I find my views at variance with the conclusion arrived at by the majority. I agree with them that, insofar as tangible personal property is concerned, the doctrine of mobiliasequuntur is outworn and discarded. See Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 26 S. Ct. 36,50 L. ed. 150, 4 Ann. Cas. 493. It follows, of course, as they say, that the place of incorporation of the taxpayer does not control as to such property. This leaves their opinion resting upon the facts that all the planes of defendant at regular times come within the protection of this state, that major repairs are made here, and that the company's offices are here. Does an opinion so grounded harmonize with the principles of due process as developed and announced by the United States Supreme Court?
I think the majority are misled by failing to distinguish between what that court has said in cases involving intangibles and what it has held in those involving tangible property. If the broad expressions used with reference to intangible property such as those used in State Tax Comm. v. Aldrich,316 U.S. 174, 62 S. Ct. 1008, 86 L. ed. 1358, 139 A.L.R. 1436, cited by the majority, should be applied to tangible property, which was not there under consideration, we should find that the doctrine of mobilia sequuntur, which the majority agree is now discarded as to tangible property, would be restored in great measure and made applicable to tangible property as well as to intangibles. It certainly applies only to tangible property when that property has acquired no situs whatever for taxation elsewhere. "The arguments in favor of the taxation of intangible property at the domicil of the owner have no application to tangible property." Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 206, 26 S. Ct. 36, 38,50 L. ed. 150, 4 Ann. Cas. 493. *Page 412
The Supreme Court has drawn a clear distinction between tangible personal property and intangible property in the application of due process. In Curry v. McCanless,307 U.S. 357, 365, 59 S. Ct. 900, 905, 83 L. ed. 1339, 123 A.L.R. 162, involving intangibles, Mr. Justice Stone (now Chief Justice), speaking for the court, after discussing the situs of tangibles in relation to the taxing power, said:
"Very different considerations, both theoretical and practical, apply to the taxation of intangibles, that is, rights which are not related to physical things. Such rights are but relationships between persons, natural or corporate, which the law recognizes by attaching to them certain sanctions enforceable in courts. The power of government over them and the protection which it gives them cannot be exerted through control of a physical thing. They can be made effective only through control over and protection afforded to those persons whose relationships are the origin of the rights. [Citing cases.] Obviously, as sources of actual or potentional wealth — which is an appropriate measure of any tax imposed on ownership or its exercise — they cannot be dissociated from the persons from whose relationships they are derived. These are not in any sense fictions. They are indisputable realities."
Therefore, the broad expressions with reference to the power and jurisdiction to tax contained in cases relative to intangibles, such as State Tax Comm. v. Aldrich, 316 U.S. 174,62 S. Ct. 1008, 86 L. ed. 1358, 139 A.L.R. 1436, and Curry v. McCanless, 307 U.S. 357, 59 S. Ct. 900, 83 L. ed. 1339, 123 A.L.R. 162, are not applicable to due process as applied to the taxation of tangible property. In the "intangible" cases, the protection of the right of transfer of the evidence of ownership may result, as in State Tax Comm. v. Aldrich,supra, in what appears to be double or multiple taxation.
It appears to me that it would be very unfortunate to extend to tangible property theories which have been applied to intangibles only. The Supreme Court has not done so. Should the habitual *Page 413 use and flight of airplanes over the various jurisdictions be held to subject all the taxpayer's planes — not only a proper proportionate share of them — to double or multiple taxation on their full value, it would not only be unjust but would create a situation so burdensome to the airlines as materially to handicap their development and extention, so vital to the national interest. It would likewise be unfortunate for those states imposing the tax on the full value and would doubtless in the end result in congressional authorization of the incorporation of airlines under national law and control of taxation. See Mr. Justice Jackson's dissent, concurred in by Mr. Justice Roberts, in State Tax Comm. v. Aldrich,316 U.S. 174, 185, 202, 62 S. Ct. 1008, 86 L. ed. 1358, 139 A.L.R. 1436, supra.
The problem of taxation of airplanes engaged in scheduled aerial transportation is one of first impression. Airplanes span the continent in a few hours, passing over many jurisdictions in the course of a day's flight. A plane may be in any one state but one or two hours out of the 24, or even only part of an hour. In its very nature, aerial transport is largely interstate. If the operations of an airline were confined to the protection of any single state and to the benefits and opportunities conferred by the laws of that state, such a line would be of little importance in the vast field of air transport. If defendant's operations were confined to the state of Minnesota, doubtless two or three planes would answer its needs. Its ownership of the large number of planes here sought to be taxed is necessitated by its operations in interstate commerce, where it habitually and regularly subjects itself to the protection of other jurisdictions and receives the benefits afforded by the laws of other states, to whose sovereignty it becomes subject, except as it falls within the control of the federal government. In that regard there is no distinction between the benefit and protection afforded by Minnesota and that afforded by Illinois, Wisconsin, North Dakota, Montana, Idaho, or Washington. If the protection and benefit extended by state sovereignty *Page 414 to these aircraft justifies a tax on the full value of all of them because they are continually traversing the air across this state and because at times they all come within its boundaries, then every state traversed by the air route may tax the whole number that flies over such state on the full value. If the tax imposed by Minnesota on the full value of all the planes used by defendant is sustained, it becomes not only a tax imposed for the protection afforded by Minnesota but a tax burdening the entire service of these planes throughout their route. In reality it assesses their owner as if its protection covered the planes throughout their route. Thus, it assesses for protection it does not furnish and which it has no power to furnish.
"The power of taxation, indispensable to the existence of every civilized government, is exercised upon the assumption of an equivalent rendered to the taxpayer in protection of his person and property." Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 202, 26 S. Ct. 36, 37, 50 L. ed. 150, 4 Ann. Cas. 493.
I am in full accord with the view that the law as applied to steamships where the sovereignty of the flag follows the ship throughout the voyage does not apply to airplanes flying scheduled flights over land. Logically, planes are more like fleets of railroad cars being operated in interstate traffic.
Johnson Oil Ref. Co. v. Oklahoma ex rel. Mitchell,290 U.S. 158, 54 S. Ct. 152, 78 L. ed. 238, was a case where Pawnee county, Oklahoma, under a state statute, sought to tax the entire fleet of the Johnson company's tank cars, which were used mainly in transporting oil from its refinery in Oklahoma to other states. The Johnson company was an Illinois corporation, but its refinery, trackage, and repair facilities were in Oklahoma. Like defendant's planes, the cars were in almost continuous movement and the major share of the time were beyond the boundaries of the state, though they were all marked to be returned to the refinery in Oklahoma, where was located the control and supervision of the cars. Thus we have a situation much like that presented to us in *Page 415 the case at bar, except that the Johnson company was incorporated in Illinois instead of Oklahoma, a matter which the United States Supreme Court and the majority here seem to regard as immaterial insofar as tangible property is concerned. A stronger feature for the company in the case at bar is that its planes are beyond the state boundaries on regular uniform schedules and routes defined by the Civil Aeronautics Authority. Oklahoma's right to tax all the cars was challenged as a violation of the due process clause of theFourteenth Amendment. Relating to the jurisdiction to tax, the court in that case, speaking through Mr. Chief Justice Hughes, said (290 U.S. 162, 54 S. Ct. 154, 78 L. ed. 238):
"The basis of the jurisdiction is the habitual employment ofthe property within the State. By virtue of that employment the property should bear its fair share of the burdens of taxation to which other property within the State is subject. When afleet of cars is habitually employed in several States — theindividual cars constantly running in and out of each State —it cannot be said that any one of the States is entitled to taxthe entire number of cars regardless of their use in the otherStates." (Italics supplied.)
True, the Chief Justice, speaking for the court, also said (290 U.S. 161, 54 S. Ct. 153, 78 L. ed. 238):
"Appellant had its domicile in Illinois, and that State had jurisdiction to tax appellant's personal property which had not acquired an actual situs elsewhere. 'The State of origin remains the permanent situs of the property notwithstanding its occasional excursions to foreign parts.' "
True enough, assuming that the property had acquired asitus in the domiciliary state, but the statement was obviously not intended to apply if it had not. Union Refrigerator Transit Co. v. Kentucky, 199 U.S. 194, 26 S. Ct. 36, 50 L. ed. 150, 4 Ann. Cas. 493, supra. But the situation in the Johnson Oil Co. case, 290 U.S. 158, 54 S. Ct. 152, 78 L. ed. 238, as here, was that the *Page 416 tangible personal property had acquired situs for proportionate taxation elsewhere. In the case at bar, the flights on regular daily schedules throughout the year were not mere (290 U.S. 161, 54 S. Ct. 152, 78 L. ed. 238) "occasional excursions" into other jurisdictions, but the property (290 U.S. 162,54 S. Ct. 154, 78 L. ed. 238) "habitually used and employed" on such flights within other states acquired a situs for proportionate taxation in those states.
As illustrated by the Johnson Oil Co. case, thesitus in the other states for tax purposes may be proportionate only. It need not be such a situs as would confer jurisdiction to tax the full value of all cars which come into the state even when they come in habitual use. It may be a jurisdiction to tax a fair proportion as determined by average presence or other fair method of apportioning the tax. It might, in the case of aircraft, be based upon miles or hours flown in the state in proportion to those flown elsewhere.
I cannot find that the Johnson Oil Co. case has been overruled or qualified insofar as tangible property is concerned, nor do I think it is in conflict with the previous case of People ex rel. N.Y. C. H. R. R. Co. v. Miller,202 U.S. 584, 597, 26 S. Ct. 714, 717, 50 L. ed. 1155, where New York's franchise tax, measured by property, was sustained as applied to all the cars of the railroad company. There the court said, speaking of the problem before it:
"In the present case, however, it does not appear thatany specific cars or any average of cars was so continuously in any other State as to be taxable there. The absences relied anwere not in the course of travel upon fixed routes but randomexcursions of casually chosen cars, determined by the varyingorders of particular shippers and the arbitrary convenience ofother roads." (Italics supplied.)
Whatever the actual facts as to car routings may have been, the court in that case viewed the record as showing only "random excursions of casually chosen cars" outside the state. The case was decided on that assumption. That situation is not present in *Page 417 the case at bar. Here we have air transport planes continuously and habitually used on scheduled flights over fixed routes, much more extensive than through Minnesota, over at least six other states, where they have acquired a situs for proportionate taxation by virtue of the protection and benefit of those jurisdictions, which subjects them to taxation in those states. American Refrigerator Transit Co. v. Hall,174 U.S. 70, 82, 19 S. Ct. 599, 43 L. ed. 899; Johnson Oil Ref. Co. v. Oklahoma ex rel. Mitchell, 290 U.S. 158, 54 S. Ct. 152,78 L.ed. 238, supra; Union Refrigerator Transit Co. v. Lynch,177 U.S. 149, 20 S. Ct. 631, 44 L. ed. 708.
While neither state nor national constitution contains a specific prohibition against double or multiple taxation as such, obviously the imposition of such a tax may under certain circumstances offend some provision of the fundamental law. Reed v. Bjornson, 191 Minn. 254, 253 N.W. 102. It is to be avoided if reasonably possible. Bemis Bro. Bag Co. v. Wallace,197 Minn. 216, 228, 266 N.W. 690. "Protection against * * * unjust and oppressive taxation is matter of the greatest moment." Farmers L. T. Co. v. Minnesota, 280 U.S. 204, 212,50 S. Ct. 98, 100, 74 L. ed. 371, 65 A.L.R. 1000. Here, quite obviously, it is not only oppressive but burdens interstate commerce. It would not do so if it were confined to Minnesota's proportionate share.
There is no question but that Minnesota may tax its proportionate share of the airplanes here involved; but, as said in Johnson Oil Ref. Co. v. Oklahoma ex rel. Mitchell,290 U.S. 162, 54 S. Ct. 152, 154, 78 L. ed. 238, the jurisdiction "to tax property of this description must be determined on a basis which is consistent with the like jurisdiction of other States." It is the power of other states to tax due to habitual use and employment of the planes within their boundaries which affects the situs of the planes and the right of Minnesota to tax more than its proportionate share. As said in Farmers L. T. Co. v. Minnesota, 280 U.S. 204, 211, 50 S. Ct. 100,74 L. ed. 371, 65 A.L.R. 1000, "the right of one State to tax may depend somewhat upon the power *Page 418 of another to do so." Certainly that rule has not been changed as to tangibles, as witness the Johnson Oil Co. case,supra. It is the existence of the power to tax, not the exercise of it, that affects the situs, Sancho v. Humacao Shipping Corp. (1 Cir.) 108 F.2d 157, 160, though in the case at bar all states on defendant's scheduled routes except Idaho have exercised it.
Whether a proportionate tax should be imposed on the theory of miles or hours flown within the state as compared to the total mileage or hours flown, or upon the basis of average number of planes present in the state under normal operating conditions, having in mind that during most of the time, as was the case with the cars in the Johnson Oil Co. case, most of the planes are outside the state, is probably not a problem for this court to determine. It should not, however, distinguish this case from the Johnson Oil Co. case. That the planes come into the state every day or nearly every day does not distinguish it. They are out of the state on flights over other jurisdictions a large proportion of the time. The only difference from the Johnson Oil Co. case is that planes move faster and more frequently than cars. The principle is the same. What this court should say is that the tax may only be imposed by Minnesota upon its proportionate share figured on some reasonable basis, which, primarily, the taxing authorities should first determine.
To summarize:
*Page 4191. We have a case of a specific tax on tangible personal property, viz., aircraft.
2. Such property is not subject to the rules applied to intangibles.
3. By habitual use and employment on fixed schedules in flights over other states, the aircraft have acquired a situs for proportionate taxation in those states.
4. That situs must be taken into consideration in determining Minnesota's constitutional power to tax, regardless of the domicile or principal place of business of the taxpayer.
5. Minnesota may tax only proportionate part of the value of the property arrived at on some reasonable basis primarily to be fixed by the taxing authorities.
I think the judgment should be reversed.