Slick Airways, Inc. v. Los Angeles County

• Decision Date: 28 March 1956
• Citation: 295 P.2d 46,140 Cal.App.2d 311
• Court: California Court of Appeals Court of Appeals
• Parties: SLICK AIRWAYS, Inc., a corporation, Plaintiff and Respondent, v. COUNTY of LOS ANGELES, and City of Santa Monica, a municipal corporation, Defendants and Appellants. Civ. 21178.

Page 46

295 P.2d 46

140 Cal.App.2d 311

SLICK AIRWAYS, Inc., a corporation, Plaintiff and Respondent, v. COUNTY of LOS ANGELES, and City of Santa Monica, a municipal corporation, Defendants and Appellants.

Civ. 21178.

District Court of Appeal, Second District, Division 1, California.

March 28, 1956.

Harold W. Kennedy, County Counsel, By Gordon Boller, Deputy County Counsel, Los Angeles, for appellants.

John W. Walbert, Burbank, for respondents.

FOURT, Justice.

By this action Slick Airways, Inc., is seeking to recover from the county of Los Angeles and the city of Santa Monica taxes paid under protest to said county and collected by it for its own account and for the city of Santa Monica. Defendants demurred to the complaint. The demurrer was overruled with leave to answer and defendants not having answered, judgment was rendered in favor of plaintiff. Defendants have appealed.

Plaintiff is engaged in flying a fleet of airplanes in interstate and foreign commerce. Such airplanes, under the practice of the county assessor of Los Angeles County, are assessed on the basis of a fair allocation of time, to wit, the ratio of the time spent in Los Angeles County as compared to total time. For the year 1953, this allocation was determined by computing the total hours in Los Angeles County of all plaintiff's fleet aircraft during the week immediately preceding the assessment date and determining the percentage that time bore to the total hours in the week. This ratio was then applied to the assessed value of the fleet to determine the proper assessable value thereof in Los Angeles County.

The tax which plaintiff seeks to recover is the tax on an airplane which was assessed not as a part of plaintiff's fleet but as a single airplane. Such classification of the aircraft as a separate item instead of as a part of the fleet resulted in a higher assessed valuation.

In its complaint plaintiff alleges that it is a Delaware corporation authorized to transact business in California; that its aircraft are flown exclusively in interstate or foreign commerce; the airplane in question was manufactured for it by Douglas Aircraft Company in the city of Santa Monica, where it was delivered to and accepted by plaintiff on February 27, 1953; the aircraft was purchased for the exclusive purpose of adding to plaintiff's fleet of aircraft flying in interstate commerce; prior to acceptance on February 27, 1953, plaintiff conducted a check flight on the airplane and from March 4, to March 8, 1953, plaintiff conducted daily necessary 'shakedown and crew familiarization' flights of the airplane; the first scheduled revenue flight of the aircraft took place on March 12, 1953; at all times subsequent to February 27, 1953, plaintiff considered said airplane to be part of its fleet of airplanes flown in interstate and foreign commerce.

The sole question for determination is whether plaintiff's airplane was erroneously classified and valued by the assessor as an individual item of property in the county rather than as a part of plaintiff's fleet of aircraft operating in interstate and foreign commerce.

Defendants contend that the taxable status of property is fixed as of 12:00 o'clock noon on the first Monday in March; that on that date the aircraft in question was not a part of respondent's fleet flying in interstate and foreign commerce and that therefore the assessment as an individual item of property was proper, such assessment having been made according to the condition and status of the property on the controlling tax date. Defendants further contend that the tax apportionment doctrine of Pullman's Palace-Car Co. v. Commonwealth of Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 35 L.Ed. 613, upheld in Ott v. Mississippi Valley Barge Line Co., 336 U.S. 169, 69 S.Ct. 432, 93 L.Ed. 585; Standard Oil Co. v. Peck, 342 U.S. 382, 72 S.Ct. 309, 96 L.Ed. 427, and Braniff Airways, Inc., v. Nebraska State Board, 347 U.S. 590, 74 S.Ct. 757, 98 L.Ed. 967, is inapplicable in the present instance for the reason that the airplane had not become a part of respondent's fleet nor was it available for use therein on the tax date.

The basis of the doctrine in the Pullman case, supra, is the continuous benefits or protection afforded by the taxing state throughout the tax year to a portion of the commerce, and the formula approved was one which fairly apportioned the tax to the commerce carried on within the state. Thus, in Standard Oil Co. v. Peck, supra, it was held that it was a violation of the Due Process Clause of the Fourteenth Amendment for the state of domicile of a corporation which transported oil on inland waters to levy a property tax on all of the corporation's vessels engaged in such transportation when it appeared that most, if not all, were almost continually outside of the domiciliary state during the tax year. The court said, 342 U.S. at pages 384-385, 72 S.Ct. at page 310, 'The rule which permits taxation by two or more states on an apportionment basis precludes taxation of all of the property by the state of the domicile. See Union Refrigerator Transit Co. v. Commonwealth of Kentucky, 199 U.S. 194, 26 S.Ct. 36, 50 L.Ed. 150 . Otherwise there would be multiple taxation of interstate operations and the tax would have no relation to the opportunities,...