Pledger v. Mid-State Constr. & Materials, Inc.

James C. PLEDGER, Director of the Department
of Finance and Administration v. MID-STATE
CONSTRUCTION & MATERIALS, INC.

95-1130                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
                 Opinion delivered July 15, 1996


1.   Judgment -- summary judgment -- standard of review. -- Summary
     judgment is a remedy that should be granted only when it is
     clear that there is no genuine issue of material fact to be
     litigated; on review, the appellate court must only decide if
     the granting of summary judgment was appropriate based on
     whether the evidentiary items presented by the moving party in
     support of the motion left a material question of fact
     unanswered; all proof submitted must be viewed in a light most
     favorable to the party resisting the motion, and any doubts
     and inferences must be resolved against the moving party.

2.   Taxation -- tax-exemption cases -- rules of construction --
     standard of review. -- In cases that involve a claim of tax
     exemption, it is well settled that a presumption exists in
     favor of the taxing power of the state; a taxpayer has the
     burden of establishing the right to an exemption beyond a
     reasonable doubt; tax exemptions must be strictly construed
     against exemption, and to doubt is to deny the exemption; tax-
     exemption cases are reviewed de novo, and the appellate court
     does not set aside the findings of the chancellor unless they
     are clearly erroneous.

3.   Statutes -- primary rule is to give effect to intent of
     legislature. -- The primary rule in construing legislation is
     to ascertain and to give effect to the intent of the
     legislature; where the intent is clear, there is no room for
     other interpretation or construction.

4.   Statutes -- special act applicable to particular case excludes
     operation of general act -- general isolated-sale exemption
     not applicable to sale of used vehicles. -- It is a rule of
     statutory construction that when a special act applies to a
     particular case, it excludes the operation of a general act;
     thus, with respect to the present case, the general isolated-
     sale exemption has never been applicable to the sale of used
     vehicles because the legislature included the private-sale
     exemption, which applied specifically to used vehicles, in the
     same Act that first imposed a sales tax on such vehicles.

5.   Statutes -- amendment of act does not control interpretation
     of another statute. -- The amendment of an act does not
     control the interpretation of another statute enacted prior to
     the amendment, nor does it change the meaning that the
     original statute acquired prior to the amendment.

6.   Legislature -- no power retrospectively to abrogate judicial
     pronouncements. -- The legislature can prospectively change
     the tax laws of this state, within constitutional limitations,
     but it does not have the power or authority retrospectively to
     abrogate judicial pronouncements of the courts of this state
     by a legislative interpretation of the law.

7.   Statutes -- determination of legislative intent. -- The
     supreme court can look to changes to statutes made by
     subsequent amendments to determine legislative intent.

8.   Statutes -- intent of General Assembly -- private sale of used
     motor vehicles subject to sales tax -- isolated-sales
     exemption not applicable -- trial court erred in granting
     summary judgment to appellee -- reversed and remanded. --The
     supreme court held that it has been the clear intent of the
     General Assembly since 1959 that the private sale of used
     motor vehicles be subject to the sales tax and that the
     general isolated-sales exemption has no application to such
     sales; the supreme court concluded that appellee did not meet
     its burden of establishing the right to this exemption beyond
     a reasonable doubt and that the trial court erred in granting
     summary judgment to appellee and should have granted
     appellant's motion for summary judgment; the chancellor's
     finding that an isolated-sale exemption applied to the sale of
     used vehicles by sellers who are not regularly engaged in the
     business of selling vehicles was reversed and remanded.


     Appeal from Pulaski Chancery Court; Vann Smith, Chancellor;
reversed and remanded.
     Beth B. Carson, for appellant.
     Jack, Lyon & Jones, P.A., by: Eugene G. Sayre, for appellee.

     Andree Layton Roaf, Justice.*ADVREP*SC11*








JAMES C. PLEDGER, DIRECTOR OF
THE DEPARTMENT OF FINANCE AND
ADMINISTRATION,
                    APPELLANT,

V.

MID-STATE CONSTRUCTION &
MATERIALS, INC.,
                    APPELLEE,

July 15, 1996

95-1130


APPEAL FROM THE PULASKI COUNTY
CHANCERY COURT,
NO. 93-5402,
HON. VANN SMITH, JUDGE,




REVERSED AND REMANDED.
              Andree Layton Roaf, Associate Justice


     This case involves the "isolated sale" tax exemption found in
Ark. Code Ann.  26-52-401(17).  The appellee, Mid-State
Construction & Materials, Inc., ("Mid-State") challenged the
assessment of gross-receipts (sales) tax on used motor vehicles and
trailers it purchased in a sale of assets from another company. 
The appellant, Department of Finance and Administration, ("DFA")
appeals from a summary judgment awarded to Mid-State; the
chancellor determined that the isolated-sale exemption applied to
the sale of used vehicles by sellers who are not regularly engaged
in the business of selling vehicles.  We reverse the chancellor's
finding of an exemption.  
     In March 1993, Mid-State purchased all of the assets of a
corporation also named Mid-State, which was engaged in the business
of highway construction, production of asphalt and concrete, and
stone quarrying.  The seller corporation changed its name after the
sale and dissolved; Mid-State then assumed the name of the seller
and continued the same business activities using the assets
acquired from the now defunct corporation.  The assets purchased
included furniture, fixtures, supplies, equipment, and 75 used
motor vehicles and trailers.  When Mid-State attempted to register
title to the motor vehicles and trailers, it was informed by DFA
that sales taxes would have to be paid on the market value of these
items.  The other assets purchased by Mid-State in the asset sale
were not taxed by DFA, pursuant to the isolated-sale tax exemption. 
Mid-State was assessed $80,849.00 in state and local sales taxes on
the value of the motor vehicles and trailers.  
     In May 1993, Mid-State filed a claim for refund with DFA and
asserted that the sale of the used vehicles was exempt as an
isolated sale pursuant to Ark. Code Ann.  26-52-401(17).  DFA
denied the refund on the basis that used vehicle sales were
excluded from the isolated-sale exemption.  Mid-State filed a
complaint for refund in Pulaski County Chancery Court in August
1993.  Both parties filed motions for summary judgment.  The sole
legal issue before the trial court was whether the isolated-sale
exemption applied to the sale of used vehicles by sellers who are
not regularly engaged in the business of selling vehicles.   
     Mid-State, in its motion for summary judgment, asserted that
the sale of the used motor vehicles and trailers constituted an
isolated sale within the meaning of  26-52-401(17), that DFA's
administrative practice of excluding used motor vehicles from the
isolated-sale exemption was an erroneous and illegal interpretation
of sales tax law, that DFA had erroneously and illegally
interpreted  6 of Act 3 of 1991 and that promulgation by DFA of
gross-receipts tax regulation GR-49(c) was erroneous and illegal
and should be declared void.  
     DFA, in its motion for summary judgment and also in its
response to the motion by Mid-State, contended that since 1959 the
General Assembly has specifically intended that the isolated sale
of used motor vehicles be subject to sales and use tax; DFA traced
the history of relevant tax legislation from the 1941 Sales Tax Act
forward in support of this contention.  DFA further argued that a
non-repealer clause in Act 3 of 1991 relied upon by Mid-State had
no application to an exemption which had not existed since 1959. 
DFA also asserted that the General Assembly has established a
statutory sales-and-use-tax scheme which addresses vehicles
separately from other tangible personal property.  DFA further
argued that it had acted within its authority to promulgate
regulation GR-49(c) to clarify this legislative intent, and to
rectify certain errors which occurred in compiling the 1957 and
1959 Acts and in the codification of the Arkansas Statutes in 1987. 
DFA finally contended that an absurd and unconstitutional result
would occur if Mid-State's motion for summary judgment were
granted, because individual in-state sales of used vehicles would
be exempt from sales tax while such vehicles purchased from out-of-
state individuals would be taxable.  DFA asserted that the
complimentary nature of the sales and use tax would thus be
destroyed.
     In its findings of fact and conclusions of law entered on June
30, 1995, the trial court determined that there was no genuine
issue as to any material fact.  The trial court concluded that the
General Assembly did not intend to prohibit the applicability of
the isolated-sale exemption to the transfer by one corporation to
another of title to used motor vehicles and used trailers in the
factual setting of a one-time asset purchase.  The trial court
determined that DFA had exceeded its legislative grant of rule
making authority in adopting gross-receipts regulation GR-49(c). 
The chancellor also found that while this suit was pending, the
General Assembly had enacted legislation effective February 13,
1995, which expressly provides that the benefit of the isolated-
sale exemption is not available for the transfer of title to used
motor vehicles or used trailers.  However, he concluded that
despite language in an emergency clause to the contrary, the 1995
legislation was a change and not a clarification of existing law
and should not be applied retroactively to the March 1993 purchase
by Mid-State.  
     After granting Mid-State's motion for summary judgment and
denying DFA's motion, the trial court entered judgment in favor of
Mid-State and ordered DFA to refund the amount of state and local
sales taxes paid, plus interest.  The sole issue on appeal is
whether, at the time of the purchase by Mid-State, gross receipts
from the sale of a used vehicle by a person not in the business of
selling vehicles were exempt from sales tax pursuant to the
isolated-sale exemption provided in Ark. Code Ann.  26-52-401(17). 
     In order to answer this question, we must outline, as did DFA,
the development of the relevant law regarding both sales and use
tax.  In so doing, we keep in mind the following settled rules
regarding summary judgment and review of tax-exemption cases. 
Summary judgment is a remedy that should be granted only when it is
clear, as in this instance, that there is no genuine issue of
material fact to be litigated. Wyatt v. St. Paul Fire & Marine Ins.
Co., 315 Ark. 547, 868 S.W.2d 505 (1995).  On appellate review,
this court must only decide if the granting of summary judgment was
appropriate based on whether the evidentiary items presented by the
moving party in support of the motion leaves a material question of
fact unanswered. Reynolds v. Shelter Mut. Ins. Co., 313 Ark. 145,
852 S.W.2d 799 (1993).  All proof submitted must be viewed in a
light most favorable to the party resisting the motion, and any
doubts and inferences must be resolved against the moving party.
Id.
     In cases which involve a claim of tax exemption, it is well
settled that a presumption exists in favor of the taxing power of
the state, and a taxpayer has the burden of establishing the right
to an exemption beyond a reasonable doubt. Pledger v. Baldor Int'l
Inc., 309 Ark. 30, 827 S.W.2d 646 (1992).  Tax exemptions must be
strictly construed against exemption, and to doubt is to deny the
exemption. Id.  In addition, this court has stated that tax-
exemption cases are reviewed de novo, and the appellate court does
not set aside the findings of the chancellor unless they are
clearly erroneous. Id.

                       1941 Sales Tax Act
     In 1941, the General Assembly enacted the "Arkansas Gross
Receipts Act of 1941."  This was the first state sales tax, and the
act provided for a 2 percent sales tax on the gross proceeds or
gross receipts from all sales of "tangible personal property." The
term "seller" was defined in the Act as "every person making a sale
in an established business;" DFA has always construed "established
business" as the business of selling.  The Act provided for the
taxes to be collected and paid to the Commissioner of Revenues by
the seller, except with respect to the sale of new automobiles;
instead of being collected by the automobile dealer, sales taxes on
new automobiles were to be collected from the buyer at the time the
automobile license was issued.  
     The Act further listed some 19 exemptions, including two that
are relevant to this discussion.  The first exempted the "gross
receipts or gross proceeds derived from isolated sales not made by
an established business."  This "isolated sale" exemption has
remained since 1941, and can be found at Ark. Code Ann.  26-52-
401(17); this is the exemption which Mid-State is claiming for its
1993 purchase of the used vehicles and trailers.  The second
exempted the proceeds from the sale of "second-hand and used
personal property" on which sales tax had once been paid, and also
where the used property was traded in as part of the purchase price
of other tangible property.  
     DFA asserts, and we agree, that the isolated-sale exemption
had no relevance to the sale of vehicles in the 1941 legislation,
because no sales tax was imposed on used vehicles, and new vehicles
were sold only by dealers, who were not entitled to the exemption. 

                         Act 54 of 1945
     In 1945, the General Assembly amended the 1941 Sales Tax Act
to provide for the first time that used cars would be subject to
the sales tax.  The amendment provided that, as with new cars, the
tax would not be collected by dealer, but would be paid at the time
the vehicle license was issued.  The 1945 act also contained two
exemptions.  The "registration exemption" applied to used cars
which had been previously registered and taxed in Arkansas.  The
second exemption provided that "in no case shall the tax apply on
a private sale of a used automobile where the seller is not engaged
in business as a dealer."  This exemption is referred to as the
"private sale exemption," and would clearly be available to Mid-
State if it were still in effect.   
                       Use Tax Act of 1949
     In 1949, the legislature enacted a compensating-use tax of two
percent, to prevent "discrimination in favor of those who made
purchases of personal property in this state."  Morley, Comm. of
Rev. v. E.E. Barber Constr. Co., 220 Ark. 485, 248 S.W.2d 689
(1952).  This Act provided a general exemption from use tax for
property specifically exempted from sales taxes.  Thus, the private
sale and registration exemption from the 1945 Sales Tax Act would
apply to also exempt from the use tax used vehicles bought from
out-of-state sellers.  This legislation made no change in the
sales-tax exemptions.
                         Act 19 of 1957
     The only purpose of the 1957 Act was to increase the sales and
use tax rate from two to three percent.  This legislation made no
substantive changes in either the sales or use tax statutes,
however, the Act contained the following provision:
     Nothing in this Act shall be construed to repeal any
     exemption from the Arkansas Gross Receipts Act of 1941 or
     the Arkansas Compensation Tax Act of 1949.  
The private-sale exemption would thus still be available for a sale
of a used vehicle by a non-dealer, after 1957.
                         Act 260 of 1959
     In 1959, the General Assembly amended the Gross Receipts
statute to delete the exemption for the private sale of used
vehicles.  The registration exemption remained.  The Use Tax
statute was correspondingly amended to reflect the deletion of the
private-sale exemption:
     Used Cars.  All used cars shall, upon being registered in
     this state for the first time, be subject to the tax
     levied herein irrespective of whether such car was
     purchased from a dealer or an individual.  
(Emphasis added.)  
     In  3 of Act 260, the intent of the legislature is stated,
and is clear and unequivocal: 

     It is the intent and purpose of this Act to require that
     either the Arkansas Gross Receipts Tax levied by Act 386
     of 1941, as amended, or the Compensating Tax levied by
     Act 487 of 1949, as amended, be paid upon every used car,
     excepting those cars upon which either the Arkansas Gross
     Receipts Tax or the Arkansas Compensating Tax has once
     been paid as evidenced by previous registration in this
     State, irrespective of whether such car was purchased
     from a dealer or from an individual.
     
          
     DFA contends, and we agree, that as a result of the 1959 Act,
all sales of used vehicles became taxable, and only the
registration exemption remained.  The primary rule in construing
legislation is to ascertain and give effect to the intent of the
legislature, and when the intent is clear, there is no room for
other interpretation or construction.  Graham v. Forrest City
Housing Auth., 304 Ark. 632, 803 S.W.2d 923 (1991).  In this
instance, the General Assembly specifically and clearly provided
that the private sales of used automobiles would be exempt from
sales tax in 1945.  The legislature just as clearly repealed this
exemption by amending the sales and use tax statutes in 1959. 
Moreover, it is a rule of statutory construction that when a
special act applies to a particular case, it excludes the operation
of a general act.  Ballheimer v. Service Finance Corp., 292 Ark.
92, 728 S.W.2d 178 (1987).  Thus, the general isolated-sale
exemption has never been applicable to the sale of used vehicles
because the legislature included the private-sale exemption, which
applied specifically to used vehicles, in the same Act which first
imposed a sales tax on such vehicles.
                       Codification Errors
     DFA argues that Mid-State has based its claim of exemption in
part upon certain codification errors involving the 1957 and 1959
Acts.  Section 3 of act 260 of 1959, which clearly expressed the
legislative intent that either sales or use tax be paid upon every
used car except those previously registered and taxed in Arkansas,
was never compiled, in either the sales or use tax statues and was
also not included in the Arkansas Code of 1987.  This statement of
intent was included in the compiler's notes to the Use Tax statute,
but was omitted from the notes to the sales tax section.  See Ark.
Stat. Ann.  84-3105 and  84-1903.  Thus, although the private-
sale exemption was deleted from the sales-tax statutes by the 1959
Act, this exemption was simply removed from the statute by the
compiler; the language expressing the clear intent of the
legislature that all used car sales be subject to sales or use tax
except those entitled to the registration exemption was not
included anywhere in the sales-tax statutes.  
     Mid-State also bases its claim for exemption upon the non-
repealer statement included in the 1957 Act which simply raised the
tax rates from 2 to 3 percent.  This statement was not included in
the Arkansas Statutes but was picked up by the codifiers of the
1987 Code, and included as a new subsection of the sales and use
tax provisions.  See Ark. Code Ann.  26-52-510(d) and  26-53-
126(f).  This provision states that "nothing in this section shall
be construed to repeal any exemption from the Arkansas Gross
Receipt Act  26-52-101, et seq."  DFA argues that the provision is
extraneous, if not erroneous.  Mid-State claims that this is
evidence of the legislature's intent that the isolated-sale
exemption for 1941 not be repealed with regard to the sales of used
vehicles.  We agree that the inclusion of the non-repealer section
from the 1957 Act, which only raised the tax rates, can in no way
support a claim of exemption which was specifically and clearly
repealed by the legislature in 1959.  The legislature also
anticipated that such errors would occur when the Arkansas Statutes
were codified in 1987.  Arkansas Code Annotated  1-2-103 (Repl.
1996), provides that all acts, codes, and statutes in effect on
December 31, 1987 are repealed by the 1987 Arkansas Code unless: 
       (1) Expressly continued by specific provision of this
     Code;

       (2) Omitted improperly or erroneously as a consequence
     of compilation, revision, or both, of the laws enacted
     prior to this Code, including without limitation any
     omissions that may have occurred during the compilations,
     revision, or both, of the laws comprising this Code; or

       (3) Omitted, changed, or modified by the Arkansas Code
     Revision Commission, or its predecessors, in a manner not
     authorized by the laws or the constitutions of Arkansas
     in effect at the time of the omission, change, or
     modification.

       (b) In the event one of the above exceptions should be
     applicable, the law as it existed on December 31, 1987,
     shall continue to be valid, effective, and controlling.
(Emphasis added.)
                          Act 3 of 1991
     In 1991, the registration exemption was repealed.  A non-
repealer statement was included in this act.
     Again, the non-repealer statement included in this legislation
could not serve to resurrect an exemption which the legislature had
clearly and specifically repealed thirty-two years before the 1991
Act.
                         Act 268 of 1995
     The legislature amended both the sales and use tax statutes in
1995 to provide: "The exemption provided for in  26-52-401 for
isolated sales shall not apply to the sale of motor vehicles,
trailers and semitrailers."  The emergency clause contained in the
Act stated:
     It is hereby found . . . that current law disallows the
     isolated sales exemption to a purchase of a motor vehicle
     or trailer; [the sales and use tax] provisions are in
     need of clarification to ensure the original legislative
     intent is fulfilled; and that Sections 6 and 7 of the Act
     should be effective immediately to prevent possible
     confusion among the taxpayers of the state.
The trial court determined that this amendment was a remedy
available to the legislature at any time it saw the need to remove
confusion in the existing statutes, and therefore could not serve
to retroactively state the legislative intent of prior legislative
sessions.  We do not agree that Act 268 of 1995 is an attempt by
the legislature to retroactively change existing law.
     We have stated that the amendment of an act does not control
the interpretation of another statute enacted prior to the
amendment, nor does it change the meaning which the original
statute acquired prior to the amendment. Peterson Produce Co. v.
Cheney, Commr., 237 Ark. 600, 374 S.W.2d 809 (1964).  Further, the
legislature can prospectively change the tax laws of this state,
within constitutional limitations, but it does not have the power
or authority to retrospectively abrogate judicial pronouncements of
the courts of this State by a legislative interpretation of the
law. Federal Express Corp. v. Skelton, 265 Ark. 187, 578 S.W.2d 1
(1979).  However, we can look to changes to statutes made by
subsequent amendments to determine legislative intent.  State Farm
Mut. Auto. Ins. Co. v. Beavers, 321 Ark. 292, 901 S.W.2d 13 (1995). 
In Baldor Int'l Inc., supra, we stated that the General Assembly,
in enacting a 1985 Act, did not change the prior law but merely
intended to clarify it and, therefore, the chancellor did not err
in considering the subsequent act.  We conclude that here, the
legislature has merely clarified the law as it has existed since
1959.  
     We hold that it has been the clear intent of the General
Assembly since 1959 that the private sale of used motor vehicles be
subject to the sales tax, and that the general isolated-sales
exemption has no application to such sales.  We conclude that Mid-
State did not meet its burden of establishing the right to this
exemption beyond a reasonable doubt.  The trial court in this
instance erred in granting summary judgment to Mid-State, and
should have granted DFA's motion for summary judgment.
     Because we hold that the legislature did not intend that the
isolated-sale exemption be applied to the private sale of used
vehicles, we need not consider whether DFA acted within its
authority in promulgating regulation GR-49(c) or whether an
unconstitutional and absurd result would occur if Mid-State is
determined to be entitled to this exemption.
     Reversed and remanded.
     Dudley, J., not participating.