Court Opinion

ID: 9789887
Source: CourtListenerOpinion
Date Created: 2023-08-31 01:43:33.406007+00
Date Added: 2024-06-11T07:37:24.958761
License: Public Domain

SOSA, Senior Justice, and FEDERICI, Justice, specially concurring and dissenting. We concur in the results reached as to the severability of the Act and as to the unconstitutionality of Section 114. However we would have premised these results on an analysis substantially different from the majority opinion. We concur in both the rationale and result of the majority opinion discussion as to Section 103. However as to this latter section, we would affirm on the additional ground that procedural due process should be accorded where there is a deprivation of a property interest. We respectfully dissent as to the majority’s conclusion that Section 36 is constitutional. We would hold this section unconstitutional as a taking of property interests without due process of law. Section 36 In our view, the liquor licenses in this' case were in the nature of property interests which therefore merited some form of compensation under the Fifth and Fourteenth Amendments to the United States Constitution and Sections 18 and 20 of Article II of the New Mexico Constitution. A liquor license is clearly a property interest for some purposes. “Broadly defined, property includes every interest a person may have in a thing that can be the subject of ownership, including the right to enjoy, use, freely possess and transfer that interest.” Muckleroy v. Muckleroy, 84 N.M. 14, 15, 498 P.2d 1357, 1358 (1972). New Mexico has consistently held that although a license is not property as between a licensee and the State, between a licensee and “creditors and for purposes of secured transactions, executions, liens, receiverships and other similar transactions, a liquor license is to be considered as tangible personal property.” State ex rel. Clinton Realty Co. v. Scarborough, 78 N.M. 132, 135, 429 P.2d 330, 333 (1967); Nelson v. Naranjo, 74 N.M. 502, 395 P.2d 228 (1964); see Valley Country Club Inc. v. Mender, 64 N.M. 59, 323 P.2d 1099 (1958). In none of these cases was there an attempt by the Legislature to entirely deprive license holders of certain property interests in "their licenses. The Legislature recognized that the Act takes away certain interests which licensees have possessed until now. Section 36 states that licenses issued prior to the effective date of the Act retain certain property interests until 1991. Legislative acknowledgement of licensees’ property interests is also found in Section 114 which attempts to pay licensees in tax credits for the deprivation of these interests. It is clear that the Legislature felt some remuneration would be warranted for the taking of the property interests involved. It is highly unlikely the Act would have passed in its present form if the legislators felt that the proprietary interests taken did not merit some form of remuneration. Although prior cases have held that a liquor license is a mere permit which may be modified or annulled at the pleasure of the legislature, Floeck v. Bureau of Revenue, 44 N.M. 194, 100 P.2d 225 (1940); Ex parte Deats, 22 N.M. 536, 166 P. 913 (1917); In re Everman, 18 N.M. 605, 139 P. 156 (1914), the distinction between a privilege and a right has been eroded in the area of governmentally generated property interests. Increasingly, due process rights have been afforded governmental licensees. Rights regulated under various types of licenses have been considered property rights. Roberts v. State Board of Embalmers & Funeral Directors, 78 N.M. 536, 434 P.2d 61 (1967); see Muckleroy v. Muckleroy; L. TRIBE, AMERICAN CONSTITUTIONAL LAW § 10-9 (1978). The United States Supreme Court has stated “this Court now has rejected the concept that constitutional rights turn upon whether a governmental benefit is characterized as a ‘right’ or as a ‘privilege.’ ” Graham v. Richardson, 403 U.S. 365, 374, 91 S.Ct. 1848, 1853, 29 L.Ed.2d 534 (1971). The traditional “rights-privilege” distinction is no longer viable. See O’Bannon v. Town Court Nursing Center, 447 U.S. 773, 796, 100 S.Ct. 2467, 2481, 65 L.Ed.2d 506 (1980) (Blackmun, J., concurring); Perry v. Sindermann, 408 U.S. 593, 92 S.Ct. 2694, 33 L.Ed.2d 570 (1972); Goldberg v. Kelly, 397 U.S. 254, 90 S.Ct. 1011, 25 L.Ed.2d 287 (1970). Even though the State could, through the exercise of its police power, significantly curtail or abolish the right to sell alcoholic beverages, where it does not do so but merely regulates, such regulation is subject to constitutional limitations. This Court has recognized that liquor control regulations must conform to constitutional strictures and that the State’s regulatory powers are limited. “But when the manufacture and sale of liquor is lawful, as it is under our laws, statutes providing for the regulation of the business are limited by constitutional guaranties * * * * ” Drink, Inc. v. Babcock, 77 N.M. 277, 280, 421 P.2d 798, 800 (1966). Today it is clear that when regulation goes too far it must be treated as a taking and deemed invalid unless compensation is provided. L. TRIBE, § 9-2. This recognized principle has been historically followed, being enunciated by Justice Holmes in Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 43 S.Ct. 158, 67 L.Ed. 322 (1922). Adhering to this proposition the United States Court of Claims stated: When the effect of a governmental regulation on a citizen’s property is so pervasive that the property is greatly depreciated in value or that the owner’s right to use the property is substantially interfered with, the citizen is entitled to compensation * * * * “The general rule at least, is that while property may be regulated to a certain extent, if regulation goes too far it will be recognized as a taking.... We are in danger of forgetting that a strong public desire to improve the public condition is not enough to warrant achieving the desire by a shorter cut than the constitutional way of paying for the change.” Pete v. United States, 531 F.2d 1018, 1034, 209 Ct.Cl. 270 (1976) (quoting Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415-16, 43 S.Ct. 158, 160, 67 L.Ed. 322 (1922)). Justice Rehnquist clarified this concept by asserting [a] taking does not become a noncompensable exercise of police power simply because the government in its grace allows the owner to make some “reasonable” use of his property. “[I]t is the character of the invasion, not the amount of damage resulting from it, so long as the damage is substantial, that determines the question whether it is a taking.” Penn Central Transportation Co. v. New York City, 438 U.S. 104, 149-50, 98 S.Ct. 2646, 2672-2673, 57 L.Ed.2d 631 (1978) (Rehnquist, J., dissenting), reh’g denied, 439 U.S. 883, 99 S.Ct. 226, 58 L.Ed.2d 198 (1978) (quoting United States v. Cress, 243 U.S. 316, 328, 37 S.Ct. 380, 385, 61 L.Ed. 746 (1917)). This Court has stated that “[t]he general rule is that a regulation which imposes a reasonable restriction on the use of private property will not constitute a ‘taking’ of that property if the regulation * * * does not unreasonably deprive the property owner of all, or substantially all, of the beneficial use of his property.” Temple Baptist Church v. City of Albuquerque, 98 N.M. 138, 144-145, 646 P.2d 565, 571-72 (1982). We believe that the Act does deprive licensees of substantially all their beneficial use of certain property interests in the licenses. As of July 1, 1991, the licensees will be without capacity to convey, encumber or devise the liquor licenses they own. The fair market value of the licenses has dropped due to the inter-county transfer provision, Section 113, and due to expected losses of other rights later. Their value for use as collateral is diminishing. By 1991, this value will be diminished to zero. We believe that this is the taking of a property interest which must be declared compensable. Comparable property interests are now in jeopardy under the reasoning of the majority opinion. The majority opinion, when carried to its conclusion, would subject personal, professional, and business licenses held by the citizens of this State to confiscation without remuneration. For these reasons, we would hold that Section 36 violates the constitutional guarantees of due process. Section 114 While we agree with the majority holding that Section 114 is unconstitutional, we would hold it unconstitutional on the grounds that there is little demonstrated relation between the tax credit benefits and the fair market value of the individual licenses involved. Where there is a taking of property interests, as we believe there has been in this case, compensation should be coincident to the time of taking, and there is a constitutional right to interest from the time of taking until payment is made. 3 J. SACKMAN, NICHOLS’ THE LAW OF EMINENT DOMAIN § 8.63 (rev. 3d ed. 1981); see State ex rel. State Highway Commission v. Peace Foundation, Inc., 79 N.M. 576, 446 P.2d 443 (1968). In addition, compensation must be fixed at the “actual value” of the property taken. See NMSA 1978 § 42A-1-24, (Repl.Pamp.1981). It is well settled that the amount of compensation to be paid an owner for a taking under the power of eminent domain cannot be decided by a legislative body. 3 NICHOLS’, § 8.9. Section 114, by providing a flat credit against gross receipts tax up to $30,000 per year for ten years, violates these concepts. In many cases, the credit bears no relation to the actual fair market value of the license. The State’s expert stated that ten years of maximum present-day value of the use of the tax credit is approximately $150,000. This amount has no relationship to the market values of the licenses. Under the formula which provides for gross receipts tax credit compensation, some licensees could receive a much greater amount than the actual value of their licenses, while other licensees could receive a much smaller amount than the actual value of their licenses. In no case will the owner be compensated at the appropriate time. No provision has been made for payment of interest on the compensation. The legislative attempt to compensate for the loss suffered by the licensees is inadequate to meet the requirements of just compensation. We would thus hold that Section 114 violates the constitutional guarantee of just compensation. Section 103 While we do not disagree with the majority rationale or holding as to Section 103, we believe that the summary provisions of this section also violate due process since property interests are involved in this case. Governmental procedures which result in depriving individuals of property interests within the meaning of the due process clauses of the Fifth or Fourteenth Amendments to the United States Constitution must provide the individual with procedural due process. Because we would hold that license holders are deprived by this Act of a property interest, we would also conclude that they are clearly entitled to procedural due process. Mathews v. Eldridge, 424 U.S. 319, 96 S.Ct. 893, 47 L.Ed.2d 18 (1976). The United States Supreme Court has consistently held that some form of hearing is required before an individual is finally deprived of a property interest. Id. In determining the type of process which is due prior to initial termination of benefits, pending review, the Court held that the following three factors should be weighed: First, the private interest that will be affected by the official action; second, the risk of an erroneous deprivation of such interest through the procedures used, and the probable value, if any, of additional or substitute procedural safeguards; and finally, the Government’s interest, including the function involved and the fiscal and administrative burdens that the additional or substitute procedural requirement would entail. Id. at 335, 96 S.Ct. at 903. The private interest that will be affected by an official action under Section 103 would be the licensees’ business reputation and livelihood. The risk of an erroneous deprivation of a property right may demean constitutional rights. The risk in the instant case is that the licensee will be unable to operate under a license for an unspecified time without an opportunity to be heard. While Section 103 requires the director of the department of alcoholic beverage control to comply with Section 100 of the Act immediately, Section 100 does not require the director to file charges against a licensee or request that the Governor appoint a hearing officer within a reasonable time. The Government’s interest in the three-day summary suspension is small. The administrative burden of providing notice and an informal hearing would be minimal. We would thus find Section 103 unconstitutional on these additional grounds. Severability We agree that the Governor had no power to veto the severability provisions of the Act. We would point out in addition that in determining if an act is severable, New Mexico courts have established a three-pronged test: First, the invalid portion must be able to be separated from the other portions without impairing their effect. Second, the legislative purpose expressed in the valid portion of the act must be able to be given effect without the invalid portion. And, thirdly, it cannot be said, on a consideration of the whole act, that the legislature would not have passed the valid part if it had known that the objectionable part was invalid. State v. Spearman, 84 N.M. 366, 368, 503 P.2d 649, 651 (Ct.App.1972); Bradbury & Stamm Construction Co. v. Bureau of Revenue, 70 N.M. 226, 372 P.2d 808 (1962); see Nall v. Baca, 95 N.M. 783, 626 P.2d 1280 (1981). We would find that the force and effect of the remainder of the Liquor Control Act is not impaired by severance of any unconstitutional sections. The other sections of the Act can stand independently from the severed sections. For example, the elimination of Section 103 creates no textual anomalies in any of the remaining portions of the Liquor Control Act. Paragraphs (F) and (G) of Section 113 render certain licensees ineligible for the tax credit provided by Section 114. Elimination of Section 114 will not impair the effect of these paragraphs. We do not believe that the Legislature would have passed any of the Act had it intended that the invalidity of any one section would render the entire Act invalid. The Legislature specifically included a severability clause in the Act. 1981 N.M. Laws, ch. 39, § 129. Section 129 stated that “[i]f any part or application of this act is held invalid, the remainder, or its application to other situations or persons, shall not be affected.” We consider this an indication of legislative intent. See State ex rel. Maloney v. Sierra, 82 N.M. 125, 477 P.2d 301 (1970). Where, as here, a [severability clause], has been incorporated expressly stating the legislative intent that the valid portion of the enactment should stand even though other parts may be determined to be invalid, there can be no question of legislative intent and if possible the portion of the legislation free from objection should be given effect. Clovis National Bank v. Callaway, 69 N.M. 119, 129, 364 P.2d 748, 755 (1961). The Legislature’s intent that the Act be severable is also shown by the fact that the application of the other sections is not impaired by the elimination of Sections 36,103 and 114. Statutes carry with them a presumption of validity and any court must be well satisfied as to their invalidity before striking them down. State ex rel. Dickson v. Saiz, 62 N.M. 227, 308 P.2d 205 (1957). CONCLUSION For the foregoing reasons, we would hold that Sections 36, 103 and 114 of the Liquor Control Act are unconstitutional but that the Act is severable and operative except for Sections 36, 103 and 114.