Title: Pledger v. Halvorson

State: arkansas

Issuer: Arkansas Supreme Court

Document:

James PLEDGER, Director of the Arkansas
Department of Finance and Administration, and
Timothy J. Leathers, Commissioner of Revenues
v. Frank HALVORSON, et al.

95-1321                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                Opinion delivered April 29, 1996


1.   Appeal & error -- review of chancery cases. -- Although
     chancery cases are reviewed de novo, the supreme court will
     not disturb the chancellor's findings of fact unless they are
     clearly erroneous.

2.   Property -- fixtures -- test for determining. -- The test for
     determining whether an article remains personal property or
     becomes a fixture is: (1) whether the items are annexed to the
     realty; (2) whether the items are appropriate and adapted to
     the use or purpose of that part of the realty to which the
     items are connected; and (3) whether the party making the
     annexation intended to make it permanent.

3.   Property -- fixtures -- intention to make permanent --
     consideration of primary importance. -- The intention of the
     party to make the annexation permanent is inferred from the
     nature of the chattel, the relation and situation of the party
     making the annexation, the structure and mode of annexation,
     and the purpose for which the annexation has been made; the
     intention of the person making the annexation is a
     consideration of primary importance; however, courts apply an
     objective test and arrive at the annexer's intention by
     looking to his outward acts rather than to the inner workings
     of his mind.

4.   Property -- fixtures -- evidence did not support finding that
     annexation was intended to be permanent. -- Where, although
     the chancellor concluded that none of the taxpayers had
     manifested any intent to move their mobile homes, appellees
     admitted that they claimed the right to move their mobile
     homes at the termination of their rental agreements, and where
     the mobile-home park owner testified that she claimed no
     ownership in the homes because of their annexation to her
     property, the evidence did not support the finding that
     appellees' annexation of the mobile homes was intended to be
     permanent; it was clear that a disinterested observer would
     doubt that a tenant would want to give up ownership of an item
     he had attached on the landlord's property.

5.   Appeal & error -- failure to present convincing argument or
     authority -- issue not addressed. -- Where appellant, with no
     authority for the proposition, presented no further argument
     beyond the bare assertion that the second element of the
     fixture test was not satisfied because the mobile homes could
     easily be adapted for use on any other realty, the supreme
     court did not address the argument, as it was not apparent
     without further research that it was well-founded.

6.   Taxation -- gross-receipts tax -- statute made clear General
     Assembly's intent for certain mobile homes to be subject to
     sales tax. -- The Arkansas Gross Receipts Act, at Ark. Code
     Ann.  26-52-104 (Repl. 1992), provides that "[t]he tax
     imposed by this act shall be in addition to any or all taxes
     except as otherwise provided in this act"; Ark. Code Ann. 
     26-52-504 (Supp. 1995) makes it clear that the General
     Assembly intended for certain mobile homes to be subject to
     sales tax.

7.   Attorney's fees -- not allowed except when expressly provided
     for by statute. -- The recovery of attorney's fees is not
     allowed except when expressly provided for by statute. 


     Appeal from Baxter Chancery Court; Gary Isbell, Chancellor;
reversed and dismissed.
     Kenneth R. Williams, for appellants.
     Poynter & Gearhart, P.A., by: Terry M. Poynter, for appellees.

     Andree Layton Roaf, Justice.April 29, 1996.   *ADVREP11*







JAMES PLEDGER, DIRECTOR OF THE
ARKANSAS DEPARTMENT OF FINANCE
AND ADMINISTRATION, AND TIMOTHY
J. LEATHERS, COMMISSIONER OF
REVENUES,
                    APPELLANTS,

V.

FRANK HALVORSON, ET AL.,
                    APPELLEES,






95-1321


APPEAL FROM THE BAXTER COUNTY
CHANCERY COURT,
NO. E94-200-2,
HON. GARY ISBELL, CHANCELLOR,




REVERSED AND DISMISSED.

                   Justice Andree Layton Roaf

     This is an appeal by the Director of the Department of Finance
and Administration and the Commissioner of Revenues from a
chancellor's holding that the appellees' mobile homes, which were
attached to rented lots in a mobile home park, were fixtures and
not tangible personal property subject to the gross receipts
(sales) tax.  The chancellor ordered a refund to the appellees of
the gross receipts taxes paid upon purchase of their mobile homes
and awarded attorney's fees to the appellees.  We agree that the
chancellor erred and reverse and dismiss.
     Each of the appellees ("taxpayers") purchased a manufactured
or mobile home located in the Rolling Meadows Mobile Home Park in
Mountain Home, Arkansas, between October 1991 and May 1994; the
Department of Finance and Administration ("DFA") collected sales
tax from the taxpayers on the purchases.  The taxpayers filed
claims for refund pursuant to Ark. Code Ann.  26-18-507 (Repl.
1992).  The claims were denied, and the taxpayers filed the instant
action in Baxter County Chancery Court.  
     The taxpayers contended that (1) their purchases were exempt
from the gross receipts tax as isolated purchases pursuant to Ark.
Code Ann.  26-52-301 (Repl. 1992), (2) the gross receipts tax was
an illegal exaction and violated the Fourteenth Amendment to the
United States Constitution, (3) the statute imposing the tax was
administered by DFA in an unconstitutionally discriminatory manner,
and (4) the mobile homes or manufactured homes were fixtures rather
than personalty subject to sales tax.  In addition to seeking a
refund, the taxpayers requested attorney's fees and costs.  DFA
admitted that the taxes had been paid and that the claims for
refund had been made and denied; however, DFA denied that the
taxpayers were entitled to a refund or attorney's fees.
     The chancellor made the following findings of fact.  All of
the taxpayers were commonly situated as purchasers of homes affixed
to lands belonging to the Weymeyer family trust in the Rolling
Meadows Mobile Home Park.  They pay a monthly rental on the grounds
around and beneath their mobile homes.  Each of the homes had lost
its character as transportable because there were no tongues,
axles, or wheels on any of the homes, and the homes had all been
placed on concrete or concrete block foundations with underground
utilities and extensive structural modifications including roofs,
patios, enclosed porches, and carports.  All of the homes were
purchased from former owners at the same location and had been
utilized as permanent dwellings through as many as four different
owners.  The proof established the near impossibility of removal of
the homes absent extensive and expensive efforts.
     However, the chancellor also found that ownership of the homes
carried with it the right to remove the homes at any time and that
the owners have only a leasehold interest in the real property on
which the homes are located.  Finally, the chancellor concluded
that neither the current owners nor the previous owners had
manifested any desire to move the mobile homes from the lots; in
fact, they had more firmly affixed the dwellings by making
improvements.
     DFA argues that the chancellor erred in holding that mobile
homes attached to rented lots in a mobile home park are "fixtures"
and not subject to sales tax as tangible personal property. 
Arkansas Code Annotated  26-52-301 (Supp. 1995) provides in part
that there is levied an excise tax of three percent upon the gross
proceeds or gross receipts derived from all sales to any person of
tangible personal property.  In the instant case, the chancellor
determined that the isolated sale exemption was not applicable.  He
concluded that the gross receipts tax could not be levied because
the mobile homes are not tangible personal property.  See Pledger
v. Troll Book Clubs, Inc., 316 Ark. 195,