No. 13530 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

19 7 6 

FIRST NATIONAL BANK IN BOZEMAN, 

at BOZEMAN, MONTANA, a national 

banking corporation, 

Plaintiff and Respondent, 

SOURDOUGH LAND and CATTLE COMPANY, a 

Montana corporation, MONTANA EDUCATIONAL 

BROADCASTING COMMISSION, an agency for 

the State of Montana, and THE STATE OF 

MONTANA, 

Defendants and Appellants. 

Appeal from: District Court of the Eighteenth Judicial District, 

Honorable W. We Lessley, Judge presiding. 

Counsel of Record: 

For Appellants : 

Morrow, Nash and Sedivy, Bozeman, Montana 

Edmund Sedivy argued, Bozeman, Montana 

For Respondent: 

Hon. Robert L. Woodahl, Attorney General, Helena, 

Montana 

Walter S. Murf itt argued, Special Assistant Attorney 

General, Helena, Montana 

Berg, Angel, Andriolo & Morgan, Bozeman, Montana 

Submitted: October 28, 1976 

DecidedDEC 3 0 1976 

Filed : t ALG J IJ *.jLjfj 
Mr. Justice John Conway Harrison delivered the Opinion of the Court. 

This is an action in interpleader brought by the First National 

Bank in Bozeman (Bank) naming Sourdough Land and Cattle Company (Sourdough), 

the Montana Educational Broadcasting Commission and the State of Montana 

as defendants. 

Sourdough sought to satisfy a judgment against the state of Montana 

by garnisheeing State funds held by the Bank. The judgment was in the amount 

of $220,000. It arose out of the refusal of a special session of the legislature to appropriate money to continue lease payments on a lease entered into 

by the Montana Educational Broadcasting Commission. The Commission was 

specifically directed by the legislature not to pay any future monies to 

Sourdough on the lease. Sourdough filed suit asking damages of $751,445.81 

as the amount due for the breach of the ten year lease. As provided by 

section 83-606, R.C.M. 1947, negotiations toward settlement began. A stipulation by the board of examiners for the state of Montana, such board consisting of Thomas L. Judge, Governor, Frank Murray, Secretary of State, and 

Robert L. Woodahl, Attorney General, was entered into for the compromise and 

settlement of the contractual claim against the state in the amount of $220,000. 

Judgment was entered in that amount and presented to the special session of 

the Forty-fourth Legislative Assembly which was called by a proclamation of 

the governor and limited to: 

1. Enactment of the six mill property tax levy authorized by 

section 84-3804, R.C.M. 1947. 

2. Amendment of the general appropriation bill s, House Bills 264, 

269, 271, 289 and 712, to appropriate and authorize expenditure funds, the 

receipt of which was not anticipated when the legislature met in regular 

session. No action was taken by that body to satisfy the judgment. 

Thereafter, Sourdough caused the sheriff of Gallatin County to 

execute upon the $220,000 on deposit with the First National Bank in Bozeman. 

The Bank furnished a certified check in that amount from an account of the 

state but brought this action seeking to have Sourdough and the state interplead 
their claims and to have the court adjudicate the rights of the parties 

to the money. 

The district court found (1) that the state was not a judgment 

creditor within the meaning of that term as used in Chapter 58, Title 93, 

R.C.M. 1947; (2) that there was one remedy for Sourdough pursuant to 

section 83-607, R.C.M. 1947; (3) that the special session was not the 

legislative assembly next succeeding the date of judgment; and (4) that 

the term referred to was the Forty-fifth Legislative Assembly meeting in 

1977. 

The issues presented for review are: 

(1) Is the state of Montana a "judgment debtor" within the meaning of Chapter 58, Title 93, R.C.M. 1947, thus allowing Sourdough to levy 

upon the monies of the state on deposit with the Bank? 

(2) Is section 83-607, R.C.M. 1947, the sole means of obtaining 

satisfaction of a judgment against the state? 

(3) To what does the term "legislative assembly" refer and was the 

special session the "legislative assembly of the state of Montana next 

succeeding the date of judgment" within the meaning of section 83-607? 

(4) If the state is not subject to execution and if the sole means 

of satisfying a judgment against the state is pursuant to section 83-607, 

and if the special session was the legislative assembly next succeeding the 

judgment, and since that body did not appropriate funds to pay the judgment, 

then what remedy does Sourdough have? 

On the first issue, whether the state is a "judgment debtor" Sourdough makes several arguments. It argues there is nothing in Chapter 58, 

Title 93, R.C.M. 1947, which either excludes or includes the state. By 

analogy to the definition of debt in section 18-101, R.C.M. 1947, which is 

general and could be read to include the state as a debtor, Sourdough argues 

that therefore the state can be a debtor and thus a judgment debtor. Sourdough points to State of Montana, Dept. of Soc. & Rehab. Services v. Hultgren, 

Mon t . , 541 P.2d 1211, 32 St.Rep. 1091, wherein this Court found that 
the general rule the state is not ordinarily considered within the purview of a statute, however general, unless there is a clear manifest 

intention to do so, has been relaxed in modern times. This it claims is a 

basis for including the state within the meaning of judgment creditor. 

Sourdough also argues that section 93-5814, R.C.M. 1947, which exempts 

certain property of the judgment creditor from execution,specifically 

certain property of cities and counties, by implication includes the state 

within the definition of judgment creditor or there would be no need to 

exempt governmental property. Article VIII, Section 14, 1972 Montana 

Constitution provides: 

"Except for interest on the public debt, no money shall 

be paid out of the treasury unless upon an appropriation 

made by law and a warrant drawn by the proper officer in 

pursuance thereof. " 

It is argued that this Article does not apply, and if it did, it would 

operate to harm other rights chiefly due process guarantees. 

Sourdough is undoubtedly correct in observing that the language of 

Chapter 58, Title 93, does not explicitly include or exclude the state as a 

judgment debtor. The analogy to section 18-101, R.C.M. 1947, definition of 

debtor, fails because that section is specifically hedged by the phrase 

" * * * within the meaning of this chapter * * *" indicating the intent 

that the definition not be generalized in the manner Sourdough wishes. 

State of Montana Dept. of Soc. & Rehab. Services v. Hultgren, 

Mont. , 541 P.2d 1211, 1213, 32 St.Rep. 1091, 1094, sets out the applicable 

rules: 

"' * * * the rule to be observed in the construction of 

statutes is that the state is not included by general 

words therein creating a right and providing a remedy for 

its enforcement.' 

"' * * * the general rule has been relaxed in modern times. 

Accordingly, the state may have the benefit of general 

laws; and the general rule has been held not to apply to 

statutes by which the government or a part or agency 

thereof is given powers rather than deprived of them, or 

where no impairment of the sovereign powers will result 

* * *"I (Emphasis supplied.) 

In Hultgren, the Court was dealing with the term "third person" in the context 

-4- 
of a statute empowering a third person, who in good faith supplies 

necessary articles to a child, to recover the reasonable value of such 

articles from the parent. It is clear that such construction would give 

the state power and would not impair the sovereign powers of the state. 

The broad construction of judgment debtor does not result in 

the state gaining any beneficial powers and it does impair the sovereign 

power of the state. See Waterbury v. Board of Commissioners of Deer Lodge 

County, 10 Mont. 515, 26 P. 1002. In Haterbury the Court came to this same 

conclusion and quoted with approval the discussion in Merwin v. City of 

Chicago, 45 Ill. 133, 92 Am.Dec. 204. What was said in Waterbury about 

the seizure of revenues paralyzing government is even truer today than it 

was in 1891 because the financial structure of government is infinitely more 

complex. To allow the state's creditors to seize state funds where they 

find them would cause chaos and allow the creditors to weaken government. 

In Klein v. City of New Orleans, 99 U.S. 149, 25 L Ed 430, 431, the United 

States Supreme Court said: 

"Property and revenue necessary for the exercise of these 

powers become part of the machinery of government, and 

to permit a creditor to seize and sell them to collect 

his debt would be to permit him in some degree to destroy 

government itself . " 

We hold that the state as a "judgment debtor" and subject to execution 

would result in the impairment of its sovereign powers and would be 

contrary to public policy. 

Sourdough next argues that because section 93-581 4(10) specifical ly 

excludes certain county and city properties from execution, this implies 

that the state is a judgment creditor because there would be no need to 

exclude some types of governmental property unless other types of property 

were subject to execution. Section 93-5814(10) is not a model of draftmanship, it has been amended several times, and as it presently reads 

grants the exemptions only to married judgment creditors. It seems unlikely 

that there are many married judgment creditors who own county courthouses, 

jails or public offices. This section was probably originally enacted as a 

part of a list of those things exempt under the common law from execution. 
Certainly to argue that such exemption of city and county property somehow 

makes state monies subject to seizure by a private creditor is to read too 

much into the statute. The state is not a judgment debtor and its funds 

are not subject to execution. 

The sole means of collecting a judgment against the state in 

a contractual dispute is that provided in section 83-607, R.C.M. 1947, 

entitled "Judgments--payment." which reads: 

"A final judgment shall be the obligation of the state 

of Montana, and shall be paid out of funds appropriated by 

the legislative assembly of the state of Montana next 

succeeding the date of judgment." 

This section conforms with the 1972 Montana Constitution, Article VIII, 

Section 14, which reads: 

"Prohibited payments. Except for interest on the public 

debt, no money shall be paid out of the treasury unless 

upon an appropriation made by law and a warrant drawn by 

the proper officer in pursuance thereof." 

The Convention Notes indicate: 

"No change except in grammar [Art.XII, Sec. 101". 

Sourdough argues that a case interpreting the 1889 sections, State 

-3, L 

ex rel. Toomey v. State Board of Examiners, 74 Mont. 1, 238 P. -339, stands 

for the proposition that "appropriation made by law" does not require a 

specific appropriation bill. In Toomey the legislature required by statute 

that an amount sufficient to meet the principal and interest on state 

treasury notes be set aside out of the genera1 fund. Toomey was discussed 

in State ex rel. Dean v. Brandjord, 108 Mont. 447, 454, 455, 92 P.2d 2731 

"The phrase contained in the constitutional provision, 

'appropriations made by law' does not require the introduction of an appropriation bill, the requirement being 

met by an appropriation sanctioned by law. (State ex rel. 

Toomey v. State Board of Examiners, 74 Mont. 1, 238 P. 316.) 

The usual statement of the requirement is, 'that no specific 

language is necessary to make an appropriation, for the test 

is as to whether or not the people have expressed an intention that the money in question be paid.' [Citing cases.] 

Illustrative of this type of compliance with the constitutional 

requirement of 'appropriations by law' in this jurisdiction 

are the cases of State ex rel. Rotwitt v. Hickman, 9 Mont. 

370, 23 P. 740, 8 L.R.A. 403; State ex rel. Buck v. Hickman, 

10 Mont. 497, 26 P. 386; State ex rel. Wade v. Kenney, 10 

Mont. 485, 26 P. 197. These cases dealt with salaries fixed 
by law and which were ordered paid, or at least warrants 

drawn therefor without express appropriations having 

been made for their payment. " 

There has been no express intent that the money, in this case the judgment, 

be paid that would substitute for an express appropriation by the legislative 

assembly. While it is clear the statutory section imposes a duty upon the 

legislature to pay the judgment, that is not enough. In Brandjord, the 

Court said: 

" * * * But the mere duty on the part of the legislature 

to make an appropriation does not satisfy the requirement 

of an 'appropriation by law' any more than does the promise 

of the government to pay money or make an appropriation." 

Sourdough argues it is denied the right to full redress if it cannot 

execute against the state, but this is not the case. Here the state has 

set up a procedure for satisfying judgments against it which protects the 

interests of the state and prevents the disruption of the orderly processes 

of government. 

The reasons for the procedure set out in section 83-607, R.C.M. 

1947, are the same ones which deny Sourdough the right to execute against 

the state. The payment of the judgment here must be part of an orderly 

budgetary process. The random seizure of state assets would likely result 

in the disruption of orderly government. The presentation of the amount 

due to judgment creditors at the beginning of the normal budgetary process 

allows the legislative assembly to order its funding priorities, while the 

seizure of funds from one agency or one department would allow chaos in 

budgeting. 

Sourdough contends it complied with the provisions of section 

Lc7 

83-697-, R.C.M. 1947, when it presented an appropriation bill to the special 

session. The question raised by this contention is this: Was the special 

session the "legislative assembly" next succeeding? The term legislative 

assembly is used in Chapter 2, Title 43, R.C.M. 1947, which is entitled 

"THE LEGISLATIVE ASSEMBLY--ITS COMPOSITION, ORGANIZATION, OFFICERS AND 

EMPLOYEES." In section 43-201, it is stated: 
"The legislative assembly consists of senators and 

representatives elected from the several senatorial and 

respresentative districts of the state in the number 

specified by law." 

This provision speaks of the legislative assembly in terms of its members 

and not in terms of the time at which it meets. There is reference to 

"Each session of the legislative assembly" in section 43-205 and in 

section 43-207 there is reference to "the meeting of any regular session 

of the legislative assembly". It seems clear that when the legislature 

intended to speak of sessions of the unique group of senators and representatives that make up each legislative assembly that it chose to do so by using 

the word "session". The reference in section 83-607, R.C.M. 1947 to the 

"legislative assembly next succeeding the judgment" is a reference, in 

this case, to the Forty-fifth Legislative Assembly meeting in 1977. This 

is consistent with the logic behind the statute which is to incorporate 

the judgments into the orderly budgetary process. It is possible, as was 

the case here, that the next session of the legislative assembly would be 

a special session called for limited purposes and not one which was going 

to go back through the budget and reorder it. The next session would not 

always be a proper place to consider and incorporate judgments against the 

state into a careful budget. 

Because we find Sourdough has not followed the proper procedure, 

there is no need to answer the last question raised by it. The judgment of 

the district court is affirmed. 

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