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, 

-VSMONTANA 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: , jC . jq78 $4 r.. 
Mr. 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 to that court for a 

writ of prohibition and mandamus directing the State Department 

of Revenue to desist from allowing the transfer of a liquor 

license from ~ddie's Club to the Silvertip Lounge and Liquor Store 

in Missoula. 

Plaintiffs are Missoula residents in the area near the 

intersection of Southwest Higgins and Bancroft Avenues in 

Missoula, and live close to the new Silvertip Lounge and Liquor 

Store. In seeking to prevent intervenor Jack C. Seitz from 

operating the new lounge and liquor store, plaintiffs petitioned 

the District Court for the writ. 

The dispute revolves around the interpretation of section 

4-4-203, R.C.M. 1947, which provides: 

"Lapse of license for nonuse. From and after 

February 1, 1949, any retail license issued pursuant 

to this code * * * not actually used in a going 

establishment for a period of ninety (90) days, shall 

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 shall be refundable. * * *" (Emphasis 

added. ) 

Plaintiffs contend that Seitz, in transferring the liquor license 

to his new place of business, did not do so within the 90 day 

period and he therefore lost his right to the license. 

The District Court issued a temporary writ and set March 

4, 1977, as the date for a show cause hearing. At the hearing, 

license holder Jack Seitz and other investors in the new liquor 

establishment were allowed to intervene without objection from 

plaintiffs. On March 29, the District Court quashed the writ and 

dismissed the petition and plaintiffs appeal. 
Seitz is the holder of an all beverage retail liquor 

license used formerly at Eddie's Club at 428 North Higgins 

Avenue in Missoula. On August 9, 1976, he submitted an application 

to transfer the location of the license to the Silvertip Lounge, 

a proposed facility not then constructed, located at the intersection of Southwest Higgins and Bancroft Avenues. The new location was zoned to allow a bar and was bordered by commercial 

businesses to 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. No one appeared to protest the 

transfer. Nor did Seitz or any of his investors appear at the 

hearing. On September 16, 1976, the licensing authority granted 

the application for transfer subject to compliance with health 

regulations and final inspection. 

Following this conditional approval of the license transfer, 

Seitz and his investors obtained financing for the purchase of 

the property and for construction of the new building. Seitz 

continued to operate Eddie' s Club until February 13, 1977, at 

which time he closed the business to 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. On May 

5, 1977, Seitz requested an extension of time for nonuse of the 

license past 90 days, pursuant to section 4-4-203, because he was 

not quite ready to open for business. An extension was granted 

from May 13 to May 31, but Seitz used only one day of the extension 

before he opened for business on May 14. 
Plaintiffs contend that at 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 to 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 is silent as to whether it applies to 

transfers of an existing license to another place of business. 

However, plaintiffs 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 time for non-use of a license * * * 

shall furnish written evidence, certified to be 

correct, of the reasons for his failure to place 

said license in operation within the time prescribed." 

This reliance is misplaced. This regulation does not apply to 

transfer of a license. It applies only to 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 (MAC 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 plaintiffs' 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 all the 

financing, purchase the property, build new premises and actually 

commence business. This approach is supported by neither logic nor 

fairness. 
Plaintiffs ignore reality by contending the 90 day period of 

nonuse commences upon conditional approval, and the right to 

transfer vested on that date, subject to divestment only upon 

failure to meet health requirements and inspection. The fair and 

logical answer is that the license continues in the old place of 

business (as long as it is actively being used) until the ultimate 

transfer is approved by the licensing authority. 

The order of the licensing authority granting conditional 

approval on September 16, 1976, stated: 

"The application for transfer of ownership 

and/or location of the license above-described is 

approved, subject to favorable final inspection of 

the premises and compliance with the rules and regulations of the Department of Health and Environmental 

Sciences .'I 

A related letter dated October 29, 1976, stated: "This letter 

does not constitute authority for the purchase and/or sale of 

alcoholic beverages." Surely the purchase and sale of liquor 

are the primary rights of a license holder which are implied 

under section 4-4-104, R.C.M. 1947. The true use of the license 

does not take place at the new premises until liquor can be sold. 

The bureau chief of the licensing authority testified 

that the usual procedure of the licensing authority is not to 

recognize transfer of the license until the date of final approval. 

until that time the licensing ,authority allows the applicant to 

operate under the license on the former premises. 

A similar situation was faced in 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 for transfer of his 

license was justified, to the end that he might 

ascertain the attitude of the municipal body with 

respect thereto. Otherwise, he would have been 

burdened with the expenditure of a large sum of 
money to erect and construct a building on the 

vacant lot in question at the risk of the possible 

refusal of the municipal body to approve such a 

transfer .I1 

The New Jersey court also recognized that the established practice of the board allowing use of the license in the former location was given "great weight * * *, especially where no legislative 

action has been subsequently taken to indicate a contrary view 

Here, it is also clear that the licensing authority is 

empowered by statute to take the action it 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 to this code; 

"(i) Without in any limiting, or being limited 

by the foregoing, to do all such things as are deemed 

necessary or advisable by the department for the purpose of carrying into effect the provisions of this 

code, or the regulations made thereunder." 

Moreover, section 4-4-206(3), R.C.M. 1947, allows a transfer of 

location "to do justice to the licensee applying for the transfer" 

subject to "sanitary, health and service facilities * * *.I1 These 

statutes surely empower the licensing authority to allow the 

license transfer applicant to continue his livelihood while final 

approval of the transfer is pending. 

Plaintiffs also argue that only their interpretation will 

prevent abuse of the liquor license system through speculation on 

population growth. They use the example of a transfer of a rural 

license to a location just outside the city limits, and then holding 

the license at the original location until the city limits 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 exist, it does not exist 
under the facts here. Immediately upon conditional approval, 

Seitz and his investors obtained financing and commenced construction of the new facility, notifying the licensing authority that 

completion would be in mid-May 1977. Completion occurred on 

schedule. Furthermore, we cannot believe the licensing authority 

is without power to prevent speculation in the manner suggested by 

plaintiffs. 

Under the circumstances presented here, it is clear that 

nonuse of the license as contemplated by section 4-4-203 did not 

commence until Seitz closed ~ddie's Club on February 13. Within 

90 days thereafter he was obligated to either open for business 

in his new establishment or obtain an extension. He obtained an 

extension within the 90 day period and actually used only one day 

of the extension. Accordingly, Seitz was not in violation of the 

statute. 

Plaintiffs did not raise the issue of the sufficiency 

of the notice of application for transfer. However, for future 

cases we feel it necessary to comment on the notice in this case 

as it relates to the public's right to know. It is doubtful 

plaintiffs -would have filed this action if they had received a 

meaningful notice of the hearing to be held on Seitz's application for transfer of his license. 

Section 4-4-302(1), R.C.M. 1947, requires, inter alia, , 

that notice of application for a liquor license or transfer of a 

liquor license be published once a week for two consecutive weeks 

in a local newspaper and that a hearing date in Helena be set to 

hear anyone who has a protest. The statutory form of notice which 

applied to this case provided: 
"NOTICE OF APPLICATION FOR RETAIL ALL-BEVERAGES 

LICENSE 

"Notice is hereby given that on the - day 

of 19 , one (name of applicant) filed an 

application for a retail all-beverages license 

with the Montana department of revenue, to be 

used at (describe location of premises where 

beverages are to be sold), and protests, if any 

there be, against the issuance of such license 

will be heard at the hour of - M, on the - 

day of -, 19, at the office of the Montana 

department of revenue in Helena, Montana." 

(Emphasis added.) 

The notice published in the instant case stated it was 

an application for a transfer of a license, and complied with 

the statute in all important particulars. 

Plaintiffs stated they did not see the notice when it was 

published in the newspaper and for this reason did not attend 

the hearing to protest the building of a liquor establishment 

so near their homes. They first realized what was being built 

on the property involved after Seitz started construction. 

Plaintiffs freely admit their only purpose in applying for the 

writ and mandamus was a last ditch attempt to prevent the liquor 

store from being operated at its new location. 

The notice published in the newspaper described the 

proposed new premises by its legal description. This is hardly 

terminology that a layman could understand. The notice in these 

situations is such that it is meaningless to all but the well 

versed in legalese. 

Notice is the first procedural cornerstone of due process 

of law. Without it the remaining procedural rights cannot be 

effectively exercised, if at all. The notice provisions set out 

in statutes are minimum requirements and there is no certainty that 

all of them give adequate notice. Those public agencies that are 

charged with conducting the public's business through hearings, 
have the right and indeed, often the duty to provide additional 

notice other than the minimum required by statute or by their own 

rules. 

For example, in the present case the street of the proposed 

liquor establishment could have been given, together with a statement that it would be located at the intersection of Southwest 

Higgins and Bancroft Avenues. In addition, a proposed new 

establishment may be located near familiar landmarks, long 

established and well known stores or other businesses, and could 

be easily pinpointed by such references. It would be a simple 

matter to tie the property to the landmarks involved, so that 

citizens most likely affected would have a better chance to know 

the proposed location of the new business. The notice could tell 

the public they could send written and signed protests to Helena 

in advance of the hearing date. If these letters were to be used 

as a basis to deny the application, the applicant could be 

notified before a final determination and he could be granted 

an opportunity to meet the information contained in the letters. 

Nor do we think it necessary or advisable to stop at the 

legal section of the newspapers for the publication of notices. 

The agency could also issue a news release which would be more 

likely to reach the public and, accordingly, those who may be 

most affected by the proposed action. We think it safe to assume 

that only those who have a specific interest in the legal notice 

section of the newspaper will ever take the time to read it 

regularly. We do not think there is a duty to read the legal notice 

section of the newspaper every day if one wants to be notified that 

a lounge and liquor store might be built next to his home. 

In the situation here it is most likely the residents near 

the proposed new lounge and liquor store would have the greatest 
interest in providing input to the licensing authority, as to 

the propriety of the location. If the licensing authority is in 

fact interested in the opinions of the citizenry it would be simple 

enough to require the posting of the property involved. This could 

be done with conspicuous signs and conspicuous lettering, placed 

at or near the proposed location where the affected public would 

be most likely to see them. The signs, for example, could state 

that the location was proposed for a new lounge and liquor store and 

state the time and place for the hearing of any protests. In this 

regard the states of Arizona (2 Ariz. Rev.St. Anno. $4-201) and 

New Mexico (N.M.Stat. Anno. $46-4-11) require notice to be conspicuously posted at the proposed place of business of a new liquor 

establishment . 

In view of the circumstances in this case, we do not deem it 

unusual that no protestors traveled to Helena or wrote to Helena, 

and that the applicant and his investors were so assured of a 

successful transfer that they did not bother to show up at the hearing. 

Too often the dealings of commerce are enshrouded in secrecy, encouraged by governmental acquiescence. This cannot be tolerated where 

the public has the right to be informed by the government of the 

proposed actions of the commercial world. It is the obligation of 

government to effectively inform the public wherever the public 

has a right to know, and the government cannot squeak by in every case 

by complying only with the minimum statutory requirements of notice. 

Due process of law is more meaningful than that. 

In view of the circumstances as exist in this case, and 

that the issue of notice was not raised in the trial court or on 

appeal, the decision of the District Court is 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. 

bd J.%&Q 

Chief Justice 

Mr. Justices Gene B. Daly and Mr. Justice John C. Harrison: 

We concur with the above special concurrence of Mr.