Petition for Writ of Certiorari — L. N. Jackson & Co. v. Royal Norwegian Government
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FiILxD
EB 2 1950
CHARLES ELMORE CROPLEY
Supreme Court of the United States
Ocroser TeERM—1949
No. 576
L. N. Jackson & Co., Inc.,
Petitioner,
against
Tue Royat Norwecian GovERNMENT,
Respondent.
Oe
PETITION FOR WRIT OF CERTIORARI AND
SUPPORTING BRIEF
CopaL Mintz,
Attorney for Petitioner,
150 Broadway,
New York 7, N. Y.
INDEX
a,
Petition FOR Writ oF CERTIORARI
Judgment Sought To Be Reviewed
| The Opinions Below
The Matter Involved
A Summary Statement of the Facts
The Ratio Decidendi of the District Court
The Grounds of the Reversal
Judge Learned Hand’s Dissent
The Testimony of Defendant’s Representatives
Basis of Jurisdiction
SupportTinG Brier
Preliminary Statement
Summary of Argument
Port I: The Authorities Cited in the Prevailing
Opinion Do Not Countenance the Enunciation—
and Reject the Doctrine—That, Even Though a
Contract Is Valid and Binding, the Law Does
Not Hold the Promisor to Performance If, in the
Circumstances of the Case, it Appears to A
Court That ‘‘In Fairness and Justice’’ the
Promisor Should Not Be Held To His Promise
Summary of the Cases Cited in the Prevailing
li INDEX
PAGE
Pornt II: The Authorities Cited in the Prevailing
Opinion Do Not Countenance ‘‘Governmental
Coercion’’—as Distinguished From Frustration
By Law—As Releasing a Promisor From Lia- |
bility For Non-Performance .................. 4
Pornt III: Other Authoritative Decisions—Decisions
Not Mentioned in the Prevailing Opinion—Rule
Out ‘‘Governmental Coercion’’ As an Excuse .. 4
Pornt IV: No ‘‘New Circumstances’’ Require Or
Justify the Disregard Or Reversal of the Well-
Settled Principles of Law in the Field of Con-
tract Jurisprudence Which Are Involved Here 4
Porst V: The Factual Hypothesis of the Prevailing
Opinion—That the Defendant Was ‘‘Coerced”’
by the Government of the United States Which
Exercised and Exerted an ‘‘Overriding Power”’
—Are Without the Slightest Basis in the Record
and Directly Contrary to the Testimony of the
SE © WOMENS ny. uh cs ceuaebn sv nvce cen 47
Concuiusion: It Is Respectfully Submitted That the
Petition Herein Should be Granted and Writ of
Ces CE OID cc ccc ce ceenasa onde 47
APPENDIX
Testimony of Defendant’s Witnesses George Otto
Mejlaender and Per A. Lorentzen ........... 48-54
TABLE oF CasEs
Allanwilde Transport Co. v. Vacuum Oil Co., 248 U.S.
Ee SE Kéd deuce nkucavocNuRcna pen iwton ances 34
Arkell &€ Douglas v. N. H. Borenstein & Sons, 188
A, EX UR, Kee Bh. Es GH: GSR CEBEB) «on oo ceca 16
ill
PAGE
Baker Castor Oil Co. v. Insurance Company of North
America, 60 Fed. S. 32 (S. D. N. Y. Goddard, J.)
aff’d 157 F. (2nd) 3 (C. C. A. 2), ed. 329 U.S.
7, 14, 17, 35-7, 40-41, 44
Bank Line Ltd. v. Arthur Capell & Co., 1919 A.C. 485 28
Canadian Industrial Alcohol Co. v. Dunbar Molasses
Co., 259 N. Y. 193 (1932)
Cameron-Hawn Realty Co. v. City of Albany, 207
N. Y. 377 (1913)
Carnegie Steel Co. v. U. S., 240 U.S. 156 (1916)...
The Claveresk, 264 F. 276 (C. C. A. 2nd Cir.,, 1920,
Rogers, Hought and Manton, C. J.), affirming
8 a i RS ee aan 34-5
Chicago & Eastern Ill. Rwy. Co. v. Collins Produce
Co., 249 U. S. 186 (1918)
Columbus Railway & Power Co. v. Columbus, 249 U.S.
399 (1919)
Companhia De Navegacao Lloyd Brasileiro v. C. J.
Blake Co., 34 F. 2d 616, 619 (2nd C. 1929)
Day v. U. S., 245 U. &. 159 (1917)
Edward Maurer v. Tubeless Tire Co., 285 F. 113
(C. C. A. 6th Cir., 1922)
E. Hulton & Co., Lid. v. Chadwick & Taylor, 34 T. L.
R. 230 (1918)
Eppens, Smith & Wiemann Co. v. Littlejohn, 164 N. Y.
187 (1900)
F. A. Tamplin Co. v. Anglo-Mezxican Co., 1916, 2 A. C.
Gottesman v. Canada, Atlanta & Pacific Steamship
Co., 259 F. 298 (E. D. N. Y., 1919)
The Isle of Mull, 257 F. 798 (D. C. Md. Rose, D. J.,
1919) reversed 278 F. 131 (4th C. 1921) e.d. 257
SS ee eT re er eee eee 22-3, 28, 39
Joseph Constantine Steamship Line Ltd. v. Imperial
Smelting Corp., Ltd., 1941 2 ALL Eng. R 165. .28-30, 39
** Julian Blake’’, 107 U. S. ee pers 2
The Kronprinzessin Cecile, 244 U.S. 12 (1917) ...... 26-7
Krulewitch v. National Importing & Trading Co., Inc.,
195 A. D. 544, 186 N. Y. S. 838 (1921)........... 16
L. N. Jackson & Co. v. Seas Shipping Co., Inc, 185
SE cates bab cae and 6 O48 bale A AOS «cK aeE 38
Madeirense Do Brasil 8/A v. Stulman-Emrick Lum-
ber Co., 147 F. 2d 399 (C. C. A. 2nd Cir. 1945),
“SS 4 GERRI Cet SE ra SET OE es 16, 314
Mawhinney v. Milbrook Woolen Mills, 231 N. Y. 290
Nia nk he Cin 55 ths ashhi ot eoed heen ccknn 37
Megan v. Updike Grain Corp., 94 F. 2d 553 (8th C.,
DE Sat Giada cee ake atin awk eabandnd bah cdnee 16
Moore & Tierney, Inc. v. Roxford Knitting Co., 250 F.
278 (N. D. N. Y. 1918), aff’d 265 F. 177 (2nd C.),
ee ee es rere 24-6, 37, 41
BE chia cd x bKCMAN RAE CANRLS a Soe eee KER e AE 10, 39
New York Trust Co. v. Securities Exchange Commis-
ston, 131 F. 2d 274 (C. C. A. 2nd Cir., 1942), ed.
Bs i AK bath aed ae w Ramen eaaan sob 0 40k <eaws 35
Nitro Powder Co. v. Agency of Canadian Car & Foun-
Gry Cé., SEB RB. TF. BOO CIBER). wns ccc encsavcs 378
Northern Pacific Railway Co. v. American Trading
Coy 190: U0. G. GBD (BOE) «6:5 ins ctnwsivtcas 16-17, 34, 4
119 5th Avenue v. Tatyo Trading Co., Inc., 190 Mise.
ee 2 eS 6 Res eee eerreree 16
Patch v. Solar Corp., 149 F. 2d 558 (C. C. A. 7th
Cir., 1945), ed. 326 U. S. 741
The Poznam, 276 F. 418 (S. D. N. Y., 1921)
Raner v. Goldberg, 244 N. Y. 439 (1927)
Richards € Co. v. Wreschner, 174 A. D. 484, 158
N. Y. S. 1129 (1916)
Rubin v. Dairymen’s League Co-Op. Assn., Inc., 284
The Simmons Transportation Co. v. Alpha Port-
land Cement Co., 286 F. 955 (S. D. N. Y., 1922)
State Mutual Life Assurance Co. v. Gruber, 269 A. D.
170, 54 N. Y. S. 2d 720 (1945)
Sun Printing € Publishing Assn. v. Moore, 183 U. S.
642, 654-5 (1901)
Swayne € Hoyt v. Everett, 255 F. 71 (9th C.,
16, 17, 46
The Texas Co. v. Hogarth Shipping Co., 256 U. S.
619 (1921)
Thaddeus Davids Co. v. Hoffman-LaRoche Chemical
Works, 178 A. D. 855, 166 N. Y. S. 179 (1919) ... 16
The Tornado, 108 U. S. 342 (1882)
W. J. Tatem, Ltd. v. Gamboa, 1939 1 K. B. 132 ....
Watts, Watts & Co. v. Mitsui, 1918 A. C. 119
TABLE OF STATUTES
Act of May 31, 1941, 55 Stat. 236, amending Act of
June 28, 1940, 50 U. S. C. A. App. Section
1152(a) (7)
Act of June 6, 1941, c. 174, 55 Stat. 242,50 U.S. C. A.
App. Section 1271
vi INDEX
PAGE
National Defense Act of June 3, 1916, c. 134, 39 Stat.
BD £50 bees b wees boob ee eeks GO abe Wesneninnns 25, 37
Naval Appropriations Act of March 4, 1917, c. 180,
PE AEE cue kn iwd al Can eh Ekes wd dea CA0K As 3
Ship Warrants Act, 55 Stat. 591, U. S. C. Title 50,
Appendix, Section 1281, et seq. ............. 5, 6, 9, LL
28 U. S. C., Section 1254, Subdivision 1 (Public Law
773—S0th Comgress) .........ccccccccccceess 13
TaBLE or TEXTS
Corbin, ‘‘Frustration of Contract in the United
States of America’’, 29 J. Comp. Leg. and Inter.
oe, SF es Se errr Pret iee 8
Dodd, ‘‘Impossibility of Performance of Contracts
Due to Wartime Regulations’’, 32 Harv. L. Rev.
Serer rerrrr rt rr err re Tree 3
Frey, ‘‘Contract Defaults and Cancellations in War-
ae Pere creer ee eee i
Pedrick and Springfield, ‘‘War Measures and Con-
tract Liability’’, 20 Texas L. Rev., 710 ........ 10
Supreme Court of the United States
Ocroser TermM—1949
No.
yp.
v
L. N. Jacxson & Co., Inc.,
Petitioner,
agaist
Tue Roya Norwecian GoveERNMENT,
Respondent.
dp
v
PETITION FOR WRIT OF CERTIORARI
To roe HonoraBLE SuPREME Court OF THE UNITED STATES:
L. N. Jackson & Co., Inc. (a New York corporation),
hereby respectfully petitions this Court to issue a writ
of certiorari to the United States Court of Appeals for
the Second Circuit to certify to this Court, for review
and determination, its proceedings and final judgment,
rendered on November 10, 1949 (with the dissent of Chief
Judge Learned Hand), reversing a $91,384.52 judgment in
plaintiff’s favor against the Royal Norwegian Government
and directing the dismissal of the complaint.
The judgment so reversed had been rendered by the
United States District Court for the Southern District of
New York on March 3, 1949 after trial before Goddard, J.,
without a jury (R. 340-1).
2
A timely petition for rehearing was filed on November
23, 1949, and was denied on November 29, 1949 (R. 364
385).
This action was commenced in the referred to United
States District Court on November 27, 1946, by the filing
of the complaint and issuance of summons (R. 2-8). Those
were served on November 29, 1946 (R. 1). Issue was
joined on April 29, 1947 (id). The action was tried
before the Hon. Henry W. Goddard, without a jury, on
December 27-29, 1948 (id). An opinion was rendered on
February 9, 1949. Findings and conclusions were signed
on March 2, 1949. Judgment followed on March 3, 1949
for damages in the sum of $64,190.00 plus interest of
$27,096.95 plus costs of $94.56, making in all $91,384.51.
The Royal Norwegian Government duly appealed to the
United States Court of Appeals for the Second Circuit.
That Court (composed of Judges Learned Hand, Thomas
W. Swan and Charles E. Clark), rendered its opinion,
decision and judgment, as noted above, on November 10,
1949, Chief Judge Hand, dissenting.
After the denial of a petition for rehearing, the Court
of Appeals issued its mandate on November 30, 1949.
Judgment in accordance therewith was entered in the
District Court on December 9, 1949.
The Opinions Below
The opinion of the trial court appears at pages 326-335
of the record and is reported in 83 F. Sup. 486.
The reversing opinion of Clark, C. J., concurred in by
Swan, C. J., and the dissenting opinion of Learned Hand,
C. J., are reported in 177 F. 2d 694 and appear at pages
347-362 of the Record. |
Digests of the opinions appear at pages 6-12, infra.
The Matter Involved
The matter involved is the exoneration of a promisor
from the payment of damages caused by his total non-
performance of an unqualified commercial contract—where
such non-performance is claimed to have arisen from, or
been due to, compliance by the promisor (who owed ne
allegiance and was not subject to the laws of the United
States) with an earlier voluntary and at-will contract with
the United States.
The exculpating decision by the majority of the Court
of Appeals appears to be an unprecedented departure
from all prior decisions on the point.
Performance in this case cannot be said, and has not
been said, to have been rendered impossible by the de-
struction or governmental requisition of the res or of the
means of performance nor by a supervening contingency
beyond the promisor’s control nor by the intervention
of superior power or force; nor was performance pro-
hibited by law or any act having the force of law.
Thus none of the hitherto recognized grounds of exculpa-
tion applied.
Acknowledging that, the opinion of the reversing two
Cireuit Judges rested their decision on a liberal appli-
cation of a philosophy, quoted from Professor Dodd’s
“Impossibility of Performance of Contracts Due to War-
Time Regulations’, 32 Harv. L. Rev. 789, 791, that
“Courts are free to regard the problems arising out of
governmental interference in war-time as to a large de-
gree sut generis, and that they need not adhere strictly
in cases of this sort to the precedents which have been
established in the law of impossibility of performance in
- general, but are at liberty to reach the results most con-
‘sistent with justice and public policy, as long as these
--Tesults can be obtained with due regard to the more funda-
mental principles of the law of contracts’’ (R. 351).
4
A Summary Statement of the Facts
On November 7, 1941, in New York, by a contract in
writing (Plif’s. Ex. 1, R. 239-240, admitted at R. 62-3) which
expressed no qualifications or reservation, The Royal Nor.
wegian Government (acting through a domestic berth
agent) undertook to transport to the plaintiff in New York
from Beira in Africa 1,000 tons of copra, at $22.00 per
ton, by a vessel named the ‘‘Tropic Star’. ~
The vessel was ‘‘owned, operated, controlled and man.
aged’’ by The Royal Norwegian Government and flew the
Norwegian flag (finding 3, R. 336). It was then in Africa
(finding 7, R. 337). It had not been here for a year, if at
all (R. 113).
After consented to delay in the commencement of the
voyage and while the copra was awaiting loading, ‘‘deiend-
ant notified the plaintiff on December 23, 1941 that pursv-
ant to the orders of the United States Maritime Commis-
sion, plaintiff’s shipment of copra * * * was cancelled”
(finding 8, R. 337).
The referred to ‘‘orders’’ were a telegram from an
assistant director (one of a number) of the United States
Maritime Commission to the berth agent in New York:
‘*Tropic Star due to requirements for critical strategic
commodities please cancel booking 1,000 tons of copra,
substitute sisal wool. Confirm’? (Defendant’s Exhibit E,
R. 279, admitted R. 133). The substance of this was re-
iterated by the same assistant director in a telegram on
January 2, 1942 (Defendant’s Exhibit G, R. 280, admitted
R. 135).
Thereafter, defendant refused and failed to load and
carry plaintiff’s copra. In place thereof, it carried 1,00
tons of wool, at $56.00 per ton (R. 220, 234). Thus non-
performance of the contract with the plaintiff resulted in
a profit to the defendant of $34,000.
Wool and copra had precisely the same O. P. M. strategic
rating of C (R. 295), and according to O. P. M.’s official
certification, there was no O. P. M. directive for priority
5
of one over the other (R. 293-4). It was the O. P. M.
which determined and certified to the Maritime Commis-
sion the relative strategic needs (R. 139, 144-52, 175-9,
215-216, 218).
The assistant director of the United States Maritime
Commission who had sent the telegrams testified that he
did so on his own initiative, without consulting, or report-
ing to, any of his superiors or the legal department; he
consulted neither as to the policy nor authority to direct
or request a breach of an unqualified contract, which, as
here, had been entered into after consultation with, and
approval by, the Commission (R. 159-160, 205-9). His im-
mediate superior testified that he had not been consulted,
nor informed, and that the matter of ordering ship owners
to cancel shipping contracts had never been taken up by
him or the Commission (R. 139, 144-7). The matter was
not covered by any instructions or regulations (R. 147,
207). A request or directive to cancel a specific contract
was without precedent (R. 190).
A month before contracting with the plaintiff—on
October 4, 1941—‘‘defendant voluntarily filed’’ with the
United States Maritime Commission, an ‘‘ Undertaking for
Merchant Ship Warrants’’ under the Ship Warrants Act
of July 14, 1941 (55 Stat. 591, U. S. C. Title 50, Appendix
See. 1281, et seq.). The ‘‘undertaking’’ was ‘‘in respect
to the vessels described in Schedules A and B attached
hereto’’. The ‘‘Tropic Star’’ was not included in any
schedule filed prior to April, 1942. (Finding 5, R. 536;
Defendant’s Exhibits B, C, J, R. 259-278, 283-4, admitted
R. 85, 95, 136). The trial court, however, found that the
“Undertaking’’ which the defendant ‘‘voluntarily filed’’
om October 4, 1941 was ‘‘for all its ships which would or
might come to United States ports’’ (Finding 5, R. 336).
The ‘‘Undertaking’’ specified no period of duration.
Its at-will character (Rubin v. Dairymen’s League Co-Op.
Assn., Inc., 284 N. Y. 32) was emphasized by provisions
that ship warrants were surrenderable at the will of the
6
holder and revocable at the will of the Commission (R.
261).
After the filing of the ‘‘ Undertaking’’ as before, and in.
cluding November and December, 1941, and January, 1942
according to the uncontradicted testimony of the repre.
sentatives of the defendant as witnesses for the defend.
ant, defendant at all times dealt with the United States
Maritime Commission not on a basis of command and
obedience but on the basis of mutual consultation and
mutual agreement; there never was a taking of orders (R.
69-70, 74-76, 109-112, quoted in the Appendix, pp. 48-54,
infra).
‘‘The facts found by the [trial] court’’, the defendant
said in its brief to the Court of Appeals, ‘‘are, generally
speaking, deemed correct with the exception of finding No.
10 (F. 1011) which a conclusion of law.’’ The referred
to finding 10 is: ‘‘This intervention of the United States
Maritime Commission was an event which was foreseeable
by the defendant at the time it entered its contract with the
plaintiff and was a condition that could and should have
been provided for in the said contract’’ (R. 337).
The Ratio Decidendi of the District Court
The District Court held that defendant’s contract with
the United States Maritime Commission having been er-
tered into—voluntarily—on October 4, 1941, the defendant,
at the time of contracting with the plaintiff on November
7, 1941, ‘‘knew or should have known’’ that the latter was
‘subject to the conditions and potential limitations of
the Ship Warrants Act’’ and if defendant expected to be
excused from performing in the event of a conflict with its
obligations under the earlier contract with the Maritime
Commission, a condition to that effect ‘‘could and should
have been provided * * * in the contract with the plaintiff”
(findings 9-10, R. 337). ‘‘* * * the defendant cannot claim
that the orders of the Maritime Commission were not fore-
seeable’’ even though it be assumed that it ‘‘did not ex
pect the outbreak of war nor anticipate that the Maritime
7
Commission would exercise the rights granted under the
Ship Warrants Act’’ (opinion, at R. 333).
The District Court held further (R. 333-4) :
“To establish the defense of frustration it must
appear that the one asserting it had not been instru-
mental in bringing about the intervening event either
by positive action or acquiescence, and the act of
government which is alleged to have frustrated the
performance of the contract must be one in its sover-
eign capacity, a vis major or in the nature of a vis
major. * * *
‘‘Where one voluntarily by contract places ships
under government order, the doctrine of frustration
does not apply. * * * It further appears that the act
of the Maritime Commission in requesting the cancel-
lation of the booking of plaintiff’s copra was not an
exercise of vis major, but merely the exercise of a con-
tractual right granted to it by the defendant. Baker
Castor Oil Co. v. Insurance Company of North
America, 157 F. (2nd) 3 (C. C. A. 2).”’
The Grounds of the Reversal
In reversing the judgment of the District Court, Judges
Clark and Swan, in an opinion written by the former, held,
in substance, as already indicated, that the doctrine of
the inexorableness of the obligation to perform a contract,
except as expressly or impliedly qualified by the terms of
the contract itself, has been undergoing a process of
progressive relaxation and that it was time to pronounce
the rule to be that non-performance is excused when, in
“fairness and justice’, a party should not be held to his
contract. They held further that in this case it was
unfair and unjust to hold The Royal Norwegian Govern-
ment in damages for its non-performance because it
seemed to them [without proof] that the Norwegian Gov-
ernment acted under ‘‘governmental coercion’’ by the
United States and, further, in laudable cooperation ‘‘with
8
the war effort’’ in which the two governments were jointly
engaged as allies.
In this connection, the opinion of Judge Clark states:
‘*Here the parties, the court below, and the state court
have framed the issue in terms of the ‘frustration’
of a contract; but that, as Professor Corbin has said,
may be ‘only perpetuating the use of a bad term to
state the result.’ Corbin, Frustration of Contract in
the United States of America, 29 J. Comp. Leg. & Int.
L., Pts. III and IV, pp. 1, 7 * * * And since the
parties may have stipulated as to, or at least had in
mind, the very occurrence, the issue becomes one as
to the fairness and justice of excusing performance
in the light of the circumstances affecting the parties
at the time they made their contract. [R. 352]
‘* * * To us the overriding power of the American
government seems so clear. * * * [R. 352-3]
‘*Finally the assertion that defendant, as a sov-
ereign power, was not bound to obey the commands
of an ally overlooks the realities of defendant’s
position, as well as the terms of its own comnit-
ment. This was a year and a half after the German
invasion of Norway. Defendant was then a gover-
ment in exile. Neither then nor later did it give sign
of lack of loyalty to the allied cause; and it was one
of the twenty-six countries which on January 2, 1942
subscribed to the ‘Declaration by the United Nations,
as a pledge to pursue a common purpose against a
common foe and to co-operate with each other in their
common struggle. It was not likely, therefore, that
it would join with the three countries of known Fascist
sympathies—Argentina, Portugal, Spain—against the
vast body of the world’s neutral merchant marine, in
refusing to accept the Ship Warrants system. Had it
done so, the President’s power to requisition foreign
merchant vessels in American waters had already been
granted by the Act of June 6, 1941, c. 174, 55 Stat
242, 50 U. S. C. A. App. § 1271, and was available for
9
as effective use here’ as was its operation against, for
example, the Danish vessels. * * * And the reality
of the coercion upon the defendant to carry the wool,
instead of the copra, is not subject to doubt upon this
record.’ [R. 353-4]
Turning ‘‘to the controlling question that the defend-
ant’s promise was so without exception in law, that not-
withstanding the governmental coercion, it must pay the
plaintiff’s lost profits on the transaction’’ (R. 354), Judge
Clark stated that the District Court’s ‘‘approach prac-
tically puts the burden upon the promisor to show non-
foreseeability’’ of the interfering contingency (R. 355).
That was ‘‘too heavy a burden upon the defendant’’ (R.
355). It ‘‘passes belief’’ that the plaintiff did not know
on November 7, 1941 that defendant’s vessels had been
placed under the Ship Warrants Act—although no evidence
was presented by either party of such knowledge by the
plaintiff or its shipping brokers (R. 356). ‘‘ Plaintiff
should have known of the existence and operation of the
system substantially as fully as the defendant. * * * De-
fendant could reasonably, have so concluded, and hence
** * there was no arbitrary® obligation on the defendant
to protect itself by express stipulation against the opera-
tion of the system’”’ (R. 356).
‘After all, we need not consider what would have been
the legal effect of a direction from the Maritime Com-
mission for the substitution of a cargo in the place
of the one contracted for had it been given before
1 This argument overlooks (a) the realities of international inter-
course and (b) also the fact that the statute applied only to merchant
vessels “lying idle in the waters within the jurisdiction of the United
States’. Most of defendant’s vessels, including the Tropic Star,
were not in the United States (R. 96, 99, 112).
_* The record contains not an iota of evidence of such coercion ;
directly to the contrary is the testimony of only defendant’s own
witness (see appendix, infra, pp. 48-54).
* Why call it “arbitrary”?
10
December 7. That did not happen. It is clear that
the Maritime Commission, which originally suggested
the availability of the ‘Tropic Star’ to Seas Shipping
for this voyage, expected the arrangement to be car.
ried out, as did all the other parties at the time it
was initiated. Actually it was the Pearl Harbor
calamity, the resulting wars over the world, and the
immediate shipping crisis which furnished the real
oceasion for the chain of events precipitating this case,
To say that this, the greatest naval disaster in our
history, was unexpected is of course an understate.
ment.’’ [R. 357]
e . * *
‘‘Finally we turn to an important enunciation of
public policy in situations of this sort as made by
Congress in the Act of May 31, 1941, 55 Stat. 236,
amending the prior act of June 28, 1940, and now set
forth in 50 U. S. C. A. App. §1152(a)(7). This aet
authorized the President to assign priorities on de
livery of materials and then provided: ‘No person,
firm or corporation shall be held liable for damages or
penalties for any default under any contract or order —
which shall result directly or indirectly from his con-
pliance with any rule, regulation, or order issued
under this section.’ (Later it was amended to add that
this should be so, even though the rule, regulation,
or order should thereafter be declared invalid.) Since
the Commission’s order was a step to carry out the
priority requirements as established by the Office of
Production Management, there is ground for asserting
that this statute is directly applicable to the circum-
stances of this case. Pedrick and Springfield, supra,
at 719; ef. Nash v. Southern Pac. Co., D. C. N. D. Cal,
260 F. 280, 284. But we need not go that far here in
view of the basis we find in the common law for our
conclusion. At the very least the Act, particularly
against the background of its legislative history, is
ample demonstration of the legislative view that per-
11
sons co-operating with the war effort should not be
held liable for civil damages because of their acts.
Frey, supra at 169. It thus re-enforces and supports
the common-law principle.’’ [R. 359-360]
That disposition of the case, petitioner verily believes,
ignores the facts as found by the trial court despite de-
fendant’s concession of the correctness thereof, ignores
“the issue’ as ‘‘framed’’ by the parties and tried and
decided by the District Court (see Judge Clark’s opinion
at R. 352) and postulates facts which have no basis in the
evidence and are contrary to the evidence, and lays down
rules of law contrary to those which heretofore have pre-
vailed.
Judge Learned Hand’s Dissent
In dissenting, Chief Judge Learned Hand noted the ab-
sence of evidence that at the time of contracting the plain-
tiff knew ‘‘that the defendant had already consented to
take out warrants under the [Ship Warrants] Act’’ (R.
361-2). ‘‘For this reason,’’ he continued (R. 361-2),
‘in the case at bar the defendant’s excuse is to be
judged as though it had not in fact consented to
take out warrants for all its ships; and, while I agree
that we cannot say affirmatively that our entrance into
the war would not in that case have excused the de-
fendant’s performance, this record does not satisfy
me that it would. True the plaintiff did urge upon
the Commission that a cancellation of its contract
would involve it in loss, and the Commission was ob-
durate; but, the defendant was in a much weaker
position to press such a claim because of its consent.
Perhaps it would not have been successful had it not
consented; but I do not see how we can say that a
priori. After all, although it was at the time a feeble
government in exile, it represented a friendly power
and an ally, which by hypothesis had not yet agreed to
12
pool its many ships; and surely it would have bee
highly desirable to us that it should do so voluntarily,
I do not suggest that the Commission could not have
forced it to comply, but I do suggest that it might have
thought that less than one third* the cargo space of
the ‘Tropic Seas’ was not a stake which would have
justified coercive measures, while the defendant’s won-
sent still remained in abeyance; or indeed a stake
which, all things considered, would have justified even
a request to repudiate its contract with the plaintiff.
Whether such a request unaccompanied by any in-
timation of coercion would have been an excuse is a
question which I am not prepared to answer, and it
is not necessary to do so, since my views are not to
prevail.
‘‘Therefore, I think that the defendant had the
burden of proving (1) either that the Commission
would have coerced or at least would have requested
the defendant to repudiate its contract; or (2) that
the plaintiff would have engaged the space in the
‘Tropic Seas,’ even if it had known that the defend-
ant had already consented to take out warrants for
its ships. Strictly, we might therefore affirm the judg-
ment because of this failure in the proof; but that I
think would be scarcely just for the trial was not con-
ducted on any such theory. I would therefore reverse
the judgment; but, instead of dismissing the complaint
I would remand the cause for a new trial.’’
The Testimony of Defendant’s Representatives
Not only is the record barren of any evidence of the
hypothesized ‘‘governmental coercion’’; but supposition
thereof, on the basis of alleged historical perception or in-
tuition, is precluded in this case by the affirmative testi-
—
“Actually it was only approximately one-eighth, for the vessel
carried 7,806 tons (R. 219).
13
mony of defendant’s representatives negativing and dis-
avowing subservience by defendant to the government of
the United States. That testimony is reproduced in an
appendix hereto (pp. 48-54, infra).
Basis of Jurisdiction
This petition is presented pursuant to, and invokes this
Court’s jurisdiction under 28 U. S. C., Section 1254, sub-
division 1 (Public Law 773—80th Congress).
The Questions Herein
In the light of the ground taken in the fourteen page
opinion of Judges Clark and Swan, the questions presented
herein are:
1. Was the defendant mistaken in formulating and
urging its defense in terms of ‘‘frustration’’ by the law,
and is ‘governmental coercion’’ (assuming its existence)
—as distinguished from legal prohibition—sufficient to
excuse from performance?
2. Is the true test of legal liability for non-performance
of a contract (which, in terms, is unqualified), whether ‘‘in
fairness and justice’’ as viewed by the Court the promisor
should be held to his promise?
3. Is there any evidence in the record of ‘‘ governmental
coercion’? Does the record show that, as postulated by
the prevailing opinion (R. 352-3), ‘‘the American gov-
ernment had and exercised an overriding power’’ over
its ally, the equally sovereign Royal Norwegian Govern-
ment, and that had the latter refused to ‘‘accept the Ship
Warrants system’’ its vessels would have been subject to
“the President’s power to requisition foreign merchant
vessels in American waters’’ under the Act of June 6,
14
1941, c. 174, 55 Stat. 242, 50 U. S. C. A. App. See. 1271
even though under that Act power to requisition foreign
merchant vessels was limited to those ‘‘lying idle in the
waters within the jurisdiction of the United States’’?
4. May it be assumed, in the absence of evidence, that
in November-December, 1941 and thereafter, operation of
vessels without ‘‘warrants’’ issued by the United States
Maritime Commission under the Ship Warrants Act of
July 14, 1941 was so burdensome and impracticable as to
be a practical impossibility, in the face of the evidence in
the record that a number of foreign governments continued
to operate their vessels to and from the United States
without such ‘‘warrants’’ (R. 202-3) and in the face of the
adjudication in Baker Castor Oil Co. v. Insurance Com.
pany of North America, 60 Fed. Sup. 32 (U. S. D. C,
S. D. N. Y., Goddard, J.), affirmed 157 Fed. 2d 3 (C. C. A.
2d Cir.), ce. d. 329 U. S. 800?
5. Were the relied on telegrams from an assistant diree-
tor of the United States Maritime Commission (who acted
on his own initiative without consultation with or knowl
edge of any of his superiors or the legal department of
the United States Maritime Commission) coercive, and did
they constitute ‘‘governmental coercion’’, when the only
evidence in the case, in that regard, is the testimony of
defendant’s representatives that the dealings between the
United States Maritime Commission and the defendant
were on the basis of the equality of the sovereignty of the
two governments and of mutual consultation and agree-
ment and not that of command and obedience?
6. If, as held by the Court of Appeals, the basis or
source of exoneration is defendant’s undertaking on Octo-
ber 4, 1941 under the Ship Warrants Act, can it fairly be
said that the impediment to performance in this case arose
from the ‘‘unexpected’’ ‘‘disaster’’ at Pearl Harbor rather
than the October 4, 1941 agreement with the United States
15
Maritime Commission without which the United States
Maritime Commission could not have exercised any author-
ity in the premises?
7. Where, in pleadings and at the trial, a case is pre-
sented to the District Court on a defense deliberately
formulated and urged by the defendant, and the District
Court renders judgment thereon, and, on appeal, the de-
fendant again presents the case on the same theory and
ground, is it proper for a United States Court of Appeals
not only to reverse the judgment but also dismiss the com-
plaint on a ground and theory formulated by the Court
itself?
8. If the test is what is ‘‘fair and just’’, is it fair and
just that the defendant should retain the $34,000 additional
freight which it received by carrying wool instead of plain-
tiff’s copra? If ‘‘fairness and justice’’ is the guiding
goal, should not the courts in such cases prevent a party
from being enriched by his non-performance, at the expense
and damage of the stranded promisee, by molding a doc-
trine of constructive trust or agency whereby the profit
would belong to the injured promisee?
Reasons for Granting the Writ
1. It is respectfully submitted that the decision sought
to be reviewed constitutes, in the very important field of
contract law, a radical departure from, and a reversal of,
the law which heretofore has prevailed under the decisions
of this Court and the courts throughout the land.
The doctrine ingrained in the common law, it is sub-
mitted, is that fairness and justice require that where there
is a valid contract, the promisor should be held to his
promise (as connoted by the terms used and their fair
implication), regardless of how unexpectedly burden-
some or difficult performance becomes; that the only per-
missible course for one unwilling to assume such a burden
16
is properly to qualify his promise; that it is not fair an
just for one to promise unqualifiedly and then seek to
excuse himself on the ground of unexpected or uwnap.
ticipated obstacles (e. g. Columbus Railway & Power
Co. v. Columbus, 249 U. S. 399 (1919); Carnegie Steel
Co. v. U. S., 240 U. S. 156 (1916); Day v. U. S., 2%
U. S. 159 (1917); Northern Pacific Railway Co. y,
American Trading Co., 195 U. S. 439 (1904) ; Sun Printing
& Publishing Assn. v. Moore, 183 U. S. 642, 654-5 (1901);
Madeirense Do Brasil S/A v. Stulman-Emrick Lumber Co,
147 F. 2d 399 (C. C. A. 2nd Cir. 1945), ¢. d. 325 U. S. 861;
Megan v. Updike Grain Corp., 94 F. 2d 553 (8th C. 1938);
Companhia De Navegacao Lloyd Brasileiro v. C. J. Blake
Co., 34 F. 2d 616, 619 (2nd C. 1929); The Poznam, 276 F.
418 (S. D. N. Y., 1921); Swayne & Hoyt v. Everett, 25%
F. 71 (9th C., 1919); The Simmons Transportation Co.
v. Alpha Portland Cement Co., 286 F. 955 (S. D. N. Y,
1922) ; Gottesman v. Canada, Atlanta & Pacific Steamship
Co., 259 F. 298 (E. D. N. Y., 1919); Canadian Industrial
Alcohol Co. v. Dunbar Molasses Co., 259 N. Y. 193 (1932);
Raner v. Goldberg, 244 N. Y. 489 (1927); Cameron-Hawn
Realty Co. v. City of Albany, 207 N. Y. 377 (1913); Ep
pens, Smith & Wiemann Co. v. Littlejohn, 164 N. Y. 187
(1900); State Mutual Life Assurance Co. v. Gruber, 269
A. D. 170, 54 N. Y. S. 2d 720 (1945) ; Thaddeus Davids Co.
v. Hoffman-La Roche Chemical Works, 178 A. D. 855, 166
N. Y. S. 179 (1919); Krulewitch v. National Importing ¢
Trading Co., Inc., 195 A. D. 544, 186 N. Y. S. 838 (1921);
Arkell & Douglas v. N. H. Borenstein € Sons, 188 A. D.
158, 176 N. Y. S. 581 (1919); Richards € Co. v. Wreschner,
174 A. D. 484, 158 N. Y. S. 1129 (1916) ; 119 5th Avenue v.
Taiyo Trading Co., Inc., 190 Misc. 123, 23 N. Y. S. 2d 774
(1947) ; Watts, Watts € Co. v. Mitsui, 1918 A. C. 119).
That when there is no prohibition by law ‘‘ governmental
soercion’’ affords no excuse for the non-performance of an
anqualified contract was held directly by this court in
Northern Pacific Railway Co. v. American Trading Co.,
supra, 195 U. S. 439 (1904), and, in a case analogous to the
17
one at bar, by the United States Circuit Court of Appeals
for the Ninth Circuit in Swayne & Hoyt v. Everett, supra,
255 Fed. 71 (1919).
Moreover, the very court which decided this case—the
Second Circuit Court of Appeals—in Baker Castor Oil Co.
y. Insurance Company of North America, supra, held that
the “Ship Warrants system’’ under the Ship Warrants
Act of July 14, 1941 was not coercive in the sense of afford-
ing an excuse, ‘‘as a restraint of princes’’, for deviation
from a later contract.
The prevailing opinion, it will be observed, relies heav-
ily and almost exclusively on the writings of several schol-
arly authors who have urged that the decisions in this field
of law are outmoded and should be abandoned. Such
a departure from established law, it is urged, should be
considered and reviewed by this court before it is allowed
to become the law of the land.
It seems to petitioner particularly appropriate that
there be a review by this court in the light of the fact that
the judges below have divided evenly—2 to 2—District
Judge Goddard and Chief Circuit Judge L. Hand holding
one way and Circuit Judges Clark and Swan holding the
other way.
2. The Court of Appeals for the Second Circuit being
located in the business nub of the country, its decision
herein is bound very substantially to affect the course of
decision in that most important business section of the
world. The decision (if not reversed), of course, will be
binding as a precedent on the federal courts in that circuit.
In addition, because of the prestige and high repute of that
court, the decision is likely to influence the course of de-
cision in many other jurisdictions, State and Federal.
If the decision is erroneous, the injustice and error which
it will thus work should, it is submitted, be avoided.
Bc
18
Moreover, since the decision is a conscious and almost
express alteration of the law as previously expounded and
applied, petitioner respectfully urges that the decision
should be reviewed and considered by this Court before it
has a revolutionary effect on this branch of contract lay,
3. The decision sought to be reviewed casts a serious
reflection upon the Government of the United States, in
the assumption that because of the distress in which the
Royal Norwegian Government found itself as a result of
its having been overrun by the Hitler forces, ‘‘the Amer.
ican Government had and exercised an overriding power”
over the Norwegian Government and subjected the latter
to ‘‘coercion’’ under threats of taking measures in respect
to its vessels and property somewhat akin to the force
which Hitler had exercised.
As already pointed out, the defendant has made no such
representation; its witnesses testified directly to the con.
trary; no one has made a charge of that character.
4. The decision is of substantial importance to the
plaintiff since it deprives it of an over $91,000 judgment.
If, as is verily believed, that decision is contrary to the
law and is contrary to the course of decision which here-
tofore has been followed by this court and the courts
throughout the land, there is here a deprival which, it is
submitted, it would be unjust not to correct.
The Appended Brief
A more detailed consideration of the decision sought to
be reviewed and its abandonment of ingrained precedent
appears in the appended brief.
19
Prayer
Wuenerore petitioner respectfully prays that this Peti-
tion for a writ of certiorari to review the complained of
judgment be granted.
Dated, New York, February 1, 1950.
L. N. Jackson & Co., Inc.
By Copa Mintz,
Attorney for Petitioner.
Supreme Court of the United States
OcrosErR TeERM—1949
No.
’™
v
L. N. Jackson & Co., Ine.,
Petitioner,
against |
THe Roya Norweeian GoveRNMENT,
Respondent.
>
7
PETITIONER’S BRIEF IN SUPPORT OF THE
FOREGOING PETITION FOR A
WRIT OF CERTIORARI
Preliminary Statement
Since the foregoing petition contains an adequate state-
ment of the opinions below (pp. 2, 6-12, supra), the basis
of jurisdiction (p. 13, supra), the facts, to the extent
material (pp. 3-6), and the questions involved (pp. 1314,
supra), those matters are not repeated here.
This brief is intended merely to supplement the petition
in only one respect—to demonstrate that the 2 to 2 prevail-
ing decision herein is a radical departure from, and cot
stitutes a reversal of, the law in such a vital branch of
jurisprudence as the law of contracts.
20
21
Summary of Argument
L The authorities cited in the prevailing opinion do not
countenance the enunciation—and reject the doctrine—
that, even though a contract is valid and binding, the law
does not hold the promisor to performance if, in the cir-
cumstances of the case, it appears to a court that ‘‘in fair-
ness and justice’’ the promisor should not be held to his
promise (pp. 22-44, infra).
IL The authorities cited in the prevailing opinion do
not countenance ‘‘governmental coercion’’—as distin-
guished from frustration by law—as releasing a prom-
isor from liability for non-performance (p. 44, infra).
IIL Other authoritative decisions—decisions not men-
tioned in the prevailing opinion—rule out ‘‘governmental
coercion’? as an excuse (pp. 44-46, infra).
IV. No ‘‘new circumstances’’ require or justify the
disregard or reversal of the well-settled principles of law
in the field of contract jurisprudence which are involved
here (p. 46, infra).
V. The factual hypothesis of the prevailing opinion—
that the defendant was ‘‘coerced’’ by the Government of
the United States which exercised and exerted an ‘‘over-
riding power’’—are without the slightest basis in the
record and directly contrary to the testimony of the de-
fendant’s witnesses (p. 47, and appendix, pp. 48-54, infra).
22
The authorities cited in the prevailing opinion do
not countenance the enunciation—and reject the
doctrine—that, even though a contract is valid and
binding, the law does not hold the promisor to per
formance if, in the circumstances of the case, it ap.
pears to a court that “in fairness and justice” the
promisor should not be held to his promise.
This brief does not undertake an examination of the
authors referred to in the prevailing opinion, nor a com-
parison of their writings with views on the subject ex-
pressed by other eminent writers, for—whatever may be
the impact of those dissertations on the minds of the judges
—there necessarily is a variance between the products of
such unilateral thinking and the legal principles which the
courts apply as the result of their long course of resolving
concrete conflicts, in the light of the fuller understanding of
all sides wrought by adversary presentation and scrutiny.
Therefore, we proceed to test what is said in the prevail-
ing opinion of Judge Clark with the cases therein referred
to—in the order in which they appear therein.
The Isle of Mull, 257 F. 798 (D. C. Md. Rose, D. J., 1919),
reversed 278 F. 131 (4th C. 1921), ¢.d. 257 U. S. 662, was a
case of true frustration of a charter party by the lawful
requisition by the British Admiralty of the chartered
British vessel owned by a British corporation.
The District Court, recognizing the frustration, never-
theless held that, as a matter of justice and equity, the char-
terer should receive the amounts which the owner was paid
by the British Admiralty in excess of the stipulated charter
hire during the period of the charter party, for, otherwise
the frustration and consequent non-performance would
result in the enrichment of the non-performer at the ex-
pense of the promisee.
__.<gals
The Circuit Court of Appeals was much impressed with
the justice of that determination and catalogued ‘‘the
strong reasons in favor’’ of it. Nevertheless it felt itself
constrained to reverse the judgment for the amount of the
owner’s enrichment because, as a matter of law, the actual
requisition by a government in the exercise of its govern-
mental power over its nationals and over its ships ‘‘com-
pletely frustrated the contract and put an end to all rights
of both parties.’’ The Circuit Court discountenanced the
embarking by the courts on an effort to adjudicate con-
troversies over business contracts in accordance with a
judge’s appraisal of the equities, in these words (at p. 135):
-
“The hardship of applying [the rule of law] to some
cases in the meantime cannot be denied, but it will be
found in the practical administration of justice better
to allow even this hardship than for courts to enter
upon the confusing, if not impossible, task of adjusting
the equities. * * * The effort to measure [the] * * * fac-
tors entering into the adjustment of the equities would
involve the parties in intricate and costly litigation
and delay.’’
Certiorari was denied by this Court.
The Texas Co. v. Hogarth Shipping Co., 256 U. S. 619
(1921), likewise, was a case of true frustration by lawful
governmental requisition. There is nothing in the facts or
opinion in that case which lends support to the opinion of
Clark, J., in this case. The subject of the charter party
in that case was a British vessel owned by a British corpo-
ration. ‘‘While in British waters and being provisioned
for the intended voyage’’ the vessel ‘‘was requisitioned by
the British Government and pressed into war service’’ (at
p. 626). ‘*The owner made the usual preparations for com-
plying with the charter party, earnestly sought to prevent
the requisitioning of the vessel, urged the existence of the
charter party as a reason for leaving her free, and
24
respected the requisition when made, because no other
course was reasonably open”’ (at p. 627).
Upon those facts this Court said (at pp. 627-8):
‘* As the ship was British and in British waters and the
owner was a British corporation, the power of the
British Government to requisition the ship is beyond
question.”’
This Court held further that since the continued avail-
ability of the vessel was necessary to the performance of
the charter party, the contract necessarily ‘‘must be re
garded as subject to an implied condition that, if * * *
without the default of either party the particular thing
ceases to exist or be available for the purpose, the contract
shall be dissolved and the parties excused from performing
a
Continuing its exposition, this Court took the pain to
say that the principle did not apply where the terms or
nature of the contract did not import the implication ‘‘nor
where performance is not practically cut off but only
rendered more difficult or costly. * * * Here the ship * **
was rendered unavailable for the performance of the char-
ter party by the requisition’’ and thus ‘‘compliance of the
charter party was made impossible by an act of state. * **
The important consideration is that [the contract] became
impossible of performance through a supervening act of
state which operated directly on the ship and the parties
could not avoid’’ (at p. 631).
The Tornado, 108 U. S. 342 (1882), also was a case of
true and absolute frustration. There the disabling occur-
rence was the accidental burning of the vessel. That
involuntary destruction terminated the contract because
the continued availability of the vessel was a sine qua non
of the contract and thus an implied condition thereof.
Moore & Tierney, Inc. v. Roxford Knitting Co., 250 F. 278
(N. D. N. Y. 1918), aff’d 265 F. 177 (2nd C.), ¢. d. 283
U. S. 498, was a case of frustration by imperative law.
25
Nothing in the opinions therein give countenance to what
has been said in the case at bar. The National Defense Act
of June 3, 1916, c. 124, 39 Stat. 166, and the Naval Appro-
priations Act of March 4, 1917, ¢. 180, 39 Stat. 1168, were
construed, in accordance with their express provisions as
making it obligatory upon manufacturers to accept govern-
ment procurement orders end give them priority, under
penalties of fines and imprisonment and plant requisition.
Therefore, if compliance with orders placed by the govern-
ment under the Acts ‘‘made it impossible’’ for the con-
tractor to fill contracts with private individuals, the latter
contracts ended. ‘‘In such case or cases it is clear that,
under the provisions of the Acts of Congress referred to,
performance * * * was made impossible by the act and
requirements of the United States Government.’’ How-
ever, added the court, if a party (emphasis supplied)
“thinking it more profitable or patriotic, to work for
the government than in the performance of its existing
contract with B, voluntarily sought a contract with the
government * * * and voluntarily entered into such
a contract sought by it with the United States a teats
he is not excused, * * * In such case performance * * uf
is not prevented by act of God, or viz major. Non-
performance is the result of his voluntary act or acts,
not that of the government, and he acts under no com-
pulsion whatever’’ (at pp. 281-2).*
The Circuit Court of Appeals for the Second Circuit
(Ward, Rogers and Hough, C. J.) in an affirming opinion
by Judge Rogers said:
“Tt is not questioned that, if a party by his contract
charges himself with an obligation possible to be per-
formed, he must make it good, unless performance is
rendered impossible by the act of God, the law or the
* See directly in point Chicago & Eastern Ill. Rwy. Co. v. Collins
Produce Co., 249 U. S. 186 (1918).
26
other party. If what is agreed to be done is possible
and lawful, it must be done. Sun Printing & Publish.
ing Assn. v. Moore, 183 U. S. 642; Carnegie Steel Co,
v. U. S. 240 U. S. 156, 165. The plaintiff admits that jt
entered into contracts with defendant which it did not
completely perform within the time agreed upon. The
performance was not prevented either by act of God or
the other party. Was-it prevented by the law? If
not, was performance excused under the clause in the
contracts declaring that the obligations assumed were
subject to ‘delays or nondelivery caused by * * * any
other reasons beyond our control?’ ’’ (at p. 178).
**If the orders [by the government for plaintiff's
manufacture of goods] were contracts voluntarily
made, we agree that the performance of contracts so
made was not entitled to precedence over other con-
tracts previously taken’’ (at p. 180).
E. Hulton & Co., Ltd. v. Chadwick & Taylor, 34 T. L. B.
230 (1918), also, was a case of true frustration by the law
of the land of which both the plaintiff and the defendant
were subjects and where the contract was to be performed.
Nothing in the opinion in that case gives support to the
judgment in this case.
The Kronprinzessin Cecile, 244 U. S. 12 (1917), like The
Texas Co. v. Hogarth Shipping Co., supra, turned upon an
implied condition. Performance of the contract with the
plaintiff in that case, as well as performance of the con-
tracts with the other shippers and with the passengers,
depended upon the safety of the ship. Therefore the con-
tracts imposed upon the carrier the obligation of reason-
able vigilance in safeguarding the ship. Consequently
what the master, reasonably and in good faith, deemed
necessary for the safety of the ship and of the cargo and
the passengers was in performance rather than in breach
of the contract. Hence, the master acted within the scope
of the contract as the nature of the engagement has been
understood for generations. The necessity of the safety
27
of the ship is so obviously vital to all contracts of carriage
by sea that, in the historical development of maritime law,
it has been the mutual and joint concern of the owners of
the cargo no less than of the owner of the vessel; therefore,
the master, in a sense, has been viewed also as the agent
of the owners of the cargo (see The “‘Julian Blake’’, 107
U. S. 418 (1882)).
There is no analogy whatsoever between that and this
case—factually or legally. No question of safety of the
vessel was involved here. The principles there enunciated
provide no support for exculpation of a voluntary and
wilful choice not to perform in furtherance of a purely
voluntary at-will commitment to a government which had
no sovereign jurisdiction in the premises.
W. J. Tatem, Ltd. v. Gamboa, 1939 1 K. B. 132, contains
nothing other than strict definitions of frustration. It was
there held that frustration occurs when the thing upon
which performance depends ceases to exist through circum-
stances beyond the control of the parties.
F. A. Tamplin Co. v. Anglo-Mexican Co., 1916, 2 A. C.
397, was another case of the requisition by Britain of a
British vessel. There was no disagreement among the
judges as to the effectiveness of the requisition to prevent
performance during the period of requisition and the
supervention thereof over the five year charter party
between the parties. The disagreement was over whether
the requisition effected a complete frustration of the char-
ter party or merely modified it or suspended it, and that
disagreement was not due to divergence of view as to the
underlying legal doctrine. Viscount Haldane of the minor-
ity expressed no dissent from Earl Loreburn of the ma-
jority who said that the only allowable principle upon
which the courts proceed is the existence of a releasing
‘implied condition in the contract * * * for no court has
an absolving power’’ (at p. 404). Since charter parties are
dependent upon the ‘‘continued availability’’ of the vessel,
28
there necessarily is an implicit condition (unless affirms.
tively negatived) that when the vessel ceases to be avail.
able ‘‘by reason of circumstances beyond the control of the
parties’’ the charter party ‘‘comes to an end’’.
That was repeated by Lord Haldane several years later,
in Bank Line Ltd. v. Arthur Capell & Co., 1919 A. C. 435,
where a vessel which was the subject of a charter party
was requisitioned by the government of which the owner
of the vessel was a national and whose flag the vessel flew.
He there said (at p. 445):
‘*What is clear is that when people enter into a
contract which is dependent for the possibility of its
performance on the continued availability of the sub.
ject matter, and that availability comes to an unfore-.
seen end by reason of circumstances over which its
owner had no control, the owner is not bound unless
it is quite plain that he has contracted to be so.”’
In the same case Lord Sumner remarked that it was
‘*well-settled that the principle of frustration of an adven-
ture assumes the frustration arises without blame or fault
on either side. Reliance cannot be placed on self-induced
frustration’’ (at p. 452).
Directly contrary to the rationale of the prevailing opin-
ion in this case, Lord Sumner said that cases of this charac-
ter should not be disposed of according to a jury’s view
‘‘of what is fair between man and man’’ (see p. 459), but
on rules capable of objective application without regard to
what may be deemed the ‘‘equities’’ of a particular case.
Lord Sumner did not claim for judges a power of sub-
jective disposition according to individual views which he
held improper for collective consensus and judgment by
juries (cf. the later decision by the C. C. A. 4th Cir. in
The Isle of Mull, swpra at pp. 22-3).
Joseph Constantine Steamship Line Ltd. v. Imperial
Smelting Corp., Ltd., 1941 2 All Eng. R. 165, concerned
al
29
itself solely with a question of burden of proof which is
not presented in the case at bar. There the performance
of the contract was frustrated by an explosion of the vessel
which everybody agreed excused performance unless such
explosion was caused by the defendant or its employees.
The presentation of all of the available proof left the
causation of the explosion a mystery. In those circum-
stances, it was decided that the presumption of innocence
and absence of fault led to the exculpation of the defend-
ant. The opinions rendered in that case seem to petitioner
significant here for the following contents.
Viscount Simon, L. C., said (emphasis supplied) :
“<* * * There is no doubt of course that * * * ‘self-
induced’ frustration provides no defense. Thus in
Mertens v. Home Freeholds Co., Lord Sterndale, M. R.,
observed, at p. 536: ‘It has never been held that a man
is entitled to take advantage of circumstances as a
frustration of the contracts if he has brought those
circumstances about himself’ * * * Similarly * * * Lord
Wright * * * laid it down. * * * ‘The essence of ‘‘frus-
tration’’ is that it should not be due to the act or elec-
tion of the party’ ’’ (p. 169).
“The most satisfactory basis, I think, upon which
the doctrine (of frustration) can be put is that it de-
pends on an implied term in the contract of the parties.
** * Tt has the advantage of bringing out the distinc-
tion that there can be no discharge by supervening
impossibility if the express terms of the contract bind
the parties to performance notwithstanding that the
' supervening event may occur. Discharge by super-
vening impossibility is not a common law rule of gen-
eral application like discharge by supervening ile-
gality. Whether the contract is terminated or not
depends on its terms and surrounding circumstances
in each case. * * * Every case in this branch of the
law can be stated as turning on the question whether,
30
from the express terms of the particular contract,
a further term should be implied which, when its con.
ditions are fulfilled, puts an end to the contract”
(p. 171).
Viscount Maugham observed that ‘‘the contract auto
matically comes to an end * * * provided only that the
event is ‘caused by something for which neither party was
responsible’ ’’ (p. 177).
Lord Russell of Killowen said:
“** * * as a general rule, impossibility of perform.
ance does not release from liability the person who
promised the performance. An exception, however,
exists in the case of contracts the performance of
which is necessarily dependent in the continued exist-
ence, or the continued existence in sound condition, of
a person or thing’’ (p. 180).
Directly contrary to the doctrine enunciated in the pre
vailing opinion in this case are the following remarks by
Lord Wright:
‘** * * the court is not claiming to exercise a dis-
pensing power, or to modify or alter contracts. The
parties did not express the qualification because they
did not think of the possibility of the occurrence * * *”
(p. 186).
. a * . * *
‘*The explanation which has been generally accepted
in English law is that impossibility or frustration de
pends on the court implying a term or exception and
that as part of the contract’’ (p. 187).
The principle rests, he continued, ‘‘on the true meaning
of the contract, as it appears to the court. The essential
feature of the rule is that the court construes the contract,
7. ey
31
In Madeirense Do Brasil S/A v. Stulman-Emrick Lum-
ber Co., 147 F. 2d 399 (C. C. A. 2nd Cir. 1945, Swan, Clark
and Frank, C. J.), ¢.d. 325 U. S. 861, a seller in Brazil con-
tracted with a buyer in New York on December 5, 1940,
to ship certain lumber ‘‘up to December 31, 1940”. The
contract was entered into in contemplation of shipment on
a vessel for which arrangements had been made and at an
agreed upon freight rate of $14. The vessel thereafter
refused to take the lumber. Substitute carriage was ex-
tremely difficult to procure and, if procurable, only at a
freight rate of over $33. In those circumstances, the seller
declared the contract ‘‘canceled on account of force majeur
eee?)
Under the reasoning of the prevailing opinion in this
ease, the court should have said that since the contract had
been entered into in the expectation by both parties that
the arranged for vessel would carry the lumber and do so
at the agreed upon rate of $14, the radical change of condi-
tions through no fault of the seller, in fairness and justice,
exonerated the seller from his contract.
Directly to the contrary, however, did Judge Clark write
in that case (emphasis supplied) :
‘Even had there been no ships available, plaintiff
was not under the circumstances of this case excused
from performance. The plaintiff’s [seller’s] letters
indicate clearly that at the time of the making of the
contract * * * it was aware of the fact that boats were
at a premium. * * * There was no startling change in
conditions. * * * Hence the lack of ships in January
1941 was a foreseeable risk which plaintiff willingly
took upon itself; and it cannot under such circum-
stances plead the defense of ‘force majeur’. Com-
panhia De Navegacao Lloyd Brasileiro v. C. G. Blake
Co., supra, 34 F. 2d at p. 619.”
32
In the case last cited, the court refused to exonerate g
seller because of extreme difficulty in procuring shipping
accommodations where it appeared that the parties con.
tracted with knowledge of those conditions. Judge Learned
Hand, writing for himself and Judges Swan and Augustus
Hand, said: ‘‘* * * this was a risk which both parties well
understood, and in the face of which the seller made his
engagement’’. Therefore, the seller was bound to perform
his engagement irrespective of the conditions beyond his
control.
On a parity of reasoning, Judge Clark in this case should
have written that the defendant having contracted with the
plaintiff at a time when (according to the construction of
its ‘‘undertaking’’ to the Maritime Commission which de-
fendant successfully urged upon the courts below), it had
engaged itself to follow directions by the United States
Maritime Commission as to what to carry and what not
to carry—even to the point of giving the Commission
authority to direct the non-fulfillment of an unqualified
contract entered into with the Commission’s express ap-
proval—it, the defendant, ‘‘willingly took upon itself’’ the
risk and consequence of such an obstacle to performanee,
when, and in the face of its commitments, it unqualifiedly
contracted with the plaintiff to carry plaintiff’s 1,000 tons
of copra.
The important circumstance here cannot be an assump-
tion that defendant expected the United States Maritime
Commission to abstain from exercising the contractual
authority which it is said the defendant had granted to the
Commission, or that the defendant did not foresee the
arisal of an occasion for the exercise of that contractual
authority. The controlling consideration is that (according
to the defendant and the courts below) such contractual
authority had been granted. In consequence, the possi-
bility or likelihood of the exercise thereof plainly was
‘‘foreseeable’’ by the defendant. Surely, one who deliber-
33
ately and knowingly grants contractual authority cannot
pe heard to plead that he did not foresee the likelihood or
possibility of its exercise. Why is authority asked and
given if not in anticipation of its exercise—at least so that
it might be exercised?
It will be observed that in the cited case, the fact that
parties contracted unqualifiedly in the face of unusual cir-
cumstances known to both and risks foreseeable by both,
was held by Judge Clark (following the established rule
of construction) to preclude the implication that interfer-
ence with performance by the foreseeable contingencies
would excuse performance. In the case at bar, however,
Judge Clark adopted diametrically contrary reasoning and
construction and, to bring plaintiff into the orbit of a thus -
inverted rule, he imputed to the plaintiff (without an iota
of evidence) knowledge of, and complete familiarity with,
defendant’s contract with the United States Maritime
Commission.
The illogic of tne holding in this case, it seems to peti-
tioner, is indicated by (1) not only its head-on conflict with
the rule of construction heretofore unanimously applied,
(2) not. only by the necessity of charging the plaintiff, as a
matter of law, with as complete and intimate a knowledge
of the defendant’s business and commitments as the defend-
ant itself possessed, but (3) also by the fact that since
defendant certainly must be presumed to have fully
known its own business and its own outstanding commit-
ments, it follows that had defendant intended its engage-
ment with the plaintiff to be purely conditional and subject
to cancellation in the event of a request therefor by the
United States Maritime Commission, it would have said so
very plainly by such a simple statement as ‘‘subject to
cancellation at the request of the United States Maritime
Commission.’”’
It seems to petitioner strange reasoning indeed that fair-
ness and justice should be deemed to require that the court
34
insert a provision which the defendant knowingly failed to
include.
In the next case cited, Allanwilde Transport Co, y,
Vacuum Ou Co., 248 U. S. 377 (1918), there was an abgo.
lute frustration by law since the sailing in that case wa
absolutely prohibited by the lawful denial of clearanc
from New York.
The Claveresk, 264 F. 276 (C. C. A. 2nd Cir., 19%,
Rogers, Hough and Manton, C. J.), affirming 254 F. 1%
(L. Hand, J.), like most of the other cases mentioned in
the opinion, was an instance of a charter party frustrated
by the requisitioning by the British Admiralty of a British
vessel. In that case the charter party was entered into in
1913 by a British corporation as owner and a Pennsylvania
corporation as charterer. It contained the usual ‘break
down’’ and ‘‘restraint of princes’’ clauses. On January
25, 1917, the owner, at its home office in Newcastle, Eng.
land, received notice of requisition of the vessel. Pursuant
to that notice the vessel thereafter went into government
service at a rate of hire greater than specified in the char-
ter party. In an action for damages by the charterer, the
owner ‘‘substantially pleaded the requisition (1) as a
restraint of princes; (2) as a frustration of the commer-
cial adventure between the parties’’. The court found that
the owner ‘‘did not voluntarily—.e. did not seek to—with-
draw the Claveresk from libellant’s service, nor ask nor
induce the government to requisition.”’
In holding, in those circumstances, that the requisition
by the British government of a British vessel from a Brit-
ish owner located in England was a yielding ‘‘to that
restraint of princes’’ which was provided for in the charter
party, the court, in an opinion by Hough, C. J., said:
‘** * * The fundamental essential of a restraint of
rulers is that the restraining act should be govern-
mental. Northern, ete. Co. v. American ete. Co., 1%
Roa
35
* * * No citizen or subject is by lawful private con-
tract either required to or justified * * * in resisting or
evading the compulsion of its government’’.
In Edward Maurer v. Tubeless Tire Co., 285 F. 113 (C.
C. A. 6th Cir., 1922), the contract, by its terms, was ex-
pressly subject to all rules and regulations imposed by the
United States Government.
New York Trust Co. v. Securities Exchange Commission,
131 F. 2d 274 (C. C. A. 2nd Cir., 1942), ed. 318 U. S. 786,
held that where a valid and binding order of the Securities
Exchange Commission dissolved a corporation, such dis-
solution necessarily called for the liquidation of the un-
matured obligations and, therefore, contract provisions for
the payment of premiums in the event of voluntary pre-
payment had no application. That was a plain case of
termination of a contract by law or by lawful act of gov-
ernment having the force and mandate of law.
Similarly, Patch v. Solar Corp., 149 F. 2d 558 (C. C. A.
Tth Cir., 1945), c.d. 326 U. S. 741, was a case of suspension
of a contract by inexorable legal prohibition. In that case
the manufacture of the article which was the subject of
the royalty contract was prohibited by law, and the court
held that the royalty provisions were suspended coter-
minously with, and during the period of, the prohibition
of manufacture. Again, the prohibition was imposed by
a government upon its citizens within its territory, and
the parties had no lawful alternative to obedience of their
sovereign.
While the prevailing opinion in this case disposes of the
same court’s prior decision in Baker Castor Oil Co. v.
Insurance Company of North America, 60 Fed. Sup. 32
(S. D. N. Y., Goddard, J.), affirmed 157 F. 2d 3 (1946), e.d.
329 U. S. 800, as ‘‘not in point’’, it is respectfully sub-
mitted that the Baker Castor Oil Co. case is squarely in
point, because therein the courts held that the compliance
by the government of Brazil, in its operation of a ship-
36
warrant-holding Brazilian vessel, with a directive of th
War Shipping Administration (the successor to the Tegy.
latory functions of the United States Maritime Comnis
sion), legally, was voluntary as an act of choice by the
Brazilian government as owner, and was not an act of
state. What the Brazilian Government did, it was held,
was not in mandated obedience to the United States Gor.
ernment as sovereign and certainly not as sOvereign over
Brazil.
The facts virtually completely parallel those of the case
at bar. Yet, therein the same court with the concurrence
of Clark, J., found no occasion for ascribing to the United
States Government the exercise of ‘‘coercive power” nor
did it find therein a practical necessity to Brazil to do as
bidden by the Shipping Administration. There Judges
Augustus N. Hand, Chase and Clark, speaking through
Judge Chase, in affirming the District Court (Goddard, J,),
said:
“‘The District Court correctly held that there were
no acts by either the Government of Brazil or that of
the United States constituting a sovereign restraint
within the terms of this war risk policy * * *, What
Lloyd Brasileiro did as a private owner and with re-
gard only to its own ships was not the exercise of any
sovereign power. Nor were the acts of the War Ship-
ping Administration and its branches an exercise of
the sovereign power of the United States. Rather,
those acts were the exercise of a right voluntarily con-
ferred upon the War Shipping Administration by the
owners in order to secure the warrants and hull in-
surance. The United States did not purport to deny
all rights to any owner not obeying its rules * * *”
(emphasis supplied).
In the District Court, Goddard, J., said in that case that
“there is no evidence indicating’ that had the vessels
gone to the destination contracted for “*they would have
37
-jneurred any penalty other than forfeiting their right to
the priorities which they gained from the ship warrants
and voiding their insurance’. The election to avoid such
detriments to it is ‘‘voluntary conduet of the owner, how-
ever strong are the motives * * * for so acting”’.
Mawhinney v. Milbrook Woolen Mills, 231 N. Y. 290
(1921), does no more than parallel Moore & Tierney, Inc. v.
Rozford Knitting Co., supra at pages 24-26. The New
York Court of Appeals construed the 1916 National De-
fense Act as making the acceptance of and compliance
with government procurement and purchase orders ‘‘ob-
ligatory’’ and the giving of preference and priority thereto
as mandatory. Therefore, the court held that if, and to
the extent that, such mandated orders actually prevented
compliance with private contracts, there was presented a
case of true frustration by law. The limitations of the
principle are pointed out in the later decision in that case
(234 N. Y. 244) rendered after retrial. The New York
Court of Appeals there said that ‘‘it does not follow that
defendant could ignore plaintiff’s rights entirely. It was
bound to do the best it could for him under the circum-
stances * * *. With all the indulgence conceded to the
manufacturer by this Court in its former decision, no
intimation was given that it might unnecessarily ignore
the claims of its private customers prior to November 24,
1917’? when defendant’s plant was completely requisi-
tioned by the government.
In Nitro Powder Co. v. Agency of Canadian Car &
Foundry Co., 233 N. Y. 294 (1922), ‘‘the contract’’, said
the court, ‘‘is in terms conditional on governmental inac-
tion and subject to the condition that if the government
should requisition the goods and render it impossible that
the seller should perform its contract, performance should
be excused’. There was such a governmental requisition-
ing under express statutory provision. ‘‘Defendant had
no control over the situation’’, said the court; ‘‘defendant
merely acquiesced in action which it had no power to stop
38
***. It cannot be said that the taking by the governmey}
was induced or procured by the defendant. Defendant was
not an unwilling party, but the taking was not dependent
upon its consent. No doubt it was complaisant if no
eager. That its attitude had any effect upon the result
is purely speculative * * *. The case is destitute of the
suggestion that after the contract in suit was made defend.
ant went to the government and brought the material to its
attention, or induced it to action where inaction was im.
minent’’. Plainly, that is no authority for exoneration
when non-performance is a purely voluntary preference
resulting from the exercise of freedom of choice.
The decision by the trial court in L. N. Jackson & Co. y,
Seas Shipping Co., Inc., 185 Mise. 94, in so far as it deals
with the question of frustration, held only that the Seas
Shipping Co., Inc., a New York Corporation (which in that
case mistakenly was sued as the contracting party), was
bound to obedience of an order issued by the United States
Maritime Commission. But the contract herein in fact, as
that court held, was not by or with the Seas Shipping Co,
Inc.; the contract was by and with the Royal Norwegian
Government who itself was a sovereign, on a par with and
not in any way subject or subordinate to, the sovereign
power of the United States. Not a word in the opinion, or
in the findings or conclusions, of the New York Supreme
Court relates to the exculpability of the Royal Norwegian
Government. It is apparent from the record that the New
York Court of Appeals affirmed the judgment in favor of
the Seas Shipping Co., Inc. solely on the ground that hav-
ing contracted in behalf of the Royal Norwegian Gover-
ment as a disclosed principal, the Seas Shipping Co., Ine.
had no contractual obligation and, therefore, could not be
liable for any breach of contract. This appears from the
fact that the court refused to certify that it had passed
on any federal question (R. 50, 61-2, 81-4, 187, 231-2; Plf’s
Exs. 4, 5, admitted at R. 231-2 and printed at R. 2444
246-250; see also 296 N. Y. 529).
39
In the last case mentioned in the prevailing opinion,
Nash v. Southern Pacific Co., 260 F. 280 (D. C. N. D., Cal.
1919), petitioner can find nothing in point.
Summary of the Cases Cited in the Prevailing Opinion
The foregoing digest and discussion of each of the cases
referred to in the opinion of Clark, J., make clear, it seems
to petitioner, that the decision herein is contrary to every
fore, if it were practicable, and legally and socially de-
ease cited on the subject.
1. None of the referred to decisions suggests that where
legal prohibition of performance of a contract is absent,
the test of the excusability of non-performance is whether,
in the light of the circumstances known to the parties at
the time of contracting and as altered by subsequent
events, the promisor, ‘‘in fairness and justice’’, should be
held to his promise.
Indeed, such a subjective nebulous concept as a prac-
ticable basis for the determination of rights and liabilities
under business contracts, was considered in The Isle of
Mull, supra pages 22-23, 278 F. 131, ¢.d. 257 U. S. 662, only
to be emphatically rejected.
That idea was rejected also by Viscount Haldane in
F, A. Tamplin Co. v. Anglo-Mexican Co., supra at page
27, when he said ‘‘no court has an absolving power’’
and by Lord Wright in the more recent case of Joseph
Constantin Steamship Line, Ltd. v. Imperial Smelting
Corp., supra at pages 28-30, when he said that courts do
not ‘‘exercise a dispensing power’’.
Surely, a claim of novelty in circumstances cannot justify
a reversal in that regard, for whatever may be said about
the impact of new conditions upon the law, certainly the
striving for, and the concept of, fairness and justice are
ancient and perennial; old, too, is the problem of non-
performance of contracts when the unusual occurs. There-
40
sirable, to make the determination of the liability in suc)
cases dependent upon the court’s view of what was fair
and just in the particular case, that doctrine would haye
been enunciated long, long ago.
The unacceptability of such an absence of objective
standard or workable formula seems patent. ‘‘ Fairness
and justice’’, however idyllic, obviously furnish no rule,
no guide. Judges, no differently from other men, on the
same facts and circumstances, come to opposing conclusions
as to what is fair and just. Much depends upon which, of
what may appear equally logical major premises, is ac.
cepted or selected as the vantage point. That may he
conditioned by, and varies with, the judges’ personality
and experience in life. Some are exacting; others, lenient
or indulgent. If the personal nature and outlook of the
judge were to be determinative, how would businessmen
know when they have firm contracts on which they can rely
for either performance or full indemnification in the event
of non-performance?
Heretofore, the settled rule has been that every party
is held to his valid contract and is required to perform
(except when otherwise stipulated or implied) unless
performance is probibited by law or rendered impossible
by an act of God. Those rules furnish practicable and ob-
jective tests capable of uniform application. It is sub-
mitted that there have been no ‘‘new circumstances’”’ which
warrant or call for a judicial alteration of that long-
enforced basic principle of contract law.
2. None of the referred to cases countenances ‘‘govert-
mental coercion’’, as distinguished from true vis major,
as sufficient to excuse performance of a contract which
a party lawfully and in fact could perform.
Indeed, as late as 1946, the United States Circuit Court
of Appeals for the Second Circuit unanimously (with the
participation of Clark, J.), and the apparent concurrence
of this Court, refused to hold compliance with a directive
41
of the War Shipping Administration under the Ship War-
rants Act as a ‘‘restraint of princes’’ (Baker Castor Oil
Co. v. Insurance Co., supra at pp. 35-37).
The problem of interference with the performance of
private contracts by governmental action is not one which
arose only recently. The techniques used during the re-
cent war were fully developed during the First World
War. The fact that there was a broader use of them does
not change the underlying principles.
It is made abundantly clear in all of the cases that
only where there is an ‘‘act of state’’ which is binding
and mandatory on the promisor and which allows the
promisor no alternative to non-performance of his pri-
vate contract, is there a legal absolution from the private
eontract. In other words, there must be true frustration
by law—by the law itself or a lawful act of government
in its sovereign capacity which has the force of law. Vol-
untary election, in the legal sense—whether out of patri-
otism or the baser motive of more profit—to perform a
contract with the sovereign, expressly was said to furnish
no excuse in Moore & Tierney, Inc. v. Roxford Knitting
Co., supra at pages 24-26, 265 F. 177, ¢.d. 253 U. S. 498.
Such a voluntary preference to serve one’s government,
at another’s expense, does not present a case of preven-
tion ‘by act of God or vis major”’ and ‘‘is the result of
** * voluntary * * * acts, not that of the government”’
(id).
If the exigencies of total war had been thought to
require setting aside and nullification of all contracts, or
the elimination of private claims under contracts volun-
tarily ignored by parties in their fervor to render what
appeared to them a service more helpful to the war effort,
Congress, as the law-making branch of the government,
would have so legislated. Is it gainsayable that such
absolution is a matter of law making, not judicial con-
struction of contracts?
42
3. Except where there is true frustration by law ¢qp.
tingencies beyond a party’s control excuse performance,
in the absence of a provision therefor, only when a pn.
vision for such exoneration is implicit in the nature o
provisions of the contract. That implied condition is the
sole permissible basis of exoneration is virtually the
unanimous holding of all the authorities.
Therefore, under the cases cited in the prevailing opin.
ion the result reached therein is justifiable only if, as
matter of contract construction, the defendant’s contract
with the plaintiff may and should be read as embodying
(1) a reference to the fact that the defendant had con
tracted with the United States Maritime Commission to
place all its vessels, or the ‘‘Tropic Star’’ in particular,
under the complete supervision and control of the United
States Maritime Commission, (2) a statement that, under
that contract, the Commission is authorized to request
cancellation of the engagement to the plaintiff and in that
event defendant would be obliged to and would caneel,
and (3) accordingly, the engagement was subject to can-
cellation if and when requested by the United States Mari-
time Commission.
Is it reasonable to say that is what the parties meant
by their words? Is that what a reader of the contract
on November 7, 1941 would have understood it to say!
All the decisions, other than the 2 to 2 prevailing decision
in this case, say no.
Under the law as understood and applied heretofore,
because the contract, as written, was dependent for per.
formance upon the continued availability of the ‘‘Tropic
Star’’, it was impliedly conditioned upon the ‘‘Tropie
Star’’ not ceasing to be available through an act of God or
action by the enemy or other true vis major or unavoidable
accident. That condition was inherent in the nature of
the engagement and, therefore, under well-settled lav,
implicit in the contract.
43
But under the same well-settled law, interference with
performance by conditions which the defendant itself vol-
untarily brought on or by the obligations of a conflicting
eontract in which the defendant voluntarily entered, were
not implicit in—but directly in conflict with—the engage-
ment to which defendant signed its name and on which
the plaintiff, in good faith, relied. This contract cannot
be read differently without reversing existing law and
setting up as the law the converse of what heretofore has
prevailed.
It should not be overlooked that, in characteristic fash-
ion, the contract was written by the defendant; that the
writing of, and entry into, such contracts was part of
defendant’s regular course of business; that this was a
business engagement of defendant’s own election; that
the plaintiff, no differently from others, had the right to
assume that the defendant was acting with full knowl-
edge and appraisal of its outstanding commitments.
Surely, plaintiff had the right to assume that the defend-
ant knew what it was at, and plaintiff had the right to
take defendant at its word.
A business engagement should not be presumed to have
been intended as an illusory or misleading promise. That
the plaintiff placed in the contract full reliance is estab-
lished by the stipulated proof that the plaintiff did not
contract for the copra until the defendant, by a firm con-
tract, had engaged itself to transport it (R. 241).
If the defendant intended that its promise should not be
depended upon and was to be understood by plaintiff as
purely contingent, it easily could have, and, as a matter of
fair-dealing, should have, said so (Carnegie Steel Co. v.
U. §., supra, 240 U. S. 156, at p. 165). It could have done
80 by a simple clause. Plaintiff then would have had the
choice of whether or not to contract on that basis.
44
Since the above facts and considerations are typical,
the far reaching consequences of the decision herein seen
apparent.
The authorities cited in the prevailing opinion &
not countenance “governmental coercion”— as dis
tinguished from frustration by law—as releasing 1
promisor from liability for non-performance.
This, it is submitted, is evident from the digest of the
cases cited in the prevailing opinion, and is highlighted by
Baker Castor Oil Co. v. Insurance Co. of North Ameria
(supra at pp. 35-37).
In every case where a party was exonerated because of
prevention by governmental requisition or by priority man
dated for government contracts, it was emphasized that the
controlling consideration was the absence of legal alterna-
tive to compliance with the governmental mandate.
In every one of the cases, the governmental action was
by the government in its sovereign capacity and the
promisor owed allegiance to, and was subject to the
jurisdiction of, the government; compliance was absolutely
mandatory.
Other authoritative decisions—decisions not men
tioned in the prevailing opinion—rule out “gover
mental coercivn” as an excuse.
The prevailing opinion is significant for its omission of
any mention of Northern Pacific Railway Company \.
American Trading Co., 195 U. S. 439. In that case, the
‘‘governmental coercion’? was not a matter of hypothesis
45
in the absence of evidence. It was established beyond dis-
ute. It was real. It was imperative. It was irresistible
except by litigation which would have meant costly delay.
But, in point of law, the action of the Collector of the Port
was unlawful. Compliance therewith, therefore, was held
® no excuse when it resulted in failure to perform a corttract.
The Collector’s erroneous action, this Court said ‘‘should
not be at the expense of the shippers who had obtained this
contract for transportation while all parties actwally knew
the difficulties that might concern the exportation’’.
Although the act of the governmental official made clear-
ance of the vessel with the plaintiff’s goods thereon impos-
sible, that, it was held, ‘“‘did not render unlawful the con-
tract to transport’’ and, since the Collector’s act was con-
trary to the law ‘‘it was not an act of the state’’; therefore,
whatever its practical effect and consequence, it was ‘‘not
sufficient as an excuse for the non-performance of the con-
tract’? with the plaintiff.
From the fact that the prevailing opinion below does not
mention that decision, it is to be inferred that the author
of that opinion deemed the decision outmoded. Yet, what
has happened since 1904 to impair the substance of that de-
cision? The expansion of governmental controls and the
consequent multiplication of occasions for directives or
refusals by governmental officials? That, it seems to peti-
tioner, sharpens, rather than dulls, the necessity of distin-
guishing authoritative and truly mandatory acts of state
from those which are merely advisory or precatory or
unauthorized. Surely, the same legal consequences do not
attach to utterances in the latter category as to acts which
truly are binding on parties. It cannot be that our battling
authoritarianism abroad has boomeranged to destroy for
us here the significance of our boast that ours is a ‘‘gov-
ernment of law and not men’’.
The prevailing opinion below is significant also for its
omission of any reference to Swayne & Hoyt v. Everett, 255
46
F. 71 (C. C. A. 9th C. 1919), where, again, ‘‘ governmental
eoercion’’, although not so labelled, was held no excuse for
non-performance of a contract. In that case, a California
corporation operating a vessel between Shanghai ani
United States ports, whose British Shanghai agent refused
to accept a shipment from Everett, a citizen of the Unite
States, because of orders against him by the British Gov.
ernment for his dealings with Germany which at the time
was at war with England, was held liable to Everett. The
orders of the British Government to the carrier’s agent, a
British subject, were held no defense because the British
Government had no governmental jurisdiction over the
American carrier.
IV.
No “new circumstances” require or justify the dis
regard or reversal of the well-settled principles of law
in the field of contract jurisprudence which are in
volved here.
To what already has been said above, petitioner deems it
necessary to add only that this case presented no new prob
lem nor a new phase of an old problem.
The number and variety of the cases mentioned in the
prevailing opinion and which are digested above—but a
fraction of the reported cases in point—make clear the
absence of novelty.
The novelty here is only the opinion of which review is
sought—an opinion which, it is earnestly and sincerely sub-
mitted, departs from established law as fully as it ignores
the facts proved by the evidence and postulates as facts
conclusions not drawn from, and contrary to, the record
in the case.
47
V.
The factual hypothesis of the prevailing opinion—
that the defendant was “coerced” by the government
of the United States which exercised and exerted an
“overriding power’—are without the slightest basis
in the record and directly contrary to the testimony
of the defendant’s witnesses.
The Court is respectfully referred to the testimony re-
produced in the Appendix (at pp. 48-54, infra).
CONCLUSION
It is respectfully submitted that the petition herein
should be granted and writ of certiorari should issue.
Respectfully submitted,
Copa Mintz,
Attorney for Petitioner.
February 1, 1950.
48
APPENDIX
Testimony of Defendant’s Witnesses George Otto
Mejlaender and Per A. Lorentzen
[At R. 68-69]:
‘*Grorce Orro MEJLAENDER, called as a witness on behalf
of the defendant, being first duly sworn, testified as follows:
Direct Examination by Mr. Murphy:
Q. Mr. Mejlaender, what is your business? A. Ship
brokers.
Q. In 1941 were you connected with the Norwegian
Shipping & Trade Mission? A. Yes, sir.
Q. In what capacity? A. As representative in
Washington of the Norwegian Shipping & Trade Mis
sion.
* * * *
Q. For how long were you connected with the Nor.
traship? A. From June 1941 until November 1, 194.
Q. Did your duties then take you into contact with
the United States Maritime Commission? A. Yes, sit.
Q. About how often during a week would you say
you were in consultation with various persons con
nected with the U. S. Maritime Commission? A. Every
hour of the day.
Q. Will you give us all the details, as best you recall,
of the business that you did on behalf of Nortraship
with the United States Maritime Commission from
June 1941 until the end of 1941? A. Why, tt com
sisted largely in consulting with the Maritime Com-
mission as to the utilization of ships, that is to sa,
where they were to go and what they were to load.
49
Appendix
The Court: Did you follow their instructions in
reference to where the ships were to go and what
they were to carry?
The Witness: Yes, sir.
[At R. 74-77]:
Q. Your main job was to offer the services of the
Norwegian merchant marine to the United States? Is
that the sum and substance of what you did? A. My
job was to determine together with the United States
where the ships were going to be used and to the best
effort, and where they could do their maximum service
in the war.
Q. Does the answer to my last question also extend
over to January 2, 1942, with respect to following the
orders of the Maritime Commission. A. I don’t quite
understand the question, Mr. Murphy.
Q. The last question I asked you, about Nortraship
obeying orders of the Maritime Commission from
June to the end of December, 1941, did that also extend
over to January 2, 1942? A. Yes, sir.
* . o aa
The Witness: I think I can say that the coopera-
tion between Nortraship and the United States after
Pearl Harbor was, of course, still more close than at
any other time prior to December 7th.
Cross-examination by Mr. Mintz:
Q. Mr. Mejlaender, was it a policy of cooperation
or of taking orders which your Government was fol-
lowing? A. The Norwegian Government had exactly
the same interests as the United States Government,
50
Appendix
that is to say, to win this war. It was a question tha
was never raised. We were just as interested in oy
ships being utilized to the fullest extent in the war
effort as the United States was because we had mor
at stake than anybody else.
Q. Were there occasions when there were differ.
ences of opinion between the officials with whom yu
were dealing in behalf of the United States Goven.
ment and your own Mission? A. Yes, sir.
Q. As to what would be the best thing to do under
certain circumstances? A. Yes, sir.
Q. What happened in cases where there were thos
differences of opinion? A. They were abways compro.
mised. It was a question of give and take and the
were compromised.
Q. So it was not a situation where your Gover.
ment was taking orders from the United States Gov.
ernment? <A. I don’t think you can say that tt wasa
case where the Norwegian Government took orders.
We are a democracy both in this country and in Nor.
way. It wasn’t a question of taking orders. It wasa
question of compromising any differences and arrit-
ing at a solution that was to the best purposes of th
war effort.
_ Q. Of course, during that period you maintained the
position that the Norwegian Government was a sov-
ereign power? A. I do, sir.
Q. On a par with the United States as a sovereign
power? A. I do, sir.
(Witness excused.)
51
Appendix
‘‘Pgr A. LoRENTZEN, called as a witness on behalf of the
defendant, being first duly sworn, testified as follows:
Direct Examination by Mr. Murphy:
Q. In 1941 were you connected with the Nortra-
ship? A. Yes, sir.
Q. In what capacity? A. I was manager of the
chartering department.
[At R. 109-112]:
Q. Mr. Lorentzen, prior to the execution of that
undertaking on October 4, 1941, did the Norwegian
Shipping & Trade Mission accept directions from the
Maritime Commission as to what routes your Nor-
wegian ships would follow and what cargo they would
earry? A. I will say we followed the requests.
Q. And you heard Mr. Mejlaender testify this morn-
ing, did you? A. Yes.
Q. Do you subscribe, from what you know of your
dealings personally with the Maritime Commission,
to what he testified this morning? A. Yes, sir.
Q. By the way, in your dealings with the Maritime
Commission were there times when you differed with
them with respect to what cargo a ship ought to carry
and what type of cargo was best fitted for that ship?
A. Yes. -
Q. When you differed with them, you then discussed
it with them and explained what your knowledge of
the ship was and what was best for the safety of the
ship for it to carry? <A. Yes.
The Court: And did you follow their orders?
The Witness: Well, your Honor, I am—I don’t
think it ever came to a question of ordering. It was
a question of cooperation.
52
Appendix
The Court: At all times you complied with their-
The Witness: Requests.
The Court: Requests.
Cross Examination by Mr. Mintz:
Q. You regarded them as requests and not a
orders, is that not so? A. Well, as I repeat, I don
think it came to becoming an order, because it was
never necessary to give an order.
Q. In other words, you from time to time had dis
cussions and came to agreements and then you com
plied with whatever you agreed to comply with, is
that correct? A. That is right.
Q. You did have the right to refuse to comply? A
If there was—if we thought we had reason to do w.
Q. In other words, you did not surrender the sor.
ereign rights of the Norwegian Government with r
spect to these vessels, is that so?
The Court: Do you understand that question!
The Witness: Yes, I understand.
Q. What is the answer? A. I think I understand it
My answer is, yes, we did not submit.
The Court: You what?
The Witness: We did not submit.
The Court: Have you any objection: to that ques
tion?
Mr. Murphy: He is talking about before the exe
eution of this undertaking, your Honor, I take it
I have no objection, if it is before October 4th.
The Court: There is no limitation put on th
question, as I heard it.
Mr. Murphy: Then I do object to anything afte
October 4th, your Honor.
53
Appendix
The Court: That objection is sustained.
Mr. Mintz: I respectfully except.
Q. In October—
The Court: The answer is stricken out, if there
was an answer.
Q. Let me put it this way: Were you dealing with
the United States Maritime Commission as a repre-
sentative of another sovereign power? A. Yes, sir.
The Court: At what time? I think you should
indicate it.
Q. Was that so in October, November and December
of 19417 A. Yes.
Q. And in January 1942? A. Yes.’’
[At R. 120-121]:
**Q. And between October 1941 and January 1942,
if you decided you want to take the Tropic Star and
send her elsewhere than the United States, you were
at liberty so to do, weren’t you? A. That I couldn’t
answer.
Q. Well, who was in control of the vessel? A. The
Norwegian Shipping & Trade Mission.
Q. Who employed the captain? A. The Norwegian
Shipping & Trade Mission.
Q. Who employed the crew? A. The Norwegian
Shipping & Trade Mission.
Q. Under whose orders did the captain operate? A.
Under the orders of Norwegian Shipping & Trade
Mission.
Q. Had he received any orders from you to proceed
elsewhere than to the United States— A. No, sir.
——Q.-No, I say, had he received orders, he would have
been bound to obey your orders, would he not? A. Yes.
54
Appendix
Q. The captain? The captain was acting under or.
ders of the Norwegian Shipping & Trade Mission!
A. To proceed when he could.
Q. If he had received orders from you not to pn.
ceed, he would have been bound to obey your orders,
isn’t that so? A. Yes.
Q. You expect him to take your orders, do you not!
A. Yes.’’
[At R. 123]:
**Q. You say any request would have been followed
Suppose you regarded a certain request as being w-
reasonable? A. I would discuss it.
Q. So it wasn’t a case of taking orders? A. 4s/
said before, t never came to the question of taking
orders to my knowledge.”’
No witness testified in contradiction of the above.
MAR 2 1950
Ocroser TeRM—1949
No. 576
y*
a4
L. N. Jacxson & Co., Inc.,
Petitioner,
against
Tue Roya Norwecian GOVERNMENT,
Respondent.
wp
v
PETITIONER’S REPLY MEMORANDUM
Petitioner begs leave to respectfully submit the following
several brief observations in reply to the respondent’s
brief.
(1) In its argument as to the effect and scope of re-
spondent’s ‘‘undertaking’’ to the United States Maritime
Commission, and the consequences of failure to heed a
request or directive thereunder, respondent’s brief over-
looks not only (a) the testimony of respondent’s own rep-
resentatives (quoted in Petitioner’s Br., Appendix, pp. 48-
54) and (b) the sovereignty of the respondent, but also that
(c) the ‘‘undertaking’’, by its terms, was limited to the
scheduled vessels, (d) the applicability of the ‘‘undertak-
ing’ to any vessel was terminable by the surrender of the
warrant therefor, and (e) the agreement (R. 263) ‘‘to give
priority to the transportation of materials specified by the
Commission, to the extent of the full cargo carrying capac-
2
ity of any vessel,’’ was qualified by the following language
immediately following that quoted in respondent’s brief:
‘‘the terms and/or condition of such transportation to be
fair and reasonable. The Commission will equitably ap.
portion, insofar as is practicable, requests for such trans.
portation between operators of suitable and available
ships’’ (R. 263). Respondent’s brief ignores those quali-
fications in the abbreviated quotations on pages 3, If
and 18.
(2) At several points of its brief, respondent cites as
established facts the wholly uncorroborated generalized
utterances of a witness, which, if true, could have been
properly documented. That applies to the footnote on
page 4, the quotation from the Record on page 9, and the
footnote on page 13.
(3) Respondent’s discussion of, and quotation from, the
opinion and decision of Mr. Justice Irving L. Levey of the
New York State Supreme Court overlook the fact that that ©
Justice was discussing the obligations of the defendant in
that suit, the Seas Shipping Co., Inc., who was a resi-
dent national of the United States. Mr. Justice Levey was
not called upon to consider, and offered no views on, the
obligations and liabilities of the sovereign Royal Nor-
wegian Government (who was not before him as a party
or otherwise).
(4) Respondent’s brief appears to be a complete rejec-
tion of the opinion on and by which the Court of Appeals
reversed the judgment of the District Court. Surely, Judge
Clark would not have written the lengthy opinion reported
in 177 F. 2d 694, and Judge Swan would not have con-
curred in it, if they deemed this a case where the law
intervened to enjoin performance and rendered it unlavw-
ful. And if that were the situation, Judge Learned Hand
would not have written as he did.
3
(5) Respondent’s argument of res judicata was rejected
by the District Court and by Judge Learned Hand and
cannot be claimed to have been sustained by Judges Clark
and Swan. The suggestion that Mr. Justice Levey’s deter-
mination in the New York court that respondent’s disclosed
agent, the Seas Shipping Co., Inc., was not liable to peti-
tioner for breach of the contract of its principal The Royal
Norwegian Government, is available to the latter as res
judicata that it is not liable, is contrary to the basic prin-
ciples of estoppel by judgment and is opposed by a host
of cases of which several examples are: U.S. v. California
Bridge & Construction Co., 245 U. S. 337; Bigelow v. Old
Dominion Copper Co., 225 U. S. 111; United Shoe Machin-
ery v. U. S., 258 U. S. 451; U. S. v. Pink, 315 U. S. 203,
216-218; Hansberry v. Lee, 311 U. 8S. 32; Anderson v. Ab-
bott, 321 U. S. 349, 354-5; Drummond v. U. S., 324 U. S.
316, 317-318; Land v. Dollar, 330 U. S. 731, 736-7; U. S. v.
Kales, 314 U. 8. 186, 197-200; U. S. v. Nunnally Investment
Co., 316 U. S. 258; Commissioner of Internal Revenue v.
Sunnen, 333 U. S. 591, 597-602; Fish v. Vanderlip, 218
N. Y. 229.
Respectfully submitted, |
CopaL Mintz,
Attorney for Petitioner.
February 28, 1950.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.