City of Wellston v. SBC Communications, Inc.

• Citation: 203 S.W.3d 189
• Decision Date: 08 August 2006
• Docket Number: No. SC 87207,SC 87207
• Parties: City of Wellston, Missouri, and City of Winchester, Missouri, Appellants v. SBC Communications, Inc., et al., Respondent.
• Court: United States State Supreme Court of Missouri

203 S.W.3d 189

City of Wellston, Missouri, and City of Winchester, Missouri, Appellants v. SBC Communications, Inc., et al., Respondent.

No. SC 87207

Supreme Court of Missouri, En Banc.

August 8, 2006

Stephen M. Tillery, Steven A. Katz, Douglas R. Sprong, John W. Hoffman, John F. Mulligan, Jr., and Howard Paperner, Counsel for Appellant.

John F. Medler, Jr., Suzanne L. Montgomery, Stephen B. Higgins, Ann Ahrens Beck, Amanda J. Hettinger and Sharon B. Rosenberg, Counsel for Respondent.

Opinion

LAURA DENVIR STITH, Judge.

This is one of four companion cases decided on this date. Each case involves claims that the "Municipal Telecommunications Business License Tax Simplification Act" ("Act")¹ unconstitutionally regulates and prohibits collection by municipalities of business license taxes on telecommunication companies for wireless service already provided by those companies before the law was enacted.

Unlike its three companion cases,² this case requires that before reaching the constitutionality of the Act this Court must determine whether plaintiffs, the cities of Wellston and Winchester ("the Cities"), have standing to bring this action in their own names or whether, as respondents allege, they were required to sue in the name of the state. The trial court held that sections 94.150 and 94.310, RSMo 2000,³ require that suits for "city taxes" be brought in the name of the state by third-class and fourth-class cities such as Wellston and Winchester and that their failure to do so deprived them of standing.

The trial court erred in holding that section 94.310 requires fourth-class cities to bring suit in the name of the state. It contains no such requirement. While section 94.150 does require third-class cities to sue for "city taxes" in the name of the state, failure to do so may be corrected by amendment and does not deprive the plaintiff of standing. Moreover, the license taxes sought by the Cities are not "city taxes" as that term is used in section 94.150, and so, Wellston could sue in its own name. This Court, therefore, may reach the Cities' constitutional challenges to the Act. This Court's analysis of those issues in City of Springfield v. Sprint Spectrum, L.P., ____ S.W.3d ___ (Mo. banc 2006) (No. SC87238, decided August 8, 2006), is fully applicable here. For the reasons set out in that opinion, sections 92.074 to 92.089, RSMo Supp. 2005, are invalid.

I. FACTUAL AND PROCEDURAL BACKGROUND

The Cities have imposed gross receipts business license taxes on providers of land and wireless telephone service, including respondents and others (hereinafter collectively referred to as "SBC"). The tax, sometimes referred to as a "Telephone Company Alternative Tax," is imposed by Winchester pursuant to an ordinance stating:

Pursuant to the laws of Missouri, every firm, person or corporation now or hereafter engaged in the business of supplying or furnishing telephone or telephone service in the City of Winchester, Missouri, shall pay to the said City as a license or occupational tax six per cent (6%) of the gross receipts derived from such business within the said City.

City of Winchester, sec. 640.010 (Ordinance 253 s-l). The tax is imposed by Wellston pursuant to an ordinance stating:

Every person engaged in the business of furnishing exchange telephone service in the city shall pay the city, as a license or occupational tax five (5) percent of the gross receipts derived from such business with the city.

City of Wellston, sec. 13-131 (Code 1980 SS 14-71).

The Cities claimed SBC refused to file required statements and had not paid the gross receipt taxes, interest and penalties required under the ordinance. Therefore, seeking to enforce the application of their tax to the wireless service SBC had already supplied to its customers, the Cities filed suit in the circuit court of St. Louis City in late December 2004.⁴ SBC countered that the Cities had no right to sue in their own names, but rather that under sections 94.150 and 94.310 suit had to be brought in the name of the state for the use and benefit of the city collector. The trial court dismissed the Cities' suit on this basis in August 2005. The Cities appeal.

II. RIGHT OF THIRD AND FOURTH-CLASS CITIES TO SUE IN OWN NAME

A. SBC's Contentions.

SBC bases its argument that Wellston has no right to sue in its own name on section 94.150, which applies to collection of taxes by third-class cities and states:

The enforcement of all taxes authorized by sections 94.010 to 94.180 shall be made in the same manner and under the same rules and regulations as are or may be provided by law for the collection and enforcement of the payment of state and county taxes, including the seizure and sale of goods and chattels, both before and after said taxes shall become delinquent; provided, that all suits for the collection of city taxes shall be brought in the name of the state, at the relation and to the use of the city collector.

Sec. 94.150 (emphasis added). SBC argues that, as Wellston is a third-class city, and as this suit is for taxes, Wellston erred in bringing suit in its own name. SBC acknowledges that cases decided many decades ago may not have included license taxes within the definition of "city taxes" but argues that the statutes now treat all taxes imposed by a city in the same manner and all should be considered "city taxes." It further argues that failure to sue in the name of the state deprives Wellston of standing and that the trial court properly dismissed its suit. See, e.g., Sauter v. Schnuck Markets, Inc., 803 S.W.2d 54, 55 (Mo. App. E.D. 1991)

(standing to sue cannot be waived).

SBC similarly argues that the City of Winchester, a fourth-class city, was required to bring suit in the name of the state under section 94.310, which states:

The enforcement of all taxes authorized by sections 94.190 to 94.330 shall be made in the same manner as is provided by law for the collection and enforcement of the payment of state and county taxes, including the seizure and sale of goods and chattels after the taxes become delinquent. Where applicable in chapter 140, RSMo, the term "county" shall be construed" city", the term "county clerk" shall be construed" city clerk", and the term "county collector" shall be construed "city collector" or other proper officer collecting taxes in the city.

Sec. 94.310. SBC concedes that, unlike section 94.150, section 94.310 does not contain a concluding proviso requiring that suits for "city taxes" filed by fourth-class cities must be brought in the name of the state. But, SBC argues and the court below held, there is "no logical reason" to treat fourth-class cities differently.

B. Fourth-Class Cities Are Not Required to Sue in the Name of the State.

It is not up to this Court to determine which legislative scheme for suits by municipalities is most logical. This Court must enforce statutes as written, not as they might have been written.⁵ Section 94.150 states that suits by third-class cities must be brought in the name of the state at the relation and to the use of the city collector. Section 94.310 does not contain this requirement for fourth-class cities, although it otherwise generally tracks the language of section 94.150. This Court cannot add language to the statute that the legislature did not include.⁶ The legislature did not include in section 94.310 the requirement that suit for "city taxes" be brought in the name of the state.

A review of the history of section 94.310 reveals that this omission was intentional. From at least 1895 until 1959, the predecessors to section 94.310 did require that suits by fourth-class cities be brought in the name of the state.⁷ In 1961, however, the legislature specifically repealed the 1959 version of section 94.310 and readopted it in substantially similar terms except the legislature specifically deleted the phrase that had previously required fourth-class cities to sue in the name of the state for the use and to the benefit of the city collector. 1961 Mo. Laws 220. The current statute is identical to that adopted in 1961. Sec. 94.310.

For these reasons, the trial court erred in holding that Winchester was required to bring suit in the name of the state at the relation and to the use of the city collector.

C. Wellston Not Required to Sue for License Taxes in Name of State.

This Court also disagrees with the trial court's conclusion that Wellston, a third-class city, had no standing to sue in its own name for unpaid business license taxes.

1. Standing.

First, the trial court was incorrect that failure to bring suit in the name of the state goes to Wellston's standing to sue. The alleged error is not one of standing but of whether the city had the capacity to sue in its own name or should have brought suit in the name of the state at the relation and for the use of the city collector:

Capacity to sue refers to the status of a person or group as an entity that can sue or be sued, and is not dependent on the character of the specific claim alleged in the lawsuit. . . .

Standing to sue evaluates the sufficiency of a plaintiff's interest in the subject of the lawsuit. It is a concept used to ascertain if a party is sufficiently affected by the conduct complained of in the suit, so as to insure that a justiciable controversy is before the court . . . Objections to standing, unlike objections based on the real party in interest rule, cannot be waived . . .

15 Mo. Prac. Civil Rules Practice sec. 52.01-2 (Mary Coffey ed., 2d ed. 1997) (footnote omitted).

Missouri courts on multiple occasions have treated errors in bringing a claim directly rather than in the name of another party, or similar defects, as issues of capacity rather than standing, which may be waived or avoided by amendment of the pleadings. In Bank of Oak Ridge v. Duncan, 40 S.W.2d 656 (Mo. 1931), a bank brought suit on a fidelity bond for fraud committed by a bank employee. This Court found suit should...