Missouri Water v. Collector of St. Charles, ED 81550.

• Decision Date: 25 February 2003
• Docket Number: No. ED 81550.,ED 81550.
• Citation: 103 S.W.3d 266
• Parties: MISSOURI AMERICAN WATER COMPANY, Appellant, v. COLLECTOR OF ST. CHARLES COUNTY, MISSOURI, Respondent.
• Court: Missouri Court of Appeals

Page 266

103 S.W.3d 266

MISSOURI AMERICAN WATER COMPANY, Appellant, v. COLLECTOR OF ST. CHARLES COUNTY, MISSOURI, Respondent.

No. ED 81550.

Missouri Court of Appeals, Eastern District, Division Four.

February 25, 2003.

Motion for Rehearing and/or Transfer to Supreme Court Denied April 16, 2003.

Application for Transfer Denied May 27, 2003.

COPYRIGHT MATERIAL OMITTED

Meredith E. Perkins, St. Louis, MO, for appellant.

Charissa L. Watson, St. Charles, MO, for respondent.

GLENN A. NORTON, Judge.

Missouri American Water Company appeals the judgment dismissing its petition against the Collector of St. Charles County for a refund of taxes "mistakenly or erroneously paid." We affirm.

I. BACKGROUND

Because this is an appeal from the grant of a defendant's motion to dismiss for failure to state a claim, we accept as true all well-pled allegations in American Water's petition and liberally grant it all reasonable inferences drawn therefrom. See Nazeri v. Missouri Valley College, 860 S.W.2d 303, 306 (Mo. banc 1993). We also consider exhibits attached to the petition as part of the allegations. Suburban Business Products, Inc. v. T.E. Schmitt Co., 796 S.W.2d 77, 78 (Mo.App. E.D.1990); Rule 55.12.

In 1999, American Water filed lists declaring the value of its taxable real property at a total of over $12.5 million. The valuations shown on American Water's tax bills were the same as the company had declared. Based on these values, the company's tax liability was $249,403, which American Water paid timely and without protest. The following year, American Water determined that it had made a clerical error in calculating the value of its property. The total value of the property was actually less than $1.5 million. American Water timely requested a partial refund from the Collector, claiming that its valuation was a material misstatement. It believed that extra data had been inadvertently included in its calculations, but because the responsible employee no longer worked at the company and left nothing to support his work, American Water would "never know for sure" what happened.

The Collector denied the request for a refund, finding American Water's explanation insufficient to establish that the taxes had been mistakenly or erroneously paid. American Water filed an application for review of the valuation with the board of equalization, which the board denied as untimely because it did not have authority to hear appeals from previous tax years. American Water also filed a petition with the circuit court, seeking relief under section 139.031.5 RSMo 2000.¹

The Collector moved to dismiss the petition on the grounds that American Water had failed to state a claim. The court granted the motion. Because the company had provided the valuation itself, the court found that American Water had adequate notice and an opportunity to seek administrative relief from the value assessment. Having failed to timely seek that relief, the court concluded that the taxes calculated on American Water's value assessment were valid. The court found that section 139.031.5 was not designed to remedy American Water's problem: it "is not a substitute for exhaustion of administrative remedies, and the clerical error described by [American Water] ... is not the type of mistake or error in payment that Section 139.031.5 is designed to remedy."

II. DISCUSSION

A motion to dismiss for failure to state a claim is solely a test of the adequacy of the plaintiff's petition. Nazeri, 860 S.W.2d at 306; see also Freeman v. Leader Nat. Ins. Co., 58 S.W.3d 590, 596 (Mo App. E.D.2001). We do not attempt a weigh whether alleged facts are credible or persuasive. Nazeri, 860 S.W.2d at 306. "Instead, the petition is reviewed in an almost academic manner, to determine if the facts alleged meet the elements of a recognized cause of action, or of a cause that might be adopted in that case." Id. at 306. We will reverse a dismissal if the facts in the petition and any reasonable inferences drawn therefrom state any basis for relief. See Sullivan v. Carlisle, 851 S.W.2d 510, 512 (Mo. banc 1993).

American Water claims that it has a basis for relief under section 139.031.5. In its three inter-related points on appeal, American Water contends that to recover a refund under section 139.031.5, the taxpayer need not exhaust any administrative remedies. American Water argues that taxpayers are automatically entitled to a refund for taxes mistakenly or erroneously paid by filing a timely application with the collector. Because a portion of the taxes in this case were paid on the basis of a clerical error, American Water claims that they were mistakenly or erroneously paid and that it is entitled to a refund.

The Supreme Court has exclusive jurisdiction over the construction of the revenue laws of this state. Mo. CONST art. V, sec. 3. The legal issues raised in this appeal can be disposed of by applying prior Supreme Court cases construing section 139.031.5; therefore, this Court has jurisdiction. Bachman v. City of St. Louis, 868 S.W.2d 199, 200 (Mo.App. E.D.1994).²

Section 139.031.5 provides that the Collector "shall, upon written application of a taxpayer, refund any real ... property tax mistakenly or erroneously paid .... Such application shall be filed within one year after the tax is mistakenly or erroneously paid." The Supreme Court has addressed only a few cases in which the taxpayer sought a refund under this section. American Water relies on Crest Communications v. Kuehle, 754 S.W.2d 563, 566 (Mo. banc 1988). In that case, the taxpayer declared the value of his property for 1985, and the county sent notice of an increased assessment, which the taxpayer appealed to the board of equalization and state tax commission. Id. at 563-64. While the administrative appeal was pending, the taxpayer paid the 1985 taxes under protest and declared the value of his property for 1986 at the same amount he had declared in 1985. Id. at 564. The taxpayer paid the 1986 taxes, as shown on his tax bill, without protest. Id. The 1986 taxes had been calculated on the increased assessment amount, but the taxpayer had not received notice of the increase for 1986. Id. Thereafter, the state tax commission issued its decision finding the increased assessment excessive and issuing its determination of a reduced assessment. Id. The taxpayer applied to the collector for a refund of that portion of the 1986 taxes calculated on the excessive assessment, which the collector denied. Id. The taxpayer then sought relief in circuit court under section 139.031.5. Id.

The circuit court dismissed the petition for failure to state a claim because the taxes were not mistakenly or erroneously paid and because, having failed to first pay under protest, the taxpayer was precluded from seeking relief. Id. On appeal, the Supreme Court found that when notice of an increased assessment is not given as required by statute, then a taxpayer cannot be required to first pay the taxes under protest before recovering under section 139.031.5 for mistaken or erroneous payments. Id. at 566.

The Court also concluded that the taxpayer had alleged facts establishing a mistaken or erroneous payment within the meaning of section 139.013.5. It found that because the increase without notice was invalid, payment of taxes calculated thereon was mistaken or erroneous "at least in a case in which the public authorities are well aware of the disagreement with the taxpayer over valuation, as indicated here by the 1985 valuation litigation." Id. at 567. The Court distinguished between its situation and one where the taxes are lawfully and properly assessed:

Like the taxpayer who makes a double payment of his tax bill, the plaintiff here has alleged payment of taxes not owed, and this situation is to be distinguished from the circumstances ... in which the taxpayer paid taxes "lawfully and properly assessed."

Id. at 567 (quoting State ex rel. Council Apartments, Inc. v. Leachman, 603 S.W.2d 930, 931 (Mo.1980) (decided under section 139.031.4 RSMo 1978, predecessor to section 139.031.5)).

The Court in Crest demonstrated that its holding was consistent with the purpose of the statute — to balance the interests of taxpayers and collectors by assigning duties and responsibilities to each — and with public policy favoring certainty in revenue collection and discouraging suits for refunds. 754 S.W.2d at 567. "If in this case the [statutory] scheme did not provide the government with all the revenue it anticipated and resulted in undesired litigation, it is because the county assessor failed to fulfill his statutory obligation [regarding notice]." Id. The Court concluded that the plaintiffs had stated a cause of action under section 139.031.5. Id.

As the Supreme Court has since pointed out, the facts of Crest were unique and resulted in a unique outcome. Buck v. Leggett, 813 S.W.2d 872, 878 (Mo. banc 1991). In Buck, the taxpayer's property was assessed at $11,000 one year, $50,700 the next, and $19,600 the following year. Id. at 874. For each of those years, the taxpayer paid the taxes shown on his tax bills, which were based on these valuations, without protest. Id. Later, he claimed that the taxes based on the $50,700 valuation were mistakenly or erroneously paid and sought a refund under section 139.031.5, which the collector denied. Id. The taxpayer petitioned the circuit court for relief under section 139.031.5, and summary judgment was entered in the collector's favor. Id.

On appeal, the taxpayer admitted that ordinarily certain steps must be taken to preserve a challenge to an increased value assessment. Buck, 813 S.W.2d at 875. But he claimed that he did not have to exhaust these administrative remedies before seeking a refund under 139.031.5 because he had no notice of the increase. Id. The Supreme Court found that even if the taxpayer has not received formal notice, by paying the taxes he was charged with notice of the...