Sloan Shipyards Corp. v. United States Shipping Bd. Emergency Fleet Corp.

Decision Date04 October 1920
Docket Number182-E.
Citation268 F. 624
PartiesSLOAN SHIPYARDS CORPORATION v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION.
CourtU.S. District Court — Western District of Washington

This is an action by a corporation of the state of Washington against the United States Shipping Board Emergency Fleet Corporation. It is alleged in substance that the plaintiff was in possession of a well-equipped shipbuilding plant, and of a well-equipped machine shop, for use in the preparation of machinery, appliances, etc., and equipment that was to go into the construction of ships, and on the 18th day of May 1917, it entered into a contract with the defendant to construct 16 wood cargo-carrying steamers for a consideration named, with payments specified, and that it entered upon the execution of this contract and that it also had under construction 4 full-power motorships, and other vessels, from which, it is alleged, it could realize 'a handsome profit'; that the plaintiff caused to be organized the Anacordes Shipbuilding Company, which constructed shipways and shipyards at Anacordes, Wash., so as to enable the plaintiff to speedily comply with its contract with the defendant, and that on December 1, 1917, the plaintiff had on the ways at Anacordes, Wash., and at Olympia, Wash., 6 ships under construction, and 2 additional keels laid, and was entitled to receive large payments in addition to payments theretofore made; that on said day the defendant wrongfully seized the possession and control of the plaintiffs' property at Anacordes and Olympia, and the Capital City Iron Works, owned by the plaintiffs, and retained exclusive control, possession, and management thereof; that prior to this time the plaintiff had contracted for about 15,000,000 feet of timber, and for all the engines and machine equipment, and all the material necessary for the construction of the entire 16 ships 'at extremely low and advantageous prices,' but after the seizure the defendant canceled all such contracts and purchased other materials at increased prices; that plaintiff was denied access to the books and records of the company and was denied the privilege of participation in the management and control of the business; that construction of the ships was deliberately delayed, extravagant prices were indulged in, and largely increased costs made in the construction of the ships by employment of unnecessary labor-- and sets out many elements of damage occasioned to the plaintiff by the defendant covering 15 pages of typewritten matter, and prays an order enjoining the defendant from removing the books, records, and files of the plaintiff from the offices of the plaintiff at Olympia and Anacordes, and from disposing of any property of the plaintiff, and for an order canceling certain mortgages set out in the complaint, quieting title to the property covered by the mortgages, and for an accounting, and for a decree determining and establishing the profits to which the complainant is entitled under its contract, alleging damage in excess of a million dollars.

The defendant moves to dismiss on the ground that, the suit being against the United States Shipping Board Emergency Fleet Corporation, which is simply an agency of the United States is a suit against the United States, and therefore not cognizable in this court, in so far as this bill may allege breach of contract, and not cognizable in any court so far as the bill may allege the commission of a tort; that the court is without jurisdiction; that the bill does not state facts sufficient to constitute a valid cause of action; that there is a nonjoinder of parties defendant.

George H. Bailey, James Hamilton Lewis, and Kerr & McCord, all of Seattle, Wash., for plaintiff.

Robert C. Saunders, U.S. Atty., of Seattle, Wash., for intervener.

Howard Cosgrove, of Seattle, Wash., for defendant Shipping Board.

NETERER District Judge (after stating the facts as above).

That the United States cannot be sued for a tort, even though committed by its officers in the discharge of their duties, is well settled. Ballaine v. Alaska Northern Ry. Co. (U.S., Intervener) 259 F. 183, 170 C.C.A. 251, and cases cited. The relation of the United States to the defendant must be determined by the act creating the defendant, the objects of its creation, and the purposes to which the property is to be used.

Chief Justice Marshall, in the Dartmouth College Case, 4 Wheat. 518, at page 561 (4 L.Ed. 629), said:

'To determine the character of a corporation, the beneficial purposes to which the property of the corporation is to be used may be considered.'

The object and manner of organization and purposes and operation of the defendant are set forth in the Merchant Marine Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, Secs. 8146a-8146t). Concisely stated, the act creates a Shipping Board composed of five members, to be appointed by the President. The board, with the President's approval, is to have constructed and equipped in American shipyards and navy yards, etc., or to lease and purchase, vessels so far as commercial requirements of the trade of the United States may permit, for use as naval auxiliaries or army transports. A corporation may be formed under the laws of the District of Columbia, and have a capital stock not to exceed $50,000,000, the board to subscribe and vote not less than a majority of the stock. The board, with the President's approval, may sell any or all of the stock, but at no time shall the government be a minority stockholder. The board to give public notice of the fact that vessels are offered, and the terms and conditions upon which the contract will be made, and shall invite competitive offers and make full report to the President. The corporation shall stand dissolved at the expiration of five years from the conclusion of the present European War, and all stock of such corporation owned by others at the time of dissolution shall be taken over by the board at a fair and reasonable value, and paid for with the funds to the credit of the board. The liability to be incurred under the provisions of sections 5 and 11 shall not exceed $50,000,000; and the proceeds of the sale of bonds and any proceeds for sales, charters, and leases of vessels and all sales of stock made by the board and of all of the monies received from any source to be covered into the treasury to the credit of the board.

By Act Oct. 6, 1917 (section 251a, Comp. Stat. Annot.), section 5 of Act June 22, 1906, prohibiting the transfer of employees from one executive department to another, or to independent establishments, or vice versa, is made to apply to the...

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8 cases
  • Providence Engineering Corporation v. Downey Shipbuilding Corporation
    • United States
    • U.S. Court of Appeals — Second Circuit
    • November 5, 1923
    ... ... BANK OF CITY OF NEW YORK v. UNITED STATES SHIPPING BOARD EMERGENCY FLEET CORPORATION ... in 1922 in Sloan Shipyards Corporation v. United States ... ...
  • Taylor v. American International Shipbuilding Corporation
    • United States
    • Pennsylvania Supreme Court
    • June 24, 1922
    ... ... opinion of the Supreme Court states the facts ... Verdict ... and ... 335; Rixon v. Telegraph Co., 271 Pa. 67; Sloan ... Shipyards v. Fleet Corp., 268 F. 624; Keeley ... Superior ... Ct. 582; Haines v. Emergency Fleet Corp., 268 ... Pa. 92; Kane v ... ...
  • Union Nat. Bank of Clarksburg, W. Va. v. McDonald
    • United States
    • U.S. District Court — Northern District of West Virginia
    • December 9, 1940
    ...Corporation, D.C., 24 F. Supp. 844; Henson et al. v. Eichorn et al., D.C., 24 F.Supp. 842; Sloan Shipyards Corporation v. United States Shipping Board Emergency Fleet Corporation, D.C., 268 F. 624. With a growing tendency to utilize corporations and agencies for governmental purposes, there......
  • UNITED STATES SHIPPING BOARD EMERGENCY F. CORP. v. Eichberg
    • United States
    • U.S. Court of Appeals — District of Columbia Circuit
    • June 1, 1926
    ...suit was originally brought, "on the ground that, as the claim was for more than $10,000, the suit must be brought in the Court of Claims. 268 F. 624; 272 F. 132." In that case, as in this, there was nothing in the contract or in the proceedings adopted by the Fleet Corporation to cancel th......
  • Request a trial to view additional results

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