Billy Joe Russell v. State of Arkansas
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SUPREME COURT OF ARKANSAS
No.
CR06-180
Opinion Delivered November 2, 2006
BILLY JOE RUSSELL,
APPELLANT,
VS.
AN APPEAL FROM THE CIRCUIT
COURT OF PULASKI COUNTY,
ARKANSAS, NO. CR 2005-388,
HONORABLE BARRY SIMS,
CIRCUIT JUDGE,
STATE OF ARKANSAS,
APPELLEE,
AFFIRMED AS MODIFIED.
TOM GLAZE, Associate Justice
We are asked in this appeal to address an issue of first impression: in a theft-byreceiving case, should the sales tax paid on an item be included when determining the value
of the item stolen? Appellant Billy Joe Russell was charged with theft by receiving; the
charges stemmed from the theft of a Sears generator that had been purchased by Morris
Gilmore. Gilmore testified that he bought the generator on January 18, 2004, and that it cost
$499.99, plus $49.99 for an extended warranty and $39.19 in sales tax, for a total of $589.17.
The State introduced into evidence Gilmore’s sales receipt, which reflected these amounts.
At the conclusion of the State’s case, Russell moved for a directed verdict, arguing
that the State had not proven that the value of the stolen property was in excess of $500.
The trial court denied Russell’s motion, giving its reasons in the following colloquy:
DEFENSE:
[W]hat was actually paid for [the] goods was $589 and some
change as the gentleman had testified. That’s the cost of that
generator. The value of that generator is $499.99.
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COURT:
Well, okay. If he had taken it back to Sears, he would have
gotten $589.17 back, so I’m denying your motion on that.
DEFENSE:
I don’t know . . .
STATE:
Your Honor . . .
DEFENSE:
Judge, I just don’t know if that is true. Number one, he’d had
that generator for over six months.
COURT:
That’s what he testified to.
DEFENSE:
If there’s no one from Sears to testify that they would have
accepted it —
COURT:
Well, I’m going with what he testified to on that because I’m
certain that that’s the way it would be.
(Emphasis added.) The trial court denied Russell’s renewed directed-verdict motion at the
conclusion of the trial and convicted Russell of theft by receiving, sentencing him to ten
years in prison.
On appeal, Russell challenges the sufficiency of the evidence supporting the verdict.
A motion to dismiss at a bench trial and a motion for a directed verdict at a jury trial are
challenges to the sufficiency of the evidence. See Ark. R. Crim. P. 33.1 (2004); Graham v.
State, ___ Ark. ___, ___ S.W.3d ___ (Feb. 16, 2006). When a defendant challenges the
sufficiency of the evidence that led to a conviction, the evidence is viewed in the light most
favorable to the State. See Gamble v. State, 351 Ark. 541, 95 S.W.3d 755 (2003). Only
evidence supporting the verdict will be considered. Id. The test for determining the
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sufficiency of the evidence is whether the verdict is supported by substantial evidence, direct
or circumstantial. Id. The question of what constitutes the “value” of stolen property,
however, is a question of law, which this court reviews de novo. See Winkle v. State, ___ Ark.
___, ___ S.W.3d ___ (May 11, 2006).
As noted above, Russell was convicted of theft by receiving, a Class C felony. A
person commits the offense of theft by receiving if he or she “receives, retains, or disposes
of stolen property of another person: (1) [k]nowing that the property was stolen; or (2)
[h]aving good reason to believe the property was stolen.” Ark. Code Ann. § 5-36-106(a)
(Repl. 2006). The offense is a Class C felony if “[t]he value of the property is less than two
thousand five hundred dollars ($2,500) but more than five hundred dollars ($500)[,]”Ark.
Code Ann. § 5-35-106(e)(2)(A) (Repl. 2006), and a “Class A misdemeanor if otherwise
committed.” Ark. Code Ann. § 5-36-106(e)(3) (Repl. 2006).
“Value” is defined, in pertinent part, as “[t]he market value of a property . . . at the
time and place of the offense, or if the market value of the property cannot be ascertained,
the cost of replacing the property within a reasonable time after the offense[.]” Ark. Code
Ann. § 5-36-101(12)(A)(i) (Repl. 2006). Our court has held that the State has the burden
of proving the value of the property stolen, and the preferred method of establishing value
is by expert testimony. Reed v. State, 353 Ark. 22, 26-27, 109 S.W.3d 665, 668 (2003); Ayers
v. State, 334 Ark. 258, 975 S.W.2d 88 (1998). However, value may be sufficiently
established by circumstances that clearly show a value in excess of the statutory requirement.
Reed, supra (citing Coley v. State, 302 Ark. 526, 790 S.W.2d 899 (1990)). This court has also
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held that the original cost of property may be one factor considered by the fact finder in
determining market value, as long as it is not too remote in time and relevance. Reed, supra;
Jones v. State, 276 Ark. 116, 632 S.W.2d 414 (1982).
Russell argues that the State failed to prove that the value of the stolen generator was
in excess of $500. He points out that Gilmore purchased the generator for $499.99, but
additionally paid sales taxes of $39.19 and bought an extended warranty for $49.99, making
the total of the purchase $589.17.
In his opening brief, Russell raises three basic premises. First, he asserts that, because
Gilmore paid Sears only $499.99 for the generator, that amount was the value of the item
when it was stolen; it was only after taxes and the purchase of the warranty were added that
the monetary figure exceeded $500. Second, he urges that the State failed to prove that the
generator was valued in excess of $500 at the time of the offense because there was testimony
that the generator showed signs of wear at the time it was stolen and re-sold to another
individual named Dennis Chudy. Third, he notes that the trial court ruled that if Gilmore
had taken the generator back, he would have received the full amount paid, but the State did
not introduce evidence regarding Sears’s return policy.
The State does not address this third point in its brief. However, this court has held
that it is not proper to leave a fact finder to the individual ideas of that fact finder to
determine value. See Cannon v. State, 265 Ark. 270, 578 S.W.2d 20 (1979); Kansas City
Southern Ry. Co. v. Biggs, 181 Ark. 818, 28 S.W.2d 68 (1930). The Cannon court further
held that, while a fact finder may apply its own common knowledge and experience in
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concluding that the requisite value has been shown, such experience and common
knowledge “are only to be applied to [the] evidence adduced.” Cannon, 265 Ark. at 273, 578
S.W.2d at 22 (citing Missouri Pacific R.R. Co. v. Benham, 192 Ark. 35, 89 S.W.2d 928
(1936)). Here, the State adduced no evidence pertaining to Sears’s return policies; therefore,
the trial court erred in concluding, based on its “certain[ty] that that’s the way it would be,”
that Sears would have refunded the full $589.17 to Gilmore.
We next address an argument that the State does discuss — namely, that the inclusion
of the amount paid for the sales tax and the warranty increased the “value” of the generator
over the $500 threshold for a Class C felony. We begin our analysis by pointing out that,
if the sales tax and warranty amounts are excluded, the State clearly failed to meet its burden
of proving that the stolen property was valued in excess of the felony threshold of $500,
because the generator itself cost only $499.99.
There is no Arkansas case law directly on point, but the jurisdictions that have
considered the issue have generally concluded that a sales tax is not truly a component of the
value of a good or service. See, e.g., State v. Kluge, 672 N.W.2d 506, 509 (Iowa Ct. App.
2003). Rather, the tax is a “separate amount collected by a retailer for the benefit of a
governmental taxing authority. It is a fee collected because of a transaction.” Id. At least
two lower courts in New York have likewise concluded that the value of stolen goods is the
market value of those goods as reflected by the purchase price, exclusive of any levied sales
taxes. See People v. Medjdoubi, 173 Misc.2d 259, 661 N.Y.S.2d 502 (1997); People v. Barbuto,
106 Misc.2d 542, 434 N.Y.S.2d 120 (1980); but see People v. Bazo, 139 Misc.2d 1003, 529
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N.Y.S.2d 432 (1988) (concluding that the market value of a stolen item was to be
determined by the “consumer-seller” market, in which a reasonable buyer would consider
the sales tax in determining what he or she would pay for the item).
In People v. Medjdoubi, supra, the court reasoned that the purpose of the theft statutes
“fixing the higher degrees of crimes is not related to regulating the economic market but to
assessing the scale of criminal operations by the defendant.” Medjdoubi, 173 Misc. 2d at 263,
661 N.Y.S.2d at 506. The court continued as follows:
The Legislature’s more serious treatment is predicated upon the worth of the
stolen property as reflected by the amount of its dollar value. Imposing greater
criminal liability dependent solely on whether or not sales tax is paid, has no
rational relationship to an assessment of the gravity of the larcenous act.
Rather, even where the consumer pays the tax, the thief would be arbitrarily
penalized because of an inappropriate focus on the added cost to the victim.
Such a focus on the economic loss to the victim is a proper consideration when
the court is determining what statutorily authorized sentence or amount of
restitution it will impose [citations omitted]. The Penal Law does not provide
such a process for classifying the level of crime and its attendant criminal
penalties. A defendant, found guilty of higher felony level charges due to the
addition of sales tax, would be subjected to greater punishment in no way
related to a higher level of criminal conduct.
Sales tax does not enhance the value of property. Rather, it is itself calculated
based upon the dollar value of the property. It therefore should not be used to
elevate the seriousness of the charge by changing its classification and the
punishment that can be imposed. This court, therefore, holds that the value of
stolen property which is retail merchandise is its market value as reflected by
the purchase price exclusive of any levied sales tax.
Id. at 263-64, 661 N.Y.S.2d at 506 (emphasis added).
Similarly, in People v. Barbuto, supra, the New York court noted that the New York
tax statutes clearly provided that a vendor was to collect taxes from each customer and hold
those taxes as a trustee for and on account of the State, and that the actual selling price of the
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goods and the sales tax to be collected thereon were separate and distinct items. Barbuto, 106
Misc.2d at 544, 434 N.Y.S.2d at 121. Therefore, “[t]he rational conclusion is that, while a
sales tax may increase the cost of an object, it does not increase the value thereof.” Id. (emphasis
added).
In the Kluge case cited above, appellant Kluge was convicted of second-degree theft
after he failed to return a tile saw to the store from which he had rented it. In Iowa, seconddegree theft requires a finding that the value of the stolen property was over $1000 but not
more than $10,000. Kluge, 672 N.W.2d at 508 (citing Iowa Code § 714.2(2) (2001)). The
State presented evidence that, had Kluge purchased the saw, it would have cost $995, plus
sales tax, for a total of $1064.65. Id.
On appeal, Kluge argued that the trial court had improperly included the sales tax in
determining the value of the saw. The Court of Appeals of Iowa reasoned that, because the
theft statute was silent as to the inclusion of sales tax in the computation of the value of stolen
property, it was necessary to determine the legislature’s intent. Id.
In ascertaining legislative intent, we believe the nature of a tax, in
general, and a sales tax specifically, is important to examine. A tax may be
considered “a pecuniary burden laid upon individuals or property to support
the government.” Black’s Law Dictionary 1628 (Revised 4th ed. 1968).
Webster’s defines “sales tax” as “a tax levied on the sale of goods and services
that is usually calculated as a percentage of the purchase price and collected by
the seller.” Webster’s Ninth New Collegiate Dictionary, 1038 (1986). . . . Iowa
Code section 422.43(1) imposes a “tax of five percent upon the gross receipts
from all sales of tangible personal property . . . sold at retail in the state to
consumers or users[.]” Iowa Code § 422.43(1).
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Id. at 509. Accordingly, the Iowa court concluded that a sales tax did not increase the value
of property, and therefore, that state’s statutory scheme did not allow for sales taxes to be
used to elevate the degree of a theft charge where the issue was the theft of a tangible good
from a retailer. Id.
The Louisiana Supreme Court has considered whether an insurance company could
recover a sales tax payment in a subrogation claim on behalf of its insured against a tortfeasor
who caused the total loss of the tort victim’s vehicle. See State Farm Mut. Auto. Ins. Co. v.
Berthelot, 732 So.2d 1230, 1231 (La. 1999). The insurance policy in that case provided that
the limits of State Farm’s liability for loss to property was the lower of the actual cash value,
or the cost of repair or replacement. Following the total loss to its insured’s vehicle, State
Farm calculated its payment to the insured to include a reimbursement for sales tax. The
tortfeasor, Berthelot, and his insurance company paid the cash value for the totaled car, but
refused to pay the sales tax. State Farm filed suit, and the trial court ordered Berthelot to pay
the sales tax. Id. at 1232.
On appeal, the Louisiana Court of Appeals affirmed, but the Supreme Court reversed,
pointing out that “a sales tax is a distinct and separate charge [that] the retail seller is required
to collect as a pass-through entity for the benefit of the state and locality.” Id. at 1234-35.
Moreover, the court noted that Louisiana’s sales and use tax was “an excise tax, a tax upon
the transaction itself, not the property involved in the transaction.” Id. at 1235. Therefore,
the court concluded as follows:
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[W]hile it may be said that sales tax may increase the cost to the buyer in the
retail market, it is equally clear that it does not increase the value of the property
purchased. Simply stated, . . . a sales tax is a mandatory cost [that] state and local
governments have added to the sale transaction, over and above the value of
the purchased property.
Id. (emphasis added).
In Arkansas, as in Iowa and Louisiana, the sales tax is an excise tax “upon the gross
proceeds or gross receipts derived from all sales to any person” of goods and services
enumerated in the statute, including “[t]angible personal property[.]” Ark. Code Ann. § 2652-301(1) (Repl. 1997 & Supp. 2005). A sales tax is a tax “imposed on the sale of goods and
services” that is usually “measured as a percentage of their price.” Black’s Law Dictionary 1498
(8th ed. 2004). Clearly, the sales tax is a cost imposed on the transaction. It does not in any
way increase or enhance the “value” of the property. Therefore, we hold that sales taxes
are not properly considered a component of the value of an item of stolen property, and we
conclude that the trial court erred in including the sales taxes in computing the generator’s
value.1
1
Our conclusion is strengthened by reference to the general rule that, in
interpreting a penal statute, “[i]t is well settled that penal statutes are strictly construed
with all doubts resolved in favor of the defendant, and nothing is taken as intended which
is not clearly expressed.” Hunt v. State, 354 Ark. 682, 128 S.W.3d 820 (2003). The basic
rule of statutory construction, to which all other interpretive guides must yield, is to give
effect to the intent of the legislature. Id. However, even a penal statute must not be
construed so strictly as to defeat the obvious intent of the legislature. Russell v. State, 295
Ark. 619, 751 S.W.2d 334 (1988). In the present case, construing the theft-by-receiving
statute to exclude the amount of any sales taxes paid would not defeat the intent of the
legislature. The General Assembly clearly defined the “value” of stolen property to mean
the “market value of a property . . . at the time and place of the offense.” Ark. Code Ann. §
5-36-101(12)(A)(i) (Repl. 2006). Given this definition, it is logical and reasonable to
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Finally, we must address the State’s argument that the inclusion of the $49.99 warranty
in the purchase price caused the “value” of the generator to be in excess of $500. The State
claims that because Gilmore bought the warranty when he bought the generator, Russell
“not only stole a generator, but he stole a generator that was under warranty.” In support
of this contention, the State cites Hardrick v. State, 47 Ark. App. 105, 885 S.W.2d 910 (1994),
for the proposition that “[i]t is the owner’s present interest in the property that the law seeks
to protect.” Hardrick, 47 Ark. App. at 111, 885 S.W.2d at 913. However, neither Hardrick
nor any other reported Arkansas case holds that the price of an optional extended warranty
should be included in the calculation of the value of stolen property.
In Chappelle v. United States, 736 A.2d 212 (D.C. 1999), the District of Columbia
Court of Appeals held that the cost of a warranty should not be included, because “the
obligations encompassed in the agreement were not exclusive to the stolen telephone and
thus arguably an integral part of its ‘value.’” Chappelle, 736 A.2d at 216. Rather, the court
held, because the warranty contract would “carry over” to the next phone that the owner
purchased, “the cost of these transferable ancillary services cannot be considered in
determining the value of the property taken.” Id.
exclude any sales tax paid from a computation of the “value” of property, especially when,
as here, the property is stolen from one who purchased the property some time in the past.
The sales tax is a fee on the sales transaction, collected at the time the transaction occurred.
Here, the theft occurred six months or so after the sales transaction. Clearly, the sales tax
was in no way involved in the later theft, nor was the “value” of the generator at the time
of the theft affected or enhanced by the collection of the sales tax six months earlier.
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In the instant case, the State introduced no evidence that Russell received a warranty
on the stolen generator, or even that Gilmore’s warranty was stolen. Citing Chappelle, supra,
Russell notes that the State “failed to prove at trial that the warranty Mr. Gilmore purchased
was exclusive to the generator at issue and would not cover any replacement generator he
might have purchased.” We agree, and hold that the cost of the warranty was improperly
included in the computation of the generator’s value.
In sum, because the sales tax should not have been included in computing the value
of the generator, and the State failed to prove that the warranty was stolen along with the
generator, Russell’s Class C felony theft conviction cannot stand. However, Russell does
not challenge the sufficiency of the evidence showing that he was generally guilty of theft
by receiving. As the value of the generator was, at most, $499.99, Russell still stands
convicted of a Class A misdemeanor. See § 5-36-106(e)(3); see also Cannon v. State, 265 Ark.
at 274, 578 S.W.2d at 22 (where there was no contention that the evidence did not warrant
a finding that appellant was guilty of theft by receiving, any error in the denial of appellant’s
motion to dismiss could be corrected by modifying the judgment to reduce it to an
appropriate sentence for a misdemeanor). Accordingly, Russell’s conviction is affirmed as
modified, and his sentence is likewise modified to reflect the maximum sentence for a Class
A misdemeanor of one year, see Ark. Code Ann. § 5-4-401(b)(1) (Repl. 2006), with credit
for any time Russell has already served. See Cannon, supra; see also Reed v. State, 353 Ark. at
28, 109 S.W.3d at 669.
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Affirmed as modified.
CORBIN , DICKEY and GUNTER , JJ., dissent.
JIM G UNTER, Justice, dissenting. I respectfully dissent, as I believe that the value of
the property in this case included the sales tax paid by appellant and would therefore affirm
the judgment of the circuit court. The majority refers to this case as one of first impression,
ignores our case law, and then proceeds to rely upon the case law of other jurisdictions. In my
view, there is no need to resort to the case law of other jurisdictions, as our own statute and
case law require us to affirm.
Appellant was charged with theft by receiving property having a “value . . . less than
two thousand five hundred dollars ($2,500) but more than five hundred dollars ($500).” Ark.
Code Ann. § 5-36-106(e)(2)(A)(Repl. 2006). “Value” means “[t]he market value of a
property or service at the time and place of the offense, or if the market value of the property
cannot be ascertained, the cost of replacing the property within a reasonable time after the
offense.” Ark. Code Ann. § 5-36-101(12)(A)(I) (Repl. 2006). This court has held that the
“original cost of property may be one factor” considered in determining market value. Reed
v. State, 353 Ark. 22, 27, 109 S.W.3d 665, 668 (2003). In Tillman v. State, 271 Ark. 552, 609
S.W.2d 340 (1980), we held that the owner’s testimony of what he paid for the stolen item
eighteen months before the theft constituted substantial evidence of value. Finally, we said in
Cannon v. State, 265 Ark. 270, 273, 578 S.W.2d 20, 22 (1979), that the market value of a car
is “what it will bring on the open market when sold by a willing seller to a willing and able
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buyer.” “Evidence of the purchase price recently paid for the property may be evidence of
market value when admitted without objection.” Id.
In this case, the owner of the generator, Mr. Gilmore, testified that he purchased the
generator at Sears and paid $589.17. He provided a receipt to support his testimony. This is
evidence of what a willing buyer, Mr. Gilmore, paid to a willing seller, Sears, just six months
before the theft. See Cannon, supra; People v. Bazo, 139 Misc. 2d 1003, 529 N.Y.S.2d 432
(1988) (concluding that the market value of a stolen item is determined by the “consumerseller” market, in which a reasonable buyer would consider the sales tax in determining what
he or she would pay for the item). Mr. Gilmore also testified that he had never taken the
generator out of the box. Further, it was undisputed that the generator was still in the box
when it was stolen and appeared to be unused. In my view, this is substantial evidence to
support the court’s conclusion that the value of the generator exceeded $500. The trier of fact
is free to believe all of part of any witness’s testimony and may resolve questions of conflicting
testimony and inconsistent evidence. Wilson v. State, 365 Ark. 664, __ S.W.3d __ (Mar. 16,
2006). Accordingly, I would affirm.
C ORBIN and D ICKEY, J.J., join this dissent.
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