TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                          NO. 03-02-00335-CV



                  Kellair Aviation Company, Appellant

                                   v.

      Travis Central Appraisal District and Travis County Appraisal
                       Review Board, Appellees




FROM THE DISTRICT COURT OF TRAVIS COUNTY, 261ST JUDICIAL DISTRICT
    NO. GN001760, HONORABLE DARLENE BYRNE, JUDGE PRESIDING



                             OPINION
                 This is an ad valorem tax appeal concerning the right of Kellair Aviation Company to avail

itself of the remedy provision of section 25.25(c)(3) of the tax code to receive allocation of the market value

of its passenger aircraft for tax years 1996 and 1997. See Tex. Tax Code Ann. ' 25.25 (West 2001).1

The trial court issued a take-nothing judgment against Kellair and in favor of Travis Central Appraisal

District (ADistrict@) and Travis County Appraisal Review Board (ABoard@),2 concluding that Kellair was not

entitled to allocation of the value of its aircraft because (1) section 25.25(c)(3) does not provide a remedy,

and (2) Kellair failed to pursue its right to interstate allocation pursuant to section 21.03 through the

remedies in chapters 41 and 42 of the tax code. Kellair presents four issues asserting: (1) it is entitled to

allocation of the market value of its aircraft under section 21.03(a); (2) failure to protest allocation under

chapter 41 does not result in forfeiture of remedies under chapter 25; (3) section 25.25(c)(3) provides a

remedy for obtaining allocation of the value of Kellair=s aircraft for tax years 1996 and 1997; and (4)

calculating allocation based on the number of departures fairly reflects the use of Kellair=s aircraft in Texas.

We conclude that a motion to correct under section 25.25(c)(3) is not a proper means of seeking a

commercial aircraft=s allocation and affirm the trial court=s judgment.


                                      FACTUAL BACKGROUND




        1
         Section 25.25 has been amended since this cause of action arose, but its meaning has not
changed. We will therefore cite to the current statute.
        2
             For convenience, we will refer to appellees collectively as the ADistrict@ unless otherwise
indicated.


                                                       2
                 Kellair owns a Raytheon Hawker HS 125 800 as business personal property. The aircraft

was continually used in interstate and foreign commerce during each twelve-month period preceding January

1 of each tax year at issue. The aircraft was maintained in leased hangar space at the Robert Mueller

Municipal Airport in Austin. Between uses, the aircraft was returned to the hangar space in Austin for

repair, storage, inspection, maintenance, and service.

                 The aircraft was appraised for ad valorem tax purposes by the District during tax years

1996 and 1997. Kellair did not request an allocation or protest the District=s failure to allocate the market

value of the aircraft during the tax years at issue.3 The District listed the aircraft on the appraisal roll at one

hundred percent of its market value for tax years 1996 and 1997. On December 30, 1999, Kellair filed a

motion to correct the appraisal roll, seeking allocation of the market value of the aircraft to reflect its use in

Texas for tax years 1996 and 1997. See Tex. Tax Code Ann. '' 21.03, 25.25(c)(3) (West 2001).

                 The Board held a hearing on the motion but ultimately denied Kellair=s motion to correct the

appraisal roll. Kellair subsequently filed the underlying lawsuit. The case was tried to the court on the

following stipulated facts: Kellair=s principal office was located in Austin, Texas, from 1995 through 2001;


        3
           During tax years 1996 and 1997, there was a question as to the constitutionality of section 21.03
of the Texas Tax Code. Section 21.03, which recognizes a property owner=s right to interstate allocation,
was declared unconstitutional in Aransas County Appraisal Review Board v. Texas Gulf Shrimp Co.
707 S.W.2d 186, 192 (Tex. App.CCorpus Christi 1986, writ ref=d n.r.e.). It wasn=t until 1998 that the
supreme court considered the constitutionality of section 21.05 of the tax code, which recognizes a property
owner=s right to interstate allocation of the value of commercial aircraft in Appraisal Review Board v. Tex-
Air Helicopters, Inc., 970 S.W.2d 530 (Tex. 1998). Sections 21.03 and 21.05 are identical on the
principle of interstate allocation. Section 21.03 recognizes a property owner=s right to interstate allocation
while section 21.05 recognizes a property owner=s right to interstate allocation of the value of commercial
aircrafts. Tex-Air disapproved of the constitutional analysis of section 21.03 in Gulf Shrimp and upheld
the constitutionality of section 21.05.

                                                        3
Kellair is the owner of the aircraft in issue; the plane was normally returned to Kellair=s leased hangar space

at the Robert Mueller Municipal Airport between uses for repair, storage, inspection, maintenance and

service; the plane had a taxable situs in Texas; and during tax years 1996 and 1997, Kellair did not request

allocation and did not protest the District=s failure to allocate. The trial court found in favor of the District

and signed a take-nothing judgment, which Kellair now appeals.


                                               DISCUSSION

                 The main issue before this Court is not whether, under the current law, Kellair is entitled to

allocation of its aircraft when it is used in interstate commerce. Both parties agree that sections 21.03 and

21.05 of the tax code allows Texas tax authorities to tax only that part of a commercial aircraft=s value that

fairly reflects the aircraft=s use in Texas.4 Tex. Tax Code Ann. '' 21.03, 21.05(a) (West 2001); see

Appraisal Review Bd. v. Tex-Air Helicopters, Inc., 970 S.W.2d 530, 532 (Tex. 1998) (upholding the

constitutionality of section 21.05). The issue this Court must decide is whether section 25.25(c)(3) allows a

correction of the District=s appraisal roll for tax years 1996 and 1997 under these facts. Kellair recognizes

that section 41.41 of the tax code provides the remedy for a current year protest, but argues that section

25.25 provides a method for a property owner to seek a correction of a prior year=s tax roll in very limited

circumstances. Kellair contends that the failure to grant an interstate allocation under section 21.03(a)

involves an error that is subject to correction under section 25.25(c)(3).




        4
          Because the parties do not dispute that Kellair would otherwise be entitled to allocation under
section 21.03, Kellair=s first issue is moot; therefore, we will not address it.


                                                       4
                 Section 41.41 of the tax code entitles the property owner to file a written protest with the

Appraisal Review Board before June 1 of the taxing year or not later than thirty days after the date that the

notice was delivered to the property owner. Tex. Tax Code Ann. ' 41.41 (West 2001). By contrast,

section 25.25 of the Tax Code grants a five-year window to correct clerical or certain other limited errors:


        (a) Except as provided by Chapters 41 and 42 of this code and by this section, the
            appraisal roll may not be changed.
              ....

        (c) The appraisal review board, on motion of the chief appraiser or of a property owner,
            may direct by written order changes in the appraisal role for any of the five preceding
            years to correct:

              (1) clerical errors that affect a property owner=s liability for a tax imposed in that tax
                  year;

              (2) multiple appraisals of a property in that tax year; or

              (3) the inclusion of property that does not exist in the form or at the location
                  described in the appraisal roll.


Tex. Tax Code Ann. ' 25.25 (West 2001) (emphasis added).

                 Under chapter 41 of the tax code, a property owner has the right to protest a broad array

of tax actions. Although the scope of actions that may be protested is broad, the time period within which

the property owner must initiate a protest is limitedCfar more limited than the five-year period available

under section 25.25.5 Compare Tex. Tax Code Ann. ' 41.44, with Tex. Tax Code Ann. ' 25.25. In



        5
           The legislature is aware of the need for a taxing entity to establish a final tax roll so that it can use
that information in making its budget. Therefore, the legislature has built in these time frames within which

                                                         5
most cases, a notice of protest must be filed within thirty days of the date the property owner receives

notice of the appraised value. GE Capital Corp. v. Dallas Cent. Appraisal Dist., 971 S.W.2d 591, 594

(Tex. App.CDallas 1998, no pet.). Section 25.25 allows the appraisal review board to change the

appraisal roll at any time during a five-year period to correct basic factual errors. Id. at 593. Because of

the circumstances outlined in section 25.25(c), it is apparent that the purpose is to correct objective, factual

errors that would cause the payment of taxes based on the uncorrected records to be fundamentally unfair.

Id.

                 Kellair contends that section 25.25(c)(3) allows a property owner to obtain interstate

allocation because the portion of the airplane allocable to interstate commerce did not exist at the location

described in the appraisal roll. The tax code does not explain what is meant by the phrase Aproperty that

does not exist in the form or at the location described in the appraisal roll.@ Tex. Tax Code Ann. '

25.25(c)(3); Titanium Metals Corp. v. Dallas County Appraisal Dist., 3 S.W.3d 63, 66 (Tex.

App.CDallas 1999, no pet.). Titanium Metals defined the term Aform@ in section 25.25(c)(3) to mean the

property=s identification as real property, personal property, or some other physical description of the

property other than its appraised value or its use. 3 S.W.3d at 66 (citing Dallas Cent. Appraisal Dist.

v. G.T.E. Directories Corp., 905 S.W.2d 318, 321 (Tex. App.CDallas 1995, writ denied)). Therefore,

the court reasoned, section 25.25(c)(3) applies only when no property exists in the form or at the location

described in the appraisal roll. Id.; see G.T.E. Directories, 905 S.W.2d at 321. In other words, section



protests are required to be filed. Aramco Associated Co. v. Harris County Appraisal Dist., 33 S.W.3d
361, 364 n.2 (Tex. App.CTexarkana 2000, pet. denied).


                                                       6
25.25(c)(3) permits correction of the appraisal roll only when it erroneously reflects that a particular form of

property exists at a specified location and, in fact, no such property exists at that location. Titanium

Metals, 3 S.W.3d at 66.

                 Several Texas courts have explored the remedies available under section 25.25(c)(3)

Kellair relies on Himont USA, Inc. v. Harris County Appraisal Dist., 904 S.W.2d 740 (Tex.

App.CHouston [1st Dist.] 1995, no writ). Himont owned and operated railcars that were used continually

in interstate commerce. The appraisal district included the full value of the railcars in its appraised value.

Himont had not previously requested allocation and did not protest the appraised value pursuant to chapter

41 of the tax code. Himont later filed a motion requesting allocation, which was denied. The court of

appeals noted that since Himont failed to avail itself of the remedies in chapters 41 and 42 of the tax code,

the appraisal rolls could only be corrected if the language of section 25.25(c)(3) appliedC that is, if the rolls

included property that did not exist in the form or at the location described in the roll. Himont argued that

the excess value of its railcars did not exist in the location described in the appraisal roll, thus correction of

the rolls under 25.25(c)(3) was applicable. The court agreed, concluding, Athe portion of Himont=s railcars

allocable to interstate commerce does not exist at the location described in the appraisal roll.@ Id. at 743.

                 Since Himont, every Texas court considering the availability of allocation as a remedy has

disapproved Himont and held that the language of section 25.25(c)(3) cannot be expanded to include such

a remedy. In Aramco Associated Co. v. Harris County Appraisal District, a case directly on point to

this appeal, the Texarkana Court of Appeals held that based on Aramco=s stipulation that the property did

have taxable situs within the taxing entity=s jurisdiction, and that the property did exist in the form described


                                                        7
on the appraisal roll, the relief offered by section 25.25(c)(3) was not a proper remedy for Aramco=s

request to allocate the value of the property. 33 S.W.3d 361, 364 (Tex. App.CTexarkana 2000, pet

denied).

                  Shortly after the Aramco decision, the San Antonio Court of Appeals held that a motion to

correct an appraisal under section 25.25(c)(3) was not a proper method of seeking allocation of the value

of commercial aircraft used in interstate commerce. Gunn v. Bexar County Appraisal Dist., 71 S.W.3d

425, 426 (Tex. App.CSan Antonio 2002, pet. denied). Gunn had failed to protest the appraised value of

its aircraft for tax years 1997 through 1999 and sought allocation to correct the appraisal rolls under section

25.25(c)(3). The court, citing Aramco, concluded that Abecause personal property can have more than one

taxable situs, if the location described on the tax roll is a taxable situs of the property, the aircraft did exist at

that location, precluding review under section 25.25(c)(3).@ Id. at 428. We find the reasoning of Aramco

and Gunn more persuasive and decline to follow Himont.

                  In the present case, there is a stipulation that the aircraft did exist at the location, which was

a legal situs for tax purposes, and did exist in the form described in the appraisal, a Raytheon Hawker HS

125 800. Thus, the relief offered by section 25.25(c)(3) is not a proper remedy for Kellair=s protest. In

Gunn, the court characterized Gunn=s motion to correct as an improper challenge of the appraised value of

the aircraft, agreeing with the Aramco court=s reasoning as follows: AThe legislature has given property

owners two procedures to challenge appraised values on appraisal rolls under chapters 41 and 42 and

under section 25.25(d).6 The legislature has placed restrictions on the right to challenge the appraised value


         6
             Section 25.25(d) provides that A[a]t any time prior to the date the taxes become delinquent, a

                                                          8
in both procedures.@ Id. at 429. We agree with the court in Gunn that broadly construing Alocation@ to

permit a challenge under section 25.25(c)(3) to the allocation of the appraised value would be contrary to

the legislative scheme of providing a taxing entity the ability to establish a final tax roll. See id. at 429.

                 Kellair cannot use section 21.03 to prove that the plane was not located within the district

for purposes of correction under section 25.25(c)(3), which requires that the property not exist at the

location indicated on the appraisal roll. Because section 25.25(c)(3) only authorizes changes for errors in

the description of the form or location of property in the appraisal roll, Kellair is essentially asking this Court

to do is look behind the appraisal roll to determine how value was determined. This we will not do. We

overrule issue three.

                 In its second issue, Kellair claims the trial court erred in its conclusion that Kellair was not

entitled to interstate allocation because it failed to pursue its allocation request through the remedies in

chapter 41 of the tax code. Kellair claims that the trial court=s conclusion ignores the application of section

25.25(c)(3) and creates a forfeiture or waiver where none exists. We disagree.                   The    court in

Aramco addressed this very issue. Aramco, 33 S.W.3d at 364. While the court agreed that Aramco had

a constitutional right to allocation, it said that Aramco could have had the property apportioned if it had

properly sought this benefit through section 41.41 of the tax code. Id. The court went on to say that even



property owner . . . may file a motion with the appraisal review board to change the appraisal roll to correct
an error that resulted in an incorrect appraised value . . . .@ Tex. Tax Code Ann. ' 25.25(d) (West 2001).
This provision is not an issue in this appeal.




                                                        9
constitutional entitlement can be waived when a party fails to follow the implementing legislation. Id.

Aramco failed to obtain relief under chapters 41 and 42 and sought relief under section 25.25(c)(3). Id.

The court concluded that because the aircraft in question did exist at the location and in the form described

in the appraisal roll, section 25.25(c)(3) was not a proper remedy for Aramco=s protest. Id. Therefore, by

failing to timely file a protest under section 41.41, Kellair has waived its right to allocation for tax years

1996 and 1997. Kellair=s second issue is overruled. Having decided that Kellair is not entitled to allocation

under section 25.25(c)(3), it is unnecessary for us to reach its fourth issue concerning calculating allocation.

                                              CONCLUSION

                 Because we hold that a motion to correct under section 25.25(c)(3) is not a proper means

of seeking allocation of property used in interstate commerce, we affirm the trial court=s judgment.




                                                   David Puryear, Justice

Before Chief Justice Law, Justices B. A. Smith and Puryear

Affirmed

Filed: February 6, 2003




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