9 FSM Intrm.200-215

Summary judgment under FSM Civil Procedure Rule 56 is appropriate when, viewing the facts in the light most favorable to the party against whom judgment is sought, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Weno v. Stinnett, 9 FSM Intrm. 200, 206 (App. 1999).

The language, "and may delegate certain taxing powers to the municipal governments by statute," contemplates that municipal governments are invested with the power to tax only insofar as they receive that power from the state government. Without express delegation to a municipality of the authority to tax, the municipality lacked this power. Weno v. Stinnett, 9 FSM Intrm. 200, 207 (App. 1999).

as the state government may elect, to the municipal governments. Article XIII, section 1 of the Chuuk Constitution provides that the two levels of government are state and municipal. As between these two levels of government the one holding the right to delegate is superior. Weno v. Stinnett, 9 FSM Intrm. 200, 207 (App. 1999).

Because the express provision for delegation of the taxing authority is inconsistent with the notion that municipalities already had this power, in the absence of specific legislative action authorizing a municipality to impose taxes, the municipality does not have the authority to impose business license fees. Weno v. Stinnett, 9 FSM Intrm. 200, 207 (App. 1999).

When the Chuuk Constitution says the state "may delegate certain taxing powers to the municipal governments by statute," it is plain that "certain" in this context means nothing more, and nothing less, than that the state government may delegate such of its taxing powers as it sees fit ) the point is that the option is the state government's. Weno v. Stinnett, 9 FSM Intrm. 200, 207 (App. 1999).

A committee report that refers to language that is not in the Constitution and that accompanied a committee proposal that was killed by the Constitutional Convention cannot be relied upon to discover the real intent of the framers. At best it can only be used to show what was not their intent. Weno v. Stinnett, 9 FSM Intrm. 200, 208 (App. 1999).

The only conclusion to be fairly drawn from the deletion of a sentence giving the municipal governments the exclusive power to levy head taxes and business license fees from the proposal as adopted is that the Chuuk Constitution's framers did not intend that the municipal governments should have the power to levy head taxes and business license fees. Weno v. Stinnett, 9 FSM Intrm. 200, 208 (App. 1999).

Just as the trial court could exercise its discretion to certify the questions on its own motion, it could properly exercise that discretion to grant plaintiffs' unopposed motion to withdraw the certification after nearly a year had elapsed without any indication from the Chuuk state court appellate division that it would hear the question. Weno v. Stinnett, 9 FSM Intrm. 200, 209 (App. 1999).

have the capacity, by their mere occurrence, to create reversible error in a different case before a different court. The FSM trial court was not obliged to be aware of and draw inferences from those events, which did not constitute controlling precedent, in order to discern the Chuuk State Supreme Court appellate division's mind with respect to the certification question. When Chuuk State Supreme Court appellate division did not speak to the certification issue, the FSM Supreme Court trial division properly exercised its discretion to withdraw the certification. Weno v. Stinnett, 9 FSM Intrm. 200, 209-10 (App. 1999).

The filing of a suit to contest the legality of a tax, which the trial court found to be the plaintiffs' only remedy, obviates the need for demonstrating duress and notice of protest, as required by the common law, for payments made after suit is instigated. The filing of suit is protest of the most emphatic sort, and allowing a claim for recovery for payments made thereafter without regard to duress recognizes the "implied duress" under which contested taxes are paid. Weno v. Stinnett, 9 FSM Intrm. 200, 212 (App. 1999).

Duress and protest need not be shown to state a claim for recovery of tax payments extracted under an unconstitutional enactment when the plaintiffs seek refund of payments made after instigation of suit in a court having jurisdiction over the parties, and when such a lawsuit is the plaintiff's only remedy. Weno v. Stinnett, 9 FSM Intrm. 200, 212 (App. 1999).

Since the Due Process Clause in the Declaration of Rights of the FSM Constitution is based on the Due Process Clause of the U.S. Constitution's Fourteenth Amendment, the FSM Supreme Court may properly consider U.S. cases in construing due process under the FSM Constitution. Weno v. Stinnett, 9 FSM Intrm. 200, 213 (App. 1999).

The taxing authority, if it opts not to provide predeprivation process, must by way of post deprivation process provide a clear and certain remedy for any erroneous or unlawful tax collection to ensure that the opportunity to contest the tax is a meaningful one. A clear and certain remedy is one designed to render the opportunity to challenge a tax meaningful by preventing any permanent unlawful deprivation of property. Weno v. Stinnett, 9 FSM Intrm. 200, 213 (App. 1999).

When deciding the question of retroactivity of a decision declaring a tax unconstitutional, a court considers three factors: 1) whether a decision enunciates a new and unanticipated principle; 2) whether retroactive application to this case would promote implementation of the rule at issue, taking into consideration the rule's history; and 3) the equities of the case as they are associated with retroactive application. Weno v. Stinnett, 9 FSM Intrm. 200, 214 (App. 1999).

To permit taxes to be retained that were extracted under an unconstitutional statute would have the effect of prolonging the viability of an ordinance that runs afoul of the Chuuk Constitution, at the expense of establishing the correct rule. The better course is to permit recovery of the taxes. Weno v. Stinnett, 9 FSM Intrm. 200, 214 (App. 1999).

When litigation over the constitutionality of a municipality's taxes was pending for five years, the municipality was put on notice early on that the taxes collected under the ordinances were subject to a claim for refund, and nothing prevented the municipality from planning for this eventuality. Having failed to do so, it cannot now claim hardship. Weno v. Stinnett, 9 FSM Intrm. 200, 214 (App. 1999).

These two cases raise the same central issue, whether Weno Municipal Ordinances 011-88, 04-03-92, and 01-01-93 violate article VIII, section 7 of the Chuuk Constitution. Weno v. Stinnett et al., App. Case No. C2-1997, ("Stinnett") raises the constitutionality of ordinance 01-01-93, while Weno v. Chuuk Chamber of Commerce et al., App. Case No. C3-1997 ("Chuuk Chamber") challenges all three. Municipal Ordinance 001-88 was in effect as of October 1, 1988, when the Chuuk Constitution went into effect; ordinances 04-03-92 and 01-01-93 were its successors. These ordinances impose business license fees. It was undisputed that these fees are taxes, and the trial court found that they violated the Chuuk Constitution. In addition, in the case below in Chuuk Chamber, plaintiffs sought and obtained a judgment for a refund of the taxes which they had paid after the filing of suit.

Plaintiffs in both cases filed summary judgment motions on the constitutionality question. The trial court deferred ruling on the motions, and on August 25, 1994, in both cases and on its own motion after soliciting the comments of the parties, certified the constitutionality issue to the Appellate Division of the Chuuk State Supreme Court. In Chuuk Chamber, the trial court also certified the refund issue. The Chuuk Appellate Division had not acted on the certified questions as of August 14, 1995, and on the plaintiffs' unopposed motions in both cases to vacate the certification, the trial court did so by separate orders entered in both cases on September 22, 1995.

The trial court then ruled on the summary judgment motions on the constitutionality issue, and by a single order entered in both lawsuits on August 30, 1996, found that the ordinances violated article VIII, section 7 of the Chuuk Constitution.1 This order terminated the case below in Stinnett, since plaintiffs in that case had sought only declaratory and injunctive relief to enjoin the collection of the tax.2 Judgment permanently enjoining enforcement of Municipal Ordinance 01-01-93 was subsequently entered in that case on June 20, 1997.

The case below in Chuuk Chamber proceeded to trial on March 5 and 6, 1997, because in addition to requesting declaratory and injunctive relief, plaintiffs had also sought a refund of the taxes which they had paid under the ordinances. On July 4, 1997, the court entered its findings of fact and conclusions of law in which it found in favor of plaintiffs, awarding refunds ranging in amount from $1,500 (to plaintiff Kristoph Killion) to $29,350 (to plaintiff Black Micro Corporation), for a total of $208,754.00. On the same day, Weno filed a motion to vacate, alter, or amend judgment in the case below in Stinnett; also on the same day in the case below in Chuuk Chamber, which by that time had proceeded to trial, Weno filed a motion to modify the order granting summary judgment. These motions were made in a single pleading and addressed the constitutionality issue, which was the basis for the trial court's August 30, 1996, order granting plaintiffs' motions for summary judgment. These motions were denied by a single order entered on August 5, 1997, in both cases. Stinnett v. Weno, 8 FSM Intrm. 142 (Chk. 1997). Also on August 5, 1997, judgment was entered in the case below in Chuuk Chamber. Appeals in both cases followed.

Stinnett raises two issues on appeal; Chuuk Chamber raises those two same issues (the text discussing them in all of the briefs is identical), plus three more. The main issue is the first one as it appears in both briefs: whether the trial court erred in granting the plaintiff's motion for summary judgment when it found the ordinances violative of the Chuuk Constitution. Also made part of this first

issue in both cases is the question whether the trial court erred when it denied Weno's request for the trial court to reverse itself on the grant of summary judgment to plaintiffs in both cases on the constitutionality question.3 Both motions were brought in a single pleading, and as discussed infra under issue one, section B, the basis for them was what was alleged to be newly discovered evidence in the form of a Subcommittee Report from the 1988 Chuuk (then Truk) Constitutional Convention, and a Committee Proposal based thereon.

Summary judgment under Rule 56 of the FSM Rules of Civil Procedure is appropriate where, viewing the facts in the light most favorable to the party against whom judgment is sought, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Nanpei v. Kihara, 7 FSM Intrm. 319, 323 (App. 1995); Etscheit v. Adams, 6 FSM Intrm 365, 373 (Pon. 1994). The trial court decided the motions as a matter of law. We review issues of law de novo. Nanpei, 7 FSM Intrm. at 323-24.

By its August 30, 1996, order, and upon the plaintiffs' summary judgment motions in both cases, the trial court found that all three of the challenged ordinances, Weno Municipal Ordinance 011-88, 04-03-92, and 01-01-93, violated article VIII, section 7 of the Chuuk Constitution. The uncontested fact below was that those ordinances impose a tax in the form of a business license fee. Article VIII, section 7, of the Chuuk Constitution states: "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."

The meaning of this provision is forthright, and we apply our analysis to the language of this constitutional provision as it appears on its face. The state government of Chuuk has the power to levy taxes. The language, "and may delegate certain taxing powers to the municipal governments by statute," contemplates that municipal governments are invested with the power to tax only insofar as they receive that power from the state government. The state government did not delegate the power to Weno in this case. Without express delegation to Weno of the authority to tax, Weno lacked this power. We find article VIII, section 7, subject to no other interpretation.

Weno, however, urges that the provision does not speak with so certain a voice. Weno points out that the provisions does not say that state government has the "exclusive" power to tax, and therefore concludes that the power to tax also lies with the municipalities ab initio. Matters are further complicated, according to Weno, because the provision provides that the state government may delegate "certain" taxing powers. Weno contends that the use of "certain" creates an ambiguity, because it leaves open the question which powers the state government may delegate.

We do not derive significance from the fact that the word "exclusive" does not qualify "power to tax." The axiomatic language of the organic provision provides, in one sentence, for the creation of the state taxing power and its delegation, as the state government may elect, to the municipal governments. Article XIII, section 1 of the Chuuk Constitution provides that "[t]he two levels of government in the State of Chuuk are state and municipal." We agree with the trial court that as between these two levels of government, "the one holding the right to delegate is superior." Stinnett v. Weno, 7 FSM Intrm. 560, 562 (Chk. 1996). Express provision for delegation of the taxing authority is inconsistent with the notion that Weno already had this power. In the absence of specific legislative action authorizing Weno to impose the taxes at issue, Weno did not have the authority to impose the business license fees.

Nor do we conclude, as Weno would have it, that the use of the word "certain" to describe the taxing powers delegable by the Chuuk state government suggests an ambiguity. The provision provides that Chuuk "may delegate certain taxing powers to the municipal governments by statute." Chk. Const. art. VIII, § 7 (emphasis added). It is plain that "certain" in this context means nothing more, and nothing less, than that the state government may delegate such of its taxing powers as it sees fit ) the point is that the option is the state government's. We find no ambiguity in this regard.

court an affidavit of Hernak Paul, who according to his affidavit was the chief clerk of the Second Chuuk State Constitutional Convention. No journal was maintained of that convention. However, Mr. Paul was able to locate a copy of Standing Committee Report No. 36 (SCREP. No. 36). Weno urged in its motion that it was clear from the report that "the intent was to centralize the taxing power with the State government, but also to allow the municipalities to retain the right to impose business license fees and head taxes." Motion to Modify Order Granting Summary Judgment at 5.

The trial court denied the motion, holding that because article VIII, section 7 of the Chuuk Constitution did not admit of ambiguity, there was no need to consider SCREP. No. 36. Further, the trial court found that the material which the defendant sought to bring before the court did not qualify as newly discovered evidence, since there was no evidence presented as to the alleged prior unavailability of the committee report. However, the trial court went on to review the materials presented, and concluded that their content in fact supported the grant of the motion for summary judgment, and was not a basis for vacating the order granting summary judgment.

We do not rehearse here the well-reasoned opinion of the trial court on these points raising mixed questions of law and fact, and reported at 8 FSM Intrm. at 146-47, except to emphasize the following. First, we have held today that article VIII, section 7 of the Chuuk Constitution is clear on its face. Consideration of the legislative history of this provision is therefore inappropriate. Nena v. Kosrae (III), 6 FSM Intrm. 564, 568 (App. 1994); Robert v. Mori, 6 FSM Intrm. 394, 397 (App. 1994). Second, this suit was filed on September 1, 1992, and Weno's motion alleging the existence of newly discovered evidence was filed nearly five years later on July 4, 1997. The new materials which Weno sought to bring before the court bear a date of October of 1988, and nothing below suggested that anything had prevented Weno's access to these materials during the course of the litigation. These facts amply support the trial court's finding that these materials did not constitute newly discovered evidence.

Third, and last, with respect to SCREP. No. 36, we note as follows. SCREP. No. 36 contains this comment: "Municipalities currently have the power to raise revenues through head taxes and business license fees." The proposal issuing from the committee was consistent with this comment, and was in the following form: "The State Government shall have the power to tax, and may delegate such powers to the Municipal Governments by law. The Municipal Governments shall have the exclusive power to levy head head [sic] taxes and business license fees. All State taxes shall be prescribed by statute." However, the second sentence was stricken in its entirety, and pointedly we think, by handwritten slash marks from the final proposal as adopted. As the court in Luzama v. Ponape Enterprises Co., 7 FSM Intrm. 40, 47 (App. 1995) observed:

Similarly, the only conclusion to be fairly drawn from the deletion of the sentence, "The Municipal Governments shall have the exclusive power to levy head head [sic] taxes and business license fees," in the proposal as adopted is that the framers did not intend that the municipal governments should have the power to levy head taxes and business license fees.

On August 25, 1994, the trial court, on its own motion but after consultation with the parties, certified the question of the constitutionality of the ordinances at issue to the Appellate Division of the Chuuk State Supreme Court. The stated basis for the certification was that this was a question "more properly settled by the courts of Chuuk State rather than by this Court." As of August 14, 1995, the Appellate Division of Chuuk State Supreme Court had taken no action, and on that date, plaintiffs filed their Motion to Vacate Certification of Questions. On September 22, 1995, the trial court entered an order vacating the certification, noting that the motion was unopposed, and citing the fact that the Chuuk Appellate Division had neither noticed the parties of its consent to hear the question nor noticed the parties of any scheduled proceedings. The trial court concluded that the Appellate Division of the Chuuk State Supreme Court had declined to entertain the certified questions.

There was no error in the trial court's withdrawal of the certification. Certification as practiced in the FSM is a judicially devised procedure that is entirely discretionary with the court. Panuelo v. Pohnpei (III), 2 FSM Intrm. 244, 246 (Pon. 1986); Pryor v. Moses, 4 FSM Intrm. 138, 141 (Pon. 1989) ("the choice of whether to . . . certify questions is one that lies wholly within the discretion of the Court"). Nothing required the certification in the first instance. It was the court itself that initiated the discussions about possible certification in the first place when it issued a notice on June 28, 1994, inviting the comments of the parties on the certification issue. Just as the trial court could exercise its discretion to certify the questions on its own motion, it could properly exercise that discretion to grant plaintiffs' unopposed motion to withdraw the certification after nearly a year had elapsed without any indication from the Chuuk State Appellate Division that it would hear the question. The trial court abuses its discretion where its decision is "clearly unreasonable, arbitrary, or fanciful." Jano v. King, 5 FSM Intrm. 326, 330 (App. 1992) (citing Heat & Control, Inc. v. Hestor, Inc., 785 F.2d 1017, 1022 (Fed. Cir. 1986)). The facts before us do not demonstrate abuse of judicial discretion, and we find that there was none.

Weno, however, urges that the withdrawal of the certification was error by making inferences from events occurring in another case. At relevant times, Wainit v. Weno, Civil Action No. 122-93, was pending before the Chuuk State Supreme Court Trial Division. In the Wainit case, plaintiff had challenged the constitutionality of one of the same Weno municipal ordinances at issue here, 01-01-93. On April 17, 1995, while the certification in the instant cases was pending before the Appellate Division, the Chuuk State Supreme Court Trial Division found that Weno Municipal Ordinance 01-01-93 was constitutional, and that Weno could properly impose the licensing fees.4 Plaintiff in Wainit had then appealed that decision to the Chuuk Appellate Division, and the appeal was pending at the time the certification was withdrawn. That appeal was subsequently dismissed for lack of prosecution by a single justice of the Chuuk State Appellate Division. 5

State Court could have consciously delayed in answering the certified questions while the same issues were currently pending before its trial division, pending that outcome." Appellant's Initial Brief in Stinnett at 23; Appellant's Initial Brief in Chuuk Chamber at 19. Weno also urges that "the trial Court abused its discretion in withdrawing the request for certification, even with the unopposed motion to withdraw filed by Appellees, since the motion filed by Appellees omitted to inform the court that the Chuuk Court [i.e., the Chuuk trial division] had already ruled on the key issue certified." Appellant's Initial Brief in Stinnett at 23; Appellant's Initial Brief in Chuuk Chamber at 19.

We are not persuaded that events transpiring in other litigation before the trial division of the Chuuk State Supreme Court had the capacity, by their mere occurrence, to create reversible error in the instant case, a different case before a different court. The trial court was not obliged to be aware of and draw inferences from those events, which did not constitute controlling precedent, in order to discern the mind of the Appellate Division of the Chuuk State Supreme Court with respect to the certification question at bar. The Chuuk Appellate Division was fully capable of speaking to the certification issue in this case. When it did not, the trial court properly exercised its discretion to withdraw the certification.

Weno contends that the trial court erred when it denied its request for abstention. Trial took place on March 5 and 6, 1997, on the remaining issue, that of refund. On June 9, 1997, the court issued a notice inviting the parties' comments on the limited question of whether the parties were entitled to refund for taxes paid after institution of suit. In response, Weno filed its Memorandum by Defendant on June 24, 1997. In that memorandum, Weno asserted that "it is appropriate for this Court to now abstain on the issue of the refund in order to permit the State of Chuuk Supreme Court Appellate Division to resolve this issue and to exercise jurisdiction over this part of the case." Memorandum of Defendant at 6 (June 24, 1997). 6

We agree that the request for abstention, coming as it did after trial on the issue as to which abstention was sought, was untimely. To render the two day trial in this matter redundant by granting abstention would have resulted in a pointless expenditure of the finite judicial and legal resources necessary for a trial to take place. It also would have prolonged unnecessarily the resolution of this matter. In Gimnang v. Trial Division, 6 FSM Intrm 482, 485 (App. 1994), we emphasized the distinction between certification and abstention:

In the case of abstention, the FSM trial court simply says that it is not going to decide the issue and allows the parties to file in state or local court. The national court does not submit or transfer anything to another court at either the trial or appellate level ) it simply says it will not decide the state or local law matter and leaves it to the parties to

The abstention request came after trial, and after the case had been pending for approximately five years. Abstention would have required initiation of a new lawsuit in the state court, and the consequent delay would have prolonged the resolution of the parties' dispute. These factors militated against granting the request for abstention.

On February 7, 1997, Weno filed its Motion for Partial Summary Judgment on Reimbursement Issue. Weno urged in that motion, and correctly so as a general proposition, that payments made under an unconstitutional statute cannot be recovered back unless those payments are made involuntarily and under protest.Innocenti v. Wainit, 2 FSM Intrm. 173, 187 (App. 1986). Weno contended that it was entitled to summary judgment, because the contested payments were not made under any form of duress. At the request of the parties, the court held an evidentiary hearing on the defendant's motion for summary judgment on March 5, 1997, just prior to the commencement of trial on that same day. The court denied the motion from the bench without stating the specific basis for the denial.

Since the trial court did not give its reasoning for its oral denial of the motion, we review this denial in light of the court's subsequent ruling after trial on the reimbursement issue, which the trial court decided on a legal, not factual, basis. We conclude that the trial court was correct on the law, and that it therefore correctly denied the motion. We review this legal point de novo. Nanpei, 7 FSM Intrm. at 323-24.

In its findings of fact and conclusions of law, the trial court drew a distinction between the taxes paid by the plaintiffs before the inception of the lawsuit, and those paid afterwards. The only contested payment made before suit was filed was one made by the Brutons on July 17, 1989. As to that payment, the trial court denied recovery because it was made before the effective date (October 1, 1989) of the Chuuk Constitution under which the payments were challenged, and that portion of the trial court's ruling is not at issue on appeal. As to the payments made after the filing of suit, while acknowledging itself bound by our precedent in Innocenti v. Wainit, 2 FSM Intrm. 173 (App. 1986), the trial court found that the filing of suit served the same purpose as duress and protest. The court concluded that "[t]he rule, lacking support in reason, itself falls. This is because `the rule ceases with the reason on which it is founded.' Hunt v. Rousmanier's Adm'rs, 21 U.S. (8 Wheat.) 174, 205, 5 L. Ed. 589, 597 (1823) (Marshall, C. J.)." Stinnett v. Weno, 8 FSM Intrm. 122, 126 (Chk. 1997).

In Innocenti, 2 FSM Intrm. 173, 187 (App. 1986), we adopted the common law rule that in order for a plaintiff to recover payments made under an unconstitutional tax statute, he must demonstrate that he made those payments under both duress and notice of protest. Id. In Innocenti, there was no question that the taxpayers had paid the tax under duress, since they had to pay the tax in order to get their goods released from the dock. Id. The trial division of the Yap State Court adopted Innocenti as controlling precedent in a case involving the same facts on the question of duress. In Gimnang v. Yap, 7 FSM Intrm. 606 (Yap S. Ct. Tr. 1996), under a statute similar to the one challenged in Innocenti, plaintiff likewise could not take delivery of his goods until he paid the tax. Hence, duress was a settled point in both Innocenti and Gimnang.

Railway Co. v. O'Connor, 233 U.S. 280, 285-86, 32 S. Ct. 216, 217, 56 L. Ed. 436, 438 (1912) (Holmes, J.), a seminal case in that it establishes the notion of a "clear and certain remedy" for a taxpayer from whom an illegal tax has been extracted. This remains the benchmark in the United States by which post deprivation due process (i.e., the right to contest a tax after payment) is measured. See McKesson Corp. v. Division of Alcoholic Beverages & Tobacco, 496 U.S. 18, 39, 110 S. Ct. 2238, 2251, 110 L. Ed. 2d 17, 37 (1990), discussed infra under issue five. O'Connor, like the two cases at bar, was "an action to recover taxes paid under duress and protest, the plaintiff contending that the law under which the tax was levied is unconstitutional." 233 U.S. at 285, 32 S. Ct. at 217, 56 L. Ed. at 438. After noting that "it is reasonable that a man who denies the legality of a tax should have a clear and certain remedy," id., Justice Holmes went on to observe that

courts sometimes, perhaps, have been a little too slow to recognize the implied duress under which payment [of contested taxes] is made. But even if the state is driven to an action, if, at the same time, the citizen is put at a serious disadvantage in the assertion of legal, in this case his constitutional, rights, by defense in the suit, justice may require that he should be at liberty to avoid those disadvantages by paying promptly and bringing suit on his side. He is entitled to assert his supposed right on reasonably equal terms. See Ex parte Young, 209 U.S. 123, 146, 52 L. ed. 714, 723, 13 L.R.A. (N.S.) 932, 28 Sup. Ct. Rep. 441, 14 A. & E.Ann. Cas. 764.

We find these words persuasive. We agree with the trial court that the filing of such a suit, which the trial court found to be the plaintiffs' only remedy in both cases below, obviates the need for demonstrating duress and notice of protest as required by the common law, for payments made after suit is instigated. The filing of suit is protest of the most emphatic sort, and allowing a claim for recovery for payments made thereafter without regard to duress recognizes the "implied duress" under which taxes are paid. A taxpayer no longer faces the predicament of waiving a claim for recovery in the event that the degree of any alleged pressure he felt to make the payments turns out to be insufficient to make his payments involuntary within the context of the duress requirement of the common law rule, thus avoiding entirely an inquiry as to the degree of objective pressure versus subjective pressure that the taxpayer may have felt. In Justice Holmes' words, it ensures that the taxpayer "is entitled to assert his supposed right on reasonably equal terms," id., and that the dispute will proceed to resolution within the ordered confines of the lawsuit. Specifically, it avoids an inquiry into the effect of the police visits to certain of the taxpayers in these cases, where the stated purpose of the visits was to remind the taxpayers to pay. During the pendency of suit, the taxpayer may make his payments as they come due, with the knowledge that his right to state a claim for refund has been preserved.

Accordingly, we hold that duress and protest need not be shown to state a claim for recovery of tax payments extracted under an unconstitutional enactment where the plaintiffs seek refund of payments made after instigation of suit in a court having jurisdiction over the parties, and where such a lawsuit is the plaintiff's only remedy. We affirm the trial court's denial of Weno's motion for summary judgment on the reimbursement issue.

In leaving this point, we offer a caveat. Our holding today on the duress and notice of protest question is separate from the issue of retroactivity. It is a self-evident proposition that any judgment for a refund is retroactive, because a refund by definition is the return of money already paid. On the facts of the case below in Chuuk Chamber, we determine that duress and notice of protest are not necessary elements of a claim for refund. However, a resolution in favor of a plaintiff on the retroactivity issue, where it is duly raised, remains a predicate to a refund.

In the case below in Chuuk Chamber, the complaint was filed on September 9, 1992. The court granted summary judgment finding the ordinances to be unconstitutional under the Chuuk Constitution on August 30; final judgment for refund was entered on August 5, 1997. Weno contends that the trial court erred when it found that the taxes paid during the pendency of the lawsuit should be refunded retroactively to the time of the filing of the lawsuit. In analyzing the retroactivity question, the trial court looked to the test that we have previously adopted in Innocenti v. Wainit, 2 FSM Intrm. 173, 185-86 (App. 1986). As a preface to its discussion the trial court, citing McKesson Corp. v. Division of Alcoholic Beverages & Tobacco, 496 U.S. 18, 110 S. Ct. 2238, 110 L. Ed. 2d 17 (1990), observed that Weno's position that it not pay any refund had due process implications.

McKesson involved a challenge to a Florida liquor tax that gave favorable treatment to beverages manufactured from Florida agricultural crops, the challenge resting in part on the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution. 496 U.S. at 22-23, 36, 110 S. Ct. at 2242-43, 2250, 110 L. Ed. 2d 27, 35-36. Since the Due Process Clause found in the Declaration of Rights of the FSM Constitution is based on the Due Process Clause of the U.S. Constitution's Fourteenth Amendment, we have held that we may properly consider cases such as McKesson in construing due process under the FSM Constitution.Ludwig v. FSM 2 FSM Intrm. 27, 35 (App. 1985); Ishizawa v. Pohnpei, 2 FSM Intrm. 67, 76 (Pon. 1985).

The United States Supreme Court in McKesson noted that it was "well established that a State need not provide predeprivation process [i.e., process before payment] for the exaction of taxes." 496 U.S. at 37, 110 S. Ct. at 2250, 110 L. Ed. 2d at 36. This is because "[a]llowing taxpayers to litigate their tax liabilities prior to payment might threaten a government's financial security, both by creating unpredictable interim revenue shortfalls against which the State cannot easily prepare, and by making the ultimate collection of validly imposed taxes more difficult." Id. However, the taxing authority, if it opts not to provide predeprivation process, must by way of post deprivation process provide a "`clear and certain remedy,' O'Connor, 223 U.S., at 285, 56 L.Ed. 436, 32 S.Ct. 216, for any erroneous or unlawful tax collection to ensure that the opportunity to contest the tax is a meaningful one." McKesson, 496 U.S. at 39, 110 S. Ct. at 2251, 110 L. Ed. at 37. A "clear and certain remedy" is one "designed to render the opportunity [to challenge a tax] meaningful by preventing any permanent unlawful deprivation of property." McKesson, 496 U.S. at 40, 110 S. Ct. at 2252, 110 L. Ed. 2d at 38.

Weno did not provide any such post deprivation process. However, Weno would distinguish McKesson on the basis that the taxpayers in this case, unlike those in McKesson, had a predeprivation remedy, thus obviating the necessity for any kind of post deprivation due process. According to appellant, "[t]he fees were due every year, in an annual payment, due in July. Prior to payment in July of any given year, any appellee had the ability to challenge the legality or constitutionality of the ordinance imposing the fee." Appellant's Initial Brief at 38. If this is saying that the business owners in this case should have paid their fees on any given July 15th, the due date of the tax, and then instituted suit on July 16th in expectation of resolving the constitutionality of the upcoming tax before the following July 15th, then we find this argument unpersuasive. Under this paradigm, the taxpayer would still be left without a remedy for the taxes until the commencement of the selected one year window period, which would have to be contested on a post deprivation, not predeprivation, basis. Additionally, this litigation has been pending since 1992, so it seems unlikely that the taxpayers had the realistic option of resolving the constitutionality of the challenged tax within the one year period posited by Weno. We conclude that Weno provided for no predeprivation process for challenging the constitutionality of the ordinance.

Since Weno provided neither pre- nor post deprivation process, not for consideration is whether that remedy was sufficiently adequate such that we need not address the refund question.7 We turn then to whether the Chuuk Chamber plaintiffs were entitled to recover their payments, and conclude that they were.

This court has previously considered the question of retroactivity of a decision declaring a tax unconstitutional. In deciding this question, the court in Innocenti v. Wainit, 2 FSM Intrm. 173, 185-86 (App. 1986) (citing Chevron Oil Co. v. Huson, 404 U.S. at 106, 92 S. Ct. at 355, 30 L. Ed. 2d 296 (1971)), considered three factors: 1) whether a decision enunciates a new and unanticipated principle; 2) whether retroactive application to this case would promote implementation of the rule at issue, taking into consideration the rule's history; and 3) the equities of the case as they are associated with retroactive application.

As to the first factor, the essential point of our decision today is straightforward. We conclude that on its face, article VIII, section 3 of the Chuuk Constitution is clear that only the state government has the power to tax. The language of this provision has remained static from the time the Chuuk Constitution was adopted. Our interpretation of this language does not overrule any past precedent, and it cannot be said that our resolution of this issue could not have been predicted. To the contrary, our holding today is based on what we consider to be a self-evident reading of article VIII, section 7 of the Chuuk Constitution. For these reasons, the first factor favors a finding of retroactive application.

With respect to the second factor, the facts of Innocenti are helpful. In that case, the issue was similar ) whether a state could impose an import tax in the face of a provision in the FSM Constitution that the FSM had the exclusive power to impose such taxes. We held that Chuuk did not have the power to impose the tax, and held that the decision should be applied retroactively to permit plaintiffs to recover the tax. In considering the second Innocenti factor, we observed that to "permit collection of taxes accrued up to the date of the trial court's decision would prolong the period of overlapping taxation and administrative duplication, contrary to the purposes of the constitutional rule placing the power to base taxes on imports exclusively with the national government." 2 FSM Intrm. at 185-86. Similarly, to permit Weno to retain the taxes which it extracted under an unconstitutional statute would have the effect of prolonging the viability of an ordinance that runs afoul of the Chuuk Constitution, at the expense of establishing the correct rule. The better course is to apply our holding retroactively to permit recovery of the taxes.

The third consideration is the equities of this matter. Weno cites the hardship it will face in its fiscal administration should it be required to refund the taxes. However, that argument misses the point, since the position in which Weno finds itself is of its own creation. A reading of the plain language of the Chuuk Constitution leads to the conclusion that Weno had imposed, and had collected, an unconstitutional tax. This litigation has been pending for five years, and the vast bulk of the judgment amount is for taxes paid during this period. Weno was therefore put on notice early on that the taxes collected under the ordinances were subject to a claim for refund, and nothing prevented Weno from planning for this eventuality. Having failed to do so, Weno cannot now claim hardship.

1. The trial court in Stinnett had previously entered partial summary judgment on July 8, 1993, in favor of Kachutosy Paulus and Raymond Setik enjoining operation of ordinance 01-01-93, apparently after an agreement among the parties that the ordinance did not apply to insurance agents. The trial court also granted partial summary judgment enjoining operation of 01-01-93 in favor of one of the d/b/a's of Christina Stinnett, Truk Travel Unlimited, on January 14, 1994, on the basis that such application was restrictive of interstate commerce. Stinnett v. Weno, 6 FSM Intrm. 312 (Chk. 1994). These rulings have not been appealed.

3. In the case below in Stinnett, Weno asked the trial court to revisit its grant of summary judgment by its July 4, 1997, motion to vacate, alter, or amend judgment brought under Rule 59(a) and (e) and in the alternative under Rule 60(b)(2) of the FSM Rules of Civil Procedure. Judgment was entered on the case below in Stinnett on June 20, 1997. The trial court noted that Rule 59(a) did not apply, and that it properly considered the motion under either Rule 59(e) or 60(b). The trial court further noted that given the interlocutory appeal then pending, it had the power to deny, but not grant the motion. Stinnett v. Weno, 8 FSM Intrm. 142, 15 .

5. The dismissal was then appealed to this court as Wainit v. Weno, Appeal Case No. C2-1996. On May 28, 1999, we remanded the matter to the full appellate panel of the Chuuk State Supreme Court Appellate Division pursuant to Rule 27(c) of the Chuuk Appellate Rules of Procedure on the basis that the order of the single justice dismissing the case was not a final, and therefore appealable, decision within the meaning of article VII, section 5(b) of the Chuuk Constitution and sections 37, 38(1), and 39 of the Chuuk State Judiciary Act of 1990. Wainit v. Weno, 9 FSM Intrm. 160 (App. 1999).

7. For example, the court in McKesson noted that Florida had a range of measures it might implement to satisfy due process short of refunding the taxes, including "assess[ment] and collect[tion of] back taxes from petitioner's competitors who benefited from the rate reduction during the contested tax period, calibrating the retroactive assessment to create in hindsight a nondiscriminatory scheme." See the discussion in this regard at 496 U.S. at 39-41, 110 S. Ct. at 2251-52, 110 L. Ed. 2d at 37-39.