Brown v. BOARD OF EDUC. OF MONTG. COUNTY

• Decision Date: 02 May 2003
• Citation: 863 So.2d 73
• Parties: Joe BROWN et al. v. BOARD OF EDUCATION OF MONTGOMERY COUNTY et al. Elmore County v. Board of Education of Montgomery County et al. Susan V. Helms et al. v. Board of Education of Montgomery County et al. B. Elebash Agricola and Matthew Givens v. Board of Education of Montgomery County et al. Floyd Minor et al. v. Board of Education of Montgomery County et al. Ellen Brooks, District Attorney v. Board of Education of Montgomery County et al.
• Court: Alabama Supreme Court

863 So.2d 73

Joe BROWN et al. v. BOARD OF EDUCATION OF MONTGOMERY COUNTY et al.

Elmore County v. Board of Education of Montgomery County et al.

Susan V. Helms et al. v. Board of Education of Montgomery County et al.

B. Elebash Agricola and Matthew Givens v. Board of Education of Montgomery County et al.

Floyd Minor et al. v. Board of Education of Montgomery County et al.

Ellen Brooks, District Attorney v. Board of Education of Montgomery County et al.

1020755, 1020758, 1020763, 1020764, 1020768, and 1020773.

Supreme Court of Alabama.

May 2, 2003.

John E. Enslen of Enslen, Pinkston & Courtney, LLP, Wetumpka, for appellants Joe Brown, Rose Marie Brown, Christopher Brown, and other individual taxpayers in case no. 1020755.

George L. Beck, Jr., Gregory M. Biggs, and Terrie S. Biggs of George L. Beck, Jr., P.C., Montgomery, for appellant Elmore County in case no. 1020758.

James M. Sizemore, Jr., Montgomery, for appellants Susan V. Helms et al. in case no. 1020763.

Jeffery C. Duffey, Montgomery, for appellants B. Elebash Agricola and Matthew Givens in case no. 1020764.

J. Doyle Fuller, Montgomery, and L. Cooper Rutland, Jr., of Rutland & Braswell, Union Springs, for appellants Glenn Franklin Bayles, Floyd Minor, and Rawl T. Barksdale in case no. 1020768.

Eleanor I. Brooks, district atty., and Tracy L. Roberts, deputy district atty., Montgomery, in case no. 1020773.

James R. Seale of Hill, Hill, Carter, Franco, Cole & Black, P.C., Montgomery; Terry G. Davis of Davis & Hatcher, L.L.C., Montgomery; and James N. Walter, Jr., and John F. Andrews of Capell & Howard, P.C., Montgomery, for appellees the Board of Education of Montgomery County and its members.

Thomas T. Gallion III of Haskell Slaughter Young & Gallion, LLC, Montgomery; and Tyrone C. Means of Thomas, Means, Gillis & Seay, P.C., Montgomery, for appellee Montgomery County Commission.

Charles B. Paterson of Balch & Bingham, LLP, Montgomery, for amici curiae Montgomery Area Chamber of Commerce and Montgomery Interdemoninational Ministerial Alliance; Robert A. Huffaker of Rushton, Stakely, Johnston & Garrett, P.A., Montgomery, for amicus curiae Montgomery Education Foundation; David R. Boyd and Dorman Walker of Balch & Bingham, LLP, Montgomery, for amicus curiae Alabama Association of School Boards; and Tabor R. Novak, Jr., of Ball, Ball, Matthews & Novak, P.A., Montgomery, for amicus curiae A+ Education Foundation, in support of the appellants.

PER CURIAM.

On January 31, 2003, the Montgomery Circuit Court entered a judgment confirming the validity and legality of (1) $100 million in revenue warrants ("the warrants") issued by the Board of Education of Montgomery County ("the Board")¹ and (2) an ordinance ("the ordinance") enacted by the Montgomery County Commission ("the Commission") imposing a "Privilege License Tax Upon the Privilege of Engaging in Trades, Occupations and Professions in Montgomery County" ("the occupational tax").

The Montgomery County district attorney (on behalf of the taxpayers and citizens of Montgomery County), intervenor taxpayers (the district attorney and the intervenor taxpayers are hereinafter referred to collectively as "the taxpayers"), and Elmore County filed six notices of appeal. Upon motion of the parties, the six appeals were consolidated. We reverse and remand.

I. Facts

On August 19, 2002, the Board passed a resolution authorizing the sale and issuance of the warrants, and the Commission, by a vote of 3 to 2, enacted the ordinance, imposing a 1.5% tax on "Employee Compensation" and "Owner Compensation" (as those terms are defined in the ordinance) received by individuals who work in Montgomery County. Also on August 19, 2002, the Board filed this action seeking to have the warrants and the occupational tax validated in accordance with Ala.Code 1975, §§ 11-81-220 through XX-XX-XXX (included in Article 7 of Chapter 81, entitled "Validation of Bonds Prior to Issuance"). The proceeds of the occupational tax were pledged to the Board "for public school purposes, including, without limitation, the payment of the principal of, premium, if any, and interest on the Warrants."

In accordance with § 11-81-222(b), the trial court issued an order requiring taxpayers and citizens of Montgomery County to show cause by September 13, 2002, as to why the warrants should not be validated and confirmed. A copy of the trial court's order was published once a week for three consecutive weeks in the Montgomery Advertiser, a daily newspaper published in Montgomery County. A copy of the complaint and order was served on the district attorney of Montgomery County more than 18 days before the date set for the hearing on the complaint.

The district attorney answered the complaint, raising a number of legal defenses on behalf of taxpayers and citizens of Montgomery County. Numerous individual citizens, including citizens and taxpayers who reside outside Montgomery County, were permitted to intervene and to assert defenses. Of those entities that sought to intervene, only Elmore County and the Alabama State Employees Association were denied the right to intervene.² The trial court held a three-day hearing at which ore tenus evidence was presented; it then entered its final judgment.

II. Standard of Review

The trial court made 14 separate findings of fact, none of which is in dispute. This appeal concerns questions of law, including the interpretation of statutory provisions. Therefore, we review the issues presented by this appeal de novo, and the trial court's decision carries no presumption of correctness. Ex parte Baron Servs., Inc., [Ms. 1011635, April 4, 2003] ___ So.2d ___ (Ala.2003). Additionally, we note that an ordinance enacted by a local governing body "is presumed reasonable and valid, and that the burden is on the one challenging the ordinance to clearly show its invalidity." Jefferson County v. Richards, 805 So.2d 690, 706 (Ala.2001).³

III. Analysis

A.

The taxpayers assert several arguments against the imposition of the occupational tax, including, among others, (1) that Ala. Code 1975, § 40-12-4(a), does not authorize the Commission to impose the occupational tax because the occupational tax is not a franchise, excise, or privilege-license tax and, as it applies to most taxpayers, is not levied with respect to "privileges or receipts from privileges"; (2) that § 40-12-4(b) prohibits the imposition of the occupational tax both because it is a tax "measured by gross proceeds" and because it is not "levied uniformly"; (3) that the occupational tax violates the Due Process Clause and the Equal Protection Clause of the Fourteenth Amendment to the United States Constitution; and (4) that the occupational tax cannot be legally imposed on military personnel or lawyers. However, we need not address each of these arguments, because of our holding that the occupational tax violates § 40-12-4(b).

It is well established that "Alabama counties are creatures of statute, and thus `can exercise only that authority conferred on [them] by [the Legislature].'" Dillard v. Baldwin County Comm'n, 833 So.2d 11, 16 (Ala.2002) (quoting Jefferson County v. Johnson, 333 So.2d 143, 145 (Ala.1976)). This principle is true with regard to all county powers, including the power of taxation. Lightwave Techs., LLC v. Escambia County, 804 So.2d 176, 180 (Ala.2001). By enacting Ala.Code 1975, § 40-12-4(a), the Legislature authorized counties to impose certain taxes for school purposes⁴:

"(a) In order to provide funds for public school purposes, the governing body of each of the several counties in this state is hereby authorized by ordinance to levy and provide for the assessment and collection of franchise, excise and privilege license taxes with respect to privileges or receipts from privileges exercised in such county, which shall be in addition to any and all other county taxes heretofore or hereafter authorized by law in such county.... All the proceeds from any tax levied pursuant to this section less the cost of collection thereof shall be used exclusively for public school purposes, including specifically and without limitation capital improvements and the payment of debt service on obligations issued therefor."

(Emphasis added.)

However, the Legislature's grant in § 40-12-4(a) of taxing authority is expressly limited by § 40-12-4(b):

"(b) Notwithstanding anything to the contrary herein, said governing body shall not levy any tax hereunder measured by gross receipts, except a sales or use tax which parallels, except for the rate of tax, that imposed by the state under this title.... No such governing body shall levy any tax upon the privilege of engaging in any business or profession unless such tax is levied uniformly and at the same rate against every person engaged in the pursuit of any business or profession within the county; except, that any tax levied hereunder upon the privilege of engaging in any business or profession may be measured by the number of employees of such business or the number of persons engaged in the pursuit of such profession."⁵

B.

By beginning with the phrase, "[n]otwithstanding anything to the contrary herein," § 40-12-4(b) expressly trumps any contrary language in § 40-12-4(a) because we interpret "herein" as referring to anything else in § 40-12-4. Hence, anything in § 40-12-4(b) that is inconsistent with the levy of an occupational tax supersedes any reference in § 40-12-4(a) that could be read as encompassing such a tax. Black's Law Dictionary, 585 (7th ed.1999), defines an excise tax:

"A tax imposed on the manufacture, sale, or use of goods (such as cigarette tax), or on an occupation or activity.... —Also termed excise tax...."

Black's Law Dictionary, 1471, defines "occupation tax" as follows:

"An excise tax imposed for the privilege of carrying on a business, trade, or profession.... Also termed occupational tax."

(Some emphasis in definitions added; some emphasis original.) The introductory...