NO. 90-582 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

TED EVERTZ, 

Petitioner and Appellant, 

STATE OF MONTANA; MONTANA BOARD OF JU/. 

LAND COMMISSIONERS; DEPARTMENT OF *' Lqg; 

STATE LANDS; CORY B. MARTINSON and C,f' f, 2 

IRENE B. MARTINSON, 'LERI; ur2 , ..I - ." " 4-4 r?& L 07' *. 9' 

e. 

1, a;d;:- -91jR: 

Respondents. ",,+ f . 

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APPEAL FROM: District Court of the First Judicial District, 

In and for the County of Lewis and Clark, 

The Honorable Jeffrey M. Sherlock, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

James A. Patten, Patten Law Firm, 

Billings, Montana 

For Respondents State of Montana: 

Lon J. Maxwell, Daprtment of State Lands, 

Helena, Montana 

For Respondents Martinson: 

Jock 0. Anderson, Gough, Shanahan, Johnson 

& Waterman, Helena, Montana 

Filed: 

Submitted on Briefs: May 10, 1991 

Decided: July 2, 1991 

Clerk 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

Ted Evertz appeals the decision of the District Court of the 

First Judicial District for Lewis and Clark County, affirming an 

appraisal made by the Department of State Lands of improvements to 

a State Land lease formerly owned by Evertz. We affirm the 

District Court. 

The issue on appeal is whether the District Court erred in 

accepting the Department's appraisal over the values proffered by 

Evertz. Specifically, Evertz contends that: (1) the District 

Court's decision cannot be supported by the record; (2) he was 

denied due process; and (3) the District Court used the wrong 

criteria in arriving at the value of his improvements. 

Evertz is the former lessee of Department of State Lands Lease 

No. 4458, which consisted of approximately 1500 acres in Prairie 

County. Evertz's lease was cancelled due to mismanagement of the 

property, and the lease was transferred to Cory and Irene 

Martinson. Pursuant to S 77-6-302, MCA, Evertz sought compensation 

from the Martinsons for the improvements to the land. However, the 

parties could not agree on a value. In accordance with 5 77-6-306, 

MCA, a panel of arbitrators was chosen to decide the value of the 

improvements. Each party selected one arbitrator. The arbitrators 

selected by the parties chose the third member of the panel. 

The arbitrators entered their decision, assigning a value of 

$2800 to the improvements. Evertz's valuation of the improvements 

was $53,132. iss satisfied with the arbitrators' valuation, the 
petitioner appealed the decision to the Department of State Lands, 

pursuant to 5 77-6-306(3), MCA. The Department and its employee, 

Sharon Moore, reviewed the arbitrators1 findings. Ms. Moore 

prepared a 16 page document detailing each and every improvement 

to the lease claimed by Evertz, and indicated she agreed with the 

findings of the arbitrators. Relying on Moore's findings, the 

Department thereafter affirmed the decision of the arbitrators. 

Evertz petitioned the District Court for judicial review of 

the Department's decision, pursuant to subsection (4) of 

5 77-6-306, MCA. The court found that "the decision of the 

arbitrators and supported by the investigation of Ms. Moore is more 

credible than Evertz s assertion^^^ and affirmed the decision of the 

Department of State Lands. The court then directed the successors 

in interest to Evertz, the Martinsons, to pay $2800 to Evertz. 

This appeal followed. 

Evertz contends that the procedure followed at the agency 

level and upon judicial review denied him due process, and that he 

is entitled to a trial de novo before the District Court. Evertz 

states that the record before the lower court was compiled without 

any opportunity on his part to challenge or dispute the parties 

providing the information. 

In cases where the parties cannot agree on the value of 

improvements, there is a procedure provided by statute to reach an 

equitable decision. Section 77-6-306, MCA, states that if a 

decision cannot be reached between the parties, both the former 
lessee and the current lessee are allowed to appoint an arbitrator. 

The arbitrators then appoint a third arbitrator. Together they 

assign a value to the improvements. This procedure was utilized 

by Evertz and the Martinsons. Both parties were on equal footing, 

having personally selectedthe person to serve as their arbitrator. 

Both parties were free to provide information or documentation to 

the arbitrators. Evertz's chosen arbitrator, who was presumably 

familiar with the property in question, participated in the panel's 

joint decision setting the value of the improvements at $2800. 

Upon request for agency review of the decision, the Department 

sent Sharon Moore into the field to inspect the tract and gather 

information. Moore was familiar with the property, having been 

there some 30 times in the prior six years. In the scope of her 

review, Moore sought the advice of many individuals knowledgeable 

of the leasehold and of appraising methods. She then compiled a 

report for the Department's review. 

The Department, upon reviewing all the evidence before it, 

including information supplied by Evertz, affirmed the panel's 

decision. The petitioner then sought judicial review. 

At that review, Evertz argued that the record should consist 

solely of the depositions of himself and Sharon Moore. He argued 

that the record proffered by the Department was compiled without 

his input, and that he was unable to cross-examine any of the 

people who had supplied the information. The Department argued, 

and the court agreed, that all testimony and documentation created 
by the arbitrators and the Department in reaching their valuation 

should be included in the record. The District Court gave Evertz 

the opportunity to cross-examine any or all of the witnesses that 

Sharon Moore relied on and submit their deposition testimony. 

However, he chose to present only the testimony of Ms. Moore and 

himself. 

We conclude that the District Court properly considered all 

the documentation regarding the leasehold upon its review. There 

is no indication in 5 77-6-306, MCA, that the judicial review is 

to be a trial de novo, as Evertz maintains. The lower court is in 

a better position to understand how a decision was reached if it 

is able to review all of the material used to reach that decision. 

As the District Court stated, Evertz had ample opportunity to 

provide the court with depositions of any of the people involved 

in the valuation process or mentioned in Sharon Moore's report. 

He did not do so. 

Evertz correctly notes that one of the primary purposes of 

judicial review is to assure that parties have been afforded due 

process. State ex rel. Bailey v. Grande, 154 Mont. 437, 445, 465 

P.2d 334, 339 (1970). This Court stated in Great Northern Railway 

Co. v. Roosevelt County, 134 Mont. 355, 362, 332 P.2d 501, 505 

(1958), that I1l[d]ue process of law1 refers to and means certain 

fundamental rights which our system of jurisprudence has always 

recognized, that is, of requiring notice to be given and a hearing 

had before property may be taken . . . . l1 Evertz had two 
opportunities to present evidence on his behalf, both at the 

Department review of the arbitration proceedings and at the 

judicial review. While 5 77-6-306(3), MCA, does not provide for 

a hearing and an opportunity to examine witnesses as part of the 

Department review, he clearly had that opportunity on appeal to the 

District Court. He cannot now claim he was not afforded due 

process if he chose not to exercise his rights at either of those 

reviews. The petitioner has not offered credible evidence to show 

that he was denied an effective opportunity to be heard. Goldberg 

v. Kelly, 397 U.S. 254, 268, 90 S.Ct 1011, 25 L.Ed 287 (1970). 

Evertz next contends that the District Court improperly 

received the opinion testimony of Moore, and that her opinion was 

based on hearsay. 

While Sharon Moore was not a professional appraiser, the 

statute does not require the use of professional appraisers. The 

statute requires that the Department Ifshall examine the 

improvementsw and decide whether the arbitrators1 award should be 

upheld. Sharon Moore was qualified to make that examination for 

two reasons: (1) She had extensive knowledge of the property in 

question, based on her supervisory authority over the State lease 

in question since 1983, and had visited the land some 30 times 

prior to her review; and (2) The primary focus of her inquiry was 

the propertyls original cost and its current condition. Section 

77-6-303, MCA. This inquiry did not require the expertise of a 

professional appraiser. The credibility and weight to be given to 
opinion testimony are matters for the district court's 

determination in a non-jury proceeding. We conclude that no abuse 

of discretion resulted fromthe District Court's reliance on Sharon 

Moore's opinion in this case. City of Fairview v. Deming, 

238 Mont. 496, 778 P.2d 876 (1989). 

As to Evertz's contention that part of Moore's opinion was 

based upon hearsay, this Court held in State Highway Commission v. 

Greenfield, 145 Mont. 164, 169, 339 P.2d 989, 992, (1965), that an 

opinion on land valuation may be based upon hearsay, if it is found 

to be reliable. 

Evertz next contends that the District Court did not properly 

consider the factors used by him in determining the value of his 

improvements. Specifically, Evertz states that in determining the 

value of the improvements the District Court should not be limited 

to the initial cost, but should include the replacement cost as 

well. 

The statute regarding valuation, 5 77-6-303 (1) , MCA, states 

in pertinent part: 

In determining the value of these improvements, 

consideration shall be given to their original cost, 

their present condition, their suitableness for the uses 

ordinarily made of the lands on which they are located 

The statute refers to original cost and present condition as 

starting points for valuation. It is clear that the purpose is to 

compensate lessees for their expenses with some consideration of 

the extent to which the improvement has been depreciated. 
Evertzls methodology of valuation uses replacement cost. 

There is a great difference between the two methods, resulting, in 

this case, in two very different valuations. As noted by the 

Department, a former lessee, by using a replacement cost method and 

thereby assigning market prices to improvements on his lease could 

effectively "chillI1 the bidding process on a lease. It is not 

unlikely that the Martinsons, or any other potential lessee, would 

be reluctant to acquire the lease in this case if they were forced 

to pay Evertzls replacement valuation of $54,000. The Department 

used the process called for in the statute, and the District Court 

did not err in accepting those values rather than the values 

offered by the petitioner. 

We affirm the District Court. 

We Concur: // 

&,dvr& Chief Justice