State of Alabama ex rel. Waterworks and Gas Board of Dora, Alabama v. Edwards
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McArthur Sargent, chairman of The Waterworks and Gas Board of Dora, Alabama ("the Board"), in the name of the State of Alabama, appealed a circuit court order denying Sargent's petition for a writ of quo warranto seeking to declare Chris Edwards ineligible to hold office as a member of the Board because he was then-currently serving on the City Council of the City of Dora. The Alabama Supreme Court found that the restated and amended certificate of incorporation, which was controlling, did not include any prohibition against municipal officers serving on the Board. Accordingly, the Court held Edwards was duly appointed to serve as a member of the Board effective July 1, 2018, notwithstanding that he was already serving, as a member of the City Council of the City of Dora.
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Rel: April 26, 2019 Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern Reporter. Readers are requested to notify the Reporter of Decisions, Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-0649), of any typographical or other errors, in order that corrections may be made before the opinion is printed in Southern Reporter. SUPREME COURT OF ALABAMA OCTOBER TERM, 2018-2019 _________________________ 1180105 _________________________ State of Alabama ex rel. McArthur Sargent, chairman of The Waterworks and Gas Board of Dora, Alabama v. Chris Edwards Appeal from Walker Circuit Court (CV-18-31) SELLERS, Justice. McArthur Sargent, chairman of The Waterworks and Gas Board of Dora, Alabama ("the Board"), in the name of the State of Alabama, appeals from an order entered by the Walker Circuit Court denying Sargent's petition for a writ of quo 1180105 warranto seeking to declare Chris Edwards ineligible to hold office as a member of the Board because he is currently serving on the City Council of the City of Dora. We affirm. Facts and Procedural History The Board was originally incorporated as the Gas Board of the Town of Dora on August 31, 1954, pursuant to Act No. 175, Ala. Acts 1951 (Regular Session). At that time, § 3 of Act No. 175 provided that "[n]o member of the board of directors [of a municipal-utilities board] shall be an officer of the municipality." The Board's original certificate of incorporation echoed this prohibition, stating, in pertinent part: "(4) The corporate power shall be exercised by a board of directors, which shall consist of three members, which shall be the maximum and minimum number thereof. The members of the Board of directors shall be elected by the governing body of the Town of Dora. None of the members of the said board of directors shall be an officer of the Town of Dora. The members of the board of directors shall be elected in the manner and hold office for the terms as provided by law." (Emphasis added.) In 1956, the Alabama Legislature amended § 3 of Act No. 175, removing the municipal-officer prohibition and providing that "[a]ny officer of the municipality shall be eligible for 2 1180105 appointment and may serve as a member of the board of directors." Act No. 116, § 1, Ala. Acts 1956 (2d Special Session). The acts authorizing the incorporation of a municipal-utilities board as a public corporation are now codified at § 11-50-310 et seq., Ala. Code 1975. Section 11- 50-313(a), Ala. Code 1975, states, in pertinent part: "Except as provided herein, any officer of the municipality shall be eligible for appointment and may serve as a member of the board of directors for the term for which he or she is appointed or during his or her tenure as a municipal officer, whichever expires first, and may receive a fee for his or her services, provided it is first approved by the board of directors. ... Notwithstanding the foregoing, the certificate of incorporation or an amendment to the certificate heretofore or hereafter adopted may restrict or prohibit service on the board of directors by officers of the municipality." Since 1956, the Board's certificate of incorporation has been amended multiple times. First, in February 1964, a resolution was adopted by the town council increasing the number of members serving on the board of directors from three to five and electing members to fill the new vacancies as well as vacancies created by the expiration of terms of offices. Later, in January 1971, an amendment to the certificate of incorporation was adopted to change the name of the Board to "The Waterworks and Gas Board of Dora, Alabama," to decrease 3 1180105 the number of members serving on the board of directors to three, and to authorize the creation of a waterworks system for Dora. The 1971 amendment tracked the original certificate of incorporation paragraph by paragraph, but made changes to certain paragraphs. Notably, paragraph 4 of the 1971 amendment failed to include any reference to the prohibition against municipal officers serving as members of the Board. Finally, in October 1991, a "Restated and Amended Certificate of Incorporation" was adopted, which reads as follows: "The undersigned, being all of the members of the Board of Directors of The Waterworks and Gas Board of Dora, Alabama and the Secretary of such Board, do hereby restate and amend the Certificate of Incorporation of such Board to read as follows: "(1) The name of the Corporation is and shall be 'The Waterworks and Gas Board of Dora, Alabama.' "(2) The location of the principal office of the Corporation shall be in the City of Dora, Alabama, and the post office address of the Corporation shall be Dora, Alabama. "(3) The duration period of this Corporation shall be perpetual. "(4) The corporate power shall be exercised by a Board of Directors, which shall consist of three members. The members presently serving are listed below as the undersigned, and upon their expiration of term of office each successor will be appointed by the governing body of the City of Dora, Alabama, 4 1180105 to serve during a period of years as provided by law. "(5) The objects for which the corporation is organized are to acquire, purchase, construct, operate, maintain, enlarge, improve and extend a water system and a gas system ... in the City of Dora, Alabama, and other areas. In furtherance of the said purposes, the Corporation shall have all powers conferred on corporations of like nature by the laws of Alabama under which the Corporation is organized and any amendments thereof and laws supplementary thereto. "(6) The Board of Directors of the Board and the governing body of the City of Dora each adopted resolutions on October 29, 1991 approving this Restated and Amended Certificate of Incorporation. On January 26, 1971, the Board of Directors of the Board and the governing body of the City of Dora each adopted resolutions approving the Amended Certificate of Incorporation recorded in the office of the Judge of Probate of Walker County in Volume 17, page 319, et seq." The restated and amended certificate of incorporation tracked the 1971 amendment paragraph by paragraph, but replaced all references to the "Town of Dora" with the "City of Dora" and added paragraph 6. and amended As did the 1971 amendment, the restated certificate of incorporation omitted from paragraph 4 any reference to the prohibition against municipal officers serving as Board members. In May 2018, the city council voted to appoint Edwards as a member of the Board effective July 1, 2018; at that time, 5 1180105 Edwards was serving as a member of the city council. Sargent, chairman of the Board, advised Edwards and the city council that the Board's original certificate of incorporation prohibited any member of the city council from serving as a Board member, which, in Sargent's opinion, rendered Edwards ineligible to serve as appointed. Edwards declined to resign from the city council or to relinquish his appointment to the Board. On July 13, 2018, Sargent filed a quo warranto proceeding in the name of the State pursuant to § 6-6591(a)(1), Ala. Code 1975, challenging Edwards's eligibility to serve as a member of the Board. 1 Following Edwards's answer and limited discovery, Sargent and Edwards each filed cross-motions for a summary judgment. Sargent argued that Edwards's appointment to the Board violated its certificate of incorporation, which, he claimed, 1 Section 6-6-591(a)(1), Ala. Code 1975, states: "(a) An action may be commenced in the name of the state against the party offending in the following cases: "(1) When any person usurps, intrudes into or unlawfully holds or exercises any public office ... within this state or any office in a corporation created by the authority of this state ...." 6 1180105 still prohibits a municipal officer from serving on the Board. Conversely, Edwards argued that the 1991 restated and amended certificate of incorporation superseded the original certificate of incorporation and removed the municipal-officer prohibition, making Edwards eligible for appointment to the Board. Additionally, Edwards argued that Sargent should be estopped from bringing a quo warranto action against him because Sargent himself previously served on the Board while simultaneously serving as a city councilman. 2 The circuit court entered an order denying the writ of quo warranto and entering a summary judgment in favor of Edwards--concluding that Edwards was a duly appointed member of the Board effective July 1, 2018. The circuit court found that the purpose of restating and amending the certificate of incorporation, which in essence restated what was already adopted by the 1971 amendment, was to supersede and supplant the original amendments. certificate of incorporation and all prior Sargent filed a postjudgment motion seeking to 2 We note that Edwards did not raise this issue on appeal; thus, we pretermit any discussion of the applicability of the doctrine of equitable estoppel here. 7 1180105 alter, amend, or vacate the summary judgment, which was denied. Sargent appealed. Standard of Review "The standard of review applicable to a summary judgment is the same as the standard for granting the motion, that is, we must determine whether there was a genuine issue of material fact and, if not, whether the movant was entitled to a judgment as a matter of law." McClendon v. Mountain Top Indoor Flea Market, Inc., 601 So. 2d 957, 958 (Ala. 1992). Discussion This Court is asked to consider whether the prohibition against a municipal officer serving on the Board–-as included in the original certificate of incorporation–-remains effective and bars Edwards from serving on the Board, or whether the restriction was invalidated and superseded by the restated and amended certificate of incorporation that omitted any such prohibition. Initially, we note that the municipal-officer prohibition included in the Board's original certificate of incorporation was consistent with the legislative requirements for municipal-utilities boards at the time it was adopted. See Act No. 175, § 3, Ala. Acts 1951. The governing legislation was 8 1180105 later amended to allow municipal officers to serve on municipal-utilities boards. See Act No. 116, § 1, Ala. Acts 1956. Consistent with that legislative change, both the 1971 amendment to the Board's certificate of incorporation and the restated and amended certificate of incorporation adopted in 1991 omitted any reference to the municipal-officer prohibition. Sargent does not dispute that those amendments were properly adopted and recorded as required under § 11-50312(b), Ala. Code 1975. Nevertheless, Sargent argues that the municipal-officer prohibition included in the original certificate of incorporation remains effective and that it bars Edwards from serving on the Board because, he argues, the subsequent amendments and restatement of the certificate did not expressly state that the prohibition was to be removed from the certificate. Sargent asserts that each amendment to the Board's original certificate of incorporation was adopted for a specific, stated purpose, e.g., to increase or decrease the number of members, and that none of the amendments ever stated that the purpose of the amendment was to remove the prohibition against municipal officers serving on the Board. 9 1180105 In support of his argument, Sargent cites Buffalow v. State, 281 Ala. 132, 199 So. 2d 672 (1967). In Buffalow, a former city councilman for the City of Florala brought a quo warranto action against the mayor of Florala seeking to exclude the mayor from serving on the City's waterworks and sewer board. Like here, the dispute centered on a prohibition that was included in the waterworks and sewer board's original articles of incorporation precluding a municipal officer from serving on the board. The trial court's order preventing the mayor from serving on the board noted that "'[t]he [board's] Articles of Incorporation were amended, changing the name of the Water Works Board to the Water Works and Sewer Board of the City of Florala and permitting said board to engage in matters not embraced within the original Articles of Incorporation but wholly failed to authorize members of the governing body of the City of Florala to serve on the Board of Directors of the Water Works and Sewer Board of the City of Florala.'" Buffalow, 281 Ala. at 133, 199 So. 2d at 673. On appeal, this Court affirmed the trial court's judgment, holding that, although the legislature had amended the statute governing municipal-utilities boards to allow municipal officers to serve on those boards, the amended legislation was permissive, 10 1180105 not mandatory. 281 Ala. at 134, 199 So. 2d at 674. Thus, the Court held that the restriction included in the board's original articles of incorporation remained effective because the board "did not see fit to remove [the] restriction and it remain[ed] in its articles of incorporation." Id. Sargent argues that Buffalow is indistinguishable from this case and is dispositive of the issue presented. disagree. We Unlike Buffalow, this case involves a restated and amended certificate of incorporation that omits the municipalofficer prohibition included in the original certificate. The statutes governing the incorporation of a municipalutilities board do not specifically address the effect of a restated certificate of incorporation, see 11-50-310 et seq., Ala. Code 1975, and there are no Alabama cases directly addressing whether a restated certificate of incorporation supersedes an original certificate of incorporation. But, generally, the intent of executing a restated instrument is to replace the original. restated trust This Court has previously held that a agreement was a complete instrument that accomplished both revoking the prior trust and replacing it with another agreement, the terms and conditions of which 11 1180105 superseded the terms and conditions of the initial trust. See Merchants Nat'l Bank of Mobile v. Cowley, 265 Ala. 125, 133, 89 So. 2d 616, 623 (1956) ("To effectuate a revocation it was not essential to recite in the later instrument that the prior instrument of trust was thereby 'revoked.'"). Likewise, under Chapter 2 of the Alabama Business and Nonprofit Entities Code, § 10A-1-1.01 et seq., Ala. Code 1975, which governs business corporations within the State, "[d]uly adopted restated articles of incorporation supersede the original articles of incorporation and all amendments to them." Ala. Code 1975, § 10A-2-10.07(e). In this case, the preamble of the restated and amended certificate of incorporation states: "The undersigned, being all of the members of the Board of Directors of The Waterworks and Gas Board of Dora, Alabama and the Secretary of such Board, do hereby restate and amend the Certificate of Incorporation of such Board to read as follows[.]" (Emphasis added.) terms and Moreover, the instrument embodies all the provisions required in a new certificate of incorporation. See Ala. Code 1975, § 11-50-312. Therefore, we agree with the circuit court that a complete reading of the restated and amended certificate of incorporation indicates a 12 1180105 clear intent for it to be treated prospectively as the controlling certificate, superseding all prior amendments and expressing in totality the powers of the Board. The restated and amended certificate of incorporation, which is controlling, does not include any prohibition against municipal officers serving on the Board. Accordingly, we hold that Edwards was duly appointed to serve as a member of the Board effective July 1, 2018, notwithstanding that he was already serving, and continues to serve, as a member of the City Council of the City of Dora. Conclusion We affirm the summary judgment in Edwards's favor. AFFIRMED. Bolin, Bryan, Mendheim, Stewart, and Mitchell, concur. Parker, C.J., and Shaw, J., concur specially. 13 JJ., 1180105 SHAW, Justice (concurring specially). I concur with the main opinion. I write specially to emphasize that, even without the adoption of the "Restated and Amended Certificate of Incorporation" in 1991, the defendant, Chris Edwards, is eligible to serve as a member of The Waterworks and Gas Board of Dora, Alabama ("the Board"). Municipal-utility corporations, including the Board, are governed by Ala. Code 1975, §§ 11-50-310 through -324. Section 11-50-313(a) regulates the boards of directors for such corporations and states: "[A]ny officer of the municipality shall be eligible for appointment and may serve as a member of the board of directors." (Emphasis added.) Clearly a municipal officer is eligible to be a member of a municipal-utility corporation's board of directors. But there is a limitation: "certificate of a municipal-utility incorporation or an corporation's amendment to the certificate ... may restrict or prohibit service on the board of directors by officers of the municipality." Id. In the instant case, if such a restriction is found in the Board's certificate of incorporation, then an municipality may not serve on the Board. 14 officer of the 1180105 Before 1971, the Board's certificate of incorporation prohibited officers of the City of Dora from being members of the Board. The certificate was amended in 1971, and that provision was deleted. Under § 11-50-313(a), the certificate of incorporation thereafter did not "restrict or prohibit" officers of the municipality from serving as members of the Board. Thus, § 11-50-313(a) explicitly provides that any officer of the municipality "shall be eligible for appointment and may serve as a member of the board of directors." The appointment to the Board of Edwards, who was a municipal officer, was clearly allowed by law. Parker, C.J., concurs. 15
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