Summary
In State ex rel. McCarten v. Harris, 112 Mont. 344, 349, 115 P.2d 292, 295, this court said: "Since the licenses are not transferable and are `applicable only to the premises in respect to which they are issued' (section 8), it is clear that the possession of suitable premises is a qualification which the applicant must possess in order to be entitled to a license."
Summary of this case from State ex Rel., Jester v. PaigeOpinion
No. 8,228.
Submitted June 30, 1941.
Decided July 10, 1941.
Intoxicating Liquors — Mandamus to Compel Issuance of Retail License — Duties and Powers of State Liquor Control Board — Discretion — Statutes and Statutory Construction — Board's Discretionary Authority not Delegable to Inhabitants of Town — Petition for Writ — Sufficiency. Intoxicating Liquors — Mandamus to Compel Issuance of Retail Liquor License — State Liquor Control Board Governed by Rules and Regulations, not Whim, Caprice or Extraneous Reasons. 1. In a proceeding in mandamus to compel the State Liquor Control Board to issue a retail liquor license, under Chapter 84, Laws of 1937, held that a review of the provisions of the Act makes it apparent that, among other things, the suitability of the premises on which the sale of liquor is contemplated to be carried on is controlled by rules and regulations, and not by caprice, whim or extraneous reason. Statutes — Interpretation — Effect of Failure of Legislature to Change Act as Interpreted by Supreme Court. 2. Where, after interpretation of a statute by the supreme court, the legislature makes radical changes in phraseology in the Act, an intention is thereby shown to establish a rule different from that announced by the court; if, on the other hand, it fails to change another part of the statute construed, its failure in that behalf must logically be taken as an intention to retain to that extent the rule announced by the court. Intoxicating Liquors — Mandatory Duty of State Liquor Control Board to Issue License to Qualified Applicants — Holding of Supreme Court in Prior Case Impliedly Approved by Legislature. 3. Held, under rule 2 above, that a prior decision of the supreme court to the effect that section 3 of Chapter 84, supra, makes the issuance of retail liquor licenses by the State Liquor Control Board to qualified applicants mandatory was impliedly approved by the legislature in that, while it thereafter repealed certain portions of the Act as construed by the court, it made no change therein as to the mandatory duty of the board in the above particular. Same — Possession of Suitable Premises for Carrying on Liquor Business — When Liquor Board must Issue License. 4. The possession of suitable premises for carrying on the sale of liquor at retail is a qualification which an applicant for a license must possess, in addition to others; and where the Liquor Control Board in the due exercise of its discretion finds that all the qualifications exist, it must issue the license and has no discretion to refuse it for extraneous reasons. Same — Admission by Liquor Board That Only Reason for Refusal of License a Given One, Court on Mandamus may not Indulge Presumption That It had Another Reason. 5. Where defendant State Liquor Control Board by motion to quash a petition for writ of mandate to compel it to issue a retail liquor license admitted that its sole reason for refusal to issue it was that it believed that a majority of the inhabitants of a town "and vicinity" were opposed to it, the court could not indulge the presumption that the board had another reason, i.e., that the petitioner's premises were unsuitable. Same — State Liquor Board Without Power to Delegate Discretionary Authority in Issuing Liquor Licenses to Any Other Agency. 6. The State Board of Liquor Control not having any statutory authority to delegate its discretionary power to pass upon the sufficiency of an application for a retail liquor license to any other agency, its contention in defense to a petition for writ of mandate to compel issuance of the license that a finding of the board that the inhabitants of a given town and vicinity were opposed to granting it was equivalent to a finding that petitioner's premises were unsuitable, has no merit. Same — Mandamus to Compel Issuance of License — Sufficiency of Petition for Writ. 7. The allegation in a petition for writ of mandate to compel the State Liquor Control Board to issue a retail liquor license to petitioner that the premises in which the business is intended to be carried on "conform to all provisions of law and rules and regulations" of the board, held sufficient as against the contention of defendant board, relying on section 6 of Chapter 84, supra, that it was further incumbent upon petitioner to allege that the premises were "suitable for the carrying on of the business." Same — State Liquor Control Board may not Find Premises of Applicant for License Unsuitable on Grounds Other Than Those Found in Statute. 8. In the absence of a provision in Chapter 84, supra, authorizing disqualification of the premises of an applicant for a retail liquor license for grounds other than those set forth in subdivision 5 of section 10 thereof — to-wit, if they do not conform to the provisions of law and the rules and regulations of the State Liquor Control Board — which rules and regulations must be laid down by the board so that its action in each instance will be free from any imputation of caprice, whim or arbitrary conduct, the board is without power to find the premises unsuitable on such extraneous grounds. Same — Fact That Inhabitants of Town Opposed to Granting of Liquor License not Reason for Refusal of License. 9. The legislature, in enacting Chapter 84, Laws of 1937, regulating the sale of liquor at retail, not having made any provision for authorizing a plebiscite or local option election, informal or otherwise, with reference to individual applications for license to sell liquor, the fact that a majority of the inhabitants of a town "and vicinity" may be opposed to granting a license does not constitute a reason for refusal of the license by the State Board of Liquor Control.
Appeal from District Court, Richland County; Frank P. Leiper, Judge.
Mr. C.T. Sanders, for Appellant, submitted a brief and argued the cause orally.
Mr. John W. Bonner, Attorney General, Mr. Clarence Hanley, Assistant Attorney General, and Mr. John E. Erickson, for Respondents, submitted a brief; Mr. Hanley and Mr. Erickson argued the cause orally.
Messrs. Booth Booth, Amici Curiae, submitted a brief; Mr. Edwin S. Booth, Sr., argued the cause orally.
Petitioner appeals from a judgment entered after an order sustaining defendants' motion to quash his petition for a writ of mandate. The sole question is the sufficiency of the petition to state a cause of action for the relief sought.
It is not necessary to set forth the petition in full. It recites that the defendants constitute the Montana Liquor Control Board and that the petitioner filed his application for a retail liquor license and tendered the statutory fee on March 19, 1941; sets forth as an exhibit a copy of the application filed by him with the defendants; expressly alleges petitioner's possession of the various qualifications required of applicants by Chapter 84 of the Laws of 1937, and expressly negatives the various disqualifications imposed on persons and premises by the Act; recites that his premises conform to all the provisions of law and the rules and regulations of the board; recites that the defendants set a time for the consideration of his application and afforded him an opportunity to state his qualifications and those of his premises for such retail liquor license, but on the same day refused without legal cause to grant him the license; that defendants' action "was based on the sole ground and for the sole reason that the said Defendant Board determined not to grant such application for a license to sell liquor at retail, to your petitioner at his premises aforesaid, because said Defendant Board believed and was of the opinion that a majority of the inhabitants of Sidney and vicinity, were opposed thereto."
It is agreed that the chief question is the amount of discretion reposed in the board by the Act. The preamble declares it the policy of the state to grant licenses to persons "qualified under this Act" to sell liquor at retail posted price "in accordance with this Act and under rules and regulations promulgated by the said board." Section 3 provides that the board "is hereby empowered, authorized and directed to issue licenses to qualified applicants as herein provided." Section 6 provides that within thirty days after the filing of the application the board shall cause a thorough investigation to be made and "shall determine whether such applicant is qualified to receive a license and his premises are suitable for the carrying on of the business, and whether the requirements of this Act and the rules and regulations promulgated by the board are met and complied with." Section 8 provides among other things that "all licenses are applicable only to the premises in respect to which they are issued." Subdivision 5 of section 10 provides that no license shall be issued to "a person who is not qualified or whose premises do not conform to the provisions of this Act, or with the rules and regulations promulgated by the board." Section 13 expressly disqualifies certain premises within six hundred feet of places of worship and schools not commercially operated. Section 22 requires the board to "make, promulgate and publish" such rules and regulations as it may deem necessary in the administration of the Act, except as limited or prohibited by law; and that they "shall have the force of statute."
It is significant that among these rules and regulations [1] required to be made, promulgated and published are those prescribing "the proof to be furnished and the conditions to be observed in the issuance of licenses," "the conditions and qualifications necessary to obtain a license," and "specifying and describing the place and manner in which the liquor may be lawfully kept or stored," and "covering the conduct, management and equipment of premises licensed to sell liquor," etc. It seems clear that the suitability of the premises is contemplated within these provisions and that it is the legislative intent to require that it be controlled by rule and not by caprice, whim, or reason of the kind admitted by the motion to quash.
As stated by this court in McCarten v. Sanderson, 111 [2, 3] Mont. 407, 109 P.2d 1108, 132 A.L.R. 1229, section 3 makes mandatory the issuance of licenses "to qualified applicants as herein provided." While not strictly in issue in that case, in which the question was the duty of the board of county commissioners to approve applications under Chapter 221, Laws of 1939 (since repealed by Chapter 163, Laws of 1941), it became necessary in the opinion to contrast the statutory provision directing the state board to issue licenses to qualified applicants and the provision requiring the applicant to first procure the county board's approval, but not directing the board to give its approval to qualified applicants. As we pointed out in that opinion, the fact that the limited local option feature of the 1937 Act for the licensing of retail liquor stores had expired might well explain the greater degree of discretion intrusted by the legislature to the local authorities than to the state board, in not directing them to approve the applications of qualified applicants. At any rate, the distinction was essential to the opinion and the legislature's subsequent action in repealing the prerequisite that the county commissioners' approval be obtained, but not changing in any particular the sections relating to the state board, is significant. Where, after a statute has been interpreted, the legislature makes radical changes in phraseology an intention is thereby shown to establish a rule different from that announced by the court. ( Edwards v. County of Lewis and Clark, 53 Mont. 359, 165 P. 297.) Conversely its failure to change another part of the statute construed must logically be taken as an intention to retain to that extent the rule announced by the court.
It is of course true that all parts of the Act must be [4] considered with section 3; and, as appellant necessarily concedes, that section is limited by subdivision 5 of section 10 which provides that no license shall be issued to a person whose premises do not conform to the provisions of the Act or to the board's rules and regulations made thereunder. Since the licenses are not transferable and are "applicable only to the premises in respect to which they are issued" (section 8), it is clear that the possession of suitable premises is a qualification which the applicant must possess in order to be entitled to a license. That is obviously why section 6 requires the board to make a thorough investigation to determine, among other things, whether the premises are suitable and all requirements of the statute and of the rules and regulations complied with. The board's discretion necessarily extends to the determination of all those qualifications, and if in the due exercise of its discretion the board finds that they exist, it is directed by the Act to issue the license and has no discretion to refuse it for extraneous reasons.
The defendants admit that the personal qualifications of the [5, 6] applicant are not in question, but contend that it must be presumed that upon investigation the board found the applicant's premises not suitable. However, it is alleged in the complaint, and for present purposes admitted by the motion to quash, that the board's sole reason for refusal of the license was that it "believed and was of the opinion that a majority of the inhabitants of Sidney and vicinity were opposed thereto." We cannot therefore indulge the presumption that the board had an additional reason, or that the additional reason was the unsuitability of the petitioner's premises.
They next contend that a finding that a majority of the inhabitants were opposed to the license is equivalent to a finding by the board that the premises were unsuitable. We are entirely unable to follow this reasoning, for obviously there might be any number of reasons other than the unsuitability of the premises upon which such majority objection might be based, including the general objection which might formerly have been expressed at a local option election; and even if we could find from that statement that the local majority opposed the license for that reason we can still not find that the board had the same reason, for it has no statutory authority to delegate its discretionary power to a local majority or to any other agency.
The board next contends that the petition is insufficient in [7, 8] alleging that the premises "conform to all provisions of law and rules and regulations" of the board without stating also that they are "suitable for the carrying on of the business." (Section 6 of the Act.) The contention is that even aside from the statute and the rules and regulations the board has the discretion to find that the premises are not suitable. However, under subdivision 5 of section 10, an applicant is disqualified for the license only if his premises do not conform to the provisions of law and of the rules and regulations, and there is no provision in the Act disqualifying either him or his premises because without reference to the Act or its rules or regulations thereunder, the board may find the premises unsuitable.
It must, therefore, be held that the allegation of conformity of the premises with all requirements of statute, rules and regulations is for present purposes a sufficient statement of the suitability of the premises.
Naturally, it may not be possible for the board to define the term "suitable" absolutely in its rules and regulations and there must be some discretion to be exercised by it in arriving at a decision with reference to each particular application. But obviously under the Act the general rules and regulations must be laid down by the board so that its action in each instance will be free from any imputation of caprice, whim or arbitrary conduct.
It may be unfortunate that the legislature has seen fit to [9] remove all measure of local control, but its reason for repealing the requirement that local authorities' approval be obtained may well have been for the sole purpose of preventing arbitrary action. Certainly in enacting the repeal statute it made no provision for intrusting to the defendant board the arbitrary power thus taken away from the local authorities.
We might say in passing that while local option provisions are common we have been able to find no similar or comparable Act by which the licensing authority is authorized to conduct a plebiscite or local option election, informal or otherwise, with reference to individual applications. Certainly the legislature has not done so in this instance, and if it were to do so our traditional principles of jurisprudence would require established rules and regulations to insure uniformity of procedure, and especially to define the territory the residents of which are to express their preferences. Otherwise the board might in various instances consider the preference of the people of the county, of the city, the land township, the section of land, several miles or so each way on a road, or any other territorial tract, without in any one situation being open to the complaint of obvious abuse of discretion. By so doing it could arrive at a desired arbitrary result in each individual instance, thus denying the equal protection of the law. Certainly nothing appears in the statutes or in the pleadings of this case to define what is meant by the "vicinity," the inhabitants of which are believed to be opposed to the petitioner's application, and it might be possible to consider an entirely different territorial boundary upon the next application for a license for the same premises by the same or another applicant. In the light of the features of the Act commented on above, and of the local option statutes, we cannot find a legislative intent to make possible such a result. The local option provision of the general liquor control action, sections 2815.96 to 2815.103, and the local option provisions of the Beer Act, sections 2815.53 to 2815.59, are in point, the latter being applicable because section 9 of the Act makes the possession of a beer license a prerequisite to a license under this Act. These statutes are quite specific in setting forth the uniform procedure to be followed and of course relate to the entire territory and not to particular applications for licenses therein.
The petition stating a cause of action for the relief sought, it follows that the motion to quash should have been denied. If in fact the board has found that the petitioner or his premises are not qualified under the statute and the rules and regulations of the board for the license sought, that is a matter to be pleaded and proven by it.
The judgment is therefore reversed and the district court directed to set aside the order granting the motion to quash and the judgment entered thereon, and to make an order denying the motion and granting the defendants time in which to plead further.
ASSOCIATE JUSTICES ANGSTMAN, ANDERSON, MORRIS and HONORABLE A.J. HORSKY, District Judge, sitting in place of MR. JUSTICE ERICKSON, disqualified, concur.