lost upon the Court here.

V. Conclusion

¶70 The people of this State, through their elected representatives, adopted a system

designed to ensure that ballot measures would not appear on the ballot unless certain

prerequisites were satisfied. To be sure, the statutory “scheme”—which is, perhaps, an

apt appellation—is far from perfect. In this regard, the Attorney General explains that the

Legislature revised the initiative process in 2007 in order to avoid a repeat of the

“electoral confusion” and “crisis of direct democracy” that surrounded three ballot issues

in 2006. See generally Laws of Montana, 2007, ch. 481; Stop Over Spending Montana

41
v. State, 2006 MT 178, 333 Mont. 42, 139 P.3d 788; Montanans For Justice v. State ex

rel. McGrath, 2006 MT 277, 334 Mont. 237, 146 P.3d 759. Unfortunately, however, as

the present challenges to I-164 demonstrate, problems still remain—not the least of

which is the fact that challenges to petitions are brought after the petitions have been

circulated and signed, not to mention the fact that this Court has been granted “original

jurisdiction” which the Montana Constitution does not authorize. Moreover, we are once

again faced with a challenge to a ballot initiative on an extremely tight timeline, and the

parties have failed to comply with the most basic requirements adopted by the

Legislature: certify the absence of factual issues, or stipulate to and file any factual

record necessary to our decision. To the extent these circumstances have created another

“crisis,” blame for it plainly lies with lawmakers and the patent failure of the parties to

comply with the statutes.

¶71 The entire scheme should probably be scrapped, and the Legislature should simply

start over from scratch with a clear statutory framework that (a) is practical and can be

understood; (b) allows sufficient time for review by the designated state officials,

revisions to the extent necessary, and review of the inevitable ballot challenges by this

Court; and (c) guarantees transparency and truth in the initiative and ballot process. In

the meantime, however, it is not this Court’s prerogative to take on the role of pseudo-

legislators and manipulate clear statutory mandates in order to achieve some presumed

greater good. It is the Legislature’s constitutional role to enact the statutes, and it is this

42
Court’s constitutional role to apply them in a forthright manner. The only “crisis of

direct democracy” in the present case is this Court’s inability to simply follow the law.

¶72 I am no more a fan of lending institutions that gouge consumers, especially those

with lower incomes, than I am of people who charge for the “sport” of shooting

defenseless penned animals—indeed, the two compare favorably. However, both the

blackletter law and our caselaw require that voters be truthfully informed; that the

purposes driving a citizens’ initiative, as well as the implications of the initiative, be

transparent; and that voters not be misled into voting for the wolf of a facially well-

intentioned initiative cloaked in the sheep’s clothing of misleading statements of purpose

and implication.

¶73 As for the goals of I-164’s proponents, since there is, apparently, such a public

hullabaloo over the interest rates that payday lenders and title lenders charge, the public

should simply demand that its representatives in the Legislature step up to the plate in the

next session, do the job which that body has always had the power to do, and actually

regulate the interest rates of payday, title, and other “regulated” lenders in the interests of

consumers. The demise of I-164 certainly would not prevent the Legislature from

accomplishing this objective itself.

¶74 Lastly, as to the Concurrence, while it is always easier to shoot the messenger, this

Dissent’s analysis stands unrefuted.

¶75 I would hold that this Court does not have jurisdiction to entertain Harrington’s

and MCFA’s petitions challenging the I-164 ballot statements. Furthermore, even if we

43
did have jurisdiction under § 3-2-202(3)(a), MCA, we would be required to refer this

proceeding to a district court pursuant to § 3-2-202(3)(b)(ii), MCA. Alternatively, on the

merits of MCFA’s challenge, I conclude that the Attorney General’s legal sufficiency

determination is incorrect and that I-164 does not comply with statutory requirements.

As a result, the petitions are void, and I-164 may not appear on the ballot. See

§ 13-27-316(3)(c)(iii), MCA. Finally, the Court’s decision to rewrite the statements for

the November ballot, despite the fact that the underlying petitions are void, is without

authority and legally untenable.

¶76 I dissent.

/S/ JAMES C. NELSON

44
EXHIBIT: I-164 Petition (3 pages)

45
46
47
Justice Jim Rice, dissenting.

¶77 I believe the Court’s determination that Harrington has raised only substantive

legal issues, and not issues governing submission of the initiative to the voters, is

untenable. I agree with Justice Nelson’s Dissent in this regard. Dissent, ¶¶ 40-43. The

Court’s own summary of the arguments, provided in ¶ 6 of the Opinion, demonstrates

that the arguments made by the challengers are directed to the initiative’s submission and

challenge the Attorney General’s “legal sufficiency” determination, as that term is

defined in § 13-27-312(7), MCA. Thus, § 3-2-202(3), MCA, applies and governs. Under

this unique but specific provision, because the parties have failed to make a certification

or stipulation regarding factual issues, “the supreme court shall refer the proceeding to

the district court . . . for development of a factual record.” Section 3-2-202(3)(b)(ii),

MCA.

¶78 The good reason for this legislative directive can be seen by today’s decision. The

Court, by its modification of the ballot language, is deciding what groups will be named

on the ballot. This critical task, if undertaken at all, requires the careful selection of few

words and should be based upon a solid factual foundation.

¶79 I would remand in accordance with the statute.

/S/ JIM RICE

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