NO. 85-55 INTHE SUPREME COURT OF THE STATE OF MONTANA 1985

MOUNTAIN STATES INSURANCECOMPANY, Plaintiff andAppellant,

STATE OF MONTANA, acting by and through the BOARD OF HAIL INSURANCE,DEPT. OF AGRICULTURE, et al., Defendants and Respondents.

APPEAL FROM: DistrictCourt of the First Judicial District, Inand for the County of Lewis & Clark, TheHonorableHenry Loble, Judgepresiding. COUNSELOF RECORD: ForA.ppellant: PhilipW. Stropeargued, Helena,Montana Roger Tippy argued, Helena,Montana For Respondent: Garth Jacobson argued,Bd. of Hail Insurance,Helena, Montana Robert Throssell,State Auditor's Office, Helena, Montana ForAmicus Curiae: John J. Oitzinger,Governor'sCouncilon Management, Helena, Montana

Submitted: September 24, 1985 Decided: November 4, 1985

Filed: 

### NOV~ 

# -1985

p. 8 

## &;f~ 257(

# %ddd ClerkMr. Justice John C. Sheehy delivered the Opinion of the Court.

Mountain States Insurance Company brought this action for a declaratory judgment in the First Judicial District, Lewis and Clark County, seeking an order declaring the Eoard of Hail-Insurancetobe unconstitutional. Bothplaintiff and defendants filed motions for summary judgment. The District Court granted defendants

### ' motion for summary judgment. Plaintiff appeals. We affirm theDistrictCourt. Appellant Mountain States Insurance raises three issues

on appeal. First, does the statutory duty of the State Auditor to serve on the Board 

### of Hail Insurance violate the constitutional prohibition against dual office holding? Second, is there a conflict of interest between the State Auditor's duties as a member of the Hail Board and the Auditor's duties as ex officio insurance commissioner? Third,assuming arquendo thepresence of the State Auditor on the Hail Board is illegal, does the entire act creating the Hail Board fail for lack of a severability cia-use? In 1917, the Montana legislature established the Hail Insurance Roard to administer Montana's hail insurance program for agricul-turalcrops. The hail insurance program provides low cost hail insurance to farmers. Five persons

serve on the Hail Board which administers the program: the StateAuditor, the director of the Departmentof Agriculture, and three persons appointed by the Governor. Section 2-15-3003,MCA. The StateAuditor and the Director of the Department of Agriculture arenot compensated for their service on theHail Roard. Section 80-2-202(3),MCA. The State Auditor is anelected official who serves as ex officio Commissj.oner of Insurancepursuant to section 2-15-1903,MCA. As ex officio insurance commissioner, the State Auditor is required by law to approve the formof allhail insurance policies written in Montana and at the same time is requiredby statute to sit as

amember of theBoard of Hail Insurancewhich establishes the form,substanceand rates of all hailpolicies issued.

Appellant, Mountain States Insurance contends the statutory appointment of the State Auditor to the Hail Board violates the constitutional prohibition against dual office holding in Art. VI, $ 5, 1972 Mont. Const. That section provides: During his term, no elected officer of the executive branch may hold another public office or receive compensation for services from any other governmentalagency. Hemay be a ca.ndidatefor any public office during his term. The State Auditor is an elected officer of the executive branch whose duties areprescribed by law. Art. VI, S 4(5), 1972Mont. Const. In this case, appellant contends the State Auditor is violating the constitutional prohibition against dual office holding by virtue of the legislatively-assigned duty to be a member of the Hail Board. This Court has already held the State Auditor could.be a member of the Industrial.Accident Board without violating the constitutional prohibition against dual office holding. Shea v. North-Butte Mining Co.

(1919),55Mont. 522, 179 P. 499. We stated in Shea: The next contention made by counsel is that the board is an unlawful body because the state auditor, one member of it, holds two offices. By this we presume counsel mean that because the auditor is made a member of the board and. is required to execute a bond to guarantee the faithful performance of his duties, thisconstitutes him a public officer, in a capacity other than as state auditor. A complete answer to this contention is found in section 1 of Article VII of the Constitutj.on. This section enumerates the state executive officers. It then provides that they shall perform such duties as are prescribed in the Constitution and by the Laws of the State. It is not necessary to refer to the constitutional duties enumerated appertaining to the auditor's office. The only limitation imposed upon the legislature in imposing duties upon the auditor is found in section 1 ofArticle IV. This prohibi-tsthe imposition of duties upon him that appertain to the legislative or judicial departments of the government. So long as this limitation is not violated, the legislature is at liberty to impose any governmental duty upon this officer. Id. at 538-39, 179 P. at 504-05. 

### - In the case at hand, the legislature chose to impose upon the State Auditor the governmental duty of being a member of the Hail Board. The State Auditor d.oesnot hold dual officesby carrying outhisduties. Appellant contends that State ex rel. Barney v. Hawkins (1927), 79 Mont. 506, 257 P. 411 controls. In Barney, a. state legislator was hired as an auditor for the Board of Railroad Commissioners. The issue before this Court was: Did a legislator who was hired as an auditor violate the constitutionalprohibition against legislators holdingpublic offices? InBarney,we adopted a five-part test todetermine if a position of public employmentwas a public office. However, that test is inapplicable here because Barney is clearly distinguishableon its facts. Barney dealt with a legislator who sought another governmental position while in office. However in the case at hand, the State Auditor was assigned

ex officio duties by the legislature. As we held in Shea, the only limit upon the dutieswhich may be assigned by the legislatureto an officer of the executivebranch is that theduties may not pertain to the legislative or judicial departments of government. We conclude that the statutory appointment of the State Auditor to the Hail Board is constitutional. 11. The second issue appellant raises on appeal is whether there is a conflict of interest between the State Auditor's du-tiesas Hail Board member and the Auditor's duties as ex officio insurance commissioner. Appellant contends two conflicts exist: a statutory conflictand an incompatibility between the two offices. The appellant contends the statutory conflict arises because section 33-1-305, MCA prohibits the insurance commissioner from having any financial interest in an insurer or insurance transaction. "Financi-a1interest" is defined in section 2-2-102(4) as "an interestheld by an individual, his spouse,orminor children which is: 

# . . 

# . (f) a directorship or officership in a business." Appellant contends the Hail Board is the business in which the State Auditor is financially interested. We find the StateAuditor as ex officio insurance commissioner is not financially interested in the Hail. Board within the meaning of section 2-2-102(4), MCA. That section is a part of the Code of Ethics. The Code of Ethics was constitutionally mandated by Art. XITI, 5 4, 1972 Mont. Const., which states, "The legislature shall provide a code of ethics prohibiting conflict between public duty and private interest for members of the legislatureand all state and local officers and employees.

### " When the Code of Ethics

was passed by the legislature, a statement of purpose was enacted in section 2-2-101, MCA. "Thepurpose of this part is to set fortha code of ethics prohibiting conflict betweenpublic duty and private interest as required by the constitution of Montana." The State Auditor has no private interest in the Hail Board. He derives no compensation for his service on the Hail Board. The State Auditor has affirmatively alleged and it isnot denied that he has never received any compensation, benefit, or gain from the Hail Insurance Program or from any other source for the performance of his d.uties as a Hail Board member. We conclude there is no statutory conflict of interest that would preclude the State Auditor from serving on the Hail Board.

Appellant next contends the two offices of Insurance Commissioner and Hail Board member are incompatible offices which create a conflict of interest. Appellant relies on Bath Club, Inc. v. Dad.eCounty (Fla. 19811, 394 So.2d 110. In the Bath Club case,the Florida legislature created a real 

## -- property tax equalization board made up of three county commissioners and two school board members. The board was challenged as being constitutionally defective in light of the Florida provision against dual office holding. The appellant contended an inherent conflict of interest existed between the board's duty to grant impartial hearings on tax assessments,and theboard members' desire to secure adequate

revenues for their agencies. The Florida Court held that therewas no conflict of interestbetween the duty of county commissionersand schoolboard members to levy the ad valorem taxes on real property and the "limited function of Board members to review and correct individual assessments made by the county tax appraiser." 

## -- Bath Club, 394 So.2d at 112. Likewise, in this case, there is no conflict of interestbetween the duty of the Haii Board members to set hail insurance ratesand the limited functionof the State Auditor

as insurance commissionerto review those rates. We conclude the District Court was correct in holding no conflict of interest exists. Becausewe have held the State Auditor may be a member of the Hail Eoard,we do not reach the issue of whether the entire act creating the Hail Board must falldue to the lack of the severabilityclause. We also do not reach the issue presented by amicus curiae in a brief submitted in this case, as to whether the Hail Insurance Program violates economic due process. In State ex rel. Bennett v. Bonner (1950), 123 Mont. 414, 214 P.2d 747,we held that an amicushas no right to question the constitutionality of an act because he is not a party, and his rights arenotbeing affected. This Court "willnotpass on grounds of invalidity urged by an amicus curiae but not presented by the parties." 

### - Id. at 421, 214 P.2d at 751. Therefore, the judgment of the District Court is affirmed.

We Concur:

# dz5. /fi'YIP--9 The Hon. C. B. McNeil, District Judge, Sitting for theHon. William E. Hunt, Sr.