#### BAY STATE FISHING COMPANY v. THE UNITED STATES.

[No. *24-A.*

Decided January 9, 1922.]

*On the Proofs.*

*Contract; lease agreement for hire of vessels.*— Where the Government leases certain vessels, stipulating in the agreements that the charter money shall be paid “from the time of delivery until the return thereof to the owner, at the place of delivery,” such vessels “ to be used * * * for such period of time as may in the discretion of the Secretary of the Navy be desirable,” the United States to pay the cost of restoring said vessels to the same condition, ordinary wear and tear excepted, as when delivered to the Government, such cost to be determined by a board of arbitrators provided for by said agreements, *held*that the owner is entitled to the hire of such vessels until their return to it at the place of delivery, notwithstanding the refusal of such owner, after the cancellation of the lease agreements, to sign a receipt materially changing the provisions of said agreements as to ascertainment of the cost of repairs, as a condition precedent to the return of said vessels.

*The Reporter's*statement of the case:

*Mr. Harold,*Williams, jr., for the plaintiff. *Mr. Robert H. Davison*and Barker, White, *Wood <& Williams*were on the briefs.

*Mr. Alexander H.*McCormick, with whom was *Mr. Assistant Attorney General Robert H.*Lovett, for the defendant.

The following are the facts of the case as found by the court:

I. The plaintiff, the Bay State Fishing Company, since before April 18, 1917, has been and now is a corporation organized and existing under the laws of the State of Maine, with its principal office at the Boston Fish Pier, in the city of Boston and Commonwealth of Massachusetts.

II. On April 18, 1917, the United States, represented by the commandant of the first naval district, acting under the *65direction of the Secretary of the Navy, entered into an agreement for the lease to the United States of the vessel *Orest,*a copy of which is attached to the plaintiff’s petition and marked *“*Exhibit 1 ” and made a part of these findings by reference. The said commandant thereupon took possession of said vessel *Orest*under said agreement and had possession and use thereof until some time in October, 1917, when the plaintiff was notified by the Navy Department that said lease was terminated.

III. On October 22, 1917, the United States, represented by the commandant of the first naval district, acting under the direction of the Secretary of the Navy, in pursuance of the authority granted by “An act making appropriations for the Naval Service for the fiscal year ending June 30, 1917, and for other purposes,” approved August 29, 1916, 39 Stat., 592, entered into an agreement for the lease to the United States of the vessel Orest, a copy of which is attached to the plaintiff’s petition and marked “ Exhibit 2 ” and is made a part hereof by reference.

IY. Said lease of the vessel *Orest,*dated October 22, 1917, contained the following provision:

“ Fifth. The Government shall pay to the owner as charter money for said vessel for the use thereof from the time of her delivery until the return to the owner a monthly sum as shall be determined by the board of appraisal appointed by the President’s order of July 2,1917.”

And in accordance with said provision the charter hire of the said *Orest*was set at $4,000 a month.

Y. On June 12, 1918, the United States, represented by the commandant of the first naval district acting under the direction of the Secretary of the Navy, in pursuance of the authority granted by said act of August 29, 1916, entered into an agreement for the lease to the United States of the vessel *Breaher,*a copy of which is attached to the plaintiff’s petition and marked “ Exhibit 4 ” and made a part hereof by reference, said lease being in the same form and containing identical provisions with the said lease of the *Orest.*

YI. The charter hire of the *Breaher*under said lease of June 12, 1918, was duly fixed at $4,000 a month.

*66VII. On June 12, 1918, the United States, represented by the commandant of the first naval district, acting under the direction of the Secretary of the Navy, in pursuance of the authority granted by said act of August 29, 1916, entered into an agreement for the lease to the United States of the vessel *Billow,*a copy of which is attached to the plaintiff’s petition and marked “ Exhibit 5,” and by reference.made a part hereof, said lease being in the same form and containing identical provisions with the said lease of the *Orest.*

VIII. The charter hire of the *Billow*under said lease of June 12, 1918, was duly fixed at $4,000 a month. The indemnity for the several vessels at the rates of sums stated per month was reasonable.

IX. Said *Orest,*Breaker, and *Billow*remained continu- . ously in the possession of the United States from the respective dates of said leases up to and until April 3,1919.

X. The charter money accruing under each of said leases of the *Orest,*Breaker, and *Billow*was duly paid from time to time up to and including January 31,1919.

XI. No charter money has been paid on account of any of said vessels, *Orest,*Breaker, and *Billow*from January 31, 1919, up to and including April 3,1919.

XII. On January 22, 1919, the Secretary of the Navy sent to the plaintiff a telegram, reading:

“ Navy Department' cancels leases of the trawlers *Breaker, Billow,*and *Orest,*as of January thirty-first.”

XIII. On January 23,1919, the plaintiff received from the Navy Department a letter signed by the Secretary of the Navy reading as follows:

“ OP-14 — B-ES1/23 JaN. 23, 1919.

“ Síes : In view of the fact that the services of the *Billow, Breaker,*and *Orest*are no longer needed by the Navy, it has been decided to cancel their leases and return them to you, the owners.

“ The commandant of the first naval district, Near Admiral S. S. Wood, U. S. N., Little Building, Boston, Mass., has been directed to deliver the boats to you and to terminate the leases as of January 31, 1919. It is considered that all expenses incurred by the Government after that date for the care and maintenance of these vessels are chargeable against their owners.

*67“ Inclosed herewith yon will find a copy of a despatch sent you this date, of which this letter may be considered a confirmation.”

XIY. The Crest, Breaker, and *Billow*were none of them returned to the possession of the plaintiff or anyone authorized to receive possession in its behalf until April 3, 1919, but were so returned upon that day.

XV. The commandant of the first naval district until Monday, March 31,1919, refused to return said vessels Crest, Breaker, and *Billow*to the plaintiff unless the plaintiff would sign releases therefor in the form attached to the plaintiff’s petition as Exhibit 8, and known in the Navy Department as Sol-X.

XVI. On Monday, March 31, 1919, the United States agreed to return the vessels Crest, Breaker, and *Billow*to the plaintiff upon its executing a receipt in the form attached to the plaintiff’s petition as Exhibit 9.

XVII. Beceipts in the form of Exhibit 9 attached to the plaintiff’s petition were executed by the plaintiff on April 2,1919, and were delivered April 3,1919, coincidentally with the delivery by the United States to the plaintiff of said vessels Crest, Breaker, and *Billow.*

XVII. On October 22, 1917, the United States Government leased from the plaintiff the vessels *Whitecap,*Comber, and *Surf,*under leases in the same form as those of the *Crest,*Breaker, and *Billow,*the rental value therefor being duly determined as $4,000 a month for the said *Surf*and $4,500 a month for each of the said *Whitecap*and *Comber,*the said leases were canceled as of March 31,1919, and rental paid thereon up to said date. From said amount there was deducted the sum of $4,327.87, being the amount claimed by the Navy Department to be due from the plaintiff for alleged care and maintenance of said *Crest, Breaker,*and *Billow.*If the defendant is entitled to deduct this item for care and maintenance the amount named is a reasonable charge therefor. Unless this claim can be upheld the United States owes the plaintiff as the balance of unpaid rental on *Whitecap,*Comber, and *Surf*prior to March 31, 1919, the said sum of $4,327.87.

*68XIX. The plaintiff’s claim is made np as follows:

Rent of *Orest, Breaker,*and *Billow*for February and March, 1919_$24, 000.00

Rent of *Orest, Breaker,*and *Billow*for the first and second days of April, 1919_ 800.00

Deduction on account of alleged care and maintenance charged for *Orest, Breaker,*and *Billow,*made from moneys owing the plaintiff_ 4, 327.87

Rent of *Whitecap, Comber,*and *Surf*for the first and second days of April, 1919- 866. 67

Making a total claim of-$29, 994. 54

Campbell, *Chief*Justice,

delivered the opinion of the court:

Under authority of the act of August 29, 1916, 39 Stat., 592, the Government entered into several contracts with plaintiff for use of certain trawlers, the property of the plaintiff. By the several contracts (and they are substantially alike) the plaintiff agrees “to let and demise” the named vessel to the Government “ to be used in such manner, for such purposes, and for such period of time as may in the discretion of the Secretary of the Navy be desirable.” The Government agreed to pay to the owner as charter money for said vessel for the use thereof “ from the time of her delivery until the return thereof to the owner ” a monthly sum, to be determined by a board of appraisers appointed by order of the President. The amount of the charter money was duly determined, and no question arises upon this amount. The contract further provided that the vessel would be returned to the owner “ at the place of delivery ” at a date not later than “ a reasonable time after peace is declared,” and that the Government would pay the cost of restoring the vessel to the same condition and good order in all respects in which she was when delivered to the Government, ordinary wear and tear excepted, and provision is made for the determination of this amount by a board of arbitrators, one to be chosen by each of the parties, and the third to be selected by the two so chosen. The determination of the arbitration was to be subject to the approval of the Secretary of the Navy. In case of loss of the vessel, the Government was to pay her value at the time of her delivery to the Government, such value to be determined by the board of appraisers above mentioned.

*69After the three vessels, with which this case mainly has' to do, had been in use for some months, during which period the charter money as ascertained and determined by the board of appraisers had been regularly paid, the Secretary of the Navy on January 23, 1919, telegraphed the plaintiff that the Navy Department “cancels” the leases of those three trawlers as of January 31, and, confirming this telegram by letter of same date, stated that in view of the fact, that the services of the trawlers were “no longer needed, by the Navy, it has been decided to cancel their leases and return them to you, the owners.” The letter also stated! that the commandant of the first naval district had been directed “ to deliver the boats to you and to terminate the leases as of January 31, 1919.”

The vessels were not actually delivered to plaintiff until April 3, 1919. The Government debited plaintiff’s claim on account of three other vessels with the amount which defendant claims was the cost to it of the care and maintenance of the three trawlers from January 31 to April 1, and refused to pay any sum on account of charter money during the period in question. The plaintiff is therefore-suing for the agreed pay of its trawlers for the period elapsing between January 31 and April 3, 1919, and for the-amount deducted by the Government from other moneys; due the plaintiff under its claim for care and maintenance,, also for compensation for three other trawlers which should' have been returned March 31 and were not delivered to the owners until April 3.

The contracts, called “Lease agreement,” provide for the use of the trawlers for such period of time as in the discretion of the Secretary of tire Navy may be desirable. This; authorized the Secretary to terminate the lease at any time. The contracts also contemplated that the vessels would be-returned to their owner “at the place of delivery” and', that the stipulated or ascertained charter money would be paid “ from the time of her delivery until the return thereof to the owner.” Why were they not returned to the owner' before the date mentioned in April?

When the naval officers had been directed, in pursuance-of the Secretary’s letter to plaintiff, “ to deliver the boats *70to plaintiff “ and to terminate tbe leases as of Jannary 31,” the plaintiff was notified by the officers that they desired to return and were ready to return the vessels, but before doing so the plaintiff would have to ■ sign a form of receipt or release which was shown to plaintiff, and the latter declined to sign the release. As a consequence of this demand and refusal the delivery of the vessels to plaintiff was delayed until the time stated, at which time a very different receipt was executed and accepted. The release, for such it was, which the plaintiff was asked to sign as a condition precedent to the return of the trawlers would have materially altered the rights secured by the contract or lease under which the vessels were held by the Government.

The provisions of the contract relative to the payment of cost of restoration of the vessels and the manner of its ascertainment contemplates a simple and reasonably expeditious method of determining the amount, namely, by arbitrators chosen by the parties, as has been stated. The release which plaintiff was asked to sign left this question to a board of appraisers without any provision as to when the board should act, and remitted the owner to a lawsuit in case the award of the board was unsatisfactory. The defendant’s counsel suggests, however, that the Government had the right to cancel the contract under the provisions of the act of June 15, 1917, 40 Stat. 182. It is unnecessary to again discuss that act. See *Meyer Scale & Hardware Co. Case,*ante, p. 26. But the, Secretary of the Navy did not proceed under this act. His instructions to the commandant were to “ terminate ” the lease as of a given date, and his use of the word “cancel” did not vary the purpose. This right to terminate at his discretion the lease was secured by the express terms of the contract, and the Secretary recognized this and also the Government’s obligation to “ return ” the vessels to their owners. After the plaintiff had refused to sign the tendered release and after the delay which was responsible for this suit the Navy Department receded from its demand and accepted from plaintiff a simple receipt for the vessels. This kind of receipt the plaintiff had during the delay been willing to give.

*71The defendant next suggests that there is no proof of damages, if it be conceded that the demand of the release constituted a breach of the contract. But the contract itself provides that the Government shall pay charter money “ from the time of her delivery until the return thereof to the owner.” Evidently the Secretary of the Navy recognized that a return of the vessels was as much a part of the Government’s contractual obligation on the termination of the lease as the right to terminate was itself contractual, and he proceeded in recognition of these rights. The plaintiff’s use and enjoyment of its craft was as much interrupted by the failure to return the vessels as it was by their actual use by the Government. The latter agreed to pay for them until their return.

It follows that the plaintiff should recover the several amounts stated in the findings to be $29,994.54, and judgment should be accordingly entered against the United States. And it is so ordered.

Gbaham, *Judge;*Hat, *Judge;*DowNey, *Judge;*and Booth, Judge, concur.