Nick v. Montana Department of Highways

                               NO. 84-245

               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                    1985



RODNEY NICK,
         Plaintiff and Appellant,


MONTANA DEPARTMENT OF HIGHWAYS,
GARY WICKS as Director, RUSSELL
WRIGG, as Administrator of Divi-
sion of Motor Pool Equipment,
         Defendants and Respondents.




APPEAL FROM:     District Court of the First Judicial District,
                 In and for the County of Lewis & Clark,
                 The Honorable Henry Lohle, Judge presiding.

COUNSEL OF RECORD:

      For Appellant:
               John L. Hollow argued, Helena, Montana

      For Respondents:
               Roy Andes argued, Agency Legal Services, Helena,
               Montana
               Jack Holstrom argued, Dept. of Highways, Helena,
               Montana



                                 Submitted: May 15, 1955
                                  Decided:   December 27, 1985


Filed: DEC 2   :'7985
Mr. Justice L. C. Gul-brandson delivered the Opinion of the
Court.

        Rodney Nick, a disabled veteran, appeals an order of
the District Court, of the First Judicial District, Lewis and
Clark County, granting the State's motion for judgment on the
pleadings.        The District Court          found that the veterans'
preference was a gratuity, repealable or amendable at any
time,    rather     than    a   constitutionally protected         property
right; that the retroactive repealer in the newer statute did
not deny him equal protection; and that the newer statute did
not require a two-thirds vote by the Legislature to repeal
the old law and bar claims under it.            We affirm.
        Nick is a veteran of both World War I1 and the Korean
conflict.    He was employed as a Bureau Chief with the Montana
Department of Highways from 1978 to 1981.             In 1981, Nick was
laid-off as part. of the Department's "reduction in force. "
He then applied for two other similar jobs available in that
Department but did not receive either.
        Nick filed a petition for damages and requested the
court issue an order that defendant show cause why plaintiff
should not be employed by the Department of Highways, on the
grounds     that     his    veterans'    preference       right    was   not
considered     in    his    dismissal    or    in   his   two     subsequent
applications        for    employment.        The   court    granted     the
Department of Highways' motion for judgment on the pleadinqs
on April 17, 1984.          The District Court determined that the
Montana Legislature, in Chapter 1, Section 14, Laws of 1983,
passed in the 1983 Special Session (hereinafter Section 14)
effectively repealed the veterans' preference statute and
that this repeal applied retroactively to bar Nick's claim
because it had not been reduced to judgment.
        After Nick appealed, the State requested an extension
of time because the issues raised by Nick's appeal were
pending      before this Court in Conboy v .               State of Montana
(Mont. 1985), 693 P.2d 547, 42 St.Rep. 120.                     Both Nick and
the Department of Highways filed amicus briefs in Conboy                     .
After this Court affirmed the constitutionality of Section
14, Nick continued to press his appeal.

      The jssues Nick presents are:
      (1) That Section 14 deprives Nick of property without
due process of law in violation of Article 2, Section 17 of
the Montana Constitution and the Fourteenth Amendment of the
United States Constitution.
      (2) That Section 14, by treating Nick differently than
other veterans and           handicapped persons, denies him equal
protection of the laws guaranteed by Article 2, Section 4 of
the Montana Constitution and the Fourteenth Amendment of the
United States Constitution.
      (3) That Section 14 is invalid under Article 2, Section
14 of the Montana Constitution because it bars Nick's suit
for injury to property and it failed to receive the necessary
two-thirds vote         of     all   of   the members      of   the House of
Representatives.
     This is another case following the wake of our decision
in Crabtree v. Montana State Library (Mont. 1983) , 665 P.2d
231, 40 St.Rep.         963.     In Crabtree, we determined that the
preference      in     hiring    and      firing    accorded    to   qualified
veterans     and     disabled        persons   by    §   10-2-203,   MCA   was
absolute.       Subsequently, Governor Schwinden called a Special.
Session    of    the    1983 Montana        Legislature to       address   the
situation created by Crabtree.              The Legislature passed a bill.
retroactively repealing the statutes interpreted in Crabtree
and prospectively making the preference accorded veterans and
disabled persons a tie-breaking device.                  See Ch. 1, 48th Sp.
Session, Laws of Montana, Dec. 1983.                     The portion of the
Veterans' Preference Act that is directly addressed. in this
case is Section 14, which states:
          Sections 10-2-201 through 10-2-206, MCA,
          are repealed.      This repeal applies
          retroactively to bar any claim of
          violation or application of 10-2-201
          through 10-2-206 that has not been
          reduced to judgment, whether or not the
          judgment is final, on [the effective date
          of this act].     Claims under 10-2-201
          through 10-2-206 that have been reduced
          to judgment, whether or not the judgment
          is final, on [the effective date of this
          act] are enforceable.    No claim for a
          violation of 10-2-201 through 10-2-206
          may be made under [section 81 of this
          act. (Effective date December 20, 1983.)
     The Act passed the House of Representatives by a vote
of 66-33, with one member absent and not voting.                Legislative
records disclose that, at the time of the Special Session,
approximately fourteen   1a.wsuits were pending                 against the
State based on this Court's interpretation of          §    10-2-203, MCA
in Crabtree.    The legislative history of Section 14 shows
that the Legislature was unequivocal in its aim to bar those
pending   claims.   Minutes       of   the   meeting       of    the   House
Judiciary Committee on December 13, 1-983, p. 1-5, point out
the Legislature's intent:
          CHAIRMAN BROWN     introduced  a   second
          amend-mentto bar any claims pending under
          the preference rule :


          He said his concern arose yesterday when
          Superintendent Koke, from the East Helena
          Schools, described the situa-tion they
          were in concerning the decisions they
          made after the Crabtree case to hire all
          veterans beca.use five of seven people who
          had applied for employment were veterans
          and there were only five positions
          available .     Essentiall-y, what    this
          amendment does is bar any cla-ims pending
          except those that are pending final
          judgement    [sic]  .    Senator   Mazurek
          indicated in testimony that there were
          only one or two cases at the judgement
          [sic] stage.       Representative Keyser
          seconded the motion.
          REPRESENTATIVE HANNAH asked John McMaster
          what the discussion was in the interim
          committee on this particular issue. Can
          the legislature go back and take away the
          rights of people who have already filed
          under the current statutes?          John
          McMaster stated that the only thing that
          is really questionable is whether we can
          take away a judgement [sic] that is
          already conclusive.
          REPRESENTATIVE HANNAH asked John what was
          the point he had made during the interim
          committee hearing that said, in effect,
          that it was questionable whether or not
          you could go back and take away rights
          that somebody had under the previous law.
          Mr. McMaster said that what he was saying
          was limited to the right to file where a
          judgement [sic] had already been made.
          Generally   speaking, if you have a
          statutory right and a statutory methods
          [sic] of enforcing that right, and the
          whole statute is repealed, then that
          right is lost even if a lawsuit is filed.
      In Conboy, 693 P.2d 549, we ruled on the validity of
Section   14.   Conboy   involved   a   complaint   of   wrongful
discharge by a former deputy clerk of the Supreme Court who
was not reappointed to that position. We upheld the district
court's granting of summary judgment to the State because
Conboy never legally held the job before he was discharged.
Conboy also alleged that he was not granted his veterans'
preference in his discharge.   We observed in Conboy:
          In substance, the District Court held
          that the veterans' preference was a
          government gratuity which was repealable
          by the legislature at any time by a
          majority vote. We adopt the analysis of
          veterans' preference rights in State ex
          rel. Dolan v. Civil Service Bur. of St.
          Paul (1972), 293 Minn. 477, 197 N.W.2d
          711, 714, where the Minnesota Supreme
          Court stated:
          "Veterans' preference rights are not
          rights that have been earned through
          years of service to the state. They are
          a gratuity, given to the class of persons
          to show the state's appreciation for
          service in the Armed Forces of the United
          States, and they do not amount to vested
          rights    in    the    recipients   ....
          Therefore, a veterans' preference right
          can be    adjusted when     and as the
          legislature sees fit without violating
          any vested rights. ' (Citations omitted)
                             I
          We hold that the veterans ' preference
          rights granted under the repealed portion
          of the Veterans Preference Act are not
          rights earned through years of service to
          the state, but are a gratuity given to
          citizens of Montana by the State to show
          its appreciation for service in the Armed
          Forces.   They do not amount to rights
          vested in the veterans.
Conboy, 693 P.2d at 552.
      Nick argues that Conboy and Dolan are distinguishable
from the case at bar because neither involved a situation
where a veteran had claimed. (or "accepted") his statutory
preference, only       to   have   it retroactively taken by          the
legislature.    In Conboy, the plaintiff had not claimed the
preference prior to filing his complaint.                In Dolan, the
Minnesota Supreme Court only upheld the legislature's power
to   prospectively     modify      the     preference   scheme.      This
distinction is legally significant and, for that reason, we
must go beyond Conboy and examine Nick's due process claim in
light of his situation.
      As presented in this case, the dispositive question is:
What, for due process purposes, is the nature of a claimed
veterans' preference?        Nick's equal protection argument also
hinges on this inquiry.
      The due process clause in the Fourteenth Amendment to
the United States Constitution, and in Section 17, Article 2

of the Montana Constitution provides that the state may not
deprive a person of life, liberty, or property without "due
process   of   law."        This   poses    the   question   of   whether
"claiming" or "accepting" a veterans' preference creates a
property interest sufficiently great to hold sway over the
legislature's power to retract the same.
      Nick suggests two ways in which he acquired a property
interest in his preference; by              contract or by    reliance.
Neither of these convince us that Nick had an interest the
legislature        was     powerless          to     revoke    absent          "just
compensation."
        For Nick's first argument, we reaffirm the position we
adopted     in    Conboy    that        the   veterans'    preference          is   a
gratuity, not a contractual right.                    This Court held that
veterans did not acquire any rights beyond those of other
citizens for their service in the Armed Forces.                        Conboy, 693
P.2d    at 552.       The United States Supreme Court expressly
rejected the same contractual right argument in United States
v. Teller        (1883), 107 U.S.        64, 2 S.Ct.      39, 27 L.Ed.          352.
This principle was          reaffirmed in Lynch v.              United        States
(1934), 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434, where that
Court reasoned:
            Pensions, compensation allowances, and
            privileges are gratuities. They involve
            no agreement of parties; and the grant of
            them creates no vested right.         The
            benefits conferred by gratuities may be
            redistributed or withdrawn at any time in
            the discretion of Congress. (Citations
            omitted. )
292 U.S. at 577.         Noting that this principle has never been
overruled or modified, the Ninth Circuit Court of Appeals, in
Monaco v. United States (9th Cir. 1975), 523 F.2d 935, cert.
den. 424 U.S. 914, 96 S.Ct. 1.11.4, 47 L.Ed.2d 319, upheld the
constitutionality of the "Dual Compensation Act of 1964," 5
U. S.C. SS3501-3503.        That Act revoked preferences originally
granted to veterans by the "Veterans' Preference Act of 1944"
(originally codified at 5 U.S.C. S861 et. seq.)                    .    In Monaco,
"the plaintiffs       . . . were        threatened with        loss      of    their
civil     service    jobs    as     a    consequence      of   a       substantial
reduction in force at the [military facility]                  ."      523 F.2d at
937.      Addressing       the    veterans'        argument that        they   were
unconstitutionally denied rights vested under the Veterans'
Preference Act, the court noted:
            ...   [Wlhatever     anticipations    a
            serviceman entertained between 1944 and
            1964   with   respect   to    preferential
            advantage in the federal civil service
            were no more than some sort of floating
            expectancy entirely dependent upon the
            Government's bounty.        A   claim of
            unconstitutional deprivation cannot be
            built upon this foundation.
523 F.2d at 940.          See also Kizas v. Webster (D.C.Cir. 1983),
707 F.2d 524 and Mack v. United States (Ct. of Claims 1980),


      Nick does not have a reliance interest in the veterans'
preference unless and until. it is actually received.             Before
that point, Nick did not incur any direct, specific financial
detriment in gaining the status of a veteran--the cost of war
and the armed services falls on all shoulders, albeit on some
more heavily than others.          The preference was given by the
legislature to those more heavily saddled with that burden
for public purposes.
      For    a     reliance    interest to    be   valid, it must    be
reasonable.      We held in Conboy that veterans acting under the
veterans' preference statute did so in contemplation of the
legislature's power of repeal and cited S 1-2-110, MCA:
            Any statute may be repealed at an.y time
            except when it is otherwise provided
            therein.     Persons acting under any
            statute are deemed to have acted in
            contemplation of this power of repeal.


     Along this line, Nick argues that Article 11, Section
35 of the Montana Constitution requires this Court to find
tha.t the veterans' preference is, in Montana, more than a
gratuity.        That Section states:        "The people declare that
Montana servicemen, servicewomen, and veterans may be given
special considerations determined by the legislature."
      Our reading of this provision is that it is permissive
and does not provide an independent, substantive ground for
finding     that    the    veterans'   preference    has   any   greater
incidents of property than that found in Conboy, Dolan or the
federal cases discussed above.                The meaning of the above
clause and the context of the term "special considerations"
lead    us     to    the   conclusion    that     the   use    of    the   word
consideration was not meant as implying a term of art from
contract law.         This is supported by the minutes of discussion
of     the   above     clause    at    the   Constitutional         Convention.
Delegate McKeon, who proposed Section 35 stated that:
               .. . [Tlhis section is a permissive
             section to be added to the Bill of
             Rights, allowing the Legislature to give
             special consideration to veterans of
             wars     ...
               I think that we should include a section
               of this nature in the Bill of Rights to
               give the Legislature an impetus to try
               and   help    these   individuals             ...
Vol.     VI,        Montana    Constitutional      Convention,        verbatim
transcript, p. 1842.
        Section 35 is permissive, laudatory and suggestive in
nature, and was designed to remove any other constitutional
impediment that might stand in the way of the preferential
treatment of vetera.ns.
        Wick also contended at oral argument that the statement
in White v. State of Montana             (Mont. 1983), 661 P.2d 1272,
1275, 40 St.Rep. 507, 510, that "all persons have a speedy
remedy for every injury" is an independent ground for his
lawsuit.       This language alone does not provide Nick a new
cause of action not otherwise recognized.                Further, White is
distinguishable         from    the   case   at   bar   in    that here,    as
discussed above, no fundamental right is burdened.
        This result is supported by Jensen v. State of Montana
(Mont. 1984), 689 P.2d 1231, 41 St.Rep.                 1971, holding that
the remedy for denial of the statutory preference alone,
(i.e. absent the other elements of wrongful discharge or
discrimination) is a writ of mandamus directing the hiring
agency    to    re-open     the   application process         and     fill the
vacancy in accordance with Crabtree.
        This brings us to Nick's            argument that Section 14
offends    the     equal    protection    clauses      of    the     Fourteenth
Amendment to the United States Constitution, and Article TI,
Section 4 of the Montana Constitution. In order for this
Court to apply a strict scrutiny analysis to this claim, Nick
must show that Section 14 either burdens a fundamental right
or involves a suspect class.               Oberg v.     City of Rillings
(Mont. 1983), 674 P.2d            494, 40 St.Rep.       2034.        Otherwise,
Section 14 survives review if the legislature has a rational
basis for its action.
       Nick argues that Section 14 created three classes of
veterans :        (1)     those   who    received    the     full     Crabtree
preferen.ce; (2)        his   class,     those   who    were       denied   the
preference post- Crabtree but failed to obtain a judgment
before Section 14 took effect and received nothing; and (3)
those who received the tie-breaker preference articulated in
Section 14.       These classes do not involve a suspect criteria
such as race, nationality or alienage, so a strict scrutiny
analysis is not required. The legislative history, of Section
1.4 shows the legislature's valid and rational reasons for its

actions.       Testimony indicated that many governmental bodies
were     thrust    into    difficult     situations     by     the    Crabtree
decision       after      interpreting     the      preference         statutes
differently       for decades.       Legislators voiced concerns of
fiscal integrity, employee competence, and academic freedom.
Ch.    1, Laws     1983, including Section 14, was a rational
response to these legitimate concerns.
       The legislature's giving of a veterans' preference does
not cause that preference to be a fundamenta.1 right, as
discussed in the first issue.            This government gra-tuity fits
within one group of statutory rights discussed by Professor
Charles R .    Hochman in his article, The Supreme Court - -
                                                         and the
Constitutionality - Retroactive Legislation, 73 Harv.L.Rev.
                  of


              There are two special types of statutory
              right which may be altered or repudiated
              at any time until the benefits conferred
              by them are actually received. The first
              of these embraces rights arising from
              statutes granting gratuities from the
              government. The Court has said that the
              general principle governing such statutes
              is that "benefits conferred by gratuities
              may be redistributed or withdrawn at any
              time in the d-iscretion of Congress."
              [Citing Lynch, 292 U.S. at 577.1


              The key element in both the gratutiy and
              penalty cases appears to be the absence
              of any financial cost in the acquisition
              of the right based upon the original
              statute.     [Citing Steamship Co. v.
              Joliffe (1865), 69 U.S. (2 Wall.) 450.1


              It should be stressed that the reliance
              required - remove a right from . -
                        to                          the
              category of gratuity or penalty is a
              financial detriment - - acquisition o
                                  in txe              ?
              the right, - - merely reliance - -
                         and not                 on t
                                                    &
              fiht after it accrues, as, for example,
                          OaF
              the making - - financiaT commitmen; -  in
              reliance upon the statute.    The reason
              for this stricter requirement is probably
              similar to that encountered in the cases
              sustaining the extension of statutes of
              limitations; the penalty or gratuity is
              given by a statute for public purposes
              which are not controlled by the merits of
              the donee's claim to the right.     Under
              these   circumstances,   the   Court   is
              reluctant to permit the donee to obstruct
              a rea~sessme~t these purposes by the
                              of
              legislature. (Emphasis added.)
73   Harv.L.Rev.     at    724-726.      Again,   no     strict    scrutiny
analysis      applies     since   Section   14    does    not     burden    a
fundamental right         and   the   legislature's reasons        for     its
actions, articulated above, satisfy the rational basis test.
       Finally, Nick argues that Section 14 failed to garner
the Constitutionally required two-thirds vote of the House of
Representatives, and is thus invalid; see Art. 11, Sec 18,
Mont.Const.      We affirm the following holding in Conboy: "We
 conclude     that   the    legislature   properly   could   repeal   the
 veterans' preference by a majority vote at any time             ...    "


       The District Court's order is affirmed




   n
 We concur:           '7



6g     Justice




 Justices                    /I   /-"-7


 Honorable Thoma
 Judge of the
 sitting in
 Justice William           Hunt, Sr.
Mr.    J u s t i c e Frank R. M o r r i s o n , J r . d i s s e n t s a s f o l l o w s :

        The      majority            opinion          simply        fails               to     address       the

paramount         issue presented                i n t h i s appeal.                     That     issue is:

        WHERE A CAUSE O F ACTION CAN BE STATED FOR A
        W O G U TERMINATION OR W O G U FAILURE TO HIF.E,
         R N F L                 R N F L
        CAN THAT CAUSE O F ACTION RE ELIMINATED WITHOUT
        OFFENDING  THE ACCESS   CLAUSE   OF THE MONTANA
        CONSTITUTION?

        Nick      was     terminated             in        1981    and        shortly            thereafter

applied       f o r two        similar        jobs,        but     did not receive e i t h e r .

Nick was e n t i t l e d t o p r e f e r e n c e p o i n t s under t h e v e t e r a n s 1

preference s t a t u t e then i n existence.                             I f Nick had a c l a i m ,

t h e m e r i t s o f which a r e n o t b e f o r e t h i s C o u r t , t h a t c l a i m had

r i p e n e d p r i o r t o t h e l e g i s l a t i v e r e p e a l i n 1983.

        This      case     does       not        involve          the    question               of    whether

v e t e r a n s ' p r e f e r e n c e p o i n t s a r e a g r a t u i t y which can be t a k e n

by    the     legislature.              I     do      agree       that        a         statute       granting

p r e f e r e n c e p o i n t s can be r e p e a l e d .          I n o t h e r words, a v e t e r a n

i s not       entitled         t o preference              points        for the               life     of   the

v e t e r a n simply b e c a u s e t h e y e x i s t e d a t t h e t i m e t h e v e t e r a n

entered the service.

        Nick      alleges       that        he     was      terminated                  and    not     rehired

b e c a u s e t h e S t a t e o f Montana f a i l e d t o comply w i t h t h e l e g a l

mandate       granting         preference             points.            Rather               than     seek    a

r e o p e n i n g of t h e b i d d i n g p r o c e s s , Nick sued f o r damages.                            The

damages        claimed         arose        out       of     a     wrongful                  discharge       and

wrongful f a i l u r e t o r e h i r e i n t h a t t h e S t a t e f a i l e d t o f o l l o w

t h e law and t h e r e f o r e v i o l a t e d p u b l i c p o l i c y .                     Such a c a u s e

of    a c t i o n i s r e c o g n i z e d i n Montana.                  Nye       17.     Department          of

L i v e s t o c k ( 1 9 8 2 ) , 196 Mont. 2 2 2 , 639 P.2d 498.

        Nick      alleges       damages.              If    i t be       true            that     the    State

violated       the      law     in    f a i l i n g t o give preference points                               and

Nick was damaged, t h e c a u s e of a c t i o n r i p e n e d a t t h e t i m e t h e

S t a t e acted.         A t    that        p o i n t Nick        had    a        c l a i m f o r damages

which had v a l u e ,          if     true.        In enacting the legislation i n

1983,       and      applying           it        retroactively,                        the     legislature
abolished a cause of action for damage to Nick's property
interest which was, at that time, recognized by law.
     Article 11, Section 16 of the 1972 Montana Constitution
provides :
     The administration of justice. Courts of justice
     shall be open to every person, and speedy remedy
     afforded for every injury of person, property, or
     character.
     We      have    interpreted   this        section    to   afford   a
constitutional right to full legal redress for every injury
to person or property.        White v. State of Montana             (Mont.
1983), 661 P.2d 1272, 40 St.Rep. 507.
     The constitutional right stated in Article 11, Section
16 has not been held by this Court to be an absolute right.
Rather we have held that the right, being stated in the
Declaration     of   Rights   section     of    the    Constitution,    is
fundamental     in   character.     Being       a     fundamental   right,
classification systems which discriminate among litigants are
subjected to a strict scrutiny analysis.
     Here we have a group of people, veterans and handicapped
persons,     who had a cause of action when their preference
points were unlawfully taken from them.             All other employees
who were terminated by the State or other employers, in
violation of the law, have a recourse in the court system.
Veterans are singled out and are denied any recourse although
the law was violated in their discharge.               Such treatment of
veterans, the group to which Nick belongs, must be strictly
scrutinized and the discriminatory scheme fail unless there
is a compelling state interest shown.                 White v. State of
Montana, supra.
     The State cannot satisfy a compelling state interest
showing by a mere claim on the legislature's part that a
compelling state interest exists.         White v. State of Montana,
supra.     The majority opinion does not even contend that a
compelling state interest has here been shown.
     The discrimination against veterans who had a cause of

action and were entitled to redress under the Constitution
must fail when subjected to a strict scrutiny analysis.   I

would remand this case for trial.



I concur in the dissent of Jus