American Export Lines, Inc. v. United States

• Citation: 290 F.2d 925
• Decision Date: 19 July 1961
• Docket Number: No. 70-56,132-55.,70-56
• Parties: AMERICAN EXPORT LINES, INC. v. UNITED STATES. NEW YORK AND CUBA MAIL STEAMSHIP COMPANY v. UNITED STATES.
• Court: Court of Federal Claims

290 F.2d 925 (1961)

AMERICAN EXPORT LINES, INC. v. UNITED STATES.

NEW YORK AND CUBA MAIL STEAMSHIP COMPANY v. UNITED STATES.

Nos. 70-56, 132-55.

United States Court of Claims.

April 7, 1961.

Rehearing Denied July 19, 1961.

J. Franklin Fort, Washington, D. C., for plaintiffs. Kominers & Fort, John Cunningham and Israel Convisser, Washington, D. C., were on the briefs.

Lawrence F. Ledebur, Washington, D. C., with whom was Acting Asst. Atty. Gen. Geo. S. Leonard, for defendant. Leavenworth Colby, Washington, D. C., was on the briefs.

WHITAKER, Judge.

American Export Lines, Inc., sues for operating-differential monies, admittedly due, in the sum of $22,594.84, which defendant has withheld as an offset against amounts which defendant claims are due it for the bareboat charter of its vessels. New York and Cuba Mail Steamship Company sues for amounts charged for "desirable features" on vessels sold it by the Maritime Commission. Following the decision of this court in New York & Cuba Mail Steamship Co. v. United States, 172 F.Supp. 684, the parties agreed that the amount due to be refunded on account of the amount charged for desirable features was $7,536.76, but defendant has withheld this amount, claiming the right to offset it against amounts it claims are due it for the bareboat charter of certain of its vessels by New York and Cuba Mail Steamship Company.

The principal controversy in these two cases arises out of counterclaims filed by defendant involving the amount of rental or charter hire due the United States under several contracts with plaintiffs for the bareboat charter of numerous Government-owned vessels.

Although the facts in each of the two cases vary as to dates, amounts, etc., the legal issues to be decided are identical and for that reason they will be disposed of in one opinion.

The United States asserts counterclaims against American Export in the estimated amount of $19,602,454.25, and against New York and Cuba Mail in the estimated amount of $5,317,724.76, which sums represent the amounts it claims are due it from each plaintiff, respectively, over and above the amounts it has withheld from plaintiffs. In its counterclaims the Government asserts that, in violation of law, the Maritime Commission and plaintiffs agreed upon total charter hire rates lower than those required by statute, and that plaintiffs, accordingly, are indebted to the United States, not only for the unpaid portion of the contractual hire, which plaintiffs agreed to pay and have not paid, but also for the difference between the contractual hire and the larger hire which Congress allegedly required to be exacted for the use of the Government's vessels.

Section 5(b) of the Merchant Ship Sales Act of 1946, 50 U.S.C.A.Appendix, § 1738(b) provided for a basic charter hire to be fixed at such rate as the Commission determined to be consistent with the policies of the Act, but at not less than 15 percent of the statutory sales price, except upon the vote of four members of the Commission; and it was further provided that, if the rate fixed by the Commission should differ from the rate specified, it could not be less than the world market charter rate for similar vessels for similar uses. Section 5(c) of the Act provided that all charters made thereunder should incorporate the provisions of section 709(a) of the Merchant Marine Act of 1936, 46 U.S.C.A. § 1199, which provided for the payment of additional charter hire equal to one-half the cumulative net voyage profits in excess of a 10 per centum return on capital necessarily employed in the business of the chartered vessels.

Under the charter contracts, plaintiffs were charged a basic charter hire of 15 percent of the unadjusted statutory sales price of the chartered vessels and, in addition, it was agreed that plaintiffs should pay to defendant additional charter hire as follows:

"a Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) not in excess of $100 per day — 50%.

"b Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) in excess of $100 per day but not in excess of $300 per day — 75% of such excess over $100 per day.

"c Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) in excess of $300 per day — 90% on such excess over $300 per day."

In addition to amounts which defendant claims are due it as unpaid hire under the several contracts with plaintiffs, defendant now claims that the charter contracts did not provide for that charter hire which was required by section 5(b) of the Merchant Ship Sales Act, since it was less than the prevailing world market charter rate for similar vessels for similar uses.

In their replies plaintiffs deny that any additional amounts are due defendant, either under the contracts as executed or under any contract required by statute. On the other hand, they say, they have paid a charter hire at a rate greater than that authorized by statute, in that the contract called for a basic charter hire of 15 percent of the unadjusted statutory sales price, whereas the statute required that the basic charter hire should be based upon the statutory sales price adjusted as of the date of the charter. Second, they say that the statute authorized an additional charter hire of no more than 50 percent of the cumulative net voyage profits, and that the Commission was without authority to charge the additional amounts of from 25 to 40 percent of the cumulative net voyage profits. Third, they allege that in determining net voyage profits, they should have been allowed to cumulate or offset losses and profits incurred during each calendar year against losses and profits in subsequent years, irrespective of the sequence in which such losses or profits occurred. Lastly, they allege that the requirement under the so-called "Foreign Trade Addendum", that the year 1947 should be divided as of September 1 of that year so that early 1947 profits should be accounted for without deduction of the losses incurred during the latter part of 1947, was contrary to the statute.

Plaintiffs, therefore, allege that the rates charged under the contracts, and paid by them pursuant thereto, were in excess of the rates authorized by statute and, hence, they assert, by way of what they call "counterclaims" to defendant's counterclaims, their demands for refund of the alleged overpayment of charter hire. Defendant has raised a question as to the jurisdiction of this court to entertain plaintiffs' cross "counterclaims." However, plaintiffs have agreed that in the event this court dismisses all of defendant's counterclaims, their cross "counterclaims" should be dismissed without prejudice to their rights to later assert the same in an appropriate forum.

Plaintiffs have moved for summary judgment in both cases, to which defendant has filed cross motions for summary judgment in both cases. The issues which this court must decide are as follows:

1. Was the Commission authorized under section 5 of the Merchant Ship Sales Act of 1946, to fix a basic charter hire rate of 15 percent of the statutory sales price, or was it required to fix a rate which was not less than the prevailing world market rate for similar vessels for similar uses, when such world market rate was higher than 15 percent of the statutory sales price?

2. Was the Commission authorized under section 709(a) of the Merchant Marine Act of 1936, to charge additional charter hire on a sliding scale of 50, 75 and 90 percent of the cumulative net voyage profits in excess of a 10 percent return on the charterers' capital necessarily employed in the operation of the vessels, or was 50 percent the maximum rate which could be charged?

"(a) As a subsidiary question, was the additional charter hire in excess of 50 per cent of the cumulative net voyage profits a part of the basic charter hire under section 5(b) of the Merchant Ship Sales Act of 1946?"

3. Are plaintiffs estopped from contesting the rates fixed by the charter contracts?

Since we are of opinion that defendant is not entitled to recover on its counterclaims, we do not consider the other issues raised by plaintiffs' cross counterclaims.

The first issue is the minimum amount of basic charter hire which is authorized by statute. The governing statute is section 5(b) of the Merchant Ship Sales Act of 1946, 60 Stat. 43, which provides as follows:

"The charter hire for any vessel chartered under the provisions of this section shall be fixed by the Commission at such rate as the Commission determines to be consistent with the policies of this Act, but, except upon the affirmative vote of not less than four members of the Commission, such rate shall not be less than 15 per centum per annum of the statutory sales price (computed as of the date of charter). Except in the case of vessels having passenger accommodations for not less than eighty passengers, rates of charter hire fixed by the Commission on any war-built vessel which differ from the rate specified in this subsection shall not be less than the prevailing world market charter rates for similar vessels for similar use as determined by the Commission."

It will be noted that 50 U.S.C.Appendix, § 1738(b) (1952 and 1958 Eds.) omits the following language which appears in the original statute:

"* * * but, except upon the affirmative vote of not less than four members of the Commission, such rate shall not be less than 15 per centum per annum of the statutory sales price (computed as of the date of charter)."

The authority cited by the codifiers for the omission of this clause is 1950 Reorg. Plan No. 21, 46 U.S.C.A. § 1111 note. But it will be noted that this reorganization plan does not authorize the elimination of the words quoted above. The codifiers justify their elimination only by virtue of the fact that the Maritime Commission was abolished and its functions were transferred to the Secretary of...