*1 302 at that time for he made no demand percent because

bility he took. We receive from files was to fees Milligan attorney under another contention purpose hold that Milligan’s presents evidence. There audits into Rule 408 for admitting expense them. court in the trial receiving was no abuse of discretion by and remanded. Reversed

ACW, INC.; and United Corporation; Phillips Development Inc., Florists, and All Behalf of Themselves On Wholesale WEISS, Director Situated v. Richard Others Similarly Administration, and Theis Finance & Department John 96-894 Arkansas Court of Supreme delivered

Opinion June 11, 1997*; denied rehearing September [Appellants’ petition denied for rehearing September appellees’ petition 1997.] * J., grant. Glaze, would *3 Fox, Holiman, Davis RichardE. M.

Timothy Gregory Hop- kins, for appellants. Carson, Counsel,

Beth Briscoe Chief A. Richard appellees Weiss H. Theis. *4 John Ray Thornton, are the named Appellants plain- Justice. a 3,100

tiffs in certified class of approximately seek- corporations of a refund ing income taxes levied Act 1052 of corporate ACW, Inc.; 1991. the Each of named plaintiffs, Phillips Develop- Florists, ment Inc., and United Wholesale Corporation; filed Arkansas state income-tax returns Arkansas net taxable reporting $100,000. income excess of Each at paid corporate the flat rate of 6V2% on their entire net income. After seeking refunds the named filed a verified individually, claim plaintiffs $100,000 of of taxes on repayment their first of net overpayment income, taxable on of behalf themselves and others situ- similarly ated. contended that the They assessment would a proper $100,000, rate the first graduated as is applied corporations $100,000 net with of taxable income or less. remedies, appellants their administrative

After exhausting court, Act 1052 (1) which alleged: chancery filed complaint Const, V, 38; the Act (2) Ark. art. the of violates provisions § $100,000 the first of rates on of graduated application requires alternative, if the Act income, that it is (3) in the ambiguous; $100,000 the first flat rate on levies a 6lh% unambiguously results in a confis- income, the Act (4) it violates protection; equal to Ark. R. certification class pursuant tax. They catory requested Const, refunds, XVI, asked for art. 23 and Ark. Civ. P. § relief, a common fund. the establishment injunctive certification, the but affirmed class The trial court granted and denied the flat rate the decision of Commissioner imposing the the Act was relief. It found that subject pro- the requested Const, V, 38, that art. which passage visions of Ark. requires § to an emergency allowing imposition of the Act be response each House of the General a three-fourths vote of of such a tax by had been stated. Regarding and that an emergency Assembly, the lan- the trial court acknowledged ambiguity argument, results, read to reach three of the statute could be divergent guage that the offered by but concluded interpretation appellees, and Administration and the Commis- of Finance Department Revenues, found that court should Finally, sioner prevail. violate the statute did not equal protection. there was not (1) contend

On appellants appeal, of the tax as provided by emergency allowing Const, passage 38; V, and should be the statute is (2) art. ambiguous inter- (3) resolved in favor of Department’s taxpayer; tax and violates the Act results in a confiscatory equal pretation the trial court’s finding agree protection. of the under the Arkansas Constitution for adoption requirements met, had been and affirm on this statute point. that the with the trial court’s statute

While we finding agree results, we with its read to reach disagree ruling could be divergent and we should prevail; Department’s interpretation *5 reverse on this point. that contending we consider cross-appeal,

Finally, appellees’ the certification of invalidates the doctrine of sovereign immunity

307 in the of of refunds this case. On basis class seeking taxpayers Tedder, 495, our recent decisions State v. S.W.2d 341, Staton, 325 and Ark. S.W.2d (1996), State we (substituted (1996) rehearing), opinion granting agree ordered, that should been and no class certification have appellees reverse certification.

The Existence an Emergency of We first address trial court’s determination of the exist- of an ence that the emergency. argue Appellants by imposed Act 1052 of 1991 must fail it because was not to an response the tax allowing the votes of three- emergency passage fourths of the members of each house of the General Assembly. with the trial court state agree clause did emergency an sufficient to meet the emergency of the Arkansas requirements V, 1052, Constitution art. under 38. Section 9 of Act the emer- § Act, clause of the gency provided following: It is found and hereby determined General Assembly additional funds are necessary provide higher educa- quality tional which are accessible programs by all of the segments popu- state; lation in the that recent studies have shown in the year must workers have a minimum of (14) fourteen years force; education to function in the work state is in des- perate force; need of training, and retraining work upgrading that this act will provide the funding necessary to provide every citizen with an opportunity participate vocational-technical training college transfer and that it is programs; for necessary this act to become effective immediately provide funding needed Therefore, for these as soon programs as possible. emergency hereby declared to exist and this act being necessary health, the immediate preservation peace, and public shall be in full safety force effect and from and after its and passage approval. For a of the thorough understanding provisions require- Const, V,

ments art. a brief review of its historical At the time background the article was required. as adopted Amendment 19 in Arkansas was in the throes of financial More than 165 emergency. million dollars of road highway default, bonds were in improvement checks drawn *6 308 The session of worthless. regular were nearly

state treasury half, established cut state of 1933 spending General Assembly checks, a constitutional and fund to off proposed sinking pay evidence of of bonds or other the issuance amendment limiting amendment, Amendment That together indebtedness. and overwhelming adopted by were by legislature, proposed 6, 1934. election on November at the majorities general for and with a notable its other exception Among provisions, state, Confederate debts of just pensions, paying Amendment for educational highway purposes, expenditures million two one-half exceeding, expenditures prohibited the votes of biennial “unless by dollars any approved during period each House of the Gen- the members elected to three-fourths of eral Assembly.” also that:

Amendment 19 provided excise, or for privilege personal None of rates property, taxes, increased the General Assembly now levied shall be electors thereon voting after the qualified except approval election, the votes of three- at an or in case of emergency, each House of the General fourths of the members elected to Assembly. an that this amendment does not either emer-

We observe require The an vote to new classes of taxes. or extraordinary adopt gency to increased rates for limitations of the amendment apply excise, in existence at the taxes personal property, privilege, taxes, sales and the amendment was Other such as time adopted. revenues, taxes, or other means of such as use increasing repeal tax liabilities on deductions computation applicable taxes, of emer- without declaration may any adopted vote. For and without an extraordinary majority example, gency, are we have decided that rates of income taxes while higher an included in the class of taxes three- requiring extraordinary Amendment Hardin v. fourths under majority adoption Co., & 202 Ark. Fort Smith Couch Bedding is not we have also determined that a three-fourths vote (1941), federal taxes a deduction from necessary exemption repeal or. Remmel, taxes, state income Morley used computing 434, 221 S.W.2d *7 of tax

The selective of certain classes specific targeting increases Amendment 19 a for may perhaps express preference revenues, of but not a other means does establish raising public revenues for raising significant policy opposed appropriate education, such and the of as payment public purposes, highways, To the of our state debts. contrary, public clearly public policy favors schools and sustaining necessary public defraying expenses 1927, of For as we as held that long government. example, ago the maintenance of institutions of was a education neces- higher of did not an sary expense government require extraordinary from vote both houses of the General Hudson majority Assembly. 175 Ark 299 S.W. 1000 Higgins, In a fine of cases clauses long interpreting emergency in accordance with Amendment 7’s on initia adopted provision matters, tive referendum we have deference given great to leg islative determination whether exists. Such emergency clauses must state not a emergency but grave problem, because the effect of the clause tois allow an act to become effec tive there must also upon be a a passage, of need showing promptly begin circumstances that have response gener However, ated it not essential emergency. emer discovered gency suddenly or remedy immediately Polk, effective. In Priest v. 322 Ark. 912 S.W.2d 902 (1995), we out that the revision of our pointed state’s Constitution was described as an even properly emergency, though problems discovered, were not remedies recently would not bring immediate results. The following articulated reasoning U.S. District States, Court of Lumber Co. Oregon v. United Daugherty is useful for (1956), our F.Supp. consideration:

Legislative are those emergencies situations where the common good public interest is declared to be legislatively paramount to individual interests. Common knowledge tells us legislative action effective has on immediately, legion occasions been to correct an adopted adverse interest of public long standing. Id. at 581. for the is enacted purpose

Emergency legislation Sutherland Statu Norman Singer, conditions. grave alleviating J. remedial 71.06, shows a at 282. If legislation Construction tory another Id. As construction. it will be given generous purpose, immediate action. stated, must show necessity court facts Comm’n, S.W.2d v. State Outdoor Advertising Highway Osage 1984). 566 (Mo. App. constitutional, and the burden are

Statutes presumed Ports of the statute. the challenger otherwise upon proving Tucker, 749 (1996). Petroleum Co. v. that there was no bear the burden Here proving appellants emergency. that it inadequate may many years recognize require *8 realization of an there is a of education before legislative

support and societal from the economic that has resulted emergency that educa- education. We also observe of that inadequate impact As by cannot be corrected immediately. expressed tional problems access to in Act the is to the clause goal provide emergency that fourteen of education all of the so years segments population that the of time the 2000. We note length is available by year and rational is in itself strong to address required problem basis for started toward a solution. getting Const, V, 38, art.

In of the of Ark. light history § state, emer of we hold that an our policy expressed public existed, the Act the General to by Assembly pass gency enabling the entire vote of three-fourths of membership extraordinary each house of the General of Assembly. that the

We have also considered argument appellants’ to fail of the revenues will be allocated measure must because 3% and the Central Services Officers Fund State Constitutional tax is of revenues to be derived from this Fund. The application in which to review and action years subject legislative during overhead costs can be the revenues are realized. Some expected, court, once the threshold and as out the trial question pointed resolved, lacked an the trial court of the existence of emergency those in the to substitute its authority priorities expressed statute. it should

Finally, emphasized adoption not of their clause does emergency deprive people rights McCollum, vote. refer measure to a any popular Jumper 837, 18 S.W.2d 359 (1929).

Statutory Interpretation next that even if the of Act 1052 met Appellants urge passage V, 38, of art. its either requirements application appellees Act, reflects a of the of the or in the misinterpretation language alternative, tax, results in an unconstitutional of a levy confiscatory well as the as taxation in viola- imposition arbitrarily unequal tion state and federal equal protection guarantees.

Each filed Arkansas state income-tax appellant returns report- $100,000.00 Arkansas net taxable-income tax ing in the excess of Each year. income tax at flat rate per paid corporate on their refunds, entire net income. Each sought the cor- contending rect tax should based on a tax rate liability graduated 1% up $100,000.00 income, on the to 6% first of net identical with that $100,000.00 a net applied income of corporations having or less; and that the final bracket of should 6V2% “on net apply, $100,000.00. . . .” exceeding contend that the Appellees statute creates two distinct classes of those taxpayers, making $100,000.00 less, $100,000.50 or and those more, making that those in the second are more group pay taxes on required $100,000.00 their first of income than of those in the first required *9 group.

Act 1052 of codified at Ark. Ann. Code 26-51-205 as (Repl. 1992), follows: provides

(a) Every corporation organized under the laws of this state shall pay an income tax annually with on or respect carrying doing business on the entire net income of the . corporation,. .received corporation during income on the year, following basis: $3,000 (1) On the first of net income or any part thereof............................................ 1% $3,000 On the second net income or part thereof .. any 2% $5,000 On the next of net income or any part thereof.. 3% $14,000 On the next of net income or any thereof. part 5% thereof, $75,000 but income or any part of net On the next $100,000 6% ............................. exceeding

not $100,000, six and one- a flat rate of exceeding On net income (2) entire net income. shall be (6V2 %) applied half percent (b) foreign corporations. in subsection applies Similar language that “the statement language the trial court’s with We agree read in . . . when (2) conjunction in the subsection (a) set fourth of the three results can be read to reach any . . . with sections (a)(1) no. 35.” exhibit in the set forth plaintiffs indicate in section (a)(1) no There is absolutely language $100,000 net the first tax on shall any pay any corporation that section. taxes other than provided graduated the statute following: “Every corpo- To contrary, provides then out the basis:” and sets . .on following ration. . .shall pay. to all With- schedule clearly applies corporations. graduated of (a)(1), clear and schedule reference to the unambiguous out any reads as follows: On “(2) of the next sentence the first phrase $100,000, a flat rate of . . . shall 6V2% net income exceeding . . .” applied. statute, the in the note that until this interpretation

We point render the statute but the next five words remains unambiguous, the entire net income.” We words are “. . .to Those ambiguous. take over that those words are next told precedence by appellees scale of taxes con- (a)(1) graduated language repeal section, the effect that the charged tained in that with taxpayer entire net income. ...” How- “to the with a 6V2% applied ever, becomes even more strained when this interpretation must in the section dealing foreign corporations same words than “the entire net other as meaning something interpreted income.” where have determined that a statute is ambiguous constructions, it or where such

it is to two or more open that reasonable minds might disagree obscure or doubtful meaning Little Rock v. Arkansas as to its or be uncertain meaning. City of Comm’n, We hold Corp. *10 inconsistent and the before us is internally ambiguous. statute to we must effect the

When a statute give ambiguous, & intent. Tube Conduit Corp. legislative Omega Maples, 489, Therefore, our review now turns to Act, to make an examination of the whole reconciling provisions harmonious, consistent, in an them and sensible effort give 493, effect to Id. at 850 S.W.2d at 319. To determine every part. intent, this looks to as court such matters legislative appropriate the and the matter legislative history, language, subject 495, at The involved. Id. S.W.2d at 320. manner in which a statute has been executive administrative by interpreted considered, officers also be and will not be may unless disregarded Id. clearly wrong. of Act

Following official Arkansas adoption Tax Handbook Legislative Council of prepared by Legislative the Arkansas General for the 1992-93 and 1994 set Assembly years out income taxes as enacted the Act corporate as follows: $3,000

On the first of net income.................... 1% $3,000 theOn second of net income................. 2% $5,000 On the next of net income................... 3% $14,000 the next On of net income.................. 5% $75,000 the next On of net income but not exceeding $100,000 .......................................... 6% $100,000 all net On income in excess of .............. 6.5% In a further reference to the effect of Act 1052 of the hand- “ — book contained the Act 1052 of 1991 following: 6.5% $100,000.” entire net income applies over We note with interest the 1991-1993 Official Biennial Arkansas, of State of Budget director prepared appel- lee, Administration, Finance Department as at abstracted “ - 9, contains the page on 16: following Act 1052 summary page Increases the income tax corporate on with net corporations $100,000. income The new tax exceeding flat on the 6.5% net $100,000.” taxable income that exceeds

The above official documents that suggest legislative intent was a flat impose 61A% excess $100,000. these earlier of the Notwithstanding interpretations *11 tax rate Act, decided 6V2% finally Department $100,000 net for the first schedule the graduated repealed The result is it with 6V2% higher levy. replaced itself, inter- the executive and administrative the statute like and that the minds could differ show that reasonable pretations statute clearly ambiguous. stated that a tax cannot

We have often imposed and that words indicating purpose, any except express in favor of the or doubts must be resolved taxpayer. ambiguity Inc., 214, 876 S.W.2d 583 v. Active 317 Ark. Leathers Realty of the intent and con Based our review legislative upon of tax decisions sistent with our own relating interpretation measures, we find that the statute graduated applying imposes $100,000 income, and a flat the first of net to all corporations $100,000. The uni the entire net income above tax of on 6V2% all resolves the issues of tax rates on form corporations application taxation and violations of alleged equal protection confiscatory guarantees.

Class Certification there no that because was argue cross-appeal Appellees the chancellor lacked waiver of immunity, authority sovereign that did not file refund claims. the members of the class certify the order class certification. and reverse granting agree, state, suits Our constitution against prohibits Const, however, V, 20; this art. sovereign immunity may § Staton, limited circumstances. State v. 325 Ark. waived in certain 344, allows a at 942 S.W.2d at 805. The legislature taxpayer collected tax after that tax sue the state for an only improperly denied. has a refund and that has been request payer requested In State v. 26-18-507(e)(2)(A) 1992). Ark. Code Ann. (Repl. § Tedder, at 932 S.W.2d at we determined 326 Ark. denied a refund who has has been requested only taxpayer a waiver of under this has obtained sovereign statutory provision “A trial court no where suit is jurisdiction immunity. acquires there is no waiver of immu one the State and sovereign against Staton, at at 805. State nity.” case, the named have fol In instant plaintiffs Ark. Code Ann. 26-18- lowed the outlined in procedure for a our refund. Under 507(e)(2)(A) by applying prior holdings, named for whom are only persons sovereign plaintiffs *12 Therefore, been waived. the order class has immunity granting certification must be reversed.

Conclusion sum, In we hold that Act 1052 of the 1991 meets require- V, ments of art. 38 of Arkansas Constitution. We observe § consistent, that its be can reconciled into a ambiguous language harmonious, and sensible the same interpretation provides tax rates all both graduated for- upon corporations, statute, and domestic. We hold that the so eign does interpreted, not violate constitutional provisions equal protection; we hold that finally, the doctrine of bars the sovereign immunity a certification of class of to seek refunds of taxes. taxpayers in affirm and reverse and remand in for part, further part consistent with this proceedings opinion. dissent. JJ., Glaze,

Newbern dissents in J., concurs in Brown, part part. L. in Justice, and dissent- Brown, concurring part

Robert in I with the ing part. agree on direct majority’s opinion appeal, but I would affirm the cross-appeal.

The court’s decision with respect cross-appeal gives in this a case plaintiffs hollow the mistake victory repeats that was Staton, made the substituted in State v. opinion 942 S.W.2d 804 dissent in that case fore- My told that this would work to who precedent deny had taxpayers been assessedan tax viable illegal to reclaim only those remedy taxes. As an is it estimated in this case that example, individual $1,060 have at risk in corporations this It litigation. would be for to cost-prohibitive take on the corporation expense filing claim, claim, administrative and then denial of upon relief the trial court pursue through and on The bottom appeal. fine that the State has motivation take the most every aggres- statute, it now a virtual certainty tax stance on given sive will bounty extreme reap the most interpretation that even tax revenue. illegal the notion sovereign decision in Staton hinged

Our of its illegal the State from consequences immunity protects classactions will bank- on the actions and also porous premise Staton, dissent in sovereign I stated in the State. As my rupt its the General Assembly by waived was sufficiently immunity hence, 1992); Ann. 26-18-507 (Repl. enactment of Ark. Code of this of no light rule is consequence the voluntary payment Moreover, toward will not State pushed refund statute. still actions. Individual these class taxpayers bankruptcy claims should the their interpretation would have prove in their favor. decided to remedy many illegal

A classaction is way practical the most because only before the court today, taxes like one *13 the arduous burden of undertake citizen would civic-minded nominal could relief when the recovery obtaining judicial Bosnick, 45, S.W.2d v. 306 Ark. 811 The death of at best. Pledger families and of this left the companies 286 has (1991), taxpaying of Finance and the will of the Department State subject- action I would class without a permit Administration remedy. to proceed. view, I must dissent. In my Justice, dissenting. Glaze, Tom trouble for and bodes decision is disturbing

the majority precedent short, that Act 1052 of 1991 is In I submit Arkansas taxpayers. 5, to Article Sec- it was enacted contrary unconstitutional because Constitution, Amendment 38, as amended of the Arkansas by tion 19.

First, Constitution in mind that the Arkansas it must be kept and not a legislature. is a limitation grant power upon 272, Co., S.W.2d 638 283 Ark. 675 v. Horton Erxleben Printing mentioned, to inter- this court is called on As (1984). previously terms, 19, and in relevant provision Amendment simple pret taxes from increasingpersonal except the General Assembly prohibits the General increase, or in case the voters emergency, after approve vote. a the increase by Assemblyapproves three-fourths

317 Here, in the voters have not an increase approved personal taxes, is, so the did an exist that authorize issue would emergency a General under Amendment 19 enact measure Assembly a increase In three-fourths vote to such taxes? by determining 19, what is meant of Amendment this hmiting language court should look to the and state of when history things existing the constitution was framed Glover v. adopted. Hot Springs Club, 544, Kennel Ark. 323 S.W.2d 902 v. (1959); Lybrand 298, 296 S.W.2d 729 With this Wafford, princi- mind, in this court must look to the situation ple confronting Arkansas when Constitutional Amendment they people adopted — so, 19 in and when it does the conclusion is obvious Arkansas and all were states fighting depression. Unquestiona- Arkansas voters Amendment 19 bly, the increase passed prohibit them, taxes (1) when the except (2) emer- people approved when the General gencies, enacted an Assembly increase three- fourths vote. other,

The majority mistakenly relies cases from opinion that lend no jurisdictions on Amendment 19’s but light history, instead espouse general principles largely concerning statutory Here, construction. the reader must in mind that this court keep is asked to on the Arkansas Constitution. expound

The also looks to majority Arkansas’s Initiative and opinion Referendum Amendment 7 to define meaning emergency and in Polk, cites to a support Priest v. plurality opinion, Ark. However, 912 S.W.2d 902 (1995). this court’s decision in Burroughs Ingram, S.W.2d 319 (1995), *14 and, to be the law appears in this prevailing court held Burroughs, the word in its most “emergency,” means some accepted usage, sudden or a unexpected creates need for immedi- happening ate action.

Act 1052 no reveals “sudden or unexpected happening,” which its the General required To passage by the con- Assembly. 9 of Act trary, recites merely General Assembly studied State’s education and higher quality its stud- programs that, ies showed in the year workers will need more educa- tion and the State is in need of desperate training, and retraining, Act reads that the The Act further the work force.

upgrading to citizen every necessary “will provide provide funding or in training to vocational-technical an opportunity participate it is for this Act to necessary and transfer programs, college for needed to funding become effective immediately provide these as soon as possible.” programs sum, I first to that Act 1052’s

In while am the concede or one, that it cannot fairly a the fact remains is lofty objective all a to train that the establishment of be said program reasonably a or 2000 is goal citizens function concept to workplace event. or that resulted from “sudden” “unexpected” conclusion, to final In I must the majority opinion’s respond this that Act 1052 is court’s holding emergency suggestion their refer any not rights measure does deprive people First, that it is much I note the obvious measure to a vote. popular Act tax increase to the for to refer 1052’s too late now citizens the Arkansas vote of SeeAmendment Constitu- the people. Second, tion. and more the majority’s suggestion important, decision, that, under the Arkansas underscores today’s cryptically for tax-increase have the burden to remain watchful now people future, well- like Act 1052 in the organized, measures such funded otherwise to initiate referendums on prepared measures. difficult, that,

It if not me to believe when impossible, intended an the voters of Arkansas Amendment they passed authorize the could be so declared so as to Gen- emergency easily eral a tax increase without vote of Assembly approve peo- did intend to establish a situation Nor they procedure ple. to refer tax-increase Arkansas voters would forced whereby their on such taxes. The measures in order to ensure to vote right of Amendment 19 and its term majority opinion’s interpretation view, broad, and is much error. too “emergencies” my reasons, I would For the above reverse dismiss. Newbern, this dissent. joins J.,