                              No. 80-110
               IN THE SUPREME COURT OF THE STATE OF MONTANA
                                 1980


NILSON ENTERPRISES, INC.,
                            Plaintiff and Appellant,
         VS.

CITY OF GREAT FALLS,
                            Defendant and Respondent.


Appeal from:   District Court of the Eighth Judicial District,
               In and for the County of Cascade.
               Honorable Ronald D. McPhillips, Judge presiding.
Counsel of Record:
    For Appellant:
        Jardine, Stephenson, Blewett and Weaver, Great Falls,
         Montana
        Gary W. Bjelland argued, Great Falls, Montana
    For Respondent:
        David V. Gliko, City Attorney, argued, Great Falls,
         Montana


                                 Submitted:    November 24, 1980
                                   Decided:   DEc 1 5 1980
Mr.   J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of
t h e Court.

        ~ i l s o n n t e r p r i s e s (taxpayer) appeals an adverse deci-
                  E

s i o n of t h e Cascade County D i s t r i c t C o u r t , u p h o l d i n g a n

a n n e x a t i o n by t h e C i t y of G r e a t F a l l s ( C i t y ) .

        Taxpayer f i l e d a c o m p l a i n t a g a i n s t t h e C i t y on J a n u a r y
28, 1974, a t t e m p t i n g t o r e c o v e r a s p e c i a l improvement d i s -

t r i c t a s s e s s m e n t f o r t h e f i s c a l y e a r e n d i n g J u n e 30, 1974.

The t a x p a y e r had made t h e payment under p r o t e s t on November

30, 1973.         The t a x p a y e r charged t h a t t h e C i t y had no j u r i s -

d i c t i o n t o c r e a t e a s p e c i a l improvement d i s t r i c t , and,

t h e r e f o r e , t h e a s s e s s m e n t was i n v a l i d a s i t was based on a n

i n v a l i d annexation,

        On November 21, 1974, t h e C i t y and t h e t a x p a y e r e n t e r e d

i n t o a s t i p u l a t i o n a g r e e i n g t h a t , i f t a x p a y e r made any

f u r t h e r payments under p r o t e s t b e f o r e t h e f i n a l d e t e r m i n a -

t i o n of t h e s u i t , i t would n o t b e r e q u i r e d t o i n i t i a t e any

other suit.           On J u n e 2 1 , 1977, t h e p a r t i e s f u r t h e r s t i p u -

l a t e d t o a s e t of f a c t s , a g r e e d t h a t no e v i d e n t i a r y h e a r i n g

o r t r i a l would be r e q u i r e d , a g r e e d t h a t a l l p a r t i e s would

f i l e t h e i r m o t i o n s f o r summary judgment on t h e r e c o r d a s i t

s t o o d , and f i n a l l y a g r e e d t h a t t h e c a s e would be u l t i m a t e l y

decided a t t h e D i s t r i c t Court l e v e l , s u b j e c t t o appeal.                The

C i t y and t h e t a x p a y e r b o t h f i l e d m o t i o n s f o r summary judg-

ment w i t h s u p p o r t i n g b r i e f s .      On J a n u a r y 1 6 , 1980, t h e

D i s t r i c t C o u r t found i n f a v o r of t h e C i t y , d e t e r m i n i n g t h a t

t h e a s s e s s m e n t and a n n e x a t i o n w e r e p r o p e r .   Taxpayer a p p e a l s .

        The f a c t s a r e u n d i s p u t e d .     Taxpayer i s a Montana c o r -

p o r a t i o n d o i n g b u s i n e s s and owning r e a l p r o p e r t y i n c a s c a d e

County.        The C i t y of G r e a t F a l l s i s a m u n i c i p a l c o r p o r a t i o n ,

I n September 1972, t h e c i t y c o u n c i l p a s s e d a r e s o l u t i o n t o
e x t e n d t h e b o u n d a r i e s o f t h e C i t y t o i n c l u d e two a d d i t i o n a l

t r a c t s o f l a n d , which were c o n t i g u o u s t o t h e m u n i c i p a l c i t y
limits.         T a x p a y e r ' s p r o p e r t y , p r i o r t o a n n e x a t i o n , was n o t

contiguous t o the c i t y l i m i t s .

         A t a l l t i m e s d u r i n g t h i s a c t i o n t h e S t a t e h a s had and

s t i l l d o e s have a n i n t e r e s t i n t h e r e a l p r o p e r t y d e s c r i b e d

a s T r a c t s 1 and 2--namely,              a highway p u r s u a n t t o a r i g h t - o f -

way deed.          The a n n e x a t i o n was approved by t h e mayor on Sep-

tember 1 2 , 1972.            On September 2 5 , 1972, t h e C i t y d e c l a r e d

i t s intention t o create a special lighting d i s t r i c t , relying

on t h e a n n e x a t i o n f o r i t s v a l i d i t y .     Taxpayer was a s s e s s e d

and o r d e r e d t o pay t a x e s of $389.81 and d i d s o under pro-

test.        Taxpayer h a s p a i d i t s a s s e s s m e n t under p r o t e s t e v e r y

f i s c a l y e a r s i n c e 1974.

        A t t h e h e a r t of t h e i s s u e s r a i s e d by t h e t a x p a y e r i s a

c h a l l e n g e t o t h e v a l i d i t y o f t h e C i t y ' s j u r i s d i c t i o n t o make

assessments a g a i n s t t h e taxpayer's property.                          Taxpayer

a r g u e s t h a t t h e a c t i o n s by t h e C i t y , b o t h t h e a n n e x a t i o n and

t h e assessments, a r e void - i n i t i o .
                              ab                                  Involved h e r e i s a

s t a t u t e which, i f p r o p e r l y f o l l o w e d , a u t h o r i z e s a c i t y t o

assess a s p e c i a l improvement t a x on p r o p e r t y o u t s i d e o f , y e t
contiguous t o , t h e c i t y l i m i t s .            The t a x l i a b i l i t y depends

on whether t h e p r o p e r t y i n i s s u e h a s been p r o p e r l y made con-

tiguous t o t h e c i t y ' s boundaries.                    I f it has not, t h e r e i s

no l i a b i l i t y .

        Taxpayer s u b m i t s t h r e e i s s u e s f o r r e v i e w :

        1.     Does a t a x p a y e r who h a s been a s s e s s e d s p e c i a l

improvement t a x e s under a s t a t u t e a u t h o r i z i n g t a x a t i o n of

l a n d which i s " c o n t i g u o u s " t o a c i t y have t h e c a p a c i t y t o

c h a l l e n g e t h e a n n e x a t i o n p r o c e e d i n g which made i t s own l a n d

contiguous t o t h e c i t y ?
        2.     Does a c i t y ' s f a i l u r e t o f i l e a l a n d d e s c r i p t i o n ,

c e r t i f i c a t e of ownership, o r o w n e r ' s s t a t e m e n t of a d e s i r e

t o have t h e l a n d annexed r e n d e r a n n e x a t i o n p r o c e e d i n g s v o i d



        3.    Does a t a x p a y e r ' s f a i l u r e t o p r o t e s t a n n e x a t i o n o r

a s p e c i a l improvement t a x immediately a f t e r n o t i c e e s t o p i t

from c h a l l e n g i n g l a t e r ?
                                                                                  .ie'?'cs
        S e c t i o n 11-511,     R.C.M.     1947 (now s e c t i o n 7-2-4444                et.

s e q . , MCA), r e s t r i c t s t h e r i g h t of a m u n i c i p a l i t y t o annex

l a n d i n which t h e S t a t e of Montana h a s any b e n e f i c i a l i n t e r -

e s t , s u c h a s t h e S t a t e of Montana had i n t h e p r o p e r t y d e s i g -

n a t e d as T r a c t s 1 and 2 i n t h i s c a s e ,        This s t a t u t e provides

i n pertinent part:

       "Contiguous l a n d owned by government--desire
       f o r annexation--procedure.                     Whenever any l a n d
       c o n t i g u o u s t o a m u n i c i p a l i t y i s owned by t h e
       U n i t e d S t a t e s o r by t h e s t a t e of Montana, o r
       by any agency, i n s t r u m e n t a l i t y , o r p o l i t i c a l
       s u b d i v i s i o n of e i t h e r , o r whenever any of t h e
       f o r e g o i n g have a b e n e f i c i a l i n t e r e s t i n any
       l a n d c o n t i g u o u s t o a m u n i c i p a l i t y , such l a n d
       may be i n c o r p o r a t e d and i n c l u d e d i n t h e muni-
       c i p a l i t y t o which i t i s c o n t i g u o u s , and may
       be annexed t h e r e t o and made a p a r t t h e r e o f ,
       i n t h e f o l l o w i n g manner:

       "1. The a d m i n i s t r a t i v e head of t h e owner of
       t h e l a n d , o r t h e a d m i n i s t r a t i v e head of t h e
       h o l d e r of a b e n e f i c i a l i n t e r e s t i n t h e l a n d ,
       s h a l l --- e c l e r k of the m u n i c i p a l i t y
                  f i l e with th
       - d e s c r i p t i o n - -e-a n d , a c e r t i f i c a t i o n of
       a                         of t h l
       ownership - - b e n e f i c i a l T n t e r e s t therein,
                           o r of
       - - a s t a t e m e n t t h a t t h e owner -, - -
       and                                                     of or the
       h o l d e r -, - b e n e f i c i a l i n t e r e s t - -e- n d
                     of the                                           i n t h la
       d e s i r e s - - -i t annexed. Whereupon, t h e
                       t o have
       q o v e r n i n g body of t h e m u n i c i p a l i t y s h a l l p a s s
       a   r e s o l u t i o n r e c i t i n g i t s i n t e n t i o n t o annex
       t h e l a n d and s e t t i n g a t i m e and p l a c e f o r a
       p u b l i c hearing thereon."                 S e c t i o n 11-511,
       R.C.M.        1947.        (See s e c t i o n s 7-2-4402, -4403,
       -4404, MCA).               (Emphasis added.)

       On May 24, 1972, i n r e s p o n s e t o t h e C i t y ' s r e q u e s t f o r

t h e Montana S t a t e Highway D e p a r t m e n t ' s p o l i c y on a n n e x a t i o n

o f s t a t e highway l a n d , R o b e r t E . Champion, s u p e r v i s o r of t h e
right-of-way        s e c t i o n of t h e Montana Highway Department,

stated:       " I n g e n e r a l t h e r e would be no o b j e c t i o n s t o annexa-

t i o n p r o v i d i n g such a c t i o n p r e c l u d e s t h e l e v y of any a s s e s s -

ment a g a i n s t t h e highway r i g h t of way."              The C i t y a s s e r t s

t h a t Champion's l e t t e r s u b s t a n t i a l l y c o m p l i e s w i t h t h e

r e q u i r e m e n t s of t h e s t a t u t e even though n o t h i n g w a s f i l e d

with the c i t y clerk.

       I n i t s d e c i s i o n i n f a v o r of t h e C i t y , t h e D i s t r i c t
Court reasoned:

       "To p r o v e t h a t t h e a n n e x a t i o n was v o i d a b
       i n i t i o , the p l a i n t i f f s argue t h a t the f i l i n g
       r e q u i r e m e n t s of M.C.A.,          1979, S e c t i o n 7-2-
       4403, r e q u i r i n g f i l i n g by t h e owner o f a l a n d
       d e s c r i p t i o n , a c e r t i f i c a t i o n of ownership,
       and a s t a t e m e n t t h a t t h e owner d e s i r e d t o
       have t h e l a n d annexed, w e r e n o t f o l l o w e d .
       These i r r e g u l a r i t i e s do n o t seem g l a r i n g
       enough t o d e p r i v e t h e C i t y of j u r i s d i c t i o n .
       The C o u r t s which have c o n s i d e r e d t h e matter
       have g e n e r a l l y found t h a t a C i t y ' s a n n e x a t i o n
       i s void f o r lack of j u r i s d i c t i o n i n only
       t h r e e ( 3 ) i n s t a n c e s : 1) Where one c i t y a t -
       t e m p t s t o annex p a r t of a n o t h e r c i t y ; 2)
       Where a c i t y a t t e m p t s t o annex p r o p e r t y n o t
       a d j a c e n t t o it i n a contravention of s t a t u t e ,
       and 3 ) Where a c i t y a t t e m p t s t o annex w i t h -
       o u t c o n s e n t o f t h e landowners o f t h e new
       territory.             Annot., 1 3 ALR2d 1279, 1292
        ( 1 9 5 0 ) ; B a r t o n v. S t u c k y , 1 2 1 Okla. 226, 248
       P. 592 ( 1 9 2 6 ) . P l a i n t i f f s a l l e g e none of
       these. "

       Taxpayer a s s e r t s t h a t t h e r e e x i s t s a f o u r t h ground f o r

i n v a l i d a t i n g a c i t y ' s annexation a s being void           ab    initio:

where a c i t y f a i l s t o comply w i t h a l l t h e mandatory r e q u i r e -

ments of s t a t u t o r y law.        2 McQuillin, Municipal Corporations,

Sec. 7.29 a t 422; Pool v . Town of Townsend ( 1 9 2 0 ) , 58 Mont.



       ". . .  I f , t h e n , t h e Codes p r o v i d e t h e means
       by which a n a d d i t i o n becomes a p a r t of a c i t y
       o r town and s u b j e c t t o i t s j u r i s d i c t i o n , t h e
       means s o p r o v i d e d must be h e l d t o be e x c l u -
       sive."    Pool, 58 Mont. a t 304, 1 9 1 P. a t 386.
         The c o n t i n u e d v a l i d i t y of Pool was r e c e n t l y u n d e r s c o r e d

 t w i c e by t h i s C o u r t i n Gregory v. C i t y of F o r s y t h (19801,

       Mont.     -,       609 P.2d 248, 37 St.Rep.                 277, 279, and Balock
v . Town of Melstone ( 1 9 8 0 ) ,                     Mont   .         ,   607 P.2d 545,



         The C o u r t i n G r e g o r y ,    603 P.2d a t 252, s t a t e d :

        "The g e n e r a l r u l e i s t h a t m u n i c i p a l boun-
        d a r i e s may b e e x t e n d e d o n l y a s p r e s c r i b e d by
        law.        2 M c Q u i l l i n , Municipal C o r p o r a t i o n s ,
        Sec. 7.14 a t 317 ( 3 r d r e v . e d . 1 9 7 9 ) . S i n c e
        t h e j u r i s d i c t i o n of a c i t y t o extend i t s
        b o u n d a r i e s i s a s p e c i a l power, c o n f e r r e d by
        t h e l e g i s l a t u r e , a s u b s t a n t i a l compliance
        w i t h a l l t h e mandatory r e q u i r e m e n t s of
        s t a t u t o r y l a w i s e s s e n t i a l . McQuillin supra,
        Sec. 7.29 a t 422; Pool v . Town o f Townsend
         ( 1 9 2 0 ) , 58 Mont. 297, 304, 1 9 1 P. 385, 386."

        The g i s t o f t a x p a y e r ' s argument i s t h a t t h e C i t y n e i -

t h e r complied w i t h t h e s t a t u t o r y r e q u i r e m e n t s n o r s e c u r e d

t h e S t a t e ' s c o n s e n t , and t h a t e i t h e r f a i l u r e d e n i e d t h e C i t y

o f t h e j u r i s d i c t i o n t o v a l i d l y annex t h e p r o p e r t y and l e v y

a s s e s s m e n t s a g a i n s t it.   The C i t y ' s view i s t h a t Champion's

l e t t e r s e r v e d a s e v i d e n c e of t h e S t a t e ' s c o n s e n t and t h a t it

a l s o s e r v e d a s s u b s t a n t i a l compliance w i t h s t a t u t o r y r e q u i r e -

ments.       W e f i n d f o r t h e taxpayer.

        A s t o t h e i s s u e of consent, w e conclude t h a t t h e C i t y

had a q u a l i f i e d o r c o n d i t i o n a l c o n s e n t a t b e s t .    The c o n s e n t

by t h e S t a t e of Montana, t a c i t l y g i v e n by Champion i n h i s

May 24 l e t t e r , w a s c l e a r l y s u b j e c t t o t h e a b s e n c e o f any

l e v y a g a i n s t t h e highway right-of-way.                 Although n o t i f i e d of

t h e c o n d i t i o n a l n a t u r e of t h e S t a t e ' s c o n s e n t t o t h e annexa-

t i o n , t h e C i t y promptly l e v i e d a n a s s e s s m e n t a g a i n s t t h e

p r o p e r t y i n t e r e s t of t h e S t a t e .   By a f f i d a v i t i n t h e r e c o r d ,

Champion s t a t e d w i t h r e g a r d t o h i s May 24 l e t t e r :

        " T h i s s t a t e m e n t embodied t h e p o l i c y of m       y
        o f f i c e and s u b j e c t t o t h e p r o v i s i o n r e g a r d i n g
        a s s e s s m e n t a g a i n s t t h e Montana Department o f
         Highways r i g h t of way, m o f f i c e had no ob-
                                                    y
         j e c t i o n t o s u c h a n n e x a t i o n on t h e d a t e o f
         t h a t l e t t e r . However, s i n c e t h e a n n e x a t i o n
         took p l a c e , t h e C i t y of Great F a l l s has
         l e v i e d a s s e s s m e n t s a g a i n s t t h e p r o p e r t y of
         t h e S t a t e o f Montana highway r i g h t of way.
         These a s s e s s m e n t s have n o t been p a i d by t h e
         S t a t e and have been s t r o n g l y r e s i s t e d .



         "Also, n e i t h e r m o f f i c e n o r , t o t h e b e s t of
                                  y
         m knowledge and b e l i e f , any o t h e r o f f i c e of
           y
         t h e S t a t e of Montana, Department of Highways,
         h a s e v e r f i l e d w i t h t h e C l e r k of t h e C i t y of
         Great F a l l s a d e s c r i p t i o n of t h e l a n d t o be
         annexed, a c e r t i f i c a t i o n of ownership o r of
         beneficial i n t e r e s t therein, o r a statement
         t h a t t h e Department of Highways d e s i r e d t o
         have t h e l a n d annexed.

         "The Department of Highways h a s and w i l l con-
         t i n u e t o r e s i s t any l e v y of a s s e s s m e n t s a g a i n s t
         i t s highway r i g h t o f way p u r s u a n t t o t h e an-
         n e x a t i o n o f t h i s l a n d and t h e c r e a t i o n of t h e
         appurtenant special l i g h t i n g d i s t r i c t . "

         C o n t r a r y t o t h e f i n d i n g of t h e D i s t r i c t C o u r t , t h e

t a x p a y e r d i d c h a l l e n g e t h e a n n e x a t i o n on t h e i s s u e of t h e

S t a t e ' s consent.        Any c o n s e n t g i v e n by t h e S t a t e w a s c l e a r l y

f o r s a k e n by t h e C i t y ' s d e c i s i o n t o l e v y a n a s s e s s m e n t a g a i n s t

t h e S t a t e ' s property.         Without t h e p r o p e r t y o w n e r ' s c o n s e n t

t h e C i t y w a s without t h e j u r i s d i c t i o n t o proceed w i t h t h e

annexation.           The a n n e x a t i o n was v o i d - i n i t i o .
                                                          ab                        Annot.,     13

A.L.R.    2d 1279, 1292 ( 1 9 5 0 ) .

         Moreover, w e r e a f f i r m t h i s C o u r t ' s d e c i s i o n s i n P o o l ,

Balock and Gregory, s u p r a .                When s t a t u t o r y language p r o v i d e s

t h e manner i n which a c i t y o r town may annex a p o r t i o n of

contiguous property,                 i t must        c o m p l e t e l y and s t r i c t l y

comply w i t h t h e s t a t u t e ' s r e q u i r e m e n t s .    Annexation, and t h e

t a x a t i o n i m p l i c a t i o n s t h a t accompany i t , s h o u l d n o t be

approached l i g h t l y .         The p r o c e d u r e s h o u l d n o t be haphazard.

Although Gregory r e a f f i r m e d t h e r u l e of s u b s t a n t i a l compli-

a n c e , t h e complete f a i l u r e t o s e c u r e t h e documents n e c e s s a r y
t o t h e p r o p e r a n n e x a t i o n of p r o p e r t y i s n o t s u b s t a n t i a l

compliance.          The complete d i s r e g a r d of t h e mandates o f what

i s now s e c t i o n 7-2-4403,          MCA, was a n e r r o r f a t a l t o t h e

C i t y ' s power t o annex.

        A s t o t h i s t a x p a y e r ' s s t a n d i n g t o c h a l l e n g e t h e annexa-

t i o n , we concur w i t h t h e D i s t r i c t C o u r t ' s c i t a t i o n of t h e

a p p l i c a b l e law.    Applying t h e r u l e of Sharkey v. B u t t e

( 1 9 1 6 ) , 52 Mont. 1 6 , 155 P .          266, t h e lower c o u r t q u o t e d t h i s

Court:       "   . . . where       s u c h p r o c e e d i n g s are v o i d - i n i t i o f o r
                                                                             ab

want of j u r i s d i c t i o n of t h e s u b j e c t m a t t e r , a s h e r e , e q u i t y

w i l l a f f o r d r e l i e f t o t h e p r o p e r t y owner whose t a x e s would
be i n c r e a s e d i f h i s p r o p e r t y were i n c l u d e d w i t h i n t h e c i t y ' s

limits."         52 Mont. a t 23.           See a l s o 62 C.J.S.           Municipal

Corporations,          §
                       ,   66 a t 178 ( 1 9 4 9 ) .

        Having d e t e r m i n e d t h a t t h e p r o c e e d i n g s by t h e C i t y of

G r e a t F a l l s w e r e i n d e e d v o i d a t ' i n c e p t i o n f o r want of p r o p e r

jurisdiction,         w e a r e convinced t h a t t h i s t a x p a y e r h a s s t a n d -
i n g and i s e n t i t l e d t o r e l i e f .      6+hw
                                                      - p      '




        T h i s C o u r t i s f u r t h e r persuaded t h a t t h e p r i n c i p l e s of

e s t o p p e l do n o t s e r v e t o deny t h e t a x p a y e r r e l i e f .       Although

t h e C i t y c i t e s o u r d e c i s i o n i n Power v. C i t y of Helena

( 1 9 1 1 ) , 43 Mont. 336, 116 P.              415, and p e r s u a d e d t h e ~ i s t r i c t

C o u r t t h a t a f a i l u r e by a t a x p a y e r t o p r o t e s t a s p e c i a l

a s s e s s m e n t o r improvement t a x when g i v e n a n o p p o r t u n i t y t o
do s o a t a p u b l i c h e a r i n g , e s t o p s t h e t a x p a y e r from a l a t e r

c h a l l e n g e , t h e r e l i a n c e on t h a t d e c i s i o n i s improper.             In
Power, t h e j u r i s d i c t i o n o f t h e C i t y t o annex and assess w a s

n o t challenged a s being void - i n i t i o .
                                ab                                  I n t h a t opinion,
although we found Power to have been estopped from chal-
lenging the assessment, we also wrote:
        "Of course, if the fact that plaintiff's prop-
        erty cannot receive any benefit from the im-
        provement appeared from the face of the city's
        proceedings, --- of jurisdiction would -
                      the want                       be
        apparent, - - a collateral attack --
                  and                      upon the
        assessment could be maintained. But such is
        not the case hr.
                      ee"     43 Mont. at 343.  (Empha-
        sis added.)
     Where there is a substantial defect in the original
proceedings, which operates to deprive a city of the juris-
diction to act from the outset, estoppel will not bar a
taxpayer's prayer for relief.
     We note with disapproval that this case, after submis-
sion to the trial judge, languished in the hands of the
district judge some 415 days.     In our opinion, this period
between submission and decision was far too long and unneces-
sary.    Judicial delay in this decision has caused additional
costs to the City and unnecessary expense to the taxpayer.
        For lack of the State's consent and failure of the City
of Great Falls to comply with the requirements of the stat-
ute, we reverse.
                                                                  .
                                                 --
                                                  ,
We concur:


    phief Justice,,




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    ,
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      Justices            \
