APPEAL FROM THE DISTRICT COURT OF THE UNITED STATES FOR PORTO RICO.
MR. JUSTICE McKENNA delivered the opinion of the court.
The question in the case is the power of Porto Rico to tax certain machinery and boats which at the time of the levy of the taxes were in the harbor of San Juan engaged in dredging work in pursuance of a contract of the Standard Dredging Company with the United States Government.
The dredging company filed a bill to enjoin the appellant, Treasurer of Porto Rico, from enforcing the tax. Appellant demurred to the bill for insufficiency and want of equity, which was overruled. He declined to answer, and the injunction which had been granted was made perpetual. This appeal was then taken.
The material allegations of the bill are as follows:
The dredging company is a Delaware corporation, with its principal office and place of business at the city of Wilmington, State of Delaware. Gromer is Treasurer of Porto Rico.
That theretofore and prior to April 1, 1908, the dredging
company entered into a contract with the United States Government to dredge certain portions of the harbor of San Juan and the channel leading from the ocean to the harbor area. Prior to that date, for use in connection with its operations under the contract, it brought to the harbor one dredge, one tugboat, two scows for dumping material to be removed, one coal scow and one launch. The boats and machinery are its property and have been constantly used by it in the performance of its contract, and were not used in connection with any other business or operations, and were at all times within the harbor where the operations under the contract were carried on. The dredging company has neither conducted nor carried on any other business in Porto Rico or the waters adjacent thereto except its operations under the contract.
Gromer, as Treasurer of Porto Rico, pretending to act under the revenue laws of Porto Rico, assumed to assess and levy on the said property as of the value of $75,000 a tax of $1,200, for the fiscal year 1908-9, and he and his agents "have levied an embargo on part of said property . . . and are threatening to foreclose the same and to sell the property for the purpose of enforcing the collection of the said alleged tax."
The tax is illegal and its enforcement will be illegal by virtue of the laws of the United States and of Porto Rico, and especially by virtue of the acts and proclamations of Congress and of the President of the United States creating reservations in and about the island of Porto Rico. The insular government of Porto Rico is not authorized to levy or collect any tax in connection with property the situs of which is within the reservation or within any navigable waters of harbor areas of the island of Porto Rico.The property of the company has not been brought within the jurisdiction of the insular government, nor is it subject to taxation while being employed in the performance
of the contract with the United States and within the harbor area.
It is alleged that the company is without any remedy at law, and an injunction is therefore prayed.
In support of his demurrer appellant contends that the dredging company had an adequate remedy at law and that § 12 of the act of the Legislative Assembly of Porto Rico, approved March 8, 1906 (Acts 1906, p. 86 at 89), which provided that an "injunction may be issued to prevent the illegal levying of any tax, duty or toll, or for the illegal collection thereof, or against any proceeding to enforce such collection . . ." does not apply to the District Court of the United States for Porto Rico. We, however, pass the contention, as we prefer to rest our decision on the merits.
The bill of the dredging company, and its contentions here, are based on two propositions: (1) the property was not within the jurisdiction of Porto Rico but was within the harbor area reserved by the United States; (2) the property was being used "within the harbor area" in the performance of a contract with the United States and therefore not subject to taxation for insular purposes.
To sustain the first proposition § 13 of the Foraker Act (April 12, 1900, 31 Stat. 77, c. 191) is relied on and the act of Congress of July 1, 1902 (32 Stat. 731, c. 1383).
Section 13 (31 Stat. 80) reads as follows:
"That all property which may have been acquired in Porto Rico by the United States under the cession of Spain in said treaty of peace in any public bridges, road houses, water powers, highways, unnavigable streams, and the beds thereof, subterranean waters, mines, or minerals under the surface of private lands, and all property which, at the time of the cession belonged, under the laws of Spain then in force, to the various harbor works boards of Porto Rico, and of the harbor shores, docks, slips, and reclaimed lands, but not including harbor areas or
navigable waters, is hereby placed under the control of the government established by this Act to be administered for the benefit of the people of Porto Rico; and the legislative assembly hereby created shall have authority, subject to the limitations imposed upon all its acts, to legislate with respect to all such matters as it may deem advisable." [Italics ours.]
Under the act of Congress of July 1, 1902, a division of the public properties of Porto Rico was made under which the President of the United States was authorized to reserve certain public properties for the use of the Federal Government. The properties not reserved were granted to the Government of Porto Rico to be held or disposed of for the use and benefit of the people of the island. The reservations included lands and buildings for army and navy and other Federal governmental purposes. The exception of harbors and navigable streams was as follows:
"And all the public lands and buildings, not including harbor areas and navigable streams and bodies of water and the submerged lands underlying the same, owned by the United States in said island and not so reserved," etc.
Considering these provisions alone it is, we think, manifest that they only provide for proprietary reservations and dispositions and not for limitations upon the exercise of government. This conclusion is confirmed by § 1 of the Foraker Act, which provides that the provisions of the act "shall apply to the Island of Porto Rico and to the adjacent islands and waters of the islands lying east of the seventy-fourth meridian of longitude west of Greenwich, which were ceded to the United States by the Government of Spain by treaty entered into on the tenth day of December, eighteen hundred and ninety-eight; and the name Porto Rico, as used in this Act, shall be held to include not only the island of that name, but all of the adjacent islands, as aforesaid."
As early as 1901 the control by the Government of the
United States over Porto Rican waters came up for consideration and was referred by the Secretary of War to the Attorney General for determination. The elements in question were the River and Harbor Act of 1899 (March 3, 1899, 30 Stat. 1151, c. 425) and the act of April 12, 1900, "temporarily to provide revenues and a civil government for Porto Rico, and for other purposes." 31 Stat. 77, 80. Section 14 of the latter act provided, with certain exceptions, that the statutory laws of the United States not locally inapplicable should have the same force and effect in Porto Rico as in the United States. Section 13 provided that certain harbor property which at the time of the cession belonged, under the laws of Spain, to the various Harbor Works Boards of Porto Rico, "but not including harbor areas or navigable waters," should be "placed under the control of the government established by this act and to be administered for the benefit of the people of Porto Rico." The Legislative Assembly created by the act was given authority "to legislate with respect to all such matters" as it might deem advisable, and this authority was extended to all matters of a legislative character not locally inapplicable. It was further provided that all laws should be referred to Congress, which reserved the power to annual the same.
The River and Harbor Act of March 3, 1899 (30 Stat. 1121, 1151, c. 425) prohibited unauthorized obstructions to navigation in any of the waters of the United States, and provided for control by the Secretary of War of wharves and similar structures in ports and other waters of the United States.
The Attorney General expressed the opinion that under these statutes the coastal waters, harbors and other navigable waters of the island were waters of the United States and that a license granted by the Secretary of War to build a wharf in the harbor, given before the ratification of the treaty with Spain, was valid, and that the
power under the license to rebuild the wharf, which had been destroyed by fire, continued as against the control of the Executive Council of Porto Rico. Commenting on the provisions of the River and Harbor Act and the acts in regard to Porto Rico, it was said that Congress, since the ratification of the treaty with Spain, has nowhere indicated that Porto Rican waters are not to be regarded as waters of the United States, nor directed that the authority of the Secretary of War, under the River and Harbor Act of 1899, shall not extend to the Porto Rican waters."On the contrary, Congress has used language in the Porto Rican Act, as, for instance, in section 13, which clearly contemplates national jurisdiction over those waters as waters of the United States." 23 Op. Atty. Genl. 551. In other words, the jurisdiction of the United States over those waters was the jurisdiction that the United States had over all other navigable waters, an exercise of which the River and Harbor Act was an example.
This is made clear by a subsequent opinion, in which it was declared "that Congress had committed to local control, subject to the express limitation upon the local legislative power, the administration of certain public property and utilities, including 'harbor shores, docks, slips, and reclaimed lands,' but excluding 'harbor areas or navigable waters,'" And, speaking of §§ 12 and 13 of the Porto Rican Act of April 12, 1900, it was said that the "obvious implication" from them is "that the General Government retains title to, possession of, and control over certain other public property, of which fortifications and their appurtenances are specified, and also reserves for its own administration the usual national powers over lights, buoys, and other matters affecting navigation or 'works undertaken by the United States.'" And it was said, further: "From all this it is certain that the ordinary national control of the marine belt affects the coastal
waters of Porto Rico as well as those of any State or any other Territory of the United States." But as to the "harbor margins" it was said that "the Government of the United States, by reason of these grants . . . to Porto Rico, is in the same position with reference to the island government, as well as to private owners, as it would be in a similar case affecting a State of the United States." 23 Op. Atty. Genl. 564, 566.
From this principle it was concluded that the United States could not appropriate the islands of Culebra for a naval base, they being within the limits described in § 1 of the act of April 12, 1900. And § 1 of that act is identical with § 1 of the Foraker Act and its provisions for "harbor areas and navigable waters" are the same as in the Foraker Act. The views of the Attorney General, therefore, are expressly applicable, for the language of the act ...