                                 IN THE SUPREME COURT OF THE STATE OF MONTANA


NORTHERN BORDER PIPELINE COMPANY, a partnership,
              Plaintiff and Respondent,
       -vs-
THE STATE OF MONTANA; THE DEPARTMENT OF REVENUE OF THE STATE OF
M0NTANA;KEN NORDTVEDT, Director of the Department of Revenue of the
State of Montana; VALLEY COUNTY, MONTANA, a political division of the
State of Montana having corporate power; ARDEN NICHOLS, Valley County
Commissioner, ARTHUR ARNOLD, Valley County Commissioner,ELEANOR PRATT,
Valley County Commissioner,MARLA J. DeBRAY, Valley County Treasurer;
ELLEN BYRNES, Valley County Assessor,ROOSEVELT COUNTY, MONTANA, a
politicaL division of the State of Montana having corporate power; JAMES
R HALVERSON, Roosevelt County Commissioner; LaVERN SCHLEDEWITZ, Roosevelt
County Commissioner; ALFRED KASCHUBE, Roosevelt County Commissioner; and
VIRGINIA W PLOUFFE, Roosevelt County Treasurer, LEO F KASCHUBE, Roosevelt
County Assessor,
              Defendants and Appellants.

APPEAL FROM:                                        The District Court of the Seventeenth Judicial District,
                                                    In and for the County of Valley,
                                                    The Honorable Leonard Langen, Judge presiding.
COUNSEL OF RECORD:

             For Appellants:
                    Marc Racicot, Attorney General; Helena, Montana
                    Clay R. Smith, Assistant Attorney General; Helena, MT
                    David W. Woodgerd, Dept of Revenue; Helena, Montana
                    David L Nielsen, Valley County Attorney; Glasgow, MT
                    James A McCann, Roosevelt County Attorney; Wolf Point, MT
             For Respondent :
                    Michael E Webster and Ronald R Lodders, Crowley, Haughey,
                    Hanson, Toole & Dietrich; Billings, Montana


                                I-
                                CT.                                   Submitted on Briefs: March 21, 1989
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            2-        :'c>                                                Decided: April 20,   1989
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r . Justice John C.   Sheehy delivered   the Opinion of the
Court.


     The defendants above named appeal from an order and
4udgment of the District Court, Seventeenth Judicial
District, Valley Countv, denyinq appellants attorneys' fees
in a case where the appellants were successfuL in securing
the dissolution of an injunctive order.
     The District. Court reasoned that It would not award
attorneys' fees as an element of damages here because
Roosevelt County, Valley County and the State of Montana each
pay their respective attorneys a salarv for representation in
matters affecting those entities, and because the affidavits
filed in the case did not show that the attorneys' services
burdened the taxpayers beyond their salaries. We uphold and
affirm the District Court.
     Respondent Northern Border Pipeline Company initiated an
action on November 23, 1987, seeking injunctive relief
against the imposition of 1987 state property taxes on its
pipeline Located within the exterior boundaries of the Fort
Peck Indian Reservation. Northern Border proceeded under 5
15-1-405, MCA, which permits a district court to restrain the
collection of any tax or part thereof "where the tax or the
part thereof sought to be enjoined is illegal or not
authorized by law." As a basis for the injunction, Northern
Border set out in its complaint six claims for relief-
(1)  that the assessing, levying and collecting of taxes h v
Valley and Roosevelt Counties on the property interests o+
Northern Border within the exterior boundaries of the Fort
Peck Indian Reservation were inconsistent with federal
policies and were preempted by federal law; (2) that such
assessina, levyinq and toll-ectinq of taxes interfered to an
impermissible extent with the right of the tribes thereon to
govern themselves; (3) that no nexus existed between the
counties and the property interests of Northern Border
located on trust land within the boundaries of the Fort Peck
Indian Reservation; (4) that the proposed taxes violated
Art.  I, Section 8, Clause 3, of the United States
Constitution; (5) that the proposed collection of taxes
violated Section 4 of the Enabling Act for the State of
Montana and Article I of the Montana Constitution; and,
(6) that the imposition of taxes by the two counties was
confiscatory as to Northern Border and violated Northern
Border's rights to equal protection and due process of law
under the United States Constitution.
     The appellants herein, the defendants below, include the
State of Montana, the Montana Department of Revenue and its
director,    Roosevelt      County,   Valley   County   and     various
officials of those counties.
     While the tax dispute was in the District Court, the
parties filed cross-motions for summary judgment, and on June
29, 1988, the motion of the appellants was granted and that
of Northern Border was denied. In relevant part, the June 29
order dissolved the previously issued preliminary injunctjon
and directed entry of judgment in the appellants' favor.
    On July 11, 1988, the appellants filed a motion for
attorneys'    fees    and    expenses,   requesting     $7,027.76     as
damages.   Of that amount, $5,695.26 was attributed to
attornevs' fees, later increased bv $192.00; and $1,320.00
97as attributed to transportation expenses in connection with
two hearings before the District Court in Glasgow, Montana.
     In the same order in which the District Court denied the
appellants' attorneys' fees, it granted the                award     For
transportation  expenses.    Northern Border                has     not
cross-appealed   as    to   the   transportati on   expenses.       This
appeal relates solely to the item of attorneys' fees claimed
by the appellants.
     Section 27-19-306, MCA, provides that when a district
court grants an injunction or restraining order, the court
shall require a written undertaking to be given by the
applicant, in such sum as the court considers to be proper,
                         costs - damages as may be incurred
"for the payment of such -
                         -     and
or suffered by any party who is found to have been wrongfully
enjoined or restrained." (Emphasis added.)
     In Sheridan County Electric Co-op., Inc. v. Ferguson
(1951), 124 Mont. 543, 551, ? 2 7 P.2d 597, 601, this Court
held that:
     Where . . . the sole purpose of the action was to
     obtain injunctive relief, then after dissolution of
     the injunction and upon final adjudication, counsel
     fees are recoverable for defense of the entire
     suit.
In that case, Ferguson, a minority stockholder of the
cooperative, sought to restrain and en-join the corporation
from moving its principal place of business from Westhy,
Montana, to Medicine Lake, Montana and a restraining order
was granted.   In that case, also, Ferguson had posted an
undertaking.   The actFon by the cooperative was upon the
injunction bond after the injunctive order was dissolved, and
this Court held in that case:
     The measure of damages in an action on the
     injunction bond is the a.mount which will compensate
     for all the detriment proximately caused b 7 the
                                                   l
     injunction during the time it is operative, or
     which in the ordinary course of things, wou1.d be
     likely to result therefrom.
124 Mont. at 549, 227 P . 2 d at 601.
     In Marta v. Smith (1981), 622 P.2d     1011, this Co,urt
stretched the right to recover attorneys' fees by a litigant
who successfully procures a dissolution of an injunctive
order to cases where an undertaking was not filed.              In that
case, this Court said:
     .    ..
           Despite the fact that section 2 7 - 1 9 - 3 0 6
     provides for recovery by an action on an injunction
     bond, we apply the same reasonable standard to
     those actions for attorney fees in which a bond is
     not involved. In making attorney fees an element
     of damaqes under section 2 7 - 1 9 - 3 0 6 , the legislature
     surely did not intend to make the recovery depend
     on   the  judge's discretion              in demanding    an
     injunction bond.   Thus we find that the district
     judge should have awarded reasonable fees as an
     element of damages, pursuant to section 2 7 - 1 9 - 3 0 6 ,
     MCA, and not as costs of suit.


     Thus,     Marta     clearly   established    that    recovery     of
attorneys' fees was not dependent upon the furnishing of a
bond or undertaking but just as clearly held that reasonable
attorneys' fees were an element of damages and not costs of
suit.
     In    this   case,    appellants   are   aslcing   this   Court   to
stretch --
        Marta     even    further, bv    allowing the     recovery oF
attorneys' fees where no monetary damages are established.
     The motion of the Attorney General for attorneys' fees
was supported by affidavits from a Deputy Attorney Genera!
who claimed 5 4 . 5 hours of services at $ 4 8 per hour; an
attorney for the Department of Revenue, who claimed 3 2 hours
of services at $ 3 0 per hour (based on the budget given to the
Department of Revenue); another attorney for the Department
of Revenue who claimed 1 8 hours of services at $ 3 0 per hour;
and the County Attorney of Roosevelt County, who claimed 1 8
hours of services at $ 2 1 . 0 7 per hour. Each of the affidavits
was made by persons who were salaried employees of the state
or of the county.
     Section 27-1.-202,     MCA, defines the right to compensatory
damaqes to persons who suffered. detriment from the unlawful.
act or omission of another.   Although Northern Border did not
act unlawfully here in pursuing its perceived rights under S
15-1-405, MCA, under Marta, supra, damages in cases such as
this include attorneys' fees. Yet, attorneys' fees here were
not incurred in the sense that the State and two counties
involved would have had the salary expense of the respective
attorneys with or without Northern Border's litigation. As
the District Court reasoned, no additional burden has been
placed upon the taxpayers of any governmental entity bv
virtue of Northern Border's actions, although the appellants
argue that the time spent by the respective attorneys on this
litigation was time taken     from other matters which those
attorneys could have handled.   We hold that such a claim for
damages is too remote to be considered a proper basis for the
assessment of damages.
     In this case, no bond or undertaking was required of
Northern Border when it applied for its injunctive relief.
Part I, Title 15, MCA, provides several alternative remedies
that may be taken by a taxpayer that wishes to contest the
assessment, levying or collection of a tax.     One of those
alternatives is the injunctive method provided in 5 15-1-405,
MCA.   No mention in that statute is made that a taxpayer
seeking injunctive relief under B 15-1-405, MCA, must comply
with the undertaking provisions of 5 27-19-306, MCA. It is
not necessary to decide that point here, however.
     Our decision here does not affect our holding in City of
Helena v. Brule (1895), 15 Mont. 429, 39 P.2d 456 where we
held that public entities may recover attorneys' fees paid to
retain outside counsel as damages for being wrongfull-v
enjoined.   Our holding in this case is compatible with the
generally accepted view of compensatory damages that the
reason for the award of damages is to make the damaged person
whole.
     W e a f f i r m the h o l d i n q of the District C o u r t .




W e Concur:
                  A




          Justices
Mr. Justice R. C. McDonough dissents:



     The rationale of the majority lacks consistency and
ignores reality. It carves out an unlisted exception to the
meaning of statutory damages as applied to attorney fees and
contradicts our previous holding in Sheridan County Electric
Co-op, Inc. v. Ferguson (1951), 124 Mont. 543, 221 P.2d 597.
Temporary    restraining   orders   and    injunctions   are
extraordinary remedies and if the party obtaining such orders
later loses such party should pay the winner's damages as
provided by statute. That is the statutory scheme.
     There is damage to the State of Montana and the public
entities.   They here have adequately and with precision
proved their reasonable legal costs         (damages) as per hour
salaried costs. They did not include secondary costs such as
pro rata costs of library, equipment, secretarial costs,
rent, utilj-ties, etc., which would he charged by private
counsel. Flours billed are one way of 1-ife between attorneys
and clients.   To say damages based on proved hours are too
remote is to close one's eyes to the way its being done. The
taxpayer, or any defendant, should not ultimately bear the
cost   of   damages   incurred   in   a   winninq   defense   to   an
extraordinary remedy, just because in-house counsel are used.
Salaried attornevs do not come free. Any legislator, county
commissioner, or corporate executive wou1.d affirm this
statement.   A number of these cases requesting declaratory
injunctive relief are now and have recently been before this
Court.
     The message of the majority is that a public entity, a
private person or corporation should not use in-house counsel
in a defense to an injunction, because only the charges of
outside counsel will be reimbursed as statutory leqal damage
if one prevails.    This is so even though outside counsel's
charges in all likelihood will be computed on an hourly basis
and in some instances their employment would be costly and
inefficient.   1 vrould reverse the District Court.




                                         Justice        /


     Justice John C. Harrison and      Justice   Fred   J.   Weber
concur in the foregoing dissent.
