Court Opinion

ID: 6819453
Source: CourtListenerOpinion
Date Created: 2022-07-23 19:05:25.405268+00
Date Added: 2024-06-11T16:04:03.634116
License: Public Domain

O’Connell, Judge,
dissenting:
On oral argument, counsel stated that this proceeding was instituted mainly for the purpose of establishing a precedent for the administrative use of the customs service, the oil industry and the shipping industry insofar as it is engaged in' other than the American coastwise trade.
The question of law upon which the parties seek a decision is based upon a transaction in which a ship of a regular line actually engaged *198in trade between ports of the United States and ports of South America is sold at the port of New York by the line in question to another regular line engaged in trade between ports of the United States and Alaska and transported by the new owner in ballast from New York to Seattle to engage from there in service of the regular line between ports of the United States and Alaska.
En route from New York to Seattle the ship used fuel oil laden at New York as ships’ supplies, which is tax exempt under the law if the ship in being transported from New York to Seattle by the new owner was actually engaged in trade either between ports of the Atlantic and Pacific or between a port of the United States and one of its possessions.
The difficulty in reaching a decision on the foregoing facts is that the stipulation entered into between- the parties supplemented by a letter from the collector of customs at New York leaves some of such facts to conjecture, and while this oversight is to be deplored, nevertheless the overlooked facts must be dismissed from consideration.
However, it is definitely disclosed by the stipulation that the S. S. Caracas was sold by the Grace Line to the Alaska Steamship Company and was transported in ballast from the port of New York to Seattle “to enter into trade between the United States and. Alaska.” The Caracas made the voyage under her own power and the oil laden as supplies for the voyage, amounting to 66,601 gallons, was used as fuel en route between New York and Seattle.
To the above facts, may be added a contribution from the letter of the collector of customs, 'which is set forth in the majority opinion, that the new owners sent the ship in ballast to the Pacific Coast for fitting out, and that the Caracas prior to her transfer to the Alaska Steamship Company was actually engaged in trade.
That the aforesaidTetter of the collector of customs is a self-serving declaration is disclosed by the fact that the letter is written by the official who assessed the tax, who is employed by appellee, and who naturally has an interest in sustaining his position herein. By his statement with reference to the Caracas that “when it left here after sale it was not engaged in trade at all,” he is in effect rendering the decision that the court is called upon to make in this case, and to support his legal conclusion that the vessel was not engaged in trade at all, he states that “It could have been-broken for scrap or made into a floating hotel or tied up to a wharf upon arrival on the Pacific Coast so far as its status on the delivery trip is concerned.”
The collector’s statement that she could be “made into a floating hotel” is worthy of note in a case where the facts relative to the condition of the vessel are as meager as they are here. The statement warrants an inference, however, that the vessel was not in a state of *199disrepair or unpresentable or that its facilities and appointments were unsuitable for occupation as a hotel. Furthermore, as stated by the collector, prior to her sale, the ship had been actually engaged in trade.
The collector’s statement 'that* [the Caracas was sent to the Pacific Coast “for fitting out,” was interpreted by the trial court to mean that the fuel oil was laden on board the Caracas “for the delivery of itself from the east to west coast, where it was to be refitted so as to 'become able to enter actual trade between the United States and one of its possessions.” [Italics mine.]
Based upon the aforesaid statement of the collector, that the Caracas was transported to Seattle “for fitting out and to begin from there a trade with Alaska,” the majority opinion concludes that the ship was transported there “to have her outfitted and made suitable to enter into trade between the United States and Alaska,” also that the Caracas “was transported to the port of Seattle for the purpose of being outfitted and put in a suitable condition to enter into trade between the United States and Alaska.” [Italics mine.]
There is not a single word in the record that the Caracas was not a first class ship and was not in first class seaworthy condition at all times, and the “outfitting” referred to in the collector’s letter, so far as the record shows, may well have meant, for example, the taking on of a pilot, or deckhands, or a crew familiar with the navigation of the Alaskan ports a,nd waters, or the loading of cots for soldiers stationed in Alaska and engaged there in the military service of the United States. Ón the contrary, prior to her sale, as stated by the collector, the Caracas was “actually engaged in trade.”
In deciding the question relative to the issue in the case at bar, the courts usually cite two well-known judicial precedents, as is done in the majority opinion and in the opinion of the trial court, namely, Standard Oil Company of New Jersey v. United States, 29 C. C. P. A. (Customs) 82, C. A. D. 174, and Standard Oil Company of Louisiana v. United States, 3 Cust. Ct. 39, C. D. 199.
The first case deals with the Leviathan which was owned by an English concern and transported by it in ballast from New York to Scotland to be broken up for scrap. The other case deals with the S. S. Delmundo which was engaged in trade between New Orleans and South America and was transported in ballast from New Orleans to Pensacola to begin from there the dispatch of cargo destined for ports in South America.
The courts held that the Leviathan in her voyage from New York to Scotland, in ballast, was not actually engaged in foreign trade and therefore was subject to the tax, while in the other case, the court held that the Delmundo in her voyage, in ballast, from New Orleans to Pensacola was actually engaged in foreign trade and therefore was exempt from the tax.
*200The conclusion reacted by tbe court below and in tbe decision of tbe majority herein disclose tbat botb courts bave associated tbe voyage of tbe Caracas witb tbe circumstances associated witb tbe voyage of tbe Leviathan and bave rejected tbe idea tbat tbe voyage of tbe Caracas is to be classified witb tbe circumstances relative to tbe voyage of tbe Delmundo.
Tbe trial and appellate courts in tbe case at bar bave failed to note tbe difference between tbe voyage of tbe Leviathan from New York to Scotland and tbe voyage of tbe Caracas from New York to Seattle.
Tbe Leviathan was sent to Scotland to be dismantled and end a career, tbe Caracas was sent to Seattle to be outfitted and begin a career. The Leviathan was transported to tbe scrap heap, tbe Caracas was transported to work. On tbe other band, tbe voyage of tbe Caracas falls squarely within tbe facts and interpretation of law as enunciated in the Delmundo case.
Tbe majority opinion states tbat there is no evidence tbat tbe Caracas ever engaged in tbe Alaskan trade or any other trade after she reached Seattle. It seems to me tbat tbe court is authorized to take judicial notice of tbe fact tbat tbe executives of an important and regularly operated line in tbe American shipping industry 'are not likely to invest a huge sum of money in tbe purchase and transfer of a seaworthy ship from tbe Atlantic to tbe Pacific for tbe purpose of junking it. Yet tbat is tbe precise judicial interpretation of appellant’s action in tbe decision of this and the lower court, and in sending tbe Caracas to tbe scrap heap they send along witb her tbe regulation of tbe customs service which for years has been tbe basis of tbe administrative practice not only of tbe customs service of tbe United States, but also of tbe shipping and oil industries.
In tbe process of reaching its decision, tbe lower court went on tbe theory, as stated in tbe concluding paragraph of its opinion, tbat “tbe Caracas took on tbe fuel for purposes other than as an incident in trade between the United States and any of its possessions, to wit, for the delivery of itself from tbe east to tbe west coast.” [Italics mine.] The statement tbat tbe Caracas delivered itself from tbe east to" tbe west coast violates tbe dictates of common sense, but it represents tbe theory upon which tbe Alaska Steamship Company was deprived by tbe court of any connection witb tbe transportation of tbe vessel from tbe east to tbe west coast, and it also broke tbe continuity of tbe occupation in which tbe Caracas was engaged. Furthermore, tbe implication to be drawn from tbe opinions of botb courts in this case is that tbe Caracas would, bave been actually engaged in trade bad she loaded any cargo whatever, say a bunch of bananas, or a box of cigars, en route from New York to Seattle.
A vessel is actually engaged in trade under tbe statutes when she is making her voyage in tbe dispatch of her owner’s business. A vessel *201is not actually engaged in trade when she is not occupied upon a voyage in the dispatch of her owner’s business, but is employed, say, as a floating hotel, or has no occupation whatever and is tied to a wharf, is in dry dock, or is indefinitely at anchor awaiting a future disposition, such as in the case of the recent fleet of worn-out destroyers, or the “phantom fleet” of the Shipping Board which was anchored in the waters of the Hudson subsequent to World War I.
There is no reason to conclude from the record in this case that the Caracas during the period involved was not continuously engaged in trade, and whether such trade was trade between the ports of the Atlantic and Pacific, or between the ports of the United States and Alaska, is immaterial, as the fuel oil used in either class of trade is exempt from tax under the provisions of the statutes.
It seems to me that this court is nullifying the statute through a judicial definition of the word “trade,” as the statute was heretofore nullified by a judicial definition of the word “export.” Swan and Finch, Company v. United States, 190 U. S. 143. After the decision in the Swan case, Congress revived the legislation by enacting for the benefit of the courts the definition of the word “export.”
In devising legislation to cover a wide and active field of industrial endeavor, it is impossible for Congress to enumerate the multitudinous instances in which the legislation is to be applied and to set forth in minute detail the precise situations in which the law is applicable. That Congress has not specifically enumerated the precise set of facts herein as coming within the express provision of the statutes, is no reason for reversing or restricting the operation of the law.
I dissent from the decision which has been reached in this case for the reasons hereinbefore stated, and for the reasons stated in the recent decision of this court in United States v. Gulf Oil Corporation, 32 C. C. P. A. (Customs) 133, C. A. D. 297, Customs Appeal No. 4482, decided January 4, 1945.