Schara v. Anaconda Company

• Court: Montana Supreme Court
• Decided: April 23, 1980
• Docket: 14800
• Status: Published

Opinion

No. 14829 IN THE SUPREME COURT OF THE STATE OF MONTANA

JOHN V. SCHARA and MARDELL SCHARA,

Plaintiff and Respondents and Cross-Appellants, VS. THE ANACONDA COMPANY, a Delaware corporation,

Defendant and Appellant

No. 14800 TliE ANACONDA COMPANY,

Relator, VS . THE HON. JAMES D. FREEBOURN, DISTRICT JDUGE PRESIDING IN THE DISTRICT COURT OF THE SECOND JUDICIAL DISTRICT et al.,

Respondents.

Appeal from: District Court of the Second Judicial District, In and For the County of Silver Bow Honorable Judge James D. Freebourn and Honorable Judge Arnold H. Olstin presiding. Counsel of Record:

For Appellant: Poore Law Firm, Butte, Montana Urban L . Roth argued, Butte, Montana For Respondent:

McCaffery and Peterson, Butte, Montana John L. Peterson argued, Butte, Montana

Submitted: February 28, 1980 Mr. Chief Justice Frank I. Haswell delivered the Opinion of the Court. This is an appeal in which two actions have been consol- idated. The first is a condemnation action brought by The Ana- conda Company (Anaconda) to condemn approximately two acres of land in the Columbia Gardens Addition of Butte, Nontana, The property sought to be condemned is owned by John and filardell Schara (Scharas), The second is an action brought by khe Scharas to enjoin Anaconda from allegedly violating the conditions of a restrictive covenant incorporated in deeds to lots in the Col~un- bia Gardens Addition. Both actions were filed in the Silver Bow County District Court. In the first action, the District Court entered incorn- p& Le findings and was thereafter directed by this Court to comp1et.e such findings. In the second action, the District Court granteii a mandn-- tory permanent injunction enjoining Anaconda from violating t.he restrictive covenant which ' a d attached to the Scharas' property, Anaconda moved for a stay of the injunction, but the mot-ion was denied by the District Court. This Court granted Anaconda a tern- porary stay pending determination of the merits of this appeal, Anaconda appeals from both District Court judgments, and the Scharas cross-appeal from the judgment entered in the condem- nation action. John and Mardell Sct:a.ra are the owners of approximately 2 - 2 ' 7 0 4 acres of land, Lots 51, 52 and 54 of the Columbia Gardens

Addition in Butte, Montana. On September 1, 1978, the Columbia Gardens Addition was incorpo.ra.tedunder the Master Zoning Plan for Butte-Silver Bow and was zoned "Mu for mininy or industrial. Most of the 26 acres and the entire mineral estate within the Addition is owned by the Ailaconda Company. The only access to the Scharas' property and the Addition is Montgomery Avenue. Anaconda owns all of the land adjacent to Montgomery Avenue on both sides, plus all of Montgomery Avenue to the Columbia Gardens Addition. At the

present timc, the Scharas are the sole residents of the addi-

tion. Since 1970, the Addition and its immediate neighborhood have undergone extensive changes, most of which have been prompted

by Anaconda. The Columbia Gardens Anlusement Park has been razed,

the Continental East Pit operation located 300 to 400 feet from the Addition has commenced, an interstate highway has been con- structed through the southeast corner of the ~ddition,the Berkeley Pit has expanded and a power line has been constructed through the north end of the Addition. The Anaconda Company has, upon s i r r i occasions, attempted to acquire the Scharas' property :\ea through negotiation and offers to purchase. Anaconda instituted a condemnation proceeding against the Scharas to acquire their land. for the purpose of establishing a dumping site for mining waste. In support of its claim, Anaconda presented evidence that it wished to expand its mining operations, that the expansion would require new techniques and expensive equipment, that it would be economically infeasible and imprac- tical to d.ump waste on any other land, and that the 1.ancI was es.- sential to carrying out Anaconda's long term mining plan. Anacoxr-

da's testimony reveals that if the land is not acquired it would be infeasible to expand the Berkeley Pit eastward; consequen,kly, mining would terminate within seven years due to exhaustion of the pit, shortening the life of mining in Butte by 14 years. Aria,-

conda's mining plan requires that Montgomery Avenue as well as the Coluntbia Gardens Addition be inundated by overburden by the n j d 1.- 1980's. The Scharas presented contradictory evidence of alter- native dumping sites which were not as economically feasible for the mining operation but which were being contemplated by rmacorlda if the Scharasyand could not be obtained. The Scharas also

proffered testimony that Anaconda had made inconsistent !~tatcmenl.s concerning future mining operations in its petition for the Woodville Road closure in 1977. Anaconda had stated at that time that with the road closure it could continue mining until about year 2000. In the second action, the Scharas sought to enjoin Ana- conda from violating one of the restrictive covenants placed upon their property. The covenant was the result of a trust agreement signed in 1950 between North Butte Mining Company, Anaconda's predecessor in interest, and all of the owners of Columbia Gardens Addition, one of whom was the Scharasqrede- cessor in interest. The trust instrument bound successors in interest and provided: "That in all conveyances, uses or permits there shall be a restriction upon the use of said prem- ises that said premises shall be for residential use only and that no building, use or operation of the premises shall create or constitute a nuisance." The District Court denied Anaconda's motion to 2tay the restrictive covenant proceedrngs until the outcome of the condem- nation action, and Judge Olsen entered judgment against Anaconda on March 28, 1979. Pursuant to this judgment, a permansnt injunc- tlon was issued which restrained Anaconda from using its property within the Columbia Gardens Addition for any purpose other than residential and from creating or maintaining a nuisance. The inlunctlon also commanded Anaconda to remove an electr~ctrans- mission line from the Addition and to repair or remove all vacated buildings located upon its property within the Addition. Originally the District Court, in the condemnatjon action, the Honorable James D. Freebourn presiding, made the foL1.owing findings of fact and conclusions of Law on April 19, 19'79: "5. At this date, plaintiff has nearly reached the maximum depth at which ore can be economically mined from the pit; the pit must be expanded horizontally in one direction or another; defen- dants' property lies east and south of the pit; expansion to the east and south, instead of some other direction, is compatible with the greatest public good and least private injury; "10. Plaintiff's past, present and continuation of future operations have and will accrue as a benefit to the public and to the use of the public. Acquisition of lots 51, 52 and 54 of the Columbia Garde.n Addition, on substantial and satisfactory estimations, now in evidence, will continue plain- tiff" operations for some 13 or more years. "11. Plaintiff has shown, by a preponderance of the evidence, that the use and taking of said lots is authorized by law; that the taking of said lots is necessary to such use; that the need of said lots is necessary to continue plaintiff's mining operations and such taking, at this definite and specific location, is being accon.plished in a manner which will be most compatible with the greatest public good and the least private injury." However, the court took judicial notice of the permanent injunction issued on March 30, 1979, by the Honorable Arnold H. Olsen in favor of the Scharas and against Anaconda concerning the violation of restrictive covenants in the Columbia Gardens Addi- tion. As a result, Judge Freebourn refused to enter a condcmna- tion award until this Court. reviewed the permanent injunction since such an award would amount to a reversal of Judge Olsen's injunction. Subsequently, Anaconda sought a writ from this Court t o . direct Judge Freebourn to complete his findings and conclusions. On July 11, 1979, this Court directed the District Court to enter those conclusions. Judge Freebourn then made "amended and supple- mental" findings of fact and conclusions of law in which he held that Anaconda had "more than sufficient land for dumping purposes and to continue its mining operations for some 14 or 1 5 years without the need and necessity of the use of defendantsX land," and further found that Anaconda" need for the Scharas' property would not arise for some "14 or 15 years" in the future. The District Court then concluded Anaconda had failed to prove rts need of the Scharas' property in the immediate future and because of increases in land values over the last five years, the present taking of the Schara property for "some 14 or 15 years in the future, wou1.d deny defendants just compensation for such use." The following issues are before us on appeal: (1) Whether the District Court was in error by denying Anaconda's motion to stay the restrictive covenant action until a final determination of the condemnation action; (2) In the alternative, whether the restrictive covenant is unen-forcealiie due to the radical changes which have occurred in the Columbia Gardens Addition since 1950; (3) Whether the District CourL abused iLs discretion by not having substantial evidence upon which to base its finding that no "necessity" will exist for Anaconda to condemn the Scharas' property for 14 or 15 yea.rs. The Scharas raise the following issues on cross,-appeal: (1) Whether the proposed condemnation is excessive; (2) Whether, by reason of the Hardrock Mining Act, a valid mining permit is an absolute condition precedent to condom- nation for mining purposes; (3) Whether section 70-30-102, MCA, which distinguishes between copper mining and coal mining as a public use, is uncon- stitutional under the Equal Protection Clause. Looking first to Judge Olsen's denial of Anacoiic~a's soti<,>ri to stay the covenant action pending the outcome of the condemna- tion proceedings, the heart of this issue is the effect that a restrictive covenant has upon a proceeding seeking a preliminary cendm.%ion award. Nichols on Eminent Domain discusses the issue as foLiows: "5.73 - . Restrictive covenants. - "A rather perplexing situation arises out of the existence of what are commonly called 'building restrictions.' A large tract of land is often cut up into lots and sold for residential purposes, and each lot is sold subject to restrictions against use for various purposes, the restriction upon each lot being for the benefit of all other lots in the same development or 'common plan or scheme,' reasonable in their character, they are enforced by courts of equity in favor of the benefitted owner, so long as he continues to own any part of the tract for the benefit of which the restrictic~nswere createz, as well as in favor of the owner of hny one of the lots into which the tract was divided, and against the owner of any of the lots who attempts to disregard the restric- tions. Such restrictions do not, however, have- an -- inhibiting influencexon The right to exercise -- the power of eminent domain . . ." (Emphasis added.) Nichols on Eminent Domain, S 5 . 7 5 . -

This approach is consistent with Montana eminent domain

statutes. Section 70-30-103, MCA, provides that all real prop- erty as well as all classes of private property may be taken for public use when such taking is authorized by law, and section 70-30-104, MCA, states that "such estate or rights as may be necessary up to and including a fee simple when taken ... for

. a place for the deposit of debris or tailings of a mine . . ." are " . . . subject to be t-aken for the public use." In our present appeal, the restrictive covenant. is at most a part of the fee or something less than a fee. Therefore,

it is the proper subject of a condemnation proceeding. Once it is determined that the property sought is a proper subject of

condemnation, the court must find that the taking is necessary to the public interest and consistent with the greatest public good and the least private injury.

We therefore conclude that a restrictive covenant action

is moot when a preliminary condemnation action involvinc~the same

property is pending. If i. is found that a preliminary condem-. nation award is proper, the condemnee may seek compensation which

takes into account the value of the property pursuant to the uses

allowed. On the other hand, if the condemnor is not entitled to

a preliminary condemnation award, the covenantee may proceed with a suit on the restrictive covenant.

The District Court was in error by not granting the motion to stay the restrictive covenant proceeding until t.he propriety of the condemnation action was finally determined. Since we find the restrictive covenant action moot, we nerd not reach the xssue involving the unenfo-~cakilityof a covenant when radical changer; have occurred rn the character of a neighborhood.

Next, with regard to the propriety of the District Court's denial of a preliminary condemnation order, it is Anaconda's son- tention that substantial credible evidence does not exist to support the tlndrng ot no necessxty tor condemnatlon, Section 70-30-111, MCA, is entitled "Facts necessarx to , .

.~ be found before condemnation." It provides, in pertinent part, '\ . . [blefore property c r be taken, it must appear: at (1) that -- the use to which it is to be applied is a use authorized b x L 3 ; ( 2 ) that the taking is necessary to such use . . ." Section 70- 30-110, MCA, states that the proposed condemnation "must: be lo- cated in the manner which will be most compatible with the greatest public good and the least private injury." From the preceding statutes the key determinations to be made are: (1) Whether the proposed use is "authorized by law,'" ( 2 ) whether "the taking is necessary", and (3) whether the location

is the "most compatible with the greatest public good a l the least id private injury." The determination involving whether the proposed use is "authorized by law" is easily made. Section 70-30-102, MCA, enumerates the public uses which are the proper subject oi c$)n- de.nnatron and therefore "authorized by law." Mininq, except the strip rnininq of coal, is an authorized public use within sectxan 70-30-102 (15), MCA. The determinations of whether the taking is necessary and whethes it is conipatible with the greatest public good a i rd the least private injury both involve factual issues. With regard to whether the talcing is necessary, this Court has consistently held that the necessity need not be ab- solute. Instead the test is "reasonable, requi-site,and proper for the accomplishment of the end in view, under the particular circumstances of the case." Montana Power Co. v. Bokma (1969)

153 Mont. 390, 398, 457 P.2~1 769, 774; State Highway Coinmissron a. Yost Farm Co. (19631, 142 Mont. 239, 384 P.2d 277; Butte,

A, & P. Ry. Co. V. Montana U. Ry. Co. (1895)' 16 Mont. 504, 4 1 P. 232- This Court made the following statement with regard to

the determination of "necessity" and "the greatest good" and the "least private iL1jllr~i1' Mmta7aPower Co. v. Bokma, supra. in

"The taking of private property by condemnation proceedings must be compatible with the greatest public good and the least private injury. . . The greatest good on the one hand and the least injury on the other are questions of fact to be determined in passing upon the question of necessity. . . ?'hese questions commonly arise in connection with the location of the proposed improvement. Since the condemnor has the expertise and detailed knowledge of considerations involved in determining 1ocati.on of the improvement, i.ts choice of location is given great weight. . . Such choice will not be overturned except on clear and convincing proof that the taking has been excessive or arbitrary, it not being the function of the judiciary to dt:.tcrmine as an engineer the best location of the proposed improvements. .. On the other hand when the condemnor fails to cun- sider the question of the Least private injury be- tween alternate routcs equal in terms of public good, its action is arbitrary and amounts to an abuse of discretion." (Citations omitted.) 153 Mont. at 399-400, 457 P.2d at 774-775. According to the above approach the condemnor's (Anaconda%) choice of location is to be given great weight, it is to be over- turned only by clear and convincing proof that the decision was

excessive or arbitrary, and an abuse of discretion will be found

if the condemnor fails to study alternatives. The record dis- closes that Anaconda studied all alternatives and rejected them as being economically infeasible. The District Court in its

original findings found that Anaconda had "shown, by a prepon- derance of the evidence that the . . . taking is necessary .. and will be most compatible: with the greatest public good and the least private injury." Mysteriously, in the court" amended and supplemental findings of fact and conclusions of law, the original findings remain intact, but tl fcllodi~ginconsistent !e finding is added: "Plaintiff has falled to prove by a preponderance of the evidence the need and necessity of plain- tiff for the use for mining of defendants' land in the immediate future and such need and necessity will not arise for some 14 or 15 years in the future," Normally, the entry c f inconsistent findings wo~iLd require ) us to remand the case for further proceedings in the District Court; however here we find no evidence to support the court's latest findings and substantial evidence to support the initial findings. We conclude that the findings entered by the District Court on April 9, 1979, arc correct and must be entered. The record does disclose that mining in the present Berkeley Pit will be completed in 1986. In order to increase the life of future mining in Butte the Berkeley Pit must be expanded, and ac- cordinq to Anaconda's long term mining plan strippinq of overburden must commence by 1983. Anaconda explains that new technoloyy has been developed for removing overburden, and in order to have the equipment on line by 1983, inmediate action is requi-red. The equipment requires a tremendous investment and Anaconda must know the result of the condemnation action before it can be ordered. It is further disclosed that Anaconda considered two al- ternatives to the condemnaticin of the Scharas' property. One al- ternative was backfilling the Berkeley Pit with overburclen. This alternative was rejected since the long term mining plan contem- plates vertically mining ore deposnts located beneath the deepest portion of the Berkeley Plt. This future vertical mining plan 1s not now feaslbie because of both a lack of technology and current market conditions; however, it would be completely precluded if Anaccnaa backfilled the pit, The second alternative studied by Anaconda was the establishment of a dumping site on a portion of its own land. Testimony reveals that although this alternative

is feasible from an engineering standpoint, it is economicalLy infeasible to transport the waste the distance involved.. his

leaves condemnation of the Scharas' land as the only feasible alternative to continue the life of mining in Butte. The Scharas contend that since the preceding alternatives exist, condemnation of their land is not "necessary" nor "corn- patibSe with the greatest public good and the least private i..njl~:i?y-'' We find this contention lacking in merit in light of Montana Power Co. v. Bokma, supra. As a result, we find substant:ial credible evidence to support the findings entered,by the District Court on April 19, 3.979.

The Scharas contend on cross-appeal that the amount of property sought to be condemned is excessive. The basis for this argument is that Anaconda has recognized in its mining plan that a portion of the Scharas' land is within the Highway Department's proposed right-of-way for expansion of Interstate 15 and that Anaconda only contemplates use of the Scharas' property up to the proposed highway right-of-way.

Again this argument centers on absolute necessity, rather than the Montana test of necessity, "reasonable, requisite and proper for the accomplishment of the end in view, under the particular cir- cumstances of the case." Montana Power Co. v. Bokma, supra. Test- imony reveals that Anaconda would not use a small portion of the Scharas-and within the proposed highway right-of-way if the Hi-gh- way Department does acquire it. Based on this testimony we cannot find that the proposed condemnation is excessive merely because

Anaconda points out to the District Court that the Highway Depart- ment may have a superior claim to a small portion of the land. We

find that condcmnation of the Scharas' property is reasonable, requisite, and proper for thc accomplishment of the end in view under the peculiar circumstances of the case. The possibil- ity that Anaconda may have to forfeit a small portion of the land

to a superior claimant at a later date does not render the taking excessive. The Scharas next contend on cross-appeal that since seca- tion 70-30-111, MCA, requires the use to be "authorized by law" before condemnation is allowed, the obtaining of a valid mining permit is a condition precedent to condemnation. However, there is nothing in either the Hardrock Mining Act, section 82-4-301, MCA, et seq., or the eminent domain statutes, section 70-30-101, MCA, et seq., to support this position. Section 70-30-102, MCA, declares mining to be a public use and it is unquestioned that Anaconda is allowed to engage in mining activities. To find that "authorized by law" requires that a mining company obtain a valid mining permit prior to condemnation would be inconsistent with Itontana statutory authority and would bc contrary to the public policy of providing expediency in eminent domain proceedings. The Scharas' next issue on cross-appeal is that section 70-30-102(15), MCA, is unconstitutional. The statute provides, in pertinent part: "Public uses enumerated. Subject to the provisions 07 this chaoter, the riqht of eminent domain mav be exercise2 in behalf of the following public Gscs:

"(15) to mine and extract ores, metals, or minerals owned by the plaintiff located beneath or upon the surface of wrowertv where the title to said surface vests in others. Gowever, the use of the surface -- - for strip mining or open pit mining of coal (i.e., any mlnlng method or process zn which the strata or overburden is removed-or displaced in order to ex- tract the coal) - not a pubiic use, and eminent is . -- domain may - .. ." (Emphasis added.) It is contended that since the statute allows the mining of copper to be a public use and disallows the strip mining of an coal as a public use, there is/unconstitutional violation of the Equal Protection Clause, However, it is weil established that the equal protection clause is very iimited in cases involviny eminent domain statutes. This is especially so when the statute merely declares the legislative determination as to what is to be considered a public use. A11 that is required to survive an equal protection challenge in this context is that there be a "reasanable" basis for the distinction. Nichols on Eminent Domain, S4.15. The legislature has provided its basis for the distinction between copper mining and coal mining in section 70-30-106, MCA, which provides: "70-30-106. Eminent domain not to be used for -- coal mining in certain cases--pol*. For the following reasons the state's power of eminent domain may not be exercised to mine and extract coal owned by the plaintiff located beneath the surface of property where the title to the sur- face is vested in others: " ( I ) Because of the large reserves of and the renewed interest in coal in eastern Montana, coal development is potentially more destructive to land and watercourses and underground aquifers and potentially more extensive geographically than the forseeable development of other ores, metals, or minerals and affects large areas of land and Large numbers of people. " ( 2 ) In many areas of Montana set forth in (1) here- inabove, the title to the surface is vested in dn owner other than the mineral owner, and the surface owner is putting that surface to a productive use, and it is the public policy of the state to encour- age and foster such productive use by such owner, and to permit the mineral owner to condemn the sur- face owner is to deprive the surface owner of the right to use his property in a productive manner as he determines and is also contrary to public policy as set forth in subsection (4).

" (3) The magnitude of the potential coal devel0~~- ment in eastern Montana will subject landowners to undue harassment by excessive use of emlnent donialn "(4) It is the public policy of the state to encourage and foster diversity of land ownership, and the surface mining of coal and control of large areas of land by the surface coal mining industry would not foster pub- lic policy and further the public interest." Based upon the immediatei:i preceding legislative policy we find a reasonable basis for the distinction between copper rn~ningand coal minlng. We conclude that section 70-30-102(15) does not viola-te the Equal Protection Clause. The judgments of the Distri.ct Court in both. actions are reversed. The restrictive covenant action is dismissed. The con- demnation action is remanded to the District Court for entry of judgment of condemnation in accordance with this opinion.

Chief Justice Wc concur: Mr. Justice John C. Sheehy dissenting:

At the base of this Court" decision and that of Judge Freebourn in the condemnation action was the contention of the

Anaconda Company that unless the Schara property were acquired by the company, the company's mining operations would be reduced from 20 years in the Butte area to 6 to 7 years of active life and we are told "this obviously would be disastrous for the public good of Butte-Silver Bow, Deer Lodge Counties and the State of Montana." The closing threat is not new, It seems to me that I have heard this song before. It is from an old familiar score. We can only be sure that the decision to go or remain be w i l l noddependent on the Schara property.

Judge Freebourn, when this Court forced him by mandate to make final findings of fact and conclusions of law so as to override Judge Olsenk restrictive covenant decision, found that "for dumping purposes" and to continue its mining operations for some 14 or 1 5 years, Anaconda has sufficient

land already. Therefore he saw no need for the Schara property until some 14 or 15 years in the future and conclud.ed that to permit condemnation now would deny them just corn- pensation for the use of their Land. Althouyh Rule 52, M.R.Civ.P. makes it mandatory that firidinys of a District Court shall. not be set. aside unless clearly erroneous, this Court through the majority opinion not only

sets Judge Freebourn's findings aside, but proceeds to make findings of its own. There is ample support in the record that the Anaconda company owns a considerable area of Land which could be used for dumping purposes, established in the cross.- examination of Wilbur Crisswell. Moreover, Judge Freebourn had before him the testimony regarding the East Continental

Pit. The old highway leading to Woodville had been closed to permit the opening of the East Continental Pit, upon the representation that such <:losing of the highway would extend Butte's mininq life for 22 years. East Continental Pit was

abandoned after 2 years. As a second point, I cannot permit myself to sign an opinion which finds it "reasonable" for eminent domain power to be granted to open-pit hard rock mining companies, but Lo be denied to open-pit coal mining companies. Every reason st.nted for denying eminent domain power to the coal mining industry

in section 70-30-106, MCA, applies with equal force to the copper mining industry, There is no real distinction between an open-pit copper mine and an open-pit coal mine, except that the ie7islature favored cows over people. We give mere lip service to the equal protection clause of the federal con- stitution when we find a distinction without a difference in section 70-30-106. For these reasons, I dissent.