96-291
No. 96-291
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
BILLINGS POST NO. 1634,
VETERANS OF FOREIGN WARS
OF THE UNITED STATES,
Plaintiff and Appellant,
v.
MONTANA DEPARTMENT OF REVENUE,
Defendant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Maurice R. Colberg, Jr., Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James P. Healow; Sweeney & Healow, Billings, Montana
For Respondent:
R. Bruce McGinnis, Montana Department of Revenue,
Helena, Montana
Submitted on Briefs: March 20, 1997
Decided: August 1, 1997
Filed:
__________________________________________
Clerk
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Justice Karla M. Gray delivered the Opinion of the Court.
Billings Post No. 1634, Veterans of Foreign Wars of the United States (VFW),
appeals from the judgment entered by the Thirteenth Judicial District Court,
Yellowstone
County, on its order granting the Montana Department of Revenue's motion for summary
judgment. We affirm.
The VFW raises the following issues on appeal:
1. Did the District Court err in concluding that the Department of Revenue was
not equitably estopped from refusing to classify the VFW's current all-beverage
license
as transferable and assignable and reissue the VFW's lapsed liquor and beer licenses?
2. Did the District Court err in refusing to order the Department of Revenue to
classify the VFW's current all-beverage license as transferable and assignable and
reissue
the VFW's lapsed liquor and beer licenses as a matter of equity?
The material facts in this case are undisputed. The VFW is a Billings, Montana,
post of a nationally chartered veterans' organization. It operated a bar under
licenses
to serve liquor and beer from approximately 1941 through 1974. Prior to 1947, no
quota
system existed in Montana regarding liquor licensing. In 1947, the Montana
legislature
enacted a quota law limiting the number of beer and liquor licenses which could be
issued
for each city or town. See 1947 Mont. Laws Chs. 225 and 226. Two years later, the
legislature exempted certain fraternal and veterans' organizations from the quota
system
limitations on the number of beer and liquor licenses. The exemption provided that
the foregoing limitations shall not prevent the granting of non-transferable
and non-assignable licenses to posts of nationally chartered veterans'
organizations, and lodges of recognized national fraternal organizations,
which said national organizations have been in existence for five (5) years
or more prior to January 1st, 1949.
1949 Mont. Laws Chs. 164 and 165. After 1949, the Montana Liquor Control Board and
its successor, the Montana Department of Revenue (Department), endorsed the liquor
and
beer licenses of fraternal and veterans' organizations as nontransferable and
nonassignable. The renewals of the VFW's pre-1947 liquor and beer licenses were so
endorsed.
In 1974, the VFW experienced financial difficulties which ultimately resulted in
the sale of its premises located on Lewis Avenue in Billings. According to the VFW,
it
never considered selling its liquor and beer licenses due to the nontransferability
and
nonassignability endorsements on the licenses; instead, it allowed the licenses to
lapse.
The VFW subsequently reopened in a different Billings location. In 1979, five
years after allowing its pre-1947 licenses to lapse, the VFW applied for and
received its
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present nontransferable and nonassignable all-beverage liquor license under the
statutory
exemption from the quota system for beer and liquor licenses.
In 1991, this Court concluded that liquor and beer licenses issued prior to 1947
were not subject to the quota system limitations enacted in 1947 and, therefore,
that those
licenses remained transferable and assignable. As a result, we held that the
legislature's
1949 restrictions on the transfer and assignment of licenses issued to fraternal and
veterans' organizations did not apply to the Helena Eagles Club's pre-1947 beer
license.
See Helena Aerie No. 16 v. Mont. D. of Rev. (1991), 251 Mont. 77, 82, 822 P.2d
1057, 1060.
According to the VFW, it accepted an offer to buy its lapsed pre-1947 licenses
for
$165,000 shortly after Helena Aerie. The VFW contacted the Department and was
informed that its pre-1947 licenses were not governed by Helena Aerie because they
had
been allowed to lapse. On June 27, 1994, the VFW demanded that the Department issue
its 1994-1995 all-beverage liquor license as a "quota all beverage license," stating
that
the Department's failure to do so would result in the VFW losing approximately
$250,000. The Department refused on the basis that the VFW's all-beverage license
was
a nontransferable and nonassignable veterans' organization license under 16-4-201
(4),
MCA. On June 30, 1994, the VFW filed a declaratory judgment action against the
Department requesting the District Court to declare that the VFW's current all-
beverage
liquor license is a transferable and assignable quota license and that the VFW is
entitled
to reinstatement of its lapsed liquor and beer licenses.
The VFW and the Department subsequently filed cross-motions for summary
judgment in which each party agreed that the material facts were undisputed. The
District Court determined that the Department was entitled to judgment as a matter of
law, granted the Department's motion for summary judgment and denied the VFW's
motion for summary judgment. The VFW appeals.
STANDARD OF REVIEW
Summary judgment is proper where no genuine issues of material fact exist and
the moving party is entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.
P. We
review a district court's grant of summary judgment de novo, applying the same Rule
56(c), M.R.Civ.P., criteria used by that court. Matter of Estate of Lien (1995), 270
Mont. 295, 298, 892 P.2d 530, 532 (citation omitted). Ordinarily, such a review
requires that we first determine whether the moving party met its burden of
establishing
both the absence of genuine issues of material fact and entitlement to judgment as a
matter of law. Jarrett v. Valley Park, Inc. (1996), 277 Mont. 333, 338, 922 P.2d
485,
487.
In this case, however, the parties agree that there are no disputed issues of
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material
fact. Thus, our review is limited to whether the District Court properly concluded
that
the Department is entitled to judgment as a matter of law. We review a district
court's
conclusion of law to determine whether the interpretation of the law is correct.
Carbon
County v. Union Reserve Coal Co., Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686
(citation omitted).
DISCUSSION
1. Did the District Court err in concluding that the Department was not
equitably estopped from refusing to classify the VFW's current all-beverage
license as transferable and assignable and reissue the VFW's lapsed liquor
and beer licenses?
The VFW contended in the District Court--and contends on appeal--that the
Department misrepresented the transferability and assignability status of its pre-
1947
liquor and beer licenses and that it relied on that misrepresentation to its
detriment in
allowing the licenses to lapse in 1974. As a result, according to the VFW, the
Department should be equitably estopped from denying that its current all-beverage
license is a transferable and assignable quota license and from refusing to reissue
its
lapsed licenses. The Department responds that, prior to Helena Aerie in 1991, it
neither
knew nor could have known, that its interpretation regarding the liquor license
quota law
was erroneous and that the VFW's pre-1947 licenses were transferable and assignable.
The District Court concluded that the doctrine of equitable estoppel does not apply
in this
case. We agree.
Equitable estoppel has long been recognized in Montana and is invoked to promote
justice, honesty and fair dealing; the purpose of the doctrine of equitable estoppel
is to
prevent a party from taking unconscionable advantage of his or her wrong while
asserting
a strict legal right. In re Marriage of K.E.V. (1994), 267 Mont. 323, 331, 883 P.2d
1246, 1251 (citation omitted). The six elements of equitable estoppel are:
1. the existence of conduct, acts, language, or silence amounting to
a representation or a concealment of a material fact;
2. these facts must be known to the party estopped at the time of his
conduct, or at least the circumstances must be such that knowledge of them
is necessarily imputed to him;
3. the truth concerning these facts must be unknown to the other
party claiming the benefit of the estoppel at the time it was acted upon by
him;
4. the conduct must be done with the intention, or at least the
expectation, that it will be acted upon by the other party, or under
circumstances both natural and probable that it will be so acted upon;
5. the conduct must be relied upon by the other party and, thus
relying, he must be led to act upon it; and
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6. he must in fact act upon it in such a manner as to change his
position for the worse.
Elk Park Ranch, Inc. v. Park County (Mont. 1997), 935 P.2d 1131, 1137-38, 54 St.Rep.
293, 297-98 (citations omitted). All six elements must be established before the
doctrine
can be invoked. Elk Park Ranch, 935 P.2d at 1138 (citation omitted). Moreover, clear
and convincing evidence is necessary to establish equitable estoppel. Beery v. Grace
Drilling (1993), 260 Mont. 157, 163, 859 P.2d 429, 433 (citations omitted).
Here, the VFW has not established the first and second elements of equitable
estoppel. With regard to the first element, equitable estoppel requires a
misrepresentation
or concealment of a material fact. Elk Park Ranch, 935 P.2d at 1138 (citations
omitted).
The alleged misrepresentation of material fact in the present case is the
Department's
erroneous endorsement of the VFW's pre-1947 liquor and beer licenses as
nontransferable
and nonassignable.
As indicated above, we first addressed the status of pre-1947 liquor and beer
licenses held by fraternal and veterans' organizations in Helena Aerie. There, we
determined that the Department's classification of the Eagles Club's pre-1947 beer
license
as nontransferable and nonassignable conflicted with the 1947 quota law providing
that
such licenses were renewable; as a result, we concluded that the Eagles Club's pre-
1947
beer license remained renewable under the 1947 quota law with its original
transferability
and assignability characteristics. Helena Aerie, 822 P.2d at 1060. Thus, pursuant
to
Helena Aerie, the Department's interpretation of the 1947 quota law and the exemption
thereto enacted in 1949 was incorrect. As a result, it is clear in this case that
the
Department erroneously classified the VFW's pre-1947 liquor and beer licenses as
nontransferable and nonassignable.
We recently clarified, however, that "[b]ecause the imposition of equitable
estoppel
is premised on a misrepresentation of fact, it is inapplicable when . . . the conduct
complained of consists solely of legal representations." Elk Park Ranch, 935 P.2d at
1138. Here, the classification of the VFW's lapsed liquor and beer licenses as
nontransferable and nonassignable was an erroneous legal interpretation of the 1947
quota
law by the Department. That incorrect classification constitutes a
misrepresentation of
law; it does not constitute a misrepresentation of fact. Therefore, the VFW has not
established the first element of equitable estoppel, which requires a
misrepresentation of
fact.
Moreover, the second element of equitable estoppel requires that the party to be
estopped have actual or imputed knowledge of the alleged misrepresentation of fact.
Elk
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Park Ranch, 935 P.2d at 1137. Here, nothing in the record before us establishes, or
even
suggests, that the Department's legal misrepresentation regarding the status of the
VFW's
pre-1947 licenses was knowing. Nor does anything in Helena Aerie suggest that the
Department should have known that its legal interpretation was incorrect for
purposes of
imputing knowledge to the Department and establishing the second element of equitable
estoppel.
The VFW relies on Mellum v. Kalispell Laundry (1989), 237 Mont. 439, 774 P.2d
390, in support of its argument that the Department should be charged with imputed
knowledge of the transferability and assignability of its lapsed liquor and beer
licenses.
That reliance is misplaced.
In Mellum, the Workers' Compensation Court dismissed an appeal from a denial
of Marie Mellum's occupational disease benefits claim by the Division of Workers'
Compensation (Division) on the basis that it did not have jurisdiction to hear the
appeal
because Mellum failed to request a rehearing with the Division as required by 39-
72-
612, MCA. Mellum, 774 P.2d at 390-91. On appeal, we observed that Mellum's failure
to strictly comply with Montana Occupational Disease Act (MODA) procedures by filing
a "Request for Rehearing" was caused by the Division's orders which incorrectly set
forth
the MODA procedures to be followed by Mellum in pursuing her claim for occupational
disease benefits. See Mellum, 774 P.2d at 391. Moreover, the record in Mellum
reflected that, while Mellum did not file a document entitled "Request for
Rehearing,"
the Division considered her exceptions to the Division hearing examiner's findings
of fact
and conclusions of law as a request for rehearing in accordance with 39-72-612,
MCA.
See Mellum, 774 P.2d at 391-92.
We likened the Division's confusing and inconsistent orders and responses to
Mellum's inquiries regarding how to proceed and protect her rights to misstatements
by
an employer or insurer in the workers' compensation context which prevent a claimant
from timely filing a claim or mislead the claimant into believing that no claim can
or
need be filed; we observed that, under such circumstances, we had applied equitable
estoppel to toll the statute of limitations and allow the filing of a claim.
Mellum, 774
P.2d at 391-92 (citation omitted). Because a failure to apply equitable estoppel
would
have permitted the Division's own misstatements to foreclose the availability of any
remedy to Mellum, we concluded that knowledge of the proper MODA procedures could
be imputed to the Division. Mellum, 774 P.2d at 392.
Mellum does not help the VFW here. First, Mellum predated Elk Park Ranch,
and its continued viability in light of that recent case clarifying that legal
misrepresentations do not satisfy the first element of equitable estoppel may be
called
into question in some future case. Second, the present case is distinguishable from
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Mellum in that no statement or representation of law or of fact by the Department
interfered with legal remedies available to the VFW to challenge the Department's
interpretation regarding the nontransferability and nonassignability of the pre-1947
licenses before they were allowed to lapse in 1974. In other words, the VFW could
have
challenged the Department's legal interpretation at any time after 1949--as the
Helena
Eagles Club did later in Helena Aerie--and it was not prevented from doing so by the
legal "misrepresentation" at issue here.
Finally, the knowledge imputed to the Division in Mellum was of straightforward
procedural requirements about which no questions of interpretation were raised.
Here,
the knowledge the VFW seeks to impute to the Department--namely, that the
Department's interpretation of the pre-1947 licenses as nontransferable and
nonassignable
was erroneous--simply is not established by clear and convincing evidence and, given
that
a trial court had determined in Helena Aerie that the Department's interpretation was
correct, no basis for imputing such knowledge exists in the present case.
All six elements of equitable estoppel must be established before the doctrine
can
be applied. Elk Park Ranch, 935 P.2d at 1138. Having concluded that the VFW did not
establish the first two elements, we hold that the District Court did not err in
concluding
that the Department is not equitably estopped from refusing to classify the VFW's
current
all-beverage license as transferable and assignable and reissue the VFW's lapsed
liquor
and beer licenses.
2. Did the District Court err in refusing to order the Department to classify
the VFW's current all-beverage license as transferable and assignable and
reissue the VFW's lapsed liquor and beer licenses as a matter of equity?
The VFW contends that the State of Montana, acting through the Department,
induced it to allow its pre-1947 liquor and beer licenses to lapse through years of
misrepresentation as to the transferability and assignability of those licenses. On
that
basis, it argues that the District Court should have invoked its equitable powers and
restored the VFW to "its status quo position." The District Court concluded that
equitable relief was not warranted. We agree.
It is well-settled in Montana that a court may accept jurisdiction in equity
only
where no statutory or legal remedy is available. See Eagle Watch Inv., Inc. v. Smith
(1996), 278 Mont. 187, 192, 924 P.2d 257, 260; Jeffries Coal Co. v. Industrial
Accident
Bd. (1952), 126 Mont. 411, 413, 252 P.2d 1046, 1047. As Helena Aerie illustrates,
however, the VFW had a legal remedy available at all times with regard to the
Department's classification of its licenses; it could have brought a declaratory
judgment
action prior to allowing its pre-1947 licenses to lapse, as did the Helena Eagles
Club.
See Helena Aerie, 822 P.2d at 1058. That the VFW it did not avail itself of that
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remedy
by challenging the Department's interpretation of the 1949 exemption from the quota
system for fraternal and veterans' organizations does not negate the existence of
the legal
remedy. Moreover, here, the VFW filed a declaratory judgment action pursuant to
27-
8-202, MCA, seeking its legal remedy thereunder. Had it succeeded in the declaratory
judgment action, whatever supplemental relief deemed "necessary or proper" could have
been granted. See 27-8-313, MCA. The VFW having initiated an action at law
pursuant to Montana statute and under which all appropriate relief was available, the
District Court could not properly have accepted jurisdiction in equity in this case.
The VFW contends that the District Court should have accepted jurisdiction in
equity pursuant to State ex rel. Barker v. Town of Stevensville (1974), 164 Mont.
375,
523 P.2d 1388. In Barker, however, the facts established the applicability of
estoppel.
On that basis, we addressed the issue of whether a municipal corporation could be
bound
by the acts or statements of its agents where third parties relied thereon to their
detriment. See Barker, 523 P.2d at 1390-91. Observing that the great weight of
authority held that a municipality could not be bound by acts or statements of its
agents
in excess of their authority, we rejected such a harsh and inflexible rule; instead,
we
joined other jurisdictions in adopting a qualification to the general rule. We then
applied
the qualification to the facts before us in order to fashion appropriate relief.
Barker, 523
P.2d at 1390-91.
Unlike the situation before us in Barker, we determined above that equitable
estoppel is not applicable in the present case because the VFW did not establish the
necessary elements. Thus, the premise upon which Barker was decided does not exist
here.
Accordingly, we hold that the District Court did not err in refusing to order
the
Department to classify the VFW's current all-beverage license as transferable and
assignable and reissue the VFW's lapsed liquor and beer licenses as a matter of
equity.
Having concluded above that equitable estoppel is inapplicable here, we further hold
that
the District Court did not err in concluding that the Department is entitled to
judgment
as a matter of law.
Affirmed.
/S/ KARLA M. GRAY
We concur:
/S/ J. A. TURNAGE
/S/ JIM REGNIER
/S/ W. WILLIAM LEAPHART
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/S/ WILLIAM E. HUNT, SR.
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