{ "id": 8723158, "name": "GULF OIL CORPORATION v. Richard R. HEATH, Director of the Department of Finance and Administration", "name_abbreviation": "Gulf Oil Corp. v. Heath", "decision_date": "1973-12-03", "docket_number": "73-126", "first_page": "604", "last_page": "613", "citations": [ { "type": "official", "cite": "255 Ark. 604" }, { "type": "parallel", "cite": "501 S.W.2d 787" } ], "court": { "name_abbreviation": "Ark.", "id": 8808, "name": "Arkansas Supreme Court" }, "jurisdiction": { "id": 34, "name_long": "Arkansas", "name": "Ark." }, "cites_to": [ { "cite": "279 U.S. 421", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 3906325 ], "opinion_index": 0, "case_paths": [ "/us/279/0421-01" ] }, { "cite": "447 F. 2d 1082", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 808672 ], "opinion_index": 0, "case_paths": [ "/f2d/447/1082-01" ] }, { "cite": "412 U. S. 441", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6173345 ], "opinion_index": 0, "case_paths": [ "/us/412/0441-01" ] }, { "cite": "411 U. S. 356", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 9939 ], "opinion_index": 0, "case_paths": [ "/us/411/0356-01" ] }, { "cite": "285 U. S. 312", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1175193 ], "year": 1932, "opinion_index": 0, "case_paths": [ "/us/285/0312-01" ] }, { "cite": "270 U. S. 230", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 6138990 ], "year": 1926, "opinion_index": 0, "case_paths": [ "/us/270/0230-01" ] }, { "cite": "132 Mass. 246", "category": "reporters:state", "reporter": "Mass.", "case_ids": [ 2131641 ], "opinion_index": 0, "case_paths": [ "/mass/132/0246-01" ] }, { "cite": "37 N.M. 238", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1575348 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/37/0238-01" ] }, { "cite": "159 P. 2d 1", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "26 Cal. 2d 365", "category": "reporters:state", "reporter": "Cal. 2d", "case_ids": [ 2168415 ], "opinion_index": 0, "case_paths": [ "/cal-2d/26/0365-01" ] }, { "cite": "151 P. 2d 133", "category": "reporters:state_regional", "reporter": "P.2d", "opinion_index": 0 }, { "cite": "50 F.2d 903", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 1825082 ], "opinion_index": 0, "case_paths": [ "/f2d/50/0903-01" ] }, { "cite": "215 F. 2d 818", "category": "reporters:federal", "reporter": "F.2d", "case_ids": [ 533695 ], "opinion_index": 0, "case_paths": [ "/f2d/215/0818-01" ] }, { "cite": "101 Fed. 423", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 3831497, 3830916 ], "pin_cites": [ { "page": "424" } ], "opinion_index": 0, "case_paths": [ "/f/101/0423-02", "/f/101/0423-01" ] }, { "cite": "121 C.C.A. 271", "category": "reporters:federal", "reporter": "C.C.A.", "opinion_index": 0 }, { "cite": "202 Fed. 913", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 6746235 ], "opinion_index": 0, "case_paths": [ "/f/202/0913-01" ] }, { "cite": "27 Fed. 730", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 3767087 ], "pin_cites": [ { "page": "734" } ], "opinion_index": 0, "case_paths": [ "/f/27/0730-01" ] }, { "cite": "5 Fed. 11", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 3752787 ], "pin_cites": [ { "page": "16" } ], "opinion_index": 0, "case_paths": [ "/f/5/0011-01" ] }, { "cite": "285 F. 402", "category": "reporters:federal", "reporter": "F.", "case_ids": [ 3603234 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/f/285/0402-01" ] }, { "cite": "169 N.W. 313", "category": "reporters:state_regional", "reporter": "N.W.", "case_ids": [ 4458752 ], "opinion_index": 0, "case_paths": [ "/nd/40/0595-01" ] }, { "cite": "271 U. S. 50", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 1276149 ], "weight": 3, "opinion_index": 0, "case_paths": [ "/us/271/0050-01" ] }, { "cite": "285 S.W. 16", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "171 Ark. 415", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1369461 ], "opinion_index": 0, "case_paths": [ "/ark/171/0415-01" ] }, { "cite": "269 S.W. 63", "category": "reporters:state_regional", "reporter": "S.W.", "opinion_index": 0 }, { "cite": "167 Ark. 614", "category": "reporters:state", "reporter": "Ark.", "case_ids": [ 1377065 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/ark/167/0614-01" ] } ], "analysis": { "cardinality": 881, "char_count": 18802, "ocr_confidence": 0.85, "pagerank": { "raw": 4.867095174397821e-08, "percentile": 0.30634681790328316 }, "sha256": "159e14b2922d671a031d87b4e31a7b01e07f1896a0e256b06a2f5821dc931eda", "simhash": "1:ab66dec554574213", "word_count": 3184 }, "last_updated": "2023-07-14T17:24:11.540726+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Fogleman J., concurs." ], "parties": [ "GULF OIL CORPORATION v. Richard R. HEATH, Director of the Department of Finance and Administration" ], "opinions": [ { "text": "Carleton Harris, Chief Justice.\nThis appeal relates to a suit for refund of franchise tax assessments totaling $46,129.74, which appellant, Gulf Oil Corporation (hereinafter called Gulf) paid under protest for \u00bfhe years 1970, 1971, and 1972. In 1968, appellant amended its Articles of Incorporation so as to provide for a two for one stock split by reclassifying and changing its outstanding shares of stock from par value of $8.33 1/3 per share to no-par $4.16 2/3 per share stated value. In 1969, Gulf duly filed its franchise tax reports and paid taxes in the total amount of $12,349.62 for those years. This amount was computed by Gulf on the basis that the reclassification of its stock from par value to no-par stated value did not change the amount of capital of the corporation represented by its no-par stated value shares of stock. Appellee refused to accept these payments on the basis that Ark. Stat. Ann. \u00a7 84-1837 (Repl. 1960) required that the value of no-par stock be computed at $25.00 per share and an additional payment from Gulf was demanded in the amount of $61,708.12 covering the aforementioned period. This amount was paid under protest. The commissioner was requested to conduct an informal hearing for the purpose of determining the proper basis for the computation of the amount of taxes due, and at such hearing, Gulf contended that under the statute, the commissioner possessed discretionary authority to disregard the presumed statutory value of $25.00 per share and to compute the tax on the basis of the aforementioned stated value of the no-par value stock. The commissioner disagreed, holding that he was required under the aforementioned statute to compute Gulf\u2019s franchise taxes on the no-par value stock on a basis of $25.00 per share. Suit was instituted by appellant in the Pulaski County Chancery Court wherein judgment was sought for the asserted overpayment, and Gulf also sought a restraining order restraining appellee from assigning for franchise tax purposes an arbitrary value of $25.00 per share on the no-par stated value stock. Appellee demurred to the complaint, which demurrer was sustained by the trial court, and appellant, electing to stand upon the complaint, same was dismissed for want of equity. From the decree so entered, appellant brings this appeal. For reversal, three points are asserted which we proceed to discuss.\nIt is first contended that the Corporate Franchise Tax Act, Act 304 of 1953 (Ark. Stat. Ann. \u00a7 84-1833\u2014 84-1842 [Repl. I960]), made decisive changes in the substance and administration of the Corporate Franchise Tax Act then in existence, Act 367 of 1923, by creating only a rebuttable presumption as to the value of no-par value stock and by granting appellee discretionary authority to compute the amount of franchise tax on the basis of the stated value of said no-par stock. This argument is based on the fact that the present statute, heretofore cited, uses the phrase \u201csuch shares of no-par value shall be deemed [our emphasis] to be of the par value of Twenty-five Dollars ($25.00) per share\u201d, while Act 367 of 1923 used the language \u201csuch shares shall be taken [our emphasis] to be of the par value of Twenty-five Dollars ($25.00) each.\u201d\nIn State v. Margay Oil Corporation, 167 Ark. 614, 269 S.W. 63, this court held that the 1923 act was valid; that the state may make reasonable classifications of corporations for taxing purposes if all corporations of the same class are treated alike, and further held that the $25.00 per share figure given no-par value stock was reasonable. There was apparently no contention on the part of Margay that the words \u201cbe taken\u201d created anything other than a conclusive presumption. In Gilliland Oil Co. v. State, ex rel Attorney General, 171 Ark. 415, 285 S.W. 16, we said:\n\u201cThe question of the validity of the act of 1923, supra, fixing the taxable value of nonpar value stock, and the question of the application of that statute to foreign corporations, must be treated as foreclosed by the decision of this court in State v. Margay Oil Corporation, 167 Ark. 614.\u201d\nOn appeal to the United States Supreme Court, that court, in a short Per Curiam, affirmed Margay on the authority of Roberts & Schaefer Co. v. Emmerson, 271 U. S. 50. In the cited case, the court said:\n\u201cThe only question with which we need be concerned is whether there are such differences between the two privileges to issue the two classes of stock, as to constitute a proper basis for classification for purposes of taxation, so that the amount of the tax in the one case may be based on the issue price of the stock, and in the other upon the maximum price at which it may be issued, regardless of the price at which it actually is issued.\u201d\nThe court held there was such a basis.\nAccordingly, our statute which used the words \u201cbe taken\u201d has been held valid, and the court has said that a state has the right to make reasonable classifications; this, of course, included our own classification wherein the value of no-par stock was set at $25.00 per share.\nThough admitting that under the 1923 act, there was a conclusive presumption that no-par value stock was to be taxed at the value of $25.00, the commissioner having no discretion to find otherwise, appellant contends the use of the word \u201cdeemed\u201d in the present statute only creates a rebuttable presumption and the commissioner is free to follow or reject the $25.00 figure.\nIt is asserted that Section 6 of Act 304 (Ark. Stat. Ann. \u00a7 84-1838), when read in conjunction with Section 5 (Ark. Stat. Ann. \u00a7 84-1837) of the act, supports this construction. We do not accept this argument for we agree with appellee that Section 6 refers back to Section 4 (Ark. Stat. Ann. \u00a7 84-1836)._\nWe do not attach the importance to the change from \u201cbe taken\u201d to \u201cdeemed\u201d that is argued by appellant. In the first place, we do not have a situation where only one word was changed; rather, the entire section has been re-written and there have been numerous changes in words used. In the next place, practically all judicial construction of the word \u201cdeemed\u201d is contrary to the argument of appellant. Only one case is cited holding with appellant, viz., the North Dakota case of Kleppe v. Odin Township, 169 N.W. 313, where the district court construed the word \u201cdeemed\u201d to be a disputable presumption. In Harder v. Irwin, 285 F. 402, the District Court for the Northern District of New York, said:\n\u201cThe word \u2018deemed\u2019 has been judicially defined. In Leonard v. Grant (C. C.) 5 Fed. 11, 16, it is stated that:\n\u2018 \u201cDeemed\u201d is the equivalent of \u201cconsidered\u201d or \u201cadjudged,\u201d and therefore whatever an act requires to be \u201cdeemed\u201d or \u201ctaken\u201d as true of any person or thing, must, in law, be considered as having been duly adjudged or established concerning such person or thing, and have force and effect accordingly.\u2019\n\u201cIn U.S. v. Doherty, (D. C.) 27 Fed. 730, 734, it was thus defined:\n\u2018 \"\u2018Deem\u201d means \u201cjudge;\u201d \u201cdetermine on considera-uon.\u201d The primary meaning of the word is to form a judgment; to conclude on consideration.\u2019 Words and Phrases, First Series, \u2018Deem.\u2019\n\u201cThere are several other judicial expressions of the word \u2018deemed,\u2019 among them being in Walton v. Cavin, 16 Q.B. 48, 81, where it was stated that where a person was \u2018deemed\u2019 to be a soldier it must be understood to mean that he was thereafter to be taken in that capacity. Also, in Cardinel v. Smith, 5 Fed. Cas. 45, 47 No. 2, 395, the statute provided that dealers in canned goods under certain circumstances shall be deemed to be manufacturers and the court stated that they were to be held liable as manufacturers, notwithstanding that they were not such in fact. Other cases to the same effect are Lawrence & Co. v. Seyburn, 202 Fed. 913, 121 C.C.A. 271; Michel v. Nunn (C.C.) 101 Fed. 423, 424.\u201d\nIn H.P. Coffee Company v. Reconstruction Finance Corp., 215 F. 2d 818, the question of the meaning of the word \u201cdeemed\u201d arose and the court stated:\n\u201cIt is said that the word must be construed as raising only a rebuttable presumption that the subsidy has been paid on all coffee which an importer has in his terminal inventory, and that this presumption disappears on proof by an importer that, in fact, he has received no subsidy payments thereon. This contention flies directly into the teeth of the generally accepted definitive import of the word \u2018deemed\u2019 and almost unanimous judicial determination that the word, when employed in statutory law, creates a conclusive presumption. E.g., United States v. Davis, 1 Cir., 50 F.2d 903; Harder v. Irwin, D.C., 285 F. 402; Intagliata v. Shipowners & Merchants Towboat Co., Cal. App., 151 P. 2d 133, subsequent opinion 26 Cal. 2d 365, 159 P. 2d 1; King v. McElroy, 37 N.M. 238, 21 P. 2d 80; Commonwealth v. Pratt, 132 Mass. 246. See 11 Words and Phrases, Deem, pp. 478 - 482. Absent qualifying language, or ambiguity, we must give to the word \u2018deemed\u2019, as employed in the emphasized language of paragraph 1 (f) (iii), its natural import.\u201d\nWe cannot agree that there is significance in the use of the word \u201cdeemed\u201d rather than \u201ctaken\u201d, and accordingly find no merit in this contention, holding that the language of the act creates a conclusive presumption as to the value of the corporation\u2019s no-par stock.\nIt is next asserted that if the tax act in question created a conclusive and irrebuttable presumption, Amendment Fourteen to the United States Constitution is violated, and the act is unconstitutional. Appellant calls attention to the cases of Schlesinger v. Wisconsin, 270 U. S. 230 (1926), Heiner v. Donnan, 285 U. S. 312 (1932), and Mourning v. Family Publication Service, 411 U. S. 356. In Schlesinger, the court held that a conclusive statutory presumption that all gifts of a material part of a decedent\u2019s estate made by him within six years of his death were made in contemplation of death, created an arbitrary classification and conflicted with the Fourteenth Amendment. In Heiner, the court held a congressional act violative of the Fifth Amendment, said act creating a conclusive presumption that gifts made within two years prior to the death of the donor were made in contemplation of death, and we cannot see that Mourning (which dealt with the Truth in Lending Act) adds anything to the holdings in those cases. Of course, none of these cases dealt with a franchise tax and the most recent case cited by appellant, Vlandis v. Kline, et al., 412 U. S. 441, decided by the United States Supreme Court on June 11, 1973, deals with the residency of students attending state supported institutions in Connecticut. In fact, we find no recent case involving a franchise tax. Both appellant and appel-lee agree that in Shanahan v. United States, 447 F. 2d 1082, the Circuit Court of Appeals for the Tenth Circuit, in construing the internal revenue statute, stated that a conclusive presumption will be upheld so long as it is reasonable. Appellant recognizes that there are statutes in other jurisdictions applying a value to shares of no-par stock, but asserts that this fact is not persuasive.\nLet it be remembered that appellant voluntarily brought itself within the statute at issue, having full knowledge of the law as it had existed since 1953, it having paid the tax on par value stock until 1969. In H. P. Coffee Company v. Reconstruction Finance Corp., supra, the complainant contended that if the term \u201cdeemed\u201d was construed as a conclusive presumption, such construction would conflict with the due process clause of the constitution. Though this case dealt with a contract between the parties, we think the observation of the court, in holding contrary to this contention, was interesting. The Court said:\n\u201cHaving brought itself within the terms of the provisions by its own voluntary act, complainant cannot say that the logical result offends against the due process clause.\u201d\nActually, the question here at issue was decided adversely to the present appellant when we disagreed with its argument relative to there being a difference between the meaning of the words \u201cdeemed\u201d and \u201cbe taken\u201d, and accordingly held that \u201cdeemed\u201d creates a conclusive presumption. Such construction leaves the holding in Margay controlling.\nFinally, it is contended that if a conclusive and ir-rebuttable presumption as to the value of no-par stock was created by the statute, then said franchise tax as applied to corporations with no-par stock is unconstitutional since it creates a discriminatory classification between tax assessment at par as opposed to no-par stock because no practical or legal differences exist between the two classes of stock. The view taken by appellant is contrary to Roberts & Schaefer Co. v. Emmerson, supra, and New York v. Latrobe, 279 U.S. 421. We have already quoted from Emmerson, and in the last mentioned case, the court said:\n\u201cIt is said that the tax computed on the number of non-par shares at a flat rate may bear little relation to the property and business of the corporation within the state and consequently corporations having like property and business within the state, but with a different non-par capitalization, may be required to pay a different tax. But this is equally true of corporations having par value stock, even though full value be paid in on its issue. Par value and actual value of issued stock are not synonymous and there is often a wide disparity between them. Par value has long been a familiar basis of computing a franchise tax upon foreign corporations, and when otherwise unobjectionable has been repeatedly upheld by this Court.***\n\u201cThe kind and number of shares with which a foreign corporation is permitted to carry on its business within the state is a part of the privilege which the state extends to it and is a proper element to be taken into account in fixing a tax on the privilege. It may be assumed that if the doing of business with a greater number of non-par shares is not deemed by the taxpayer to be a valuable privilege, it will reduce the number of shares as the statute permits. ***\n\u201cNor is such a tax to be deemed a denial of equal protection because a different measure or method of computing the tax is applied to corporations having non-par stock from that applied to corporations having stock of par value.\u201d\nHere, too, if appellant, as stated in its point for re-ver s\u00e1l, feels that there is no difference between the two classes of stock, it is, of course, free to return to the par value stock. And, if there is no difference, the question immediately arises as to what potential benefits necessitated the change. Without going into detail, suffice it to say that we do not agree that there are no longer any differences between the two types of stock; while the differences may not be as distinct or as easily ascertainable as at the time of Roberts & Schaefer Co. v. Emmerson, supra, and State v. Margay Oil Corporation, supra, nonetheless, differences do remain. For instance, one of the vital differences between par value and no-par value stock lies in the method of fixing the consideration to be paid by the subscriber to the capital of the corporation, i.e., a main difference is that par stock must be issued for at least its par value, while no-par stock may be sold for any consideration fixed by the directors. At any rate, we do not detect such changes as would vitiate the Supreme Court decisions in Emmerson and Margay; if, however, we are incorrect in this conclusion, the proper place for nullification of the rulings there rendered is the United States Supreme Court \u2014 not this court.\nAffirmed.\nFogleman J., concurs.\nThe original suit was brought against A. B. Hervey, Jr., Acting Director of the Department of Finance and Administration, but was revived in the name of Richard R. Heath, Director of such department as the successor in office to Hervey.\nPertinent provisions of those sections read as follows:\n\u201cSection 4. ***Each corporation, the tax for which is fixed in lump sums by this act, which shall fail or refuse to file its report or shall fail or refuse to furnish the information necessary to the proper determination of the tax hereunder on or before June 20th of the reporting year, shall pay the maximum tax herein provided for corporations of this particular classification, and each other corporadon which shall fail or refuse to file its report or shall fail or refuse to furnish the information necessary to the proper determination of the tax due hereunder on or before June 20th of the reporting year, shall pay a tax at the rate herein provided based on its entire outstanding capital stock whether or not all or only a part of its capital is employed in Arkansas, and the Commissioner shall accordingly, on the basis of information available to him from whatever source, including prior reports, charge and collect such tax. ***\n\u201cSection 5. In any case in which the par value of the shares of a corporation is required to be stated in any report required' under the provisions of this act, if such shares are without par value, the number of such shares shall be stated, and, for the purpose of computing the franchise tax by this act prescribed, such shares of no par value shall be deemed to be of the par value of Twenty-five Dollars ($25.00) per share.\n\"Section 6. The Commissioner, from the facts reported and from any other facts coming to his knowledge bearing upon the subject, shall compute the amount of the tax by each of said corporations at the applicable rate or rates hereinbefore provided, *#*\u201d.\nFrom appellant\u2019s brief:\n\u201cWe are also familiar with statutes from other states which apply a presumed value to each share of no-par stock which said statutes are completely irrelevant to a correct interpretation of Ark. Stats. 84-1837. We are not challenging the constitutionality or reasonableness of those statutes. Such statutes are not persuasive in this case unless appellee can prove the constitutionality and reasonableness of each of those statutes, as applied to the facts and law involved herein.\u201d", "type": "majority", "author": "Carleton Harris, Chief Justice." }, { "text": "John A. Fogleman, Justice,\nconcurring. I concur because Act 304 of 1953 was a comprehensive new act governing franchise taxes and not simply an amendment or, for that matter, even a re-enactment of Act 367 of 1923, which was somewhat more limited in scope. Otherwise, since the word \u201cdeemed\u201d is not necessarily completely synonymous with the word \u201ctaken,\u201d I would attach great significance to the change of words.", "type": "concurrence", "author": "John A. Fogleman, Justice," } ], "attorneys": [ "Cockrill, Laser, McGehee, Sharp & Boswell, John E. Bailey and William G. Duck, for appellant.", "Walter Skelton, Karl Daley Glass Jr., John F. Gautney Jr., Alexander W. Nisbet, Dewey Moore Jr., and /. R. Nash, for appellee." ], "corrections": "", "head_matter": "GULF OIL CORPORATION v. Richard R. HEATH, Director of the Department of Finance and Administration\n73-126\n501 S.W. 2d 787\nOpinion delivered December 3, 1973\nCockrill, Laser, McGehee, Sharp & Boswell, John E. Bailey and William G. Duck, for appellant.\nWalter Skelton, Karl Daley Glass Jr., John F. Gautney Jr., Alexander W. Nisbet, Dewey Moore Jr., and /. R. Nash, for appellee." }, "file_name": "0604-01", "first_page_order": 626, "last_page_order": 635 }