NO. 91-228 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

RAE SUBDIVISION COUNTY WATER 

& SEWER DISTRICT NO. 313, a Montana 

public service corporation, 

Plaintiff and Respondent, 

V. I 

FRANK J. TRUNK & SON, a Montana 

partnership; FRANK J. TRUNK, JR., 

PATRICIA A. TRUNK: and MARIE DOTING, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas A. Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Brian H. Gallik (argued), James H. Goetz, 

Goetz, Madden & Dunn, Bozeman, Montana: 

J. David Penwell, Bozeman, Montana: 

John Brown, Cok & Wheat, Bozeman, Montana 

For Respondent: 

Michael J. Lilly (argued), Berg Law Firm, 

Bozeman, Montana 

Filed: 

Submitted: October 10, 1991 

Decided: December 4, 1991 

i 

'Clerk 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

RAE Subdivision Water and Sewer District (RAE) sued the Trunks 

in the Eighteenth Judicial District Court in Gallatin County to 

collect "annual assessments1' for the retirement of bonded 

indebtedness. The parties stipulated to relevant facts and then 

filed separate summary judgment motions. The District Court 

granted RAE'S motion and denied the Trunks' motion. The Trunks 

unsuccessfully moved for reconsideration, and now appeal. We 

reverse. 

The issues are: 

1. Did the District Court err in finding that RAE has 

authority to levy "annual assessmentst1 against the Trunks? 

2. Did the District Court err in finding that the Trunks are 

personally liable for these "annual assessments"? 

Because we conclude that RAE had no authority to levy "annual 

assessments," we will not address the second issue. 

RAE is a water and sewer district located outside Bozeman. 

The Trunks own unimproved real property within the district but 

that property is not connected to RAE'S water and sewer system. 

The Trunks can demand to be connected to the system at any time, 

but had not done so at the time of this litigation. RAE finances 

its physical plant and operations through monthly service charges, 

special assessments, and "annual assessments. RAE uses the 

"annual assessments" to retire bonded indebtedness it incurred to 

finance the construction of its water and sewer system. 

2 
RAE bills only those property owners who are actually 

connected to the system for monthly service charges. It also 

levies "annual assessments" against all property owners within the 

district, regardless of whether the property is actually connected 

to the water and sewer system. RAE has never billed the Trunks for 

monthly service charges, but it has levied "annual assessments" 

against them. The Trunks have not paid these "annual assessments" 

since 1981, and if the assessments are valid the amount currently 

delinquent is $110,196.09. 

In 1985, RAE sued the Trunks to foreclose a lien for 

assessments against their property. The District Court dismissed 

that action on the theory that only Gallatin County could foreclose 

such a tax lien. RAE did not appeal. Instead, RAE requested 

Gallatin County to collect the assessments. Gallatin County 

refused, and RAE sought a writ of mandamus to compel the county to 

do as it asked. The District Court denied the writ, holding that 

Gallatin County had no clear legal duty to collect the delinquent 

assessments. RAE appealed, and we affirmed. RAE Siibdivisioii v. Gnllariii 

COUfZly (1988), 233 Mont. 456, 460, 760 P.2d 755, 757 (MEI). RAE 

then filed the instant action and ultimately prevailed in the 

District Court. 

The issue in this appeal is whether the District Court erred 

in finding that RAE has authority to levy "annual assessments" 

against the Trunks. 

3 
The statutes governing fund-raising devices for water and 

sewer districts do not expressly provide for "annual assessments." 

Section 7-13-2301, MCA, provides in pertinent part: 

7-13-2301. Establishment of charges for services. (1) The 

board of directors shall fix all water and sewer rates 

and shall, through the general manager, collect the sewer 

charges and the charges for the sale and distribution of 

water to all users. 

(2 ) The board in thefumishing of water, sewer service, other services, and 

facilities shall fix such rate, fee, toll, rent, or othercharge 

as will pay the operating expenses of the district, 

provide for repairs and depreciation of works owned or 

operated by it, pay the interest on any bonded debt, and 

so far as possible, provide a sinking or other fund for 

the payment of the principal of such debt as it may 

become due. [Emphasis added.] 

The Trunks argue that this section applies only to users and that 

it cannot apply to those who are not connected to the water and 

sewer system. RAE concedes that subsection (1) is limited to users 

but argues that the words "other charge" in subsection (2) 

authorize it to assess non-users in order to make them pay their 

fair share of the bonded indebtedness. 

Section 7-13-2302 (l), MCA, describes what happens if the 

fund-raising devices listed in 5 7-13-2301, MCA, prove inadequate: 

7-13-2302. Levy of taxes to meet bond obligations and 

other expenses. (1) If from any cause the revenues of 

the district shall be inadequate to pay the interest orpnncipal of any 

bonded debt as it becomes due or any other expenses or claims 

against the district, then the board of directors must . . . furnish to the board . . . of county commissioners . . . an estimate in writing: 

(a) of the amount of money required by the district forthe 

payment of the principal of or interest on any bonded debt as it becomes due : 

(b) of the amount of money required to establish 

reasonable reserve funds . . . and 

4 
(c) of the amount of money required by the district for 

any other purpose set forth in this section. [Emphasis 

added. ] 

The county commissioners must then levy an appropriate tax on the 

lands in the water and sewer district. Section 7-13-2302(2), MCA. 

The Trunks argue that this is the only procedure RAE can use to 

reach non-users. RAE admits that it did not follow this lltaxll 

procedure but argues that the l1taxlr procedure becomes necessary 

only in the event of an emergency. 

In RAE'S view, the only relevant distinction between the 

statutes is the identity of the assessing or taxing entity. RAE 

argues that 5 7-13-2301, MCA, lists the fund-raising devices 

available to the district and that 5 7-13-2302, MCA, lists the 

fund-raising devices available to the county. By this argument, it 

seems to imply that the revenue powers of the district and the 

county are co-extensive, and that the district has an "assessment" 

power very similar to the county's "taxing" power. We disagree. 

The statutes governing the county "tax" procedure require 

notice, 5 7-13-2304, MCA, and a hearing, 5 7-13-2307, MCA. Section 

7-13-2301, MCA, the statute upon which RAE relies for its 

"as~essment~~ power, does not contain any similar notice and hearing 

provisions. Thus, RAE argues that it can achieve by fiat what the 

county cannot do without affording fundamental due process. 

We find it instructive to compare 5 7-13-2301, MCA, with the 

statutes governing conservancy districts. These districts have 

express statutory authority to levy assessments without supervision 

5 
by the county commissioners. Section 85-9-601, MCA. Furthermore, 

conservancy districts are statutorily obligated to provide due 

process. Section 85-9-602, MCA. In order to conclude that RAE is 

authorized to levy assessments, we would have to imply that power 

where it does not exist in 5 7-13-2301, MCA. In construing 

statutes, it is not our role to "insert what has been omitted." 

Section 1-2-101, MCA. Thus, we decline to read an assessment power 

into § 7-13-2301, MCA. 

RAE cites RAE1 for the proposition that we have already 

upheld the assessments at issue in this case. In particular, RAE 

points to the following language in that opinion: 

RAE has the power to sue under § 7-13-2217(1) (b) , MCA. 

We conclude that under that statute and 5 7-13-2301, MCA, 

RAE had the power to bring an action to collect the 

delinquent assessments from Mr. Trunk, without referring 

the same to the county for collection as taxes. 

[Emphasis added.] 

RAE 1, 760 P.2d at 757. Because the Trunks were not parties to 

RAEI, RAE concedes that collateral estoppel does not apply. 

Instead, it argues that the quoted language should be extremely 

persuasive in our resolution of the present appeal. We do not 

share RAE'S assessment of the import of that language. 

In RAEI we framed the issue as follows: 

Did the trial court err in concluding that Gallatin 

County did not have a clear legal duty to collect the 

deliizqueizt water and sewer assessments levied by RAE? 

[Emphasis added.] 

6 
RAE I, 760 P.2d at 756. We held that the county had no duty to 

collect RAE'S assessments under the circumstances of this case 

because the assessments had not been levied by the county. We 

said: 

We conclude that the statutes do not set forth a clear 

legal duty on the part of the county to collect the 

delinquent water charges. The county can assess taxes 

sufficient to cover both the bonded indebtedness payments 

and operating expenses, but in order to do so there must 

be notice given in advance so that all interested parties 

may protest the tax levy. Section[s] 7-13-2304 through 

2307, MCA. Delinquent water and sewer assessments levied 

against an individual are different from taxes levied 

against all property within the district under 

3 7-13-2302, MCA. [Emphasis in original.] 

RAEI, 760 P.2d at 757. 

Neither RAE nor Gallatin County briefed or argued the validity 

of the assessments themselves. That question was not before us. 

We held only that 3 7-13-2301, MCA, did not impose a clear legal 

duty upon Gallatin County to collect RAE'S assessments once they 

had become delinquent. MEI, 760 P.2d at 757. Any discussion by 

this Court of the underlying validity of the assessments themselves 

was therefore dicta and not binding for purposes of this appeal. 

We hold that 5 7-13-2301, MCA, does not authorize RAE to levy 

"annual assessmentstt against non-users. The assessments were 

therefore void. 

Reversed. 

7 
We concur: 

A 

Chief Just'ice 

Justices 

a 
Justice Fred J. Weber specially concurs as follows: 

As I agree with the legal analysis of the majority opinion, I 

join in the holding. 

In RAE I, 760 P.2d at 757, we stated: 

RAE has the power to sue under § 7-13-2217(1) (b) , MCA. We conclude that under that statute and 5 7-13- 

2301, MCA, RAE has the power to bring an action to 

collect the delinquent assessments from Mr. Trunk, 

without referring the same to the county for collection 

as taxes. We recognize that this conclusion contradicts 

the ruling of the district court in the first action 

brought by RAE. Unfortunately, RAE chose not to appeal 

the judgment in that case. 

The foregoing constitute the Court's conclusion that RAE had the 

power to sue under the statute and the power to bring an action to 

collect the delinquent assessments from Mr. Trunk. That is the 

procedure followed in the present action which we are now 

considering on this appeal. 

I am not able to join in the conclusion stated by the 

majority: "Any discussion by this Court of the underlying validity 

of the assessments themselves was therefore dicta and not bindinq 

for purwoses of this ameal." (Emphasis added.) Technically it is 

true that the stated conclusions were dicta because the only issue 

presented in the case was whether or not the county had a duty to 

collect the delinquent assessments; but that does not address the 

clear suggestion made by the Court of the appropriate procedure. 

I believe it more appropriate to acknowledge that we made a 

mistake in RAE. It is true that we did not have all of the facts 

before us in RAE I and it is also true that the present case 

establishes that the conclusion in RAE I was incorrect. As the 

9 
author of RAE I, I prefer to acknowledge our mistake in reaching 

the stated conclusions, rather than using a theory of dicta to 

disclaim responsibility. 

mustice 

10 
December 4, 1991 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the 

following named: 

James H. Goetz 

Brian K. Gallik 

GOETZ, MADDEN & DUNN, P.C. 

35 North Grand 

Bozeman, MT 59715 

J. DAVID PENWELL 

125 West Mendenhall 

Bozeman. MT 59715 

John Brown 

COK & WHEAT 

P.O. Box 1105 

Bozeman, MT 59771-1105 

Michael J. Lilly 

BERG LAW FIRM 

910 Technology Blvd., Suite A 

Bozeman, MT 59715 

ED SMITH 

THE SUPREME COURT 

MONTANA 

Deputy