Ex parte City of Tuscaloosa

• Decision Date: 23 July 1999
• Parties: Ex parte CITY OF TUSCALOOSA and Ex parte Howell Lumber Company, Inc. (In re Howell Lumber Company, Inc. v. City of Tuscaloosa; and City of Tuscaloosa v. Howell Lumber Company, Inc.).
• Court: Alabama Supreme Court

757 So.2d 1182

Ex parte CITY OF TUSCALOOSA and

Ex parte Howell Lumber Company, Inc.

(In re Howell Lumber Company, Inc. v. City of Tuscaloosa; and City of Tuscaloosa v. Howell Lumber Company, Inc.).

1981.

Supreme Court of Alabama.

July 23, 1999.

Timothy H. Nunnally, asst. city atty., City of Tuscaloosa Legal Dep't, for the City of Tuscaloosa.

W. Cameron Parsons of Parsons & Sutton, Tuscaloosa, for Howell Lumber Company, Inc.

LYONS, Justice.¹

Howell Lumber Company, Inc. ("Howell Lumber"), and the City of Tuscaloosa ("the City") appealed to the Court of Civil Appeals from a judgment entered by the trial court after a bench trial. The Court of Civil Appeals affirmed the judgment in part and reversed it in part. Howell Lumber Co. v. City of Tuscaloosa, 757 So.2d 1173 (Ala.Civ.App.1997). Both parties then petitioned for certiorari review, and we granted their petitions. We affirm in part and reverse in part the judgment of the Court of Civil Appeals, and, as to case no. 1961569, we remand.

I. Factual Background and Procedural History

This litigation arises as a result of a taxation scheme through which the Alabama Legislature has given a municipality the authority to collect license fees from businesses, trades, or professions located outside the municipality's corporate limits, but within its police jurisdiction, subject to two limitations: (1) that the amount of such license fees should not be more than one-half of the amount of the license fees charged and collected for similar entities within the corporate limits; and (2) that the total amount of such license fees should not be greater than the cost of the services provided by a municipality within its police jurisdiction. See § 11-51-91, Ala.Code 1975, initially enacted over 50 years ago.

In the years since § 11-51-91 was enacted, this Court, through a line of cases, beginning with Alabama Power Co. v. City of Carbon Hill, 234 Ala. 489, 175 So. 289 (1937), and Hawkins v. City of Prichard, 249 Ala. 234, 30 So.2d 659 (1947), and culminating with Ex parte City of Leeds, 473 So.2d 1060 (Ala.1985), held that a municipality must be able to relate the license fee levied upon a particular business within the police jurisdiction but outside the city limits to the cost of municipal services rendered in the past to that business at its physical plant. In an obvious effort to nullify the effect of that line of cases, the Legislature amended § 11-51-91 in 1986 to eliminate the requirement that a municipality calculate the cost of services provided to any particular business within its police jurisdiction, so long as the total amount of the license fees collected in the police jurisdiction did not exceed the cost of services provided by the municipality to the police jurisdiction. See Act No. 86-427, Ala. Acts 1986 ("the Act"), amending § 11-51-91. Ironically, this Court overruled the City of Leeds line of cases just two years later, in State Department of Revenue v. Reynolds Metals Co., 541 So.2d 524 (Ala.1988). In Reynolds Metals, this Court replaced the requirement of a perbusiness determination with a presumption of reasonableness when the total receipts from license fees within the police jurisdiction do not exceed the amounts estimated to be reasonably necessary to provide municipality services to the police jurisdiction. The Court stated:

"The standard to be applied, to cases arising before or after the April 29, 1986, amendment to Code 1975, § 11-51-91, is as follows:

"A municipality must estimate the amount reasonably necessary to provide for the protection of the lives, health, and property of businesses and residents, and for the maintenance of good order and the preservation of public morals within its entire police jurisdiction. The municipality may then, by a properly adopted ordinance or resolution, set a license fee for businesses within its police jurisdiction, but outside its city limits, so that the total receipts from all such licenses do not exceed the amounts estimated to be reasonably necessary to provide these services to the police jurisdiction. No license fee charged to any business within the police jurisdiction, but outside the city limits, shall be more than one-half of the license fee charged to a similar business within the city limits. Such ordinances shall be presumed to be reasonable, and the burden shall be upon the business challenging the license fee charged to it to prove that such license fee is unreasonable or that the ordinance was illegally adopted or is violative of the statutory or fundamental law of the United States or the State of Alabama."

541 So.2d at 532.

Howell Lumber is a business located outside the corporate limits of the City, but within its police jurisdiction. Howell Lumber also is located within the Carroll's Creek Fire District.² An ordinance of the City requires businesses located in the City's police jurisdiction to purchase a business license. The purpose of the tax generated by these business licenses, the City says, is to pay for municipality services, such as police and fire protection, provided to businesses located outside the Tuscaloosa city limits but inside the Tuscaloosa police jurisdiction. Howell Lumber did not pay this license tax until October 1992, when it was required by the Tuscaloosa Revenue Department to do so.

Howell Lumber subsequently sued the City, asking the circuit court to declare that the City's collection of the license taxes from it for the years 1992, 1993, and 1994 was prohibited under § 2 of Act No. 86-427, amending § 11-51-91. Howell Lumber also made claims under 42 U.S.C. §§ 1983 and 1988, seeking (1) a declaration that the City's collection of a license tax from it was an unconstitutional denial of due process and equal protection; (2) an injunction against further imposition of the tax; (3) a refund of the license taxes it had paid for 1992, 1993, and 1994; and (4) attorney fees. The City counterclaimed, seeking a declaration that it was not required to respond to any police or fire calls within fire districts located within its police jurisdiction.

Before its 1986 amendment, § 11-51-91 stated:

"Any city or town within the state of Alabama may fix and collect licenses for any business, trade or profession done within the police jurisdiction of such city or town but outside the corporate limits thereof; provided, that the amount of such licenses shall not be more than one half the amount charged and collected as a license [sic] for like business, trade or profession done within the corporate limits of such city or town, fees and penalties excluded...."

The 1986 Act reads:

"AN ACT

"To amend Section 11-51-91, Code of Alabama, 1975, so as to clarify the meaning of said Section; to require a liberal construction of the meaning of said Section.

"Be It Enacted by the Legislature of Alabama:

"Section 1. Section 11-51-91, Code of Alabama, 1975, is hereby amended to read as follows:

"` § 11-51-91. Establishment and collection of license for conduct of business, trade or profession outside corporate limits of municipality.

"`Any city or town within the state of Alabama may fix and collect licenses for any business, trade or profession done within the police jurisdiction of such city or town but outside the corporate limits thereof; provided, that the amount of such licenses shall not be more than one half the amount charged and collected as a license [sic] for like business, trade or profession done within the corporate limits of such city or town, fees and penalties excluded; and provided further, that the total amount of such licenses shall not be in amount [sic] greater than the cost of services provided by the city or town within the police jurisdiction; and provided further, no calculation is required to be made by the municipal officials for the cost of services to any particular business or classification of businesses within the police jurisdiction so long as the total amount of such licenses collected in the police jurisdiction shall not be in an amount greater than the cost of services provided by the city or town to the police jurisdiction.... This section shall be given a liberal construction to effectuate its purpose and meaning.'

"Section 2. This Act shall not apply to business [sic] or homes laying [sic] within a fire district."

(Emphasis supplied to language added by the Act to § 11-51-91.)

The parties filed cross motions for summary judgment on the issue of the applicability of § 11-51-91, as amended, to Howell Lumber. The trial court entered a partial summary judgment in favor of the City. The trial court held that if § 2 of the Act were deemed to exempt from licensing those businesses located within both a municipal police jurisdiction and a fire district ("fire-district occupants"), then § 2 would exceed the scope of the Act's title. The trial court thus construed § 2 of the Act to mean that the amended version of § 11-51-91 would not apply to fire-district occupants. The court held instead that the unamended version of § 11-51-91 would remain in effect for fire-district occupants, while the amended version of the statute would apply to all other businesses in the police jurisdiction. The trial court further held, based upon Reynolds Metals, that the Act did not substantially affect the City's power to collect license taxes from businesses such as Howell Lumber; it wrote:

"Accordingly, even though the Court concludes, as explained hereinabove, that the `version' of Section 11-51-91 to which the Plaintiff is subject would be that which existed prior to the phrases and clauses added thereto by [Act No.] 86-427, the effect of Reynolds Metals Co. is to invest and imbue that version of that Code Section with essentially the same attributes as 86-487 served to apply to all businesses or homes located within a police jurisdiction but `laying [sic] within a fire district.'"

Partial Summary Judgment entered on August 25, 1994 (C.R.72-73).

After the court...