No. 14474
IN THE SUPREME COURT OF THE STATE OF MONTANA 1979
STATE OF MONTANA, ACTING BY AND THROUGH THE DEPARTMENT OF HIGHWAYS OF THE STATE OF MONTANA, Plaintiff and Appellant, -vs- WILLIAM K. BURLINGAME et al., Defendant and Respondent.
Appeal from: District Court of the Fourth Judicial District, Honorable E. Gardner Brownlee, Judge presiding. Counsel of Record: For Appellant:
Terry Clausen argued, Helena, Montana For Respondent : K. M. Bridenstine argued, Polson, Montana Claude Burlingame, Plains, Montana
Submitted: February 1, 1979 Decided 2 i279 Filed: !$- -- 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 o f t h e Court.
The S t a t e of Montana, Department of Highways, a p p e a l s
from t h a t p o r t i o n o f a judgment, awarding c o s t s and a t t o r -
n e y ' s f e e s i n a n eminent domain p r o c e e d i n g , e n t e r e d by t h e
Honorable E. Gardner Brownlee, F o u r t h J u d i c i a l D i s t r i c t ,
Missoula County.
The S t a t e of Montana, Department o f Highways, i n s t i -
t u t e d eminent domain p r o c e e d i n g s on J a n u a r y 26, 1977, a f t e r
d e f e n d a n t r e f u s e d i t s o f f e r t o a c q u i r e by p u r c h a s e 1.32
a c r e s of d e f e n d a n t ' s l a n d i n Missoula County. By s t i p u l a -
t i o n , a p r e l i m i n a r y o r d e r of condemnation was e n t e r e d Febru-
a r y 25, 1977. P u r s u a n t t o s e c t i o n 93-9910, R.C.M. 1947, now
s e c t i o n 70-30-205 MCA, d e f e n d a n t , on March 1 4 , 1977, f i l e d
a n answer, c l a i m i n g $85,000 a s f a i r and j u s t compensation
f o r t h e l a n d t a k e n and f o r damage t o t h e r e m a i n d e r . A value
commission h e a r d t h e m a t t e r August 1 0 , 1977, and t h e r e a f t e r
awarded d e f e n d a n t $53,900. Both p a r t i e s a p p e a l e d t h a t
determination.
A jury t r i a l i n D i s t r i c t Court r e s u l t e d i n a v e r d i c t ,
i s s u e d J u n e 21, 1978, f o r d e f e n d a n t i n t h e amount of $39,750,
o f which $31,530 w a s deemed t h e v a l u e o f t h e l a n d t a k e n and
$8,220 t h e v a l u e of damage t o t h e r e m a i n d e r . On J u n e 27,
1978, d e f e n d a n t f i l e d a memorandum of c o s t s and d i s b u r s e -
m e n t s , which t h e S t a t e moved t o s t r i k e . A h e a r i n g on t h e
motion t o s t r i k e was h e l d on J u l y 11, 1978. Two d a y s l a t e r
t h e D i s t r i c t C o u r t e n t e r e d a n o r d e r denying t h e S t a t e ' s motion and awarding d e f e n d a n t c o s t s and a t t o r n e y ' s f e e s .
The s u b s t a n c e of t h a t o r d e r w a s i n c o r p o r a t e d i n t o t h e judg-
ment awarding d e f e n d a n t $39,750, p l u s i n t e r e s t t h e r e o n a t 1 0 p e r c e n t p e r annum i n t h e sum of $5,865.51. Of t h e a d d i - tional $6,247.93 awarded as costs, $4,711.57 represents attorney's fees. No hearing on the reasonableness of the attorney's fees had been held. The State raises two issues: 1. In an eminent domain proceeding where the District Court found the State's final offer was $43,100 and the jury verdict was $39,750, was it error for the District Court to award attorney's fees and costs? 2. Was it error for the District Court to award attorney's fees without an evidentiary hearing to determine the reasonableness of the fees awarded? We find the trial court erred in awarding attorney's fees in this case because the private property owner did not prevail as required by law. In so holding, it is unneces- sary to discuss the second issue. Defendant argues that the offer of $43,100 was not the "final offer" made by the State. The State contends that its final offer was made in a letter dated June 8, 1978. The letter, addressed to K. M. Bridenstine, counsel for defen- dant, and signed by Donald A. Douglas, attorney for the Department of Highways, reads - - in toto: "Dear K : "This letter is to advise you that pursuant to the provisions of R.C.M., 1947, Section 92- 9921.1, the State of Montana, Department of High- ways, makes an offer in the sum of $43,100.00 plus necessary expenses of the condemnee accrued to this date and interest for all interests in the property which is the subject matter of the above entitled condemnation suit, being Cause No. 45474 in Missoula County, Montana." Of significance is that the offer specifically includes "necessary expenses . . . accrued to this date." Thus, defendant's expenditures for "engineer's fees," incurred on i n s t r u c t i o n by t h e D i s t r i c t C o u r t , would have been r e i m -
b u r s e d by t h e S t a t e had t h e o f f e r been a c c e p t e d . The o t h e r " n e c e s s a r y e x p e n s e s , " i n c l u d i n g c o s t s and r e a s o n a b l e a t t o r -
n e y ' s f e e s , l i k e w i s e would have been r e i m b u r s e d .
The s t a t u t e a t t h e f o c a l p o i n t of t h i s d i s p u t e i s
s e c t i o n 93-9921.1, R.C.M. 1947, now s e c t i o n 70-30-305 MCA:
"The condemnor, s h a l l w i t h i n t h i r t y ( 3 0 ) d a y s a f t e r a n a p p e a l i s p e r f e c t e d from t h e commis- s i o n e r ' s award o r r e p o r t , s u b m i t t o condemnee a w r i t t e n f i n a l o f f e r o f judgment f o r t h e prop- e r t y t o b e condemned, t o g e t h e r w i t h n e c e s s a r y e x p e n s e s of condemnee t h e n a c c r u e d .
" I f a t any t i m e p r i o r t o t e n ( 1 0 ) d a y s b e f o r e t r i a l , t h e condemnee s e r v e s w r i t t e n n o t i c e t h a t t h e o f f e r i s a c c e p t e d , e i t h e r p a r t y may t h e n f i l e t h e o f f e r and n o t i c e o f a c c e p t a n c e t o g e t h e r w i t h proof o f s e r v i c e t h e r e o f and t h e r e u p o n judg- ment s h a l l b e e n t e r e d . An o f f e r n o t a c c e p t e d s h a l l b e deemed withdrawn and e v i d e n c e t h e r e o f i s n o t a d m i s s i b l e a t t h e t r i a l e x c e p t i n a pro- ceeding t o determine c o s t s . The f a c t t h a t an o f f e r i s made b u t n o t a c c e p t e d d o e s n o t p r e c l u d e a s u b s e q u e n t o f f e r . - -e e v e n t of l i t i g a t i o n , In th and when t h e p r i v a t e p r o p e r t y o w n e r p r e v a i l s f --- a r e c e i v i n g a n award - e x c e s s - -e f i n a l o f - in of t h f e r-f- e condemnor. t h e c o u r t s h a l l award n e c e s - o th - s a r y e x p e n s e s o f l i t i g a t i o n - -e condemnee. ' t o th (Emphasis added.)
T h i s s t a t u t e implements A r t i c l e 11, S e c t i o n 29 of t h e
Montana C o n s t i t u t i o n , which i n p a r t p r o v i d e s t h a t " [ i l n t h e
e v e n t of l i t i g a t i o n [ i n a n eminent domain p r o c e e d i n g ] , j u s t
- compensation s h a l l i n c l u d e n e c e s s a r y e x p e n s e s of l i t i g a t i o n
- - awarded - -e c o u r t when t h e p r i v a t e p r o p e r t y owner t o be by t h -- prevails." (Ehnphasis added.)
S e c t i o n 93-9921.1 was i n t e r p r e t e d by t h i s C o u r t i n
S t a t e Department of Highways v . O l s e n ( 1 9 7 5 ) , 166 Mont. 1 3 9 ,
531 P.2d 1330. T h e r e t h e C o u r t q u o t e d l a n g u a g e from t h e
C o n s t i t u t i o n a l Convention n o t e s :
" ' R e t a i n s provision i n 1889 c o n s t i t u t i o n [ A r t . 111, sec. 1 4 1 on e m i n e n t domain and expands i t s p r o t e c t i o n by g u a r a n t e e i n g t h a t a p r o p e r t y owner who g o e s t o c o u r t and i s awarded more money t h a n o f f e r e d f o r h i s p r o p e r t y b e i n g condemned w i l l b e r e i m b u r s e d f o r t h e n e c e s s a r y e x p e n s e s of t h e l a w s u i t ( s u c h a s a p p r a i s e r and a t t o r n e y s f e e s ) . ' " 166 Mont. a t 145, 531 P.2d a t 1333.
A t i s s u e i n O l s e n w a s whether t h e new s t a t u t o r y p r o v i s i o n
a p p l i e d t o a n a c t i o n pending a t t h e t i m e t h e r i g h t t o
c o s t s , i n c l u d i n g a t t o r n e y ' s f e e s , came i n t o b e i n g . Although
t h e i s s u e d i f f e r s from t h a t i n t h e i n s t a n t c a s e , c e r t a i n
d i c t u m from O l s e n i s h e l p f u l , e . g . , "The r i g h t t o n e c e s s a r y
c o s t s of l i t i g a t i o n p r o v i d e d by s e c t i o n 93-9921.1, R.C.M.
1947, d o e s n o t a r i s e when t h e s u i t i s f i l e d , b u t v e s t s o n l y
-- when t h e p r i v a t e p r o p e r t y owner p r e v a i l s , s e c u r i n g - - e r - a v
diet h i g h e r -- S t a t e ' s f i n a l o f f e r . " 166 Mont. a t 1 4 6 , than t h e
531 P.2d a t 1334. (Emphasis added.) It is clear t h a t a
p r i v a t e p r o p e r t y owner, t o b e e n t i t l e d t o " n e c e s s a r y ex-
p e n s e s o f l i t i g a t i o n , " must p r e v a i l . To p r e v a i l , he must
r e c e i v e " a n award i n e x c e s s of t h e f i n a l o f f e r of t h e con-
demnor," t h e S t a t e . S e c t i o n 93-9921.1, R.C.M. 1947.
The f o l l o w i n g e x c e r p t from t h e r e c o r d of t h e C o n s t i t u -
t i o n a l Convention d e b a t e s , Vol. V I I , pp. 5638-40, confirms
this:
"DELEGATE HABEDANK: M r . Dahood, f o r t h e p u r p o s e of t h e journal i n f u t u r e l i t i g a t i o n over t h e i n t e r p r e t a t i o n o f t h i s t e r m , w i l l you p l e a s e s t a t e i n t o t h e r e c o r d , what i s meant by t h e words, p r e v a i l i n g p a r t y ?
"DELEGATE DAHOOD: By p r e v a i l i n g p a r t y I mean, f o r t h e r e c o r d , t h e p r o p e r t y owner, i n t h e e v e n t t h a t he i s t h e p r e v a i l i n g p a r t y . The o n l y p e r s o n i n t e n d e d by t h i s p a r t i c u l a r s e c t i o n and t h e s e n t e n c e t h a t h a s been added -- j u s t compensation s h a l l b e awarded by t h e c o u r t o n l y -- j u s t compensation s h a l l i n c l u d e e x p e n s e s of l i t i g a t i o n o n l y when t h e p r e v a i l i n g p a r t y i s t h e p r i v a t e p r o p e r t y owner.
"CHAIRMAN GRAYBILL: Mr. Habedank.
"DELEGATE HABEDANK: M r . Dahood, I f a i l e d t o ask t h e question properly. I f t h e highway de- p a r t m e n t o f f e r e d t h e owner f i v e thousand d o l l a r s f o r h i s p r o p e r t y and t h e owner r e f u s e d i t and went i n t o c o u r t and s e c u r e d a judgment from t h e j u r y f o r less t h a n f i v e thousand d o l l a r s , would he t h e n be a p r e v a i l i n g p a r t y ?
DELEGATE DAHOOD: H e would n o t b e a p r e v a i l i n g party . "DELEGATE HABEDANK: I f h e o b t a i n e d f i v e thou- s a n d and one d o l l a r s , would he b e a p r e v a i l i n g - -
"DELEGATE DAHOOD: H e would b e a p r e v a i l i n g party.
DELEGATE HABEDANK: Thank you, M r . Dahood.
"CHAIRMAN GRAYBILL: Is t h e r e any o t h e r d i s c u s - s i o n of s e c t i o n twenty-nine? M r . Harlow.
"DELEGATE H R O :AL W I merely w i s h t o r i s e i n sup- p o r t of t h i s s e c t i o n . I want t o a s k M r . Dahood t h e one q u e s t i o n i n between what M r . Habedank -- had and t h e p a r t y r e c e i v e d o n l y t h e f i v e thousand d o l l a r s . Would h e b e p r e v a i l i n g ?
"DELEGATE DAHOOD: H e i s not the prevailing party i n t h a t instance.
"DELEGATE H R O : AL W H e ' s g o t t o g e t one d o l l a r more.
"DELEGATE DAHOOD: - -s-o exceed t h e o f f e r made H e ha t by t h e S t a t e o f Montana."
To d e t e r m i n e i f t h e award of c o s t s and a t t o r n e y ' s f e e s
was p r o p e r , t h e l e t t e r from t h e Highway Department a t t o r n e y
t o d e f e n d a n t ' s a t t o r n e y , q u o t e d above, must be deemed a n
o f f e r , e i t h e r a f i n a l o f f e r o r a s u b s e q u e n t o f f e r which h a s
become a f i n a l o f f e r i n v i r t u e of i t b e i n g t h e l a s t made by
the State. Subsequent o f f e r s may b e made, of c o u r s e .
S e c t i o n 93-9221.1 i n c l u d e s t h i s s e n t e n c e : "The f a c t t h a t a n
o f f e r i s made b u t n o t a c c e p t e d d o e s n o t p r e c l u d e a s u b s e -
quent offer."
The D i s t r i c t C o u r t judge, i n t h e order dated J u l y 13,
1978, deemed t h e o f f e r made by t h e S t a t e i n t h a t l e t t e r a
"final offer." In p a r t the order recites:
"The m a t t e r w a s t h e n s e t f o r t r i a l by t h e C o u r t f o r t h e 1 9 t h d a y of J u n e , 1 9 7 8 . The S t a t e w r o t e a l e t t e r t o t h e a t t o r n e y r e p r e s e n t i n g t h e land- owner and made a n o f f e r i n t h e sum of $43,100.00 p l u s i n t e r e s t and p l u s n e c e s s a r y e x p e n s e s . This o f f e r was n o t a c c e p t e d by t h e landowner and t h e m a t t e r went t o t r i a l . The j u r y t r i a l r e s u l t e d i n a v e r d i c t i n f a v o r o f t h e landowner f o r t h e s m u o f $39,750.00. The landowner t h e n f i l e d a C o s t B i l l asking f o r :
" A p p r a i s e r ' s f e e s ( w i t n e s s fees)---------- $964.11
" E n g i n e e r ' s f e e s (sewer d e s i g n ) ---------- $549.25
"The S t a t e t h e n moved t o s t r i k e t h e C o s t B i l l on t h e grounds and f o r t h e r e a s o n t h a t t h e landowner d i d n o t g e t more t h a n $43,100.00 which was t h e ' f i n a l o f f e r ' made by t h e S t a t e of Montana.
"The ' f i n a l o f f e r ' made Q t h e S t a t e of Montana - fa - s i n -c t i-i n e x c e s s o f - j u r y v e r d i c t p l u s - - the - the c o s t s and d i s b u r s e m e n t s r e q u e s t e d - -e Defen- by t h -n t i-t h i s a c t i o n . From t h e t i m e t h e a p p e a l da - n w a s f i l e d u n t i l about t e n days before t h e a c t u a l t r i a l o f t h e a c t i o n t h e state n e v e r o f f e r e d t h e landowner more t h a n t h e o r i g i n a l sum of $25,600.00. The S t a t e ' s d e l a y i n making t h e ' f i n a l o f f e r ' of $43,100.00 r e s u l t e d i n t h e landowner expending money f o r e n g i n e e r i n g f e e s f o r t r i a l p r e p a r a t i o n . The C o u r t f i n d s t h a t t h i s d e l a y on t h e p a r t of t h e S t a t e i n r a i s i n g t h e i r o f f e r from $25,600.00 t o $43,100.00 a c t u a l l y r e q u i r e d t h e landowner t o expend money f o r t r i a l p r e p a r a t i o n . I n equity it a p p e a r s t o t h i s C o u r t t h a t t h e landowner s h o u l d b e e n t i t l e d t o a l l o f h i s c o s t s and d i s b u r s e m e n t s - view of t h e f a c t t h a t t h e t o t a l of -e c o s t s in - th and d i s b u r s e m e n t s - - j u r y award --t and t h e does no --- exceed t h e ' f i n a l o f f e r ' made by t h e S t a t e of - Montana. " (Emphasis added. )
The S t a t e m a i n t a i n s t h a t t h e o f f e r of J u n e 8 , 1978, w a s
a f i n a l o f f e r per - a s c o n t e m p l a t e d by s t a t u t e . se Even i f
t h a t o f f e r i s n o t i n and o f i t s e l f a " f i n a l o f f e r , " c o n t e n d s
t h e S t a t e , t h e n i t i s a s u b s e q u e n t o f f e r a s c o n t e m p l a t e d by
s e c t i o n 93-9921.1 and became a f i n a l o f f e r i n v i r t u e of i t s
b e i n g t h e l a s t made by t h e S t a t e . The S t a t e c i t e s S t a t e
Department o f Highways v. O l s e n , 166 Mont. a t 148, 531 P.2d
a t 1334, q u o t i n g t h a t p o r t i o n of s e c t i o n 93-9921.1 which s t a t e s t h a t t h e f a c t t h a t a n o f f e r i s made b u t n o t a c c e p t e d
does n o t preclude a subsequent o f f e r . The l a n g u a g e of O l s e n
immediately following t h i s i s s i g n i f i c a n t . The C o u r t s t a t e d :
have made a n o f f e r - q t i m e p r i o r "Thus, t h e S t a t e c o u l d - - a t
- trial. to . ." The S t a t e a s s e r t s t h a t one of t h e p r i n c i p l e s
o f O l s e n i s t h a t a b s e n t any s u b s e q u e n t o f f e r , t h e S t a t e ' s
o f f e r made p r i o r t o t h e f i l i n g of a condemnation a c t i o n w i l l
b e deemed t h e S t a t e ' s f i n a l o f f e r . E x t r a p o l a t i n g from t h a t
p r i n c i p l e , t h e S t a t e then contends t h a t given t h e f a c t t h a t
i t d i d make a n o f f e r s u b s e q u e n t t o t h e one made b e f o r e
i n s t i t u t i n g t h e condemnation a c t i o n , t h a t i s , t h e o f f e r of
J u n e 8, 1978, t h a t o f f e r must be r e g a r d e d a s t h e S t a t e ' s
f i n a l o f f e r f o r p u r p o s e s o f d e t e r m i n i n g whether d e f e n d a n t i s
e n t i t l e d t o c o s t s and a t t o r n e y ' s f e e s . We find that the
l a s t o f f e r made, a t l e a s t under t h e f a c t s of t h i s c a s e , i s
the final offer. . Counsel f o r d e f e n d a n t m a i n t a i n s t h a t t h e o n l y o f f e r
made by t h e S t a t e w a s $ 2 5 , 6 0 0 - - t h i s i n t h e f a c e of acknowl-
e d g i n g t h e J u n e 8 , 1978, l e t t e r and r e j e c t i n g t h e o f f e r made
therein. I t i s contended t h a t s e c t i o n 93-9921.1 requires
t h a t t h e S t a t e ' s f i n a l o f f e r b e made w i t h i n t h i r t y d a y s
a f t e r a n a p p e a l o f t h e c o m m i s s i o n e r ' s award. The f i r s t
s e n t e n c e of t h a t s t a t u t e i s r e p e a t e d h e r e : "The condemnor,
s h a l l w i t h i n t h i r t y (30) days a f t e r an appeal i s p e r f e c t e d
from t h e c o m m i s s i o n e r ' s award o r r e p o r t , s u b m i t t o condemnee
a w r i t t e n f i n a l o f f e r of judgment f o r t h e p r o p e r t y t o b e
condemned, t o g e t h e r w i t h n e c e s s a r y e x p e n s e s of condemnee
then accrued."
Defendant t h e n a r g u e s (1) t h a t t h e S t a t e ' s o f f e r
c a n n o t b e deemed a " s u b s e q u e n t o f f e r " b e c a u s e i t was n o t
s u b s e q u e n t t o one made w i t h i n t h i r t y d a y s a f t e r an a p p e a l from t h e c o m m i s s i o n e r ' s award, and ( 2 ) t h a t t h e J u n e 8 ,
1978, o f f e r was n o t a n o f f e r of any s o r t , t h a t i t was v o i d
- i n i t i o , even though i n r e j e c t i n g i t , h e t r e a t e d i t as a n ab
offer . D e f e n d a n t ' s c o u n s e l f u r t h e r c h a r g e s t h a t t h e " S t a t e can
h a r d l y h i d e i t s f a i l u r e t o f o l l o w S t a t u t o r y mandate, though
it s e e k s e x c u l p a t i o n by t e r m i n g i t s l e t t e r of J u n e 8 , 1978
a 'subsequent' offer." H e then charges t h e S t a t e with
t a k i n g " a l a s t moment gamble on A t t o r n e y ' s f e e s and c o s t s . "
Having a n t i c i p a t e d t h e s e remarks, t h e S t a t e a s s e r t s f i r s t
t h a t " f a i r n e s s and common s e n s e " d i c t a t e t h a t an o f f e r
l a b e l e d a s a f i n a l o f f e r , a c t e d upon by t h e landowner a s a
f i n a l o f f e r , i s i n f a c t a f i n a l o f f e r as c o n t e m p l a t e d by
s e c t i o n 93-9921.1. Secondly, t h e S t a t e argues t h a t " c o n s t i -
t u t i o n a l p r o v i s i o n s o u g h t n o t t o b e f r u s t r a t e d by i n a d v e r -
t e n t v i o l a t i o n s of s t a t u t o r y p r o c e d u r e , " c i t i n g Olsen i n
s u p p o r t of t h a t d e c l a r a t i o n . Hidden i n t h e s e remarks i s t h e
a d m i s s i o n t h a t t h e S t a t e i n a d v e r t e n t l y f a i l e d t o make a n
o f f e r within t h e t h i r t y days a f t e r perfecting t h e appeal
from t h e c o m m i s s i o n e r ' s award, b u t t h a t i t s h o u l d n o t b e
penalized f o r such inadvertence, because t h e o f f e r a t least
q u a l i f i e s a s a s u b s e q u e n t o f f e r which became a f i n a l o f f e r
i n v i r t u e of i t s b e i n g t h e f i n a l ( l a s t ) o n e made.
The c o n c e p t of " f i n a l o f f e r " w a s d i s c u s s e d i n Rauser v .
Toston I r r i g a t i o n D i s t . (1977), - Mont . , 565 P.2d
632, 641, 3 4 S t - R e p . 496, 506. The C o u r t s a i d t h a t , w h i l e
i t was u n d e r s t a n d a b l e t h a t t h e D i s t r i c t C o u r t d i d n o t w i s h
t o f o l l o w t h e s t a t u t o r y condemnation p r o c e d u r e i n t h a t c a s e ,
t h i s c o u l d n o t be used t o deny t h e landowners t h e i r a t t o r -
ney's fees. The C o u r t i m p l i c i t l y found t h a t t h e D i s t r i c t
had made a " f i n a l o f f e r " even though t h e r e w a s no " o f f e r " denominated a s s u c h o r a c t e d upon a s such. The b i d f o r work t o b e done t o c u r e t h e problem of w a t e r s e e p a g e , r e j e c t e d by
t h e D i s t r i c t a s b e i n g t o o c o s t l y , w a s deemed t h e f i n a l o f f e r
f o r p u r p o s e s of d e t e r m i n i n g whether t h e landowner p r e v a i l e d .
The C o u r t found t h a t i n d e e d t h e landowner had p r e v a i l e d , a s
t h e j u r y award o f $100,000 exceeded t h e " f i n a l o f f e r " o f t h e
D i strict-condemnor . Although t h i s c a s e i s n o t r e l i e d on by e i t h e r p a r t y , i t
c l e a r l y supports t h e S t a t e ' s position. The l a c k of a n o f f e r
w i t h i n t h i r t y d a y s o f p e r f e c t i n g a p p e a l from t h e commis-
s i o n e r ' s award c a n n o t b e used t o f r u s t r a t e t h e i n t e n t of
s e c t i o n 93-9921.1. The S t a t e , i n t h e l e t t e r of J u n e 8 ,
1978, s p e c i f i c a l l y denominated t h e o f f e r a s a n o f f e r . In
r e j e c t i n g t h e o f f e r , counsel f o r defendant t r e a t e d t h e o f f e r
a s an o f f e r .
TO p r e v a i l , t h e p r i v a t e p r o p e r t y owner must have re-
c e i v e d a n award i n e x c e s s of t h e f i n a l o f f e r o f t h e con-
demnor. Defendant r e c e i v e d a n award of $39,750 from t h e
jury; t h e S t a t e ' s f i n a l o f f e r was $43,100. The former i s
less t h a n t h e l a t t e r ; t h u s d e f e n d a n t d i d n o t p r e v a i l a s
c o n t e m p l a t e d by t h e f r a m e r s of t h e 1972 C o n s t i t u t i o n .
T h a t p o r t i o n o f t h e judgment awarding a t t o r n e y ' s f e e s
i s reversed.
W concur: e
Justices Mr. Justice John C. Sheehy dissenting:
It has seemed to me that this Court is reluctant to allow or award attorney fees. In this case, however, the Court swings with a double- bladed axe. Not only is the attorney pruned of his rightful fee, but the client, a condemnee supposedly guaranteed his
costs under the 1972 Montana Constitution, finds his constitutional recovery of costs cut to nothing. He must reach into his recovery in order to pay his expenses of litigation.
"Just compensation" is defined in the 1972 Mont. Const. lit. 11, as follows:
"Section 29. Eminent domain. Private property shall not be taken or damaged for-pubiic use without just compensation to the full extent of the loss having been first made to or paid into court for the owner. - - In the event of litigation, just compensation shall include necessary expenses of litigation to be awarded by the court when the private property owner prevails." (Emphasis added.) What is lacking in the decision of this Court in this case is an understanding of the intention of the constitutional framers in adopting 1972 Mont. Const. Art. 11, 529. Prior to 1972, there was no statutory provision for an offer during litigation by the Highway Department, because prior to 1972, each condemnee had to bear the considerable cost of litigation, including appraisers, engineers and attorney fees, out of any recovery he made. The landowner was forced many times to inadequate settlements because he couldn't win for losing, even
though the previous constitution provided for "just compensation" for the owner (1889 Mont. Const. Art. 111, 814). Before 1972, as now, the Highway Department followed the practice of issuing a letter designated a "final offer", stating separately the offer for land and for after-damage, before
litigation was commenced. Before the "final offer" the State and landowner were in contact many times, sometimes for several years while the proposed construction went through the long process from drawing board to contract- letting. It was when the contract was about to be let that the State felt the compulsion to get out its letter of final offer, for litigation then became necessary. That background explains the dialogue of the delegates to the 1972 convention. The proposal in the condemnation provision of the new constitution of 1972 was that "just
compensation" should include necessary costs of litigation to the "prevailing party". It was the contemplation of the delegates that if the landowner, by litigation, proved that the final offer received before litigation was insufficient,
he was the prevailing party and entitled to his ccsts of litigation as a part of his "just compensation".
This background explains why the constitutional convention notes appended to 1972 Mont. Const. Art. 11, 829, state: "Retains provision in 1889 Constitution [Art. 111, sec. 141 on eminent domain and expands its protection by guaranteeing that a property owner who- - to court - goes and is awarded more money than offered for his property being condemned will be reimbursed for the necessary expenses of the lawsuit (such as appraiser and attorneys fees)." (Emphasis added.) In 1973, the State Highway Department (not the landowners) went to the legislature to obtain the passage of Ch. 453, Laws of Montana (1973) codified as section 93-9921.1, R.C.M. 1947, which reads as follows: "Necessary expenses of litigation. The condemnor, shall within thirty (30) days after an appeal is perfected from the commissicner's award or report, submit to condemnee a written final offer of judgment for the property to be ~ondemnedyto~ether with necessary expenses of condemnee then accrued. "If at any time prior to ten (10) days before trial, the condemnee serves written notice that the offer is accepted, either party may then file the offer and notice of acceptance together with proof of service thereof and thereupon judgment shall be entered. An offer not accepted shall be deemed withdrawn and evidence thereof is not admissible at the trial except in a prcceeding to determine costs. The fact that an offer is made but not accepted does not preclude a subsequent offer. - - - - In the event-of litigation, and when the private property owner prevails, by receiving an award in excess of the final offer of the condemnor, the court shall award necessary expenses of litigation to the condemnee." (Emphasis added.) Note especially that the only "final offer" described in section 93-9921.1, now section 70-30-305 MCA is the one which must occur within thirty days of the appeal of the
comrnissi~ner'saward. Any other later offer is a "subsequent offer". But it is the "final offer" under the statute that fixes the right of the condemnee to attorney fees and costs as a part of his recovery in just compensation. One could assume that section 93-9921.1, now section
70-30-305 MCA is clear and unambiguous on its face, and needs no interpretation. In this decision, the Court abandons
its rule of State Department of Highways v. Olsen (1975), 166 Mont. 139, 148, 531 P.2d 1330. In that case, the parties
had waived by stipulation the commission hearing (provided in section 93-9912, R.C.M. 1947, now section 70-30-207 MCA) and proceeded straight to jury trial on the issues. The only offer made by the State was before the litigation commenced. The State claimed that since it had not made an offer within thirty days of a commission decision, no "final offer" existed and therefore, the prevailing condemnee could not collect attorney fees. The court rejected this contention saying: "To adopt such a theory here would contravene the intent of the statute and would violate the constitutional mandate. Article 11, Section 29, 1972 Constitution requires that a landowner be compensated for necessary expenses of litigation if he prevails. This constitutional directive cannot be frustrated by inadvertent or intentional violations of statutory procedure." 166 Mont. p. 147, 531 P.2d p. 1334. Statutes are made to be obeyed, by the servants of the State as well as by the general public. Here the condemnee
is being punished because the State failed to follow the mandate of the statute as to when the final offer should
be made. To reach that unlawful result the majority decision
equates "subsequent offer" with "final offer", but the "subsequent offer" here does not follow anything. Result: section 93-9921.1, now section 70-30-305 MCA, is tortured beyond recognition and the intent of the constitutional framers is thwarted. The majority opinion cites Rauser v. Toston Irrigation
District (1977), Mont . , 565 P.2d 632, 641, 34 St.Rep. 496, 506, as authority for what it does in this case. Rauser is not authority for any issue in this case. In Rauser, there was involved an inverse condemnation, where no offers were made. There the court merely implied that a rejected
compromise sum was an offer in order to award attorney fees to the prevailing party. Today's decision sounds the final knell for the purposes of section 93-9921.1, now section 70-30-305 MCA. Not only is the statutory thirty-day requirement thrown out the window, but the Highway Department is given carte blanche to defeat the condemnee's right to attorney fees and costs by allowing the Highway Department to make its offer (final or subsequent, as you will) at any time, perhaps even during the trial and gamble on the outcome. We have come full circle. The landowners are back where
they were prior to 1972. In my opinion Judge Brownlee understood the situation
perfectly. I would affirm his decision.
Justice