UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
June 16, 1952
A. H. BULL S.S. CO., Inc.
UNITED STATES. THE MARY
The opinion of the court was delivered by: MURPHY
Libelant, owner of the S.S. Mary, a vessel which was sunk by enemy action on March 3, 1942, sues upon a charter and an amendment to it to recover the sum of $ 7,529.57 as additional charter hire for the vessel for the period from January 23, 1942 to March 3, 1942, and the further sum of $ 48,250 alleged to represent the increase in war risk insurance valuation of the vessel under terms of the amendment to the charter for the vessel.
The facts are not in dispute and present two issues of law for determination: (I) Whether under the amendment to the charter libelant is entitled to additional charter hire and additional compensation for total loss of vessel; and (II) Whether this court has jurisdiction of the suit under the Suits of Admiralty Act of 1920, 41 Stat. 525, 46 U.S.C.A. § 741 et seq. The facts will be set forth first and these two issues determined in that order.
On January 23, 1942, the Maritime Commission telegraphed libelant, in part, as follows:
'Your S.S. Mary required for National Defense Purposed. (Sic) Maritime Commission will Charter Vessel upon Readiness Load on Uniform Charter Conditions Rates as Per General Order No. 49. Please Advise Readiness Date and Port. * * *'
Three days later the vessel was delivered to the Commission at Baltimore 'under terms and conditions of time charter to be executed.' On the same day a letter confirming its telegram was sent by the Commission indicating, among other things, that the Commission 'will charter this vessel * * for a round voyage to Red Sea via port or ports and return to U.S. North Atlantic port for redelivery.' After respondent's agent had loaded the vessel with a cargo of general merchandise she sailed for the Persian Gulf via the Cape of Good Hope. While en route at about 11:40 a.m. on March 3, 1942, she was sunk by enemy action.
The original written charter party dated 'as of January 23, 1942' was tendered to libelant for execution on March 2, 1942, and was executed by both parties some time between March 19 and 26, 1942. Amendment to the charter was tendered to the libelant on March 27th and executed by both parties some time between May 21st and June 1, 1942.
The original charter under uniform charter conditions of the United States Maritime Commission on its form 9018-A recites its statutory authority as Public Law 101, 77th Congress, approved June 6, 1941, 55 Stat. 242, 50 U.S.C.A.Appendix, § 1273, which empowered the Commission until six months after the war 'to charter any vessel' when 'necessary for transportation of foreign commerce of the United States or of commodities essential to the national defense'. It is conceded that the rate of hire fixed in this charter at $ 27,600 per month from the time of delivery of the vessel was determined in accordance with the appropriate maximum provided in General Order 49 of the Commission, issued on December 30, 1941 and effective January 20, 1942. Similarly conceded is the correctness of determining the maximum war risk insurance valuation at $ 591,750 under the Commission's General Order 53, issued January 22, 1942.
Subsequently the amendment to this charter referred to above was issued. Its provisions, set forth in the margin,
conferred upon owners the option of receiving benefits of modifications in rates of hire (General Order 49) or insurance values (General Order 53) applicable from the date of delivery, in the event the War Shipping Administrator made such modifications prior to May 15, 1942. On May 14, 1942, the Administrator made the modifications, establishing new schedules of rates of hire (General Order 8) and of insurance values (General Order 9). So far as 'vessels included' are concerned, General Order 9 is worded almost
identically with General Order 8, set forth below.
It is important to point out that forth orders include 'vessels chartered under terms and conditions of charter parties tendered by the War Shipping Administration to owners of such vessels pursuant to the provisions of Sec. 902 of the Merchant Marine Act, 1936, as amended, * * *.' No provision was made for vessels, like the Mary, chartered pursuant to the provisions of Public Law 101.
The libelant exercised its option for increased rates of hire by filing public vouchers on June 11, 1942, which were returned unpaid on December 2, 1943, and submitted these again together with deadweight and speed certificate from the American Bureau of Shipping on December 11, 1947, with similar results. Oral applications for increased insurance valuation were made to officials of the War Shipping Administration by libelant's vice-president to no avail. This libel for both increased rates of hire and insurance valuations was filed May 12, 1944.
The first question, whether libelant is entitled to additional charter hire and additional compensation for total loss of the Mary under amendment to its charter and modifications of the War Shipping Administrator, turns upon the applicability of such revisions to the Mary. Unquestionably the Mary was not within the letter of the Administrator's orders of modification. She had not in fact been 'chartered under terms and conditions of charter parties tendered by the War Shipping Administration to owners of such vessels pursuant to the provisions of Sec. 902 of the Merchant Marine Act, 1936, as amended,' as the orders required (supra, notes 2, 3). Concededly, as her charter recited, she was chartered 'pursuant to the provisions of Public Law No. 101- 77th Congress, approved June 6, 1941.'
The two statutes are distinct. Section 902 of the Merchant Marine Act of 1936, 46 U.S.C.A. § 1242, set forth in part below,
deals with requisition or purchase of vessels in time of emergency proclaimed by the President. Although the phrase 'to requisition or charter the use of any such property' appears in Section 902(a), 46 U.S.C.A. § 1242(a), it is evident that Congress intended to authorize the Commission to 'charter the use of any such (i.e., requisitioned) property.' This is made clear not only in the antecedent language in Section 902(a) to which the word 'such' refers, but also the provisions of subdivisions (c) and (d) of the statute, 46 U.S.C.A. § 1242(c, d) which set forth the procedure for tendering charters for vessels after they have been requisitioned (infra, note 4). The Presidential proclamation of an unlimited national emergency on May 27, 1941, 55 Stat. 1647, No. 2487, 50 U.S.C.A.Appendix, note preceding section 1, effectuated this manner of acquisition long before the date of delivery of the Mary. Despite this statute, on June 6, 1941, an additional method of acquisition was provided for in Public Law 101, 55 Stat. 242, 50 U.S.C.A.Appendix, § 1273. Under Public Law 101, the Commission could clearly charter vessels without first exercising its power of requisition with its possible judicial consequences of an eminent domain nature. This is made clear by Section 3(a)
which would be redundant insofar as it applied to vessels of the United States if existing provisions of the Merchant Marine Act enabled the Maritime Commission to charter vessels without first requisitioning them.
However significant the difference in these two statutes, the Administrator, acting pursuant to executive order and statute which authorized him to modify contracts 'with or without consideration' Public Law 354, 77th Congress, 55 Stat. 838, 50 U.S.C.A.Appendix, § 611; Executive Orders 9001, 6 Fed.Reg. 6787, December 27, 1941, 50 U.S.C.A.Appendix, § 611 note, 9054, 7 Fed.Reg. 837, February 7, 1942, undertook to limit the option of receiving benefits of upward revision of rates of hire and insurance valuations to owners of certain vessels acquired pursuant to Section 902 of the Merchant Marine Act (supra, notes 2, 3). No compulsion of contract arising from amendment to the charter of the Mary requires extension of option of these benefits to its owner since the amendment explicitly stated, 'the Owner shall have the option of receiving the benefits of such modifications to the extent that they may be applicable to the Vessel chartered hereunder' (supra, note 1).
The omission by the Administrator of vessels such as the Mary chartered pursuant to Public Law 101 or his failure to tender vessels so chartered another charter pursuant to Section 902 of the Merchant Marine Act so as to make available the option of receiving these benefits, may have been oppressive in some instances. But the remedy in such cases, not available in the judicially declared law of contract and admiralty, must be sought in a forum other than the judiciary.
The remaining question, one ordinarily resolved at the outset but reserved until now in this case because prior determination of the controversy on its merits supplies superior perspective, is whether this court has jurisdiction of this suit under the Suits in Admiralty Act of 1920, 41 Stat. 525, 46 U.S.C.A. § 741 et seq.
Section 1 of the Act, 46 U.S.C.A. § 741, so far as here relevant provides:
'No vessel owned by the United States * * * or in the possession of the United States * * * or operated by or for the United States * * * shall (hereafter), in view of the provision herein made for a libel in personam, be subject to arrest or seizure by judicial process in the United States or its possessions: * * *.'
And Section 2 of the Act, 46 U.S.C.A. § 742, provides in part:
'In cases where if such vessel were privately owned or operated * * * a proceeding in admiralty could be maintained at the time of the commencement of the action herein provided for, a libel in personam may be brought against the United States * * * provided that such vessel is employed as a merchant vessel * *.'
Since it has been conceded that the Mary had been 'employed as a merchant vessel' and since she was not 'owned by the United States * * * or in the possession of the United States', the only question presented is whether or not she was 'operated by or for the United States'.
As a merchant vessel the Mary had in fact been operated 'for' the United States. The United States had employed her under a time charter relationship which left the charterer in control of the voyages made, goods carried and performance of its orders by master and crew. In Matson Navigation Co. v. United States, 284 U.S.352, 52 S. Ct. 162, 164, 76 L. Ed. 336, a time charter like the one involved here was held to be a contract for the operation of a vessel 'for the United States.' While in the Matson case the charter contained the recital that the ship was to be operated 'for the United States', the omission of such labeling language in the instant charter in the face of substantially identical terms and conditions should not vary the result. As the Court of Appeals recently pointed out in Calmar S.S. Corp. v. Scott, 2 Cir., 197 F.2d 795, 802, per L. Hand, C. J., 'It is obvious that a vessel under a voyage charter to the United States is operated 'for' the United States- indeed, were it not so, 'for' would be redundant.'
Judgment for respondent.