Ott v. De Bardeleben Coal Corporation

• Decision Date: 13 April 1948
• Docket Number: No. 12116-12126.,12116-12126.
• Citation: 166 F.2d 509
• Parties: OTT v. DE BARDELEBEN COAL CORPORATION (and ten other cases).
• Court: U.S. Court of Appeals — Fifth Circuit

166 F.2d 509 (1948)

OTT v. DE BARDELEBEN COAL CORPORATION (and ten other cases).

Nos. 12116-12126.

Circuit Court of Appeals, Fifth Circuit.

March 5, 1948.

Rehearing Denied April 13, 1948.

COPYRIGHT MATERIAL OMITTED

W. C. Perrault, First Asst. Atty. Gen., Henry G. McCall, City Atty., H. W. Lenfant and Alden W. Muller, all of New Orleans, and Bertrand I. Cahn, Sp. Asst. Atty. Gen., for appellants.

Arthur A. Moreno, of New Orleans, La., for appellees.

Before HUTCHESON, McCORD, and LEE, Circuit Judges.

LEE, Circuit Judge.

These suits were brought by appellees for the return of ad valorem taxes assessed and collected by the City of New Orleans and the State of Louisiana. They were consolidated for the purpose of trial as they are for the purpose of appeal.¹

The four appellees, Mississippi Valley Barge Line Co. (hereinafter called "Mississippi"), American Barge Line Co. ("American"), Union Barge Line Corporation ("Union"), and DeBardeleben Coal Corporation ("DeBardeleben"), as their names imply, operate barge lines. Mississippi, American, and DeBardeleben sued for return of taxes collected for the years 1944 and 1945, while Union sued for return of taxes collected for the year 1945.² The taxes were levied under assessments made by the Louisiana Tax Commission under Act No. 152 of 1932, as amended by Act No. 59 of 1944, on the proportion of appellees' lines in Louisiana as compared to their entire systems. Appellees' petitions all follow the same general trend, that the tax is unconstitutional because it is a burden upon interstate commerce, because it violates the due-process clause of the State and federal Constitutions, Const.La.1921, art. 1 § 2; Const.U.S. Amend. 14, and further that the assessments were arbitrary and capricious. Appellants contend that the taxes were constitutional and proper, and further that the question of assessments, that is, the method of making them and the amount thereof, is not now before the court, since appellees did not avail themselves of the administrative remedies given them by the Louisiana law. The trial below resulted in judgments for each of the appellees, ordering the return of the taxes paid, the court holding that in the cases of Mississippi, American, and Union, the retention of the taxes by appellants constituted the taking of property without due process of law in violation of the federal and State Constitutions and holding in the case of DeBardeleben that, while Louisiana had the right to tax such of its property as had a tax situs in Louisiana, the assessment on the proportionate rule basis as made was illegal, null, and void. From the eleven judgments in favor of appellees, both appellants have appealed.

The question common to the various appeals is whether tugboats and barges owned by the different appellees, all non-resident corporations, are taxable in Louisiana as property having a tax situs there.

The record shows that each of the appellees is a corporation chartered under the laws of States other than Louisiana. American, Mississippi, and DeBardeleben are Delaware corporations, and Union is a Pennsylvania corporation. None of the watercraft of American, DeBardeleben, or Mississippi was ever physically within the State of Delaware, but some, if not all, of the taxed property of Union was present during the tax year within the State of Pennsylvania. American and Mississippi maintain offices in New Orleans, though their principal business offices are in Louisville and St. Louis, respectively. Union merely employs an agent in New Orleans for the conduct of its business; its principal office is in Pittsburgh. The principal office of the Marine Division of DeBardeleben is in New Orleans; its official home office is in Birmingham, Ala. Each of the four corporations is engaged in transportation of freight upon inland waterways of the United States under authority of a certificate of Public Necessity and Convenience issued by the Interstate Commerce Commission. The taxed towboats of American and DeBardeleben are enrolled under United States Shipping Regulations pertaining to vessels engaged in domestic commerce, Title 46, c. 12, U.S.C.A., at Wilmington, Del., and there, too, they have registered their barges. The towboats of Union are enrolled at Pittsburgh, and the watercraft of Mississippi are enrolled at St. Louis. Under neither Delaware nor Pennsylvania law is the marine equipment of the appellees subject to State taxation.

DeBardeleben operates from New Orleans to Houston, Galveston, and Corpus Christi, in Texas; in Alabama, as far as Mobile; in Florida, to Pensacola, Panama City, and Carrabelle; and in the tax years in question its watercraft made occasional trips up the Mississippi to points north of the Louisiana boundary. The other three operate up and down the Mississippi and its tributaries to points as far north as Minneapolis and east to Pittsburgh. In all trips to Louisiana a tug brings a line of barges to New Orleans, where the barges are left for unloading and reloading and where the tug picks up a loaded line of barges for ports outside Louisiana. These turn-arounds are accomplished as quickly as possible and there is no regular schedule in the sense of a timetable held to. The result is that the tugs and barges are within the boundary of Louisiana only a small portion of the time. Of the total time covered by the interstate commerce operations in 1943, American's towboats spent about 3.8% within the port of New Orleans. In the case of Mississippi for that year, its towboats spent about 17.25%, and its barges about 12.7%; in 1944, its towboats about 10.2%, and its barges about 17.5%. In 1944, Union's towboats spent about 2.2% and its barges about 4.3%. Appellees' watercraft, while in the port of New Orleans have the benefit of such fire protection as is afforded all craft moored to the wharves, and of harbor police surveillance, and of all sanitary regulations of the State and City Boards of Health.

DeBardeleben was merged or consolidated in 1937 with W. G. Coyle, Inc., a Louisiana corporation which had operated a Marine Terminal and harbor traffic business within the port of New Orleans. To Coyle's operations in 1934 had been added a common carrier water transportation business, mainly in the Gulf Intracoastal Waterways, running westerly as well as easterly from the port of New Orleans. After the merger in 1937, the Coyle operations were conducted as the Marine Division of DeBardeleben, without interruption or material change, under the name of Coyle Lines. The main office of the Marine Division of DeBardeleben, from which it controlled and carried on continuously all of the Coyle Line operations, was located in New Orleans, and so also was the machine and repair shop, maintained for upkeep and repair of its watercraft. At the New Orleans office the crews of the tows were regularly paid their wages, and to it the employees reported at the customary taking of the usual 24-hour lay-off at the end of each 6-day work period called for under the union labor contract. At the Coyle New Orleans Terminal, the tugs operated by Coyle Lines were usually fueled, and there, too, as a rule, were made all scheduled general repairs or minor voyage repairs needed by the Marine Division watercraft. None of the Coyle Lines watercraft ever permanently left the original situs in Louisiana except eight barges especially assigned wholly to hauling company coal on the Warrior River in Alabama.

The court below found from these facts that the tugboats and barges of American, Mississippi, and Union were never permanently within the State of Louisiana during the tax years, hence had no tax situs in Louisiana and could not be taxed by that State or by the City of New Orleans. With respect to DeBardeleben, it found that New Orleans was the home port of its tugboats and barges, from which they operated; that with the exception of the eight barges in Alabama, its watercraft were never permanently away from that city; hence the tax situs was in Louisiana and the tugboats and barges having a tax situs there could be taxed by the City of New Orleans. But the court further found that in assessing the tugboats and barges there had been included in the assessment the eight barges permanently located in Alabama, and that such fact made the city tax against DeBardeleben illegal, null, and void. The correctness of these rulings with respect to the several companies is the sole question before us.

The Louisiana statutes under which the State and the City of New Orleans taxed the tugboats and barges of appellees are set out in a footnote.³

Appellants contend that for the watercraft of American, Mississippi, and Union, New Orleans is the terminus into and out of which those lines haul the greater part of the freight handled by them; that the watercraft were loading and unloading in New Orleans throughout the tax years; and that in fact they were within the State of Louisiana more than in any other State. Appellants insist that under the doctrine of Pullman's Palace-Car Co. v. Pennsylvania, 141 U.S. 18, 11 S.Ct. 876, 36 L.Ed. 613, Louisiana has the right to tax the craft in question, upon the theory that they have an average continuous presence in Louisiana, the basis of assessment of each appellee being the ratio between the total...