Union Oil Co. of California v. Bryan

• Decision Date: 14 October 1943
• Docket Number: No. 1749 O'C Civil.,1749 O'C Civil.
• Citation: 52 F. Supp. 256
• Court: U.S. District Court — Southern District of California
• Parties: UNION OIL CO. OF CALIFORNIA v. BRYAN.

52 F. Supp. 256

UNION OIL CO. OF CALIFORNIA v. BRYAN.

No. 1749 O'C Civil.

District Court, S. D. California, Central Division.

October 14, 1943.

Walter I. Carpeneti, of San Francisco, Cal., for plaintiff.

Charles H. Carr, U. S. Atty., and John M. Gault and James L. Crawford, Asst. U. S. Attys., all of Los Angeles, Cal., for defendant.

J. F. T. O'CONNOR, District Judge.

This is an action to recover tonnage taxes assessed and paid upon the plaintiff's vessel, American tank steamer, Montebello, pursuant to 46 U.S.C.A. § 121.

Three questions are presented to the court for determination: (1) Has this court jurisdiction of a controversy involving the assessment and collection of tonnage taxes? (2) Were the tonnage taxes properly assessed? (3) Can the Collector of Customs be sued to recover a tonnage tax, if such tax is found to be illegally collected?

Under the first contention only two decisions, both written fifty-three years ago (North German Lloyd Steamship Co. v. Hedden, 43 F. 17, May 21, 1890, Circuit Court for the District of New Jersey; and Laidlaw v. Abraham, 43 F. 297, August 18, 1890, Circuit Court for the District of Oregon) have passed upon the question.

The parties have filed extensive and carefully prepared briefs. The final decision of the courts will affect the tonnage tax, and therefore the commerce flowing into our ports. The facts are stipulated. The application of those facts to the law is the court's problem.

The plaintiff, Union Oil Company of California, "now is and at all material times was the owner and operator of the American Tank Steamer Montebello, an ocean-going vessel of 5,107 net tons * * *." On October 23, 1940, the Montebello was loaded with a cargo of crude petroleum, oil fuel and diesel oil at Los Angeles, California, destined for discharge at various ports in Chile, South America. The crew of said vessel signed ship's articles for a voyage to Iquique, Valparaiso, and Antofagasto, Chile, and return to a Pacific Coast United States Port. On various dates after October 23, 1940, when the tank steamer, Montebello, cleared from Port of Los Angeles, its cargo was discharged at the respective ports designated on different dates until it cleared for Antogafasto. Upon completion of discharge at the last named port, the Montebello proceeded in ballast to Talara, Peru, where she loaded a cargo of crude petroleum, and thereupon cleared for Vancouver, British Columbia. Upon arrival in that port, she discharged her entire cargo. The Montebello then proceeded in ballast from Vancouver, B. C., to Port San Luis, California, arriving December 24, 1940. Upon arrival at San Luis, the Master of the vessel tendered to the Deputy Collector of Customs a Master's Oath on form No. 3251, showing the Montebello as arriving from Vancouver, Canada. The Collector refused to accept the Master's Oath and demanded an Oath showing the vessel arrived from Talara, Peru, which was furnished, and then the Collector demanded and collected from plaintiff tonnage duty at the rate of six (6) cents per ton in the total sum of three hundred six and forty-two one-hundredths dollars.

Following the entry of the Montebello, her crew were paid and discharged before a United States Shipping Commissioner. The certificate of registry was surrendered owing to a change of trade from foreign to coastwise operations. On May 7, 1941, the plaintiff applied to the Director of the Bureau of Marine Inspection and Navigation, hereinafter referred to as the Director, for refund of two hundred four and twenty-eight hundredths dollars, representing the difference between the amount of tonnage tax computed at the six (6) per cent rate and the amount computed at two (2) per cent, which the plaintiff deemed applicable. It appeared by affidavit that any party in interest to a matter involving the payment of tonnage taxes may obtain, upon request, an opportunity to appear and be heard either before the Director or one of his qualified assistants. Neither the Customs brokers, who entered vessels, nor the owners of the vessels, were ever advised that an oral hearing could be had. On May 31, 1941, the Director decided that the tonnage tax was correctly assessed upon entry of the Montebello, on December 24, 1940. The application for refund was denied.

The statute provides: "The Commissioner of Navigation shall be charged with the supervision of the laws relating to the admeasurement of vessels, and the assigning of signal letters thereto, and of designating their official number; and on all questions of interpretation growing out of the execution of the laws relating to these subjects, and relating to the collection of tonnage tax, and to the refund of such tax when collected erroneously or illegally, his decision shall be final."

Act July 5, 1884, 23 Stat. 119, 46 U.S. C.A. § 3.

Prior to the enactment of the Act of July 5, 1884, an appeal could be taken to the Secretary of the Treasury for a refund of tonnage tax (Act of June 30, 1864, 13 Stat. 202), and to the Department of State upon the interpretation of treaties involving the collection of said tax. The Act of July 5, 1884, was a reorganization measure. See statement, Representative Dingley, 15 Congressional Record, Part 4. This Act ended administration confusion and made the decision of the Commissioner of Navigation final, thus terminating appeals to the Secretary of the Treasury, the Secretary of State, or any other administrative head. There was no intention on the part of Congress to deprive the courts of jurisdiction.

"By the Act of June 30, 1932, Chapter 314, Section 501 (47 Stat. 415), (5 U.S.C.A. § 597a), the Bureau of Navigation was consolidated with the Steamboat Inspection Service into the Bureau of Navigation and Steamboat Inspection, under the Chief of the new bureau, who succeeded to the duties and powers of the Commissioner of Navigation under the 1884 Act quoted above. (46 U.S.C.A. § 3.) By the Act of May 27, 1936, Chapter 463, Section 1, 49 Stat. 1380, 5 U.S.C.A. § 597a-1, the name of the bureau was changed to "Bureau of Marine Inspection and Navigation." The Director of the renamed bureau was charged with the duties and powers of the former Commissioner of Navigation under the 1884 statute quoted above. (46 U.S. C.A. § 1 note.) * * *

"The functions of the Bureau of Marine Inspection and Navigation were transferred to the Bureau of Customs by Executive Order No. 9083, effective March 1, 1942, and published in (1942) 7 Fed. Reg. 1609 50 U.S.C.A. Appendix § 601 note, and the powers of the Bureau of Marine Inspection and Navigation were vested in the Commissioner of Customs by the same order, which was an exercise of the statutory powers granted the President to reorganize the executive branch of the Government."

Going now directly to the question of jurisdiction, we must examine carefully the Hedden and the Laidlaw opinions. The Hedden opinion clearly states that the question of jurisdiction was raised by the court sua sponte. The court said 43 F. 23: "* * * on the other hand, the labor and responsibility of the court have been increased by the omission of the defendant's counsel to furnish any assistance towards the solution of the questions, and permitting them to pass sub silentio." It is reasonable to conclude that the government assumed the court had jurisdiction. The Attorney General, five years prior to the Hedden decision (18 Op.Atty.Gen. 197, June 12, 1885) held that the Act in question was designed to terminate the right of appellate review formerly existing in the Secretary of the Treasury and the Secretary of State. The tonnage tax and the power of the Commissioner of Navigation were directly at issue in the Hedden case, and the court held that: "Congress has seen fit to constitute him the final arbiter in certain disputes, and congress alone can supply a remedy for any wrong which may have arisen from his construction of the law relating to the collection of tonnage due." 43 F. 25. The court further held Congress had the authority under the court to vest in the Commissioner the power to make final decisions.

Three months after the Hedden decision the Circuit Court for the District of Oregon rendered its opinion in Re Laidlaw v. Abraham, 43 F. 297. The plaintiff claimed the wrongful collection of a tonnage tax and instituted suit. The court at first decided against the plaintiff and held in Re Laidlaw, C.C., 42 F. 401, 403, decided May 13, 1890: "* * * the decision of the commissioner of the navigation appears to be final." However, about three months thereafter the same court reversed its own opinion in Re Laidlaw v. Abraham, 43 F. 297, 299, which was decided August 18, 1890. The question of jurisdiction was directly raised. The defendant filed a general demurrer to the complaint, urging that the facts did not state a cause of action and the court is without jurisdiction. Judge Deady said:

"The only other point made in support of the demurrer is that the decision on the appeal to the secretary was, under the Act of July 5, 1884, (23 St. 118,) in fact made by the commissioner of navigation, and is by said act made final, and is therefore a bar to this action.

"This act is entitled `An act to constitute a bureau of navigation in the treasury department.' The commissioner created by it is charged, `under the direction of the secretary of the treasury' with many duties concerning `the commercial, marine, and merchant seamen of the United States;' and, by section 3 thereof, `with the supervision of the laws relating to the admeasurement of vessels and the assigning of signal letters thereto, and of designating their official number; and on all questions of interpretation growing out of the execution of the laws relating to these subjects, and relating to the collection of tonnage tax, and to the refund of such tax when collected erroneously or illegally, his decision shall be final.'

"At first blush it may appear that this provision in the act of 1...