text:
    Gene Courtney SUTTLE and Wanda Wideman Suttle v. Robert C. TUCKER.
    79-712.
    Supreme Court of Alabama.
    May 1, 1981.
    R. A. Ferguson, Jr., of Leach, Hampe, Dillard & Ferguson, Birmingham, for appellants.
    Charles E. Robinson, of Church, Trussell & Robinson, Pell City, for appellee.
   PER CURIAM.

Tucker sued the ■ Suttles for blocking a road leading from a paved road over his land, and over land owned by the Suttles. This blockage deprived Tucker of a convenient and direct access to a public highway.

Tucker contended that the road was public, and had been for more than 50 years. To that contention, the Suttles say, well, it may have been a public road in the past, but for the last 25 years there has been little to no use of the alleged road. Therefore, it is no longer a public road.

After hearing the case ore tenus, and after personally viewing the lands relating to the disputed roadway, the trial court found:

The road in dispute is located on lands situated near the Odenville area, a community located in western St. Clair County, Alabama, and is near churches and other development areas of the community of Odenville, Alabama.
The Court finds that the road, as described in the complaint, leading across the lands owned by the defendants to the lands owned by the plaintiff is a public road, and had been used by the public continuously for many years.
The Court finds from the testimony that many years ago in the vicinity of where the plaintiff’s property is located, that there were several homeplaces; that the residents used the said road as a means of ingress and egress; that one of the witnesses, viz: T. M. Campbell testified that he had lived in the vicinity of the said road for sixty years, and that he had traveled the said road on many occasions going from Odenville to a water mill known as Coleman Mill; that the last time he traveled the road was in the early 1950’s; that the road was considered public.
Other witnesses testified that the road was used by the public.
The plaintiff testified that even though the public in general has not used the road in several years, he and his family have continued to use the road as a means of ingress and egress up and to the time the defendants stopped them prior to the filing of the complaint.
The Court further notes that a geodetic survey map of the areas was introduced into evidence which clearly defined the road in question.
The Court further finds that the defendants were well aware of the plaintiff’s contention that the road was public at the time he blocked the road and prohibited the plaintiff from using said road.
After hearing the testimony, the Court accompanied by the attorneys representing the plaintiff and defendants, went to the property and personally viewed the old road. From viewing the area, the Court has determined that there clearly is a road bed as described in the complaint.

From these findings, the trial court ordered the obstruction removed, and enjoined the Suttles from closing or blocking the road, or in “any manner obstructing the public road.”

As a general rule, an open, defined roadway in continuous use by the public, without let or hindrance for a period of 20 years becomes a public road by prescription. The burden is on the landowner to show permissive use only in recognition of his title, and his right to reclaim possession. Ritter v. Hewitt, 236 Ala. 205, 181 So. 289 (1938); Scruggs v. Benson, 246 Ala. 405, 20 So.2d 774 (1945).

This Court has said that it is the character rather than the quantum of use that controls whether a road is public. Valenzuela v. Sellers, 246 Ala. 329, 20 So.2d 469 (1945). Here, the character of the road was clearly defined by a geodetic survey; the trial judge viewed the road, and found it to exist. We, therefore, conclude that the character of the road, rather than the quantum of use is controlling. Finally, the fact that the “public” has moved out does not destroy the character of the road. Davis v. Linden, 340 So.2d 775 (Ala.1976).

We opine that the trial judge was correct in finding the disputed road to be a public one. His decree is, therefore, affirmed.

AFFIRMED.

MADDOX, FAULKNER, ALMON, EM-BRY and ADAMS, JJ., concur.


source: Caselaw Access Project

author: ALMON, Justice.

license: Public Domain

text:
    Mary Ruth TAYLOR v. Cecil H. TAYLOR.
    79-932.
    Supreme Court of Alabama.
    May 1, 1981.

      Chris S. Christ and Michael Sheier, Birmingham, for appellant.
    Bobby R. Newman of Nolen & Newman, Fayette, for appellee.
   ALMON, Justice.

Cecil and Mary Ruth Taylor were divorced in 1975. As part of the divorce decree, the judge awarded Mary Ruth possession of the Taylors’ forty acres during the minority of the Taylors’ children. In July of 1979, Cecil petitioned the court to sell the property and divide the proceeds. The trial judge determined that Cecil was entitled to his requested relief and entered an order which provided in part:

Therefore, it is the Order, Judgment and Decree of this Court, that the Clerk of the Court proceed to sell the above described lands at public outcry, to the highest bidder for cash, in front of the East door of the Courthouse at Fayette, Alabama, after having given notice of the time, place and terms of the sale with a description of the land to be sold, for thirty (30) days by advertising for four (4) successive weeks in the Marion County, The Journal Record, a newspaper of general circulation published in Marion County, Alabama.
After such sale has been made, the Clerk will make and file in his office a written report of said sale, and that said report shall lie over in the Office of the Clerk for five days for exceptions and objections thereto by any party of interest, and after the expiration of said five days, the Clerk shall forward said report of sale together with the exceptions or objections, if any, which have been interposed to the Judge of said Court for consideration and decree.

Although not clear from the record, it appears that notice of the sale which was to be held on February 18,1980, was published before the sale was stayed pending an April 28,1980, hearing on Mary Ruth’s motion for new trial. When her motion was denied at that hearing, the trial judge issued an order which provided, in part:

It is further ORDERED, ADJUDGED AND DECREED, by this court that the Clerk is hereby ordered to advertise for sale the land, which is the subject of this law suit, for two (2) successive weeks in the Marion County, The Journal Record, a newspaper of general circulation published in Marion County, Alabama, and sell the same under the terms as heretofore specified by orders of this Court.

The notice of sale published in The Journal Record on May 1,1980 and May 8,1980, provided:

Notice is hereby given that under the terms of the decree rendered in this cause on January 11, 1980, I, Pride Gann, Clerk of said Court, will sell at public auction to the highest bidder for cash, in front of the West door of the Courthouse in Marion County, Alabama, on Friday, May 9, 1980, during the legal hours of sale, said legal hour being 11:00 A.M., the following described real estate, to-wit:
[description of the property to be sold] Pride Gann Circuit Clerk 5-1,8

The sale was held on May 9, 1980, in accordance with the notice. Cecil Taylor was the successful bidder at a purchase price of $42,000.00. The clerk of the circuit court filed the report of sale with trial judge on May 15, 1980, and he confirmed the sale after finding:

And it appearing to the Court that said sale was fairly and legally conducted in accordance with law and the former decree of this Court and the price paid for said property not disproportionate to the real value of said real estate; that said Clerk’s Report has lain over in his office for five (5) days for the filing objections or exceptions and none have been filed.

On June 26, 1980, Mary Ruth Taylor filed notice of appeal.

The question we must initially decide is Cecil’s motion to dismiss this appeal. He contends that Mary Ruth’s motion for new trial was denied on April 28, 1980, that the order denying same was entered on the docket on that date, and that the forty-two day period provided by Rule 4, ARAP, within which she could appeal expired on June 9,1980. He argues that Mary Ruth’s notice of appeal filed June 26, 1980, is untimely and therefore is due to be dismissed pursuant to Rule 2(a), ARAP.

It is a well established rule that, with limited exceptions, an appeal will lie only from a final judgment which determines the issues before the court and ascertains and declares the rights of the parties involved. Kelley v. U.S.A. Oil Corp., 363 So.2d 758 (Ala.1978); Alabama Public Service Commission v. Redwing Carriers, Inc., 281 Ala. 111, 199 So.2d 653 (1967). Decrees and orders entered in equity proceedings involving the sale and division of real property present an unusual situation, as this Court has previously noted:

Equity decrees may be partly final and partly interlocutory. A decree which ascertains and declares the rights of the parties and settles the equities is a final decree, although it provides for further proceedings under the direction of the court in order to make the final decree effective, such decree is interlocutory and remains within the control of the court because as to such decree and further proceedings thereunder the cause remains in fieri. * * *
This rule is strikingly illustrated in suits in equity to sell lands for division. When the court orders the land sold, that decree is final insofar as it will support an appeal. Three illustrations of our entertaining appeals from such decrees are Berry v. Berry, 266 Ala. 252, 95 So.2d 798; Coppett v. Monahan, 267 Ala. 572, 103 So.2d 169; Raper v. Belk, 276 Ala. 370, 162 So.2d 465. We have also held that the decree confirming the sale is the final decree in judicial proceedings for the sale of lands for division, Pettit v. Gibson, 201 Ala. 177, 77 So. 703; and that a sale of land for division among joint owners is not binding until confirmed by the court.

Sexton v. Sexton, 280 Ala. 479, 195 So.2d 531 (1967) (citations omitted).

It is clear from the notice of appeal that Mary Ruth does not appeal from the decree ordering the sale, but instead appeals from the decree confirming the sale. The forty-two day period for appeal from that decree, which was entered on May 15, 1980, would have expired on June 27, 1980. Mary Ruth’s notice, filed on June 26, 1980, was therefore timely filed. Cecil’s motion to dismiss the appeal is due to be denied.

The thrust of Mary Ruth’s first argument is that, the trial judge erred to reversal when he confirmed the sale which had not been preceded by the requisite publication. We disagree because we conclude that Mary Ruth may not now raise questions concerning the sufficiency of the notice of sale.

The rule which controls this case was established in Cargile v. Ragan, 65 Ala. 287 (1880). In that case the Cargiles’ land was purchased by Cunningham at a judicial sale. Cunningham subsequently conveyed the land to the Ragans. Four years after the judicial sale to Cunningham had been confirmed by the court, Ragan sued to recover possession from the Cargiles. The trial judge refused to permit the Cargiles to attack, by way of objecting to its admission, the judicial sale and confirmation. In affirming the trial judge, this Court stated:

The sale by the register was subject to confirmation by the court, and unti confirmation it was incomplete, conferring only inchoate rights. Its confirmation rested in the sound discretion of the court; and if irregularities intervened in making the sale — if it was made at an improper time or place — these irregularities were the subject of exception to its confirmation. If not made the subject of an exception, they are cured by confirmation; and afterwards it must be intended, that the court, in confirming, ascertained and adjudged that no injury had resulted from them. Certainly, a party to the suit,' having full opportunity to except to the report of sale, because of them, and who was silent, can not be heard collaterally to question the validity of the sale, because of them. * * * * The appellant, when he had the opportunity of contesting, and when, if dissatisfied, he ought to have complained, acquiesced in the sale, and can not now question its validity.

65 Ala. at 292. This principle was recently applied by this Court in Conville v. Liveoak, 342 So.2d 1319 (Ala.1977), and Baer v. Alco Land and Timber Company, Inc., 291 Ala. 640, 285 So.2d 913 (1973). See also Harris v. Stevenson, 147 Ala. 537, 41 So. 1008 (1906); In Re Burr Mfg. & Supply Co., 217 F. 16 (2d Cir. 1914). Although these cases involved a collateral attack upon the validity of the sale, the principle remains the same when the attack is a direct one: a party to a judicial sale who has an opportunity to except to irregularities surrounding the sale, but who fails to raise the objection or exception may not later attack the validity of the sale in an appellate court of this State.

By virtue of the decree entered January 15, 1980, Mary Ruth had notice that the clerk’s report of the sale would “lie over in the Office of the Clerk for five days [following the sale] for exceptions and objections thereto by any party of interest * * .” The record is devoid of any evidence that Mary Ruth filed any objections or exceptions to the sufficiency of the publication which preceded the sale. She is therefore precluded from raising for the first time on appeal an issue she should have raised before.

In her second argument, Mary Ruth, contends the trial judge erred to reversal when he failed to consider the provisions of Code 1975, § 35-6-100, which provides:

Upon the filing of any petition for a sale for division of any property, real or personal, held by joint owners or tenants in common, the court shall provide for the purchase of the interest of the joint owners or tenants in common filing for the petition or any others named therein who agree to the sale by the other joint owners or tenants in common or any one of them. Provided that the joint owners or tenants in common interested in purchasing such interests shall notify the court of same not later than 10 days prior to the date set for trial of the case and shall be allowed to purchase whether default has been entered against them or not.

Mary Ruth apparently interprets this statute to require that, when a proceeding for sale for division has been instituted, a joint owner who desires to purchase his property at a judicial sale must give notice of same to the court at least ten days prior to trial. She contends Cecil failed to give such notice. Mary Ruth’s interpretation of the statute is incorrect. It does not mandate that in every instance where a joint owner desires to purchase the property he must give notice of that desire. It merely provides a method of avoiding the necessity of a public sale by compelling the court to sell the property to a joint owner if the other owners consent to such sale. The fact that Cecil failed to invoke the provisions of § 35-6-100 in no way affects the validity of the sale.

For the foregoing reasons, the trial judge’s decree confirming the sale is due to be affirmed.

MOTION TO DISMISS DENIED; AFFIRMED.

TORBERT, C. J. and FAULKNER, EM-BRY and ADAMS, JJ., concur.


author: FAULKNER, Justice.

text:
    W. R. PIERCE v. Violet G. WEBB et al.
    80-420.
    Supreme Court of Alabama.
    May 5, 1981.
    Buster Landreau of Faulk & Landreau, Phenix City, for appellant.
    Joseph W. Smith and W. Donald Morgan, Jr. of Smith, Smith & Morgan, Phenix City, for appellees.
   FAULKNER, Justice.

This is an appeal from an order dismissing Pierce’s action after finding it was barred by the statute of limitations of one year. We affirm.

On July 27, 1976, Pierce sued Ms. Webb, individually, and doing business as Webb Sand and Gravel Company, for injunction and incidental relief. He alleged that she had altered the natural flow of surface water near his property, and caused it to be channeled onto his property in excessive quantities. Webb in her answer did not specifically plead the statute of limitations. However, at the conclusion of Pierce’s evidence, she moved to exclude it because it showed that the claim was barred by the one-year statute of limitations. Next, at the close of the case, she filed an amended answer under Rule 15(b), ARCP, to conform to the evidence. And, there she specifically pleaded the statute of limitations.

The sole issue presented for review is whether the amended answer pleading the defense of statute of limitations at the close of the case should have been permitted by the trial court. We hold that the amended answer was permissible.

Pierce contends that the defense of statute of limitations must be specifically pleaded for it to be available as a defense. Moreover, he contends under the authority of Robinson v. Morse, 352 So.2d 1355 (Ala. 1977), that the defense, if not specifically pleaded, is generally deemed to have been waived.

Jutice Blood worth wrote in Robinson that Rule 8(c), ARCP, requires that the affirmative defense of the statute of limitations be affirmatively pleaded, and, if not pleaded, the defense is generally deemed to have been waived. But, he also wrote that there are exceptions to the rule, citing 5 Wright & Miller, Federal Practice and Procedure § 1278. The case before us falls within an exception to the rule. Here, the defense of the statute of limitations was raised before judgment by the amended answer to conform to the evidence. In Robinson the defense was raised six days after judgment.

Rule 15(b), ARCP, permits a trial judge within his discretion to allow amended pleadings. Stead v. Blue Cross-Blue Shield of Alabama, 294 Ala. 3, 310 So.2d 469 (1975). Here, the evidence shows that the defense of the statute of limitations was established by the direct examination of Pierce. That being so, that issue was tried by the implied consent of the parties; there was no objection to the introduction of the evidence. Therefore, Webb’s amendment was properly allowed. Cf. Committee Comment, Rule 15, ARCP.

AFFIRMED.

TORBERT, C. J., and ALMON, EMBRY and ADAMS, JJ., concur.


author: BEATTY, Justice. EMBRY, Justice,

text:
    James Noble HARRELL et al. v. Hal M. DODSON, Jr., et al.
    79-277.
    Supreme Court of Alabama.
    May 8, 1981.

      George Beck, Montgomery, for appellants.
    Jere L. Beasley and Frank M. Wilson, Montgomery, for appellees Hal M. Dodson, Jr. and Sharon D. Dodson.
    C. Lanier Branch, Montgomery, for ap-pellee Rossi & Turner Realty, Inc.
    Robert C. Black of Hill, Hill, Carter, Franco, Cole & Black, Montgomery, for ap-pellees Jean M. Evans and Stowers-Abrell, Inc.
   BEATTY, Justice.

This action was brought by James N. Harrell and his wife Jennifer W. Harrell for damages allegedly suffered by them as a result of fraudulent misrepresentation and concealment, negligence and wanton misconduct in connection with the sale to them of a dwelling house.

The Harrells appeal from the final judgment entered on a directed verdict in favor of Hal M. Dodson and wife Sharon D. Dodson, sellers of the house; Rossi & Turner Realty, Inc., their broker; Stowers-Abrell, Inc., purchasers’ broker; and Jean Evans, its agent. We affirm.

The Dodsons sought to sell their fifty year old house through Rossi & Turner Realty, Inc., using their daughter Cathy Ber-man as listing agent. The house was sold to Mr. and Mrs. Harrell who had previously engaged the services of Jean Evans, a salesperson of Stowers-Abrell, Inc., to locate a house for them.

The Harrells were first shown the house by Jean Evans. When questioned about Mrs. Evans’s representation concerning the house Mrs. Harrell testified as follows:

Q During your observation of the house, did you have an occasion to ask Mrs. Evans any questions about the condition of the house?
A Well, after we got around the house, I asked her questions. I asked her specifically about the wiring and the plumbing and the condition of the roof, the possible condition of the foundations.
Q Did she reply?
A She did. She said that if the property passed the VA appraisal, it would be basically sound and she said we would not have to worry.
Q Did she say it would be VA appraised?
A Yes, she did.
Q What did she say about that?
A As I recall, she said the appraisal would be done. It hadn’t yet been done.
Q Did you ask her about these conditions one time or more than once?
A I asked her about the conditions probably several times but at the same period of time.
Q In other words, would you move into one room and ask about the condition or were you all in one room standing-
A No, we were all in one room standing.
Q During this conversation, you asked her several times about the condition of the house?
A Yes.
Q And what was her response each time?
A That we would not have to worry because it would be looked at professionally. It would be appraised.
Q Did she say by whom it would be appraised?
A She said the Veterans Administration. It would be appraised and inspected by the Veterans Administration.

Neither Jean Evans, nor any of the other defendants, made any other representations regarding the condition of the house with the exception of a description of it contained in a multiple listing book. Mr. Harrell testified he had seen the listing book and it stated the house was in excellent condition. That listing had been taken by Cathy Berman and placed with the multiple listing service through Rossi & Turner Realty, Inc.

The Harrells inspected the house and satisfied themselves that it was in good condition. It was inspected by a VA approved appraiser upon the basis of whose appraisal the house was approved for a VA guaranteed loan on it as an existing house, not newly constructed. After the loan was closed on July 15, 1978, the sale concluded, and the Harrells had moved into the house, cracks in the walls, bulges in paneling, warped doors and frames and unlevel floors began to appear. The Harrells consulted two structural engineers who attributed these problems to settlement and movement of the house and concluded that repairs would be costly.

With the exception of the Dodsons’ testimony, there was no evidence the other defendants knew any more about the condition of the house than a visual inspection, such as the one made by the Harrells, would reveal. Regarding the Dodsons’ knowledge of the condition of the house, there was evidence that Mr. Dodson had, on occasion, leveled the floors, patched mortar cracks and replaced bricks in the exterior brick work. Fifteen to seventeen months before selling the house, Mr. Dodson had hung new wallpaper over an area where cracks in the plaster had previously been filled.

We must decide whether there was sufficient evidence to present a jury question as to whether any of defendants were guilty of fraudulent misrepresentation or concealment, negligence or wanton misconduct proximately resulting in damage to the Harrells.

First we address the issue of misrepresentation. The elementary rule is that evidence of misrepresentation of a material fact must be shown to support a claim for damages on account of a misrepresentation. Code 1975, § 6-5-101. This court has stated that:

Whether a given representation is an expression of opinion or a statement of fact depends upon all the circumstances of the particular case, such as the form and subject matter of the representation and the knowledge, intelligence and relation of the respective parties. The mere form of the representation as one of opinion or fact is not in itself conclusive, and in cases of doubt the question should be left to the jury. [Citations omitted.]
Whenever a person states a matter which might otherwise be only an opinion, not as a mere expression of his own opinion but as an existing fact material to the transaction, so that the other party may reasonably treat it as a fact, the statement clearly becomes a statement of fact. [Citations omitted.] [Fidelity & Casualty Company of New York v. J. D. Pittman Tractor Company, 244 Ala. 354, 358, 13 So.2d 669, 672 (1943).]

The representation of Jean Evans which we have quoted is, in our considered opinion, not a misrepresentation of material fact but a statement of opinion only. Although there is however testimony that Jean Evans made that statement in response to the Harrells’ specific inquiries, the statement itself and the circumstances under which it was made leave no doubt in our minds that it was a sales “puff.” The testimony of Mr. Harrell affirmatively supports this conclusion. On cross-examination Mr. Harrell testified as follows:

Q Well, what representation — you have filed a suit against her, and you say in the complaint that Mrs. Evans made false statements to you concerning this transaction, and I want you to tell us what those false statements are.
A Well, I think that the point here is that the house was probably not even as Mrs. Evans thought it was. Now, I don’t want to be — you know, this is not a personal vendetta, but I’m saying that the house was sold as one thing and turned out to be another thing, and that the agent of that sale happened to be Mrs. Evans.
Q To your knowledge, did Mrs. Evans have any knowledge of any of the defects that you later found?
A To my knowledge, no.
Q Did she, to your knowledge, conceal any condition?
A I would have no way of knowing this.
Q All right. So, do you know of any facts that have led you to believe_
A Nothing that would lead me to suppose so.
Q —that she either made any false statements to you or concealed any facts from you? Do you have any knowledge of any facts of that?
A I’m hard pressed to know what, you know, what kind of evidence that I could have to know, I mean_
Q That’s what I am asking you, what evidence do you have?
A I don’t know.
Q All right, sir. In regard to the VA appraisal, did she make any representations to you as to what that appraisal represented, or what it was supposed to be?
A I don’t recall. I don’t recall the, you know, exact discussion about the VA, except I remember Mrs. Evans saying the VA, you know, approved it, it had to be basically sound. This did not distress me because I certainly would assume that myself.
Q You would assume that was the case also?
A Absolutely. ...

At the close of his testimony Mr. Harrell reiterated his testimony:

Q All right. Now, in your complaint, Mr. Harrell you say that Mrs. Evans — the plaintiff requested of defendant agent as to the condition of the roof, foundation, sewer, plumbing, electrical wiring, and general soundness of the residence, and plaintiff inquired of defendant agent — and by the way, defendant agent is Mrs. Evans, and that’s how she is identified in the complaint — as to whether said residence would be thoroughly inspected and appraised, and defendant agent stated in reply that plaintiff could rest assured that if the residence passed the VA inspection and appraisal, then the house was sound; is that the allegation? Tell me about any conversations in which Mrs. Evans said that the condition of the roof, foundation, sewer, plumbing, and electrical wiring was sound. Is that a specific thing that she said to you all, either you or your wife?
A I don’t know whether, you know, — I don’t know to what extent these problems were addressed.
Q Are you saying that just in general she said that the house appeared sound?
A This is my remembrance of the conversation, yes. I cannot recall it precisely.
Q You can’t recall really specifically in discussing the roof or foundation or the sewer or plumbing or wiring?
A I — we may have. I didn’t say — I can’t say categorically.
Q You can’t say whether you did or didn’t?
A No. We’ve talked about the condition of the house, but I don’t remember how much time we spent on any given part.
Q All right. I gathered your real complaint about Mrs. Evans is that she told you that it would be appraised by a qualified VA appraisal, is that your basic complaint against her?
A Well, yes. This certainly, you know, would have a bearing.
Q Do you have any other complaints of any wrong that Mrs. Evans did to you other than that?
A No. As I said earlier, I see — Mrs. Evans represented the house as it was given to her to represent. I feel that she did that fairly.

Additionally, there is testimony that VA appraisers are required to inspect older homes, note deficiencies and recommend repairs to make the house safer, sound and sanitary under the VA’s basic standards. Although the VA does not guarantee the condition of the property or assume responsibility for its condition, still this evidence discloses that the VA is not indifferent to its condition. The form Certificate of Reasonable Value, issued by the VA, provides for the specification of repairs to be completed. The salesperson, who filled out the sales contract, understood that the VA appraisal was important. When she executed the contract she specifically provided: “Seller to pay for any repairs required by VA.” It is clear from these circumstances that her statement was thus one of her own opinion and not a statement of fact, and therefore there was insufficient evidence of an actionable misrepresentation by Jean Evans on which to go to the jury. Cf. Ray v. Montgomery, Ala., 399 So.2d 230 (1980).

There is evidence of only one other representation, made by any of the defendants, that plaintiffs contend misled them. That was in the form of a notation that Mr. Harrell allegedly saw in a multiple listing book while riding with Jean Evans to inspect certain houses the Harrells might be interested in buying. That listing noted the condition of the house as “exc.,” allegedly meaning excellent. The listing was taken by Cathy Berman and placed with the Multiple Listing Service by Rossi & Turner Realty, Inc. There is no evidence the notation was pointed out to the Harrells in answer to some specific question. In fact, there is no evidence to provide a basis for attaching to that representation an implied underlying representation of material fact that the house was in excellent condition justifying reliance upon it as such rather than merely an opinion to the same effect. We therefore conclude the Harrells failed to adduce sufficient evidence to support a cause of action for misrepresentation or fraud based upon the notation in the multiple listing book.

Respecting the issue of fraudulent concealment under Code 1975, §§ 6-5-102 and 6-5-104, one charged with that act or acts, must either be under an obligation to communicate either by virtue of the existence of a confidential relationship, or from the particular circumstances of the case, or must knowingly conceal a material fact with intent to deceive. There is no evidence to support an inference that Stowers-Abrell, Inc., Rossi & Turner Realty, Inc. or Jean Evans knew any material facts about the house that, under those tests, were fraudulently concealed. As a matter of law, one can only be liable for concealing facts of which one has knowledge. Brasher v. First National Bank of Birmingham, 232 Ala. 340, 168 So. 42 (1936).

Examining the record regarding the sellers, we find that Mr. Dodson testified that he had made several repairs over a period of years, including jacking up floors and repairing cracked plaster. Although this might conceivably be evidence of sellers’ knowledge of some past settling of the fifty year old house, sellers owed no duty of disclosure to the purchasers. The purchasers were allowed to, and did, fully inspect the house. The purchasers asked no questions nor had any communications with the sellers regarding the condition of the house. The evidence that the sellers made certain repairs on the house, the most recent of which was made over a year before the house was sold, does not, without more, give rise to a reasonable inference that the sellers intentionally concealed a material fact for the purpose of continuing a false impression or suppressing inquiry, and thereby effecting a sale. Ray v. Montgomery, supra; Cashion v. Ahmadi, Ala., 345 So.2d 268 (1977). We conclude that a verdict was properly directed on the issue of fraudulent concealment as to all defendants.

Finally, we must consider whether the trial court erred in directing a verdict for all defendants on the Harrells’ negligence and wanton misconduct claims. The Harrells alleged, as the bases for those claims, that defendants undertook to advise and represent to them the condition and market value of the house and that advice and those representations were negligently, willfully or wantonly made by the defendants, who negligently, willfully and wantonly inspected, examined, appraised, or represented the condition and value of the house to the Harrells. The only evidence of any advice or representations made to the Harrells regarding the condition or value of the house is that discussed previously regarding the claim for misrepresentation. Clearly, there is no evidence that any of the defendants, except Jean Evans, undertook in any manner to advise or make representations to the Harrells.

The trial court did not err in directing a verdict in favor of all of the defendants and therefore the judgment as to all defendants is due to be, and is, hereby affirmed.

AFFIRMED.

TORBERT, C. J, and FAULKNER, JONES, ALMON and SHORES, JJ., concur.

MADDOX, J., is recused.

EMBRY and ADAMS, JJ., dissent.

EMBRY, Justice,

dissenting:

I must respectfully dissent. I cannot agree that the trial court did not err in directing a verdict in favor of the defendant Jean Evans and her principal, Stowers-Abrell, Inc. In her role as agent for the Harrells, when inquiry was made of her by them concerning the house under discussion for possible purchase by them, she was under a duty to disclose anything she knew concerning that house, and conditions of the soil in the Montgomery area that might affect the foundation causing cracks and similar kinds of damage, gained from information commonly known to the community and especially to those engaged in the sale of dwelling houses. The evidence is clear that she was an experienced real estate agent and was completely familiar with those conditions.

In the majority opinion a statement of Jean Evans made to the Harrells is set out to the effect that they (the Harrells) would not have to worry because it (the house) would be looked at professionally. It would be appraised and inspected by the Veterans Administration. This is not the only representation made by Evans to the Harrells. Mrs. Harrell testified, when asked about any statement that Jean Evans may have made concerning that house, that: “. . . She [Jean Evans] said that if the property passed the VA appraisal, it would be basically sound and she said we would not have to worry.” Mr. Harrell testified that Mrs. Evans said the VA, you know, if it approved it, it had to be basically sound. These statements by Mrs. Evans are more than statements of mere opinion; they amount to representations of present fact and are, therefore, in my judgment, actionable. The record is clear to the effect that the trier of fact, the jury, would certainly be authorized from all the evidence in the case to conclude that not only were they misrepresentations of fact but they were also relied upon by the Harrells to their detriment. Clearly, this evidence was sufficient to submit the case to the jury as to the liability of Jean Evans and, vicariously, that of Stowers-Abrell.

Therefore, directing a verdict in favor of Mrs. Evans and Stowers-Abrell, Inc., is reversible error and requires reversal of the judgment as to those parties and retrial of the case regarding their liability regarding the issue of actionable misrepresentation.

ADAMS, J., concurs.


author: MADDOX, Justice. TORBERT, Chief Justice,

text:
    LAKESHORE DRIVE RECREATION CLUB, INC. v. UNITED STATES FIDELITY AND GUARANTY COMPANY.
    79-796.
    Supreme Court of Alabama.
    May 8, 1981.
    Edward F. Morgan, Tuscaloosa, for appellant.
    Robert B. Harwood, Jr. of Rosen, Wright, Harwood, Albright & Cook, Tuscaloosa, for appellee.
   MADDOX, Justice.

Appellant Lakeshore Drive Recreation Club, Inc., appeals the granting of summary judgment in favor of appellee United States Fidelity and Guaranty Company (USF&G). For the reasons hereinafter set forth, we reverse and remand.

I

On August 3, 1973, Southeast Contractors, Inc., a highway construction company, entered into a construction contract with the State of Alabama for the widening and altering of 15th Street East in Tuscaloosa. Under the terms of this contract, Southeast was required to carry at least $100,000 in liability insurance to cover all damages arising out of injury to or destruction of any public or private property. In addition, Southeast was required to restore in an acceptable manner all property, public and private, damaged incident to the prosecution of the work.

In compliance with these contractual provisions, Southeast secured a series of one-year liability insurance policies from USF&G and executed a performance bond with Travelers Indemnity Company. The USF&G policies contained specific provisions requiring the insured to notify USF&G in the event of an “occurrence,” the making of a “claim,” or the filing of a “suit.” An “occurrence” was defined under the policy as “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.” The notice provisions were as follows:

4. Insured’s Duties in the Event of Occurrence, Claim or Suit
(a) In the event of an occurrence, written notice containing particulars sufficient to identify the Insured and also reasonably obtainable information with respect to the time, place and circumstances thereof, and the names and addresses of the injured and of available witnesses, shall be given by or for the Insured to the Company or any of its authoritized [sic] agents as soon as practicable.
(b) If claim is made or suit is brought against the Insured, the Insured shall immediately forward to the Company every demand, notice, summons or other process received by him or his representative.

Furthermore, the policy expressly provided that:

No action shall lie against the Company unless as a condition precedent thereto, there shall have been full compliance with all of the terms of this policy, nor until the amount of the Insured’s obligation to pay shall have been finally determined either by judgment against the Insured after actual trial or by written agreement of the Insured, the claimant and the Company.

On August 30,1973, Southeast began construction on 15th Street East. Almon & Associates, Inc. was the designated Project Engineer, with Robert Almon as the “principal in charge” of construction. As the work progressed, Lakeshore Drive Lake, a small lake located approximately one city block from 15th Street East, began to deteriorate as a result of erosion and siltage buildup caused by the construction. These siltage problems were noticed as early as September of 1974 when Scott Bonner, an employee of Almon & Associates, had numerous discussions with Benton Andrews, the project superintendent for Southeast, concerning the serious damage to Lake-shore Drive Lake. On February 17, 1975, Almon received a letter from Joe Shepherd, the president of appellant Lakeshore Drive Recreation Club, in which Shepherd alluded to the Club’s “claim” against Southeast for damages to Lakeshore Drive Lake, and requested that Southeast either restore the lake to its previous condition or pay the Club damages in an amount sufficient to restore the lake. Pursuant to that letter, Almon inspected the construction site and instructed Southeast not to take any action until the project was satisfactorily grassed and further erosion prevented. Almon suggested that after the project was completed Southeast should take appropriate action to remove the sediment from the lake.

On February 20, 1976, the project was officially completed and accepted by the State except for the restoration of Lake-shore Drive Lake. Bobby J. Kemp, Division Engineer for the Division Office of the State Highway Department, formally notified the Club of this limited acceptance by letter dated April 9, 1976. In addition, Kemp notified Southeast that the State was withholding approximately $130,000 in re-tainage pending the satisfactory restoration of the lake.

On April 6, 1976, Mrs. Joseph Shepherd, who succeeded her husband as president of Lakeshore Drive Recreation Club, forwarded a letter to Southeast in which she stated that the grassing of the project was complete and she requested that Southeast begin restoration of the lake as soon as possible. In that letter Mrs. Shepherd expressly stated that “Lakeshore Recreation Club hereby files its claim against Southeast Contractors, Inc. for damages to its lake caused by excessive silting originating from construction of Fifteenth Street East in Tuscaloosa, Alabama”; however, no civil action was actually filed.

In May of 1976, Southeast moved equipment to the lake and initiated dredging efforts to clean out the silt. When these dredging efforts met with very little success, a dragline had to be brought onto the project. In late 1976, Southeast advised Frank House of Engel-House Insurance of the serious problems it was having with the lake. Engel-House was both the general independent agent authorized to represent USF&G and the area representative for Travelers Indemnity Company. In an affidavit, House stated that he believed Southeast contacted him “not for the purpose of inquiring about the possibility of coverage for the matter under any of the [USF&G] liability policies, but, rather, ... for the purpose of looking into the possibility of coverage for the matter under the Travelers Performance Bond.”

In March of 1977, Southeast met with various club members, city officials and highway department officials concerning the restoration problems. At this meeting, James W. Riley, Southeast’s attorney, stated that Southeast would not do any more work in restoring the lake because it had already removed more silt than it put in. The State evidently concurred in this determination because it released the retainage due and owing Southeast. Thereafter, the Club’s attorney, Kathryn Rossback, wrote a letter to Southeast stating that the Club’s “claim is again filed.” It was not until June of 1977, that Mrs. Rossback contacted USF&G.

Suit was eventually filed against Southeast on July 26, 1977. Southeast transferred the defense of these cases to USF&G, which declined coverage on the ground that, among other things, Southeast had breached the policy provisions requiring prompt notice of any occurrence, claim or demand. Southeast agreed that it had violated the notice provisions of the policies and, therefore, concluded that denial of coverage by USF&G was both reasonable and valid.

A settlement was eventually negotiated between Southeast and the Club, with a consent judgment being entered against Southeast in the amount of $21,000. When Southeast subsequently became insolvent, the Club proceeded against USF&G on the insurance policies, Travelers on the performance bond and Ray Bass (acting Highway Director for the State of Alabama) for negligently releasing to Southeast money (i. e., the retainage) in which the Club held an interest. USF&G filed a motion for summary judgment which was granted by the trial court pursuant to Rule 54(b), ARCP. The trial court concluded that there was no genuine issue of material fact and that USF&G was entitled to judgment as a matter of law because Southeast breached the notice provisions of the policies.

II

This appeal is limited to the resolution of a single issue, viz., whether the trial court erred in granting USF&G’s motion for summary judgment. The trial court concluded that since Southeast failed to promptly inform USF&G of either the initial damage to the lake (which constituted an “occurrence”) or the Club’s repeated “claims” and demands, it failed to notify USF&G as expressly required under the liability policies and, therefore, precluded the possibility of insurance coverage in the very first instance. The court expressly held that Southeast’s action was “unreasonable as a matter of law,” there being no excuse or justification for the delay in giving notice.

Assuming arguendo that the siltation of the lake is the only possible “occurrence” involved in the instant case, we would agree with the trial court that Southeast was guilty of a failure to give timely notice. It is obvious that Southeast was fully aware of the damage to Lakeshore Drive Lake as early as September, 1974, and was, likewise, apprised of the Club’s “claim” for damages as early as February, 1975. Notwithstanding these facts, USF&G was not informed of Southeast’s potential liability until it received Mrs. Rossback’s letter in June of 1977, over two years later. The Club strongly argues that its discussions with House in May of 1976 constituted constructive notice to USF&G because he was the general independent agent authorized to represent USF&G. Nevertheless, it is clear from House’s affidavit and from letters directed to him that he was contacted by Southeast and Mrs. Rossback as bonding agent under the Travelers performance bond. This notice, therefore, did not constitute notice to USF&G because notice acquired by an agent while pursuing some other person’s business is not constructive notice to his principal. See, Florence v. Carr, 226 Ala. 654, 148 So. 148 (1933); Girard Fire & Marine Ins. Co. v. Gunn, 221 Ala. 654, 130 So. 180 (1930). In view of these facts, the trial court properly concluded that Southeast breached the notice provisions of the insurance policies as concerns the original damage to Lakeshore Drive Lake. Since the Club currently stands in the shoes of the insured in seeking to recover under the USF&G policies, it is bound by Southeast’s dilatory action; however, USF&G was not entitled to summary judgment unless, on the basis of relevant information presented to the trial court, it proved that there was lacking any discerna-ble circumstances under which the nonmov-ing party (the Lakeshore Club) might be able to recover. Ex parte Bagby Elevator & Electric Co., 383 So.2d 173 (Ala.1980); Ragland v. Alabama Power Co., 366 So.2d 1097 (Ala.1978). Upon reviewing the evidence presented to the trial court (i. e., the pleadings, affidavits, letters, answers to interrogatories, contract forms, etc.), we hold there are alternative circumstances under which the Club might be able to recover and, therefore, conclude that summary judgment was inappropriate.

Ill

Under the terms of its contract with the State of Alabama, Southeast was required to carry, without extra compensation, liability insurance in accordance with the Alabama State Highway Department’s standard specifications for highways and bridges. These standard specifications establish standard provisions for general liability policies and include specific instructions for the preparation of insurance policies by companies. The standard property damage liability provisions contemplate insurance coverage as follows:

To pay on behalf of the insured all sums which the insured shall become legally obligated to pay as damages because of physical injury to or destruction of property, including loss of use of any property due to such injury or destruction, hereinafter called “property damage” arising out of acts or omissions at the designated job site which are related to or are in connection with the work .... [Emphasis supplied.]

In the general instructions for usage of the standard insurance form including these provisions, it is expressly provided that the form is “expressed in standard language which may not be amended and no part of which may be omitted. ...” [Emphasis supplied.] Thus, Southeast was required by the terms of its contract to procure adequate liability insurance to cover any property damage resulting from any act or omission incident to the prosecution of the work. In purported compliance with these provisions, Southeast procured liability insurance with USF&G.

We believe that in the instant case an omission incident to the work may have occurred if USF&G failed to satisfactorily restore the lake. As noted previously, Southeast’s contract with the State, in conformity with the standard specifications for highways and bridges, required Southeast, as a part of the final cleaning up, to restore in an acceptable manner all property damaged incident to the prosecution of the work. Furthermore, the contract provided that “[w]hen any damage is done to public or private property by or on account of any act, omission, or negligence of the Contractor he shall make good such damage in an acceptable manner.” Therefore, the restoration of the lake was within the scope of the work. This is even more certain in view of the fact that the State conditionally accepted the project pending the restoration of the lake. If Southeast failed to acceptably restore the lake, this could constitute an omission incident to the prosecution of the work which, according to the contract’s standard insurance provisions, may be included in the coverage under the liability insurance policies; therefore, there exists an alternative set of circumstances under which USF&G may be responsible for liability insurance coverage. Although USF&G is not responsible for damages accompanying the original siltation of Lakeshore Drive Lake, it may be liable for damages for failing to restore the lake.

USF&G argues that it is not responsible for any omission in the restoration of the lake because there is no identifiable “occurrence” to which coverage would apply. USF&G argues that since an “occurrence” is defined under the insurance policies as an accident which results in property damage which is neither expected nor intended from the standpoint of the insured, Southeast’s intentional cessation of restoration efforts will not constitute an “occurrence,” and hence, coverage. USF&G’s argument is based upon the Club’s theory of liability that “the insurance policy in question” is exclusively the one which commenced February 6, 1977, and ended February 6, 1978. USF&G, in its brief, stated:

In its brief, Lakeshore Drive Recreation Club, Inc. (“Lakeshore”) appears to have elected to put all of its eggs into one basket with an attempt to accomplish a reversal on the theory that “the insurance policy in question” is exclusively that one which commenced February 6, 1977 and ended February 6, 1978, and that, therefore, neither the happening of an “occurrence” prior to that time nor the making of a “claim” and the insured’s receipt of a “demand” or “notice” relating thereto prior to that time would have any effect on coverage under the policy. Time and time again throughout its brief, Lake-shore emphasizes that this is its theory of the case.

USF&G is correct in assessing the Club’s theory of liability. In its original brief, the Club argued:

There wasn’t any delay! The defendant in this case knew about the restoration efforts on the lake at the time it issued the policy in question. The restoration work on the lake was going at the time that the policy was issued and the defendant knew that. All of the defendant’s contentions concerning knowledge by Southeast of its damage to Lakeshore Drive Lake in 1975, and in 1976, are moot. The defendant knew that the only work being done on this project was the restoration of the lake at the time the policy was issued. At least that’s the logical inference, as the project was accepted by the State shortly after the defendant issued the insurance policy in 1976, and, if the defendant was businesslike at all in its operation, it should have known what it was insuring in 1977.
The General Agent knew about the work to restore the lake and had had frequent conversations with the President of Southeast Contractors, the insured, about it for months before the policy in question was written. (House affidavit page 67).
* * * * * *
The policy was issued on February 6, 1977, at which time the restoration work on the lake was going on and had been going on for months and on March 17, a little over a month later Southeast Contractors stopped work, contending that it had taken out at that time more silt than they had put in the lake (Rossback affidavit — Tr. 57). Southeast was supported in its contention by the Division Engineer for the State of Alabama, B. J. Kemp, presently Highway Director for the State of Alabama.
At the time Southeast pulled out from its operation, Frank House, General Agent for the defendant, was notified by the President of Southeast Contractors. (Affidavit of Norman Reid — Tr. 87).
On April 26th, 1977, Agent for USF&G, Frank House, was notified by letter from the attorney for the plaintiff. (Rossback Affidavit P. 58).
On June 13, 1977, the defendant was notified by certified mail at its Baltimore office of the fact that Southeast Contractors had stopped work. (Rossback affidavit, Exhibit C Page 62 of the transcript.) Suit was filed on September 5, 1977, and the suits were then turned over to the defendant by Southeast Contractors (Exhibit A to answers to interrogatories Tr. 19).
It is obvious from the circumstances of this case that there was no delay in notification and that not only was there no delay in notification but that the policy was issued to cover the very work that was going on. Now the defendant is trying to escape liability claiming that they did not know about it!
It is plaintiff’s position that there was not only no delay in notification, but there was nothing about which notification could be given under the circumstances of this ease until Southeast stopped clean out operations on March 17, 1977. Up until that time Southeast was performing the only work for which the defendant had issued liability insurance to cover.

USF&G had issued liability policies which were in effect when the siltage initially occurred. Because of this fact, USF&G claims that the Club’s theory of limiting coverage to the policy issued in 1977 creates a dilemma. In brief, USF&G describes what it contends is the Club’s dilemma, as follows:

Having adopted this approach as its theory of the case, the Appellant may thereby escape forfeiture of any available coverage on account of tardy notice, but it does so at the expense of establishing a complete absence of such coverage in the first instance. This is because no “occurrence” for which coverage would be available took place after the February 6,1977 commencement of the policy’s coverage. As of that date the project had been grassed and accepted by the State for almost an entire year and the abandonment of the clean-up effort was announced only 33 days after this policy went into effect.

USF&G’s argument sounds plausible, and a jury or trier of fact, may agree with its interpretation of the policy provisions, but we cannot conclude, as a matter of law, under all the circumstances of this case, that the insured was not under a duty to remove the silt from the lake and restore it, or that it did not breach that duty when it omitted to do what it should have done under the terms of the public works contract, or that as a proximate result of that failure the Club was not damaged, or that the injury suffered was not covered, because it was not within the reasonable expectancy of both contracting parties that it should be covered.

In other words, a trier of fact could conclude that Southeast ended its restoration work because it believed it had already removed more silt than it had put in, and if it erred in this determination or, in some other manner, failed to acceptably restore the lake, an “omission” would have occurred resulting in property damage which Southeast did not intend or expect. Accordingly, we hold that there are circumstances under which appellant Club might be able to recover; therefore, the trial court’s entry of summary judgment is due to be reversed and remanded.

REVERSED AND REMANDED.

JONES, SHORES, BEATTY and ADAMS, JJ., concur.

TORBERT, C. J., and FAULKNER and EMBRY, JJ., dissent.

ALMON, J., recused.

TORBERT, Chief Justice,

dissenting.

I respectfully dissent from the majority’s holding in this case.

Suit was originally filed against both USF&G, the liability insuror, and Travelers Indemnity Company, the surety on the performance bond. Together these two companies provided the insurance required by the State for the project. We are not here concerned with the obligations of Travelers, but only with those of USF&G under its liability policy.

The majority quotes the contract entered into by the State of Alabama and Southeast whereby Southeast agreed to obtain insurance coverage for property damage “arising out of acts or omissions at the designated job site which are related to or are in connection with the work.” The majority goes on to read this contract provision into the contract for insurance negotiated between Southeast and USF&G. It is hornbook contract law that someone who is not a party to a contract cannot be bound by the contract. See, e. g., Calhoun County v. Art Metal Construction Co., 152 Ala. 607, 44 So. 876 (1907); Cowley v. Shelby, 71 Ala. 122 (1881); Birmingham Waterworks Co. v. Brooks, 16 Ala.App. 209, 76 So. 515 (1917). Therefore, there must be some compelling circumstance present before a party is bound by contract terms to which he did not agree.

We found such a compelling circumstance in the case of performance bonds in Royal Indemnity Co. v. Young & Vann Supply Co., 225 Ala. 591, 144 So. 532 (1932). The compelling circumstance justifying the addition of contract terms to which the insu-ror had not agreed was the existence of a statute, now found in Code 1975, § 39-1-1, setting out in detail the type of performance bond required of companies contracting to do work for the State of Alabama, and the terms that such a bond must contain. Even so, before the statute may be “read into” the performance bond, the bond must show on its face that it was executed in compliance with the statute. Waterworks, Gas & Sewer Board of Oneonta v. P. A. Buchanan Contracting Co., 294 Ala. 402, 318 So.2d 267 (1975); American Casualty Co. v. Devine, 275 Ala. 628, 157 So.2d 661 (1963).

There is no statute setting out the requirements a liability insurance policy must meet for projects contracted for with the State. The insurance requirements for the job involved in the present case were merely set out in the contract between the State and Southeast, and USF&G cannot be bound by a contract to which it was not a party. USF&G, therefore, is only bound by the provisions of its own policy.

In the liability insurance policy entered into between USF&G and Southeast, USF&G assumed liability for “all sums which the Insured shall become legally obligated to pay as damages because of A. bodily injury or B. property damage to which this insurance applies, caused by an occurrence." (Emphasis added.) “Occurrence” is defined in the policy as “an accident, including continuous or repeated exposure to conditions, which results in bodily injury or property damage neither expected nor intended from the standpoint of the Insured.” (Emphasis added.) The language in the policy clearly states that only unintentional or negligent conduct was to be covered. The termination of the restoration efforts at the lake was clearly an intentional act. Southeast did not “accidentally” cease work and remove its machinery from the area; it deliberately did so. Since the policy only covers damages “neither expected nor intended from the standpoint of the Insured,” these acts are clearly outside the scope of the policy, and USF&G is not liable for them.

The only possible “occurrence” was the original silting of the lake. The subsequent clean-up effort was only a continuation of the original occurrence. Since USF&G was absolved from liability for this occurrence, due to Southeast’s failure to properly notify USF&G of the Club’s claim, liability cannot be revived by Southeast’s subsequent deliberate abandonment of the clean-up efforts it had undertaken.

Because of the foregoing, I would affirm the decision of the trial court, and I therefore dissent.

FAULKNER and EMBRY, JJ., concur.


author: MADDOX, Justice.

text:
    ALABAMA POWER COMPANY v. ALABAMA PUBLIC SERVICE COMMISSION et al.
    80-98.
    Supreme Court of Alabama.
    May 8, 1981.
    John Bingham, S. Eason Balch, Jr. and Albert L. Jordan of Balch, Bingham, Baker, Hawthorne, Williams & Ward, Birmingham, Robert E. Steiner, III and Wanda D. Dever-eaux of Steiner, Crum & Baker, Montgomery, for appellants.
    Oakley Melton, Jr. of Melton & Espy, Montgomery, for appellee Alabama Public Service Commission.
    Charles A. Graddick, Atty. Gen., Wendell Cauley, Thomas F. Parker, IV and William A. North, Asst. Attys. Gen., for appellee State of Alabama and -affected customers of all electric and gas utilities.
    Robert John Varley of Legal Services Corp. of Alabama, Montgomery, for appel-lees Bessie Prince, Lillian Bilbro and R. C. Gary.
    David M. Olive of McMillan & Spratling, Gilbert E. Johnston, Jr. of Johnston, Barton, Proctor, Swedlaw & Naff, Birmingham, for Alabama Press Ass’n, Alabama Broadcasters Ass’n, Alabama Cable Tel. Ass’n, Cargill, Wilson & Aeree, Inc., and Outdoor Advertising Ass’n of Alabama, amicus curiae.
   MADDOX, Justice.

This is an appeal by Alabama Power Company from an order of the Alabama Public Service Commission in Docket No. 17752, dated October 8, 1980.

Docket No. 17752 was a rule-making proceeding commenced by the Commission pursuant to the requirements of Section 113 of the Public Utility Regulatory Policies Act of 1978 (P.L. 95-617), in order to determine the appropriateness of certain standards for regulating electric utilities. Among these standards were rules for the exclusion of expenditures for political and promotional advertising as operating expenses for rate-making purposes. The Power Company participated in these proceedings, by submission of oral and written comments.

On October 8, 1980, the Commission, by Report and Order, adopted rules regarding advertising, which provide that in future rate proceedings for electric and gas utilities, expenditures for promotional or political advertising shall not be allowed as operating expenses for rate-making purposes.

The initial issue is whether the Commission rule which excludes promotional and political advertising from consideration as operating expenses is an “action or order” in a case involving a controversy respecting rates and charges of the Company under the provisions of Code 1975, § 37-1-140, so that a direct appeal would lie to this Court.

The Commission and other appellees have filed a motion to dismiss the appeal and contend that since rates and charges are not directly involved in this case, this Court does not have jurisdiction of this appeal under Code 1975, § 37-1-140. That section provides:

Direct appeal to supreme court as a matter of right; preferred setting of appeals; time for taking appeals; bond required when appellant is utility or person.
In all cases involving controversies respecting rates and charges of telephone companies or public utilities, an appeal from any action or order of the Alabama public service commission in the exercise of the jurisdiction, power and authority conferred upon it by this title, as amended and supplemented, shall lie directly to the supreme court of Alabama. All such appeals shall be given a preferred setting in the supreme court and shall be heard and determined by said court en banc. Nothing in this subdivision 2 shall be deemed to apply to any such cases other than those in which rates and charges are involved. All such appeals shall be taken within 30 days from the date of such action or order of the Alabama public service commission and shall be granted as a matter of right and be deemed perfected by filing with the public service commission a bond for the security of the cost of said appeal when the appellant is a utility or person, and by filing notice of an appeal when the appellant is the state of Alabama.

The facts on which this appeal is based are not complex. Pursuant to notice and hearing, the Commission adopted the following rule which excludes expenditures for political and promotional advertising from rate-making determinations:

Appendix D

' POLICY STATEMENT

Re: Promotional and Political Advertising Expenses

1. Definitions

(A) The term “advertising” means the commercial use, by an electric or gas utility, of any media, including newspaper, printed matter, radio, and television, in order to transmit a message to a substantial number of members of the public or to such utility’s electric consumers.

(B) The term “political advertising” means any advertising for the purpose of influencing public opinion with respect to legislative, administrative, or electoral matters, or with respect to any controversial issue of public importance.

(C) The term “promotional advertising” means any advertising for the purpose of encouraging any person to select or use the service or additional service of an electric or gas utility or the selection or installation of any appliance or equipment designed to use such utility’s service. ■

2. Exclusions

The terms “political advertising” and “promotional advertising” do not include:

(A) advertising which informs consumers how they can conserve energy or can reduce peak demand,

(B) advertising required by law or regulation,

(C) advertising regarding service interruptions, safety measures, or emergency conditions,

(D) advertising concerning employment opportunities with such utility,

(E) advertising which promotes the use of energy efficient appliances, equipment or services, or

(F) any explanation or justification of existing or proposed rate schedules, or notifications of hearings thereon.

3. Statement

In future proceedings concerning the rates of electric and gas utilities, direct and indirect expenditures for promotional or political advertising shall not be considered or treated as expenses of a utility in determining the adequacy or reasonableness of rates, rate levels, or rate of return.

Report and Order, Appendix D.

PURPA requires State regulatory commissions to consider five standards set out in Section 113(b), including the standard on advertising, pursuant to notice and public hearing.

Pursuant to this requirement, on June 27, 1979, the Commission issued notices setting out an initial schedule for hearing and receipt of written comments regarding the standards set out in Section 113 and Section 303 of PURPA. APSC Docket No. 17752. The Power Company and others became parties to the proceeding by submission of written and oral comments. An initial hearing was held on July 30, 1979, and written comments were received by the Commission on or before August 17, 1979.

On November 9, 1979, the Commission staff issued Notice of Proposed Rules and Determination setting out its proposed recommendations to the Commission regarding the PURPA Section 113 and Section 303 standards. The Commission requested additional comments from the parties on the Proposed Rules and Determinations.

A further hearing in Docket No. 17752 was held on January 14, 1980, and additional written comments were received on or before February 4, 1980. In early July of 1980, the Commission made available to the public a copy of its draft Report and Order of the Commission which set out the revised recommendations of the Commission staff regarding the Section 113 and Section 303 standards. On July 11, 1980, the Power Company requested distribution of the draft Report and Order of the Commission to all parties of record in Docket No. 17752 to allow further comment. On July 16, 1980, the Commission, by order, granted the Company’s request and directed that further written comments would be received on or before August 22, 1980.

The Commission staff in both its Proposed Rules and Determination issued on November 9, 1979, and its draft Report and Order of the Commission, distributed in early July of 1980, recommended that the advertising standards set forth in Section 113(b)(5) and Section 303(b)(2) not be adopted because the standards were not consistent with the ruling of this Court in Alabama Power Company v. Alabama Public Service Commission, 359 So.2d 776 (Ala. 1978), and because there was presently no need for their adoption.

On October 8, 1980, the Commission issued its Report and Order in Docket No. 17752. Therein the Commission adopted a rule which “incorporates the federal standards concerning advertising in Section 113(b)(5) and Section 303(b)(2)” of PURPA, and which is quoted above in full.

We conclude that the order appealed from is not a case involving a controversy “respecting rates and charges” of the Power Company; consequently, this Court does not have jurisdiction of the appeal. Cf. Wallace v. Alabama Public Service Commission, 364 So.2d 309 (Ala.1978); Code 1975, § 37-1-140.

APPEAL DISMISSED.

All the Justices concur.


author: WRIGHT, Presiding Judge. HOLMES, Judge

text:
    STATE of Alabama v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY.
    Civ. 1995.
    Court of Civil Appeals of Alabama.
    Feb. 6, 1980.
    Rehearing Denied March 19, 1980.
    Charles A. Graddick, Atty. Gen., Herbert I. Burson, Jr., Ronald J. Bowden, Asst. At-tys. Gen., for appellant.
    M. R. Nachman, Jr., of Steiner, Crum & Baker, Montgomery, and Robert C. Moore, of Louisville, Ky., for appellee.
   WRIGHT, Presiding Judge.

This is a tax case. The State of Alabama appeals from a judgment of the trial court setting aside assessments of gross receipts tax against the Louisville and Nashville Railroad Company (L&N) for the years 1974, 1975 and 1976 and ordering a refund of gross receipts tax paid by L&N for the years 1972 and 1973.

The gross receipts tax which the State seeks to collect is authorized by § 40-21-57, Code of Alabama (1975) which reads in pertinent part as follows:

§ 40-21-57. Railroads. In addition to all other taxes imposed by this title, there is hereby levied a license or privilege tax upon each person engaged in the business of operating a railroad in the state of Alabama for the privilege of engaging in such business; ... and shall be in a sum equal to two and one-half percent of the gross receipts in excess of $150,000.00 of such railroad from all intrastate business of such railroad within the state of Alabama during the preceding year, the gross intrastate earning to be determined by the amount received from intrastate business.

The only issue presented by this appeal is whether gross receipts by L&N from certain transportation movements were receipts from “intrastate business” within the meaning of § 40-21-57. The movements involved are export and import movements through the Port of Mobile, Alabama.

An export movement is a shipment delivered to L&N at a point within the state of Alabama for transport to the Alabama State Docks in Mobile. L&N transports the shipment in its cars to an interchange track at the Port of Mobile. The Alabama State Docks Terminal then switches the car to a shipside track; shipment is unloaded from the car and loaded on the ship for export; and the Terminal Company returns the empty car to the interchange track.

On a typical import shipment L&N furnishes to the Alabama State Docks a supply of empty cars which are switched to a ship-side track for loading of imported goods. When loaded the cars are moved by the Terminal Company to the interchange track where they are picked up by L&N for delivery to a point within the state of Alabama. In all transactions sought to be taxed L&N’s transportation obligation is to transport goods between the Port of Mobile and other points within the state of Alabama.

L&N contends the trial court was correct in finding that these shipments were in “interstate or foreign commerce” and that its revenues derived from transporting these shipments were not gross receipts from “intrastate business” within the meaning of § 40-21-57. In support of this contention L&N cites a number of cases which characterize similar movements as interstate or foreign commerce. Under the facts of this case we do not consider a determination that the goods involved are moving in interstate or foreign commerce to be controlling. The tax authorized by § 40-21-57 is placed upon the revenue generated by L&N’s business not upon the goods themselves. The issue as we see it is whether the movement of those goods by L&N between points within the state of Alabama constitutes “intrastate business.”

Absent any indication to the contrary, the words of a statute should be given their plain everyday meaning. Guthrie v. Civil Service Board of City of Jasper, 342 So.2d 372 (Ala.Civ.App.1977). “Intrastate” means within a state. Webster’s Third New International Dictionary 1186 (1971). Thus “intrastate business” is business conducted within a state. The busi ness of L&N is the transportation of goods. Under the plain wording of the statute, the transportation of goods between points within the state of Alabama would constitute “intrastate business.” It is undisputed that all movements which are sought to be taxed are between points within the state of Alabama. L&N seeks to apply the terms “intrastate business” and “intrastate earnings” used in the statute, as antonyms to “interstate commerce.” Such application is not appropriate. It is evident from the cases cited by L&N that a business may be operated and its gross receipts earned wholly intrastate (that is within the boundaries of a state) yet be involved wholly in interstate commerce. We find that the L&N in transporting goods and materials as described by the stipulations in this case within the boundaries of the state of Alabama is conducting intrastate business and that the gross receipts therefrom are “intrastate earnings,” even though such transporting is a part of a shipment moving in interstate or foreign commerce. We further find that such is subject to the tax imposed by § 40-21-57.

L&N next argues that the State is bound by a longstanding administrative construction of the statute. L&N contends that the State has not previously sought to collect the gross receipts tax on export and import shipments and that the failure to collect the tax evidences an administrative construction of the statute as not including shipments of this type. L&N cites State v. Southern Electric Generating Co., 274 Ala. 668, 151 So.2d 216 (1963) as controlling precedent. We do not find it to be so. In Southern Electric the administrative construction relied upon by the taxpayer was evidenced by a written opinion of the State Tax Commission and a subsequent opinion by the attorney general. There have been no such rulings, opinions or construction in this case. The testimony showed there had been no audits made of the returns of any railroad subject to the tax and that the State Department of Revenue had assumed the returns to include the designated transactions.

The failure of the State to attempt to collect a tax does not establish a precedent nor constitute an administrative ruling or interpretation absent a formal ruling or order. Morgan v. State, 280 Ala. 414, 194 So.2d 820 (1967); State v. Advertiser Co., 257 Ala. 423, 59 So.2d 576 (1952). There being no such ruling here, the State is not bound by any previous administrative construction.

The trial court’s judgment setting aside the assessments under § 40-21-57 for the years 1974, 1975 and 1976 and ordering a refund of the tax paid for the years 1972 and 1973 is reversed.

REVERSED AND REMANDED.

BRADLEY, J., concurs.

HOLMES, J., dissents.

HOLMES, Judge

(dissenting):

I respectfully dissent.

It is clear to me that the trial court ruled correctly in finding and holding that L&N’s business activity in the instant appeal was not “intrastate.” I believe the following paragraph from L&N’s brief expresses my view exactly and is as follows:

The key issue in this case involves the application of familiar statutory and constitutional language — “intrastate business” and “intrastate earningfs]” — to the undisputed nature of the transportation movements which were the business or commerce and which produced the earnings. L & N’s revenues are derived from charges, fixed and approved by the Interstate Commerce Commission as “interstate” tariffs, for its portion of transportation movements which began in Selma and ended in Venezuela or which began in Peru and ended in Birmingham. The trial court was exactly correct in finding and holding that L & N’s business activity was not “intrastate”; that its earnings from this activity were not “intrastate”; and, that accordingly, the Alabama gross receipts tax, which in terms taxes only “intrastate” earnings and business, could not be applied to these receipts.

In support of the above, see, Dept. of Rev. of State of Wash. v. Ass’n of Wash. Steve. Co., 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977); United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947); Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735 (1922); Western Union Telegraph Co. v. Speight, 254 U.S. 17, 41 S.Ct. 11, 65 L.Ed. 104 (1920); Illinois C. R. Co. v. DeFuentes, 236 U.S. 157, 35 S.Ct. 275, 59 L.Ed. 517 (1915); Southern P. T. Co. v. Interstate Com. Com., 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310 (1911); Hanley v. Kansas City Southern R. Co., 187 U.S. 617, 23 S.Ct. 214, 47 L.Ed. 333 (1903); Gibbons v. Ogden, 22 U.S. 1, 6 L.Ed. 23 (9 Wheat.) (1824); Texas v. Anderson, Clayton & Co., 92 F.2d 104 (5th Cir. 1937); U. S. v. Picou, 71 F.2d 854 (5th Cir. 1934).

The majority opinion, in my view, ignores the above longstanding case authority in reaching the decision that L&N is conducting “intrastate” business and that the gross receipts therefrom are “intrastate” earnings. I cannot find, and neither is any authority cited, which supports, in situations such as we have here, the differentiation between goods in interstate commerce and revenue generated from movement of interstate commerce.

As indicated, it appears to me the majority considers the dispositive issue to be whether the movement of goods by L&N between points within the State of Alabama constitutes “intrastate” business under the statute. The fact that goods involved might be moving in interstate commerce is said by the majority not to be controlling.

Clearly to me, in this instance, L&N is conducting interstate business and the fact that its activity occurs wholly within Alabama does not change the character of its activities from interstate business to intrastate business for purposes of § 40-21-57.

I would affirm.

      . Department of Revenue of State of Washington v. Association of Washington Stevedoring Companies, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977); United States v. Yellow Cab Co., 332 U.S. 218, 67 S.Ct. 1560, 91 L.Ed. 2010 (1947).


text:
    Ex parte LOUISVILLE & NASHVILLE RAILROAD COMPANY. (In re: State of Alabama v. Louisville & Nashville Railroad Company).
    No. 79-463.
    The Supreme Court of Alabama.
    March 6, 1981.

      M. R. Nachman, Jr. of Steiner, Crum & Baker, Montgomery, for petitioner.
    Charles A. Graddick, Atty. Gen., and Herbert I. Burson, Jr., and Ronald J. Bowden, Asst. Counsel, Department of Revenue, and Asst. Attys. Gen., for respondent.
   ALMON, Justice.

This appeal presents the question of whether Alabama’s gross receipts tax upon a railroad’s earnings from “intrastate business” applies to receipts generated by the L & N Railroad’s movement of goods between two points in Alabama. The Court of Civil Appeals held these receipts are taxable under the statute. We reverse.

The railroad gross receipts tax statute presently provides:

In addition to all other taxes imposed by this title, there is hereby levied a license or privilege tax upon each person engaged in the business of operating a railroad in the state of Alabama for the privilege of engaging in such business; said license tax or privilege tax shall be ... in a sum equal to two and one-half percent of the gross receipts in excess of $150,000.00 of such railroad from all intrastate business of such railroad within the state of Alabama during the preceding year, the gross intrastate earning to be determined by the amount received from intrastate business.

Code 1975, § 40-21-57 (emphasis supplied).

The receipts the State seeks to tax under this statute were derived from L & N’s movement of various products to and from the Port of Mobile. These movements, stipulated by the parties as typical of the transactions at issue, consist of both export and import shipments. Export shipments involve transportation of paper goods from Selma to the Port, where the goods are then off-loaded onto a ship and subsequently exported. Import shipments involve the movement of iron ore pellets from Lima, Peru, to Birmingham via the Port; L & N’s role in these shipments is limited to transporting the ore from the Mobile docks to Birmingham.

No questions concerning taxes due under the statute arose until 1976, when L & N petitioned the Department of Revenue for a refund of taxes paid on receipts earned in 1972 and 1973. L & N asserted taxes on these movements were erroneously paid because of a clerical and/or computer error, and that no taxes were due on these “interstate” shipments. The Department denied L & N’s petition and soon thereafter entered assessments for similar receipts earned during 1974, 1975 and 1976.

It is clear from recent decisions of the United States Supreme Court that, under proper circumstances and regardless of whether the transaction is characterized as interstate or intrastate, the State may tax the gross receipts generated by L & N’s services without offending either the Commerce Clause, Art. I, § 8, cl. 3, or Import-Export Clause, Art. I, § 10, cl. 2, of the Federal Constitution. Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977). That fact alone, however, does not necessarily justify the imposition of the tax to the transactions in this case. As we have stated, recent pronouncements of the United States Supreme Court which enlarge the permissible area of state taxation cannot change the intent or enlarge the scope of enactments passed by our Legislature. State v. Southern Electric Generating Co., 274 Ala. 668, 151 So.2d 216 (1963). Therefore, the question is not whether the State may, under prevailing caselaw, impose a tax upon the gross receipts earned from these transactions. Rather, the controlling issue is whether, in originally enacting this statute, the Legislature intended to tax these transactions. To determine that intent, we must look to the nature of the activity involved as well as the “history of the times” when the statute was enacted. Champion v. McLean, 266 Ala. 103, 95 So.2d 82 (1957); Houston County v. Martin, 232 Ala. 511, 169 So. 13 (1936); Standard Oil v. State, 55 Ala.App. 103, 313 So.2d 532 (Ala. Civ.App.1975).

I

We begin by noting that the issue before us cannot be resolved by simply resorting to the literal meaning of the phrase “intrastate business.” Nor can the proper resolution be reached by dissecting the phrase into two words and applying their respective definitions. Numerous decisions have used the terms “business” and “commerce” interchangeably in the context of state taxation of commerce. See, e. g., Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68 (1937); Shannon v. Streckfus Steamers, 279 Ky. 649, 131 S.W.2d 833 (1939). An even greater number of decisions have indicated that whether an activity is truly intrastate or interstate depends upon many factors beyond whether the activity occurred within the boundaries of one or more states. See, e. g, The Daniel Ball, 77 (Wall.) U.S. 557, 19 L.Ed. 999 (1870); Merchants Fast Motor Service, Inc. v. I. C. C., 528 F.2d 1042 (5th Cir. 1976); United States v. Philadelphia & R. Ry. Co., 232 F. 946 (D.C.Pa.1916); HC & D Moving & Storage Co. v. Yemane, 48 Haw. 486, 405 P.2d 382 (1965); Beam v. Baltimore & O. R. Co., 77 Ohio App. 419, 68 N.E.2d 159 (1945).

As a general rule, it is both the origin and intended destination of a transaction which governs whether the transportation is interstate; and once the movement acquires its interstate character, it remains until the final destination is reached. HC & D Moving & Storage Co. v. Yemane, supra; Shannon v. Streckfus Steamers, supra; State v. Department of Public Service, 1 Wash.2d 102, 95 P.2d 1007 (1939). Furthermore, “[t]he fact that several different and independent agencies are employed in transporting the commodity, some acting entirely in one State, and some acting through two or more States, does in no respect affect the character of the transaction.” The Daniel Ball, 77 (Wall.) U.S. 557, 565, 19 L.Ed. 999 (1870). Accord, Merchants Fast Motor Lines, Inc. v. I. C. C., 528 F.2d 1042 (5th Cir. 1976). Here the transactions were import and export shipments. Based upon the foregoing, we are of the opinion that L & N’s movements — whether they occurred in 1975 or 1875 — constitute the intrastate segment of interstate commerce. That finding, however, does not resolve the issue, for “even if it be found that certain transactions are in fact interstate commerce, such conclusion does not answer the further inquiry whether a particular assertion of power by a State over such transactions offends the Commerce Clause.” Central Greyhound Lines of New York v. Mealey, 334 U.S. 653, 655, 68 S.Ct. 1260, 1262, 92 L.Ed. 1633 (1948).

II

The United States Supreme Court has been more receptive to those regulatory measures affecting interstate commerce which are based upon a state’s police power than it has been to those measures based upon a state’s power to tax. Freeman v. Hewitt, 329 U.S. 249, 253, 67 S.Ct. 274, 277, 91 L.Ed. 265 (1946). The Court’s early attitude towards state taxation of interstate commerce was illustrated in Minnesota v. Blasius, 290 U.S. 1, 54 S.Ct. 34, 78 L.Ed. 131 (1933), wherein it was stated:

The States may not impose direct burdens upon interstate commerce, that is, they may not regulate or restrain that which from its nature should be under the control of the one authority and be free from restrictions save as it is governed in the manner that the national legislature constitutionally ordains. This limitation applies to the exertion of the State’s taxing power as well as to any other interference by the State with the essential freedom of interstate commerce. Thus, the States cannot tax interstate commerce, either by laying the tax upon the business which constitutes such commerce or the privilege of engaging in it, or upon the receipts, as such, derived from it.

290 U.S. at 8-9, 54 S.Ct. at 36-37 (footnote omitted and emphasis supplied). It was upon this basis, /. e., an impermissible burden upon interstate commerce, that the Court struck down many gross receipts tax statutes. See, e. g., Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 59 S.Ct. 325, 83 L.Ed 272 (1939); Adams Mfg. Co. v. Storen, 304 U.S. 307, 58 S.Ct. 913, 82 L.Ed. 1365 (1938); Philadelphia & Southern SS Co. v. Pennsylvania, 122 U.S. 326, 7 S.Ct. 1118, 30 L.Ed. 1200 (1887); Fargo v. Michigan, 121 U.S. 230, 7 S.Ct. 857, 30 L.Ed. 888 (1887).

Tax immunity for interstate commerce did not remain absolute, however. In 1938, the Court’s decision in Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823 (1938), demonstrated a philosophical change in the Court. In that case it was indicated that interstate commerce was not totally immune from state regulation, that it should pay its own way, and that certain taxes could be levied on interstate commerce as long as the tax was fairly apportioned. See also, Central Greyhound Lines of New York, Inc. v. Mealey, 334 U.S. 653, 68 S.Ct. 1260, 92 L.Ed. 1633 (1948).

Despite the conservative position adopted by the Court, some gross receipts taxes were upheld in limited circumstances. Such taxes were sustained against constitutional attack when the tax was imposed “in lieu of” all other taxes the state could levy upon the taxpayer. See, e. g., Illinois Central RR. v. Minnesota, 309 U.S. 157, 60 S.Ct. 419, 84 L.Ed. 670 (1940); Pullman v. Richardson, 261 U.S. 330, 43 S.Ct. 366, 67 L.Ed. 682 (1923); United States Express Co. v. Minnesota, 223 U.S. 335, 32 S.Ct. 211, 56 L.Ed. 459 (1912). In this context, the gross receipts tax was considered a fair substitute for other taxes such as property taxes, and could be imposed as long as it was a fair equivalent to other tax burdens and was not levied in addition to other taxes. See New Jersey Bell Tel. Co. v. State Board of Taxes, 280 U.S. 338, 50 S.Ct. 111, 74 L.Ed. 463 (1930); Meyer v. Wells Fargo & Co., 223 U.S. 298, 32 S.Ct. 218, 56 L.Ed. 445 (1912).

Gross receipts taxes were also sustained when the tax was imposed upon some purely local activity which justified the exercise of the state’s taxing power. See, e. g., Memphis Natural Gas Co. v. Stone, 335 U.S. 80, 68 S.Ct. 1475, 92 L.Ed. 1832 (1938); Coverdale v. Arkansas-Louisiana Pipeline Co., 303 U.S. 604, 58 S.Ct. 736, 82 L.Ed. 1043 (1938). But the theory of “local activity” as a basis for taxation does not permit an abstract segmentation of the integral parts of interstate commerce. The Court has recognized that:

[i]f the only thing necessary to sustain a state tax bearing upon interstate commerce were to discover some local incident which might be regarded as separate and distinct from “the transportation or intercourse which is” the commerce itself and then to lay the tax on that incident, all interstate commerce would be subjected to state taxation and without regard to the substantial economic effects of the tax upon the commerce. For the situation is difficult to think of in which some incident of an interstate transaction taking place within a State could not be segregated by an act of mental gymnastics and made the fulcrum of the tax. All interstate commerce takes place within the confines of the States and necessarily involves “incidents” occurring within each State through which it passes or with which it is connected in fact. And there is no known limit to the human mind’s capacity to carve out from what is an entire or integral economic process particular phases or incidents, label them as “separate and distinct or “local and thus achieve its desired result.

Nippert v. City of Richmond, 327 U.S. 416, 423, 66 S.Ct. 586, 589, 90 L.Ed. 760 (1946).

The practical application of this local/interstate dichotomy is illustrated in Puget Sound Stevedoring Co. v. Tax Commission, 302 U.S. 90, 58 S.Ct. 72, 82 L.Ed. 68 (1937). In that case the State of Washington imposed a tax upon the gross receipts earned by the Appellant-Stevedoring Company from its business of loading and unloading ships in Puget Sound. The Court sustained the tax upon receipts earned from one aspect of the Company’s business, but held the statute invalid as applied to receipts earned from the other activities. In the Court’s view, the Company’s business of “supplying longshoremen to shipowners or masters without directing or controlling the work of loading or unloading, [was] not interstate or foreign commerce, but rather a local business, and subject, like such business generally, to taxation by the state.” 302 U.S. at 94, 58 S.Ct. at 74. The other activities, however, were different in nature:

The business of appellant, in so far as it consists of the loading and discharge of cargoes by longshoremen subject to its own direction and control, is interstate or foreign commerce.
Transportation of a cargo by water is impossible or futile unless the thing to be transported is put aboard the ship and taken off at destination. A stevedore who in person or by servants does work so indispensable is as much an agency of commerce as shipowner or master. .. .
The business of loading and unloading being interstate or foreign commerce, the state of Washington is not at liberty to tax the privilege of doing it by exacting in return therefore a percentage of the gross receipts.

302 U.S. at 92, 94, 58 S.Ct. at 73, 74.

Similarly, in Spector Motor Service v. O’Connor, 340 U.S. 602, 71 S.Ct. 508, 95 L.Ed. 573 (1951), the Court noted:

Our conclusion [striking down a state tax based upon net income received from business transactions within the state as applied to activities which were exclusively interstate in character] is not in conflict with the principle that, where a taxpayer is engaged both in intrastate and interstate commerce, a state may tax the privilege of carrying on intrastate business and, within reasonable limits, may compute the amount of the charge by applying the tax rate to a fair proportion of the taxpayer’s business done within the state, including both interstate and intrastate. . . . The same is true where the taxpayer’s business activity is local in nature, such as the transportation of passengers between points within the same state, although including interstate travel....

340 U.S. at 609-10, 71 S.Ct. at 512 (citations omitted).

Finally, in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), and Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978), the Court embarked upon a new course in the area of state taxation of interstate commerce. In Complete Auto the Court overruled the rule in Spector Motor Service “that a state tax on the ‘privilege of doing business’ is per se unconstitutional when . .. applied to interstate commerce,” 430 U.S. at 289, 97 S.Ct. at 1084, and held that a state could impose an apportioned tax upon the gross receipts derived from a segment of interstate commerce conducted entirely within the taxing state. In Washington Department of Revenue the Court overruled Puget Sound and held that a state tax is not necessarily invalid because it is imposed directly on the privilege of conducting interstate business. It is upon these two recent decisions that the State places principal reliance for its argument that the taxes can be sustained as applied to L & N’s transactions. We disagree.

The question before us is one of legislative intent. We presume that, in enacting the statute in 1935, the Legislature was aware of the existing interpretations and permissible limits of a state’s power to tax. Wright v. Turner, 351 So.2d 1 (Ala. 1977); Coden Beach Marina, Inc. v. City of Bayou La Batre, 284 Ala. 718, 228 So.2d 468 (1969). Thus, we presume our Legislature knew that at the time the statute was passed, the rule in Biasius would have prevented the application of the tax to transactions similar to those at issue because they constitute a portion of interstate commerce. We also presume that the Legislature was aware of the fact that this tax could not be sustained as one “in lieu of” other taxes because the tax was expressly levied “[i]n addition to all other taxes.” Code 1975, § 40-21-57. Similarly, we presume that the Legislature was apprised of the fact that it could not justify this tax as one upon “local activity,” because to do so would require the indulgence in the proscribed conceptual segmentation of the integral parts of an interstate transaction. Finally, we presume that the Legislature is aware of the judicial enlargement of the State’s permissible area and method of taxation, so that the Legislature could have taken full advantage of those changes if it either intended or desired to. Wright v. Turner, supra; Coden Beach Marina, Inc. v. City of Bayou La Batre, supra. No such changes have been made during the forty-five years since the statute was passed and the State has not, by legislation, attempted to enlarge the scope of its taxation. Thus, viewed in its broadest scope, the statute in question could reach and impose a tax upon only those activities which were local and purely intrastate in character. We therefore conclude that the statute, as enacted in 1935 and as it exists today, was not intended to apply to receipts generated by transactions such as these which, although conducted wholly within the confines of Alabama, constitute an integral portion or segment of interstate commerce.

REVERSED AND REMANDED.

All the Justices concur.

      . These and other decisions have held that a tax upon commerce, either intrastate or interstate, is permissible if: (1) there is a substantial nexus between the activity and taxing state; (2) the tax is fairly apportioned; (3) the tax is nondiscriminatory; and (4) it is reasonably related to services and protection provided by the taxing state.

      . These cases also placed reliance upon the fact that no cumulative burden was imposed upon the activity because no state other than the taxing state could tax the local activity.

      . Overruled in Washington Rev. Dept. v. Stevedoring Assn., 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978), discussed infra.

      . Overruled in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 97 S.Ct. 1076, 51 L.Ed.2d 326 (1977), discussed infra.

      . Complete Auto Transit’s activities consisted of delivering automobiles which had been shipped into the state, from the railhead in the state to the retailers within the state. The Court did not expressly find that the activities constituted interstate commerce, but merely assumed, as did the lower court, that the activities were in fact interstate commerce. 430 U.S. 276, n. 4, 97 S.Ct. at 1077 n. 4.


author: WRIGHT, Presiding Judge.

text:
    STATE of Alabama v. LOUISVILLE AND NASHVILLE RAILROAD COMPANY.
    Civ. 1995.
    Court of Civil Appeals of Alabama.
    April 15, 1981.
   WRIGHT, Presiding Judge.

The Supreme Court of Alabama 398 So.2d 291 having reviewed by certiorari the judgment of this court 398 So.2d 288 entered on February 6, 1980, did by its judgment entered March 6, 1981, reverse said judgment of this court and remand the cause. In accordance therewith, there being no further issue for consideration, the judgment of this court of February 6, 1980, is set aside, and the judgment of the circuit court entered July 6,1979, is reinstated and hereby affirmed.

AFFIRMED.

BRADLEY and HOLMES, JJ., concur.