CARKULIS v DOE

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No. 12548 I N THE SUPREME C U T QF THE STATE O MONTANA OR F 1974 THEODORE CARKULIS, D i r e c t o r of t h e Department of S o c i a l and R e h a b i l i t a t i o n S e r v i c e s of t h e S t a t e o f Montana, Petitioner, J O H N DOE, i n d i v i d u a l l y and on behalf of a l l o t h e r s i m i l a r l y s i t u a t e d , Respondents. ORIGINAL PROCEEDING: For P e t i t i o n e r : Thomas H. Mahan argued, Helena, Montana For Respondents: Steven L . Bunch argued, Helena, Montana Nick R o t e r i n g appeared, Helena, Montana N e i l Haight appeared, Helena, Montana For Amicus Curiae: James B. Wheelis, Missoula, Montana , 5 , I :/?d . ( .. :I3 , Submitted : Januaq- -&By 1974 Decided Filed : lh'U8' 7 1974 :m7 1914 Mr. Justice John C. Harrison delivered the Opinion of the Court. This is an original proceeding brought by the director of the Department of Social and Rehabilitation Services for the purpose of obtaining a declaratory judgment under Title 93, Chapter 89, R.C.M. 1947. Petitioner requests this Court to declare H.B. 60 of the Forty-third Legislative Assembly unconstitutional. The named respondent, a property owner of Lewis and Clark County, appears individually and on behalf of others similarly situated. The Court invited participation of those interested in the outcome of the proceedings. The essential allegations of the petitioner's complaint are : 1. That the respondents, individually and as a class, own real estate in the State of Montana upon which has been placed liens by reason of the fact that they have applied for and are receiving or have received at some time since July 1, 1953, welfare assistance through the old age assistance or aid to the disabled assistance plans of the Welfare Act. 2. That, as a condition precedent to receiving said assistance, all such recipients have been required to sign an agreement for a lien on real property, acknowledging and agreeing that the amount of all assistance thereafter paid to the applicant shall constitute an obligation and an indebtedness of the applicant or recipient to the state and county. 3. That there are approximately 100,000 individuals who have received aid over the period from 1953 who now have liens against their property in the 56 counties of the state. 4. That petitioner acts as an agent for the 56 counties and the federal government in the recovery of benefits paid, and that over the years the counties, state and federal government have benefited to the extent of approximately a quarter million dollars, ($250,000) p e r y e a r . 5. That under t h e l i e n law, s e c t i o n 91-3601, R.C.M. 1947, t h e l i e n h a s a No. 4 p r i o r i t y i n t h e o r d e r o f payment o f e s t a t e debts. Under t h e p r o v i s i o n s o f H.B. 60, t h a t p r i o r i t y d r o p s t o No. 5 c a t e g o r y , t h a t of a g e n e r a l c r e d i t o r , and t h a t i n s u c h a c l a s s t h e s t a t e would s u f f e r a r e d u c t i o n of a r e c o v e r y i f n o t a t o t a l l o s s of i t s c l a i m as a g e n e r a l c r e d i t o r . There a r e no q u e s t i o n s of f a c t t o be l i t i g a t e d . There r e m a i n . o n l y q u e s t i o n s of law f o r o u r c o n s i d e r a t i o n : (1) Could t h e L e g i s l a t u r e r e t r o a c t i v e l y r e n d e r l i e n s on r e a l p r o p e r t y u n e n f o r c e a b l e i n view of t h e p r o v i s i o n s of t h e Montana C o n s t i t u t i o n ? ( 2 ) I n t h e e v e n t t h a t H.B. 60 i s u n c o n s t i t u t i o n a l , f o r t h e r e a s o n t h a t t h e L e g i s l a t u r e may n o t r e n d e r w e l f a r e l i e n s on r e a l p r o p e r t y u n e n f o r c e a b l e i n a r e t r o a c t i v e manner, would t h e e n t i r e a c t be n u l l and v o i d , o r o n l y t h a t p o r t i o n t h a t i s r e t r o a c t i v e i n nature? P r i o r t o c o n s i d e r i n g t h e two above i s s u e s w e n o t e t h a t i n a r e c e n t o p i n i o n o f t h i s C o u r t , S t a t e e x r e l . R o b e r t L. Woodah1 v. Straub, Mont . 1 P.2d - , 3 1 St.Rep. 138, we h e l d t h a t t h e 1973 L e g i s l a t u r e c o u l d e n a c t p r o s p e c t i v e o r a n t i c i p a t o r y l e g i s l a t i o n t o become e f f e c t i v e J u l y 1, 1973, under t h e t e r m s of t h e 1972 C o n s t i t u t i o n which became e f f e c t i v e on J u l y 1, 1973. A s t o the f i r s t i s s u e presented, t h e r e t r o a c t i v e e f f e c t of t h e A c t , we answer i n t h e a f f i r m a t i v e . A s n o t e d above, from 1953 t o 1973, a s t a t u t o r y l i e n was r e c o r d e d a s s e c u r i t y f o r r e imbursement f o r a l l p e r s o n s r e c e i v i n g s p e c i f i e d a i d g r a n t s . e f f e c t of H.B. The 60 i s t o remove t h e l i e n p r i o r i t y of t h e w e l f a r e c l a i m and r e d u c e i t t o t h a t o f an o r d i n a r y g e n e r a l c r e d i t o r c l a i m . The p e t i t i o n e r a r g u e s t h a t i n s o d o i n g t h e l e g i s l a t u r e d i m i n i s h e d an obligation due the State of Montana and that such action would be clearly unconstitutional under Article 11, 5 31, of the 1972 Constitution of Montana, which provides: "No ex post facto law nor any law impairing the obligation of contracts, or making any irrevocable grant of special privileges, franchises, or immunities, shall be passed by the legislature." We do not agree with petitioner's position. We have care- fully examined the authorities cited in the briefs and find those relied upon by the respondent to be more persuasive. In 1942 the Supreme Court of Indiana in a factual case very similar to this case, County Dept. of Pub. Welfare v. Potthoff, 44 N.E.2d 494, held that the state's contractual rights were not subject to the protection of the contract clause stating: "While the contract clause of the Constitution protects parties dealing with the state, it does not, of course, affect the validity of statutes releasing obligations due the state. * * * " In Potthoff the court found that the real party in interest to the contract was the state, not the State Welfare Department, thus the statute was merely a voluntary release of the contractual right of the contracting party. The rationale of the Potthoff decision indicates that the grant to an agency of the state does not, and cannot, vest rights and can thus be both retroactively and prospectively repealed by the Legislature. H.B. 60 is, therefore, a legitimate and con- stitutional exercise of legislative power. 16 C.J.S. Constitu- tional Law 5 243; 29 ALR 2d 731. Having affirmatively decided the first issue we need not consider the second. The judgment is affirmed. A We concur: '. Chief Justice . < ,,-;,,--,*--2------------------ Justices

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