text:
    BOB’S READY TO WEAR, INC., a Kentucky Corporation, Morris Glen Parman and Jack Edward Parman, Appellants, v. Drew C. WEAVER and wife, Betty Jane Weaver, Appellees.
    Court of Appeals of Kentucky.
    Aug. 11, 1978.

      J. Milton Luker, London, for appellants.
    Robert L. Milby, Joe T. Roberts, London, for appellees.
    Before HOGGE, PARK and WHITE, JJ.
   PARK, Judge.

This litigation is the result of the construction of a chain link fence along a portion of the common boundary line between owners of commercial property. The plaintiffs-appellants (the Parmans) are the owners of Bob’s Ready to Wear Store located on Main Street within the city of London. The defendants-appellees, Drew and Betty Jane Weaver, own and operate a restaurant on a lot adjacent to Bob’s Store. In addition, the Weavers own a lot at the rear of Bob’s Store and the Weaver restaurant. This lot is rented to the city as a municipal parking lot. The Weavers constructed a chain link fence which prevented any access between the parking lot and an entrance at the rear of Bob’s Store.

The Parmans filed an action in the Laurel Circuit Court seeking an injunction requiring the removal of the fence and enjoining the Weavers from any further interference with access between Bob’s Store and the parking lot. The Parmans asserted that

they owned an easement by prescription, implication or equitable estoppel. Following a trial before the court, judgment was entered denying the injunction and dismissing the complaint. The Parmans appeal.

I

The facts in this case are not in dispute and can be understood by reference to the following diagram:

The property in question was originally part of a commercial block owned by the Eversole family. This block was bounded by Main Street on the east, Sixth Street on the north and Broad Street on the west. The Weaver family had conducted a restaurant in the building (A, B, H, G) at the corner of Main and Sixth Streets since 1940. Beginning in 1953, the Parmans had operated Bob’s Store, a retail clothing business, in a building (G, I, K, J) adjacent to the Weaver restaurant fronting on Main Street. Immediately to the rear of the restaurant and store was a vacant lot extending along Sixth Street to Broad Street. In 1965, the Eversole family leased the lot to the city of London. The city installed parking meters, and the city has operated the property (C, N, M, L) as a municipal parking lot.

In 1971, the Weavers and the Parmans purchased from the Eversole family the buildings presently occupied by the respective parties. In addition to the property previously occupied by Bob’s Store, the Par-mans purchased a portion of the building which had been a part of the Weaver Restaurant (D, E, H, G). The building originally occupied as Bob’s Store extended back from Main Street approximately 100 feet. The building originally occupied by the Weavers extended back a distance of only 80 feet. In order to make the rear property lines (C, F, I, L) straight, the conveyance from the Eversole family to the Parmans included a small paved lot (E, F, I, H) approximately 20 feet square at the rear of that portion of the building that had previously been released to the Weavers. A similar paved area (B, C, F, E) approximately 20 feet square was included in the conveyance from the Eversole family to the Weavers.

At the time of the conveyances by the Eversole family in 1971, there were no physical barriers between the paved parking lot leased to the city and the paved area at the rear of Bob’s Store and the Weaver restaurant. Shortly after acquiring title to their respective buildings, the Parmans and the Weavers both made significant structural and decorative improvements to the rear entrances of their respective buildings. The Parmans installed display windows and a new door (point X) which opened onto the 20 foot plot acquired with the building by the deed from the Eversole family.

The municipal parking lot was used by customers as a means of access to the rear entrances to Bob’s Store and to the Weaver’s restaurant. In addition, trucks used the parking lot as a means of access to the rear of Bob’s Store for the purpose of making deliveries or picking up refuse. In 1976, the Eversole family conveyed the parking lot property to the Weavers. The city continues to maintain a municipal parking lot on the property, but only as a tenant from month to month. Following their purchase of the parking lot property in 1976, the Weavers closed off the rear entrance to Bob’s Store by erecting a chain link fence (E, F, I) along the two open sides of the 20 foot plot at the rear of their building. At the present time, the only functional purpose of the fence is to block access between Bob’s Store and the municipal parking lot.

II

The Parmans claim a right of access over the parking lot property under the theory that an easement of access was acquired by prescription. The trial court correctly rejected this contention. The Par-mans argue that for a period of forty years they and their predecessors in the location have used the parking lot to gain access to the back entrance to their business establishment. The only evidence relating to the period of time prior to the Parmans’ tenancy beginning in 1953 was that of a prior tenant, Ernest Kidd. Kidd was not in privity with the owners of Bob’s Ready to Wear. Therefore, the Parmans cannot tack the period of Kidd’s occupancy for purposes of making up a prescriptive period. 2 American Law of Property § 8.59 (1952); Griffith v. Dicken, 34 Ky. (4 Dana) 561 (1856).

More important, the evidence demonstrates that the use by the occupant of the Parman portion of the building was with the permission of rather than adverse to the rights of the Eversoles. The lot in question has been at all times open to the public. Prior to leasing the property to the city, the Eversoles permitted its use as a parking lot and taxi stand, evidently for the benefit of its commercial tenants in the adjacent building. Since 1955 the city has operated the lot expressly for the benefit of the general public. Use of semi-public property which has been designedly left open and unenclosed is generally regarded as permissive and not adverse to the interest of its owner. See the cases cited in the Annotation, 46 A.L.R.2d 1140 at 1157 (1956). The trial court did not err in concluding that the Parmans had not acquired an easement by prescription.

Ill

The Parmans also argue that an easement by implication resulted from the sale of the Bob’s Store building by the Eversole family to the Parmans in 1971. When finding an easement by implication, courts in effect infer an unarticulated intention by the owner of property that a particular use of one portion of the property for the benefit of another portion be continued although one or both segments of the whole are conveyed away. Necessarily, the use sought to be imposed upon the servient tract for the benefit of the dominant tract must have been initiated when both tracts were the property of a common owner. Once common ownership is established and the particular use is found to have been initiated prior to severance, the determination whether the creation of an easement was intended will depend upon a number of factors. 2 American Law of Property § 8.31 (A. J. Casner, ed. 1952). Until 1971, the Eversoles owned the property occupied by the commercial building fronting on Main Street and the adjacent property to the rear which was used as a parking lot. During the entire period of their ownership prior to the severance of the commercially improved portion of the property, the Eversoles permitted free access from the parking lot to the rear exits of the building. Therefore, the Parmans have satisfied the two threshold prerequisites to a finding of an implied easement.

Among the factors bearing upon the intention of the grantor and grantee are the following: (1) whether the claimant is the grantor or the grantee of the dominant tract; (2) the extent of necessity of the easement to the claimant; (3) whether reciprocal benefits accrue to both the grantor and grantee; (4) the manner in which the land was used prior to conveyance; and (5) whether the prior use was or might have been known to the parties to the present litigation. Knight v. Shell, 313 Ky. 852, 233 S.W.2d 973 (1950); 5 Restatement of the Law of Property § 476 (1944); Note, Implied Easements of Necessity Contrasted with those Based on Quasi-Easements, 40 Ky.LJ. 324 (1952).

Courts imply an easement more readily in favor of a grantee than a grant- or. The Parmans claim an easement by implication as grantees from the Eversole heirs, the original owners of all the property. For many years prior to the 1971 conveyance, the parking lot had been openly and continuously used as a means of access to the rear entrances of the buildings fronting on Main Street. While they were tenants of the Eversole heirs, the Weavers had enjoyed free access to the rear entrance of their business across the parking lot. Following the 1971 sales, .both the Weavers and the Parmans continued to use the parking lot as a means of access to the rear of their buildings. One of the Eversole heirs testified that she specifically advised the Weavers prior to the 1976 sale of the lot that the Parmans had a right of access to and from the parking lot. All of these factors favor finding an easement by implication in favor of the Parmans.

When the question of necessity is considered, the facts are less clear. The main entrance to Bob’s Store is from Main Street, the main thoroughfare in the city. Recently, the Parmans have opened an entrance leading to Fifth Street through other property. There is no showing of absolute necessity for access to the parking lot. However, absolute necessity is not required. The fact that the Parmans have other access to their store is not an automatic bar to their claim to an easement by implication to the parking lot. Irvine v. McCreary, 108 Ky. 495, 56 S.W. 966 (1900). All that is required is that the easement be “reasonably necessary.” Knight v. Shell, supra, 313 Ky. 852, 233 S.W.2d at 975. Without access to the parking lot which opened on Broad and Sixth Streets, the recently developed rear entrance to Bob’s Store becomes landlocked. The 20 foot plot at the rear of Bob’s Store becomes virtually useless if the Weavers are permitted to cut off all access to the parking lot. The trial judge specifically found that the Parmans had suffered and would in the future suffer monetary damages from the maintenance of the chain link fence.

The last factor to be considered is whether reciprocal benefits accrue to both the grantor and the grantee if an easement is implied as a part of the 1971 conveyance from the Eversole heirs to the Parmans. The benefit to the Parmans is obvious if customers may use the rear entrance to Bob’s Store only a few feet from the parking lot. Access to the public parking lot at the rear of the building can only have enhanced the purchase price paid by the Par-mans to the Eversoles. In turn, Bob’s Store would attract customers to the parking lot thereby enhancing the value of that property. Unfortunately, an easement by implication would be of mutual benefit to grantors and grantees only so long as a public parking lot was maintained on the property to the rear of Bob’s Store. The existence of an easement from Broad Street across the lot to the rear of Bob’s Store would be an extremely heavy burden impeding any future development of this valuable city property.

Giving consideration to the relative nature of the necessity for an easement of access to the parking lot and the possible future burden to the Weavers, we conclude that the evidence was not so overwhelming as to require the trial judge to find that an easement by implication existed. Balancing the interest of both parties, we conclude that the trial judge did not err in refusing to adjudge the Parmans an easement by implication.

IV

The Parmans assert that the Weavers are estopped to sever access between the rear entrance of Bob’s Store and the municipal parking lot by construction of the chain link fence. Not having an easement for access across the parking lot to the rear of the Bob’s Store, the Parmans had only a license to use the parking lot. As a general rule, a license is revocable at the will of the owner of the property subject to the license. However, an owner may be estopped to revoke the license when, with the knowledge of the owner, the licensee makes valuable improvements in reliance upon the continued existence of the license. Holbrook v. Taylor, Ky., 532 S.W.2d 763 (1976).

Following the purchase of their building in 1971, the Parmans made valuable improvements to the rear entrance to Bob’s Store. These improvements were made with the knowledge of both the Eversole heirs and the Weavers. The only purpose for the new rear entrance was as a means of access to and from the municipal parking lot. The value of the improvements would be destroyed if access to the parking lot were blocked. The city of London continues to maintain a municipal parking lot on the property leased from the Weavers. The only purpose of the chain link fence is to revoke the Parmans’ license by obstructing access to the parking lot. There is detriment to the Parmans and no benefit to the Weavers. Under these circumstances, we conclude that the Weavers are estopped to revoke the Parmans’ license for access between the rear entrance to Bob’s Store and the parking lot.

Even if the Weavers are es-topped to revoke the Parmans’ license across the parking lot, it does not follow that the Parmans have, in effect, an unlimited easement of access across that tract. The duration of a license may be limited even though the licensor is estopped to revoke the license:

Since the estoppel to terminate a license arises out of action taken in reliance upon representations as to duration of the license, the extent of the estoppel is measured, in part at least, by the extent of the action taken. The fact that a licensor is estopped to revoke or terminate a license altogether does not necessarily mean that the license constitutes an irrevocable privilege in accordance with its terms. It means that it is irrevocable to the extent necessary to prevent the licensee from being unfairly deprived of the fruits of expenditures made by him. It may still be possible to terminate at will some though not all of the privileges created by the license.

Restatement of the Law of Property § 519, Comment g. (1944). The improvements made by the Parmans to the rear entrance to Bob’s Store were substantial. Nevertheless, the expenditures were not so substantial that the Parmans were entitled to assume that the property subject to the license would be maintained as a public parking lot forever.

We conclude that the Parmans could reasonably rely upon the continuation of the license only so long as the property was maintained as a public parking lot. Clearly, the Parmans have no right to compel the Weavers to maintain the property as a public parking lot. When a landowner grants a license for a limited purpose, licenses which are irrevocable because of estoppel should not be extended beyond their original purpose to additional uses. Smallwood v. Diz, Ky., 245 S.W.2d 439 (1952). In this case, the primary purpose of the license is a means of access between Bob’s Store and the municipal parking lot. If the Weaver property should cease to be used as a parking lot open to members of the public, then the Parmans’ license should also cease. In this way, the improvements made by the Parmans in reliance upon the existence of the license may be balanced against the right of the Weavers to devote their property to a more profitable use. Of course, any decision on the part of the Weavers to terminate the use of' the property as a public parking lot must be made in good faith and not merely for the purpose of denying the Parmans their rights established by this litigation. Wilson v. Irwin, 144 Ky. 311, 138 S.W. 373 (1911).

V

The judgment of the circuit court is reversed with directions to enter a judgment enjoining the Weavers from obstructing or interfering with access between the rear entrance of Bob’s Ready to Wear Store and the parking lot property owned by the Weavers, for so long as the Weavers’ property shall be maintained as a parking lot open to the public.

ALL CONCUR.

      . The term “easement by implication” includes both easements of necessity ana so-called quasi-easements.


source: Caselaw Access Project

author: GANT, Judge.

license: Public Domain

text:
    GRANVILLE & NUTTER SHOE COMPANY INC., Ray Stanley Granville, and James Watts Nutter, Appellants, v. The FLORSHEIM SHOE COMPANY, Appellee.
    Court of Appeals of Kentucky.
    Aug. 11, 1978.
    Donnie H. White, Lexington, for appellants.
    William M. Johnson, Frankfort, for appel-lee.
    Before GANT, LESTER and VANCE, JJ.
   GANT, Judge.

Appellants herein were personal guarantors under a contract, the consideration for which was the extension of credit by the appellee to a corporation owned by the appellants. When the appellants failed to pay their account in an amount in excess of $6,500, action was brought on this guaranty agreement and a default judgment obtained against the appellants for $2,000 each. The complaint filed by the appellee asked for this relief but a copy of the guaranty agreement was filed with the complaint and made a part thereof, which agreement provided, by reference, in pertinent part, that the appellants bound themselves “jointly and severally” to appellee, and that “the right of recovery hereunder is limited to Two Thousand and no/100 Dollars ($2,000.00).”

Eleven months after the default judgment was entered, appellants moved the court, pursuant to CR 55.02 and CR 60.02, to set aside or amend the judgment to reflect the liability against the appellants in accordance with the guaranty agreement and to provide that a $1,000 corporate bond be applied to further reduce that indebtedness. The lower court denied the motion on the ground that “no valid or reasonable excuse for default” had been presented. It is from the order overruling the appellants’ motion that this appeal results.

Under the former law in Kentucky, the lower court was without power to vacate or modify its own judgment under Section 518 of the Civil Code. Section 514 of the Civil Code granted to the Court of Appeals of Kentucky the right to reverse or modify for errors appearing in the record and this rule is now embodied in KRS 22A.060. However, CR 60.02 repealed Section 518 of the old Civil Code and it is, presently, within the power of the lower court to “. upon such terms as are just, relieve a party from its final judgment . .”

This was an instance of a default judgment rendered on the pleadings. The error was a patent one and the mistake was that of the court in entering a judgment for double the amount called for in the guaranty agreement. In the case of Samuels v. Weikel, 195 Ky. 522, 242 S.W. 836 (1922), there was a suit on a note against a husband and wife, the petition alleging that both owed the note sued upon, together with interest. The note was filed with the petition, incorporated as a part thereof and showed on the face of the note that the husband had not signed it and was in no way liable for its payment. The husband was summoned, failed to answer, and a default judgment was rendered against him. The Court of Appeals reversed this case and set aside the judgment against the husband, holding as follows:

. a judgment is erroneous unless it is supported by the pleadings, and by that it is meant unless the averments of the pleadings are such as authorize the rendition of the judgment.
Another familiar rule in this jurisdiction is that a written exhibit, upon which a petition or pleading is based, if filed as a part of it, must prevail as against the averments of the petition where there is a conflict between the two. (Citing cases).

The motion filed herein clearly called to the court’s attention the error which was manifest upon the face of the pleadings themselves. The court mistakenly entered a default judgment for double the amount to which the appellee was entitled according to the pleadings themselves, and to deny relief on the motion filed herein within the time limits permitted by the rules is an abuse of discretion by the lower court. The lower court in its ruling indicated that the absence of a showing of excusable neglect precluded recovery by the appellants. Excusable neglect, however, is but one of several grounds permitted under CR 60.02 and is not the sole plea in vindication. Mistake, inadvertence, newly discovered evidence and other grounds are also listed.

In cases too numerous to mention, our courts have consistently held that default judgments should be cautiously granted and closely examined. It should be further pointed out that there is no allegation in the present case that the appellee has relied upon the judgment herein entered to its detriment.

Despite the contention of the appel-lee that CR 59.05 precludes the modification of a default judgment, we do not agree. We do not construe that rule as being inconsistent with CR 60.02 pertaining to default judgments.

We feel that the second ground urged by the appellants is without merit, as the posted bond was a corporate bond and the debt of the corporation exceeded the guaranty amount.

Accordingly, this case is reversed and remanded to the lower court with instructions to set aside the judgment previously entered herein and to enter a judgment in favor of the appellee against the appellants, jointly and severally, in the amount of $2,000.00, together with interest thereon from the date of the original judgment, and for costs.

All concur.


author: FINCH, Judge. DONNELLY, Judge.

text:
    Robert POLLOCK, Administrator of the Estate of Nellie J. Pollock, Deceased, Plaintiff-Respondent, v. Harold W. BROWN, Defendant-Appellant.
    No. 60024.
    Supreme Court of Missouri, En Banc.
    July 24, 1978.
    Amended Opinion Sept. 12, 1978.

      Wendell E. Koemer, Jr., Brown, Douglas & Brown, St. Joseph, for defendant-appellant.
    Robert B. Randolph, St. Joseph, for plaintiff-respondent.
   FINCH, Judge.

This is an action in six counts commenced by Nellie J. Pollock (plaintiff) against Harold W. Brown (defendant). After judgment for plaintiff on all counts except Count III, defendant appealed to the Missouri Court of Appeals, Kansas City District, which affirmed. On application of defendant, we ordered the case transferred and we now decide it as though here on direct appeal.

The case is written on recent reassignment. In drafting this opinion, the writer has utilized much of what was written in the prior proposed opinion, particularly with reference to the $20,000 transaction and the deed transaction.

In Count I plaintiff sought to recover $20,000 allegedly loaned to defendant and payable on demand. Count II sought to replevy a $5,000 certificate of deposit, issued in names of “Nellie J. Pollock or Harold W. Brown, Joint owners with right of survivorship,” allegedly left with defendant for safekeeping while plaintiff was in Europe, which defendant refused to return to her on demand. Count III asked for damages for loss of use of the $20,000 sought in Count I and loss of use and income of the $5,000 sought in Count II. Count IV sought punitive damages for wrongful refusal to return the $5,000 certificate. Count V sought to set aside a deed by which she had conveyed land on which her home was located to Nellie J. Pollock and Harold W. Brown. Count VI alleged that the $20,000 loaned (Count I) was used to purchase twenty $1,000 certificates of deposit in the names of Harold W. Brown and/or Milton V. Brown, defendant’s son, and that she should be awarded a constructive trust covering said certificates.

Defendant filed an answer to each count of plaintiff’s petition and a counterclaim. His answer was, in effect, a general denial. In his counterclaim he alleged, in substance: (1) that plaintiff gave him an interest as a joint tenant in the $5,000 savings certificate; (2) that the $20,000 sued for was a gift to be used by him for the following purposes: (a) to provide himself with interest income for his support; (b) to provide himself with $10,000 of the principal when needed to cover expenses of himself for private nursing care during old age; and (c) to provide $10,000 of the principal for a trust fund to be used by him, as trustee, to pay expenses of nursing home care of plaintiff, if necessary; and (3) that he, as a joint tenant, is the owner of an interest in the real estate described in the pleadings.

The findings of fact and conclusions of law made and filed by the trial court are as follows:

“The Court finds that plaintiff Nellie Pollock is 71 years old and childish and forget- , ful and has been for several years but is not incompetent according to the definition set out in Sehr v. Lindenmann [Lindemann] [153 Mo. 276], 54 S.W. 537. Defendant Harold Brown is almost as childish as plaintiff, although somewhat shrewder. Plaintiff and defendant have been close friends for many years. Plaintiff has been better off financially than defendant. Defendant on occasion has asked plaintiff to give him the interest on some of her money and told her how honest he was. Plaintiff was in the hospital in June of 1972, and when she got out she began to plan a trip to Europe in October with defendant’s daughter-in-law.

“On Counts II and IV, the Court finds that in May of 1972, plaintiff purchased a five thousand dollar certificate of deposit with her funds, which she made out in her name and that of the defendant as joint tenants. She never delivered it to the defendant. She intended for the defendant to have the certificate when she died but not before. Plaintiff placed this certificate, together with other personal effects, in an envelope and left it in defendant’s custody to keep for her while she was gone on her trip to Europe. Defendant took possession of the certificate and did not give it back to her when she returned, although plaintiff demanded the return of the certificate, and defendant promised to do so and intended to do so until another man came into the picture. He never has and testifies now that he will not. Plaintiff never intended to make an out-right gift of this certificate of deposit, and there was no delivery of a present interest. The Court does not believe defendant’s testimony that plaintiff handed him the certificate and said, “here, I want you to have it.” And that he simply said, “Why, thank you, Nellie, very much.” The Court finds that defendant’s action in taking possession of the five thousand dollar certificate of deposit and refusing to return it was wrongful and with legal malice. Plaintiff is therefore entitled to judgment for the return of the certificate and $575.00, being the interest earned and payable since May 5,1972. Plaintiff is entitled to punitive damages in the amount of $500.00. As to defendant’s counterclaim, the Court finds and declares that plaintiff is the owner and entitled to possession of the certificate. See Carroll v. Hahn [Mo. App.] 498 S.W.2d 602.

“As to the twenty thousand dollars on Counts I and VI, the Court finds that on September 14, 1973, plaintiff attempted to make an oral trust of twenty thousand dollars; ten thousand to be used for her for nursing home expenses if needed, and ten thousand for the defendant for nursing home expenses for him if needed. There was no mention of what was to happen to the money if either or neither had to go to a nursing home. The money was to be put into certificates of deposit and was not to be in Milton Brown’s name and defendant was to have the interest on the money. There was no intention on the part of the plaintiff to make a unilateral gift of ten thousand dollars to the defendant. The defendant, on September 18, purchased twenty $1,000.00 certificates of deposit in the name of Harold and/or Milton Brown, his son. Plaintiff demanded the return of the money, but defendant refused to do so until after the interest paying date and then refused to do so at all. The above transaction was too uncertain and indefinite to be declared a trust and amounted to no more than a loan of the use of the money to be repaid on demand. Further, however the transaction is characterized, the defendant breached the conditions thereof by putting the money in Milton’s name, and plaintiff did all she could to revoke the transaction, and plaintiff is entitled to recover from the defendant $20,000.00 with interest at 6 per cent from September 18,-1973. As to defendant’s counterclaim, the Court finds and declares that Milton Brown and Harold Brown have no lawful right or title in any of the twenty $1,000.00 certificates of deposit and that they are held in constructive trust for plaintiff Nellie Pollock.

“As to the deed to plaintiff’s home, Count V, the Court finds that in August of 1972, plaintiff went to her own attorney, unaccompanied by the defendant, and executed a deed to her home place to herself and the defendant as joint tenants. The deed was recorded by her attorney and mailed to her. It was never delivered to the defendant. The deed was among plaintiff’s effects left with the defendant when she went on her trip, and she showed the deed to the defendant and told him that she made him a survivor of it. It was returned to her when she returned. There was no confidential relationship between the plaintiff and defendant. Defendant never perpetrated any fraud on plaintiff, and defendant did not use undue influence on plaintiff.

“Plaintiff, by Count V, seeks to have the deed to plaintiff’s home set aside on the grounds of fraud, deceit and undue influence (not alleged but argued), which the Court has not found to have occurred. Defendant in his counterclaim has asked the Court to find and declare the parties’ rights and interests in the property. The Court has considered two cases cited by the defendant similar to the one at bar: Wilke [Wilkie] v. Elmore [Mo.App.], 395 S.W.2d 168, where the grantor was found to have intended to deliver the deed; and Shroyer v. Shroyer [Mo.], 425 S.W.2d 214, where grantor was found not to have intended to deliver the deed. The distinguishing factors in the two cases is that in the Wilke case the deed was recorded and grantor reserved a life estate, and in the Shroyer case the deed was not recorded and grantor did not reserve a life estate. In this case the deed was recorded but it created an immediate interest and grantor did not reserve a life estate. The recording of the deed raised a presumption that the deed was delivered. This presumption is rebut-table. It does place on the plaintiff grantor the burden of proving the deed was not delivered to the defendant grantee. The question to be resolved is whether or not plaintiff parted with dominion over the deed with the intention of relinquishing all dominion and control over the deed and of making it presently effective and operative as a conveyance of title to the house. Shroyer v. Shroyer, supra, at 219.

“Considering all of the facts on this case; i. e., the relationship between the parties, the plans for the European trip, the fact that plaintiff told defendant that he was to be the survivor of it and that rather than giving the defendant title subject to a life estate, the deed made defendant a joint tenant in plaintiff’s home, which is a present interest giving to the defendant the equal right to either possession or rent or to partition, the Court finds that plaintiff intended the defendant to have the house on her death and not before. She had no intention of parting with control and dominion over the property. In effect, she made a testamentary disposition of the house, and as such she should be able to revoke it. She did what she could to revoke it by tearing up the deed. The fact that it was recorded should not prevent her from changing her mind.

“In view of the findings on Counts I, II and IV, plaintiff is not entitled to recover on Count III.”

Our review of this court-tried case is pursuant to Rule 73.01(3) interpreted in Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976), to mean “that the decree or judgment of the trial court will be sustained by the appellate court unless there is no substantial evidence to support it, unless it is against the weight of the evidence, unless it erroneously declares the law, or unless it erroneously applies the law. Appellate courts should exercise the power to set aside a decree or judgment on the ground that it is ‘against the weight of the evidence’ with caution and with a firm belief that the decree or judgment is wrong.”

THE $20,000 TRANSACTION

Was the $20,000 a loan, as plaintiff contends? Or was it, as defendant now contends, (1) a gift of $10,000 to him, and (2) a transfer of the remaining $10,000 to him in trust for these purposes: (a) the interest income to be paid to defendant for his support, and (b) the corpus of the trust to be used to pay any nursing home expenses Mrs. Pollock might incur? Defendant also contends, in the alternative, that if plaintiff intended to establish a trust in the whole $20,000, the court erred in not entering a decree that it was “a * * * trust during the lives of the parties with the income to be paid to the defendant, and a resulting trust in favor of the plaintiff.”

The trial court found that plaintiff did not intend to make a gift of $10,000 of this money to defendant. This finding is supported by substantial evidence. Consequently, no property was transferred to defendant by inter vivos gift. In re Estate of Hoffman, 490 S.W.2d 98 (Mo.1973). The court further found and concluded that plaintiff attempted but failed to create an oral trust with this $20,000 to be used by defendant for the following purposes: (1) to buy bank certificates of deposit in his name and thereby produce interest to be paid to himself as beneficiary; and (2) to use, if needed, (a) $10,000 of the corpus for nursing home expenses Mrs. Pollock might have, and (b) $10,000 of the corpus for nursing home expenses Mr. Brown might have.

The court found and concluded that the transaction between these two parties was too indefinite and uncertain to create a trust and, in particular, the trust attempted.

In Northrip v. Burge, 255 Mo. 641, 654, 164 S.W. 584, 586 (1914), this court said that “in order to create a valid verbal or parol trust in personal property, three things are indispensable; First, the words of the set-tlor must express a declaration and grant by him of an estate or interest containing all the essential elements of a trust; second, there must be a definite subject-matter of a trust; third, there must be a definite object or beneficiary of the trust.” Accord, Gardner v. Bernard, 401 S.W.2d 415, 421 (Mo.1966).

With the exception of the words of plaintiff that she wanted defendant to have the interest earned by the $20,000 transferred to him, the words relied upon to express a declaration and grant by plaintiff of an interest containing all essential elements of a trust come from the mouth of defendant.

Defendant’s testimony is consistent with (1)an intent on the part of plaintiff to make an absolute gift of $10,000 to defendant and a transfer of the other $10,000 to defendant in trust to use to pay such nursing home expenses as Mrs. Pollock might have; or (2) an intent to transfer the whole $20,000 to defendant in trust to pay the interest earned by the trust corpus to defendant and to use up to $10,000 of the corpus for such nursing care (or nursing home) expenses as he might have, and up to $10,000 for such nursing home expenses as Mrs. Pollock might have; or (3) an intent not to create a trust, but to give the whole $20,000 to defendant; or (4) an intent to create a trust in the whole $20,000 with the only use and purpose being to pay the interest earned by the trust corpus to defendant. In these circumstances, the words relied upon to express a declaration and grant of an interest with all the elements of a trust are, to say the least, ambiguous. The amount of the corpus of the trust, the identity of its beneficiary or beneficiaries, and the purposes for which it is to be used, are, as a result of the conflict between (1), (2), and (4) above, indefinite and uncertain. No provision is made by expression of the set-tlor (through defendant’s testimony) for disposition of the corpus when the trust ends, if none of it is required to be used for the purposes expressed in (1) or (2) above, or if part, but not all, is required for use for those purposes.

If plaintiff’s intent was as expressed in (4) above, then defendant contends, in the alternative, that the trial court should have decreed that it was “a * * * trust during the lives of the parties * * * and erred in failing to do so. There is no evidence from any source as to how long a trust for this suggested purpose was intended to last, or what disposition was to be made of the corpus whenever the trust might terminate.

These uncertainties and ambiguities in the declaration of the nature and terms of the trust, in the description of its subject matter, in the designation of the purposes for which it is to be used, and in the designation of its beneficiaries demonstrate that the trust attempted failed because it is too vague and indefinite.

However, we do not agree with the trial court’s conclusion that the transaction intended was a “loan” and that it was also an attempt to create a trust; the two are inconsistent. Wheat v. Platte City Ben. Assessment Special Road Dist. of Platte County, 227 Mo.App. 869, 59 S.W.2d 88 (1933); Restatement (Second) of Trusts § 12 (1959). Nor do we agree with its conclusion that because the trust attempted failed, 'this transaction “amounted to * * a loan of the use of the money to be repaid on demand” for which she was entitled to a judgment for $20,000 and a decree that the twenty $1,000 certificates of deposit purchased with this “loan” are held by the payees named therein in a constructive trust for the benefit of plaintiff. In so concluding, the trial court erroneously declared and applied the law. The judgment on Count I is reversed. However, we reach substantially the same ultimate result on Count VI as was reached by the trial court, but upon a different legal theory.

We hold that because the attempted express trust failed, defendant held the $20,000 on a resulting trust for the benefit of plaintiff. The Restatement (Second) of Trusts § 65 B (1959) states that “a trust or a provision in the terms of the trust may be unenforceable because of indefiniteness.” Comment a to this section declares that if the purposes for which the trust is created are too indefinite, then the trust fails. See also 89 C.J.S. Trusts § 45 (1955). Under these circumstances, “ . . . transferee holds the trust estate upon a resulting trust for the transferor or his estate.” Restatement (Second) of Trusts § 411 (1959). The above stated rule is applicable to these facts. See Gill v. Gill, 4 Ohio Mise. 141, 212 N.E.2d 83 (1965) (declaring attempted testamentary trust void for uncertainty, indefiniteness, and vagueness as to duration and in other respects, and ordering distribution to children who were decedent’s only heirs); McGowan v. St. Louis Union Trust Co., 369 S.W.2d 144 (Mo.1963) (if trust failed at outset because it violated the Rule against Perpetuities, trustee held corpus on resulting trust).

Defendant, as trustee of the resulting trust, breached his fiduciary duty to protect the integrity and security of the trust corpus by using it to purchase certificates of deposit in the names of and payable to himself, in his individual capacity (not as trustee), “and/or Milton V. Brown,” his son and a stranger to the trust. Access to the funds of the trust in his individual capacity results in unjust enrichment of defendant for his wrongful act. Equity will not tolerate his unjust enrichment. An explanation of this principle is found in Murphy v. Olds, 508 S.W.2d 249, 252 (Mo.App.1974):

“A constructive trust, however, is not a technical trust but a device used by a court of equity to provide a remedy in cases of actual or constructive fraud to prevent unjust enrichment. March v. Gerstenschlager, 436 S.W.2d 6, 8[2] (Mo. 1969); Service Life Insurance Co. of Fort Worth v. Davis, 466 S.W.2d 190, 196[4] (Mo.App.1971). And since a breach of a fiduciary or confidential relationship is itself a constructive fraud, if such a relationship is shown between the putative trustee and beneficiary, no proof of actual fraud is necessary in order to establish a constructive trust. Swon v. Huddleston, supra, 1. c. 282 S.W.2d [18] at 25[9, 10]; Trieseler v. Helmbacher, 350 Mo. 807, 168 S.W.2d 1030, 1036[5-7] (1943). Thus, the availability to plaintiffs of the constructive trust remedy does not derive from an imputation of actual fraud, but from the breach of the fiduciary relationship which subsisted because [consistent with the principle of Parker v. Blakeley (338 Mo. 1189, 93 S.W.2d 981), supra, cited by defendants] ‘to permit [defendants] to retain the property thus procured would tend to induce fraud and would be against public policy upon the true owner doing equity.’ Decker v. Fittge, ,365 Mo. 139, 276 S.W.2d 144, 150 (1955).”

Accord, Ward Parkway Shops v. C. S. W. Consultants, 542 S.W.2d 308, 313 (Mo.App. 1976).

Milton Brown paid no value for any property interest transferred to him by his father having the twenty $1,000 certificates of deposit issued in his and his son’s name. Also, defendant informed his son by letter that he held the money in trust for plaintiff. Under these circumstances, Milton Brown cannot hold free from trust any property interest in the account, or the certificates evidencing the account, which was created by his father in breach of his fiduciary duties. Restatement (Second) of Trusts §§ 289, 292 (1959).

Because of defendant’s breach of his fiduciary obligations as trustee of the resulting trust, we hold plaintiff is entitled to a decree on Count VI that defendant and Milton V. Brown have no property interest in the twenty $1,000 certificates of deposit issued by the American National Bank or the money the certificates represent; and that they hold these certificates of deposit on constructive trust for the benefit of plaintiff and shall deliver them to the administrator of her estate. The decree on Count VI is modified accordingly.

THE $5,000 SAVINGS CERTIFICATE

The trial court’s findings of fact as to this certificate are supported by substantial evidence and we do not disturb those findings. We thus have a factual situation in which' plaintiff purchased with her funds a $5,000 certificate of deposit which she had issued in her name and Harold Brown’s name as joint tenants with right of survivorship. She retained the certificate which evidenced the funds deposited in the survivor-ship account, intending that Brown should not have the certificate unless and until he survived her. However, when she took a trip to Europe, she placed this certificate of deposit in an envelope and left it with Harold Brown for safekeeping during her trip. It was to be returned to her after she came back from Europe but, in spite of her requests, Brown refused to return the certificate.

By depositing her $5,000 in the bank in the names of and payable to herself and Harold Brown “as joint owners with right of survivorship,” plaintiff established a statutory joint tenancy. In re Estate of LaGarce, 487 S.W.2d 493 (Mo. banc 1972).

In the words of the applicable statute, such deposit becomes “the property of these persons as joint tenants, and * * * shall be held for the exclusive use of the persons so named, and may be paid to any of them, or to the survivor . . . .” In that case we recognized that prior cases had refused to recognize joint tenancies created under § 362.470 and what is now § 369.174 because of the absence of the common law elements essential to a valid gift inter vivos or because deemed void on the basis that the attempted gift was testamentary in nature (donor intended to retain control during lifetime) and thus in violation of the statute of wills. LaGarce held that prior cases so holding had the effect of nullifying the legislative intent expressed in said statutes and should not thereafter be followed.

We reaffirm the holding in LaGarce. There was created a present statutory joint tenancy in the $5,000 account in the Commerce Bank of St. Joseph. However, plaintiff had a right to retain possession of the certificate of deposit which evidenced said account, thereby retaining control over the account by reason of the fact that surrender of the certificate was required for withdrawal of funds from the account. This is consistent with the holding in LaGarce which discussed possession and utilization of the certificate and the necessity that the certificate be surrendered if the account is to be terminated.

The trial court held that plaintiff delivered the certificate of deposit to defendant for safekeeping while she went to Europe with the understanding that it would be returned to her when she came back from her trip. In other words, there was a bailment of the certificate to defendant. When he refused to return it pursuant to plaintiff’s request, he violated the terms of the bailment. It was on this theory that plaintiff sought by replevin to recover possession of the certificate of deposit.

There are cases which hold that a joint owner of personal property cannot maintain replevin to recover such property from another joint owner. McDowell v. Hollingsworth, 10 S.W.2d 314 (Mo.App.1928); Farmers’ Savings Bank v. American Trust Co., 196 S.W. 35 (Mo.App.1917). Those cases apply to conventional joint tenancies in personal property. In this instance we deal not with a conventional joint tenancy but with a specially created statutory joint tenancy. LaGarce so recognized when it stated that “the statute creates what might be described as a statutory joint tenancy.” 487 S.W.2d at 500. As a result, each joint tenant has a present interest in the bank account. However, as LaGarce recognizes, one party may possess the certificate evidencing the deposit and this may be for the purpose of controlling the withdrawal of funds from the account, thereby effecting a testamentary disposition. Such being the case, the rule against permitting replevin by one joint tenant against another should not be applied to a situation involving such a certificate of deposit. This is particularly true where, as here, the holder of the certificate is a bailee who has breached a duty to surrender it to the bailor. This view is supported by the case of Pulliam v. Burlin-game, 81 Mo. Ill (1883), wherein defendant borrowed two mules from plaintiff but refused to return them on request. When plaintiff sought to replevy the mules, defendant alleged that his wife owned an interest therein and he was in possession as agent for his wife. On that basis he asserted the rule that one joint owner of personal property may not maintain replevin against his joint tenant. The court rejected that contention, saying that defendant could not assert such a defense where he had acquired possession by a contract of bailment. The court stated that the bailee assumed a position of trust and confidence which continued until the property was returned or lawfully accounted for. The bailee could not dispute the bailor’s title. The replevin action could be maintained against bailee of the mules. Likewise, plaintiff, as bailor of the certificate, was entitled to replevy it from the bailee when he refused to return it as he had agreed to do.

We conclude that the trial court properly permitted plaintiff to replevy the certificate of deposit for $5,000. The judgment on Count II is affirmed.

Defendant also appeals from the action of the trial court in awarding punitive damages of $500 on Count IV in connection with his retention of possession of the $5,000 certificate of deposit. His argument is based on the proposition that there was no evidence that his retention of the certificate was wrongful and that retention of a certificate which shows him as a joint owner could not be wrongful and could not support an award of punitive damages. Although we reject these contentions, we have concluded that the findings of the trial court do not support an award of punitive damages in this case.

The trial court’s award of punitive damages was based on its determination that “defendant’s action in taking possession of the five thousand dollar certificate of deposit and refusing to return it was wrongful and with legal malice.” This is a mixed question of law and fact. Although we must defer to the findings of the trial court where supported by substantial evidence, the determination that defendant’s action in taking possession of the certificate was wrongful must be rejected. This finding is not only unsupported by the record but also is plainly inconsistent with the court’s prior determination that defendant took possession of the certificate at plaintiff’s request and with the intent to return it. It is on the basis of the bailment thereby created that we affirmed the order permitting re-plevin.

Inasmuch as there was a bailment, the finding of the trial court that defendant’s refusal to return the certificate after demand was wrongful is supported by substantial evidence. Punitive damages, if justified, must therefore be premised on this action.

As previously indicated, the trial court concluded that the defendant’s refusal to return the certificate was “with legal malice.” In Missouri, actual malice, commonly defined as motivation by spite or ill will, is not a prerequisite to exemplary damages and legal malice, if supported by the evidence, will suffice. Comment, 42 Mo.L.Rev. 593, 598-600 (1977). As stated in Beggs v. Universal C. I. T. Corporation, 409 S.W.2d 719, 722 (Mo.1966),

“The test to be applied in determining whether malice existed as a basis for the award of punitive damages is whether the defendant did a wrongful act intentionally and without just cause or excuse. ‘This means that defendant not only intended to do the act which is ascertained to be wrongful but that he knew it was wrongful when he did it. There must be, in order to justify punitive damages, some element of wantonness or bad motive, but if one intentionally does a wrongful act and knows at the time that it is wrongful he does it wantonly and with a bad motive.’ * * * ”

Applying the foregoing test, we believe the trial court’s conclusion that defendant acted with legal malice in this case is the result of an erroneous application of the law. The trial court made no finding that defendant knew his refusal to return the certificate was wrongful, nor do we believe that the record would justify such a finding. Defendant was in possession of a certificate which on its face declared his present interest therein. Although he had agreed to return the certificate, it is readily apparent that without benefit of this opinion he might in good faith have determined that his obligation to do so was more moral than legal. A good faith mistake as to the legality of the defendant’s act has been held to negate legal malice under the foregoing test. Booth v. Quality Dairy Company, 393 S.W.2d 845 (Mo.App.1965); Comment, 42 Mo.L.Rev. 593 (1977). On the record before us and in the absence of a finding that defendant knew he had a legal obligation to return the certificate, we believe the award of punitive damages is inappropriate. The judgment on Count IV is reversed.

THE DEED TRANSACTION

[12] The trial court found and concluded that defendant did not secure this deed from plaintiff by practicing fraud, trickery and deceit upon her; that there was no confidential relationship between them and no undue influence by him upon her decision to deed the property to herself and defendant “as joint tenants and not as tenants in common.” These findings and conclusions are supported by substantial evidence.

The only questions remaining are whether there was delivery and acceptance of the deed, mixed questions of law and fact. In this connection, the court further found as fact that “plaintiff went to her own attorney, unaccompanied by the defendant and executed a deed to her homeplace to herself and the defendant as joint tenants”; that “the deed was recorded by her attorney and mailed to her”; that the “deed was among plaintiff’s effects left with the defendant when she went on her [European] trip, and she showed the deed to defendant and told him she made him survivor of it”; that the deed “was returned to her when she returned” from the trip. These findings, with one exception, are supported by substantial evidence. The exception is: that she “told him she made him survivor of it.” There is evidence she showed him this deed, but none that she made such a statement about the deed or homeplace at any time.

The court was presented with similar questions in Wilkie v. Elmore, 395 S,W.2d 168 (Mo.1965), the answers to which are applicable to the facts in this case. The court said at 172:

“Cancellation of a deed is the exercise of the most extraordinary power of a court of equity; such power should not be exercised except in clear cases upon proof which is clear, cogent and convincing, and the burden of such proof is on the party who seeks the cancellation. Cruwell v. Vaughn, Mo., 353 S.W.2d 616, 624[l-4], On the issue of whether there was a delivery of the deed, the burden of showing nondelivery rests upon plaintiff because she is the one who seeks to invalidate the deed upon that ground. Cleary v. Cleary, supra, 273 S.W.2d [340] 1. c. 346[9]; O’Mohundro v. Mattingly, Mo., 353 S.W.2d 786, 792[1].
“It is not necessary that there be an actual manual delivery of a deed in order to accomplish an effective delivery, Marshall v. Hartzfelt, 98 Mo.App. 178, 71 S.W. 1061, 1062; Hafford v. Smith, Mo. App., 369 S.W.2d 290, 294[3] * * *. Although recording of a deed, even by the grantor, does not in itself operate as a delivery of the deed, such recording as here creates a presumption or a prima facie case of delivery in view of our recording statute, Section 442.390, RSMo 1959, V.A.M.S. * * *. The acceptance necessary to delivery and validation of the deed can be presumed where the transfer of an interest is beneficial to the defendant grantee as in this case. Clark v. Skinner, 334 Mo. 1190, 70 S.W.2d 1094, 1099[12].”

The court said in Schroyer v. Sehroyer, 425 S.W.2d 214, 219-220 (Mo.1968): “It is not necessary, in order to constitute a delivery of a deed, that the instrument actually be handed over to the grantee or to another person for the grantee. There may be a delivery notwithstanding the deed remains in the custody of the grantor. Baker v. Baker, 363 Mo. 318, 251 S.W.2d 31, 33 A.L. R.2d 1431, and authorities cited 1. c. 37.”

Under the facts and circumstances presented, including the recording of the deed, there was a strong presumption of delivery and acceptance of the deed. There is no clear, cogent and convincing evidence to rebut this presumption. Plaintiff failed to meet her burden of proof. Accordingly, the decree on Count V setting aside this deed is reversed.

In summary, we reverse on Count I, we affirm on Count II, we reverse on Count IV, we reverse on Count V and we affirm as modified on Count VI. The judgment of the trial court on Count III was for defendant and plaintiff did not appeal therefrom. Accordingly, it remains as entered in the trial court.

MORGAN, C. J., and BARDGETT, RENDLEN and SEILER, JJ., concur.

DONNELLY, J., concurs in part and dissents in part in separate opinion filed.

SIMEONE, J., not participating because not a member of the court when cause was submitted.

OPINION CONCURRING IN PART AND DISSENTING IN PART

DONNELLY, Judge.

I concur in all of the principal opinion except the portion which pertains to replev-in of the $5000 savings certificate.

In concluding there was no delivery to defendant of a present interest in the certificate and that plaintiff was the owner and entitled to possession thereof, the trial court erroneously declared and applied the law. In re Estate of LaGarce, 487 S.W.2d 493 (Mo. banc 1972).

The principal opinion concedes there was delivery of a present interest in the certificate but then dilutes LaGarce by holding that a bailment was created. It then cites Pulliam v. Burlingame, 81 Mo. Ill (1883) for the proposition that, in a bailment situation, the accepted rule that one joint owner of personal property cannot maintain an action of replevin against his joint tenant does not apply.

I understand Pulliam to hold that where defendant borrowed two mules from plaintiff, and at the time made no mention of any claim to them, he was estopped to claim them against plaintiff. Here, the parties were joint tenants and they both knew they were joint tenants. There is no estoppel here.

Plaintiff may not maintain the replevin action asserted in Count II or the action asserted in Count IV for punitive damages in connection with defendant’s retention of possession of the $5000 savings certificate.

To the extent indicated, I respectfully dissent.

ON MOTION TO AMEND OPINION

PER CURIAM.

In a motion to amend the opinion herein, plaintiff alleges that failure of the opinion to make any statement about liability of defendant to plaintiff for interest on the $20,000 in certificates of deposit held on constructive trust for the benefit of plaintiff has created uncertainty as to whether defendant is liable for interest. Plaintiff is entitled to receive from defendant the interest which defendant has received on said certificates of deposit. McHenry v. Brown, 388 S.W.2d 797, 804 (Mo.1965). Our opinion is amended accordingly.

In view of the fact that the interest rate paid thereon changed at some time and this court does not have sufficient information to enable it to compute the amount of interest due, it is necessary that we remand the case to the circuit court for a determination thereof. Accordingly, our opinion is amended to reverse and remand this case with directions to enter a decree in accordance with the views herein expressed.

SIMEONE, J., not participating.

      . Mrs. Pollock died January 8, 1976, after appeal had been perfected to the Court of Appeals, Kansas City District. The administrator of her estate was substituted as party plaintiff in that court. We will continue to refer to the parties by their designation in the trial court.

      . Plaintiff sought in this count only the possession of the savings certificate. She did not seek a determination, as between herself and defendant, of their respective rights to or interests in the money deposited in this account. Hence, we do not reach that question.

      . This amount was subsequently stricken from the judgment by amendment on the court’s own motion and by plaintiff’s stipulation.

      . Restatement (Second) of Trusts, Introductory Note to Sections on Resulting Trusts at 326 (1959) declares that “the trustee of a resulting trust, like the trustee of an express trust, is in a fiduciary relation to the beneficiary.” See also McHenry v. Brown, 388 S.W.2d 797 (Mo. 1965) (constructive trustee accountable as express trustee).

      . Section 362.470, RSMo 1969. This section has been subsequently amended by Laws 1977, p. 554.

      . Including Jenkins v. Meyer, 380 S.W.2d 315 (Mo.1964); Wantuck v. United Savings & Loan Assn., 461 S.W.2d 692 (Mo. banc 1971), and other cases.

      . We decide only the right to possession as determined by the trial court. We recognize that Nellie Pollock is now deceased and that Harold Brown may claim the certificate and the deposit it represents as surviving joint tenant. We do not resolve that question by our affirmance of the trial court’s judgment on Count II.


author: SEILER, Judge. FINCH, Judge.

text:
    Patrick G. SCHELLERT, Appellant, v. STATE of Missouri, Respondent.
    No. 60305.
    Supreme Court of Missouri, En Banc.
    Sept. 12, 1978.

      Gary L. Gardner, Asst. Public Defender, Melvin G. Franke, Public Defender, Union, for appellant.
    John D. Ashcroft, Atty. Gen., Philip M. Koppe, Asst. Atty. Gen., Jefferson City, for respondent.
   SEILER, Judge.

Appellant pleaded guilty to feloniously uttering a check for over $100.00 without sufficient funds for payment. He was sentenced to five years’ imprisonment, the maximum penalty. The facts about the guilty plea and sentencing were that after several continuances, during which it was uncertain whether appellant had funds to or would employ counsel, appellant appeared on the trial date, without counsel, and informed the court he would like to change his plea. The court also was told by the prosecutor that he had told appellant that if he were to plead guilty the state would recommend probation. The court asked appellant if he understood that the recommendation “is nothing more than that” and that the court had authority to impose different punishment. Appellant responded, “Yes, sir, I’m very well aware of that.”

After informing appellant of the rights waived by a plea of guilty and questioning appellant and the prosecutor as to the facts on which the charge was based, the court accepted appellant’s plea of guilty and ordered a pre-sentence investigation. Approximately nine weeks later appellant appeared, again without counsel. The court announced its readiness to proceed and reminded appellant that the court was not involved in the recommendation made by the prosecutor and was free to impose whatever sentence it deemed appropriate. The court then granted allocution and imposed the five-year sentence. At no time prior to imposition of sentence did the court inform defendant the court was not going to follow the recommendation of the prosecutor, and this being the case, of course the occasion never arose whereby the appellant was given an opportunity thereafter to withdraw his plea.

In his subsequent rule 27.26 motion, appellant contended that he did not knowingly and intelligently waive his right to the assistance of counsel and that his plea of guilty was involuntary.

The trial court denied the 27.26 motion without an evidentiary hearing and this was affirmed by the court of appeals, St. Louis district, with Dowd, J., dissenting. The majority opinion found that “the guilty plea proceeding substantially followed that recommended in Judge Donnelly’s separate concurring opinion in Flood v. State, 476 S.W.2d 529, 535-37 (Mo.1972)”, which restated former rule 11 of the Federal Rules of Criminal Procedure prior to the 1975 amendments.

We granted transfer to consider whether, as a matter of substantial fairness, a trial court should afford a criminal defendant the opportunity to withdraw a plea of guilty in any case in which the judge determines not to grant the sentence concessions contemplated by a plea agreement or plea bargain made between the defendant and the prosecutor. We believe that such is required and therefore reverse and remand the custody of the accused to the trial court for the entry of a new plea.

It is commonly estimated that at least ninety percent of all criminal convictions are by pleas of guilty. Alschuler, The Trial Judge’s Role in Plea Bargaining, Part I, 76 Colum.L.Rev. 1059, n.l (1976); 8 J. Moore’s Fed.Prac. § 11.01[4], at 11-11 (1977); see Note, Plea Bargaining and the Transformation of the Criminal Process, 90 Harv.L.Rev. 564 (1977). Each such plea “is a serious and sobering occasion inasmuch as it constitutes a waiver of the fundamental rights to a jury trial, Duncan v. Louisiana, 391 U.S. 145, 88 S.Ct. 1444, 20 L.Ed.2d 491 (1968), to confront one’s accusers, Pointer v. Texas, 380 U.S. 400, 85 S.Ct. 1065, 13 L.Ed.2d 923 (1965), to present witnesses in one’s defense, Washington v. Texas, 388 U.S. 14, 87 S.Ct. 1920, 18 L.Ed.2d 1019 (1967), to remain silent, Malloy v. Hogan, 378 U.S. 1, 84 S.Ct. 1489, 12 L.Ed.2d 653 (1964), and to be convicted by proof beyond all reasonable doubt, In re Winship, 397 U.S. 358, 90 S.Ct. 1068, 25 L.Ed.2d 368 (1970).” Santobello v. New York, 404 U.S. 257, 264, 92 S.Ct. 495, 500, 30 L.Ed.2d 427 (1971) (Douglas, J., concurring).

Plea bargaining, in more recent years, has been openly discussed and acknowledged to be “not only an essential part of the [criminal justice] process but a highly desirable part for many reasons. It leads to prompt and largely final disposition of most criminal cases; it avoids much of the corrosive impact of enforced idleness during pre-trial confinement for those who are denied release pending trial; it protects the public from those accused persons who are prone to continue criminal conduct even while on pretrial release; and, by shortening the time between charge and disposition, it enhances whatever may be the rehabilitative prospects of the guilty when they are ultimately imprisoned.” Santobello v. New York, supra, 404 U.S. at 261, 92 S.Ct. at 498; see also Bordenkircher v. Hayes, 434 U.S. 357, 98 S.Ct. 663, 667, 54 L.Ed.2d 604 (1978); Blackledge v. Allison, 431 U.S. 63,71, 97 S.Ct. 1621 (1977); Brady v. United States, 397 U.S. 742, 751-52, 90 S.Ct. 1463, 25 L.Ed.2d 747, 52 L.Ed.2d 136 (1970); American Bar Association Project on Minimum Standards for Criminal Justice [hereinafter ABA Standards], Standards Relating to Pleas of Guilty 1-3 (Approved Draft, 1968); ALI Model Code of Pre-Arraignment Procedure, § 350.3, Commentary (1975). Guilty pleas must be knowing and voluntary as a matter of fact, Boykin v. Alabama, 395 U.S. 238, 89 S.Ct. 1709, 23 L.Ed.2d 274 (1969); Flood v. State, 476 S.W.2d 529, 634 (Mo. banc 1972), and such must be evidenced by the record under our order of February 22, 1972, accompanying rule 25.04.

Plea bargaining has thus become accepted by the courts as “a legitimate and respectable adjunct of the administration of the criminal laws.” State v. Thomas, 61 N.J. 314, 321, 294 A.2d 57, 61 (1972). There is “nothing unholy in honest plea bargaining between the prosecutor and defendant and his attorney in criminal eases.” Id., quoting State v. Taylor, 49 N.J. 440, 455, 231 A.2d 212, 221 (1967).

A criminal defendant obviously makes a choice when he agrees (acting alone or through or with his attorney) in a bargain with the prosecutor to plead guilty and waive the full panoply of non-jurisdictional constitutional rights. In the instant case, the state’s attorney insisted in oral argument that there are certain “risks” involved in plea bargaining, which he likened to the risk that a jury might sentence a first offender to more punishment than he would expect or hope. This is an unsound argument, however, because it is the very risk of uncertainty before a jury which the defendant seeks to avoid in striking an agreement with the prosecutor. If the risk were the same, he would be foolish to waive his right to trial in exchange for the prosecutor’s recommendation as to sentence or disposition. The risk is demonstrably not the same, as evidenced by the overwhelming number of plea bargains. The actions of judges and prosecutors speak louder than words, and criminal defendants “ordinarily [have] very little reason to fear that this [plea agreement] . . . [will] be disregarded by the court. Alschuler, supra, 76 Colum.L.Rev. at 1065.

“For a system of criminal justice strongly to encourage a defendant to believe that a certain sentence will follow the abandonment of his constitutional rights and yet to impose an entirely different sentence seems manifestly unfair,” id. at 1069; see Note, Withdrawal of Pleas in Nebraska: The Rejected Plea Bargain, 56 Neb.L.Rev. 193, 202 (1977), and “a mockery of justice.” Note, Plea Bargaining — Proposed Amendments to Federal Criminal Rule 11, 56 Minn.L.Rev. 718, 730 (1972). Defendants who plea bargain are clearly so encouraged. See ABA Standards, Pleas of Guilty, § 3.1 Commentary at 60-69 (Approved Draft, 1968). It “is not unusual for an accused to be lulled into believing that the court proceedings are a mere formality, and that everyone involved is party to the promised bargain, upon which the plea is founded.” Commonwealth v. Barrett, 223 Pa.Super. 163, 166, 299 A.2d 30,.31 (1972).

The United States Supreme Court has ruled that “when a plea rests in any significant degree on a promise or agreement of the prosecutor, so that it can be said to be part of the inducement or consideration, such promise must be fulfilled.” Santobello v. New York, 404 U.S. 257, 262, 92 S.Ct. 495, 499, 30 L.Ed.2d 427 (1972). This court has said that a guilty plea is like “a confession” which “should never be received unless it is freely and voluntarily made. If the defendant should be . induced to plead guilty by . persuasion, or the holding out of hopes which prove to be false or ill founded, he should be permitted to withdraw his plea.” State v. Hovis, 353 Mo. 602, 183 S.W.2d 147, 148 (1944); State v. Cochran, 332 Mo. 742, 60 S.W.2d 1, 2 (1933); see Brown v. State, 485 S.W.2d 424, 429 (Mo.1972); State v. Rose, 440 S.W.2d 441, 443 (Mo.1969); State v. Good, 403 S.W:2d 594, 599 (Mo.1966); State v. Williams, 391 S.W.2d 227, 234-35 (Mo.1965).

In State v. Good, 403 S.W.2d 594 (Mo. 1966), the court praised “a judge who thoroughly, patiently and pointedly disabused accused and his counsel of their preconceived ideas with reference to the length of term of imprisonment he hoped to receive; in effect offered accused a jury trial even after pleas of guilty were entered, and positively stated that he would not assess the recommended punishment.” Id. at 600. That effort “exemplifies] . . . the extent to which the trial court should explain [its] . . . sentencing function.” State v. Bonds, 521 S.W.2d 18, 21 (Mo.App. 1975).

In short, plea bargaining is an essential component of the criminal justice system, satisfying many useful purposes. Properly administered it should be used and should be encouraged. But when plea discussions and agreements are made, the facts of the bargain should be disclosed in open court, and spread upon the record so that more than a ritual takes place.

“If plea bargaining is to fulfill its intended purpose, it must be conducted fairly on both sides and the results must not disappoint the reasonable expectations of either.” State v. Thomas, 61 N.J. 314, 321, 294 A.2d 57, 61 (1972). Though the court is not bound by the plea bargain between the prosecutor and the defendant and/or his attorney, if the court does not intend to follow the prosecutor’s recommendation, the defendant should have the privilege of withdrawing his plea. He should not be entrapped. Ballard v. State, 131 Ga.App. 847, 207 S.E.2d 246, 249 (1974).

The trial judge should not accept a plea of guilty without first inquiring whether there is a plea agreement and, if there is one, requiring that it be disclosed on the record in open court, or on a showing

of good cause, in camera, at the time the plea is offered. Thereupon the court may accept or reject the agreement, or may defer its decision as to the acceptance or rejection until there has been an opportunity to consider the presentence report.

If the plea agreement contemplates the granting of sentence concessions by the trial judge, he should give the agreement due consideration, but notwithstanding its existence reach an independent decision on whether to grant sentence concessions. If the court rejects the plea agreement, either at the time of the plea proceedings or at the time of sentencing, the court shall, on the record, inform the parties of that fact, advise the defendant personally in open court, or on a showing of good cause, in camera, that the court is not bound by the plea agreement, afford the defendant the opportunity then to withdraw his plea, and advise the defendant that if he persists in his guilty plea, the disposition of the case may be less favorable to the defendant than that contemplated by the plea agreement. See United States v. Hammerman, 528 F.2d 326 (4th Cir. 1975); United States v. Gallington, 488 F.2d 637 (8th Cir. 1973), cert, denied, 416 U.S. 907, 94 S.Ct. 1613, 40 L.Ed.2d 112 (1974); United States ex rel. Culbreath v. Rundle, 466 F.2d 730 (3rd Cir. 1972); English v. State, 325 So.2d 211 (Ala.Crim.1975); People v. Johnson, 10 Cal.3d 868, 519 P.2d 604, 112 Cal.Rptr. 556 (1974); Quintana v. Robinson, 31 Conn.Sup. 22, 319 A.2d 515 (1973) (but see Szarwak v. Warden, 167 Conn. 10, 355 A.2d 49 (1974)); Davis v. State, 308 So.2d 27 (Fla.1975); Ballard v. State, 131 Ga.App. 847, 207 S.E.2d 246 (1974); People v. Lambrechts, 411 Ill. App.3d 729, 355 N.E.2d 53 (1976); Watson v. State, 300 N.E.2d 354 (Ind.1973); State v. Fisher, 223 N.W.2d 243 (Iowa 1974); State v. Lloyd, 291 Minn. 528, 190 N.W.2d 123 (1971); State v. Wolske, 280 Minn. 465, 160 N.W.2d 146 (1968); State v. Farris, 320 A.2d 642 (N.H.1974); State v. Thomas, 61 N.J. 314, 294 A.2d 57 (1972); Commonwealth v. Sutherland, 234 Pa.Super. 520, 340 A.2d 582 (1975); Commonwealth v. Barrett, 223 Pa.Super. 163, 299 A.2d 30 (1972); Fed.Rule Crim.Proc. 11(e); Illinois Supreme Court Rule 402 (1970); ABA Standards,

The Function of the Trial Judge, § 4.1 Commentary (Approved Draft, 1972); ABA Standards, Pleas of Guilty, Proposed Revisions § 2.1(a)(ii)(5) and Commentary (Approved Draft, 1968); ALI Model Code of Pre-Arraignment Procedure, §§ 350.5 and 350.6 and Commentary (1975); 8 J. Moore’s' Fed.Prac. §§ 11.01 et seq. (1977).

To the extent that Brown v. State, 485 S.W.2d 424 (Mo.1972) differs with the rule hereinbefore announced, it is no longer to be followed. With respect to the outline for conducting a guilty plea proceeding suggested in the concurring opinion in Flood v. State, 476 S.W.2d 529, 535 (Mo.1972), the rule herein adopted should be added thereto.

This decision is to apply to the instant case and prospectively only.

The cause is remanded and the accused is remanded to the trial court for the entry of a new plea to the state’s charge.

MORGAN, C. J., BARDGETT, DONNELLY and RENDLEN, JJ., and HOUSER, Special Judge, concur.

FINCH, J., concurs in result in separate opinion filed.

SIMEONE, J., not participating because not a member of the Court when cause was submitted.

OPINION CONCURRING IN RESULT

FINCH, Judge.

I agree that under the facts of this case movant should be given an opportunity to withdraw his plea of guilty and plead anew. However, I would not amend Rule 27.25, V.A.M.R. by judicial decision without simultaneously actually amending the rule itself. To leave Rule 27.25 as it presently reads, while articulating a more expanded rule by judicial decision, will lead to confusion and mistake which is avoidable if the applicable rule is amended to spell out procedure and requirements.

What the principal opinion proposes without so stating is the adoption of the provisions of Rule 11(e)(4) of the Federal Rules of Criminal Procedure except for the reference therein to pleas of nolo contendere. Our standing Committee on Rules, chaired by Judge Cullen Coil, recommended in an earlier report that this court do precisely that. The recommendation was a part of a proposed revision of all of our rules of criminal procedure. The court delayed action thereon for the purpose of determining what, if any, changes therein would be required by reason of the adoption of the new Judicial Article and the new Criminal Code. I would go ahead at this time and at least act on and adopt the proposed new rule with reference to pleas and the withdrawal of pleas of guilty.

      . A second issue was raised on this appeal concerning whether defendant had knowingly and voluntarily waived his right to counsel at his guilty plea proceeding. Because our disposition of this case is to remand for entry of a new plea on other grounds, we need not consider the allegations concerning the waiver. The state, in its brief and on oral argument, insisted that the question concerning the guilty plea process was not before this court because it was not raised in appellant’s 27.26 motión and arose only as a result of the dissenting opinion of Dowd, J., in the court of appeals, and first appeared in appellant’s application for transfer here. Appellant alleged in his 27.26 motion that he believed that the prosecutor’s promise of probation was binding on the court and that he was unaware that the trial court was not bound by the “deal”. The transcript shows that until the very last moment the defendant was harboring the idea that while the judge was not bound by the prosecutor’s recommendation, the judge had not rejected it and it still was an open possibility. When combined with appellant’s allegations, this is enough to permit us, on review, to consider whether the guilty plea procedure used in this case is inherently unfair.

      . “Anytime you go into the criminal process, whether it involves a decision to plead guilty or to go to trial, that process is fraught with certain risks that you take. And there are no guarantees; you don’t know whether the jury is going to give you ten years or twenty years. All you know is what the range of punishment is and what the possibilities and potentialities are. Now, I may agree that if the record showed here conclusively that at the time the court began the whole proceeding, it had looked at the case and said: ‘There is no way I’m going to give this man probation’ — but if it allowed him to proceed with that expectation, perhaps that would be fundamentally unfair. I don’t know that there are any cases that talk about it.” We agree with counsel’s inclination as to what would be fundamentally unfair, but see no reason why such a situation should prevail only if the trial judge rejects the bargain “at the time the court began the whole proceeding.”

      . This is our present rule governing the withdrawal of pleas of guilty.

      . The provision recommended by the committee reads as follows:

        “Rejection of a Plea Agreement. If the court rejects the plea agreement, the court shall, on the record, inform the parties of this fact, advise the defendant personally in open court or,
      on a showing Of good cause, in camera, that the court is not bound by the plea agreement, afford the defendant the opportunity to then withdraw his plea, and advise the defendant that if he persists in his guilty plea, the disposition of the case may be less favorable to the defendant than that contemplated by the plea agreement."


author: FINCH, Judge.

text:
    McKAY BUICK, INC., a'corporation, and Gilbert Buick, Inc., a corporation, Plaintiffs-Respondents, v. Robert F. LOVE, Chairman, and Stephen Snyder, and Tom Otto, Members of the Tax Commission of the State of Missouri, Defendants-Appellants.
    No. 60518.
    Supreme Court of Missouri, en banc.
    Sept. 12, 1978.

      John D. Ashcroft, Atty. Gen., Philip R. Baker, Asst. Atty. Gen., Jefferson City, for defendants-appellants.
    David Brydon, Kenneth R. Satterly, Hawkins, Brydon & Swearengen, P. C., Jefferson City, for plaintiffs-respondents.
    Stanley P. Christopher, III, Deputy County Counselor, Kansas City, James H. White, Thomas W. Wehrle, Clayton, for amici.
   FINCH, Judge.

This is an appeal from a declaratory judgment wherein the trial court held that § 150.040, RSMo Supp.1976, a new statute enacted in 1976 to impose an ad valorem tax on new motor vehicles, is constitutional and that § 137.115, RSMo Supp.1973 is applicable to the valuation established in § 150.040 in determining the assessed valuation to which the applicable tax rate should be applied. Defendants appealed to this court which has jurisdiction because construction of a revenue law and construction of provisions of the Missouri Constitution are involved. We reverse for the reason that we conclude that § 150.040.2 violates the provisions of Mo.Const. art. X, § 4(b).

In 1975 this court held unconstitutional § 150.010, RSMo Supp.1974 which imposed an ad valorem tax on new and used motor vehicles held for use and sale by motor vehicle dealers. (McKay Buick, Inc. v. Spradling, 529 S.W.2d 394 (Mo. banc 1975), hereinafter referred to as McKay I.) In its next session, the legislature enacted §§ 150.035 and 150.040 which impose an ad valorem tax, equal to that imposed on real estate, on goods, wares and merchandise of merchants. Section 150.040.1 covers the imposition of the tax on goods, wares and merchandise other than new motor vehicles. It is based on the highest amount thereof which merchants have in their possession or control, whether owned or consigned, at any time between the first Monday in January and the first Monday in April in each year. Section 150.040.2 provides for the tax on new motor vehicles. It states:

“Merchants shall pay an ad valorem tax equal to that which is levied upon real estate on new motor vehicles. The inventory valuation for assessment purposes for the ad valorem tax on new motor vehicles shall be nine and one-half percent of the gross amount received from sales by merchants for new motor vehicles sold by them from January first through March thirty-first of each year

In response to an inquiry by the State Tax Commission, the Attorney General rendered opinion No. 64 dated March 17, 1977, wherein he expressed the view that § 137.-115, which provides generally that real and tangible personal property shall be assessed for purposes of ad valorem taxation at thirty-three and one-third percent of its true value in money, does not apply to the inventory valuation established for new motor vehicles by § 150.040.2. Plaintiffs, who are automobile dealers, then brought this action wherein they sought to have the court declare that § 137.115 should be applied to the inventory valuation established by § 150.040 in order to establish the figure on which the tax would be computed. Defendants, in addition to filing an answer to that contention, filed a counterclaim wherein they sought a declaration that § 150.040.2 violates Mo.Const. art. X, §§ 3, 4(a) and 4(b) and is unconstitutional.

The only witness called by plaintiffs was Mr. Ralph J. Kalberloh, executive vice-president of the Missouri Automobile Dealers’ Association, who caused Senate Bill 828 to be introduced in 1976. He testified that prior to that time assessments of automobile dealers were not uniform, but varied from county to county. As a result, dealers in one county were paying substantially higher taxes than a competing dealer in an adjoining county. This bill sought to establish a fair and equitable method of valuing inventory whereby dealers would pay the tax on the same basis. The method employed in the statute was to use a percentage of gross receipts from the sale of new motor vehicles during a specified three months period. He explained that some areas of the state will receive less tax income than before while others will receive more, but that on a statewide basis the new bill can be expected to produce more tax than in the past.

Defendants called no witnesses and introduced no evidence other than the Attorney General’s opinion dated March 17, 1977.

A duly enacted statute is presumed to be constitutional unless shown to be otherwise, Hull v. Baumann, 345 Mo. 159, 131 S.W.2d 721 (1939), and the burden of proving unconstitutionality is on the one asserting it. Walters v. City of St. Louis, 364 Mo. 56, 259 S.W.2d 377, 386 (banc 1953). However, this rule as to the burden of proof has no application where, without the necessity for extraneous evidence, it appears from the provisions of the act itself that it transgresses some constitutional provision. An example of such a case is McKay I. In that case the defendants (Director of Revenue and State Tax Commission) asserted in their answer that § 150.010, RSMo Supp. 1974 was unconstitutional because it violated Mo.Const. art. X, § 4(b). (They also alleged violation of Mo.Const. art. X, §§ 3 and 4(a) but the court did not reach those questions.) Defendants offered no testimony. Hence, there was no evidence from which to ascertain whether defendants had sustained their burden of proof to establish that the statute was unconstitutional. Even so, this court, based on an analysis of the provisions of § 150.010, held it to be unconstitutional. The statute provided for an ad valorem tax of $2.43 on each new motor vehicle and $1.50 on each used motor vehicle, regardless of make or model or size. It did so without assessment of the motor vehicles at their value or such percentage thereof as might be fixed by law. The court held that in eliminating assessment and the value factor, the statute violated the requirements of Mo.Const. art. X, § 4(b) which requires that tangible personal property be assessed for property tax purposes at its value or such percentage thereof as may be fixed by law. Thus, the court held the act unconstitutional on the basis of what was readily and clearly apparent from the provisions of the statute itself without requiring any other evidence.

As previously noted, defendants in this case offered no evidence relative to constitutionality of § 150.040.2. They did not undertake to sustain in that manner their burden of proving the statute is unconstitutional. Therefore, they are not entitled to a ruling that it is unconstitutional unless it is readily and clearly apparent from an examination of its provisions that it violates one of the constitutional provisions pleaded by defendants.

In providing for the ad valorem tax on new motor vehicles, § 150.040.2 makes no reference to the number of vehicles owned, possessed or controlled by the dealer at any time. Such ownership, possession or control is not a determining factor. Instead, the tax is computed entirely on the basis of gross receipts from the sale of new motor vehicles between January first and March thirty-first of each year. One dealer might have substantially more automobiles on hand during this period than some other dealer and yet, due to such things as less effective sales efforts, strikes, adverse weather or other factors, have gross receipts substantially equal to those of a dealer with fewer automobiles. In that event they would pay the same amount of tax. In such a situation the dealers obviously are not paying a tax based on the value of motor vehicles owned or possessed or controlled during the specified period. Assessment of those vehicles does not occur. Instead, the tax definitely is based on gross receipts. The fact that § 150.040.2 specifies nine and one-half percent of gross receipts for the period does not alter the fact that it is a tax based entirely on gross receipts. This would still be true if it specified five percent or fifty percent or one hundred percent of gross receipts from sales.

In Viquesney v. Kansas City, 305 Mo. 488, 266 S.W. 700 (banc 1924), this court considered the nature of a tax based on gross receipts. In that case plaintiff sought to enjoin collection of taxes due under ordinances which levied various taxes, each of which was described as a license tax. The cost of the various licenses was established by different formulas, each of which was based upon gross receipts, or volume of business done by the taxpayer. For example, a tax of one cent per gallon was imposed on gasoline sold by Viquesney at his garage. He claimed that these were actually ad valorem taxes rather than license or excise taxes and that they were unconstitutional because they violated Mo.Const. art. X, § 4 (1875) which required that property be taxed in proportion to its value. In affirming the action of the trial court in denying plaintiff relief, the court said at 702:

“The first question for determination is whether the tax of 1 cent a gallon on the gasoline sold by the dealer is a property tax or an excise or occupation tax. Where a tax is imposed and is measured by the amount of business done or the extent to which the privilege is conferred or exercised by a taxpayer, irrespective of the value of his assets, it is an ‘excise tax.’
“In the present case the tax is in no sense an ad valorem tax. There is no assessment of the property owned by the taxpayer; it would not matter how much gasoline he owned at any particular time, or whether he owned any gasoline at all. It is measured by the volume of his business, without any regard to the amount of gasoline on hand. . . . Therefore it is not a tax on property and does not come within the requirement of section 4, art. 10, of the Constitution, requiring property to be taxed in proportion to its value.”

In this case, as in Viquesney, the basis of the tax is not the value of the motor vehicles on which it is levied. There is no assessment of those vehicles as Mo. Const, art. X, § 4(a) requires for an ad valorem tax on property. The fact that § 150.040.2, in specifying a valuation based on a percentage of gross receipts, labels it an “inventory valuation for assessment purposes” does not alter the real basis on which the tax is determined. The use of those words does not result in the tax being based on an assessment of new motor vehicles owned, possessed or controlled by the dealer or in those vehicles being taxed in proportion to their value. The formula is based entirely on gross receipts. If the dealer’s business was shut down and made no sales for some reason for all of the three months period, it would owe no tax even though it owned, possessed or controlled new motor vehicles during the period. Section 150.-040.2 conflicts with Mo.Const. art. X, § 4(b) and is unconstitutional.

In their brief and in oral argument plaintiffs call attention to our decision in Xerox Corporation v. State Tax Commission, 529 S.W.2d 413 (Mo. banc 1975), arguing that if the formula approved therein is constitutional, then a fortiori, the method specified in § 150.040.2 must be so. We do not agree. In Xerox the State Tax Commission established a formula for valuing rental machines leased by Xerox at 40 times the average monthly rental thereon, divided by 3. Determining value of property based on the rentals it produces is a reasonable method of arriving at a value of property for tax purposes particularly where, as in Xerox, the property involved is not priced for sale and is not offered for sale. Xerox is not authority for approving § 150.040.2.

Having so concluded, we need not and do not reach the question of whether § 150.-040.2 violates the provisions of Mo.Const. art. X, §§ 3 and 4(a), nor do we decide the question of whether the “inventory valuation for assessment purposes” specified in § 150.040.2, if valid, would be reduced by applying thereto the percentage formula provided in § 137.115.

The judgment on the petition and the judgment on the counterclaim are reversed and the cause is remanded to the circuit court with directions to enter judgment in accordance with the views herein expressed.

MORGAN, C. J., BARDGETT, DONNELLY, RENDLEN and SEILER, JJ., and HOUSER, Special Judge, concur.

SIMEONE, J., not participating because not a member of the court when cause was submitted.

      . Laws 1976, p. 662, S.B. 828, § 1.

      . Laws 1973, p. 213, C.C.S.H.B. 592, § 1.

      . Mo.Const. art. X, § 4(b) provides in pertinent part:
      “Property in classes 1 and 2 and subclasses of class 2, shall be assessed for tax purposes at its value or such percentage of its value as may be fixed by law for each class and for each subclass of class 2.”
      Classes 1 and 2, referred to in § 4(b), are (1) real property and (2) tangible personal property. Mo.Const. art. X, § 4(a).

      . Laws 1974, p. 782, S.B. 402, § 1.

      . Laws 1976, p. 662, S.B. 828, § 1.

      . Laws 1974, p. 782, S.B. 402, § 1.