No. 85-274 INTHE SUPREME COURT OF THE STATE OF MONTANA 1986

D & F SANITATION SERVICE, BIG SKY HAUL ALVAY and YELLOWSTONE SANITATION SERVICE, Plaintiffsand Appellants,

CITY OF BILLINGS, Defendantand Respondent.

APPEAL FROM: DistrictCourtof theThirteenthJudicial District, Inand fortheCountyof Yellowstone, TheHonorableDianeG. Barz, Judge presiding.

COUNSEL OF RECORD:

For Appellant: Alexander & Baucus; GaryM. Zadickargued, Great Falls, Montana

For Respondent: Peterson, Sch.ofield & Leckie; KennethPetersonargued, Billings, Montana

Filed: Submitted: October25, 1985 Decided: January 16, 1986 

# JAN16

## 1986

# 

# WzA1;5k %&&c*m/ ClerkMr. Justice John C. Sheehy d.elivered the Opinion of the Court.

Plaintiff garbage haulers brought this action for damages and injunctive relief against defendant City 

### of Billings in the District Court of the Thirteenth Judicial District,Yellowstone County. The District Court denied the injunction. The parties stipulated to the facts and submitted th.e issues to the District Court. The District Court ruled for the City. Both parties stipulated to entry of judgment in the City's favor. The District Court dismissed the complaintwithprejudice 

### in accordance with the stipulation. Plaintiffs appeal and defendant cross-appeals from the judgment. We affirm. There are two issues on cross-appealand three issues on appeal. We begin with the two issues on cross-appeal since they are logically prior. Is section 7-2-4736, MCA, constitutional? And how should itbe interpreted? There are three issues raised by appellants on appeal. What is the plain meaning of section 7-2-4736, MCA? Did the District Court erroneously assume the residents who receive service from private garbage haulers had to pay twice for garbage service? Has the 1egisl.ature by enacting section 7-2-4736, MCApre-empted the field ofgarbage regulation? The parties stipulated to the facts in this case. Plaintiffs are Montana corporations authorized by the Public Service Commission to collect garbage in and outside the Billings city limits. They brought this action for damages and an injunction against the City of Billings for violating section 7-2-4736,MCA. Section 7-2-4736,MCA, states: PRESERVATION OF EXISTING GARBAGE OR SOLID WASTE SERVICE INTHEEVENT OF ANNEXATION. Amunicipality

### that annexes or incorporates additional area receiving garbage and solid waste disposal service by amotor carrierauthorizedby the public service comission to conduct such service may not provide competitive or similar garbage and solid waste disposal service to the area for 5

### years following annexation except upon a proper showing to the public service commission that the existing carrier is unable or refuses toprovide adequate serviceto the annexed or incorporated area, and after the expirationof 5

### years,themunicipalitymay provide such service only ifamajority of the residentsof theannexed or incorporated area request in writing to the municipality that such service be provided by the municipality. If a proper showing ismade that the existing carrier is unable or refuses to provide adequate service to the annexed or incorporated area or if amajority of the residents request service from the municipality, the municipality may assume sole jurisdiction for the garbage and solid waste disposal service to the entire annexed or incorporated area. The City of Billings has provided garbage service to annexed areason the followingbasis: a) 

### when totally undeveloped, vacant lands are annexed, the City provides all subsequent garbage services; 

### b) when developed lands are 

### annexed that are receiving no garbage services, the City provides all subsequent garbage services; c) when developed lands are annexed onwhich some persons are receiving private garbage services, those persons cannot receive City garbage service for 5 

### years, but the City provides garbage collection services to all subsequent residents in the area. Thegarbage collectedby theplaintiffs,is taken to the city landfill. City customers of theplaintiffs are assessed

a 

### disposal feeby the City. County customers are assessed a feeby the county,which is remitted to the City. The first issue raised on cross-appeal is the constitutiona.lity of section 7-2-4736, PICA. Respondent c0ntend.ssection 7-2-4736, MCA isunconstitutional because it violates 1972 Mont. Const., Art. 11, 

### 5 31, which prohibits laws making irrevocable grants of franchises; the equal protection cla-useof 1972 Mont. Const., Art. 11, S 

### 4; and1972 Mont. Const., Art. V, 12 which prohibits the legislature frompassing special or local laws. We begin with respondent's first contention that section 7-2-4736, MCA violates 1972 Mont. Const., Art. XI, S 31. That section states: "No ex post facto law nor any law impairing the obligation of contracts, or making any irrevocable grant of special privileges, franchises, or immunities, shall be passed by the legislature." Respondent contends a franchise is granted where a specialprivilege is conferred by government upon an individual or association which does not belong to citizens generally. Respondent contends that a grant of an excl-usiveright for a definite period of time falls within the commonly established definition of a franchise, and that section 7-2-4736, MCA grants a franchise and special privilege to the appellants to collect garbage within aportion of the City. Appellants contend the statute does not grant an irrevocable privilege or franchise but that the privilege created in the appellants canbe terminated. We defined a franchise as a "specialprivilege conferred by the government on an individualwhich does not belong to the citizens generally." Glodt v. City ofMissoula (1948)

### , 121Mont. 178, 183, 190P.2d 545, 548. Section 7-2-4736, MCA confers a special privilege or franchise upon the private garbage haulers. However,we agree with the District Court that the franchise granted isnot irrevocable. The privilege

can be terminated by either a showing that the private carrier is unable or refused to provide adequate service; or by written request of a majority of residents after a set period of time. 

### Thus even if section 7-2-4736, MCA does grant a franchise, it is not an irrevocable one within themeaning of 1972Mont. Const., Art. 11, S 31. We hold section 7-2-4736 is constitutional under 1972Mont. Const., Art. 11, S 31.Respondent next contends section 7-2-4736,MCA violates the equal protection clauseof the Montana Constitutionwhich states: "No person shall be denied the equal protection of the laws." 1972 Mont. Const., Art. 11, $ 4. Respondent makes an allegation that the law places a greater tax on annexed taxpayers as opposed to unannexed taxpayers." A privilege conferred upon one class is a discrimination in favor of that class and against all others." Hill v. Rae (1916), 52 Mont. 378, 382, 158 P. 826, 828. But the mere fact it is discriminatory is not necessarily unlawful. The greater part of all legislation is discriminatory in some

manner. 

### - Id. An analysis of whether a privilege viol-ates equal protection requires a determination as to whether the classification is legally permissible and if the classification is reasonable. 

### - Id. This statute is not subject to strict scrutiny because it does not burden a fundamental right or constitute invidious discrimination against a suspect classification. The test here is whether the classification is rationally related to a legitimate governmental interest. Tipco Corp., Inc. v. City ofBillings (1982), 197Mont. 339, 345, 642P.2d 1074, 1078. The legislature sought to protect the investments of motor carriers in enacting section 7-2-4736,MCA. Generally, prior to annexation, land areas are sparsely populated. They do not represent the most attractive business to private carriers. Yet the need for garbage disposal services is not met by the City. Therefore the legislature sought to make

### unannexed areas a more attractive business proposal by allowing the private carriers time to recoup their investments after annexation. This is a legitimate governmental objective. The classification of 

### people in annexed areas using private garbage services prior to annexation bears a rational relation to the governmental purpose of encouraging private garbage service in unannexed

areas. We hold this statute does not violate equal protection. Finally, respondent contends section 7-2-4736, MCA violates 1972Mont. Const., Art. V, S 

### 12which states: "The legislature shall not pass a special or local act when a general act is, or can be made, applicable.

### " A 

### general law need not be a law which operates on all persons. "Theword

'general' comes from the Latin 'genus' and relates to the whole kind,classor order;hence a law which affectsa class of 

### persons less than allmay be a general law." Leutholdv. Brandjord (1935),100Mont. 96,

### 105, 47P.2d 41, 45. 

### Speciallaws are lawsmade for individual cases, or for less than a class; local laws are special as to place. Such laws are prohibited in order to prevent a diversity of laws on the

same subject. 

### - Id. The test for a special law is: "Does it operate equally upon all of a group of objectswhich,having regard to the purpose of the legislature, are distinguished by characteristics sufficientlymarked and important tomake them a 

### classby themselves?" State ex rel. Redman v. Meyers 11922), 65 Mont. 124, 128, 210 P. 1064, 1066. We have already determined the legislative purpose to encourage private garbage service to unannexed areas is a 

### sufficiently important governmental interest to justify the classification. Section 7-2-4736, MCA 

### is not a special orlocal law. This statute is a general law which does not violate 1972 Mont. Const., Art. V, S 12. We find section 7-2-4736, MCA tobe constitutional. The next issue raised on cross-appeal and on appeal is the interpretation of section 7-2-4736, MCA. Appellants contend the plain meaning of section 7-2-4736, MCA is to prohibit all competitive garbage service by a city in an annexed area for a period of five years after annexation. They argue the statute refers to "annexed area"but does not differentiate between old and new customersas the City does. Therefore they argue all new residents of an annexed area must use private garbage services for a period of fiveyears after annexation. Respondent contends the language of the statute and the intent of the legislature is to preserve existing garbage services, but not to force subsequent residents in annexed areas to use private garbage services. Therefore, the City has been providing garbage services to subsequent residents in annexed areas. Respondent also contends that where a statute grants a franchise to a corporation the words of grantmust be construed against the grantee. We hold the District Court was correct in interpreting the statute to mean that the private garbage carriers may continue to provide services to those customers ithad prior to annexation only. We hold the City is correct in its interpretation for three reasons. First, the purpose of the statute is to allow the private garbage haulers to recoup their investment for providing an essential service. The investment in providing servicesprior to annexation is only

as great as the need for services at that time and therefore section 7-2-4736,MCA shouldbe limited to existing customersat the time of annexation. Second, section 7-2-4736, MCA grants a franchise to the private garbage haulers. In the grant of a franchiseby the government the grantee takes only what is clearly given by the grant, and nothing by implication. Sheridan County Elec. Co-op v. ~ontana-Dakota Utilities Co. (I-954),128 Mont. 84, 87, 270 ~.2d 742, 743. Thus the statute must be interpreted to refer only to customers existing 2t the time of annexation. Third, if a governmental grant of a. franchise is susceptible to two meanings, the meaning which works the least harm to the public must he adopted. City of Helena 

### v. Helena Light and ~y. Co. (1922), 63 Mont. 108, 115, 207 P. 337, 339. The interpretation restricting the scope of the statute to existing servicesworks the least harm to thepublic andmust be adopted. The second issue on appeal iswhether theDistrict Court erred in assuming the residents who receive private garbage service had to pay twice for garbage services? As part of its "leastharm to the publ-ic"analysis, the District Court found that if the statutewere limited to existing residents at the time of annexation, only they would have to pay twice

(onceas a taxpayer,and once to the private carrier). The stipulation of fact entered by the parties states, "That the waste collected by the Plaintiffs is taken to the City operated. landfill where it is disposed of by the City. City customers of the Plaintj.fflsare assessed a disposal fee by the City. County area customers of the Plaintiffspay a solid waste fee which is assessed by the County and then the County remits to the City. Roll-off boxes containing construction or demolition material taken by the Plaintiffs to the City landfill are assessed a fee based upon cubic yardage and the fee is collected from the carrier." From this stipulation of fact it is unclear whether or not the City taxpayerspay twice for ga-rbageservice. Thus it isimpossible for us to determine if the District Court was in error, but even if in error, it was harmless. 

### An error in the court's findingsof factwill not lead to reversal unless

a correctionof the error might lead to a different judgment. Grogan

### v. Valley TradingCo. (1904),30 Mont. 229, 237, 76 P. 211., 214. In this case, the finding of fact of the District Court is harmless error. Stanford v. Coram (1902)

## , 26 Mont. 285, 67P. 1005. The third issue on appeal is whether the legislatureby enacting section 7-2-4736, MCA has pre-empted the field of garbage regulation. The appellants contend the legislature has evidenced its intent to pre-empt municipali-ties from collecting garbage by authorizing the PSC to grant certificates of operating authority to garbage carriers. Appellant argues municipalitj-eshave only such power as is granted by the legislature,and if the legislaturechooses to pre-empt a field, the city is powerless to act. Appe1-l-ants contend that local regulation wa.s not intended by the legislature since 

### no statutory authority exists for the regulationofgarbageasBillingsdoes. Prior to the 1972 Montana Constitution, i.t was fundamental that cities were subordinate political subdivisionsof the State. State ex rel. Great FallsHousing Authority

### v. Great Fa.lls (1940)

## , 110Mont.. 31-8,100 P.2d 915. Cities had only those powers expressly given to them by the legislature. State ex rel. City of Libby v. Haswell (1966), 147Mont. 492, 494-95, 414 P.2d 652, 653;City of Bozeman v. Ramsey (1961), 139Mont. 148, 156, 362 P.2d 206, 210; City of Billings v. Herold (1956), 130 Mont. 138, 140-41, 296 P.2d 263, 264; State ex rel. Wiley 

### v. District Court (1945), 118 Mont. 50, 54, 164 P.2d 358, 360. Thus if the statelegislature deemed a subject to be a matter of statewide concern, it could enact laws on the subject and.pre-empt local governments from the field. Haswell, 147Mont. at 496, 

### 414 P.2d at 654; Ramsey, 139 Mont. at 163, 362 P.2d at 214; Herold, 130 Mont. at 141, 296 P.2d at 269-70; ~iley, 118 Mont. at 54, 164 P.2d at 361. However, the 1972Montana Constitution changed the role and power of local governments in Montana. The new Constitution provides local governments with the option of adopting a sel-f-government charter or retaining general government powers. 

### If a local government adopts a charter, the local governmentmay exercise anypower notprohibited by the Constitution, law or the charter. 1972 Mont. Const., Art. XI, § 6. This section grants local governments,which formerly had.only such powers granted to them, the authority to share powers with the state government. "[Tlhe 'shared powers' conceptdoesnot leave the localunit free from stete control; it does, however, change the basic assumption concerning the power of local government. At present, that

[sic]assumption is that local government lacks power unless it has been specifically granted. Under the shared powers concept, the assumption is that local government possesses the power, unless it has been specifically denied." 1972 Mont. Const., Con. Committee Notes (1972), Vol. 11, pp. 796-97. (Emphasis in original.

### 1 Hence, if a local government did,adopt self-government powers under the 1972 Constitution, then Haswell, Ramsey, Herold, and Wiley would no longer apply. If a local government choose to retain general government powers, the local government would have only the powers given to it by the legislature and those cases would stillbe applicable.We take judicialnotice under Rule 202(b)(2)

### ,M.R.Evid., that Billings voters adopted a self-government charter on November 14, 1976. With the adoption of the charter, the City of Billings assumed self-government powers. The City may exercise any power or provide any service except those specifically prohibited by the constituti.on, law, or the charter. Section 7-1-102,MCA. Because of thiswe expressly overrule statements in City of Billings v. Weatherwax (Mont. 1981), 530 P.2d 1216, 38 St.Rep. 1034, that municipalities have only such power as is granted them by the legislature. Thiswas the law under the 1889 Constitution. It is not the lawunder the 1972 Constitution. Under the new Constitution, the City of Billings has all. powers save those expressly prohibited. The only way the doctrine of pre-emption by the state can co-existwith self-government powers of 

### amunicipality is if there is an express prohibition by statute which forbids local governments with self-government powers from acting in

a certain area. The doctrine of implied pre-emption, by definition, cannot apply to local governments with self-governmentpowers. TipcoCorp. Inc. v. City of Billings

(1982),197 Mont. 339, 642 P.2d 1074. We look then to the statutes to determine if there has been 

### an express prohibition against local governments regulating garbage. The powers specificall-ydenied to local governments are enumerated in section 7-1-111 MCA. Billings Firefighters Local 521v. Billings (Mont.19851,694P.2d 1335, 42 St.Rep. 112. 

### "A local government unit with self-government powers is prohibited the exercise of the following: 

# . . . (4) any power that prohibits the grant or denial of a certificate of public convenience and necessity." Garbage disposal service

### operators are required to get a certificate of public convenience and necessity issued by the PSC prior to doing business. Section 69-12-314, MCA. 

### The certificate grants the carriers the right to operate their business upon the public streets. Barney v. Board of Railroad Comm'rs (1932), 93

### Mont. 115, 138, 17P.2d 82, 88. 

### The decision of the voter of the City of Billings, that the City should provide garbage pick-up services for its residents in no way prohibits the grant or denial of a certificateofpublic necessity. TheCity has not refused to allow garbage service companies to operate despite their certificate, nor has the City allowed garbage service companies to operate without a certificate. The City is simply exercising its self-government powers to provide a service for its residents and taxing them for that service. This is clearly within the self-government powers ofBillings and 

### doesnot conflictwith state law. We 

### affirm the judgment of the DistrictCourt.

We Concur:

I 

### ChiefJusw