Petition for Writ of Certiorari — Manuel Rodriguez Trading Corp. v. United States
Supreme Court brief1958
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WC 14 1957
Ni. PLY, Clerk
SUPREME COURT OF THE UNITED STATES
OCTOBER TERM, 1957
No. — 664
MANUEL RODRIGUEZ TRADING CORPORATION
axnp MANUEL RODRIGL EZ,
Petitioners
THE UNITED STATES OF AMERICA
/
+
—-—
PETITION FOR A WRIT OF. CERTIORAR! TO THE -——
UNITED STATES COURT OF CLAIMS
Pau D. Pace, Jr.,
Washington Building,
Washington 5, D.C.
DecemBer, 1957 .
-
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CITATIONS
{ “uses
A. H. Buli Steamship Company v. Crated States, 123 C.
FH Foe i Se i Pee Ay
Norton Clapp v. United States, 127 C. Cl. 505, cert. den.
348 CREE cs Werden thi, Beene ae
Statutes:
Merchant Ship Sales Act of Sia (50 U.S.C. 1987)......
Public Law 423, 0th Cong. ¢ ... 262. 62g sevens
Sh ppingrAct, 1916, Sections 9 41 (46 UCS S08, 839).
“Treatise:
“A Treatiwe on the Lao of Damages,” by J. (i. Sutheriand,
(Cee Ce es inc Gr ee cee
ec
Page
* SUPREME COURT OF THE UNITED STATES
4 OCTOBER TERM, 1957
No. —
ee
MANUEL RODRIGUEZ TRADING CORPORATION
asp MANUEL RODRIGUEZ,
Petitioners
0.
THE UNITED STATES OF AMERICA
PETITION FOR A WRIT OF CERTIORARI TO FHE
UNITED STATES COURT OF CLAIMS |
Manuel Rodriguez Trading Corporation and Manuel
Rodriguez, by their undersigned counsel pray that a writ
of certiorari issue to review the judgment of the United
States Court of Claims, entered in the above case on July
12, 1957.
Opinion Beiow
The opinion of thesCourt of Claims is not yet reported
but it is set out as Appendix A to this petition,
Jurisdiction
The judgment of the Court of Claims oS entered on
July f2. 1957 (CR. 69), and timely motions rer rehearing
by both parties were denied on October 9 1957 (RL 110).
(1)
2
The jurisdiction of this Court is invoked under 28 U.S.C.
1255(1). «
Questions Presented
The Manuel Rodriguez Trading Corporation' bought
two ships from the Government. Some months thereafter,
with the approval of the Maritime Connuission, it sold them
toanal ©, thereafter bringing timely suit to recover $164,-
19960 waich it claimed had been illegally exacted from it
in connection with the sales. The Government counter-
claimed for (among other things) the sum of $49,852.01. The
(Court below held that the Government was entitled to re-
cover the $49,852.01 and retain the $164,199.60, all as dam-
ages; dismissed the petition; and entered judgment on the
counterclaim for $49,852.01. The questions presented are:
(1) May the United States recover as damages from a
United States citizen sums of money which would have been
payable to the United States under a contract with a non-
citizen, which contract could have been executed only in vio-
lation of pertinent Federal law?
2) May the Court of Claims make a finding of fact and
render judgment thereon in the amount of $49,852.01 when
such finding and judgment is without evidentiary support
and demonstrably based on testimony and exhibits specif-
ically excluded from the evidence?
Statutes Involved
The statutes involved are the Merchant Ship Sales Aet of
146 (90 ULS.C. Sees. 1737 and 1739), Publie Law 423, 80th
Congress, See. (b), and the Shipping Act, 1916 (46 U.S.C.
Secs. SOS and 839). These are printed as Appendix B to
this petition.
‘Hereinafter “plaintiff”. All acts were performed by it. Manuel
Rodriguez Was made a party to answer the counterclaim, by order of the
(ourt below.
Statement
In order that this statement may not. be regarded as less
than candid we point out: first, by F.F. 22, R. 97, the court
finds that in selling the tankers to plaintiff the Maritime
Commission relied upon represertations that they were pur-
chased for operation under the flag of the United States; and
second, by F.F. 34, R. 108-109, the court finds that plaintiff
was acting, in effect, as agent for the purchasing agency of
the Argentine Government and intended to accomplish the
transfer of the tankers to that agency. In its opinion, p. 12,
R. 80, the court below admits that plaintiff a citizen acquired
the tankers as a citizen ‘“*thereby circumventing the prov:-
sions of law regarding sale to a non-citizen’’. As to this
plain non sequitur we point out briefly that the enly sale to
a non-citizen was by plaintiff in strict conformity with ap.-
plicable law (Section 9 of the Shipping Act, 1916) ; chat when
the tankers were sold to plaintiff they became plaintiT’s
property, the property of a citizen; that plaintiff by pur-
chasing the tankers,gained no right to operate tle tankers
except undér the American flag, and no right to sell them to
a non eitizen; and that when thé Maritime Commission er-
pressly approved the sale of the tankers to the Argentine
purchasing commission with iransfer to Argentine registry
and flag, it could not possibiy bave relied upon a representa-
tion that the tankers were to be operated under the American
flag. A brief upon the merits of this case will prove Seyon
shadow of doubt that nothing in the case ‘‘cireurivents”
Public Law 423, 80th Congress, ugyh in pertinent part, ts «
limitation on the power of a government selling agency, and
in no way affects sales by private parties.
The following statement should be considered in the light
of these four important facts: (1) At no time involr ed in this
case could the Government have sold these two ships to a
non-citizen of the United States. (2) The Government has
4 “8
received from vlaintiff, a United States citizen, $164,199.60
more than the Government was legally authorized to charge
a United States citizen for the ships? which excessive
amount would be increased to $214,051.61 Uf the judgment
onthe counterclaim could stand. (3) At all times involved
in this case plaintiff could (with the approval of the United
States Maritime Commission, which plaintiff secured) sell
these two ships to a non-citizen of the United States. (4)
None of plaintiff?s actions in this matter have been found
fraudulent or illegal bythe Court below. }
The fact-findings of the Court below show:
(1) Plaintiff, a United States citizen, by contract dated
\ pril 6, 1948 bought two small tankers (Carrran and Sucar-
taxp) from defendant at a price in accordance with the
Merchant Ship Sales Act of 1946 and the applicable rules
and regulations of the selliug agency, the United States
Maritime Commission. (F.F. 1 and 2, R. 85).
(2) The contract contained the following provision:
“The buyer agrees, if it shall be determined by the Com-
missiog_upon examination of the (each) vessel, that the
vessel lacks or contairs desirable features as defined in
clauses (2) and (3) of See. 3(d) of the Act, then sueh pur-
chase price shall be decreased, within the limits of the floor
price of the vessel, or increased, by such amounts, if any,
as may be determined by the Comiuission pursuant to said
clauses.’’ (F.F. 8, R. 84).
(3) Under the clause just quoted plaintiff paid an ad-
ditions | $28,756.81 * (FF. 8, R. $4).
(4) Plaintit® was charged in accordance with the terms
See Norton Clapp Y. lnited States, 127 C. Cl. 504, cert, den, 345
PS shh and ft HE Bull Steamship Componn v. United States, res €:: €h.
7 t i; rroent did not seek eertiorari.
tT ss could not legally be made against a United States citizen.
i_if ht ‘/ ef eupra ad
4)
of its contract and the Commission’s policy governing sales
to United States citizens, the sum of $42.00 for repairs.
(F.F. 9, R. 86).
(5) The price plaintiff paid for the” iwo tankers was de-
creased according to law by $135,442.79, the cost of putting
them in class to operate under the United States ae. (ELF.
32, R. 107-108). .
(6) On- October 21, 1948, plaintiff, pursuant ‘to Section
9, of the Shipping Act, 1916, sought Maritime (ommission
approval of sale by plaintiff of the two tankers to a pur-
chasing commission of the Argentine Government, with
transfer of flag and registry; the Commission approved on
December 7, 1948 (with a condition, as shown immediately
hereafter) and the vessels were thereafter sold and trans-
. ferred by plaintiff. (F.F. 5, 6, R. 83-84).
(7) The Commission’s approvel was “upon the condition
that, prior to the issuance of formal Transfer Orders in
evidence of the approval of the transfer of these tankers to
Argentine ownership and registry as above set forth, any
and ali allowances made to your corporation for placing
these vessels in class‘ and ail monies due and owing the
Commission by our corporation in connection with the sale
by the Commission shall be paid (or provision therefor by
wav of deposit be_made).to the Commission and upon the
receipt from your company of a waiver of any claims for
allowarees’’ (F.F. 31, R. 105-107).
Plaintiff (invoking Sefion 149], U.S.C. as the basis -
jurisdiction) sued in the Court below for (1) $135,442.75
payment of which was exacted from plaintiff for the a.
time Commission’s approval of plaintiff’s sale of the two
tankers to a purchasing commission of the Argentine Gay-
ernment, with transfer of flag and registry, and (2) $28,-
4In Norton Clapp, supra, it was held that the requirement of a money
payment for such approval was unlawful, and that amounts paid pyrsvrnt
to such requirement may be reeovered in the Court of Claims.
vu
6
756.81, paid under the sales-contract clause quoted in (2)
above for ‘desirable features’’, an aggregate $164,109.60,
Defendant counterclaimed for (among other amounts)
$49,852.01 as the cost of unrecouped repairs less $#2.00
claimed by the Maritime Commission afid paid by plaintsit
as such cost.
The Court below held that ail three items just set out
constituted ‘‘damages defendant has suffered’’; dismissed
the petition because ‘*defendant is entitled to retain’’ the
first two items; and rendered judgment on the counterclaim
for the third ite .n of $49,852.01 (Opinion 14, first, second,
and third paragraphs, R. 82).
Reasons Why the Writ Should Be Granted
The Court below has decided in this cave important ques-
tions of federal law which have not | out should be,
settled by this court. [n so doing, th
far departd from the accepted and usual course of judicral
Court below has su
proceedings as to cail for an exercise of this Court's power
of supervision. .
]
In this unique decision (the Court below cited no case
and none can be cited to sustain it) the Court of Claims
has laiddown a precedent as broad and general in its appli-
cation as it is eynical in essence.
It is this: a party forbidden by law to taxe certain action
(and without any finding that he could or would take suel
action, of course) may recover (and retain) what would
have been the fruits ef the illegal action had he taken it, as
damages.
And not only this: such damages may be recovered (sud
retained where previously exacted on unjawful crounds)
from a party guiltless of fraud or unlawful action.
The principle (?) "laid down then, is far-reaching in its
7
importance, and may not be minimized by the fact that
the two tenkers were sold to plaintiff under a ‘*dead siat-
ute’’, the Merchant Ship Sales Act of 1946. The decision
is not a construction of that Act, and its baneful effect ic
in no way limited to transactions arising under it, a num-
her of which incidentally, are still in litigation.
Notwithstandinw its finding of fact No. 17 (R. 90) that
the sale of war-built vessel: such as these tankers to non-
citizens was prohibited by law after March 1, 1948° the
Court below explains iis judgment as follows:
“We believe the defendant should be put in the
same position as if the transfer had not been made to
plaintiff. That is to say, bad the tankers been sold
directly to the Argentine Naval Commission, the Gev-
ernment could have charged $135,442.79 as class al
lowance and $28,756.81 fer desirable features.6 These
sums had been paid to the defendant and we hold
that the defendant is entitled to retain them. The only
other tem of damages” (emphasis supplied) **de-
fendant has suffered is the cost of unamortized repairs
which would be charged to non-citizen _purchasers.***
The tindings show that ‘‘during the time that the
Commission was authorized to sell to non-citizens,”
it made a charge to the buyer“ of the unrecouped cost
—————_—— - ————
2 Pubhe Law 423. 80th Cone. prohibited and prohibits the Government
from selling to non-citizens. Tt dees net prohibit plainti® from seileig to
non-citizens.
®Somethine Public Law 423, S0th Cong. erpressla forbids. The Gv.
ernment could wot sell to the Argentine Naval Conuatssion er any non-
citizen and henee could not charge anvbody these amounts, whieh under
the law and the Court of Clans’ deetsiens in Clapp and Ball supra could
wot be charged any citizen-purcha-er, ;
7 There eould be ao such non-citizen purchasers, and, therefore, no =i h
charges.
Which ended before the Commission sold them to plauntiff, a eitize
“ Mesning a nen-ceitizen buver.
¢
&
of repairs made subsequent to January 1, 1947, less
depreciation at the rate of $6,000 per month for each
month of operation. This, for the SvGarnanp would :
have amounted to a charge of $49,894.01. If! the
policy respecting sales to citizens required a charge
of the cost of unrecouped repairs made after July. 1,
1947, the charge-t the case of the SuGarLaxp was
- $42. only, or $49,852.01 less.”’ |
Under Section 6 of the Merchant Ship Sales Act, supra,
the sales price to‘non-citizens was merely the minimurg
statutory price." Therefore, plaintiff’s purchase as a citi-
zen saved $49,852.01 ° which defendant could have charged
a non- -citigen. *S° The Government lost that amount '* and ts
entitled to recover the same under its counterclaim.”
bs 2 p. 14, R. 82). FPS saa arise
The quotation immediately foregoins with the factual
iootnotes thereto, incontestably proyes that the ¢ Ceart be-
low has answéred the first “Question Presented’? in the
affirmative. In other word®, taking as‘true all facts found
by eC ourt of Claims, thatCourt has er?ed as a matter vf
law by. holding that the United States may (a) recover
from a citizen of the United States $79,852.01, and
(b) retain an aggregate sum of $164,199.60 ($135,442.74
his $28,756.81), all three items as damages, because if de-
feudant had sold the tankers to the non-citizen to whom
4° Tmportantly, this “if” should be “as. See FUP. 32.) R. \a&
"Obviously garbled. Section 6, in pertinent part, and prior to Publa
Law 425, 0th Cona., authorized such sales “at not less than the statutory
sales price.”
2 Plaintu® being a eitizen, could onty purchase “s< a etizen” and
“saved” nothing at a citizen's price.
Since defendant could not sell to a non-citizen it could mot charee ;
non-citizen $49,852.01) or anything at all,
'§ Tins conelusion is indisputably erroneous, and in fact, completely in
confliet with the anderlving findings of faet. :
OO te ils! VEG AG IG OCEAN! er A,
ane
al ated ee
EE AS Se a eT ET ITS FAD ED
9
they were legally and with defendant’s approval sold by
plaintiff, def ndant ‘‘could have charged’’ plaintiff's
vendee the abeve amounts, although the Court expressly
finds that defendant, the United States, was prohibited
by the law of the United States from selling the tankers to
plaintiff’s vendee, or to anybody it could lave charged
such amounts. J |
We respectfully submit that when the Court of Claims
lays dewn a broad and general precedent at vartanee with
all accepted Principles of law then (and especially be-
eause failing review by this Court, the injured party is
without the protection of any judicial consideration other
than that of the Court of first instance) there is clearly
hefore this Court an important question of federal law
which has not been but should be decided by this Court,
—~and that when, as here, a Court of frst instance (there
being no possible infervenitgs-appellate réview) issues an
‘opinion flatly opposed to a, hithéerto-nndisputed principle
of law that Court’ so far departs from the accepted anc
sual course of judicial proceedings as to ‘call for an exer-
cise of this Court’s power of supervision.
i] é
With respect to the judgement? on the counterclaim for
S49 852.01, not only did the Court below err as a matter of
law (as shown above), but it made a mock of judicial pro-
eedure by founding its judgment on testimony and exhibits
specifically eroluded trom evidence, and which of cqgurse,
plaintiff had no reason to rebut. Because this faet mtust
+8)
Jn his “Treatixe on the Lawtof Damages” (Callaghan & Co., 1916,
pp. 17-18) Sutherland says that “It may be assumed as an wa disputed
principle that ne action will he to reeover a demand or a suppoSed clan
for damages if, to establish it. the ‘plaintiff requires aid from an illegal
transaction, or is under the necessity of showing and depending an any
degree upon an illegal agreement to whieh he was a party.”
x 10
rae
be almost as amazing and at first blush incredible to this
Court as it is to the writer of this petition, who entered the
case subsequent to its decision by the Court of Claims, it
is necessary to prove it forthwith.
The only evidence in this record with respect to the un-
recouped cost of repairs chargeable against a non-citizen
purchaser, which item is represented by the judgment on
the counterclaim for $49,852.01, is in the testimony of
James L. Pimper, Esq., (Tr. 229, 280, Tr. 240-241), and
Defendant's Exhibits 100 and 101. Neither the Pimper
testimony nor the exhibits refer to the two tankers here
involved, repairs made to them, or the cest of such repairs.
They reflect only the policy of Maritime Commission with
respect to charges to non-citizen buyers for such repairs
and contain no facts which can be coatended to support
the finding of the Commissioner and Court that the unre-
couped cost of repairs to the SucarLanp made subsequent
to January 1, 1947 less depreciation at the rate of 36,000
per month for each month of operation would have
amounted to $49,894.01,
"ce judgment on the connterclgim is unquestionably and
obviously based on Tr. 248-249, Tr. 250-250, Tr. 196-205,
and Defendant’s Exhibits fer: identification only Nos. 9,
06, and 102. Reference to the cited pages of the transcript,
especially pages 201 249, 251 and 254, shows that the ‘tes
timonyv’’ of Messrs Fetsko, Langley, and Hutchinson, and
the three exhibits which contain the ied Bia whiet
the judgement on the counterelaim was made
the record only as an offer of proof.
2ecause the judgment on the counterclaim is not sup.
ported by any evidence in the case, and ne contention to the
contrary can be made, that judgment cannot stand. It would
he impossible to manufacture a situation wherein a court
up stand im.
i 1]
eee
could depart further from the aecepted and usual course
of judicial proceedings, or more unjustifiably hoodwink
counsel and penalize litigants thar is here the case. The
Phin PESO ab VEE:
foundation of a money judgment on data specifically ex-
cluded from the evidence by the trial court is surely the
absolute antithesis of judicial procedure.
Conclusion
The facts found by the Court below establish
(1) That defendant acting through the Maritinie Cor
mission has damaged plaintiffs in the amount of $164,199.60,
for which amount plaintiffs were and are entitled to judy-
ment against the United States.
ee eee ?
EE i A Cj
ENE
a Ok OR ee
AR RS
(2) That this damage has been aggravated by the judg.
inent of the Court below in the amount of $49,852.01, which
judgment has no support in the evidence, is™based upon
data which the Court below specifically excluded from evi-
denee, and would not be supportable in law even if the re-
jeeted “evidence”* had been accepted as such by the Court
helow.
(3) That the Conrt below has feund as facts that the
two vessels were lawfully sold first, by defendant to plaintitl,
and second by plaintiff toa non-citizen of the United Stutes,—
but without any finding of fraud or iNewality las concluded
that the transaction should be treated ly the Court as it
it were an illegal sale by defendant to the non-citizen, and the
illegal fruits thereof awarded to defendant as ‘tdamages”’.
The preéedeut-foree of this unprecedented decision can
hot be over-e&timated, cannot command conseientious sup-
port, and in the Jast analysis would probably be of incalen-
lable damage to its present beneficiary, the government of
the United States,
12
This is in addition to the destcuctive financial result to
the personal plaintiff, who has not received justice at the
hands of the Court below.
For the reasons stated, it is respectfully submitted thiat
this petition for a writ of certiorari should be granted. —
Pau. D. Pace, Jr.,
Washington Building.
Washington 5, D.C.
DecemBer, 1957
s)
RR HT ye
APPENDIX A
IN THE UNITED STATES COURT OF CLAIMS
No. 50197
(Decided July 12, 1957)
Manven Ropricvez Trapinc Corporation anp Manvrn~
RopriGuvez
vv.
Tue Unirep Srares
Mr. Homer C. Clay for the plaintiff.
Vr. Edward L. Metzler, with whom was Mr. Assistant.
Attorney General George Cochran Doub, for the defendant.
t
ee OPINION
Lanamone, Judge, delivered the opinion of the court:
This tsa suit by plaintiff, Manuel Rodriguez Trading Cor-
poration, to recover sums of $135,442.79 and $28,756.81 paid
toine U.S. Maritime Commission. The defendant counter-
claims for damages, and Manuel Rodriguez has been joined
as a party plaintiff under rule 23 of this court.
The $135,442.79 was paid to the Maritime Commission by
plaintiff under an agreement. made in December 1948 that
the Commission would approve plaintiff's sale of the tankers
Camtan and Sugarland to the Argentine Naval Commission
and their transfer to Argentine registry and flag, which was
accomplished, The $135,442.79 represented reductions in
the statutory sale price of the two tankers whieh had been
acquired by a contract dated April 6.1948. The redactions
were allowed plaintiff by the Maritime Commission under
section 3 (d) (1) of the Merchant Ship Sales Act of 1946, 60
Stat. 41, as amended 62 Stat: 1196, 1199. The $28,756.81
represents the Maritime Commission’s charges for ‘‘desir-
able features’? not found in standard vessels, payment for
which was agreed to by plaintiff in the contract dated Apri!
6, 1948, and by an agreement made in December 1948.
&
(1)?
o
Plaintiff contends that it is entitled to recover the $135,-
442.79 under the decision of this court in Norton Clapp v.
United States, 127 C. Cs. 505 and asserts that the Maritime
Commission did not have authority to condition its approval
of the sale and transfer by requiring that the class allowance
be refunded, and that such requirement was also a breach of
contract.
Plaintiff contends it is entitled to recover the $28,796.81
paid for ‘desirable features’? under the decision of this
court in A.W. Bull Steamship Cov. United States, 123 CC ls.
520. It contends that the statutory formula provided by the
Merchant Ship Sales Act, supra, requires the cost of desir
able features to be added to the statutory sales price and
then depreciated, and that this results here in the cost of
desirable features being wholly absorbed and lost, although
the floor price is maintained: Plaintiff further contends that
a citizen's purehase of tankers after March 1. 1948, for the
purpose of resale té aliens, would not vielate Pubhe Law
423, 62 Stat. SS, if the Maritime Commission approved.
The defendant contends that plaintiff procured the two
tankers from the Maritinie Commission and ebtained price
reductions of $135,442.79 on the basis of mitsreprescntations
that it was acquiring the tankers as a United States citizen
for operation under American flag and registry, and that
plaintiff, knowing that sales to noneitizens were expres <!
prohibited after March 1, 1948, hw Publie Law 425, was net
acquiring the tankers for American flag ownership ane!
everation, but in order te sell and transfer them to the
Argentine Naval Commission for operation under: Vreven
tine flag and registry. - :
Public Law 423 provides in pertinent part as follows:
(h) Notwithstanding the provisions of subsection
(a), no centraet of sale under seetion 6 of the Merethas:
Ship Sales Act of 1946 shall be made after March 1,
~1948: and nothing contained in this or any othen Net
shall be deemed to authorize the United States Miri
time Ce umission to charter any war-built vessels ca.
defined in the Merchant Ship Sales Act of 1946) te a
person who is net a etizen of the United States (a-
defined in the Merchant Ship Sales Aet of 1946),
F mar
] °
3
The government further contends that it is entitled to
judgiment on its counterclaim for the losses and damages
sustained by reason of plaintiff’s misrepresentations.
The facts as found by the Cormenissioner and adopted by
the court are as follows:
The Manuel Rodriguez Trading Corporation was, from
January 1947 to February 1951, a New York corporation
with its prineipal place of business at 220 Broadway, New
York City, New York. Only SO shares of the corporate stock
were issued. During the corporate existayee Manuel Rod-
riguez was the president and aetually operated as sole
owner, As of September 2, 1948, he had formality aequired
the 20 shares issued January 30, 1947, in the name of his
wife, Adela Rodriguez, a citizen of Cuba. As of December
29. 1050, the assets of the corporation were distributed to
the two remainine stockholders, Rodriguez receiving *556,-
101 SP and Lonis Russell $4,255.59. A certifieate of dissolu-
tion was filed February 1, 1951, dated December 29, 1950,
Manuel Rodriguez has been impleaded personally and by
order of the court joined as a party plaintiff. The term
plyintiff as used herein refers to the corporation or to Man
nel Rodriguez personally. |
Plaintit®? by contract dated April 6, 1948, acquired from
the U.S. Maritime Commission two T-1 tankers, the Suagar-
lind and the Capitan, at a price of $887,019 each. The price
Was in aveordanee with the Merchant Ship Sales Act of 1946
and the rules and regulations issued pursuant thereto as set
forth in the Maritime Commission's General Order 60, The
contract provided for a reduction of a price by an amount
equal to’ the cost, as determined by the Commission, which
would be required to enable the Commission to deliver the
vessels in class with valid certifieates of classification and
inspection in accordance with the minimum requirements of
the rules and regulations of the Anerican Bureau of Ship-
ping and the U.S. Coast Guard Marine Inspection. Plain-
tiff filed claims for such price reductions and was allowed
125.442.70 i. 6. on the Sugarland $4,094 for repairs and
S15.250.37 for predelivery and maintenance expenses, and
on the Capitan $94,067 for repairs and $22,022.42 for pre
thelivers and maintenance expenses.
4
Title to the Sugarland and Capitan, respectiveiy, was
transferred to plaintiff on June 8, 1948, and August 20, 1948.
Plaintiff thereafter, on October 21, | 48, applied for ap-
proval to sell the tankers to the Argentine Naval Commis-
sion and to transfer them to Argentine registry and flag.
On December 7, 1948, the Commission approved the sale
and transfer on the condition that the price reductions or
class allowances were paid. Plaintiff agreed and deposited
a $200,000 check of the Argentine Naval Commission. The
tankers were consequently transferred from United States
registry. On June 3, 1949, plaintiff requested that the
Maritime Commission reconsider its requirement that the
£135,442.79 be paid, but the Maritime Commission adhered
to its decision, and denied a reauest for reconsideration.
The Maritime Commission also determined that the tank-
ers contained desirable features and pursuant to the pur-
chase contract and plaigtiff’s consent charged plaintiff the
depreciated value of the desirable features, @. ¢. $27,650 on
the Sugarland and $1,105.96 ca the Capitan. The Maritime
Commission also determined that under Article TV of the
contract applying to a citizen sale plaintiff should be
charged only $42 for unamortized repairs made on the
Suoarland, deducted this amount from a deposit and re-
funded the balance.
Tue GoverNMENT’s CouNTERCLAIM
The Merehant Ship Sales Act of 1946 provided that the
Maritime Commission might sell certain Government-
owned war-built vessels to a citizen of the United States,
as defined in the act, at a ‘*statntory sales price.’’ In the
case of tanker s statutory sales price was defined 1 in the act
(section 3 (d) to mean ‘fan amount equal to 8714 per centum
of the prewar domestic cost of a tanker of that type’? sub-
ject to adjustments set forth therein. In the case of a
tanker the adjustments could not reduce the sales price to
less than 50 percent of the domestic war cost and the price
of the Capitan and Sugarland, T-1-M-BT tankers, was fixcd
at the floor price of $887,019. Under certain conditions
sales to noncitizens were authorized ‘‘at not less than the
statutory sales price’? but Senate Joint Resolution 173,
Public Law 423, 80th Congress, 2d session, approved Feb-
rnary 27, 1948, expressly prohibited sales to noncitizens
. 5
after March 1, 1948. The questioned transactions occurred
subsequent to “March 1, 1948.
In November, 1947 an employee of the Maritime Com-
inission, John E. Jacobsen, advised Rodriquez that there
was a possibility that ten T-1 tankers might be, purchased
from ‘he Maritime Commission for resale to Argentina.
At that time the Argentine Government had a purchasing
commission known as the Argentine Naval Commission lo-
eated in New York City. The Naval Commission was headed
by Rear Admiral Athos Colonna, and Captain Julio Maz-
zoli, Naval Architect, was in charge of ship inspections.
On December 19, 1947, plaintiff retained Homer C. Clay
and Jacobsen to represent it in bringing about the sale of
ten or less tankers. Clay and Jacobsen were to receive ou
a contingent basis a fee of $25,000 for each tanker pur-
chased. On December 20 and 31, 1947, Rodriguez con-
ferred with representatives of the Argentine Naval Com-
mission advising that the present basic sales price of the
ten tankers was $887,019, but that he would sell them for
£965,000 each (or Mss if more than five were obtained) with
title and authority to change the flag, ete., the offer being
subject to approval of the Maritime Commission, On Feb-
rnary 4, 1948, Clay wired Rodriquez that there was a strong
probability Congress would prohibit: sales of war-built
vessels to foreigh countries after February 29 and urged
filing an applieation immediately. Plaintiff and the. Ar-
gentine Naval Commission then entered into a contract
whereby the Naval Commission was to purchase ten tank-
ers from plaintiff for $035,000 each and delivered two
checks, payable to the Treasurer of the United States, for
$1,000,000 each. The checks were certiffed respectively by
the Chase National Bank and the National City Bank, both
of New York-City on February 16, 1948.
On February 18, 1948, plaintiff made written applica-
tion to the Maritime Commission to purchase, ten tankers
st the statutory sales price for transfer to the Argentine
flay stating that 1 was not then and never had been engaged
in the ship sping business. On March 1, 1948, the Maritime
Connnis-ion disapproved the appite ation but at 11:30 FP. M.
March 1,°1948, approved the sale of one tanker to plaintiff
ior transfer to Argentina.
6
Senaie Joint Resolution 193, as stated, prohibited the
sale of a war-built vessel to a nonecitizen after Mareh 1,
1948. Rodriquez was quite aware of the prohibition which
had been imminent and so wrote the Argentine Naval Com-
mission .on March 5, 1948. At the same time plaintiff ad-
vised that Commission that Rodriquez was endeavori.g to
obtain one additional tanker on the premise the corporation
Was a citizen purchaser, as well as still another vessel, and
that their efforts would be continued.
On March 7, 1948, plaintiff's attorney in fact, Homer ©.
Clay, wired the Secretary of the Maritime Commission
as follows:
APPLICATION MANUEL RODRIGUEZ “TRADING CORP. iEREBS
AMENDED TO ELIMINATE ALL REFERENCE TO TRANSFER OF
SHIPS TO ARGENTINE REGISTRY APPLICANT DESIRES: TO PUR-
CHASE AS AMERICAN CITIZEN TERMS CASH ON DELIVERY
WITH TWO MILLION POLLARS NOW DEPOSITED WITH APPLI-
CATION TO RE APPLIED ON PUNCHASE PRICE,
On March 10, 1948 plaintiff filed a formal amendment to
its February 18, 1948 application by striking therefrom:
* * a * v
wae rFerence to the transfer of the vessels re-
ferred to therein to for. en flag or registry and ‘> pro
vide that the appli@ant will purchase any one or mere
of the vessels referred to in said application as a United
States citizen (applicant is a New York corporation)
for operation under the flag and registry of the United
States and to further provide that should appleant
be granted the right to purchase any vessel or vessels,
pursuant to itz amended appheation, applicant will ob-
tuin the services of one of the established and experi-
enced ship operatine companies to operate said vessel
or vessels. |
~~" On March-t1, 1948, plaintiff's amended application was
referred fo the Maritime Cominission by memorandum
from the appropriate ofheer, the Chief of the Large Vessel
Sales Division, James L. Pimper, who recommended the
sale of two T1-M-BT tankers with the advice that the ‘‘ap-
piicant Wishes to eliminate originaNXveference te transfer
to Argentine registry and purchase as an American Citi-
7
zen’’ and to pay cash in full on delivery. The Commission
was advised that:
Applicant clainis no shipping experience but states
that it will obtain the services of one of the established
and experienced ship operating companies to operate
the vessels when purchased.
* * » 6 £
ae since the applicant offers to pay cash in full for
the vessei, the Comission ts justified in considering
that the applicant possesses the necessary finanical
resources,
«e a a so >
Applicant proposes to operate the vessels in estab-
lished tankers trades, chiety from North Atl atie ports
to the River Platte and occasionally from Venezuelan
ports to the River Platte.
ad *. * * *
On March 12, 1948, the Cormmission approved plaintiff's
application as to three T-1 ttinkers. Hoawever, the Navy
Department requested the transfer of one tanker and the
Maritime Commission on March 51, 1948, approved the sale
of two tankers, the Capitan and Sugarland, Yor operation
under United States flag,’’ the terms of payment to be
“cash in-full on delivery.’ :
Under date of March 31, 1948, the date the Maritime Com-
mission approved the sale for operation under United
States flag, plaintiff and the Argentine Naval Commission
entered into contracts relating to the Capitan and Sugar-
land, The contracts recited in part that jplaintiff Sold
said tankers to the Naval Commission with a view to their
transfer to the Argentine Navy, that the Naval Commis-
Sion would turn over the official price of $887,019 each, and
upon obtaining agra approval for, transfer to. the
Argentine flag the Naval Conimission nee pay the price
fixed by the offer of December 31, 1947; 0. 62, $965,000 if
l to 4+ tankers were acquired. Paragraph G of the contracts
provided that in the event a legal transfer was not possible
and in the event-of a disagreement over settlement the
ships would be sold without loss to plaintiff, or 20 percent
of the protits, In the event of United States expropriation
its payment Was to be immedi: itely transferred to the Nawal
~~
/ ‘
8
Commission. The Naval Commissien was also to pz vy all ‘
other expenses inevrred, subject to its written approval.
In reliance upon plaintiff's representations that the tank-
es were purchased by plaintiff as a United States citizen for
operation nnder the flag of the United States for Maritime
Commission, under date of April 6, 1948, entered into the
formal sales contract referred to in finding 2 for sale of the
Capiten and Sugarland at $887,019 each.
The Argentine Naval Commission made the down pay-
ments on the Capitan ane Suaarland on April 2, 1948, by
issuing two $88,701.90 cheeks.
On April 28, 1948, the Argentine Naval Commission paid
plaintiff the $798,517.10 balance of the $887,019 floor price
on each tanker.
aintifl’< bocks and accounting records show the tankers
were sold to the Argentine Naval Commission in April 1948,
that the tankers were purchased for resale and not for oper-
ation and that they were carried as merelandise inventory
until June 30, 1948, when the books showed the Argentine
Naval Conimnission had advanced $065,060 on sales contracts
on each of the tankers. Plaintiff's Federal tax returns also
show the pirchases were for eale rather thar operation.
Nether Rodriguez ner the corporation had ever been en-
vaged in, the shipping business and had ne experience in
operating tankers. No effort was made to obtain the serv-
ices Of a ship operating company or to hire officers or a
crew.
Following the allocation of the tankers Rodriguez was in
constant consultation with the Argentine Naval Commis-
ston over the control and disposition of the tankers. The
Argentine representatives inspected the vessels, work plans
amd specifications were submitted to them in advance, and
they prepared plans and specifications for repairs and sent
them to Rodriguez in August 1%48. Upon closing the sales
with the Maritime Commission in June and August 1948 the
bills of sale and master carpenter's certificate were deliv-
ered to plaintiff's attorney-in-fact, Homer C. Clay. These
documents were promptly turned over to the Argentine
representatives. Pursuant to arrangements. between Rodri-
vuez and Admiral Colonna, the Aigentine Naval Commiis-
sion also stationed its own erew aboard the tankers to act as
watchmen pending the contemplated transfer.
9
In August 1948 plaintiff inserted an ad in the New York
Journal of Commerce advertising T-1 tankers for sale:
“United States flag. Immediate delivery. Principals only.
All eash in dollars.’’ A similar advertisement ‘was inserted
in the New Times of August 29, 1948. Four responders
indicated a desire fer foreign registry and two suggested
domestic use, but plaintiff conmunicated with none.
Under date of August 30, 1948, however, a letter was pre-
pared to plaintiff from the Argentine Naval Commission
over the signature of Rear Admiral Colonna in which tie
Argentine Naval Commission purported te answer the ad
appearing in the New York Jou:nal of Commerce for August
27, 1948, and offered to purchase tankers with U. 5S.
currency. A copy of the ad was aitached to the Naval
Wommission’s letter.
On October 21, 1948, plaintiff transmitted to the Maritime
Commission its application for the approval required by
Sections 9 and 41 of the Shipping Act of 1916, as amended,
of a proposed sale and transfer of the Capitan and Suger-
land to Argentine registry and .ale te an alien, namely,
the Argentine Naval Commission. The applications rep-
resented that the tankers had never been operated, and
that they had been on the market for sale to American citi-
zens for three months prior to the application but no offers
had been received. The proposed sale price was repre.
sented as **actual cost of vessel to owner’ paytible in cash.
The application attached: Admiral Colonna’s letter pur-
porting to answer the ad, and represented that sale and
transfer to the Argentine Naval Comumisssion was desires
as the tankers wre unsuitable, conditions had chanwed,
the initial ‘‘cost; and repairs for the owner's account”
exceeded $1,800,000 and maintenance costs were a threat
to the company’s poivency, :
The Chief of the Maritine Conmission’s Bureau of Goy
ernment Aids recommended that the application be denied.
Howeyer, at a meeting on December 7, 1948, Homer ©.
Clay and Ralph Immell appeared before the Commission
and, after reterring to the information contaimed in the
application, advised the Coramission further that plaintiff*s
president had invested his entire personal fortune of
$1,800,000 in the tankers, that to cut expenses crews had
heen reduced and guards put on board, and that plamtif
was obliged to sell the tankers or go into bankruptey. ‘It
10
e 4 i ’ ®
was also represented that the proposed, sales price of
$912,000, per tanker, adjusted for the value of the heating
coils, might enablé Rodriguez to break even but he stood to
lose $45,000. At the hearing Mr. Clay specifically, on be-
half of the plaintiff, denied any possibility of an advance
arrangeme nt with the Argentine interests whereby later
approval of the sale and transfer would be sought. At the
December 7, 1248 meeting the Conmissjon by a3 to 2 vote
approved the sale and transfer *** * “ upon the condition
that any and all.allowances made to the Manuel Rodrignez
Tr ading ( ‘orpogation for placing the vessels in class and
‘ali monies due and owing tie Commission by the said
Manuel Rodriguez Pradine 4 ‘orporation shall be paid to
the Contuission prior to the issuance of any orders author-
izing the ‘transfer of fac and registry-6° the said vessels
and the COMPANY W wives any claims for aflowances.** By
memorandum of December 9, 1948, the- Commission advised
its Chief, Brean of trovernioent Aids, ef its conditional
approval, and on December 10, 1448 the Cofimission alse
‘notified plaintiff of its approval under the conditions noted
above, and, because plaintiff requested that transfer orders
he issued as early as possible renanested a S206,000 deposit.
The Commission’ advised that, the deposit would net pres
clide reconsideration but stat is also understood that any
future aetion by the Commission on this matter will be
acceptable toevou as final. Phaintifi ocotad these pre-
serpbed conditions in a detter dated Deeember 14, 1948,
noting it ‘accepts and agrecs’? and deposited a certified
check of the Arge ntine Miival Commission far s200.000,
Subsequently the ( ‘ommiission delivered transfer orders |
to plaintiff authortzievs the sale of the tankers to the Argen-
tine Naval Cormmiission and-themr transfer to Argentine
eetstry and flag. The conditions were not repeated in the
transfer orders-as neither the Commission’s revulations
ner practice required this.
The Maritime Conunission had agreed to reconsider its
vetion on the charges if plaintiff! would accept such action
as final Plaintiff agreed tocthis. On June 30, 1949, Clay
and Ralph Tnanuell also filed a formal application for re.
consideration repeating the same representations as were
11
°
nade before the sale to the Argentine Naval Commission.
They stated the sale occurred *‘after issuance of the foreign
transfer orders’? and as plariaff had soid at the price paid
the Maritime Comunission it could not be reimbursed by the
Argentine Naval Commission because of the refund of the
class allowances. It was stated that there was no under-
standing that Rodriguez would appear subsequently and
ask for an order to resell and chat if the corporation ‘‘hav-
ing purchase these ships, hed let them sit idle and then
subsequently sold them to\the Argentine Naval Commis-
sio® the allowances should be wiped out and the plaintiff
should aot profit by them. The Commission denied the
request August 12, 19497 and plaintiff was so advised.
Prior to March 1, 1948, and subsequently, the plaintiff was
acting, in effect, as agent for the Argentine Naval Commis-
sion in acquiring the tankers and that at all times plaintiff
planned in one way or another to accomplish their transfer
from the Matgime Commission to Argentina.
The Capitan and Sugarland were,built in 1945. The Mari-
time Commission pursuant to the Merchant Ship Sales Act
of 1946 determined that their domestic war cost was $1,774,
O38 each. Their 1947 costs would have been about 15 percent
greater or $2,040,143.70. In Mareh 1948 the Argentine
Naval Commission offered to pay $965,000 for each vessel.
The Argentine Naval Commission paid $2,202,225.87 for
the tankers. According to. plaintiff's available records,
which do not show what-oecurred with respect te the S200,-
000 deposit made by check of the Argentine Naval Cormmiis-
sica, plaintiff corporation made a gross profit of $155,900.29
on the acquisition and transfer of the two tankers, exclusive
of tite s200,900 deposit.
Tie Maritime Coimission received a total of $1,s02.
&36.81 for the vessels which would have cost $4,080,.287.40
to replace or $2,777,450.29 less than the replacement cost.
Duri ing the tune the Maritime Commission was authorized
to sell to noneitizens i charged noncitizens the unreequped
costs of repairs, In the case of the Sugarland this viuld
have amounted to $49,894.01 but as a supposed citizen pur-
ehaser plaintiff was charged but S42 or $49,852.01 less. -The
Government also counterclaims for this item.
.
12
The facts clearly show and the court has found that plain-
tiff was acting, in effect, as agent for the Argentine Naval
Commission in aequiring these vessels and that at all times
plaintiff planned in one way or another to ace ouplish the
transfer of these vessels from the Maritime omimission to
the Argentine Naval Commission,
In this climate what then is the result of such action.
Plaintiff says this court’s decision in the Norton Clapp case,
supra, decides the question. However, we are not inciined
to that view. The plaintiff in the Norton Clapp ease ae-
quired the ship in question in 1949 from an owner who had
_ previously acquired the same from the Maritime Commis-
sion in 1947.) [ny 1951 Norton Clapp contracted to sell the
ship to a Finnish corporation and applied for approval of
the same. The Maritime Commission approved the sale
upon payment of the sum of $7,500 as ‘consideration for
release of obligation to operate vessels under United States
laws.’’?) The court in the Norton Clagsji case held that the
limitation of sale to domestic bidders was because the Mari-
time Commission at that time was unwilling for ships to be
sold to aliens at any price and that in 1951 the reasons for
the restriction were no Jgnger present. The court farther
found that price hud nothing to do with either the restrietion
or the removal and the $7,500 charge was irrelevant.
It must be borne \in mind that the plaintiff in the Vorton
Clapp ease was a citizen of the Uifited States. Here the
situation is different\—plaintiff was acting as agent for the
Argentine Naval Commission but by his actions and asser
tions acquired the vessels as a citizen of the United States,
thereby circumventing the provisions of law regarding sale
to a noneitizen,. Plaintiff procured the tankers and ob tained
the price reductions or « af ass allowances ou the basis or re P-
resentations that it was Acquiring the tankers as a Unit ced |
States citizen for operation under the United States flare
and registry, knowing that sale to poncitizens was pro-
hibited under Publie Lat 4233, svpra. whereas in fact is wa-
acquiring the vessels in order to sell and transfer them toa
noneltizen,
Had the Argentine Naval Cotmission been permitted to
purchase the tanker. certainty the United States could have
exacted the $195,442.79 and could further have charged for
the desirable features.
Under these circumstances we believe plaintiff i is in the
same position as the Argentine Naval Commission, a non-
citizen, would have been had it negotiated and purchased the
tankers. That is to say, the Maritime Commission had every
right to charge tlie Argentine Naval Commission more for
the vessels than it could have charged a citizen, and there
is no reason to believe that such a charge would not have
been tnade. Thus the Maritime Commission, by reason of
the representation of plaintiff, lost the difference in sale
price and, if fraud were present, we could think of no reason
why plaintiff should be permitted to profit thereby. How-
ever, no specific finding of fraud is made in this case and in
the absence thereof, plaintiff would not be chargeable under
a constructive trust for the’ proceeds received from the sale
to the Argentine Nava] Conmunission. Restatement of the
Law of Restitution, Ch. 13, see. 202; United States v. New-
bury Mfg. Co., 86.F. Supp. 602. ® a
a et
Under these circumstances the Governnient is entitled to
retain the $135,442.79 whieh plaintu® a au citizen saved
under the floor price and the $28,756.81 primi for desir-
able features.
Defendant counterclaims for losses and damages sus-
tained, /. ¢., (a) the value of the Capitan and Sugarland; (b)
the differences he tween the amount te nial for the t tankers by
the Argentine Naval Commission and the amount received
by the Maritime Commission, 4. e., $899,357.06; (¢) the gross
'The case of Beso Nederland N. V., ete. No, 689-53, decided May 8,
157, presented a similar situation wherein a noneitizen sought relief trom
payment for desirable features pursuant to 4. H. Bull Steamship Ca, v.
Vuited States, supra, The court in the Esso Nederland case held that the
specific intention which the parties intended and incerporated in the eon-
traet was that the desirable features were to. be paid in addition, to, the
already known floor prices of the ships. The contract provision in the’
instant case is exactly the same as in the Esso Nederland esse and is as
follows: ”
“The Bayer agrees, if it shall be determined by the Commission upon
examination of the (each) vessel, that the vessel lacks Or eontains
desirable features as detined in clauses (2) and (3) of Seetion 34d)
of the Aet, then. seh; 13 turchase pree shall be deereased, within the
linnits of the floor price of the vessel, or increased, by such amounts,
any, as may be determined by the Commission pursnant te said
‘clanses.”
Led
: 14
profit made by plaintiff on the illegal transaction; and (d)
$49,852.01 for unreeouped repairs.
We believe the defendant shouldgpe put in the same posi-
tion as if the transfer had not been made to plaintiff. That
is to say, had the tankers been sold directly to the Argentine
Naval Commission, the Government could have charged
$135,442.79 as class allowance and $28,756.81 for desirable
features. These sums had been paid to the defendant and
we hold that the defendant is entitled to retain them. The
only other damage defendant has suffered is the cost of un-
amortized repairs which would be charged to noneitizen
meen on
The findings show that ‘‘during the time that the Commis-
sion was authorized to sell to noncitizens, it made a charge
to the buyer of the unrecouped cost of repairs made subse-
quent to January 1, 1947, less depreciation at the rate of
$6,000 per month for each month of operation. This, for the
Sugeriand would have amounted to a charge of $49,894.01.
If the policy respecting sales to citizens required a charge of
the cost of unrecouped repairs made after July 1, 1947, the
charge in the case of the Sugarland was $42 only, or $49,-
852.01 less.’*.; ¢
Under seefion 6 of the Merchant Ship Sales Act, supra,
the sale price to noncitizens was merely the minimum statu-
tory price. Therefore, plaintiff’s purchase as a citizen
saved $49,852.01 which defendant could have charged a non-
citizen. The Government jost that amount and is entitled®
to recover the same under its counterclain.
Since asa result of the dissolution of the plaintiff corpora.
tion, Manuel Rodeyruez acquired all but $4,255.59 of the
corporate assets ; has been made a party plaintif? to
answer tfie defendamt's counterclaim, we hold that judgment
will be entered against the plaintiff corporation and Manuel
Rodriguez personally.
The plaintiff is not entitled to recover, and the petition of
Manuel Rodriguez Trading Corporation is dimissed.
Defendant is entitled to recover of and from the plaintiffs,
Manuel Rodriguez Trading Corporation and Mannel Rodri-
enez, on its counterclaim the sum of $49,852.01,
It is so ordered. |
Mappex, Judge; Wuerakxer, Judge; Liveverox, Judac:
and Jones, Chief Judge, coneur.
15
Finptncs or Fact
The court, having considered the evidence, the report of
Connnissioner George H. Foster, and the briefs and argu-
ment of counsel, makes findings of fact as follows:
The Manuel Rodriguez Trading Corporation was from
January 1947 to February 1951 a corporation organized
purspant to the laws of the State of New York with prin-
cipal place ef business located at 220 Broadway, New York,
New York. Manuel Rod:'xuez was the principal stock-
holder, and he, in his capacity as presiden’, actually op-
erated as sole owner. Hereinafter, the term plaintiff refers
to the corporation or to Manual Rodriguez personally.
Plaintiff. by contract dated April 6, 1948, aequired
from: the United States Maritime Commission, two T-1
tankers, the Sugarland and the Capitan at a price of
£887,019 each. The price was in aecord with the Ship Sales
Aet (at; App. U.S.C., see. 1739) and the rules and regula-
tions issued pursuant t] ereto as set forth in General Order
60 of the U.S. Maritime Commission.
The contract provided for a reduction of price by an
sania equal to the cost, as determined by the Commission,
which would be required to enable the Commission to de-
liver the vessels in class with valid-certifieates of classiftea-
tion and inspection in accordance with the minimum re-
quirements of the rules and rventations of the American
Bureau of Shipping and. the Ul S. Coast Guard Mariie
gece ide
4. Plaintit filed claims ss reduction of price and reduc-
tiona. were allowed in the total sum of $195,442.79. Pur-
suant to the contract, said- reductions were based on the
following : ;
The Sugarland
= 4,004.00 for repairs.
15,259.37 for predelivery and maintenance expenses.
The Capitan
894,067.00 for repairs.
2 022.42 for predelivery and Hiaintenace expenses.
Title to the Sugarland was transterred to the plamtiff on
June 8, 1948, and title to the Capitan was transferred Au-
gust 20, 1948. onde
aie
16
5. On October 21, 1948, plaintiff applied to the Commis-
sion pursuant to sections 9 and 41 of the Shipping Act for
approval to sell the vessels to the Argentine Naval Com-
mission. 7
On December 7, 1948, the Commission approved the pro-
posed sale to the Argentine Naval Commission.
6. On December 14, 1948, plaintiff sent a certified check
for a deposit as required. The vessels were thereafter
transferred from the U. S. Registry.
7. One June 3, 1949, plaintiff requested the Commission
to reconsider the requirement that the allowance of $135,-
442.79 be paid to the Commission. The Commission re-
fused to change it decision and upon request fer-recon-
sideration thereof, the request was denied. Plaintiff was
so advised on September 12, 1949.
8. The contract of purchase contained the following pro-
vision: 3 |
‘The Buyer agrees, if it shall be determined by the
Commission upon examination of the (each) vessei,
that the vessel lacks or contzius desirable features as
defined in clauses (2) and (3° of See. 3 (d) of the Act,
then such purchase price shall be decreased, within
the limits of the floor price of the vessel, or inereased,
by such amaounts, if any, as may be determined by the
Commission pursuant to said clauses.*’
On June 8, 1948, plaintiff wrote to the Maritime Commis.
sion with reference to the Sugarland, The letter contained
the following:
The absence or presence of desirable features no:
having been determined by the Commission, in aecord-
ance with the terms of the coutract of sale, we agree to
pay to the Commission the cost of such desirable fea-
tures chargeable to the Buyer under the terms of the
contract of sale or the Commission will make an allow-
ance, within the limits of the floor price of the vessel
for the absence of such features.
- f
| eS
$
Homer ©. Clay, who was, acting as, attorney in fact for
plaintiff, on August 20,-1948,-wrote similarly relating to
the Capitan. or ;
The Commission determined that both on the Sugarland
and on the Capitan there were desirable features and desig-
nated them as follows:
ati
Sugarland: Depreciated value
Heating coil installation... 6... gan tick $23 “S423
Diesel generator..... . .... Re reat 3 2°R.12
Low pressure Evaporating plant __. Ma Ads cc oten 1,128 50
Captain: i
Low pressure Evaporating plant... Saas a 1,105 96
28 .7h6 81
In response to a request for information as to the amount
of the charge for the heating coil, the Commission on Octo-
ber 7, 1949, advised as follows:
In this connection, your attention is drawn to Con-
tract MCe-61155, Exhibit A, Paragraph 1; and Gen-
eral Order 60, Subpart A, Section 299.1 (f) (3). Pur-
suant to the above, the Bureau of Engineering has
advised that at the time of delivery of the MV SUGAR.
LAND to you there were on board certain heating coils.
The unadjusted statutory sale price (87% of the pre-
war domestice cost) is $24,200, against which deprecia-
tion at the rate of five percent per annum from the date
of installation of such coils (September 5, 1947) to the
-date of title transfer (June 8, 1948) is allowed. After
depreciation for this period is deducted the charge for
the heating coils is $25,284.23, which will be charged to
your account.
The depreciated values charged for the other features
were derived as follows:
; Sugarland
Diesel generator: Statutory Sales Price Unadjusted $3. 760 00
Depreciation: Po
Normal: 5° from 8-31-45 to 6-8 48 $520 &5
War Service: 14°, from 8-31 45 to G9 2-44 10s
521 88
Amount charged 3,238 12
Floor Price of Desirable Features 2.625 00
ye 1 '
ne me ag a ss
ee ®.
° 18 |
- . Sugarland
Low Pressure Evaporating Plant: Statutory Sales Price Un-
SN pe eiaraaatas Be eae 3 | i310 00
Depreciation: oe |
Normal; 6% from 8-31-45 to 6-8 48. _- $isi 47
War Service: 19°% from 8-31-45 to 9-2-45 Os
| Ist
Amount ops 96 ee a Se 1128 50
oor Price of Desirable Features. _ ooo On
Cajntan
Low Preseure Evaporating Plant: Statutory Sales Price Un-
EE RE ing eke $! 310 00
Depreciation :
Normal: 5°; from 7-14 45 to § 20-48 $203 14
War Service: '3°% from 7-14 45 to @ 2-45 Wi
———— 204 O04
Amount charged. etratierres "8 1105 Oe:
Floor Price of Desirable Features O00 00
4. Due to a shortage of privately-owned tanker tonnage
to meet the demand for oil, the Maritime Commission op-
erated its tankers and kept then: in repair, Tn cases wher
the tankers were sold before the Commission had recouped
the :opair expense from op rations, the Conimissier re.
quired the buyer to pay a pest of these repair expenses,
"The Sugarland and the Capitan were sold to p aintitf
pursuant to the policy governing sales to U.S. eitizens and
Net TV cof the contract covered this repair expense
On June &, 1948, Maintif wrote the (Ouimiussion with re
spect to repair expenses on the Sugarland and deposited
SZORS4 to cover repair costs. :
It was later determined by the Commission that only $42
for repair expenses shonld be charved and the balance of
the deposit was returned. ;
Tuk Government's Counxrenct dim
10. The Government has filed a counterclaim fos the pre
ceeds received by plaintiff from: the acquisition of these two
tankers and the subsequent transfer of thom to the Argen
tine Naval Commission. In connection with the counter
claim, the Government innleaded Manuel Rodrieues per.
sonally as a party plaintiff,
11. During the corporate existence of the Manuel Rodel
guez Trading Corporation, Manuel Rodriguez was the pres
ident of the corporation. The steck of the corporation we.
originally issued on January 30, 1947. Manuel Rodrieues
was issued 49 shares, his wife, Adele Rodriguez. a citizen
19
of Cuba, was issued 30 shares, and one share was issued to
Louis Russell. Of the stockholders, Manuel Rodriguez
alone paid consideration for the stock.
As of September 2, 1948, Manuel Rodriguez acquired thie
stock of his wife, and as of December 29, 1950, the assets of
the corporation were distributed to the two remaining
stockholders as follows:
Manuel Rodriguez $336,191.81
Louis Russell 4,255.59
The corporation was dissolved by a certifieate of dissolu-
tien filed February 1, 1951, but dated December 22, 1950.
¢. Tie Merchant Ship Sales Act of 1946 approved
March &, 1946 (60 Stat. 41), provided that the Maritime
Commission aight sell certain Government-owned war-
built vessels to a citizen of the United States, defined in
the act to include a corporation, if such corporation is a
citizen of the United States within the meaning of sec. 2
of the Shipping Act of 1916 as amended, (30 Stat. 729, 46
U.S.C. see, 802.)
The sale to citizens were to be at a ‘tstatutory sales
price.”’ Statutory sales prices in the ease of tankers was
defined in the act (see. 8d) to mean ‘tan amount equal to
Sit. pey centum of the prewar domestic cost of a tanker of
that type ° subject to adjustment set forth therein. Un
der certain conditions also set forth in the act (see. 6) sales
to non-citizens*were authorized. By act of February 27,
1948 (62 Stat. 38), sales to non-citizens were prohibited
after March 1, 1948.
1S. On April 13, 1946, the Maritime Commission pio
tnulygated rules and regulations and supplements thereto
(dated August 17, 1946) which reeited that the ostimated
cost of T-1-M BT tankers as of Jarnary 1, 1941, was $094,-
(44), the dqnestic war cost $1,¢¢405s. The unsdjusted
statutory 7 price of &7bS per centum of the 1941 cost
was $869,750. A limitation an the adjustments provided
for in the act, was that in case of a tanker, ne adjustments
should reduce the statutory sales price te less than ot} per
cent of the demestic war cost, thus fixing a floor pree of
$887,019. The regulations and supplements were pub-
lished in the Federal Register of April 23, 1946, April 30,
1946, and August 17. 1946. (11 Fed. Rew. 4459, 4702.)
\
20
14. In November, 1947, John E. Jacobsen, then an em-
ployee in the Burean of Operations of the Maritime Com.
mission,* advised Manual Rodriguez that there was a pos-
sibility that ten T-1 tankers might be purchased from the
Maritime Commission for resale to Argentina.
At that time there was located in New York City an Ar-
ventine Government purehasing commission, known as the -
Argentine Naval Commission.
On December 19, 1947, plaintiff retained Homer . Clay
and John E. Jacobsen to represent it in bringing about the
sale of ten or any less number of tankers, for which serv-
ices Clay and Jacobsen were to receive on a contingent
basis a fee of $25,000 for each tanker actually purchased.
15. On February 18, 1948, the plaintiff made written ap-
plication to the Maritime Commission to purchase ten des-
ignated tankers at the statutory sales price. In the appli-
cation, it was stated that two of the three stockholders and
directors were citizens of the United States, namely, Man-
vel Rodriguez and Louis Russell. The application stated
that plaintiff was not then and never had been engaged in
the shipping business.
In connection with the application, there was forwarded
to the Maritime Comnfission as evidence of good faith two
certified checks, each for $1,000,000, drawn by the Argen-
tine Naval Commission by its chief on February 14, 1948,
pavable to the Treasurer of the United States. One check
was drawn on the Chase National Bank and the other on
the National City Bank of New York, which banks certified
the checks on February 16, 1948.
16. Prior to the formal application, Manuel Rodriguez
had on December 30 and 31, 1947, conferred with members
of the Argentine Naval Commission in New York and on
December 31, 1947, wrote to,that commission sending spec-
ifications of the ten tankers which had been discitssed at
the December 30 and 31 meetings.
The letter contained the following:
o . . 4 o oO
PRICE.— Originally the price of, these vessels, to the
United States Government, was $1,774,038.00. If
these vessels were to be built teday, according to the
a re]
2 Jacobson was on annual leave from Awzust 31, 1947, to December 22,
1947, and on “forloneh” thereafter to February 28, 1048.
21
present cost of labor, the price would be $2,040,143.00
as you can easily verify.
The present basie sale price is $887,019.00 for each
vessel, and we ave selling them to you at the féllowing.
prices: paella
1 to 5 vessels $965,000.00 each.
6 to S vessels 950,000.08 each.
& to 10 vessels 935,000.00) each.
INSPECTION.—They can be inspected as soon as you
wish, since we already have the required permits from
the U.S. Maritime Commission to zo to inspect them,
.
as we indieated to yor. ~ eee rit nnn cnn taeda deccatsotteindmenine ialalioneinediis
PUBLIC SALE.—These vessels are not on public sale,
but we have very good and well-founded reasons, ae-
cording to the letters that I showed you, to believe that
we can obtain them immediately. ,‘In the difference be-
tween the basie price and the price that we quoted vou
there would be included all the necessary expenses for
obtaining the vessels for you, ine lnding transfer of
“titles,” change of ‘‘flag.’’ transfer expenses, fees,
ete. For this reason we believe this is a very convenient
offer for you.
DELIVERY. -These vessels ore to be delivered
immediately.
We want it clearly understood that this offer is subject
to the approval of the U.S. Maritime Commission,
and in addition, we bind ourselves to obtain the * flag”
change.
In the event that we are not able to obtain the change
of flag, this sale becomes null and void and the deposit
that vou made by check to the name of the U.S. Mari.
time Commission will be returned to you immediately.’
r
On February 4, 1948, Clay had wired Rodriguez as fol-
lows:
STRONG PROBABILITY THAT CONGRESS WILL PROHIBIT SALES
WAR BUILT VESSELS TO FOREIGN COUNTRIES AFTER FPEBRU-
Ary 29. URGE APPLICATION BE FILED IMMEDIATELY.
Also, previous bo the formal offer, plaintiff and the Ar-
gentine Naval Commission on February 14, 1948, entered
3 This is « translation from the Spanish of the org'nal letter.
into a contract whereby the Argentine Naval Commission
agreed to purchase, and plaintiff agreed to sell, ten tankers
for $935,000 each. The letter of agreement contained the
following :
FOURTH .—The Seller promises to obtain a change of
flag and an export permit, if it is necessary, so that
these vessels can be legally transferred to the Govern-
ment of the Republie of Argentina. It is expressly
established that if for any reason the legal transfer of
same eannot be effected, this Contract becomes null
and void, and that neither party will demand from the
other indemnification of any kind. In this event, the
deposit made to the U. S. Maritime Commission in the
offer to buy will be returned immediately to the Ar-
gentina Naval Commission.
FIFTH.—I\n ordet to effect the offer to purchase these
vessels from the U.S. Maritime Commission, the Ar-
gentina Naval Commission delivers in advance to the
Seller the sum-ef Two MILJoN UV, 8. DOLLARS (U.S. $2,000-,
000.00) in two checks made to the order of the Treas-
urer of the United tates: one for ONE MILLION U. 8. DOL-
cans (U.S. $1,000,00000) against The National City
Bank, No. 1359, and another for the same amount
against The Chase National Bank, No. 1391, both
signed on the same date as this Contract.
SINTH.-\t is expressly indicated that this Contract
will be executed as a public document after the ap-
proval of the sale by the U.S. Maritime Commission.'
+ * * +
17. When the formal application was filed with the Mar-
itime Commission on February 18, 1948, it was referred to
various officers of the Maritime Commission for comment,
niaking reference to the request that purchase would be
on condition that transfer to Argentine registration be
permitted. At a meeting of the Maritime Commission on
March 1, 1948, the aplication for purchase of the ten
tankers, for sale and transfer to a foreign registry and
4A tran lation from the Spanish.
t ner
mo?)
flag was formally disapproved.’ At 11:30 P. M., March 1,
1948, liowever, the sale of one tanker to plaintiff for
transfer to Argentina was approved.
Senate J. R. 173 approved February 27, 1948, 62 Stat.
os, prohibited the sale of a war-built vessel to a non-citizen
after Mareh 1, 1948,
18. On March 5, 1948, Rodriguez wrote to the Argentine
Naval Commission as follows.
As you well know we ‘presented our application to
the U.S. Maritime Commission on February 18, 1948,
for the right to purchase ten (10) petreleam. tankers
with the right to transfer the title and registry of the
same to the Argentine flag.
Atd1:50 P. M.,on March 1, 1948, one-half hour before
such sales would become forbidden by law, we signed
with the Maritime Coninission for the purchase of one
tauker,
* * « o *
Meanwhile, it was evidcet that a law would be en-
acted which would affect our application and on Fel
rnary 3, 1948, [T personally informed you thereof by
telephone. There was a great probability that the
Congress would forbid the sale of these types of ves-
sels to foreign countries following February 29, 1948,
and the application had to be presented immediately.
Qu February 18, 1948, our fears were realized. The
House of Representatives of the United States passed
a bill forbidding such sales to persons who were not
citizens of this country, or representatives thereof, af-
ter March 1, 1948. A few days later the same bill was
passed by the Senate and signed by the President of
the United States. Henee, our application coincided
with the Congressional action whieh discontinued ,the
sale of the types of vessels in which we were interested,
after March 1
The result was an ‘‘avalanche’ > of applications for
these and other types of vessels for foreign govern.
ments and their representatives. A member of the
*On the same date similar action was taken with reference. to other
offers; one tanker for transfer to Panaianian flag and 3 tankers for trans
fer to the Argentine flag. *
ey
24
Maritime Commission informed us that they had more
than forty applications for the purchase of the tank-
ers which we were endeavering to buy.
Not ouly did the demand inerease due to the immi-
rence of the date of expiration of the law, but on Feb-
juary 18, when our application was finally presented,
only six tankers remained unsold. The other four
which we wanted had already been sold prior to our ap-
plication. The competition for these T-1 tankers pro-
duced a terrible pressure upon the Maritime Commis-
sion,
Each applicant, of course, tried to obtain faverable
consideration for his application. As you well know,
we were active. We contacted persons having high
connections with the majority of the officials of the
Maritime Commission and we received the strongest
possible promises that they were going to give us two
or more tankers, but they were unable to give them to
us due to an application of the Standard Oii Company
(a corporation of the United States) for three vessels
for the service of the Dutch East India [sie], which
application by law had to receive preference.
We continued and shall continue to maintain contact
with members of the Maritime Commission and we had
and still have officials of the United States making rep-
resentations on our behalf. Likewise, thanks to the
kind efforts on your pa.i, the Argentine Embassy in
Wa hington sent a note to the Department of State
reconnuending the sale of these types of vessels to the
Argentine, and, thereby, along with the influential per-
sons whom We know in said Department of State, we
have been able to obtain great pressnre from the same
in favor of our application. Needless to say, the prom-
ises made to us that e would receive two or more
vessels did not materialize. i
We are still endeavoring to obtain one additional
T-1 tanker on the premise that we, the purchasers, are
citizens of this country (a corporation of the State of
New York) and that, therefore, the law does not
prive us of making these purchases. Furtherme-e,
there is a remote possibility that we may obtain still
another vessel, the one which they are endeavoring to
obtain for us. Ih may well be that we will be success-
ful; however, at this time we cannot evaluate the pos-
sibilities,
*. > > >. a
You can rest assured that we will continue our ef-
forts and, as we’ obtain favorable results, we will com-
miunicate the same to yvou.*
19. On Mareh 7, 1948, plaintiff's attorney in fact, Homer
(. Clay, wired the Secretary of the Maritime Comunission
as follows:
APPLICATION MANUEL RODRIGUEZ TLADING CORP HEREBY
AMENDED TO ELIMINATE ALL KEFERFENCE To TRANSFER OF
SHIPS TO ARGENTINE UEGISTEY APPLICAN4 DESIRES TO PUR-
(CHASE AS AMERICAN CITIZEN TERMS CASH ON DELIVERY WITH
PWO MILLION boLLAS NOW DEPOSITED WITH APPLICATION
PO BE APPLIED ON PURCHASE PRICE,
On March 10, 1948, plaintitf filed a formal amendment to
the application of February 18, 1948, by striking there-
from:
* all reference to the transfer of the vessels re-
ferred to therein to foreign flag or registry and to pro-
Vide that the applicant will purchase any one or more of
the vessels referred to in said application as a United
States citizen Gapplieant is a New York corporation)
for operation under the flag and registry of the United
States and to further provide that shou'd applicant be
vranted the right to purchase any vessel or vessels
pursuant to its amended application, applicant will ob-
tain the services of one of the established and experi-
enced ship operating companies to operate said vessel
or vessels.
20. Mareh 11, 1948, plaintiff's amended application was
referred to the Maritime Commission by memorandum
from the appropriate officer, the Chief ef the Large Ves-
sel Sales Division, James L. Pimper, who recommended
the sale of two Ti-M-BT tankers with the advice that the
“appleant wishes to eliminate original referenee to trans-
* Translation from the Spanish
26
ly ,
+ fer ta Argentine ig and purchase as an American
Citizen’? and to pay cash in full on delivery. The Com-
mission was advised that:
s
2 > = * * *
Applic: uit claims no shipping experience but states
that if will cbtain the services of one of the established
and experienced ship operating companies to operate
the vessels when purchased.
a
A
« ~ w . - . J *
? a
* * since the applieant offers.to pay cash in full for
the vessel, the Comimission is justified in considering
that the applicant possesses the necessary financial
resourees, ; :
> ~ . * *
Applicant proposes to operate the vessel: in estab-
lished tanker trades, chiefly from North Atlantic ports
to the River Platte and oceasionally from Venezuelan
ports to the River Platte.
* : 9%. = * .
March 12, 1948, the Commission approved plaintiff's
application as to three T-1 tankers.
By memorandum of Mare’ 4, 1948,Mr. Pimper advised
~ the Commission that plaintitt ind be en ‘allocated the last
three remaining tankers of this type’’ but the Navy Depart-
ment had requested the transfer of one tanker for military”
operations so that he recommended that the action of March
12, 1948, approving the sale of three tankers be modified to
\ approve of the sale of two only. This reeommendation was
approved by the Commission March 26, and on March a1,
1948, the Conumission adviged plaintiff's representative of
the approval of the sale “for operation under United
States flag,’’ the terms of payment to be ‘‘eash in full on
delivery,”’ :
21. Under date of March 21, 1948, plaintiff and the Ar-
gentine Naval Commission entered into accontract relating
to the Capitan as follows:
“ FIRSTLY: The Seller sells to the purchaser and the
latter buys from the former, a Diesel tanker, T1-M-
BT 1, with the following deseription :
27
-Former name: Klickitat.
Present new name: Pi pitan.
Builder’s No.: 83: : eee
U.S. Maritime Cominission Hull No.: 2624.
The other characteristics of the said ship are already
known by the Purchaser. This tanker is at present in
the possession of the (.S. Maritime Commission. .
SECONDLY : The Seiler, on February 18, 1948, with
the previous authorization and in accordance with the
Argentine Naval Commission, applied to the UL S.
Maritime Commission fer the eurchase of ten T-1
tankers, which application was aecompanied by the
deposit of 2 certitied cheeks drawn by the Argentine
Naval Commission in favor of *'The Treasurer of the
United States’ for the amount of $2,000,000.00 (two
miuilion, dollars) and requested on that occasion the
een
approval of the ULS. Maritimy Conmnission to.trans-.
fer the registration and title Of the said ships ta the
Argentine flag. .
THIRDLY : Since 'toas the desire of the Argentine
Navel Commision to obtain more tankers Jike the ten
opportu iely offered, in order to satisfy the needs of the
Argentine Navy, and in order not to lose the possi-
bilities of purchasing which exist at present, ML annuel
Rodriguez Trading Corporation 4s requested to serve
asx intermediary in the acquisition of the aforement
tioned off tankers, Shis commitment beine subject. to
the fe asible future transfer of the same to the Ministry
of the Navy ef the Argentine Republic. This transfer
should be mede™ when cireutn stances wermit it te he
done legally,
FOURTHLY: The aforementioned transter must be
made wothin four months afier the signing of this con
tract. In case this conmnitment ie be fulfilled, the
Argentine Naval Cononisston will be able at the end of,
this time to. grant an extension of two months. at the
mest, or to arranyve the sale of those ships thus recover.
Ing the money invested up to ghat moment in the pur-
chase, preservation, InsSuranee, raintenamee, ete, of
the an. -
FIFTHULY: Therefore, and in ecusideration of the
routual benefits to be obtained in this econtraet, and
|
oe
Fg.
&
other good and valuable considerations, Manuel Rod-
riguez Trading Corporation and the Argentine Naval
Commission mutually agree to the following:
A. The Corporation shall be able to modify the ap-
plication dated February 18, 1948, made to the U.3.
Maritime Commission in any way which may be neces:
sary in order to obtain the approval for sale of the
tankers to the party applying as a corporation of the
United States.
B. The Corporation promises to try to obtain on its
own account from the U. S.' Maritime Commission the .
greatest number of tankers within the mimber of ten
which appears on the application mentioned in A,
C. The certified checks of the Argerttine Naval Com-
mission {or $2,000,000,0G (two million dollars) which
are at present deposited with the U.S. Maritime Com-
mission, will be able to remain there as a guarantee for
the application vs it has been modified, until May 31 of
this vear. 7
D. If the request is approved, the Corporation will
be able to receive the title of the number of tankers
which are granted to it and the money to pay for them
will be turned over by the Argentine Naval Cocnmission,
at the official price of 887,019 dollars, fixed by the U.S.
Maritime Commission, and in case the Jatter should
change if, an attempt should be made to come to an
agreement on it by both contracting parties,
E. Onee the Corporation has received the title
titles of the ships as is mentioned in the preceding para
wgraph, the Cerporation will take steps with the U.S.
Maritime Commission to get its approval for the change
of title to the Argentine Naval Cominigssion, and of the
flag and registration to the Argentine Republic and to
obtain and provide for this Naval Commission withont
any expense to the Purchaser, all the necessary docu
mentation so that the ships can be used without any
obstacles by the Argentine Government. ;
BK. When the Corporation has obtained the legal
transfer of the tithe of ownership to the Argentine
Naval Cormmission, the change of the flag to the Argen
tine Republic and the aforementioned documents the
Commission will pay to Manuel Rodriguez Trading
2p
29
Corporation the amount remaining between the price
paid to the U. S. Maritime Commission and the prices
fixed in the offer of December 51, 1947 and an expla-
nation added on the day of the date. :
G. In case the laws or governmental provisions make
it impossible to obtain the legal transfer of the title to
the Argentine Naval Commissron and the change of
flag to that of the Argentine Republic, both contracting
parties will consult with one another for the purpose of
finding an appropriate ‘solution to the problem. pre-
sented, and in ease they eannot eome to this agreement,
they will proceed to sell the shipis on the account of the
“Argentine Naval Commission, without any loss to the
Corporation, and from the profits, 20% will be credited
to Manuel Rodriguez Trading Corporation to compen-
sate for any expenses which it might have inenurred in
the sale of the ships. In case the Government of the
United States of North America should expropriate the
ships, it is understood that the payment which it makes
Will immediately be transferred to the Argentine Naval
(‘cunmission.
H. Expenses for Insurance and Other Bocpenses: The
expenses for insurance as well as any other PXPENses,
as for example, expenses for the wharf, towing, fuel,
ete, will be paid by the Argentine Naval Commission.
It is also ynderstood that all the arrangements which
are made for the insurance, wharf expenses, ete. will
always be subject to the written approval of the Argen
tine Naval Comunissior
SIXTHLY: From the moment this Contract. is
signed, the Argentine Naval (‘ornmission will he ahle to
dispose of the ship in any wav whieh it will deem eon:
venient, but respecting the obligations of the flac.
SEVENTHLY: The Argentine Naval Commission
will have a guarantee in this purchase by receiving in
deposit from Manuel Rodrixuez Trading Corporation,
the titles or ownership of the ships and the receipts for
the pavinents miade Is the sntd Corporation,
FIGHCHLY: Inspection: This ship has alread
Deen inspected by the Argentine Naval ¢ ‘OMI Ss on, and
it has accepted it.
As proof of the conformity uy both contracting
30
parties, four copies of the same kind and for one single
effect are signed in the offices of the Argentine Naval
Commission, on March 31, 1948."
&
Accepted by the Seller
> Manuel Rodriquez (Signed)
Manvuew Ropricvez Trapinc Corporation
Accepted by the Purchaser
(Signature dlegible)
ARGENTINE NavaL CoMMISSION
A similar contract relating to the Suearland was made
the same day.
22. In reliance upon representations thatthe tankers were
purchased for operation under the flag of the United States,
under date of April 6, 1948, the Maritime Commission
entered into a formal sales contract for the sale of the
Capitan and the Sugarland to plaintiff at a floor price of
$887,019. A copy of the contract is printed as Exhibit A
to the petition and is incorporated herein by references
23. The two checks drawn by the Argentine Naval Com-
mission and deposited with fhe Maritime Cominission were
not applied as payment for the two tankers. The cheeks
were subsequently returned uncashed, one in April 1948
and the other in June 1948 after payments of the purchase
price of the two tankers had been completed.
24. A summary of the payments for the tankers as re-
fected by the records of the paintiff corporation is’ as
follows = ¢ :
1048: r Cayntan Sugarland Totals
» April 5 ; 2 Sk oF01 O)} SRS 701 9O = S177.4035 BO
May 7 600 000 00) GOO 008) 00 1 200 000 00
June 7 194,223 10 194,225 10
Aug. 19 . 104. 250 10 14.250 10
Subtotal! 7U2 952 00 RS20925 00 1 675 877 00
Less: ‘
Nov. 9, 1948, r-fund by the US
Maritime Commis ion for class
work allowance 22 ,022 . 42 15,259 37 37.281 79
7 085 63 1.638 505 21
Net payments for vessels 770,929 58 SF
‘Translation from the Spanish.
Other Costs:
(a) Paymeht for repairs (under
par. IV, exhibit. A of contract)
upon delivery
Less refund to ‘plaintiff, Oct. 17,
1050 Ppt) Be
Net additional cost on
Sugarland .
(h) Payment to U. 8. Maritime
ommission upon delivery for
consumable stores
(ce) Inspection, repair. ,
and agéney expense
insurance,
Total cost
31
S D6 OO
i33., 908 48
a. $e “4 36
20,729
R34
42
7.512
62
=“
1
01
OO
00
690 59%
eee
937
,910.%
”)
~~
i
$2 00
13,028 00
196 599 37
-—4- + --
848.264 58
os >
In accordance with the agreements, the Areentine Naval
Commission advanced sams to plaintiff for payments of
the tankers at the times. and in the amounts, as follows:
Capitan Sugarland Totals
\pril 2, 194s S88. 701 90) 388 701 GO $177 .408 8D
April 28, 1048 6G 317 10 198. $17.10) 1,596,634 20
Subtotal (official price} S87 ang (M) 887 ole mot, 774, 038 00
Dec. 23, 1948, balance 77,981 00 77,981 00 155 G52 OO
: Total price of Dec. 31, 1947 O65. 000 00 65. 000 00 S 430. 000 Oo
Add:
Oet. 25, 1949, additional pay-
ment for certain expense as
provided under Sth (HH) of
the agreements 41.826 G7 30.397 80 42.223 87
Total of amounts received 1 006.826 07 995.397 80 2.002.223 87
The funds advanced by the Argentine Naval Commis-
-ton for the full official price of the ships were received by
plaintif? corporation before it was required to make sue hy
payments to the United States Maritime Comission under
its agreement to purchase ther,
Piaintiff corporation’. records contained no evidence of
the receipt of the $200,000 deposit required by the United
States Maritiine Conunission in December 1948, upon the
approval of the transfer of title of the ships to the Argen-
tine Naval Conimission, nor of any refund of any portion of
the same,
Qn the basis of the above accounts, the plaintiff cor-
poration made a vross profiton the aequisition and transfer
of the two tankers of $153,959.29.
25. On October 21, 1948, the plaintiil transmitted to the
Maritime Cotoraission application for the approval required
hy and 41 of the Shipping Act of 1976,
amended, of propo:ed transfer to Argentine registry and
seetions
iis
a
32
asleif an alien, namely the Argentine Naval Commission,
of eth of the two tankers. Bhe applications were on forms
of the Maritime Communission whieh required statenients by
the applicant designed to elicit information desired by the
Maritime Conmunission for consideration of the requests.
Item Ne. 3 of the application form requested informa-
tion as to the total complement of the vessel and whether
employment would be available for the officers and crew if
the ship was sold. To this inquiry, plaintiff stated that no
officers or crew were employ ed because the vessel was not
in operation.
Item 4 related to the operation of vessel under American
registry. To this, plaintiff stated, that because of facts set
forth in the attached memorandum, the vessel had not been
operated since owner acquired title. Under this item it was
also stated that the vessel had been offered for sale to Amer-
ican citizens: that it had been on the market for sale for
three months prior to the application and no offers had been
received. It stated further that the proposed sales price
was the ‘actual cost of vessel to owner,.” to be paid in eash.
Attached to the application was a letter from the Argen-
tine Naval Comunission under date of August 30, 1848, as
follows: ,
In reply to the attached ad which appeare «din the New
York Journal of Commerce, August 27, 1948, there is no
evidence of the number of -T-1 tanker [sic] you have for
sale. For this. reason, we herewith submit our bid to
purchase such T-1 tankers as you may have for sale up
to five vessels, We are prepared to pay in U.S. cur-
rency for five vessels or whatever number of vessels
vou may have less than five. In.order to arrange for
an inspection and to disenss the price, please contact
us at once, m
The ‘attached ad’? was as follows:
T-1 Tankers For Save
U.S. fag. Lnmediate delivery
Principals only. All eash in dollars
Zox Y 955, Journal of Commerce
Another attachment was in part as follows:
/
« ¢ * ° . *
When the Commission offered the tankers to the Man-
uel Rodriguez Trading Corporation in March 1948, the
tp
Pe
company was influenced to accept them by the fact that
the demand for tankers at thatatime was so strony as
to be perhaps unprecedented in pe acetime, , Private
charter rates stoed well above the Maritime Coniunis
sion rates and the market price of vessels gene ‘rally well
above the statutory ang floor prices. “This situation
induced applicant to believe that domestic employment
of the vessels would be possible and profitable.
The company aceepted the vessels with the knowléde:
that it could opeyate, ch: ater or sell the vessels in the
domestic market,’ and or gimder appropriate and mer-
itorious cireumghances con EBoply to the Cofinission
in acedrdance, Swith the Jak Yor approvel to change
registry, & - cee ;
Although the vessels were Allocated in March 1948,
When the tanker market was strong, it was not yutil
August 20, 1948, that re pairs were completed on the see.
gud vessel and tithe was tendered to the Manuel Redri-
guez Trading € Oonoration, oe this period a
drastie change ocenrred in the tanker market. ( ‘harterss
rates fell below the Maritime € ‘OMISSION se ale, and
there became a surplus of tonnage.
* . ° * *
Notwithstanding the adverse and discouraging mar.
ket situation, the company has made diligent efforts to
employ the vessels profitably in the domestic raarket
Advertisments affe ‘ring the vessels for sale were place ed
Jin the New York Times and th e New York Journal af
Commerce on Antust 25, 26, 27 and 29. In its efforts to
find a market for the vessels, the company has been in
_freqnent conmanest ion with broker Sand Operators in
the oil transportation business. It has be con found that
no demand for these vessels exists, The only promising
Inegiries were from sourees that desired ty catchase
for foreign transfer.
‘The lack of domestic market for Tei tankers is not
surprising in view of the characteristies and history of
these partienlar vessels, The Manne ‘| Redri ignez Trad.
ing Corporation is new fatiwnia that these vessels were
never destened with anv idea that after the war they
would be useful or practital for ordin: ary comme reial
’
“~~
34
use. It is generally conceded that T-1 tankers are too
small, too stow, and too expensive to Operate to competes
successfully in the present market. Although a crew of
approximately 34 is required to operate the vessels,
their capacity is only approximately 51,0000 barrels,
their speed only 10 knots. These characteristics place
T-1 tankers at a distinet competitive disadvantage i
relation to the average tanker which employs a crew of
perhaps 40, has.a speed ef, 14 to 16 knots and a carrying
capacity four times as great as that of a T-1 tanker.
These vessels were intended for ase by the ULS. Navy
and by foreign governments. Perhaps the best indica _
tion of their lack of suitability for domestic operation
is the fact that, with three exeeptions (excluding the
Manuel Rodricnez Trading Corporation, the: Maritine
(C‘ornumission has sokd these vessels to foreign buyers.
The following reeord of the disposition of Tol tankers
is siwnificant: Sa
Argentine Geverninent 3
Manuel Rodriguez Trading Corp. for Argentine
Government aa
Government of Turkes l
Compagnie Petroleo Lago (Venezuela) H
Standard Oil (Central Aiveriea) 1
Duteh Subsidiaries of Standard O14!
Five sold domestic as follows:
Manne! Redriguez Trading Corp.
Standard of California
£yL ———<——$—-v : at ale
eXYas, Co
Tidewater nl Co
— — = § =
Although the company dack~ direct information as
fo the nse te whieh the three other American buyers
have pnt their tankers, it is belleved that they are used
by their owners for transportation of their own prod
ucts in special situations where shallow ‘draft. small
vessels Can he utilized and ON pense of Operation ane
speed are of to great importance,
Still another indieation of the andesirability of T)
tankers fer Anierican operations inayv be seen in the
fact that the Maritime Cenimnission still holds three
of these vessels and apparently is unable to disposed ot
them to any American buyer.
—
39
After more than two years of availability, including
the recent period of drastic oil shortage, no American
buvers found these three ships desirable. |
From the above indications it therefore seems. clear
that little domestic demand exists or is ever likely to
exist for T-1 tankers.
Yo retain these vessels under American registry is
apt to mean that they will He idle. If they are trans-
ferred to foreign registry they will be in use and to
that extent help prevent worldwide shortage in oil
transportation. ee
The initial cost and repairs for the owner's account
of the Capitan and Sugarland exceeded 1 800,000.00,
The cost of maintenance is rapidly becoming an oppres-
* sive burden, and constitutes a grave threat to the
solvency of the company.
Under these circumstances if is hoped that the Com
mission will see fit to grant the application of the
Manuel Rodriguez Trading Corporation for the right
to sell and deliver these two T--1 tankers to a eitizen
or tothe government of the Argentine and fo* the right
to transfer registry of the vessels consistent with said
sale.
Zh. While the letter of August 50, 1948, attached to thie
application for anthority to sei] te a foreigner indicated
that the Argentine Naval Comission was offering to Tay
cn response te—the tind ad in the New York Journal of
Commerce, the Argentine Naval Cotumission liad con
tracted with phaintil corporation to benny the two tankers
awred by plamti® corporation on March O21, 1948, and liad
advanced the funds by whieh they had been purchased ty
plaintiff. Phaintl®, having delivered to the Argentine
Naval Comunission the billsof-sale and tmiaster carpenter's
certifiate, documents necessary for American registration
46 UL S.C. see. 24). sale by plaintif to American put
chasers for doinestic operation would have required the
Argentine Naval Conunis-iou to consent thereto, at least to
the extehit of returning te plaintiff these docaments. Plain.
nfl, fewever, in August 1948, inserted the advertisement
mentioned in the attachment to the request for authority
(§ndinA25) as well as similar advertisement iv the New
York Times of August 29 19S. At least six responses
were received to the advertisements not counting the
36
Argentine Naval Commission. Four responses indicated
a desire for foreign registration and two suggested do-
mestie use.- Plaintiff did not communicate with any of the
6 responders. Shoe
The application for transfer authority stated that the
vessels were to be sold to Argentina at the actual cost to
plaintiff. Homer Clay, plaintiff’s attorney. in fact, on No-
vember 9, 1948, wrote to the Maritime Commission, that
Mr. Rodriguez had instructed him to advise that the pro-
posed sales price to the Argentine Naval Commission. wa
$912,000 for each tanker subject to adjustment for the
heating coils and other items in the original cost of the ves-
sels to plaintiff.
27. Following the allocation of the two tankers to plain-
tiff, the Argentine Naval Commision was consulted by Rod
riguez with respect to actions taken in connection with the
tankers as follows:
When the Sugarland arrived in Baston, April 28, 1945,
the Naval Commission's engineers were on hand to inspect
it. A letter dated May 19, 1948, from Admiral Colonna
of the Argentine Naval Commission to Rodriguez requested
information ‘‘concerning the transportation—ef—naphtia
and petreleunr derivatives in the tank vessels that we have
obtained from vour firm.”* Rodriguez promptly obtained
and furnished such inform :tion to the Naval Commission
hy letter of May 25, 1948, without questioning the state
ment. When work was to he done on the Sugarland or
Capitan, the plans were submitted by plaintiff to the Ar
eentine Naval Commission in advance, When the sale ot
the Suqerland was closed with the Maritime Commitssion,
June 8, 1948, the bill-of-sale and master carpenter's certif-
icate were dplivered to Homer C. Clay by the Maritime
(‘ommiission a these documents together with a mem
orandum of fhe closing and a statement of account were
transmitted to the Naval Commission by Rodriguez June
10, 1948, and the same action was taken with respect to the
Capitan documents later, The Sugarland was delivered to
Rodriguez at Hoboken, New Jersey, on June 8, 1948. Pur-
suant fo arrangements between Rodriguez and Admira!
Colonna the Argentine Naval Commission stationed a crew
of about fifteen men aboard beth the Sugarland and Capitan
to act as watchmen pending the contemplated transfer, to
. 37
the Naval Commission. In August 1948 the Argentine
Naval Commission also sent its plans and specifications for
inodifications and repairs on the Sugarland to Rodriguez
in order that he might obiain quotations from various fimns.
28. Plaint:ff’s books ineluded both the Suvaartand (which
was delivered June 8, 1948) and the Capitan as part of
plaintiff’s merchandise inventory and as having been sold
to the Argentine Naval Commission in April 1948. Plain-
tiff’s accounting records show that the tankers were pur-
chased fer resale and not for operation. Plaintiff’s books
were revised as of June 30; 1948, and then showed the Ar-
gentine Naval Commission had advanced $965,000 on each
of the sales contracts for the two tankers, the vessels not
having then been formally delivered. Plaintiff’s Federal
income-tax return for the fiscal year ending June 30, 1948,
is consistent with the view that the two tankers were pur-
chased for sale and not for operation.
29. Neither plaintiff nor its president, Rodriguez, had
ever been engaged in the slipping business and had no
experience in the operation of tankers. After acquiring title
to the two tankers, plaintiff made no efforts to obtain the
services of a ship operating company to operate the ves
sels. No officers or crews were hired.
30. Plaintiffs application for authority to transfer the
vessels was considered by the chief of the Burean of Gov
erpment Aids of the Maritime Commission who, on No
vember 26, 1948, recommended to the Gommission that the
appheation be denied. The application eame béfore the
Commission at a meeting of December 2. 1948.) Tt was then
considered but not acted upon.
At a meeting of the Commission on December 7. O48.
Homer C. Clay and Ralph Imimell represented plaintif® and
after referring to the information contained in the applica
tion, advised the Comraission further that plaintiffs presi
dent had invested his entire personal fortune of $1,800,000
in the tankers; that in order to ent down expenses, the
crews had been reduced hind guards put on board and that
plaintiff was obliged to.seil the tankers or go into bank-
ruptey. It was also represented that the proposed sales
price of $9,812,000 per tanker adjusted for the value of the
heating coils, might enable Rodriguez to break even but.
he stood to lose $45,000,
38
One of the commissioners at this meeting inquired
plaintiff's representatives as follows:
Let me ask one other question. I don’t know whether
vou have it of your own knowledge, but it would have a
bearing. Is there any infermation that you have re-
ceived, directly or indirectly, that could lead into a
possible implication that your client: had an arrange-
ment in advance made with the Argentine interests
prior to their filing an application, with the view that
a would later come before this Commission and seek
for approval of the sale and transfer?
The following answer was given by Mr. Clay:
No, sir. T think it would be absolutely iipossible
for such an implication to be made. T advised Mr.
lodriguez when the new law went into effect that hs
must buy those ships, own them outright, that he must
pay for them himself, that he could not even make any
commitinent or agreement to sell in the future. Tle has
had.that understanding and [ have made him adhere
most rigorously to the law in regard to his pnrehase of
these vessels.
Thereafter the Comunission teak action as follows:
A motion was made by Commissioner Carson, see
onded by Commissioner Mellen. that the application rat
Manuel Rodriguez, Trading Corporation, New York,
New York. for the approval required by Secttou 9 of
the Shipping Aet 1916, as amended (46 UL S.C. S08)
of the sale or 2 TI-M-BTL tankers te the Argentine
Naval Conmmission and the transfer of said vessels to
Areentine registry and tlag be approved, upon the eon:
dition that any and all allowanees rade to the Manue!
Rodrignez Trading Corporation for placing the vessel
in class and all monies due and owing the Conmilssion
hy the said Mannel Rodriguez Trading Corporat ion
shall be paid to the Commission prior to the issuanee of
any orders authorizing the transfer of flag and registry
of the said vessels and the Company waives any claims
for allowances.
Upon a vote being taken, Chairman Smith and Com-
missioners Carson and Mellen voted ‘tyes,’ and Com-
missioners Coddaire and MeKeough voted “nay, * to
the foregoing motion.
The proper ofticers of the Commission were author.
ized and directed to take any and all actions necessary
antl proper to carry the action of the Conmmiission as
above set forth fully into effect.
By inemorandum of December 9, 1948, the Comimission
advised the Chief, Bureau of Governmeit Aids, that at its
meeting of December 7 it had considered his memorandum
and approved plaintiff’s application, part of which mem-
orandum reads as follows:
upon the condition that any and all allowances
nade to the Manuel Rodriguez Trading Corporation for
placing the vessels in class and all monies due and owing
the Cominission by the said Manuel Rodriguez Trading
Corporation shall be paid to the Comuission prior te
the issuance of any orders authorizing the transfer of
fagcand registry of the said vessels and the company
wives any claims for allowances.
31, On December 10, 1948, the Commission advised plain
tiff as follows:
This is to advise von that the Maritime Conini-sion
at its meeting December 7, 1948, considered and “ay
proved, pursuant to Seetion Y of the Shipping Act 1916,
as amended (46 USS. ClS808), the sale of your two TI
M-BTT tankers SUGARLAND, O, N. 249212, and CAP.
ITAN, OWN. 256418, to the Argentine Naval Comenis
sion, an ageney of the Argentine Government, and the
transfer of said vessels to Arventine registry and flag,
“upon the condition that. prior to the issuance of for-
mal Transter Orders in evidence of the approval of the
transfer of these tankers ta Argentine ownership ane
reaistry as above set forth, anv and all allowances made
to Tour corporation for placing these vessels in class<
and all monies due and owing the Commission by Vout
corporation in connection with the sale by the Comunis-
i ad
40
sion shall be paid (or provision therefor by way ef de
posit be made) to the Commission 2rd upon. the receipt
from your company of a waiver of any claims for allow
ances.
Since the exact amount of these allowances and ad
justments has not vet been dete rmined and, in view of
the fact that vou desire that the said Transfer Orders
be issued as carly as possible, you are requested to de-
posit with the Commission a certified cheek for S200,
(HH).00, upon the receipt of which the Commission will
issue the aforesaid Transfer Orders. If the final
amount of your indebtedness is found to be less thatthe
umountef-your deposit, the difference will be refunded
to you. Tf additional sums are required to meet your
indebtedness, you will deposit such additional sums to
the Conunission upon request.
Your Counsel has informed us that vou will wish to
request the Conunission’s reconsideration of the appro
propris iteness of certain of these charges against you.
It ix understood that the deposit of the above-mentioned
certified check will not preelude vou from requesting thé
Commission for such a reconsideration, but it is alse
understood that any future action by the Commission on
this matter will he aceeptable to vou as final.
Plaintiff accepted the prescribed conditions in its letter
dated December 14, 1948, which states: f
Receipt is hereby acknowkedged of letter signed ty
Mr. A. J. Williams, Secretary of the Unitec. State-
Maritime Conunission, dated December 10, 1948, ad
vising of Commissian approval on December 7, 1948, of
the sale by this Corporation of the two tankers SUGAR
LAND and CAPITAN to the Argentine Naval Com
mission, an agency of the Argentine Government and
the transfer of said vessels to Argentine registry cid
flav, upon and subject te the conditions therein eon
tained.
The Manuel Rodrignez Trading Corporation, a cer
poration organized and existing uader the laws of th:
State of New York, with offices at 220 Broadway, New
York 7, New York, hereby aceents and agrees to th
conditions contained in said Jetter and pursuant to the
41
terms and conditions thereof, herewith delivers to the
United States Maritime Commission a certified check
bearing date December 13, JO48, and No. 2419. drawn
upon The Chase National Bank of the City of New
York, Rockefeller Center Branch, payable to the order
of the Uniied States Maritime Conmunission in the
amount of S200, drawn by the Argentine Naval
Cofninission, signed ky officials designated as Account
ant and Chief, Naval Commission, respectively, to be
subject to the terme —and-condifions in said letter of
~ December 10, 1948.
Subsequent to the exchange of the correspondences dated
December 1 and 14, 1948, the Commission delivered tran-
fer orders to plaintif? authorizing the sale of the tankers to
the Areentine Naval Commission and their transfer te
\rgentane registry and flax. The transfer orders did) net
recite the conditions under which is-ued because neither the
Commission's regnlations nor practice required this.
o2. Tn fixing the priee for these two tankers, the. Maritinn
Commission reduced the floor price of SSS87,019 by the <a
of S120 442.79 as the cost of putting the vessels inala-s to
qperate under the flag of the United States. In order to
comply with the conditions attached to the grant of autho:
ity to transfer the vessels to Argentina, there was deposited
by plaintiY a certified check of the Argentine Naval Com
mission dated December 12, 1948, for $200,000 te caver thi.
illowanece,
On April 20, 1949, the Commission advised plaintit® a-
follows with regard to the requirements:
As tu paragraph 5, the Commission, as above indi
cated, required your company, as a condition of it-
approval of the transfer to Argentine registry and thas,
todeposit with it the sum of $200,000 to insure that al!
elas. allowances and moneys due the Commission from
vour company in connection with the sale would be re
paid te the Commission. This sum is still an deposit
and no part has beew refunded to vou. The Cony
sion has agreed to reconsider the appropriateness. ot
certain of these charges against you upon the conditios,
held ina special deposit by the Maritime Comission
price paid by plaintiff te the Maritime Commi
| ‘
Aa } g
- 42 ¥ } Bi
|
that. any future action by the Commissioy on ‘this’
raatter will Me ace ‘ptablé to you as final.
wee
Qu Pune 30, V49, Cjay and Tmmeli,filed a formal applies.
tiow on plaintiff's behalf repeating the same representation
‘ay bef ste as to ~ sale to Argentina and stated that the sale
odvurred g aitly issuance of the foreign trans! at orders,’
and as praintt it had sold the vessels to nm in at the
ston, plain.
ti¥.coukt not be reimbursed by-the-Argentine (‘ommigsion
for the refund of the class allowance, and Gas
*
, At the time these shijss were purcha od rot the
Moki itime Commission there was no underdtanding, that
T know df, w ith anybody, that our client would ay: pear
“subsequently aid ask for anorder to resell. [t was. defi-
snitedy Stated by ye oplé in authority for the ¢ ‘omission
th th no Nuc +harrdAngement would be tolerated.
* \ a © : * *. .
“eS eo ‘puis were purely a bookkeeping etre, we
wouldn't be here. Tf the Rodriguez ‘Crading Corpora
tion, having purchased these ships, had let them: sit idle
ini “then, subseque aitly soldNthem to the Argentine
Naval ormission, we feel of course that in that case
> these aNowances-that ven would make should be wiped
outand the Rodriguez Trading Corporation should not
profit by the extent of the allowances made tor putting
the ships in class, ee:
Tir Conenission. dented the request on August 12, 1949,
and plaintiff was, so advised. Had the vesseis been sold toca
non-citizen, the allowance of $155,442.79 below the statutory
sales price would not have been made. Also, during the time
tat the Comnisston _ authorized to seil tO non-citizens,
itanade ae harge to the buver of the unrecouped cost of re-
pairs nade spbseqnent to January 1, 1942, less depreciation.
oat the rate ef $6,006 per month -for each monih of operatip~n.
This. for the Suqgearlavd would have amounted to a charg? of
OS4SSE OT ONS the poliey respecting sales to citizens re
quired a charge af the cost of unreeonped repairs made
atter Jmly 1,.1047, the charge in the case of the Sugutand
wys S42 only, or r 449, $52.01 less.
=
43 J
The two vessels involved were built in 1945 and the
(ommission determined that the domestie war cost was
“1.¢74,058 each. This amount was approximately 15 percen
‘loss than the 1947 costs. The Argentine Naval Commission
affered to pay $965,000 plus for each vessel in Mareh 194s,
$4. The evidence establishes that prior to March 1, 1948,
and sabsequently, the plaintiff was acting, in effect, as agent
for the Argentine Naval Commission in aequiring thes«
vessels and that ‘at all times plaintiff planned in one way or
another to accomplish the’traasfer of these vessels from the
Mi iritime © omission to Argentina.
Concuusion or Law
Upon the foregoing findings of fact, which are made a
part of the judgment herein, the court concludes as a matter
of law that the plaintiff, Manuel Rodriguez Trading © rpo
ration, is Bot entitled to recover and its petition is di-
missed, Fee
The court tarther concludes as a matter of law that the
defendant is -sntitled to recover of and from the plaintitfs,
Manuel RBdrienez Trading ¢ arporation and Manuel Po J
riguez, on its counterclaim the sum of forty-nine thansaned,
eight hundred fifty-two dollars and one cent ($49,852.01).
o
a.
APPENDIX B
Merchant Ship Sales det of 1916 (SOU S.C. A787, ATBO)
(edt,
See, Wat. (a) Any citizen of the United States may
make appleation to the Commission to purchase a war
Mats ; VES oe under the jurisdiction atid coms o} of the Corn
mis “10, at the sty tutory <4 Os price .. the Commission
determines that the applicant POs<Osses the ability, experi
enee, finaneial resourees, and other qualifications, neces
sry to enable lim te operate and maintain the vessel under
norm competitive conditions, and that suel sale will aid
In carrying Out the policies of this Act the Comunission shail
sell such vessel to the appleant at the statutory sales price
(h) At thectime of sale, the purchaser shall pay to the
Commission at least 2) per eentum of the statutory sales
pret. The balances oft t| statutory mala ~ price whiad] bee
parable In not iere tran twe nts curt annul | installments,
with initepest (ry the pert on al thie ~fatutary male “ price
remaining Uripearted, atl the rate of v7 Ped carsypfuprns per wn
Hui, Or shall be pavatle under -osueh other amortization
provisions Whiel permit the purchaser to accelerate pay
ment oof the aopacd balances as the Comission deems sat-
isfactoryv. The oldivation of the purchaser with respect tos
payment of such unpaid oalanee wiih interést) shall be
~ecured OV a prefers dt ortorey ry thie vend sold
(¢) pha eontraect ct smb and t! rigrtuiiwe ¢ { ery thy
-ecnre the payment of the unpaid balance of the purehia:
cries, shall net restriet the luwfal or proper use ar pera
Trot a} the \é «sel ies
al TET wi a i) Vrs pot r<on not a eitizen of th); H nited
States may rake application ta the Yorunusston to pur
chess a War banal Ve ye Bs hott is i th; r/a Ll ps tre aor other
pea ret TS poe and other What a Pflerts ty pie cullie r Oy
tanker}. under the qurtadiction and control of the Com
mission. Tf the Comrrossien deterntines
(1) that the appiicent: has the: finaneial resonrees,
ability, and OX per ence pera’ sa dr ¢ risgdsdar niw: fo Tui
j . t . J = }
Hill all oluigations with re speet fo opavinenrnt of abv, ade
: ‘
erred portion of the pores heres ind that saie o
} } ‘
thie Verssep tint word ar f ites thststent w th am
' ' J e+ ‘ ]
peokiew at the | fool Suites in per ' ore cs lee
3
2
uncer section 9 of the Shipping Act, 1916, as amended;
and
(2) after consultation with the Setret tary of the
Navy, that such vessel is not necessary to the defense
of the United Staces; and
(3) that such vessel is not necessary to the promo-
tion and maintenance of an American merchant marine
desertbed insertion 2; and
(4) that for a reasonable period of time, whieh in
the case of tankers and **C * type vessels shall not end
hefore ninety days after publication of the applicable
prewar domestic cost tin the Federal Register under
subsection 3(c) of thrs Aet, such vessel has been avail-
alle for sale at the statutory sales price to citizens of
the United States, or for charter under section 3 te
citizens of the United States. and that no responsible
offer has beet nitete br a cit izen of the United States
to purchase or charter sueli vessels ;
then the Commission is authorized to approve the appliea-
tron and sed) such vessel to the applicant at not less than
the statutory sales prive. In cause af application submitted
by 5 cltizen of the ¢ ommonwealt h of the P hilippines, par-
veraph (4) of this subsection shall not apply. Notwith-
standing paragraph (4) of this subsection, not to exesed
ten “*t>”” type vessels, except C-3'sa may be sold to non-
citizens at any time “iter such date of publication at not
less than tue statutory sw@es price.
(b) Notwithstanding any other provision of law, no 'war-
bnilt vessel shall be sold te amy person 10c a citizen of the
United States, except, in accordance with subsection (a),
or upon terms or conditions more favorable than those at
which such war-bnilt vessel is offered to a citizen of the
Unjted States, but where the vessel so sold is being trans-
ferged to foreign registry and flag, the mortgage securing
te sunpaid “balance of -the purchase price and interest:
thereen ska’l contain provisions according So sach mort-
weze the priorities over other liens and encumbrances ac.
corded such mortgages on merchant vessels under the laws
Gf such vegistry ane flag.”
Publ Law 123, soth Conga, i (b) (62 Stat. 38:- ‘*Not
withstanding tle provisions of subsection (a), 0 eon-
tract of sale under section 6 of the Merchant Ship
Sales Act of 1946 shall be made after March 1, 1948;
_and nothing contained in this or any other Act shall
be deemed to authorize the United States Maritime
Conunission to ¢harter any war-built vessel (as de-
fined in the Merchant Ship Sales Act of 1946) to any
person who ts not a citizen of the United States (as
defined in the Merchant Ship Sales Act of 1946).°°
Shipping Act, 1916 (46 U.S.C, 808, 859, 25 Stat., 728):
“See. 9 That any vessel purchased, chartered, or
leased from the beard, by persons who are citizens of
the United States, may be registered or enrolled and
Hicensed, as a vessel of the United States and entitled
to the benefits ait privileges appertaining thereto:
Provided, That foreigu-built vessels admitted to Amer-
ican registry or enrollment and license under this Act,
aud vessels owned by any corporation in which the
Uniced States isa stockholder, and vessels sold. leased,
or chartered by the board to any person, a citizen of
the United Stites, as provided in this Act. may engage
In the coastwise trade of the Unitea States “while
owned, leased, or chartered by such a person,
Every vessel! pu.chased, chartered, or leased from
the board shall, unless otherwise authorized liv. the
Hoard, be operated only under such registry or enroll-
ment and license. Such vessels while employed solely
as merchant vessels shall be subject to all laws, reeu-
istions, and liabilit‘'es governing merchant vessels,
whether the United States be intere ted therein as
owner. in whole or in part, or hold any mortgage, lien,
or other interest therein,
Except as provided in section 611 of the Merchant
‘Marine Act, 1936, av amended, it shall be x lawful,
Without the approval of the United States Maricime
Commission, to sell, inorteage, lease, charter, deliver,
or in any manner transfer, or agree to sell, mortgage,
lease, charter, deliver, or in any’manner transfer, or
gree to seth, mortgage, lease, charter, deliver, or in any
Inanner transfer, to. any™persen net a citizen of the
United States, or transfer or place under foreien roy:
istry or flag, any vessel or any interest thercin owned
4
in whole or ‘n part by a citizen of the United States
and documented under the laws of the United States,
or the last documentation of which was under the laws
of the United States.
Any such vessel, or any interest therein, chartered,
sold, transferred, or mortgaged to a person not a
citizen of the United States or placed under a foreign
registry or flag, or operated, in violation of any pro-
vision of this section shall be forfeited to the United
States, and whoever violates any provision of this sec-
tion shall pe guilty of a misdemeanor and subject to a
fine of not more than $5,000, or to imprisonment for
not more than five years, or both.”*) ~——
‘*Section 44.- That whenever by said section nine
or thirty-seven the approval of the board is required
to render any act or transaction lawful, such approval!
may be accorded either absolutely or upon such condi-
tions as the board prescribes. Whenever the approval
of the board is accorded upon any cendition a state-
ment of such condition shall be entered upon its ree-
ord and incorporated in the same document or paper
which notifies the applicant of such approval. <A vio-
lation of such condition so incorporated shail consti-
tute a misdemeanor and shall be panishable by fine—
and imprisonment in the same manner, and shall sub-
ject the vessel, stocks, bonds, or other subject matter
of the application couditionally approved to forfeiture |
in the same manner, as though the Act conditionally —
approved had heen done without the approval of the
hoard, but the offense shall be deemed to have been”
committed at the time of the vielation of the «ondition.
Whenever by this Act the approval of the board ts
required to render any vet or transaction lawful, who-
ever knowingly makes any false statement of a ma-
terial fact to the board, or to any member thereof, or
to any officer, attorney, or agent thereof. for the pur-
pose of seeuring such approval, shall be guilty of a
misdemeanor and subject to a fine of not more than
$5,000, or to imprisonment for not more than five years,
or both.”’ 3
(8204-0)
=
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.