UNITED STATES DISTRICT COURT, SOUTHERN DISTRICT OF NEW YORK
June 10, 1955
AMERICAN EASTERN CORPORATION, Libelant,
The UNITED STATES of America, Respondent
The opinion of the court was delivered by: WALSH
Libelant here seeks to recover from respondent alleged overpayments made pursuant to its charter of two government-owned vessels. Respondent excepts to the libel as barred by the statute of limitations. The exception is sustained.
The suit being under the Suits in Admiralty Act, 46 U.S.C.A. § 741 et seq., there is no dispute as to the period of the statute. It is two years. 46 U.S.C.A. § 745. The question is when the cause of action arose, when the libelant could first have maintained an action and been granted complete relief.
The controversy concerns 'additional charter hire', an amount over and above basic charter hire, based upon profits earned under the charter. The libel alleges that this charter provision is in conflict with the statute which authorized the charter (Par. 6); and that respondent withheld overpayments by libelant in violation of both the statute and the charter (Pars. 7-10).
The immediate claim of libelant is that 'cumulative net voyage profit', upon which the additional charter hire is computed, permits the carrying back of subsequent losses over the full period of the charter to offset earlier profits. Respondent contends that the language of the charter requires that the 'cumulative net voyage profit' be computed for each calendar year, rather than averaged over the life of the charter.
We are not concerned with the correctness of the rival contentions but whether the claim is time-barred. On this question we are handicapped by the vagueness of the libel which, in disregard of the jurisdictional need for allegations showing the timeliness of actions under the Suits in Admiralty Act,
evades an answer to almost all precise inquires. Exactly, when or how the alleged claim came into being is not expressed in words but, apparently, by a cryptic exhibit attached thereto, entitled 'Final Accounting under Shipsalesdemise, 303 Contract MCc-42706'. The readily understandable portion of the libel deals only with generalities: that the charter was executed 'notwithstanding' the 'mandatory' provisions of the statute; that respondent 'refused' to permit the continuation of profits and losses over the period of the charter; -- it leaves to be gleaned from the exhibit, if at all, whether there were profits, when they were accounted for, in what respect improperly, what was paid, whether there were overpayments, and when libelant thinks it should have gotten something back.
Interpreting the exhibit as
best I can,
aided by Maritime Commission
regulations and correspondence
at argument, the facts seem
to be as
1946 Congress authorized
the charter of government
owned vessels under
the Merchant Ship
Sales Act of 1946 (60
Stat. 41, c. 82, § 5, § 50
U.S.C.A.App. § § 1738).
This act incorporated
by reference the provisions
of the Merchant
Marine Act of 1936
which provide for
additional charter hire if
charterer makes a profit
in excess of ten percent
on capital involved.
(49 Stat. 2010,
c.858, title VII, § § 709,
46 U.S.C.A. § § 1199).
March 4,1947 The charter in question
was executed between
libelant and respondent.
Clause 13 provided
charter hire. The
charter covered two
April 10, 1947 Libelant operated the
-June 16, 1948 vessels. It paid
amounts based on tentative
estimate of additional
charter hire, in
accordance with procedure
provided by Maritime
April 1, 1947 Libelant earned profit
-Oct. 31, 1947 subject to additional
charter hire. This
profit was accounted
for as of the calendar
year 1947. As a result
libelant was subject to
the additional charter
hire in question, for
that accounting period.
Oct. 1, 1947 Libelant incurred a
-June 30, 1948 heavy loss which was
accounted for separately.
It is this loss
which libelant seeks to
offset against the 1947
June 16, 1948 Last vessel returned to
Feb. 21, 1950 Maritime Commission
for final accounting,
assert that profits may
not be offset by losses
incurred in subsequent
Sept. 14, 1951 Libelant submitted its
demanding return of
overpayments in the
amount of $ 10,187.12
but not making any
claim upon the basis of
carrying back subsequent
losses, the only
claim advanced in this
Nov. 29, 1951 Respondent allowed the
claim of libelant to the
extent of $ 8,436.40.
Mar. 19, 1952 Respondent's Comptroller
in this amount subject
to reservations for
(a) Applicable items
recorded subsequent to
June 30, 1951.
(b) The net overage or
shortage of expendable
(c) Any errors or
Apr. 25, 1952 Respondent repaid to
libelant $ 8,436.40, thus
Nov. 18,1952 Libelant made a further
claim under (b)
refund of $ 603.60.
Feb. 18, 1953 Additional refund of
$ 603.60 approved.
Mar. 12, 1953 Respondent paid
libelant $ 603.60.
Feb. 12, 1955 Further claim for
overpayment was submitted,
for the first time
claiming an overpayment
on the basis alleged
in this action.
Feb. 16, 1955 Present libel filed.
To the extent that libelant claims under the charter, its claim had arisen by June 16, 1948, when it returned the last of its ships to respondent. At that point all facts upon which its claim is based had occurred. Profits had been earned; losses incurred; preliminary payments had been paid. Thereafter it was merely a matter of computation to determine the amount of excess preliminary payments to which libelant was entitled. Delay in computation on the hope that respondent will compute upon the basis libelant believes correct does not toll the statute. Cf. Corporation of Royal Exch. Assur. v. United States, 2 Cir., 75 F.2d 478, 480; United States v. Sligh, 9 Cir., 24 F.2d 636, 638, reversed on other grounds 1928, 277 U.S. 582, 48 S. Ct. 600, 72 L. Ed. 998.
There was no open account between the parties as contended by libelant, wherein the claim arises with the last entry because previous entries are regarded as offsets to each other. Here there was no two-way trade but merely a one-way account for charter-hire with periodic payments. See Spring v. Gray, 1832, 6 Pet. 151, 164, 31 U.S. 151, 164, 8 L. Ed. 352. The complexity of the computation of these payments did not alter the nature of the account.
No provision of the statute or charter required libelant to await the promulgation of regulations for final accounting before commencing its action. If it had in fact overpaid and was entitled to return payments under the charter no regulation of the Commission could bar the right and none was necessary to round it out.
Neither was it necessary for libelant to await the outcome of claims presented through administrative channels. Cohen, Coldman & Co. v. United States, 1933, 77 Ct.Cl. 713, 730, certiorari denied 1933, 290 U.S. 681, 54 S. Ct. 119, 78 L. Ed. 587; Moriarty, Inc., v. United States, 1942, 97 Ct.Cl. 338, 339; Withers v. United States, 1930, 69 Ct.Cl. 584, 587.
To the extent libelant claims for money had and received, its claim was mature when respondent, through the Maritime Commission's regulations for final accounting, unequivocally asserted its intent to withhold the money now claimed by libelant. These regulations were promulgated on February 21, 1950. The outline of procedure incorporated therein expressly stated that profits could not be offset by losses incurred in subsequent accounting periods. The language is as follows:
'In providing for the calculation of additional charter hire based on the cumulative net voyage profit of the Charterer, Clause 13 of Aprt II of Shipsalesdemise 303 provides also that such cumulative net profit so accounted for shall not be included in the calculation of cumulative net profit in any subsequent year or period. Pursuant to these provisions of the bareboat charter agreements, only deficiencies in net voyage profits may be carried forward, and then only under the following conditions:' (Emphasis in original) 46 C.F.R. § 299.37-4(C) (2).
More than two years have run since the promulgation of this regulation.
Libelant asserts that respondent's position was not unequivocal because of certain reservations in other provisions of the procedure for final accounting reserving the Commission's right to deviate from its formula for the calculation and allocation of capital and income where necessary to avoid an inequity. This does not establish that the regulations were in any sense tentative. This reservation was inherent in the complexity of the subject matter, the inability to prescribe a formula which would do justice in every case. It was not the deferment of the interpretation of the charter. Further, the matter affected by such reservations did not concern the basis for the present claim and, in any event, the reservations were of such a general nature that they could not diffuse the effect of the precisely expressed proscription against offsetting profits by subsequent losses.
Libelant might also contend that it was unable to determine whether its present claim was more than academic because of reservations in the provisions of charter clause 22 for the computations of 'net voyage profit', 'gross income', 'fair and reasonable overhead' and 'capital necessarily employed' which were, in turn, necessary to the determination of additional charter hire. In theory it might have believed that the 1947 profit, which it is trying to offset, could be otherwise wiped out by final recomputation of these factors and thus make its present claim unnecessary. Such a possibility, which would be no more than a hope, of course could not toll the statute. Even this bare hope would have been dispelled when libelant did file its final accounting on September 14, 1951, showing the existence of a substantial profit for this period.
The labyrinthine aspects of the charter and regulations which libelant has seen fit to exaggerate are really only superficial. They are to be expected in any administrative attempt to deal with a complex subject matter on a mass scale. Care must be taken not to permit their seeming complexity to confuse the elementary simplicity of the dealings between the parties.
The exceptive allegations are sustained.
On Motion to Amend Libel.
After exceptive allegations to the original libel had been sustained and the claim herein held time-barred, libelant has moved to amend its libel. The prior determination was not limited to the form of the original libel. At the invitation of both parties, the court also considered the correspondence and maritime administration regulations which were handed up at argument.
The proposed amended libel does not overcome the defects as to which the exceptive allegations were sustained. Although the allegations in the proposed new Articles Sixth and Seventh regarding the addendum to the original charter explain the basis of libelant's claim more clearly than libelant's counsel was able to do at the original argument, and remove uncertainties as to underlying facts pointed out in the court's original opinion, they would not bring the claim within the two-year period of the statute. The addendum there alleged was executed, and all facts relating to the claim based upon it occurred, more than two years before the commencement of the action. Whatever rights libelant had accrued either before the return of the ships or the promulgation of the Commission's first regulations for accounting.
The conclusory allegation contained in Article Eighth that the determination of all controversies was reserved until the completion of final audit of all items by the Commission, is a conclusion of law and a conclusion contrary to that reached by the court upon the underlying correspondence. Libelant cannot overcome the force of the court's earlier determination that the claims arose prior to the two year statutory period by merely adding to the libel an allegation of the legal conclusion that they did not.
Under these circumstances, the motion to amend the libel is denied.