D & F Sanitation Service v. City of Red Lodge

No. 81-25
I N THE SUPREME COURT O THE STATE O M N A A
F F OTN
1981
D & F SANITATION SERVICE,
a Montana c o r p o r a t i o n ,
P l a i n t i f f and A p p e l l a n t ,
CITY OF RED LODGE,
D e f e n d a n t and Respondent.
Appeal from: D i s t r i c t Court of t h e Thirteenth J u d i c i a l D i s t r i c t ,
I n and f o r t h e County o f Carbon
Honorable W i l l i a m J. S p e a r e , Judge p r e s i d i n g .
C o u n s e l o f Record:
For A p p e l l a n t :
A l e x a n d e r & Baucus, Great F a l l s , Montana
N e i l U g r i n a r g u e d , Great F a l l s , Montana
F o r Respondent:
Hon. Mike G r e e l y , A t t o r n e y G e n e r a l , H e l e n a , Montana
A r t h u r W. A y e r s , J r . , a r g u e d , C i t y A t t o r n e y , Red Lodge,
Montana
Submitted: September 14, 1 9 8 1
Decided : flb d l
FEB 111982
Filed:
Mr. Justice Daniel J. Shea delivered the Opinion of the Court.
Plaintiff, D & F Sanitation Service, appeals from a
summary judgment entered by the Carbon County District
Court, which held unconstitutional section 7-13-4107, MCA,
which retroactively prohibits a municipality from providing
its own garbage collection service unless it gives any
existing private garbage contractor five years notice of its
intention to do so, or unless the municipality purchases the
private contractor's equipment at fair market value. The
District Court declared that this statute violated the
prohibition against impairment of contracts of the Montana
Constitution (Art. 11, 5 31) and also that the statute
violated the prohibition against retroactive application of
laws of the Montana Constitution (Art. XIII, § l(3)) . We
affirm the District Court, but on a different ground. We
hold that the contract involved had expired before the
effective date of the statute and therefore that the statute
could not be applied to the expired contract.
Plaintiff, D & F Sanitation Service (D & F) is a private
motor carrier duly licensed by the Public Service Commission
to transport solid waste in Carbon County, Montana. The
defendant, City of Red Lodge (City), is a municipal corporation
in Carbon County. On November 25, 1978, D & F and the City
entered into a contract for solid waste collection. This
contract provided that D & F was to perform garbage collection
services for the City from November 1, 1978 through June 30,
1979. During the entire period of the contract, D & F
provided exclusive garbage collection services for the City.
In 1979, the legislature enacted section 7-13-4107, MCA
(Ch. 448, Laws of Montana (1979) which states:
)
"7-13-4107. Protection of private waste
disposal service in municipality. A municipality,
as of January 1, 1979, that receives garbage and
solid waste disposal services from a private motor
carrier authorized by the public service commission
to provide such service may not, by ordinance or
otherwise, elect to provide exclusive garbage and
solid waste service unless the municipality pays
the private motor carrier fair market value
for his equipment or unless the municipality delays
commencing the public service for a period of 5
years from the date of the decision by the
municipality to provide the garbage and solid waste
services. The private motor carrier shall be given
notice of the decision by the municipality to provide
exclusive garbage and solid waste services no later
than 10 days after the decision has been made by
the municipality."
This statute, of course, was not in existence when the
City and D & F signed their contract in November 1978, and
obviously was not in the contemplation of the parties when
the contract was signed. On June 30, 1979, the day the
contract was to expire, the city council met at a special
session. The council voted to provide its own garbage
collection service, and authorized the mayor to hire city
employees for this purpose. The City has provided garbage
collection service since July 1, 1979.
After learning of the city council action, D & F invoked
section 7-13-4107, and demanded that the City either pay to
D & F the fair market value of its equipment or delay providing
its own garbage collection service for five years. The City
refused this demand and D & F then filed suit to recover the
full market value of its equipment. In defending, the City
relied on the impairment of contract and on the constitutional
prohibition against retroactive application of the law. The
City also, however, contended that the contract had expired
before the effective date of the statute. The trial court
ruled in favor of the City on both constitutional arguments,
but did not address the argument that the contract had
expired.
W do n o t d e c i d e t h e c o n s t i t u t i o n a l i t y o f s e c t i o n 7-i3-
e
410'7. The u n d e n i a b l e f a c t i s t h a t t h e c o n t r a c t e x p i r e d
b e f o r e t h e e f f e c t i v e d a t e of t h e s t a t u t e . The s t a t u t e went
i n t o e f f e c t on J u l y 1, 1979, and a l t h o u g h i t i s i n t e n d e d t o
a p p l y t o c o n t r a c t u a l r e l a t i o n s h i p s " a s of J a n u a r y 1, 1 9 7 9 , "
t h e r e w a s no c o n t r a c t i n e x i s t e n c e on J u l y 1 t o which t h e
s t a t u t e could apply. The c o n t r a c t e x p i r e d on J u n e 30, 1979
a t m i d n i g h t , and t h e C i t y on J u n e 30, 1979, had d e c i d e d t h a t
s t a r t i n g on J u l y 1, 1979, it would assume t h e r e s p o n s i b i l i t i e s
o f c o l l e c t i n g garbage. F u r t h e r m o r e , w e do n o t b e l i e v e t h a t
t h e s t a t u t e was i n t e n d e d t o a p p l y t o c o n t a c t s i n e x i s t e n c e
b e f o r e J a n u a r y 1, 1979. The l a n g u a g e o f s e c t i o n 7-13-4107--
" a s o f J a n u a r y 1, 1979"--appears t o be i n t e n d e d t o a p p l y t o
c o n t r a c t s s i g n e d on o r a f t e r J a n u a r y 1, 1979.
A p p l i c a t i o n of s e c t i o n 7-13-4107 t o the contract here
would c l e a r l y s u b s t a n t i a l l y i m p a i r t h e c o n t r a c t u a l o b l i g a t i o n s
of t h e City. Whether i t c o n s t i t u t e s a n u n c o n s t i t u t i o n a l
impairment o f c o n t r a c t , o r would c o n s t i t u t e a n u n c o n s t i t u t i o n a l
r e t r o a c t i v e a p p l i c a t i o n of a law, w e need n o t d e c i d e , a s t h e
c o n t r a c t expired b e f o r e t h e e f f e c t i v e d a t e of t h e s t a t u t e .
On a ground o t h e r t h a n t h a t d e c i d e d by t h e D i s t r i c t
C o u r t , w e a f f i r m t h e g r a n t o f summary judgment.
W e Concur:
Chief J u s t i c e
Justices