                                        No. 12383
           I N THE SUPREME COURT OF THE STATE OF MONTANA
                                           1972



THE STATE OF MONTANA, ex re1
FALLON COUNTY, MONTANA,

                                   Plaintiff,



THE D I S T R I C T COURT OF THE SIXTEENTH
J U D I C I A L D I S T R I C T OF THE STATE OF
MONTANA, I N AND FOR THE COUNTY OF FALLON,
and t h e HONORABLE ALFRED B. COATE, JUDGE
P R E S I D I N G THEREIN,

                                   Defendants.




ORIGINAL PROCEEDING:

       For P l a i n t i f f :

                H a b e d a n k , Cumming 6 B e s t , Sidney, M o n t a n a .
                O t t o T. H a b e d a n k and Jacque W. B e s t argued, S i d n e y ,
                 Montana.

       For D e f e n d a n t s :

                G e n e H u n t l e y argued, B a k e r , M o n t a n a .



                                                Submitted:         December 4 , 1972
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                                                                                     9
                                                   Decided:

F i l e d : ,-JL !   ,-' , '




                                                                Clerk
"ir. . J u s t i c e Frank I . tiaswell d e l i v e r e d t h e Opinion o f t h e Court.


             Thrs i s an o r i g i n a l proceeding s e e k i n g s u p e r v i s o r y c o n t r o l
LQ        eeview and r e v e r s e a d e n i a l of summary judgment t o defendant i n

a damage a c t i o n by a m o t o r i s t who a l l e g e d l y s u f f e r e d p e r s o n a l

i n j u r i e s i n an automobile a c c i d e n t .             The o r d e r denying summary

judgment was e n t e r e d i n t h e d i s t r i c t c o u r t of t h e s i x t e e n t h j u d i -
c i a l d i s t r i c t , F a l l o n County, by t h e Hon. A l f r e d B. Coate, d i s -
t r i c t judge.
             R e l a t o r , defendant below, i s F a l l o n County.                Respondent i s

the d i s t r i c t c o u r t and t h e judge t h e r e o f t h a t e n t e r e d t h e o r d e r

denying summary judgment.
             P l a i n t i f f i-n t h e d i s t r i c t c o u r t a c t i o n was E a r l 14. Holce who

a l l e g e d t h a t he s u s t a i n e d p e r s o n a l i n j u r i e s i n a s i n g l e v e h i c l e
a c c i d e n t on a county road i n F a l l o n County, Montana, on August

2 7 , 1968.           His complaint a l l e g e s n e g l i g e n c e on t h e p a r t of

defendant F a l l o n County i n f a i l i n g t o p r o p e r l y m a i n t a i n and mark
     'l
a         T I 1 i n t e r s e c t i o n of county r o a d s .   The e x i s t e n c e of l i a b i l i t y
i n s u r a n c e p r e c l u d i n g t h e d e f e n s e of s o v e r e i g n   immunity was a l -

leged.            The a c t i o n was f i l e d more t h a n two y e a r s , b u t l e s s t h a n

t h r e e y e a r s , a f t e r t h e d a t e of t h e a c c i d e n t ,

             One of t h e d e f e n s e s pleaded i n d e f e n d a n t ' s amended answer

was t h a t p l a i n t i f f ' s a c t i o n was b a r r e d by t h e two y e a r s t a t u t e of

l i m i t a t i o n s i n s e c t i o n 93-2607(1), R.C.M.               1947, governing a c t i o n s
"upon a l i a b i l i t y c r e a t e d by s t a t u t e o t h e r than a p e n a l t y o r
forfeiture."               Defendant moved f o r summary judgment on t h i s b a s i s .

Subsequently t h e d i s t r i c t c o u r t e n t e r e d i t s o r d e r denying d e f e n d a n t ' s

motion f o r summary judgment.
             Defendant thereupon f i l e d an o r i g i n a l proceeding i n t h i s
Court s e e k i n g a w r i t of s u p e r v i s o r y c o n t r o l t o review and r e -
v e r s e t h e o r d e r of t h e d i s t r i c t c o u r t denying i t summary judgment.
Foll-owing ex p a r t e p r e s e n t a t i o n , t h i s Court found t h i s t o be a

proper c a s e f o r s u p e r v i s o r y c o n t r o l and i s s u e d an a l t e r n a t i v e

w r i t s e t t i n g t h e m a t t e r f o r a d v e r s a r y h e a r i n g on December 4 , 1972.

A t t h a t time, o r a l argument was h e a r d on b e h a l f of b o t h p a r t i e s
and t h e d e c i s i o n taken under advisement.
           The s o l e i s s u e f o r review i n t h i s proceeding i s whether
p l a i l l t i f f ' s a c t i o n i s b a r r e d by t h e two y e a r s t a t u t e of l i m i t a -
t i o n s c o n t a i n e d i n s e c t i o n 93-2607(1), R.C.M.                1947.
           R e l a t o r county contends t h a t p l a i n t i f f ' s a c t i o n i s b a r r e d
t h e r e u n d e r because i t i s an a c t i o n "upon a l i a b i l i t y c r e a t e d by
s t a t u t e other than a penalty or f o r f e i t u r e " .                   Relator argues
that p l a i n t i f f ' s action f a l l s           i n t h i s c a t e g o r y because s e c t i o n
40-4402, R.C.M.              1947, waives "sovereign immunity" t o t h e e x t e n t
of t h e c o u n t y ' s l i a b i l i t y i n s u r a n c e coverage t h u s p e r m i t t i n g

p l a i n t i f f ' s action.       According t o r e l a t o r , no l i a b i l i t y would
                                                        is
e x i s t a b s e n t s e c t i o n 40-4402, w h i c h l t h e t e s t of whether l i a b i l i t y
i s c r e a t e d by s t a t u t e w i t h i n t h e meaning of s t a t u t e s of l i m i t a -
t i o n s , c i t i n g i n support:         H o l l i n g e r v , Board of County Commissioners,
115 Kan, 92, 222 P. 136; Barrows v. Lehigh Valley R.Co.,                                            62 N . Y . S .
200; Anno. 32 ALR2d 1240, 1243.                            F i n a l l y , r e l a t o r contends t h a t
II
     s o v e r e i g n immunity" p r e s e n t s a j u r i s d i c t i o n a l i s s u e r a t h e r t h a n
i n v o l v i n g simply a m a t t e r of a f f i r m a t i v e d e f e n s e .
           Respondent, on t h e o t h e r hand, contends t h a t p l a i n t i f f ' s
a c t i o n i s n o t s u b j e c t t o t h e two y e a r s t a t u t e of l i m i t a t i o n s a s

an a c t i o n upon a l i a b i l i t y c r e a t e d by s t a t u t e , b u t on t h e con-
t r a r y i s governed by t h e t h r e e y e a r s t a t u t e of l i m i t a t i o n s
a p p l i c a b l e t o p e r s o n a l i n j u r y n e g l i g e n c e a c t i o n s c o n t a i n e d i.n
s e c t i o n 93-2605, R,C.M.             1947.       Respondent a r g u e s t h a t s e c t i o n
40-4402, R.C.M.              1947, p e r m i t t i n g a c t i o n s a g a i n s t a county t o
t h e e x t e n t of i t s l i a b i l i t y i n s u r a n c e coverage, simply removes

t h e d e f e n s e of s o v e r e i g n immunity and i s n o t a j u r i s d i c t i o n a l
issue creating l i a b i l i t y .             Respondent c i t e s B e e l e r v. B u t t e &
London Copper Development Co., 4 1 Mont. 465, 472, 110 P.528, 530,
a s c o n t r o l l i n g a u t h o r i t y a s w e l l a s s e v e r a l c a s e s from o t h e r
j u r i s d i c t i o n s i n support:         Jones v . C i t y of Alhambra, 1 1 7 C.A.2d
728, 256 P.2d 628; Gonzalez v . P a c i f i c F r u i t Express Co., D.C.
Nev., 99 F.Supp.  1012; Hoffman v . idair, D.C.Ore., 193 F.Supp.727;
                                     v , Warford,
14aricopa County Municipal C.D.No.11 69 A r i z . 1 , 206 P.2d 1168.
        I n our view, t h e r a t i o n a l e i n Beeler determines t h e i s s u e
i n t h i s case.        There we h e l d t h a t although an a c t i o n a g a i n s t a
f e l l o w s e r v a n t f o r p e r s o n a l i n j u r i e s was n o t m a i n t a i n a b l e under
common law p r i o r t o passage of a Montana s t a t u t e p e r m i t t i n g such
a c t i o n , n e v e r t h e l e s s t h e a c t i o n was s u b j e c t t o t h e t h r e e y e a r
s t a t u t e of l i m i t a t i o n s on p e r s o n a l i n j u r y a c t i o n s and n o t t o
t h e two y e a r s t a t u t e on "a l i a b i l i t y c r e a t e d by s t a t e " ,           The
r a t i o n a l e i n Beeler       i s explained i n t h e following e x c e r p t a t
page 530 of 110 P a c i f i c :
        "The t h e o r y of l i m i t a t i o n , a s d i s c l o s e d i n t h e
        c h a p t e r of t h e Code on t h a t s u b j e c t , h a s no r e f e r e n c e
        t o t h e d e f e n s e s t h a t may o r may n o t be i n t e r p o s e d i n
        r e s i s t a n c e t o a p l a i n t i f f ' s demand; b u t i t i s grounded
        i n every i n s t a n c e upon t h e n a t u r e of t h e demand i t s e l f
        ---     whether i t be upon a judgment, w r i t t e n c o n t r a c t ,
        account, e t c . Subdivision 1, 5 6449, must be viewed
        i n t h e l i g h t of t h e f a c t t h a t t h e phrase ' l i a b i l i t y
        c r e a t e d by s t a t u t e ' h a s come t o have a f i x e d a p p l i c a -
        t i o n t o a c l a s s of c a s e s q u i t e d i s t i n c t from t h o s e
        elsewhere mentioned o r r e f e r r e d t o i n t h e same c h a p t e r .
        I f t h e a c t i o n a t b a r had been f o r i n j u r i e s r e s u l t i n g
        from t h e n e g l i g e n c e of a v i c e p r i n c i p a l , i n s t e a d of a
        f e l l o w s e r v a n t , i t would be recognized a t once a s a
        s t r a i g h t a c t i o n i n t o r t , governed, a s t o i t s l i m i t a t i o n ,
        w i t h o u t any thought of i t s b e i n g a ' l i a b i l i t y c r e a t e d
        by s t a t u t e . 1 Now, t h e f a c t t h a t t h e i n j u r y which i s
        t h e b a s i s of t h e a c t i o n , r e s u l t e d from t h e n e g l i g e n c e
        of a f e l l o w s e r v a n t i n s t e a d of a v i c e p r i n c i p a l does
        n o t a f f e c t t h e e s s e n t i a l n a t u r e of t h e a c t i o n ; i t i s
        s t i l l an a c t i o n f o r p e r s o n a l i n j u r i e s founded upon
        a c t i o n a b l e negligence. And while i t may p r o p e r l y be
        s a i d ( s e e Kelly v. Northern Pac. Ry. Co., 35 Mont. 243,
        88 Pac. 1009) t h a t under t h e a c t approved February 20,
        1905, a n empfoyet's l i a b i l i t y e x i s t s where none e x i s t e d
        b e f o r e , y e t t h e t r u e f u n c t i o n of t h a t a c t must be r e -
        garded, n o t a s c r e a t i n g a new cause of a c t i o n , b u t merely
        t o c a r r y forward t h e r i g h t of t h e i n j u r e d p a r t y and t o
        remove a defense t h e r e t o f o r e a v a i l a b l e i n t h i s c l a s s of
        causes ( D i l l o n v. Great Northern Ry. Co, , 38 Mont. 485,
        100 Pac. 960). It follows t h a t i n t h e sense employed
        by t h e c h a p t e r on l i m i t a t i o n s of a c t i o n s , t h i s i s n o t
        an a c t i o n on a ' l i a b i l i t y c r e a t e d by s t a t u t e , ' and t h e
        c o n t e n t i o n t h a t i t i s b a r r e d by s u b d i v i s i o n 1, 5 6449,
        i s n o t sound."
        T h i s r a t i o n a l e i s f u r t h e r s t r e n g t h e n e d as a p p l i e d t o t h e
i n s t a n t c a s e by t h e p r o v i s i o n s of s e c t i o n 40-4402, R.C.M.              1947,
r e f e r r i n g throughout t o "sovereign immunity" a s a defense:
        II
          Sovereign immunity defense p r o h i b i t e d when l i a b i l i t y
        insured      -   r e d u c t i o n of award t o p o l i c y l i m i t s , Whenever
        an i n s u r e r a c c e p t s any premium, money, o r o t h e r c o n s i d e r a -
        t i o n from a p o l i t i c a l s u b d i v i s i o n of t h e s t a t e , munici-
        p a l i t y , o r any p u b l i c body, c o r p o r a t i o n , commission, board
         agency, o r g a n i z a t i o n , o r o t h e r p u b l i c e n t i t y f o r
         c a s u a l t y o r l i a b i l i t y i n s u r a n c e , n e i t h e r such i n s u r e d
         nor i n s u r e r s h a l l r a i s e t h e defense of sovereign o r
         governmental immunity i n any damage a c t i o n brought
         a g a i n s t such i n s u r e d o r i n s u r e r , and any agreement
         i n t h e i n s u r a n c e c o n t r a c t p e r m i t t i n g t h e defense of
         sovereign o r governmental immunity i s hereby d e c l a r e d
         void. N a t t e m p t s h a l l be made i n t h e t r i a l of an
                        o
         a c t i o n brought a g a i n s t such p o l i t i c a l s u b d i v i s i o n
         of t h e s t a t e , m u n i c i p a l i t y , o r any p u b l i c body, c o r -
         p o r a t i o n , commission, board, agency, o r g a n i z a t i o n , o r
         o t h e r p u b l i c e n t i t y , t o suggest t h e e x i s t e n c e of any
         i n s u r a n c e which covers i n whole o r i n p a r t any judg-
         ment o r award which may be rendered i n f a v o r of p l a i n -
         t i f f . I f t h e c o u r t s h a l l determine t h a t t h e defendant
         could have s u c c e s s f u l l y r a i s e d t h e d e f e n s e of sovereign
         o r governmental immunity, and i f t h e v e r d i c t exceeds
         t h e l i m i t s of t h e a p p l i c a b l e i n s u r a n c e , t h e c o u r t s h a l l
         reduce t h e amount of such judgment o r award t o a sum
         e q u a l t o t h e a p p l i c a b l e l i m i t s t a t e d i n t h e p o l i c y . 11
         (Emphasis added).
         R e l a t o r seeks t o d i s t i n g u i s h Beeler on t h e b a s i s t h a t i t
p e r t a i n s simply t o a procedural change which e l i m i n a t e d a
common law d e f e n s e , w h i l e t h e i n s t a n t c a s e i n v o l v e s a j u r i s -
d i c t i o n a l i s s u e b e a r i n g on t h e e x i s t e n c e of l i a b i l i t y i t s e l f .
The r a t i o n a l e i n Beeler and t h e language of s e c t i o n 40-4402,
R.C.M.      1947, b e l i e such c o n t e n t i o n .        I n Beeler, a s here, l i a -
b i l i t y e x i s t e d under t h e s t a t u t e where none e x i s t e d b e f o r e ,
buc simply by v i r t u e of removal of a defense p r e v i o u s l y a v a i l -
a b l e and n o t otherwise,              This i s t h e law of Montana whatever t h e
law may be i n t h e o t h e r j u r i s d i c t i o n s under c a s e s c i t e d by
relator.          Judge Coate was c o r r e c t i n denying r e l a t o r a summary
j udgment     .
         The a l t e r n a t i v e w r i t h e r e t o f o r e i s s u e d i s vacated and t h i s
proceeding dismissed.


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