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, 

### INAND 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:

## JAN7 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 takingjurisdiction of allfurther 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 toreview thejudgment entered therein on July 

### 16, 1975, as amended by order oi the district court dated August 

### 8, 1975, and to reverse the j~dgmentand 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 finaljudgment of the district court. ihis Court deemed the appeal tobe 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, *2biairieJfrom the Montana Liquor Control Board a beer and a liquor Li~ense to operate a liquor business tobe known as the "Great vhllsMunicipal Airport ~ounge",located atthe 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 forrestaurant, bar, and ~ocktail lounge facilities atthe Great Falls Airport. The lease urovided in part:"8. Party of the 

### firstpart [City] is the Dwner 

### of beer and liquor permits numbered 1059 and 990 respectively. 

### It 

### is covenanted and agreed that said permits 

### willbe assigned toand operated under the name of party of the second part [Robinson] for the duration of this lease, tobe re-assigned toparty of the first part upon the termination of said lease for any cause whatsoever. 9: 9:" The Citywas tobe 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:

II

For a good and valuable consideration and subject to the approval of theMontana Liquor Control Board, 

### I hereby sell, assign, transfer and set over unto Don F. Robinson 

# ** allright, 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 inthe licenses. InNovember 1952, the City and Robinson executed a new lease for the airport lounge facilities for a term of fiveyears. This 

### lease contained a provision which was tobe used inall leases between the City and various 

### lessees of the airport lounge 

### until the present leasewith victor's, Inc. The provision changed from the original leasereads: 

### "8. Party of the First Part [City]was originally the owner of the State of Montana retailbeer and liquor licensesused in the operation of saidbar and cocktail lounge operated by party of the Second Part in the above-described premises, and said licenses have been assigned toand arenow in the name df party of the Second Part; it 

### iscovenanted and agreed that said permits and licenses aretobe operated under thename of party of the Second Part and that party of the Second Part 

### willcontinue topay for 

### allof said licenses and the renewals of 

### allof said licenses, and shallpay allfees, taxes and dharges assessed under Federal, State, orLocal statutes and ordinances, insofar as they areapplicable, 

## - and chat party of the Second Part willassign toparty of the First Part upon the termination of this lease all ~f saidbeer and liquor licenses." ( Emphasis supplied.) 'The colliperlsation paid by the lesseewas changed from a percentage of rhe grvss toa setmonthly rental figure.I'he I_lcerrsesweie iransLe~reJ a ~urrlber of Limes and eventuaLly transferred by the Horizon Club toVictor's, Inc. in 1362 under a Horizon Club leasewhich 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 tothe other and mortgages placed upon the licensesby velidee orbank and filedwith 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:

II

Lessor was originally the owner of the State of Montana retailbeer and liquor licensesused in the operation of said bar and cocktail lounge operated by Lessee in the above-described premises, and said licenses have been assigned toand arenow in the liame of the Lessee; 

### it is covenanted and agreed that >aidpermits and licenses aretobe operated under che name of Lessee and that Lessee

### willcontinue topay 

### dl1of said licenses and renewals of allof said licenses, dnd shall pay allfees, taxes and charges assessed under )Jederal,State, or Local statutes and ordinances, insofar as they areapplicable. Lessee shall, upon termination of this Lease, assign to Lessor allof his interest in and to said Beer and Liquor license; PROVIDED, however, that ifLessee assigns this Lease or sub-leases ;:he premises as herein provided inParagraph 

### 12, Lessee nay selland assign, solelywith written consent of 

### Lessoris interest in said Lease to theAssignee or SubLessee. (Emphasis supplied).

II Lessee argues that theword 

### ease" in the last line of the above quoted paragraph 

### is inerror and makes no sense asused and should be "license". The City of Great Falls has constructed a new airport cerrninal building and has contracted with an out of statefirm designated Dyneteria, Inc., tooperate the food and lounge facility and has contradto furnish Dyneteria, Inc. the licenses in question here. The leasewith 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 retailLiquor 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 factwere 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 itspredecessors paid a separate consideration for the licenses on acquisition; that therewas 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 tocomplete the transfer of the Licenses to the City. Victor's, Inc. presents many issues for review, however, Ehe iontrolling issue 

### iswhether the Citymust pay consideration

so Victor's, Inc. for the assignment of 

### its interest inthe liquor and beer licenses tothe City or 

### its designee. The suit 

### is 

### a specific performance action which means i-t

### jeeks tocompel 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 todo more complete justice 

### is attained ehan by giving damages forbreach of contract. 

### It 

### is an extradrdinary remedy, which was not recognized atcommon law. So, specific performance 

### is purely an equitableremedy and 

### is governed by equitable principles. 81C.J.S. Specific Performance 

### 5 1, p. 408. In 81C.J.S. Specific Performance 

### 5 3, p. 411, it 

### is

ttk ;t specific performance 

### willbe ordered only on equitable grounds in view of allthe conditions surrounding the particular case. ;k ;k 9~IIA bill in equiry for sprciric performar~ceis 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.II 4ection 17-808, R.C.M. 1947, states that specific perior~uiince cannot be enforced against a party to a contract

II iLthat 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 equitablyjustify

1 the assignment of Victor's, Inc. s interest in the licenses to the City. Although this suit 

### isbrought only to enforce a pro

### vision 

### in a leasebetween the City and Victor's, Inc., the determination as towhether the consideration for assignment

I 

### ai ~ictor's, Inc. s interestwas 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 itsuse had arisen on four occasions. These additional facts are pertinent here. The district court held:Id- .r- #% ,& ;r .+tno time

### did the City 3f 

### Great Falls ever receive any independent or separate consideration orpayment for transfer by it 

### of the iiquor and beer licenses toRobinson or to any of 

### the other lessees, including defendant. II .As 

### heretofore set forth, the City in dealingwith 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

# *** allright, cicle and interest in and to ;k f;" 

### the licenses here inquestion. Thereafter, the lease arrangement was altered to set forth that zhe 

### Citywas the original owner, rather than owner. Robinson and allsubsequent lessees and sublesseeswere allowed to selltheir interests in thebar fixtures, licenses and the 

### lease to the succeeding lessee forwhatever price the current business market would bear. The Citywas 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 tobe the sole owners of the licenses. Section 4-410, R.C.M. 

### 1947, requires that thenames of allpersons 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 isnot the owner and operator of the business.

## " (Emphasis supplied), All

### applicable federal, stateand 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 collateraland the mortgages duly recorded

### with the Montana Liquor Control Board asrequired by law. The City consented to allthree mortgages. Montana Bank of Great Falls 

### is currently a mortgagee of the licenses on a loan forapproximately $40,000. On two occasions

# - in 1954 and 1955

# - contracts for sale

were used toconvey the assignment of the lease and licenses from

one lessee toanother. Language in the contracts provided that upon default, the licenses would be setover to thevendor-lessee and they shallbelong to the vendors. No mention of the Clty's

I I

### ownershipf'

### ismade in these contracts. Copies of these contracts
were filedwith theMontana Liquor Control Board and the City. Extensive argument was presented concerning thenegotiation with Palmer, the airport manager, and Victor's, Inc. on the very point of compensation for the licenses upon termination or sale. It seems tobe admitted that this took place and Palmer did have authority tonegotiate airport contracts, but former members of the airport commission could not confirm any agreements on this issue. Yet, coincidently atthis time, the City elected to change the language as it 

### pertained toreassignment in the lease from a reassignment of the licenses toa reassignment of lessee's

[Victor's, Inc.] interest in the licenses. Together with allof these facts there isa disputed probability that the same lease interest assignment clause gave Victor's, Inc. the right to sell itsinterest inthe licenses upon assignment, with consent of the City. Indulging the Citywith the presumption, which we think

we 

### must, that it 

### complied with the laws of the stateof Montana and that allof itsdealingswith its 

### lesseeswere honest and open and none were intended toevade the licensing laws of the stateof Montana and its

### affirmative acts ornon-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-lcensesnust 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 arepersonal 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 Clrynever 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 thenew lesseewould then not have been required to Day the seller 

### for the licenses. The City didnot do this. It 

### acquiesced in the transfers dlrectly from party toparty for cash consideration with theresult chat the licenses acquired value to theparties and they paid ~or~sideration for them. victor's, Inc. was therefore entitled to relyupon 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 thebusiness and be compensated for the value of the Licenses.However, the City decided toassign the licenses tothe
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 inthe licenses but ifthe City would like tobestow this gratuityupon Dyneteria, Inc., the City must compensate Victor's, Inc. inan amount equal to the true market value of the personal property. The City claims and the trialcourt held that adequate consideration supported the transfer demanded by the City, although the court didnot specify thenature of the consideration.

### Generally speaking, consideration is 

### the pricebargained for and paid for a promise. 17 C.J.S. Contracts $70, p. 747. Consideration sufficient towarrant 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 leasesbetween the City and prior lessees. The lesseewas topay the Citymonthly rent ($600 per month in the current lease) and operate the lounge under established minimum specifications. The City inreturn leases the space tothe 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, inreturn for thepackage of (a) bar fixtures, (b) licenses, and (c) leasehold. The interest in those three items was sold as a unit, but it 

### isclear that themost important item of the threewas the licenses. A 

### liquor license isa valuable piece of personal property. Witness the $40,000 mortgage obtained by victor's, Inc. from a bank with thebeer and liquor licenses used as collateral. Stallinger v. Gcs S, 

### 121Mont. 437, 438, 193 P.2d 810. If all

### that
was soldbetween vendor and vendee lesseeswas the fixtures ina leased bar, it 

### iscertain that the salepricewould be substantially less than ifbeer and liquor licenses alsowere included in the sale. The City claims that the "City's willingness toallow the transfer of the licenses and lease to [victor's, Inc.] and to permit [Victor's, Inc.] tocontinue inpossession of the premises after expiration of the initial lease is

### allthe consideration which is

### necessary to support the agreement to reassign." With this,
we cannot agree.

### The City's willingness toallow the transfer of the lease interest and topermit Victor's, Inc. tocontinue in possession of the premises 

### is consideration sufficient only toobligatevictor's, Inc. topay the rent and abideby the other general terms of the lease, excluding the reassignment provision. It stretches the imagination of fairness to say that the City's 

### willingness toallow the transfer of the licenses toVictor's, Inc. (i.e., to allowvictor's, Inc. topay fair market value for the licenses toa third party) is consideration fully sufficient or adequate toforcevictor's, Inc. toassign the licenses tothe City. In examining the above two contracts and especially the rather standard lease arrangement, togetherwith the considerationwhich supported them, we do not find consideration'to support the assignment of the licenses to the City orDyneteria, Inc. The judgment of the district court isreversed and the

cause remanded tothe district court with instructions to determine fairmarket value of the licenses tobe paid Victor's, Inc., and the completion of the transaction inaccordancewith this opinion.