December 2, 2008
Dear City Manager:
Your question appears to be this: Can the city enact and enforce zoning and other police
power regulations against transient vendors?
The following facts are related to your question: Two transient vendors operate from tents
in the city; both are located on Highway “A”. One has operated for five months from the tent
and apparently the transient vendor and his wife have lived in a camper next to the tent. After
the five months, the transient vendor transferred the business to his wife. The operation has now
been in the tent for six months and the transient vendor plans to stay in it for four more months.
The answer is that the city can probably enact zoning regulations and other police power
regulations against transient vendors, including regulations that restrict sales from tents for more
than a certain period. However, I must add here that I have not studied the question of exactly
what zoning and other police power regulations can be enacted against transient vendors, in
particular transient vendors who are operating from tents. I will attempt to do that if the city
wishes it. This letter concentrates on the question of whether Tennessee’s transient vendor
statutes intercept zoning and police power regulations pertaining to that class of merchants, and
takes up the further issue of what federal standards police powers that have the effect of
restricting the First Amendment rights of merchants to advertise and sell their merchandise must
meet.
Generally
There are many cases in the United States interpreting and applying itinerant merchants or
vendors statutes, but most of them involve questions of who is an “itinerant vendor,” “transient
vendor,” etc. [See 9 4A.L.R. 1076, Who may be classed as “itinerant vendor, ‘transient
merchant,’ or the like, within license regulations,” and how much such merchants or vendors can
be charged for licenses. But I will assume here that who qualifies as a “transient vendor” is
sufficiently clear under Tennessee’s statutes governing that subject, that it is not an issue here.
Surprisingly, few of the cases involving transient merchants and vendors involve the question of
whether cities can enact and enforce zoning and other police power regulations against them. But
the few cases that do hold that the answer is yes.
The City’s Transient Vendors Ordinance
Provisions governing transient vendors are found in Title 9, Chapter 1 of the city’s
municipal code. That Chapter is entitled Business, Peddlers and Solicitors, Etc.. It is essentially
a duplicate of the Businesses, Peddlers and Solicitors, Etc., ordinance that I drafted for the
MTAS sample code a few years ago. That ordinance may have contributed to the problems you
are having with transient vendors. Its definition of “transient vendor” was derived from the state
laws on that subject, but the ordinance itself may be misleading in the respect that it suggests that
it reflects all of the regulations that can apply to transient vendors (and peddlers and solicitors as
well). . For that reason I may go back and revisit that sample ordinance.
But here we will deal with the ordinance you have. Section 9-101 contains definitions of
“Peddler, ‘Solicitor, Solicitor for charitable or religious purposes,’ Solicitor for subscriptions,”
and “Transient Vendor.” The definition of “Transient vendor” is:
any person who brings into temporary premises and exhibits stocks
of merchandise to the public for the purpose of selling or offering
to sell the merchandise to the public. Transient vendor does not
include any person selling goods by sample, brochure, or sales
catalog for future delivery; or to sales resulting from the prior
invitation to the seller by the owner or occupant of a residence.
For the purposes of this definition, “merchandise” means any
consumer item that is or is represented to be new or not previously
owned by a consumer, and “temporary premises” means any public
or quasi-public place including a hotel, rooming house, storeroom,
building or part of a building, tent, vacant lot, railroad car, or motor
vehicle which is temporarily occupied for the purpose of exhibiting
stocks of merchandise to the public. Premises are not temporary if
the same person has conducted business at those premises for more
than six (6) consecutive months or has occupied the premises as his
or her permanent residence for more than six (6) consecutive
months.
Footnote 1 on the page on which contains the definition of “transient vendor” declares
that:
The definition of “transient vendors” is taken from Tennessee
Code Annotated, ' 62-30-101(3). Note also that Tennessee Code
Annotated, ' 67-4-709(a) prescribes that transient vendors shall
pay a tax of $50.00 for each 14 day period in each county and/or
municipality in which such vendors sell or offer to sell
merchandise for which they are issued a business license, but that
they are not liable for the gross receipts portion of the tax provided
for in Tennessee Code Annotated, ' 67-4-709(b).
Tennessee Code Annotated, section 62-30-101, actually regulates “transitory vendors” in
counties, and it defines the terms “merchandise,” “transitory vendor” and “temporary premises”
separately, as follows:
(1) “Merchandise” means any consumer item, that is, or is
represented to be, new or not previously owned by a consumer.
(2) “Transitory vendor” means any person who brings into
temporary premises and exhibits to the public stocks of
merchandise for the purpose of selling, or offering to sell, such
merchandise to the public.
(3) “Temporary premises” means any public or quasi-public place
including a hotel, rooming house, storeroom, building or part of a
building, tent, vacant lot, railroad car or motor vehicle, temporarily
occupied for the purpose of exhibiting stocks of merchandise to the
public. Premises are not temporary if the same person has
conducted business at those Premises for more than six (6)
consecutive months;
Read together those definitions essentially equal the definition of “transient vendor”
found in ' 1-901 of the Municipal Code. However, it would have been more accurate if the
MTAS sample Businesses, Peddlers, Solicitors, Etc. ordinance, from which ' 1-901 of your
municipal code was taken, had said that the definition of “Transient vendor” comes from
Tennessee Code Annotated, ' 67-4-702(21); the definitions in both places are identical.
Tennessee Code Annotated, ' 67-4-702 is a part of, and contains all the definitions that apply to,
the Business Tax Act contained in Tennessee Code Annotated, ' 67-4-701 et seq. Footnote 1
accurately points out that Tennessee Code Annotated, ' 67-4-709(a) prescribes that:
transient vendors shall pay a tax of $50.00 for each 14 day period
in each county and/or municipality in which such vendors sell or
offer for sale merchandise for which they are issued a business
license, but that they are that tot liable for the gross receipts
portion of the tax provided for in Tennessee Code Annotated, '
67-4-709(b).
Tennessee Code Annotated, ' 67-4-701 et seq. is a Taxing Statute
What seems abundantly clear from Tennessee Code Annotated, 67-4-701 et seq., is that
its transient vendor provision is part of the Business Tax Act, and obviously reflects a taxing,
rather than a police power, statute. The significance of that is found in State ex rel. Polin v. Hill,
547 S.W.2d 916 (Tenn. 1977), in which the Tennessee Supreme Court held that a city was
required to issue a business license to an applicant even though the city alleged that the
applicant’s business was in violation of the zoning ordinance and other city regulations. The
Court reasoned that the Business Tax Act was strictly a taxing statute, that it could not be used to
enforce city zoning regulations, and that: “The only condition precedent to the issuance of the
license is payment of the tax and no grounds are provided upon which to predicate a refusal to
issue said licenses...” [At 917]
What seems equally clear from that case is that it did not stand in the way of the
application of zoning and other police power regulations on businesses covered by the Business
Tax Acts; it stood only for the proposition that the city could not use the Business Tax Act to
enforce zoning and other police power regulations.
Police Powers Granted to City that Support Zoning and other Police Power
Regulations on Transient Vendors
The City has numerous police powers granted to it in its charter, which is contained in
Private Acts 1993, Chapter 78. Among those police powers in Article II is the power to:
- “(20) License and regulate all persons, firms, corporations, companies and associations
engaged in any business, occupation, calling, profession or trade not prohibited by law.”
- “(22) Define, prohibit, abate, suppress, prevent and regulate all acts, practices, conduct,
business, occupations, callings, trades, use of property and all other things whatsoever
detrimental to the health, morals, comfort, safety, convenience or welfare to the inhabitants of the
municipality, and exercise general police powers.”
- “(23) Prescribe limits within which business occupations and practices liable to be
nuisances or detrimental to the health, morals, security or general welfare of the people may
lawfully be established, conducted or maintained.”
Also found in Article II is a grant of zoning power in (25), which gives the city the police
power to:
“Regulate the location, bulk,, occupancy, area, lot, location, height,
construction and materials of all buildings and structures, and
inspect all building, lands and places as to their condition for
health, cleanliness and safety, and when necessary, prevent their
use and require any alteration or changes necessary to make them
healthful, clean or safe;...”
The grant of zoning power also has its counterpart in a comprehensive grant of zoning
powers to all municipalities in Tennessee Code Annotated, Title 13.
It has also been held that “very broad powers of regulation, and wide discretion, in the
exercise of the police powers, are held to be vested in municipalities in touching the use of its
streets.” [Steil v. City of Chattanooga, 152 S.W.2d 624, at 626(Tenn. 1941).] It is also generally
the law that where private activities near, as well as in, street rights-of-way pose a hazard to
street traffic, a city can prohibit or regulate that activity. Indeed, the police power generally
pertains to the right of a city to impose restrictions on the use of private property through
reasonable laws and ordinances that are necessary to secure the safety, health, good order, peace,
comfort, protection and convenience of the state or of a municipality. That right is broad and
well-established. [S & P Enters, Inc. v. City of Memphis, 672 S.W.2d 213 (Tenn. Ct. App. 1983);
Rivergate Wine and Liquors, Inc. v. City of Goodlettsville, 647 S.W.2d 631 (Tenn. 1983); PennDixie Cement Corporation v. Kingsport, 225 S.W.2d 270 (Tenn. 1949); Miller v. Memphis, 178
S.W.2d 382 (Tenn. 1944)].
All, or various combinations of, those grants of police powers to the city are probably
sufficient to support zoning and police power regulations of transient vendors, provided, of
course, that the exercise of the police power is consistent with state and federal legal standards
for the exercise of that power.
Cases Supporting Zoning and other Police Power Regulation on Transient Vendors
The question of whether a military veteran in Michigan could operate a seasonal roadside
stand without applying and paying for a municipal permit, arose in Williams v. City of
Rochester, 625 N.W.2e 64 (Ct. App. Mich. 2001). The court held that under a Michigan state
statute that gave veterans the right to “hawk, vend and peddle his own good, wares, and
merchandise within this state” [At 69] by obtaining a permit from the county without charge,
exempted him from obtaining a permit from the city. But to the question of whether that statute
exempted him from the city’s zoning regulations, the court said;
Consequently, it is our opinion that the legislature intended to
provide in substance that veterans should have the right to hawk,
vend and peddle within this state including hawking and peddling
within municipalities without payment of a fee therefor, but that it
was not intended that the regulatory provisions of municipal
ordinances shall be made inapplicable to such veterans. The net
result of this is that although veterans holding licenses under the
state act must comply with municipal police regulations, they may
not be compelled to pay a fee for the privilege of exercising the
right to hawk and peddle which has been given by the state. [At 72]
[Emphasis is the court’s.]
That case seems well-reasoned and applicable to Tennessee’s statutory scheme regulating
transient vendors. Under the Business Tax Act they are entitled to a transitory vendor’s license,
but there is nothing in that Act that remotely suggests those who hold such a license are exempt
from municipal zoning and other police power regulations. (In fact, nothing in the transitory
vendor statute found in Tennessee Code Annotated, ' 62-30-101 even remotely suggests that
persons issued mobile vendor’s permits by the county are exempt from county zoning or other
county “police power” regulations.)
The Williams v. City of Rochester Court also cited a case for support that is instructive.
In North Bergen Township v. Lord, 329 A.2d 575 (N.J. Super. 1974) New Jersey had a statute
similar to the one in Williams v. City of Rochester. The trial court in that case held that the
veteran in question, a pushcart hot dog vendor, was not required to obtain a city permit to peddle
hot dogs. The New Jersey Superior Court reversed the trial court, holding that the city’s
ordinance “was adopted as an exercise of the law-making delegated [to the city] by the
Legislature.” Although we are not told in that case what health provisions the city’s ordinance
contained, the Court reasoned that:
We perceive no logical reason why a health regulation ordinance
which by its terms is applicable to all sellers of foodstuffs within
the municipality should not be applied to itinerant vendors. The
veterans licensing statute, J.J.S.A. 45:24-9, in its present form,
evidences no intention on the part of the Legislature to preempt the
entire field of regulating hawkers, peddlers or vendors. In fact, the
statute now specifically permits the regulation by municipal
ordinance of hawking, peddling and vending on the public streets
and highways. [At 576] [Citations omitted by me.]
In City of Stevens Point v. Brocksenbaum, 274 N.W.505 (Wis. 1937), a municipal
ordinance prohibited provided that:
“No such hawker, peddler or transient merchant shall in carrying
on his business as such, use of (sic?) any space in city public
square of the city of Stevens Point for a consecutive period longer
than fifteen minutes whether such use or occupancy be by a wagon,
truck, or other vehicle or by maintaining a stand or stock of goods
or fixtures for use in such a business...”
The ordinance also required such persons to move every fifteen minutes. The ordinance
was based on the city’s police powers over the use of its streets.
The court upheld the ordinance against a challenge that it was unreasonable, reasoning
that while making peddlers, hawkers and transient merchants move every fifteen minutes might
actually create traffic problems in the public square, the city had a right to entirely prohibit the
use of the public square for the sale of merchandise, and if that was so could make merchants
move every fifteen minutes, which accomplished the same purpose.
The transient vendor selling merchandise from a tent (and camped out in a motor vehicle
beside the tent) in the City apparently does not do so in the city’s right of way, but the point of
the above cases is that where a statute provides that a transient vendor is entitled to a license
from the city, he is not exempt from the city’s zoning and other police power regulations. As
pointed out above, a city has police power over activities that occur on private property that
affect the use of city streets.
Federal Standards Governing Zoning and other Police Power Regulations Applied
to Transient Vendors
But particularly instructive on the City’s question is the recent case of Wilson v.
Lexington-Layette Urban County Government, 201 F. Apex. 317, 2006 WL 2918817 (C.A. 6
Ky.). The reason is that merchants engaged in the advertisement and sale of their merchandise
are protected by the First Amendment. That case considers the issue of the First Amendment
protection of a ticket scalper. Although it is an unreported case, it is a Sixth U.S. Circuit Court
of Appeals case which is significant because the law in the Sixth Circuit applies to Tennessee.
There, the plaintiff Wilson, was arrested and cited for selling two University of Kentucky
basketball tickets to two people outside of Rupp Arena. The basis of the arrest and citation was a
Lexington-Layette County ordinance providing that:
(2) It shall be unlawful for any peddler to sell, or offer for sale,
food or goods while in the Lexington Center area, at any time
during the two (2) hours preceding a ticketed Rupp Arena event or
during the one (1) hour following a Rupp Arena event. Goods
shall include tickets to any event taking place in Rupp Arena.
The fine for violating the ordinance was up to $250 and/or imprisonment for seven days.
The plaintiff asked for, and the court upheld the district court’s denial of, his request for
an injunction against the enforcement of the ordinance, rejecting the plaintiff’s arguments that
the ordinance was unconstitutional on several grounds. The only ground that I will take up here
is that the ordinance was not narrowly tailored, because it relates to the conditions under which a
city, under its police powers, can restrict what amounts to commercial speech without violating
the First Amendment..
The city responded to the plaintiff’s argument that the ordinance was not narrowly
tailored, and was therefore unconstitutional, by urging that the ordinance was within the police
powers granted to the local government by Kentucky law, and was a valid, “time, place and
manner” restriction narrowly tailored to serve legitimate governments interests while leaving
open ample alternative channels for the communication of speech by the plaintiff. The court
accepted the city’s argument, saying:
“Speech advancing commercial transactions falls within ambit that
is ‘traditionally subject to government regulation’” [Citations
omitted by me.]... In Central Hudson Gas & Electric, the Supreme
Court articulated the proper analysis to be undertaken when
reviewing a regulation of commercial speech:
In commercial speech cases ..., we must [first] determine whether
the expression is protected by the First Amendment. For
commercial speech to come within that provision, it at least must
concern lawful activity and not be misleading. Next we ask
whether the asserted government interest is substantial. If both
inquiries yield positive answers, we must determine whether the
regulation directly advances the governmental interest asserted, and
whether it is not more extensive than is necessary to serve that
interest. [At 7]
Under that analysis, the court concluded that the city was able to show that the ordinance
advanced its interest in regulating traffic in public areas to ensure public safety. Moreover,
continued the court, the prohibition imposed by the ordinance is limited to the sidewalks and
parking areas adjacent to the arena and to the time immediately before and immediately after an
arena event. For that reason, it was narrowly drawn to serve the government’s interest.
The Sixth Circuit was a little clearer and more complete on the standards for measuring
the constitutionality of regulations on speech in Prime Media, Inc. v. City of Brentwood, 398
F.3d 814 (6th Cir. Ct. App. 2005):
[T]he [U.S. Supreme] Court has subjected time, place and manner
restrictions on speech to the following test: They “are valid
provided (1) that they are justified without reference to the content
of the regulated speech, (2) that they are narrowly tailored (3) to
serve a significant governmental interest, and (4) that they leave
open ample alternative channels of communication of the
information.” [At 818] [Citations omitted.]
That test has been used in innumerable cases by the U.S. Supreme Court to determine
whether restrictions on speech, political or commercial, are constitutional. [See, for example,
City of Lade v. Gilled, 512 U.S. 43 (1994); Watchtower Bible and Tract Society of New York,
Inc. v. Village of Station, 536 U.S. 150 (2002).
Potential Problem BCommerce Clause
During the course of doing research for this letter, I discovered a federal case that should
cause any city applying a transient merchant’s taxing or licensing statute some concern. That
case, Homier Distributing Co. v. Scaley, 371 F. Supp.2d 1006 (Dist. Ark.(2003), held that the
Arkansas Transient Merchant Licensing Act violated the Commerce Clause of the U.S.
Constitution:. That Act defined:
“temporary or transient business” as “any business conducted for
the sale or offer for sale of goods, wares or merchandise which is
carried on in any building, structure, moor vehicle, railroad car, or
rest estate for a period of less than six (6) months in each year.”
The same Act defined a “transient merchant” as:
Any person, firm, corporation, partnership, or other entity which
engages in, does, or transacts any temporary or transient business
in the state, either in one (1) locality or in traveling from place to
place in the state, offer for sale or selling goods, wares,
merchandise or services, and includes those merchants who hire,
lease, use, or occupy any building, structure, motor vehicle,
railroad car, or real estate for the purpose of carrying on such a
business.
The Act also required transient merchants to purchase a license from the county clerk for
$250, which was required to be accompanied by a cash or surety bond of $2,000 or 5% of the
wholesale value of any good, wares, merchandise, or services to be offered for sale, whichever
was greater. The license was good for 90 days, and the license fee and bond were the same
whether for a one day or 90 days sale.
The Act had never been enforced against an in-state merchant, but the case does not
appear to turn on that fact, but on the court’s view that the law facially discriminated against
transient merchants in favor of local merchants. The court noted that “At first blush, it appears
that the TMLA regulates even-handedly. All transient merchants, whether from Arkansas or
another state, must satisfy the Act’s requirements....” [At 1012.] But that was not the test for
even-handedness under the Commerce Clause. Pointing to language from a New York case with
the same plaintiff, Homier Distb. Co. Inc. v. City of Albany, 681 N.E.2d 390 (1971), the court
declared that:
Albany’s transient retailer’s tax is imposed on all merchants who
do not operate from a fixed location within the City’s borders and,
consequently, it confers an economic advantage on a particular
class of local businesses, i.e. those that ply their wares from fixed
locations. Since by definition, the class of favored businesses
includes only locals, the ordinance cannot be considered “evenhanded” and is, thus, per se invalid. [At 1212]
The court, in Footnote 3, also had a problem with the time and place of sale under the
transient merchant’s license:
Furthermore, the license is valid only for a specific location and
duration. A transient merchant seeking to hold sales at various
locations or at different times presently must obtain multiple
licenses. [At 1013]
The court appears to have tied those limitations to “Supreme Court decisions concluding
that statutes structured so as to pressure entities to establish or increase local operation are
vocative of the Commerce Clause.” [At 1013-1014] [Citations omitted by me.]
The court also had a problem with the fixed license fee in connection with the question of
whether the fee was a “compensatory tax”:
The Court is mindful of the Defendant’s argument that “one of the
benefits of conducing a transient business is to avoid the burdens
associated with maintaining a permanent business, such as rent,
utilities, real property tax, etc.” However, the Defendant’s do not
argue, and offer no proof, that the TMLA fee is meant to serve as a
“compensatory tax” placing transient merchants on the equal
footing with fixed-location retailers. See Holier, 659 N.Y.2d 223,
681 N.E.2d at 396. In any event, the license fee is a fixed amount,
and not tied to an applicant’s gross sales, or even a sale’s duration.
[At 1014]
I have not closely analyzed the Arkansas Transient Merchant’s Law against Tennessee’s
Transient Vendor’s Law from the perspective of the Commerce Clause. One reason is that as far
as I can determine, Homier v. Scaley has not been repeated or cited in any other case. Another
reason is that Tennessee’s transient merchant statute arguably discriminates more in favor of
transient merchants than local merchants operating from fixed sites. I raise that case here only as
a potential problem that might apply to many transient merchant and vendors statutes.
Sincerely,
Sidney D. Hemsley
Senior Law Consultant
SDH/