Worth v. City of Rogers

W.H. “Dub” Arnold, Chief Judge,

dissenting. I disagree udge, payment of taxes for the years 1990-95. The trial'judge ruled that the appellants were not entitled to a refund of these taxes as they were not paid under protest. This court has consistendy followed the common-law rule that prohibits the recovery of voluntarily paid taxes unless paid under protest.

The facts present in this case are similar to the facts in Mertz v. Pappas, 320 Ark. 368, 896 S.W.2d 593 (1995). The appellants in the instant case did not plead, nor did they prove that there were any uncollected delinquent taxes as a result of the taxes levied for the years 1990 through 1995. In Mertz, this court held:

Appellants do not have a claim because the taxes were voluntarily paid before suit was filed. We have consistently followed the common law rule that prohibits the recovery of voluntarily paid taxes, except where a recovery is authorized by a statute without regard to whether the payment is voluntary or compulsory. See, e.g., City of Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d 229 (1982); Searcy County v. Stephenson, 244 Ark. 54, 424 S.W.2d 369 (1968); Thompson v. Continental Southern Lines, Inc., 222 Ark. 108, 257 S.W.2d 375 (1953). We follow this rule even when an illegal exaction claim is based on constitutional grounds. Cash, 277 Ark. at 504-05, 644 S.W.2d at 233. When recovery is authorized by statute upon payment “under protest,” we literally require a payment “under protest .’’ Hercules, Inc. v. Pledger, 319 Ark. 702, 894 S.W.2d 576 (1995). There is an exception for payment under coercion, see Cash, 277 Ark. at 505, 644 S.W.2d at 233; Chapman & Dewey Land Co. v. Board of Directors, 172 Ark. 414, 288 S.W. 910 (1926), but that exception is not applicable to the case at bar.
The reasoning underlying our cases is sound. When taxes are paid to a government they are deposited into that government’s general revenues and ordinarily are spent within that tax year. However, when the government is put on notice that it may be required to refund those taxes, it can make the appropriate allowance for a possible refund. See Hercules, Inc., 319 Ark. at 707, 894 S.W.2d at 578. If we were to allow refunds for taxes voluntarily paid in previous years, it would jeopardize current and future governmental operations because current and future funds might be necessary for the refund.

320 Ark. at 370, 896 S.W.2d at 594.

As recently as March of this year, this court handed down two decisions that reaffirmed the common-law rule that prohibits the recovery of voluntarily paid taxes. See Oxford v. Perry, 340 Ark. 577, 13 S.W.3d 567 (2000); Elzea v. Perry, 340 Ark. 588, 12 S.W.3d 213 (2000). We are bound to follow prior case law under the doctrine of stare decisis, and that policy is designed to lend predictability, as well as stability, to the law. Liberty Mutual Insurance Co. v. Thomas, 333 Ark. 655, 971 S.W.2d 244 (1998). In Parish v. Pitts, 244 Ark. 1239, 429 S.W.2d 45 (1968), this court held that precedent governs until it gives a result so patently wrong, so manifestly unjust, that a break becomes unavoidable. There is no reason to depart from established precedent in the instant case. In Lord v. Mazzanti, 339 Ark. 25, 2 S.W.2d 76 (1999), this court concluded that there was no reason for the court to reverse its interpretation of its own rules and throw precedent to the “four winds”; unfortunately, I believe that is exactly what the majority is doing in this case.

The majority acknowledges our holding in Mertz v. Pappas, supra, as well as other similar cases, yet hinges its reversal on the supposition that there are issues present of whether the tax payments were made as a result of coercion and whether the payments were made with full knowledge of the facts. In so doing, the majority accepts the argument of the appellants that since the tax is a lien on real property, any payment would be considered “under coercion.” This argument is absurd. If this were true, all tax payments would be paid “under coercion,” which logically is not the case. Although voluntary payments existed in, Mertz, Oxford, and Elzea, this court held that in each case voluntary payments could not be recovered. If the majority is correct, then we were wrong in each of the prior cases.

A taxpayer has the right to question an illegal tax but not years later, after voluntary payment. If a taxpayer wants to question real property taxes, he or she may do so in one of two ways — either the taxes must literally be paid “under protest,” or a suit must be filed before payment. It is neither fair nor right for a person to pay real property taxes while silently objecting to the payment, and then expect a refund years after the tax has been paid.

This court held in Mertz that if we were to allow refunds for taxes voluntarily paid in previous years, it would jeopardize current and future governmental operations because current and future funds might be necessary for the refund. That is exactly the situation present in the instant case. We know that school districts and governmental units customarily spend all of their money designated for a particular year. If these school districts have to repay tax money for the years of 1990 through 1995, how will they do this? Current funds, as well as future funds, will undoubtedly have to be used; this means the children will suffer. The districts will have to evaluate what will be taken away first: athletics, school activities, or personnel. All of this could be avoided by simply foEowing the common-law rule that there wiE be no recovery for taxes voluntarüy paid without protest. I would foEow the wisdom of the trial judge and affirm.

For these reason, I respectfuEy dissent.

Thornton, J., joins.