Appendix — United Air Lines, Inc. v. Mahin
Supreme Court brief1973
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Dates of Relevant Proceedings in Lower Courts ......
‘Amended Complaint in Chancery / 1
Motion for Temporary Injunction .................. 24
be er, Injunotion OTE oi vet cccrenscnceeeds 25
wer of Shell Oil Sun J 26
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Amended Answer by Shell Oil Company ............ 46
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sport of Proceedings before the Circuit Court of
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Opinion of the Supreme Court ot the State of Illinois. .
"Petition for Rehearing in the Illinois Supreme Curt. 206
Order of Illinois Supreme Court denying . for
Rehearing
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1 United Mixhibit 21 111 234
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United Exhibit 2% es 236
United Exhibit ũ575 seen 237
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Defendants Exhibit 1 i 241
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1.
DATES OF RELEVANT PROCEEDINGS
Complaint in Chancery, filed September 12, 1963, with
exhibits.
Motion for Temporary Injunction, filed September 17,
1963. :
Temporary Injunction Order, entered on September
19, 1963. oe
Amended Complaint in Chancery, filed September 25,
1963, with exhibits.
Motion for Temporary Injunction, filed October 17,
Order for Temporary Injunction, entered on December
13, 1963. ,
Answer of Shell Oil Company, filed December 19, 1963,
Answer of Harry H. Hulman, irector of the Depart-
ment of Revenue, filed January 10, 1964.
Stipulation, filed January 19, 1966, with appendices.
Interrogatories, filed January 17, 1966.
Reply to interrogatories, filed November 15, 1966.
Additional Stipulation, filed January 18, 1968.
oo Answer of Shell Oil Company, filed January
26, ;
Order setting cause for trial and granting leave
substitute Theodore A. Jones as a feat L.
entered December 12, 1967.
Answer (of Harry L. Hulman, Director of the Depart-
ment of Revenue) to Amended Complaint, filed Feb-
ruary 10, 1968.
Order of Permanent junction, entered on February,
14, 1968.
11
17. Report of Proceedings in the Cireuit Court of Cook
County, Illinois held on February 14, February 15;
February 16 and February 19, 1968.
. Opinion of Circuit Court of Cook County, Illinois,
er eee 1968 and ordered filed on
Final Deoree of Cireuit Court of Cook County, Illinois,
entered on December 23, 1968. 5
Notice of Appeal to Illinois Supreme Court, filed Janu-
ary iB, 1969.
of the Supreme Court of the State of Illinois,
filed April 1, 1971.
Petition for rehearing * in Illinois Supreme Court, filed
May 1, 1971.
Order entered October 4, 1971, denying petition for
rehearing.
Notice, motion and order of Justice Daniel P. Ward
filed October 15, 1971, staying the mandate until com-
pletion of appeal proceedings before the United States
Supreme Court.
Notice of Appeal to the Supreme Court of the United
States, filed December 20, 1971.
REET
*
*
F A Nat LE ate RY NE SATS
0381 Filed Sept. 25, 1963
ics or Iturmons rig
Corr or Coox
IN THE CIRCUIT COURT OF COOK COUNTY
HARRY L. HULMAN, Director of Revenue 8 0 17049
This Amended Complaint is filed pursuant to and in ac-
cordance with the order entered by Judge William V.
Brothers on September 19, 1963.
AMENDED COMPLAINT IN CHANCERY
UNITED AIR LINES, INC., plaintiff, for and on behalf
of itself and all others similarly situated, by its attorneys
and attorneys for all other members of the class of
taxpayers to which plaintiff belongs, complains against
HARRY L. HULMAN, Director of Revenue of the Depart-
ment of Revenue of the State of Illinois, WILLIAM d.
CLARK, Attorney General of the State of Illinois, WIL-
LIAM J. SCOTT, Treasurer of the State of Illinois, and
SHELL OIL CO., a Delaware corporation, defendants, and
alleges as follows:
* Numbers in brackets [] throughout Appendix indicate page
references to official record.
(039] 1. Plaintiff is a corporation subsisting under the
laws of the State of Delaware, with its principal place of
business located at 1200 Algonquin Road, Elk Grove Town-
ship, Cook County, Illinois, and is qualified to do business
in Illinois.
2. Defendant Harry L. Hulman is the duly appointed,
qualiſied and acting Director of Revenue of the Department
of Revenue of the State of Illinois, and in that capacity is
charged with administering and enforeing the revenue acts
of the State of Hlinois including the Use Tax Act, Ill. Rev.
Stat. 1961, ch. 120, §§ 439.1 et seg.
. ‘Defendant William G: Clark is the duly elected, quali-
fied and acting Attorney General of the State of Illinois,
and in that capacity is charged with the duty of represent-
ing defendant Harry L. Hulman, as Director of Revenue,
in all legal proceedings involving the administration, en-
forcement and collection of the Illinois use tax.
A: ‘Defendant William J. Scott is the duly elected, quali-
fied and acting Treasurer of the State of Illinois, and in
that capacity is the legal custodian of funds in the State
Treasury ‘resulting from and created by the collection of
Ilinois use tax.
44. ‘Shell Oil Co. is a corporation subsisting under the
laws of the State of Delaware, with its principal place of
business located at 50 West 50th Street, New York City,
New York, and is qualified to do business in the State of
Illinois.
1040) 8. The class to which plaintiff belongs, and on
behalf of which it has instituted this action, is desoribed in
paragraph 27.
6. Plaintiff brings this action under the general chan-
cery jurisdiction of this Court to enjoin imposition of il-
legal, unauthorized and invalid tax based on the authority
3
ot Owens-Illinois Glass Co. v. McKibbin, 385 III. 245, 256
_ (1944), in which the Illinois Supreme Court stated as
follows: —
Prom the foregoing resumé the enjoining of the col-
lection of illegal taxes constitutes an exception to the
general rule that equity will not take jurisdiction of a
cause when there is an adequate remedy at law. It is
established that where a tax is unauthorized by law,
or where it is levied upon property exempt from taxa-
tion, equity will take jursdiction and enjoin the collec-
tion of the tax. This constitutes an independent ground
of equitable relief, and in such cases it is not necessary
that special circumstances exist to authorize issuing an
injunction. It is also the rule in such cases that where
remedies are provided by statute they are cumulative,
and are exclusive only where they have been first in-
voked by the taxpayer. And it is to be noted this ex-
ception to the general rule applies only to the illegal
and unauthorized imposition of a tax, and not to ir-
regularities in levying a lawful tax.”
See also Johnson v. Halpin, 413 IIl. 257 (1952).
7. To the extent that payments of the use tax may be
| made under protest by plaintiff or other members of the
dalass to which plaintiff belongs, this action is also brought
pursuant to Sections 2a and 2a.1 of the Act of June 9, 1911,
as amended (known sometimes as the Public Moneys Act
or as the Protest Fund Act), Ill. Rev. Stat. 1961, ch. 127,
$§ 172, 172(a).
8. Plaintiff is, and continually since January 1, 1960 (the
period to which this complaint pertains) has been, the
[041] holder of certificates of public convenience and
necessity issued to it by the United States Civil Aero-
nautics Board under the provisions of the Federal Aviation
_ Act of 1958, as amended, 49 U.S.C. §§ 1301' et seq., author-
_ izing it to engage in the transportation of persons, prop-
erty and United States mail by air on regularly scheduled
4
flights between designated terminal and intermediate points
on routes described in such certificates. A map of plaintiff’s
certified routes is attached hereto and incorporated herein
as Exhibit A. Plaintiff thereby also is authorized to oper-
ate charter flights without regard to the points named in
such certificates.
9. Pursuant to these certificates of public convenience
and necessity plaintiff performs, and during all or a por-
tion of the period since January 1, 1960, has performed,
common carriage by aircraft of persons, property and
United States mail on scheduled fiights between points
within the State of Illinois, on one hand, and points within
the States of Massachusetts, Connecticut, Rhode Island,
New York, Maryland, Virginia, Pennsylvania, Ohio, Michi-
gan, Indiana, Wisconsin, Minnesota, Iowa, Nebraska, Mis-
souri, Colorado, Utah, Nevada, Idaho, Washington, Oregon,
California, Hawaii and the District of Columbia on the
other hand. During this period plaintiff has also performed
common carriage by air of persons and property on charter
flights between points within the State of Illinois and points
outside the State of Illinois, including flights to Canada.
[042] 10. The points within the State of Illinois from
and to which plaintiff presently operates aircraft are O’Hare
International Airport, Chicago, and Quad-Cities Airport,
Moline. For a period after January 1, 1960, plaintiff also
operated aircraft from and to Midway Airport, Chicago.
11. All flights to and from Chicago are, and since Jan-
uary 1, 1960, have been, from or to points outside Illinois,
except for limited scheduled service between Chicago and
Moline and some intrastate charter flights.
12.. In excess of 99.5% of all flights of plaintiff’s aircraft
departing pursuant to plaintiff’s certificates of public con-
venience and necessity since January 1, 1960, from Midway
5
and O’Hare Airports have been according to published
schedules filed with the United States Post Office Depart-
ment and the Civil Aeronautics Board. Most of the remain-
ing % of 1% have been charter flights. There has also been
a de minimis amount of training, testing, ferry, and non-
revenue flights for purposes of positioning aircraft, which
are not flights pursuant to plaintiff’s certificates of public
convenience and necessity.
13. At present, and since J: anuary 1, 1960, most, if not
virtually all, plaintiff’s flights departing from O’Hare and
Midway Airports take and have taken on fuel, either as
aviation gasoline for piston engine aircraft or kerosene for
turbine aircraft.
14. All such fuel loaded aboard plaintiff's flights depart-
ing from Chicago is, and since January 1, 1960, has [043]
been, purchased by and delivered to plaintiff outside IIli-
nois, specifically at East Chicago and Hammond, Indiana,
pursuant to contracts negotiated and executed outside
Illinois. :
14A. The seller of all such fuel is, and during the
applicable period was, Shell Oil Co. Shell Oil Co. does not,
and during the applicable period has not collected Illinois
use tax from plaintiff, a practice established in 1955 and
continued uninterrupted since then with the repeated ap-
proval of authorized representatives of the Director of
Revenue and his predecessors in office.
15. After purchasing the fuel and receiving delivery of
it outside Illinois, plaintiff causes, and since January 1,
1960, continuously has caused, such fuel to be transported
by truck or pipeline to storage facilities near and on O’Hare
and Midway Airports.
16. As operations require, the fuel is, and since January
1, 1960, has been, withdrawn from the storage facilities at
Midway and O’Hare Airports for loading aboard plaintiff’s
flights departing from such airports. Such fueling is cus-
tomarily done immediately prior to departure.
17. The actual course that all plaintiff's flights take, or
have taken since January 1, 1960, is and has been governed
by the Federal Aviation Agency, established by the Federal
Aviation Act of 1958, supra. Such actual courses are deter-
mined by “departure routes” which govern the climb portion
of a flight, and “airways” which govern the cruise portion.
The same departure routes and airways customarily [044]
are assigned to plaintiff for particular flights, although
there may be and are certain variations on a given day from
either such typical departure routes or airways depending
on weather and other operating conditions. Despite these
day-to-day variations, plaintiff’s flights departing from
O’Hare are being, and flights which have departed from
O’Hare and Midway Airports since January 1, 1960, have
been, flown on what can be accurately described as “typical”
departure routes and airways. Although such departure
routes and airways have varied from time to time and
according to the type of aircraft being flown, at present for
eastbound flights there are three principal ones, for north-
bound two, and for westbound four.
18. Pursuant to regulations of the Federal Aviation
Agency, all aircraft operated by plaintiff are, and since
January 1, 1960, have been required to maintain a “reserve
fuel supply,” above and beyond that required to transport
a plane to its scheduled destination. Such reserve fuel
requirements have varied from time to time, and vary
according to the type of aircraft involved and with antici-
pated weather conditions. A current example is that the
reserve fuel requirement for a Boeing 720 or a Douglas
DCS four-engined jet is 8,000 pounds of fuel, plus, if
weather conditions require the specification of an alternate
„FFC 8
7
destination on the flight plan, such additional fuel as is
required to take the plane from its scheduled destination
to the specified alternate point for such flight. Typical alter-
nate points for jet aircraft destined for Chicago include
1045 Minneapolis, Omaha, Milwaukee, Detroit and Cleve-
land.
19. Plaintiff has established, in the conduct of its flight
operation, reserve fuel requirements which are, and since
January 1, 1960, continuously have been, in excess of those
of the Federal Aviation Agency. For example, plaintiff's
current reserve requirement for Boeing 720 and Douglas
DC-8 aircraft is a minimum of 12,000 pounds, plus, if
weather conditions require the specification of an alternate
destination on the flight plan, the greater of 3,000 additional
pounds of fuel or such additional fuel as is required to take
the plane from its scheduled destination to the specified
alternate point for such flight.
20. Because of the reserve fuel supply required by the
Federal Aviation Agency, as supplemented by plaintiff’s
operating regulations, plaintiff's aircraft landing at Midway
and O’Hare Airports almost always have a considerable
that virtually all, if not all, of plaintiff’s planes which have
arrived at Midway or O’Hare Airports since January 1,
1960 have had sufficient fuel aboard when they landed to
take them, without additional fuel, outside Illinois on the
plane’s actually succeeding flight on typical (as described
in paragraph 17) eastbound or northbound airways, taking
into account fuel consumed in taxing, n- up, take-off,
_ climb and cruise. According to engineering fuel consump-
tion data, confirmed by actual spot checks, a similar condi-
tion appears to have existed [046] on virmally all flights
' departing Illinois using typical westbound airways, with
the exception of a small number of piston angine flights to
8
Kansas City. It follows, from a traditional and realistic
first-in, first-out viewpoint of fuel consumption, that with
de mimimis exceptions, none of the fuel loaded aboard at
O’Hare and Midway Airports by plaintiff since January 1,
1960, is or has been actually used or consumed within the
borders of Illinois (excluding certain intrastate flights on
which the applicable Illinois use tax has been and is being
paid).
21. By a series of letter opinions issued in 1955 and
thereafter, examples of which are set forth as Exhibits B
and C attached hereto and incorporated herein, the Director
of Revenue, and his predecessors in office, have taken the
position that fuel purchased by interstate carriers outside
Illinois, brought into and temporarily stored by them in
Illinois, is subject to use tax only to the extent of the portion
of such fuel actually used or consumed by being burned off
within Illinois. Such ruling also relieved retailers of the
fuel from the duty of collecting the use tax in such situa-
tions, and required the carrier to directly file a use tax
return and pay the tax according to what was actually
burned off by it within Illinois.
22. The interpretation set forth in the preceding para-
graph was, upon information and belief, repeatedly reiter-
ated since 1955 by auditors representing the Director of
Revenue during the examination of the books and records
of numerous carriers and by other representatives of the
Director [047] of Revenue upon inquiry by interested per-
sons. This interpretation in fact was a publicly known
policy and practice of the Director of Revenue.
23. This interpretation of the Director of Revenue, and
his predecessors, continuously in effect from 1955 until June
of 1963, has, upon information and belief, been known and
relied upon by numerous carriers and by numerous retailers
of fuel.
9
24. This interpretation of the Director of Revenue, and
his predecessors, has been known and relied upon by the
plaintiff since 1955, Plaintiff accordingly has for all periods
(a) On all fuel consumed on flights originating within
and terminating within Illinois (intrastate operations)
and
(b) On a portion of the fuel deemed to have been
used and consumed (burned off) in Illinois on flights
departing from Midway and O’Hare to points outside
Illinois. The computation of the use tax paid under
this arrangement is and has been pursuant to a formula
accepted by representatives of the Department of Rev.
enue during several audits since 1955.
defendant Theodore J. Isaacs, on June 3, 1963, issued an
interpretation in the form of a Bulletin entitled, Tem-
porary Storage of Motor Fuel under Provisions of the Use
Tax Act”, a copy of which is attached hereto and incorpo-
rated herein as Exhibit D. This Bulletin provides in part
that temporary storage ends and a taxable use occurs
when the fuel is taken out of storage facilities and is placed
into the tank of the airplane, railroad engine or truck. At
this point the fuel is converted into its ultimate use, and,
therefore, a taxable use occurs in Illinois.“
10
Bulletin) craft or vehicles, and that therefore such fuel is
subject to Illinois use tax, regardless of whether it:
(a) is used and consumed in the integral conduct
of interstate and foreign commerce, or
(b) in whole F out-
side IIlinois.
27. By this interpretation, the Director of Revenue is
asserting that use tax due as aforesaid on all fuel loaded
in Illinois aboard aircraft of the plaintiff and all other air
carriers and upon the vehicles or craft of all railroads,
truck lines, bus lines, barge lines and steamship companies
[049] which operate in interstate or foreign commerce as
common, contract or private carriers. Such carriers consti-
tate a class, all of which have the same issues of law in fact,
as does the plaintiff—to wit, the applicability of the Illinois
use tax to fuel which, having been purchased outside Illi-
nois and stored in Illinois by the carrier, is loaded by it in
Illinois aboard craft and vehicles to be used and consumed
in propelling such craft or vehicles in interstate and for-
eign commerce.
W. By this interpretation, the Director of Revenue
applies the use tax to fuel in a manner different from all
other types of tangible personal property, in that the act
of preparing to transport some or all of the fuel outside
the State is deemed to be a taxable use. No other interpre-
tation by the Director of Revenue applies such a rule to
any other types of tangible personal property.
29. By this interpretation, the Director of Revenue dis-
tinguishes, for purposes of applying the use tax, the type
of container in which fuel is stored, in that fuel stored in
the tank of a craft or vehicle is not considered temporary
‘storage in contrast to storage in any other form of con-
tainer or facility. No other interpretation by the Director
11
of Revenue applies such a rule to the storage of any other
type of tangible personal property.
30. The interpretation of the Director of Revenue set
forth in the Bulletin dated June 3, 1963, is contrary to the
intention of the General Assembly and the express language
[050] of the Use Tax Act in the following respects :
(a) it is contrary to Section 3 of the Use Tax Act,
Tl. Rev. Stat. 1961, ch. 120, § 439.3, which imposes the
tax .. . upon the privilege of using in this State tang-
ible personal property . . . [emphasis supplied] ms
(b) it is contrary to the plain meaning and in-
tended scope of the definition of “use” set forth in Sec-
tion 2 of the Act, id. § 439.2;
(e) it is contrary to the plain meaning and inten-
tion of the “temporary storage” exemption set forth in
Section 3 of the Act, id. § 439.3.
31. The allegations set forth in the preceding paragraph
are confirmed by the following rules of statutory construc-
tion uniformly followed by the Conrts of this State:
(a) the interpretation of the Director of Revenue
would, as alleged in paragraphs 28 and 29, apply the
use tax on fuel in a way different from the application
of such tax to all other types of tangible personal prop-
erty, thus infringing upon the rule of uniform and con-
sistent construction of tax acts;
(b) the interpretation of the Director of Revenue
would be contrary to the common and ordinary mean-
ing of the words “use” and “temporary storage”. See
Revean v. Nudelman, 370 III. 180, 184-5 (1938) ;
(c) the interpretation of the Director of [051] Rev-
enue would be contrary to his long-continued interpre-
tation and application of the Use Tax Act relating to
fuel loaded in Dlinois aboard craft and vehicles en-
gaged in interstate and foreign commerce, which inter-
pretation and application can be deemed to have been
12
approved by. the General Assembly because of its fail-
ure to amend or clarify the relevant statutory lan-
guage, i ly, when it repeatedly amended since
1955 ons 2 and 3 of the Act. See e.g. People v.
Lyons, 1 III. 2d 409, 414 (1953) and |
(d) the interpretation of the Director of Revenue
would violate the established rule, as stated in Ingersoll
Milling Machine Co. v. Department of Revenue, 405
III. 367, 373 (1950):
“Taxing statutes are to be strictly construed
and their language is not to be extended or en-
larged by implication beyond its clear import, but
in cases of doubt such laws are construed most
strongly against the government and in favor of
the taxpayer.”
32. The interpretation of the Department of Revenue
is contrary to the Constitution of Illinois in the following
respects :
(a) the application of the use tax to fuel in a man-
ner different from all other types of tangible personal
property, as more fully set out in paragraph 28, con-
stitutes an unreasonable classification in violation of
the Revenue [052] Article, Article IX, §1;
: (b) the application of the use tax according to the
type of container in which the fuel is stored, as set
forth in paragraph 29, constitutes an unreasonable
classification in violation of the Revenue Article,
Article IX, $1, in that (i) it applies the temporary stor-
age exemption to fuel in a way different from all other
types of tangible personal property, and (ii) further,
it discriminates against air and water carriers which
are less able than land carriers to transport fuel in
tanks unconnected with the motive power of the craft
or vehicle;
(e) the application of the use tax as set forth in
su (a) above violates the Due Process Sec-
tion, Article II, § 2;
13
(d) the application of the use tax as set forth in
subparagraph (b) above violates the Due Process Sec-
tion, Article II, § 2;
of using tangible personal property im this State [em-
phasis [053] supplied)”. III. Laws 1955, p. 2027, as
amended, III. Laws 1959, p. 654, § 2. ;
33. If the interpretation of the Director of Revenue is
construed to impose the use tax on either (i) the loading in
Illinois of fuel aboard aircraft or vehicles about to com-
mence journeys in interstate or foreign commerce or
(ii) upon the use or consumption of the fuel in the inter-
state or foreign journey, such interpretation would violate
the Commerce Clause, Article I, §8, cl. 3, of the United
States Constitution, in that it would directly burden and
would tend to create multiple burdens on interstate com-
merce.
34. If the interpretation of the Director of Revenue is
construed to impose the use tax on either (i) the loading in
inois of fuel aboard craft or vehicles about to commence
journeys in foreign commerce, or (ii) upon the use or con-
‘sumption of the fuel in foreign commerce, such interpre-
tation would violate the Import-Export Clause, Article I,
$10, cl. 2, of the United States Constitution.
35. If the interpretation of the Director of Revenue is
“sonstrued to impose the use tax according to the distinc.
tions more fully outlined in paragraphs 28 and 29, such
imposition would, as an unreasonable and arbitrary classifi-
‘tation, violate the Due Process and Equal Protection
Glauses of the United States Constitution.
14
36. The Director of Revenue seeks to enforce the Bulle-
tin retroactively as well as prospectively. Such retroactive
interpretation, which would reverse the long [054] con-
tinued publicly announced practice and letter rulings of
the Department of Revenue, which interpretation can be
deemed to have been approved by the State Legislature,
would violate the Due Process and ex post facto law pro-
visions, respectively Article II, §2 and §14 of the Illinois
Constitution, as well as the principle against retroactive —
application of a changed administrative interpretation
established by the Supreme Court in Pressed Steel Cor Co.
v. Lyons, 7 IIl. 2d 96, 105-6 (1955).
37. The retroactive application of the Bulletin of the
Director of Revenue, as outlined in the preceding paragraph,
also would violate the Due Process Clause of the Four-
teenth Amendment of the United States Constitution.
38. Plaintiff and all other members of the class to which
it belongs are without an adequate remedy at law, because
unless each of them complies with the regulation herein
complained of, and pays an Illinois use tax on all fuel loaded
aboard craft or vehicles in this State, they will severally be
subjected to numerous actions instituted against them by
the Department of Revenue through the Attorney General
of Illinois. Moreover, those members of the class who do
not directly file use tax returns and remit the use tax, but
who have it collected from them by the retailer selling such
fuel to them outside IIlinois similarly have no adequate
remedy at law.
‘WHEREFORE, plaintiff prays of this Court for and on
behalf of itself and all other members of the class above
described as follows:
[055] I. To grant forthwith a temporary writ of
injunction directed to defendant Harry L. Hulman as
Director of Revenue of the Department of Revenue of
15
the State of IIlinois, his representatives and successors
in office, and William G. Clark, his representatives and
Successors in office, enjoining each of them, until further
order of this Court, from in any way, directly or indi-.
rectly, imposing, assessing (including making any final
denial of a claim for credit or refund pursuant to an
Rev. Stat. 1961, ch. 127, § 172, by a member of the class
to which plaintiff belongs who paid the use tax under
protest on the use of fuel within the scope of this
litigation) or collecting or attempting to impose, assess
or collect a use tax upon all fuel which, after being
purchased outside Illinois and stored in Illinois by a
common, contract, or private carrier by air, land, or
water, is loaded in Illinois by such carrier aboard craft
II. To grant forthwith a temporary writ of [056] in-
junction directed to defendant Harry L. Hulman, as
Director of Revenue of the Department of Revenue of
the State of Illinois, his representatives and successors
in office, enjoining each of them, until farther order of
this Court from turning over to the Treasurer of Illinois
any moneys paid to defendant Hulman under protest
as use tax by or on behalf of the plaintiff or any other
member of the class ( including payment under protest
of use tax by a retailer who collected such tax from any
member of the class) for fuel which, after being pur-
chased outside Illinois and stored in Illinois, is loaded
in Illinois by such carrier aboard craft or vehicles to
be used and consumed in propelling such craft or vehi-
2a.1 of the Act of June 9, 1911, as amended, III. Rev.
Stat. 1961, ch. 127, §§ 172, 172(a);
16
III. To grant forthwith a temporary writ of injunc-
tion directed to defendant William J. Scott, Treasurer
of Illinois, his representatives and successors in office,
enjoining each of them until further order of this Court,
from placing any such moneys into the General Revenue
Fund or in any fund other than a Protest Fund main-
tained by such defendant [057] for the purposes of this
litigation ;
IV. That in order to avoid a multiplicity of similar
suits by members of the class to which the plaintiff
belongs and for which the plaintiff is prosecuting this
action, to forthwith grant a temporary writ of injunc-
tion against all other members of the class, as defined
in paragraph 27, from litigating by any procedure be-
fore the Courts of this State against the State officers
made defendants herein the substantive issues raised in
this proceeding and diligently prosecuted by the plain-
tiff herein, provided that no person within this class (i)
is prohibited from paying the use tax under protest and
filing a complaint in chancery for a temporary injunc-
tion and a claim for refund or credit with the Director
of Revenue pursuant to Section 2a of the Act of June
9, 1911, as amended, III. Rev. Stat., 1961, ch. 127, § 172,
or (ii) from joining or intervening in this proceeding ;
V. That, after full and complete hearing, to finally
determine that the use tax sought be imposed, assessed
and collected on fuel loaded in Illinois by common, con-
tract or private carriers by air, land or water aboard
craft vehicles to be used or consumed in propelling such
craft or vehicles in interstate or foreign commerce is
contrary to [058] the Use Tax Act and the Illinois Con-
stitution, and/or the Federal Constitution as herein
alleged ;
VI. That after full and complete hearing to make
permanent the temporary injunction orders set forth
as I, II, and III;
VII. That, after full and complete hearing, result-
ing in a final determination in favor of the plaintiff
and other members of the class pursuant to V. above,
17
to issue a writ of injunction to the defendant William
J. Scott, as Treasurer of Illinois, ordering him to dis-
tribute such portion of the Protest Fund deemed to
have been collected contrary to law to the plaintiff and
VIII. To grant to the plaintiff and all other mem-
bers of the class such other further relief as may be
just and equitable to do complete and substantial
justice.
Mark H. Berens
231 8. LaSalle Street
Chicago 4, Illinois
MAYER, FRIEDLICH, SPIESS,
TIERNEY, BROWN & PLATT
231 South LaSalle Street
Chicago 4, Illinois
STate 2-0600
Of Counsel
[059]: State or ILLIINOIS
County or Coox 885
J 0 F. McERLEAN, being first duly sworn, deposes and
says that he is Senior Vice President - Law of United Air
Lines, Inc., plaintiff herein, and makes this affidavit. on its
behalf, by and with its authority, that he has read the
above and foregoing amended complaint, knows the con-
‘tents thereof, and that the matters and things alleged
therein are true, excepting the allegations contained in
paragraphs 22 and 23 of the complaint, which allegations
he is informed and believes are true and correct.
„ 2 2 „%%% eee „„ „„ „„ „„ „„ „„
C. F. McErlean
SUBSCRIBED AND SWORN TO
before me this ... day
Dares ere „1963.
*⁵*õrĩ „„ „„ „ „ „ „466
Notary Public
U
8
aalinn 30 sainos d
1061 Exhibit B
Richard J. Lyons Rules and Regulations
Director Division
Andrew Fasscao
Assistant Director
STATE OF ILLINOIS
William G. Stratton, Governor
DEPARTMENT OF REVENUE
Springfield
July 12, 1955
Honorable Paul J. Randolph
155 North Wacker Drive
Chicago 6, Illinois
Dear Representative Randolph:
This is with reference to your telephone call of yesterday.
If and when the Governor signs Senate Bill No. 510 (the
Use Tax Act), we intend to interpret examption (b), in the
part of Section 3 of the law dealing with exemptions that
are allowed to prevent multi-state taxation, as meaning the
transportation vehicles of any kind of interstate company
(railroad, bus line, air line, trucking company, etc.). We
think that this broad sense is the way in which the General
Assembly intended “rolling stock” in this situation to be
interpreted since the reason for the exemption (to prevent
taxation by more than one state) applies as much to the
rolling stock or transportation vehicles of one kind of in-
terstate carrier as to those of another, where such trans-
portation vehicles or rolling stock move in interstate
ecommerce so as to be used in more than one state. Any
other interpretation restricting “rolling stock” to the trans-
_ portation vehicles of a railroad or some other one kind of
_ interstate carrier would be discriminatory and, in our
opinion, would not carry out the Legislature’s intention in
20
adopting this exemption provision, and we believe the pro-
vision should be given a construction which makes it
nondiscriminatory in effect when the. provision is reason-
ably capable of such a construction. There is nothing in the
provision which restricts its application to any particular
kind of carrier except for “rolling stock” to be given its
narrowest and most literal meaning, and we do not believe
that this should be done when the result would obviously
defeat the Legislature’s purpose by causing discrimination.
Equipment (not transportation vehicles), gasoline and
other supplies would not qualify as “rolling stock” under
any reasonable interpretation of that phrase and so would
not come within the exemption provision under discussion.
If such items which are not within the exemption are pur-
chased outside Illinois by a carrier, and some of the items
or units thereof (such as so many gallons of gasoline) are
used in Illinois and some of the items or units thereof
(such as so many gallons of gasoline) are used outside
Illinois, the carrier would be liable for the use tax on the
items used in Illinois, but not on the items used outside
Illinois assuming that the carrier keeps adequate records
to aggregate the nontaxable from the taxable items.
It should be pointed out that if a seller, when selling
tangible personal property to the carrier for use, delivers
the property from a point in Tilinois to the purchasing car-
rier at a point in Illinois, the seller incurs retailers’ occupa-
tion tax liability regardless of where the property may be
used by the purchaser. This is just as true of rolling stock
{transportation vehicles) as it is of gasoline and other kinds
of tangible personal property. Please refer to paragraph
1 of subdivision II of Article 5 of the retailers’ occupation
tax Rules and Regulations, a copy of which is enclosed.
Nothing in the Use Tax Act changes the Retailers’ Occupa-
tion Tax Act.
1 5 e ee Willard Ie
21
[062]
August 26, 1955
Re: Your File 11-0—TIllinois Use Tax
Phillips Petroleum Company
Bartlesville
Oklahoma
Atrention: Mr. F. H. Chichester, Director—Excise Tax
Gentlemen:
Tuͤ0our letters of August 2 and 19, 1955, addressed to the
Retailers’ Occupation Tax Division, have been referred to
this office for reply.
Since you are a “retailer maintaining a place of business
in this State”, you would be required to collect the use tax
when shipping gasoline from a point outside Illinois to a
_ purchaser like American Airlines in Illinois for use. In gen-
eral, you cannot be relieved of your responsibility for eol-
lecting the use tax simply because the purchaser wishes to
assume responsibility for paying the use tax directly to
this Department. However, if the retailers’ occupation tax
does not apply to the transaction so that the only tax
involved is the use tax, there is an exemption provision in
the Use Tax Act for tangible personal property that is
acquired outside Illinois and stored here temporarily, but
then used exclusively outside Illinois. Where the purchaser
is the kind that could use the tangible personal property
in more than one state (such as an interstate airline or an
interstate railroad) and the property is the kind that could
be used in more than one state (such as fuel), and where
such purchaser acquires the property from you outside
Illinois under such circumstances that no tax but the use
tax could be involved in the transaction, you will be relieved
__ from collecting the use tax from the purchaser if the pur-
chaser certifies to you that the tangible personal property
covered by the purchase order is to be stored temporarily
in Illinois and then used outside Dlinois. If the purchaser
thereafter should happen to change its intention in this
respect and use some of such tangible personal property
in Illinois, the purchaser will be expected to pay the use
tax thereon directly to this Department. In the type of case
just described, you should retain the exemption certificate
in question from the purchaser among your books and
records in case of an audit by the Department.
Very truly yours,
Richard J. Lyons,
Director of Revenue
By:
Willard Ice, Supervisor
Rules and Regulations Division
WI:mh
ec. American Airlines
1063] Exhibit D
STATE OF ILLINOIS
DEPARTMENT OF REVENUE
Springfield
Theodore J. Isaacs
Director
Albert R. Imle
Assistant Director
BULLETIN
Rz: Temporary Storage of Motor Fuel Under Provisions
of the Use Tax Act
The purpose of this bulletin is to clarify the Depart-
ment’s position concerning the temporary storage provi-
sions of the Use Tax Act and their relationship to fuel
consumed by a common carrier.
The Department’s position is that temporary storage
ends and a taxable use occurs when the fuel is taken out of
storage facilities and is placed inté the tank of the airplane,
railroad engine or truck. At this point, the fuel is converted
into its ultimate use, and, therefore, a taxable use occurs in
Illinois.
If a common carrier does not have separate facilities for
transferring the fuel out of the State of Illinois but always
puts it into the tank of the airplane, railroad engine or
truck for final consumption, then they no longer will be able
to give a certificate to the vendor stating that the fuel is
purchased within the temporary storage provisions of the
Use Tax Act, but must pay the use tax to their supplier.
Txreopore J. Isaacs
Theodore J. Isaacs
Director of Revenue
Issued: June 3, 1963
[065] Starz or Inuuxows
Counry or Coox
IN THE CIRCUIT COURT OF COOK COUNTY
Revenue | 63017049
MOTION FOR TEMPORARY INJUNCTION
Now comes United Air Lines, Inc., plaintiff, by its attor-
neys, and moves this Court to enter an order for tempo-
rary injunction in accordance with paragraph I of the
Prayer of plaintiff’s Amended Complaint in Chancery, said
temporary injunction to be limited, however, to the follow-
ing terms:
That defendant Theodore J. Isaacs, as Director of
‘ Revenue of the Department of Revenue of the State
of Illinois, his representatives and successors in office,
de, and they and each of them are hereby restrained,
ns until further order of this Court, from in any way,
directly or indirectly, imposing, assessing (including
making any determination, [066] final or otherwise, of
a claim for credit or refund pertaining to the use of
fuel within the scope of this litigation and filed by
plaintiff either (i) to recover use tax paid by plaintiff
under protest or (ii) for use tax paid by plaintiff not
under protest) or collecting or attempting to impose,
assess or collect a use tax upon any fuel which, after
being purchased by plaintiff outside Illinois and stored
in Illinois, is loaded by plaintiff in Illinois aboard air-
craft to be used and consumed in propelling said air-
craft in interstate or foreign commerce, irrespective of
whether such fuel actually is burried off within or out-
side the borders of Illinois.
UNITED AIR LINES, INC.
Plaintiff
By Manx H. Berens
Mark H. Berens
Wm. Bruce Horr, Jz.
Wm. Bruce Hoff, Jr.
Its Attorneys
Of Counsel:
MAYER, FRIEDLICH, SPIESS,
TIERNEY, BROWN & PLATT
231 South LaSalle Street
Chicago 4, Illinois
STate 2-0600
[068] [Caption Omitted]
ORDER FOR TEMPORARY INJUNCTION
This cause coming on to be heard on the motion of United
Air Lines, Inc., plaintiff, by its attorneys, for a temporary
injunction under the general Chancery jurisdiction of this
Court,
IT IS ORDERED that defendant Theodore J. Isaacs, as
Director of Revenue of the Department of Revenue of the
State of Illinois, his representatives and successors in office,
be, and they and each of them are hereby restrained, until
further order of this Court, from in any way, directly or
indirectly, imposing, assessing (including making any deter-
_ mination, final or otherwise, of a claim for credit or refund
pertaining to the use of fuel within the scope of this litiga-
tion and filed by plaintiff either (i) to recover use tax paid
by plaintiff under protest or (ii) for use tax paid by plain-
tiff not under protest) or collecting or attempting to impose,
assess or collect a use tax upon any fuel which, after being
[069] purchased by plaintiff outside Illinois and stored in
Illinois, was loaded prior to June 3, 1963, by plaintiff in
Illinois, aboard aircraft to be used and consumed in pro-
pelling said aircraft in interstate or foreign commerce,
irrespective of whether such fuel actually was burned off
within or outside the borders of Illinois.
IT IS FURTHER ORDERED that the manner and ex-
tent to which plaintiff shall furnish indemnification covering
said temporary injunction shall be determined and agreed
upon between the attorneys for plaintiff and the attorneys
for defendant.
IT IS FURTHER ORDERED that plaintiff’s motion for
an injunction under the general Chancery jurisdiction of
this Court is denied as to the period between June 3, 1963
and August 1, 1963.
IT IS FURTHER ORDERED that plaintiff’s motion for
an injunction under the general Chancery jurisdiction of
this Court is denied as to all periods subsequent to August
1, 1963.
DATED: December 13th, 1963.
William V. Brothers
Judge
[071] [Caption Omitted]
ANSWER
Now comes Suztx On, Company, a Delaware corporation,
one of the defendants herein, by Peterson, Lowry, Ratu,
Bann & Ross, its attorneys, and for its Answer states as
follows: 4
27
2, 3, 4, 4A, 14A, 22 and 23, Defendant admits the matters
and allegations contained in paragraphs 2, 3, 4, 4A, 14A,
22 and 23.
Further answering, defendant states that as to the re-
maining allegations and matters contained in all other
paragraphs, it is without information or facts sufficient to
form an opinion or belief.
Wuenzrone, Suett On, Company, a corporation, one of
the defendants herein, prays that the plaintiff’s complaint
should be dismissed as against the defendant, Suzi, On
Company.
PETERSON, LOWRY, RALL,
BARBER & ROSS
By: Owen Rati
Attorneys for Defendant
PETERSON, LOWRY, RALL, BARBER & ROSS
135 South LaSalle Street
Chicago 3, Illinois
ANdover 3-7300
[072] [Certificate of Service Omitted in Printing]
[074] [Caption Omitted]
ANSWE
Now come the defendants, L. Hulman, Successor
Director of the Department of Revenue of the State of
Illinois, and William G. Clark, Attorney General of the
State of Illinois, by William G. Clark, Attorney General
of the State of Illinois, their attorney, and for their joint
answer to the complaint amended herein, they and each of
them say:
28
1. Admit the allegations of fact of Paragraphs one, two,
three and four of plaintiff's complaint as amended;
2. Deny the allegation of Paragraph five and assert that
plaintiff’s complaint represents an improper attempt as a
class action and wrongfully assumes a common interest in
questions of law and fact necessary in such actions;
3. Deny the allegations of Paragraph six of said com-
plaint and state that plaintiff has waived any right or privi-
lege to. [075] proceed under the Owens-Illinois Glass Com-
pany, vs. McGibbin, decision by pursuing the remedies pro-
vided under Illinois Revised Statutes, 1961, Ch. 127, Secs.
172, 172(a);
4. Admit the allegation of Paragraph seven of said
Complaint ;
5. That they have no knowledge sufficient to form a
belief as to the truth or correctness of the allegations
contained in Paragraphs eight, nine, ten, eleven, twelve,
thirteen, fourteen, fifteen, sixteen, seventeen, eighteen,
nineteen and twenty of said complaint and therefore neither
admit nor deny but demand strict proof thereof;
6. Admit the existence of correspondence from time to
time by employees of the Department of Revenue but deny
the conclusions and opinions of plaintiff relating to such
correspondence as alleged in Paragraph twenty-one of said
complaint. If as plaintiff alleges the existence of a prior
administrative policy or practice exempting such transac-
tions, such policy or practice, if erroneous can not imure
to the benefit of plaintiff. Defendants further deny that
either of the exhibits attached to and made a part of the
complaint support any such allegation of any ruling by the
Director of Revenue with respect to the transactions in
question ;
7. Deny that any interpretation of the transactions
involved by the auditors of the Department of Reve-
i
nue has any binding effect on the issue raised in the com-
plaint. Defendants further deny any official ruling exempt-
ing the matter in controversy as alleged in Paragraph
twenty-two of said complaint;
[076] 8. That they have no knowledge sufficient to
form a belief of the allegations contained in Paragraph
twenty-three and neither admit nor deny, but demand strict
proof thereof;
9. That they have no knowledge sufficient to form a
belief as to the truth or correctness of the reliance placed
by plaintiff on any matter relating to the Use Tax in ques-
tion as alleged in Paragraph twenty-four and these defen-
dants state that the remaining allegations of fact contained
in said paragraph, which are descriptive of plaintiff's
transactions, clearly disclose that the plaintiff is engaged
in a taxable use and that said plaintiff has not paid to any
of these defendants the tax provided by the Use Tax Act
upon and with reference to the matters set forth in the said
complaint, at the rate or the amount prescribed by said
Statute;
10. Admit the issuance of the Bulletin as alleged in
Paragraph twenty-five, and a copy of said Bulletin is at-
tached hereto and made a part of this Answer;
‘ 11. Paragraph twenty-six states various conclusions
that the defendants deny;
12. Paragraph twenty-seven states various conclusions
of the pleader and the Bulletin issued on June 3, 1963, and
the Use Tax Act, are the best source to determine what is
asserted or attempted to be asserted as the same apply to
plaintiff ;
13. Paragraphs twenty-seven, twenty-eight, twenty-nine,
_ thirty, thirty-one, thirty-two, thirty-three, thirty-four and
_ [077] thirty-five state various conclusions and opinions of
6
the plaintiff that these defendants deny, the same being
legal conclusions of plaintiff;
14. Deny the allegations of Paragraphs thirty-six and
thirty-seven, the same being legal conclusions and opinions
of plaintiff. Defendants assert that within the meaning of
the Use Tax Act, the Bulletin issued on June 3, 1963,
clearly stated that “the purpose of this Bulletin is to clarify
the Department’s position. . . . and said Bulletin did not
in any manner alter or change existing law. Nor did said
Bulletin recognize or admit that plaintiff was excluded or
exempt from the operation of the Use Tax Act with refer-
ence to the transactions set forth in the said complaint;
15. That notwithstanding the plaintiff’s assertion to the
contrary, The Use Tax Act, as-amended, is in all respects
valid and constitutional as are the regulations and Bulletins
of the Department of Revenue as promulgated under that
Act and as are the actions of the defendants which this suit
seeks to enjoin. More particularly neither the Use Tax Act
nor any regulation or Bulletin of the Department of Reve-
nue, nor any action of the defendants in enforcing that Act
violate the Use Tax Act or Article I, Section 1, Article II,
Section 2 and 14, and Article IV, Section 13, of the Consti-
tution of the State of Illinois. Nor does the Act, Regula-
tions or Bulletins violate Article I, Section 8 or 10, or the
14th Amendment to the Constitution of the United States;
16. That plaintiff has a full and adequate remedy at law
for the determination of its tax liability under the Use Tax
Act, [078] 1961 Illinois Revised Statutes,’ Ch. 120, Pars.
439.1 to 439.22, such legal remedy and the procedure to be
followed having been specifically provided for by and con-
tained within, the terms and provisions of said aforemen-
tioned Act. Plaintiff. also has a full and complete statutory
remedy provided in Section 2(a) of “An Act in relation
to the payment and disposition of monies received for and
31
on behalf of the State“, approved June 9, 1911, as amended
by Act approved May 15, 1961, 1961 Illinois Revised
Statutes, Ch. 127, Sec. 172;
17. That plaintiff’s complaint is insubstantial and insuf-
ficient and fails to state a cause of action to permit a Court
of Equity to take jurisdiction;
18. The construction of the Use Tax which results in
the imposition of the Use Tax on plaintiff’s transactions
described in the complaint filed herein is a proper construc-
tion and interpretation of said Act.
4
_ Wuenrerorr, the defendants pray that plaintiff's com-
plaint be dismissed for want of equity, the injunction here-
tofore entered be dissolved and vacated, judgment be
entered in favor of defendants, and that these defendants
may have such other and further relief in the — as
shall be just and equitable.
HARRY L. HULMAN, Director of Revenue
of the Department of Revenue of the State
of Illinois
by: Wu G. CLanRk
William G. Clark, Attorney General
of the State of Illinois
Attorney for the defendants
[Jurat Omitted in Printing]
32.
{080} State of Illinois
bares DEPARTMENT OF REVENUE
Springfield
Theodore J. Isaacs
Director
Albert R. Imle
Assistant Director
RE: TEMPORARY STORAGE OF MOTOR FUEL
_ UNDER PROVISIONS OF THE USE TAX ACT
“The purpose of this bulletin is to clarify the Department’
position: concerning the temporary storage provisions of
the Use Tax Act and their relationship to fuel consumed 191
a common carrier.
The Department's position is that temporary storage
ends and a taxable use occurs when the fuel is taken out
of storage facilities and is placed into the tank of the air-
plane, railroad engine or truck. At this point, the fuel is
converted into its ultimate use, e 1 8 a taxable
use occurs in Illinois.
If a common carrier does not have 8 facilities for
transferring the fuel out of the State of Illinois but always
puts it into the tank of the airplane, railroad engine or
truck for final consumption, then they no longer will be
able to give a certificate to the vendor stating that the fuel
is purchased within the temporary storage provisions of the
Use Tax Act, but must pay the use tax to their supplier.
Treopore J. Isaacs
Theodore J. Isaacs
Director of Revenue
Issued: June 3, 1963
33
{Caption omitted]
STIPULATION
It is hereby stipulated and agreed between United Air
Lines, Inc., plaintiff, and Marshall Korshak, Director of
Revenue of the Department of Revenue of the State of
Illinois, William G. Clark, Attorney General of the State of
Illinois, and Shell Oil Company, defendants, that:
1. United Air Lines, Inc. (“United”) is a Delaware cor-
poration qualified to do business in the State of Illinois, and
is engaged in the business of transporting persons, property
and United States Mail by air on scheduled and chartered
flights in interstate and foreign commerce.’ Until its merger
into United on June 1, 1961, Capital Airlines, Inc. (“Cap-
ital“) was also a Delaware corporation qualified to do busi-
ness in the State of Illinois, and was engaged in the business
of transporting persons, property and United States mail
by air on scheduled and chartered flights in interstate com-
merce.”
2. All such scheduled and chartered flights are made
pursuant to Certificates of Public Convenience and Neces-
sity, conferring authority to fly particular routes and issued
to United by the Civil Aeronautics Board, and pursuant to
Operating Certificates and Operations Specifications pre-
scribing the manner in which aircraft are to be flown over
those routes and issued to United by the Federal Aviation
Agency. All such Certificates and Specifications are issued
under authority of the Federal Aviation Act of 1958, as
- amended (49 U.S.C. §§ 1301 et seq.).
1 United also provides scheduled intrastate service within various
states, including, in Illinois, a limited number of flights between
Chicago and Quad-Cities Airport, Moline. United has also per-
formed a few charter flights between points within Illinois. United,
- however, pays Illinois Use Tax on fuel consumed on such intrastate
- flights (see footnote 6, below), and this lawsuit therefore involves
e no intrastate
"Capital provided no intrastate service in Illinois,
1098]
34
United’s scheduled service, is presently provided over a
route system extending, via numerous intermediate points
from the East to the West coasts and Hawaii, north and
south along both the Atlantic and Pacific seaboards and,
generally, north and south from the Middle Atlantic and
New England states to the Gulf of Mexico.“
This route system consists of 17,420 unduplicated route
miles, of which only 256 route miles, or less than 1.6% are
within Illinois. It includes service on interstate and foreign
flights to 110 cities in 32 states, the District of Columbia
na
United presently provides scheduled interstate service
from O’Hare and Midway airports in Chicago to 55 cities
in 20 states and the District of Columbia. Such service
involves an average of approximately 4,580 departing
flights per month, more than half of which are continuations
of interstate flights that both begin and end outside Mlinois
and on which Chicago is a stopover point.
United also performs an average of approximately 21
monthly charter flights in interstate and foreign commerce
between Chicago and various points in the United States
and Canada.“
eee showing United’s principal certificated routes
is atttached to United's Amended Complaint as Exhibit A. A de-
“The information and average figures given in this paragraph
„n Appendix: $ are dend on
ee ee Average figures for prior years
35
3. Because United’s operations are under Federal au-
thorization of the Certificates of Public Convenience and
‘Necessity, Operating Certificate and Operations Specifica-
tions referred to in Paragraph 2, United’s interstate and
foreign operations are regulated and controlled by various
agencies and instrumentalities of the Federal government.
Among other things:
Dnited's tariffs (fares, rates and terms and conditions of
carriage) are filed with and subject to the approval of the
Civil Aeronautics Board.
5 Under the Federal Aviation Act, United is required to
provide regularly scheduled service over all portions of its
route system unless specifically authorized to suspend such
__ service by the Civil Aeronautics Board, and is required to
_ file all its schedules with the Civil Aeronautics Board and
the United States Post Office Department. (14 Code of Fed-
eral Regulations, Part 231 (1964).)
- _ Under the Federal Aviation Act (49 U.S.C. § 1375), the
Post Office Department has extensive authority to require
airlines, such as United, to affirmatively establish schedules
which meet the needs of the Post Office Department; con-
. versely, the Post Office Department has a veto power over
proposed schedule changes which would adversely affect its
postal operations. Approximately 99.5% of United’s flights
from O’Hare and Midway Airports are operated according
to such schedules.
_ Scheduled air carriers, such as United, are required to
perform their established schedules, unless good cause, such
as weather conditions or equipment difficulties, is shown.
~~ To that end, the Civil Aeronautics Board regularly monitors
3 the scheduled performance of all airlines, including United.
([ 4 C. F. R. Part 234 (1964).)
Pursuant to the Federal Aviation Act, the Federal Avia-
tion Agency has established a national air traffic control
system whereby the actual routes between airports of all
commercial aircraft ‘are fixed. Under such control, ‘no
United aircraft may depart from O' Hare or Midway until
its flight plan has been approved by the Federal Aviation
Agency officer in charge, and the course and altitude of air-
craft are assigned throughout all flights. Subject to certain
exceptions near busy airports, the routings are on fixed
courses which are much like aerial highways.
Such routes; as they apply to a given route segment to be
flown. and as assigned by the federal air traffic control
authorities, must be followed by aircraft proceeding in ac-
cordance with instrument flight rules promulgated by the
Federal. Aviation Agency. To comply with its federally
issued Operations Specifications (14 C.F.R. § 40.18 (1964)),
United must conduct all of its turbojet flights in accordance
with instrument flight rules (except in terminal areas when
4 radio contact with air traffic control) and, consequently,
ong designated air space routes unless radar vectored
estore by air traffic control, As a matter of policy,
United conducts all of its flights ‘(tarbojet, turboprop and
piston aircraft) enroute in accordance with instrument flight
rules and along designated air space routes. While operat-
ing under instrument flight rules aircraft are controlled as
to routing, altitude and airspeed by the air traffic control
function of the Federal Aviation Agency. Normally, flights
to given destinations are assigned the same routings day
after day..
Federal Aviation ‘Agency regulations (14 C. F. R. 50 42a,
52 1(1964)) require that all commercial aircraft, including
those of United, carry a minimum specified amount of re-
serve fuel over and above that required to carry the partic-
ular aircraft to its scheduled destination. Such regulations
| 37
also require, that, where it is uncertain if weather conditions
at the scheduled destination will permit landing, additional
Fuel necessary to take the aircraft from the scheduled
destination to a specified alternate destination must be
carried.“ (14 C.F.R. §§ 42a, 52 (1964).)
- United must submit to the Federal Aviation Agency for
its ratification Flight Manuals for each type of aircraft
operated by it. Among other things, such Flight Manuals
must specify: engine power settings for all phases of flight,
- including run-up (for piston aircraft), take-off, climb and
eruise; detailed fuel consumption data for all operating
conditions, in terms of weather conditions, loaded weight
of aircraft and engine power settings during all phases of
flight; equipment and instrument check-out procedures;
various additional take-off, landing and other flight pro-
- cedures.
4. All of United’s flights are made with aircraft which
were purchased or leased by, and delivered to, United out-
ide Illinois and which include fuel storage tanks as integral
parts thereof. These tanks are for the storage of fuel prior
to the time it is pumped from such tanks through a system
of fuel lines into the aircraft engines and there burned in
- taxiing, take-off, and flight.
5. All of the fuel involved in this litigation is consumed
in the interstate and foreign commerce described in the
_ foregoing paragraphs.°
Reserve fuel requirements and the manner in which basic fuel
8 1 are computed are described in paragraph 10 and
ee Pc senenel be tenia ce
well as on fuel consumed on intrastate flights in Illinois, including:
(a) flights originating in Chicago and terminating at Moline;
(b) WWW
(0 charter flights between points within Ino
6. All such fuel (aviation gasoline for piston aircraft
and kerosene for turboprop and jet aircraft) is purchased
by United from Shell Oil Company, and is delivered to
United, with possession, title and all risk of loss passing to
United, either at Hammond, Indiana or at East Chicago,
Indiana."
7. All such fuel is thereafter transported by pipeline or
tank trucks, by common carriers under contract to United,
normally on a daily basis, to ground fuel storage facilities
located within Illinois, on or near O’Hare or Midway Air-
ports in Chicago, where it is stored prior to being trans-
ferred to the fuel storage tanks of aircraft. The period of
storage in such ground fuel storage facilities ranges from a
minimum of two days (during which period jet fuel is
processed to eliminate impurities) to a maximum of twelve
days. The average period of storage ranges, depending on
the type of fuel and storage facilities involved, from two
and a half to six days.
8. All such fuel is transferred from the b fuel
storage facilities at O Hare and Midway Airports into the
fuel storage tanks of aireraft either by fueling trucks or
direetly through underground pipes and flexible hoses. Such
transfers are made on an average of more than 150 times a
day. With insignificant exceptions, all such transfers are
made into the fuel storage tanks of aircraft immediately
prior to departure, and the fuel so transferred remains in
such fuel storage tanks in an unchanged condition until it
is pumped through a system of fuel lines into the engines
of the aircraft and there burned in taxiing, take-off, and
flight. On stopover flights, unused fuel remains stored in
the fuel tanks of the aircraft until aircraft is again flown.’
"7 Bush purchases end deliveries of fuel have been made under the
game arrangement since May 1, 1953.
® Occasionally, fuel is removed from the aircraft and replaced in
ground fuel storage facilities. In an extremely small number of in-
stances, it may be dumped in flight. /
9. By virtue of the control and supervision of the Civil
Aeronautics Board and Post Office Department as described
in Paragraph 3, and as a matter of commercial, or “competi-
tive,” necessity, United is required, weather and condition
of equipment permitting, to perform all flights as sched-
uled.“ United also is under contract to its passengers and
cargo customers to perform all scheduled and chartered
- flights. In order to perform these regulatory and contractual
obligations, United is committed to transport fuel in its
direraft to points outside Illinois.
10. As stated in Paragraph 3, Federal Aviation Agency
regulations (14 C. F. R. 66 42a, 52 (1964)) require that cer-
_ tain fuel load computation procedures be made for every
commercial flight. Included in those regulations is the
requirement that all commercial aircraft, including those of
~ United, carry a minimum specified amount of reserve fuel.
In addition, and as a further safety factor, United's Flight
Manuals, filed with and ratified by the Federal Aviation
8 N e
5 Agency, include requirements that all of its aircraft carry
~~ amounts of reserve fuel in excess of those required by
Federal Aviation Agency regulation. Accordingly, after
the United pilot and the dispatcher at the particular airport
have taken into account all of the elements which might
affect fuel consumption on a particular flight, such as
weight of the aircraft as loaded and weather conditions
along the assigned route, and, where weather conditions
indicate that a landing at the intended destination may not
de possible, have computed the amount of fuel necessary to
take the particular aircraft to a specified alternate destina-
tion, they must add the specified Federal Aviation Agency
o During the first nine months of 1964, United performed roughly
ö 99% of its scheduled departures from O Hare and Midway Airports.
10 Reserve fuel requirements for each type of aircraft operated
by United are shown on the table attached to this Stipulation as
Appendix 2.
40
and United Flight Manual reserve fuel requirement to the
naan so calculated.“
11. As a result of the fuel requirements and procedures
described above, coupled with the rigid control of all. of
United’s flight routes by the Federal Aviation Agency as
outlined in paragraph 3: (a) approximately 99.75% of
United’s incoming flights arrive at O’Hare and Midway
Airports with fuel aboard equal to or exceeding the reserve
requirements imposed directly by the Federal Aviation
Agency regulations; (b) approximately 99% of United’s
incoming flights arrive at O’Hare and Midway Airports with
fuel aboard equal to or exceeding the combined reserve
requirements imposed: by the Federal Aviation Agency
regulations and by United’s Flight Manuals; (e) all of
United's flights departing from O Hare and Midway Air-
ports arrive at such airports with enough fuel on board to
take them beyond the borders of Illinois on the actual route
they follow.on the outbound leg of their journey; and (d)
if the only fuel aboard arriving aircraft were the combined
fuel reserve requirements of the Federal Aviation Agency
and United’s Flight Manuals, 99.3% of United’s flights
departing from O Hare and Midway Airports would have
arrived with sufficient fuel aboard to take them beyond the
a. e ee
outbound leg of their journey.
2 )%%%ſ%ͤͤͤ% end 0 meet the
amount specified by the pilot and dispatcher. If the pilot’s and the
dispatcher’s requirements vary, eden rd dee Aren
To illustrate the amount of additional fuel carried for alternative
alternate destinations for four engine jet aircraft des-
4
132. As a further result of the Federal Aviation Agency
regulations and United Flight Manual requirements
described above, no United aircraft departs from O' Hare
and Midway Airports without a minimum dispatch load
of fuel on board.”
13. From the effective date of the Illinois Use Tax in
1955 through June 3, 1963, United paid the Illinois Use Tax
upon the fuel loaded aboard aircraft in Illinois that was
actually consumed (“burned-off”) in or over Illinois. In
addition, since May 1, 1953, Shell Oil Company has collected
from United the Indiana Gross Income Tax measured by
the purchase price of such fuel paid by United to Shell Oil
Company. Since June, 1963, the applicable rate of the
Indiana Gross Income Tax has been % of 1 per cent. Apart
from this, United incurs no State sales, use or similar tax
on fuel loaded aboard aircraft in Illinois.
14. The parties have reviewed the documents, charts,
Surveys, statistical computations and other data supporting
~~ the facts set forth in this Stipulation. Except as otherwise
specifically indicated, it is understood that statements of
present fact have been true continuously from January 1,
1960, and were true of Capital’s position and operations
prior to its merger into United on June 1, 1961. It is further
understood that Appendices 1 and 2 hereto, as well as Ex-
_ hibits A and D to United’s Complaint, referred to herein,
are part of this Stipulation..
18 Minimum dispatch loads for each type of aircraft operated by
United (in all cases more than twice that required to carry the air-
craft beyond the Illinois border) are set forth in the table attached
do this Stipulation as Appendix 2.
42
It is further stipulated and agreed that all of the parties
hereto shall have the right to offer additional evidence on
any matter relevant to the subject matter of this litigation.
UNITED AIRLINES, IN W.
5s, Wu. Bruce Horr, In.
MARSHALL KORSHAK, Di-
rector of Revenue of the De-
partment of Revenue of the
State of Illinois
/s/ Mus Korsnak
WILLIAM d. CLARK, Attor-
ney General of the State of
Illinois
57s, Wu G. CLanx
SHELL OIL COMPANY
Peterson, Lowry, Rall,
Barber & Ross
/3/ Owen Rati
+ e 8 *
Appendix 1 to Stipulation introduced in essentially iden-
tical form as United Exhibit 5, Reproduced at page 230,
8
500 13, 350 14,550 27,900 4,200
000 18,350 15,350 33,700 5,600
a
2,700 8,100
400
000 4,000 12,000 18,000 23,600 28,600 52,200 8,700
000 4,000 12,000 26,000
‘ | 25,400 34,100 59,500 8,400
000 4,000 12,000 26,000
y during the periods in which the information reflected
ilable for only west
„since eastbound
a -
er
as no southbound
signi
*
average shown in this column.
applicable to both ai
a
ya
ts would be
columns was collected. However, the same basic
igh
Midwa
operating conditions are
18 Precise burn-off
no
ts involve onl
oan for all fl
eparture routes from O’Hare or Midway.
fl
d
44
[Caption Omitted]
11461 ADDITIONAL STIPULATION ;
It is hereby stipulated and agreed between United Air
Lines, Inc., plaintiff, and Theodore A. Jones, Director of
Revenue of the Department. of Revenue of the State of
Illinois, William G. Clark, Attorney General of the State of
Illinois, and Shell Oil Company, defendants, that:
1. From August, 1955 when the Use Tax Act was en-
acted to June 3, 1963, the Department of Revenue uniformly
and consistently interpreted and applied the Illinois Use
Tax Act to fuel purchased outside Illinois by interstate air-
.. lines and railroads, brought into the State and stored here
by them prior to the use of such fuel by them in propelling
aircraft and trains in interstate commerce so that only that
portion of the fuel actually consumed (“burned off”) in or
over Illinois was subjected to the Illinois Use Tax.
2. In reliance. upon the facts stated in paragraph 1,
numerous railroads and airlines (that purchased fuel out-
side the State of Illinois, caused it to be brought into Illi-
nois and temporarily stored here before use in interstate
movements of aircraft and trains) computed and paid Illi-
nois Use Tax according to burn-off formulas.
3. Pursuant to this interpretation, United computed and
paid its Illinois Use Tax on fuel loaded at Midway and
~ O'Hare Airports in Chicago from August 1955 to June 1963
on a burn-off basis. Payments of Illinois Use Tax on air-
craft fuel on this burn-off basis for the period July 1, 1959
through December 31, 1962, were audited by the Depart-
ment of Revenue and approved by it subject to minor com-
> Whe facts herein stipulated are in addition to those set
C
e aes 1966.
4
It is further stipulated and agreed that all of the parties
_ hereto shall have the right to offer additional evidence on
any matter relevant to the subject matter of this litigation.
UNITED AIR LINES, INC.
By /s/ Marx H. Berens
THEODORE A. JONES, Di-
rector of Revenue of the De-
partment of Revenue of the
State of IIlinois
By /s/ T oDOnR A. Jonze
WILLIAM G. CLARK, Attor-
ney General of the State of
Illinois
By /s/ Wu G. CLanx
SHELL OIL COMPANY
By Peterson, Lowry, Rar,
Bana & Ross
By /s/ Owzw Ratt
5
11490) ‘ te the » [Caption Omitted]
Now comes SHELL OIL COMPANY, a Delaware Cor-
poration, one of the defendants herein, by Peterson, Lowry,
Rall, Barber & Ross, its attorneys, by leave of court first
had ‘and obtained, and for its Amended Answer to the
Amended Complaint: ee filed by United Air Lines,
18 atates as follows:
2, 8, 4, 4M, 14, 14A, 15, re and 23. Defendant admits
‘the matters and allegations contained in paragraphs
2, 3 4, 4A, 14, 14A, 15, 22 and 28.
Further answering, defendant states that as to the re-
maining allegations ons and matters contained in all other
paragraphs, it is without information or facts sufficient to
form an opinion or belief.
WHEREFORE, SHELL Ou. COMPANY, a corpora-
tion, one of the defendants herein, prays that the plaintiff’s
complaint. should. be, dismissed as against the defendant,
SHELL OIL COMPANY.
» \ PETERSON, LOWRY, RALL,
BARBER & ROSS
By Owzn Rati
Attorneys for Defendant
PETERSON, LOWRY, RALL, BARBER & ROSS
135 South LaSalle Street
Chicago, Illinois 60603
ANdover 3-7300,
Attorneys for SHELL OIL COMPANY, Defendant
47
ö 11511 Caption Omitted]
ORDER OF PERMANENT INJUNCTION
|» This cause coming on to be heard on the motion of United
| Air Lines, Ine, plaintiff, by its attorneys, the Court being
advised by the Attorney General as the attorney for the
defendant, Theodore A. Jones, Director of Revenue of the
epartment of Revenue of the State of Illinois, that all
Notices of Proposed Assessments, if any, relating to fuel
ed into plaintiff’s aircraft in Illinois during the period
ior to July 1, 1963, will be withdrawn and that the De-
partment of Revenue has abandoned its claim with respect
to stich fuel for said period, and the Court being r
dvised by the attorneys for plaintiff that plaintiff wi
_ withdraw its claim for credit (aggreg¢ting $49,020.15) for
Ix IS ORDERED that Theadore A. Jones, Director of
Revenue of the Department of Revenue of the State of
Illinois, his representatives and successors in office, be, and
_ they [152] and each of them are hereby permanently re-
strained from in any way, directly or indirectly, imposing,
" assessing or collecting or attempting to impose, assess or
collect a use tax upon any fuel loaded into plaintiff's air-
_ craft in Illinois during the period prior to July 1, 1963.
“DATED: February 14, 1968
‘ Thomas Donovan
Judge
\
*
48
11840 [Caption Omitted]
„b
Now ‘comes: Theodore A. Jones, Successor Director of
Revenne of the Department of Revenue of the State of
Illinois, and. WILLIAM d. CLARK, Attorney General of
the State of Illinois, by WILLIAM d. CLARK, Attorney
General of the State of Illinois, their attorney, and for
their supplemental joint answer to the ene eee
herein, they e den e.
om corey ara og lm
144: ‘Admit that part of the allegations contained
.
‘was the seller of the fuel during the period
involved. Defendants deny the ee
as conclusions of Plaintiff. :
WILLIAM d. CLARK, Attorney
General of the State of Illinois
Attorney for the Defendants.
[Jurat Omitted in Printing!
= MR. BERENS: —to refresh e memory of the
49
REPORT OF PROCEEDINGS
_ [2] MR. BERENS: We are ready for trial today, Your
Honor, but before that, we’ve got a couple of preliminary
matters. Here is an agreed order for permanent injunction
on the so-called past period that is running from January
I, 1960, through June 30, 1963.
For your recollection, that is not in protest fund.
= ~ THE COURT: I understand.
MR. BERENS: The temporary injunction was against
any assessment—
‘THE COURT: Pending the outcome of this litigation,
there will be a fund available.
MR. BERENS: Yes, for the so-called current period,
- which is all that remains in the case after you have
5 13) signed that order and which is in the protest fund.
MR. CAMPBELL: I would like to explain to the Court
te basis for this order. The taxpayer raised in Paragraph
_ 6 of their complaint, as amended, the question of the retro-
active application of the bulletin, which was issued by the
Director of Revenue on June 3, 1963. And in order to
avoid that problem and because of the Pressed Steel Car
ease, the Department has decided not to assert the tax
elaim for the period prior to the date mentioned in the
order and that is the reason for the order.
So we have no objection to the entry of the order.
THE COURT: All right.
_ [5] MR. BERENS: As I stated a moment ago, Your
Honor, United Air Lines is ready for trial. And if it please
dme Court, I would like to make a brief opening statement
THE COURT: Please do.
MR. BERENS: eee eee
iod out of the case. So the issue and the lia-
bility, if any, for use tax in this matter starts July 1, 1963,
and continues up to the present.
We have before the Court as part of the relief requested
a motion for permanent injunction against assessment for
the present period and there is a protest fund injunction
that has been issued by the Court. And the amount in con-
troversy up to the eurrent date is in the protest fund with
the State Treasurer.
_ THE.COURT: Is this prior to July 1, 681
MR. BERENS: No, that commences as of July 1, 63,
Your Honor. re —
9 * *
[20] MR. HOFF: Exhibit No. 3 is the bulletin that has
caused all the troubles here. June 3, 1963, bulletin signed
by. Theodore J. Isaacs, Director of Revenne.
1 bed
12272 "WILLIAM LOUIS MOORE, JB.
was called as a witness herein, having been first duly sworn,
was examined and testified as follows:
4 DIRECT EXAMINATION
BY MR. HOFF:
Q. Would you state your name, please?
A. William Louis Moore, Jr.
THE COURT: M-o-o-r-e?
THE WITNESS: M.-o-o-r-e, yes, sir.
MR. HOFF: d. Where do you live, Mr. Moore!
A. I ive at 350 Forest Road, Hinsdale, IIlinois.
Q. And by whom are you en
A. By United Air Lines.
0. Very briefly, Mr. Moore, would you outline the his-
tory of your employment with United?
ae}
7
51
A. I was employed in January, 1940. I worked for two
years on the West Coast in the Reservations Department.
I went into military service, January, 42; returned to
United Air Lines in March of 46.
Since that time, I have been in the Schedule Planning
Department, and I am now Director [23] of Schedule
Planning for United.
Q. What are the responsibilities of the Schedule Plan-
ning Department of United, Mr. Moore?
A. To plan and coordinate them internally, all of United
- schedules, systems schedules for passengers and cargo:
Q. Does the responsibility of that department include
arranging for technical facilities and aircraft? ‘
A. Not for technical facilities in aircraft.
. I meant to say and aircraft.
A. Indirectly, yes, we—
Q. In what way, please?
A. We are involved almost continually in the planning
kor the numbers and types of equipment that United will
order, the facilities that we will build at various airports.
. All right. :
MR. CAMPBELL: Your Honor, if I may just make a
_ statement here, I don’t know what the witness intends to
testify to, but certainly we stipulate that United Air Lines
is an airline, and, of course, they have scheduled flights.
124] I don’t know if we can shorten the hearing in so far
as the technical aspects or the operational aspects, but we
are willihg to agree, of course, that they are an airline and
that they do maintain schedules as well as, I suppose, un-
scheduled flights. If this will facilitate the
MR. HOFF: I think this witness is going to speak for
much more than merely the fact that United is an airline
and runs a schedule.
I I was just giving his background quite briefly.
_ THE COURT: Yes, background qualifying him for sub-
sequent testimony.
ny Rha 84 i 7 een
I think the Court ‘could: even take judicial knowledge of
the fact that United Air Linss is an airline. e
IR HOFF: . Mr. Moore, I show you United Group
Exhibit 4 for identifoation and ask you to ut what tha
exhibit is. 61
A., Ahe is the Federal anthority issued by the. Civil
Aes ee ee e bee eee ee ee ee
convenience and necessity. It outlines the cities and the
routes over which 125] United is permitted and required
e ee ee ua. f
e ee ee e ee eee eee eee
TPhaintitfe Group Exhibit 4 for identification. )
“MR. HOFF: 2. Has United held these certificates au-
thorizing it to fly essentially the same routes from 1963 on!
A. Yes, it has. There are minor revisions as time goes
on, but these are essentially the same. |
Q. Does United provide any intrastate service in IIli-
Pe . eee Dbicego and Moline. )
Tun COURT: That was in your certificate, wasn't it!
MR. HOFF: ee eee aa
MR. HOFF: tien be .
sand. I would like to make the comment to the Court at this
DRE eee Agee We: phy. the taxon the Chicago to
Moline traffic,
IHE COURT: I understand that’s in your original
[26} stipulation, |
MR. HOFF: And in the Aalen and btbor informa-
tion that is to be presented here, all figures’ relating to
Chieago-Moline have been broken out or are otherwise ex-
plained in the exhibits themselves. 155255
I just wanted 8 make that — for the Court’s
benefit.
| THE COURT: ‘Very wel, Tartana
7
7
MR. HOFF: Q. Mr. Moore, I now show you United’s
_ ‘Exhibit 5 for identification, and ask you what that docu-
ment is.
A. This is a geographic portrayal of the cities and
2 routes that United Air Lines is authorized to serve under
8 (The document above referred to was marked
Mes Plaintiff’s Exhibit 5 for identification.)
MR. HOFF: Q. How many cities does United cur-
- rently serve, Mr. Moore?
A. There are 105.
2. In serving the route system portrayed on that ex-
hibit, how many takeoffs and landings does [27] United
make per day?
A. In December, we averaged 1,769 takeoffs and the
~ game number of landings each day.
Q. Does that include any all-revenue producing flights?
4. That is only the revenue producing flights, the sched-
led, the charter and extra section flights.
2. Mr. Moore, I now show you a document marked
_ “United Exhibit 6 for identification,” and I ask you what
that document is.
A. This is our system timetable effective January 15,
Which lists all the flights that we operate in the period
-- shown here effective January 15, 1968.
THE COURT: 681
IH WITNESS: Yes, sir.
(The document above referred to was marked
Plaintiff’s Exhibit 6 for identification.)
# MR. HOFF: C. How long in the normal course will
_ that schedule remain in effect, Mr. Moore!
A. In the normal course, it would remain in [28] effect
dome four to eight weeks. This happens to be effective for
CAMPBELL: Vour Honor, we don’t intend to be
Ba
technical; but we would like to object to this line of ques-
Homing as not having n bearing on the issues raised in the
comiplatiit:
» THE COURT: I don’t know that it has or not at this
point, Mr. Campbell.
Een n tins. If it has no
bearing, you may renew it later.
MR. HOFF: All right, I would like to offer these three
—well, no. ee en ee Court
please.
Q. I now show you United Exhibit 7 for identification
and ask you what—will you tell us what that document is?
A. This'is a list of United airplanes.
(The document above referred to was marked
112 Plaintiff's Exhibit 7 for identification.)
MR. CAMPBELL: We would renew the same objection
to this document, Your Honor.
{29] THE COURT: The ruling will be the same.
THE WITNESS: This is a list of our airplanes that we
own and operated as of the Zist of December, 1967.
It is broken down hereby jet, jet-prop, and piston; and
it also shows the number in scheduled service, the support
aircraft, and those which are grounded and waiting dis-
MR. HOFF: Q. In other words, 295 aircraft during
this period were actually—
MR. CAMPBELL: We object to counsel commenting on
the exhibit, Your Honor.
. THE COURT: Objection will be sustained.
‘THE WITNESS: It shows 295 in scheduled service.
MR. CAMPBELL: We object to the witness reading
from it.
_ THE COURT: Les, it speaks for iteclf.
PP
It may need some explanation. —
MR. HOFF: Q. By “scheduled service,“ what is re-
- ferred to?
THE COURT: I don’t know what “aircraft” means
130] by United. I think I would like some enlightenment
on it.
Odjection will be overruled.
MR. HOFF: Q. By “aircraft in scheduled service,“
Mr. Mere, what is intended by this heading on this
exhibit?
A. These are the airplanes actively used or assigned to
scheduled operations as of that date.
Q. And by “scheduled aircraft”—
A. As opposed to support aircraft, which are those that
are in training, in project work, in maintenance, assign-
ment in overhaul, and the grounded aircraft are eleven
Viscounts which had been withdrawn from service. They
. are on the ground awaiting disposal.
Qi. All right, Mr. Moore, in order to make the average
of 1,769 takeoffs per day which you have just referred to,
how many takeoffs per day must these 295 aircraft as-
signed to scheduled service make?
MR. CAMPBELL: Objection, Your Honor. Calls for a
conclusion of the witness.
131] THE COURT: It is a mathematical process, I sup-
pose, unless some make more than others. I don’t know.
, Objection is overruled. May answer.
THE WITNESS: Your Honor, you are right; some do
make more than others. Some aircraft will make only one
departure a day. We get as high on some airplanes as
~ fifteen. The average comes out to six, and, as a general
rule, the most frequent number would be in the neighbor-
hood of five to six to seven per day per aircraft.
THE COURT: That is takeoffs and landings?
. THE WITNESS: Takeoffs and landings, of course,
would be the same number.
Se ae
SET ae a eee
pects
8 RI
* ag 4 5
“THE COURT: It happens to be the same. It just can’t
stay up there.
THE WITNESS: That's richt. f f
R. HOFF: eee
offer into evidence United’s Exhibits 4, 5, 6, and 7, which
are the route certificates, the route map, the. United sched-
tle, and Table No. 7, which lists the aircraft, and by way
of explanation, I would like to state to the Court that these
[32] exhibits constitute the basis upon which later evidence
will he predicated, summaries. of statistical nature. |
MR. CAMPBELL: Pam sane d e ex-
hibits, Your Honor.
IHE 7. Do you wish to have me withhold raling
until you crose.examine on these!
MR. CAMPBELL: Beg pardon?
- THE COURT: You do wish to have the Court withhold
its ruling until you have had a chance to cross examine on
these?
‘MR. CAMPBELL: No, Mids Manin, we dd-nck? with.
THE COUBT: They will be admitted.
(Said documents, heretofore marked Plaintiff's
Exhibits 4, 5, 6, and 7 for identification, were ad-
«» Mitted in evidence.) 8
[33] MR. HOFF: . Moving now, if we may, Mr.
Moore, from the general to the specific, and confining our-
selves for the moment only to the operations of United Air
Lines, could you tell us in a very general way how Chicago
ſits into these operations out of O Hare, how Chicago fits
into this general nation-wide pattern of operations that
we have been discussing?
Our operation at O Hare is the largest that we have
in the system. We.enplane more passengers, we have
more flights than anyplace else. It is the hub of our opera-
tion, the focal point, as far as our connecting services, both
on line and off line to—that is, connections from United to
4
57
Vnited, or connections’ between United and other carriers
. What fact is responsible for this situation, Mr.
Moore, fact or facts, if any?
A. Well, first, Chicago is the center of a large metro-
politan complex and there is a great amount of traffic
destined to or enplaning in Chicago.
[84] MR. CAMPBELL: We would object to the question,
Your Honor. The witness was called upon te state a con-
en an ta why Chicago happens to be the largest opera-
tional center.
WMWe think that this 1 0 for a conclusion. He is called
‘upon to interpret facts.
THE COURT: Well, no. I think this witness is fairly
qualified to answer the question.
+ Objection will be overruled.
MR. HOFF: Q. Go ahead, Mr. Moore.
A. In addition to ite—to the needs of Chicago, it is a
- metropolitan complex by, you could call it, geographic cir-
oeumstances. It represents a connegting point here in Chi-
cago for that traffic which flows from one part of the
zs 1
In Chicago, Unieed, in Partiel, has a large number
. oath. de, coming Hho Chicago,
let us say, from the East and connecting at Chicago to go
to the West Coast, or vice versa, or to off-line points to
the South. As a matter of fact, the connections at Chicago
are so great that they really help support the over-all opera-
tion of Chicago or to carry that one step [35] further, if
_. the traffic at O’Hare was all and only that destined to and
- from Chicago, we would have far fewer departures and
_ arrivals at O Hare. The connecting traffic adds to the com-
2 So far, you have been talking about United, I take it?
A. Yes, sir.
Q. To what extent is the same thing true of other air-
lines? If we might, if you would, please, let us talk about
other trunk carriers like United, as opposed to local service
carriers.
MR CAMPBELL: Ahe knows: :
MR. HOFF: If be knows, oh, yes. a
why .
THE WITNESS: United is the largest of the trunk car-
riers, but the other trunks have similar situations as United
bas. Some more with the off line, the terminal carriers,
such as Braniff and Continental who terminate here, would
have connecting complexes and connection passengers off
line—
. THE COURT: Excuse me.
(Short interruption.)
MR. HOFF: Q. The last question, I believe, [36] related
to the extent to which the circumstances which we have been
talking about affected the other trunk carriers. Had you
completed your answer, Mr. Moore? I personally don’t
A. I think so. -
THE COURT: 1 hope e0:oni she record:
MR. HOFF: Q. Well, now, how about the local service
carriers? To what extent, if at all, are they in the same
situation? :
A. hey. are in much the same situation as the trunks,
except that most of the local service operation terminates
and originates in Chicago. And to that extent, they rely
even more upon the connecting business at Chicago.
Q. All right, Mr. Moore, I show you a document marked
United Exhibit 8 for identification, and I will ask you to
A. What we have here is the projection for the third
quarter, 1967, of the category of passengers handled by
United Air Lines at O’Hare on an average day.
Q. Only one day, is that correct?
A. This is an average per day, yes.
[87] (The document above referred to was marked
Plaintiff's Exhibit 8 for identification.)
MR. HOFF: Q. Why has the third quarter of 1967
| been used, Mr. Moore?
| A. This is the last quarter for which complete records
are available.
. Referring to part A of this exhibit, on what are the
figures given in.that part of the exhibit based?. >
A. The through-line passengers carried through Chi-
eago are an actual count based on company records. The
~ sixth line, which are the total daily passenger volume in
Chicago, is likewise based upon actual records.
The breakdown of the originating passengers enplaned
and the destination passengers deplaned is based upon a
study completed about five years ago, and it incorporates
the ratios which were derived at that time between origi-
“nating passengers enplaned, passengers carried through,
and passengers connecting between United flights, and pas-
_ Bengers connecting between United and other [38] carriers.
. And with respect to Part B of this exhibit, on what
are those—upon what is that figure based?
“iy © That is based upon an actual first quarter 67 record
of the local Chicago-Moline passengers in intrastate serv-
doe expanded by fifteen per cent, which is the normal ex-
pansion we had systemwide between the first and third
quarter of 67.
= Q. Are the records to which you have just referred
present in the courtroom!
A. I have the basic records in my briefcase. I failed
to bring them up with me.
L. That's all right.
A. They are part of the United station summary sta-
MR. HOFF: Your e 1 will offer United Exhibit 8
for identification. ye
- THE COURT: Have you seen itt
MR. CAMPBELL: Same objection, Your Honor.
IHE COURT: It will be admitted. ;
[39] (Said document, heretofore marked Plaintiff's
Exhibit 8 for-identification, was admitted in evi-
dence.)
{[40) MR. HOFF: Q. Excluding passenger growth to
the extent that it has or might in the future exist, has the
relationship between interstate and intrastate passengers
handled by United been substantially the same from 1963 to
date?
A. Yes, sir.
. . that rela-
tionship would change in the future?
MR. CAMPBELL: Object, Your Honor.
THE COURT: Objection will be sustained.
MR. HOFF: Well, it is not that important a point, Your
Honor. But the man—well, let me put it this way:
Q. Based on your experience in this business, Mr.
Moore, do you have an opinion as to whether this relation-
ship is likely to change in the future?
MR. CAMPBELL: Same objection, Your Honor. We
feel that the answer to this question is not relevant to the
- THE. COURT: Well, I am wondering about that.
MR. CAMPBELL: It relates to a future matter.
THE COURT: It relates to intrastate.
MR. HOFF: Of course, we want to show the heavy
{41] interstate balance, the flow of traffic, and we think it
is relevant.
The State’s bulletin theoretically runs on and on into the
future. Certainly this expert’s and I think he is an expert,
61
opinion as to what is likely to be the situation in the future
is relevant, is admissible on that point.
THE COURT: There is something in your stipulation
about that. Well, I will let him answer the question. I will
allow him to answer the question.
I am being a little more liberal that way. You may an-
swer the question.
THE WITNESS: Third quarter ratio is about three-
quarters of one per cent of the total United traffic United
handles intrastate. I would expect that that ratio would
stay essentially the same in the future. :
MR. HOFF: Q. All right, on a nation-wide basis, Mr.
3 Moore, how many passengers did United handle on an
average day during the third quarter of 1967?
A. In the third quarter of 67, we enplaned an average
of 72,000 passengers per day.
142] Q. Mr. Moore, how many takeoffs per day —oh, ex-
cuse me.
The average of 1, 769 takeoffs per day which United
makes throughout the country, how many are made from
Chicago?
A. The present count is 244.
Q. Is that more than in any other city in the country?
A. It is more than any other city. It is about twice the
number that we have at New York, twice the number at
San Francisco, and twice the number at Los Angeles.
Q. The figure you gave was 244.
A. 234. I beg your pardon. J think that was right.
iQ, Excuse me. 234.
A. 234.
Q. 234; of those 234 takeoffs per day from Chicago, how
‘many are on through flights, Mr. Moore?
A. 171.
Q. And of the remainder, how many are on short turn-
arounds 7
A. I believe that number is 21.
[43] Q. Will you tell us what I meant or what we mean by
“short turn-around” ?
A. A short turn-around is one in which the airplane
arrives and in a relatively short period of time, generally
in the one to two—up to three hours, and in certain excep-
tional cases, up to about four hours, would turn around and
proceed to another destination with a different flight
number. 3
It is not designed to carry through traffic. It is designed
to come in, unload the passengers, and go out relatively
soon.
Q. As opposed to a through flight which would have the
same flight number, is that correct?
A. Yes.
Q. Mr. Moore, does United maintain records showing
the average amount of time which its ai spend on the
ground in Chicago between different leg of its through
flights?
A. We have records like that; yes, sir.
Q. On the number of short turn-arounds, Mr. Moore,
would you—you told us 21. Are you sure that is correct?
[44] A. No, as a matter of fact, I think
MR. CAMPBELL: Objection, Your Honor. This is an
attempt here by the attorney to suggest answers to the
witness.
THE COURT: Read the question, please?
(Question read.)
MR. HOFF: He would like to correct that answer,
—maybe I should say.
THE WITNESS: The number is in the forties—
THE COURT: Wait a minute. Well, go ahead, answer
the question.
THE WITNESS: I believe the number is 42.
MR. HOFF: Q. Now, we were talking about an aver-
age amount of time spent on the ground by through flights.
I show you United Exhibit 9 for identification and ask you
to tell us what exhibit shows.
A. By aircraft type, this shows the number of through
flights and the average time by each type, and the number
of short turn-around flights, and the average time on the
ground on short turn-arounds.
Q. The average for through flights is what?
[45] A. In passenger, it is 45.1 minutes; in cargo, it is
one hour, forty-three, and over-all, 47.
On the through flights and on the short turn-arounds,
the average is just under two hours.
(The document above referred to was marked
Plaintiff’s Exhibit 9 for identification.)
MR. CAMPBELL: Your Honor, we would object to the
questions asked of the witness on Exhibit No. 9. We don’t
feel that this has any bearing on the issues raised in the
complaint whatsoever, about the amount of time spent on
the ground of the planes. .
THE COURT: Well, it may not.- I think the objection is
very well taken on the ground that the exhibit speaks for
itself.
The objection will be sustained.
MR. HOFF: Very well.
Q. Mr. Moore, what is done to an aircraft when it is on
the ground? Let us talk first about through flights.
A. Ona through flight, the five major areas [46] of work
would be, first, to dock the airplane; that is, to put it in
the position at the gate to extend the jet-way out; off-load
the passengers and cargo; service the airplane.
That would include mechanical service as necessary, a
review of the outside of the airplane, a check of the logbook
: 5 in the cabin, a check of the oxygen supply, a quick run-
through of the cabin—picking up any newspapers or maga-
) 5 zines that — have accumulated—straightening up of
O4
the cabin and then the boarding of the fuel and the food,
the passengers, cargo, and departure.
Q. On a short turn-around, what, if anything, in addi-
tion to the things you have just talked about is done?
A. Primarily, on a short turn-around, the added work-
load would involve the change ‘of ‘the lavoratory service,
or an emptying of the tank; and on a more complete cleanup
of the cabin area, and it can involve some minor mechanical
work at the same time.
Q. Mr. er bo hep this
ground time on both through flight and [47] short turn-
around flights as shown as possible?
A. We do, particularly at O’Hare.
Q. Why is it as long as it is, Mr. Moore?
A. It is primarily to allow for the work involved that
I just mentioned, plus the connecting times which are neces-
sary to connect passengers and baggage in the connection
. banks that we operate.
MR. HOFF: Your Honor, I would like to offer United
Exhibit No. 9; which shows these various ground times.
MR. CAMPBELL: Same objection.
THE COURT: Same objection, same ruling. Admitted.
(Said document, heretofore marked Plaintiff’s
Exhibit 9 for identification, was admitted in evi-
dence.) f
[48] MR. HOFF: Q. As a part of your duties in pre-
paring United schedules, Mr. Moore, are you also con-
cerned with the problem of the availability of aircraft at
particular airports at e times?
A. Yes, sir, we are.
; Q&- Tn gimeral, what fadtors do you ee eee
ment of a particular aircraft to particular flights?
A ‘The principal factors would be the range capability
of the aircraft and the size of the market and the limita-
tions on facilities that we might have in an airport, and
the timing of connections, both on line and off line to facili-
tate the—to expedite the flow of traffic through the O'Hare
facility or any other terminal facility.
Q. What is a routing chart, Mr. Moore?
A. A routing chart is a listing in one form or another
showing for each day for each fleet the turn-around and the
routing of the entire fleet assigned to schedule.
. Mr. Moore, I show you United Exhibit 10 for identi-
fication and ask you to tell us what [49] that document is.
A. This is an aircraft routing chart for our 28 727 QC
aircraft as of the October 29, 1967, schedules.
On the left, we show the cities generally geographically
spaced and across the time increments from midnight over
to midnight the following day.
Each horizontal line on here, above which a number
appears, shows the flight number of an airplane which has
just arrived or is about ready to take off at the city in-
volved, and it is drawn so as to depict the time of arrival
or departure.
The diagonal line connects the two cities together between
which the flight operates. As an example, in the upper left-
hand corner, there is a Flight 989, which shows leaving
Seattle at approximately 0155 in the morning. It flies to
San Francisco. That's SFO. Seattle is SEA. It arrives at
San Francisco approximately 3:20 and is on the ground at
San Francisco until 4:15, and then proceeds on down to
Los Angeles, LAX, and so forth.
. Yes. This is 28 planes for one day, is [50] that cor-
rect?
A. This is 28 airplanes for one day or in effect what one
airplane does because we try to route them through the
entire operation. What one airplane will do in a series of
—series of 28 consecutive days.
Q. Similar charts exist or are made up for all of the
aircraft operated by United on a given day, is that correct?
A. Yes, sir; yes, sir.
(The document above referred to was marked
Plaintiff’s Exhibit 10 for identification.)
MR. HOFF: . What symbol stands for O’Hare on
st) . ;
A. O. are appears in about the center. It is “ORD.”
It is outlined above and below with a red line.
Q. Mr. Moore, I have studied this before I came here.
I don’t attempt to have done this on the spot. But I notice
that almost every one of these flights, if not every one, has
been in or out of Chicago at least once on this. particular
day—=([51] each one of these planes, I should say. And that
some of them have been in and out of Chicago several times.
In that respect, is this particular routing chart typical of
United’s—the operation of other types of aircraft by
United?
A. Tes, this is generally typical and a little easier read
THE COURT: This is easier to read?
THE WITNESS: Than some. -
(Laughter)
THE COURT: I will wait until I see the others.
. THE WITNESS: All the fleets that we operate touch
Chicago, except for the Convair fleet, which is confined
entirely to the West Coast and currently to the DC-861
fleet, which is quite small and confined to Honolulu-Cali-
fornia operations. All the rest do operate through Chicago.
MR. HOFF: Your Honor, I would like to offer United
Exhibit 10 for identification in evidence.
MR. CAMPBELL: Same objection, Your Honor.
THE COURT: It will be admitted.
152 (Said document, heretofore marked Plaintiff's
Exhibit 10 for identification, was admitted in evi-
dence. ).
67
[56] Q. First of all, Mr. Moore—let’s have the first slide.
I think we have covered this question. J
. Mr. Moore, will you tell us what—this is United Exhibit
11 for identification, by the way. [57] Will you tell us what
that exhibit shows?
A. This is a geographic portrayal of all the cities that
United Air Lines is certificated to serve.
(The document above referred to was marked
Plaintiff’s Exhibit 11 for identification.)
MR. HOFF: Q. And the next one, please? This is
United Exhibit 12 for identification. Will you tell us what
that shows, Mr. Moore?
A. This is the same basic format of the cities which have
red circles around the dots and are those to which—to which
through service is offered between Chicago and each of
those cities.
(The document above referred to was marked
Plaintiff’s Exhibit 12 for identification.)
MR HOFF: Q. And the next one. This is United Ex-
hibit No. 13 for identification. What does this map show?
A. This shows the lines—shows the segments and they
connect the points between Chicago and the other cities here
to which nonstop service is [58] provided.
5 (The document above referred to was marked
Plaintiff’s Exhibit 13 for identification.)
MR. HOFF: Q. Mr. Moore, in what way, if at all, does
United arrange its service to handle the volume of connect-
ing traffic through Chicago which you described earlier?
A. We intentionally time our flights to provide what we
term a connection bank. Several times during the day, we
bring a large number of airplanes in, let us say, from the
East and connecting at Chicago to go west.
Our routes are predominantly east-west of Chicago. We
also connect off line to and from the trunk earriers and the
local service carriers.
68
All right, now can we have the next one? This is
United Exhibit 14 for identification. Mr. Moore, would you
tell us what this exhibit shows? 55
A. The block in the middle marked O' Hare“ separates
the destinations—let’s say the cities east of Chicago and
those west on United’s route. [59] This is what we call our
1300, or 1:00 bank of flights. ‘Those flights shown on the
right, the blue lines here, represent the number of flights
and where they come from. It is a litle difficult to read, but
that, I believe, is South Bend (indicating), this is Fort
Wayne (indicating), that’s Cleveland, and so forth.
These flights come into Chicago. Some will go through.
All will connect to the outbound flights going to the West to
Minneapolis, St. Paul; I believe that’s Milwaukee (indicat-
ing), Seattle, Portland (indicating), and so forth. Each
line represents one flight. -
Q. The connections are possible from every incoming
flight to every outgoing flight in this particular bank?
A. Yes, that’s right.
iss (The document: above referred to was marked
: Plaintiff’s Exhibit 14 for identification.)
THE COURT : What is the 5 e of the double line
to Los Angeles? |
THE WITNESS: We 3 to have, Your Honor,
{60] so much traffic that one airplane will not carry it; so
in that bank, we have two flights.
THE COURT: Like the old “Twentieth Century” ee to
carry two trains -
b e tar ianaae Yes. Some day, we hope to get a larger
MR. HOFF: Qs This is what you call you 1300 bank?
A. Yes.
Q. There are seis aie eatin the day?
A. Yes, there are several other W during the ony
both eastbound and westbound.
69
. All right, can we see the next one, which is United
Exhibit 15 for identification? Does this relate to the same
connecting bank, Mr. Moore?
A. It does. It is the same bank; in blue again are the
United flights in and out, and in the darker color are the
other trunk flights outbound from Chicago. 1
For example, there is a flicht to Great Falls and Billings,
there is another flight to Minneapolis-St. Paul, there are
two other flights to Los Angeles, there are two flights to
161] San Frantisco, and so forth.
2. Again, are connections possible from all of the incom-
ing flights shown on that map to all of the outgoing flights?
A. Yes, these are only those to which connections are
made within one hour time. *
J. One of your westbound flights seems to swing back
south and east, Mr. Moore.
A. Well—
Q. What is the explanation for that?
A. That is shown—that is down to Atlanta and into the
Florida area, and that is shown because there is some traffic
that backhauls, or, let us say, goes slightly west first in order
to go south. For example, from Flint and Saginaw up in
Michigan, from Lansing to Muskegon, from South Bend to
Fort Wayne, there is traffic that flows into Chicago-O’Hare
and then connects to Atlanta, Jacksonville, and Miami.
. For that traffic, Chicago happens to be the most con-
venient connecting point, is that correct?
A. That's right, that’s right.
[62] (The document above referred to was marked
Plaintiff’s Exhibit 15 for identification.)
MR. HOFF: O. Now, can we see the next one? Now,
Q. Tell us what this one shows.
70
A. It is the 1:00 p.m. bank and here again we have shown
only United flights coming in, going out. We show here, in
addition to United in blue and the trunk carriers in the
darker color, we depict here in red connections to the local
service carriers at O’Hare. Again, all the flights coming in
will connect to all these going out.
(The document above referred to was marked
Plaintiff’s Exhibit 16 for identification.)
MR. HOFF: Q. Next one, and this one is?
A. This is somewhat the reverse of the second one of
this type (indicating). This shows only United outgoing,
but it shows the blue lines of United incoming to Chitage
and in the darker lines, [63] the trunk carriers in addition
to United between passengers in and cargo in for connection.
Here again, all the inbound flights connect all outbound
flights.
(The document above referred to was marked
Plaintiff’s Exhibit 17 for identification.)
MR. HOFF: Q. All right.
A. This one tends to include the local service carriers
coming into the O’Hare 1:00 p.m. westbound bank showing
United in blue, other trunks dark, local service in the red
color connecting only to the United flights west.
(The document above referred to was marked
Plaintiff’s Exhibit 18 for identification.)
MR. HOFF: Q. Now, this series of five exhibits, or five
slides, if I understand it correctly, shows only connections
which are possibly either from or to United in this. partic-
ular connecting ‘bank, is that correct?
A. That’s correct.
Q. Or other combinations of connections [64] possible!
A. Oh, yes. The carrier—or a passenger could come in
on another trunk carrier to O’Hare at essentially the same
time of day and connect with one of the local service car-
riers on another trunk.
71
MR. HOFF: All right, Your Honor
Q. Well, one more thing, Mr. Moore. I now show you
United Exhibit No. 19 for identification and I ask you if
you would please state—
MR. CAMPBELL: Your Honor, pardon me. I don't
know whether you have ruled. I object to this.
MR. HOFF: I am going to offer copies of all these ex-
hibits, including the one that I am now ‘showing him.
(The document above referred to was marked
Plaintiff's Exhibit 19 for identification.)
* * „
[66] Q. Mr. Moore, you have before you now United
Exhibit 19 for identification; would you tell us what that
is?
A. We had talked about connecting banks. What this
does is list the five major eastbound banks and five major
westbound banks.
(The document above referred to was marked
Plaintiff's Exhibit 19 for identification.)
MR. HOFF: I didn’t give you one of these. I’m sorry.
(Addressing Mr. Campbell.) f
THE WITNESS: In the right-hand column is a calcula-
tion of the number of cross connection possibilities. These
are from one flight to another flight, the number of con-
necting possibilities available to the traveling public in
each of these ten different banks.
MR. HOFF: Well, if the Court please, I would [67] like
_ to offer at this time, and I understand that you are reserv-
ing ruling on the photographs which correspond to the
_ tlides, I would like at this time to offer United Exhibit—
formally offer United Exhibits 11 through 19 for identifica-
tion. They are all connected to this connecting bank.
MR. CAMPBELL: We renew the objection as just
stated.
72
THE COURT: For whatever bearing it may have on
the third point. this is a violation of the Federal Con-
stitution of the Commerce Clause . . it may have some
bearing on it. I don’t know.
But again perhaps for whatever bearing it may have, I
am going#to admit them in evidence.
(Said documents, heretofore marked Plaintiff’s
Exhibit 11 through 19 for identification, were ad-
. mitted in evidence.)
[68] MR. HOFF: We will sort these out, Your Honor,
and distribute copies of them.
THE COURT: All right.
MR. HOFF: Q. Mr. Moore, in setting up these con-
necting banks, does United cooperate with other airlines?
A. We cooperate very closely in setting up of the banks
and in setting down the connections themselves. The whole
industry has to maintain a very interdependent attitude
here. '
Q. In that respect, are the schedules of other airlines
and in particular of the local service airlines dependent on
United’s schedules?
A. Yes, sir.
. And quite apart from the convenience of the con-
necting—these connecting banks and making connections,
to what extent are other airlines, whether trunk or local
service, dependent on United?
A. I think we are all interdependent upon each other
whether we have connection banks or individual flights
which connect. _
In order to expedite the flow of traffic through O Hare
Airport and to utilize the facility [69] as efficiently as
possible, it is incumbent upon the entire industry—United
and all the other carriers—to work together, and we depend
upon, to a certain extent, upon their timing, and they depend
to an even greater extent upon our timing.
73
Q. Are United’s own operations in other parts of the
country dependent on or controlled by its operations in
Chicago?
A. They are. Chicago is the keystone in the—in our
arch of planning.
Q. Could you give us a few examples of what you mean?
A. The timing is one example, the timing across the
Los Angeles-San Diego segment to the extent that it relies
or is part of a Chicago-Los Angeles-San Diego through
service would be dependent upon the time of the connection
back at Chicago.
Another example is the specific example, we have a
flight at 5:00 p.m. out of Chicago to Denver—
MR. CAMPBELL: Your Honor, we will stipulate that
other airlines are dependent upon United Air [70] Lines.
MR. HOFF: I think he is almost through with his
answer. Maybe he was—
THE COURT: Naturally, I would like to hear about
this one about Denver.
THE WITNESS: We have a flight at 5:00 p.m. from
Chicago to Denver, which proceeds on through to Reno and
Sacramento, and provides through service to those points,
and it provides Chicago-Denver service at 5:00 p.m.
THE COURT: Off the record.
(Discussion had off record.)
THE COURT: We will take a short recess.
(Short recess.)
THE COURT: You may proceed.
MR. HOFF: Q. Mr. Moore, are all of United’s flights
which pass through Chicago fueled while they are in Chi-
oago «
A. Practically all would be fueled here.
2. When does fuel—in the case of through flights—when
does fueling take place?
A. Well, there is very little time for slack on either side.
og Fueling takes place shortly after [71] arrival and shortly
74
before departure. As a rule, it depends upon when the
fuelers and the equipment is available, but usually it is.
just shortly before takeoff.
. And on short turn-arounds, when is the oe per-
mitted?
A. Essentially the same.
Q. Mr. Moore, as far as the basic operational facts to
which you have testified are concerned, do you foresee any
change in the pattern and volume of United’s operations in
the future?
A. Only growth.
MR. HOFF: That is all for this witness, Your Honor.
THE COURT: Cross examination?
1751 JOHN G. AR TUS
was called as a witness herein, having been first duly sworn,
was examined and testified as follows:
DIRECT EXAMINATION
BY MR. HOFF:
Q. Will you state your name, please?
A. My name is John G. Artus.
THE COURT: Spell your last name.
THE WITNESS: A-r-t-u-s.
MR. HOFF: Q. And your business, Mr. Artus? Do
you have a title?
A. I am a flight manager and check pilot for United
Air Lines.
Tou are referred to as “Captain,” I think.
Tes.
Where do you live, Captain Artus!
I live at 820 Country Drive, Barrington.
By whom are you employed?
Q. And your present title again!
A. Flight manager.
Q. As flight manager, Captain Artus, what are your
responsibilities ?
[76] A. Well, I have sixty some Pilots assigned to me,
and I have direct supervision over them to check them
periodically as to their proficiency and see to their route
qualifications and generally supervise their entire activity.
Do you fly?
A. Les.
Q. As flight manager, do you ff!
A. Tes, I do.
Q. To what extent?
A. Well, I am at the controls myself approximately 25
“hours a month and fty to sixty hours a month, I am in
“the cockpit as check pilot.
. How long have you been a fligit manager for United?
A. About a year and a half.
Prior to that, how long had yu been a pilot?
A. Well, I started flying in 1939,
. Will you briefly tell us the history of your career as
à pilot?
A Ves. I started flying in 1939 and when my experi-
ene level was at the point that I eculd [77] apply with an
airline, I applied for a job as first ofioer, or a co-pilot, with
5 Pennsylvania Central Airlines, which later became known
as Capitol Airlines and subsequent y Merged with United
2 Air Lines in 1961.
Tour present fiying is out of td back into O Hare, is
correct? :
4. That's correct.
= 0 Prior to that, have you als? flown in and out of
8 O Hare!
. Yes, Ihave flown in nd out € O'Hare as long asi
been in existenee.
76
Q. Were you 8 have been stationed at Chi.
cago, so to speak, for how long?
A. Four and a half years.
Q. Captain Artus, are you familiar with the air traffic
control function of the Federal Aviation Agency?
A Yes, I am,
Q. Would you describe that function, please?
A. Well, the air traffic control system
MR. CAMPBELL: We object, Your Honor, to this line
of conversation as to thet s assume that the 1781 F. AA.
Federal Aviation— 3
THE WITNESS: 8
L791 MR. HOFF: Q. Go ahead, Captain Artus.
A. Well, the air route traffic control system is a depart-
ment of the Federal Aviation Agency and its prime respon-
sibility is the separation of aircraft operating on a time
flight rule condition. And to do this, their basic working
tool is a system [80) of radar, in which aircraft are identi-
fied and tracked by a controller at a radarscope much like
a TV sereen. And he follows the blip across this screen.
And as a result, he knows absolutely where the aircraft is
and what route it is traversing. ©
6 Would you describe how this works in the case of a
particular flight beginning at the point of takeoff and carry-
ing it through to the borders of Illinois? 3
A. Well, every flight that departs O’Hare on an instru-
ment flight rule clearance files a flight plan for the particular
route, and these routes are laid down, as you might say,
highways in the sky. They are specified routes that are
eight miles wide that we have to follow.
Wikia fight Gepard Bid i 10 véstored or given a
heading to one of these routes that he would select? To do
this, he is given a heading to fly, after takeoff at O Hare,
and if I could use the case of a westbound flight, taking off
77
on Runway 27, which is heading 270 degrees heading to the
west, the controller will tell him [81] to maintain a heading
of 270 degrees after takeoff.
From that point, he changes his radio frequency to what
we call departure control and this is the first man in this
radar network that handles him, and he is located right at
O Hare Field. And he continues him on these vectors until
he gets to his specified airway. He is “at and off,” as we
say to the air route controller by the time—by the time that
he is fifteen or twenty miles west of O’Hare, and then this
. function is taken over by the air route traffic controller who
is located in Aurora, Illinois, and he continues him from that
point.
Q. You mentioned instrument flight rules. Are all
_ United’s flights flown under instrument flight rules?
A. Yes, it is under policy to fly all flights on instrument
fight rule condition, and as a result, we are under the posi-
tive control of these radar operators.
Buy means of this system, are aircraft assigned to
particular departure routes as they depart from O’Hare
Field?
182] A. Yes, they are.
Fon referred to flight plans, Captain Artus. Would
Jou tell us what a flight plan is, and would yon tell us if
there is more than one type, and would you describe them,
Please?
A. Well, a flight plan is information needed and required
by the air traffic control system, and it has to be filed prior
to departure; so that the aircraft can be given a clearance
and in a flight plan is specified the route of flight, the alti-
_ tude to be flown, the true air speed, the time of the flight,
and various other information items that pertain to tech-
nical equipment on the airplane.
78
Q. Is it always ee Let me interrupt for just this
one question.
A. el there could be some
delays incurred in being able to allow this flight on this
airway at that particular time because of conflicting traffic.
All right. Is there any difference between short
range and long range flights as far {83] as flight plans are
concerned? .
A. Well; short range flights are what we consider any-
thing under 1,200 nautical miles and we have—now we have
a system which we call Center Stored Flight Plan. These
pertain to flights that operate day in and day out the same
flight number, and so on. And we store these flight plans
in the Center, in the computer in the air traffic control
center, and these have a standard routing, and a standard
time enroute, a standard altitude, and it is used day in and
day out, and always over the same roiute.
On long range flights, more that 1,200 nautical miles,
there is a choice of various routes maimly due to operational
factors—such as weather on one particular route, or strong
headwinds on another—that you may select one or the other
route rather than the primary.
Q. How often does the pilot on short range flights
how often does the pilot follow the Cemter Stored Plan?
A. All of the time with the exception of weather; he
might want to deviate from it in that; [84] case.
. As a result of the system which you have described,
Captain Artus, can United determine geographically where
its aircraft fly over the State of Illinois when departing
from O’Hare Field going to a specific direction?
A. Yes, they can.
MR. HOFF: We have one more slide, Your Honor.
MR. CAMPBELL: We enter our objection again, Your
Honor, unless counsel can indicate to the Court what the
basis of the slides are.
79
MR. HOFF: Oh, excuse me. This is going to be the map
of Illinois which will show the departure routes which this
_ witness has been testifying to.
It is going to contain certain other information which will
be verified and authenticated by the third witness, which we
are offering as a part of our direct case, Mr. Titus, who is
sitting here in the back of the courtroom.
MR. CAMPBELL: I think certainly the Court can take
judicial knowledge of the exhibits that are already into
evidence and certainly the Court takes judicial knowledge
of the State of Illinois [85] and the location of O’Hare Field.
R HOFF: These are going to show routes through
IIlinois.
THE COURT: Well, this is primarily nation-wide, the
other exhibits that I have.
MR. CAMPBELL: We will again offer to stipulate that
the plaintiff flies out of O’Hare, Your Honor, in various
directions and on various flight plans.
THE COURT: And I am interested in what the various
directions are.
MMR. HOFF: Exactly, Your Honor.
THE COURT: Very well.
What exhibit number is this? 207
(The document above referred to was marked
Plaintiff’s Exhibit 20 for identification.)
MR. HOFF: Q. Captain Artus, this map, as you notice,
shows the State of Illinois. Have you checked—the red lines
shown on this map, are those the departure routes which
vou have been testifying about?
A. Yes, they are.
86] Q. Have you checked the accuracy of those depar-
ture routes as shown on this map?
A. Yes, I have.
NQ. Could you identify some of the Center Stored short-
© ange routes that you have testified to?
A. Yes. For instance, if I can point out Route M, I
believe it is here, this is a Center Stored short-range route
to Denver, which is basically what we call a radar vector
to Des Moines, Iowa, and from that point, you pick up
the number of the jet airway that runs from that point to
Denver.
Now, this is true of every one of those routes shown, that
these are all radar vectors to a particular airway.
Q. Could you point out one of the long-range routes!
A. Yes, this dashed line shows a long-range route to
Los Angeles.
Q. Why is that route dashed, Captain Artus, or as
shown by a dashed line?
A. It is very rarely used. We have it in [87] our com-
puter, stored in our own computer as a safety valve, let us
say, because of weather; you might have a squall line up
to the northwest or to the west, and it might be all clear
to the southwest. So the pilot would elect to fly this route
rather than one of the primary routes. :
Q. Are those all of the routes you testified about?
A. Yes.
Q. Is there any possibility that a pilot might use one
of the routes—excuse me—a route which is not shown on
this map?
A. No. He has to take a radar vector to one of the es-
tablished jet routes.
Q. Okay. That's all on that.
We are not offering that exhibit at this time, Your
Honor. There is some other material on there that will
offered by another witness, as I have indicated.
Ton have indicated that while using one of these vectored
routes out of O’Hare and the aircraft is under the positive
contro] of the Federal Aviation Agency personnel. Does
this raise [88] the possibility that while following one of
81
instruct the pilot to depart from that route in some
respect!
. Yes, they quite often, because of the conflict with
traffic, they will assign a different radar vector other than
the standard.
Q. Could you in terms of specific headings, could you
give us an example of such a change?
A. Well, the standard radar vector to Des Moines is 270
degree heading, and because of inbound conflict with traffic,
they may assign you to a 260 heading, or possibly a 280
heading.
But after the conflicts have been relieved, they would
either vector you back to the original track or a parallel
track.
0. How much additional mileage inside the borders of
Illinois would such a change in heading normally add?
A. This would add one mile to the difference between a
260 and a 270 heading.
Q. In the example you have ere!
A. Yes.
[89] Q. One mile?
A. One mile.
. What would an extreme case be in terms of addi-
tional mileage within the State of Illinois as occasioned by
one of these changes?
A. I would say the extreme limit would be perhaps five
_ --Q: Captain Artus, are there standard procedures under
‘which United’s aircraft are flown?
A. Yes.
Q. In a very gerd way, what do these 3
dodover! N
A. Well, we calculate the standard operating procedure,
_ which is laid down in our approved flight plan manual, and
this flight manual is our bible. It has every bit of informa-
tion that we need to operate the airplane in a safe manner
and an economical manner.
Q. Do these procedures or flight manuals specify the
power settings to be used by the pilot during various
phases of the flight!
A. Tes, they do.
Q. When we say “phases of flight,” in general, [90] what
phases are we referring to?
A. Takeof, climb, cruise, and descent.
Q. Must these procedures, as set forth in these flight
manuals, be followed by the pilots?
A. This is what we check them for and we require that
they do follow the standard operating procedure.
The captain always has the right to exercise his emer-
gency authority and depart from some established proce-
dure if he feels it is the safest course of action.
Q. What would be the effect on fuel consumption if the
pilot were to deviate in one of the respects that you have
just testified to?
A. Well, as far as the fuel, the fuel would remain—
the fuel flow consumption would remain fairly constant.
What I am speaking of is a deviation because of a conflict
with another airplane that was not pointed out to him—
something that popped. up.
Does this answer your question?
Q. I think to my satisfaction anyway.
Captain Artus, are you familiar with the [91] stipulation
that was entered into with the State in which it describes
the aircraft departure routing system in effect from 1960
to approximately 1964?
A. Tes.
. Are vou familiar with that stipulation?
N
. . 1 that alr
craft departure routing system ‘since that time?
j 4
83
A. No, there have not.
Do you anticipate that there will be any material
change in that departure routing system within the fore-
seeable future?
A. To my knowledge, I don’t anticipate any.
Q. On what do you base that opinion?
A. I beg your pardon?
Q. On what do you base that opinion?
A. Well, the radar system is a proven system and it is
basic to the operation of the entire air traffic control. And
580 I say to the best of my knowledge, it could be in the
future unless in the distant future they come up with some
more [92] economical system, but we have the radar system
and it is firmly established, and I know we are going to
stick with it. So I don’t anticipate any changes.
. United is beginning to operate more flights out of |
ih Midway, Captain Artus. Will the basic pattern of oper-
ations out of Midway be the same as at O' Hare:
A. Yes, it will.
f . 8
sz F. E. TITUS
Was called as a witness herein, having been first duly sworn,
2 was examined and testified as follows:
i DIRECT EXAMINATION
By Mr. Doyle:
7 Ae . a *
01 MR. DOYLE: Q. Now, Captain Artus testified
as to the standard procedures under which United flights
are operated, and he mentioned that they appear in a flight
manual.
84
Are you familiar with the flight manuals ee, Nate by
United)
A. Yes, I am.
Q. And by whom are the—maybe I should say it another
way.
What 8 of United has responsibility for pro-
mulgated flight manuals?
A. The flight operations’ department.
. And the standard operating procedures mentioned
by Captain Artus, by whom are those prepared!
A. The standard operating procedures have part of
their origin from the Federal Aviation Agency. Certain
procedurés are mandatory. These procedures are supple-
mented with ‘so-called company procedures and the total
procedures are contained in this flight manual.
MR. CAMPBELL: ‘Your Honor, again we—I don't wish
to interrupt, but we must renew our objections [102] to this
line of questioning and answers as intending to duplicate
what the last witness testified to, and again we find our-
selves involved in the flight plans again.
THE COURT: There would seem to be some duplication
here. I think, however, this witness’ testimony is in some
wa lanatory of the previous witness, Artus.
‘MR. DOYLE: I might add, Your Honor, that we are
merely laying a predicate to introduce the flight manual as
an exhibit, and to that extent, we are somewhat duplicative,
but I am done with it. T am ready to put the exhibit in.
THE COURT: All right.
MR. DOYLE: Q. These flight manuals are promulgated
ee ee. ‘Titus?!
A. Tes, they are. ey
iQ Tae tated Dales Beka Bo: 22 for identifica-
dame Would you please explain what this is? is
ie This is the airplane flight manual for the Boeing
727 type aircraft operated by United and the flight manual
5 e crepes
4
7
— R 2
85
11031 Q. Are these manuels approved by any govern-
mental agency?
A. Yes, they ate approved by the F. A. A.
(The document above referred to was marked
Flaintiff's Exhibit 22 for identification.)
MR. DOYLE: Q. I now show you United Exhibit 23
for identification. Will you explain what this is?
A. This is merely the letter granting the approval to
the company airplane flight manual from the Federal Avi-
ation Agency.
(The document above referred to was marked
Plaintiff’s Exhibit 23 for identification.)
MR. DOYLE: Your Honor, at this time, I move that
United's Exhibits 20, 21, and 22 be received into evidence
MR. CAMPBELL: We would object, Your Honor, as
the same have no bearing on the issues again raised in the
pleadings in this case.
MR. DOYLE: Your Honor, I would like to speak—
IHE COURT: Well, I will overrule it, Mr. Campbell.
It may have some bearing on this. [104] Tm not sure, and
Lam going to admit them. If they have no bearing, then the
Court will—
MR. CAMPBELL: We didn’t get a copy of these. Is
there a copy for—have you given us copies of all the other
exhibits? |
MR DOYLE: Im sorry. Those are about $425 each.
un CAMPBELL: We have not had an opportunity to
if 2 THE COURT: I will give you all the time you wish.
ey MR. CAMPBELL: —these documents, Your Honor, ‘and
n to their being introduced into evidence, we would
THE COURT: I will withhold my ruling until you have
an opportunity to examine them.
MR. DOYLE: Our Exhibits 20 and 23 are then in?
THE COURT: I think I am going to admit your Exhibit
No. 20. I can see that may have some materiality.
(Said document, heretofore marked Plaintiff’s Ex-
hibit 20 for identification, was admitted in evi-
duenne.)
11051 THE COURT: I will withhold nne until counsel
has had a chance to examine them since he hasn’t seen them.
MR. DOYLE: Q. Now, are there similar manuals to
the one you identified with respect to the Boeing 727 for
each, of the pes of aircraft flown, by United?
A. Yes, there are.
Q. And are each of these manuals approved by the Fed-
eral Aviation Agency?
A. Yes, they are.
. Do these manuals include fuel consumption figures
for the specific of aircraft covered?
A. Yes, they
Q. On what are these fuel consumption figures based!
A. The original figures are provided by the manufac-
turer when we first get an airplane from him, and they are
constantly audited by United Air Lines as the experience
is acquired with the airplane and revised where and when-
ever necessary.
Q. And are fuel consumption figures given for each
power setting on which the aircraft may [106] be operated!
A. Yes, they are.
Q. By referring to the standard operating procedures
contained in the flight manuals and the fuel consumption
tables developed for each type of aircraft, it is possible to
determine how much fuel a specific type of aircraft will use
departing from a specific airport when it travels a distance
that is known?
A. Yes.
é 87
_. Q. How would this be done?
A. This would be done by taking the various phases of
flight, takeoff, climb, and cruise, and determining the amount
ol fuel burned in each case and totaling the amount.
. Would it also be necessary to make an allowance for
fuel on the ground :
A. Yes, for taxiing.
90. Does United have current studies of its taxiing at
O Hare Field?
A. Yes, they do. United is constantly monitoring taxi
times not only at O Hare, but the entire [107] system, since
tis is an important ingredient of the flight schedules that
we publish. i
Q. Knowing the taxi time, is it possible to determine
the amount of fuel that an aireraft will oonsume during the
taxi portion?
A. Yes, it is.
~ Q. Mr. Titus, I show you United’s Exhibit No. 24 for
identification. Would you explain what this is?
A. This is a compilation of the fuel that would be burned
out by each type of aircraft operated by United in going
from O’Hare Field to the Illinois border over the various
routes that have been indicated on the chart that has been
displayed. ,
ay (The document above referred to was marked
Plaintiff's Exhibit 24 for identification.)
MR. DOYLE: Q. Do these calculations assume if
standard operating procedures were followed on the part
_ of United’s pilots?
A. Yes, they do.
Q. What would be the effect if there were [108] permis-
_ sible deviations from these standard procedures?
A. The effect would be negligible.
N. In other words, your calculations assume more rather
than less fuel would be used?
A. Yes.
: 88
*
1126] MR. CAMPBELL: The second motion, Your Honor,
is a motion which was served upon the attorneys for
United Air Lines this morning at 10:45; and I would just
like to comment to the court the réasons for this motion.
produce for examination before this court a witness or an
agent who is familiar with the matters alleged in the
THE COURT: And out of the county?
MR. CAMPBELL: I beg your pardon?
THE COURT: And out of the county? I think the rule
says out of the county, doesn’t it?
[127] MR. CAMPBELL: No, Your Honor, this is rule
THE COURT: Let’s read it and see.
MR. CAMPBELL: 237.
THE COURT: Read it.
MR. CAMPBELL: All right, I have it here.
THE COURT: Maybe I am confused— :
MR. HOFF: We have no objection as to the form
IHE COURT: But I haven't seen it in some time.
MR. CAMPBELL: I will show it to Your Honor, Rule
287. There is no time limitation contained in the rule.
THE COURT: “If at the time the notice is served the
party or person is a non-resident of the county, the court
may order any terms and conditions in connection with his
appearance at the trial and that are just, including pay-
ment of his reasonable expenses.”
MR. CAMPBELL: Yes, and United Air Lines is author-
ized to do business in the state—
THE COURT: The rule says if at the time the notice
is served the party or person is not a [128] resident of the
county—it is my recollection that this was in the rule—the
court may order—in other words, the theory, of course,
being if he is in the county he can be served with a sum-
mons or subpoena. That is the last sentence in that rule.
.MR..CAMPBELL: I wanted to apprise the court the
é reason this motion was served.
: THE COURT: Well, we are talking about another—
maybe they will produce him anyway
MR. BERENS: We have no objection as to the form,
although we are somewhat curious as to its purpose.
MR. CAMPBELL: We wanted to explain—
THE COURT: Well, of course, the purpose at this point
‘ is no concern of mine.
MR. BERENS: Yes.
MR. CAMPBELL: We eee eee
this motion, Your Honor. It became apparent yesterday
from the witnesses who testified that perhaps the plaintiff
here would not call a witness who could be examined by
this court relating to the sale or purchase of the fuel which
arrives in East Chicago and Hammond, Indiana, and trans-
ported [129] to DesPlaines and then to O’Hare Field. We
feel that the basis of this lawsuit—
THE COURT: Excuse me. I don’t interrupt very often,
but this will be the last one, I assure you, it is a long dis-
tance call that I placed.
(Short interruption.)
MR. CAMPBELL: As I was stating, Your Honor, it
became apparent yesterday that we didn’t feel that the
plaintiff would call in a witness who would testify as to the
matters relating to the purchase and sale of this fuel and
to testify about the transportation of this fuel, the storage
of this fuel at DesPlaines and the subsequent delivery of
this fuel to O’Hare Field,
We felt that it was necessary—since this is a tax ex-
emption suit that the plaintiffs here are seeking, a complete
exemption of the use tax involved here, and the complaint
.
: 90
also states that it is a class action, we felt that in order to
aid the court that it would be necessary to have all of the
We felt that perhaps the plaintiff was not going to produce
such u ‘witness, and that is the reason for this motion.
[130] THE COURT: Is there any objection to the—
you don’t want them all, I take it?
MR. CAMPBELL: One witness; one witness who can
testify as to the matters in the complaint and the para-
graphs that we have referred to in the stipulation. In
conversation and conferences with counsel, and a deposi-
tion, we find that perhaps the facts may be different from
the stipulation paragraphs.
- THE COURT: We commented on this yesterday, five,
six, seven and eight.
‘MR. CAMPBELL: Yes, and we feel in order to be fair
to the court and fair to the taxpayers, since this does in-
» THE COURT: And fair to the state.
MR. CAMPBELL: I beg your pardon? |
THE COURT: And fair to the state.
MR. CAMPBELL: Yes; and since it does involve reve-
nue, that it would be in the best interest of all of the parties
to have a witness here to testify to these matters—
THE COURT: How about it?
MR. CAMPBELL: —and to be examined.
MR. BERENS: Your Honor, we will object to [131]
producing a witness on any questions or facts that tend to
contradict the specific terms of the Stipulation. Now, I
have to make my position very clear here. Yesterday we
introduced evidence over objection of counsel, which we
said supplemented the original stipulation.
‘THE COURT: That’s right.
MR. BERENS: We also used the phrase that it updated
although we didn’t mention this yesterday, we can point
85 certain updated information that we voluntarily entered
7
1
.
desk
_ THE COURT: May I have my file. I think I took that
file inside, didn't. I. See if you can find it.
MR. CAMPBELL: Here is a copy of the stipulation,
_ Your Honor.
IHE COURT: All right. You are talking now [132]
“about paragraph4! ,
MR. BERENS: I misstated, Your Honor; paragraph six.
THE COURT: Yes.
MR. BERENS: Which reads in part that all of the fuel
purchased by United from Shell Oil Company is delivered
to United with possession, title and all risk of loss passing
0 United either at Hammond, Indiana or East Chicago,
Now, counsel yesterday pointed out several times in his
odzections on how hard we strived to get this stipulation,
and he is quite right. We remember working for months
en and off with the department and with the Attorney Gen-
eral's office in getting this stipulation.
At the time of the negotiations, as in all stipulations,
“there were areas which were being highly negotiated as to
Phraseology so that neither one side or the other would get
en advantage. This stipulation was a good deal more nar-
tow than what we had proposed originally as fair to both
We had to make these concessions in various areas, but
“We did not make any concession, I don’t believe, in the area
of paragraph six, that [133] is, where delivery, risk of loss,
title and possession had been made.
92
One of the express conditions of the state as to entering
into this stipulation was the withdrawal of two interlocu-
tory appeals we had taken on the earlier order of the oourt.
And I would like to go back a little bit on this, because
Judge Brothers handled that. We came in originally ask-
ing for relief both for the past and the so-called current
period on the general equity jurisdiction of this court, not
under the protest fund act. It was our contention that this
was 80 clearly a misapplication of the law that equity should
ee pe
test fund.
Judge Brothers agreed with us as to the past period;
he did not agree with us as to the current period.
THE COURT: Ree tinea te period prieete Tay 3, Gs
or=——:
MR. BERENS: Yes, for that we got the temporary in-
junction. For the period from that date, he was only willing
to grant a protest fund injunction. This, of course, is a
matter of discretion of the [134] trial judge.
On our research of the law at the time, it was —particu-
larly the Baumgartner case and a few others in that area,
we thought he had made a mistake and had abused his dis-
cretion in not allowing equity jurisdiction, particularly
when United was willing to put up a very considerable bond
to avoid paying this large sum of money during the pen-
dency of this litigation into the protest fund.
We had to take two interlocutory appeals because of the
confusion in the Dlinois rules as to where an interlocutory
appeal on a revenue matter goes. So we had dual appeals
pending in the Appellate and Supreme Court for several
months during which we were negotiating this stipulation.
The stipulation was entered into on the 16th of January of
86; it was filed the 19th of January in this court, and pursu-
ant to our agreement with the state we withdrew both ap-
peals on the interlocutory i issues on February ist of that
same year.
uld have ordered [135] a reconsideration of this
to grant a general equity
very substantial sum of
has been a change of fact since the stipulation which justice
would require that the parties be relieved, [136] or one of
them be relieved, of the burden of the stipulation.
Now, in counsel’s opening presentation, he did not imply
or assert fraud ; I don’t believe he was implying or assert.
did not set up—so far as we know, because we received no
pro assessment, on the basis that this was delivery
94
in Illinois and therefore very obviously taxable. Similarly
Shell Oil Company, who is our supplier has been audited
up through the year 1965, and at no time did any auditor
assert that they were subject to the retailers’ occupation
tax for having delivered this fuel or sold it to us in Illinois.
At the time the stipulation was being negotiated we re-
peatedly offered to Mr. Campbell’s predecessor, Mr. Dore,
and I think during the latter [137] period to Mr. Campbell
and to John Gaughan, who was with the Department of
Revenue at that time, invited them to check with us these
facts,
We said “We are trying to get a fair stipulation, one that
will be helpful and one that naturally will be as good as it
can be for our client’s position, but we want you to be sure
that we are not over-reaching here.”
This offer must have been made in a half dozen confer-
ences. They did not take up the offer at that time, indicat-
ing, I would say, that their audit was adequate and that
they felt we were people that they could rely on.
Last summer, a year and a half after the stipulation was
entered into, I believe it was Mr. Bromberg, who initially
contacted one of my partners and said “We would like to
go into the delivery question.”
And I interpose here, Your Honor, we are not going to
claim surprise on this, because this would be an unfair
assertion on our part. We discussed this with the client,
who was reluctant to go through a reaudit and take up the
time of people going over stuff that they thought had been
[138] gone over once before very thoroughly. We insisted
to the client that first of all that the state has the right to
audit and that to go over it a second time would not be a
basis of an objection to this, and that they should make this
available.
The client made one or more accounting personnel avail-
able on a continuous basis to the auditor. We had Mr.
1 Doyle with the auditor for I believe several days—was it?
Boing through every thing and anything he wanted as to
the then recent period of 67 and 66, and also on a selected
basis whatever he wanted on the past period.
This included, so far as I know, the following documents:
%
*
The fuel contracts between Shell and United and all of the
’ ‘amendments reaching from 1953 on; the lease agreement
between Shell and United and some amendments—seven
~ ‘amendments to it.
_ THE COURT: What was leased?
MR. BERENS: Some facilities at O Hare Field.
8 (Continuing) — the invoices from Shell to United; the
payment records from United to Shell of these invoices; the
delivery receipts from Shell to West Shore Pipeline in
Indiana showing the quantities delivered; the orders from
~ United to [139] Shell for the different shipments and the
similar orders by United to West Shore for arranging the
_ shipping on the common carrier line. We tried in all of
_ these documents for the auditor to his satisfaction, we
thought, showing that there was no delivery, but more im-
portantly in the context of this argument, that there was
v0 change during this whole period, and in particular, no
change since the stipulation had been entered into.
We think that the state initially had—had full access to
_ these records; we offered at the time of the stipulation to
make anything available to them. We have since, without
any attempt to harass or inhibit them before this court,
let them reandit the documents. We have made everything
_ available at length to them, and we think that if a stipula-
~ tion should be binding under these circumstances, where all
_ the facts were made available at all times to them, where
ve gave up an interlocutory appeal at an economic cost to
ourselves at the express request of the state to enter into
the stipulation, that the stipulation should stand, and I
£
* would like to make a couple of concluding comments.
I am in the position of implying that [140] there is
something wrong with the delivery situation, possibly; we
do not think this. We think this is an extremely remote
possibility. In fact, I might characterize it from what we
can see, this theory is frivolous, but nonetheless, this is
a risk and—at least a theoretical risk. 7 5
Now, let's assume that there is something wrong with the
delivery for the moment, as an assumption. For two years
since the stipulation, or for four years since the first pro-
posed assessments, we would have been able to do some-
thing about it and correct it, so that we would not be ex-
posed to any liability on the R. O. T. issue at this time; but
on the contrary, we have been relying, first of all, on the
inaction of the state in proposing any assessment on this
basis, but more pertinently, on their specific stipulation
with us for a consideration that delivery—the facts of de-
livery were not part of this issue.
Now, if the court would admit this evidence and we would
be subjected to liability, we will have two years of reliance,
almost to a point of entrapment—although I don’t like to
use that extreme term.
[141] We also have another problem with this. If this is
an R. O. T. assertion or the equivalent to it, a use base tax
based on delivery, the statute of limitations of three years,
reaching back to July 1, 63, should have expired on a good
portion of the earlier term of this, This statute has been
tolled by the pendency of this litigation under the usual
rule; however, we will have the strange effect of the statute
being tolled as to the R. O. T. issue, because we have a litiga-
tion on an entirely different question, whether loading fuel
aboard aircrafts is a taxable use. And for that reason, we
think that it would be unfair and unjust to our client to
permit the state to contradict what they stipulated to us
—with us, as to this delivery.
contradict, Your Honor. I think counsel used the expres-
sion yesterday “to put some flesh on the stipulation,” on
which they consumed an entire afternoon. Counsel also—
remarks, they are unwilling to pro-
dace these witnesses to be examined to see whether the
stipulation as entered into is true or-whether it is untrue. -
In January, 1966, we entered into the stipulation. I think
about three weeks ago, at counsel’s office, at the time of a
deposition involving the Shell Oil Company, one of the
defendants in this case, it developed that the fuel upon
arriving in East Chicago and in Hammond is transported by
Way of the West Shore Pipeline, in which one of the defen.
dants or both have an interest. [143] It also developed that
the storage facilities in Des Plaines, Illinois, are owned by
“one of the defendants here, Shell Oil Company. It also
developed that there is a Lockeed, I think, Terminal Air, Inc.
that also one of the defendants has an interest in, transport-
ing the fuel from Des Plaines to O’Hare Field.
These are matters that we think the court should be ap-
prised of as to the connections between these defendants,
because by virtue of the statute if a taxable event occurs in
98
the State of Illinois prior to the departure of the plane, we
think the statute applies. And again, since the plaintiff
here, by virtue of a class action, we think the court ought to
be apprised of the facts relating to this particular delivery
system, and this is what we seek by virtue of this motion,
and if in fact it has taken the plaintiff by surprise, we have
no objections, Your Honor—
THE COURT: He says he is not raising that.
MR. CAMPBELL: All right. We have no objection, then,
if the plaintiff has any serious objection to this motion,
then, Your Honor, we would respectfully decline to say that
we feel that the [144] facts have changed subsequent to the
entry of this stipulation, to ask the withdrawal of para-
graphs 5, 6, 7 and 8 of the stipulation, if the plaintiffs are
unwilling to produce a witness who would testify as to the
matters relating to the delivery system.
THE COURT: Well, it seems to me that whatever your
purpose is in calling an officer of this corporation, I think
you have a right to have them here. Then depending on
what the line of interrogation is, then the court can deter-
mine whether or not it is proper. It seems to me that if
there is a change in the situation which was not known to
one of the parties at the time—or I don’t mean change, I am
a little ahead of myself, either a change in the factual situa-
tion has developed since the time the stipulation was entered
into, or some facts that were not known to one of the parties,
I think that is one of the exceptions that you have here,
then they have a right to at least by way of further develop-
ment or explanation, or something of that nature—perhaps
the choice of language is not the best here, to develop. But
there isn’t any doubt in my mind, if they want an officer of
this plaintiff corporation, they are entitled to have [145]
them here.
MR. BERENS: We have no objection, as we said, to the
subpoena to produce a witness.
99
THE COURT: I am not even sure they have to subpoena
him. I think you are required to produce them.
MR. BERENS: Well, we are willing to produce him.
THE COURT: All right, I am sure you are.
MR. BERENS: All right.
THE COURT: But I just didn’t want any misunder-
standing—
MR. BERENS: I would like to add just one or two com-
ments, if I may, in response to Mr. Campbell. First of all,
I am surprised that he doesn’t remember the agreement to
withdraw the appeals for the stipulation. There were three
of us in our office—
MR. CAMPBELL: I am not denying that. This may have
been worked out with Dick Michaels in the appeals division.
I wasn’t in on the conferences, that is what I am saying.
MR. BERENS: I didn’t mean with Michaels. We had a
meeting the Friday before this was entered into, and that
was one of the conditions. And, Cal, you [146] may remem-
ber after reflecting on it, you were present, and Roger Bar-
rett, Bruce Hoff and myself of our office were present. But—
MR. CAMPBELL: I don’t remember.
MR. BERENS: But it was for us.a very important meet-
ing at the time. But I would also like to emphasize—and I
would like to offer this memo of law to Your Honor, that
the case law in Illinois is very clear that these rules regard:
ing standing by a stipulation applies equally to the state.
I mention this because Mr. Campbell has indicated that
this is a tax case and that if a tax is due it should be
collected. Apparently, the rules of orderly procedure of
court and that parties agree to stipulations supercedes that
concept.
I would like to mention one other thing, if we get into
this delivery question, in addition to what we have called
the basic question of whether the loading of fuel aboard an
aircraft is a taxable use, we are going to very substantially
100
not only lengthen and complicate the trial, but we are also
going to—if I may be so bold as to suggest it, complicate
the problem that Your Honor [147] will have in making the
resultant rulings that will be appealable, and I think we
will be almost certainly back and forth between the Supreme
Court on new trials, and so forth, with all of the possibilities
that we have here among the issues.
Mr. Campbell also mentioned the class suit problem. We
made the allegation for a purely defensive reason of not
getting involved in a group of other class suits, which had
been filed on the so-called trucking area at the same time.
This is a class—possibly it is a class of one taxpayer of
which no one else can belong. United is the only taxpayer
who is buying fuel from Shell Oil under the conditions that
have been alleged in the complaint, and as has been stipu-
lated; so I think this class suit question doesn’t advance the
basic issue.
THE COURT: Well, I don’t know about whether it is a
class suit or not. Of course, that isn’t really of any great
consequence now. There is a question of whether or not
the state has a right to seek to introduce evidence which is
beyond the terms of the stipulation, and perhaps in contra-
diction of the terms of the stipulation, I don’t know. I
assume from the statement by each of you that that [148]
may be the fact.
MR. BERENS: I am sorry, Your Honor, that which may
be the fact?
THE COURT: That the evidence which the state pro-
duces—seeks to produce, would be in contradiction of the
stipulation?
MR. BERENS: Yes.
THE COURT: I don’t know. Whether it relates to some-
thing that is beyond the subject matter of that covered by
the stipulation, these things I don’t know; and I have no
way of knowing anything until the person is produced, as
101
to what he is going to be asked, and whether or not it is
relevant or pertinent in asking him these questions and for
him to answer these questions. It seems to me that—I don’t
like to prolong these things any more than anyone else does,
because time never frightens me.
Off the record.
(Discussion had off the record.)
THE COURT: We will meet, then, these questions that
are now raised as they come before us; perhaps we may
never—they may never appear. We have had that kind of
thing happen. I think you have some other evidence, and I
want to get on and hear it. [149] But as far as the Plaintiff’s
motion is concerned, I think that at some time in this pro-
ceeding that you will be required to have an officer of this
plaintiff corporation here.
MR. BERENS: Well, we will have him here, and we will
raise our objections at the proper time.
THE COURT: Then we will cross that when we come
to it.
0 * e
1153] Mr. Stark, would you take the stand, please.
( Witness sworn.)
THE COURT: All right.
JOHN HENRY STARK, SR.
called as a witness on behalf of the Plaintiff, being first duly
sworn, was examined and testified as follows:
DIRECT EXAMINATION
BY MR. HOFF:
. Would you state your name, please?
John Henry Stark, Sr.
S-t-a-r-k?
Correct.
Where do you live, Mr. Stark?
A. 33 Forest Avenue, Roselle, Illinois.
102
Q. And by whom are you employed?
A. United Air Lines. :
Q. What is your title or position with United Air Lines!
A. My title and position with United Air Lines is Direc-
tor of Petroleum Administration.
Q. Very generally, Mr. Stark, will you tell us what your
duties and responsibilities are as [154] Direc
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