Title: Pledger v. Mid-State Constr. & Materials, Inc.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

James C. PLEDGER, Director of the Department
of Finance and Administration v. MID-STATE
CONSTRUCTION & MATERIALS, INC.

95-1130                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered July 15, 1996


1.   Judgment -- summary judgment -- standard of review. -- Summary
     judgment is a remedy that should be granted only when it is
     clear that there is no genuine issue of material fact to be
     litigated; on review, the appellate court must only decide if
     the granting of summary judgment was appropriate based on
     whether the evidentiary items presented by the moving party in
     support of the motion left a material question of fact
     unanswered; all proof submitted must be viewed in a light most
     favorable to the party resisting the motion, and any doubts
     and inferences must be resolved against the moving party.

2.   Taxation -- tax-exemption cases -- rules of construction --
     standard of review. -- In cases that involve a claim of tax
     exemption, it is well settled that a presumption exists in
     favor of the taxing power of the state; a taxpayer has the
     burden of establishing the right to an exemption beyond a
     reasonable doubt; tax exemptions must be strictly construed
     against exemption, and to doubt is to deny the exemption; tax-
     exemption cases are reviewed de novo, and the appellate court
     does not set aside the findings of the chancellor unless they
     are clearly erroneous.

3.   Statutes -- primary rule is to give effect to intent of
     legislature. -- The primary rule in construing legislation is
     to ascertain and to give effect to the intent of the
     legislature; where the intent is clear, there is no room for
     other interpretation or construction.

4.   Statutes -- special act applicable to particular case excludes
     operation of general act -- general isolated-sale exemption
     not applicable to sale of used vehicles. -- It is a rule of
     statutory construction that when a special act applies to a
     particular case, it excludes the operation of a general act;
     thus, with respect to the present case, the general isolated-
     sale exemption has never been applicable to the sale of used
     vehicles because the legislature included the private-sale
     exemption, which applied specifically to used vehicles, in the
     same Act that first imposed a sales tax on such vehicles.

5.   Statutes -- amendment of act does not control interpretation
     of another statute. -- The amendment of an act does not
     control the interpretation of another statute enacted prior to
     the amendment, nor does it change the meaning that the
     original statute acquired prior to the amendment.

6.   Legislature -- no power retrospectively to abrogate judicial
     pronouncements. -- The legislature can prospectively change
     the tax laws of this state, within constitutional limitations,
     but it does not have the power or authority retrospectively to
     abrogate judicial pronouncements of the courts of this state
     by a legislative interpretation of the law.

7.   Statutes -- determination of legislative intent. -- The
     supreme court can look to changes to statutes made by
     subsequent amendments to determine legislative intent.

8.   Statutes -- intent of General Assembly -- private sale of used
     motor vehicles subject to sales tax -- isolated-sales
     exemption not applicable -- trial court erred in granting
     summary judgment to appellee -- reversed and remanded. --The
     supreme court held that it has been the clear intent of the
     General Assembly since 1959 that the private sale of used
     motor vehicles be subject to the sales tax and that the
     general isolated-sales exemption has no application to such
     sales; the supreme court concluded that appellee did not meet
     its burden of establishing the right to this exemption beyond
     a reasonable doubt and that the trial court erred in granting
     summary judgment to appellee and should have granted
     appellant's motion for summary judgment; the chancellor's
     finding that an isolated-sale exemption applied to the sale of
     used vehicles by sellers who are not regularly engaged in the
     business of selling vehicles was reversed and remanded.


     Appeal from Pulaski Chancery Court; Vann Smith, Chancellor;
reversed and remanded.
     Beth B. Carson, for appellant.
     Jack, Lyon & Jones, P.A., by: Eugene G. Sayre, for appellee.

     Andree Layton Roaf, Justice.*ADVREP*SC11*








JAMES C. PLEDGER, DIRECTOR OF
THE DEPARTMENT OF FINANCE AND
ADMINISTRATION,
                    APPELLANT,

V.

MID-STATE CONSTRUCTION &
MATERIALS, INC.,
                    APPELLEE,

July 15, 1996

95-1130


APPEAL FROM THE PULASKI COUNTY
CHANCERY COURT,
NO. 93-5402,
HON. VANN SMITH, JUDGE,




REVERSED AND REMANDED.
              Andree Layton Roaf, Associate Justice


     This case involves the "isolated sale" tax exemption found in
Ark. Code Ann.  26-52-401(17).  The appellee, Mid-State
Construction & Materials, Inc., ("Mid-State") challenged the
assessment of gross-receipts (sales) tax on used motor vehicles and
trailers it purchased in a sale of assets from another company. 
The appellant, Department of Finance and Administration, ("DFA")
appeals from a summary judgment awarded to Mid-State; the
chancellor determined that the isolated-sale exemption applied to
the sale of used vehicles by sellers who are not regularly engaged
in the business of selling vehicles.  We reverse the chancellor's
finding of an exemption.  
     In March 1993, Mid-State purchased all of the assets of a
corporation also named Mid-State, which was engaged in the business
of highway construction, production of asphalt and concrete, and
stone quarrying.  The seller corporation changed its name after the
sale and dissolved; Mid-State then assumed the name of the seller
and continued the same business activities using the assets
acquired from the now defunct corporation.  The assets purchased
included furniture, fixtures, supplies, equipment, and 75 used
motor vehicles and trailers.  When Mid-State attempted to register
title to the motor vehicles and trailers, it was informed by DFA
that sales taxes would have to be paid on the market value of these
items.  The other assets purchased by Mid-State in the asset sale
were not taxed by DFA, pursuant to the isolated-sale tax exemption. 
Mid-State was assessed $80,849.00 in state and local sales taxes on
the value of the motor vehicles and trailers.  
     In May 1993, Mid-State filed a claim for refund with DFA and
asserted that the sale of the used vehicles was exempt as an
isolated sale pursuant to Ark. Code Ann.  26-52-401(17).  DFA
denied the refund on the basis that used vehicle sales were
excluded from the isolated-sale exemption.  Mid-State filed a
complaint for refund in Pulaski County Chancery Court in August
1993.  Both parties filed motions for summary judgment.  The sole
legal issue before the trial court was whether the isolated-sale
exemption applied to the sale of used vehicles by sellers who are
not regularly engaged in the business of selling vehicles.   
     Mid-State, in its motion for summary judgment, asserted that
the sale of the used motor vehicles and trailers constituted an
isolated sale within the meaning of  26-52-401(17), that DFA's
administrative practice of excluding used motor vehicles from the
isolated-sale exemption was an erroneous and illegal interpretation
of sales tax law, that DFA had erroneously and illegally
interpreted  6 of Act 3 of 1991 and that promulgation by DFA of
gross-receipts tax regulation GR-49(c) was erroneous and illegal
and should be declared void.  
     DFA, in its motion for summary judgment and also in its
response to the motion by Mid-State, contended that since 1959 the
General Assembly has specifically intended that the isolated sale
of used motor vehicles be subject to sales and use tax; DFA traced
the history of relevant tax legislation from the 1941 Sales Tax Act
forward in support of this contention.  DFA further argued that a
non-repealer clause in Act 3 of 1991 relied upon by Mid-State had
no application to an exemption which had not existed since 1959. 
DFA also asserted that the General Assembly has established a
statutory sales-and-use-tax scheme which addresses vehicles
separately from other tangible personal property.  DFA further
argued that it had acted within its authority to promulgate
regulation GR-49(c) to clarify this legislative intent, and to
rectify certain errors which occurred in compiling the 1957 and
1959 Acts and in the codification of the Arkansas Statutes in 1987. 
DFA finally contended that an absurd and unconstitutional result
would occur if Mid-State's motion for summary judgment were
granted, because individual in-state sales of used vehicles would
be exempt from sales tax while such vehicles purchased from out-of-
state individuals would be taxable.  DFA asserted that the
complimentary nature of the sales and use tax would thus be
destroyed.
     In its findings of fact and conclusions of law entered on June
30, 1995, the trial court determined that there was no genuine
issue as to any material fact.  The trial court concluded that the
General Assembly did not intend to prohibit the applicability of
the isolated-sale exemption to the transfer by one corporation to
another of title to used motor vehicles and used trailers in the
factual setting of a one-time asset purchase.  The trial court
determined that DFA had exceeded its legislative grant of rule
making authority in adopting gross-receipts regulation GR-49(c). 
The chancellor also found that while this suit was pending, the
General Assembly had enacted legislation effective February 13,
1995, which expressly provides that the benefit of the isolated-
sale exemption is not available for the transfer of title to used
motor vehicles or used trailers.  However, he concluded that
despite language in an emergency clause to the contrary, the 1995
legislation was a change and not a clarification of existing law
and should not be applied retroactively to the March 1993 purchase
by Mid-State.  
     After granting Mid-State's motion for summary judgment and
denying DFA's motion, the trial court entered judgment in favor of
Mid-State and ordered DFA to refund the amount of state and local
sales taxes paid, plus interest.  The sole issue on appeal is
whether, at the time of the purchase by Mid-State, gross receipts
from the sale of a used vehicle by a person not in the business of
selling vehicles were exempt from sales tax pursuant to the
isolated-sale exemption provided in Ark. Code Ann.  26-52-401(17). 
     In order to answer this question, we must outline, as did DFA,
the development of the relevant law regarding both sales and use
tax.  In so doing, we keep in mind the following settled rules
regarding summary judgment and review of tax-exemption cases. 
Summary judgment is a remedy that should be granted only when it is
clear, as in this instance, that there is no genuine issue of
material fact to be litigated. Wyatt v. St. Paul Fire & Marine Ins.
Co., 315 Ark. 547,