City of Dallas v. Overton

• Decision Date: 14 December 1962
• Docket Number: No. 16177,16177
• Citation: 363 S.W.2d 821
• Parties: CITY OF DALLAS et al., Appellants, v. W. T. OVERTON et al., Appellees.
• Court: Texas Court of Appeals

Page 821

363 S.W.2d 821

CITY OF DALLAS et al., Appellants, v. W. T. OVERTON et al., Appellees.

No. 16177.

Court of Civil Appeals of Texas, Dallas.

Dec. 14, 1962.

Rehearing Denied Jan. 4, 1963.

H. P. Kucera, City Atty., N. Alex Bickley and Thomas B. Warren, Asst. City Attys., Dallas, for appellants.

Jackson, Walker, Winstead, Cantwell & Miller, D. L. Case, B. L. Woolley, Jr., and Jack Pew, Jr., Dallas, for appellees.

WILLIAMS, Justice.

Declaratory judgment action by W. T. Overton and Tecon Corporation against City of Dallas and Norman Register, the Assessor and Collector of Texas of said City, involving the question of taxable situs of tangible personal property.

The essential stipulated facts, and uncontroverted testimony, may be summarized as follows: W. T. Overton was on and prior to January 1, 1961, and is now, a resident of and has his domicile in the City of Dallas, Texas; that he has a business office in the City of Dallas, where he is engaged in the investment business. On and prior to the critical date of January 1, 1961 Overton was and is the owner of a Cessna Airplane which, when not in use, is located at Addison Airport which is located in the City of Addison, Dallas County, Texas. Such aircraft is used by Overton in his investment business and for pleasure and when not in use it is kept at the Addison Airport, receiving service and maintenance as is provided at such airport. Overton uses the said Addison Airport not only for storing and servicing of his airplane, as is provided at such airport, but also for landing and take off of said plane. Tecon Corporation, a Delaware Corporation, was on and prior to January 1st, 1961 doing business in the State of Texas and having its home office and principal place of business in the City of Dallas, Texas. On and prior to said critical date of January 1st, 1961 Tecon was and is the owner of a Convair Aircraft and a DC-3 Aircraft, both of which are used by the corporation in its business and for pleasure, and when not in use both planes are located and hangared at the Addison Airport, receiving service and maintenance there as well as using the facilities of said airport for landing and take off. The airplanes in question are private crafts; that they are not available for transporting property of others for hire and that they do not fly on a fixed schedule. The airplanes are used for business and pleasure trips by their owners. That Addison Airport is located within the City limits of Addison, and no part thereof is in the corporate limits of the City of Dallas. The City of Addison is a general law city and has the power to tax personal property; that it provides water, street lighting, fire and police protection to the Addison Airport. That Norman Register, in his capacity as Assessor and Collector of Taxes for the City of Dallas, has, on behalf of the City of Dallas, notified Overton and Tecon that their airplanes, hangared at the Addison Airport, are subject to ad valorem taxes by the City of Dallas and has demanded that a payment of such taxes be made. Overton and Tecon have declined to render such airplanes to the City of Dallas for taxation.

At the conclusion of a non-jury trial judgment was rendered in favor of Overton and Tecon Corporation denying the City of Dallas the right to tax the personal property in question.

In extremely able briefs, as well as in helpful oral argument before this Court, the attorneys for both appellants and appellees agree that the sole question presented by this appeal from the order of the District Court is whether, under the facts presented, the taxable situs of the personal property in question is within the City of Dallas, Texas.

Art. VIII, Sec. 11, Texas Constitution, Vernon's Ann.St. is the basic law which provides that all property, whether owned by persons or corporations, shall be assessed for taxation, and the taxes paid in the County where situated. Art. 1175, Vernon's Ann.Civ.St. grants to Home Rule Cities, such as the City of Dallas, the power to levy and collect ad valorem taxes. Section 1181 of the Home Rule Charter of the City of Dallas provides that:

'All property, real, personal or mixed, lying and being within the corporate limits of the City of Dallas on the 1st, day of January, shall be subject to taxation, excepting such property as may be exempt from taxation under the Constitution and the Laws of the State of Texas.' (Emphasis ours.)

Being limited to the authority granted to it by its Charter, the City of Dallas, in order to levy and collect a tax upon appellees' airplanes, must show that such property has a taxable situs, either actually or constructively, within the limits of the City of Dallas. Great Southern Life Ins. Co. v. City of Austin, 112 Tex. 1, 243 S.W. 778.

Since it is agreed by the parties that appellees' 'airplanes were not and are not physically within the Corporate limits of the City of Dallas' the appellants, in order to prevail, must demonstrate constructive tax situs, or as stated by appellees, an artificial or fictional situs, at the domicile of their owners in the City of Dallas. Appellant contends the 'within' provision of its Charter does not necessarily mean a physical location, relying upon the language of the Supreme Court in City of Dallas v. Texas Prudential Ins. Co., 156 Tex. 36, 291 S.W.2d 693 in which it was said:

'[I]t is our opinion that the language 'where situated', as used in the Constitution, does not, by its own force, determine the situs of personal property to be where it is physically located.'

Since there is admittedly no applicable statute controlling this particular situation appellants necessarily rely upon the application of the common law maxim, 'mobilia sequuntur personam' (movables follow the person) meaning that all movable property was considered to have its tax situs at the domicile of its owner.

The rationale, as well as the history of the ancient common law doctrine 'mobilia sequuntur personam' is succinctly stated in 51 Am.Jur. 'Taxation' Sec. 451, p. 466 as follows:

'A literal application of the principle of mobilia sequuntur personam to taxation of personal property not only justified a sovereign in taxing the property of his subjects although it was kept outside the territory, but also prohibited him from taxing property of persons who were not his subjects which was kept within his territory; this principle was sufficiently satisfactory in the Middle Ages when the resident of one country rarely kept personal property in another country, and if he traveled, he generally carried his wealth with him, but with changing economic conditions and increasing accumulations of wealth in the various forms of personal property kept by owners at places other than their place of residence or domicil, it became obvious that the principle of mobilia sequuntur personam could not properly be applied as the ultimate test of situs of tangible personalty for purposes of taxation. That principle is inapplicable where, contrary to the principle it establishes, the property has acquired an actual situs in a jurisdiction other than the domicil of the owner.'

Cooley 'The Law of Taxation' Vol. 2, Fourth Ed., Sec. 440 discusses the ancient doctrine and its modern exceptions in the following language:

'In relation to situs for purposes of taxation, there is much reference to the legal maxim 'mobilia sequuntur personam' i. e., 'movables follow the person'. That maxim is sometimes loosely expressed in the phrase 'The situs of personal property is the domicile of the owner.' However, this maxim is merely a fiction of law. It was 'intended for convenience, and not to be controlling where justice does not demand it.' It is not of universal application, does not rest on any constitutional foundation, and gives way before express law. As has been said, 'the fiction that personal property follows the domicile of its owner' cannot be allowed to obstruct the truth.' 'This rule,' it has been well said, 'is subject to so many exceptions and limitations that it is quite as liable to mislead as to furnish a correct guide, when considered alone.' So far as applied to taxation, it merely means that the situs of personal property for purposes of taxation is the domicile of the owner unless (1) there is a statute to the contrary, or (2) the property is tangible and has acquired an actual situs of its own in a state or place other than where the owner is domiciled, or (3), in case of intangible property, it has acquired a business situs in a state other than the one where the owner is domiciled. As thus limited, the maxim applies to taxation of personal property.'

For further background on the history and modern development of common law rule see In re County of Washington v. Estate of Jefferson, 35 Minn. 215, 28 N.W. 256; Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 26 S.Ct. 36, 50 L.Ed. 150, 48 LRA 790; Pullman's Palace-Car Co. v. Pennsylvania, 141 U.S. 18 and 11 S.Ct. 876, 35 L.Ed. 613.

In the early case of Hardesty Bros. v. Fleming, 57 Tex. 395 (1882) the Supreme Court held that cattle owned by residents of Kansas, but pastured in Hansford County Texas, were taxable where they had acquired a tax situs in Texas.

The more modern rule, which we think has application in our jurisdiction, is enunciated in 84 C.J.S. Taxation Sec. 115, pp. 224, 225, as follows:

'Although, in determining the situs of tangible personal property, two opposed considerations, that is, place of ownership and place of property location, have been applied and have caused some legal difficulty in the broad application of the principle of mobilia sequuntur personam, the general rule is that movable property which has a value of its own, instead of being merely the evidence or reprsentative of value, and which has a visible and substantial existence, is taxable where it is usually or permanently kept; and, if located in the state or territory, it is taxable there regardless...