Billings Post No. 1634 v. Montana Dept. of Revenue

Decision Date01 August 1997
Docket NumberNo. 96-291,96-291
PartiesBILLINGS POST NO. 1634, Veterans of Foreign Wars of the United States, Plaintiff and Appellant, v. MONTANA DEPARTMENT OF REVENUE, Defendant and Respondent.
CourtMontana Supreme Court

James P. Healow; Sweeney & Healow, Billings, for Plaintiff and Appellant.

R. Bruce McGinnis, Montana Department of Revenue, Helena, for Defendant and Respondent.

GRAY, Justice.

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 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.

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

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 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 In this case, however, the parties agree that there are no disputed issues of 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).

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.

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

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), 282 Mont. 154, ---- - ----, 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...

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