Case Summary for August 18, 1999

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Case Summary for August 18, 1999

THE FOLLOWING DOCKET SUMMARIES ARE PREPARED BY THE COURT'S STAFF FOR THE INTEREST AND CONVENIENCE OF THE READER. THE SUMMARIES MAY NOT INCLUDE ALL ISSUES PENDING BEFORE THE COURT AND DO NOT REFLECT ANY OPINION OF THE COURT ON THE MERITS OF A CASE. COPIES OF ALL BRIEFS FILED WITH THE COURT ARE AVAILABLE AT THE SUPREME COURT BUILDING, COURT EN BANC DIVISION. SUMMARIES ARE UNOFFICIAL AND SHOULD NOT BE QUOTED OR CITED.

SUPREME COURT OF MISSOURI
DOCKET SUMMARIES

Wednesday, August 18, 1999

81605
Dale Ensor, Treasurer of Lafayette County, Missouri, v. Director of Revenue
Forfeiture proceeds distribution
Cole County

The General Assembly amended section 166.131 to change distribution of forfeiture proceeds from the county school fund of the county in which the forfeiture was filed to the state school building revolving fund under section 166.300. Plaintiff Ensor, a county treasurer, challenged the change’s constitutionality. The circuit court granted summary judgment in defendant-respondent Director of Revenue’s favor, upholding the constitutionality of the statute. Ensor appeals.

Ensor argues Article IX, section 7, dictates that the proceeds of forfeitures must go to the local county school fund. The history of changes in the constitutional provisions on education and statutory changes indicate forfeitures continue to go to the county school funds. Context indicates the forfeitures go to the various counties ("several counties"), rather than the state.

The Director counters that the constitution no longer requires forfeiture proceeds be preserved as county school funds, as that provision was deleted in 1945. If forfeiture proceeds are not deposited in county school funds, Article IX, section 7, does not address how they can or should be allocated . Thus, the General Assembly could aggregate forfeiture proceeds from around the state into a fund to allocate to individual school districts on the basis of need. This accords with the policy of funding schools towards equality statewide rather than based on fortuitous location near, for example, an interstate highway.

The Director also contends that even if Article IX, section 7, did control the disposition of forfeiture proceeds that are not in county school funds, the constitution provides only that the proceeds be distributed to the schools of the several counties, ie. of the state. The General Assembly can control how such proceeds are distributed to them. Finally, even if forfeiture proceeds must be deposited in county school funds and distributed only to the schools in the county where the forfeiture occurred, the General Assembly can control how the schools use the money.

The Kansas City, Missouri School District filed an amicus curiae brief. The District argues Article IX, section 7, creates and defines a source of local funds, including forfeitures, which cannot be diverted to a state fund. Additionally, diverting local funds to the state school building revolving fund, which only provides loans to certain eligible school districts, does not satisfy the constitutional requirement that local funds be distributed annually to the local schools. Finally, the trial court’s ruling would result in an absurd reading, namely that all the items listed with forfeitures in the constitution (including income generated by a particular county’s local funds, penalties, fines, estrays, and “other moneys’ coming into the local school funds) may also be diverted into the state fund.

The Treasurer of Johnson County also filed an amicus curiae brief, arguing section 166.131 as amended fails to provide for the constitutionally mandated annual distribution of forfeitures to the schools but, rather, diverts forfeitures to a state fund that is not required to pay money annually to the local schools.

81757
State of Missouri ex rel. Missouri Growth Association, a Missouri not-for-profit corporation, John D. Schneider, Marlo J. Brais, Gary M. Lee, Karen L. Lee, Valcour Development Company, a Missouri corporation, St. Louis Apartment Association, a Missouri not-for-profit corporation, Sandy Rothschild, Alan Hamilton, and Kathleen O’C. Hamilton v. State Tax Commission and Van E. Donley, Bruce E. Davis and Douglas W. Burnett, Members of State Tax Commission in their representative capacities
Agricultural land value (property tax) assessments
Cole County

The State Tax Commission proposed a new land valuation rule to be used for the 1999-2000 property tax assessment years. The new values represented about 13 percent increases for certain agricultural land. The legislature disapproved the increases, by concurrent resolution (HCR 3). Plaintiffs, two not-for-profit trade associations, a development corporation, and seven individual property owners, challenged the disapproval. The circuit court found HCR 3 violated several provisions of the Missouri Constitution and three statutes dealing with the duties and responsibilities of the Tax Commission. The court also found the part of section 137.021 that authorizes the legislature to disapprove the Tax Commission’s proposed rule is invalid. The Tax Commission appeals.

The Tax Commission argues: The court lacked jurisdiction because (1) Respondents offered no proof of standing--no evidence that they own real property, pay property taxes, or are Missouri citizens. (2) Respondents did not join all necessary and indispensable parties, including the Secretary of State, without whose action relief cannot be effected, and at least one agricultural property owner. (3) To the extent the Tax Commission was not the proper party to defend the constitutionality of HCR 3 and its authorizing provision in section 137.012.1, the case lacks the adversity of interests necessary for a justiciable controversy. (4) The court’s judgment cannot compel a vain or unlawful act, such as enforcing the lapsed regulation proposing the increase or making it effective for the 1999-2000 assessment cycle. (5) The court exceeded its authority in issuing a mandamus because mandamus cannot declare rights or obligations and cannot compel a discretionary act, such as setting a particular increase in values and assessment. (6) Respondents’ challenge of discriminatory assessments is premature. Even if not, respondents have an adequate remedy at law by appeal to the tax commission, which respondents must exhaust.

The Tax Commission also contends the court misinterpreted provisions relating to uniformity and equalization: (7) The court erred in ruling the Tax Commission must increase agricultural property values to equalize and make them uniform with other subclasses of property. Neither Article X, section 14, nor Article X, section 3, require that the subclasses be equal or uniform. Rather, Article X, section 4(b) expressly recognizes agricultural property as dissimilar to residential and commercial property. (8) The court erred in holding HCR 3 and section 137.021 violate Article X, sections 3, 4(b), and 14, and sections 137.115, 138.380, and 138.390 by preventing the Tax Commission from adding to property values. Such duty and power is only in the context of equalization, and there is no duty to equalize assessed value as between subclasses of real property. (9) HCR 3 and section 137.021 do not violate Article X, section 4(b) and sections 137.115, 138.380, and 138.390. These provisions constitute a general grant of authority to the Tax Commission, which was properly implemented through the specific procedures in section 137.021.1 and HCR 3.

The Tax Commission submits: (10) HCR 3 and section 137.021 do not violate Article IV, section 16. That article imposes a minimum, rather than maximum, 10-day waiting period before an agency’s regulations become effective.

(11) HCR 3 and section 137.0211 do not violate the separation of powers clause of Article II, section 1. Concurrent resolutions do not constitute unilateral legislative intrusions into the executive process because they satisfy the constitutional requirements of bicameralism and presentment to the governor. (12) The court erred in holding HCR 3 was premature. Section 137.021.1 permits the legislature to act by concurrent resolution on a proposed rule.

(13) HCR 3 did not violate Article III, section 21, and Article IV, section 8. Those provisions and the court’s decisions condemn only legislative intrusion upon rules having the force of law, and HCR 3 properly acted only on a proposed rule. Thus it did not have the force of law and did not repeal, extend or amend any law. (14) HCR 3 did not violate Article IV, section 8, and Article III, section 21. Concurrent resolutions passed in compliance with Article IV, section 8 are not subject to the additional bill passage requirements in Article III, section 21. (15) HCR 3 did not violate Article III, section 21. Such finding is not supported by substantial evidence. Respondents did not meet their burden to produce clear and undoubted evidence that HCR 3 did not satisfy the 3-readings requirement, and the evidence submitted demonstrated the contrary.

(16) The last 2 sentences of section 137.021.1 cannot be severed, as it would violate the clear legislative intent expressed in the statute.

The Missouri Farm Bureau Federation filed an amicus curiae brief. The Farm Bureau is a not-for-profit organization dedicated to supporting Missouri agriculture, with over 90,000 members statewide. The Farm Bureau states that it helped to pass the current legislation that permits different assessment of agricultural land and, later, assisted the legislature in understanding that the proposed increases reflected a change in methodology rather than value and, thus, should be rejected. Like the Tax Commission, the Farm Bureau argues the court lacked subject matter jurisdiction because respondents failed to properly allege or offer any proof of standing to pursue their claims, And, respondents failed to join all necessary and indispensable parties, which renders the judgment void.

Respondents’ brief is due August 13, 1999.

Appellants’ reply brief is due august 17, 1999.