Opinion ID: 255137
Heading Depth: 2
Heading Rank: 1

Heading: Authority under Section 21.

Text: 35 Petitioners advance three contentions as to why the instant order falls outside the authority conferred on the Board by 21 of the Shipping Act. They argue: (1) 21 does not cover 'contracts, agreements, and understandings'; (2) 21 is limited to obtaining information relevant to the Board's 'regulatory' power over carriers' rates under 17 and 18; and (3) 21 does not authorize the Board to compel the production of documents located outside the territorial confines of the United States. 36 Petitioners' first contention is properly answered in Kerr: namely, that, although 21 does not expressly speak of 'contracts, agreements or understandings,' it is clear that such papers are encompassed within the broad language of the section which requires carriers and other persons subject to the Act to file 'any account, record, rate, or charge, or any memorandum of any facts and transactions appertaining to the business of such carrier or other person subject to this chapter.' Mutual dealings between parties culminating in consensual arrangements are clearly 'transactions.' And the writings evidencing the arrangements arrived at are just as clearly 'memoranda.' Therefore, the instant order falls within the scope of 21. 37 Petitioners present an elaborate argument based upon the legislative history of 21. They contend that section is modeled upon 20 of the Interstate Commerce Act, 34 Stat. 594 (1906), 49 U.S.C.A. 20, and that a year before the enactment of the Shipping Act the Supreme Court in United States v. Louisville & N.R.R., 1915, 236 U.S. 318, 35 S.Ct. 363, 368, 59 L.Ed. 598, limited the similar language of 20 to cover only accounting and bookkeeping records. Assuming arguendo that petitioners' claims are correct, there is good reason why they should not be followed and why 21 should not be given a similarly restrictive meaning. In Louisville the Interstate Commerce Commission had attempted to inspect the railroad's correspondence under 20. Had the Supreme Court upheld the Commission's authorization to do so under 20, it would have been forced to resolve the question whether such inspection constituted an unreasonable search and seizure. Under the Court's then view of the Fourth Amendment's limitation on the compulsory production of corporate records and documents-- a view no longer followed, compare Federal Trade Comm. v. American Tobacco Co., 1924, 264 U.S. 298, 44 S.Ct. 336, 68 L.Ed. 696, with Oklahoma Press Pub. Co. v. Walling, 1946, 327 U.S. 186, 66 S.Ct. 494, 90 L.Ed. 614, and United States v. Morton Salt Co., 1950, 338 U.S. 632, 70 S.Ct. 357, 94 L.Ed. 401, the Court would probably have had to answer that question in the affirmative. Because the prevailing views on the constitutional question led to a restrictive reading of 20 of the Interstate Commerce Act in 1915 does not seem to us to justify a similarly restrictive reading of 21 of the Shipping Act today when those views are no longer followed. 38 In addition it should be noted that in Louisville the Supreme Court defined 'records' as used in 20 of the Interstate Commerce Act to include 'the written evidence of (a corporation's) contracts and business transactions.' 11 Section 21 of the Shipping Act also speaks of 'records,' and consequently the Louisville case may be read as supporting the Board's authority under that section. 39 Petitioners' second contention is that 21 is limited to enabling the Board to obtain information relevant to carrying out its supervisory power over carriers' rates under 17 and 18 and is therefore inapplicable where the Board is seeking information to determine whether the prohibitions of 14-16 are being complied with. We find no basis in the Shipping Act for this bifurcation of the Board's authority. Furthermore, petitioners' claim would appear to be laid at rest by the Supreme Court's description of 21 in Isbrandtsen-Moller Co. v. United States, 1937, 300 U.S. 139, 144-145, 57 S.Ct. 407, 410, 81 L.Ed. 562: 40 'The purpose of section 21 is not far to seek. Other sections forbid allowance of rebates, require the filing of agreements fixing or regulating rates, granting special rates, accommodations or privileges, which may be disapproved, canceled, or modified if the Board finds them unjustly discriminatory or violative of the act, prohibit undue or unreasonable preferences or the cutting of established rates and unjust discrimination between shippers or ports. To enable it to perform its functions the Board may well need such information as that which the section gives it power to demand.' 41 This quotation refers to the Board's responsibilities under 14-16 as well as 17 and 18. It is apparent that 21 is not to be restricted to what petitioners characterize as the 'regulatory' as opposed to the 'enforcement' sections of the Act. 42 Petitioners finally contend that, since 21 does not expressly authorize the Board to require the production of records or memoranda located outside the territorial confines of the United States, that power ought not to be implied. In support of this argument, they point to 27 of the Shipping Act, 46 U.S.C.A. 826, under which the Board 'for the purpose of investigating alleged violations' may subpoena witnesses or documents 'from any place in the United States at any designated place of hearing.' Petitioners contend this restriction should be read into 21. We think not. 43 It is questionable whether the Board is in fact powerless under 27 to subpoena documents outside the territorial confines of the United States. Cf. Securities and Exchange Comm. v. Minas De Artemisa, S.A., 9 Cir., 1945, 150 F.2d 215, in which a similar description of the Security and Exchange Commission's subpoena power under 22(b) of the Securities Act of 1933, 15 U.S.C.A. 77 v(b), was held not to preclude the Commission from compelling persons within the United States to produce documents of foreign corporations situated outside this country. 44 In any event, in light of the coverage and the purposes of the Shipping Act, we can see no reason to restrict 21 to cover only information within the United States. In enacting the Shipping Act, which deals with foreign as well as interstate commerce, Congress was clearly mindful of the fact that foreign flag as well as United States carriers were subject to regulation thereunder. See H.R.Rep. No. 659, 64th Cong., 1st Sess. (1916). If the Board's investigatory powers were limited to the territorial confines of the United States, regulation of foreign flag carriers would be hampered to a substantial degree. Consequently, we will not read into 21 a territorial limitation which appears to be contrary to the purposes of the Shipping Act. 45 We must reject petitioners' contentions regarding protests of foreign governments and extra-territorial enforcement of the Board's order. As the Second Circuit pointed out in Kerr, the protests of foreign governments are matters for consideration by the Executive and not the courts. And the question as to whether the order can be enforced by extra-territorial means is not presently before us. All that is here involved is whether the order was properly and validly issued. 46