                                    NO.    91-291
                IN THE SUPREME COURT OF THE STATE OF MONTANA
                                          1991


MARGARET JOHNSON,
                         Plaintiff and Respondent,
    v.
CAPITAL FORD GARAGE,
                         Defendant and Appellant.



APPEAL FROM:             District Court of the First Judicial District,
                         In and for the County of Lewis & Clark,
                         The Honorable Dorothy McCarter, Judge presiding.


COUNSEL OF RECORD:
               For Appellant:
                         R. J. "JimttSewell, Jr., and Lewis K. Smith,
                         Smith Law Firm, Helena, Montana
               For Respondent:
                         Margaret Johnson, Pro Se, Helena, Montana
               For Amicus Curiae:
                         Honorable Marc Racicot, Attorney General;
                         Clay R. Smith, Solicitor, Helena, Montana



         ..,                         Submitted on Briefs:   October 17, 1991
         !
               ,,,<
                \     14 ;39'1
                       .
Justice Terry N. Trieweiler delivered the opinion of the Court.
       Margaret Johnson sued Capital Ford in the Small Claims
Division of the Lewis and Clark county Justice Court.            Johnson
prevailed, and Capital Ford appealedto the First Judicial District
Court in Lewis and Clark County.        The District Court reviewed the
taped record from the Small Claims Division and affirmed.        Capital
Ford     then   moved    for    reconsideration   and   raised   certain
constitutional issues.         The District Court denied Capital Ford's
motion for reconsideration.        Capital Ford appeals.   We affirm.
       The issues are:
       1.    Does the statutory prohibition against de novo appeals
from the decisions of small claims courts violate Capital Ford's
right to due process?
       2.    Did the District Court violate Capital Ford's right to
due process by limiting its review to the record from the Small
Claims Division?
       3.    Did the District Court err in finding sufficient evidence
in the record to support the judgment of the Small Claims Division?
       In July or August 1988, Johnson left her car with Capital Ford
for repairs.      She did not pick it up until January 30, 1989.        At
that time, she found grease on the passenger seat, grease in the
trunk, dents in the hood and trunk lid, and a broken rear tail
light.      These damages were not present when she delivered the car
to Capital Ford in 1988.
      A   series    of   frustrating discussions       with    Capital    Ford
followed.     At one point, a Capital Ford mechanic admitted in the
presence of both Johnson and shop manager Dirk Fredrickson that
Capital Ford's employees had removed the old engine and left it in
the trunk while they waited for delivery of a new engine. However,
Fredrickson was unsympathetic and refused to remedy the damage or
pay   for    repairs.       Fredrickson's    supervisors      supported   this
decision.
      On January 29, 1991, Johnson filed a complaint in the Small
Claims Division of the Lewis and Clark County Justice Court.               She
claimed     $2500   in damages.      Judge Jewel1 heard         the case on
February 25, 1991.          Johnson testified on her own behalf and
presented testimony from other witnesses, as well as several
exhibits.     John Elliott appeared on behalf of Capital Ford.              On
February     28,    1991,   Judge   Jewell   entered   Findings     of    Fact,
Conclusions of Law, and a Memorandum in which he found for Johnson
and awarded her $2500 in damages, plus costs.
      Capital Ford obtained counsel and appealed to District Court.
The court limited its review to the record from the Small Claims
Division, and on April 11, 1991, it issued an order affirming the
decision of the Small Claims Division.
      On April 22, 1991, Capital Ford moved for reconsideration. It
arguedthat the evidence was insufficient to support Judge Jewell's
findings, that Johnson had not proved Capital Ford damaged her car,
that Judge Jewell had           admitted exhibits without the proper
                                       3
foundation, and that the District Court's refusal to entertain a de
novo appeal violated Capital Ford's right to due process.                             Capital
Ford briefed these issues. Johnson, who appeared pro se, did not.
The District Court held a hearing on May 17, 1991, and d e n i e d
Capital Ford's motion on May 28, 1991.
     capital Ford then appealed to this Court.                                It is still
represented by counsel.            Johnson is still pro se, and has briefed
the fact issues. We ordered the Attorney General's Office to brief
the constitutional issues on her behalf,


     Does the statutory prohibition against de novo appeals from
the decisions of small claims courts violate Capital Ford's right
to due process?
     Capital Ford argues that the statutory procedure governing
appeals from small claims courts violates the state and federal due
process guarantees.          Section 25-35-803, MCA, provides:

     (1) If either party is dissatisfied with the judgment of
     the small claims court, he may appeal to the district
     court of the county where the judgment was rendered. An
     appeal shall be commenced by giving written notice to the
     small claims court and serving a copy of the notice of
     appeal on the adverse party within 10 days after entry of
     judgment    .
      ( 2 ) There may not be a trial de rzovo ifz the district court, Tlze appeal shall he
     limited to questiurzs of law.    [Emphasis added.

Attorneys may not appear in small claims court, unless all parties
are represented. Section            25-35-505(2),        MCA.     Capital Ford asserts
that this statutory scheme unconstitutionally deprives it of the
assistance of counsel at all levels of the fact-finding process.
     Capital Ford cites North CentralServices, Iizc. v. Hafdahl (198l), 191

Mont. 440, 625 P.2d 56, in support of this position.                  In Hafdald,

the appellant challenged 5         25-35-403(2),      MCA   (1979) (repealed
1981), a statute that was virtually identical to present                §   25-35-
803 (2), MCA.   We said:
     The Montana Constitution is silent on right to counsel in
     civil cases, but nearly all courts have held that such
     right is implicit in due process guarantees. For example
                                                                  .
     see Prudential Ins. Co. v. Small Claims Co~crt (1946) , 76 Cal App. 2d
     379, 173 P.2d 38; Fosterv. Walus (l959), 81 Idaho 452, 347
     P.2d 120. We hold that in Montana the right to counsel
     is implicit within constitutional guarantees of due
     process, and the right to counsel must exist at somestage
     of the proceeding. [Emphasis added.]



     We concluded that the statutory prohibition against de novo
appeals was:
     [Ulnconstitutional because it effectively denies counsel
                                     .
     at all levels of facaid detenniizalio~t The right to counsel can be
     denied in the small claims procedure, as long as the
     right is protected on appeal. [Emphasis added.]
Hafdahl, 625 P.2d at 58.     Capital Ford asserts that Hafdahl required

the legislature to provide for de novo appeals. Apparently Capital
Ford believes any statutory solution other than de novo appeal is
unconstitutional for the reasons we enumerated in Hnfdnlzl.                     We

disagree.
      The 1981 legislature responded to Hafdahl with Senate Bill 485.

The recitals preceding the bill, as enacted, make it clear that the
legislature was attempting to remedy the problems we enumerated in
H l d l l See 1981 Mont. Laws 586. Senate Bill 485 repealed all of
 fffh.
the then-existing small claims statutes.           Section 29, 1981 Mont.
Laws 586. However, the legislature re-enacted some of the repealed
statutes as part of a new statutory scheme.
      Significantly, the legislature chose not to provide for de novo

appeal.     See   5   21(2),    1981 Mont.   Laws 586   (now codified as

§   25-35-803(2), MCA)     .   Instead, it afforded defendants in small
claims court an opportunity to remove their cases to justice's
court, and provided that failure to do so operates as a waiver of
the rights to counsel and trial by jury. Section 18(2), 1981 Mont.
Laws 586 (now codified as 5 25-35-605(3), MCA).              We have not
previously had occasion to consider the constitutionality of this
revised statutory scheme.
      Under the new procedure, the small claims plaintiff must
notify the defendant of the possibility of procedural waiver of the
rights to counsel and trial by jury. See 5 7, 1981 Mont. Laws 586

(now codified as      §   25-35-602, MCA).   Pursuant to this notification
requirement, the complaint in the instant case contained the
following language:
       You are hereby further notified that, within 10 days of
       service upon you of this complaint and order, you may
       remove this action from small claims court to Justice's
     Court, and t h a t your failure to remove shall constitute
     a waiver of your right to trial by jury and to
     representation by counsel.
This warning appears on the front of the complaint in the same
typeface as the rest of the document.     Capital Ford does not argue
that this warning was visually inadequate so we do not reach that
issue. However, we believe a warning of such importance should be
conspicuous and we suggest to the state's small claims courts that
in the future they print the warning in bold type.
     Capital Ford does not deny receiving this warning; it argues
instead    that   its   representatives    could   not   evaluate   the
significance of the waiver without the assistance of counsel.        We
are not persuaded. The complaint very clearly warned the defendant
that it would waive its right to counsel and jury trial by failing
to remove. The assistance of counsel is, therefore, not essential
to a voluntary and knowing waiver of these rights in a civil case.
Furthermore, the    statute did   not prevent      Capital   Ford   from
consulting with an attorney immediately following its receipt of
the complaint.      The   statute merely    prohibited    the   in-court
appearance of an attorney on Capital Ford's behalf.
     The new small claims procedure complies with Hafdnhl because it

does not    absolutely prohibit    counsel at      all   stages in the
litigation. Instead, it places the responsibility for preservation
of that right on the defendant who must choose between the peace of
mind that comes from representation by counsel, and the quick,
affordable justice available in small claims court.         capital Ford
made the decision to take its chances in small claims court and now
it must abide by the result.      We hold that the revised statutory
scheme does not violate Capital Ford's    right to due process.
                                   I1
     Did the District Court violate Capital Ford's          right to due
process by limiting its review to the record from the Small Claims
Division?
     Capital Ford argues that the District Court violated its due
process rights by refusing to allow capital Ford's attorney to do
more than file a notice of appeal.        Specificafly, Capital Ford
complains that ll[f]romthat point on, the Court reviewed the record
and affirmed the judgment,      Apparently this is little more than a
restatement of Capital Ford's     de novo appeal argument.        For the
reasons articulated in Part I of this opinion, we hold that in the
context     of   the   new   statutory   scheme   it   is    no    longer
unconstitutional to prohibit de novo appeals.


     Did the District Court err in finding sufficient evidence in
the record to support the judgment of the Small Claims Division?
     Capital Ford argues that the record contains insufficient
evidence to support the judgment in Johnson's      favor.     However, a
close reading of Capital Ford's brief reveals that Capital Ford is
actually arguing that Judge Jewel1 admitted exhibits without
requiring Johnson to establish the proper evidentiary foundation.
                                   8
Specifically, Capital Ford challenges the admissibility of repair
estimates Johnson obtained two years after she retrieved her car
from Capital Ford.     We find no merit in this argument.
      In enacting the statutes governing small claims procedure, the
legislature sought to provide for the informal disposition of
claims.   Section   25-35-501,   MCA, provides:
      It is the purpose of this chapter to provide a speedy
      remedy for small claims and to promote a forum in which
      such claims may be heard and disposed of without the
      necessity of a formal trial.
Capital Ford's insistence on strict compliance with technical rules
of   evidence   is contradictory to the          legislature's     expressed
intention to provide a forum for the informal resolution of small
claims.
      Furthermore, 5   25-35-702,    MCA, provides:
     The plaintiff and the defendant may offer evidence in
     their behalf by witnesses appearing at such hearing in
     the same manner as in other cases arising in justice's
     court or by written evidence, and the judge may direct the
     production of evidence as he considers appropriate. The small claims
     court has the subpoena power granted to justices' courts
     in all civil cases. [Emphasis added.]
We believe the emphasized language grants the small claims judge
broad discretion in controlling the admissibility of testimony and
exhibits.
      The taped record in the instant case shows that Capital Ford
did not stand helplessly by while Johnson put her evidence in front
of the small claims judge. Although Mr. Elliott did not object to
Johnson's references to the repair estimates during her testimony,
he did voice specific concerns about the reliability of that
evidence before Judge Jewel1 appended it to the record. Johnson then

replied that she had not obtained estimates earlier because she
believed Capital Ford would ultimately accept responsibility for
the damage.
     The small claims judge and the District Court took Mr.
Elliott's    concerns into account in assessing the weight of this
evidence rather than its admissibility.     The smaller of the two
repair estimates for body work alone exceeded Johnson's recovery by
almost a hundred dollars.      We hold that the record contains
sufficient evidence to support the judgment against Capital Ford.
     Affirmed .




We concur:



     Chief ~ustice-
                                       November 14, 1991

                                  CERTIFICATE OF SERVICE

I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:


R.J. "Jim" Sewell and Lewis K. Smith
SMITH LAW FIRM, P.C.
P.O. Box 604
Helena. MT 59624

Margaret Johnson
8230 Green Meadow Drive
Helena. MT 59601

Hon. Marc Racicot, Attorney General
Clay R. Smith, Solicitor
Justice Bldg.
Helena, MT 59620


                                                     ED SMITH
                                                     CLERK OF THE SUPREME COURT
                                                     STATE OF MONTANA
