State Ex Rel. Wiley v. District Court of Sixteenth Judicial Dist.

Relator is the holder of a license issued by the Liquor Control Board authorizing him to sell liquor at retail at 611 Main Street in Miles City. He has paid the license fee required for selling liquor and has likewise been issued a state beer license. After obtaining his state license he tendered to the city of Miles City an amount equal to 50% of the fees paid by him to the state board as a license fee to the city. The city refuses to accept the fee and to issue a city license. Relator proceeded to sell liquor at the place named in the state license and was arrested by the officials of the city of Miles City. He thereupon filed a complaint before the district court seeking an injunction enjoining the city and its police department from "interfering with, annulling, restricting, or rendering ineffective the retail liquor *Page 52 license" issued by the state board and enjoining them from entering the premises for the purpose of preventing him from operating as a retail liquor dealer, providing that he pays the license fee required by the city which he is willing to do. The complaint, in addition to the foregoing facts, alleged that the premises in question are not on the same street or avenue within 600 feet of any building occupied exclusively as a church, synagogue, or other place of worship, or a school; that no complaint has been filed with the state board charging relator with the commission of any act which would be cause for the suspension or revocation of a state license; that the action of the city and its officers in refusing relator a license from the city is to make the state license ineffective; that the city and its officers acted arbitrarily in denying the local license and that it is their duty to permit relator to operate under the license issued by the state board; that the premises in question are equipped with front and back bars and with fixtures and equipment necessary for the operation of a retail liquor store and that relator has purchased from the state board a complete stock of liquor, investing large sums of money in the license, fixtures and stock, all of which will be lost to him if he is not permitted to operate. To the complaint the city filed a general and special demurrer. The demurrer on the general ground was sustained and also the demurrer was sustained on two of the special grounds; namely, that it was unintelligible and uncertain in the following particulars: (1) "That the complaint does not allege and it cannot be told therefrom whether the defendant city has provided for the issuance of licenses to persons to whom a license has been issued by the State Liquor Control Board"; and (2) "That if defendant city has by ordinance or otherwise provided for the issuance of such license the said complaint does not allege nor can it be told therefrom the provisions or requirements thereof and whether or not the plaintiff complied with the provisions and requirements required by the defendant in making his application to the said city." Upon sustaining the *Page 53 demurrer the court granted plaintiff, relator above-named, thirty days within which to file and serve an amended complaint. Plaintiff declining to plead further, judgment was entered in favor of the city, dismissing the action and awarding the city its costs. Relator thereupon and by this proceeding seeks the supervisory powers of this court to annul the order and judgment of the court stressing the inadequacy of an appeal. Relator contends that under the statutes and prior decisions of this court the city of Miles City was without authority to decline to accept the license fee tendered by him, and that the city has no authority to interfere with his right to sell liquor pursuant to the license issued by the state board. He contends that the sole jurisdiction of selecting applicants to whom licenses shall be issued for the sale of liquor and the premises where they shall be sold rests in the state board and that when the state board has acted the city has no jurisdiction in the matter other than to provide for the collection of a city license fee which cannot exceed one-half of the fee paid to the state. The statutes relied upon by relator in support of his contention are Chapter 84 of the Laws of 1937; Chapter 221 of the Laws of 1939; and Chapter 163 of the Laws of 1941. In Chapter 84 the legislature, by way of preamble, declared it to be the policy of the state that it is necessary "to insure the entire control of the sale of liquor in the Montana liquor control board" to provide for certain things thereafter provided for in the Act. Section 5 of that chapter simply required the applicant to file an application before the state board without making any provision for consulting the local authorities. Section 28 of that chapter, however, contained this provision: "The city council of any incorporated town or city, or the county commissioners outside of any incorporated town or city, may provide for the issuance of licenses to persons to whom a license has been issued under the provisions of this act, and may fix license fees thereof, not to exceed a sum equal to fifty per cent (50%) of the license fee collected by the board from such licensee under this act." *Page 54 Chapter 221 of the Laws of 1939 amended section 5 by inserting this clause: "Prior to the issuance of a license by the Montana liquor control board, any applicant for such license shall have first appeared before the licensing authority of the incorporated city or town in which the premises are to be licensed, or if such premises are situate outside of the boundaries of an incorporated city or town, the applicant for a license shall have appeared before the county commissioners of the county in which the premises are to be licensed, and from such authorities receive written approval of the application for license; whereupon the applicant shall file such written approval, properly authenticated by such city licensing authorities or board of county commissioners, along with an application in writing, to the Montana liquor control board, * * *." With the statutes thus in force the case of McCarten v. Sanderson, 111 Mont. 407, 109 P.2d 1108, 1110, 132 A.L.R. 1229, came before this court, wherein this court in stating the purpose of section 28 above referred to said: "No provision for approval or control by local authorities was included in the act. Section 28 merely made permissible a local license to those licensed by the state board, with local license fees, and in effect constituted the county, city and town authorities as local license boards for that purpose, without the power to make state licenses ineffective by refusing local ones." The court further said: "It indicates that once the license has been granted by the state board it cannot be nullified by the local board through the denial of a local license, any more than it could have been before the amendment." The court also pointed out that the effect of the 1939 amendment was to restore a "measure of local control." Chapter 163 of the Laws of 1941 amended Chapter 221, Laws of[1] 1939, by eliminating that part of section 5 above quoted. It seems clear to us that the purpose of eliminating the language appearing in section 5 of Chapter 221 was to again deprive the local authorities of that "measure of local control" restored by the amendment made in 1939. In effect that is what this court *Page 55 held in State ex rel. McCarten v. Harris, 112 Mont. 344, 115 P.2d 292, 295, where this court said: "It may be unfortunate that the legislature has seen fit to 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." Respondents rely upon the case of State ex rel. McIntire v.[2] City Council of the City of Libby, 107 Mont. 216, 82 P.2d 587, wherein this court held that the city has the right by ordinance to limit the number of places where beer may be sold within the city. That case relied upon sections 5039.3 and 2815.44, both of which were passed long before the statutes relied upon by relator and, under familiar rules, to the extent of any repugnancy they are controlled by the later statutes. It is true that Chapter 84 of the Laws of 1937 was in effect when that decision was rendered and was considered by the court in its opinion. We think the effect of the McCarten cases, supra, was to[3] overrule the Libby case so far as it attempted to justify the city in limiting the number of beer licenses when to do so had the effect of nullifying the license issued by the state board, as here. It is our view that, because of the statutory history of our laws on the subject when construed in the light of the language employed in the McCarten cases, the city has no discretion when once the state board has issued a license to an applicant as here and may not prevent the licensee from engaging in business. This conclusion is further fortified by the fact that no provision is made for a refund of the state license fee if the city should exercise its claimed right to deny the right of the licensee to operate under the state license. This conclusion is further evidenced by the definition of the word "License" as given in section 2, Chapter 84, Laws of 1937, wherein it is provided that "License" means a "license issued *Page 56 by the Montana liquor control board to a qualified person under which it shall be lawful for the licensee to sell and dispense liquor at retail as provided in this act." There being nothing in the act to indicate that the state license is in any way subject to being nullified or made ineffective by local action, relator was and is entitled to sell liquor under the state license subject only to the payment of the fee which might be exacted by the city not exceeding in amount 50% of the fee paid to the state. Was plaintiff justified in seeking injunctive relief? The[4] general rule is that a court of equity will not restrain criminal prosecutions. A well established exception is that equity will intercede when property rights are about to be invaded by a threatened prosecution under a void statute. State ex rel. Freebourn v. District Court, 85 Mont. 439, 279 P. 234. Here we must assume that the prosecution is based upon a city ordinance, otherwise there would be no basis for the prosecution. As above noted, any city ordinance which attempted to operate in such a way as to make relator's state license ineffective was and is void. There being no valid law justifying the prosecution and relator having shown that his property rights are being invaded, the proper proceeding is by way of injunction. The court erred in sustaining the demurrer to the complaint. The judgment is set aside and the cause remanded to the district court with directions to vacate and set aside its order sustaining the demurrer and to enter an order overruling it and for such further proceedings, in accordance with this opinion, as may be proper. Mr. Chief Justice Johnson and Associate Justices Adair and Cheadle concur.