Case Title: STATE EX REL CORETTE v DEPT OF R

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1978-04-18T00:00:00Z

Document:
No. 13856 IN THE SUPREME COURT OF THE STATE OF MONTANA 1978 STATE OF MONTANA, ex rel., HOLT W. CORETTE, et al., Relators and Appellants, -VS- MONTANA DEPARTMENT OF REVENUE et al., Respondents and Respondents, JACK C. SEITZ, et al., Intervenors and Respondents. Appeal from: District Court of the First Judicial District, Honorable Peter Meloy, Judge presiding. Counsel of Record: For Appellants: Milodragovich, Dale & Dye, Missoula, Montana Harold Dye argued, Missoula, Montana For Respondents: David Jackson, Helena, Montana Robert Corcoran argued, Helena, Montana For Intervenors: Garlington, Lohn and Robinson, Missoula, Montana Ronald B. MacDonald argued, Missoula, Montana Submitted: March 7, 1978 Filed: , j C . jq78 $4 r . . M r . Justice Daniel J. Shea delivered the Opinion of the Court: Plaintiffs appeal from an order of the District Court, Lewis and Clark County, denying their petition t o that court for a w r i t of prohibition and mandamus directing the State Department of Revenue t o desist from allowing the transfer of a liquor license from ~ d d i e ' s Club to the Silvertip Lounge and Liquor Store in Missoula. Plaintiffs are Missoula residents i n the area near the intersection of Southwest Higgins and Bancroft Avenues i n Missoula, and live close t o the new Silvertip Lounge and Liquor Store. In seeking to prevent intervenor Jack C. Seitz from operating the new lounge and liquor store, p l a i n t i f f s petitioned the District Court for the w r i t . The dispute revolves around the interpretation of section 4-4-203, R.C.M. 1947, which provides: "Lapse of license for nonuse. From and a f t e r February 1, 1949, any r e t a i l license issued pursuant t o t h i s code * * * not actually used i n a going establishment for a period of ninety (90) days, s h a l l automatically lapse. Upon determining the fact of nonuser for such period the department shall cancel such license of record and no portion of the fee paid therefor s h a l l be refundable. * * *" (Emphasis added. ) P l a i n t i f f s contend that Seitz, i n transferring the liquor license t o h i s new place of business, did not do so within the 90 day period and he therefore l o s t h i s right t o the license. The District Court issued a temporary w r i t and s e t March 4, 1977, as the date for a show cause hearing. A t the hearing, license holder Jack Seitz and other investors i n the new liquor establishment were allowed t o intervene without objection from p l a i n t i f f s . O n March 29, the District Court quashed the w r i t and dismissed the petition and p l a i n t i f f s appeal. Seitz i s the holder of an a l l beverage r e t a i l liquor license used formerly a t Eddie's Club a t 428 North Higgins Avenue i n Missoula. O n August 9, 1976, he submitted an application to transfer the location of the license t o the Silvertip Lounge, a proposed f a c i l i t y not then constructed, located a t the inter- section of Southwest Higgins and Bancroft Avenues. The new loca- tion was zoned t o allow a bar and was bordered by commercial businesses t o the west, apartments and offices to the south, and single family residents on the east and north. The required statutory notice of the application for transfer was published, and the Liquor Division of the Department of Revenue (the licensing authority) conducted a hearing in Helena on September 10, 1976. N o one appeared t o protest the transfer. Nor did Seitz or any of h i s investors appear a t the hearing. On September 16, 1976, the licensing authority granted the application for transfer subject t o compliance with health regulations and f i n a l inspection. Following t h i s conditional approval of the license transfer, Seitz and h i s investors obtained financing for the purchase of the property and for construction of the new building. Seitz continued t o operate Eddie' s Club u n t i l February 13, 1977, a t which time he closed the business t o help complete construction of the new building. On April 28, 1977, the licensing authority inspected the new premises and completed the transfer of the license. O n M a y 5, 1977, Seitz requested an extension of time for nonuse of the license past 90 days, pursuant t o section 4-4-203, because he was not quite ready to open for business. A n extension was granted from M a y 13 t o M a y 31, but Seitz used only one day of the extension before he opened for business on M a y 14. Plaintiffs contend that a t the time the license transfer was approved, April 28, 1977, the 90 day nonuse provision of section 4-4-203 had already expired, and therefore the licensing authority had no right t o complete the transfer. They argue the period of nonuse commences to run as of the date that conditional approval for the license transfer is obtained. Accordingly, they contend the license automatically lapsed 90 days from September 16, 1976, the date the conditional approval was granted. Section 4-4-203 i s s i l e n t as t o whether it applies t o transfers of an existing license t o another place of business. However, p l a i n t i f f s contend that an administrative regulation ( MAC 42-2.12(6)-S1298(8)) requires such construction. That regulation provides : "Any licensee or applicant requesting an extension of t i m e for non-use of a license * * * s h a l l furnish written evidence, c e r t i f i e d to be correct, of the reasons for h i s failure t o place said license i n operation within the time prescribed." This reliance i s misplaced. This regulation does not apply t o transfer of a license. It applies only t o one who originally applies for a license or one who has the license but has not yet put it into operation by actually commencing business. A separate administrative regulation ( M A C 42-2.12(6)-S12013) specifically covers license transfers and says nothing about the effect of nonuse of a license while a transfer is pending. To adopt p l a i n t i f f s ' argument would mean that in the absence of an extension obtained from the licensing authority, an applicant for transfer of a license must, within 90 days of the date of conditional approval of the license, obtain a l l the financing, purchase the property, build new premises and actually commence business. This approach i s supported by neither logic nor fairness. P l a i n t i f f s ignore r e a l i t y by contending the 90 day period of nonuse commences upon conditional approval, and the r i g h t t o transfer vested on t h a t date, subject t o divestment only upon f a i l u r e t o meet health requirements and inspection. The f a i r and logical answer is t h a t the license continues i n the old place of business (as long a s it is actively being used) u n t i l the ultimate transfer i s approved by the licensing authority. The order of the licensing authority granting conditional approval on September 16, 1976, stated: "The application f o r t r a n s f e r of ownership and/or location of the license above-described is approved, subject t o favorable f i n a l inspection of the premises and compliance with the r u l e s and regu- l a t i o n s of the Department of Health and Environmental Sciences .'I A related l e t t e r dated October 29, 1976, stated: "This l e t t e r does not c o n s t i t u t e authority f o r the purchase and/or s a l e of alcoholic beverages." Surely the purchase and s a l e of liquor a r e the primary r i g h t s of a license holder which a r e implied under section 4-4-104, R.C.M. 1947. The t r u e use of the license does not take place a t the new premises u n t i l liquor can be sold. The bureau chief of the licensing authority t e s t i f i e d t h a t the usual procedure of the licensing authority i s not t o recognize transfer of the license u n t i l the date of f i n a l approval. u n t i l t h a t time the licensing ,authority allows the applicant t o operate under the license on the former premises. A similar s i t u a t i o n was faced i n Passarella v. Board of Commissioners of Atlantic City, (1949), 1 N.J.Super. 313, 64 A.2d 361, 363, where the court stated: "* * * Venafro's application f o r t r a n s f e r of h i s license was j u s t i f i e d , t o the end t h a t he might ascertain the a t t i t u d e of the municipal body with respect thereto. Otherwise, he would have been burdened with the expenditure of a large sum of money t o erect and construct a building on the vacant l o t i n question a t the r i s k of the possible refusal of the municipal body to approve such a transfer . I 1 The N e w Jersey court also recognized that the established prac- t i c e of the board allowing use of the license i n the former loca- tion was given "great weight * * *, especially where no legislative action has been subsequently taken t o indicate a contrary view Here, it is also clear that the licensing authority i s empowered by statute t o take the action i t did. Under the Alcoholic Beverage Code of 1975, the powers of the licensing authority include the following under section 4-1-302, R.C.M. 1947: "(h) To grant and issue licenses under and in pursuance t o t h i s code; " ( i ) Without i n any limiting, or being limited by the foregoing, to do a l l such things a s are deemed necessary or advisable by the department for the pur- pose of carrying into effect the provisions of t h i s code, or the regulations made thereunder." Moreover, section 4-4-206(3), R.C.M. 1947, allows a transfer of location "to do justice t o the licensee applying for the transfer" subject t o "sanitary, health and service f a c i l i t i e s * * *.I1 These statutes surely empower the licensing authority t o allow the license transfer applicant t o continue h i s livelihood while f i n a l approval of the transfer i s pending. P l a i n t i f f s also argue that only t h e i r interpretation w i l l prevent abuse of the liquor license system through speculation on population growth. They use the example of a transfer of a rural license t o a location j u s t outside the c i t y l i m i t s , and then holding the license a t the original location u n t i l the c i t y l i m i t s incorporate the location of the proposed liquor license transfer, thereby automatically increasing the value of the license under an urban classification. While the possibility may e x i s t , i t does not e x i s t under the facts here. Immediately upon conditional approval, Seitz and h i s investors obtained financing and commenced construc- tion of the new f a c i l i t y , notifying the licensing authority that completion would be i n mid-May 1977. Completion occurred on schedule. Furthermore, w e cannot believe the licensing authority i s without power t o prevent speculation i n the manner suggested by plaintiffs. Under the circumstances presented here, it i s clear that nonuse of the license as contemplated by section 4-4-203 did not commence u n t i l Seitz closed ~ d d i e ' s Club on February 13. Within 90 days thereafter he was obligated t o e i t h e r open for business i n h i s new establishment or obtain an extension. H e obtained an extension within the 90 day period and actually used only one day of the extension. Accordingly, Seitz was not i n violation of the statute. P l a i n t i f f s did not raise the issue of the sufficiency of the notice of application for transfer. However, for future cases w e f e e l it necessary t o comment on the notice i n t h i s case as it relates t o the public's right t o know. It is doubtful p l a i n t i f f s -would have f i l e d t h i s action i f they had received a meaningful notice of the hearing to be held on Seitz's applica- tion for transfer of h i s license. Section 4-4-302(1), R.C.M. 1947, requires, i n t e r a l i a , , that notice of application for a liquor license or transfer of a liquor license be published once a week for two consecutive weeks i n a local newspaper and that a hearing date i n Helena be s e t t o hear anyone who has a protest. The statutory form of notice which applied t o t h i s case provided: "NOTICE OF APPLICATION FOR RETAIL ALL-BEVERAGES LICENSE "Notice i s hereby given that on the - day of 19 , one (name of applicant) f i l e d an application for a r e t a i l all-beverages license with the Montana department of revenue, t o be used a t (describe location of premises where beverages are t o be sold), and protests, i f any there be, against the issuance of such license w i l l be heard a t the hour of - M, on the - day of - , 1 9 , a t the office of the Montana department of revenue i n Helena, Montana." (Emphasis added.) The notice published i n the instant case stated it was an application for a transfer of a license, and complied with the s t a t u t e i n a l l important particulars. P l a i n t i f f s stated they did not see the notice when it was published i n the newspaper and for t h i s reason did not attend the hearing t o protest the building of a liquor establishment so near their homes. They f i r s t realized what was being b u i l t on the property involved a f t e r Seitz started construction. Plaintiffs freely admit their only purpose i n applying for the w r i t and mandamus was a l a s t ditch attempt t o prevent the liquor store from being operated a t i t s new location. The notice published i n the newspaper described the proposed new premises by i t s legal description. This i s hardly terminology that a layman could understand. The notice i n these situations i s such that it i s meaningless t o a l l but the well versed i n legalese. Notice is the f i r s t procedural cornerstone of due process of law. Without it the remaining procedural rights cannot be effectively exercised, i f a t a l l . The notice provisions s e t out i n statutes are minimum requirements and there is no certainty that a l l of them give adequate notice. Those public agencies that are charged with conducting the public's business through hearings, have the r i g h t and indeed, often the duty t o provide additional notice other than the minimum required by s t a t u t e o r by t h e i r own rules. For example, i n the present case the s t r e e t of the proposed liquor establishment could have been given, together with a s t a t e - ment t h a t it would be located a t the intersection of Southwest Higgins and Bancroft Avenues. I n addition, a proposed new establishment may be located near familiar landmarks, long established and well known stores o r other businesses, and could be e a s i l y pinpointed by such references. It would be a simple matter t o t i e the property t o the landmarks involved, so t h a t c i t i z e n s most l i k e l y affected would have a b e t t e r chance t o know the proposed location of the new business. The notice could t e l l the public they could send written and signed protests t o Helena i n advance of the hearing date. I f these l e t t e r s were t o be used a s a basis t o deny the application, the applicant could be n o t i f i e d before a f i n a l determination and he could be granted an opportunity t o meet the information contained i n the l e t t e r s . Nor do w e think it necessary or advisable t o stop a t the l e g a l section of the newspapers f o r the publication of notices. The agency could a l s o issue a news release which would be more l i k e l y t o reach the public and, accordingly, those who may be most affected by the proposed action. W e think it s a f e t o assume t h a t only those who have a specific i n t e r e s t i n the l e g a l notice section of the newspaper w i l l ever take the time t o read it regularly. W e do not think there i s a duty t o read the l e g a l notice section of the newspaper every day i f one wants t o be n o t i f i e d t h a t a lounge and liquor s t o r e might be b u i l t next t o h i s home. I n the s i t u a t i o n here it i s most l i k e l y the residents near the proposed new lounge and liquor s t o r e would have the g r e a t e s t i n t e r e s t i n providing input t o the licensing authority, as t o the propriety of the location. I f the licensing authority is i n f a c t interested i n the opinions of the citizenry it would be simple enough t o require the posting of the property involved. This could be done with conspicuous signs and conspicuous l e t t e r i n g , placed a t or near the proposed location where the affected public would be most l i k e l y t o see them. The signs, f o r example, could s t a t e t h a t the location was proposed f o r a new lounge and liquor s t o r e and s t a t e the time and place f o r the hearing of any protests. I n t h i s regard the s t a t e s of Arizona (2 Ariz. Rev.St. Anno. $4-201) and N e w Mexico (N.M.Stat. Anno. $46-4-11) require notice t o be conspicu- ously posted a t the proposed place of business of a new liquor establishment . I n view of the circumstances i n t h i s case, we do not deem it unusual t h a t no protestors traveled t o Helena o r wrote t o Helena, and t h a t the applicant and h i s investors were so assured of a successful t r a n s f e r t h a t they did not bother t o show up a t the hearing. Too often the dealings of commerce a r e enshrouded i n secrecy, en- couraged by governmental acquiescence. This cannot be tolerated where the public has the r i g h t t o be informed by the government of the proposed actions of the commercial world. It i s the obligation of government t o effectively inform the public wherever t h e public has a r i g h t t o know, and the government cannot squeak by i n every case by complying only with the minimum statutory requirements of notice. Due process of law is more meaningful than t h a t . I n view of the circumstances a s e x i s t i n t h i s case, and t h a t the issue of notice was not raised i n the t r i a l court o r on appeal, the decision of the D i s t r i c t Court i s affirmed. Mr. Chief Justice Frank I. Haswell, specially concurring: I concur in the result and the interpretation of the statute on which it is based. However, the discussion of notice is beyond the issues in the case and should not be included in the opinion in my view. b d J.%&Q Chief Justice Mr. Justices Gene B. Daly and Mr. Justice John C. Harrison: We concur with the above special concurrence of Mr.