On motion for rehearing I have given further consideration to this case. Extensive briefs have been filed by the parties as well as by others who have been permitted to appear amici curiae. As a result of further study of the case, I am of the opinion that the former opinion is erroneous and that the trial court was correct in sustaining the demurrer to the complaint.
In the first place I think the former opinion placed undue emphasis upon certain language used in the opinions in the cases of McCarten v. Sanderson, 111 Mont. 407, 109 P.2d 1108, 132 A.L.R. 1229, and State ex rel. McCarten v. Harris, 112 Mont. 344,115 P.2d 292. Neither of those cases dealt with the question of the right of the city to limit the number of liquor licensees.
The first case was brought against the County Commissioners to require them to approve of the application before its submission to the state board. It held that under the amendment of 1939 the County Commissioners had the power and discretion to either approve or disapprove of the application as long as they did not act arbitrarily.
The second case above cited was brought against the state board to compel it to issue a license.
This court held that a complaint showing that petitioner and his premises are qualified to be licensed under the statute states facts sufficient to constitute a cause of action so as to withstand a motion to quash and that if the board had a defense it was incumbent upon the board to plead and prove it. Hence, since neither case had anything to do with the power of the city council to restrict the number of licensees, nothing has yet interceded to change the rule stated in the case of State ex rel. McIntyre v. City Council of the City of Libby, 107 Mont. 216,82 P.2d 587. In that case it was squarely held that the city may limit the number of licenses issued within the city. The statutory law is exactly the same today as it was when the Libby case was decided. I think that since the legislature has not changed the statute on this point since the Libby case was *Page 61 decided, though it did change the statute in other respects not material here, the indication is that the legislature was and is satisfied with the rule there stated. Bottomly v. Ford, Mont.,157 P.2d 108, and State ex rel. McCarten v. Harris, supra.
It follows that if the city may limit the number of licensees within the city it may cease to issue licenses after the limit has been reached.
If the city may refuse the issuance of a license on any ground, then it must be assumed that its officers are acting legally and not arbitrarily. Section 10606, subd. 15. Hence I think the court properly sustained the demurrer to the complaint.
I should say too that I think some of the broad language used in the second McCarten case, supra, as to the extent of local control must be treated as dictum because that point was not involved in the case and there was no occasion to give it consideration. I should add too that the amendment made by Chapter 221, Laws of 1939, had nothing to do with the rule stated in the Libby case. It dealt with the matter of procedure in procuring a state license. By it the approval of the city had to be submitted with the application for a state license. The repeal by Chapter 163 of the Laws of 1941 of what had been added in 1939 likewise did not affect the rule stated in the Libby case.
For another reason, I think the court properly sustained the demurrer.
The complaint filed by relator to enjoin the city and its chief of police is not clear as to what charge was preferred against relator or the exact nature of the prosecution.
In such a situation we must treat as directly averred whatever is necessarily or reasonably implied from that which is directly averred. Cook v. Galen, 83 Mont. 334, 272 P. 250. Thus viewing the complaint the reasonable implication from what is directly averred is that relator was arrested for not having a city license which it is alleged the city wrongfully refused to issue.
In the application made by relator before this court it is alleged that the city through its chief of police "arrested the *Page 62 plaintiff solely on the ground that he had not obtained a city liquor license which the city had refused." While this allegation is denied by respondents in the proceedings in this court, it cannot be unfair to relator to accept his statement as to the cause of his arrest. When we do this we must reach the conclusion that the court was right in sustaining the demurrer to the complaint.
The rule is well established that it is no defense to a criminal prosecution for the sale of intoxicating liquor without a license that the officials wrongfully refused to issue a license. City of Montpelier v. Mills, 171 Ind. 175, 85 N.E. 6, 17 Ann. Cas., p. 57, and see list of supporting cases on page 60. There are some cases taking the contrary view but the overwhelming weight of authority supports the view as above stated.
The same reasoning supports the view that the wrongful refusal to issue a license is no cause for restraining criminal prosecutions for selling without a license. Relator's remedy, if the action of the city in refusing to issue a license be wrongful, is to compel the issuance of a license by mandamus.
In my opinion the court was right in sustaining the demurrer to the complaint and hence I think the foregoing opinion should be changed on the motion for rehearing or else the motion should be granted.
Mr. Justice Morris:
Having disagreed with the majority opinion in the first instance, I agree with the foregoing dissenting opinion of Mr. Justice Angstman.