No. 85-274 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

D & F SANITATION SERVICE, BIG SKY 

HAUL ALVAY and YELLOWSTONE SANITATION 

SERVICE, 

Plaintiffs and Appellants, 

CITY OF BILLINGS, 

Defendant and Respondent. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable Diane G. Barz, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Alexander & Baucus; Gary M. Zadick argued, Great 

Falls, Montana 

For Respondent: 

Peterson, Sch.ofield & Leckie; Kenneth Peterson argued, 

Billings, Montana 

Filed: 

Submitted: October 25, 1985 

Decided: January 16, 1986 

JAN 1 6 1986 

# WzA 1;5k %&&c*m/ 

Clerk 
Mr. 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 complaint with prejudice in accordance with the 

stipulation. Plaintiffs appeal and defendant cross-appeals 

from the judgment. We affirm. 

There are two issues on cross-appeal and 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 it be 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, 

MCA pre-empted the field of garbage 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 IN THE EVENT OF ANNEXATION. A municipality 
that annexes or incorporates additional area 

receiving garbage and solid waste disposal service 

by a motor carrier authorized by 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 to provide adequate service to 

the annexed or incorporated area, and after the 

expiration of 5 years, the municipality may provide 

such service only if a majority of the residents of 

the annexed or incorporated area request in writing 

to the municipality that such service be provided 

by the municipality. If a proper showing is made 

that the existing carrier is unable or refuses to 

provide adequate service to the annexed or 

incorporated area or if a majority 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 areas on the following basis: 

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 on which 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. 

The garbage collected by the plaintiffs, is taken to the 

city landfill. City customers of the plaintiffs are assessed 

a disposal fee by the City. County customers are assessed a 

fee by 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.s section 7-2-4736, MCA is unconstitutional because it 

violates 1972 Mont. Const., Art. 11, 5 31, which prohibits 

laws making irrevocable grants of franchises; the equal 

protection cla-use of 1972 Mont. Const., Art. 11, S 4; and 
1972 Mont. Const., Art. V, 12 which prohibits the 

legislature from passing 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 special privilege is 

conferred by government upon an individual or association 

which does not belong to citizens generally. Respondent 

contends that a grant of an excl-usive right 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 a portion of the City. 

Appellants contend the statute does not grant an 

irrevocable privilege or franchise but that the privilege 

created in the appellants can be terminated. 

We defined a franchise as a "special privilege conferred 

by the government on an individual which does not belong to 

the citizens generally. " Glodt v. City of Missoula (1948) , 

121 Mont. 178, 183, 190 P.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 is not 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 the 
meaning of 1972 Mont. Const., Art. 11, S 31. We hold section 

7-2-4736 is constitutional under 1972 Mont. Const., Art. 11, 

S 31. 

Respondent next contends section 7-2-4736, MCA violates 

the equal protection clause of the Montana Constitution which 

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 of Billings (1982), 197 Mont. 339, 345, 642 P.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 1972 Mont. Const., Art. V, S 12 which 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. "The word 

'general' comes from the Latin 'genus' and relates to the 

whole kind, class or order; hence a law which affects a class 

of persons less than all may be a general law." Leuthold v. 

Brandjord (1935), 100 Mont. 96, 105, 47 P.2d 41, 45. Speciallaws are laws made 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 objects which, having 

regard to the purpose of the legislature, are distinguished 

by characteristics sufficiently marked and important to make 

them a class by 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 or 
local 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 to be 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 customers as the City does. 

Therefore they argue all new residents of an annexed area 

must use private garbage services for a period of five years 

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 

grant must 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 it had 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 services prior to annexation is only 

as great as the need for services at that time and therefore 

section 7-2-4736, MCA should be limited to existing customers 
at the time of annexation. Second, section 7-2-4736, MCA 

grants a franchise to the private garbage haulers. In the 

grant of a franchise by 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 services works the least harm to the public and must 

be adopted. 

The second issue on appeal is whether the District Court 

erred in assuming the residents who receive private garbage 

service had to pay twice for garbage services? As part of 

its "least harm to the publ-ic" analysis, the District Court 

found that if the statute were limited to existing residents 

at the time of annexation, only they would have to pay twice 

(once as 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.ffls are assessed a disposal fee by the 

City. County area customers of the Plaintiffs pay 

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 taxpayers pay twice for ga-rbage service. Thus it is 
impossible 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 findings of fact will not lead to reversal unless 

a correction of the error might lead to a different judgment. 

Grogan v. Valley Trading Co. (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, 67 P. 1005. 

The third issue on appeal is whether the legislature by 

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-es have only such power as is 

granted by the legislature, and if the legislature chooses 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 

regulation of garbage as Billings does. 

Prior to the 1972 Montana Constitution, i.t was 

fundamental that cities were subordinate political 

subdivisions of the State. State ex rel. Great Falls Housing 

Authority v. Great Fa.lls (1940) , 110 Mont.. 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), 

147 Mont. 492, 494-95, 414 P.2d 652, 653; City of Bozeman v. 

Ramsey (1961), 139 Mont. 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 state 
legislature 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, 147 Mont. 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 1972 Montana 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 government may exercise any power not prohibited 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' concept does not leave the local unit 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 still be applicable. 
We take judicial notice 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 this we 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. 

This was the law under the 1889 Constitution. It is not the 

law under 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-exist with self-government powers of a municipality 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-government powers. Tipco Corp. 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-y denied to local governments are 

enumerated in section 7-1-111 MCA. Billings Firefighters 

Local 521 v. Billings (Mont. 19851, 694 P.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, 17 P.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 

certificate of public necessity. The City 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 of Billings 

and does not conflict with state law. 

We affirm the judgment of the District Court. 

We Concur: 

I 

Chief Jusw