No. 14474 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1979 

STATE OF MONTANA, ACTING BY AND 

THROUGH THE DEPARTMENT OF HIGHWAYS 

OF THE STATE OF MONTANA, 

Plaintiff and Appellant, 

-vsWILLIAM K. BURLINGAME et al., 

Defendant and Respondent. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable E. Gardner Brownlee, Judge presiding. 

Counsel of Record: 

For Appellant: 

Terry Clausen argued, Helena, Montana 

For Respondent : 

K. M. Bridenstine argued, Polson, Montana 

Claude Burlingame, Plains, Montana 

Submitted: February 1, 1979 

Decided 2 i279 

Filed: !$- -- 
Mr. Justice John Conway Harrison delivered the Opinion of 

the Court. 

The State of Montana, Department of Highways, appeals 

from that portion of a judgment, awarding costs and attorney's fees in an eminent domain proceeding, entered by the 

Honorable E. Gardner Brownlee, Fourth Judicial District, 

Missoula County. 

The State of Montana, Department of Highways, instituted eminent domain proceedings on January 26, 1977, after 

defendant refused its offer to acquire by purchase 1.32 

acres of defendant's land in Missoula County. By stipulation, a preliminary order of condemnation was entered February 25, 1977. Pursuant to section 93-9910, R.C.M. 1947, now 

section 70-30-205 MCA, defendant, on March 14, 1977, filed 

an answer, claiming $85,000 as fair and just compensation 

for the land taken and for damage to the remainder. A value 

commission heard the matter August 10, 1977, and thereafter 

awarded defendant $53,900. Both parties appealed that 

determination. 

A jury trial in District Court resulted in a verdict, 

issued June 21, 1978, for defendant in the amount of $39,750, 

of which $31,530 was deemed the value of the land taken and 

$8,220 the value of damage to the remainder. On June 27, 

1978, defendant filed a memorandum of costs and disbursements, which the State moved to strike. A hearing on the 

motion to strike was held on July 11, 1978. Two days later 

the District Court entered an order denying the State's 

motion and awarding defendant costs and attorney's fees. 

The substance of that order was incorporated into the judgment awarding defendant $39,750, plus interest thereon at 10 

percent per annum in the sum of $5,865.51. Of the addi- 
tional $6,247.93 awarded as costs, $4,711.57 represents 

attorney's fees. No hearing on the reasonableness of the 

attorney's fees had been held. 

The State raises two issues: 

1. In an eminent domain proceeding where the District 

Court found the State's final offer was $43,100 and the jury 

verdict was $39,750, was it error for the District Court to 

award attorney's fees and costs? 

2. Was it error for the District Court to award 

attorney's fees without an evidentiary hearing to determine 

the reasonableness of the fees awarded? 

We find the trial court erred in awarding attorney's 

fees in this case because the private property owner did not 

prevail as required by law. In so holding, it is unnecessary to discuss the second issue. 

Defendant argues that the offer of $43,100 was not the 

"final offer" made by the State. The State contends that 

its final offer was made in a letter dated June 8, 1978. The 

letter, addressed to K. M. Bridenstine, counsel for defendant, and signed by Donald A. Douglas, attorney for the 

Department of Highways, reads -- in toto: 

"Dear K : 

"This letter is to advise you that pursuant 

to the provisions of R.C.M., 1947, Section 92- 

9921.1, the State of Montana, Department of Highways, makes an offer in the sum of $43,100.00 

plus necessary expenses of the condemnee accrued 

to this date and interest for all interests in 

the property which is the subject matter of the 

above entitled condemnation suit, being Cause 

No. 45474 in Missoula County, Montana." 

Of significance is that the offer specifically includes 

"necessary expenses . . . accrued to this date." Thus, 

defendant's expenditures for "engineer's fees," incurred on 
instruction by the District Court, would have been reimbursed by the State had the offer been accepted. The other 

"necessary expenses," including costs and reasonable attorney's fees, likewise would have been reimbursed. 

The statute at the focal point of this dispute is 

section 93-9921.1, R.C.M. 1947, now section 70-30-305 MCA: 

"The condemnor, shall within thirty (30) days 

after an appeal is perfected from the commissioner's award or report, submit to condemnee 

a written final offer of judgment for the property to be condemned, together with necessary 

expenses of condemnee then accrued. 

"If at any time prior to ten (10) days before 

trial, the condemnee serves written notice that 

the offer is accepted, either party may then 

file the offer and notice of acceptance together 

with proof of service thereof and thereupon judgment shall be entered. An offer not accepted 

shall be deemed withdrawn and evidence thereof 

is not admissible at the trial except in a proceeding to determine costs. The fact that an 

offer is made but not accepted does not preclude 

a subsequent offer. -- In the event of litigation, 

--- and when the private property ownerprevailsf 

a receiving an award - in excess -- of the final of- 

--- fer of the condemnor. the court shall award necessary expenses of litigation -- to the condemnee. ' 

(Emphasis added.) 

This statute implements Article 11, Section 29 of the 

Montana Constitution, which in part provides that "[iln the 

event of litigation [in an eminent domain proceeding], just 

compensation shall include necessary expenses of - litigation 

-- to be awarded -- by the court when -- the private property owner 

prevails." (Ehnphasis added.) 

Section 93-9921.1 was interpreted by this Court in 

State Department of Highways v. Olsen (1975), 166 Mont. 139, 

531 P.2d 1330. There the Court quoted language from the 

Constitutional Convention notes: 

"'Retains provision in 1889 constitution [Art. 

111, sec. 141 on eminent domain and expands its 

protection by guaranteeing that a property owner 

who goes to court and is awarded more money than 
offered for his property being condemned will be 

reimbursed for the necessary expenses of the 

lawsuit (such as appraiser and attorneys fees).'" 

166 Mont. at 145, 531 P.2d at 1333. 

At issue in Olsen was whether the new statutory provision 

applied to an action pending at the time the right to 

costs, including attorney's fees, came into being. Although 

the issue differs from that in the instant case, certain 

dictum from Olsen is helpful, e.g., "The right to necessary 

costs of litigation provided by section 93-9921.1, R.C.M. 

1947, does not arise when the suit is filed, but vests only 

when -- the private property owner prevails, securing a ver- -- 

diet higher than -- the State's final offer." 166 Mont. at 146, 

531 P.2d at 1334. (Emphasis added.) It is clear that a 

private property owner, to be entitled to "necessary expenses of litigation," must prevail. To prevail, he must 

receive "an award in excess of the final offer of the condemnor," the State. Section 93-9921.1, R.C.M. 1947. 

The following excerpt from the record of the Constitutional Convention debates, Vol. VII, pp. 5638-40, confirms 

this: 

"DELEGATE HABEDANK: Mr. Dahood, for the purpose 

of the journal in future litigation over the 

interpretation of this term, will you please 

state into the record, what is meant by the 

words, prevailing party? 

"DELEGATE DAHOOD: By prevailing party I mean, 

for the record, the property owner, in the 

event that he is the prevailing party. The 

only person intended by this particular section 

and the sentence that has been added -- just 

compensation shall be awarded by the court only 

-- just compensation shall include expenses of 

litigation only when the prevailing party is 

the private property owner. 

"CHAIRMAN GRAYBILL: Mr. Habedank. 

"DELEGATE HABEDANK: Mr. Dahood, I failed to 

ask the question properly. If the highway department offered the owner five thousand dollars 

for his property and the owner refused it and 
went into court and secured a judgment from the 

jury for less than five thousand dollars, would 

he then be a prevailing party? 

DELEGATE DAHOOD: He would not be a prevailing 

party . 

"DELEGATE HABEDANK: If he obtained five thousand and one dollars, would he be a prevailing-- 

"DELEGATE DAHOOD: He would be a prevailing 

party. 

DELEGATE HABEDANK: Thank you, Mr. Dahood. 

"CHAIRMAN GRAYBILL: Is there any other discussion of section twenty-nine? Mr. Harlow. 

"DELEGATE HARLOW: I merely wish to rise in support of this section. I want to ask Mr. Dahood 

the one question in between what Mr. Habedank -- 

had and the party received only the five thousand 

dollars. Would he be prevailing? 

"DELEGATE DAHOOD: He is not the prevailing party 

in that instance. 

"DELEGATE HARLOW: He's got to get one dollar more. 

"DELEGATE DAHOOD: --- He has to exceed the offer made 

by the State of Montana." 

To determine if the award of costs and attorney's fees 

was proper, the letter from the Highway Department attorney 

to defendant's attorney, quoted above, must be deemed an 

offer, either a final offer or a subsequent offer which has 

become a final offer in virtue of it being the last made by 

the State. Subsequent offers may be made, of course. 

Section 93-9221.1 includes this sentence: "The fact that an 

offer is made but not accepted does not preclude a subsequent offer." 

The District Court judge, in the order dated July 13, 

1978, deemed the offer made by the State in that letter a 

"final offer." In part the order recites: 

"The matter was then set for trial by the Court 

for the 19th day of June, 1978. The State wrote 

a letter to the attorney representing the landowner and made an offer in the sum of $43,100.00 
plus interest and plus necessary expenses. This 

offer was not accepted by the landowner and the 

matter went to trial. The jury trial resulted in 

a verdict in favor of the landowner for the sum 

of $39,750.00. The landowner then filed a Cost 

Bill asking for: 

"Appraiser's fees (witness fees)---------- $964.11 

"Engineer's fees (sewer design) ---------- $549.25 

"The State then moved to strike the Cost Bill on 

the grounds and for the reason that the landowner 

did not get more than $43,100.00 which was the 

'final offer' made by the State of Montana. 

"The 'final offer' made Q the State of Montana 

---- in fact is in excess of -- the jury verdict plus -- the 

costs and disbursements requested -- by the Defen- 

--- dant in this action. From the time the appeal 

was filed until about ten days before the actual 

trial of the action the state never offered the 

landowner more than the original sum of $25,600.00. 

The State's delay in making the 'final offer' of 

$43,100.00 resulted in the landowner expending 

money for engineering fees for trial preparation. 

The Court finds that this delay on the part of 

the State in raising their offer from $25,600.00 

to $43,100.00 actually required the landowner to 

expend money for trial preparation. In equity it 

appears to this Court that the landowner should 

be entitled to all of his costs and disbursements 

- in view of the fact that the total of -- the costs 

and disbursements -- and the jury award -- does not 

exceed the 'final offer' made --- by the State of - Montana. " (Emphasis added. ) 

The State maintains that the offer of June 8, 1978, was 

a final offer per - se as contemplated by statute. Even if 

that offer is not in and of itself a "final offer," contends 

the State, then it is a subsequent offer as contemplated by 

section 93-9921.1 and became a final offer in virtue of its 

being the last made by the State. The State cites State 

Department of Highways v. Olsen, 166 Mont. at 148, 531 P.2d 

at 1334, quoting that portion of section 93-9921.1 which 
states that the fact that an offer is made but not accepted 

does not preclude a subsequent offer. The language of Olsen 

immediately following this is significant. The Court stated: 

"Thus, the State could have made an offer -- - at q time prior 

- to trial. . ." The State asserts that one of the principles 

of Olsen is that absent any subsequent offer, the State's 

offer made prior to the filing of a condemnation action will 

be deemed the State's final offer. Extrapolating from that 

principle, the State then contends that given the fact that 

it did make an offer subsequent to the one made before 

instituting the condemnation action, that is, the offer of 

June 8, 1978, that offer must be regarded as the State's 

final offer for purposes of determining whether defendant is 

entitled to costs and attorney's fees. We find that the 

last offer made, at least under the facts of this case, is 

the final offer. . 

Counsel for defendant maintains that the only offer 

made by the State was $25,600--this in the face of acknowledging the June 8, 1978, letter and rejecting the offer made 

therein. It is contended that section 93-9921.1 requires 

that the State's final offer be made within thirty days 

after an appeal of the commissioner's award. The first 

sentence of that statute is repeated here: "The condemnor, 

shall within thirty (30) days after an appeal is perfected 

from the commissioner's award or report, submit to condemnee 

a written final offer of judgment for the property to be 

condemned, together with necessary expenses of condemnee 

then accrued." 

Defendant then argues (1) that the State's offer 

cannot be deemed a "subsequent offer" because it was not 

subsequent to one made within thirty days after an appeal 
from the commissioner's award, and (2) that the June 8, 

1978, offer was not an offer of any sort, that it was void 

- ab initio, even though in rejecting it, he treated it as an 

offer . 

Defendant's counsel further charges that the "State can 

hardly hide its failure to follow Statutory mandate, though 

it seeks exculpation by terming its letter of June 8, 1978 

a 'subsequent' offer." He then charges the State with 

taking "a last moment gamble on Attorney's fees and costs." 

Having anticipated these remarks, the State asserts first 

that "fairness and common sense" dictate that an offer 

labeled as a final offer, acted upon by the landowner as a 

final offer, is in fact a final offer as contemplated by 

section 93-9921.1. Secondly, the State argues that "constitutional provisions ought not to be frustrated by inadvertent violations of statutory procedure," citing Olsen in 

support of that declaration. Hidden in these remarks is the 

admission that the State inadvertently failed to make an 

offer within the thirty days after perfecting the appeal 

from the commissioner's award, but that it should not be 

penalized for such inadvertence, because the offer at least 

qualifies as a subsequent offer which became a final offer 

in virtue of its being the final (last) one made. 

The concept of "final offer" was discussed in Rauser v. 

Toston Irrigation Dist. (1977), - Mont . , 565 P.2d 

632, 641, 34 St-Rep. 496, 506. The Court said that, while 

it was understandable that the District Court did not wish 

to follow the statutory condemnation procedure in that case, 

this could not be used to deny the landowners their attorney's fees. The Court implicitly found that the District 

had made a "final offer" even though there was no "offer" 
denominated as such or acted upon as such. The bid for work 

to be done to cure the problem of water seepage, rejected by 

the District as being too costly, was deemed the final offer 

for purposes of determining whether the landowner prevailed. 

The Court found that indeed the landowner had prevailed, as 

the jury award of $100,000 exceeded the "final offer" of the 

Dis trict-condemnor . 

Although this case is not relied on by either party, it 

clearly supports the State's position. The lack of an offer 

within thirty days of perfecting appeal from the commissioner's award cannot be used to frustrate the intent of 

section 93-9921.1. The State, in the letter of June 8, 

1978, specifically denominated the offer as an offer. In 

rejecting the offer, counsel for defendant treated the offer 

as an offer. 

TO prevail, the private property owner must have received an award in excess of the final offer of the condemnor. Defendant received an award of $39,750 from the 

jury; the State's final offer was $43,100. The former is 

less than the latter; thus defendant did not prevail as 

contemplated by the framers of the 1972 Constitution. 

That portion of the judgment awarding attorney's fees 

is reversed. 

We concur: 

Justices 
Mr. Justice John C. Sheehy dissenting: 

It has seemed to me that this Court is reluctant to 

allow or award attorney fees. 

In this case, however, the Court swings with a doublebladed axe. Not only is the attorney pruned of his rightful 

fee, but the client, a condemnee supposedly guaranteed his 

costs under the 1972 Montana Constitution, finds his constitutional 

recovery of costs cut to nothing. He must reach into his 

recovery in order to pay his expenses of litigation. 

"Just compensation" is defined in the 1972 Mont. Const. 

lit. 11, as follows: 

"Section 29. Eminent domain. 

Private property shall not be taken or 

damaged for- pubiic use without just 

compensation to the full extent of 

the loss having been first made to or 

paid into court for the owner. -- In the 

event of litigation, just compensation 

shall include necessary expenses of 

litigation to be awarded by the court 

when the private property owner prevails." 

(Emphasis added.) 

What is lacking in the decision of this Court in this 

case is an understanding of the intention of the constitutional 

framers in adopting 1972 Mont. Const. Art. 11, 529. Prior to 

1972, there was no statutory provision for an offer during 

litigation by the Highway Department, because prior to 1972, 

each condemnee had to bear the considerable cost of litigation, 

including appraisers, engineers and attorney fees, out of 

any recovery he made. The landowner was forced many times to 

inadequate settlements because he couldn't win for losing, even 

though the previous constitution provided for "just compensation" 

for the owner (1889 Mont. Const. Art. 111, 814). 

Before 1972, as now, the Highway Department followed the 

practice of issuing a letter designated a "final offer", stating 
separately the offer for land and for after-damage, before 

litigation was commenced. Before the "final offer" the 

State and landowner were in contact many times, sometimes 

for several years while the proposed construction went 

through the long process from drawing board to contractletting. It was when the contract was about to be let that 

the State felt the compulsion to get out its letter of final 

offer, for litigation then became necessary. 

That background explains the dialogue of the delegates 

to the 1972 convention. The proposal in the condemnation 

provision of the new constitution of 1972 was that "just 

compensation" should include necessary costs of litigation 

to the "prevailing party". It was the contemplation of the 

delegates that if the landowner, by litigation, proved that 

the final offer received before litigation was insufficient, 

he was the prevailing party and entitled to his ccsts of 

litigation as a part of his "just compensation". 

This background explains why the constitutional convention 

notes appended to 1972 Mont. Const. Art. 11, 829, state: 

"Retains provision in 1889 Constitution 

[Art. 111, sec. 141 on eminent domain 

and expands its protection by guaranteeing 

that a property owner who goes to court --- and is awarded more money than offered 

for his property being condemned will be 

reimbursed for the necessary expenses 

of the lawsuit (such as appraiser 

and attorneys fees)." (Emphasis added.) 

In 1973, the State Highway Department (not the landowners) 

went to the legislature to obtain the passage of Ch. 453, 

Laws of Montana (1973) codified as section 93-9921.1, R.C.M. 

1947, which reads as follows: 

"Necessary expenses of litigation. The 

condemnor, shall within thirty (30) days 

after an appeal is perfected from the 

commissicner's award or report, submit to 

condemnee a written final offer of judgment 

for the property to be ~ondemnedyto~ether with 

necessary expenses of condemnee then accrued. 
"If at any time prior to ten (10) days before 

trial, the condemnee serves written notice that 

the offer is accepted, either party may then 

file the offer and notice of acceptance together 

with proof of service thereof and thereupon judgment 

shall be entered. An offer not accepted shall 

be deemed withdrawn and evidence thereof is not 

admissible at the trial except in a prcceeding 

to determine costs. The fact that an offer is 

made but not accepted does not preclude a 

subsequent offer. ---- In the event-of litigation, 

and when the private property owner prevails, by 

receiving an award in excess of the final offer 

of the condemnor, the court shall award necessary 

expenses of litigation to the condemnee." 

(Emphasis added.) 

Note especially that the only "final offer" described 

in section 93-9921.1, now section 70-30-305 MCA is the one 

which must occur within thirty days of the appeal of the 

comrnissi~ner's award. Any other later offer is a "subsequent 

offer". But it is the "final offer" under the statute that 

fixes the right of the condemnee to attorney fees and costs 

as a part of his recovery in just compensation. 

One could assume that section 93-9921.1, now section 

70-30-305 MCA is clear and unambiguous on its face, and 

needs no interpretation. In this decision, the Court abandons 

its rule of State Department of Highways v. Olsen (1975), 

166 Mont. 139, 148, 531 P.2d 1330. In that case, the parties 

had waived by stipulation the commission hearing (provided 

in section 93-9912, R.C.M. 1947, now section 70-30-207 MCA) 

and proceeded straight to jury trial on the issues. The only 

offer made by the State was before the litigation commenced. 

The State claimed that since it had not made an offer within 

thirty days of a commission decision, no "final offer" existed 

and therefore, the prevailing condemnee could not collect 

attorney fees. The court rejected this contention saying: 

"To adopt such a theory here would contravene 

the intent of the statute and would violate 

the constitutional mandate. Article 11, 

Section 29, 1972 Constitution requires that 

a landowner be compensated for necessary expenses 
of litigation if he prevails. This constitutional 

directive cannot be frustrated by inadvertent 

or intentional violations of statutory procedure." 

166 Mont. p. 147, 531 P.2d p. 1334. 

Statutes are made to be obeyed, by the servants of the 

State as well as by the general public. Here the condemnee 

is being punished because the State failed to follow the 

mandate of the statute as to when the final offer should 

be made. To reach that unlawful result the majority decision 

equates "subsequent offer" with "final offer", but the 

"subsequent offer" here does not follow anything. Result: 

section 93-9921.1, now section 70-30-305 MCA, is tortured 

beyond recognition and the intent of the constitutional framers 

is thwarted. 

The majority opinion cites Rauser v. Toston Irrigation 

District (1977), Mont . , 565 P.2d 632, 641, 34 

St.Rep. 496, 506, as authority for what it does in this case. 

Rauser is not authority for any issue in this case. In Rauser, 

there was involved an inverse condemnation, where no offers 

were made. There the court merely implied that a rejected 

compromise sum was an offer in order to award attorney fees 

to the prevailing party. 

Today's decision sounds the final knell for the purposes 

of section 93-9921.1, now section 70-30-305 MCA. Not only 

is the statutory thirty-day requirement thrown out the window, 

but the Highway Department is given carte blanche to defeat 

the condemnee's right to attorney fees and costs by allowing 

the Highway Department to make its offer (final or subsequent, 

as you will) at any time, perhaps even during the trial and 

gamble on the outcome. 

We have come full circle. The landowners are back where 

they were prior to 1972. 

In my opinion Judge Brownlee understood the situation 

perfectly. I would affirm his decision. 

Justice