Johnstone Allison v. Svejovsky

ido. 13270
LN i'Hh YUPKISME \:OLJlUH!LS'l'Ol\1L -intf -I~,;,TSON,
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P l a i n t i f f s and A p p e l l a n t s ,
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MYRhTA SVEJKOVSKY,
D e f e n d a n t and Kespondent.
CTOLLL; '11s r i c t CourI: of t h e ISighteenth J u d i c i a l D i s t r i c t ,
t
d o n o r a b l e W. W . L e s s l e y , J u d g e p r e s i d i n g .
i ; o u ~ l s e lof Record :
For Appellants :
Murphy, R o b i n s o n , Hecka t h o r n and P h i l 1 i p s ,
Ka l i s p e l l , Montana
3 u u g l a s D. D a s i n g e r a r g u e d , K a l i s p e l l , Montana
Brown, P e p p e r and Kommers, Bozeman, Montana
James M. Kommers a r g u e d , Bozeman, Montana
---
Submitted: August 31, 1 9 7 6
Ilecided: '
-
7 lcJq@
Mr. Justice John Conway Harrison delivered the Opinion
of the Court:
This appeal arises from an action by plaintiffs for the
return of money paid on a contract or, in the alternative, to
have the contract declared null and void. Defendant counter-
claimed. The district court, Gallatin County, found for de-
fendant on her counterclaim and for attorney fees in the amount
of $1,800.
Defendant Myrna Svejkovsky sold ''all of her right title
and interest in the business of the operation of the bar and
related facilities at the V.F.W. Club of Bozeman, Montanat1
to plaintiffs Steve Johnstone and James F. Allison. Defendant
purchased what is called an interest in the bar plus $2,000
for the inventory, on June 1, 1973. In the spring of 1974, she
was approached by Johnstone and Allison to purchase that interest
for the sum of $9,100 and it was sold to them on or about May
11, 1974.
Svejkovsky operated the V.F.W. Club bar, paid all expenses
and kept the profits. Johnstone and Allison intended to run the
bar in the same manner, but shortly after they purchased
Svejkovsky's interest a representative from the Montana Liquor
Control Board informed them that this arrangement with the V.F.W.
Club would not be allowed to continue. Thereafter, Johnstone
was hired as manager for the bar, for which he was to receive
wages of $1,000 per month out of the profits of the bar, if
there were any. When informed that they could not take all the
profits, as Svejkovsky did, Johnstone and Allison tried to get
their money back by filing this action.
P l a i n t i f f a p p e l l a n t s r a i s e d t h r e e i s s u e s on a p p e a l :
1. Was t h e c o n t r a c t f o r such a s a l e i l l e g a l , a s
c o n t r a r y t o law?
2. Was t h e t r a n s f e r of t h e l i q u o r a s a l e p r o h i b i t e d by
law?
3. W s defendant e n t i t l e d t o judgment f o r a t t o r n e y f e e s
a
i n t h e amount of $1,800.
A p p e l l a n t s a t t a c k t h e t r i a l c o u r t ' s f i n d i n g of f a c t No.
5 which s t a t e d :
"That t h e agreement between t h e p l a i n t i f f s and t h e
defendant w a s n o t i n t e n d e d t o t r a n s f e r any i n t e r e s t
i n t h e l i q u o r l i c e n s e owned by t h e VW Club, n o r
F
d i d t h e s a i d agreement r e q u i r e any a c t s t h a t were
i l l e g a l o r a g a i n s t p u b l i c p o l i c y . 11
A p p e l l a n t s argue t h a t s e c t i o n 4-150 (now 4-1-201), R.C.M.
1947, provided i n p e r t i n e n t p a r t :
" S a l e of l i q u o r unlawful, when ---foreign substance
i n l i q u o r forbidden---possession of l i q u o r , when
unlawful. (1) Except a s provided by t h i s A c t , no
person s h a l l , w i t h i n t h e s t a t e , by h i m s e l f , h i s c l e r k ,
s e r v a n t , o r a g e n t , expose o r keep f o r s a l e , o r
d i r e c t l y o r i n d i r e c t l y o r upon any p r e t e n s e , o r upon
any d e v i c e , s e l l , o r o f f e r t o s e l l , o r i n c o n s i d e r a -
t i o n of t h e purchase o r t r a n s f e r of any p r o p e r t y , o r
f o r any o t h e r c o n s i d e r a t i o n , o r a t t h e time of t h e
t r a n s f e r of any p r o p e r t y , g i v e t o any o t h e r person any
liquor. II
They a l s o argue t h a t s e c t i o n 4-420 (now 4-4-407), R.C.M. 1947,
f u r t h e r p r o h i b i t s t h e s a l e of any a l c o h o l i c l i q u o r by any
person n o t a l i c e n s e e . I n view of t h e f a c t t h a t Svejkovsky
d i d n o t own t h e l i c e n s e , t h e V.F.W. Club d i d , a p p e l l a n t s a r g u e
t h e s a l e was i n d i r e c t v i o l a t i o n of e x p r e s s s t a t u t o r y p r o v i s i o n s
and i l l e g a l .
W f i n d t h e f a c t u a l p o r t i o n of t h e c o u r t ' s f i n d i n g s
e .
v a l i d f o r t h e r e was no r e a l evidence i n t r o d u c e d t o o f f s e t
such findings by appellants. There was no testimony in
support of their testimony that the Montana Liquor Control
Board put an end to their arrangement with the V.F.W. Club.
The agreement made with Svejkovsky was originally drawn
up by appellants' attorney and then submitted to ~vejkovsky's
attorney who made changes that appellants accepted without
ever referring it back to their attorney to check. The testi-
mony of Johnstone clearly indicates he knew what he was buying,
investigated it before making a $4,000 payment, and that he
intended to continue as Svej>kovsky. had until the legal question
of the license arose. Further, immediately after the legal
question arose he was hired by the V.F.W. Club to manage the
club for about the same figure he would have made under the
agreement with Svejkovsky.
This Court held in Hellickson v. Barrett Mobile Home
Transport, Inc., 161 Mont. 455, 459, 507 P.2d 523:
'I* **
In examining the evidence, we must view the
testimony in the light most favorable to the pre-
vailing party. * * * However, while the presumption
is in plaintiff's favor, he is also the appealing
party and as such, the burden is upon him to overcome
the presumption of the correctness of the trial
court's findings of fact."
See also Spencer v. Robertson, 151 Mont. 507, 445 P.2d 48.
Appellants' m d issue challenges the finding that the
transfer of interest in the liquor was a part of the business
and not a sale prohibited by the law of the state. They argue
that section 4-150, R.C.M. 1947, clearly prohibits the sale or
transfer of liquor in consideration of the purchase or transfer
of any property.
Under t h e f a c t s of t h e i n s t a n t case we ha,ve a bulk s a l e
of t h e l i q u o r on t h e shelves and n o t a r e t a i l s a l e f o r con-
sumption a s well a s a s a l e of a management i n t e r e s t i n t h e
V.F .W. Club. Here ~ o n t a n as law and l i q u o r r e g u l a t i o n s
' provide
a unique method t o operate t h i s type of club and i t was p o s s i b l e
f o r t h e c o u r t , w i t h i n t h e s e laws and r e g u l a t i o n s , t o n o t e a
d i s t i n c t i o n between t h e t r a n s f e r of a l i c e n s e and t h e t r a n s f e r
of a business conducted under a l i c e n s e . W affirm the t r i a l
e
c o u r t ' s finding allowing t h e t r a n s f e r a s n o t one p r o h i b i t e d by
law.
Appellants' t h i r d i s s u e i s d i r e c t e d t o t h e award of a t t o r n e y
f e e s i n t h e amount of $1,800. The i s s u e was not contested a t
t h e t r i a l and i s r a i s e d h e r e f o r t h e f i r s t time on appeal.
Appellants c o n t e s t t h e award of t h i s amount by c i t i n g a r e c e n t
decision of t h i s Court, Crncevich v. Georgetown Recreation Corp.,
Mont . , 541 P.2d 56, 32 S t . Rep.963. This i s n o t a
c a s e f a c t u a l l y s i m i l a r t o Crncevich f o r h e r e t h e respondent
counterclaimed f o r a t t o r n e y f e e s which was n o t contested by
a p p e l l a n t s before t h e t r i a l c o u r t . This Court i n Spencer v.
Robertson, 151 Mont. 507, 511, 445 P.2d 48, s a i d :
"Upon appeal, t h i s Court w i l l consider f o r review
only those questions r a i s e d i n t h e t r i a l court."
See a l s o Rule 7 ( a ) , M.R.Civ.P.
The judgment of t h e d i s t r i c t c o u r t i s affirmed.
Justices.
Mr. Justice Haswell, dissenting:
I dissent. In my view, ,the - contract is a subterfuge
to avoid compliance with Montana's Liquor Control Act, hence
illegal and should be declared void and unenforceable.
Section 4-410, R.C.M. 1947, provides in effect, that
every person owning an interest in a retail liquor business
must appear on the license. The contract which is the subject
of this suit sells the right to operate a retail liquor business
and retain the profits to an unlicensed person. If this
subterfuge is permitted to continue, transfers of retail liquor
businesses to . uninvestigated and unlicensed operators would
effectively remove control of retail liquor establishments from
the Montana Liquor Control Board.
I believe this is contrary to the purpose of the Montana
Liquor Control Act, a violation of the public policy of state
control of retail liquor establishments, and therefore the
contract in question should be declared illegal, void and
unenforceable .
Justice. '