Board of County Com'rs v. Aerolineas Peruanasa, SA

• Decision Date: 31 August 1962
• Docket Number: 19632.,No. 19476,19476
• Citation: 307 F.2d 802
• Parties: BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellant, v. AEROLINEAS PERUANASA, S. A., et al., Appellees. AEROLINEAS PERUANASA, S. A., et al., Appellants, v. BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellee. BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellant, v. LINEAS AEREAS DE NICARAGUA, S. A., Appellee. LINEAS AEREAS DE NICARAGUA, S. A., Appellant, v. BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

307 F.2d 802 (1962)

BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellant, v. AEROLINEAS PERUANASA, S. A., et al., Appellees.

AEROLINEAS PERUANASA, S. A., et al., Appellants, v. BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellee.

BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellant, v. LINEAS AEREAS DE NICARAGUA, S. A., Appellee.

LINEAS AEREAS DE NICARAGUA, S. A., Appellant, v. BOARD OF COUNTY COMMISSIONERS OF DADE COUNTY, FLORIDA, acting as the Dade County Port Authority, Appellee.

Nos. 19476, 19632.

United States Court of Appeals Fifth Circuit.

August 31, 1962.

Chester Bedell, Jacksonville, Fla., Thomas G. Spicer, Asst. Gen. Counsel, Dade County Port Authority, Paul G. Hyman, Miami, Fla., for appellant.

Philip Schleit, Washington, D. C., J. Leo McShane, Miami, Fla., Davis W. Morton, Jr., Washington, D. C., for appellees.

Jackson L. Peters, Miami, Fla., for British Overseas Airways Corp., British West Indian Airways Ltd., Bahamas Airways Ltd., and KLM Royal Dutch Airlines, amici curiae.

Before TUTTLE, Chief Judge, BELL, Circuit Judge and CARSWELL, District Judge.

GRIFFIN B. BELL, Circuit Judge.

These consolidated appeals are from final decrees of the District Court holding that appellant may not charge the foreign airlines according to its usual schedule of charges for landing and other aviation fees and for fees paid concessionaires by the appellees and in turn paid to appellant, but must give them the benefit of lower charges to which four others are entitled by virtue of contracts. The decrees also awarded judgments for the amount of the excess charges paid by appellees and their suppliers since 1955, together with interest.¹

Appellant owns and operates the Miami International Airport. Appellees are ten Latin American airline corporations and have made substantial use of the airport facilities in international operations during recent years. Their cause of action is premised on Article 15 of the provisions of the Convention on International Civil Aviation, the "Chicago Convention", which became effective as a treaty between the ratifying states on April 4, 1947. 61 Stat. 1180. This treaty was ratified by the United States of America and by, among others, the countries of which appellees are nationals. The Republic of Panama did not ratify the treaty until January 18, 1960, but appellee Aerovias Interamericanas de Panama, S.A., relies on an executive agreement between the Republic of Panama and this country which became effective April 14, 1949 and which, for the purpose of this case, is as effective as the Chicago Convention.

That Convention provided, in setting out principles and arrangements for the development of International Civil Aviation on the Basis of equality of opportunity, as follows: (Article 15)

"Any charges that may be imposed or permitted to be imposed by a contracting State for the use of such airports and air navigation facilities by the aircraft of any other contracting State shall not be higher,

"(a) As to aircraft not engaged in scheduled international air services, then those that would be paid by its national aircraft of the same class engaged in similar operations, and

"(b) As to aircraft engaged in scheduled international air services, than those that would be paid by its national aircraft engaged in similar international air services."

The District Court construed this article in a favored nation clause concept, but refused to consider it on the basis of determining the presence or absence of discrimination. It was treated as being an absolute requirement to the end that charges against appellees could be no higher than the lowest charges or rates paid by American nationals, no matter what the classification or circumstances. We disagree and reverse.

The dispute centers around the fact that two separate schedules of charges were effective at the airport; one schedule being based on contracts made at or near the time the airport opened for business in 1946, and the other being based on Resolution No. 56 of appellant setting charges applicable to all aircraft except those of the companies who entered into the contracts. The facts are not in dispute and our decision turns on the construction of the Chicago Convention treaty in light of the undisputed facts.

At the close of World War II, Pan American Airways, Inc. owned the 36th Street Airport near the City of Miami in Dade County, Florida, embracing 223 acres of land. The United States of America owned the adjacent Convair property consisting of 102 acres and both tracts were improved by various airport facilities. Eastern Airlines, Inc., Delta C & S Airlines, Inc. and National Airlines, Inc. were using the facilities of the 36th Street Airport under an arrangement with Pan American. Only Pan American was flying internationally.

The Board of County Commissioners of Dade County was authorized by the Florida Legislature in 1945 to establish airport facilities to be financed by ad valorem taxation on property within the county, and by revenue bonds payable solely from the revenues of any facility established. Pursuant to this statutory authority, the county commissioners acting as the Dade County Port Authority issued twenty year bonds in the municipal amount of $2,500,000 payable only from anticipated revenues. These were exchanged with Pan American Airlines, Inc. for a deed to the 36th Street Airport. Appellant simultaneously borrowing $700,000 from Eastern Airlines with which to purchase the Convair property. This vested title to an existing 325 acre airport in appellant with no cash outlay. At the same time appellant entered into contracts with Pan American and Eastern whereunder Pan American leased a portion of the airport for the term of the revenue bonds and Eastern leased the Convair property for the same term. Pan American and Eastern, because of the indebtedness of the Authority, were committed to the airport from the beginning but leases were also tendered to other airlines at the same time. National, Delta, and Taca Airways Agency, Inc., a corporation of El Salvador engaged in international service, all accepted identical twenty year leases with the amount of rent depending on space taken. Each lease contract provided that appellant and the lessees would share in the profits of the airport, and sustain it in losses for as long as appellant desired to be so sustained. The contracts required appellants to provide without expense to lessees the necessary facilities for governmental agencies such as the weather bureau, health services, and immigration and customs. Each lease set forth the same schedule of aviation fees to be charged, based on a graduated scale for flights scheduled, plus landing weight of the aircraft. The lessees and their suppliers were not to be otherwise charged for the use of the airport facilities. Each contract provided that the Authority could redeem the bond issue at any time and in such event the provision of the contracts providing for the sharing of profits and losses would become ineffective. Each lessee had the option of continuing under the contracts, save for that part, or of entering into a new ten year lease calling for rentals and airport charges comparable to those charged by comparable United States airports.

Appellant commenced operations at the airport on March 23, 1946 with a small staff, offering domestic service only. A schedule of charges applicable to airlines who did not commit themselves to the long term contract was published at that time. On September 24, 1956 appellant adopted Resolution No. 56 setting forth a permanent schedule of charges applicable to all aircraft using the facilities except aircraft of the lessees under the contracts. Appellees commenced using the facilities thereafter, one as early as 1948, and another as late as 1960, and were charged on the basis of Resolution No. 56. These charges exceeded those paid by the lessees in respect to landing charges and included the following, none of which were required of the twenty year lessees: passenger terminal charges, cargo terminal charges, and concessionaire charges, imposed on the supplier and passed on to appellees, based on five per cent of the gross sales price of gasoline, oil and meals purchased by appellees.

The growth of the airport was rapid and after little more than a year of operations appellant redeemed the original bond issue with part of the proceeds of a new issue. The profit and loss sharing arrangement under the contracts was terminated and the five contracting airlines elected to continue the use of the facilities for the remaining almost eighteen years under the favorable schedule of charges under the contracts, rather than entering into new ten year leases whereunder the charges would have been increased.

The facilities of the airport were greatly expanded and finally in 1955 it was moved to a new location. The contracts of the five original lessee airlines will expire December 31, 1965. In the meantime, Taca terminated services to Miami and its contract was mutually cancelled.

The background facts demonstrate that various airlines, other than those having the original contracts, have long been dissatisfied with the charges under Resolution No. 56 in view of the lower charges under the contracts. For example, Pan American on behalf of its subsidiary corporation, Cubana de Aviacion S.A., sought to obtain for it the rates afforded to Pan American under the contract. The matter was arbitrated and the contention of Pan American for Cubana was rejected.²

Complaints against the charges filed by KML Royal Dutch Airlines and British South American Airways, Inc. in 1949 were denied, as well as the complaint filed in 1955 by Braniff International Airways, Inc., a United States airline flying internationally. Braniff has paid...