GARTNER v MARTIN
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No. 13540 I N THE SUPREME COURT OF THE STATE O M N A A F OTN 1977 WILBERT F. GARTNER, P l a i n t i f f and A p p e l l a n t , T O A C. MARTIN, H M S D e f e n d a n t and R e s p o n d e n t . Appeal from: D i s t r i c t Court of t h e Tenth J u d i c i a l D i s t r i c t , H o n o r a b l e LeRoy L. McKinnon, J u d g e p r e s i d i n g . C o u n s e l o f Record: For Appellant: B. M i l e s L a r s o n a r g u e d , S t a n f o r d , Montana F o r Respondent: Theodore P. Cowan a r g u e d , Lewistown, Montana Submitted: Decided : Filed: March 9 , 1977 JUN 8 M r . Chief J u s t i c e Paul G. H a t f i e l d d e l i v e r e d t h e Opinion of t h e Court. P l a i n t i f f Wilbert F. Gartner b r i n g s t h i s appeal from an adverse suIing.:of t h e - d i s t r i c t c o u r t , J u d i t h Basin.County, g r a n t i n g summary judgment t o defendant Thomas C. Martin and denying summary judgment t o p l a i n t i f f a f t e r cross-motions f o r summary judgment were submitted by both p a r t i e s and a hearing held. P l a i n t i f f Gartner brought an a c t i o n i n d i s t r i c t c o u r t t o q u i e t t i t l e t o Montana R e t a i l Beer and Liquor License No. 36-452-3630-01, City Club Bar, Hobson, Montana. Defendant Martin answered admitting Gartner was t h e owner and i n possession of s a i d beer and l i q u o r l i c e n s e and admitted claiming an i n t e r e s t i n t h e l i c e n s e . Martin a l s o f i l e d a counterclaim, again admitting Gartner t o be t h e t i t l e holder of t h e l i c e n s e , a l l e g i n g t h a t i n 1956 Martin owned t h e l i c e n s e i n question. A t t h a t time he assigned t h e l i c e n s e t o Dewey Meyer, who i n t u r n signed a c h a t t e l mortgage i n t h e sum of $16,000 a g a i n s t t h e l i c e n s e t o p r o t e c t Martin's i n t e r e s t t h e r e i n and t h e c h a t t e l mortgage was f i l e d f o r record with t h e S t a t e Department of Revenue, Montana Liquor Control Board on J u l y 18, 1956; t h a t Martin i s and has been t h e owner of Lots 1 and 2, Block 13, O r i g i n a l Townsite of Hobson, J u d i t h Basin County, Montana, upon which i s located t h e City Club Bar where t h e d i s puted l i c e n s e was used. T h e r e a f t e r s e v e r a l d i f f e r e n t persons were assigned t h e l i c e n s e and i n each case Martin was acknowledged i n w r i t i n g by each assignee a s mortgagee on t h e l i c e n s e . Gartner i s t h e l a s t person t o d a t e who was assigned t h e l i c e n s e . Gartner con- sented i n w r i t i n g t h a t Martin be placed on t h e l i c e n s e a s a mortgagee on March 26, 1971. Martin f u r t h e r a l l e g e d a general l e a s e agreement between himself and Gartner f o r one year a f t e r May 1, 1974, and a breach of t h a t l e a s e . I n r e p l y , Gartner s t a t e s t h e g e n e r a l l e a s e agreement expired by i t s terms on May 1, 1975. Both p a r t i e s moved f o t summary judgment and a f t e r a hearing and testimony by Martin, t h e c o u r t , a f t e r c o n s i d e r a t i o n of t h e cross-motions f o r summary judgment, found t h a t Montana R e t a i l Beer and Liquor License No. 36-452-3630-01 was s u b j e c t t o t h e c h a t t e l mortgage held by.-Martin; t h a t p l a i n t i f f knowingly received s a i d l i c e n s e s u b j e c t t o t h e mortgage; t h a t defendant has never been paid a reasonable purchase p r i c e f o r s a i d l i c e n s e ; and, t h a t Gartner v i o l a t e d t h e terms of t h e mortgage i n claiming ownership of t h e l i c e n s e . The d i s t r i c t c o u r t found a s a conclu- s i o n of law, t h a t Martin i s t h e r i g h t f u l owner of Montana R e t a i l Beer and Liquor License No. 36-452-3630-01. These i s s u e s a r e presented f o r t h i s Court's review: (1) Did t h e d i s t r i c t c o u r t e r r i n e n t e r i n g i t s judgment determining t h a t Montana R e t a i l Beer and Liquor License No. 36-452-3630-01 was s u b j e c t t o t h e c h a t t l e mortgage held by Martin? (2) Did t h e c o u r t e r r i n f i n d i n g t h a t Gartner never paid a reasonable p r i c e f o r t h e r e t a i l beer and l i q u o r l i c e n s e and Martin i s t h e r i g h t f u l owner of Montana R e t a i l Beer and Liquor License No. 36-452-3630-Ol? Testimony shows t h e r e was no note evidencing t h e $16,000 s t a t e d i n t h e c h a t t e l mortgage and Martin himself d r a f t e d t h e mortgage on t h e advice of Howard King, t h e l i q u o r i n s p e c t o r a t t h a t time. Much discussion could be had, however t h i s case i s cont r o l l e d by Beard v. McCormick, 147 Mont. 361, 364, 411 P.2d ,964, where t h e Court s t a t e d : "There can be no question t h a t t h e l e a s e of t h e premises and t h e assignment of t h e l i c e n s e s were both p a r t of t h e same t r a n s a c t i o n between t h e p a r t i e s . * Our Codes r e q u i r e t h a t those dispensing l i q u o r be l i c e n s e d (R.C.M. 1947, $4-401) and t h a t such l i c e n s i n g be only a f t e r approval of t h e Liquor Control Board. R.C.M. 1947, $4-410, s t a t e s i n p a r t : * *. "'No t r a n s f e r of any l i c e n s e a s t o person o r l o c a t i o n s h a l l be e f f e c t i v e u n l e s s and u n t i l approved ' by t h e board * * *. "The defendant could n o t , w i t h i n t h e law, o p e r a t e t h e p l a i n t i f f s ' t a v e r n under t h e e x i s t i n g l e a s e u n t i l approval of t h e Board was given. Assignment of t h e p l a i n t i f f s ' l i c e n s e s t o t h e defendant was an e s s e n t i a l s t e p toward such approval, t h e same being necessary i f t h e Board was t o e f f e c t i v e l y preserve i t s powers and a u t h o r i t y over t h e tavern operator and e x e r c i s e i t s s t a t u t o r y d u t i e s a s prescribed by our codes. The l e a s e would have been t o t a l l y u s e l e s s without such assignment s i n c e t h e b u i l d i n g could be used only a s a tavern. A s between t h e p a r t i e s t h e r e f o r e , t h e instruments stand together and a r e inseparable. "But one case i s found i n Montana s i m i l a r t o t h e one a t b a r . I n S u l l i v a n v. Marsh, 124 Mont. 415, 225 P.2d 868, t h e p l a i n t i f f S u l l i v a n leased h i s h o t e l and b a r t o t h e defendant f o r f i v e years a t $3,000 per year. The l e a s e period was from 1944 t o 1949. The defendant and one Tappa executed t h e agreement May 2 7 , 1944, and took possession of t h e premises J u l y 1, 1944, t h e day a f t e r t h e p l a i n t i f f ' s l i q u o r l i c e n s e s expired. For t h e next f i v e y e a r s , t h e defendant paid f o r and was issued i n h i s name t h e necessary l i q u o r l i c e n s e s t o operate t h e tavern. The l e a s e contained no provision f o r i t s renewal and renewal was refused by t h e p l a i n t i f f a few weeks p r i o r t o i t s e x p i r a t i o n . The defendant turned back t o t h e p l a i n t i f f t h e p r o p e r t i e s and f i x t u r e s covered by t h e l e a s e b u t refused t o r e t u r n t h e l i q u o r l i c e n s e and applied t o t h e Board f o r a t r a n s f e r t o a d i f f e r e n t locat i o n . This c o u r t eventually held t h a t t h e defendant had a r i g h t t o t h e l i c e n s e . The important d i f f e r e n c e s i n t h a t case from t h i s one a r e t h a t (1) no assignment was necessary from S u l l i v a n t o Marsh. S u l l i v a n l e t h i s l i c e n s e e x p i r e and Marsh applied f o r one i n h i s own name, and, (2) l i q u o r l i c e n s e s were n o t l i m i t e d i n 1944 by our quota law. They were e a s i l y obtained and held l i t t l e g r e a t e r value than t h e renewal expenses. W f e e l , t h e r e f o r e , t h a t t h e S u l l i v a n e case i s not a p p l i c a b l e t o t h e one a t bar. A t t h e time t h e l e a s e i n t h e S u l l i v a n case was executed, r e t a i l beer and l i q u o r l i c e n s e s were not t h e t r e a s u r e they appear t o be today, because of t h e quota system now i n e f f e c t . ** Courts of e q u i t y a r e n o t bound by c a s t - i r o n r u l e s . The r u l e s by which they a r e governed a r e f l e x i b l e and adapt themselves t o t h e exigencies of t h e p a r t i c u l a r case. Relief w i l l be granted when, i n view of a l l t h e circumstances, t o deny i t would permit one p a r t y t o s u f f e r a g r o s s wrong a t t h e hands of t h e other! Parchen v. Chessman, 49 Mont. 326, 339, 142 P. 631, 635. "I* " e f e e l t h e t r i a l court e r r e d i n not binding t h e W l e a s e and t h e assignment together and causing one t o be dependent upon t h e o t h e r . I n h e r testimony, t h e de$50 under fendant s a i d she paid only the r e n t required t h e l e a s e . She admitted she paid no a d d i t i o n a l sums i n connection with t h e tavern business t o the p l a i n t i f f . N o money was paid d i r e c t l y f o r t h e t r a n s f e r of t h e unexpired l i c e n s e s and no p r o f i t s were shared. About a year and one-half before t h e l e a s e expired, defendant admitted she t o l d t h e p l a i n t i f f she thought t h e l i c e n s e s were then worth $10,000 o r more. - - "It i s inconceivable t h a t t h e p l a i n t i f f intended t o r e l i n q u i s h h i s valuable l i c e n s e p r i v i l e g e s f o r a s l i t t l e a s $3,000 c o l l e c t e d i n t h e form of r e n t over a give-year period by $50 monthly i n s t a l l m e n t payments." The i n s t a n t case p r e s e n t s s u f f i c i e n t l y s i m i l a r f a c t s . Therefore, t h e findings of f a c t and conclusion of law of t h e t r i a l judge a r e affirmed, i n t h a t Martin i s t h e r i g h t f u l owner of Montana R e t a i l Beer and Liquor License No. 36-452-3630-01. m i e f Justice W Concur: e % I , d S ( a / , ~ 1'1
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