Case Summary for May 7, 2003

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Case Summary for May 7, 2003

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DOCKET SUMMARIES
SUPREME COURT OF MISSOURI

Wednesday, May 7, 2003
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SC84948
Branson Properties USA, L.P. v. Director of Revenue
Taney County
Application of sales and use tax exemptions to amusement park

Branson Properties USA, L.P., owned and operated the Branson USA amusement park for the 1998 through 2000 tax years. It bought the land for the park in a December 1997 foreclosure sale, made improvements to the land, purchased and placed into service about 30 mechanical rides and attractions, which were used to manufacture and produce intangible entertainment products. It opened the park in the spring of 1999 and subsequently bought more than $53,800 in higher quality replacement parts it used to enhance the safety of the rides and attractions. Customers bought the entertainment products by purchasing a wristband allowing the customer to ride or use all the rides or attractions or by purchasing an individual ticket for a specific ride or attraction. It collected sales tax on these purchases and remitted the tax to the director of revenue. Following an audit by her department, the director determined that Branson Properties should have paid tax on its purchases of rides, equipment and replacement parts. The park challenged the determination. In November 2002, the administrative hearing commission determined that Branson Properties is not subject to the manufacturing exemption to taxation and affirmed the director's assessments that the park owed more than $1,700 in sales tax and about $95,900 in use tax, plus interest. Branson Properties appeals.

Branson Properties argues that the commission's decision is not supported by competent and substantial evidence. It contends its purchases of machinery, equipment and parts were exempt from state sales and use tax under section 144.030.2(4), RSMo, because they are replacement parts used to manufacture and/or produce products. Branson Properties asserts that its purchase of machinery, equipment and parts also were exempt from sales and use tax under section 144.030.2(5), RSMo, because they were used to manufacture products in a new or expanded plant.

The director responds that the commission correctly decided that neither tax exemption applies to Branson Properties. She argues the tax exemption under section 144.030.2(4) only is for purchases of replacement machinery, equipment and parts used directly in manufacturing, mining, fabricating or producing a product that is sold for final use or consumption. She contends the tax exemption under section 144.030.2(5) applies only to machinery and equipment used to establish or expand existing manufacturing, mining or fabricating plants. The director asserts that Branson Properties' operation of an amusement park does not constitute manufacturing, mining, fabricating or producing a product and that it is not operating any manufacturing, mining or fabricating plant within the amusement park.

SC84956
Eighty Hundred Clayton Corporation, d/b/a Tropicana Lanes v. Director of Revenue
St. Louis County
Applicability of tax to bowling shoe rentals

Eighty Hundred Clayton Corp., which does business as Tropicana Lanes, operated a St. Louis County bowling center during the refund period of various months from 1997 through 2000. Tropicana charged its customers a fee for each game bowled and required them to wear bowling shoes. If they did not have shoes, Tropicana charged customers fees to use bowling shoes. Tropicana sought a refund of nearly $23,900 in sales taxes it had collected and remitted on these fees. The director of revenue denied the refund, and Tropicana appealed. The administrative hearing commission determined that these fees were not taxable under either the general amusement tax, section 144.020.1(2), RSMo, or the more specific lease tax, section 144.020.1(8), RSMo, because Tropicana paid sales tax when it purchased the bowling shoes. The commission determined that Tropicana was entitled to a sales tax refund, and the director appeals.

The director argues jurisdiction is proper in this Court because the case requires construction of a revenue law. She contends the commission erred in awarding Tropicana a sales tax refund and in holding that Tropicana's bowling shoe fee was not taxable. She asserts that these sales are taxable under the amusement tax because Tropicana's bowling center is a place of amusement and the fee it charged to use bowling shoes was a fee paid in or to a place of amusement. The director argues that this Court should overrule its holding in Westwood Country Club v. Director of Revenue, 6 S.W.3d 885 (Mo. banc 1999). She alternatively contends Tropicana's shoe fee transaction did not constitute the lease or rental of tangible personal property and, therefore, the lease tax did not apply. The director asserts that even if the shoe fee transaction was a lease or a rental, then the tax exemption in the lease tax did not apply because Tropicana did not purchase the bowling shoes under the conditions of a retail sale.

Tropicana responds that this Court lacks jurisdiction because the case involves questions of application -- not construction -- of a revenue law. It argues the commission properly granted it a sales tax refund because the charges for the rental of bowling shoes were not taxable. It contends the evidence supports the commission's finding that these charges were not subject to an amusement tax because they were not paid in or to a place of amusement. Tropicana contends that this Court's decision in Westwood Country Club is correct and should not be overruled. It asserts that, because it paid tax when it purchased the bowling shoes, the rental of those shoes is excluded from the lease tax.

SC84978
In re: Stanley L. Wiles
Jackson County
Attorney discipline

In January 1996, Lindy Painter injured her back when the elevator in which she was riding at the University of Kansas Medical Center fell several floors. After her first lawsuit was dismissed, she retained Kansas City attorney Stanley Wiles to refile the suit in Kansas. In January 2000, the Kansas court dismissed her case against the defendant medical center and the Kansas state board of regents because Wiles did not serve these defendants properly before the statute of limitations expired. Wiles told Painter her claims against the hospital and the board of regents were dismissed but did not tell her they were dismissed because he failed to achieve timely service of process. In October 2001, Wiles received a settlement check for Painter's remaining claims and deposited the check into his firm's operating account. He then wrote a check for Painter's share of the settlement on the operating account, but when she tried to cash it, the bank refused to pay it due to insufficient funds in the account. As a result of these problems, the Kansas Supreme Court imposed a published censure (similar to a Missouri public reprimand) against Wiles. It previously had admonished him informally twice. In addition, between November 1998 and August 2001, Missouri disciplinary authorities have admonished Wiles six times for failure to represent his clients diligently, failure to communicate with his clients and to keep them informed about their legal matters, failure to pay settlement funds promptly to his client or his client's third-party creditor, and for being abusive and demeaning toward a woman and her physician. The Missouri chief disciplinary counsel seeks reciprocal discipline against Wiles due to the Kansas published censure.

The chief disciplinary counsel argues Wiles should be disciplined in Missouri for professional misconduct. She contends he provided incompetent service to Painter in violation of Rule 4-1.1 and failed to represent Painter diligently, in violation of Rule 4-1.3, by not getting the defendants served in a timely manner. She asserts he failed to keep Painter informed about her case, in violation of Rule 4-1.4(a), by not telling her the court dismissed two defendants because he did not serve them timely. The chief disciplinary counsel also argues Wiles failed to safeguard Painter's property, in violation of Rule 4-1.15(a) by depositing her share of a settlement check in his operating account and not maintaining a balance in the account at least equal to Painter's share of the settlement. The chief disciplinary counsel contends this Court should suspend Wiles' license to practice law indefinitely with leave to apply for reinstatement after six months. She asserts that this Court should stay the suspension for 12 months so the public can be protected from Wiles' misconduct in this case and in the six admonitions he previously has received.

Wiles acknowledges that he is subject to reciprocal discipline in Missouri, but he responds that he did not intentionally engage in professional misconduct in Kansas and already has been censured in that state. He argues he has made the necessary changes in his practice. Wiles contends this Court should not suspend his Missouri law license because he has engaged in no acts that would require suspension. He also asserts that he has not engaged in any unethical acts that would require this Court to protect the public from him.