### IN THE SUPREME COURTOF THE STATEOF MONTANA

NORTHERN BORDER PIPELINE COMPANY, a partnership, Plaintiffand Respondent,-vsTHE STATEOF MONTANA;THE DEPARTMENTOF REVENUE OF THE STATEOF M0NTANA;KEN NORDTVEDT, Director of the Departmentof Revenue of the State ofMontana; VALLEY COUNTY, MONTANA, apolitical divisionof the State of Montanahaving corporatepower; ARDEN NICHOLS,Valley County Commissioner,ARTHUR ARNOLD,Valley County Commissioner,ELEANOR PRATT, Valley County Commissioner,MARLAJ. DeBRAY,Valley County Treasurer; ELLEN BYRNES,Valley CountyAssessor,ROOSEVELT COUNTY, MONTANA, a politicaL division of the State ofMontana having corporatepower; JAMES R 

### HALVERSON,Roosevelt County Commissioner; LaVERN SCHLEDEWITZ,Roosevelt County Commissioner;ALFRED KASCHUBE,Roosevelt County Commissioner; and VIRGINIAW PLOUFFE,Roosevelt County Treasurer,LEO 

### F KASCHUBE,Roosevelt CountyAssessor, DefendantsandAppellants.

APPEAL FROM: TheDistrict Court of the SeventeenthJudicial District, In and for the County of Valley, TheHonorableLeonard Langen, Judgepresiding.
COUNSELOF RECORD:
ForAppellants: Marc Racicot,Attorney General; Helena,Montana Clay R. Smith,Assistant Attorney General; Helena,MT DavidW. 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 EWebster 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 

### ; I I-: V 

### Filed: 6~ II m 6:- 1' t 

### =i r3 --"- k, 04
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### .LC I-; .A P
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(J <.I <-3 . . .".-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 taxpayersbeyond their salaries. We uphold and affirm the DistrictCourt. Respondent Northern Border PipelineCompany 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 animpermissible 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 theUnited StatesConstitution. 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 ofNorthern Borderwas denied. In relevantpart, theJune 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 DistrictCourt denied the appellants' attorneys' fees, it granted the award For transportation expenses. Northern Border has not cross-appealed 

### as to the transportation 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, "forthe payment of such-- 

### costs 

### - and damages asmay be incurred
or sufferedby any party who is found tohavebeen wrongfully enjoined or restrained." (Emphasisadded.) 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 afterdissolution of the injunctionand 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 injunctionbond after the injunctive order was dissolved, and this Courtheld in that case: The measure of damages in an action on the injunctionbond is the a.mountwhichwill 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.
124Mont. 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 injunctiveorder to cases where an undertaking was not filed. 

### In that case, this Court said:



# .

# ..Despite the fact that section 27-19-306 provides for recoveryby an action on an injunction bond, we apply the same reasonable standard to those actions for attorney fees inwhich 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 ofRevenue,who claimed 32 hours of services at $30per hour (basedon the budget given to the Department of Revenue); another attorney for the Department of Revenue who claimed 18hours 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 itsperceived rights under S 15-1-405,MCA, under Marta, supra, damages in cases such as this include attorneys' fees. Yet, attorneys' fees herewere 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 spentby 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 tobe considered aproper 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 injunctivemethod 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 thatpoint here,however. Our decisionhere doesnot affect our holding in City 

### of Helena v. Brule (1895),15 Mont. 429, 39 P.2d 456 where we held thatpublic entitiesmay recoverattorneys' feespaid 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.

WeConcur: 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),124Mont. 543, 221 P.2d 597. Temporary restraining orders and injunctions are extraordinary remediesand 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 ofMontana 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-ifebetween attorneys and clients. To say damages based on proved hours are too remote is to close one's eyes to the way itsbeing 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 counselareused. 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 damageif 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.