                 IN THE COURT OF APPEALS OF TENNESSEE
                            AT KNOXVILLE
                                  February 13, 2002 Session

CITY OF COLLEGEDALE, TENNESSEE, ET AL. v. HAMILTON COUNTY
     WATER AND WASTEWATER TREATMENT AUTHORITY

                     Appeal from the Circuit Court for Anderson County
                         No. 00C1814     Samuel H. Payne, Judge

                                      FILED JULY 31, 2002

                                 No. E2001-02041-COA-R3-CV



This is a suit brought by the City of Collegedale, seeking a declaration that Hamilton County
Wastewater and Wastewater Treatment Authority is required to arbitrate a dispute between them in
connection with the City annexing certain property served by the Authority. The complaint also
sought a declaration that in the event the City prevails the Authority would not be entitled to
prosecute a suit to condemn and re-acquire the facilities in question. The Trial Judge found in favor
of the City on both issues and the Authority appeals. We affirm in part and vacate in part.

   Tenn.R.App.P. 3 Appeal as of Right; Judgment of the Circuit Court Affirmed in Part;
                            Vacated in Part and Remanded

HOUSTON M. GODDARD, P.J., delivered the opinion of the court, in which HERSCHEL P. FRANKS and
D. MICHAEL SWINEY , JJ., joined.

John R. Anderson and Harry R. Cash, Chattanooga, Tennessee, for the Appellant, Hamilton County
Water and Wastewater Treatment Authority

Sam D. Elliott, Chattanooga, Tennessee, for the Appellee, City of Collegedale, Tennessee


                                             OPINION


        In this appeal the City seeks an order compelling the Authority to arbitrate a dispute arising
in connection with the City’s annexing certain property which as to waste water treatment was
served by the Authority. The complaint insists that T.C.A. 6-51-111(b) entitles them to arbitration
of the dispute.
         The complaint also seeks a declaratory judgment declaring that in the event the City prevails
and is entitled to service, maintain and own the waste water facilities pursuant to the aforesaid Code
Section the Authority would not be entitled to prosecute a suit to condemn and re-acquire the
facilities in question.

      The Trial Court found both issues in favor of the City, resulting in the Authority’s appeal,
wherein they raise the following two issues:

                                 STATEMENT OF THE ISSUES

         I.      THE TRIAL COURT ERRED IN HOLDING THAT § 6-51-111
                 CONTROLS AND THAT HAMILTON COUNTY WATER AND
                 WASTEWATER TREATMENT AUTHORITY SHOULD BE
                 COMPELLED TO SUBMIT TO ARBITRATION PURSUANT TO
                 T.C.A. § 6-51-111(b).

         II.     THE TRIAL COURT ERRED IN HOLDING THAT THE
                 AUTHORITY DID NOT HAVE THE RIGHT TO ACQUIRE THE
                 FACILITIES THROUGH EMINENT DOMAIN PURSUANT TO
                 68-221-610(a).

        The facts necessary for resolution of this dispute are succinctly stated in the Authority’s brief
as follows:

                                     STATEMENT OF FACTS


                This case involves a dispute between the City of Collegedale (hereinafter
         “Collegedale”) and the Hamilton County Water and Wastewater Authority
         (hereinafter “Authority”) over the ownership and control of certain of the
         Authority’s sewer facilities located in Hamilton County in the Ooltewah
         community of Hamilton County, Tennessee. The facts in this care are largely
         undisputed.

                The sewer facilities at issue were constructed and installed by both
         Hamilton County and the Authority. Prior to the establishment of the Authority
         in 1993, sewers in the unincorporated areas of Hamilton County were built and
         maintained by the County. In 1994, the County’s sewer facilities were transferred
         to the Authority. Thereafter, the Authority maintained the existing “County”
         sewer facilities and built new facilities in the unincorporated areas of Hamilton
         County.



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                Among the sewer facilities built and maintained by the Authority after its
        establishment in 1993 were certain facilities in the Ooltewah community of
        northern Hamilton County. In April, 2000, Collegedale annexed the area in which
        some of the sewer facilities built and maintained by the Authority were installed.
        Collegedale claims that it has the right to perform or provide municipal and utility
        functions in the annexed areas by the powers granted to it under T.C.A. §6-51-111,
        a statute enacted in 1955. The Authority contends that the facilities in the
        annexed area are within the Authority’s “service area” and that no municipality
        has the right, statutory or otherwise, to take facilities within the Authority’s
        service area pursuant to T.C.A. §68-221-601, et seq., and T.C.A. §§5-6-120 and
        205.

               During the annexation process in 1997, Collegedale approved a plan of
        services to provide the residents of the annexed area with information on what
        services Collegedale would provide to the annexed area. The plan of services
        provided to residents of the annexed area provided that Collegedale would
        subsidize the rate for sewer customers in the annexed area in order to equal the
        Collegedale sewer rate. It did not provide a time limit for how long the subsidy
        would be provided, nor did it provide that Collegedale would take over ownership
        and control of the facilities.

                 The Authority continually provided sewer service to the annexed area both
         before and after the annexation. In fact, the Authority still provides sewer service
         to the annexed area. The Authority also provided sewer service to at least one
         business which was located in Collegedale prior to the annexation.

                On August 2, 2000, the Hamilton County Board of Commissioners passed
         Resolution Number 800-9 to set out in writing the Authority’s service area. On
         the same date, the Authority’s Board of Commissioners passed Resolution
         Number 800-1 to ratify, confirm and accept the service area established by the
         Hamilton County Board of Commissioners’ Resolution Number 800-9. The
         Authority’s Resolution was passed to put in writing what the Authority’s service
         area was in light of the publicity surrounding the issue of urban growth.

        The resolution of this dispute requires that we examine certain statutes touching on the
subject and determine which are applicable to the case presented. Construction of the Statute is a
question of law, and our review is de novo without any presumption accorded the determination of
the Trial Court.

       The City relies on, as heretofore noted, T.C.A. 6-51-111(b), which provides the following:

         6-51-111. Municipal property and services. . . .


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         (b) Subject to such exclusive right, any such matters upon which the
 respective parties are not in agreement in writing within sixty (60) days after the
 operative date of such annexation shall be settled by arbitration with the laws of
 arbitration of the state of Tennessee effective at the time of submission to the
 arbitrators, and § 29-5-101(2) shall not apply to any arbitration arising under this
 part and § 6-51-301. The award so rendered shall be transmitted to the chancery
 court of the county in which the annexing municipality is situated, and thereupon
 shall be subject to review in accordance with §§ 29-5-113 - 29-5-115 and
 29-5-118.

The Authority relies upon portions of T.C.A. 5-6-120 and 5-6-205 to the following effect:

          5-6-120. Transfer of duties to water and wastewater treatment
 authorities. -- (a) (1) The duties of the county executive in regard to any petition
 filed pursuant to title 7, chapter 82, are transferred to the water and wastewater
 treatment authority board under title 68, chapter 221, part 6 in any county which
 has created such authority. Such petitions may be granted if the board determines
 in its sole discretion that the public convenience and necessity require the same.
 The general assembly enacts this section as a statement of its intent that this
 section is a clarification of title 68, chapter 221, part 6. From and after the
 creation of a water and wastewater treatment authority and the establishment of
 its service area, the authority shall be the sole and exclusive provider of its
 authorized services in its service area. The designated service area for any
 particular function or service shall not include any area located within the
 boundaries of another governmental entity providing the same function or service
 on the date the service area is established. Different service areas may be
 established for different functions or services. The authority may cede all or any
 portion of its functions or service area to another governmental entity upon the
 board determining in its sole discretion that the public convenience and necessity
 require the same.

         ....

         (b) The authority granted in this section shall prevail over any other
 provision of the law to the contrary for all water and wastewater service providers
 proposing to provide such services in the service area of the authority. Any city
 proposing to provide such services in the service area of the authority shall have
 authorization to do so only by filing a petition in the manner established by this
 section and receiving a cession by the authority.

         5-6-205. Effect on private and other acts. -- (a) Any provision of law,
 private act or general act of local application in conflict with any provision of this
 chapter and chapters 1 and 5 of this title is hereby repealed.

                                          -4-
        The Authority insists that the latter statutes repeal the ones relied upon by the City and the
arbitration provision is superceded.

       The general rule of statutory construction set out in Cronin v. Howe, 906 S.W.2d 910, 912
(Tenn. 1995), is to this effect:

                A construction which places one statute in conflict with another must be
         avoided; therefore, we must resolve any possible conflict between statutes in favor
         of each other, so as to provide a harmonious operation of the laws. State By and
         Through Pierotti ex rel. Boone v. Sundquist, 884 S.W.2d 438, 444 (Tenn. 1994).
         In the event two acts conflict and cannot be reconciled, the prior act will be
         repealed or amended by implication to the extent of the inconsistency between the
         two, because the Legislature is presumed to have knowledge of its prior
         enactments and to know the state of the law at the time it passes legislation.
         Wilson v. Johnson County, 879 S.W.2d at 809. Repeals by implication are not
         favored, however, and will be recognized only when no fair and reasonable
         construction will permit the statutes to stand together. Id.

         The parties in their briefs address the question of which statute was last passed. It appears
that as to the conflicting provisions of the statutes above set out, the ones relied upon by the
Authority--T.C.A. 5-6-120(a)(1) was passed last. An amendment to the statute relied upon by the
City, T.C.A. 6-51-111(b), was passed subsequent to any amendment to the statutes relied upon by
the Authority. The City cites us to the case of Redmon v. LeFevre, 503 S.W.2d 97 (Tenn. 1973),
wherein the Court held that the passage of an amendment to a statute has the effect of re-enacting
the entire statute as of the effective date of the amendment. This might be true where statutes, as
often is the case, are stricken in their entirety and an amendment enacted by re-enacting the original
statute, including the amendment. We doubt, however, this case is applicable because the
amendment subsequent to the statutes relied upon by the Authority merely added a subsection
unrelated to the issue we have before us. In this regard we also wonder whether the codification of
the statute relied upon by the City at the beginning of the ensuing legislative year would serve to re-
enact the statute as amended in its entirety.

        We do not believe, however, it is necessary to resolve this question to dispose of the principal
issue in dispute. We say this because the language contained in T.C.A. 5-6-120(a)(1), above
referenced, is only applicable to areas which have been designated.

        It is undisputed that no specific designation of a service area had been made as of the
effective date of the City’s annexation. Indeed, the Authority attempted subsequently--on August
2, 2000--to designate the area. The Authority argues, however, that the installation of its equipment
served to designate its service area. We, however, are not impressed with this argument. As pointed
out by the brief of the City, Webster’s New Collegiate Dictionary (1974), defines the word
“designate” as follows:


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                 The word “designate” means 1(a) “to point out the location”; (b) to
         indicate; (c) to distinguish as to class; (d) specify, stipulate; 2. to call by a
         distinctive title, term or expression; 3. “to indicate and set apart for a specific
         purpose, office or duty;” 4. Denote. Webster’s New Collegiate Dictionary (1974),
         s.v. “designate.”

       In State v. Mayor, Etc., of City of Red Lodge, 83 P. 642 (Mont. 1905), the Montana Supreme
Court defined “designate” as follows:

         The term “designate” is defined as follows: “To mark out and make known; to
         point out; to name; to indicate; to show; to distinguish by mark or description; to
         specify; to call by a distinctive title; to indicate or set apart for a purpose or duty.”
         Webster’s International Dictionary.

       Moreover, any number of cases of similar import may be found in Words and Phrases, Vol.
12, page 415.

        We conclude in light of the foregoing definitions that it was incumbent upon the Authority
to take some formal action, as it subsequently did, to designate its service area. We say this because
it would be rather burdensome for the City to otherwise identify the service area.

        We accordingly find as to the first issue that because the Authority did not designate a service
area, the Statute it relies upon is inapplicable.

       As to the question of the right of the Authority to condemn the water sewage treatment in
question, we decline to entertain this issue as it may be that upon arbitration the matter would be
resolved to the satisfaction of the Authority. It does seem to us, however, that if the Authority can
condemn that the City would also be entitled to condemn and condemnation proceedings between
the two entities might go on indefinitely.

        In our view it is appropriate to affirm the Trial Court as to the first issue and to vacate the
judgment of the Trial Court relative to the question of condemnation. We remand the case for such
further proceedings, if any, as may be necessary. Costs of appeal are adjudged against Hamilton
County Water and Wastewater Treatment Authority, and its surety.



                                                 _________________________________________
                                                 HOUSTON M. GODDARD, PRESIDING JUDGE




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