State ex rel. Attorney General v. Chicago Mill & Lumber Corp.
| Decision Date | 27 March 1933 |
| Docket Number | 4-2988 |
| Parties | STATE EX REL. ATTORNEY GENERAL v. CHICAGO MILL & LUMBER CORPORATION |
| Court | Arkansas Supreme Court |
Appeal from Phillips Chancery Court; A. L. Hutchins, Chancellor affirmed.
STATEMENT BY THE COURT.
This is the second appeal in this case. Reference is here made to the opinion of this court on the former appeal for a more concise statement of the facts. It will be found in State ex rel., etc., v. Chicago Mill & Lumber Corporation, 184 Ark. 1011, 45 S.W.2d 26.
It is alleged by the State that the machinery and lumber at appellee's mill at West Helena in Phillips County and Blytheville in Mississippi County were so grossly underassessed for the years 1927, 1928, 1929 and 1930 inclusive, as to amount to fraud within the meaning of act 281 of 1931; that the machinery and lumber are always assessed jointly on the tax books under the heading of "Machinery and Manufactured Articles"; that appellee's machinery and lumber at each of said mills possessed a value of one million, five hundred thousand dollars throughout the taxable period of each of said years when, in truth and in fact, the same should have been assessed at $ 450,000 for said period on the assessable basis of fifty (50) per cent. of its true value; that the actual assessments made by appellees have been for the Blytheville machinery and lumber, for the year 1927, $ 75,000; for 1928 $ 72,600; for the year 1929, $ 72,500 for 1930, $ 72,500, or at approximately 5 per cent. of the true value; that the assessment on the West Helena machinery and lumber for 1927 was $ 135,000 and a similar assessment was made thereon for each of the years 1928, 1929 and 1930, which was approximately only nine (9%) per cent. of its true value. It was further alleged that similar property in said counties and property generally throughout the State was assessed at an average of fifty (50%) per cent. of the true value, which basis was asked to be applied as the legal basis for assessment in this case.
It was further alleged by appellants that the assessments so made by appellees are so grossly inadequate as to shock the conscience and constitute an actual fraud by appellee on the State and on Mississippi and Phillips counties and the school districts in which said property is located; that the lumber and machinery aforesaid are extremely difficult to value, and that the taxing officials had no access to the record values thereof; that the tax officials have been compelled to rely in making assessments on the representations of appellees as to values; that the representations so made by the owners as to values to the taxing authorities have been too low and far below the assessments of other similar properties in said counties and throughout the State.
After the remand of the case by this court to the Phillips County Chancery Court, the appellee, Chicago Mill & Lumber Corporation, filed its motion to require the State to make its complaint more definite and certain in many particulars, and in response thereto the complaint was amended in the following particulars: That the kinds, character and amount of lumber owned by the appellees for the years 1927 to 1930, inclusive, located at Helena and Blytheville, are matters within the sole and exclusive knowledge of the defendants and cannot be alleged by plaintiff; that plaintiff could not allege the officials or agents who made false or fraudulent representations to the assessors in reference to values; that the nature of the representations made by the corporate officials or agents of the appellees for the years 1927 to 1930, inclusive, to the assessor was by delivering certain statement of the valuation of the defendant's machinery and lumber in Mississippi and Phillips counties for each of said years, which sworn statement showing the valuation of said lumber and machinery for said respective years to be figures at which said property was actually assessed for said years respectively; that said sworn valuations were so grossly inadequate as to shock the conscience and constitute a fraud upon the State; that the valuations so made by the officials of said corporations were not made in separate items and no separate valuation of the different items was shown; that it was extremely difficult for the assessor and other taxing authorities of Mississippi and Phillips counties to appraise and value defendant's lumber and machinery for the years 1927 to 1930, inclusive, and therefore the assessors of Mississippi and Phillips counties were compelled to rely, and did rely, upon the alleged valuation of said lumber made by the corporate officials.
After the response and amendments to the complaint were filed, the appellee filed a general demurrer to the complaint, alleging that the complaint and amendments thereto did not state facts sufficient to constitute a cause of action against the defendants, etc.
On hearing of the demurrer the Phillips County Chancery Court sustained the same and dismissed the appellant's complaint for want of equity, and this appeal is prosecuted to reverse this decree.
Judgment affirmed.
Hal L. Norwood, Attorney General, and John M. Rose, for appellant.
W. R. Satterfield and Daggett & Daggett, for appellee.
OPINION
JOHNSON, C. J., (after stating the facts).
As indicated in the statement of facts, this is the second appeal in this case. By referring to the former opinion, it will be found that the State brought suit against the Chicago Mill & Lumber Corporation and the Paepcke Corporation, two foreign corporations, to recover back taxes alleged to be due for the years 1927 to 1930, both inclusive, by reason of gross undervaluation in the assessments of the machinery and manufactured lumber at the mills of said corporation at West Helena and Blytheville, Arkansas. This court held that there was no personal liability of the Paepcke Corporation and that a recovery, in any event, could only be had for property now situated in the State of Arkansas which had passed into the hands of the Chicago Mill & Lumber Corporation. The case was reversed and remanded for further proceedings in accordance with the principles of equity and not inconsistent with the opinion.
In this suit act 281 of 1931 was not argued by counsel on either side, and was not considered by this court.
After the rendition of the opinion of this court on the former appeal and on September 26, 1932, this court determined the case of State ex rel. Attorney General v. Anderson-Tully Company, wherein act 281 of 1931 was brought to the attention of this court. In the Anderson-Tully case, supra, which was an overdue tax proceeding on account of a gross undervaluation assessment on real estate, this court specifically held that a recovery could not be had by the State except for actual fraud of the taxpayer in making his assessment. The court held:
etc.
It is insisted that the Anderson-Tully case, supra, is not authority in the instant case, because it is said that the property here in controversy is personal property, whereas the property involved in the Anderson-Tully case was real estate. It is difficult to see just why that the rule should be different in reference to the assessment of personal property and the assessment of real property. Under the statutes of this State the owner of real property is required to list his property for taxation. The same is true with reference to his personal property. The tax assessor is not bound by any value placed upon either real or personal property by the owner.
The court has reached the conclusion that act 281 of 1931 is conclusive of all the issues now presented, and for this reason no other question will be discussed or decided in the case. Prior to this enactment a showing by the State that the property of the taxpayer had been grossly under-assessed was sufficient to allow a recovery in behalf of the State. Section 1 of act 281 of 1931 reads as follows:
"That, after the assessment and full payment of any general property, privilege or excise tax, no proceedings shall thereafter be brought or maintained for the reassessment of the value on which such tax is based, except for actual fraud of the taxpayer, provided that failure to assess taxes as required by law shall be prima facie evidence of fraud."
Evidently, it was the purpose of the Legislature to change the law in reference to, and to regulate the collection of, overdue taxes in this State.
In the case of White River Lumber Co. v. State, 175 Ark. 956, 2 S.W.2d 25, this court used the following language:
"We are of the opinion that the statute (collection of overdue taxes) was intended to give the State the right to recover back taxes where there had been a gross undervaluation of the property in the hands of the corporation," etc.
Previous to the White River Lumber Company case, supra, this court had held in State v. K. C. & Memphis Railway & Bridge Co., 117 Ark. 606, 174 S.W. 248, as follows:
"It was evident that the statute was intended to afford a complete remedy for the collection of back taxes," etc.
The White River Lumber Company case, cited supra, was appealed to the Supreme Court of the United States, and is reported in 279...
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