No. 14829 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980

JOHN

### V. SCHARA and MARDELL SCHARA, Plaintiff and Respondents and

Cross-Appellants, VS. THE ANACONDA COMPANY, a Delaware corporation, Defendant and Appellant

No. 14800 TliE ANACONDA COMPANY, Relator, VS

# . THE HON. JAMES D. FREEBOURN,DISTRICT JDUGE PRESIDING IN THE DISTRICT COURT OF THE SECOND JUDICIALDISTRICT et al., Respondents. Appeal from: District Court of the Second Judicial District, In and For the County of Silver Bow Honorable Judge James D. Freebourn and Honorable

JudgeArnold H. Olstin presiding. Counsel of Record: For Appellant: Poore Law Firm, Butte, Montana Urban L. Roth argued, Butte,Montana For Respondent: McCaffery and Peterson, Butte,Montana John L. Peterson argued, Butte,Montana

Submitted: February 28, 1980Mr. Chief JusticeFrank I. Haswell delivered the Opinion of the Court. This is an appeal inwhich two actions have been consolidated. The first is a condemnation action brought by The Anaconda Company (Anaconda)to condemn approximately two acres of land in the Columbia GardensAddition of Butte,Nontana, The property sought to be condemned is owned by John and filardell Schara (Scharas), The second is an action brought by khe Scharas to enjoin Anaconda from allegedly violating the conditions of a restrictive covenant incorporated in deeds to lots in the Col~unbia GardensAddition. Both actions were filed in the Silver Bow County District Court. In the first action, the District Court entered incornpL&e findings and was thereafter directed by this Court to comp1et.e such findings. In the second action, the District Court granteii a mandn-- tory permanent injunctionenjoining Anaconda fromviolating t.he restrictive covenantwhich 'ad attached to the Scharas' property, Anacondamoved for a stay 

### of the injunction,but themot-ionwas denied by the District Court. This Court granted Anaconda a ternporary staypending determination of themerits of this appeal, Anaconda appeals from both District Court judgments,and the Scharas cross-appeal from the judgment entered in the condemnation action. John and Mardell Sct:a.raare the owners of approximately 2-2'704 acres of land, Lots 51, 52 and 54 of the Columbia Gardens Addition in Butte,Montana. On September 1,1978,the Columbia GardensAddition was incorpo.ra.ted under theMaster Zoning Plan 

### for Butte-Silver Bow and was zoned "Muformininy or industrial. Most of the 26 acres and the entire mineral estatewithin theAddition is owned by theAilaconda Company. The only access to the Scharas' property and theAddition isMontgomery Avenue. Anaconda owns allof the land adjacent to Montgomery Avenue on both sides,plus all of Montgomery Avenue to the Columbia GardensAddition. At the present timc, the Scharas are the sole residents of the addition. Since 1970, the Addition and its immediateneighborhood have undergone extensive changes,most of which have been prompted by Anaconda. The Columbia GardensAnlusement Park has been razed, the Continental East Pit operation located 300 to 400 feet from the Addition has commenced, an interstate highway has been constructed through the southeast corner of the ~ddition, the Berkeley Pit has expanded and a power line has been constructed through the north end of the Addition. The Anaconda Company has, upon s:i\rerai occasions,attempted to acquire the Scharas' property through negotiation and offers to purchase. Anaconda instituted a condemnationproceeding against the Scharas to acquire their land.for thepurpose of establishing 

### a dumping site for mining waste. In support of its claim,Anaconda presented evidence that it wished to expand itsmining operations, that the expansion would require new techniques and expensive equipment, that it would be economically infeasibleand impractical to d.umpwaste on any other land,and that the 1.ancIwas es.- sential to carrying out Anaconda's long termmining plan. Anacoxrda's testimony reveals that if the land is not acquired it would be infeasible to expand the Berkeley Pit eastward; consequen,kly, mining would terminate within seven years due to exhaustion of the pit, shortening the life of mining in Butte by 14years. Aria,- conda'smining plan requires that Montgomery Avenue as well as the Coluntbia Gardens Addition be inundated by overburden by the n1j.d1980's. The Scharaspresented contradictory evidence of alternative dumping sites which were not as economically feasible 

### for themining operation but which were being contemplated 

### by rmacorlda if the Scharasyand could not be obtained. The Scharas also proffered testimony that Anaconda had made inconsistent !~tatcmenl.sconcerning futuremining operations in itspetition for the Woodville Road closure in 1977. Anaconda had stated at that time that with the road closure it could continuemining until about year 2000. In the second action, the Scharas sought to enjoin Anaconda from violating one of the restrictive covenantsplaced upon their property. The covenantwas the result of a trust agreement signed in 1950between North Butte Mining Company, Anaconda's predecessor in interest,and all of the owners of Columbia Gardens Addition, one of whom was the Scharasqredecessor in interest. The trust instrument bound successors in interest and provided: "That in all conveyances, uses or permits there shall be a restriction upon the use of said premises that said premises shall be for residential use only and that no building, use or operation of the premises shall create or constitute a nuisance." The District Court denied Anaconda's motion to 2tay the restrictive covenantproceedrngs until the outcome of the condemnation action, and JudgeOlsen entered judgment against Anaconda



### on March 28, 1979. Pursuant to this judgment,a permansnt injunctlon was issued which restrained Anaconda from using itsproperty within the Columbia GardensAddition for any purpose other than residential and from creating ormaintaining a nuisance. The inlunctlon also commanded Anaconda to remove an electr~ctransmission line from theAddition and to repair or remove all vacated buildings located upon its property within the Addition. Originally the District Court, in the condemnatjon action, the Honorable James D. Freebourn presiding, made the foL1.owing findings of fact and conclusions of Law onApril 19,19'79: "5. At this date,plaintiff has nearly reached the maximum depth at which ore can be economically mined from thepit; the pit must be expanded horizontally in one direction or another; defendants' property lies east and south of thepit; expansion to the east and south, instead of some other direction, is compatible with the greatest public good and least private injury;

### "10. Plaintiff'spast, present and continuation of future operationshave and will accrue as a benefit to the public and to the use of thepublic. Acquisition of lots 51, 52 and 54 of the Columbia Garde.nAddition, on substantialand satisfactory estimations,now in evidence,will continue plaintiff" operations for some 13 or more years. "11. Plaintiff has shown,by a preponderance of the evidence, that the use and taking of said lots is authorized by law; that the taking of said lots is necessary to such use; that the need of said lots is necessary to continueplaintiff's mining operations and such taking, at this definite and specific location, is being accon.plishedin amanner which will be most compatiblewith the greatest public good and the least private injury." However, the court took judicial notice of the permanent injunction issued on March 30, 1979,by the HonorableArnold H. Olsen in favor of the Scharas and against Anaconda concerning the violation of restrictive covenants in the Columbia GardensAddition. As a result,Judge Freebourn refused to enter a condcmnation award until this Court.reviewed the permanent injunction since such an award would amount to a reversal of Judge Olsen's injunction. Subsequently,Anaconda sought a writ from this Court t.o direct Judge Freebourn to complete his findingsand conclusions. On July 11, 1979, this Court directed the District Court to enter those conclusions. Judge Freebourn then made "amended and supplemental" findingsof fact and conclusionsof law inwhich he held thatAnaconda had "more than sufficient land for dumping purposes and to continue its mining operations for some 14 or 15years without the need and necessity of the use of defendantsXland," and further found thatAnaconda" need for the Scharas'property would not arise for some "14or 15years" in the future. The District Court then concluded Anaconda had failed to prove rts need of the Scharas'property in the immediate future and because of increases in land values over the last five years,the present taking of the Scharaproperty for "some 14 or 15years in thefuture,wou1.d deny defendants just compensation for suchuse." The following issues are before us on appeal:

(1) Whether the District Courtwas in error by denying Anaconda's motion to stay the restrictive covenant action until



### a finaldeterminationof the condemnation action; (2) In the alternative, whether the restrictive covenant is unen-forcealiiedue to the radical changeswhich have occurred in the Columbia Gardens Addition since 1950; (3) Whether the District CourL abused iLs discretion by not having substantial evidence upon which to base its finding that no "necessity"will exist for Anaconda to condemn the Scharas' property for 14 or 15yea.rs. The Scharas raise the following issues on cross,-appeal:

(1) Whether theproposed condemnation is excessive; (2) Whether, by reason of the Hardrock Mining Act, a valid mining permit is an absolute conditionprecedent to condomnation for mining purposes; (3) Whether section 70-30-102, MCA, which distinguishes between copper mining and coalmining as a public use, is unconstitutionalunder the Equal Protection Clause. Looking first to Judge Olsen's denial of Anacoiic~a'ssoti<,>ri to stay the covenant action pending the outcome of the condemnation proceedings, the heart of this issue is the effect that 

### a restrictive covenant has upon a proceeding seeking a preliminary cendm.%ion award. Nichols on Eminent Domain discusses the issue as foLiows: "5.73 Restrictive covenants. 

### -. 

### - "A rather perplexing situation arises out of the existence ofwhat are commonly called 'building restrictions.' A large tract of land is often cut up into lots and sold for residential purposes, and each lot is sold subject to restrictions against use for various purposes, the restriction upon each lot being for the benefit of all other lots in the same development or 'commonplan orscheme,' reasonable in their character,they are enforced by courts of equity in favor of the benefitted owner, so long as he continues to own any part of the tract for the benefit of which the restrictic~ns were createz,as well as in favor of the owner of hny one of the lots into which the tractwas divided,and against the owner of any of the lots who attempts to disregard the restrictions. Such 

### restrictions do not, however, have

### --an inhibiting influencexon The right 

### -- to exercise 

### -- the power of eminent domain 

## .

# . ." (Emphasisadded.) Nichols on Eminent Domain,S5.75.- This approach is consistent with Montana eminent domain statutes. Section 70-30-103,MCA, provides that all real property as well as all classes of private property may be taken for public use when such taking is authorized by law,and section 70-30-104,MCA, states that "such estate or rights asmay be necessary up to and including a fee simple when taken

# . .

# . for



# . a place for the deposit of debris or tailings of 

### amine 

## . . ."

are " 

# . .

# . subject to be t-akenfor thepublic use." In our present appeal, the restrictive covenant.is at most a part of the fee or something less than a fee. Therefore, it is theproper subject of a condemnation proceeding. Once it is determined that theproperty sought is a proper subject of condemnation, the courtmust find that the taking is necessary to the public interest and consistentwith the greatest public good and the least private injury. We therefore conclude that a restrictive covenant action is moot when a preliminary condemnation action involvinc~ the same property is pending. If i. is found that a preliminary condem-. nation award is proper, the condemneemay seek compensationwhich takes into account the value of the property pursuant to the uses allowed. On the other hand, if the condemnor is not entitled 

### to

a preliminary condemnation award, the covenanteemay proceed with a suit on the restrictive covenant. The District Court was in error by not granting the motion to stay the restrictive covenant proceeding until t.heproprietyof the condemnation actionwas finally determined. Sincewe find the restrictive covenant actionmoot,we nerd not reach the xssue involving the unenfo-~cakility of a covenantwhen radical changer;have occurred rn the character of

a neighborhood. Next,with regard to the propriety of the District Court's denial of a preliminary condemnation order, it is Anaconda's 

### sontention that substantial credible evidence does not exist to support the tlndrng ot no necessxty tor condemnatlon, Section 70-30-111,MCA, is entitled "Factsnecessarx

., to be found before condemnation." .~ It provides, in pertinent part, 

### '\



## .

# . [bleforeproperty cart be taken, it must appear: (1) that the use to which it is to be applied is a use authorized 

### --bxL3; (2) that the taking is necessary to such use

# . .

# ." Section 70- 30-110,MCA, states that the proposed condemnation "must: be 

### located in the manner which will be most compatiblewith the greatest public good and the least private injury." From thepreceding statutes the key determinations to be made are: (1)Whether the proposed use is "authorizedby law,'"

(2)whether "the taking is necessary",and (3)whether the location is the "most compatiblewith the greatestpublic good aild the least private injury." The determination involving whether the proposed use is "authorizedby law" is easily made. Section 70-30-102, MCA, enumerates thepublic uses which are theproper subject oi c$)nde.nnatron and therefore "authorized by law." Mininq, except the striprnininq of coal, is an authorizedpublic use within sectxan 70-30-102(15),MCA. The determinations of whether the taking is necessary and whethes it is conipatiblewith the greatestpublic good arid the least private injury both involve factual issues. With regard to whether the talcing is necessary, thisCourt has consistently held that the necessity need not be absolute. Instead the test is "reasonable,requi-site,and proper for the accomplishmentof the end in view, under the particular circumstances of the case." Montana Power Co. v. Bokma (1969) 153 Mont. 390, 398, 457 P.2~1769, 774; State Highway Coinmissron

a. Yost Farm Co. (19631,142Mont. 239, 384 P.2d 277; Butte, A, & P. Ry. Co. V. Montana U. Ry. Co. (1895)' 16 Mont. 504, 41 P. 232-This Court made the following statement with regard to the determination of "necessity"and "thegreatest good" and the "leastprivate iL1jllr~i1' in Mmta7aPower Co. v. Bokma, supra. "Thetaking of private property by condemnation proceedings must be compatible with the greatest public good and the least private injury. 

## .. The greatest good on the one hand and the least injury on the other are questions of fact to be determined in passing upon the question of necessity. 

## . . ?'hese questions commonly arise in connection with the location of the proposed improvement. Since the condemnor has the expertise and detailed knowledge of considerations involved in determining 1ocati.on of the improvement, i.tschoice of location is given great weight. 

## . . Such choicewill not be overturned except on clear and convincing proof that the taking has been excessive or arbitrary, it not being the function of the judiciary to dt:.tcrmine as an engineer the best location of the proposed improvements. 

# .. On the other hand when the condemnor fails to cunsider the question of the Least private injury between alternate routcs equal in terms of public good, its action is arbitrary and amounts to an abuse of discretion." (Citationsomitted.) 153Mont. at 399-400, 457 P.2d at 774-775. According to the above approach the condemnor's (Anaconda%) choice of location is to be given great weight, it is to be overturned only by clear and convincing proof that the decision was excessive or arbitrary, and an abuse of discretion will be found if the condemnor fails to study alternatives. The record discloses that Anaconda studied all alternatives and rejected them

as being economically infeasible. The District Court in its original findings found that Anaconda had "shown,by a preponderance of the evidence that the 

## .

# . . taking is necessary

# . . and will be most compatible:with the greatest public good andthe least private injury." Mysteriously,in the court" amended and supplemental findingsof fact and conclusions of law,the original findings remain intact,but t!le fcllodi~g inconsistent finding is added: "Plaintiffhas falled to prove by a preponderance of the evidence the need and necessity of plaintiff for the use for mining of defendants' land in the immediate future and suchneed and necessity will not arise for some 14 or 15years in the future," Normally, the entry c)f inconsistent findingswo~iLdrequire



### us to remand the case for furtherproceedings in the District Court; however here we find no evidence to support the court's latest findings and substantial evidence to support the initial findings. We conclude that the findings entered by the District Court on April 9,1979,arc correct and must be entered. The record does disclose that mining in the present Berkeley Pitwill be completed in 1986. In order to increase the life of future mining in Butte the Berkeley Pit must be expanded, and accordinq toAnaconda's long term mining plan strippinq of overburden must commence by 1983. Anaconda explains that new technoloyy has been developed for removing overburden,and in order to have the equipment on line by 1983, inmediate action is requi-red. The equipment requires a tremendous investmentand Anacondamust know the result of the condemnation action before it can be ordered. It is furtherdisclosed that Anaconda considered two alternatives to the condemnaticin of the Scharas' property. One 

### alternativewas backfilling the Berkeley Pitwith overburclen. This alternativewas rejected since the long termmining plan contemplates vertically mining ore deposnts located beneath the deepest portion of the Berkeley Plt. This futurevertical mining plan 1s not now feaslbiebecause of both a lack of technology and current market conditions; however, itwould be completely precluded if Anaccnaa backfilled thepit, The second alternative studied by Anaconda was the establishmentof a dumping site on a portion 

### ofits own land. Testimony reveals that although this alternative is feasible from an engineering standpoint, it is economicalLy infeasible to transport the waste the distance involved.. 

### his leaves condemnation of the Scharas' land as the only feasible alternative to continue the life of mining in Butte. The Scharas contend that since the preceding alternatives exist, condemnation of their land isnot "necessary"nor "cornpatibSe with the greatest public good and the leastprivate i..njl~:i?y-'' We find this contention lacking inmerit in light of Montana Power Co. v. Bokma, supra. As a result,we find substant:ial credible evidence to support the findingsentered,by the District Court onApril 19, 3.979. The Scharas contend on cross-appeal that the amount of property sought to be condemned is excessive. The basis for this argument is that Anaconda has recognized in itsmining plan that

a portion of the Scharas' land is within the Highway Department's proposed right-of-way for expansion of Interstate 15 and that Anaconda only contemplatesuse of the Scharas'property up 

### to the proposed highway right-of-way. Again this argument centers on absolute necessity,rather than the Montana test of necessity, "reasonable,requisite and proper for the accomplishmentof the end in view, under the particular circumstances of the case." Montana Power Co. v. Bokma, supra. Testimony reveals thatAnaconda would not use a smallportion of the Scharas-and within the proposed highway right-of-way if the Hi-ghway Department does acquire it. Based on this testimony we cannot find that the proposed condemnation is excessivemerely because Anaconda points out to the District Court that the Highway Department may have a superior claim to a smallportion of the land. We find that condcmnation of the Scharas'property is reasonable,

### requisite,and proper for thc accomplishmentof the end in view under the peculiar circumstancesof the case. Thepossibility that Anacondamay have to forfeit a small portion of the land to a superior claimant at a later date does not render the taking excessive. The Scharas next contend on cross-appeal that since secation 70-30-111, MCA, requires the use tobe "authorizedby law" before condemnation is allowed, the obtaining of a valid mining permit is a conditionprecedent to condemnation. However, there isnothing in either the Hardrock Mining Act, section 82-4-301, MCA, 

### et seq., or the eminent domain statutes, section 70-30-101, MCA, et seq., to support this position. Section 70-30-102,MCA, 

### declaresmining to be a public use and it is unquestioned that Anaconda is allowed to engage inmining activities. To find that "authorizedby law"requires that amining company obtain a valid mining permit prior to condemnationwould be inconsistentwith Itontana statutory authority and would bc contrary to the public policy of providing expediency in eminent domain proceedings. The Scharas' next issue on cross-appeal is that section 70-30-102(15), MCA, 

### is unconstitutional. The statute provides, in 

### pertinent part: "Publicuses enumerated. Subject to the provisions 

### 07 this chaoter,the riqht of eminent domainmav be exercise2 in behalf of the following public Gscs:

"(15) tomine and extract ores,metals, orminerals owned by theplaintiff located beneath or upon the surface of wrowertv where the title to said surface vests in others. Gowever, the use of the surface for strip mining or openpit mining of coal (i.e., 

### --

## - any mlnlng method or process znwhich the strata or overburden is removed-ordisplaced in order to ex

### tract the coal) is not a

### pubiic use, and eminent -. 

### -- domainmay 

# . . ." - (Emphasisadded.) It is contended that since the statute allows the mining of copper to be a public use and disallows the stripmining ofan coal as a public use, there is/unconstitutional violation of the Equal Protection Clause, However, it is weil established that the equal protection clause is very iimited in cases involviny eminent domain statutes. This is especially so when the statute merely declares the legislative determination as to what is to 

### be considered 

### a public use. A11 that is required to survive

an equal protection challenge in this context is that there be a "reasanable"basis for the distinction. Nichols on Eminent Domain, S4.15. The legislature has provided its basis for the distinction between coppermining and coal mining in section 70-30-106,MCA, which provides: "70-30-106. Eminent domain not to be used for coalmining in certain 

### -- cases--pol*. For the following reasons the state'spower of eminent domain may not be exercised to mine and extract coal owned by the plaintiff located beneath the surface of property where the title to the surface isvested in others: "(I) Because of the large reserves of and the renewed interest in coal in eastern Montana, coal development is potentially more destructive to land and watercourses and underground aquifers and potentiallymore extensive geographically than the forseeable development of other ores,metals,

### or minerals and affects large areas of land and Large numbers of people.

"(2) In many areas of Montana set forth in (1) hereinabove, the title to the surface isvested in dn owner other than the mineral owner, and the surface owner is putting that surface to a productive use, and it is the public policy of the state to encourage and foster such productive use by such owner, and to permit the mineral owner to condemn the surface owner is to deprive the surface owner of the right to use his property in aproductivemanner as he determines and is also contrary to public policy as set forth in subsection (4). 

### "(3)Themagnitude of the potential coal devel0~~- ment in eastern Montana will subject landowners to undue harassment by excessive use of emlnent donialn "(4) It is the public policy of the state to encourage and foster diversity of land ownership, and the surface mining of coal and control of large areas of land by the surface coalmining industrywould not foster public policy and further the public interest."Based upon the immediatei:i preceding legislative policy we find



### a reasonable basis for the distinction between copper rn~ning

### and coalminlng. We conclude that section 70-30-102(15) does not viola-tethe Equal Protection Clause. The judgments of the Distri.ctCourt in both.actions are reversed. The restrictive covenant action is dismissed. The condemnation action is remanded to the District Court for entry of judgment of condemnation in accordance with this opinion.

Chief Justice Wc concur:Mr. Justice John C. Sheehy dissenting:

At the base of this Court" decision and that of Judge Freebourn in the condemnation action was the contention of the Anaconda Company that unless the Schara property were acquired by the company, the company's mining operationswould be reduced from 20 years in the Butte area to 6 to 7years of active life and we are told "thisobviously would be disastrous for the public good of Butte-Silver Bow,Deer Lodge Counties and the State of Montana." The closing threat is not new, It seems to me that I have heard this song before. It is from an old familiar

score. We can only be sure that the decision to go or remain be willnoddependent on the Schara property. Judge Freebourn, when this Court forced him by mandate to make final findings of fact and conclusionsof law so as to override Judge Olsenk restrictive covenant decision, found that "fordumping purposes" and to continue its mining operations for some 14 or 15years,Anaconda has sufficient land already. Therefore he saw no need for the Schara property until some 14 or 15 years in the future and conclud.ed that to permit condemnation now would deny them just cornpensation for the use of their Land. Althouyh Rule 52,M.R.Civ.P. makes it mandatory that firidinys of a District Court shall.not be set.aside unless clearly erroneous, this Court through the majority opinion not only sets Judge Freebourn's findings aside, but proceeds to make findings of its own. There is ample support in the record that the Anaconda company owns a considerable area of Land which could be used for dumping purposes, established in the cross.- examination of Wilbur Crisswell. Moreover, Judge Freebournhadbefore him the testimony regarding the East Continental Pit. The old highway leading to Woodville had been closed to permit the opening of the East Continental Pit,upon the representation that such <:losing of the highway would extend Butte's mininq life for 22years. East Continental Pit was abandoned after 2 years. As a secondpoint, I cannot permit myself to sign an opinion which finds it "reasonable" for eminent domainpower to be granted to open-pit hard rock mining companies,but Lo be denied to open-pit coalmining companies. Every reason st.nted for denying eminentdomain power to the coalmining industry in section 70-30-106,MCA, applies with equal force to the coppermining industry, There is no real distinction between an open-pit copper mine and an open-pit coal mine, except that the ie7islature favored cows over people. We give mere lip service to the equal protection clause of the federal constitutionwhen we find a distinction without a difference in section 70-30-106. For these reasons, I dissent.