Dillon's Rule - Relationship of Municipalities to the State
To understand what a municipal charter is, you have to know what a municipality is. You may be surprised to learn that, from a legal standpoint, a municipality almost anywhere in the United States, including Tennessee, is not much. Some writers have compared municipalities to children and state legislatures to their parents. But that comparison isn’t completely accurate because most children have greater legal protection against their parents than municipalities do against their state legislatures.

The classic statement of a municipality’s relationship to its state legislature was made by Judge John F. Dillon speaking for the Iowa Supreme Court in the famous case of City of Clinton v. Cedar Rapids and Missouri Railroad Company, 24 Iowa 455 (1868):

Municipal corporations owe their origin to, and derive their powers from, the legislature. It breathes into them the breath of life, without which they cannot exist. As it created, so may it destroy. If it may destroy, it may abridge the control. Unless there is some constitutional limitation on the right, the legislature might, by a single act, if we can suppose it capable of so great a folly and a great wrong, sweep from existence all of the municipal corporations of the state, and the corporations could not prevent it. We know of no limitation on this right so far as corporations themselves are concerned. They are, so to phrase it, the mere tenants at will of the legislature.

There is a “constitutional limitation” against abolishing Tennessee’s home rule municipalities found in Article XI, Section 9, of the Tennessee Constitution. In addition, the remaining Tennessee municipalities receive a measure of security from abolition in the same provision of the Tennessee Constitution, which provides that “The General Assembly shall by general law provide the exclusive methods by which municipalities may be created, merged, consolidated and dissolved and by which municipal boundaries may be changed.” In any event, the legal subordination of municipalities to their state legislatures is no reason to lock up city hall and go home. Municipalities in every state have been around for a long time; there are more than 340 of them in Tennessee.

But Judge Dillon didn’t stop there. In Merriam v. Moody’s Executor, 25 Iowa 163, 170 (1868), he achieved everlasting fame among municipal lawyers and students of local government by announcing what is known as Dillon’s Rule. Dillon’s Rule outlines the kind of powers legislatures give to municipalities and what happens if there is some doubt about a municipality’s power:

It is a general and undisputed proposition of law that a municipal corporation possesses and can exercise the following powers, and no others: First, those granted in express words; second, those necessarily or fairly implied in or incident to the powers expressly granted; third, those essential to the accomplishment of the declared objects and purposes of the corporation — not simply convenient, but indispensable. Any fair, reasonable, substantial doubt concerning the existence of power is resolved by the courts against the corporation, and the power is denied.

Dillon’s Rule has been abolished in some states, but in the recent case of Southern Contractors v. Loudon County Board of Education, 58 S.W.3d (Tenn. 2001), the Tennessee Supreme Court announced that Dillon’s Rule still lives in Tennessee and applied it to hold that while a county school board did not have the express authority to arbitrate a contract, it had the implied power to arbitrate the contract at issue. But, the court also pointed out that Dillon’s Rule is only a rule of statutory construction that applies when a statute is ambiguous, and that several important exceptions to that rule have diminished its practical importance. The rule:

• Does not apply to home rule municipalities; and
• Where the General Assembly has granted local governments “comprehensive governmental power … without either enumerating the powers or expressly limiting the scope of that authority,” that “general provision” [will] be “liberally construed.” The court cited three examples of comprehensive grants of powers to municipalities from the general law municipal charters found in Tennessee Code Annotated, Title 6:
  • Section 6-19-102 of the general law manager-commission charter: “The enumeration of particular powers in this charter is not exclusive of others, or restrictive of general words or phrases granting powers, nor shall a grant or failure to grant power in this chapter impair a power granted in any other part of this chapter, and whether powers, objects or purposes are expressed conjunctively or disjunctively, they shall be construed so as to permit the city to exercise freely any one (1) or more such powers as to any one (1) or more objects for any one (1) or more such purposes.”
  • Section 6-19-101(33) of the general law city manager commission charter: “[Every city incorporated under chapters 18-22 of this title may] [h]ave and exercise all powers that now or hereafter it would be competent for this charter specifically to enumerate, as fully and completely as though such powers were specifically enumerated in this section.”
  • Section 6-2-201(32) of the general law mayor-aldermanic charter: “[Every municipality incorporated under this charter may] [h]ave and exercise all powers that now or hereafter it would be competent for this charter specifically to enumerate, as fully and completely as though these powers were specifically enumerated.”