No. 80-306 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

THE STATE OF MONTANA, acting by and through the 

Department of Highways of the State, 

Plaintiff and Respondent, 

VS . 

THE CITY OF HELENA, 

Defendant and Appellant. 

Appeal from: District Court of the First Judicial District, 

In and for the County of Lewis and Clark. 

Honorable Gordon Bennett, Judge presiding. 

Counsel of Record: 

For Appellant: 

Hull and Sherlock, Helena, Montana 

Jeffrey M. Sherlock argued, Helena, Montana 

For Respondent: 

Beate Galda argued, Helena, Montana 

Submitted: June 17, 1981 

Decided: August 11, 1981 

Filed : AUG 11 1981 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the 

Court . 

~efendant city of Helena appeals from a declaratory judgment entered June 19, 1980, in the District Court of the First 

~udicial District. The judgment ordered the City to pay 25 

percent of costs incurred in the relocation of certain utility 

facilities owned by the City. 

On August 9, 1974, Helena's Broadway Avenue between Montana 

and Warren Streets was approved to become part of the Federal 

Aid Urban System. With such designation, jurisdiction over 

Broadway Avenue was transferred from the City to the Montana 

Highway Department. Construction of the project was completed 

on May 15, 1979. 

A necessary part of the project was the relocation of certain facilities owned by the City and used in its water, sewer 

and light systems. On May 16, 1977, the City and the Montana 

Highway Department entered into an agreement concerning the 

relocation of those facilities. The parties agreed that the relocation of the facilities was necessary and in the public interest, and the City granted the State the authority to adjust, 

replace, repair and relocate the facilities. In the document 

both parties indicated they could not agree on the proper allocation of relocation costs; however, they did not wish the dispute to interfere with the construction project. Therefore, 

the parties agreed to allow the Montana Highway Department to 

proceed with the project and to litigate the cost dispute. The 

cost of relocation relevant to this action amounted to $14,572.80 

On June 19, 1980, the District Court issued its order requiring 

the City of Helena to pay 25 percent of the relocation costs, 

equivalent to $3,643.20. 

The following issues are raised by the City of Helena on 

appeal : 
1. whether the City of Helena is required by section 

60-4-403, MCA, to pay 25 percent of the utility relocation costs 

incurred as a result of the Broadway Avenue project; 

2. whether the necessary relocation of municipally-owned 

utility systems is a taking of private property requiring just 

compensation; 

I 3. whether the doctrine of local self-government prevents 

the application of section 60-4-403, MCA, to Montana's cities; 

and 

4. whether requiring municipally-owned utility systems to 

pay 25 percent of relocation costs imposes an unlawful tax or 

debt upon municipal residents. 

The City contends that section 60-4-403, MCA, is inapposite 

and that the City is entitled to be paid just compensation because the State has exercised its eminent domain power. The 

City would have the State pay as just compensation the entire 

relocation cost. The State is willing to be responsible for 75 

percent of the cost as provided for in the statute. 

The District Court concluded that the City of Helena was 

required by section 60-4-403, MCA, to pay 25 percent of the 

costs incurred in the relocation of the utility facilities on 

Broadway Avenue. Sections 60-4-401 et seq., MCA, provide for 

the relocation of utility facilities on any of the Federal Aid 

Urban System projects. The statute provides that 75 percent of 

all costs of relocation are to be paid by the State Highway 

Department. The statute expressly applies to both publicly and 

privately owned utilities. A city acting in its proprietary 

capacity as an operator of water, sewer and lighting facilities 

is a public utility. Section 69-3-101, MCA; Leischner v. 

Knight (1959), 135 Mont. 109, 337 P.2d 359. 
The City contends that the relocation statute, sections 

60-4-401 et seq., MCA, does not apply to this case because the 

City had jurisdiction of the street when the utilities were originally installed. The City relies on Jones v. Burns (1960), 

138 Mont. 268, 357 P.2d 22, and construes Jones to hold that 

sections 60-4-401 et seq., MCA, control only when the utilities 

were initially installed pursuant to section 69-4-101, MCA. 

Therefore, the City argues that since it did not need the State's 

permission to locate its facilities on Broadway, section 60-4-403, 

MCA, does not apply. However, Jones does not stand for the proposition that the two statutes are interrelated in the manner suggested by the City. In Jones, the predecessor to sections 60-4- 

401 et seq., MCA, was attacked on numerous constitutional grounds. 

It was argued that the relocation statute would transform a bare 

permissive use of public roads by utility companies into a vested 

property right. Section 69-4-101, MCA, was cited to illustrate 

that the telephone and telegraph companies involved in the litigation did not have a vested property right, but rather a mere 

permission from the state to locate facilities on the public ways. 

This Court found that the relocation statute did not give the 

utility companies a vested property right to place facilities 

in the public way, but rather the statute merely recognized an 

equitable right in the utility companies to be protected against 

any loss they might suffer as a result of the state's exercise 

of its police power. 

The state has ownership and control of all city streets in 

Montana, and if the state chooses to delegate authority to the 

city to control its streets, the city becomes a trustee thereof. 

Palffy v. Director of Finance of City of Bozeman (1975), 168 

Mont. 108, 540 P. 2d 955; State v. State Water Conservation ~oard 

(1958), 134 Mont. 403, 332 P.2d 913; City of ~illings v. ~erold 

(1956), 130 Mont. 138, 296 P.2d 263; Bidlingmeyer v. city of 
Deer Lodge (1954), 128 Mont. 292, 274 P.2d 821. The state may 

also revoke the jurisdiction given to the city to control and 

maintain the city streets. Bidlingmeyer, supra. The City of 

Helena, exercising the jurisdiction delegated to it by the 

State, granted itself a franchise to use the streets for location 

of utilities controlled by the City in its proprietary capacity. 

When operating in a proprietary capacity, a city is subject to the 

same burdens, responsibilities and liabilities as a private 

business and is entitled to the same rights, privileges and immunities. State v. Holmes (1935), 100 Mont. 256, 47 P.2d 624. 

When the jurisdiction of Broadway Avenue was transferred from 

the City of Helena to the Montana Highway Department, the nature 

of the City's rights as a public utility did not change. Under 

common law, any franchise granted to a public or private utility 

to use city streets is subject to an implied obligation to relocate its facilities therein at its own expense when necessary 

to make way for a proper governmental use of the streets. Jones 

v. Burns (1960), 138 Mont. 268, 357 P.2d 22; Connecticut Ry. & 

L. Co. v. New Britain Redev. Comm'n (1971), 161 Conn. 234, 287 

A.2d 362; McQuillin, Municipal Corporations, §§ 34.72, 34.74(a), 

(1970 ed.). The fact that the governing body which requires the 

relocation was not the grantor of the franchise does not affect 

the power to require relocation, nor does it affect the applicability of sections 60-4-401 et seq., MCA. 

It is the position of the City of Helena that the utility 

facilities were the private property of the City and that just 

compensation must be paid under Mont. Const., Art. 11, Sec. 29, 

for the "taking" of the facilities. The District Court found 

that when the State requests the utility to move its facilities, 

there is no "taking" in the constitutional sense. There was no 

error in this conclusion. 
While it is true that private property of a municipality 

cannot be taken without just compensation, City of Three Forks 

v. State Highway Commission (1971), 156 Mont. 392, 480 P.2d 826; 

and that the utility facilities are the private property of the 

municipality acting in its proprietary capacity, appellant's 

conclusion that forced relocation of the utilities requires just 

compensation does not follow. 

If the state action is a proper exercise of the ,pol-ice 

power and is directly connected with matters of public health, 

safety and welfare, a reasonable burden may be imposed upon 

private property without compensation. Yellowstone Valley 

Electric Cooperative, Inc. v. Ostermiller (1980), - Mont. - I 

- P. 2d , 37 St.Rep. 536. On the other hand, if the state 

action is an exercise of the eminent domain power whereby 

private property is taken for a public use, just compensation 

is required. See e.g. McTaggert v. Montana Power Co. (1979), 

- Mont. P. 2d -I - - , 36 St.Rep. 2079. The line of demarcation is not always clearly visible. 

In McTaggert, the owner of agricultural land petitioned 

for relocation of a utility line pursuant to sections 69-4-401 

et seq., MCA, alleging that he desired to install a new irrigation system and that the utility line which crossed his land 

interfered with the planned system. The statutes were found 

to constitute a taking of private property for public use under 

the eminent domain power rather than an exercise of the pol-ice 

power. Public health, safety and welfare were only indirectly 

concerned. 

The Yellowstone Valley case involved a challenge to a 

statute which required utilities at their own expense to raise 

or remove their transmission lines to allow for the passage of 

oversized equipment and structures being moved on the public 

highways. Section 69-4-603, MCA. For several reasons the 
statute was found to be a regulation enacted within the police 

power of the state. Public safety was promoted by the statute 

which was intended to prevent electrical accidents. Second, 

a public benefit was conferred with minimal interference with 

the private rights of the utilities. And most significantly, 

there was no appropriation of a property right because: 

"In locating their facilities upon a public 

right-of-way, utilities and cooperatives are 

conferred a property right which, by its very 

nature, is subject to other competing franchises 

and privileges. The easement which is obtained 

is not an absolute property right; there is no 

right conferred upon utilities to have their 

facilities occupy a particular location." Yellowstone Valley Elec. Coop., Inc. v. Ostermiller, 

supra, 37 St.Rep. 536, 540. 

The McTaggert situation involved a greater property right, 

since the utility had an easement across private land which was 

disturbed by the application of the statute. 

The City of Helena did not have an absolute right to 

locate its utility facilities in the street, but rather the right 

was subject to the State's exercise of its police power. Jones, 

supra. The benefit to the public as a whole outweighed the 

temporary deprivation and inconvenience suffered by the City. 

We find that the District Court correctly concluded that when 

the State required the City to relocate its utilities, there was 

no taking in the constitutional. sense, but rather a legitimate 

use of the police power for which no compensation is required. 

Finally, the City argues that the doctrine of local selfgovernment prevents application of section 60-4-403, MCA, to 

Montana' s cities, and that the statute unconstitutionally compels the City to incur a debt or impose taxes without its consent. We find no merit in these contentions. The legislature 

in enacting sections 60-4-401 et seq., MCA, sought to alleviate part of the burden imposed upon utilities by the common 

law rule which required utilities to shoulder the entire 
expense of relocation of facilities. Jones, supra. The 

statutes require the State to assume 75 percent of the cost 

of relocation necessitated by federally aided projects. Since 

the statute alleviates most of the burden previously imposed 

upon utilities, the City's argument that the legislature has 

imposed a tax or compelled the incurrence of a debt must fail. 

Nor is the right of home rule adversely affected by the 

statute. It is difficult to perceive how a statute alleviating 

a financial burden could constitute an impermissibl-e meddling 

into purely local affairs. 

Affirmed. 

Chief Justice