Villines v. Harris

Howard W. Brill, Special Justice,

concurring. I concur in the opinion that the circuit court should not have issued an injunction. However, as set out below I do so for different reasons than the majority.

Certainly this court does not issue advisory opinions. Therefore since the trial court expressly refused to rule upon issues of damages and class certification, the majority wisely refused to address those issues. However, the Circuit Court in its order of December 28, 1998, did grant summary judgment for the taxpayer, recognizing the validity of the county court judgment and granting the taxpayer relief on the merits. In addition, the parties at the trial court level and in their briefs and arguments have raised and contested the issues of illegal-exaction claims and res judicata. When this case is remanded to the circuit court, and perhaps transferred back to chancery, these issues will return. Guidance from this court will help the subsequent judicial process.

I. Subject-matter jurisdiction

This case is properly in the circuit court and should remain there. With the consent of both parties, the action was transferred to Circuit Court in July 1997. While motions were pending, the taxpayer filed an amended petition on August 10, 1998. It alleged that taxes had been based on the appraisal and had therefore been unlawfully collected, and the taxpayer sought damages.

As the majority states, this action clearly could have remained in chancery court because that court would have had authority under the clean-up doctrine to award damages. However, circuit courts are the repository of all matters, unless the Constitution vests exclusive jurisdiction elsewhere. Ark. Const, art. 7, § 11. Likewise, Ark. Code Ann. section 16-13-201 provides that circuit courts have “orignal jurisdiction of all actions and proceedings for the enforcement of civil rights or redress of civil wrongs, except when exclusive jurisdiction is given to other courts.”

The crucial issue when the original action was commenced in 1996 in the county court was the assessment itself. The issue when this action was filed in April 1997 in chancery court was whether an injunction should be granted to stop the collection of taxes. But when this action was transferred to circuit court and the amended complaint filed in August 1998, the primary issue became damages. The taxes had been collected, and any injunction would be of scant, if any, relevance. Further, equity jurisdiction is predicated on the absence of an adequate remedy at law. In this procedural context damages have become an adequate remedy, leaving the case properly in circuit court. Despite the circular fashion in which this action came to circuit court, the circuit judge did have subject-matter jurisdiction when he ruled.

II. Injunctions in circuit court

The parties have contested the authority of a circuit court to issue injunctions. The majority opinion sets forth the five scattered precedents that deal with this issue. However, given the passage of time since the 1996 appraisal, the question of an injunction in this matter has declined in significance and the adequacy of the damages remedy has grown. Accordingly, it is unnecessary to hold, as the majority does, that circuit courts lack power to issue injunctions.

III. Res judicata

The elements of res judicata are well established. The doctrine bars relitigation of a claim in a subsequent suit when “(1) the first suit resulted in a final judgment on the merits; (2) the first suit was based upon proper jurisdiction; (3) the first suit was fully contested in good faith; (4) both suits involve the same claim or cause of action; and (5) both suits involve the same parties or their privies.” Bailey v. Harris Brake Fire Protection District, 287 Ark. 268, 697 S.W.2d 916 (1985).

While the county court is not a court of general jurisdiction, it is a court of record, Ark. Code Ann. § 14-14-1001, and had subject-matter jurisdiction. The essence of res judicata is that the parties had a full and fair opportunity to litigate the issue. The county had such a chance in the original action. In addition, res judicata requires that a dissatisfied party have the opportunity to appeal. Here the county had the right, and indeed under Ark. Code Ann. section 16-67-201 had six months to act, and failed to do so.

The parties were not identical in the two actions, for the chancery/circuit court action includes an additional defendant. However, the modern definition of privity is “a person so identified in interest with another that he represents the same legal right.” Bruns Foods of Morrilton, Inc. v. Hawkins, 328 Ark. 416, 418, 944 S.W.2d 509, 510 (1997). The privity requirement is satisfied.

The claim in the county court action challenged the appraisal; the claim in the chancery/circuit court action went further and challenged the collection of taxes and sought damages. Those issues were premature and could not have been asserted initially. However, “issues and remedies raised in the subsequent suit do not have to be identical to those raised in the initial suit in order for the claim preclusion part of res judicata to apply.” Swofford v. Stafford, 295 Ark. 433, 435, 748 S.W.2d 660, 662 (1988). The circuit court properly held that the issue of the application of Ark. Code Ann, section 26-26-601 and the county’s failure to follow the procedures had been fairly litigated and the finding was thereby conclusive. The county had its day in court and is not entitled to relitigate its failure to adhere to the Arkansas statutes.

IV Illegal-exaction claims

Article 16, section 13, of the Constitution permits any citizen to sue for himself and all others interested to protect “against the enforcement of any illegal exactions whatever.” When properly asserted, illegal-exaction claims may be brought in either circuit or chancery court, depending in large part on the remedy sought. Hoyle v. Faucher, 334 Ark. 529, 975 S.W.2d 843 (1998). The provision encompasses two types of claims: those involving public funds and those involving illegal taxes. Western Foods, Inc. v. Weiss, 338 Ark. 140, 992 S.W.2d 100 (1999); Pledger v. Featherlite Precast Corp., 308 Ark. 124, 823 S.W.2d 852 (1992).

Cases involving taxes are divided between those alleging that the tax itself is illegal or void, and those alleging that the assessment or collection of the tax is flawed or erroneous. Allegations that a tax is contrary to a constitutional or statutory provision fall within the scope of illegal exactions, and thus come within the subject-matter jurisdiction of the circuit and chancery courts. Barclay v. Melton, 339 Ark. 362, 5 S.W.3d 457 (1999); Barnhart v. City of Fayetteville, 321 Ark. 197, 900 S.W.2d 539 (1995). Likewise, allegations that a government has failed to roll back taxes as required by Amendment 59 support an illegal- exaction claim. See Hoyle v. Faucher, 334 Ark. 529, 975 S.W.2d 843 (1998); Barker v. Frank, 327 Ark. 589, 939 S.W.2d 837 (1997). But the authorities are equally clear that a flaw in the assessment procedure, no matter how serious or grievous to the taxpayer, does not make the exaction itself illegal or void. Pockrus v. Bella Vista Village Property Owners Assn., 316 Ark. 468, 872 S.W.2d 416 (1994); Scott County v. Frost, 305 Ark. 358, 807 S.W.2d 469 (1991); McIntosh v. Southwestern Truck Sales, 304 Ark. 224, 800 S.W.2d 431 (1990).

The unique posture of this case falls between the two classic situations. The original action alleged a flaw in the assessment and was properly brought in county court; it was not an illegal-exaction claim. Further, neither the county suit nor this suit specifically alleged that the tax itself was illegal or contrary to law. Accordingly, the county contends that a mistake or flaw in the assessment procedure can never rise to the level of an illegal exaction. The taxpayer on the other hand, while admitting that the special circumstances of this case present a form of illegal exaction never before addressed by this Court, contends that the mistake or error in the assessment grew into an illegal exaction because of two subsequent events: first, the determination by the county judge, and second, the county’s failure to abide by the judicial determination.

The taxpayer has made an express and frank request to extend existing law. Without deciding whether a flaw in the assessment procedure can ever rise to an illegal exaction, in the unusual setting of this case it did not. At a special session in 1994, the Board of Equalization decided, pursuant to its authority in Ark. Code Ann. section 26-27-311, to employ professional appraisers to conduct the appraisal, rather than have its in-house staff carry out its duties. However, the Board ignored, or overlooked, the provisions of Ark. Code Ann. section 26-26-601 et seq. These provisions require (1) a petition signed by the county assessor, a majority of the equalization board, and a majority of the local government governing bodies and school boards; (2) publication of the petition; (3) a public hearing, with the opportunity for property owners to be heard in support or in opposition to the petition; (4) approval by the county court; (5) negotiations by three property owners appointed by the court for the employment of professional appraisers; and (6) approval of the contract by the county judge, a majority of the members of the municipal governing bodies, and a majority of the affected school boards.

Certainly this court should not undermine the significance of this statute or the legislative intent in enacting these safeguards. However, these facts do not rise to this court’s prior definition of an illegal or void tax. Taxes collected pursuant to an appraisal conducted by an appraiser hired in violation of this statute do not become illegal or void.

V. Damages

The taxpayer has been wronged. She has been denied the rights given her by the Arkansas statutes. With notice and the chance to participate in a hearing, she might have persuaded the court that no county-wide reappraisal was required or that a different professional appraiser be hired.

The Constitution guarantees her redress. “Every person is entitled to a certain remedy in the laws for all injuries or wrongs he may receive in his person, property or character.” Ark. Const, art. 2, § 13. The circuit court has jurisdiction of proceedings “for the enforcement of civil rights or redress of civil wrongs.” Ark. Code Ann. § 16-13-201. Governments should not be permitted with impunity to ignore the orders of courts. Upon remand, the taxpayer should have the opportunity to prove her damages.