State Ex Rel Victor S Inc. v. Dist.

No. 13150
I N THE SUPREME C U T O THE STATE O MONTANA
OR F F
1975
T E STATE O MONTANA, ON THE RELATION
H F
O VICTOR'S,INC.,
F A Montana C o r p o r a t i o n ,
R e l a t o r and A p p l i c a n t ,
THE DISTRICT COURT OF THE EIGHTH JUDICIAL
DISTRICT O THE STATE O MONTANA, I N AND
F F
F R THE COUNTY O CASCADE; THE HONORABLE
O F
B. W. THOMAS, D i s t r i c t Judge, Being t h e
P r e s i d i n g Judge and t h e C i t y o f Great F a l l s ,
A Municipa 1 C o r p o r a t i o n ,
Respondents.
ORIGINAL PROCEEDING:
Counsel o f Record:
For R e l a t o r :
Smith, Emmons and B a i l l i e , G r e a t F a l l s ,
Montana
Robert J. Ernmons a r g u e d , G r e a t F a l l s , Montana
For Respondents :
Alexander, Kuenning, Miller and Ugrin, G r e a t
F a l l s , Montana
P a u l D. M i l l e r a r g u e d , G r e a t F a l l s , Montana
Submitted: September 30, 1975
Decided: JAN 7 1376
;Gjl I
Filed : I 5%
T h i s m a t t e r i s b e f o r e t h e Court on an a p p l i c a t i o n by
Victor's, m c . , d e f e n d a n t i n t h e d i s t r i c t c o u r t , f o r a w r i t of
supervisory ~ o n t r o l r other appropriate w r i t , directed t o the
o
J i s t r i c t c o u r t , Cascade County, and t o t h e p r e s i d i n g j u d g e ,
dssuming and t a k i n g j u r i s d i c t i o n of a l l f u r t h e r proceedings i n
jchat c e r t a i n c a u s e i n s a i d c o u r t , b e i n g Cause No. 78667-B, entitled
' C I T Y O GREAT FALLS, a m u n i c i p a l c o r p o r a t i o n , and GREAT FALLS
F
LN'I'ERNATIONAL AIRPORT AUTHORITY, P l a i n t i f f s , v s . V I C T O R ' S , INC.,
a '\fontana c o r p o r a t i o n , Defendant". T h i s Court was asked t o review
t h e judgment e n t e r e d t h e r e i n on J u l y 1 6 , 1975, a s amended by o r d e r
oi t h e d i s t r i c t c o u r t d a t e d August 8 , 1975, and t o r e v e r s e t h e
j ~ d g m e n t and r e n d e r judgment f o r r e l a t o r and a p p l i c a n t h e r e i n ,
~ ~ l c t o r ' s nc.
I, P r i o r t o t h i s a p p l i c a t i o n V i c t o r ' s , I n c . had f i l e d
L L n o t i c e of a p p e a l from t h e f i n a l judgment of t h e d i s t r i c t c o u r t .
~
i h i s Court deemed t h e a p p e a l t o be i n a d e q u a t e , c o n s o l i d a t e d t h e
dppeal [ t h i s C o u r t ' s ?,,13149] w i t h t h i s a p p l i c a t i o n [ t h i s C o u r t ' s
d13150], and assumed j u r i s d i c t i o n under s u p e r v i s o r y c o n t r o l .
'She m a t t e r was b r i e f e d , h e a r d i n o r a l argument and s u b m i t t e d .
I n 1947 t h e C i t y of Great F a l l s , a m u n i c i p a l c o r p o r a t i o n ,
* 2 b i a i r i e J from t h e Montana Liquor C o n t r o l Board a b e e r and a l i q u o r
L i ~ e n s et o o p e r a t e a l i q u o r b u s i n e s s t o be known a s t h e "Great
v h l l s Municipal A i r p o r t ~ o u n g e " , l o c a t e d a t t h e Great F a l l s
b i u ~ i i c i p a lA i r p o r t . This a i r p o r t i s o u t s i d e t h e c o r p o r a t e l i m i t s
~f t h e C i t y o f Great F a l l s .
Simultaneously t h e C i t y , a s l e s s o r , and Donald F. Robinson,
db ' - e s s z e , e n t e r e d i n t o a l e a s e agreement f o r r e s t a u r a n t , b a r , and
~ o c k t a i llounge f a c i l i t i e s a t t h e Great F a l l s A i r p o r t . The l e a s e
urovided i n p a r t :
"8. P a r t y o f t h e f i r s t p a r t [ C i t y ] i s t h e Dwner
o f b e e r and l i q u o r p e r m i t s numbered 1059 and 990
respectively. I t i s covenanted and a g r e e d t h a t
s a i d p e r m i t s w i l l b e a s s i g n e d t o and o p e r a t e d u n d e r
t h e name o f p a r t y of t h e second p a r t [Robinson] f o r
t h e duration of t h i s l e a s e , t o be re-assigned t o p a r t y
o f t h e f i r s t p a r t upon t h e t e r m i n a t i o n of s a i d l e a s e
f o r any c a u s e w h a t s o e v e r . 9: 9:"
The C i t y was t o b e p a i d a p e r c e n t a g e , b a s e d on t h e g r o s s r e c e i p t s
o f ~ o b i n s o n ' so p e r a t i o n .
O May 8 , 1948, t h e C i t y s u b m i t t e d a s i g n e d a s s i g n m e n t
n
o f i n t e r e s t t o t h e Montana Liquor C o n t r o l Board which p r o v i d e d :
II
For a good and v a l u a b l e c o n s i d e r a t i o n and s u b j e c t
t o t h e a p p r o v a l of t h e Montana L i q u o r C o n t r o l
Board, I h e r e b y s e l l , a s s i g n , t r a n s f e r and s e t
o v e r u n t o Don F. Robinson ** a l l right, t i t l e
and i n t e r e s t i n and t o [ t h e b e e r and l i q u o r l i c e n s e
(Emphasis s u p p l i e d ) .
The assignment was s i g n e d by t h e mayor o f G r e a t F a l l s . The C i t y
d i d n o t t a k e any s e c u r i t y i n t e r e s t i n t h e l i c e n s e s .
I n November 1952, t h e C i t y and Robinson e x e c u t e d a new
l e a s e f o r t h e a i r p o r t lounge f a c i l i t i e s f o r a term o f f i v e y e a r s .
T h i s lease c o n t a i n e d a p r o v i s i o n which was t o b e u s e d i n a l l
l e a s e s between t h e C i t y and v a r i o u s lessees o f t h e a i r p o r t lounge
u n t i l t h e present l e a s e with v i c t o r ' s , Inc. The p r o v i s i o n changed
from t h e o r i g i n a l l e a s e r e a d s :
"8. P a r t y o f t h e F i r s t P a r t [ C i t y ] was o r i g i n a l l y
t h e owner o f t h e S t a t e o f Montana r e t a i l b e e r and
l i q u o r l i c e n s e s u s e d i n t h e o p e r a t i o n of s a i d b a r
and c o c k t a i l l o u n g e o p e r a t e d by p a r t y of t h e Second
P a r t i n t h e a b o v e - d e s c r i b e d p r e m i s e s , and s a i d
l i c e n s e s have been a s s i g n e d t o and a r e now i n t h e name
d f p a r t y o f t h e Second P a r t ; i t i s covenanted and
a g r e e d t h a t s a i d p e r m i t s and l i c e n s e s a r e t o b e o p e r -
a t e d under t h e name o f p a r t y o f t h e Second P a r t and
t h a t p a r t y o f t h e Second P a r t w i l l c o n t i n u e t o pay
f o r a l l o f s a i d l i c e n s e s and t h e r e n e w a l s o f a l l of
s a i d l i c e n s e s , and s h a l l pay a l l f e e s , t a x e s and
dharges assessed under F e d e r a l , S t a t e , o r Local s t a t u t e s
and o r d i n a n c e s , i n s o f a r a s t h e y a r e a p p l i c a b l e , -
and
c h a t p a r t y of t h e Second P a r t w i l l a s s i g n t o p a r t y o f
t h e F i r s t P a r t upon t h e t e r m i n a t i o n of t h i s l e a s e a l l
~f s a i d b e e r and l i q u o r l i c e n s e s . " ( Emphasis s u p p l i e d . )
'The colliperlsation p a i d by t h e l e s s e e was changed from a p e r c e n t a g e of
r h e g r v s s t o a s e t monthly r e n t a l f i g u r e .
I'he I_lcerrses w e i e i r a n s L e ~ r e Ja ~urrlber o f Limes and
e v e n t u a L l y t r a n s f e r r e d by t h e Horizon Club t o V i c t o r ' s , I n c . in
1362 under a Horizon Club l e a s e which was t o e x p i r e i n 1964. In
dach c a s e t h e assignment accompanied a s a l e of t h e lounge and
i l x t u r e s t h e m s e l v e s t o g e t h e r w i t h a t r a n s f e r o f t h e l i c e n s e s from
dlle owner t o t h e o t h e r and mortgages p l a c e d upon t h e l i c e n s e s by
velidee o r bank and f i l e d w i t h t h e Montana L i q u o r Control. Board,
!
:
d s e c u r e payment under t h e t r a n s a c t i o n . I n March 1966, v i c t o r ' s ,
Lric. executed i t s own l e a s e agreement w i t h t h e C i t y . The s e c t i o n
p r c v i d i n g f o r c o n t r o l o f t h e l i c e n s e s i s somewhat d i f f e r e n t t h a n t h e
pdst l e a s e s i n t h a t it only provides t h a t l e s s e e a s s i g n h i s i n t e r e s t
n o t t h e l i c e n s e s t h e m s e l v e s i n t h i s language:
II
L e s s o r was o r i g i n a l l y t h e owner of t h e S t a t e o f
Montana r e t a i l b e e r and l i q u o r l i c e n s e s u s e d i n t h e
o p e r a t i o n o f s a i d b a r and c o c k t a i l lounge o p e r a t e d
by L e s s e e i n t h e a b o v e - d e s c r i b e d p r e m i s e s , and s a i d
l i c e n s e s have been a s s i g n e d t o and a r e now i n t h e
liame of t h e L e s s e e ; i t i s covenanted and a g r e e d t h a t
> a i d p e r m i t s and l i c e n s e s a r e t o b e o p e r a t e d under
che name o f L e s s e e and t h a t L e s s e e w i l l c o n t i n u e t o pay
d l 1 of s a i d l i c e n s e s and r e n e w a l s o f a l l o f s a i d l i c e n s e s ,
dnd s h a l l pay a l l f e e s , t a x e s and c h a r g e s a s s e s s e d u n d e r
) J e d e r a l , S t a t e , o r L o c a l s t a t u t e s and o r d i n a n c e s , i n s o -
f a r a s t h e y a r e a p p l i c a b l e . L e s s e e s h a l l , upon t e r m i n -
a t i o n of t h i s Lease, assign t o Lessor a l l of h i s i n t e r e s t
i n and t o s a i d Beer and L i q u o r l i c e n s e ; PROVIDED, how-
e v e r , t h a t i f L e s s e e a s s i g n s t h i s Lease o r s u b - l e a s e s
;:he p r e m i s e s a s h e r e i n p r o v i d e d i n Paragraph 1 2 , L e s s e e
nay s e l l and a s s i g n , s o l e l y w i t h w r i t t e n c o n s e n t of
L e s s o r i s i n t e r e s t i n s a i d Lease t o t h e A s s i g n e e o r Sub-
L e s s e e . (Emphasis s u p p l i e d ) .
Lessee a r g u e s t h a t t h e word II
ease" i n t h e l a s t l i n e o f t h e above
quoted p a r a g r a p h i s i n e r r o r and makes no s e n s e a s u s e d and s h o u l d
be " l i c e n s e " .
The C i t y o f G r e a t F a l l s h a s c o n s t r u c t e d a new a i r p o r t
cerrninal b u i l d i n g and h a s c o n t r a c t e d w i t h an o u t o f s t a t e f i r m
d e s i g n a t e d D y n e t e r i a , I n c . , t o o p e r a t e t h e food and lounge
f a c i l i t y and h a s c o n t r a d t o f u r n i s h D y n e t e r i a , I n c . t h e l i c e n s e s
i n question here. The l e a s e w i t h v i c t o r ' s , I n c . e x p i r e d and t h e
C i t y b r o u g h t an a c t i o n a g a i n s t V i c t o r ' s , I n c . t o s p e c i f i c a l l y en-
f o r c e t h e l e a s e p r o v i s i o n w i t h r e s p e c t t o assignment o f t h e r e t a i l
Liquor dnd 3eer L ~ c e a s e sand t h d c V i c L o r s , inc. b e o r d e r e d co
dssign t o t h e City o r i t s designee.
The m a t t e r was t r i e d t o t h e d i s c r i c t c o u r t and e x t e n s i v e
r l n d i n g s of f a c t were d e t e r m i n e d by t h e c o u r t t o g e t h e r w i t h
e o r ~ c l u s i o n so f law which i n e s s e n c e found t h a t t h e C i t y had n e v e r
r e c e i v e d any c o n s i d e r a t i o n f o r t h e l i c e n s e s ; t h a t n e i t h e r V i c t o r ' s ,
i.nc. n o r i t s p r e d e c e s s o r s p a i d a s e p a r a t e c o n s i d e r a t i o n f o r t h e
l i c e n s e s on a c q u i s i t i o n ; t h a t t h e r e was a d e q u a t e c o n s i d e r a t i o n
< u n s p e c i f i e d ] t o s u p p o r t t r a n s f e r of t h e l i c e n s e s t o t h e C i t y
upon t e r m i n a t i o n by V i c t o r ' s , I n c . ; t h a t t h e City could l e g a l l y
ioLd a l i q u o r and a b e e r l i c e n s e ; and t h a t d e f e n d a n t V i c t o r ' s , I n c .
t r a n s f e r t h e l i c e n s e s t o t h e C i t y w i t h i n t h i r t y days o r t h e c l e r k
of c o u r t would b e a u t h o r i z e d t o c o m p l e t e t h e t r a n s f e r o f t h e
Licenses t o t h e C i t y .
V i c t o r ' s , I n c . p r e s e n t s many i s s u e s f o r r e v i e w , however,
Ehe i o n t r o l l i n g i s s u e i s whether t h e C i t y must pay c o n s i d e r a t i o n
so V i c t o r ' s , I n c . f o r t h e assignment o f i t s i n t e r e s t i n t h e l i q u o r
and b e e r l i c e n s e s t o t h e City o r i t s designee.
The s u i t i s a s p e c i f i c performance a c t i o n which means
i-t j e e k s t o compel t h e performance o f a c o n t r a c t i n t h e p r e c i s e
Lerms a g r e e d upon. The f o u n d a t i o n o f a s u i t f o r s p e c i f i c performance
uf a c o n t r a c t i s t h a t by c o m p e l l i n g t h e p a r t i e s t o do t h e v e r y
r h i n g s whey have a g r e e d t o do more complete j u s t i c e i s a t t a i n e d
ehan by g i v i n g damages f o r b r e a c h o f c o n t r a c t . I t i s an e x t r a -
d r d i n a r y remedy, which was n o t r e c o g n i z e d a t common law. So,
s p e c i f i c performance i s p u r e l y a n e q u i t a b l e remedy and i s governed
by equitable principles. 8 1 C.J.S. S p e c i f i c Performance 5 1, p. 408.
I n 8 1 C.J.S. S p e c i f i c Performance 5 3 , p . 411, i t i s
ttk ; s p e c i f i c performance w i l l b e o r d e r e d o n l y
t
on e q u i t a b l e grounds i n view o f a l l t h e c o n d i t i o n s
s u r r o u n d i n g t h e p a r t i c u l a r c a s e . ;k ;k 9~
II
A b i l l in e q u i r y f o r s p r c i r i c performar~ce i s an
a p p e a l t o t h e conscience of t h e c o u r t , and
s e n e r a l l y , i n such a proceeding, t h e i n q u i r y must
5e whether, i n e q u i t y and good c o n s c i e n c e , t h e
c o u r t should s p e c i f i c a l l y e n f o r c e t h e c o n t r a c t . I I
4 e c t i o n 17-808, R.C.M. 1947, s t a t e s t h a t s p e c i f i c
perior~uiincecannot be e n f o r c e d a g a i n s t a p a r t y t o a c o n t r a c t
II
i L t h a t party h a s n o t r e c e i v e d an adequate c o n s i d e r a t i o n f o r
che contract. " Whether c o n s i d e r a t i o n i s adequate f o r a given
d o n t r a c t depends on t h e f a c t s and c i r c u m s t a n c e s of each c a s e .
T h e r e f o r e , we a r e r e q u i r e d t o c l o s e l y examine t h e f a c t s and
:ircumstances surrounding t h i s c a s e t o determine whether t h e
z o n s i d e r a t i o n i n t h e c o n t r a c t was adequate t o e q u i t a b l y j u s t i f y
t h e assignment of V i c t o r ' s , I n c . 1 s i n t e r e s t i n t h e l i c e n s e s
t o the City.
Although t h i s s u i t i s brought o n l y t o e n f o r c e a pro-
v i s i o n i n a l e a s e between t h e C i t y and V i c t o r ' s , I n c . , t h e
d e t e r m i n a t i o n a s t o whether t h e c o n s i d e r a t i o n f o r assignment
ai ~ i c t o r ' s ,I n c . I s i n t e r e s t was adequate cannot be made by
~ o o k i n go n l y t o t h e c o n t e n t s of t h e l e a s e . In negotiations
f o r t h e l e a s e , t h e C i t y and v i c t o r ' s , I n c . were aware of t h e f a c t
t h a t v i c t o r ' s , I n c . had p a i d a s u b s t a n t i a l amount of money f o r
i n r e r e s t i n t h e b a r f i x t u r e s , l i c e n s e s and t h e p r e v i o u s l e a s e .
Both p a r t i e s were a l s o aware of t h e f a c t t h a t a l t h o u g h a l l
previous l e a s e s c o n t a i n e d p r o v i s i o n s r e q u i r i n g assignment of t h e
a l c o h o l l i c e n s e s themselves upon t e r m i n a t i o n of t h e l e a s e , t h i s
p r o v i s i o n had never been employed by t h e C i t y - - a l t h o u g h t h e
o p p o r t u n i t y f o r i t s u s e had a r i s e n on f o u r o c c a s i o n s .
These a d d i t i o n a l f a c t s a r e p e r t i n e n t h e r e . The d i s t r i c t
court held:
Id-
;r .+t no t i m e d i d t h e C i t y 3 f Great F a l l s
.r-
#% ,&
e v e r r e c e i v e any independent o r s e p a r a t e con-
s i d e r a t i o n o r payment f o r t r a n s f e r by i t of t h e
i i q u o r and b e e r l i c e n s e s t o Robinson o r t o any
o f t h e o t h e r l e s s e e s , i n c l u d i n g defendant. I I
.As h e r e t o f o r e s e t f o r t h , t h e C i t y i n d e a l i n g w i t h Robinson
firs^ zlaimed ownership of t h e l i c e n s e s . Thereafter t h e City f i l e d
a Jocument w i t h t h e Montana Liquor C o n t r o l Board s e t t i n g f o r t h t h a t
t h e City 11
For a good and v a l u a b l e c o n s i d e r a t i o n * ;k * s e l l , a s s i g n
arid t r a n s f e r and s e t over u n t o Don F. Robinson * * * a l l right,
c i c l e and i n t e r e s t i n and t o k
; f"
; the licenses here i n question.
T h e r e a f t e r , t h e l e a s e arrangement was a l t e r e d t o s e t f o r t h t h a t
zhe C i t y was t h e o r i g i n a l owner, r a t h e r t h a n owner.
Robinson and a l l subsequent l e s s e e s and s u b l e s s e e s were
allowed t o s e l l t h e i r i n t e r e s t s i n t h e b a r f i x t u r e s , l i c e n s e s and
t h e l e a s e t o t h e succeeding l e s s e e f o r whatever p r i c e t h e c u r r e n t
b u s i n e s s market would b e a r . The C i t y was involved i n t h e s e s a l e s
orily t o t h e e x t e n t of c o n s e n t i n g t o t h e assignments. The C i t y a t
no time r e c e i v e d t h e l i c e n s e s from t h e vendor-assignor and t h e n
r e a s s i g n e d t h e l i c e n s e s t o t h e vendee-assignee. Four p r e v i o u s
Leases e x p i r e d and t h e C i t y d i d n o t demand r e t u r n of t h e l i c e n s e s .
P u b l i c - r e c o r d ownership [ a t t h e Montana Liquor C o n t r o l
% o a r d l showed t h e l e s s e e s t o be t h e s o l e owners of t h e l i c e n s e s .
S e c t i o n 4-410, R.C.M. 1947, r e q u i r e s t h a t t h e names of a l l persons
i u c e r e s t e d i n t h e l i c e n s e must appear on t h e a p p l i c a t i o n f o r t h e
license. S e c t i o n 4-412(7), R.C.M. 1947, p r o v i d e s t h a t a l i c e n s e
If
may n o t be i s s u e d t o one who i s n o t t h e owner and o p e r a t o r of t h e
business. " (Emphasis s u p p l i e d ) ,
A l l a p p l i c a b l e f e d e r a l , s t a t e and l o c a l f e e s and t a x e s
a t c r n d a n t w i t h t h e l i c e n s e s were p a i d by t h e l e s s e e s , i n c l u d i n g
~ i c t o r ' s ,I n c .
On t h r e e o c c a s i o n s , t h e l i c e n s e s were mortgaged by v a r i o u s
lessees t o a bank o r o t h e r c o r p o r a t i o n f o r l o a n s of money. The
l i c e n s e s were used a s c o l l a t e r a l and t h e mortgages d u l y recorded
w i t h t h e Montana Liquor Control Board a s r e q u i r e d by law. The
C i t y consented t o a l l t h r e e mortgages. Montana Bank of Great F a l l s
i s c u r r e n t l y a mortgagee of t h e l i c e n s e s on a loan f o r approximately
$40,000.
O two occasions
n - i n 1954 and 1955 - contracts for sale
were used t o convey t h e assignment of t h e l e a s e and l i c e n s e s from
one l e s s e e t o a n o t h e r . Language i n t h e c o n t r a c t s provided t h a t upon
default, the licenses would be s e t over t o t h e vendor-lessee
and t h e y s h a l l belong t o t h e vendors. N mention of t h e C l t y ' s
o
II
ownershipf' i s made i n t h e s e c o n t r a c t s . Copies of t h e s e c o n t r a c t s
were f i l e d w i t h t h e Montana Liquor Control Board and t h e C i t y .
Extensive argument was presented concerning t h e n e g o t i a t i o n
w i t h Palmer, t h e a i r p o r t manager, and V i c t o r ' s , I n c . on t h e very
p o i n t of compensation f o r t h e l i c e n s e s upon t e r m i n a t i o n o r s a l e .
It seems t o be admitted t h a t t h i s took p l a c e and Palmer d i d have
a u t h o r i t y t o n e g o t i a t e a i r p o r t c o n t r a c t s , b u t former members of
t h e a i r p o r t commission could n o t confirm any agreements on t h i s
issue. Yet, c o i n c i d e n t l y a t t h i s time, t h e C i t y e l e c t e d t o change
t h e language a s i t p e r t a i n e d t o reassignment i n t h e l e a s e from a
reassignment of t h e l i c e n s e s t o a reassignment of l e s s e e ' s
[Victor's, Inc.] i n t e r e s t i n the licenses. Together w i t h a l l of
t h e s e f a c t s t h e r e i s a d i s p u t e d p r o b a b i l i t y t h a t t h e same l e a s e
i n t e r e s t assignment c l a u s e gave V i c t o r ' s , I n c . t h e r i g h t t o s e l l
i t s i n t e r e s t i n t h e l i c e n s e s upon assignment, w i t h consent o f t h e
City.
Indulging t h e C i t y w i t h t h e presumption, which we t h i n k
w e must, t h a t i t complied w i t h t h e laws of t h e s t a t e o f Montana
and t h a t a l l of i t s d e a l i n g s w i t h i t s l e s s e e s were honest and
open and none were intended t o evade t h e l i c e n s i n g laws of t h e
s t a t e of Montana and i t s a f f i r m a t i v e a c t s o r non-action over t h e
term of t h e s e t r a n s a c t i o n s i n d i c a t e d i t s i n t e n t i o n s , t h e C i t y
could have no i n t e r e s t i n t h e l i c e n s e s themselves. It d i d a t a l l
cirues by Lease dgreeine~li;d i o v l d e i n a c she I-lcenses n u s t s t a y
w i t h t h e l o c a t i o n by a s s i g n m e n t when t h e l e s s e e t e r m i n a t e d h i s
business relationship with the City. v i c t o r ' s , Inc. agrees t h a t
r h e l i c e n s e s c a n n o t b e moved from t h e a i r p o r t .
These l i c e n s e s a r e p e r s o n a l p r o p e r t y and have a r e c o g n i z e d
v a l u e above and beyond t h e f e e s p a i d t o t h e v a r i o u s government
dgencies. These l i c e n s e s a c q u i r e d t h i s t y p e o f v a l u e b e c a u s e t h e
Clry never required nor c o n t r o l l e d t h e reassignment of t h e l i c e n s e s
when a l e a s e t e r m i n a t e d . I f t h e C i t y had e n f o r c e d t h e l e a s e
~ r o v i s i o n si t c o u l d have r e a s s i g n e d t h e l i c e n s e s on e a c h t r a n s -
d c t i o n and t h e new l e s s e e would t h e n n o t have been r e q u i r e d t o
Day t h e s e l l e r f o r t h e l i c e n s e s .
The C i t y d i d n o t do t h i s . It acquiesced i n t h e t r a n s f e r s
d l r e c t l y from p a r t y t o p a r t y f o r c a s h c o n s i d e r a t i o n w i t h t h e r e s u l t
c h a t t h e l i c e n s e s a c q u i r e d v a l u e t o t h e p a r t i e s and t h e y p a i d
~ o r ~ s i d e r a t i ofn r them.
o v i c t o r ' s , I n c . was t h e r e f o r e e n t i t l e d t o
r e l y upon t h e a c t s and c o n d u c t o f t h e C i t y t h a t , when t h e t i m e
L-arne f o r a n assignment from V i c t o r ' s , I n c ., i t could a s s i g n t o t h e
new o p e r a t o r of t h e b u s i n e s s and b e compensated f o r t h e v a l u e of t h e
Licenses.
However, t h e C i t y d e c i d e d t o a s s i g n t h e l i c e n s e s t o t h e
new l e s s e e , Dyneteria, I n c . , w i t h o u t compensation from i t and now
demands t h a t v i c t o r ' s , I n c . make a g r a t u i t o u s a s s i g n m e n t . As
h e r e t o f o r e s t a t e d , t h e C i t y h a s t h e r i g h t t o i n s i s t on V i c t o r ' s ,
Lnc. t s a s s i g n m e n t o f i t s i n t e r e s t i n t h e l i c e n s e s b u t i f t h e C i t y
would l i k e t o bestow t h i s g r a t u i t y upon D y n e t e r i a , I n c . , t h e C i t y
must compensate V i c t o r ' s , I n c . i n an amount e q u a l t o t h e t r u e
market v a l u e of t h e p e r s o n a l p r o p e r t y .
The C i t y c l a i m s and t h e t r i a l c o u r t h e l d t h a t a d e q u a t e
c o n s i d e r a t i o n s u p p o r t e d t h e t r a n s f e r demanded by t h e C i t y , a l t h o u g h
the court did not specify t h e nature of t h e consideration.
Generally speaking, c o n s i d e r a t i o n i s t h e p r i c e bargained
f o r and p a i d f o r a promise. 17 C.J.S. C o n t r a c t s $70, p. 747.
Consideration s u f f i c i e n t t o warrant s p e c i f i c performance f o r t h e
assignment o f v a l u a b l e p e r s o n a l p r o p e r t y such a s l i q u o r l i c e n s e s
j u s t b e obvious and unambiguous. I n reviewing t h e c o n s i d e r a t i o n
f o r t h e two c o n t r a c t s , t h e c o n s i d e r a t i o n which s u p p o r t s t h e l e a s e
between t h e C i t y and v i c t o r ' s , Inc. was s i m i l a r t o t h e c o n s i d e r a t i o n
which had supported e a r l i e r l e a s e s between t h e C i t y and p r i o r
lessees. The l e s s e e was t o pay t h e C i t y monthly r e n t ($600 p e r
month i n t h e c u r r e n t l e a s e ) and o p e r a t e t h e lounge under e s t a b -
l i s h e d minimum s p e c i f i c a t i o n s . The C i t y i n r e t u r n l e a s e s t h e space
t o t h e various p a r t i e s .
The c o n s i d e r a t i o n which supported t h e s a l e s and a s s i g n -
ments of i n t e r e s t between s u c c e s s i v e l e s s e e s was an exchange of
money, e i t h e r d i r e c t l y o r under a c o n t r a c t f o r s a l e , i n r e t u r n
f o r t h e package of (a) b a r f i x t u r e s , (b) l i c e n s e s , and ( c ) l e a s e -
hold. The i n t e r e s t i n t h o s e t h r e e items was s o l d a s a u n i t , b u t
i t i s c l e a r t h a t t h e most important item o f t h e t h r e e was t h e
licenses. A l i q u o r l i c e n s e i s a v a l u a b l e p i e c e of p e r s o n a l property.
Witness t h e $40,000 mortgage obtained by v i c t o r ' s , I n c . from a
bank w i t h t h e b e e r and l i q u o r l i c e n s e s used a s c o l l a t e r a l .
S t a l l i n g e r v. Gcs S, 121 Mont. 437, 438, 193 P.2d 810. I f all that
was s o l d between vendor and vendee l e s s e e s was t h e f i x t u r e s i n a
l e a s e d b a r , i t i s c e r t a i n t h a t t h e s a l e p r i c e would be s u b s t a n t i a l l y
l e s s than i f b e e r and l i q u o r l i c e n s e s a l s o were included i n t h e s a l e .
The C i t y claims t h a t t h e " C i t y ' s w i l l i n g n e s s t o a l l o w
t h e t r a n s f e r o f t h e l i c e n s e s and l e a s e t o [ v i c t o r ' s , Inc. ] and t o
permit [ V i c t o r ' s , I n c . ] t o c o n t i n u e i n possession of t h e premises
a f t e r e x p i r a t i o n of t h e i n i t i a l l e a s e i s a l l t h e c o n s i d e r a t i o n
which i s n e c e s s a r y t o support t h e agreement t o r e a s s i g n . " With t h i s ,
we cannot agree.
The C i t y ' s w i l l i n g n e s s t o a l l o w t h e t r a n s f e r of t h e
l e a s e i n t e r e s t and t o permit V i c t o r ' s , Inc. t o c o n t i n u e i n
possession of t h e premises i s c o n s i d e r a t i o n s u f f i c i e n t o n l y
t o o b l i g a t e v i c t o r ' s , Inc. t o pay t h e r e n t and a b i d e by t h e
o t h e r g e n e r a l terms of t h e l e a s e , excluding t h e reassignment
provision. I t s t r e t c h e s t h e imagination of f a i r n e s s t o s a y t h a t
t h e C i t y ' s w i l l i n g n e s s t o a l l o w t h e t r a n s f e r of t h e l i c e n s e s
t o V i c t o r ' s , Inc. (i.e., t o a l l o w v i c t o r ' s , I n c . t o pay f a i r
market v a l u e f o r t h e l i c e n s e s t o a t h i r d p a r t y ) i s c o n s i d e r a t i o n
f u l l y s u f f i c i e n t o r adequate t o f o r c e v i c t o r ' s , Inc. t o a s s i g n
t h e licenses t o t h e City.
I n examining t h e above two c o n t r a c t s and e s p e c i a l l y
t h e r a t h e r s t a n d a r d l e a s e arrangement, t o g e t h e r w i t h t h e c o n s i d e r a -
t i o n which supported them, we do n o t f i n d c o n s i d e r a t i o n ' t o
support t h e assignment o f t h e l i c e n s e s t o t h e C i t y o r Dyneteria, Inc.
The judgment of t h e d i s t r i c t c o u r t i s r e v e r s e d and t h e
cause remanded t o t h e d i s t r i c t c o u r t w i t h i n s t r u c t i o n s t o determine
f a i r market value of t h e l i c e n s e s t o b e paid V i c t o r ' s , I n c . , and
t h e completion of t h e t r a n s a c t i o n i n accordance w i t h t h i s opinion.