Kanakuk-Kanakomo Kampus, Inc. v. Director Of Revenue

• Decision Date: 07 December 1999
• Citation: 8 S.W.3d 94
• Parties: (Mo.banc 1999) . Kanakuk-Kanakomo Kamps, Inc., Appellant, v. Director of Revenue, Respondent. Case Number: SC81365 Supreme Court of Missouri Handdown Date:
• Court: Missouri Supreme Court

8 S.W.3d 94 (Mo.banc 1999)

This slip opinion is subject to revision and may not reflect the final opinion adopted by the Court.

Kanakuk-Kanakomo Kamps, Inc., Appellant, v. Director of Revenue, Respondent.

Case Number: SC81365

Supreme Court of Missouri

Handdown Date: 12/07/99

Appeal From: Petition for Review of a Decision of the Administrative Hearing Commission, Hon. Willard C. Reine, Commissioner

Counsel for Appellant: Donald E. Woody and O.J. Taylor

Counsel for Respondent: Evan J. Buchheim

Opinion Summary:

Kanakuk operates summer camps for youths offering athletic activities and Christian faith and values. The administrative hearing commission found it a place of "recreation, games and athletic events" and, therefore, subject to sales tax.

AFFIRMED.

Court en banc holds:

Section 144.020.1(2) imposes sales tax on fees paid in or to any place of amusement, entertainment or recreation, games or athletic events. Given a list of sports and games offered at the camps, there is no uncertainty that the statute applies and, thus, no real need to engage in a painstaking effort to discern the facilities' primary purpose. Kanakuk fails to show how its activities are outside the statutory taxing language even under the "primary purpose" test. The listing of activities, documents, and sports manuals do not suggest extensive time is spent on instruction but, rather, that the purpose of the camps is recreation, games and athletics.

Opinion Concurring in Result

The separate opinion concurs with the result reached by the majority but not that part of its rationale based on prior case law that attempts to distinguish a primary purpose between exercise and recreation.

Citation:

Opinion Author: John C. Holstein, Judge

Opinion Vote: AFFIRMED. Limbaugh, Covington, White and Wolff, JJ., and Ahrens, Sp.J., concur; Price, C.J., concurs in result in separate opinion filed; Wolff, J., concurs in opinion of Price, C.J. Benton, J., not participating.

Opinion:

Kanakuk-Kanakomo Kamps, Inc., (Kanakuk) appeals the decision of the Administrative Hearing Commission (AHC) finding it a place of "recreation, games and athletic events" within the meaning of sec. 144.020.1(2)¹ and, therefore, subject to sales tax. Since this case requires the construction of revenue laws, this Court has exclusive appellate jurisdiction. Mo. Const. art. V, sec. 3. The decision of the AHC is affirmed.

This Court's review of the AHC's decision is limited. The AHC's decision shall be upheld when authorized by law and supported by competent and substantial evidence upon the whole record. Sec. 621.193; see also Mo. Const. art. V, sec. 18. Moreover, the evidence is viewed in a light most favorable to the decision, together with all reasonable inferences that support it. Shell Oil Co. v. Director of Revenue, 732 S.W.2d 178, 180 (Mo. banc 1987). Viewed in this light, the facts are as follows:

Kanakuk is a Texas corporation with a principal place of business in Branson, Missouri. Kanakuk operates five summer camps in Taney and Stone Counties for youths ranging from age 8 to 18. Both boys and girls attend the camps, although they stay in segregated quarters on opposite sides of the facilities. Approximately 9,500 campers stay at Kanakuk each summer. Each can sign up for stays of 7, 14, or 26 days for which all but a few underprivileged children pay a tuition fee.² The camps offer children athletic activities and attempt to inculcate Christian faith and values at the same time.³ The activities Kanakuk offers include: football, soccer, basketball, baseball, tennis, kayaking, archery, fishing, golf, karate, mountain biking, riflery, track and field, volleyball, weight training, wilderness camping, wrestling, gymnastics, cheerleading, dance, fitness and nutrition, nature and leather craft activities, water slides, the blob,⁴ water zipline,⁵ jet ski, water trolley, canoeing, diving, sailing, swimming, wind surfing, frisbee, ultimate frisbee, frisbee golf, aerial tennis, cross country, adventure games, wall climbing, juggling, rappelling, ropes, challenge courses, pottery, crafts, barn swing, warball, musical and dramatic presentations, putt-putt, and washers.⁶

These activities are tightly scheduled and highly structured. Campers get to choose a sport that becomes their specialty activity, such as football, soccer, or basketball. The older children spend more time engaging in this specialty activity due to increased ability to concentrate. In addition to this "major" sport, children may participate in sessions focusing on "minor" events as well as some free time to select from a number of activities of their choosing with instructor supervision. Each of the activities at Kanakuk is designed to teach Christian principles in addition to improving athletic skills. In the evening, more time is set aside for Christian teaching in addition to the scheduled morning and evening devotional periods.

Kanakuk instructors and counselors are typically student athletes in college or have just completed high school. The camp seeks to hire staff with athletic abilities, and admits it cannot really use employees lacking athletic abilities. Kanakuk insists that each of them be a committed Christian. However, the greatest emphasis is on athletic abilities and experience. Since the staff eats, sleeps, and works around and with children, Kanakuk tries to employ people who also love children. Instructors are provided with clinic handbooks for each specialty sport, which outline drills and techniques to practice the various sports, daily Bible verses, and allocate time to specific drills, competition, or exercise.

Section 144.020.1(2) imposes sales tax on fees paid in or to any place of "amusement, entertainment or recreation, games and athletic events." Laws imposing taxes are to be strictly construed, and so the right to tax must be conferred by plain language, for it will not be extended by implication. Blue Springs Bowl v. Spradling, 551 S.W.2d 596, 599 (Mo. banc 1977). The plain language of the statute makes it clear that Kanukuk, if it is to be taxed, must be a place of "recreation, games and athletic events." Where there is uncertainty as to the application of these statutory words, this Court's recent decision in Columbia Athletic Club v. Director of Revenue, 961 S.W.2d 806 (Mo. banc 1998), offers guidance.

[I]n the context of section 144.020.1(2), a place of recreation is a building or locality that has as its special purpose, the facilitation of diversion or entertainment. The focus of the analysis, when applying section 144.020.1(2), is necessarily on that special purpose, or more accurately, on the primary purpose of the facility involved. If the primary purpose of the facility is to facilitate diversion or entertainment, then the facility is a place of recreation and is subject to assessment of sales tax....

Id. at 809-10 (emphasis original). There is no uncertainty as to the applicability of the statutory language to the activities here and, thus, no real need to engage in a painstaking effort to discern the facilities' primary purpose. Kanakuk fails to show how its activities are outside the statutory taxing language even under the "primary purpose" test.

In seeking to determine the primary purpose of the athletic club's facility in Columbia Athletic Club, this Court identified the dual nature of exercise. Id. at 810. Specifically, since the fitness center facilitated exercise, this Court had to determine whether exercise, having both recreational and health-related aspects, can be considered recreation under sec. 144.020.1(2). Id. In ascertaining the primary purpose of a facility displaying a dual nature, one recreational and one non-recreational, a court must consider how the facility is viewed within normal contemplation. Id. Clearly, this requires an objective analysis of the nature of a facility. The Court discounted the subjective reasons any...