Pan American World Airways, Inc. v. State Board of Equalization

NOURSE, P. J.

Plaintiff sued to recover the amount collected by defendants as a “use” tax on certain equipment on airplanes of plaintiff located in this state. It was the theory of the plaintiff that the personal property taxed herein was exempt from taxation under section 6366 of the Revenue and Taxation Code. Plaintiff had judgment.

The code section reads: “ § 6366. There are exempted from the taxes imposed by this part the gross receipts from the sale of and the storage, use, or other consumption of aircraft sold to persons using such aircraft as certificated or licensed carriers of persons or property in interstate or foreign commerce under authority of the laws of the United States or any foreign government, or sold to any foreign government for use by such government outside of this State, or sold to persons who are not residents of this State and who will not use such aircraft in this State otherwise than in the removal of such aircraft from this State.”

Preliminarily it should be said that respondent does not contend for the exemption of such passenger service equipment as blankets, pillows, sheets, etc., or such buffet equipment as dishes, silverware, glasses, etc. It limits its claims to such articles as are required by the Civil Aeronautics Authority to be installed prior to a certificate of airworthiness. Such a certificate was issued by the Authority on all of respondent’s planes certifying the installation of all the items here involved, such as galley equipment, radio navigation equipment, first-aid kits, overwater emergency equipment, liferafts, life jackets, radio sets and passenger oxygen.

The question arising is whether these articles, all of which had been installed prior to the delivery of the planes into this state, become an integral part of the aircraft before delivery within this state.

The facts are that respondent contracted with the Boeing Aircraft Company of Seattle, Washington, for the delivery

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of 20 passenger planes fully equipped in accordance with the specifications of the federal regulations. Respondent purchased the equipment here involved from a manufacturer who delivered them to Boeing in Seattle, who installed them in the aircraft as stated. Delivery to respondent was made outside the State of California. Hence, when they were brought into this state the planes were fully equipped.