Town of Huntsville, Tennessee, et al. v. Scott County, Tennessee, et al.

The dispositive issue on appeal in this annexation dispute by the annexing municipality against the county and Tennessee Commissioner of Revenue is which tax allocation statute controls the allocation of Local Option Revenue derived from the annexed territory, the one in effect when the municipality passed the annexation ordinances upon final reading or the one in effect when quo warranto litigation challenging the ordinances was concluded. The county and Commissioner of Revenue contend the statute in effect when the quo warranto actions challenging the validity of the ordinances were concluded applies, because that is the date the annexations became operative. The municipality contends that the tax scheme in effect when the ordinances were passed by final reading applies became the quo warranto actions challenging the ordinances were dismissed due to the petitioners’ failure to effect sufficient service of process on the municipality. The Chancellor ruled in favor of the municipality, finding in pertinent part that the quo warranto litigation that was filed but not followed by sufficient service of process had no effect on the operative dates of annexation. We reverse, finding that the statute in effect when the quo warranto litigation was concluded controls the allocation of tax revenue from the annexed territories.