Boeing Air Transport v. Edelman

• Decision Date: 27 June 1931
• Docket Number: No. 2049.,2049.
• Citation: 51 F.2d 130
• Parties: BOEING AIR TRANSPORT, Inc., v. EDELMAN, State Treasurer, et al.
• Court: U.S. District Court — District of Wyoming

51 F.2d 130 (1931)

BOEING AIR TRANSPORT, Inc., v. EDELMAN, State Treasurer, et al.

No. 2049.

District Court, D. Wyoming.

June 27, 1931.

John W. Lacey of Cheyenne, Wyo., for plaintiff.

James A. Greenwood, Atty. Gen., and Richard J. Jackson, George W. Ferguson, and Philip S. Garbutt, Asst. Attys. Gen., for defendant State Treasurer.

Harry B. Henderson, Jr., of Cheyenne, Wyo., for defendant City of Cheyenne.

T. S. Taliaferro, Jr., and F. W. Johnson, both of Rock Springs, Wyo., for defendant City of Rock Springs.

KENNEDY, District Judge.

This is a suit in equity in which the plaintiff seeks to restrain the enforcement of a state law in regard to the collection of a gasoline tax upon the gasoline used by the plaintiff in its operation of an air line in interstate commerce in connection with the use of airports at the cities of Cheyenne and Rock Springs in the state of Wyoming. The prayer of the bill seeks an interlocutory injunction and upon final hearing a permanent injunction against the collection of such tax.

The set-up of the case is one which would seem to bring it within the purview of a statutory court of three judges (28 USCA § 380), but, as no action was taken by the plaintiff to move for a hearing upon an interlocutory injunction, the case proceeded to final hearing before a single judge without objection on the part of the defendants, and we assume therefore that the court has jurisdiction of the proceeding. Seaboard Air Line Railway v. Railroad Commission, 213 F. 27 (C. C. A. 5).

The substance of the statutory enactment challenged by the plaintiff as being unconstitutional in regard to the interstate business of the plaintiff is found in chapter 14 of the Session Laws of Wyoming 1929, Special Session, reading as follows: "On and after April 1, 1929, each and every wholesaler as defined in this Act, who is now engaged or who may hereafter engage in his own name, or in the name of others, or in the name of his representatives or agents in this State, in the sale or use of gasoline as herein defined shall not later than the fifteenth of each month, render to the State Treasurer a statement of all gasoline sold or used by them in the State of Wyoming during the preceding calendar month, and pay to the State Treasurer at the same time, the license tax of four cents per gallon on all such gasoline. Said statement to the State Treasurer shall be upon blanks furnished by him, and shall be sworn to by the owner or managing agent in the case of an individual, firm or association, by the resident general agent or attorney, in the case of a foreign corporation or by one of the principal officers in the case of a domestic corporation. Every person, firm or corporation, who shall use any gasoline in this state upon which the said tax has not been paid by any wholesaler in this state, shall, on or before the 15th day of each calendar month, beginning with the first calendar month after this Act has become effective, render a true statement to the State Treasurer, duly signed and sworn to, and accompany such statement with the payment of a tax of four cents per gallon on all gasoline as shown by such statement to have been used by him; provided that before making the distribution of funds provided for in Section 1 hereof the State Treasurer shall pay over all funds received from the gasoline license tax on gasoline used at any municipal air field to the city or town where such air field is located, to be used for the maintenance and improvement of such air field."

Upon the final hearing testimony was adduced by the parties, and the following may be considered as a sketchy outline of the facts in the case:

The plaintiff is a corporation organized and existing under the laws of the state of Washington and engaged in the operation of an air transport line upon regular schedule between Chicago, Illinois, and San Francisco, Cal. In such operation it enjoys a contract with the United States government in the transportation of United States mails, and likewise transports passengers and express for hire over its entire line. The substantial portion of its business is interstate, in fact the testimony shows that its transportation of mails, passengers, or express within the state of Wyoming is an insignificant percentage of its entire business, so that it would be impractical and impossible to determine or estimate the relative amount of gasoline which would be consumed in carrying on its intrastate business. In the operation of its air line it makes use of two landing fields owned by the defendant cities of Cheyenne and Rock Springs, respectively, at which points its planes are regularly landed on schedule for the discharge and reception of mail, passengers, and express. At these points its planes are refueled, examined, and conditioned. Some time after the passage and operation of the law which the plaintiff challenges, it began a segregation of the gasoline used by it by tolling the amount of such gasoline which was used for the operation of its ships, traveling in interstate commerce, as distinguished from the gasoline which was used in the testing of airships at the field, conditioning its motors, and sales made to other airplane users. As to the first-mentioned gasoline, the tax of 4 cents per gallon was paid to the state treasurer under protest in consideration of the high penalties fixed for a violation of the statute, but as to the latter classification of gasoline the said tax was paid thereon to the state treasurer without protest. During the period covering substantially eight months, from the 15th of March, 1930, to the 15th of November, 1930, the plaintiff paid to the state treasurer, in the amount of this protested tax, the sum of $5,529.28, representing the tax upon gasoline used in interstate commerce at the Cheyenne field, and during the same period it paid to the state treasurer $2,726.32 as representing the tax upon gasoline used in interstate commerce at the Rock Springs field. Testimony was likewise offered as to the continuing payments of said protested and unprotested amounts after the filing of the bill and substantially up to the final hearing. The amount testified to as having been paid of the unprotested tax is considerably less than that paid as the protested tax at both airports. The city of Cheyenne entered into a contract with the plaintiff company some time in the year of 1929 which provided for the use of the municipal air field by the plaintiff in the operation of its transcontinental air line. The provisions of such contract are numerous, and not all of them are material to the matter here being considered. Among other provisions of the contract, it may be said that the plaintiff and the city were to share the expense of grading additional land and building a new outlining lighting system at a cost of $7,000. The city agrees to acquire additional land for the airport for which it should pay the expense, and that it should keep the field during the term of the lease (designated as twenty-five years) as a well-maintained and well-regulated airplane landing field for the reasonable use of any and all planes and airships operated by the plaintiff. In addition, the plaintiff agrees to pay the city an annual rental of $1,050 for hangar space and taxiways, and $3,000 for rental of several hangars located on the field and owned by the city. The city agrees to pay the plaintiff $2,400 a year for the general supervision of the field, under the general direction of the city. Similar contract relations exist between the plaintiff and the city of Rock Springs, but of less magnitude owing to the smaller business of the company at that point, but involving a rental there paid by the plaintiff of $600 per year. At both ports the plaintiff has the privilege of selling gasoline to the public for airplane purposes. As to the city of Cheyenne, the money received from the state treasurer representing this tax on gasoline used at the airport is placed in an airport fund and used exclusively for the purpose of improving and maintaining the airfield. During the year last past not all of the money so received and maintained in this separate fund had been expended, but all of which had been expended was expended in connection with the airport. No direct testimony was offered by the city of Rock Springs as to its segregation of this money received from the state treasurer, except as it may be inferred that the general purpose of the law would be carried out by that municipality. In Cheyenne, at a recent popular election, a bond issue was voted upon and approved by the people authorizing the expenditure of $15,000 for various purposes in connection with the improving of its municipal air field.

Under these circumstances the plaintiff contends that the law requiring the payment of the tax of 4 cents per gallon so segregated and used by it in the operation of its air line in interstate commerce is unconstitutional as applied to the plaintiff, in that it is in direct contravention of the commerce clause of the Constitution. Counsel in such contention rely principally upon the case of Helson v. Kentucky, 279 U. S. 245, 49 S. Ct. 279, 73 L. Ed. 683, where the state of Kentucky attempted to tax 75 per cent. of the gasoline consumed within the limits of Kentucky by a ferryboat operating exclusively in interstate commerce. The court, through Mr. Justice Sutherland, at page 248 of 279 U. S., 49 S. Ct. 279, 280, expresses the gist of the decision in the following language:

"The claim under the commerce clause of the federal Constitution was denied on the ground that the tax was confined to gasoline used within the limits of the state and the commerce clause was not affected. It is with the latter question only that we are here concerned.

"Regulation of interstate and foreign commerce is a matter committed exclusively to the control of Congress, and the rule is settled by innumerable decisions of this court,...