No. 

### 12383 IN THE SUPREME COURT OF THE STATE OF MONTANA 1972

THE STATE OF MONTANA, 

### ex re1 FALLON COUNTY, MONTANA, Plaintiff,

THE DISTRICT COURT OF THE SIXTEENTH JUDICIALDISTRICT OF THE STATE OF MONTANA, INAND FOR THE COUNTY OF FALLON, and theHONORABLE ALFRED B. COATE, JUDGE PRESIDING THEREIN, Defendants.

ORIGINAL PROCEEDING: For Plaintiff: Habedank, Cumming 6 Best, Sidney, Montana. OttoT. Habedank and Jacque W. Best

### argued, Sidney,

Montana. For Defendants: GeneHuntleyargued, Baker, Montana.

Submitted: December

### 4, 1972

- ,, <; ,; 9 .j7> Decided: 

### OLL

## ,-
.. Filed: ,-JL ! ,-' ,'

Clerk"ir. .Justice Frank I. tiaswell delivered the Opinion of the Court.
Thrs isan original proceeding seeking supervisory control LQ eeview and reverse a denial of summary judgment to defendant in

a damage actionby a motorist who allegedly suffered personal injuries in an automobile accident. The order denying summary judgment was entered in the district court of the sixteenthjudicialdistrict, Fallon County, by the Hon. Alfred B. Coate, districtjudge. Relator, defendant below, isFallon County. Respondent is the district court and thejudge thereof that entered the order denying summary judgment. Plaintiff i-n the district court action was Earl 14. Holce who alleged that he sustained personal injuries in a singlevehicle accident on a county road inFallon County, Montana, on August 27, 1968. His complaint alleges negligence on the part of defendant Fallon County in failing to properly maintain and mark

'l I1 a T intersection of county roads. The existence of liability insurance precluding the defense of sovereign immunity was alleged. The actionwas filed more than two years, but less than three years, after the date of the accident, One of the defenses pleaded indefendant's amended answer
was that plaintiff's action was barred by the two year statute of limitations in section 93-2607(1), 

### R.C.M. 1947, governing actions "upon a liabilitycreated by statute other than a penalty or forfeiture." Defendant moved for summary judgment on this basis. Subsequently the district court entered itsorder denying defendant's motion for summary judgment. Defendant thereupon filed an original proceeding in this Court seeking a writ of supervisory control toreview and reverse the order of the district court denying it summary judgment. Foll-owing ex parte presentation, this Court found this tobe a proper case for supervisory control and issued an alternative writ setting the matter for adversary hearing on December 4, 1972. At that time, oral argument was heard on behalf of both partiesand the decision taken under advisement. The sole issue for review in this proceeding iswhether plailltiff's action isbarred by the two year statute of limitations contained in section 93-2607(1), R.C.M. 1947. Relator county contends that plaintiff's action isbarred thereunder because it 

### is an action "upon a liabilitycreated by statute other than a penalty or forfeiture". Relator argues that plaintiff's action falls inthis category because section 40-4402, R.C.M. 1947, waives "sovereign immunity" to the extent of the county's liabilityinsurance coverage thus permitting plaintiff's action. According torelator, no liabilitywould is exist absent section 40-4402, whichlthe test of whether liability iscreated by statutewithin the meaning of statutes of limitations,citing in support: Hollinger v, Board of County Commissioners, 115 Kan, 92, 222 P. 136; Barrows 

### v. Lehigh Valley R.Co., 62 N.Y.S. 200; Anno. 32 ALR2d 1240, 1243. Finally, relator contends that

IIsovereign immunity" presents a jurisdictional issue rather than involving simply a matter of affirmative defense. Respondent, on the other hand, contends that plaintiff's action isnot subject to the two year statute of limitations as
an action upon a liabilitycreated by statute, but on the contrary is governed by the three year statute of limitations applicable topersonal injury negligence actions contained i.n section 93-2605, R,C.M. 1947. Respondent argues that section 40-4402, R.C.M. 1947, permitting actions against a county to the extent of itsliability insurance coverage, simply removes the defense of sovereign immunity and isnot a jurisdictional issuecreating liability. Respondent cites Beeler v. Butte & London Copper Development Co., 41Mont. 465, 472, 110 P.528, 530,

as controlling authority aswell as several cases from other jurisdictions in support: Jones v. City of Alhambra, 

### 117C.A.2d 728, 256 P.2d 628; Gonzalez v. Pacific Fruit Express Co., D.C. Nev., 99 F.Supp. 1012; Hoffman v. idair, D.C.Ore., 193 F.Supp.727; v, Warford, 14aricopa County Municipal C.D.No.11 

### 69 Ariz.1, 206 P.2d 1168.In our view, the rationale inBeeler determines the issue in this case. There we held that although an action against a fellow servant for personal injurieswas not maintainable under
common law prior topassage of a Montana statutepermitting such action, nevertheless the actionwas subject to the three year statute of limitations on personal injury actions and not to the two year statute on "a liabilitycreated by state", The rationale inBeeler 

### is explained inthe following excerpt at page 530 of 110 Pacific: "The theory of limitation, as disclosed in the chapter of the Code on that subject, has no reference to the defenses that may or may not be interposed in resistance toa plaintiff's demand; but it isgrounded inevery instance upon the nature of the demand itself 

# --- whether itbe upon ajudgment, written contract, account, etc. Subdivision 

### 1, 

### 5 6449, must be viewed inthe light of the fact that the phrase 'liability created by statute' has come tohave a fixed application toa class of cases quite distinct from those elsewhere mentioned or referred tointhe same chapter. If the action atbar had been for injuries resulting from thenegligence of a vice principal, instead of a fellow servant, it would be recognized atonce as a straight action intort, governed, as to

### its limitation, without any thought of 

### itsbeing a 'liability created 1 by statute. Now, the fact that the injurywhich is thebasis of the action, resulted from the negligence of a fellow servant instead of a vice principal does not affect the essentialnature of the action; it is stillan action forpersonal injuries founded upon actionable negligence. And while it may properly be said (see Kelly v. Northern Pac. Ry. Co., 35 Mont. 243, 

### 88 Pac. 1009) that under the act approved February 20, 1905, an empfoyet's liabilityexistswhere none existed before, yet the true function of that actmust be regarded, not as creating a new cause of action, but merely tocarry forward the right of the injured party and to remove a defense theretofore available inthis class of causes (Dillonv. Great Northern Ry. Co,

## , 38 Mont. 485, 100 Pac. 960). It follows that inthe sense employed by the chapter on limitations of actions, this 

### isnot an action on a 'liabilitycreatedby statute,' and the contention that it isbarred by subdivision 1, 

### 5 6449, 

### isnot sound." This rationale isfurther strengthened as applied to the instant case by the provisions of section 40-4402, R.C.M. 1947, referring throughout to "sovereign immunity" as a defense:

IISovereign immunity defense prohibited when liability insured

# - reduction of award topolicy limits, Whenever an insurer accepts any premium, money, or other consideration from a political subdivision of the state, municipality, or any public body, corporation, commission, boardagency, organization, or other public entity for casualty or liabilityinsurance, neither such insured nor insurer shallraise the defense of sovereign or governmental immunity in any damage actionbrought against such insured or insurer, and any agreement in the insurance contract permitting the defense of sovereign orgovernmental immunity 

### ishereby declared void. No attempt shallbe made in the trialof an actionbrought against such political subdivision of the state, municipality, or any public body, corporation, commission, board, agency, organization, or other public entity, to suggest the existence of any insurancewhich covers inwhole or inpart any judgment or award which may be rendered in favor of plaintiff. If the court shalldetermine that the defendant couldhave successfully raised the defense of sovereign or governmental immunity, and if the verdict exceeds the limitsof the applicable insurance, the court shall reduce the amount of suchjudgment or award to a sum equal tothe applicable limit stated inthe policy. 11 (Emphasis added). Relator seeks to distinguish Beeler on thebasis that it pertains simply to a procedural change which eliminated a
common law defense, while the instant case involves ajurisdictional issuebearing on the existence of liability itself. The rationale inBeeler and the language of section 40-4402, R.C.M. 1947, belie such contention. In Beeler, ashere, liabilityexistedunder the statutewhere none existedbefore, buc simplyby virtue of removal of a defense previously available and not otherwise, This isthe law of Montana whatever the law may be inthe otherjurisdictions under cases citedby relator. Judge Coate was correct indenying relator a summary judgment

# . The alternative

### writheretofore issued isvacated and this proceeding dismissed. 

## / Associate Justice

------------I----------------- Associate Jusf:ices.