American Polled Hereford Ass'n v. City of Kansas City, 61987

• Decision Date: 12 January 1982
• Docket Number: No. 2,No. 61987,61987,2
• Parties: AMERICAN POLLED HEREFORD ASSOCIATION, Appellant, v. CITY OF KANSAS CITY, Missouri, Respondent
• Court: Missouri Supreme Court

Page 237

626 S.W.2d 237

AMERICAN POLLED HEREFORD ASSOCIATION, Appellant, v. CITY OF KANSAS CITY, Missouri, Respondent.

No. 61987.

Supreme Court of Missouri, Division No. 2.

Jan. 12, 1982.

William B. Prugh, Kansas City, for appellant.

John F. Ingraham, Asst. City Atty., Kansas City, for respondent.

EDWARD D. HODGE, Special Judge.

Appellant, the American Polled Hereford Association, appeals from a judgment and decree denying the Association's claim that it is exempt from real estate taxes levied by respondent, City of Kansas City.

This cause comes here on transfer from the Court of Appeals, Western District, 617 S.W.2d 128. Originally filed here, the cause was transferred to the Western District for the possible application of Kansas City Exposition Driving Park v. Kansas City, 174 Mo. 425, 74 S.W. 979 (1903). The Western District found Driving Park not controlling and transferred the cause to this Court for interpretation and construction of the applicable state revenue statute. We will refrain from further exploring the precedential significance of Driving Park as a means for resolving the issue raised by appellant in this cause. In the interest of judicial economy we feel constrained to address these questions afresh.

Specifically, appellant claims exemption from taxation under the provisions of Article X, Section 6 of the Missouri Constitution (1945), and Section 137.100, RSMo 1978. Three major arguments are urged by appellant Association: First, that it is a non profit agricultural association within the meaning of Article X, Section 6 of the Missouri Constitution of 1945 and Section 137.100, RSMo 1978. ¹ Second, that in April 1975, the Circuit Court of Missouri's 16th Judicial Circuit, in two cases, found this appellant exempt from taxation by Jackson County under the aforementioned constitutional and statutory provisions. American Polled Hereford Association v. State Tax Commission, et al., Nos. 764,946 and 767,645, Circuit Court, 16th Judicial Circuit. The appellant asserts that by virtue of these decisions the issue of its exempt status is res judicata and thus respondent City is estopped from assessing and taxing appellant's real property. Finally, appellant argues that to grant the tax exemption to a Missouri not for profit corporation discriminates against a foreign not for profit corporation, as is appellant, in violation of the equal protection guarantees under Article I, Section 2, of the Missouri Constitution and the Fourteenth Amendment to the United States Constitution.

The threshold issue to be resolved can be simply stated: Is the appellant an agricultural society within the meaning of Article X, Section 6 of the Missouri Constitution? If so, appellant is exempt and the questions of res judicata and equal protection would not require our consideration.

Appellant's claimed exemption, being based as it is on the construction of a state revenue law, is subject to the cardinal rule of statutory construction that laws exempting property from taxation must be strictly construed. The burden of establishing by unequivocal proof that such release is required by the terms of the statute devolves upon the party claiming the exemption. The law granting such immunity must be clear and unambiguous and if any doubt exists it must operate most strongly against the party claiming the exemption. State ex rel. St. Louis Young Men's Christian Association v. Gehner, 320 Mo. 1172, 11 S.W.2d 30 (banc 1928); Fitterer v. Crawford, 157 Mo. 51, 57 S.W. 532, 533 (1900).

Addressing the issue as to appellant's qualification as an agricultural society, we return to the Driving Park decision for a clearer understanding of the significance of that term as used in Article X, Section 6 of the Missouri Constitution (1945), and Section 137.100, RSMo 1978. In Driving Park, the history of agricultural societies and agricultural and horticultural societies is set forth in some detail. There, Judge Gantt noted that:

Prior to the adoption of the Constitution of 1875, the Legislature was forbidden to pass any law exempting any property, real or personal, from taxation 'except such as should be used exclusively for public schools and such as belonged to the United States, to this state, to counties or municipal corporations, within this State.' Const. 1865, art. 11, Sec. 16. As early as 1853 the General Assembly of this state incorporated the Missouri State Agricultural Society Act, Feb. 24, 1853 (Laws, 1852-53, p. 16). By an act of the Legislature approved Dec. 13, 1855 (Laws, 1855, p. 8), that law was repealed, and a new act adopted, dividing the state into agricultural districts, and establishing a society for each, and designating the counties that should constitute such district agricultural society. Their powers were defined by the act. Later, in 1863, the Missouri State Board of Agriculture was created a body corporate, and it was made the duty of all agricultural and horticultural societies to make reports to such state board. The scheme of promoting county agricultural societies will be found in General Statutes of 1865, pp. 321 to 324. These societies were intended to promote agricultural manufactures and raising stock. The county courts were authorized to vote money for premiums, and they were adjuncts of the State Board of Agriculture, and the presidents of said county societies were ex officio members of the State Board of Agriculture, and they were required to make reports of their transactions to the State Board. These county agricultural and horticultural societies were thus provided for in the General Statutes of this state when the constitutional convention of 1875 met and organized, and these statutes were continued in our general revision in 1899 (Rev.St. 1889, pp. 178 to 183, inclusive) ....

Driving Park, 74 S.W. at 981.

The same terminology has been preserved in Article X, Section 6 of the Missouri Constitution of 1945, and in Section 137.100, RSMo 1978, under which the exemption is claimed by this appellant. It is apparent, as indicated by Judge Gantt in Driving Park, that these agricultural societies have been favored objects of the state's bounty for many years. It is equally apparent to this Court that appellant, notwithstanding its not for profit corporate status, is not one of these unique quasi state or county organizations referred to in the Constitution and statutes as an agricultural or agricultural and horticultural society. It appears quite clear from this historical review that neither the constitutional nor the statutory provision was intended to exempt all not for profit corporations engaged in agricultural activities, but only those unique societies organized as adjuncts of the State Board of Agriculture. We find the appellant does not come within the term "agricultural society" and that the statutory exemption is inapplicable.

Having concluded that appellant is not an "agricultural society" within the meaning of the statute and Constitution, we must turn to appellant's assertion that by virtue of the doctrine of collateral estoppel respondent is estopped from assessing and collecting taxes on appellant's real property.

Traditionally, res judicata (claim preclusion) precludes the same parties or their privities from relitigating the same cause of action whereas collateral estoppel (issue preclusion) precludes the same parties or those in privity from relitigating issues which have been previously litigated. Oates v. Safeco Insurance Co. of America, 583 S.W.2d 713 (Mo.banc 1979). Applying this traditional analysis, it becomes apparent that appellant's claim is one of issue preclusion rather than claim preclusion, as the cause of action under review pertains to the levy and assessment of city taxes whereas the prior adjudication related to a cause of action for the collection of taxes by Jackson County. A critical distinction is made between claim preclusion and issue preclusion: Where the question is one of issue preclusion the established rule is that the judgment in the prior adjudication operates only as to the issues, points, or questions actually litigated and determined and not as to matters not litigated in the former action even though such matters might properly have been determined therein. Schmitt v. Pierce, 379 S.W.2d 548 (Mo.1964); 46 Am.Jur.2d Judgments, § 418 (1969).

Thus, for appellant to prevail as to its claim of issue preclusion, two questions must be affirmatively answered. First, was respondent City in privity with the plaintiff County in the prior adjudication in the Circuit Court of Jackson County? Second, was the specific issue in the case now before this Court actually litigated and determined in the prior adjudication?

As to the question of privity, appellant argues that because respondent City derives its statutory powers from the state law, respondent is therefore in privity with the state of Missouri and bound by a prior judgment against another political subdivision of the state, i.e. Jackson County, wherein the question of appellant's tax exemption was considered. We find none of the cases cited by appellant in its brief support such a sweeping conclusion. It is settled law that privity within the meaning of the doctrine of issue preclusion is privity as it exists in relation to an identity of interests in the subject matter of the litigation. It is not established from the mere fact that persons may happen to be interested in the same question, or in proving or disproving the same state of facts. Drainage District No. 1 Reformed v. Matthews, 361 Mo. 286, 234 S.W.2d 567 (Mo.1950); 46 Am.Jur.2d, Judgments § 532 (1969).

The subject matter of the Jackson County cases was the assessment and collection of county taxes and appellant's claimed exemption therefrom. The subject matter of the cause...