Kiser v. Department of Revenue ( 1999 )

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No. 99-253
IN THE SUPREME COURT OF THE STATE OF MONTANA
1999 MT 228PHILIP G. KISER,
Petitioner and Appellant,
v.
STATE OF MONTANA, DEPARTMENT OF REVENUE
and HASSBRA, INC., a Montana Corporation,
Respondents and Respondents.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis and Clark,
Honorable Thomas C. Honzel, Judge Presiding.
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COUNSEL OF RECORD:
For Appellant:
Gregory G. Smith, Smith Law Offices, Great Falls, Montana
For Respondents:
R. Bruce McGinnis, Department of Revenue, Helena, Montana
Karl P. Seel, Attorney at Law, Bozeman, Montana
Submitted on Briefs: August 5, 1999
Decided: September 28, 1999
Filed:
__________________________________________
Clerk
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Chief Justice J. A. Turnage delivered the Opinion of the Court.
1. ¶This is an appeal from a decision of the First Judicial District Court, Lewis and
Clark County, which affirmed the issuance of a retail beer/wine license to Hassbra,
Inc., d/b/a Café Internationalé. We affirm.
2. ¶We restate the issues as follows:
3. ¶1. Did the District Court err in determining that the Department of Revenue's
(DOR's) decision awarding the subject license to Café Internationalé was supported
by substantial evidence, particularly in relation to liquor licensing requirements
pertaining to public convenience and necessity?
4. ¶2. Is the location requirement of DOR's liquor licensing process unreasonable,
discriminatory, and unconstitutional as applied by DOR?
5. ¶The District Court succinctly summarized the background facts:
Based on the 1994 census update, DOR determined that because of an increase in
population in Bozeman, Montana, one additional retail beer/wine license could be issued
in the Bozeman quota area. A number of applicants applied for the license, including Kiser
and [Café Internationalé]. Although DOR initially returned Kiser's application because it
failed to specify a proposed location, Kiser was allowed to participate in the proceedings
and his application was considered by the hearing examiner. Following a public hearing,
the hearing examiner found that public convenience and necessity would best be served by
awarding the license to [Café Internationalé]. DOR adopted the hearing examiner's
recommendation and issued the license to [Café Internationalé]. [Café Internationalé] has
been operating under the license since January 5, 1998.
After reviewing the record, the District Court issued a memorandum and order stating that
the detailed findings of fact made by DOR's hearing examiner were supported by
substantial evidence and did not indicate a misapprehension of the effect of the evidence.
The court ruled that DOR's decision to issue the beer/wine license to the established
business at Café Internationalé instead of to Kiser's potential business venture was not
clearly erroneous.
Issue 1
1. ¶Did the District Court err in determining that DOR's decision awarding the subject
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license to Café Internationalé was supported by substantial evidence, particularly in
relation to liquor licensing requirements pertaining to public convenience and
necessity?
2. ¶The standard of review of findings of fact to determine whether they are clearly
erroneous was set forth in Weitz v. Department of Natural Resources &
Conservation (1997), 284 Mont. 130, 133-34, 943 P.2d 990, 992:
(1) the record will be reviewed to see if the findings are supported by substantial evidence;
(2) if the findings are supported by substantial evidence, it will be determined whether the
trial court misapprehended the effect of evidence; and (3) if substantial evidence exists
and the effect of evidence has not been misapprehended, the Supreme Court may still
decide that a finding is clearly erroneous when, although there is evidence to support it, a
review of the record leaves the Court with the definite and firm conviction that a mistake
has been committed.
We review conclusions of law to determine if the agency's interpretation of the law is
correct. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601,
603.
1. ¶In this case, § 16-4-203, MCA (1995), controlled. That statute stated that a beer/
wine license may be approved "only if the department has determined, upon a
hearing held pursuant to the Montana Administrative Procedure Act, that the
issuance or transfer of the license is justified by public convenience and necessity."
The statute did not provide a definition for the term "public convenience and
necessity,"
2. ¶The main thrust of Kiser's argument on appeal is that the hearing examiner erred in
finding that Café Internationalé is the applicant best able to satisfy public
convenience and necessity. Kiser essentially argues that public convenience and
necessity require that the new liquor license must be issued to the applicant best able
to supply the most liquor to the most people for the most hours per day. He asserts
that Café Internationalé is not that applicant, because Café Internationalé proposed
to serve liquor only during the evening hours and only with restaurant dinners, and
did not plan to advertise the availability of liquor on the outside of its building.
Kiser contends that his proposed business could distribute more liquor to more
people, which he paradoxically asserts is the goal of Montana's quota system
limiting the number of liquor licenses available in any given area.
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3. ¶Kiser unpersuasively points to various administrative regulations in support of his
public convenience and necessity argument. None of the regulations are dispositive.
This Court has recognized that rigid rules defining the term public convenience and
necessity are not necessary, because public convenience and necessity involve a fact-
intensive inquiry. Ramage v. Department of Revenue (1989), 236 Mont. 69, 73, 768
P.2d 864, 866. Several factors should be considered:
[P]ublic convenience and necessity are advanced where the issuance of the license will
materially promote the public's ability to engage in the licensed activity. This
determination involves an evaluation of a variety of criteria, including inter alia the
business abilities and character of the applicant, the demand for services in the area to be
served, the impact on existing purveyors,
and any adverse impact on the area to be served. No single factor is a necessary or
sufficient indicator of public convenience and necessity . . . .
Ramage, 236 Mont. at 74, 768 P.2d at 867.
1. ¶The District Court noted that the hearing examiner made detailed findings of fact
and thoroughly analyzed all of the applicants for the beer/wine license. The court
correctly stated that it could not substitute its judgment as to the weight of the
evidence on questions of fact. It noted the evidence of strong public support for Café
Internationalé's application, "in spite of" the limitations on availability of service. In
determining that Café Internationalé was most deserving of the available license, the
hearing examiner noted that Café Internationalé's application was supported by
more persons than any other applicant's. Petitions were submitted containing 721
signatures supporting the application of Café Internationalé and separate letters of
support were received from nine families and fifty-five individuals. Further, the
hearing examiner deemed it important that Café Internationalé had demonstrated
itself to be a successful enterprise, even without a liquor license. Kiser's proposed
establishment, in contrast, was untested as a business.
2. ¶Kiser specifically challenges the hearing examiner's finding that the lack of a beer/
wine license has "hampered [Café Internationalé's] catering efforts." Kiser argues
that this is irrelevant; the question is whether the public's need for catering of
alcohol is currently being met from the viewpoint of the public, not from the
viewpoint of Café Internationalé.
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This finding, however, is supported by substantial evidence and, when viewed in the
context of all of the findings of fact, is not otherwise clearly erroneous.
1. ¶Kiser asserts that other findings should have been made but were not. He asserts
that the hearing examiner should have found that Café Internationalé's application
for the beer/wine license did not best serve public convenience and necessity
because Café Internationalé is located on the same street as several churches and in
a building which was also temporarily housing an alternative high school. The
hearing examiner discussed these matters in his written decision, determining that
Café Internationalé's location did not bar its application.
2. ¶Kiser's assertions concerning findings which should have been made but were not
must be reviewed under the second and third prongs of our standard of review of
findings of fact: whether the trial court misapprehended the effect of the evidence or
a review of the record leaves the Court with the definite and firm conviction that a
mistake has been committed. The Court has reviewed the extensive findings. The
hearing examiner did not misapprehend the effect of the evidence, nor are we left
with a definite and firm conviction that a mistake has been committed.
3. ¶Kiser also points out that Café Internationalé was the only applicant to have protest
letters filed against it. The hearing examiner discussed those two letters in his
written decision, pointing out that the letter writers did not follow up by appearing
personally at the hearing to oppose Café Internationalé's application, and
determining that the letters were not fatal to Café Internationalé's application.
4. ¶We hold that the District Court did not err in determining that DOR's decision
awarding the subject license to Café Internationalé was supported by substantial
evidence and was not otherwise clearly erroneous.
Issue 2
1. ¶Is the location requirement of DOR's liquor licensing process unreasonable,
discriminatory, and unconstitutional as applied by DOR?
2. ¶An application for a liquor license must specify a location in order to be
considered. Section 16-4-402, MCA. Despite Kiser's failure to specify a location for
his proposed establishment in his application, he was permitted to participate in the
licensing process and his application was considered on its merits. The hearing
examiner's findings specifically discussed the lack of a proposed location as to
Kiser's application.
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16. The Liquor Division, Montana Department of Revenue, acted correctly in returning
the application and supporting documents of Philip G. Kiser, d/b/a River City, due to the
fact that no location for the premises proposed for licensing had been identified.
17. The location of a premises proposed for licensing must be identified at the outset of
the application process. Section 16-4-207, MCA, addressing publication of notices of
applications, includes the specific necessity of showing a location in its notice format. The
agency must also know the location of a premises under § 16-4-405, MCA, in order to
determine if the premises is off regular police beats, if it is in a zoned area where the sale
of alcohol is prohibited, if the welfare of persons residing in the vicinity will be adversely
or seriously affected, or if there is a public convenience and necessity justification for a
license at that location.
Kiser asserts that the distinction made by DOR between enforcement of the location
requirement (which must be satisfied at the beginning of the application process) and
enforcement of the requirement that the applicant be a United States citizen (which must
be satisfied before the license is issued) is clearly erroneous.
1. ¶The question of the applicant's citizenship in a beer/wine license application is
answered "yes" or "no" and does not require a comparative analysis by the hearing
examiner. As to this requirement, we have affirmed DOR's practice of permitting
applicants to cure defects in an application prior to actual issuance of a license.
Tokumoto v. Department of Revenue (1994), 264 Mont. 56, 869 P.2d 782.
2. ¶Identification of the location where the beer/wine license will be used, on the other
hand, is an element to be weighed when balancing applicants' qualifications and the
relative degrees to which their proposals serve public convenience and necessity. In
its order, the District Court elaborated:
Kiser's failure to identify a location did not bar his consideration. It did, however, frustrate
the ability of the public and the hearing examiner to weigh Kiser's application against the
others. The hearing examiner was unable to determine what advantages might be received
from issuing the license to Kiser's nebulous concept as no location was available for
comparison. Furthermore, the public needed to know where Kiser's business would be
located should he be issued the license. Without that information, members of the public
would be unable to determine whether they might want to oppose Kiser's application.
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We agree, and we hold that the distinction made between enforcement of the location
requirement and enforcement of the citizenship requirement is not clearly erroneous.
1. ¶Finally, without citing authority on point, Kiser asserts that requiring him to secure
a location for his proposed establishment before his application will be fully
considered violates equal protection guarantees. He asserts that the procedure used
in this case discriminated against potential applicants based upon the social
condition and economic status of whether they were Gallatin County property
owners or lessees. He also asserts that the DOR's procedures discriminate against
applicants for licenses who do not own a going concern, in favor of those who do.
He says this effectively prevented economically disadvantaged people from
receiving the benefit of an asset of significant value.
2. ¶ The first prerequisite to a meritorious equal protection claim is a showing that the
state has adopted a classification that affects two or more similarly situated groups
in an unequal manner. State v. Renee, 1999 MT 135, ¶ 27, 57 St.Rep. 545, ¶ 27.
Under the requirements as here interpreted by DOR, an applicant need not be a
property owner; the applicant need only have identified a location where the license
will be used. Because Kiser has not described a manner in which similarly situated
classes receive different treatment under the location requirement for beer/wine
license applicants, he has not made a case for violation of his right to equal
protection under the law. Nor has he shown it unreasonable to require an applicant
for a liquor license to specify a proposed or existing location for purposes of
determining whether the business will serve public convenience and necessity.
1. ¶We affirm the judgment of the District Court.
/S/ J. A. TURNAGE
We concur:
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/S/ JAMES C. NELSON
/S/ WILLIAM E. HUNT, SR.
/S/ TERRY N. TRIEWEILER
/S/ W. WILLIAM LEAPHART
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