author: AKIN, Justice.

text:
    Pat SLAVIN, Appellant, v. CITIZENS STATE BANK OF FROST, Texas, Appellee.
    No. 19561.
    Court of Civil Appeals of Texas, Dallas.
    June 23, 1978.

      Nathan Allen, Jr., Allen & Clements, Dallas, for appellant.
    Bill Walls, Roberts, Walls & Boydston, Dallas, for appellee.
   AKIN, Justice.

Citizens State Bank sued Pat Slavin to recover judgment on a promissory note. A motion for summary judgment filed by Citizens was granted and from this judgment Slavin appeals. Because we hold that the bank has sustained its burden of proof and because appellant has failed to support his affirmative defense of offset by proper summary-judgment evidence, we affirm the judgment.

Slavin first argues that it was error for the trial court to grant appellee’s motion for summary judgment because the bank failed to establish by competent summary-judgment proof a right to recover as a matter of law where it failed to attach a certified copy of the promissory note. Attached to the bank’s motion was the affidavit of Ted Green, its president, reciting that a certified copy of the note was attached to the bank’s first amended original petition. In fact, no certified copy of the note was attached to the amended petition, but one was attached to Green’s affidavit. Slavin argues that since Green’s affidavit referred to a document that did not exist, the bank failed in its proof to show that it was the owner and holder of any promissory note. Although Slavin made no objections in the trial court to the sufficiency of the summary-judgment proof, he now asserts that no objection was necessary on this ground in order to preserve his right to complain of this defect on appeal. He recognizes the rule in Youngstown Sheet & Tube Co. v. Penn, 363 S.W.2d 230 (Tex.1963), and in Jones v. McSpedden, 560 S.W.2d 177 (Tex.Civ.App.—Dallas 1978, no writ), to the effect that the failure to object at trial to defects of form waives the right to assert those matters as error on appeal, but now argues that they are not applicable. In this respect, he contends that those cases presuppose that an affidavit refers to an existing document but simply fails to comply with Tex.R.Civ.Proc. Rule 166-A. Thus, he urges that since here the affidavit refers to a document which does not exist, it was not necessary to object in the trial court. We cannot agree. A certified copy of the note was before the trial court, and is before us, although it was correctly attached to the affidavit rather than the petition as the bank alleged. This'was a defect of form which could have ■ been cured at trial if Slavin had pointed'it out to the trial court. Since he failed to objéct to .this defect in form in the trial coüít^wé/hold that he has waived his right to ásísert this point on appeal. Youngstown Sheet & Tube Co. v. Penn, supra ; Jones v. McSpedden, supra.

Slavin next argues that the trial court erred in granting summary judgment because his affidavit in opposition to the motion for summary judgment raised a fact issue as to whether offsets, credits and payments made to the bank were credited to the note. The bank’s affidavit recited that all just and legal offsets, credits and payments had been allowed. Slavin failed to plead payment in any form but in his affidavit he states that all legal offsets, credits and payments had not been allowed. Although his affidavit does state that when the loan was made it was agreed that proceeds from the sale of cattle by his agent would be applied as partial payment to the balance due on the note and that such proceeds were in fact paid over to the bank, the amounts of any such payments were not shown. A plea of payment is an affirmative defense and, consequently, in order for appellant to avoid summary judgment, it was necessary that his affidavit present summary-judgment evidence on all of the elements necessary to his affirmative defense. Seale v. Nichols, 505 S.W.2d 251 (Tex.1974); “Moore” Burger, Inc. v. Phillips Petroleum Co., 492 S.W.2d 934 (Tex.1973); Newsom v. Starkey, 541 S.W.2d 468 (Tex.Civ.App. — Dallas 1976, writ ref’d n. r. e.). Slavin has failed to present evidence on every element of his affirmative defense since his affidavit does not recite the amount of credit that should have been given. Thus, his affidavit is no more than a conclusion and does not establish his right to any credits on the note. To be effective, his affidavit should have gone further and stated what the credits and offsets were. Tex.R.Civ.P. 95 provides that where a defendant desires to prove payment, he must file an account stating distinctly the nature of the payment along with his answer. In Harrison v. Leasing Associates, Inc., 454 S.W.2d 808 (Tex.Civ.App.—Houston [14th Dist.] 1970, no writ), that court stated that a plea of payment must specify what the credits and offsets were. Accordingly, we hold that a necessary element of Slavin’s affirmative defense of partial payment is lacking. Seale v. Nichols, supra; “Moore” Burger, Inc. v. Phillips Petroleum Co., supra.

Neither is the rule in Womack v. Allstate Insurance Co., 156 Tex. 467, 296 S.W.2d 233 (1957), helpful to Slavin. In Womack the supreme court held that the failure to plead a defense is not fatal if the summary-judgment evidence establishes facts which if true would establish a defense. In Wom-ack, the affidavit raising the defense contained all of the elements of that defense. The rule in “Moore” Burger, Inc. and Seale still requires appellant’s affidavit to show by summary-judgment evidence all the elements necessary to his affirmative defense. Here, Slavin did not plead payment. His affidavit avers that he had made payments but does not set forth summary-judgment evidence raising all the elements necessary to establish his affirmative defense of payment in that no amount is set forth. Accordingly, we hold that he failed to establish his affirmative defense.

Our holding is supported by Smith v. Crockett Production Credit Association, 372 S.W.2d 956 (Tex.Civ.App.—Houston 1963, writ ref’d n. r. e.), a similar case factually. In that case, plaintiff sued two defendants on a promissory note. Neither defendant pleaded payment but an affidavit of one of the defendants recited that “the plaintiff had not given this defendant credit for all the offsets and payments that had been made.” Plaintiff’s motion for summary judgment was granted and on appeal defendants argued that there was a fact issue as to whether all payments that were made had been credited. The court of civil appeals affirmed the granting of the summary judgment. Although that court recognized the Womack rule, it held that appellant’s affidavit stating that all offsets and credits had not been allowed was but a conclusion and that it should have gone further and specified what the credits and offsets were. Similarly, Slavin’s affidavit should also have stated more fully what the credits and offsets were. In the absence of an averment of the amount of the offset claimed, the affidavit does not raise all the necessary elements of the plea of payment and thus fails to sustain his burden of proof on his affirmative defense. Accordingly, we affirm.

GUITTARD, C. J., not sitting.

      . Summary judgment was granted prior to the effective date of the amendments to rule 166A which became effective on January 1, 1978. We also note that counsel for appellant on this appeal was not appellant’s counsel in the trial court.


source: Caselaw Access Project

license: Public Domain

text:
    F. M. ANGUS, Appellant, v. AIR COILS, INC., Appellee.
    No. 19448.
    Court of Civil Appeals of Texas, Dallas.
    June 28, 1978.
    Ralph W. Currie, Dallas, for appellant.
    Don Wilmarth, Dallas, for appellee.
   AKIN, Justice.

Air Coils, Inc., appellee, sued appellant, Angus, individually and doing business as Texas Refrigeration and Engineering Co., for an indebtedness of Texas Refrigeration, a corporation no longer in existence. The trial court found that Texas Refrigeration and Engineering Co. was the alter ego of appellant and held him personally liable to Air Coils, Inc. Angus appeals. The principal question presented is whether the findings of fact support the trial court’s conclusion that Texas Refrigeration was the alter ego of appellant. We hold that the findings do not support such a conclusion. Accordingly, we reverse and render.

The material facts as found by the trial court are undisputed. The first business contact between the parties occurred on August 22, 1969, when Air Coils received a purchase order from Texas Refrigeration and Engineering Company to fabricate an air coil condenser and ship it to a church in San Jose, California. Air Coils fabricated the unit and payment was made by Texas Refrigeration and Engineering Company. Apparently, a problem arose with respect to the air coil condenser because Texas Refrigeration and Engineering Company by purchase order dated June 25, 1970, requested Air Coils to modify and repair the original equipment. This purchase order was in the name of Texas Refrigeration and was signed by appellant Angus in his representative capacity as president. On August 31, 1970, Air Coils invoiced Texas Refrigeration for the sum of $1,021.25 for labor and materials expended in repairing the unit. This invoice was never paid because Angus did. not believe that Texas Refrigeration owed this money and because he thought Air Coils had collected this sum directly from the church.

On October 20, 1971, Angus filed Articles of Dissolution with the Secretary of State of Texas and Texas Refrigeration was dissolved on October 21,1971. In the Articles of Dissolution, Angus swore that all liabilities of the corporation had been discharged or adequate provision had been made for paying all liabilities. With respect to the dissolution, the trial court found that Angus had not acted overtly in a fraudulent manner, but concluded that Angus violated § 6.04(A)(2) of the Texas Business Corporation Act (Vernon Supp.1978) by not sending notice to Air Coils as well as § 6.06(A)(4) by representing that all debts were paid when he knew of Air Coil’s invoice of January, 1971.

As to the earlier history of the corporation, the trial court found that Angus had operated as a professional engineer from 1946 to 1958 when he incorporated his business as Texas Refrigeration and Engineering Company. Angus, his wife and son were the only directors of the corporation. The corporation issued 419 shares to Angus, one to his wife, and twenty to his son, totalling 440 shares. The trial court found that no notice was given in 1958 that he had incorporated his business. Furthermore, the corporation used one of Angus’ patents, and was to pay him a royalty of five percent, which was never paid. The court also found that Angus’ wife had loaned the corporation $13,650, that the corporation owed Angus $16,000, and that Angus’ son had loaned the corporation $4,750. None of these loans were reflected in the Articles of Dissolution.

Based upon these facts, the trial court concluded that Angus was liable individually because the corporation was his alter ego. In reaching this conclusion, the court noted that “the corporate entity, if allowed to stand, would promote an injustice to Air Coils, and although the corporation was adequately capitalized in 1958, the infusion by defendant (Angus), his wife and son, of additional capital without receiving a note in exchange therefor indicates that by 1971 the corporation was inadequately capitalized. The defendant F. M. Angus had individual control and managed the entity in such a manner that it became his alter ego and although some corporate formalities were adhered to by the corporation, the facts of this case indicate that F. M. Angus treated the corporation as his alter ego.”

Two interrelated questions are presented by these findings of fact and conclusions of law of the trial court. First, is the question of whether the facts as found, even if supported by the evidence, justify the legal conclusion that the dissolved corporation was the alter ego of Angus, thus making Angus liable personally for an obligation of the corporation. A second question is whether a violation of sections 6.04(A)(2) and 6.06(A)(4) of the Texas Business Corporation Act (Vernon Supp.1978) is evidence that Angus treated the corporation as his alter ego.

With respect to the question of whether Texas Refrigeration Company was the alter ego of Angus, we hold that, as a matter of law, it was not. Courts are justifiably reluctant to disregard the corporate entity and impose individual liability unless the corporate entity is employed to defraud existing creditors of the shareholder, to circumvent a statute, to evade an existing obligation, to protect crimes or to achieve or perpetuate a monopoly. Pace Corporation v. Jackson, 155 Tex. 179, 284 S.W.2d 340 (1955); Hanson Southwest Corp. v. Dal-Mac Construction Co., 554 S.W.2d 712, 718 (Tex.Civ.App.—Dallas 1977, writ ref’d n. r. e.). Additionally, there must be a showing of bad faith or fraud. Holmes v. Clow, 533 S.W.2d 99, 106 (Tex.Civ.App.—Tyler 1976, no writ). None of these extraordinary circumstances exist here so as to justify the trial court’s conclusion that Texas Refrigeration was the alter ego of Angus under the standards enunciated in Hanson v. Dal-Mac, supra. The trial court found no bad faith or fraud on the part of Angus, and we cannot deem such findings as made when no such evidence was introduced. Tex.R. Civ.P. 299. There is no contention and no finding that Air Coils was deceived by Angus as to the entity with which it was dealing. In fact, the evidence shows that Air Coils was initially put on notice it was dealing with a corporation when it received purchase orders from Texas Refrigeration since Angus signed the orders as president. An employee of Air Coils who dealt with Angus testified that Angus held himself out as president of Texas Refrigeration. Indeed, the court specifically found that the invoice prior to the one now in question was paid by Texas Refrigeration. The fact that Angus and his family put their money into the corporation, presumably to keep it solvent, is not the kind of evidence that justifies piercing the corporate veil. Radio KBUY, Inc. v. Lieurance, 390 S.W.2d 16, 20 (Tex.Civ.App.—Amarillo 1965, no writ). Similarly, the fact that the majority of the corporation’s stock was owned by one person does not establish that the corporation is that person’s alter ego. Commonwealth of Massachusetts v. Davis, 140 Tex. 398, 168 S.W.2d 216, 224 (Tex.1943); Hanson Southwest v. Dal-Mac, supra, at 716; Evans v. General Insurance Co. of America, 390 S.W.2d 818, 822 (Tex.Civ.App.—Dallas 1965, no writ).

Furthermore, courts have been more stringent in refusing to disregard the corporate entity in contract cases than in tort cases because the injured party in a contract case had the opportunity to select the entity with whom he contracted; no such selection is afforded a plaintiff in a tort case. Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex.1975). Here, Air Coils knew it was dealing with a corporation but nevertheless chose so to do. Thus, since Air Coils chose to deal with Texas Refrigeration Company and since that corporation failed to pay an invoice, the reasonable question arises as to whether Air Coils should be permitted to impose that liability on Angus individually. Under contract law, Air Coils clearly could not impose liability individually on Augus for the debt of the corporation. Consequently, Air Coils seeks to use the alter ego doctrine to collect from Angus the debt of the corporation. This it cannot do under these facts. We hold, therefore, that the. trial court erred in concluding that the corporation was the alter ego of Angus.

To hold as Air Coils would have us do would erode the concept of a corporation as a separate legal entity, apart from its shareholders, directors, and officers. Corporations would then become meaningless. Consequently, the juridical concept of the corporate entity should be disregarded only where the sacrifice is essential to defending or upholding a strongly accepted public policy, such as the antitrust laws, the prevention of crime or fraud. Bell Oil & Gas Co. v. Allied Chemical Corp., 431 S.W.2d 336, 339 (Tex.1968). No such extraordinary reasons exist here for ignoring the corporate entity.

Neither do we agree with Air Coils that violations of certain provisions of the Texas Business Corporation Act makes the corporation Angus’ alter-ego. In this respect, the trial court concluded that the failure of Angus to send notice of dissolution to Air Coils violated § 6.04(A)(2) of the Texas Business Corporation Act (Vernon Supp.1978), that Angus’ statement filed with the Secretary of State that no debts of the corporation remained unpaid violated § 6.06(A)(4), and that the actions of Angus in not disclosing the existence of the dissolution of the corporation until such time as the statute of limitations and the period of corporate survival had run would be an injustice to Air Coils. Air Coils argues that these violations evidence a course of conduct of bad faith showing that Angus disregarded the corporate entity so as to make it his alter-ego. We cannot agree. Even assuming that a violation of the Texas Business Corporation Act was shown, it still must be shown that the corporate entity was used as a means of perpetrating a fraud or is relied upon to justify a wrong to hold Angus liable personally. We conclude, therefore, that violations of these provisions of the Texas Business Corporation Act are not grounds, in and of themselves, to disregard the corporate entity on an alter-ego theory and to impose liability individually for a corporate debt on a former shareholder. Accordingly, the judgment of the trial court is reversed and judgment here rendered that Air Coils take nothing against Angus.

GUITTARD, C. J., not participating.


author: ROBERTSON, Justice.

text:
    Gloria WARD, Appellant, v. CHARTER OAK FIRE INSURANCE COMPANY, Appellee.
    No. 19567.
    Court of Civil Appeals of Texas, Dallas.
    June 30, 1978.

      Ralph C. Jones, Carter, Jones, Magee, Rudberg, Moss & Mayes, Dallas, for appellant.
    David R. Noteware, Thompson, Knight, Simmons & Bullion, Dallas, for appellee.
   ROBERTSON, Justice.

This is a worker’s compensation case. Gloria Ward appeals from the trial court’s judgment sustaining Charter Oak Fire Insurance Company’s plea to the jurisdiction and dismissing the cause. The dismissal was based upon Ward’s failure to timely file her notice of appeal from a ruling of the Industrial Accident Board. Since we conclude that Ward has not complied with the requirements of the worker’s compensation laws, we affirm.

The sole question on this appeal is whether Ward has complied with the provisions of Section 5 of Article 8307, Texas Revised Civil Statutes, which provides, in applicable part:

Any interested party who is not willing and does not consent to abide by the final ruling and decision of [the Industrial Accident Board] shall, within twenty (20) days after the rendition of said final ruling and decision by said Board, file with the Board notice that he will not abide by said final ruling and decision.

In the present case, the Board entered its award on June 28, 1977, and Ward mailed her notice of appeal to the Board on July 12, 1977. The envelope containing the notice was received in Austin on July 15,1977, marked “postage due: 11 cents” and returned to the sender. Charter Oak concedes that no postage was actually due, and that the letter was thus erroneously returned. The letter was returned to the offices of Ward’s attorneys on July 18,1977. Again, her attorneys mailed the notice to the Board. The notice was finally received by the Board on July 20, 1977, two days after the expiration of the twenty-day filing period.

Ward argues that she has substantially complied with the requirements of Article 8307 by using due diligence in mailing her notice to the Board a full six days before it was due. She urges that she should not be penalized for the error of the postal authorities in improperly refusing to deliver the letter. In support of this contention, she cites Tate v. Standard Accident Ins. Co., 32 S.W.2d 932 (Tex.Civ.App.—Beaumont 1930, writ ref’d) and Travelers Ins. Co. v. Johnson, 131 S.W.2d 242 (Tex.Civ.App.—Beaumont 1939, writ dism’d, jdgmt. cor.), which hold that when an aggrieved party uses reasonable diligence to comply with the timing requirements of Article 8307 by mailing the notification in ample time for it to be received and filed by the Board, the party is not to be charged with any delay in delivery caused by circumstances beyond his control. These decisions were based upon the principle that the worker’s compensation laws are to be liberally construed to effectuate the remedies which they grant.

Although Ward’s argument is persuasive, it cannot be accepted. In 1938, our supreme court made its last definitive statement on this subject by refusing the writ of error in Fidelity & Casualty Co. of New York v. Millican, 115 S.W.2d 464 (Tex.Civ. App.—San Antonio 1938, writ ref’d). In that case, a party mailed his notice of appeal to the Board in time for it to be timely filed; however, the notice was not delivered to the Board until the twentieth day, which was a Sunday. The Board filed the notice the following day. On appeal from a judgment favorable to the claimant, the insurer argued that the trial court lacked jurisdiction to render its judgment because of the claimant’s failure to timely file notice of appeal. The San Antonio Court of Civil Appeals agreed, stating:

The Workmen’s Compensation Act having created the rights to be enforced and provided the remedy therefor; each step in the progress of the maturity of the claim from the time of the injury to its final adjudication is a mandatory requirement, necessary to the exercise of jurisdiction by the first and succeeding statutory agencies. (115 S.W.2d at 465) (emphasis added)

As we noted above, this holding was specifically approved by our supreme court when the writ of error filed by the claimant was unconditionally refused. This case appears to impliedly overrule the contrary rationale expressed in Tate v. Standard Accident Ins. Co., supra, which was decided eight years earlier. Consequently, we must reluctantly follow the rule set forth in Miliican, although, in our view, that rule is harsh and unjust under the facts here presented and perhaps should be modified.

Moreover, even if Tate and Johnson can be sufficiently distinguished from Miliican to avoid invalidation, they still do not control this case. In both cases, the failure of the Board to receive notice was not due to any fault of the claimant, but rather resulted from fault attributable to the Board. No such showing is made here. Ward blames the postal authorities for failing to properly deliver the notice. However, since Ward selected the mails as her mode of delivery, the postal authorities became her agent, and she is thus bound by their failure to timely deliver the notice. American Motorists Ins. Co. v. Box, 531 S.W.2d 401 (Tex.Civ.App.—Tyler 1976, writ ref’d n. r. e.). Therefore, we conclude that this case is controlled by the line of cases holding that strict compliance with the timing requirements set forth in art. 8307 is required. See Mingus v. Wadley, 115 Tex. 551, 285 S.W. 1084 (1926); American General Insurance Co. v. Kohn, 425 S.W.2d 688 (Tex.Civ.App.—Austin 1968, no writ); Taylor v. Royal Indemnity Co., 276 S.W.2d 412 (Tex.Civ.App.—Galveston 1955, no writ); cf. American . Motorists Ins. Co. v. Box, supra (late filing of petition).

Contrary to Ward’s arguments, this timing requirement is not one that can be extended by rule 5 of the Texas Rules of Civil Procedure, for by its terms, that rule only applies to matters “relating to taking an appeal or writ of error from the trial court to any higher court . . . ” (Emphasis added). Accordingly, this rule is not applicable to proceedings instituted to challenge administrative orders in the trial court. See Taylor v. Royal Indemnity Co., supra, at 414 (Hambleton, C. J., concurring).

Since we conclude that, under the authorities, strict compliance with the timing provisions of Article 8307 is required, we must affirm the trial court’s dismissal of the cause. This is an extraordinarily harsh result, and one which we do not personally favor. Nevertheless, we are bound by both legislative mandate and supreme court authority on this point, and as an intermediate appellate court, we must defer to their judgment.

Affirmed.

GUITTARD, C. J., not sitting.


author: GANT, Judge.

text:
    PEABODY COAL COMPANY, Appellant, v. Edgie C. BURKS, James R. Yocom, Commissioner of Labor and Custodian of the Special Fund, and Workmen's Compensation Board, Appellees.
    Court of Appeals of Kentucky.
    March 24, 1978.
    As Modified On Denial of Rehearing June 16, 1978.
    Thomas L. Ferreri, Mills, Mitchell, Turner & Donan, Madisonville, for appellant.
    Sidney H. Hulette, Ruark & Hulette, Morganfield, for appellee, Edgie C. Burks.
    John Riehl, Jr., Asst. Counsel, Dept, of Labor, Louisville, Kenneth E. Hollis, Gen. Counsel, Dept, of Labor, Frankfort, for ap-pellee, Special Fund.
    Before GANT, COOPER and PARK, JJ.
   GANT, Judge.

The appellee and claimant, Edgie C. Burks, filed two separate Applications for Adjustment of Claims with the Workmen’s Compensation Board. The first claim was filed April 8, 1975, alleging total disability from the occupational disease of pneumoco-niosis occurring on October 1,1973, the last day of employment. The second claim was filed April 29, 1975, three weeks after the first claim, alleging total disability from injury occurring on the last day of employment. The Board entered an order holding the injury claim in abeyance until consideration of the occupational disease case and entered an order in the latter case finding the claimant totally disabled due to pneu-moconiosis, awarding $63.00 per week for 425 weeks, apportioned 75% to the Special Fund and 25% to the employer. Ten weeks later the Board entered an order removing the injury claim from the abeyance order and consolidated it with the occupational disease claim. In February, 1977, the Board found the claimant totally disabled from his job-related injury and assessed the entire award against the employer. The Board further ordered that the claimant must draw his compensation' for his injury claim first. The employer appealed, asking that the occupational disease award be paid first for 425 weeks and that the injury award be held in abeyance. The Union Circuit Court dismissed the petition for review and affirmed the opinion and award of the Board. We agree with this action.

The appellant urges four grounds for reversal of the lower court. First, he argues- that the 1972 amendments to the Workmen’s Compensation Law negated the holding of the court in Estep Coal Company v. Ward, Ky., 421 S.W.2d 367 (1967); Beth-Elkhorn Corp. v. Young, Ky., 474 S.W.2d 64 (1971); and Young v. Island Creek Coal Co., Ky., 474 S.W.2d 350 (1971), by redefining compensable injuries. KRS 342.620(1) and KRS 342.610(1). We cannot agree. The amendments referred to still delineate between injury and occupational disease although including the latter in the definition of the former. The reason for this inclusion was obviously to save verbiage and confusion in the other sections of the statute. Injury and occupational disease are treated in the same manner by the statutes but are not the same. They are entirely separate phenomena. Traumatic injuries occur suddenly and usually result in abrupt cessation of work while occupational diseases progress gradually and it is customarily difficult to determine at what point work must cease. When traumatic injuries and ripening of occupational disease occur simultaneously, it is the traumatic injury which causes the claimant to cease work on any particular day. As the court said in Estep Coal Company v. Ward, supra, “[t]he disability for which the employer is liable is that which flows from the accident and which would have flowed from the accident quite apart from the occupational disease feature of the case.” See also Young v. Sturgill, Ky., 445 S.W.2d 442 (1969).

The next three assignments of error can be treated together. Appellant argues that the board is precluded from making a second award, having once made the first award which was not appealed; that the Special Fund is estopped to claim credit against the first award for sums awarded for the injury because of its failure to appeal the first award; and that the claimant elected his remedy by filing the occupational disease claim first and is thus precluded from pursuing the injury claim. In this case the claimant has two separate and distinct injuries. Election of remedies occurs only when a person has two modes of redress for a single occurrence, which modes are contradictory and inconsistent. The claimant is one person and cannot be more than 100% disabled but he is, by law, entitled to pursue his claim for both causes. The first claim was prosecuted to a successful conclusion and there was no need for appeal by either the claimant or the Special Fund. The Special Fund is clearly within its rights to claim as credit against the previous award and its liability therefor any sums awarded to the claimant on account of his injury.

Accordingly, the judgment of the lower court is affirmed.

All concur.


author: MARTIN, Chief Judge.

text:
    Alvester TAYLOR, Movant, v. COMMONWEALTH of Kentucky, Respondent.
    Court of Appeals of Kentucky.
    May 19, 1978.
    As Modified June 2, 1978.
    Timothy T. Riddell, Asst. Public Defender, Frankfort, Ernesto Scorsone, Lexington, for appellant.
    Robert F. Stephens, Atty. Gen., Frankfort, for appellee.
   OPINION AND ORDER

Before the full Court En Banc.

MARTIN, Chief Judge.

This case is before the Court on a motion for clarification. The movant seeks to determine if he should proceed by direct appeal, or whether he must proceed on a motion for discretionary review.

On August 3,1977, a petition was filed in the Fayette County Court, Juvenile Division, charging Alvester Taylor with kidnapping, rape in the first degree, and assault in the first degree. Following a probable cause hearing the juvenile court dismissed the charge of kidnapping. On November 2, 1977, Taylor was adjudicated delinquent by the juvenile court on the remaining two charges and was ordered committed to the Department for Human Resources as a delinquent child until age 21, with a recommendation that he be given the maximum sentence available. On November 7, 1977, Taylor filed an appeal from the juvenile court in the Fayette Circuit Court and requested a trial de novo. On March 10,1978, after conducting a three-day nonjury trial, the circuit court entered “Findings of Fact and Verdict” against Taylor, finding him “guilty of rape in the first degree and assault in the first degree” and “affirmed and reinstated” the judgment of the juvenile court. On March 31, Taylor filed his notice of appeal from the March 10 judgment.

Given the facts and circumstances of the present case we believe that Taylor is entitled to a direct appeal as a matter of right. Amended section 115 of the Kentucky Constitution is a part of the judicial reform, which was ratified in November 1975, and became effective on January 1, 1976. Section 115 guarantees that “[i]n all cases . . . there shall be allowed as a matter of right at least one appeal” and that appeals “shall be upon the record.” In this action the circuit court properly heard Taylor’s appeal from the juvenile court in a de novo proceeding pursuant to RCr 12.06, which applied to all judgments entered in lower courts on or before December 31, 1977. See RCr 12.08. Because Taylor’s appeal to the circuit court was heard de novo, he has not yet had one appeal on the record, as guaranteed by § 115. In fact, it has been said, even in this jurisdiction, that a de novo consideration is not truly an appeal at all but is a redetermination by a different decision-making body. Reeves v. Fries, 292 Ky. 450, 166 S.W.2d 985 (1942).

It should be noted that the judicial amendment itself recognized that this de novo procedure would continue during the transitional period of the lower courts. Section two of the act set forth a schedule of transitional provisions. One provided that until January 1978, when the district courts were to begin operations, the quarterly, county, justices’ and police courts would continue in existence and would “continue to be governed by the present constitution and none of the provisions of this amendment shall apply to them.” Although the district courts are now courts of record, most of their predecessors were not and were allowed to continue in that fashion for the remainder of their existence. Thus appeals from the predecessor courts were necessarily heard de novo, as there was no record for the circuit court to review.

Consistent with our decision is CR 73.-01(2), which now applies to criminal appeals as well as civil appeals. It provides that a motion for review “by the Court of Appeals of an appellate decision of the circuit court, shall be made as provided in Rule 76.20.” CR 76.20 sets forth the procedure for proceeding upon a motion for discretionary review. In this case, the circuit court’s decision was not an “appellate” decision. There was no review of the record, no search for reversible error by the court below, and no determination of whether Taylor received a fair trial. Instead, a new proceeding was conducted, and evidence was taken over a period of three days. On the basis of that evidence the circuit judge concluded that “Alvester Taylor is guilty of rape in the first degree and assault in the first degree.” Under these circumstances, Taylor has not had the benefit of an appeal to determine whether he received a fair trial. He merely had a “second chance,” or a second opportunity to be found delinquent. Under the de novo appeal procedure, error may occur for the first time in the circuit court, and without an appeal on the record there is no opportunity to correct it.

In reaching this decision, we recognize that K.R.S. 22A.020(1), might arguably conflict in part with our conclusion. It states:

Except as provided in section 110 of the constitution, an appeal may be taken as a matter of right to the Court of Appeals from any conviction, final judgment, order, or decree in any case in circuit court, unless such conviction, final judgment, order, or decree was rendered on an appeal from a court inferior to circuit court. [Emphasis added.]

Because we believe that the constitutional direction given to this Court is paramount, we construe “rendered on an appeal from a court inferior to circuit court” as referring only to decisions of the circuit court made while sitting as an appellate review court, and not to those made sitting as a trial court.

Therefore, we shall consider by direct appeal from circuit court all cases decided by the lower courts prior to January 1, 1978, and reviewed de novo by the circuit court. The motion to allow this case to proceed as a direct appeal is GRANTED.

      . § 115. Right of appeal — Procedure.—In all cases, civil and criminal, there shall be allowed as a matter of right at least one appeal to another court, except that the commonwealth may not appeal from a judgment of acquittal in a criminal case, other than for the purpose of securing a certification of law, and the general assembly may prescribe that there shall be no appeal from that portion of a judgment dissolving a marriage. Procedural rules shall provide for expeditious and inexpensive appeals. Appeals shall be upon the record and not by trial de novo.


text:
    SHEDD BARTUSH FOODS, Appellant, v. Deleta BRATCHER, James R. Yocom, Commissioner of Labor, and Custodian of Special Fund, and Workmen's Compensation Board of Kentucky, Appellees.
    Court of Appeals of Kentucky.
    May 26, 1978.
    Armer H. Mahan, Jr., Louisville, for appellant.
    Kenneth E. Hollis, Gen. Counsel, Dept, of Labor, Frankfort, John Riehl, Jr., Dept, of Labor, Louisville, for Special Fund.
    Paul K. Murphy, Louisville, for appellee Deleta Bratcher.
    Before MARTIN, C. J., and REYNOLDS and WILHOIT, JJ.
   MARTIN, Chief Judge.

This is an appeal from a judgment of the Jefferson Circuit Court affirming an award by the Workmen’s Compensation Board of a sixty percent disability to the claimant. In seeking review of the Board’s decision in the circuit court, the employer objected to the amount of the award as well as the apportionment of the award. On the appeal now before us, the only issue argued by appellant is the apportionment of liability between the employer and the Commissioner of Labor as Custodian of the Special Fund.

The appellant, Deleta Bratcher, was injured in a work-related accident while employed by appellant Shedd Bartush Foods in Louisville. She was examined by Dr. John Glover, a Nashville, Tennessee orthopedic surgeon, and given a conservative program of rest and muscle relaxants as treatment for her injury. After a period of time, Dr. Glover determined that this medical program was not successful in treating his initial diagnosis that Mrs. Bratcher had suffered a chronic lumbar sprain. Therefore, surgery was performed in July of 1975, at his recommendation. Dr. Glover described the surgical procedure as decompression of the first sacral nerve. He further stated that he would describe the procedure as an operation to remove pressure on a nerve rather than the more commonly described procedure to relieve pain in the back caused by problems connected with the disc. During the operation, Dr. Glover found Mrs. Bratcher had some deformity in the bone structure in the lower part of her back, in the area where her back joins her pelvic bone. Dr. Glover testified further that he did not know if there was a specific medical term or description, other than a congenital deformity, that would describe his observations during the operation. He did state that x-rays would not ordinarily reveal this type of deformity. Specifically, he described his findings as follows:

Her lower vertebras in the lumbar area right above her pelvis were overlapping just like shingles, she didn’t have the normal space between them and the fifth lumbar vertebra on the right was actually deformed and markedly thickened from front to back and this made her back much more susceptible to an injury. It prevented the nerve at that level from having as much space as a normal one does and I feel that her injury twisted this vertebra to the extent that it loosened up and caused continued, repeated pinching of the nerve as she carried out her activities.

Throughout the period of treatment, Mrs. Bratcher had been receiving benefits under workmen’s compensation. Before a final award was made, Mrs. Bratcher was examined by two other orthopedic surgeons. Both physicians performed evaluation examinations and did not prescribe to Mrs. Bratcher any medical treatment for her injuries. A major reason for the evaluation examinations was to determine if Mrs. Bratcher was suffering from some prior medical problem that would shift part of the burden of her workmen’s compensation payments from her employer to the Special Fund.

Dr. Andrew H. Miller, a Nashville, Tennessee orthopedic surgeon examined Mrs. Bratcher and took x-rays of her back and pelvic area. He stated there was a possibility of a preexisting medical condition. He concluded in his testimony, however, that having not seen Mrs. Bratcher before she was operated on by Dr. Glover, he could not now diagnose her initial injury. He testified that the x-rays revealed a prior lami-nectomy. From his examination he could observe the incision made by Dr. Glover, but he did not refute the testimony of Dr. Glover concerning his observations during surgery.

The second evaluation examination was performed by Louisville orthopedic surgeon Dr. Ernest Eggers who was appointed by the Board. K.R.S. 342.121. His testimony was sketchy at best. He stated that Mrs. Bratcher had suffered from no dormant nondisabling condition prior to her job-related injury. He concluded that her present disability was due solely to the lam-inectomy and probable disc operation performed by Dr. Glover.

Disregarding totally the observations of Dr. Glover during surgery, the Board adopted the. theory of Dr. Eggers and found the employer totally liable for the injury to Mrs. Bratcher. We disagree. We believe that the Board was clearly erroneous in totally disregarding the testimony of Dr. Glover. Dr. Glover was the only physician who observed Mrs. Bratcher’s condition. As he testified, the condition was not easily seen on x-rays. When a conflict in evidence arises and the treating physician is in a better position to observe the condition than physicians who perform only evaluation examinations, then his testimony must be given greater weight than theirs.

The proposed contribution by the Special Fund to Mrs. Bratcher’s award is founded upon K.R.S. 342.120. The statute provides that the Special Fund shall be liable for a “. . . condition which was aroused or brought into disabling reality . . . ” by the work-related injury. The appellant has properly joined the Special Fund as a party to this appeal. See Yocom v. Jordan Auto Parts Co., Ky., 521 S.W.2d 519 (1975). The terminology of this section of the statute has been subject to great discussion. The question of prior work-related injuries has long since been put to rest. The purpose of the Special Fund had always been to more equally distribute the costs of assisting in the recovery of those who receive work-related injuries. It was not until Yocom v. Gibbs, Ky., 525 S.W.2d 744 (1975), that it was held the Special Fund was liable for an apportioned award because of the arousal in an injured employee of a dormant, preexisting congenital defect. A further step in clarifying the legislative intent of this statute was Yocom v. Jackson, Ky.App., 554 S.W.2d 891 (1977), the court stating at page 896:

Often, an employee’s disability resulting from an industrial injury would have been less “but for” pre-existing mental or physical characteristics of the employee. For example, the degree of occupational disability resulting from an injury to an employee’s left hand will depend upon a pre-existing physical characteristic, namely, whether the employee is left handed or right handed. It is clear that the term “condition” in KRS 342.120 is not used in the “but for” sense . It was not the intention of legislature to relieve employers from the natural consequences of their employees’ work related injuries merely because the degree of disability was affected by some physical or mental characteristic which ordinarily would never have affected the employees’ ability to work.

We do not believe the Board applied this standard in the present case when it found Mrs. Bratcher had no preexisting difficulty when she received a work-related injury. In support of their position, the Special Fund argues that where there is a conflict in the medical evidence before the Board, its decision is conclusive upon the court. K.R.S. 342.285(3). We disagree. In Cabe v. Splash Dam By-Products Coal Corp., Ky., 416 S.W.2d 361 (1967), the court was faced with facts similar to the present case. The Board determined there had been no existing disability or pre-existing condition which had been aroused into a disabling reality by the work-related traumatic injury to the employee’s back. The Board’s decision had been based upon testimony of the Board-appointed physician. The same is true in the present case. Dr. Eggers did not discuss the case with Dr. Glover, who performed the operation, nor did he examine Mrs. Bratcher for the purpose of determining if she did have a congenital defect prior to her injury. As pointed out in Collins v. Castleton Farms, Inc., Ky.App., 560 S.W.2d 830, 24 Ky.L.Summ. 12 (1977), the Board can not disregard competent evidence of probative value even when there is a conflict. Where the evidence is of equal value, we do not intend to interject on review our opinion, even though we may disagree with the conclusion reached by the Board. But where the testimony, as here, of the treating physician who performed the operation, observed the condition, explained in considerable detail why such a condition can not be quickly identified in x-rays, and is supported in part by a second physician, is totally disregarded, the finding of the Board will be set aside. The opportunity to observe and describe the injury far outweighs the conclusion of the Board-appointed physician in his evaluation examination.

The judgment of the Jefferson Circuit Court is reversed.

All concur.


author: VANCE, Judge.

text:
    Donald Lee HOOP, Individually and as Administrator of the Estate of Michael Thomas Hoop, Deceased and Shirley Ann Hoop, Appellants, v. Charles HAHN, Greg Quinn, Lee Quinn and Elk Lake Property Owners Association, Inc., Appellees.
    Court of Appeals of Kentucky.
    June 16, 1978.
    Bernard J. Blau, Jolly, Johnson, Blau & Parry, Marcus Hanna, Newport, Laurence W. Grause, Covington, for appellants.
    James G. Osborne, R. Barry Wehrman, Covington, Richard J. Schimpf, Cincinnati, Ohio, Donald L. Stepner, Covington, for appellees.
    Before HAYES, REYNOLDS and VANCE, JJ.
   VANCE, Judge.

This is an appeal from a judgment dismissing a claim against the Appellee, Elk Lake Property Owners Association, Inc. for lack of proper venue. The judgment was made final pursuant to CR 54.02.

The decedent, Michael Thomas Hoop, was killed in a boating accident at Elk Lake Shores in Owen County, Kentucky. A boat owned by appellee, Charles Hahn, a resident of Kenton County, and operated with his permission by Greg Quinn, also a resident of Kenton County, ran over Michael Hoop. The appellee, Lee Quinn, also a resident of Kenton County, is the father of Greg Quinn.

Appellants instituted suit for wrongful death in Kenton County and the appellees Greg Quinn, Lee Quinn and Charles Hahn were served with process in Kenton County. The venue as to each of these appellees was proper. KRS 452.460. By an amended complaint Elk Lake Property Owners Association, Inc., a corporation whose office and place of business is situated in Owen County, Kentucky was made a defendant. It moved to dismiss upon the ground that venue in an action against a corporation lies only in the county where its office or place of business is located. KRS 452.450.

Except in cases having no application here, KRS 452.450 provides that an action for tort against a corporation which has an office or place of business in this state must be brought in the county in which such office or place of business is situated or in which the tort was committed. Appellants contend that KRS 452.450 is limited in application to instances in which a corporation is the sole defendant. They cite no authority for this proposition, and we find nothing in the statute to support such an interpretation.

Appellants rely upon CR 14.01 and 14.02 governing third-party practice. CR 14.01 authorizes a defendant to assert a claim as a third-party plaintiff against a person who may be liable to him for all or part of the plaintiff’s claim against him. It was held in Goodwin Brothers v. Preferred Risk Mutual Insurance Company, Ky., 410 S.W.2d 714 (1967) that such a third-party claim may be maintained against a corporation even though the action was originally brought in a county other than one in which the corporation had its office or place of business.

This exception to the venue statute relates only to third-party practice under CR 14.01. Appellants claim against Elk Lake Property Owners Association, Inc. is not a third-party claim in which appellants attempt to assert that a third-party defendant may be liable to them for all or a part of a claim made against them. It is an original claim by appellants against the association.

The original defendants in this action could have utilized CR 14.01 to file a third-party claim against the association but only to the extent that the association may be liable to the original defendants for a part of the original plaintiffs claim against them but they have not done so. The rule cannot be utilized by a plaintiff to assert an additional claim against another party.

CR 14.02 permits a plaintiff to bring in a third party when the third party may be liable to the plaintiff for a portion of the relief sought against the plaintiff by a counterclaim. Here, however, it is not contended that Elk Lake Association is liable to appellants for a part of the relief sought against appellants by a counterclaim.

The amended complaint against Elk Lake Association was filed before any counterclaim was asserted, and although the original defendants did later assert a counterclaim, it alleged only that the appellants were themselves negligent in causing the death of their son and the counterclaim demanded indemnity or contribution.

Appellants could have asserted their claim against all the appellees in Owen County where the tort occurred. They elected to assert the claim in Kenton County against only three of the appellees who were residents of Kenton County. If, having elected to proceed in Kenton County against the Kenton County residents, they are permitted to join by an amended complaint another defendant who could not have been joined in the original action, they will accomplish by indirection what they could not do directly.

We think the appellee, Elk Lake Property Owners Association, Inc., was properly dismissed from the action.

The judgment is affirmed.

All concur.


author: HOWERTON, Judge.

text:
    James R. YOCOM, Commissioner of Labor and Custodian of the Special Fund and John Gordon Smith, Appellants, v. ISLAND CREEK COAL COMPANY, and Workmen's Compensation Board of Kentucky, Appellees.
    Court of Appeals of Kentucky.
    June 16, 1978.

      Gemma M. Harding, Deputy Gen. Counsel for Appeals, Dept, of Labor, Louisville, Kenneth E. Hollis, Gen. Counsel, Dept, of Labor, Frankfort, for appellant Yocom.
    Leland Monhollon, Madisonville, for appellant Smith.
    Larry L. Johnson, William P. Swain, Thomas H. Watson, Boehl, Stoffer, Graves & Deindoerfer, Louisville, for appellees.
    Before HOWERTON, GANT and WHITE, JJ.
   HOWERTON, Judge.

Appellant, John Gordon Smith, developed pneumoconiosis in the course of his employment with the appellee, Island Creek Coal Company. While still working for the ap-pellee, Smith injured his hand, thereby halting his employment. He filed a claim for the occupational disease, and was ultimately awarded $63.00 per week for 425 weeks. Before one year had expired following the date of his injury, Smith also filed a claim for total and permanent disability due to the injured hand.

The Workmen’s Compensation Board entered its award for the disease, and then ordered that both claims be consolidated. The Board subsequently ordered that the injury claim be held in abeyance until the termination of the 425 weeks. The appellant, Special Fund, was required to pay 75% of the award for the disease, and the employer was to pay 25%. Smith and the Special Fund appealed the order holding the injury claim in abeyance to the Union Circuit Court. The circuit court did not consider the consolidation of the cases and, in each action, the court affirmed the Board’s order holding the injury claim in abeyance.

This appeal is taken from the injury case only, and the Special Fund is the only actual appellant, although Smith was added in name. Appellant Smith has made no appearance and has filed no brief on his own behalf. The appellee, Island Creek Coal Company, contends that the Special Fund has no standing in this action and cannot prosecute the claim on the grounds that the injured employee did not elect to appeal. We disagree. The Fund acquired an interest in the injury claim when it was consolidated with the disease claim, as it should have been. Appellee’s argument is disposed of in the case of Yocom v. Payne, Ky., 512 S.W. 517 (1974), in which the court said, “The cases having been consolidated, there remains one case

The Special Fund is not asserting Smith’s claim for benefits due to the traumatic injury, as alleged by Island Creek,but is attempting to mitigate its own liability for 75% of the $63.00 awarded for the disease, arguing that it is entitled to receive credit against the' disease award for any sums accruing because of the injury. The employer is primarily responsible for work-caused disabilities. In the recent decision of Peabody Coal Company v. Edgie Burkes, Ky.App., 568 S.W.2d 50, 25 Ky.L.Summ. 5 (March 24, 1978), this Court ruled that the Special Fund is entitled to credit against its liability for all sums awarded because of a traumatic injury. The Court further held that the injury award could not be held in abeyance for the tenure of the occupational disease award. This is dispositive of the issue presented in this appeal.

Smith’s failure to properly appeal to this Court, from either the disease award (which he had no reason to appeal since he received the maximum) or the Board’s order holding the injury claim in abeyance, precludes him from receiving any greater amount than the $63.00 during the 425-week period. At the end of that time, the claimant may continue to receive what compensation, if any, the Board determines the injury alone justifies.

The Special Fund is entitled to be credited for any amount due and owing to the claimant as a result of the hand injury. Any reimbursement would be for the difference between what the Fund has paid and what it should have paid.

For the above stated reasons, the judgment of the lower court is reversed. The case is remanded with instructions to direct the Workmen’s Compensation Board to consider the injury claim and to compute the parties’ respective liabilities as set out by this opinion.

All concur.


author: RENDLEN, Judge. FINCH, Judge,

text:
    SMITH BEVERAGE CO. OF COLUMBIA, INC., et al., Respondents, v. A. Gerald REISS, Director of Revenue of the State of Missouri, Appellant.
    No. 60002.
    Supreme Court of Missouri, En Banc.
    June 15, 1978.
    Rehearing Denied July 24, 1978.

      John D. Ashcroft, Atty. Gen., S. Joel Wilson, Asst. Atty. Gen., Jefferson City, for appellant.
    Cullen Coil, Jefferson City, for respondents.
   RENDLEN, Judge.

Declaratory judgment action for construction of the State Use Tax laws. Respondents seek a declaration that the Revenue Department’s amended Rule 34 conflicts with the Use Tax exemption provisions of § 144.615(6), RSMo 1969, and is thus invalid, also for an injunction to stay enforcement of the Rule and a determination that respondents and others of their class qualify for the exemption afforded by the statute.

In the first hearing of the cause, the trial court adjudged the questioned portion of amended Rule 34 invalid as conflicting with § 144.615(6), and enjoined its enforcement as to plaintiffs and others of their class respecting payment of sales or use tax on the purchase of reusable soft drink bottles by plaintiff from outstate suppliers. This Court by its opinion in the first appeal, Smith Beverage Co. of Columbia v. Spradling, 533 S.W.2d 606 (Mo.1976), identified the issue as “whether the transfer of bottles by plaintiffs to ‘retailers and other institutions’ is or is not a sale; or, to be more specific, whether the bottles when purchased by plaintiffs are held by them (and their class members) ‘solely for resale in the regular course of business.’ ” It was noted the Director had admitted plaintiffs were jobbers of soft drinks, but he contended plaintiffs were not jobbers of the bottles because they did not sell them. This contention is stated in appellant’s current brief as follows: “[rjespondents do not purchase and hold these bottles solely for resale, but rather respondents use them over and over again as a convenient and economical way to market their beverage.” The Court in the first appeal characterized appellant’s position this way: “His theory apparently is that there is merely a loan or bailment.” The issue, thus framed, is in the language of the Use Tax, § 144.610.1, which provides: “A tax is imposed for the privilege of storing, using or consuming within this state any article of tangible personal property .,” and the qualifying language of the exemption in § 144.615(6), which excludes from the Use Tax, “Tangible personal property held by processors, retailers, importers, manufacturers, wholesalers, or jobbers solely for resale in the regular course of business; . . .” (Emphasis added.)

The cause was reversed upon a finding that “there is no evidence, there are no admissions, and there is no stipulation from which this issue can intelligently be resolved." The opinion points out that on the question of whether these bottles are held “solely for resale in the regular course of business” thus qualifying for the exemption of § 144.615(6), the authorities cited from other jurisdictions are divided. The Court suggested a number of factual questions upon which evidence should be obtained and pursuant to that suggestion the parties on remand stipulated to a variety of facts which we summarize: (1) Respondents as jobbers are engaged in the manufacture and sale of bottled soft drinks for sale to various retailers who in turn sell them to the general public; (2) jobbers (who acquire their bottles from outstate suppliers) require deposits on reusable bottles from the retailers who in turn require a similar deposit from the consumers; (3) there is no formal agreement between bottlers and retailers concerning the return of reusable bottles although trade usage establishes that bottlers accept and pay for bottles which retailers choose to return; (4) this system enables the reuse of bottles an average of seven to twelve times before they are lost or discarded and permits a bottle “charge” or “deposit” below the bottler’s actual cost; (5) the cost of a reusable bottle ranges from ten to fifteen cents for a bottle smaller than quart size and from twenty to twenty-five cents for a quart size bottle; (6) deposits are approximately five cents on bottles of sixteen ounces or less and ten cents on bottles in excess of the sixteen ounce size; bottlers keep records concerning inventories, costs and deposit accounts of retailers; (7) however, there is no requirement that the consumer return bottles to the retailer or the retailer to return bottles to the bottler; (8) bottles are permanently marked with the name (trademark) of the soft drink contained in the bottle, but are not specifically identifiable to the original bottler; (9) thus bottles first used by one bottler can be reused by another producing the same soft drink; (10) many bottles contain applied color labels reading “return for deposit” and in efforts to encourage return of reusable bottles, advertisements have asked, “Wouldn’t you rather borrow our bottles than buy them?”

In the second proceeding, the trial court again declared the amendment to respondent’s Rule 34 invalid insofar as it requires plaintiffs and other members of the class represented, “to pay sales or use tax on reusable bottles to their respective suppliers at the time each member purchases those bottles and insofar as said Rule declares that bottlers who bottle carbonated beverages into a reusable bottle and who are required to charge a refundable deposit on those bottles are consumers of those bottles or will be considered to be consumers of those bottles” and the Court again enjoined enforcement of the Rule. This appeal followed.

The Use Tax, generally complementary to the Sales Tax, is designed to tax transactions on which no Sales Tax can be imposed because the sales do not occur in Missouri. Section 144.610 taxes the privilege of “storing, using or consuming within this state any article of tangible personal property” (emphasis added) and as a taxing statute must be strictly construed in favor of the taxpayer and against the taxing authority. Wiethop Truck Sales, Inc. v. Spradling, 538 S.W.2d 585 (Mo.1976). On the other hand, § 144.615(6) establishes a Use Tax exemption as to tangible personal property held “solely for resale in the regular course of business” (emphasis added) and that exemption is to be construed against the taxpayer, though such construction must be reasonable and not curtail the exemption’s intended scope and purpose. City of St. Louis v. State Tax Commission, 524 S.W.2d 839, 843[2] (Mo. banc 1975).

Seeking to enforce the Use Tax, the Director on September 28, 1973, promulgated his amendment to Rule 34 which is in pertinent part as follows:

“A vendor who packages or bottles tangible personal property [1] into a reusable container and [2] will charge a refundable deposit on those containers is considered to be the consumer of those containers. Thus this vendor [bottler] shall pay sales or use tax to his supplier at the time he purchases those containers.” (Emphasis added.)

This amendment to the Rule has been described as the Director’s interpretation or the Department’s view of the term “consuming” as used in § 144.610. As noted above, the statute imposes a Use Tax on the privilege of “consuming within this state,” any article of tangible personal property and by the Rule the statute is given special application to bottlers. It is declared they consume such bottles if they bottle their product (1) “into a reusable container” and (2) “charge a refundable deposit on those containers” and in such event, the bottler “shall pay . . . use tax to his supplier at the time he purchases those containers.” If such is the intended purpose of the Rule, and it appears so to be, plaintiffs are brought within the ambit of § 144.610 without regard to the exemption provided in § 144.615(6), and the Rule in effect nullifies the exemption section as to them. Alternatively, the amended Rule might be interpreted as not absolutely negating but merely qualifying § 144.615(6), so that any bottler placing his product in a reusable container and charging a refundable deposit would be considered as not holding the same “solely for resale in the regular course of business”, and thus ineligible for the exemption. Such interpretation, though couched in language of § 144.615(6), (rather than the language of § 144.610) would work a similar foreclosure of plaintiffs’ claim to the exemption. We are neither bound nor persuaded by these inflexible interpretations of the legislative intent. Instead we must examine the language of the statute and determine whether plaintiff qualifies for the intended exemption. This leads to the principal question at bar, i. e., whether, without regard to the considerations of Rule 34, it may be said that plaintiffs, in the course of their business, hold such bottles “solely for resale” within the meaning of § 144.615(6).

The term sale appearing in the Missouri “Compensatory Use Tax Law” (§§ 144.600-144.745) is defined by § 144.605, RSMo Supp.1975, as:

“any transfer, barter or exchange of the title or ownership of tangible personal property, or the right to use, store or consume the same, for a consideration paid or to be paid . . . .”

That definition is applicable to the term resale used in § 144.615(6). The bottles plaintiffs purchase and fill with their products then transfer (sell or bail) to their vendees are exempt from Missouri’s Use Tax, if when transferred to the plaintiffs’ vendee, such bottles are sold by the plaintiffs rather than merely loaned, bailed or otherwise delivered for some special purpose. To qualify as sales, it must be found that by the transfer, title or ownership of the bottles pass for consideration paid. In State ex reí. Thompson-Stearns-Roger v. Schaffner, 489 S.W.2d 207 (Mo.1973), this Court, discussing provisions of the Missouri sales tax law, stated “The term ‘ownership’ cannot be said to have a fixed, definite meaning. Its meaning varies in the context in which the term is used.” That concept has application here as clearly many elements of ownership pass from the bottler to his vendee with the conveyance and delivery of the bottles. The retailer who purchases from the bottler and in turn the ultimate consumer have dominion over the bottles they acquire. Each has “paid” for the bottles by their “deposit” and is free to keep or return them. If returned, they have a definite expectation of receiving on the “resale” the amount of the “deposit.” In Coca-Cola Bottling Works Co. v. Kentucky Department of Revenue, 517 S.W.2d 746 (Ky.1974), the court considered whether bottles and cases delivered from Ohio to dealers in Kentucky constituted property purchased for storage, use or other consumption in that state, subjecting them to the use tax imposed by the Kentucky statute, or whether the bottles and cases when so delivered were held by the Kentucky dealers for resale, and thus exempt from sales or use tax under KRS 139.100. The statutes, though arranged somewhat differently than the comparable Missouri statutes, exempted from the Kentucky use tax property acquired for sale in the regular course of business. Considering facts, essentially similar to those at bar, the Kentucky court stated,

“[tjhere was no obligation on any dealer to return any empty bottles or cases; the dealer was free to use them for any purpose of his own, or to throw them away. Under the law of sales, title to the bottles and cases clearly passed to the dealers, and the ‘redemption’ by the company was in legal effect a sale back to the company. . . . [T]he question is whether there was a sale of the bottles and cases to the dealers within the meaning of the sales and use tax statutes.”

The argument was made by the Kentucky Department of Revenue, as in the case at bar, that when selling the bottles and cases the company did not intend to permanently divest itself of title, that the purpose of the company was “to use” them on a continuing basis, and “the purported sales are simply a device of convenience to insure that a sufficient percentage of the bottles and cases will be returned for continued use.” Coca-Cola Bottling Works Co. v. Kentucky Department of Revenue, supra at 748. It was pointed out that the price paid by the dealers and the ultimate consumers for bottle “deposits” was lower than the cost of new bottles and cases. From this the Department contended that “the company could not reasonably be considered to have had a bona fide intent to sell the bottles and cases.” The Kentucky court considered this contention stating: “[w]e do not find any valid basis for such a conclusion. As a practical matter, the company could afford to sell the bottles and cases below cost, knowing that most buyers, having little use for the empty bottles and cases, would be willing to sell them back at the original price.” (l.c. 748) We are persuaded by the ruling and rationale in that case.

A like result was reached by the Michigan court interpreting that State’s Use Tax. In Goebel Brewing Co. v. Brown, 306 Mich. 222, 10 N.W.2d 835 (1943), the Michigan court discussed a common form of contract described as “sale or return by which property is sold, but is liable to be returned to the seller at the option of the buyer.” (Emphasis ours.) The court observed that such transactions vest title immediately in the buyer where it remains unless he exercises his sell-back option. Similarly, the New York court in Nehi Bottling Co. v. Gallman, 39 A.D.2d 256, 333 N.Y.S.2d 824 (1972) aff’d, 34 N.Y.2d 808, 359 N.Y.S.2d 44, 316 N.E.2d 331 (1974), held that deposits on the bottles which were much less than their original cost, did not offset the fact that the purchaser was under no legal obligation to return them, had a right to retain them if he chose and to leave the money deposited as payment for the bottles which “amounts in law to a sale of them, at the election of the party to whom they are delivered.” The court further stated, “[a]t most, the present record establishes the continuous offer by the petitioner to repurchase such bottles and carrying cases as its vendees might decide to offer to it for repurchase.”

Other cases cited by respondent reaching similar results include Indiana Department of State Revenue v. Associated Beverage Company, Inc., 353 N.E.2d 544 (Ind.App.1976); Belleville Dr. Pepper Co. v. Korshak, 36 Ill.2d 352, 221 N.E.2d 635 (1965) and Owens-Illinois Glass Co. v. McKibbin, 52 N.E.2d 117 (Ill.1943).

Appellant cites a number of contrary decisions, including District of Columbia v. Seven-Up Washington, Inc., 93 U.S.App.D.C. 272, 214 F.2d 197 (1954); Arkansas Beverage Co. v. Heath, 257 Ark. 991, 521 S.W.2d 835 (1975); Gay v. Canada Dry Bottling Co. of Florida, 59 So.2d 788 (Fla.1952) and Wichita Coca-Cola Bottling Co. v. United States, 152 F.2d 6 (5th Cir. 1945). The thrust of those cases is that jobbers in comparable fact situations do not resell the reusable bottles in which they package their products, but use them to convey their product to the ultimate consumer. Among the reasons assigned in these decisions for the results reached were the actual cost to the bottlers of these bottles was significantly more than the deposits required and most bottles were used by the bottler a number of times after the original sale. In the case at bar respondent, contending for “use” visa-vis “sale”, points to the following: (1) The prices paid by ultimate consumers range between one-third and one-half of the bottle’s original cost; (2) though no formal agreement exists between the bottler, retailer and consumer requiring the return of the bottle once the beverage had been consumed, the long standing practice is to do so and most bottles are returned; (8) labels on some bottles employ the words “return for deposit” and advertising encourages returns. In one advertisement the language appeared, “Wouldn’t you rather borrow our bottles than buy them?” However, the latter could be construed as merely encouraging return of the bottles, i. e., if bottles are returned for deposit they are borrowed; if kept, they are purchased.

Considering all factors, we must ask these additional questions. If an ultimate purchaser drank the beverage and decided to keep, sell, give, destroy or otherwise dispose of the bottle, would the retailer or the bottler have a right to take it from him on the tender of the deposit previously paid or alternatively demand its value? We think not. To like effect, if the bottles were in the ultimate consumer’s possession and taken from him wrongfully by a third person, who would have the right of action to recover the bottles or their value? Certainly not the retailer from whom the consumer purchased the full bottles nor the bottler, who in the first instance sold them to the retailer. The facts, as stipulated here, indicate that in the regular course of business the bottles are purchased by the ultimate consumer of the soft drink with the knowledge that he is free to do with them as he pleases. We conclude that the reasoning of the Kentucky court in Coca-Cola Bottling Co. v. Kentucky Department of Revenue, supra, has application here and hold that the bottles purchased by plaintiffs are tangible personal property held by them as jobbers “solely for resale in the regular course of business” and qualify under § 144.615(6), RSMo 1969, as exempt from the Missouri Use Tax.

Finally, appellant contends the legislative history and sequence of departmental rules indicate an intent of the legislature to tax the bottles coming into Missouri under the circumstances here. This contention calls for a review of the pertinent statutes and rules. In the usual course of business, conveyance and delivery of the bottles occur at five stages, four of which are repeated numerous times during the useful life of the bottles. Stage I: The sale from an outstate manufacturer to a Missouri bottler which is not subject to the Missouri Sales Tax. Southwestern Bell Telephone Co. v. Morris, 345 S.W.2d 62 (Mo. banc 1961). Stage II: Sale from the bottler to the retailer (e. g., grocer), which is a sale at wholesale and not subject to Missouri retail sales tax. Sections 144.010(8), 144.020. Stage III: Sales by the retailer (grocer) to the ultimate beverage consumer (drinker) for which a bottle deposit is required to be refunded on the bottle’s return. Transactions at this stage were deemed subject to retail sales tax under Departmental Rule 93 until the enactment of § 144.011 in 1973. Stage IV: Sales of the bottle by the consumer who returns the empties to the retailer and receives a refund of his deposit. Stage V: Sales from the retailer back to the bottler. Nothing in the record indicates these have at any time been considered as other than sales for resale.

Stage III sales were subject to the retail sales act as interpreted by the Director of Revenue’s Rule 93, which remained in effect until the enactment of § 144.011 in 1973. That Rule provided in part:

“Bottlers of soft drinks, beer and other beverages are not required to pay sales tax on bottles purchased by them which are used to bottle their beverage. Such purchases [Stage I] by bottlers are sales for resale. The bottle is consequently taxed together with its content when sold at retail. [Stage III] In other words, the purchasers or consumers of beverages are liable to remit sales tax to the vendor or seller on the total selling price of the beverage, plus the cost or deposit of the bottles. The bottle then becomes the property of the purchaser and he has the option to retain the bottle or return same for a refund. When the latter [Stage IV] occurs, the vendor shall incorporate the amount of sales tax previously paid by the purchaser, as part of said refund. Should the purchaser return ‘empties’ in exchange for full bottles, sales tax previously paid shall be credited to the cost of the new purchase. Retailers may claim refunds as a deduction on their sales tax returns in an amount equal to the sum refunded to customers.” (Emphasis added.)

It is apparent the Department at that time considered Stage I sales from outstate manufacturers to Missouri bottlers as “sales for resale” (thus exempt from the use tax) and that the bottles became the property of the “purchasers or consumers of beverages,” and were subject to the payment of sales tax thereon. Also the purchasers had the option to retain or return the bottles for refund. Clearly the Department considered Stage II transactions exempt from Sales Tax because they were deemed “sales for resale” and for the same reason Stage I transactions were exempt from the use tax under § 144.615(6).

Apparently to relieve the cumbersome process of collecting sales tax on bottle deposits in Stage III transactions and the accounting problems incurred in the refund of those deposits in Stage IV transactions, the Seventy-seventh Missouri General assembly enacted as an amendment to the Sales Tax Law, § 144.011, effective September 15, 1973, which provides:

“For purposes of Sections 144.010 to 144.510 and the tax imposed thereby, the definition of ‘sale at retail’ shall not be construed to include the transfer of reusable containers used in connection with the sale of tangible personal property contained therein for which a deposit is required and refunded on return.”

Appellant contends enactment of § 144.011 manifests a legislative intent to restrict the use tax exemption of § 144.-615(6). This contention is not well taken for several reasons. Section 144.011, clear and unambiguous in its terms, specifically states it is applicable only to the Sales Tax Law, i. e., §§ 144.010 to 144.510, RSMo 1969, as amended. If the legislature had intended to extend the ambit of § 144.011 to the Use Tax Law, it could have expressly so provided. Additionally, when § 144.011 was enacted, the Revenue Department by Rule 93 had declared its interpretation of § 144.-615(6) as exempting Stage I transactions described here for the reason such sales were considered “sales for resale.” Section 144.011 makes no reference to or restricts in any way either § 144.615(6) or the Department’s announced interpretation of the Use Tax exemption under then Rule 93. While an administrative interpretation may not be permitted to alter or overturn a prior judicial construction of a statute, administrative interpretations are utilized as a tool for determining legislative intent when construing an ambiguous statute, State ex rel. Philipp Transit Lines v. Public Service Commission, 552 S.W.2d 696, 702 (Mo. banc 1977). We may assume a legislative awareness of Rule 93, yet nothing was done to expressly alter its effect with respect to the Use Tax exemption and nothing appears from which it may reasonably be inferred the legislature intended to alter the Department Rule or restrict § 144.615(6) as it had been formerly construed. To the contrary, it may be fairly inferred no change or restriction of the Use Tax exemption statute was intended for if it were otherwise the legislature could readily have expressed that intention in the statute. Appellant nevertheless argues that since the Sales Tax was removed from Stage III transactions by § 144.011, the legislature must have intended to impose a Use Tax and abrogate the exemption provided in § 144.-615(6) as to Stage I transactions for otherwise the bottles would escape imposition of both Sales and Use Tax. Appellant further contends that the purpose of § 144.011 was to simply change the point at which taxation occurs. However, this hypothesis overlooks the express language of § 144.011, the presumed legislative awareness of then Rule 93 and an apparent legislative intent to exempt the bottles from Sales as well as Use Tax. Finding no intent to impose restrictions on the exemption provided by § 144.615(6), we hold that the cited portion of the Director of Revenue’s amendment to Rule 34 is invalid and void to the extent it requires plaintiffs and other members of the Missouri Soft Drink Association and the class here represented to pay Use Tax on reusable bottles purchased from their respective outstate suppliers.

The defendant, as Director of the Department of Revenue of the State of Missouri, is permanently enjoined from enforcing or attempting to enforce the provisions of Rule 34 to the extent they purport to require plaintiffs and members of the class represented to pay Use Tax on reusable bottles to their respective suppliers. The judgment of the trial court as hereby modified is affirmed.

MORGAN, C. J., and BARDGETT and DONNELLY, JJ., concur.

FINCH, J., dissents in separate dissenting opinion filed.

SEILER, J., dissents and concurs in separate dissenting opinion of FINCH, J-.

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

FINCH, Judge,

dissenting.

The principal opinion holds that bottles purchased by plaintiff bottlers are tangible personal property held by them “solely for resale in the regular course of business” and, hence, qualify under § 144.615(e), for exemption from the compensating use tax. On that basis the opinion holds that defendant is permanently enjoined from enforcing the provisions of the Revenue Department’s amended Rule 34 to the extent that it requires plaintiffs and members of the class represented by them to pay use tax on reusable bottles. I disagree with that holding and, hence, must respectfully dissent. I would hold amended Rule 34 to be valid.

Section 144.610 imposes a use tax “for the privilege of storing, using or consuming within this state any article of tangible personal property purchased on or after the effective date” of the act. That language clearly is broad enough to cover the bottles in question unless exempted under some other provision of the act. The principal opinion makes no contention that § 144.610 is not broad enough to apply to the bottles purchased by plaintiffs from outstate suppliers. Instead, it relies on § 144.615(6), a subsection of the exemption section, in holding that the bottles are not subject to tax. In testing the propriety of this conclusion, it must be kept in mind, as the principal opinion recognizes, that in construing tax exemptions, the statute is to be construed against the taxpayer.

In determining applicability of § 144.-615(6), the principal opinion limits itself to the question of whether the procedure utilized by plaintiffs results in a “sale” of the bottles in which plaintiffs place and sell their beverages. It emphasizes that “ * * * many elements of ownership pass from the bottler to his vendee with the conveyance and delivery of the bottles. The retailer who purchases from the bottler and in turn the ultimate consumer have dominion over the bottles they acquire. Each has ‘paid’ for the bottles by their ‘deposit’ and is free to keep or return them. If returned, they have a definite expectation of receiving on the ‘resale’ the amount of the ‘deposit’.” On the basis that what occurs results in passage of title to the bottles, the principal opinion holds that the bottles in question qualify under § 144.-615(6) as tangible personal property held solely for resale.

In my view, the conclusion that the transaction between bottler and retailer is technically a “sale” is an inadequate basis upon which to decide this case. Section 144.-615(6) grants an exemption only if the property is held solely for resale in the ordinary course of business. Yet, the principal opinion looks only at whether the transfer of the bottles between bottler and retailer can be characterized as a sale. Having concluded that it can, the principal opinion fails to make the more fundamental inquiry mandated by § 144.615(6) as to the purpose for which the property is held by the bottler. The requirement that property be held solely for resale cannot be ignored or written out of the statute. It must be given some meaning. In my view, it can be read to mean nothing less than that property may be held for continuing and repeated use in the operation of the business, and therefore subject to tax, even though technically a sale thereof from time to time was contemplated and may be said to have occurred.

When the statute is so interpreted and it is recognized that the exemption granted by § 144.615(6) applies only to property which is held solely for resale and not for any other purpose, it is plain that the analysis made in the principal opinion is incomplete and inadequate. As previously noted, it focuses only on the question of whether one purpose for which the bottlers hold the bottles is resale rather than on the more pertinent question of whether such is the only purpose or is one of multiple purposes.

Even assuming that what occurs results in a technical sale so that the bottler could not enforce recovery of the bottles and the retailer is not obligated to return the bottles, the fact remains that the stipulated facts on which this case was submitted establish that these bottles were not held solely for resale. Instead, it is clear that they were acquired and held with the expectation that the bottles would be returned for reuse after the contents were consumed and that they would be used over and over in the bottling and sale of plaintiffs’ soft drinks. In fact, on the average, bottles were returned and were reused seven to twelve times. The bottlers followed procedures designed to bring about such return and reuse of bottles. They advertised from time to time to encourage consumers to purchase soft drinks in the most economical manner, which is in a reusable bottle which can be returned for the deposit made thereon when the beverage was purchased. In the case of plaintiff Macon Coca-Cola Company, it has advertised for years, “Wouldn’t You Rather Borrow Our Bottles Than Buy Them?”

Other stipulated facts show that the bottles were acquired and held primarily for repeated use in bottling and selling beverages rather than solely for selling them in the usual course of business. When one in business has items solely for resale, it is to be expected that such items will be priced to bring at least cost or, more likely, cost plus a reasonable profit. Plaintiffs did not do this. Instead, bottles were priced at from one-third to one-half of actual cost. Smaller size bottles cost bottlers 10$ to 15$ each but the deposit or charge therefor by the bottler to retailers was only 5$. Bottles larger than 16 oz. cost 20$ to 25$ but the deposit or charge thereon to retailers was only 10$.

Bookkeeping methods also reflected that these bottles were purchased and held primarily for reuse rather than resale in the usual course of business. Each day, when the bottler sold his bottled product to retailers, he did not simply enter gross receipts for product, including beverage and bottles. Instead, he entered on his books a separate record of amounts received from retailers for bottle charges or deposits. That record also gave the amounts expended each day for bottles returned. In addition, Moberly Bottling Company depreciated the cost of each new bottle over a four-year period at the rate of 25% each year. Jefferson City Coca-Cola Company carried new reusable bottles on its books at cost “until the new bottles are placed in service, when the value of each such bottle is changed to its deposit value. The difference between the cost value and the deposit value is charged off as a business expense.” The stipulation does not indicate at what point the bottle is charged off completely. “Smith Beverage Company, upon purchase of new reusable bottles, immediately inventories, and thereafter carries each bottle at its deposit value.” Quarterly profit and loss statements reflect as a loss in inventory this difference between the cost of bottles purchased and the deposit value of the bottles. None of these methods are ones reasonably expected in the case of goods purchased and held solely for resale.

The principal opinion cites several cases from other states in support of the conclusion it reaches. Those cases, like the principal opinion, emphasize and rely on the fact that the transactions between bottlers and retailers have attributes of a sale and purchase in which the bottler has no right to insist on return of bottles and the retailer and ultimate consumer are free to return or keep bottles as they choose. On the other hand, certain other cases, cited but not followed in the principal opinion, examine the whole picture to determine the purposes for which bottles are purchased and held. They conclude, as I would here, that the bottles are purchased and held for reuse, not just sale. For example, in District of Columbia v. Seven-Up Washington, 93 U.S.App.D.C. 272, 214 F.2d 197 (1954), the bottler sold bottled drinks at prices which, as here, included only a fraction of the cost of bottles and cases. No formal agreement for return or repurchase of the bottles and cases existed but it was understood that the bottler would give credit for those returned. The Tax Court, on the basis that title passed without obligation to return but with an option to do so, held that the bottles and cases were purchased by bottlers for resale. In reversing that ruling, the appellate court said, 93 U.S.App.D.C. at 275, 214 F.2d at 200:

“[W]e think the Tax Court erred in holding that purchases of the bottles and cases by respondents were for the purpose of resale to their customers. The purpose was to use them, not to resell them. Respondents are not in the business of selling bottles or cases but of using them as a means of marketing their soft drinks. We have seen that a charge is made, or a deposit required, for the containers, and that a high percentage of them are returned, whereupon a credit for the charge or deposit is given, or its amount is refunded in cash. We have seen also that this amount is much less than the value of the containers. If full value were charged, sale of the soft drinks themselves would be impeded because of the larger outlay required of purchasers. Yet the fact that some charge is made for the containers, with refund available, induces their return, because respondents’ customers, like respondents, also are not in the business of buying and selling bottles and cases, but soft drinks. When we advert further to the fact that except for this constant return of bottles and cases the respondents’ businesses could not survive, because the charge or deposit required for the containers is less than their cost, the true purpose of their purchase is apparent. It is to use and reuse them. * * ”

Subsequently, 93 U.S.App.D.C. at 276, 214 F.2d at 201, the court summarizes:

“Thus the ‘sale’ or ‘buying’ aspect of the dealing between respondents and their customers is overshadowed by respondents’ use. We must keep in mind that the statute does not provide that the tax shall not apply whenever there is a resale ; it is only when the purpose of the purchase is to resell. The true purpose here is not to resell but to use, even if this use is made possible in part through the form of resale and repurchase. * * ” (Emphasis supplied.)

I find the foregoing to be well reasoned and highly persuasive. The court’s analysis and conclusion coincides with that mandated by our statute for the exemption claim asserted by bottlers in this case.

Although the principal opinion does not rely on the legislative history of the act and the sequence of Department of Revenue rules to justify its conclusion, it does discuss them in response to contentions in the appellant’s brief. Some discussion thereof in this dissent is appropriate.

Prior to the adoption of Rule 34 in 1973, the Department’s Rule 93 was in force. It provided that bottles containing soft drinks and other beverages were taxable under the retail sales act when sold at retail. Retailers were to remit sales tax on the selling price of the beverage plus the deposit on bottles. It then provided for handling for tax purposes when the bottles were returned for refund, including provisions for refund claims. The rule stated that purchases of bottles by bottlers were for resale and not taxable.

This procedure evidently caused much bookkeeping and confusion at the retail level and, as the principal opinion notes, in 1973 the legislature amended the sales tax act, apparently to relieve the cumbersome process of collecting sales tax on bottle deposits. It enacted § 144.011, effective September 15, 1973, which provides:

“For purposes of sections 144.010 to 144.510 and the tax imposed thereby, the definition of ‘sale at retail’ shall not be construed to include the transfer of reusable containers used in connection with the sale of tangible personal property contained therein for which a deposit is required and refunded on return;”

After that enactment there was no sales tax collected at the retail level. The legislature said that when tangible personal property is placed in reusable containers, for which a deposit, refundable on return, was required, the transfer of the reusable container would not be a sale at retail under the sales tax act. As a result of that enactment, the Department of Revenue reexamined the situation and issued Rule 34 which implicitly concludes that reusable containers purchased and held by bottlers are not held solely for resale. It provided that a tax thereon is due at the time of purchase.

The principal opinion seems to conclude that Rules 93 and 34 are inconsistent. However, a closer examination reveals that the premise of this conclusion is unsound. The principal opinion states that “when § 144.011 was enacted, the Revenue Department by Rule 93 had declared its interpretation of § 144.615(6) as exempting [the transaction between bottlers and retailers] for the reason such sales were considered ‘sales for resale’.” [At 67, emphasis supplied.] Rule 93 could not have involved an interpretation of § 144.615(6) because it addressed only the liability of the bottler for sales tax and, by its terms, § 144.615(6) applies only to the use tax. Although it need not be decided in this case, it would appear that Rule 93 was correct in determining bottlers not liable for sales tax because under §§ 144.010(8) and .020 of the sales tax law, the transaction may be characterized as a sale at wholesale. The principal opinion so concludes at p. 66.

Labeling the transaction a “sale for resale” for purposes of liability for sales tax in Rule 93, although perhaps an inartful choice of words, is by no means inconsistent with the conclusion of Rule 34 that the bottles are not held “solely for resale” so as to be exempt from the use tax. Under the sales tax law, § 144.010(8), a sale includes “any transfer, . . . conditional or otherwise ... of tangible personal property for a valuable consideration . . . ” but § 144.020 taxes only retail sales, which the transfer from bottler to retailer plainly is not. The sales tax provisions under which Rule 93 declared the transaction exempt from the sales tax laws obviously require no inquiry into whether a sale is the sole purpose of the transaction. Thus, to compare the two rules is to compare apples and oranges.

The sales tax act and compensating use tax act envision compensating taxes and are designed to tax the sale of property only once. That tax was imposed under Rule 93 on the sale to the consumer until § 144.011 was enacted to effectively remove the bottles from the ambit of the sales tax. When this occurred, the Director quite properly conducted a fair reappraisal of what actually occurs and concluded that the bottlers were using the bottles in the course of their business within the meaning and intent of § 144.610. He further concluded that such bottles were not held solely for resale in the ordinary course of business as required for use tax exemption under § 144.615(6) for the reason that they are primarily held as a convenient means of transporting the actual product to the consumer on a recurrent and highly predictable basis. In my view, the stipulated facts in this case establish the correctness of this position.

On the basis of the foregoing, it is apparent that the principal opinion not only fails to apply the conceded rule that exemption statutes are to be construed narrowly but also, as a practical matter, amends the statute by a construction which ignores the word “solely”. The taxpayers in this case plainly failed to sustain the burden of showing that the reusable bottles were held “solely for resale in the regular course of business.” On the contrary, the stipulated facts clearly reflect the validity of Rule 34. The judgment below should be reversed and remanded with directions.

      . All citations of statutes are to RSMo 1969, unless otherwise stated.

      . Both in the original trial and on remand, the only sales involved were the interstate sales of bottles from outstate suppliers to Missouri bot-tiers. As pointed out in the first appeal of this case, no sales tax can be imposed on these transactions because the sales are not made in Missouri. See Southwestern Bell Telephone Co. v. Morris, 345 S.W.2d 62 (Mo. banc 1961).

      . The stipulation provides that plaintiffs or other witnesses, if sworn, would testify to the “facts” set out therein. This stipulation constitutes the only evidence of record with respect to the matters addressed and there is little or no dispute as to the essential facts.

      . Though not involved here, it appears the Rule is also intended to apply to intrastate bottle sales from manufacturer to bottler and expresses the Director’s interpretation of property “for use or consumption” as that phrase appears in § 144.010(9), RSMo 1969.

      . The record does not disclose if it was the practice of the Department to tax Stage IV sales prior to the enactment of § 144.011. However, pertinent sections of Rule 93 indicate such Stage IV transfers or sales were not considered taxable by the Department for the reason that when the drinker returned the bottles for a refund, the vendor (grocer) was directed to incorporate the amount of sales tax previously paid by the drinker as a part of the refund. Thus the deposit, plus the sales tax previously paid on the deposit, was refunded. Further, if the purchaser (drinker) returned empties in exchange for full bottles, the sales tax previously paid was to be credited against the cost of the new purchase. From this it would seem no sales tax was imposed on Stage IV transactions, apparently for the reason such transactions would properly be considered as sales for resale since the retailer (grocer) would in turn convey the bottles to the bottler.

      . All statutory references are to RSMo 1969 unless otherwise indicated.

      . Coca-Cola Bottling Works Co. v. Kentucky Dep’t of Revenue, 517 S.W.2d 746 (Ky.1974), upon which the principal opinion primarily relies, is not contrary to the views expressed herein. The Kentucky statutory scheme is considerably different from our own and the court made no inquiry into whether the bottles were held for any purpose other than resale.

      . See also Arkansas Beverage Co. v. Heath, 257 Ark. 991, 521 S.W.2d 835 (1975); Gay v. Canada Dry Bottling Co. of Florida, 59 So.2d 788 (Fla.1952); Wichita Coca-Cola Bottling Co. v. United States, 152 F.2d 6 (5th Cir. 1945).

      . Laws 1973, p. 223, § 1.