Syllabus. U.S. Shipping Bd. Merch. Fleet Corp. v. Harwood, 281 U.S. 519 (1930)
Case details
Bluebook Citation
Syllabus. U.S. Shipping Bd. Merch. Fleet Corp. v. Harwood, 281 U.S. 519 (1930)
Full caption
Syllabus. U. S. SHIPPING BOARD MERCHANT FLEET CORPORATION v. HARWOOD, TRUSTEE IN BANKRUPTCY, et al .
Country
United States
Jurisdiction
Federal
Court
Supreme Court of the United States
Decided
May 19, 1930
Majority
Stone (Justice)
Syllabus.
U. S. SHIPPING BOARD MERCHANT FLEET CORPORATION v. HARWOOD, TRUSTEE IN BANKRUPTCY, et al .
CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE
SECOND CIRCUIT.
No. 345. Argued April 16, 1930.—Decided May 19, 1930.
1
The Fleet Corporation held suable on contracts purporting to bind it, made by it in its own name, as a corporation organized under the laws of the District of Columbia, and describing it as representing and acting for and in behalf of the United States, but containing no words purporting to bind the United States or in terms restricting the liability of the corporation. P. 524.
2
The quasi-public character of the Fleet Corporation, and the duties imposed upon it as an agency of the United States by Acts of Congress and Executive Orders, do not except it from the rule that an agent may be bound, notwithstanding his known agency, by contracts that he executes in his own name. Id.
3
There is no basis for presuming that the Fleet Corporation is not to be deemed bound by the contracts into which it enters, merely because it is acting as a public agency; and its liability as measured by their terms is not to be curtailed by the presumption which might be indulged in favor of an individual acting for the Government. P. 525.
4
Section 2 (b) (2) of the Merchant Marine Act, which provides that all rights or remedies accruing as a result of contracts previously made under the Emergency Shipping Fund legislation “ shall be in all respects as valid, and may be exercised and enforced in like manner, subject to the provisions of subdivision (c) of this section, as if this Act had not been passed,” saves the right to sue the Fleet Corporation on its contracts. P. 527.
5
Subdivision (c) of § 2 of the Merchant Marine Act, providing that any person dissatisfied with any decision of the Shipping Board “ shall have the same right to sue the United States as he would have had if the decision had been made by the President of the United States under the Acts hereby repealed,” if it is applicable to suits on contracts of the Fleet Corporation at most gave an additional remedy against the United States and not a substitute for existing remedies against the Fleet Corporation expressly preserved by subdivision (b) (2), supra. P. 527. 32 F. (2d) 680, affirmed. Certi orar i, 280 U. S. 544, to review a judgment of the Circuit Court of Appeals reversing a judgment of the District Court in a suit, brought originally in a state court,, against the Fleet Corporation to cancel a contract, for duress and fraud, and to secure an accounting under earlier contracts. The District Court dismissed the bill upon the ground that the only remedy was against the United States, 26 F. (2d) 116. The Court of Appeals held otherwise, but limited the relief to an accounting under the contract sought to be canceled. Mr. Claude R. Branch, Special Assistant to the Attorney General, with whom Attorney General Mitchell and Messrs. J. Frank Staley, Erwin N. Griswold, Chauncey G. Parker, General Counsel, Fleet Corporation, and O. P. M. Brown, Special Counsel, Fleet Corporation, were on the brief, for petitioner. In executing the contract of March 26, 1920, the Fleet Corporation was acting as the agent of a disclosed sovereign principal. Besides disclosing in the description of the parties that it was acting solely in a representative capacity and solely on behalf of its principal, much of the subject matter of the contract relates to matters, such as the cancellation of contracts and the payments of just compensation therefor, with which the Fleet Corporation, under its corporate charter powers, had no concern. Moreover, the authority under which this public agent was acting existed by reason of Acts of Congress and Executive Orders, of which everyone was chargeable with notice. When a public officer or agent acts in the line of his duty and by legal authority, his contracts, made on ac-Where a person, discovered in the act of transporting liquor unlawfully, has been arrested and the transporting vehicle seized under § 26 of the National Prohibition Act, proceedings to forfeit the vehicle must be taken under that section, which protects innocent lienors, and will not lie under Rev. Stats. § 3450. P. 532. 34 F. (2d) 38 and 35 id. 928, reversed. Certi orari , 280 U. S. 549, and post, p. 707, to review judgments affirming forfeitures of automobiles under Rev. Stats. § 3450. The present petitioners intervened 1 Section' 26, Title II, of the National Prohibition Act, c. 85, 41 Stat. 305, 315 (U. S. C., Title 27, Sec. 40): “When the commissioner, his assistants, inspectors, or any officer of the law shall discover any person in the act of transporting in violation of the law, intoxicating liquors in any wagon, buggy, automobile, water or aircraft, or other vehicle, it shall be his duty to seize any and all intoxicating liquors found therein being transported contrary to law. Whenever intoxicating liquors transported or possessed illegally shall be seized by an officer he shall take possession of the vehicle and team or automobile, boat, air or water craft, or any other conveyance, and shall arrest any person in charge thereof. Such officer shall at once proceed against the person arrested under the provisions of this title in any court having competent jurisdic98234°—30----- 34 . *
(no text on this page in the source reporter)
519 Argument for Petitioner.
count of the Government, are public and not personal. They inure to the benefit of and bind the Government, not the agent. It can not matter that the public agent is a corporation rather than an individual.
In authorizing the President to delegate to such agencies as he might determine the power conferred on him for the production of ships for the use of the Nation in the war emergency, Congress did not intend that the public agents so selected should enter into contracts for the benefit of the United States upon the agents’ own personal credit, nor that the enormous sums of public money appropriated were to be expended for the personal account of the agents; nor did Congress intend that such agents should be held personally liable for their lawful acts and engagements while so employed.
The decision of this Court in the Sloan-Astoria cases (258 U. S. 549; 295 Fed. 415) is not authority for holding the Fleet Corporation personally liable in this case, because the only question determined in those cases was the jurisdiction of the District Courts to entertain suits against the Fleet Corporation. The contract in this case differs in many particulars from the contract considered in the Sloan-Astoria cases.
The corporate liability of the Fleet Corporation to account to respondents in this suit, if any exists, must be predicated upon the contract of March 26, 1920, which the court below found was an accord and satisfaction of all prior demands. Since respondents have not asked for a review of that finding, they may not question it before this Court. If the court below was right in holding that the Fleet Corporation had made itself personally liable on the earlier contracts with the Groton Iron Works because of the frame of the earlier instruments, the contract of March 26, 1920, constituted a novation by the United States of any liability which previously may have been p. 522incurred by the Fleet Corporation, and the Iron Works accepted the novation in full accord and satisfaction of all its rights arising from the earlier contracts.
If the form of the contracts involved in this case, in the light of the applicable statutory provisions, was not sufficient to exclude liability on the part of the Fleet Corporation, this liability was assumed and taken over by Congress on behalf of the United States, and the remedy provided by statute for the enforcement of this liability is exclusive. Merchant Marine Act.
Mr. Frederick H. Wood, with whom Messrs. Herbert B. Lee, Richard 8. Holmes, W. H. L. Edwards, and William W. Robison were on the brief, for respondents.
Mr . Just ice Stone delivered the opinion of the Court.
In this case certiorari was granted, 280 U. S. 544, to review a ruling of the Court of Appeals for the Second Circuit that the Fleet Corporation is subject to suit upon a contract which it entered into, acting as an agency of the United States under the Urgent Deficiencies Act of June 15, 1917, (40 Stat. 182) as amended.
On June 15, 1917, the Fleet Corporation contracted with Groton Iron Works for the construction of twelve wooden ships, reduced to eight by contract of September 30, 1918. On August 11, 1917, and April 20, 1918, contracts were executed, each for the construction of six steel ships. After the armistice the Fleet Corporation gave directions to suspend work on a part of the steel ships. The Iron Works became financially involved and, the Fleet Corporation having advanced large sums to it, negotiation for a settlement of various differences between the two corporations resulted in the contract between it and the Fleet Corporation of March 26, 1920. This p. 523described the Fleet Corporation as “ representing and acting ... for and in behalf of the United States of America (hereinafter referred to as the owner).” It cancelled the earlier contracts, with some exceptions relating to the completion of the steel ships, and settled and released numerous other claims not now important, saving certain claims growing out of a reconciliation of accounts, then in progress, to determine the amount due for certain work on the wooden ships.
The Iron Works, before its bankruptcy, brought the present suit in the Superior Court of Connecticut, which was removed to the District Court for Connecticut, where, respondent, the trustee in bankruptcy, having intervened, the complaint was reframed so as to pray the cancellation of the contract of March 26, 1920, as procured by duress and fraud, an accounting and judgment for such amounts as should be found to be due for breach of the earlier contracts. A fourth separate defense, which alone is presently involved, set up that with respect to all the transactions alleged in the bill of complaint, petitioner acted solely as an agency of the United States, under powers delegated to it by the President under the Urgent Deficiencies Act, and that with respect to those transactions it was under no personal liability and respondent’s only remedy was against the United States.
The District Court confirmed findings of a special master, in favor of petitioner, on the issues of fraud and duress and his conclusion that the rights of the parties were fixed by the contract of March 26, 1920, but gave judgment^ sustaining the fourth defense and dismissing the complaint. 26 F. (2d) 116. The Court of Appeals reversed the judgment, holding that the suit might be maintained against the petitioner, but limited the relief to an accounting under the contract of March 26, 1920. 32 F. (2d) 680.
Concededly, as both courts below and the special master agree, in entering into the several contracts referred to, the Fleet Corporation was acting as an agency of the United States as alleged. But all of the contracts were signed and sealed by the Fleet Corporation, which was referred to as a corporation organized under the laws of the District of Columbia and which promised to pay the stipulated price for the ships and to perform the other obligations of the contracts, in terms imposed on it. They contained no words purporting to bind the United States or in terms restricting the liability of the petitioner.
One acting as a private agent may be bound, notwithstanding his known agency, upon contracts which he executes in his own name. Sprague v. Rosenbaum, 38 Fed. 386; Guernsey v. Cook, 117 Mass. 548; Brown v. Bradlee, 156 Mass. 28; Sadler v. Young, 78 N. J. L. 594; McCauley v. Ridgewood Trust Co., 81 N. J. L. 86; Jones v. Gould, 200 N. Y. 18. See Worthington v. Cowles, 112 Mass. 30; Kean v. Davis, 20 N. J. L. 425; Cream City Glass Co. v. Friedlander, 84 Wis. 53. Compare Whitney v. Wyman, 101 U. S. 392; Post v. Pearson, 108 U. S. 418. The only question now presented is whether the quasi-public character of the Fleet Corporation and the duties imposed upon it as an agency of the United States by Acts of Congress and Executive Orders, described and considered in earlier opinions of this Court, require a different conclusion with respect to its contracts. Shipping Act of September 7, 1916, c. 431, 39 Stat. 728, 730-732; Urgent Deficiency Act of 1917, supra', Merchant Marine Act of June 5, 1920, c. 250, 41 Stat. 988; Executive Orders No. 2664, July 11, 1917, No. 2888, January 18, 1918, No. 3018, December 3, 1918, No. 3145, August 11, 1919, and see The Lake Monroe, 250 U. S. 246; United States v. Strang, 254 U. S. 491; Sloan Shipyards v. Fleet Corporation, 258 U. S. 549; Skinner & Eddy Corporation v. McCarl, 275 U. S. 1; Emergency Fleet Corporation v. Western Union, 275 U. S. 415, 421.
The petitioner contends that there is a strong presumption, which is here controlling, that a public officer or agent is not to be deemed bound as an individual upon his contracts made in behalf of the government in the performance of a public duty, since no one participating in such a contract would be justified in assuming, in the absence of a clearly expressed intention otherwise, that the officer intends to bind himself 'to defray public expense from his private purse. Parks v. Ross, 11 How. 361; Hodgson v. Dexter Company, 1 Cranch 345; Sheets v. Selden’s Lessee, 2 Wall. 177; see District of Columbia v. Camden Iron Works, 181 U. S. 453, 459.
But we need not decide the point or attempt to draw the line where that presumption may be overcome by language of the written contract which falls short of an explicit limitation of the personal liability of the agent. See Hodgson v. Dexter, supra, 364. For in the present case the agent is not an individual and its liability does not involve any expenditure of private funds for the satisfaction of public obligations. Its entire capital stock is government owned. Its funds and property were furnished to it by the government. They and government indemnity are alone the sources from which its obligations will be defrayed.
It was created as a government agency to construct a fleet of vessels to meet a wartime emergency. It was in order better to fulfill that purpose that Congress chose an instrument having the power to contract, as well as all the other powers of a private corporation, but with its every action government-controlled and all its assets supplied from government sources. The advantages of resorting to such powers in meeting the national emergency were urged as grounds for the choice of this particular form of agency, when the Urgent Deficiency bill was pending in Congress. See remarks of Senator Underwood, reporting the bill for the Senate Conferees, 55
Opinion pf the Court. 281 U. S.
Cong. Rec. 65th Cong., p. 3549; see The Lake Monroe, supra, p. 254, Skinner & Eddy Corporation v. McCarl, supra, p. 8. There is thus no basis for presuming that the Fleet Corporation is not to be deemed bound by the contracts into which it enters merely because it is acting as such an agency, and its liability as measured by their terms is not to be curtailed by the presumption which, it is urged, may be indulged in favor of an individual acting for the government.
That is the effect of the decision in Astoria Marine Works v. United States Shipping Board Emergency Fleet Corporation, 258 U. S. 549, 569. It was there held that suit might be maintained against the Fleet Corporation in a district court upon a contract in form and in manner of execution like those presently involved and where, as here the Fleet Corporation was described in the contract as “ representing the United States of America.” It is true, as the petitioner argues, that the precise question at issue was one of jurisdiction of the district court to entertain the suit rather than the Court of Claims, as one against the Government. But the jurisdiction was sustained on the ground that the Fleet Corporation was bound by its contract, even though it acted as an agency of the United States and so was subject to the suit upon it in the District Court. The court said (p. 569): “ The whole frame of the instrument [the contract] seems to us plainly to recognize the corporation as the immediate party to the contracts. ... If we are right in this, further reasoning seems to us unnecessary to show that there was jurisdiction of the suit. The fact that the corporation was formed under the general laws of the District of Columbia is persuasive, even standing alone, that it was expected to contract and to stand suit in its own person, whatever indemnities might be furnished by the United States.” See United States v. Wood, 290 Fed. 115, 263 U. S. 680.
Petitioner also insists that even though the Fleet Corporation is bound by its contracts, the liability has been undertaken by the United States by §§ 2(b) (1), 2(b) (2) and 2(c) of the Merchant Marine Act of June 5, 1920, 41 Stat. 988, which now affords the exclusive remedy for the enforcement of the liability. This legislation repealed, with certain specified exceptions, the Emergency Shipping Fund provisions of the Urgent Deficiencies Act of June, 1917, as amended. Section 2(b) (1) directed that “all contracts or agreements” previously made under the Emergency Shipping Fund legislation “ be assumed and carried out by the United States Shipping Board.” But § 2(b) (2) saved all rights or remedies accruing as a result of such contracts and provided that they “ may be exercised in like manner, subject to the provisions of subdivision (c)” of § 2. Subdivision (c) directed the Board to settle “ all matters arising out of or incident to the exercise by or through the President of any of the powers or duties imposed upon the President ” by the earlier legislation “ and for this purpose the Board, instead of the President, shall have and exercise any of such powers and duties relating to the determination and payment of just compensation.” It further provided that “ Any person dissatisfied with any decision of the Board shall have the same right to sue the United States as he would have had if the decision had been made by the President of the United States under the acts ” repealed.
Petitioner points to no provisions of earlier acts giving to the President power to determine the amount due a contractor under a contract made by the Fleet Corporation, and respondent asserts that the powers of the President referred to in (c) are limited to the award of just compensation. But even if we assume that his powers were not so limited, we think subsection (c) at most, gave an additional remedy against the United States and not a substitute for existing remedies upon
Statement of the Case. 281 U. S.
contract liabilities expressly preserved by subdivision (b) (2). The words of subdivision (b) (2), saving all existing remedies which “may be exercised and enforced in like manner, subject to the provisions of subdivision (c),” must be taken to preserve the old remedies and to give the new one if the matter is one which the Board is authorized to settle by (c). Any other construction would nullify the saving clause of (b) (2), for if the “ decision of the Board ” as used in the proviso of (c) embraces settlements of all matters arising out of contracts which, by paragraph (b) (1), it was directed to carry out and in the event that its decision is not accepted, the exclusive remedy is by suit against the United States, then none of the remedies accruing under such contracts and in terms saved by paragraph 2, were preserved.
Affirmed.
RICHBOURG MOTOR COMPANY v. UNITED STATES.
DAVIES MOTORS, INCORPORATED, v. UNITED STATES.
CERTIORARI TO THE CIRCUIT COURTS OF APPEALS FOR THE FOURTH AND NINTH CIRCUITS RESPECTIVELY.
Nos. 452 and 569. Argued April 25, 1930.—Decided May 19, 1930. p. 529in the District Court to set up their interests in the vehicles as innocent lienors. Their claims were rejected by the courts below as not permissible under the section mentioned.
Mr. Joseph G. Myerson, with whom Messrs. Phillip W. Haberman, Charles G. Lee, Jr., and R. R. Williams were on the brief, for Richbourg Motor Company.
Mr. Duane R. Dills, with whom Messrs. William K. Young and Berthold Muecke, Jr., were on the brief, for Davies Motors, Inc.
Assistant Attorney General Richardson, with whom Solicitor General Thacher, Assistant Attorney General Youngquist, Messrs. Claude R. Branch, Special Assistant to the Attorney General, and Mahlon D. Kiefer, were on the brief, for the United States.
Mr . Justice Stone delivered the opinion of the Court.
In these cases certiorari was granted, 280 U. S. 549, and post, p. 707, respectively, to pass on the question, whether proceedings for the forfeiture of a vehicle seized under § 26 of the National Prohibition Act,1 as one used for p. 530unlawful transportation of intoxicating liquor, but where there has been no prosecution for that offense, must be had under that section, or whether they may be prosecuted under the provisions of R. S. § 3450.2 The latter authorizes the forfeiture of vehicles used in the removal or concealment of any commodity with intent to deprive the United States of any tax upon it, which is made a criminal offense. The section does not, as does § 26, protect the interests of innocent lienors. Goldsmith Grant Co. v. United States, 254 U. S. 505; cf. Van Oster v. Kansas, 272 U. S. 465.
In each case the Court of Appeals answered the question by affirming a judgment of a district court, forfeiting, under § 3450, automobiles in which the petitioners,
tion; but the said vehicle or conveyance shall be returned to the owner upon execution by him of a good and valid bond, with sufficient sureties, in a sum double the value of the property, which said bond shall be approved by said officer and shall be conditioned to return said property to the custody of said officer on the day of trial to abide the judgment of the court. The court upon conviction of the person so arrested shall order the liquor destroyed, and unless good cause to the contrary is shown by the owner, shall order a sale by public auction of the property seized, and the officer making the sale, after deducting the expenses of keeping the property, the fee for the seizure, and the cost of the sale, shall pay all liens, according to their priorities, which are established, by intervention or otherwise at said hearing or in other proceeding brought for said purpose, as being bona fide and as having been created without the lienor having any notice that the carrying vehicle was being used or was* to be used for illegal transportation of liquor, and shall pay the balance of the proceeds into the Treasury of the United States as miscellaneous receipts. All liens against property sold under the provisions of this section shall be transferred from the property to the proceeds of the sale of the property. . . .”
2 Section 3450, Revised Statutes (U. S. C., Title 26, Sec. 1181):
“Whenever any goods or commodities for or in respect whereof any tax is or shall be imposed, or any materials, utensils, or vessels proper or intended to be made use of for or in the making of such goods or commodities are removed, or are deposited or concealed in p. 531respectively, asserted an interest as innocent lienors. Richbourg Motor Co. v. United States (4th Circuit), 34 F. (2d) 38; Davies Motor Co. n . United States (9th Circuit), 35 F. (2d) 928. In each a person operating an automobile belonging to another was arrested and arraigned before a United States Commissioner on a charge of illegal transportation of intoxicating liquor. The liquor and the car used for its transportation were seized by the officer making the arrest. The United States Attorney did not proceed with the prosecution of the charge, but procured the indictment and conviction of the prisoners, under § 3450, for removing and concealing spirits with intent to defraud the government of the tax.
The proceedings presently involved for the forfeiture of the vehicles were also had under that section. In each the respective petitioners intervened, setting up that they were lienors under conditional contracts of sale, to persons other than those arrested, and that petitioners and the conditional vendees were innocent of any participation in the unlawful acts charged. In No. 452 the court refused a request of petitioner to submit to the jury the question whether the seized automobile was used in the unlawful transportation of liquor and whether the
any place, with intent to defraud the United States of such tax, or any part thereof, all such goods and commodities, and all such materials, utensils, and vessels, respectively, shall be forfeited; and in every such case all the casks, vessels, cases, or other packages whatsoever, containing, or which shall have contained, such goods or commodities, respectively, and every vessel, boat, cart, carriage, or other conveyance whatsoever, and all horses or other animals, and all things used in the removal or for the deposit or concealment thereof, respectively, shall be forfeited. And every person who removes, deposits, or conceals, or is concerned in removing, depositing, or concealing any goods or commodities for or in respect whereof any tax is or shall be imposed, with intent to defraud the United States of such tax or any part thereof, shall be liable to a fine or penalty of not more than five hundred dollars. , , ” p. 532persons in the car were arrested at the time of its seizure, and refused a motion to dismiss the libel on the ground that by such arrest and seizure the government was bound to proceed for the forfeiture of the vehicle under § 26, and barred from proceeding under § 3450. In No. 569 trial was by the court without a jury, which found the facts as already stated, and decreed forfeiture of the vehicle under § 3450.
By § 5 of the Willis-Campbell Act of November 23, 1921, c. 134, 42 Stat. 222, 223, all laws relating to the manufacture, taxation and traffic in intoxicating liquors and penalties for their violation, in force when the National Prohibition Act was adopted, were continued in force except such provisions as are “directly in conflict with any provision of the National Prohibition Act.”
In United States v. One Ford Coupe, 272 U. S. 321, it was* held that there was no such direct conflict between § 26 and § 3450 as to preclude the forfeiture of the interest of an innocent lienor under the latter, where the intoxicating liquor was concealed in the seized vehicle with intent to defraud the government of the tax, and where it did not appear that there was transportation of the liquor. In Port Gardner Investment Co. n . United States, 272 U. S. 564, and in Commercial Credit Co. v. United States, 276 U. S. 226, it was held that prosecution and conviction of the offender for the transportation of intoxicating liquor under the Prohibition Act, barred forfeiture of the seized vehicle under § 3450, since the disposition of the vehicle after the conviction, prescribed by § 26, is mandatory. These cases left undetermined the question now presented, whether, under § 26, the mere arrest of the person discovered in the act of transportation, and the seizure of the transporting vehicle, bar the forfeiture under § 3450.
The language of § 26 is in form mandatory throughout. It is made the “ duty ” of the officer discovering any p. 533person in the act of transporting liquor to seize the liquor, when “ he shall take possession of the vehicle ” and “ shall arrest any person in charge” of it. He “shall at once proceed against the person arrested under the provisions of this title.” The vehicle “ shall be returned to the owner” upon his giving bond. “The court upon conviction of the person so arrested . . . shall order a sale by public auction of the property seized ” and the officer making the sale “shall pay all liens which are established ... as being bona fide and as having been created without the lienor having any notice that the carrying vehicle was being used or was to be used for illegal transportation of liquor. . . .” It is plain that, whenever the vehicle seized by the arresting officers is discovered in use in the prohibited transportation, literal compliance with these requirements would compel the forfeiture under § 26, with the consequent protection of the interests of innocent lienors. To that extent, § 26, if interpreted to exact such compliance, is in direct conflict with the forfeiture provisions of § 3450 and supersedes them whenever any person within the provisions of § 26 is discovered “ in the act of transporting . . . intoxicating liquors in any . . . vehicle,” which liquor is “removed . . . deposited or concealed . . . with intent to defraud the United States” of the tax.
But the government contends that § 26 is not to be read thus literally; that it was not intended by its mandatory phrases to do more than state generally the duty resting on all law enforcement officers to enforce the law, but which leaves them free, when the same act or transaction constitutes an offense under different statutes, to proceed under either one. It is argued that § 26 could not have been intended to preclude district attorneys from prosecuting violations of § 3450 merely because they involve transportation, and it can no less be taken to p. 534deprive them of their election to forfeit the offending vehicle under either section.
Undoubtedly, “ shall ” is sometimes the equivalent of “ may ” when used in a statute prospectively affecting government action. See Railroad v. Hecht, 95 U. S. 168; West Wisconsin Ry. Co. v. Foley, 94 U. S. 100, 103. The usual provisions of criminal statutes that the offender “ shall ” be punished as the statute prescribes is not necessarily to be taken, as against the government, to direct prosecution under that rather than some other applicable statute.
But the prescription in detail, by § 26, whenever transportation is involved, of successive steps to be taken which, if followed, lead unavoidably to forfeiture under that section and no other, with the important consequence of protecting the interests of innocent third persons, suggests a definite purpose to make the protection effective by bringing all forfeitures in such cases under its controlling provisions. If the purpose were the more general one of imposing on government officers the general duty to procure the forfeiture at their election, either under § 26 or any other applicable statute, most of the requirements of § 26 might have been omitted. The end sought could have been attained more easily by the simple enactment, in the language of § 3450, that the offending vehicle “ shall be forfeited,” saving the rights of innocent lienors if the proceeding were had under § 26.
It is to be observed that § 26 neither prohibits transportation of intoxicating liquors nor prescribes the punishment of the offender. That is provided for in §§ 3 and 29, as amended by the Jones Act (45 Stat. 1446). The general duty of investigating and reporting violations of § 3, as well as other sections of the National Prohibition Act, to United States Attorneys, is imposed on all prohibition officers by §§ 2 and 29. That duty is mandatory. Donnelley v. United States, 276 U. S. 505. The general p. 535duty to prosecute all criminal offenses is imposed on district attorneys by R. S. § 777. The objective of § 26 is not the prosecution of the offender, elsewhere provided for, but the confiscation of the seized liquor and the forfeiture of vehicles used in its transportation, to the limited extent specified in the section. Every act which it enjoins on public officials is directed to that end.
In providing for forfeitures under this section, Congress was not unaware that the enactment of the National Prohibition Act would enormously increase seizures of vehicles, beyond those made under § 3450, and that their forfeiture would place an increased and heavy burden on many innocent persons, unless afforded some protection by the new legislation. By § 26 it gave such protection in all cases where the prosecution of the person guilty of the transportation is had under the National Prohibition Act. This would have been but an idle gesture and the Congressional purpose would have been defeated if, in practically every case where the transporting vehicle is seized, the prosecuting officers could compel forfeiture of the interests of innocent third persons under § 3450. Yet, that is the effect of the construction of § 26 contended for by the government, since, with the enactment of national prohibition, there can be few cases of illegal transportation which do not involve the concealment of non-tax-paid liquor. See One Ford Coupe v. United States, supra, p. 326.
We think that Congress did not take the precaution to enact the carefully chosen language of § 26 merely to impose general duties on prosecuting officers already placed on them by other sections of the Act, but that its purpose was to preclude the nullification of the protection' which § 26 had extended to innocent third persons.
This Court has already held that the provision in § 26 that “The court, upon the conviction of the person so p. 536arrested, shall . . . order a sale by public auction of the property seized ” is mandatory and requires the forfeiture to proceed under that section. Port Gardner Investment Co. v. United States, supra; Commercial Credit Co. v. United States, supra. No tenable ground of distinction is suggested which would enable us to say, where forfeiture is involved, that the preceding requirement of the section, that the proceedings against the person arrested “shall be under the provisions of this title,” is any less so.
The conclusion we reach is not without support in the legislative history of § 26. The clause protecting the interests of innocent lienors was added by amendment in the House of Representatives to H. R. 6810, which became the National Prohibition Act. The sponsor for the amendment pointed out that the procedure prescribed by the section as originally drawn protected the interests of the innocent owner and stated that the amendment was designed to save from forfeiture the interests of innocent lienors and innocent owners alike. Congressional Record, 66th Cong., 1st Sess., Vol. 58, Pt. 3, p. 2902, July 19, 1919.
Report No. 151 of the Senate Judiciary Committee on this bill, August 18, 1919, 66th Cong., 1st Sess., stated that the “ seizure of any vehicle in which liquor is being transported in violation of law, together with liquor being transported, is authorized, as well as the arrest of the person engaged in such illegal transaction, the property seized to be disposed of under the direction of the court, as provided in § 26.”
We are of opinion that under § 26 it is the duty of prohibition officers to arrest any person discovered in the act of transportation and to seize the transporting vehicle; that such arrest and seizure require the government to proceed for forfeiture of the vehicle under § 26. It is unnecessary to say whether, if for any reason the seizure p. 537528 Syllabus.
cannot be made or the forfeiture proceeded with, prosecution for any offense committed must be had under the National Prohibition Act rather than other statutory provisions.
Reversed.
1
Upon review of a decision of a state court denying the existence under the loeal law of a right alleged to exist under that law and for which protection was claimed under the Federal Constitution, the province of this Court is to inquire whether the decision rests upon a fair or substantial basis; and if there was no evasion of the constitutional issue, and the non-federal ground has fair support, this Court will not inquire whether the rule applied by the state court is right or wrong, or substitute its own view of what should be deemed the better rule for that of the state court. P. 540.
2
Two South Carolina corporations, one of them with a franchise to establish and operate an electric street railway and power system upon condition that the railway be in operation within five years, and the other with a franchise to sell and distribute electricity for light and power and for that purpose to erect poles and conductors, were consolidated under a .special act of the legislature, in a new corporation, whose franchises and privileges were granted for its corporate life, extending beyond the lives of the other companies. Under the consolidation act the franchises of the old companies were consolidated and became vested in the new one. The new company established a street railway and an electric power and lighting plant, using, so far as practicable, the same poles, wires and rights of way for both systems, and for forty years operated the properties as one business. In a suit brought by the State, the South Carolina Supreme Court decided that, by virtue of the consolidation, the privilege of operating the street railway was in98234°—30----- 35