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

---- - -- - JOHNV. SCHARA and MARDELL SCHARA, Plaintiff and Respondents and

Cross-Appellants,

THE ANACONDA COMPANY, a Delaware corporation, Defendant and Appellant.

No. 14800 THEANACONDA COMPANY, Relator, VS. THE HON. JAMES D. FREEBOURN, DISTRICT JDUGE PRESIDING IN THE DISTRICT COURT OF THE SECOND JUDICIAL DISTRICT 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. 0lsgnpresiding. 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, 1980 Decided:

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# 1980

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# APF2;Mr, Chief Justice Frank I. Haswell delivered the Opinion of the Court. This is an appeal in which two actions have been consolidated. The first is a condemnation action brought by TheAnaconda Company (~naconda) to condemn approximately two acres of land in the Columbia GardensAddition of Butte,Montana. The property sought to be condemned is owned by John and Mardell Schara (Scharas), The second is an action brought by the Scharas to enjoin Anaconda from allegedly violating the conditions of a restrictive covenant incorporated in deeds to lots in the Columbia GardensAddition. Both actions were filed in the Silver Bow County District Court. In the first action, the District Court entered incomplee findingsand was thereafter directed by this Court to complete such findings. In the second action, the District Court granted a mandatory permanent injunction enjoining Anaconda from violating the restrictive covenant which had attached to the Scharas' property. Anaconda moved for a stay of the injunction,but themotion was denied by the District Court. This Court granted Anaconda a temporary stay pending determinationof 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 Schara are the owners of approximately 2.2704 acres of land,Lots 51, 52 and 54 of the Columbia Gardens Addition in Butte, Montana. On September 1, 1978, the Columbia GardensAddition was incorporated under the Master Zoning Plan for Butte-Silver Bow and was zoned "M" formining or industrial. Most of the 26 acres and the entiremineral estate within theAddition is owned by theAnaconda Company. The only access to the Scharas' property and the ~ddition is Montgomery Avenue. Anaconda owns allof the land adjacent to Montgomery Avenue on both sides,plus all of Montgomery Avenue to the Columbia Gardens ~ddition. At the present time, the Scharas are the sole residents of the ~ddition. Since 1970, the Addition and its immediateneighborhood have undergone extensive changes, most of which have been prompted by Anaconda. The Columbia Gardens Amusement Park has been razed, the Continental East Pit operation located 300 to 400 feet from theAddition 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 theAddition. The Anaconda Company has, upon several 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 the purpose of establishing a dumping site formining waste. In support of its claim,Anaconda presented evidence that itwished to expand itsmining operations, that the expansion would require new techniques and expensive equipment, that it would be economically infeasible and impractical to dump waste on any other land, and that the land was essential to carrying outAnaconda's long term mining plan. Anaconda's testimony reveals that if the land is not acquired it would be infeasible to expand the Berkeley Pit eastward; consequently, mining would terminate within seven years due to exhaustion of the pit, shortening the life of mining in Butte by 14years. Anaconda's mining plan requires thatMontgomery Avenue as well as the Columbia Gardens Addition be inundated by overburdenby the mid1980's. The Scharaspresented contradictory evidence of alternative dumping sites which were not as economically feasible for themining operationbut which were being contemplated by Anaconda if the Scharas' land could not be obtained. The Scharas also proffered testimony that Anaconda had made inconsistent statementsconcerning future mining operations in itspetition for the Woodville Road closure in 1977. Anaconda had stated at that time thatwith the road closure it could continuemining until about year 2000. In the second action, the Scharas sought to enjoin Anaconda fromviolating one of the restrictive covenantsplaced upon their property. The covenantwas the result of a trust agreement signed in 1950 between North Butte Mining Company, Anaconda's predecessor in interest,and all of the owners of Columbia GardensAddition, one of whom was the Scharas' predecessor in interest. The trust instrument bound successors in interest and provided: "That in all conveyances, uses or permits there shallbe 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 prenises shall create or constitute a nuisance." The District Court denied Anaconda's motion to stay the restrictive covenant proceedings until the outcome of the condemnation action, and Judge Olsen entered judgment against Anaconda

onMarch 28, 1979. Pursuant to this judgment,a permanent injunction was issuedwhich restrained Anaconda from using its property within the Columbia GardensAddition for any purpose other than residential and from creating ormaintaining a nuisance. The injunction also commanded Anaconda to remove an electric transmission line from theAddition and to repair or remove all vacated buildings located upon itsproperty within the Addition. Originally the District Court, in the condemnation action, the Honorable James D. Freebourn presiding, made the following findingsof fact and conclusionsof law onApril 19, 1979: "5. At this date,plaintiff has nearly reached the maximum depth atwhich ore can be economically mined from the pit; the pit must be expanded horizontally in one direction or another; defendants' property lies east and south of the pit; expansion to the east and south, instead of some other direction, is compatiblewith the greatest public good and least private injury;"10. Plaintiff's past,present and continuation of future operationshave and will accrue as a benefit to thepublic and to the use of the public. Acquisition of lots 51, 52 and 54 of the Columbia Garden Addition, on substantial and satisfactory estimations,now in evidence, will continueplaintiff's 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 acconplished in a manner 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 againstAnaconda concerning the violation of restrictive covenants in the Columbia Gardens Addition. As a result, Judge Freebourn refused to enter a condemnation award until this Court reviewed the permanent injunction since such an award would amount to a reversal of Judge Olsents injunction. Subsequently,Anaconda sought a writ from this Court to direct Judge Freebourn to completehis findings and conclusions. On July 11, 1979, this Court directed the District Court to enter those conclusions. Judge Freebourn thenmade "amended and supplemental" findings of fact and conclusions of law in which he held thatAnaconda had "more than sufficient land for dumping purposes and to continue itsmining operations for some 14 or 15 years without the need and necessity of the use of defendantstland," and further found thatAnaconda's 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 its 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 Schara property for "some 14 or 15 years in thefuture,would deny defendants just compensation for such use." The following issues are before us on appeal:

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

a finaldetermination of the condemnation action; (2) In the alternative, whether the restrictive covenant is unenforcealie due to the radical changes which have occurred in the Columbia Gardens Addition since 1950; (3) Whether the District Court abused its discretion by not having substantial evidence upon which to base its finding that no "necessity"will exist forAnaconda to condemn the Scharas' property for 14 or 15 years. The Scharas raise the following issues on cross-appeal:

(1) Whether the proposed condemnation is excessive; (2) Whether, by reason of the Hardrock Mining Act, a valid mining permit is an absolute conditionprecedent to condemnation for mining purposes; (3) Whether section 70-30-102,MCA, which distinguishes between coppermining and coalmining as a public use, is unconstitutionalunder the Equal Protection Clause. Looking first to Judge Olsen's denial of Anaconda's motion 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 condamation award. Nichols on Eminent Domain discusses the issue as follows: "5.73 Restrictive covenants. "A ratherperplexing 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 restrictLonswere created, as well as in favor of the owner of myone of the lots into which the tract was divided,and against the owner of any of the lots who attempts to disregard the restrictions. Such restrictions do not,however, have an inhibitina influence wonthe riaht to exercise 2 C 2 the power of eminent domain 

# ..." (Emphasisadded.) Nichols on Eminent Domain, 85.73. This approach is consistentwith Montana eminent domain statutes. Section 70-30-103, MCA, provides that all realproperty 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 estat.eor rights as may be necessary up to and including a fee simple when taken

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# . for



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

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are 

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# . . subject to be taken for the public 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 the proper subject of a condemnationproceeding. Once it is determined that the property sought is a proper subject of condemnation, the courtmust find that the taking is necessary to the public interest and consistentwith the greatestpublic good and the least private injury. We therefore conclude that a restrictive covenant action ismoot when a preliminary condemnation action involving the same property is pending. If i-Lis found that a preliminary condemnation award isproper, 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 themotion to stay the restrictive covenantproceeding until theproprietyof the condemnationaction was finally determined. Sincewe find the restrictive covenant actionmoot,we need not reach the issue involving the unenforceahility of a covenantwhen radical changes have occurred in the character of

a neighborhood. Next, with regard to the propriety of the District Court's denial of a preliminary condemnationorder, it isAnaconda's contention that substantial credible evidence does not exist to support the finding of no necessity for condemnation. Section 70-30-111,MCA, is entitled "Factsnecessary to be found before condemnation." It provides, in pertinent part, 

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# ... [bleforeproperty can be taken, itmust appear: (1) that the use to which it is to be applied is a use authorized by law; (2) that the taking is necessary to suchuse 

# ..." Section 70- 30-110,MCA, states that the proposed condemnation "mustbe located in themanner which will be most compatible with 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 "thetaking is necessary",and (3)whether the location is the "mostcompatiblewith the greatest public good and the least private injury." The determination involvingwhether the proposed use is "authorizedby law" is easilymade. Section 70-30-102,MCA, enumerates the public uses which are the proper subject of condennation and therefore "authorized by law." Mining, except the strip mining of coal, is an authorized public usewithin section 70-30-102 (15)

## ,MCA. The determinationsof whether the taking is necessary and whether it is compatible with the greatest public good and the leastprivate injury both involve factual issues. With regard to whether the taking is necessary, thisCourt has consistently held that the necessity need not be absolute. Instead the test is "reasonable, requisite, and proper for the accomplishment of the end in view, under the particular circumstancesof the case." Montana Power Co. v. Bokma (1969), 153Mont. 390, 398, 457 P.2d 769, 774; State Highway Commission

v. Yost Farm Co. (1963), 142Mont. 239, 384 P.2d 277; Butte, A. & P. Ry. Co. v. Montana U. Ry. Co. (1895), 16 Mont. 504, 41

This Court made the following statementwith regard to the determinationof "necessity"and "thegreatest good" and the "least private iiljury" in McntaaPower Co. v. Bokma, supra. "Thetaking of private property by condemnation proceedings must be compatiblewith 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. 

# .. These questions commonly arise in connectionwith the locationof the proposed improvement. Since the condemnorhas the expertise and detailed knowledge of considerations involved in determining location of the improvement, its choice of location is given greatweight. 

# . . Such choice will 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 determine as an engineer the best location of theproposed improvements. 

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# . On the other hand when the condemnor fails to consider the question of the least private injury between alternate routes 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 (~naconda's) choice of location is to be given great weight, it is to be overturned only by clear and convincing proof that the decisionwas 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

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# . taking is necessary

# .. . and will be most compatiblewith the greatest public good andthe least private injury." Mysteriously, in the court's amended and supplemental findingsof fact and conclusionsof law, the original findings remain intact,but tlze foll.owi.~g inconsistent finding is added: "Plaintiffhas failed 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 such need and necessity will not arise for some 14 or 15years in the future." Normally, the entry of inconsistent findings would require

us to remand the case for further proceedings 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,are correct and must be entered. The record does disclose thatmining in the present Berkeley Pitwill be completed in 1986. In order to increase the life of future mining in Butte the Berkeley Pitmust be expanded,and according to Anaconda's long term mining plan stripping of overburden must commenceby 1983. Anaconda explains that new technology has been developed for removing overburden,and in order to have the equipment on line by 1983, immediate action is required. The equipment requires a tremendous investment and Anaconda must know the result of the condemnation action before it can be ordered. It is further disclosed thatAnaconda considered two alternatives to the condemnation of the Scharas' property. One alternative was backfilling the Berkeley Pitwith overburden. This alternativewas rejected since the long term mining plan contemplates vertically mining ore deposits located beneath the deepest portion of the Berkeley Pit. This futurevertical mining plan is not now feasiblebecause of both a lack of technology and current market conditions;however, itwould be completely precluded if Anaccnda backfilled the pit. The second alternative studied by Anaconda was the establishment of 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 thewaste 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 is not "necessary"nor "cornpatible with the greatestpublic good and the least private injury." We find this contention lacking inmerit in light of Montana Power Co. v. Bokma, supra. AS a result,we find substantial credible evidence to support the findingsentered by the District Court on April 19, 1979. The Scharas contend on cross-appeal that the amount of property sought to be condemned is excessive. The basis for this argument is thatAnaconda has recognized in itsmining plan that a portion of the Scharas' land iswithin the Highway Department's proposed right-of-way for expansion of Interstate 15 and that Anaconda only contemplates use 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 accomplishment of 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' land within the proposed highway right-of-way if the Highway Department does acquire it. Based on this testimonywe 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 condemnation of the Scharas' property is reasonable,requisite, and proper for the accomplishmentof the end in view under the peculiar circumstancesof the case. The possibility that Anaconda may have to forfeit a smallportion 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 section 70-30-111, MCA, requires the use to be "authorized by law" before condemnation is allowed,the obtaining of a valid mining permit is a condition precedent to condemnation. However, there is nothing 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 a mining company obtain a valid mining permit prior to condemnation would be inconsistent with Montana statutory authority and would be 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 of this chapter, the right of eminent domainmay be exercised in behalf of the following public uses:

"(15) tomine and extract ores,metals, or minerals owned by the plaintiff located beneath or upon the surface of property where the title to said surface vests in others. However, the use of the surface for strip mining or open pit mining of coal (i-e., any mining method or process in which the strata or overburden is removed or displaced in order to extract the coal) is not a pubiic use, and eminent domainmay not be exercised for this purpose 

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# .."

(Emphasisadded.) It is contended that since the statute allows the mining of copper to be a public use and disallows the strip mining ofan coal as a public use, there is/unconstitutional violation of the Equal Protection Clause. However, it iswell established that the equal protection clause isvery limited in cases involving eminent domain statutes. This is especially sowhen the statute merely declares the legislative determination as to what is to be considered a public use. All that is required to survive

an equalprotection challenge in this context is that there be a "reasonable" basis for the distinction. Nichols on Eminent Domain,

The legislaturehas provided its basis for the distinction between coppermining and coalmining in section 70-30-106,MCA, which provides: "70-30-106. Eminent domainnot to be used for coalmining in certain cases--policy. For the following reasons the state's power 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: "(1) Because of the large reserves of and the renewed interest in coal in eastern Montana, coal development ispotentiallymore destructive to land and watercourses and underground aquifers and potentially more extensive geographically than the forseeable development of other ores,metals, or minerals and affects large areas of land and large numbers of people. 

### " (2) Inmany areas of Montana set forth in (1)hereinabove,the title to the surface isvested in an 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 suchproductive use by such owner, and to permit themineral owner to condemn the surface owner is to deprive the surface owner of the right to use his property in a productive manner as he determines and is also contrary to public policy as set forth in subsection (4). "(3) Themagnitude of the potential coal development in eastern Montana will subject landowners to undue harassment by excessive use of eminent domain. "(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 imrnediateiypreceding legislativepolicy we find a reasonablebasis for the distinctionbetween coppermining and coalmining. We conclude that section 70-30-102(15) does not violate the Equal Protection Clause. The judgmentsof the District Court 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 We concur:Mr. Justice John C. Sheehy dissenting:

At the base of this Court's decision and that of Judge Freebourn in the condemnationactionwas the contention of the Anaconda Company that unless the Scharaproperty 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 willnot/dependent on the Schara property. Judge Freebourn, when this Court forced him by mandate to make final findingsof fact and conclusions of law so as to override Judge Olsen's restrictive covenant decision, found that "fordumping purposes" and to continue its mining operations for some 14 or 15 years,Anaconda has sufficient land already. Thereforehe saw no need for the Schara property until some 14 or 15years in the future and concluded that to permit condemnation nowwould deny them just compensation for the use of their land. Although Rule 52,M.R.Civ.P. makes itmandatory that findings of a DistrictCourt 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 crossexaminationof Wilbur Crisswell. Moreover, Judge Freebournhadbefore him the testimony regarding the East Continental Pit. The oldhighway leading toWoodville had been closed topermit the opening of the East Continental Pit, upon the representation that such closingof the highway would extend Butte's mining lifefor 22 years. East Continental Pitwas abandoned after 2 years. As a second point, I cannot permit myself to sign an opinion which finds it "reasonable" for eminent domain power tobe granted toopen-pit hard rock mining companies, but to be denied toopen-pit coalmining companies. Every reason stated fordenying eminent domain power tothe coal mining industry insection 70-30-106, MCA, applies with equal force tothe copper mining industry. There isno real distinctionbetween

an open-pit copper mine and an open-pit coal mine, except thatthe legislature favored cows over people. We givemere lipservice tothe equalprotection clause of the federal constitutionwhen we finda distinctionwithout a difference insection 70-30-106. For these reasons,' I dissent.



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