Arens v. Village of Rogers

• Decision Date: 04 December 1953
• Docket Number: No. 36056,36056
• Citation: 240 Minn. 386,61 N.W.2d 508
• Parties: ARENS et al. v. VILLAGE OF ROGERS.
• Court: Minnesota Supreme Court

Page 508

61 N.W.2d 508

240 Minn. 386

ARENS et al. v. VILLAGE OF ROGERS.

No. 36056.

Supreme Court of Minnesota.

Dec. 4, 1953.

Syllabus by the Court.

1. A taxpayer of a municipality which is engaged in the operation of a municipal liquor store may, under the Uniform Declaratory Judgments Act, M.S.A. c. 555, challenge the constitutionality of the statutes authorizing the establishment of municipal liquor stores where ther operation of the municipal liquor store has resulted in a financial loss to the municipality.

2. M.S.A. § 340.07, subd. 5, and 340.11, subd. 10, authorizing the establishment of municipal liquor stores in cities, villages, and boroughs of not over 10,000 population are not invalid as special legislation prohibited by Minn.Const. art. 4, § 33, M.S.A.

3. The refusal of defendant village to renew plaintiffs' private liquor licenses in order to establish an exclusive 'on sale' and 'off sale' municipal liquor store did not deprive plaintiffs of their liberty and property without due process of law in violation of U.S.Const. Amend. XIV, and Minn.Const. art. 1, § 7.

4. M.S.A. § 340.11, subd. 16, which requires municipalities establishing municipal liquor stores to purchase the stock, equipment, and other tangible personal property of private liquor establishments thereby divested of their business, provides for the expenditure of public funds for private purposes and is, therefore, unconstitutional.

Stanley D. Kane, Minneapolis, for appellants.

Hall, Smith & Hedlund, Minneapolis, for respondent.

J. A. A. Burnquist, Atty. Gen., Geo. B. Sjoselius, Dep. Atty. Gen., Orville C. Peterson, Minneapolis, for League of Minnesota Municipalities.

Byron W. McCullagh, Minneapolis, for Minnesota Municipal Liquor Stores Ass'n.

CHRISTIANSON, Justice.

Action was brought by plaintiffs on behalf of themselves and all other taxpayers of the village of Rogers in the Hennepin county district court on December 4, 1951, seeking: (1) A declaratory judgment to the effect that the authorization and establishment of municipal liquor stores in vaillages and cities of the fourth class, including the village of Rogers, pursuant to M.S.A. §§ 340.07, subd. 5, and 340.11, subd. 10, is unconstitutional, (2) to prevent the operation of a municipal liquor store by the village of Rogers to the exclusion of plaintiffs or other private interests, (3) an order directing the village of Rogers to commence appropriate action against the past and present members of its village council who voted to establish or continue operation of a municipal liquor store to recover the money illegally spent in operation of the municipal liquor store, and (4) to have it adjudged and decreed illegal for the village of Rogers to operate its municipal liquor store to the exclusion of plaintiffs or other private interests without first purchasing, as prescribed by § 340.11, subd. 16, the stock, equipment, and other tangible personal property owned and formerly used by plaintiffs in their respective private liquor establishments.

Defendant, Village of Rogers, moved for summary judgment under Rule 56.02 of the Rules of Civil Procedure. The motion was granted, and plaintiffs appeal from the judgment entered pursuant to the district court's order granting defendant summary judgment.

Plaintiffs are citizens, taxpayers, residents, and freeholders of the village of Rogers, Hennepin county, Minnesota. For many years prior to June 30, 1950, they had been licensed by village of Rogers to sell intoxicating liquor both 'on sale' and 'off sale' in that village. During this period plaintiffs operated orderly liquor establishments and at no time committed any violation of existing liquor laws. On July 1, 1950, one day following the expiration of plaintiffs' licenses, defendant, by the authority granted in §§ 340.07, subd. 5, and 340.11, subd. 10, commenced operation of an on- and off-sale municipal liquor store. Since that date the municipal liquor store has been the sole and exclusive liquor store in the village of Rogers. ¹ Plaintiffs alleged in their complaint that for the period from July 1, 1950, to December 31, 1950, the municipal liquor store operated at a loss, the amount of such loss being substantially in excess of the $1,257.39 shown by the village of Rogers' own records. The complaint further alleged that the operating loss from January 1, 1951, to December 31, 1951, would be in excess of $5,000. Defendant by its answer admitted that its municipal liquor store operated at a loss for the period from July 1, 1950, to December 31, 1951, but it neither accepted plaintiffs' claim as to the amount of such losses nor made its own showing in this regard. Plaintiffs further alleged that, since no trunk highway runs through the village of Rogers, it is not a suitable location for a municipal liquor store and that any such store would operate at a loss to plaintiffs and other taxpayers. Since the establishment of the municipal liquor store, the village of Rogers has purchased a part of the stock of plaintiff Leo Arens for $3,000 but has failed and refused to purchase the other stock, equipment, and personal property owned and used by plaintiffs in their respective liquor stores in the village of Rogers prior to the commencement of operations at the municipal liquor store.

The case presented to us on appeal is a composite of two separate causes of action. One is essentially a taxpayers' class action seeking a declaratory judgment under the Uniform Declaratory Judgments Act, M.S.A. c. 555, as to the constitutionality of §§ 340.07, subd. 5, and 340.11, subd. 10. The other is an action by plaintiffs as taxpayers and former liquor licensees in the village of Rogers seeking to prevent the operation of the municipal liquor store in the village of Rogers and to have it decreed, in any event, that operation of the exclusive municipal liquor store without compliance with § 340.11, subd. 16, is illegal. Four main issues are raised for our consideration on appeal.

(1) Do plaintiffs have a sufficient legal standing to obtain a declaratory judgment regarding the constitutionality of §§ 340.07, sub. 5, and 340.11, subd. 10?

(2) Are §§ 340.07, subd. 5, and 340.11, subd. 10, invalid as special legislation prohibited by Minn.Const. art. 4, § 33, M.S.A.?

(3) Did the establishment of defendant's exclusive municipal liquor store deprive plaintiffs of their liberty and property without due process of law in violation of U.S.Const. Amend. XIV, and Minn.Const. art. 1, § 7?

(4) Is § 340.11, subd. 16, which requires municipalities establishing municipal liquor stores to purchase the stock, equipment, and other tangible personal property of private liquor establishments thereby divested of their business, constitutional?

While it appears from the memorandum of the trial court that other substantive and procedural questions were raised on the motion for summary judgment, only the foregoing questions need be considered in view of our disposition of the appeal.

1. The first question presented is whether plaintiffs have legal standing to obtain a declaratory judgment regarding the constitutionality of §§ 340.07, subd. 5, and 340.11, subd. 10. Defendant correctly points out in its brief that one seeking a declaratory judgment regarding the constitutionality of a state statute must have a direct interest in the validity of that statute which is different in character from the interest of the citizenry in general. From this premise it argues (1) that being mere citizens, taxpayers, residents, and freeholders does not give to plaintiffs a sufficient interest, citing State ex rel. Smith v. Haveland, 223 Minn. 89, 25 N.W.2d 474, 174 A.L.R. 544, and (2) that a legal standing is not present by reason of their being the former holders of the last private liquor licenses issued in the village of Rogers because liquor licensees have no vested right to renewal of their licenses and their status upon expiration of their licenses is indistinguishable from that of the public in general, citing Paron v. City of Shakopee, 226 Minn. 222, 32 N.W.2d 603, 2 A.L.R.2d 1227.

The trial court, after considering the above arguments, concluded that this was a proper case for a declaratory judgment on the grounds that taxpayers as a class have an interest in such a proceeding as this, particularlty where, as here, it is admitted that the operation of the municipal liquor store resulted in a financial loss to the community.

The undoubted rule in this state is that a justiciable controversy must exist before the courts have jurisdiction to render a declaratory judgment regarding the constitutionality of a statute. Hassler v. Engberg, 233 Minn. 487, 48 N.W.2d 343; State ex rel. Smith v. Haveland, supra; County Board of Education v. Borgen, 192 Minn. 512, 257 N.W. 92. As this court stated in the Smith case, 223 Minn. 92, 25 N.W.2d 477:

'Among the essentials necessary to the raising of a justiciable controversy is the existence of a genuine conflict in the tangible interests of the opposing litigants. Commplainant must prove his possession of a legal interest or right which is capable of and in need of protection from the claims, demands, or objections emanating from a source competent legally to place such legal interest or right in jeopardy. Although complainant need not necessarily possess a cause of action (as that term is ordinarily used) as a basis for obtaining declaratory relief, nevertheless he must, as a minimum requirement, possess a bona fide legal interest which has been, or with respect to the ripening seeds of a controversy is about to be, affected in a prejudicial manner.'

Whether a taxpayer has a sufficient legal interest to entitle him to standing under the Uniform Declaratory Judgments Act, M.S.A. c. 555, to contest the constitutionality of legislative enactments has been considered previously by this and other courts. In Leighton v. City of Minneapolis, 222 Minn. 516, 25 N.W.2d 263, this...