Ramage v. Department of Revenue of State of Mont.

• Decision Date: 03 February 1989
• Docket Number: 88-119,Nos. 88-220,s. 88-220
• Court: Montana Supreme Court
• Parties: John F. RAMAGE and Andrew E. Wilson, Petitioners and Appellants, v. DEPARTMENT OF REVENUE OF the STATE OF MONTANA, Respondent and Respondent. Rosalie WOODHALL, Petitioner and Appellant, v. DEPARTMENT OF REVENUE OF the STATE OF MONTANA, Respondent and Respondent.

Page 864

768 P.2d 864

236 Mont. 69

John F. RAMAGE and Andrew E. Wilson, Petitioners and Appellants, v. DEPARTMENT OF REVENUE OF the STATE OF MONTANA, Respondent

and Respondent.

Rosalie WOODHALL, Petitioner and Appellant, v. DEPARTMENT OF REVENUE OF the STATE OF MONTANA, Respondent

and Respondent.

Nos. 88-220, 88-119.

Supreme Court of Montana.

Submitted on Briefs Oct. 6, 1988.

Decided Feb. 3, 1989.

Terry L. Seiffert, Billings, for Rosalie Woodhall.

Curtis E. Larsen, Jackson, Murdo, Grant & Larsen, Helena, for John F. Ramage & Andrew E. Wilson.

Paul Van Tricht, Helena, for respondent.

HUNT, Justice.

Appellants in this consolidated action appeal from District Court orders upholding the denial of their applications for original all-alcoholic beverage licenses by the Department of Revenue of the State of Montana (DOR). We affirm.

Appellants Ramage and Wilson and appellant Woodhall raise the following issue for review:

1) Did the respective District Courts err in finding that substantial credible evidence supported DOR's denial of their applications for liquor licenses?

Ramage and Wilson present two additional issues for our consideration:

2) In the processing of an application for a liquor license, when must DOR's investigation of the applicant and the proposed premises be completed?

3) Does DOR have independent authority to weigh the evidence pertaining to public convenience and necessity when no protests from the public regarding the issuance of a liquor license are filed with the agency?

On March 14, 1985, John F. Ramage and Andrew E. Wilson filed an application with DOR for a Yellowstone County quota area liquor license. Ramage and Wilson proposed to use the license for a bar called The Hanger that they planned to construct on the 8400 block of Grand Avenue, a little more than 5 miles outside the city limits of Billings. In April, 1985, in response to DOR's request for evidence in support of public convenience and necessity, Ramage and Wilson submitted petitions signed by approximately 100 Billings area residents. The petitioners asserted their belief that the public need called for a new cocktail lounge and dance club at the proposed location of The Hanger.

Thereafter, DOR published notice of the application in the Billings Gazette. The notice, among other things, invited interested persons to file written protests against the issuance of the license. No protests were filed with DOR.

Ramage and Wilson proceeded with the remodeling of the proposed premises. Before the work was completed, however, fire destroyed the structure. The cause of the fire was unknown. After the fire, Ramage and Wilson commenced reconstruction of the building.

Meanwhile, in July, 1985, DOR received two more applications for Yellowstone county liquor licenses for establishments to be located on the 8400 block of Grand Avenue. One application was from appellant Rosalie Woodhall. Woodhall desired the license for the operation of a proposed bar called R & R Store and Lounge.

On October 18, 1985, the city of Billings annexed the area surrounding the proposed taverns. The annexation resulted in the incorporation of the sites of the proposed bars into the Billings city limits and the city liquor license quota area.

Prior to the annexation, on October 1, 1985, DOR's License Bureau Chief issued notices to all three applicants, informing them that their applications were denied because issuance of liquor licenses for their proposed premises was not justified by public convenience and necessity. Each notice stated:

The location of your proposed premises is in close proximity to three existing establishments licensed for the sale and service of all alcoholic beverages for consumption on the premises. The service area surrounding the proposed premises for licensing is sparsely populated and the demand for all-beverages sale and consumption does not warrant the issuance of additional all-beverages licenses at this time.

All three applicants requested a hearing on the decision. After the hearings, the hearing examiner issued proposed findings of fact, conclusions of law and orders, denying all three applications. Appellant Woodhall and appellants Ramage and Wilson filed exceptions to the proposed orders. Oral arguments were held before the Director of DOR.

In the fall of 1986, the Director issued the final department decisions, modifying and adopting the hearing examiner's proposed orders. The Director denied the applications because the proposed bars were not justified by public convenience and necessity and the proposed premises were inside the Billings quota area which was full.

Ramage and Wilson filed a petition for judicial review with the First Judicial District Court, Lewis and Clark County. The District Court denied the petition and affirmed DOR's final decision.

Woodhall filed a petition for judicial review with the Thirteenth Judicial District Court, Yellowstone County. On December 12, 1986, the District Court remanded the petition for a redetermination of the public convenience and necessity issue. On April 13, 1987, the hearing examiner entered supplemental findings of fact, conclusions of law and proposed order. The hearing examiner concluded that Woodhall's proposed R & R Store and Lounge failed to meet the statutory requirements for public convenience and necessity.

Woodhall filed exceptions to the proposed order but did not request oral argument. On July 13, 1987, the Director rejected Woodhall's exceptions and adopted the hearing examiner's supplemental findings, conclusions and order.

Woodhall again submitted the case to the Yellowstone County District Court. The District Court affirmed the Department's final decision.

Woodhall filed an appeal of the District Court order, as did Ramage and Wilson. Upon motion by DOR, the appeals were consolidated into one action.

Both District Courts upheld DOR's denial of the appellants' liquor license applications on the ground that the issuance of such licenses would not be justified by public convenience and necessity. Appellants argue that their respective District Courts erred in finding that DOR's denial was supported by substantial credible evidence.

The Montana legislature has delegated the administration of the Montana Alcoholic Beverage Code, Secs. 16-1-101 through 16-1-411, MCA, to DOR. Section 16-1-301, MCA. DOR's powers include the ability to issue liquor licenses. Section 16-1-302(8), MCA. DOR may issue a license to any person it approves as fit and proper to sell alcoholic beverages, as long as the number of licenses do not exceed quota limitations. Section 16-4-201, MCA. In addition, DOR must find that the issuance of such license is justified by public convenience and necessity. Section 16-4-203, MCA.

Public convenience and necessity is not defined in the statute books. Nor can a precise definition of the phrase be found in agency regulations. This Court has acknowledged the difficulties inherent in defining the term. In Baker Sales Barn, Inc. v. Montana Livestock Commission (1962), 140 Mont. 1, 12, 367 P.2d 775, 781, we recognized that whether an application is justified by public convenience and necessity depends on the facts of each case. Because the determination of public convenience and necessity involves such a fact-intensive inquiry, it is not necessary that DOR adopt rigid rules defining the term. "[T]he choice made between proceeding by general rule or by individual, ad hoc litigation is one that lies primarily in the informed discretion of the administrative agency." NLRB v. Bell Aerospace Co. (1974), 416 U.S. 267, 293, 94 S.Ct. 1757, 1771, 40 L.Ed.2d 134, 153 (quoting SEC v. Chenery Corp. (1947), 332 U.S. 194, 203, 67 S.Ct. 1575, 1580, 91 L.Ed. 1995, 2002). DOR's use of the adjudicative process to determine whether applications for liquor licenses are warranted by public convenience and necessity is not, as Ramage and Wilson argue, an invalid exercise of rulemaking authority.

Ramage and Wilson also argue that DOR...