State ex rel. Brady Motorfrate, Inc. v. State Tax Commission

• Decision Date: 16 December 1974
• Docket Number: No. 58378,No. 2,58378,2
• Citation: 517 S.W.2d 133
• Parties: STATE of Missouri ex rel. BRADY MOTORFRATE, INC., a corporation, and Bruce Motor Freight, Inc., a corporation, Appellants-Respondents, v. STATE TAX COMMISSION, State of Missouri, Respondent-Appellant
• Court: Missouri Supreme Court

Page 133

517 S.W.2d 133

STATE of Missouri ex rel. BRADY MOTORFRATE, INC., a corporation, and Bruce Motor Freight, Inc., a corporation, Appellants-Respondents, v. STATE TAX COMMISSION, State of Missouri, Respondent-Appellant.

No. 58378.

Supreme Court of Missouri, Division No. 2.

Dec. 16, 1974.

Hendren & Andrae, John E. Burruss, Jr., Jefferson City, for appellants-respondents.

John C. Danforth, Atty. Gen., Richard L. Wieler, Asst. Atty. Gen., Jefferson City, for respondent-appellant.

HOUSER, Commissioner.

Brady Motorfrate, Inc. and Bruce Motor Freight, Inc., interstate motor carriers based in Iowa, filed with Missouri Department of Revenue claims for refund of Missouri license fees allegedly overpaid for the years 1968 and 1969 in the aggregate sum of $33,308.33. Later similar claims for the years 1966 and 1967, aggregating.$41,963.41, were filed by them. The Director of Revenue denied all claims. The State Tax Commission affirmed the ruling. The carriers then filed a petition for judicial review in circuit court which court reversed the rulings as to the 1968 and 1969 claims, holding that the wrong formula for calculating fees had been employed, and affirmed the denial of the 1966 and 1967 claims on the basis of the statute of limitations. The State Tax Commission appeals from the order of reversal. The carriers appeal from the order of affirmance. This Court has jurisdiction because a construction of the revenue laws of this state is involved.

The 1968 and 1969 Claims

In November, 1959, pursuant to the provisions of what is now § 301.277, RSMo 1969, V.A.M.S., the Missouri Highway Reciprocity Commission entered into a Vehicle Registration Proration and Reciprocity agreement with sixteen states, the purpose of which was to permit the contracting states to allow owners of fleets of commercial vehicles operating in two or more states to prorate the registration of their vehicles in each state in which the fleets operate on the basis of the proportion of miles operated within such state to total fleet miles. The agreement provided for the computation of annual fees and taxes by the total miles formula for carriers such as Brady and Bruce. Total fleet miles is defined in § 52 of the agreement as the total miles operated by the fleet in the contracting state, in all other contracting states, in other states having proportionate registration provisions, states with which such contracting states have reciprocity, and such other states as the administrator determines should be included under the circumstances in order to protect or promote the interest of his state, 'except that in States having laws requiring proration on the basis of a different determination of total fleet miles, total fleet miles shall be determined on such basis.'

The State of Iowa breached the agreement, acting unilaterally by permitting the use of another method of calculation known as the compact miles formula, under which a ratio is determined by comparing the miles operated by the fleet in the licensing state to the miles operated in the other states which are parties to the agreement, thus ignoring the factor of total miles operated by the fleet as defined in the agreement. The result was to increase the licensing state's percentage and thus to increase the dollar amount the carrier was required to pay for license fees.

When Iowa applied only compact miles in computing its proration percentage the Missouri Highway Reciprocity Commission decided 'to do the same to their (Iowa's) carriers to try and bring them back in line with the other states.' Accordingly, for the years 1966--1969, both inclusive, Missouri adopted the compact miles formula in calculating the fees charged Iowa-based carriers. As a result of this change the two Iowa-based carriers, Brady and Bruce, were required to pay additional license fees aggregating.$41,963.41 for the years 1966 and 1967 and $33,308.33 for the years 1968 and 1969. On January 6, 1970 Brady and Bruce filed claims for refund for 1968 and 1969 and on March 31, 1970 filed claims for refund for 1966 and 1967, in the above stated amounts, respectively, these figures representing the difference between computations under the compact miles and total miles formulae.

The issue is whether the Missouri Highway Reciprocity Commission had authority to compute and assess registration fees against Brady and Bruce on the compact miles formula.

The State Tax Commission seeks to justify its action on the basis of subsection 1 of par. 1 of § 301.277, RSMo 1969, V.A.M.S., which follows:

'1. The commission may negotiate and enter into reciprocal agreements or arrangements with other states, the District of Columbia, territories and possessions of the United States, and foreign countries as follows:

(1) To exempt, either wholly or partially, under such terms, conditions and restrictions as it deems proper, motor vehicles and trailers licensed in other states, the District of Columbia, territories and possessions of the United States, and foreign countries or political subdivisions thereof wherein the owner is a resident, from any or all registration fees, as provided by law, but any exemption afforded hereunder shall be extended to owners whose vehicles are duly licensed in the state of their residence only to the extent that substantially equivalent exemptions are extended by that state to vehicles which are duly licensed in this state.'

We are urged to rule that the conditions, restrictions and limitations upon the powers of the reciprocity commission contained in the above subsection mandatorily required the commission to deny exemptions to fleet owners based in states that do not afford similar exemptions to vehicles registered in Missouri--that is, called upon the commission to take steps to insure that Missouri-based vehicles were not 'disadvantaged' by the actions of other states. It is further proposed that the subsection 'by its express terms provides for the modification of the compact upon the occurrence of a stipulated event--the failure of another contracting state to treat Missouri carriers in a manner identical to Missouri's treatment of that state's carriers.' Citing Steel Haulers, Inc. v. United States, 316 F.Supp. 707 (W.D.Mo.1970), aff'd 440 F.2d 1176 (8th Cir. 1971); Berger v. McBride & Son Builders, Inc., 447 S.W.2d 18 (Mo.App.1969); Sharp v. Interstate Motor Freight System, 442 S.W.2d 939 (Mo. banc 1969); 1 Am.Jur.2d Administrative Law, §§ 92 et seq., and 81 C.J.S. States § 10, p. 905, the commission takes the position that an administrative agency may not act in excess of the powers and restrictions delegated to and imposed upon it by the legislative body; that the agreement entered into by the agency must be consistent with the enabling statute under which it is made, and that the agreement will be valid and in force only to the extent that it does not conflict with the state laws (with all of which we readily agree), and that when Iowa breached the total miles formula and applied the compact miles formula its action automatically modified the agreement and authorized the Missouri reciprocity commission to ignore the former and apply the latter formula to Iowa-based carriers (with which we thoroughly disagree).

We construe the limitation contained in the last clause of the subsection to relate to the formation of the contract; that it governs what the commission may not do in negotiating and entering into a reciprocal agreement with other states. It relates to the subject-matter and content of the...