Pledger v. Bosnick, 90-39

• Decision Date: 10 June 1991
• Docket Number: No. 90-39,90-39
• Citation: 811 S.W.2d 286,306 Ark. 45
• Parties: , 60 USLW 2027, 14 Employee Benefits Cas. 1038 Jim C. PLEDGER, Tim Leathers, et al., Appellants, v. Stanley BOSNICK, et al., Appellees.
• Court: Arkansas Supreme Court

Page 286

811 S.W.2d 286

306 Ark. 45, 60 USLW 2027, 14

Employee Benefits Cas. 1038

Jim C. PLEDGER, Tim Leathers, et al., Appellants, v. Stanley BOSNICK, et al., Appellees.

No. 90-39.

Supreme Court of Arkansas.

June 10, 1991.

Lynley Arnett, Asst. Atty. Gen., Little Rock, for Jimmie Lou fisher.

William E. Keadle, Little Rock, Revenue Legal Counsel, for Jim C. Pledger and Tim Leathers.

Carrold E. Ray, Hilburn, Calhoon, Harper, Prunski & Calhoun, Ltd., North Little Rock, for appellees.

ALLEN W. BIRD, II, Special Chief Justice.

Appellants, Jim C. Pledger, Director of the Arkansas Department of Finance and Administration, and Tim Leathers, Commissioner of Revenues, were charged with the enforcement of the Arkansas Income Tax. Appellees consist of a certified class of Arkansas residents who have retired from employment with various United States civil service agencies, with the various branches of the United States Armed Services, and with other states' agencies and political subdivisions.

Appellees filed suit in the Chancery Court of Pulaski County, Arkansas, against appellants Pledger and Leathers in their respective capacities, along with Jimmie Lou Fisher, in her capacity as Treasurer of the State of Arkansas. Appellees contended that the provisions of Ark.Code Ann. § 26-51-307 (1987), which provided a full exemption from Arkansas Income Tax for the retirement income received by retirees from the Arkansas Public Employees, Teachers, State Highway Police, and State Highway Employees Retirement Systems, while allowing an exemption for only the first $6,000 of appellees' and all other retirees' retirement income, was in violation of the principles of intergovernmental tax immunity by favoring retired employees of the State of Arkansas and local government employees over retired federal employees and retired employees of other states and political subdivisions thereof. The Chancellor, citing the United States Supreme Court case of Davis v. Michigan Dep't of Treasury, 489 U.S. 803, 109 S.Ct. 1500, 103 L.Ed.2d 891 (1989), agreed with appellees' contention, and on November 1, 1989, ordered the appellants to refund to all members of the class all such income tax collected on their retirement income since 1985 and awarded appellees' counsel an attorney's fee from a portion of this refund. From this decision and decree entered by the Chancellor appellants have perfected this appeal. We affirm the lower court.

Initially we must determine whether the appeal herein is final for the purposes of Rule 2 of the Arkansas Rules of Appellate Procedure. Neither the appellants nor the appellees have raised this issue; however, we addressed the issue during oral argument of the case. Even though the parties to an appeal do not raise the issue of the appealability of an order, it is the duty of this court to do so, as a determination that the order appealed from is not final would deprive this court of jurisdiction to hear the appeal. Associates Fin. Serv. Co. of Okla., Inc. v. Crawford County Memorial Hosp., Inc., 297 Ark. 14, 759 S.W.2d 210 (1988). The existence of a final order is a jurisdictional requirement for bringing an appeal, which this court is obliged to raise even though the parties do not. 3-W Lumber Co. v. Housing Auth., 287 Ark. 70, 696 S.W.2d 725 (1985); John Cheeseman Trucking Inc. v. Dougan, 305 Ark 49, 805 S.W.2d 69 (1991).

The Arkansas Rules of Appellate Procedure state at Rule 2:

(a) An appeal may be taken from a circuit, chancery, or probate court to the Arkansas Supreme Court from:

1. A final judgment or decree entered by the trial court; ...

9. An order certifying a case as a class action in accordance with ARCP Rule 23....

This action was filed as a class action, and the complaint and its amendments specifically prayed that a class be certified pursuant to Arkansas Rule of Civil Procedure 23. The Chancellor entered his order on August 22, 1989, finding that class certification was proper under Rule 23.

In addition, the complaint asked the lower court to: (i) find that the Arkansas Income Tax unconstitutionally discriminates against retired federal employees and retired employees of other states who receive or have received retirement benefits in excess of $6,000; (ii) enjoin the defendants from appropriating and expending any of the funds collected pursuant to a levy of the illegal income taxes and account for the amounts so collected to date; (iii) refund to the class the illegally collected income taxes, together with interest; and (iv) award reasonable attorney's fees and reimbursement of costs under Ark.Code Ann. § 26-35-902 (1987).

On November 1, 1990, the Chancellor entered his order and (i) found that the Arkansas income tax laws violated the principles of intergovernmental tax immunity and 4 U.S.C. § 111; (ii) enjoined the defendants from collecting the income tax found to be unconstitutional; (iii) ordered an accounting for and refund of the income taxes to all taxpayers represented by the class to the extent such taxes were collected in excess of the lawful taxes as determined by the court; and (iv) stated an intention to allow a reasonable part of the taxes to be refunded as attorney's fees.

The class certification order entered on August 22, 1989, was an appealable order pursuant to Arkansas Rule of Appellate Procedure 2(a)(9). International Union of Elec., Radio and Mach. Workers v. Hudson, 295 Ark. 107, 747 S.W.2d 81 (1988). Although the appellees have not raised the issue of timeliness of appeal of the class certification issue, timeliness of the appeal is also jurisdictional for this court. LaRue v. LaRue, 268 Ark. 86, 593 S.W.2d 185 (1980). However, whether the appellants failed to appeal that order in a timely manner is moot because we affirm for the reasons set forth below. The remaining issue on appealability is whether the balance of the appeal is properly before this court as a final order.

The test of finality and appealability of an order is whether the order puts the court's directive into execution, ending the litigation or a separable branch of it. Mueller v. Killam, 295 Ark. 270, 748 S.W.2d 141 (1988). We have often held that in order for an order to be appealable it must be such a final determination of the issues as may be enforced by some appropriate manner. Estate of Hastings v. Planters and Stockmen Bank, 296 Ark. 409, 757 S.W.2d 546 (1988); Cigna Ins. Co. v. Brisson, 294 Ark. 504, 744 S.W.2d 716 (1988). The members of the class, in the court below, asked for relief common to the class, including a declaration that certain provisions of the income tax laws of the state are unconstitutional, an injunction against using the funds illegally collected, a refund to the class, and attorney's fees for the attorney. The order of the Chancellor granted the prayer in favor of the members of the class on all of those issues. There appears to be no question that the Chancellor's rulings are final as to those issues which are common to the class. The only real issue as to appealability before this Court is whether the final rulings on those issues are rendered nonappealable when coupled with the ruling awarding attorney's fees in an unliquidated amount, and a requirement that the appellants submit a plan for providing notice to the class of their rights to a refund and establishing the procedures for such refunds.

We view the action left to be taken after the entry of the order appealed from, relating to notice to the members of the class (1) to be remote and collateral to the main issues before the court, (2) to require an examination of factors beyond the issues needed to be decided with the merits of the original complaint, and (3) to be a largely ministerial task similar to assessing the traditional items of cost. Collateral action, such as this, is action that does not make any direct step toward final disposition of the merits of a case, will not be merged in the final judgment, is not an ingredient of the cause of action, and does not require consideration with the main cause of action. Such collateral and ministerial orders need not be final for purposes of Arkansas Rule of Civil Procedure 54 nor Arkansas Rule of Appellate Procedure 2. In Farm Bureau Mutual Ins. Co. v. Southall, 281 Ark 141, 661 S.W.2d 383 (1983) we were faced with a property insurer who was faced with a second action based upon a policy. The insurer had confessed judgment and tendered the policy limits, plus penalty and interest into the registry of the court in an action in Hot Spring County. The matter of attorney's fees was still pending in the Hot Spring County action when the insured filed a second action in Pulaski County. We said in that action, "The only part of the Hot Spring County case still pending is that of determining the amount of the attorney's fees to be assessed against [the insurer]. For all practical purposes the original action is not pending." 281 Ark. at 145, 661 S.W.2d at 386.

The same is true in the case at bar. The order appealed from in this matter otherwise terminates the action as it was requested by the moving parties in the complaint on the issue of the constitutionality of the tax, the injunction and the refund. We view the matter of the details of notice and attorney's fees to be primarily collateral and ministerial and in furtherance of the enforcement of the court's decision. It is not required under our interpretation of Rule 2 that such collateral ministerial matters be final. The order appealed from granted all the relief prayed for in the complaint and was thus final. See Terket v. Lund, 623 F.2d 29 (7th Cir.1980).

Upon questioning during oral argument, counsel for the appellees was asked whether he was seeking additional attorney's fees for which additional orders of the chancery court might be necessary. Counsel indicated that he reserved his rights to seek fees pursuant to 42 U.S.C. §§ 1986 and 1988. Does such a stated intention prevent the...