IN THE SUPREME COURT OF THE STATE OF MONTANA 

NORTHERN BORDER PIPELINE COMPANY, a partnership, 

Plaintiff and Respondent, 

-vsTHE STATE OF MONTANA; THE DEPARTMENT OF REVENUE OF THE STATE OF 

M0NTANA;KEN NORDTVEDT, Director of the Department of Revenue of the 

State of Montana; VALLEY COUNTY, MONTANA, a political division of the 

State of Montana having corporate power; ARDEN NICHOLS, Valley County 

Commissioner, ARTHUR ARNOLD, Valley County Commissioner,ELEANOR PRATT, 

Valley County Commissioner,MARLA J. DeBRAY, Valley County Treasurer; 

ELLEN BYRNES, Valley County Assessor,ROOSEVELT COUNTY, MONTANA, a 

politicaL division of the State of Montana having corporate power; JAMES 

R HALVERSON, Roosevelt County Commissioner; LaVERN SCHLEDEWITZ, Roosevelt 

County Commissioner; ALFRED KASCHUBE, Roosevelt County Commissioner; and 

VIRGINIA W PLOUFFE, Roosevelt County Treasurer, LEO F KASCHUBE, Roosevelt 

County Assessor, 

Defendants and Appellants. 

APPEAL FROM: The District Court of the Seventeenth Judicial District, 

In and for the County of Valley, 

The Honorable Leonard Langen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Marc Racicot, Attorney General; Helena, Montana 

Clay R. Smith, Assistant Attorney General; Helena, MT 

David W. Woodgerd, Dept of Revenue; Helena, Montana 

David L Nielsen, Valley County Attorney; Glasgow, MT 

James A McCann, Roosevelt County Attorney; Wolf Point, MT 

For Respondent : 

Michael E Webster and Ronald R Lodders, Crowley, Haughey, 

Hanson, Toole & Dietrich; Billings, Montana 

ICT. Submitted on Briefs: March 21, 1989 

03 3 0 2- :'c> Decided: April 20, 1989 

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Filed: 6~ I I 

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r. Justice John C. Sheehy delivered the Opinion of the 

Court. 

The defendants above named appeal from an order and 

4udgment of the District Court, Seventeenth Judicial 

District, Valley Countv, denyinq appellants attorneys' fees 

in a case where the appellants were successfuL in securing 

the dissolution of an injunctive order. 

The District. Court reasoned that It would not award 

attorneys' fees as an element of damages here because 

Roosevelt County, Valley County and the State of Montana each 

pay their respective attorneys a salarv for representation in 

matters affecting those entities, and because the affidavits 

filed in the case did not show that the attorneys' services 

burdened the taxpayers beyond their salaries. We uphold and 

affirm the District Court. 

Respondent Northern Border Pipeline Company initiated an 

action on November 23, 1987, seeking injunctive relief 

against the imposition of 1987 state property taxes on its 

pipeline Located within the exterior boundaries of the Fort 

Peck Indian Reservation. Northern Border proceeded under 5 

15-1-405, MCA, which permits a district court to restrain the 

collection of any tax or part thereof "where the tax or the 

part thereof sought to be enjoined is illegal or not 

authorized by law." As a basis for the injunction, Northern 

Border set out in its complaint six claims for relief- 

(1) that the assessing, levying and collecting of taxes hv 

Valley and Roosevelt Counties on the property interests o+ 

Northern Border within the exterior boundaries of the Fort 

Peck Indian Reservation were inconsistent with federal 

policies and were preempted by federal law; (2) that such 

assessina, levyinq and toll-ectinq of taxes interfered to an 
impermissible extent with the right of the tribes thereon to 

govern themselves; (3) that no nexus existed between the 

counties and the property interests of Northern Border 

located on trust land within the boundaries of the Fort Peck 

Indian Reservation; (4) that the proposed taxes violated 

Art. I, Section 8, Clause 3, of the United States 

Constitution; (5) that the proposed collection of taxes 

violated Section 4 of the Enabling Act for the State of 

Montana and Article I of the Montana Constitution; and, 

(6) that the imposition of taxes by the two counties was 

confiscatory as to Northern Border and violated Northern 

Border's rights to equal protection and due process of law 

under the United States Constitution. 

The appellants herein, the defendants below, include the 

State of Montana, the Montana Department of Revenue and its 

director, Roosevelt County, Valley County and various 

officials of those counties. 

While the tax dispute was in the District Court, the 

parties filed cross-motions for summary judgment, and on June 

29, 1988, the motion of the appellants was granted and that 

of Northern Border was denied. In relevant part, the June 29 

order dissolved the previously issued preliminary injunctjon 

and directed entry of judgment in the appellants' favor. 

On July 11, 1988, the appellants filed a motion for 

attorneys' fees and expenses, requesting $7,027.76 as 

damages. Of that amount, $5,695.26 was attributed to 

attornevs' fees, later increased bv $192.00; and $1,320.00 

97as attributed to transportation expenses in connection with 

two hearings before the District Court in Glasgow, Montana. 

In the same order in which the District Court denied the 

appellants' attorneys' fees, it granted the award For 

transportation expenses. Northern Border has not 

cross-appealed as to the transportati on expenses. This 
appeal relates solely to the item of attorneys' fees claimed 

by the appellants. 

Section 27-19-306, MCA, provides that when a district 

court grants an injunction or restraining order, the court 

shall require a written undertaking to be given by the 

applicant, in such sum as the court considers to be proper, 

"for the payment of such -- costs - and damages as may be incurred 

or suffered by any party who is found to have been wrongfully 

enjoined or restrained." (Emphasis added.) 

In Sheridan County Electric Co-op., Inc. v. Ferguson 

(1951), 124 Mont. 543, 551, ?27 P.2d 597, 601, this Court 

held that: 

Where . . . the sole purpose of the action was to 

obtain injunctive relief, then after dissolution of 

the injunction and upon final adjudication, counsel 

fees are recoverable for defense of the entire 

suit. 

In that case, Ferguson, a minority stockholder of the 

cooperative, sought to restrain and en-join the corporation 

from moving its principal place of business from Westhy, 

Montana, to Medicine Lake, Montana and a restraining order 

was granted. In that case, also, Ferguson had posted an 

undertaking. The actFon by the cooperative was upon the 

injunction bond after the injunctive order was dissolved, and 

this Court held in that case: 

The measure of damages in an action on the 

injunction bond is the a.mount which will compensate 

for all the detriment proximately caused bl7 the 

injunction during the time it is operative, or 

which in the ordinary course of things, wou1.d be 

likely to result therefrom. 

124 Mont. at 549, 227 P.2d at 601. 

In Marta v. Smith (1981), 622 P.2d 1011, this Co,urt 

stretched the right to recover attorneys' fees by a litigant 

who successfully procures a dissolution of an injunctive 
order to cases where an undertaking was not filed. In that 

case, this Court said: 

. . . Despite the fact that section 27-19-306 

provides for recovery by an action on an injunction 

bond, we apply the same reasonable standard to 

those actions for attorney fees in which a bond is 

not involved. In making attorney fees an element 

of damaqes under section 27-19-306, the legislature 

surely did not intend to make the recovery depend 

on the judge's discretion in demanding an 

injunction bond. Thus we find that the district 

judge should have awarded reasonable fees as an 

element of damages, pursuant to section 27-19-306, 

MCA, and not as costs of suit. 

Thus, Marta clearly established that recovery of 

attorneys' fees was not dependent upon the furnishing of a 

bond or undertaking but just as clearly held that reasonable 

attorneys' fees were an element of damages and not costs of 

suit. 

In this case, appellants are aslcing this Court to 

stretch -- Marta even further, bv allowing the recovery oF 

attorneys' fees where no monetary damages are established. 

The motion of the Attorney General for attorneys' fees 

was supported by affidavits from a Deputy Attorney Genera! 

who claimed 54.5 hours of services at $48 per hour; an 

attorney for the Department of Revenue, who claimed 32 hours 

of services at $30 per hour (based on the budget given to the 

Department of Revenue); another attorney for the Department 

of Revenue who claimed 18 hours of services at $30 per hour; 

and the County Attorney of Roosevelt County, who claimed 18 

hours of services at $21.07 per hour. Each of the affidavits 

was made by persons who were salaried employees of the state 

or of the county. 

Section 27-1.-202, MCA, defines the right to compensatory 

damaqes to persons who suffered. detriment from the unlawful. 
act or omission of another. Although Northern Border did not 

act unlawfully here in pursuing its perceived rights under S 

15-1-405, MCA, under Marta, supra, damages in cases such as 

this include attorneys' fees. Yet, attorneys' fees here were 

not incurred in the sense that the State and two counties 

involved would have had the salary expense of the respective 

attorneys with or without Northern Border's litigation. As 

the District Court reasoned, no additional burden has been 

placed upon the taxpayers of any governmental entity bv 

virtue of Northern Border's actions, although the appellants 

argue that the time spent by the respective attorneys on this 

litigation was time taken from other matters which those 

attorneys could have handled. We hold that such a claim for 

damages is too remote to be considered a proper basis for the 

assessment of damages. 

In this case, no bond or undertaking was required of 

Northern Border when it applied for its injunctive relief. 

Part I, Title 15, MCA, provides several alternative remedies 

that may be taken by a taxpayer that wishes to contest the 

assessment, levying or collection of a tax. One of those 

alternatives is the injunctive method provided in 5 15-1-405, 

MCA. No mention in that statute is made that a taxpayer 

seeking injunctive relief under B 15-1-405, MCA, must comply 

with the undertaking provisions of 5 27-19-306, MCA. It is 

not necessary to decide that point here, however. 

Our decision here does not affect our holding in City of 

Helena v. Brule (1895), 15 Mont. 429, 39 P.2d 456 where we 

held that public entities may recover attorneys' fees paid to 

retain outside counsel as damages for being wrongfull-v 

enjoined. Our holding in this case is compatible with the 

generally accepted view of compensatory damages that the 

reason for the award of damages is to make the damaged person 

whole. 
We affirm the holdinq of the District Court. 

We Concur: A 

Justices 
Mr. Justice R. C. McDonough dissents: 

The rationale of the majority lacks consistency and 

ignores reality. It carves out an unlisted exception to the 

meaning of statutory damages as applied to attorney fees and 

contradicts our previous holding in Sheridan County Electric 

Co-op, Inc. v. Ferguson (1951), 124 Mont. 543, 221 P.2d 597. 

Temporary restraining orders and injunctions are 

extraordinary remedies and if the party obtaining such orders 

later loses such party should pay the winner's damages as 

provided by statute. That is the statutory scheme. 

There is damage to the State of Montana and the public 

entities. They here have adequately and with precision 

proved their reasonable legal costs (damages) as per hour 

salaried costs. They did not include secondary costs such as 

pro rata costs of library, equipment, secretarial costs, 

rent, utilj-ties, etc., which would he charged by private 

counsel. Flours billed are one way of 1-ife between attorneys 

and clients. To say damages based on proved hours are too 

remote is to close one's eyes to the way its being done. The 

taxpayer, or any defendant, should not ultimately bear the 

cost of damages incurred in a winninq defense to an 

extraordinary remedy, just because in-house counsel are used. 

Salaried attornevs do not come free. Any legislator, county 

commissioner, or corporate executive wou1.d affirm this 

statement. A number of these cases requesting declaratory 

injunctive relief are now and have recently been before this 

Court. 

The message of the majority is that a public entity, a 

private person or corporation should not use in-house counsel 

in a defense to an injunction, because only the charges of 

outside counsel will be reimbursed as statutory leqal damage 
if one prevails. This is so even though outside counsel's 

charges in all likelihood will be computed on an hourly basis 

and in some instances their employment would be costly and 

inefficient. 1 vrould reverse the District Court. 

Justice / 

Justice John C. Harrison and Justice Fred J. Weber 

concur in the foregoing dissent.