June 13, 1989

Mitchell D. Johnson
Keystone City Attorney
2902 West Main Street
Rapid City, SD 57702

OFFICIAL OPINION NO. 89-18

Municipal licensing of hotels and motels

Dear Mr. Johnson:

You have requested an official opinion from this Office in regard to the following factual situation:

FACTS:

The Town of Keystone, South Dakota, has enacted an ordinance requiring applications and licenses for any and all businesses within the city limits of Keystone, regardless of their business nature. Numerous statutes included in Title 9 of the South Dakota Code provide specifically for the municipal regulation and licensing of certain trades, occupations and businesses. The statutes do not, however, make any reference to hotels or motels, and consequently, Keystone's authority to require business applications and licenses from hotels and motel owners has been questioned.

Based upon the foregoing, you have asked the following question:

QUESTION:

May a municipality in South Dakota require hotel and motel owners to make application for a municipal business license?

GENERAL DISCUSSION:

It has long been recognized that municipal corporations are creatures of the State Constitution and statutes. They possess only those powers expressly granted by law together with those that are necessarily implied in, or incident to, the express powers granted. See Sioux Falls Municipal Employees Assoc., Inc. v. City of Sioux Falls, 233 N.W.2d 306, 309 (S.D. 1975); and Schryver v. Schirmer, 171 N.W.2d 634, 635 (S.D. 1969). Municipalities clearly have no inherent powers. Ericksen v. City of Sioux Falls, 14 N.W.2d 89, 95 (S.D. 1944). "In order to legislate upon or in reference to a particular subject or occupation [the municipality] must be able to point out the statute which gives it the power to do so." City of Chicago v. Chicago Beverage Co., 22 N.E.2d 708, 709 (Ill. 1939).

As you note in your opinion request, there are numerous statutes, many in Ch. 9-34 of the South Dakota Code, which expressly confer upon municipalities the power to regulate and require licenses for the practice of certain trades, occupations and businesses. Examples of trades, occupations and businesses subject to municipal regulation are plumbers, electricians, hawkers, peddlers, pawn brokers, bus drivers, taxi drivers, pool rooms, bowling alleys, and junk stores. See SDCL 9-34-8, 9-34-9, 9-34-10, 9-34-12, and 9-34-14. The list of trades, occupations and businesses that may, under express statutory language be regulated and licensed by municipalities continues at length. There does not, however, appear to be any statute which expressly provides for the municipal licensing of hotel and motel establishments.

There being no express municipal power to license hotels and motels, one must go on to consider whether the power is necessarily implied under any related statute or statutes. There is authority to suggest that the power to license may be implied under certain police powers such as that, for example, found under SDCL 9-32-1, the "power to do what may be necessary or expedient for the promotion of health or the suppression of disease" or SDCL 9-33-9, the "power to prevent and provide for remedying any dangerous construction or condition of any building, enclosure, or manufactory or any equivalent . . . and to require all buildings and places to be put and kept in a safe condition." See McQuillin on Municipal Corporations, 3d Ed., Sec. 26.22.

I do not believe, however, on comprehensive review of the present pertinent municipal statutes that the power to license hotels and motels must necessarily be implied from any of the general police power provisions. The State Legislature, in my opinion, by expressly and specifically setting forth in statute those trades, occupations and businesses that may be regulated and licensed by municipalities, has displayed an intent to exclude from municipal licensing those trades, occupations and businesses not specifically referred to in statute.

More direct evidence of that intent is found in recent amendments by the Legislature of Chs. 9-29 and 9-34 of the Code. The Legislature in 1985 and 1986 found it necessary to enact SDCL 9-29-26 and 9-34-17. Those sections expressly provide, respectively, for the municipal regulation of "family day care homes" and the "practice of tattooing." Their enactment certainly indicates that express statutory authority is required to properly establish any municipal business or trade licensing scheme.

In particular, with regard to the municipal licensing of hotels and motels, the need for specific statutory authority appears even more clear in view of SDCL Ch. 34-18. The statutes contained therein establish a state system of regulation and licensing over "lodging establishments" which by statutory definition include hotels and motels. An annual state license is required thereunder of all lodging establishments and the State Department of Health is empowered to adopt rules and regulations setting forth minimum public health and safety requirements for all lodging establishments. See SDCL  34-18-10 and 34-18-22. The existing State scheme of regulation over lodging establishments acts to negate any contention that similar municipal regulation and licensing is necessary under the general police powers. This statewide system also supports my conclusion that any municipal licensing power over hotels and motels must be expressly granted.

In short, my answer to your question is No. Municipalities of this State are not, in my opinion, authorized to require a municipal business license from the owners of hotel and motel establishments.

Respectfully submitted,

ROGER A. TELLINGHUISEN
ATTORNEY GENERAL

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