#### ORIENTAL NAVIGATION COMPANY v. THE UNITED STATES

[No. D-872.

Decided February 1, 1926]

*On the Proofs*

*Gontriaet; reimbursement of Panama Canal tolls.*— Tbe Navy Department advertised for bids for the transportation of coal from the east to the west coast, the Hawaiian Islands, and to other points on. the east coast, by circular providing that “ Panama Canal tolls will be assumed by the Navy Department on the west coast tonnage.” The plaintiff’s bid was accepted and a contract entered into which named the vessels, specified the dates of their sailings, and provided that “ Panama Canal tolls will be assumed by the Navy,” without mentioning west coast tonnage. *Helé,*that the plaintiff is entitled to reimbursement for that portion of the eastbound tolls paid on the return voyages, assessable as in ballast, whether vessels were carrying cargo or not.

*The Reporter's*statement of the case:

*Mr. Robert*Ash, for the plaintiff.

*Mr. Heber II.*Rice, with whom was *Mr. Assistant Attorney General Herman J.*Galloway, for the defendant.

The court made special findings of fact, as follows:

I. On or about April 1, 1923, the Navy Department advertised for bids for the transportation of coal from Hampton Roads, Va., to the Pacific ports of San Diego, Calif., Puget Sound, Wash., and Pearl Harbor, Hawaiian Islands. *508The advertisement was made by sending ont to prospective bidders circulars upon which the bids were to be submitted.

II. In pursuance of the above advertisement the Oriental Navigation Company submitted a bid, upon said circular form, for the transportation of coal to said Pacific ports, which bid is attached hereto as Exhibit A. Said circular and bid contained the following provision:

“ 5. The Panama Canal tolls will be assumed by the Navy Department on the west coast tonnage.”

“ 13. *(a)*Name of steel steamer for loading 10 May for Puget Sound, Orinoco.”

“13. *(i)*Name of steel steamer for loading 24 May for San Diego, *New Britain.”*

“ 13. *(c)*Names of Vessels for subsequent cargoes, *Orleans,*Orient, Orinoco.”

“ 13. (/) Approximate dates steamers will report for subsequent cargoes, about July 5, Aug. 1, Aug. 15, Sept. 5, Oct. 20, Nov. 1, Dec. 1, 1923.”

III. The said bid of the Oriental Navigation Company was duly accepted by the Navy Department by telegram and confirmation letter, both dated May 3, 1923, and which are attached hereto as Exhibits B and C, respectively, and, pursuant thereto, a contract was entered into covering the pro-' posed transportation of coal from Hampton Roads to said Pacific ports. Said contract is attached to plaintiff’s petition and is incorporated herein by reference. Said contract contains, among others, the following provisions:

“ 1. The contractor will at his own risk and expense, furnish the transportation for the delivery of the cargoes of coal herein mentioned, from Hampton Roads, Va., to Navy Yard, Puget Sound, Wash., and/or Naval Fuel Depot, San Diego, Calif., and/or Naval Station, Pearl Harbor, T. H., at the price and time herein specified.”

“ 3. The charterer agrees to furnish to said vessel cargoes amounting to 60,000 tons of coal, 10 per cent more or less, and to pay to contractor for 'use of said vessel during the voyages aforesaid three (3) dollars ninety eight (98) cents for Puget Sound and San Diego cargoes and four (4) dollars and ninety eight (98) cents for Pearl Harbo.r cargoes per .ton of 2,240 pounds.”

“ 30. The *Orinoco*will report at Hampton Roads for first cargo to be transported under this contract 12-21 May, 1923, for discharge at Puget Sound.

*509“ The *New Britain*will report at Hampton Roads for second cargo to be transported under this contract 24 — 31 May, 1923, for discharge at San Diego.

“ The Orleans, Orient, and *Orinoco*will report at Hampton Roads for subsequent cargoes about 5 July, 1 August, 15 August, 5 September, 20 October, 1 November, and 1 December, 1923.”

“ Payment of freight charges will be made promptly for each voyage as soon as information has been received from the naval representative at destination that discharge has been completed.”

“ Panama Canal tolls will be assumed by the Navy.”

IV.Pursuant to the above contract, the vessels Orinoco, *New*Britain., *Orleans,*and *Orient*sailed from Hampton Roads with the cargoes of coal to the following ports and upon the dates designated:



V. On June 1, 1923, the plaintiff wrote to the Navy Department inquiring whether the Navy Department expected to pay the Panama Canal tolls upon plaintiff’s vessels upon their return (eastbound) trips. In reply thereto, the Navy Department, on June 7, 1923, advised the plaintiff that the Government would not pay tolls upon the eastbound vessels and denied any liability for same under the contract. The correspondence upon said subject continued for many months thereafter, wherein the plaintiff asserted that the Government should pay said tolls and the Government continued to disclaim such liability.

VI. When the vessels reached the Panama Canal on the westbound passage they were passed through the canal without payment of tolls. Upon their eastbound (return) *510trips free passage was refused. On five of the passages through the canal a small amount of commercial cargo was carried eastbound. In one of the passages through the canal a vessel was in ballast. The dates of passage, the tolls paid, and the tolls assessable by the Panama Canal, if in ballast, are indicated as follows:



For those vessels which were to make second trips there was only a brief time in which to negotiate for the return cargoes, and, in consequence, those'particular vessels picked up their return cargoes at the ports where the coal was discharged.

$18,886.32 is the total amount of tolls assessable by the Panama Canal if all the designated east-bound vessels had proceeded through the canal in ballast.

Exhibit A

Dup. 900-7166

BIDS FOR TRANSPORTATION OP NAVY COAL TO BE OPENED AT NOON

3 MAY, 1923

Schedule 900-7166 (Supplies and Accounts).

Duplicate^ | Indicate which by erasure.

Send this schedule, in duplicate, to the Bureau of Supplies and Accounts, Navy Department, Washington, D. C. *511
      *Bid of (full name of bidder:) Oriental Navigation Company, Inc., (address:) 17 Battery*Place, *New York, N. Y.*

1.Bids are solicited for the transportation of four cargoes of Navy coal from Hampton Hoads, Ya., to the destinations specified below, in vessels of *American registry.*The destinations, guaranteed daily rate of. discharge, cargoes required, and approximate loading dates at Hampton Roads are as follows:



2. In the event that owners or operators of vessels are not in a position to submit bids in strict conformity with the loadings and the cargoes specified, bids on such transportation as they are able to furnish may be submitted for consideration.

The discharge rate at Puget Sound for vessels of less than 4,000 tons cargo capacity will be 500 tons per day.

3. Bids on barges will not be considered for this transportation. Bids offering schooners will be considered for the transportation of the West Coast tonnage with the understanding that if bid is accepted the owners of schooner will insure the cargo for its full value at loading point, policies to be payable to the United States as its interests may appear. Bids offering schooners will not be considered for the transportation of the Portsmouth and Boston cargoes.

4. The usual conditions of the standard coal charter party of the Bureau of Supplies and Accounts will govern. Attention is invited to the following clause which has been made a part of the charter party:

It is mutually agreed that this charter party shall be subject to all the provisions of and exemptions from liability contained in the Act of February 13, 1893, of the Congress of the United States entitled “An Act Relating to the Navigation of Vessels, etc.”

A copy of this charter party form was previously furnished to your company. An additional copy may be *512obtained by submitting request to the Bureau of Supplies and Accounts, Navy Department, Washington, D. C.

5. The conditions of the charter party will include the following provisions: That the cargo will be loaded at the rate of not less than 1,500 tons per running day; that the expenses of loading will be for account of the vessel, that the vessel will be held responsible for any car demurrage which may accrue by reason of the failure of such vessel to report on loading date specified in charter party; that the Navy has the option of rejecting any vessel which fails to report for cargo within three days of the date set for loading, and that the discharging will be done by and for account of the Navy. Panama Canal tolls will be assumed by the Navy on the West Coast tonnage.

6. The following information should be furnished in detail:

*(a) Cargo for delivery navy yard, Puget*Sound, *Wash., for loading about 10 May*

1. Name of vessel, if possible: *Orinoco.*

2. Cargo capacity of vessel: 6,500 tons.

3. Actual date vessel will report: Earliest May 12, 1923. Not later than May 21, 1923.

4. Type of vessel: Steel cargo steamer. If steamer, whether steel or wooden: -.

5. Size and number of hatches: 5 hatches, *#1,*29' x 22'; #2, 33' x 22'; #3,12' x 8'; #4, 34' x 22'; #5, 33' x 22'.

G. Number of between decks: One.

*I.*Transportation rate per gross ton: $3.98.

8. Demurrage rate to apply if any demurrage is incurred: 15^ per net reg. ton.

9. Whether owner or agent of vessel: Owner.

10. Full name and address of firm in whose name contract should be drawn: Oriental Navigation Company, Inc., II Battery Place, New York, N. Y.

II. Whether vessel is designed for transportation of coal cargoes; Ordinary ’tween deck cargo vessel which has carried many coal cargoes successfully.

12.Remarks:

*(b) Cargo for delivery navy yard, Portsmouth, for loading about 16 May*

1. Name of steamer, if possible: - — .

2. Cargo capacity of steamer:-.

3. Actual date steamer will report:-.

*5134.Type of steamer, steel or wooden:-.

o. Size and number of hatches:-.

6. Number of between decks: -.

7. Transportation rate per gross ton: -.

8. Demurrage rate to apply if any demurrage is incurred:

9. Whether owner or agent of steamer:-.

10. Full name and address of firm in whose name contract should be drawn:-.

11. Remarks: -.

Note. — Vessel must be placed alongside coal dock by contractor at Navy Yard, Portsmouth, N. H.

*(c) Cargo for delivery nrnal fuel depot, San Diego, for loading about May*

1. Name of vessel, if possible: *New Britain.*

2. Cargo capacity of vessel: 6,800 tons.

3. Actual date vessel will report: Earliest May 24, 1923: not later than May 31, 1923.

4. Type of vessel: Steel' cargo steamer. If steamer, whether steel or wooden: -.

5. Size and number of hatches: 5 hatches *#1,*24'xl8'; #2, 26' x 18'; #3, 18' x 11'; #4, 26' x 18'; #5, 27' x 18'.

6. Number of between decks: One.

7. Transportation rate per gross ton: $3.98.

8. Demurrage rate to apply if any demurrage is incurred: 15$ per net reg. ton.

9. Whether owner or agent of vessel: Chartered owner.

10. Full name and address of firm in whose name contract should be drawn: Oriental Navigation Company, Inc., 17 Battery Place, New York, N. Y.

11. Whether vessel is designed for transportation of coal ■cargoes: Ordinary ’tween deck cargo vessel which has carried many coal cargoes successfully.

12. Remarks:

*.(d) Cargo for delivenj navy yard, Boston, Mass., for loading about W June*

1. Name of steamer, if possible:-.

2. Cargo capacity of steamer:-.

3. Actual date steamer will report:-.

4. Type of steamer, steel or wooden:-.

*5.*Size and number of hatches:-.'

*5146. Number of between decks: -.

7. Transportation rate per gross ton:-.

8. Demurrage rate to apply if any demurrage is incurred: - — .

9. Whether owner or agent of steamer:-.

10. Full name ancl address of firm in whose name contract should be drawn:-.

11. ftemarks: -.

Note. — Wooden vessel of 3,500 tons cargo capacity or less can not be accepted for the transportation of the Boston cargo.

alternate proposal

7. Alternate bids are solicited for the transportation of about 60,000 gross tons of coal from Hampton Hoads, Va., to Navy Yard, Puget Sound, Wash., and/or Naval Fuel Depot, San Diego, Calif., and/or Naval Station, Pearl Harbor, T. H., for loading prior to 31 December, 1923.

8. Steel steamers of about 7,000 to 10,000 tons cargo capacity are preferred for this service. The use of the same vessels for repeated trips will be given consideration if so offered.

9. The vessel to transport the first cargo will load about 10 May for discharge at Puget Sound and the second vessel will load about 24 May for discharge at San Diego; the remaining tonnage will be shipped in as nearly equal monthly installments as may be' practicable.

10. Bids submitted under this alternate proposal are subject to the conditions outlined in paragraphs 4 and 5 of this schedule. In the event that award is made under this alternate proposal no award will be made for the transportation of coal to Puget Sound for loading 10 May and for San Diego for loading 24 May as called for in paragraph 1 of this schedule.

11. In the event of a second vessel arriving at the same port for discharge prior to the completion of discharge of a vessel, serving under the same contract which is either undergoing or awaiting discharge, lay days on the second vessel will not commence until expiration of the allowed lay days on the first vessel.

12. The guaranteed daily discharge rate will be as follows:

Puget Sound-600 tons.

San Diego — 500 tons.

Pearl Harbor 1, 600 tons.

*51513. The following information should be furnished in detail to cover the shipment of the 60,000 tons of coal covered, by the alternate proposal:

(a) Name of steel steamer for loading 10 May for Puget Sound, *Orinoco'.*

(&) Name of steel steamer for loading 24 May for San Diego, *New Britain.*

*(c)*Names of vessels for subsequent cargoes, *Orleans, ■Orient, Orinoco.*

(If names of vessels can not be furnished with bid the names should be furnished in each instance at least one month before vessel will report for loading.)

*(d)*Actual date steamer will report for cargo scheduled for 10 May: May 12/21, 1923.

*(e)*Actual date steamer will report for cargo scheduled for 24 May: May 24/31, 1923.

(/) Approximate dates steamers will report for subsequent cargoes, about July 5, Aug. 1, Aug*. 15, Sept. 5, Oct. 20, Nov. 1, Dec. 1, 1923.

(If dates can not be furnished with bid the actual reporting dates should be furnished by letter at least one month before vessels will report for loading.)

*(g)*Size and number of hatches of steamer for loading 10 May, S. S. *Orinoco:*Hatches, #1, 29' x 22'; *#2,*33' *x*22'; #3, 12' x 8'; #4, 34' x 22'; #5, 33' x *22'.*

(A) Size and number of hatches of steamer for loading 24 May, *New Britain:*5 hatches; #1, 24' x 18'; *#2,*26' x 18'; #3, 18' x 11'; #4, 26' x 18'; #5, 27' x 18'.

*(i)*Size and number of hatches of steamers for subsequent cargoes, S. S. *Orient,*same as S. S. *Orinoco;*S. S. *Orleans,*5 hatches, *#1,*31' x 17'; *#2,*31' x 17'; #3, 10' x 17'; #4, 31'.x 17';' #5, 31' x 17'.

(If this information can not be furnished' with bid it should be forwarded in detail when vessels are assigned.)

*(j)*Number of between decks of steamer for loading 10 May: One.

(A) Number of between decks of steamer for loading 24 May: One.

*(Jj)*Number of between decks of steamers for subsequent cargoes: One.

(If this information can not be furnished with bid it should be furnished when vessels are assigned.)

(m) Transportation rate per gross ton:

If cargo discharged at Puget Sound-$3.98

If cargo discharged at San Diego- 3. 98

If cargo discharged at Pearl Harbor- 4. 98

*516(n) Demurrage rate to apply if any demurrage is incurred : *15‡*per net reg. ton.

(o) Full name and address of firm in whose name contract should be prepared: Oriental Navigation Company, Inc., 17 Battery Place, New York, N. Y.

(p) Whether steamers are designed for transportation of coal cargoes: Ordinary ’tween deck cargo vessels which have carried many coal cargoes successfully.

*(q)*Remarks: One port of discharge only on each cargo.

Note 1. — In the event that vessels differing from the type of those furnished for transporting the first two cargoes under the alternate proposal are nominated for subsequent cargoes, such nominations will be subject to the approval of the Navy.

Note 2. — Payment of freight charges will be made promptly for each voyage as soon as information has been received from the naval representative that discharge has been completed.

14. Bids should be submitted in duplicate and mailed in the enclosed envelope.

15. The right is reserved to accept or reject any or all bids as may be deemed to the best interests of the Government.

Exhibit B

Despatch

Navt Department, Supplies and Accounts,

*Washington, 3 May, 19^3.*

Oriental Navigation Co.,

*17 Battery Place, New Yorh, N. Y.*

900-7166-PF, 57705, 536

Contract fifty-seven seven naught five awarded you trans-

§ortation sixty thousand tons coal to San Diego and Puget ound at three ninety-eight and Pearl Harbor at four ninety-eight accordance your alternate bid keep Commandant Fifth Naval District Hampton Roads advised movements vessel.

David Potter,

*Paymaster General of Navy.*

*517Exhibit C

NOTICE OE AWARD

In reply refer to No. 57705-PF.

Navy Department,

Bureau of Supplies and Accounts,

*Washington, D. 0.*

*Bid No. %*

1.The following classes in your proposal for naval supplies, opened in this bureau 3 May, 1923, are hereby awarded to you under contract No. 57705.



2. A formal contract for the material specified above will be forwardedi promptly to be executed and returned. If other classes are awarded, “ Notices of award ” will be duly forwarded, and the additional classes shall be, if possible, incorporated in the.same contract; otherwise a second contract will be executed.

3. *Gorrespondence.*— The. successful bidder should eliminate useless correspondence by first looking through all conditions in his proposal to ascertain if the points in question are not already explained. Should further information be desired, all such correspondence should refer to the contract, schedule, and class numbers and be addressed to the Bureau of Supplies and Accounts, except when it is in regard to inspection, in which case the correspondence should be with the inspection officer, if known, otherwise with the bureau concerned (to ascertain the bureau concerned, see the top of the front page of each schedule).

4. *Deliveries.*— Before proceeding with the delivery, please refer to the conditions of delivery in your retained copy of the proposal.

If the proposal provides for varied deliveries as may be required in the future, during the existence of the contract, you are to make deliveries only upon the receipt of orders from a competent authority.

*518But if the proposal provides for delivery of a specified quantity within a definite period, provided there is to be no inspection before shipment, you are authorized to proceed at once with the preparation and delivery of the material. * * *

Respectfully,

David Potter,

*Paymaster General of the Navy.*

Oriental Navigation Co., Inc.,

*17 Battery*Place, *New Torh*Oity, *N. T.*

The court decided that plaintiff was entitled to recover.

Downey, Judge,

delivered the opinion of the court:

The plaintiff contracted with the Navy Department to carry approximately 60,000 tons of coal from Hampton Roads, Va., to Navy Yard, Puget Sound, Wash., and/or Naval Fuel Depot, San Diego, Calif., and/or Naval Station, Pearl Harbor, T. H. The formal contract followed the issuance of a circular inviting bids, the submission of a bid by plaintiff and its acceptance. The contract was performed and the only question is as to canal tolls at ballast rates on vessels engaged in the performance of the contract on return trips for second or third cargoes. The claim was originally broader but has been reduced to the basis stated.

The contract contained the provision that “ Panama Canal tolls will be assumed by the Navy.” The circular inviting bids and the plaintiff’s bid thereon contained the provision that “ Panama Canal tolls will be assumed by the Navy on the West Coast tonnage.”

The defendant argues that the real contract is to be found in the circular, the bid, and the acceptance, and that these make it clear that the tolls assumed by the Navy were “ on the West Coast tonnage, i. e., upon the tonnage bound for the West Coast,” apparently construing this language as, intended to differentiate between a westbound trip with cargo and a return trip of the vessel eastboúnd.

The argument would be of force if there were not another, and, it seems to us, a better explanation as to why the language of the circular and of the contract were not the same.

This explanation is found in the fact that the circular invited bids first for the transportation of coal not only to *519Puget Sound and San Diego, on the West Coast, but also to Portsmouth, N. H., and Boston on the East Coast, and there was therefore propriety in providing for canal tolls to refer to them as tolls “ on the West Coast tonnage ” as distinguished from the East Coast tonnage as to which there were •of course no tolls to be assumed. The distinction was evidently as between East and West Coast destinations. The “ alternative proposal ” called for by the circular was the one submitted by the plaintiff and as it involved no East Coast transportation there was no occasion for distinguishing as between East and West Coast tonnage and the contract therefore simply provided that “ Panama Canal tolls will be assumed by the Navy.”

There is another feature of the matter which is of weight in determining the question presented. The contract provided that “ The following vessels have been nominated to transport nine cargoes, approximately 60,000 tons, of coal ” followed by the names of four vessels, with some descriptive features, so that it was plainly contemplated by the contract that four vessels would carry nine cargoes, necessitating the return of vessels, not simply for return to home port, but for a second and even third cargo.

The transportation seems to have been performed in eight trips instead of nine, but in accomplishing the service one vessel carried three cargoes, two vessels carried two each, while the fourth vessel carried but one. There were thus four return trips after second and third cargoes, two by the Orinoco, and one each by the *Orleans*and *Orient.*

The tolls upon these vessels for these four trips in ballast amount to $12,179.52, the amount to which the claim is now reduced, and this we think the plaintiff, under a fair interpretation of the contract, is entitled to recover.

Graham, *Judge;*Hat, *Judge;*Booth, *Judge;*and Campbell, *Chief*Justice, concur.