No. 12635 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

STATE OF MONTANA, EX REL. 

SLETTEN CONSTRUCTION COMPANY, 

a Montana Corporation, 

Petitioner, 

CITY OF GREAT FALLS, STATE OF MONTANA, 

CURTIS A. AMMONDSON, DONALD L. OSTREM, 

JOHN H . SHEFFELS , WILLIAM E. SAMSON and 

WILLIAM M. SCOTT, as Commissioners thereof, 

and DEPARTMENT OF REVENUE, STATE OF MONTANA, 

and KEITH L. COLBO, as Director thereof, 

Defendants. 

ORIGINAL PROCEEDING: 

Counsel of Record: 

For Petitioner: 

Jardine, Stephenson, Blewett & Weaver, Great Falls, 

Montana 

Alex Blewett argued, Great Falls, Montana 

For Defendants: 

John Yuenning and Paul Miller, Great Falls, Montana 

John Kuenning argued, Great Falls, Montana 

Smith, Emmons and Baillie, Great Falls, Montana 

James R. Walsh argued, Great Falls, Montana 

Terence B. Cosgrove argued, Helena, Montana 

Robert W. Corcoran appeared, Helena, Montana 

R. Bruce McGinnis appeared, Helena, Montana 

Submitted: November 16, 1973 

Decided : Wc 13 1m 

Filed : 
PER CURIAM: 

This is an original application for a writ of mandate or 

other appropriate writ to compel the City of Great Falls, Montana 

to award a public works construction contract to petitioner 

Sletten Construction Company, a Montana corporation. The essence 

of petitioner's contention is that it is entitled to the contract 

award under the provisions of ~ontana's resident contractor preference law. 

An order to show cause was issued setting the matter for 

hearing on November 16, 1973; service was accomplished on defendants: the City of Great Falls and its Commissioners; the 

Department of Revenue, State of Montana, and its Director; and 

upon the successful bidder, Acton Construction Company, Inc. of 

Hugo, Minnesota. Leave to intervene was granted to Acton; a 

motion to quash was filed by the Department of Revenue; answers 

were filed by all defendants and intervenor; briefs were filed 

by all parties; and oral argument was heard at the hearing. 

Thereafter this Court by judgment dated November 21, 1973, 

accepted jurisdiction; held Acton1s affidavit of residency insufficient to support the certificate of residency issued by the 

Department of Revenue and annulled the same; ruled that the parties 

were free to proceed thereafter in accordance with law; and indicated a written opinion would follow. Subsequently, the City of 

Great Falls revoked its original award and awarded the contract 

to petitioner Sletten Construction Company. 

The relevant facts indicate the City of Great Falls invited 

bids on a public works construction contract on improvements to 

its water treatment plant which was denominated "Contract 2, Water 

Works Improvements1'. It received several bids, the two lowest 

being that of Acton Construction Company, Inc., a foreign corporation of Hugo, Minnesota, in the amount of $1,752,240, and the 

Sletten Construction Company, a Montana corporation, of Great Falls 

in the amount of $1,775,000. It is to be noted that lett ten's 

bid is less than 3% higher than Acton1s. 
At all material times in 1973 Acton had a Montana contractor's 

license, but had not initially qualified as a resident contractor 

under ~ontana's resident contractor preference law. However in 

October 1973, Acton filed with the Department of Revenue, State 

Montana, an affidavit seeking resident contractor status stating 

in pertinent part: 

"Affiant states that at all times during 1973 

all materials, supplies and equipment offered 

by Acton Construction Co., Inc. on any Public 

Works Contracts are produced in Montana by 

industries located in Montana insofar as such 

materials, supplies and equipment are available. 

1 'With the exception of selected supervisory 

personnel Montana labor is exclusively employed 

on all Public Works Contracts involving Acton 

Construction Co., Inc. in the State of Montana." 

On the basis of this affidavit Acton requested recognition as a 

resident bidder as of January 9, 1973. The Department of Revenue 

thereupon issued its certification of Acton as a resident contractor under section 84-1925, R.C.M. 1947. 

On November 6, 1973, the City Commission of Great Falls 

acting on the basis of this certification passed a resolution 

accepting the bid of Acton and authorized the City Manager to 

execute the necessary contracts. 

Petitioner brought the instant original proceeding in 

this Court thereafter. 

Defendants and intervenor raise the following issues which 

we will summarize: 

(1) The standing of petitioner to maintain this action. 

(2) The appropriateness of an original proceeding for 

writ of mandate as a remedy. 

(3) The legality of the actions of the Department of 

Revenue and the City of Great Falls under ~ontana's resident contractor preference law. 

The Department of Revenue and Acton take the position that 

Sletten has no standing to challenge the validity of the ~epartment's 

action by a proceeding seeking judicial review. They cite in 
support: State ex rel. Stuewe v. Hindson, 44 Mont. 429, 120 P. 485; 

Koich v. Cvar, 111 Mont. 463, 110 P.2d 964; Ruidoso State Bank v. 

Brumlow, 81 N.M. 379, 467 P.2d 395; Baltimore Retail Liquor Package 

Stores Association v. Kerngood, 171 Md. 426, 189 A. 209, 109 A.L. 

R. 1253; State ex rel. Rouveyrol v. Donnelly, 365 Mo. 686, 285 

S.W.2d 669. In our view all these cases are clearly distinguishable 

and do not support the proposition that Sletten has no standing in 

the instant proceeding. 

We recognize the broad proposition that an unsuccessful 

bidder has no standing in mandamus or otherwise to control the 

discretion of the city council in awarding a contract to the lowest 

responsible bidder. The relief granted in the instant case does 

not do this. On the contrary, this Court's judgment of November 

21 simply annulled the certificate of residency the Department of 

Revenue granted Acton, leaving the parties free to proceed in accordance with law. A resident contractor such as Sletten who, 

in effect, had been denied its statutory preference is an aggrieved 

party entitled to judicial review. For an example of cases involving judicial review under resident contractor preference 

statutes at the instance of unsuccessful bidders, see Stebbins & 

Roberts, Inc., v. Pulaski Glass & Mirror Co., 233 Ark. 449, 345 

S.W.2d 912; Schrey v. Allison Steel Mfg. Co., 75 Ariz. 282, 255 

P.2d 604. 

The Department of Revenue and intervenor next contend that 

a writ of mandate is not proper in the instant case because it will 

not lie to control discretionary acts; the contract award has 

already been made; and administrative remedies within the Department 

of Revenue have not been exhausted. 

In this case the judgment of November 21 did not attempt to 

control any discretionary acts of public agencies but simply cancelled and annulled a certificate of residency granted a Minnesota 

contractor by the Department of Revenue upon which the city relied 

in making the contract award. As this certificate of residency was 

invalid, we simply annulled it and left the parties in their original 

position. 
We recognize the general principle that ordinarily administrative remedies must be exhausted before applying for judicial 

review. However, this principle has no application to the instant 

case. Sletten was not a party to the administrative proceedings 

awarding the certificate of residency to Acton, had no notice 

thereof, and could hardly be said to have an administrative remedy 

under such circumstances. 

The principal issue is the legality of the certificate 

of residency issued by the Department of Revenue to Acton upon 

which the City relied in its original contract award. 

Section 82-1924, R.C.M. 1947, grants a preference to resident contractors over non-resident contractors in bidding on 

public contracts, providing in relevant part: 

I I In order to provide for an orderly administration 

of the business of the state of Montana in awarding 

contracts for materials, supplies, equipment, construction, repair and public works of all kinds, 

it shall be the duty of each board, commission, officer or individual charged by law with the responsibility for the execution of the contract on behalf of 

the state, board, commission, political subdivision, 

agency, school district or a public corporation of 

the state of Montana, to award such contract to the 

lowest responsible bidder who is a resident of the 

state of Montana and whose bid is not more than 

three per cent (3%) higher than that of the lowest 

responsible bidder who is a nonresident of this state. 

In awarding contracts for purchase of products, materials, 

supplies or equipment such board, commission, officer 

or individual shall award the contract to any such 

resident whose offered materials, supplies or equipment are manufactured or produced in this state by 

Montana industry and labor and whose bid is not more 

than three per cent (3%) higher than that of the 

lowest responsible resident bidder whose offered 

materials, supplies or equipment are not so manufactured 

or produced, provided that such products, materials, 

supplies and equipment are comparable in quality and 

performance. * * *I1 

Section 82-1925, R.C.M. 1947, provides who shall be deemed 

resident contractors, the pertinent part of which provides: 

I I For the purpose of this act the word 'resident' 

shall include * * * any individual, partnership 

or corporation, foreign or domestic and regardless 

of ownership thereof, whose offered materials, supplies or equipment are manufactured or produced in 

this state by industry located in Montana and Montana 

labor shall be deemed to be a resident for the purpose 

of this act. I I 
Section 82-1925.1, R.C.M. 1947, grants authority to the 

Department of Revenue to make the initial determination of resident 

contractor status: 

"1t shall be the duty of the state department 

of revenue of the state of Montana, at the time 

that a public contractor makes application for a 

license under the provisions of chapter 35, Title 

84 of this code, to determine whether or not such 

1 contractor is a resident' of the state of Montana 

within the meaning of sections 82-1924 and 82-1925. 

The department shall endorse upon the contractor's 

license whether or not such contractor is a 'resident' 

as aforesaid. If a contractor is not a 'resident' 

at the time such license is issued, but thereafter 

qualifies as such, he may apply to the department of 

revenue for a redetermination of his residency, and, 

if found to qualify as a 'resident,' the department 

shall endorse such fact upon his license, together 

with the date of such qualification. It shall be 

the duty of the state department of revenue, upon 

written request of any board, commission, officer 

or individual charged by law with the responsibility 

for the execution of any contract subject to the 

provisions of section 82-1924 on behalf of the state, 

board, commission, political subdivision, agency, 

school district or public corporation of the state 

of Montana, to furnish a list of contractors who 

1 have qualified as 'residents, as aforesaid, to 

such requesting body. The determination of the 

department of revenue that a public contractor is 

1 or is not a resident' within the meaning of sections 

82-1924 and 82-1925 shall be prima facie evidence of 

such fact. 1 t 

On January 9, 1973, the Department of Revenue issued a 

public contractor's license to Acton. No determination of residency 

was made until October 23, 1973, when the Department of Revenue 

issued a certificate of residency based upon the affidavit of Acton, 

heretofore quoted, to the effect that it would use Montana products 

and materials insofar as they are available and would use Montana 

labor except for selected supervisory personnel. 

All other questions aside, the affidavit of Acton simply 

does not conform to the statutory criteria authorizing the Department of Revenue to certify Acton as a resident contractor. Acton 

is a foreign corporation. The only way it can qualify as a resident contractor is to offer materials, supplies or equipment 

"manufactured or produced in this state by industry located in 

Montana and Montana labor". Its affidavit falls far short of 

establishing this. Acton states it will use Montana products and 
It materials insofar as they are available". Who determines their 

availability3 What does available mean" Acton states that it will 

I I use Montana labor except for selected supervisory personnel". 

What supervisory personnel? FJho selects those to be exempted' 

How many employees are involved in the exception? Although the 

affidavit must be interpreted reasonably, there are too many loopholes to insure that the purpose of the resident contractor preference law will be fulfilled. If the affidavit here was sufficient to clothe Acton with resident contractor status, any foreign 

corporation or non-resident contractor could qualify for the 

preference and the law would be meaningless. 

For these reasons, our judgment of November 21 annulling and 

setting aside the certificate of residency and freeing the parties 

to proceed thereafter in accordance with law was issued. Thereafter a petition for rehearing was filed by Acton and objections 

thereto filed by Sletten. After consideration of same, the petition 

for rehearing is denied. 

Mr. Justice Wesley Castles took no part in the foregoing 

Opinion.