Title: Eagerton v. Williams
Citation: 433 So. 2d 436
Docket Number: N/A
State: Alabama
Issuer: Alabama Supreme Court
Date: April 8, 1983

433 So. 2d 436 (1983)
Ralph P. EAGERTON, Jr., as Commissioner of Revenue, State of Alabama; Annie Laurie Gunter, as Treasurer, State of Alabama; Mack McWhorter, as Chairman of the Montgomery County Commission; William H. Lyerly, as Tax Collector for Montgomery County; Marvin Driver, as Tax Assessor for Montgomery County; Tommy Miller, as Chief Appraiser for Montgomery County
v.
James Harmon WILLIAMS, et al.
81-344.

Supreme Court of Alabama.
April 8, 1983.
Rehearing Denied June 3, 1983.
*437 J. Knox Argo, of Argo &amp; Enslen and James W. Webb of Webb, Crumpton &amp; McGregor, Montgomery, and Charles A. Graddick, Atty. Gen., and Ron Bowden, Asst. Atty. Gen., for appellants.
Morris S. Dees, and David B. Byrne, Jr. and John M. Bolton, III of Robison &amp; Belser and Walter B. Chandler, III of Chandler &amp; Pool, Montgomery, for appellees.
Thomas W. Thagard, Jr. and William P. Cobb, II of Smith, Bowman, Thagard, Crook &amp; Culpepper, Montgomery, for amici curiae Montgomery County Bd. of Educ. and Alabama Ass'n of School Bds.
Edward Still, Birmingham, for amici curiae Alabama Educ. Ass'n, Inc., and "Weissinger Plaintiff Class."
M.P. Ames of Reeves &amp; Stewart, Selma, for amici curiae R.W. Buchanan, R.W. Buchanan, Jr., Wallace A. Buchanan, William G. Buchanan, A.F. Caley, Jr. and wife, Mae M. Caley, Kaye C. Plummer and husband, James Floyd Plummer, Fred Holladay, Jr., L.Y. Sadler, Jr., First Nat. Bank of Mobile as trustee, and R.W. Buchanan, Wallace A. Buchanan, Richard W. Buchanan, Jr., William G. Buchanan as trustees, intervening appellees.
Drayton N. Hamilton, Montgomery, for amicus curiae Alabama League of Municipalities.
ALMON, Justice.
This case involves a class action suit brought by certain rural land owners in Montgomery County challenging the method used by the county tax assessor to determine current use valuation of land for ad valorem tax purposes as being contrary to the provisions of Amendment No. 373, Constitution of Alabama (1901) and Act No. 135, Acts of Alabama, 2nd Special Session, *438 1978.[1] We affirm the trial court's holding that the Montgomery County Tax Assessor assessed plaintiffs' land at fair market value instead of current use value and thus did not comply with Act No. 135, but we reverse in part and remand on other grounds.
To convey a fuller understanding of this case, we shall recount the recent history of ad valorem taxes in Alabama in general and in Montgomery County in particular. In Weissinger v. Boswell, 330 F. Supp. 615 (M.D.Ala.1971), a three-judge federal panel held that the lack of uniformity in ad valorem taxes across Alabama violated the federal and state constitutions. The court concluded,
Id., at 625.
The Court below described the efforts of the Montgomery County Tax Assessor to comply with the order in Weissinger, supra, as follows:
The trial court then set out the Rural Land Schedule, but we reserve it for a more pertinent point in the opinion, infra.
State-wide, the reappraisals ordered by the Weissinger court took considerably longer to complete than the one year contemplated by the federal court.[2] It became clear that many Alabama landowners' property taxes would increase significantly. In 1978, the Governor called the legislature into special session to avert the substantial increases in ad valorem taxes imminent under the new appraisals.[3]
*439 Included in the governor's tax relief package was a proposed amendment to Section 217 of the Constitution of Alabama of 1901. It passed the legislature, was ratified by the people, and is now Amendment No. 373 to the Constitution of 1901. In pertinent part, it reads:
To implement this constitutional amendment, the legislature passed Act No. 135[4] in the above-mentioned special session. Act No. 135, set out in pertinent part below, provided for the appraisal of Class III property at current use value upon application by the property owner:
Although Act No. 135 directed the Department of Revenue to prescribe all rules and regulations needed to implement the overall act, the department failed to issue any guidelines or regulations by the May 1, 1979, deadline except to establish March 31, 1979, as a cut-off date for applications for current use treatment. As a result, the legislature responded with guidelines of its own in the form of House Joint Resolution No. 153, 1979 Ala. Acts 269 (hereinafter referred to as H.J.R. 153).[5]
Through H.J.R. 153, the legislature recommended that the current use value of agricultural and forest property be determined from a "net income" formula. This formula established ten soil groups along with a suggested net income per acre, the net income being capitalized at a percentage based on the most recent five-year average of the interest rates on long-term United States Government bonds.[6]
In the wake of H.J.R. 153, the Department of Revenue finally issued a regulation pursuant to the authority granted by Act 135. This regulation, dated June 1, 1979, extended the deadline for applications to June 15, 1979, and set forth the method to be used by tax assessors in determining the current use value of Class III property. It provided, inter alia, as follows:
Just over a week later, however, on June 12, 1979, the commissioner issued another order which revoked all previous extensions of the application deadline and rescinded paragraph 5(b) of the above regulation. The commissioner instructed the tax assessor of each county to revalue property involved in current use applications "in accordance with the provisions of Code of Alabama, 40-7-25.1 using his discretion." This new regulation failed to set out any alternative to the net income method of H.J.R. 153. Accordingly, for the tax year ending September 30, 1979, county tax assessors were left with a short period in which to exercise their "discretion" and formulate a current use schedule.
In Montgomery County, tax assessor Marvin Driver worked with his chief appraiser, Tommy Miller, and established a "Current Use Schedule" within the brief time allotted. Under this schedule, parcels of land in Montgomery County containing ten acres or more and being used for agricultural, pasture, or forestry purposes were assigned a current use value taken from the following "Current Use Land Pricing Schedule," also formulated by Miller. The Current Use Schedule stated that "current use value and market value are one and the same."
As the trial court noted, each of these current use values was identical to the highest fair market value for the corresponding type of land as set out in Montgomery County's Rural Land Schedule. This schedule, mentioned above in connection with the Weissinger reappraisal, is as follows:
*443 Note that the figures in the "State Paved, Zone B" column are the same as the "current use values" in Miller's Current Use Land Pricing Schedule.
After Montgomery County implemented the above current use schedule, James Williams, Pat McIntyre, John Dees, and Morris Dees brought an action in the Circuit Court of Montgomery County on October 1, 1979, on behalf of themselves and all landowners who own rural Montgomery County land composed of cropland, pastureland, or timberland upon which ad valorem taxes are assessed. These plaintiffs claimed that the named defendants, officers and employees of Montgomery County and the State of Alabama, had illegally failed to comply with Act 135 by continuing to assess agricultural, pasture, and forest land in Montgomery County at fair market value.
The trial court found for the plaintiffs in the extensive and well-reasoned opinion from which excerpts are quoted herein and set out the following in the accompanying order: the defendants had illegally failed and refused to comply with Act 135; the value of agricultural and forest property in Montgomery County should be reassessed based upon the current use provisions of Act 135; each rural landowner should recover the amount of ad valorem taxes illegally collected; and the attorney's fees and costs should be paid out of the "pool of assets" created by the tax refund.
From this order and the final judgment thereon, the defendants now appeal. We shall first address the major issue of whether the appellants incorrectly applied Act No. 135.
I. Did the appellants illegally fail to comply with Act No. 135 in determining the current use value of agricultural and forest land in Montgomery County?
The trial court found:
We find no error in the trial court's holding that the Montgomery County Tax Assessor, through his appraiser, drafted Montgomery County's "Current Use Land Pricing Schedule" by merely copying the nine highest fair market values from the "Rural Land Schedule" which was prepared and used for fair market value ad valorem assessment prior to Act No. 135. This being the case, current use value in Montgomery County would necessarily incorporate and include all the factors which had previously been considered in the computation of the fair market value of agricultural and forest land in Montgomery County.
The record reflects that one such factor previously considered in determining fair market value and now included within current use value, is the price that a willing buyer of agricultural or forest land would pay a willing seller of such land. The plaintiffs' expert, O.G. Pinkston, testified, however, and the trial court found, that the price between a willing buyer and seller, even of agricultural or forest land, will take into consideration other possible uses of the land such as uses for speculation, tax shelters, home sites, etc. As a result, the use of such a price for current use value directly contravened the express mandate of Act 135. Section 4 of the Act clearly states that "no consideration shall be taken of the prospective value such property might have if it were put to some other possible use ... as if there were a legal prohibition against its use for any other purpose."
In addition, by deciding to simply copy figures off of the pre-current-use "Rural Land Schedule," those responsible for Montgomery County's ad valorem assessments were continuing to appraise agricultural and forest land using fair and reasonable market values. Yet, turning again to the language of Section 4 of Act 135, we find that it specifically prohibits substitution of fair and reasonable market value for current use value. "For ad valorem tax years beginning on and after October 1, 1978, ... the assessor shall base his appraisal of the value of [Class III] property on its current use on October 1 in any taxable year and not on its fair and reasonable market value." (Emphasis added.)
We quote again from the trial court's opinion to emphasize that Miller did not apply current use value as mandated by Act No. 135:
This attempt by Miller to explain his schedule by reference to capitalization of income tacitly acknowledges that the method for determining current use value set out in H.J.R. 153 is consistent with the legislative intent expressed in Act No. 135, and that the method he used is not consistent with that intent. It is evident, therefore, that current use value was not determined in Montgomery County in accordance with the terms of Act No. 135. Substituting "fair and reasonable market value" for current use value was absolutely contrary to the directives of Act No. 135.
II. Were appellees who failed to apply for current use valuation proper parties in the action below?
The trial court, "upon plaintiffs' motion, certified this action as a class suit under Rule 23(c)(2), the class being defined as:
This delineation of the class comes directly from the county's current use schedule as set out above. We hold that the trial court erred by including property owners within the class without regard to whether they had applied for current use valuation.
Amendment 373, paragraph (j), provides that, on and after October 1, 1978, Class III property "shall, upon application by the owner of such property, be assessed at the ratio of assessed value to the current use value of such taxable property and not the fair and reasonable market value of such *447 property." (Emphasis added.) Act 135 specifies that the assessor shall appraise Class III property at current use value "upon request by the owner of such property as hereinafter provided...." (Emphasis added.) Thus both the Constitution and the statute clearly require application for current use treatment as a condition of the right to such treatment.
The trial court held that "[i]t would have been futile for a landowner to have requested current use valuation under Act No. 135 since defendants' procedures and price schedules precluded such treatment in advance of such application being made." This conclusion cannot be sustained, because the right to current use valuation depends upon a timely application therefor.
We agree with the holding in Cooper v. Board of Equalization of Madison County, 392 So. 2d 244 (Ala.Civ.App.1980), that the right to current use assessment does not arise in a landowner who fails to timely file a request for current use valuation. As explained in Cooper, current use treatment is an exception to the rule of fair market valuation. Hence, of the landowners included in the class by the trial court, those who did not file for current use treatment never possessed the right to such treatment.
The result is that those landowners who did not file never possessed the very right which the action below sought to protect; therefore, they should not have been included as members of the class. The rule is well settled that to be a proper party plaintiff, a person must have an interest in the right to be protected. See, e.g., Bagley v. City of Mobile, 352 So. 2d 1115 (Ala.1977). By the same reasoning, the named plaintiffs who did not apply had no right to relief.
The trial court's reliance on the futility doctrine is misplaced. Montgomery County did not publish the Current Use Schedule or the Current Use Land Pricing Schedule until after the June 15, 1979, deadline, which was the latest deadline for applications allowed by the Commissioner. Montgomery County landowners could not have known in advance that the tax assessor would assess Class III property at fair market value instead of current use value. Even if they somehow had known this, an application would have been a prerequisite to challenging the schedule, as discussed above.
Regarding the deadline beyond which applications were untimely, we find that the commissioner's June 12 order revoking all prior extensions was unreasonable. Act No. 135 required the commissioner to timely issue rules and regulations; the only such regulation timely issued was one extending the deadline for applications. Taxpayers would have been justified in relying on this and other extensions, so the commissioner cannot make these applications untimely after the fact.
III. Should the appellees who properly applied for current use treatment have been required to exhaust their administrative remedies?
The appellants argue that the trial court had no jurisdiction to hear this cause because the plaintiffs failed to pursue the statutorily-provided remedies for challenging tax assessments prior to instituting this action.
Section 5(d) of Act 135 provides:
Code 1975, § 40-3-19, grants property owners a hearing before the county board of equalization to present objections to assessments or valuations of property. Sections 40-3-24 and -25 grant the right of, and the procedure for, appeal from the board of equalization's order to the circuit court. Sections 40-7-45 through -48 grant a more general right of appeal from "any final assessment or valuation of property for taxation made by any officer, board, or commission...."
*448 Appellants cite such cases as City of Gadsden v. Entrekin, 387 So. 2d 829 (Ala. 1980), and Ex parte Board of Educ. of Blount Co., 264 Ala. 34, 84 So. 2d 653 (1955), for the proposition that failure to exhaust administrative remedies bars the appellees from bringing this suit. Appellees contend the doctrine of exhaustion of remedies does not apply in this case because they are challenging the assessment procedure employed by appellants as void and illegal. We agree that the method used in Montgomery County was illegal on its face, and thus the appellees were entitled to challenge the appellants' actions without exhausting their administrative remedies.
In Graves v. McDonough, 264 Ala. 407, 88 So. 2d 371 (1956), the taxpayer sought a declaratory judgment that the comptroller should refund taxes paid on an erroneous assessment of property which the assessor deemed to have escaped assessment in previous years. This Court affirmed the judgment for the plaintiff:
Id., 264 Ala. at 409, 88 So. 2d 371. This Court followed the above reasoning and reached the same result in Thorn v. Jefferson County, 375 So. 2d 780, at 788 (Ala.1979). Compare City of Gadsden v. Entrekin, 387 So. 2d 829 (Ala.1980), where it is observed that exceptions to the doctrine of exhaustion of remedies in zoning matters
Id., at 833, citing 101A C.J.S. Zoning and Land Planning § 281 (1979).
The appellees herein challenged the Montgomery County current use schedules as illegal applications of the current use law. The trial court held as follows:
We agree with appellees and with the trial court that this case fits within the exceptions to the exhaustion of administrative remedies doctrine. Questions of law and of statutory construction preponderate over those of fact. The appellees challenged the county's application of the current use law in its entirety, not as it applies to particular pieces of property. Thus, the rationales for the exhaustion doctrineprotection of the courts from a multiplicity of suits, fact-finding and record-building by administrative bodies, etc.do not apply to this action.
As explained under Issue I above, the Montgomery County current use schedules were indeed contrary to the legislative intent expressed in Act 135. Under the exceptions set out in the authorities cited above, the appellees need not have exhausted their administrative remedies instead of bringing this action.
IV. Was class action an appropriate mode of relief for the appellees?
Appellants contend that the trial court erred in certifying this action as a class action because questions of law or fact common to the members of the class do not predominate over questions affecting only individuals. Rule 23(b)(3), A.R.Civ.P. We hold that the trial court correctly determined that a class action was superior to other available methods of adjudication and that the common burden of proving illegal the ad valorem tax assessment schedule predominated over any questions affecting only the individual appellees.
The appellees challenged the tax as it applied to all of Montgomery County, not as it applied to them individually. Reassessments of property belonging to class members would be merely administrative calculations, however, once the court decided the controlling common question of whether appellees properly applied Act 135. As the trial court observed,
For this reason, a class action was proper, despite the fact that all the appellees were not identically situated. See, Thorn v. Jefferson County, surpa, in which this Court held that a class action was a permissible vehicle to restrain the enforcement of an invalid tax and to recover any taxes illegally paid.
We do note, however, that membership in the class should have been limited to those landowners who had filed for current use treatment. See discussion of Issue II above.
V. What relief is now available for the appellee landowners?
We find that the appellees who are properly in this cause (See Issues II &amp; III *450 above) are now entitled to have the county redetermine current use value of their land for those tax years in which the county applied fair and reasonable market value instead of current use value. So as to conform with the legislative intent behind Act 135, the county shall base these revaluations on the specific current use formula set out in H.J.R. 153.
As we have previously stated, the legislature approved H.J.R. 153 to recommend sorely needed guidelines for the implementation of current use valuation. At that time the Department of Revenue had issued no rules or regulations concerning the formulation of current use value, nor had the Montgomery County Tax Assessor taken any steps toward arriving at a system of current use valuation.
We recognize that House Joint Resolution 153 was not an Act of the Legislature, as such. Gunter v. Beasley, 414 So. 2d 41 (Ala. 1982). Nevertheless, at the time the appellants formulated their current use schedules, it was the latest expression of the Legislature on the intent behind Act No. 135 and on the method the appellants should use to implement Amendment No. 373.
We can say, therefore, that H.J.R. 153, as a valid expression of legislative opinion, gives a definite formula for current use valuation consistent with the legislative purpose behind Act No. 135. The preamble to H.J.R. 153 explicitly states that the method of appraisal set out therein "would fulfill the legislative mandate contained in Section 4 of Act No. 135 with respect to agricultural and forest property." As the trial court noted, the relatively brief period between the passage of the two measures and the fact that some of the same legislators were sponsors of each further demonstrate that H.J.R. 153 was in fact consistent with Act No. 135.
The trial court ordered the appellants to formulate a new current use schedule consistent with Act No. 135. To prevent any further confusion or delay, we hold that the tax assessor must now apply the formula set out in H.J.R. 153.
We therefore affirm the trial court's judgment ordering appellants Driver and Miller to formulate a new current use schedule based on the guidelines of H.J.R. 153. Under the trial court's order, appellants shall then use this schedule to redetermine the current use value of appellees' land for those tax years in which the previously mentioned "Current Use Schedule" and "Current Use Land Pricing Schedule" were applied in Montgomery County. Following these assessments, each class member shall be entitled to a refund equal to the difference between ad valorem taxes previously paid and the amount of taxes due as figured under the new schedule.
VI. Was the grant of attorneys' fees proper in this case?
In Alabama, attorneys' fees are recoverable only where authorized by statute, when provided in a contract, or by special equity, such as in a proceeding where the efforts of an attorney create a fund out of which fees may be paid. Shelby County Commission v. Smith, 372 So. 2d 1092 (Ala. 1979); State ex rel. Payne v. Empire Life Ins. Co., 351 So. 2d 538 (Ala.1977). We affirm the trial court's finding that the decree creates a common fund from which counsel fees may be paid.
An identifiable common fund, termed the "refund pool" by the trial court, will be created prior to the actual distribution of refunds to eligible landowners:
Consistent with the underlying philosophy of the common fund doctrine, an award of attorneys' fees from this fund spreads the costs and expenses of litigation among all those who benefit. The attorneys herein rendered their services not only for the litigant landowners, but also for all other members of the class. As this Court stated in Kimbrough v. Dickinson, 251 Ala. 677, 684, 39 So. 2d 241 (1949):
See also, Annot., 89 A.L.R.3d 690 (1979).
For the reasons stated in this opinion, the judgment of the trial court is affirmed except as to the relief granted to landowners who did not apply for current use treatment.
AFFIRMED IN PART, REVERSED IN PART, AND REMANDED.
All the Justices concur.
[1]  Act 135 is found at 1978 Ala.Acts 1868, and was codified at Code 1975, § 40-7-25.1, et seq. Sections 40-7-25.1, et seq., as found in the 1982 supplement to the code, set out the current use law as amended by Act 302, Acts of Alabama, Regular Session, 1982 (1982 Ala.Acts 383).
[2]  See, e.g., Johnston-Clark Appraisal Co. v. State, 392 So. 2d 1164 (Ala.1980).
[3]  1978 Ala.Acts 1587.
[4]  Supra, n. 1.
[5]  An order issued by the Commissioner of Revenue on May 28, 1979, and a regulation issued by the Commissioner on June 1, 1979, give the date of H.J.R. 153 as May 24, 1979. The discrepancy between the May 24 date and the May 31 date shown in the resolution is not at issue in this case.
[6]  Act No. 302, 1982 Ala.Acts 383, mandates a more detailed income capitalization method for current use valuation for tax years beginning October 1, 1981, and thereafter. This is consistent with the intent expressed in H.J.R. 153.
[7]  This aspect of Graves is distinguishable from the case at bar regarding the necessity of filing an application, because Graves clearly had a right and the question concerned his remedy. As set out in Issue II, appellees herein have no redressable right in the absence of a filing for current use treatment.