No. 94-456
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
GARY R. GROSHELLE,
Plaintiff and Respondent,
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Maurice R. Colberg, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
James P. Heal-w, Sweeney & Healow,
Billings, Montana
For Respondents:
Larry D. Herman, Herman Law Office,
Laurel, Montana
Submitted on Briefs: February 23, 1995
Decided: April 4, 1995
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Appellants Melvin E. and Sheila Reid appeal from an order of
the Thirteenth Judicial District Court, Yellowstone County,
granting partial summary judgment in favor of respondent Gary R.
Groshelle, declaring that the provisions of a lease requiring the
transfer of a Montana Beer and Wine License from appellants to
respondent at the termination of the lease is valid and
enforceable, subject to approval by the Montana Department of
Revenue.
We affirm.
The issue on appeal is:
Did the District Court err in granting partial summary
judgment in favor of respondent?
On May 27, 1988, respondent filed an application with the
Montana Department of Revenue for the issuance of a Montana Retail
On-Premises Consumption Beer/Wine License for use at 105 East Main,
Laurel, Montana. On September 22, 1988, the Montana Department of
Revenue issued its order approving respondent's application for
Beer/Wine License No. 03-044-9153-301.
On May 15, 1989, respondent leased the bar and tavern space at
105 East Main to Clayton and Isabel Bertsch for two years, with an
option to renew. The Bertschs agreed to rent the premises for $400
a month, to be increased to $500 a month in the seventh month of
the lease. The lease provided that respondent would assign the
beer and wine license to the Bertschs, and that he would retain a
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security interest in the license. The Bertschs agreed to reassign
the license to respondent on the termination of the lease. On
July 20, 1989, the Montana Department of Revenue issued its order
approvrng the transfer of the license to the Bertschs, subject to
respondent's security interest.
After deciding to sell the business, the Bertschs filed an
application with the Montana Department of Revenue for transfer of
the license to appellants, subject to respondent's security
interest. On June 27, 1990, the Bertschs filed a continuation
statement signed by respondent and appellants with the Montana
Department of Revenue showing the continuation of respondent's
security interest in the license.
On August 22, 1990, a lease was executed naming respondent as
landlord and appellants as tenants of the bar and tavern space at
105 East Main, along with furniture and fixtures. The lease was
executed for a term of one year at $500 a month, with an option to
renew. On termination of the lease, the license would be
reassigned to respondent. On August 29, 1990, the Montana
Department of Revenue issued its order approving the transfer of
the license to appellants, subject to respondent's security
interest.
On December 27, 1991, respondent and appellants executed
another one-year lease for the premises, fixtures, and furniture.
The rent was increased to $525 a month. The new lease had similar
provisions as to the license. Appellants executed an assignment of
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the license to respondent as security to be used upon termination
of the lease.
On December 22, 1992, respondent and appellants executed
another one-year lease with terms similar to the previous lease
between the parties as to rent and the license.
On October 11, 1993, respondent notified appellants that he
would agree to another one-year lease, subject to a $50 a month
increase in rent. No agreement was reached between the parties.
On December 22, 1993, the one-year lease expired, and appellants
continued as hold-over tenants. On January 11, 1994, appellants
acknowledged that the lease had expired and demanded that
respondent release his security interest in the license. On
January 19, 1994, respondent informed appellants that if a new
lease was not negotiated, the month-to-month lease would be
terminated. On February 7, 1994, respondent notified appellants
that the month-to-month lease would terminate on March 11, 1994,
and that respondent would apply to the Montana Department of
Revenue to transfer the beer and wine license to respondent. On
March 4, 1994, the Montana Department of Revenue denied
respondent's application and refused to transfer the license to
respondent pending a judicial determination.
On March 30, 1994, respondent filed a complaint seeking a
judgment declaring the reassignment provisions of the lease valid
and enforceable. Appellants counterclaimed, seeking a judgment
declaring the reassignment portion of the expired lease unlawful,
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void, and unenforceable, and discharging respondent's security
interest in the beer and wine license.
On August 11, 1994, the District Court entered final judgment
declaring that the provision of the lease requiring transfer of the
beer and wine license to respondent to be valid and enforceable as
between the parties, subject to the approval of the Montana
Department of Revenue. It is from the District Court's final
judgment that appellants appeal.
Did the District Court err in granting partial summary
judgment in favor of respondent?
Because factual matters outside of the pleading were relied
upon by the parties, the District Court treated the cross-motions
for judgment on the pleading as motions for summary judgment under
Rule 56, M.R.Civ.P. See Rule 12(c), M.R.Civ.P.
Our standard of review on a grant of summary judgment is
identical to that of the district court. Cooper v. Sisters of
Charity (19941, 265 Mont. 205, 207, 875 P.2d 352, 353. Summary
judgment is only proper when there is no genuine issue of material
fact, and the moving party is entitled to judgment as a matter of
law. Rule 56(c), M.R.Civ.P.; Spain-Morrow Ranch, Inc. v. West
(1994) I 264 Mont. 441, 442, 872 P.2d 330, 332. The burden of proof
rests with the party seeking summary judgment to provide the court
with evidence which excludes any real doubt as to the existence of
a genuine issue of material fact. Berens v. Wilson (1990), 246
Mont. 269, 271, 806 P.2d 14, 16. Only after the moving party has
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met this burden of proof does the burden shift to the nonmoving
party to show that a genuine issue of material fact exists. Morton
v. N.W.M., Inc. (1994), 263 Mont. 245, 249, 868 P.2d 576, 579.
"When raising the allegations that disputed issues of fact exist,
the nonmoving party has an affirmative duty to respond by
affidavits or other sworn testimony containing material facts that
raise genuine issues; conclusory or speculative statements will not
suffice." Koepplin v. Zortman Mining (Mont. 1994), 881 P.Zd 1306,
1309, 51 St. Rep. 881, 882.
Appellants argue that the District Court erred by declaring
that the provision of the expired lease between the parties which
reassigned the beer and wine license to respondent was enforceable,
subject to the approval of the Montana Department of Revenue.
Appellants contend that respondent is not entitled to enforce the
reassignment provision of lease because his name did not appear on
the license as the owner of the license throughout the time he
claimed his security interest. Appellants argue that Feurherm &
Neiss v. Schmaing (1979), 181 Mont. 136, 592 P.2d 924, is
controlling. The issue in Feurherm is whether a person who claims
equitable ownership of a beer license and wishes to have that
license revert to him at the expiration of a lease may enforce his
claim when he has never been the record owner of the license, his
name has never been endorsed on the license in any other capacity,
and as a result, he has never been subjected to the scrutiny of the
Department of Revenue throughout the time he claimed his equitable
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interest. We reversed the district court's holding that Neiss was
the owner of the license and that reversion was proper. We
reasoned that Neiss's claimed interest was never made known to the
Department of Revenue, and therefore, his qualifications to own a
beer license had never been scrutinized by the Department of
Revenue.
We agree with the District Court's conclusion that Feurherm is
distinguishable. In Feurherm, we sought to prevent an undisclosed
license owner from avoiding the Department of Revenue's power to
revoke a license by revealing at the last minute that he or she,
rather than the named licensee, is the true owner. We reasoned
that in order for the Department of Revenue to have complete and
effective control over the sale of intoxicating beverages, it must
be notified of the nature and interest of each person who claims
some interest in the license. That was not the case in Feurherm.
However, as the original owner of the license, respondent in
the present case was subjected to Department of Revenue scrutiny
pending approval of his application. His security interest in the
license was filed with the Department of Revenue. His name
appeared on the license in his capacity as a secured party.
Respondent's first assignment of the license to the Bertschs was
approved by the Department of Revenue in 1989. In 1990, the
Department of Revenue approved the transfer of the license to
appellants, subject to respondent's security interest. In
connection with this transfer, a continuation statement was signed
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by respondent and appellants and filed with the Department of
Revenue. All subsequent transfers of the license from respondent
to appellants were approved by the Department of Revenue. It is
clear that the harm we sought to prevent in Feurherm does not exist
in the present case.
A beer and wine license is a privilege personal to the
licensee, and in no case shall the licensee lease the license to
another party. Section 42.12.206(l), ARM. However, the owner of
a beer and wine license may transfer the license, subject to
approval of the Department of Revenue. See Gartner v. Martin
(1977) I 173 Mont. 50, 566 P.Zd 66; Beard v. McCormick (1966), 147
Mont. 361, 411 P.2d 964. In order to secure the transferor's
interest, an alcohol beverage license may be subject to a mortgage,
security interest, and other valid liens. Section 42.12.205(l)
and (4), ARM. Nothing in the language of the various leases
respondent entered into subsequent to receiving the initial
Department of Revenue approval in 1989 creates a lease in the
license. Respondent received no fair market value compensation for
the license he transferred to appellants. Respondent leased the
premises, furniture, and fixtures to appellants, and in addition,
transferred the license to appellants, subject to his security
interest and the reassignment provision of the lease in order to
give value to the lease. There is nothing in the record to suggest
that respondent intended to relinquish his beer and wine license
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for the amount of rent collected from appellants over the course of
four years.
We agree with the District Court's conclusion that the lease
provision relating to reassignment of the beer and wine license is
lawful and enforceable, subject to approval of the Department of
Revenue. We hold that the District Court did not err in granting
partial summary judgment in favor of respondent.
We affirm.
Justic'e
We concur:
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