text:
    Larry J. VOORHEES, Appellant, v. Charles L. JOHNSON, Individually and dba Johnson-Amason Sales Agency, Appellee.
    No. 7839.
    Court of Civil Appeals of Texas, Beaumont.
    June 17, 1976.
    Rehearing Denied July 8, 1976.
    George D. Jones, Robert G. Chappell, Abilene, for appellant.
    Milton L. Bankston, James V. Hammett, Jr., Austin, for appellee.
   DIES, Chief Justice.

In April 1975, appellant Larry J. Voor-hees, signed a contract with Charles L. Johnson, d/b/a The Johnson-Amason Sales Agency, appellee, which contained the following covenant:

“During the period commencing with the date hereof and ending three years after the termination of his representation of Company, Representative covenants and agrees that he will not directly or indirectly for his own account or benefit, or for the account or benefit of any other person or party, engage or have any interest in as owner, partner, employee, agent, shareholder or otherwise, any business, enterprise or entity engaging in any business or activity in the United States which is in any way competitive with Company.”

Appellee employed agents such as appellant to sell insurance annuities that qualified as tax deductions for retirement benefits for the self-employed, commonly known as the “Keough plan” [H.R. 10]. Appellee purchased mailing lists of self-employed persons, to whom he sent a “sales kit” which he had developed and written. When the addressee responded favorably, an agent was given the “lead” hopefully to conclude the sale of an annuity. Shortly after signing the contract, appellant went to California and proceeded with another to form his own business using appellee’s sales kit, and hiring some of appellee’s agents. Appellee brought suit below for, among other things, a temporary injunction to prohibit competitive activity by appellant. After a hearing, the court ordered a temporary injunction as follows:

“It is accordingly ordered that the Clerk of this Court issue a writ of injunction pending final hearing and determination of this cause restraining and enjoining Larry J. Voorhees, Defendant, individually or as the agent, employer, partner, associate, representative, or employee of another, from in any way or manner, directly or indirectly, and within the states of Texas, South Dakota, Oklahoma, North Dakota, New Mexico, Nevada, Nebraska, Minnesota, Mississippi, Missouri, Alabama, Arizona, Arkansas, California, Colorado, Florida, Illinois, Indiana, Iowa, Kansas, and Louisiana, competing with Plaintiff for his own account or benefit or for the account or benefit of any other person or party:
“(1) in the sale of insurance in any form whatever, including without limitation, the sale of annuity contracts, or any other form of self-employed retirement plan;
“(2) by inducing representatives of Plaintiff to terminate their employment with Plaintiff;
“(3) by employing or engaging in business with any person known by Defendant to be a representative or employee of Plaintiff on subject to a contract with Plaintiff not to compete with Plaintiff;
“(4) by using or allowing others to use the sales material or customer leads copied or prepared by Defendant from the materials furnished to Defendant by Plaintiff.”

From this temporary injunction, representative Voorhees has appealed. Among his points is one that contends the injunction is too broad and goes beyond what is reasonably necessary to protect the business and goodwill of appellee.

An agreement on the part of an employee not to compete with his employer after termination of the employment is in restraint of trade and will not be enforced in accordance with its terms unless the same are reasonable. The test for determining the validity of the covenant as written is whether it imposes upon the employee any greater restraint than is reasonably necessary to protect the business and goodwill of the employer. Weatherford Oil Tool Company v. Campbell, 161 Tex. 310, 340 S.W.2d 950 (1960). It is the former employer’s burden of proof to show what is reasonably necessary to protect his business. Denny v. Roth, 296 S.W.2d 944, 947 (Tex.Civ.App., Galveston 1956, writ ref’d). The area restriction must be reasonable. American Speedreading Academy, Inc. v. Holst, 496 S.W.2d 133 (Tex.Civ.App., Beaumont 1973, no writ).

The proof here does not support a restrictive area of twenty-one states. Appellant did not know the states in which he was licensed. He was vague and unsure what states he was operating in. It seems doubtful that in several of the states listed he had any business. He was not sure how many employees he had. Apparently appellant only sold “Keough” plans and a hospitalization known as “Self Medicare,” and yet he is enjoined from competing with appellee “in the sale of insurance in any form whatever.”

We recognize that we could reform this contract. See Weatherford, supra at 952 and authorities cited, but the proof is just insufficient for us to determine what is reasonably necessary as laid down by Weatherford. For that reason, we remand this cause for a new hearing. Appellant’s point above set out is sustained.

REVERSED and REMANDED.

STEPHENSON, J., not participating.


source: Caselaw Access Project

author:
KEITH, Justice.
      DIES, Chief Justice

license: Public Domain

text:
    SEMICO, INC, Appellant, v. PIPEFITTERS LOCAL NO. 195 et al., Appellees.
    No. 7843.
    Court of Civil Appeals of Texas, Beaumont.
    June 17, 1976.
    Rehearing Denied July 8, 1976.
    Glen M. Chaney, Pearland, for appellant.
    Robert C. Grossheim, Beaumont, for ap-pellee.
   KEITH, Justice.

Defendant below appeals from an adverse judgment rendered in a bench trial and we will designate the parties as they appeared in the trial court.

During the period March 1, 1973, to August 15, 1973, (according to plaintiffs’ allegations) defendant employed the individual plaintiffs to perform work for it in Jefferson County. Before such work was performed, defendant had agreed to be bound by the terms of the collective bargaining agreement then in effect between the plaintiff local union and the employers’ representatives in the area. This contract called for certain special payments into a union depository. There is no dispute between the parties as to the defendant being bound by the contract or the provisions thereof.

Defendant failed to make all of the payments as and when due under the terms of the contract, and plaintiffs brought suit on January 25, 1974, to recover the sums due plus penalties and attorney’s fees. The individual plaintiffs sought to recover the principal sum of $1,599.35, while the principal of the debt, alleged to be due to the union, was set at $1,195.41. Defendant stipulated that these sums were due and consented to the entry of judgment together with interest thereon.

However, both groups of plaintiffs sought to recover a penalty of fifteen percent per month upon the sums due, the individual plaintiffs contending that the penalty due them amounted to $4,885.20, which additional sum they claimed as “damages.” The plaintiff union sought its “damages” in the sum of $4,650.77. Attorney’s fees were stipulated. The trial court entered judgment for the precise amount sought by the plaintiffs and the defendant has appealed only as to the award of the penalty or damages.

The sole item in dispute is the validity of the contractual provision fixing the penalty of fifteen percent per month upon the contributions remaining unpaid. We set out the pertinent language of the penalty clause in the margin. Defendant contends that this provision is invalid; and, after a careful consideration of the matter, we agree.

We begin our discussion of the authorities by quoting from 5 Corbin on Contracts § 1065 at 373 (1964), wherein this broad but dispositive statement is made:

“One case in which the courts all agree that the amount is a penalty and unenforceable is where a sum of money is made payable upon default in the payment of a smaller sum of money, and the difference between the two sums is not merely the interest value of the smaller.”

In applying the liquidated damages/penalty dichotomy to the issue of collective bargaining agreements, courts have looked to the comparative size of the stipulated sum with the value of the subject matter and with the probable consequences of the breach. See, e. g., Jensen v. Garvison, 274 F.Supp. 866, 870 (D. Ore. 1967). Thus, damages which were difficult to determine and which have come within the liquidated damages rule have been upheld. United States v. Carter, 353 U.S. 210, 77 S.Ct. 793, 1 L.Ed.2d 776 (1957); Judy Bond, Inc. v. Kreindler, 36 Misc.2d 943, 234 N.Y.S.2d 375, 377-378 (1962); Plumbers Loe. U. N. 519, Miami, Fla. v. Service Plbg. Co., Inc., 401 F.Supp. 1008, 1014 (S.D.Fla.1975).

But we are not here concerned with damages which are uncertain or which are within the realm of legal liquidated damages. The' author of the contractual language quoted in footnote one hereof correctly labeled the same as a penalty and not liquidated damages; and, it is to be noted that the penalty bears no relationship to the actual damages which may be sustained. Thus, the contractual “penalty” is unenforceable.

Chief Justice Hickman in Stewart v. Basey, 150 Tex. 666, 245 S.W.2d 484, 487 (1952), after discussing the liquidated damage/penalty rule, continued:

“An obligation to pay an indemnity is nothing more than an obligation to pay a sum of money theretofore ascertained, and a provision that failure to pay a definite sum of money upon default of performance of a covenant in a contract entitles the obligee to recover liquidated damages in excess of the interest rate will not be enforced. Langever v. R. G. Smith & Co., Tex.Com.App., 278 S.W. 178.” (emphasis supplied)

The cited case, Langever v. R. G. Smith & Co., 278 S.W. 178, 179 (Tex.Com.App. 1925, jdgmt. adopted), upheld a contract calling for liquidated damages where it was certain that damages would flow from the breach of contract and it was also certain that they could not be accurately measured. However, in considering the question, the Court discussed the difference in a contract calling for liquidated damages which it upheld and one involving a penalty, this language being critical to the case under consideration:

“[I]n a case of a contract for the payment of money simply, a stipulation to pay a fixed sum, in default of performance, will be regarded as an agreement for a penalty and not as a covenant for liquidated damages — the reason for this rule being that, for the nonpayment of money, the law awards damages measured by interest, and hence there is no difficulty in ascertaining the damages in such a case.”

And, so it is here. This is a simple action in assumpsit wherein plaintiffs seek a monetary recovery for breach of the contract by the defendant. Upon defendant’s failure to make the payments, it became liable under the law to pay damages but the law fixed such damages as lawful interest — six percent per annum. Art. 5069 — 1.03, Tex.Rev. Civ.Stat.Ann. (1971). The penalty provided in the contract was an attempt to provide damages for the detention of money at the rate of one hundred eighty percent per annum when the law fixed such damages at six percent with a maximum lawful rate of ten percent per annum.

We have examined carefully each of the authorities relied upon by our dissenting brother and find none to be either pertinent or persuasive. The general language found in the dissent does not address itself to the problem now under consideration. For instance, the two decisions from the United States Supreme Court cited relate to compulsory arbitration under the applicable federal statutes and decisions; and, none of the other authorities therein touch our problem.

Courts have upheld collective bargaining agreements which called for the payment of liquidated damages in the event an employer fails to make prompt payment of sums due under a contract. See, e. g., Jensen v. Garvison, supra (274 F.Supp. 866, 870). But, our dissenting brother and counsel for the plaintiffs have failed to cite a single case which has upheld a penalty such as we have under consideration. Our own independent research has not produced any authority which would authorize the enforcement of the penalty under consideration.

Thus, under the applicable authorities, we conclude that the penalty provision is invalid and unenforceable in the courts of Texas. It follows, consequently, that the trial court erred in awarding judgment for the penalties.

The trial court properly entered judgment wherein the individual plaintiffs recovered judgment against defendant in the principal sum of $1,599.35, and the union plaintiff recovered judgment in the amount of $1,195.41; and, further, that the individual plaintiffs and the union plaintiffs, jointly and severally, recover their attorney’s fees in the amount of $750.00 from the defendant. That portion of said judgment is affirmed and shall bear interest at the rate of nine percent per annum from and after December 31, 1975, until paid.

The trial court erred in entering judgment in favor of the individual plaintiffs in the amount of $4,885.20 as penalty and in favor of the union plaintiff in the amount of $4,650.77 as penalty for the failure to pay promptly the sums due under said contract. As to the two items herein set out, the judgment of the trial court is reformed and plaintiffs are denied any recovery of said penalties.

All costs in the trial court are adjudged against the defendant; costs upon appeal are adjudged against the plaintiffs, jointly and severally.

REFORMED and AFFIRMED.

DIES, Chief Justice

(dissenting).

I respectfully dissent. None of the cases cited in the majority opinion involve collective bargaining agreements. Generally, an employer and an employee may contract as they see fit. See 51 C.J.S. Labor Relations § 6 at 574 (1967). The law and public policy favor collective bargaining; it is the established labor policy of the United States. 51 C.J.S. Labor Relations § 149 at 879 (1967). Bargaining need not be confined to statutory subjects; but, as to matters other than wages, etc., each party is free to bargain or not to bargain. 51 C.J.S. Labor Relations § 155 at 893 (1967) and authorities cited. Collective bargaining agreements “are more than just a contract.” Line Drivers Local No. 961 of Int. Bro. of Team. v. W. J. Digby, Inc., 341 F.2d 1016, 1919 (10th Cir. 1956). See United Steel Workers v. Warrior & G. Nav. Co., 363 U.S. 574, 80 S.Ct. 1347, 4 L.Ed.2d, 1409, 1415, (1960). See also Wilburn v. Missouri-Kansas-Texas R. Co. of Texas, 268 S.W.2d 726, 732 (Tex.Civ.App., Dallas 1954, no writ).

“While the principles of law governing ordinary contracts would not bind to a contract an unconsenting successor to a contracting party, a collective bargaining agreement is not an ordinary contract. . [emphasis supplied] [It] covers the whole employment relationship. It calls into being a new common law — the common law of a particular industry or of a particular plant.” Wiley & Sons v. Livingston, 376 U.S. 543, 550, 84 S.Ct. 909, 914, 11 L.Ed.2d 898, 904-905 (1964).

      . . .If any Employer required to make contributions under this Agreement fails to make such payments by the Twenty-Fifty [sic.] (25th) of the month following closing of the month for which payments are due, it is agreed that the delinquent Employer shall pay a Fifteen (15%) per cent penalty for each additional month that such payment is delinquent.” (emphasis supplied)

      . In Carter, supra, the United States Supreme Court upheld a provision in a collective bar-gaming agreement which required the employer to make certain payments into a union-sponsored trust fund. This agreement provided that if the employer did not make the payments due by the 25th of the month, the same became delinquent “and the sum of $20 per delinquency or 10% of the amount due, whichever was greater, was owed by the delinquent employer as liquidated damages and not as a penalty.” (353 U.S. at 214, 77 S.Ct. at 795, 1 L.Ed.2d 781, emphasis supplied)

      . We have no occasion to consider whether or not such contractual provision rendered the contract usurious and subject to the penalties provided in Title 79, Chapter 1, Tex.Rev.Civ. Stat.Ann. See, e. g., Art. 5069 — 1.04, Tex.Rev. Civ.Stat.Ann. (1971).


author: CLAYTON, Justice.

text:
    Waylan G. DAULTON, Appellant, v. Robert G. REED et al., Appellees.
    Supreme Court of Kentucky.
    March 19, 1976.
    Opinion Modified July 30, 1976.

      J. Peter Cassidy, Jr., Moloney & Moloney, Lexington, for appellant.
    James F. Clay, Clay & Clay, Danville, for appellees Janet Reed and Robert Reed.
    Ben K. Wilmot, Stanford, for appellee Reed Lige Phillips.
   CLAYTON, Justice.

This is an appeal from a final judgment of the Lincoln Circuit Court entered June 22,1972, upon a jury verdict whereby appellant Waylan G. Daulton was adjudged liable to appellees Janet Reed and Robert Reed for $8,568.75 in damages arising from an automobile accident. The accident in question occurred April 19, 1971, at the intersection of Miller Street and U. S. Highway 27 in Lincoln County, Kentucky. This was a three-car accident involving two separate collisions. At this intersection, Miller Street is a two-lane road with one eastbound lane and one westbound lane, with traffic moving thereon being required to stop at a stop sign on Miller Street before proceeding across or onto U. S. 27. U. S. 27 runs in a north-south direction, and immediately south of the Miller Street intersection U. S. 27 is a four-lane highway consisting of two southbound lanes and two northbound lanes separated by a sixteen-foot median. Immediately north of the Miller Street intersection U. S. 27 narrows over a distance of some 220 feet to become a two-lane roadway — the north and southbound lanes being separated over this distance by a triangular-shaped median with U. S. 27 eventually merging into two lanes of traffic at the apex of the median.

The first collision involved the automobiles being operated by Daulton and appel-lee Reed Lige Phillips. As he approached the intersection, Daulton was traveling north on U. S. 27 in the right-hand lane at approximately 45 miles per hour (the posted speed limit). Phillips had stopped at the stop sign on Miller Street before proceeding east at a low rate of speed across U. S. 27 and into the path of Daulton’s vehicle. Daulton attempted to avoid the impending collision by increasing his speed, but his effort was to no avail and the vehicles collided in the intersection in Daulton’s lane with the front of the Phillips automobile striking the left rear portion of Daulton’s automobile. As a result of this collision Daulton’s automobile went out of control, crossed the median north of the intersection, and collided with the southbound automobile driven by Janet Reed.

On this appeal the three assignments of error may be briefly stated as follows: (1) the trial court erred in not apportioning the damages between Daulton and Phillips; (2) the trial court erred in ruling that Janet Reed was free of contributory negligence as a matter of law; and (3) the trial court erred in instructing the jury that Daulton had an absolute duty to yield to Phillips once Phillips had stopped at the stop sign on Miller Street and had proceeded onto U. S. 27.

This action was brought by the Reeds against Daulton and Phillips, who then cross-claimed against each other. In the course of a second trial, but before it was submitted to the jury, the Reeds dismissed their claim against Phillips. Prior to submission the trial judge found as a matter of law that Phillips was contributo-rily negligent, thus barring his claim against Daulton and that Janet Reed was free of contributory negligence. The verdict awarded the Reeds a total of $8,568.75 and apportioned the causation 75% against Daulton and 25% against Phillips. Since the Reeds’ claim against Phillips had been dismissed, the trial court rendered judgment against Daulton for the full sum of $8,568.75 and gave Daulton a judgment against Phillips for 25% of that amount. This was error.

In the recent ease of Nix v. Jordan, Ky., 532 S.W.2d 762 (1975), it was pointed out that the principle of Orr v. Coleman, Ky., 455 S.W.2d 59 (1970), applies when there has been an active assertion of a claim against one who would be a defendant but for the fact that he has settled the claim. The same rationale applies to this situation, in which the claim asserted by the Reeds against Phillips was later dropped, whatever may have been the reason. The judgment against Daulton should have been for 75% of the damages awarded to the Reeds.

Whether Janet Reed was free of contributory negligence as a matter of law, as held by the trial court, is a close question. In the recent case of House v. Kellerman, Ky., 519 S.W.2d 380, 383 (1975), for example, we held that the defendant Kel-lerman, who was following behind a car which went out of control into the median and then swerved back into his line of travel on the highway, could reasonably have been found negligent in view of testimony to the effect that the other car had moved some 200 feet down the median before returning onto the pavement. There was nothing to prevent his observing this erratic course of the other car from beginning to end, yet he testified that he saw nothing unusual until it popped back into the highway right in front of him. Obviously, therefore, there was a basis for finding that he was not maintaining a proper lookout. Also, he was traveling along the traffic lane next to the median, and could possibly have swerved to the outer lane had he been alert. Here, on the other hand, Mrs. Reed was already in the right-hand or outer lane when she struck the Daulton vehicle. When she first saw the Daulton car it was partially in the southbound lane next to the median, and to the right was a stone embankment. The only possible way in which she could have avoided the accident was to bring her car to a stop. According to her own testimony, she was 285 feet from the intersection (still on the two-lane portion of the highway) when she saw the Daulton car in the median. Since the point of impact was about 50 feet north of the intersection, she had at least 200 feet in which to stop her car.

Mrs. Reed testified that she was moving at a speed of 40 miles per hour. According to expert testimony by a state trooper, the stopping distance for an automobile traveling at that speed, including reaction time, is 150 to 160 feet. However, it is undisputed that the Daulton automobile was moving at such a speed that after being struck by the Phillips car, and after then traveling 70 feet and colliding with the Reed car, it struck the stone embankment to the west of U. S. 27, careened 84 feet back across the highway and came to rest against the embankment east of U. S. 27.

There is no question as to Mrs. Reed’s observance of her lookout duty. There was evidence to justify a conclusion that she could have stopped short of the point of impact. Nevertheless, the crucial point is that even if she had done so, whether the collision could or would have been avoided is a matter of speculation. Therefore, we cannot say it was error for the trial court not to instruct on contributory negligence.

In discussing appellant’s third assignment of error it is noted that one of the duties of Phillips as enumerated in the instructions was to yield the right-of-way to traffic on U. S. 27 that had entered the intersection or was approaching it so closely as to constitute an immediate hazard. This, of course, was proper. However, the instruction covering Daulton’s duties included the following:

“5. To yield the right of way to any vehicle which had entered the intersection of U. S. Highway 27 and Miller Street after stopping at the traffic stop sign on Miller Street which he saw in the intersection proceeding onto or across U. S. Highway 27.”

Daulton’s complaint against this portion of the instructions is well taken. Its effect was to deprive him of the right-of-way, thus requiring him to yield, if Phillips had stopped at the stop sign before entering the intersection. This means that even if Daul-ton was approaching so closely as to constitute an immediate hazard when Phillips entered the intersection, the fact that Phillips had stopped before doing so made it incumbent on Daulton to yield. In short, even though Phillips had violated his own duty to yield, it became the absolute duty of Daulton to yield. That cannot be correct.

The basic duty of a motorist entering upon a street or highway from an inferior way (whether it be another public street or highway, a private way, or any other property) is to yield the right-of-way to traffic approaching so closely on the superior way as to constitute an immediate hazard. Though it has been customary for instructions covering the duties of the driver on the inferior street or highway to recite the duty to stop, or “come to a complete stop,” it is really unnecessary because, whether he actually stopped or not, the causal question centers on the duty to yield — that is, “whether at the time he entered the intersection the [other] car was approaching so closely as to constitute an immediate hazard. If it was not, then the question of whether he stopped or did not stop is of no materiality, because it plays no causal part.” Frozen Food Marketers v. Feisstreitzer, Ky., 335 S.W.2d 896, 898 (1960); Clark v. Johnston, Ky., 492 S.W.2d 447, 449 (1973). And if the other vehicle was close enough to be an immediate hazard, in the final analysis the failure to yield will have been the significant causal factor regardless of whether he had stopped before entering the intersection. See also Reidling v. Wickes Lbr. & Bldg. Supply Co., Ky., 471 S.W.2d 319, 321 (1971).

The point, then, is that the duties of Daulton could not be made to depend on whether Phillips had or had not stopped before entering the intersection. He had no duty to yield unless in the exercise of ordinary care he should have realized that Phillips was not yielding the right-of-way, and by the exercise of ordinary care could then have avoided the accident. Cf. Metcalfe v. Hopper, Ky., 400 S.W.2d 531, 534 (1966). For the motorist traveling on the superior highway this duty is sufficiently embraced by an instruction requiring him to exercise ordinary care generally to avoid collision with other persons or vehicles using the highway, that being the duty that prevents his right-of-way from being absolute. Upon another trial of this case the portion of the instruction quoted above should be omitted in favor of an additional duty as follows:

“To exercise ordinary care generally to avoid collision with other persons or vehicles, including the Phillips and Reed automobiles, using the highway.”

Since the apportionment of causation between Daulton and Phillips was determined by the jury under erroneous instructions, it will be necessary to try that issue again, but it will not be necessary for the issue of damages to be retried.

The judgment is reversed with directions for a new trial limited to the issue of causation attributable to the negligence (if any) of the appellant, Daulton.

All concur.


author: LAURANCE M. HYDE, Special Commissioner.

text:
    MEADOWBROOK COUNTRY CLUB, Plaintiff-Respondent, v. STATE TAX COMMISSION of Missouri, Defendant-Appellant.
    No. 58960.
    Supreme Court of Missouri, Division No. 1.
    June 14, 1976.
    Motion for Rehearing to Supreme Court en Banc or Transfer Denied July 12,1976.
    Thomas W. Wehrle, St. Louis County Counselor, George W. Lang, II, Asst. St. Louis County Counselor, Clayton, for defendant-appellant.
    Carter & Becker, Joe Bill Carter, John J. Allan, Clayton, for plaintiff-respondent.
   LAURANCE M. HYDE, Special Commissioner.

Petition for review of an administrative determination by the State Tax Commission setting the assessment of real property owned by plaintiff in St. Louis County for real estate tax purposes. The Court quashed the Findings of Fact and Conclusions of Law of the Commission as not being timely filed and remanded the case to the Commission with rulings on the merits of the case and instructions as to how the Commission should rule on its reconsideration of the case. We have jurisdiction because this case involves the construction of revenue laws of this state, specifically § 137.115, RSMo 1969, requiring assessment at “true value in money” and § 138.470(4) providing for review of Tax Commission decisions “in the manner provided in sections 536.100 to 536.140, RSMo.” Mo.Const. Art. V, § 3.

The property involved is a golf course of 187.07 acres and 64.63 acres not so used. The Commission’s valuation of the golf course property was $3,500 per acre. Part of the other land involved was valued at $1,000 per acre and part at $450 per acre. Plaintiff’s claim is that the golf course valuation should not exceed $2,500 per acre. The court’s judgment quashed the Findings of Fact, Conclusions of Law and Decision of the State Tax Commission and then instructed the Tax Commission to find and conclude as follows:

“1. That the State Tax Commission cannot consider the ‘amenities' furnished by the club’ in determining the value of the land since the only evidence of ‘amenities furnished by the club’ were the improvements which have been separately assessed.

“2. That the State Tax Commission cannot consider the improvements of the building and other structures as a factor in determining the value of the land.

“3. That the State Tax Commission is required to assess the value of the land and the improvements as separate items.

“4. That the State Tax Commission, in considering location as a criteria for equalization must consider the values for land that the County placed on other golf courses in the immediate surrounding location.

“5. That the State Tax Commission cannot consider the values the County placed on the land of other golf courses that are not in the immediate location unless the land uses surrounding such golf courses have some similarity to the land uses surrounding the subject tract.

“6. That the State Tax Commission, in considering development of the club as criteria, can only consider the cost of developing the golf course and not the cost of buildings and structures which have been assessed separately as improvements.

“7. That the State Tax Commission, in considering development of the club as criteria, if it uses the cost of the construction of the golf course cannot use a figure over and above $1,000.00 per acre since no other evidence exists with regard to such costs and the testimony presented before the Commission.

“8. That the State Tax Commission cannot ignore competent and substantial evidence of the valuations placed on surrounding ground by the County and of the valuation placed on the land of the only other golf courses in the area.

“9. That the State Tax Commission must consider the form of ownership of the golf course and the effect that that form of ownership has on the market value, if that form of ownership restricts or enhances the land’s true value in money.”

Defendant agrees that it failed to follow the requirements of the law in not handing down its findings of fact and conclusions of law concurrently with its decision regarding the real estate assessment of plaintiff. See § 536.090, RSMo 1969 and Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798, 804 (Mo.1973). Defendant offered to confess judgment as to that and have the case remanded to the Commission so that it could hand down findings of fact and conclusions of law as required by § 536.090. However, we consider the Stephen case to require the Commission on a remand for such reasons to “consider all relevant factors in the record bearing on the ‘true value in money’ of the property in question, and make proper findings of fact and conclusions of law to support its decision.”

Defendant says the trial court exceeded the permissible scope of administrative review seeking to set its own opinion as to value citing Xerox Corp. v. State Tax Commission, 529 S.W.2d 413, 414, 415 (Mo. banc 1975), where the sole question was “what is the correct valuation to be placed on Xerox’s equipment which it leases to the general public.” We reversed and remanded with directions to reinstate the order of the State Tax Commission because we agreed with the Commission’s basic assertion that the circuit court erroneously “sought to substitute its discretion for that vested in the Commission, in respect to the adoption of a proper method for the valuation of leased business machine equipment for ad valorem tax purposes.” See also Drey v. State Tax Commission, 345 S.W.2d 228, 236 (Mo.1961); St. Louis County v. State Tax Commission, 515 S.W.2d 446, 450 (Mo.1974); John Calvin Manor, Inc. v. Aylward, 517 S.W.2d 59, 63 (Mo.1974).

Defendant also says the trial court had no authority to order the State Tax Commission to consider the form of ownership of the property (which was joint ownership by plaintiffs members) as affecting its value. Defendant cites NeBoShone Association v. State Tax Commission, 58 Mich.App. 324, 227 N.W.2d 358, 363 (1975), where there was joint ownership of land by members of the association involved. The court said: “This restriction may well be advantageous to the individual stockholders, but it cannot affect the value of the property because if it would, the Association would be able to forbid any sale of the property for 5 or 10 years with the resultant argument that until the expiration of such period of time there is no market value of the property and therefore no possible true cash value and resulting assessment. A private individual could not self-impose a restriction whereby he might be able to avoid or limit paying his just share of the ad valo-rem taxes due to government, nor can a corporation.” Our tax law, § 137.115, RSMo Supp.1973 provides for assessing all property “at thirty-three and one-third percent of its true value in money.” We hold that the form of ownership shown here should not be considered in determining value for taxation.

Defendant also cites Iron County v. State Tax Commission, 480 S.W.2d 65 (Mo.1972), in which the trial court held the findings and conclusions of the Commission to be inadequate and ordered remand to the Commission because the court could not know the basis upon which the Commission acted. Certainly the trial court could not know the basis on which the Commission acted in this case when it acted without making any findings of fact.

Since the Tax Commission did not follow the requirements of the law by failing to hand down its findings of fact and conclusions of law with its decision as to the real estate assessment of plaintiff, as required by § 536.090, RSMo 1969, the circuit court should have remanded the case to the Commission for it to do that. Stephen v. Stephen Properties, Inc. v. State Tax Commission, supra; St. Louis County Water Co. v. State Highway Commission, 386 S.W.2d 119 (Mo.1964). In the latter case, we said “ ‘The Commission is the fact-finding body, and the Court examines the evidence not to make findings for the Commission but to ascertain whether its findings are properly supported.’ ” We followed this principle in Iron County v. State Tax Commission, supra, 480 S.W.2d l.c. 70, dismissing an appeal where there were “no findings of fact appearing in the Commission’s ‘Findings of Fact, Conclusions of Law and Decision’ from which a Circuit Court could know the basis upon which the Commission reduced the assessment” involved. We dismissed the appeal and held the trial court’s order of remand to State Tax Commission was proper. The same result is required in this case because the Commission did not comply with § 536.090; but the circuit court had no authority to direct the Commission as to matters it should and should not consider in making its decision.

It is ordered that ease be remanded to the Circuit Court with directions to remand to the Commission.

PER CURIAM:

The foregoing opinion by LAURANCE M. HYDE, Special Commissioner, is adopted as the opinion of the court.

All of the Judges concur.


author: BARDGETT, Judge.

text:
    FARM AND HOME SAVINGS ASSOCIATION, Respondent, v. James R. SPRADLING, as Director of Revenue of the State of Missouri, Appellant.
    No. 59091.
    Supreme Court of Missouri, Division No. 1.
    June 14, 1976.
    Motion to Transfer en Banc Denied July 12, 1976.

      John C. Danforth, Atty. Gen., John D. Ashcroft, Asst. Atty. Gen., appellant.
    Ewing, Ewing, Carter & Woodfill, Gilbert Carter, Nevada, for respondent.
   BARDGETT, Judge.

The question presented is whether section 148.520, RSMo 1969, exempts the purchase of items otherwise taxable under the Missouri Sales and Use Tax statutes, sections 144.010 to 144.745, RSMo 1969, from those taxes when the purchaser is a savings and loan association.

Farm & Home Savings Association (Association) instituted this suit by the filing of an agreed statement of facts in the circuit court of Vernon county, Missouri, against the director of revenue, state of Missouri (Director), seeking a refund of sales and use taxes paid by the Association, purchaser, or International Business Machines Corp. (IBM), the seller, to the Director under protest.

The Association also contends that if this court decides that the sales tax is payable on the purchases then it is entitled to the 2% deduction for remitting the same under section 144.140.

The refund claims are described as follows:

1. 3. 4. 5. 6.
Claim No. Claim Amount Tax Type By Whom Paid Date or Dates of Payment Date Claim Filed
1 § 4,686.55 Use Farm & Home 1-30-74 1-30-74
65,734.05 Use Farm & Home 1-30-74 1-30-74
34,897.50 Use Farm & Home 4-24-72 1-30-74
31,759.53 Use IBM Various 1-30-74
2,576.33 Use Farm & Home 4-24A74 4-24-74
4,522.39 Use Farm & Home 4-24-74 4-24-74
1,582.82 Use Farm & Home 7-19-74 7-19-74
1,458.84 Use Farm & Home 7-19-74 7-19-74
9 5,420.70 Sales Farm & Home 7-19-74 7-19-74
10 6,735.54 Sales/Use Farm & Home 10-10-74 10-10-74
11 1,265.44 Use Farm & Home 10-10-74 10-10-74
Column one assigns to each claim the numerical designation given it for purposes of this agreement.
Column two shows the amount of each claim as it appears in the claim for refund or protest affidavit that Farm & Home filed with the Director (as amended in the case of claim No. 4). It is agreed that such amount was paid to the Department of Revenue.
Column three shows for each claim the type of tax that was paid, that is, whether use tax or sales tax.
Column four shows for each claim by whom (whether by Farm & Home or by its supplier or suppliers) the tax amount shown in column two was paid to the Department of Revenue.
Column five shows for each claim the date or dates of payment to the Department of Revenue of the tax amount shown in column two.
Column six shows for each claim the date that it was filed with the Director.

The Association is a mutual savings and loan association as defined in section 148.-470.

The circuit court held that the purchases by the Association were exempt from the sales and use tax under section 148.520 and the Director appealed. This court has jurisdiction because the case involves the construction of the revenue laws of this state. Art. V, sec. 3, Mo.Const., as amended.

The Association’s claims for refund are based entirely upon section 148.520 which provides:

Sections 148.470 to 148.530 constitute a classification of accounts of associations as intangible property, and the annual tax imposed by the sections upon the earnings, including dividends and interest, paid or credited to an account, which shall be the annual yield from the account, is exclusive and in lieu of all other taxes of whatsoever nature against or upon associations, their property, capital or income, except ad valorem taxes upon real and tangible personal property and social security, unemployment compensation and franchise taxes.

As noted supra, some of the purchases are claimed by the Director to be subject to the sales tax and others to the use tax. Missouri’s sales tax provisions were originally adopted in 1934 (Laws of Mo.1933-34, Ex.Sess., p. 155), while the first general use tax known as the “Compensating Use Tax Law” was enacted in 1959 (Laws of Mo. 1959, H.B. 35). Since the sales tax was enacted before the use tax, the sales tax will be considered initially.

The Director contends that the sales tax is a tax on the seller, not the purchaser, and therefore the exemption provisions of section 148.520 do not apply because the Association is the purchaser, not the seller. The Association argues that the burden of sales taxes falls on the purchaser and therefore it is exempt from the imposition of this tax under section 148.520.

In Automatic Retailers of America, Inc., v. Morris, Director of Revenue, 386 S.W.2d 901 (Mo. banc 1965), this court held the sales tax law, sections 144.010-144.430, as amended Laws 1963, pp. 195-199, constituted a tax upon the purchaser and not upon the seller. The court invited the general assembly, which was then in session, to consider whether it desired to take legislative action with respect to the nature of the sales tax. The general assembly readily accepted the invitation with the adoption of H.B. 523 with an emergency clause. See Laws of Mo.1965, p. 261.

Subsequently, this court has on two occasions considered the question of whether the sales tax law, as amended in 1965, constituted a tax on the buyer or the seller and on both occasions held the sales tax law as amended was a gross-receipts tax imposed upon the seller. Fabick and Company v. Schaffner, 492 S.W.2d 737 (Mo.1973); Virden v. Schaffner, 496 S.W.2d 846 (Mo.1973). In Virden, the second of the two cases, the court said at 848: “We reaffirm that the entire tax imposed by Chapter 144 is a gross receipts tax.”

In this case the Association is the purchaser. The sales tax is a tax upon the gross receipts of the seller. The fact that section 144.060, RSMo 1969, imposes the duty upon the purchaser to pay the amount of the tax to the seller does not alter the legal nature of the tax. In Ferrara v. Director, Division of Taxation, 127 N.J.Super. 240, 317 A.2d 80, 83 (1974), it was said, “. . . the mere fact that it may be universally recognized that the ultimate economic burden of a tax is passed on to the consumer does not determine the legal incidence of the tax. Traditionally, the economic burden of all taxes, like costs in general, is passed down to the consumer level.” See also Martin Oil Service, Inc. v. Department of Revenue, 49 Ill.2d 260, 273 N.E.2d 823 (1971), cert. denied 405 U.S. 923, 92 S.Ct. 961, 30 L.Ed.2d 794.

The court holds that section 148.520, supra, does not afford the Association a tax exempt status as to sales taxes.

Section 148.520 was enacted in 1945, Laws of Mo.1945, p. 1919, sec. 7, but, as noted supra, it was not until 1959 that the general assembly enacted the “Compensating Use Tax Law” in Missouri. See sections 144.600-144.745; RSMo 1969. Section 144.610(1) imposes a tax for the privilege of storing, using or consuming within Missouri any article of tangible personal property purchased on or after a certain date in an amount equivalent to the percentage imposed on the sales price in the sales tax law in section 144.020. The purchaser is liable for the tax although there are provisions whereby the seller can collect the tax and remit it to the state and give the purchaser a receipt therefor. Sec. 144.610(2). “Person” is defined by section 144.605(2) as “any individual, firm, copartnership, joint adventure, association, corporation, municipal or private, and whether organized for profit or not, state, county, political subdivision, state department, commission, board, bureau or agency, except the state highway department, estate, trust, business trust, receiver or trustee appointed by the state or federal court, syndicate, or any other group or combination acting as a unit, and the plural as well as the singular number;

The act provides for specific exemptions from the tax by section 144.615 and incorporates as exemptions from the use tax some of the exemption provisions of the sales tax law. There are no provisions exempting savings and loan associations from the tax either by use of a description of the type of enterprise such as “religious and charitable organizations” (144.040) and “ticket sales made by benevolent, scientific and educational associations” (144.042) or by a description of the use to which the property is to be put by the purchaser (144.030).

The “use tax” has been characterized as “ ‘ . . .a levy on the privilege of using within the taxing state property purchased outside the state, if the property would have been subject to the sales tax had it been purchased at home.’ ” Southwestern Bell Telephone Co. v. Morris, 345 S.W.2d 62, 66 (Mo. banc 1961), 85 A.L.R.2d 1033, 1039. It is not a tax on the property itself, but rather on the privilege of buying or selling the property. Sullivan v. United States, 395 U.S. 169, 175, 89 S.Ct. 1648, 23 L.Ed.2d 182.

In Southwestern Bell v. Morris, supra, this court considered the use tax act in depth and clearly demonstrated that the primary function of a use tax is to complement the sales tax, to supplement and protect the sales tax, to complement the sales tax by creating equality of taxation of purchasers on use of property purchased outside the state which cannot be reached as sales because of the commerce clause of the federal constitution.

With respect to exemption, this court in Southwestern Bell said at 67-68: “In the light of these principles it is not surprising to find the Illinois Supreme Court ruling directly that the Use Tax Act ‘is designed to complement and to protect the tax imposed upon the occupation of selling at retail [sales tax] iand the validity of its exemptions is to be determined in the light of that purpose.’ (Emphasis supplied.) Turner v. Wright, 11 Ill.2d 161, 142 N.E.2d 84, 89. We are in complete agreement with this holding.”

The court has held supra, in this case, that the Association is not entitled to a refund of sales taxes paid by IBM on sales of property to the Association which were subject to the sales tax law. The Association’s claim of exemption from sales taxes is premised upon the same statute, section 148.520, supra, that the use tax exemption is claimed. Tax exemption provisions are to be strictly construed against the party claiming the exemption. Mississippi River Fuel Corporation v. Smith, 350 Mo. 1, 164 S.W.2d 370, 377 (1942).

It begs credulity to believe the Missouri legislature intended to relieve purchases made by an association from out-of-state merchants from the compensating use tax but to require that sales made by instate merchants to an association be subject to the sales tax and thereby give a substantial competitive advantage to out-of-state merchants over resident merchants. The strong language of this court in Southwestern Bell v. Morris, supra, that exemptions from the use tax are to be determined in the light of the purpose of the use tax and the recognition that the use tax was designed to complement the sales tax belies a construction of the law which would extend the exemption provisions of section 148.520 to the use tax but not to the sales tax.

The instant case involves exemption provisions of a statute (148.520) other than the statute imposing the tax (144.610). In 68 Am.Jur.2d, Sales and Use Taxes, sec. 101, p. 149, it is stated: “Whether exemption from imposition of a sales tax may be claimed by virtue of exemption provisions of statutes or ordinances other than those imposing the sales tax (usually earlier statutes) involves an application to this sphere of inquiry of general rules and principles governing interpretation of tax exemptions. Applying such principles, the few cases in which the precise question has been considered are in accord as to the result reached, and, though differing slightly in the reasons given as the basis for their conclusions, have uniformly held that sales taxes were not within the exemption provisions of other statutes imposing a different tax.” This statement is borne out in the cases annotated at 1 A.L.R.2d 465, “Sale or Use Tax Exemptions”, and subsequent cases.

In Oxford v. Housing Authority of City of Barnesville, 104 Ga.App. 797, 123 S.E.2d 175, 176 (1961), the housing authority sued for refund of sales and use taxes paid by it claiming to be exempt by reason of Code Ann. sec. 99-1132 (Ga.L.1937, pp. 210, 230), which provides in part: “The property of an authority is declared to be public property used for essential public and governmental purposes and not for purposes of private or corporate benefit and income, and such property and an authority shall be exempt from all taxes and special assessments of the city, the county, the State or any political subdivision thereof.” The court held, loe. cit. 177, the Georgia sales and use tax to be “ . . . ‘all-inclusive, covering everything from the cradle to the grave. Exemptions are the rare exception.’ . This comprehensiveness extends to persons who are made taxpayers by the act as well as to those who are defined as “persons” under the act, . . . which, we have determined, includes the Housing Authority in the instant ease. We cannot say that the legislature, in 1937 when it enacted Code Ann. § 99-1132 (Ga.L.1937, pp. 210, 230), intended to exempt the Housing Authority from the provisions of the sales and use tax act, which was not enacted until 1951. Under the ruling of Thompson v. Atlantic Coast Line R. Co., 200 Ga. 856, 38 S.E.2d 774, we find it necessary to hold that the sales and use tax provisions apply to the Housing Authority for the reason that the sales and use tax law was enacted subsequent to the exemption statute (Code Ann. § 99-1132), and that the sales and use tax law is an all inclusive act which includes the Housing Authority as a taxpayer, since no provision appears in the sales and use tax act which excludes the Housing Authority.” (Emphasis added.)

In Security Life and Accident Company v. Heckers, 177 Colo. 455, 495 P.2d 225 (Colo, banc 1972), two insurance companies sued for refunds of sales and use taxes paid by them. Their claim was based upon section 72-l-14(l)(a), originally enacted in 1907 and amended in 1965, which imposed a tax of 2¼% on gross premiums and by subsection (l)(c) thereof provided: “The taxes aforesaid shall constitute all taxes collectible under the laws of this state against any such insurance companies, and no other occupation tax or other taxes shall be levied or be collected from any insurance company by any county, city or town within this state, but this chapter shall not be construed to prohibit the levy and collection of state, county, school and municipal taxes upon the real and personal property of such companies.”

The Colorado Supreme Court in Security Life and Accident Company, supra, denied the claimed exemption, saying at 227: “At the time the sales and use tax legislation was passed, the legislature was aware of the existence of Section 72-l-14(l)(c) and in spite of that knowledge, sales and use taxes were imposed on all sales and purchases of property at retail; upon telephone and telegraph services; for gas and electric service; upon meals, food and public accommodations. The provisions for exemptions of certain commodities in the Sales and Use Tax Act do not cover the kinds of purchases here stipulated to, nor do the insurance companies fall within the classifications of the entities exempted under the Act. Sections 138-5-14, 138-5-34.”

The Supreme Court of Connecticut refused to apply the provisions of an “in lieu of all other taxation” statute so as to relieve the Connecticut Light & Power Company from sales and use taxes on certain transactions in Connecticut Light & Power Co. v. Walsh, 134 Conn. 295, 57 A.2d 128, 1 ALR2d 453 (1948). There the court pointed out that the sales and use tax acts themselves provided for certain exemptions and applied the principle that “the express mention in a statute of one exemption precludes reading others into it”, and “[h]ad the General Assembly intended such a result [exemption], it could easily have broadened the provision to exempt public utility companies from the imposition of the use tax.” 57 A.2d 131.

The Missouri use tax law is similar to Georgia, Colorado, Connecticut, and other states, and is an all inclusive act which provides specifically for the exemptions to that particular tax. Those exemptions do not include savings and loan associations nor any of the other entities mentioned supra within its exemption provisions. This court will not read into the use tax act exemptions which do not clearly appear therein. Had the legislature intended to exempt savings and loan associations from the use tax, it could, and we believe would, have declared such an intent in the act itself or specifically so provided in section 148.520, the “in lieu” taxing statute applicable to savings and loan associations.

In Santa Fe Downs, Inc. v. Bureau of Revenue, 85 N.M. 115, 509 P.2d 882 (1973), the court held the New Mexico “in lieu” of other taxes statute relieved the taxpayer of sales and use taxes. But there the “in lieu” act specifically exempted race track licensees from “ . . . further excise . taxes levied by the state, . . . ” (Emphasis ours.) The New Mexico court, therefore, held that the race track licensee was literally within the exemption provision. In the instant case there is no specific or literal exemption for savings and loan associations found in either the sale and use tax statutes or in section 148.520.

As noted supra, the use tax is so interrelated to the sales tax that the exemption from the use tax must be determined in the light of the purpose of the compensating use tax act. Southwestern Bell v. Morris, supra; Turner v. Wright, supra. The court has considered cases cited by the Association but does not find them persuasive.

The court holds that a savings and loan association is not exempt from the compensating use tax law.

The last issue is whether the Association is entitled to retain 2% of the sales taxes paid as reflected in claims Nos. 9 and 10 supra under the provisions of section 144.140 which provides: “From every remittance to the director of revenue made on or before the date when the same becomes due, the person required to remit the same shall be entitled to deduct and retain an amount equal to two percent thereof.”

Section 144.080 requires the seller (not the purchaser) to remit the sales taxes to the Director of Revenue. Section 144.021 imposes the primary burden of the sales tax on the seller with certain exemptions not relevant to this case.

Section 144.210 provides in part, “Exemption certificates signed by the purchaser or his agent shall be required to be kept by the seller as evidence for any exempt sales claimed; except, that when a purchaser has purchased tangible personal property or services sales tax free under a claim of exemption which is found to be improper the director of revenue may collect the proper amount of tax, interest and penalty from the purchaser directly. Any tax, interest or penalty collected by the director from the purchaser shall be credited against the amount otherwise due from the seller on the purchases or sales where the exemption was claimed.”

It is clear that the entire tenor of the sales tax law is to impose the obligation to remit the tax on the seller. It does not impose the obligation of remitting sales taxes on the buyer. The furnishing of an exemption certificate to a seller by a buyer constitutes a claim by the buyer that the sale is exempt from the tax. If the claim is found to be improper, the seller remains liable for the tax but the Director may proceed against the buyer. If the Director collects the tax from the buyer, then the seller is entitled to a credit against the amount due from the seller on that purchase. The 2% deduction is allowable only when the person required to remit the taxes does so on or before the date the taxes are due.

The purpose of allowing the retention of 2% of the tax due was to compensate the seller who is required, as a part of his regular course of business, to collect sales tax from a buyer, keep records, and make remittance to the Director, all of which could increase the seller’s cost of doing business. It was not the primary purpose of section 144.140 to give a tax reduction simply because the tax was paid when due although the deduction may very well encourage prompt payment.

The court holds that the phrase “person required to remit the same” in section 144.-140 means the seller, not the buyer, because it is the seller who is required by the other provisions of the sales tax law to remit the taxes to the Director.

The Association is not entitled to deduct 2% from the sales taxes due on claims Nos. 9 and 10.

The judgment of the circuit court is reversed and the cause remanded with directions to enter a judgment disallowing the claims of Farm & Home Savings Association for refund of sales and use taxes and decreeing that said Association is not entitled, as a purchaser, to the 2% deduction provided for in section 144.140.

HOLMAN, P. J., concurs.

DONNELLY, J., concurs in result.

      . Missouri also has similar “in lieu” of statutes, reference stock insurance companies (sec. 148.-320), banks (sec. 148.030), farmers’ cooperative credit associations (sec. 148.540), and perhaps others.


author: HENLEY, Judge.

text:
    ALLRIGHT MISSOURI, INC. et al., Plaintiffs-Respondents, v. CIVIC PLAZA REDEVELOPMENT CORPORATION, Defendant-Appellant, and Kansas City, Missouri and John Danforth, Attorney General of the State of Missouri, Defendants.
    No. 59180.
    Supreme Court of Missouri, En Banc.
    June 14, 1976.
    Rehearing Denied July 12, 1976.

      Sherwin L. Epstein, Stubbs, Epstein & Mann, Kansas City, for defendant-appellant.
    William J. Koenigsdorf, Kansas City, for plaintiffs-respondents.
    Edward E. Schmitt and Jesse L. Childers, Kansas City, for amicus curiae.
   HENLEY, Judge.

This is an action in which plaintiffs-respondents seek: (1) a judgment declaring certain statutes of the state, ordinances of the city of Kansas City, and a contract of the city with defendant-appellant unconstitutional and void; and (2) an injunction enjoining all defendants from proceeding with a redevelopment project described in one of the ordinances. Judgment was for plaintiffs and one of the defendants appealed to the Missouri Court of Appeals, Kansas City district. That court affirmed the judgment. On application of defendant-appellant we ordered the case transferred to this court. We reverse and remand.

The plaintiffs, Allright Missouri, Inc., Phil Jacobs Building Corporation and Joseph D. and Anna Marie Cassata (hereinafter referred to collectively as Allright) are owners or lessees of property located within a part of the business district of defendant, Kansas City (hereinafter the City), proposed for redevelopment by defendant-appellant, Civic Plaza Redevelopment Corporation (hereinafter Civic Plaza). Civic Plaza is an urban redevelopment corporation organized under Chapter 353.

On March 9, 1967, Civic Plaza filed with the city clerk an application for approval of a plan for redevelopment of a part of the business district. An amended development plan was filed April 30, 1969. The area proposed for this redevelopment is described generally as being bounded on the north by 13th street; on the east by Locust between 13th and 14th streets, and the junction of 14th street with the Crosstown Freeway; on the south by the Crosstown Freeway; and on the west by McGee street. The Jackson county courthouse and the public library are immediately north of and across 13th street from the area. One block north of the area is the City Hall and Police Headquarters. The new Federal Office building is immediately northeast and across the intersection of 13th and Locust streets. And the Election Board and State Office buildings are immediately east across Locust. The South Humboldt Urban Renewal Project lies generally east and northeast of the area. The Crosstown Center Urban Renewal Project described in Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, 518 S.W.2d 11 (Mo.1974) is one block west of the area.

The area covered by the plan consists of approximately six blocks divided into 26 separate tracts, 12 of which (or 45.4% of the total land area) are surface parking lots. The remaining 14 tracts are occupied by commercial buildings, eight of which are one-story, two are two-story, one is three-story, and two are six-story buildings. In general, the plan calls for the acquisition of all property in the project area and demolition of all buildings, except the Red Cross and Civic Plaza National Bank buildings. These two would be kept intact, but improved to conform to the overall design and scheme of rehabilitation. The plan includes the construction of several new buildings in seven years. Phase 1 includes a six-level parking structure covering two blocks with three 25-story buildings (referred to as Towers) over the parking structure. Phases 2, 3 and 4 include rehabilitation of the Red Cross and Civic Plaza National Bank buildings and the construction of a new parking structure immediately south of those two buildings. Phases 5 and 6 include the construction of underground parking facilities and a park-like gre'en area at ground level. Phase 7 includes the construction of an office building at least 14 stories high. The estimated cost is approximately $50,000,000.

After the amended plan was filed, the application was referred to The City Plan Commission (hereinafter the Commission). Notice was published that a public hearing would be held to consider the plan on May 22, 1969, at the City Hall. It was held; all proponents and opponents of the plan present and desiring to be heard were heard; thereafter the Commission filed its report recommending that the plan be disapproved for reasons fairly summarized by a committee of the City Council as follows:

“1. The area can be successfully redeveloped without the Urban Redevelopment law.

“2. The development plan does not proceed in an orderly fashion.

“3. The development plan does not adequately describe what will be built in the development area.”

Thereafter, the matter of this redevelopment plan (with an ordinance which had been submitted to the Council by the Commission providing for disapproval of the plan) was referred by the City Council to its Committee on Plans and Zoning (hereinafter the Committee) for investigation, consideration, and its recommendation. After publication of notice that it would do so, the Committee held a public hearing on September 25, 1969. Three witnesses testified for and 18 against the plan. In its report of this hearing the Committee referred to and summarized the contentions presented by the opponents as: (1) “that the present property owners did not want to sell their land,” and (2) “that the Redevelopment Corporation did not have the financial ability as required by our ordinances to proceed with the project.” In addition to this hearing, the Committee held other hearings, public and private, including discussions with the principals of Civic Plaza regarding its financial ability to carry out the project; meetings to view and investigate the project area; and discussions of the project at other meetings and council sessions. Along with knowledge acquired by its investigation and a transcript of the testimony heard at its September 25,1969, hearing the Committee also had for consideration in its deliberations two dozen photographs of buildings and open spaces in the project area and a two-volume (estimated to be at least 300 pages) “Appraisal and Blight Study” made and prepared by the Vincent J. O’Flaherty Company for Civic Plaza and filed by it as one of the documents in support of its application. The report and recommendation of the Committee with its findings (and the evidence considered by it) was filed with the city clerk and an oral presentation thereof was made and discussed at a regular meeting of the City Council. With its report the Committee filed a “Committee Substitute for Ordinance No. 37349” and recommended that the substitute “do pass.” The Committee’s substitute ordinance, adopted by the City Council March 20, 1970, declared (1) that the area is blighted and redevelopment thereof as proposed in Civic Plaza’s plan necessary and in the public interest; (2) that Civic Plaza is financially able to undertake and complete the plan as proposed; (3) that acquisition of the properties in the area by Civic Plaza through the power of eminent domain is necessary and in the public interest, and is authorized; (4) that the contract covering the redevelopment project (a copy of which was attached to the ordinance) as proposed and executed by Civic Plaza be executed for and on behalf of the City by its proper officers.

As indicated, the evidence available to and considered by the City Council in making its determination that the area was blighted and that Civic Plaza’s proposed project for redevelopment thereof should be approved was voluminous. It related to the area generally and to each property proposed for acquisition. The buildings in the area range in age from three to over 70 years, most of them being well over 40 years old. Their condition (physical and functional) and the type of maintenance they have received is described in this evidence as “very poor,” “poor,” “fair,” “good” or, in the case of two, a gasoline service station and a one-story bar and restaurant building, as “excellent.” The service station is three years old and the bar and restaurant building six. The evidence as to design or architecture of the buildings ranged from “poor,” to “outmoded,” to “good.” The O’Flaherty Company’s appraised value of the land and buildings in the area was $4,400,000 of which $3,400,000 was assigned to land. The total assessed value of land and buildings for tax purposes was $506,000 (approximately 12.5% of the total appraised value) which produced annually ad valorem taxes of a little less than $39,000. Some of the witnesses at the hearing before the Committee expressed the opinion that the area was not blighted; others, that it was blighted.

The evidence heard by the trial court was substantially the same as that considered by the City Council.

Allright’s position has been from the beginning, and continues to be, in general: (1) that the area described in Civic Plaza’s application is not in fact blighted; (2) that Civic Plaza’s application was not supported by factual evidence of blight; (3) that the City Planning Commission’s disapproval of Civic Plaza’s plan is conclusive evidence that the area is not blighted and redevelopment not necessary; and (4) that the finding of blight by the City Council was therefore arbitrary and unreasonable. From these premises, Allright concludes and argues that the ordinance approving Civic Plaza’s application and the contract between the City and Civic Plaza executed under authority of this ordinance violate the federal and state constitutions in that they authorize the taking, by eminent domain, of private property for private use.

The trial court found and concluded that the City Council’s determination that the area is blighted was arbitrary and unreasonable. Civic Plaza contends that the court erred in so finding and concluding.

The parties agree that the applicable law is: in determining whether an area is blighted, the City Council acts in its legislative capacity; that, in this case, judicial review is limited to whether the legislative determination was arbitrary, there being no contention that such determination was induced by fraud, collusion or bad faith. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, 518 S.W.2d 11, 15[1] (Mo.1974); Annbar Associates v. West Side Redevelopment Corporation, 397 S.W.2d 635, 650[9] (Mo.banc 1965); State on inf. of Dalton v. Land Clearance for Redevelopment Authority of Kansas City, 364 Mo. 974, 270 S.W.2d 44, 52[2] (1954).

The issue of whether a legislative determination of blight is arbitrary turns upon the facts of each case. And, the burden of proving that it is arbitrary is upon the party so charging. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, supra (518 S.W.2d at 16).

The court said in Parking Systems, Inc., supra, that in determining whether this burden of proof has been met, “ * * * it must be kept in mind that the courts cannot interfere with a discretionary exercise of judgment in determining a condition of blight in a given area * * * and * * ‘[ujnless it should appear that the conclusion of the City’s legislative body in the respect in issue * * * is clearly arbitrary * * *, we cannot substitute our opinion for that of the City’s * * * . If the City’s action * * * is reasonably doubtful or even fairly debatable’ we cannot substitute our opinion for that of the City Council.” 518 S.W.2d at 16.

The evidence on which the City’s legislative body made its determination did not compel a conclusion that the area was blighted and the plan proposed for its redevelopment necessary and in the public interest. Nor did it compel a conclusion that it was not. There was room for reasonable differences of opinion and fair debate on this question. From evidence before it, this legislative body reasonably could have determined, as it did, that the area was “blighted” within the meaning of applicable statutes and ordinances. Hence, it may not be said that the adoption of the ordinance approving Civic Plaza’s application amounted to an arbitrary exercise of legislative power. Allright failed to meet its burden of proof.

There is no merit in Allright’s contention that the Commission’s disapproval of Civic Plaza’s plan is conclusive evidence that the area is not blighted and redevelopment not necessary. We note that the Commission’s recommendation is not based on a finding that the area was not blighted. In fact its report does not mention what conclusion, if any, it reached on this question. The Commission’s recommendation, whatever it may be, clearly is not conclusive or binding on the City Council on the question of whether an area is blighted and its redevelopment necessary and in the public interest. The authority and responsibility for making that determination is vested exclusively in the City’s legislative body; not in the Commission. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, supra (518 S.W.2d at 17-18[9]).

Allright has also taken the position and contended from the beginning that the evidence presented to the Commission, the Committee, and the City Council in support of Civic Plaza’s method and means of financing the project was insufficient to support a determination by the City’s legislative body that “sufficient funds were immediately available and would be used for the redevelopment project.”

Briefly, the evidence as to availability and sufficiency of funds to finance the project consisted of (1) a letter of commitment by Civic Plaza and its principals of certain stock and equities owned by them to guarantee acquisition of the necessary properties; (2) a resolution adopted by the board of Building Leasing Corporation committing itself to lend several million dollars to Civic Plaza for use in this project; (3) a consolidated financial statement of Building Leasing Corporation and Metropolitan Construction Company; (4) a letter from City Bond and Mortgage Company expressing its interest in development of the project and its intent and purpose to secure commitments from its institutional investors for long-term financing of the proposed improvements if the project should be approved by the City; (5) the report of the Committee of the results of its investigation of the financial condition of Civic Plaza and its principals and their ability to make available immediately sufficient funds or securities for normal equity financing of the project proposed.

Allright complains, in particular, that no investigation was made as to the authenticity of these commitments or Civic Plaza’s financial ability; that there was no evidence of an audit of the consolidated financial statement referred to above or even an auditor’s statement regarding its preparation and authenticity; and that the commitments and financial statement were mere “wordage and figures typed on a sheet of paper.”

It was at least debatable from the record before the City Council that the proposed method of financing redevelopment of the area was adequate and that sufficient funds were available immediately for use as needed for normal equity financing of the project. Hence, it may not be said that adoption of the ordinance approving the application and Civic Plaza’s proposed method and plans for financing was an arbitrary exercise of legislative power. Parking Systems, Inc. v. Kansas City Downtown Redevelopment Corporation, supra (518 S.W.2d at 18-20[11, 12]).

Having concluded that the City Council’s action in the above respects was not arbitrary, it necessarily follows that the ordinance and contract were not an unconstitutional delegation of the power of eminent domain. Annbar Associates v. West Side Redevelopment Corporation, supra.

The judgment is reversed and the cause is remanded with directions that judgment consistent with this opinion be entered for Civic Plaza.

All concur.

      . In addition to these plaintiffs, Research Hospital and Medical Center, also an owner of land within the area proposed for redevelopment, appeared and filed briefs in support of plaintiffs’ position in the Court of Appeals and in this court, having been granted leave by the Court of Appeals to file briefs amicus curiae. References to contentions on appeal by Allright will include points briefed by the hospital and medical center.

      . References to chapter or sections of the statutes are to RSMo 1969.

      . Shortly after the filing of Civic Plaza’s application, the City, on March 24, 1967, adopted a resolution declaring as blighted and in need of rehabilitation and redevelopment a large area of downtown Kansas City designated in the resolution as “Central Business District Urban Renewal Area.” The area proposed for redevelopment by Civic Plaza is within the Central Business District Urban Renewal Area.