Opinion
No. ED 84012
May 25, 2004
Appeal from the Circuit Court of Jefferson County, Honorable M. Edward Williams.
David L. Welsh, St. Louis, MO, for appellant.
Davod P. Senkel, Hillsboro, MO, for respondents.
Before Gary M. Gaertner, Sr., P.J., and Robert G. Dowd, Jr., J., concur.
J.H. Berra Construction Co., Inc. ("Berra") appeals from the judgment affirming the State Tax Commission's ("Commission") decision that certain construction equipment owned by Berra was subject to personal property tax assessment in Jefferson County in 2001. Berra challenges the Commission's finding that the construction equipment was "situated" in Jefferson County on January 1, 2001, thereby giving it a taxable situs in Jefferson County pursuant to section 137.095.1 RSMo 2000. We find no error and affirm.
All further statutory references are to RSMo 2000 unless otherwise indicated.
Berra is a Missouri corporation engaged in the business of heavy construction, primarily the construction of highways, sewers, and water mains, as well as grading. Its corporate offices are located in St. Louis County, and its facilities in St. Louis County include an office building, maintenance shops, a fuel depot, an equipment and material storage yard, and a concrete plant. Berra dispatches labor and equipment from its corporate office location to various job sites throughout eastern Missouri and southern Illinois. Berra owns and operates a number of large pieces of construction equipment, including bulldozers, earth-movers, drills, and paving equipment. Many pieces of Berra's equipment require disassembly to be moved because they are so large, and others pieces require permits for moving oversized and overweight loads. To minimize equipment movement, the equipment is sometimes parked on a particular job site and not worked because it is awaiting its work task or because of weather limitations. Berra asserts that its equipment is kept on a project site only for the time needed to perform its given task.
On January 1, 2001, Berra had construction equipment located on four construction job sites in Jefferson County: Arrow Ridge, Romaine Bluffs, Seckman Lakes, and the Highway 21 Phase II project. It submitted equipment usage reports for these job sites reflecting the length of time that construction equipment was physically located on the job sites, as well as the number of days each piece was used during that time.
Berra further submitted records showing the length of each of its four projects in Jefferson County. The Highway 21 project began on July 3, 2000, and was completed on December 1, 2002. Berra subcontracted some of the work on the Highway 21 project, but maintained an office trailer on the Highway 21 project site during the project. In addition to the Highway 21 project, Berra was working on ten other highway construction projects in 2001 that were located in other counties. These other projects required the same type of equipment as the Highway 21 project.
Berra's other three projects in Jefferson County in 2001 — Arrow Ridge, Romaine Bluffs, and Seckman Lakes — involved the installation of sanitary sewers and storm sewers to serve private residential developments. Berra asserted that during 2001 it was also working on similar projects in two other counties.
This case arose when Randy Holman, Assessor for Jefferson County ("Assessor"), assessed personal property taxes for 2001 on some of Berra's construction equipment located in Jefferson County. Michael Boyton, Director of Assessments for the Jefferson County Assessor's Office ("Director"), testified that he compiled an inventory of Berra's taxable personal property that was located in Jefferson County as of January 1, 2001. Director indicated that he had compiled the inventory from field notes and photographs from 2000 and 2001 visits to sites where Berra's machinery and equipment was located in the county. Director stated that he personally observed the constant presence of trucks, machinery, and equipment owned by Berra during the Highway 21 project. He further testified that he had traveled throughout the county and observed Berra's equipment at several locations at various times. Additionally, Director utilized excavation diaries from the Missouri Department of Transportation and documents provided by Berra and the St. Louis County Assessor's office in making his assessment of Berra's equipment.
Director, however, testified on cross-examination at the Commission hearing that he could not say how long each piece of equipment on which he based his tax assessment was located in Jefferson County. Director acknowledged that the time each piece of equipment was located on a job site varied depending on the work for which it was needed, and Director indicated that he understood that the equipment was located in Jefferson County only to complete work on Berra's projects there.
Director opined, however, that Berra's equipment was "situated" in Jefferson County for tax purposes as of January 1, 2001, because it was a "permanent fixture at various locations throughout Jefferson County, especially at [Berra's] long-term projects." Director did not utilize any set amount of time to establish when a piece of equipment became "situated" in Jefferson County. He stated, however, that he had to make "some judgment calls" as to Berra's equipment and that he concluded that "there [was] a constant presence of equipment on certain job sites."
Berra appealed the tax assessment to the Jefferson County Board of Equalization, which upheld the assessment. Berra then appealed the board's decision to the Commission. Berra and Assessor pre-filed written testimony with the Commission, and a hearing was conducted by a hearing officer from the Commission. The Commission's Chief Hearing Officer issued a decision and order affirming the assessment, and Berra applied to have the full Commission review the hearing officer's decision. The hearing officer's order was upheld, and Berra filed for judicial review of the Commission's decision in the Jefferson County Circuit Court. After review of the record of the Commission, the circuit court entered its judgment affirming the Commission's decision.
Berra now appeals to our court. Before addressing Berra's points on appeal we must address the issue of our jurisdiction. Article V, section 3 of the Missouri Constitution grants exclusive appellate jurisdiction to the Missouri Supreme Court for cases involving the construction of revenue laws. Exclusive jurisdiction in the Supreme Court is established if the case involves: (1) the construction; (2) of the revenue laws; (3) of Missouri. Twelve Oaks Motor Inn, Inc. v. Strahan, 96 S.W.3d 106, 108 (Mo.App. 2003). This case involves section 137.095, which is a revenue law of Missouri. We distinguish, however, between cases involving the construction of a revenue law versus those requiring only the application of a revenue law. Id. at 108-09. If the Supreme Court has already decided an issue, we can apply the precedent. Id. at 109. We have jurisdiction for application of precedent because it does not require construction of a revenue law. Id.
Berra asserts that we have jurisdiction in this case because this case involves the application of the term "situated" as used in section 137.095.1 to the evidence before the Commission. Both parties asserted during oral argument that we have jurisdiction because we can utilize existing Supreme Court precedent in determining whether competent and substantial evidence supported the Commission's findings that Appellant's construction equipment was "situated" in Jefferson County in 2001. We cannot find any Missouri case law construing the term "situated" as used in section 137.095.1 that is directly on point to the facts of this case involving construction equipment. We can, however, apply existing precedent interpreting the definition of "situated" as it used in section 137.095.1 generally. Using existing Supreme Court construction of "situated" have jurisdiction to determine whether the Commission erred in finding that Berra's equipment was "situated" in Jefferson County in 2001 for tax purposes.
We review the decision of the Commission, not the judgment of the circuit court. F.X. Daly v. P.D. George Co., 77 S.W.3d 645, 648 (Mo.App. 2002). We review the Commission's decision by determining whether it was supported by competent and substantial evidence on the whole record, or whether it was arbitrary, capricious, unreasonable, unlawful, or in excess of the Commission's jurisdiction. Section 536.140.2; Daly, 77 S.W.3d at 648. We consider the evidence in the light most favorable to the Commission's decision and if the evidence could support two opposed findings, we are bound by the Commission's decision. Daly, 77 S.W.3d at 648. We give due weight to the Commission's opportunity to observe witnesses, and its expertness and experience in tax matters. Hornsby v. Dir. of Revenue, 865 S.W.2d 662, 663 (Mo. banc 1993). Although we will not substitute our judgment for that of the Commission, we will review whether the Commission could have reasonably made its findings and reached its result upon consideration of all the evidence before it.Morton v. Mo. Air Conservation Comm'n, 944 S.W.2d 231, 236 (Mo.App. 1997). If the Commission's findings and conclusions are clearly contrary to the overwhelming weight of the evidence, we must reverse or order further appropriate action. Id. If an administrative agency's interpretation of a statute is reasonable and consistent with the language of the statute, it is entitled to considerable deference. Id. When the agency's decision, however, is based on an interpretation of law, we will exercise unrestricted, independent judgment and correct any incorrect interpretations. Id. at 237.
Berra's first point asserts that the Commission erred in affirming the assessed valuation of its equipment in Jefferson County because the construction equipment at issue had only a temporary presence in Jefferson County, and, therefore, was not "situated" there for personal property tax assessment purposes under section 137.095.1.
Section 137.095.1 provides:
The real and tangible personal property of all corporations operating in any county in the state of Missouri and in the city of St. Louis, and subject to assessment by county or township assessors, shall be assessed and taxed in the county in which the property is situated on the first day of January of the year for which the taxes are assessed, and every general or business corporation having or owning tangible personal property on the first day of January in each year, which is situated in any other county than the one in which the corporation is located, shall make return to the assessor of the county or township where the property is situated, in the same manner as other tangible personal property is required by law to be returned, except that all motor vehicles which are the property of the corporation and which are subject to regulation under chapter 390, RSMo, shall be assessed for tax purposes in the county in which the motor vehicles are based.
Section 137.095.2 goes on to define "based" as used in section 137.095.1 as "the place where [a motor] vehicle is most frequently dispatched, garaged, serviced, maintained, operated or otherwise controlled. . . ."
Section 137.095.1 (emphasis added).
The term "situated" is defined as it pertains to personal property taxation under section 137.095.1 in Buchanan County v. State Tax Commission. 407 S.W.2d 910, 913-14 (Mo. 1966). The Supreme Court of Missouri held in Buchanan that "situated" under section 137.095 did not mean that the property needed to be "physically present" in the taxing county on tax day. Id. at 914. Instead, the court found that "the word 'situated' as used in a statute authorizing or directing the taxation of property, connotes a more or less permanent location or situs." Id. The court cited cases suggesting that "situated" implies "some element of permanency" and that it "require[s] more than a mere temporary presence."Id. (internal citations omitted). It further suggested that the word "'situated' refers to the place where the personal property is regularly kept." Id.
At the time of the Buchanan decision, section 137.095 did not distinguish taxation for motor vehicles from taxation of other personal property. Following the Buchanan decision, however, the legislature enacted section 137.095.2 to reflect that motor vehicles should be taxed where they are "based" on tax day. See Be-Mac Transp. Co., Inc. v. State Tax Comm'n of Mo., 725 S.W.2d 599, 601 (Mo. banc 1987). This amendment sought to account for the mobility of vehicles used in commercial enterprises. Be-Mac, 725 S.W.2d at 601. We agree with the Commission that the amended version of section 137.095 "clearly contemplates that there can be a difference between where a piece of property is 'situated' and where a piece of property is 'based.'" In particular, unless the property is regulated pursuant to Chapter 390, the correct analysis for tax purposes is to determine where the property is "situated," not where it is "based." Because the equipment at issue in this appeal is not property regulated pursuant to Chapter 390, the fact that it is "based" in St. Louis County where Berra operates its corporate headquarters does not preclude it from being "situated" in some other county for tax purposes.
Berra relies heavily on Buchanan to suggest that its equipment was not "situated" in Jefferson County because it was there only temporarily while it completed the construction projects. Berra asserts that we should determine whether its equipment was only temporarily in Jefferson County by looking at the nature of its use there. It states that its equipment is only located in Jefferson County until it is no longer needed at a particular construction project site or until it is needed at project site in another county.
While Berra urges us to consider the purpose of the presence of the equipment in Jefferson County, Assessor urges consideration of the length of time the equipment was physically present in the county. Berra contends, however, that the duration of a construction project is irrelevant in determining whether construction equipment used for that project acquired a more than temporary presence in the county where the project was located. Assessor argues that we apply the Buchanan standard, which would require us to find the equipment was "situated" in Jefferson County for tax purposes if it acquired a more or less permanent situs there. Assessor asserts the equipment had a more than temporary presence in Jefferson County because it either remained at one project site for an extended period of time or because it was moved from construction site to construction site within Jefferson County.
In making their arguments, both parties cite cases from other jurisdictions. The decisions in these cases are not binding on this court and we decline to discuss them.
The Commission found that Berra's equipment was "situated" in Jefferson County for 2001 tax purposes. In making its decision, the Commission considered both written and oral testimony of the parties and a variety of documents and records from both parties. These sources led the Commission to decide that Berra's equipment was "situated" in Jefferson County on January 1, 2001.
Our standard of review instructs that we must consider the evidence in the light most favorable to the Commission's decision. Daly, 77 S.W.3d at 648. Given our standard of review, we cannot find that the Commission's decision was arbitrary, capricious, or unreasonable. Viewed in the light most favorable to the Commission's decision, there was substantial evidence from which the Commission could have reasonably concluded that Berra's equipment was "situated" in Jefferson County under section 137.095.1 for 2001 tax purposes.
The Commission stated that Berra "failed to present substantial and persuasive evidence tending to show that [Jefferson County's] assessment was erroneous." The Commission's decision indicated that Berra owned 48 pieces of equipment which were physically located in Jefferson County on January 1, 2001, but it found Berra's records were inadequate to identify the number of days each piece of equipment was physically located in the county. The Commission acknowledged that the equipment would be returned to Berra's corporate headquarters in St. Louis County when not in use, but it found that Berra had a "practice of parking unused equipment on job sites to reduce transportation costs." The Commission also noted that Berra sometimes repaired equipment at its corporate facilities, but other times serviced the equipment on job sites. The Commission further found that Assessor's employees had observed Berra's equipment in Jefferson County for a number of years, and it found that Berra maintained an office trailer at the Highway 21 job site.
The Commission's finding that Berra had 48 pieces of equipment in Jefferson County on January 1, 2001 cites to Complainant's Exhibit B. That document, however, lists only 42 pieces of equipment.
There was competent and substantial evidence to show that the equipment was "situated" in Jefferson County under the standards set forth inBuchanan. There was substantial evidence presented from which the Commission could reasonably find that the equipment at issue had "some element of permanency" in Jefferson County, that it had "more than a mere temporary presence" there, and that it was "regularly kept" there during 2001 while Berra completed several large-scale and long-term projects in that county.
We do not find persuasive Berra's assertions that we should consider the purpose of its property being located in Jefferson County rather than the length of time it was located there. Buchanan instructs that we should determine whether property is "situated" for tax purposes in a given county by considering whether it had a "more than mere temporary presence" there or whether it was "regularly kept" there. 407 S.W.2d at 914. These standards suggest that determining where property is "situated" under section 137.095.1 should focus on the length of time the property is in a given taxing jurisdiction, and not its purpose for being there.
Berra's first point is denied.
Berra's second point asserts that the Commission erred because it utilized an incorrect standard in requiring Berra to prove that its equipment was "continuously and habitually employed" in another county, rather than to assess whether the equipment was "situated" in Jefferson County under section 137.095.1.
In finding that Berra's equipment was "situated" in Jefferson County for 2001 tax purposes, the Commission cited Buchanan for the proposition that "situated" refers to where a piece of property has a "more or less permanent location" and not where it is physically located on tax day. The Commission, however, also cited Bi Go Markets, Inc. v. Morton, 843 S.W.2d 916 (Mo. banc 1992), for the proposition that location cannot be discounted when determining tax situs.
Berra is correct in asserting that Bi Go is not directly on point with the instant case because Bi Go involved principles of interstate commerce, due process, and apportionment. We find, however, that Bi Go does offer relevant instruction regarding whether property is "situated" in a given location for section 137.095.1 tax purposes. Buchanan specifically construed the meaning of "situated" under section 137.095.1 as it applied to property taxation in a Missouri county, and that holding remains good law. The Supreme Court of Missouri in Bi Go, however, also construed the meaning of "situated" as it is used in section 137.095.1.
In Bi Go an out-of-state corporation's airplane was found to be "situated" in St. Louis County under section 137.095.1 because it was regularly hangared and serviced in St. Louis County and it had spent 255 out of 309 days there. 843 S.W.2d at 917, 920. In Bi Go the court discussed the evolution of taxing personal property — first it was taxed in the owner's domicile and then, as property became more mobile, it was taxed where it had a physical situs. Id. at 918. The Bi Go court explained that United States law developed an exception to taxing personal property based on its physical situs, and began to consider whether the property was "habitually or continuously employed within [a given] state" in order to determine which state had the ability to impose tax on the property. Id. Because the Bi Go court found that the record in that case did not show that the aircraft had a habitual presence or continuous use within the state of its owner's domicile, it concluded that the aircraft could be taxed in Missouri. Id. at 920. The Bi Go court stated that tax situs should be determined by establishing whether the aircraft received "substantial 'opportunities, benefits, and protections' from [its domicile state] by habitual or continuous use within [the domicile state]." Id. at 919-20. The court pointed out that there is "no clear demarcation of 'habitual or continuous'" use, and it looked to the facts of other cases for guidance in determining if the aircraft had regular contact with Missouri such that Missouri could impose a tax on it. Id. at 920.
Nothing in Bi Go negates the standards set forth in Buchanan for determining whether property is "situated" within a given taxing jurisdiction. Bi Go merely offers further guidance as to the type of factual considerations that are relevant in assessing whether property is "regularly kept" or "more or less permanently" located in a given taxing jurisdiction. Although Bi Go and Buchanan phrase their standards differently, the preeminent consideration under both cases is whether the property at issue is "situated" in the taxing authority pursuant to section 137.095.1.
We agree with Assessor that the Commission did not apply the "continuously and habitually employed" standard from Bi Go to determine whether Berra's equipment was subject to tax in Jefferson County. Instead, the Commission merely used the holding in Bi Go to illuminate the definition of "situated" as it is used in section 137.095.1 and in the Buchanan case.
Reading the Commission's decision as a whole, we find that its statement that Berra needed to demonstrate that the equipment at issue "was 'continuously and habitually employed' or located in a county other than Jefferson County" equated to a statement that Berra needed to demonstrate that its equipment was "situated" in some other county for 2001 tax purposes under section 137.095.1. As such, the Commission did not err in concluding that Berra was required to demonstrate that the equipment at issue was located — "situated" — in another county. The taxpayer in a Commission tax appeal proceeding bears the burden of proof to show by a preponderance of the evidence that the appealed assessment was incorrect. See Westwood P'ship v. Gogarty, 103 S.W.3d 152, 161 (Mo.App. 2003). For example, in Bi Go the court cited Peabody Coal Co. v. State Tax Commission, 731 S.W.2d 837 (Mo. banc 1987), for the proposition that the complainant taxpayer in Bi Go bore the burden of showing that the property at issue had either a continuous presence or an actual tax situs in some other state that would limit the exclusive taxing authority of Missouri. Bi Go, 843 S.W.2d 921. In Buchanan, the court suggested that a taxpayer's failure to make a tax return in the county in which it asserts its property is "situated" is an admission against interest relevant to the Commission's consideration of whether the taxpayer's property is "situated" in another county seeking to impose an assessment. 407 S.W.2d at 914. Buchanan and Bi Go make clear that the Commission did not err in requiring Berra to demonstrate that the subject equipment was "situated" in some other county in order to demonstrate that it was not "situated" in Jefferson County.
Berra's second point is denied.
The Commission did not err in affirming the assessed valuation of Berra's equipment in Jefferson County. The Commission's decision is affirmed. We find, however, that the factual situation presented in this case is unique and has not been addressed by our Supreme Court. In that this case presents a question of general importance and statewide interest, we transfer it to the Supreme Court pursuant to Rule 83.02.
Gary M. Gaertner, Sr., P.J., and Robert G. Dowd, Jr., J., concur.