ABB.] STATE EX REL. V. CHICAGO MILL & LBR. CORP. 65 STATE EX REL. ATTORNEY GENERAL V. CHICAGO MILL & LUMBER' CORPORATION. 4-2988
Opinion delivered March 27, 1933. TAXATION—VALUATION OF PROPERTY.—A tax assessor is not bound by the valuation placed on real or personal proPerty by its owner. • .• 2. TAXATION —RIGHT TO RECOVER BACK TAXES.—Under Acts 1931; No. 281, the State cannot recover back taxes where the Property owner has made an assessment with the county assessor and paid the taxes regularly assessed unless actual fraud has been practiced by the owner in making an underassessment. r „ . TAXATION—UNDERASSESSMENT OF PitOPERTY—FRAUD.—A coin-plaiht by the State seeking to recover back —taxes irom a corPoration, alleging that defendant's personal property was grossly underassessed, without alleging that actual fraud was .practiced , by defendaht in making the underassessment, held. demurrable. 4. TAXATION — UNDERASSESSMENT.—The proviso , in 'Acts 1931, No. • 281, "that failure to assess taxes as required . by law shall be prima facie evidence Of fraud," has no application where per• sonal property was regularly assessed, though the State _claims that it was grossly underassessed.
66- - STAtt CHICAGO-MILLA- Lint. :Con. p ; [187 • Appeal from Phillips,Chancery Court ;. A. L. Hutch-ins,_Chancellor l ; 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 (0 Lumber Corporation, 184 Ark. 1011, 45 S. W. (2d) 26. - It is alleged by the State that the machinery and luinber at appellee's mill at West Helena - in Phillips County and Blytheville . in Mississippi County were • so grosSly underdsseSsed for the years 1927, 1928, 1929 and 1930, inClusive, as to. amount to frand 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 $450,00. 0 for said period on the : assess-able 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, $72600 ;• 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 anade.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 proPertin " said Counties and- property' generally throughout the State was assessed at an average of fifty (po%) per cent di the trne . valife, whih haSis WaS asked to be -Applied. as Jhe legal basis for _ assessment in this case.- : It was further-alleged-by appellants that the assessments so nadde . by appellees are so grossly inadequate as tti shock the c'onscience and corlstitute an actual fraud bY appellee on the State and 'on Mississippi and Phillips counties and the school districts in which said property
ARK.] STATE EX REL. V. CHICAGO MILL & LBR. CORP. 67 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 coprt fo the Phillips County Chaneery '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 tho 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 luraber And madhinery said- reSpeetive years to be figures , at which: said property was actually assessed for said years : regpectively ; 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 hy '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 ap: praise and value defendant's lumber and machinery for the years 1927 to 1930, inclusive,. and therefore the-asses-sora of Mississippi and Phillips counties were compelled
68 STATE EX REIa.-V. -CHICAGO MILL & LBR. -CORP. [18-7- to rely, and did tely, 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 catise 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. • lid/ L. -Norwood, Attorney General, and John M. Rose, for appellant. . W. R. Satterfield and haggett & Daggett, for appellee. joHNso, 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 Cotporation, 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 ho personal liability of the . Paepcke Corporation and that A recovery, in any eventi -. 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 waS not considered by this court.. After the• rendition of the opinion of this 'court on the former . appeal and on September 26, 1932, tbis court determined the case of State- ex réi. Attoi rney General V. Anderon-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 tai proceeding
ARK.] STATE EX REL. V. CHICAGO MILL & LBR. CORP. 69' on account of a gross undervaluation assessment on real estate, this court specifically held that a recoVery cotild 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 *hether the proviso in § 1 of the act, 'That failure to assess taxes as required by law shall be prima facie evidence of frand,' 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 ease . 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 1.931 is conclusive of all the issues now presented, and for this reason no other question Will . be Aiseussed or decided in the 'case. 'Prior to this enactment a showing by the State that the property of the ta*payer 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 r reassessment of the value on which *such tax is based, except for actual fraud of th , e taxpayer, prbvided that failure to assess taxes as required bYla* shall be prima facie evidenebof fraud."
70 STATE EX R.EL. V. .CHICAGO MILL & LBR. CORP. [187 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 under-valuation of the property in the hands of the corpora- tion," etc. Previous to the White River Lumber Company case, supra, this court had held in State v. K. C. <6 Memphis. Railway . c6 Bridge Co., 117 Ark. 606, 174 S. W. 248, aS follows : . "It \vas 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 231 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 teassessment 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 underassess-ment, The only allegation in the complaint in this case .
ARkj STATE 'EX REt.' V:, thdA:Gb LBEt.. 71 is that the property -Was groSsly underassessed; and n , o facts are alleged which would shoW or amount tO' actual fraud: • -The-proviso "that faikire . to . aSsess tak as required by law shall bei 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 .1aW" does not , nfean that an: underassessthent has been made: It is perfectly natural rfor 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, ik the party fails . to assess any article of property with the assessors', in so far as this article a proPerty is. concerned, such assessment would be frandu-lent, but where an assessment is made and the Complaint is abbut, and only about, the difference in , value of the property, this would nof amount to fraud. This cburt took a definite and deliberate position in reference to the prosechtion 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 : Tully 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. liumpiinEYs and MEHAFFy, JJ., dissent., • MEHAFFY, , J., (dissenting). I do ,not agree with the majority in holding that the complaint filed does not state facts sufficient to constitute a cause of' action, and' in holding. that, the demurrer; shotild be:sustained. ' 2 The Majority opinion cites State ex rel. Atty. General K. Anderson Tully Co., 168 Ark. 170, 53 S. W. (2d) 17'.
72 STATE EX REL. V. cHICAGO M T V, & LBR. CORP. [187 The writer . filed . a . dissenting . opinion in the Anderson-Tully case which is reported on page 175 of 168 Ark. I shall not repeat what was said there with reference to act 281 of the Acts of 1931 being retroactive. Reference is made to the dissenting opinion there for a discussion of that question. The complaint states : "All of the property set out in the. original complaint, which includes the machinery and stocks of lumber 'therein mentioned, in both Missis-sippi and Phillips counties, and on which _taxeS are sought • to be recovered herein, is now and has- been throughout the years 1927 to 1930, inclUsive, and throughout the taxable periods ficT said .years, in existence in the State of Arkansas. The Percentage of value at which all property , is required to be assessed for -taxation in MississiPpi and Phillips counties, and throughout the State of . Arkansas, and has been throughoUt the period covered bY the complaint, 50 per cent: of • the true value thereof, said baSis of assessment 'having been pre-. scribed for each of said. years involved herein by the Arkansas Tax CommisSion under the authority of the Constitution .and statutes of the State of Arkansas." . . It was further,,charged in the complaint that the. amount set out in the original complaint constituted an assessment at only nine per: c a en t: on the Phillips County property, and an assessment only five. per cent..oP the Mississippi County. pfoperty ; that this censtituted a groSs underassessment of appellees ? property. It was further. stated that the lumber and machinery-are extremely difficult to yalue on account of the large' amount thereof, and that the-fact 'that the taxing officers have not had access to the records relating thereto, said officials have -been compelled to rely; 'and had aettially relied in making the assessments' aforesaid, on the representatiOns of defendants as to the value of said properties. Said representations have not - been fairly mAde to said taxing authorities. There were other allegations in the complaint as to the underassessment, and a p pellees filed motien for the court to require the plaintiff to make the' eomplaint more
ARK.] STATE EX REL. V. CHICAGO MILL & LBR. CORP. 73 " definite and certain in Certain particulars.' The motion 'consisted . Of ' tW-enty tyPeWritten 'pages' and' 'forty-seven separate , ' paragraph's.' Sortie ' 'of the' paragraphs Asked that plaintiff be -required to state the names of the witnesses :that filed the -list for lakation,- others to describe hi partiCular the kinds of hirriber and kinds of machinery, but some of the paragraphs aSked that theY be required tO . state the natftre of -the 're _ p re . sentatiOn . s' allei?:ed to' haVe 'been Made by the corporate *Offisci,alS: In respOnSe: to • thig motinn aft' 'aniendMent to the complaint was filed. One " paragraph of *the amendMent, states that both the assessments. actually mada, and the -aMouirtS at which• the property should have been . a' ss ' essed, . being • expreSsly stated for each of the years 19274930, and- for the y property at West 11elena and • Blytheville separately, and this paragraPh Also -stated that under the Arkansas statutes, lumber, manufaCtured article' s, and machinery are assassed jointly under the head _of "machinery and 'manufactured -articles." The 'amendment to the. complaint further stated .that the nature , of 'the representations made by the' corporate , Officials , and • agents of the defendant , corporations for the years 1927-1930 was delivering -a sworn' statement of the; Vahre of' - defendant 'S MAChinery . and lumber to the .taX asSessors . for each of 'S'aid yearsç Whic sworn statement Showed the value of said lumber and machinery for 'Said respective yeais, to be_ the figUres - at which , sAid property was actually asseSsed for said years respe'ctive-ly, and which are specifically set out in thejAaintiff 's .comPlaint. • Said representations -of -. Value were so • gfoSSIV indeqUate as to shock the conScience And con-'Stitute a fraud on the State, - the counties, and school districts in which said property is located; that other similar property in the counties named was assessed at 50 'per cent. of its true value, and the assessments . on defendant's property was approximately 5 per cent.,in sippi Connty and 9 per cent. in . Phillips 'County. We have copied enough Of the complaint, wa think, to Show that there were sufficient fa.ets stated to ... constitute a Cause of actiori when the sufficiencY of the Corn-
74 STATE EX_REL. V: CHICAGO 4ILL . & _LARR. COR2. .[187 plaint is tested_by . general demurrer. . The. fact., that. appellees' property was 'assessed at from 5 per cent. io 9 per cent. of its value, and all .other prOperty in the two counties assessed at 50 per cent. -of its value, is. not a concluSion . of law, but a statement" . of fact. If this is true, tben the affidavit furnished the taxing authorities for the purpose of assessment . was a statement of fact and . not . a conclusion of law. It . is -also stated as a fact that tbe affidavit and, assessment constituted an actual fraud. - These statements of fact may _or may- not be true.: That could be , determined. however, Only -by,.the evidence. . We have frequently held . that,. in testing the Sufficiency of a pleading by general demurrer; every reasonable ineendme.nt should be indulged to support .it. Contrary to the common-law rule, under our Code every reasonable intendment and presumption is to be made in favor of a pleading, and a . complaint will . not be set aside on demurrer unless it be so fatally defective that, taking all the facts to be admitted, the court can say that they furnish no cause Of action whatever. Wright y. Lake, 1 . 78 Ark: 1184, 13 S. W. (2d) 826; Ellis y. First g ational Bank, 163.Ark. 471, 260 S. W.• 714.1 It,should be held in . mind tbat allegations of fact in a complaint must be accepted as true on demurrer. Parkey v. Sims, 185 Ark: 1111,51 S.W. (2d) 51-7. Considering the statement Of facts in tbe Complaint as :true . and indulging every reasonable intendment as we. mnst, we: think the complaint, states a .cauw of action.. _ :• "As in other cases, it . is not sufficient to plead . mere conclusions of Jaw, but the , facts- constituting . the: fraud must be pleaded subject of course , to the usual limitation _that . the evidence. should not be set out ; and 'if the facts are so set out that the adverse party is fairly apprised of what be is to meet, it is sufficient." 10 Standard Enc. of Proc., 53. • "If fraud has .been alleged 'with suff - icient larity, we .dO not doubt that,7Whatever may be its final outcome, the case as. made by- the declaration diScloses justiciable and actionable. fraud. On . the alleged in-
sufficiency Of the declaration in point of particularity, we have but little to say. While . the . allegations of fraud in somVrespects are not as formal as *may be 'desirable, we regard them as sufficient.: It is true that the mere use of adjectives importing' fraud or deceit cannot be permitted to supply the place of the esSential facts conStituting the frand* . or dedeit 'relied- on. But an impracticable standard or particularity is ne more required in allegations of fraud than' innn indictrnent.:, Mere Matter .of evidence 1.S not reqUired to be stated. In the amended jcleelaration -all the , facts &instituting the fraud are, though somewhat informally, plainly alleged, and, the defendant is fully advised . of the case it is called - on to Meet." ROgers v. Virginia-Carolina Chemical Co., 149 - Ped. -1. • , It' is n ot necessary' u r , rid oeur Code io plead the , probative, or . evidential facts. It is. sufficient • if ultimate facts • are alleged, . which show the falsity , of the rePresentation. . . • . The onlY question . for .the consideration and determination•by the court is whether the facts alleged constitute a cause *of action, and it is immaterial that the cause of action. may be defectively .stated if- there .are allegations of fact which constitute . fraud.. A statement of fact supported by the affidavit -of the party that the value of tbe property is, a certain, amount,. and a statement, of fact that this is untrue, I think, is a sufficient .statement to:apprise the adverse , party of what he is called .on to meet. I.. therefore think the case should. be reversed and remanded for triah . ..• I am authorized to state that Mr. Justice HUMPHREYS •grees.with.me in the views herein.stated.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.