Town of North Courtland v. Town of Courtland

• Decision Date: 03 April 1992
• Citation: 597 So.2d 1336
• Parties: . 1902017. Supreme Court of Alabama
• Court: Alabama Supreme Court

Page 1336

597 So.2d 1336

TOWN OF NORTH COURTLAND v. TOWN OF COURTLAND.

1902017.

Supreme Court of Alabama.

April 3, 1992.

Jerry D. Baker and David L. Rawls, Huntsville, for appellant.

W.H. Rogers, Moulton, for appellee.

HORNSBY, Chief Justice.

The Town of Courtland entered into a contract with the Tennessee Valley Authority ("TVA") in 1976 for the provision of electricity throughout Lawrence County, Alabama, including the Town of North Courtland. Because of Courtland's activities in regard to that contract, North Courtland sued Courtland in 1990, alleging that Courtland was operating a business within the police jurisdiction and corporate limits of North Courtland and was, therefore, liable for a privilege license tax that Courtland had not paid since 1985. North Courtland amended its original complaint to allege, as a third-party beneficiary of the TVA contract, breach of contract, unjust enrichment, conversion, and breach of fiduciary duty, based upon its contention that Courtland had failed to distribute a portion of "in lieu of tax" payments to North Courtland as North Courtland says Courtland is required to do by the contract between the TVA and Courtland.

While this action was pending in the Lawrence County Circuit Court, Courtland sought a declaratory judgment in the United States District Court for the Northern District of Alabama, asking that court to declare that North Courtland's license tax, as applied to Courtland, is invalid. The court held that "[b]ecause the Town of Courtland is contractually bound to operate its facility at a zero profit margin, hence not producing revenue, ... North Courtland may not impose a tax on the Town of Courtland's electric operation."

Following the district court's order, Courtland moved for a summary judgment in the circuit court. The court entered the following order, from which North Courtland appeals:

"This cause coming on to be heard on the defendant's Motion for Summary Judgment as to the plaintiff's claim for compensation and damages resulting from the furnishing of electricity by the Town of Courtland to the corporate limits and police jurisdiction of the Town of North Courtland, Alabama and the Court having considered the contract made and entered into as of the 27th day of May 1976, ... between Tennessee Valley Authority, a corporation created and existing under and by virtue of the Tennessee Valley Authority Act of 1933, as amended and the Town of Courtland, a municipal corporation existing under and by virtue of the laws of the State of Alabama; the rationale of The City of Sheffield, Alabama vs. Town of Cherokee, Alabama, Civil Action 89-AR-5073-NE (October 12, 1989), and the Order of Senior Judge Seybourn H. Lynne entered on the 28th day of December 1990 among the same parties in The Town of Courtland, Alabama, a municipal corporation vs. Town of North Courtland, a municipal corporation, Civil Action 90-L-1346-NE, wherein it was held that the Town of North Courtland could not impose a tax on the Town of Courtland's electric operation.

"FURTHERMORE, the Court finds that that portion of the original complaint wherein the plaintiff contends that a privilege license tax is applicable to the defendant for the furnishing of electricity within the corporate limits and the police jurisdiction of the Town of North Courtland and the amended complaint consisting of four Counts filed on the 14th day of December 1990 do not raise any genuine issue of a material fact.

"It is accordingly ORDERED, ADJUDGED and DECREED by the Court that there is no genuine issue of fact alleged in the original complaint and the amended complaint for the furnishing of electricity by the Town of Courtland, Alabama within the corporate and police jurisdiction of the Town of North Courtland, Alabama and Partial Summary Judgment is hereby awarded to the defendant thereon.

"DONE and ORDERED this 22nd day of March 1991.

"/s/ ______

"PHILIP REICH, CIRCUIT JUDGE"

Although the trial court purported to enter a partial summary judgment in favor of Courtland, we believe that, in effect, the trial court entered a complete summary judgment. The order states that "there is no genuine issue of fact alleged in the original complaint and the amended complaint for the furnishing of electricity by the Town of Courtland." It is our understanding of the order that the court found summary judgment to be appropriate on all of North Courtland's claims.

Rule 56, A.R.Civ.P., sets forth a two-tiered standard for entering a summary judgment. The rule requires the trial court, in order to enter a summary judgment, to determine (1) that there is no genuine issue of material fact and (2) that the moving party is entitled to a judgment as a matter of law. The burdens placed on the moving party by this rule have often been discussed by this Court:

" 'The burden is on one moving for summary judgment to demonstrate that no genuine issue of material fact is left for consideration by the jury. The burden does not shift to the opposing party to establish a genuine issue of material fact until the moving party has made a prima facie showing that there is no such issue of material fact. Woodham v. Nationwide Life Ins. Co., 349 So.2d 1110 (Ala.1977); Shades Ridge Holding Co. v. Cobbs, Allen & Hall Mortg. Co., 390 So.2d 601 (Ala.1980); Fulton v. Advertiser Co., 388 So.2d 533 (Ala.1980).' "

Berner v. Caldwell, 543 So.2d 686, 688 (Ala.1989) (quoting Schoen v. Gulledge, 481 So.2d 1094, 1096-97 (Ala.1985)).

The standard of review applicable to a summary judgment is the same as the standard for granting the motion, that is, we must determine whether there was a genuine issue of material fact and, if not, whether the movant was entitled to a judgment as a matter of law. Our review is further subject to the caveat that this Court must review the record in a light most favorable to the nonmovant and resolve all reasonable doubts against the movant. Wilson v. Brown, 496 So.2d 756, 758 (Ala.1986); Harrell v. Reynolds Metals Co., 495 So.2d 1381 (Ala.1986). See also Hanners v. Balfour Guthrie, Inc., 564 So.2d 412 (Ala.1990).

Because this action was not pending on June 11, 1987, Ala.Code 1975, § 12-21-12, mandates that the nonmovant, North Courtland, meet its burden by "substantial evidence." Bass v. SouthTrust Bank of Baldwin County, 538 So.2d 794, 797-98 (Ala.1989). Under the substantial evidence rule, the nonmovant must present "evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved." West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989). More simply stated, "[a]n issue is genuine if reasonable persons could disagree." Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issues of Material Fact, 99 F.R.D. 465, 481 (1982).

I. The Privilege License Tax

North Courtland's original complaint alleged that Courtland was liable for a privilege license tax because Courtland was furnishing electricity within the corporate limits and the police jurisdiction of North Courtland. As noted earlier, the United States District Court for the Northern District of Alabama held that North Courtland could not impose the license tax on Courtland. Town of Courtland, Alabama v. Town of North Courtland, Alabama, No. 90-L-1346-NE (N.D.Ala., Dec. 28, 1990). In so holding, the federal district court relied on City of Sheffield, Alabama v. Town of Cherokee, Alabama, No. 89-AR-5073-NW (N.D.Ala., Oct. 12, 1989). In City of Sheffield, the court held that a municipality may not "levy a tax against another municipal corporation which operates an electric operation on a non-profit basis pursuant to the TVA Act." In reaching its conclusion, the court in City of Sheffield recognized 16 U.S.C. § 831l (1988), which provides, in pertinent part, the following:

"In order to render financial assistance to those States and local governments in which the power operations of the Corporation are carried on and in which the Corporation has acquired properties previously subject to State and local taxation, the board is authorized and directed to pay to said States, and the counties therein, for each fiscal year, beginning July 1, 1940, ... percentages of the gross proceeds derived from the sale of power by the Corporation for the preceding fiscal year.... The payments herein authorized are in lieu of taxation, and the Corporation, its property, franchises and income, are expressly exempted from taxation in any manner or form by any State, county, municipality, or any subdivision or district thereof."

Id. (emphasis added).

The trial court was clearly justified in relying on City of Sheffield and the district court's recognition therein that § 831l prohibits a municipality from levying "a tax against another municipal corporation which operates an electric operation on a non-profit basis pursuant to the TVA Act." Therefore, because Courtland was entitled to a judgment as a matter of law on the issue regarding the privilege license tax, we affirm the summary judgment as to that issue.

II. Payments In Lieu of Taxes

North Courtland's amended complaint added four allegations to its original complaint. First, North Courtland, claiming to be a third-party beneficiary of the contract between the TVA and Courtland, alleged that Courtland had failed to comply with § 2 of the contract's "Schedule of Terms and Conditions" and had thereby breached the contract. The relevant parts of § 2 provide:

"2. Payments of or in Lieu of Taxes.

"(a) To the extent revenues are available after the satisfaction of all items set forth in paragraphs (1), (2), and (3) of section 6(a) of the contract ¹ of which these Terms and Conditions are a party, Municipality may take each year from the electric system, in lieu of...