THE SUPREME COURT OF THE
FEDERATED STATES OF MICRONESIA
TRIAL DIVISION - CHUUK
Cite as Stinnett v. Weno ,
7 FSM Intrm. 560 (Chk. 1996)
CHRISTINA STINNETT d/b/a TRUK STOP,
RAYMOND SETIK d/b/a CHRISTOPHER INN,
KATCHUTOSY PAULUS, and TRUK
CONTINENTAL HOTEL, INC., a corporation,
CIVIL ACTION NO. 1992-1036
CHUUK CHAMBER OF COMMERCE et al.,)
CIVIL ACTION NO. 1992-1038
ORDER GRANTING SUMMARY JUDGMENT
Richard H. Benson
Decided: August 30, 1996
For the Plaintiffs: R. Barrie Michelsen, Esq.
(1992-1036) Law Offices of R. Barrie Michelsen
P.O. Box 1450
Kolonia, Pohnpei FM 96941
For the Plaintiffs: Fredrick L. Ramp, Esq.
(1992-1038) P.O. Box 1480
Kolonia, Pohnpei FM 96941
For the Defendant: Maketo Robert, Esq.
P.O. Box 1100
Weno, Chuuk FM 96942
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Constitutional Law ) Chuuk; Taxation ) Constitutionality
The power to tax is vested in the state which may delegate certain taxing powers to a municipality. Without such delegation a municipality has no power to tax. Stinnett v. Weno, 7 FSM Intrm. 560, 561 (Chk. 1996).
Constitutional Law ) Chuuk
The Chuuk Constitution provision that permits continued operation of existing municipalities pending the adoption of their own constitutions does not permit the continuation of functions outside "the limits prescribed by" the Chuuk Constitution. Stinnett v. Weno, 7 FSM Intrm. 560, 562 (Chk. 1996).
Constitutional Law ) Chuuk; Taxation ) Constitutionality
A municipal ordinance levying taxes did not continue in effect after the effective date of the Chuuk Constitution because it is inconsistent with that Constitution. Stinnett v. Weno, 7 FSM Intrm. 560, 562 (Chk. 1996).
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RICHARD H. BENSON, Associate Justice:
The plaintiffs in both cases have moved for summary judgment. The same issue is presented in both motions: whether Weno Municipality can impose license fees for revenue purposes after the effective date of the Chuuk State Constitution, which, in part, provides that the state government has the power to tax and may delegate certain taxing powers to the municipal governments, and there has been no delegation of taxing power. I conclude that Weno cannot.
On January 31, 1994, the plaintiffs in Civil Action No. 1992-1036 filed their motion for partial summary judgment declaring that Weno Municipal Ordinance No. 01-01-93 is invalid and enjoining its enforcement. On February 26, 1996, the plaintiffs in Civil Action No. 1992-1038 filed their Supplement to Plaintiffs' Motion for Summary Judgment Filed August 27, 1993, seeking a declaration of the validity of Ordinances Nos. 001-88, 04-03-92 and 01-01-93 and an injunction against its enforcement.
All parties in both cases agree that there is no genuine issue as to any material fact presented. At issue in case 1992-1038 are three ordinances, each with the stated purpose of creating and collecting revenue. In case 1992-1036 only Ordinance 01-01-93 is at issue. These ordinances impose "business license fees," not for regulatory purposes, but for tax purposes. Weno Municipality does not dispute this. The ordinances are Nos. 001-88, 04-03-92 and 01-01-93.
The Chuuk State Constitution became effective on October 1, 1989. Chk. Const. art. XV, § 1. Article VIII, section 7 provides, "The State Government has the power to tax, and may delegate certain taxing powers to the municipal governments by statute." No statute has been enacted pursuant to this provision giving municipal governments, including Weno, the power to tax. The Chuuk "Constitution is the supreme law of the State of Chuuk. An act of government in conflict with this Constitution is invalid to the extent of conflict." Chk. Const. art. II, § 1.
The plaintiffs in case 1992-1038 contend that 001-88, which was in effect on October 1, 1989, became invalid on October 1, 1989 because, pursuant to article VIII, section 7, Weno could only tax
under a delegation of that power from the state. They further contend that the two ordinances enacted subsequent to October 1, 1989, Nos. 04-03-92 and 01-01-93, are invalid for the same reason: the state has never enacted a statute delegating taxing powers to the municipalities. The plaintiffs in case 1992-1036 make the same contention as to Ordinance No. 01-01-93.
As to Ordinance No. 01-01-93 the plaintiffs in 1992-1038 also contend that it shows on its face that it was not duly enacted, since it recites that it becomes effective upon approval by the President of the Federated States of Micronesia, and the President's signature does not appear. I do not believe this contention has merit, because the ordinance was enacted in conformity to the Weno Constitution.
I have carefully considered all memorandums of law. I have also studied Wainit v. Weno, 7 FSM Intrm. 121 (Chk. S. Ct. Tr. 1995). I conclude that the motion should properly be granted.
The plaintiffs are correct in their analyses. When the Constitution for Chuuk became effective in 1989 it specified that "[t]he State Government has the power to tax." Chk. Const. art. VIII, § 7. It then provided that certain taxing powers may be delegated to the municipal governments. Id. There is no significance in the absence of limiting words, such as "the exclusive power to tax", or that "only the State Government has the power to tax." Nor do I give any weight to the difference in the wording of the Truk State Charter whose comparable provision reads, "The taxing power shall be reserved to the State Government . . . ." Truk State Charter art. VII, § 3.1 That all taxing power is vested in the state government is clear from the next clause of the Constitution containing the permission to delegate. Chk. Const. art. VIII, § 7. Further emphasis comes from article XIII, section 1 which states, "The two levels of government in the State of Chuuk are state and municipal." There can thus be only two governments involved, and the one holding the right to delegate is superior.
The defendant's arguments center on the circumstance that Weno has been collecting taxes from Ordinance 001-88 and other earlier ones for years before 1989 and on the assertion that article VIII, section 7 should not be interpreted to infringe upon earlier rights. The defendant contends that the transition clause of the Chuuk State Constitution preserves this practice. That clause reads in part, "A statute in force in the State of Chuuk on the effective date of this Constitution continues in effect to the extent it is consistent with this Constitution . . . ." Chk. Const. art. XV, § 9.
I cannot say that the Weno ordinances are consistent with the current Constitution solely because there was earlier authority for them. I hold that since October 1, 1989 the Municipality of Weno had no taxing power since the state government has not delegated its power to tax.
Article XIII of the Chuuk Constitution governs municipalities. Section 5 provides in part, "Each municipality shall adopt its own constitution within limits prescribed by this Constitution and by general law." (emphasis added). Section 6 provides in part, "A municipality existing on the effective date of this Constitution shall continue to exercise its power and functions under existing law." Chk. Const. art. XIII, § 6. Weno suggests that section 6 permits the ordinances at issue in this case to continue in effect. I do not agree. The entire article concerns the formation of municipalities under the Constitution. Section 6 permits continued operation of the existing municipalities pending the adoption of their own constitution; it does not permit the continuing of functions outside "the limits prescribed by" the Chuuk State Constitution. Cf. Chk. Const. art. XIII, § 5. Secondly, to consider section 6 as a transition clause for ordinances would be redundant because of article XV, section 9, and would be giving a general statement precedence over the specific.
I have considered each of Weno's arguments, although I have not tried to comment on each one. For the reasons stated, the motions for a partial summary judgment are granted. The plaintiffs in both cases are entitled to judgments declaring the ordinances invalid ) as to case 1992-1036, Ordinance No. 01-01-93, and as to case 1992-1038 Ordinance No. 001-88 since October 1, 1989 and Ordinances Nos. 04-03-92 and 01-01-93. The plaintiffs in both cases are entitled to have further collection enjoined. The plaintiffs in each case are requested to submit a proposed judgment as to their case.
The motion for summary judgment in case 1992-1036 also alleged due process and equal protection grounds for the invalidity. Because of my decision on the municipality's power to tax, it is not necessary or proper to decide these grounds.
The relief is partial because the plaintiffs in 1992-1036 prayed for damages and the plaintiffs in 1992-1038 prayed for a reimbursement of license fees collected under the ordinances. The plaintiffs in each case may move for a setting to determine these issues.
On April 8, 1994, the defendant in case 1994-1036 filed its Motion for Summary Judgment. That motion and its supporting memorandum have been considered in support of the motion itself, and as I considered the plaintiffs' motion. Because of my ruling, stated above, on the fundamental issue of the power to tax, the defendant's Motion for Summary Judgment is denied.
1. Weno points to the continued application of licensing ordinances under the Charter. As an aside I note that perhaps Weno continued applying them because they were not challenged.