The Arctic Maid v. Territory of Alaska

• Citation: 277 F.2d 120
• Decision Date: 23 March 1960
• Docket Number: No. 15283-15288.,15283-15288.
• Parties: THE ARCTIC MAID and Arctic Maid Fisheries, Inc., Appellants, v. TERRITORY OF ALASKA, Appellee. THE PACIFIC REEFER and Pacific Reefer Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee. THE PACIFIC QUEEN and Pacific Queen Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee. THE ALASKA REEFER and Alaska Reefer Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee. THE NORTH STAR and North Star Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee. NORTHERN REEFER COMPANY, Grimes Packing Company and Reefer II, Appellants, v. TERRITORY OF ALASKA, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

277 F.2d 120 (1960)

THE ARCTIC MAID and Arctic Maid Fisheries, Inc., Appellants, v. TERRITORY OF ALASKA, Appellee.

THE PACIFIC REEFER and Pacific Reefer Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee.

THE PACIFIC QUEEN and Pacific Queen Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee.

THE ALASKA REEFER and Alaska Reefer Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee.

THE NORTH STAR and North Star Fisheries, Appellants, v. TERRITORY OF ALASKA, Appellee.

NORTHERN REEFER COMPANY, Grimes Packing Company and Reefer II, Appellants, v. TERRITORY OF ALASKA, Appellee.

Nos. 15283-15288.

United States Court of Appeals Ninth Circuit.

March 23, 1960.

John H. Dimond, Juneau, Alaska; Evans, McLaren, Lane, Powell & Beeks, Martin P. Detels, Jr., M. Bayard Crutcher, Seattle, Wash., for appellants.

In Case No. 15288 only, Bogle, Bogle & Gates, Seattle, Wash., for appellant together with John H. Dimond, Juneau, Alaska.

Gary Thurlow, Atty. Gen., Douglas Gregg, Asst. Atty. Gen., State of Alaska, for appellee.

Before CHAMBERS, Chief Judge, and STEPHENS, POPE, BARNES, HAMLEY, HAMLIN, JERTBERG, MERRILL, and KOELSCH, Circuit Judges.

HAMLEY, Circuit Judge.

These actions were brought by the Territory of Alaska to recover unpaid license taxes incurred in the operation of freezer ships during the years 1951 through 1954. The partnerships and corporation which were named defendants denied liability. Four of them counterclaimed to recover taxes which they had paid.¹ The actions were consolidated for trial.

Judgment was entered for Alaska and against each defendant, the total award being $116,731.53. In support of this judgment the trial court filed an opinion containing findings of fact and conclusions of law in addition to a discussion of the issues. Territory of Alaska v. The Arctic Maid, D.C., 140 F.Supp. 190, 16 Alaska 126. In an unreported supplemental opinion thereafter filed there is further discussion of some of the issues.

Defendants have joined in this appeal. They raise a number of questions relating to the construction of the taxing statute, the territorial jurisdiction of Alaska over the business activity in question, and the validity of the tax, as applied, under certain constitutional and statutory provisions. Two of the defendants, Northern Reefer Company and Grimes Packing Company, present an additional question relating to the enforceability of a tax lien asserted against the freezer ship Reefer II.

The appeal was originally argued before a court consisting of two circuit judges and one district judge. After an opinion had been filed by the court as so constituted a rehearing en banc was granted. The previously entered opinion is hereby withdrawn and this opinion by the court en banc is entered in substitution therefor.

The facts necessary to be considered are not in dispute. Appellant Arctic Maid is a Washington corporation not qualified to do business in Alaska. The remaining appellants are partnerships, all members of which are residents of either the State of Washington or the State of California, and all are citizens of the United States. None of the copartners resides in Alaska. All of the appellants operate canneries located on Puget Sound in the State of Washington. In order to obtain fish for their respective canneries they each send freezer ships to the waters adjacent to Alaska each year during the salmon season.

The freezer ships are vessels equipped with refrigeration and storage facilities for the freezing, storage, and transportation of fish. They are also equipped to provide transportation facilities for fishermen, and food and quarters for fishermen during the Alaska fishing season. In addition these freezer ships provide means for transporting "catcher" boats from Puget Sound to Alaskan fishing waters and back again at the end of the fishing season.

The fish are caught from the catcher boats, and are then transferred to the freezer ships. These catcher boats are of a general type commonly known as "Bristol Bay gillnetters." They are gas-powered vessels about thirty to thirty-two feet in length.

In most instances these gillnetters are owned by appellants and are transported from and returned to Puget Sound aboard the freezer ships. In some cases gillnetters owned by appellants are not transported to and from Puget Sound, but are stored ashore in the Bristol Bay area. In other instances appellants have contracted with others owning gillnetters to catch fish for the freezer ships during the salmon season.

The gillnetters are manned by fishermen — two to each boat — employed each season by appellants under the terms of the current Bristol Bay agreement between the salmon industry and the Alaska Fishermen's Union.² In addition to obtaining fish through the use of gillnetters owned by or operated under contract with appellants, fish are also purchased from independent fishermen and taken aboard the freezer ships.

The freezer ships are utilized primarily in connection with the Bristol Bay red salmon season. They anchor seaward of a line drawn parallel to and at a distance of three miles from mean low tide mark on the shore of Bristol Bay and serve as a base for the operations of the gillnetters.

The gillnetters leave their respective freezer ships at the beginning of each open period during the fishing season and proceed to the fishing areas inshore. They traverse this inshore water, searching for fish, and return periodically to their freezer ships. The fish which have been caught are then transferred to the freezer ships by means of a net suspended from a boom. As the fishermen throw the fish into the net the fish are tallied by the crew of the freezer ship. The fishermen's pay is based upon the number of fish so tallied.

During some of the years here in question some of the appellants operated their freezer ships at other times or in other areas than during the Bristol Bay red salmon season. For example, freezer ships were sometimes utilized in the Bristol Bay king salmon season, or in the Kodiak, Cook Inlet, or Southeastern Alaska areas. During these operations, as distinguished from the Bristol Bay red salmon season, the freezer ships were operated at points closer to shore than three miles and obtained fish from catcher boats while so positioned.

When fish are taken aboard the freezer ships from the gillnetters owned or operated under contract by appellants, or after purchase from independent fishermen, they are dumped into quick-freezing brine tanks. The freezing begins immediately and continues over a period of ten to twelve hours. During this time the brine in the tank is constantly changed and circulated. At the end of ten to twelve hours the temperature of the fish has been lowered to twelve to fifteen degrees and they are fully frozen.

Traps in the bottom of the brine tanks are then opened and by means of a chute the fish are directed into the refrigerated hold where they are stored until discharged at destination on Puget Sound. The brine tanks themselves are sometimes used for the storage of fish.³

At the conclusion of the operations in waters adjacent to Alaska appellants take on board the gillnetters which had been transported from Puget Sound on the freezer ships. Appellants then return these freezer ships to Puget Sound and discharge the frozen fish at their respective canneries. During the years in question all but five hundred pounds of the frozen fish so transported to Puget Sound were canned there by appellants.

The Alaska license tax here in question has its genesis in Session Laws of Alaska 1949, chapter 97. Under this 1949 statute a one-per-cent annual license tax was imposed upon persons, firms, or corporations prosecuting certain lines of business. The specified lines of business were "cold storage and other fish processors, except salmon canneries, herring processing plants, crab canneries and clam canneries otherwise licensed: * * *." It was provided that the annual tax would be equal to one per cent of the value of the fish "* * * bought or otherwise obtained for processing through freezing, salting or other method."

It will be observed that in so far as cold storages are concerned no distinction was drawn in the 1949 statute between shore-based plants and freezer ships or other floating cold storages. All were to be taxed at the rate of one per cent of the value of the raw fish.

Such a distinction was drawn in 1951, however, when the territorial legislature enacted chapter 116, amending chapter 97, Sess.Laws Alaska 1949. In the 1951 enactment the lines of business to be taxed were divided into two groups. The first, consisting of "shore based cold storages and all other fish processors, except salmon canneries, herring processing plants, crab canneries and clam canneries otherwise licensed: * * *.," were taxed at the 1949 rate of one per cent. The second group, consisting of "freezer ships and other floating cold storages," were taxed at the rate of four per cent.⁴

In 1949 Alaska also imposed a four-per-cent license tax on salmon canneries, both shore-based and floating (Sess.Laws Alaska 1949, ch. 82). This tax was raised to six per cent in 1951. Sess.Laws Alaska 1951, ch. 113, Alaska Comp.Laws, Cum.Supp.1958, § 35-1-91.⁵ Also in 1949 Alaska imposed a five-dollar annual license fee for resident commercial fishermen who take fish from the fishery resources of Alaska, and a fifty-dollar annual license fee on nonresident commercial fishermen engaged in the same activity. Sess.Laws Alaska 1949, ch. 66. This tax was thereafter declared invalid. Anderson v. Mullaney, 9 Cir., 191 F.2d 123, affirmed sub nom. Mullaney v. Anderson, 342 U.S. 415, 72 S.Ct. 428, 96 L.Ed. 458.

One of the contentions made by appellants on this appeal is that the tax in question, as applied, imposes an undue burden on and discriminates against interstate commerce, and is an attempted regulation of interstate commerce, all in violation of Article I, section...