Present: All the Justices 

SHELOR MOTOR COMPANY, INC., 

D/B/A HOMER COX FORD, ET AL. 

v. Record No. 001073 OPINION BY JUSTICE BARBARA MILANO KEENAN 

 April 20, 2001 

NANCY W. MILLER, COMMISSIONER OF 

THE REVENUE FOR MONTGOMERY COUNTY 

FROM THE CIRCUIT COURT OF MONTGOMERY COUNTY 

Ray W. Grubbs, Judge 

 This is an appeal from a decree entered in a declaratory 

judgment suit. We consider whether the chancellor erred in 

holding that certain merchants' capital that was removed 

temporarily from a county before the "tax day" of January 1 is 

subject to taxation by that county under Code § 58.1-3511(A). 

 The petitioners, Shelor Motor Company, Inc., d/b/a Homer 

Cox Ford, Shelor Chevrolet Corporation, and Shelor Toyota, Inc., 

d/b/a Shelor Chrysler Dodge (collectively, Shelor), are 

corporations organized and operated under the laws of the 

Commonwealth. These corporations maintain their principal 

places of business in the Town of Christiansburg in Montgomery 

County (the County). Shelor is engaged in the retail sale of 

automobiles in several local jurisdictions, including the 

County, and a portion of its inventory typically is located in 

the County. 

 Shelor's automobile inventory is "merchants' capital," 

which is defined in Code § 58.1-3510(A), in relevant part, as 
"[i]nventory of stock on hand." Shelor's inventory located in 

the County is subject to the County's merchants' capital tax 

under Code § 58.1-3511(A), which provides, in relevant part: 

The situs for the assessment and taxation of tangible 

personal property, merchants' capital and machinery and 

tools shall in all cases be the county, district, town or 

city in which such property may be physically located on 

the tax day. However, the situs for purposes of assessment 

of motor vehicles, travel trailers, boats and airplanes as 

personal property shall be the county, district, town or 

city where the vehicle is normally garaged, docked or 

parked. . . . 

Under Code § 58.1-3515, "tax day" in the County for purposes of 

applying the merchants' capital tax is January 1 of each year. 

 In December 1998, Shelor moved its automobile inventory 

from the County to its other business locations outside the 

County and offered those vehicles for sale in these locations. 

On "tax day," January 1, 1999, none of Shelor's automobile 

inventory was located in the County. During January 1999, 

Shelor moved the relocated inventory that had not been sold back 

to Shelor's places of business in the County. The County has 

not yet assessed merchants' capital tax on Shelor's automobile 

inventory for the 1999 tax year. 

 In March 1999, Shelor filed bills of complaint for 

declaratory judgment against Nancy W. Miller, Commissioner of 

the Revenue for Montgomery County (the Commissioner).1 Shelor 

 1

Shelor Motor Company, Inc., d/b/a Homer Cox Ford, Shelor 

Chevrolet Corporation, and Shelor Toyota, Inc., d/b/a Shelor 

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asked the chancellor to declare that Shelor's merchants' capital 

located outside the County on January 1, 1999 is not subject to 

the County's merchants' capital tax for that year. Shelor also 

asked the chancellor to declare that the situs for assessment 

and taxation (taxation situs) of merchants' capital under Code 

§ 58.1-3511 is the locality where the property is "physically 

located on the tax day," regardless of where the property is 

kept during the remainder of the tax year. 

 The Commissioner filed demurrers asserting, among other 

things, that Shelor had "fail[ed] to state a claim upon which 

relief can be granted" because Shelor had removed its automobile 

inventory from the County "with the intent to circumvent the tax 

laws." The Commissioner thus contended that Shelor’s entire 

automobile inventory was still subject to the County's 

merchants’ capital tax. 

 The chancellor sustained the Commissioner's demurrers and 

entered a final decree dismissing the cases with prejudice. He 

explained his decision in a letter opinion, which was 

incorporated by reference into the final decree. 

 The chancellor's decision was based in part on his 

interpretation of Newport News v. Commonwealth, 165 Va. 635, 183 

S.E. 514 (1936), and Hogan v. County of Norfolk, 198 Va. 733, 96 

 

Chrysler Dodge each filed separate but identical bills of 

complaint. The three suits were consolidated for trial. 

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S.E.2d 744 (1957). Citing Newport News, the chancellor 

concluded that the term "physically located," as used in Code 

§ 58.1-3511(A), refers to property that has acquired a degree of 

permanency within the taxing jurisdiction. Quoting the Hogan

decision, the chancellor stated that property "physically 

located" in a jurisdiction, within the meaning of Code § 58.1-

3511(A), is property that is "being used in such a way as to be 

fairly regarded as part of the property of the [c]ounty." 198 

Va. at 735, 96 S.E.2d at 746. The chancellor concluded that 

Shelor's pleadings established only a temporary removal of the 

vehicles and, thus, failed to establish that the vehicles were 

"physically located" outside the County, as that term is used in 

Code § 58.1-3511(A).2

 On appeal, Shelor argues that the plain language of Code 

§ 58.1-3511(A) allows the County to tax only merchants' capital 

that is "physically located [in the County] on the tax day," 

 2

In addition to addressing the merits of Shelor's bills of 

complaint in her demurrers, the Commissioner also asserted that 

the chancellor should decline to exercise his jurisdiction 

because declaratory relief "is not a proper vehicle to determine 

the validity of tax assessments.” In his letter opinion, the 

chancellor preliminarily stated that he was sustaining the 

demurrers and declining to exercise jurisdiction for this other 

reason. However, since the chancellor ultimately did rule on 

the merits of Shelor’s bills of complaint, the chancellor in 

fact exercised his declaratory judgment jurisdiction and, thus, 

effectively reconsidered and overruled his preliminary ruling 

that he was declining to exercise that jurisdiction. Therefore, 

we do not further address the chancellor's preliminary ruling in 

this case. 

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January 1. Shelor asserts that the chancellor's interpretation 

effectively deletes the phrase "on the tax day" from the first 

sentence of the statute, which applies to all merchants' 

capital. 

 Shelor also contends that the chancellor incorrectly relied 

on this Court's decisions in Newport News and Hogan. First, 

Shelor asserts that both cases are inapplicable because they 

addressed the taxation situs of mobile personal property, not 

automobiles held as merchants' capital. Second, Shelor notes 

that the Hogan and Newport News cases were decided under 

predecessor statutes to Code § 58.1-3511(A), which did not 

contain the second sentence of the present Code § 58.11-3511(A) 

that treats mobile personal property differently from merchants' 

capital. 

 In response, the Commissioner argues that the chancellor 

correctly relied on Newport News and Hogan in construing Code 

§ 58.1-3511(A). The Commissioner asserts that although these 

cases involved the taxation situs of personal property rather 

than of merchants' capital, these decisions still control the 

present issue because the phrase "physically located" in the 

predecessor statutes to Code § 58.1-3511(A) applied to both 

merchants' capital and personal property. 

 The Commissioner contends that the addition of the second 

sentence in Code § 58.1-3511(A) governing the assessment of 

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taxes on certain types of mobile personal property should not 

affect the Court's construction of the term "physically located" 

in the first sentence. The Commissioner asserts that the second 

sentence was added only to address the difficulty of 

ascertaining a tax situs for mobile personal property such as 

automobiles and not to alter the meaning of the first sentence 

of the statute. We are not persuaded by the Commissioner's 

arguments. 

 Initially, we observe that the function of a demurrer is to 

test whether a bill of complaint states a cause of action on 

which relief can be granted. Grossmann v. Saunders, 237 Va. 

113, 119, 376 S.E.2d 66, 69 (1989); Penick v. Dekker, 228 Va. 

161, 166, 319 S.E.2d 760, 763 (1984). In the present case, the 

chancellor decided the merits of the issue pleaded, effectively 

treating the demurrer as if the Commissioner had made a motion 

for summary judgment. However, since Shelor made no objection 

to the Commissioner's use of a demurrer to test the merits of 

the suit, or to the chancellor's action ruling on the merits of 

the issue pleaded on demurrer, we review the chancellor's 

holding as if he had entered summary judgment for the 

Commissioner. See Johnson v. Campbell, 258 Va. 453, 456, 521 

S.E.2d 764, 766 (1999); Carmel v. City of Hampton, 241 Va. 457, 

458, 403 S.E.2d 335, 336 (1991). 

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 The statute at issue, Code § 58.1-3511(A), is part of a 

comprehensive scheme that authorizes local governments to 

assess, levy, and collect a tax on certain categories of 

property, including merchants' capital. Fundamental principles 

govern our consideration of this taxation statute. Taxes can be 

imposed only in the manner prescribed by express statutory 

authority. Hampton Nissan v. City of Hampton, 251 Va. 100, 104, 

466 S.E.2d 95, 97 (1996); Commonwealth v. P. Lorillard Co., 129 

Va. 74, 82, 105 S.E. 683, 685 (1921). Taxing statutes must be 

construed strongly in the taxpayer's favor, and will not be 

extended by implication beyond the clear import of the statutory 

language. Hampton Nissan, 251 Va. at 104, 466 S.E.2d at 97; 

City of Winchester v. American Woodmark, 250 Va. 451, 456, 464 

S.E.2d 148, 152 (1995); Commonwealth v. Gen. Elec. Co., 236 Va. 

54, 64, 372 S.E.2d 599, 605 (1988); P. Lorillard, 129 Va. at 81-

82, 105 S.E. at 685. 

 Under basic rules of statutory construction, we examine 

Code § 58.1-3511(A) in its entirety, rather than by isolating 

particular words or phrases. Cummings v. Fulghum, 261 Va. 73, 

77, 540 S.E.2d 494, 496 (2001); Earley v. Landsidle, 257 Va. 

365, 369, 514 S.E.2d 153, 155 (1999); Ragan v. Woodcroft Vill. 

Apartments, 255 Va. 322, 325, 497 S.E.2d 740, 742 (1998). When 

the language of a statute is plain and unambiguous, we are bound 

by the plain meaning of that language. Cummings, 261 Va. at 77, 

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540 S.E.2d at 496; Earley, 257 Va. at 370, 514 S.E.2d at 155; 

Ragan, 255 Va. at 326, 497 S.E.2d at 742. We must determine the 

intent of the General Assembly from the words contained in the 

statute, unless a literal construction of the statute would 

yield an absurd result. Cummings, 261 Va. at 77, 540 S.E.2d at 

496; Earley, 257 Va. at 369, 514 S.E.2d at 155; Ragan, 255 Va. 

at 325-26, 497 S.E.2d at 742. 

 The language of Code § 58.1-3511(A) is plain and 

unambiguous, and provides a single directive for determining the 

taxation situs of merchants' capital of any type. Under the 

statutory language, this taxation situs "shall in all cases be 

the county, district, town or city in which such property may be 

physically located on the tax day." Code § 58.1-3511(A). This 

language does not provide for a determination of where the 

merchants' capital is "ordinarily" or "normally" kept, but 

requires that the situs be determined by the physical location 

of the merchants' capital on one particular day of each year. 

 The second sentence of Code § 58.1-3511(A), which applies 

only to the taxation situs of certain types of mobile personal 

property, provides a distinct contrast to the statutory 

provisions that govern the taxation situs for merchants' 

capital. The taxation situs for those types of mobile personal 

property is where the vehicle is "normally garaged, docked or 

parked. . . ." The Commissioner's argument effectively asks us 

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to add qualifying language such as "normally" or "ordinarily" to 

the first sentence of the statute. However, we are not 

permitted to add language to a statute. When the legislature 

has used words of a plain and definite meaning, courts cannot 

accord those words a meaning that amounts to holding that the 

legislature did not mean what it actually expressed. Jan Paul 

Fruiterman, M.D. and Assocs. v. Waziri, 259 Va. 540, 544, 525 

S.E.2d 552, 554 (2000); Haislip v. Southern Heritage Ins. Co., 

254 Va. 265, 268, 492 S.E.2d 135, 137 (1997); Davis v. Tazewell 

Place Assocs., 254 Va. 257, 260-61, 492 S.E.2d 162, 164 (1997). 

 We also observe that when the General Assembly uses two 

different terms in the same act, those terms are presumed to 

mean two different things. Greenberg v. Commonwealth, 255 Va. 

594, 601, 499 S.E.2d 266, 270 (1998); City of Hopewell v. County 

of Prince George, 239 Va. 287, 294, 389 S.E.2d 685, 689 (1990); 

Klarfeld v. Salsbury, 233 Va. 277, 284-85, 355 S.E.2d 319, 323 

(1987). Applying this principle, we presume that the General 

Assembly meant two different things in using the term 

"physically located on the tax day" in the first sentence of 

Code § 58.1-3511(A), while using the term "normally garaged, 

parked or docked" in the second sentence of the statute. Thus, 

the inclusion of merchants' capital in the first sentence of 

Code § 58.1-3511(A) mandates the use of the situs test of 

"physically located on the tax day," without any qualification 

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or limitation regarding the length of time that the property has 

been situated in a given locality. 

 We disagree with the Commissioner's argument that our 

decisions in Hogan and Newport News require a different result. 

Those decisions addressed the taxation situs for certain mobile 

personal property, not the taxation situs for merchants' 

capital. Moreover, those decisions were rendered under 

predecessor statutes to Code § 58.1-3511(A), which did not 

include the second sentence of the present statute. The second 

sentence of the present statute sets forth a new and separate 

test for determining the taxation situs for the types of mobile 

personal property we considered in Hogan and Newport News. In 

light of the addition of the second sentence, we conclude that 

the General Assembly intended in the present statute to provide 

a different test to determine the taxation situs for merchants' 

capital than for the types of mobile personal property we 

considered in Hogan and Newport News. 

 For these reasons, we will reverse the chancellor's decree 

and enter final judgment for Shelor declaring that the taxation 

situs for merchants' capital is the county, district, town, or 

city in which such property may be physically located on the 

"tax day," January 1.3

 3

Based on our holding, we do not consider Shelor's remaining 

assignments of error. 

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Reversed and final judgment.

JUSTICE KINSER, dissenting. 

 I believe that the judgment of the circuit court should be 

affirmed but for reasons unrelated to the merits of the issue 

addressed by the majority. 

 One of the grounds asserted by Nancy W. Miller, 

Commissioner of the Revenue for Montgomery County, in support of 

her demurrer to the bills of complaint was that the declaratory 

judgment statute, Code § 8.01-184, is not the “appropriate 

vehicle to determine the validity of tax assessments.” Instead, 

Miller contended that the procedures established in Code 

§§ 58.1-3980 through -3993 should be followed when an aggrieved 

taxpayer seeks to correct an erroneous or invalid tax 

assessment. In its letter opinion, the circuit court agreed and 

sustained the demurrer on that ground. Despite that finding, 

the court then addressed the merits of the question concerning 

the tax situs of merchants’ capital under Code § 58.1-3511(A). 

 Code § 8.01-184 authorizes circuit courts to issue 

declaratory judgments in cases of actual controversy. However, 

we have said on more than one occasion that the authority “to 

make a declaratory judgment is a discretionary one and must be 

exercised with care and caution.” Liberty Mut. Ins. Co. v. 

Bishop, 211 Va. 414, 421, 177 S.E.2d 519, 524 (1970); accord

USAA Cas. Ins. Co. v. Randolph, 255 Va. 342, 346, 497 S.E.2d 

11
744, 746 (1998); Haughton v. Lankford, 189 Va. 183, 192, 52 

S.E.2d 111, 114 (1949). Furthermore, the power to enter a 

declaratory judgment should not be exercised “when some other 

mode of proceeding is provided.” Randolph, 255 Va. at 346, 497 

S.E.2d at 746; accord Bishop, 211 Va. at 421, 177 S.E.2d at 524. 

 In Haughton, this Court also cautioned against the exercise 

of jurisdiction in declaratory judgment proceedings that involve 

questions of tax liability. We did so because such questions 

affect the orderly administration of the Commonwealth’s fiscal 

affairs, which should not be unduly interfered with by the 

courts. Haughton, 189 Va. at 198, 52 S.E.2d at 117. The same 

caution should be exercised in this case because of Montgomery 

County’s administration of its fiscal affairs. 

 As the circuit court noted in its letter opinion, the 

taxpayers in this case can apply to the circuit court, pursuant 

to Code § 58.1-3984, for correction of any erroneous assessment 

of local taxes. Thus, another “mode of proceeding” is 

available. Randolph, 255 Va. at 346, 497 S.E.2d at 746. 

Additionally, entry of declaratory relief now, before Montgomery 

County has assessed any tax on the merchants’ capital at issue, 

could affect the administration of the County’s fiscal affairs. 

For these reasons, I cannot say that the circuit court abused 

its discretion in declining to exercise its jurisdiction under 

Code § 8.01-184. See Reisen v. Aetna Life & Cas. Co., 225 Va. 

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327, 334, 302 S.E.2d 529, 532 (1983)(abuse of discretion 

standard used to review trial court’s decision regarding whether 

to exercise power to issue declaratory judgments). Having 

decided that it would not exercise its declaratory judgment 

jurisdiction, the circuit court then erred by addressing the 

merits of the bills of complaint. Once a court exercises its 

discretion to decline jurisdiction under Code § 8.01-184, 

nothing further remains before the court for adjudication. 

Thus, I conclude that the remainder of the circuit court’s 

letter opinion was merely advisory. 

Accordingly, I would affirm the judgment of the circuit 

court sustaining the demurrer on the basis that declaratory 

relief is not the appropriate mechanism to determine the tax 

situs of the merchants’ capital at issue, vacate the remaining 

portions of its judgment, and dismiss the declaratory judgment 

actions. 

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