Case Title: Myron Green Corp. v. Director of Revenue

Citation: 

Docket Number: SC96903

State: missouri

Court: Missouri Supreme Court

Date: 2019-01-15T00:00:00Z

Document:
SUPREME COURT OF MISSOURI
en banc 
MYRON GREEN CORPORATION, 
  ) 
  ) 
Appellant, 
  ) 
  ) 
v. 
  ) 
No.  SC96903 
  ) 
DIRECTOR OF REVENUE, 
  ) 
  ) 
Respondent. 
  ) 
PETITION FOR REVIEW OF A DECISION OF THE ADMINSTRATIVE 
HEARING COMMISSION 
The Honorable Audrey Hanson McIntosh, Commissioner 
Myron Green Corporation petitions for review of the administrative hearing 
commission’s decision finding Myron Green liable for sales tax on food sold to employees 
of the Federal Reserve Bank of Kansas City in the bank’s on-site cafeteria.  Because Myron 
Green regularly sold food in the on-site cafeteria “to the public” as this term is used in 
Missouri’s revenue code, and the bank’s sales tax exemption does not extend to its 
individual employees, the commission’s decision is affirmed.     
I. Factual and Procedural History
Myron Green Corporation operates corporate cafeterias in various businesses 
throughout the Kansas City metropolitan area.  The Federal Reserve Bank of Kansas City 
Opinion issued January 15, 2019
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contracted with Myron Green to operate the bank’s on-site cafeteria.  The bank is a secure 
facility.  As a result, public access to the cafeteria is restricted.  However, anyone can 
purchase food from the cafeteria upon entry and access to the bank. 
Myron Green entered into a “cost-plus” contract with the bank.  Pursuant to the 
contract, the bank pays Myron Green its actual costs and expenses, plus an additional fee 
to compensate Myron Green for its services.  Under the contract, Myron Green handles 
nearly all aspects of the cafeteria’s operation.  Myron Green purchases food from wholesale 
distributors and arranges for its transport to the bank.  Myron Green employees stock the 
cafeteria, cook the food, and operate the point-of-sale system.  The bank does not buy any 
food from Myron Green before the food is sold to the cafeteria customers, and the bank’s 
influence is limited to setting the price customers pay for food, determining the cafeteria’s 
hours of operation, and screening the Myron Green employees who work in the cafeteria.  
Customers purchase items in the bank’s cafeteria similarly to any other cafeteria. 
Customers select the food and drink products they wish to buy then pay a cashier for those 
items.  Customers can pay with cash or, if the customer is a bank employee, via payroll 
deduction.  The cafeteria does not accept credit or debit cards.  Approximately 80 percent 
of customers at the cafeteria pay via payroll deduction. 
Cash payments from customers go directly to Myron Green’s bank account, and the 
bank does not interact with those funds.  The payroll deduction option allows employees 
to swipe their identification badges at checkout.  This instructs the bank to withhold the 
payment amount from the employee’s next paycheck.  The withholding is held in a separate 
account at the bank.  Myron Green tracks payroll deduction sales and transmits a list of all 
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such sales to the bank twice per month, aligning with the bank’s pay period.  At the end of 
each two-week pay period, the bank uses its corporate credit card to pay Myron Green the 
total amount deducted from employee paychecks.  The bank then uses the funds in the 
payroll deduction holding account to reimburse itself.  The cash and two payroll deduction 
payments do not cover the contracted monthly price the bank agreed to pay Myron Green 
because the cafeteria sells food below market value.  Therefore, at the beginning of each 
month, the bank makes a third “shortfall” payment to Myron Green, which covers the 
remainder of the contract price for the previous month.  In this way, the bank subsidizes 
the cost of food in the cafeteria.   
The bank’s purchases are exempt from Missouri sales and use tax.  See 12 U.S.C. § 
531. Believing this exemption applied to all sales transactions at the bank’s cafeteria,
Myron Green did not charge or collect sales tax on any products sold in the cafeteria.  
Following an audit, however, the director of revenue determined the cafeteria’s cash sales 
and payroll deduction sales were taxable, finding individual customers made those 
purchases, not the bank.  The director concluded Myron Green owed sales tax to the state 
of Missouri for all products sold in the cafeteria.  Myron Green appealed the director’s 
decision to the administrative hearing commission.  The commission affirmed the 
director’s tax audit findings in a published decision.  Myron Green petitioned this Court 
directly for review. 
II. Jurisdiction
This Court has exclusive appellate jurisdiction over cases involving the construction 
of Missouri’s revenue laws.  MO. CONST. art. V, § 3.  “A ‘revenue law’ is one that imposes, 
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amends, or abolishes a tax or fee.”  Armstrong-Trotwood, LLC v. State Tax Comm’n, 516 
S.W.3d 830, 834 (Mo. banc 2017).  This case presents questions requiring the interpretation 
of § 144.020,1 which sets the statewide sales tax.  Accordingly, this Court has exclusive 
appellate jurisdiction. 
III. Standard of Review
This Court reviews the commission’s legal decisions de novo.  Shelter Mut. Ins. Co. 
v. Dir. of Revenue, 107 S.W.3d 919, 920 (Mo. banc 2003).  This Court will affirm a
commission decision if it is supported by competent and substantial evidence on the record 
as a whole and is not “arbitrary, capricious, unreasonable, unlawful, or in excess of 
jurisdiction.”  J.B. Vending Co., Inc. v. Dir. of Revenue, 54 S.W.3d 183, 185 (Mo. banc 
2001); see also MO. CONST. art. V, § 18.   
IV. Analysis
The primary issue before this Court is whether a third-party operator of a company 
cafeteria is liable for sales tax on food purchased by employees of a tax-exempt 
organization in that cafeteria when the organization influences pricing, sets the cafeteria’s 
hours, and subsidizes the cost of food in the cafeteria.  Myron Green argues the commission 
erred by upholding the director’s decision to impose sales tax on sales made in the bank’s 
on-site cafeteria.  In affirming the director, the commission reached three legal conclusions: 
(1) the bank cafeteria regularly served meals and drinks to the public within the context of
§ 144.020.1(6); (2) the bank’s sales tax exemption did not extend to individual employees;
1 All statutory references are to RSMo 2000, as amended. 
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and (3) the commission’s decision was not unexpected within the context of § 143.903.  
Myron Green contests each finding in its three points relied on.  The Court addresses each 
in turn and affirms the commission’s findings on each of the three separate issues. 
A.  The bank cafeteria regularly served meals and drinks to the public. 
 
Section 144.020.1 imposes a tax on sellers of tangible personal property for the 
privilege of engaging in that business.  Any place where “meals or drinks are regularly 
served to the public” is subject to the tax.  § 144.020.1(6).  Myron Green argues the bank’s 
highly secured nature means its cafeteria does not serve food to the public.  In finding the 
bank’s cafeteria served meals and drinks to the public, the commission relied on this 
Court’s decision in J.B. Vending, Co., Inc. v. Director of Revenue, 54 S.W.3d 183 (2001).   
In J.B. Vending, this Court rejected the argument that a company cafeteria does not 
serve food to the public solely because the company limits access to the cafeteria.   
J.B. Vending was a commercial cafeteria operator, which operated company cafeterias for 
13 businesses in the St. Louis and Cape Girardeau areas.  Id. at 184.  This included tracking 
inventory, preparing and cooking food, and operating the point-of-sale system.  Id.  All 13 
locations in which J.B. Vending operated a cafeteria restricted access to their buildings, 
and only those persons with a legitimate business purpose could enter.  Id.  Once inside, 
however, anyone could buy food from and eat in the cafeterias.  Id. at 185.  J.B. Vending 
argued it was exempt from the taxing provisions of § 144.020 because the secure nature of 
its clients buildings precluded it from selling food and drink to the public.  Id.  This Court 
disagreed, holding cafeterias do not become non-public for the purposes of § 144.020.1(6) 
merely because a third party restricts access to them.  Id. at 187.  Accordingly, J.B. Vending 
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was subject to the taxing provisions of § 144.020 because it regularly sold food and drink 
to the public.  Myron Green is similarly situated. 
Myron Green tries to distinguish this case by comparing it to Shelter Mutual 
Insurance Co., v. Director of Revenue, 107 S.W.3d 919 (Mo. banc 2003).  In Shelter, this 
Court held items sold in a company cafeteria were not subject to sales tax because there 
was no sale “to the public” within the context of § 144.020.  Id. at 922.  There, Shelter’s 
company headquarters had an on-site cafeteria.  This Court held Shelter’s cafeteria did not 
sell meals and drinks to the public because, inter alia, Shelter’s main business was not 
operating company cafeterias.  Id. at 922.  Rather, Shelter’s primary business was selling 
insurance.  Id.  Shelter did not “provide its dining services as ‘separate and independent’ 
of its primary business.”  Id. (internal citation omitted).  Instead, “Shelter offered meals 
and drinks to its employees ‘as an incidental but necessary undertaking’ of its insurance 
business.”  Id. (internal citation omitted).  Moreover, different from the present case and 
J.B. Vending, Shelter operated the cafeteria itself; it did not hire a commercial vendor. 
Here, operating on-site cafeterias for corporate clients is Myron Green’s primary 
business.  Holding oneself out as “ready to contract for cafeteria services with any company 
that hires its services” means that company’s cafeterias regularly serve the public 
regardless of whether the cafeteria is in a restricted-access building.  J.B. Vending, 54 
S.W.3d at 189.  Similar to J.B. Vending, Myron Green was willing to provide its cafeteria 
services to any client willing to contract with it.  Although the bank restricts access to the 
cafeteria, this was the bank’s choice, not Myron Green’s.  Myron Green “does not limit 
sales to only its own employees, or even to only building employees.”  Id.  Rather, Myron 
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Green stands ready “to serve those who present themselves at its cafeteria lines and serves 
all who appear at its cafeterias. … Any member of the public who can gain access to the 
building can eat in the cafeteria.”  Id.  The bank’s cafeteria, therefore, remains public for 
purposes of § 144.020 even though the bank restricts entry and access to the cafeteria.  Id. 
at 187.   
Finally, this Court in both Shelter and J.B. Vending highlighted the importance of a 
special relationship between a cafeteria operator and its customers when deciding whether 
that establishment serves the public.  An operator’s special relationship with its customers 
can establish the cafeteria does not regularly serve meals and drinks to the public.  Shelter, 
107 S.W.3d at 922-23.  In finding Shelter’s cafeteria did not regularly serve the public, this 
Court considered how most of the cafeteria’s customers were also Shelter employees.  Id. 
at 922.  This special employer-employee relationship showed the cafeteria did not regularly 
serve the public.  Id. at 922-23.  In contrast, there is no special relationship between Myron 
Green and the cafeteria customers.  True, most of the cafeteria’s customers are bank 
employees, but the special relationship discussed in Shelter exists between employer and 
employee, not customer and seller.  The special relationship between the bank and its 
employees does not extend to Myron Green and the bank employees.  See § II(B), infra.   
Myron Green is in the business of operating corporate cafeterias, and it has no 
special relationship with its customers in the bank cafeteria.  Accordingly, there was 
competent and substantial evidence supporting the commission’s finding that Myron 
Green’s sales in the bank’s cafeteria are taxable because the cafeteria regularly serves 
meals and drinks to the public as defined by § 144.020.1(6). 
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B. The bank’s sales tax exemption did not extend to individual employees.
State law exempts from sales tax “any retail sale which the state of Missouri is 
prohibited from taxing pursuant to the Constitution or laws of the United States.”  
§ 144.030.1.  Federal law generally exempts federal reserve banks from state taxation.  See
12 U.S.C. § 531.  Further, a 2002 letter from the director of revenue advised the bank its 
purchases were exempt from Missouri sales tax so long as it made purchases within the 
bank’s exempt functions.  Myron Green argues this authority renders its cafeteria sales 
non-taxable because the food and drink items were sold to the bank and, therefore, qualify 
as a “retail sale which the state of Missouri is prohibited from taxing” under federal law.  
§ 144.030.1.
Whether Myron Green’s food sales are exempt from sales tax in this case turns on 
the identity of the purchaser.  Myron Green argues the bank purchased food and drink 
products from Myron Green, while the director argues the individual customers purchased 
food directly from Myron Green.  A purchaser of goods is the one who exercises dominion 
and control over the thing purchased.  Becker Elec. Co., Inc. v. Dir. of Revenue, 749 S.W.2d 
403, 407 (Mo. banc 1988).  Myron Green argues the bank exercised dominion and control 
over the food because the bank stores the food, influences pricing, and sets the cafeteria’s 
hours.  The commission correctly rejected this view, however, because the bank’s overall 
transaction structure and payment schedule with Myron Green is not compatible with the 
bank exercising dominion over the food. 
A party exercises dominion over property by determining the “utilization of the 
purchased property, including how, where, and when the property was to be used.”  Olin 
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Corp. v. Dir. of Revenue, 945 S.W.2d 442, 444 (Mo. banc 1997).  To the extent the bank 
exercised any control over the food, it was limited to establishing prices and the cafeteria’s 
hours of operation.  The bank had little influence over “how, where, and when” the 
purchased food was used.2  Id.  Rather, cafeteria customers made these decisions.  Cafeteria 
customers decided which food products to purchase and when and where the food products 
would be used and consumed.  It was cafeteria customers, therefore, not the bank, 
exercising dominion over the food products and purchasing the goods sold by Myron 
Green. 
Myron Green also attempts, but fails, to analogize this case to Canteen Corp. v. 
Goldberg, 592 S.W.2d 754 (Mo. banc 1980).  In Canteen, a commercial food service 
provider sold food to a retirement home, which resold the food to its residents.  This Court 
deemed the retirement home to be the purchaser in that scenario.  Id. at 756.  Myron Green 
argues the bank is no different from the retirement home.  The distinction, however, lies in 
the fact the retirement home bought and paid for the food before serving it to its residents.  
Id.  In contrast, the bank did not pay Myron Green in advance for any food stocked in its 
cafeteria.  Rather, Myron Green bought the food from wholesale distributors and arranged 
for the wholesaler to transport, deliver, and store all supplies at the bank until Myron Green 
employees prepared and served it to the cafeteria’s customers.  Further, Myron Green 
maintained control over the inventory after the wholesaler delivered the food to Myron 
                                                 
2 Prior to sale to cafeteria customers, Myron Green - not the bank - exercised dominion 
over the food products.  Myron Green’s employees devised the cafeteria’s menus, prepared 
all the food, filled orders, and operated the cash register. 
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Green at the bank.  Myron Green controlled the bank cafeteria’s inventory to such an extent 
it could transfer supplies between the bank’s cafeteria and other Myron Green facilities.   
Cafeteria customers paid for their meals either with cash or by deducting the 
purchase price from their bank paycheck.  The cash payments went directly to Myron 
Green, and evidence adduced at the hearing showed Myron Green tracked all payroll 
deduction charges and submitted a list of swipe-card transactions to the bank twice per 
month.  Although the bank paid the contract price to Myron Green with its corporate credit 
card and reimbursed itself by deducting funds from its employees’ paychecks, the bank 
effectively remitted all payroll deductions to Myron Green.  In this sense, the bank merely 
provided an avenue through which bank employees could pay Myron Green directly by 
deducting funds from their bank paychecks.  This payment system is incompatible with 
Myron Green’s theory that the bank purchased food from Myron Green and resold it to 
cafeteria customers.  Accordingly, the bank did not purchase any food from Myron Green 
because Myron Green exercised exclusive dominion and control over the food until the 
customer selected and paid for it.  Becker, 749 S.W.2d at 407.  There was competent and 
substantial evidence, therefore, supporting the commission’s finding that Myron Green 
sold food to individual customers instead of to the bank. 
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C.  The commission’s decision was not unexpected. 
 
In its final point, Myron Green argues, if this Court affirms the commission’s 
decision, then Myron Green should be liable for sales tax only going forward because the 
commission’s decision was unexpected.  “[A]n unexpected decision by or order of a court 
of competent jurisdiction or the administrative hearing commission shall only apply after 
the most recently ended tax period ….”  § 143.903.1.  A decision is unexpected when a 
“reasonable person would not have expected the decision or order based on prior law, 
previous policy or regulation of the department of revenue.”  Sneary v. Dir. of Revenue, 
865 S.W.2d 342, 348 (Mo. banc 1993); § 143.903.2.  A decision is not unexpected merely 
because a court or the commission construes a statute less favorably than a taxpayer would 
like.  Gate Gourmet, Inc. v. Dir. of Revenue, 504 S.W.3d 59, 65 (Mo. banc 2016).  Rather, 
to show a decision was unexpected, “the taxpayer must show that the result in its case 
‘overrules a prior case or invalidates a previous statute, regulation or policy of the director 
of revenue and the decision was not reasonably foreseeable.’”  First Nat. Bank of Callaway 
Cty. v. Dir. of Revenue, 931 S.W.2d 471, 473 (Mo. banc 1996) (quoting Lloyd v. Dir. of 
Revenue, 851 S.W.2d 519, 523 (Mo. banc 1993)) (emphasis added).  This case is almost 
directly on point with J.B. Vending.  Accordingly, a reasonable person could have expected 
the decision by the commission and this Court.  Sneary, 865 S.W.2d at 348.  Although this 
Court interprets “served to the public” within the context of § 144.020.1(6) differently than 
Myron Green would prefer, such interpretation is consistent with this Court’s precedent.  
In addition, this Court does not overrule precedent in deciding this case today.  Indeed, 
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today’s decision adheres to it.  Therefore, Myron Green’s sales tax liability is retroactive 
because the decision of the commission and this Court was not unexpected. 
V. Conclusion
For these reasons, the commission’s decision is affirmed. 
____________________ 
W. Brent Powell, Judge
All concur.