No. 13150 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1975 

THE STATE OF MONTANA, ON THE RELATION 

OF VICTOR'S,INC., A Montana Corporation, 

Relator and Applicant, 

THE DISTRICT COURT OF THE EIGHTH JUDICIAL 

DISTRICT OF THE STATE OF MONTANA, IN AND 

FOR THE COUNTY OF CASCADE; THE HONORABLE 

B. W. THOMAS, District Judge, Being the 

Presiding Judge and the City of Great Falls, 

A Municipa 1 Corporation, 

Respondents. 

ORIGINAL PROCEEDING: 

Counsel of Record: 

For Relator : 

Smith, Emmons and Baillie, Great Falls, 

Montana 

Robert J. Ernmons argued, Great Falls, Montana 

For Respondents : 

Alexander, Kuenning, Miller and Ugrin, Great 

Falls, Montana 

Paul D. Miller argued, Great Falls, Montana 

Submitted: September 30, 1975 

Decided: JAN 7 1376 

;Gjl I Filed : I 5% 
This matter is before the Court on an application by 

Victor's, mc., defendant in the district court, for a writ of 

supervisory ~ontrol or other appropriate writ, directed to the 

Jistrict court, Cascade County, and to the presiding judge, 

dssuming and taking jurisdiction of all further proceedings in 

jchat certain cause in said court, being Cause No. 78667-B, entitled 

'CITY OF GREAT FALLS, a municipal corporation, and GREAT FALLS 

LN'I'ERNATIONAL AIRPORT AUTHORITY, Plaintiffs, vs. VICTOR'S, INC., 

a '\fontana corporation, Defendant". This Court was asked to review 

the judgment entered therein on July 16, 1975, as amended by order 

oi the district court dated August 8, 1975, and to reverse the 

j~dgment and render judgment for relator and applicant herein, 

~~lctor's, Inc. Prior to this application Victor's, Inc. had filed 

LL~ notice of appeal from the final judgment of the district court. 

ihis Court deemed the appeal to be inadequate, consolidated the 

dppeal [this Court's ?,,13149] with this application [this Court's 

d13150], and assumed jurisdiction under supervisory control. 

'She matter was briefed, heard in oral argument and submitted. 

In 1947 the City of Great Falls, a municipal corporation, 

*2biairieJ from the Montana Liquor Control Board a beer and a liquor 

Li~ense to operate a liquor business to be known as the "Great 

vhlls Municipal Airport ~ounge", located at the Great Falls 

biu~iicipal Airport. This airport is outside the corporate limits 

~f the City of Great Falls. 

Simultaneously the City, as lessor, and Donald F. Robinson, 

db '-essze, entered into a lease agreement for restaurant, bar, and 

~ocktail lounge facilities at the Great Falls Airport. The lease 

urovided in part: 
"8. Party of the first part [City] is the Dwner 

of beer and liquor permits numbered 1059 and 990 

respectively. It is covenanted and agreed that 

said permits will be assigned to and operated under 

the name of party of the second part [Robinson] for 

the duration of this lease, to be re-assigned to party 

of the first part upon the termination of said lease 

for any cause whatsoever. 9: 9:" 

The City was to be paid a percentage, based on the gross receipts 

of ~obinson's operation. 

On May 8, 1948, the City submitted a signed assignment 

of interest to the Montana Liquor Control Board which provided: 

I I For a good and valuable consideration and subject 

to the approval of the Montana Liquor Control 

Board, I hereby sell, assign, transfer and set 

over unto Don F. Robinson * * all right, title 

and interest in and to [the beer and liquor license 

(Emphasis supplied). 

The assignment was signed by the mayor of Great Falls. The City 

did not take any security interest in the licenses. 

In November 1952, the City and Robinson executed a new 

lease for the airport lounge facilities for a term of five years. 

This lease contained a provision which was to be used in all 

leases between the City and various lessees of the airport lounge 

until the present lease with victor's, Inc. The provision changed 

from the original lease reads: 

"8. Party of the First Part [City] was originally 

the owner of the State of Montana retail beer and 

liquor licenses used in the operation of said bar 

and cocktail lounge operated by party of the Second 

Part in the above-described premises, and said 

licenses have been assigned to and are now in the name 

df party of the Second Part; it is covenanted and 

agreed that said permits and licenses are to be operated under the name of party of the Second Part and 

that party of the Second Part will continue to pay 

for all of said licenses and the renewals of all of 

said licenses, and shall pay all fees, taxes and 

dharges assessed under Federal, State, or Local statutes 

and ordinances, insofar as they are applicable, - and 

chat party of the Second Part will assign to party of 

the First Part upon the termination of this lease all 

~f said beer and liquor licenses." ( Emphasis supplied.) 

'The colliperlsation paid by the lessee was changed from a percentage of 

rhe grvss to a set monthly rental figure. 
I'he I_lcerrses weie iransLe~reJ a ~urrlber of Limes and 

eventuaLly transferred by the Horizon Club to Victor's, Inc. in 

1362 under a Horizon Club lease which was to expire in 1964. In 

dach case the assignment accompanied a sale of the lounge and 

ilxtures themselves together with a transfer of the licenses from 

dlle owner to the other and mortgages placed upon the licenses by 

velidee or bank and filed with the Montana Liquor Control. Board, 

!:d secure payment under the transaction. In March 1966, victor's, 

Lric. executed its own lease agreement with the City. The section 

prcviding for control of the licenses is somewhat different than the 

pdst leases in that it only provides that lessee assign his interest 

not the licenses themselves in this language: 

I I Lessor was originally the owner of the State of 

Montana retail beer and liquor licenses used in the 

operation of said bar and cocktail lounge operated 

by Lessee in the above-described premises, and said 

licenses have been assigned to and are now in the 

liame of the Lessee; it is covenanted and agreed that 

>aid permits and licenses are to be operated under 

che name of Lessee and that Lessee will continue to pay dl1 of said licenses and renewals of all of said licenses, 

dnd shall pay all fees, taxes and charges assessed under 

)Jederal, State, or Local statutes and ordinances, insofar as they are applicable. Lessee shall, upon termination of this Lease, assign to Lessor all of his interest 

in and to said Beer and Liquor license; PROVIDED, however, that if Lessee assigns this Lease or sub-leases 

;:he premises as herein provided in Paragraph 12, Lessee 

nay sell and assign, solely with written consent of 

Lessoris interest in said Lease to the Assignee or SubLessee. (Emphasis supplied). 

I I Lessee argues that the word ease" in the last line of the above 

quoted paragraph is in error and makes no sense as used and should 

be "license". 

The City of Great Falls has constructed a new airport 

cerrninal building and has contracted with an out of state firm 

designated Dyneteria, Inc., to operate the food and lounge 

facility and has contradto furnish Dyneteria, Inc. the licenses 

in question here. The lease with victor's, Inc. expired and the 

City brought an action against Victor's, Inc. to specifically enforce the lease provision with respect to assignment of the retail 
Liquor dnd 3eer L~ceases and thdc VicLor s, inc. be ordered co 

dssign to the City or its designee. 

The matter was tried to the discrict court and extensive 

rlndings of fact were determined by the court together with 

eor~clusions of law which in essence found that the City had never 

received any consideration for the licenses; that neither Victor's, 

i.nc. nor its predecessors paid a separate consideration for the 

licenses on acquisition; that there was adequate consideration 

<unspecified] to support transfer of the licenses to the City 

upon termination by Victor's, Inc.; that the City could legally 

ioLd a liquor and a beer license; and that defendant Victor's, Inc. 

transfer the licenses to the City within thirty days or the clerk 

of court would be authorized to complete the transfer of the 

Licenses to the City. 

Victor's, Inc. presents many issues for review, however, 

Ehe iontrolling issue is whether the City must pay consideration 

so Victor's, Inc. for the assignment of its interest in the liquor 

and beer licenses to the City or its designee. 

The suit is a specific performance action which means 

i-t jeeks to compel the performance of a contract in the precise 

Lerms agreed upon. The foundation of a suit for specific performance 

uf a contract is that by compelling the parties to do the very 

rhings whey have agreed to do more complete justice is attained 

ehan by giving damages for breach of contract. It is an extradrdinary remedy, which was not recognized at common law. So, 

specific performance is purely an equitable remedy and is governed 

by equitable principles. 81 C.J.S. Specific Performance 5 1, p. 408. 

In 81 C.J.S. Specific Performance 5 3, p. 411, it is 

ttk ;t specific performance will be ordered only 

on equitable grounds in view of all the conditions 

surrounding the particular case. ;k ;k 9~ 
I I A bill in equiry for sprciric performar~ce is an 

appeal to the conscience of the court, and 

senerally, in such a proceeding, the inquiry must 

5e whether, in equity and good conscience, the 

court should specifically enforce the contract. I I 

4ection 17-808, R.C.M. 1947, states that specific 

perior~uiince cannot be enforced against a party to a contract 

I I iL that party has not received an adequate consideration for 

che contract. " Whether consideration is adequate for a given 

dontract depends on the facts and circumstances of each case. 

Therefore, we are required to closely examine the facts and 

:ircumstances surrounding this case to determine whether the 

zonsideration in the contract was adequate to equitably justify 

1 the assignment of Victor's, Inc. s interest in the licenses 

to the City. 

Although this suit is brought only to enforce a provision in a lease between the City and Victor's, Inc., the 

determination as to whether the consideration for assignment 

I ai ~ictor's, Inc. s interest was adequate cannot be made by 

~ooking only to the contents of the lease. In negotiations 

for the lease, the City and victor's, Inc. were aware of the fact 

that victor's, Inc. had paid a substantial amount of money for 

inrerest in the bar fixtures, licenses and the previous lease. 

Both parties were also aware of the fact that although all 

previous leases contained provisions requiring assignment of the 

alcohol licenses themselves upon termination of the lease, this 

provision had never been employed by the City--although the 

opportunity for its use had arisen on four occasions. 

These additional facts are pertinent here. The district 

court held: 
Id- .r- 

#% ,& ;r .+t no time did the City 3f Great Falls 

ever receive any independent or separate consideration or payment for transfer by it of the 

iiquor and beer licenses to Robinson or to any 

of the other lessees, including defendant. I I 

.As heretofore set forth, the City in dealing with Robinson 

 firs^ zlaimed ownership of the licenses. Thereafter the City filed 

a Jocument with the Montana Liquor Control Board setting forth that 

11 the City For a good and valuable consideration * ;k * sell, assign 

arid transfer and set over unto Don F. Robinson * * * all right, 

cicle and interest in and to ;k f;" the licenses here in question. 

Thereafter, the lease arrangement was altered to set forth that 

zhe City was the original owner, rather than owner. 

Robinson and all subsequent lessees and sublessees were 

allowed to sell their interests in the bar fixtures, licenses and 

the lease to the succeeding lessee for whatever price the current 

business market would bear. The City was involved in these sales 

orily to the extent of consenting to the assignments. The City at 

no time received the licenses from the vendor-assignor and then 

reassigned the licenses to the vendee-assignee. Four previous 

Leases expired and the City did not demand return of the licenses. 

Public-record ownership [at the Montana Liquor Control 

%oardl showed the lessees to be the sole owners of the licenses. 

Section 4-410, R.C.M. 1947, requires that the names of all persons 

iucerested in the license must appear on the application for the 

license. Section 4-412(7), R.C.M. 1947, provides that a license 

If may not be issued to one who is not the owner and operator of the 

business. " (Emphasis supplied), 

All applicable federal, state and local fees and taxes 

atcrndant with the licenses were paid by the lessees, including 

~ictor's, Inc. 

On three occasions, the licenses were mortgaged by various 

lessees to a bank or other corporation for loans of money. The 

licenses were used as collateral and the mortgages duly recorded 
with the Montana Liquor Control Board as required by law. The 

City consented to all three mortgages. Montana Bank of Great Falls 

is currently a mortgagee of the licenses on a loan for approximately 

$40,000. 

On two occasions - in 1954 and 1955 - contracts for sale 

were used to convey the assignment of the lease and licenses from 

one lessee to another. Language in the contracts provided that upon 

default, the licenses would be set over to the vendor-lessee 

and they shall belong to the vendors. No mention of the Clty's 

I I ownershipf' is made in these contracts. Copies of these contracts 

were filed with the Montana Liquor Control Board and the City. 

Extensive argument was presented concerning the negotiation 

with Palmer, the airport manager, and Victor's, Inc. on the very 

point of compensation for the licenses upon termination or sale. 

It seems to be admitted that this took place and Palmer did have 

authority to negotiate airport contracts, but former members of 

the airport commission could not confirm any agreements on this 

issue. Yet, coincidently at this time, the City elected to change 

the language as it pertained to reassignment in the lease from a 

reassignment of the licenses to a reassignment of lessee's 

[Victor's, Inc.] interest in the licenses. Together with all of 

these facts there is a disputed probability that the same lease 

interest assignment clause gave Victor's, Inc. the right to sell 

its interest in the licenses upon assignment, with consent of the 

City. 

Indulging the City with the presumption, which we think 

we must, that it complied with the laws of the state of Montana 

and that all of its dealings with its lessees were honest and 

open and none were intended to evade the licensing laws of the 

state of Montana and its affirmative acts or non-action over the 

term of these transactions indicated its intentions, the City 

could have no interest in the licenses themselves. It did a t a l l 
cirues by Lease dgreeine~li; diovlde inac she I-lcenses nust stay 

with the location by assignment when the lessee terminated his 

business relationship with the City. victor's, Inc. agrees that 

rhe licenses cannot be moved from the airport. 

These licenses are personal property and have a recognized 

value above and beyond the fees paid to the various government 

dgencies. These licenses acquired this type of value because the 

Clry never required nor controlled the reassignment of the licenses 

when a lease terminated. If the City had enforced the lease 

~rovisions it could have reassigned the licenses on each transdction and the new lessee would then not have been required to 

Day the seller for the licenses. 

The City did not do this. It acquiesced in the transfers 

dlrectly from party to party for cash consideration with the result 

chat the licenses acquired value to the parties and they paid 

~or~sideration for them. victor's, Inc. was therefore entitled to 

rely upon the acts and conduct of the City that, when the time 

L-arne for an assignment from Victor's, Inc . , it could assign to the 

new operator of the business and be compensated for the value of the 

Licenses. 

However, the City decided to assign the licenses to the 

new lessee, Dyneteria, Inc., without compensation from it and now 

demands that victor's, Inc. make a gratuitous assignment. As 

heretofore stated, the City has the right to insist on Victor's, 

t Lnc. s assignment of its interest in the licenses but if the City 

would like to bestow this gratuity upon Dyneteria, Inc., the City 

must compensate Victor's, Inc. in an amount equal to the true 

market value of the personal property. 

The City claims and the trial court held that adequate 

consideration supported the transfer demanded by the City, although 

the court did not specify the nature of the consideration. 
Generally speaking, consideration is the price bargained 

for and paid for a promise. 17 C.J.S. Contracts $70, p. 747. 

Consideration sufficient to warrant specific performance for the 

assignment of valuable personal property such as liquor licenses 

just be obvious and unambiguous. In reviewing the consideration 

for the two contracts, the consideration which supports the lease 

between the City and victor's, Inc. was similar to the consideration 

which had supported earlier leases between the City and prior 

lessees. The lessee was to pay the City monthly rent ($600 per 

month in the current lease) and operate the lounge under established minimum specifications. The City in return leases the space 

to the various parties. 

The consideration which supported the sales and assignments of interest between successive lessees was an exchange of 

money, either directly or under a contract for sale, in return 

for the package of (a) bar fixtures, (b) licenses, and (c) leasehold. The interest in those three items was sold as a unit, but 

it is clear that the most important item of the three was the 

licenses. A liquor license is a valuable piece of personal property. 

Witness the $40,000 mortgage obtained by victor's, Inc. from a 

bank with the beer and liquor licenses used as collateral. 

Stallinger v. Gcs S, 121 Mont. 437, 438, 193 P.2d 810. If all that 

was sold between vendor and vendee lessees was the fixtures in a 

leased bar, it is certain that the sale price would be substantially 

less than if beer and liquor licenses also were included in the sale. 

The City claims that the "City's willingness to allow 

the transfer of the licenses and lease to [victor's, Inc. ] and to 

permit [Victor's, Inc.] to continue in possession of the premises 

after expiration of the initial lease is all the consideration 

which is necessary to support the agreement to reassign." With this, 

we cannot agree. 
The City's willingness to allow the transfer of the 

lease interest and to permit Victor's, Inc. to continue in 

possession of the premises is consideration sufficient only 

to obligate victor's, Inc. to pay the rent and abide by the 

other general terms of the lease, excluding the reassignment 

provision. It stretches the imagination of fairness to say that 

the City's willingness to allow the transfer of the licenses 

to Victor's, Inc. (i.e., to allow victor's, Inc. to pay fair 

market value for the licenses to a third party) is consideration 

fully sufficient or adequate to force victor's, Inc. to assign 

the licenses to the City. 

In examining the above two contracts and especially 

the rather standard lease arrangement, together with the consideration which supported them, we do not find consideration'to 

support the assignment of the licenses to the City or Dyneteria, Inc. 

The judgment of the district court is reversed and the 

cause remanded to the district court with instructions to determine 

fair market value of the licenses to be paid Victor's, Inc., and 

the completion of the transaction in accordance with this opinion.