Ponape Chamber of Commerce v Nett Municipality Government [1984] FMSC 2; 1 FSM Intrm. 389 (Pon. 1984) (30 January 1984)

THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
Cite as Ponape Chamber of Commerce v. Nett Municipality Government,
[1984] FMSC 2; 1 FSM Intrm. 389 (Pon. 1984)

TRIAL DIVISION-STATE OF PONAPE

PONAPE CHAMBER OF COMMERCE et al.
Plaintiffs,

vs.

NETT MUNICIPAL GOVERNMENT et al.
Defendants.

CIVIL ACTION NO. 1982-026

OPINION

Before Edward C. King
Chief Justice
Ponape, Federated States of Micronesia
96941
January 30, 1984

APPEARANCES:

For the Plaintiffs: Alan B. Burdick

Attorney at Law

Goodsill, Anderson, Quinn & Stifel

P.O. Box 3196

Honolulu, Hawaii 96801

Martin F. Mix

Trial Counselor

P.O. Box 143

Ponape, Caroline Islands 96941

For the Defendants: Frederick C. Canavor, Jr.

State Litigator

Office of the Attorney General

State of Ponape

Ponape, Caroline Islands 96941

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The Ponape State Chamber of Commerce and some fourteen importers who use the Nett docking facilities on the Island of Ponape seek a declaration that Nett Municipal Ordinance 05-82 is "null and void." That ordinance provides that any importer using the docking facilities must obtain from Nett Municipality a usage permit, the annual fee for which is "$600 per importer."

Plaintiffs have filed a motion for summary judgment under Rule 56 of this Court's Rules of Civil Procedure. There is apparent agreement among the parties that the activities of the Plaintiffs come within the language of the ordinance. If the ordinance is valid, it applies to the plaintiffs. There are no genuine issues of material fact and the case therefore may be resolved by summary judgment.

This case, like many others filed in these early days of the Federated States of Micronesia, raises several legal issues not previously considered by this Court. To reach the question of the ordinance's validity, it is necessary, first to consider the scope of the Court's jurisdiction over litigation involving both national and state issues. We must also verify the power of the Court to grant declaratory judgments.

[1 FSM Intrm. 390]

Jurisdiction

The Constitution of the Federated States of Micronesia provides that the national courts, including the trial division of the Supreme Court, have concurrent original jurisdiction in cases arising under the Constitution and national law. FSM Const. art. XI, § 6(b).

Petitioners here make several constitutional assertions including claims that the ordinance violates exclusive powers of the national government to "impose taxes, duties, and tariffs based on imports" and to "regulate foreign commerce." FSM Const. art. IX, §§ 2(d) and (g). Petitioners also assert that the ordinance violates their rights of due process and equal protection of the laws. FSM Const. art. IV, §§ 3 and 4.

The constitutional issues raised by petitioners are serious and substantial. Each is supported by authorities and reasoning of legal substance. These issues plainly "arise under" the Constitution within the meaning of art. XI, § 6(b) of the Constitution of the Federated States of Micronesia.

This does not complete the jurisdictional inquiry however. We must consider whether this Court's jurisdiction is somehow diminished or affected by the fact that some issues in this case do not "arise under" the Federated

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States of Micronesia Constitution or national law, but instead are questions of state law. Specifically, plaintiffs contend that Ordinance 05-82 is beyond the powers allocated to municipalities under the Ponape State Charter or other state law. They also couple their argument that the ordinance violates their rights of equal protection under the national constitution with a similar claim that their equal protection rights under the Ponape State Charter are violated.

For the following reasons, I conclude that the state claims do not reduce or affect the jurisdiction of the Court to address the claims which arise under the national constitution or national law and that the issues of state law also fall within the Court's jurisdiction in this
case.

This is the first case in which the Court has been required to determine whether, in exercising jurisdiction over litigation involving issues which arise under the national Constitution or national law, we may also adjudicate related state or local claims.

However, we have held that where jurisdiction exists by virtue of diversity of the parties, this Court may resolve the dispute despite the fact that matters squarely within the legislative powers of states (e.g., probate,

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inheritance and land issues) may be involved. In re Estate of Nahnsen, 1 FSM Intrm. 97 (Pon. 1982). That holding recognized that the allocation of judicial authority under this constitutional system is made on the basis of jurisdictional grants, not whether state, or national "powers," are at issue. Id. at 108. Nahnsen stands for the proposition that a national court may adjudicate state or local issues, so long as the Court has jurisdiction over the case or dispute.

The constitutional history also reflects recognition by the framers of the constitution that some cases before the national courts might involve state or local issues.

The Committee on Governmental Functions in its report, on the judiciary article said:

The Committee proposes that national court jurisdiction extend to cases "arising under" the constitution, laws and treaties of the nation. By this we mean cases involving the enforcement of a right protected or created by the national constitution, national law or a treaty and cases involving the construction or interpretation of the national constitution, national law or a treaty.

SCREP No. 49, II J. of Micro. Con. Con. 876, 879.1

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This case involves "interpretation of the national constitution" and therefore falls under the jurisdiction of this Court. Neither the Constitution nor the constitutional convention's reports or debates indicate that national court jurisdiction is to be dissolved where state or local issues also appear in a case otherwise qualifying for national court Jurisdiction.

Another legitimate method for determining the meaning of a constitution is to trace the language to its source. We have frequently recognized that the Constitution of the Federated States of Micronesia is modelled to a substantial degree upon the United States Constitution. Where the two Constitutions are similar we have looked to interpretations of United States courts, especially those in existence during the Micronesian Constitutional Convention, as a guide to the intended meaning of the Constitution of the Federated States of Micronesia.

The jurisdictional provisions are quite similar. The Constitution of the Federated States of Micronesia says, "the national courts, including the trial division of the

[1 FSM Intrm. 394]

Supreme Court, have concurrent original jurisdiction in cases arising under this Constitution; national law or treaties..." FSM Const. art. XI, § 6(b). The United States Constitution says, "the judicial Power shall extend to all Cases, in Law and Equity, arising under this Constitution, the Laws of the United States, and Treaties made or which shall be made, under their Authority..." U.S. Const. art. III, § 2.

United States courts have long held that where a federal question "forms an ingredient of the original cause," the courts may exercise jurisdiction over that cause "although other questions of fact or of law may be involved in it." Osborn v. Bank of United States, 22 U.S. [1812] USSC 8; (9 Wheat.) 738, 823[1812] USSC 8; , 6 L. Ed 204, 224 (1824). This has come to be known as the "pendent jurisdiction doctrine."

As one commentator has aptly said, "There could hardly be any other rule...[A] court of original jurisdiction could not function ... unless it had power to decide all the questions that the case presents. This functional justification of the Osborn rule finds support also in the constitution language, which grants jurisdiction over cases rather than over questions." C. Wright, Law of Federal Courts 103 (4th ed. 1983).

The use of similar jurisdictional language in the Constitution here, coupled with the Governmental Functions

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Committee's explicit discussion of the words, "arising under" leave no doubt that this Court is to exercise jurisdiction over cases involving interpretation of the Constitution or national law, despite the fact that state or local issues may be involved in the same case.

For all of these reasons, I conclude it is proper to employ the rule of pendent jurisdiction in measuring our constitutional jurisdiction over cases arising under national law pursuant to Article XI, Section 6(b).

The rule in its current form holds that where a substantial issue is involved in a case, the national courts may exercise pendent jurisdiction over state or local claims which "derive from a common nucleus of operative fact" and are such that the plaintiff would "ordinarily be expected to try them all in one judicial proceeding." United Mine Workers v. Gibbs, [1966] USSC 62; 383 U.S. 715, 725[1966] USSC 62; , 86 S. Ct. 1130, 1138[1966] USSC 62; , 16 L. Ed. 2d 218, 228 (1966).

This case plainly meets the established standards. As already noted, plaintiffs' constitutional claims are substantial. The "operative facts" here are the municipal ordinance and its apparent application to plaintiffs' use of the docking facilities. The state and national issues all derive from this "common nucleus" and all address enforceability of the ordinance. These are issues which

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a plaintiff "would ordinarily be expected to try ... in one judicial proceeding."

Even though the requirements for pendent jurisdiction are met, the court has discretion to decline to exercise jurisdiction over state claims. This determination, it has been said, should turn on "considerations of judicial economy, convenience and fairness to litigants" and should be instructed by d desire of the federal or national court to avoid "needless decisions of state law." United Mine Workers v. Gibbs, 383 U.S. at 726, 86 S. Ct. at 1139, 16 L. Ed. 2d at 228; C. Wright, supra page 395, at 74.

I find that this case involves primarily national issues and that considerations of judicial economy call for the exercise of pendent jurisdiction over the state court issues. Moreover, the defendants have specifically requested that we resolve this matter on the basis of state issues rather than the constitutional issues raised by the importers. Finally, any inclination I might otherwise have to transfer the state issues is erased by the fact that the Ponape State Court system has not begun functioning. This Court will therefore exercise its discretionary power to consider the issues of state law. In re Estate of Nahnsen, 1 FSM Intrm. at 110-11.

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Declaratory Judgment

The relief sought by petitioners is a declaratory judgment that the ordinance is null and void. A declaratory judgment determines the rights or status of the parties even though no affirmative relief (that is, no award of damages or injunction) is awarded. Although our Civil Procedure Rule 57 contemplates issuance of declaratory judgments, we have not previously discussed the Court's power to issue such a judgment.

For many years, United States Federal Courts harbored doubts that power to issue declaratory judgments was available under the United States Constitution. In essence this was because of a widely held belief that if no coercive remedy was needed, the dispute had not matured to the point of an actual case or controversy, so that the federal courts had no jurisdiction. See, e.g., Willing v. Chicago Auditorium Ass'n, [1928] USSC 122; 277 U.S. 274, 48 S. Ct. 507, 72 L. Ed. 880 (1928); Liberty Warehouse Co. v. Grannis, [1927] USSC 12; 273 U.S. 70, 47 S. Ct. 282, 71 L. Ed. 541 (1927); Muskrat v. United States, [1902] USSC 164; 219 U.S. 346, 31 S. Ct. 250, 55 L. Ed. 246 (1911).

However, the United States Supreme Court in Nashville, Chattanooga & St. Louis Ry. v. Wallace, [1933] USSC 31; 288 U.S. 249, 53 S. Ct. 345, 77 L. Ed. 730 (1933) resolved the problem.

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The crucial constitutional requirement, the Court found, was not the form of relief requested, but that there be an actual "case," that is, an adversarial proceeding involving a real controversy. If such a "case" is presented, the court concluded, federal courts are not constitutionally barred from granting declaratory judgments. Since then the declaratory judgment has been an integral part of the arsenal of remedies available through the courts. Virtually all states in the United States have enacted statutes empowering their courts to render declaratory relief, and actions for such relief have become increasingly common. RESTATEMENT (SECOND) OF JUDGMENTS § 33 comment a (1982). It is noteworthy also that courts in Micronesia were empowered to issue declaratory judgments for many years before the Constitution was adopted. 6 F.S.M.C. 1501.

The judicial power of the national government of the Federated States of Micronesia is vested in the Supreme Court. FSM Const. art. XI, § 1. The Judiciary Act of 1979 confirms that each division of the Supreme Court has "power to issue all writs and other process, make rules and orders, and do all acts, not inconsistent with law or with the rules of procedure and evidence established by the chief justice, as may be necessary for the due administration of justice..." 4 F.S.M.C. 117.

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No suggestion appears either in the Constitution or the Judiciary Act that the powers of the national judiciary are limited or fail to include the now generally recognized power of courts to grant declaratory judgments.

I conclude that the power to issue declaratory judgments is within the judicial power vested in this Court by Article XI, § 1 of the Constitution and confirmed by the Judiciary Act of 1979 and that this Court may exercise jurisdiction over an action seeking a declaratory judgment so long as there is a "case" within the meaning of Article XI, § 6(b).

The word "case" is not defined in the Constitution, nor does constitutional history provide direct instruction as to the meaning of that term. See SCREP No. 49, II J. of Micro. Con. Con. 878-79 and I J. of Micro. Con. Con. 434-36, 447-50, 492-95, all discussing the judicial article.

As noted previously in this opinion, the FSM Constitution's jurisdictional provisions contain language similar to the United States Constitution. See also In re Estate of Nahnsen, 1 FSM Intrm. at 102 n.3; Lonno v. Trust Territory, 1 FSM Intrm. 53, 70 (Kos. 1982). It therefore is appropriate to look to the meaning assigned to the word "cases" in the

[1 FSM Intrm. 400]

United States Constitution as a guide. See Alaphonso v. FSM, [1982] FMSC 22; 1 FSM Intrm. 209, 216 (App. 1982).

United States courts have held that the term "cases" is practically indistinguishable from its companion word "controversies," with the possible exception that "controversies" might include only suits of a civil nature and therefore may be less comprehensive than "cases." Aetna Life Ins. Co. of Hartford, Conn. v. Haworth, [1937] USSC 43; 300 U.S. 227 239[1937] USSC 43; , 57 S. Ct. 461, 463[1937] USSC 43; , 81 L. Ed. 617, 620 (1937). A case must be one "appropriate for judicial determination," that is, a "justiciable controversy," as distinguished from a "difference or dispute of a hypothetical or abstract character," or one that is "academic or moot." The controversy must be "definite and concrete, touching the legal relations of parties having adverse legal interests." Id. at 240-41, 57 S. Ct. at 464, 81 L. Ed. at 6621

These standards are met here. This is no hypothetical or abstract conflict. The importers use the Nett docking facilities. If the municipality's ordinance is enforceable: each importer is required to pay an annual fee of $600 for a "usage permit" fee to be paid as a condition to any use of the docking facilities. The differences here are definite and concrete. The dispute touches the legal relations of all parties. The importers and the municipality have adverse legal interests as to the enforceability of the

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ordinance. This is, then, a "case" within the meaning of the Constitution. Since the case "arises under" the Constitution, it falls within the jurisdiction of this Court.

Substantive Issues

Having concluded that the Court has jurisdiction over this case and the requisite power to grant the relief sought by plaintiffs, I am free to move to the substantive issues.

Defendants have urged the Court to consider, before constitutional issues, whether this case may be resolved on more limited grounds. This Court has recognized the desirability of resolving cases without unnecessary constitutional pronouncements. In re Otokichy[1982] FMSC 16; , 1 FSM Intrm. 183, 190 (App. 1982); Truk v. Hartman, [1982] FMSC 15; 1 FSM Intrm. 174, 180-81 (Truk 1982); Suldan v. FSM, [1982] FMSC 19; 1 FSM Intrm. 201, 205 (Pon. 1982). United States Courts exercising pendent jurisdiction likewise have expressed a preference for considering state issues in such cases before reaching federal constitutional issues. Siler v. Louisville & Nashville R.R., [1909] USSC 95; 213 U.S. 175, 191, 193[1909] USSC 95; , 29 S. Ct. 451, 454-55[1909] USSC 95; , 53 L. Ed. 753, 758 (1909). See also Hagans v. Lavine, [1974] USSC 57; 415 U.S. 528, 545-46[1974] USSC 57; , 94 S. Ct. 1372, 1383-84, 39 L. Ed. 2d 577, 592-93 (1974) ("[I]t is evident from Gibbs that pendent

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state claims are not always, or even most always, to be dismissed and not adjudicated. On the contrary, given advantages of economy and convenience and no unfairness to litigants, Gibbs contemplates adjudication of these claims."); Mayor of Philadelphia v. Educational Equality League, [1974] USSC 58; 415 U.S. 605, 637[1974] USSC 58; , 94 S. Ct. 1323, 1341, 39 L. Ed. 2d 630, 654 (1974) (White, J. dissenting).

The first issue of state law suggested by the defendants is adequate for resolution of this case. The Ponape State Charter, art. IX, § 1, states that "the legislature shall by general law provide for local government, and delegate taxing power thereto..." No Ponape state law delegating to any municipality the authority to establish a tax such as this one has been brought to the Court's attention. No other rationale has been suggested whereby Nett Municipality might have the authority to enact this ordinance. It therefore appears that the municipality is without the power or authority to enact a taxing ordinance such as the one at issue in this case. Accordingly, Ordinance 05-82 must be declared void.

Conclusion

Ordinance 05-82 is void as an unauthorized attempt by Nett Municipality to exercise taxing power presently

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unavailable to it. A judgment shall issue declaring the Ordinance null and void.

/s/ Edward C. King
Chief Justice
Supreme Court of the Federated
States of Micronesia

Entered this 30th day of January, 1984.

/s/ Emiliana J. Kihleng
Chief Clerk of Court

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1.The same Committee report suggests that "cases involving primarily national issues be brought to national courts and conversely, that cases involving primarily state issues be brought to state courts." SCREP No. 49, II J. of Micro. Con. Con. 876, 879. That suggestion may have been effectively overruled by subsequent amendment of the Committee's proposed language, deleting reference to "state and local (continued from previous page) courts" from those named to exercise concurrent Jurisdiction over cases arising under the Constitution. See the November 4, 1975 floor amendment, I J. of Micro. Con. Con. 492-93 of Committee Proposal No. 24, and Joint Committee Amendment 10, II J. of Micro. Con. Con. 925.

In any event there is no need here to achieve an ultimate reconciliation of these two statements. Under either criteria this Court would have jurisdiction over the instant case.