Kansas City v. Querry

• Decision Date: 22 July 1974
• Docket Number: No. 57457,No. 1,57457,1
• Parties: KANSAS CITY, Missouri, a municipal corporation, Respondent, v. Marion N. QUERRY, Appellant
• Court: Missouri Supreme Court

Page 790

511 S.W.2d 790

KANSAS CITY, Missouri, a municipal corporation, Respondent, v. Marion N. QUERRY, Appellant.

No. 57457.

Supreme Court of Missouri, Division No. 1.

July 22, 1974.

Aaron A. Wilson, City Counselor, Norma S. Webster, Asst. City Counselor, Kansas City, for respondent, Kansas City, Missouri.

Kenneth K. Simon, Bruce W. Simon, Kansas City, for appellant.

HIGGINS, Commissioner.

Appeal from judgment for plaintiff for delinquent earnings taxes involving construction of revenue laws.

On June 24, 1955, the City of Kansas City, by deed of gift, donated to the United States 1,787.85 acres of land, more or less, of which 837.64 acres were located in Jackson County, Missouri.

Exclusive jurisdiction over the lands above described was ceded to the United States by the State of Missouri by virtue of Section 12.040 Revised Statutes of Missouri, Laws 1955, page 768, Section 2, which became effective on August 29, 1955, subject to reservation of right of taxation for the State of Missouri.

Exclusive jurisdiction of the lands was accepted by the United States on September 20, 1955, by letter from the Undersecretary of the Air Force to the Governor of Missouri, and the lands were incorporated into and now comprise the major part of the federal military installation known as Richards-Gebaur Air Force Base.

Under the authority of the Constitution and Laws of Missouri, the charter of Kansas City, Missouri, was amended March 1, 1960, by adding to Article I one new section extending the corporate limits of the city in Jackson County, Missouri, and fixing the effective date of the amendment as January 1, 1963. The legal description of the lands annexed by the charter amendment includes that part of Richards-Gebaur Air Force Base which lies in Jackson County, Missouri.

Annexation of said lands was not objected to by the United States, and the annexation does not affect federal title, legislative jurisdiction, or otherwise interfere with operation of the base by the Department of the Air Force.

Under authority of the Constitution and Laws of Missouri and by provisions of its charter, plaintiff has enacted Ordinance No. 29331 entitled 'Earnings and Profits Tax,' which ordinance bacame effective December 20, 1963, and has remained in full force and effect to the present date. Section 32.141(a)(2) of the ordinance provided that a tax of one-half percent per annum was imposed on all salaries, wages, commissions, and other compensation earned or received by nonresident individuals of the city for work done or services performed or rendered in the city.

During the year 1967, defendant was a nonresident of Kansas City, Missouri, and earned fifty percent of his income in the year 1967 as a result of employment for the United States government within that portion of the Richards-Gebaur Air Force Base situated within Jackson County, Missouri. His earnings in that capacity amounted to $8,235.27.

The court found:

'1. The annexation of the City of Kansas City, Missouri of that parts of Richards-Gebaur Air Force Base lying within Jackson County, Missouri is valid.

'2. The City of Kansas City, Missouri has the power to tax earnings of non-residents of the City employed upon that portion of Richards-Gebaur Air Force Base within the city limits.

'3. Sec. 12.040 V.A.M.S. '. . . reserving . . . to the State of Missouri the right of taxation to the same extent and in the same manner as if this cession had not been made . . .' (pertaining to land acquired by the United States for military and other purposes) is to be construed as reserving said rights to the State of Missouri including its political subdivisions.

'4. The City of Kansas City, Missouri is not denied the right to tax the earnings in question by virtue of Sec. 12.040 V.A.M.S.

'5. Defendant is obligated to plaintiff for earnings taxes for the year 1967 in the sum of $20.59 plus interest at the rate of 6 percent per annum from April 15, 1968.'

Judgment was rendered accordingly.

Appellant contends the court erred 'in holding that a nonresident of Kansas City employed by federal government on a federal reservation and performing a portion of his duties on said reservation within Jackson County, Missouri, is subject to the taxing provisions of the City of Kansas City, Missouri.'

Appellant argues that Section 12.040, RSMo 1959, V.A.M.S., ¹ precludes the City of Kansas City, or any other city so situate, from enforcing its tax ordinances upon the income of defendant or others so situate. He describes this provision as an 'exemption,' to argue further that such exemption is consistent with other mandatory exemptions of sources of income utilized by the state legislature which result in restriction of the scope of the 'E Tax.' In the latter category appellant cites Section 92.220 RSMo 1969, V.A.M.S., and Section 32.144, Code of General Ordinances of the City of Kansas City, which exempt from the earnings tax income referred to in Sections 143.120 to 143.150, i.e., service pay, income from certain organizations, estates and trusts, and other types of income, none of which resembles appellant's earnings; and Section 148.480, RSMo 1959, V.A.M.S., which provides that a two percent tax on dividends of savings and loan associations shall be exclusive and in lieu of all other taxes due from such associations. See City of Poplar Bluff v. Poplar Bluff Loan & Bldg. Ass'n, 369 S.W.2d 764 (Mo.App.1963).

Appellant asserts that these provisions show that the legislature can exclude any particular source of income from a city's taxing power; and that because of the language of Section 12.040, supra, the State of Missouri unconditionally surrendered any jurisdictional interest other than the right to tax specifically reserved to the state without similar protection to any subordinate jurisdiction such as a county or city.

Appellant also asserts that the only reason for acquisition of the lands in question by Kansas City was for revenue purposes, and that such annexation is not valid because it was solely for 'profit' for the city. See the 'unique' case, United States v. City of Bellevue, 474 F.2d 473 (8th Cir.1973), affirming 334 F.Supp. 881 (D.C.Neb.1971), where a direct attack on a city's intended annexation was successful under conclusive evidence that the city's intention by the annexation was solely to obtain revenue.

Appellant's position presents two questions:

1. Is the annexation by Kansas City of part of Richards-Gebaur Air Force Base valid?

2. Does Kansas City have the power to tax earnings of nonresidents of the city employed upon that portion of the base within the city limits?

Both questions are answered in the affirmative.

Howard v. Commissioners of Louisville, 344 U.S. 624, 73 S.Ct. 465, 97 L.Ed. 617 (1953), presented virtually identical questions, i.e., the validity of the annexation by the city of federally-owned lands on which a naval ordnance plant was located; and the validity of the city's occupational tax as applied to employees of the plant. The facts were equally similar: In 1940 the United States acquired the land by condemnation with consent of the legislature of Kentucky given by general statute. In 1941, the Secretary of the Navy on behalf of the United States accepted exclusive jurisdiction over the area, and the Governor of Kentucky acknowledged this acceptance. In 1947 and 1950 the city annexed certain territory including the ordnance plant tract. The annexation was not challenged. After the annexation, the city started to collect from employees of the plant a license tax for the privilege of working in the city, measured by one percent of all salaries, wages and commissions earned in the city. The plant employees sought a declaratory judgment that the ordnance plant was not within the city and therefore the employees were not subject to the tax. The Jefferson County Circuit Court of Kentucky granted relief to the employees; the Court of Appeals of Kentucky reversed and entered judgment for the city. The Supreme Court agreed, answering the questions presented in the affirmative:

'The appellants first contend that the City could not annex this federal area because it had ceased to be a part of Kentucky when the United States assumed exclusive jurisdiction over it. With this we do not agree. When the United States, with the consent of Kentucky, acquired...