American-Foreign Steamship Corp. v. United States
| Decision Date | 26 May 1961 |
| Docket Number | 24283-24289,24200,24291,Docket 24190,24400-24402.,No. 202-215,24292,202-215 |
| Parties | AMERICAN-FOREIGN STEAMSHIP CORPORATION, Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. STOCKARD STEAMSHIP CORPORATION, Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. A. H. BULL STEAMSHIP CO., Bull-Insular Line, Inc., Baltimore Insular Line, Inc., Libelants-Appellants, v. UNITED STATES of America, Respondent-Appellee. NEW YORK AND CUBA MAIL STEAMSHIP COMPANY, Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. DICHMANN, WRIGHT & PUGH, INC., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. POLARUS STEAMSHIP CO., Inc., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. A. L. BURBANK & COMPANY, Ltd., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. T. J. STEVENSON & CO., Inc., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. NORTH ATLANTIC AND GULF STEAMSHIP CO., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. LUCKENBACH STEAMSHIP COMPANY, Inc., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. BLIDBERG ROTHCHILD CO., Inc., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. FALL RIVER NAVIGATION CO., Libelant-Appellant, v. UNITED STATES of America, Respondent-Appellee. |
| Court | U.S. Court of Appeals — Second Circuit |
J. Franklin Fort, Kominers & Fort, Washington, D. C. (John Cunningham, and Israel Convisser, Washington, D. C., of counsel), for all libelants-appellants except American-Foreign S. S. Corp.
Burlingham, Hupper & Kennedy, New York City, of counsel, for North Atlantic & Gulf Steamship Co. and Luckenbach Steamship Co.
Cravath, Swaine & Moore, New York City, of counsel, for New York & Cuba Mail S. S. Co.
Hill, Betts & Nash, New York City, of counsel, for Dichmann, Wright & Pugh, Inc.
Kirlin, Campbell & Keating, New York City, of counsel, for A. H. Bull S. S. Co., etc.
Lester Levin, New York City, of counsel, for Polarus S. S. Co., Inc., A. L. Burbank & Co., Ltd., and T. J. Stevenson & Co., Inc.
Zock, Petrie, Sheneman & Reid, New York City, of counsel, for Stockard S. S. Corp., Blidberg Rothchild Co., Inc., and Fall River Nav. Co. (Roberts & McInnis, Washington, D. C., Francis J. O'Brien, New York City, Charles B. McInnis, and Roger H. Muzzall, Washington, D. C., of counsel), for Fall River Nav. Co.
Arthur M. Becker, Washington, D. C., Foley, James & Conran, New York City (Becker & Maguire and Gerald B. Greenwald, Washington, D. C. of counsel), for libelant-appellant American-Foreign S. S. Corp.
Leavenworth Colby, Chief, Admiralty & Shipping Section, Dept. of Justice, Washington, D. C. (George Cochran Doub, Asst. Atty. Gen., and S. Hazard Gillespie, Jr., U. S. Attorney, S.D.N.Y., New York City, on the briefs), for the United States.
Before CLARK, WATERMAN, MOORE, FRIENDLY and SMITH, Circuit Judges.
The instant case presents fourteen consolidated appeals. The appellants are in all cases shipping concerns whose actions against the United States under the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., have been dismissed in the District Court for the Southern District of New York as time-barred.1 On appeal to this court, a panel composed of Circuit Judges Hincks and Medina and Retired District Judge Leibell affirmed the dismissal of the libels, American-Foreign Steamship Corp. et al. v. United States, 2 Cir., 1957, 265 F.2d 136, on the authority of Sword Line, Inc. v. United States, 2 Cir., 1955, 228 F.2d 344, affirmed on rehearing, 2 Cir., 230 F.2d 75, affirmed as to admiralty jurisdiction, 1956, 351 U.S. 976, 76 S.Ct. 1047, 100 L.Ed. 1493, and American Eastern Corp. v. United States, D.C.S.D. N.Y.1955, 133 F.Supp. 11, affirmed 2 Cir., 231 F.2d 664, certiorari denied 351 U.S. 983, 76 S.Ct. 1050, 100 L.Ed. 1497.
That panel, however, indicated that, were it not for the aforementioned two recent decisions by other panels of this court, it might well pass differently on the limitations question. Petition for reargument in banc was granted and the case was heard again by the then active Circuit Judges, Chief Judge Clark, and Judges Medina, Hincks, Moore and Waterman.2 A majority of that court rejected the Sword Line and American Eastern cases and held that the libels had been improperly dismissed. The causes were ordered remanded for further factual inquiry to determine whether the parties had agreed, in Clause 13 of the bareboat charters, to postpone suits on all questions until after final audit of the charters — thus suspending operation of the time-bar. Judges Waterman and Clark dissented, being of the opinion that Clause 13 clearly did not postpone the running of the limitations period and that Sword Line and American Eastern were correctly decided; Judge Clark, in his dissent, further questioned, under the wording of 28 U.S.C. § 46(c), the right of Judge Medina (who had retired from regular active service under the provisions of 28 U.S.C. § 371 (b) between the time of the submission of the appeals to the court in banc and the date of the decision in the case) to cast a vote on the in banc court.
After the denial of a petition for rehearing, the Supreme Court granted certiorari only on the question of Judge Medina's interim retirement, 1959, 361 U.S. 861, 80 S.Ct. 117, 4 L.Ed.2d 101. That Court held, per Justice Stewart, that he had not been eligible; it vacated the in banc decision and remanded to this court for further proceedings, intimating "no view as to the merits of the underlying litigation." 1960, 363 U.S. 685, 80 S.Ct. 1336, 1340, 4 L.Ed.2d 1491.
Although the factual background of these disputes has been recorded in the course of former voyages through this court, it will be helpful to attempt once again to place these facts in proper perspective. During the Second World War the United States Government, not surprisingly, had a virtual monopoly on the ownership of all floating vessels. It used the facilities of the existing civilian maritime industry with those ship operators acting generally as managerial agents for the United States. After the termination of hostilities the government moved to get out of the general maritime industry in favor of the civilian commercial operators. Starting in early 1946 the War Shipping Administration began chartering many war-built vessels under a form of bareboat charter agreement known as "Warshipdemiseout Form 203." By the Act of Congress of July 8, 1946, Section 202, 60 Stat. 481, at page 501, the War Shipping Administration was abolished effective September 1, 1946 and its functions transferred to the Maritime Commission (Maritime). In August, Maritime announced its intention to cancel all Warshipdemiseout 203 charters as of August 31, 1946 — and to substitute a new form of charter, "Shipsalesdemise 303," which was chiefly distinguished from its predecessor by a sliding scale for the payment of "additional charter hire" geared to the profits of the charterers. Whereas the earlier charter had provided for a flat 50% government charge on profits in excess of a 10% return on capital, "303" provided for the payment to Maritime of up to 90% of the excess profits
Appellants, singly and through their trade association, protested the imposition of this sliding scale for "additional charter hire," alleging that Maritime's action was illegal and outside the scope of its statutory authority under section 5(a) and (b) of the Merchant Ship Sales Act of 1946, 50 U.S.C.A.Appendix § 1738 and § 709(a) of the Merchant Marine Act of 1936, 46 U.S.C.A. § 1199(a). Nevertheless, they all signed the new charters calling, in Clause 13, for the sliding scale on profits in excess of 10% of capital necessarily employed. The disputed Clause 13, after making provision for the graduated rates, stated:
"The Charterer agrees to make preliminary payments to the Owner on account of such additional charter hire and on account of any additional charter hire accrued under any War Shipping Administration Form 203 (Warshipdemiseout) charter (prior to the times of payment provided for above or in such Warshipdemiseout charters) at such times and in such manner and amounts as may be required by the Owner; provided, however, that such payment of additional charter hire shall be deemed to be preliminary and subject to adjustment either at the time of the rendition of preliminary statements or upon the completion of each final audit by the Owner, at which times such payments will be made to the Owner as such preliminary statements or final audit may show to be due, or such overpayments refunded to the Charterer as may be required."
Although by far the largest claims of these applicants concern the repayment of allegedly illegal additional charter hire,3 there are many other claims pressed, some of them quite substantial. One is based on the alleged unauthorized insistence by Maritime that 1947 be split into two separate accounting years because of the insertion of a "foreign trade addendum" into the charters.4 There are disputes on the interpretation of the charters concerning the availability of certain cumulative accounting methods involving the disallowance by Maritime of "loss carry-backs."5 Finally, there are diverse claims involving the disallowance of specific expenditures involved in the computation of the basic and additional charter hire paid Maritime. These include disagreements over "capital necessarily employed,"6 the disallowance of certain alleged post-redelivery overhead expenses,7 management fees,8 and agency fees.9 Blidberg alone asserts a claim against the government for recovery of expenses incurred because of claimed latent defects present in certain vessels at the time the government handed them over to the charterer.
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