Case Title: Dubray v. Howshar

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1994-10-28T00:00:00Z

Document:
Dubray v. Howshar1994 WY 118884 P.2d 23Case Number: 93-244Decided: 10/28/1994Supreme Court of Wyoming
Gordon T. DUBRAY and 
Linda Dubray, husband and wife,

Appellants 
(Plaintiffs),

v.

Edward G. HOWSHAR and 
Mary Virginia Howshar,

Appellees 
(Defendants).

 

Appeal from District 
Court of Goshen County, Keith G. Kautz, J.

 

Representing 
Appellants:

John J. Maier, 
Torrington.

Representing 
Appellees:

Frank J. Jones, 
Wheatland.

Before 
GOLDEN, C.J., THOMAS, CARDINE* and MACY, JJ., and BROWN, J., 
Retired.

CARDINE, Justice, 
Retired.

[¶1]      This case 
involves an action for personal injury damages arising out of a gunshot wound 
suffered by Gordon Dubray while patronizing a bar and restaurant in Torrington, 
Wyoming. The plaintiffs, a married couple, appeal the trial court's grant of 
summary judgment to the sellers by contract for deed of the bar and 
restaurant.

[¶2]      We 
affirm.

I. 
ISSUES

[¶3]      Appellants, 
plaintiffs below, raise one issue:

Did the trial court err 
in granting summary judgment to appellees when appellees are not entitled to 
judgment as a matter of law and when genuine issues of material fact 
exist?

II. 
FACTS

[¶4]      On January 3, 
1989, Edward G. Howshar and Mary Virginia Howshar (Howshars), husband and wife, 
purchased what is now known as the Sugar Hill Restaurant and Lounge (Sugar Hill) 
located in Torrington, Wyoming. In November 1989, the Howshars orally leased 
Sugar Hill to Louis, Steve, and Alice Carabajal for a term of six months with an 
option to renew the lease. On December 6, 1989, Edward Howshar obtained a retail 
liquor license in his name for Sugar Hill. Also on December 6, 1990, Alice 
Carabajal (Carabajal) exercised her option to renew the lease from the Howshars. 
The second lease granted Carabajal an option to purchase Sugar Hill.

[¶5]      On November 8, 
1990, Edward Howshar successfully renewed the liquor license for Sugar Hill. 
That license was valid from December 6, 1990, until December 5, 1991, and was 
issued to Edward Howshar. On September 30, 1991, Edward Howshar again applied 
for renewal of the liquor license. 

[¶6]      On October 24, 
1991, Carabajal exercised her option to purchase Sugar Hill and entered into an 
installment agreement with the Howshars. The terms of that agreement provided: 
(1) that Carabajal would pay $10,000.00 down, make monthly installments until 
principal and interest were satisfied, pay property taxes after the date of the 
agreement, insure the premises, and maintain the premises in good condition; and 
(2) that the Howshars provide merchantable title, execute a warranty deed, and 
give Carabajal possession of the premises. The agreement also contained the 
following escrow clause:

9. ESCROW 
PROVISION: A copy of this Agreement, a Warranty Deed executed by Seller, 
a Quitclaim Deed executed by Purchaser, the abstract of title or title insurance 
policy, the re-assignment of liquor license and the casualty insurance policy as 
provided for herein shall be placed in escrow at Tri-County Federal Savings and 
Loan Association, Wheatland, Wyoming, without liability to said agent except the 
duty to account. All payments due hereunder shall be paid to the escrow agent 
for credit to Seller. Upon full performance of the terms of this Agreement by 
Purchaser, the escrow agent shall deliver all documents to the Purchaser. In the 
event of any default by Purchaser and upon written demand therefor, all 
documents shall be delivered to Seller.

In addition, 
under the agreement the Howshars retained the right to inspect Sugar Hill to 
insure that Carabajal properly maintained the premises, and they retained a veto 
power over any transfer or assignment of Sugar Hill or the 
agreement.

[¶7]      Also on October 
24, 1991, the Howshars executed an assignment of Sugar Hill's liquor license to 
Carabajal. The assignment was made subject to Carabajal's ability to obtain 
approval for the transfer and required Carabajal to promptly apply for that 
approval. On November 6, 1991, after the installment sales agreement had been 
executed, Sugar Hill's liquor license was renewed and issued again in Edward 
Howshar's name.

[¶8]      Sometime during 
the evening of January 18, 1992, and the early morning hours of the next day, 
Gordon Dubray was shot in the right leg by an intoxicated Jose Luis 
Paramo-Quiroz (hereinafter the gunman) while at Sugar Hill. On January 12, 1993, 
Gordon Dubray and his wife, Linda Dubray, filed this action against Sugar Hill's 
owner before the Howshars, the Howshars, Carabajal, the gunman and the owner of 
the gun.

[¶9]      In their amended 
complaint, the Dubrays alleged that the Howshars were negligent in supervising 
Sugar Hill and for entrusting the control and operation of Sugar Hill and its 
liquor license to Carabajal, that the Howshars violated duties imposed by liquor 
licensing statutes, and that the Howshars were liable under nuisance 
statutes.

[¶10]   On May 28, 1993, the Howshars moved 
for summary judgment and filed supporting affidavits and exhibits. After the 
Dubrays filed a memorandum opposing summary judgment and supporting documents, 
the trial court, on September 15, 1993, granted the Howshars' motion for summary 
judgment and a W.R.C.P. 54(b) certification permitting this appeal. The case 
against the remaining defendants is still pending in the trial 
court.

III. 
DISCUSSION

[¶11]   We sustain summary judgment if: (1) 
there are no genuine issues of material fact, and (2) based on those undisputed 
material facts the prevailing party is entitled to judgment as a matter of law. 
W.R.C.P. 56. Success in negligence actions hinges on proof of four elements - 
defendant's duty, defendant's breach of that duty, that the breach proximately 
caused the alleged injury, and the alleged injury. The failure to establish any 
one of the four elements is fatal to a claim of negligence. Claassen v. Nord, 
756 P.2d 189, 194 (Wyo. 1988). The Howshars are, therefore, entitled to summary 
judgment if the material facts are undisputed and those undisputed facts 
demonstrate that at least one of the elements of negligence is 
absent.

[¶12]   The existence of the first element, 
duty, is a "matter of law for the court to decide." Goodrich v. Seamands, 
870 P.2d 1061, 1064 (Wyo. 1994) (citing ABC Builders, Inc. v. Phillips, 
632 P.2d 925, 931 (Wyo. 1981)). 

Common Law 
Claim

[¶13]   The Dubrays contend that the 
Howshars have a duty, as holders of legal title to Sugar Hill and as holders of 
the liquor license, to exercise reasonable care to avoid injuries to others 
while they are at Sugar Hill. The Howshars, however, assert that because they 
sold Sugar Hill before Dubray was shot they owed no duty to the 
Dubrays.

[¶14]   This court has adopted § 353 of the 
Restatement, Second, Torts to define the standard of care owed by vendors of 
real property. See ABC Builders, Inc., 632 P.2d  at 932; Goodrich, 
870 P.2d  at 1064. When the purchaser of land (vendee) takes possession of the 
land, the seller (vendor) has a duty to disclose any natural or artificial 
condition that creates an unreasonable risk to persons on the land if: (1) the 
vendee does not know or have reason to know of the condition or the risk, (2) 
the vendor knows or has reason to know of the condition, (3) the vendor realizes 
or should realize the risk involved, and (4) the vendor has reason to believe 
that the vendee will not discover the condition or realize the risk. 
Goodrich, 870 P.2d  at 1064 (citing Restatement, Second, Torts § 
353).

[¶15]   The Dubrays contend that the 
Howshars are not "vendors" but should be classified as owners or lessors of 
Sugar Hill and subject to a duty of reasonable care under the circumstances 
because they retained sufficient control over Sugar Hill under the installment 
contract and by virtue of the liquor license. Legal treatises agree that a 
"vendor" of real property is one "who parts with title, possession and control" 
of that property. W. Page Keeton, Prosser and Keeton On Torts § 64 at 446 (5th 
ed. 1984), Restatement, Second, Torts § 351 comment a. Thus, we must determine 
whether the Howshars have parted with title, possession and control of Sugar 
Hill.

[¶16]   It is undisputed that the Howshars 
no longer possess Sugar Hill and that they executed a warranty deed to 
Carabajal, which is held in escrow. This court has held:

When property is sold 
under a valid contract and an escrow created, the purchaser under the 
contract is the equitable owner and assumes all the risk, including 
liability of ownership, while the seller holds legal title in trust for the 
purchaser as security for the performance of the contract.

Mayflower 
Restaurant, Co. v. Griego, 741 P.2d 1106, 1113 
(Wyo. 1987) (emphasis added). Therefore, in addition to no longer being in 
possession of Sugar Hill, the Howshars no longer hold title because Carabajal is 
the equitable owner.

[¶17]   The Dubrays contend that the 
Howshars retained control over Sugar Hill and should be treated as owners or 
lessors because Mr. Howshar's name remains on the liquor license and because the 
installment contract requires Carabajal to carry insurance, allows for 
"reasonable inspection," and limits transferability of Sugar Hill. In 
Anderson v. Cosmopolitan Nat'l Bank of Chicago, 54 Ill. 2d 504, 301 N.E.2d 296 (1973), the Supreme Court of Illinois wrote:

[T]he argument is that 
those who sell real estate upon installment contracts should be subjected to a 
different and more strict liability than is imposed upon other vendors * * * 
because of the significant rights that he retains under his contract. These 
rights usually include the right to enter and make repairs and to charge the 
cost to the buyer[,] * * * the right to insure if the buyer fails to do so and, 
in the event of a default on the part of the buyer, has a simple remedy by which 
he may regain possession. We are not persuaded by this argument. Substantially 
similar arguments can be advanced with respect to mortgagees, who have the same 
or substantially similar rights. That the device of the installment contract as 
a means of financing the purchase of real estate is subject to abuse, and indeed 
has been abused, does not mean that it is not a useful credit device or that 
this court should impose upon a contract seller the liability of an owner of 
real estate.

Anderson, 301 N.E.2d at 298-99; 
see also Welz v. Wong, 413 Pa. Super. 299, 605 A.2d 368, 370-71 (1992) 
(holding that liability of a seller under installment contract is the same as a 
conventional vendor and quoting Anderson). As to Dubrays' claim that the 
Howshars retained control over Sugar Hill because of the terms of the 
installment contract, we find the reasoning of the Illinois Supreme Court to be 
persuasive. The very limited rights retained by the Howshars under this contract 
with Carabajal affords them no control over the day to day management of Sugar 
Hill and should not be a basis for imposing liability.

[¶18]   In addition, the simple fact that 
Mr. Howshar's name appears on the liquor license does not give him sufficient 
control over Sugar Hill to support a higher standard of liability. Since the 
Howshars assigned the liquor license to Carabajal, they obviously did not intend 
to use, nor have they used, the liquor license as a means to control Sugar Hill. 
It is also clear that the sales contract with Carabajal was a bona fide sale of 
property and that the Howshars have not been and are not involved in the 
day-to-day management and supervision of Sugar Hill.

[¶19]   Having determined that the Howshars 
have parted with possession, title and control over Sugar Hill, we hold that 
they are vendors who owed no duty to appellants based upon our pronouncements in 
ABC Builders, Inc. We are satisfied, based on the undisputed facts, that 
if anyone had reason to know or knew of the alleged dangerous condition - 
careless operation of a liquor establishment - it was Carabajal, the vendee. And 
there being no dangerous condition of the premises, the Howshars had no duty to 
disclose as required by § 353 of the Restatement.

Statutory 
Claim

[¶20]   In addition to their claims of 
common law duties, the Dubrays assert that Edward Howshar, as the named licensee 
on the liquor license used at Sugar Hill when Mr. Dubray was shot, violated 
several provisions of Wyoming's Alcoholic Beverages Act (Title 12) and that 
those violations proximately caused Mr. Dubray's injuries. The alleged Title 12 
violations are: (1) under W.S. 12-4-102(b), W.S. 12-4-201(a), W.S. 12-4-601 and 
W.S. 12-4-604 (1986), illegal transfer of a liquor license; and (2) under W.S. 
12-8-102 (1986), selling liquor without a proper license.

[¶21]   The undisputed evidence 
demonstrates that Edward Howshar, at the time of Dubray's injury, was not 
selling liquor without a license and, therefore, was not violating any duty 
which may have been imposed under W.S. 12-8-102 (1986). The evidence does 
reflect, however, that Edward Howshar may have been in violation of the statutes 
governing the transfer of liquor licenses because he may not have obtained prior 
approval from the licensing authority before assigning the license to Carabajal, 
as required under W.S. 12-4-601.

[¶22]   In Distad v. Cubin, 633 P.2d 167 (Wyo. 1981), this court adopted §§ 286 through 288C of the Restatement, 
Second, Torts, as guidelines for addressing negligence claims premised on duties 
created by statutes, regulations or ordinances. Id., at 175; see also 
Short v. Spring Creek Ranch, Inc., 731 P.2d 1195, 1198-99 (Wyo. 1987) and 
Dubus v. Dresser Industries, 649 P.2d 198, 202 (Wyo. 1982). Section 286 
provides:

The court may adopt as 
the standard of conduct of a reasonable man the requirements of a legislative 
enactment or an administrative regulation whose purpose is found to be 
exclusively or in part

(a) to protect a class of 
persons which includes the one whose interest is invaded, and

(b) to protect the 
particular interest which is invaded, and

(c) to protect that 
interest against the kind of harm which has resulted, and

(d) to protect that 
interest against the particular hazard from which the harm results.

In other words, 
a statute, regulation or ordinance may be adopted as the standard of care only 
if "the injured party belongs to the class of persons that the statute was 
intended to protect, and the injury is of the type that the statute was intended 
to prevent." Sagebrush Ltd. v. Carson City, 99 Nev. 204, 660 P.2d 1013, 
1015 (1983).

[¶23]   Based on these "directions," we 
must determine whether the four criteria of § 286 are met "because, if * * * 
not, then the statute imposes no duty of care for the breach of which he will be 
heard to successfully complain." Dubus, 649 P.2d  at 202, and see 
Short, 731 P.2d  at 1198-99. "[E]ven if the court finds that the [four] 
criteria of § 286 are met, [the court] is not required to adopt [W.S. 12-4-601] 
as the standard of conduct because of the permissive language of the Restatement 
2d." Short, 731 P.2d  at 1199 (citing Distad, 633 P.2d 
167).

[¶24]   Under W.S. 12-4-604 it is illegal 
to transfer a liquor license except as directed in W.S. 12-4-601, which provides 
in part:

(b) A licensee, or the 
executor or administrator of the estate of a deceased licensee, may assign and 
transfer the license or permit by a sale made in good faith. The assignment and 
transfer shall first have the approval of the licensing authority, which 
consideration shall be based in part upon a public hearing and an application 
filed under oath by the assignee or transferee showing the person or entity to 
be qualified to hold a license or permit under Wyoming law. The approval of the 
transfer shall not be given by the licensing authority if proceedings are 
pending to suspend, revoke or otherwise penalize the original license or permit 
holder. A transfer of a license or permit shall not require the payment of any 
additional license fee for the transfer and upon assignment the assignee may 
exercise the privilege of continuing the business authorized by the license or 
permit.

[¶25]   The district court concluded that 
this statute is purely administrative and, therefore, it does not create a duty 
from the Howshars, as licensees, to the Dubrays. In McClellan v. 
Tottenhoff, this court held that several statutes in Title 12, which forbid 
the sale of liquor to minors, impose a duty on vendors toward the general 
public. McClellan, 666 P.2d 408, 413 (Wyo. 1983). Unlike the statutes in 
McClellan, W.S. 12-4-601 and -604 are not intended to protect the general 
public from physical injury. The requirement that liquor licenses only be 
transferred according to W.S. 12-4-601 serves to assure that the regulatory 
authorities can administer the licensing process in an orderly fashion and that 
"the operator of [a] retail liquor establishment * * * be exposed to the 
scrutiny of the licensing process including a public hearing." Kurpjuweit v. 
Northwestern Dev. Co., Inc., 708 P.2d 39, 46 (Wyo. 1985). Since the purpose 
of W.S. 12-4-601 and -604 is not to protect against the kind of harm suffered by 
the Dubrays - physical injury -, we decline to adopt those statutes as the 
Howshars' standard of care.

Nuisance 
Claim

[¶26]   In their complaint, the Dubrays 
also asserted claims based on Wyoming's nuisance statutes, W.S. 6-6-201 and 
6-6-209, which make it illegal to own, control or lease property "for * * * sale 
or disposition of intoxicating liquor * * * in violation of law." They allege 
that the Howshars' violation of the liquor licensing statutes amounts to a 
nuisance and that it proximately caused Dubray's injuries.

[¶27]   If any nuisance existed, it was not 
created by the Howshars.

[T]he test of liability 
for damage caused by a nuisance turns on whether the defendants were in control 
over the instrumentality alleged to constitute the nuisance, either through 
ownership or otherwise * * * [and] no one is to be held liable for a nuisance 
which he cannot himself physically abate without legal action against another 
for that purpose, unless the nuisance is the result of his own wrongful 
conduct.

58 Am.Jur.2d 
Nuisances §§ 117-118 (1989). Although Edward Howshar's name remained on 
the liquor license, the undisputed facts demonstrate that the Howshars neither 
owned, controlled, maintained nor leased Sugar Hill at the time that Gordon 
Dubray was injured. In addition, since the Howshars had sold Sugar Hill under a 
contract, they were bound by the terms of that contract and would have had to 
resort to legal proceedings to assert any significant control over Sugar Hill. 
Therefore, we hold that no action in nuisance lies against the Howshars because 
they had no control over the alleged nuisance.

IV. 
CONCLUSION

[¶28]   The district court properly entered 
summary judgment in favor of the Howshars because the undisputed material facts 
show that they owed no common law or statutory duty to the Dubrays and, since 
they had little or no control over Sugar Hill, were not liable for nuisance, if 
any there was, created at Sugar Hill.

[¶29]   We affirm.

THOMAS, J., files a dissenting 
opinion.

THOMAS, Justice, 
dissenting.

[¶30]   The product of the majority opinion 
is that accountability with respect to compliance with the laws relating to the 
sale of intoxicating beverages and the transfer of liquor licenses is excused. I 
do not think that result is appropriate, and I dissent.

[¶31]   The major premise of the majority 
opinion is that no duty is owed to third persons by a vendor of real property 
under a contract for deed and, since the Howshars were vendors of real property 
under a contract for deed, they owed no duty to the Dubrays. The majority 
opinion eschews any reference to Scranton v. Whitlock, 389 P.2d 1015 
(Wyo. 1964). Yet the thrust of Scranton is that, because of the violation 
of WYO. STAT. § 12-4-601(b) (1986), the very contract upon which the Howshars 
rely for protection from liability is "illegal, void, and unenforceable." 
Scranton, 389 P.2d  at 1018. As it might apply to the facts of this case, 
in which the liquor license was held by someone other than the owner of the 
building in which it was used, Scranton was reaffirmed in Kurpjuweit 
v. Northwestern Dev. Co., Inc., 708 P.2d 39 (Wyo. 1985).

[¶32]   My primary concern, however, is 
with the application of the statutory provisions relating to local licenses for 
the sale of alcoholic and malt beverages and the transfers of such licenses. In 
this regard, it is clear the county liquor license for the Sugar Hill Restaurant 
and Lounge was issued to Edward G. Howshar. It never was transferred to Alice 
Carabajal in connection with the sale of the business. WYO. STAT. § 12-4-103 
(1986) provides in pertinent part:

(a) A license or permit 
authorized by this title shall not be held by, issued or transferred 
to:

* * * * * *

(iii) Any person who 
does not own the building in which the sales room is located or hold a 
written lease for the period for which the license will be effective containing 
an agreement by the lessor that alcoholic or malt beverages may be sold upon the 
leased premises, except as provided by paragraph (iv) of this subsection * * *. 
(Emphasis added.)

WYO. STAT. § 
12-8-101 (1986) makes violation of any provision of the title a misdemeanor. In 
this instance, either the Howshars were in violation of the law because they 
held a license without owning the building in which the sales room was located; 
they were aiding and abetting a violation of the law by Carabajal for selling 
liquor without a license; or Carabajal was the Howshars' agent in the operation 
of the Sugar Hill Restaurant and Lounge. I would rather assume that any unlawful 
activity was not intended or undertaken, and Carabajal was the Howshars' agent. 
Since the complaint encompasses an adequate allegation of agency, the liability 
of the Howshars should be submitted to trial like any liability of 
Carabajal.

[¶33]   My understanding of our prior 
decisions in this area is that we have adopted a policy that demands 
accountability by the vendor of alcoholic beverages. White v. HA, Inc., 
782 P.2d 1125 (Wyo. 1989); Mayflower Restaurant Co. v. Griego, 741 P.2d 1106 (Wyo. 1987); McClellan v. Tottenhoff, 666 P.2d 408 (Wyo. 1983); 
Fisher v. Robbins, 78 Wyo. 50, 319 P.2d 116 (Wyo. 1957). In 
Tottenhoff, 666 P.2d  at 412, we described "a duty to exercise the degree 
of care required of a reasonable person in light of all the circumstances." In 
the seminal case of Fisher, 319 P.2d  at 126, we said:

We do not intend that 
anything which we have said should be considered as placing us in disagreement 
with the many well-considered statements from reputable authorities as to the 
high degree of care which must be exercised by those maintaining places for 
public patronage, and especially for that class of establishments where 
experience has shown disturbances of more or less violent character are more 
likely to occur. This is, of course, particularly true with respect to barrooms 
and other similar places where intoxicating liquors are consumed, for it is 
common knowledge that the use of intoxicants frequently unduly excites the 
tempers, emotions and actions of those who indulge in them.

Apparently, the 
trial court applied this rule with respect to Carabajal. If the issue of 
liability is to be tried as to Carabajal, it follows that the vicarious 
liability of the Howshars must also be tried.

[¶34]   Applying the accountability of a 
vendor to the holder of the liquor license constitutes an appropriate extension 
of our policy, particularly in an instance such as this in which the only lawful 
utilization of the license would constitute the vendor the agent of the holder 
of the license. I cannot agree the case is appropriately resolved under rules 
relating to the ownership of real property, and I dissent from the decision of 
the majority.

[¶35]   I would reverse the case and remand 
it to the district court for trial on the question of the vicarious liability of 
the holder of the liquor license.

 

FOOTNOTES

*Retired July 
6, 1994.