Council House Redevelopment Corp. v. Hill

• Decision Date: 23 January 1996
• Docket Number: No. 78219,78219
• Citation: 920 S.W.2d 890
• Parties: COUNCIL HOUSE REDEVELOPMENT CORPORATION, Appellant, v. Dennis HILL, Assessor, City of St. Louis, Missouri, et al., Respondents.
• Court: Missouri Supreme Court

Page 890

920 S.W.2d 890

COUNCIL HOUSE REDEVELOPMENT CORPORATION, Appellant, v. Dennis HILL, Assessor, City of St. Louis, Missouri, et al Respondents.

No. 78219.

Supreme Court of Missouri En Banc.

Jan. 23, 1996.

Nancy M. Watkins, George O. Suggs, St. Louis, James C. Owens, Chesterfield, for Council House.

Tyrone A. Taborn, Edward J. Hanlon, Eugene Hanses, St. Louis, for Hill.

Kenneth C. Brostron, Michael D. Regan, St. Louis, for intervenor-respondent.

COVINGTON, Judge.

Appellant Council House Redevelopment Corp. (Council House), appeals from an order of the trial court dismissing its action against respondents Dennis Hill, Assessor of the City of St. Louis, and the St. Louis Board of Equalization. Council House seeks a declaratory judgment that it is entitled to a charitable exemption from ad valorem taxation under section 137.100(5), RSMo 1994, on certain real property it owns. The Board of Education for the City of St. Louis intervened on the side of the respondents. The trial court dismissed the petition on subject matter jurisdictional grounds, concluding that Council House had not properly preserved its claim as it related to taxes levied in 1992 and 1993. As to Council House's exemption claim as it related to taxes levied in 1994, the trial court found that Council House had not properly exhausted all available administrative remedies before filing for declaratory relief in the circuit court. The court of appeals affirmed. This Court granted transfer. Affirmed in part; reversed and remanded in part.

Council House is incorporated as an urban redevelopment corporation under the provisions of chapter 353, RSMo. At issue is the taxation of certain real property that Council House owns in the City of St. Louis upon which is built a residential apartment building in which three hundred residential units are rented to senior citizens or disabled individuals who meet certain qualifications under federal law. It is undisputed that Council House is exempt from federal income tax. I.R.C. § 501(c)(4) (1994).

The city assessed ad valorem taxes on the real estate for the 1992 tax year. Council House appealed the assessment to the board of equalization claiming that the real estate was exempt from taxation as property "actually and regularly used exclusively ... for purposes purely charitable and not held for private or corporate profit...." § 137.100(5). After a hearing, the board of equalization denied Council House's appeal. In July 1992, Council House filed a petition in the circuit court seeking a declaration of its right to a charitable exemption. The trial court heard evidence on the claim on May 10, 1994. Evidence was adduced at trial with respect to Council House's use of the property from 1992 to 1994, as well as the taxes assessed and paid for the tax years 1992 and 1993.

Subsequent to its filing of the present action, Council House paid without protest ad valorem taxes that were assessed in 1992 and 1993. In order to recover taxes allegedly collected illegally, the taxes must be paid in compliance with the protest procedures set forth in section 139.031, RSMo 1994. B & D Inv. Co., Inc. v. Schneider, 646 S.W.2d 759, 763-64 (Mo. banc 1983); see also Nexus Rent-A-Car, Inc. v. Nash, 747 S.W.2d 683, 687 (Mo.App.1988) ("[T]he taxpayer's remedy under § 139.031 is exclusive.... [F]ailure to comply with § 139.031.1[ ] bars recovery of the taxes in question."). Because Council House failed to pursue the appropriate administrative remedy for a refund, namely paying the taxes it claimed were invalidly assessed under protest and at the time of payment filing with the collector a written protest statement, the trial court properly ruled that any issues regarding the taxes paid for the years 1992 and 1993 were abandoned.

Remaining at issue is the ad valorem tax assessed on Council House's property for the 1994 tax year, which had not been paid as of the date of trial. The trial court dismissed Council House's action as it pertained to this tax as well, holding that the issue was not properly before the court for the reason that Council House had failed to exhaust either of the available statutory remedies. Specifically, the court noted that Council House could appeal the assessment to the City of St. Louis board of equalization. § 138.180, RSMo 1994. An adverse ruling by the board of equalization could then be appealed to either the State Tax Commission pursuant to section 138.430.1, RSMo 1994, or the circuit court under section 138.430.3, RSMo 1994. Alternatively, the court held that Council House could have paid the taxes under protest pursuant to section 139.031 and brought suit for a refund. In rejecting Council House's contention that it need not follow these administrative procedures, the court held that "[o]nly in exceptional circumstances ... may a taxpayer resort directly to a court of equity without first pursuing such remedies."

In its sole point on appeal, Council House asserts that the trial court erred in dismissing the declaratory judgment action as it pertains to the 1994 tax assessment. Council House contends that an appeal to the board of equalization is not a jurisdictional prerequisite to filing a declaratory action in the circuit court when the only issue is its exempt status as a charity rather than the valuation of the assessment itself. This Court agrees with Council House's assessment. ¹

The legislative scheme governing the assessment and levy of ad valorem property taxes is found in chapter 137, RSMo. All real property is assessed annually as of the first day of January. § 137.080, RSMo 1994. Property held for "purposes purely charitable" is specifically exempted from all taxation by the Missouri Constitution, article X, section 6, and codified at section 137.100, RSMo 1994. Any person aggrieved by an assessment of taxes may appeal in writing to the county board of equalization. § 137.275, RSMo 1994. The procedures for equalization and review of real estate tax assessments are set out in chapter 138, RSMo. In the City of St. Louis, a taxpayer must appeal in writing to the board of equalization by the second Monday in May of each year. § 138.180. "The county board of equalization shall, in a summary way, determine all appeals from the valuation of property made by the assessor, and shall correct and adjust the assessment accordingly." § 138.060, RSMo 1994. The board of equalization may raise, lower, or keep a property valuation at the amount set by the assessor. §§ 138.050, .100, .150, RSMo 1994.

The trial court in the present case correctly pointed out that Council House could not file for a refund of improperly assessed taxes under the procedures set out in section 139.031. At the time of trial the taxes for 1994 had not yet been paid; in fact, they were not yet due. An action for refund coupled with the payment under protest of the taxes would, therefore, have been premature. In dismissing Council House's action the trial court noted that Council House was obligated to pursue an appeal to the board of equalization under section 138.430.3 before filing for a declaratory judgment in the circuit court. Section 138.430.3 provides that in all questions and disputes regarding the exclusion or exemption of property from assessment or from the tax rolls, "[e]very owner of real property ... shall have the right to appeal to the circuit court ... from the decision of the local board of equalization not later than thirty days after the final decision of the board of equalization...." Significantly, the statute provides that the appeal to the circuit court on exclusion or exemption issues "shall be as a trial de novo in the manner prescribed for nonjury civil proceedings." Id.

The trial court found that Council House had not alleged any "exceptional circumstances" that would warrant disregarding the statutory procedures set out in section 138.430.3, implicitly holding that Council House must first exhaust all available administrative remedies before filing in the circuit court. The trial court presumably relied on the exhaustion doctrine, which provides that "where a remedy before an administrative agency is available, relief must be sought by exhausting this remedy before the courts will act." Sperry Corp. v. Wiles, 695 S.W.2d 471, 472 (Mo. banc 1985); see also § 536.100, RSMo 1994 (granting judicial review of a final decision in a contested case only to those parties who have exhausted all administrative remedies provided by law).

As a general rule, courts will refrain from acting until the litigants have exhausted all available administrative remedies provided by statute. In establishing a system for the levying of taxes and the appeal of property tax assessments, including those set out in sections 138.060, 138.430, and 139.031, the legislature has properly charged administrative agencies with responsibilities associated with the determination of property valuation methods as well as the actual assessment of property.

Proceedings before administrative bodies are not, however, a taxpayer's exclusive remedy for claiming an exemption from taxation. Washington Univ. v. Baumann, 341 Mo. 708, 726, 108 S.W.2d 403, 413 (banc 1937). "[W]hen a taxpayer does not question the valuation of his property, but asserts it is not subject to the tax, he need not appear before the Board of Equalization but may enjoin the enforcement of the tax." B & D Inv. Co., Inc. v. Schneider, 646 S.W.2d 759, 762 (Mo. banc 1983). In Pentecostal Church of God v. Hughlett, 737 S.W.2d 728 (Mo. banc 1987), for example, plaintiff, claiming that its property was exempt from taxation for the reason that it was used exclusively for charitable purposes, paid ad valorem real estate taxes under protest and filed suit in the circuit court for a refund pursuant to section 139.031. Id. at 729. The trial court entered judgment for the defendant collector. Id. On appeal, defendant argued that the circuit court was without...