Petition for Writ of Certiorari — Northwest Airlines, Inc. v. Minnesota

. OP Y= = | =

APR 3\ 1943 :

3 — RL

Supreme Court uf the Whe Bn

October Term, 1942

xo ee 33

—

IN THE MATTER OF THE PROCEEDINGS TO ENFORCE PAYMENT 8 N

o DBLINQUENT PERSONAL PropprTy TAXES FOR TH YEAR : 4

1939. nee Sah 3 7 „3

: . ) 5 „

NORTHWEST AIRLINES, INC., |

Petitioner, g

: 2

State Or MINNESOTA, — : . |

PETITION FOR. WRIT OF CERTIORARI TO THE 4

SUPREME COURT OF MINNESOTA . }

AND —— BRIEF. 4

M. J. DOHERTY,

a W. E. RUMBLE, .

Saint Paul, Minnesota,

Attorneys for Petitioner.

DOHERTY, RUMBLE, BUTLER,

SULLIVAN & MITCHELL,

Saint Paul, Minnesota,

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SUBJECT INDEX.

. ; Page.

Summary Statement......... VV 7

Questions Presenteeldl 8 3

Basis of Jurisdiction ...... rf... ar

Reason for Allowance of Write. 4

J ů SAA 08 6

Assignments of Error 31 „ 1

c c „ 5 „

Denial of Due Process of Law Prerer ane ‘ 8

Rolling Stock Cases q .

Basis of Majority Opinion iceman 11

Place of Domicile Not Controlling 11

No „Equivalent“ 00000000 14

No Distinetion between a and Specific |

Items of Tangible Property, U. 135

Cases on Taxation of angle 3 16

b C 4 18

„ TT TRTETLIETTEe eT TTT eee Tee 19

‘TABLE OF CASES.

Page

American Refrigerator Transit Company v. Hall, 174 .

We Ee AERA ͤ G. ²⁰ 5 ¹w̃̃ ⁵K—ñ. j 8, 9

Blackstone v. Miller, 188 U. S. 6 . „

Blodgett v. Silberman, 277 U. S. 1. „ 11

Curry v. McCanless, 307 U. S. 357........ . 16, 17

Delaware L. & W. R. R. Co. v. Pennsylvania, 198 U. 3

P ree Peer Tre TT eT er . 11, 14, 16

First National Bank v. Maine, 284 U. S. 312........ 16, 18

Frick v. Pennsylvania, 268 U. 8. 473 were? 1, 14, 16

1

a Oil Refining Co. v. Oklahoma, 290 U. S.

CUTP—P—Tw.ͤͤͤ eee 8, 9, 13

Marye v. n & Ohio-R. R. Co., 127 U. S. 117. 8

Memphis Natural Gas Co. v. Beeler, 315 U. S. 649, 88

L. Ed. 7.̈un˖nununun cece sc ceccenecesecccccase’s 4

Pullman Company v. Richardson, 261. U. S. 330...... 8

Pullman's Palace Car Co. v. ä 141 U. S. ö

8 FF 1 8, 9

State Tax Commissioner v. Aldrich, 316 U. S. 174....16,18

Union Refrigerator Transit Company v. Kentucky, 199

o lll 8, 9, 11, 14

Union Refrigerator Transit Company *., ‘Lynch, 177

J eT Teer TT EET ESTE TETETN TE TTET TS. 8

Union Tank Line Company v. Wright, 249 U. S. 275.. 8

Wheeling Steel Corporation v. Fox, 298 U. S. 193... 17

Wisconsin v. J. C. Penney Co., 311 U. S. 1 16

STATUTES CITED.

Judicial Code, Sec. 237 (b), 28 U. S. C. A., Sec. 344. 3

Minnesota Statutes, 1941

r cic sneecdcades 3 poi 18

00 K 4 4 30

Supreme Gout of the Muited Bates

x 5 Oetober term, 1942

IN THE MATTER OF THE PROCEEDINGS TO ENFORCE PAYMENT

OF DELINQUENT PERSONAL PROPERTY TAXES FOR THD YRAR

1939. 75

_NorTHwest AreLings, INC.,

; 8 Petitioner,

4 0 5 VS.

„Srarn OF MINNESOTA,

N i Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

SUPREME COURT OF MINNESOTA. -

4 3

»

To the. Honorabie ‘The Chief Justice and. Associate Justices

of.the Supreme Court of the United States:

Your petftioner, Northwest Airlines, Inc., hereby peti-

tions for review, upon writ of certiorari, of the decision

und judgment of the Supreme Court of Minnesota, being

the court of last resort of that State, and respectfully

shows: %

* ee

- 5 2 J

| SUMMARY | STATEMENT. OF MATTER INVOLVED.

This is an action by the State of Minnesota to recover

from Northwest Airlines, Inc. the amount of an alleged de-

linquent personal property tax (and penalty) assessed

against the Airlines for the year 1939. The tax was upon

the entire fleet of airplanes owned by the Airlines and op-

erated by it in interstate transportation of persons and

property. The action was conheiiet by the Airlines on the

ground that the levy and - assessment of the tax was in vio-

lation of the commerce, due process, and equal protection

celauses of the Federal Constitution, and also of certain

provisions of the Constitution of Minnesota. The court of

flrst instance (Distriet Court ‘of Ramsey County, Minne-

| - sota ) overruled the objections, held the assessment valid,

and rendered judgment in favor of the State and against

the Airlines for the sum of $18, 266.68. Upon appeal to the

Supreme Court of Minnesota, this judgment was affirmed

(three justices dissenting) and a petition for rehearing

was denied. it

The: case was tr.d upon a stipulation. of facts. From

this stipulation, and the findings based thereon, it appears

that the Airlines is a Minnesota corporation engaged in

the transportation of persons and property, including mail,

in interstate commerce, involving the operation of its air -

craft on regular schedules through and serving seven states

and a puovince of Canada. No particular airplanes are oe

allotted to any route or section. All are operated inter-

changeably over the whole system.. The result is that while -

no specific planes can be allocated to any state, a propor-

‘tion of the entire fleet is capable of being so allocated on a

plané mileage, route mileage, or similar basis. (Amended

' Stipulation of Facts, paragraphs I to VIII.)

The position of the Airlines was and is that Minnesota

is without jurisdiction to tax the entire fleet of airplanes

on a full ad valorem basis; that it can, within its constitu-

tional power, tax only that proportion of the fleet which is

regularly and habitually used in the state; that a cor-

responding right is enjoyed and is in fact exercised by each

of the other ‘states through which the planes operate; and_

that authority in such other states to tax proportions of

the fleet is incompatible with authority in Minnesota to tax

the whole.

| QUESTIONS PRESENTED.

The ultimate questions thus presented are whether the

enforcement of the tax as levied would deprive the Airlines

of its property without due process of law or deny it the

equal protection of the laws, in violation of Article XIV,

Section 1, of the Amendments to the Constitution of the

United States, or would place an unlawful burden on inter-

state commerce, in violation of Article I, Section 8, of the

Constifution of the United States.

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BASIS OF JURISDICTION.

A A review of the judgment is plainly within the jurisdic.

tion of this Court, under Section 237 (b) of the Judicial

Code (28 U. S. C. A., Section 344), authorizing such review:

“Where any title, right, privilege, or immunity is

specially set up or claimed by either party under the

Constitution * *.* of * * * the United States.“

The citation by which the action was instituted by the

State did not designate the statute ander which the right to

15

impose the tax was asserted. The answer of the Airlines

(interposed in the District Court), alleges that the levy

and assessment of the tax is in violation of the defendant's

rights under the due process, equal protection, and com-

merce clauses of the Federal Constitution, without conjec-

ture as to the statute under which the State had assumed

to the tax (Section X of defendant’s answer). This

tion was adhered to on appeal to the State Supreme

Court, where the same constitutional objections to the tax

were raised by assignments of error and argument. In the

circumstances, the procedure available to the Airlines ap-.

peers to be by application for certiorari rather than by

appeal. Memphis Natural Gas Co. v. Beeler, 315 U. S. 649,

86 L. Ed. 745.

The judgment sought to 10 reviewed was enterbd in the

Supreme Court of Minnesota on December 31, 1942.

A copy of the findings of fact and a of law of

the District Court is found in the record, immediately fol-

lowing the Amended Stipulation of Facts. *

A copy of the opinions (majority and minority) of the

Supreme Court of Minnesota are included in the printed

record near the conclusion thereof. The decision is report-

ed in 7 N. W. (2d) 691, but has not yet appeared in the

Minnesota *

REASON FOR ALLOWANCE OF WRIT.

The Supreme Court of Minnesota has decided a Federal

question of substance in’ a way that is not in accord with

the applicable decisions of this Court.

The questions presented are. of grave perten not

only to this Airlinef but to the entire air transport in-

|

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5

dustry in the, United States. Upon the answers to these

questions depends, the liability of this and other Airlines

to inordinately ‘burdensome multiple taxation of their air

craft employed in interstate transportation. The import

ance of the matter to the Airlines is too, apparent to re

quire emphasis, The matter is in fact one of threefold

concern: . first, to the Airlines, that intolerable: burden of

multiple taxation be avoided; second, to the States, that

there be an equitable sharimg of the revenues to be de

rived from legitimate taxation of airplanes employed in

interstate flights, and, third, to the general public, that

there be an opportunity for normal development, unhamp-

- ered by oppressive taxation, of a young and rapidly growing

industry vital to the national welfare.

More broadly there is involved the general question of

whether tangible personal property may be subjected to

multiple taxation ; whether such property may have a tax

situs in more than one state, or whether 4s to such prop

erty tax liability in one state is correlative with immunity

in others. | | eo

With respect to, the taxation of airplanes, the questions

presented are of first impression, but the applicable prin-

ciple has been ‘established by this Court in cases involving

taxation. of the rollifig stock of interstate railroads. The

decisions of this Court in such cases are in direct eonflict

with the decision of the Supreme Court of Minnesota in the

instant case, and a consistent application of the rule estab-

- lished by them necessarily condemns the present tax. The

rolling stock cases will be analyzed in the brief supporting

this petition. es: . aa

_ STATEMENT OF THE CASE.

Some factual details, in addition to the foregoing sum-

mary statement, seem desirable, particularly in reference

to the nature of the Airlines’ business and the manner of

its operation. It operates a fleet of air transport planes

between Chicago and Seattle and Portland and a conneet-

ing line between Fargo, North Dakota, and Winnipeg,

2

Canada. On its Chicago Pacifle Coast route it serves seven

states, in the course of which it makes regular scheduled

landings in seventeen cities, two of which are in Minnesota.

The total route mileage in May, 1939, was 2,466 miles, of

which 320.2 miles, or fourteen per cent, were in Minnesota.

The daily plane mileage was 14,414 miles, of which 2,348.4

miles, or sixteen per cent, were in Minnesota. At seven of

its landing points it operates bangurs and business offices,

two of which (at Chicago and Fargo).are owned. Five are

leased. At the other ten landing points it leases office

and other space for its business headquarters and aetivi-

ties, At each point it has a station manager, radio oper-

ator, and other employees. On its Chicago-Pacific Coast

route there are four flight crew bases, representing the

‘termini of flight crew divisions, where the crews begin and

end their runs and make their headquarters. Fargo to

Winnipeg is one division. Also there are six so-called main-

tenance bases, one of which is at Minneapolis. At these

bases are maintained completely manned and equipped

service stations for the repair and maintenance of planes.

At Saint Paul there is maintained a service station for

major overhaul and repair work. (Amended Stipulation

of Facts paragraphs II to VI and XII.)

—

*

On both routes the Airlines“ planes, as a matter of prac- .

- tical operation, are obliged to and -do follow approximately

fixed courses of travel. This is made necessary by the reg-

. ular landing points, by the radio range courses operated

by the Civil Aeronautics Authority, and by the regular

Series of emergency landing fields, also maintained by the

Authority. The. Airlines operates under a certificate of con-

venience and necessity issued by the Civil Aeronautics

Board, which fixes both its terminal points and all inter-- 1

mediate stops. Its course is prescribed, and the law per-

mits neither deviation nor abandonment, (Amended Stip-

ulation of Facts paragraphs V and VIII.)

- ASSIGNMENTS OF ERROR.

The Supreme Court of Minnesota erred :

1. In affirming the judgment of the District Court of

Ramsey County, Minnesota.

2. In holding the tax valid.

3. In holding that appellant's e entire feet of airplanes .

had a taxable situs in Minnesota.

“i is holding that any given portion of appellant’s air-

planes might have a tax situs in more than one state.

5. In holding that the tax was not a violation of Section

8 of Article I of the Constitution of the United States and

in refusing to hold the contrary. :

6. In holding that the tax was not a violation of Sec-

; tion 1 of Article XIV of the ‘Amendments to the Constitu-

tion of the United States and in refusing to hold the con-

5 * ‘

oh

g Enforcement of the Tax in Question Would Deprive the

Airlines of Its Property Without Due Process of Law.

The decision of the Supreme Court “al nend is

wholly out of accord with the applicable decisions of this

Court regpeeting taxation of tangible personal property,

and appears to be largely the result af an endeavor to

apply tò the case what was said by this Court respecting

taxation of intangibles, or more accurately to apply the

interpretation placed by the majority below upon what was

so said. ; |

Rolling Stock ssp |

7 ee

/

The: true rule applicable. under the tacts of this case is

that laid down by this Court in the so-called rolling ‘stock

cases. That rule is khat equipment habitually employed in

interstate transportation of persons and property between

and through several states is taxable by each of the states

on an average or proportionate basis only, and is not tax-

able by any of the states in its entirety. Marye v. Balti

more & Ohio R. N. Co., 127 U. S. 117; Pullman’s Palace Car

Co. v. Pennsylvania, 141 U. S. 18; Amerioun Refrigerator

Fransit Company v. Hall, 174 U. S. 70; Union Refrigerator

Transit Company v. Lynch, 177 U. S. 149; Union Refriger- »

ator Transit Company v. Kentucky, 199 U. S. 194; Union

Tank Line Company v. Wright, 249 U. S. 275; Pullman

Company v. Richardson, 261 U. S. 330; Johnson Oil Refin-

ing Co. v. Oklahoma, 290 U. S. 158. The rule could be stated

in broader terms, but the foregoing covers the case.

“

*

.

eel

In Johnson Oil Refining Co. v. Oklahoma, supra, the

facts were that the Refining Company, an Illinois corpora- °

‘tion, operated a refinery in Pawnee County, Oklahoma, from

wich it shipped oil in its own tank cars into many states.

A tax laid by Oklahoma on the entire fleet of cars was held

to be in violation of the due process clause of the Fourteenth

Amendnient. This Court said: * f 53

oF “When a fleet of cars is ‘habitually employed in sev-

eral States—the individual cars constantly running in

and out of each State—it cannot be said that any one

of the States is entitled to tag the entire number of cars

regardless of their use in the other States. When in-

dividual items. of rolling ‘stock are not continuously.

‘the same but are constantly changing, as the nature

of their use requires, this Court has held that a State

may fix the tax by reference to the average number of

cars found to be habitually ‘within its limits.” |

In Union Refrigerator Transit Company v. : Kentucky; 2

supra, an attempt was made by the State o of Kentucky to

tax in its entirety an aggregate of railroad cars owned by

“the Transit Company, a Kentucky corporation, portions of

which were habitually used in other states by shipper les-

Sees. This tax was also held to be in. violation of ‘the

Fourteenth Amendment. As illustrating the rule of ap-

_ portionment which ‘must be applied in such cases, the he Court

__said, referring to its previous decision in Pullman's Palace

Car Co. v. Pennsylvania, 141 U. S. 18:

We have also held that, if a e be 1

in running railroad cars into, through and out of the

State, and having at all times a large number of cars

within the State, it may be taxed by taking as the

basis of assessment such proportion of its capital stock

. as the number of miles of railroad over which its cars

10

are run within the State bears to the whole number of

miles in all the States over which its cars are run.”

In American Refrigerator Transit Co. v. Hall, supra, this

Court sustained a tax by the State of Colorado based. upon

the average number of the Refrigerator Company’s cars. em-

ployed in the state * the period in question, with this

comment:

We think that such a tax may be properly assessed

and collected, in cases like the present, where the

specific and individual items of property so used and

employed were not continuously the same, but were

constantly changing, according to the exigencies off

the business, and that the- tax may be fixed by an ap-

praisement and valuation of the average amount of the

property thus habitually used and employed.“

The facts of these cases are indistinguishable in. prin-

ciple from those of the instant case, and the rule there

established should control. The Supreme Court of Minne-

sota was agreed (1) that the rolling stock rule is as ap.

plicable to airplanes as to railroad cars; (2) that some

proportion of the Airlines’ planes acquired a situs in other

states, and to that extent were taxable in such states;

(3) that the power of each such other gtate to tax was lim-

ited to the average number of planes within its borders dur-

ing the tax period; (4) that if ‘a specific item of tangible

personal property acquired a situs in another state, it could

not be taxed at the owner's domicile. The Court said:

“The question * * is * * one of when and under

what conditions the state of the owner's, domicile loses.

jurisdiction to tax tangible point ** moving about

from state to state. ”

*

117

Basis of Majority Opinion Below. and Errors

° Involved Therein. a

/ From the premises just reviewed the invalidity of the

tax would seem to inevitably follow. The Court below

reached the contrary conclusion, apparently ‘upon the fol-

‘lowing main considerations: , (1) Notwithstanding its dis-

claimer of reliance. upon the doctrine of mobilia sequunter

personam, large importance was attftbuted to the presence

in Minnesota of the corporate domi eile and main business

office of the Airlines; (2) that all of defendant’s airplanes

were at some time during the year in the State, and that

major repairs- were made there; (3) that the Airlines

mi shared in the benefit of the government and laws of the

State; (4) certain recent decisions of this Court were evi-

dently interpreted as: indicating a trend towards the view

that tangible personal: property may have a tax situs in and

be taxed by more then one State.

ß cd ei cies hai ns chs ‘

ee "ge e cove

That the Airlines. Y as chartered by Minnesota is not a

controlling fact at least as to tangible property having a

tax situs elsewhere. The personal property in question

(proportion of planes habitually used outside Minnesota)

was found below to have acquired a tax situs in other

states; This excluded it from taxation by Minnesota.

Delaware: L. & W. R. R. Co. v. Pennsylvania, 198 U. 8.

341; Union Refrigerutor Transit Co. v. Kentucky, 199 U. S.

194; Frick v. Pennsylwania, 268 U. S. 473.

In the Union Refrigerator Transit Company case (to

which brief reference has already been made), this Court

condemned ‘an attempt by Kentucky, the company’s domi-

cile, to tax its rolling stock employed in other states.

The Court below thought this case distinguishable from the

f instant chse on the ground that in the Transit Company

ease some of the cars were never physically « in Kentucky. |

during the tax period, “while in the present case it was

found that, although only a part of the Airlines’ fleet had

been in Minnesota 6n. May 1, 1939, the assessment valua-

tion date, all of its planes had been in the State at times

during the year. The decision in; the Transit Company

casé does not rest upon any such narrow distinction, and it

becomes at least doubtful that the Court below correctly

construed the language of the opinion when read in the

light of the facts as they appear from the findings of the

County Court of Kentucky, not questioned on Leas The

County Court determined:

4% © © that the transit company was the owner of

two thousand cars in September, 1897, 1898, 1899, and

1900 * * *;-that the correct method of ascertaining.

the number of cars which should be assessed for tax-

ation was to. ascertain and list such a proportion of its

cars as under a system of averages upon their gross

earnings were shown to be used in the state of Ken-

| tucky during the fiscal year, the court. finding by this

method that there were subject to assessment in. Ken-

tucky twenty-eight cars for the year 1897, twenty- nine

for the year 1898, forty for the year 1899, and sixty-

seven for the year 1900.” Nr —

This finding obviously does not soles to any ee

twenty-eight, | twenty-nine, forty, or sixty-seven cars, but

only expresses the conclusion that that was the average

number of cars in the state during the respective years in

| question. The ratio may render it improbable that each

of the two thousand cars vas at any time in the state dur

ing any year, but that is not impossible. If the Court con-

sidered the point of any decisive significance, some com-

ment might have been expected upon it. When the Court

referred to the property involved as being “pe ently

located in other states and employed there”, it muy well

have referred to the proportion of the company's cars 80

located. and used rather than to specific cars. It is hardly

" conceivable that the decision of this Court would have been

different had it affirmatively appeared that all of the Tran -

sit Company’s cars had at some. time during the year been

in Kentucky

That the location in Minnesota of the Airlines’ main

business office ‘and. hangar for major repair work is not ot

controlling significance is determined by the “decision in

Johnson Oil Refining Co: v. Oklahoma, before discusséd.

The Refining Company used its own fleet of tank cars for

the shipment of its prodycts into various states. After

making déliveries the cars returned to the refinery, where

they were repaired as needed, refilled, and reshipped or

held for later. use. The refinery was the operational head- .

quarters of the company. Vet a tax by Oklahoma on the

entire fleet of cars was held invalid, the Court saying:

he jurisdiction of Oklahoma to tax property of

this description must be determined on a basis which

is consistent with the like jurisdiction of other states.”

The corporate domicile and. business headquarters of the

Airlines could at most draw the property in question to.

.. the jurisdiction of Minnesota for taxation only if that prop-

erty had no tax situs elsewhere. It was determined by the

Court below that it did have a tax situs elsewhere.

*

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*

X. .

1 7 *

14

.

The authority to tax is also predicated upon supposed

fovernmental protection given in return by the State of

Minnesota. One of the authorifies cited in support of this

theory is Union Transit Company v. Kentucky,-199 U. 8.

194, in which the Court said;

The power of taxation * * is exercised upon

the assumption of an equivalent rendered to the tax:

payer in the protection of his property- al

*

The equivalence here spoken ot does not require that the

benefits of go be appraiséd in dollars and cents

and balanced aga tax. It does, however, require at

least a theoretical “equivalent” having some minimum limit.

Also the protection ‘and benefits must be with respect to the

particular property in question rather than to the taxpayer

generally. Defendant's franchise to exist as a corporation

under the laws of Minnesota and the privilege of exercising

corporate management and business direction in that state *

is obviously not such a benefit-in relation to the corpora:

tion’s tangible property located elsewhere as to authorize

the taxation of that property. Delaware L. & W. R. R. Co.

o. Pennsylvania, 198 U. S. 341; Union Refrigerator Transit

' Co. v. Kentucky, 199 U. 8. 194; Frick v. Pennsylvania, 268

V. S. 473. The benefits must have a more direct relation

to the property. The impossibility of an “equivalent” in

tte present case seems self-evident. The majority opinion —

belo recognizes the right of other states to tax & propor-

tion of defendant’s planes on the assumption, presumably,

that those states give in return an equivalent of protection.

Such an assumption precludes justification of a like tax by

the State of Minnesota upon the same property on the

o.

4

be sugtained, then a dozen or more states traversed by an

air route might with equal show of right impose a full tax

upon the air transport company’s fleet. of planes upon the

_ prétext of an equivalent of protection. The havoe which

might be wrougpt upon this * by such a doctrine

ean readily be seen.

~~

|

No Distinction Reepecting Situs Between Proportions and —

8 — of Tangible Personal 1223 :

hag The Court below appears to draw a distinction between

<, tangible personal property represented by specific items and

_ tangible personal property represented by proportions. This

is illogical and contrary to the rolling stock cases, . The

supposed distinction wey or une Conception Which per.

9

12

"ears

nal we. Habitual use 4 proportion is deemed for tax

' purposes the legal a of permanent location of

ö

tion. In either case the tax is upon tangible. personal prop-

tax upon real estate. A proportion ig no more capable of

having a permanent location or situs in two different States,

anil therefore of being taxable in both, than Would any in.

dividual item of the tangibles represented in the propor-

tion. Hence the situs of a proportion of defendant's

planes beyond the State (as found hy the Court below)

just as effectively removes that proportion from the State’s

jurisdiction as would 4 * situs of specific planes.

OO.

mits taxation of diff of the same property

by different states. dach such cases is based upon habit-

specific ftems equal in the aggregate to_the > given propor-

theory of another . of protection. If mh aclaiim. .

9

N erty. There is nothing else to) tax. This is merely like

saying that a tax upon an undivided interest in land is a

a

C

Cases On Taxation of Intangibles.

The majority opinion below finally rests ee upon

the supposed significance of the decisions of this Court in

State Taw Commissioner v. Aldrich, 316 U. S. 174, and

Curry v. McCanless, 307 U. S. 357. Wisconsin b. J. C.

Penney Co., 311 U. S. 435, a privilege tax case, is also re-

N ferred to, but rather for general language used than for

what was decided. The Aldrich and McCanless cases are

apparently construed as erasing all distinction between

tangible and intangible personal property as respects mul-

‘ tiple tax situses and liability to tax in more than one state.

“Property”, the Court said, “may have a situs in more than

one state. The Aldrich and McCanless cases have

no such broad implication. They were concerned with

transfer taxes upon intangibles, and jurisdiction to tax

was discussed only in terms of intangibles and ‘of the na-

ture and characteristics of that class of property. There

was a careful avoidance of indiscriminate reference to per-

sonal property generally or the inclusion of tangibles with

intangibles. In the Aldrich case, as the Court below ob-

served, First National Bank & Maine, 284 U. S. 312, was

overruled, and Blackstone v. Miller, 188 U. S. 189, was re-

instated. But again both of these cases dealt: only with

succession taxes on intangibles. It is important to note

that there has been no overruling of Frick v. Pennsylvania,

268 U. S. 473, or of Delaware L. & W. R. R. Co. v. Penn-

sylrania, 198 U. S. 341, or of the decisions in the rolling

stock cases. These are the cases that established the rule

with reference to the taxation of tangibles. In the Frick

case, this Court held Pennsylvania to be without power to

impose a tax on transfer by death of a Pennsylvania resi-

dent in respect of tang: e personal property located else-

17

where. The State urged: as authority for the tax Black-

stone v. Miller and a subsequent case. The comment of

this Court was:

Both cases related to intangible personalty, which

has been regarded as on a different footing from tangi-.

ble personalty. When they are read with this distinc.

tion in mind, * it is apparent that they do not

support the tax in question.”

The same distinction is implicit in Curry v. McCanless, 307

U. S. 357, involving inheritance and succession taxes upon

intangible property in which the opinion spoke of the

“cleavage between the rules of law applicable to fangibles 3

and those relating to intangibles“, and said:

That rights in tangibles—land and chattels—are to

be regarded in many respects as localized at the place

where the tangible itself is located * . for pur.

poses of taxation, is a doctrine generally accepted both

in the common law and other legal systems before the

adoption of the Fourteenth Amendment and since.”

And later added: .

Very different considerations, both theoretical and

peactical, ‘apply to the taxation of intangibles, that is,

rights which are not related to Pen things.” -

For another deviation drawing the same distinction, see

Blodgett v. Silberman, 277 U. S. 1. In Wheeling Steel

Corporation v. Fox, 298 U. S. 193, 209, it was said: 7

“When we deal with intangible property, such as

credits and choses in action generally, we encounter

the difficulty that by reason of the absence of physical

characteristics they have no situs in the physical sense,

but have the situs. atterbutanie. to them in — con-

ception.”

ö

18 7

It is noteworthy that all of the decisions cited in the Aldrich.

case as supporting that Wecision and as condemning First

National Bank v. Maine (with one exception not here sig:

nificant) are decisions involving the taxation of intangible

property. There is nothing in these cases marking a de-

parture from the established rule that tangible personal

property can have but one situs, and therefore can be but

once taxed.

2 Statutes,

; It may be of interest to the Court to know of the basic

taxing statutes of Minnesota.

Section 272.01, Minnesota Statutes, 1941 (Section 1974,

Mason's Minnesota Statutes, 1927), reads as follows:

“All real and personal property in this state and all |

personal property of persons residing therein, includ-

ing the ‘property of corporations, is taxable |

* * #9 pier ad

This statute was considered by the Court below to be

authority for the tax. That there is no other statutory

authority for it will probably be conceded by the State.

This: statute, literally read, taxes all tangible as well as in-

tangible personal property of persons residing in the State,

even though physically and permanently located elsewhere.

So construed, the statute would manifestly be unconstitu-

tional. as authorizing the taxation of property W. bé-

yond the State’s jurisdiction.

Section 273.01, Minnesota Statutes, 1941 (Section 1984,

Mason's Minnesota Statutes, 1927 „ reads in . as fol-

lows:

Personal property Shall te listed and assessed an-

nually. with reference to its value on May 1, and if ac-

e

ot

.

i as Earp 2 Te ae cid oS SRR aM ed

AGA ae AE He OR St

ae te eK We 8 r

19

. aetna on that day shall be listed by or for the ciara,

acquiring it.” ;

On. May 1, 1939, only a part of the Airlines’ fleet of air-

planes was in the State of Minnesota at any time during

the day, and of the fifteen planes that were in the state on

that day only eight were in the State during the entire day.

(Amended Stipulation of Facts Paragraph VII.) This

serves to emphasize the overexertion of the power of the.

State in assuming to impose a tax upon the entire fleet...

CONCLUSION.

The foregoing, it is submitted, compels the conclusion that

a portion of the Airlines’ fleet of planes has a physical situs

without the State of Minnesota, and is therefore beyond

the jurisdiction of the State in respect of taxation. As to

that portion of its planes, the exaction of the tax in *ques-

‘tion would deprive the Airlines of its property without due .

process of law, in violation of the Fourteenth Amendment.

This being considered the clearest ground against the valid-

ity of the tax, the equal protection and commerce clauses,

which are more uncertain of ft application, will not be urged

in this brief. a

One more word on the por tamen of a: decision by the

ultimate judicial authority on the constitutional question

_ here presented. The air transport business has had very

rapid development and is still growing at an extraordinary

rate. The tremendous impetus to that growth imparted by

the present world war will undoubtedly carry through after

the war and give the industry an importance in the na-

tional and world economy that will dwarf even its present