Department of Revenue v. Wardair Canada, Ltd.

Citation455 So.2d 326
Decision Date14 June 1984
Docket NumberNo. 64036,64036
PartiesDEPARTMENT OF REVENUE, Appellant, v. WARDAIR CANADA, LTD., Appellee.
CourtUnited States State Supreme Court of Florida

Jim Smith, Atty. Gen. and Joseph C. Mellichamp, III, Asst. Atty. Gen., and Larry Levy, General Counsel and Stephen J. Keller, Asst. General Counsel, Tallahassee, for appellant.

S. Alan Stanley of Turner, Fascell, Russo & Stanley, Coral Gables, for appellee.

ADKINS, Justice.

This case is before us on an order from the First District Court of Appeal certifying the issue in the case to be of great public importance. We have jurisdiction. Art. V, § 3(b)(5), Fla. Const.

This case arose with the filing of a complaint in the circuit court in Leon County by Wardair Canada, Ltd. (hereinafter Wardair) challenging the constitutionality of chapter 83-3, Laws of Florida. The court consolidated this case with an action filed by Air Jamaica for the purpose of trial. The parties stipulated to a procedure whereby the airline was allowed to self-accrue the sales tax imposed under chapter 83-3 during the pendency of the proceedings subject to certain conditions. The circuit court entered an order of final judgment on July 19, 1983, separate from its order in the Air Jamaica case. The court upheld the constitutionality of the law dismissing three of Wardair's counts in its complaint but ruled in favor of the airline in recognizing an exemption to the airlines to the motor fuel and special fuel tax imposed by the law by virtue of certain executive agreements with the United States. The trial judge had previously upheld chapter 83-3 in Delta Airlines, Inc. v. Department of Revenue, No. 83-761 (Leon County Cir.Ct.--Civ.Div. May 23, 1983). The Department of Revenue filed its notice of appeal from the trial court's final judgment on July 21, 1983. Shortly thereafter, Wardair filed its notice of cross-appeal. The First District Court of Appeal then certified the case to this Court.

This Court has ruled on three of the four issues raised by Wardair in its original complaint and on cross-appeal in its decision in Delta Airlines, Inc. v. Department of Revenue, 455 So.2d 317 (Fla.1984). The department has appealed the circuit court's ruling recognizing an exemption to the excise tax for the foreign airlines. The circuit court found that chapter 83-3 was inconsistent with a Non-scheduled Air Service Agreement between the United States and Canada, May 8, 1974, T.I.A.S. 7826.

The circuit court's order noted that article XII(1) of the Air Services Agreement exempts both the United States and Canada from national duties and charges on fuels and article XIV provides that neither party will discriminate against the other. The court then relied on its holding in Lineas Aereas Costarricenses, S.A. v. Department of Revenue, No. 83-761 (Fla. 2d Cir. June 21, 1983). In that case the court held that when the federal policy is to exempt foreign airlines from fuel taxes and prevent discrimination, the individual states are precluded from acting in that area.

The department argues that the agreement is inapplicable to estop the enforcement of chapter 83-3 for two reasons: 1) the agreement is not self-executing; and 2) the agreement specifically addresses only national customs, duties, excise taxes and charges with no application to or restriction on state taxation schemes. The circuit court did not expressly recognize a distinction between executory and non-executory agreement provisions in its order.

The department asserts that the following provisions in the agreement are executory and thus require an additional legislative enactment to effect implementation:

Each Contracting Party shall exempt the carriers of the other Contracting Party to the fullest extent possible under its national law from import restrictions, customs duties, excise taxes, inspection fees, and other national duties and charges on fuel, lubricants, consumable technical supplies ... and other items intended for use solely in connection with the operation, maintenance or servicing of aircraft of the carriers of the other Contracting Party. The exemptions granted by this paragraph shall apply to items:

(a) introduced into the territory of one Contracting Party by or on behalf of the carriers of the other Contracting Party;

(b) retained on board aircraft of the carriers of one Contracting Party upon arriving in or leaving the territory of the other Contracting Party;

(c) taken on board aircraft of the carriers of one Contracting Party in the territory of the other Contracting Party and intended solely for use in international air services; whether or not such items are consumed wholly within the territory of the Contracting Party granting the exemption.

Because we agree with the department's conclusion that the agreement is inapplicable because it specifically addresses only national customs, duties, and excise taxes and charges, we find it unnecessary to determine whether these provisions are executory or not. The Air Services Agreement is not a treaty ratified by the United States Senate. However, it is a formally executed international agreement and, as such, is valid and binding as if approved by act of Congress. United States v. Pink, 315 U.S. 203, 62 S.Ct. 552, 86 L.Ed. 796 (1942). The purpose of the agreement is obviously to preserve, protect and promote the continued development of a system of air transport free from discriminatory practices and to support equal commercial opportunity between the nations.

The doctrine of preemption which is given effect through the supremacy clause mandates that federal law overrides any state regulation where there is an actual conflict between the two sets of legislation such that both cannot validly stand. The United States Supreme Court has formulated analytical standards for preemption. In Hines v. Davidowitz, 312 U.S. 52, 61 S.Ct. 399, 85 L.Ed. 581 (1941), the Court construed the Federal Alien Registration Act of 1940 to override Pennsylvania's Alien Registration Act of 1939. The Court noted that if state law "stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress," federal regulation must preempt state regulation to give effect to the desired national policy. Id. at 67, 61 S.Ct. at 404.

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    ...85 L.Ed.2d 714 (1985); Ohio State Pharmaceutical Ass'n v. Creasy, 587 F.Supp. 698, 705 (S.D.Ohio 1984); Department of Revenue v. Wardair Canada, Ltd., 455 So.2d 326, 328-29 (Fla.1984), affirmed, 477 U.S. 1, 106 S.Ct. 2369, 91 L.Ed.2d 1 (1986); Phillips v. General Fin. Corp. of Fla., 297 So.......
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    ...where there is an actual conflict between the two sets of legislation such that both cannot validly stand." Dep't of Revenue v. Wardair Canada, Ltd., 455 So.2d 326, 328 (Fla.1984), aff'd, 477 U.S. 1, 106 S.Ct. 2369, 91 L.Ed.2d 1 (1986). While it is true that federal legislation could preemp......
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