Baker Sales Barn, Inc., Application of, 10183

• Decision Date: 04 January 1962
• Docket Number: No. 10183,10183
• Citation: 367 P.2d 775,140 Mont. 1
• Parties: Application of the BAKER SALES BARN, INC., for a Certificate of Public Convenience and Necessity Authorizing the Operation of a Livestock Market at Baker, Montana. BAKER SALES BARN, INC., Applicant and Respondent, v. MONTANA LIVESTOCK COMMISSION, Appellant.
• Court: Montana Supreme Court

Page 775

367 P.2d 775

140 Mont. 1

Application of the BAKER SALES BARN, INC., for a Certificate of Public Convenience and Necessity Authorizing the Operation of a Livestock Market at Baker, Montana BAKER SALES BARN, INC., Applicant and Respondent, v. MONTANA LIVESTOCK COMMISSION, Appellant.

No. 10183.

Supreme Court of Montana.

Jan. 4, 1962.

Robert J. Emmons, Great Falls, Ralph J. Anderson (argued orally), Stanley P. Sorenson, Helena, for appellant.

F. F. Haynes (argued orally), Forsyth, for respondent.

CASTLES, Justice.

This is an appeal from a judgment of the district court of Fallon County, which judgment ordered the appellant, Montana Livestock Commission, to issue forthwith a Certificate of Public Convenience and Necessity to the respondent, Baker Sales Barn, Inc., upon the filing of satisfactory bonds required by the rules of the Commission.

The cause arose out of an application by the respondent to the appellant Commission for a Certificate of Public Convenience and Necessity authorizing the licensing of a livestock market at Baker, Montana, under the provisions of R.C.M.1947, § 46-908 et seq. There were presented to the appellant Commission three aplications for a Certificate. The first application was denied; the record in that application is referred to as Docket No. 24 of the Commission, and it was heard on June 30, 1958. The second application was by one Gerald J. Stenberg, the record being referred to as Docket No. 25. That application was heard on September 29, 1958, and due to the death of Stenberg before decision, no decision was rendered. The third application was by the respondent Corporation; it was heard on June 1, 1959, and is referred to as Docket No. 26. Dockets Nos. 24 and 25 were introduced at the third hearing, were considered by the Commission and are part of the record on this appeal. The Commission denied the application.

The applicant took an appeal to the district court pursuant to the provisions of section 46-917, R.C.M.1947. That court, on the basis of the record contained in the three aforementioned Dockets, rendered an opinion in which it held section 46-917 unconstitutional as a denial of the right to acquire property and of being deprived of property without due process of law and as violative of the fourteenth amendment to the Constitution of the United States. The district court also found that the Commission acted capriciously and arbitrarily and abused its discretion.

R.C.M.1947, § 46-917, provides in part:

'* * * The trial shall be had summarily before the district court upon the record of the evidence presented to the commission of which a complete record must be kept of the hearings of the commission as shown by said transcript and the exhibits, if any, presented to the commission and * * * upon which its decision was rendered and there shall not be any additional evidence introduced or anything in the nature of a trial de novo. The court shall not substitute its discretion for that of the commission but shall determine whether the commission acted capriciously, arbitrarily, or abused its discretion and whether it acted according to law.' Emphasis supplied.

It is the foregoing underlined part of section 46-917 which the district court found unconstitutional. The court did not take additional evidence and seems to have made its holding on constitutionality gratuitously since it was also found that the Commission acted capriciously, arbitrarily and abused its discretion. Upon this basis the court then set aside the Commission's denial of the application and ordered the Certificate of Convenience and Necessity to issue.

The district court wrote an opinion with its order, and in such opinion the district court said:

'This brings us to the only matter to be considered by the Commission in this cause as to whether a certificate for a market should be granted at Baker, and as to its convenience or necessity. The testimony is clear that it would be much more convenient for the areas in Fallon and Carter Counties, Montana, to avoid the long haul and narrow roads to Miles City, Glendive or Sidney. As to necessity there is the Milwaukee Railroad at Baker and ranchers can ship to Chicago or some other large terminal. The same question might be asked as to Miles City, Glendive or Sidney. Necessity and convenience are synonymous, but difficult to prove and for this reason the law leaves the authority in the Commission that, because necessity and convenience have not been proved, they can deny the application for the certificate.

'In other words, this leads to the creation of a monopoly for the markets in Montana and a denial of our citizens to engage in free enterprise.'

Before going further to set out some background facts from the record, it should be observed that the foregoing quotation from the district court's opinion is strange and most confusing. It does, however, reveal the error in the district court's decision as will be hereinafter discussed.

At the time of the hearings in this case before the Commission, there were fourteen livestock markets in Montana distributed somewhat geographically in the state. Those markets were located at Hamilton, Missoula, Great Falls, Havre, Glasgow, Butte, two at Billings, Bozeman, Lewistown, Miles City, Shelby, Glendive, and Sidney. Of course there are many other out-of-state markets, the particular ones of some influence in the area here involved being at Bowman and Dickinson, North Dakota, and Belle Fourche, South Dakota.

Baker, Montana, the scene of the application, is the county seat of Fallon County in southeastern Montana. It is on the main line of the Milwaukee Railroad. Highways extend east and west and north and south. It is about eighty miles east of Miles City and eighty miles south of Glendive. These are the only two Montana markets which have any effect on the area.

The record generally reveals that Baker would draw from a ranching area, being mainly range country with relatively small amounts of feeding operations. Generally, too, the bulk of marketing of cattle, upon which the market would be largely dependent, would be and is confined to the Fall months of the year. Much of the testimony regards the distances to markets and the fact that for a rather large local area, the distance would be materially less to market if a mraket were established at Baker.

The statutes of Montana, sections 46-901 to 46-921, set up a comprehensive livestock market regulation covering subjects including brand inspections, quarantine and sanitation, sale of stray stock, warranty of title, record-keeping, etc., all designed generally for the protection of, and service to livestock producers.

Specifically section 46-907 provides for regulation by the State Livestock Commission and Sanitary Board.

Section 46-908 provides for certificates for each application 'declaring that public convenience and necessity require such operation' and sets forth the requirements of the application.

Section 46-909 provides for hearings, notice and procedure on applications and then states:

'If, after hearing upon such application, the commission shall find from the evidence that public convenience and necessity require the authorization of the proposed livestock market, a certificate therefor shall be issued to the applicant. In determining whether or not public convenience and necessity require such livestock market, the commission shall give reasonable consideration to the service rendered by other existing livestock markets in the state and the effect upon them if the proposed livestock market is authorized, and shall give due consideration to the likelihood of the proposed service being permanent and continuous throughout twelve (12) months of the year; provided, however, that the commission shall not authorize the proposed livestock market unless it shall appear from the evidence submitted at the hearing that the minimum revenue derived by the state from inspection fees shall be equal to seventy-five per cent (75%) of the cost to the state in maintaining a resident livestock inspector and an office for him at such proposed livestock market, and the cost of maintaining such office of a sufficient record of the recorded livestock brands and marks in the state; provided, however, that the commission may authorize the same if the operator of the proposed market shall by bond approved by the commission guarantee the payment of such minimum revenue.'

Although the latter provision relating to seventy-five percent of the cost of a resident livestock inspector figured in the Commission's findings, the applicant corporation did provide for its bonding and we deem that particular matter unimportant in the discussion of the case.

It is the first part of the above quotation from 46-909 which we deem of importance to this decision. The evidence demonstrated that the proposed Baker market would not materially affect any Montana market; it being shown that not more than about eight percent of the cattle sold in both Miles City and Glendive came from the Baker area. The Commission in its findings did not rely on the effect on other in-state markets.

The part that did receive attention was 'convenience and necessity'. The statutes do not define these terms. The hearings held and evidence adduced went to proof or lack of proof of 'convenience and necessity' and the allied problem of the 'proposed service being permanent and continuous throughout twelve (12) months of the year.'

The record is voluminous. Many witnesses appeared for and against the petition. By and large, the figures used by all witnesses came from the Livestock Commission's own records or government reports. Most of the testimony on crucial points amounted to opinion testimony by the very nature of the problem.

The specifications of error bring forth two main questions. First, did the Commission act capriciously and arbitrarily in arriving at its findings and conclusions in...