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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. McCormick v. City of Dillingham (1/26/01) sp-5359

McCormick v. City of Dillingham (1/26/01) sp-5359

     Notice:  This opinion is subject to correction before publication in
the Pacific Reporter.  Readers are requested to bring errors to the attention of
the Clerk of the Appellate Courts, 303 K Street, Anchorage, Alaska 99501, phone
(907) 264-0608, fax (907) 264-0878.


HILLBILLY ENTERPRISES, INC.,  )    Supreme Court No. S-9037
             Appellants,      )    Superior Court No.
                              )    3AN-95-6301 CI
     v.                       )
                              )    O P I N I O N
municipal corporation,        )    [No. 5359 - January 26, 2001]
             Appellee.        )

          Appeal from the Superior Court of the State of
Alaska, Third Judicial District, Anchorage,
               William H. Fuld, Judge pro tem, and
                      Dan A. Hensley, Judge.

          Appearances:  R. R. De Young, Wade & De Young,
APC, Anchorage, for Appellants.  Brooks W. Chandler and Krista S.
Stearns, Hicks, Boyd, Chandler & Falconer, Anchorage, for Appellee.

          Before:  Matthews, Chief Justice, Eastaugh,
Fabe, Bryner, and Carpeneti, Justices.  

          FABE, Justice.

          Fred McCormick operated a construction company in
Dillingham.  Contending that Dillingham's business license fee and
sales tax were invalid, McCormick refused to pay or collect either. 
Dillingham sued McCormick personally to collect the fees, taxes,
and penalties that it believed McCormick owed.  The superior court
granted partial summary judgment to the city, concluding that the
license fee and sales tax were valid.  After a bench trial, the
superior court further determined that McCormick should be held
personally liable.  We affirm the superior court on all issues.
     A.   The Sales Tax Ordinance
          McCormick and his company, Hillbilly Enterprises, Inc.,
have refused to collect and pay the Dillingham sales tax. 
McCormick alleges that the sales tax was repealed in 1977 and never
legally reenacted.  Dillingham sued McCormick for withholding his
company's books from an audit and failing to pay the sales tax. 
Dillingham filed for summary judgment, and Superior Court Judge Pro
Tem William H. Fuld concluded that the Dillingham sales tax was
     B.   The Business License Ordinance
          Contending that Dillingham enacted its business license
ordinance illegally, McCormick has refused to pay it.  The city
sued to collect the license fees, and McCormick filed a motion for
partial summary judgment seeking to have the ordinance declared
void.  Dillingham filed an opposition and cross-motion for summary
judgment, demanding that McCormick obtain a business license and
pay penalties for his non-compliance.  The superior court concluded
that the business license ordinance was valid.  McCormick appeals,
arguing that state law preempts Dillingham's business license
ordinance and that Dillingham failed to comply with public notice
     C.   Piercing the Corporate Veil
          After the trial court determined that the sales tax and
business license fees were valid, Dillingham sought to collect back
taxes, fees, and penalties from McCormick and his business,
Hillbilly Enterprises.  Although Dillingham sought recovery based
on a de facto partnership theory, Superior Court Judge Dan A.
Hensley directed the parties to prepare for a trial to determine
whether to pierce Hillbilly's corporate veil and hold McCormick
personally liable.
          After hearing the evidence at trial, the superior court
pierced Hillbilly's corporate veil.  The court entered a final
judgment of $51,696.58 in favor of Dillingham; this amount
consisted of the back taxes and fees, pre-judgment and post-
judgment interest, and attorney's fees.  McCormick appeals.
          We review a grant of summary judgment de novo. [Fn. 1] 
We uphold a grant of summary judgment when the record presents no
genuine issue of material fact and one party is entitled to
judgment as a matter of law. [Fn. 2]  When considering whether the
moving party is entitled to summary judgment, we construe the facts
in the light most favorable to the non-moving party, [Fn. 3] and we
review the trial court's factual findings under the clearly
erroneous standard. [Fn. 4]  
     A.   The Dillingham Sales Tax Ordinance Was Valid. 
          1.   The 1977 repeal and reenactment
          Dillingham first approved a sales tax in 1966.  Although
the original sales tax ordinance, Ordinance 13, is no longer a part
of Dillingham's city records, Amendment A to Ordinance 13, which
amended the original sales tax ordinance in 1967, has survived.  In
1977 Dillingham undertook an effort to codify its city ordinances. 
In doing so it passed Ordinance 77-10.  Ordinance 77-10 repealed
the sales tax ordinance and simultaneously enacted Title 8, which
was to be titled "Taxation and Special Assessments."  But Ordinance
77-10 did not clearly indicate the ordinances that were to be
reenacted as Title 8.  Instead, Ordinance 77-10 stated that these
would be "more particularly set forth in Exhibit A attached
hereto."  Although Exhibit A has not survived in Dillingham's
records, a sales tax similar to the original sales tax ordinance
appeared in Title 4, rather than Title 8, of the codification of
the Dillingham municipal code. [Fn. 5]  McCormick maintains that
because Exhibit A cannot be found, it should be assumed that
Ordinance 77-10 repealed the sales tax and did not reenact it.
          McCormick argues that he has generated a genuine issue of
material fact as to whether Dillingham properly reenacted its sales
tax in 1977.  But he has the burden of overcoming the "presumption
that proceedings of the governing body of a municipality have been
conducted in accordance with the law." [Fn. 6]  McCormick argues
that because Dillingham has been either unwilling or unable to
produce Exhibit A of Ordinance 77-10 and because the sales tax
appears in Title 4 of the Dillingham Municipal Code, rather than
Title 8 as directed by Ordinance 77-10, he has overcome the
presumption that Dillingham acted in compliance with the law.
          To overcome the Liberati presumption of government
regularity, [Fn. 7] however, McCormick must do more than point to
a lost exhibit or the mislabeling of the municipal code.  Ordinance
77-10 was not a drastic change in policy for the city of
Dillingham.  Instead, it was an effort to codify the municipal
ordinances, which had included a sales tax for ten years.  The
published municipal code and Ordinance 13, the earliest surviving
Dillingham sales tax ordinance, contain the same organization and
substantially identical language.  Moreover, the codified municipal
ordinance refers to section 2 of Ordinance 77-10, which is the
portion referring to the missing Exhibit A, as the source for the
sales tax ordinance.
          Although McCormick can point to anomalies in the
codification of the sales tax in 1977, he has not established that
the city failed to comply with the law.  Instead, he has asked the
court to infer that the city council conspired to illegally revive
substantially the same sales tax ordinance that it repealed in
Ordinance 77-10 when it codified Dillingham's ordinances.  But the
1980 version of the Dillingham Municipal Code states that Ordinance
77-10 is the legal authority for the codification of the sales tax. 
We therefore agree with the superior court that McCormick has
failed to present sufficient evidence to overcome the presumption
that Dillingham lawfully passed its sales tax.
          2.   The 1989 increase in the rate of levy
          In 1989 the city council again addressed the Dillingham
sales tax. [Fn. 8]  The city sought to increase the tax rate from
three percent to five percent by passing Ordinance 89-03.  Because
the ordinance was "an increase in the rate of levy of a sales tax,"
Dillingham held the statutorily required public vote to ratify the
tax. [Fn. 9]  The voters approved the increase.
          McCormick objects to Ordinance 89-03 because he claims
that the city misled voters by referring to the existing sales tax,
which he claims the council repealed in 1977.  McCormick posits
that because Dillingham failed to "fully inform[]" the voters, the
election results were invalid.  But because we conclude that
Dillingham had a valid sales tax prior to the 1989 vote,
McCormick's argument rests on a flawed premise.  Moreover, the
results of the ratifying vote demonstrate that the voters were
aware of and approved the Dillingham sales tax. [Fn. 10]
          3.   The 1992 modification
          In 1992 Dillingham became aware that its failure to
publish notice in a newspaper of general circulation called into
question all of its city ordinances. [Fn. 11]  In response, the
council adopted Ordinance 92-18 requiring publication of all public
notices in a newspaper of general circulation in Dillingham.  The
city manager recommended that the mayor and city council reenact
all of the revenue ordinances after providing public notices.  The
city also considered Ordinance 92-14, which raised the cap on the
value of transactions subject to the sales tax from $1,000 to
$2,000.  The city prepared notice of the public hearing, published
it in the Bristol Bay Times, and ultimately passed the ordinance. 
But McCormick challenges the validity of the ordinance on the
grounds that the city failed to notify the public that it had no
valid sales tax.
          We reject McCormick's challenge to Ordinance 92-14, which
raised the cap on the value of transactions subject to the sales
tax from $1,000 to $2,000.  Because we conclude that Dillingham had
a valid sales tax, McCormick's argument that Dillingham did not
notify the public that it had previously repealed its sales tax has
no merit.
     B.   The Dillingham Business License Ordinance Was Valid.
          Dillingham also brought a claim against McCormick for his
failure to obtain and pay for the city business license.  The city
originally passed the license fee as Ordinance 92-07 in June 1992. 
McCormick argues that the city did not provide adequate notice of
the hearing regarding the proposed business license fee. 
Dillingham, however, does not rely on Ordinance 92-07 when it
asserts that it has a valid business license ordinance.  Instead,
it submits that it need not have complied with the public notice
requirements in passing Ordinance 92-07 because it validly
reenacted the business license when it passed Ordinance 92-13 in
October 1992 as part of its effort to comply with the state
statutory notice requirements.  But McCormick argues that
Dillingham's procedure in enacting Ordinance 92-13 was deficient as
          The city council first introduced Ordinance 92-13 on
August 20, 1992.  The council set a public hearing for September 3,
1992.  As required by statute, [Fn. 12] Dillingham published notice
in the Bristol Bay Times and posted the notice around Dillingham. 
The published notice stated that the purpose of Ordinance 92-13 was
"[a]mending the Dillingham Business License Code."  At the
September 3 meeting, council members expressed concern that
charitable endeavors were equally subject to the application fee. 
As a result, the council tabled the ordinance.
          The council modified Ordinance 92-13 to address the
council's concerns and set another public hearing for October 15,
1992.  The city posted notice of this public hearing and also
published notice in the Bristol Bay Times.  But the council did not
hold a public hearing on October 15 because it did not have a
quorum.  The city clerk rescheduled the meeting for October 21,
1992.  Because the Bristol Bay Times is a weekly newspaper, there
was insufficient time to publish notice of this meeting. [Fn. 13] 
But notice of the rescheduled meeting was posted around town and
publicized on the radio.  At the October 21 meeting, the council
passed Ordinance 92-13, reenacting the business license ordinance.
          McCormick first argues that the city of Dillingham does
not have the power to pass a business license ordinance because the
state business license ordinance has preempted it.  McCormick also
claims that Ordinance 92-13 is invalid because no notice of the
public hearing at which the ordinance passed appeared in a
newspaper of general circulation.  Finally, McCormick argues that
Dillingham violated its own municipal code by passing Ordinance 92-
13 at the October 21 meeting.
          1.   Preemption
          McCormick's argument that the state business license law
preempted Dillingham's ability to pass a local business license fee
ordinance is incorrect.  Dillingham may exercise "a power not
otherwise prohibited by law." [Fn. 14]  Those powers include the
power "to levy a tax." [Fn. 15]  McCormick argues that because the
state charges a fee for a business license [Fn. 16] and regulates
construction contractors, [Fn. 17] Dillingham is prohibited from
assessing a fee for a business license.  But McCormick points to no
language in state law prohibiting a municipality from charging a
fee for a business license.  In the absence of such a prohibition
or interference with the function of a state statute, [Fn. 18]
Dillingham may properly charge the fee.
          Moreover, we have determined that "[m]erely because the
state has enacted legislation concerning a particular subject does
not mean that all municipal power to act on the same subject is
lost." [Fn. 19]  Absent "an express legislative direction or a
direct conflict with a statute," preemption exists "only where an
ordinance substantially interferes with the effective functioning
of a state statute or regulation or its underlying purpose." [Fn.
20]  McCormick presents no reason why Dillingham's regulation of
local businesses cannot coexist with the state's regulation.  
          2.   Dillingham's compliance with state and local                notice

          McCormick argues that Dillingham has failed to comply
with state and local notice requirements.  Alaska Statute
29.25.020(b)(2) requires that "an ordinance shall be set by the
governing body for a public hearing."  Alaska Statute
29.25.020(b)(3) requires that for a hearing to be properly noticed,
"[a]t least five days before the public hearing a summary of the
ordinance shall be published together with a notice of the time and
place for the hearing."  Alaska Statute 29.71.800(18) defines
"published" as "appearing at least once in a newspaper of general
circulation distributed in the municipality, or if there is no
newspaper of general circulation distributed in the municipality,
posting in three public places for at least three days." 
Dillingham has not contested that the Bristol Bay Times was a
newspaper of general circulation in 1992.  Moreover, we have
determined that compliance with AS 29.25.020(b)(3)'s publication
requirement is mandatory in the context of a revenue-enhancing
ordinance. [Fn. 21]
          But Dillingham complied with the state notice
requirements.  McCormick does not contest the fact that notice of
the September 3 first public hearing regarding Ordinance 92-13
appeared in the Bristol Bay Times. [Fn. 22]  Alaska's public notice
statutes require one public hearing regarding an ordinance. [Fn.
23]  And our prior cases establish that if an ordinance is amended
after the initial public hearing, "[o]nly those changes to an
ordinance which are so substantial as to change its basic character
require that the public hearing process be repeated." [Fn. 24] 
Accordingly, if Dillingham properly provided notice of the first
hearing, and the amendments did not alter the basic character of
the original proposed ordinance, it was then unnecessary to hold a
second public hearing.  Thus, any deficiency in the notice provided
for the second hearing would constitute harmless error. [Fn. 25]
          The amendments considered at the second hearing regarding
the ordinance, held on October 21, did not alter the basic
character of the ordinance.  The amendments merely exempted home
businesses and non-profit organizations from the license fee. In
Jefferson v. City of Anchorage, [Fn. 26] we considered an ordinance
setting the salary for the mayor of Anchorage.  Although the
original ordinance set the mayor's full-time salary, an amendment
was presented at the meeting during which the ordinance was passed
to set a lower salary for the mayor if he or she elected to work
part-time. [Fn. 27]  We concluded that such an amendment did not
require repeating the hearing process. [Fn. 28]  Accordingly, a
second hearing on the business license ordinance was also not
required. [Fn. 29]
          Even though Dillingham complied with state notice
requirements, however, we must still address whether it complied
with local requirements.  Specifically, McCormick argues that the
Dillingham Municipal Code only allows an ordinance to be passed
after a properly noticed hearing if it is "without amendment." [Fn.
30]  Dillingham, however, contends that the language in Dillingham
Municipal Code 02.12.050 is not an accurate codification of
Dillingham's ordinances.  At oral argument before this court,
counsel for Dillingham asserted that due to a printing error, the
Dillingham code provision was not published accurately and that the
relevant code provision as passed provides: "After the hearing, the
council shall consider the proposed ordinance and may adopt it with
or without amendment." [Fn. 31]
          The record reveals that the city council amended the
relevant ordinance in 1986 when it passed Ordinance 86-8, retaining
the "with or without" language.  And McCormick has not challenged
the authenticity of that ordinance.  We therefore accept
Dillingham's representations with respect to the content of its
city ordinances and conclude that Dillingham Municipal Code
02.12.050 should read "with or without amendment."
          Because we conclude that Dillingham Municipal Code
02.12.050 should read "with or without amendment," it follows that
the city council complied with the ordinance. [Fn. 32]  According
to the Dillingham Municipal Code, once the city council held one
properly noticed public hearing with regard to Ordinance 92-13, it
could subsequently adopt the ordinance even with amendments.
     C.   The Superior Court Did Not Err When it Pierced the
Corporate Veil and Held McCormick Personally Liable for the
Obligations of Hillbilly Construction.

          The corporate history of McCormick's construction
business came to light at a bench trial regarding McCormick's
personal liability for uncollected taxes, fees, interest, and
penalties owed to the city.  In 1990 McCormick incorporated his
business under the name McCormick Construction and Maintenance,
Inc.  He and his wife, Tatiana McCormick, were the sole
shareholders of the business, but McCormick ran the daily
operations.  In 1993 the corporation changed its name to Hillbilly
Enterprises, Inc., and McCormick transferred his ownership interest
to his wife so that the company could take advantage of contracts
designated for minority businesses.  McCormick continued to operate
the business.
          Hillbilly was never fully capitalized.  It never owned
any significant assets.  McCormick himself continued to own and
operate the construction equipment for the benefit of Hillbilly,
but there was never a formal leasing arrangement between the
company and McCormick.
          The Hillbilly finances were not kept separately from the
McCormick family finances.  McCormick took out personal loans from
the bank to pay corporate bills.  McCormick also used the corporate
bank account as his own personal account.  Tatiana McCormick worked
for the Dillingham School District, but had her checks deposited in
the corporate account.
          Based on these factors, the superior court found that
McCormick was personally liable for the debts of Hillbilly
Construction.  McCormick argues that the superior court committed
several errors in reaching this decision.  McCormick first asserts
that the court erred by allowing the trial to proceed on the theory
that Hillbilly's corporate veil should be pierced.  He further
argues that the superior court relied on erroneous factual findings
when it made the legal determination that Hillbilly's corporate
veil should be pierced.
          1.   The superior court did not err in conducting a
bench trial on the question of whether to pierce the corporate veil
of Hillbilly Enterprises.  

          McCormick argues that because Dillingham sought recovery
from him on a theory of a de facto partnership and never pled the
corporate veil theory, conducting a trial on that theory was
erroneous.  McCormick believes Dillingham never put him on notice
that he could be held personally liable.  But Dillingham made it
clear from the outset that it would seek payment for unpaid taxes,
fees, and penalties from McCormick.  The initial complaint named
him as the sole defendant.  Only in its amended complaint, after
McCormick had replied that he was only an employee of Hillbilly
Enterprises, did Dillingham add Hillbilly Enterprises as a
          The complaint provided McCormick with sufficient notice
that he might be held responsible for Hillbilly's failure to pay
Dillingham taxes.  Our decision in Griffith v. Taylor establishes
that if a party has notice of the conduct for which the opposing
party is seeking relief, the opposing party may recover under any
theory supported by the evidence:
          [T]he complaint's function is to put the
opposing party on notice of the nature of the claim being asserted,
leaving it to discovery and other pretrial procedures to narrow the
issues.  Additionally, we have stated that a party should be
granted the relief to which he is entitled under the evidence,
regardless of the theory of his pleadings.[ [Fn. 33]]

Dillingham alleged in its first complaint that McCormick had failed
to pay city taxes, fees, and penalties, stating that it would seek
payment from McCormick.  McCormick therefore had sufficient notice.
          Moreover, McCormick waived any objection to the superior
court's proceeding to a trial on a piercing the corporate veil
theory.  Dillingham came to the pre-trial conference intending to
prove that McCormick was actually a partner with the Hillbilly
Corporation and therefore liable for its debts.  The city
apparently believed that if it pierced the corporate veil, it could
not recover from McCormick personally because he was not a
shareholder of the corporation.  But the trial court believed that
a trial regarding whether Hillbilly's corporate veil should be
pierced was the theory most suited to the case: 
          [The factors established by the Alaska Supreme
Court] are the same kind of things that would be considered if
there were a claim for piercing the corporate veil.  They're the
same kind of things that I would consider relevant in determining
whether Mr. McCormick, although designated general manager, was
acting in some other capacity not as an employee of the

          And those . . . will be the kinds of things
I'll require the City to prove for the City to prevail.  Is there
any reason we can't go to trial now that the Court has clarified
what it considers the elements of the City's claim?

To this question both counsel replied, "I see no reason, Your
Honor."  By this reply McCormick waived any objection to the
corporate veil theory.  If McCormick believed that Dillingham had
inappropriately omitted the theory from its complaint, he should
have objected at the pre-trial conference.
          2.   The superior court did not err in piercing the
corporate veil.

          In Uchitel Co. v. Telephone Co., [Fn. 34] we announced
the standards for determining when those in control of a
corporation might be held personally liable:
          (a)  whether the shareholder sought to be
charged owns all or most of the stock of the corporation; (b)
whether the shareholder has subscribed to all of the capital stock
of the corporation or otherwise caused its incorporation; (c)
whether the corporation has grossly inadequate capital; (d) whether
the shareholder uses the property of the corporation as his own;
(e) whether the directors or executives of the corporation act
independently in the interest of the corporation or simply take
their orders from the shareholder in the latter's interest; (f)
whether the formal legal requirements of the corporation are
observed.[ [Fn. 35]]

After hearing the evidence at trial and considering these factors,
the superior court decided to pierce the corporate veil and found
McCormick personally liable.
          McCormick challenges the court's factual findings
underlying its consideration of the Uchitel factors and its legal
conclusion that he is personally liable.  We consider his arguments
under each of the factors.
               a.   Ownership of stock
          McCormick can be held personally liable despite the fact
that he does not own any Hillbilly stock.  McCormick's wife,
Tatiana, owns all of the company's stock.  But when a court
considers whether to pierce the corporate veil, it does not simply
ask who owns the corporation's stock, but also inquires who
controls the company. [Fn. 36]  If other factors militate in favor
of piercing the corporate veil, a court may impose personal
liability on the control person even if he owns no stock. [Fn. 37] 

               b.   Cause of the incorporation
          The trial court found that McCormick was responsible for
the formation of the original corporation, McCormick Construction,
as well as its transformation into Hillbilly Enterprises.  The
record supports this finding.  And McCormick even concedes in his
brief that he and his wife changed the name of his corporation to
Hillbilly Enterprises, making Tatiana McCormick the sole
               c.   Inadequate capital
          The trial court focused much of its analysis on the fact
that Hillbilly had grossly inadequate capital.  The trial court
found that not only was Hillbilly undercapitalized, but also that
it never had adequate capital.
          McCormick challenges the superior court's factual
findings, arguing that they were based on incomplete tax records.
McCormick's argument is disingenuous; the court sanctioned him for
failing to produce the tax returns.  Moreover, McCormick does not
challenge the superior court's finding that Hillbilly was so
inadequately capitalized that it did not have collateral for a
loan.  Instead, McCormick took personal loans to pay Hillbilly's
debts.  We cannot conclude that the trial court's finding was
clearly erroneous.
               d.   Personal use of corporate property
          In this case, the corporation owned no significant
property.  Instead, Hillbilly used McCormick's personal
construction equipment without any formal leasing arrangement
between Hillbilly and McCormick.  Hillbilly did, however, pay for
the maintenance on the equipment and take the depreciation
deduction on its tax return.
          McCormick asserts that Hillbilly's lack of assets
militates against imposing personal liability.  But Hillbilly
enjoyed the benefits of the construction equipment and accepted
none of the burdens; it was able to use the equipment and take
depreciation but did not have to make lease payments or subject the
equipment to attachment by creditors.  We conclude that the
ownership structure of Hillbilly's property favors imposing
personal liability on McCormick.
               e.   Corporate independence
          Although the superior court did not address this factor
directly, it found that McCormick controlled Hillbilly as if he
were the sole owner.  McCormick offers the following statement,
which he made at trial, to argue that this conclusion was clearly
erroneous: "It's [my wife, Tatiana's] company.  I cannot tell her
what to do."  In light of the whole record, however, the trial
court did not clearly err in concluding that McCormick controlled
Hillbilly.  McCormick performed most of the work for the company
and decided whom to hire and fire.  He did not get paid as an
employee, but rather he took "draws" whenever he saw fit.  He even
referred to the money in the corporate checking account as "my
               f.   Observance of formal legal requirements
          While it is undisputed that Hillbilly kept some corporate
records, it is also clear that the McCormicks used the corporate
checking account to conduct non-corporate business.  In any event,
the superior court put little emphasis on Hillbilly's compliance or
lack of compliance with formal legal requirements.
          In light of the superior court's factual findings, we
conclude that the Uchitel factors favor imposing personal
liability.  We therefore affirm the superior court's decision to
impose personal liability.
          We AFFIRM the superior court's grant of summary judgment
establishing the validity of the Dillingham business license fee
and sales tax.  In both instances McCormick failed to overcome the
presumption that the actions of a local government are undertaken
in compliance with the law.  Moreover, we conclude that the
superior court's factual findings regarding Hillbilly Enterprise's
corporate dealings were not clearly erroneous and that those
findings justify imposing personal liability.


Footnote 1:

     See Mount Juneau Enters., Inc. v. City & Borough of Juneau,
923 P.2d 768, 772-73 (Alaska 1996).

Footnote 2:

     See Semlek v. National Bank of Alaska, 458 P.2d 1003, 1005-06
(Alaska 1969).

Footnote 3:

     See Zeman v. Lufthansa German Airlines, 699 P.2d 1274, 1280
(Alaska 1985).

Footnote 4:

     See Parker v. Northern Mixing Co., 756 P.2d 881, 887-88 n.11
(Alaska 1988).

Footnote 5:

     Although Ordinance 77-10 calls for the "Taxation and
Assessment" ordinance to appear in Title 8, Dillingham explains the
fact that the sales tax appears in Title 4 because of a decision of
the publisher.

Footnote 6:

     Liberati v. Bristol Bay Borough, 584 P.2d 1115, 1118 (Alaska
1978); see also     City of St. Mary's v. St. Mary's Native Corp.,
9 P.3d 1002, 1009 (Alaska 2000).

Footnote 7:

     See 584 P.2d at 1118.

Footnote 8:

     In 1986 Dillingham had undertaken another effort to reorganize
its municipal code by passing Ordinance 86-10.  The ordinance
repealed, reorganized, and reenacted Title 4 of the Dillingham
Municipal Code.  Because the ordinance did not repeal Title 8,
which according to Ordinance 77-10 should have been the sales tax
provision, and reenact it as Title 4, McCormick contends that
Dillingham was attempting to resurrect its repealed sales tax. But
again McCormick has failed to overcome the presumption that the
Dillingham sales tax was reenacted in compliance with the law in
1977.  Thus, we need not address the superior court's conclusion
that the city council cured any discrepancies when it passed
Ordinance 86-10 in 1986.

Footnote 9:

     See AS 29.45.670 ("A new sales and use tax or an increase in
the rate of levy of a sales tax approved by ordinance does not take
effect until ratified by a majority of the voters at an

Footnote 10:

     We also note that Dillingham only sought from McCormick and
his business the payment of sales taxes due since 1990, after the
voters had ratified the Dillingham sales tax.

Footnote 11:

     See AS 29.25.020(b)(3) (prescribing the requirements for
notice of a hearing adopting a new tax).

Footnote 12:

     See AS 29.25.020(b)(3); AS 29.71.800(18). 

Footnote 13:

     The record indicates that the paper was published on Friday,
October 9, 1992.  If the Thursday, October 15 meeting were canceled
late on that day, then it would have been impossible to publish
notice of the rescheduled meeting in the next weekly edition of the
paper, October 16, before the rescheduled meeting occurred on
Wednesday, October 21, 1992.

Footnote 14:

          AS 29.35.260(a); see AS 29.35.400 ("A liberal
construction shall be given to all powers and functions of a
municipality conferred in this title.").

Footnote 15:

     AS 29.35.010(6). 

Footnote 16:

     See AS 43.70.030(a).

Footnote 17:

     See AS 08.18.011-.171.

Footnote 18:

     See Kotzebue Lions Club v. City of Kotzebue, 955 P.2d 921, 922
(Alaska 1998) (quoting Liberati, 584 P.2d at 1122).

Footnote 19:

     Liberati, 584 P.2d at 1121-22. 

Footnote 20:

     Kotzebue Lions Club, 955 P.2d at 922 (quoting Liberati, 584
P.2d at 1122).

Footnote 21:

     See City of St. Mary's v. St. Mary's Native Corp., 9 P.3d
1002, 1010-12 (Alaska 2000).

Footnote 22:

     McCormick argues that Ordinance 92-13 is invalid because the
public notice mischaracterized the ordinance as an amendment rather
than a reenactment.  We have determined that a summary of a
proposed ordinance "meets the statutory requirements so long as it
describes clearly, if generally, what the proposed ordinance would
accomplish." [Fn. 38]  Kotzebue Lions Club, 955 P.2d at 924-25
(quoting Fairbanks N. Star Borough v. College Utils. Corp., 689
P.2d 460, 462 (Alaska 1984)). In this case, the published summary
did describe what proposed Ordinance 92-13 would accomplish. 
Proposed Ordinance 92-13 contained amendments to Ordinance 92-07. 
Differences in the two ordinances may be found in Dillingham
Municipal Code 4.16.030(C), and the penalty provision in Dillingham
Municipal Code 4.15.060.  In addition, the ordinance amended
Chapter 6.04 of the Dillingham Municipal Code.  Ordinance 92-13 was
literally an "amendment" of Ordinance 92-07.  The fact that the
city council passed Ordinance 92-13 to cure a procedural deficiency
is legally irrelevant.

Footnote 23:

     AS 29.25.020(b)(2) only requires "a" hearing, not multiple

Footnote 24:

     Liberati, 584 P.2d at 1119 (interpreting former AS
29.48.150(a) that contains language nearly identical to AS
29.25.020(b) with respect to passing amended ordinances).

Footnote 25:

     See Kotzebue Lions Club, 955 P.2d at 924.

Footnote 26:

     513 P.2d 1099, 1100-01 (Alaska 1973).

Footnote 27:

     See id. at 1100.

Footnote 28:

     See id. at 1102.

Footnote 29:

     See Liberati, 584 P.2d at 1119.

Footnote 30:

     Dillingham Municipal Code 02.12.050.

Footnote 31:

     We accordingly ordered counsel for Dillingham to provide
documentation to support this assertion, and we invited McCormick
to respond.  Dillingham's counsel complied with the order and no
response was filed.  

Footnote 32:

     McCormick's argument that AS 29.45.670 required voter
ratification of the business license fee is without merit.  AS
29.45.670 requires voter ratification of "[a] new sales and use
tax."  Although McCormick argues that the business license fee is
sufficiently like a sales tax to trigger the voter ratification
requirement, he does not provide any legal authority to support his
claim, nor is there any reasonable basis for labeling a $100 annual
fee for doing business in Dillingham a "sales tax" for the purposes
of AS 29.45.670.

Footnote 33:

     937 P.2d 297, 307 (Alaska 1997) (footnotes omitted) (quoting
Martin v. Mears, 602 P.2d 421, 427 (Alaska 1979)); see Schaible v.
Fairbanks Med. & Surgical Clinic, Inc., 531 P.2d 1252, 1255-56 &
n.16 (Alaska 1975); Brayton v. City of Anchorage, 386 P.2d 832, 833
(Alaska 1963).

Footnote 34:

     646 P.2d 229 (Alaska 1982).

Footnote 35:

     Id. at 235.

Footnote 36:

     See Labadie Coal Co. v. Black, 672 F.2d 92, 97 (D.C. Cir.

Footnote 37:

     See id.; LaFond v. Basham, 683 P.2d 367, 369 (Colo. App.
1984); Robert's Hawaii Sch. Bus v. Laupahoehoe, 982 P.2d 853, 872
(Haw. 1999) ("Therefore, because control is determined by the
actual relationship of the parties, formal stock ownership is not

Footnote 38: