# Petition for Writ of Certiorari — Manuel Rodriguez Trading Corp. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386419_0081%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1958 - **Citation:** 356 U.S. 902 ## Text , Office - Supreme Ceurt, Us.) ea ea rFILepb 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 . - INDEX CNMI NINE Ss a i a ne ee bs a ee eee pe cg OE CR LP SOT irr ae GORE Ete pe en le eer I IN hk NS ote ww ae te Daa Pha bo ooo PORE IRL OE a er FERN ee ML PR ERE Ny CENT? mapas tor erbetiens the whit... ). 5.55258 .50 seks, cas SNR trl ein Baas wae ee ha hte tas i. athtids SINE SE 25 2 face ad oS Uae ae Cn oka a eee REE iis Oe es ke 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 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’ 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 ——— 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 ”” 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.