State v. Northwest Airlines
| Decision Date | 18 December 1942 |
| Docket Number | No. 33176.,33176. |
| Citation | 213 Minn. 395,7 N.W.2d 691 |
| Parties | STATE v. NORTHWEST AIRLINES, Inc. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Ramsey County; Kenneth G. Brill, Judge.
In the matter of proceedings by the State of Minnesota to enforce payment of delinquent personal property taxes for 1939 imposed against Northwest Airlines, Incorporated. From an adverse judgment, Northwest Airlines, Incorporated, appeals. Affirmed.
Doherty, Rumble, Butler, Sullivan & Mitchell, of St. Paul, for appellant.
Howard C. Westwood, Gerhard A. Gesell, William DuB. Sheldon, and Dwight Taylor, all of Washington, D. C. (Covington, Burling, Rublee, Acheson, & Shorb, of Washington, D. C., on behalf of eighteen airline companies of counsel), amici curiae.
J. A. A. Burnquist, Atty. Gen., George B. Sjoselius, Asst. Atty. Gen., and James F. Lynch, Co. Atty., and Andrew R. Bratter, Asst. Co. Atty., both of St. Paul, for respondent.
From the findings of the lower court and the stipulation upon which they were based, it appears that defendant is a corporation, organized and existing under the laws of this state with its principal place of business in the city of St. Paul, Minnesota. On May 1, 1939, it owned and operated a fleet of airplanes carrying passengers, property, and mail for hire in interstate commerce on regular schedules between Chicago, Illinois, at one end of the route, and Portland, Oregon, at the other. Regular scheduled stops were made at Milwaukee and Madison, in Wisconsin; Rochester, St. Paul, and Minneapolis in Minnesota; Fargo, Bismarck, and Mandan in North Dakota; Miles City, Billings, Butte, Helena, and Missoula in Montana; and Spokane, Wenatchee, and Yakima in Washington. Regular flights were also maintained between Fargo, North Dakota, and Winnipeg, Manitoba, Canada, and since June 1, 1940, between Minneapolis and Chicago.
On May 1, 1939, at defendant's maintenance bases at Chicago, Minneapolis, Fargo, Billings, Spokane, and Seattle, mechanics were employed and the necessary tools and equipment provided for service, repair, and maintenance work. Major repairs and overhaul work were done at St. Paul, where defendant maintained its airplane and engine overhaul base.
At all of the stops, with the exception of St. Paul, defendant employed, on the date stated above, a radio operator and station manager. Baggage handlers, ticket sellers, information clerks, dispatchers, and the like were kept at many of the stops. At all of the stops defendant either owned or leased buildings for housing the operations conducted at these points. At several of the ports at which the planes landed, defendant owned or leased hangars and office space. The flight crews, including pilots, copilots, and stewardesses, were located at definite bases at which they began and ended their runs. One of these was at Minneapolis. The routes of defendant's planes were along fixed paths, marked by radio stations operated continuously by the Civil Aeronautics Authority. Also along the entire routes, at regular intervals, were emergency landing fields maintained by the same authority. These routes were always followed except when weather conditions made it necessary to pursue another course for brief periods.
While flying in the course of defendant's operations, its airplanes were constantly changing from place to place along its routes, and flew from state to state. Their location was constantly changing from one county to another and from one state to another, except for brief stops at the airports and occasional lay-ups for repairs and overhauling.
All of defendant's airplanes were in Minnesota from time to time during the year 1939, carrying passengers, property, and mail, and they came here also for the purpose of periodic overhauling.
On May 1, 1939, there were present in this state for at least part of the day 17 airplanes. On that date, the total length of the routes over which defendant was operating its scheduled flights was 2,466 miles. Of this total, 320.2 miles were maintained in this state. The scheduled plane mileage on that date over all of these routes was 14,414 miles, of which 2,348.4 were in Minnesota.
Defendant filed its tax return for the year 1939 in which it included a portion of its airplanes at the full value of $77,000. This valuation was based on planes in the state on May 1, 1939. Later, an additional assessment was made by the county auditor in which he included the remaining airplanes owned by the defendant at the full value of $511,500.
From the foregoing facts the lower court concluded that all of the planes "had a situs for taxation in the state of Minnesota and not elsewhere" and accordingly directed judgment to be entered for the taxes upon all of the planes in the sum of $16,913.60, together with penalty thereon, making a total of $18,266.68.
The question before us is whether this state may impose a tax upon all of defendant's planes. The right to do so is attacked on the grounds that it is a violation of the due process clauses of the state and federal constitutions, Const.Minn. art. 1, § 7; Const. U. S. Amend. 14, and that it is an interference with interstate commerce.
Taking up first the claim that the tax is a violation of due process, the general rule is that a tax by a state which has no jurisdiction to impose it violates the constitutional prohibition against taking property without due process of law. For present purposes it is unnecessary to consider separately the due process clauses of the state and federal constitutions. If under this clause of the federal constitution this state may impose a tax upon all of the planes owned by defendant, it may also do so under the state constitution. The state provision was not intended to be more restrictive than that of the federal constitution. State v. Weyerhauser, 72 Minn. 519, 75 N.W. 718; W. J. Armstrong Co. v. New York Cent. & H. R. R. Co., 129 Minn. 104, 151 N.W. 917, Ann.Cas.1916E, 335, L.R.A.1916E, 232. In Re Taylor's Estate, 175 Minn. 310, 315, 219 N.W. 153, 221 N.W. 64, 65, this court said: "It is our aim to follow the decisions of the Supreme Court of the United States, since we are construing a provision of the Federal Constitution, although our own state Constitution contains a similar provision." If, therefore, the tax may be imposed under the due process clause of the Fourteenth Amendment, it may also be imposed under our constitution.
The airplane has raised many unique legal questions in other fields. We do not, however, consider it of such a nature that it must be placed in a new and independent category so far as taxation is concerned. It is but personal property used for the transportation of persons and goods. Its distinction lies in that it leaves the ground and travels through the air. But this is not of significance here. The sovereign power and jurisdiction of a state is not limited to the ground. An airplane in the air over the territory of a state is within the state and subject to its sovereign power. As the Supreme Judicial Court of Massachusetts has said in Smith v. New England Aircraft Co., Inc., 270 Mass. 511, 521, 170 N.E. 385, 389, 69 A.L.R. 300, 308: See also People v. Katz, 140 Misc. 46, 249 N.Y.S. 719.
The question we have, then, is the broader one of when and under what conditions the state of the owner's domicile loses jurisdiction to tax tangible personal property moving about from state to state. May the state of domicile tax the whole thereof?
Two classes of cases have particular bearing on this question. The first deals with ships upon the high seas. It has been held in those cases that where a ship sails from its home port and into the port of a foreign state and stays there but temporarily for the purpose of loading or unloading it cannot be taxed by the latter state. Hays v. Pacific Mail S. S. Co., 58 U.S. 596, 17 How. 596, 15 L.Ed. 254; Morgan v. Parham, 83 U.S. 471, 16 Wall. 471, 21 L.Ed. 302; Southern Pacific Co. v. Kentucky, 222 U.S. 63, 32 S.Ct. 13, 56 L.Ed. 96. The rule has been applied to ships plying navigable streams. City of St. Louis v. Wiggins Ferry Co., 78 U.S. 423, 11 Wall. 423, 20 L.Ed. 192; Gloucester Ferry Co. v. Pennsylvania, 114 U.S. 196, 5 S.Ct. 826, 29 L.Ed. 158.
In some of these cases the court relied upon the maxim Mobilia sequuntur personam; immobilia situm. Mobilia non habent sequelam. Another reason given was that the property had not "become incorporated with the other personal property of the state" seeking to impose the tax. Hays v. Pacific Mail S. S. Co., 58 U. S. 596, 17 How. 596, 598, 15 L.Ed. 254; Morgan v. Parham, 83 U.S. 471, 16 Wall. 471, 21 L.Ed. 302; and see Old Dominion S. S. Co. v. Virginia, 198 U.S. 299, 25 S. Ct. 686, 41 L.Ed. 1059. The more basic reason was given in Southern Pacific Co. v. Kentucky, 222 U.S. 63, 68, 32 S.Ct. 13, 15, 56 L.Ed. 96: "The ancient maxim which assigns to tangibles, as well as intangibles, the situs of the owner for purposes of taxation, has its foundation in the protection which the owner receives from the government of his residence."
If the ship has obtained an actual situs in a state other than that of the home port that state might validly subject the ship to the ordinary property taxes of that state. Old Dominion S. S. Co. v. Virginia, 198 U.S. 299, 25 S.Ct. 686, 49 L.Ed. 1059. In that event, it has been said that the situs of the domicile yields to the actual situs and resulting dominion of another government.
The second class of cases relating to the question here involved deals with the taxation of rolling stock of railroad companies. For the purpose of determining whether such property has acquired a situs in a state foreign to that of the domicile...
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