State Ex Rel. May Department Stores Co. v. Koupal

PRICE, Judge.

The May Department Stores Company (May) appeals the summary judgment granted against it in the circuit court denying May a recalculation of its enterprize zone tax credits (EZ credits) for the tax year ending January 1, 1988. In bringing this appeal, May contests the circuit court’s interpretation of § 135.225(8), RSMo 1986,1 a revenue statute, and as such falls within *319the ambit of this Court’s exclusive appellate jurisdiction. Mo. Const, art. Y, § 3. We reverse and remand.

I.

May is a New York corporation with its principal place of business in Missouri. May operates a number of retail department stores in Missouri. In 1987, May completed construction on two new stores in Joplin.2 The Joplin metropolitan area had been designated as an enterprise zone pursuant to § 135.210, RSMo 1986, by the Director of the Department of Economic Development (Department). By establishing new business facilities within the enterprise zone, May became entitled to certain EZ tax credits.

To qualify for the credits, May had to submit the matter to the Department to calculate and certify to the Director of the Department of Revenue (Director) the amount of EZ credits allowed. For the tax year 1987, May claimed that it was entitled to $398,669 in EZ credits for the two stores. However, the Department limited May’s EZ credits to the amount of May’s taxable Missouri income that was attributed to the two new stores, $47,032.97.

May challenged the Department’s certification of $47,032.97 in EZ credits and claimed the EZ credits should be computed relative to its entire Missouri taxable income and not just its new business facility income. Accordingly, May, on its 1987 corporate tax return, attempted to claim the full amount of $398,669 in EZ credits. The Director of the Department of Revenue rejected this amount and accepted the lesser total certified by the Department of Economic Development. This suit followed.

Before the circuit court, May and the Department both filed motions for summary judgment with accompanying affidavits. After hearing argument on both motions, the circuit court on August 8, 1991, issued its judgment granting the Department’s motion. In granting summary judgment, the circuit court held:

Pursuant to § 135.225, RSMo 1986, the enterprize zone credits claimed by [May] for the tax year ending January 30,1988, are limited to the income tax imposed by Chapter 143 on plaintiff’s new business facility income, as defined by § 135.-100(6), RSMo 1986.

May appeals stating that: the circuit court misinterpreted § 135.225(8); the circuit court’s interpretation violates May’s equal protection rights; and the circuit court erred in holding that the Department was not estopped from denying May the full total of EZ credits allowable. Since we agree with May’s first position, we do not address the latter points.

II.

As a preliminary matter, it is appropriate to note that this case was properly decided upon cross motions for summary judgment. Summary judgment is an integral part of our rules of procedure that can allow for a relatively speedy and inexpensive resolution of disputes. Wood & Huston Bank v. Malan, 815 S.W.2d 454, 457 (Mo.App.1991).

III.

The legal issue presented to this Court for ruling is whether § 135.225(8), RSMo 1986, allows the EZ tax credits for each new business facility to extend to all of the taxpayer’s taxable Missouri income, or only to the taxable income generated by the new facility itself. The section provides no express limitation. It reads:

The amount of the credit allowed for each new business facility employee employed within an enterprise zone or investment in a new business facility within an enterprise zone shall not be limited to some portion of the income tax.

The Department, however, argues that the introductory language contained in § 135.-225 refers to “§ 135.100 to § 135.160” and provides that the credits shall be “on the same terms and conditions as specified in those sections.” As they relate to the issue at hand, the pertinent portions of § 135.110(2) and (3) are identical and read:

*320... the credit allowed by subsection 1 of this section shall not be limited to some portion of the income tax otherwise imposed ... on such taxpayer’s new business facility income for the taxable year for which the credit is allowed ...

As such, the Department contends the limitation contained in § 135.110(2) and (3) should be read into § 135.225(8) restricting the EZ credits to the “taxpayer’s new business facility income.”

The weakness of the Department’s argument, however, is apparent. While § 135.-225(8) specifically includes language stating that the taxpayer’s credit “shall not be limited to some portion of the income tax,” it does not include the continued language from § 135.110(2) and (3) “on such taxpayer’s new business facility income.” The absence of this key language cannot be ignored. It compels us to conclude that a different result was intended. Had the legislature intended to limit EZ credits to only new business income, it could have easily inserted the language used in § 135.-110(2) and (3) into § 135.225(8). Alternatively, if the legislature had intended to rely entirely upon the “terms and conditions” of §§ 135.100 to 135.160 as stated in the preamble of § 135.225, subsection (8) need not have been included at all.

The Department further argues that the use of the word “the” in the phrase “some portion of the income tax” implies reference to “income tax” as a prior defined term. The Department argues that the word “the” signals that the term “income tax” as used in § 135.225(8) is to have the same meaning as it did in § 135.110(2) and (3), where it was expressly limited by the words “on such taxpayer’s new business facility income.” This argument misses the mark. Both § 135.110(2) and (3) also refer to “the” income tax, thus begging the question of the previous definition to which they might then refer. Moreover, if the Department were correct, there would have been no need to continue the § 135.110(3) definitional phrase “on such taxpayer’s new business facility income,” as that phrase would have been implied there just as the Department argues it should be implied in § 135.225(8) by the term “the income tax.” A more reasoned conclusion is that the legislature chose to limit the benefits provided in § 135.110(2) and (3) to income produced by the new business facility, while it did not choose to so limit the more generous EZ credit benefit.

Finally, the Department argues that a credit should be construed narrowly against the taxpayer and that the Department’s interpretation should be given great weight. While both propositions are generally so, they cannot overcome a construction of the statute based upon the plain and simple words used therein.

Here, § 135.225(8) expressly states that the amount of credit allowed “... shall not be limited to some portion of the income tax.” While many arguments can be made that these words should be construed with reference to other sections of the revenue statutes, and while many rules of statutory construction can be cited, the cardinal rule of statutory construction is to consider the words in their plain and ordinary meaning. Union Electric Co. v. Director of Revenue, State of Missouri, 799 S.W.2d 78, 79 (Mo. banc 1990). By our ruling today, we have done just that. Rather than forcing a construction of § 135.225(8) by implication from language used in other sections of the statute, we hold that the EZ credits “shall not be limited to some portion of the income tax,” either by percentage, source of income, or otherwise. Accordingly, the judgment of the circuit court is reversed and the case is remanded for a recalculation of May’s EZ credit.

Reversed and remanded.

HOLSTEIN and THOMAS, JJ„ and SHANGLER and MONTGOMERY, Special Judges, concur. SPINDEN, Special Judge, dissents in separate opinion filed. ROBERTSON, C.J., concurs in opinion of SPINDEN, Special Judge. COVINGTON and BENTON, JJ., not participating.

. This statute, along with most of the sections dealing with enterprise zones, was rewritten in whole or in part in 1991.

. The number of new jobs created by these two stores was 258.