# Opposition Brief — United States Shipping Bd. Merchant Fleet Corporation v. Harwood > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0376%3A05 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 1930 - **Citation:** 281 U.S. 519 ## Text 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 Pf