Johnstone Allison v. Svejovsky

ido. 13270

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P l a i n t i f f s and A p p e l l a n t s ,

-Vb - MYRhTA SVEJKOVSKY,

D e f e n d a n t and Kespondent.

CTOLLL; '11s r i c t CourI: of t h e ISighteenth J u d i c i a l D i s t r i c t , t d o n o r a b l e W. W . L e s s l e y , J u d g e p r e s i d i n g .

i ; o u ~ l s e lof Record :

For Appellants :

Murphy, R o b i n s o n , Hecka t h o r n and P h i l 1 i p s , Ka l i s p e l l , Montana 3 u u g l a s D. D a s i n g e r a r g u e d , K a l i s p e l l , Montana

Brown, P e p p e r and Kommers, Bozeman, Montana James M. Kommers a r g u e d , Bozeman, Montana

---

Submitted: August 31, 1 9 7 6

Ilecided: ' - 7 lcJq@

Mr. Justice John Conway Harrison delivered the Opinion of the Court:

This appeal arises from an action by plaintiffs for the

return of money paid on a contract or, in the alternative, to have the contract declared null and void. Defendant counter-

claimed. The district court, Gallatin County, found for de-

fendant on her counterclaim and for attorney fees in the amount of $1,800.

Defendant Myrna Svejkovsky sold ''all of her right title

and interest in the business of the operation of the bar and related facilities at the V.F.W. Club of Bozeman, Montanat1

to plaintiffs Steve Johnstone and James F. Allison. Defendant purchased what is called an interest in the bar plus $2,000

for the inventory, on June 1, 1973. In the spring of 1974, she was approached by Johnstone and Allison to purchase that interest

for the sum of $9,100 and it was sold to them on or about May 11, 1974.

Svejkovsky operated the V.F.W. Club bar, paid all expenses and kept the profits. Johnstone and Allison intended to run the bar in the same manner, but shortly after they purchased

Svejkovsky's interest a representative from the Montana Liquor Control Board informed them that this arrangement with the V.F.W.

Club would not be allowed to continue. Thereafter, Johnstone was hired as manager for the bar, for which he was to receive wages of $1,000 per month out of the profits of the bar, if there were any. When informed that they could not take all the profits, as Svejkovsky did, Johnstone and Allison tried to get

their money back by filing this action.

P l a i n t i f f a p p e l l a n t s r a i s e d t h r e e i s s u e s on a p p e a l :

1. Was t h e c o n t r a c t f o r such a s a l e i l l e g a l , a s c o n t r a r y t o law?

2. Was t h e t r a n s f e r of t h e l i q u o r a s a l e p r o h i b i t e d by law?

3. W s defendant e n t i t l e d t o judgment f o r a t t o r n e y f e e s a

i n t h e amount of $1,800.

A p p e l l a n t s a t t a c k t h e t r i a l c o u r t ' s f i n d i n g of f a c t No. 5 which s t a t e d :

"That t h e agreement between t h e p l a i n t i f f s and t h e defendant w a s n o t i n t e n d e d t o t r a n s f e r any i n t e r e s t i n t h e l i q u o r l i c e n s e owned by t h e VW Club, n o r F d i d t h e s a i d agreement r e q u i r e any a c t s t h a t were i l l e g a l o r a g a i n s t p u b l i c p o l i c y . 11

A p p e l l a n t s argue t h a t s e c t i o n 4-150 (now 4-1-201), R.C.M. 1947, provided i n p e r t i n e n t p a r t :

" S a l e of l i q u o r unlawful, when ---foreign substance i n l i q u o r forbidden---possession of l i q u o r , when unlawful. (1) Except a s provided by t h i s A c t , no person s h a l l , w i t h i n t h e s t a t e , by h i m s e l f , h i s c l e r k , s e r v a n t , o r a g e n t , expose o r keep f o r s a l e , o r d i r e c t l y o r i n d i r e c t l y o r upon any p r e t e n s e , o r upon any d e v i c e , s e l l , o r o f f e r t o s e l l , o r i n c o n s i d e r a - t i o n of t h e purchase o r t r a n s f e r of any p r o p e r t y , o r f o r any o t h e r c o n s i d e r a t i o n , o r a t t h e time of t h e t r a n s f e r of any p r o p e r t y , g i v e t o any o t h e r person any liquor. II

They a l s o argue t h a t s e c t i o n 4-420 (now 4-4-407), R.C.M. 1947, f u r t h e r p r o h i b i t s t h e s a l e of any a l c o h o l i c l i q u o r by any person n o t a l i c e n s e e . I n view of t h e f a c t t h a t Svejkovsky d i d n o t own t h e l i c e n s e , t h e V.F.W. Club d i d , a p p e l l a n t s a r g u e t h e s a l e was i n d i r e c t v i o l a t i o n of e x p r e s s s t a t u t o r y p r o v i s i o n s and i l l e g a l .

W f i n d t h e f a c t u a l p o r t i o n of t h e c o u r t ' s f i n d i n g s e .

v a l i d f o r t h e r e was no r e a l evidence i n t r o d u c e d t o o f f s e t

such findings by appellants. There was no testimony in support of their testimony that the Montana Liquor Control

Board put an end to their arrangement with the V.F.W. Club.

The agreement made with Svejkovsky was originally drawn up by appellants' attorney and then submitted to ~vejkovsky's attorney who made changes that appellants accepted without

ever referring it back to their attorney to check. The testi- mony of Johnstone clearly indicates he knew what he was buying,

investigated it before making a $4,000 payment, and that he intended to continue as Svej>kovsky. had until the legal question of the license arose. Further, immediately after the legal question arose he was hired by the V.F.W. Club to manage the club for about the same figure he would have made under the agreement with Svejkovsky.

This Court held in Hellickson v. Barrett Mobile Home Transport, Inc., 161 Mont. 455, 459, 507 P.2d 523:

'I* ** In examining the evidence, we must view the testimony in the light most favorable to the pre- vailing party. * * * However, while the presumption is in plaintiff's favor, he is also the appealing party and as such, the burden is upon him to overcome the presumption of the correctness of the trial court's findings of fact."

See also Spencer v. Robertson, 151 Mont. 507, 445 P.2d 48.

Appellants' m d issue challenges the finding that the

transfer of interest in the liquor was a part of the business and not a sale prohibited by the law of the state. They argue that section 4-150, R.C.M. 1947, clearly prohibits the sale or

transfer of liquor in consideration of the purchase or transfer of any property.

Under t h e f a c t s of t h e i n s t a n t case we ha,ve a bulk s a l e of t h e l i q u o r on t h e shelves and n o t a r e t a i l s a l e f o r consumption a s well a s a s a l e of a management i n t e r e s t i n t h e

V.F .W. Club. Here ~ o n t a n as law and l i q u o r r e g u l a t i o n s ' provide

a unique method t o operate t h i s type of club and i t was p o s s i b l e f o r t h e c o u r t , w i t h i n t h e s e laws and r e g u l a t i o n s , t o n o t e a d i s t i n c t i o n between t h e t r a n s f e r of a l i c e n s e and t h e t r a n s f e r

of a business conducted under a l i c e n s e . W affirm the t r i a l e

c o u r t ' s finding allowing t h e t r a n s f e r a s n o t one p r o h i b i t e d by law.

Appellants' t h i r d i s s u e i s d i r e c t e d t o t h e award of a t t o r n e y f e e s i n t h e amount of $1,800. The i s s u e was not contested a t t h e t r i a l and i s r a i s e d h e r e f o r t h e f i r s t time on appeal. Appellants c o n t e s t t h e award of t h i s amount by c i t i n g a r e c e n t decision of t h i s Court, Crncevich v. Georgetown Recreation Corp.,

Mont . , 541 P.2d 56, 32 S t . Rep.963. This i s n o t a c a s e f a c t u a l l y s i m i l a r t o Crncevich f o r h e r e t h e respondent counterclaimed f o r a t t o r n e y f e e s which was n o t contested by a p p e l l a n t s before t h e t r i a l c o u r t . This Court i n Spencer v. Robertson, 151 Mont. 507, 511, 445 P.2d 48, s a i d :

"Upon appeal, t h i s Court w i l l consider f o r review only those questions r a i s e d i n t h e t r i a l court."

See a l s o Rule 7 ( a ) , M.R.Civ.P.

The judgment of t h e d i s t r i c t c o u r t i s affirmed. Justices. Mr. Justice Haswell, dissenting:

I dissent. In my view, ,the - contract is a subterfuge to avoid compliance with Montana's Liquor Control Act, hence illegal and should be declared void and unenforceable.

Section 4-410, R.C.M. 1947, provides in effect, that every person owning an interest in a retail liquor business must appear on the license. The contract which is the subject

of this suit sells the right to operate a retail liquor business and retain the profits to an unlicensed person. If this subterfuge is permitted to continue, transfers of retail liquor businesses to . uninvestigated and unlicensed operators would effectively remove control of retail liquor establishments from the Montana Liquor Control Board.

I believe this is contrary to the purpose of the Montana Liquor Control Act, a violation of the public policy of state

control of retail liquor establishments, and therefore the contract in question should be declared illegal, void and unenforceable .

Justice. '