State Ex Rel. Department of Highways v. City of Helena

No. 80-306
IN THE SUPREME COURT OF THE STATE OF MONTANA
1981

THE STATE OF MONTANA, acting by and through the
Department of Highways of the State,
Plaintiff and Respondent,
VS .
THE CITY OF HELENA,
Defendant and Appellant.

Appeal from: District Court of the First Judicial District,
In and for the County of Lewis and Clark.
Honorable Gordon Bennett, Judge presiding.
Counsel of Record:
For Appellant:
Hull and Sherlock, Helena, Montana
Jeffrey M. Sherlock argued, Helena, Montana
For Respondent:
Beate Galda argued, Helena, Montana

Submitted: June 17, 1981
Decided: August 11, 1981

Filed : AUG 11 1981
Mr.Chief J u s t i c e Frank I . H a s w e l l d e l i v e r e d t h e Opinion of t h e
Court .
~ e f e n d a n t i t y of Helena a p p e a l s from a d e c l a r a t o r y judg-
c

ment e n t e r e d J u n e 1 9 , 1980, i n t h e D i s t r i c t C o u r t of t h e F i r s t

~ u d i c i a l istrict.
D The judgment o r d e r e d t h e C i t y t o pay 25
p e r c e n t of c o s t s i n c u r r e d i n t h e r e l o c a t i o n of c e r t a i n u t i l i t y

f a c i l i t i e s owned by t h e C i t y .

On August 9, 1974, H e l e n a ' s Broadway Avenue between Montana

and Warren S t r e e t s was approved t o become p a r t of t h e F e d e r a l

Aid Urban System. With such d e s i g n a t i o n , j u r i s d i c t i o n o v e r

Broadway Avenue w a s t r a n s f e r r e d from t h e C i t y t o t h e Montana

Highway Department. C o n s t r u c t i o n of t h e p r o j e c t was completed

on May 1 5 , 1979.

A n e c e s s a r y p a r t of t h e p r o j e c t was t h e r e l o c a t i o n o f cer-

t a i n f a c i l i t i e s owned by t h e C i t y and used i n i t s w a t e r , sewer

and l i g h t systems. On May 1 6 , 1977, t h e C i t y and t h e Montana

Highway Department e n t e r e d i n t o a n agreement c o n c e r n i n g t h e

r e l o c a t i o n of those f a c i l i t i e s . The p a r t i e s a g r e e d t h a t t h e re-

l o c a t i o n of t h e f a c i l i t i e s was n e c e s s a r y and i n t h e p u b l i c i n -

t e r e s t , and t h e C i t y g r a n t e d t h e S t a t e t h e a u t h o r i t y t o a d j u s t ,

r e p l a c e , r e p a i r and r e l o c a t e t h e f a c i l i t i e s . I n t h e document

b o t h p a r t i e s i n d i c a t e d t h e y c o u l d n o t a g r e e on t h e p r o p e r a l l o -

c a t i o n of r e l o c a t i o n c o s t s ; however, t h e y d i d n o t w i s h t h e d i s -

pute t o i n t e r f e r e with the construction project. Therefore,

t h e p a r t i e s a g r e e d t o a l l o w t h e Montana Highway Department t o

proceed w i t h t h e p r o j e c t and t o l i t i g a t e t h e c o s t d i s p u t e . The

c o s t of r e l o c a t i o n r e l e v a n t t o t h i s a c t i o n amounted t o $14,572.80

On J u n e 1 9 , 1980, t h e D i s t r i c t C o u r t i s s u e d i t s o r d e r r e q u i r i n g

t h e C i t y of Helena t o pay 2 5 p e r c e n t of t h e r e l o c a t i o n c o s t s ,

e q u i v a l e n t t o $3,643.20.

The f o l l o w i n g i s s u e s a r e r a i s e d by t h e C i t y of Helena on

appeal :
 1. whether t h e C i t y of Helena i s r e q u i r e d by s e c t i o n

60-4-403, MCA, t o pay 25 p e r c e n t of t h e u t i l i t y r e l o c a t i o n c o s t s

i n c u r r e d a s a r e s u l t o f t h e Broadway Avenue p r o j e c t ;

2. whether t h e n e c e s s a r y r e l o c a t i o n of municipally-owned

u t i l i t y systems i s a t a k i n g of p r i v a t e p r o p e r t y r e q u i r i n g j u s t

compensation;
I
3. whether t h e d o c t r i n e of l o c a l s e l f - g o v e r n m e n t p r e v e n t s

t h e a p p l i c a t i o n of s e c t i o n 60-4-403, MCA, t o Montana's c i t i e s ;

and

4 . whether r e q u i r i n g municipally-owned u t i l i t y systems t o

pay 25 p e r c e n t of r e l o c a t i o n c o s t s imposes a n u n l a w f u l t a x o r

d e b t upon m u n i c i p a l r e s i d e n t s .

The C i t y c o n t e n d s t h a t s e c t i o n 60-4-403, MCA, is inapposite

and t h a t t h e C i t y i s e n t i t l e d t o be p a i d j u s t compensation be-

c a u s e t h e S t a t e h a s e x e r c i s e d i t s eminent domain power. The

C i t y would have t h e S t a t e pay a s j u s t compensation t h e e n t i r e

relocation cost. The S t a t e i s w i l l i n g t o be r e s p o n s i b l e f o r 75

p e r c e n t of t h e c o s t a s p r o v i d e d f o r i n t h e s t a t u t e .

The D i s t r i c t C o u r t concluded t h a t t h e C i t y of Helena was

r e q u i r e d by s e c t i o n 60-4-403, MCA, t o pay 25 p e r c e n t of t h e

c o s t s i n c u r r e d i n t h e r e l o c a t i o n of t h e u t i l i t y f a c i l i t i e s on

Broadway Avenue. S e c t i o n s 60-4-401 e t s e q . , MCA, p r o v i d e f o r

t h e r e l o c a t i o n of u t i l i t y f a c i l i t i e s on any of t h e F e d e r a l Aid

Urban System p r o j e c t s . The s t a t u t e p r o v i d e s t h a t 75 p e r c e n t of

a l l c o s t s of r e l o c a t i o n a r e t o be p a i d by t h e S t a t e Highway

Department. The s t a t u t e e x p r e s s l y a p p l i e s t o b o t h p u b l i c l y and

p r i v a t e l y owned u t i l i t i e s . A c i t y acting i n i t s proprietary

c a p a c i t y a s a n o p e r a t o r of w a t e r , sewer and l i g h t i n g f a c i l i t i e s

is a public u t i l i t y . S e c t i o n 69-3-101, MCA; L e i s c h n e r v.

Knight ( 1 9 5 9 ) , 135 Mont. 109, 337 P.2d 359.
 The C i t y c o n t e n d s t h a t t h e r e l o c a t i o n s t a t u t e , s e c t i o n s

60-4-401 e t s e q . , MCA, d o e s n o t a p p l y t o t h i s c a s e b e c a u s e t h e

C i t y had j u r i s d i c t i o n of t h e s t r e e t when t h e u t i l i t i e s w e r e o r i -

ginally installed. The C i t y r e l i e s on J o n e s v . Burns ( 1 9 6 0 ) ,

138 Mont. 268, 357 P.2d 2 2 , and c o n s t r u e s J o n e s t o h o l d t h a t

s e c t i o n s 60-4-401 e t seq., MCA, c o n t r o l o n l y when t h e u t i l i t i e s

were i n i t i a l l y i n s t a l l e d p u r s u a n t t o s e c t i o n 69-4-101, MCA.

Therefore, t h e C i t y a r g u e s t h a t s i n c e i t d i d n o t need t h e S t a t e ' s

p e r m i s s i o n t o l o c a t e i t s f a c i l i t i e s on Broadway, s e c t i o n 60-4-403,

MCA, does n o t apply. However, J o n e s d o e s n o t s t a n d f o r t h e pro-

p o s i t i o n t h a t t h e two s t a t u t e s a r e i n t e r r e l a t e d i n t h e manner sug-

g e s t e d by t h e C i t y . I n J o n e s , t h e p r e d e c e s s o r t o s e c t i o n s 60-4-

4 0 1 e t seq., MCA, was a t t a c k e d on numerous c o n s t i t u t i o n a l grounds.

I t was a r g u e d t h a t t h e r e l o c a t i o n s t a t u t e would t r a n s f o r m a b a r e

p e r m i s s i v e u s e of p u b l i c r o a d s by u t i l i t y companies i n t o a v e s t e d

property r i g h t . S e c t i o n 69-4-101, MCA, was c i t e d t o i l l u s t r a t e

t h a t t h e t e l e p h o n e and t e l e g r a p h companies i n v o l v e d i n t h e liti-

g a t i o n d i d n o t have a v e s t e d p r o p e r t y r i g h t , b u t r a t h e r a m e r e

p e r m i s s i o n from t h e s t a t e t o l o c a t e f a c i l i t i e s on t h e p u b l i c ways.

T h i s C o u r t found t h a t t h e r e l o c a t i o n s t a t u t e d i d n o t g i v e t h e

u t i l i t y companies a v e s t e d p r o p e r t y r i g h t t o p l a c e f a c i l i t i e s

i n t h e p u b l i c way, b u t r a t h e r t h e s t a t u t e m e r e l y r e c o g n i z e d a n

e q u i t a b l e r i g h t i n t h e u t i l i t y companies t o be p r o t e c t e d a g a i n s t

any l o s s t h e y might s u f f e r a s a r e s u l t of t h e s t a t e ' s e x e r c i s e

of i t s p o l i c e power.

The s t a t e h a s ownership and c o n t r o l of a l l c i t y s t r e e t s i n

Montana, and i f t h e s t a t e chooses t o d e l e g a t e a u t h o r i t y t o t h e
c i t y t o c o n t r o l i t s s t r e e t s , t h e c i t y becomes a t r u s t e e t h e r e o f .

P a l f f y v . D i r e c t o r of F i n a n c e of C i t y of Bozeman ( 1 9 7 5 ) , 168

Mont. 108, 540 P. 2d 955; S t a t e v . S t a t e Water C o n s e r v a t i o n ~ o a r d

( 1 9 5 8 ) , 134 Mont. 403, 332 P.2d 913; C i t y of ~ i l l i n g s . ~ e r o l d
v

( 1 9 5 6 ) , 130 Mont. 138, 296 P.2d 263; Bidlingmeyer v . c i t y of
Deer Lodge ( 1 9 5 4 ) , 128 Mont. 292, 274 P.2d 821. The s t a t e may

a l s o r e v o k e t h e j u r i s d i c t i o n g i v e n t o t h e c i t y t o c o n t r o l and

maintain t h e c i t y s t r e e t s . Bidlingmeyer, s u p r a . The C i t y of

Helena, e x e r c i s i n g t h e j u r i s d i c t i o n d e l e g a t e d t o i t by t h e

S t a t e , granted i t s e l f a franchise t o use the s t r e e t s f o r location

of u t i l i t i e s c o n t r o l l e d by t h e C i t y i n i t s p r o p r i e t a r y c a p a c i t y .

When o p e r a t i n g i n a p r o p r i e t a r y c a p a c i t y , a c i t y i s s u b j e c t t o t h e

same b u r d e n s , r e s p o n s i b i l i t i e s and l i a b i l i t i e s a s a p r i v a t e

b u s i n e s s and i s e n t i t l e d t o t h e same r i g h t s , p r i v i l e g e s and i m -

munities. S t a t e v. Holmes ( 1 9 3 5 ) , 1 0 0 Mont. 256, 47 P.2d 624.

When t h e j u r i s d i c t i o n of Broadway Avenue w a s t r a n s f e r r e d from

t h e C i t y of Helena t o t h e Montana Highway Department, t h e n a t u r e

of t h e C i t y ' s r i g h t s a s a p u b l i c u t i l i t y d i d n o t change. Under

common law, any f r a n c h i s e g r a n t e d t o a p u b l i c o r p r i v a t e u t i l i t y

t o use c i t y s t r e e t s i s s u b j e c t t o an implied o b l i g a t i o n t o r e l o -

c a t e i t s f a c i l i t i e s t h e r e i n a t i t s own expense when n e c e s s a r y

t o make way f o r a p r o p e r governmental u s e o f t h e s t r e e t s . Jones

v . Burns ( 1 9 6 0 ) , 138 Mont. 268, 357 P.2d 2 2 ; C o n n e c t i c u t Ry. &

L. Co. v. N e w B r i t a i n Redev. Comm'n ( 1 9 7 1 ) , 1 6 1 Conn. 234, 287

A.2d 362; M c Q u i l l i n , Municipal C o r p o r a t i o n s , § § 34.72, 34.74(a),

(1970 e d . ) . The f a c t t h a t t h e g o v e r n i n g body which r e q u i r e s t h e

r e l o c a t i o n was n o t t h e g r a n t o r of t h e f r a n c h i s e d o e s n o t a f f e c t

t h e power t o r e q u i r e r e l o c a t i o n , nor d o e s i t a f f e c t t h e a p p l i -

c a b i l i t y of s e c t i o n s 60-4-401 e t s e q . , MCA.
I t i s t h e p o s i t i o n o f t h e C i t y of Helena t h a t t h e u t i l i t y

f a c i l i t i e s were t h e p r i v a t e p r o p e r t y of t h e C i t y and t h a t j u s t

compensation must be p a i d under Mont. C o n s t . , A r t . 11, S e c . 29,

f o r t h e " t a k i n g " of t h e f a c i l i t i e s . The D i s t r i c t C o u r t found

t h a t when t h e S t a t e r e q u e s t s t h e u t i l i t y t o move i t s f a c i l i t i e s ,

t h e r e i s no " t a k i n g " i n t h e c o n s t i t u t i o n a l s e n s e . There was no

e r r o r i n t h i s conclusion.
 While i t i s t r u e t h a t p r i v a t e p r o p e r t y of a m u n i c i p a l i t y

c a n n o t be t a k e n w i t h o u t j u s t compensation, C i t y of Three F o r k s

v. S t a t e Highway Commission ( 1 9 7 1 ) , 156 Mont. 392, 480 P.2d 826;

and t h a t t h e u t i l i t y f a c i l i t i e s a r e t h e p r i v a t e p r o p e r t y of t h e

municipality acting i n i t s proprietary capacity, appellant's

c o n c l u s i o n t h a t f o r c e d r e l o c a t i o n of t h e u t i l i t i e s r e q u i r e s j u s t

compensation d o e s n o t f o l l o w .

I f t h e s t a t e a c t i o n i s a p r o p e r e x e r c i s e of t h e , p o l - i c e

power and i s d i r e c t l y connected w i t h m a t t e r s of p u b l i c h e a l t h ,

s a f e t y and w e l f a r e , a r e a s o n a b l e burden may be imposed upon

p r i v a t e p r o p e r t y w i t h o u t compensation. Yellowstone V a l l e y

E l e c t r i c Cooperative, Inc. v. Ostermiller (1980), -Mont. - I

- 2d
P. , 37 St.Rep. 536. On t h e o t h e r hand, i f t h e s t a t e

a c t i o n i s a n e x e r c i s e of t h e eminent domain power whereby

p r i v a t e p r o p e r t y i s t a k e n f o r a p u b l i c u s e , j u s t compensation

i s required. See e . g . McTaggert v . Montana Power Co. (1979),

-Mont. -I
P. ,
- 2d - 36 St.Rep. 2079. The l i n e of demarca-

t i o n i s n o t always c l e a r l y v i s i b l e .

I n McTaggert, t h e owner of a g r i c u l t u r a l l a n d p e t i t i o n e d

f o r r e l o c a t i o n of a u t i l i t y l i n e p u r s u a n t t o s e c t i o n s 69-4-401

e t s e q . , MCA, a l l e g i n g t h a t he d e s i r e d t o i n s t a l l a new i r r i g a -

t i o n system and t h a t t h e u t i l i t y l i n e which c r o s s e d h i s l a n d

i n t e r f e r e d with t h e planned system. The s t a t u t e s w e r e found

t o c o n s t i t u t e a t a k i n g of p r i v a t e p r o p e r t y f o r p u b l i c u s e under

t h e eminent domain power r a t h e r t h a n a n e x e r c i s e of t h e p o l - i c e

power. P u b l i c h e a l t h , s a f e t y and w e l f a r e were o n l y i n d i r e c t l y

concerned.

The Yellowstone V a l l e y c a s e i n v o l v e d a c h a l l e n g e t o a

s t a t u t e which r e q u i r e d u t i l i t i e s a t t h e i r own expense t o r a i s e

o r remove t h e i r t r a n s m i s s i o n l i n e s t o a l l o w f o r t h e p a s s a g e of

o v e r s i z e d equipment and s t r u c t u r e s b e i n g moved on t h e p u b l i c

highways. S e c t i o n 69-4-603, MCA. For s e v e r a l r e a s o n s t h e
s t a t u t e was found t o b e a r e g u l a t i o n e n a c t e d w i t h i n t h e p o l i c e

power o f t h e s t a t e . P u b l i c s a f e t y was promoted by t h e s t a t u t e

which was i n t e n d e d t o p r e v e n t e l e c t r i c a l a c c i d e n t s . Second,

a p u b l i c b e n e f i t was c o n f e r r e d w i t h minimal i n t e r f e r e n c e w i t h

t h e p r i v a t e r i g h t s of t h e u t i l i t i e s . And m o s t s i g n i f i c a n t l y ,

t h e r e was no a p p r o p r i a t i o n o f a p r o p e r t y r i g h t b e c a u s e :

" I n l o c a t i n g t h e i r f a c i l i t i e s upon a p u b l i c
r i g h t - o f - w a y , u t i l i t i e s and c o o p e r a t i v e s a r e
c o n f e r r e d a p r o p e r t y r i g h t w h i c h , by i t s v e r y
n a t u r e , i s s u b j e c t t o o t h e r competing f r a n c h i s e s
and p r i v i l e g e s . The e a s e m e n t which i s o b t a i n e d
i s n o t a n a b s o l u t e p r o p e r t y r i g h t ; t h e r e i s no
r i g h t c o n f e r r e d upon u t i l i t i e s t o h a v e t h e i r
f a c i l i t i e s occupy a p a r t i c u l a r l o c a t i o n . " Yel-
l o w s t o n e V a l l e y E l e c . Coop., I n c . v. O s t e r m i l l e r ,
s u p r a , 37 St.Rep. 536, 540.

The McTaggert s i t u a t i o n i n v o l v e d a g r e a t e r p r o p e r t y r i g h t ,

s i n c e t h e u t i l i t y had a n e a s e m e n t a c r o s s p r i v a t e l a n d which was

d i s t u r b e d by t h e a p p l i c a t i o n of t h e s t a t u t e .

The C i t y o f Helena d i d n o t h a v e a n a b s o l u t e r i g h t t o

l o c a t e i t s u t i l i t y f a c i l i t i e s i n the street, b u t r a t h e r t h e r i g h t

was s u b j e c t t o t h e S t a t e ' s e x e r c i s e o f i t s p o l i c e power. Jones,

supra. The b e n e f i t t o t h e p u b l i c a s a whole o u t w e i g h e d t h e

t e m p o r a r y d e p r i v a t i o n and i n c o n v e n i e n c e s u f f e r e d by t h e C i t y .

W e f i n d t h a t t h e D i s t r i c t C o u r t c o r r e c t l y c o n c l u d e d t h a t when

t h e S t a t e r e q u i r e d t h e C i t y t o r e l o c a t e i t s u t i l i t i e s , t h e r e was

no t a k i n g i n t h e c o n s t i t u t i o n a l . s e n s e , b u t r a t h e r a l e g i t i m a t e

u s e o f t h e p o l i c e power f o r which no c o m p e n s a t i o n i s r e q u i r e d .

F i n a l l y , t h e C i t y argues t h a t t h e d o c t r i n e of l o c a l s e l f -

government p r e v e n t s a p p l i c a t i o n o f s e c t i o n 60-4-403, MCA, to

Montana' s c i t i e s , and t h a t t h e s t a t u t e u n c o n s t i t u t i o n a l l y com-

p e l s t h e C i t y t o i n c u r a d e b t o r impose t a x e s w i t h o u t i t s con-

sent. W e f i n d no m e r i t i n t h e s e c o n t e n t i o n s . The l e g i s l a t u r e

i n e n a c t i n g s e c t i o n s 60-4-401 e t seq., MCA, sought t o a l l e v i -

a t e p a r t o f t h e b u r d e n imposed upon u t i l i t i e s by t h e common

law r u l e which r e q u i r e d u t i l i t i e s t o s h o u l d e r t h e e n t i r e
e x p e n s e of r e l o c a t i o n o f f a c i l i t i e s . Jones, supra. The

s t a t u t e s r e q u i r e t h e S t a t e t o assume 7 5 p e r c e n t o f t h e c o s t

o f r e l o c a t i o n n e c e s s i t a t e d by f e d e r a l l y a i d e d p r o j e c t s . Since

t h e s t a t u t e a l l e v i a t e s most of t h e b u r d e n p r e v i o u s l y imposed

upon u t i l i t i e s , t h e C i t y ' s argument t h a t t h e l e g i s l a t u r e h a s

imposed a t a x o r compelled t h e i n c u r r e n c e o f a d e b t must f a i l .

Nor i s t h e r i g h t o f home r u l e a d v e r s e l y a f f e c t e d by t h e

statute. I t i s d i f f i c u l t t o p e r c e i v e how a s t a t u t e a l l e v i a t i n g

a f i n a n c i a l burden could c o n s t i t u t e a n impermissibl-e meddling

i n t o purely local a f f a i r s .

Affirmed.

Chief J u s t i c e