No, 12942 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

MONTANA LAND TITLE ASSOCIATION, 

a Montana nonprofit corporation, 

Plaintiff and Respondent, 

FIRST AMERICAN TITLE AND ESCROW OF 

BILLINGS,, et al., 

Defendants and Appellants, 

Appeal from: District Court of the Thirteenth Judicial District, 

Honorable Robert H, Wilson, Judge presiding. 

Counsel of Record: 

For Appellants : 

Anderson, Syrmnes, Forbes, Peete and Brown, 

Billings, Montana 

Benjamin N, Forbes argued, Billings, Montana 

For Respondent : 

Crowley, Kilbourne, Haughey, Hanson and Gallagher, 

Billings, Montana 

Septhen H. Foster argued, Billings, Montana 

Submitted: June 18, 1975 
Mr. Chief Justice James T. Harrison delivered the Opinion 

of the Court. 

This is an appeal by defendants from a judgment entered 

in the district court, Yellowstone County, on December 16, 1974; 

which permanently enjoined defendants from issuing title insurance policies as to property in this state, subject to certain 

exceptions. The injunction was suspended during the pendency 

of this appeal. 

The facts were stipulated and in brief are: (1) Plaintiff Montana Land Title Association is a nonprofit Montana corporation. (2) Defendant First American Title and Escrow of 

Billings is a limited partnership. (3) Defendant First America 

Title Insurance is a California corporation doing business in 

the state of Montana. (4) That defendants are issuing and underwriting title insurance policies without written evidence of the 

condition of title certified by one holding a certificate of 

authority issued under section 66-2111, R.C.M. 1947. (5) Such 

policies are not issued through a licensed title insurance agent 

as required by section 40-4601, R.C.M. 1947. 

Section 40-4601 provides, so far as pertinent here: 

"No title insurance policy as to property in this 

state shall be issued by any insurer unless based 

upon evidence of the condition of title certified 

in writing as of the date of the policy by some 

person, firm, or corporation holding a certificate 

of authority issued under section 66-2111, to 

engage in the title abstracting business in the 

county in which the property is located; except, 

that this provision shall not apply as to title 

insurance policies issued upon the basis of an 

opinion of an attorney, duly authorized to practice law in this state, as to the condition of 

the title following a review by such attorney of 

pertinent title records or abstracts, and issued 

through a licensed title insurance agent who was 

so licensed and was regularly procuring title 

insurance policies issued upon such basis up to 

the effective date of this code." 

Only two issues are raised on appeal. First, defendants 

contend the district court did not have jurisdiction by reason 
of the failure of plaintiff to exhaust or pursue the administrative remedies provided by sections 40-2720 through 2725, 

R.C.M. 1947. It will not be necessary to discuss this issue 

in view of our holding on the second issue. 

That issue is, whether section 40-4601, R.C.M. 1947, is 

constitutional under the Montana Constitution or the Fourteenth 

Amendment of the United States Constitution. 

Section 40-4601 in essence states that title insurance 

companies may issue title insurance policies on the basis of a 

legal opinion of a duly licensed Montana attorney if they were 

doing so regularly on July 1, 1961, the effective date of the 

Act, but title insurance companies who were not doing so regularly on said date cannot issue title insurance policies based 

upon the opinion of a duly licensed attorney in the state of 

Montana. In other words, some licensed title insurance agents 

may issue title insurance based upon the opinion of a duly 

authorized Montana attorney, but others may not. It is defendants' contention that such discrimination violates the Fourteenth 

Amendment to the Constitution of the United States which states 

that no state shall "deny to any person within its jurisdiction 

the equal protection of the laws." 

Article 11, Section 17, 1972 Montana Constitution, is 

the counterpart of the Fourteenth Amendment to the United States 

Constitution, and states that "No person shall be deprived of 

life, liberty or property without due process of law." 

The constitutional guarantee of equal protection of the 

laws requires that all persons shall be treated alike under like 

circumstances and conditions, both in the privileges conferred 

and in the liabilities imposed. 

This Court early adhered to this guarantee, as expressed 

in State v. Cudahy Packing Co. 33 Mont. 179, 186, 82 P. 833, in 
these words: 

" * * * 'the equal protection of the laws is a 

pledge of the protection of equal laws,' herein declaring, in substance, that not only must the law 

as enacted furnish equal protection to all, but 

also that the legislature, in enacting any law, 

must so adjust its provision that it will operate 

equally upon the individuals constituting the class 

of citizens whose conduct it is intended to control." 

Plaintiff relies heavily on State ex rel. Freeman v. 

Abstracters Board of Examiners, 99 Mont. 564, 580, 45 P.2d 

668 (1935) which upheld section 66-2112, R.C.M. 1947, requiring 

abstracters to have abstract books or indices, but permitted 

the issuance of a temporary license for a period of one year 

only to abstracters who, on the effective date of the Act, were 

in the process of preparing abstract books or indices. The 

Court rejected the contention that the statute was arbitrary 

and discriminatory, and in its opinion made this comment: 

"As to those in business and then holding a certificate issued under the old law, they are entitled 

to a certificate for one year from the expiration 

of the current certificate, at the end of which they 

must comply with the requirements of the Act or go 

out of business, or those who are making an honest 

effort to perfect a plant are permitted a temporary 

certificate on showing that they have their books 

half completed; this certificate may be renewed 

once, and once only. This, it would seem, constitutes a reasonable classification, if it may be 

called classification. The constitutional provisions 

against discrimination do 'not forbid statutes and 

statutory changes to have a beqinninq, and thus to 

discriminate between the rights of an earlier and 

later time.' All things must have a period of adjustment, and such classification is not 'arbitrary 

classification.' (Sperry & Hutchinson Co. v. Rhodes, 

220 U.S. 502, 31 Sup.Ct. 490, 491, 55 L.Ed. 561; 

Williams v. Walsh, 222 U.S. 415, 421, 32 Sup.Ct. 

137, 56 L.Ed 253.)" (Emphasis ours.) 

Defendants contend that this is what happens here, in 

that the statute involved here has no period of adjustment provided for whatsoever, and title insurance agents issuing policies 

on the basis of legal opinions on the date of enactment of the 

Act can presumably forever continue to do so, whereas, all other 

title insurance agents must build and have certified an abstract 
plant. They assert such unequal treatment is violative of the 

Fourteenth Amendment since it creates a tremendous burden of 

time and expense on title insurance agents writing policies 

subsequent to the date of the Act as compared to title insurance 

agents who were and still are allowed to write title insurance 

policies on the basis of a legal opinion, without any abstract 

plant whatsoever. 

Admitting there may be classifications provided for by 

the laws, but one of the essential requirements is that they 

shall not be capricious or arbitrary, be reasonable and have a 

rational basis. 

Equal protection of the laws means subjection to equal 

laws applying alike to all in the same situation. While reasonable classification is permitted without doing violence to the 

equal protection of the laws, such classification must be based 

upon some real and substantial distinction bearing a reasonable 

and just relation to the things in respect to which such classification is imposed; such classification cannot be arbitrarily 

made without any substantial basis. Arbitrary selection cannot 

be justified by calling it classification. See: State v. Safeway Stores, Inc., 106 Mont. 182, 76 P.2d 81; Southern R. Co. v. 

Greene, 216 U.S. 400, 30 Sup.Ct. 287, 54 L.Ed 536; Atchison T. 

& S. F. R. Co. v. Vosburg, 238 U.S. 56, 35 Sup.Ct. 675, 59 L.Ed 

1199; Colgate v. Harvey, 296 U.S. 404, 56 Sup.Ct. 252, 80 L.Ed 

299, 102 A.L.R. 54; Hartford S.B.I. & Ins. Co. v. Harrison, 301 

U.S. 459, 57 Sup.Ct. 838, 81 L.Ed 857; Royster Guano Co. v. 

Virginia, 253 U.S. 412, 40 Sup.Ct. 560, 64 L.Ed 989; Mallinckrodt 

Chemical Works v. Missouri ex rel. Jones, 238 U.S. 41, 35 Sup. 

Ct. 671, 59 L.Ed 1192, 1198. 

We have many times discussed equal protection of the 

laws and reasonable classification and we observe no need to 
quote from such opinions here. As illustrative cases we refer 

to these: Brackman v. Kruse, 122 Mont. 91, 199 P.2d 971; 

Garden Spot Market v. State Board of Equalization, 141 Mont. 

382, 378 P.2d 220; State ex rel. Bennett v. Stow, 144 Mont. 599, 

399 P.2d 221; State ex rel. Schultz-Lindsay v. Board of Equalization, 145 Mont. 380, 403 P.2d 635; Great Falls National 

Bank v. McCormick, 152 Mont. 319, 448 P.2d 991; and cases therein 

cited. 

In our view section 40-4601, R.C.M. 1947, discriminates 

in favor of those agents who were writing title insurance on the 

basis of legal opinions on July 1, 1961, and against those licensed 

agents who later attempted to do so and thereby is in violation 

of the guarantee of equal protection of the laws and unconstitutional. 

The judgment is reversed and the cause remanded to the 

district court which is directed to enter judgment for defendants. 

Chief Justice 

We concur: 

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2 

3 

-' Justices