Smith-Johnson Steamship Corp. v. United States

• Decision Date: 11 June 1956
• Docket Number: 314-55.,No. 98-55,262-55,98-55
• Citation: 139 F. Supp. 298
• Parties: SMITH-JOHNSON STEAMSHIP CORP. v. The UNITED STATES. PACIFIC FAR EAST LINE, Inc., v. The UNITED STATES. BLACK DIAMOND STEAMSHIP CORP. v. The UNITED STATES.
• Court: U.S. Claims Court

139 F. Supp. 298

SMITH-JOHNSON STEAMSHIP CORP. v. The UNITED STATES.

PACIFIC FAR EAST LINE, Inc., v. The UNITED STATES.

BLACK DIAMOND STEAMSHIP CORP. v. The UNITED STATES.

Nos. 98-55, 262-55, 314-55.

United States Court of Claims.

March 6, 1956.

Writ of Certiorari Denied June 11, 1956.

Arthur M. Becker, Washington, D. C., for plaintiff in case No. 98-55; Melvin Spaeth, Gerald B. Greenwald, and Becker & Maguire, Washington, D. C., were on the briefs.

J. Franklin Fort, Washington, D. C., for plaintiff in case No. 262-55; Radner, Zito, Kominers & Fort, and Israel Convisser, Washington, D. C., were on the briefs.

George F. Galland, Washington, D. C., for plaintiff in case No. 314-55; William J. Lippman, Robert N. Kharasch, and Galland & Kharasch, Washington, D. C., were on the briefs.

Leavenworth Colby, Washington, D. C., with whom was Warren E. Burger, Asst. Atty. Gen., for defendant.

Before JONES, Chief Judge, and LITTLETON, WHITAKER, MADDEN and LARAMORE, Judges.

Writ of Certiorari Denied June 11, 1956. See 76 S.Ct. 1047.

WHITAKER, Judge.

Plaintiff alleges in the Smith-Johnson Steamship Corporation case that the defendant exacted from it for the hire of certain vessels more than was authorized by the Merchant Ship Sales Act of 1946, 60 Stat. 41, 50 U.S.C.A.Appendix, § 1735 et seq., and the Merchant Marine Act of 1936, 49 Stat. 1985, 46 U.S.C.A. § 1101 et seq. It sues for the excess. Defendant in its answer sets up the special defense that this court lacks jurisdiction of the subject matter, because, it says, plaintiff's cause of action is on the contract for the hire of the vessels and is, therefore, maritime in nature, of which actions the admiralty courts have exclusive jurisdiction. Plaintiff says its action is on the statute and it moves to strike defendant's special defense.

The Merchant Ship Sales Act of 1946 provided for the charter of war-built vessels. Section 5(b) authorized the United States Maritime Commission to fix the charter hire for vessels at such rates as the Commission should determine to be consistent with the policy of the Act. Plaintiff says that, in fixing the charter hire for the vessels chartered to it, the Commission went contrary to the policy of the Act in that it exacted from it a stated hire and in addition percentages of its profits on the voyages of the vessels in excess of the percentages authorize by the Act.

Section 5(c) of the Act incorporated section 709(a) of the Merchant Marine Act of 1936, 49 Stat. 1985, 2010, which provided:

"Every charter made by the Commission * * * shall provide that whenever, at the end of any calendar year subsequent to the execution of such charter, the cumulative net voyage profits (after payment of the charter hire reserved in the charter and payment of the charterer's fair and reasonable overhead expenses applicable to operation of the chartered vessels) shall exceed 10 per centum per annum on the charterer's capital necessarily employed in the business of such chartered vessels, the charterer shall pay over to the Commission, as additional charter hire, one-half of such cumulative net voyage profit in excess of 10 per centum per annum: Provided, That the cumulative net profit so accounted for shall not be included in any calculation of cumulative net profit in subsequent years."

The charter agreement tendered plaintiff by the Maritime Commission provided for a basic charter hire and also for additional charter hire as follows:

"Clause 13. Additional Charter Hire. If at the end of the calendar year 1946, or any subsequent calendar year or at the termination of this Agreement, the cumulative net voyage profit (after the payment of the basic charter hire hereinabove specified and payment of the charterer's fair and reasonable overhead expenses applicable to operation of the vessels) shall exceed 10 per centum per annum on the charterer's capital necessarily employed in the business of the vessels (all as hereinafter defined), the charterer shall pay over to the owner at Washington, D. C., within 30 days after the end of such year or other period, as additional charter hire for such year or other period, an amount equal to the percentages of such cumulative net voyage profit in excess of 10 per centum per annum on such capital computed in accordance with the following table (but such cumulative net profit so accounted for shall not be included in any calculation of cumulative net profit in any subsequent year or period):

"Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) not in excess of $100 per day — 50%.

"Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) in excess of $100 per day but not in excess of $300 per day — 75% on such excess over $100 per day.

"Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) in excess of $300 per day — 90% on such excess over $300 per day.

"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 in such WARSHIPDEMISEOUT chartered) 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."

Plaintiff says this charter agreement exacted a percentage of its profits in excess of that authorized by law. Nevertheless, the charter agreement was executed and eight vessels were delivered to plaintiff. While the charter agreement was in effect plaintiff made preliminary...