Bi Go Markets, Inc. v. Morton

• Decision Date: 18 December 1992
• Docket Number: No. 74711,74711
• Citation: 843 S.W.2d 916
• Parties: BI GO MARKETS, INC., and Wetterau Incorporated, Respondents, v. Kenneth D. MORTON, Assessor for St. Louis County, Missouri, et al., Appellants.
• Court: Missouri Supreme Court

Page 916

843 S.W.2d 916

BI GO MARKETS, INC., and Wetterau Incorporated, Respondents, v. Kenneth D. MORTON, Assessor for St. Louis County, Missouri,

et al., Appellants.

No. 74711.

Supreme Court of Missouri,

En Banc.

Dec. 18, 1992.

John A. Ross, Paula J. Lemerman, Clayton, for appellants.

Juan D. Keller, Mark B. Leadlove, St. Louis, for respondents.

COVINGTON, Judge.

Kenneth Morton, assessor for St. Louis County, and others, appeal from the trial court's grant of a summary judgment in favor of Bi Go Markets, Inc., and Wetterau, Incorporated. At issue is whether Bi Go and Wetterau owe 1991 ad valorem personal property tax in St. Louis County on an aircraft owned by Bi Go and leased by it to Wetterau. The judgment is reversed.

Bi Go, a New Hampshire corporation and subsidiary of Wetterau, having its principal place of business in New Hampshire, is the owner and lessor of an Avions Marcel Dessault Falcon 900 jet aircraft. Bi Go leases the aircraft to Wetterau. The aircraft is regularly kept, hangared, and serviced at Lambert Field in St. Louis County. The flight logs show that from July of 1990, to May of 1991, the aircraft spent two hundred fifty-five of three hundred nine nights at the St. Louis airport, with the remainder of time being spent in fourteen other states. The aircraft made thirteen stops in New Hampshire, of a total of over six hundred stops, and was present overnight in that state three times. On April 1, 1991, Bi Go registered the aircraft with the State of New Hampshire, as required by New Hampshire law, and paid an annual fee in the sum of $57,230.

On May 16, 1991, Bi Go and Wetterau received notice of assessment of the aircraft for 1991 ad valorem personal property tax in St. Louis County. Bi Go and Wetterau appealed to the Board of Equalization of St. Louis County contending the aircraft was not subject to taxation in St. Louis County. The Board denied the appeal after which Bi Go and Wetterau appealed to the Circuit Court of St. Louis County.

Appellants and respondents filed motions for summary judgment. Bi Go and Wetterau contended that St. Louis County is constitutionally prohibited from assessing an unapportioned ad valorem personal property tax against the aircraft. Bi Go and Wetterau acknowledged that St. Louis County may have the right to assess an apportioned ad valorem personal property tax against the aircraft; they contended, however, that the absence of statutory authority for the county to apportion prohibits it from doing so. The trial court granted Bi Go and Wetterau's motion and ordered the assessor to exempt the aircraft from St. Louis County tax rolls. Bi Go and Wetterau then paid the tax under protest.

Appellants contend the circuit court erred in granting summary judgment because the tax situs of the aircraft is St. Louis County and, therefore, §§ 137.075, 137.095, RSMo 1986, require Bi Go and Wetterau to account for property taxes on the aircraft in this state. Appellants further contend that Missouri is the sole taxable situs for the aircraft; therefore, apportionment is not required. Even if apportionment is constitutionally required, appellants further assert, the fact that there is no statutory procedure by which an apportionment may be made does not defeat St. Louis County's ability to impose an apportioned tax.

The present case involves principles of interstate commerce and the due process clause of the Fourteenth Amendment. If two or more states or subdivisions of the states have the power to tax the aircraft, the commerce clause requires the taxing authorities to apportion taxes in a nondiscriminatory manner. Central R.R. v. Pennsylvania, 370 U.S. 607, 613, 82 S.Ct. 1297, 1302, 8 L.Ed.2d 720 (1962); Braniff Airways, Inc. v. Nebraska State Board of Equalization and Assessment, 347 U.S. 590, 598, 74 S.Ct. 757, 762, 98 L.Ed. 967 (1954); Complete Auto Transit v. Brady, 430 U.S. 274, 278, 287, 97 S.Ct. 1076, 1078, 1083, 51 L.Ed.2d 326 (1977); Quill Corp. v. North Dakota, 504 U.S. 298, ----, 112 S.Ct. 1904, 1912, 119 L.Ed.2d 91 (1992). The taxpayer has the burden of establishing multiple jurisdictions having the ability to tax. Central R.R., 370 U.S. at 613, 82 S.Ct. at 1302.

St. Louis County has a right to levy an ad valorem property tax on the aircraft. § 137.095; Buchanan County v. State Tax Comm'n, 407 S.W.2d 910, 914 (Mo.1966). The question is whether the County's tax must be apportioned. Determination of whether the County can levy an unapportioned tax on the aircraft is first dependent upon whether New Hampshire is constitutionally able to levy a property tax on the aircraft. ¹

The law of authority to tax mobile property used in interstate commerce has developed without clear direction and guidance. By the ancient fiction of mobilia sequuntur personam only the domicile of the owner could properly levy personal property taxes. 71 Am.Jur.2d State and Local Taxation, § 655 (1973); see also State ex rel. American Automobile Ins. Co. v. Gehner, 320 Mo. 702, 712, 8 S.W.2d 1057, 1059-60 (1928). As personal property became more mobile, the ancient fiction gave way to the rule that tangible personal property is to be taxed only where the property has a physical situs. 71 Am.Jur.2d State and Local Taxation, § 659 (1973).

With the gradual decline of the mobilia sequuntur personam doctrine in the beginning of the twentieth century, the United States Supreme Court began to restrict the power of states to tax mobile goods used in interstate commerce. A review of the United States Supreme Court decisions indicates that constitutional concerns of interstate commerce and due process limit the extent to which any state may tax tangible personal property. In Union Refrigerator Transit v. Kentucky, 199 U.S. 194, 26 S.Ct. 36, 50 L.Ed. 150 (1905), the state of Kentucky, the domicile of the property owner, assessed box cars leased to others permanently situated in other states. The Court held that taxation by the domicile violated the due process clause when the property was permanently located in a nondomiciliary state because the taxpayer was required to pay for state services it was never afforded, taxation by the domicile under the circumstances partook "rather of the nature of an extortion than a tax." Id. at 202, 26 S.Ct. at 37.

In Johnson Oil Refining Co. v. Oklahoma, 290 U.S. 158, 54 S.Ct. 152, 78 L.Ed. 238 (1933), the Court further defined the ability of domiciliary and nondomiciliary states to tax property used in interstate commerce. In Johnson Oil, an Illinois corporation operated an oil refinery in Oklahoma. Id. at 159, 54 S.Ct. at 152. The refinery had several railroad tankers used almost exclusively in interstate commerce but which where loaded out of and returned to Oklahoma on a routine basis. Id. at 160, 54 S.Ct. at 153. The tankers visited Illinois only on a very infrequent basis. Id. The Court found the domiciliary state, Illinois, had lost its jurisdiction to tax the property because the property had an actual situs elsewhere. Id. at 161, 54 S.Ct. at 153. To determine whether the tankers had a tax situs in Oklahoma the Court looked to whether the property was habitually or continuously employed within the state. Id. at 162, 54 S.Ct. at 153. Although the Court found that Oklahoma was a tax situs, it allowed the state to tax only on an apportioned basis because the tankers were habitually and continuously employed in other states as well. Id. at 163, 54 S.Ct. at 154.

In Northwest Airlines, Inc. v. Minnesota, 322 U.S. 292, 64 S.Ct. 950, 88 L.Ed. 1283 (1944), the Court refused to extend the Johnson Oil test for determining tax situs to commercial airlines. Northwest Airlines was domiciled in and had its principal place of business in Minnesota. Id. at 293, 64 S.Ct. at 951. The airlines operated aircraft in Illinois, Minnesota, North Dakota, Montana, Oregon, Wisconsin, and Washington. Id. The Court refused to consider factors such as stopovers, runs, location of flying crew bases, and the location of flight facilities in determining whether the aircraft had established tax situs elsewhere. Id. Rather, the Court held that no nondomiciliary state had provided continuous protection or benefits throughout the year to the airlines so that Minnesota, the domiciliary state, retained full power to tax. Id. at 297, 300, 64 S.Ct. at 953, 954.

In Braniff Airways, Inc. v. Nebraska State Board of Equalization and Assessment, 347 U.S. 590, 74 S.Ct. 757, 98 L.Ed. 967 (1954), the Court assessed the plurality holding in Northwest Airlines and found a nondomiciliary state could establish a tax situs if the airline made regularly scheduled flights into the state. The Court rejected the argument that the commerce clause immunized interstate instrumentalities from all state taxation, but found that commerce may be required to pay a nondiscriminatory or apportioned share of the tax burden. Id. at 597-98, 74 S.Ct. at 761-62. The Court also rejected the argument that the due process clause prohibited the airline from paying tax in the nondomiciliary state. Id. at 598-602, 74 S.Ct. at 762-765. Under due process considerations the only concern is "whether the tax in practical operation has relation to the opportunities, benefits or protection conferred by or afforded by the taxing state." Id. at 600, 74 S.Ct. at 763.

In Central Railroad Co. v. Pennsylvania, 370 U.S. 607, 82 S.Ct. 1297, 8 L.Ed.2d 720 (1962), the Court again addressed the question of whether taxation by a nondomiciliary state violated the commerce clause. The Court held that it is only multiple unapportioned taxation of interstate operations that offends the commerce clause. Id. at 612, 82 S.Ct. at 1301.

In sum, the United States Supreme Court decisions reflect that the due process clause is satisfied when tangible personal property is taxed according to its "tax situs," i.e., the place the property is located, and commerce clause concerns are satisfied if the property tax is apportioned when multiple...