Title: Shelor Motor Co. v. Miller
Citation: N/A
Docket Number: 001073
State: Virginia
Issuer: Virginia Supreme Court
Date: April 20, 2001

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 
                     
 
1Shelor 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," 
                     
 
2In 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
                     
 
3Based 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 
 
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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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