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 

JUDICIAL DISTRICT OF THE STATE OF 

MONTANA, IN AND FOR THE COUNTY OF FALLON, 

and the HONORABLE ALFRED B. COATE, JUDGE 

PRESIDING THEREIN, 

Defendants. 

ORIGINAL PROCEEDING: 

For Plaintiff: 

Habedank, Cumming 6 Best, Sidney, Montana. 

Otto T. Habedank and Jacque W. Best argued, Sidney, 

Montana. 

For Defendants: 

Gene Huntley argued, 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 is an original proceeding seeking supervisory control 

LQ eeview and reverse a denial of summary judgment to defendant in 

a damage action by a motorist who allegedly suffered personal 

injuries in an automobile accident. The order denying summary 

judgment was entered in the district court of the sixteenth judicial district, Fallon County, by the Hon. Alfred B. Coate, district judge. 

Relator, defendant below, is Fallon County. Respondent is 

the district court and the judge 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 single vehicle 

accident on a county road in Fallon 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 action was filed more than two years, but less than 

three years, after the date of the accident, 

One of the defenses pleaded in defendant'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 liability created by statute other than a penalty or 

forfeiture." Defendant moved for summary judgment on this basis. 

Subsequently the district court entered its order denying defendant's 

motion for summary judgment. 

Defendant thereupon filed an original proceeding in this 

Court seeking a writ of supervisory control to review and reverse the order of the district court denying it summary judgment. 

Foll-owing ex parte presentation, this Court found this to be 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 parties 
and the decision taken under advisement. 

The sole issue for review in this proceeding is whether 

plailltiff's action is barred by the two year statute of limitations contained in section 93-2607(1), R.C.M. 1947. 

Relator county contends that plaintiff's action is barred 

thereunder because it is an action "upon a liability created by 

statute other than a penalty or forfeiture". Relator argues 

that plaintiff's action falls in this category because section 

40-4402, R.C.M. 1947, waives "sovereign immunity" to the extent 

of the county's liability insurance coverage thus permitting 

plaintiff's action. According to relator, no liability would 

is 

exist absent section 40-4402, whichlthe test of whether liability 

is created by statute within 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 

I I sovereign immunity" presents a jurisdictional issue rather than 

involving simply a matter of affirmative defense. 

Respondent, on the other hand, contends that plaintiff's 

action is not subject to the two year statute of limitations as 

an action upon a liability created by statute, but on the contrary is governed by the three year statute of limitations 

applicable to personal 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 its liability insurance coverage, simply removes 

the defense of sovereign immunity and is not a jurisdictional 

issue creating liability. Respondent cites Beeler v. Butte & 

London Copper Development Co., 41 Mont. 465, 472, 110 P.528, 530, 

as controlling authority as well as several cases from other 

jurisdictions in support: Jones v. City of Alhambra, 117 C.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 in Beeler determines the issue 

in this case. There we held that although an action against a 

fellow servant for personal injuries was not maintainable under 

common law prior to passage of a Montana statute permitting such 

action, nevertheless the action was subject to the three year 

statute of limitations on personal injury actions and not to 

the two year statute on "a liability created by state", The 

rationale in Beeler is explained in the 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 to a plaintiff's demand; but it is grounded 

in every instance upon the nature of the demand itself 

--- whether it be upon a judgment, written contract, 

account, etc. Subdivision 1, 5 6449, must be viewed 

in the light of the fact that the phrase 'liability 

created by statute' has come to have a fixed application to a class of cases quite distinct from those 

elsewhere mentioned or referred to in the same chapter. 

If the action at bar had been for injuries resulting 

from the negligence of a vice principal, instead of a 

fellow servant, it would be recognized at once as a 

straight action in tort, governed, as to its limitation, 

without any thought of its being a 'liability created 

1 by statute. Now, the fact that the injury which is 

the basis of the action, resulted from the negligence 

of a fellow servant instead of a vice principal does 

not affect the essential nature of the action; it is 

still an action for personal 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 liability exists where none existed 

before, yet the true function of that act must be regarded, not as creating a new cause of action, but merely 

to carry forward the right of the injured party and to 

remove a defense theretofore available in this class of 

causes (Dillon v. Great Northern Ry. Co, , 38 Mont. 485, 

100 Pac. 960). It follows that in the sense employed 

by the chapter on limitations of actions, this is not 

an action on a 'liability created by statute,' and the 

contention that it is barred by subdivision 1, 5 6449, 

is not sound." 

This rationale is further 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: 

I I Sovereign immunity defense prohibited when liability 

insured - reduction of award to policy 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, board 
agency, organization, or other public entity for 

casualty or liability insurance, neither such insured 

nor insurer shall raise the defense of sovereign or 

governmental immunity in any damage action brought 

against such insured or insurer, and any agreement 

in the insurance contract permitting the defense of 

sovereign or governmental immunity is hereby declared 

void. No attempt shall be made in the trial of an 

action brought 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 

insurance which covers in whole or in part any judgment or award which may be rendered in favor of plaintiff. If the court shall determine that the defendant 

could have successfully raised the defense of sovereign 

or governmental immunity, and if the verdict exceeds 

the limits of the applicable insurance, the court shall 

reduce the amount of such judgment or award to a sum 

equal to the applicable limit stated in the policy. 11 

(Emphasis added). 

Relator seeks to distinguish Beeler on the basis that it 

pertains simply to a procedural change which eliminated a 

common law defense, while the instant case involves a jurisdictional issue bearing on the existence of liability itself. 

The rationale in Beeler and the language of section 40-4402, 

R.C.M. 1947, belie such contention. In Beeler, as here, liability existed under the statute where none existed before, 

buc simply by virtue of removal of a defense previously available and not otherwise, This is the law of Montana whatever the 

law may be in the other jurisdictions under cases cited by 

relator. Judge Coate was correct in denying relator a summary 

j udgment . 

The alternative writ heretofore issued is vacated and this 

proceeding dismissed. 

/ Associate Justice 

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Associate Jusf:ices.