Court Opinion

ID: 1076590
Source: CourtListenerOpinion
Date Created: 2013-10-09 20:19:35.783096+00
Date Added: 2024-06-11T15:46:33.099297
License: Public Domain

I N    T H E C O U R T O F A P P E A L S
                                                        A T K N O X V I L L E
                                                                                                                                     FILED
                                                                                                                                     APRIL 16, 1999

                                                                                                                                Cecil Crowson, Jr.
                                                                                                                                 Appellate Court
                                                                                                                                       Clerk

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J A M E S S .       W E B B     O F   C L E V E L A N D       a n d       B R I A N       L .     K U H N     O F    M E M P H I S     F O R
A P P E L L E E

                                                          O     P     I     N   I     O     N

                                                                                                                    Goddard, P.J.

                        This is a declaratory judgment action initiated by the

City of Cleveland to determine whether the agreements it had with
Bradley County concerning the division of one-half of the Local

Option Revenue Tax were terminable.                                                       The City also sought its

share of various Capital Outlay Notes issued by Bradley County

for educational purposes.

                                                                I.          FACTS
                      The 1963 Local Option Revenue Act1 authorized a county

to levy a local sales tax on all retail sales within the county.

Bradley County levied a local sales tax of 2.25%.                                  This tax has
been collected by the State of Tennessee, for distribution to

Bradley County and the City by the Commissioner of Revenue for

the State of Tennessee since 1967.

                      T.C.A. 67-6-712 provides for one-half of the proceeds

to be distributed in the same manner as the county property tax
for school purposes.                             The second one-half is to be distributed

according to where the tax was collected, either inside the City

limits or outside in Bradley County.                                  T.C.A. 67-6-712(a)(2)(C)
authorizes a county and city to enter into a contract to provide

for other distribution of the second one-half of the tax

collections.

                      On March 7, 1967, the Board of Mayor and Commissioners
of the City held a special called meeting dealing solely with the

issue of whether to enter into an agreement whereby the second

one-half of the collected tax receipts would be distributed in
the same manner as the county property tax for school purposes.

At that time most of the collected tax receipts would be

collected outside the City limits.                                  The Notice and Waiver of Call
Meeting was signed by all the Commissioners and the Mayor.                                  The

resolution was unanimously adopted and was signed by the Mayor.

                      On May 10, 1967, Bradley County and the City entered
into a Contract for the distribution of the other one-half of the

local sales tax receipts.                                  The contract in pertinent part

provides for distribution as follows:

    1
        T . C . A .    6 7 - 6 - 7 0 1 ,   e t   s e q .

                                                               2
     1. One-half of the net proceeds from the local sales
     tax received by Bradley County from the State of
     Tennessee shall be used exclusively for school purposes
     and shall be appropriated to Bradley County and the
     City of Cleveland for school operational purposes as
     provided in T.C.A. 67-3052(1).

     2. The remaining one-half of the net proceeds from the
     local sales tax received by Bradley County from the
     Department of Revenue of the State of Tennessee, being
     that portion distributable according to Section 67-
     3052(2) of Tennessee Code Annotated, shall be
     distributed between Bradley County and the City of
     Cleveland by reversing the percentages in Paragraph 1
     herein and distributing the same to the City of
     Cleveland and Bradley County in accordance with the
     reverse percentages of Paragraph 1.
     3. This formula for the distribution of the second
     one-half of the net proceeds from the local sales tax
     shall be used to distribute the same until such time as
     the average daily attendance of children in the two
     school systems shall reach 50% percent for each system
     at and from which time the second one-half of said
     proceeds shall be distributed by each system, taking
     the same per cent as it received in distribution of the
     first one-half of said proceeds.

          An amendment to the Contract was authorized by a

resolution of the Board of Mayor and Commissioners of the City,

at a regular meeting held on January 10, 1972.   On February 21,

1972, the parties entered into an Amendment to the Contract,
agreeing that the funds from an additional sales tax to be levied

in Bradley County would continue to be divided in accordance with

                               3
the original Contract.                                                                         It was signed by the Mayor. The City’s

Charter2 was silent as to the power to contract.

                                          Bradley County entered into a Contract for

Administration of the Bradley County Local Sales and Use Tax with

the Department of Revenue of the State of Tennessee.                                                                                                                                                                    The
Contract was effective as of June 1, 1967,3 and provided for its

termination in paragraph 7.4

            2
                T h e                C i      t y      ’ s C h a r t e r , w h i c h                        w a s    i n           e f f e c t             d u r i n g              t h e        r e l e v a n t                t i m e
p e r i o d ,      p r           o    v i      d e      d a s f o l l o w s :
            A    r t i           c    l e         4
            L    e g i           s    l a      t i     v e b o d y t o b e B o a r d o                              f M a y o r a n d c o m m i s s i o n e r s
            T    h e             l    e g      i s     l a t i v e p o w e r o f T h e C                            i t y o f C l e v e l a n d s h a l l b e e x e r c i s e d
            b    y t             h    e        B o     a r d o f M a y o r a n d c o m m                            i s s i o n e r s e l e c t e d u n d e r t h e
            p    r o v           i    s i      o n     s o f t h e c h a r t e r o f s                              a i d C i t y .
            *      *             *
            A    r t i           c    l   e        1   8
            G    e n e           r    a   l        O   r d     i n a n c e P o w e         r
            T    h e             B    o   a    r   d     o     f M a y o r a n d               C   o m m i s s i o n           e   r s s h a           l   l     h a      v   e s      u    c   h p o w e r a n d
            a    u t h           o    r   i    t   y     t     o p a s s a l l             b   y   l a w s a n d               o   r d i n a n         c   e   s n        e   c e s    s    a   r y t o e n f o r c e
            t    h e             p    o   w    e   r   s       h e r e i n g r a n         t   e   d a s i s n                 o   t i n c o           n   s   i s t      e   n t      w    i   t h t h e
            C    o n s           t    i   t    u   t   i o     n a n d l a w s             o   f     t h e U n i t             e   d S t a t           e   s   , t        h   e S      t    a   t e o f
            T    e n n           e    s   s    e   e   ,       o r t h e p r o v           i   s   i o n s o f t               h   i s c h a           p   t   e r .

            A    r       t i c l          e        1   9
            P    a       s s a g          e        o   f       O r d i n a n c e s a n d R e s o l u t i o n s
            T    h       e s t            y    l   e       o   r i n t r o d u c t o r y c l a u s e o f a l l o r d i n a n c e s s h a l l b e : “ B e
            i    t         o r d          a    i   n e     d     b y t h e B o a r d o f M a y o r a n d C o m m i s s i o n e r s o f T h e C i t y o f
            C    l       e v e l          a    n   d .     ”
            E    v       e r y            o    r   d i     n   a n c e a n d r        e s o l u t i o n u p o n f i                            n   a   l p         a   s s a g e s              h a l l     b   e       s   i   g n e d
            i    n         o p e          n        m e     e   t i n g b y t h        e M a y o r o r M a y o r                                p   r   o t         e   m a n d a                t l e a     s   t       o   n   e
            o    t       h e r            C    o   m m     i   s s i o n e r , a      n d i t s h a l l t h e r e                              u   p   o n         b   e d e l i v              e r e d     t   o       t   h   e
            C    i       t y C            l    e   r k     ,     w h o s e d u t      y i t s h a l l b e t o                                  c   o   p y         i   t i n a                  b o o k     t   o       b   e     k e p t
            f    o       r t h            a    t     p     u   r p o s e , t o g      e t h e r w i t h t h e s i                              g   n   a t u       r   e o f t h                e M a y     o   r       a   n   d
            c    o       m m i s          s    i   o n     e   r s . . . .

            3
                I t              w a s             e x e c u t e d           b y   t h e           p a r t i e s         o n         J u n e           1 3 ,           1 9 6 7 .

            4
              7      .           C A N C E L L A T I O N O F C O N T R A C T . I t i s u n d e r s t o o d a n d                                                                                      a g r e e d t h a t t h i s
c o n t r a c t              m a y b e c a n c e l e d u p o n t h e o c c u r r e n c e o f a n y o n e o f                                                                                           t h e f o l l o w i n g
e v e n t s :
a .         T h          e        D e     p    a r     t   m e   n t o r        C o u n    t y        m a    y   g i v     e t        h e      o t h       e   r     p    a r   t    y s i        x     m o n   t h ’ s            n o t i c e
            t h          a   t      i     t      n     o     l   o n g e r      d e s i    r e s        t    h e a g       r e e      m e n    t t         o       b e      e   f    f e c t      i   v e .
b .         T h          e        D e     p    a r     t   m e   n t s h      a l l h      a v e        t    h e r i       g h t        t o      c a       n   c   e l      t   h    i s a        g   r e e m   e   n   t     i    m   m e   d i   a t e l y
            u p          o   n      a     n    y       b   r e   a c h b      y t h e        C o      u n    t y o f         a n      y p      r o v       i   s   i o    n     o    f t h        i   s a g     r   e   e   m e    n   t ,     o   r o f
            a n          y        p r     o    v i     s   i o   n   c o n    t a i n e    d i        n      t h e s       t a t      u t e    , r         e   s   o l    u t   i    o n o        f     a d o   p   t   i   o n    ,     r   u l   e s
            a n          d        r e     g    u l     a   t i   o n s p      e r t a i    n i n      g      t h e r e     t o ,        o r      t h       e       t e    r m   s      o f        t   h i s     a   g   r   e e    m   e n   t .       I n
            t h          e        e v     e    n t         o f     s u c h      c a n c    e l l      a t    i o n b       y t        h e      D e p       a   r   t m    e n   t    , t h        e     D e p   a   r   t   m e    n   t ’   s
            o b          l   i    g a     t    i o     n     s   h a l l      e x t e n    d o        n l    y   t o       m a k      e c      o l l       e   c   t i    o n        o f t        h   e l o     c   a   l     t    a   x     f o   r   t h e
            r e          m   a    i n     d    e r         o f     t h e      c u r r e    n t        m o    n t h ,       a n d        m a    k e         t   o     t    h e        c o u n      t   y a       p   r   o   p e    r
            d i          s   t    r i     b    u t     i   o n     w i t h      r e s p    e c t        t    o   s u c     h c        o l l    e c t       i   o   n .
c .         T h          e        r e     s    o l     u   t i   o n i m      p o s i n    g t        h e      l o c a     l s        a l e    s o         r       u s    e     t a x           s h a l l       b e         r e p e a l e d ,            a s
            p r          o   v    i d     e    d       f   o r     i n S      e c t i o    n 6        7 -    3 0 5 5 ,       T .      C . A    .

                                                                                                                           4
          The City filed suit against Bradley County contending

that if the proceeds had been distributed in accordance with

T.C.A.   67-6-712(a)(2)(B), rather than according to the Contract
and the Amendment, the City claims that it would have received

from the sales tax collections the following additional amounts:

                  FISCAL YEAR    ADDITIONAL REVENUES
                    1992-1993           $    668,518
                    1993-1994                 798,007
                    1994-1995                 992,430
                    1995-1996                 967,693
                         TOTAL         $    3,417,646

           The City sought to have the trial court determine that

the Contract was ultra vires or as an alternative that the
Contract did not contain a termination clause and consequently it
was a Contract in perpetuity and therefore against public policy.

If the trial court so found, then the City would be able to

terminate the Contract, which was it ultimate goal so that more
monies would flow into its coffers under the statutory division

of the second one-half of the tax proceeds.

                   B.   THE CAPITAL OUTLAY NOTES

           Beginning in 1989, Bradley County issued Capital Outlay

Notes for educational purposes pursuant to T.C.A. 9-21-101, et

seq. the Local Government Public Obligations Law. Each of the
Notes were issued pursuant to resolutions of Bradley County

Commission. In each resolution, Bradley County “pledged its

taxing power as to all taxable property in Bradley County,

                                  5
Tennessee for the purpose of providing funds for the payment of

the principal and interest on the notes.”

          DATE                 PURPOSE              AMOUNT
        2/20/89    Valley View School Project $      262,000
        9/18/89    Various School Projects           500,000
        1/25/91    School Capital Projects           750,000
        9/01/92    School Buses                      102,000
        2/26/93    School Capital Projects           775,000
        6/29/93    School Capital Projects         3,500,000
        12/05/94   School Capital projects           600,000
                   TOTAL                         $ 6,489,000

          Bradley County repaid the Notes from tax revenues

collected on all property in Bradley County, including property

inside the corporate limits of the City.     None of the proceeds of
the Notes was designated by Bradley County for the use of the
schools operated by the City.

          T.C.A. 49-3-1001, et seq., grants counties the
authority to issue bonds for educational purposes.     From the

proceeds of any borrowing for school purposes, T.C.A. 49-3-

1001(b)(1) requires the trustee of Bradley County to pay over to
the City the amount of funds in the same ratio as the average

daily attendance between the City’s school system and the Bradley

County School System.      During the years in which the Notes were

issued by Bradley County, the applicable average daily attendance

of students in the City‘s School System as a percentage of the

total enrollment of students in Bradley County was as follows:

                                   6
                              ADA PERCENTAGE
                           YEAR    CITY   COUNTY
                          1986-87 32.48% 67.52%
                          1987-88 31.81% 68.19%
                          1988-89 32.27% 67.73%
                          1989-90 32.34% 67.66%
                          1990-91 32.33% 67.67%
                          1991-92 32.90% 67.10%
                          1992-93 32.99% 67.01%
                          1993-94 33.62% 66.38%
                          1994-95 33.61% 66.39%
                          1995-96 33.98% 66.02%

            The City contended that it was entitled to $2,128.995,

which is its share of the funds based on the ADA in its schools.

     YEAR     GROSS AMOUNT       ADA PERCENTAGE        CITY’S SHARE
                                CITY      COUNTY
    1987-88    $    262,000      31.81%      68.19%         $ 83,342
    1988-89         500,000      32.27%     67.73%           161,350
    1989-90         750,000      32.34%     67.66%           242,550
    1990-91         102,000      32.33%     67.67%            33,558
    1991-92        4,275,000     32.90%     67.10%         1,406,475
    1992-93          600,000     32.99%     67.01%           201,720
     TOTALS    $ 6,489,000                               $ 2,128,995

                    II.   HOLDING OF THE TRIAL COURT

            Both parties filed motions for summary judgments based
upon the facts stated above and their respective theories.
Chancellor Earl H. Henley, sitting by interchange, found in

regard to the declaratory judgment portion of the complaint that
Bradley County’s motion for summary judgment should be granted.
The trial court found that the Contract was not ultra vires.

Moreover, Chancellor Henley declared that the Contract was not a

                                   7
Contract in perpetuity and that paragraph 3 of the Contract dated

May 10, 1967, set a specific time or event that triggered

termination of the Contract and the 1972 Amendment.   Accordingly,
the Contract was not terminable by the City and should remain in

full force and effect according to the Contract’s terms.

          As to the money judgment portion of the complaint,

Chancellor Henley found that the City’s motion for summary

judgment should be granted.   He entered a judgment in favor of
the City against Bradley County in the amount of $2,128,995.

This amount was the City’s pro rata share of the aggregate amount

of Notes issued by Bradley County for educational purposes.

          The City appealed the portion of the judgment granting

Bradley County’s motion for summary judgment concerning the

Contract and the Amendment.   Bradley County appealed the portion

of the final judgment denying Bradley County’s motion to dismiss
and granting the City’s motion for summary judgment on the money

judgment portion of the Complaint.

                          III.       ISSUES

          Each party presents one main issue with many sub-issues
for our consideration.

          The City primarily contends that the trial judge was in

error in holding that the Contract and its subsequent Amendment
concerning the disposition of a portion of the Local Option Sales

Tax contained a specific time or event that triggered termination

of the Contract; therefore, the Contract was not in perpetuity
and terminable by the City.

                                 8
          Bradley County, however, claims that the Chancellor

Henley was in error in his granting the City’s Motion for Summary

Judgment as to the money judgment portion of the Complaint and in
entering a judgment awarding the City its pro rata share

($2,128,995) of the aggregate amount of the Notes issued by

Bradley County for educational purposes.

                      IV.   LAW AND DISCUSSION

          Both of the awards by the Chancellor in this matter
were based on motions for summary judgment. Since a motion for

summary judgment involves only a question of law, no presumption

of correctness attaches to the Chancellor’s decision. Our

standard of review of a trial court's grant of summary judgment

is well-settled:

     Tenn.R.Civ.P. 56.03 provides that summary judgment is
     only appropriate where: (1) there is no genuine issue
     with regard to the material facts relevant to the claim
     or defense contained in the motion, Byrd v. Hall, 847
S.W.2d 208, 210 (Tenn. 1993); and (2) the moving party
     is entitled to a judgment as a matter of law on the
     undisputed facts. Anderson v. Standard Register Co.,
     857 S.W.2d 555, 559 (Tenn. 1993). The moving party has
     the burden of proving that its motion satisfies these
     requirements. Downen v. Allstate Ins. Co., 811 S.W.2d
523, 524 (Tenn. 1991). When the party seeking summary
     judgment makes a properly supported motion, the burden
     shifts to the nonmoving party to set forth specific
     facts establishing the existence of disputed, material
     facts which must be resolved by the trier of fact.
     Byrd, 847 S.W.2d at 215.

Nelson v. Martin, 958 S.W.2d 643, 646-647 (Tenn.1997).

          We shall view the record in this matter in the light of

those requirements.

                                 9
                     A.           The Contract and Amendment were Ultra Vires.

                         The first sub-issue proffered by the City is that the
Contract and Amendment are ultra vires because they were

authorized by Resolution and not Ordinance as required by the

City’s Charter and were not adopted in accordance with the
provisions of the Charter.

                         McQuillin Mun. Corp. § 15.01, Definitions (3rd Ed.)
p.54, defines the term “ordinance” as designating “a local law of

a municipal corporation, duly enacted by the proper authorities,

prescribing general, uniform, and permanent rules of conduct,
relating to the corporate affairs of the municipality...The

passage of an ordinance is, of course, a legislative act, a

legislative function, and equivalent to legislative action.”                                                                                              An

ordinance prescribes some permanent rule of conduct or

government, to continue in force until the ordinance is
repealed.5

                         A resolution can be any type of non-legislative action
and in effect encompasses all actions of the municipal body other

than ordinances. It deals with matters of a special or temporary

character and is simply an expression of opinion or mind or
policy concerning some particular item of business coming within

the legislative body’s official cognizance, ordinarily

ministerial in character and relating to the administrative

business of the municipality.6

            5
              M c Q u i l l i n    M u n .   C o r p .    §     1 5 . 0 2 ,   R e s o l u t i o n s   a n d   O r d i n a n c e s   D i s t i n g u i s h e d
( 3 r d   E d . )

            6
              M c Q u i l l i n    M u n . C o r p .      §       1 5 . 0 2 , R e s o l u t i o n s a n d O r d i n a n c e s D i s t i n g u i s h e d ;
§   1 5 . 0 8 , N a t u r e ,       R e q u i s i t e s       a n d O p e r a t i o n o f M u n i c i p a l O r d i n a n c e s ( 3 r d E d . ) .

                                                                                1 0
                                    Resolutions need not be, in the absence of some express

requirement, in any set or particular form.                                                                                                                                             Julian v. Mayor,

Councilmen & Citizens of Liberty City of Liberty, 391 S.W.2d 864
(Mo. 1965); McQuillin Mun. Corp. § 15.08, Nature, Requisites and

Operation of Municipal Ordinances, (3rd Ed.). A resolution,

particularly when used to express a ministerial act, need not
partake of any definite form and need not be a written

instrument.                                           Steward v. Rust, 221 Ark. 286, 252 S.W.2d 816

(1952).

                 "Under Tennessee law, a municipal action may be
            declared ultra vires for either of two reasons: (1)
            because the action was wholly outside the scope of the
            city's authority under its charter or a statute, or (2)
            because the action was not undertaken consistent with
            the mandatory provisions of its charter or a statute."

City of Lebanon v. Baird, 756 S.W.2d 236, 241 (Tenn. 1988).

                                    We have conducted an exhaustive review of the Charter

as it was in 1967 and 1972.7 The Charter is totally silent as to
the method of passing a resolution and as to the power to
contract.8

            7
              S i n c e t h e n , t h e C i t y o f C l e v e l a n d h a s a n e w f o r m o f g o v e r n m e n t a n d a
n e w C h a r t e r .      T h e n e w C h a r t e r s p e c i f i c a l l y p r o v i d e s t h a t b e f o r e t h e C i t y o f
C l e v e l a n d c a n c o n t r a c t i t m u s t p a s s a n o r d i n a n c e t o d o s o .

            8
              A   r t     i c      l e        1       o   f         t     h e      C h a    r t    e r         p r o      v i    d e     s       f o r t h e T o w n o f C l e v e l a n d t o b e a
“ b o d y p o      l i     t i      c     a       n d         c   o r      p o   r a t e     ”      a n    d      g i      v e    s          t h e C i t y t h e g e n e r a l p o w e r s t o r e c e i v e ,
h o l d a n d         d    i s      p o   s       e o         f       p    e r   s o n a     l      p r    o    p e r      t y    .
            A r    t i     c l      e     5         r e       q   u i      r e   s t h       e      m e    m    b e r      s      o f          t h e      B   o   a r d     o f     M   a   y o   r   a n   d C o m m i s   s i o   n e r s
t o h o l d        r e     g u      l a   r         m o       n   t h      l y      m e e    t i    n g    s    .          I t       i       s s i l      e   n   t a s       t   o     a   n y     c a l   l e d m e e t   i n g   s .
H o w e v e r ,       A    r t      i c   l       e 2         0   ,        w h   i c h       d e    a l    s      w i      t h       f       r a n c h    i   s   e o r     d i   n a   n   c e   s , s     a y s t h a t     a
f r a n c h i s    e       o r      d i   n       a n c       e       c    a n   n o t       b e       p   a    s s e      d      e x        c e p t      o   n     t h r   e e     r   e   a d   i n g s     w i t h “ n   o t     m o r e
t h a n o n e         r    e a      d i   n       g a         t       t    h e      s a m    e      m e    e    t i n      g ,       o       r o n        a   n   y r e     a d   i n   g     a   t a n     y b u t a       r e g   u l a r
m e e t i n g .    ”          T     h i   s         i m       p   l i      c i   t l y       i n    d i    c    a t e      s      t h        a t t h      e   r   e m a     y     b e       c a   l l e d     o r s p e c   i a l
m e e t i n g s    .
            A r    t i     c   l e      1         8   g       i v     e s      t o      t    h   e B       o a    r   d      o f M             a   y o   r a n d C o m m i              s s i o n e r s t h e          p o w e r      t o
p a s s a l l         b    y   - l    a w         s   a       n d       o    r d i n    a    n   c e s       n    e   c    e s s a r           y     t   o e n f o r c e t              h e p o w e r s i n            t h e
C h a r t e r .            T   h e    r e           i s         n     o      m e n t    i    o   n o       f      r   e    s o l u t           i   o n   s .
            A r    t i     c   l e      1         9 d         e t     a i    l s t      h    e     p a     s s    a   g    e o f               o   r d   i n a n c e s , b i            l l s , a n d b y - l a w s .     W h i l e
i t c i t e s         “    r   e s    o l         u t i       o n     s ”      i n      i    t   s h       e a    d   i    n g , t             h   e r   e i s n o r e f                e r e n c e t o r e s o l u t i o n s i n
t h e b o d y         o    f     t    h e           a r       t i     c l    e .
            A r    t i     c   l e      2         1 e         n u     m e    r a t e    s t h e                m i s c e l l a n e o u s p o w e r s a n d a u t h o r i t y b y
o r d i n a n c     e      o   f      t h         e B         o a     r d      o f      M a y o r              a n d C o m m i s s i o n e r s .    T h e p o w e r t o c o n t r a c t                                                 i s

                                                                                                                                     1 1
                        Moreover, 19 Tenn. Juris., Municipal Corporations, §

70, states the following:

                 In determining the extent of the power of a
            municipal corporation to make contracts, and in
            ascertaining the mode in which the power is to be
            exercised, the importance of a careful study of the
            charter or incorporating act and of the general
            legislation of the state on the subject, if there be
            any, cannot be too strongly urged. Where there are
            express provisions on the subject, these will, of
            course, measure, as far as they extend, the authority
            of the corporation. The power to make contracts, and
            to sue and be sued thereon, is usually conferred in
            general terms in the incorporating act. But where the
            power is conferred in this manner, it is not to be
            construed as authorizing the making of contracts of all
            descriptions, but only such as are necessary and usual,
            fit and proper, to enable the corporation to secure or
            to carry into effect the purposes for which it was
            created; and the extent of the power will depend upon
            the other provisions of the charter prescribing the
            matters in respect of which the corporation is
            authorized to act. To the extent necessary to execute
            the special powers and functions with which it is
            endowed by its charter, there is, indeed, an implied or
            incidental authority to contract obligations, and to
            sue and be sued in the corporate name.9

                        The general rule is that where a charter commits the

decision of a matter to the council or legislative body alone,

and is silent as to the mode of its exercise, the decision may be
evidenced by resolution.                                 Eichenlaub v. City of St. Joseph, 113
Mo. 395, 21 S.W. 8 (1893);                                     Keenan & Wade v. City of Trenton,

130 Tenn. 71, 168 S.W. 1053 (1914).                                               The rule unquestionably is
applicable to the performance of a ministerial act or

administrative business of a municipality.                                                       If there is not

general provision a charter outlining what must be done by

ordinance, and the charter does provide that some particular
things shall be done by ordinance, the implication is that

n o t   m e n t i o n e d .

            9
              M a y o r o f C i t y o f     N a s h v i l l e v . S u t h e r l a n d ,   9 2 T e n n . 3 3 5 , 2 1 S . W . 6 7 4
( 1 8 9 3 ) ; C r o c k e r v . T o w n      o f M a n c h e s t e r , 1 7 8 T e n n .     6 7 , 1 5 6 S . W . 2 d 3 8 3 ( 1 9 4 1 ) .
[ f o o t n o t e i n o r i g i n a l . ]

                                                                     1 2
matters which are not specifically required to be dealt with by

ordinance may be dealt with otherwise.10

                      Under the facts of this case, the municipal action was

not outside the scope of the City’s authority because T.C.A. 67-

6-712(a)(2)(C) provides that a county and city may contract to
provide for other distributions of the one-half of the proceeds,

which is not allocated to school purposes.                                                          Since the Charter was

silent as to the contracting power of the City, but was specific
in other instances, we deduce that the City’s mayor had the

authority to enter into the Contract with Bradley County, since

it was for a system of free schools and at that time was in the
City’s best interest.                               19 Tenn. Juris., Municipal Corporations,

§ 89 (1985).                   We find no merit in the City of Cleveland’s

assertion that the Contract is ultra vires.

                      Secondly, the City argues that if the Contract is found

not to be ultra vires then the term of the Contract is in

perpetuity for there is no termination clause in the Contract.
Bradley County takes the position that even if the Contact

between the City and Bradley County contains no termination

provision, then the contract between Bradley County and the State
does and it was incorporated into the Contract between Bradley

County and the City.                             We do not need to address that issue,

however, because we are in agreement with the trial court that

paragraph 3 of the Contract contains the Contract’s termination
provisions.                  Paragraph 3 of the Contract provides that when the

average daily attendance of children in the two school systems

reaches fifty percent for each system then the distribution of

           1 0
               M c Q u i l l i n M u n i c i p a l C o r p o r a t i o n s , §    1 5 . 0 6 , N a t u r e ,   R e q u i s i t e s   a n d
O p e r a t i o n o f M u n i c i p a l O r d i n a n c e s ( 3 r d E d .        R e v i s e d ) .

                                                                       1 3
the proceeds would revert back to the division provided in the

Code. The Contract contains no provision for a continuation of

the division of proceeds after the point that the ADA equals 50%.
That is, if the ADA at the City’s schools the year after the 50-

50 year go to 60%, the City does not receive 60% of the second

half of the tax proceeds. There is no further provision in the
Contract for the Contract to continue in effect in any manner.

At this point, in order to deviate from the Code provisions, a

new contract would have to be negotiated.    We find that the
Chancellor was correct in his holding that paragraph 3 was the

Contract’s termination clause.

           Thirdly, the City argues that the trial court’s

decision is against public policy in that future city council

members would be tied to a contract relating to government

matters.   In support of its position the City quotes from

Shelbyville v. State ex rel. Bedford County, 220 Tenn. 197, 415
S.W.2d 139, 145 (1967) as follows:

          Thus, where the contract involved relates to
     governmental or legislative functions of the counsel,
     or involves a matter of discretion to be exercised by
     the council unless the statute conferring power to
     contract clearly authorizes the council to make a
     contract extending beyond its own term, no power of the
     council so to do exists.

           We do not agree, however, because our Tennessee

Legislature was the empowering authority which granted the right

to contract one-half of the proceeds of the local tax revenues.
The Tennessee legislature also enacted T.C.A. 7-51-903 pertaining

to long-term contracts, which provides:

     Except as otherwise authorized or provided by law,
     municipalities are hereby authorized to enter into
     long-term contracts for such period or duration as the

                                 1 4
     municipality may determine for any purpose for which
     short-term contracts not extending beyond the term of
     the members of the governing body could be entered;
     provided, that the provisions of § 7-51-902 shall
     govern the periods or terms of contracts, leases, and
     lease-purchase agreements with respect to capital
     improvement property.

             Our Supreme Court in 1985 addressed this issue in
Washington County Board of Education v. MarketAmerica, 693 S.W.2d
344 (Tenn. 1985).     The City’s argument is basically the same as

was that of the plaintiff in Washington County Board of

Education.    Justice Drowota opined:

          After carefully considering the respective
     arguments of counsel and the relevant legal
     authorities, this Court is of the opinion that the
     contract entered into between MarketAmerica, Inc. and
     the Washington County Board of Education is valid and
     binding upon both parties. Because of the importance of
     the issues in this case to local governments, we are
     compelled to elaborate on our reasons for this
     conclusion.

     * * *
          Plaintiff's argument that Chapter 186 of the
     Public Acts of 1983 acknowledged that counties were
     without authority to enter into long-term contracts
     prior to that legislation is not supported by the
     legislative history. Senator Cohen and Representative
     Burnett, the Senate and House sponsors of the bill,
     indicated that the bill "only clarifies what cities
     could always do." One sponsor further stated that the
     legislation was intended to clarify the law in this
     area because an opinion of the Attorney General had
     suggested that counties lacked the capacity to enter
     into contracts requiring payments beyond the current
     fiscal year. The new legislation and the debate
     concerning it illustrates that the legislature never
     intended that Chapter 2 of Title 49 serve as a
     limitation upon the authority of counties to enter into
     long-term contracts.

Washington County Board of Education, at 348-349.     We also find
that a valid Contract exists between the City and Bradley County.

The City having received the benefit of its bargain in the early

years of the Contract period, is obligated to honor its Contract
with Bradley County during the period when Bradley County is

                                  1 5
receiving its benefit.     The City’s argument falls far short of

convincing us of any merit in its position on this issue.

           Fifthly, the City argues that since Article 20 of the

Charter limits the power of the City to grant a franchise to only

20 years that therefore the Contract at issue here is void.    By
its own wording, Article 20 deals specifically with franchises

and not to the disbursement of the local tax revenues at issue

here.   Again, we find no merit in the City’s arguments on the
Contract interpretation portion of this matter and affirm the

Chancellor’s decision on this issue in toto.

            B.   AFFIRMATIVE DEFENSES FOR THE MONEY DEBT

           At the outset of our discussion we will address Bradley

County’s affirmative defenses that the City’s complaint should be

dismissed because (1) the trial court did not have jurisdiction
because of the City’s failure to file a petition for writ of

certiorari, and, (2) because the City failed to make all persons

who have or claim any interest parties of this proceeding; and,
(3) the statute of limitations codified at T.C.A. 28-3-109

mandates the dismissal of the declaratory judgment action and

claims on any capital outlay notes issued before 1991.

                                 1.

           We will first address the issue of the City’s filing a
declaratory judgment rather than a writ of certiorari.     In Fallin

v. Knox County Board of Commissioners, 656 S.W.2d 338 (Tenn.1983)

the Supreme Court held that T.C.A. 27-9-101, et seq., is not
applicable unless there is a judicial or quasi judicial

determination by the governmental board involved. The court,

                                 1 6
treating the issue before it as one for declaratory judgment,

quoted with approval from Holdredge v. City of Cleveland, 218
Tenn. 239, 402 S.W.2d 709 (1966) as follows:

          The remedy by certiorari provided in T.C.A. 27-
     901, et seq., “was intended to have application only in
     a review of an order or judgment rendered after a
     hearing before a board or commission.” Stockton v.
     Morris & Pierce, 172 Tenn. 197, 110 S.W.2d 480 (1927).
402 S.W.2d at 712.
          We are convinced the validity of the ordinance
     amending the zoning ordinance may be tested under our
     Declaratory Judgment Act and that certiorari is not the
     exclusive remedy. 402 S.W.2d at 713-14.

Fallin, at p. 341-342.

          The issues before us here are not judicial or even

quasi judicial determinations and therefore, T.C.A. 27-9-101, et

seq., does not apply.

                                2.

          Bradley County next claims that all parties necessary
to this suit are not before this Court.    Relying upon Huntsville

Utility District of Scott County v. General Trust Co., 839 S.W.
2d 397, 400 (Tenn.App. 1992), Bradley County then argues that the
Complaint should have been dismissed because all necessary

persons were not before the court.    We disagree.

          All of the capital outlay notes have been repaid by
Bradley County, therefore, the City’s Board of Education and the

Bradley County School Board are not necessary or proper parties.

The trustee of Bradley County is not a party to either the
contract or the amendment.   No party is declaring that the

capital outlay notes were improperly issued or that the Local

                                1 7
Public Obligations Act is unconstitutional. As in any contract

action the parties to the contract are necessary parties, and the

parties to the contract and the amendment are before the court.
There is no merit to this argument.

                                                                   3.

                     Bradley County’s third affirmative defense pertains to

the statute of limitations codified at T.C.A. 28-3-109.                                      It
relies upon Ferguson v. Peoples National Bank of Lafollette, 800
S.W.2d 181, (Tenn. 1990).                                      In this matter, however,   T.C.A. 28-3-

109 has no application to either the Complaint for declaratory
judgment and/or the Complaint for money debt by the City. City of

Maryville v. Blount County, filed on January 6, 1993, an

unreported opinion of our Court, held that a municipality acts as

an arm of the state and is exempt from the statute of limitations

when it seeks to recover local education funding which should
have been allocated to it pursuant to state education

legislation.                  Bradley County’s argument on this issue also fails.

                                               C.      CAPITAL OUTLAY NOTES

                     Bradley County denies that it should share the proceeds
of the Capital Outlay Notes, which were issued for educational

purposes and declares that summary judgment is inappropriate.

Bradley County claims that the Notes were issued pursuant to the

Local Government Public Obligations Act,11 which does not require
a sharing of the proceeds.

     1 1
           T . C . A .   2 9 - 2 1 - 1 0 1 ,   e t   s e q .

                                                                   1 8
                     Its argument is predicated upon three cases: (1) Guffee

v. Crockett, 315 S.W.2d 646 (Tenn. 1958); (2) Board of Education

of Memphis City Schools v. Shelby County, 207 Tenn. 330, 339
S.W.2d 569 (1960); and, (3) Phillips v. Anderson County,

Tennessee, 698 S.W.2d 76 (Tenn.App. 1985).

                     Bradley County avers that the trial court’s reliance

upon Guffee was misplaced in that it only dealt with an intra-

statutory interpretation of what was T.C.A. 49-701 (now T.C.A.
49-3-1001, et seq.) dealing with the issuance of school bonds.

Rather, it argues that the issue before us is the inter-statutory

interpretation between two separate statutes - the Local
Government Public Obligation Act12 and the School Bond Act.13

                     Guffee was decided in 1958 prior to the adoption of the

Local Government Public Obligation Act in 1986.                          Moreover, Board

of Education of Memphis City Schools and Phillips were also
decided before the adoption of the Local Government Public

Obligation Act.                       Therefore, the court in those cases did not take

the School Bond Act into consideration in its determination on
any of the cases.

                     We find that there is no conflict between the Local
Government Public Obligation Act of 1986 and the School Bond Act

and the cases cited by the parties.

                                  D. THE ATTORNEY GENERAL’S OPINIONS

     1 2
           T . C . A .   9 - 2 1 - 1 0 1 ,     e t     s e q .

     1 3
           T . C . A .   4 9 - 3 - 1 0 0 1 ,     e t     s e q .

                                                                   1 9
          Lastly, Bradley County argues that the Attorney

General’s Opinions should carry great weight with this Court and

that we should find that Bradley County has no obligation to
share the Notes proceeds with the City.   In Washington County

Board of Education, 693 S.W.2d at 348, Justice Drowota, addressed

the issue of an opinion by the Attorney General to the effect:

     It appears that the present lawsuit was precipitated in
     part by an opinion of the Attorney General for the
     State of Tennessee that concluded that the Washington
     County Board of Education was without the necessary
     authority to enter into the contract with
     MarketAmerica. That opinion, dated February 25, 1983,
     relied solely upon this Court's decision in Brown and
     previous opinions of the Attorney General. The Attorney
     General observed that the duration of the contract and
     the provision requiring documentation that future
     boards would be bound were the principal deficiencies
     of the contract. Although opinions of the Attorney
     General are useful in advising parties as to a
     recommended course of action and to avoid litigation,
     they are not binding authority for legal conclusions,
     and courts are not required or obliged to follow them.

          On this point, we find Judge John B. Hagler’s

Memorandum Opinion in the City of Sweetwater v. Monroe County, an
excellent review of the Attorney General’s Opinions, and directly

to the point in this matter.   Judge Hagler stated:

     In arguing that the pro rata standard does not apply to
     a “loan,” Monroe County relies primarily, and
     reasonably, on a series of Attorney General Opinions
     going back to 1980. In 1980, the Attorney General
     opined that the proceeds of capital outlay notes
     (issued under T.C.A. 5-10-105, et seq., repealed in
     1988) need not be prorated even though all taxable
     property in a county was subject to a tax to retire the
     notes. Op. Atty. Gen. No. 80-290 (June 10, 1980).
     Relying upon this opinion, the Attorney General in 1988
     opined that “general obligation bonds” issued pursuant
     to the “Local Government Public Obligations Act of 1986
     (T.C.A. 9-21-101, et seq.) Which superseded all earlier
     statutes dealing with bonds and notes, are not subject
     to the mandated proration of T.C.A. 49-3-1003. Op.
     Atty. Gen. No. 88-110 (June 2, 1988). Likewise,
     relying on his 1980 and 1988 opinions, the Attorney
     General opined in 1989 and 1993 that the proceeds of
     capital outlay notes also issued under the new 1986

                                2 0
          statute did not have to be shared. Op. Atty. Gen. No.
          U89-19 (March 10, 1989); U03-09 (February 2, 1993).
          Although opinions of the Attorney General do not carry
          the weight of court opinions, they must be accorded
          great consideration not only because of the expertise
          that office develops in advising state and local
          governments but also because of the reliance upon these
          opinions by governmental authorities.
          Nevertheless, the Court is forced to conclude that,
          while the 1980 opinion, dealing with certain specific
          language in the then-current “capital outlay notes”
          statute, may have been correct, the subsequent opinions
          in 1988, 1989, and 1993 are incorrect.
          A short analysis of these opinions is necessary to show
          that the Attorney General failed, after the 1980
          opinion, to take account of specific language in the
          1986 statute. The Attorney General in 1980, while
          recognizing the authority previously cited here, was
          impressed by the following language in T.C.A. 5-10-
          501(s)(7), which, at that time, governed the issuance
          of capital outlay notes:
               “The provisions of clause ‘one’ of the first
               Paragraph and the provisions of the second
               paragraph of this section (which related to
               school funding) shall be in addition to and
               supplemental to all other provisions of other
               laws of the State of Tennessee, provided that
               whenever the application of these provisions
               conflicts with the application of such other
               provisions, these provisions shall prevail.”
          Emphasis added. This special language convinced the
          Attorney General that this “separate authority” for the
          issuance of capital outlay notes was not subject to the
          requirement for allotting a portion of the note
          proceeds to municipal or special school districts even
          though the taxable property within such districts were
          subject to the county’s taxing power. Op. Atty. Gen.
          No. 80-290. The Attorney General acknowledged that
          this “creates risk” of double taxation within the
          school districts but noted that double taxation itself
          is not unconstitutional where it is “plain that the
          legislature intended such result.” Id.
               However, the unreported Court of Appeals’
          decision,14 which resulted when the parties to whom the
          Attorney General rendered the opinion brought an action
          for Declaratory Judgment, declined to follow the
          Attorney General’s analysis. Although finding
          proration unnecessary with respect to capital outlay
          notes, the court reached this conclusion only by
          striking down that portion of the county’s resolution
          pledging a levy on all taxable property in the county.
          The Court was of the opinion that the statute, which
          authorized the issue of capital outlay notes prohibited
          the county from levying ad valorem taxes for the

          1 4
             T h e B o a r d o f T r u s t e e s o f t h e       T r e n t o n S p e c i a l S c h o o l D i s t r i c t v . T h e
G i b s o n C o u n t y L e g i s l a t i v e B o a r d , e t   a l . , C t . A p p . W e s t e r n S e c t i o n , D e c e m b e r   4 ,
1 9 8 1 , T A M 7 / 5 - 1 0 .

                                                                   2 1
           payment of such notes.15 The upshot is that the court
           left undisturbed the principle that pro rata allocation
           is necessary whenever there is a pledge to levy on all
           taxable property in the county.
                Following the 1980 opinion, the Attorney General
           opined in 1988, 1989, and 1993 that the proceeds of
           general obligation bonds and capital outlay notes,
           issued under the new Local Government Public
           Obligations Act of 1986, T.C.A. 9-21-101 et seq., are
           not subject to the pro rata distribution requirements
           of T.C.A. 49-23-1003. The Attorney General found, in
           each of the three opinions, that no provision of the
           new Act requires pro rata distribution among school
           systems within a county and that T.C.A. 9-21-124, like
           the earlier statute he construed in 1980, provides that
           if the “provisions of this law conflict with any other
           provisions of law or are inconsistent with any other
           provisions of law, the provisions of this chapter shall
           prevail with respect to all bonds and notes issued
           under this chapter.”
                Unfortunately, the Attorney General in each of
           these later opinions overlooked another provision in
           the Local government Public Obligations Act of 1986
           which was not in the “old capital outlay notes”
           statute:
                     9-21-107. Powers of Local
                Governments./All local governments have the
                power . . .to:
                *******************************************
                (4) pledge the full faith, credit and
                unlimited taxing power of the local
                government as to all taxable property in the
                local government or a portion of the local
                government, if applicable, to the punctual
                payment of the principal of and interest on
                the bonds or notes issues to finance any
                public works project. . .
                ********************************************
                (5) in the case of a county or metropolitan
                government which contains within its
                boundaries a special school district and/or
                incorporated city or town maintaining a
                public school system separate from the county
                or metropolitan government public school
                system, the tax pledge authorized by
                subdivision (4), when pledged to the payment
                of bonds or notes issued to finance the
                construction of public schools of the county
                or metropolitan government serving outside
                the territorial limits of such special school
                district and/or incorporated city or town,
                may be a pledge of taxes to be levied only
                upon taxable property within that portion of
                the county or metropolitan government lying

           1 5
               I t i s p o     s s i b       l e      t h e c o u r t m     i s r e a d     t h i s p r o h i b i t i o n a s a p p l y i n g t o
c a p i t a l o u t l a y     n o t e    s         w h e n , i n f a c     t , i t a       p p e a r s t o h a v e a p p l i e d o n l y t o “ g r a n t
a n t i c i p a t i o n n o   t e s .    ”           T . C . A . § 5 -     1 0 - 5 0 1 (   b ) ( 6 ) .    O r , p e r h a p s t h i s c o u r t i s
m i s s i n g s o m e l i     n k i      n         t h e l e g i s l a t   i v e c h a     i n .

                                                                                     2 2
               outside the territorial limited of such
               special school district and/or incorporated
               city or town. . .”
          There could not be a clearer statement of the
          legislative intent that the only way to avoid
          proration, as required by T.C.A. 49-3-1003, is a pledge
          of taxes to be levied only upon taxable property within
          that portion of the county lying outside the
          territorial limits of a city. Therefore, there is
          no”conflict,” as existed with the earlier statute,
          between the statute relating to general public
          obligations and the statute relating to school
          financing, and reading them in pari materia, the result
          is that the proceeds of general obligation bonds,
          capital outlay notes, and all other bonds and notes are
          considered “school bonds” and are subject to the
          proration mandate of T.C.A. 49-3-1003.

                    We affirm the decision of the Chancellor in respect to
the decision requiring Bradley County to share the proceeds of

the Notes with the City.

                                                    V. CONCLUSION

                    There being no dispute as to any material fact in this

matter, the Trial Court correctly granted Bradley County’s motion

for summary judgment on the declaratory judgment portion of the

Complaint and correctly granted the City’s motion for summary
judgment on the money debt.                               For the reasons stated above, the

judgment of the Trial Court is affirmed and the cause remanded

for collection of costs below.                                     Costs of this appeal are adjudged
equally against the parties and their sureties.

                                                            _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
                                                            H o u s t o n M . G o d d a r d , P . J .

C O N C U R :

_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
H e r s c h e l P . F r a n k s , J .

                                                                  2 3
        ( N o t P a r t i c i p a t i n g )
D o n   T . M c M u r r a y , J .

                                              2 4