Original Author: Hemsley, Sid
Date of Material: 02/08/1996
Businesses--Licenses and permits
Licenses and permits
Zoning--Laws and regulations
Denying a Business License to a Person Whose Business Establishment is in Violation of the City's Zoning Ordinance
Reviewed Date: 06/18/2021
MTAS was asked whether the city can deny a business license to a person whose business establishment is in violation of the city's zoning ordinance.
Can the city deny a business license to a person whose business establishment is in violation of the city's zoning ordinance?
The answer is clearly no.
That precise question arose in State ex rel. Polin v. Hill, 547 S.W.2d 916 (1977). There the City of Gatlinburg refused to issue business licenses to four businessmen whose businesses the city claimed were in violation of the zoning ordinance and another ordinance that prohibited activities that interfered with the normal use of adjacent sidewalks [Ordinance 330]. Section 5 of the latter ordinance provided that:
[A]ny officer or employee of the City of Gatlinburg charged with the responsibility of issuing privilege licenses is hereby authorized to refuse to issue a Privilege [sic] license to any applicant when it is apparent that the contemplated activities under the privilege license for which application is made involve activities made unlawful by this ordinance.
The Tennessee Supreme Court held illegal the city's denial of the businesses licenses, saying:
Section V [sic] of Ordinance 330 cannot be used to deny relators the right to procure a license required by the Business Tax Act, a state law of general application. Nor can the zoning ordinance be enforced by the indirect method employed here. [At 918]
The Court reasoned that under the Business Tax Act the city had only the power with respect to the issuance of business licenses contained in that Act, that under that Act "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 license," and that:
Enforcement of these ordinances must be by direct proceedings as prescribed by law wherein the possession or non-possession of the privilege license required by T.C.A. 67-5819 is as irrelevant as compliance or non-compliance with said ordinances are to this proceeding. [AT 917, 918]
Under Polin, if an applicant tenders the money for a business license, the Business Tax Act requires that the license be issued, and the city cannot use any other grounds to deny the applicant the license.
Sidney D. Hemsley
Senior Law Consultant