Missouri Gaming Commission v. Missouri Veterans' Commission

ROBERTSON, Judge. Are administrative penalties imposed by the Missouri Gaming Commission pursuant to section 313.805(6), RSMo 1994, “collected for a breach of the penal laws of the state” and, therefore, required to be distributed to schools pursuant to article IX, section 7 of the Missouri Constitution? The trial court held that the Missouri Gaming Commission penalties are not imposed by a penal law of the state and ordered the penalties distributed as directed in section 313.835, RSMo 1994. Because the constitutionality of section 313.835 is at issue, this Court has exclusive appellate jurisdiction. Mo. Const. ART. V, sec. 3. We reverse the judgment of the trial court and remand the cause with directions to enter an order transferring the disputed funds to the appropriate school district or districts. I. The facts are stipulated. The Missouri Gaming Commission (“Gaming Commission”) assessed an administrative penalty of $225,-000 against the President Riverboat and Casino-Missouri, Inc. (“President Casino”) for employing unlicensed persons and for failing to report regulatory violations. President Casino operates in the City of St. Louis. Both offenses violated the Gaming Commission’s rules and regulations. [612] President Casino paid the penalty. The Gaming Commission filed a petition in inter-pleader requesting the Circuit Court of Cole County to order the Veterans’ Commission and the St. Louis City School Fund to inter-plead and state a claim to the $225,000. The circuit court granted leave for the Board of Education of the City of St. Louis (“the Board”) to intervene, finding that the Board, as the ultimate beneficiary of any funds recovered, was the only party that could properly represent the Board’s interests. The trial court declared that not every penalty is collected under a penal law and found that the Gaming Commission imposed the administrative penalty for a violation of the Gaming Commission’s regulations and not for a violation of a penal law of the state and held that the proceeds should be distributed according to section 313.835. The Board appealed. II. Section 313.805(6), RSMo 1994, empowers the Gaming Commission “[t]o assess any appropriate administrative penalty against a licensee, including, but not limited to, suspension, revocation, and penalties of an amount as determined by the commission.” Section 313.835.1, RSMo 1994, provides: All revenue received by the [gaming] commission from license fees, penalties, administrative fees, reimbursement by any excursion gambling boat operators for services provided by the commission and admission fees authorized under the provisions of sections 313.800 to 313.850 shall be deposited in the state treasury to the credit of the “Gaming Commission Fund” which is hereby created for the sole purpose of funding the administrative costs of the commission relating to excursion gambling boat operations, subject to appropriation. ... Beginning July 1, 1995, any excess moneys not already encumbered at the end of any fiscal year in the gaming commission fund shall be distributed in the following manner: (1) The first five hundred thousand dollars shall be appropriated on a per cap-ita basis to cities and counties that match the state portion and have demonstrated a need for funding community neighborhood organization programs for the homeless and to deter gang-related violence and crimes; (2) Until July 1, 2000, the remaining unencumbered funds shall be transferred to the “Veterans’ Homes Capital Improvement Trust Fund”, as hereby created in the state treasury_ Beginning July 1, 2000, the remaining unencumbered funds shall be transferred from the gaming commission fund to the state general revenue fund. Article IX, section 7 of the state constitution dictates that “all penalties, forfeitures, and fines collected hereafter for any breach of the penal laws of the state, shall be distributed annually to the schools of the several counties according to the law.” (Emphasis added.) The parties agree that the casino paid the administrative penalty pursuant to section 313.805(6) for a violation of section 313.812.14(2),1 RSMo 1994. The only issue in this case, therefore, is whether section 313.805(6) is a penal law of the state within the meaning of article IX, section 7. “[W]e presume that [a] statute is valid unless it clearly contradicts a constitutional provision.” Asbury v. Lombardi, 846 S.W.2d 196, 199 (Mo. banc 1993). We assign to words not otherwise defined in the constitution their plain, ordinary and natural meaning as found in the dictionary. Buechner v. Bond, 650 S.W.2d 611, 613 (Mo. banc 1983). “Penal” means “designed to impose punishment.” WebsteR’s ThiRD New INTERNATIONAL DICTIONARY 1668 (1976). [613] The Veteran’s Commission relies on New Franklin School Dist. No. 28 v. Bates, 359 Mo. 1202, 225 S.W.2d 769 (1950), for the proposition that a penal law is a criminal law and does not include penalties imposed for civil violations. New Franklin notes that State ex rel. Rodes v. Warner, 197 Mo. 650, 94 S.W. 962, 964 (1906), cites Huntington v. Attrill, 146 U.S. 657, 667, 18 S.Ct. 224, 227, 36 L.Ed. 1123 (1892), which says that penal laws “strictly and properly, are those imposing punishment for an offense committed against the state, and which, by the English and American constitutions, the executive of the state has the power to pardon.” 225 S.W.2d at 774, quoting Huntington. The Veteran’s Commission thus argues that this Court has adopted a legal definition, not the plain, ordinary definition in determining the meaning of the phrase “penal laws” used in the constitution. We disagree. In New Franklin, the attorney general had filed a quo warranto action against several insurance companies for an “abuse and misuse of their corporate franchises to do business in this State.” 225 S.W.2d at 771. The trial court imposed substantial penalties against the insurance companies to which a school district laid claim under article IX, section 7, after the insurance companies paid the penalties. This Court’s decision that the constitution did not require payment of the penalties to the school district turned on the fact that the trial court had imposed the penalties under quo warranto, a common law action, rather than pursuant to a statute that permitted penalties. The Court said: [T]he right of this court to impose the penalties ... which were imposed were [sic] not based upon any statutory enactments authorizing the imposition and collection of such fines and penalties. The proceeding was not a statutory action for the assessment and collection of fines and penalties prescribed by law, nor an action to recover a statutory fine or penalty. It was a common law action for the breach of implied contracts with the state. Penalties were assessed, but they were not the penalties provided by any penal laws. New Franklin, 225 S.W.2d at 773. The Court said, “We hold that the words ‘penal laws of the state’ as used in Sec. 7, art. IX of the Constitution refer to statutory enactments fixing or providing for penalties, forfeitures and fines and for their assessment and collection.” 225 S.W.2d at 774. The New Franklin holding is broad and consistent with the ordinary meaning of the words used in article IX, section 7. It is also consistent with Rodes. Rodes divided penal laws into three categories: First, “[w]here penal statutes are merely leveled at a violation of private rights, the penalties provided in such laws are not devoted by the Constitution itself to the public school fund.” 94 S.W. at 965. Second, “where penalties may be recovered by a civil action part may go to the informer and the other part may be devoted to the purposes prescribed by statute law.” 94 S.W. at 965. Third, [W]here fines and penalties are prescribed as a punishment for a violation of public rights, i.e., crimes, and such penalties or fines are to be recovered by public authority, the disposition of such recovered fines or penalties comes within the constitutional provision [article IX, section 7] ... and they may not be turned awry from the prescribed constitutional course. 94 S.W. at 966. Applying New Franklin it is apparent that section 313.805(6) is a statutory enactment, that the Gaming Commission penalized President Casino under the authority of section 313.805(6), which provides for penalties, and for their assessment and collection. And under Rodes, the penalty is for violation of a public right, as opposed to a private one, and it is recoverable by public authority. On the strength of this precedent, we conclude that section 313.805(6) is a penal law of the state within the plain meaning of article IX, section 7. Accord Reorganized School District No. 7 v. Douthit, 799 S.W.2d 591 (Mo. banc 1990) (civil forfeitures under the criminal forfeiture act, section 513.607, RSMo 1986, are payable to school districts pursuant to article IX, section 7). To the extent that section 313.835 provides for the disbursement of moneys collected from penalties, forfeitures and fines to entities other than the public schools of the [614] several counties, it violates article IX, section 7 of the constitution. Accordingly, we hold that any penalties, forfeitures or fines collected pursuant to section 313.805(6), must be distributed as required by article IX, section 7 of the Missouri Constitution. III. The judgment of the trial court is reversed and the cause is remanded with directions to enter an order transferring the disputed funds to the appropriate school district or districts. BENTON, C.J., and PRICE, LIMBAUGH, COVINGTON and WHITE, JJ., concur. HOLSTEIN, J., concurs in result in separate opinion filed. Footnotes [1] Section 313.812.14 provides that: |T|he following acts or omissions may be grounds for such discipline: [[Image here]] (2) Failing to comply with any rule, order or ruling of the commission or its agents pertaining to gambling;