# Brief for the United States in Opposition — Manuel Rodriguez Trading Corp. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386419_0081%3A3 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief for the United States in Opposition - **Published:** January 1, 1958 - **Citation:** 356 U.S. 902 ## Text 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