BHA Investments, Inc. v. State
Decision Date | 30 January 2003 |
Docket Number | No. 28238.,28238. |
Citation | 138 Idaho 348,63 P.3d 474 |
Parties | BHA INVESTMENTS, INC., an Idaho corporation, on behalf of itself and all others similarly situated, Plaintiffs-Appellants, v. STATE of Idaho, Alcohol Beverage Control Board, of the State of Idaho, Defendant-Respondent. |
Court | Idaho Supreme Court |
Davison, Copple, Copple & Copple, Boise, for appellants. Edward J. Guerricabeitia argued.
Hon. Alan G. Lance, Attorney General, Boise, for respondent. Victor A. Ramirez argued.
This case involves the constitutionality of a liquor license transfer fee. When BHA Investments, Inc. (BHA) sold its liquor license, it was required to pay a transfer fee equal to 10% of the sale price to the State of Idaho (the State), pursuant to I.C. § 23-908(5). BHA paid the transfer fee under protest and filed suit in district court against the State, arguing that the transfer fee is a disguised and unconstitutional tax, a taking without just compensation, and an unjust enrichment for the State. The district court dismissed the case, finding no claim upon which relief could be granted. BHA appeals.
On July 17, 2000, BHA sold an Idaho State liquor license to Power House, LLC for $115,000.00. BHA notified the State of Idaho Alcohol Beverage Control Board of the sale. The State instructed BHA to submit an application for transfer to the Director of the Idaho State Police, who would investigate the application and license transfer pursuant to I.C. § 23-908(2) and I.C. § 23-907. BHA was also told that it must pay 10% of the license transfer sale price to the Director of the Idaho State Police as a "transfer fee" pursuant to I.C. § 23-908(5). The Director approved the license transfer, and BHA submitted the transferred license to the City of Boise. BHA paid the transfer fee of $11,500.00 to the State under protest and filed a complaint in district court. The State answered and filed a motion to dismiss for failure to state a claim on which relief could be granted. BHA appealed.
This case comes to the Court on review of grant of a Rule 12(b)(6) dismissal for failure to state a claim upon which relief can be granted. In Bradbury v. Idaho Judicial Council, 136 Idaho 63, 67, 28 P.3d 1006, 1010 (2001), this Court stated the standard of review relevant to this case:
The Court's standard of review for an order of the district court dismissing a case pursuant to I.R.C.P. 12(b)(6) is the same as the summary judgment standard of review. See Coghlan v. Beta Theta Pi Fraternity, 133 Idaho 388, 398, 987 P.2d 300, 310 (1999); see also Orthman v. Idaho Power Co., 126 Idaho 960, 962, 895 P.2d 561, 563 (1995). After viewing all facts and inferences from the record in favor of the non-moving party, the Court will ask whether a claim for relief has been stated. Coghlan, 133 Idaho at 398,987 P.2d at 310. "The issue is not whether the plaintiff will ultimately prevail, but whether the party is `entitled to offer evidence to support the claims.'" Id. citing Orthman, 126 Idaho at 962,895 P.2d at 563,quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 1686, 40 L.Ed.2d 90, 96 (1974) (citation omitted).
The constitutionality of a statute is a question of law. State v. Cobb, 132 Idaho 195, 197, 969 P.2d 244, 246 (1998). The party challenging a statute on constitutional grounds bears the burden of establishing the statute is unconstitutional and "must overcome a strong presumption of validity." Olsen v. J.A. Freeman Co., 117 Idaho 706, 709, 791 P.2d 1285, 1288 (1990).
This Court exercises free review over the trial court's conclusions of law to determine if the trial court correctly stated the principles of law and if the legal conclusions are supported by the facts as found. Nampa & Meridian Irrigation Dist. v. Washington Fed. Sav., 135 Idaho 518, 521, 20 P.3d 702, 705 (2001). The Court is "free to draw its own conclusions from the facts presented." Kootenai Elec. Coop. v. Washington Water Power Co., 127 Idaho 432, 435, 901 P.2d 1333, 1336 (1995).
BHA contends that the fee imposed under I.C. § 23-908(5) on those wishing to sell their liquor license is a disguised tax. Such a distinction is significant, BHA argues, because if the transfer fee is a tax, then it violates the uniformity and proportionality requirements for taxes as set forth in sections 2 and 5 of Article VII of the Idaho Constitution:
Idaho Const. art. VII, §§ 2 and 5.
The state has plenary power over the traffic of liquor within the state of Idaho pursuant to the Idaho Constitution, which provides that "the legislature of the state of Idaho shall have full power and authority to permit, control and regulate or prohibit the manufacture, sale, keeping for sale, and transportation for sale, of intoxicating liquors for beverage purposes." Idaho Const. art. III, § 26. The legislature passed I.C. § 23-908 pursuant to the power granted by the Constitution. That section in relevant part states, "The fee for transferring a liquor license shall be ten percent (10%) of the purchase price of the liquor license or the cost of good will, whichever is greater; except no fee shall be collected in the following events: [exceptions not applicable in this case]." I.C. § 23-908(5).
In State v. Doherty, 3 (Hasb.) Idaho 384, 29 P. 855 (1892), this Court addressed the constitutionality of a State liquor license fee. The same provisions of the Idaho Constitution at issue in that case are at issue here—Article VII, Sections 2 and 5. After quoting the relevant constitutional and code sections, this Court stated:
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