### No. 

### 13530

IN

### THE SUPREME 

### COURT 

### OF THE STATE OF 

### MONTANA 19 7

### 6

FIRST 

### NATIONAL BANK IN

### BOZEMAN, 

### atBOZEMAN, 

### 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. 

### Murfitt argued, Special Assistant Attorney

General, Helena, Montana Berg, Angel, Andriolo & 

### Morgan, Bozeman, Montana

Submitted: October 

### 28, 1976 DecidedDEC

## 30 

# 1976

Filed

### : t

### ALGJ IJ *.jLjfjMr. Justice John Conway Harrison delivered the Opinion of the Court.

This isan action ininterpleader brought by the First National Bank inBozeman (Bank) naming Sourdough Land and Cattle Company (Sourdough), the Montana Educational Broadcasting Commission and the State ofMontana

as defendants. Sourdough sought to satisfy a judgment against the state of Montana by garnisheeing State funds held by the Bank. The judgment was inthe amount of $220,000. Itarose 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 ofThomas L. Judge, Governor, Frank Murray, Secretary of State, and Robert L. Woodahl, Attorney General, was entered intofor the compromise and settlement of the contractual claim against the state inthe amount of $220,000. Judgment was entered inthat amount and presented to the special session of the Forty-fourth LegislativeAssembly which was called by a proclamation of the governor and limitedto: 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 ofwhich was not anticipated when the legislature met inregular session. No action was taken by that body to satisfythe judgment. Thereafter, Sourdough caused the sheriff ofGallatin County to execute upon the $220,000 on deposit with the First National Bank inBozeman. The Bank furnished a certifiedcheck inthat amount from an account of the state but brought this action seeking to have Sourdough and the state interpleadtheir claims and to have the court adjudicate the rights of the parties to the money. The districtcourt found (1) that the statewas not a judgment creditor within the meaning ofthat term as used inChapter 58, Title 93, R.C.M. 1947; (2) that therewas one remedy for Sourdough pursuant to section 83-607, R.C.M. 1947; (3) that the special session was not the legislativeassembly next succeeding the date ofjudgment; and 

### (4) that the term referredtowas 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 ofthe state on deposit with the Bank? (2) Is section 83-607, R.C.M. 1947, the sole means ofobtaining satisfaction ofa judgment against the state? (3) To what does the term "legislative assembly" refer and was the special session the "legislative assembly ofthe state ofMontana next succeeding the date ofjudgment" within the meaning of section 83-607? (4) 

### Ifthe state isnot subject to execution and 

### ifthe sole means of satisfying a judgment against the state ispursuant tosection 83-607, and ifthe 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 isa "judgment debtor" Sourdough makes several arguments. Itargues there isnothing inChapter 58, Title93, R.C.M. 1947, which either excludes or includes the state. By analogy tothe definitionofdebt insection 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, Mont

# . , 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 clearmanifest intention to do 

### so, has been relaxed in modern times. This itclaims is a basis for including the statewithin 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.

## " Itis argued that this Article does 

### not apply, and if itdid, it

### would operate to harm other rights chiefly due process guarantees. Sourdough isundoubtedly 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 itsenforcement.' 

### "'

## *

## * * the general rule has been relaxed in modern times. Accordingly, the statemay 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 ingood faith supplies necessary articles toa child, to recover the reasonable value of such articles from the parent. It isclear that such construction would give the state power and would not impair the sovereign powers of the state. The broad construction ofjudgment debtor does not result in the state gaining any beneficial powers and itdoes impair the sovereign power of the state. See Waterbury v. Board of Commissioners ofDeer Lodge County, 10 Mont. 515, 

### 26 P. 1002. InHaterbury the Court came to this same conclusion and quotedwith approval the discussion inMerwin v. City of Chicago, 45 

### Ill.133, 92 Am.Dec. 204. What was said inWaterbury about the seizure of revenues paralyzing government iseven truer today than it

was in1891 because the financial structure of government isinfinitelymore complex. To allow the state's creditors toseize state funds where they find them would cause chaos and allow the creditors toweaken government. InKlein 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 ofthese powers become part of the machinery of government, and to permit a creditor toseize and sell them tocollect his debt would be to permit him insome degree todestroy government itself

# ." We hold that the state as a "judgment debtor" and subject toexecution would result inthe impairment of itssovereign powers and would be contrary to public policy. Sourdough next argues that because section 93-5814(10) specifically excludes certain county and cityproperties from execution, this implies that the state isa judgment creditor because there would be no need to exclude some types of governmental property unless other types ofproperty

were subject toexecution. Section 93-5814(10) isnot a model ofdraftmanship, ithas been amended several times, and as itpresently reads grants the exemptions only tomarriedjudgment creditors. Itseems unlikely that there are many marriedjudgment creditors who own county courthouses, jails or public offices. This section was probably originally enacted as a part of a listofthose 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 isto read too much intothe statute. The state isnot a judgment debtor and itsfunds

are not subject to execution. The sole means of collectinga judgment against the state in

a contractual dispute isthat provided insection 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 offunds appropriated by the legislativeassembly ofthe state ofMontana next succeeding the date ofjudgment." 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 ofthe treasury unless upon an appropriation made by law and a warrant drawn by the proper officer inpursuance thereof." The Convention Notes indicate: "No change except ingrammar [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. InToomey the legislature required by statute that an amount sufficient to meet the principal and interest on state treasury notes be setaside out ofthe genera1 fund. Toomey was discussed inState ex rel. Dean v. Brandjord, 108 Mont. 447, 454, 455, 92 P.2d 2731 "The phrase contained inthe constitutional provision, 'appropriations made by law' does not requirethe 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 ofthe requirement is, 'that no specific language isnecessary to make an appropriation, for the test isas towhether or not the people have expressed an intention that the money inquestion be paid.' [Citing cases.] Illustrative ofthis type of compliance with the constitutional requirement of 'appropriations by law' inthisjurisdiction 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 fixedby law and which were ordered paid, or at leastwarrants drawn therefor without express appropriations having been made for their payment.

## " There has been no express intent that the money, inthis case the judgment, be paid that would substitute for an express appropriation by the legislative assembly. While it isclear the statutory section imposes a duty upon the legislaturetopay the judgment, that isnot enough. InBrandjord, the Court said: 

### " 

## * * * But the mere duty on the part of the legislature tomake an appropriation does not satisfy the requirement of an 'appropriation by law' any more than does the promise of the government topay money or make an appropriation." Sourdough argues it isdenied the rightto full redress if itcannot execute against the state, but this isnot the case. Here the state has set up a procedure for satisfyingjudgments against 

### itwhich protects the interests of the state and prevents the disruption of the orderly processes of government. The reasons for the procedure set out insection 83-607, 

### R.C.M. 1947, are the same ones which deny Sourdough the righttoexecute against the state. The payment ofthe judgment here must be part of an orderly budgetary process. The random seizure of state assets would likely result inthe disruption oforderly government. The presentation of the amount due tojudgment creditors atthe beginning of the normal budgetary process allows the legislativeassembly to order itsfunding priorities, while the seizure offunds from one agency or one department would allow chaos in budgeting. Sourdough contends itcomplied with the provisions ofsection 

## Lc7 83-697-, 

### R.C.M. 1947, when itpresented an appropriation bill to the special session. The question raised by this contention isthis: Was the special session the "legislative assembly" next succeeding? The term legislative assembly isused inChapter 2, Title43, R.C.M. 1947, which isentitled "THE LEGISLATIVE ASSEMBLY--ITS COMPOSITION, ORGANIZATION, OFFICERS AND EMPLOYEES." Insection 43-201, itisstated:"The legislative assembly consists of senators and representatives elected from the several senatorial and respresentative districts ofthe state inthe number specified by law." This provision speaks ofthe legislative assembly interms of itsmembers and not interms of the time atwhich itmeets. There isreference to "Each session ofthe legislativeassembly" insection 43-205 and in section 43-207 there isreference to "the meeting ofany regular session of the legislativeassembly". It seems clear that when the legislature intended to speak of sessions ofthe unique group of senators and representatives that make up each legislativeassembly that itchose to do so by using the word "session". The reference insection 83-607, R.C.M. 1947 tothe "legislative assembly next succeeding the judgment" is

### a reference, in this case, tothe Forty-fifth Legislative Assembly meeting in1977. This isconsistent with the logic behind the statute which isto incorporate the judgments intothe orderly budgetary process. It ispossible, as was the case here, that the next session ofthe legislativeassembly 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 toconsider and incorporatejudgments against the state into a careful budget. Because we find Sourdough has not followed the proper procedure, there isno need toanswer the lastquestion raised by it. The judgment of the districtcourt isaffirmed.

/