Jefferson Savings & Loan Ass'n v. Goldberg

MORGAN, Judge,

dissenting.

Being convinced that the principal opinion reaches an erroneous result, I respectfully dissent because (1) it totally disregards long standing rules of statutory construction that a legislative enactment is presumed to be valid and where susceptible of a construction harmonious with the Constitution must be given that construction; (2) it creates a strained interpretation of Sec. 4(b) of Art. X of the Missouri Constitution by assuming and imposing thereon a definition of the term “annual yield” which is inconsistent with other provisions of said section; (3) it compounds said error by in-grafting the same erroneous definition to Sec. 148.480, RSMo 1978, which of necessity faults the proposed analysis of said section; (4) it creates by something more than implication a threat to any tax law which allows a taxpayer, individual or corporate, to make business decisions affecting the amount of tax due; (5) it fails to follow the dictates of Sec. 1.140, RSMo 1978, that “provisions of every statute shall be severable” (absent certain findings) if, for argument only, the exemption of income from “obligations of or guaranteed by the United States” are found objectionable and stricken instead of unnecessarily striking the entire last sentence of the statute as now proposed; (6) it erroneously interprets Sec. 148.520, which if read as printed clarifies the question; (7) and lastly, but perhaps most importantly, it moves the Court improperly into the legislative and executive arena as shown by the concurring opinion of Judge Welliver.

For convenience of reference, Sec. 4(b) of Art. X of the Constitution of 1945 is requot-ed as follows:

Property in classes 1 [real property] and 2 [tangible personal property] . . . shall be assessed for tax purposes at its value or such percentage of its value as may be fixed by law for each class .... Proper*646ty in class 3 [intangible personal property] ... shall be taxed only to the extent authorized and at the rate fixed by law for each class ... and the tax shall be based on the annual yield and shall not exceed eight per cent thereof.

Since the question is one solely of construction, one must look first to the principal opinion’s reading of the constitutional provision in Sec. 4(b) and the relevant statutes. Three excerpts therefrom readily identify the reason why an erroneous result was inevitable:

(a) ... class 1 and class 2 property may be assessed on a percentage of value as well as full value, but that a sharp distinction is drawn in this regard as to intangible personal property.
(b) It is plain the framers of the constitution intended to differentiate between the tax base permitted for real and tangible personal property and that permitted for intangible personal property. Had it been intended that intangible personal property could likewise be taxed on a percentage of its value or return, the constitution would have said so, as it did with class 1 and class 2 property.
(c) As seen from art. X, § 4(b) quoted earlier, the tax on intangible property ‘shall be based on the annual yield’. The noun ‘yield’ in the sense used in the constitutional provision means, of course, the return upon an investment. The parties are in agreement that the annual yield from an account in a savings and loan association is the earnings paid or credited to the account during the year, as the statute declares, § 148.520.

Had the declaration in (c) been followed, a correct result had to follow. Conversely, allowing those in (a) and (b) to control, as did the principal opinion, forced an incorrect result.

Simply put, the principal opinion looked to Sec. 4(b) of the constitution and focused on “the tax shall be based on the annual yield” (emphasis added); and, after assuming it referred to the annual yield of the “association” instead of the annual yield of the “account holder,” ignored the first portion of the same sentence that class 3 (intangible personal property) “shall be taxed only to the extent authorized....” Clearly, the last part quoted makes the assumptions in (a) and (b) extremely tenuous.

With the taxing power resting in the General Assembly, the meaning encompasses to the extent authorized “by the General Assembly”; and the annual yield is that realized by the account holder from the tax as authorized “by the General Assembly”.

As shown in Sec. 148.480 the tax is imposed on the account holder to the extent that funds credited to his account fall under the taxable portion of said earnings. The extent to which funds credited are taxed may turn on “business judgment” decisions of the particular association which the particular account holder selected. The principal opinion would reject such a possibility, and I suggest such a result to be inconsistent with all known taxing statutes. Query, as to how the recent “All-Saver” and “IRA” statutes will survive with the effects thereof on tax liabilities being dependent on a personal “business” decision to participate or not.

If the exception of income derived from “obligations of or guaranteed by the United States” is unconstitutional (a thought which should be rejected) and causes the basic problem, it could be stricken under Sec. 1.140 and leave the remaining portion which easily can stand alone.

The constitution authorized the tax and it was assessed properly by the legislative department of this state and should be upheld.