NO. 82-194 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1983 

R. PEYTON HOVEY, 

petitioner and Appellant, 

VS. 

DEPARTMENT OF REVENUE, LIQUOR 

DIVISION, of the State of Montana, 

and LEE WILLIAMS, et al., 

Respondents. 

Appeal from: District Court of the First Judicial District, 

In and for the County of Lewis and Clark 

Honorable Gordon Bennett, Judge presiding. 

Counsel of Record: 

For Appellant: 

John W. Mahan argued, Helena, Montana 

Carter Picotte argued, Helena, Montana 

For Respondents: 

Mike Garrity argued, Dept. of Revenue, Helena, Montana 

submitted: January 14, 1983 

Decides: February 24, 1983 

p- .-. - I- t 8 2 4 1983 Filed: 

Clerk -- - 
Mr. Justice L. C. Gulbrandson delivered the Opinion of the Court. 

This case comes to this Court from the District Court of the 

First Judicial District, Lewis and Clark County. The District 

Court denied appellant's petition for a writ of mandate, 

requiring the Department of Revenue (DOR) to allow him to apply 

for one of six new liquor licenses to be issued in the Billings 

area. From that denial this appeal was taken. 

In September 1981, six new floater all beverage liquor licenses became available in Billings based on the statistics compiled 

in the 1980 census. On October 5, 1981, appellant, Hovey, 

applied for one of these licenses to use in his downtown Billings 

restaurant. Appellant's application was rejected by the 

DOR on October 21, 1981. This rejection was on the grounds that 

the appellant's place of business was in violation of section 

16-3-306, MCA, which prohibits liquor dispensing premises 

(hereinafter premises) within 600 feet of churches or schools 

when on the same street, and the DORIS interpretation of that 

section, set out in section 42.12.129, ARM. 

On November 2, 1981, Hovey filed a petition for an alternative writ of mandate in the District Court of the First 

Judicial District, Lewis and Clark County. On that date an order 

was secured directing the DOR to revoke its ruling that appellant 

was ineligible to apply for one of the six new licenses or in the 

alternative to show cause why that ruling had not been revoked. 

An initial hearing was held on the order to show cause on 

November 9 , 1981. A subsequent hearing was ordered to be held 

February 4, 1982, following a ruling issued by the Honorable 

Arnold Olsen in the case of Fletcher v. DOR, No. 47319, (decided 

March 8, 1982, Lewis and Clark County), which presented a similar 

issue. 

In the interim between the second hearing and the District 

Court Is final decision, the appellant was allowed to participate 

in the DOR administrative hearing with other applicants. This 

was only to expedite matters in case of an adverse ruling by the 
District Court. The Court's final order came down in support of 

the DOR's position and appellant was denied a license. 

The appellant is the owner of Cellar 301, a restaurant 

located in the old chamber building on the corner of Third Avenue 

North and North 27th Street in downtown Billings. The restaurant 

was opened in 1977 with its business address being 2615 Third 

Avenue North. There are no doors on North 27th Street because 

when the building was renovated, the appellant placed the 

entrance on Third Avenue. 

The church building in question is the First Congregational 

Church of Christ and is located at 310 North 27th Street. The 

church owns a large tract of land which extends to the intersection where the appellant's restaurant is located. They have 

granted the City of Billings a bus stop at this intersection, and 

the City has erected and maintains shelters on the property in 

connection with the bus stop. 

The issue to be determined by this Court is whether the 

District Court's denial of appellant's application for a writ of 

mandate, on the grounds that the building in which appellant's 

restaurant is located, violates section 16-3-306, MCA, and section 42.12.129, ARM, the DOR's interpretation of the statute, 

constitutes reversible error? 

The actual thrust of this case centers around a question of 

statutory interpretation and whether it was proper for the DOR to 

deny the appellant the opportunity to apply for one of the new 

floater all beverage liquor licenses to be issued in Billings, on 

the grounds that he is in violation of the "on the same street" 

requirement of section 16-3-306, MCA, as interpreted by the DOR 

in section 42.12.129, ARM. That regulation states: 

"(1) In order to determine if the provisions 

of 16-3-306, MCA, are applicable, the department utilizes a two step test: (a) determination of street of location; and (b) 

determination of distance between entrance 

doors. (2) (a) A building is considered to 

be on each street that abuts the building and 

appurtenant land. An alley is generally not 

considered to be a street unless it is used by 

the general public as a public thoroughfare 
for vehicular travel. (b) If the proposed 

premises for liquor sales are not located on 

the same street as a place of worship or 

school, the provisions of 16-3-306, MCA, are 

not applicable. If the proposed premises are 

on the same street, then the second step of 

the tests, provided for in subsection (3)r is 

utilized. (3) (a) If the proposed premises 

are on the same street, the distance between 

entrance doors is measured by a geometric 

straight line, regardless of intervening property and buildings. An entrance is considered to be a means of ingress to the 

premises generally used by the public. (b) 

If the distance is more than 600 feet, the 

provisions of 16-3-306, MCA, are not applicable. If the distance is less than or equal 

to 600 feet, Section 16-3-306, MCA applies." 

This particular regulation places a corner building on both 

streets on which it abuts rather than only on the street where 

its entrance and address are located. 

In such matters of statutory interpretation, the court must 

first look for the intention of the legislature in the plain 

meaning of the words used, and may go no further when the 

interpretation of the statute can be made from its words. Dunphy 

v. Anaconda Company (1968), 151 Mont. 76, 438 P.2d 660; State v. 

Hubbard (1982), 649 P.2d 1331, 39 St.Rep. 1608. 

The statute involved in the present case is section 16-3-306, 

MCA, and reads as follows: 

"(1) Except as provided in subsections (2) 

and (3), no retail license may be issued pursuant to this code to any business or 

enterprise whose premises are within 600 feet 

of and on the same street as a building used 

exclusively as a church, synagogue, or other 

place of worship or as a school other than a 

commercially operated or postsecondary school. 

This distance shall be measured in a straight 

line from the center of the nearest entrance 

of the place of worship or school to the 

nearest entrance of the licensee's premises. 

This section is a limitation upon the 

department s licensing authority. 

" (2) However, the department may renew a 

license for any establishment located in 

violation of this section if the licensee does 

not relocate his entrances any closer than the 

existing entrances and if the establishment: 

"(a) was located on the site before the place 

of worship or school opened; or 

"(b) was located in a bona fide hotel, 

restaurant, or fraternal organization building 

at the site since January 1, 1937. 
"(3) Subsection (1) does not apply to licenses for the sale of beer, table wine, or both 

in the original package for off-premises consumption." Section 16-3-306, MCA. 

We are concerned here with subsection one of the statute. 

The phraseology of that subsection shows the intent of the 

legislature. Where the phrase "on the same street" is viewed in 

conjunction with the second sentence of subsection one, which 

requires the distance between the premises and a church or school 

to be measured in a straight line from entrance to entrance, it 

is evident that the legislature only intended this section to 

apply where the entrances were on the same street. There is no 

reference to the abutting principal set out in the DOR1s 

regulation. Thus, the import of the language of the statute is 

plain and it can only be applied where the entrances to the 

buildings used as churches and the premises are "on the same 

street." 

Further support is lent to our construction of this statute 

by the reenactment doctrine, as the DOR1s interpretation of the 

statute is apparently inconsistent with the way the statute has 

been administered since its inception in 1937. The appellant, 

during the hearings, brought in examples of how establishments in 

similar situations to his had licenses and were operating. Also, 

the case of Fletcher v. DOR, supra, which presented almost the 

identical issue was being litigated at the same time as this proceeding. The parties to this action stipulated into evidence all 

the exhibits introduced in the Fletcher case. Contained in those 

exhibits was a letter dated July 6, 1971, from Joseph T. Shea, 

administrator of the old liquor control board, to the city 

manager of Bozeman explaining that the "on the same street" 

requirement of then section 4-415, RCM, 1947, (now 16-3-306, MCA) 

was interpreted so that it only came into play when both the premises and church had their addresses on the same street. This is 

exactly how the appellant contends that the statute should be 

applied. 

The reenactment doctrine has been recognized in Montana in 
the cases of State ex rel. Lewis and Clark County v. State Board 

of Public Welfare (1962), 141 Mont. 209, 376 P.2d 1002; Vgntura 

9 

v. Montana Liquor Control Board (1942), 113 Mont. 265, 124 P.2d 

569. The statute in question was originally enacted in 1937. It 

has been amended twice, first in 1975, at which time its number 

was also changed from section 4-415, RCM, 1947, to section 

4-4-107, RCM, 1947, and most recently in 1981 to its present version, section 16-3-306, MCA. Each version of the statute maintained the operative language that no license be issued "on the 

same street" and within 600 feet of a place of worship or school, 

and kept the same method of performing the measurement of the 

distance. 

Based on the letter from the administrator of the old liquor 

control board and the examples of other premises locations in 

relation to churches and schools, introduced at trial, it is 

apparent that prior to the DOR1s attempt to change the meaning of 

"on the same street" it was interpreted and applied so that the 

statute only came into play when the premises' and the churches' 

or schools' street addresses were on the same street. It did not 

apply where, as in the present case, the restaurant is on Third 

Avenue North and the church is on the cross street, North 27th 

Street . 

This Court, in discussing the reenactment doctrine in the 

past, has stated: 

"The rule is that in adopting a statute the 

legislature is presumed to have acted with 

knowledge of the previous construct ion of 

similar statutes (United States v. Albright, 

D. C., 234 Fed. 202) and to have adopted such 

construction (United States v. Ryan, 284 U. S. 

167, 52 Sup. Ct. 65, 76 L. Ed. 244.) This 

rule applies not only to Acts previously 

construed by the courts, but has equal application to statutes previously construed by the 

executive or administrative departmeat of the 

government. (59 C. J. 1064.)'' V&ntura v. 

Montana Liquor Control Board, 113 Mont. at 

270-271. 

This position is strengthened further by the holdings of the 

federal courts as evidenced by the United States Supreme Court 

case of Commissioner of Internal Revenue Service v. Noel Is Estate 
(1965), 380 U.S. 678, 85 S.Ct. 1238, \4 L.Ed.2d 159, where the 

court stated : 

" [A] long-standing administrative interpretation, applying to a substantially re-enacted 

statute, is deemed to have received 

congressional approval and has the effect of 

law. See, e.g. National Lead Co. v. United 

States, 252 U.S. 140, 146, 40 Sect. 237, 239, 

64 L.Ed. 496; United States v. Dakota-Montana 

Oil Co., 288 U.S. 459, 466, 53 S.Ct. 435, 438, 

77 L.Ed. 893." 380 U.S. at 682. 

The opinion of the United States District Court in Newman v. 

Vessel Lady Arnnette (D S.C. 1979) 470 F.Supp. 520, further 

clarifies and concisely states the rules governing the present 

situation where it states: 

"The U.S. Supreme Court has stated as a 

general principle that a long-standing administrative interpretation applying to a 

substantially reenacted statute is deemed to 

have Congressional approval and hence the 

force and effect of law, C. I. R. v. Noel's 

Estate, 380 U.S. 678, 85 S.Ct. 1238, 14 

L.Ed .2d 159 (1965). Although this principle 

is more persuasive when it can be demonstrated 

that Congress was aware of the administrative 

construction at the time of the reenactment, 

Mitchell v. C. I. R., 300 F.2d 533 (4th Cir. 

1962), Congressional awareness may be presumed 

where, as here, the administrative cons truction is consistent and long-standing, 

Lorillard v. Pons, 434 U.S. 575, 98 S.Ct. 866, 

55 L.Ed.2d 40 (1978)r particularly when 

Congress has shown specific and repeated 

interest in the administratively cons trued 

sections prior to the reenactment." 470 

F.Supp. at 527. 

Based on the above-cited principles, it is evident that the 

long-standing interpretation of what constitutes "on the same 

street" has the force and effect of law due to the repeated 

reenactment by the legislature , of the operative parts, without 

change. Thus, it cannot be changed by administrative reinterpretation and therefore section 42.12.129, ARM, is invalid. 

We therefore hold that a writ of mandate should have been 

issued by the District Court, allowing Mr. Hovey to apply for one 

of the six new liquor licenses, because under the plain language 

of section 16-3-306, MCA, and its legislatively-approved 

interpretation, through repeated reenactment, he had met all the 

requirements imposed by it. Where such requirements are met 
there is a clear legal duty on the part of the DOR to allow 

appellant to apply, and where such a duty exists, mandamus is 

proper. Cain v. Department of Health and Environmental Sciences, 

(1978), 177 Mont. 448, 451, 582 P.2d 332. It is true that the 

granting of a writ of mandate is a discretionary act which will 

be upheld unless there is a showing that the District Court 

abused its discretion. Cain v. Department of Health and 

Environmental Sciences, supra. But, based on the plain import of 

the language of the statute and the long-standing legislative 

acceptance of the interpretation placed on it, we believe such a 

showing of abuse of discretion was made as the DOR had a legal 

duty due to these interpretations to allow Hovey to apply. 

Therefore, the judgment of the District Court is reversed and ,-/ 

this cause remanded for the issuance of an.,,:%propriate writ. / / 

Justice, 

%~Adl* &!ii WLQ 

Chief Justice 
Mr. Justice Daniel J. Shea, concurring: 

I agree with the result of the majority opinion but not 

in all that is said. I further emphasize that the handling 

of the case of Fletcher v. DOR, supra, which case was being 

processed through the District Court almost simultaneously 

with this case, is hardly an example of even-handed treatment 

by the agency. 

In Fletcher v. DOR, a Bozeman liquor license applicant 

was faced with virtually the same problem as exists in this 

case. However, on March 8, 1982, the District Court for the 

same First Judicial District (Judge Arnold Olsen presiding) 

held the regulation involved here to be invalid. The agency 

did not appeal from this ruling, the result being that the 

applicant received the liquor license. 

In arguing this appeal, counsel for the agency 

acknowledged this inconsistency, but properly argued that he, 

as one of the attorneys, is not responsible for the agency's 

decisions. Nonetheless, someone in that agency, in deciding 

not to appeal the Fletcher case, permitted a license to issue 

by the simple expedient of ordering that the agency not 

appeal from the District Court's ruling. Yet, in this case, 

after obtaining a result 180 degrees from the decision in 

Fletcher, the agency argues that the applicant should not be 

permitted to apply for a license because of the proximity of 

his establishment to a church. 

The agency surely didn't think much of its regulation in 

the Fletcher case if it decided not to take an appeal. It is 

now more than a little inconsistent and more than a little 

unfair for the agency to argue here that the agency 

regulation should be given full force and effect. How can 
the agency claim to be effectively enforcing statutes and 

regulations under the police power of the State when -- it took 

- such -- a diametrically opposed position in the Fletcher case? 

This Court and most courts have been most reluctant to 

apply equitable estoppel to a governmental agency, but 

perhaps the time has come to rigorously apply this doctrine. 

It may well be time for this Court to breathe more life into 

this doctrine by rigorously applying it to governmental 

agencies when grossly inequitable results may be the result 

of not applying it. 

I would apply a form of collateral estoppel or waiver in 

m* 

this case. In the Fletcher case, the agency 42.12.129 

A.R.M., the sa.me rule on which the District Court in this 

case relied, on in refusing relief to the petitioner here. 

And now, ' of course, the agency relies on this rule in 

defending the appeal. I would not permit the agency to do 

so. Once the 60 days expired for the agency to take its 

appeal -in the Fletcher case, the agency effectively 

acquiesced in a ruling that the rule was invalid. 

The petitioner here had a right to hold the agency to 

its acquiescence in the Fletcher case that the rule was 

invalid. If invalid as to the Fletcher application, the rule 

was also invalid as to the license application in this case.