*1 Appellants. MARSH, SULLIVAN, al., et Respondent, No. 8978. 18, 1950. December 9, 1950. Decided Submitted. October (2d) 868. Thomas, Messrs. Ford, Helena,
Mr. Sam Burns and Chi- C. nook, Emigh, Butte, F. for defendant Marsh. Mr. J. Atty. Wesley Wertz, Spec. Olsen, Gen., Mr. W.
Mr. Arnold H. Atty. Joyce, Atty. Gen., Gen., Asst. Mr. Thomas Asst. F. Liquor Montana Control Board. Ford, Joyce, Atty.
Mr. Sam Mr. Gen., C. Thomas F. Asst. argued Emigh orally appellants. Mr. J. F. the ease *2 ’Donnell, Chinook, Messrs. 0 Sias and Messrs. Multz and Han- ley, respondent. argued Helena, for Hanley Mr. Multz and Mr. orally. the cause
THE LESSLEY, HON. W. Judge, sitting place W. District of MR. BOTTOMRY, JUSTICE disqualified: equity seeking
This is a suit to have the court decree reformation of two written contracts. May 27, J. 1944, by
The first contract was executed William Sullivan, Harvey Tappa, party, first and A. Marsh and Charles parties. second July 12,
The second contract was executed William Sullivan, Harvey J. party, only, party. first and A. Marsh second
Each property. involves contract the same Each contract duly acknowledged on the date of its same execution before the notary public. Each is for the sale a stock of and leasing for the of certain and same term property Chinook, Hotel, Montana, known as the Montana owned William J. Sullivan. The hotel contains lobby 31 large originally rooms in addition to a and room used as a restaurant. years 1933
From operated Sullivan restaurant, property upon a hotel but repeal and prohibition the restaurant into a bar from he converted and July 1944, personally operated he both the hotel and bar. 1944, plaintiff spring of decided
In the late that because longer operate health he was no able to continued ill the business and that of his state beer and (June 1944) he would sell his stock of give property including a term lease on his hotel the bar. With view, negotiations such end in plaintiff entered into Tappa Harvey Marsh, resulting agreement Charles in an whereby plaintiff agreed Tappa Marsh, sell plaintiff’s five-year stock of on hand and to them a on the including hotel and bar furniture, furnishings equip- ment therein.
Plaintiff Sias, attorney caused D. Chinook, J. at law of draft a evidencing written contract agreement, which con- parties duly tract acknowledged May 27, executed and on 1944. Tappa Neither suggested nor any change or caused whatsoever to be made in prepared by plain- the instrument as attorney. tiff’s
July 1, 1944, Tappa and Marsh possession entered into property, pursuant to the aforesaid written contract.
State retail beer year licenses for the commencing July 1, 1944, to, issued and in the names of co-partners, Tappa Marsh, they operated bar thereunder days, at the end partnership whereof the was dissolved and *3 Marsh, purchasing the Tappa, interest of took over the business.
July 12, 1944, Marsh entered into a second written contract with Sullivan, identical with May the contract 27th, except Tappa party not a to the second contract and except for a paragraph designated 8, which was added to the second con- tract.
By July the terms of the contract of prop- the hotel erty including bar was leased to Marsh heirs, “his admin- assigns istrators and for the full (5) years term of five from and July 1, 1944, after yearly at a rental of Three Thousand and Dollars ($3,000.00) paid equal to be monthly pay- No/100 first'day ments on the of each month.”
Paragraph 8 of the contract reads: supersedes “This lease and replaces that certain lease made and entered into under date May 27th, 1944 between Wm. J. Sullivan Harvey as Lessor and A. Tappa, Marsh and Lessees, Charles the partnership then existing between the said lessees named in having said lease been Harvey A. by agreement partners and
dissolved between the said Tappa having purchased said Charles March the interest of the partnership.” in said any renewal option provision
The or for contract contains no expiration term, thereof mention at the of its aid agrees Lessor to provision makes of licenses that “the is a obtaining city for the assist the Lessee in licenses state operation said bar.” fis- required for the state beer and years 1948-1949, were 1945-1946, 1946-1947, 1947-1948,
cal only, issued Marsh as owner to and the name of the defendant operator of the bar. operated During the remainder of the contract term money protect- expended property and considerable time and ing fully performed improving same and all ob- ligations upon him imposed virtue of the contract. 30,1949, contract term was few weeks before June when the attempted obtain from expire, the defendant Marsh Sullivan, for plaintiff of his an additional renewal term, notice gave consent but Sullivan declined to thereto and possession property upon to Marsh to deliver of the demised term. him testimony applied that when Marsh Sullivan’s said, ‘No,’ going “I I and he the term: wasn’t extension of up going place if he was to.” to take some town would have “ Q. "What Again testified: on his direct examination you license, Mr. do, anything, if reference to this as to did going I if was me Well, Marsh? Mr. Marsh he asked says: enough get money and he ‘If it’.” license Marsh’s rejected offer to sell and transfer Plaintiff Marsh’s instead, application made in the licenses interest *4 for issuance him of state liquor control board the Montana year premises the fiscal liquor licenses the beer ending 30, 1950. July 1949, June beginning “Quota Law,” being Chapter of By enactment of the Session Laws pp. 326-328, legislature of state estab- lished and fixed limitations on the number of licenses which the may Montana control board issue the various cities and towns the state, providing already but licenses issued which are in excess of said limitations and which in effect at are approval time of the of the Act “shall be renewable but no new licenses shall be issued until the of licenses number shall be ’’ * * * * * * reduced to within specified. limitations
At the time application made for licenses for the year fiscal 1949-1950, the outstanding number of licenses issued to licensees in quota Chinook by exceeded fixed statute and plaintiff’s the board denied application and him declined to issue sought. licenses Paragraph designated 6 July 12, 1944, pro- the contract of vides: “At term, of the said the Lessee will peaceably yield up to premises the Lessor the and all erections upon additions good made the same, repair and all rea- sonable wear and tear damage by fire and unavoidable eas accepted, ualties may put same are or be Lessor. agrees Lessee lease, the termination of this he will yield surrender up Lessor, to the equipment fixtures and hereby let to them in connection with the lease of said any and that in the event equipment said or fixtures shall at damaged the said time missing, be or pay he will Lessor a to the ’’ reasonable value thereof. 29, 1949, On being day June before Marsh’s contract with him expire, was to filed his complaint amended in this against action Marsh and the Montana control board seek- ing to have the court reform May 27, 1944, given Tappa, to Marsh and subsequent July as well as the contract of 12,1944, given alone, enjoin to Marsh the Montana cancelling approving any board from control or transfer of issuing held Marsh or from new licenses and to have the court directing make a decree compelling
420 assign plaintiff
Marsh to and transfer license to the his Sullivan. specifically,
More in trial plaintiff this action seeks to have the adjudge paragraph court 6 contained in be each contract changed by inserting in the second sentence thereof the word “licenses” after the “the fixtures” and words before the words “and equipment” provide so that the as to make the contracts lessee, Harvey “agrees upon A. Marsh the termination of lease, Lessor, yield up this he will surrender fix- tures, licenses, equipment” let. so July 1, 1949,
On defendant Marsh surrendered de- plaintiff complete possession full livered to the Sullivan the property including equip- of all the demised all the fixtures and ment him in let to connection with lease of is provided contracts, and written but he declined trans- assign fer or his and interest in his beer state being compensated licenses without therefor. trial, sitting jury, had the court before without a resulted plaintiff adjudging in a decree that the contracts reformed for be by inserting paragraph place 6 of each contract at the indi- cated, the word “licenses.” The decree also orders the defendant assignment Marsh to make and of his execute judgment state retail beer and licenses and awards against judgment. costs appeal Marsh. This is an from such question presented plaintiff’s right The determinative adjudged. the reformation ordered and equity. requires suit in statute that in such suits This is a questions arising supreme “the court shall review all of fact * * * presented evidence in the record and determine the same, questions law, unless, good cause, as well as a new taking trial or further the court below be evidence ” 1947, 93-216; Higby Hooper, R. ~M. 124 ordered. C. see. v. (2d) 331, 1043; Barron, Mont. 221 Pac. Hart v. 350, (2d) 797; Miller, Miller 121 190 55, v. Mont. Pac. 310, Nagle Naughton, 306, Mont. (2d) 72; ex rel. State 123, 63 Pac. (2d) and cases therein cited. 1944-1945, years State retail the fiscal licenses for long prior 1945-1946 to the enactment and 1946-1947were issued ‘‘ ’’ Quota Law, legisla- Ch. Laws ture. long It was the enactment of law after the contracts this were entered time than into at a when more one-half of expired, term had diffi- that made licenses more cult privilege to obtain. It is the renewal accorded to licensees *6 outstanding the 1947 of Act that makes an retail state eagerly sought license a treasure to in be all communities where quota the has been exceeded. “Quota
itWere not for years the enacted three Law” almost after plaintiff Sullivan, the contracts were entered into difficulty neither he nor Marsh would encountered have obtaining board, from for the state year fiscal 1949-1950,nor, quota of had the for Chinook not been at application exceeded the time Sullivan made to the board in June would experienced any difficulty then have in obtaining changes a license. Thus have the in the statutes by “Quota effected long of Law” enactment after the made, precipitated contracts controversy. were this to have a equity court of decree the reformation of a written is remedy instrument not absolute. While the recognized, arbitrarily. well it is not be administered Such granted relief when must flow from and be accord with the ’ agreements obligations parties. always proceed
While the chancellor must utmost with the proceed caution in character, suits this he must even more cautiously in this, where, cases such as since the contracts were executed, legislation, long new enacted after the contracts affecting entered into procuring liquor licenses, given has exceptional importance alleged to the “mistake” of which the plaintiff complains. may employ
One not a suit for reformation of a contract for agreement. Such entirely new making an purpose already existing perpetuate suits are to establish parties as intent of the express the real contract, and to make agreement. making of the time of the such intent existed at the agree by decree an empowered supply equity is not court of empowered amend and not ment made. It is which was never parties understandingly made fairly and alter a contract there on which by inserting words, therein terms or conditions 93-401-15. 1947, sec. meeting R. C. M. a minds. was never parties duty contracts which It is the of the courts to enforce con and different not to make new themselves have made and significant additions thereto parties make tracts for the or to advantages benefits and parties, thus one or more of the never met. contracting parties have on which the minds of Instruments, p. sec. at Jur., Reformation of In 45 Am. make equity recognizing the cannot said: “The court it is ought made or to have as it thinks such inserting in in- informed, made, if better would have fully parties never which the important conditions strument what merely makes the instrument court assented to. The it to be.” parties intended seeks to have grounds action and his
Here the mistake of “by mutual solely reason of the reformed contracts *7 ’’ Tappa. Marsh and said defendant plaintiff the pr ior presupposes a mutual mistake Reformation parties that the must be clear It agreement. understanding understanding. This is mutual complete to a have come standard in accordance no there would be necessary; otherwise of the Restatement reformed. writing could be the which p. 969. Contracts, 504 at sec. Law of prior is a is this: There reformation sequence statement con- execute a written parties the parties; understanding of the understanding the between sometime tract; somewhere instrument, written of the creation actual and the reached writing agreement reducing the in It occurs occurs. mistake n whichthe Obviously alleged mistake have intended. something contemplation parties. must relate to then in the in- sought The fault is that executed written to be corrected understanding strument does not reflect the actual true parties. principal This is a cardinal in the field of reforma- powers tion for mutual Then, then, mistake. can the equity be invoked to Correct mistake. his premised proposition
Plaintiff’s case is on the that it was understanding liquor with Marsh that the period. The plaintiff leasing be returned to at the end of the evidence, however, proposition. fails to sustain such
On his plaintiff direct examination the Sullivan testified: “Q. you "Will understandings relate what those A. were? Well, property they was to be returned to me as received it.”
Again, referring to the second written contract tes- : tified
“Q. lease, And Plaintiff’s Exhibit No. that the you entered into with Marsh ? A. Yes.
“Q. Does that lease provisions contain the same as the other lease? Yes, does; yes. believe it
“Q. just changed It was the name. Is that idea? A. just changed It Tappa, just from left that out and Mr. put Marsh’s name was in.”
Concerning license, testified: “Q. [Marsh], Was he as far as anything you, he said has particularly interested license? Did he make you statements regarding license when he leased property, as to whether he wanted that or No, not? A. he didn’t I think but he wanted business, the whole hotel way was, bar the with the license in there.
“Q. particularly Was he interested in license? A. Well, put so much that it was so the lease that I help would get liquor license, help him to him getting with his the license. “Q. understanding you, What was the between if anything
regarding lease? during renewal of the the term of that license A. There wasn’t at all.’-’
Plaintiff further testified:
“Q. you signed lease, plaintiff’s Before this exhibit No. which is May you Sullivan, assume 27,1 it, lease read Mr. 'and looked it over ? A. Yes.
“Q. you signed you You knew the contents of it before experience had before. A. Yes. -had considerable business A. “Q. you lease, suppose, carefully. I rather So read the you -'Well, hospital I how careful a fellow know does when he is sick.
“Q. Well, you you thought it read the at that time and lease your understandings Tappa was all and contained understanding figured I Marsh. A. With the had with them did. it
“Q. Yes, you thought it did. A. Yes.” Again plaintiff testified:
“Q. Now, you signed 12, plaintiff’s July before the lease of 2, you exhibit No. it? A. Yes. read feeling pretty good read it “Q. you were At that time carefully? rather A. Yes.
“Q. you then No. con- far as know Plaintiff’s Exhibit As Yes, your understanding Marsh. A. that is with Mr. tained fact.
“Q. No. Nothing was omitted. A. . Yes, I “Q. you sign Sias also? A. be- this before Mr. Did so; yes.” lieve parties concerning understanding of the
As to the plaintiff testified: signing the lease license at the time of ’ discover the lease didn’t con- you first that “Q. When did A. understandings you had with Mr. Marsh. alleged tain start, from- that it never said knew that Well, was—I liquor license. anything about the you then, if knew that it didn’t sign “Q. Why you did Well, time, at that when the provision? contain *9 mentioning the necessity Governor, was made there nowas they every place.” liquor license; a a dozen were dime Marsh The defendant testified: ‘‘ to Q. go him about what you Did or talk to ever to Mr. Sias put A. No. the lease? “ Q. relative you of the information So far as know then all given were to the in this lease incorporated terms that to be * ** to Mr. Sias Mr. Sullivan? A. Yes. ‘‘Q. it, Marsh, conversation Now, as understand Mr. contained you that had Mr. Sullivan to the terms relative in those here. A. That leases was all we ever had. conversation [*] down at the * * veterans hospital “Q. you anything Was there ever said this conversation had with licenses ? Mr. Sullivan relative to A. No.
On cross examination Marsh testified: “Q. Now, at question the time there was no about the number given county or community was there? A. I don’t think was, there no.
“Q. No. When Mr. Sullivan had leased you, those to you exactly intended him back gave you. what he A. No, not license.
”Q. your That wasn’t at all. No, intention was.” never possible This court is called to ascertain if the intention If parties. of the a mutual mistake occurred in the trans understanding parties ference of the writing, the writ ing may be reformed to understanding. reflect the true pre The sumption writing is that the agreement contains the final of the expresses their purpose real and intent.- To meet presumption plaintiff and overcome that required was present clear, convincing satisfactory proof. Realty McNamer Co. Co., 332, v. Sunburst Oil & Gas 76 Mont. 247 Pac. 166. general rule is that to obtain reformation- the mistake Realty mutual. R. M.
must be Cobban Co. Chicago, v. M. Co., 173; P. 52 Mont. & St. R. Hoskins v. Scottish 195 Union & Nat’l Mont. 50. Pac. Ins. Co. 837: Comerford 984; United 45 Am. Co., States F. & G. Pac. Jur., 618; J., Instruments, pp. 617, Reformation of sec. 53 C. Instruments, 42, p. Reformation of sec. 928. The before record us fails to show mutual mistake. quite apparent fully
It is under- both Sullivan and appreciated provisions stood and the terms and of their written contract, im- party discharging obligations thereby each posed upon throughout five-year him contract term. ' It not until a term was few weeks before the agreed upon any question the con- arose as the terms of de- question tract and such raised after he had Sullivan extend Marsh had de- clined to or renew the contract and after right, clined to transfer his and interest in his licenses to title compensated Sullivan unless therefor. *10 liquor by a matter license issued state is of personal
privilege right. privilege rather than of is to property, a nor a con licensee. The license is neither of right, legal or tract or contract in the constitutional sense of run liquor terms. Such license does not with the business those privilege grants of conducted under the not asset it. “lands,” “buildings,” “improvements,” nor It is neither Light Zeiter, fixtures.” “stock and (2d) 295. July 12, 1944, neither the contract nor the contract of
As of any May 27, 1944, superseded, provision for which it contained any five-year provision extension of the term renewal or nor upon liquor beer and licenses a transfer the licensee of the term, and, as at no expiration the contract of a or a trans- agreed time had to either renewal of the contract to licenses, sitting or the district court fer of the state beer altering the writ- equity a was no more warranted court of thereof adjudging a reformation that would contracts and ten than in transfer licenses to Sullivan require Marsh to his require renew would Sullivan to adjudging a reformation that a new or additional term of lease on the contract decree this case premises. facts demised Under part of the trial of discretion on an abuse entered constitutes court. fact findings court’s sustain the trial
The evidence fails to Ac- contrary law. are law and decree and its conclusions of is remanded cause reversed and the cordingly, the decree is strike aside, vacate directions to set the district court with judgment enter and to findings and conclusions trial court’s against plaintiff. for the defendants directions. Decree reversed with JUS- ADAIR ASSOCIATE
MR. CHIEF JUSTICE METCALF, concur. TICE LESSLET, Judge, sat in
THE W. District HONORABLE W. place BOTTOMLT, disqualified. of JUSTICE
MR, ANGSTMAN, dissenting: JUSTICE I am not able conclusion to subscribe reached in the majority opinion. anything justify find do not in the record the assertion majority opinion
made in the had view the mat- selling giving his ter of stock on his hotel property expiration of state retail his beer and 30, 1944). (June I read the As record he decided sell his stock property lease his because he was unable reason of sickness to operate the business and it was sickness and not expiration date of his licenses that motivated actions. his made at the
The lease not date of his *11 30, 1944) by (June but was made licenses written of instrument May 27,1944. Tappa that when applied
The record shows Marsh and for a 1944, they license and a beer license on liquor June in- were by they liquor the control that formed board must obtain an assignment liquor and beer licenses then plaintiff. held accomplish parties plaintiff intention of the the did execute To
428 assignment of .the 9, 1944, licenses on June without addi-
tional appearing consideration than that in the lease. Judge
I think Padbury right finding was in plaintiff. ascertaining In the intention of the ato contract is it proper to subject consider the matter of the contract and the execution; purpose of its Mining Co., Lee v. Lee Gold 592, 230 1091. Pac. plain
"It is to me from including evidence the the assignment liquor of beer the defendant Marsh taking period over the of liquor the lease the business operated by>plaintiff, theretofore expiration and that at the of period the of the lease defendant was return plaintiff the liquor same business.
There was part no intention plaintiff on the either of or de- speculate fendant that defendant should or traffic in They simply licenses as such. incidental to the busi- contemplated ness and was that the entire be restored business period at the of of I the the lease. think properly the court the specifically reformed to make it parties, relate the of I think intention but also it was unneces- sary already contemplated to reform it because it restoration everything at end of term defendant of received from incidental to the business. Furthermore this court has held that a license ap- plicable premises to the for which it was issued. ex State Paige, rel. Jester v. (2d) Mont. 441. I did opinion case, agree not with in the Jester but it is law Montana, accept' it, I as such under the of doctrine stare Paige, decisis. rel. State ex Boulds Mont. Pac. (2d) 141. ruling passes think the license
Under change rightful occupancy of much as an ownership automobile, license automobile follows the sub- course, ject, pass control board to occupant premises. fitness of new Brubaker *12 the view (2d) 179 Pac. 538. This is D’Orazi, 22, v. 295, in- 67, (2d) Pac. Light Zeiter, Mont. took volving a case. somewhat similar judgment should be affirmed.
I think the the district court dissenting in the MB. FKEEBOUBN concurs JUSTICE opinion ANGSTMAN. of ME. JUSTICE January
Eehearing denied 1951. SANFORD, Relator, v. DISTRICT COURT STATE ex rel. OF IN FOR FOURTH JUDICIAL DISTRICT AND MIS Respondents. COUNTY,
SOULA et al., No. 9036. 1950. December 1950. Submitted November Decided (2d) 866.