Federal Maritime Commission v. Caragher
| Decision Date | 15 June 1965 |
| Citation | 243 F. Supp. 136 |
| Parties | FEDERAL MARITIME COMMISSION, Petitioner, v. E. G. CARAGHER, Vice President, Norton, Lilly & Co., Inc., General Agents for Yamashita-Shinnihon Steamship Co., Ltd. (formerly Yamashita Kisen Kaisha), Sochira Yaguchi, General Manager, Nippon Yusen Kaisha, Ltd., Ib Alvin, Moller-Maersk Line, A.P., P. D. Marchessini, P. D. Marchessini & Co., Cortland Linder, Managing Director, Kerr Steamship Co. Inc., General Agents for Kawasaki Kisen Kaisha, Ltd., T. J. Royden, President, Funch, Edye & Co., Inc., General Agents for De La Rama Lines, James Young, Vice President, Barber Fern-Ville Lines, Barber-Wilhelmsen Line, and Mordecai Chovers, Vice-President, American-Israeli Shipping Co., Inc., General Agents for Zim Israel Navigation Co., Ltd., Respondents. |
| Court | U.S. District Court — Southern District of New York |
Robert M. Morgenthau, U. S. Atty., Louis E. Greco, Attorney in Charge, Admiralty & Shipping Section, Department of Justice, Gilbert S. Fleischer, Attorney, Admiralty & Shipping Section, Department of Justice, M. C. Miskovsky, Sol., Federal Maritime Commission, H. B. Mutter, Attorney, Office of Sol., Federal Maritime Commission, for petitioner.
Haight, Gardner, Poor & Havens, New York City, for respondents except Mordecai Chovers; Thomas K. Roche, Sanford C. Miller, William F. Faison, New York City, of counsel.
Hill, Betts, Yamaoka, Freehill & Longcope, New York City, for respondent Mordecai Chovers.
The petitioner moves by order to show cause to enforce subpoenas duces tecum issued in connection with an "Investigation of Rates in the Hong Kong-United States Atlantic and Gulf Trade." They call for production of five categories of documents. The motion is granted as to items 1 and 2. It is denied as to items 3, 4 and 5.
Common carriers by water in foreign commerce and conferences of such carriers are required to file with the Commission, tariffs showing all the rates and charges of such carriers or conferences of carriers.1 The Commission has the power to disapprove such rates if after a hearing it determines that they are so unreasonably high or low as to be detrimental to the commerce of the United States.2
Pursuant to its statutory authority, the Commission by an order dated December 10, 1962, commenced an investigation to determine if the rates in the Hong Kong-United States Atlantic and Gulf Trade were so unreasonably low as to be detrimental to the commerce of the United States. Thereafter, in an order dated June 10, 1963, the scope of the investigation was expanded in order also to determine if any of the respondents were engaging in practices which may be in violation of sections 14, 16, 17 or 18(b) (3) of the Shipping Act. Thereupon all of the instant respondents were served with subpoenas duces tecum calling for the production of the following: (1) all inbound rated manifests for cargo transported from Hong Kong to the Atlantic or Gulf coasts from January 1, 1962, to the present; (2) all inbound rated manifests in possession of the addressee at the time of the hearing for cargo loaded at Hong Kong but which vessels have not yet arrived at Atlantic or Gulf Ports; (3) all stevedoring and terminal services contracts which contain rates and conditions for handling cargo moving from Hong Kong to New York City, New York during the year 1962; (4) all invoices evidencing billing for stevedoring and terminal services in connection with handling cargo moving from Hong Kong to New York City, New York during the year 1962; (5) all cancelled checks or receipts for payment for stevedoring and terminal services in connection with handling cargo moving from Hong Kong to New York City, New York during the year 1962. Respondent Zim Israel did not comply fully, the remaining respondents did not comply in any respect with the subpoenas.
The most serious challenge to the subpoenas is that the Commission lacked the power to issue them with respect to items 3, 4 and 5. The respondents do not question the relevance of these items to the issue of unreasonably low rates but rather contend that the Commission may issue subpoenas only in connection with investigations respecting "alleged violations" of the Act3 and that an investigation of rates under 18(b) (5) of the Act4 is not an investigation of any violation. The Commission contends that its subpoena power is not thus limited but also covers an 18(b) (5) investigation because a hearing would be meaningless without the production of documents.
In an effort to show that the Commission's power is limited to investigations of "alleged violations" respondents refer to the 1961 amendments to the Shipping Act. "However, statutes are construed by the courts with reference to the circumstances existing at the time of passage."5 Section 27, which defines the Commission's power of subpoena, was contained in the original Act when it was enacted in 1916. Therefore reference will be made to the circumstances existing at that time.
When the original Act was before the House, Representative Alexander, Chairman of the House Committee on Merchant Marine and Fisheries of the 62d Congress, stated: "The provisions of section 27 relating to the power of the board to compel the attendance of witnesses and the production of documentary and other evidence are also substantially similar to those of the interstate-commerce act, except that the board may exercise such power only `for the purpose of investigating alleged violations of this act' instead of `for the purposes of this act' as in the interstate-commerce act."6 (Emphasis added.) The phrase "for the purposes of this Act" as contained in the Interstate Commerce Act was interpreted by the Supreme Court as limited to violations of that Act. Harriman v. Interstate Commerce Commission.7 That the import of the Harriman decision was known to the Legislature at the time it enacted the Shipping Act of 1916 is apparent from the record. Mr. Alexander, specifically referred to the decision and stated: "the power of the board the Commission's predecessor is limited to investigations of violations."8 It is therefore apparent that section 27 did not give the Commission the power of subpoena in connection with all of its functions under the Act but only for the investigation of alleged violations.9
Section 18(b) (5) does not by its terms forbid any activity. It merely gives the Commission the power to disapprove rates "which, after a hearing, it finds to be so unreasonably high or low as to be detrimental to the commerce of the United States." The Commission indeed does not contend otherwise but only that the power of subpoena is necessary for the proper performance of its function under that section. Be that as it may, Congress has not seen fit to give it that power.
In 1961 when section 18(b) (5) was added to the Shipping Act, the 87th Congress was well aware of the limitations on the Commission's power to issue subpoenas. In fact it was specifically recommended that the Commission's power be expanded: 10 These recommendations were not accepted and the provisions of section 27 remain unchanged. Thus it is clear that Congress initially intended to limit the power of subpoena and more specifically, when section 18(b) (5) was added in 1961, adhered to its original intention. Lee v. Federal Maritime Board upon which the petitioner relies does not require a different result. There, the Court of Appeals for the Ninth Circuit was not concerned with the question of the Commission's power of subpoena where no violation of the Act was involved, nor was the case decided upon that basis.11 Accordingly, it is concluded that the Commission is without the power to compel the production in this proceeding of items 3, 4 and 5 of the subpoena.12
Items 1 and 2 appear to be relevant to the investigation into possible violations of sections 14, 16, 17 and 18(b) (3) of the Act. Respondents indeed do not strongly urge lack of...
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