Actouka v Kolonia Town Municipality [1991] FMSC 20; 5 FSM Intrm. 121 (Pon. 1991) (30 July 1991)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION
Cite as Actouka v Kolonia Town Municipality, [1991] FMSC 20; 5 FSM Intrm. 121 (Pon. 1991)

MARCELINO ACTOUKA
d/b/a ACTOUKA EXECUTIVE INSURANCE UNDERWRITERS,
MOYLAN'S INSURANCE UNDERWRITERS (FSM),
PACIFIC ISLANDS INSURANCE INC.,
BANK OF THE FEDERATED STATES OF MICRONESIA,
BANK OF GUAM, BANK OF HAWAII
Plaintiffs

vs

KOLONIA TOWN MUNICIPALITY
Defendant

FSM CIVIL ACTION 1991-006

Before the Honorable Edward C. King,
Chief Justice
Decided: July 30, 1991

APPEARANCES:

For the Plaintiffs:
R. Barrie Michelsen,
Attorney At Law;

For the Defendant:
John Brackett,
Attorney At Law

HEADNOTES

Constitutional Law; Banking; Insurance; Permits and Licenses
A license fee ordinance which separately defines banking and insurance businesses and specifically imposes a different rate upon those businesses than would be imposed upon other kinds of businesses on its face appears to be an effort to regulate banking and insurance and is unconstitutional and void. Actouka v. Kolonia Town Municipality, [1991] FMSC 20; 5 FSM Intrm. 121, 122 (Pon. 1991).

Civil Procedure - Summary Judgment
Where a defendant has not filed a response to a motion for summary judgment within the ten days provided by FSM Civ. R. 6(d), the defendant is deemed to have consented to the granting of the motion and the court may decline to hear oral argument. Actouka v. Kolonia Town Municipality, [1991] FMSC 20; 5 FSM Intrm. 121, 123 (Pon. 1991).

* * * *

COURT'S OPINION

EDWARD C. KING, Chief Justice:

This is a challenge by plaintiffs, various persons and organizations engaged in insurance and banking business within the Federated States of Micronesia, to the constitutionality of license fees assessed against them pursuant to Kolonia Town Ordinance No. KTG-014-90, enacted on July 24, 1990.

Plaintiffs assert that the license fee is in fact a form of tax which represents an attempt by Kolonia Town to regulate plaintiffs right to engage in banking and insurance. Accordingly, plaintiffs contend that the ordinance is in violation of article IX, section 2(g) of the FSM Constitution which places in the national government the power "to regulate banking, foreign and interstate commerce, insurance" and other matters.

The ordinance identifies and defines various kinds of businesses and imposes differing fees upon each, depending upon the type of business. License fees range from lows of $10.00 for a short term business and $25.00 (for, e.g., video machine, boat rentals; shoe repair and barber shops, vending machines and small gasoline stations) up to $1,000.00 for various kinds of businesses, including banking and lending institutions, and insurance operations.

By separately defining the banking and insurance businesses and specifically imposing a different rate upon those businesses than would be imposed upon other kinds of businesses, the ordinance on its face appears to be an effort to regulate banking and insurance.

Kolonia Town has put forward no argument to justify the ordinance. On February 26, 1991, plaintiffs served on Kolonia Town a motion for preliminary injunction setting forth their substantive claims in this litigation. Kolonia Town did not respond to plaintiffs' arguments but instead simply agreed not to enforce the ordinance against the plaintiffs while the litigation is pending.

Subsequently, on May 29, 1991, plaintiffs filed this motion for summary judgment, still relying upon the substantive arguments already explained in connection with the February 26 motion for preliminary injunction.

Although Kolonia Town had well over a month to consider plaintiffs' arguments, the municipality did not file a response to the motion for summary judgment within the ten days provided by FSM Civ. R. 6(d) and indeed never did attempt to file a responsive memorandum at any time up through the date scheduled for hearing of this matter, July 9. Counsel for Kolonia Town requested the opportunity to be heard in opposition to the motion at oral argument but gave no reason for the defendant's failure to file a responsive memorandum. Accordingly, Kolonia Town is deemed under FSM Civ. R. 6(d) to have consented to the granting of the motion and the Court has therefore declined to hear oral argument from the defendant.

Based upon these considerations, the Court concludes that Kolonia Town Ordinance No. KTG-014-90, insofar as it purports to assess a license fee against banks and insurance companies, is unconstitutional and void.