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June 27, 1951


The opinion of the court was delivered by: WEINFELD

Libellant was the owner of the motor vessel, the Dona Aurora, which had been requisitioned by the War Shipping Administration in April 1942. It was torpedoed and sunk on December 25th, 1942. This libel was filed thereafter upon a claim for war risk insurance pursuant to Title 46 U.S.C.A. § 1128d.

The amount which libellant is entitled to recover for the loss of the vessel, if awarded a final decree, has been fixed at $ 2,082,000 by an order of District Judge Irving R. Kaufman, following the rendition of a report by a Commissioner to whom the issue of damages had been referred in advance of trial. D.C., 92 F.Supp. 243. The remaining issues to be decided concern the right of libellant to recover.

The Government resists libellant's claim upon jurisdictional and other grounds. The facts are not in dispute, although the interpretations drawn therefrom are in conflict. They are to be considered against the background of the statutory authority under which the War Shipping Administration or its Administrator acted with respect to the Dona Aurora.

 The Merchant Marine Act of 1936 set up the procedure for the acquisition of vessels by the Government when required by the national defense or during any national emergency. Upon appropriate proclamation by the President, the Maritime Commission was authorized to requisition or purchase any vessel and the owner was to be paid just compensation for the property or its use. Ch. 858, Title IX, § 902, 49 Stat. 2015, 46 U.S.C.A. § 1242. An amendment to the Act conferred authority upon the Commission to provide marine or war risk insurance on vessels so chartered or requisitioned. 54 Stat. 689-691, 57 Stat. 51, 46 U.S.C.A. §§ 1128-1128h. *fn1" Authority to charter vessels on a 'time charter' basis upon such terms and conditions as the Commission deemed necessary or desirable, including the issuance of insurance, was also granted by § 1273 of Title 50, U.S.C.A. Appendix.

 On March 27th, 1942, the War Shipping Administration notified libellant by telegram that it desired to charter the Dona Aurora on a time charter basis. On March 30th, 1942, respondent issued its war risk insurance binder T.C. 1142 in the sum of $ 1,500,000 in the event of total loss of the vessel. On April 1st, 1942, the vessel was delivered by libellant to the War Shipping Administration, which acknowledged that such delivery was made under the terms of a time 'charter to be executed later.' In fact, this time charter was not executed and delivered to libellant until April 24th, 1942, effective 'as of March 27th, 1942' and was for a period of about one year. War risk insurance valuation was also fixed thereunder at $ 1,500,000, the same as that set forth in the binder issued on March 30th, 1942, which binder was not delivered to libellant until May 9th, 1942.

 On May 20th, 1942, libellant received from the War Shipping Administration notice of requisition of the Dona Aurora as follows:

 'War Shipping Administration has previously chartered from you following vessels: Dona Aurora * * *.

 'In order to carry out requisition program now in effect all of the above vessels are hereby requisitioned for use under time form charter * * *.

 'Requisition charter in form set forth in Federal Register of May 16, 1942 together with rates and insurance valuations contained in General Order 8 and 9 published Federal Register May 16, 1942 will be tendered to you as soon as possible. Please advise immediately whether you desire to have these rates and valuations made effective as of time of delivery under current charter * * *.'

 Part II of the requisition charter form published in the Federal Register of May 16th, 1942, and referred to in the foregoing telegram, contained a provision which obligated the War Shipping Administration as charterer to provide and pay for war risk insurance (Clause 20). *fn2"

 The published form also contained alternative measures of war risk insurance valuation, Options I and II. Option II provided for valuation equivalent to 'Just compensation to be determined in accordance with Section 902 of the Merchant Marine Act, 1936, as amended, for any loss or damage due to the operation of a risk assumed by the Charterer under the terms of this Charter to the extend the person entitled thereto is not reimbursed therefor through policies of insurance against such loss or damage.'

 Libellant replied to the War Shipping Administration notification by telegram on June 15th, 1942, advising of its choice of rates. As to insurance valuation, it pointed out that the vessel- having been built after 1935- was excepted from the application of General Order No. 9 formula for fixing insurance valuations, Option I. *fn3" Thus, Option II was the only choice open to libellant.

 Section 902 of the Merchant Marine Act of 1936 imposed on the War Shipping Administration the duty of transmitting 'at the time of the taking or as soon thereafter as the exigencies of the situation may permit, * * * a charter setting forth the terms which, in the Commission's (Administrator's) judgment, should govern the relations between the United States and' the person entitled to possession of the requisitioned vessel. 46 U.S.C.A. § 1242(c).

 No charter was delivered at or about the time of the requisition or, as we shall see, until long thereafter and subsequent to the sinking of the vessel.

 The first step taken by respondent was on October 29th, 1942, while the Dona Aurora was still sailing the seas, when it issued an insurance binder, described as R.C. No. 944, containing the legend, 'War Risks Binder Covering Vessels Requisitioned by the War Shipping Administration, Division of Wartime Insurance, Washington, D.C.' Also appearing thereon is the notation, 'Cancels and supersedes Binder T.C. 1142'- that issued on March 30th, 1942.

 The Binder of October 29th, 1942, recites that the War Shipping Administration 'insures against War Risks * * * listed in schedule below: As required by Article 20 of the Charter Party.' The duration of the binder is stated as:

 'From Time of delivery to War Shipping Administration about April 1, 1942

 'To Termination of charter' and the value and amount for hull coverage are listed, 'As per charter.'

 It also contained two attachments; and endorsement No. 1 thereof, likewise dated October ...

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