David Ranken, Jr. Technical Institute v. Boykins

• Citation: 816 S.W.2d 189
• Decision Date: 10 September 1991
• Docket Number: No. 73444,73444
• Parties: 70 Ed. Law Rep. 686 The DAVID RANKEN, JR. TECHNICAL INSTITUTE, Plaintiff/Respondent, v. Billie BOYKINS, License Collector of the City of St. Louis, Missouri, Defendant/Appellant.
• Court: Missouri Supreme Court

Page 189

816 S.W.2d 189

70 Ed. Law Rep. 686

The DAVID RANKEN, JR. TECHNICAL INSTITUTE, Plaintiff/Respondent, v. Billie BOYKINS, License Collector of the City of St. Louis Missouri, Defendant/Appellant.

No. 73444.

Supreme Court of Missouri En Banc.

Sept. 10, 1991.

Paul Edward Martin, Sp. City Counselor, St. Louis, for defendant/appellant.

Juan D. Keller, Harry Charles, St. Louis, for plaintiff/respondent.

FLAKE L. McHANEY, Senior Judge.

Billie Boykins, License Collector for the City of St. Louis, Missouri, appeals from the judgment of the Circuit Court of the City of St. Louis, which found The David Ranken, Jr. Technical Institute not subject to the city license tax of the City of St. Louis and ordered that the taxes paid under protest be refunded together with the allowance of an attorney's fee in favor of Ranken. After having paid the tax assessed under protest, Ranken filed a declaratory judgment suit seeking a declaration that it is exempt from the city's business license tax, for recovery of the taxes paid under protest and an award of attorney's fee. The Missouri Court of Appeals, Eastern District, correctly found that the case involves construction of the revenue laws of this state, and, therefore, under the provisions of Missouri Constitution, article V, section 11, transferred the cause to this Court.

We affirm the judgment of the circuit court finding that Ranken is not subject to the license tax but reverse the judgment that granted Ranken an attorney's fee.

The case was submitted on stipulated facts and on the affidavit of one Ben H. Ernest, president of The David Ranken, Jr. Technical Institute, which was incorporated on October 16, 1907, as a Missouri charitable corporation. Its only function has been as a charitable and educational school to teach young people in manual and mechanical trades. It has qualified for and has been treated as a charity by all relevant taxing authorities. It is exempt from City of St. Louis property taxes, State of Missouri sales and use taxes and United States income and excise taxes, including taxes on fuel and communications.

The City of St. Louis enacted City Ordinance 60643. Section 1 of that ordinance reads in part:

There is hereby imposed ... a graduated business license tax on all merchants, manufacturers, businesses, avocations, pursuits and callings that are not exempt from the payment of licenses by law.

This city ordinance was enacted pursuant to section 92.045.1, RSMo 1986. This section provides in part:

Any constitutional charter city in this state ... is hereby authorized, for city and local purposes, to license, tax, and regulate the occupation of merchants, manufacturers, and all businesses, avocations, pursuits, and callings that are not exempt from the payment of licenses by law....

Ranken contends that it is not subject to a city license tax because of the provisions of section 71.620.1, RSMo 1986, which reads as follows:

Hereafter no person following for a livelihood the profession or calling of minister of the gospel, duly accredited Christian Science practitioner, teacher, professor in a college, priest, lawyer, certified public accountant, dentist, chiropractor, optometrist, chiropodist, or physician or surgeon in this state, shall be taxed or made liable to pay any municipal or other corporation tax or license fee of any description whatever for the privilege of following or carrying on such profession or calling, any law, ordinance or charter to the contrary notwithstanding.

The above section does not define "person," nor has it been defined by any court. However, section 1.020(11), RSMo Supp.1988, provides:

As used in the statutory laws of this state, unless otherwise specially provided or unless plainly repugnant to the intent of the legislature or to the context thereof:

* * *

(11) The word "person" may extend and be applied to bodies politic and corporate, and to partnerships and other unincorporated associations....

Since this was a court-tried case, the standard of review of this appeal is that of Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976). However, since the issue of taxation was submitted on stipulation of fact, and the facts are not contested, the only questions presented as to that issue are whether the court below erroneously declared or erroneously applied the law. As to the issue of attorney's fee, the additional question presented is whether the judgment is supported by substantial evidence.

Appellant points to the rule of law that a tax exemption provision is to be construed strictly against the party who claims the exemption. Shell Oil Co. v. Director of Revenue, 732 S.W.2d 178, 183 (Mo. banc 1987). In Spudich v. Director of Revenue, 745 S.W.2d 677, 682 (Mo. banc 1988), it is said that exemptions from taxation are the exception and that the burden is on the taxpayer to prove that his property falls within an exempted class. There is a competing rule of construction and that is that taxing statutes are read strictly against the taxing authority and in favor of the taxpayer. Southwestern Bell Telephone Co. v. Mahn, 766 S.W.2d 443, 445 (Mo. banc 1989). If the statute is clear and unambiguous, there is no room for construction. Community Federal Savings & Loan v. Director of Revenue, 752 S.W.2d 794, 798 (Mo. banc 1988).

The case of Petrolene, Inc. v. City of Arnold, 515 S.W.2d 551, 553 (Mo.1974), dealt with a city license tax and quoted with approval the following:

[A] grant by the legislature of the taxing power to a municipal corporation is to be strictly construed.... [U]nless the business avocation, pursuit, or calling sought to be taxed by the municipal corporation is specifically named as taxable in the charter, or unless such power is conferred by statute, the power to tax is not clearly and unambiguously delegated, and therefore consistent with the general sound policy of the law, it cannot be exercised.

We therefore have competing rules of statutory construction. If Ranken is to rely on the exemption set forth in section 71.620.1, such exemption therein provided is strictly construed against Ranken. However, on the other hand, the licensing tax set forth in the St. Louis City ordinance is to be strictly construed against the city. There is to be no ambiguity that Ranken was intended to be taxed under the ordinance and that the taxing power exists. If one would assume that the exemption statute is ambiguous as applied to this school, strict construction against the party claiming the exemption might deny the exemption to the school. However, since the taxing ordinance incorporates the exemption statute, it would appear that the taxing statute would be ambiguous, and applying strict construction against the taxing authority might require that the taxing power be denied. No case has been cited to us, nor have we been able to find one, which articulates the proper application for the two rules in that situation.

Appellant contends that section 71.620.1, which exempts teachers from a license tax, is limited to a person; that "person" means a natural person and does not include a corporation; that section 1.020(11) does not apply because to extend the word "person" to a corporation would be "repugnant to the intent of the legislature or to the context thereof." Appellant's claim of repugnancy is that a corporation cannot "follow for a livelihood the profession of minister ... teacher, professor, ... priest, lawyer, ... physician...." (Emphasis added.)

"Livelihood" is not a precise term with a precise legal meaning. It has not been defined by any Missouri court, nor has any case been called to our attention that does define it. The common definition of "livelihood" is means of support or subsistence. Webster's Third New International Dictionary (1961). As applied to a corporation, we believe "livelihood" means that which permits it to continue its existence and which permits it to subsist. It should be remembered that section 1.020(11) provides that "person" may extend to a corporation "unless plainly repugnant to the intent of the legislature...." (Emphasis added.) We do not find the term "livelihood" within the exemption statute plainly repugnant to extending the word "person" to include corporations.

If appellant is correct, this would mean that a physician practicing alone would not be subject to the city license tax, but should he utilize a professional corporation, it would be. Also, this would mean that if a physician would engage in partnership with other doctors, the doctors could not be charged with a license tax but the partnership could. Appellant admits this is her position. We find this to be an absurd result. The ramification of that result would be staggering.

It is presumed that in the enactment of laws, the legislature does not intend to enact absurd laws. Rothschild v. State Tax Commission, 762 S.W.2d 35, 37 (Mo. banc 1988). Statutory construction is favored that avoids unjust or unreasonable results. State ex rel. McNary v. Hais, 670 S.W.2d 494, 495 (Mo. banc 1984). This Court is obligated to ascertain the intent of the legislature from the language used and to give effect to that intent without arriving at an absurd result. The law favors statutory construction that harmonizes with reason and that tends to avoid absurd results. State ex rel. Trautman v. Farmington, 799 S.W.2d 638, 642 (Mo.App.1990). See also State ex rel. Zoological Pk. Subd., St. Louis v. Jordan, 521 S.W.2d 369, 372 (Mo.1975). We do not believe that it was the intent of the legislature to prevent a city from enacting a licensing tax upon teachers and doctors and the other occupations therein named but permit it to enact a licensing tax if those professions chose to incorporate. It would be unreasonable to believe that the prohibition can be circumvented by the city's passing a licensing tax that would not impose a tax upon the teachers but upon the charitable school for whom they work; nor upon a doctor but...