LYKES-YOUNGSTOWN CORPORATION v. United States, 399-67.
| Decision Date | 23 January 1970 |
| Docket Number | No. 399-67.,399-67. |
| Citation | 190 Ct. Cl. 348,420 F.2d 735 |
| Parties | LYKES-YOUNGSTOWN CORPORATION v. The UNITED STATES. |
| Court | U.S. Claims Court |
J. Alton Boyer, Washington, D. C., for plaintiff, Odell Kominers, Washington, D. C., attorney of record, J. Alton Boyer, Michael Joseph, and Kominers, Fort, Schlefer, Farmer & Boyer, Washington, D. C., of counsel.
Edward J. Friedlander, Washington, D. C., with whom was Asst. Atty. Gen. William D. Ruckelshaus, for defendant.
Before COWEN, Chief Judge, and LARAMORE, DURFEE, DAVIS, COLLINS, SKELTON and NICHOLS, Judges.
ON PLAINTIFF'S MOTION AND DEFENDANT'S CROSS MOTION FOR SUMMARY JUDGMENT
This is a suit by a steamship company against the United States for damages for an alleged breach of three construction-differential subsidy contracts involving the construction of twelve ships. (Four ships in each of the contracts.)1
The plaintiff is now, and, at all times relevant to this case, has been engaged in the business of operating ocean-going cargo ships on regular routes found by the Maritime Subsidy Board to be essential trade routes of the United States between ports in this country and ports in foreign countries throughout the world.2
These operations are conducted under an operating-differential subsidy contract (No. FMB-59) entered into pursuant to Title VI of the Merchant Marine Act of 1936, 49 Stat. 1985, as amended (46 U.S.C. §§ 1171-1183) by plaintiff and the United States in 1957 for a term of twenty years beginning January 1, 1958. Under this contract, plaintiff is required to perform specified numbers of voyages annually on essential trade routes and to replace its existing ships by contracting to build new ones. The replacement program in the contract required plaintiff to build three groups of four ships each, construction of which was to commence on or about March 18, 1963, July 1, 1963, and July 1, 1964, respectively. Plaintiff's obligation to have these ships constructed was conditioned upon the board's policy to provide construction-differential subsidy pursuant to Title V of the Act for such new construction, and, if not provided, was to be deferred until such subsidy was provided.
The purpose of the construction-differential subsidy, which is a shipyard subsidy, is to equalize the cost of building ships in high-cost domestic United States shipyards with the lower cost of building such ships in foreign shipyards, from the standpoint of the owner, which is required by law and contract to have its ships built in the United States. The plaintiff filed applications for construction-differential subsidy covering each of the three groups of ships and the Board approved such applications and agreed to provide construction-differential subsidy in accordance with contracts entered into between the plaintiff and the defendant as described in the following paragraphs.
On April 4, 1963, November 21, 1963, and June 26, 1964, the plaintiff, as owner, and the Board entered into three construction-differential subsidy contracts Nos. MA/MSB-20, MA/MSB-31, and MA/MSB-37, each covering a group of four ships and each specifying the terms of the grant of subsidy by the Board in connection with the construction of said ships. At the same time, three construction contracts, Nos. MA/MSB-19, MA/MSB-30, and MA/MSB-36, were entered into between the plaintiff, as owner, and Avondale Shipyards, Inc., as contractor, and the Board, which provided for the construction of the twelve ships by the contractor. These construction contracts are only incidentally involved in this case. Each of the construction contracts contained the same provisions as those set forth below from contract No. MA/MSB-19, differing only in the amount of subsidy per vessel and the percentage for changes determined by the Board to be eligible for subsidy:
The contractor is not a party to this suit. When the dispute arose between the plaintiff and the Board, an agreement was signed between them to the effect that the plaintiff would make payments to the contractor in excess of the amounts which plaintiff contends should be paid by it and that the making of such payments should be without prejudice to the rights of the plaintiff to assert its contention in court to recover from the United States the amounts which the plaintiff claims it is entitled to as subsidy for the changes involved in this case. Consequently, we are not required to determine any rights which the contractor may have had with respect to these construction contracts. However, the pertinent provisions of such contracts, which are quoted above, are included here so that the whole picture may be presented with respect to the claim of the plaintiff for subsidy payments arising out of the changes in its vessels described above.
Each of the three construction-differential subsidy contracts contained provisions that are pertinent to this case which are the same as those set forth below from contract No. MA/MSB-20, differing only in the amount of subsidy per vessel and the percentage for changes determined by the Board to be eligible for subsidy:4
It will be observed from the foregoing provisions of the subsidy contracts that Article 1(a) (1) obligated the United States to pay a grant equal to the dollar difference between established foreign costs for building comparable ships and the cost of building the ships in the United States. These differentials were reflected in...
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