Montana Consumer Finance Ass'n v. State Ex Rel. Bullock

August 17 2010
OP 10-0366, OP 10-0371
IN THE SUPREME COURT OF THE STATE OF MONTANA
2010 MT 185____________________
MONTANA CONSUMER FINANCE ASSOCIATION,
Petitioner,
v.
STATE OF MONTANA, by and through STEVE BULLOCK, OPINION
in his capacity as the Attorney General, and LINDA McCULLOCH,
in her capacity as Secretary of State. AND
Respondent. ORDER
____________________
BERNARD J. HARRINGTON, Individually, and
as Treasurer for Coalition for Consumer Choice
Against I-164, a Political Committee,
Petitioner,
v.
STATE OF MONTANA, by and through STEVE BULLOCK,
in his capacity as the Attorney General, and LINDA McCULLOCH,
in her capacity as Secretary of State,
Respondent.
____________________
¶1 Petitioner Bernard J. Harrington in his individual capacity and as representative of
the Coalition for Consumer Choice Against I-164 (Harrington) and Petitioner Montana
Consumer Finance Association (MCFA) (Collectively “Petitioners”) invoke this Court’s
original jurisdiction to challenge the Attorney General’s legal sufficiency determination
and ballot statements for Initiative No. 164 (I-164). We review the following issue:
¶2 Do the Attorney General’s ballot and fiscal statements comply with § 13-27-312,
MCA?
FACTUAL AND PROCEDURAL BACKGROUND
¶3 I-164 seeks to cap interest rates for certain loans at an annual interest rate of 36
percent. Petitioners challenge the ballot statements and Attorney General’s legal
sufficiency determination for I-164 under § 13-27-316, MCA. Section 13-27-316, MCA,
constitutes the “exclusive remedy” for such challenges. I-164 would affect interest rates
on certain lenders. Section 1 proposes a finding that some lenders are charging
Montanans more than 400% interest annually. Section 2 would repeal exemptions on
interest rate limits and usury provisions for deferred deposit lenders, title lenders, and
consumer loan licensees. Section 3 would provide for penalties for violation of the
initiative under the Consumer Protection Act. Section 4 caps the finance charge on retail
installment contracts at 36% annually. Section 5 caps the interest rates for pawnbrokers.
Section 6 limits fees for deferred deposit loans to 36% annually and provides for
allocation of attorneys fees. Section 7 caps the interest rate at 36% for title loans.
Section 8 limits interest rates to 36% for “consumer loans,” a statutory term that excludes
deferred deposit, title, mortgage backed loans, and loans by “regulated lenders.” Section
9 provides that the statutory amendments would take effect on January 1, 2011.
¶4 The Attorney General found that the proponents’ proposed ballot statement did not
specify the type of loans subject to the limits and contained “potentially argumentative
and misleading detail about federal legislation concerning military personnel and their
2
families.” The Attorney General determined that the statements did not comply with the
requirements of § 13-27-312, MCA, and redrafted the ballot statement. The Attorney
General requested a fiscal note from the Budget Director. The fiscal note estimated a
reduction in licensing and examination revenue of $189,900 per year, totaling $526,800
over the three year analysis period, and no impact to the General Fund. The Attorney
General drafted the fiscal statement in accordance with the finding that there would be a
fiscal impact if I-164 were to become law. Section 13-27-312(3), MCA.
¶5 The Attorney General’s amended ballot statement reads as follows:
Statement of Purpose
Under Montana law, deferred deposit (payday) lenders may charge fees
equaling one-fourth of the loan, which is the same as an annual interest rate
of 300 percent for a 31 day loan or 650 percent for a 14-day loan. Title
lenders may charge interest equaling one-fourth of the loan, which is the
same as an annual interest rate of 300 percent for a 30 day loan. I-164
reduces the interest, fees, and charges that payday, title, and retail
installment lenders may charge to an annual interest rate of 36 percent. It
prohibits businesses from structuring other transactions to avoid the rate
limit.
Fiscal Statement
I-164 reduces the licenses and examination fee revenue paid to the State
because certain lenders may not renew their licenses.
[] FOR reducing the annual interest, fees, and charges payday, title, and
retail installment lenders may charge on loans to 36 percent.
[] AGAINST reducing the annual interest, fees, and charges payday, title,
and retail installment lenders may charge on loans to 36 percent.
¶6 The Secretary of State certified I-164 in accordance with § 13-27-308, MCA, on
July 19, 2010. Petitioners filed suit under § 13-27-316, MCA. Section 13-27-316(5),
MCA, endows this Court with original jurisdiction to hear challenges to ballot statements
3
and constitutes the “exclusive remedy” for such challenges. Both Harrington and MCFA
challenged the ballot statements for failure to comply with the substantive requirements
of § 13-27-312, MCA. Harrington argued that the statements of purpose and implication
failed to “express a true and impartial explanation of the proposed measure in plain,
easily understood language.” Harrington also challenged the fiscal statement under § 5-
4-205, MCA. MCFA claims that the ballot statement for I-164 does not meet the
requirements of § 13-27-312(4), MCA, because it fails to specifically mention “consumer
loan licensees” in the statement of purpose. MCFA contends that, due to this omission,
the statement does not constitute a “true and impartial explanation of the proposed ballot
issue.” Section 13-27-312(4), MCA. MCFA argues that voters would be misled and thus
precluded from casting an informed ballot. Harrington requested that this Court adopt an
alternative ballot statement that Harrington provided. MCFA requested that this Court
overturn the Attorney General’s legal sufficiency determination and, alternatively, that
we strike the term “consumer loan licensee” from the text of the initiative. Nearly two
weeks after filing his initial petition, Harrington filed with this Court a motion for referral
to district court for development of the factual record under § 3-2-202, MCA.
JURISDICTION AND VENUE
¶7 This Court possesses original jurisdiction to review ballot statements for initiative
measures and the Attorney General’s legal sufficiency determination in actions brought
pursuant to § 13-27-316, MCA. Section 13-27-316, MCA, constitutes the sole remedy
for such challenges.
4
DISCUSSION
¶8 Do the Attorney General’s ballot and fiscal statements comply with § 13-27-312,
MCA?
¶9 We must address as a threshold matter Harrington’s motion for referral to the
district court pursuant to § 3-2-202, MCA. Harrington did not raise issues of fact in his
initial petition, and no issues of fact exist to preclude this Court from deciding
Harrington’s petition. More importantly, § 3-2-202, MCA, does not apply to
Harrington’s petition. Section 3-2-202(3)(b), MCA, requires that the parties to a
proceeding under Subsection (3)(a) must “certify the absence of factual issues or stipulate
to and file any factual record necessary” to this Court’s consideration of the challenge.
That provision applies to the petitioner’s ballot statements for initiated measures and the
Attorney General’s ballot statements for referred measures. Section 3-2-202(3)(a), MCA.
Harrington’s petition challenges the Attorney General’s ballot statement for an initiated
measure and therefore does not fall into either of the categories specified by § 3-2-202(a),
MCA. Harrington’s petition likewise does not come within the ambit of the statute as a
challenge under § 13-12-316, MCA, to the Attorney General’s legal sufficiency
determination. The legal sufficiency determination applies only to “the statutory and
constitutional requirements governing submission of the proposed issue to the electors.”
Section 13-27-312(7), MCA. “Legal Sufficiency” does not encompass “consideration of
the substantive legality of the issue if approved by the voters.” Id. Harrington’s petition
raises only substantive legal arguments concerning the legality of the ballot statements
5
and underlying initiative. We therefore deny Harrington’s motion for referral and
proceed to analyze both petitioners’ claims under §§ 13-27-312 and -316, MCA.
¶10 Ballot statements must “express the true and impartial explanation of the proposed
ballot issue in plain, easily understood language and may not be arguments or so written
as to create prejudice for or against the issue.” Section 13-27-312(4), MCA. We have
refused to overturn the Attorney General’s version of a ballot statement, provided that the
statement meets the statutory requirements. Citizens Right to Recall v. State, 2006 MT
192, ¶ 10, 333 Mont. 153, 142 P.3d 764. This practice reflects the rule followed in other
jurisdictions that courts “do not sit as some kind of literary editorial board.” Shulte v.
Long, 687 N.W.2d 495, 498 (S.D. 2004). Courts thus will not “invalidate a summary
simply because they believe a better one could be written.” Burgess v. Miller, 654 P.2d
273, 276, n. 7 (Alaska 1982).
¶11 The Attorney General’s ballot statement meets the requirements of the statute so
long as it employs “ordinary plain language, explains the general purpose of the issues
submitted in language that is true and impartial, and [is] not argumentative or likely to
create prejudice either for or against the issue.” Stop Over Spending Mont. v. State, 2006
MT 178, ¶ 12, 333 Mont. 42, 139 P.3d 788. We review the Attorney General’s ballot
statements solely for compliance with § 13-27-312, MCA. Citizens Right to Recall, ¶ 13.
The statute does not grant petitioners “the right to the ballot statements of their
choosing.” Id.
6
¶12 The Attorney General determined that “the application of a 36% annual interest
rate to consumer loans is more straightforward and, based on the public comments
received, less salient than the core payday, title, and retail installment issues.” The
process of producing a 100 word purpose statement that constitutes a “true and impartial
explanation” of the measure “involves a degree of discretion entrusted to the Attorney
General by the Legislature that we will not overturn absent noncompliance with the
statute.” Citizens Right to Recall, ¶ 18. We acknowledge that the statutory 100 word
limit on statements of purpose will inevitably lead to the omission of some provisions
that Petitioners would like to include. Citizens Right to Recall, ¶ 18. A complete
description of every part of the measure cannot be included. Stop Over Spending Mont.,
¶ 17.
¶13 Petitioners argue that the Attorney General’s statements of purpose and
implication do not constitute a “true and impartial explanation” of what the measure
would do because they identify specifically “deferred deposit lenders,” “title lenders,”
and “retail installment lenders,” but not “consumer loan licensees.” Section 13-27-
312(4), MCA. MCFA requests that we remedy this fault by striking the term “consumer
loan licensees” from the body of the measure. Section 13-27-316, MCA, does not give
this Court the authority to modify the text of a ballot initiative. The statute does provide,
however, that “if this court decides that the ballot statements do not meet the
requirements of 13-27-312, it may . . . certify to the secretary of state a statement that the
court determines will meet the requirements of 13-27-312, MCA.” Section 13-27-
7
316(3)(c)(ii), MCA. We determine therefore that adding the term “consumer loan
licensees” to the statements of purpose and implication and making other minor additions
and stylistic changes will be the most effective remedy for the omission of which MCFA
complains. The amended ballot statement shall read as follows:
Statement of Purpose
Under Montana law, deferred deposit (payday) lenders may charge fees
equaling one-fourth of the loan, which, as an annual interest rate could
range from 300 percent to 650 percent. Title lenders may charge similar
interest rates. I-164 reduces the interest, fees, and charges that payday
lenders, title lenders, retail installment lenders, and consumer loan licensees
may charge to an annual interest rate of 36 percent. It prohibits businesses
from structuring other transactions to avoid the rate limit. It also revises
statutes applicable to pawn brokers and junk dealers.
Fiscal Statement
I-164 reduces the licenses and examination fee revenue paid to the State
because certain lenders may not renew their licenses.
[] FOR reducing the annual interest, fees, and charges payday, title, and
retail installment lenders and consumer loan licensees may charge on loans
to 36 percent.
[] AGAINST reducing the annual interest, fees, and charges payday, title,
and retail installment lenders and consumer loan licensees may charge on
loans to 36 percent.
¶14 Harrington next claims that the Attorney General’s fiscal statement does not
comply with the requirements of § 13-27-312, MCA, and that the fiscal statement is
argumentative and creates prejudice. The statute requires that the Attorney General shall
prepare a fiscal statement if the fiscal note indicates a fiscal impact. Section 13-27-
312(3), MCA. The statement must be used on the petition and ballot. Id. The statute
does not stipulate what information must be included in the fiscal statement. The
Attorney General acted within his discretion in formulating the fiscal statement at issue
8
here. The Attorney General’s fiscal statement accurately provides that I-164 will reduce
the license and examination fee revenue paid to the state “because certain lenders may
not renew their licenses.”
¶15 Harrington claims also that the Attorney General failed to formulate the fiscal note
and fiscal statement in accordance with the statutory provisions because the Budget
Director failed to consult with the Department of Revenue. The Attorney General must
order a fiscal note that estimates the effect on revenue if the proposed initiative will affect
the State’s revenue, expenditures, or fiscal liability. Id. The fiscal note must estimate,
where possible, the dollar amount of the increase or decrease in revenue or expenditures,
costs, and long term financial effects. Section 5-4-205, MCA. The fiscal note serves as
an objective analysis of the financial impacts of the legislation and may not comment or
express an opinion upon the merits of the proposed legislation. Id. The Attorney General
must prepare a fiscal statement if the fiscal note indicates that a fiscal impact will occur
as a result of the proposed legislation. The Attorney General’s fiscal statement must be
included on the petition and on the ballot if the issue is placed on the ballot. Section 13-
27-312(3), MCA.
¶16 The thrust of Harrington’s argument appears to be that the Department of Revenue
constitutes an agency “affected by the ballot issue,” and therefore should have been
consulted by the Budget Director pursuant to § 13-27-312(3), MCA. The Budget
Director consulted with the Division of Banking and Finance in the Department of
Administration. The fiscal note complies with the requirements of § 5-4-205, MCA, and
9
the statute requires nothing more. Harrington requests that we include language as to the
exact amount of revenue estimated to be lost and the volume of such loans processed in
the state each year. This information falls outside the statutory requirements under these
circumstances. The fact that the Attorney General failed to include this information in
the fiscal statement “does not prevent a voter from casting ‘an intelligent and informed
ballot.’” Citizens Right to Recall, ¶ 18.
¶17 Petitioners’ arguments as to prejudice are similarly unavailing. Ballot statements
must “eschew advocacy – argument – for or against the proposal’s adoption.” Id., ¶ 20
(citing Fairness and Acct. in Ins. Reform v. Greene, 886 P.2d 1338 (Ariz. 1994)).
Petitioners fail to point to specific provisions in either the statement of implication or the
fiscal statement that violate this requirement.
¶18 Resolution of these matters has been unnecessarily complicated by the language of
the revised statutes at issue. The intent of § 13-27-316, MCA, is to provide – via an
original proceeding in this Court – the “sole remedy” for challenges to ballot statements
or the Attorney General’s opinion as to legal sufficiency. The statute’s confused and
internally contradictory language, however, threatens to frustrate the will of voters who
have expressed their intent that a measure appear on the ballot. Section 13-27-316,
MCA, applies to statements that have been approved by the Attorney General. Such
statements, of necessity, have already been circulated for voter signatures. In particular,
§ 13-27-316(2), MCA, contemplates challenges to ballot statements “approved by the
attorney general.” The statute then requires, however, that statements revised by this
10
Court and certified to the secretary of state must be placed “on the petition for circulation
and on the official ballot.” Section 13-27-316(3)(c)(ii), MCA (emphasis added).
Statements that have been approved by the Attorney General have of necessity already
completed the circulation process. Compliance with all provisions of subsection (3)(c)(ii)
is thus rendered impossible in cases such as the present when a party brings a challenge
under § 13-27-316, MCA, mere weeks before the statement would be placed on the
ballot. Notwithstanding this and other internal inconsistencies, we have attempted to
apply the statute in accordance with the obvious legislative intent and with due
consideration for the expressed will of Montana’s voters.
¶19 We decline Petitioners’ request to overrule the Attorney General’s legal
sufficiency determination for I-164, or to tamper with the text of the initiative itself.
Citizens Right to Recall, ¶ 29. The Attorney General acted within his considerable
discretion in drafting the ballot statements and fiscal statement for I-164. We determine,
however, that MCFA’s complaint as to the omission of the term “consumer loan
licensees” from the statement of purpose is valid. We therefore certify to the Secretary of
State the ballot statement set forth at ¶ 13, which we have determined will meet the
requirements of § 13-27-312, MCA.
DATED this 17th day of August, 2010.
/S/ BRIAN MORRIS
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We Concur:
/S/ W. WILLIAM LEAPHART
/S/ PATRICIA COTTER
/S/ MICHAEL E WHEAT
Justice Brian Morris specially concurs.
¶20 Winston Churchill observed in a speech before the House of Commons in 1947
that “[d]emocracy is the worst form of government except for all of those other forms
that have been tried from time to time.” Direct democracy removes the filter of the
voters’ elected representatives and takes the audacious step of posing questions directly
to the voters. Montana voters originally adopted the initiative process in 1906 as part of
the incomplete effort to cast aside the “copper collar” that bedeviled Montana politics for
much of the 20th century.
¶21 Montana’s 1972 Constitutional Convention considered carefully the issue of
whether to continue this experiment in direct democracy. The delegates opted to include
in the Constitution an express right of the people to amend the Constitution or enact laws
through the initiative process. Mont. Const., art. III, Sec. 4. This considered decision by
the delegates to the 1972 Constitutional Convention followed more than 65 years of
12
experience with the initiative system in place. The people’s right to constitutional and
statutory initiatives represents “a unique and important retained power.” State ex rel.
Montana Sch. Bd. v. Waltermire, 224 Mont. 296, 299, 729 P.2d 1297, 1299 (1986). Its
inclusion in the Constitution “emphasizes the degree of control the people desired to
retain” over changes to the Constitution or statutes. Id.¶22 The initiative process allows citizens to put before voters issues that their elected
representatives either have chosen not to address, or more likely, have been unable to
resolve. These issues range from the enlightened, such as Constitutional Amendment 3,
commonly known as the coal severance tax trust fund; to the controversial, Constitutional
Amendment 64, the term limits initiative, Initiative 143, restricting trophy hunting on
game farms, Initiative 122, protection of water quality from metal mines, and Initiative
125, prohibiting corporate contributions to ballot issue campaigns; to the banal,
Constitutional Amendment 25, a provision that added the public retirement system to the
State’s unified investment program. The initiative process relies on the wisdom of the
voters to separate sound policy proposals from the fad of the month-type proposals. For
better or worse, the right to amend the Constitution or enact laws by initiative has served
the people of Montana for more than a century.
¶23 The Dissent oozes with hostility toward this initiative process. The Dissent
editorializes about the knowledge, or lack thereof, that “most voters” possess with respect
to a policy proposal. ¶ 65, n.4. The Dissent fails to inform where it gains its insights into
13
the minds of “most voters.” I believe these questions best left to pollsters and political
scientists.
¶24 This same lack of confidence in the knowledge of the voters animates the
Dissent’s “bait-and-switch fraud” argument. The Dissent suggests that this Court’s minor
revisions to the Attorney General’s ballot statement could lead to certain voters
unwittingly signing a petition in support of an initiative that they otherwise would not
support. This argument ignores the fact that the law requires all petitions for signatures
to include a statement of purpose, statements of implication, fiscal impact statement, if
required, and a complete copy of the proposed initiative. Sections 13-27-202 and -312,
MCA.
¶25 The statement of purpose represents only a summary of the proposed initiative.
Interested voters have the opportunity to read the entire petition, if they choose, before
deciding whether to sign the petition. The legislature empowered the Court to amend the
ballot statement to reflect more accurately the initiative’s intent. The legislature did not
authorize the Court to amend the language of the proposed initiative itself. The Court has
not changed one jot of the language of the proposed initiative. This safeguard protects
against any effort to “mislead the voters” – whether that effort be made by the Attorney
General, the initiative proponents, or any other party that the Dissent assumes may seek
to dupe the unwary citizenry.
¶26 The Dissent next suggests that the Court favors a party to this dispute. ¶ 67, n.5.
The Dissent implies that the Court has disregarded its constitutional oath of office by
14
taking sides in a case. Mont. Const., art. III, Sec. 3. I take seriously my responsibility to
decide cases without bias or partiality to any party. Canons of Jud. Ethics, Rule 2.2. I
am sure that my colleagues do the same. In fact, this Court scrupulously has avoided
taking sides in this dispute. The Court simply has sought to provide a remedy to this
dispute in a manner that complies with the statutory scheme developed by the legislature.
The legislative remedy allows this Court the ability to revise the Attorney General’s
statement of purpose to reflect more accurately the intent of the proposed initiative.
Section 13-27-316(3)(c)(ii), MCA.
¶27 The Court has elected to pursue this remedy. In choosing an appropriate remedy,
the Court must be guided by principle that “initiative and referendum provisions of the
Constitution should be broadly construed to maintain the maximum power in the people.”
Nicholson v. Cooney, 265 Mont. 406, 411, 877 P.2d 486, 488 (1994); Chouteau County v.
Grossman, 172 Mont. 373, 378, 563 P.2d 1125, 1128 (1977). The maximum power in
the people requires that the people be given the opportunity to vote on an initiative when
the requisite number of voters have signed petitions to qualify a measure for the ballot
and the proponents of the measure have complied with the statutory scheme put in place
by the legislature.
¶28 The Dissent snickers over the Court’s use of the term “statutory scheme” to
describe the system enacted by the 2007 Legislature to address the process by which an
initiative may qualify for the ballot and by which a party may challenge that process.
The snickering infers that the statutes enacted to address this process represent some sort
15
of con game designed to trap unwary voters. The Dissent suggests that proponents of
initiatives could avoid these traps for the unwary by getting their acts together early in the
process. The Dissent proposes that initiative proponents could gather sufficient
signatures months in advance of the deadline, obtain all of the necessary clearances from
the Secretary of State and the Attorney General, defend the matter before this Court, and
then, if the Court decided to revise slightly the ballot statement, collect the thousands of
signatures all over again before the statutory deadline. This proposal would gut the
people’s constitutional right to initiative. The fact that Montana voters face only a
handful of proposed constitutional and statutory initiatives at each election cycle reflects
the difficulty of qualifying a proposed initiative for the ballot. The Dissent’s proposal
would eliminate even these handfuls of proposals from consideration by the people.
¶29 The Dissent finally blithely recommends that the people demand that their elected
representatives regulate interest rates if “such a public hullabaloo” actually exists over
these interest rates. ¶ 73. The people of Montana ensured that they would not be without
power to address issues of policy – whether accompanied by a “public hullabaloo” or
simply supported by a group of concerned people – when they adopted the initiative
system. The delegates to the 1972 Constitutional Convention confirmed the wisdom of
this approach. The people need not rely on their elected representatives to enact a law
that would restrict interest rates charged by certain lenders. Article II, Section 3 of our
Constitution enshrines that right. I would not undermine this power. I support the
16
Court’s remedy to revise the Attorney General’s ballot statement for I-164 to reflect more
accurately the Initiative’s intent.
/S/ BRIAN MORRIS
Justice W. William Leaphart joins in the foregoing special concurrence.
/S/ W. WILLIAM LEAPHART
Justice James C. Nelson, dissenting.
I. Overview
¶30 “ ‘[T]here are few evils which can be afflicted by strict
adherence to the law so great as that which is done by an
habitual disregard, by any department of the government, of a
plain requirement of that instrument from which it derives its
authority, and which ought, therefore, to be scrupulously
observed and obeyed.’ ”1
1
State ex rel. Montana Citizens v. Waltermire, 227 Mont. 85, 93, 738 P.2d 1255,
1260 (1987) (quoting State ex rel. Woods v. Tooker, 15 Mont. 8, 13, 37 P. 840, 842
(1894)).
17
¶31 The only action that this Court is statutorily authorized to take in the present cases
is clear. “If, upon review, the attorney general or the supreme court revises the petition
form or ballot statements, any petitions signed prior to the revision are void.” Section
13-27-316(4), MCA (emphasis added). Here, the Court has revised the ballot statements.
Accordingly, “any petitions signed prior to the revision are void.” Section 13-27-316(4),
MCA. And without valid petitions, the ballot issue may not appear on the ballot. See
§§ 13-27-307, -308, MCA; see also e.g. § 13-27-316(3)(c)(iii), MCA. That is the holding
we are required to reach.
¶32 Regardless that this result may seem harsh to some, it is the result mandated under
the initiative procedures adopted by the people through their elected representatives.
This Court is required to scrupulously observe and obey those procedures. We are not at
liberty to rewrite them, nor is it our prerogative to disregard them. And there is no
“obvious legislative intent” justifying what the Court has done here.
¶33 In this regard, it should be noted that the timetable laid out by the Legislature is
not as “impossible” as the Court majority would have us believe. That timetable
proceeds as follows:
1. A proponent of a ballot issue first submits the proposed issue to the Secretary
of State, together with draft ballot statements (the statement of purpose, fiscal
statement, and statements of implication). Section 13-27-202(1), MCA. The
Secretary of State forwards a copy of the proposed issue and statements to the
Legislative Services Division and, thereafter, to the Attorney General. Section
13-27-202(1), (4), MCA. The Legislative Services Division is given 14 days
to complete its review, § 13-27-202(2)(b), MCA, and the Attorney General is
given 30 days to complete his review, § 13-27-312(8)(a), MCA.
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2. Once approved, the proponent may circulate petitions for the purpose of
signature gathering starting one year before the deadline for filing the signed
petitions with county election officials. Section 13-27-202(1), (5)(b), MCA.
Signed petitions may be submitted to county election officials as early as nine
months, but no later than four weeks, before the deadline for filing the petitions
with the Secretary of State. Section 13-27-301(1), MCA. The deadline for
filing the petitions with the Secretary of State is the third Friday of the fourth
month prior to the election (here, July 16, 2010). Section 13-27-104, MCA.
Thus, the proponent of a ballot issue for the November 2, 2010 ballot could
theoretically start circulating petitions as of June 16, 2009, and submitting
signed petitions to county election officials as of October 16, 2009, but no later
than June 16, 2010.2
3. County election officials are required to verify names and signatures within
four weeks after receiving the sheets or sections of a petition. Section
13-27-303(1), MCA. The petitions are then forwarded to the Secretary of
State. Section 13-27-304, MCA.
4. Once a sufficient number of signatures have been filed with the Secretary of
State, he or she must “immediately” certify to the Governor that the completed
petition has been officially filed. Section 13-27-308, MCA. That occurred in
the present case on July 19, 2010.
5. An opponent then has ten days in which to file a challenge to the ballot
statements or the legal sufficiency of the petitions. Section 13-27-316(2),
MCA. This Court must give the case “precedence” and render a decision “as
soon as possible.” Section 13-27-316(3)(c)(i), MCA.
¶34 If we determine that the petitions are not legally sufficient, then the proponent may
start over using legally sufficient petitions. Section 13-27-316(3)(c)(iii), MCA. Of
course, the proponent remains subject to the deadline on submitting the petitions. But it
is not necessarily “impossible” to comply with the foregoing timetable. To be sure, it
may be “impossible” to resubmit the ballot issue if the proponents did not commence the
2
Here, the I-164 proponents first submitted the proposed ballot issue and draft
ballot statements to the Secretary of State on February 23, 2010. The Legislative
Services Division completed its review on March 5, the Attorney General completed his
review on April 22, and the Secretary of State authorized the proponents to commence
signature gathering on April 23.
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initiative process soon enough or if they delayed in submitting the signed petitions to the
county election officials. Under those circumstances, there may not be sufficient time to
recirculate new petitions if the signed ones are determined to be void. But that is the
reality of election deadlines, and it is the risk of which the proponents are on notice when
they start the process late. If time runs out, the fault can hardly be placed on the courts.
More to the point, it is not justification for this Court to flout unambiguous statutory
directives in a proactive effort to rescue the proponents from their own lack of diligence
or inability to obtain signatures and submit petitions in a timely manner.
¶35 Nevertheless, this Court has determined to save I-164 from the doom to which it
unquestionably is destined under the statutory scheme. To that end, the Court employs a
“cafeteria-style” approach to statutory application, picking and choosing only that
statutory language which serves to achieve its goal and rejecting or simply ignoring those
provisions which get in the way. I cannot agree with this brand of decision-making.
Absent our overruling the statutes based on constitutional authority, we are required to
apply them as written. See § 1-2-101, MCA. Doing so here, I would hold as follows:
1. If this Court has jurisdiction over the present ballot challenges, that jurisdiction
is set forth in § 3-2-202, MCA, and the parties were required to make the
certification or stipulation mandated by § 3-2-202(3)(b)(i), MCA.
2. On the merits of MCFA’s challenge, the ballot statements contained on the
circulated and signed petitions are void.
3. This Court has no authority to place statements on the November ballots that
are different from the statements on the circulated petitions.
I address these points in turn below.
20
II. Jurisdiction
A. Article VII, Section 2
¶36 Jurisdiction is the power and authority of a court to hear and decide the case or
matter before it. State v. Martz, 2008 MT 382, ¶ 21, 347 Mont. 47, 196 P.3d 1239. This
power and authority is conferred on courts only by the Constitution or statutes adopted
pursuant to the Constitution. Martz, ¶ 21.
¶37 Because jurisdiction involves the fundamental power and authority of a court to
determine and hear an issue, a court may address the question of its jurisdiction sua
sponte. See Stanley v. Lemire, 2006 MT 304, ¶¶ 30-32, 334 Mont. 489, 148 P.3d 643. In
fact, courts have an “independent obligation” to determine whether jurisdiction exists,
even in the absence of a challenge from any party, and a court which in fact lacks
jurisdiction cannot acquire it by consent of the parties. Stanley, ¶¶ 31-32.
¶38 Article VII, Section 2 of the Montana Constitution delineates the parameters of
this Court’s jurisdiction. It states as follows:
(1) The supreme court has appellate jurisdiction and may issue, hear,
and determine writs appropriate thereto. It has original jurisdiction to issue,
hear, and determine writs of habeas corpus and such other writs as may be
provided by law.
(2) It has general supervisory control over all other courts.
(3) It may make rules governing appellate procedure, practice and
procedure for all other courts, admission to the bar and the conduct of its
members. Rules of procedure shall be subject to disapproval by the
legislature in either of the two sessions following promulgation.
(4) Supreme court process shall extend to all parts of the state.
¶39 Nowhere in Article VII, Section 2, is there authority for this Court to entertain an
original proceeding concerning a ballot challenge. Our original jurisdiction is limited.
21
We have original jurisdiction “to issue, hear, and determine writs of habeas corpus and
such other writs as may be provided by law.” The present proceeding does not involve a
writ. Hence, there being no constitutional source for this Court to exercise original
jurisdiction over a non-writ proceeding, the statutes granting us such jurisdiction are,
necessarily, null and void. Stanley, ¶ 52 (“Jurisdiction is conferred on the courts only by
the Constitution or statutes adopted pursuant to the Constitution.” (emphasis added)).
We must dismiss these cases sua sponte.
B. Section 3-2-202(3), MCA
i. The Law
¶40 The Court nevertheless proceeds on the premise that it has jurisdiction over this
proceeding. The statutes governing this Court’s jurisdiction are set out in Title 3,
chapter 2, part 2, MCA (which is titled “Supreme Court Jurisdiction”). The jurisdictional
provisions specific to review of ballot statements are contained in § 3-2-202(3), MCA,
which provides as follows:
(a) The supreme court has original jurisdiction to review the
petitioner’s ballot statements for initiated measures and the attorney
general’s ballot statements for referred measures and the attorney general’s
legal sufficiency determination in an action brought pursuant to 13-27-316.
(b)(i) In an original proceeding under subsection (3)(a), the
petitioner and the attorney general shall certify the absence of factual issues
or shall stipulate to and file any factual record necessary to the supreme
court’s consideration of the petitioner’s ballot statements or the attorney
general’s legal sufficiency determination.
(ii) If the parties to an original proceeding under subsection (3)(a)
fail to make the certification or stipulation required by subsection (3)(b)(i),
the supreme court shall refer the proceeding to the district court in the
county of residence of the lead petitioner for development of a factual
record and an order that addresses the issues provided in 13-27-316(3). . . .
22
¶41 Beginning with subsection (3)(a), this Court “has original jurisdiction to review
[1] the petitioner’s ballot statements for initiated measures and [2] the attorney general’s
ballot statements for referred measures and [3] the attorney general’s legal sufficiency
determination in an action brought pursuant to 13-27-316.” This case falls into the third
category: a challenge to “the attorney general’s legal sufficiency determination in an
action brought pursuant to 13-27-316.” MCFA’s and Harrington’s petitions state that
they are brought under § 13-27-316, MCA, and the petitions specifically challenge the
Attorney General’s legal sufficiency determination for I-164.
¶42 Next, there is no dispute that the parties have failed to make the certification or
stipulation required by subsection (3)(b)(i)—i.e., they have not certified the absence of
factual issues or stipulated to and filed any factual record. The Attorney General asserts
that the development of a factual record in district court would be “minimal,” and the
Court opines that “no issues of fact exist to preclude this Court from” rendering a
decision. But that is beside the point. The statute states that the petitioner and the
Attorney General “shall certify the absence of factual issues or shall stipulate to and file
any factual record necessary to the supreme court’s consideration of . . . the attorney
general’s legal sufficiency determination.” Section 3-2-202(3)(b)(i), MCA. The statute
does not say that the certification or stipulation need be filed only if the Attorney General
believes the development of a factual record in district court would be more than
“minimal” or if this Court happens to perceive some factual issues. Rather, it says that
the certification or stipulation “shall” be filed. Period.
23
¶43 Lastly, when the parties fail to abide by this requirement, as is the case here, this
Court’s only course of action is statutorily mandated:
If the parties to an original proceeding under subsection (3)(a) fail to
make the certification or stipulation required by subsection (3)(b)(i), the
supreme court shall refer the proceeding to the district court in the county
of residence of the lead petitioner for development of a factual record and
an order that addresses the issues provided in 13-27-316(3).
Section 3-2-202(3)(b)(ii), MCA (emphasis added). Honoring this unambiguous statutory
mandate, we are required to refer this proceeding to a district court for the purposes stated
in § 3-2-303(3)(b)(ii), MCA.
ii. The Court’s Workaround
¶44 As a practical matter, if this proceeding were referred to a district court, there
would not be time to resolve MCFA’s and Harrington’s challenges before the Secretary
of State’s August 19, 2010 deadline for certifying the candidates and ballot issues for the
November 2 ballot. See § 13-12-201(1), MCA. To get around this problem, the Court
declares that § 3-2-202, MCA, does not apply to these cases.
¶45 The first obvious problem with this approach is that if § 3-2-202, MCA, does not
apply to these cases, then we do not have jurisdiction. As noted, § 3-2-202(3), MCA, is
the statute which purports to confer “original jurisdiction” on this Court to review ballot
statements. No other provision does so. The Court asserts that § 13-27-316(5), MCA,
“endows” this Court with “original jurisdiction” to hear challenges to ballot statements,
but this is pure fantasy. Section 13-27-316(5), MCA, states:
An original proceeding in the supreme court under this section is the
exclusive remedy for a challenge to the petitioner’s ballot statements, as
24
approved by the attorney general, or the attorney general’s legal sufficiency
determination. A ballot issue may not be invalidated under this section
after the secretary of state has certified the ballot under 13-12-201.
It is self-evident that this is not an affirmative “endowment” of jurisdiction. Rather, it is
a reference to the “original proceeding” which is established by the grant of “original
jurisdiction” in § 3-2-202(3), MCA.
¶46 The second problem with the Court’s approach is that it involves a blatant
remaking of Harrington’s and MCFA’s challenges. Again, this Court “has original
jurisdiction to review [1] the petitioner’s ballot statements for initiated measures and [2]
the attorney general’s ballot statements for referred measures and [3] the attorney
general’s legal sufficiency determination in an action brought pursuant to 13-27-316.”
Section 3-2-202(3)(a), MCA. Focusing on the third category, the question becomes
whether Harrington and MCFA challenge the Attorney General’s “legal sufficiency”
determination and whether their action is brought pursuant to § 13-27-316, MCA.
Section 13-27-316(2), MCA, states:
If the opponents of a ballot issue believe that the petitioner ballot
statements approved by the attorney general do not satisfy the requirements
of 13-27-312 or believe that the attorney general was incorrect in
determining that the petition was legally sufficient, they may, within 10
days of the date of certification to the governor that the completed petition
has been officially filed, file an original proceeding in the supreme court
challenging the adequacy of the statement or the attorney general’s
determination and requesting the court to alter the statement or overrule the
attorney general’s determination concerning the legal sufficiency of the
petition. . . .
25
¶47 The Court concedes that Harrington and MCFA “challenge the ballot statements
and Attorney General’s legal sufficiency determination for I-164 under § 13-27-316,
MCA.” In this regard, “legal sufficiency” is defined as follows:
As used in this part, “legal sufficiency” means that the petition complies
with statutory and constitutional requirements governing submission of the
proposed issue to the electors. Review of the petition for legal sufficiency
does not include consideration of the substantive legality of the issue if
approved by the voters.
Section 13-27-312(7), MCA (emphasis added). One of the so-called “statutory . . .
requirements governing submission of the proposed issue to the electors” is set forth in
subsection (4) of the same statute: “The ballot statements must express the true and
impartial explanation of the proposed ballot issue in plain, easily understood language
and may not be arguments or written so as to create prejudice for or against the issue.”
Section 13-27-312(4), MCA. The Attorney General is specifically instructed to ensure
that this “statutory requirement” is met. See § 13-27-312(1), MCA (“[T]he attorney
general . . . shall determine whether the ballot statements comply with the requirements
of this section.”). Here, Harrington and MCFA challenge the Attorney General’s
determination that I-164’s statement of purpose, fiscal statement, and statements of
implication are legally sufficient under § 13-27-312(4), MCA. Thus, Harrington and
MCFA do, in fact, challenge the Attorney General’s determination that the petition
complies with the “requirements governing submission of the proposed issue to the
electors.”
26
¶48 According to the Court, however, Harrington and MCFA raise an improper
challenge to the “substantive legality” of I-164, rather than to the Attorney General’s
determination of legal sufficiency. This is an outright fabrication. Indeed, the Court
cannot point to a single sentence in MCFA’s petition or Harrington’s petition challenging
the “substantive legality” of I-164. They do not contend that I-164, if approved by the
voters, would constitute a taking of property without just compensation. They do not
contend that I-164, if approved by the voters, would violate the Equal Protection Clause.
They do not contend that I-164, if approved by the voters, would deprive lenders of
property without due process of law. They do not contend that I-164, if approved by the
voters, would constitute unconstitutional special legislation. In short, neither MCFA nor
Harrington lodges any challenge whatsoever to “the substantive legality of [I-164] if
approved by the voters.” Section 13-27-312(7), MCA.
¶49 Rather, their petitions clearly and unmistakably challenge the Attorney General’s
determination that the ballot statements comply with the statutory requirements
governing submission of I-164 to the electors. The first sentence of MCFA’s Summary
of Argument states:
MCFA contends that I-164’s ballot statements do not meet the
requirements of section 13-27-312, MCA. As a result, the statements do
not meet the statutory requirements for submitting the proposed issue to the
electors.
And the first sentence of MCFA’s analysis beginning on page 6 of its petition states:
MCFA initiated this original proceeding pursuant to section
13-27-316, MCA, for the purpose of challenging the adequacy of I-164’s
ballot statements.
27
MCFA then goes on, over four pages, to explain why, in its view, the ballot statements do
not satisfy § 13-27-312(4), MCA. Finally, at the conclusion of its argument, MCFA asks
this Court to
find that I-164 ballot statements do not meet the requirements of section
13-27-312, MCA, and consequently do not meet the statutory requirements
for submitting the proposed issue to the electors, and overrule any
determination that the ballot issue is legally sufficient.
Harrington’s petition is to the same effect. He states:
This is an action for judgment arising from the manner in which the
Office of the Attorney General of the State of Montana, erroneously
prepared and approved statements and made a legal sufficiency
determination for a ballot initiative, I-164 . . . .
Harrington further asserts that the statement of purpose, fiscal statement, and statements
of implication approved by the Attorney General do not meet the requirements of
§ 13-27-312(4), MCA—i.e., they do not “express the true and impartial explanation of
the proposed ballot issue in plain, easily understood language,” and they are “written so
as to create prejudice for . . . the issue.” Harrington then goes on to propose alternate
ballot statements, something he would not have to bother with if he were truly raising a
challenge to the “substantive legality” of the measure as the Court claims. See
§ 13-27-316(3)(b), MCA (“If the proceeding requests modification of ballot statements,
an action brought under this section must state how the petitioner’s ballot statements
approved by the attorney general do not satisfy the requirements of 13-27-312 and must
propose alternate ballot statements that satisfy the requirements of 13-27-312.” (emphasis
added)).
28
¶50 Even the Court concedes elsewhere in its Order that MCFA and Harrington
“invoke this Court’s original jurisdiction to challenge the Attorney General’s legal
sufficiency determination and ballot statements for Initiative No. 164” and that MCFA
and Harrington “challenge the ballot statements and Attorney General’s legal sufficiency
determination for I-164 under § 13-27-316, MCA.” Indeed, if their challenges were to
the substantive legality of I-164, and not to the Attorney General’s determination under
§ 13-27-312(7), MCA, that “the petition complies with statutory and constitutional
requirements governing submission of the proposed issue to the electors,” then there
would be no need to rewrite the ballot statements, as the Court does.
¶51 Accordingly, these cases fall squarely within the third category of § 3-2-202(3)(a),
MCA. Yet, the parties have failed to make the certification or stipulation required by
§ 3-2-202(3)(b)(i), MCA. Consequently, this Court is required to refer this proceeding to
a district court. The Court’s refusal to do so only demonstrates that it is willing to ignore
statutory mandates and to distort Petitioners’ arguments in order to reach a desired result.
III. The Merits of MCFA’s Challenge
¶52 I agree with the Court’s implicit conclusion that the statement of purpose and
statements of implication adopted by the Attorney General do not “express the true and
impartial explanation of the proposed ballot issue in plain, easily understood language.”
Section 13-27-312(4), MCA. I reach this conclusion for the reasons argued by MCFA,
which I explain below.
29
¶53 Initially, however, I note the Attorney General’s threshold argument that MCFA’s
petition is deficient because MCFA has not proposed alternate ballot statements. This
argument is totally without merit. For one thing, alternate ballot statements are required
only if the challenger “requests modification of ballot statements” in the action before
this Court. Section 13-27-316(3)(b), MCA. And here, MCFA does not request
modification of the ballot statements. Rather, MCFA seeks to invalidate the I-164
petitions and I-164 itself on the ground that the ballot statements contained on the
petitions were deficient. Thus, MCFA was not required to propose alternate statements.
¶54 Furthermore, if the language of the I-164 petitions is in fact invalid, no proposed
alternate language could save them now. The petitions have already been circulated and
signed. Those who signed the petitions have already read the deficient statement of
purpose and deficient statements of implication. It is too late to recirculate the petitions.
See §§ 13-12-201(1), 13-27-104, MCA. The Attorney General fails to explain what
possible purpose could be served at this point by proposing alternate language. And there
is no statutory requirement that an opponent do so under the present circumstances.
¶55 Turning then to the merits of the issue, the fundamental problem with the language
of the petitions is quite apparent; and it is perplexing, therefore, that the Attorney General
did not recognize and remedy this problem, prior to the petitions’ being circulated, in his
review of the proposed language and his consultation with parties on both sides of the
issue. See § 13-27-312(1), (2), MCA. I-164 changes the law with respect to five
categories of lenders/businesses. Specifically, the initiative applies to:
30
1. So-called “retail installment lenders” (the term used in I-164’s statement of
purpose). Such entities are regulated under Title 31, chapter 1, part 2, MCA
(the Montana Retail Installment Sales Act). They include “a person who sells
goods or furnishes services to a retail buyer in a written retail installment
contract or written retail installment transaction.” Section 31-1-202(1)(p),
MCA. Sections 3 and 4 of I-164 amend §§ 31-1-203 and -241, MCA,
respectively, to limit the permissible finance charge retail installment lenders
may charge to 36% per annum.
2. Pawnbrokers, who are regulated under Title 31, chapter 1, part 4, MCA.
Section 5 of I-164 amends § 31-1-401, MCA, to prohibit pawnbrokers from
engaging in certain financial activities (such as cashing or advancing money
for a postdated or deferred presentment check in exchange for a fee or finance
charge), unless the pawnbroker is licensed as a consumer loan licensee,
deferred deposit loan licensee, or title loan licensee. Thus, if I-164 passed,
pawnbrokers would be subject to the same 36% interest rate cap to which these
other entities are subject.
3. Deferred deposit (payday) lenders, who are regulated under Title 31, chapter
1, part 7, MCA (the Montana Deferred Deposit Loan Act). Sections 2 and 6 of
I-164 amend §§ 31-1-112 and -722, MCA, respectively, to limit the
permissible finance charge deferred deposit lenders may charge to 36% per
annum.
4. Title lenders, who are regulated under Title 31, chapter 1, part 8, MCA (the
Montana Title Loan Act). Sections 2 and 7 of I-164 amend §§ 31-1-112 and
-817, MCA, respectively, to limit the permissible finance charge title lenders
may charge to 36% per annum.
5. Consumer loan licensees, who are regulated under Title 32, chapter 5, MCA
(the Montana Consumer Loan Act). Such entities are licensed to offer or
extend credit to an individual primarily for personal, family, or household
purposes. See § 32-5-102(2)(a), MCA. They do not include deferred deposit
lenders, title lenders, and certain other regulated lenders such as banks and
credit unions. See §§ 32-5-102(2)(b), -103(5), MCA. Sections 2 and 8 of
I-164 amend §§ 31-1-112 and 32-5-301, MCA, respectively, to limit the
permissible finance charge consumer loan licensees may charge to 36% per
annum.
¶56 Two of these affected entities are not disclosed to voters in the statement of
purpose and the statements of implication adopted by the Attorney General and presented
31
on the face of the petitions (one of which is included as an exhibit at the end of this
Dissent). The Attorney General’s statement of purpose, fiscal note, and statements of
implication inform voters that I-164 does the following (with emphases added):
Under Montana law, deferred deposit (payday) lenders may charge fees
equaling one-fourth of the loan, which is the same as an annual interest rate
of 300 percent for a 31-day loan or 650 percent for a 14-day loan. Title
lenders may charge interest equaling one-fourth of the loan, which is the
same as an annual interest rate of 300 percent for a 30-day loan. I-164
reduces the interest, fees, and charges that payday, title, and retail
installment lenders may charge to an annual interest rate of 36 percent. It
prohibits businesses from structuring other transactions to avoid the rate
limit.
I-164 reduces the license and examination fee revenue paid to the State
because certain lenders may not renew their licenses.
[ ] FOR reducing the annual interest, fees, and charges payday, title, and
retail installment lenders may charge on loans to 36 percent.
[ ] AGAINST reducing the annual interest, fees, and charges payday, title,
and retail installment lenders may charge on loans to 36 percent.
Deferred deposit (payday) lenders, title lenders, and retail installment lenders are
identified. But, as MCFA correctly points out, the statement of purpose and the
statements of implication make no mention whatsoever of consumer loan licensees or
pawnbrokers, even though these entities are covered and affected by the initiative.
Voters are not told that I-164 reduces the interest, fees, and charges that consumer loan
licensees may charge to an annual interest rate of 36 percent. In this regard, it must be
recalled that the statutory scheme clearly distinguishes consumer loans from deferred
deposit loans, title loans, and retail installment transactions. See §§ 31-1-202(1)(m)-(o),
32-5-102(2), MCA.
32
¶57 The Attorney General is required by law to review a proposed ballot issue for legal
sufficiency—i.e., whether the petition “complies with statutory and constitutional
requirements governing submission of the proposed issue to the electors.” Section
13-27-312(1), (7), MCA. Among other statutory requirements, perhaps the most basic is
that the statement of purpose and the statements of implication “must express the true and
impartial explanation of the proposed ballot issue in plain, easily understood language.”
Section 13-27-312(4), MCA. Although the summary preceding an initiative need not
contain a complete catalog or index of all provisions within the initiative, the statement of
purpose must “provide fair notice of the content of the proposed amendment so that the
voter will not be misled as to its purpose, and can cast an intelligent and informed ballot.”
Citizens Right to Recall v. McGrath, 2006 MT 192, ¶ 16, 333 Mont. 153, 142 P.3d 764(internal quotation marks omitted).
¶58 Here, MCFA contends, and I agree, that the statement of purpose adopted by the
Attorney General “not only fails to specifically mention Montana consumer loan
licensees, but does not even provide a clue that this licensee is a subject of the initiative.”
The statement of purpose identifies “payday, title, and retail installment lenders” only. It
does not identify any other type of lender, and there is no language that could reasonably
be understood to include consumer loan licensees and pawnbrokers within I-164’s scope.
¶59 Consequently, the statement of purpose and the statements of implication on the
face of the I-164 petitions submitted to voters for signatures are deficient and invalid.
They do not “express the true and impartial explanation of the proposed ballot issue in
33
plain, easily understood language.” Section 13-27-312(4), MCA. Nor do they provide
fair notice of the content of the proposed initiative, so that the voter will not be misled as
to its purpose and can make an intelligent decision of whether to sign the petition.
Citizens Right to Recall, ¶ 16. They are, in fact, misleading in their suggestion that I-164
applies only to “payday, title, and retail installment lenders,” when it actually applies to
pawnbrokers and consumer loan licensees as well. Cf. Sawyer Stores v. Mitchell, 103
Mont. 148, 163-64, 62 P.2d 342, 349-50 (1936).
¶60 The Attorney General argues, first, that there is a “scarce” 100-word limit on a
statement of purpose, see § 13-27-312(2)(a), as if to suggest that some of the parties who
will be affected by a proposed ballot initiative may be omitted or ignored in order to
satisfy this word limit. This contention is not even remotely persuasive. A statement of
purpose is supposed to be a “true” explanation of the proposed ballot issue. Section
13-27-312(4), MCA. When the Attorney General provides a discrete list of three specific
entities to which I-164 specifically applies (“payday, title, and retail installment
lenders”), the logical inference is that these entities are the only entities covered by the
initiative. A person of average intelligence and common sense is not going to assume
that there may be some unknown quantity of other entities which are covered by the
initiative but which the Attorney General did not bother to mention. The notion that a
statement of purpose is “true” when it purports to list the parties affected by the initiative,
but actually omits two of those affected parties, is utterly implausible, and the Court
properly rejects it.
34
¶61 The Attorney General next argues that the statement of purpose “indicate[s] that
other ‘businesses’ are subject to the initiative as well” because the term “businesses” is
used in the last sentence of the statement of purpose, which states: “[I-164] prohibits
businesses from structuring other transactions to avoid the rate limit.” This contention is
truly bizarre for two reasons. First, it is not clear what the term “businesses” even means
here. Is it a reference to the “businesses” mentioned in the preceding sentence (“payday,
title, and retail installment lenders”)? Or is it a reference to all “businesses”? If the
latter, then the term “businesses” is misleading because I-164 does not actually impose
the 36 percent rate limit on all businesses. To the contrary, there are various businesses
which, like consumer loan licensees, deferred deposit loan licensees, and title loan
licensees, are considered “regulated lenders,” but which are not covered by I-164. These
include banks, building and loan associations, savings and loan associations, trust
companies, credit unions, credit associations, residential mortgage lender licensees,
development corporations, bank holding companies, and mutual or stock insurance
companies. Section 31-1-111(1), MCA. These “businesses” are exempt from all
limitations on the rate of interest that they may charge and are also exempt from the
operation and effect of all usury statutes. See § 31-1-112(1), MCA. While Ben Bernanke
might have an idea of what the term “businesses” means in the last sentence of the
Attorney General’s statement of purpose, the average voter presented with an I-164
petition certainly would not.
35
¶62 Second, the Attorney General concedes that one of the reasons he rewrote the
proponents’ statement of purpose in the first place was because the statement “did not
specify the type of loans subject to the limits.” The proponents’ statement of purpose
read (with emphasis added):
Initiative [164] limits the annual interest, fees and charges certain lenders,
including payday and car title lenders, may charge on loans to 36 percent
because some lenders charge annual rates of more than 400 percent. It
extends to all Montanans the same interest rate limit provided to military
personnel and their families. It imposes restrictions to prevent lenders from
avoiding the rate limits. Loans in violation of the 36 percent annual rate
violate the Montana Unfair Trade Practices and Consumer Protection Act.
Yet, the word “businesses” selected by the Attorney General likewise does not specify
the type of loans subject to the limits. It is no more informative than the word “certain
lenders” selected by the proponents. In fact, it is less informative because “certain
lenders” is obviously narrower than “businesses.” The proponents’ proposed statement
of purpose at least had the virtue of letting voters know that there were other lenders
besides “payday and car title lenders” that were affected by I-164. The Attorney
General’s statement of purpose, on the other hand, refers to “payday, title, and retail
installment lenders” and in no way indicates that there are two other regulated lenders
that are affected by the initiative.
¶63 Next, the Attorney General argues, in conclusory fashion, that voters would not
understand, or might misconstrue, what “consumer loan licensees” are. First of all,
however, this is not a valid justification for omitting these entities from the statement of
purpose. Consumer loan licensees are one of five specific entities targeted by the
36
initiative, and they therefore should be mentioned in the statement of purpose along with
the three targeted entities that are mentioned. Moreover, while the Attorney General
criticizes Harrington for not presenting any evidence in support of his arguments, the
Attorney General himself presents no evidence that voters would be confused by the term
“providers of consumer loans” or that voters understand this term any less than they
understand the terms “retail installment lenders,” “deferred deposit (payday) lenders,”
and “title lenders.” The Attorney General’s argument, rather, is based entirely on sheer
conjecture.3 Finally, and even more to the point, to the extent that voters actually would
be confused by the statement of purpose and the statements of implication as written, it is
the Attorney General’s statutory obligation to reject those statements outright,
§§ 13-27-202(4), -312(1), MCA, and to rewrite the language so that voters will not be
confused, § 13-27-312(8)(b), MCA. Simply leaving voters in the dark is not a lawful
option.
¶64 It is ironic that in rejecting Harrington’s assertion that the statement of purpose
should name the types of regulated lenders that are excluded from I-164’s application, the
Attorney General suggests that what voters actually “care about” are the entities that are
affected by I-164, not the ones that are not affected by the initiative. Yet, two affected
entities (pawnbrokers and consumer loan licensees) are not even mentioned.
3
Not only that, the Attorney General’s arguments are internally inconsistent. In
one paragraph, the Attorney General states that he left consumer loan licensees out of the
statement of purpose because “the application of a 36% annual interest rate to consumer
loans is more straightforward.” Yet, in the very next paragraph, the Attorney General
asserts that “consumer lender” is “a technical term” that voters might misconstrue.
37
¶65 As a final matter, although not explicitly cited by MCFA, it is important to
acknowledge another facet of I-164 that is not mentioned in the Attorney General’s
statement of purpose. Again, § 13-27-312(4), MCA, read together with Citizens Right to
Recall, ¶ 16, requires that the statement of purpose and the statements of implication be
written so as not to mislead voters as to the initiative’s purpose. They must be written
with the goal of “fair notice”—i.e., to truthfully inform, so that voters can make an
intelligent decision. Unfortunately, as with I-143, it appears that I-164 is yet another
“carefully crafted” initiative to put out of business certain lawfully operating businesses
which are licensed and regulated by the State. See Kafka v. Montana Dept. of FWP, 2008
MT 460, ¶¶ 114-116, 348 Mont. 80, 201 P.3d 8 (Nelson, Rice, & Swandal, JJ.,
dissenting). With I-143, it was alternative livestock ranchers (game farmers). With
I-164, it is certain types of regulated lenders (payday and title lenders in particular).
Through the simple expedient of statutorily reducing the price for which t h e
businessperson can sell his or her product or service—here the interest rate such lenders
may charge—the public can, without paying just compensation for the taking (see Kafka,
¶¶ 54, 64, 83, 94 (Opinion of the Court)), simply render a business unprofitable.4
4
It is unlikely, also, that most voters appreciate that payday and title lenders exist,
if at all, because most people with lower incomes—whose only “asset” is their car or
minimum-wage paycheck—have no legitimate source of reasonably priced, short-term
credit when there are more bills than money at the end of the month or when presented
with an unexpected financial emergency. They borrow at exorbitant rates of interest
because there is no other alternative. I doubt, too, that most voters understand that other
“regulated lenders,” including banks, building and loan associations, savings and loan
associations, trust companies, credit unions, credit associations, residential mortgage
lender licensees, development corporations, bank holding companies, and mutual or stock
38
¶66 For the foregoing reasons, the language of the I-164 petitions is invalid. Because
we cannot go back and “fix” that language, see § 13-27-316(3)(c)(ii), MCA, as the
petitions have already been presented to and signed by registered voters, the legally
correct course of action is to grant MCFA’s requested remedy of declaring the petitions
void and ordering that I-164 may not appear on the ballot, see § 13-27-316(3)(c)(iii),
MCA.
IV. The Court’s New Ballot Statements
¶67 As noted at the outset, this Court has no authority to place statements on the
November ballots that are different from the statements on the circulated petitions.
Granted, this Court has been given authority to rewrite the ballot statements.5 See
§ 13-27-316(3)(c)(ii), MCA (“If the court decides that the ballot statements do not meet
the requirements of 13-27-312, it may . . . certify to the secretary of state a statement that
the court determines will meet the requirements of 13-27-312.”). But “[a] statement . . .
certified by the court must be placed on the petition for circulation and on the official
ballot.” Section 13-27-316(3)(c)(ii), MCA (emphasis added). Moreover, “[i]f . . . the
insurance companies (see § 31-1-111(1), MCA)—some of the same folks that lapped up
billions in taxpayer-funded bailouts and bonuses—are exempt from all limitations on the
rate of interest that they may charge and are exempt from the operation and effect of all
usury statutes (see § 31-1-112(1), MCA).
5
As an aside, I find it untenable that this Court possesses such authority. This
Court is, or at least should be, in the business of judging conflicts and disputes over
language. It should not be in the business of rewriting disputed language so that the
favored party—here, the Attorney General—wins the dispute. That the statute even
permits such a perverse result violates the most fundamental principles of fairness and
impartiality that presumably govern all courts and judges.
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supreme court revises the petition form or ballot statements, any petitions signed prior to
the revision are void.” Section 13-27-316(4), MCA.
¶68 Even as a purely intuitive matter, it seems patently obvious that the statement of
purpose, fiscal statement, and statements of implication contained on the petitions
circulated to voters must be the same (at least in substance) as the statement of purpose,
fiscal statement, and statements of implication on the ballot provided at the election.
Circulating petitions that say one thing and then providing election ballots that say
something else undermines the initiative process and misleads the voters. Indeed, it is
bait-and-switch fraud and akin to obtaining illegal petition signatures. See § 13-27-317,
MCA (requiring the ballot issue to be decertified under such circumstances). This is why
when this Court revises the petition form or ballot statements, “any petitions signed prior
to the revision are void.” Section 13-27-316(4), MCA. And without valid petitions, the
ballot issue may not appear on the ballot. See §§ 13-27-307, -308, MCA; see also e.g.
§ 13-27-316(3)(c)(iii), MCA.
¶69 That this Court would so blatantly disregard the law so that a ballot measure can
appear on the ballot, notwithstanding the fact that the petitions upon which the measure is
premised are void, should be of grave concern to the very people the Court purports to be
protecting: the voters. In this connection, there is an undercurrent in the Attorney
General’s arguments and in the Court’s decision in these cases that invalidating I-164
would disenfranchise voters. This proposition is utterly unavailing. Those who signed
the petitions were not properly advised of I-164’s purpose and the implications of a vote
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for or against the initiative. At this point in time, no one has “voted” on I-164, and no
one is being “disenfranchised”—i.e., deprived of the right to vote. See Black’s Law
Dictionary 480 (Bryan A. Garner ed., 7th ed., West 1999). Indeed, if this sort of
argument had any merit, we could never declare an initiative invalid, for to do so would
“disenfranchise” voters. That, of course, is nonsense, since we do, on occasion, declare
initiatives which violate the law or the constitution invalid, both before and after voters
have voted. See e.g. State ex rel. Montana Citizens v. Waltermire, 227 Mont. 85, 738
P.2d 1255 (1987); Marshall v. State ex rel. Cooney, 1999 MT 33, 293 Mont. 274, 975
P.2d 325; Montanans For Justice v. State ex rel. McGrath, 2006 MT 277, 334 Mont. 237,
146 P.3d 759; Citizens Against CI-97 v. State, 2006 MT 278, 334 Mont. 265, 147 P.3d
174. The lesson from these cases, and others like them, is that no one has the right to
vote on a ballot measure that is placed before them in violation of the law or the
Constitution. Unfortunately, this is a lesson lost upon the Court here.
V. Conclusion
¶70 The people of this State, through their elected representatives, adopted a system
designed to ensure that ballot measures would not appear on the ballot unless certain
prerequisites were satisfied. To be sure, the statutory “scheme”—which is, perhaps, an
apt appellation—is far from perfect. In this regard, the Attorney General explains that the
Legislature revised the initiative process in 2007 in order to avoid a repeat of the
“electoral confusion” and “crisis of direct democracy” that surrounded three ballot issues
in 2006. See generally Laws of Montana, 2007, ch. 481; Stop Over Spending Montana
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v. State, 2006 MT 178, 333 Mont. 42, 139 P.3d 788; Montanans For Justice v. State ex
rel. McGrath, 2006 MT 277, 334 Mont. 237, 146 P.3d 759. Unfortunately, however, as
the present challenges to I-164 demonstrate, problems still remain—not the least of
which is the fact that challenges to petitions are brought after the petitions have been
circulated and signed, not to mention the fact that this Court has been granted “original
jurisdiction” which the Montana Constitution does not authorize. Moreover, we are once
again faced with a challenge to a ballot initiative on an extremely tight timeline, and the
parties have failed to comply with the most basic requirements adopted by the
Legislature: certify the absence of factual issues, or stipulate to and file any factual
record necessary to our decision. To the extent these circumstances have created another
“crisis,” blame for it plainly lies with lawmakers and the patent failure of the parties to
comply with the statutes.
¶71 The entire scheme should probably be scrapped, and the Legislature should simply
start over from scratch with a clear statutory framework that (a) is practical and can be
understood; (b) allows sufficient time for review by the designated state officials,
revisions to the extent necessary, and review of the inevitable ballot challenges by this
Court; and (c) guarantees transparency and truth in the initiative and ballot process. In
the meantime, however, it is not this Court’s prerogative to take on the role of pseudo-
legislators and manipulate clear statutory mandates in order to achieve some presumed
greater good. It is the Legislature’s constitutional role to enact the statutes, and it is this
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Court’s constitutional role to apply them in a forthright manner. The only “crisis of
direct democracy” in the present case is this Court’s inability to simply follow the law.
¶72 I am no more a fan of lending institutions that gouge consumers, especially those
with lower incomes, than I am of people who charge for the “sport” of shooting
defenseless penned animals—indeed, the two compare favorably. However, both the
blackletter law and our caselaw require that voters be truthfully informed; that the
purposes driving a citizens’ initiative, as well as the implications of the initiative, be
transparent; and that voters not be misled into voting for the wolf of a facially well-
intentioned initiative cloaked in the sheep’s clothing of misleading statements of purpose
and implication.
¶73 As for the goals of I-164’s proponents, since there is, apparently, such a public
hullabaloo over the interest rates that payday lenders and title lenders charge, the public
should simply demand that its representatives in the Legislature step up to the plate in the
next session, do the job which that body has always had the power to do, and actually
regulate the interest rates of payday, title, and other “regulated” lenders in the interests of
consumers. The demise of I-164 certainly would not prevent the Legislature from
accomplishing this objective itself.
¶74 Lastly, as to the Concurrence, while it is always easier to shoot the messenger, this
Dissent’s analysis stands unrefuted.
¶75 I would hold that this Court does not have jurisdiction to entertain Harrington’s
and MCFA’s petitions challenging the I-164 ballot statements. Furthermore, even if we
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did have jurisdiction under § 3-2-202(3)(a), MCA, we would be required to refer this
proceeding to a district court pursuant to § 3-2-202(3)(b)(ii), MCA. Alternatively, on the
merits of MCFA’s challenge, I conclude that the Attorney General’s legal sufficiency
determination is incorrect and that I-164 does not comply with statutory requirements.
As a result, the petitions are void, and I-164 may not appear on the ballot. See
§ 13-27-316(3)(c)(iii), MCA. Finally, the Court’s decision to rewrite the statements for
the November ballot, despite the fact that the underlying petitions are void, is without
authority and legally untenable.
¶76 I dissent.
/S/ JAMES C. NELSON
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EXHIBIT: I-164 Petition (3 pages)
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46
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Justice Jim Rice, dissenting.
¶77 I believe the Court’s determination that Harrington has raised only substantive
legal issues, and not issues governing submission of the initiative to the voters, is
untenable. I agree with Justice Nelson’s Dissent in this regard. Dissent, ¶¶ 40-43. The
Court’s own summary of the arguments, provided in ¶ 6 of the Opinion, demonstrates
that the arguments made by the challengers are directed to the initiative’s submission and
challenge the Attorney General’s “legal sufficiency” determination, as that term is
defined in § 13-27-312(7), MCA. Thus, § 3-2-202(3), MCA, applies and governs. Under
this unique but specific provision, because the parties have failed to make a certification
or stipulation regarding factual issues, “the supreme court shall refer the proceeding to
the district court . . . for development of a factual record.” Section 3-2-202(3)(b)(ii),
MCA.
¶78 The good reason for this legislative directive can be seen by today’s decision. The
Court, by its modification of the ballot language, is deciding what groups will be named
on the ballot. This critical task, if undertaken at all, requires the careful selection of few
words and should be based upon a solid factual foundation.
¶79 I would remand in accordance with the statute.
/S/ JIM RICE
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