Weiss v. Geisbauer

• Decision Date: 13 October 2005
• Docket Number: No. 04-1324.,04-1324.
• Citation: 215 S.W.3d 628
• Parties: Richard A. WEISS, Director, Arkansas Department of Finance and Administration, State of Arkansas, Appellant, v. Ronald J. GEISBAUER, Appellee.
• Court: Arkansas Supreme Court

215 S.W.3d 628

Richard A. WEISS, Director, Arkansas Department of Finance and Administration, State of Arkansas, Appellant, v. Ronald J. GEISBAUER, Appellee.

No. 04-1324.

Supreme Court of Arkansas.

October 13, 2005.

Michael J. Wehrle, and William E. Keadle, Little Rock, for appellant.

Daily & Woods, P.L.L.C., by: Jerry L. Canfield, Fort Smith, for appellee.

BETTY C. DICKEY, Justice.

This appeal arises from a constitutional challenge to Section 2 of Act 727 of the 1997 Acts of Arkansas (§ 2 of Act 727 of 1997), which is now codified at Ark.Code Ann. § 26-55-211. The circuit court held that § 2 of Act 727 of 1997, as written, is unconstitutional and concluded that the words "the Mississippi" should be struck from the statute and substituted with the words "a river." Appellant asserts that (1) the trial court erred by declaring the classification created by § 2 of Act 727 of 1997, between border cities located on the Mississippi River and border cities that are not, violates the Arkansas and United States Constitution; and (2) the trial court erred by declaring that the term "The Mississippi" should be struck from § 26-55-211 and that the term "a river" should be substituted in its place. We affirm in part and reverse in part.

Ark.Code Ann. § 26-55-205 levies a motor-fuel tax on the sale of motor fuels in Arkansas. Ark.Code Ann. § 26-55-210 provides that, in certain "border cities" and specified territory, the motor fuel tax shall not be greater than one cent per gallon above the rate of tax levied in the adjoining state ("border city exemption"). The General Assembly has, at various times, amended the legislation now codified at § 26-55-211 to provide that "border cities" will not include any territory annexed to those cities after a specified date. (Act 1498 of the 2001 Acts of Arkansas changed the date from February 1, 1973 to July 1, 2001.) Section 2 of Act 727 of 1997 added a provision to § 26-55-211 that makes the limitation date, July 1, 2001, irrelevant "in a city bordering a state line which is in the main channel of the Mississippi ..." In other words, a border city that borders the main channel of the Mississippi can annex territory and that territory will qualify for the border city exemption, regardless of the date of the annexation.

Appellee, Ronald J. Geisbauer, owns and operates a retail business, Ron's NSC, that sells motor fuels. Appellee's business is the tenant of a commercial tract of real property utilized for the distribution and sale of motor fuels, which was annexed to the City of Fort Smith after July 1, 2001. Because Fort Smith is not a city bordering a state line that is in the main channel of the Mississippi, the appellee's land does not qualify for the border city exemption. On June 11, 2003, on behalf of the appellee, appellee's landlord sought administrative relief from the director of the Arkansas Department of Finance and Administration, Richard A. Weiss. Appellee was denied relief and, on December 3, 2003, sought to obtain a declaratory judgment from the circuit court that the addition to § 26-55-211 by § 2 of Act 727 of 1997 was unconstitutional. It was appellee's contention that the classification between border cities located on the Mississippi and border cities located on other rivers is unconstitutional. Further, appellee sought a declaratory judgment that the legislative intent of the Arkansas General Assembly would be best effectuated by striking the unconstitutional portion and extending the addition to all river border cities within the state of Arkansas.

On August 16, 2004, the circuit court entered an order in favor of the appellee. The court first concluded that § 2 of Act 727 of 1997, as written, is unconstitutional. Then, the court attempted to cure the unconstitutionality of the Act by striking the words "the Mississippi" and substituting the words "a river," claiming that this would be the intention of the General Assembly. The circuit court entered an order on September 7, 2004, denying the appellant's motion to vacate or modify the order; and, appellant then filed his notice of appeal on September 14, 2004.

The first argument presented on appeal is that the circuit court erred by declaring that the classification, created by § 2 of Act 727 of 1997, between border cities located on the Mississippi River and border cities located on other rivers violates both the Arkansas and United States Constitutions. However, appellee maintains that the classification (1) is special or local legislation in violation of Amendment 14 to the Arkansas Constitution and (2) ignores that the equal protection and privileges and immunities provisions of Article 2, sections 3 and 18 of the Arkansas Constitution and under Amendment 14 to the United States Constitution that prohibit the arbitrary separation of some person, place, or thing from those upon which, but for the separation, it would operate. This court uses a "rational basis" standard of review when determining whether legislation is special or local and prohibited by Amendment 14. McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997); Fayetteville Sch. Dist. No. 1 v. Arkansas State Bd. of Educ., 313 Ark. 1, 852 S.W.2d 122 (1993). This same standard is applicable to the constitutional issues raised by appellee under the equal protection and privileges and immunities provisions of the Arkansas and United States Constitutions. Medlock v. Leathers, 311 Ark. 175, 842 S.W.2d 428 (1992); Streight v. Ragland, 280 Ark. 206, 655 S.W.2d 459 (1983). Therefore, all the constitutional arguments presented require the same analysis from this court, a rational basis review.

Amendment 14 of the Arkansas Constitution provides: "The General Assembly shall not pass any local or special act." Local legislation has been interpreted by this court to mean legislation that is arbitrarily applied to only one geographic area of the state, while special legislation has been interpreted to mean legislation that arbitrarily separates from the operation of an act some person, place, or thing from another. Boyd v. Weiss, 333 Ark. 684, 971 S.W.2d 237 (1998); Fayetteville Sch. Dist. No. 1 v. Arkansas State Bd. of Educ., 313 Ark. 1, 852 S.W.2d 122 (1993). It is important to note that state statutes are presumed to be constitutional, and the party attacking the statute has the burden of showing that the challenged statute is clearly unconstitutional. Id.

Fort Smith, the city where appellee's business is adversely affected, is a river border city. Land annexed to Fort Smith after July 1, 2001 does not qualify to receive the border city exemption. However, if Fort Smith were to border the Mississippi River, the appellee's land would not be excluded from receiving that exemption. Appellee asserts that this classification between river border cities that lie on the Mississippi River and all other river border cities is arbitrary local and special legislation. The fact that a statute affects less than all of the state's territory does not automatically render it local or special legislation. McCutchen v. Huckabee, supra; Littleton v. Blanton, 281 Ark. 395, 665 S.W.2d 239 (1984). We have consistently held that an act of the general assembly that applies to only a portion of the state is constitutional if the reason for limiting the act to one area is rationally related to the purposes of that act. McCutchen v. Huckabee, 328 Ark. 202, 943 S.W.2d 225 (1997). What we review is whether the decision to apply the act to only one area of the state is rational. Id.

This court has upheld the constitutionality of legislation that made a distinction between border cities and non-border cities; and even legislation that created a separate classification for border cities that were separated by a street-state-line. Bollinger v. Watson, 187 Ark. 1044, 63 S.W.2d 642 (1933); Boyd v. Weiss, 333 Ark. 684, 971 S.W.2d 237 (1998). Act 63 of the 1931 Acts of Arkansas, which was a predecessor to § 26-55-210, provided that motor vehicle fuel tax in border cities would be the same rate as in the adjoining state, not to exceed a rate established in the Act. We concluded that the purpose of the act was to impose a tax for the use of the amount of motor fuel consumed in motor-driven vehicles, and the object was to obtain revenue for the building and maintenance of the highway system for the benefit of those who used it. Id. We recognized that the legislature had in mind that the rate of taxation on motor fuel was much lower in some of the bordering states than in this state because of the greater wealth and population in those states. Id. It was clear that the classification for border cities was made necessary, and bore a reasonable relation to the purpose and objective of the act, because inhabitants of border cities could go across the state line to purchase their fuel and deprive revenue from Arkansas. Id.

Years later, in Boyd v. Weiss, this court addressed the constitutionality of legislation that created the distinction between border cities that were separated by a street-state-line and border cities that were not. This classification was created by Act 48 of the 1977 Acts of Arkansas. Texarkana was the only city in Arkansas eligible for the benefit of the Act; the city of Texarkana was permitted to elect to adopt an additional one cent gross receipts tax in lieu of its residents paying income taxes. The constitutionality of that classification was challenged. Boyd v. Weiss, 333 Ark. 684, 971 S.W.2d 237 (1998). This court concluded that the stated purpose of Act 48 was to protect the city of Texarkana by exempting residents from state income taxes who might otherwise be induced to move to Texas, which would only require them to cross the street. Id. In addition, we noted that the classification was reasonably related to the purpose of the Act because residents of other border cities, like West Memphis, would have less incentive to relocate due to long distances...