American-Hawaiian Steamship Co. v. United States, 236

• Decision Date: 13 August 1951
• Docket Number: Docket 21486.,No. 236,236
• Citation: 191 F.2d 26
• Parties: AMERICAN-HAWAIIAN STEAMSHIP CO. v. UNITED STATES. THE ALASKAN.
• Court: U.S. Court of Appeals — Second Circuit

191 F.2d 26 (1951)

AMERICAN-HAWAIIAN STEAMSHIP CO. v. UNITED STATES THE ALASKAN.

No. 236, Docket 21486.

United States Court of Appeals Second Circuit.

Argued May 8, 1951.

Decided August 13, 1951.

Newell Clapp, Acting Asst. Atty. Gen., Irving H. Saypol, U. S. Atty., New York City, Leavenworth Colby, Special Asst. to the Atty. Gen. (Paul D. Page, Jr., Sol., Washington, D. C., and Joseph A. Klausner, Atty., Maritime Administration, New York City, of counsel), for appellant.

Kirlin, Campbell & Keating, New York City (Clement C. Rinehart, New York City, of counsel), for appellee.

Before SWAN, Chief Judge, and AUGUSTUS N. HAND and CLARK, Circuit Judges.

SWAN, Chief Judge.

This is a suit on a policy of war risk insurance covering the libellant's steamship Alaskan which was requisitioned in May 1942 and was subsequently insured by the War Shipping Administration. The vessel was torpedoed and sunk on November 28, 1942. The War Shipping Administration determined "just compensation" for the vessel to be $776,003. This sum being deemed unsatisfactory by the libellant, it elected to receive 75 per cent. thereof and to sue for an additional amount, as permitted by the Merchant Marine Act of 1936, as amended, 46 U.S.C.A. § 1242(d). The libel was filed November 27, 1944, claiming $1,035,000 with interest, less credits for the sums received under the War Shipping Administration's valuation. The case was tried before George W. Alger as Commissioner. He submitted a detailed report, finding "just compensation" for loss of the Alaskan to be $983,250. His report was thoroughly reviewed by Judge Leibell and was approved as correct, except as to the calculation of interest. 85 F.Supp. 815. From the final decree entered March 4, 1949, the United States appealed on the ground that the award was too large, and the libellant filed cross-assignments of error on the ground that it was too small. After the appeal was taken, the decision in United States v. Cors, 337 U.S. 325, 69 S.Ct. 1086, 93 L.Ed. 1392, was handed down, construing the so-called enhancement clause of section 902(a) of the Act, 46 U.S.C.A. § 1242(a).¹ Thereafter on January 30, 1950, the appellant moved in this court for an order remanding the cause for the taking of evidence and the making of findings alleged to be required under the Cors decision. We denied the motion with leave to the District Court to hear it. After a most thorough and careful consideration, Judge Leibell denied the motion.² The appellant then moved in this court for leave to amend its notice of appeal and to incorporate in the record on appeal the proceedings upon the motion to take additional evidence. We granted leave to incorporate portions of the motion proceedings in the District Court and postponed to the argument of the appeal further consideration of the motion before us.

Most of the appellant's brief is devoted to argument that the court erred in denying the Government's motion to take further proof with respect to elements of enhancement under the rule of United States v. Cors.³ This order, if reviewable on appeal, can be reversed only for an abuse of discretion. We find none. For reasons fully stated by Judge Leibell, we do not think that the Cors case made any such change in law applied by the District Court as to constitute a "supervening decision."⁴ Furthermore, the evidence sought to be introduced was as available to the Government during the trial as it was upon the motion. No reason is apparent to us why the Government should not be treated like any private litigant in applying the rule that available evidence, if it is to be used, must be brought forward at the trial.⁵ We are content to affirm denial of the motion to reopen the case on the opinion below, 92 F. Supp. 785.

The Commissioner in large part based his valuation of $983,250, which is at the rate of $95 per deadweight ton, on the market value of comparable vessels in 1941. The appellant contends that the 1941 market value includes forbidden enhancement due to the Government's need; but the evidence by which this is sought to be established is solely that which was presented upon the motion and which we have just held was properly excluded. Of the record made before the Commissioner, Judge Leibell said, 85 F.Supp. at page 824: "The Commissioner gave due consideration to Rules 1, 3 and 4 of the Advisory Board on Just Compensation * * *. His report shows that `enhancement' due to a general rise in prices or earnings was not deducted from the value at the time of taking, but that any enhancement due to the Government's need was deducted." We see nothing to justify reversal of this conclusion as "clearly erroneous."

The Commissioner's valuation is also attacked on the ground (1) that it fails to give effect to the Government's restrictive controls which the Commissioner found had depressed 1942 values below 1941 levels; (2) that it was error to consider reconstruction cost and fail to give adequate effect to the vessel's depreciation from age in determining her value; and (3) that it was error to choose June 12, 1942 (the vessel's delivery date under time charter requisition) rather than November 28, 1942 (the date of her loss) as the date as of which she should be valued, although the Commissioner found her value on both dates to have been the same. All of these points were satisfactorily considered in Judge Leibell's first opinion.⁶ We see no occasion to add to that opinion. Nor do we find it necessary to discuss the appellee's contentions that the award should be increased and interest allowed from the date of the vessel's loss rather than from the date the libel was filed.⁷ Accordingly both the final decree and the order declining to take further proofs are affirmed on the opinions below, with costs.

CLARK, Circuit Judge (dissenting).

Beginning in 1916, in the lengthening shadow of World War I, the Congress followed widespread popular demand to attempt to devise means of "taking the profit out of war," believing that in a time of universal sacrifice a few should not profit immeasurably. That movement has taken many turns and courses; clearly it has not yet exhausted itself. As affects our present issue, it reached its climax in the "enhancement clause" first proposed in 1922, adopted with respect to government-aided ships in 1928, and given its present scope as an amendment to the Merchant Marine Act in 1936. By this the owner of a requisitioned vessel is to be paid "just compensation" for the property taken or used, "but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use." § 902(a), 46 U.S.C.A. § 1242 (a). The important and extensive legislative history behind all this is set forth in the appendix to respondent's brief. Because it may there be found, because, too, it is so wholly one way as a search for ways and means of accomplishing a clear and agreed-upon objective, I shall forbear to rehearse it here. But some stress upon that cherished objective is still justified because of the importance it has assumed in the legislative purpose — and still assumes, as is shown by the restrictions set upon the disbursement of funds for vessels in the Appropriation Act of June 2, 1951.¹ How spectacularly that objective has failed of accomplishment in this instance is shown by a bare recital of facts beyond dispute.

The vessel here to be valued, the Alaskan, was built in 1918 and hence was 24 years old at the time of its sinking, November 28, 1942. According to the testimony it was of an antiquated and obsolete design. Libelant had bought it from the Shipping Board in 1928, paying about $289,100, and then added reconditioning to bring its cost up to $526,519.59. As the parties themselves stipulated, its value on September 8, 1939, was $450,000. The Commissioner rejected 1942 values — in part because he considered them unrepresentatively low — and found a 1941 value of $983,250, which is now affirmed. Hence in this short period, which covered, however, our government's great defensive efforts, including the lend-lease program of aid to the Allies and its accompanying tremendous demand for shipping, this old vessel more than doubled in value.² The figures themselves, against this background, belie the conclusion that all enhancement of value due to the Government's need for shipping (the cause necessitating the requisition here) has been rigorously squeezed out. Actually, as his report makes quite clear, the Commissioner made no use of the enhancement clause whatsoever to keep values down; he did use it, at least fleetingly, to support an increase in value over the 1942 lower point.

Before I turn to matters of detail I think it only fair to point out that a legislative policy so firmly bottomed on public demand would not have been so demonstrably frustrated for light and inconsequential reasons. There have been substantial and, to a considerable extent, well founded doubts as to the validity of any legislation seeming to limit the constitutional concept of just compensation for a governmental taking below the fair value of the property at the taking. These led to a diversity of response to the legislation within the various agencies of the Government itself, with a basic split between the General Accounting Office and the War Shipping Administration and its Administrator. The former took the position that all enhancement of value, other than that resting on economic improvement in general conditions, occurring after the President's proclamation of limited national emergency on September 8, 1939, should be disallowed. The latter, entertaining serious doubts of the validity of the legislation, recommended settlements based on rises in value due to the wartime demand for ships. The appointment and reports of two Advisory Boards on Just Compensation, set up by the President, did not settle the matter and the decision of the Court of Claims in Cors v....