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OZANIC v. UNITED STATES

March 10, 1949

OZANIC
v.
UNITED STATES. THE PETAR



The opinion of the court was delivered by: RIFKIND

Shipping Assets Clearing, Ltd., a British corporation, moves for admission as intervening petitioner and for a decree directing payment to itself as the true party in interest, of the recovery heretofore adjudged against the United States in favor of libellant as bailee of the S.S. Petar, sunk in collision with a U.S. Naval Tanker. Issues of fact having arisen, they were tried to the court.

Petitioner is the assignee of the claim by assignment from the Yugoslav Government, which had nationalized the Yugoslav corporate owner of the Petar, together with all its claims and other assets, before May 23, 1947, when the recovery herein was decreed. The assignment was made pursuant to an overall shipping settlement agreement among the Yugoslav Government, the British Government, the several nationalized Yugoslav shipping corporations and various non-Yugoslav private parties who had interests in, liabilities to, or claims against the Yugoslav corporations. The agreement was signed July 31, 1947, and became fully operative under its terms on October 20, 1947. The specific assignment of the Petar claim was made August 26, 1947.

 On July 19, 1948, the Governments of the United States and Yugoslavia, in connection with and as part of an agreement adjusting and settling the lend-lease account between the parties, entered into an agreement concerning mutual obligations and claims whereby, inter alia, they mutually waived all claims arising out of maritime collisions occurring between 1941 and 1946. The Petar collision occurred in 1942. The Department of State of the United States declares by letter signed for the Acting Secretary of State, that the Petar claim is ' * * * therefore waived by the Yugoslav government under section 8e of that agreement.'

 The procedural propriety of intervention at this late stage of these proceedings (nothing remains to be done but to enter judgment upon the mandate of the Court of Appeals which affirmed the judgment below) is not contested by the Government. It defends from two positions, that the Anti-Assignment Statute, 31 U.S.C.A. § 203, and the reciprocity provision of the Public Vessels Act, 46 U.S.C.A. § 785, bar the petitioner. Then it counterattacks with the contentions that the execution of the United States-Yugoslav agreement constitutes executive action in the field of foreign affairs which removes the claim from judicial cognizance, and that such agreement constitutes a settlement of the obligation with the assignor by the obligor without notice of the prior assignment to petitioner.

 The first defense is good, unless some exception to the Anti-Assignment Statute is applicable, for the statute unequivocally declares all assignments of claims against the United States (with exceptions here inapplicable) null and void. National Bank of Commerce of Seattle v. Downie, 1910, 218 U.S. 345, 31 S. Ct. 89, 54 L. Ed. 1065, 20 Ann.Cas. 1116.

 Despite the broad sweep of the statutory language some exceptions have become well recognized. The statute has been restricted in its application to voluntary assignments. United States v. Gillis, 1877, 95 U.S. 407, 416, 24 L. Ed. 503; see Aetna Casualty and Surety Co. v. United States, 2 Cir., 1948, 170 F.2d 469, 471. Transfers by operation of law, Erwin v. United States, 1878, 97 U.S. 392, 24 L. Ed. 1065; assignments for the benefit of creditors, Goodman v. Niblack, 1880, 102 U.S. 556, 560, 26 L. Ed. 229; and transfers by judicial order, Price v. Forrest, 1899, 173 U.S. 410, 19 S. Ct. 434, 43 L. Ed. 749; New Rawson Corporation v. United States, D.C. Mass. 1943, 55 F.Supp. 291, are not within the statute. Nor does the statute apply to a transfer resulting from the consolidation of two corporations. Seaboard Air Line Ry. v. United States, 1921, 256 U.S. 655, 41 S. Ct. 611, 65 L. Ed. 1149.

 Instructive is the similar construction given the statutory prohibition against assignment of government contracts. 41 U.S.C.A. § 15; Note, 52 Harv.L.Rev. 296 (1938).

 Since the Yugoslav Government is recognized by the United States, the original nationalization of the Petar's corporate owner by the Yugoslav Government must be accorded respect, cf. United States v. Belmont, 1937, 301 U.S. 324, 57 S. Ct. 758, 81 L. Ed. 1134, and considered as a transfer by operation of law so as to be without the statute. But the same is not true of the Yugoslav Government's later assignment to the petitioner. Though made pursuant to an agreement to which the Yugoslav and British Governments were two of the parties, it was in its nature a voluntary assignment of a claim against the United States as much as if it had been made by a private person. While it is true that the transferor of the demand against the United States was a government and that the transfer, therefore, represented an exercise of governmental power in the sense that an act of any kind by a government necessarily constitutes such exercise, nevertheless it seems to me that such an assignment was not one effected by 'operation of law' (173 U.S. 410, 19 S. Ct. 438) as these words are used in the cited decisions of the Supreme Court. It certainly was not an involuntary act on the part of Yugoslavia. *fn1"

 Exceptions to the Anti-Assignment Statute are occasionally allowed where they would not produce the evils at which the statute was aimed. Richmond Screw Anchor Co. v. United States, 1928, 275 U.S. 331, 341, 48 S. Ct. 194, 72 L. Ed. 303.

 The purpose of the statute was to secure the United States Government against embroilment in conflicting claims and subjection to double liability, and to discourage the enlistment of improper influences in advocacy of the claims. Goodman v. Niblack, 1880, 102 U.S. 556, 26 L. Ed. 229; cf. United States v. Crain, 8 Cir., 1945, 151 F.2d 606, 608, certiorari denied 1946, 327 U.S. 792, 66 S. Ct. 817, 90 L. Ed. 1019.

 In this case, the evils at which the statute was aimed are blatantly proclaimed by this very contest, since the United States, through both its State and Justice Departments, considers that it has already satisfied the claim in question by diplomatic agreement with the assignor.

 Suits pursuant to the Public Vessels Act, 46 U.S.C.A. § 781 et seq., such as this, have not been judicially exempted from the Anti-Assignment Statute, but since they are to be conducted in accordance with the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., it is reasonable to assume that if the Anti-Assignment Statute is inapplicable to the latter it is equally inapplicable to the former. More or less relevant to the question are Smith v. United States Shipping Board Emergency Fleet Corp., 1928, 2 Cir., 26 F.2d 337, certiorari denied 1928, 278 U.S. 628, 49 S. Ct. 29, 73 L. Ed. 547; Seaboard Fruit Co. Inc. v. United States, D.C.S.D.N.Y. 1946, 73 F.Supp. 730, 731, 732; Rhodes v. United States, D.C.E.D.N.Y., 1934, 8 F.Supp. 124; and The West Grama, D.C.S.D.N.Y., 1924, 1924 A.M.C. 1444.

 The Smith case held that the question of assignment not having been raised below, it was not properly before the court for consideration, but went on to suggest what the Rhodes case subsequently held, that assignments of claims against the Emergency Fleet Corporation were not forbidden because the Fleet Corporation was an entity separate from the United States and thus not within the Anti-Assignment Statute, citing Charles Nelson Co. v. United States, D.C.W.D. Wash., 1926, 11 F.2d 906. The Seaboard cases held the assignment of a claim against the United States good on the authority of The West Grama. This last case held that a tug, as assignee of its tow, might sue the United States for collision damage despite the Anti-Assignment Statute, because the provisions of the Suits in Admiralty Act, 'That in cases where if such vessel were privately owned or operated * * * a proceeding in admiralty could be maintained * * * a libel in personam may be brought against the United States * * * ', and 'That the provisions of all other Acts inconsistent herewith are hereby repealed' are ' * * * sufficiently sweeping to * * * allow the courts of admiralty to enforce against the Government claims transferred by assignment which may be asserted against all other persons.' The West Grama, supra, 1924 A.M.C.at pages 1445-1446. The basic premise of this decision requires examination, since no authority was cited and the case has apparently been followed but once.

 The Suits in Admiralty Act contained the following provision: 'Such suits shall proceed and shall be heard and determined according to the principles of law and the to the rules of practice obtaining in ...


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