State v. Indianapolis Airport Authority

• Decision Date: 05 May 1977
• Docket Number: No. 1--1175A201,1--1175A201
• Citation: 362 N.E.2d 200,173 Ind.App. 55
• Parties: STATE of Indiana et al., Appellants (Defendants below), v. INDIANAPOLIS AIRPORT AUTHORITY, Appellee (Plaintiff below).
• Court: Indiana Appellate Court

Page 200

362 N.E.2d 200

173 Ind.App. 55

STATE of Indiana et al., Appellants (Defendants below), v. INDIANAPOLIS AIRPORT AUTHORITY, Appellee (Plaintiff below).

No. 1--1175A201.

Court of Appeals of Indiana, First District.

May 5, 1977.

Theodore L. Sendak, Atty. Gen., Joseph J. Reiswerg, Deputy Atty. Gen., Indianapolis, for appellant.

Chalmer Schlosser, Jr., Indianapolis, for appellee; Schlosser, White & Schlosser, Ice, Miller, Donadio & Ryan, George B. Gavit, G. Daniel Kelley, Jr., Indianapolis, of counsel.

LYBROOK, Judge.

Defendants-appellants, State of Indiana; James O. Mathis, Commissioner of Revenue; and Lee R. Eads, Sheriff of Marion County, bring this appeal following the granting of a permanent injunction barring their attempt to tax plaintiff-appellee Indianapolis Airport Authority. (I.A.A.). The injunction also prohibited attachment or levy upon any assets of the I.A.A.

The facts most favorable to the judgment indicate that I.A.A. is the owner and operator of Weir Cook Airport. It also operates and maintains Indianapolis Metropolitan Airport in Hamilton County, Speedway Airport in Hendricks County and Eagle Creek Airport. The I.A.A. has total responsibility for the care, maintenance and safety of the above facilities.

Weir Cook Airport serves the entire State of Indiana and a small percentage of its patrons are from other States. The airport is supported by a combination of landing fees, parking fees, rental to airport tenants, gallonage fee on fuel sold, tax levy on Marion County taxpayers and additional Federal Funds which are provided on a matching basis to help maintain safety standards. The airport has not shown a profit in the last 12 years. The record indicates that all major airports are operated as units of government.

I.A.A. is a municipal corporation created pursuant to IC 1971, 19--6--2--1 et seq. (Burns Code Ed.). The record further indicates the total budget of the I.A.A. exceeds $5,000,000 annually, of which approximately $700,000 is expended for essential police and fire protection.

The record indicates that growth in air travel will necessitate a new runway costing $22,000,000, of which I.A.A. must supply $5,500,000. The collection of the demanded tax would reduce the funds available for expansion and thus result in loss of matching Federal funds. This loss in Federal funds would have the result of eventually overloading the airport facilities due to the lack of expansion of runways.

The uncontroverted evidence shows that I.A.A. was frequently audited by the State Board of Accounts and that no tax had ever been assessed against I.A.A. in spite of constant knowledge of its gross income for the years 1962 thru 1968.

The State is attempting to assess I.A.A. with $252,067.94 in gross income tax retroactive to 1962. Included in that sum are penalties and interest of $71,730.47. The defendants used this levy to freeze I.A.A.'s bank accounts and thus prevented payment to I.A.A.'s police and fire prevention staffs.

Upon the above facts the trial court held that I.A.A. was not a 'person' subject to Indiana Gross Income Tax and issued an injunction barring further attachment of I.A.A. funds or assets.

The State presents the following alleged errors for review:

(1) Did the trial court have jurisdiction to hear the case and issue the injunction?

(2) Were the trial court's special findings of fact numbered 4, 5, 7, 9, 15 and 16 supported by sufficient evidence?

(3) Were the trial court's conclusions of law numbered 2, 3, 4 and 6 erroneous?

I

The State's challenge to the jurisdiction of the trial court is predicated on IC 1971, 6--2--1--19 (Burns Code Ed.) which, in partinent part reads as follows:

'(d) No injunction to restrain or delay the collection of any tax claimed to be due under the provisions of this act shall be issued by any court, but in all cases in which, for any reason, it be claimed that any such tax about to be collected is wrongful or illegal in whole or in part, the remedy, except as otherwise expressly provided in this act, shall be by payment and action to recover such tax as provided in this section.'

The cases of State ex rel. Indiana Dept. of Revenue v. Marion Circuit Court (1970), 255 Ind. 501, 265 N.E.2d 241 and Marhoefer Packing Co., Inc. v. Indiana Dept. of State Revenue (1973), 157 Ind.App. 505, 301 N.E.2d 209, appear to say that payment and request for refund are the sole and exclusive remedies available to test the legality of an imposition of the Indiana Gross Income Tax.

A closer examination of the Gross Income Tax Act reveals one threshold which the State must cross before succeeding in the above argument. If I.A.A. is neither a 'person' nor a 'taxpayer' the provision quoted above would not apply. IC 1971, 6--2--1--19 uses the terms 'any person' or 'any taxpayer' and the refund procedure applies only to such parties. Mathis v. Cooperative Vendors, Inc. (1976), Ind.App., 354 N.E.2d 269. Jurisdiction of the trial court is thus controlled by I.A.A.'s status in regard to being a 'person' or 'taxpayer'.

The term person is synonymous with tax-payer and may be used interchangeably. Mathis, supra. See Burns Admin. Rules and Regs. IC 1971, (6--2--1--19)--1, instruction 1--1. The Indiana Legislature has provided the definition of 'person' which is controlling in this case. IC 1971, 6--2--1--1 (Burns Code Ed.):

'6--2--1--1 (64--2601). Short title--Definitions.--This chapter (6--2--1--1--6--2--1--53)...