text:
    STATE ex rel. KEN REYNOLDS PHARMACIES, INC., a corporation, et al., Relators, v. Honorable Ben F. PYLE, Judge of the Circuit Court of Jasper County, Missouri, Respondent.
    No. 60124.
    Supreme Court of Missouri, En Banc.
    April 14, 1978.
    Rehearing Denied April 28, 1978.

      Ron Mitchell, Jon Dermott, Joplin, Don W. Kennedy, Nevada, for relators.
    A. L. Shortridge, Joplin, for respondent.
   BARDGETT, Judge.

This case was transferred by this court after opinion of the court of appeals, Springfield district, on application of respondent. Art. 5, sec. 10, Mo.Const., as amended 1970.

The case involves the prejudgment seizure of property by a secured creditor without the debtor having been given prior notice of the seizure or an opportunity to be heard. The court of appeals made absolute its writ of prohibition issued to respondent barring enforcement of his order of delivery in the replevin action out of which the case arose.

On November 3, 1973, Kenneth Reynolds and Betty Jo Reynolds, husband and wife, sold all the outstanding shares of Ken Reynolds Pharmacies, Inc., to J. D. Wilkinson and Marilyn R. Wilkinson, husband and wife, for $290,000. On the same day the Wilkinsons and Ken Reynolds Pharmacies, Inc., signed a promissory note in the amount of $169,218 with interest at 5% per annum, payable to the Reynolds. A payment schedule was set out in the promissory note. The parties also entered into a security agreement giving the Reynolds a security interest in “All drugs, cosmetics and other merchandise, stock and fixtures contained in or attached to the premises numbered 3126 and 3128 Main, Joplin, Missouri [the address of the Ken Reynolds Pharmacy], and one 1971 GMC Van, Mfg. No. GS 105 U 111336 and one 1972 Chev. Coupe, Mfg. No. 1X27D 2 L129486” and “any and all additions, accessions, and substitutions thereto or therefor and proceeds thereof ..” A financing statement was also filed.

On September 11, 1975, Mrs. Reynolds, as sole owner and holder of the promissory note (Kenneth R. Reynolds died prior to this date) brought suit in replevin in the Circuit Court of Jasper County, Missouri, seeking possession of the items described in the security agreement. The petition alleged default in payment of the promissory note and breach of the security agreement by pledging the proceeds and assigning the accounts receivable to First National Bank and Trust Company of Joplin.

The affidavit of Mrs. Reynolds which accompanied the petition stated, in accordance with former Rule 99.01, that she was entitled to the property; that it was wrongfully detained by defendants (relators here); that it had an actual value of $100,-000; that it had not been seized under any process, execution or attachment against her property; and that she would be in danger of losing the property unless it was taken out of the possession of relators or otherwise' secured because defendants had attempted to assign an interest in the property and had pledged the proceeds of the stock, and also because the stock could be sold in the ordinary course of business free of her secured interest.

At the time of the suit the principal balance due on the note was $99,034. Ken Reynolds Pharmacies, Inc., a pharmacy, gift and variety store, doing business at 3128 Main, Joplin, Missouri, was an ongoing business with annual sales at approximately $800,000.

Respondent held an ex parte hearing on September 11,1975, at which Mrs. Reynolds and her attorney appeared. The relators were not notified. Mrs. Reynolds testified to matters tending to support the allegations made in her petition and the items sworn to in her affidavit. Respondent found Mrs. Reynolds to be in danger of losing the property as security for the note. He ordered the sheriff to take possession of the property to the value of $100,000 and deliver it to Mrs. Reynolds. He also approved her bond in the amount of $200,000.

On that same day, September 11, 1975, the sheriff took possession of the property in question by placing a guard in supervision for five hours, but before delivery, relators filed a redelivery bond in the amount of $200,000. By letter dated September 17, 1975, the clerk of the Jasper County circuit court was informed by the bonding company purportedly bound by the redelivery bond that the bond was not valid. On October 6, 1975, the sheriff, at the request of Mrs. Reynolds took possession of the property. While in custody, payments for merchandise and on account were collected by the sheriff. On the 7th of October, the receipts collected the day before were turned over to relators’ attorney pursuant to the preliminary writ of prohibition issued by the court of appeals.

Respondent did not order relators to provide a new and valid bond, nor did he issue a new order directing the sheriff to take the property. The seizure of October 6, 1975, was made under the original order of September 11, 1975, without notice or an opportunity to be heard. Relators immediately sought relief from respondent but were advised that a hearing could not be held before October 17, eleven days later. It was at this time that relators sought and received a preliminary writ of prohibition from the court of appeals which was made absolute on March 10, 1977. In the meantime, relators prepared and on October 9, 1975, filed an answer to the petition denying any default under the promissory note or violation of the security agreement. Re-lators also sought $50,000 actual and $25,-000 punitive damages in their counterclaim based on wrongful and tortious replevin and injury to their business reputation.

The court of appeals found respondent’s order of delivery void because the ex parte hearing conducted by respondent did not comply with the due process requirements for notice and an opportunity to be heard enunciated in Fuentes v. Shevin, 407 U.S. 67, 92 S.Ct. 1983, 32 L.Ed.2d 556 (1972), and State ex rel. Williams v. Berrey, 492 S.W.2d 731 (Mo. banc 1973).

As relators operate an ongoing business, they could suffer severe hardship and possible financial ruin if forced to relinquish possession of the drugs, merchandise or fixtures of the pharmacy while awaiting a hearing or trial and possible appeal. The same would be true if the sheriff collected the daily receipts and payments on account. Under such circumstances, relators have no adequate remedy by trial and appeal and prohibition is thus proper. See State ex rel. Berbiglia, Inc. v. Randall, 423 S.W.2d 765, 770 (Mo. banc 1968).

The parties in their briefs and on oral argument concentrated almost exclusively on the constitutional issues, namely, the standards required by the due process clauses of the United States and Missouri constitutions for prejudgment seizure of property by a secured creditor. It is not necessary that these issues be decided in order to resolve this case. As pointed out in City of St. Louis v. Missouri Commission on Human Rights, 517 S.W.2d 65, 71 (Mo.1974), and City of St. Joseph v. Christgen, 513 S.W.2d 458, 459 (Mo.1974), constitutional questions should be decided only if essential to a proper resolution of the case. This principle is especially applicable here where new rules covering actions in replevin have been adopted substantially changing the procedure surrounding a replevin action. (See new Rule 99, Replevin, consisting of 99.01 to 99.15, effective December 1, 1977.)

Rule 99.09, as it existed prior to December 1, 1977, and during the proceedings before respondent in 1975, provided: “If the court should in like time be satisfied that the bond of the defendant shall not be good and sufficient, a like order shall be made that the defendant give a new bond, with good and sufficient sureties, within such time as the court in such order shall direct; and upon his failing to comply with such order the court shall make a further order that the proper officer retake the property and deliver it to the plaintiff, and that the defendant deliver the same to the officer therefor, and the answer or other pleadings, if any, of the defendant be stricken out, and render such judgment for the plaintiff as the court may by law render against the defendant and his sureties.” (emphasis supplied.)

As noted supra, the surety company purportedly bound under relators’ redelivery bond notified the clerk of the Jasper County Circuit Court by letter dated September 17, 1975, that the bond was invalid. Under these circumstances former Rule 99.09 required that the court order relators to give a new bond and if they did not comply within the time set by the court, the court was required to “make a further order” that the sheriff take the property and deliver it to Mrs. Reynolds.

In the present case, respondent neither ordered a new bond be given nor did he issue a second or “further order” that the sheriff take and deliver the property to Mrs. Reynolds. In absence of either of these orders, the sheriff could not proceed against the property. The writ of prohibition was properly issued and made absolute because the rules in effect at that time did not permit enforcement of the first order of delivery dated September 11, 1975. This result is supported by former Rules 99.08 and 99.10. Rule 99.08 required a procedure similar to Rule 99.09 should the plaintiff’s delivery bond be found to be void. The court was instructed to order the plaintiff to give a new bond, or if none was given to “make a further order” that the sheriff retake the property and deliver it to the defendant. Clearly, two orders are also contemplated by former Rule 99.08.

Former Rule 99.10 concerned the execution of the second order entered pursuant to former Rules 99.08 or 99.09. The clerk was directed to deliver to the proper officer the order so that the property could be delivered to the proper party. The order was to “be directed and executed in like manner as an order for the taking and delivery of property to the plaintiff in the first instance, and shall be served on the party-having the property, as other orders.”

The language of former Rule 99.09, as well as former Rules 99.08 and 99.10, would be meaningless and inconsistent if not construed to require another court order after the bond has been determined to be invalid. On this basis, this court finds that delivery of the property to Mrs. Reynolds was improper without a second order directing the proper officer to deliver the property. Thus, respondent was properly prohibited from enforcing his first order of delivery issued September 11, 1975.

For the foregoing reasons, the preliminary writ of prohibition is made absolute.

All of the Judges concur.


source: Caselaw Access Project

author: DONNELLY, Judge.

license: Public Domain

text:
    STATE of Missouri, Respondent, v. Leroy REYNOLDS, Appellant.
    No. 59687.
    Supreme Court of Missouri, En Banc.
    April 14, 1978.
    Douglas N. Merritt, Kansas City, for appellant.
    John D. Ashcroft, Atty. Gen., Carson El-liff, Asst. Atty. Gen., Jefferson City, for respondent.
   DONNELLY, Judge.

Appellant, Leroy Reynolds, was convicted of sodomy by a jury in the Circuit Court of Jackson County and was sentenced to twenty years imprisonment. Following rendition of judgment and imposition of sentence, an appeal was perfected to this Court.

Appellant alleges that the trial court erred in refusing to strike the jury panel because the panel was drawn in a manner which systematically excluded women from jury service, thereby denying appellant a panel drawn from a cross-section of the community. This point, which placed jurisdiction of this cause in this Court, has been ruled adversely to appellant in State v. Duren, 556 S.W.2d 11 (Mo.banc 1977).

Of the remaining assignments of error, one is dispositive of this case. Appellant contends that the trial court erred by permitting the prosecuting attorney to call defense counsel as a witness, thereby depriving appellant of counsel during this period and forcing defense counsel to testify against his client.

Defense counsel was called by the State as its first rebuttal witness. Counsel was not notified ahead of time that he would be called by the prosecution. The purpose of the prosecution in calling defense counsel was to refute testimony by the appellant that he had requested a polygraph test but had been denied one by the State.

Defense counsel was initially asked if he recalled being in the prosecutor’s office on the previous Monday afternoon. Counsel replied that he refused to answer any questions concerning his association with the case on the basis of attorney-client privilege unless his client chose to waive the privilege. Appellant declined to make a waiver, and the court ruled that no privilege existed as to the subject matter elicited by the examination. Defense counsel continued to refuse to answer questions, and the court instructed him to answer on pain of contempt.

Defense counsel testified that seven people were present at a meeting held on the Monday afternoon prior to trial in the prosecutor’s office. These people included the prosecutor, defense counsel, appellant, an inmate and guard from the Jackson County Jail, and a member of the prosecutor’s staff. Defense counsel testified that at this meeting an understanding was reached that the prosecutor would arrange for a polygraph examination to be given to both the victim and the appellant. If the victim refused to take the test or failed it, charges would be dismissed. Likewise, if appellant passed the test, the charges would be dismissed. The issue of whether perjury charges would be filed against the victim if he failed the examination was left unsettled. Defense counsel stated that he telephoned the prosecutor the following day and informed him that his client refused to take the test unless the prosecutor would promise that perjury charges would be filed against the victim. Counsel then stated that after he informed the prosecutor about his client’s further demand, “the bargain fell away.”

Art. I, § 18(a), Mo.Const., provides in part that “in criminal prosecutions the accused shall have the right to appear and defend, in person and by counsel . . .” In State v. Livingston, 30 Ohio App.2d 232, 59 Ohio Ops.2d 364, 285 N.E.2d 75 (1972), a similar constitutional provision of the Ohio constitution was construed to confer the right on a defendant to consult with his counsel at all times during trial and to be represented by counsel during the entire trial. Denial of this right by the calling of defense counsel as a prosecution witness over objection and without previous notice was held to be reversible error when defense counsel’s testimony established an element of the crime charged.

In People v. Lathrom, 192 Cal.App.2d 216, 13 Cal.Rptr. 325 (1961), defense counsel was called as a witness by the prosecution, without prior notice, and was required to testify in regard to other litigation in which his client was involved to help establish motive for an alleged arson. Defendant’s conviction was reversed on appeal on the basis that he was denied his constitutional right to “appear and defend, in person and with counsel.” The court noted the many problems which occur when defense counsel is called on to testify for the prosecution:

“The impossibility of defendant’s being able to consult with his attorney, to talk with him during the presentation of the evidence in question as contemplated in our system of administering justice is apparent. Furthermore, the impossibility of one person’s being able at one time to protect the record of the defendant . and at the same time to keep in mind what questions should ultimately be asked of himself on cross-examination, and finally during all of the time to conduct himself before the jury as a witness for the prosecution and simultaneously as counsellor for the defendant, appears obvious. There was no opportunity for the defendant to call attention to any possible inaccuracy in the testimony of the witness or to suggest proper questions on cross-examination. A most important and perhaps devastating impression was being made upon the jury.” Id., 13 Cal. Rptr. at 332.

The court noted in Lathrom that there was no necessity for calling defense counsel, and that the files about which he testified were public record.

In State v. Sullivan, 60 Wash.2d 214, 373 P.2d 474 (1962), defense counsel was called on prior notice to testify for the prosecution about communications between counsel and his client and about the search for and identification of evidence. Counsel’s testimony regarding the evidence was cumulative of the testimony of other witnesses. Although the case was decided on another ground, the court discussed the propriety of defense counsel’s being called to testify for the prosecution. The court noted that the use of defense counsel as a prosecution witness may invade the defendant’s right to complete an unhampered representation. Balanced against this right is the possibility that defense counsel’s testimony may be necessary for the State to prove its case. In Sullivan, since defense counsel’s testimony was repetitious, the court noted that the balance was in defendant’s favor and that counsel’s use as a witness for the State rendered his services less effective and invaded the defendant’s right to unhampered representation at trial.

In the case at bar, defense counsel was called on to testify as a rebuttal witness for the prosecution without prior notice. No cocounsel was present at trial to aid the defendant while counsel testified. Defense counsel testified that his client had, in fact, been offered a lie detector test but had refused to take it unless an appropriate deal were made. This testimony refuted appellant’s prior statement at trial that the State had refused to give him a polygraph test after he requested one.

Appellant’s defense in this case was a denial of having committed the act of sodomy in question. Both the victim and a State’s witness testified that appellant committed the act, while appellant and a defense witness testified he did not. Thus, appellant’s credibility was a major issue. Appellant testified on direct examination that he had requested a polygraph test, but was denied one by the prosecutor. Defense counsel’s testimony on rebuttal served to impeach appellant’s testimony regarding the polygraph discussion. We believe the use of defense counsel’s testimony to impeach appellant was prejudicial error.

The judgment is reversed and the cause remanded.

All concur.


text:
    STATE of Missouri, Respondent, v. Frederick Thurman DAVIS, Appellant.
    No. 60189.
    Supreme Court of Missouri, En Banc.
    April 14, 1978.

      Meir Westreich, Mary-Louise Moran, Asst. Public Defenders, St. Louis, for appellant.
    John D. Ashcroft, Atty. Gen., Robert L. Presson and Stanley H. Robinson, Asst. At-tys. Gen., Jefferson City, for respondent.
   DONNELLY, Judge.

Appellant, Frederick Thurman Davis, was convicted of murder in the second degree by a jury in the Circuit Court of the City of St. Louis and was sentenced to imprisonment for a term of fifteen years. Following rendition of judgment and imposition of sentence, an appeal was perfected to the Missouri Court of Appeals, St. Louis District, where the judgment was reversed and the cause remanded. Upon application of respondent, the cause was transferred here by order of this Court. We determine the cause “the same as on original appeal”. Mo.Const. Art. V, § 10.

The question of general interest or importance is whether, after trial has commenced under one judge who becomes disabled after all the evidence is adduced but before instructions are given, argument is had and verdict returned, another judge may be substituted and preside in his place.

The facts of this case indicate that after both the State and the appellant rested their cases, but prior to the giving of instructions, closing argument and submission of the ease to the jury for verdict, the trial judge became ill and was hospitalized. At this point in the trial there remained to be ruled upon: (1) a motion to suppress identification which was taken with the case; (2) a motion for judgment of acquittal at the close of all of the evidence; (3) the determination of the instructions to be read to the jury; and (4) final argument. The court was adjourned for the day and the following morning the judge presiding in the Criminal Assignment Division of the Court was advised that the judge presiding at the trial of the cause had become ill and had been taken to the hospital. Another judge was assigned to proceed with the trial. Pri- or to proceeding with the ease, the substitute judge conferred with counsel in chambers. During the course of this conference the substitute judge advised counsel that he had reviewed “the judge’s notes that he took during the trial”. He also conferred with counsel for the parties “in a review of the testimony” and stated that he had also reviewed the file itself so that he would be in a position “to instruct and argue”. He announced that he was ready to proceed with the case.

Defense counsel objected to proceeding in this fashion and advised the substitute judge that there was still pending and un-ruled on a motion to suppress identification, the motion for judgment of acquittal at the close of all of the evidence, the question of what instructions were appropriate to the evidence, and final argument which might raise points that only the judge who listened to the evidence might be able to rule upon. He then requested that a mistrial be declared. Further discussion disclosed that there was no post-arrest confrontation of the appellant with any of the witnesses while he was in custody and that witnesses for both the State and appellant were acquainted with him for some time preceding the incident for which he was on trial. The substitute judge then stated that his review of the testimony placed him in a position to rule upon the pending motions and he proceeded to overrule the motion to suppress identification and the motion for judgment of acquittal.

Defense counsel next objected because of the Habitual Criminal allegation in the indictment, contending that because the trial judge would assess the punishment were the appellant found guilty of the charge for which he was on trial, the judge who actually heard the evidence in support of the Second Offender Act, § 556.280, RSMo 1969, should be the one to impose the sentence. This objection, too, was overruled and motion for mistrial denied on that ground because the substitute judge was of the opinion that he could assess punishment if the appellant were found guilty of the charge or, if the judge who had presided theretofore returned, he could assess the punishment. The substitute judge then proceeded to overrule all of the pending motions based upon his “review of the evidence” and the case was then concluded.

In the federal courts, the problem of a judge’s becoming disabled during trial is dealt with by Fed.R.Crim.P. 25(a), which states:

“(a) During Trial. If by reason of death, sickness or other disability the judge before whom a jury trial has commenced is unable to proceed with the trial, any other judge regularly sitting in or assigned to the court, upon certifying that he has familiarized himself with the record of the trial, may proceed with and finish the trial.”

In 2 C. Wright, Federal Practice and Procedure § 392 (1969), the status of the law applicable to federal courts is summarized as follows:

“Rule 25(a) is a new provision, added in 1966. It provides that if, during the course of a jury trial, the judge before whom trial is commenced becomes unable to proceed by reason of death, sickness, or other disability, any other judge regularly sitting in or assigned to the court may proceed with and finish the trial upon certifying that he has familiarized himself with the record of the trial.
“The new provision was added in response to a recommendation of the Judicial Conference of the United States, intended to meet the problem of illness or disability of a judge during the trial of a protracted case, a problem thought to have become more acute with the increase in the number of protracted cases.
“Although subdivision (a) serves a useful purpose, it may well be open to constitutional question. Indeed when Rule 25 was originally being formulated the Supreme Court commented adversely on a draft that apparently would have permitted substitution during the trial, asking if it had been considered whether such a rule were constitutional and in any event whether as a matter of policy it should be permitted.
“In a well-known older case, the Second Circuit held that the Constitution does not permit substitution of a judge during a criminal trial even with the consent of the defendant. [Freeman v. United States, 227 F. 732 (2d Cir. 1915), modification of mandate denied, 237 F. 815 (1916)] It thought that in a criminal case ‘trial by jury means trial by a tribunal consisting of at least one judge and twelve jurors, all of whom must remain identical from the beginning to the end.’ And since it thought that defendant is powerless to consent to waiver of jury trial, altogether, he is powerless to waive this element of jury trial. The latter portion of the Second Circuit’s reasoning is no longer of force. It is now settled that a defendant may waive jury trial [Patton v. United States, 281 U.S. 276 [50 S.Ct. 253, 74 L.Ed. 854] (1930)], and it would seem to follow that he may waive this element of it. Accordingly Rule 25(a) poses no substantial constitutional problem if the defendant consents to substitution of judges during trial. The reasoning of the Second Circuit still has vitality if defendant does not consent. In the absence of consent, it would seem that Rule 25(a) cannot be validly applied, and that the death or disability of the judge requires that a mistrial be granted.”

No Missouri ease has decided the issue of whether, in a criminal cause, a new judge may be substituted for a judge who becomes disabled after evidence has been presented but before instructions have been given and final arguments had. Cases in other jurisdictions have held it is reversible error to substitute a judge at a similar point in a trial without the consent of the defendant. Commonwealth v. Claney, 113 Pa.Super. 439, 173 A. 840 (1934); Mason v. Ohio, 28 C.D. 203, 26 Ohio C.C. 535 (1904); Durden v. People, 192 Ill. 493, 61 N.E. 317 (1901). We are unable to find any state court case approving of such a substitution. We decline at this time to adopt a rule of practice comparable to Fed.R.Crim.P. 25(a). We invite comments from the Bench and Bar as to whether a comparable rule should be made a part of our Rules of Criminal Procedure. Cf. Rule 79.01.

The judgment is reversed and the cause remanded.

MORGAN, C. J., and HENLEY, FINCH, RENDLEN and SEILER, JJ., concur.

BARDGETT, J., concurs in result.


author: FINCH, Judge.

text:
    Lois M. CROWDER, Plaintiff-Appellant, v. Arthur VANDENDEALE, Defendant-Respondent.
    No. 59917.
    Supreme Court of Missouri, En Banc.
    April 14, 1978.

      Don R. Lolli, Morris, Foust & Beckett, Kansas City, for plaintiff-appellant.
    John Gregory Dorsey, Dorsey, Brannon & Dorsey, North Kansas City, for defendant-respondent.
   FINCH, Judge.

This is an action by the present home owner against a contractor who built the house and sold it to plaintiff’s vendors, the previous occupants. The petition alleged that shortly after purchasing the house plaintiff discovered that the front porch and steps were settling and separating from the house foundation, causing cracks in the brickwork and the foundation wall. It further alleged that it later developed that the foundation wall all along the south side of the house also was settling, resulting in cracks in the brickwork and foundation wall as well as a crack in the ground floor slab. In addition, the concrete driveway adjacent to the house settled and cracked.

The petition alleged that the damage to the house resulted from defendant’s negligence in failing to conduct a proper analysis of existing soil conditions, improperly preparing and pouring footings for the foundation and, in general, failing to construct the house in a good, workmanlike manner. It sought to recover expenses incurred in repairing the house and driveway in the sum of $6,500.

The trial court sustained defendant’s motion to dismiss for failure of the petition to state a claim upon which relief could be granted. On appeal the Missouri Court of Appeals, Kansas City District, reversed and remanded for trial. We ordered the case transferred on defendant’s application and we now decide the case as though here on direct appeal.

The fundamental question presented is whether builders have a duty, enforceable by an action in tort, to protect prospective purchasers from damage consisting of deterioration or “loss of bargain.” It should be noted that plaintiff does not seek recovery under the doctrine of implied warranty recognized in Smith v. Old Warson Development Co., 479 S.W.2d 795 (Mo. banc 1975). Whether this additional remedy in tort sought by plaintiff should be established is a question of public policy. In determining that question, we should and do consider the policies which give rise to the incidents and limitations of the implied warranty action which we have established.

In Old Warson an original purchaser of a new home was allowed to recover from a builder-vendor for damages resulting from latent structural defects on the basis of a common law implied warranty of habitability or quality. This was based on our determination that to suck extent the existing rule of caveat emptor as applied to the sale of new houses should be relaxed. The court stated, 479 S.W.2d at 801: “Relaxing the caveat emptor rule in this limited area would not require a builder-vendor to construct a perfect house as the test would be one of reasonableness of quality. In addition, the duration of liability would be premised, also, on a standard of reasonableness.”

The language of Old Warson has given rise to some uncertainty as to whether the action of implied warranty allowed in that case was grounded in contract or in tort. We recognize that in Old Warson this court quoted the earlier opinion by the Missouri Court of Appeals, St. Louis District, which, based on language used in Keener v. Dayton Electric Manufacturing Co., 445 S.W.2d 362 (Mo.1969), stated that the difference between “strict liability” and “implied warranty” would not be one of substance in Missouri because of the tort nature of the liability imposed. Keener and the cases it relied on were for personal injury, including death, or property damage either to property other than the property sold or to the property sold where it was rendered useless by some violent occurrence. Those are situations where strict liability was found to be appropriate. The liability clearly is for tort in those instances, regardless of how labeled. However, after further consideration of the nature of recovery for deterioration of a house, as contrasted with the kind of recovery involved in Keener (damages for death caused by faulty product), we have concluded that the liability imposed for mere deterioration or loss of bargain resulting from latent structural defects is contractual, and that the recovery allowed in Old Warson is to be justified on that basis.

This conclusion is buttressed by several factors. First, the liability imposed in Old Warson clearly was predicated on the transaction of purchase rather than the conduct of the builder. This is not true of negligence, which is inherently tied to the conduct of the builder.

Also implicitly recognized in our analysis in that case is the potential vitality of traditional contractual defenses under proper circumstances. For example, rather than reject outright the possibility of a valid disclaimer or modification under any set of facts, the provision in question was instead deemed ineffective under the facts presented. Thus, the right of the parties to make their own bargain as to economic risk was preserved even though the burden of demonstrating the fact of such a bargain, insofar as it is asserted that it varies implied warranty terms, remains great. By this approach, boilerplate clauses, however worded, are rendered ineffective, thereby affording the consumer the desired protection without denying enforcement of what is in fact the intention of both parties.

A third factor supporting the conclusion that the liability involved where the purchaser seeks recovery from the builder for deterioration of the house purchased is contractual is the fact that in such instances it is desirable to require purchasers to give notice of the breach (the deterioration) and an opportunity to repair to the builder. Notice was not placed in issue in Old War-son but it is clear that the builder was given notice of the breach and an opportunity to repair. Likewise, in O’Dell v. Custom Builders Corp., supra, fn. 2, an implied warranty case, such notice was given. Notice is not required when recovery is sought on a tort theory. Permitting recovery in negligence would not afford builders the opportunity to make repairs.

The contractual nature of the theoretical underpinnings of the implied warranty recognized in Old Warson also implicitly limits the right of action to the first purchaser. Because the warranty is implied by virtue of the contemplated sale to the first purchaser and arises by reason of the purchase, it theoretically accrues in him. The practical aspects of the contractual defenses also lead to this conclusion. The first purchaser is the only one with whom the builder may negotiate an allocation of the risk. Furthermore, the builder is in a better position to know the condition of the home at the time of sale, and thus whether defects were latent. This is not true if the builder is sued by a subsequent vendee.

Analysis of the policy factors which led to our recognition of the implied warranty theory in Old Warson clearly demonstrates our focus on the quality of the home sold rather than the conduct in building it. The inquiry is directed to whether the home is of reasonable quality or reasonable fitness. If, by reason of some latent structural defect, it is not, the builder will be held responsible. In arriving at this standard, we indicated our concern that the structural quality of the home is not susceptible of discovery by the ordinary consumer who must rely on the builder’s implicit representation that the home is fit for use as a residence. This assumed standard of quality is so fundamental to any sale of a new home that we engage in no fiction in declaring it to be an implied term. Unless it is otherwise clear from the bargain that the buyer and builder have reached an understanding to the contrary, we will presume that it is part of the bargain.

The foregoing stands in sharp contrast with negligence theory. In negligence, the focus is on both conduct and result. Generally, the standard of negligence is the requirement that the actor use ordinary care and skill. Yet this is particularly difficult to determine in the case of a completed home. The quality of new homes varies considerably. This is no particular evil standing alone because the variance in quality is substantially reflected in the price, thereby providing a broader market and enabling many to own their own homes. Purchasers are not ignorant of the more obvious variations in quality. Indeed, this largely accounts for the variation in price. Thus, there is little need to protect consumers from discoverable shortcuts in construction. However, as to latent structural defects in a completed home, where protection is needed, it may be difficult to pinpoint the exact cause of the defect. Often the only proof will be by inference from the result — a difficult problem where, as will often be the case, many parties may be involved in design, providing materials and construction.

A duty to use ordinary care and skill is not imposed in the abstract. It results from a conclusion that an interest entitled to protection will be damaged if such care is not exercised. Traditionally, interests which have been deemed entitled to protection in negligence have been related to safety or freedom from physical harm. Thus, where personal injury is threatened, a duty in negligence has been readily found. Property interests also have generally been found to merit protection from physical harm. However, where mere deterioration or loss of bargain is claimed, the concern is with a failure to meet some standard of quality. This standard of quality must be defined by reference to that which the parties have agreed upon. In the absence of some express agreement to the contrary, the standard of quality will be presumed to be that of the implied warranty term — reasonable fitness for use as a residence.

It is apparent from the foregoing that if recovery for this type of loss is allowed in negligence, the remedy would be dependent in every instance upon the implied warranty term of every new home sale recognized in Old Warson. Furthermore, the remedy would necessarily be more restrictive than implied warranty recovery because it would be available only in those instances where the defect could be attributed to a failure of the builder to use ordinary care. Fault is irrelevant in an action in implied warranty.

It is clear that in tort actions seeking recovery for deterioration resulting from a failure to use ordinary care, there is no inherent requirement that defects be latent in order to support recovery as is required in implied warranty. Absent some artificial injection of such a condition into a traditional negligence action for failure to use ordinary care, such a limitation would arise only by reason of traditional negligence defenses such as assumption of the risk or contributory negligence which are not suitable for this purpose.

The conceivable situations where a right of recovery in negligence as well as in implied warranty would be of assistance to buyers are not persuasive that we should establish this second means of recovery. One such instance is when the statute of limitations for warranty has expired. The tort statute of limitations might well be longer if the time of injury is equated with the time of discovery of the defect. However, the resultant uncertainty thus presented does not appear to be justified by any significant advancement of policy. The type of defect addressed in Old Warson may be expected to become manifest within the period established by the statute of limitations for warranty. It is certainly of sufficient length that we do not expect builders to gamble to the contrary.

A second situation where an additional remedy in negligence could be of assistance to buyers is the one involved in this case — a suit by a remote vendee. As discussed previously, such an action could not be maintained in implied warranty. Assuming ar-guendo that lack of privity would not bar recovery, a tort duty would run directly to the subsequent vendee. However, the builder would have no opportunity to disclaim or otherwise allocate the economic risks with this purchaser because there would be no contractual relationship. Thus, the builder could be held liable in negligence to the second purchaser even if such liability was successfully disclaimed as to the first. This is but a further indication that tort theory is ill suited as a means of recovery for this type of loss.

As the foregoing analysis indicates, the reasoning of the numerous personal injury and property damage cases cited by plaintiff is not controlling here. The relatively few cases which have allowed recovery in negligence for the type of damage claimed here have relied heavily on such reasoning without addressing what we perceive to be a fundamental difference in the type of damages involved. Nor have any of these decisions addressed our concerns about the failure of negligence theory to protect adequately the numerous policies and economic interests involved.

Our conclusion is that implied warranty recovery provides an adequate and appropriate remedy where a first purchaser seeks damages from a builder for deterioration as a result of latent structural defects in the house purchased and that a second theory of recovery based on failure to use ordinary care should not be authorized. It follows that the judgment of the trial court must be affirmed.

All concur.

      . In O’Dell v. Custom Builders Corp., 560 S.W.2d 862 (Mo. banc 1978), this warranty is stated to be closely analogous to that found in § 400.2-314, RSMo 1969, which is therein termed “implied warranty of merchantability.” This theory has rapidly gained widespread acceptance. At least 20 jurisdictions now recognize this doctrine. Many of the cases are collected in McNamara, Implied Warranty in New House Construction Revisited, 3 Real Est. L.J. 136 (1974).

      . This statement as to the nature of the liability imposed in Old Warson was repeated in O’Dell v. Custom Builders Corp., 560 S.W.2d 862 (Mo. banc 1978).

      . This is not to say that liability is predicated on the sale contract. The warranty, from which liability arises, is an independently implied covenant arising by reason of the purchase which survives the deed. It is not merged in the deed because the warranty and the doctrine of merger are both creatures of policy. The doctrine of merger is drawn from the rule of caveat emptor which was relaxed to the extent of this implied warranty in Old War-son.

      .As indicated by analysis in Old Warson, one seeking the benefit of such a disclaimer must not only show a conspicuous provision which fully discloses the consequences of its inclusion but also that such was in fact the agreement reached. The heavy burden thus placed upon the builder is completely justified, for by his assertion of the disclaimer he is seeking to show that the buyer has relinquished protection afforded him by public policy. A knowing waiver of this protection will not be readily implied.

      . “Negligence, knowledge or fault of the vendor or manufacturer is not required where recovery is sought for a defective condition under either implied warranty or strict liability.” Smith v. Old Warson Dev. Co., 479 S.W.2d 795, 798 (Mo. banc 1975).

      . We express no opinion on the potential impact of § 516.097, RSMo 1977 Supp. (cited by plaintiff), on this problem.

      . Although the point need not be determined in view of our disposition of this case, plaintiff urges that the modern trend is to hold a building contractor liable to all those who foresee-ably may be injured by the house he built when he fails to disclose dangerous conditions known to him or when the work is negligently done. She contends that pursuant to such trend recovery by a second purchaser should be permitted in this case.
      It is true that the modern trend in the cases is to hold a building contractor liable to third persons for personal injuries arising from negligent construction of a building. This is merely an application of traditional tort principles to enforce the public policy of preventing physical harm to others. As in most negligence or strict liability situations, the focus is not on privity between the injured person and the negligent party. Rather, it is on whether the injured person is a member of a foreseeable class who might be injured by the conduct. Annot. 25 A.L.R.3d 383, 397-409. However, we do not find, as plaintiff contends, an established trend to impose on builders a liability based on negligence to second and even subsequent purchasers for deterioration or loss of bargain. The only case cited by plaintiff which deals with and allows recovery in negligence by a second purchaser from the house builder for deterioration (in that case repairs necessitated by a leaky roof) is Steinberg v. Coda Roberson Const. Co., 79 N.M. 123, 440 P.2d 798 (1968). We are not persuaded by that case. It places heavy reliance on cases involving recovery for personal injuries, but there is no discussion and analysis of the difference between claims for personal injury, and the type of injury there involved.
      In the other cases cited by plaintiff which allow recovery in negligence for this type of loss by the original vendee, the status of a subsequent vendee was not presented or addressed. See, e. g., Fisher v. Simon, 15 Wis.2d 207, 112 N.W.2d 705 (1968); Sabella v. Wisler, 59 Cal.2d 21, 27 Cal.Rptr. 689, 377 P.2d 889 (1963). In one case, McDonough v. Whalen, 365 Mass. 506, 313 N.E.2d 435 (1974), the court expressly reserved judgment on the question. 313 N.E.2d at 439, n. 8.


author: NORWIN D. HOUSER, Special Judge.

text:
    Harold AUSTIN, Plaintiff-Respondent, v. MEHLVILLE R-9 SCHOOL DISTRICT and James Price, Dale Brooks, Robert Hanley, Helen Barrett, Robert Thill, and Richard Tisell, Members and Officers of the Board of Education of the Mehlville R-9 School District, Defendants-Appellants.
    No. 59918.
    Supreme Court of Missouri, En Banc.
    April 14, 1978.
    Rehearing Denied May 9, 1978.

      George J. Bude, Clayton, for defendants-appellants.
    Charles A. Werner, St. Louis, for plaintiff-respondent.
   NORWIN D. HOUSER, Special Judge.

Harold Austin, a teacher at Oakville Senior High School, Mehlville School District, filed a petition against the district and the individual officers and members of the board of education to enjoin defendants from transferring him from his teaching position at Oakville Senior High School for the 1976-1977 school year. An order to show cause issued. Defendants filed a return and an answer. Following an extensive hearing the trial chancellor found the issues for plaintiff and against defendants and issued a permanent injunction against transfer. The chancellor filed a formal opinion complete with findings of fact and conclusions of law.

The school district and board of education appeal, posing first the question whether the words of a striking teacher participating in a picket line in front of the school in the course of an illegal strike who, in support of the strike, in the presence of striking and nonstriking teachers and in the immediate presence of two assistant principals, refers to the assistant principals as “scabs,” constitute free speech protected by federal or state constitutional provisions; second, whether the use of the term “scabs” under the circumstances constituted slanderous and insulting words tending to incite an immediate breach of the peace, so as to disentitle plaintiff to constitutional protection in the use of the term.

The motivation of the board of education in ordering the transfer is a matter of concern in determining the first question. Was it to punish plaintiff for exercising a constitutionally protected right of free speech, or was it a proper exercise of administrative discretion in the operation of the school system? The chancellor held that the board of education gave the wrong reason for transferring plaintiff; that the real reason for the board’s action was to discipline and punish plaintiff (who was contented to teach at Oakville and did not wish to go elsewhere in the system) and for the chilling effect his transfer would have on other teachers (who would thereby be discouraged from speaking up and speaking out against the policies of the administration); that he had been disciplined and punished because “management” had been “affronted by an incivil remark of its jester,” and for the substantial effect the transfer would have upon other teachers; that teachers “must not be sterilized for the sake [of] maintaining management immune from criticism and entrenched in control. Teachers must not be so muzzled that they cannot bark even though the law forbids them to bite,” and that the transfer should be enjoined. The chancellor found that neither Mr. Jordan nor the board of education felt that the transfer was made because the school’s management or operation, or the role played therein by plaintiff, would in any way be impaired by plaintiff continuing to teach at Oakville; that plaintiff’s remark was disconnected from any school activity; that the reference to the assistant principals as scabs was literally true, and was meant as a jest, more to provoke amusement and maintain morale among plaintiff’s fellow strikers than anything else; that there was no evidence that it could have any effect on discipline at the school or harmony between any of the teachers or between plaintiff and the two assistant principals; that plaintiff’s transfer was ordered because he exercised his constitutional right of free speech.

A review of the record demonstrates that the chancellor’s finding of fact that the motivation or true reason the board ordered the transfer was to discipline and punish plaintiff for exercising his constitutional right of free speech is against the overwhelming weight of the evidence.

The immediate circumstances surrounding the making of the remark shed light on the question of motivation. As between striking and nonstriking teachers the situation was tense. The latter were concerned about their personal safety as they departed from the school building and went to their parked cars. When plaintiff applied the term “scabs” to assistant principals Lake and Fortune the latter were accompanying several of the nonstriking teachers, in effect escorting them, to their cars. Several of the striking teachers regarded the remark humorously, as a jest, but neither Lake nor Fortune considered the remark as having been made in a joking vein; they took it seriously. Plaintiff concedes they did not seem to take the remark as a jest. Fortune testified that plaintiff was looking straight at them when he made the remark; that there was “no levity” in the way the remark was made and no smile on plaintiff’s face. Nor were the assistant principals smiling. Lake testified that plaintiff leaned forward as he made the remark, stepped into the area where Lake was, came toward him and converged to a point 4 to 6 feet away from Lake. Neither of the assistant principals made any verbal response, but Lake felt “anger and hostility.” He turned, “whirled a little bit,” “cocked his arm,” and clenched his fist. Fortune intervened, reached for Lake’s hand to move him away. “Better judgment prevailed” and Lake desisted from any attempt to use physical force. Neither of the assistant principals said anything to plaintiff or the several strikers backing him up, but Lake and Fortune promptly reported the facts to the principal, who testified that Lake and Fortune were upset.

The board of education acted upon the recommendation of Mr. Jack Jordan, Principal of Oakville Senior High School, contained in a memorandum prepared by Mr. Jordan and directed to his immediate superior, the director of secondary education, after hearing Mr. Jordan present the matter at a session of the board. The memorandum stated:

“DATE: April 19, 1976
TO: Mr. Arthur Voerg,
Director of Secondary Education
FROM: Jack M. Jordan, Principal Oakville Senior High School
RE: To be placed in the personnel file of Mr. Harold Austin
It has been brought to my attention by my two assistant principals, Mr. Irl Lake and Mr. James Fortune, that they were confronted by Mr. Harold Austin on the date of Thursday, April 8, 1976, at approximately 2:45 p. m. He commented to my two assistant principals the following: ‘Where do you scabs think you are going?’. It should be noted that neither Mr. Lake or Mr. Fortune responded in any why. Mr. Austin is quite aware of Mr. Lake and Mr. Fortune’s management role in our school. This type of comment was completely out of line. Therefore, I recommend that consideration be given to transferring Mr. Harold Austin to another secondary school in the Mehlville School District for the beginning of the 1976-77 school year.
Respectfully,
Jack M. Jordan, Principal Oakville Senior High School”

Contrary to the chancellor’s finding that the transfer was not made for the effect the remark had upon the management or operation of the school system, or plaintiff’s role therein, Mr. Jordan testified that although one reason for his recommendation was plaintiff’s failure to seek out the two assistant principals and apologize to them, his “basic reason” was that plaintiff had put his two assistants in a “very bad position” relative to the faculty and administration of the school by making a statement like that; that it undermined the authority of the assistant principals, who were in supervisory positions; that “there has to be a certain amount of respect for authority * * * [a]nd when derogatory comments are made to people who are in positions of authority * * * it is a necessary time that action be taken,” and that he did not want it to happen again; that there was one channel by which he could insure that it did not happen again as between plaintiff and the two assistants, without involving firing plaintiff or causing him loss of pay, and that was to transfer him; that this occurrence could have evolved into something much more serious and regrettable— “something physical”; that he was “very concerned,” especially on the second day of the strike, “because of some of the actions and talk on our campus,” and some of the things people were doing to each other; that he did not intend his action as a disciplinary action, although it could have a punitive effect because plaintiff was “fond of his particular setting” and did not want to leave his present teaching post.

The testimony of Mr. Dale Brooks, the only member of the board of education who testified at the trial, also contradicts the court’s findings of fact with respect to the effect of the statement on the management and operation of the school, and plaintiff’s role therein. Mr. Brooks testified that plaintiff’s remark had “a lot to do” with plaintiff’s transfer, but “the recommendation from the administration had the whole bearing on it”; that the administration felt it would be “feasible” to make the transfer — a lateral move, without demotion — not principally because of the remark but because of the future relationship “like next year * * * with the administrators that were going to be present there to try to work with this gentleman under this animosity.”

The overwhelming weight of the evidence on motivation establishes without question that the true reason for the board’s transfer order was not to discipline or punish plaintiff because of plaintiff’s exercise of the right of free speech, but rather that the remark, under the circumstances in which it was uttered and considering the effect it had, demonstrated disrespect for the authority of plaintiff’s superiors, tended to undermine and disrupt the relationship between them, interfere with the management and operation of the Oakville Senior High School, and create animosity and the possibility of physical violence as between plaintiff and the assistant principals. In contrast with Pickering v. Board of Education, 391 U.S. 563, 88 S.Ct. 1731, 20 L.Ed.2d 811 (1968), which the chancellor characterized as the leading case dealing with the right of a public school teacher to criticize policies of school authorities, the words used in this case were directed to persons with whom plaintiff would normally be in contact in the course of his daily work as a teacher; as a result of their utterance a serious question arose of maintaining discipline by his immediate superiors, and harmony among coworkers, and the close-working relationship between plaintiff and the principal (requiring personal loyalty and confidence) was involved. The remark bore a rational relationship to plaintiff’s employment, contrary to the chancellor’s finding that the remark was disconnected from any school activity. The action of the board in ordering plaintiff’s transfer, taken for legitimate managerial reasons, constituted a proper exercise of administrative discretion in response to an actual rather than an anticipated problem. It is not the policy of the courts to intervene in the internal operation and management of the public school system in cases which do not directly and sharply involve basic constitutional rights.

In this view of the case we do not reach and need not decide the constitutional questions sought to be raised.

The judgment and decree ordering the issuance of a permanent injunction against transfer of plaintiff from Oakville Senior High School is reversed, and the cause is remanded with directions, to dissolve the injunction and sustain the motion to dismiss the petition for injunction.

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

DONNELLY, J., not sitting.


author: BARDGETT, Judge.

text:
    HERMEL, INC., Appellant, v. STATE TAX COMMISSION of Missouri, et al., Respondents.
    No. 59824.
    Supreme Court of Missouri, En Banc.
    April 24, 1978.

      J. Bruce MeCurry, Springfield, for appellant.
    Theodore L. Johnson, III, Springfield, for respondent.
   BARDGETT, Judge.

Hermel, Inc., appeals from the judgment of the circuit court affirming a decision of the State Tax Commission which set a valuation on appellant’s property in Greene County, Missouri. This case involves the valuation for 1971 (the valuation date is January 1, 1971; sec. 137.080, RSMo 1969) state and county property taxes of the Battlefield Mall (mall) in Springfield, Missouri. The mall is owned by appellant, Hermel, Inc., (Hermel), an Indiana corporation. Hermel challenges the assessment of the State Tax Commission (commission) as being unlawful, unfair, improper, arbitrary, and capricious. This dispute involves only the valuation of improvements on the land, not the valuation of the land itself.

A brief history of this litigation is in order. The commission rendered its original decision on December 3, 1971, fixing a land value of $1,441,612 and an improvement value of $9,000,000. Greene County then filed a petition for review seeking a higher assessment on the improvements. The circuit court found the decision of the commission arbitrary and not supported by competent and substantial evidence. The cause was remanded to the commission with instructions to reinstate the assessment of the county assessor, who valued the land at $1,441,612 and the improvements at $11,-744,909. Hermel appealed to this court.

In Greene County v. Hermel, Inc., 511 S.W.2d 762, 770 (Mo.1974), the judgment of the circuit court was reversed and the cause was remanded for another hearing because the decision (valuation) of the commission was not based on competent and substantial evidence. A second hearing was held and this time the commission in its decision of November 7, 1975, found the true value to be $1,441,612 for the land and $11,744,909 for the improvements. These were the figures originally determined by the assessor to represent the true value of the land and improvements. The circuit court affirmed and Hermel appealed to this court.

Because of the issues presented, it is necessary to review the evidence before the commission. As the transcript of the first hearing was admitted as evidence in the second hearing, a review of the evidence proffered in both hearings is required. A summary of the evidence from the first hearing will be taken as needed from Greene County v. Hermel, supra, without use of quotation marks.

At the first hearing the following evidence was presented: The mall, located in Greene County, Missouri, consists of about 60 acres of land and a building approximately 1400 feet long containing 40 to 50 stores (on rehearing the undisputed testimony was that 60 stores were in operation on January 1, 1971) and an enclosed mall. The mall was opened for business in July of 1970.

Mr. Elliott Freed, Hermel’s vice-president in charge of the construction, produced the final request of the general contractor for payment, with credits for previous payments, and testified that Hermel had paid those amounts. The total listed was $7,036,935.25, (the commission found this amount to be $7,072,495.25), but to this Mr. Freed added the amount paid to another contractor and the sum of the amounts allowed and paid to tenants for the completion of their respective stores “in a normal manner,” arriving at a grand total of $8,362,884 (the commission found this amount to be $8,305,363.25). This figure, Mr. Freed said, represented the cost of the building. He also presented an exhibit which showed the cost as apportioned by the contractor to separate stores and sections of the building; this exhibit also showed, by way of comparison, the assessment figures (as received from the assessor) on the same stores and sections. The exhibit shows very substantial increases in the assessment of most of the units over their respective costs, but we are dealing here with the improvements as a whole. It is worthy of note, however, that the assessor arrived at his supposed replacement cost by computing it upon each separate unit, with no apparent relation to actual cost. Mr. Freed could not recall that he was ever asked by the assessor for figures on income or expenses; he testified that the annual net income from rents was approximately $1,390,000, with a provision in the leases for an additional percentage rental based on gross income as a “hedge” against inflation; no figure could be given on this latter item, since the stores had not been in operation for a full year as of January 1, 1971. The amounts allowed and paid to the tenants for completion of their respective store interiors were negotiated with the tenants; Hermel did not claim any interest in any property produced by expenditures in excess of these allowances and did not even know what totals were spent. It takes depreciation only upon the amounts allowed and paid. Mr. Freed testified that, “to his knowledge” he was not asked by the assessor for the construction costs; he furnished all of the figures to Mr. Duck of B. W. Duck and Associates who was selected to make an appraisal of the property. This firm had never been used by Hermel previously; after inquiry, Mr. Freed determined that none of the Springfield appraisers had time to do the job for Hermel. The deed of trust on this property contained a provision that the loan should not be more than 75% of the value of the property; the actual loan was $10,125,000. Mr. Freed assumed that an appraisal had been made at the time of the loan but testified that any then valuation was not his.

B. W. Duck of B. W. Duck and Associates of Indianapolis, Indiana, had been engaged in the business of real estate appraisals and management, and allied fields since 1933. He was a member of the American Institute of Real Estate Appraisers, and of various real estate organizations. He had spent a day in Springfield examining the property and making inquiries, had made various telephone calls for information thereafter, and had spent “weeks” in studying the matter and arriving at his computations. He testified: that there are three generally accepted approaches to the valuation of real estate, namely, the reproduction cost less depreciation plus the land value, the income capitalization approach, and the market data approach; that he had seen copies of various records of the assessor; that his computations on the different bases are shown in his report, which was received as an exhibit. He first showed, as the cost approach, a figure of $8,012,108.25 for the improvements after deducting $293,255 for grading and site work which he considered as a land cost; he testified that, since the appraisal was made as of January 1, 1971, and the mall had not been opened until July of 1970, the property had suffered no “Measurable depreciation”; he added a land value, but we are not concerned with that. He next considered the valuation from the income approach; he had examined the income figures in Hermel’s office, but since the mall had not been open for a full year, it was necessary to make a projection of the rentals, including possible vacancies. He examined certain of the leases. He arrived at a net annual income figure of $1,394,550. Upon an assumed rate of interest, a consideration of the taxes, and a useful life of 25 years he found a capitalization value of $8,472,691 for the improvements. The third method, the market data approach, was said to be a consideration of the sales or offers for sale of comparable properties. Mr. Duck found no comparable property in the Springfield area and used for comparison properties in Minneapolis, Denver and West Virginia. From these comparisons, first, on a square foot basis, and, secondly, by a “gross rent multiplier” derived from one of the properties and applied to ours, he arrived at a valuation of $8,590,000 for the property involved, on the market data approach. Mr. Duck further testified that upon a consideration of all three approaches or methods, he gave most weight to the income approach, next to the cost approach, and least to the market data approach, arriving at a weighted average value of $9,512,-000, including the land. This, of course, would leave a value of $8,100,400 on the improvements. It was Mr. Duck’s opinion that “a shopping center today that is 25 years old is gone.”

Two representatives of the assessor’s office, Hugh Haseltine and Clyde Dusenberry, testified, collectively: that they had worked approximately a month in making this assessment; that they measured every store and each room, and prepared field notes and diagrams; that they arrived at a valuation of $11,744,909 on the improvements, using the replacement cost approach; that they did not have the income figures and that there were no other comparable properties in the area; that building costs had been rising all the time; that they did not “disbelieve” the evidence as to Hermel’s overall costs, although they doubted that the hallways were built at the figure indicated; that in arriving at their replacement cost they used the “Kentucky Manual”, a publication about ten years old, put out by the State of Kentucky, which consisted of a series of averages of costs; the assessment was based “partially” on this; that to the figures there shown they added 20% “on most items”, and in some places more, using the manual as a base; that on some things they used “local costs”; that the Kentucky Manual does not fit any particular building, and there were no shopping centers when it was published; that the three recognized methods of valuation are the cost, market data and income approaches; that they utilized the cost approach and the result was simply their opinion; that at one time Mr. Freed and his counsel had given them a list of figures supposedly showing the construction costs, but that they did not use them.

Mr. Alva E. Koch, a Springfield real estate appraiser, testified for the County in substance: that he had reviewed the assessment and that the figure of $11,744,909 on the improvements represented about $17.50 per square foot of completed store area, excluding the hallways, and that this fell “within the range of construction of that type” as of January 1, 1971; that he had not examined or studied the property, having been contacted on “short notice”; that he heard Mr. Duck’s testimony and felt that the capitalization rate which he used on income was high, and that the twenty-five-year life of the improvements was too low; that he did not make square foot comparisons of construction costs.

Two of the tenants of the mall testified (over objection) that they had spent substantial sums in excess of their respective allowances in completing and furnishing the interiors of their stores; one had spent a total in excess of $100,000 as compared with an allowance of $24,000; he thought that his firm depreciated these costs. The other tenant received an allowance of $59,940 and spent approximately $180,000. Some of the expenses on these stores included carpentry, tile, steel, heating, air conditioning, plumbing, painting, plaster, sheet metal, vinyl and wiring; the second tenant also depreciated the excess expense. A copy of the lease to Hermel from the fee owners of the real estate was offered and received in evidence. It called for payments of $65,000 per year, and Hermel was to pay the taxes.

The rehearing was held on July 15, 1975. Many of the witnesses who appeared at the first hearing also appeared at the second hearing, along with updated testimony.

Mr. Freed was the first witness to testify. As noted supra, he was the vice-president of Hermel. His testimony generally followed that given at the first hearing. On cross-examination he stated that certain indirect costs, such as legal fees incurred in obtaining the land and preparing leases, the salaries of personnel employed to secure tenants, and the cost of interim financing, were not included in cost figures given at the first hearing. He said there were two types of stores constructed: “shell” stores which required the tenants to complete the interiors, and “turnkey” stores which were to be turned over to the operators with completed interiors ready for business. He did not know the exact sums expended by tenants in excess of the amounts given by Hermel (Hermel allowed tenants $545,938 for the purpose of finishing what were mostly store “shells” into individual stores as each tenant desired) for completion of the interiors of the stores, nor did he know what the money was expended on.

The testimony of Mr. Joseph M. Bramer was entered by way of deposition. Mr. Bramer was the vice-president and secretary of Bramer Construction which participated in the construction of the mall. His testimony tended to corroborate the testimony of Mr. Freed given at the first hearing. He stated that the replacement cost as of January 1, 1971, would have been essentially the same as the actual cost of the work done by Bramer Construction because the various factors which would inflate the cost of the work over the life of the contract, such as increases in the cost of labor and materials, were figured into the bid. He also testified that most of the construction work done by Bramer Construction was for interior completion. Some of this was under contract with individual tenants and some was under contract with Hermel. He did not know if more was spent in finishing interiors by the individual tenants than the allowances given by Hermel.

Hermel’s next witness was Mr. G. Larry Kelly, executive vice-president of Pickens-Bond Construction Company, during construction of the mall. Pickens-Bond was under contract with Hermel for construction of the site and building, or shell. His testimony also corroborated Mr. Freed’s testimony in the first hearing concerning the cost of the building. He testified that the cost as of January 1, 1971, would not have differed greatly from the 1969 bid of Pick-ens-Bond. Fulfilling their part of the contract took 18 to 20 months. Mr. Kelly also testified that his estimate for the costs of completing the interior of the store, what he called a “complete basic space” ready for business, prepared according to the “Melvin Simon basic” (according to Mr. Kelly, the “Melvin Simon basic” is a room with a floor, floor covering, sliding glass doors, a ceiling, light fixtures, air conditioning, toilet and a partition across the back) was $908,506. Objection by defendants’ counsel that this amount was hypothetical and not based on actual replacement cost of actual improvements as of January 1, 1971, was sustained by the commission.

Hermel’s next witness was B. W. Duck of B. W. Duck and Associates, who had been a principal witness for Hermel at the first hearing. He testified that his computation of the true value of the improvements based on the market data approach and the income capitalization approach had not changed since the first hearing. Mr. Duck testified that his computation of the value of improvements based on the replacement cost less depreciation approach had been changed because of the calculation of Pick-ens-Bond on the cost of completing the individual stores. The County objected to this testimony because it was based on the estimates of Mr. Kelly. The commission allowed the testimony for “what it may be worth”. The revised figure for improvements was $8,374,676.25. This amount does not include $293,255 for grading and site work.

On cross-examination Mr. Duck testified that he did not include indirect costs in determining the replacement cost of the mall. This testimony corroborated that of Mr. Freed noted supra. Mr. Duck also testified that he did not know the actual cost of the interior improvements made by the various store owners. Finally, Mr. Duck testified that he relied most heavily on the income capitalization approach, then on the cost approach, and he gave little regard to the market data approach.

The County’s evidence consisted of the depositions of the tenants and the testimony of Mr. Alva E. Koch and Mr. Jóe E. Roberts.

The depositions of the tenants showed the total cost of leasehold improvements to be $2,521,889.52. Hermel objected to the depositions and to a compilation of the data contained in them on grounds that the totals contained amounts spent on personal property and that they were speculative.

Mr. Koch testified as an expert for Greene County. He testified that actual construction costs and indirect costs plus a 12.1% construction cost increase from April 1969 to January 1971 amounted to a replacement cost of $12,305,000 for improvements. The commission found the amount to be $12,705,821. Indirect costs included legal and title expenses involved in the title to the land and the preparation and negotiation of the leases. It also included certain interim expenses such as interim taxes, insurance and financing, and the administration cost involved in engaging architects, letting contracts, selecting tenants, etc. The percentage of 12.1 was added because the cost was figured as of April 1969 when the bid was let, and the valuation was to represent the cost as of January 1, 1971. Mr. Koch testified that construction costs increased by approximately 12.1% during the period between April 1969 and January 1, 1971. His original estimate of replacement cost was under $11,000,000 but this figure was updated to $12,305,000 to comport with the depositions introduced into evidence of the various tenants of the mall which showed that the tenants had spent greater sums than first estimated in converting their shells into ready-for-business stores. Mr. Koch also testified that the value of the improvements based on the income approach to be $12,205,000. This figure included a sum for prepaid rent based on the large tenant improvements to the leasehold as shown by the depositions of the tenants, referred to supra.

Mr. Joe E. Roberts, who in 1969 was employed by New York Life Insurance Company, the lender for permanent loan of the Battlefield Mall, testified that he and another New York Life appraiser, F. H. Lehman, conducted an appraisal in 1969 of Battlefield Mall to determine value for loan purposes in order for New York Life Insurance Company to comply with the requirement of New York law prohibiting loans in excess of 75% of the true value of property. They arrived at cost figures by using the Marshall-Stevens Valuation Service cost per square foot and determined it to be $12,-175,000 for improvements. Mr. Roberts was later requested by Greene County to revise the appraisal as of January 1, 1971. Using the cost approach, he arrived at a value for improvements of $12,565,000. Mr. Roberts used the Elwood or mortgage-equity method to determine the value according to the income approach. The figure arrived at was $12,115,000 for improvements. This was revised to $12,665,000. Using the market approach, his total estimated value was $14,900,000 for land and improvements. The land value was not specified. Mr. Roberts concluded his testimony by stating that the income approach was the best approach under the circumstances and that his final estimated value was $14,300,000 for land and improvements, or $12,665,000 for the improvements alone.

In its “Conclusions of Law” following the second hearing, the commission found the assessor’s valuation of improvements to be the true value. The commission stated that the assessor’s valuation is presumed to be correct unless shown in some respect to be incorrect, citing Foster Bros. Mfg. Co. v. State Tax Commission, 319 S.W.2d 590 (Mo.1958). As Hermel failed to overcome this presumption, the appraisal of the assessor must stand. This decision was grounded on Hermel’s failure to produce any evidence showing the actual cost for construction and completion of the individual leasehold improvements made by the tenants. Furthermore, the commission found the appraisals of Mr. Roberts and Mr. Koch supported the assessment of the assessor and showed it to be reasonable and proper and the appraisal of Mr. Duck to be less accurate because it did not include indirect costs, site improvements and inflationary factors in the cost approach or mortgage data in the income approach.

Hermel’s contentions on appeal are: (1) that the presumption in favor of the assessor’s valuation was rebutted because the decision of the commission after the first hearing is res judicata on that issue as sufficient evidence was introduced to rebut the presumption and favorable evidence introduced by the County showed the assessor’s valuation to be grossly excessive; (2) that the decision of the commission was arbitrary and unreasonable and unsupported by competent and substantial evidence in that there was no new evidence at the 1975 hearing on the assessor’s valuation which had been disallowed by the commission and the supreme court; the finding that Hermel’s expert did not include indirect costs, site improvements, inflationary factors and mortgage data in his appraisal was decided with res judicata effect in 1971 in Hermel’s favor and was contradicted by the evidence; and the evidence of improvements made by individual tenants included valuations for personal property; (3) the trial court substituted its discretion for the commission’s when it found that Hermel failed to meet its burden.

On review of an administrative decision, this court is limited to a determination of whether the decision was supported by competent and substantial evidence upon the whole record, whether it was arbitrary, capricious or unreasonable, or whether the commission abused its discretion. Greene County v. Hermel, Inc., supra, at 768; sec. 536.140, RSMo 1969. The evidence must be considered in a light most favorable to the administrative body, together with all reasonable inferences which support it, and if the evidence would support either of two opposed findings, the reviewing court is bound by the administrative determination. Board of Education, Mt. Vernon Schools, Mt. Vernon v. Shank, 542 S.W.2d 779, 782 (Mo. banc 1976).

Hermel takes the position that the evidence of the assessor showing a valuation of $11,744,909 was considered and rejected by the commission in 1971 and that finding is res judicata as to that issue. Hermel asserts that the 1971 decision of the commission that Hermel rebutted the presumption in favor of the assessor’s valuation and met its burden of proof must stand as a final determination on those issues. According to Hermel, this also means that there cannot be competent and substantial evidence to support the 1975 decision of the commission.

Hermel’s reliance on res judicata is misplaced. The doctrine of res judicata is inapplicable here because this cause has not proceeded to a final judgment. See Hickman v. Division of Employment Security, 448 S.W.2d 270 (Mo.App.1969); Noll v. Noll, 286 S.W.2d 58 (Mo.App.1956), and Smith v. Smith, 176 S.W.2d 647 (Mo.App.1944). Section 536.140 gives a court on review the authority to reverse an agency’s order and “order the reconsideration of the case in the light of the court’s opinion and judgment and . . order the agency to take such further action as it may be proper to require; . . In Greene County v. Hermel, supra, the court ordered the commission to reconsider its decision in light of its opinion, stating at 771: “On another hearing the finding should be more specific and, if replacement cost is to be relied on, Hermel should have further evidence, especially since the construction contract was obviously executed and the costs fixed as early as 1969. In any event, the Commission must arrive at the ‘true value’ or fair market value as of January 1, 1971, by whatever method is followed.” (emphasis supplied.) It is clear that a rehearing was required and that the commission was to consider all the evidence including the evidence introduced at the first hearing.

Although the court in Greene County v. Hermel, supra, held that the assessor’s valuation was not correct as a matter of law (511 S.W.2d at 768), this did not preclude the commission from concluding that it was the proper valuation. The commission had before it new evidence from other sources which showed the assessor’s valuation to be reasonable and proper. That the evidence after the first hearing did not show the assessor’s valuation to be correct as a matter of law does not rule out the possibility that there could be substantial evidence supporting the assessor’s valuation. In such a case, where the evidence supports either of two findings, the reviewing court is bound by the determination of the agency. Board of Education, Mt. Vernon Schools, supra, at 782. Hermel’s point based on the application of res judicata is overruled.

Hermel’s attacks on the merits of the evidence are essentially that it overcame the presumption in favor of the assessor’s valuation, that it met its burden of proof, and that the decision of the commission was unsupported by competent and substantial evidence on the record as a whole.

A presumption exists in favor of the correctness of the valuation of the tax assessor. Wymore v. Markway, 338 Mo. 46, 89 S.W.2d 9, 14 (1935). In Cupples Hesse Corporation v. State Tax Commission, 329 S.W.2d 696, 702 (Mo.1959), it was held that to obliterate the presumption, “substantial controverting evidence” is required. Substantial evidence is “that evidence which, if true, ‘has probative force upon the issues .,’ and from which the trier of fact can reasonably decide the case on the fact issues. . . .” The court went on to say, “[t]he evidence of petitioner here failed to show either discrimination or a valuation which was excessive ... In such a situation, the presumption is not overcome.” The initial question for this court is whether Hermel produced substantial evidence showing the assessment to be excessive.

Hermel produced evidence on the replacement cost, capitalization of income and market data approaches. As there was no evidence on the reliability of the market data approach, and substantial evidence from all parties that it was generally unreliable because of the absence of similar property in the Springfield area, we will omit any further mention of it. Hermel’s principal contention is that it submitted substantial evidence on the cost and income approaches.

As noted in the factual statement, Her-mel’s evidence on replacement value consisted of the cost of construction determined by the 1969 bids and an estimated value for tenant improvements. As noted by the commission, this replacement value did not include data such as indirect costs, site improvements, and inflationary factors. Hermel made no attempt to incorporate the depositions of the tenants as to leasehold improvements into its cost analyses. Although Hermel objected to the depositions because they included certain items arguably classified as personal property, the cost of these items as enumerated in Hermel’s brief amounted to only $75,605.93. When subtracted from $2,521,889.52, the amount the depositions show as the leasehold improvements, this leaves a total for tenant improvements at $2,446,283.59. When added to the basic cost of $7,466,170.25 (as per Hermel’s contracts) plus $293,255 for site work and $991,068 for indirect costs (site work and indirect expenses are factors which the commission could find relevant elements in determining the replacement costs, see St. Louis County v. Security Bonhomme, Inc., 558 S.W.2d 655 (Mo. banc 1977), and Stephen & Stephen Properties, Inc. v. State Tax Commission, 499 S.W.2d 798 (Mo.1973)), the total cost comes to $11,-196,776.84 without adjustment for inflation. None of the valuations urged on this court by Hermel are within $1,500,000 of this figure. In view of the large figures under consideration and the replacement cost assessments of Mr. Roberts and Mr. Koch which exceeded the valuation of the assessor, the assessor’s valuation of the improvements at $11,744,909 was not excessive.

It should be further noted that Her-mel tried to introduce an estimate by one of its contractors on the value of improvements but an objection to the evidence was sustained and that ruling is not disputed here. Furthermore, a valuation made on construction costs alone is not based on competent and substantial evidence. State ex rel. Kahler v. State Tax Commission, 393 S.W.2d 460, 465 (Mo.1965). In Greene County v. Hermel, supra, at 771, the court said that the commission could adopt Her-mel’s construction cost figure as the replacement cost if adjusted to reflect the cost of tenants’ additional improvements and the fact that the bid was let and costs fixed as early as 1969. This court holds that the replacement cost assessment of Hermel did not amount to substantial evidence.

Mr. Koch, Mr. Roberts, and Mr. Duck each testified that the preferred method of evaluating an income producing property was the income capitalization approach. Their results under this approach, however, were very different. Mr. Duck, who testified for Hermel, arrived at a valuation of $8,472,691. Mr. Koch’s figure was $12,205,-000 and Mr. Roberts’ was $12,665,000. Mr. Koch and Mr. Roberts both used the mortgage-equity approach to determine the capitalization rate. Mr. Duck, on the other hand, used' the straight-line method which assumed a 100% ownership by the developer and assumed the property would not be sold for income tax purposes. Mr. Koch and Mr. Roberts testified that the straight-line method was not used by investment brokers currently, and Mr. Koch further testified that the straight-line method had not been favored since 1960 or 1965. The failure of Mr. Duck to include relevant mortgage data into his income approach prompted the commission to find his evidence “less accurate”.

It is not within the purview of this court to ascertain the correct or modern means of determining the value according to the income capitalization approach just as it is not within the purview of this court to determine the method of valuation to be adopted by the commission. Xerox Corporation v. State Tax Commission, 529 S.W.2d 413 (Mo. banc 1975). It was within the administrative discretion of the commission to determine that the existing mortgage was a factor which should be considered in fixing the “true value in money” under the income capitalization approach in this case. St. Louis County v. Security Bonhomme, Inc., supra.

For the foregoing reasons, we find the commission’s conclusion that Hermel did not rebut the correctness of the assessor’s valuation justified. As the presumption was not overcome, it is unnecessary for this court to determine if Hermel met its burden of proof. Cupples Hesse Corporation, supra.

The decision of the commission was supported by competent and substantial evidence on the record as a whole. The assessor’s valuation was based in part on local costs and in part on use of the Kentucky Manual, a manual of average costs in Kentucky approximately ten years old at the time of the assessment, upgraded by 20%. Although the evidence on the means used to arrive at the 20% figure is lacking, there was evidence that inflation between 1969 and 1971 increased construction costs by over 12%, and in this light the 20% figure is not totally arbitrary and capricious. Furthermore, the valuations of Mr. Roberts and Mr. Koch using the income approach showed the assessor’s valuation not to be excessive. The “true value” which the commission must find is at best a mere estimate (Stein v. State Tax Commission, 379 S.W.2d 495, 498 (Mo.1964)) and it is within the commission’s discretion to adopt whichever approach it deems proper. Xerox Corporation, supra. The commission’s decision that $11,744,909 represented the true value of improvements as of January 1, 1971, was supported by competent and substantial evidence on the record as a whole.

Hermel contends that the trial court substituted its discretion for that of the commission when it found that even if Her-mel had rebutted the presumption in favor of the assessor’s valuation, it did not meet its burden of proof. This contention is without merit. In the case of an affirmance of the agency’s decision, nothing more is required than the rendition of the judgment of affirmance. Mobil Oil Corporation v. State Tax Commission, 513 S.W.2d 319 (Mo.1974). In this instance, the circuit court affirmed the judgment and held that the decision of the commission was supported by competent and substantial evidence on the record as a whole, and in accepting the assessor’s figures the commission was not acting arbitrarily, capriciously, unreasonably, nor in abuse of its discretion. This is within the scope of review afforded the circuit court by see. 536.140. The fact that the circuit court went further to state that, even if Hermel rebutted the presumption, it did not meet its burden of proof is immaterial in the disposition of this case as we find the conclusion of the commission was not erroneous.

At the request of this court, both parties addressed the issue of the propriety of review by this court of cases involving the improper valuation of real estate. It is a fact that this court has reviewed cases of this type where the assessment of property is alleged to be arbitrary, capricious, unlawful or unfair. See, for example, Sullivan County v. State Tax Commission, 513 S.W.2d 452 (Mo.1974); Stephen & Stephen Properties, Inc. v. State Tax Commission, supra; State ex rel. Kahler v. State Tax Commission, supra; Koplar v. State Tax Commission, 321 S.W.2d 686 (Mo.1959), and May Department Stores Co. v. State Tax Commission, 308 S.W.2d 748 (Mo.1958). Moreover, this appeal emanates from the exact case previously appealed to this court and held by it to be within the jurisdiction of this court. Greene County v. Hermel, supra.

The rationale of these decisions and others like them is that an attack on the valuation on a piece of property involves a construction of a revenue law under art. 5, sec. 3, Mo.Const., namely, the construction of the words “true value” as found in sec. 137.115. See Stephen & Stephen Properties, Inc. v. State Tax Commission, supra. The question before us is whether or not these types of eases actually involve a construction of the words “true value” or merely an application of the meaning of the words to the facts of the case.

In Dorrance v. Dorrance, 242 Mo. 625, 148 S.W. 94, 98 (1912), it was held that construction “ ‘signifies determining the meaning and proper effect of language by a consideration of the subject-matter and attendant circumstances in connection with the words employed.’ ” See also Ewing v. City of Springfield, 449 S.W.2d 681 (Mo.App.1970). “True value” is an estimate of the fair market value on the valuation date. Stein v. State Tax Commission, supra, at 498; Greene County v. Hermel, supra, at 771. This definition has not changed from case to case. What does change are the methods used and the factors considered in determining “true value”. The determination of which factors are relevant in a particular case and thus are required to be considered in determining true value has been held to involve the construction of a revenue law. Stephen & Stephen Properties, Inc., supra. The real question before the court in such a case is not the construction of the term “true value” but an application of this term to the facts of the case. Those facts will include the various methods of valuation and factors or data considered as a part of each method along with the results of the valuation. The meaning of the term “true value” is clear but its application to the facts in cases, such as the present one, is not so clear.

Because this court has accepted jurisdiction in this type of case in the past, and because this cáse has been decided by this court previously, we have decided the issues on the merits. In the future, however, cases questioning the value placed on a piece of property for tax purposes and challenging the valuation on the grounds that it is arbitrary and not supported by competent and substantial evidence shall not be considered within the exclusive jurisdiction of the supreme court because they do not involve a construction of the revenue laws of Missouri pursuant to art. 5, sec. 3, Mo.Const.

The judgment is affirmed.

All of the Judges concur.