State ex rel. Attorney General v. Chicago Mill & Lumber Corp.

• Decision Date: 21 December 1931
• Docket Number: 57
• Parties: STATE EX REL. ATTORNEY GENERAL v. CHICAGO MILL & LUMBER CORPORATION
• Court: Arkansas Supreme Court

45 S.W.2d 26

184 Ark. 1011

STATE EX REL. ATTORNEY GENERAL v. CHICAGO MILL & LUMBER CORPORATION

No. 57

Supreme Court of Arkansas

December 21, 1931

Appeal from Phillips Chancery Court; A. L. Hutchins, Chancellor reversed in part.

STATEMENT BY THE COURT.

The State of Arkansas, on the relation of the Attorney General brought this suit in equity against Chicago Mill & Lumber Corporation and 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 assessment of the machinery and manufactured lumber at the mills of said corporations at West Helena, Phillips County, Arkansas, and at Blytheville Mississippi County, Arkansas. A more particular statement of the allegations of the complaint will appear under appropriate headings in the discussion of the issues of law raised by the pleadings.

The Paepcke Corporation, without appearing for any other purpose filed a motion to dismiss the cause of action against it for want of jurisdiction, on the ground that it is a nonresident corporation, existing under the laws of the State of Illinois, and is not doing business, and is not authorized to do business in the State of Arkansas. The Chicago Mill & Lumber Corporation filed a demurrer to the complaint on several grounds.

The chancery court sustained the motion of the Paepcke Corporation to quash service of process against it, and dismissed the action as to it for want of jurisdiction. The chancery court sustained the demurrer of the Chicago Mill & Lumber Corporation and dismissed the complaint against it for want of equity. The State has appealed.

Decree reversed and cause remanded.

Hal L. Norwood, Attorney General and John M. Rose, for appellant.

W. R. Statterfield and Daggett & Daggett, for appellees.

J. G. Williamson, Lamar Williamson and Adrian Williamson, amici curiae.

HART C. J. BUTLER, J. dissenting.

OPINION

HART, C. J., (after stating the facts).

The correctness of the decree of the chancery court depends upon the proper interpretation to be given to what is commonly known as our "back tax statute."

Our original back tax act was passed by the Legislature of 1887, and its title recites that it is "An act to provide for the collection of overdue taxes from corporations doing business in the State." Acts of 1887, p. 33; Kirby's Digest, §§ 7204-7213, inclusive. This act was amended by the Legislature of 1911 so as to fix the compensation to be paid to special counsel employed to assist the Attorney General in the enforcement of the act. Acts of 1911, p. 324. This act came up for construction by the court in the case of State v. Kansas City & Memphis Ry. & Bridge Co., 106 Ark. 248, 153 S.W. 614, where it was held that, under the provisions of the act, the State could not recover back taxes for undervaluation made in assessing property, and that a review by the courts was only permitted when the assessing officers had proceeded on a wrong basis of valuation in omitting some property or element of value, or in adopting the wrong basis of estimating value.

In order to correct this supposed defect in the act, the Legislature of 1913 amended the former act by inserting a provision for the recovery of back taxes where an assessment was made on an inadequate valuation or undervaluation of the property. The amended act also provided that it should be construed as retrospective as well as prospective in operation. This amended act came before the court for construction in State v. K. C. & Memphis Ry. & Bridge Co., 117 Ark. 606, 174 S.W. 248.

The first section with the word "or" inserted in brackets is copied in the statement of facts by the court, and reads as follows:

"Where the Attorney General is satisfied from his own investigation, or it is made to appear to him by the statement in writing of any reputable taxpayer of the State, that, in consequence of the failure from any cause to assess and levy taxes, or because of any pretended assessment and levy of taxes upon any basis of valuation other than the true value in money of any property hereinafter mentioned, or because of any inadequate or insufficient valuation or assessment of such property or undervaluation thereof, or from any other cause, that there are overdue and unpaid taxes owing to the State, or any county or municipal corporation, or road district, or school district, by any corporation, (or) upon any property now in this State which belonged to any corporation at the time such taxes should have been properly assessed and paid, that it shall become his duty to at once institute a suit or suits in chancery in the name of the State of Arkansas for the collection of the same in any county in which the corporation owing such taxes may be found, or in any county in which any part of such property as may have escaped the payment in whole or in part of the taxes, as aforesaid, may be situated, in which suit or suits the corporation owing such taxes, or any corporation (or person) claiming an interest in any such property as may have escaped taxation as aforesaid, shall be made a party defendant, and the Governor is authorized to employ any attorneys that may be necessary to assist the Attorney General in such suits; provided, that this act shall be construed as retrospective as well as prospective in operation."

Although there is no express declaration of the court to that effect, it is apparent from the insertion of the word "or" in brackets by the court, and from its reasoning in the case, that the court considered that the word "or" had been left out of the act as amended by the Legislature of 1913 by inadvertence or clerical mistake. With the word "or" omitted, the terms of the act would be restricted or limited to property in existence in the State at the time of the bringing of the back-tax suit instead of enlarging its provisions so as to provide for the recovery of back taxes where the property had been grossly undervalued in making the original assessment. With the word "or" omitted, it is plain that the statute would give the Attorney General the right to bring suit for back taxes where they were due by any corporation upon any property now in the State which belonged to the corporation at the time such taxes should have been properly assessed, the word "now" being used as contemporaneous with the thing to be done, which was the bringing of the back-tax suit. It is manifest from the title of the act, and from the context, that the Legislature did not intend to omit the word "or" in the act as amended in 1913, because the amended act provides that suit may be brought in any county in which the corporation owing such taxes may be found, thereby indicating that a personal judgment might be rendered against the corporation owing the taxes. It further provides that suit might be brought in any county in which any part of such property might be located.

In such event, a corporation owing the taxes or any corporation claiming an interest in the property shall be made a defendant, thereby indicating that a subsequent sale of the property should not defeat an action for the recovery of back taxes. The section concludes with a proviso that the act shall be construed as retrospective as well as prospective in operation.

It is a well- settled principle of statutory construction that statutes should receive a common-sense construction, and, where one word has been erroneously used for another, or a word omitted, and the context affords the means of correction, the proper word will be deemed substituted or supplied. This is but making the strict letter of the statute yield to the obvious intent of the Legislature. Lewis' Sutherland Statutory Construction (2d ed.), vol. 2, pp. 796, 797.

It is the office of judicial construction to supply such omitted words as give effect to the act, if this can be done within the reasonable scope of language used by the Legislature, when read in connection with the purposes of the act. Croze v. St. Mary's Canal Mineral Land Co., 153 Mich. 363, 117 N.W. 81.

In order to determine whether the omission of a word in an amended act was a mere inadvertence, the prior and subsequent legislation on the same subject may be sought to establish that fact. Hutchings v. Commercial Bank, 91 Va. 68, 20 S.E. 950.

This court, in numerous cases, has announced the same principle as to substitution, elimination or supplying words in conformity to the obvious spirit and purposes of the act in attempting to carry out the obvious intention of the Legislature. Haney v. State, 34 Ark. 263; Bowman v. State, 93 Ark. 168, 129 S.W. 80; and Williams v. State, 99 Ark. 149, 137 S.W. 927, Ann. Cas. 1913A, 1056, and cases cited.

The view that the word "or" was omitted in the amended act of 1913, through inadvertence or clerical mistake is manifest by the reasoning of the court in the case of State v. K. C. & Memphis Ry. & Bridge Co., 117 Ark. 606, 174 S.W. 248. In that case the court said that, taking into consideration the origin and history of the legislation on the subject and the language of the different provisions, and particularly of that provision which restricts the operation of the act to property "now in this State," that is, within the jurisdiction of the courts of the State at the time, it was evident that the statute was intended to afford a complete remedy for the collection of back taxes, and operated retrospectively as well as prospectively, independent of any express declaration to that effect.

It is insisted, however, that the statute does not provide for the collection of back taxes on personal property, but we think that this view is opposed to our later decisions on the subject. In State v. Bodcaw Lumber Co.,...