PE Harris & Co. v. Mullaney

• Decision Date: 03 October 1949
• Docket Number: No. 6105-A.,6105-A.
• Citation: 87 F. Supp. 248
• Parties: P. E. HARRIS & CO. v. MULLANEY et al.
• Court: U.S. District Court — District of Alaska

87 F. Supp. 248

P. E. HARRIS & CO. v. MULLANEY et al.

No. 6105-A.

United States District Court, Alaska First Division, Juneau.

October 3, 1949.

W. C. Arnold, Seattle, Washington, Bogle, Bogle & Gates, Seattle, Washington, Faulkner, Banfield & Boochever, Juneau, Alaska, for plaintiff.

Edward W. Allen, Seattle, Washington, R. E. Robertson, Juneau, Alaska, W. C. Arnold, Seattle, Wash., for intervenor.

J. Gerald Williams, Territorial Atty. Gen., John H. Dimond, Asst. Atty. Gen., for defendant.

FOLTA, District Judge.

Plaintiff and intervenors seek to enjoin the enforcement of Chapter 11, Session Laws of Alaska 1949, amending paragraph (h) of subsection 7 of Section 35-1-11, A.C. L.A.1949, by increasing the tax on salmon traps 400% and on the first 100,000 salmon taken from any one trap from no tax at all to $6,750, and thereafter progressively increasing the tax so that on 250,000 salmon taken from any one trap the increase is from $600 to $43,500 or 72½ times the previous rate. Plaintiff's Exhibit 5. The former rate was $4 on each thousand fish in excess of 100,000 taken from any one trap.

The case is now before me on the merits.

The basic tax on a fish trap whether of the pile or floating type (the only kinds here involved) is $1,200 as against $10 for a seine, its nearest competitor, and $2 for a gill net. Since no tax is imposed on fish caught with a seine or gill net, it costs the trap operator in taxes on 100,000 fish 675 times, or on 250,000, 4,350 times as much as the seine operator is required to pay.

Plaintiff and intervenors contend that the act is void because:

(1) It imposes an undue burden on interstate commerce in violation of the commerce clause of the Constitution, art. 1, § 8, cl. 3;

(2) It unreasonably and arbitrarily discriminates between fixed-type fishing gear, and mobile gear, and also between trap operators by imposing a flat tax without regard to wide variations in species, size and value of the fish, in violation of the Fifth and Fourteenth Amendments to the Constitution, Section 9 of the Organic Act, 37 Stat. 512, 48 U.S.C.A. §§ 77, 78, and the Civil Rights Act, 8 U.S.C.A. § 41;

(3) The taxing power is used to accomplish a forbidden end — the prohibition of the use of fish traps — in violation of Section 1 of the White Act, 44 Stat. 752, 48 U.S.C.A. § 222; Section 3 of the Organic Act, 37 Stat. 512, 48 U.S.C.A. §§ 23, 24;

(4) It was made retroactive to January 1, 1949, without providing for a refund of the license fees already paid, thus depriving licensees, confronted with such confiscatory taxation, of the right to withdraw without forfeiting the fees paid.

Defendant contends that the tax, with its gradations, is merely a revenue measure based on ability to pay.

It is obvious, therefore, that there is more to this litigation than meets the eye, and that legislative intent assumes a place of paramount importance in the solution of the questions presented.

Plaintiff operates 3 salmon canneries, and 26 pile and floating traps in connection therewith, in Southeastern and Western Alaska. It has been in this business 40 years. Intervenors have operated 3 traps since 1942.

Except for one end of the mooring cable, which is made fast to the shore or upland, the entire trap structure is erected on or over tide or submerged land and extends to the seaward, usually at right angles to the shore, terminating in the trap proper beyond the line of ordinary law water, where it intercepts the run of salmon on their way to the spawning grounds. Approximately 40% of the catch of salmon is made by traps, 35% by seines and 25% by gill nets. The entire pack of salmon, except for negligible portion sold locally, is marketed in the States and foreign countries. During the period 1943-1947 the number of seines employed in the salmon fisheries of Alaska was 869, the average take of which was slightly more than 30,000 salmon per seine, plaintiff's exhibit 6, as against 405 traps which caught an average of less than 80,000 each (plaintiff's exhibit 8) upon which the tax, computed at the present rates, would be 1/400 of a cent and 7.43¢ respectively, or 3,000 times greater on 80,000 fish caught in a trap than if taken in a seine (plaintiff's exhibit 5). Manifestly a tax on the fish caught in a trap is a tax on the trap itself. Cf. Fairbank v. United States, 181 U.S. 283, 21 S.Ct. 648, 45 L.Ed. 862.

Before the enactment of Chapter 11, plaintiff and intervenors paid the territorial license fees and obtained licenses to operate their traps after which the Territory demanded, under the retroactive provision, the payment of the additional fees exacted by the Act.

It is conceded that the Territory has no power to regulate the fisheries, that power being lodged in Congress.

In support of their contention that the tax is confiscatory and so excessive that it is prohibitory and, therefore, regulatory, plaintiff and intervenors have introduced many documentary exhibits, prepared by certified public accountants, which show that the application of the present taxes to their operations for the past 7 or 8 years would have resulted in substantial losses. Intervenors' Exhibit 1; Exhibits C and D of plaintiff's exhibit 1; Plaintiff's Exhibit 2, 3 and 13. These figures, however, are merely illustrative because income was not computed at current fish prices. As against that showing defendant's exhibits C and D indicate that the increase in the tax computed on the salmon caught in traps in 1948 would amount to but slightly more then 1,000% for the entire industry and approximately the same on the salmon caught in the traps of plaintiff and intervenors.

Since the run of salmon fluctuates from year to year and between the several districts into which the Territory has been divided by the Secretary of the Interior for administrative purposes, there is a corresponding fluctuation in income from year to year and district to district. Moreover, since the entire salmon pack is never sold in the year in which packed, it is impossible to obtain an accurate picture of the industry from data complied on the basis of any one year's operations, and, hence, plaintiff's and intervenors' evidence covers the period 1941 to the time of the trial. Thus plaintiff's exhibits 1 and 2 show the number of fish taken in plaintiff's and intervenors' traps during that period, their cost and market value, and the losses that would have been sustained had the taxes imposed under Chapter 11 been in effect. On the other hand, the defendant points out in his brief that different methods of computation and bookkeeping and the application of 1948 prices to the catch of at least some of the earlier years embraced within the 1941-1948 period, would convert the losses claimed into profit.

It may not be amiss at this point to note briefly the differences between a trap and a seine and the methods employed in their operation.

A trap is a massive structure which is erected in navigable waters under a permit issued only upon a determination by the War Department that it will not interfere with navigation. Once a pile trap is constructed or a floating trap is anchored on the site for which the permit has been issued, it remains in place and is kept in a fishing condition for the duration of the fishing season, except that it must be closed during the weekly closed period of 36 hours fixed by federal law. 48 U.S.C.A. § 234. It is so placed as to intercept any run of salmon along or near the shore. A crew of 2 keeps the trap in fishing condition, except during the closed periods mentioned. When sufficient fish are caught, the trap is brailed by a brailing crew aboard a tender assigned to the job of transporting the catch from the trap to the cannery.

The expense of placing a pile or floating trap in a fishing condition before the opening of the season each year is fixed in the sense that it bears no relation to the catch expected or realized, and must in any event be incurred if the trap is to fish. Indeed, this cost may be said to be the only constant in an equation of variables. But once the value of the catch equals this cost, the ratio of profit to operating expenses increases progressively.

A seine costs much less than a trap, but since it is not self-operating, it requires a boat and a crew of 5 or 6 to fish with it and, hence, the initial outlay is perhaps as great on the average as in the case of the trap. Unlike the trap, however, which is stationary, the seine boat goes from place to place, according to report or rumor of the presence of fish, and although the cost of putting it into fishing condition each year is likewise irreducible, regardless of whether preparations are made for a large or small catch, its operating expenses continue and are in direct relation to the time and effort expended in fishing operations. In other words, after this fixed pre-season expense has been met and the only other expense which must be met is the cost of actual fishing operations, the cost of each successive haul thereafter does not diminish, and there is no progressive increase in income as in the case of the trap. Moreover, while the trap remains in a fishing condition night and day, fishing operations with a seine are limited to the hours of daylight. This might account to some extent for an average catch of 80,000 by a trap as against 30,000 by a seine.

For further information in regard to these types of gear, see the report of the Committee on Interstate and Foreign Commerce on S. 1446, a bill to authorize the leasing of salmon trap sites in Alaskan waters, 80th Congress, 2d session. Plaintiff's exhibit 10.

I am of the opinion that the contention that the tax is so excessive as to infringe on the right to fish on the basis of equality guaranteed by the White Act must be sustained, and, hence,...