Porter v. United States

• Decision Date: 15 May 1974
• Docket Number: No. 111-73.,111-73.
• Parties: Rose Marie PORTER et al. v. The UNITED STATES.
• Court: U.S. Claims Court

496 F.2d 583 (1974)

Rose Marie PORTER et al. v. The UNITED STATES.

No. 111-73.

United States Court of Claims.

May 15, 1974.

COPYRIGHT MATERIAL OMITTED

John P. Meade, Washington, D. C., attorney of record for plaintiffs.

Gerald L. Schrader, Washington, D. C., with whom was Acting Asst. Atty. Gen. Irving Jaffe, for defendant.

Before COWEN, Chief Judge, and DAVIS, SKELTON, NICHOLS, KASIWA, KUNZIG and BENNETT, Judges.

KUNZIG, Judge:

The court is confronted in this case with a jurisdictional question of first impression: is the United States subject to suit (1) for alleged breach of a contract negotiated by officials serving in the capacity of administrators for the United States Pacific Islands Trust Territory, or (2) for an alleged taking of property arising from actions by such officials pursuant to that contract? We conclude that the court lacks jurisdiction over either of these claims. Accordingly, we dismiss the petition.

Plaintiffs are sixteen named shareholders in Transpacific Lines, Inc. (Transpacific), a corporation chartered by the Government of the Trust Territory of the Pacific Islands (Trust Territory).¹ Their suit for recovery of financial losses incurred by their enterprise derives from the following factual background.

On March 18, 1968, the Office of the Trust Territory High Commissioner issued a press release headlined "Trust Territory Invites Shipping Proposals." The release stated in part:

The Government of the Trust Territory of the Pacific Islands is seeking proposals for a 10-year sea transportation contract. In addition to providing direct service from the U.S. west coast the contractor would be called upon to service the Trust Territory\'s six scattered districts * * *. The Territory is administered by the United States under a United Nations trusteeship agreement.

Subsequently, a "Solicitation for Proposals for Trust Territory of the Pacific Islands Sea Transportation Services" was issued. This directed interested parties to submit proposals to the High Commissioner of the Territory, together with a copy to the Director of the Office of Territories, United States Department of the Interior (Interior), by May 15, 1968. Timely proposals were received at these offices from Marine Chartering Company (Marine), a California corporation, and several other enterprises. In July 1968, Robert E. Vaughn, Deputy Assistant Secretary of the Interior, invited representatives of bidding parties to meet with a review panel at Interior to discuss the proposals. Following this meeting, attended by Marine's president, the panel concluded Marine had presented the best proposal.

Negotiations resulted in an agreement entered into on August 1, 1968. The agreement's preamble recited that it was "by and between the Government of the Trust Territory * * * and Marine Chartering Company, Inc." The signature block again identified the contracting parties as the Trust Territory government and Marine.

By article XVIII of the agreement, Marine was required to transfer and assign the agreement within six months to Micronesia Interoceans Line, Inc. (MILI), which was to be organized and capitalized by Marine with substantial participation by citizens of the Trust Territory. The article also provided that, during the contract's tenure, "the Carrier shall operate the Vessels under the flag of the Trust Territory * * *." On August 8, 1968, articles of incorporation were filed for MILI with the Registrar of Corporations in Saipan. MILI's principal office and place of business were listed as Saipan. The agreement was thereupon transferred and assigned to MILI.

On September 22, 1971, Barclays Bank of San Francisco informed the Trust Territory government that MILI would not be extending a $500,000 letter of credit which it had opened in the Trust Territory government's favor, and that the letter would expire in two days. The Trust Territory was already concerned with numerous other alleged performance deficiencies on MILI's part, and on September 29, 1971 notified the corporation of its intention to terminate for default as authorized by article XX of the agreement.

After meetings between the president of Marine, which still owned substantial shares of MILI, and the Trust Territory attorney general, an agreement was signed by the Territory's High Commissioner and by representatives of MILI. The agreement inter alia withdrew notice of default, suspended article XXVI (which required Marine to furnish a $500,000 performance bond), and set up a trust for certain MILI shares held by Marine.

On October 20, 1971, Marine, MILI and the Trust Territory attorney general became parties to a "Trust Agreement" by which the attorney general was designated trustee of the 210,000 class B shares in MILI owned by Marine. A complete divestment of Marine's stock in MILI, in consideration of the Trust Territory government withdrawing its notice of cancellation of the 1968 contract, was then accomplished. Subsequent to plaintiffs' filing of petition on March 30, 1973, on the breach and unconstitutional taking issues raised above, the corporate name of MILI was changed to Transpacific.²

Defendant has moved for summary judgment on both issues. For the reasons which follow, we grant the motion on both issues.

The Breach Claim

As a forum for claims against the Federal Government, a necessary antecedent to our jurisdiction is a waiver by the Government of its sovereign immunity from suit. National State Bank of Newark v. United States, 357 F.2d 704, 706, 174 Ct.Cl. 872, 876 (1966). In our general jurisdictional statute, 28 U.S.C. § 1491 (Supp. II, 1972), Congress has waived the immunity of the United States in a host of actions, including those based upon express or implied contracts.

Plaintiffs invoke this jurisdictional statute by asserting their claim arises from a contract, either express or implied, with the United States. Defendant counters that plaintiffs fail to state a claim within the court's jurisdiction since no privity of contract exists between Transpacific and the United States. We agree with defendant.³

The analysis which follows deals with the relevant questions of (1) whether defendant is an express party to the subject, written contract; (2) whether defendant is a principal to the subject, written contract; (3) whether an implied contract exists between the parties.

Plaintiffs' claim is purportedly based upon the contract for sea transportation services of August 1, 1968. The United States, however, was not a party to that agreement. As recited in the preamble to the contract and again in the signature block, the parties to the agreement were the Trust Territory government and Transpacific (as successor to Marine).

Since defendant was not a named party contracting with Transpacific, the court can have jurisdiction over this claim only if, as a matter of law, the Trust Territory government was an agency or instrumentality of the United States acting within the scope of its authority in entering into the disputed agreement and thereby binding defendant as a principal to it. D.R. Smalley & Sons, Inc. v. United States, 372 F.2d 505, 178 Ct.Cl. 593, cert. denied, 389 U.S. 835, 88 S.Ct. 45, 19 L.Ed.2d 97 (1967); Housing Corp. of America v. United States, 468 F.2d 922, 199 Ct.Cl. 705 (1972); Raymond Constructors of Africa, Ltd. v. United States, 411 F.2d 1227, 188 Ct.Cl. 147 (1969). Under such circumstances, the Federal Government would be considered to have waived its sovereign immunity from suit on this contract. National State Bank of Newark v. United States, supra, 357 F.2d at 706, 174 Ct.Cl. at 876-877.

It is therefore necessary to examine the exact nature of the relationship between the Trust Territory government and the United States. This relationship traces to World War II, when the islands of Micronesia came under United States military control with the defeat of Japan, which had held a mandate over the islands under the League of Nations. The establishment of the United Nations (U.N.) and its Trusteeship Council, with jurisdiction over non-self-governing territories, resulted in the execution of trusteeship agreements between the U.N. and those signatory powers in de facto possession of such territories. One such agreement, ratified by the Security Council on April 2, 1947, and approved by Congressional joint resolution on July 18, 1947, designated the United States as the "administering authority" over the Pacific Islands Trust Territory. 61 Stat. 3301, T.I.A.S. No. 1665, 8 U.N.T.S. 189.

This "bi-lateral contract" with the Security Council represented a means for the United States to reconcile its new strategic interests in the Pacific with its announced policy against self-aggrandizement as a result of the war. Trusteeship served as a workable alternative to the military departments' urgings for outright annexation of the former Japanese mandate. Note, A. Macrostudy of Micronesia: The Ending of a Trusteeship, 18 N.Y.L.F. 139, 144 (1972).

Article 3 of the trusteeship agreement provided:

The administering authority shall have full powers of administration, legislation, and jurisdiction over the territory subject to the provisions of this agreement, and may apply to the trust territory, subject to any modifications which the administering authority may consider desirable, such of the laws of the United States as it may deem appropriate to local conditions and requirements.

Under article 4, however, the United States was obligated to discharge its trustee duties "in accordance with the Charter of the United Nations, and the provisions of this agreement," and to apply the objectives of the trusteeship system in this effort. See U.N. Charter arts. 75-77, 82-84. Thest broad goals include to "foster the development of such political institutions as are suited to the trust territory" and to "promote the economic advancement and self-sufficiency of the inhabitants." Trusteeship Agreement, art. 6, 61 Stat. 3302....