Atlantic Carriers v. United States

• Decision Date: 17 May 1955
• Citation: 131 F. Supp. 1
• Parties: ATLANTIC CARRIERS, Inc., Libelant, v. UNITED STATES of America, Respondent. TRAMP CARGO CARRIERS, Inc., as Owner of THE LIBERTY BELL, Libelant, v. UNITED STATES of America, Respondent.
• Court: U.S. District Court — Southern District of New York

131 F. Supp. 1

ATLANTIC CARRIERS, Inc., Libelant, v. UNITED STATES of America, Respondent.

TRAMP CARGO CARRIERS, Inc., as Owner of THE LIBERTY BELL, Libelant, v. UNITED STATES of America, Respondent.

United States District Court S. D. New York.

April 19, 1955.

Rehearing Denied May 17, 1955.

Zock & Petrie, New York City, for libelant Atlantic Carriers, Inc. and Tramp Cargo Carriers, Inc. Francis J. O'Brien, New York City, of counsel.

J. Edward Lumbard, U. S. Atty., New York City, for respondent, Benjamin H. Berman, Atty., Dept. of Justice, New York City, of counsel.

IRVING R. KAUFMAN, District Judge.

This suit is brought, pursuant to the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., for an alleged breach of a charter party.¹ On April 6, 1953, the steamship John C., a vessel owned by the libelant was chartered to the respondent and was redelivered to libelant in allegedly damaged condition on August 8, 1954.

By exceptive allegations the respondent now raises a provision in the charter — a "disputes clause" — as a complete bar to the suit. The provision, Article 32 of the Charter, provides that any unsettled dispute "concerning a question of fact arising under this contract" shall be determined by the Government "Contracting Officer", with right of appeal to "the Secretary". Their decisions "shall be final and conclusive". Libelant concedes that the disputes clause is normally a bar to the prosecution of this suit and that it is required to pursue its administrative remedies before suit may be brought. "But the Article * * * is something more than a dead letter to be revived only at the convenience or discretion of the contractor. It is a clear, unambiguous provision applicable at all times and binding on all parties to the contract. No court is justified in disregarding its letter or spirit. The Article * * * is controlling as to all disputes `concerning questions arising under this contract' unless otherwise specified in the contract. It creates a mechanism whereby adjustments may be made and errors corrected on an administrative level, thereby permitting the Government to mitigate or avoid large damage claims that might otherwise be created. * * * This mechanism, moreover, is exclusive in nature. Solely through its operation may claims be made and adjudicated as to matters arising under the contract. * * * And in the absence of some clear evidence that the appeal procedure is inadequate or unavailable, that procedure must be pursued and exhausted before a contractor can be heard to complain in a court." United States v. Joseph A. Holpuch Co., 1946, 328 U.S. 234, 239, 66 S.Ct. 1000, 1003, 90 L.Ed. 1192. See also United States v. Moorman, 1950, 338 U.S. 457, 70 S.Ct. 288, 94 L.Ed. 256; United States v. Blair, 1944, 321 U.S. 730, 734, 64 S.Ct. 820, 88 L.Ed. 1039; United States v. Callahan Walker Construction Co., 1942, 317 U.S. 56, 63 S.Ct. 113, 87 L.Ed. 49; United States v. Wessel, Duval & Co., D.C.S.D.N.Y.1953, 115 F.Supp. 678, 685.

The libelant is now in the process of presenting its claims to the contracting officer. The libelant has not pressed the instant suit, and it has represented to the Government and to the Court that it will not require the respondent to answer or otherwise plead until the administrative processing is completed and that "the libel was filed for protective purposes only" — i. e., to avoid the bar of the two year statute of limitations of the Suits in Admiralty Act, 46 U.S.C.A. § 745.

Although the disputes clause would normally be a bar to the institution of a suit until the completion of the administrative process, the libelant urges that the libel should remain on the docket because its administrative remedy may prove so dilatory that it may be time barred from later bringing suit to review the administrative determinations of fact and to press contentions of law. The basis in the instant action for threatened inadequacy of the administrative remedy, appearing in the affidavit of libelant's Secretary-Treasurer, is that, predicated upon the average time the agency has taken to currently process claims in relation to the number of claims having precedence over libelant's claim, its claim "will not be processed until sometime in January of 1956." After this date, other steps must allegedly be taken to complete the administrative process.

There is authority for the view that the inadequacy by time delay of an administrative remedy permits resort to the courts. Southeastern Oil Florida, Inc., v. United States, Ct.Cl.1953, 115 F.Supp. 198; cf. Eastern S. S. Lines v. United States, 1953, 112 F.Supp. 167, 176, 125 Ct.Cl. 422; see United States v. Holpuch Co., 328 U.S. 234, 240 (1946); United States v. Blair, 1944, 321 U.S. 730, 736, 64 S.Ct. 820, 88 L.Ed. 1039. Where the threat of having the statute of limitations permanently foreclose judicial review is imminent the injured party should be permitted to at least file, if not prosecute, his libel in the court. In Wessel, Duval & Co. v. United States, D.C.S.D.N.Y.1954, 126 F.Supp. 79, 81, Judge Noonan permitted the filing of a protective libel "a few days before the statute of limitations would have precluded the libelant from ever bringing the action."

Our inquiry must, therefore, be directed to the statute of limitations. The Suits in Admiralty Act requires that the suit be brought within two years after "the cause of action arises." 46 U.S.C.A. § 745. The libelant assumes that its cause of action arose after its original delivery of the vessel on April 6, 1953 but before respondent's redelivery to it on August 8, 1954.² On the other hand, respondent appears to urge that the cause of action will not arise until the administrative process becomes final in view of the statute enacted into law on May 11, 1954, which expressly provides for judicial review of administrative decisions pursuant to disputes clauses. 41 U.S.C.A. § 321. The legislative history of the review statute clearly indicates that the statute was...