North Supply Company

• Decision Date: 17 October 2000
• Citation: 29 S.W.3d 378
• Parties: (Mo.banc 2000) . North Supply Company, Appellant, v. Director of Revenue, Respondent. Case Number: SC82257 Supreme Court of Missouri Handdown Date:
• Court: Missouri Supreme Court

29 S.W.3d 378 (Mo.banc 2000)

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

North Supply Company, Appellant, v. Director of Revenue, Respondent.

Case Number: SC82257

Supreme Court of Missouri

Handdown Date: 10/17/2000

Appeal From: Petition for Review of a Decision of the Administrative Hearing Commission

Counsel for Appellant: Anthony M. Whalen

Counsel for Respondent: James R. Layton

Opinion Summary:

North Supply Company paid use taxes under section 144.190, which was later invalidated as unconstitutional. The legislature then repealed the statute in a bill that included an emergency clause so that the bill took effect on the governor's signature. Before the repeal, a taxpayer had three years to request a refund. Three days after the repeal became effective, NSC applied for the three-year refund. The Director of Revenue refused the three-year refund because of the statute's repeal and, instead, permitted a two-year refund under the general tax refund provision. The Administrative Hearing Commission affirmed.

REVERSED AND REMANDED.

Court holds:

Due process requires a refund of the unlawful taxes paid for all three years. The company was entitled to pursue what appeared to be a clear and certain post-deprivation remedy under the statute, regardless of the availability of the other remedies. The statute's clear and certain remedy was denied. The company should not be penalized for waiting until both the courts and legislature had spoken, and it should have a reasonable time after the statute's repeal to apply for a refund.

An earlier case, St. Charles County v. Director of Revenue, applying the two-year limitation period did not raise the due process issue and, therefore, the Court did not address it in that case.

Opinion Author: Stephen N. Limbaugh, Jr., Judge

Opinion Vote: REVERSED AND REMANDED. All concur.

Opinion:

Appellant, North Supply Company (NSC), seeks review of a decision of the Administrative Hearing Commission (AHC) affirming the Director of Revenue's (Director) partial denial of an application for a refund of local use taxes. NSC asks this Court to declare that the 1996 act repealing the local use tax was unconstitutional as applied, to the extent that it also eliminated the three-year statutory period for obtaining refunds of that tax. Because NSC challenges the constitutionality of a statute, this Court has jurisdiction. Mo. Const. art. V, sec. 3. The decision of the AHC is reversed, and the cause is remanded. Section 144.748, RSMo Supp. 1992, effective July 1, 1992, imposed a 1.5 percent local use tax, which applied to tangible personal property purchased from sellers outside Missouri but stored, used or consumed within Missouri. This tax was imposed in addition to a 4.225 percent local use tax in place before July 1, 1992, under sec. 144.610, RSMo 1986. In Associated Industries of Missouri v. Lohman, 511 U.S. 641 (1994) (AIM II), the United States Supreme Court, reversing the decision of this Court in Associated Industries of Missouri v. Director of Revenue, 857 S.W.2d 182 (Mo. banc 1993) (AIM I), held that, in localities where the use tax exceeds the sales tax, the system impermissibly discriminates against interstate commerce. AIM II, 511 U.S. at 643. On April 23, 1996, after remand from the Supreme Court, this Court struck down sec. 144.748 in its entirety, having determined that the legislature clearly intended that the statute be applied uniformly throughout the state or not at all. Associated Industries of Missouri v. Director of Revenue, 918 S.W.2d 780 (Mo. banc 1996) (AIM III). Soon thereafter, and in apparent response to AIM III, the legislature repealed sec. 144.748. The bill was signed into law on May 21, 1996, and was effective that date (instead of the usual 90 days after adjournment) by virtue of an emergency clause. Three days later, on May 24, NSC applied for a refund of the use taxes paid during the previous three years, from May 1993 through April 1996.

Before it was repealed, sec. 144.748 incorporated a special tax refund provision, sec. 144.190, RSMo 1994, that permitted full refunds with interest for taxes erroneously paid within three years of the refund request. When this Court first addressed the refund issue in St. Charles County v. Director of Revenue, 961 S.W.2d 44 (Mo. banc 1998), claims for refunds under sec. 144.190 that were made after May 21, 1996, were disallowed on the ground that the incorporation of that section was necessarily repealed as part of the repeal of sec. 144.748. Id. at 49. However, taxpayers who had not requested a refund before May 21, 1996, could still apply under the general tax refund provision, sec. 136.035, RSMo 1994, which has a two-year limitation period and which was not affected by the repeal of sec. 144.748. Consequently, the Director granted NSC a two-year refund under sec. 136.035, but denied a refund for the first year (1993-94) of the three-year claim. Thereafter, the AHC reviewed the Director's decision and affirmed.

NSC now raises a constitutional question that was neither raised nor addressed in St. Charles County: whether due process requires a refund of the unlawful taxes paid for all three years as had been provided under sec. 144.190. On this general question, the United States Supreme Court has held that the Due Process Clause requires states to "provide taxpayers with, not only a fair opportunity to challenge the accuracy and legal validity of their tax obligation, but also a 'clear and certain remedy' . . . for any erroneous or unlawful tax collection to ensure that the opportunity to contest the tax is a meaningful one." McKesson v. Department of Alcoholic Beverages & Tobacco, 496 U.S. 18, 39 (1990). In AIM II, the Supreme Court applied that principle in discussing the remand, noting that a "clear and certain remedy" must...