State Ex Rel. Attorney General v. Chicago Mill & Lumber Corp.

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 he found that the State brought suit against the Chicago Mill & Lumber Corporation and the Paepcke Corporation, two foreign corporations, to recover hack 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 he 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 ivas 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 AndersonTully 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: ‘ ‘ This brings us to a consideration of the question as to whether the complaint charged actual fraud of the taxpayer and whether the proviso in § 1 of the act, ‘ That failure to assess taxes as required by law shall be prima facie evidence of fraud,’ is sufficient to put appellee on its proof and therefore to answer the complaint. We answer both questions in the negative, as did the learned trial court. The complaint charged no actual fraud of the taxpayer. It did charge that its land was greatly underassessed,” 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 U. S. 692, 49 S. Ct. 457, where it was held that the overdue tax act did not violate the equal protection clause of the Fourteenth Amendment to the Constitution of the United States. It is perfectly evident that the Legislature had in mind the White River Lumber Company case and all other decisions of this court in reference to the collection of overdue taxes when it passed act 281 of 1931. If the Legislature said what it meant and meant what it said in § 1 of act 281 of 1931, “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 said tax is based, except for actual fraud of the taxpayer,” then it must be perfectly evident that the State cannot recover where the property owner has made an assessment of property with the county assessor of the county, and has paid the taxes regularly assessed thereon, unless it can be shown that actual fraud has been practiced by the taxpayer in making the underassessment. The only allegation in the complaint in this case is that the property was grossly underassessed, and no facts are alleged which would show or amount to actual fraud. The proviso “that failure to assess tax as required by law shall be prima facie evidence of fraud” does not save the situation here presented. This proviso means exactly what it says. “Failure to assess taxes as required by law” does not mean that an underassessment has been made. It is perfectly natural for the property owner to appraise the value of his property for taxation at a lower sum than the county assessor would do. It is perfectly natural for people to have different opinions about the value of property. We think that this proviso means that, if the party fails to assess any article of property with the assessors, in so far as this article of property is concerned, such assessment would be fraudulent, but where an assessment is made and the complaint is about, and only about, the difference in value of the property, this would not amount to fraud. This court took a definite and deliberate position in reference to the prosecution of overdue tax suits under act 281 of 1931 in the Anderson-Tully case, cited supra, wherein real estate assessments were involved, and we are of the opinion that all that was said by the court in the Anderson-Tuliy case in reference to real estate assessments should have full application in this case, and that the issues determined in the Anderson-Tully case settled and determine all issues presented in this case.' It is the opinion of the court that the complaint filed herein does not state facts sufficient to constitute a cause of action against the appellee, Chicago Mill & Lumber Corporation, and that the chancellor was correct in sustaining a demurrer thereto. Let the judgment be affirmed. Humphreys and Mehaffy, JJ., dissent.