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No. 80-110 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 NILSON ENTERPRISES, INC., Plaintiff and Appellant, VS. CITY OF GREAT FALLS, Defendant and Respondent. Appeal from: District Court of the Eighth Judicial District, In and for the County of Cascade. Honorable Ronald D. McPhillips, Judge presiding. Counsel of Record: For Appellant: Jardine, Stephenson, Blewett and Weaver, Great Falls, Montana Gary W. Bjelland argued, Great Falls, Montana For Respondent: David V. Gliko, City Attorney, argued, Great Falls, Montana Submitted: Decided: November 24, 1980 DEc 1 5 1980 J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e Court. Mr. ~ i l s o n n t e r p r i s e s (taxpayer) appeals an adverse deciE s i o n of t h e Cascade County D i s t r i c t C o u r t , u p h o l d i n g a n a n n e x a t i o n by t h e C i t y of G r e a t F a l l s ( C i t y ) . Taxpayer f i l e d a c o m p l a i n t a g a i n s t t h e C i t y on J a n u a r y 28, 1974, a t t e m p t i n g t o r e c o v e r a s p e c i a l improvement d i s t r i c t a s s e s s m e n t f o r t h e f i s c a l y e a r e n d i n g J u n e 30, 1974. The t a x p a y e r had made t h e payment under p r o t e s t on November 30, 1973. The t a x p a y e r charged t h a t t h e C i t y had no j u r i s - d i c t i o n t o c r e a t e a s p e c i a l improvement d i s t r i c t , and, t h e r e f o r e , t h e a s s e s s m e n t was i n v a l i d a s i t was based on a n i n v a l i d annexation, On November 21, 1974, t h e C i t y and t h e t a x p a y e r e n t e r e d i n t o a s t i p u l a t i o n a g r e e i n g t h a t , i f t a x p a y e r made any f u r t h e r payments under p r o t e s t b e f o r e t h e f i n a l d e t e r m i n a t i o n of t h e s u i t , i t would n o t b e r e q u i r e d t o i n i t i a t e any other suit. On J u n e 2 1 , 1977, t h e p a r t i e s f u r t h e r s t i p u - l a t e d t o a s e t of f a c t s , a g r e e d t h a t no e v i d e n t i a r y h e a r i n g o r t r i a l would be r e q u i r e d , a g r e e d t h a t a l l p a r t i e s would f i l e t h e i r m o t i o n s f o r summary judgment on t h e r e c o r d a s i t s t o o d , and f i n a l l y a g r e e d t h a t t h e c a s e would be u l t i m a t e l y decided a t t h e D i s t r i c t Court l e v e l , s u b j e c t t o appeal. The C i t y and t h e t a x p a y e r b o t h f i l e d m o t i o n s f o r summary judgment w i t h s u p p o r t i n g b r i e f s . On J a n u a r y 1 6 , 1980, t h e D i s t r i c t C o u r t found i n f a v o r of t h e C i t y , d e t e r m i n i n g t h a t t h e a s s e s s m e n t and a n n e x a t i o n w e r e p r o p e r . The f a c t s a r e u n d i s p u t e d . Taxpayer a p p e a l s . Taxpayer i s a Montana c o r - p o r a t i o n d o i n g b u s i n e s s and owning r e a l p r o p e r t y i n c a s c a d e County. The C i t y of G r e a t F a l l s i s a m u n i c i p a l c o r p o r a t i o n , I n September 1972, t h e c i t y c o u n c i l p a s s e d a r e s o l u t i o n t o e x t e n d t h e b o u n d a r i e s o f t h e C i t y t o i n c l u d e two a d d i t i o n a l t r a c t s o f l a n d , which were c o n t i g u o u s t o t h e m u n i c i p a l c i t y limits. T a x p a y e r ' s p r o p e r t y , p r i o r t o a n n e x a t i o n , was n o t contiguous t o the c i t y l i m i t s . A t a l l t i m e s d u r i n g t h i s a c t i o n t h e S t a t e h a s had and s t i l l d o e s have a n i n t e r e s t i n t h e r e a l p r o p e r t y d e s c r i b e d a s T r a c t s 1 and 2--namely, way deed. a highway p u r s u a n t t o a r i g h t - o f - The a n n e x a t i o n was approved by t h e mayor on Sep- tember 1 2 , 1972. On September 2 5 , 1972, t h e C i t y d e c l a r e d i t s intention t o create a special lighting d i s t r i c t , relying on t h e a n n e x a t i o n f o r i t s v a l i d i t y . Taxpayer was a s s e s s e d and o r d e r e d t o pay t a x e s of $389.81 and d i d s o under proTaxpayer h a s p a i d i t s a s s e s s m e n t under p r o t e s t e v e r y test. f i s c a l y e a r s i n c e 1974. A t t h e h e a r t of t h e i s s u e s r a i s e d by t h e t a x p a y e r i s a c h a l l e n g e t o t h e v a l i d i t y o f t h e C i t y ' s j u r i s d i c t i o n t o make assessments a g a i n s t t h e taxpayer's property. Taxpayer a r g u e s t h a t t h e a c t i o n s by t h e C i t y , b o t h t h e a n n e x a t i o n and t h e assessments, a r e void - i n i t i o . ab Involved h e r e i s a s t a t u t e which, i f p r o p e r l y f o l l o w e d , a u t h o r i z e s a c i t y t o assess a s p e c i a l improvement t a x on p r o p e r t y o u t s i d e o f , y e t contiguous t o , t h e c i t y l i m i t s . The t a x l i a b i l i t y depends on whether t h e p r o p e r t y i n i s s u e h a s been p r o p e r l y made contiguous t o t h e c i t y ' s boundaries. I f it has not, t h e r e i s no l i a b i l i t y . Taxpayer s u b m i t s t h r e e i s s u e s f o r r e v i e w : 1. Does a t a x p a y e r who h a s been a s s e s s e d s p e c i a l improvement t a x e s under a s t a t u t e a u t h o r i z i n g t a x a t i o n of l a n d which i s " c o n t i g u o u s " t o a c i t y have t h e c a p a c i t y t o c h a l l e n g e t h e a n n e x a t i o n p r o c e e d i n g which made i t s own l a n d contiguous t o t h e c i t y ? 2. Does a c i t y ' s f a i l u r e t o f i l e a l a n d d e s c r i p t i o n , c e r t i f i c a t e of ownership, o r o w n e r ' s s t a t e m e n t of a d e s i r e t o have t h e l a n d annexed r e n d e r a n n e x a t i o n p r o c e e d i n g s v o i d 3. Does a t a x p a y e r ' s f a i l u r e t o p r o t e s t a n n e x a t i o n o r a s p e c i a l improvement t a x immediately a f t e r n o t i c e e s t o p i t from c h a l l e n g i n g l a t e r ? S e c t i o n 11-511, R.C.M. .ie'?'cs 1947 (now s e c t i o n 7-2-4444 et. s e q . , MCA), r e s t r i c t s t h e r i g h t of a m u n i c i p a l i t y t o annex l a n d i n which t h e S t a t e of Montana h a s any b e n e f i c i a l i n t e r e s t , s u c h a s t h e S t a t e of Montana had i n t h e p r o p e r t y d e s i g n a t e d as T r a c t s 1 and 2 i n t h i s c a s e , This s t a t u t e provides i n pertinent part: "Contiguous l a n d owned by government--desire f o r annexation--procedure. Whenever any l a n d c o n t i g u o u s t o a m u n i c i p a l i t y i s owned by t h e U n i t e d S t a t e s o r by t h e s t a t e of Montana, o r by any agency, i n s t r u m e n t a l i t y , o r p o l i t i c a l s u b d i v i s i o n of e i t h e r , o r whenever any of t h e f o r e g o i n g have a b e n e f i c i a l i n t e r e s t i n any l a n d c o n t i g u o u s t o a m u n i c i p a l i t y , such l a n d may be i n c o r p o r a t e d and i n c l u d e d i n t h e munic i p a l i t y t o which i t i s c o n t i g u o u s , and may be annexed t h e r e t o and made a p a r t t h e r e o f , i n t h e f o l l o w i n g manner: "1. The a d m i n i s t r a t i v e head of t h e owner of t h e l a n d , o r t h e a d m i n i s t r a t i v e head of t h e h o l d e r of a b e n e f i c i a l i n t e r e s t i n t h e l a n d , f i l e with th s h a l l --- e c l e r k of the m u n i c i p a l i t y a of t h l - d e s c r i p t i o n - -e-a n d , a c e r t i f i c a t i o n of ownership - - b e n e f i c i a l T n t e r e s t therein, o r of and of or the - - a s t a t e m e n t t h a t t h e owner -, - h o l d e r -, - b e n e f i c i a l i n t e r e s t - -e- n d of the i n t h la t o have d e s i r e s - - -i t annexed. Whereupon, t h e q o v e r n i n g body of t h e m u n i c i p a l i t y s h a l l p a s s r e s o l u t i o n r e c i t i n g i t s i n t e n t i o n t o annex t h e l a n d and s e t t i n g a t i m e and p l a c e f o r a p u b l i c hearing thereon." S e c t i o n 11-511, R.C.M. 1947. (See s e c t i o n s 7-2-4402, -4403, (Emphasis added.) -4404, MCA). a On May 24, 1972, i n r e s p o n s e t o t h e C i t y ' s r e q u e s t f o r t h e Montana S t a t e Highway D e p a r t m e n t ' s p o l i c y on a n n e x a t i o n o f s t a t e highway l a n d , R o b e r t E . Champion, s u p e r v i s o r of t h e right-of-way stated: s e c t i o n of t h e Montana Highway Department, " I n g e n e r a l t h e r e would be no o b j e c t i o n s t o annexa- t i o n p r o v i d i n g such a c t i o n p r e c l u d e s t h e l e v y of any a s s e s s ment a g a i n s t t h e highway r i g h t of way." The C i t y a s s e r t s t h a t Champion's l e t t e r s u b s t a n t i a l l y c o m p l i e s w i t h t h e r e q u i r e m e n t s of t h e s t a t u t e even though n o t h i n g w a s f i l e d with the c i t y clerk. I n i t s d e c i s i o n i n f a v o r of t h e C i t y , t h e D i s t r i c t Court reasoned: "To p r o v e t h a t t h e a n n e x a t i o n was v o i d a b i n i t i o , the p l a i n t i f f s argue t h a t the f i l i n g r e q u i r e m e n t s of M.C.A., 1979, S e c t i o n 7-24403, r e q u i r i n g f i l i n g by t h e owner o f a l a n d d e s c r i p t i o n , a c e r t i f i c a t i o n of ownership, and a s t a t e m e n t t h a t t h e owner d e s i r e d t o have t h e l a n d annexed, w e r e n o t f o l l o w e d . These i r r e g u l a r i t i e s do n o t seem g l a r i n g enough t o d e p r i v e t h e C i t y of j u r i s d i c t i o n . The C o u r t s which have c o n s i d e r e d t h e matter have g e n e r a l l y found t h a t a C i t y ' s a n n e x a t i o n i s void f o r lack of j u r i s d i c t i o n i n only t h r e e ( 3 ) i n s t a n c e s : 1) Where one c i t y a t t e m p t s t o annex p a r t of a n o t h e r c i t y ; 2) Where a c i t y a t t e m p t s t o annex p r o p e r t y n o t a d j a c e n t t o it i n a contravention of s t a t u t e , and 3 ) Where a c i t y a t t e m p t s t o annex w i t h o u t c o n s e n t o f t h e landowners o f t h e new Annot., 1 3 ALR2d 1279, 1292 territory. ( 1 9 5 0 ) ; B a r t o n v. S t u c k y , 1 2 1 Okla. 226, 248 P. 592 ( 1 9 2 6 ) . P l a i n t i f f s a l l e g e none of these. " Taxpayer a s s e r t s t h a t t h e r e e x i s t s a f o u r t h ground f o r i n v a l i d a t i n g a c i t y ' s annexation a s being void ab initio: where a c i t y f a i l s t o comply w i t h a l l t h e mandatory r e q u i r e ments of s t a t u t o r y law. 2 McQuillin, Municipal Corporations, Sec. 7.29 a t 422; Pool v . Town of Townsend ( 1 9 2 0 ) , 58 Mont. ". . . I f , t h e n , t h e Codes p r o v i d e t h e means by which a n a d d i t i o n becomes a p a r t of a c i t y o r town and s u b j e c t t o i t s j u r i s d i c t i o n , t h e means s o p r o v i d e d must be h e l d t o be e x c l u sive." Pool, 58 Mont. a t 304, 1 9 1 P. a t 386. The c o n t i n u e d v a l i d i t y of Pool was r e c e n t l y u n d e r s c o r e d t w i c e by t h i s C o u r t i n Gregory v. C i t y of F o r s y t h (19801, Mont. , 609 P.2d 248, 37 St.Rep. v . Town of Melstone ( 1 9 8 0 ) , The C o u r t i n G r e g o r y , Mont . 277, 279, and Balock , 607 P.2d 545, 603 P.2d a t 252, s t a t e d : "The g e n e r a l r u l e i s t h a t m u n i c i p a l bound a r i e s may b e e x t e n d e d o n l y a s p r e s c r i b e d by 2 M c Q u i l l i n , Municipal C o r p o r a t i o n s , law. Sec. 7.14 a t 317 ( 3 r d r e v . e d . 1 9 7 9 ) . S i n c e t h e j u r i s d i c t i o n of a c i t y t o extend i t s b o u n d a r i e s i s a s p e c i a l power, c o n f e r r e d by t h e l e g i s l a t u r e , a s u b s t a n t i a l compliance w i t h a l l t h e mandatory r e q u i r e m e n t s of s t a t u t o r y l a w i s e s s e n t i a l . McQuillin supra, Sec. 7.29 a t 422; Pool v . Town o f Townsend ( 1 9 2 0 ) , 58 Mont. 297, 304, 1 9 1 P. 385, 386." The g i s t o f t a x p a y e r ' s argument i s t h a t t h e C i t y n e i t h e r complied w i t h t h e s t a t u t o r y r e q u i r e m e n t s n o r s e c u r e d t h e S t a t e ' s c o n s e n t , and t h a t e i t h e r f a i l u r e d e n i e d t h e C i t y o f t h e j u r i s d i c t i o n t o v a l i d l y annex t h e p r o p e r t y and l e v y a s s e s s m e n t s a g a i n s t it. The C i t y ' s view i s t h a t Champion's l e t t e r s e r v e d a s e v i d e n c e of t h e S t a t e ' s c o n s e n t and t h a t it a l s o s e r v e d a s s u b s t a n t i a l compliance w i t h s t a t u t o r y r e q u i r e ments. W e f i n d f o r t h e taxpayer. A s t o t h e i s s u e of consent, w e conclude t h a t t h e C i t y had a q u a l i f i e d o r c o n d i t i o n a l c o n s e n t a t b e s t . The c o n s e n t by t h e S t a t e of Montana, t a c i t l y g i v e n by Champion i n h i s May 24 l e t t e r , w a s c l e a r l y s u b j e c t t o t h e a b s e n c e o f any l e v y a g a i n s t t h e highway right-of-way. Although n o t i f i e d of t h e c o n d i t i o n a l n a t u r e of t h e S t a t e ' s c o n s e n t t o t h e annexat i o n , t h e C i t y promptly l e v i e d a n a s s e s s m e n t a g a i n s t t h e p r o p e r t y i n t e r e s t of t h e S t a t e . By a f f i d a v i t i n t h e r e c o r d , Champion s t a t e d w i t h r e g a r d t o h i s May 24 l e t t e r : " T h i s s t a t e m e n t embodied t h e p o l i c y of m y o f f i c e and s u b j e c t t o t h e p r o v i s i o n r e g a r d i n g a s s e s s m e n t a g a i n s t t h e Montana Department o f Highways r i g h t of way, m o f f i c e had no oby j e c t i o n t o s u c h a n n e x a t i o n on t h e d a t e o f t h a t l e t t e r . However, s i n c e t h e a n n e x a t i o n took p l a c e , t h e C i t y of Great F a l l s has l e v i e d a s s e s s m e n t s a g a i n s t t h e p r o p e r t y of t h e S t a t e o f Montana highway r i g h t of way. These a s s e s s m e n t s have n o t been p a i d by t h e S t a t e and have been s t r o n g l y r e s i s t e d . "Also, n e i t h e r m o f f i c e n o r , t o t h e b e s t of y m knowledge and b e l i e f , any o t h e r o f f i c e of y t h e S t a t e of Montana, Department of Highways, h a s e v e r f i l e d w i t h t h e C l e r k of t h e C i t y of Great F a l l s a d e s c r i p t i o n of t h e l a n d t o be annexed, a c e r t i f i c a t i o n of ownership o r of beneficial i n t e r e s t therein, o r a statement t h a t t h e Department of Highways d e s i r e d t o have t h e l a n d annexed. "The Department of Highways h a s and w i l l cont i n u e t o r e s i s t any l e v y of a s s e s s m e n t s a g a i n s t i t s highway r i g h t o f way p u r s u a n t t o t h e ann e x a t i o n o f t h i s l a n d and t h e c r e a t i o n of t h e appurtenant special l i g h t i n g d i s t r i c t . " C o n t r a r y t o t h e f i n d i n g of t h e D i s t r i c t C o u r t , t h e t a x p a y e r d i d c h a l l e n g e t h e a n n e x a t i o n on t h e i s s u e of t h e S t a t e ' s consent. Any c o n s e n t g i v e n by t h e S t a t e w a s c l e a r l y f o r s a k e n by t h e C i t y ' s d e c i s i o n t o l e v y a n a s s e s s m e n t a g a i n s t t h e S t a t e ' s property. Without t h e p r o p e r t y o w n e r ' s c o n s e n t t h e C i t y w a s without t h e j u r i s d i c t i o n t o proceed w i t h t h e annexation. A.L.R. ab The a n n e x a t i o n was v o i d - i n i t i o . Annot., 13 2d 1279, 1292 ( 1 9 5 0 ) . Moreover, w e r e a f f i r m t h i s C o u r t ' s d e c i s i o n s i n P o o l , Balock and Gregory, s u p r a . When s t a t u t o r y language p r o v i d e s t h e manner i n which a c i t y o r town may annex a p o r t i o n of contiguous property, i t must c o m p l e t e l y and s t r i c t l y comply w i t h t h e s t a t u t e ' s r e q u i r e m e n t s . Annexation, and t h e t a x a t i o n i m p l i c a t i o n s t h a t accompany i t , s h o u l d n o t be approached l i g h t l y . The p r o c e d u r e s h o u l d n o t be haphazard. Although Gregory r e a f f i r m e d t h e r u l e of s u b s t a n t i a l complia n c e , t h e complete f a i l u r e t o s e c u r e t h e documents n e c e s s a r y t o t h e p r o p e r a n n e x a t i o n of p r o p e r t y i s n o t s u b s t a n t i a l compliance. The complete d i s r e g a r d of t h e mandates o f what i s now s e c t i o n 7-2-4403, MCA, was a n e r r o r f a t a l t o t h e C i t y ' s power t o annex. A s t o t h i s t a x p a y e r ' s s t a n d i n g t o c h a l l e n g e t h e annexa- t i o n , we concur w i t h t h e D i s t r i c t C o u r t ' s c i t a t i o n of t h e a p p l i c a b l e law. Applying t h e r u l e of Sharkey v. B u t t e ( 1 9 1 6 ) , 52 Mont. 1 6 , 155 P . Court: " . . . where 266, t h e lower c o u r t q u o t e d t h i s s u c h p r o c e e d i n g s are v o i d - i n i t i o f o r ab want of j u r i s d i c t i o n of t h e s u b j e c t m a t t e r , a s h e r e , e q u i t y w i l l a f f o r d r e l i e f t o t h e p r o p e r t y owner whose t a x e s would be i n c r e a s e d i f h i s p r o p e r t y were i n c l u d e d w i t h i n t h e c i t y ' s limits." 52 Mont. a t 23. Corporations, § , See a l s o 62 C.J.S. Municipal 66 a t 178 ( 1 9 4 9 ) . Having d e t e r m i n e d t h a t t h e p r o c e e d i n g s by t h e C i t y of G r e a t F a l l s w e r e i n d e e d v o i d a t ' i n c e p t i o n f o r want of p r o p e r jurisdiction, w e a r e convinced t h a t t h i s t a x p a y e r h a s s t a n d - i n g and i s e n t i t l e d t o r e l i e f . 6+hw p ' T h i s C o u r t i s f u r t h e r persuaded t h a t t h e p r i n c i p l e s of e s t o p p e l do n o t s e r v e t o deny t h e t a x p a y e r r e l i e f . Although t h e C i t y c i t e s o u r d e c i s i o n i n Power v. C i t y of Helena ( 1 9 1 1 ) , 43 Mont. 336, 116 P. 415, and p e r s u a d e d t h e ~ i s t r i c t C o u r t t h a t a f a i l u r e by a t a x p a y e r t o p r o t e s t a s p e c i a l a s s e s s m e n t o r improvement t a x when g i v e n a n o p p o r t u n i t y t o do s o a t a p u b l i c h e a r i n g , e s t o p s t h e t a x p a y e r from a l a t e r c h a l l e n g e , t h e r e l i a n c e on t h a t d e c i s i o n i s improper. In Power, t h e j u r i s d i c t i o n o f t h e C i t y t o annex and assess w a s n o t challenged a s being void - i n i t i o . ab I n t h a t opinion, although we found Power to have been estopped from challenging the assessment, we also wrote: "Of course, if the fact that plaintiff's property cannot receive any benefit from the improvement appeared from the face of the city's proceedings, --- of jurisdiction would the want be apparent, - - a collateral attack -and upon the assessment could be maintained. But such is not the case hr. ee" 43 Mont. at 343. (Emphasis added.) Where there is a substantial defect in the original proceedings, which operates to deprive a city of the jurisdiction to act from the outset, estoppel will not bar a taxpayer's prayer for relief. We note with disapproval that this case, after submission to the trial judge, languished in the hands of the district judge some 415 days. In our opinion, this period between submission and decision was far too long and unnecessary. Judicial delay in this decision has caused additional costs to the City and unnecessary expense to the taxpayer. For lack of the State's consent and failure of the City of Great Falls to comply with the requirements of the statute, we reverse. . -, We concur: phief Justice,, i , , ,,&lLI Justices \

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