Staley v. Missouri Director of Revenue, 62847

• Decision Date: 10 November 1981
• Docket Number: No. 62847,62847
• Parties: Robert L. and William C. STALEY, Petitioners, v. MISSOURI DIRECTOR OF REVENUE, Respondent.
• Court: Missouri Supreme Court

Page 246

623 S.W.2d 246

Robert L. and William C. STALEY, Petitioners, v. MISSOURI DIRECTOR OF REVENUE, Respondent.

No. 62847.

Supreme Court of Missouri, en banc.

Nov. 10, 1981.

Richard N. Brown, Brown & Casey, Brookfield, for petitioners.

John Ashcroft, Atty. Gen., Richard L. Wieler, Asst. Atty. Gen., Jefferson City, for respondent.

HIGGINS, Judge.

Petitioners seek reversal of a decision of the Administrative Hearing Commission which affirmed the Director's assessment of sales tax, penalties, and interest on petitioners' sale of certain tangible personal property. Petitioners assert that the decision is neither supported by substantial and competent evidence upon the whole record nor authorized by law. Section 161.338, RSMo 1978. Reversed.

Petitioners, as partners, owned two buildings used as grocery stores, both furnished with cash registers, counters, meat slicers, shopping carts, etc. The partnership leased all of this to two corporations, Staley's Super Foods, Inc., d/b/a Staley's Thiftway, in Brookfield, Mo., and Reed's Thriftway, Inc., d/b/a Staley's Thriftway in Macon, Mo. On August 17, 1977, the partnership contracted to sell all of the furnishings and lease the buildings to Wetterau, Inc., or its assigns, and agreed not to compete with Wetterau, Inc., or its assigns. This agreement further provided Staley's Super Foods, Inc. and Reed's Super Foods, Inc., would transfer the business of the two markets to Wetterau, Inc. The sale was closed on October 11, 1977, when the furnishings were sold for $523,000. On May 10, 1979, after an audit, the Director of Revenue assessed a tax on the sale of the furnishings which, including penalties and interest, totalled $40,000.

The tax was assessed pursuant to § 144.020.1, RSMo 1978 which in relevant part states, "A tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property ... in this state." The Director of Revenue asserts the tax was properly assessed because petitioners' sale is within the definition of "business" found in § 144.010.1(2), RSMo 1978: ¹

'Business' includes any activity engaged in by any person ... with the object of gain, benefit, or advantage, either direct or indirect, and the classification of which business is of such character as to be subject to the terms of sections 144.010 to 144.510. The isolated or occasional sale of tangible personal property, service substance, or thing, by a person not engaged in such business does not constitute engaging in business, within the meaning of sections 144.010 to 144.510 unless the total amount of the gross receipts from such sales, exclusive of receipts from the sale of tangible personal property by persons which is sold in the course of the partial or complete liquidation of a household, farm or non-business enterprise, exceeds three thousand dollars in any calendar year. The provisions of this subdivision shall not be construed to make any sale of property which is exempt from sales or use tax on June 1, 1977, subject to that tax thereafter.

Id. Under these sections any seller must pay sales tax if he is "engaged in the 'business' of selling" unless the sale is "isolated or occasional" in nature and totals less than $3,000 in a calendar year. An exception exists for the "liquidation of households, farms or non-business enterprises" which is not subject to sales tax regardless of the amount.

The Administrative Hearing Commission found that petitioners were not engaged in the business of selling supermarket furnishings and that the sale was a one-time, complete liquidation sale within the meaning of an isolated or occasional sale. It also held that because the sale was clearly in excess of the $3,000 limit and because petitioners were in business (and thus not within the non-business enterprise exception), sales tax was properly imposed. Petitioners contend that because they were in the rental business and not in the business of selling store furnishings, the sale comes within the "non-business enterprise" exception.

This case requires determination of the meaning of an "isolated or occasional sale ... in the course of the partial or complete liquidation of a ... non- business enterprise ..." § 144.010.1(2), RSMo 1978. The construction of a statute is a question of law. State ex rel. Igoe v. Bradford, 611 S.W.2d 343 (Mo.App.1980). Administrative agency decisions clearly based on the interpretation or application of law "are matters for the independent judgment of the reviewing court, and correction where erroneous." St. Louis County v. State Tax Commission of Missouri, 562 S.W.2d 334, 337-338 (Mo.banc 1979), State Board of Registration for Healing Arts v. Masters, 512 S.W.2d 150, 158 (Mo.App.1974). This Court must ascertain and enforce the intent of the legislature as manifested by the plain language of the statute viewed as a whole. Goldberg v. Administrative Hearing Commission, 609 S.W.2d 140 (Mo.banc 1980), Blue Springs Bowl v. Spradling, 551 S.W.2d 596 (Mo.banc 1977).

As related to liquidation sales the term "non-business enterprise" is subject to two interpretations. The first meaning is any such sale not made by a commercial entity. Under this meaning, adopted by the Commission, no sale by any business whatever constitutes a "non-business enterprise" liquidation. The other meaning, asserted by petitioners, includes all that which is encompassed by the first definition plus liquidation sales by commercial entities which are not within the normal course of dealings of the particular business. Although the latter interpretation arguably exceeds the plain meaning of "non-business", consideration of the plain meaning of the entire definition of "business" indicates that petitioners' interpretation is what the legislature intended.

The definition states that "business includes any activity ...." An "activity" is defined in Webster's Third New International Dictionary as "an occupation (or) pursuit ... in which a person is active." By comparision an "Act" is defined as "a thing done or being done", supra. The difference between an act, which denotes a single deed and an activity which denotes an ongoing occupation is significant because the legislature chose to use only "activity" and not both. To make this distinction clear, the next sentence states that "The isolated or occasional sale of tangible personal property ... by a person not engaged in such business (defined in the preceding sentence as activity) ... does not constitute engaging in business ...." Thus, when the general assembly contrasts "business" with "isolated or occasional sale", it intends to distinguish the two.

The legislature also selectively used the singular and plural forms of the word "sale". In reference to "isolated or occasional" transaction, "sale" is used; when referring to the $3,000 limit the word "sales" appears. Yet, the legislature returned to the singular, "sale", regarding "partial or complete liquidation". When "sales" is used it refers to when "the total amount of gross receipts from such sales ... exceeds three thousand dollars in any calendar year." The time length of one year fixed by the statute contemplates ongoing and repeated conduct. This usage indicates the legislature's intent to distinguish between the one-time liquidator and the repeated liquidator of tangible personal property.

In selective use of "sale" and "sales", and in distinguishing between "business" and "an isolated or occasional sale", the legislature intended to place a $3,000 limit, during any calendar year, on liquidation sales by one who is not, strictly speaking, in the business of selling the item(s) sold but who liquidates with such regularity that sales are not "isolated or occasional". As to "an isolated or occasional" liquidation sale within a year, by one not "engaged in the business of selling" the item sold, no $3,000 limit is applicable.

This construction is confirmed by the last sentence of this section which states: "The provisions of this subdivision shall not be construed to make any sale of property which is exempt from sales or use tax on June 1, 1977, subject to that tax thereafter." The previously existing section ² provided that the "isolated or occasional sale" was not equivalent to "engaging in the business of selling" and thus excluded. The sale in this case was, according to the Commission, "a one-time, complete liquidation sale which, prior to the 1977 amendment, would have been excluded from sales tax ... as an isolated or occasional sale." Yet, the Commission held that since the petitioners were in a business the tax applied. This holding by the Commission renders the last sentence meaningless. The legislature may not be charged with having done a meaningless act. State ex rel. Thompson-Sterns-Roger v. Schaffner, 489 S.W.2d 207 (Mo.1973). Admittedly petitioners' interpretation allows taxation of some "occasional or isolated sale" which formerly was exempt (i.e., those over $3,000), and thus is also contrary to the last sentence of the section. It is, however, the only reasonable interpretation which gives some effect to all of the provisions of § 144.010.1(2), RSMo 1978. It permits the assessment of sales tax on "isolated or occasional sales" over $3,000 in a year and maintains the exempt status of many if not all of those sales which the legislature intended to exclude prior to June 1, 1977 (i.e., those "isolated or occasional sales" which are either less than $3,000 or which constitute a liquidation of a household, farm or non-business enterprise). All provisions of a statute must be harmonized and every word, clause, sentence, and section thereof must be given some meaning. City of Willow Springs v. Missouri State Librarian, 596 S.W.2d 441 (Mo. banc 1980). Legislative changes should not be construed to be without purpose unless no other conclusion is possible. Kilbane v....