Court Opinion

ID: 1060192
Source: CourtListenerOpinion
Date Created: 2013-10-09 18:42:57.775479+00
Date Added: 2024-06-11T12:05:16.681303
License: Public Domain

Present: Compton, Stephenson, Lacy, Hassell, Keenan, and Koontz,
JJ., and Whiting, Senior Justice

CHARLES E. SMITH MANAGEMENT, INC.
                         OPINION BY JUSTICE LAWRENCE L. KOONTZ, JR.
v. Record No. 950266                   March 1, 1996

DEPARTMENT OF TAXATION OF THE COMMONWEALTH OF VIRGINIA, ET AL.

                FROM THE CIRCUIT COURT OF ARLINGTON COUNTY
                       William T. Newman, Jr., Judge

      In this case, we determine the validity of a tax assessment

imposed pursuant to Code § 58.1-1502 on a non-resident owner of a

large private aircraft hangared at Washington National Airport

(National Airport), which is a federal enclave.
      The facts of the case are not in dispute.             Charles E. Smith

Management, Inc. (CES) is a District of Columbia corporation with

its principal place of business in Arlington County.                Since 1990,

CES has hangared and maintained an aircraft at National Airport.

The purchase of the aircraft and all other transactions related

thereto occurred outside the Commonwealth.

      On   March    4,   1991,   the     Department    of   Taxation    of     the

Commonwealth of Virginia (the Department) assessed against CES an

aircraft use tax of $300,000, a $75,000 penalty, and $34,084.93 in

interest   pursuant      to   Code    § 58.1-1502.     On   March    20,     1991,

exercising its right pursuant to Code § 58.1-1821, CES protested

the assessment.      On June 29, 1992, the Tax Commissioner ruled the

assessment valid.

      Thereafter, under protest, CES paid the assessment, penalty,

and   accrued    interest.       On    November   2,   1993,   CES     filed   an

"Application for Correction of Erroneous and Improper Assessments

of State Taxes" in the circuit court pursuant to Code § 58.1-1825
et seq.        CES asserted that the Commonwealth was without power to

assess a use tax on aircraft hangared at National Airport and

owned by nonresidents because the airport is a federal enclave

ceded to the United States by the Commonwealth under the Act of

Cession, Code § 7.1-10.          Recognizing that subsequent enactments of

the federal government had returned certain powers of sovereignty

to   the      Commonwealth,   CES     further      asserted     that   none    of     these

powers permitted the assessment of the tax authorized by Code

§ 58.1-1502.
        The Department filed a motion for summary judgment on August

16, 1994, and CES filed a cross-motion for summary judgment on

September 1, 1994.           The issues were briefed and the trial court

heard      oral   argument.      On       November    21,    1994,   the    trial     court

granted the Department's motion for summary judgment on the ground

that     aircraft     hangared       at     National     Airport      are   subject     to

licensure by the Commonwealth pursuant to Code § 5.1-5, and thus

to   assessment      for   taxation        pursuant    to    Code    § 58.1-1502.       We

awarded this appeal to review the action of the trial court.

        Code § 58.1-1502 levies a tax on "the use in the Commonwealth

of any aircraft required to be licensed by the Department of

Aviation pursuant to [Code] § 5.1-5."                       In pertinent part, Code

§ 5.1-5(a)        requires    that        "every     nonresident      owning    a     civil

aircraft based in this Commonwealth over sixty days during any

twelve-month period. . . shall, before the same is operated in

this Commonwealth, obtain from the Department [of Aviation] an

aircraft license for such aircraft."

        CES     apparently    and         appropriately       recognizes       that    the
Commonwealth has the power to enact a use tax on aircraft based at

National Airport.       See Commonwealth v. United Airlines, Inc., 219
Va. 374,    387-92,   248 S.E.2d 124,   131-34    (1978)      (holding   that

Commonwealth may assess use and sales taxes on personal property

based at National Airport).

      However,      since      the   Commonwealth        conditioned      such   tax

liability on an aircraft being "required to be licensed by the

Department of Aviation pursuant to [Code] § 5.1-5," CES contends

that it is not liable for the tax because the Commonwealth has no

power to license aircraft based at National Airport.                      CES bases

this contention on the claim that the power to license aircraft

was   not     retroceded      to   the   Commonwealth      by   the    Metropolitan
                                                            1
Washington Airports Act of 1986 (the 1986 Act).
      In response, the Department contends that the Commonwealth's

right to require licensure of aircraft based at National Airport

      1
          In pertinent part, the 1986 Act provides:

           The Commonwealth of Virginia shall have concurrent
      police power authority over the Metropolitan Washington
      Airports, and the courts of the Commonwealth of Virginia
      may exercise jurisdiction over Washington National
      Airport.

Public L. No. 99-591, § 6009(c), 100 Stat. 3341-387 (codified at
49 U.S.C. App. § 2458(c)).

     In accepting this grant of concurrent police power authority,
the General Assembly provided:

           The Commonwealth hereby grants, accepts and agrees to
      concurrent police power authority over the Metropolitan
      Washington Airports as provided in § 6009(c) of the
      Metropolitan Washington Airports Act of 1986.

Acts 1987, ch. 665 § 7(A).
is    a       part   of   the    police    power    that    was    retroceded         to    the

Commonwealth in the 1986 Act.                   Thus, we must decide whether the

Commonwealth's licensure of aircraft based at National Airport is

a valid exercise of the police power retroceded to it in the 1986

Act.

          To decide this issue, we consider the scope of the police

power retroceded in the 1986 Act.                   Although CES claims that this

power is limited to "public safety, crime and law enforcement" and

"increasing          safety     and   security,"     we    did   not    so    limit    it   in
Singleton v. International Ass'n of Machinists, 240 Va. 403, 397
S.E.2d 856 (1990).                There, we held that under its concurrent

police power, Virginia courts could enforce Virginia's right-to-

work laws as those laws pertain to private employment contracts at

National Airport.              Id. at 407, 397 S.E.2d at 859.                 And we think

that the licensure of aircraft is clearly an exercise of the

Commonwealth's police power.                   See C.I.T. Corp. v. W.J. Crosby &

Co., 175 Va. 16, 21-22, 7 S.E.2d 107, 109-110 (1940)(licensure of

nonresident's motor vehicle authorized under police power); Board
of     Aeronautics        v.    Sims,     41 S.E.2d 506,    509    (W.    Va.    1947)

(regulation of aviation part of state's police power).

          Accordingly, we conclude that the Commonwealth, exercising

its    police        power     retroceded      in   the   1986    Act,       could    require

aircraft hangared at National Airport to be licensed pursuant to

Code § 5.1-5. 2           Thus, CES's aircraft was taxable pursuant to Code
          2
      We find no merit in CES's argument that its aircraft was
not "based in this Commonwealth," Code § 5.1-5, when it was
hangared at National Airport. Nor do we agree that Code
§ 58.1-1502 "masquerade[s] as a police power regulation" because
a tax is assessed only on those airplanes subject to Code § 5.1-
§ 58.1-1502.

     For these reasons, the judgment of the circuit court will be

affirmed.

                                                        Affirmed.

5.