Seatrade Corporation v. United States

• Decision Date: 18 January 1961
• Docket Number: No. 245-55.,245-55.
• Parties: SEATRADE CORPORATION v. UNITED STATES.
• Court: U.S. Claims Court

152 Ct. Cl. 356, 285 F.2d 448 (1961)

SEATRADE CORPORATION v. UNITED STATES.

No. 245-55.

United States Court of Claims.

January 18, 1961.

Mark P. Schlefer, Washington, D. C., for the plaintiff. T. S. L. Perlman and Kominers & Fort, Washington, D. C., were on the briefs.

Anthony W. Gross, Washington, D. C., with whom was George Cochran Doub, Asst. Atty. Gen., for defendant.

MADDEN, Judge.

The plaintiff sues to recover money which, it asserts, was illegally exacted from it by the former United States Maritime Commission upon the occasion of the plaintiff's transfer of four ships from American to foreign ownership and flag.

During the years 1947 and 1948 the plaintiff purchased from the Maritime Commission four German merchant ships which had been acquired by the United States as reparations at the end of World War II. The Commission had limited the bidding for the ships to United States citizens, and had required the purchasers to agree that the ships would be documented and operated under the United States flag. To make these foreign-built ships conform to United States standards required extensive conversion.

The plaintiff selected the one of the four ships which seemed to require the least alteration and had it converted. The cost of conversion was some $300,000 and was several times as much as the plaintiff had expected it to be. The consequence was that the plaintiff had more than $500,000 invested in a 4,200-ton ship, when the Commission was selling 10,400-ton American-built Liberty ships for $544,000. The plaintiff operated the converted German ship but the operation was at a loss. Conversion of the other three ships would have been still more expensive, and the plaintiff laid them up. Conversion to American standards not being economically feasible, the plaintiff would have had to scrap the ships if it could not obtain permission to operate them under a foreign flag, or sell them into foreign ownership.

The plaintiff sought permission to place some of the ships under Panamanian registry. The Commission refused to give such permission. The plaintiff found a potential Danish buyer for one of the ships, but the Commission refused permission for the transfer. The plaintiff found another Danish buyer for two of the ships and offered to buy three Liberty ships from the Commission and place them in American operation if the Commission would permit the foreign sales of the German ships. Some months later the Commission notified the plaintiff that it had approved the proposed sales of three of the German ships on condition that the plaintiff pay $450,000 to the Commission, pay to the Commission such further amount by which the cost of conversion of the converted German ship might, upon investigation, turn out to be less than $300,000, and purchase three Liberty ships from the Commission.

During the period of delay, the condition of the ships had deteriorated and the market price had fallen. The foreign purchasers insisted upon large reductions in the formerly agreed prices of the ships. The plaintiff requested the Commission to reconsider the amount of money demanded from it, but, its request being refused, it agreed to the conditions set by the Commission, paid the money and sold the ships. The fourth German ship was later sold, with the Commission's permission, to an Israeli purchaser, the Commission requiring the plaintiff to pay $50,000 to the Commission and to buy another ship from the Commission.

For the three Liberty ships which the plaintiff agreed to buy at the time it sold the first three German ships to foreign purchasers, the Commission and the plaintiff later agreed to the substitution of two Victory ships. There is no issue in this case as to those ships, nor as to the ship which the plaintiff bought from the Commission at the time of the sale to the Israeli purchaser.

As to the condition inserted in the Commission's permission to sell the first three German ships to foreign purchasers, that if, upon audit of the plaintiff's cost of conversion of the first German ship, it should be found that the cost was less than $300,000, the plaintiff should pay the Commission the difference, the Commission required the plaintiff to pay $16,308.82. The amounts of the cash payments to the Commission in connection with the transfers were, then, $450,000, $16,308.82, and $50,000, a total of $516,308.82.

The plaintiff says that this case is, in all essential respects, like the case of Clapp v. United States, 117 F.Supp. 576, 127 Ct.Cl. 505, certiorari denied 348 U.S. 834, 75 S.Ct. 55, 99 L.Ed. 658, and the case of Suwannee Steamship Co. v. United States, Ct.Cl., 279 F.2d 874, decided June 8, 1960. In those cases this court held that the Maritime Commission's power to grant, or to deny, permission to an owner of a ship to sell it to a foreign purchaser, was intended to be exercised with due consideration of this country's defense position, its...