South Corp. v. U.S.

Citation690 F.2d 1368
Decision Date28 October 1982
Docket NumberNo. 82-19,82-19
Parties, 215 U.S.P.Q. 657, 1 Fed. Cir. (T) 1 SOUTH CORPORATION and Seal Fleet, Inc., Appellants, v. The UNITED STATES, Appellee. Appeal
CourtUnited States Courts of Appeals. United States Court of Appeals for the Federal Circuit

John K. Meyer, Houston, Tex., argued for appellants. With him on the brief was Hinds & Meyer, Houston, Tex.

Madeline B. Kuflik, New York City, argued for appellee. With her on the brief were Asst. Atty. Gen. J. Paul McGrath, Washington, D. C., Director David M. Cohen, and Atty. in Charge Joseph I. Liebman, New York City.

Before MARKEY, Chief Judge, and FRIEDMAN, RICH, DAVIS, BALDWIN, KASHIWA, BENNETT, MILLER, SMITH and NIES, Circuit Judges.

MARKEY, Chief Judge.

This appeal is the first to be heard, and this opinion the first to be published, by the United States Court of Appeals for the Federal Circuit, established October 1, 1982 by the Federal Courts Improvement Act of 1982, Pub.L.No.97-164, 96 Stat. 25.

The court sits in banc to consider what case law, if any, may appropriately serve as established precedent. We hold that the holdings of our predecessor courts, the United States Court of Claims and the United States Court of Customs and Patent Appeals, announced by those courts before the close of business September 30, 1982, shall be binding as precedent in this court.

Respecting the merits, South Corporation (South) and Seal Fleet, Inc. (Seal) appeal from a judgment of the United States Court of International Trade (Edward D. Re, Chief Judge), upholding the imposition of foreign repair duties under 19 U.S.C. § 1466(a). 1 We affirm that judgment, 531 F.Supp. 180.

Background

The parties stipulated that the involved vessels were at all material times: (a) engaged exclusively in oceanographic research and intended solely for that purpose; and South's vessel M/V NORTH SEAL departed the United States on July 18, 1972 and was on a foreign voyage until its return to the United States on December 23, 1972. Repairs costing $98.40 were made on December 2, 1972 at Montego Bay, Jamaica. Duty of $49.20 was assessed and paid under § 1466(a).

(b) designed and used primarily for purposes other than transporting passengers or property in the foreign or coasting trade.

Seal's vessel M/V ATLANTIC SEAL departed the United States in December 1970. Repairs were made on December 29, 1970 and on January 2, January 22, and February 9, 1971, all at Ancona, Italy, at a total cost of $3,274.10. Duty totalling $1,637.05 was assessed and paid under § 1466(a).

South and Seal timely protested the duties. When Customs overruled the protests, South and Seal each filed an action for refund in the United States Court of International Trade. The court consolidated the causes and, holding that the repair duties were properly assessed and imposed, dismissed the consolidated action.

Issue

The sole issue on the merits is whether error occurred in upholding imposition of repair duties under 19 U.S.C. § 1466(a).

OPINION
I. Choice of Governing Law.

As a foundation for decision in this and subsequent cases in this court, we deem it fitting, necessary, and proper to adopt an established body of law as precedent. That body of law represented by the holdings of the Court of Claims and the Court of Customs and Patent Appeals announced before the close of business on September 30, 1982 is most applicable to the areas of law within the substantive jurisdiction of this new court. It is also most familiar to members of the bar. Accordingly, that body of law is herewith adopted by this court sitting in banc. 2

To proceed without precedent, deciding each legal principle anew, would for too long deprive the bar and the public of the stability and predictability essential to the effort of a free society to live under a rule of law. As the Supreme Court said in Moragne v. States Marine Lines, Inc., 398 U.S. 375, 90 S.Ct. 1772, 26 L.Ed.2d 339 (1970):

Very weighty considerations underlie the principle that courts should not lightly overrule past decisions. Among these are the desirability that the law furnish a clear guide for the conduct of individuals, to enable them to plan their affairs with assurance against untoward surprise; the importance of furthering fair and expeditious adjudication by eliminating the need to relitigate every relevant proposition in every case; and the necessity of maintaining public faith in the judiciary as a source of impersonal and reasoned judgments.

Id. at 403, 90 S.Ct. at 1789.

The considerations listed by the Court as underlying restraint upon the power to overrule are applicable equally to the power to start afresh. An orderly administration of justice would not be aided by the latter course. For every panel of judges of this court to examine anew every issue presented would be a practice devoid of counterbalancing advantage. Such an alternative, "start from scratch" approach would entail years of delay in constructing a body of law worthy of description as the law of the circuit. We choose therefore to begin on a readily available and clearly identifiable base, maintaining at the same time a controlled capacity for change when change is compelled.

The adoption of precedents here announced continues the stability in those areas of the law previously within the jurisdiction of our predecessor courts. That jurisprudence was established in great part by judges now members of this court. The public and the bar have presumably structured their legal affairs in accordance with that jurisprudence. To abandon it at this stage would be to cast the court, the public, and the bar adrift on a sea of uncertainty.

Other than that created by our predecessor courts, no body of law established by any other court or set of courts would appear a suitable candidate for adoption. No other such body would include all or as many of the areas of law with which this court will be dealing. In those areas new to this court, selection of one from many available bodies of law would require an immediate rush to resolution of numerous conflicts existing among them; yet resolution of conflict, a major element in this court's mission, requires not a one-shot selection but a careful, considered, cautious, and contemplative approach.

As a court of nationwide geographic jurisdiction, created and chartered with the hope and intent that stability and uniformity would be achieved in all fields of law within its substantive jurisdiction, we begin by adopting as a basic foundation the jurisprudence of the two national courts which served not only as our predecessors, but as outstanding contributors to the administration of justice for a combined total of 199 years, the Court of Claims and the Court of Customs and Patent Appeals.

II. Imposition of Repair Duties under 19 U.S.C. § 1466(a).

19 U.S.C. § 1466(a) imposes a duty on repairs performed in a foreign country upon vessels documented under our laws "to engage in the foreign ... trade" or "intended to be employed in such trade." South and Seal concede that the present vessels are documented and are entitled to engage in trade, but contend that repairs to them are outside the scope of § 1466(a) because the phrase "to engage" means "for the purpose of engaging" and the vessels are not documented for that purpose.

The argument rests on a misconstruction of the dichotomy in the statute. It is, moreover, in conflict with the statute's legislative history.

Section 1466(a) plainly and unambiguously applies to repair of a vessel which is either documented to engage in trade or is intended to be employed in trade. South and Seal cite nothing in the legislative history that would indicate a congressional intent that "documented to engage" should be read as "documented for the purpose of engaging", if the latter phrase has a meaning different from that appearing in the statute. 3 Nor is there anything in the record to indicate that the vessel owner's individual "purpose" is in any manner relevant when a vessel is "documented to engage in foreign ... trade".

Moreover, an argument based on an effort to rewrite the statutory phrase "to engage" as "for the purpose of engaging" involves a disregard of the term "or" and the phrase "intended to be employed in such trade" in the statute. The particular purpose or intent of the vessel owner is not a part of the present documentation. That the owner of a vessel documented to engage in trade may elect not to so employ that vessel, or may never have intended so to employ it, is simply irrelevant. Intent appears in the statute only in relation to non-documented vessels. The statutory provision is not concerned with vessels that are neither documented nor intended to engage in trade. Thus application of the concept of intended use to repairs on vessels documented to engage in trade and to repairs on vessels not documented to engage in trade would inject a new category into the statute, i.e., vessels documented only to engage in trade but not intended to be so engaged. The plain language of the statute, however, spells out a dichotomy between vessels "documented to engage in trade" (whatever may be the changeable purpose of the vessel owner) and vessels not documented but "intended to be employed" in trade.

Thus, once it is established that a vessel is documented only to engage in trade, inquiry into whether that vessel is also actually engaged in trade, or is also intended to be employed or engaged in trade, or into the vessel owner's purpose, is unnecessary and irrelevant. Though courts may disregard a term's literal meaning where it is evident that a special or limited meaning is necessary to effectuate the legislative intent, Malat v. Riddell, 383 U.S. 569, 571, 86 S.Ct. 1030, 1032, 16 L.Ed.2d 102 (1966), there is no such or similar basis here for requiring a disregard of the disjunctive meaning of the statutory term "or" and the clear division it makes in the statute between a category of vessels documented to engage...

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