Kilbane v. Director of Dept. of Revenue
| Decision Date | 13 December 1976 |
| Docket Number | No. 59341,59341 |
| Citation | 544 S.W.2d 9 |
| Parties | Jerry KILBANE d/b/a Kilbane Dental Lab, Appellant, v. The DIRECTOR OF the DEPARTMENT OF REVENUE of the State of Missouri, Respondent. |
| Court | Missouri Supreme Court |
Jack N. Bohm, Stoup & Bohm, Kansas City, for appellant.
John C. Danforth, Atty. Gen., Douglas Mooney, Asst. Atty. Gen., Jefferson City, for respondent.
This is an appeal from a judgment which affirmed an assessment of sales tax by the Missouri Department of Revenue on gold and porcelain crown and bridgework fabricated on prescription by appellant for dentists. The sole issue for determination on appeal is whether such purchases by dentists are sales at retail within the definition thereof contained in § 144.010.1(9). 1 Since construction of the revenue laws of the state is involved, we have jurisdiction. Art. V, § 3, Mo.Const.
This case was heard in Division Two wherein an opinion was adopted which reversed the judgment and directed abatement of the tax assessed. Thereafter, the case was transferred to the court en banc and reheard. We affirm.
Appellant operates a dental laboratory in which he makes crown and bridgework pursuant to orders received from dentists. Appellant is furnished a prescription for each order, usually accompanied by an impression of the mouth of the patient. When completed, the crowns and bridgework are furnished to the dentist who then installs them in the mouth of his patient.
Appellant purchases from dental supply houses the various materials used by him in making crowns and bridgework. He pays sales tax on those materials but has not reported and paid sales tax on crowns and bridgework made for and sold to dentists.
On February 13, 1975, the Director of Revenue made an assessment of sales tax on bridgework and crowns sold by appellant between January 1, 1971, and March 30, 1974. Appellant contested the assessment and an evidentiary hearing was held by a hearing officer for the Department of Revenue. He made findings of fact and conclusions of law wherein he upheld the assessment, after allowing credit thereon for sales taxes shown to have been paid by appellant on materials used in making the crowns and bridgework. The amount of the assessment approved, including penalty and interest to date of the hearing officer's order, was $9,446.04. Thereafter, on petition for review to the circuit court, the assessment was affirmed and judgment was entered accordingly. This appeal followed.
In Berry-Kofron Dental Laboratory Co. v. Smith, 345 Mo. 922, 137 S.W.2d 452 (1940), this court determined that under the then existing sales tax law a dental laboratory was not liable for sales taxes on sales to dentists of articles similar to those involved here. At that time, § 1(g) of the Sales Tax Act, Laws 1937, p. 552, defined retail sales thus: "Sale at retail' means any transfer made by any person engaged in business as defined herein of the ownership of, or title to, tangible personal property to the purchaser, for use or consumption and not for resale in any form as tangible personal property, for a valuable consideration.' The court concluded that sales by dental laboratories to dentists of dentures, inlays, bridgework and other such items were not sales at retail within that definition and were not subject to sales tax. In so holding, the court concluded that when the dentist placed such devices in the mouths of his patients, he did not use or consume them.
Thereafter, in 1947, the Missouri General Assembly amended the Sales Tax Act by adding to the definition of 'Sale at Retail' the following language: '; provided, however, that for the purpose of this act and the tax imposed thereby, purchases of tangible personal property made by duly licensed physicians, dentists and veterinarians and used in the practice of their professions shall be deemed to be purchases for use or consumption and not for resale.' 2 The question squarely presented is whether, as a result of this amended definition of 'Sale at Retail,' sales of items such as crowns and bridgework, made for and sold to dentists for use in the mouths of their patients, are subject to sales tax.
When Berry-Kofron was decided, the sales tax law made taxable the transfer of tangible personal property for use or consumption by the purchaser. The act did not define the words 'use' or 'consumption' and there was no language specifically indicating whether the legislature intended to include therein items such as crowns, bridgework or dentures purchased by dentists on prescription for installation in the mouths of their patients. Accordingly, the court reviewed various dictionary definitions and concluded that the items in question were not used or consumed by the dentist. On that basis the court held that the sales thereof were not taxable to the dental laboratory, the seller.
With that background, the General Assembly enacted the 1947 amendment. By that amendment, the legislature added language to the existing definition which said that henceforth purchases of tangible personal property by dentists which were then used in the practice of their profession 'shall be deemed to be purchases for use and consumption and not for resale'. The same was to be true of similar purchases by physicians and veterinarians. What did the legislature intend by that amendment? What change in the applicable law was made?
Appellant argues that the new language applies only to things purchased from dental supply houses, such as dentist's chairs, surgical instruments, bandages, tongue depressors, medicines, etc., but does not apply to items made on order by dental laboratories and sold to the dentist placing the order. We find no language in the act to support such an interpretation. Neither dental supply houses nor dental laboratories are mentioned in the act. Furthermore, adoption of the interpretation proposed by appellant would mean that the 1947 amendment made no change in the law, because the items listed by appellant as taxable under the amended law were taxable before the amendment. In other words, the 1947 amendment would have accomplished nothing and would have been a useless act. Legislative changes should not be so construed unless no other conclusion is possible. The applicable rule of construction, stated in Gross v. Merchants-Produce Bank, 390 S.W.2d 591, 597 (Mo.App.1965), is as follows:
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...statutes by the courts, and that in amending a statute, the intent was to effect some change in the existing law. Kilbane v. Director of the Department of Revenue, 544 S.W.2d 9 (Mo. banc 1976); Sermchief, supra. Once the legislative intent is determined, the statute must be construed to eff......
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