Court Opinion

ID: 9864420
Source: CourtListenerOpinion
Date Created: 2023-09-25 13:04:38.030361+00
Date Added: 2024-06-11T12:12:03.579128
License: Public Domain

Opinion on rehearing delivered March 28, 193'2. Hart, C. J. On the 29th day of June, 1931, an opinion was delivered in this case in which it was held that shares of stock in a domestic corporation, organized under the laws of this State and doing business here, whether held by residents or nonresidents, are taxable as property in this State; and such shares remain as property here until the death of the owner when they pass to his successor, subject to the inheritance laws of this State. Consequently, the judgment of the circuit court was reversed, and the cause was remanded with directions to dismiss the complaint of appellee. There was a motion for rehearing filed by appellee within the time required by statute; but, by leave of the court, obtained upon the consent of the parties, the cause was passed for further consideration until a case containing a similar question was decided by the Supreme Court of the United States. On January 4,1932, the case of First National Bank of Boston v. State of Maine, upon appeal from the Supreme Court of the State of Maine was decided by the Supreme Court of the United States [284 U.'S. 312, 52 S. Ct. 174]. In an opinion delivered by Mr. Justice Sutherlanb, it was held that shares of corporate stock, like certain other specific intangible property, money, bonds. notes, and credits can be subject to inheritance tax by one State only. It was further held that shares of stock in a Maine corporation belonging to the estate of decedent, domiciled in Massachusetts, were not subject to an inheritance tax in Maine, because this would be in violation of the Fourteenth Amendment of the Constitution of the United States. A dissenting opinion was delivered by Mr. Justice Stone, which was concurred in by Mr. Justice Holmes, and Mr. Justice Brandéis. It becomes our duty to follow the opinion of the Supreme Court of the United States because that court held that the exaction of a similar .tax was not within the power of the States under the Fourteenth Amendment. Consequently, it is earnestly insisted that a rehearing should be granted, and the judgment of the circuit court should be affirmed. This, by no means follows for the reason that the record in the case before us shows that the payment of the tax by appellee was voluntary within the meaning of the law, and under our rules of practice our former opinion ordinarily would have been placed upon that ground. We decided the question'of the constitutionality of the act merely because of the public interest involved in the matter. Trammell v. Bradley, 37 Ark. 374; and McClure v. Topf & Wright, 112 Ark. 342, 166 S. W. 171. This court has followed the general rule that one who voluntarily pays a tax, imposed by a law unconstitutional in whole or in part, can not recover the amount SO1 paid. Board of Directors of Crawford County Levee District v. Dunbar, 107 Ark. 285, 155 S. W. 96. For illustrative cases, see notes to 48 A. L. B. commencing at page 1381 and 74 A. L. B., commencing at page 1301. The later cases of Dickinson v. Housley, 130 Ark. 259, 197 S. W. 25; and White River Lumber Company v. Elliott, 146 Ark. 551, 226 S. W. 164, follow the same rule; but, under the facts of these cases, the payment of the taxes was held to be involuntary. In the Dickinson case, the increase of valuation by the Board of Equalization was held to be illegal, and the taxpayer, having paid the amount under protest, was held entitled to recover it from the collector who still had the funds in his hands at the time the suit was brought. In the White River Lumber Company case, payment was held to be involuntary because the collector would have sold the lands of the taxpayer for the nonpayment of the taxes, and this would have constituted a cloud upon his title. In the present case, the record shows that on March 9, 1928, appellant, by her proper officer, and appellee, by proper representatives, appeared in the probate court of Jefferson County in the matter of the State inheritance tax upon the estate of Nellie Hicks Hunter, deceased. Nellie Hicks Hunter died testate on the 19th day of January, 1927, a resident of Memphis, Shelby County, Tennessee. The court found that there was an inheritance tax due the State of Arkansas in the sum of $7,796.88, and judgment was rendered in favor of appellant against appellees for that amount. The judgment further recites that it being made to appear to the court that said tax has been paid in full, as evidenced by the State Treasurer ’s receipt with certificate attached, the judgment has been satisfied in full, and that the above-described property is free from all claims of the State of Arkansas on account of said inheritance tax. The proceedings for the collection of the tax were had pursuant to the provisions of §' 10,288- of Crawford & Moses’ Digest, which was the law in force at that time for the collection of inheritance taxes. The section provides for the filing of the complaint by the officers of the State whose duty it was to collect the taxes, and that a summons be issued and served on the defendants. The section also provides that the case shall be tried before the probate judge without a jury upon oral testimony or depositions. The section further provides that appeal may be taken from the judgment of the probate court to the circuit court by either party. No appeal was taken from the judgment of the probate court. On July 9, 1930, appellee filed the present suit in the probate court against appellant. This suit was decided in favor of appellee by the probate court, and was appealed to the, circuit court. There the case was tried upon the agreed statement of facts, as will appear from our former opinion and from the statement made above. There was again a judgment in favor of appellee, and appellant filed a motion for a new.trial on the ground that the judgment of the circuit court was contrary to law. The ease in apt time was brought to this court, and the motion for a new trial filed by appellant in the circuit court raised the question of whether the payment was a voluntary or involuntary one. For the reasons given above, we are of the opinion that the payment was voluntary, made under a mistake of law, but with a full knowledge of all the facts, and can not be recovered. This was undoubtedly the law at the time the first judgment was rendered in the probate court on March 9, 1928. The Legislature of 1929' passed act 106 for the purpose of amending the inheritance laws of the State of Arkansas. Acts of 1929, vol. 1, page 526. Section 6 of the act made some amendments to § 10,228 of Crawford & Moses ’ Digest, which is not pertinent to the issue raised by the appeal. Counsel for appellee bases its right to recover the tax under § 12 of the act 106 of the Acts of 1929 above referred to. That section provides that claims for return of inheritance taxes heretofore or hereafter wrongfully and illegally collected may be made within five years from and after the date of payment of said tax and shall be filed in the probate court having original jurisdiction. It further provides for making the Commissioner of Revenues a party defendant and allows appeal by either party to the circuit court. We do not think that section was meant by the Legislature to apply to cases like the present one. As we have just seen, the State and the taxpayer were both parties in the probate court and judgment was rendered for the payment of the tax without objection. The judgment recites that it was satisfied in full by the payifient of the tax awarded and by the taking of the State Treasurer’s receipt therefor. Hence, as we have already seen, the tax was not wrongfully and illegally collected. The tax might have been paid by appellee without suit and under protest, or it mig’ht have been recovered by suit. The record shows that it was recovered in the latter way. Resort to judicial proceedings on the part of the State against appellee was necessary to collect and enforce the tax. The statute provides for this mode of collection. If appellee had declined to pay it, it necessarily followed that, under the statutory mode of proceeding, it would have had its day in court where it could raise the question of its liability for the tax. If it had paid the tax under protest and for the purpose of preventing a cloud upon the title to its property, it would be entitled to> recover under the section just referred to, providing* for the recovery of inheritance taxes wrongfully and illegally collected. The mere fact that the act under which the money was paid was unconstitutional in part and the tax for that reason illegally laid is not sufficient to authorize an action to recover back the amount paid under § 12 of act 106, passed by the Legislature of 1929: That act was passed to enable the taxpayer to recover taxes illegally or wrongfully paid without suit, and where they were paid under protest or some act which would be deemed in law an involuntary payment. It was never intended to apply to cases where the taxpayer had paid the tax when he had had his day in court and failed to avail himself of it and thereby give him the right to litigate over again the matter which had become res judicata by his failing to appeal and by his voluntary payment of the tax to satisfy the judgment. The motion for rehearing will therefore be overruled.