1. A vessel owned by a Maine corporation, the stock of which is
owned by a Vermont corporation, whose shares, with the voting
power, are in turn vested in a Canadian corporation, is not "a
vessel . . . owned by persons who are citizens of the United
States," within the meaning of § 27 of the Merchant Marine Act,
1920, prohibiting the transportation of merchandise, on penalty of
its forfeiture, between points in the United States, by water, or
by land and water, in a vessel other than one "owned by persons who
are citizens of the United States." P.
294 U. S.
37.
So
held in view of §§ 37 and 38 of this Act (the latter
amending § 2 of the Shipping Act of 1916) whereby the interests
required to be held by citizens in order that a corporation may be
deemed "a citizen of the United States" are defined.
2. The proviso of § 27 of the Merchant Marine Act, exempting
from its operation
"merchandise transported between points within the continental
United States, excluding Alaska, over through routes heretofore or
hereafter recognized by the Interstate Commerce Commission for
which routes rate tariffs have been or shall hereafter be filed
with said Commission when such routes are in part over Canadian
rail lines and their own or other connecting water facilities . .
."
does not apply to merchandise shipped from St. Albans, Vt., to
New London, Conn., by rail, and thence by water to New York City,
even though the route be part of a through route which elsewhere
embraces Canadian rail lines and for which tariffs were filed with
the Interstate Commerce Commission. P.
294 U. S.
37.
3. An interpretation of the proviso which would enable
foreign-owned vessels to carry merchandise in coastwise traffic,
over routes wholly within the United States, by the expedient of
filing tariffs showing participation in through routes extending
over Canadian railways, would go beyond its purpose and in large
measure defeat the prohibition of § 27. P.
294 U. S.
39.
4. The fact that a carrier by water is subject to the
jurisdiction of the Interstate Commerce Commission, by virtue of
the provisions of
Page 294 U. S. 34
the Interstate Commerce Act which extend its application
"to the transportation of passengers or property . . . partly by
railroad and partly by water when both are used under a common
control, management, or arrangement for a continuous carriage of
shipment"
and which authorize the Commission to establish through routes
and maximum joint rates over such rail and water lines and to
determine "the terms and conditions under which such lines shall be
operated in the handling of the traffic embraced"
held not
to exempt it from the operation of § 27 of the Merchant Marine Act.
P.
294 U. S.
40.
5. The application of § 27 of the Merchant Marine Act to a
foreign-controlled corporation -- Shipping Act of 1916, § 2, as
mended by § 38 of the Merchant Marine Act and made applicable by §
37 of that Act -- which had not theretofore been subjected to the
prohibition there reenacted, and though it will result in the loss
of a substantial part of the business of the corporation, does not
deprive it of its property without due process of law in violation
of the Fifth Amendment. P.
294 U. S. 41.
71 F.2d 273 affirmed.
Certiorari to review a judgment which reversed an interlocutory
order of the District Court restraining the seizure and forfeiture
of merchandise alleged to have been transported in violation of §
27 of the Merchant Marine Act.
MR. JUSTICE STONE delivered the opinion of the Court.
This suit in equity was brought by petitioner in the District
Court for Southern New York to restrain respondent, a United States
customs officer, from seizing merchandise transported by
petitioner's vessels in coastwise traffic in
Page 294 U. S. 35
alleged violation of § 27 of the Merchant Marine Act of June 5,
1920, c. 250, 41 Stat. 988, 999, 46 U.S.C. § 883. An interlocutory
order of the District Court restraining the seizure and forfeiture
of the merchandise thus transported was reversed and set aside by
the Court of Appeals for the Second Circuit on the ground that the
transportation was a plain violation of the statute. 71 F.2d 273.
This Court granted certiorari upon a petition which the government,
considering the question one of importance, did not oppose.
Petitioner is a Maine corporation engaged in operating a
steamship line on Long Island Sound between New London,
Connecticut, and New York City, employing vessels built in the
United States and documented under its laws. All of petitioner's
shares of stock, with the exception of directors' qualifying
shares, are owned and held by the Central Vermont Railway, Inc., a
Vermont corporation, which is an interstate rail carrier, with its
railroad extending northward from New London to points in
Connecticut, Massachusetts, and Vermont. The railway's stock,
except directors' qualifying shares, is held in turn by the
Canadian National Railway Company, a Canadian corporation. The
acquisition of stock of petitioner by the Central Vermont Railway,
Inc., and of the latter's stock by the Canadian National Railway
Company were duly approved by the Interstate Commerce Commission.
40 I.C.C. 589; 158 I.C.C. 397, 405, 406.
Petitioner and Central Vermont Railway, Inc., maintain a line
for transportation of merchandise by rail and water, by continuous
carriage, between points in the New England States and New York
City. About two-thirds of the freight passing over the line either
originates at points in the Northwestern States and is routed over
Canadian rail lines and thence over the Central Vermont rail and
water line to New York City or passes over the same route in the
other direction. These through routes have been
Page 294 U. S. 36
recognized by the Interstate Commerce Commission, and tariffs
for them have been filed with the Commission. The remainder of the
traffic originates in New England or New York City, and moves
between those points. All the freight which moves by petitioner's
boats between New London and New York City is therefore transported
over the whole or some part of a through route recognized by the
Interstate Commerce Commission.
Respondent has seized merchandise which had been shipped over
the Central Vermont from St. Albans, Vt., to New London, and
carried thence by petitioner's vessel to New York City, and
threatens to seize other articles carried by petitioner's vessels
upon shipments between points in New England and New York City.
Petitioner contends that the threatened seizures, which will work
irreparable injury to its business, are unauthorized by § 27,
because: (a) not within its prohibition; (b) it does not apply to
petitioner or the merchandise which it transports, because of the
paramount, and therefore exclusive, jurisdiction of the Interstate
Commerce Commission over the traffic in which petitioner
participates, and (c) if applicable to them, it infringes the due
process clause of the Fifth Amendment.
1. Section 27 of the Merchant Marine Act prohibits the
transportation of merchandise, under penalty of its forfeiture, "by
water, or by land and water," between points in the United
States
"in any other vessel than a vessel built in and documented under
the laws of the United States and owned by persons who are citizens
of the United States: . . . Provided, That this section shall not
apply to merchandise transported between points within the
continental United States, excluding Alaska, over through routes
heretofore or hereafter recognized by the Interstate Commerce
Commission for which routes rate tariffs have been or shall
hereafter be filed with said commission when such routes are in
part over Canadian rail
Page 294 U. S. 37
lines and their own or other connecting water facilities. . .
."
The vessels of petitioner are not owned by persons who are
citizens of the United States within the meaning of the Merchant
Marine Act. Section 38, when read with § 37, provides that, within
the meaning of the Act,
"no corporation . . . shall be deemed a citizen of the United
States unless the controlling interest therein is owned by citizens
of the United States, . . . but, in the case of a corporation . . .
operating any vessel in the coastwise trade, the amount of interest
required to be owned by citizens of the United States shall be 75
percentum."
Subdivision (b) of the section declares:
"The controlling interest in a corporation shall not be deemed
to be owned by citizens of the United States (a) if the title to a
majority of the stock thereof is not vested in such citizens free
from any trust or fiduciary obligation in favor of any person not a
citizen of the United States; or (b) if the majority of the voting
power in such corporation is not vested in citizens of the United
States; or (c) if through any contract or understanding it is so
arranged that the majority of the voting power may be exercised,
directly or indirectly, in behalf of any person who is not a
citizen of the United States; or (d) if by any other means
whatsoever control of the corporation is conferred upon or
permitted to be exercised by any person who is not a citizen of the
United States."
Under these provisions, the stock of petitioner, owned by a
Vermont corporation, whose stock in turn is owned and its voting
power vested in a Canadian corporation, is not "owned by persons
who are citizens of the United States."
It is said that the merchandise transported by petitioner's
vessels is freed from the prohibition of § 27 by the proviso that
it shall not apply to merchandise transported over through routes
recognized by the Interstate Commerce Commission, where such routes
are in part over
Page 294 U. S. 38
Canadian rail lines. It is true that all merchandise transported
on petitioner's vessels between New London and New York is
transported over a part of such through routes as are exempted by
the proviso. But the proviso does not speak of transportation
merely over a domestic segment of a through route which elsewhere
embraces Canadian rail lines. The immunity which it grants is to
merchandise transported "over" the through routes described. Even
though the merchandise carried between points in New England and
New York City by rail and water line might be said to be
transported on a through route which embraces Canadian rail lines,
it plainly is not transported over the route.
The construction for which petitioner contends does violence to
the words of the statute, and would thwart its purpose. The policy
declared by the enacting clause, and restated in the first section,
of the Merchant Marine Act is "to provide for the promotion and
maintenance of an American merchant marine." The policy has found
expression in the enactment of a series of statutes, beginning with
the first year of the government, which have imposed restrictions
of steadily increasing rigor on the transportation of freight in
coastwise traffic by vessels not owned by citizens of the United
States.
* The Act of March
1, 1817, c. 31, 3 Stat. 351, forbade shipment in foreign vessels
between ports in the United States. The Act of February 15, 1893,
c. 117, 27 Stat. 455, prohibited shipment in foreign vessels from
one part of the United States
Page 294 U. S. 39
to another via a foreign port, and the Act of February 17, 1898,
c. 26, 30 Stat. 248, § 1, forbade such shipments "either directly
or via a foreign port, or for any part of the voyage." As these
restrictions were thought not to include transportation that was
partly by water and partly by land,
see 30 Op.Attys.Gen.
3, the statute was amended by the addition in § 27 of the Merchant
Marine Act of the words "or by land and water." The bill for the
amendment, as originally introduced, did not contain the proviso,
which was later added in the conference committee.
See
Conference Report, H.R. No. 1093, 66th Cong., 2d Sess., p. 12. The
proviso has no other recorded legislative history, but its evident
purpose was to avoid disturbance of established routes, recognized
by the Interstate Commerce Commission as in the public interest,
between the Northwestern and Eastern States through the lake ports.
In these routes, foreign owned water carriers participated as well
as Canadian and American rail lines.
See Application of
Grand Trunk Ry. Co. of Canada, 43 I.C.C. 286; Rail-Lake-And-Rail
Rates via Canada, 96 I.C.C. 633. The proviso obviously would enable
American carriers, participating in such through routes, to retain
the benefits of the traffic which in some instances might otherwise
be diverted to all water transportation by foreign owned vessels
between points in Canada and the United States.
An interpretation of the proviso which would enable foreign
owned vessels to carry merchandise in coastwise traffic, over
routes wholly within the United States, by the expedient of filing
tariffs showing participation in through routes extending over
Canadian railways, would go beyond its purpose and in large measure
defeat the prohibition of § 27. Both the words of the statute and
the unmistakable policy of Congress compel the conclusion that the
merchandise respondent has seized, and threatens to seize, is not
within the immunity of the proviso.
Page 294 U. S. 40
2. The argument that § 27 of the Merchant Marine Act does not
apply, because petitioner is under the paramount jurisdiction of
the Interstate Commerce Commission, is based on the provisions of
the Interstate Commerce Act, as amended, which provide (§ 1,
par.(1)(a), 41 Stat. 474) that the Act shall apply to
"the transportation of passengers or property . . . partly by
railroad and partly by water when both are used under a common
control, management, or arrangement for a continuous carriage or
shipment,"
and which authorize (§ 6(13)(b), 37 Stat. 568) the Commission to
establish through routes and maximum joint rates over such rail and
water lines and to determine the "terms and conditions under which
such lines shall be operated in the handling of the traffic
embraced." But these and other sections of the Interstate Commerce
Act, c. 104, 27 Stat. 379, defining generally the Commission's
authority, which by § 1, par.(1)(a), is extended over such water
carriers, are not concerned with the subject matter of § 27, and do
not conflict with it. The application of its prohibition in terms
to any part of the transportation "by land and water," by a foreign
owned vessel, is not to be erased from the statute because the
Interstate Commerce Commission was not given authority to enforce
it. It is not to be supposed that Congress, by giving jurisdiction
to the Interstate Commerce Commission to establish through routes
and maximum joint rates for rail and water lines, intended to
remove from them an unrelated prohibition enacted March 1, 1817, 3
Stat. 351, repeatedly reenacted and specifically made applicable in
§ 27 of the Merchant Marine Act to the transportation of
merchandise by foreign vessels in coastwise traffic "by water, or
by land and water." We know of no principle of statutory
construction which would admit of such a result.
3. Petitioner, in challenging the constitutionality of the
statute, does not deny the power of Congress to exclude
Page 294 U. S. 41
from coastwise traffic vessels which are foreign owned or
controlled, regardless of the corporate form which that control may
take. But it points to the loss of its business which will ensue if
§ 27 is applied to it, and to the fact that it established its
business with the same corporate relationships which were only
later defined so as to bring them within the prohibition reenacted
in § 27. § 38 of the Merchant Marine Act, amending § 2 of the
Shipping Act of 1916, c. 451, 39 Stat. 728, 729, and made
applicable to the Merchant Marine Act by § 37 of the latter Act. It
insists that the prohibition of § 27, to which it was subjected by
the amendment, deprives it of property without due process of law,
in violation of the Fifth Amendment.
This contention is answered by the numerous cases in which this
Court has upheld regulations of interstate commerce which have
compelled the rail carriers to discontinue parts of their business
which had previously been lawful.
New York, N.H. & H. R.
Co. v. Interstate Commerce Comm'n, 200 U.
S. 361;
United States v. Delaware & Hudson
Co., 213 U. S. 366,
213 U. S.
415-416;
Delaware, L. & W. R. v. United
States, 231 U. S. 363,
231 U. S.
369-370;
Assigned Car Cases, 274 U.
S. 564,
274 U. S. 575.
There has been no taking of petitioner's property. It established
its business under foreign domination, subject to the power of
Congress to regulate it, and in the face of a long established
national policy to restrict such foreign control of coastwise
shipping. The amendment of the statute so as to include within its
prohibition the particular form of foreign control to which
petitioner was subject was no more arbitrary, burdensome, or
unreasonable than that involved in the statutes prohibiting
transportation by a railroad of its own commodities.
See United
States v. Delaware & Hudson Co., supra, 213 U. S. 415;
Delaware, Lackawanna & Western R. Co. v. United States,
supra, 231 U. S.
369-370.
Affirmed.
*
See c. 2, § 5, Act July 4, 1789, 1 Stat. 24, 27; c.
31, § 4, Act March 1, 1817, 3 Stat. 351; c. 201, § 20, Act July 18,
1866, 14 Stat. 178, 182; c. 213, § 4, Act March 1, 1873, 17 Stat.
482, 483.
Cf. Treaty with Great Britain of May 8, 1871, 17
Stat., Treaties, 873, art. 30, repealed March 3, 1883, 22 Stat.
641; c. 117, Act Feb. 15, 1893, 27 Stat. 455; c. 26, Act Feb. 17,
1898, 30 Stat. 248.