Armstrong-Maison DeVille v. Muehlheausler (SLCO)

State Tax Commission of Missouri

 

ARMSTRONG MAISON DE VILLE, LLC,)

)

Complainant,)

)

v.)Appeal(s) Number 05-10760 through 05-10762

)

PHILIP MUEHLHEAUSLER, ASSESSOR,)

ST. LOUIS COUNTY, MISSOURI,)

)

Respondent.)

 

ORDER

AFFIRMING HEARING OFFICER DECISION

UPON APPLICATION FOR REVIEW

 

On September 25, 2008, Hearing Officer Maureen Monaghan entered her Decision and Order (Decision) setting aside the decision by the St. Louis County Board of Equalization.Complainant and Respondent timely filed Applications for Review of the Decision.Respondent and Complainant timely filed Replies in Opposition.

Procedural History

1.                  On September 23, 2005, Complainants filed their Application for Review.

2.                  On August 11, 2008, Complainants filed a Motion for Decision as there were no issues of material facts remaining.

3.                  The Hearing Officer Ordered the Respondent to file a Response on or before September 2, 2008.The Respondent failed to file a Response.

4.                  On September 25, 2008, the Hearing Officer issued her Decision setting aside the assessed valuations by the Board of Equalization for St. Louis County as the Respondent failed to comply with Sections 137.115.10 and 137.115.11, RSMo.

5.                  The Hearing Officer set the assessed values for the property at $287,300 (05-10760), $212,780 (05-10761) and $241,850 (05-10762).

Respondent’s Grounds for Application

1.                  The Hearing Officer erred in finding that the Complainant property owners have a due process right to notice and no less than thirty days to request an interior inspection, because the notice requirement of Section 137.115.11, RSMo is directory, not mandatory.

 

2.                  The Hearing Officer was arbitrary and capricious in imposing a sanction upon Respondent for failure to give the property no less than thirty days to request an interior inspection.

 

3.                  Section 137.115.111 unconstitutionally invades the authority of St. Louis County to conduct assessment of real property in St. Louis County.

 

Complainant’s Grounds for Application

1.                  The Hearing Officer erred in setting the 2005-2006 assessed values of the subject properties at $287,300 (05-10760), $212,780 (05-10761) and $241,850 (05-10762).

 

CONCLUSIONS OF LAW

Standard Upon Review

The Commission will not lightly interfere with the Hearing Officer’s Decision and substitute its judgment on the credibility of witnesses and weight to be given the evidence for that of the Hearing Officer as the trier of fact.[i]

Applicable Statutes

The statutes upon which the Hearing Officer relied in rendering her Decision were Sections 137.115.10, 137.115.11 and 138.060, RSMo.

The cited statutes state in relevant part, as follows:

“Before the assessor may increase the assessed valuation of any parcel of subclass (1) real property by more than fifteen percent since the last assessment, excluding increases due to new construction or improvements, the assessor shall conduct a physical inspection of such property.”§137.115.10, RSMo.

“If a physical inspection is required, pursuant to subsection 10 of this section, the assessor shall notify the property owner of that fact in writing and shall provide the owner clear written notice of the owner’s rights relating to the physical inspection. If a physical inspection is required, the property owner may request that an interior inspection be performed during the physical inspection. The owner shall have no less than thirty days to notify the assessor of a request for an interior physical inspection.” §137.115.11 RSMo.

“ … In any county … with a charter form of government with greater than one million inhabitants, … in the event a physical inspection of the subject property is required by subsection 10 of section 137.115, RSMo, the assessor shall have the burden to establish the manner in which the physical inspection was performed and shall have the burden to prove that the physical inspection was performed in accordance with section 137.115, RSMo. In such county or city, in the event the assessor fails to provide sufficient evidence to establish that the physical inspection was performed in accordance with section 137.115, RSMo, the property owner shall prevail on the appeal as a matter of law. … .”§138.060.1, RSMo.

It is important that when subsection 10 of Section 137.115, RSMo, was amended, subsection 11 was added in Section 137.115 and subsection 1 of Section 138.060 was amended in 2002 in the same legislation – H.B. 1150, et al.See, A.L. 2002 H.B. 1150 et al.Accordingly, it was proper for the Hearing Officer to read these provisions of the law together when addressing the notice issue in the Decision.

Notice and Right to Inspection Mandatory

Respondent argues that the provisions of Section 137.115.11 are only directory and not mandatory.Respondent is asserting the Hearing Officer erred in reading the word “shall” as “has a duty to do” or “is required to” (Black’s Law Dictionary, Seventh Ed.) or as an “obligation” or “necessity”(Webster’s New World Dictionary, Second College Ed.).Respondent, in effect asserts the statute has no real meaning since the assessor is only directed to give notice and is not required to do so.To arrive at such a conclusion the Commission would have to conclude that the legislature enacted this statute to mean nothing.The argument is not persuasive.

Respondent’s line of reasoning that because the legislature did not include a penalty provision associated with an assessor failing to carry out the duties imposed by §137.115.11 it is not mandatory is likewise not persuasive.

In addressing the rules of statutory construction, Missouri courts have held:

“The primary rule of statutory construction is to determine the intent of the legislature from the language used, to give effect to that intent if possible, and to consider the words used in their plain and ordinary meaning.The use of the word ‘shall’ in a statute will usually be interpreted to command the doing of what is specified, but the term is frequently used indiscriminately and courts have not hesitated to hold that legislative intent will prevail over common meaning. ‘In determining whether a statute is mandatory or directory, the general rule is that when a statute provides what results shall follow a failure to comply with its terms, it is mandatory and must be obeyed; however, it if merely requires certain things to be done and nowhere prescribes results that follow, such a statute is merely directory.’”401 North Lindbergh Associates v. St. Louis County Board of Equalization, 807 S.W.2d 100, 104 (Mo. App. ED 1990) (citations omitted and emphasis added)

 

Generally, the use of the word “shall” in a statute connotes a mandatory duty.The absence or presence of a penalty provision is only one method for determining whether or not a statute is directory or mandatory.The absence of a penalty provision does not automatically override other considerations.St. Louis Police Officers’ Ass’n v. Board of Police Com’rs of City of St. Louis, 2007 WL 2915186 (Mo. App. ED 2007).When a statute mandates that something be done by providing that it “shall” occur and also provides what results “shall” follow a failure to comply with the statute, it is clear that it is mandatory and must be obeyed.SSM Health Care St. Louis v. Schneider, 229 S.W.3d 279 (Mo. App. ED 2007); Valli v. Glasgow Enterprises, Inc., 204 S.W.3d 273 (Mo. App. ED 2006).Generally, the use of the word “shall” in a statute connotes a mandatory duty.Neske v. City of St. Louis, 218 S.W.3d 417 (Mo. 2007); Fireman’s Retirement System v. City of St. Louis, 2006 WL 2403955 (Mo. App. ED 2006).The word “shall” in the text of a statute is usually used to express compulsion, obligation or necessity, and, therefore, it generally mandates an action.State ex rel Hunter v. Lippold, 142 S.W.3d 241 (Mo. App. ED 2004).

Respondent’s claim ignores the provisions of §138.060, enacted in the same bill as the amendment which placed subsection 11 into §137.115.To read subsection 11 only in the context of itself and that since it provides for no results which follow for failure to carry out the duties prescribed there is to read the statute too narrowly.Sections 138.060.1 and 137.115.11 must be read together.Section 138.060.1 specifically refers to §137.115.The result that follows for failure of the assessor to carry out the duties set forth in §137.115.11 is clearly found in §138.060.1 “… the property owner shall prevail on the appeal [before the Commission] as a matter of law.”

This application of the law, as was done by the Hearing Officerfinds clear support in the holding of the Missouri Supreme Court in Buck v. Leggett, 813 S.W.2d 872, 874-5 (SCt.Mo, 1991).There the Court ruled:

‘in construing a statute it is appropriate to take into consideration statutes involving similar or related subject matter when such statutes shed light upon the meaning of the statute being construed, even though the statutes are found in different chapters and were enacted at different times.’(citation omitted).

 

In the present instance, the two statutes (§§137.115.11 & 138.060) were not enacted at different times.They were enacted in the same bill.The section of law – 138.060.1 – setting forth the results to follow or the penalty to be imposed for failure to carry out the duty set by the other section of law – 137.115.11 –specifically refers to §137.115.It is clear with that reference the legislature intended the inspection and notice set forth in §137.115 must be read in conjunction with §138.060.1.Not reading the two statutes together and in harmony with one another ignores the plain language of §138.060.1.It is ignoring the rule of construction the Court established in Buck v. Leggett, supra.

Even using Respondent’s own argument that a result or penalty must be set out by the legislature for a “shall” statute to be mandatory, no error was committed by the Hearing Officer in her Decision.The result to follow or penalty to be imposed for the Assessors failure to comply with §137.115.11 is clearly established in §138.060.1.The Hearing Officer did not err as asserted by Respondent under this point.

Arbitrary and Capricious Sanction

Respondent’s claim of an arbitrary and capricious action by the Hearing Officer is that a “sanction … is nowhere to be found in Chapter 137 or 138.”Section 138.060.1 RSMo states, “… the property owner shall prevail on the appeal as a matter of law. … .”That is the sanction or penalty which results in the assessment not being increased.

In order for the Decision to be “arbitrary” it would have been based upon the individual discretion of the Hearing Officer or have been founded upon the prejudice or preference of the Hearing Officer rather than on reason or fact.See, Black’s Law Dictionary, Seventh Edition.For the Decision to be “capricious” it would have to have been founded on the Hearing Officer’s unpredictable or impulsive behavior contrary to the rule of law.See, Black’s Law Dictionary, Seventh Edition.

If §138.060.1 did not exist, then the determination that the taxpayers in these appeals were to prevail would have been arbitrary.The rule of law says failure of the assessor to establish compliance with §137.115.11 results in the property owners prevailing in an appeal before the Commission.The Hearing Officer’s Decision is not capricious.The action of the Hearing Officer was not based upon prejudice or personal preference.The language being argued was not an impulsive conclusion contrary to the applicable law.A determination based upon the clear language of a statute is neither arbitrary nor capricious.Respondent’s point is not well taken.The Hearing Officer did not err as challenged by the Respondent.On the basis of the evidence before the Hearing Officer, Respondent failed to establish compliance with §137.115.11, the Hearing Officer had no alternative than to follow the mandate of §138.060.1 and rule in favor of the taxpayers.

The values appealed by the Complainants were the increased values place on the properties by Respondent in 2005.As a consequence of a finding that those values were invalid as a matter of law, Complainants were entitled to have the increases removed.This is precisely the effect of the Hearing Officer’s Decision.

Section 137.115.11 Unconstitutionally Invades the Authority of St. Louis County

Respondent argues that Section 137.115.11 is “aimed squarely at St. Louis County” and the General Assembly has no constitutional authority to specify the assessment procedures in St. Louis County, a charter county.The Respondent cites Hellman v. St. Louis County, 302 S.W.2d 911, in support.In that case, the Assessor contracted for expert services to assist in determination of property values.The Court found that the employment of experts is not contrary to the provisions of Missouri Statutes.The case does not, as Respondent argues, give St. Louis County authority to ignore Missouri Revised Statutes when exercising its powers and duties.Article VI, § 18(b) of the Constitution directs that the charter “shall provide * * * for the exercise of all powers and duties of counties and county officers prescribed by the constitution and laws of the state.”

Section 137.115.11, RSMo does not invade the province of St. Louis County in the manner of assessments.It provides for notice to the property owner that the government will be inspecting their property and their rights pertaining to that inspection.Further, St. Louis County Ordinance 501.250 also requires notification to the property owner:

“(B)   Whenever the assessor or any person acting on the assessor’s behalf shall perform an inspection of any parcel of residential real property for the purpose of determining the appraised valuation of such parcel pursuant to …. state law due to an increase …. in the property’s appraised valuation, the assessor or such person acting on the assessor’s behalf shall:

 ….. 2.   Notify the owner of the property, both by leaving a notice on the premises at the time of the inspection and by mailing a notice to such owner, that the owner is entitled to an inspection of the interior of the property if the owner wishes to have such an inspection, and further notifying such owner of the process required to arrange for such an interior inspection….

(O. No. 20820, 3-5-02)”

 

The Complainant also argues that Section 137.115.11 is special legislation.First, the Commission notes that Respondent failed to raise this line of argument prior to the issuance of the Decision.Therefore, the Hearing Officer could not have erred for not considering an argument never presented.Second, the burden is on the party alleging that a statute is a special law and challenging the constitutionality of the statute to show that the statutory classification is arbitrary and without a rational relationship to a legislative purpose.

The Supreme Court of Missouri, in School District of Riverview Gardens,816 S.W.2d 219, set out two tests for determining whether or not a statute or ordinance violates the constitutional prohibition against special legislation. “First is the law a special or local law? Second, if so, is the vice that is sought to be corrected, the duty imposed, or the permission granted in the statute so unique to the persons, places or things classified by the law that a law of general applicability could not achieve the same result?” A law based on open-ended characteristics is not facially special and is presumed to be constitutional. Population classifications in laws are open-ended in that others may fall into the classification.Jefferson County Fire Protection District Assn. v. Blunt, 205 S.W.3d 866;School Dist. of Riverview Gardens v. St. Louis County, 816 S.W.2d 216.

Valuation Placed on the Properties

The Hearing Officer set the 2005-6 assessed values of the subject properties at $287,300 (05-10760), $212,780 (05-10761) and $241,850 (05-10762).The Complainant argues that the Hearing Officer should have ordered assessed valuations of $174,480 (05-10760), $170,730 (05-10761) and $200,080 (05-10762).

The assessed valuations, as determined by the Assessor, in the 2003-2004 cycle, were $287,300, $212,780 and $241,850.The Complainants appealed those valuations in State Tax Commission Appeal numbers 03-10435 thru 03-10437.The valuations were set aside by the State Tax Commission on January 15, 2008, due to the County’s failure to comply with Sections 137.115.10 and 137.115.11, RSMo.The State Tax Commission set the values at $174,480; $170,730; and $200,080.The Complainant’s argue that the valuations set by the State Tax

Commission on January 15, 2008, should be the assessed valuations ordered by the State Tax Commission in these appeals.

Section 138.060.1 RSMo states:

“ … In any county … with a charter form of government with greater than one million inhabitants, … in the event a physical inspection of the subject property is required by subsection 10 of section 137.115, RSMo, the assessor shall have the burden to establish the manner in which the physical inspection was performed and shall have the burden to prove that the physical inspection was performed in accordance with section 137.115, RSMo. In such county or city, in the event the assessor fails to provide sufficient evidence to establish that the physical inspection was performed in accordance with section 137.115, RSMo, the property owner shall prevail on the appeal as a matter of law. … .”§138.060.1, RSMo.

 

The Complainants, in their Complaint for Review of Assessment, proposed values of $287,300 (05-10760), $212,780 (05-10761) and $241,850 (05-10762). The Complainants, the property owners, prevailed on the appeal as a matter of law.The assessed values were set as proposed by the Complainants in their Complaint for Review of Assessment.The values proposed were the assessed valuations set by the Respondent in the 2003-2004 assessment cycle.

ORDER

The Commission upon review of the record and Decision in this appeal, finds no grounds upon which the Decision of the Hearing Officer should be reversed or modified.The Hearing Officer did not err in finding the provisions of Sections 137.115.11 and 138.060.1, RSMo were mandatory upon the Respondent.The Hearing Officer’s Decision was neither arbitrary nor capricious, but rather a proper application of the law to the facts in the record.The Decision does not violate either the uniformity or equal protection clauses of the Missouri or the United States Constitution.Accordingly, the Decision is affirmed.

Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing set forth in the Certificate of Service.

If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts unless disbursed pursuant to Section 139.031.8, RSMo.

If no judicial review is made within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in this appeal.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED December 16, 2008.

STATE TAX COMMISSION OF MISSOURI

Bruce E. Davis, Chairman

Jennifer Tidwell, Commissioner

Charles Nordwald, Commissioner

 

 

 

 

DECISION AND ORDER

 

HOLDING

 

Decision of the St. Louis County Board of Equalization is SET ASIDE.The Commission finds the prior assessment value must be applied for the 2005 – 06 assessment cycle.

On August 11, 2008, Complainant filed a Motion for Decision.The State Tax Commission ordered the Respondent to respond to said Motion by September 2, 2008.Respondent failed to respond.

Case decided by Hearing Officer Maureen Monaghan.

ISSUE

The Commission takes these appeals to determine the true value in money to be set for the 2005 – 06 assessment cycle under the provisions of Sections 137.115 and 138.060, RSMo.

FINDINGS OF FACT

1.The subject properties are:

 

 

2.The 2005 assessed valuations of the subject properties increased by more than 15% since the 2003 assessment.

 

3.The properties are residential properties.

4.The properties were inspected on May 12, 2005.

5.A written notice of the inspection was provided.

CONCLUSIONS OF LAW AND DECISION

Jurisdiction

Complainants timely appealed to the State Tax Commission from the decision of the St. Louis County Board of Equalization.The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious.Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo.The hearing officer shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious.Section 138.431.4, RSMo.

Grounds for Appeal.

The property under appeal is subclass (1) property (residential) under Section 4(b), Article X, Mo. Constitution.The Complainants stated on the Complaint for Review of Assessment that the Assessor failed to comply with the physical inspection requirement of Sections 137.115.10 and 137.115.11.

Section 137.115.10, RSMo – Requirement of Physical Inspection

Section 137.115.10, RSMo, 2006 Cum. Supp. (A.L. 2002 H.B. 1150, et al) establishes that: “Before the assessor may increase the assessed valuation of any parcel of subclass (1) real property by more than fifteen percent since the last assessment, excluding increases due to new construction or improvements, the assessor shall conduct a physical inspection of such property.”

Section 137.115.11, RSMo – Notice Regarding Physical Inspection

Section 137.115.11, RSMo, 2006 Cum. Supp. (A.L. 2002 H.B. 1150, et al) requires in those instances where a physical inspection is required under Section 137.115.10 (more than 15% increase in residential assessed value since last assessment), the assessor is required to (1) notify the property owner in writing of the fact of the physical inspection being required, and (2) provide the owner with clear written notice of the owner’s rights relating to the physical inspection.The owner shall have no less than thirty days to notify the assessor of a request for an interior physical inspection.

Section 138.060, RSMo – Assessor’s Burden of Proof on Physical Inspection

Section 138.060, RSMo, 2006 Cum. Supp. (A.L. 2002 H.B. 1150, et al) provides in relevant part, that in St. Louis County, “… in the event a physical inspection of the subject property is required by subsection 10 of Section 137.115, RSMo, the assessor shall have the burden to establish the manner in which the physical inspection was performed and shall have the burden to prove that the physical inspection was performed in accordance with Section 137.115, RSMo.….”

The Assessor inspected the property on May 12, 2005, and a notice of the inspection was provided.The notice informed the property owner that the property was inspected due to an increase of at least 15% in the assessed value.The notice also informed the property owner that they could request an additional inspection within thirty days.

The Complainant argues that the notice and the inspection of the property were inadequate and that the notice was not timely.The Hearing Officer will not make any findings on the sufficiency of the inspection or whether the notice was provided to the owner.The Hearing Officer finds that the notice did not comply with Section 137.115.11, RSMo in that the Complainant was not given at least thirty days to request an interior inspection.

Section 137.115.11, RSMo, 2006 Cum. Supp. (A.L. 2002 H.B. 1150, et al) provides that the owner shall have no less than thirty days to notify the assessor of a request for an interior physical inspection.The purpose of the inspection is to insure the Assessor has the correct valuation in the assessment book.The Assessor’s power to change a valuation ceases after delivery of the book to the county’s governing body.Wymore v. Markway , 89 S.W.2d 9 (Mo. 1935). Section 137.375, RSMo, provides that the assessor shall make out and return to the county commission the assessment books, on or before the fifteenth day of May in every year, unless the time is extended to May 31^st as provided in Section 137.335, RSMo.

The Complainant received notice of the rights related to the inspection on May 12, 2005, including a right to request an inspection and thirty days in which to exercise that right.The Assessor must turn over the assessment books, if the deadline is extended, by May 31.Therefore, the Complainant was not provided at least thirty days to request an inspection.

ORDER

The Respondent failed to meet their burden that they met the requirements of Section 137.115, RSMo.The assessed valuations by the Board of Equalization forSt. LouisCountyfor subject properties are SET ASIDE.The assessed values for the properties for tax years 2005 and 2006 are the previous assessed valuations:

 

A party may file with the Commission an application for review of this decision within thirty (30) days of the mailing of such decision.The application shall contain specific grounds upon which it is claimed the decision is erroneous.Failure to state specific facts or law upon which the appeal is based will result in summary denial.Section 138.432, RSMo 2000.

If an application for review of this decision is made to the Commission, any protested taxes presently in an escrow account in accordance with these appeals shall be held pending the final decision of the Commission and an order to the Collector to release and disburse the impounded taxes.§139.031.3, RSMo.If no application for review is received by the Commission within thirty (30) days, this decision and order is deemed final and the Collector of St. Louis County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account in accord with the decision on the underlying assessment in these appeals.If any or all protested taxes have been disbursed

pursuant to Section 139.031(8), RSMo, either party may apply to the circuit court having jurisdiction of the cause for disposition of the protested taxes held by the taxing authority.

Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed.Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.

SO ORDERED September 25, 2008.

 

STATE TAX COMMISSION OFMISSOURI

Maureen Monaghan

Hearing Officer