Uptick Corp. v. Ahlin

• Decision Date: 23 June 1982
• Docket Number: No. 13230,13230
• Citation: 647 P.2d 1236,103 Idaho 364
• Parties: UPTICK CORPORATION, an Idaho corporation, Plaintiff-Counterdefendant-Appellant, v. John AHLIN, Sr., and Agnes Ahlin, husband and wife; John Ahlin, Jr., and Jerry Ahlin, Defendant-Counter-claimants-Respondents.
• Court: Idaho Supreme Court

Page 1236

647 P.2d 1236

103 Idaho 364

UPTICK CORPORATION, an Idaho corporation, Plaintiff-Counterdefendant-Appellant, v. John AHLIN, Sr., and Agnes Ahlin, husband and wife; John Ahlin, Jr., and Jerry Ahlin, Defendant-Counter-claimants-Respondents.

No. 13230.

Supreme Court of Idaho.

June 23, 1982.

W. Anthony Park, of Park & Meuleman, Boise, for plaintiff-counterdefendant-appellant.

C. Ben Martin of Martin, Chapman, Martin & Hyde, Boise, for defendants-counterclaimants-respondents.

BAKES, Chief Justice.

Plaintiff appeals from the trial court's declaratory judgment that defendants have a "premises right" to liquor licenses used in plaintiff's business and from reformation of a lease to reflect defendants' interest.

The parties to this action are Uptick Corp., the assignee-lessee of a 1975 lease for premises situated in Garden City, Idaho, commonly known as the Alpine Lounge. Uptick Corp. is the plaintiff appellant herein. Defendant respondents, the lessors of the Alpine Lounge, are John Ahlin, Sr., and Agnes Ahlin, husband and wife, and their sons, John Ahlin, Jr., and Jerry Ahlin. Agnes Ahlin died after commencement of this action, and her personal representative was substituted as a party.

The record reflects that the Ahlins acquired the Alpine Lounge property in 1949. Although they operated the premises as a saloon for a short time, selling beer and some meals, the evidence is undisputed that the Ahlins never acquired in their own name a liquor-by-the-drink license for the premises. Louis Echevarria leased the Alpine Lounge in 1956 and acquired in his own name the original license to sell liquor by the drink on the premises. In 1959, while this lease was in effect, the Idaho legislature enacted I.C. § 23-903, or the so-called "per capita law," ¹ 1959 Idaho Sess.Laws ch. 118, § 1, entitling the owner of the liquor license originally issued to Echevarria to the grandfather right to renew the license.

Louis Echevarria formed a partnership with Antonio 'Swede' Ares in 1959, and the Ahlins negotiated a new lease for the Alpine Lounge with the partnership for the period of July 1, 1959, through January 1, 1964. The lease provided that the lessee may sell intoxicating liquors on the premises, provided the proper licenses were obtained by the lessee, and contained the following provision: "6. It is also understood that the license for these premises are not to be transferred or sold to any other premises."

The trial court found that Agnes Ahlin understood and insisted that the liquor license always remain with the premises, relying on paragraph 6 to restrain any transfer. Over plaintiff's hearsay and parol evidence objections, the trial court admitted testimony that Louis Echevarria also understood that the license be restricted to the Alpine Lounge. Antonio Ares, on the other hand, asserted that the license could be moved; however, he never attempted to do so. Upon dissolution of the Echevarria-Ares partnership in October, 1960, Echevarria sold all of his interest in the business, including the liquor license, to Antonio Ares.

During the next several years, from December 5, 1963, to 1974, Antonio Ares, and subsequently his son John, operated the Alpine Lounge. The Ahlins leased the premises to the Areses for varying terms throughout this period. The intervening leases contained in the record all included the same clauses regarding restrictions on the transfer of the licenses to sell liquor by the drink that appeared in the 1959 lease.

The trial court found that on February 4, 1974, John Ares sold the business, including the liquor licenses, to Jerry Ball for $11,100. Ball obtained a new lease from the Ahlins for the period from March 1, 1974, to December 31, 1974, with an option to renew for one year. Clause 12 of this lease, essentially similar to paragraph 6 in the prior leases, provided: "It is understood and agreed that all licenses for the property and premises hereon leased are not to be transferred or sold." Jerry Ball also was aware of Agnes Ahlin's position that the licenses were non-transferable.

Jerry Ball was unsuccessful in operating the Alpine Lounge and in 1974 sold his interest to Joe Evans for $5,000. The trial court determined that this sale also included the liquor licenses. Evans was president of Alpine Corp., the corporation formed for operation of the business. The Ahlins and Alpine Corp. entered into a new lease on December 4, 1975, and the clause regarding transferability of the licenses was changed to read as follows:

"15. ASSIGNMENT OF LICENSES DURING TERM OF LEASE. It is understood and agreed that all licenses for the property and premises herein leased are not to be transferred or sold during the term of this lease or the renewal term hereof, unless such transfer is being made in connection with the assignment of this lease with the consent of owners."

The trial court found that "(a)ccording to the evidence this clause was put into the lease to clarify the meaning of the language in the prior leases." Evans knew that the Ahlins insisted that the liquor license not be transferred to any other premises during the lease or after its termination. The Ahlins had sought legal advice (not from counsel on appeal) and were advised that the new clause prohibited transfer of the liquor license away from the premises during or after the expiration of the lease. Evans, on the other hand, was advised by his lawyer that the liquor license could be transferred by Alpine Corp. to other premises after the termination of the lease. The trial court found that "(t)he parties to the lease signed it each knowing the position of the other party, each one relying on his own lawyer's advice."

On or about November 23, 1976, Alpine Corp. sold the business to Uptick Corp., the plaintiff-appellant herein, for $40,000. The sales agreement recites that the primary assets of the business consisted of the state, city and county retail licenses for retail sale of liquor by the drink. As a part of the sale, the lease of December 4, 1975, was assigned by Alpine to Uptick. ² The trial court found that the owners of Uptick Corp. knew the Ahlins' position regarding the non-transferability of the liquor license away from the premises at the time they purchased the business.

Plaintiff Uptick Corp., claiming that the language in the 1975 lease is controlling, sought a declaratory judgment that defendants do not have any right, title, or interest in the licenses and that plaintiff is the sole and exclusive owner of all license rights. Defendants, the Ahlins, counterclaimed for reformation of the 1975 lease.

The case was tried without a jury, and after hearing the evidence the trial court declared that the Ahlins have a "premises right" to the liquor licenses and that at the time plaintiff leaves the premises, the liquor licenses must be transferred to the defendants. Even though the trial court found that the Ahlins were mistaken in their belief that clause 15 of the 1975 lease restricted the licenses to the Alpine Lounge premises, the court ordered reformation of the lease and a mandatory injunction to reflect its decision. Plaintiff appeals.

We will address three issues presented by this appeal: whether the Ahlins maintained or reserved in themselves any "premises interest" in the liquor licenses issued for use at the Alpine Lounge; whether the 1975 lease agreement restricted the liquor licenses to the Alpine Lounge beyond the term of the lease; and, whether the trial court was correct in reforming the 1975 lease agreement to conform to the intentions of the lessors, the Ahlins.

I

The trial court found that defendant lessors, the Ahlins, have a so-called "premises interest" in the liquor license issued for use at the Alpine Lounge, although the court did not specifically define what the "premises interest" entails. The lower court's analysis leads us to the conclusion that the Ahlins' "premises interest" includes at least the right to restrict the license to the premises involved, and inferentially gives the Ahlins the right to renew the license if the lease expires or is terminated. ³ Whether the trial court predicated the Ahlins' "premises interest" on their status as owner-lessors of the Alpine Lounge, or on the 1959 lease which was executed by the Ahlins and Louis Echevarria, the original owner of the liquor license in question, is also unclear. The distinction, however, is unimportant because, for the reasons set forth below, we conclude that the Ahlins lessor respondents herein, did not have any "premises interest" in the liquor license issued for use at the Alpine Lounge. ⁴

This Court has previously held that a liquor license, as between the licensee and the state, is a mere privilege to be enjoyed while the conditions and restrictions imposed by the state are complied with. Nampa Lodge No. 1389 B. P. O. E. v. Smylie, 71 Idaho 212, 229 P.2d 991 (1951); see State v. Meyers, 85 Idaho 129, 376 P.2d 710 (1962) (beer license); State v. Rorvick, 76 Idaho 58, 277 P.2d 566 (1954) (beer license). A matter of legislative grace, no one has an absolute or inherent right to sell intoxicating liquor. Crazy Horse, Inc. v. Pearce, 98 Idaho 762, 572 P.2d 865 (1977); State v. Calloway, 11 Idaho 719, 84 P. 27 (1906). In its desire to regulate the trafficking of liquor within the State of Idaho and to "ensure the entire control of the sale of liquor," the legislature deemed that licenses be issued only to persons qualified under the act. I.C. § 23-901. Qualifications and restrictions on licensees are set out in I.C. § 23-910.

The purpose of the Retail Sale of Liquor-by-the-Drink Act, I.C. §§ 23-901 et seq., is to protect the health, welfare and safety of the people of the State of Idaho and promote and encourage temperance in the use of alcoholic beverages. I.C. § 23-901; see Adams v. Department of Law Enforcement, 99 Idaho 255, 580 P.2d 858 (1978). A person wishing to obtain a liquor license must submit an...