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. JusticeDaniel 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 writof prohibition and mandamus directing the StateDepartment of Revenue to desist from allowing the transfer of a liquor license from ~ddie's Club to the SilvertipLounge and Liquor Store inMissoula. Plaintiffs areMissoula residents inthe area near the intersectionof Southwest Higgins and Bancroft Avenues in Missoula, and live close to the new SilvertipLounge 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 thiscode

# *** not actually used ina 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 shallbe refundable. 

# ***" (Emphasis added.) Plaintiffs contend that Seitz, in transferring the liquor license tohisnew place of business, didnot do sowithin the 90 day period and he therefore lost his right to the license. The District Court issued a temporary writand setMarch 4, 1977, as the date for a show cause hearing. Atthe 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 writand dismissed the petition and plaintiffs appeal.Seitz isthe holder of an allbeverage retail liquor license used formerly atEddie's Club at428 North Higgins Avenue inMissoula. On August 9, 1976, he submitted an application to transfer the location of the license to the SilvertipLounge,

a proposed facilitynot then constructed, located atthe intersection of Southwest Higgins and Bancroft Avenues. The new locationwas zoned toallow a bar and was bordered by commercial businesses to thewest, apartments and offices to the south, and single family residents on the east and north. The required statutorynotice 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 toprotest the transfer. Nor did Seitz or any of his investors appear atthe hearing. On September 16, 1976, the licensing authority granted the application for transfer subject tocompliance with health regulations and finalinspection. Following this conditional approval of the license transfer, Seitz and his investors obtained financing for thepurchase of the property and for construction of the new building. Seitz continued tooperate Eddie'

### s Club untilFebruary 13, 1977, at which time he closed thebusiness tohelp complete construction of the new building. OnApril 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 fornonuse of the license past 90 days, pursuant to section4-4-203, because he was not quite ready to open forbusiness. An extension was granted fromMay 13toMay 31, but Seitzused only one day of the extension before he opened forbusiness on May 14.Plaintiffs contend that atthe time the license transfer

was approved, April 28, 1977, the 90 day nonuse provision of section4-4-203 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 silentas towhether 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 timefornon-use of a license

# *** shall furnishwritten evidence, certified tobe correct, of the reasons forhis failure toplace said license inoperationwithin the time prescribed." This reliance ismisplaced. This regulation does not apply to transfer of a license. It applies only toone who originally applies for a license or one who has the licensebut 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 ispending. 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 allthe financing, purchase the property, build new premises and actually

commence business. This approach is supported by neither logic nor fairness.Plaintiffs ignore realityby 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 tomeet health requirements and inspection. The fairand logical answer is that the license continues inthe old place of business (as long as it is activelybeing 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 alcoholicbeverages." Surely the purchase and saleof liquor

are the primary rights of a licenseholder which are implied under section 4-4-104, R.C.M. 1947. The true use of the license does not take place atthe new premises until liquor can be sold. The bureau chief of the licensing authority testified that the usual procedure of the licensing authority isnot to recognize transfer of the license until the date of final approval. until that time the licensing ,authorityallows the applicant to operate under the license on the former premises. A similar situationwas faced inPassarella v. Board of Commissioners of Atlantic City, (1949), 1N.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 thathe might ascertain the attitude of the municipal body with respect thereto. Otherwise, he would have been burdened with the expenditure of a large sum ofmoney toerect and construct a building on the vacant lot inquestion atthe riskof the possible refusal of the municipal body to approve such a transfer.I1 The New Jersey court alsorecognized 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 alsoclear that the licensing authority is empowered by statute to take the action itdid. Under theAlcoholic Beverage Code of 1975, the powers of the licensing authority include the following under section4-1-302, R.C.M. 1947: "(h) To grant and issue licenses under and in pursuance to this code; "(i) Without inany limiting, orbeing limited by the foregoing, to do allsuch things as are deemed necessary or advisableby the department for the purpose of carrying into effect the provisions of this code, or the regulations made thereunder." Moreover, section4-4-206(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 servicefacilities

# *

# * *.I1 These statutes surely empower the licensing authority to allow the license transfer applicant tocontinuehis livelihood while final approval of the transfer 

### ispending. Plaintiffs also argue that only their interpretationwill 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 locationjust outside the city limits, and then holding the license atthe original location until the city limitsincorporate the location of the proposed liquor license transfer, thereby automatically increasing the value of the licenseunder an urban classification. While the possibility may exist, itdoes not existunder the factshere. 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 inmid-May 1977. Completion occurred on schedule. Furthermore, we cannot believe the licensing authority 

### iswithout power toprevent speculation in the manner suggestedby plaintiffs. Under the circumstances presented here, it isclear 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 toeither open forbusiness in hisnew establishment or obtain an extension. He obtained an extension within the 90 day period and actually used only one day of the extension. Accordingly, Seitzwas not inviolation of the statute.Plaintiffs didnot raise the issue of the sufficiency of the notice of application for transfer. However, for future

cases we feel itnecessary to comment on the notice inthiscase

as it relates to the public's right toknow. It 

### is doubtful plaintiffs-wouldhave filed this action if they had received 

### a meaningful notice of thehearing tobe held on Seitz's application for transfer of his license. Section4-4-302(1), R.C.M. 1947, requires, inter alia,
, thatnotice of application for a liquor license or transfer of a liquor license be published once a week for two consecutive weeks ina localnewspaper and that a hearing date inHelena be set to hear anyone who has a protest. The statutory form of noticewhich applied to this case provided:"NOTICE OFAPPLICATION FOR RETAIL ALL-BEVERAGES LICENSE "Notice ishereby given that on the 

# - day of 19 

## ,one (name of applicant) filed an application for a retail all-beverages license with theMontana department of revenue, tobe used at (describe location of premises where beverages are tobe sold), and protests, if any there be, against the issuance of such license 

### willbe heard atthe hour of 

# - M, on the 

# - day of 

## -, 19, atthe office of the Montana department of revenue inHelena, Montana." (Emphasis added.) The notice published in the instant case stated itwas

an application for a transfer of a license, and complied with the statute inallimportant particulars. Plaintiffs stated they did not see the notice when it was published inthe newspaper and for this reason didnot attend the hearing toprotest the building of a liquor establishment

sonear their homes. They firstrealized what was being built

on the property involved after Seitz started construction. Plaintiffs freely admit their only purpose inapplying for the writand mandamus was a last ditchattempt toprevent the liquor store frombeing operated atitsnew location. The notice published inthe newspaper described the proposed new premises by 

### its legal description. This ishardly terminology that a layman could understand. The notice inthese situations 

### is such that it ismeaningless to allbut the well versed in legalese. Notice is the firstprocedural cornerstone of due process of law. Without it the remaining procedural rights cannot be effectively exercised, if atall. The notice provisions set out in statutes areminimum requirements and there isno certainty that allof them give adequatenotice. 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 orby 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 itwould be located atthe intersection of Southwest Higgins and Bancroft Avenues. Inaddition, a proposed new establishment may be located near familiar landmarks, long established and well known stores or otherbusinesses, and could be easilypinpointed by such references. It would be a simple matter to tie the property to the landmarks involved, so that citizensmost likely affected would have a better chance toknow the proposed location of the new business. The notice could tell the public they could send written and signed protests toHelena inadvance of the hearing date. If these letterswere tobe used

as a basis to deny the application, the applicant could be notified before a finaldetermination and he could be granted

an opportunity tomeet the information contained in the letters. Nor do we think it necessary or advisable to stop atthe legal sectionof 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 toassume that only those who have a specific interest in the legalnotice section of the newspaper willever take the time to read it regularly. We do not think there isa duty to read the legalnotice section of the newspaper every day if one wants tobe notified that

a lounge and liquor store might be built next tohis home. In the situationhere it ismost likely the residents near the proposed new lounge and liquor storewould have the greatestinterest inproviding 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 itwould be simple enough to require the posting of the property involved. This could be done with conspicuous signs and conspicuous lettering, placed ator near the proposed location where the affected public would be most likely to see them. The signs, for example, could state that the locationwas 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 (2Ariz. Rev.St. Anno. $4-201) and New Mexico (N.M.Stat. Anno. $46-4-11) require notice tobe conspicuously posted atthe proposed place of business of a new liquor establishment

# . Inview of the circumstances inthis case, we do not deem it unusual that no protestors traveled toHelena orwrote toHelena, and that the applicant and his investors were so assured of a successful transfer that they did not bother to show up atthe 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 tobe 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 toknow, and the government cannot squeak by inevery case by complying only with the minimum statutory requirements of notice. Due process of law ismore 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 JusticeFrank 

### I. Haswell, specially concurring: 

### I concur in the result and the interpretation of the statute onwhich it is based. However, the discussion of notice is beyond the issues in the case and should notbe included in the opinion inmy 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.