Court Opinion

ID: 881965
Source: CourtListenerOpinion
Date Created: 2013-06-05 00:54:17.445984+00
Date Added: 2024-06-11T15:35:21.279461
License: Public Domain

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

                                             Submitted:   October 10, 1991
                                                Decided: December 4, 1991
Filed:

                                  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 assessmentst1against 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 ( M E I ) .   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 l1taxlrprocedure 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 R A E 1 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 R A E I 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.]

R A E I , 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.       M E I , 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
W e concur:

                 A
     C h i e f 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.

                                     m u s t i c e

                               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