Ceasar v Uman Municipality [2004] FMCSC 1; 12 FSM Intrm. 354 (Chk. S. Ct. Tr. 2004) (13 February 2004)

CHUUK STATE SUPREME COURT
TRIAL DIVISION
Cite as Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354 (Chk. S. Ct. Tr. 2004)

[2004] FMCSC 1; [12 FSM Intrm. 354]

AKAPIO CEASAR,
Appellant,

vs.

UMAN MUNICIPALITY,
Appellee.

CSSC-CR-NO. 62-2003

MEMORANDUM DECISION

John Petewon
Associate Justice

Decided: February 13, 2004

APPEARANCES:

For the Appellant:
Mike Marco
Office of the Public Defender
P.O. Box 754
Weno, Chuuk FM 96942

For the Appellee:
Joses Gallen, Esq.
Acting Attorney General
Office of the Chuuk Attorney General
P.O. Box 189
Weno, Chuuk FM 96942

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HEADNOTES

Appellate Review - Decisions Reviewable; Constitutional Law - Chuuk - Municipalities
The Chuuk Constitution provides that final decisions of municipal courts may be appealed to the Chuuk State Supreme Court appellate division, and, in addition, the Chuuk Legislature, by statute, has conferred jurisdiction upon the trial division to hear appeals from municipal court criminal decisions. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 356 (Chk. S. Ct. Tr. 2004).

Appellate Review - Decisions Reviewable; Constitutional Law - Chuuk -Municipalities
While the Chuuk Constitution expressly authorizes appeals of municipal court decisions to the Chuuk State Supreme Court appellate division, and does not specifically confer authority in the Legislature to permit appeals to the trial division but is silent on the issue and does not prohibit it, and since the Legislature is empowered to enact any and all laws not inconsistent with the state and national constitutions, the trial division thus has jurisdiction, by statute, over an appeal from a municipal court. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 356-57 (Chk. S. Ct. Tr. 2004).

[12 FSM Intrm. 355]

Separation of Powers - Chuuk - Legislative Powers
The Chuuk state government’s legislative power is vested in the Legislature, and extends to all rightful subjects of legislation not inconsistent with the Chuuk or FSM Constitutions. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 357 n.1 (Chk. S. Ct. Tr. 2004).

Appellate Review - Standard of Review
The question of whether a municipality has the legal authority to impose license fees or taxes solely as a revenue measure is a pure question of law, and on appeal, questions of law are reviewed de novo. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 357 (Chk. S. Ct. Tr. 2004).

Appellate Review - Standard of Review
If, as a matter of law, a state statute preempts any local regulation of the possession and sale of alcoholic beverages, and if the municipality is also precluded from imposing license fees or taxes for revenue purposes only, a municipal conviction for possession and sale without a municipal license must be overturned and the defendant found not guilty of the infraction as a matter of law. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 357 (Chk. S. Ct. Tr. 2004).

Commerce
The regulation of businesses is an exercise of the police power, recognized as necessary to protect the public health, morals and welfare. Regulation of intoxicating liquors pursuant to the police power is recognized in virtually every jurisdiction. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 357 (Chk. S. Ct. Tr. 2004).

Commerce
Since the police power is an incident of state sovereignty, municipal exercise of the police power may only occur when delegated by the state, and since municipalities ordinarily have no original police power, they have only such authority with respect to intoxicating liquors as is conferred upon them by the state, either in express terms or by implication. Thus, if a municipality is to have the legal right to regulate the possession and sale of alcoholic beverages, that right must have been delegated to it by the state legislature. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 357-58 (Chk. S. Ct. Tr. 2004).

Commerce; Statutes - Repeal
Chuuk municipalities once had the delegated right to regulate alcoholic beverage sales, but in 2001 the state legislature made major revisions to the law pertaining to intoxicating liquors and placed exclusive jurisdiction over the regulation of alcoholic beverages in the state. The Chuuk Legislature’s enactment removed any prior municipal authority to regulate the possession and sale of alcoholic beverages - a municipality may not by imposition of licensing fees or taxes regulate the possession or sale of such substances. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 358 (Chk. S. Ct. Tr. 2004).

Appellate Review - Standard of Review
In order for the defendant to prevail on appeal, it is necessary to determine whether a municipality has the constitutional or statutory authority to raise revenue by imposing licensing fees and taxes on businesses that engage in alcoholic beverage sales even though the municipality did not raise the issue of its power to impose business license fees or taxes for revenue, rather than regulatory purposes because, as a general rule, a lower court decision will not be reversed if based upon any proper ground. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 358 (Chk. S. Ct. Tr. 2004).

Constitutional Law - Chuuk - Municipalities; Taxation - License and Permit Fees
Chuuk municipalities are barred from imposing taxes except as specifically permitted by state statute. Municipalities have been delegated, by statute, the authority to require persons to obtain and

[12 FSM Intrm. 356]

pay for a business license before engaging or continuing in a business within the municipality in which the business is located. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 358 (Chk. S. Ct. Tr. 2004).

Statutes - Repeal; Taxation - License and Permit Fees
When the state statute authorizing municipal tax powers reserved the state’s right to enact legislation to assess, levy and collect taxes on any subject for which a tax has been assessed and levied by municipal ordinance and provided that in the event that the state enacted legislation on that same subject, the enactment would repeal the ordinance on the same subject, and when the state has in fact enacted legislation imposing fees on businesses engaged in alcoholic beverage sales, any municipal ordinance imposing business license fees on businesses engaged in alcoholic beverage sales is repealed and a municipality does not have the authority to impose business license fees or taxes on alcoholic beverage sellers. Ceasar v. Uman Municipality, [2004] FMCSC 1; 12 FSM Intrm. 354, 358-59 (Chk. S. Ct. Tr. 2004).

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COURT’S OPINION

JOHN PETEWON, Associate Justice:

This case comes before the Court on appeal from the conviction of appellant for possession and sale of alcoholic beverages without a license issued by Uman Municipality. For the reasons stated, the judgment of the Uman Municipal Court is reversed and the case is remanded to the municipal court for further proceedings consistent with this opinion.

I. Procedural History

Defendant, who at all relevant times held a license issued by the State of Chuuk to possess and sell alcoholic beverages, was tried in the Uman Municipal Court on November 13, 2003, found guilty of the offense of possession and sale of alcoholic beverages without a municipal license and fined $175.00. Judgment was entered by the Uman Municipal Court on November 26, 2003. On the same day, Defendant filed his Notice of Appeal and Motion to Stay Execution of Judgment in the municipal court. The motion for stay and the appeal were both denied on December 1, 2004. Defendant paid his fine under protest, and on December 4, 2003, filed his Notice of Appeal of the municipal court decision with the Chuuk State Supreme Court.

Defendant claims his conviction, based solely on his failure to obtain a municipal license to sell alcohol, was in violation of state laws governing the regulation and taxation of the sale of alcoholic beverages in Chuuk State. Specifically, Defendant urges that Chk. S.L. No. 6-01-16, § 3 places sole authority for the regulation of alcoholic beverage sales in the State of Chuuk, and preempts any attempt at regulation by municipalities. While not raised by the parties, the Court must also decide whether Uman Municipality has the constitutional or statutory authority to impose license fees or taxes on alcohol sellers solely for revenue purposes, without regard to the regulation of the possession and sale of alcoholic beverages.

II. Jurisdiction

The Chuuk State Constitution provides that final decisions of the municipal courts of Chuuk State may be appealed to the appellate division of the Chuuk State Supreme Court. Chk. Const. art. VII, § 4. In addition, the Chuuk State Legislature, by statute, has conferred jurisdiction upon the trial division to hear appeals from municipal court criminal decisions. Chk. S.L. No. 190-08, § 34(5).

[12 FSM Intrm. 357]

While the constitution expressly authorizes appeals of municipal court decisions to the appellate division of the Chuuk State Supreme Court, and does not specifically confer authority in the Legislature to permit appeals to the trial division, it is silent on this issue, and does not prohibit it. Since the Legislature is empowered to enact any and all laws not inconsistent with the constitutions of the state and national governments,[1] such an extension of jurisdiction is proper. See, e.g., Davis v. Brittain, 358 P.2d 322, 326 (Ariz. 1960). The Court thus has jurisdiction over this appeal pursuant to Chk. S.L. No. 190-08, § 34(5).

III. Standard of Review

The parties agree that there is no dispute about the facts of this case. They agree that Uman Municipality has an ordinance requiring the payment of a fee to the municipality for the right to possess or sell alcoholic beverages in Uman.[2] They agree that Defendant did not have such a permit, but that he did have a license to possess and sell alcoholic beverages issued by the State of Chuuk, a copy of which was received in evidence. And they agree that the Defendant was in possession of, and engaged in the sale of, alcoholic beverages in Uman Municipality.

The issue raised by the Defendant, whether Chk. S.L. No. 6-01-16 preempts any municipal law attempting to regulate the possession and sale of alcoholic beverages in municipalities, is a pure question of law. The question of whether Uman Municipality has the legal authority to impose license fees or taxes solely as a revenue measure is also a pure question of law. On appeal, questions of law are reviewed de novo. Nanpei v. Kihara, [1995] FMSC 49; 7 FSM Intrm. 319, 323-24 (App. 1995).

If, as a matter of law, Chk. S.L. No. 6-01-16, § 3 preempts any local regulation of the possession and sale of alcoholic beverages, and if Uman Municipality is also precluded from imposing license fees or taxes for revenue purposes only, the conviction must be overturned and the Defendant found not guilty of the infraction as a matter of law.

IV. Analysis

A. Regulation of alcoholic beverages.

The regulation of businesses is an exercise of the police power, recognized as necessary to protect the public health, morals and welfare. 16 Am. Jur. 2d Constitutional Law § 424, at 175-78 (1979). Regulation of intoxicating liquors pursuant to the police power is recognized in virtually every jurisdiction. 45 Am. Jur. 2d Intoxicating Liquors §§ 22, 23, at 500-02 (1969). Since it is generally recognized that the police power is an incident of state sovereignty, municipal exercise of the police power may only occur when delegated by the state. Frank D. Wagner, Annotation, Validity of Municipal Regulation More Restrictive Than State Regulation as to Time for Selling or Serving Intoxicating Liquor, 51 A.L.R.3d 1061, § 2, at 1063 (1973). With regard to the use of the police power to regulate intoxicating liquors, it is established that "since municipalities ordinarily have no original police power, they have only such authority with respect to intoxicating liquors as is conferred upon them by the state, either in express terms or by implication ..." 45 Am. Jur. 2d Intoxicating Liquors

[12 FSM Intrm. 358]

§ 27, at 504-05 (1969). Thus, if Uman Municipality is to have the legal right to regulate the possession and sale of alcoholic beverages, that right must have been delegated to Uman by the state Legislature.

Prior to the enactment of Chk. S.L. No. 06-01-16 in 2001, municipalities in Chuuk did have the right to regulate the sale of alcoholic beverages. 3 TDC[3] § 58 conferred on any municipality the right to bar the sale of alcoholic beverages by a vote of the people of the municipality.

The Chuuk State Legislature made major revisions to the provisions of the law pertaining to intoxicating liquors in 2001. Section 3 of Chk. S.L. No. 06-01-16 placed exclusive jurisdiction over the regulation of alcoholic beverages in the state: "Section 3. Grant of Authority. For the purposes of this Act, the Chuuk State Government hereby has the sole authority to administer and control the sale of alcohol within the State." (emphasis added).

It is clear as a matter of law that the Chuuk State Legislature, with the enactment of Chk. S.L. No. 06-01-16 intended to remove any prior authority of the municipalities of Chuuk State to regulate the possession and sale of alcoholic beverages. Any prior authority is therefore void, and Uman Municipality may not by imposition of licensing fees or taxes regulate the possession or sale of such substances.

B. Fees or taxes as revenue raising measures only.

In order for Defendant to prevail, however, it is necessary to determine whether Uman Municipality has the constitutional or statutory authority to raise revenue by imposing licensing fees and taxes on businesses that engage in the sale of alcoholic beverages. While Uman Municipality did not raise the issue of its power to impose business license fees or taxes for revenue, rather than regulatory purposes, as a general rule a decision of a lower court will not be reversed if based upon any proper ground. 5 Am. Jur. 2d Appeal and Error § 727, at 170 (1962). Thus, if Uman has authority to collect fees or taxes for revenue purposes, then failure to pay such fees is a proper ground for conviction, regardless of the statutory provision preempting municipal regulation of alcoholic beverages.

Article VIII, § 7 of the Chuuk State constitution provides: "Section 7. The State Government has the power to tax, and may delegate certain taxing powers to the municipal governments by statute. All taxes levied by the State Government shall be prescribed by statute." This provision has been interpreted as barring municipalities from imposing taxes except as specifically permitted by state statute. Weno v. Stinnett, [1999] FMSC 34; 9 FSM Intrm. 200, 207 (App. 1999).

In 1998, the Chuuk State Legislature by statute delegated certain taxing powers to the municipalities in Chuuk. With regard to business licensing fees, Chk. S.L. No. 4-98-35, § 3 provides: "Each Municipality may enact an ordinance requiring a person to obtain and pay for a business license before engaging or continuing in a business within the municipality in which the business is located."

This provision, if not subject to restriction, would seem to confer the right to collect business license fees from persons engaged in the sale of alcoholic beverages, and the failure to pay such license fees would support the conviction appealed from. The Legislature did, however, retain certain powers with regard to license fees. Chk. S.L. No. 4-98-35, § 5 provides:

Notwithstanding the provisions of this act, the State hereby expressly reserved [sic] the right to enact legislation to assess, levy and collect taxes on any subject for which a tax

[12 FSM Intrm. 359]

has been assessed and levied by ordinance by any of the municipality [sic] in the State of Chuuk. In the event that the State has enacted a legislation on that same subject, the enactment of such legislation automatically repeals the ordinance on the same subject.

Chuuk State has in fact enacted legislation imposing fees on businesses engaged in the sale of alcoholic beverages. Chk. S.L. No. 6-01-16, § 17 requires a license issued by the state for every person who engages in the business of importing, manufacturing or selling alcoholic beverages in Chuuk State. Chk. S.L. No. 6-01-16, § 21 imposes specific fees on such persons or businesses. Thus, by virtue of Chk. S.L. No. 4-98-35, § 5, any municipal ordinance imposing business license fees on businesses engaged in the sale of alcoholic beverages is repealed by Chk. S.L. No. 6-01-16, §§ 17 and 21. Thus, Uman Municipality does not have the authority to impose business license fees or taxes on sellers of alcoholic beverages in Chuuk State.

V. Conclusion

Defendant could only be convicted of the possession and sale of alcoholic beverages without a license issued by Uman Municipality if Uman Municipality had the legal authority to regulate the possession and sale of alcoholic beverages, or if Uman Municipality had the right to collect fees from businesses engaged in such activities. Chk. S.L. No. 6-01-16 places in the State of Chuuk the sole authority to regulate the manufacture, possession and sale of alcoholic beverages. Chk. S.L. No. 4-98-35, while conferring the right to impose and collect business license fees on municipalities in Chuuk State, also restricts such right in areas where the State has imposed such fees, going so far as to repeal any municipal ordinance previously in effect where the State acts to impose fees. Since Chk. S.L. No. 6-01-16, §§ 17 and 21 acts as such a repealer, Uman Municipality has neither the right to regulate the sale of alcoholic beverages, nor the right to collect business license fees from persons or businesses engaged in such endeavors.

The conviction of the Defendant was improper, and the fine collected for the violation of which the Defendant was convicted must be returned to the Defendant. This matter is remanded to the Municipal Court of Uman Municipality with instructions to vacate the conviction of the Defendant and to cause the fine of $175.00 paid by the Defendant to be returned to him forthwith. A mandate shall so issue.

It is so ordered.

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^[1] Article V, § 1 of the Chuuk State Constitution provides: "The legislative power of the State Government is vested in the Legislature, which consists of the Senate and the House of Representatives. This power extends to all rightful subjects of legislation not inconsistent with this Constitution or the Constitution of the Federated States of Micronesia."

^[2] The Court was not provided with a copy of the ordinance.
^[3] Abbreviation for Truk District Code.