State Ex Rel. Stewart v. District Court

Lead Opinion

May the Board of Equalization suspend a beer license for violation of liquor laws? In this case relators seek a writ of supervisory control directed to the district court. The question whether or not the board may revoke or suspend a license for violation of its Regulation No. One (see opinion) is perhaps the most vital question in the case. The question is directly raised by the motion to quash, which was submitted by the licensee at the hearing before the board. In the order which the board made requiring the licensee to appear and show cause, the licensee was charged with having sold liquor in violation of his application and the regulations of the board. The only answer of the licensee to such charge is the motion to quash. This motion partakes of the nature of an answer as well as a demurrer. It alleges that the charge made does not state sufficient grounds to authorize the revocation or suspension of said license. This directly raises an issue of law, which is the only issue made by the licensee. The claims of the licensee that it had not been convicted of any violation of the Montana Beer Act and had not violated any of the provisions of the Montana Beer Act are pregnant with the admissions that the licensee had violated Regulation No. One and the terms and conditions of the license. It is clear that from the statement of counsel before the board, this issue of law was the only question presented for determination to the board.

The record in this case shows that: (1) The board has authority to make regulations. (2) It did make such a regulation. (3) Licensee agreed to such regulation. (4) The board determined that licensee had violated such regulations; and (5) The board decreed a punishment against licensee in accord with the terms of such regulation. In such procedure a branch of the executive department of the state government duly empowered to administer certain authority of the state, proceeds in an orderly manner to carry out the duties and functions of its office. There is nothing unusual or arbitrary in relation to this procedure, and it appears to be the customary and usual procedure which a board with extensive powers might take in the execution of its authority. Unless some principle of constitutional law or some principle of statutory construction or other inhibition of law positively prevents the board from proceeding in the manner in which it has done or proposes to continue, this procedure should not be interfered with.

The state Constitution provides that the police power of the state shall never be abridged. (Art. XV, sec. 9.) The prohibition, regulation, licensing and control of the sale of intoxicating liquors has always been held to be valid exercise of the police power of the state. (33 C.J. 505; 15 R.C.L. 255;Crowley v. Christensen, 137 U.S. 86, 11 Sup. Ct. 13,34 L.Ed. 620; In re O'Brien, 29 Mont. 530, 545, 75 P. 196, 1 Ann. Cas. 373; State ex rel. Bray v. Settles, 34 Mont. 448,87 P. 445.)

This board is given extensive regulatory and supervisory powers. Its duty undoubtedly requires that it see that its licensees conduct orderly and law-abiding public places, and they do not become public nuisances and headquarters for the violation of law. It has a right to make regulations. The only limitation as to its regulations is that they be reasonable. Certainly the promulgation of Regulation No. One is reasonable, and a valid exercise of the police power of the state. In granting, refusing, suspending or revoking a beer license the board is exercising a discretionary power as a department of the executive branch of the state government. With that discretion a court may not interfere. (Fulmer v. Board ofRailroad Commissioners, 96 Mont. 22, 28 P.2d 849; Freeman v. Board of Adjustment, 97 Mont. 342, 357, 34 P.2d 534;Scott v. Township Board, 268 Mich. 170, 255 N.W. 752;Hevren v. Reed, 126 Cal. 219, 58 P. 536; State ex rel.Mueller v. District Court, 87 Mont. 108, 285 P. 928.)

The right of the state to delegate to this board the power exercised by it: The granting, refusing or revoking of a license to sell intoxicating liquors or to carry on businesses similarly classified has been generally recognized and approved as an exercise of the police power which may be placed in a commission or other officer or officers. (Crowley v. Christensen, supra;Gundling v. Chicago, 177 U.S. 183, 20 Sup. Ct. 633,44 L.Ed. 725; Wallace v. City of Reno, 27 Nev. 71, 73 P. 528, 103 Am. St. Rep. 747, 63 L.R.A. 337; Scott v. Township Board, supra; State v. Montgomery, 177 Ala. 212, 59 So. 294, 301;State ex rel. Altop v. City of Billings, 79 Mont. 25,255 P. 11, 54 A.L.R. 1091; United States v. Grimaud,220 U.S. 506, 31 Sup. Ct. 480, 55 L.Ed. 563; City of Grand Rapids v.Braudy, 105 Mich. 670, 64 N.W. 29, 32, 55 Am. St. Rep. 472, 32 L.R.A. 116; Bungalow Amusement Co. v. Seattle, 148 Wn. 485,269 P. 1043, 60 A.L.R. 166.)

If it be argued that the right to revoke a license for the cause mentioned herein was not given to the board, we would answer as follows: The board was given power to make rules which have the full effect of law. The existence of this power and its exercise are ample to give foundation for the revocation. (19 R.C.L. 975, sec. 272; State v. Milwaukee, 140 Wis. 38,121 N.W. 658, 133 Am. St. 1060; Child v. Bemus, 17 R.I. 230,21 A. 539, 12 L.R.A. 57; Metropolitan Milk Cream Co. v. Cityof New York, 113 App. Div. 377, 98 N.Y. Supp. 894; Mahaney v.City of Cisco, (Tex.Civ.App.) 248 S.W. 420.)

The petition filed in the district court by the defendants in the present proceeding alleges that the board was without authority to suspend a beer license for the violation of Regulation No. One. There is ample authority to the effect that no hearing is required in such cases. (People ex rel. Ritter v.Wallace, 160 App. Div. 787, 145 N.Y. Supp. 1041; Child v.Bemus, supra; State ex rel. Aberdeen v. Superior Court,44 Wn. 526, 87 P. 818; Wallace v. City of Reno, supra;Miles City v. State Board of Health, 39 Mont. 405,102 P. 696, 25 L.R.A. (n.s.) 589; People v. Department of Health,189 N.Y. 187, 82 N.E. 187; State ex rel. Altop v. City ofBillings, supra.) The motion to quash the alternative writ of supervisory control herein should be granted. While it is alleged that the respondent district court has acted erroneously and in an arbitrary and tyrannical manner, it appears that all that has been done by that court to date was to issue an alternative writ requiring the relators to show cause before it. The relators, however, anticipate that upon the hearing the district court would grant a permanent writ of prohibition, which would be erroneous — an arbitrary and tyrannical exercise of its powers. However, it is presumed that the district court will only act within its authority. (State ex rel. Pereira v. DistrictCourt, 83 Mont. 349, 272 P. 242; State ex rel. Bonners FerryL. Co. v. District Court, 69 Mont. 436, 222 P. 1050.) It is respectfully submitted that if a district court, which it is conceded is acting within its authority, cannot require parties to appear before it, conduct a hearing and inquire into the matter of whether or not a writ of prohibition should be granted, the use of this writ has been extended far beyond the limits heretofore established by this court. Here there is no showing that the relators have suffered any injury, but only the expression of a fear that if the matter were heard in the district court before Judge Padbury, he might decide against them. (State ex rel. Grogan v. District Court,44 Mont. 72, 119 P. 174.) The application for a writ of supervisory control should be denied.

The petition for writ of prohibition filed in the district court alleges facts sufficient to show that the Board of Equalization had acted in excess of its jurisdiction. It is alleged therein that the State Board suspended certain licenses without hearing any evidence in connection with the charges preferred by it against the licensees; the board was without any authority to take such action. The order to show cause directed to the licensees may for the purpose of this case be considered as a complaint lodged against the licensees charging that they had sold intoxicating liquor. However, when the licensees appeared before the board, since no evidence was introduced before it in support of the allegations of the complaint, it is submitted that the board had no authority to revoke the licenses or suspend them.

The provisions of the Beer Act (secs. 2815.45 and 2815.46, Revised Codes) contemplate the introduction of some evidence before the board, otherwise there would be nothing to review on appeal. This view was adopted by the court in Yates v.Mulrooney, 245 App. Div. 146, 281 N.Y. Supp. 216, 221. (See, also, Interstate Commerce Commission v. Louisville N.R.Co., 227 U.S. 88, 33 Sup. Ct. 185, 57 L.Ed. 431.) Prior to the enactment of the prohibition laws, this court held that county commissioners, in acting upon applications for liquor dealer licenses exercised quasi-judicial powers. Thus in State ex rel.More v. District Court, 49 Mont. 577, 579, 143 P. 1193, the court said: "The hearing before the board is analogous to a trial before a justice of the peace. The petitioner for the license is the plaintiff; the protestants are the defendants, and the board of county commissioners is the court. (State ex rel. Hackshaw v. District Court, 48 Mont. 477, 138 P. 1100.) Upon such hearing the board exercises quasi-judicial powers." The same view has been taken of proceedings to revoke a license once granted. (Lambert (State) v. Mayor etc. of City of Rahway, 58 N.J.L. 578, 34 A. 5, 7.)

It might be contended that the order to show cause issued to the licensees by the board, not having been answered by a verified answer specifically denying its allegations, must be taken as confessed. In the first place an appearance to the order by a motion to quash was filed, which so far as the record shows has never been ruled upon. In any event we submit such a procedure is not contemplated by the statute or if contemplated would be invalid. This precise question was passed upon in RePeck, 167 N.Y. 391, 60 N.E. 775, 53 L.R.A. 888. There a license was revoked upon the ground that the licensee had sold liquor on Sunday. The court said inter alia: "No one has testified or even alleged that he committed that offense." It could hardly be said that the order to show cause is evidence against the licensees. (Commonwealth v. McMenamin, (Pa.) 184 A. 679.)

That it is the general rule that the licensing board must hear some evidence before suspending a license may be inferred from the decisions wherein the sufficiency of the evidence before the board was reviewed by a court. (See Board of License Commrs. v.O'Connor, 17 R.I. 40, 19 A. 1080; Deignan v. Board ofLicense Commrs., 16 R.I. 727, 19 A. 332; Marter v. Repp,80 N.J. 530, 77 A. 1030; 82 N.J.L. 270, 82 A. 314; Sawicki v. Keron, 79 N.J.L. 382, 75 A. 477.) Here the State Board of Equalization's order suspending the licenses is based upon no evidence whatever, so far as the record shows. The license is for a fixed term and costs $200. Surely where, as here, the remedy provided by appeal would be inadequate, the licensee properly sought relief in the district court. There is no showing of necessity for the institution of this action, in the nature of an original proceeding in this court. It is argued by the Beer Board that inasmuch as under the provisions of the Beer Act the prohibition applicants in the court below have a right of appeal from the order of the board suspending their licenses, they cannot invoke the writ of prohibition in the district court. This is not so. The fact that an appeal lies from an order of the board does not make probibition unavailable unless such appeal is plain, speedy and adequate. (State ex rel. Marshall v. District Court, 50 Mont. 289,146 P. 743, Ann. Cas. 1917C, 164; State ex rel. Wooten v. District Court, 57 Mont. 517, 189 P. 233, 9 A.L.R. 1212;State ex rel. Mangam v. District Court, 91 Mont. 240,6 P.2d 873.) Any remedy afforded the licensees in the court below by appeal from the order of the board would be no remedy whatever. There is no provision in section 2815.46, Revised Codes, for a stay of the order of the board pending an appeal to the district court. It follows that in the instant matter an appeal would be wholly without remedy to them in the prohibition actions in the lower court. Pending the appeal the order of the board would be enforced against them and the appeals necessarily dismissed. Appeals are wholly statutory, and unless one is permitted by the statute, none exists. The statute is the limit of the right to appeal or to have a stay upon an appeal. If the Beer Act does not provide for a stay, none can be had. (State exrel. State Board v. District Court, 26 Mont. 121,66 P. 754.) As to the contention above made that in the absence of a statute specifically requiring a bond on appeal to the district court none can be required, the attention of the court is directed to the case of Thien v. Wiltse, 49 Mont. 189,141 P. 146.

However, if it could be legitimately urged that the relators in the prohibition actions in the district court had a remedy by appeal, then it is to be observed that this is a consideration properly to be addressed to such district court. If the point is well taken, then of course the district court, it must be presumed, would sustain it and dismiss the prohibition proceedings. It follows that the adequacy of a remedy by appeal is not a matter for consideration here nor a reason for permitting relators to invoke the extraordinary powers of this court by way of supervisory control. This is an original proceeding in this court brought by the relator board to annul a writ of prohibition issued by the respondent court against relators.

The relator, the State Board of Equalization, is empowered by the statute to administer the provisions of the Montana Beer Act, sections 2815.10 to 2815.59, inclusive, Revised Codes. This board, on October 15 of the current year, issued an order to show cause directed to certain persons holding retail beer licenses issued by it, all of whom were operating under their licenses in the city of Helena, wherein it stated that the board was informed that these licensees had sold intoxicating liquor in violation of their applications filed with, and the regulations of, the board. They were directed to show cause on October 21 following. On that date the board convened as such, and its chairman stated that certain information was in possession of the board to the effect that the vendors cited had violated the beer law in the consumption of intoxicating liquors in their places of business. The licensees were all represented by counsel, with certain exceptions, who made statements, but in none of these was there any denial of the charge that intoxicating liquors had been sold in their several places of business. One counselor who represented several licensees informed the board that he did not know whether his clients had sold intoxicating liquors or not. However, one of the licensees, Mr. Endress, denied that any intoxicating liquor had been sold in his place.

The various licensees, as a part of their appearance before the board, filed a motion to quash the order to show cause upon the grounds that the licensees had not been convicted of a violation of any of the provisions of the Beer Act, and that they had violated none of its provisions. No attempt was made by any of the licensees to offer any testimony denying the charge mentioned in the order to show cause.

At the conclusion of the hearing the board took the matter under consideration, and on October 26 entered an order suspending the license of the Higgins Cigar Store, one of the licensees before the board, for a period of five days.

Prior to the service of the order of suspension the Higgins Cigar Store, as relator, applied to the respondent court, together with a number of other licensees similarly situated, and secured what was denominated an "alternative writ of prohibition," which directed the relator board to show cause why it should not be absolutely restrained from any further proceedings in the matter, and why the order suspending the licenses should not be annulled. In addition it was further ordered that the board and the members thereof be restrained from any further proceedings in the matter, and from serving or seeking to enforce the order of suspension until the further order of the court. The sole ground alleged in the application for this writ was that no evidence was introduced either on behalf of the board or the relators therein at the time of the hearing. The relator board thereupon applied to this court for a writ of supervisory control, or other appropriate writ. The respondent court has appeared by motion to strike, motion to quash and answer.

It is argued on behalf of the respondent court that[1, 2] supervisory control is appropriate only where the lower court has committed errors within jurisdiction. Such is the established law of this state. (State ex rel. Finley v.District Court, 99 Mont. 200, 43 P.2d 682; State ex rel.State Bank v. District Court, 94 Mont. 551, 25 P.2d 396;In re Weston, 28 Mont. 207, 72 P. 512.) When the facts before the court are sufficient to warrant any appropriate relief, the proper writ to accomplish the same may be granted where, as here, the application was for a writ of supervisory control or other appropriate relief. (State ex rel. UnitedStates F. G. Co. v. District Court, 77 Mont. 214,250 P. 609; State ex rel. Peel v. District Court, 59 Mont. 505,197 P. 741.)

The writ of prohibition arrests the proceedings of any tribunal when such proceedings are without or in excess of the jurisdiction of such tribunal. (Sec. 9861, Rev. Codes; State exrel. Mueller v. District Court, 87 Mont. 108, 285 P. 928,931.) The relator should have applied for a writ of prohibition in this proceeding, as the question presented is whether the respondent court is acting in excess or without its jurisdiction. In view of the foregoing authorities we will give consideration to the application as though it were an application for such writ.

It is sought by the motion to strike to eliminate from relator's application any and all facts which appear therefrom and which were not before the district court as a part of the application there filed. The writ of prohibition is not, strictly speaking, a proceeding to review a proceeding in a lower court in its entirety. It is not a continuation of the proceeding in the lower court in the higher court. It is a new proceeding in the higher court to determine whether the lower court has exceeded or acted without its jurisdiction. In the case of State ex rel.Mueller v. District Court, supra, it will be observed upon a careful study of the case, that many facts were brought to the attention of this court there and were considered by it, which were not before the district court. Accordingly, the motion to strike is denied.

It is argued that this court should not issue a writ while the[3] matter as to which it is alleged the lower court is exceeding its jurisdiction is there pending and undetermined, and not until the relators have exhausted their remedies in that court. Any such contention is foreclosed by what was said by this court in the case of State ex rel. Mueller v. District Court, supra, reading as follows: "Respondents make the point that under the authorities this court should not issue a writ while the matter as to which it is alleged the lower court will exceed its jurisdiction is there pending and undetermined, and not until the relators here have exhausted their remedies in the lower court, citing State ex rel. Heinze v. DistrictCourt, 32 Mont. 394, 80 P. 673, State ex rel. Mackel v.District Court, 44 Mont. 178, 119 P. 476, and State ex rel.Scollard v. District Court, 47 Mont. 284, 132 P. 21. But the situation presented in those cases bears little, if any, analogy to that presented here. In the present case the district court already has exceeded its jurisdiction. It did so in entertaining the application and in issuing a restraining order, which is still in effect and which, unless annulled by this court, may remain in effect for an indefinite time."

Some of the powers conferred by the Beer Act are enumerated in subdivisions a and b of section 2815.12, which read as follows: "(a) To do all such things as are deemed necessary or advisable for the purpose of carrying into effect the provisions of this Act and regulations made thereunder. (b) Without in any way limiting or being limited by the foregoing, the board may make such regulations as are necessary and feasible for the purpose of carrying into effect the provisions of this Act, and such regulations shall have the full force and effect of law."

On April 10, 1933, the relator board adopted the following Resolution No. 1: "It shall be unlawful for any licensee authorized to manufacture, import or sell beer to violate any of the laws of this state or of the United States or any city ordinance relating to beer or intoxicating liquor and that any violation of this or any other rule or regulation of this board relating to the `Montana Beer Act' or the violation of any law of this state or of the United States or any city ordinance relating to beer or intoxicating liquor by any licensee shall be sufficient grounds for revocation or suspension of the license."

The form of application for license contained in substance the provisions of this regulation, which was signed by these various licensees. Likewise the applicant consents to the examination of his books, records, and stock in trade at any time, and to an examination of his premises by peace officers.

The board, by the last sentence of section 2815.30, is authorized as follows: "The board shall have the right and is hereby given authority to make, at any time, an examination of the books of account of any such retailer and of his premises and otherwise check his methods of conducting business and the alcoholic contents of the beer kept by him for sale." The board is directed to issue retail licenses to such persons as are approved "by the majority of the board, as a fit and proper person * * * to sell beer." (Sec. 2815.36.) It is authorized to suspend licenses or revoke them by the provisions of section 2815.45, which declares: "If any of the licensees herein described shall be convicted of any violation of any of the provisions of this Act, or if the board shall find, upon such examination, that such licensee has violated any of the provisions of this Act, the board may, in its discretion, and in addition to the penalties hereinbefore prescribed, revoke such license, or may suspend the same for a period of not more than three (3) months."

The power to make regulations is conferred upon this board.[4, 5] This delegation of rule-making power is valid and is within the rule declared by this court in the case of State v.Andre, 101 Mont. 366, 54 P.2d 566, 568, where we said: "`And finally, in the case of Chicago etc. Ry. Co. v. Board ofRailroad Commissioners, 76 Mont. 305, 247 P. 162, 164, after an exhaustive review of the authorities, this court said: "We think the correct rule as deduced from the better authorities is that if an Act but authorizes the administrative officer or board to carry out the definitely expressed will of the legislature, although procedural directions and the things to be done are specified only in general terms, it is not vulnerable to the criticism that it carries a delegation of legislative power." The rule thus announced was subsequently approved in the cases of Northern Pacific Ry. Co. v. Bennett,83 Mont. 483, 272 P. 987, Barbour v. State Board ofEducation, 92 Mont. 321, 13 P.2d 225, and State ex rel.City of Missoula v. Holmes, 100 Mont. 256, 47 P.2d 624 [100 A.L.R. 581].'"

It was contended on the argument of the cause that under the[6] provisions of the Act licensees may be suspended only for violations of the Act itself. Section 2815.45 provides for the cancellation or suspension of licenses when "the board shall find, upon such examination, that such licensee has violated any of the provisions of this Act." The only examination elsewhere referred to in the Act is that found in the above quotation from section 2815.30. Manifestly, in section 2815.45 reference is made to some examination elsewhere provided for. The rule of construction has long been adopted by this court that a relative clause must be construed to relate to the nearest antecedent that will make sense. (State v. Centennial Brewing Co., 55 Mont. 500,179 P. 296; Cobban Realty Co. v. Chicago, M. St. PaulRy. Co., 58 Mont. 188, 190 P. 988; State ex rel. Hinz v.Moody, 71 Mont. 473, 230 P. 575.) Accordingly we hold that the examination referred to in section 2815.45 is that mentioned in section 2815.30.

The Act provides that the regulations shall have the force and[7] effect of law. (Sec. 2815.12.) Hence the board is authorized to cancel or suspend licenses upon the violation of any valid regulation.

Lastly it is argued that the board could not cancel or suspend[8, 9] a license unless some testimony was produced before it sufficient to warrant such action at the hearing. The board is authorized by statute to make examinations, and on the hearing it disclosed the fact that it had made such an examination which was to its satisfaction sufficient to warrant action unless otherwise explained. In view of the statutory provisions this case is ruled by that of City of Miles City v. State Board of Health,39 Mont. 405, 102 P. 696, 697, where this court said: "It is said that the State Board did not hear testimony to determine whether the sewage discharged into the Yellowstone River would pollute the waters of the river. Assuming this to be true, it is not a valid objection to the order made by the board. Section 8, Chapter 177, page 477, Laws 1907 (sec. 1566, Rev. Codes), authorizes the board to make, or cause to be made, a thorough investigation in a case of this character; and, if in the judgment of the board the public health so requires, the board may make such an order as the one now under review. This section does not contemplate a public trial, but rather an ex parte investigation, and the legislature, being the repository of the police power of the state, could designate the State Board of Health as its agent, and prescribe the manner in which such police power should be exercised. As a precaution, however, against any injustice, section 10 of the Act (sec. 1568, Rev. Codes) provides that any party aggrieved by the order may appeal to the district court. If the board, then, informed itself by any means, the fact that testimony was not taken is altogether immaterial. The order recites that the board was fully advised in the premises, and found that the sewage discharged into the river would pollute the water to such an extent as to produce an unsanitary condition — one dangerous to the public health."

Let it be understood that we are not now holding that the board need not hold a hearing in order to revoke or suspend a license and that at such hearing the licensee is to be in any manner deprived of his right to be heard and to present any evidence which he may have that is relevant to the subject under consideration. In the circumstances of the case the board was justified, in the exercise of its discretion, to make an order suspending the licenses. It did not exceed its jurisdiction, and therefore the district court was acting in excess of its jurisdiction in restraining the board.

Let a peremptory writ of prohibition issue out of this court directing the respondents forthwith to annul the restraining order and to dismiss the proceeding upon which the order was issued.

ASSOCIATE JUSTICES ANDERSON, MATTHEWS, STEWART and MORRIS concur.

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Concurrence Opinion

I concur in the result reached, but not in everything that is said in the above opinion.

Case Details

Case Name: State Ex Rel. Stewart v. District Court

Court Name: Montana Supreme Court

Date Published: Dec 15, 1936

Citation: 103 Mont. 487

Docket Number: No. 7,648.

Court Abbreviation: Mont.