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interest does not come within the protection of the Due Process Clause. Likewise, full faith and credit is not applicable. Mrs. Granville-Smith is not asking that this Court make her divorce, if granted, valid in the States. That issue is not here and may never be. All she asks is that the Islands be permitted to proceed under their own law. In this connection, I find no words in the Constitution which require a territory to give full faith and credit to the laws of a State.
Nor have the Islands invaded the sphere of activities reserved to the States, contrary to the Tenth Amendment. The "Tenth Amendment does not operate as a limitation upon the powers, express or implied, delegated to the National Government." Case v. Bowles, 327 U. S. 92, 102. The Congress has the power to deal with the Islands, granting or withholding from them the powers of a State as it sees fit.
The only constitutional bugaboo is a judge-made one, domicile. It creates strange anomalies. A married couple, both of whom desire a divorce, can obtain one in Nevada merely by having one spouse “reside” there uninterruptedly for 6 weeks, and claim an intention to take up permanent residence there. See, e. g., Business Week, July 14, 1945, p. 24. Then, after divorce, though the divorcee immediately leaves Nevada, as was always intended, both sides here concede that regardless of how evident it is there was no domicile in the divorcing State, no other State can question the validity of the divorce so long as both parties appeared in the action. See Johnson v. Muelberger, 340 U. S. 581. We too agree with the language of Mr. Chief Justice Taft: "All others can see and understand this. How can we properly shut our minds to it?" 9 Still the Court strikes down the Islands' law which avoids this judicial fraud.
Divorce is an intensely practical matter, and if a husband and wife domiciled in any State want a divorce enough, we all know that they can secure it in several of our States. This being true, I see no sense in striking down the Islands' law. There is no virtue in a state of the law the only practical effect of which would be to make New Yorkers fly 2,400 miles overland to Reno instead of 1,450 miles over water to the Virgin Islands.
The only vice of the Virgin Islands statute, in an uncontested case like this, is that it makes unnecessary a choice between bigamy and perjury. I think the Court should not discourage this and I would reverse.
Mr. O'BRIEN. As I understand, the court held that Congress did not intend to give the Virgin Islands as much authority over its divorce laws as the States possess. Is that right?
Mr. ABBOTT. That is the effect of the decision, Mr. Chairman.
Mr. O'BRIEN. And you have found nothing in the deliberations of Congress which would indicate such a limitation or desire for such a limitation on the part of Congress?
Mr. ABBOTT. No. On the contrary, Mr. Chairman. It may be that Congress, examining it in a new light, may wish to restrict it, but the language taken was taken from the Foraker Act, the Federal Relations Act in Puerto Rico, except the language there was "not locally inapplicable," and the effect of the language we adopted was to remove a double negative. The intent from the Senate report accompanying the old Foraker Act was the basis of the language which was readopted in 1954.
Mr. O'BRIEN. May I ask, Mr. Abbott, what you would think of the amendment as proposed in this Congress with the phrase "in like manner as a State of the United States ?
Mr. ABBOTT. I believe that would call for a little comparison. Again, if you are inventing new language, then it would require a de novo construction by the court. I think any reaffirmation of position, even readoption of the language in existing law with a statement of intent would probably upset, so to speak, the position taken by the court, if that were the desire. But it is my first blush reaction that the suggested amendment would have to be examined, because I know of no other area under the flag where that language is used.
8 Even this is being fast undone and “English courts may now grant divorces in many cases where the parties are not domiciled in England." See 65 Harv. L. Rev. 193, 200. See also Crownover v. Crownover, 274 P. 2d 127 (1954).
An article on the Nevada divorce in a popular magazine shows that the people have not closed their minds even if this Court has. "Nevada's first requirement for a divorce is what lawyers smugly refer to as a 'legal fiction': six weeks steady residence in Nevada. After this, a mild sort of perjury is committed when the applicant mumbles in reply to the judge's mumble that she does intend to continue residence in Nevada.” Holiday, February 1949, p. 98.
Has it been employed elsewhere to your knowledge, Mr. Dudley?
Mr. DUDLEY. No, sir; it has not. I just thought the language would be used for the purpose of clarifying the intent of Congress, since the Supreme Court does have difficulty in interpreting language that other people seem to understand in a normal way.
Mr. ABBOTT. As a member of the Federal bar, I make no comment at that point.
(Subsequently the St. Thomas Chamber of Commerce formally submitted several recommendations for subcommittee consideration. The first recommendation is as follows:)
Legislature-Scope or powers. Section 8 (a):
Amend to read: "The legislative authority and power of the Virgin Islands shall extend to all rightful subjects of legislation, the same as that of a State of the United States, not inconsistent with this Act or the laws of the United States applicable to the Virgin Islands."
Justification: We recommend this amendment for the purpose of remedying the restrictive interpretation given to the section by the United States Supreme Court in the case of Granville-Smith v. Granville-Smith (349 U. S. 1, 1955).
(Subsequently the Democratic Insular Committee submitted the following recommendation for consideration :)
Section 8 (a). Scope of legislative powers.-We favor the proposed amend. ment to the 1954 act considered by the 84th Congress in giving the legislative power extended to all rightful subjects of legislation as is true in the States and which will be proposed to this committee.
Are there any other comments on section 8 (b) on the issuance of Virgin Islands bonds?
First, I should like to ask Governor Gordon whether any bonds have been issued under that provision.
Governor GORDON. Not to date, Mr. Abbott. At the last session of the legislature provision was provided for the issuance of bonds under the port authority in St. Croix. We haven't proceeded to the point of having the bonds issued.
Mr. ABBOTT. As Members are aware, under the amended 1936 act-in fact, it was the act of October 27, 1949, cited at volume 63, Statutes at Large, page 940, Congress authorized the issuance of bonds by the Government of the Virgin Islands, then, of course, as obligations of the municipality or of the legislative assembly, which would be the entire islands. The scope of purpose was limited to improvements, and the feeling on the amount of obligation was 10 percent of the aggregate assessed valuation of tax property of the municipality, or, similarly, if they were to be Virgin Islands bonds, 10 percent of all islands assessed valuation.
Under the 1954 act, however, there was general authority for issuance by the legislative branch of bonds or other obligations, again, for specific public improvement or public undertaking on a direct revenue basis, with a prohibition against their incurring any indebtedness as a general obligation as distinguished from a revenue bond obligation.
I believe we have been formally advised that it is the opinion of a number of people in the islands that this section is meaningless or at least cannot be utilized under the existing economic situation in the islands, and perhaps for reasons inherent in the authorizing provision.
But you say there have been no bonds issued to date?
Governor GORDON. No; this is the first attempt, the last regular session. At the regular session and special session we appropriated $30,000 to help the port authority get started. Mr. ABBOTT. Senator Ottley, does your commission group have
any comments on this section?
Mr. OTTLEY. No, sir; we do not. We thought Congress had gone into this matter quite well, and we thought that perhaps the provision enunciated in this section may be a healthy one.
Of course, under the 1936 organic act, even though we had a more liberal provision for bond issue, the legislature never took advantage of that provision to authorize the issuance of any bonds.
We have not discussed that matter to the point where we are willing to make any firm suggestion for amendment to this section.
Mr. ABBOTT. Am I correct, Senator, in my interpretation of the difference between the 1949 and the 1954 act, that you did have general obligation authority up to 10 percent of the assessed valuation, and you are now prohibited from incurring general indebtedness, and it would be under revenue bonds?
Mr. OTTLEY. That is right.
Mr. ABBOTT. Has that acted to preclude or at least to handicap bond issuance ?
Mr. OTTLEY. I think this provision is more restrictive.
Mr. OTTLEY. The earlier provision, of course, gave us an opportunity to issue bonds in a much easier manner than this provision could possibly give us. If there were to be a choice by the legislature or people here, I think they would want the 1936 provision.
Mr. ABBOTT. So you could have authority to incur indebtedness up to a given percentage of your assessed valuation?
Mr. OTTLEY. Yes. Mr. ABBOTT. I am convinced you are correct that the clear intent of Congress was to limit you to revenue obligations rather than general obligations of the islands government.
Do any of the other panel members have any comments on that section?
Dr. MILLER. May I ask a question there, Mr. Chairman?
Dr. MILLER. Has legislation been passed by your legislative body authorizing the issuance of bonds? Have you taken any steps in that direction?
Mr. OTTLEY. Yes; at the last session of the legislature the Governor submitted a proposal for issuance of bonds for the St. Croix Port Authority, and the legislature approved that bill, the Governor signed it, and it is now a law.
Dr. MILLER. The legislature did what?
Mr. OTTLEY. The legislature approved the issuance of the bonds and the Governor signed it. But, as the Governor said, they have not yet implemented the legislation.
I do not think the port authority has even been set up yet, has it, Governor?
Governor GORDON. Yes; it has been organized; but we did not have any money to even have a survey made, which would of course be necessary before any bonding company would be interested in buying our bonds. The feasibility would have to be proven.
The legislature at the special session voted $30,000 to give the port authority a start. It had absolutely no money. I approved the bill because we had to get it started somehow, and it is still in that state. It provides for the setting up of a corporation that would be comparable to Vicorp from a congressional point of view, as compared to a corporation set up by the local legislature.
Dr. MILLER. Has the legislature taken any steps to establish the rates of interest on moneys the authority will have?
Mr. OTTLEY. No, sir.
Mr. HILL. The safeguards are here on whatever rates of interest may be charged.
Governor GORDON. Exemptions and so forth are set up in the act under taxation.
Going back to comment on this matter of bonded indebtedness, I think it is a healthy thing not to permit it, particularly in view of the fact that the legislature never used the power when it had the power. I think you can mortgage your income to an extent that you can almost bankrupt your government. One legislature can do so, and there is a question legally as to whether or not one legislature can bind a subsequent legislature on the income.
Dr. MILLER. I noticed a rather healthy statement issued by the local bank. I thought it was rather creditable; some $7 million in the bank. Is that Federal money?
Governor GORDON. Part of it.
Governor GORDON. Local people and deposits of the local government.
Dr. MILLER. What interest, if any, do the Federal deposits draw?
Governor GORDON. One percent. I fixed it at one. The law was amended to permit that.
Let's go back a little bit. Prior to my administration the legislature passed an act setting 2 percent as a minimum amount of interest on Federal deposits. One of the banks came to me, and complained about the amount of services it was rendering us and the small amount of income it was able to make by virtue of investing our money.
Under the local law any funds in the local banks and Imust divide the deposits as nearly equal as possible between our two banks—the bank must put up security dollar for dollar, and this has resulted in the bank being able to purchase only short-term Treasury bills, which pay on the average of around 2.5 percent. They cannot invest in longterm bonds unless they have a lot of other securities.
One bank here is the national bank and one bank is a local bank, and under national bank rules the bankers have to keep a certain amount of cash deposits on hand, whereas that limitation does not exist with respect to the other bank.
So, out of that situation I submitted a bill to the legislature, and they passed it, setting a minimum rate of interest of not less than one-twentieth of 1 percent, with no maximum rate of interest. It provided that the governor could set the rate of interest periodically pursuant to the practices in the United States for the deposit of like funds and/or the interest on short-term Treasury bills, 90-day bills. And that is what was done. I set the interest at 1 percent.
Does that answer your question?
Governor GORDON. One-twentieth of 1 percent. We secured information from different States, and it varies throughout the United States as to the amount of interest there, from 4 percent on down to no interest. I felt that 1 percent at the present time, in view of the money market, was fair to the banks and fair to the government of the Virgin Islands.
Dr. MILLER. I yield to the counsel.
Mr. ABBOTT. So we may understand this, under the fiscal provisions of the present law funds drawn back from internal-revenue payments in the United States, the collections are certified by the Treasury Department, and those funds are transferred to local depositories as territorial funds, local depositories being required by the Virgin Islands law?
Governor GORDON. Yes.
Mr. ABBOTT. The act passed by the legislature—and I assume it applies; does it not, to time deposits ? Governor GORDON. Yes, to time deposits.
Mr. ABBOTT. The law passed would set as a minimum one-twentieth of 1 percent interest on time deposits?
Governor GORDON. That is correct.
Mr. ABBOTT. So that, if the depository were to invest, say, in 90day Treasury notes at 2.5-, 2.6-, or 2.7-percent interest, conceivably they could be paying only one-twentieth of 1 percent interest at the same time they were getting 2.5 or 2.6?
Governor GORDON. That is conceivable if the Governor were to set it at one-twentieth of 1 percent.
Mr. ABBOTT. That brings me to the next question. From what source do you derive your authority to set the interest? Is that in the legislative act?
Governor GORDON. That is in the legislative act itself.
Mr. ABBOTT. Do I correctly understand that under the Federal banking law of 1935, as amended in 1956, that the maximum a national bank can pay is 2.5 percent on time deposits?
Governor GORDON. I think the Federal Reserve notifies the national banks periodically as to what interest they can pay, and presently it is set at 2.5.
Mr. ABBOTT. Do you have any figures to show what percentage or what total of territorial funds locally deposited or deposited on a demand basis as distinguished from a time deposit basis?
Governor GORDON. I could not tell you offhand, but we have it. There are a couple million dollars in each bank.
Mr. ABBOTT. Do you have them both in time deposits and demand deposits?