Northeast Osteopathic Hospital v. Keitel

• Decision Date: 11 November 1946
• Docket Number: 39951
• Citation: 197 S.W.2d 970,355 Mo. 740
• Parties: Northeast Osteopathic Hospital, a Corporation, Appellant, v. E. J. Keitel, Harry Drisler and George A. Rozier, Constituting the the Unemployment Compensation Commission of Missouri
• Court: Missouri Supreme Court

197 S.W.2d 970

355 Mo. 740

Northeast Osteopathic Hospital, a Corporation, Appellant, v. E. J. Keitel, Harry Drisler and George A. Rozier, Constituting the the Unemployment Compensation Commission of Missouri

No. 39951

Supreme Court of Missouri

November 11, 1946

Rehearing Denied December 9, 1946.

Appeal from Cole Circuit Court; Hon. Sam C. Blair, Judge.

Affirmed.

Myer M. Rich and O. Hampton Stevens for appellant.

(1) The court erred in sustaining the order and findings of the commission for the reason that respondents' answer admits that appellant's employees are engaged in employment specifically exempted from the provisions of the Missouri Unemployment Compensation Act. James v. Kansas City Gas Co., 325 Mo. 1054, 30 S.W.2d 118; Conrad v Diehl, 344 Mo. 811, 129 S.W.2d 870; Kratz v Rally, 47 S.W.2d 221; Farmers & Traders Bank v. Kendrick, 341 Mo. 571, 108 S.W.2d 62; Fleming v. Joseph F. McMahon Contracting Corp., 45 S.W.2d 952. (2) The court erred in sustaining the order and findings of the commission on the ground that appellant did not claim exemption on any ground enumerated in the Unemployment Compensation Act. Sec. 9423 (i) (6) (F), Mo. Statutes, Anno.; 1 Commerce Clearing House, Unemployment Insurance Reporter, p. 604. (3) The court erred in sustaining the order and findings of the commission on the ground that part of the net earnings have inured to the benefit of a private individual. 28 Words & Phrases, p. 24; 19 C.J., p. 85; Virginia Mason Hospital Assn. v. Larson, 114 P.2d 476; Northwestern Municipal Assn., Inc., v. United States, 99 F.2d 460; Webster's Collegiate Dictionary. (4) The court erred in sustaining the order and findings of the commission on the ground that appellant was not organized and operated exclusively for charitable purposes. Secs. 5436, 5439, 5449, R.S. 1939; Washington University v. Baumann, 341 Mo. 648, 108 S.W.2d 403; American Cooperative Serum Assn. v. Anchor Serum Co., 153 F.2d 907; Mason v. Zimmerman, 81 Kan. 246; Board of Assessors v. Boston Pilots Relief Assn., 311 Mass. 232, 40 N.E.2d 889; Boston Chamber of Commerce v. Assessors of Boston, 315 Mass. 712, 54 N.E.2d 199. (5) The court erred in sustaining the order and findings of the commission because both the federal government and the State of Missouri have exempted appellant as a charitable and benevolent corporation from payment of income tax, capital stock tax, federal unemployment and social security taxes and state sales tax, and the local city and county governments have exempted appellant from liability for real estate, personal property and occupation taxes as a charitable and benevolent corporation. Lexington Cemetery Co., Inc., v. Commonwealth of Kent, 181 S.W.2d 699; 42 Am. Jur., p. 392; State ex rel. Barrett v. First Natl. Bank of St. Louis, 297 Mo. 397, 249 S.W. 619; In re Bernay's Estate, 344 Mo. 135, 126 S.W.2d 209; United States v. American Trucking Assn., 60 S.Ct. 1059, 310 U.S. 534; Internal Revenue Act, Title 26, Sec. 101, U.S. Code Ann.; Title 26, Sec. 1426 (b) (8), U.S.C.A.; Title 26, Sec. 1607 (c) (8), U.S.C.A.; Sec. 9423 (f) (6) (F), Mo. Statutes Anno. (5) The court erred in sustaining the order and findings of the commission for the reason that the commission refused to follow the law in this state as declared by the Supreme Court, which has held that the question of appellant's exemption is to be determined solely from its charter powers. Murphy v. Concordia Pub. House, 348 Mo. 753, 155 S.W.2d 122; In re First Natl. Safe Deposit Co., 351 Mo. 423, 173 S.W.2d 403; Northwest Municipal Assn. v. United States, 99 F.2d 460; Helvering v. Coleman-Gilbert, 296 U.S. 369, 56 S.Ct. 285.

Charles F. Moseley, Counsel, and John L. Porter, Assistant Counsel, for respondents; Michael J. Carroll of Counsel.

(1) No admission of a conclusion of law, such as that alleged by the appellant, was made or could be made by the respondents because such an admission would deprive the circuit court of the jurisdiction provided for it by law in suits to review findings and decisions of the Unemployment Compensation Commission. Sec. 9432B, R.S. 1939, as amended. (2) The fact that other governmental agencies may have administratively exempted the appellant from certain taxes is not controlling in considering the status of the appellant under the Unemployment Compensation Law. Park Floral Co. v. Industrial Comm., 104 Colo. 350, 91 P.2d 492; American Medical Assn. v. Board of Review of Department of Labor, 392 Ill. 614, 65 N.E.2d 350; Hassett v. Associated Hospital Service Corp. of Massachusetts, 125 F.2d 611. (3) Exemptions from taxation must be strictly construed against the applicant for the exemption. Kansas City Exposition Driving Park v. Kansas City, 174 Mo. 425, 74 S.W. 977; State ex rel. Y.M.C.A. v. Gehner, 320 Mo. 1172, 11 S.W.2d 30; St. Louis Y.M.C.A. v. Gehner, 329 Mo. 1007, 47 S.W.2d 766; Wyman v. City of St. Louis, 17 Mo. 335; Hudgins v. Mooresville Consolidated School District, 312 Mo. 1, 278 S.W. 769; State ex rel. Laundry, Inc., v. Public Serv. Comm., 327 Mo. 93, 34 S.W.2d 37; Sec. 9423 (i) (6) (F), R.S. 1939, as amended; 2 Cooley on Taxation (4th Ed.), p. 1403; 59 C.J., 1106, sec. 657; Endlich on Interpretation of Statutes, p. 142, sec. 108. (4) The appellant is neither organized nor operated exclusively for charitable purposes and a part of its net earnings inures to the benefit of a private individual. Murphy v. Concordia Publishing House, 348 Mo. 753, 155 S.W.2d 122; Better Business Bureau of Washington, D.C., Inc., v. United States, 66 S.Ct. 112; United States v. La Societe Francaise De Bienfaisance Mutulle, 153 F.2d 243; Art. X, Chap. 33, R.S. 1939; Sec. 9423 (i) (6) (F), R.S. 1939, as amended; Sec. 811, (b) (8), Social Security Act; 26 U.S.C.A., sec. 1426 (b) (8); California Employment Comm. v. Betthesda Foundation, 128 P.2d 874; Fleming Hospital Inc. v. Williams, 169 S.W.2d 241; Bistline v. Bassett, 272 P. 696; Riverview Hospital v. City of Tomahawk, 243 Wis. 501, 11 N.W.2d 188; Prairie Du Chien Sanitarium Co., Inc., v. City of Prairie Du Chien, 242 Wis. 262, 7 N.W.2d 832; Rogers Memorial Sanitarium v. Town of Summit, 279 N.W. 623; City of Knoxville v. Fort Sanders Hospital, 257 S.W. 408; In re Farmers' Union Hospital Assn. of Elk City, 126 P.2d 244; Southwestern Osteopathic Sanitarium v. Davis, 242 P. 1033.

Van Osdol, C. Bradley and Dalton, CC., concur.

OPINION

VAN OSDOL

Appeal from a judgment affirming a decision of the Unemployment Compensation Commission of Missouri.

The Commission decided the services performed in the employ of appellant Hospital are not excluded from the statutory definition of the term "employment," as used in the Unemployment Compensation Law by Section 9423 (i) (6) (7), R.S. 1939, Mo. R.S.A. Sec. 9423 (i) (6) (7); now Section 9423 (i) (6) (F), Laws of Missouri 1943, p. 921. The Section provides the term "employment" as used in the Law shall not include "(F) Service performed in the employ of a corporation, community chest, fund, or foundation, organized and operated exclusively for religious, charitable, scientific, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual . . ."

At the outset we must consider a contention of Hospital, appellant, that Commission by its answer to Hospital's petition filed in the instant action for review admitted the services performed in the employ of Hospital are specifically excluded from the purview of the Unemployment Compensation Law.

In its petition Hospital alleged, "1. Comes now Northeast Osteopathic Hospital, Plaintiff, and shows the Court that it is a corporation, duly organized and existing according to law, and that it was formerly known as Northeast Hospital; that plaintiff is a charitable corporation, within the meaning of the law, and that the employment of its employees is not subject to the Unemployment Compensation Act, for the reason that its employees are specifically exempted from the provisions of the Missouri Unemployment Compensation Act by Section 9423 (i) (6) (F)." In the second numbered paragraph of the petition the fact of the decision of Commission adverse to plaintiff Hospital is alleged, and it is further stated the action is brought to review the decision. In the third numbered paragraph (with seven lettered subparagraphs) Hospital undertook to state the grounds upon which the review was sought. See Section 9432B (c), Laws of Missouri 1943, p. 940. In this paragraph of the petition it was assigned Commission had erred in its decision for reasons set out in the seven lettered subparagraphs. The grounds for review so set out in paragraph numbered 3 were particularly stated by allegations of facts relating to Hospital's incorporation and operation, and relating to the determination of Hospital's exemption from payment of various taxes by Federal, State, County and City taxing agencies; it was further stated the exemption of Hospital should have been determined solely upon the purposes of Hospital's incorporation as set out in Hospital's charter; and that the decision of the Commission was not supported by competent and substantial evidence. Commission by answer, after certifying and stating the filing with the reviewing court of Commission's record, including all documents, papers and the transcript of the testimony as required by Section 9432B (c), supra, pleaded, "2. For further answer to the Petition of the Plaintiff herein, said Defendants deny each and every allegation in Plaintiff's Petition contained, except Defendants admit the allegations contained in the paragraphs numbered 1 . . . of said Petition." The averments in paragraph 1 of Hospital's petition that Hospital is a charitable...