Court Opinion

ID: 9794818
Source: CourtListenerOpinion
Date Created: 2023-08-31 03:12:23.156834+00
Date Added: 2024-06-11T08:20:53.852455
License: Public Domain

GRAY, Chief Justice
(dissenting).
I have no disagreement with the general basic concept which the majority appears to have followed that a trial court in an action for the foreclosure of a mortgage may, in the exercise of its broad discretion and upon a proper showing, appoint a receiver to take possession of the mortgaged property and operate it as a going concern in the interest of the parties involved. Annotation 82 A.L.R.2d 1075, et sequitur. Neither do I question the general authority of a trial Court under appropriate circumstances to place a receiver in possession of the mortgaged property when a party to the foreclosure action refuses to deliver up possession. Gloyd v. Rutherford, 62 Wash.2d 59, 380 P.2d 867, 869. I do not agree, however, .that the concept can be given unlimited sway under the circumstances of this case.
Primarily I am unable to accept the holding of the majority that the district court did not abuse its discretion and exceed its authority when it attempted to empower the receiver, among other things, to take possession of the liquor license, together with the business authorized thereby, and without approval of the licensing authority to turn the operation of that business over to C. Hampton Smith, a plaintiff in the action to foreclose the second mortgage. Apparently this was done on the theory that in some fashion or other the liquor license and business had become attached to the real property involved or that it was a “chattel” within the terms of Massachusetts Mutual’s chattel mortgage. Incidentally, at the time the receiver was appointed no effort was being made by Massachusetts Mutual to foreclose the chattel mortgage and no cross-claim had been filed by it against Gladstone Hotel, Inc., seeking foreclosure of the chattel mortgage. All that had been done was to notify the Johnsons, as individuals, and the hotel corporation that it had “elected to take immediate and full possession” of the chat*252tels and demanded prompt delivery of possession.
I would hold that the orders of the trial court relating to and involving the liquor license and the carrying on of that business under the receivership were complete nul-lities. Certainly the theory that the liquor license became attached to the real estate is wholly untenable. Under the provisions of § 12-13, W.S.1957, the holder of a liquor license may at any time upon approval of the licensing authority transfer and renew the license “on different premises on the same basis as an original application.” It is conceded by the Smiths, and the record is beyond dispute in this respect, that the hotel corporation was the owner of the license at all times herein. As owner, the corporation had the right at any time upon approval of the licensing authority to transfer the license to other premises, and this notwithstanding the terms of the lease. If the lease agreement were breached, the only remedy available to the lessor would he an action for damages. To hold otherwise is to place an instrument of oppression in the hands of the owner of the licensed premises.
With respect to the holding that Massachusetts Mutual obtained a security interest in the liquor license, it is my view that such holding is not only contrary to law, it is contrary to the uncontradicted facts disclosed by the record. Bear in mind that although the hotel corporation took the personal property subject to the mortgage, it did not assume payment of the debts secured by the Smiths’ mortgage or the mortgages of Massachusetts Mutual. Consequently there was no debtor-creditor relationship between the hotel corporation and the other parties, and at the time the Johnsons acquired all of the capital stock of the corporation they obligated themselves to pay to Stuckenhoff the sum of $60,000 for the purchase of that stock. I mention this simply to demonstrate that the corporation was something more than a mere “paper transaction” and the equities of the Johnsons must be considered along with the equities of the Smiths.
Turning now to the right of a license-holder, as a matter of law, to transfer a valid security interest in a liquor license, the pertinent provisions of § 12-13, W.S. 1957, provide that “a license shall be a personal privilege, good for one year unless sooner revoked.” Then, after making provisions for transfers by an actual bona fide sale in good faith upon approval of the licensing authorities, the statute goes on to provide, .“except as above provided, no license shall be transferred or sold, nor shall it be used for any place not described in the license at the time of issuance, nor shall it be subject to attachment, garnishment or execution.” Early in the administration of the statutes regulating the sale of intoxicating liquors, and until this case and the recent case of Bogus v. American National Bank of Cheyenne, Wyoming, 10 Cir., 401 F.2d 458, which involved the Uniform Commercial Code, which, of course, is not involved here, it was common knowledge that no transfer of an interest in a liquor license could be made without approval of the licensing authority and the granting of a security interest in a license was regarded as a transfer subject to the statute. That is well demonstrated by the positions taken by counsel for all of the parties at the time the receiver was appointed. Mr. Bostwick, a practicing attorney in Wyoming for many years and attorney for the appellants, vigorously advanced this proposition to the trial court. Mr. Wilkerson, attorney for the Smiths and also an attorney of longstanding of the Bar and experienced in such matters, at the time of the initial hearing stated to the court, “It’s true that you can’t mortgage a liquor license. There is no question about that, and that’s why it’s not in here. The draftsman of these instruments was very thorough. And I agree with counsel that you cannot mortgage a liquor license.” In fairness it can be said that he now has some second thoughts in the matter based upon a theory that the liquor license was an integral part of the operation of the hotel and it was contemplated that it was in*253tended to remain such by the Smiths. The facts, however, lend no support to that argument. Mr. Wilson, also an attorney of longstanding and experience and representing Massachusetts Mutual at the initial hearing, according to the trial court, at no time contended that the liquor license was covered by the mortgage. To me it is clear that such a construction was in keeping with the purpose and the intent of the statute to prevent transfers through, operation of general law.
Turning now to the finding of the trial court that the chattel mortgage of Massachusetts Mutual embraced the liquor license within its terms, I am of the opinion that such finding is not supported by the evidence and in fact is contrary thereto. All parties agreed that the liquor license was about the only valuable asset of the hotel corporation, and it was so recognized by the Smiths and the bank in their negotiations for the loan that enabled the Smiths to pay off Massachusetts Mutual. Certainly the liquor license had value also at the time it was transferred to the corporation. Significantly the schedule attached to the chattel mortgage covered most of the furnishings, glassware, equipment and miscellanous chattels used in connection with the business, but it did not include the most valuable asset of all, the liquor license, and did not include the liquor inventory. To say that the license nevertheless was embraced in the language “all other items necessary or useful to the practical and successful operation of the hotel” is untenable, particularly when such language is attempted to be enforced against the hotel corporation through constructive notice. Aside from the doctrine of ejusdem generis, if Massachusetts Mutual believed for one moment at the time it was taking security for its loan that a liquor license could be included, certainly one would expect to find express language accomplishing that result. A further indication that Massachusetts Mutual laid no claim to the liquor license is the fact that so far as the record shows it did not, subsequent to the amendment of the statute in 1961, disclose an interest in the license which the statute required. The particular provision provides that no person “shall have any interest, directly or indirectly, in a liquor license unless he shall sign and verify the application for the license.” Ch. 172, § 2(B), S.L. of Wyoming, 1961 (§ 12-9(B), W.S.19S7, 1967 Cum.Supp.).
The rule is fundamental that in a mortgage foreclosure the court is without authority to appoint a receiver for anything more than the property covered by the mortgage, IS Am.Jur.2d Chattel Mortgages, § 233, p. 393; 14 C.J.S. Chattel Mortgages § 409, p. 1063; and inasmuch as the liquor license was not subject to either the real estate mortgages or the chattel mortgage, the court erred in that respect.
I am further of the opinion that the order of the trial court dated May 3, 1968, insofar as it undertook to exercise jurisdiction as among the parties “of the right to apply for renewal or extension” of the liquor license and to sell the same as a part of the mortgaged real property, was likewise a nullity. As I have shown, the court had no jurisdiction over the license at any time. While the order in that respect is couched in careful language, the effect of the order is to transfer to the purchaser of the real estate at the foreclosure sale based upon the second mortgage the personal preferential right and privilege of the hotel corporation to apply for renewal of its license. In this connection I should mention that in order to accomplish that result the trial court previously — and again without authority— had restrained Gladstone Hotel, Inc., from proceeding with its application before the licensing authorities to transfer the license to other premises after it became apparent to its officers that the lease on the licensed premises would not be renewed.
There are other pronouncements made in the majority opinion with which I also *254disagree, but sufficient has been shown that to me requires reversal of the trial court’s order and judgment from which this appeal is taken.