Case ID: us-ct-cl_62/html/0378-01.html
Source: Caselaw Access Project
Author: {"author": "Hat, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

J. Y. UNDERWOOD v. THE UNITED STATES
    [No. B-390.
    Decided June 14, 1926]
    
      On the Proofs
    
    
      Shipping Board,; sale of vessels; commissions to brokers. — In attempting to consummate a sale of its vessels the United States Shipping Board was not authorized to pay commissions to brokers, nor did it have power to delegate its authority to sell or dispose of said vessels.
    
      The Reporter's statement of the case:
    
      Mr. William H. White, jr., for the plaintiff. Messrs. Henry G. Hotchkiss and John T. Trimble were on the briefs..
    
      Mr. Ralph G. Williamson, with whom was Mr. Assistant Attorney General Hermann J. Galloway, for the defendant.
    The court made special findings of fact, as follows:
    I. The United States Shipping Board was created and its. powers and duties defined by the “ shipping act of 1916.”' (39 Stat 728.)
    
      Section 7 of said act provided:
    “ That the board, upon terms and conditions prescribed by it and approved by the President, may charter, lease, or sell to any person, a citizen of the United States, any vessel so purchased, constructed, or transferred.”
    Section 8 of said act provided:
    “ Sec. 8. That when any vessel purchased or constructed by or transferred to the board as herein provided, and owned by the United States, becomes, in the opinion of the board, unfit for the purposes of this act, it shall be appraised and sold at public or private competitive sale after due advertisement free from the conditions and restrictions of this act.”
    Section 11 of said act authorized the Shipping Board to form under the laws of the District of Columbia one or more corporations to purchase, construct, equip, lease, charter, maintain, and operate merchant vessels in the commerce of the United States. Accordingly, on April 16, 1917, said Shipping Board formed a corporation known as the United States Shipping Board Emergency Fleet Corporation with a capital stock of $50,000,000, all of which stock was subscribed and has ever since been owned by the United States.
    II. By virture of the shipping-fund provision of the urgent deficiencies appropriation act of June 15,1917, the President of the United States was authorized to manage, operate, and dispose of all merchant vessels belonging to the United States, and to exercise the power and authority conferred upon him by said act and expend the moneys appropriated thereby, through such agency or agencies as he might select.
    Section 4 of said act reads:
    “4. The President may exercise the power and authority hereby vested in him, and expend the money herein and hereafter appropriated through such agency or agencies as he shall determine from time to time.
    “Provided, That all money turned over- to the United States Shipping Board Emergency Fleet Corporation may be expended as other moneys of said corporation are now expended. All ships constructed, purchased, or requisitioned under authority herein, or heretofore or hereafter acquired by the United States, shall be managed, operated, and disposed of as the President may direct.”
    
      III. On July 11, 1917, the President issued the following Executive order:
    EXECuTXVE ORDER
    [Repealed June 5, 1920. See sec. 1, merchant marine act]
    Delegating to tlie Shipping Board and the Emergency Fleet Corporation the powers granted the President by the emergency shipping legislation
    By virtue of authority vested in me in the section entitled “ Emergency shipping fund ” of an act of Congress entitled “An act making appropriations to supply urgent deficiencies in appropriations for the Military and Naval Establishments on account of war expenses for the fiscal year ending June thirtieth, nineteen hundred and seventeen, and for other purposes,” approved June 15, 1917, I hereby direct that the United States Shipping Board Emergency Fleet Corporation shall have and exercise all power and authority vested in me in said section of said act, in so far as applicable to and in furtherance of the construction of vessels, the purchase or requisitioning of vessels in process of construction, whether on the ways or already launched, or of contracts for the construction of such vessels, and the completion thereof, and all power and authority applicable to and in furtherance of the production, purchase, and requisitioning of materials for ship construction.
    And I do further direct that the United States Shipping-Board shall have and exercise all power and authority vested in me in said section of said act, in so far as applicable to and in furtherance of the taking over of title or possession, by purchase or requisition, of constructed vessels, or parts thereof, or charters therein; and the operation, management and disposition of such vessels, and of all other vessels heretofore or hereafter acquired by the United States. The powers herein delegated to the United States Shipping Board may, in the discretion of said board, be exercised directly by the said board or by it through the United States Shipping Board Emergency Fleet Corporation, or through any other corporation organized by it for such purpose.
    Woodrow WilsoN.
    The White House,
    
      11 July, 1917.
    
    IV. On December 3, 1918, the President issued the following Executive order:
    
      EXECUTIVE ORDER
    [Repealed June 5, 1920. See see. 1, merchant marine act]
    Delegating to the United States Shipping Board and to the United States Shipping Board Emergency Fleet Corporation, respectively, powers granted to the President by acts of Congress relative to the emergency shipping fund and approved on or prior to November 4, 1918
    Whereas, by Executive Order No. 2664, dated July 11, 1917, I delegated to the United States Shipping Board and to the United States Shipping Board Emergency Fleet Corporation, respectively, certain powers vested in me under the section entitled “ Emergency shipping fund ” of the urgent deficiency appropriation act approved June 15, 1917; and Whereas, since the issuance of said Executive order, the said powers granted in said act have been variously affected or extended by the section entitled “ Emergency shipping fund ” of the urgent deficiency appropriation act approved October 6,1917, by Public Act No. 138, Sixty-fifth Congress, .approved April 22, 1918, amending said section of said act of June 15, 1917, and by the sections entitled “ Emergency shipping fund ” in the sundry civil appropriation act approved July 1,1918, and in the first deficiency appropriation .act, 1919, approved November 4, 1918, respectively:
    Now, therefore, by virtue of the authority vested in me by said laws, supplementing said order No. 2664, but in no way limiting or restricting the effect thereof, or of acts heretofore done in pursuance thereof, I do hereby delegate all the power and authority so vested in me, and do direct that—
    1. The United States Shipping Board Emergency Fleet Corporation shall have and exercise all power and authority now vested in me by said laws with reference to any and all activities which may be directly or indirectly applicable to ship or plant construction; and
    2. The United States Shipping Board shall have and exercise, subject to its discretion in turn to delegate such exercise as provided in said Executive Order No. 2664, all power ■and authority now vested in me by said laws with reference to constructed dry docks, marine railways and piers, and to constructed vessels or parts thereof or charters therein; to the operation, management, and disposition of such dry docks, marine railways, piers, and vessels; and to such other matters as are not herein mentioned.
    3. All acts heretofore done by said corporation or by said board, with reference, respectively, to the kinds of power or authority herein delegated to each, and which could have been properly done by me under such statutes or any of them, be, and they are hereby, ratified and confirmed.
    WOODROW WlLSON.
    The White House,
    
      3 December, 1918.
    
    V. The merchant marine act of June 5, 1920, repealed many of the provisions of the preceding appropriation acts. It also authorized the Shipping Board to settle “ all matters arising out of or incidental to the exercise by or through the President of any of the powers or duties conferred or imposed upon the President by any such act or parts of acts.” The “ act or parts of acts ” referred to included said act of June 15,1917, to which reference is made in Finding II.
    VI. J. Y. Underwood, plaintiff, who had been an employee of the United States Shipping Board, was, during the period within which the matters herein mentioned occurred, a ship or vessel broker, with offices in New York City.
    VII. In January, 1919, plaintiff was advised by Charles Piez, Director General of the United States Shipping Board Emergency Fleet Corporation, that the United States Shipping Board was offering for sale wooden steamers under a deferred purchase plan, and upon inquiry as to terms, etc., he was referred to Mr. Bourne (secretary of said Emergency Fleet Corporation), whom Mr. Piez had commissioned to set up an organization to handle inquiries and to quote under his directions the prices at which the vessels would be disposed of.
    VIII. In December, 1918, the Shipping Board discussed the matter of the disposal of wooden vessels and decided to delegate to Mr. Piez, general manager of the Fleet Corporation, the power to undertake to formulate a way of getting rid of said vessels. It does not appear that Piez made a report to the Shipping Board of any such plan formulated by him or that any plan of his was approved by the Shipping Board. Before any of the wooden ships were sold the Shipping Board decided that the authority to sell ships resided only with it, and the authority theretofore given to Piez was withdrawn and thereafter all authority in reference to sales was exercised directly by the Shipping Board.
    
      In formulating a method of disposing of said wooden ships Mr. Piez undertook to delegate to Mr. Bourne, the secretary of the Emergency Fleet Corporation, the method of disposing of said ships, and Mr. Bourne in turn delegated this duty to a Mr. DeGot who was located in New York City and who was an assistant to Bourne.
    IX. In January, 1919, plaintiff took up with Bourne the question of the sale of certain of the wooden vessels owned by the Government to private parties whom plaintiff thought he could interest in the purchase of such ships. Plaintiff was given the terms, .prices, payment plan, etc., upon which the Government would sell. During the conversations with regard to the sale of the vessels the question of broker’s commissions was discussed, and Mr. Bourne stated to the plaintiff that that was a matter for the board to decide. Mr. Bourne stated to the plaintiff that such a policy had been determined upon at a meeting of the board of trustees of said Fleet Corporation and that he was informing brokers generally that while said board of trustees had not determined the amount of the brokerage to be paid, yet it was certain that the proper compensation would be made, and that such policy had actually been adopted by said board of trustees. Bourne transmitted such information as to the board’s policy to brokers generally.
    X. On January 21, 1919, the plaintiff, who was acting for the Oceanic Steamship Corporation, called at the office of the secretary of the Emergency Fleet Corporation at Philadelphia, and procured a list of wooden vessels owned by the Government which were for sale. The secretary of Mr. Bourne, who was the secretary of the Emergency Fleet Corporation, handed to the plaintiff at plaintiff’s request a copy of a letter addressed to the Barrett Steamship Co. which had been written by Mr. Bourne on January 24, 1919, and which, contained the following words: “ While the board has not as yet settled on the amount of brokerage that will be paid for-services rendered in the sale of these vessels, it is certain that-proper compensation will be made.” It does not appear from, any evidence in the case that Mr. Bourne was authorized by the Shipping Board to speak for it, or that any action at. that time had been taken by the board with regard to the amount of brokerage which it would pay, if any. On the same visit the plaintiff was given a copy of a so-called office memorandum made by Bourne which reads as follows:
    “ Office memorandum.
    “ I to-day discussed with Mr. Charles Day the subject of brokerage on the sale of ships, and at his suggestion I am informing brokers that, while the board has not as yet determined the amount of brokerage, a suitable commission will be paid for services rendered in the matter of the sale of ships.
    “ Stephen Bourne.
    “ CC. to Mr. Piez, Mr. R'osseter.”
    The Mr. Day referred to was one of the trustees of the board, but it does not appear that he had any authority to speak for the board.
    XI. Plaintiff called on DeGot in New York, to whom he had been referred by Bourne’s Philadelphia office as being in charge of the New York sales office of the United States Shipping Board Emergency Fleet Corporation, and stated that he had a prospective purchaser for some of the board’s wooden ships. Plaintiff was given a letter by DeGot dated January 28, 1919, in which the following appears :
    “In reference to your inquiry on commission, I beg to advise you that the board has not yet settled the amount of brokerage that will be paid for services rendered in the sale of these vessels. It is certain, however, that proper compensation will be made.”
    It does not appear that DeGot had any authority to speak for the Shipping Board, nor had the board at that time determined upon any policy with regard to commissions to be paid to brokers.
    XII. Upon receipt of this letter plaintiff again called on the American Oceanic Corporation (the company he had previously interviewed regarding the purchase of vessels) and advised them regarding available steamers, deliveries, etc. Thereafter an offer was submitted on behalf of the American Oceanic Corporation, which was finally rejected for the reason that said corporation lacked financial responsibility.
    
      Said offer was submitted to the United States Shipping Board and was signed by plaintiff personally and recited that he was acting for and in behalf of the American Oceanic Corporation. In said offer plaintiff referred to said American Oceanic Corporation as his principal.
    At the time plaintiff was given authority to make the bid on behalf of the American Oceanic Corporation for said ships he applied for and procured from said corporation a contract in writing by which said American Oceanic Corporation agreed to pay him a commission of two and one-half per cent for negotiating the sale of s'aid vessels to said corporation.
    Thereafter a new company, the Nacirema Steamship Corporation, was organized.
    Mr. Cox and Mr. Marshall, the president of the company, presented a written proposal from the Nacirema Steamship Corporation to Commissioners Page and Stevens. On March 17,1919, a modified proposal was then submitted covering the purchase of 15 wooden steamers at a purchase price of $650,000 per vessel. After a series of negotiations conducted by Mr. Marshall, the president of the corporation, a contract was entered into between the United States, by and through the United States Shipping Board, and the Naci-rema Steamship Corporation. And on June 3, 1919, said contract was duly executed, under which said Nacirema Steamship Corporation agreed to purchase 15 wooden vessels from the Government at $650,000 each, or a total of $9,750,000.
    The contract of June 3, 1919, provided that $125,000 of the purchase price of each vessel was to be paid on the delivery thereof and that a mortgage would be executed securing the payment of the balance of the purchase price of each of said vessels.
    The initial payment on but five vessels was made and the mortgages and bills of sale provided for in said contract were never executed, and no sale of any of the ships under said contract was ever consummated.
    XIII. Thereafter plaintiff procured a new list of vessels with deliveries, which was presented to the Nacirema Steamship Corporation, and plaintiff also had several conferences with Commissioners Page, Donald, Stevens, and Mittnach (who was then in charge of ship sales) regarding the purchase of additional ships by said Nacirema Steamship Corporation. The president of the Nacirema Steamship Corporation and the board entered into a contract dated January 13, 1920, whereby the price of the vessels under the contract of June 3, 1919, was reduced from $9,750,000 to $7,750,000 and whereby said Nacirema Steamship Corporation bought 11 additional vessels for $3,500,000.
    XIY. On February 12, 1919, the following record was made by the United States Shipping Board:
    “ Mr. J. Y. Underwood, on behalf of American Oceanic Corporation, 170 Broadway, New York, appeared before the board in company with Secretary Bourne, of the Emergency Fleet Corporation,. and presented a firm offer of $650,000 each, which was acceptable to the board, and Secretary Bourne was directed to incorporate the conditions of the sale, terms, etc., in a letter to Mr. Underwood.”
    At that time plaintiff had an agreement with said American Oceanic Corporation, which provided that said corporation would pay plaintiff commission up to 2y2 per cent, less what he received from the seller. Plaintiff tried to secure a similar contract with the Nacirema Steamship Corporation which was promised but which plaintiff never succeeded in securing.
    Plaintiff disclosed both the American Oceanic Corporation (the unsuccessful bidder) and the Nacirema Steamship Corporation (the successful bidder) and assisted in securing the contract for the sale of the vessels. The contract was not consummated, as the Nacirema Corporation was not financially able to comply with its contract.
    XV. On June 16, 1919, after the sale of vessels to the Nacirema Corporation had been consummated by the contract heretofore set out the United States Shipping Board adopted the following resolution:
    “ Resolved, That hereafter the United States Shipping Board will allow a commission of 1% per cent to brokers selling for the account of this board any of the wooden steamers owned by it, providing that the said brokers produce satisfactory evidence to this board that they are the intermediary between the purchaser and the board, and that the purchase order be signed both by the broker and the purchaser.”
    No purchase order has been signed both by the broker and the purchaser, and the plaintiff has not complied with the resolution of the board.
    It has not been established what is a reasonable broker’s commission in the case at bar.
    The court decided that plaintiff was not entitled to recover.
   Hat, Judge,

delivered the opinion of the court:

The plaintiff is seeking to recover from the United States the sum of $237,500 which he claims is due him as broker’s commissions on the sale of certain wooden vessels owned by the United States, which sales he claims were made in June, 1919, and January, 1920. These vessels had been built by the United States under authority conferred upon the United States Shipping Board by the President of the United States, who had had the authority conferred upon him by the Congress of the United States.

The United States Shipping Board, after the armistice in November, 1918, decided to sell some of the wooden vessels then owned by the United States, and delegated to one Charles Piez, General Manager of the Emergency Fleet Corporation, who was also a member of the Shipping Board, the authority to formulate some plan to bring about the sale of these vessels. Piez undertook to delegate what authority he had to one Steven Bourne, the secretary of the Emergency Fleet Corporation, who had his office in the city of Philadelphia, and Bourne employed one DeGot with offices in New York to give out information with regard to the sale of these vessels. Before any sale was made it was determined by the Shipping Board that the authority for the sale of these vessels was vested in them alone, and the authority given to Piez was withdrawn.

While Piez was undertaking to formulate some plan for the sale of these vessels the plaintiff, Underwood, who had been an employee of the Shipping Board, and who had resigned his position with said board in June, 1918, bégan in December, 1918, to make inquiries of Piez, Bourne, and DeGot as to the ships for sale, and representing himself as the agent of a steamship corporation, he also inquired of these various employees of the Shipping Board what payment would be made for services which might be rendered in the sale of these vessels. He made no such inquiries of the Shipping Board, but confined himself to these employees who had no authority to speak for the Shipping Board on this question. He was told by Piez that the question of compensation was one which would have to be determined by the Shipping Board. Bourne and DeGot informed him that while the Shipping Board had not decided what commission would be paid, yet that some compensation would be paid for services rendered in the sale of these vessels. It does not appear that either Bourne or DeGot had any authority to speak for or to bind the Shipping Board, or that at the time they made these representations the Shipping Board had taken any action upon the question.

Thereafter, in the name of the Oceanic Steamship Corporation, the plaintiff made an offer to the Shipping Board to buy certain ships, and at the same time had a contract with that corporation to pay him a commission of 2y2 per cent. The Shipping Board rejected this offer. Afterwards another corporation, the Nacirema Steamship Corporation, offered to purchase 15 wooden vessels from the Shipping-Board. This offer was made on March 1Y, 1919, by the plaintiff, who was accompanied by the president of the corporation. This offer was accepted and provided for the purchase of the vessels at the price of $650,000 per vessel. A contract was drawn and given to the plaintiff to present to the corporation for execution, and said, contract was duly executed on June 3, 1919. Under the provision of this contract $125,000 of the purchase price was to be paid on the delivery of each vessel, and a mortgage was to be executed by the purchaser to cover the balance of the purchase money. On five of the vessels so purchased the initial payment of $125,000 was made, but the mortgages provided for in the contract were never executed. On January 13, 1920, another contract was made between the Shipping Board and Nacirema Steamship Co. by which the sale price of the first 15 vessels was reduced to $553,571.43 each and said contract further provided for the sale by the Shipping Board to said company of 11 additional vessels for $3,500,000. The Nacirema company was financially unable to carry through either of said contracts, and the vessels were returned to the Shipping Board. In the negotiations leading up to the making of the last-mentioned contract it does not appear that the plaintiff took any active part.

On June 16, 1919, after the first contract was made the Shipping Board adopted the following resolution:

“Resolved, That hereafter the United States Shipping Board will allow a commission of V/i per cent to brokers selling for the account of this board any of the wooden steamers owned by it, providing that the said brokers produce satisfactory evidence to this board that they are the intermediary between the purchaser and the board, and that the purchase order be signed both by the broker and the purchaser.”

It is not shown that the plaintiff had any express contract with the Shipping Board as to the payment of commissions, nor with any person authorized to act for said board. The plaintiff relies upon an implied contract that he would be paid for his services in bringing about the sale of the vessels herein referred to. Apart from the fact that the sale was not in fact consummated the right of the Shipping Board to pay commission to brokers, or in other words, to employ some one outside to do the work which the law had imposed upon it, can not be sustained. Authority was vested in the Shipping Board to sell or dispose of these vessels; it was not within its power to delegate that authority to private persons to divest itself of the authority conferred upon it by law and to intrust its authority to some one not known to the law. The Shipping Board was a governmental agency, intrusted with certain powers which it could not delegate. The Government is not bound by any declaration or act of the Shipping Board unless it acted within the scope of its authority, and the plaintiff in dealing with it or any of its employees was bound to take notice of the extent of the authority conferred by law upon the board, or upon any of its employees by the board.

In the present case the plaintiff had no dealings directly with the Shipping Board, nor did the Shipping Board by any of its actions lead the plaintiff to believe that he would be paid for any of the services which he alleges he rendered in bringing about the sale of these vessels. The plaintiff was in fact a volunteer, and a volunteer whose services were not known to nor recognized by the parties to whom it is alleged they were rendered. If he claims under the resolution passed by the board, then he must comply with the terms of the resolution, a portion of which was “ that the purchase order be signed both by the broker and the purchaser.” This was not done in this case, and no reason is given as to why it was not done.

The plaintiff had no contract with the Shipping Board; from the evidence it does not appear that he sought such a contract; as a matter of fact in all of his negotiations with the board he seems to have been representing the opposite party, and the board assumed, and had the right to assume, that the plaintiff was acting for the purchaser, and that he was not representing the Shipping Board.

From the evidence it appears that the United States Shipping Board had power and authority to sell the vessels in question; that the board never delegated that power or authority to any one else; that no employee of the board had any authority to commit the United States to the payment of a commission for bringing about a sale of any of these vessels; that the plaintiff represented the purchaser rather than the Shipping Board, and that he had no contract express or implied with any person or agency who was authorized to commit the Government to the payment of a commission for the sale of these vessels.

We are therefore of opinion that the petition of the plaintiff must be dismissed. It is so ordered.

Geaham, Judge; Booth, Judge; and Campbell, Chief Justice. concur. ■