McKay Buick, Inc. v. Spradling, 59174

• Decision Date: 10 November 1975
• Docket Number: No. 59174,59174
• Citation: 529 S.W.2d 394
• Parties: McKAY BUICK, INC., a corporation, et al., Respondents, v. James R. SPRADLING, Director of the Department of Revenue of the State of Missouri, et al., Appellants.
• Court: Missouri Supreme Court

Page 394

529 S.W.2d 394

McKAY BUICK, INC., a corporation, et al., Respondents, v. James R. SPRADLING, Director of the Department of Revenue of

the State of Missouri, et al., Appellants.

No. 59174.

Supreme Court of Missouri, En Banc.

Nov. 10, 1975.

John C. Danforth, Atty. Gen., Clarence Thomas, Asst. Atty. Gen., for appellants.

David V. G. Brydon and James C. Swearengen, Jefferson City (Hawkins, Brydon & Swearengen), Jefferson City, for respondents.

BARDGETT, Judge.

In this declaratory judgment case the circuit court of Cole County upheld the constitutionality of Senate Bill 402 (§ 150.010, RSMo 1969, as amended 1974) enacted by the 77th general assembly in 1974 as against the contentions of appellants, director of revenue of Missouri and the tax commission of Missouri, that the act violated Art. X, § 4(a), (b), Mo.Const., as amended. In addition to § 150.010 being a revenue law of this state, this appeal involves the construction of the Constitution of Missouri and, therefore, this court has jurisdiction of the appeal. Art. V, § 3, Mo.Const., as amended.

Plaintiffs-respondents are motor vehicle dealers in Missouri and instituted this suit in circuit court seeking a declaration that § 150.010, as amended by Senate Bill 402 in 1974, is constitutional, and an order directing defendants-appellants to proceed with the taxation of respondents' motor vehicles and their goods, wares and merchandise held for use and sale in accordance with the provisions of § 150.010, as amended, and to enjoin said appellants from proceeding to tax respondents under the provisions of § 150.010 as it existed prior to the 1974 amendment.

Prior to the adoption of the 1974 amendment, § 150.010 provided:

150.010. Definition of merchant

Every person, corporation, copartnership or association of persons, who shall deal in the selling of goods, wares and merchandise at any store, stand or place occupied for that purpose, is declared to be a merchant. Every person, corporation, copartnership or association of persons doing business in this state who shall, as a practice in the conduct of such business, make or cause to be made any wholesale or retail sales of goods, wares and merchandise to any person, corporation, copartnership or association of persons, shall be deemed to be a merchant whether said sales be accommodation sales, whether they be made from a stock of goods on hand or by ordering goods from another source, and whether the subject of said sales be similar or different types of goods than the type, if any, regularly manufactured, processed or sold by said seller.

Motor vehicle dealers were subject to the same ad valorem property tax as other merchants and the tax on their motor vehicles and their stock of goods, wares and merchandise was computed in accordance with § 150.040 which provides:

150.040. Amount of tax to be paid

Merchants shall pay an ad valorem tax equal to that which is levied upon real estate, on the highest amount of all goods, wares and merchandise which they may have in their possession or under their control, whether owned by them or consigned to them for sale, at any time between the first Monday in January and the first Monday in April in each year; provided, that no commission merchant shall be required to pay any tax on any unmanufactured article, the growth or produce of this or any other state, which may have been consigned for sale, and in which he has no ownership or interest other than his commission.

The phrase 'amount of all goods, wares and merchandise' as used in 150.040 means the value in money of those items. That percentage of the value in money which becomes the base against which the tax rate or levy is applied is the 'assessed valuation'. Under the provisions of § 137.115, RSMo 1969, as amended 1973 (Laws of Mo.1973, p. 213), the assessed valuation of real and personal property is a sum equal to 33 1/3% of its true value in money.

In 1974 the general assembly repealed 150.010 and enacted in lieu thereof § 150.010 (Senate Bill 402) referred to herein as the 1974 amendment. Senate Bill 402, as truly agreed to and finally passed, is set forth in footnote one ¹ below.

Article X, §§ 3, 4(a) and 4(b), Mo.Const., provides:

Section 3. Limitation of taxation to public purposes--uniformity--general laws--time for payment of taxes--valuation. Taxes may be levied and collected for public purposes only, and shall be uniform upon the same class of subjects within the territorial limits of the authority levying the tax. All taxes shall be levied and collected by general laws and shall be payable during the fiscal or calendar year in which the property is assessed. Except as otherwise provided in this constitution, the methods of determining the value of property for taxation shall be fixed by law.

Section 4(a). Classification of taxable property--taxes on franchises, incomes, excises and licenses. All taxable property shall be classified for tax purposes as follows: class 1, real property; class 2, tangible personal property; class 3, intangible personal property. The general assembly, by general law, may provide for further classification within classes 2 and 3, based solely on the nature and characteristics of the property, and not on the nature, residence or business of the owner, or the amount owned. Nothing in this section shall prevent the taxing of franchises, privileges or incomes, or the levying of excise of motor vehicle license taxes, or any other taxes of the same or different types.

Section 4(b). Basis of assessment of tangible property--taxation of intangibles--limitation. Property in classes 1 and 2 and subclasses of class 2, shall be assessed for tax purposes at its value or such percentage of its value as may be fixed by law for each class and for each subclass of class 2. Property in class 3 and its subclasses shall be taxed only to the extent authorized and at the rate fixed by law for each class and subclass, and the tax shall be based on the annual yield and shall not exceed right percent thereof. (Emphasis added.)

Article X, § 8, limits the state tax on real and tangible personal property, except for that necessary to pay any bonded debt of the state to ten cents on each hundred dollars assessed valuation. Article X, § 11(b), limits municipalities and counties and school districts to various rates or levies on each one hundred dollars assessed valuation. Article X, § 14, requires the general assembly to establish a commission (state tax commission) to equalize assessments as between counties and to hear appeals from local boards in individual cases and, on appeal, to correct any, assessment which is shown to be unlawful, unfair, arbitrary, or capricious.

The constitutional and statutory provisions set forth above are not exhaustive of all laws relating to taxation in this state but are set forth because these provisions bear directly on the issue in this case and because the court is fully aware of the caution set forth in Hull v. Baumann, 345 Mo. 159, 131 S.W.2d 721 (1939), where the court, in construing the validity of a taxing statute said at 726: 'An act of the Legislature should not be declared unconstitutional unless it appears beyond a reasonable doubt that it is in contravention of the Constitution.'

All taxes are not subject to the same constitutional limitations or inhibitions. It is, therefore, necessary that the nature of the tax imposed by the 1974 amendment be determined. In Powell v. Gleason, 50 Ariz. 542, 74 P.2d 47, 114 A.L.R. 838 (1937), the court said at 50: 'Taxes fall into many different classes, and the tests as to their validity frequently differ in accordance with their nature. The three principal forms now in use are ad valorem property excise and income taxes. The phrase 'advalorem' means, literally, 'according to the value,' and is used in taxation to designate an assessment of taxes against property at a certain rate upon its value. . . . An ad valorem property tax is invariably based upon ownership of property, and is payable regardless of whether it be used or not, although of course the value may vary in accordance with such factor. . . . It, for many years, has been the chief, and frequently the only, method of securing revenue for the states and their local subdivisions. An excise tax, on the other hand, is a direct tax laid on merchandise or commodities, . . . It may or may not have an ad valorem factor therein. Scholey v. Rew, 23 Wall. (90 U.S.) 331, 23 L.Ed. 99. Income taxes are precisely what the name signifies; taxes based on income in money, gross or net. . . .'

In General American Life Ins. Co. v. Bates, 363 Mo. 143, 249 S.W.2d 458, 462 (1952), this court, in considering the nature of the tax there involved, said: 'The instant case involves a property tax, expressly so designated in the constitution, Art. 10, § 4, . . . and made subject to specific constitutional inhibitions. Excises include ". . . every form of taxation which is not a burden laid directly upon persons or property; in other words, excises include every form of charge imposed by public authority for the purpose of raising revenue upon the performance of an act, the enjoyment of a privilege, or the engaging in an occupation." (citing cases.) Excises are not subject to all the constitutional inhibitions applicable to taxes on property. They are valid as revenue measures if they operate alike upon all within the same class of subjects.'

The 1974 amendment, on its face, declares itself to be a property tax on motor vehicles. It undertakes to tax 'as a separate class of personal property' motor vehicles and the stock of goods, wares, and merchandise held for use and sale by motor vehicle dealers. It declares that the value of such personal property 'is fixed' and assesses a 'motor vehicle property tax' at $2.43 on new motor vehicles; $1.50 on used motor vehicles, and $0.57 on goods, wares, and merchandise other than motor vehicles. The tax is imposed at the time...