Case ID: us-ct-cl_61/html/0951-01.html
Source: Caselaw Access Project
Author: {"author": "Downey, Judge,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

STANDARD OIL COMPANY v. THE UNITED STATES
    [No. 34217.
    Decided March 29, 1926]
    
      On the Proofs
    
    
      Eminent domain; requisitioning of vessels; Shipping Board rates; just compensation. See Standard Transportation Oo. case ante, p. 906.
    
      The Reporter's statement of the case:
    
      Messrs. Peter M. Speer and Russell PL. Robbins for the plaintiff. Mr. Gourtlmid Palmer was on the briefs.
    
      Mr. J. Frank Staley, with whom was Mr. Assista/nt Attorney General Herman J. Galloway, for the defendant. Mr. W. W. Nottingham was on the briefs.
    The court made special findings of fact,- as follows:
    I. The plaintiff, Standard Oil Company of New York, a corporation incorporated in the year 1882 under the laws of the State of New York, during the transactions herein described was engaged in the business of manufacturing and merchandising petroleum products refined in New York City, and sold in New York State, the New England States, and in foreign countries. Its principal supply of crude oil was transported by water from points on the Mexican Gulf coast to its refineries in New York, and its finished products to the New England States where it was marketed, by a fleet of coastwise steamers and barges which carried the plaintiff’s products exclusively.
    II. On October 12, 1917, among other coastwise tank steamers plaintiff owned a vessel known as the Socony which had a tonnage of 5,075 tons dead weight, was equipped for towing a barge and had a capacity of 37,000 barrels of oil of 42 gallons each, and the barge towed by her had a capacity of approximately 30,000 barrels of oil. The Sooony was built in 1913, and had been exclusively used in the plaintiff’s service on the Atlantic coast from 1913 to 1917.
    III. Under the provisions of the urgent deficiency appropriation act for the Army and Navy, approved June 15, 1917 (40 Stat. 182), subheading, “ Emergency Shipping Fund,” the President, by Executive order dated July 11, 1917, directed that the United States Shipping Board should have all power and authority vested in him by said act as to the requisitioning or puréhase of constructed vessels and as to the operation, management and disposal of such vessels and of all other vessels theretofore or thereafter acquired by the United States. Said Executive order is set out in full in Paragraph IY of plaintiff’s amended petition and is made part of this finding by reference thereto.
    IY. On October 12, 1917, the United States Shipping Board by virtue of said act of June 15, 1917, and of said Executive order of July 11, 1917, issued a requisition order or notice that the requisition of all American steamers described therein and of which previous announcement had been made would become operative and effective on October 15, 1917, at noon, and that the ships affected by said requisition included all cargo ships able to carry not less than 2,500 tons total dead weight, including bunkers, water and stores, and all passenger steamers of not less than 2,500 tons register. Said order or notice is set out in full in Paragraph Y of plaintiff’s amended petition and is made part of this finding by reference thereto.
    V. After having determined upon the issuance of a requisition order the Shipping Board decided to fix upon a rate of hire for requisitioned vessels. Many factors were taken in consideration by the board among which were that the American mercantile marine had a number of old steamers and that there was a difference in the size of steamers and difference in type. The board concluded that as far as possible it would make a general rate to apply to all and not a rate applicable to each vessel separately, which latter they regarded as impracticable. Recognizing that there was an obligation to award just compensation, the board thought it necessary, in formulating a rate per ton per month, to take into consideration the value of the property and to award compensation, at least to some extent, based on that .value. The Shipping Board, on September 27, 1917, made an announcement of its rates, as follows:
    United States Shipping Board, Washington, September 27, 1917.
    
    The United States Shipping Board announced to-day the rates upon which it proposed to requisition all American tonnage suitable for ocean service above 2,500- tons deadweight carrying capacity. The rates are as follows:
    CARGO BOATS AND TANKERS
    Per
    d.-w. ton
    Over 10,000 tons d. w. capacity, Government form time charter_5. 75
    8,000 to 10,000 tons d. w. capacity, ditto_6.00
    6,001 to 8,000 “ “ “ “ 6.25
    4,001 to 6,000 “ “ “ “ _6.50
    3,001 to 4,000 “ “ “ “ _6.75
    2,500 to 3,000 “ “ “ “ _7.00
    The Shipping Board finally determined upon $175 per dead-weight ton as the average value for requisitioned tonnage, and from this basis deduced , as a fair return 25 per cent per annum on that sum, and 50 cents per ton added to cover overhead expenses, to which was added 1 cent per ton for convenient calculation, resulting in a monthly rate of $4.15 per dead-weight ton, and for vessels making over 11 knots per hour, 50 cents per knot for each additional knot made. This rate was called bareboat hire, the Government assuming all costs of operating the vessels, together with marine insurance and war risk.
    Vessels of speed in excess of 11 knots to be allowed 50 cents per ton dead weight per month for each knot or part of a knot over 11 knots.
    For passenger steamers, the board adopted a twofold basis of classification: Class A, consisting of steamers with a capacity of over 150 passengers, and class B, consisting of steamers with a capacity of from 75 to 150 passengers. Steamers falling in both classes are further classified according to speed. The rates for passenger steamers are as follows:
    CLASS A
    Per ton gross register
    10 to 11 knots, Government form time charter _$9. 00
    12 knots _ 9.50
    13 knots _10.00
    14 knots “ “ _10.50
    15 knots _11.00
    Over 15 knots _11.50
    CLASS B
    10 to 11 knots, Government form time charter — j.- 8. 00
    12 knots “ “ “ “ --- 8.50
    13 knots “ “ “ “ 9.00
    14 knots “ “ “ “ _ 9.50
    15 knots “ “ “ “ _10.00
    Over 15 knots “ “ “ “ -10.50
    Bainbridge Colby, of the Shipping Board, in announcing the requisition rates, said:
    “ The foregoing rates will become operative on October 15th, 1917. The vessels embraced in the requisition, except in so far as actually required for Government service, will be left in the hands of the present owners to be operated for Government account, but subject at all times to such dispositions as the board may direct.
    “ A certain number of the requisitioned vessels, which are required for the continuing and exclusive service of the Navy and Army, will be taken over on a bare-ship basis. The rate of hire on this basis has been fixed by the board at $4.15 per dead-weight ton for cargo boats and $5.75 per ton gross for passenger steamers of eleven knots, speed, with an additional allowance of fifty cents per ton for each knot in excess of eleven and up to sixteen knots.
    “All the foregoing rates are tentative. The board will carefully examine the results of operation under the requi-. sition rates and from the results, as certified by expert examiners, will determine upon such revision as fair and equitable treatment of the owners of the requisitioned vessels may require. Revisions will be made, if reasons therefor are found to exist, at intervals of not more than ninety days.
    “As to insurance, the Government will assume the war risk, and, in some instances, the marine risk as well. In cases, in which for any reason it is more convenient for the Government to assume the marine risk, the usual rate for such insurance will be deducted from the charter hire.”
    
      The rate finally determined on by the Shipping Board, $4.15, was accepted substantially by 100 per cent of cargo owners, owners of cargo vessels, and by a very large percentage of the owners of tankers or tank vessels, both with respect to tonnage and vessels and number of owners; but some did not accept it.
    VI. The tank steamer Socony of the plaintiff was of the class of vessels subject to said requisition notice or order of October 12, 1917. Said vessel was not taken at once into physical possession by the United States under the requisition order, but was allowed to remain in the possession of the plaintiff, as stated in the order of October 12, 1917, and the agreement set forth in the petition, until February 23, 1918. On said February 23, 1918, at four o’clock in the afternoon, the United States Shipping Board took possession of said Socony and retained such possession until noon of July 31, 1918, when the Socony was returned to the plaintiff. The total time, as agreed upon by the parties hereto, during which the Socony was actually in the service of the defendant under requisition, was five months, seventeen hours, and twenty minutes.
    VII. During the whole period the Socony was held under requisition by the United States she was operated by the plaintiff as agent of the United States in trans-Atlantic service and was employed in carrying petroleum products for the United States and its ally, France, under arrangements between them for the prosecution of the war. The requisition agreement of August 22, 1918 (plaintiff’s Exhibit “ B ” attached to the amended petition), and the bareboat form of charter (plaintiff’s Exhibit “A” to the amended petition) show the terms upon which the Socony was operated. These exhibits are copies of the original papers and are made parts hereof by reference.
    They were not in fact executed and delivered to the plaintiff by the United States until September 23, 1918, nearly two months after the voyage had been made.
    The voyages were made by plaintiff by direction of the United States Shipping Board, but the defendant did not at any time take actual physical possession of the Socony. 
      No inventories were taken nor were any of the expenses of said voyages paid by the defendant. -
    VIII. On August 28, 1918, a charter party was executed between the United States Shipping Board as owner by requisition and the plaintiff as charterer of the tank steamer called Topila, of 8,100 tons dead weight, for the transportation of petroleum and/or its products for a round voyage, Bayonne, N. J., to Beaumont, Texas, and return to New York. The terms of said charter were executed and performed as required thereby by both parties thereto. Simultaneously with the execution of said charter party the plaintiff executed the following agreement:
    “ In consideration of the United States Shipping Board giving the use of the steamer Topila for a voyage, under charter party dated August 28th, 1918, we, Standard Oil Company of New York, agree to accept as just compensation for the use of the steamer Socony while in transAtlantic trade under requisition by the United States, the rate of compensation fixed by the United States Shipping Board (four and 15/100 dollars per dead-weight ton per month) for such period of time as the steamer Topila may be engaged in the service of the Standard Oil Company of New York under said charter party dated August 28th, 1918, multiplied by the ratio of the dead-weight tonnage of the Topila (8,100) to the dead-weight tonnage of the Socony (5,075).
    “ Dated, New York, August 28th, 1918.
    “ In presence of
    “ (Signed) Geo. S. Ali.
    “ (Signed) Standard Oil Co. or New York,
    “ B,. C. Weit, Secretary
    
    Under said agreement the plaintiff had the use of the Topila for a period of time equivalent to thirty-one days, fifteen hours, thirty-five and one-half minutes, or 1.054 months for the Socony. Hire for the Socony for said period at the rate of $4.15 per dead-weight ton per month amounts to the sum of $22,198.55.
    IX. For the first voyage of the Socony the plaintiff collected from the French High Commission as freight for said voyage $151,098.86, being at the freight rate of $44.50 per ton of gasoline carried, and for the second voyage $158,858.18, being at the freight rate of $45.75 per ton of gasoline carried, a total for said two voyages of $309,957.04, said rates per ton being the prevailing rates at the time of said voyages. For the third voyage, on which gasoline was carried for the defendant, the freight, calculated at the same rate charged the French High Commission, would have amounted to $157,100.93. The operating expenses for said three voyages, conditioning and repairing, paid by the plaintiff, amounted to $115,628.69, in addition to which the plaintiff also performed service and furnished material for the camouflaging of said vessel for which it is agreed it is entitled to $718.71, making a total of $116,347.40. Said sum includes no allowance for operating or managing services.
    X. On and after October 12, 1917, and during the time when plaintiff’s vessel was held by the United States, practically all tank steamships in the world were commandeered, seized, or chartered by the allied belligerent nations or by rhe United States, and practically all available shipyards and shipbuilding facilities were similarly commandeered or seized, so that during the period when plaintiff’s vessel was held by the United States it was not possible for plaintiff to replace the same by purchase or hire in the open market or by contracts for new construction.
    Practically all tankers were owned and operated by oil companies, principally in their own business, and had not been available for hire or hired on a time basis even prior to the beginning of the war.
    XI. The total operating expenses for the Socony during the time she was held by the United States under requisition amounted to $115,628.69, not including any allowance to plaintiff for operating, managing, collecting freights, etc. The total premiums on marine insurance on said vessel for the same period would have amounted to $14,416.10. The total premiums on war-risk insurance at War Risk Bureau rates on said vessel for -the same period would have amounted to $71,050. The total operating expenses, premiums on marine insurance, and premiums on war-risk insurance for said vessel for the same period would have amounted to $201,094.79, or $7.65 per dead-weight ton per month.
    
      The requisition, charters had not been executed and delivered to plaintiff at the time these voyages were made, premiums for war-risk insurance were never actually incurred and paid and they were not charged as bookkeeping entries at the time the voyages were made.
    XII. There were practically no tankers on the market during the requisition-period. At the time the Socony was requisitioned, as above stated, ships were valuable, and the use of ships of the character and kind of the Socony was valuable. There was a demand for the use of such ships and the supply of them was limited. The Socony was suitable for the use to which it was put by the Government.
    XIII. In July, 1917, the Shipping Board made an arrangement with the French Ministry to charge a basic freight rate of $40.00 per ton for carrying petroleum products from North Atlantic ports of the United States to French Atlantic or Fi’ench channel poi’ts, with extra charges of from $1.00 to $2.00 per ton for discharge at Bordeaux or Rouen or at any two ports. The rates were for voyage charters, and the $40.00 rate covered all operating and other expenses and included war risk at War Risk Bureau rates. This rate of $40.00 per ton was afterwards reduced and $1,123,501 was refunded to the French Government.
    XIV. Hire for the use of the Socony under the charter party and agreement of August 28, 1918, set out in Finding VIII hereof, for the period during which the plaintiff was given the use of the Topila, being a period of 1.054 months, is at the rate of $4.15 per dead-weight ton per month and amounts to $22,198.55, and a reasonable rate of hire for the balance of the requisition period, being 4.14 months, would be $6.60 per dead-weight ton per month, and would amount to $138,669.30, making a total amount of hire for the entire requisition period of $160,867.85. A reasonable fee for plaintiff’s services as operating agent in operating said vessel, collecting freights, etc, is $3,415.
    XV. An account stated between the plaintiff and the United States on said basis of $4.15 per dead-weight ton per month for the period during which the plaintiff was given the use of the Topila and at $6.60 per dead-weight ton per month for the balance of the requisition period is as follows:
    Earnings of tlie Socony collected by plaintiff_$309,957.04
    Disbursements for operating expenses and
    repairs_$115, 628. 69
    For camouflaging as agreed with tbe Shipping Board_ 718. 71
    Use of'the Socony for the period of time during which the plaintiff was given the use of the Topila;, 1.054 months, at $4.15
    per dead-weight ton, per month_ 22,198. 55
    Use of the Socony for the balance of the requisition period, 4.14 months, at $6.60
    per dead-weight ton, per month- 138, 669. 30
    Fee as operating agent_ 3,415.00
    -— 280,630.25
    Balance_ 29, 326. 79
    The court decided that the defendant was entitled to recover on its counterclaim the balance stated in Finding XY.
   Downey, Judge,

delivered the opinion of the court:

Acting under authority of the President’s Executive order of July 11, 1917, delegating to him the powers defined in the act of June 15, 1917, 40 Stat. 182, the United States Shipping Board, on October 12, 1917, issued its general requisition order covering all American cargo and tank ships of 2,500 dead-weight tons or more, said order to become effective October 15, 1917.

The plaintiff was then the owner of a vessel known as the Socony which was of the dead-weight tonnage of 5,075 tons and therefore within the class of vessels described in said requisition order. This vessel was taken over by the Shipping Board and under the direction of that board made three trans-Atlantic voyages, upon the first two of which it carried cargoes of gasoline for the French High Commission and for which it collected from that source freights to the amount of $309,957.04, and on the third of which voyage.s it carried a cargo of gasoline for the United States Expeditionary Forces in France, for which it received no compensation. It paid all the expense of operation and some other expenses which are set out in detail in the findings. The plaintiff entered into a requisition agreement and charter covering the use of the Socony, which are attached to the petition as Exhibits A and B, although they were not finally executed and delivered to the plaintiff until after the completion of the voyages here in question.

The action is to recover compensation for the use of said vessel, since the plaintiff had refused to accept therefor the rate which had been fixed by the Shipping Board, and became entitled under a provision of its requisition agreement to sue for just compensation. This applied to the entire period of the use of this vessel except a short period referred to in Finding VIII during which the Shipping-Board chartered to the plaintiff a steamer called the Topila for temporary use in its coastwise business and in consideration of which the plaintiff agreed for a corresponding period, based on the relative tonnage of these vessels, to accept the Shipping Board rate of $4.15 per dead-weight ton.

The plaintiff’s contention is that just compensation for the use of this vessel should be measured by the earning's of the vessel on the two voyages on which it carried cargoes for the French High Commission and for which it received the freights, and in addition thereto compensation for the third voyage on the same basis, and that since compensation upon this basis is in excess of the amount of freights collected by it, it becomes entitled to a judgment. On the other hand the defendant contends that plaintiff should be compensated at the Shipping Board rate of $4.15 per dead-weight ton per month and that it should be required to account for the freights collected by it as recited above, and that upon the balancing of the accounts on this basis the United States is entitled to a judgment as against the plaintiff.

It is not regarded as necessary to review the facts with reference to the use of this vessel, which are set forth in detail in the findings, neither is it regarded as necessary to discuss at length the basis of our conclusion. We have determined and stated in the findings the rate of just compensation to the plaintiff for the use of its vessel during the period it was held by the United States, and other cases of a similar nature which have been before the court seem to obviate the necessity of detailed discussion here, which would to a considerable extent involve but repetition. See Gulf Refining Company, 58 C. Cls. 559.

The state of the account as between the plaintiff and the defendant is set out by items in Finding XY and upon that basis we have concluded that the defendant, upon its counterclaim, is entitled to recover of the plaintiff the sum of $29,326.79, being the excess of the freights collected by it over and above the various items of credit, including the award for the use of the vessel, to which we have found the plaintiff entitled.

Graham, Judge; Hay, Judge; Booth, Judge; and Campbell, Chief Justice, concur.