Beatty v. Metropolitan St. Louis Sewer Dist.

• Decision Date: 21 December 1993
• Docket Number: No. 76073,76073
• Citation: 867 S.W.2d 217
• Parties: Richard BEATTY, et al., Appellants, v. The METROPOLITAN ST. LOUIS SEWER DISTRICT, Respondent.
• Court: Missouri Supreme Court

Page 217

867 S.W.2d 217

Richard BEATTY, et al., Appellants, v. The METROPOLITAN ST. LOUIS SEWER DISTRICT, Respondent.

No. 76073.

Supreme Court of Missouri,

En Banc.

Dec. 21, 1993.

Lewis C. Green, Bruce Morrison, St. Louis, for appellants.

David Wells, Mary C. Bonacors, St. Louis, for respondent.

Christine M. Treat, City Atty., Lee's Summit, for amicus curiae Lee's Summit.

Robert W. McKinley, Tedrick A. Housh, III, Kansas City, for amicus curiae Gladstone.

Fred Boeckmann, Columbia, for amicus curiae Columbia & Municipal League.

David L. Wieland, Springfield, for amicus curiae Springfield.

William D. Geary, Asst. City Atty., Kansas City, for amicus curiae Kansas City.

Charles E. Callier, Jr., Asst. City Atty., St. Charles, for amicus curiae St. Charles.

ROBERTSON, Judge.

In this case we return to our continuing struggle to define the perimeters of the Hancock Amendment and particularly of Article X, Section 22(a) of the Missouri Constitution. The specific issue is whether the respondent may raise its sewer charges without approval of district voters. The trial court held that respondent could raise its charges without a vote, relying principally on this Court's recent decision in Keller v. Marion County Ambulance District, 820 S.W.2d 301 (Mo. banc 1991). A divided panel of the court of appeals reversed the judgment of the trial court and ordered respondent to submit its charges to the voters for approval. The court of appeals, en banc, ordered transfer of the case to this Court. We have jurisdiction, Mo. Const. art. V, § 10, and now reverse the judgment of the trial court and remand the case with directions to enter an order declaring respondent's charges subject to Article X, Section 22(a) of the Missouri Constitution.

I.

Prior to 1954, various private and governmental entities provided sewer service to the residents of the City of St. Louis and St. Louis County. On February 9 of that year, the voters of the region adopted a plan to create the Metropolitan St. Louis Sewer District ("MSD") to provide an integrated sewer system for the City of St. Louis and a majority of St. Louis County. The plan required the mayor of the City of St. Louis and the county executive of St. Louis County to appoint a six-member board of trustees to operate MSD. The plan also gave that board authority to impose ad valorem taxes and establish charges for sewer services. Under the plan, MSD took title to most of the existing sanitary and storm water sewer systems within the boundaries of the district. Today, MSD serves approximately 420,000 accounts, including single and multifamily dwellings and commercial and industrial customers, and owns and operates an extensive system of collector and interceptor sewers and treatment plants, all of which are subject to state and federal regulation. The continued ability of MSD to maintain and improve its sewer collection and treatment facilities and meet increasingly demanding state and federal regulations depends on MSD's ability to provide a revenue stream sufficient for those purposes.

For residential property, the board imposes a flat fee for sewer service. The amount of the fee remains the same no matter how much waste a residential customer sends into the system. Nonresidential customers pay a base charge plus a charge measured by the volume of waste the property adds to the system. Nearly all of the property owners within MSD receive MSD sewer charges. Failure to pay a sewer charge results in a lien against real property by operation of law. MSD is quick to point out, however, that approximately 9,000 parcels of property do not use the system and pay no service charge. These parcels escape the charge because they have an alternate means of sewage disposal or are unimproved.

Appellant Richard Beatty is a resident of St. Louis County, Missouri, owns real property there, and pays sewer charges imposed by MSD. In 1985, facing additional regulatory pressures and maintenance costs, MSD issued revenue bonds and increased its sewer charges to meet debt service on the bonds and to operate and maintain the sewer system. MSD imposed these increased charges without voter approval. Mr. Beatty filed an action challenging MSD's authority to issue revenue bonds and increase its charges without a vote of the people. Mr. Beatty contended that Article X, Section 22(a) of the Missouri Constitution prohibited such an increase without voter approval. The court of appeals reversed the trial court's judgment that held that MSD had authority to issue the revenue bonds in question. Beatty v. Metropolitan St. Louis Sewer District, 731 S.W.2d 318 (Mo.App.1987) (en banc). Because MSD did not have authority to issue the revenue bonds, the user fees imposed in conjunction with the bond issue without voter approval violated Article X, Section 22(a). Following the court of appeals' decision, MSD entered into a consent decree and agreed that Article X, Section 22(a), applied to the sewer charges at issue in the case. MSD submitted the question of increasing its user charges to the voters in 1988. The voters approved the increases in wastewater charges (to $4.18 per month), capital improvement charges ($6.50 per month), and storm sewer charges ($0.24 per month).

In February, 1990, MSD sought the voters' permission to increase its sewer charges again. The voters rejected the increase.

On December 17, 1991, this Court issued its decision in Keller. A deeply divided Court held that a local ambulance district's increased charges for ambulance service were not fees within the meaning of Article X, Section 22(a). MSD read Keller in light of its financial needs and increased its wastewater charges by $4.00 per month without voter approval. Claiming a purpose to avoid rate shock, MSD's new charges did not change the gross monthly single-family residential bill; it remained at $10.29 per month. Instead, MSD offset the wastewater charge increase of $4.00 with a reduction in the capital improvement surcharge by a corresponding $4.00.

On June 17, 1992, Mr. Beatty and others filed a new action (Beatty II ) in St. Louis County claiming that the decision in Beatty I was res judicata, required MSD to submit any increase in sewer charges to the voters for approval and, in any event, seeking a declaration that MSD's failure to submit its new charges to the voters for approval violated Article X, Section 22(a). MSD filed a motion to reopen Beatty I, seeking relief from the judgment in Beatty I, on June 26, 1992. That same day, MSD filed its motion to consolidate Beatty I and Beatty II. Ultimately, the trial court sustained these motions and consolidated the two cases. In none of its legal papers did MSD seek to recover sewer charges it lost as a result of the decision in Beatty I or to apply a favorable decision in Beatty II retroactively.

The trial court heard evidence, applied Keller, and held that the new sewer charges did not fall under Article X, Section 22(a). This appeal followed.

II.

Article X, Section 22(a), prohibits a political subdivision of this state "from increasing the current levy of an existing tax, license or fees [sic], above that current levy authorized by law or charter when this section is adopted without the approval of the required majority of the qualified voters of that ... political subdivision voting thereon." MSD is a political subdivision of the state. Thus, the question before the Court is whether the sewer charge imposed by MSD is a "tax, license or fees" [sic] within the meaning of Article X, Section 22(a). If so, such charges cannot be increased without prior voter approval. In considering this question, we assume that MSD's silence on the issue is tantamount to an admission that the four dollar increase in the wastewater service charge constitutes an increase in the charges MSD requires its residential customers to pay. This decision, while predicated on MSD's tacit admission, does not decide the question whether the constitution requires voters to approve a political subdivision's decision to increase part of its fees and decrease another part where the amount due from the fee payer remains the same.

A.

Mr. Beatty begins his brief with what he believes is a procedural coup de grace. He claims that Rule 74.06(b)(5) does not permit the trial court to relieve MSD of the final judgment in Beatty I, that the consent decree in Beatty I is res judicata, and that MSD's consent decree in Beatty I estops MSD from claiming now that it may raise its sewer charges without voter approval.

While Mr. Beatty presents an interesting academic question, it is unavailing in this context. First, Keller raises a legitimate legal question as to whether MSD's charges fall under Article X, Section 22(a). Second, in apparent recognition of this fact and in response to MSD's interpretation of Keller, Mr. Beatty himself filed an independent action challenging MSD's increased sewer charges prior to MSD seeking to reopen the Beatty I decision. MSD's motion raises the identical, ultimate legal question joined by Mr. Beatty in his second suit. The trial court's decision to consolidate Beatty I and Beatty II and decide only the genuine legal issue raised in Beatty II eliminates Mr. Beatty's procedural claim. The point is denied.

B.

Keller overruled Roberts v. McNary, 636 S.W.2d 332 (Mo. banc 1982). In doing so, Keller rejected "the contention that all fees--whether user fees or tax-fees--are subject to the Hancock Amendment." 820 S.W.2d at 304. To assist in determining whether a governmental charge is a tax within the meaning of Article X, Section 22(a), or user fee not subject to constitutional controls, Keller suggested a five-pronged analysis. Keller, 820 S.W.2d at 304-5, n. 10.

Mr. Beatty urges that we overrule Keller as wrongly decided. While the Court will continue to assess the wisdom and viability of Keller's holding in appropriate cases, we need not decide Keller's ultimate fate in this case....