Brief for the United States in Opposition — Manuel Rodriguez Trading Corp. v. United States

LIBRARY

SUPREME COURT. U. S.

| No. a

In the Supreme our of the rit Bie

Ocrosen Term, 1957

ManveEx Ropriavuez Trapine CORPORATION AND MANUEL

RODRIGUEZ, PECSTIONERS

v.

Unrtep States or AMERICA

ON. PETIT!ON FOR A WRIT OF CERTIORARI TO THE UNITED

STATES COURT OF CLAIMS

—

" BRIEF FOR THE UNITED STATES IN OPPOSITION

A a?

s-

ONS J. LEE Baier, :

' Selivitor General,

4 Assistant Altorney Genes sl, ’

| SAMUEL D. SLADE,

j - WRBERT 8. GREEK, ;

Y § Attorneys, *

Departm nt of Justice, Warringion 25, eer

' Page

ER le eat Reveal ola OW ran Caney ay Ne Ag 1

Ce ee pas anae ak hdgweiie ss l

Questions presented------ --- : Seuus 2

Statutes, regulations, and contract provial ns 3 involved... 2

Statement... .._._. : pas. os i 2

Argument ____ ..___y- 5

Conclusion__ - pas . 11

CITATIONS

('ases: ‘

Norton Clapp Vv. United States, 127 ©. Cls. 505. cer-

verari denied, 348 U.S. 834. S

Res Trailer Co. v. United States, 350 U.S. 148 G10

fnited States vo Bownd Brook Hospital, Ine. (CC. A. 3,

No. 12,303, decided January 14. 195s) O10

Statutes:

Merchant Ship Sales Act of 1046. 60 Stat. 41. 50

US. C. App. (1946 ed.) 1735, ef seq: 4

See. 1736 (ds (1) (2) (3) (4) : 3, 12

Sec. 1736 (g) ; >

Sec. 1737 Ga) 4

See. 1739 (a) GL) (2) (3) (4) » 14

Sec. 1739 (bi. 15

~SMuppmg Act of 1216, as amended, 30 Stat. 72s. 46

ULS. C. (1946 ed.) SOL, ef seq.:

mee. OOe.. occ .. 7 , 1th

Sec. 839 __- S17

Migeellaneous:

2 Restatement, © ontrac ts (1932), § 470. ' : 7

Restatement, Re-titution (1937):

ie Ge Bas 7

Sie. 151 ae hg +.8

See. 151, commeént f It}

See. 202 — "ie

454576—58——1 ce ee

~ee

M iscellaneous—-Continued | Page.

Senate Joint Resolution 173, Public Law 423, 80th

Cong., 2d Sess., 62 Stat. 38, 50 UL S. C. App. 1739,

Ep Ee Er Cae eee Pe eee 4,9, 18.

United States Maritime Commission General Order

No. 60, 11 Fed. Reg. 4459, April 23, 1946.

See. 299.1)(hi)...--------------, anes cen ae

> i ea tat 19

tiea States Maritime Comminion Geareil Order

No. 60, Supplements 1 and 3, 11 Fed. Reg. 4702,

ES i eae ad Gata wo ie Rae ia on 19

~¢

™

ee

Gn the Supreme Court of the Bnited Sits

OcroBerR TERM, 1957

No. 664

MANUEL Ropricuez TRADING CORPORATION AND MANUEL

RopriGe eZ, PETITIONERS

v.

UNITED STATES OF AMERICA

ON PETITION FOR 4 WRIT OF CERTIORARL TO THE UNITED

STATES COURT OF CLAIMS

BRIEF FOR THE UNITED STATES IN OPPOSITION

2.4

OPINION BELOW eat

The opinion of the Court of Claims (Pet. App. A)

is reported at 153 FP. Supp. 442.

- JURISDICTION

The judgment of the Court of Claims was entered

on Juby 12, 1957 (R. 69), and timely motions for re-

pres by both parties were denied on October

957 (R. 110). The petition for a writ of certiorar

was filed on December 14, 1957. The jurisdiction of

this Court is invoked under 28 U.S. C. 1255 (1).

(1)

2

QUESTIONS PRESENTED

1. Whether petitioner, having procured two ships

from the Maritime Commission on the basis of delib-

erate misrepresentations that he was purchasing these

vessels as an American citizen for use under the

United States flag, when in fact he was acting at all

times as the agent of the Argentine Government, 1

liable for class allowances, cost of desirable features,

and unrecouped cost of repairs which would have

been charged by the Commission to a non-citizen

purchaser.

29. Vhether there is sufficient evidence to support

the determination of the court below fixing the

amount due for unrecouped repairs at $49,852.01,

STATUTES, REGULATIONS, AND CONTRACT PROVISIONS

INVOLVED

The pertinent provisions of the statutes, regula-

tions, and contract provisions involved are set out in

the Appendix, infra, pp. 12-20.

STATEMENT

The facts as found by the Court of Claims are set

out in detail in the Statement of our cross-petition for

a writ of certiorari, Which we are filing simultaneously

with this brief in opposition to the petition im No,

664. For the purposes of this brie!, the facts may be

briefly cana as follows:

Petitioner ' brought suit in the court below to re-

‘Since petitioner Manuel Rodriguez Trading Corporation ts

essentially the a/ter «ge of petitioner Manuel Rodriguez, the

court below used the term “plaintiff to refer either to the

corporation or to Manuel Rodriguez, personally, aud we follow

the same usage in this pref with the term “petitioner”

\

3

cover amounts paid to the United States Maritime

Commission under an agreement by which the Com-

mission then approved petitioner's sale of the tankers

Capitan and Sugarland to the Argentine Naval Com-

mission and their transfer to Argentine registry and

fag (Pet@App. A-3). Petitioner had earher pur-

chased the tankers from the Maritime Commission by

a contract dated April 6, 1948, and as a citizen-pur-

chaser, had been allowed price reductions of $135,-

442.79 vuder Section 3 (d) (1) of the Merchant Ship

Sales Act of 1946, 50 U.S. C. App. (1946 ed.) 1736 (d)

(1), infra, p. 12, representing the cost which would be

required to enable the Commission to deliver the vessels

in class (Pet. App. A-3). On December 7, 1948, the

Maritime Commission approved the sale and transfer

of the vessels to Argentine registry on the condition

that petitioner pay to the Commission the amount of

these price reductions, together with the sum = of

$28,756.81, which petitioner was obligated to pay

under his contract of April 6, 1948, “for desirable

features’? not found in standard vessels (Pet. App.

A-+).

Petitioner contended in the court below, ‘ater alia,

that the Maritime Commission did net have authority

toy condition its approval of the sale or transfer to the

Argentine Naval Commission upon repayment of the

price reductions and that, under the statutory forrutla

provided by the Merchant Ship Sales Act, he was not

liable for the cost of the desirable features (Pet. App.

A-1-2). The United States denied liability for

this money, and also counterclaimed for damages, al-

leging that petitioner had procured the two tankers

+

from the Maritime Commission, and obtained various

price reductions thereon, on the basis of misrepresen-

tations that he was xequiring the tankers as a United

States citizen for operation under American flag and

registry, but that, knowing that szles to noncitizens

were expressly prohibited after March 1, 1948, by

Public Law 423, infru. p. 18, petitioner was in fact

avquiring the tankers in order to sell and transfer

then to the Argentine Naval Commission for foreign

operation (Pet. App. A-4).

he Court of Ciaims found the facts to be substan-

tially as claimed by the Government. It found that

petitioner had ** procured the tankers and obtained the

price reductions or class allowances on the basis [of]

representations that [he] was acquiring the tankers as

a United States citizen for operation under. the United

States flag and registry, knowing that the sale to non-

citizens was prohibited under Public Law 423,’ but

that in fact petitioner was acting at all times as agent

of the Argentine Neval Commission and had acquired

the vessels in order to sell and transfer them to a

non-citizen (Pet. App. A-11-12). The court there-

fore held that, since a non-citizen would have had to

pay the class allowances and cost of desirable features

if it had been permitted to purchase the ships directly

from the Commission, petitioner should also pay these

sums, and hence could not recover on bis claim (Pet.

App. A-13). The court found (Pet. App. A-11)

that, even after payment of these amounts, petitioner

was left with a gross profit on the transactions of at

least $153,959.29 (in addition to some $85,000 which

petitioner received but failed to account for). How-

5

ever, despite the findings concerning petitioner’s mis-

representations and. his knowing violation of Public

Law 423, the court refused to make a “specific finding

of fraud,’”’ and held that, in the absence of such a

finding, petitioner would not be chargeable under a

constructive trust for the proceeds received from his

—- the tankers (Pet. App. A-13).2 The court:

therefore limited the recovery of the United States on

yates . - .

its counterclaim to $49,852.01, the cost of unamortized

repairs which would have been charged to a non-

citizen purchaser (Pet. App. A-14).

ARGUMENT

Petitionei’s attack on the decision below is totally

without merit. As we point out more fully in our

cross-petition for a writ of certiorari, the facts as

found by the Court of @laims not only warrant the

demial of petitioner’s claims but also require a far’

? The court stated (Pet. App. A-13): ,

Under these circumstances we believe plaintiff is in the

same position as the Argentine Naval Commission, a nen-

citizen, would have been had it negotiated and purchased

the tankers. That is to say, the Maritime Commission had

every right to charge the Argentine Nava) Commiission

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\ made. Thus the Maritime Commission, by

reasen of the jrepresentation of plaintiff. lost the differ-

ence in sale price and, if fraud were present, we could think

of no reason why plaintiff should be permitted to profit

thereby. However, no specific finding of fraud is made

in this case and in the absence thereof, plaintiff would not

be chargeabla under a constructive trust for tie proceeds

received fro the sale to the Argentine Naval Commission.

Restatement of the Law of Restitution. Ch. 13. see. 202;

United States v. Newbury Mfg. Co., 36 F. Supp. 62.

ao

i)

more substantial award to the United States on its

counterclaim than the amount set by the court. In

any event, the court’s express findings that petitioner

procured the Sugarland and Capitan through delib-

erate luisrepresentation clearly entitle the Government

at least to the cost allowances, desirable features, and

unrecouped repairs which would have been charge-

able to a non-citizen purchaser. Moreover, contrary

to petitioner’s contention, there is ample evidence to

support the court's computation of the cost of these

repairs. Petitioner thus has uo valid quarrel with

the result below and he raises no substantial question

warranting this Court’s review. His petition should

plainly be denied.

1. The Court of Claims was fully justified in deny-

iige petitioner's claims and im awarding affirmative

judgement to the United States for the unreeouped cost

of repairs on the Sagerland. The court expressly

fonnd—as petitioner himself frankly acknowledges

(Pet. 3)—that petitioner mduced the Maritime Com-

mission to sell him the Sagerland and Capitan by his

representations that they were purchased for operation

under the United States flay, but-that in fact petitioner

Was acting as agent for the Argentine Naval Com-

niission and intended throughout to accomplish the

transfer of the tankers to that foreign agency. In-

stead of being satisfied, however, with the faet that

he has been permitted to retain substantially all of

the fruits of his wrongdoing,’ petitioner continues to

*Even after satisfying the Government's Judgment of $49,-

852.01, petitioner is left with a profit on these transactions of

more than %100,000, in addition to the balance of some $35,000

7

press his clapn for additional profits as ff these trans-

actions had been legitimate frome the outset. Without

laboring lis failure to take account of the repreben-

sible nature of his scheme to wrong the Government,

it is sufficient to point out that the only fault with

the decision below was that it did not go far enough;

notwithstanding the court's refusal to make a “specific

finding of frand” (Pet. App. A). the specific facts

which it did find Hoarls establish petitioner’s liability

to respond in damages for his intentional misrepre-

sentations by which he indueed the Maritime Com-

hitssion to sell him the ¢dankers. See our Cross-Peti-

tion for Certiorari; 2 Restatement, Contracts (1932),

S470; Restatement, Restitution (1937), 80 8, Lol, 202.

Nor is) there: any question but that each of the

three items involved in this petition—the class allow-

anees, the charge for desirable features, and the

unrecouped cost of repairs-—-was properly included

as an element of the Government's damages. These

sums were deductions from the actual value of the

vessels, Whieh only a bona fide citizen-purchaser would

have been excused from paying. As the Court. of

Claims found (Pet. App. A-12-15), “*[hjad the

Argentine Naval Commission been permitted to pur-

chase the tankers, certainly the United States could

have exacted the $155442.79 [for class allowances]

and could fuither have charged for the desirable fea-

tures.” Likewise, the court found that the unre-

4

which was returned to him by the Meritiuece Commission from

the $200,000 check of the Argentine Naval Commission deposited

in December 194%, and which petitioner presumably retained.

4545765—58--—2

8

couped cost of repairs, which petitioner as a citizen-

purchaser was excused from paying, would have been

recovered in a sale to a non-citizen (Pet. App. A-14).

Petitioner avoided paying these sums by deliberately

misrepresenting that he was purchasing the tankers as

a citizen for use under United States flag: as part

of the fruits of his wrongful conduet, they are plainly

recoverable by the Government. Restatement, Res-

titution, § 151.

‘We might point out that, even if petitioner's transactions were

legitimate, he would have no basis for recovering the $135,442.79

at first deducted as for class allowances, but later collected by the

‘Maritime Commission as a condition to its approval of the trans-

fer of the tankers to Argentina. Section 41 of the Shipping Act of

1916, 46 U.S. C. (1946 ed.) 859, defra, pp. 1-18, provides inter

alia, that “[w]henever * * * the approval of the commission is re-

quired to render any act or transaction lawful, such approval may

be accorded either absolutely or upon such conditions as the Com-

mission prescribes.” The Maritime Comission was justified in

prescribing payment of these previousl) -allowed price deductions,

which netitioner had received solely because of his representations

that the ships were for use under United States Hag, as a condition

to their transfer to Argentine registry.

Petitioner's reliance upon Norton Clapp v. United States, 127

C. Cls. 505, certiorari denied, 348 U.S. S34, as prohibiting im-

position of this Gondition is plainly untounded. As the court

below held in distinguishing the Clapp case (Pet. App. A-12), the

$7,500 charge which the Commission there imposed as “considera -

tion” for releasing the owner of vessels acquired from the Com-

mission of his obligation to operate the ships under United States

registry “had nothing to do with either the restriction or the

removal and the $7,500 charge was irrelevant” (/4/d.). In the

present case, this sum of $135,442.79 was anything but irrelevant ;

it represented precisely the amount which petitioner “as a citizen

saved under the floor price” (Pet. App. A-13). Since the sole

purpose of this deduction was to cover the cost of bringing the

vessels into class for operation under United States flag, the pay-

ment of this money was obviously an appropriate condition for

authorizing transfer of the ships to foreign registry.

9

There is no substance to petitioner’s argument (Pet.

>, 3-4, 8-9) that, since the Maritime Commission was

barred by Public Law 423 from selling the tankers

directly to a non-citizen purchaser, it could not validly

“charge’’ him these amounts as an agent of the Argen-

tine Government. Since petitioner himself was the

one who knowingly violated the statute, he cannot rely

upon this violation as a defense to the consequences of

his own act. In any event, the decision of the Court

of Claims makes clear that petitioner was not being

“charged” such amounts, but rather that they were

being awarded to the Government as damages for his

misrepresentations. Thus, whether or not the Mari-

time Commission could lawfully have sold the tankers

Argentina is new irrelevant: the fact is that peti-

tioner realized a considerable protit by wrongfully in-

ducing the Government te sell him the tankers at far

iess than their actual value. Lf petitioner were per-

mitted to recover the amounts in dispute (totalling

more than S200.000), he would have realized a total

profit on his transaction of more than 300,000 (see

° The Court of Claims found thar the two vessels, which were

built in 1945 at a total cost of 33545076, had a replacement

value in 1947 of S4.08028740 (Pet. App. A-11). The Mart-

time Commission received from petitioner a total of S1.802,-

36.81 for the vessels (/nc/uding the charges for desirable fea-

tures and the repayment of the class allowances}, or S277

150.20 less than their replacement cost: (#hid.). In addition to

the loss sustained by selling the tankers at this low price, the

Government. also suffered compensable loss in the resulting

defeat of its program for operation of these surplus vessels as

part of the United States Merchant Marine. See Rex Trailer

Vo. y. United States, 356 US. 148, 152; United. States v. Bound

Brook Hospital, Ine. OC. AL 3. No. 12,303, decided January 14,

195s).

V

note 3 supra, pp. 6-7), all of whieh could be recovered

10

from him under equitable principles of restitution.

‘see Restatement, Restitution (1957), § 151, com. Ff;

Rea Trailer Co. v. United States, 350 U.S, 148, 153,

footnote 6; United States v. Bound Brook Hosjital,

Ine., supra; see our Cross-Petitiofr for Certiorar.

Surely, he cannot be heard to complain of the court's

decision to assess damages in a lesser amount.

9. Contrary to petitioner's second contention (Pet.

9-1), there is an abundanee of evidence to support the

court’s determination that the unreconped cost of re-

pairs on the Sugarland amounted to $49,852.01. ‘The

facts are set forth in the court's finding 532 (Pet. App.

A-42), which was also the commissioner’s finding 32,

and they are fully supported by competent evidence.

“See, ¢. g., Pimper, ‘Tr. 229, 239, 240-241; Fetsko, Tr.

248-249: Langley, 250-251; Hutchison, Tr. 196-205;

Deft. Exs. 95. 96 Id.: i100, 101, 102, Td. Although,

at the trial, petitioner objected to certain parts of the

evidence on the ground that paragraphs 15, 14, and

15 of the answer did not mention repairs, that peti

fioner’s corporation’s “agreement” did not make it

Hable for repairs, and that “I absolutely do not know

what this claim is about’? (Tr. 197), such objections

were withouta merit. The Government's amended

counterclaim had specifically claimed “the net sum of

$49,852 incurred by defendani for repairs on the

tanker Sugarland * * * which costs were not charged”

because of petitioner’s misrepresentations. The

“agreement”? for the sale of the Sugarland did not

provide for payment of repairs te that vessel because,

as a result of petitioner’s deliberate muisrepresenta-

¥

‘

1]

tions the Maritime Commission was mnocently deal-

ing with him as a citizen-purchaser.

In view of finding 32, it as evident that the com-

missioner and the court, after full consideration, re-

jected petitioner's unfounded hii etions md eoneluded

that the evidence was competent and che proof ade-

quate, Petitioner has made no attempt to show the

contrary, either by supporting the validity of his ob-

jections or by conteadting on the merits the accuracy

of the sum arrived at by the court. Having elected

to interpose, and to stand on, erroneous objections

rather than to meet the Government's proof, he cannot

now complain of his own error.

CONCLUSION

For the foregoing reasons, it is respectfully sub-

mitted that the petition for a writ of certiorari im this

case should be denied, In the event the Court decides

to vrant the petition, however, it is respectfully re-

quested that, for the reasons there stated, the Goy

ernment’ s crops petition be granted as well.

J. LEE RANKIN,

Soltettor General,

| CGrorce CocHran Dovn,

Assistant Attorney General.

SAMUEL D). SLADE,

RopertT S. GREEN, ‘

Vd rn: WS,

FEBRUARY L9DS.

w

= APPENDIX

-

STATUTES, Reaiuations AND ConTRACT, PROVISIONS

INVOLVED

1. Statutory Provisions

The Merchant Ship Sales Act of 1946, 60 Stat. 41,

50 U.S. C. App. (1946 ed.) 1735, ef seq., provided in

pertinent part as follows (as it appears in the United

States Code):

§ 1736.

ae * * 7 a

(d) “Statutory sales price”, as applied to a

particular vessel, means, in the case ef a dry-

cargo vessel, an amount equal to 50 per cenfum

of the prewar domestic dst of that type of

vessel, and in the case of a tanker, such term

means an amount equal to 8714 per centum of

the prewar domestie cost of a tanker of that

type, such amount in each case being adjusted

as follows:

(1) Jf the Commission is ef the opinion

that the veasel is net in class, there shall be

subtracted the amgunt estimated by the Com-

mission as the cost of putting the vessel im

class.

(2) If the Commission is of the opinion

that the vessel lacks desirable features which

are incorporated in the standard vessel used

for the purpose of determining prewar do*es-

tie cost, and thatthe statutory sales price

(unadjusted) would be lower if the standard

vessel had also laeked such features, there

shall -be subtracted the amount estimated by

the Commission as the amount of such result-

ing difference in statutory sales price.

(12)

13

(3) If the Commission is ef the opinien

that the vessel contains desirable features

Which are not incorporated in the standard

vessel used for the purpose of determining

prewar domestic cost, and that the statutory

sales price (unadjusted) would be higher if

the standard vessel had also contained such

features, there shall be added the amount es-

timated by the Commission as the amount of

such resulting difference in statutory sale>

price, |

(4) There shall be subtracted, as repre-

senting normal depreciation, an amount com

puted by applying te the statutory sales price

(determined without regard te this para-

graph) the rate of 5 per centum per annum

for tha period begining with the date of the

original delivery of the vessel hy its builder

and ending with the date of sale or charter

to the applicant in question, and there shall

also be subtracted an amount computed by

applying to the statutory sales price (deter

anined without regard te this paragraph)

such rate not in excess of O per centunm per

annum in the case af a vessel other than a

tanker, and not in excess of 4 per centum

per annum in the ease of a tanker, for such

period or periods of War service as the C’orm

mission determines will make reasonable al

lowanee = for exeessive Wear and tear by

reason of war serviee which cannot be or hia

not been otherwise compensated for under

this subsection.

No adjustment, except ino respeet of passer

ger vessels constructed before Jamuary 1,

1941, shall be made under this Act whieh will

result in a statutory sales price which (1) an

the case of dry-cargo vessels (except: Liberty

type vessels) will be less than 39 per centum of

the domestic war cost of vessels of the same

type, (2) in the case of any Liberty type vessel

will be less than 3i45 per centum of the domestic

war cost of vessels of such type. or (3) in the

i : 14

case of a tankef will be Jess than 50 per ceutum

aof the domestie war cost of tankers of the same

type. For the purposes of this Act, except

section 5, all Liberty vessels shall be considered

to be vessels of one and the same type.

* - : + * 7 =

(¢) “Citizen of the United States” includes

a corporation, partnership, or asseciation only;

if it is a citizen of the United States within the

meaning of seetion 2 of the Shipping Act of

1916, as amended. The term “atfilated miter

est’ as used in secttons Gand 10 of this Act in-

Cludes any person affiliated or associated with a

citizen applicant for benefits under this Act who

the Commission, pursuant to rules and regula-

tiens prescribed hereunder, determines should

be so Inelnded in order te carry oikithe poliey

and purposes ef this Net.

SVTDT

Gt.

(a) Any citizen of the United States may

make application te the Conumissien to. pur

chase a war-built.vessel, iider the Jurisdiction

and control of the Conmumission, gt the statutory,

sales price. Tf the Corumitssion Sceternmiines theart

the appliemit: possesses The abifitv. experience.

finaneial resourees, and other qualifications,

Heeessars th enable hiitnn te operate and tracudnateetyy

the Vessed thier tortniad competitive conditions,

ond that suel sale will aid im carrying out @he

policies of this et, the “Cormmission Shall sell

such vessel te the applieant at the statutory

<Hes price, ‘ ey

« ¥ Me * *

(a) Any person net a eitizen of the United

States may make appheation to the Commission

to purchase a war-built vessel Cother than a

P-2 type or other passenger type and other

than a Liberty type eolher or tanker), under

the jurisdiction and control of the Corunis-

sion. Li the Commission determines— |

anne ieee ttt

15

3

(1) that the applicant has the financial re-

sources, ability, and experience necessary to en-

able him to fulfill all obligations with respect to

payment of any deferred portion of the pur-

chase price, and that sale.of the vessel to him

would not be inconsistent with any policy of the

United States in permitting foreign sales under

section 9 of the Shipping Act, 1916, as

amended; and | |

(2) after consultation with the Secretary of

the Navy, that such vessel is not necessary to

the defense of the United States; and

(3) that sucn vessel is not necessary to the

promotion and maintenance of an Ameriaan

merchant marine describgd in section 2; and

(4) that for a reasonable period of time,

which in the ease of tankers and “C”’ type ves-

sels shall not end befere nmety/days after-pub-

lication of the applicable prewar domestic cost

in the Federal Register under subsection 3 (¢)

of this Aect;-sach vessel has been available for

sale at the statutory sates -price_to citizens of

the United States, or for charter under section

5 ty citizens of the United States, and that no

responsible offer has been made by a citizen of

the Enited States to purchase or charter such

vessel ;

then the Commission if authorized to approve

the application and sell such vessel to the appli-

can&at not less than the statutory sales price.

In case of application submitted by a citizen of

the Commonwealth of the Philippines, para-

graph (4) of this subseetion shall not ajply.

Notwithstanding raragraph (4) of this sulsee-

tion, not te exceed ten “C™ type vessels, except

C-3’s, may be sold to noncitizens at any time

after such date of publication at not less than

the statutory sales price.

(b) Notwithstanding any other provision of

law, no war-built vessel shall be sold to any

person not a citizen of the United States, ex-

cept in accordance with subsection (a), or upon

16

terms or conditions more favorable than those

at which such war-built vessel is offered to a

citizeii of the United States, but where the ves-

sel so sold is being transferred to foreign regis-

ter and flag, the mortgage securing the unpaid

balance of the purchase price and interest

thereon shall contain provisions according to

such mortgage the priorities over ether liens

and-encumbranees accorded such mortgages on

merchant vessels under the laws of such regis-

try and flag.

The Shipping Act of 1916, as amended, 39 Stat. 728,

46 U.S. C. (1946 ed.) 801, et seq., provides in per-

tinent part as follows (as it appears in the United

States Code) :

_

§ 808. |

Any vessel purchased, chartered, or leased

from the United States Maritime Commission,

by persons who are citizens of the United States,

may be registercd or enrolled and licensed, or

both registered and enrolled and licensed, as a

vessel of the United States and entitled to the

oenefits and privileges appertaining thereto:

Provided, That foreign-built vessels admitted

to American registry or énrollment and_ h-

-eense under this ehaptor, and vessels owned

by any corporation in which the United States

is a stockholder, and vessels scld, leased, or

chartered by the commission to any person a

citizen of the United States, as provided in this

chapter, may engage in the coastwise trade of

the United States while owned, leased, or char-

tered by such a person, .

Every vessel purchased, chartered, or leased

from the commission shall, unless otherwise

authorized by the commission, be operated only

under such registry or enrollment and license.

Such vessels while employed solely as merchant ~

vessels shall be subject to all laws, regulations,

and liabilities governing merchant vessels,

whether the United States be interested therein

ee ee een re

17

as owner, in whole or in part, or hold any mort-

gage, lien, or other interest therein.

Exeept as provided in section 1181 of this

title, it shall be unlawful, witheut the approval

of the United States Maritime Commission, to

sell, mortgage, lease, charter, deliver, or in any

manner transfer, or agree to sell, mortgage,

lease, charter, deliver, or in any manner trans-

fer, to any person not a citizen of the United

States, or transfer or place under foreign regis-

try or flag, any vessel or any interest therein

owned in whole or in part by a citizen of fhe

Untied States and documented under the iaws

of the United States, or-the last documenta-

tion of whieh was under the laws of the United

States. : . 9

Any such vessel, or -any interest therein,

chartered, sold, transferred, er: mortgaged to

a person not a citizen of the United States or

placed under a foreign registry or fag, or oper-

ated, in violation of any provision of this see-

tion shall be forfeited to the United States,

and whoever violates any provision of this sec-—

tion shall be euilty of a misdemeanor and

subject to a fine of not more than $5,000, or to

imprisonment for not more than five vears, or

both. ;

. * * + *

§ 839,

Whenever by seetion S08 or 835 of this title

the approval of the commission is required to

render any act or transaction lawful, such ap-

proval may be accorded either absolutely or

upon such conditions as the commission pre-

scribes. Whenever the approval of the com-

mission isiaecérded upon anv condition a state-

ment of such condition shalt be entered upon

its records and incorporated in the same doen-

ment or paper which notifies the appheant. of

such approval. A violation of such condition

sc incorporated shall constitute a misdemeanor

and shall be punishable by fine and imprison-

18

ment in the sarne manner, and shall subject the

vassel, stocks, bonds, or other subject matter

of the appligtion conditionally approved to

forfeiture in Phe same manner, as though the

act conditionally approved had been done with-

out the approval of the commission, but the

offense shall be deemed to have been committed

at the time of the violation of the condition.

Whenever by this chapter the approval of

the commission is required to render any act or

transaction lawful, whoever knowingly makes

any false statement of a material fact to the

commission, or to any member thereof, or to

any officer, attorney, or agent thereof, for the

purpose of securing such appreval, 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 vears, or both.

Senate Joint Resolution 173, Public Law 423, 80th

Cong., 2d Sess., 62 Stat. 38, 50 UL S.C. App. 1739,

Historical Note, provides in pertinent part as follows:

(b) Notwithstanding the provisions of sub-

section (a). no contract of sale under section 6

of the Merchant Ship Sales Act of 1946 shall he

made after Mareh 1, 1948; and nothing con-

tained in this or any other Act shall be deemed

to authorize the United States Maritime Com-

mission to charter any war-built) vessel (as

defined in the Merchant Ship Sales Act of

1946) to any person who is not a citizen of the

United States (as defined tn the Merehan*

Ship Sales Act of 1946).

r

2. Regulations

United States Maritime Commission General Order

No. 60, 11 Fed. Reg. 4459, April 23, 1946, provides

in pertinent part:

§ 299.1

* * * *

(h) Citizen of the United States. “Citizen

of the United States” includes a corporation,

19

partnership, or association only if it is a Cith-

zen of the United States within the meaning

of section 2 of the Shipping Act, 1916, as

amended, and section 905 (¢) of the Merchant

Marine Act, 1936, as amended. The Secretary

of the Commission will furnish, on request,

copies of memoranda dealing with citizenship.

(i) Affiliated interest. The term ‘affiliated

interest’? shall include any person or concern

that directly or indirectly through one or more

intermediaries, controls, or is controiled by, or

is under common control with, the applicant.

The term ‘teontrol’” Cineliding the terms **con-

trolled by’? and *tunder common control with”)

as used in this paragraph means the possession,

directly or indirectly, of the power to direct or

cause the direction of the management and

policies of the applicant, whether through own-

ership of voting securities, by contract, or

otherwise.

om * * + *

General Order No, 60, Supplements Tand 3, 11 Fed.

Rey, 4702, 8972 set forth the computations of the

domestic war cost and the door price of TI-M-BT

tankers.

‘ eon

3. Contract Provisions

The contract appears as an Appendix to the origi

nal petititon in the Court of Claims filed on June 19,

1951.

It provides .

- * * +

Article 1. Agreement to Purchase. Subject

to the provisions hereinafter set fort and to

all applicable provisions of the Aet and Regu-

lations, whether specifically referyed to or not,

the Buyer agrees to purchase from the Com-

mission and the Commission agrees to sell te

the Buyer the vessel(s).

It is understood and agreed that if fer any

reason the vessels) eannot be delivered by the

‘Commission to the Buyer as herem provided,

similar vessel(s) acceptable to the Buyer, may,

20

pursuant to an addendum to this agrecment,

be delivered by the Commission in substitution

therefor.

* * * * *

ArticLe 4. Purchase Price(s) of the Ves-

sel(s). The Commission has determined, spur-

suant to the provisions of the Act, giving effect

to all adjustments (except for the absence or

presence of desirable features as defined in

clauses (2) and (3) of See. 3 (d) of the Act)

permitted by the Act and applicable to the ves-

sel; that the purchase price thereof shall be as

set forth in Exhibit “A” attached hereto and

forming a part hereof.

* * * * *

Arrictr. 9. Docu ventation of the Vessel(s).

The (each) vessel shall be documented under

the laws of the United States by the Buyer im-

mediately after sale and delivery thereof to the

Buyer.

* * * * 7

Exuipir “A’’

* ‘ * - * -

T. Purehase Price(s) of the Vessel(s). * * *

The Buyer agrees, if it shall be determined

by thie Commission upon examination of the

(each) vessel, that the vessel lacks or contains

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 increased, by

such amounts, if avy, as may be determined

by the Cymmission pursuant to said elauses.

U.S GOVERN BEAT PRINTING OFFICE: 1058