Ragland v. Forsythe

P. A. Hollingsworth, Justice. The appellee, William V. Forsythe, a Tennessee resident, was denied a music machine operator’s permit because he did not meet the residency requirements of Ark. Stat.. Ann. § 84-2634 (b) (Repl. 1980). He filed suit against the Department of Finance & Administration claiming that the statute was unconstitutional as applied to nonresidents. The trial court found that the statutory requirement of a one year Arkansas residency is unconstitutional. On appeal we affirm. Ark. Stat. Ann. § 84-2633 (Repl. 1980) provides that: The business of owning, operating or leasing coin operated amusement devices ... is hereby declared to be a privilege, and it is further declared that the owners, operators and lessor of such machines shall pay a fee for such a privilege . . . (a) “Amusement devices” means any machine, device or apparatus which provides amusement, diversion or entertainment which is coin operated and includes ... [m]usic vending phonographs, jukeboxes, and other similar musical devices for entertainment. . . Section 84-2634 provides: No license as required in Section 1 [§ 84-2633] above shall be issued unless: (a) The applicant is above the age of twenty-one (21) years. (b) The applicant is a resident of the State of Arkansas and has been such for at least one (1) year prior to the date of his application. (c) At least one-half (1/2) of any partnership or corporation applicant is owned by a resident of Arkansas who has been such for at least one (1) year prior to application. The parties stipulated to the fact that the sole basis upon which the Department of Finance & Administration denied the requested permit was the plaintiff’s failure to meet the necessary residency requirements. The plaintiff has complied in full with all other requirements necessary in order to receive a Music Machine Operator’s Permit. The circuit court found that the sole purpose of the Slot and Vending Machines Act (Ark. Stat. Ann. § 84-2601, et seq.) (of which this statute is a part) is to impose a license tax on the business of owning, operating or leasing automatic slot and vending machines. He further found that there is no valid relationship between the State’s interest in the public health, safety, and welfare, and the residency requirement found in § 84-2634. In a letter opinion, Judge Bogard stated: I. . . must find that the Supreme Court’s reasoning in Wometco Services v. Gaddy, 272 Ark. 452, 616 S.W.2d 466 (1981) control. It is interesting to note that in the Wometco decision it was held that “the State may regulate businesses which affect public health, safety, and welfare but it may not deprive an individual of his right to condust [sic] lawful business unless it can be shown that such deprivation is reasonably related to the State’s interest sought to be protected. . . there is no relationship between the required residency and a valid government interest.” In the case at bar the Court can find no valid reason from excluding nonresidents from holding permits for the sale of the equipment covered by Ark. Stat. Ann. § 84-2634 (b) (Repl. 1980). I thus can find no valid reason for having residency as a requirement for issuing the permit covered by the statute and must declare the statute in question to be unconstitutional for the reasons outlined in Mr. Gibbs’ brief. Wometco dealt with an application for a permit to sell cigarettes through vending machines. That application was denied to the appellant, a South Carolina corporation licensed to do business in Arkansas. The appellant raised three constitutional arguments: commerce clause, equal protection clause, and the privileges and immunities clause, the same allegations in the case at bar. As Judge Bogard did in this case, we found in Wometco that the sole purpose of the act is to provide a system for the collection of taxes. We have also held that the legislation in question must bear a reasonable relation to the achievement of the public objective. Jacks v. State, 219 Ark. 392, 242 S.W.2d 704 (1951). This requirement means that the law must accomplish the declared public end and not impose a burden upon someone not reasonably connected with the cause of the evil. The appellant cites our decision in Brown v. Cheney, Commissioner, 233 Ark. 920, 350 S.W.2d 184(1961) in which we upheld the constitutionality of the residence requirement in the same statute at issue here. In Brown, we stated that the owning and operation of a “juke box” is a privilege and that: On first impression it might appear that a “juke box” is harmless, and that its owner should be allowed to play it as a common right, but there are other things to be considered. It is common knowledge that coin operated “juke boxes” are not usually placed in the home, but are frequently used in dance halls, drinking places, and amusement spots. . . . The legislature, in regulating “juke boxes” had a right to take all these things into consideration. Brown v. Cheney, supra, at 922. There is nothing in the record to show that this evil is present in the instant case. In Wometco we said “the State may regulate business which affects public health, safety, and welfare, but it may not deprive an individual of his right to conduct lawful business unless it can be shown that such deprivation is reasonably related to the State interests sought to be protected.” Before we can deprive an individual of his right to conduct business, the deprivation must be reasonably related to the legitimate state interest. Here, there is no relationship between the required one year residency and a valid governmental interest. The Privilege and Immunities Clause of the U.S. Const, art IV, § 2, cl. 1, provides: “The citizens of each State shall be entitled to all Privileges and Immunities of Citizens in the Several States.” It is a general rule that license legislation that discriminates against nonresidents of a state by refusing to grant them licenses where not required under the police power of the state for the protection of local citizens is void as violating the privileges and immunities and equal protection clauses of the U.S. Constitution. 51 Am. Jur. 2d Licenses and Permits § 31 p. 41; 61 A.L.R. 337, 338. The U.S. Supreme Court in Austin v. New Hampshire, 420 U.S. 656, 662 (1975) held “the Privileges and Immunities Clause, by making noncitizenship or nonresidence an improper basis for locating a special burden, implicates not only the individual’s right to nondiscriminatory treatment but also, perhaps more so, the structural balance essential to the concept of federalism.” Therefore, we find that § 84-2634 (b) and (c) are unconstitutional as to the residency requirement contained therein and violate the equal protection and privileges and immunities clauses of the U.S. Constitution. We leave the rest of the provisions of that Statute untouched by this decision. Affirmed. Smith, George Rose, Dudley, and Hays, JJ., dissent.