Norwin G. Heimos Greenhouse, Inc. v. Director of Revenue

BLACKMAR, Judge,

dissenting.

I agree that the appellant has standing to seek a refund of sales taxes paid by it to the utilities, and by them to the State. I disagree with the conclusion that the appellant is an agricultural consumer, and so would affirm the decision of the Administrative Hearing Commission.

The principal opinion cites King v. Laclede Gas Co., 648 S.W.2d 113, 115 (Mo. banc 1983) for the proposition that the term “commercial” within § 144.020.1(3), RSMo 1978, is not to be construed broadly. In King, however, the Court distinguished “mercantile” (the actual buying and selling of commodities) from “commercial” (the larger aspects of operation of exchange) and chose not to follow the restricted reading of “commercial” previously used in State ex rel. Kansas City Power & Light Co. v. Smith, 342 Mo. 75, 111 S.W.2d 513 (banc 1938) and Kansas City Power & Light Co. v. Kansas City Public Service Co., 342 Mo. 45, 111 S.W.2d 516 (banc 1938). (Kansas City Power held that “commercial” pertains only to the buying, selling, or exchanging of commodities). King, 648 S.W.2d at 115. In justifying its broader interpretation of “commercial”, the Court noted that the term cannot be used “so narrowly as to preclude a common sense understanding of the operations of this taxpayer” nor to reject the plain meaning of the statute. Id. at 115. Here the principal opinion departs from the underlying reasoning of the King holding that operations integral to the selling of commodities are “commercial” in nature.

Contrary to the principal opinion’s assertion, the King decision does assist in determining which class of consumers are “commercial” and which are not. To decide which consumers are not “commercial”, one must establish the meaning of “commercial,” and what constitutes a “commercial” use. Then it can be determined which consumers fall outside the ambit of that definition. King provided direction in both respects.

In King, the taxpayer requested an exemption on the grounds that the electricity was used in a non-commercial, non-domestic, and non-industrial manner. Because the electricity was used as an integral part of the taxpayer’s commercial activity, the taxpayer was found non-exempt and therefore, a commercial consumer within § 144.-020.1(3), RSMo 1978. Id. at 114-115.

The appellant used its water, electricity and natural gas in the same way that Lac-lede did in King. There I noted in a concurring opinion that “natural gas is the taxpayer’s product, and, in furnishing gas to its customers, the taxpayer is engaged in the selling of commodities.” Id. at 117. Storing the electricity was an integral part of Laclede’s commercial operation, and power furnished to accomplish this end was for a “commercial” use. Id. at 117. Here the utilities were used as an integral part of Heimos’ operation — to raise the vegetables and flower plants. In furnishing the plants to its customers, retail establishments, Heimos Greenhouse was engaged in a commercial operation, and can be classified a “commercial” consumer of utilities, subject to the sales tax.

The principal opinion also relies on the Missouri Employment Security Law and St. Louis Rose Co. v. Unemployment Compensation Commission, 348 Mo. 1153, 159 S.W.2d 249 (1941) to support the conclusion that agricultural consumers are not subject to sales tax.

Under Missouri’s Employment Security Law the term “employment” does not in-*511elude service performed by an individual in agricultural labor. Section 288.034.12(1), RSMo 1986. The term “agricultural labor” means renumerated service performed on a farm, which includes greenhouses used primarily for the raising of horticultural commodities. Section 288.034.12(l)(a)(e), RSMo 1986.

This statute contains a specification which is not found in the sales tax statutes. Section 288.034.12(l)(b), RSMo 1986. It also centers on the nature of the particular employer’s duties, and not on the nature of the business. The application of the exemption, furthermore, is limited to the smaller agricultural employers. Section 288.034.12(l)(b), RSMo 1986.

Although the principal opinion finds that the legislature’s distinction between “agricultural” and “commercial” in the unemployment statute is compelling evidence that a similar distinction was intended in the sales tax statutes, logic would indicate a contrary conclusion. The statutes deal with separate subject matter. It is only reasonable to assume that the legislature would have excluded greenhouses specifically, if it had so intended.

The principal opinion stretches the holding of Saint Louis Rose Co. beyond reasonable bounds to justify the conclusion that appellant is an agricultural consumer. There we held that, for unemployment compensation purposes, greenhouse employees are engaged in agricultural labor. Id. 159 S.W.2d at 251. When the case was decided, the unemployment compensation statute did not specifically include horticultural commodities within the “agricultural labor” exemption. Id. at 251. From this limited holding the principal opinion concludes that, because the employees’ labor is considered agricultural, the appellant’s product is agricultural. Because the product is found to be agricultural, the use of the utilities is held to be agricultural consumption, and, because the appellant’s consumption is agricultural, appellant is an agricultural consumer and exempt from the sales tax statute. Absent from this circular analysis is any consideration of whether the utilities are used as an integral part of the appellant’s activities and whether, in furnishing the plants and vegetables to retail establishments, the appellant is engaged in the sale of commodities. The electricity, gas, and water used to grow the appellant's product are an integral part of the operation which, according to King, would be a “commercial”, and not an “agricultural”, use or consumption.

I believe that the appellant’s operations in growing plants for sale to consumers are not agricultural, in any accepted sense of the term. The operation is fully as commercial as any mercantile business. The decision should be affirmed.