American Eastern Corporation v. United States

• Decision Date: 19 August 1955
• Parties: AMERICAN EASTERN CORPORATION, Libelant, v. The UNITED STATES of America, Respondent.
• Court: U.S. District Court — Southern District of New York

133 F. Supp. 11

AMERICAN EASTERN CORPORATION, Libelant, v. The UNITED STATES of America, Respondent.

United States District Court S. D. New York.

June 10, 1955.

Motion to Amend Libel Denied August 19, 1955.

Radner, Zito, Kominers & Fort, Washington, D. C. and Haight, Gardner, Poor & Havens, New York City, for libelant.

J. Edward Lumbard, Lloyd F. MacMahon, U. S. Attys., New York City, for respondent. Benjamin H. Berman, New York City, of counsel.

WALSH, District Judge.

Libelant here seeks to recover from respondent alleged overpayments made pursuant to its charter of two government-owned vessels. Respondent excepts to the libel as barred by the statute of limitations. The exception is sustained.

The suit being under the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., there is no dispute as to the period of the statute. It is two years. 46 U.S.C.A. § 745. The question is when the cause of action arose, when the libelant could first have maintained an action and been granted complete relief.

The controversy concerns "additional charter hire", an amount over and above basic charter hire, based upon profits earned under the charter. The libel alleges that this charter provision is in conflict with the statute which authorized the charter (Par. 6); and that respondent withheld overpayments by libelant in violation of both the statute and the charter (Pars. 7-10).

The immediate claim of libelant is that "cumulative net voyage profit", upon which the additional charter hire is computed, permits the carrying back of subsequent losses over the full period of the charter to offset earlier profits. Respondent contends that the language of the charter requires that the "cumulative net voyage profit" be computed for each calendar year, rather than averaged over the life of the charter.¹

We are not concerned with the correctness of the rival contentions but whether the claim is time-barred. On this question we are handicapped by the vagueness of the libel which, in disregard of the jurisdictional need for allegations showing the timeliness of actions under the Suits in Admiralty Act,² evades an answer to almost all precise inquiries. Exactly, when or how the alleged claim came into being is not expressed in words but, apparently, by a cryptic exhibit attached thereto, entitled "Final Accounting under Shipsalesdemise, 303 Contract MCc-42706". The readily understandable portion of the libel deals only with generalities: that the charter was executed "notwithstanding" the "mandatory" provisions of the statute; that respondent "refused" to permit the continuation of profits and losses over the period of the charter; — it leaves to be gleaned from the exhibit, if at all, whether there were profits, when they were accounted for, in what respect improperly, what was paid, whether there were overpayments, and when libelant thinks it should have gotten something back.

Interpreting the exhibit as best I can, aided by Maritime Commission regulations and correspondence submitted at argument, the facts seem to be as follows:

1946 Congress authorized the charter of government owned vessels under the Merchant Ship Sales Act of 1946 (60 Stat. 41, c. 82, § 5, 50 U.S.C.A.App. § 1738). This act incorporated by reference the provisions of the Merchant Marine Act of 1936 which provide for additional charter hire if charterer makes a profit in excess of ten percent on capital involved. (49 Stat. 2010 c. 858, title VII, § 709, 46 U.S.C.A. § 1199). March 4, 1947 The charter in question was executed between libelant and respondent. Clause 13 provided for additional charter hire. The charter covered two vessels. April 10, 1947 Libelant operated the -June 16, 1948 vessels. It paid respondent monthly amounts based on tentative estimate of additional charter hire, in accordance with procedure provided by Maritime Commission regulations.

April 1, 1947 Libelant earned profit -Oct. 31, 1947 subject to additional charter hire. This profit was accounted for as of the calendar year 1947. As a result libelant was subject to the additional charter hire in question, for that accounting period. Oct. 1, 1947 Libelant incurred a -June 30, 1948 heavy loss which was accounted for separately.³ It is this loss which libelant seeks to offset against the 1947 profit. June 16, 1948 Last vessel returned to respondent. Feb. 21, 1950 Maritime Commission promulgated regulations for final accounting which expressly assert that profits may not be offset by losses incurred in subsequent accounting periods. Sept. 14, 1951 Libelant submitted its final accounting demanding return of overpayments in the amount of $10,187.12 but not making any claim upon the basis of carrying back subsequent losses, the only claim advanced in this action. Nov. 29, 1951 Respondent allowed the claim of libelant to the extent of $8,436.40. Mar. 19, 1952 Respondent's Comptroller approved refund in this amount subject to reservations for (a) Applicable items recorded subsequent to June 30, 1951. (b) The net overage or shortage of expendable equipment. (c) Any errors or omissions later developed. Apr. 25, 1952 Respondent repaid to libelant $8,436.40, thus allowed. Nov. 18, 1952 Libelant made a further claim under (b) "expendable equipment" demanding additional refund of $603.60. Feb. 18, 1953 Additional refund of $603.60 approved. Mar. 12. 1953 Respondent paid libelant $603.60. Feb. 12, 1955 Further claim for overpayment was submitted for the first time claiming an overpayment on the basis alleged in this action. Feb. 16, 1955 Present libel filed.

To the extent that libelant claims under the charter, its claim had arisen by June 16, 1948, when it returned the last of its ships to respondent. At that point all facts upon which its claim is based had occurred. Profits had been earned; losses incurred; preliminary payments had been paid. Thereafter it was merely a matter of computation to determine the amount of excess preliminary payments to which libelant was entitled. Delay in computation on the hope that respondent will compute upon the basis libelant believes correct does not toll the statute. Cf. Corporation of Royal Exch. Assur. v. United States, 2 Cir., 75 F.2d 478, 480; United States v. Sligh, 9 Cir., 24 F.2d 636, 638, reversed on other grounds 1928, 277 U.S. 582, 48 S.Ct. 600, 72 L.Ed. 998.

There was no open account between the parties as contended by libelant, wherein the claim arises with the last entry because previous entries are regarded as offsets to each other. Here there was no two-way trade but merely a one-way account for charter-hire with periodic payments. See Spring v. Gray, 1832, 6 Pet. 151, 164, 31 U.S. 151, 164, 8 L.Ed. 352. The complexity of the computation of these payments did not alter the nature of the account.

No provision of the statute or charter required libelant to await the promulgation of regulations for final accounting before commencing its action. If it had in fact overpaid and was entitled to return payments under the charter no regulation of the Commission could bar the right and none was necessary to round it out.⁴ Neither was it necessary for libelant to await the outcome of claims presented through administrative channels. Cohen, Goldman & Co. v. United States, 1933, 77 Ct.Cl. 713, 730, certiorari denied 1933, 290 U.S. 681, 54 S.Ct. 119, 78 L.Ed. 587; Moriarty, Inc., v. United States, 1942, 97 Ct.Cl. 338, 339; Withers v. United States, 1930, 69 Ct.Cl. 584, 587.

To the extent libelant claims for money had and received, its claim was mature when respondent, through the Maritime Commission's regulations for final accounting, unequivocally asserted its intent to withhold the money now claimed by libelant. These regulations were promulgated on February 21, 1950. The outline of procedure incorporated therein expressly stated that profits could not be offset by losses incurred in subsequent...