Opinion ID: 1743494
Heading Depth: 1
Heading Rank: 8

Heading: Registration Fees and Bond Requirements

Text: The defendants next challenge the fee and bond requirements of the Act as the imposition of a tax for the privilege of engaging in protected speech. As stated previously, the Act imposed a $1,000 (now $800) annual registration fee and a $10,000 (now $25,000) bond on professional solicitors: (a) No person shall act as a professional solicitor for a charitable organization subject to the provisions of this part unless he has first registered with the secretary of state. Registration shall include the filing of a complete application, bond and filing fee... . (b) Every person shall, before being employed in any manner whatsoever within this state by a professional solicitor, make application to the secretary of state for a certificate as an employee.... The annual fee for an employee certificate shall be ten dollars ($10.00). (c) The applicant shall, at the time of making application, file with and have approved by the secretary of state, a bond in which the applicant shall be the principal obligor in the sum of ten thousand dollars ($10,000) with one (1) or more sureties... . (d) The annual registration fee for every person who is a professional solicitor in this state shall be one thousand dollars ($1,000). Tenn. Code Ann. § 48-3-507 (Supp. 1989). The Court of Appeals held that these fees were impermissible license taxes on the privilege of speech in violation of the constitutional provisions guaranteeing freedom of speech. The court rejected the State's argument that professional solicitors are more likely to defraud or mislead the public than employees and volunteers of charitable organizations. Its conclusion was based on the finding that the additional fees imposed on professional solicitors were not justified as a means of defraying the cost of regulating charitable solicitations. Licensing fees imposed upon businesses that affect expression, must be nominal and imposed only as a regulatory measure to defray the expenses of policing such activities. Ellwest Stereo Theater, Inc. v. Boner, 718 F. Supp. 1553, 1574 (M.D.Tenn. 1989); see also Murdock v. Commonwealth of Pennsylvania, 319 U.S. 105, 113-14, 63 S.Ct. 870, 875, 87 L.Ed. 1292 (1943). In Murdock, where the challenged ordinance provided that a license be purchased by persons canvassing or soliciting within the city, the Court stated, The power to tax the exercise of a privilege is the power to control or suppress its enjoyment. Id. at 112, 63 S.Ct. at 874. The licensing requirement in that case was declared invalid: [T]he present ordinance is not narrowly drawn to safeguard the people of the community in their homes against the evils of solicitations. As we have said, it is not merely a registration ordinance calling for an identification of the solicitors so as to give the authorities some basis for investigating strangers coming into the community. And the fee is not a nominal one, imposed as a regulatory measure and calculated to defray the expense of protecting those on the streets and at home against the abuses of solicitors... . The ordinance is not narrowly drawn to prevent or control abuses or evils arising from that activity. Rather, it sets aside the residential areas as a prohibited zone, entry of which is denied petitioners unless the tax is paid. Id. at 116-17, 63 S.Ct. at 876-77 (citations omitted). That Court noted, however, The constitutional difference between [a regulatory measure to defray the expenses of policing the activities in question] and a tax on the exercise of a federal right has long been recognized. While a state may not exact a license tax for the privilege of carrying on interstate commerce it may, for example, exact a fee to defray the cost of purely local regulations in spite of the fact that those regulations incidentally affect commerce. Id. at 114, n. 8, 63 S.Ct. at 875, n. 8 (citations omitted); see e.g., Broadway Books, Inc. v. Roberts, 642 F. Supp. 486, 493 (E.D.Tenn. 1986) (A $500 annual license fee for adult oriented establishments was held to be constitutional because the city demonstrated that the yearly costs of processing each license application and enforcing the provisions of a regulatory ordinance were comparable to the fee.). Thus, the fees are consistent with the guarantees of free expression and equal protection if the State can prove that the fees are no more than that amount necessary to pay for the administrative and enforcement costs of the Act. See Cox v. New Hampshire, 312 U.S. 569, 577, 61 S.Ct. 762, 766, 85 L.Ed. 1049 (1941). The record does not contain sufficient evidence on which a determination of the costs of administering and enforcing the Act can be made. There is not sufficient evidence in the record on which to determine if the fees charged bear any reasonable relationship to the costs of administering and enforcing the Act. This is a disputed question of material fact, consequently summary judgment cannot be granted on this issue. Byrd v. Hall, 847 S.W.2d 208, 215 (Tenn. 1993). This factual issue can be determined on remand. Likewise, there is not sufficient evidence in the record on which to determine if the bond required by Section 48-3-507(c) provides any protection to the public or if the costs of the bond bear any reasonable relationship to the costs of administering and enforcing the Act. This, also, is a disputed issue of material fact and precludes the entry of summary judgment with regard to the requirement of a bond.