Kurpjuweit v. Northwestern Development Co., Inc.

• Decision Date: 15 October 1985
• Docket Number: No. 84-264,84-264
• Citation: 708 P.2d 39
• Parties: Wayne F. KURPJUWEIT and Luann M. Kurpjuweit, d/b/a Town & Country Tavern, and Dora Harvey, Appellants (Defendants), v. NORTHWESTERN DEVELOPMENT COMPANY, INC., a Wyoming corporation, Appellee (Plaintiff).
• Court: Wyoming Supreme Court

Page 39

708 P.2d 39

Wayne F. KURPJUWEIT and Luann M. Kurpjuweit, d/b/a Town & Country Tavern, and Dora Harvey, Appellants (Defendants), v. NORTHWESTERN DEVELOPMENT COMPANY, INC., a Wyoming corporation, Appellee (Plaintiff).

No. 84-264.

Supreme Court of Wyoming.

Oct. 15, 1985.

Bruce P. Badley, Clay B. Jenkins, and Fred R. Dollison (argued) of Badley and Rasmussen, P.C., Sheridan, for appellants (defendants).

E.E. Lonabaugh and Jeffrey J. Gonda (argued) of Lonabaugh and Riggs, Sheridan, for appellee (plaintiff).

Before THOMAS, C.J., ROSE, ROONEY and CARDINE, JJ., and GUTHRIE, J., Retired.

CARDINE, Justice.

In February of 1984, appellants Wayne F. and Luann H. Kurpjuweit (Kurpjuweits), the owner-operators of the Town and Country Tavern in Sheridan, Wyoming, were notified by the appellee, Northwestern Development Company, Inc. (Northwestern), that Northwestern had decided not to renew or renegotiate the lease for the bar premises. In short order a dispute developed over who would be entitled to the liquor license for the bar at the conclusion of the lease term on October 1, 1984. The Kurpjuweits and Northwestern each filed competing applications with the Sheridan County Board of Commissioners for issuance of the license. When the county commissioners refused to issue a license to either party pending a court determination of their respective rights under the lease, Northwestern filed a complaint in the district court seeking a declaratory judgment construing the terms of the lease as it concerned the status of the liquor license. Following a trial before the court on September 26, 1984, the district judge found in favor of Northwestern stating that he found Northwestern "has been the equitable owner of the license and is entitled to have the license issued in its name * * *." A written Judgment and Order was entered two days later from which appellants bring this appeal.

In their brief the appellants provide the following as their statement of the issues before the court:

1. "The district court erred in enforcing a lease provision which was void because it was contrary to the statutes of the state of Wyoming regulating the sale of alcoholic beverages, Wyoming Statutes 12-4-601 through 12-4-604."

2. "The district court erred in failing to grant appellants' motion to dismiss, for lack of jurisdiction and lack of a justiciable controversy contrary to Wyoming Statutes 12-4-101 et seq. and 16-3-101 et seq."

Northwestern counters this articulation with the following:

"1. Was the Lease Agreement which governed the relationship of the parties a legal contract and did the District Court properly enforce the provisions of that Lease?

"2. Did the District Court have jurisdiction over this matter pursuant to the provisions of Wyoming Statutes Section 1-37-101 through 1-37-115 W.S.A. 1977?

"3. Did the Appellants give any consideration for the liquor license and are they entitled to any preferential treatment insofar as issuance of the license is concerned?"

We affirm the judgment of the district court.

The focus of the present appeal is the liquor license issued by the Sheridan County Board of Commissioners under which the Town and Country Tavern was operated. The building and real property where the bar was located have been owned by Northwestern since 1958 when title was transferred to the corporation by Robert I. Diefenderfer, Jr., one of its incorporators and first president, in exchange for stock.

Diefenderfer was also the holder of the liquor license for the premises which was not transferred to the corporation despite an earlier agreement that Diefenderfer would transfer all his interest in the liquor business to Northwestern. The reason the liquor license was not transferred to the corporation was that Northwestern had leased the bar premises to a third party to whom the liquor license was directly transferred at the suggestion of the county clerk to avoid a double transfer. In that lease, like the lease under which appellants eventually operated the bar, there is a provision requiring the lessees to keep and maintain the liquor license on the premises in good order including obtaining its renewal as needed, and upon termination of the lease "without consideration, re-assign and re-transfer said liquor license or any subsequent license that may be issued by the Board of County Commissioners of Sheridan County, Wyoming to First Party [Northwestern] or its assigns."

At the termination of each subsequent lease the liquor license was transferred directly to each new lessee. In each succeeding lease, a term substantially identical to that quoted above was part of the lease terms.

A lease between Northwestern and Michael P. and Frances M. Pinder with a primary term of five years was executed on October 1, 1974. That lease contained an option to renew for an additional five-year term at its expiration; and, importantly, it required:

"LESSEES warrant that the license for said premises can be put in their name and that they have been residents of the State of Wyoming for one (1) year."

It is at this juncture that Kurpjuweits began negotiations with the Pinders for purchase of the bar. In order to accomplish a transfer to the Kurpjuweits, who as nonresidents were prohibited from holding a Wyoming liquor license under § 12-9(C)(10), W.S.1957, a scheme was devised to use a third party, appellant Dora Harvey, as a "strawman" for purposes of the transaction.

On October 29, 1974, the Pinders and Harvey executed a Memorandum of Agreement of Sale for the sale of the bar business and transfer of the liquor license. On the same day, a second Memorandum of Agreement of Sale was entered into between Harvey and Kurpjuweits which agreement paralleled the provisions of the Northwestern-Harvey agreement with the exception that the transfer of the liquor license was to take place as soon as possible after July 1, 1975, when Kurpjuweits would attain residency. The Northwestern-Pinder lease was assigned to Harvey the following day.

On November 21, 1974, an Option Agreement between Harvey and Kurpjuweits was entered into which recited that the bar business and liquor license would be transferred to Kurpjuweits subject to the approval of the county commissioners on July 1, 1975, and that until that date the Kurpjuweits would operate the bar as employees of Harvey. The agreements as drafted satisfied the requirements of our licensing statutes and, if bona fide and operated by Harvey, may have been lawful. It is clear, however, and stipulated to by the parties that no salaries were ever paid Kurpjuweits by Harvey. In fact, in her testimony, Dora Harvey indicated that she was paid by Kurpjuweits to allow the use of her name in order to effectuate the transfer of the liquor license and bar in a manner which circumvented the residency requirements of the licensing statutes. In Scranton v. Whitlock, Wyo., 389 P.2d 1015, 1017 (1964), we said:

"The mentioned statutes [§§ 12-13, 12-9, 12-1, W.S.1957] if interpreted reasonably would seem to preclude the operation of a retail liquor business in the State by one person when the license to that business is in the name of another * * *."

Here Kurpjuweits were operating the liquor business when the license was in Harvey's name. It is apparent from the record that this arrangement was known to all parties, including Northwestern, who was also a party to the arrangement made to circumvent the intent and purpose of the licensing statutes. Finally, the arrangement was known to and had the implicit approval of the Sheridan County Board of Commissioners who acquiesced in the transfer of the liquor license to Harvey to hold in her name until the appellants became residents. The issues presented to us in this case concern only the effect and validity of the lease provision requiring reassignment of the license to Northwestern. Accordingly, in conformance with our long-standing rule under which we refuse consideration of questions not directly before us, we decline to consider or determine the lawfulness of the transfer of this license to appellants.

The Northwestern-Pinder lease was assigned by Harvey without obtaining Northwestern's approval to Kurpjuweits on July 2, 1975. On the same date the liquor license was also assigned to Kurpjuweits who continued to operate the business pursuant to the lease until July 25, 1979, when they and Harvey exercised the option to renew the lease for an additional five-year period. In September of 1983, the Kurpjuweits notified Northwestern of their desire to extend the lease for an additional term. Northwestern, on February 8, 1984, gave notice to the Kurpjuweits that it would not renew or negotiate a new lease at the end of the lease term when it expired on October 1, 1984.

On March 16, 1984, Kurpjuweits filed an application for renewal and transfer of the liquor license to a new location after October 1, 1984. In addition, that application indicated they intended to change the name of the business to LuWayne's Liquor on that date. On April 13, 1984, the Kurpjuweits received a Notice of Termination of the lease from Northwestern who had also filed for renewal of the license requesting it remain at the leased premises. An amended application for renewal and transfer was filed by Kurpjuweits on July 31, 1984, requesting the license be transferred to a different location from that described in their first application. The board of county commissioners refused to issue a license to either party pending a judicial determination of their contractual rights under the lease agreement.

The present action was brought under the auspices of the Uniform Declaratory Judgments Act which has been enacted by our legislature and codified as §§ 1-37-101 to 1-37-115, W.S.1977. In particular, the complaint in this action seeks a determination of the parties' respective rights and interests under the Northwestern-Pinder lease. Section 1-37-103, W.S.1977, provides:

"Any person...