State Tax Commission of
JOHN IVEY, )
)
Complainant, )
)
v. ) Appeal Number 06-30042
)
MICHAEL O’FLAHERTY, )
DIRECTOR OF ASSESSMENT, )
JACKSON COUNTY, MISSOURI, )
)
Respondent. )
DECISION AND ORDER
HOLDING
Decision of the Jackson County Board of Equalization sustaining the assessment made by the Assessor, AFFIRMED. Commission finds true value in money for the subject property for tax year 2006 to be $563,049, assessed value of $180,173.
Complainant
appeared by Counsel Michael LeVota,
Respondent appeared by Counsel William Snyder, Chief Deputy County Counselor.
Case submitted on documents from Appeal 05-30055.
ISSUE
The Commission takes this appeal to determine whether the subject property is exempt from taxation under the provisions of Section 137.100, Revised Statutes of Missouri (RSMo) and applicable case law.
SUMMARY
Complainant appeals, on the ground of exemption, the decision of the Jackson County Board of Equalization, which sustained the assessment of the subject property as taxable. The Assessor determined an appraised value of $563,040, assessed value of $180,173, as commercial property. Complainant did not challenge valuation, but asserted the property was exempt under Section 137.100, RSMo.
Case was submitted for decision on exhibits, written direct testimony and brief filed by Complainants in Appeal 05-30055. The Commission having considered all of the competent evidence upon the whole record enters the following Decision and Order.
Complainants’ Evidence
The following exhibits were filed in Appeal 05-30055 and by Complainant’s Motion to Set Aside are received as exhibits in this appeal.
Exhibit C-1, IRS 501 (c) (3) exemption letter for Seed of Faith Church, Inc.
Exhibit C-2, Missouri Sales and Use Tax exemption letter issued to Seed of Faith, Inc., and Certificate of Amendment of a Missouri Nonprofit Corporation for Seed of Faith Church, Inc.
Exhibit C-3, Financial records for Seed of Faith Church.
Exhibit C-4, Commercial Lease Agreement, dated January 8, 2002, between Triple JD Management Company, LLC and Seed of Faith Church.
Exhibit C-5, Letter dated November 12, 2003, to Triple JD Management Company, LLC from Seed of Faith Church, exercising purchase option clause under lease agreement.
Exhibit C-6, Contract for Deed, dated November 1, 2003, recorded July 1, 2005, between John W. Ivey and Joyce C. Ivey and Seed of Faith Church, Inc.
Exhibit C-7, Nine photographs showing stages of construction of Seed of Faith Church, starting November 8, 2001.
Exhibit C-8, Six pages showing brief history of Seed of Faith Church.
Exhibit C-9, Written direct testimony of Rev. Herman Scales, pastor of Seed of Faith Church.
Exhibit C-10, Written direct testimony of John Ivey.
Counsel for Complainant submitted legal brief on the issue of exemption in Appeal 05-30055. Said Brief is received as legal brief on the issue of exemption in this appeal.
Respondent’s Evidence
Respondent did not file exhibits, written testimony or legal brief.
FINDINGS OF FACT
1. Jurisdiction over this appeal is proper. Complainant timely appealed to the State Tax Commission from the decision of the Jackson County Board of Equalization.
2. Complainant filed his Complaint for Review of Assessment on August 10, 2006. Acknowledgement of the appeal was mailed to Counsel for Complainant on August 11, 2006. Order Setting Discovery and Exchange Schedules was issued on September 22, 2006. Neither party complied with the Exchange Schedule set by the Commission Order.
On January 23, 2007, the Commission issued its Order Affirming Hearing Officer Decision Upon Application for Review in Appeal 05-30055 finding the subject property was not tax exempt. Neither party had filed a Motion to Consolidate Appeal 05-30055 and Appeal 06-30042.
The Commission has received no notification that Judicial Review of its Order in Appeal 05-30055 was had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of January 23, 2007.
On March 15, 2007, Order Dismissing Appeal 06-30042 was issued.
On March 29, 2007, Counsel for Complainant filed Motion to Set Aside on the ground the parties exchanged exhibits in Appeal 05-30055 and the parties anticipated that the 2005 decision would apply to 2006.
By Order issued April 4, 2007, Appeal 06-30042 was reinstated upon Complainant’s Motion to Set Aside being granted and official notice of the exhibits and written direct testimony filed in Appeal 05-30055 was taken and said exhibits and written direct testimony were received into this record.
3. The subject property is located at
4. Complainant is an individual and is not a not-for-profit corporation or entity.
5. The subject property is the subject of
a Contract for Deed entered into on November 1, 2003, John W. and Joyce C.
Ivey, Sellers and Seed of Faith Church, Inc., a
6. The testimony of Rev. Herman Scales (Exhibit C-9, Q & A. 7) and John Ivey (Exhibit C-10, Q & A. 5) that the subject property was owned by Seed of Faith Church on January 1, 2005, was testimony as to a conclusion of law to be determined by the Commission. As testimony on a conclusion of law from non-experts it is irrelevant in determining ownership of the subject property as of January 1, 2005, and January 1, 2006.
7. Exhibits C-1, C-2, C-3, C-4, C-5, C-7, C-8, C-9 and C-10 are irrelevant on the issue of the ownership of the property under appeal as of January 1, 2005, and January 1, 2006.
8. The subject property was owned by John and Joyce Ivey on January 1, 2005, and January 1, 2006. Exhibit C-6.
CONCLUSIONS
OF LAW AND DECISION
Jurisdiction
The Commission has jurisdiction to hear this appeal and correct any assessment which is shown to be unlawful, unfair, arbitrary or capricious. Article X, section 14, Mo. Const. of 1945; Sections 138.430, 138.431, RSMo. The Commission shall issue a decision and order affirming, modifying or reversing the determination of the board of equalization, and correcting any assessment which is unlawful, unfair, improper, arbitrary, or capricious. Section 138.431.4, RSMo.
Presumptions in Appeal
There is a
presumption of validity, good faith and correctness of assessment by the County
Board of Equalization. Hermel, Inc.
v. STC, 564 S.W.2d 888, 895 (
The Supreme Court
of Missouri has found there is a presumption of correct assessment by the
assessor. Snider v. Casino
Aztar/Aztar Missouri Gaming Corp., 156 S.W.3d 341 (
Burden of Proof
Complainant has
the burden to present substantial and persuasive evidence to rebut the
presumption of correct assessment by the Board of Equalization. Hermel, Inc. v. State Tax Commission,
564 S.W.2d 888, 895 (
The following subjects are exempt from taxation for state, county or local purposes:
(5) All property, real and personal, actually and regularly used exclusively for ... purposes purely charitable and not held for private or corporate profit, except that the
exemption herein granted does not include real property not actually used or occupied
for the purpose of the organization but held or used as investment even though the
income or rentals received therefore is used wholly for --- charitable purposes;
Franciscan
Tertiary Test
In meeting the burden of proof that the subject property is used “exclusively for ... purposes purely charitable, and not held for private or corporate profit....” Complainant must
meet the three prong test set forth by the Missouri Supreme Court in Franciscan Tertiary Province v. STC, 566 S.W.2d 213, 223-224 (Mo. banc 1978).
The court in Franciscan held:
“The first prerequisite for property to be exempt as charitable under §137.100 is that it be owned and operated on a not-for-profit basis.” Emphasis added.
The initial test to be met under Franciscan is: Property must be owned and operated on a not-for-profit basis;
In the present case, the only issue is: whether the property is owned by the not-for-profit Seed of Faith Church under the contract for deed. Complainants’ Brief, p. 2. If the property was owned by John and Joyce Ivey, on January 1, 2006, the property fails the initial Franciscan test because it is not owned by a not-for-profit entity. If the property was owned, on January 1, 2006, by the Seed of Faith Church, then the property would met the first prong of Franciscan and as a church, the use of the property would likewise meet the other two parts of the Franciscan test.
Ownership Under A Contract for Deed
The
determination of exemption, therefore, rests upon the legal question of who
holds title – is owner, for ad valorem tax purposes, under a contract for deed. Counsel for Complainants cites the Commission
to the case of Shelter Mutual Insurance
v. Crunk, 102 S.W.3d 560, 564 (
The Shelter Court stated the following, at p. 564:
“A contract for deed, also referred to as an installment land sale contract, is used as a substitute or alternative to a mortgage or deed of trust. Under a contract for deed, the buyer of real estate makes a down payment and agrees to make remaining payments at a specified rate of interest in installments to the seller. The buyer normally takes possession of the property at the time the contract for deed is made. The seller agrees to convey the property to the buyer by delivering a warranty deed upon completion of the installment payments. Long v. Smith, 776 S.W.2d 409, 413 (Mo.App. 1989). “The relation of vendor and purchaser exists as soon as the contract for the sale and purchase of land is entered into. Thereafter equity regards the purchaser as the owner and the vendor as holding the legal title in trust for him.” Brewer v. Devore, 960 S.W.2d 519, 521 (Mo.App. 1998).
The Shelter Court, relying on the Long decision notes that the actual conveyance of the property is accomplished by the deliver of a warranty deed upon completion of the installment payments. Therefore, under a contract for deed, the deed is not delivered until the contract is completed. Without a deed being recorded, the seller and not the buyer is the owner of record. The status of vendor and purchaser is not the same as grantor and grantee under a deed. Nor has the purchaser under a contract for deed reached the status of owner of the property that is subject of the contract. That status cannot be achieved until a deed is delivered to the grantee upon satisfactory completion of the contract.
In the present instance, although the warranty deed, under the terms of the contract for deed has been placed in escrow, there was no evidence that it had been delivered on or before January 1, 2006 to the Seed of Faith Church. Only upon the payment of the purchase price by Seed of Faith Church to Complainants, which is not scheduled to be completed under the Contract for Deed until December 1, 2006, will the warranty deed be delivered to Seed of Faith Church. Exhibit C-6.
The Long Court held the following, at p. 413:
“Unlike a mortgagor who holds legal title to the mortgaged property, the buyer under a contract for deed does not receive legal title to the property until the contract price is paid and a warranty deed delivered by the seller. Prior to this event, the buyer has only an equitable interest in the property.”
Missouri courts regard the contract for deed, not as an instrument to convey title, but rather as a method of financing as an alternative to the deed of trust or mortgage. See, Community Title Co. v. Roosevelt Federal Savings & Loan Association, 670 S.W.2d 895, 898 (Mo. App. E.D. 1984); Shelter and Long, supra. Legal title or ownership cannot be conveyed absent the delivery of the warranty deed. An equitable interest, which has the potential, however strong or great that potential may happen to be is not legal ownership of real property.
Blacks Law Dictionary (7th ed.) defines contract for deed as “a conditional sales contract for the sale of real property – Also termed installment land contract, land sales contract, land contract.” The document is not a deed which conveys ownership – legal title. The document is a contract. A deed is the written instrument by which land is conveyed. Blacks – deed.
John
and Joyce Ivey, as of January 1, 2006, held legal title to the real property at
ORDER
The assessed valuation for the subject property as determined by the Assessor and sustained by the Board of Equalization for Jackson County for the subject tax day is AFFIRMED.
The subject property is taxable and the assessed value for tax year 2006 is set at $180,173.
Judicial review of this Order may be had in the manner provided in Sections 138.432 and 536.100 to 536.140, RSMo within thirty days of the date of the mailing of this Order.
If judicial review of this decision is made, any protested taxes presently in an escrow account in accordance with this appeal shall be held pending the final decision of the courts. If no judicial review is made within thirty (30) days, this decision and order is deemed final and the Collector of Jackson County, as well as the collectors of all affected political subdivisions therein, shall disburse the protested taxes presently in an escrow account to the appropriate political subdivisions.
Any Finding of Fact which is a Conclusion of Law or Decision shall be so deemed. Any Decision which is a Finding of Fact or Conclusion of Law shall be so deemed.
SO ORDERED April19, 2007.
STATE TAX COMMISSION OF MISSOURI
_____________________________________
Bruce E. Davis, Chairman
_____________________________________
Jennifer Tidwell, Commissioner
_____________________________________
Charles Nordwald, Commissioner
Certificate of Service
I hereby certify that a copy of the foregoing has been mailed postage prepaid on this 19th day of April, 2007, to: Michael LeVota, 221 W. Lexington Avenue, Suite 210, Independence, MO 64050, Attorney for Complainant; William Snyder, Deputy County Counselor, Jackson County Courthouse, 415 E. 12th Street, Room 200, Kansas City, MO 64106, Attorney for Respondent; Michael O’Flaherty, Director of Assessment; Mary Jo Spino, Clerk; Christopher Williams, Director of Collections, Jackson County Courthouse, 415 E. 12th Street, Kansas City, MO 64106; and Bob Ensminger, Real Estate Records, City of Kansas City, 1st Floor, City Hall, 414 E. 12th Street, Kansas City, MO 64106.
_______________________________
Barbara Heller
Legal Coordinator