No. 12731 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1974 

LOUIS YOVETICH, on behalf of himself and all 

other residents and property owners in the 

County of Yellowstone, State of Montana, 

similarly situated, 

Plaintiffs and Appellants, 

and 

STEVE TRENKA and MABEL TRENKA, husband and wife, 

CLAYTON ORR, JOHN GLANTZ and MOLLY GLANTZ, 

husband and wife et al., 

Plaintiff and Appellant Intervenors, 

-vs - 

M. E. McCLINTOCK, A.S. ROBERTS et al, 

Defendants and Respondents 

KOBER CONSTRUCTION COMPANY, Yellowstone Electric 

Company, et al., 

Defendant and Respondent Intervenors, 

DAVID G. DRUM, WARREN F. VAUGHAN et al., 

Defendant and Respondent Intervenors. 

Appeal from: District Court of the Thirteenth Judicial District, 

Honorable M. James Sorte, Judge presiding. 

Counsel of Record : 

For Appellants : 

Larry D. Herman argued, Laurel, Montana 

Ralph Herriott argued, Hysham, Montana 

For Respondents : 

Harold F. Hanser, County Attorney, argued, Billings 

Montana 

C. W. Jones argued, Billings, Montana 

Anderson, Symmes , Forbes, Peete and Brown, Billings, 

Montana 

Benjamin N. Forbes argued, Billings, Montana 

Crowley, Kilbourne, Hanson and Gallagher, Billings, 

Montana 

Moulton, Bellingham, Longo and Mather, Billings, Montana 

William H. Bellingham argued, Billings, Montana 

Submitted: June 14, 1974 

Decided 'AW2'9 1974 
Mr. Justice John C. Harrison delivered the Opinion of the Court. 

This is an appeal from a judgment of the district court 

of Yellowstone County denying a petition for injunctive or 

declaratory relief against the Board of County Commissioners, 

Yellowstone County, for its method of funding the multi-use 

building presently being constructed at the fairgrounds in 

Billings, Montana. 

The facts disclose that on November 2, 1971, the voters 

of Yellowstone County approved the sale of general obligation 

bonds in the sum of $3,000,000 for the purpose of constructing 

and equipping a multi-use building at the fairgrounds in the City 

of Billings. The ballot presented to and approved by the voters 

read : 

"Shall the Board of County Commissioners be 

authorized to issue, negotiate and sell bonds 

of the County of Yellowstone in the amount of 

Three Million Dollars ($3,000.000.00) payable 

during a period of not to exceed twenty (20) 

years, redeemable on any interest due date 

after five (5) years; for the purpose of constructing and equipping a Multi-Use Building 

at the Midland Empire Fairgrounds, Yellowstone County, Montana, with a seating capacity 

of at least 10,000 and an arena of approximately 250 feet by 400 feet." 

When the bond issue was approved, the county commissioners had no access to a cost estimate of the building based on 

plans and specifications. In October 1972, the county commissioners employed architects who submitted a schematic design 

which set forth the size, shape, and cost of the building. The 

schematic design estimated the total cost of the building to be 

Toward the end of 1972, the county commissioners began 

to anticipate the receipt of federal revenue sharing funds. 

Consequently, the county commissioners made some refinements in 

and broadened the use of the building. These changes plus the 
existing severe inflation served to increase the cost of the 

building beyond the sum originally anticipated by the county 

commissioners. 

Bids for the construction of the multi-use building 

were opened on November 28, 1973 and contracts were awarded 

to the defendant-intervenor construction companies on December 

In January 1974, the county commissioners adopted a 

funding program which projected the cost of the building at 

$5,880,504.04. Three main sources of funds were to be utilized 

to meet this obligation: 

1. Proceeds from the bond sale and 

interest thereon--- 

2. Principal and interest on fire insurance proceeds resulting from the 

destruction of the previous building--- $ 358,591.26 

3. Revenue Sharing Funds from the federal 

government, plus interest for entitlement periods one through six--- $2,009,188.68 

TOTAL --- $5,896,410.83 

Plaintiffs, as taxpayers and residents of Yellowstone 

County,protested the funding program and set forth three main 

issues for this Court to consider: 

1. Does the funding program as adopted by the county 

commissioners of Yellowstone County violate section 16-807, 

R.C.M. 1947? 

2. Is the county commissioners' action in contracting 

with defendant construction companies ultra vires because it 

limits future boards in the exercise of their governmental powers? 

3. Is the use of federal revenue sharing funds for the 

purpose of funding the multi-use building improper? 

In the first issue, plaintiffs argue that the county 

commissioners, in using revenue sharing funds to finance the 

project, violated the terms of section 16-807, R.C.M. 1947, the 
pertinent part of which states: 

" * * * No county must incur any indebtedness 

or liability for any single purpose to an 

amount exceeding forty thousand dollars 

($40,000) without the approval of a majority 

of the electors thereof voting at an election 

to be provided by law." 

In State ex rel. Diederichs v. State Highway Commission, 

89 Mont. 205, 211, 296 P. 1033, this Court explained the purpose 

of Art. XI11 § 2 of the 1889 Montana Constitution which forbade 

the legislature from incurring a debt or liability in excess of 

$100,000 without submitting the question to a vote of the people: 

"Knowing the tendency of governments to run 

in debt, to incur liabilities, and thereby 

to affect the faith and credit of the state 

in matters of finance, thus imposing additional burdens upon the taxpaying public, the 

framers of the Constitution placed positive 

limitations upon the power of the legislative 

assembly to incur a debt or impose a liability upon the state beyond the limit prescribed, 

without referring the proposition to the electorate for its approval." 

Thus, the question to be decided here is whether the 

expenditure of revenue sharing funds creates an "indebtedness or 

liability" within the meaning of the statute thereby imposing additional tax burdens upon the residents of Yellowstone County. 

In State ex rel. Diederichs v. Board of Trustees of 

Missoula County High School, 91 Mont. 300, 307, 7 P.2d 543, the 

plaintiff sought to enjoin the Board of Trustees of Missoula 

County High School from applying fire insurance proceeds to rebuild 

a high school. In holding that the expenditure of the funds did 

not constitute an "indebtedness or liability" this Court stated: 

"It seems plain that the constitutional limitation does not apply to the expenditure of cash 

on hand provided for a specific purpose; but 

rather to the creation of an obligation to be 

met and paid in the future by the taxpayers. 

[Citing cases] . " 

Here, it is plain the revenue sharing funds are not an 

obligation to be "met and paid for in the future by the taxpayers". 
In State ex rel. Rankin v. State Board of Examiners, 

59 Mont. 557, 197 P. 988, this Court held that the words 

"indebtedness or liability" meant the creation of a debt or 

obligation in excess of "cash on hand and revenues having a potential existence by virtue of existing revenue laws." See also: 

Graham v. State Board of Examiners, 116 Mont. 584, 155 P.2d 956. 

The expenditure of the federal revenue sharing funds 

does not incur an "indebtedness or a liability" of the county 

within the meaning of the statutory restriction. Section 16-807, 

R.C.M. 1947, was never intended to prevent the expenditure of 

revenue provided for a specific purpose as noted in Diederichs v. 

Board of Trustees of Missoula County High School, supra. Had 

the legislature intended that result, it would have used the 

term "expenditure" instead of the terms "indebtedness or liability". 

As stated, the manifest purpose of the statute is to prevent the 

taxpayers from being burdened with oppressive taxation. Here, 

the county commissioners are not obligating the taxpayers to pay 

any additional sums over and above the amount included in the 

bond issue to finance the project. The entire costs of construction are to be paid from the bond issue, insurance proceeds and 

revenue sharing funds. Thus, the evil which the statute is designed to prevent, will never come into existence here. In the 

second issue plaintiffs argue the action of the county comrnissioners is ultra vires because it limits future boards in the 

exercise of their governmental functions. We disagree. 

In Bennett v. Petroleum County, 87 Mont. 436, 447, 288 P. 

1018, a taxpayer brought suit to enjoin the county commissioners 

of Petroleum County from leasing a building to be used as a courthouse for a period of four years with an option to renew the 

lease for an additional four year period. The plaintiff contended, 

inter alia, that the lease was void because it extended beyond the 
terms of office of individual members of the board, of county 

commissioners. At the time the lease was entered into, Section 

4465 Rev. Codes 1921, as amended by Chap 38, Laws of 1929 authorized the board to lease real property necessary for the use of 

the county. This Court upheld the validity of the lease with 

these words: 

"The statute specifically confers the power to 

so contract upon the board of county commissioners, the body existing at the time, and 

the mere fact that the term of office of a 

member of the body which so contracts may expire before the contract, does not in any 

manner affect its validity. Were the rule of 

law otherwise, the business of counties would 

be very greatly hampered and at times, suspended, with resulting damage. The board of 

county commissioners functions for the municipal corporation in its authorized powers as a 

continuous body, and while the personnel of its 

membership changes, the corporation continues 

unchanged. The county has power to contract, 

and its contracts are the contracts of its board 

of county commissioners, not of the individual 

members thereof." 

We agree with this reasoning. By statute, the board of 

county commissioners has the power to erect a recreation center. 

Section 16-1008A, R.C.M. 1947. Since the board has this power, 

it can enter into construction contracts that extend beyond the 

terms of office of the individual members of the board. Were the 

rule otherwise, the board would be unable to enter into long-term 

construction contracts to erect public buildings as contemplated 

by section 16-1008A, R.C.M. 1947. Such a result would be detrimental to the residents of Yellowstone County. 

Plaintiffs cornerstone much of their argument on this 

issue in what this Court recently held in Burlington Northern v. 

Flathead County, 162 Mont. 371, 512 P.2d 710, 30 St.Rep. 684, and 

Burlington Northern v. Richland Co., 162 Mont. 364, 512 P.2d 707, 

30 St.Rep. 691. The holding in those two cases was based on an 

interpretation of section 16-807, R.C.M. 1947, which is relied upon 

by the plaintiffs here. However, this case is factually different 
than the above cases for there the county commissioners attempted, 

by use of the taxing authority, to circumvent Section 5, Article 

XI11 of the 1889 Montana State Constitution and section 16-807, 

R.C.M. 1947, by budgeting excessively in order to obtain and expend 

a built-up reserve in subsequent fiscal years. Here, plaintiffs 

treat the revenue sharing fund payments as money budgeted and unexpended at the end of the fiscal year. Further, they argue that 

these funds should be placed in the general fund to be used to 

reduce taxes in subsequent years. To so hold would be for this 

Court to eliminate many, if not all, of the permissible expenditures 

allowed by Congress under section 31, C.F.R. 51.31. Too, it would 

mean that revenue sharing funds, unless spent prior to July 1 of 

each fiscal year, would be used only to reduce taxes. To carry 

out the purposes of the revenue sharing act it must be given a more 

liberal interpretation. 

It was contemplated by Public Law 92-512 (revenue sharing 

statute) Section 103, and it was the expectation of the President 

and Congress in passing and signing the Act that many new capital 

improvements would be made by the various municipal and county 

governments throughout the country. We note that in passing the 

Act, and setting aside trust funds through December 1976, and making 

necessary the expending of or obligating the funds within two years 

of receipt thereof, that Congress intended the various governing 

units could and would rely on receiving same through December 1976. 

We can find no violation of section 16-807, R.C.M. 1947, nor is 

this finding contra to our holdings in the Flathead County and 

Richland County cases. 

In the third issue, plaintiffs argue that the expenditure 

of revenue sharing funds for the purpose of financing a recreation 

center is illegal because the revenue sharing act forbids the 

capital expenditure of funds for recreation-type buildings. 
The State and Local Assistance Act, P.L. 92-512, Section 

103, 1972, more commonly known as the Federal Revenue Sharing 

Act, allocates federal revenues to state and local governments 

to be used only for "priority expenditures". The act has defined 

"priority expenditures" as ordinary and necessary maintenance 

and operating expenses for public safety, environmental protection, public transportation, health, recreation, libraries, social 

services for the poor or aged, financial administration, and 

ordinary and necessary capital expenditures authorized by law. 31 

U.S.C.A. § 1222. 

To qualify for the funds a unit of local government must 

establish a trust fund to deposit all payments received and use 

the funds for "priority expenditures". A penalty of 110% of the 

amount expended is assessed against the local government if funds 

are allocated in violation of the Act. See: 31 U.S.C.A. 5 1243(a) (3)

The local government is also required to provide for the expenditure of the funds in accordance with the applicable laws dealing 

with the expenditure of its own revenues. See: 31 U.S.C.A. 5 

1243 (a) (4) . 

Plaintiffs argue that the funds are illegally spent because a recreation center is not an "ordinary and necessary capital expenditure authorized by law." We disagree with such a restrictive reading of the Act. See Murphy v. McClintock, 160 Mont. 

355, 503 P.2d 1013, 29 St.Rep. 883; Skaggs Drug Centers v. Mont. 

Liquor Control, 146 Mont. 115, 404 P.2d 511. 

The word "ordinary" is defined in Black's Law Dictionary 

(4th ~d.1 as: 

"Regular; usual; normal; common; often recurring; according to established order; 

settled; customary; reasonable; not characterized by peculiar or unusual circumstances; 

belonging to, exercised by, or characteristic 

of, the normal or average individual." 
The word "necessary" is defined in Black's Law 

Dictionary (4th Ed. ) as: 

"This word must be considered in the connection 

in which it is used, as it is a word susceptible 

of various meanings. It may import absolute 

physical necessity or inevitability, or it may 

import that which is only convenient, useful, 

appropriate, suitable, proper, or conducive to 

the end sought. It is an adjective expressing 

degrees, and may express mere convenience or that 

which is indispensable or an absolute physical 

necessity. It may mean something which in the 

accomplishment of a given object cannot be dispensed with, or it may mean something reasonably 

useful and proper, and of greater or lesser benefit or convenience, and its force and meaning must 

be determined with relation to the particular 

object sought. " 

The Federal Revenue Sharing Act is broad in scope with 

the purpose of aiding local givernments defray the cost of 

capital expenditures. It accordingly appears to us that the 

words "ordinary and necessary" should be construed liberally and 

with latitude. It is our opinion that the multi-use building in 

question is "reasonable", "useful" and "proper", and within the 

terms of the Act. 

The judgment of the district court is affirmed. 

Justice I 

We concur: (2' 

L 

Hon. Paul Hatfield, ~~$,g~k~ Judge, sitting in plac 

Justice Frank I. Haswell. 

Mr. Justice Thomas Dignan, District Judge, sitting in place 

of Mr. Chief Justice James T. Harri~on~dissents. 

District Judge