Van Buren County v. Fairfield Bay Community Club, Inc.
FAIRFIELD BAY COMMUNITY CLUB, INC. Appellee.
Court of Appeals of Arkansas, Division I.
JOHN MAUZY PITTMAN, Judge.
This case involves a dispute over a wastewater corporation's right to a refund for taxes paid from which it was exempted as a nonprofit corporation. The trial court granted appellee a tax refund, and Van Buren County appeals. We affirm.
Van Buren County Arkansas Public Facilities Board conveyed the wastewater systems that are the subject of this dispute to Fairfield Bay Community Club, Inc., on January 11, 2002. Eleven days later, Fairfield Bay Community Club, Inc., conveyed the property to its subsidiary, Fairfield Bay Waste Water Corporation. It is undisputed that all these entities are nonprofit corporations used for public purposes and are exempt from taxation pursuant to Ark. Const. Art. 16, § 5(b) and Ark. Code Ann. § 26-3-305 (Repl. 1997). It is also undisputed that the wastewater plants were, upon conveyance to appellee, incorrectly assessed by the Van Buren County Assessor as properties required to pay taxes, and that these taxes were paid until the Van Buren County Court found in November 2008 that the properties were exempt from taxation and ordered that they be so classified by the county assessor.
The present case involves an order of the Circuit Court of Van Buren County, Arkansas, in which Circuit Judge Rhonda Wood granted appellee's petition for a tax refund for the years 2005, 2006, and 2007. This was based on Ark. Code Ann. § 26-28-111(c) (R epl. 1997), which provides for the correction of "actual and obvious errors on the tax books and related records" when property has been erroneously classified. Arkansas Code Annotated section 26-35-901(a) (Supp. 2009) requires that county taxes erroneously assessed and paid must be refunded. Taxes "erroneously paid" refers to assessments that deviate from law and are thus invalid for jurisdictional defects, rather than cases where taxpayers neglect to deduct credits to which they are entitled. Ritchie Grocer Co. v. City of Texarkana, 182 Ark. 137, 30 S.W.2d 213 (1930). For example, if the property was exempt from taxation, or if the property was not located in the county assessing the tax, or if the tax was invalid, or if there was any clear excess of power granted, so as to make the assessment beyond the jurisdiction of the assessing officer or board, then the statute gives the owner a remedy for a refund of such taxes thus erroneously paid. Id.
Considering the evidence that the property was conveyed by the Van Buren County Arkansas Public Facilities Board, which was correctly assessed as exempt from the tax by the county assessor, to the appellee, which was not exempted; and the county assessor's testimony that she knew that appellee was also a nonprofit corporation, we cannot say that the circuit judge erred in finding that the classification error was "actual and obvious" and ruling that appellee was therefore entitled to the tax refund.
Appellant further argues that the taxes were "voluntarily paid" and thus not subject to refund pursuant to the common-law voluntariness doctrine, which provides that:
Where a party pays an illegal demand, with full knowledge of all the facts which render such demand illegal, without an immediate and urgent necessity therefor, or unless to release (not to avoid) his person or property from detention, or to prevent an immediate seizure of his person or property, such payment must be deemed voluntary and cannot be recovered back. And the fact that the party, at the time of making the payment, files a written protest, does not make the payment involuntary.
Weiss v. Chavers, 357 Ark. 607, 614, 184 S.W.3d 437, 441 (2004) (citing City of Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d 229 (1982)). However, this rule applies only to illegal-exaction cases where recovery is not authorized by a statute without regard to whether the paym ent was voluntary or compulsory. Elzea v. Perry, 340 Ark. 588, 12 S.W.3d 213 (2000). Here, the refund was based on a specific statute, Ark. Code Ann. § 26-35-901(a), which requires refund of taxes paid on assessments that deviate from law and are thus void for jurisdictional defects. This was a void assessment rather than an excessive one, and we hold that the exception to the voluntariness doctrine applies.
ROBBINS and GRUBER, JJ., agree.