Court Opinion

ID: 9690423
Source: CourtListenerOpinion
Date Created: 2023-08-24 19:12:04.68154+00
Date Added: 2024-06-11T18:18:56.936723
License: Public Domain

MICHAEL A. WOLFF, Judge,
concurring.
I concur in the principal opinion.
I write separately to point out that the money to be refunded belongs to Buch-holz’s customers. If Buchholz keeps the money that the state is to refund, Buch-holz will be unjustly enriched from refund of taxes that Buchholz itself did not actually pay-
Buchholz’s customers paid the tax that Buchholz then sent to the state. A refund, minus the reasonable attorneys’ fees incurred by Buchholz to obtain the refund, rightfully belongs to those who paid the tax. See Shelter Mutual Insurance Co. v. Director of Revenue, 107 S.W.3d 919, 926-28 (Mo. banc 2003) (Wolff, J., concurring in part and dissenting in part).
Casket containers are fixtures and, thus, are not subject to sales tax, the Court holds. Buchholz’s customers purchased these containers, ranging in price from $400 to $17,000, and paid sales tax at the time of purchase. Buchholz merely collected the sales tax, which it remitted to the director. Buchholz will be unjustly enriched at the expense of its customers if allowed to pocket a refund of tax money that it did not pay.
Buchholz and other sellers who receive sales tax refunds are, and perhaps will be, subject to class suits on behalf of customers at whose expense the sellers have been enriched. This was precisely the situation in Cohon v. Oscar L. Paris Co., 17 Ill.App.2d 21, 149 N.E.2d 472 (1958), where the court granted class relief to buyers of wall-to-wall carpeting after the seller received a refund of taxes the buyers paid when purchasing the goods. See also Shelter Mutual Insurance Co. v. Director of Revenue, 107 S.W.3d at 924-28 (Wolff, J., concurring in part and dissenting in part); Cole v. Morris, 409 S.W.2d 668 (Mo.1966).
In this case, a class action is particularly appropriate because names of customers should be readily available because of the size and nature of the purchases. In eases where the buyers cannot be readily identified, a court can use the “fluid class recovery” doctrine or escheat the unclaimed *196funds to the state.1 In any event, the seller that collected the tax should not be entitled to keep the refund over and above its legal expenses incurred in seeking the refund.2
There are two options for the Administrative Hearing Commission to take, on remand, to avoid the unjust enrichment. The first option is for the commission to grant the refund in the form of a constructive trust, which the seller would maintain for the benefit of its customers. See Cole v. Morris, 409 S.W.2d 668, Restatement (First) of Restitution sec. 160 (1937).
A second option would be to prevent any future overpayment of taxes but deny the refund unless the vendor first agrees to pass the refund along to its customers. See Shelter Mutual Ins. Co., v. Director of Revenue, 107 S.W.3d 919, 926-27 (Mo. banc 2003).3
However, in the absence of statutory authority for the commission so to act, the commission may not consider itself empowered to use the court-made remedy of the constructive trust.
The commission should, however, offer Buchholz the option of agreeing on the commission’s record to giving the refund back to its customers, minus the legal expenses incurred in getting the refund. If Buchholz agrees to give the money back to its customers, it would not be subject to litigation brought by its customers. Although it would not keep the windfall it would have the benefit, derived from this litigation, of not having its future sales of casket liners subjected to sales tax. If the seller does not agree to pay the money back to its customers, it may be subject to a class suit.
If the mortuary agrees to pass along the tax money to those who paid it and is unable to identify those who should receive it, the money should, by Buchholz’s agreement, be paid over to the state as unclaimed property. See sections 447.010 et seq., RSMo 2000, (known as the Uniform Disposition of Unclaimed Property Act), State ex rel Am. Family Mut. Ins. Co. v. Clark, 106 S.W.3d 483, 495 (Mo. banc 2003).
Chapter 144 RSMo requires sellers to collect sales tax. It imposes a penalty for *197failure to do so. (Section 144.480, penalty for failure to pay tax, make return, keep records or supply information required by 144.010 — 144-510; section 144.490, penalty for false return or false statement in return relating to amount of sales or tax due under 144.010-144.510; section 144.500, amount of penalty for fraud or evasion; and section 144.510, violation of provisions of 144.010-144.510 is misdemeanor.) It also provides, in section 144.190, that a refund can be obtained by the seller required to remit the tax, but not directly by the buyers themselves. The result is a game that perversely provides sellers the incentive to overcollect taxes, with the prospect of unjust enrichment when seeking refunds. (If refunds are not sought, the state is unjustly enriched.)
In this game, the customers who have paid the tax are always the losers. In fairness the game should be played so that when the state gets beat, the tax-paying customers will win.

. The fluid class recovery doctrine is a rule of equity used in class actions, based on the cy pres doctrine. The fluid recovery doctrine is used for distribution of funds in a class action settlement or award that either cannot be feasibly distributed to individual class members or that remain unclaimed after individual distribution is completed. In the settlement context, the parties, subject to court approval, may agree that undistributed funds will be distributed for the indirect benefit of the class; When a settlement agreement is silent on distribution of surplus funds or the when the fund is a result of a judgment, the court that has jurisdiction over the recovery fund may make an appropriate order for their distribution. The unclaimed funds may also be distributed to the appropriate state or political subdivisions where the class members reside. 4 ALBA CONTE & HERBERT NEWBERG, NEWBERG ON CLASS ACTIONS §§ 10:15, 11:20 (4th ed.2002).

. In some instances, actions for tax refunds are solicited by "tax consultants” who scan the revenue laws for potential refunds and take a contingent fee from the resulting refund. To the extent that this activity involves the practice of law by nonlawyers, the fees so incurred should not be recognized as legitimate fees incurred in seeking the refunds.

. Missouri law provides that only the "person legally obligated to remit the tax” to the state — meaning the seller and not the purchaser- — can seek a refund. Section 144.190, RSMo 2000; Galamet, Inc. v. Director of Revenue, 915 S.W.2d 331, 336 (Mo. banc 1996). Although customers lack standing on their own to request a refund, they should not be precluded from bringing an action against the seller for restitution.