Great Lakes Dredge & Dock Co. v. Charlet

• Citation: 134 F.2d 213
• Decision Date: 24 May 1943
• Docket Number: No. 10290.,10290.
• Parties: GREAT LAKES DREDGE & DOCK CO. et al. v. CHARLET.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

134 F.2d 213 (1943)

GREAT LAKES DREDGE & DOCK CO. et al. v. CHARLET.

No. 10290.

Circuit Court of Appeals, Fifth Circuit.

February 11, 1943.

Judgment affirmed May 24, 1943.

Eberhard P. Deutsch, R. Emmett Kerrigan, and James J. Morrison, all of New Orleans, La., for appellants.

W. C. Perrault, of Baton Rouge, La., for appellee.

Before HUTCHESON, HOLMES, and McCORD, Circuit Judges.

Judgment affirmed May 24, 1943. See ___ U.S. ___, 63 S.Ct. 1070, 87 L.Ed. ___.

HUTCHESON, Circuit Judge.

Alleging that an actual controversy had arisen and was existing between them and Charlet, as Administrator of the Louisiana Unemployment Compensation Law,¹ over whether the said law could be lawfully applied to and enforced against them in respect to the employment by them of officers and crewmen in furtherance of their dredging operations on the navigable waters of the United States within the State of Louisiana, plaintiffs brought this suit for a declaration that in respect of the relation of employment between plaintiffs and their employees, they are not subject to the act. As their complaint alleges it, the basis of their claim to a declaration is: That the Louisiana Unemployment Compensation Law was amended in 1938 to bring within its provisions all the vessels and all the employees of plaintiffs, with the result that if valid, plaintiffs were required thereby to pay to the state unemployment fund, contributions, measured by the wages paid by them to their employees, and in addition, under the Act of 1936, to withhold a portior of the wages due their employees; that in view of the provisions of Art. 1, Sec. 8 and Art. 3, Sec. 2 of the Constitution of the United States, giving to the Congress exclusive power to legislate with respect to matters within the admiralty and maritime jurisdiction of the United States and depriving the states of all power to legislate thereto, the act as so amended is unconstitutional, null and void. The defense was: That the act levied a nondiscriminatory excise tax, based upon the exercise of the right or privilege of employing individuals, measured by the wages paid; that the right to levy such tax is inherent in state sovereignty and was not surrendered to the United States; that the statute in no way affects the rights, duties or obligations as between themselves of parties to a maritime contract, and in no way interferes with or contravenes the maritime law or affects the uniformity of that law, or contravenes the purpose or intent of any act of Congress. Submitted to the court on a stipulation of fact, these defenses were maintained, the claim for declaratory judgment was accordingly denied, and the action was dismissed. The district judge, in a thorough and exhaustive opinion, canvassing the facts and the law,² set out both fully and precisely the facts upon which the decision of the case turned, and gathered and adequately discussed the controlling authorities. We agree not only with the conclusion reached, but generally with what is said in the opinion. We shall not, therefore, enter into any detailed statement or discussion of either the facts or the authorities, but, referring to the opinion for that detail, shall content ourselves with a brief summation. In reaching this conclusion, we have assumed, without deciding, though appellee vigorously contests this,³ that within the exception of Subd. 3, Sec. 1107 (c), 42 U.S.C.A., all of plaintiffs' employees are officers and members of the crew of a vessel on the navigable waters of the United States. So assuming, we entirely agree with the district judge that plaintiffs are not entitled to the declaration they seek that the Louisiana Unemployment Compensation Act may not, because of the invoked constitutional provisions, be enforced as to them. It is stipulated that the employment relation sought to be taxed involves employees, described in detail, including what are called "shore crews", employed in the customary and usual way in the operation and navigation of dredges, pile drivers and other appurtenances used for deepening, widening, improving, extending and cleaning navigation channels and other navigable waters in Louisiana and for creating fill and other similar operations, and that such vessels do not customarily operate between ports in Louisiana and ports outside of it.

As regards those activities which are directly connected with commerce and navigation in their interstate and international aspects, it has been held,⁴ with respect to workmen's compensation laws, that the law must be uniform throughout the United States, and the laws of the various states are not competent to modify or vary it. The rationale of these cases is that a state law cannot, as between the parties, change or affect rights and obligations arising under a maritime contract or matters having a direct relation thereto. But so narrow and tenuous is the authority of these cases that it is now the well settled rule that, though a contract be maritime, if it is local in character and has no direct relationship to navigation as navigation, state compensation laws may validly apply to persons the contract affects, and this is so because such laws do not interfere with any characteristic feature of general maritime law, do not substantially affect essentially maritime rights and obligations. Thus exception after exception to the broad rule the Jensen case sought to lay down has been grafted upon it until it has become the mere shadow of its former self. This is well illustrated in the long line of cases culminating in Just v. Chambers, 312 U.S. 383, 668, 61 S.Ct. 687, 691, 85 L.Ed. 903, in the statement, "With respect to maritime torts * * * the State may modify or supplement the maritime law by creating liability which a court of admiralty will recognize and enforce when the state action is not hostile to the characteristic features of the maritime law or inconsistent with federal legislation", and the holding, that under Florida law, permitting survival against a wrongdoer's estate of a cause of action against him for tort, a cause of action for a maritime tort committed in Florida waters will survive in admiralty. If, therefore, the statutes in question here could be said to at all affect the contracts as between plaintiffs and employees, that affecting within the authority of these cases, would fall within the exceptions to, rather than within the rule of, the Jensen case. But we think it quite plain that the statute is not a regulatory but a taxing act, and that, as such, it has no effect whatever upon, but leaves, the contracts, as between plaintiffs and their employees, exactly as they are in respect of every right and obligation which, viewed as maritime contracts, they grant and impose. Beeland Wholesale Co. v. Kaufman, 234 Ala. 249, 174 So. 516; Globe Grain & Milling Co. v. Industrial Comm., 98 Utah 36, 91 P.2d 512.

As a taxing act, it stands on the firmest kind of ground. It is an excise levied upon that aspect of the employment relation which represents the exercise in a state of the right and privilege of employing persons upon work carried on there, Steward Machine Co. v. Davis, 301 U.S. 548, 57 S.Ct. 883, 81 L.Ed. 1279, 109 A.L.R. 1293; Carmichael v. Southern Coal & Coke Co., 301 U.S. 495, 57 S.Ct. 868, 81 L.Ed. 1245, 109 A.L.R. 1327. It is unquestionably valid unless it injuriously trenches upon matters of exclusive federal concern or contravenes some paramount federal legislation. Appellants say that it does both. We think it clear that it does neither. Since the time of Gibbons v. Ogden, 9 Wheat. 1, 197, 6 L.Ed. 23, it has been settled that "the grant of the federal power to lay and collect taxes is, like the power to regulate commerce, made in general terms, and has never been understood to interfere with the exercise of the same power by the states"; and that "while a state may not use its taxing power to regulate or burden interstate commerce * * *, a state excise tax which affects such commerce, not directly, but only incidentally and remotely, may be entirely valid where it is clear that it is not imposed with the covert purpose or with the...