Stout Industries, Inc. v. Leachman

• Decision Date: 08 October 1985
• Docket Number: Nos. 49638,49639,s. 49638
• Citation: 699 S.W.2d 129
• Parties: STOUT INDUSTRIES, INC., et al., Appellants, v. George C. LEACHMAN, Collector of Revenue of St. Louis County, Missouri, Respondent.
• Court: Missouri Court of Appeals

Page 129

699 S.W.2d 129

STOUT INDUSTRIES, INC., et al., Appellants, v. George C. LEACHMAN, Collector of Revenue of St. Louis County, Missouri, Respondent.

Nos. 49638, 49639.

Missouri Court of Appeals,

Eastern District,

Division Four.

Oct. 8, 1985.

Fordyce & Mayne, P.C., James D. Eckhoff, Gary L. Vincent, St. Louis, for appellants.

Thomas W. Wehrle, County Counselor, and Dennis C. Affolter, Asst. County Counselor, Clayton, for respondent.

CRANDALL, Presiding Judge.

These are consolidated appeals arising out of payment under protest by plaintiffs, Stout Industries, et al., of their 1979 and 1980 merchants' and manufacturers' taxes. The taxes were paid in 1979 and 1980 to defendant, St. Louis County Collector of Revenue. Each payment was accompanied by a protest letter as required by § 139.031.1, RSMo (1978). ¹ Timely petitions were filed in 1980 and 1981 in the circuit court seeking recovery of the amounts paid. The defendant filed a motion to dismiss both petitions for failure to state a claim upon which relief may be granted. The trial court sustained the motion and ordered both petitions dismissed with prejudice. We affirm.

Preliminarily, we note that the question presented in this appeal has been resolved by prior decisions of the Missouri Supreme Court. See Sperry Corp. v. Wiles, 695 S.W.2d 471 (Mo. banc 1985); Westglen Village Associates v. Leachman, 654 S.W.2d 897 (Mo. banc 1983); C & D Investment Co. v. Bestor, 624 S.W.2d 835 (Mo. banc 1981). Since the present case, then, involves the application of revenue laws already authoritatively construed, we determine that jurisdiction is properly vested in this court. A.P. Green Refractories v. State Tax Com'n, 621 S.W.2d 340, 345 (Mo.App.1981). We review the dismissal of the petition with prejudice to determine if, under the facts established, the defendant was entitled to such a judgment as a matter of law. Madison Block Pharmacy v. U.S. Fidelity, 620 S.W.2d 343 (Mo. banc 1981).

Plaintiffs raise four points on appeal, all of which challenge the constitutionality of the merchants' and manufacturers' tax. §§ 150.040, 150.050, 150.090, and §§ 150.310, 150.320 and 150.350, RSMo (1978). Yet, the crux of plaintiffs' argument in their brief, if not necessarily in their protest letters, ² is not limited to an attack on the constitutionality of these taxing statutes. Rather, both in their 1979 and 1980 protest letters and in their brief, they argue that the merchants' and manufacturers' tax as assessed and collected violates Art. X, §§ 3, 4, and 6 of the Constitution of Missouri. The 1980 protest letter adds that the tax as assessed and collected is contrary to the Fourteenth Amendment to the Constitution of the United States and Art. I, § 10 of the Constitution of Missouri. Plaintiffs do not question the valuation of their property by defendant. Their protest is based upon the fact that their property, as that of merchants and manufacturers, allegedly was assessed at a higher percentage of its value than other property within the same taxing jurisdiction. They argue that such an assessment illegally discriminates against them.

The dispositive issue is whether plaintiffs' petition failed to state a claim upon which relief may be granted because of their failure to exhaust their administrative remedies for relief, first to the Board of Equalization and then to the State Tax Commission, pursuant to §§ 137.385, 138.060, 138.110, 138.430, RSMo (1978). Plaintiffs acknowledge, and the briefs establish, that they did not seek administrative review before bringing their action under § 139.031. In compliance with § 139.031.2, RSMo (1978) ³ they did commence an action against the collector to recover their taxes paid under protest. This procedure, however, is only one part of a two-part statutory scheme. The protesting taxpayer simultaneously must follow two distinct statutory routes in seeking relief from a discriminatory assessment. Prugh, Property Tax Appeals in Missouri, 40 J. of Mo. Bar 23, 23 (1984). First, the taxpayer must file an administrative appeal with the appropriate agency to review their assessment, as provided in § 138.430. ⁴ Id. Secondly, the taxpayer must initiate a separate judicial proceeding to obtain a refund of the amount of taxes paid under protest, as provided in § 139.031.2. Id. See e.g. Adcor Realty v. State Tax Com'n, 627 S.W.2d 604 (Mo. banc 1982). These statutory procedures must be "meticulously followed." Adcor Realty, 627 S.W.2d at 606.

In a suit to recover taxes in which constitutional claims are raised, the administrative procedures provided by statute must be utilized and followed to exhaustion. Westglen Village, 654 S.W.2d at 900. It is not necessary to exhaust administrative remedies, however, where the sole issue is the constitutionality of a statute on its face. Weinberger v. Salfi, 422 U.S. 749, 766, 95 S.Ct. 2457, 2467, 45 L.Ed.2d 522, 539 (1975).

In Metal Form Corp. v. Leachman, 599 S.W.2d 922 (Mo. banc 1980), the Missouri Supreme Court did not require the taxpayers to exhaust their administrative remedies. In that case the taxpayers also sought recovery of the manufacturers' taxes which they had paid under protest in accordance with § 139.031. In their protest letters the taxpayers specifically attacked the validity of the manufacturers' license tax statutes (§§ 150.300 to 150.370; in particular §§ 150.310 and 150.320). They did not question the assessment of their taxes. The county collector appealed from the trial court's decision holding that the manufacturers' tax was unconstitutional and that the taxes paid should be refunded. The supreme court determined that it had jurisdiction because construction of the revenue laws of the state was involved, Mo Const., Art. V, § 3, and reversed and remanded.

The present case is distinguishable from Metal Form. As previously stated, plaintiffs' protest challenges the merchants' and manufacturers' tax as assessed and collected in addition to the facial constitutionality of the taxing statutes. Clearly, constitutional construction of state statutes is beyond the authority or jurisdiction of an administrative agency. Yet, where the dispute can be resolved on non-constitutional grounds, it is necessary for the plaintiffs to exhaust their administrative remedies before a court will consider the constitutional grounds. Aircraft & Diesel Equipment Corp. v. Hirsch, 331 U.S. 752, 773-774, 67 S.Ct. 1493, 1503-1504, 91 L.Ed. 1796, 1809 (1947). A plaintiff must make a clear showing, both of the inadequacy of the prescribed administrative procedure and of impending harm, in order to shortcut the administrative process. Id. Thus, where the taxing authority has made it impossible for the taxpayer to exercise his administrative remedies, the requirement of exhaustion is excused. Westglen Village, 654 S.W.2d at 900; see e.g. Naegele Outdoor Advertising Co., Inc. v. Kansas City, 509 S.W.2d 128 (Mo.1974). In the present case plaintiffs have made no claim that the administrative remedies were unavailable to them.

In essence, plaintiffs' sole contention is that defendant misapplied the merchants' and manufacturers' taxing statutes, such that the assessment of their property was excessive as compared to...