Ex parte HealthSouth Corporation, No. 1060296 (Ala. 5/4/2007)

• Decision Date: 04 May 2007
• Docket Number: No. 1060296.,1060296.
• Parties: Ex parte HealthSouth Corporation. In re: HealthSouth Corporation v. Jefferson County Tax Assessor, Dan Weinrib, and Jefferson County Tax Collector, J.T. Smallwood.
• Court: Alabama Supreme Court

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Ex parte HealthSouth Corporation In re: HealthSouth Corporation v. Jefferson County Tax Assessor, Dan Weinrib, and Jefferson County Tax Collector, J.T. Smallwood.

No. 1060296.

Supreme Court of Alabama.

Decided May 4, 2007.

Petition for Writ of Certiorari to the Court of Civil Appeals.

Jefferson Probate Court, 187686; Court of Civil Appeals, 2050538.

LYONS, Justice.

HealthSouth Corporation appealed to the Court of Civil Appeals from a judgment of the Jefferson Probate Court in favor of Dan Weinrib, the Jefferson County tax assessor, and J.T. Smallwood, the Jefferson County tax collector ("the taxing authorities"). The Court of Civil Appeals affirmed the judgment of the probate court. HealthSouth Corp. v. Jefferson County Tax Assessor, [Ms. 2050538, October 27, 2006] ___ So. 2d ___ (Ala. Civ. App. 2006). HealthSouth then petitioned this Court for a writ of certiorari, and we granted HealthSouth's petition to review a question of first impression presented by this case. We affirm the judgment of the Court of Civil Appeals.

I. Factual Background and Procedural History

For the tax years 2001, 2002, and 2003, HealthSouth submitted personal-property tax returns to the Jefferson County tax assessor on which it intentionally listed numerous fictitious items of personal property and assigned fabricated values to those items.¹ HealthSouth paid taxes for the years 2001 and 2002 based on the submitted returns. Before paying the amount due for 2003, however, HealthSouth amended its tax return for that year to remove the fictitious assets. The Jefferson County tax assessor allowed the adjustment as to 2003. HealthSouth then amended its 2001 and 2002 returns and filed petitions for a refund of the portion of ad valorem personal-property taxes it claims it overpaid as a result of listing the fictitious items of personal property on its tax returns for 2001 and 2002. The Jefferson County tax collector requested an opinion from the attorney general, who determined that no refund was due. The tax collector then denied the petitions for a refund of the taxes HealthSouth had paid for 2001 and 2002 on the fictitious property.

HealthSouth filed an action in the Jefferson Probate Court challenging the tax collector's refusal to grant its petitions for the refund of ad valorem taxes paid on personal property for the years 2001 and 2002. When the probate court denied the petitions for refund, HealthSouth appealed to the Court of Civil Appeals. That court affirmed the judgment of the probate court. The Court of Civil Appeals held that § 40-10-160, Ala. Code 1975, providing for tax refunds based upon a mistake or an error, did not permit a refund when the taxpayer's overpayment resulted from the taxpayer's intentionally false statements as to the value of nonexistent assets. This Court granted certiorari on the question of first impression: whether an intentional misrepresentation by a taxpayer in reporting property on a tax return constitutes a mistake or an error within the purview of § 40-10-160.

II. Standard of Review

"In reviewing a decision of the Court of Civil Appeals on a petition for a writ of certiorari, this Court 'accords no presumption of correctness to the legal conclusions of the intermediate appellate court. Therefore, we must apply de novo the standard of review that was applicable in the Court of Civil Appeals.' Ex parte Toyota Motor Corp., 684 So. 2d 132, 135 (Ala. 1996). Because the material facts before the Court of Civil Appeals were undisputed, that court's review of the trial court's ruling would be de novo as well. State Dep't of Revenue v. Robertson, 733 So. 2d 397, 399 (Ala. Civ. App. 1998). This is particularly true where the intermediate appellate court is construing statutory provisions. Robertson, supra; Pilgrim v. Gregory, 594 So. 2d 114, 120 (Ala. Civ. App. 1991)."

Ex parte Exxon Mobil Corp., 926 So. 2d 303, 308 (Ala. 2005).

III. Analysis

Section 40-10-160 provides:

"Any taxpayer who through any mistake, or by reason of any double assessment, or by any error in the assessment or collection of taxes, or other error, has paid taxes that were not due upon the property of such taxpayer shall be entitled, upon making proof of such payment to the satisfaction of the Comptroller, to have such taxes refunded to him if application shall be made therefor, as hereinafter provided, within two years from the date of such payment."

(Emphasis added.)

This Court's decision to grant HealthSouth's petition for the writ of certiorari was triggered by the pivotal issue of the significance, if any, of the legislature's choice of two words—"error" and "mistake"—in its refund statute and its linking those words with the disjunctive conjunction "or." The parties have wrestled mightily with parsed definitions from various sources that might afford a separate field of operation for the terms. Of course, HealthSouth contends that "error" can embrace an intentional act and therefore that its fraudulent inclusion on its personal-property tax returns of assets that did not exist constitutes the type of activity for which it is entitled to relief pursuant to § 40-10-160 in the form of a refund of taxes paid. HealthSouth does not contend that "mistake" embraces its activities. The taxing authorities,² on the other hand, argue that neither "error" nor "mistake" includes deliberate, intentional acts of the character committed by HealthSouth.

The Court of Civil Appeals, after citing definitions for each word, concluded:

"Although HealthSouth may be correct that the plain meaning of the word `mistake' is slightly different from the plain meaning of the word `error,' we are clear to the conclusion that an intentional misrepresentation is not included in the plain meaning of either word."

___ So. 2d at ___.

We conclude that the Court of Civil Appeals was correct. While nuanced definitions of the two words could considerably lengthen this opinion, there is ample authority for the proposition that "error" or "mistake" does not contemplate dishonest activity. This Court considered the significance of a legislative choice of "clerical error" and "other mistake of the clerk" in Ford v. Tinchant & Brother, 49 Ala. 567, 571 (1873). Although the Ford Court concluded that each of the terms had a separate field of operation, a limitation in its holding is significant to the issue in this case. This Court in Ford stated:

"The legislature cannot be held to have been so careless of language, as to have used the expressions 'clerical error,' and 'other mistake of the clerk,' in exactly synonymous sense, in view of the liability to mistake in the entries and record of causes; or to have excluded from amendment the manifest oversights and inaccuracies of the counsel, not calculated to mislead, in permitting the correction of 'any error in fact in the process.'"

(Emphasis added.) Thus, in Ford this Court qualified the field of operation of "clerical error" and "other mistake of the clerk" by embracing only conduct that was "not calculated to mislead."

In Alabama & Georgia Lumber Co. v. Tisdale, 139 Ala. 250, 36 So. 618 (1903), the amount of the judgment enforcing a mechanic's lien was less than the amount that had previously been claimed in the statement of lien filed in the office of judge of probate. The validity of the lien was challenged on the basis of the discrepancy. The applicable statute provided: "[N]o error in the amount of the demand or in the name of the owner or proprietor shall affect the lien ...." 139 Ala. at 255, 36 So. at 619. The Court observed:

"Fraud is never presumed. On the facts found, the discrepancy can and should be accounted for on the ground of a mistake or error ....

"... Whether the present statute was intended to prevent a destruction of the lien when the amount in the statement was intentionally made excessive in order to secure to the lienor a fraudulent advantage, we will not decide. But where, as here no fraudulent purpose or intent is found to exist, we are clearly of [the] opinion that the lien is not impaired or destroyed by the error as to the amount."

139 Ala. at 256-57, 36 So. at 620. Later, in Fleming v. McDade, 207 Ala. 650, 651, 93 So. 618, 619 (1922), this Court was required to resolve the question left unanswered in Alabama & Georgia Lumber Co. This Court stated:

"In Ala. & Ga. Lbr. Co. v. Tisdale, 139 Ala. 250, 257, 36 South. 618 [(1903)], there is to be found a query whether the present statute [providing for protection from destruction of the lien for error in the amount of the demand] was intended to prevent the destruction of the lien, as held in Lane & Bodley Co. v. Jones, [79 Ala. 156 (1885), holding that a fraudulent statement vitiated the lien] under the statute then in force, as to which no opinion was expressed. We are clearly of the opinion, however, that the principle announced in the older case has been in no wise affected by the provision of the present statute that 'no error in the amount of the demand, ... shall affect the lien'; for this means merely an inadvertent or honest mistake, and not a willfully false claim."

In Scheuer v. Berringer, 102 Ala. 216, 14 So. 640 (1894), dealing with error or mistake, on the one hand, or fraud, on the other, in settlements of accounts between partners, this Court recognized differing relief available attending each circumstance. This Court quoted with approval the trial court's order, which in turn quoted Cowan v. Jones, 27 Ala 317, 325 (1855), in which this Court stated, "'"The rule is settled that, where errors or mistakes only are shown, the account will not be opened, as where fraud is shown; but the party alleging error or mistake in the account, will be permitted to surcharge and falsify it."'" 102 Ala. at 220, 14 So. at 642. The trial court's order continued:

"`In Moses [Bros.] v. Noble['s Adm'r], 86 Ala. 407, [410, 5 So. 181, 182 (1888),] Justice Clopton remarks: "In the absence of allegation and proof of...