By the agreement of March 12, 1890, between the United States
and the North American Commercial Company, that company contracted
to pay to the United States a rental of $60,000 per year, during
the term of the contract, for the privilege of killing an agreed
number of seals each year, subject to a proportionate reduction of
this fixed rental in case of a limitation in the number, and also a
further sum of seven dollars, sixty two and one-half cents for each
seal taken and shipped by it.
Held that this per capita
tax was not a part of the annual rental, and was not subject to
reduction as was the annual rental of $60,000 a year.
The proviso in the original act for the naming of a maximum
number of seals to be taken, which was not to be exceeded, and
making a proportionate reduction in the fixed rental in case of a
limitation of that number, remained in force through all subsequent
legislation and contracts.
Assuming that the company took all the risk of a catch reduced
by natural causes, yet when the number that might be killed was
reduced by the act of the government, the company was entitled to
such reduction on the reserved rental as might be proper -- that
is, in the same proportion as the number of skins permitted to be
taken bore to the maximum.
The power to regulate the seal fisheries in the interest of the
preservation of the species was a sovereign protective power,
subject to which the lease was taken, and if the government found
it necessary to exercise that power to the extent which appears,
the company did not attempt to rescind or abandon, but accepted the
performance involved in the delivery of the 7500 skins.
The company cannot maintain its counterclaim for damages for
breach of the lease, and the Circuit Court erred in its disposition
thereof.
This was an action brought by the United States against the
North American Commercial Company to recover the sum of
$132,187.50, with interest, for rent reserved for the year ending
April 1, 1894, under a so-called lease, bearing date March 12,
1890, made by the Secretary of the Treasury to the company, and for
royalties upon 7,500 fur seal skins taken and shipped by the
company that year in virtue of that instrument, and for the revenue
tax of two
Page 171 U. S. 111
dollars on each skin. The claim of the government consisted of
these items:
Annual rental. . . . . . . . . . . . . . . . . . $ 60,000.00
Revenue tax on 7,500 skins at $2 . . . . . . . . 15,000.00
Per capita at $7.62 1/2 on 7,500 skins . . . . . 57,187.50
-----------
Total . . . . . . . . . . . . . . . . . . . . $132,187.50
And interest thereon from April 1, 1894
The case was tried by the circuit court without a jury. The
court found for the United States in the sum of $94,687.50, with
interest, and judgment was entered in their favor for $107,257.29,
principal, interest, and costs. 74 F. 145.
The company having taken a writ of error to the Circuit Court of
Appeals for the Second Circuit, that court certified a certain
question arising in the cause, concerning which it desired the
instructions of this Court for its proper decision, whereupon this
Court ordered that the whole record and cause by sent up for
consideration. A counterclaim of the company against the United
States for breach of the lease was disallowed and dismissed by the
circuit court, but not on the merits, and without prejudice to the
right of the company to enforce the same by any other proper legal
proceeding.
The agreement of lease out of which the cause of action arose is
as follows:
"This indenture, made in duplicate this twelfth day of March,
1890, by and between William Windom, Secretary of the Treasury of
the United States, in pursuance of chapter 3 of title 23, Revised
Statutes, and the North American Commercial Company, a corporation
duly established under the laws of the State of California, and
acting by I. Liebes, its President, in accordance with a resolution
of said corporation adopted at a meeting of its board of directors
held January 4, 1890, witnesseth: That the said Secretary of the
Treasury, in consideration of the agreements hereinafter stated,
hereby leases to the said North American Commercial company for a
term of twenty years from the first day of May, 1890, the
Page 171 U. S. 112
exclusive right to engage in the business of taking fur seals on
the Islands of St. George and St. Paul, in the Territory of Alaska,
and to send a vessel or vessels to said islands for the skins of
such seals."
"The said North American Commercial Company, in consideration of
the rights secured to it under this lease above stated, on its part
covenants and agrees to do the things following; that is to
say:"
"To pay to the Treasurer of the United States each year during
the said term of twenty years, as annual rental, the sum of sixty
thousand dollars, and, in addition thereto, agrees to pay the
revenue tax or duty of two dollars laid upon each fur-seal skin
taken and shipped by it from the islands of St. George and St.
Paul, and also to pay to said Treasurer the further sum of seven
dollars sixty-two and one-half cents apiece for each and every
fur-seal skin taken and shipped from said islands, and also to pay
the sum of fifty cents per gallon for each gallon of oil sold by
it, made from seals that may be taken on said islands during the
said period of twenty years; and, to secure the prompt payment of
the sixty thousand dollars rental above referred to, the said
company agrees to deposit with the Secretary of the Treasury bonds
of the United States to the amount of fifty thousand dollars, face
value, to be held as a guaranty for the annual payment of said
sixty thousand dollars rental, the interest thereon, when due, to
be collected and paid to the North American Commercial Company,
provided the said company is not in default of payment of any part
of the said sixty thousand dollars rental."
"That it will furnish to the native inhabitants of said islands
of St. George and St. Paul, annually, such quantity or number of
dried salmon, and such quantity of salt and such number of salt
barrels for preserving their necessary supply of meat, as the
Secretary of the Treasury shall from time to time determine."
"That it will also furnish to the said inhabitants eighty tons
of coal annually, and a sufficient number of comfortable dwellings
in which said native inhabitants may reside, and
Page 171 U. S. 113
will keep said dwellings in proper repair, and will also provide
and keep in repair such suitable school houses as may be necessary,
and will establish and maintain during eight months of each year
proper schools for the education of the children on said islands,
the same to be taught by competent teachers, who shall be paid by
the company a fair compensation, all to the satisfaction of the
Secretary of the Treasury, and will also provide and maintain a
suitable house for religious worship, and will also provide a
competent physician or physicians, and necessary and proper
medicines and medical supplies, and will also provide the
necessaries of life for the widows and orphans and aged and infirm
inhabitants of said islands, who are unable to provide for
themselves; all of which foregoing agreements will be done and
performed by the said company free of all costs and charges to said
native inhabitants of said islands, or to the United States."
"The annual rental, together with all other payments to the
United States provided for in this lease, shall be made and paid on
or before the first day of April of each and every year during the
existence of this lease, beginning with the first day of April,
1891."
"The said company further agrees to employ the native
inhabitants of said islands to perform such labor upon the islands
as they are fitted to perform, and to pay therefor a fair and just
compensation, such as may be fixed by the Secretary of the
Treasury, and also agrees to contribute, as far as in its power,
all reasonable efforts to secure the comfort, health, education,
and promote the morals and civilization of said native
inhabitants."
"The said company also agrees faithfully to obey and abide by
all rules and regulations that the Secretary o the Treasury has
heretofore or may hereafter establish or make in pursuance of law
concerning the taking of seals on said islands, and concerning the
comfort, morals, and other interests of said inhabitants, and all
matters pertaining to said islands, and the taking of seals within
the possession of the United States. It also agrees to obey and
abide by any restrictions or limitations upon the right to kill
seals that the Secretary
Page 171 U. S. 114
of the Treasury shall judge necessary, under the law, for the
preservation of the seal fisheries of the United States, and it
agrees that it will not kill, or permit to be killed, so far as it
can prevent, in any year, a greater number of seals than is
authorized by the Secretary of the Treasury."
"The said company further agrees that it will not permit any of
its agents to keep, sell, give, or dispose of any distilled spirits
or spirituous liquors or opium on either of said islands, or the
waters adjacent thereto, to any of the native inhabitants of said
islands; such person not being a physician, and furnishing the same
for use as a medicine."
"It is understood and agreed that the number of fur seals to be
taken and killed for their skins upon said islands by the North
American Commercial Company during the year ending May 1, 1891,
shall not exceed sixty thousand."
"The Secretary of the Treasury reserves the right to terminate
this lease, and all rights of the North American Commercial Company
under the same at any time, on full and satisfactory proof that the
said company has violated any of the provisions and agreements of
this lease, or in any of the laws of the United States, or any
Treasury regulation respecting the taking of fur seals, or
concerning the islands of St. George and St. Paul, or the
inhabitants thereof."
The circuit court made eighteen findings, including the
following:
"Sixth. The said islands of St. George and St. Paul, in the
Territory of Alaska, are the breeding ground of a herd of seals,
which in the early spring moves northward to Behring Sea, and are
the habitat of that herd during the summer and fall of each year;
that the seals land in great numbers upon the said islands, and
divide into families, each consisting of one male or bull, and many
females or cows; that the young or male seals, or 'bachelors,' as
they are called, are not admitted to the breeding ground, but are
driven off by the older males, and oftentimes destroyed by them;
that, until such bachelor seals arrive at the age of three or four
years, they occupy other portions of the islands, and can be driven
away from the breeding ground and killed without disturbing the
seals
Page 171 U. S. 115
on the breeding grounds; that a large proportion of these young
bachelor seals may be so killed without diminishing the birth rate
of the herd, and their skins are a valuable article of commerce,
and are more valuable than the skins of the females or older males;
that, by protecting the females, and restricting the capture to the
bachelors, the fisheries are capable of a permanent and annual
supply of skins, which would afford a valuable source of
revenue."
"Seventh. That, after the making of the said lease by the said
plaintiff and the said defendant, the said defendant entered upon
the enjoyment of the right thereby granted it; but, on account of
the enforcement by the said plaintiff of the provisions of a
convention or agreement made and entered into by the said plaintiff
with the government of Great Britain, it prohibited and prevented
the said defendant, during the years 1890, 1891, and 1892, from
taking on the said islands as many seals as might have been taken
without diminution of the herd, and far less in each year than the
number mentioned in the said lease for the first year; the numbers
taken in those years being in 1890, 20,995; in 1891, 13,482, and in
1892, 7,547."
"Eighth. That for the said years of 1890, 1891, and 1892, it was
agreed between the Secretary of the Treasury and the said defendant
that the said defendant should pay to the said plaintiff, for the
seal skins taken by it on the said islands, the tax, and such
proportionate part of the rental of $60,000 and the per capita sum
of $7.62 1/2 as the number of seals taken bore to 100,000, except
that for 1890 the per capita of $7.62 1/2 was not so reduced."
"Ninth. That by a convention or agreement with the government of
Great Britain, commonly called the '
modus vivendi,' the
United States promised, during the pendency of the arbitration
between those two governments relating to the Behring Sea
controversy, and the preservation of the seals resorting to those
waters, to prohibit seal killing on the said islands in excess of
7,500, to be taken from the islands for the subsistence of the
natives, and to use promptly its best efforts to insure the
enforcement of the prohibition. "
Page 171 U. S. 116
"Tenth. That pursuant to such agreement, the United States
prohibited and prevented the said defendant from taking any seals
whatever from the said islands during the year 1893, and thus
deprived the said defendant of the benefit of its said lease."
"Eleventh. That the Secretary of the Treasury did not exercise
the discretion conferred upon him by section 1962 of the Revised
Statutes, to limit the right of killing seals when necessary for
the preservation of such seals, and did not so limit or restrict
the right of the said defendant to take seals under its said lease
for the year 1893, and that, during that year, it was not
necessary, or even desirable, for the preservation of such seals,
to limit the killing of the seals upon the said islands to the said
number of 7,500 specified in the said
modus vivendi."
"Twelfth. That in the year 1893, the United States government
itself, through the agents of the Treasury Department, took upon
the said islands 7,500 seals; that the said defendant was permitted
to cooperate in selecting the seals so killed, and to take, and it
did take and retain, the skins of those seals, and in this way, and
in this way only, the defendant received those 7,500 skins."
"In accordance with the power reserved to him in said contract,
the Secretary of the Treasury at the commencement of the
seal-killing season for the year ending April 1, 1894, fixed the
compensation of the natives upon the islands of St. Paul and St.
George, to be paid to them by the defendant for killing the seals,
sorting the skins, and loading them on board the defendant's
steamer at 50 cents for each skin taken from the islands during the
said season, and defendant paid to the natives said compensation,
to-wit, the sum of $3,750."
"Thirteenth. That 20,000 bachelor seals could have been killed
upon the said islands during the year 1893, in the customary way,
without injury to, or diminution of, the herd, and the said
defendant would have taken that number, had it been permitted so to
do."
"Fourteenth. That if the said defendant had been allowed to and
had taken in the year 1893, under its said lease, 20,000
Page 171 U. S. 117
seal skins, there would have been due to the said plaintiff the
$60,000 rental, and for the per capita of $7.62 1/2, and the
revenue tax of $2 per skin, the sum of $192,500, making together
the sum of $252,500 (that is, $12.62 1/2 for each seal skin taken);
that, for the 7,500 received by the said defendant, as above set
forth, it owes to the said plaintiff the said sum of $12.62 1/2
apiece, amounting to the sum of $94,687.50."
"Fifteenth. The defendant could have sold 12,500 more seal
skins, if it had been allowed to take the same on the said islands
during the year 1893 at the average market price of $24 for each
skin; which for the said number of 12,500, which it might have
taken, but was prevented from taking by the act of the government
of the United States, would amount to $300,000; that for such
12,500 seal skins the said defendant would have been liable to pay,
according to the terms of its lease if it had taken 20,000 seal
skins during that year, the sum of $12.62 1/2 each, amounting to
$157,812.50, which, being deducted from the price at which such
skins could have been sold, namely, $300,000, leaves as the net
loss sustained by the said defendant in consequence of the breach
of its said lease by the said plaintiff, the sum of $142,187.50,
which is due and owing to the said defendant by the said plaintiff,
and that its claim therefor would be a proper matter of
counterclaim or credit in this action if the conditions prescribed
by section 951 of the United States Revised Statutes had been
complied with by the said defendant."
"Eighteenth. The defendant did not present to the accounting
officers of the Treasury, for their examination, any claim for
damages by reason of the losses alleged to have been incurred by
the defendant by reason of the action of the United States in
entering into the said convention or
modus vivendi with
Great Britain, and limiting the catch of seals upon the said
islands to 7,500, and such claim was not disallowed by the
accounting officers of the Treasury in whole or in part, and it
was
Page 171 U. S. 118
not proved to the satisfaction of the court that the defendant
was at the time of the trial of this action in possession of
vouchers not before in its power to procure, or that the defendant
was prevented from exhibiting its said alleged claim at the
Treasury by absence from the United States, or by unavoidable
accident."
The circuit court made these conclusions of law:
"First. That the said defendant, having received the said 7,500
seal skins taken from the said islands during the year 1893, is
liable to pay the said plaintiff therefor the said sum of
$94,687.50, with interest thereon from the first day of April,
1894, and the said plaintiff is entitled to recover in this action
said sum, with interest as aforesaid, from the said defendant."
"Second. That by reason of the breach of the said lease by the
said plaintiff, prohibiting the said defendant from taking any seal
skins during the year 1893, the said plaintiff is liable to the
said defendant for the said sum of $142,187.50, with interest
thereon from the first day of December, 1894."
"That on account of the same claim of the said defendant against
the said plaintiff for damages for breach of the said lease not
having been presented to, and disallowed by, the accounting
officers of the Treasury, it cannot be allowed as a counterclaim or
credit in this action, and the said counterclaim is therefore
dismissed, but not on the merits thereof, and without prejudice to
the right of the said defendant to enforce the same by any other
proper legal proceeding."
MR. CHIEF JUSTICE FULLER, after stating the facts in the
foregoing language, delivered the opinion of the Court.
By the Act of July 27, 1868, 15 Stat. 240, c. 273, the laws of
the United States relating to customs, commerce, and navigation
were extended over all the mainland, islands, and
Page 171 U. S. 119
waters of the territory ceded to the United States by the
Emperor of Russia March 30, 1867, so far as applicable, and by
section six of that act it was made unlawful for any person or
persons to kill any otter, mink, marten, sable, or fur seal, or
other fur-bearing animal, within the limits of said territory, or
in the waters thereof; provided, that the Secretary of the Treasury
might authorize the killing of any such fur-bearing animal, except
fur seals, under such regulations as he might prescribe, and it was
made his duty to prevent the killing of any fur seal, and to
provide for the execution of the provisions of the section until
otherwise provided by law. On the 3d of March, 1869, a resolution
was approved, 15 Stat. 348, No. 22, entitled "A resolution more
efficiently to protect the fur seal in Alaska," declaring the
islands of St. Paul and St. George, in Alaska, "a special
reservation for government purposes," and that, until otherwise
provided by law, it should be unlawful for any person to land or
remain on either of said islands, except by the authority of the
Secretary of the Treasury.
July 1 1870, an act entitled "An act to prevent the
extermination of fur-bearing animals in Alaska" was approved. 16
Stat. 180, c. 189. By the first section, it was made unlawful to
kill any fur seal upon the Islands of St. Paul and St. George or in
the waters adjacent thereto except during the months of June, July,
September, and October in each year, or to kill such seals at any
time by the use of firearms, or to use other means tending to drive
the seals away from said islands, provided that the natives should
have the privilege of killing such young seals as might be
necessary for their own food and clothing during other months, and
also such old seals as might be required for their own clothing,
and for the manufacture of boats for their own use, which killing
should be limited and controlled by such regulations as should be
prescribed by the Secretary of the Treasury.
By section 2 it was made unlawful to kill any female seal, or
any seal less than one year old at any season of the year except as
above provided, and also to kill any seal in the waters adjacent to
the islands, or on the beaches, cliffs, or rocks where they haul up
from the sea to remain.
Page 171 U. S. 120
The third section read as follows:
"SEC. 3. That for the period of twenty years from and after the
passage of this act, the number of fur seals which may be killed
for their skins upon the Island of St. Paul is hereby limited and
restricted to seventy-five thousand per annum, and the number of
fur seals which may be killed for their skins upon the Island of
St. George is hereby limited and restricted to twenty-five thousand
per annum,
provided that the Secretary of the Treasury may
restrict and limit the right of killing if it shall become
necessary for the preservation of such seals, with such
proportionate reduction of the rents reserved to the government as
shall be right and proper, and if any person shall knowingly
violate either of the provisions of this section, he shall, upon
due conviction thereof, be punished in the same way as provided
herein for a violation of the provisions of the first and second
sections of this act."
The fourth section provided that immediately after the passage
of the act, the Secretary of the Treasury should lease, for the
rental mentioned in the sixth section of the act, to the best
advantage of the United States, having due regard for the interests
of the government, the native inhabitants, parties theretofore
engaged in trade, and the protection of the seal fisheries, for a
term of twenty years from the first day of May, 1870,
"the right to engage in the business of taking fur seals on the
islands of St. Paul and St. George and to send a vessel or vessels
to said islands for the skins of such seals,"
giving a lease duly executed and not transferable and taking
from the lessee or lessees a bond conditioned
"for the faithful observance of all the laws and requirements of
Congress and of the regulations of the Secretary of the Treasury
touching the subject matter of taking fur seals, and disposing of
the same, and for the payment of all taxes and dues accruing to the
United States connected therewith, and in making said lease the
Secretary of the Treasury shall have due regard to the preservation
of the seal fur trade of said islands, and the comfort,
maintenance, and education of the natives thereof."
The fifth section read:
Page 171 U. S. 121
"SEC. 5. That at the expiration of said term of twenty years, or
on surrender or forfeiture of any lease, other leases may be made
in manner as aforesaid for other terms of twenty years; . . . and
any person who shall kill any fur seal on either of said islands,
or in the waters adjacent thereto without authority of the lessees
thereof, and any person who shall molest, disturb, or interfere
with said lessees, or either of them, or their agent or employees
in the lawful prosecution of their business, under the provisions
of this act, shall be deemed guilty of a misdemeanor, and shall for
each offense, on conviction thereof, be punished in the same way
and by like penalties as prescribed in the second section of this
act, and all vessels, their tackle, apparel, appurtenances, and
cargo, whose crews shall be found engaged in any violation of
either of the provisions of this section, shall be forfeited to the
United States, and if any person or company under any lease herein
authorized shall knowingly kill or permit to be killed any number
of seals exceeding the number for each island in this act
prescribed, such person or company shall, in addition to the
penalties and forfeitures aforesaid, also forfeit the whole number
of the skins of seals killed in that year, or, in case the same
have been disposed of, then said person or company shall forfeit
the value of the same. . . ."
By the sixth section, it was provided that
"the annual rental to be reserved by said lease shall not be
less than fifty thousand dollars per annum, . . . and in addition
thereto, a revenue tax or duty of two dollars is hereby laid upon
each fur sealskin taken and shipped from said islands during the
continuance of such lease to be paid into the Treasury of the
United States, and the Secretary of the Treasury is hereby
empowered and authorized to make all needful rules and regulations
for the collection and payment of the same, for the comfort,
maintenance, education and protection of the natives of said
islands, and also for carrying into full effect all the provisions
of this act."
These provisions, as well as others from the prior legislation,
were carried forward into the Revised Statutes, approved
Page 171 U. S. 122
June 22, 187, sections 1954 to 1976 constituting chapter 3 of
Title XXIII, relating to the Territory of Alaska, and sections 1956
to 1976 thereof to the subject under consideration.
By section 1960, the killing of any fur seals upon the islands
or their adjacent waters was forbidden except during June, July,
September, and October in each year, etc., with the same proviso as
in the first section of the act of 1870.
Sections 1962, 1963, 1968, 1969, 1972, and 1973 were as
follows:
"SEC. 1962. For the period of twenty years from the first of
July, eighteen hundred and seventy, the number of fur seals which
may be killed for their skins upon the Island of St. Paul is
limited to seventy-five thousand per annum, and the number of fur
seals which may be killed for their skins upon the Island of St.
George is limited to twenty-five thousand per annum; but the
Secretary of the Treasury may limit the right of killing, if it
becomes necessary for the preservation of such seals, with such
proportionate reduction of the rents reserved to the government as
may be proper, and every person who knowingly violates either of
the provisions of this section shall be punished as provided in the
preceding section."
"SEC. 1963. When the lease heretofore made by the Secretary of
the Treasury to 'The Alaska Commercial Company' of the right to
engage in taking fur seals on the islands of Saint Paul and Saint
George, pursuant to the Act of July 1, 1870, chapter 189, or when
any future similar lease expires, or is surrendered, forfeited, or
terminated, the Secretary shall lease to proper and responsible
parties, for the best advantage of the United States, having due
regard to the interests of the government, the native inhabitants,
their comfort, maintenance, and education, as well as to the
interests of the parties heretofore engaged in trade and the
protection of the fisheries, the right of taking fur seals on the
islands herein named and of sending a vessel or vessels to the
islands for the skins of such seals for the term of twenty years at
an annual rental of not less than fifty thousand dollars, to be
reserved in such lease and secured by a deposit of United
Page 171 U. S. 123
States bonds to that amount, and every such lease shall be duly
executed in duplicate, and shall not be transferable."
"SEC.1968. If any person or company, under any lease herein
authorized, knowingly kills, or permits to be killed any number of
seals exceeding the number for each island in this chapter
prescribed, such person or company shall, in addition to the
penalties and forfeitures herein provided, forfeit the whole number
of the skins of seals killed in that year, or, in case the same
have been disposed of, then such person or company shall forfeit
the value of the same."
"SEC. 1969. In addition to the annual rental required to be
reserved in every lease, as provided in section nineteen hundred
and sixty-three, a revenue tax or duty of two dollars is laid upon
each fur seal skin taken and shipped from the Islands of Saint Paul
and Saint George, during the continuance of any lease, to be paid
into the Treasury of the United States, and the Secretary of the
Treasury is empowered to make all needful regulations for the
collection and payment of the same, and to secure the comfort,
maintenance, education, and protection of the natives of those
islands, and also to carry into full effect all the provisions of
this chapter except as otherwise prescribed."
"SEC.1972. Congress may at any time hereafter alter, amend, or
repeal sections from nineteen hundred and sixty to nineteen hundred
and seventy-one, both inclusive, of this chapter."
"SEC. 1973. The Secretary of the Treasury is authorized to
appoint one agent and three assistant agents who shall be charged
with the management of the seal fisheries in Alaska, and the
performance of such other duties as may be assigned to them by the
Secretary of the Treasury."
Pending the adoption of the Revised Statutes, and on March 24,
1874, 18 Stat. 24, c. 64, the Act of July 1, 1870, was amended so
as to authorize the Secretary of the Treasury to designate the
months in which fur seals
"may be taken for their skins on the islands of St. Paul and St.
George, in Alaska, and in the waters adjacent thereto, and the
number to be taken on or about the islands respectively."
Thus, the
Page 171 U. S. 124
Revised Statutes were in effect amended so that, whereas, by
section 1960, the months of June, July, September, and October had
been designated as the months in which fur seals might be taken on
the islands and in the waters adjacent thereto for their skins, and
by section 1962 the maximum number which might be killed on the
Island of St. Paul was limited to 75,000, and on the Island of St.
George to 25,000, per annum, the Secretary of the Treasury was
authorized by the amendatory act to designate the months in which
fur seals might be taken, and the number to be taken on or about
each island, respectively. The times of killing and the number to
be killed were left to the judgment of the Secretary of the
Treasury.
Manifestly the object the government had in view throughout this
legislation was the preservation, by proper regulations, of the
fur-bearing animals of Alaska, including and particularly the fur
seals.
The first twenty years being about to expire, the Secretary of
the Treasury on December 24, 1889, advertised for proposals
"for the exclusive right to take fur seals upon the Islands of
St. Paul and St. George, Alaska, for the term of twenty (20) years
from the first day of May, 1890, agreeably to the provisions of the
statutes of the United States."
Among other things, the advertisement stated:
"The number of seals to be taken for their skins upon said
islands during the year ending May 1, 1891, will be limited to
sixty thousand (60,000), and for the succeeding years the number
will be determined by the Secretary of the Treasury in accordance
with the provisions of law."
There were twelve proposals or bids, of which the North American
Commercial Company put in three, numbered 10, 11, and 12, each of
which offered a gross sum as rental, and, in addition to that and
the revenue tax, a royalty per capita. The three bids set forth the
advertisement at length. No. 10 contained a proviso that the
proposal was made on the express condition that the United States
should not, through the Secretary of the Treasury or otherwise,
limit the skins to be taken to any number less than 100,000 skins
per
Page 171 U. S. 125
annum after the first year of the lease, and No. 12 made the
express condition that the United States should protect the
exclusive right of the fur-seal fisheries in and within the
islands, and the waters known as the "Behring Sea." No. 11
contained no such express conditions, and it was this bid which was
accepted by the government. The lease in question was thereupon
entered into, "in pursuance of chapter 3 of Title XXIII, Revised
Statutes," as it recites.
By its terms, the company undertook, in consideration of the
lease for twenty years of
"the exclusive right to engage in the business of taking fur
seals on the Islands of St. George and St. Paul, in the Territory
of Alaska, and to send a vessel or vessels to said islands for the
skins of such seals, . . . to pay to the Treasurer of the United
States each year during the said term of twenty years, as annual
rental, the sum of sixty thousand dollars, and in addition thereto
agrees to pay the revenue tax or duty of two dollars upon each fur
seal skin taken and shipped by it from the Islands of St. George
and St. Paul, and also to pay to said Treasurer the further sum of
seven dollars sixty-two and one-half cents apiece for each and
every fur seal skin taken and shipped from said islands, . . . and
to secure the sixty thousand dollars rental above referred to"
to deposit United States bonds of the face value of fifty
thousand dollars, and further
"faithfully to obey and abide by all rules and regulations that
the Secretary of the Treasury has heretofore or may hereafter
establish or make in pursuance of law concerning the taking of
seals on said islands, and concerning the comfort, morals, and
other interests of said inhabitants, and all matters pertaining to
said islands and the taking of seals within the possession of the
United States. It also agrees to obey and abide by any restrictions
or limitations upon the right to kill seals that the Secretary of
the Treasury shall adjudge necessary under the law for the
preservation of the seal fisheries of the United States, and it
agrees that it will not kill, or permit to be killed, so far as it
can prevent, in any year a greater number of seals than is
authorized by the Secretary of the Treasury."
It was also agreed that
"the annual rental, together with
Page 171 U. S. 126
all other payments to the United States provided for in this
lease, shall be made and paid on or before the first day of April
of each and every year during the existence of this lease,
beginning with the first day of April, 1891."
The lease also provided that the number of fur seals to be taken
and killed for their skins during the year ending May 1, 1891,
should not exceed sixty thousand.
1. It is contended on behalf of the company that, conceding that
the right of killing in 1893 had been duly limited to seventy-five
hundred seals, and that it took and received that number of skins
as full performance of the covenants of the lease on the part of
the government, it is entitled, under section 1962 of the Revised
Statutes, to a proportionate reduction of the rent reserved (that
is, in the proportion that 7,500 bears to 100,000), and that this
reduction applies to the per capita of $7.62 1/2 for each fur seal
skin taken and shipped by it, as well as to the $60,000 annual
rental. On this theory, the company tendered to the United States,
before action brought, the sum of $23,789.50, being $15,000 for the
tax on 7,500 skins; $4,500, three-fortieths of the annual rental,
and $4,289.50, three-fortieths of the full royalty on the
skins.
The latter branch of this contention may be dismissed at once as
untenable. By the terms of the lease, the per capita of $7.62 1/2
for each and every skin was not a part of the annual rental. The
lease is explicit that the annual rental is the sum of $60,000, and
that in addition the lessee shall pay the revenue duty of two
dollars per skin, and also pay the further sum of this royalty on
each and every skin. United States bonds were to be deposited "to
secure the prompt payment of the sixty thousand dollars rental
above referred to," and "the annual rental, together with all other
payments to the United States provided for in this lease" was to be
paid on or before the 1st of April of each and every year.
We think the rent reserved as such was this specified annual
rental, and that the per capita payment was in the nature of a
bonus, in the sense of an addition to the stated consideration.
Page 171 U. S. 127
The Secretary was to lease to the best advantage to the United
States, and that included the right to accept an offer of this
kind, and, while the
per capita was a part of the return
to the government, it does not follow that the provision for
reduction had reference to anything else than the specified rental,
nor is any other construction compelled by the fact that the
per capita might exceed the rental. Natural causes might
diminish the catch so that this would not be so, and at all events
the construction of the words of the statute and contract cannot be
controlled by the amount of the reduction in one view, rather than
the other. Of course, at the time the lease was made it is evident
that it was supposed that sixty thousand seals might be taken
annually, and on that basis, the
per capita royalty would
be the principal compensation of the government. This made it
directly to the interest of the government to allow the largest
possible catch, which was undoubtedly a reason for the offer of the
lessee in that form, as it tended to induce great circumspection in
prescribing any limitation.
On the other hand, it may be that each seal would cost more, as
the number taken was less, and that if the price of skins did not
keep up, the company might be subjected to a loss no matter how
many it took, and the loss might be greater the more it took. But
that was a risk the company assumed, and no reason is perceived for
relieving it from the consequences.
The reduction of what the company agreed to pay, so far as the
per capita was concerned, regulated itself. The smaller
the number of skins, the less the company would pay; the larger the
number, the more. We conclude that there is no adequate ground for
holding that there should be any reduction on the
per
capita which necessarily had to be paid.
By section 1962 of the Revised Statutes, it was provided, as it
had been by section three of the act of 1870, that for the period
of twenty years from July 1, 1870, the number of fur seals which
might be killed for their skins on the Island of St. Paul was
limited to 75,000 per annum, and the number which might be killed
on the Island of St. George to 25,000,
Page 171 U. S. 128
but the Secretary of the Treasury might limit the right of
killing if it became necessary for the preservation of such seals,
"with such proportionate reduction of the rents reserved to the
government as may be proper."
By section five of the act of 1870, that at the expiration of
the first term of twenty years or its termination by surrender or
forfeiture, other leases might be made "in manner as aforesaid, for
other terms of twenty years," and by section 1963 of the Revised
Statutes that when the first lease or any future similar lease
expired or was surrendered, forfeited, or terminated, the Secretary
should again lease for the term of twenty years.
It is argued with great force on behalf of the government that
whether reference be had to the act of 1870 or to the Revised
Statutes, the limitation of the maximum number was expressly made
only for a period of twenty years from July 1, 1870, that that
limitation determined with the expiration of that period, and that
consequently the provision for a proportionate reduction of rental
in case of a limitation by the Secretary did not afterwards apply.
But, taking the entire legislation into consideration, as we may
and indeed must in accordance with well settled rules of
construction, when interpretation results in fairly differing
meanings,
United States v. Lacher, 134 U.
S. 624,
134 U. S. 626;
Barrett v. United States, 169 U.
S. 218,
169 U. S. 227,
we are not persuaded that this position is correct.
In giving authority to make the first lease, by section four of
the act of 1870, the character of the lease was described, and a
provision for further leases was made in section five, which
referred back to the description in section four, by saying that
other leases might be made "in manner as aforesaid for other terms
of twenty years." When, however, the statutes were revised, the
first lease had been executed, and was running, and the words "in
manner as aforesaid" were eliminated. The provision for succeeding
leases was made the subject of section 1963, and, in declaring what
they should be, the same language was used as that employed in the
original act, whereby the character of future leases was
indicated.
Page 171 U. S. 129
And section 1968, taken from the latter part of section five of
the act of 1870, provided for the forfeiture of all the skins
"if any person or company, under any lease herein authorized,
knowingly kills, or permits to be killed, any number of seals
exceeding the number for each island in this chapter
prescribed."
It is said that the words "under any lease herein authorized"
were intended to apply to the then pending lease, and that the
purpose of the section was to provide for a forfeiture against any
new lessee who might come in under a lease made on the happening of
either of the contingencies mentioned in section 1963, as applied
to the first lease; but we think the operation of the section was
not intended to be thus restrained, and that it referred to any
lease authorized under the chapter, and applied the forfeiture to
the killing of seals in excess of the maximum number prescribed,
which was to remain if, when the time arrived for a new bidding, no
change had been made by Congress.
The revision of the statutes was approved June 22, 1874, but, by
the last section, section 5601, provision was made that legislation
between December 1, 1873, and the date of enactment, should take
effect as if passed subsequently.
Accordingly, the Act of March 24, 1874, operated by way of
amendment, and by authorizing the Secretary to designate the months
during which seals might be taken, and the number to be taken on or
about each island, respectively, removed the restrictions imposed
by sections 1960 and 1962 in those regards. The next day after the
approval of the act, the then Secretary availed himself of it by
entering into an agreement with the company that the lease of 1870
should be amended so as to provide that not more than 90,000 seals
should be killed per annum on the Island of St. Paul, and not more
than 10,000 on the Island of St. George, and that no seals should
be killed in any other month except the months of June, July,
August to the 15th, September, and October. It seems to us
reasonably clear that the specific restriction as to number, which,
with the other restriction as to the months, it was the object of
the act to remove, had relation to the distribution
Page 171 U. S. 130
as between the two islands "respectively," and if it were proper
to resort to what passed in Congress, no doubt could be entertained
on the subject. When the bill was reported from the committee on
commerce, no written report was made, but its purpose and scope
were explained on behalf of that committee in each house, and those
explanations declared the object to be as above indicated.
Although the authority conferred as to the times of killing and
the number to be killed was continuing and discretionary, and
although the company in the present lease covenanted that it would
not kill in any year a greater number than was authorized by the
Secretary, yet we think it would be going much too far to hold that
the original provision for a maximum number, and a proportionate
reduction of the fixed rental in case of a limitation, were done
away with by implication.
Repeals, where the intention to do so is not expressed, are not
favored, and moreover here, the mischiefs sought to be remedied are
quite obvious. One was that it was evidently thought that seals
might properly be taken during the first half of August, and the
existing statute forbade this. The other was that the maximum was
fixed for each island, whereas it had probably been ascertained
that the distribution was erroneous or that the numbers that might
be safely taken on one or the other might vary, and consequently
that greater elasticity was desirable. The language by which these
objects were attained was entirely reconcilable with the prior law
so far as it did not purport to change it.
The legislation from the beginning was directed to the
preservation of the fur seals, and the act of 1870 recognized that
it might be necessary to such preservation that the number to be
killed in the different years should be varied, and the discretion
to do this was vested in the Secretary; but while this authority
was made more comprehensive by the act of 1874, and a
redistribution, as between the two islands, authorized, we cannot
accept the view that it was the intention by that act to wholly
change the scheme of leasing by making the discretion of the
Secretary purely arbitrary and dispensing with any maximum or
reduction.
Page 171 U. S. 131
It should be added that the action of the Treasury Department in
the matter of the abatement of rent for 1890, 1891, and 1892 does
not impress us as amounting to such departmental construction as
entitles it to any particular weight, and the views of the
Department of Justice were conflicting.
Reference is made to article 5 of the treaty of 1892, extending
the
modus vivendi, and the action taken under it before
the tribunal of arbitration, as if amounting to an estoppel or an
admission against interest, or at the least as having some
considerable bearing on the construction of the lease and the
statutes. That article provided, among other things, that
"if the result of the arbitration shall be to deny the right of
British sealers to take seals within the said waters, then
compensation shall be made by Great Britain to the United States
(for itself, its citizens and lessees) for this agreement to limit
the island catch to seven thousand five hundred a season upon the
basis of the difference between this number and such larger catch
as in the opinion of the arbitrators might have been taken without
an undue diminution of the seal herds."
And it appears that the United States originally presented, as
part of its case, a claim for the recovery of the damages which it
and its lessee had sustained by reason of the limitation to 7,500,
but this claim was certainly not presented as a claim which the
company could maintain against the United States under the lease,
and it involved no question of the power of the Secretary in
respect of the lessee under the covenants of that instrument. There
was no element of estoppel about the transaction, and counsel had
no authority to bind the government for any other purpose than the
pending cause.
Moreover, counsel for the United States were constrained to
expressly admit that the evidence failed to establish that an
additional take, over and above the seventy-five hundred, could
have been safely allowed. In the argument on behalf of the United
States, Judge Blodgett, one of the counsel (and all the counsel
concurred), made this statement:
"Frankness requires us, as we think, to say that the proofs
which appear in the counter-case of the United States as to the
condition of the seal herd on the Pribilof Islands show that the
United
Page 171 U. S. 132
States could not have allowed its lessees to have much, if any,
exceeded the number of skins allowed by the
modus vivendi
of 1892, without an undue diminution of the seal herd, and upon
this branch of the case, we simply call the attention of the
tribunal to the proofs, and submit the question to its
decision."
And later counsel announced that the United States would not ask
the tribunal for any finding for damages upon and under Article
V.
Our opinion is that, assuming that the lessee took all the risk
of a catch reduced by natural causes, yet that when the number that
might be killed was limited by the act of the government or its
agent, the Secretary, the company was entitled to such reduction on
the rental reserved as might be proper, and that the rule to be
observed in that regard would be a reduction in the same proportion
as the number of skins permitted to be taken bore to the maximum.
This would reduce the annual rental for the year under
consideration from $60,000 to $4,500; the tax due would be $15,000,
and the
per capita, $57,187.50, making a total of
$76,687.50.
2. Laying out of view the concession under the first
proposition, the company further contended that the prohibition by
the United States, by agreement with Great Britain, of seal killing
in excess of 7,500, to be taken on the islands for the subsistence
of the natives, relieved the company from its covenants for the
payment of rent and royalty, and that no action could be maintained
therefor on the lease.
The evidence disclosed that prior to 1890, the number of seals
annually resorting to these islands was rapidly diminishing. This
was attributed to the open sea or pelagic sealing, whereby the
seals, especially the females, who were exempt from slaughter under
the laws of the United States, were interrupted in their passage to
the islands by the crews of foreign vessels, and were killed in
great numbers while in the water. For several years, the United
States, asserting that it had territorial jurisdiction over Behring
Sea, had been striving to prevent vessels of foreign nations from
seal hunting on the open waters thereof. Great Britain denied the
territorial jurisdiction of the United States, and denied that the
United States
Page 171 U. S. 133
had a right of property in the fur seals while on the high seas
during their progress to or from the Islands of S. Paul and St.
George, and it became necessary to resort to international
regulation to prevent the extermination of the seals. Indeed, it
appears that the Treasury agent in charge made a report to the
Secretary of the Treasury after the season of 1890 in which he
strenuously urged the necessity of stopping sealing for a number of
years absolutely upon the islands as a necessary measure for the
preservation of the seals. On the 15th of June, 1891, an agreement
for a
modus vivendi was concluded between the government
of the United States and the government of her Britannic majesty
"in relation to the fur seal fisheries in Behring Sea," 27 Stat.
980, whereby, with a view to promote the friendly settlement of the
questions between the two governments touching their respective
rights in Behring Sea, "and for the preservation of the seal
species," it was agreed that seal killing should be prohibited
until the following May, altogether by Great Britain, and by the
United States "in excess of seventy-five hundred, to be taken on
the islands for the subsistence and care of the natives." This was
followed by a convention submitting to arbitration the questions
concerning the jurisdictional rights of the United States in
Behring Sea, "the preservation of the fur seal in, or habitually
resorting to, the said sea," and the right to take such seals,
which was proclaimed May 9, 1892. 27 Stat. 947.
And under the same date, the
modus vivendi was renewed
during the pendency of the arbitration. 27 Stat. 952.
The arbitral tribunal sat in Paris in 1892-1893, and the
prohibition covered the killing period for which recovery is sought
is this case.
The learned circuit judge held that the limitation under the
modus vivendi was not a designation by the Secretary, but
was a prohibition by the government, and consequently that if the
lessees had not received any skins, the action could not have been
maintained. But he held that as the 7,500 skins were received by
the lessees, they must make compensation for them, that a proper
way to determine
Page 171 U. S. 134
this was to ascertain what the fair product of the year which
might safely be taken was, and compute what each skin would have
cost the company, assuming they had taken that number, and by this
mode of computation, having found that 20,000 might properly have
been taken, he reached the sum of $94,687.50 as the amount due to
the government.
The circuit court found that the United States, pursuant to the
modus vivendi,
"prohibited and prevented the said company from taking any seals
whatever from the said islands during the year 1893, and thus
deprived the said defendant of the benefit of its said lease."
We think this so far partakes of a conclusion of law that we are
not shut up to treating it as a finding of fact. The power to
regulate the seal fisheries in the interest of the preservation of
the species was a sovereign protective power subject to which the
lease was taken, and if the government found it necessary to
exercise that power to the extent which this finding asserts, and
if we assume that the company might thereupon have treated this
contract as rescinded, it is sufficient to say that it took no such
position, but accepted the performance involved in the delivery of
the seventy-five hundred skins. The company did not wish to rescind
or abandon, and it could not but recognize that, as the
modus was entered into in an effort to save the seal race
from extermination, and thereby to preserve something for the
future years of the lease, the prohibition was so far for its
benefit.
Again, although the government acted, in making the lease, by
the hand of the Secretary, it was the real contracting party,
exercising the power of regulation through the Secretary, so that
it was immaterial whether the Secretary, on his own judgment or in
compliance with the will of the government, confined the number of
seals taken in the year 1893 to 7,500. Undoubtedly the government
could have directed the Secretary by law to restrict the killing to
seventy-five hundred seals, and the treaty was nothing more.
The company could not object that the Secretary was constrained
to impose the limitation, for the Secretary was bound to obey the
instructions of his principal, and the company
Page 171 U. S. 135
could not make it the subject of a contest
in pais as
to whether the preservation of the herd in fact required the
limitation. The whole business of taking seals was conducted under
the supervision of the government, and by section 1973, the
Secretary was authorized to appoint agents who were charged with
the management of the seal fisheries.
The record shows that instructions were issued to the government
supervising agent on April 26, 1893, and a copy delivered to the
superintendent of the company before the commencement of the season
of that year. These instructions directed the number of seals to be
taken during the season of 1893 to be limited to 7,500. It was
stated by the Secretary that it was believed
"that if the killing be confined between the first of June and
the tenth of August, a better quality of skins would be obtained
and less injury would be done to the rookeries,"
and he added:
"This matter is, however, left, as above stated, to your
discretion, and in reference thereto you will confer fully with the
representative of the company, its interests and those of the
government in the preservation of the fur seals being
identical."
In the letter of the attorney of the company of November 15,
1893, he said: "During the present year, this company, in strict
compliance with the orders of the Treasury Department, restricted
its catch to 7,500." In other words, it appears that both parties
regarded the Secretary of the Treasury as authorizing the taking of
7,500 skins in the year 1893.
Under the law of 1870 and the various sections of the Revised
Statutes, the power was expressly reserved to the government to
make whatever restrictions of the business it might see fit to
make; the lease recognized this to the full extent, and it was
moreover expressly stipulated that the company was not to kill or
permit to be killed a greater number than the Secretary might
authorize. The company was offered 7,500 skins for 1893, took them,
paid the amount fixed by the Secretary under the lease for
compensation to the natives for taking and loading the skins, and
subsequently tendered the sum of $23,789.50 as, according to its
computation, the full amount due under the lease. These
particular
Page 171 U. S. 136
seals were killed by the government agent, but notice of the
killing from time to time was given to the company, and the company
requested to select the skins it desired, which it did. The
government did not regard the lease as broken, but proceeded under
it and delivered the 7,500 skins as full performance of the
covenant on its part, for the privilege of taking the seals was
subject to such limitation on the number as the government believed
it necessary to impose, and the company acquiesced in that view by
taking the 7,500 skins without dissent.
It was after this that the question arose not of breach of
contract, but as to what sum, if any, was due from the company
under the lease more than it had tendered. Was the company entitled
to a reduction on what it had agreed to pay, and if so, how
much?
3. Finally, the company claims that the United States are liable
to it in damages to the extent of $287,725 for skins it could have
taken during the season of 1893 without unreasonable injury to or
diminution of the seal herd, and which the United States prevented
it from doing, and that it can avail itself of this claim in this
suit by way of recoupment and counterclaim.
The circuit court rejected this counterclaim on the ground that
the claim had not been presented, and disallowed by the accounting
officers of the Treasury, and dismissed it not on the merits, but
without prejudice. The company prosecuted its writ of error from
the Circuit Court of Appeals for the Second Circuit, and assigned
as errors, among others, that the circuit court erred in adjudging
that its claim for damages was not duly presented, that the court
did not allow its counterclaim, and that judgment was not directed
in favor of the company. From what we have already said, it will
have been seen that we are of opinion that the company cannot
maintain this claim for damages, and that, assuming that the claim
had been duly presented and disallowed, and that, if meritorious,
it might be availed of by way of recoupment in this action, the
circuit court erred in its disposition of the counterclaim.
Page 171 U. S. 137
The seal fisheries of the Pribilof Islands were a branch of
commerce, and their regulation involved the exercise of power as a
sovereign, and not as a mere proprietor. Such governmental powers
cannot be contracted away, and it is absurd to argue that in this
instance there was any attempt to do so, or any sheer oppression or
wrong inflicted on the lessee by the government in the effort to
protect the fur seal from extinction.
The privilege leased was the exclusive right to take fur seals,
but it was subject, and expressly subjected, from the beginning to
whatever regulations of the business the United States might make.
If those regulations reduced the catch, the company was protected
by a reduction of the rental, and paid taxes and
per
capita only on the number taken. The other expenses to which
it bound itself were part of the risk of the venture. The catch for
1893 was lawfully limited to 7,500, and the company accepted and
disposed of the skins. It cannot now be heard to insist that that
limitation was in breach of the obligations of the government for
which, though still claiming the contract to be outstanding, it is
entitled to recover damages.
The judgment of the circuit court is reversed, and the cause
remanded, with a direction to enter judgment in favor of the United
States for $76,687.50, with interest from the first day of April,
1894, and to enter judgment in favor of the United States on the
counterclaim.
