Skillman v. Dept. of State Lands

Montana Supreme Court

Skillman v. Dept. of State Lands

Montana Supreme Court·Decided July 28, 1980·No. 80-047·Published

Opinion

No. 80-47

I N THE SUPREME COURT O T E STATE O M N A A F H F OTN

ED SKILLMAN,

P l a i n t i f f and A p p e l l a n t ,

THE DEPARTMENT O STATE LANDS O THE F F STATE O MONTANA; THE BOARD O LAND F F COMISSIONERS a n d JAMES R. FOSTER,

D e f e n d a n t s and R e s p o n d e n t s .

Appeal from: The D i s t r i c t C o u r t o f t h e F i r s t J u d i c i a l D i s t r i c t , I n and f o r t h e County o f L e w i s and C l a r k , The Honorable P e t e r G. Meloy, J u d g e p r e s i d i n g .

Counsel o f Record:

For Appellant:

H a r r i s o n , Loendorf and P o s t o n , H e l e n a , Montana

For Respondents :

David Woodgerd, Department o f S t a t e Lands, H e l e n a , Montana H. A. B o l l i n g e r , Bozeman, Montana

S u b m i t t e d on B r i e f s : J u n e 5 , 1980

Decided : J L 2 8 1980 U Mr. 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.

Respondent Ed S k i l l m a n p e t i t i o n e d t h e D i s t r i c t C o u r t

f o r j u d i c i a l r e v i e w of a d e c i s i o n by t h e S t a t e Board of Land

Commissioners t o renew a l e a s e of s t a t e l a n d t o James R.

Foster. The Board of Land Commissioners had renewed t h e

l e a s e a f t e r f i n d i n g t h a t F o s t e r had a p r e f e r e n c e r i g h t . The

D i s t r i c t C o u r t h e l d t h e Board of Land Commissioners e r r e d i n

renewing t h e lease. The c o u r t remanded t h e c a s e t o t h e

Board w i t h d i r e c t i o n s t o c a n c e l t h e F o s t e r l e a s e and lease

t h e land without a preference r i g h t . The Department of

S t a t e Lands and t h e S t a t e Board of Land Commissioners a p p e a l

t h e d e c i s i o n of t h e D i s t r i c t C o u r t a s s e r t i n g t h e l e a s e t o

F o s t e r s h o u l d be r e i n s t a t e d . S k i l l m a n c r o s s - a p p e a l s con-

t e n d i n g t h e c o u r t s h o u l d have awarded t h e lease t o him

r a t h e r t h a n o r d e r i n g t h e l e a s e reopened f o r b i d s .

The f a c t s i n t h i s c a s e a r e n o t d i s p u t e d by t h e p a r t i e s .

F o s t e r h e l d a S t a t e of Montana s u r f a c e l e a s e t o 6 4 0 acres of

g r a z i n g l a n d i n Park County, Montana. The l e a s e e x p i r e d on

F e b r u a r y 28, 1979. On J a n u a r y 2, 1979, F o s t e r a p p l i e d t o

renew h i s l e a s e on t h e l a n d a t a r a t e of $7.50 p e r AUM

(animal-unit-month). On J a n u a r y 23, 1979, S k i l l m a n a p p l i e d

t o lease t h e l a n d a t a r a t e of $18.75 p e r AUM. F o s t e r was

n o t i f i e d of t h e b i d s u b m i t t e d by S k i l l m a n and informed t h a t

a s c u r r e n t lessee he was e n t i t l e d t o e x e r c i s e a p r e f e r e n c e

r i g h t t o meet t h e b i d . F o s t e r e x e r c i s e d t h e p r e f e r e n c e and

m e t t h e b i d on F e b r u a r y 22, 1979. The l e a s e was renewed t o

him on F e b r u a r y 28, 1979.

F o s t e r a l s o r e q u e s t e d and was g r a n t e d a h e a r i n g t o

d e t e r m i n e whether t h e b i d was i n t h e b e s t i n t e r e s t o f t h e

S t a t e of Montana. S t a t e Land Commissioner Leo B e r r y con-

d u c t e d t h e h e a r i n g on t h e m a t t e r on March 27, 1979. Evi- dence i n t r o d u c e d a t t h e h e a r i n g showed t h a t F o s t e r had

s u b l e a s e d t h e l a n d t o J i m S e r r a z z e n b u t had n o t f i l e d a

s u b l e a s e form w i t h t h e Commissioners. Subsequent t o t h e

h e a r i n g , Commissioner B e r r y recommended t h a t a renewal l e a s e

be i s s u e d t o F o s t e r a t t h e r a t e of $7.50 p e r AUM. The Board

a c c e p t e d t h e recommendation and renewed t h e l e a s e a t t h e

$7.50 r a t e .

On J u l y 2 , 1979, t h e Department of S t a t e Lands c a n c e l e d

F o s t e r ' s l e a s e f o r f a i l u r e t o f i l e a sublease. On c a n c e l -

l a t i o n of t h e lease, i t was e x p l a i n e d t o F o s t e r t h a t h i s

l e a s e would be renewed i f he p a i d a p e n a l t y of 50 p e r c e n t of

t h e a n n u a l r e n t a l of t h e l a n d . F o s t e r p a i d t h e p e n a l t y , and

the lease was reinstated.

The f o l l o w i n g i s s u e i s r a i s e d by t h e Department of

S t a t e Lands f o r review:

Did t h e D i s t r i c t C o u r t err i n d e t e r m i n i n g F o s t e r s h o u l d

n o t be g r a n t e d a p r e f e r e n t i a l r i g h t t o l e a s e t h e l a n d i n

q u e s t i o n under t h e a u t h o r i t y of J e r k e v . S t a t e Department of

Lands ( 1 9 7 9 ) , Mont. , 597 P.2d 49, 36 St.Rep. 389? Respondent S k i l l m a n r a i s e s t h e f o l l o w i n g i s s u e on

cross-appeal:

Did t h e D i s t r i c t C o u r t err i n d e c l a r i n g t h e l a n d i n

q u e s t i o n s h o u l d be reopened f o r p u b l i c b i d r a t h e r t h a n

awarding t h e lease t o S k i l l m a n ?

The arguments of t h e S t a t e a r e n o t p e r s u a s i v e i n t h i s

case. Although t h e S t a t e i s c o r r e c t i n s t a t i n g t h a t J e r k e

i s l i m i t e d t o i t s f a c t s , t h e d i s t i n c t i o n s made by t h e S t a t e a r e not f a t a l t o i t s application here. A s Chief ~ u s t i c e

Haswell p o i n t e d o u t i n J e r k e , t h e c r u c i a l p o i n t of t h e case

is this: "To a l l o w a n e x i s t i n g lessee who d o e s n o t u s e t h e land t o exercise a preference r i g h t consti- t u t e s a n u n c o n s t i t u t i o n a l a p p l i c a t i o n of t h e preference r i g h t s t a t u t e , s e c t i o n 81-405(1), R.C.M. 1947, now s e c t i o n 77-6-205 (1) MCA." , 597 P.2d a t 51, 36 St.Rep. a t 392.

The m e r e f a c t t h a t t h e l e s s e e i n t h i s c a s e i s a n i n d i -

v i d u a l i n s t e a d of a g r a z i n g d i s t r i c t i s n o t s u f f i c i e n t l y

m a t e r i a l t o t h e p o l i c y involved t o disallow t h e a p p l i c a t i o n

of t h e p r e c e d e n t .

F u r t h e r , i f t h e c a s e i s d i s t i n g u i s h a b l e and J e r k e

s h o u l d n 6 t be c o n t r o l l i n g a s p r e c e d e n t , t h e r e i s even more

j u s t i f i c a t i o n f o r a p p l y i n g t h e r a t i o n a l e of J e r k e h e r e . In

J e r k e , a l t h o u g h t h e r e was a s u b l e a s e i n v o l v e d , t h e r e i s no

e v i d e n c e t h a t t h e r e was a n i l l e g a l s u b l e a s e , as i n t h e c a s e

before us. Here t h e l e s s e e , F o s t e r , s u b l e t h i s g r a z i n g

l e a s e w i t h o u t h a v i n g t h e s u b l e a s e approved by t h e Department

of S t a t e Lands a s r e q u i r e d by h i s lease w i t h t h e S t a t e .

S e c t i o n 77-6-205(1), MCA, r e c i t e s i n a p p l i c a b l e p a r t :

" ( 1 ) A l e s s e e of s t a t e l a n d c l a s s e d a s a g r i - c u l t u r a l , g r a z i n g , town l o t o r c i t y l o t who h a s p a i d a l l t h e r e n t a l s due from him t o t h e s t a t e and - - n o t v i o l a t e d - t e r m s - -s lease who h a s - the of h i - i s e n t i t l e d t o have h i s l e a s e renewed . . ." (Emphasis s u p p l i e d . )

F u r t h e r , ARM §26.3.108(2) e s t a b l i s h e s t h e D e p a r t m e n t ' s

policy:

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