Opinion ID: 1677796
Heading Depth: 1
Heading Rank: 2

Heading: sales to the public

Text: The Director contends that the Commission erred in determining that J.B.'s sales of meals and drinks were not taxable under section 144.020.1(6). Review of the Commission's decision is limited to a determination whether that decision was supported by competent and substantial evidence on the whole record, or whether it was arbitrary, capricious, unreasonable, unlawful, or in excess of jurisdiction. Psychiatric Healthcare Corp. of Mo. v. Department of Social Services, Div. of Medical Services, 996 S.W.2d 733, 735 (Mo.App. W.D.1999). Section 144.020.1(6) imposes a sales tax as follows: A tax equivalent to four percent on the amount of sales or charges for all rooms, meals, and drinks furnished at any hotel, motel, tavern, inn, restaurant, eating house, drugstore, dining car, tourist cabin, tourist camp or other place in which rooms, meals or drinks are regularly served to the public; ... Sec. 144.020.1(6) (emphasis added). The Commission found that the word public as used in section 144.020.1(6) should be given its ordinary dictionary meaning which the Commission stated was the people as a whole: populace, quoting Merriam-Webster's Collegiate Dictionary 944 (10th Ed.1993). The Commission then concluded that J.B.'s sales of meals and drinks at the cafeterias in question were not regularly served to the public because the entire populace could not actually eat in its cafeterias. The Commission reasoned that only persons permitted to enter the restricted-access buildings in which the cafeterias were located could reach the cafeterias. The Commission, therefore, concluded that J.B.'s sales made in these facilities were not taxable under section 144.020.1(6) as meals or drinks regularly served to the public. In so concluding, the Commission relied on this Court's decision in Greenbriar Hills Country Club v. Director of Revenue, 935 S.W.2d 36 (Mo. banc 1996). In Greenbriar , the issue was whether, under section 144.020.1(6), sales by a country club of meals and drinks to its members constitute sales to the public, thereby rendering them taxable under section 144.020.1(6). Id. at 36-37. This Court held that because the country club served meals and drinks only to its members and guests, and concededly did not serve them to the public, these sales were not subject to the sales tax provisions in section 144.020.1(6). Id. at 38. This Court subsequently reaffirmed this holding in Westwood Country Club v. Director of Revenue, 6 S.W.3d 885, 887 (Mo. banc 1999). To the extent that the Commission interpreted Greenbriar or Westwood to hold that sales to any restricted segment or subset of society do not constitute sales to the public, it was incorrect. In Greenbriar , the Director conceded that sales by a country club to its own members did not constitute sales to the public. This Court, therefore, never reached the issue of what types of sales do or do not constitute sales to the public. Westwood simply applied the principles from Greenbriar in deciding whether a country club was required to pay sales tax on its own purchases of goods that it would later serve its members and, therefore, also did not attempt to define what is meant by the word public as used in section 144.020.1(6). The definition of public as used in section 144.020.1(6) is properly before the Court here, however. This Court rejects J.B.'s argument the statute's use of the phrase served to the public means that a seller owes sales tax only if the seller makes its product available to the entire populace. The word public conveys several meanings. While the word public can refer to the entire populace, it can also refer to [a] particular body or section of the people; often, .... a clientele ... Webster's New Int'l Dictionary 2005 (2d Ed.1952). It can also refer to a group of people distinguished by common interests or characteristics. Webster's Third New Int'l Dictionary 1836 (1993). In another sense the word does not mean all the people, nor most of the people, nor very many of the people of a place, but so many of them as contradistinguishes them from a few. Black's Law Dictionary 1227 (6th Ed.1990). These definitions are consistent with prior cases specifically recognizing that an entity can be said to serve the public even if it serves only a subset or segment of the public and is subject to regulation on that basis. Thus, in State ex rel. Anderson v. Witthaus, 340 Mo. 1004, 102 S.W.2d 99 (banc 1937), this Court held that a business entity that selectively offered its charter bus services only to chosen segments of the general public, such as schools, clubs and churches, nevertheless constituted an entity that served the public, stating that the company held itself in readiness to engage with anyone who might apply, Id. at 101, and that, [t]he test is whether he has invited the trade of the public ... But, `the public does not mean everybody all the time'. Id. at 102. [1] Similarly, in the context of eminent domain, this Court has found that public use includes a use that benefits a particular group of persons. [I]t is not necessary that the whole community or any large part of it should actually use or be benefited by a contemplated improvement. Benefit to any considerable number is sufficient....Nor does the mere fact that the advantage of a public improvement also inures to a particular individual or group of individuals deprive it of its public character. Arata v. Monsanto Chemical Co., 351 S.W.2d 717, 721 (Mo.1961). See also City of Kansas City v. Hon, 972 S.W.2d 407, 414 (Mo.App. W.D.1998) (a city's decision to acquire land through eminent domain for the specific purpose of attracting a segment of the public, such as air cargo and aircraft manufacturers, does not preclude finding a public use). While the cases just cited involved factual contexts other than determining who serves the public for the purpose of imposing sales tax, the principle they statethat the public includes a subset of the populaceis directly applicable here. J.B. holds itself out to serve those members of the public who come into its establishment, and the fact that some third party limits those who are able to reach that establishment does not mean that J.B. does not serve meals and drinks to the public. It does. The dissenting opinion nonetheless suggests that this Court should hold that, because the word public may mean either the entire populace or some subset thereof, it is ambiguous and so must be construed to refer to the entire populace, as this is the most favorable interpretation for the taxpayer. In other words, because only employees who work in and visitors to a building where one of J.B.'s cafeterias is located have a realistic opportunity to reach the cafeteria in that building, the entire populace cannot be said to have access to each cafeteria. Therefore, the dissent argues, J.B.'s cafeterias cannot be said to serve meals and drinks to the public within the meaning of section 144.020.1(6). This argument is unconvincing. The canon of statutory construction that says that ambiguities must be construed in favor of the taxpayer does not mean that a statute is ambiguous every time it uses a word that can have more than one meaning. The issue is not whether a particular word in a statute, considered in isolation, is ambiguous, but whether the statute itself is ambiguous. This follows from the fact that the goal in interpreting a statute is to determine the legislative intent, and to do that one must consider the meaning of a particular word in the context of the entire statute in which it appears. Household Finance Corp. v. Robertson, 364 S.W.2d 595, 602 (Mo. banc 1963); State ex rel. Casey's General Stores, Inc. v. City of West Plains, 9 S.W.3d 712, 717 (Mo.App. S.D.1999). Similarly, the mere fact that the litigants disagree over the meaning of public does not render the statute ambiguous. Bank of America National Trust and Savings Ass'n v. 203 North LaSalle Street Partnership, 526 U.S. 434, 461, 119 S.Ct. 1411, 143 L.Ed.2d 607, (1999). An ambiguity means duplicity, indistinctness or uncertainty of meaning of an expression.... Lehr v. Collier, 909 S.W.2d 717, 721 (Mo.App. S.D.1995), quoting, Schupbach v. Schupbach, 760 S.W.2d 918, 923 (Mo.App. S.D.1988). Here, when the statute as a whole is considered, the intent of the legislature and the language of the statute are both intrinsically clear. Subsection 144.020.1(6) is part of section 144.020. The latter section is entitled Rate of taxtickets, notice of sales tax and begins: (1) A tax is hereby levied and imposed upon all sellers for the privilege of engaging in the business of selling tangible personal property or rendering taxable service at retail in this state. The rate of tax shall be as follows: Id. The statute then divides into six categories those sales that are either sales of personal property or sales of taxable service at retail. It then sets the rate of tax for each category at four percent, although the legislature could set different tax rates for different categories should it so choose. Subsection (6) provides for a tax on places that regularly serve meals or drinks to the public. Considered in context, the statute as a whole clearly evinces a legislative intent to tax all sellers for the privilege of selling tangible personal property or rendering taxable retail service. The purpose of the specific subsections thereunder is to set out the types of retail sales and services that shall be taxed at particular rates. This interpretation allows the statute as a whole, and subsection 144.020.1(6) in particular, to be read in harmony. It would be inconsistent with the broader legislative purpose of section 144.020 to read subsection 144.020.1(6) as if it granted an exemption from sales tax for all sales of meals and drinks that the entire populace might not be able to buy at any particular time, as the dissent suggests that the legislature intended. If the fact that only a segment of the public could gain access to buildings where J.B. operated meant that J.B. did not sell to the public, then almost no sales of meals and drinks would come within the statute. Only a limited part of the public ever has the practical ability to enter any particular business establishment. Any restaurant that serves only those individuals who have reservations could claim it did not sell to the public. In fact, under the dissenting opinion's approach, the owner of a restaurant could avoid sales tax any time a building owner set a limiting criterion for entering the buildingand it would not matter whether that criterion was being an employee who worked in the building, wearing business attire, being over a set age, or meeting some other criterion. Similarly, any business owner that operates a concession stand in a professional sports arena that serves only those who have tickets to the event could claim it does not serve meals or drinks within the meaning of subsection 144.020.1(6). Having limited that part of the public who could enter the building, any meals or drinks they might buy would not be subject to tax, for only those who met the criterion for entry could actually buy meals or drinks in the building. Certainly, this cannot be the legislature's intent, for to so read the statute would effectively nullify the provision for imposing a tax on the sale of meals or drinks to the public. Few businesses would qualify for the tax. Almost any business serving meals and drinks could create some access-limiting criterion and then argue that it was not open to the public. The legislature instead intended that all retail sales of personal property and taxable service be taxable. To construe the word public in a manner that will render the majority of such sales of meals and drinks untaxable is inconsistent with the legislative purpose. This construction cannot be the correct understanding of the word. J.B. does not address these issues of legislative intent, but instead focuses on the fact that its sales are almost entirely to employees, and narrowly argues that this is sufficiently distinct from other types of sales that it should not be considered a sale to the public and so should not be subject to sales tax. But, even if a sale of meals or drinks to one's own employees would be sufficiently distinct that it would not constitute a taxable sale of meals or drinks to the public, [2] that is not the situation before us in this case. While it is true that those who eat at J.B.'s cafeterias are usually employees, they are not J.B.'s employees. J.B.'s employees are the people who staff its cafeterias, for J.B. is in the business of operating cafeterias in buildings. As to J.B., the persons it sells meals and drinks to are, in effect, strangers; they are just those members of the public whom the building owners allow in the building. They have no contractual or other special relationship with J.B. The fact that J.B. sells food to someone else's employees does not render it uniqueany food seller normally does that. In arguing otherwise, J.B. improperly mixes its role with that of the employers who own the buildings in which it operates. In sum, J.B. holds itself out ready to contract for cafeteria services with any company that hires its services. It has, in fact, contracted with thirteen employers who own restricted-access buildings to sell meals and drinks to anyone who comes to J.B.'s cafeterias in those buildings. While some of the employers with whom J.B. contracts limit who can enter their buildings, that is the choice of the employer. J.B. does not limit sales to only its own employees, or even to only building employees. It holds itself out ready to contract with any employer and to serve those who present themselves at its cafeteria lines and serves all who appear at its cafeterias. Identification is not required. Any member of the public who can gain access to the building can eat in the cafeteria. J.B.'s cafeterias regularly serve meals and drinks to the public.