Case Title: City of Hueytown v. Burge

Citation: 342 So. 2d 339

Docket Number: 

State: alabama

Court: Alabama Supreme Court

Date: 1977-01-14T00:00:00Z

Document:
342 So. 2d 339 (1977)
CITY OF HUEYTOWN, a Municipal Corporation
v.
H. S. BURGE et al.
SC 1666.

Supreme Court of Alabama.
January 14, 1977.
Rehearing Denied February 25, 1977.
*341 James H. Weaver, Jr., Birmingham, for appellant.
Ralph L. Armstrong, Bessemer, for appellees.
Drayton N. Hamilton, Montgomery, for Ala. League of Municipalities, amicus curiae.
BEATTY, Justice.
This is an appeal from a decision of the Circuit Court of Jefferson County, Bessemer Division, holding that certain municipal ordinances of the City of Hueytown were void as applied to appellees and members of their class, and enjoining the city from collecting taxes or fees under those ordinances from members of that class. We modify and affirm.
The plaintiffs filed a complaint against the City of Hueytown in Jefferson Circuit Court, Bessemer Division, alleging that they were representatives of a class of merchants whose businesses were located outside Hueytown's city limits but within its police jurisdiction. The Court was asked to render the following relief:
1. To declare that Hueytown's Ordinances 3-J and 209 are unconstitutional, illegal and invalid as applied to the plaintiffs and others similarly situated;
2. To suspend the operation of those ordinances against plaintiffs and others similarly situated;
3. To declare that Ordinance 209 is unenforceable and uncollectible respecting sales made outside the City of Hueytown;
4. To determine that refunds should be made to the plaintiffs, attorneys fees and other costs to be paid, and equitable relief, if any, be awarded plaintiffs.
We quote pertinent parts of Ordinances 3-J and 209:
Ordinance No. 3-J
Ordinance No. 209:
Following the trial, the lower court awarded plaintiffs' relief, holding:
1. That Ordinances 3-J and 209 were void and of illegal effect as applied to plaintiffs and all other merchants similarly situated;
*342 2. That operation of such ordinances was suspended as applied to plaintiffs and all other merchants similarly situated;
3. That the City of Hueytown was permanently enjoined from interfering with the plaintiffs and all other merchants similarly situated in reference to collection of tax or fees imposed by such ordinances.
The City of Hueytown appeals from this order, citing Alabama Code, Tit. 37, § 733 (Recomp.1958) as authority for their position:
The quoted statute allows a municipality to assess a license tax against businesses located outside the corporate limits of the municipality but within the police jurisdiction in order to reasonably reimburse the city for supervision of the businesses so located, including police and fire protection. Atlantic Oil Company v. Town of Steele, 283 Ala. 56, 214 So. 2d 331 (1968); City of Homewood v. Wofford Oil Company, 232 Ala. 634, 169 So. 288 (1936). When such an assessment occurs it is presumed to be a valid exercise of the police power of a municipality unless it is shown that the city has manifestly abused its power or invalidity appears from the face of the ordinance itself. Atlantic Oil Company v. Town of Steele, supra; City of Andalusia v. Fletcher, 240 Ala. 110, 198 So. 64 (1940).
Our authorities have placed the burden on the challenger to establish affirmatively by competent evidence that abuse or invalidity exists, Franks v. City of Jasper, 259 Ala. 641, 68 So. 2d 306 (1953); City of Andalusia v. Fletcher, supra. Although these tax levies may not be imposed as a source of general revenue, Alabama Power Company v. City of Carbon Hill, 234 Ala. 489, 175 So. 289 (1937), the presumption that the ordinances are valid exercises of the municipality's police power, as we have indicated, requires that the challenger go forward with competent evidence that the city has imposed an illegal tax.
By stipulation, documents relating the operating expenses for the police and fire departments, together with records of the revenues received from business licenses and sales tax licenses, were admitted into evidence. Also admitted were a listing of licenses issued in the police jurisdiction for the years 1969-73 and a recapitulation of license tax collections for the years 1969-73 and a part of 1974.
Several witnesses testified for the plaintiff expressing various complaints concerning the inadequacy of protective services outside the city limits but within the police jurisdiction. Each of these witnesses paid business license and sales taxes to the City of Hueytown.
The license and sales tax revenue figures for police jurisdiction businesses are revealing. When compared with general revenue receipts they show:
On the other hand, general operating expenses for the fire and police departments during the same period were:
Obviously, the receipts from business licenses and sales tax collections from in-city sources far exceed those from police jurisdiction businesses, but this fact does not make legal the taxes imposed on the latter. Not only do the police and fire department expense records themselves fail to distinguish between in-city and police jurisdiction services, but the testimony of the mayor and the fire and police department heads establishes as a fact that in projecting their budgetary requirements no consideration has been given to the differences between the cost of rendering services to police jurisdiction businesses and those offered to others. The fire chief testified that it cost the city $158.83 for each fire call answered; however, this figure was an average based upon all such calls, whether inside or outside the city. On the question regarding cost allocation between such calls he testified:
He also testified that usually at the end of the year he would prepare a report of the in (city) and out calls for the information of the mayor and council, but he did not furnish them with any other statistics, and at budget hearings did not ask the council to make allocations for inside and outside operations.
The testimony of the police chief established the number of complaint calls and investigations inside and outside the city, the size of his staff, and the nature of the supervision extended. But on the subject of cost allocation this exchange occurred:
The mayor testified that revenue derived from these ordinances went into the general fund, after which he stated:
On the record we are convinced that the trial court was imminently correct in its order enjoining enforcement of these ordinances against these plaintiffs since it clearly appears that the city's decision to tax them was an arbitrary one, affirmatively shown to be based upon no effort to relate the fees to the reasonable cost of supervision. No such effort having been shown, it follows that the imposition of the taxes on police jurisdiction businesses was for general revenue purposes, an impermissible course of municipal action. Hawkins v. City of Prichard, 249 Ala. 234, 30 So. 2d 659 (1947); Tit. 37, § 733, Ala.Code.
Although this complaint originally was filed as a class action, which the defendant city denied in its answer, apparently no evidence was offered on the question nor did the trial court make an order determining whether the action should be so maintained as it is required to do under Rule 23, ARCP. This is necessary for reasons of notice to possible class members and ultimately to allow conformity with the requirements of the judgment under Rule 23(c)(3). There having been no such determination and order, the only parties-plaintiff before the Court were the individuals so named, and the judgment could extend only to them. It appears that none of the parties was prejudiced by the failure to make the class action determination, and none is claimed. Even so, that portion of the decree applicable to "all other merchants whose businesses are located within the police jurisdiction of the City of Hueytown, Alabama, but outside the corporate boundaries of the said City" is due to be stricken, and it is so ordered.
FAULKNER, JONES, ALMON and EMBRY, JJ., and FRANK B. EMBRY, Supernumerary Circuit Judge, sitting by designation of the Chief Justice, concur.
BLOODWORTH, MADDOX and SHORES, JJ., dissent.
MADDOX, Justice (dissenting).
The majority opinion concedes that an assessment such as here involved is presumed *345 to be valid and that the burden is on the challenger to show that the City has manifestly abused its power or that the ordinance is void on its face. Nevertheless, the majority holds, in effect, that the challenger sustained his burden in this case by showing that the City "in projecting their budgetary requirements no consideration has been given to the differences between the cost of rendering services to police jurisdiction businesses and those offered to others." The majority does not hold that the amount of the tax as a police measure was so much out of proportion to what was reasonable in relation to the challenger's business, "as to show that it is a subterfuge to raise revenue." Cf. Alabama Power Co. v. City of Carbon Hill, 234 Ala. 489, 175 So. 289 (1937).
The majority holds that "the city's decision to tax them was an arbitrary one, affirmatively shown to be based upon no effort to relate the fees to the reasonable cost of supervision." The majority then concludes: "No such effort having been shown, it follows that the imposition of the taxes on police jurisdiction businesses was for general revenue purposes, an impermissible cause of municipal action. Hawkins v. City of Prichard, 249 Ala. 234, 30 So. 2d 659 (1947); Tit. 37, § 733, Ala.Code."
In Hawkins, the mayor there testified that they were collecting "from these people outside the city limits money for use of the general welfare of everybody." 249 Ala. at 239, 30 So. 2d  at 663.
In fact, in Hawkins, the "revenue from licenses on filling stations paid the entire cost of the fire and police departments, for those years, when combined, with some left over for other purposes." (Emphasis added). Here, the evidence is undisputed, and the majority has conveniently set out in its opinion, that the total receipts from licenses and sales tax in the police jurisdiction represented a small portion of the operating expenses, not to mention capital expenditures, of the police and fire departments. Furthermore, there was evidence presented which showed that the City Council had available to it the total number of police calls and fire calls both in and out of the city. It was uncontradicted that the City, during the period 1969-1973, made 593 calls within the city and 158 calls out of the city. During the period 1969-1973, the City made 953 rescue calls in the city and 93 out of the city.
The police chief testified, as follows:
He also testified that he answered all calls both within and outside the city, and prepared a detailed report which showed the number of calls to businesses located within the police jurisdiction which showed a substantial number of calls to businesses, including several to "C&G Foodland," owned by one of the challengers. The Chief also testified as follows:
It is undisputed that adequate records are kept by the City to show that the license tax imposed was not out of proportion to the supervision required.
The trial court made no findings of fact. It merely held that the ordinances "are hereby declared void and of illegal effect." I think the trial court erred in determining that the levies were illegal. The guidelines for making the legal determination are set out in Hawkins, relied on so strongly by the majority. In Hawkins, it is said:
. . . . .
I believe the uncontradicted evidence shows that the City made "a sincere effort," as Justice Foster wrote in Hawkins, to predicate its tax upon a constitutional basis. Plaintiff Burge, probably without realizing it, testified to this sincerity. He stated that when complaints were made, the Mayor said "that the City of Hueytown was not in the business to make money but to sell services."
The record, in this case, in my opinion may show that Hueytown is losing money in furnishing services to the police jurisdiction. For instance, the police chief, as the majority concedes, testified that it cost the City $158.83 to make a fire call, and this did not include capital expenditures. The record is clear that 158 fire calls were made in the police jurisdiction between 1969-1973. Multiply 158 calls by $158.83 and the total is $25,095.14. The total amount collected by Hueytown from licenses and sales taxes between 1969-1973, was only $32,765.57. In other words, it cost Hueytown $25,095.14 of the $32,765.57 just to provide fire protection services (not including capital expenditures) in the police jurisdiction. The 93 rescue calls and 157 police calls shown by the record to have been made during the five-year period were provided by Hueytown, and it got $7,670.43 in exchange.
The record itself shows, in my opinion, that the ordinances were reasonable.
BLOODWORTH and SHORES, JJ., concur.