Opposition Brief — United States Shipping Bd. Merchant Fleet Corporation v. Harwood

Ser 18 1929

345 CHARLES ELeUAE GROF

. IN THE

Court of the United States

Octoser Term, 1929.

_ STATES SHIPPING BOARD MER-

CHANT FLEET CORPORATION, sued in the

| name of the UNITED STATES SHIPPING

BOARD EMERGENCY FLEET CORPORA-

‘TION,

Petitioner,

ae vz

P, LEROY HARPWOOD, as Trustee in Bankruptcy

of GROTON IRON WORKS

and

ISAAC SIEGEL and JOHN M. P. THATCHER, as

_ Ancillary Receivers of United States Steamship Co.,

Intervenors,

| Respondents.

BRIEF IN OPPOSITION TO PETITION FOR

| WRIT OF CERTIORARI

< Frepericx H. Woon,

/ Hersert B. Ler,

_W. H. L. Epwarps,

Witx1aM W. Rosison,

Attorneys for Respondents.

Statement of reasons why petition should be denied

1. The question has already been settled by

this court adversely to the petitioner

2. There is no conflict between the decision of

the Circuit Court of Appeals and that of

another Circuit Court of Appeals

3. A qualification of the Sloan case, as sought

by the petitioner would result in a mis-

carriage of justice in this and other cases. .

This case is in no way distinguishable from the

Sloan case and the Wood case in which the

Fleet Corporation was held to have contracted

1,

The contracts involved were the same in

form and substance as those reviewed in

the Sloan and other cases

The first two construction contracts

The third construction contract

The first supplemental contract

The settlement contract

. That the Fleet Corporation was acting

under authority of executive orders is

. This case is not distinguishable from the

prior cases on the ground that they only

determined that the Fleet Corporation was

suable on contracts so made

. The cases relied on by the petitioner do not

sustain its contention

ii

LIST OF CASES AND STATUTES

PAGE

Astoria Marine Works v. Fleet Corporation, 259 —

POR BES: oe ER NE OR 5

Banque-Russo-Asiatique-London v. Fleet Corpora-

Mat, Be Ta, FIG go in occ ose s este ccnars 5

Bell v. Teague, 85 Ala. 211........0 0s eee eeeees 24

Campbell v. Porter, 46 App. Div. 628............ 25

Cohn v. Fleet Corporation, 20 Fed. (2d) 56...... 5

Cook v. Irvine, 5 Serg. & R. 492. ........-. 0008. 25

Crowell v. Crispin, 4 Daly 100. .........-...008. 25

Davis v. Pringle, 268 U.S. 315..... 66... eee. 4

Dietrich v. Fleet Corporation, 9 Fed. (2d) 733....

Eichberg v. Fleet Corporation, 273 Fed. 886...... 5

Fleet Corporation v. Galveston Dry Dock Company,

13 Fed. (2d) 607...........-. pas heuer 4

Fleet Corporation v. Rosenburg Brothers & Com-

pany, 12 Fed. (2d) 721, 276 U. S. 202......

Fleet Corporation v. South Atlantic Dry Dock Co.,

Oe Be

Fleet Corporation v. Tabas, 22 Fed. (2d) 398....

Gill v. Brown, 12 Johnson, 385.........+-+-eeees 25

Thos. Gordon Malting Co. v. Bartels Brewing Co.,

yk. ae ag... SOS an an Pane rg Gages eS 3

Gerloff v. Carleton, 121 N. Y. Supp. 338........ a

Hall v. Louderdale, 46 N. Y¥. 70......-+s-eeeees 24

Hardman v. Kelley, 19 S. D. 608, 104 N. W. 272.. 14)

Hastings v. Lovering, 2 Pick. 214.........+++++ oe)

Koen y, Davis, 20N. J. L. 425... . 22... cece cee 24

Knight v. Clark, 48 N. J. L. 22.............-.. 25

The Lake Monroe, 250 U. S. 246............00- 7

owski v. Lark, 108 Mich. 500.......... 25

Lateran v. Charlottesville Lumber Co., 110 Va.

ee ee Ne ke cies backeee 25

McBrainey v. Heydecker, 8 Misc. 309............ 25

McCarthy v. Hughes, 88 Atl. 984............... 24

Merrell v. Witherby, 120 Ala. 418............... 25

Nichols v. Moody, 22 Barbour 611...........+-. 25

Ogden v. Raymond, 22 Conn. 379.............. 25

Parks v. Ross, 11 How. 362............0000000: 23

Providenge v. Miller, 11 R. I. 272.............. 25

Providence Engineering Corporation v. Downey

Shipbuilding Corporation, 294 Fed. 641; certi-

orari denied 264 U. S. 586................ 4,7

Shooters Island Shipyard Co. v. Standard Co..... 5

Simonds v. Heard, 23 Pick. 120................ 24

Sloan Shipyards v. Fleet Corporation, 258 U.S.549 2

Smith v. Fleet Corporation, 26 Fed. (2d) 337; certi-

orari denied 273 U. S. 747... .......000e 4

Steamship Bulgarian Co. v Merchants’ Despatch

Transportation Co., 135 Mass. 421.........- 24

Timpkin v. Tallmadge, 54 N. J. L. 117.......... 25

iv

ted

U. S. v. Matthews, 282 B=S. 266

U. S. v. Strang, 254 U.S. 491

U. S. v. Wood, 290 Fed. 109, aff’d 263

STATUTES

Judicial Code, Section 154; U. S. Code, Title 28,

6

Urgent Deficiencies Act of June 15, 1917, 40 Stat.

Oe Pies wean ess sivecu veh ies l

Revised Statutes, §§ 3737, 3477

Tsaxt Book

Story on Agency, §§ 269, 270, 278

Story on Agency, §§ 302, 303, 306

IN THE

foyrne Gout at the Wnied States

‘Octoser Term, 1929.

Unitep STATES SHIPPING Boarp MeEr-

CHANT FLEET CORPORATION, sued in

the name of the UNITED States Surp-

pinc Boarp EMERGENCY FLEET Cor-

PORATION,

Petitioner,

Vv.

P, LeRoy Hargwoon, as Trustee in Bank-

ruptcy of Groton Iron Works

and

Isaac SIEGEL and Joun M. P. THatcuer,

as Ancillary Receivers of United States

Steamship Co., Intervenors,

Respondents.

BRIEF IN OPPOSITION TO PETITION FOR

WRIT OF CERTIORARI.

The Question Presented.

The Emergency Shipping Fund provisions of the Ur-

gent Deficiencies Act of June 15, 1917 (40 Stat. 182)

2

authorized the construction of ships at a cost not to ex.

ceed $500,000, and empowered the President (1) to place

orders therefor, and (2) to exercise the powers conferred

through such agency or agencies, as he might determine.

By executive order dated July 11, 1917 the President

delegated to the Emergency Fleet Corporation the powers

so conferred in so far as applicable to the construction

of vessels, and by further executive order of December

3, 1918 confirmed such delegation and ratified all acts

theretofore done thereunder.

The question presented is:

I. Did the Fleet Corporation in the contracts in

suit, made in its own name in connection with the con-

struction of vessels under the authority of such executive

orders, execute such contracts as principal and is it liable

as such thereon?

SUMMARY STATEMENT OF REASONS WHY PETI-

TION SHOULD BE DENIED.

1, The question, although one of public importance, has

already been settled by this court adversely to the petitioner,

The public importance of the question may be

admitted but it is a question which has already been

answered in the affirmative by this court in Sloan Ship-

yards v. Fleet Corporation, 258 U. S. 549 and in United

States v. Wood, 263 U. S. 680 in which the contracts _

reviewed were altogether similar in form and substance.

It is said, however, that the Circuit Court of Ap |

peals misinterpreted the decision of this court in the

Sloan case; that all that was therein decided was that

» Flee Corporation was suable on such contracts; that

¢ question of liability thereunder was not determined;

and t that the Fleet Corporation, although suable on such

in its own name, was not liable, because it con-

tracted as agent and not as principal, and the contract

was that of the United States and not of the Fleet Cor-

gration. The latter argument is based entirely on the

st legal effect of the executive orders of the Pres-

ident. But the legal effect of such orders was before the

court in the Sloan case and decided therein, and an exami-

nation of the argument of the Fleet Corporation in that

case, as contained in the official report, shows that every

argument now presented was pressed upon the Court

in that case. Furthermore, as will appear from the

accompanying brief, the question presented in one of

the cases decided in the Sloan case (Fleet Corporation v.

Wood-Eastern Shore case) was one of the substantive

rights and obligations created by the contract and not

of the capacity of the Fleet Corporation to sue or be

sued. And the essence of the decision in the other two

cases was that, although acting under the authority of

these executive orders, the Fleet Corporation acted as

principal and not as agent for the United States, when

it contracted as such in its own name, and hence was

suable on the contracts so made. That is to say, it was

suable because the contracts were its contracts, by which

itwas bound as principal. Subsequently, in United States

v. Wood, 263 U. S. 680, the Court affirmed, upon the

authority of the Sloan case, a decision of the same Cir-

cuit Court of Appeals to which writ of certiorari is now

sought (290 Fed. 109, 111, 115-6), wherein the question

4

again was one of substantive right and not of capacity

to be sued, and wherein the Circuit Court of Appeals

placed the same interpretation upon the Sloan case as in

this case. Still later, in Providence Engineering Corpo.

ration v. Downey Shipbuilding Corporation, 294 Fed,

641, and in Smith v. Fleet Corporation, 26 Fed. (2d) 337,

in which the same Circuit Court of Appeals placed the

same interpretation upon the Sloan case, in cases involy-

ing substantive rights and not capacity to sue or be sued,

this Court denied certiorari (264 U. S. 586, 273 U.S.

747). It is therefore respectively submitted that the

question presented, while one of public importance, is one

already settled by this court, and should not be further

reviewed.

2. There is no conflict between the decision of the Circuit

Court of Appeals and that of another Circuit Court of Appeals.

Petitioner cites Fleet Corporation v. Galveston Dry-

dock Company, 13 Fed. (2d) 607 (Sth C. C. A.) asin

conflict. An examination of that opinion discloses that

the contract reviewed showed, on its face, that it was

not the contract of the Fleet Corporation, but of the

Shipping Board, and in the last paragraph of the opin-

ion it is expressly stated that the question of the Fleet

Corporation’s liability on contracts made in its own be

half as principal is not presented. The same court in

Fleet Corporation v. South Atlantic Drydock, 300 Fed.

56, held that under such a contract the Fleet Corpora: —

tion was personally liable, thus interpreting the Sloan

case as interpreted by the Circuit Court of Appeals in

this case. To the same effect are the decisions of every

other Circuit Court of Appeals which has passed upon

the question. United States v. Mathews, 282 Fet

5

266 (9th C. C. A.), Banque-Russo-Asiatique-London

y, Fleet Corporation, 286 Fed. 918 (34C. C. A),

Shooters Island Shipyard Co. v. Standard Shipbuild-

ing Corporation and Fleet Corporation, 293 Fed.

706, 3 Fed. (2d) 1022 (3d C. C. A.), Fleet Corporation

y, Rosenburg Bros. & Company, 12 Fed. (2d) 721 (9th

C. C. A., reversed on other grounds, 276 U. S. 202),

Cohn v. Fleet Corporation, 20 Fed. (2d), 56 (6th C.

C. A.), Fleet Corporation v. Tabas, 22 Fed. (2d) 398

(3d C. C. A.). See also the decision of the 2nd Cir-

cuit in Dietrich v. Fleet Corporation, 9 Fed. (2d) 733,

and that of the Court of Appeals of the District of

Columbia in Eichberg v. Fleet Corporation, 273 Fed.

886, 14 Fed. (2d) 248. Only one case to the contrary

is cited by the petitioner, Astoria Marine Works v. Fleet

Corporation, 259 Fed. 415, decided by the District

Court of Oregon, and which is clearly in conflict with

the decision cited above from the Ninth Circuit, as well

as with the decisions of this court in the Sloan and Wood

cases. To the same effect are the decisions of various

district and state courts cited in the margin.*

In light of the unanimous decisions of the Circuit

Courts of Appeals and District Courts in the cases cited,

with the single exception of the District Court case cited

by the petitioner, the following statement on page 7 of

the petition cannot be sustained:

“Since the decisions of this Court in the Sloan

and Astoria cases (258 U.S. 549), in 1922, there

6

has been a widespread difference of opinion in the

minds of the bench and bar as to the effect of

those decisions.”

3. A qualification of the Sloan case, as sought by the pe

titioner would result in a miscarriage of justice in this and

other cases.

If the contracts were those of the Fleet Corpora-

tion as principal, the liabilities created thereby were

those of the Fleet Corporation, enforcible only in the

State or District Courts. If, on the other hand, the con-

tention of the petitioner is sound, the United States alone

was bound. In such event, exclusive jurisdiction was

in the Court of Claims, in which suit by the respondent

is now barred by the statute of limitations.

Section 154 of the Judicial Code (United States Code,

Title 28, § 260, R. S. § 1067, March 3, 1911, c. 231, § 154,

36 Stat. 1138) provides as follows:

“Claims pending in other courts. No person

shall file or prosecute in the Court of Claims, or

in the Supreme Court on appeal the~efrom, any

claim for or in respect to which he or any assignee

of his has pending in any other court any suit or

process against ary person who, at the time when

the cause of action alleged in such suit or process

arose, was, in respect thereto, acting or professing —

to act, mediately or immediately, under the author- _

ity of the United States.”

Under this s.atute, any lawyer representing a client —

having claims arising under contracts similar to the

contract in suit was therefore compelled to determine —

whether the liability was that ot the Fleet Corporation, —

‘pon which suit should be brought in the District or

State Courts, or that of the United States, upon which

suit must be brought in the Court of Claims. He could

not, by reason of the prohibition of this statute, pursue

both remedies concurrently.

~ In the Sloan case, decided May 1, 1922, the Court

said that the conclusion reached was “led up to and al-

most required by the decisions heretofore reached

in The Lake Monroe, 250 U. S. 246, and United States v.

Strang, 254 U. S. 491,” in each of which the question

was one of substantive law and not of the capacity to

sue or be sued. Subsequently, and in the same year,

in United States v. Mathews, 282 . 266, the Cir-

cuit Court of Appeals for the Ninth Circuit inter-

preted the Sloan case as it has been interpreted by

the Circuit Court of Appeals in this case, and held

further, that despite the relation of the United States

to such contracts, it could not itself sue thereon. If

$0, it was not, of course, suable thereon. In the fol-

lowing year in November, 1923, the decision of this

Court in United States v. Wood, supra, was handed

down, affirming the same Circuit Court of Appeals

to which this writ of certiorari is sought, in holding

that in such contracts the Fleet Corporation acted as

principal. In 1924 this Court denied a writ of certiorari

to review a similar decision by the same Circuit Court

of Appeals in Providesce Engineering Corporation v.

Downey Shipbuilding Corporation (264 U. S. 586).

There have followed successively the multitude of

cases in the District Courts of the United States and

in the Circuit Courts of Appeals cited above. Under

these circumstances it is plain that any lawyer, pre.

sented with the necessity of electing between suing the

Fleet Corporation in the District Court or suing the

United States in the Court of Claims, and who had

regard for the decisions of this and other courts, had

no choice but to sue the Fleet Corporation in the Dis-

trict Court.

As stated, the statute of limitations against the

bringing of suit in the Court of Claims has ex

pired during the pendency of this case. It is said

in the petition that there are other cases pending, involy-

ing the same question between other contractors and the

Fleet Corporation. In view of the time that has elapsed

since the conclusion of the War, it is fair to assume

that the statute of limitations has likewise run in all

such cases. The effect of a reversal on certiorari, if

granted, would therefore be to permit both the Govern-

ment and the Fleet Corporation, in this case and in all

other cases now pending and growing out of the con-

struction of ships contracted to be built by the Fleet

Corporation when acting under the executive orders

of the President, to escape all liability except upon such

settlement of the amounts in dispute as the Government

is willing voluntarily to make. Such a result would

bring about a substantial and a shocking miscarriage

of justice, due not to any failure of counsel representing

such claimants to proceed in accordance with the law as

repeatedly declared, but to their failure to anticipate a

qualification of previous decisions which in numerous —

cases has been expressly rejected.

Be, We are not unmindful that it is suggested in the

petition that a paragraph from the dissenting opinion of

‘the Chief Justice in the Sloan case is suggestive of a

possible qualification of that decision. An examination

of the dissent discloses that it was based entirely upon

the theory that the effect of the decision was to hold the

Fleet Corporation liable on contracts made in its own

name and not merely suable thereon. It is true that the

Chief Justice states that if it decided the latter only, the

question discussed in the dissent does not arise, but the

very sentence in which this language is contained indi-

cates that in the opinion of the Chief Justice the point

to which the dissent was directed, namely, the liability

of the Fleet Corporation, “seems * * * to be in these

cases.” Furthermore, after the decision of this Court

in United States v. Wood, supra, and after its denial of

petition for certiorari in Providence Engineering Com-

pany v. Downey Shipbuilding Corporation, supra, in each

of which the question was one of substantive right and

not of capacity to sue, the Bar was certainly justified

in assuming that any doubt or uncertainty arising from

this language in the dissenting opinion had been com-

pletely removed.

It is respectfully suggested that if the decision in

the Sloan case is to be qualified or limited, as asserted

by the petitioner, such qualification or limitation would

have either been made in that case or in the cases which

followed, and that now so to qualify the Sloan case would

be to work such hardship and injustice as in itself to

justify a denial of the writ.

10

ARGUMENT.

THIS CASE IS IN NO WAY DISTINGUISHABLE

FROM SLOAN SHIPYARDS v. FLEET CORPORATION,

258 N. S. 549, AND UNITED STATES v. WOOD, 263

U. S 680, IN WHICH THE FLEET CORPORATION

WAS HELD TO HAVE CONTRACTED AS PRINCIPAL.

1. The contracts involved were the same in form and

substance as those reviewed in the Sloan and other cases,

and there held to have been executed by the Fleet Corpora.

tion as principal, and not as agent.

Three cases were dealt with in a single opinion in the

Sloan case. In each of the contracts reviewed the Fleet

Corporation contracted in its own name. All the obliga-

tions of the contractor ran to the Fleet Corporation, and

all obligations running to the contractor were assumed

by the Fleet Corporation in its own name. As disclosed

by the opinion, wherever the United States is mentioned

the contract on its face clearly distinguishes between the

Fleet Corporation and the United States. In two of the

contracts the Fleet Corporation was described as “rep

resenting the United States of America”. The Cour

held that despite this recital, it clearly appeared from th

contracts, and from the mutual obligations created there

by, that the contracts were those of the Fleet Corpora

tion as principal and not executed by it on behalf of th

United States as agent. Each of the contracts in sti

is similar in form and substance to those reviewed in th

Sloan case.

11

n the courts below five contracts were involved, three

st contracts, a contract modifying the first

construction contract, and supplemental thereto, and a

-gontract made in settlement of the disputes which had

n under all of the preceding four contracts. The

ment that the last named contract is the only one

| ved in this petition for certiorari is erroneous. This

statement is apparently based upon the fact that the court

below held that there was no ground for setting aside the

settlement contract upon the ground of fraud or duress,

as asserted by the respondent, hence the accounting

sought must be made under the settlement contract. The

settlement contract (fols. 354-402, R. 118-134) in Arti-

de XVII (R. 133, fol. 399) expressly provided that it

should be supplemental to the three construction con-

tracts which had preceded, and that except as otherwise

provided, the provisions of said contracts and their sup-

plements should remain in full force and effect. The

provisions of these contracts as well as the settlement

contract must therefore be considered. Furthermore, as

held by the Circuit Court of Appeals, the Fleet Corpora-

tion obviously acted in the same capacity in executing

the settlement contract as in executing the construction

contracts to which it was expressly made supplemental.

Obviously, if it contracted as principal in the construc-

tion contracts, it was contracting as principal in the set-

tlement of the disputes arising thereunder, and in the

execution of contracts supplemental thereto, the original

contracts to remain in force except as modified by the

settlement contract itself.

12

The first two construction contracts.

The first two construction contracts, (Exhibits 1 and

3, R. 58 et seq., fols. 174 et seq. and R. 76, fols. 228

et seq.) were made by the Fleet Corporation in its own

name as the owner for whom the vessels were to

be constructed. All the obligations of the contractor

run to the Fleet Corporation described as the

“Owner”, and all obligations running to the contrac-

tor are assumed by the Fleet Corporation in its own

name as principal. The only mention of the United

States is in a provision common to both (fols. 190-

191, 248-250) defining the rights of the contractor in

the event of “delay * * * of the ‘Owner’ or by reason

of alterations or additions by the ‘Owner’ or the

commandeering by the United States Government of

materials purchased etc.”

The third construction contract.

In the third construction contract (Ex. 4, R. 9%

et seq., fols. 277 et seq.), the Fleet Corporation is re-

cited as a corporation organized under the laws of

the District of Columbia, “herein called the Owner,

representing the United States of America, party of

the second part”. Petitioner in its brief relies on this

recital and a similar recital in the settlement contract

as indicating that the Fleet Corporation acted as

agent for the United States and not as principal.

In respect of a similar recital, this Court in the Sloas

case said:

“We attach no importance to the fact that the

second contract [in the Sloan Shipyards case]

13

alleged to have been illegally extorted was made

by the Fleet Corporation ‘representing the United

: States of America.’ The Fleet Corporation was

the Contractor, even if the added words had any

secondary effect.”

In the same case, in respect of a contract of the Astoria

Marine Iron Works, containihg a similar recital, this

Court said:

“* * * throughout the contract, the undertakings

of the party of the second part, are expressed to

be undertakings of the Corporation, and it is this

Corporation and its officers that are to be satisfied

in regard to what is required from the Iron

Works. It is recognized that it may be necessary

for the United States to exercise complete control

over the furnishing of supplies to the Iron Works

and it is agreed that if required by the Corpora-

tion ‘and/or the United States,’ the Iron Works

will furnish schedules, etc., etc. The whole frame

of the instrument seems to us plainly to recognize

the Corporation as the immediate party to the

contract. The distinction between it and the

United States is marked in the phrase last quoted.

eee»?

This contract has the same characteristics as the first

two contracts, in which the United States is not men-

tioned, and as the contracts dealt with in the Sloan

case. All obligations of the contractor run to the

“Owner” (the Fleet Corporation) and all obligations

tunning to the contractor are assumed by the

“Owner” (the Fleet Corporation) in its own name

a8 principal. As in the Astoria case, clear distinction

is made in the contract itself between the owner or

eieiaiealaneaeerteel 2 es

Hie x

AF

: Bh pi

adiralenetner babe Hal

rights or obligations of the parties depend upon any

action of the United States as distinguished from that

of the owner. An analysis of this contract may be

8

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15

é fila kelicatiog the distinction between the United

States and the Fleet Corporation, in each of the three

< ion contracts, it was provided that the contract

“might not be assigned without the consent of the “Owner”

= (Fleet Corporation), but that payments due or to be-

come due might be assigned for the purpose of obtaining

c ‘credit for further construction (fols. 204, 265, 324). Of

_ these provisions the first would have been superfluous if

‘the contract were with the United States, and the second

yoid (R. S. 3737, 3477).

The first supplemental contract.

_ On September 30, 1918 the first construction contract

— modified by a supplementary contract (fols. 207-

227). As stated, the contract to which it was supple-

‘mental and which it modified was made by the Fleet Cor-

poration in its own name and without any mention of

the United States. In the absence of clear intent to the

contrary, it must be assumed that in making this supple-

mentary contract, which provided among other things

that the original contract “except as hereinafter modified,

is in full force and effect”, the Fleet Corporation con-

tracted in the same capacity. This conclusion is reen-

sit el s Government o Se al dete ed

extended (flu. 201-218) In case of delay, the Owner may

vessel, te. ‘and the wer shall thereupon

ore ts ane the United States S Board a tull

ga lage seemed plow pan Title to the “insofar as

Be ve been and approved by the Owner, shall be in the

States America, but title to materials for use in the work shall

16

forced from an examination of the contract itself. Ags

in the Astoria case, no significance attaches to the fact

that the Fleet Corporation is recited in the preamble as

“representing the United States”. Other than this, the

contract contains no reference to the United States, and

the rights and obligations as in the preceding contracts

are expressed to be those of the Fleet Corporation as the

owner.

The settlement contract.

Disputes having arisen under these several contracts,

a second settlement contract was entered into on March

26, 1920. (Ex. 5, fols. 354 et seg.) This contract is

described as supplemental to the preceding contracts (fol.

399) and modifies the rights and obligations of the par-

ties thereunder.

This contract is recited to be between Groton Iron

Works, party of the first part, and the “United States

Shipping Board Emergency Fleet Corporation, a corpo-

ration organized under the laws of the District of Colum-

bia, representing and acting in respect to all matters here-

inafter contained for and on behalf of the United States

of America (hereinafter referred to as the Owner),

party of the second part” (fol. 354). Immediately fol-

lowing this designation, it is recited that the contractor

has been engaged in constructing vessels “for the Owner”

under certain contracts (fols. 355-356), which the Owner

is willing may be modified (fol. 358), and in the body of

the contract it is provided, among other things, that for

the considerations named the Owner shall be released

from all existing obligations under pre-existing contracts

17

" (fols. 365-366), but that the contractor shall be bound

by all valid existing obligations of the receivers to the

Owner, except as modified by the Agreement (fol. 364),

and that as against the payments to be made under this

settlement contract, the Owner shall be credited with all

"payments heretofore made (fols. 374, 377), and shall

“forthwith be credited with all proper credits heretofore

accrued under the pre-existing contracts” (fol. 381), all

payments heretofore made by the Owner to the contractor

or to the receivers to be credited upon the amounts due

under this settlement contract (fol. 389). These and

other provisions make it plain that, whatever ambiguity

might otherwise arise by reason of the position of the

words “hereinafter referred to as the Owner” in the

description of the parties at the beginning of the con-

tract, it is the Fleet Corporation which is designated as

the Owner. The contracts referred to in the preamble

as being with the Owner, were contracts between Groton

and the Fleet Corporation. The obligations of the Owner,

released by this settlement contract, were the obligations

of the Fleet Corporation arising under such preceding

contracts and the payments theretofore made by the

Owner, for which it was to receive credit on the pay-

ments to be made under the settlement contract, were

payments made by the Fleet Corporation under such ex-

isting contracts. Moreover, no other conclusion is con-

sistent either with the purpose of the contract or the cir-

cumstances under which it was executed. The purpose

of the contract was to modify the previously existing con-

tracts reviewed above, made by the Fleet Corporation as

principal, to discharge the Fleet Corporation and the

18

contractor from certain obligations created thereby, and

to create others in their place. In the absence of a clearly

expressed intent to the contrary, it must therefore be

presumed that this settlement contract was executed in

the same capacity as those which it modified and to which

it was supplemental, a conclusion which is re-enforced by

the provision in the settlement contract itself, that “ex.

cept as herein otherwise provided, the provisions of the

said contracts and supplements thereto shall remain in

full force and effect” (fol. 399). As in the other con-

tracts reviewed, the undertakings of the party of the sec-

ond part are those of the Fleet Corporation as Owner,

and the obligations of the contractor likewise run to it

and not to the United States. The Owner (the Fleet

Corporation) is to pay the actual cost of the uncancelled

vessels, “any amount of money in excess of that to be

furnished by the Fleet Corporation needed to complete

the said vessels” to be furnished by the contractor (fol.

381). As in the other contracts reviewed, wherever the

United States is mentioned (fols. 368, 392-393) the

phraseology of the contract itself distinguishes between

the United States and the Fleet Corporation, described

either by name or as the Owner.

The statement in the brief supporting the petition (p.

25) that paragraph (e) of Article II (R. 122) allowing

the contractor $500,000 in settlement of “all obligations

of the owner to the contractor, or to the receivers, arising

out of the suspension and cancellation of the three hulls,

10 to 12 inclusive, under Contract 225 S. C., is an agree-

ment which must have been made by the United States

as Owner”, is wholly untenable. Paragraph XVIII of

Contract 225 S. C. (R. 111-112, fol. 335) expressly pro-

19

~~

vided that the contractor should be reimbursed for losses

sustained by such cancellation. Paragraph (e) of Ar-

ticle II of the settlement contract was therefore made by

the Fleet Corporation in settlement of the obligation

which it assumed under this clause in a contract which,

as has been previously established, was entered into by

it as principal. Nor is it clear why, as the Petitioner

argues, the Fleet Corporation was not competent to agree

in its own behalf, as in paragraph 2 of Article III, to

deliver a wooden ship, a wooden hull and certain mate-

tials as compensation for the cancellation of three

wooden hulls under the first construction contract,

whether it then owned such articles or not. As to the

materials, its obligation in that regard extended only to

“such items as the Owner [the Fleet Corporation] shall

have in stock.”

The fact that in this, as in all other provisions of

the contract, it was acting as principal, and that “owner”

teans the Fleet Corporation and not the United States,

is further borne out by the release clause (Article XII,

p. 131), in which the contractor releases both the Fleet

Corporation and the United States, by reason of matters

arising under such contract, except, of course, as

qualified by Article XVI (R. 133), providing that

the earlier contracts shall govern, except as expressly

modified. That is to say, the Fleet Corporation as owner

made a settlement of its own claims and obligations aris-

ing as owner under the preceding contracts, except to

the extent that they remained unmodified and at the same

time took a release for the United States, as a separate

entity.

20

2. That the Fleet Corporation in executing contracts in

its own name, which are on their face contracts of the Fleet

Corporation as principal, was acting under authority of execu.

tive orders of the President under the Emergency Shipping

Fund provisions of the Urgent Deficiencies Act, is immaterial,

The argument in the brief accompanying the petition

is addressed entirely to the proposition that because it is

said that the Fleet Corporation was acting under these

executive orders, the contracts, notwithstanding their

form and substance, were entered into by it as agent of

the United States and not as principal. The effect of

these executive orders was before this Court in the Sloan

case, in United States v. Wood, 290, Fed. 109, affirmed

(per curiam) 263 U. S. 680. In.both cases it was held

that since the contracts were in form and substance

those of the Fleet Corporation, the fact that it was act-

ing under these executive orders of the President did not

render them contracts of the United States.

3. This case is not distinguishable from Sloan Shipyards

v. United States, or United States v. Wood, upon the ground

that all that was determined therein was that the Fleet Cor-

poration was suable on such contracts so made.

This contention, besides being based upon an unwar-

ranted distinction between suability and liability, is in

direct conflict with what was actually decided in the Sloan

case. The argument of the Fleet Corporation in that

case was that the Fleet Corporation was not liable be-

cause it acted as agent only, that the United States was

the real party in interest, and that the contracts in ques-

21

tion were contracts of the United States and not of the

Fleet Corporation. The Court held that the contracts

were the contracts of the Fleet Corporation, executed by

it as principal, and not contracts of the United States,

from which it follows that the Fleet Corporation is liable

as principal on contracts similarly made.

The first of the three cases decided in the Sloan case

(the Sloan case itself) was a suit, among other things,

to set aside a contract alleged to have been extorted by

the Fleet Corporation. The Fleet Corporation, in addi-

tion to claiming that the Fleet Corporation acted as

agent, asserted that the United States was a necessary

party to the suit, because the real party in interest. The

Court ruled adversely, holding that the contract was that

of the Fleet Corporation and that hence plaintisf could

maintain suit to set it aside against the Fleet Corporation

as principal.

The second case (the Astoria Marine Iron Works

case) was a suit for breach of a contract made by the

Fleet Corporation, “representing the United States of

America.” The Court held that the Fleet Corporation,

although acting pursuant to executive orders made in

furtherance of the Act of June 15, 1917, contracted as

principal and could be sued thereon. That is to say, it

held that it could be sued on such contract because, be-

ing the principal therein, it was liable thereunder.

In respect of thc third case (the Eastern Shore case)

the Court said:

“The third case, as we have said, is a claim

of priority in bankruptcy. It was asserted against

the estate of the Eastern Shore Shipbuilding Cor-

poration, in the District Court for the Southern

22

District of New York, under a contract similar

to that last described, made by that company with

the Fleet Corporation ‘representing the United

States of America’ to construct 6 harbor tugs.

The claim was presented by the Fleet Corpora-

tion in its own name, but was put forward by it

as the instrumentality of the Government of the

United States. It was denied successively by the

Referee, the District Court and the Circuit Court

of Appeals, on the ground that the Fleet Corpora-

tion was a distinct entity and that, whatever might

be the law as to a direct claim of the United

States, the Fleet Corporation stood like other

creditors and was not to be preferred. 274 Fed,

893. The considerations that have been stated

apply even more obviously to this case. The order

is affirmed.” (Italics ours.)

The question in that case was one of substantive

right and not of the capacity of the Fleet Corporation

to be sued, and it was because the Fleet Corporation

was held to have contracted as principal and not as an

agent of the United States that the preferences accru-

ing to the latter were denied. Although it has been since

held that such preferences extend only to claims for taxes

(Davis v. Pringle, 268 U. S. 315), and although the

three dissenting Justices concurred in the decision in the

Eastern Shore case alone on this ground, the majority

of the Court did not put its decision on such ground

but upon the ground that the Fleet Corporation was the

principal in the contract.

The decision in each of the cases decided in the

Sloan case, therefore, rested upon the proposition that

the Fleet Corporation executed the contracts in question

23

as principal. The facts and the applicable law in this

case are altogether similar, and the Fleet Corporation,

having executed the contracts as principal, although act-

ing as an agency of the United States, is liable thereon,

even under the rule of Hodgson v. Dexter, 1 Cranch.

#45, and Parks v. Ross, 11 How. 362, relied on by the

petitioner to distinguish this case from the Sloan case.

Subsequently, in United States v. Wood, supra, the

United States sought to enforce by suit in equity a debt

arising from a shipbuilder out of a similar contract,

upon the theory that the Fleet Corporation entered into

such contract as agent for the United States and not as

principal. If it did, any right growing out of its

breach was, of course, that of the United States and

not of the Fleet Corporation, and the United States

could sue thereon. The Circuit Court of Appeals held

that the Fleet Corporation entered into the contract not

as agent but as principal. In this it was affirmed by pro

curiam opinion of this Court upon the authority of

Fleet Corporation v. Wood (title of one of the three

cases decided by the opinion in the Sloan case). It neces-

sarily follows that if the United States could not enforce

the obligation arising under the contract because the con-

tract was that of the Fleet Corporation as principal, the

Fleet Corporation as principal is liable on all such con-

tracts, as well as entitled to recover thereon.

Reference has already been made to the supposed un-

certainty as to the meaning of the Sloan case growing out

of the language of the dissenting opinion. In affirming

United States v. Wood, upon the authority of the Sloan

case, it would appear that this Court had put an end to

all such uncertainty.. The decision of the lower court

24

rested also upon another ground, namely, that even if the

United States were the real party in interest it could not

maintain the suit brought. Unless, by affirming on the

authority of the Sloan case, this Court intended to de-

clare that the substantive rights and obligations of the

Fleet Corporation were those of a principal and not of

an agent, it is inconceivable that it would have affirmed

upon the authority of that case.

4. The cases relied on by the petitioner do not sustain

its contention.

Hodgson v. Dexter, supra, and Parks v. Ross, supra,

were called to the attention of this Court in the Sloan case

(brief of counsel for Fleet Corporation, 258 U. S., at p.

553) in support of the same contention.

Furthermore, Hodgson v. Dexter, supra, and Parks

v. Ross, supra, do not lay down the rule that a public

agent may not be personally liable on a contract made by

him on account of the Government, but only that a pre-

sumption arises that a public officer contracting on behalf

of the Government does not intend to bind himself per-

sonally. It is well settled that an agent may so contract

as to become personally bound. Whitney v. Wyman,

101 U. S. 392; Steamship Bulgarian Co. v. Merchants

Despatch Transportation Co., 135 Mass. 421; Wilder V.

Cowles, 100 Mass. 487; Worthington v. Cowles, 112

Mass. 30; Kean v. Davis, 20 N. J. L. 425; Hall v. Louder-

dale, 46 N. Y. 70; Gerloff v. Carleton, 121 N. Y. Supp.

338; McCarthy v. Hughes, 88 Atl. 984 (R. 1.); Humes

vy. Decatur, Land, etc., Co., 98 Ala. 461, 13 Sou. 368;

Bell v. Teague, 85 Ala. 211, 3 Sou. 861; Simonds ¥.

a

aes

Be

Heard, 23 Pick. 120 (Mass.); Landyskowski vy. Lark,

108 Mich. 500, 66 N. W. 371; Thos. Gordon Malting Co.

v. Bartels Brewing Company, 206 N. Y: 528; Mc-

Brainey v. Heydecker, 8 Misc. 309; Leterman v. Char-

lottesville Lumber Co., 110 Va. 769, 67 S. E. 281; Mer-

rell v. Witherby, 120 Ala. 418, 23 Sou. 994; Hastings

v. Lovering, 2 Pick, 214; Hardman v. Kelley, 19 S. D.

608, 104 N. W. 272; Guernsey v. Cook, 117 Mass. 548;

Campbell v. Porter, 46 App. Div. 628; Story on Agency,

§§ 269, 270, 278.

Even in the case of a public officer the presumption .

arising under the rule of Hodgson v. Dexter may -be

overcome. Gill v. Brown, 12 Johnson, 385; Walker v.

Swartwout, 12 Johnson, 444; Nichols v. Moody, 22 Bar-

bour, 611 (General Term, Sup. Ct. N. Y.); Crowell v.

Crispin, 4 Daly (N. Y.) 100; Woodbridge v. Hall, 47

N. J. L. 388; Knight v. Clark, 48 N. J. L. 22; Timpken

v. Tallmadge, 54 N. J. L. 117, 22 Atl. 996; Cook v.

Irvine, 5 Serg. & R. 492 (Sup. Ct. Pa.) ; Ogden v. Ray-

mond, 22 Conn. 379; Providence v. Miller, 11 R. L. 272.

See also Story on Agency, §§ 302, 303 and 306.

The effect of the decision in the Sloan and W ood

cases is to hold that the presumption, if any, arising from

the fact that the Fleet Corporation was acting as a gov-

ermmental agency, was overcome by the contracts en-

tered into, similar in terms, and containing the same

characteristics as those in suit. Indeed it may be doubted

whether the presumption arising under Hodgson v. Dex-

fer, in respect of contracts entered into by a public offi-

cer, applies, where, as in this case, the agency chosen

by the Government is a private corporation. In the

Sloan case the Court said:

26

“* * * The fact that the corporation was _

formed under the general laws of the District

of Columbia is persuasive, even standing alone,

that it was expected to contract and to stand suit

in its own person, whatever indemnities might

be eres by the United States.” (258 U.S,

570.)

It may not be doubted that the purpose of choos-

ing the Fleet Corporation as the agency to be em-

ployed was to be freed from the restrictions imposed

upon the letting of Government contracts, the carry-

ing on of the activities of Government Departments,

and the disbursement of Government funds. The

Act of June 15, 1917, is itself expressive of such a

purpose, since it provides “that all monies turned

over to the United States Shipping Board Emergency

Fleet Corporation may be expended as other monies

of said corporation are now expended.” This pro-

vision, added in conference, was obviously for the

purpose of permitting the Fleet Corporation, in the

execution of powers which might be conferred upon

it, to act as a private corporation free from govern-

mental restrictions in the use of its funds. If there

be any doubt that such was its purposé, such doubt

is removed by the explanation of its purpose as con-

tained in the statement made by Senator Underwood,

reporting to the Senate for the conferees the Bill

which became the Act of June 15, 1917 (Ex. 13, fols.

1264-1269, R. 422). A private corporation, deliberately

chosen as an agency for the Government for the

purpose of taking advantage of powers conferred

upon it as a private corporation and not possessed

27

by an officer of the Government itself, is clearly liable,

as other private corporations are, on contfacts ex-

ecuted by itself as principal in the exercise of such

powers. As indicated by the excerpt from the opin-

ion in the Sloan case quoted above, it may be doubted

whether the presumption arising in the case of con-

tracts made by a public officer ever arose in respect

of contracts of the Fleet Corporation made under

the circumstances disclosed of record. If so, such

presumption was entirely removed by the contracts

themselves, executed, as in the case cited, by the

Fleet Corporation as principal.

_ It is respectfully submitted that the petition for writ

of certiorari should be denied. :

Freperick H. Woop,

Hersert B. Lee,

W. H. L. Epwarps,

Wit.i1am W. Rosison,

Attorneys for Respondents.