Town of Spencer v. Town of East Spencer

• Decision Date: 03 December 1999
• Docket Number: No. 285PA98.,285PA98.
• Citation: 522 S.E.2d 297,351 N.C. 124
• Parties: TOWN OF SPENCER v. TOWN OF EAST SPENCER, Mayor Ronnie Rollings, Naomie Cowan, Thomas Mitchell, John G. Noble, III, John R. Rustin, Sr., Chris Sharpe and David R. Wray, Aldermen, and Diana Williams Cotton, Interim Town Administrator.
• Court: North Carolina Supreme Court

522 S.E.2d 297

351 N.C. 124

TOWN OF SPENCER v. TOWN OF EAST SPENCER, Mayor Ronnie Rollings, Naomie Cowan, Thomas Mitchell, John G. Noble, III, John R. Rustin, Sr., Chris Sharpe and David R. Wray, Aldermen, and Diana Williams Cotton, Interim Town Administrator.

No. 285PA98.

Supreme Court of North Carolina.

December 3, 1999.

Parker, Poe, Adams & Bernstein, L.L.P., by Anthony Fox and Jason J. Kaus, Charlotte, for plaintiff-appellant.

Ferguson and Scarbrough, P.A., by James E. Scarbrough, Concord, for defendant-appellees. LAKE, Justice.

The issues raised here on review require the interpretation of the North Carolina statutes and case law governing involuntary annexation of unincorporated areas by municipalities. Specifically, the issues are whether the question of priority between two competing municipalities is a "justiciable controversy" under the Declaratory Judgment Act and whether the inclusion of territory within the boundaries of another municipality in a resolution of intent to annex territory results in the loss of annexation jurisdictional priority.

Spencer and East Spencer are neighboring municipalities located in Rowan County, North Carolina. On 22 July 1996, East Spencer adopted a resolution of intent ("East Spencer resolution") declaring East Spencer's intent to annex an additional 133 acres of Rowan County. On 9 September 1996, East Spencer adopted an annexation services plan which slightly modified the description of the area to be annexed, but retained most of the territory described in the original East Spencer resolution. The resolution and the services plan included approximately two acres of territory already within the municipal boundaries of Spencer. On 8 October 1996, Spencer adopted its own resolution of intent ("Spencer resolution") to annex approximately eighty-seven acres of territory in Rowan County, a portion of which overlapped with the area described in the East Spencer resolution.

On 23 October 1996, Spencer filed a complaint in superior court seeking a declaratory judgment that Spencer had prior jurisdiction to annex the territory which both Spencer and East Spencer sought to annex. On 19 May 1997, Spencer's motion for summary judgment was granted based on the contention that the East Spencer resolution violated N.C.G.S. § 160A-36(b)(3) by attempting to annex territory within Spencer's municipal boundaries, and therefore, Spencer had adopted the first valid resolution. East Spencer appealed to the Court of Appeals, which reversed the trial court and held there was not a justiciable controversy under the Declaratory Judgment Act and, therefore, the trial court lacked jurisdiction. The Court of Appeals went on to address the merits of the case and held the East Spencer resolution was not void and could be amended without loss of priority as to the Spencer resolution.

For the reasons stated below, we reverse the Court of Appeals and hold that the determination of prior jurisdiction raised by competing resolutions of intent is a justiciable controversy under the Declaratory Judgement Act. Additionally, we hold that a resolution of intent to annex territory which includes any territory already within the boundaries of another municipality is void and will lose priority to an intervening and competing valid resolution of intent.

I.

Part 2, article 4A of chapter 160A of the North Carolina General Statutes governs involuntary annexation by cities which have populations of less than five thousand, such as Spencer and East Spencer. The detailed nature of the annexation scheme in part 2 "manifests the legislature's intent to require towns and cities to consider carefully the consequences of involuntary annexation of a particular territory." Town of Hazelwood v. Town of Waynesville, 320 N.C. 89, 93, 357 S.E.2d 686, 689 (1987).

An involuntary annexation proceeding is initiated by the adoption of a "resolution of intent" pursuant to section 160A-37. In order to provide ample time for public review and challenge of an annexation proposal, the effective date of the annexation is required to be at least one year from the date of public notice of the area identified for annexation. N.C.G.S. § 160A-37(i), (j) (1998).

In the case sub judice, the Court of Appeals' opinion provides a detailed analysis of the difference between a "resolution" and an "ordinance" and the appropriateness of the application of the Declaratory Judgment Act (the Act) to each. Although the opinion is very well reasoned, it overlooks precedent established by this Court that the enactment of a resolution of intent establishes a municipality's "prior jurisdiction" in annexation proceedings involving contested territory with regard to another municipality. See Town of Hazelwood,320 N.C. at 93,357 S.E.2d at 688. Therefore, a dispute between two municipalities having competing resolutions of intent is, in essence, a dispute over jurisdictional priority, and the Court of Appeals erred in holding this was not a "justiciable controversy" under the Act.

The purpose of the Act is "`to settle and afford relief from uncertainty and insecurity, with respect to rights, status, and other legal relations.'" Nationwide Mut. Ins. Co. v. Roberts, 261 N.C. 285, 287, 134 S.E.2d 654, 657 (1964) (quoting Walker v. Phelps, 202 N.C. 344, 349, 162 S.E. 727, 729 (1932)). "Any person ... whose rights, status or other legal relations are affected by a statute, municipal ordinance, contract or franchise, may have determined any question of construction or validity arising under the instrument, statute, ordinance, contract, or franchise, and obtain a declaration of rights, status, or other legal relations thereunder." N.C.G.S. § 1-254 (1996). However, "[t]he enumeration in G.S. 1-254 ... does not limit or restrict the exercise of the general powers conferred [to courts] in G.S. 1-253 in any proceedings where declaratory relief is sought, in which a judgment or decree will terminate the controversy or remove an uncertainty." N.C.G.S. § 1-256 (1996). This Court has interpreted section 1-256 as "enlarg[ing] the specific categories mentioned elsewhere in the statute," Town of Tryon v. Duke Power Co., 222 N.C. 200, 205, 22 S.E.2d 450, 453 (1942), and the legislature has stated its intent that the Act be liberally construed and administered, N.C.G.S. § 1-264 (1996).

For a court to have jurisdiction under the Act, it is required only "`that the plaintiff shall allege in his complaint and show at the trial, that a real controversy, arising out of ... opposing contentions as to... respective legal rights and liabilities ... exists between or among the parties, and that the relief prayed for will make certain that which is uncertain and secure that which is insecure.'" N.C. Consumers Power, Inc. v. Duke Power Co., 285 N.C. 434, 449, 206 S.E.2d 178, 188 (1974) (quoting Carolina Power & Light Co. v. Iseley, 203 N.C. 811, 820, 167 S.E. 56, 61 (1933)). A justiciable controversy exists when litigation to resolve the controversy appears to be unavoidable. Ferrell v. Department of Transp., 334 N.C. 650, 656, 435 S.E.2d 309, 313 (1993).

In its analysis of the controversy between Spencer and East Spencer, the Court of Appeals likened an annexation resolution of intent to a "proposed" but not yet enacted ordinance. Town of Spencer v. Town of East Spencer, 129 N.C.App. 751, 756, 501 S.E.2d 367, 371 (1998). Relying on this Court's holding in City of Raleigh v. Norfolk S. Ry. Co., 275 N.C. 454, 464, 168 S.E.2d 389, 396 (1969), that a proposed ordinance does not present a justiciable controversy under the Act, the Court of Appeals held a resolution of intent also does not present a justiciable controversy. Town of Spencer, 129 N.C.App. at 756, 501 S.E.2d at 371. This analysis, however, ignores precedent established by this Court that annexation resolutions of intent are not so ephemeral as a proposed ordinance, since they have substantive legal effect by conclusively determining prior jurisdiction. See Town of Hazelwood, 320 N.C. at 93, 357 S.E.2d at 688; City of Burlington v. Town of Elon College, 310 N.C. 723, 728, 314 S.E.2d 534, 537 (1984). Precedential cases such as these have established that the prior jurisdiction to annex territory is determined as of the date of the adoption of a valid resolution of intent. In the case of municipalities with competing resolutions of intent, postponement of the determination of the priority of jurisdictional interests until the completion of the annexation process would result in wasted municipal expense and manpower expended in futile efforts to annex unavailable territory and would delay inevitable litigation regarding a substantial right. This result contravenes the purpose of the Act to expeditiously settle a case and afford relief from uncertainty where litigation appears to be unavoidable.

East Spencer contends that even if disputes between competing resolutions of intent present a justiciable controversy, there was no risk of litigation in this case, as required by the Act. It is an undisputed fact that the East Spencer resolution contained a two-acre tract of land which was within Spencer's municipal boundaries. East Spencer contends the inclusion of the two-acre tract was inadvertent and, had the trial court not entered an injunction, East Spencer would have corrected the resolution. Although the lack of dispute over the ownership of the two acres simplifies analysis of the issue, East Spencer's contention fails to recognize that the justiciable issue in this case is not whether the inclusion of the two acres was inadvertent or whether the resolution would be corrected, but whether East Spencer's jurisdictional priority was impacted by the inclusion of those two acres in its initial resolution of intent. As to this issue, we reverse the Court of Appeals and hold the validity of a resolution of intent to annex land for the purposes of determining prior jurisdiction is a justiciable issue under the Act.

II.

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