Elected officials tend to think that they ought to be able to do whatever seems reasonable under the circumstances. But the Court of Appeals for the Eastern District of Missouri took a different view, in Cliff Hindman Real Estate, Inc. v. City of Jennings, handed down March 10, 2009. The Court of Appeals struck down an ordinance requiring landlords to buy licenses from the City, because the state of Missouri didn’t give the City the power to require such a license.
The City of Jennings, Missouri, like cities everywhere, wants to be able to make sure that its residential rental properties are properly maintained. To keep track of rental properties, the City adopted an ordinance requiring that owners of rentals buy licenses and provide detailed contact information to the City. The license fees would help defray the City’s expense of keeping track of rental property.
In other words, the City would find it easier to enforce its property maintenance codes if it could easily jerk a landlord’s license to receive rent (and perhaps cut off city utility services) if the landlord didn’t comply.
The trial court didn’t have any problem with the City’s ordinance, ruling that the landlord didn’t have standing to challenge the rental permit requirement, since his permit hadn’t been jerked. It might have ended there, since without a party having standing to sue, the court had no jurisdiction to decide whether the ordinance was valid. But the trial court ruled on that issue also, apparently buying the City’s arguments that the City’s general powers to do things for the good of the City was a sufficient basis for the ordinance.
The Court of Appeals didn’t agree with the trial court or the City at all. The Court of Appeals said that the trial court was wrong in finding that the landlord had no standing: the landlord had paid the license fee under protest and wasn’t required to violate the law in order to have the right to challenge it.
Moreover, the trial court should have dismissed the case, based on its holding that the landlord had no standing to challenge the ordinance, even though this holding was incorrect. But since the trial court had ruled, upholding the validity of the ordinance, the Court of Appeals would take this opportunity to deal with the validity of the ordinance, saving the parties of having another trial court proceeding and possible appeal.
The Court of Appeals looked at three Missouri statutes, one applying to third-class cities (section 94.110, allowing imposition of license taxes on a very long list of businesses, but not landlords) and two statutes applying to all Missouri cities:
- section 71.010, which allows a city to adopt ordinances on matters regulated by state law, only in conformity with state law, and
- section 71.610, which prohibits cities from imposing a license tax on a business without specific statutory authority.
Finding no statutory authority for a license tax for landlords, the Court of Appeals ruled the ordinance to be invalid. The Court of Appeals did not find it necessary to rule on whether the license tax on landlords violated Missouri’s Hancock Amendment, which restrains units of government from imposing taxes without voter approval.
The Court of Appeals also cited other Missouri appellate decisions, which held that cities have no inherent police power and that cities have no powers other than those given to them by the state.
Ozarks Law & Economy 