Source: https://supreme.justia.com/cases/federal/us/410/623/case.html
Timestamp: 2017-05-26 02:01:09
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Matched Legal Cases: ['§ 439', '§ 439', '§ 439', '§ 107', '§ 439', '§ 439', '§ 439', '§ 439']

United Air Lines, Inc. v. Mahin (full text) :: 410 U.S. 623 (1973) :: Justia U.S. Supreme Court Center Log In
› United Air Lines, Inc. v. Mahin
United Air Lines, Inc. v. Mahin 410 U.S. 623 (1973)
U.S. Supreme CourtUnited Air Lines, Inc. v. Mahin, 410 U.S. 623 (1973)United Air Lines, Inc. v. MahinNo. 71-862Argued November 8, 1972Decided March 5, 1973410 U.S. 623APPEAL FROM THE SUPREME COURT OF ILLINOIS
BLACKMUN, J., delivered the opinion of the Court, in which BURGER, C.J., and BRENNAN, MARSHALL, POWELL, and REHNQUIST, JJ., joined. DOUGLAS, J., filed a dissenting opinion, in which STEWART and WHITE, JJ., joined, post, p. 410 U. S. 632. WHITE, J., filed a dissenting opinion, post, p. 410 U. S. 639. Page 410 U. S. 624
Since 1953, United has purchased aviation fuel from a supplier for delivery from the supplier's Indiana facilities. This fuel is utilized by United in its extensive operations out of O'Hare and Midway airports in the Chicago area of Illinois. Although the method of delivery varies for different types of fuel and for the two airports, [Footnote 1] all fuel Page 410 U. S. 625 is delivered by common carrier and is held for periods ranging from two to 12 days in ground storage facilities maintained in Illinois by United. [Footnote 2] Fuel for both interstate and intrastate operations is delivered in the same manner. [Footnote 3] United voluntarily has paid the tax on fuel consumed in purely intrastate operations. Only the tax as applied to fuel used in interstate flights is in issue.
In 1955, Illinois enacted a general tax on the "privilege of using" tangible personal property in the State. Ill.Rev.Stat., c. 120, § 439.3 (1971). "Use" was defined to include the "exercise . . . of any right or power over tangible personal property incident to the ownership of that property." § 439.2. Some exceptions from this inclusive definition were made. One of these exceptions, which the statute recites, § 439.3, is "[t]o prevent actual or likely multi-state taxation," is the temporary storage provision. This denies application of the tax to property brought from another State and stored temporarily in Illinois before use solely outside the State. [Footnote 4] Page 410 U. S. 626
Two decisions of this Court were relied upon by the Illinois court in reaching its conclusion that the present application of the state tax was not offensive to the Federal Constitution. The cases are Edelman v. Boeing Air Transport, 289 U. S. 249 (1933), and Nashville, Chattanooga & St. Louis R. Co. v. Wallace, 288 U. S. 249 (1933). We agree that these cases support the Page 410 U. S. 627 application of the Illinois tax to all fuel stored in Illinois and loaded aboard United's aircraft for in-flight consumption.
The Supreme Court of Illinois characterized the taxable "use" under the Illinois statute as either storage or withdrawal from storage. United argued in the state court that the temporary storage provision constituted a legislative waiver of the right to tax storage prior to loading. The Illinois court rejected this contention, noting that United stored fuel at the airport for general use. Page 410 U. S. 628 On these facts, the Supreme Court of Illinois concluded that the Illinois use tax applied to storage by United before loading and that this application was constitutional:
49 Ill.2d at 55-56, 273 N.E.2d at 590 (emphasis added). The Illinois dissenters, too, treated the taxable event as storage or withdrawal. 49 Ill.2d at 57, 273 N.E.2d at 591. [Footnote 5] Page 410 U. S. 629
The line drawn between an impermissible tax on mere consumption of fuel, as in Helson, and a permissible tax on storage of fuel before loading, as in Edelman and Nashville, continues to serve rational purposes. Retaining the line at this point minimizes the danger of double taxation, and yet provides a source of revenue having a Page 410 U. S. 630 relation to the event taxed. Double taxation is minimized, because the fuel cannot be taxed by States through which it is transported, under Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S. 157 (1954), nor by the State in which it is merely consumed, under Helson. A fair result is achieved because a State in which pre-loading storage facilities are maintained is likely to provide substantial services to those facilities, including police protection and the maintenance of public access roads. [Footnote 7]
United contended in state court that the Illinois temporary storage exemption should be interpreted, as a matter of state law, to encompass the "burn off" rule which, as noted above, had received administrative sanction for eight years. 49 Ill.2d at 49, 273 N.E.2d at 587. Two justices of the Illinois court deemed themselves bound under Helson to regard the "burn off" rule as invalid under the Federal Constitution. 49 Ill.2d at 50, 273 N.E.2d at 587. This basis for construing a state statute creates a federal question. Red Cross Line v. Atlantic Fruit Co., 264 U. S. 109, 264 U. S. 120 (1924). The possibility that the state court might have reached the same conclusion if it had decided the question purely as a matter of state law does not create an adequate and independent state ground that relieves this Court of the Page 410 U. S. 631 necessity of considering the federal question. Beecher v. Alabama, 389 U. S. 35, 389 U. S. 37 n. 3 (1967); see C. Wright, Federal Courts § 107, p. 488 (2d ed.1970). Since the other justices of the Illinois court divided three to two on the state law issue, the votes of the two who felt bound by Helson could be determinative of the state issue. Under these circumstances, we proceed to consider the validity of the "burn off" rule in the light of Helson, as United has urged us to do. See Perkins v. Benguet Mining Co., 342 U. S. 437, 342 U. S. 441-443 (1952).
In the present case, Illinois is the State of storage of United's fuel before loading. If Illinois imposed a tax on the basis of that storage but measured the tax only by the fuel consumed over Illinois, a lower tax would result. The dangers of multiple taxation and possible tax windfalls, already suggested as justifying the Helson decision, would not be present if the tax were imposed on storage prior to loading but were measured by consumption. Multiple taxation and tax windfalls are avoided because only one State -- the State of storage before loading -- has a local event upon which a tax is imposed. Under Helson, States over which the planes fly will be unable to impose a tax on mere consumption. [Footnote 8] Page 410 U. S. 632
The Court today makes a break with the history of the Commerce Clause that has been largely responsible for creating in this Nation a great common market. One Page 410 U. S. 633 protective device this Court has used to keep the national channels of commerce open against hostile state legislation has been the constitutional ban on state taxation levied on interstate activities. In 1873, in Case of State Freight Tax, 15 Wall. 232, we held unconstitutional a state tax "so far as it applies to articles . . . taken up in the State and carried out of it. . . ." Id. at 82 U. S. 282. While there are ways in which interstate commerce can be required to pay its way, we have not until today abandoned the basic principle that a State may not tax interstate activities. That is what is done here, for the Illinois tax is levied on filling the fuel tanks of airplanes taking off for interstate or foreign journeys. If Illinois can tax that segment of the interstate activity, there is no reason why she may not tax the takeoff itself. The filling of fuel tanks to make an interstate or foreign journey is as indispensable a part and parcel of the interstate or foreign journey as using the runways for that purpose.
"[T]emporary storage ends and a taxable use occurs when the fuel is taken out of storage facilities Page 410 U. S. 634 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."
Ill.Rev.Stat., c. 120, § 439.3 (1971). That means that the temporary storage exemption would extend not merely to storage on the ground, but also to its loading aboard the transportation vehicles, such as trucks or railroad cars, and to its transportation from the State. It is thus obvious that, unless the means of removing the property from the State is included in the scope of the temporary storage, it would be a nullity, as appellant maintains. Since, in this case, there is no tax if fuel is withdrawn from storage and taken from the State by other means, it is clear that neither the storage nor the removal from storage is what makes the fuel taxable. The majority properly notes that, as a matter of state Page 410 U. S. 635 law and the Illinois court's interpretation thereof, it is the "consumption" wholly without the State that makes the exception operable. Conversely, I read the Illinois opinion to mean that, as a matter of state law, it is at least partial consumption within the State that brings the tax on all the fuel into play. That is so even if only a small portion of the fuel is consumed within the State, while the remainder is consumed out of State during an interstate or foreign flight. The inescapable conclusion from the state court's interpretation of this state law is that the act of loading the fuel into the fuel tanks of the interstate aircraft solely for use as the motive power is the taxable event.
In Richfield Oil Corp. v. State Board, 329 U. S. 69, we held invalid a state sales tax levied on the delivery of fuel oil into a ship for overseas carriage. We said "[t]he incident which gave rise to the accrual of the tax was a step in the export process." Id. at 329 U. S. 84. A like result was reached in Michigan-Wisconsin Pipe Line Co. v. Calvert, 347 U. S. 157, where a State sought to impose a severance tax on the transfer of gas from a refinery pipeline to an interstate pipeline. We noted that the "taxable incidence" was the taking of gas from a local plant "for the purpose of immediate interstate transmission." Page 410 U. S. 636 Id. at 347 U. S. 161. We therefore held it unconstitutional, since it was a tax "on the exit of the gas from the State." Id. at 347 U. S. 167.
The fuel in United's planes propels the interstate flights; because it is the source of the motive power, it is essential to the interstate journey. It is, therefore, indisputably a part and parcel of the interstate movement. McCarroll v. Dixie Greyhound Lines, 309 U. S. 176, involved an Arkansas statute which prohibited any truck or automobile from entering the State with more than 20 gallons of gasoline in its tank unless an excise tax were paid on the gasoline. The Court held the tax unconstitutional because it imposed a tax on "gasoline to be immediately transported over the roads of Arkansas for consumption beyond." Id. at 309 U. S. 180 (emphasis added). Similarly, Illinois imposes its tax on all of the fuel loaded into airplane tanks, whether or not that fuel is consumed out of State. In Helson v. Kentucky, 279 U. S. 245, on which the Illinois Supreme Court relied in disapproving the earlier construction of the statute, a ferry boat operated between Illinois and Kentucky, having its office in Illinois and buying all its fuel there. Kentucky sought to tax that portion of the fuel used in Kentucky. This Court invalidated the tax, saying it was "exacted as the price of the privilege of using an instrumentality of interstate commerce." Id. at 279 U. S. 252. If that tax is invalid, it follows a fortiori that Illinois may not tax the movement of airplanes from Illinois to California, from Illinois to Europe, or from Illinois to any other out-of-state point. Page 410 U. S. 637
Although "delivery of goods" within the State may be taxed, "solicitation" within the State for out-of-state Page 410 U. S. 638 confirmation and shipment into the State may not be. Nippert v. Richmond, 327 U. S. 416, 327 U. S. 422; West Point Grocery Co. v. Opelika, 354 U. S. 390. In Dunbar-Stanley Studio v. Alabama, 393 U. S. 537, a tax was sustained on out-of-state photographers, since their activities were not soliciting orders for an out-of-state house, but taking photographs within the State.
For Illinois to tax the storage of fuel within its borders is, of course, constitutionally permissible, even though, in time, the fuel may be used in interstate or foreign commerce. In Edelman v. Boeing Air Transport, 289 U. S. 249, 289 U. S. 251, the use tax was "not levied upon the consumption of gasoline in furnishing motive power for respondent's Page 410 U. S. 639 interstate planes." The tax was "applied to the stored gasoline as it is withdrawn from the storage tanks at the airport and placed in the planes." Ibid. "It is at the time of withdrawal alone that use' is measured for the purposes of the tax." Id. at 289 U. S. 252. (Italics added.) At that time, the gasoline was not irrevocably committed to interstate commerce, for it might be diverted to planes on intrastate journeys.
The Illinois statute in question, Ill.Rev.Stat., c. 120, § 439.3 (1971), taxes the use of tangible personal property in Illinois, and "use" is defined as being the "exercise . . . Page 410 U. S. 640 of any right or power over tangible personal property incident to the ownership of that property. . . ." Id., § 439.2. The Illinois Supreme Court held that, as applied in this case, the statute taxed either the storage or the withdrawal therefrom of aviation fuel. But the statute itself goes on to exempt from tax property temporarily stored in the State, withdrawn from storage, loaded on transportation facilities and transported for use solely outside the State. Id., § 439.3(d). For the tax to apply, the property must not only be stored and subsequently withdrawn, but must also be further used or consumed in the State. It is this actual use or consumption in the State after storage and withdrawal that triggers the tax. Thus, it was enough here to invoke the tax that the fuel was temporarily stored, withdrawn, loaded on interstate aircraft, and then partially used within the State. But Helson v. Kentucky, 279 U. S. 245 (1929), forbids taxing the use of gasoline consumed within the State on an interstate trip. And as for that portion of the fuel withdrawn from storage, loaded on an aircraft and consumed in another State, the exemption in the statute would seemingly cover it; but if the exemption itself is not to apply, Helson, a fortiori, bars the tax. Moreover, under the Due Process Clause of the Fourteenth Amendment, Illinois has no jurisdiction to tax the use of property occurring in another State. Norfolk & W. R. Co. v. Missouri State Tax Comm'n, 390 U. S. 317, 390 U. S. 324-325 (1968), and cases there cited.