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Water Isle Hotel and Beach Club v. Kon Tiki St. Thomas Inc.

argued: April 29, 1986.

WATER ISLE HOTEL AND BEACH CLUB, LTD., APPELLEE
v.
KON TIKI ST. THOMAS, INC., APPELLANT



Appeal from the District Court of the Virgin Islands (District of St. Thomas) (D.C. Civil No. 83-0284)

Author: Weis

HUNTER, WEIS, and MANSMANN, Circuit Judges.

The issue in this appeal is whether the Virgin Islands government has authority to enact legislation affecting property owned by the United States but which has been leased to a private entity. We conclude that because Congress has granted concurrent jurisdiction to the Virgin Islands, the local statutes should be given effect. Consequently, we will vacate an injunction granted by the district court based an erroneous view that the territorial government lacked power to legislate restrictions on the use of federal land.

The district court entered an injunction on March 27, 1984, granting the plaintiff's request for relief against defendant. Plaintiff moved to amend its complaint to delete a request for damages. On July 16, 1985, that motion was granted, and the court denied the defendant's motion to dissolve the injunction.

Plaintiff, Water Isle Hotel and Beach Club, Inc., is a sub-lessee under a lease with the United States Interior Department. The lease covers a 500-acre island off the coast of St. Thomas, near Charlotte Amalie. Plaintiff made substantial improvements to the island, including the construction of a major hotel and other facilities usually found at a vacation resort. Among the amenities available for guests is nearby Honeymoon Beach.

Defendant Kon Tiki St. Thomas, Inc. owns a catamaran, some ninety feet long, which features a restaurant, bar, gift shop, and a steel band. The craft accommodates between 150-300 persons who embark at Charlotte Amalie for the short trip around the harbor and to Water Island. Free rum drinks are served to the passenger on the voyage, which is advertised as "The booziest cruise to end all boozie cruises."

Plaintiff alleged that on arrival at Water Island, the catamaran would be tied to a palm tree, and the passengers would disembark onto Honeymoon Beach. According to plaintiff, the passengers would then "take over," causing hotel guests to leave the beach. The passengers, fueled with the free rum, were allegedly boisterous; they commandeered privately-owned beach chairs and boats, and overtaxed the sanitary facilities.

These daily visits by the Kon Tiki were made without the plaintiff's permission, and when defendant refused to discontinue the trips, plaintiff sought relief in the district court. Defendant denied responsibilities for the passengers' activities on the beach, and more significantly contended that the Open Shorelines Act of the Virgin Islands, 12 V.I.C. ยง 401-403, confers a public right to use and enjoy the beaches. Under the defendant's interpretation of that statute, plaintiff did not have sufficient propriety interest to enjoin the activities on the beach.

After an evidentiary hearing, the district court concluded the Shorelines Act does not apply to Water Island because the Virgin Islands legislature lacked authority to enact laws affecting that area. Although a federal statute granted the Virgin Islands concurrent authority over some matters on Water Island, the court noted that the statute did not give the legislature power to limit dominion over Honeymoon Beach. Therefore, said the district court, the expeditions by the Kon Tiki to the beach, being without permission, constituted a trespass.

Resolution of this case must begin with a historical background. The United States purchased the Virgin Islands, including Water Island, from Denmark in 1917. See 39 Stat. 1706 (1917). These islands and those acquired as a result of the Spanish-American War in 1898 posed constitutional problems in the early part of this century. The controversy focused on whether the newly acquired lands would be incorporated as states into the United States or remain unincorporated territories. The question became important in deciding whether trial by jury was a necessary incident to judicial procedure in the Phillipine Islands, Dorr v. United States, 195 U.S. 138, 49 L. Ed. 128, 24 S. Ct. 808 (1904); whether natives of Puerto Rico were aliens under the Immigration laws, Gonzales v. Williams, 192 U.S. 1, 48 L. Ed. 317, 24 S. Ct. 177 (1904); and whether the right to a grand jury indictment applied in the Phillipines, Ocampo v. United States, 234 U.S. 91, 58 L. Ed. 1231, 34 S. Ct. 712 (1914).

In Balzac v. Porto Rico, 258 U.S. 298, 312, 66 L. Ed. 627, 42 S. Ct. 343 (1922), the Supreme Court phrased the issue not as whether the Constitution applied to "the Phillipines or Porto Rico when we went there, but which of its provisions were applicable by way of limitation upon the exercise of executive and legislative power in dealing with new conditions and requirements." The extension of all constitutional rights, including such common law procedures as trial by jury, was considered inappropriate for people who had lived under the civil law traditions for centuries. Only territories incorporated within the United States or those acquired with promise of incorporation, were governed by the Constitution in all aspects.*fn1

The Court in Balzac concluded that even though Congress had extended many of the benefits of citizenship to Puerto Ricans, that action did not constitute incorporation by implication. Incorporation status requires express congressional enactment.

By statute the Virgin Islands is specifically designated as an unincorporated territory which does not enjoy the autonomy of a state within the union. Nevertheless, Congress has steadily increased the scope of self-government granted to the Virgin Islands.

As noted in Harris v. Boreham, 233 F.2d 110, 114 (3d Cir. 1956), "Congress may create a territorial government for an unincorporated territory and may confer upon it an autonomy similar to that of the states." Toward this end, Congress enacted the Organic Act of 1936, 49 Stat. 1807 (1936), which provided that "all property which may have been acquired by the United States from Denmark in the Virgin Islands . . . not reserved by the United States for public ...


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