One sweltering day last August, as she served freshly squeezed orange juice to a steady stream of customers at 21st and H streets NW near the George Washington University campus, fruit-juice seller Susan Hagan was approached by a D.C. police officer who gave her a ticket for violating an obscure city ordinance that prohibits vendors from staying in one place too long.

"Lord, I had a mountainful of cut oranges in my hands," Hagan recalled. "People coming and going, and she [the police officer] had one foot on the tailgate and was writing the ticket."

Before she knew it, Hagan faced a D.C. Superior Court trial and, if convicted, a $300 fine and up to 90 days in jail.

But last week Hagan got a break. The D.C. Corporation Counsel's office, after spending countless hours researching the case, discovered that the city government body to which vendors such as Hagan could apply for permanent roadside locations did not, for all practical purposes, exit.

As a result, city lawyers unceremoniously dropped the case.

"it was a Catch-22," said George H. Kendall, Hagan's attorney. "On the one hand, the District was saying, 'You do have the right to remain here if you apply for a license and we can prosecute you because you haven't.' But on the other hand, there is no current way to avail yourself of that right."

Said Geoffrey M. Alprin, deputy corporation counsel in charge of the criminal division, "We didn't think it would be fair to go forward against the individual" since there was "nowhere to apply" for the roadway vending permit that Hagan theoretically was supposed to have had.

Hagan and her partner, Steve Berman, a former GWU student, had run their mobile orange juice and lemonade stand for four years and they said they never had had problems with the police before. When Hagan's possible trial became known, about 1,300 loyal customers signed a petition offering support.They were just some of the thousands of thirsty students, office workers, State Department employes and construction workers for whom Hagan and Berman had become an institution. Once, Hagan said, when they took a day off, a customer angrily inquired: "Where were you yesterday? I came 10 blocks."

The city regulation that they allegedly violated last Aug. 11 prohibits vendors with street vehicles from staying in one spot longer than it takes to make a transaction. But Hagan said the constant flow of customers would make it impractical to pick up and leave after every sale.

Under 1978 regulations passed by the D.C. City Council, procedures were to be established by the city government so that the Districts's more than 3,700 vendors could apply for street sites for stationary vending.

Hagan's attorney Kendall said that after a great deal of searching he finally discoverd something called the Mayor's Vending Task Force.

"We were told that the task force ahd Thursday meetings," Kendall said. "We made a request that we be allowed to attend and make a pitch on behalf of Susan Hagan. We were told that we couldn't do that because the meetings were secret."

Later, Kendall says, he found out that the whole task force, comprising government and business representatives, had never met.

The chairman of the task force, Julian Nicholas, also deputy director of the city's Business and Economic Development Office, acknowledged in an interview that the task force until recently has been a bit "dormant."

But he promised that the group eventually would meet and make recommendations to the mayor on roadside vending sites. Until then, Nicholas said, it was his view that roadway vendors will have to "vend and move, vend and move."

City lawyer Alprin said he does not view the Hagan case as a precedent and added that if there are similar arrests under the vend-and-move law, the corporation counsel's office would consider them on a case-by-case basis.