Aleutco Corporation v. United States

• Decision Date: 08 May 1957
• Docket Number: No. 12039.,12039.
• Citation: 244 F.2d 674
• Parties: ALEUTCO CORPORATION v. UNITED STATES of America, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

244 F.2d 674 (1957)

ALEUTCO CORPORATION v. UNITED STATES of America, Appellant.

No. 12039.

United States Court of Appeals Third Circuit.

Argued January 11, 1957.

Decided May 8, 1957.

Morton Hollander, Washington, D. C., (George Cochran Doub, Asst. Atty. Gen., Leonard G. Hagner, U. S. Atty., Wilmington, Del., Paul A. Sweeney, Dept. of Justice., Washington, D. C., on the brief), for the United States.

Richard F. Corroon, Wilmington, Del., (Berl Potter & Anderson, Wilmington, Del., on the brief), for appellee.

Before GOODRICH, KALODNER and HASTIE, Circuit Judges.

KALODNER, Circuit Judge.

In an action against the United States under the Federal Tort Claims Act,¹ in the District of Delaware, Aleutco Corporation ("Aleutco") sought damages for conversion of certain war surplus property which it had purchased from the Government. Judgment of $68,127.50 was awarded to it and this appeal followed, presenting these contentions by the United States:

(1) Aleutco's claim is founded on contract since it had its inception in a contract of purchase for the war surplus property and such a claim is not actionable under the Federal Tort Claims Act because the latter relates exclusively to tort claims;

(2) The amount involved exceeds $10,000 and accordingly the Court of Claims, under the terms of the Tucker Act, has exclusive jurisdiction;²

(3) Assuming jurisdiction under the Federal Torts Claims Act its two-year limitation period barred Aleutco's action;

(4) There was no conversion because the property had reverted to the United States under the terms of the contract;

(5) The damages awarded rested on inadequate testimony and were excessive.

The facts as found by the District Court,³ and disclosed by the record, may be summarized as follows:

In May, 1948, Aleutco purchased from the War Assets Administration, for $868,000, miscellaneous surplus war property located in the Aleutian Islands, Alaska, in the custody of the Navy. The contract of sale required removal of the property by November 30, 1948, and gave the Government the right, upon fifteen days written notice, to treat the property as abandoned if not removed by that time.⁴ The November 30, 1948 removal date was later extended by mutual agreement to October 30, 1949.

The surplus property purchased by Aleutco consisted of approximately twenty boatloads of miscellaneous equipment and material. Eighteen boatloads were removed by Aleutco in the summer of 1948. Two additional boatloads of goods remained at Dutch Harbor in the Aleutians, one of which was removed by Aleutco in the summer of 1949.

On August 2, 1949, the General Services Administration, successor to the War Assets Administration, wrote to Aleutco acknowledging its payment of the balance of the $868,000 purchase price due under the contract and releasing it from the provisions of the credit and warehouse agreements between it and the Government.

On March 14, 1951 Aleutco (through its counsel) wrote to the Navy requesting permission to send a vessel to Dutch Harbor for the purpose of removing the balance of the property purchased under its contract. The permission sought was granted by the Navy on March 22, 1951. Pursuant thereto, Scott C. Kellogg and Bill Green, two Aleutco officials went to Kodiak in the Aleutians to arrange for the shipment. They there conferred with Coy E. Stockard, a civilian employee of the Navy, whose duties "embodied administration of disposal of surplus property". Stockard refused permission to the Aleutco representatives to remove any property from Dutch Harbor because "he did not know of any property that belonged to the Aleutco Corporation"; because they had not produced "evidence of ownership of this property"; and "that after a period of 21 months with the material and equipment left there without some arrangement for custody that I would consider the property had been abandoned."

The matter was then referred to the Navy Department in Washington for determination as to the ownership of the disputed property. Shortly thereafter, May 9, 1951, Aleutco's counsel wrote to the General Services Administration, Washington, stating that the War Assets Administration had earlier advised Aleutco that "there was no urgency for the removal of the property so long as it was kept out of any areas needed by either the Army or the Navy" and that "Specific written permission was granted by the Commander of the Naval operating base at Adak, Alaska, for an indefinite extension of time for removal of the surplus materials remaining at Dutch Harbor." On June 15, 1951, the General Services Administration wrote to Aleutco's counsel stating that the Navy Department "has been advised that it is the position of this Administration that ownership of the property covered by the sale and actually delivered in accordance with the terms thereof passed to the Aleutco Corporation as of the date of execution of the sales agreement * * * and that any arrangement which may have been made between the Aleutco Corporation and the Navy Department under which the property here involved was allowed to remain on the Aleutian Islands is a matter entirely between the Navy Department and the Aleutco Corporation, whose respective rights concerning ownership of the property would be for determination under applicable law and not for determination under the terms of the contract covering the purchase of the property by Aleutco Corporation from the United States."

On September 7, 1951, following correspondence and conferences between Aleutco and representatives of Rear Admiral Sprague, Commander, Alaskan Sea Frontier, the latter wrote Aleutco, stating in part:

"* * * The District Public Works Officer of this Command has reviewed all available information in an attempt to determine if any Corporation owned material and equipment remain at Dutch Harbor.

"This review is premised upon the understanding that any items of material or equipment which can be identified as having been included and offered on War Assets Administration Special Offering, Circular 96, remain the property of Aleutco Corporation * * *

"The completion of a review of the files does not support a claim that there is a remainder in the ownership of the Corporation. Permission for removal would, therefore, not be warranted * * *

"As a preliminary to continued negotiation, however, it is suggested that the Corporation submit a list, together with the description and numbers identical with that shown on the Sales Documents, of all items for which claim and permission to remove is made. Or, that representatives of the Corporation personally present supporting data on acceptance and removal of items as well as information from any source having a bearing on this transaction, to the Commander, Alaskan Sea Frontier, sufficient to justify further action by this Command.

"Upon receipt of conclusive evidence that property of the Aleutco Corporation remains at Dutch Harbor, this Command will arrange for a Naval inventory team to visit the area, along with representatives of the Aleutco Corporation, for the purpose of final determination of ownership and recommended action as to the removal of those items so identified."

On November 19, 1951, Aleutco's attorney wrote the Commander that an appropriate identification of the property would be prepared. It was also suggested that it would be desirable to have representatives of both parties visit Dutch Harbor for the purpose of final identification. On July 8, 1952, Aleutco's attorney requested advice as to the earliest convenient date for a conference concerning Aleutco's property. On July 11, 1952, the Commander replied stating that in view of Aleutco's failure to furnish the requested information, it had "forfeited any rights it might have once had to any property at Dutch Harbor." On that same day the Navy shipped the property from Dutch Harbor to Oakland, California where it was sold to a Chicago firm.

Aleutco filed suit on February 24, 1954, alleging in its complaint that the action was brought under the Federal Tort Claims Act, and that the shipping of the goods from Dutch Harbor and the sale to the Chicago firm "constituted a wrongful conversion of plaintiff's property."

After trial, the District Court ruled inter alia: (1) the Federal Tort Claims Act vested it with jurisdiction; (2) no act of conversion occurred prior to July, 1952, so that the action was not barred by the statute of limitations prescribed in 28 U.S.C. § 2401(b); (3) paragraph 5 of the contract of sale was not effective to revest the property in the Government; (4) Aleutco had proven the value of the goods at the time of the conversion to be $68,127.50.

The Government bases its appeal on these four findings and contends that each of them was error.

I. Jurisdiction

The act creating the Court of Claims⁵ and the Tucker Act of 1887⁶ created a concurrent jurisdiction in the Court of Claims and the district courts in suits in contract against the United States. The concurrent jurisdiction of the Court of Claims and the district courts is now limited to claims not in excess of $10,000, while the Court of Claims has exclusive jurisdiction of all claims in contract in excess of that amount. These acts were early interpreted to exclude any actions sounding in tort. Gibbons v. United States, 1869, 8 Wall. 269, 19 L.Ed. 453; Schillinger v. United States, 1894, 155 U.S. 163, 15 S.Ct. 85, 39 L.Ed. 108.

Immunity of the United States to suits in tort was waived in 1946 when the Federal Tort Claims Act was enacted⁷ conferring on the district courts:

"* * * exclusive jurisdiction of civil actions on claims against the United States, for money damages, accruing on and after January 1, 1945, for injury or loss of property, or personal injury or death caused by the negligent or wrongful act or omission of any employee of the Government while acting within the scope of his office or employment, under circumstances where the United States, if a private

...