Braniff Airways v. Nebraska State Board of Equalization and Assessment

• Decision Date: 01 June 1954
• Docket Number: No. 476,476
• Citation: 74 S.Ct. 757,98 L.Ed. 967,347 U.S. 590
• Parties: BRANIFF AIRWAYS, Inc. v. NEBRASKA STATE BOARD OF EQUALIZATION AND ASSESSMENT et al
• Court: U.S. Supreme Court

347 U.S. 590

74 S.Ct. 757

98 L.Ed. 967

BRANIFF AIRWAYS, Inc.

v NEBRASKA STATE BOARD OF EQUALIZATION AND ASSESSMENT et al.

No. 476.

Argued March 12, 1954.

Decided June 1, 1954.

Mr.

William J. Hotz, Sr., Omaha, Neb., for appellant.

Mr. C. C. Sheldon, Lincoln, Neb., for appellees.

Mr. Justice REED delivered the opinion of the Court.

The question presented by this appeal from the Supreme Court of Nebraska is whether the Constitution bars the State of Nebraska from levying an apportioned ad valorem tax on the flight equipment of appellant, an interstate air carrier. Appellant is not incorporated in Nebraska and does not have its principal place of business or home port registered under the Civil Aeronautics Act, 52 Stat. 977, 49 U.S.C. §§ 401—705, 49 U.S.C.A. §§ 401—705, in that state. Such flight equipment is employed as a part of a system of interstate air commerce operating over fixed routes and landing on and departing from airports within Nebraska on regular schedules. Appellant does not challenge the reasonableness of the apportionment prescribed by the taxing statute or the application of such apportionment to its property. It contends only that its flight equipment used in interstate commerce is immune from taxation by Nebraska because without situs in that state and because regulation of air navigation by the Federal Government precludes such state taxation.

This petition for a declaratory judgment of the invalidity of §§ 77—1244 to 77—1250 of the state tax statute¹ and an injunction against the collection of taxes assessed under such provisions for previous years was filed as an original action in the court below by Mid-Continent Airlines, Inc., and tried upon stipulated facts. Subsequent to filing, but before the decision, Mid-Continent and appellant were merged on August 1, 1952, and appellant was substituted as the party plaintiff. Mid-Continent had been incorporated in Delaware with its corporate place of business in Wilmington in that state, and Braniff is incorporated in Oklahoma and has its corporate place of business in Oklahoma City. Pursuant to the merger Mid-Continent's main executive offices were moved from Kansas City, Missouri, and merged with appellant's in Dallas, Texas. The number of regularly scheduled stops in Nebraska, fourteen per day at Omaha and four at Lincoln, was not affected by the merger.

The home port registered with the Civil Aeronautics Authority and the overhaul base for the aircraft in question is the Minneapolis-St. Paul Airport, Minnesota. All of the aircraft not undergoing overhaul fly regular schedules upon a circuit ranging from Minot, North Dakota, to New Orleans, Louisiana, with stops in fourteen states including Minnesota, Nebraska and Oklahoma. No stops were made in Delaware. The Nebraska stops are of short duration since utilized only for the discharge and loading of passengers, mail, express, and freight, and sometimes for refueling. Appellant neither owns nor maintains facilities for repairing, reconditioning, or storing its flight equipment in Nebraska, but rents depot space and hires other services as required. The Supreme Court of Nebraska made no distinction as to taxability between those years when no flights were made into the state of domicile (Delaware) and those when flights did enter the state of new domicile (Oklahoma).

It is stipulated that the tax in question is assessed only against regularly scheduled air carriers and is not applied to carriers who operate only intermittently in the state. The statute defines 'flight equipment' as 'aircraft fully equipped for flight',² and provides that 'Any tax upon or measured by the value of flight equipment of air carriers incorporated or doing business in this state shall be assessed and collected by the Tax Commissioner.'³ A formula is prescribed for arriving at the proportion of a carrier's flight equipment to be allocated to the state.⁴

The statute uses the allocation formula of the 'proposed uniform statute to provide for an equitable method of state taxation of air carriers' adopted by the Council of State Governments upon the recommendation of the National Association of Tax Administrators in 1947.⁵ Use of a uniform allocation formula to apportion air-carrier taxes among the states follows the recommendation of the Civil Aeronautics Board in its report to Congress.⁶ The Nebraska statute provides for reports, levy, and rate of tax by state average.⁷

Required reports filed by Mid-Continent for 1950 show that about 9% of its revenue and 11 1/2% of the total system tonnage originated in Nebraska and about 9% of its total stops were made in that state. From these figures, using the statutory formula, the Tax Commissioner arrived at a valuation of $118,901 allocable to Nebraska, resulting in a tax of $4,280.44. Since Mid-Continent filed no return for 1951 the same valuation was used and an increased rate resulted in assessment of $4,518.29. The Supreme Court of Nebraska held the statute not violative of the Commerce Clause and dismissed appellant's petition.⁸

Appellant argues that federal statutes governing air commerce enacted under the commerce power preempt the field of regulation of such air commerce and preclude this tax. Congress, by the Civil Aeronautics Act of 1938, 52 Stat. 977, 1028, § 1107(i)(3), 49 U.S.C. § 176(a), 49 U.S.C.A. § 176(a), enacted:

'The United States of America is declared to possess and exercise complete and exclusive national sovereignty in the air space above the United States, including the air space above all inland waters and the air space above those portions of the adjacent marginal high seas, bays, and lakes, over which by international law or treaty or convention the United States exercises national jurisdiction.'

This provision originated in the Air Commerce Act of 1926, 44 Stat. 568, 572, § 6. The 1938 Act also declares 'a public right of freedom of transit' for air commerce in the navigable air space to exist for any citizen of the United States. 52 Stat. 980, § 3, 49 U.S.C. § 403, 49 U.S.C.A. § 403.⁹

The provision pertinent to sovereignty over the navigable air space in the Air Commerce Act of 1926 was an assertion of exclusive national sovereignty. The convention between the United States and other nations respecting international civil aviation ratified August 6, 1946, 61 Stat. 1180, accords. The Act, however, did not expressly exclude the sovereign powers of the states. H.R.Rep.No. 572, 69th Cong., 1st Sess., p. 10. The Civil Aeronautics Act of 1938 gives no support to a different view.¹⁰ After the enactment of the Air Commerce Act, more than twenty states adopted the Uniform Aeronautics Act. It had three provisions indicating that the states did not consider their sovereignty affected by the National Act except to the extent that the states had ceded that sovereignty by constitutional grant.¹¹ The recommendation of the National Conference of Commissioners on Uniform State Laws to the states to enact this Act was withdrawn in 1943.¹² Where adopted, however, it continues in effect. See United States v. Praylou, 4 Cir., 208 F.2d 291. Recognizing this 'exclusive national sovereignty' and right of freedom in air transit, this Court in United States v. Causby, 328 U.S. 256, 261, 66 S.Ct. 1062, 1065, 90 L.Ed. 1206, nevertheless held that the owner of land might recover for a taking by national use of navigable air space, resulting in destruction in whole or in part of the usefulness of the land property.

These Federal Acts regulating air commerce are bottomed on the commerce power of Congress, not on national ownership of the navigable air space, as distinguished from sovereignty. In reporting the bill which became the Air Commerce Act, it was said:

'The declaration of what constitutes navigable air space is an exercise of the same source of power, the interstate commerce clause, as that under which Congress has long declared in many acts what constitutes navigable or non-navigable waters. The public right of flight in the navigable air space owes its source to the same constitutional basis which, under decisions of the Supreme Court, has given rise to a public easement of navigation in the navigable waters of the United States, regardless of the ownership of the adjacent or subjacent soil.' H.R.Rep.No. 572, 69th Cong., 1st Sess., p. 10.

The commerce power, since Gibbons v. Ogden, 9 Wheat. 1, 193, 6 L.Ed. 23, has comprehanded navigation of streams. Its breadth covers all commercial intercourse. But the federal commerce power over navigable streams does not prevent state action consistent with that power. Gilman v. City of Philadelphia, 3 Wall. 713, 729, 18 L.Ed. 96. Since, over streams, Congress acts by virtue of the commerce power, the sovereignty of the state is not impaired. State of Oklahoma ex rel. Phillips v. Guy F. Atkinson Co., 313 U.S. 508, 534, 61 S.Ct. 1050, 1063, 85 L.Ed. 1487. The title to the beds and the banks are in the states and the riparian owners, subject to the federal power over navigation.¹³ Federal regulation of interstate land and water carriers under the commerce power has not been deemed to deny all state power to tax the property of such carriers. We conclude that existent federal air-carrier regulation does not preclude the Nebraska tax challenged here.

Nor has appellant demonstrated that the Commerce Clause otherwise bars this tax as a burden on interstate commerce.¹⁴ We have frequently reiterated that the Commerce Clause does not immunize interstate instrumentalities from all state taxation, but that such commerce may be required to pay a nondiscriminatory share of the tax burden.¹⁵ And appellant does not allege that this Nebraska statute discriminates against it nor, as noted above, does it challenge the reasonableness of the apportionment prescribed by the statute. ¹⁶

The argument upon which appellant depends ultimately, however, is that its aircraft never 'attained a taxable situs within Nebraska' from which it...