Coffee Cnty. Bd. of Educ. v. City of Tullahoma, No. M2017-00935-SC-R11-CV

CourtSupreme Court of Tennessee
Writing for the CourtHolly Kirby, J.
Citation574 S.W.3d 832
Parties COFFEE COUNTY BOARD OF EDUCATION v. CITY OF TULLAHOMA
Docket NumberNo. M2017-00935-SC-R11-CV
Decision Date08 May 2019

574 S.W.3d 832

COFFEE COUNTY BOARD OF EDUCATION
v.
CITY OF TULLAHOMA

No. M2017-00935-SC-R11-CV

Supreme Court of Tennessee, AT NASHVILLE.

October 4, 2018 Session
FILED May 8, 2019


Kristin Ellis Berexa and Mark E. McGrady, Nashville, Tennessee, for the Defendant/Appellant, City of Tullahoma.

Eric J. Burch, Manchester, Tennessee, for the Plaintiff/Appellee, Coffee County Board of Education.

Holly Kirby, J., delivered the opinion of the Court, in which Jeffrey S. Bivins, C.J., and Cornelia A. Clark, Sharon G. Lee, and Roger A. Page, JJ., joined.

574 S.W.3d 834

OPINION1

Holly Kirby, J.

This is one of five cases on appeal to this Court regarding the proper distribution of liquor-by-the-drink tax proceeds between a county and a municipality within the county. In each case, the county had not approved the liquor-by-the-drink sales, but the city had approved such sales. The Commissioner of the Tennessee Department of Revenue, who collects taxes on all liquor-by-the-drink sales, distributed tax proceeds to the defendant cities in accordance with the liquor-by-the-drink tax distribution statute, Tennessee Code Annotated section 57-4-306. The statute required the recipient cities to then distribute half of their proceeds "in the same manner as the county property tax for schools is expended and distributed." Tenn. Code. Ann. § 57-4-306(a)(2)(A) (2013). In each case, the recipient city distributed half of its tax proceeds to its own city school system and did not share the proceeds with the county. The counties sued the cities, claiming that the statute required the cities to distribute the tax proceeds as the counties distribute the county property tax for schools, which is pro rata among all schools in the county based on average daily attendance. In the instant case, the trial court granted summary judgment against the county and in favor of the city. The Court of Appeals reversed, concluding that the tax distribution statute plainly required the city to distribute half of its liquor-by-the-drink tax proceeds pro rata among all schools in the county. The city appeals. We agree with the city and hold that the distribution statute directed cities to expend and distribute half of their liquor-by-the-drink tax proceeds for the benefit of the city’s own school system, if any. In this case, because the city has its own school system, it was permitted to use half of its liquor-by-the-drink tax proceeds for its own school system, and it was not required to share those proceeds with the county or the county schools. Therefore, we reverse the Court of Appeals and affirm the trial court’s grant of summary judgment in favor of the city.

The issues in this case are better understood with some knowledge of the development of the pertinent liquor-by-the-drink statutes. Consequently, we offer some background on the history of the statutes before we outline the facts and analyze the issues.

The Liquor-By-The-Drink Act

During the years of federal prohibition (1920–1933), Tennessee had "bone dry" laws, which criminalized the sale, purchase, receipt, possession, transport, and manufacture of alcoholic beverages. City of Chattanooga v. Tenn. Alcoholic Beverage Comm'n , 525 S.W.2d 470, 472 (Tenn. 1975) ; Tenn. Op. Att'y Gen. 79-215 (May 3, 1979). After prohibition ended, Tennessee enacted a "local option" law authorizing counties to hold county-wide local option elections on whether to allow off-premises (package) sales of alcoholic beverages within their

574 S.W.3d 835

borders. City of Chattanooga , 525 S.W.2d at 472 ; Chadrick v. State , 175 Tenn. 680, 137 S.W.2d 284, 285 (1940) ; see also Templeton v. Metro. Gov't of Nashville & Davidson Cnty. , 650 S.W.2d 743, 754 (Tenn. Ct. App. 1983). "The ‘bone dry law’ continued in effect in counties not electing to come under the provisions of the local option law." City of Chattanooga , 525 S.W.2d at 472 ; see also Renfro v. State , 176 Tenn. 638, 144 S.W.2d 793, 794 (1940).

In 1967, the Legislature passed comprehensive legislation related to liquor sales for on-premises consumption, i.e., liquor by the drink (hereinafter "LBD"). We refer to this as "the LBD Act." The LBD Act "authorize[s] the sale of intoxicating liquors by the drink for consumption on the premises, impose[s] taxes upon such sales[,] and provide[s] for the collection thereof." Aetna Cas. & Sur. Co. v. Woods , 565 S.W.2d 861, 865 (Tenn. 1978). Initially, the LBD Act allowed only the largest counties to hold local option elections. See Tenn. Code Ann. § 57-164 (1968). Gradually, in increments, the Act was amended to allow all counties—as well as all municipalities—to approve LBD sales by local option election. See 1987 Tenn. Pub. Acts, ch. 456 § 2; 1992 Tenn. Pub. Acts, ch. 711 § 1.

In any jurisdiction that approves LBD sales, such sales can lawfully be made by the establishments enumerated in the statutes, including restaurants, hotels, and sports facilities. See Tenn. Code Ann. § 57-4-101 (2013). Private clubs are among the enumerated establishments, but they are also permitted to sell LBD even in counties or municipalities that have not adopted LBD.2

Tennessee Code Annotated section 57-4-301(c) levies a 15% tax on all LBD sales.3 Tenn. Code Ann. § 57-4-301(c) (2013). We refer to this as "the LBD tax." Retailers collect the LBD tax from consumers and then forward the tax proceeds to the Commissioner of the Tennessee Department of Revenue ("Commissioner"). See Tenn. Code Ann. § 57-4-302 (2013 & 2018). The Commissioner then distributes the LBD tax proceeds in accordance with the statute at issue in this case, Tennessee Code Annotated section 57-4-306. We refer to this as "the distribution statute."

This case involves the application of the distribution statute as it existed prior to the enactment of a July 2014 amendment (effectuated after these lawsuits were filed).4 The relevant versions of the distribution

574 S.W.3d 836

statute required the Commissioner to distribute 50% of all LBD tax proceeds to Tennessee’s "general fund to be earmarked for education purposes." Tenn. Code Ann. § 57-4-306(a)(1). The Commissioner was directed to distribute the remaining 50% of the tax proceeds back "to the local political subdivision" that generated the proceeds. Id. § 57-4-306(a)(2).

Important to this appeal, the remaining provisions of the distribution statute described what was to be done with the tax proceeds sent back to the originating local political subdivision. The distribution statute said that half of those proceeds would go to the general fund of the county, city, or town in which the taxes were generated. Id. § 57-4-306(a)(2)(B). The other half, the distribution statute stated, "shall be expended and distributed in the same manner as the county property tax for schools is expended and distributed." Id. § 57-4-306(a)(2)(A). Interpretation of this provision is the issue presented to us in this case.

Coffee County

The facts in the instant case are essentially undisputed. The City of Tullahoma ("the City") is located in Coffee County.5 The City has at all relevant times had its own municipal school system separate from the Coffee County school system.

In 1987, citizens of the City passed a referendum authorizing LBD sales within City limits. Coffee County has never approved LBD sales in the unincorporated areas of the county.

The Commissioner has at all times distributed LBD tax proceeds generated from sales in the City in accordance with the distribution statute—50% to the State general fund for education and 50% to the City as the "local political subdivision" from which the taxes were generated.6 See Tenn. Code Ann. § 57-4-306(a).

From the 50% of LBD tax proceeds distributed to the City, the City has at all times retained half of the proceeds in its general fund and distributed the other half to its own school system. The City has never distributed any LBD tax proceeds to Coffee County or to any other local school system in the County. This longstanding practice is consistent with Tennessee Attorney General opinions from the early 1980s interpreting the distribution statute. See Tenn. Op. Att'y Gen. 83-36 (Jan. 18, 1983); Tenn. Op. Att'y Gen. 82-21 (Jan. 20, 1982); Tenn. Op. Att'y Gen. 81-270 (Apr. 27, 1981); Tenn. Op. Att'y Gen. 80-457 (Sept. 19, 1980).

On May 30, 2014, the Plaintiff/Appellee Coffee County Board of Education (referred to collectively with Coffee County as "the County") filed this lawsuit against the City7 for damages based on its failure to distribute LBD tax proceeds to the County under the distribution statute over the previous thirty years.8 The claim focused

574 S.W.3d 837

on the language in the distribution statute requiring the local political subdivision—here, the City—to distribute half of its LBD tax proceeds "in the same manner as the county property tax for schools is expended and distributed." Tenn. Code Ann. § 57-4-306(a)(2)(A). According to the County, this language meant that the City was required to distribute the proceeds in the way the property tax for schools is "expended and distributed" by the County, which is pro rata with the...

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25 practice notes
  • State v. Welch, No. E2018-00240-SC-R11-CD
    • United States
    • Supreme Court of Tennessee
    • February 19, 2020
    ...to remedy or prevent, and the purpose sought to be accomplished in its enactment." Coffee Cnty. Bd. of Educ. v. City of Tullahoma , 574 S.W.3d 832, 845–46 (Tenn. 2019) (emphasis removed) (quoting Spires v. Simpson , 539 S.W.3d 134, 143 (Tenn. 2017) ).In her dissent in the Court of Crim......
  • State v. Deberry, W2019-01666-SC-R11-CD
    • United States
    • Supreme Court of Tennessee
    • August 30, 2022
    ...674, 676 (Tenn. 1975) ). We also consider "[t]he overall statutory framework." Coffee Cnty. Bd. of Educ. v. City of Tullahoma , 574 S.W.3d 832, 846 (Tenn. 2019). "[S]tatutes ‘in pari materia’—those relating to the same subject or having a common purpose—are to be construed to......
  • Yebuah v. Ctr. for Urological Treatment, PLC, M2018-01652-SC-R11-CV
    • United States
    • Supreme Court of Tennessee
    • June 2, 2021
    ...in the context in which they appear and in light of the statute's general purpose." Coffee Cnty. Bd. of Educ. v. City of Tullahoma , 574 S.W.3d 832, 839 (Tenn. 2019) (quoting Mills v. Fulmarque, Inc. , 360 S.W.3d 362, 368 (Tenn. 2012) ).III. ANALYSIS The issue on appeal to this Court i......
  • Martin v. Rolling Hills Hosp., LLC, No. M2016-02214-SC-R11-CV
    • United States
    • Supreme Court of Tennessee
    • April 29, 2020
    ...has not amended the statute to abrogate these allegedly erroneous judicial decisions. Coffee Cnty. Bd. of Ed. v. City of Tullahoma, 574 S.W.3d 832, 847 (Tenn. 2019) ("[L]egislative inaction following a contemporaneous and practical interpretation of a statute is considered persuasive e......
  • Request a trial to view additional results
22 cases
  • State v. Welch, No. E2018-00240-SC-R11-CD
    • United States
    • Supreme Court of Tennessee
    • February 19, 2020
    ...seeks to remedy or prevent, and the purpose sought to be accomplished in its enactment." Coffee Cnty. Bd. of Educ. v. City of Tullahoma , 574 S.W.3d 832, 845–46 (Tenn. 2019) (emphasis removed) (quoting Spires v. Simpson , 539 S.W.3d 134, 143 (Tenn. 2017) ).In her dissent in the Court of Cri......
  • Yebuah v. Ctr. for Urological Treatment, PLC, M2018-01652-SC-R11-CV
    • United States
    • Supreme Court of Tennessee
    • June 2, 2021
    ...in the context in which they appear and in light of the statute's general purpose." Coffee Cnty. Bd. of Educ. v. City of Tullahoma , 574 S.W.3d 832, 839 (Tenn. 2019) (quoting Mills v. Fulmarque, Inc. , 360 S.W.3d 362, 368 (Tenn. 2012) ).III. ANALYSIS The issue on appeal to this Court is whe......
  • Martin v. Rolling Hills Hosp., LLC, No. M2016-02214-SC-R11-CV
    • United States
    • Supreme Court of Tennessee
    • April 29, 2020
    ...has not amended the statute to abrogate these allegedly erroneous judicial decisions. Coffee Cnty. Bd. of Ed. v. City of Tullahoma, 574 S.W.3d 832, 847 (Tenn. 2019) ("[L]egislative inaction following a contemporaneous and practical interpretation of a statute is considered persuasive eviden......
  • Neurology v. Beavers, M2020-00553-COA-R3-CV
    • United States
    • Court of Appeals of Tennessee
    • June 18, 2021
    ...intent and purpose of the TPPA and anti-SLAPP statutes generally. See id. § 20-17-102 ; Coffee Cnty. Bd. of Educ. v. City of Tullahoma , 574 S.W.3d 832, 845–46 (Tenn. 2019) ("In all cases involving statutory construction, judges must look not only at ‘the language of the statute,’ but also ......
  • Request a trial to view additional results

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