#### CONSORZIO VENEZIANO DI ARMAMENTO E NAVIGAZIONE v. THE UNITED STATES

[No. 34746]

*On the Proofs*

*Expropriation of contract; requ/isition under act of June 15, f917; vessels under construction.*— Where the plaintiff had a contract with a shipbuilder for the construction of a ship and before said ship was completed the Government, under the act of June 15, 1917, requisitioned the ship and expropriated plaintiff’s rights under its contract, plaintiff is entitled to just compensation for its contract rights (1) as of the date of the taking, and (2) by way of interest thereon to the date judgment is paid. Following *Broohs-Scanlon*v. *United States,*265 ü. S. 106. See cases *post,*pp. 38, 59, 80, 98, 119.

*The Reporter's*statement of the case:

*Mr. John J. Fitzgerald*for the plaintiff. Fitzgerald, *Sta-pleton da Mahon*were on the briefs.

*12
      *Messrs. Assistant Attorney General Herman J. Galloway, Henry M.*Ward, and *James Talbert*for the defendant. *Mr. W. W. Nottinghami*was on the briefs.

Decided February 14, 1927.

Motion for new trial overruled December 5, 1927.

The court made special findings of fact, as follows :

I. The plaintiff was, and still is, an Italian corporation organized and existing under the laws of the Kingdom of Italy, registered at Venice, Italy, and is a subject of the King of Italy.

II. Under and by virtue of the laws of Italy, citizens of the United States are accorded the right to prosecute claims against the Kingdom of Italy in its courts.

III. Under the provisions of Article XXIII of the treaty of commerce and navigation between the United States of America and His Majesty the King of Italy, duly proclaimed November 23, 1871, and now in full force and effect, the citizens of the United States and the subjects of the Kingdom of Italy are accorded free access to the courts of the respective Governments to maintain and defend their rights without any conditions, restrictions, or taxes other than such as are imposed upon the natives.

IV. On April 28,1917, one Carlo de Luca entered into two contracts in writing with the Standard Shipbuilding Corporation, a corporation duly organized and existing under the laws of the State of New York, owning and operating a shipyard at Shooters Island, State of New York, in and by which said Standard Shipbuilding Corporation agreed to build at its said yard for the said Carlo de Luca, two single-screw, ’tween deck, steel, cargo steamships of approximately 7,300 tons dead-weight capacity each, at an agreed price of $150 for each ton of dead-weight capacity, making the price of $1,095,000 for each ship, or $2,190,000 for both ships, payable in certain installments, as set forth in said contracts. The contracts also provided that the vessels, or any part thereof, and all materials purchased and delivered to the yards of the shipbuilder for their construction, becamS the property of the purchaser in so far as he had made payment under the contracts. The contracts further provided that in *13case the shipbuilder did not proceed with reasonable dispatch in the building of the vessels the purchaser might enter into the yard of the shipbuilder, employ any number of workmen, and use and employ the necessary machinery, engines, and tools of the shipbuilder, purchase materials, proceed with the finishing of the vessels, pay the wages of the workmen, and pay for such materials out of the balance remaining unpaid of the purchase price, and in case the same was insufficient for the purpose, the shipbuilder would pay and make good the deficiency. The contracts further provided that the shipbuilder should place in escrow in a designated bank or trust company the first payment thereunder, namely, $164,250, under each of said contracts, amounting to $328,500, being 15 per cent of the purchase price, to be held by the bank or trust company as security to the purchaser for the faithful performance of the contracts by the shipbuilder, and that the shipbuilder could at any time substitute for those deposits bonds of a surety company in favor of the purchaser for like amounts, conditioned upon the faithful performance of the contracts by the shipbuilder, whereupon the said escrow money should be paid to the shipbuilder. After the execution of these contracts the Standard Shipbuilding Corporation prepared for the construction of said vessels, designated as hulls Nos. 10 and 11. The said contracts were identical except the vessels therein were respectively designated as. hulls Nos. 10 and 11, and hull No. 10 was to be completed on March 31, Í.918, and hull No. 11, April 30, 1918. A copy of one of the contracts is attached to plaintiff’s petition as Exhibit A and is made a part of this finding by reference.

Y. Prior to July 25, 1917, there had been paid by de Luca, plaintiff’s assignor, to the Standard Shipbuilding Corporation, as provided in said contracts of April 23, 1917, on account of the construction of the said vessels the first three installments amounting to the sum of $635,100.

Prior to August 3, 1917, the Standard Shipbuilding Corporation deposited in escrow, with the Guaranty Trust Co. of New York, for the faithful performance of the work as required by the terms of the contract the sum of $328,500. Thereupon the said Guaranty Trust Co. procured from the Globe' Indemnity Co. a bond dated July 23, 1917, in favor *14of the purchaser for the sum of $328,500, conditioned upon the construction and delivery of the said vessels by the shipbuilder in accordance with the terms of the contract. Thereafter because of said bond, the purchaser released the said deposits and the Guaranty Trust Co. paid the same to the Standard Shipbuilding Corporation.

VI. On July 25, 1917, the two contracts described in Finding IV were assigned by the said Carlo de Luca to the plaintiff by an instrument in writing, a copy of which is attached to plaintiff’s petition as Exhibit B and is made part of this finding by reference. In accordance with the terms of this instrument, the plaintiff paid to the said Carlo de Luca for the assignment of said contracts the sum of $1,000,000, and in addition thereto the sum of $491,731 in fees, commissions, taxes, and other charges growing out of the purchase of said contracts. The plaintiff also reimbursed the assignor the sum of $635,100 theretofore paid by him to the shipbuilder, and itself paid to the shipbuilder on July 31, 1917, the fourth installment of $153,300 on the two vessels, a total of $788,400 paid by plaintiff and its assignor to the shipbuilder. There still remained on August 3, 1917, to be paid eight installments aggregating $1,401,600.

VII. On July 11, 1917, the President, by virtue of the authority vested in him by act of Congress of June 15, 1917, by an Executive order delegated the powers conferred upon him by the said act to the United States Shipping Board Emergency Fleet Corporation. Under authority so conferred upon it, while the work provided to be done under the said contracts of April 23, 1917, between de Luca and the Standard Shipbuilding Corporation was in progress, the Emergency Fleet Corporation on August 3, 1917, sent the Standard Shipbuilding Corporation the following telegram and the following letter which were duly received:

STANDARD SillPBIJILDING CORPORATION,

*Shooter’s*Island, *N. Y.:*

By virtue of an act approved June 15, 1917, and authority delegated to the Emergency Fleet Corporation by Executive order of *July*11, 1917, all power-driven cargo-carrying and passenger vessel's above twenty-five hundred tons deadweight capacity under construction in your yards, and ma*15terials, machinery, equipment, and outfit thereto pertaining are hereby requisitioned by the United States and will be completed with all practicable dispatch. Letter follows.

W. L. Capps, *General Manager.*

[Letter]

UNited States Shipping Boaed

EMERGENCY FLEET CORPORATION,

*Washington.*

Standard Shipbuilding Corporation,

*Shooter’s*Island, *N. Y.:*

By virtue of an act of Congress approved June 15, 1917, entitled “Act making 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,” and by authority delegated to the United States Shipping Board Emergency Fleet Corporation under Executive order of the President, dated July 11, 1917, all power-driven, cargo-carrying, and passenger ships, above 2,500 tons d.-w. capacity, under construction in your yard and certain materials, machinery, equipment, and outfit necessary for their completion are hereby requisitioned by the United States.

On behalf of the United States, by virtue of said act and said order, you are hereby required to complete the construction of said requisitioned ships under construction and will prosecute such work with all practicable dispatch.

The compensation to be paid will be determined hereaiter and will include ships, material, and contracts requisitioned.

You will furnish immediately general plans and detail specifications of the ships requisitioned, and copies of contracts and all supplemental agreements in relation thereto and full particulars as to owners, date of completion, payments made to date, amounts still due, and any other information necessary to a fair and just determination of the obligations of the Emergency Fleet Corporation in taking-over these ships and contracts.

You will report immediately whether any additional contracts are under consideration and their character and extent and will not enter into any additional contracts or commitments with respect to merchant tonnage without express authority from this corporation.

(Signed) W. L. Capps,

*General*Manager, *United States Shipping*Board,

*Emergency Fleet Gorporation.*

Washington, D. C., *August 3, 1917.*

*16Among the vessels described above were included, hulls Nos. 10 and 11 which the Standard Shipbuilding Corporation was building under these contracts.

VIII. On August 13, 1917, Eads Johnson, the district officer of the United States Shipping Board Emergency Fleet Corporation at New York, sent Admiral W. L. Capps, the general manager, the United States Shipping Board Emergency Fleet Corporation, Washington, the following letter:

Eads JohNsoN,

UNITED States Shipping BoaRD Emergency Fleet Corporation,

*£nd District, 116 Broadway, New York City,*

*August IS, 1917.*

Admiral W. L. Capps,

*General Manager Emergency Fleet Corporation, Washington, D. C.*

STANDARD SHIPBUILDING CORPORATION.

Dear Sir : Herewith copies of contracts, plans, and specifications for thirteen (13) 7,300-ton dead-weight capacity steel cargo vessels, their standard design, each contract covering one vessel only. Their letter dated August 8th, marked “A,” attached, states that these are true and correct copies. There was found, however, in the case of Nos. 6 and 7, some discrepancies, but their letter of August 10th, marked “ B,” two sheets, clears up the difference between the original and copies. . -

. 2. Copies of contracts 6 and 7, and letter furnished me by the Russian Volunteer Fleet, are also enclosed, wherein there is some difference between these and the copies furnished. These are marked “ C,” “ C-l,” “ C-2,” and “ C-3.”

3. Report of contracts on hand, so far as the financial status is concerned, is enclosed, marked “ D.”

4. Supplementing the information which they have furnished, I have made a personal inspection, and find contracts in the following conditions:

*Full No. 1:*

Has been launched.

Schedule trial trip Sept. 1st to 15th.

Present stage of completion hull steelwork, 90%.

Carpenter work, 75%.

Joiner work, 15%.

Main engines in ship, 95% completed.

Main boilers-in ship, 90% complete.

*17Piping, 30% complete. Being held up on account of valves and fittings not delivered.

Note. — I think the trial date will have to be extended from 3 to 6 weeks beyond dates they give, from present stage of the work.

*Hull No.*¡g.-

Still on stocks.

Launching date given, Septembei 10th.

No delivery date.

Hull now 85% completed.

Note. — Will require continuous work to meet launching date. Would name at least two weeks additional time necessary.

Main engines are very nearly completed and could be made ready to install in ship in ten (10) days’ time. Boilers, 43% completed.

*Hull No. 3:*

Hull about 55% completed.

Engines, T5%, completed, in shop.

Boiler, 15%, completed.

*Hull No. Jf:*

Keel and keelson laid and T5% of bottom shell in place.

No frames up.

Engines, 65% completed, in shop, awaiting forgings for-connecting rods.

Boilers, all material at plant, not worked.

*Hull No. 5:*

90% of keel laid.

40% bottom shell plates in place.

Start made on engine bedplate.

Boiler, all material at plant, not worked.

*Hull No. 6:*

Nothing done.

Material in yard.

Practically all material, including auxiliaries, with the exception of mast and spars, has been delivered for all six (6) vessels.

Report of material attached (marked “F”).

They have also received contract for two mine sweepers for the United States Navy, and the keel blocks are now ready for keels.

In accordance with instructions received from Mr. Fuller on Saturday, I sent my district auditor, with accountant, to the plant, and the result of his findings is on attached sheet (marked “ E ”).

*18I am also attaching copy of letter which I have delivered by hand, on Saturday, in accordance with Mr. Fuller’s instructions, marked “G.” Full particulars as to vessels incorporated in the specifications.

Further particulars have been furnished by my letters of August 9th and August 10th, which are in Mr. Fuller’s file, which he left with me on Saturday, and which I am returning under separate cover.

Mr. Larkin, of the firm of Jolin, Larkin and Rathbone, attorneys for the Standard Shipbuilding Corporation, called this afternoon and commented on the fact that if they followed instructions they could not fulfill their contracts for the Navy Department, and suggested that he would very much like to have an interview with Admiral Capps to get the matter finally straightened out, as he was not entirely clear as to just how far the corporation intended to exercise their power and it was necessary for him to know it. I advised Mr. Fuller by phone, and Mr. Larkin will wire when he will be in Washington.

Respectfully,

(Sgd.) Eads Johnson,

*District Officer.*

IX. On August 28, 1917, the Standard Shipbuilding Corporation received from the Emergency Fleet Corporation the following letter:

Uottidd States Shipping Board,

EMERGENCY FLEET CORPORATION,

*Washington, August 16, 1917.*Standard Shipbuilding Corporation,

*Shooters Island, N. Y.*

Gentlemen: Referring to the general order under date of August 3, requisitioning ships over 2,500 tons deadweight capacity now under construction in your yard, under the order you are required to immediately furnish general plans and detailed specifications of the ships requisitioned, copies of contracts and supplemental agreements in relation thereto, and other particulars as to owner, date of completion, payments made to date, amounts still due, and any other information necessary to a fair and just determination of the obligations of the Emergency Fleet Corporation. In addition, please state under what flag or nationality contemplated by the original contract.

Please report at once on ships nearing completion and in every case give the estimated date of completion.

The corporation requests that you make for each requisitioned vessel building by you suggestions—

*19
      *(a)*For the omission of such features as have been provided for convenience in special trades;

*(b)*For changes that will expedite placing the vessel in service;

(e) For changes that will insure the safety of the vessel;

(d) F'or omission or changes that will reduce the cost without loss of efficiency for overseas-carrying purposes.

Suggestion is also invited in case the vessels are built for a special trade as to what cargoes they are suitable for and as to what modifications could be readily made so as to make the vessels suitable for general cargoes.

Items marked (x) must be carried or provided on every ship.

Estimates of cost of changes to be submitted through district officer.

The following items may be considered in the class of omissions:

1. *Ga/r-go forts.-*— In case of ships where cargo ports are intended, they should be omitted if the work is not too far advanced, and shell openings plated in. If the ports are already out, same are to be permanently fastened and reinforced.

*2. Special cargo-handling equipment.*— Where special cargo-handling equipment is contemplated, provided the work is not too far advanced, same should be eliminated. The general requirements for cargo-handling gear would be two booms to each hatch, ancl where a third or fourth boom has been contemplated same can be omitted, together with its gear. In the case of derrick posts, as usually fitted at No. 3 hatch provided with one boom, this arrangement should remain.

3. *Excessive number of ventilators to ca/rgo holds and. ''tween decks.-*— Where cargo ventilators are in excess of two ventilators at each end of each hold and ’tween decks, same can be dispensed with. In cases where ventilators are extended up in the walls to clear deck load, this arrangement should remain.

4'. *Bulwark shutters abreast of hatches.*— Where bulwark shutters are contemplated abreast of hatches, provided the work has not advanced so far as to make it less difficult to fit shutters already cut than to omit them, they should be omitted and bulwarks closed in solid.

5. *Trucking door in ’tween-deck bulkheads.*— In all cases hinged water-tight doors in ’tween-deck bulkheads, except where necessary for cargo access, as in the case of ’tween-deck bulkheads at forward and aft end of machinery space, the door openings to be plated in solid; or if the doors are already out, same to be permanently fitted and reinforced.

*206. Where oil is not carried in double bottom, the cargo ceiling on tank top, excepting under hatches, may be eliminated.

For the intended overseas service, in view of the military reqxfirements needed, it is desired for all ships — this, however, subject to the advanced stage of construction, also in cases of ships nearing completion — that the following additions be made:

1. Additional W. T. transverse bulkheads to be fitted and present intermediate W. T. bulkheads extended up to upper deck with a view to obtaining a two-compartment ship as far as practicable — that is, two compartments may be bilged or flooded and the ships remain afloat. In cases of bulk oil ships having wing trunkway at upper deck running fore and aft W. T. bulkheads to be fitted that the upper deck may become the bulkhead deck.

2. Valves or other means fitted on bilge and drainage piping for the purpose of preventing flooding communication from one compartment.

3. It is desired to install, in cases of ships wherever practicable, subject, however, to the advanced stage of work, an ice machine and cold-storage rooms. In usual cargo ships the capacity of the ice machine would be one ton, and possibly in larger-size ships two tons capacity, and preferably of the direct expansion ammonia type. The C02 system and other makes *of*ice machines will be considered. No' ice making is intended, but a scuttle butt or other means to be provided for cold drinking water for the crew, having faucet outlet in engine room and in galley or pantry.

For ships where it is not practicable to install an ice machine and cold-storage system, for want of space and location, and due to the advanced stage of the work, a large ice house should be provided for a sufficient capacity for storage space based on the number of crew to be provisioned for a round trip to Europe, and for, say, five days in port.

4. U. S. Steam Board Inspection boat inspection requirements *for service in the war zone to- he frovided*with davits and other boat equipment to meet law.

5. __Accommodations for gun crew to be provided for, consisting of room in vicinity of officers’ quarters for lieutenant and an additional room for two gunners and further quarters for fifteen gun crew with berths, outfit, and furnishings similar to firemen’s or sailors’ quarters, and the gun crew quarters provided for as separate quarters for either sailors or firemen.

6. Where practicable a searchlight of 18-inch size to be installed. In cases, however, where searchlights of smaller *21size are already ordered or have been received, and it is not possible to obtain and substitute an 18-inch searchlight before the time of completion of the ship, the ■ smaller-size searchlight to be installed as originally contemplated. In cases where no searchlight is contemplated, every effort on your part is to be exercised to obtain and install a searchlight.

7. TJ. S. inspection requirements for crew’s quarters, lifesaving equipment, etc., to be arranged for in cases of ships contracted for under foreign flags, as far as it is practicable to work same out without undue interference with the advanced stages, of the work. In cases where it is not practicable to effect these changes you will please advise regarding the situation.

8. In cases of ships where the work has not advanced too far to make the change impracticable, for the purpose of lessening visibility, the usual mast is to be dispensed'with, twin-arrangement low derrick posts to be fitted arranged to hinge down or telescope. A light-built single mast to be fitted aft of smokestack, fitted with housing topmast which will carry the wireless. This must be for height of wireless for ships under 5,000 tons, approximately 80 feet; for ships 5,000 tons and over approximately 95 feet above the deep load line. To meet this requirement for wireless, a light-built steel mast to house may be fitted on forward side of smokestack and stack reinforced. In cases with ships, where machinery is placed aft, a separate mast with housing topmast to be fitted amidships, or the housing extension provided at derrick post.

9. In cases where forced draft is fitted to the boilers the smokestack is to. be as low as consistent, and further consideration is to be given to the possibility of providing a telescope smokestack, in which case a separate mast for wireless will be fitted.

10. War paint colors will be used for the final painting of the vessels, including the colors for the superstructure, stack, masts, etc., to eliminate visibility to the greatest extent possible. ^

11. Accommodations to be provided for the two wireless operators and in addition a separate adjoining room for operating the wireless. The corporation will supply and arrange for installing the wireless outfit. For vessels under 5,000 tons dead-weight capacity a 1 kw. radio outfit will be used, having a normal radius of 100 to 150 miles; vessels 5,000 tons and over, 2 kw. radio set having a normal radius of 300 to 400 miles.

12. Gun foundations and magazines and gear for handling same. One gun forward and one gun aft, unless other*22wise directed. The procedure in this matter, unless later directed, is that you address a request to the Chief of Naval Operations, Navy Department, Washington, D. C., stating the name of the ship, yard, number, size, tonnage, and location. The Chief of Naval Operations then directs the nearest board of naval officers to examine the ship and report at once as to what caliber and number of guns it can carry. Copies of this report are then forwarded to the Bureau of Ordnance, which furnishes the guns, mounts, and accessories, together with ammunition, to the Bureau of Construction and Repair, which sees that the decks are properly strengthened to withstand the shock of the gunfire, and to the Bureau of Navigation, which provides the officers, petty officers, and seamen for the armed guard.

13. Bunker oil, and store capacity for an 8,000-mile cruising radius at vessel’s designated speed and load.

In case of vessels originally for foreign owners, which were not intended to meet U. S. inspection requirements with respect to crew accommodations, life-saving equipment, and other matters, and which are nearing completion, and which are advanced to such an extent that it is not practical to make changes, these changes may be omitted when receiving advices from you as to the exact situation. In general, however, it is intended that these vessels, wherever practicable, shall pass the U. S. Steam Board Inspection rules and laws.

With regard to. additional transver'se bulkheads and extending up present bulkheads, this also is conditioned to the stage of the work in case of each individual vessel.

With regard to changing masts and fitting twin derrick posts in cases where work on originally intended steel masts has been materially advanced, or where the making of these changes may delay progress of the work, the changes will not be made. You will please give information and explain the situation with respect to each individual vessel.

For the purpose that you may make arrangements and make investigations in cooperation with the corporation, the foregoing general requirements are desired, which will be supplemented in detail upon receipt of plans and specifications from you and by further communication or personal' direction at your yard.

Very truly yours,

(Signed)

W. L. Capps,

*General Manager.*

X. On August 16, 1917, the United States Shipping Board sent to its district officer, New York City, Eads *23Johnson, the following letter, a copy of which Johnson sent to the Standard Shipbuilding Corporation:

UNITED States Shipping Boakd

Emergency Fleet Corporation,

*August 16, 1917.*

Mr. Eads Johnson,

*115 Broadway, New Yorh City.*

Dear Sir: Herewith you will find a copy of the corporation’s letter, in duplicate, of this date, relating to such vessels building by Standard Shipbuilding Company in your district.

notify the shipbuilding company that you are instructed to take charge, for the corporation, of the completion of these vessels, and you are authorized hereby to take over into the employ of the corporation, temporarily, the owner’s local inspecting officers at the present rates of compensation, so far as they can comply with existing instructions and those hereafter issued in regard to citizenship, being careful that they take the usual oath of office.

name, taking the oath, and the former employers of those whom you take over.

You will please forward, without delay, the usual certificates foT payments which have become due since the date of requisitioning or may become due under the contract after that date, so far as practicable, certified by the former local inspector as well as yourself. These payments to the shipbuilder for the present must not exceed the actual cost of the contractor’s outlay for labor, materials received since the last payment plus the approved overhead expense, nor must the payment so determined exceed the contract payment accrued.

regarding the substance and purpose of the contract, but this decision can not be determined until the corporation can investigate the facts and terminology of each contract to assure proper protection of the Government.

You will please furnish to the shipbuilder a copy of this letter and one copy of the inclosure, and you will request the shipbuilder to furnish you without delay, for transmission to the corporation, a statement in detail of such payments received on account of each contract prior to August 3rd, the date of the requisitioning.

Very truly yours,

(Signed)

W. L. Carps,

*General Manager.*

*24in Finding X, were copies of the following letter and the inclosure therein referred to as inclosure A, both of which the Emergency Fleet Corporation sent to Carlo. de Luca, plaintiff’s assignor, on or about August 16, 1917:

Uotted

EMERGENCY FLEET CORPORATION,

*Washington, August 16, 1917.*

Mr. Carlo de Luca.

gency Fleet Corporation issued to the Standard Shipbuilding Company the notice or requisition set forth in inclosure marked “(A).”

response Corporation, the shipbuilders, informed us that you, as owners or representatives of owners, had entered into a contract with them for the vessels listed below :

Hull No. Type D. W. tons Date of contract

Cargo steamship.. Cargo steamship.. Cargo steamship.. Cargo steamship.. 7,300 7,300 7,300 7,300 4-23-17 4-23-17 6-25-17 6-25-17

The corporation’s district officer having charge of vessels in the district in which the shipbuilders are located has been instructed to take charge, for the corporation, of the completion of vessels now under construction, and has been authorized temporarily to take over your local inspecting officers at their present compensation. Will you please inform the district officer, Mr. Eads Johnson, at 115 Broadway, New York City, the names of your representatives and their compensation, sending a duplicate to this office? Your cooperation with the corporation is invited.

The corporation will consider payments to the contractor accruing since the date of requisition upon the receipt of proper vouchers and adequate information to be forwarded through its district officers.

You are requested, as soon as possible, to report to the corporation a statement in detail of the payments already made by you on each ship named above prior to the date of the requisitioning, August 3, 1917. This statement should be accompanied by the original vouchers and receipts and should be verified under oath by the proper corporate officer of your company.

*25It is the present intention of the corporation to reimburse you promptly, so far as funds are available, for the payments heretofore made to the shipbuilder if, after investigation of data submitted by you, such payments are found in order and in conformity with the contract requirements.

At your further and early convenience, you are requested to submit to the corporation a statement of such indirect expenditures as you have made on account of'each vessel; for instance, the cost of superintendence, original design, interest on funds already paid, and the like. The matters mentioned will require careful audit, and in addition you may submit any other .matters you deem pertinent.

It will be perceived that the corporation presumes it is addressing this letter to the owners, or responsible represent^ atives of the owners, or persons entitled to receive compensation on account of the requisition of the vessels listed above. The corporation requests that there be included in your response to this letter all evidence of ownership which is necessary to establish the right of those who are entitled to receive the compensation provided by law.

The consummation of the orders herein, and heretofore transmitted, will be made the subject of later appropriate action.

Very truly yours,

(Signed)

' W. L. Caffs,

*General Manager.*

UNITED States Shipping BoaRd,

Emergency Fleet Corporation,

"Washington, *August 16, 1917.*

Enclosure.

To Mr. Carlo de Luca,

*Re Standard Ship-building Corporation:*

By virtue of an act of Congress, approved June 15, 1917, entitled “An act making 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,” and by authority delegated to the United States Shipping Board Emergency Fleet Corporation under Executive order of the President dated July 11, 1917, all power-driven cargo-carrying and passenger ships, above 2,500 tons, d. w. capacity, under construction in your yard and certain materials, machinery, equipment, and outfit necessary for their completion are hereby requisitioned by the United States.

On behalf of the United States, by virtue of said act and said order, you are hereby required to complete the construe*26tion of said requisitioned ships under construction and will prosecute such work with all practicable dispatch.

The compensation to be paid will be determined hereafter and will include ships, materials, and contracts requisitioned. ■ You will furnish immediately general plans and detail specifications of the ships requisitioned, and copies of contracts and all supplemental agreements in relation thereto and full particulars as to owner, date of completion, payments made to date, amounts still due, and any other information necessary to a fair and just determination of the obligations of the Emergency Fleet Corporation in taking over these ships and contracts.

You-will report immediately whether any additional contracts are under consideration and their character and extent, and will not enter into any additional contracts or' commitments with respect to merchant tonnage without express authority from this corporation.

(Signed) W. L. Capes,

*General Manager, United States Shipping Board,*

*Emergency Fleet Corporation.*

WASHINGTON, D. C., *August.3,1917.*

XII. On August 22, 1917, the United States Shipping Board Emergency Fleet Corporation sent to its district officer at New York City, Eads Johnson, the following letter, a copy of which Johnson sent to the Standard Shipbuilding Corporation:

United States Shipping Boaed,

EMERGENCY FLEET CORPORATION,

*'Washington, August %&, 1917.*

Mr. Eads Johnson,

*115 Broadway, New Yorh Oity.*

Dear Sir: Referring to the vessels under construction in the yard of Standard Shipbuilding Corporation, New York, N. Y., requisitioned under the corporation’s order of August 3rd. Precedent to the final examination of the contract for the vessels in' question, you are requested to inform the shipbuilder as follows:

The ships now under construction at your plant and referred to above, having been requisitioned by the duly authorized order of this corporation and title thereto taken over by the United States, and an order having been placed with you by due authority to complete the construction of said ships with all practicable dispatch, you are further ordered by the President of the United States, represented by this corpora*27tion, to proceed in tbe work of completion heretofore ordered, in conformity with the requirements of the contracts, plans, and specifications under which construction proceeded prior to the requisition of August 3, 1917, in so far as the said contract describes the ship, the materials, the machinery, equipment, outfit, workmanship, insurance classification and survey thereof, including the meeting of the requirements of the said contract and all tests as to efficiency and capacity of the ship on completion, and in so far as the contract contains provision for the benefit and protection of the person with whom the contract was made, but not otherwise.

All work will proceed under the same inspection of such persons as have been or may hereafter, from time to time, be designated by this corporation for that purpose.

For the work of completion theretofore and herein ordered the corporation will pay to you the amounts equal to payments set forth in the contract and not yet paid; provided that on acceptance in writing of this order you agree on final acceptance of the vessel to give a bill of sale to the United States in satisfactory form, conveying all your right, title, and interest in the vessel, together with your certificate that the vessel is free, from liens, claims, or equities with the exception of those of the owner, and then only to those set forth in the contract. Compensation to the shipbuilder for expedition and for extra work will, when deemed appropriate, be made the subject of a subsequent order.

This work applies only to vessels actually under construction, and in accepting it the corporation expects you to inform it of the actual stage of construction of each vessel or the parts to be assembled therein on the date of requisitioning, August 3, 1917. The corporation reserves the right to decide whether or not a vessel was actually under construction’ on August 3, 1917, on. consideration of the ascertained facts.

In replying to this communication, -please arrange to specify separately the vessels to which this order refers and refer to the corresponding contract in sufficient terms for identification of it.

Please furnish a copy of this to Standard Shipbuilding Co. and ask for an early reply.

Very truly yours,

(Signed) W. L. Capps,

*General Manager.*

*28Reporter’s Statement of' the Case

XIII. On September I, 1917, Eads Johnson, district officer of the Fleet Corporation, sent to the Standard Shipbuilding Corporation the following letter:

STANDARD ShIPBTJILDING CORPORATION,

*Shooters Island, N. Y., September 7th, 1917.*

Subject: Status of vessels commandeered.

Dear Sirs : In reply to your many communications relative to the status of vessels which have been commandeered, and that you are withholding orders necessary to fulfill requirements under commandeering act, I am instructed to inform you that — ■

No change will be made in method of requisitioning and that the corporation requires you to proceed with the completion of these vessels in accordance with instructions already given without delay.

Respectfully,

-, *District Officer.*

In reply the Standard Shipbuilding Corporation sent the Emergency Fleet Corporation the following letter:

New York, *September 10th, 1917.*

' Eads Johnson, Esq.,

*District Officer, United States Shipping Board Emergency Fleet Corporation,*

*115 Broadway, New York City.*

Dear Sir: We acknowledge receipt of your letter of the 7th instant.

We note what you say regarding the method of requisitioning vessels and we will accordingly proceed, without delay, with the completion of these vessels following the instructions given. Of course, we must make this reservation, that unless we are paid a sum equal to the sums set out in the contract there will, of necessity, result a delay in construction ; the respensibility of that, however, will rest with your principals, not with us.

We would respectfully request that you give consideration to the labor situation now pending. It has been stated in meetings of the old Shipping Board that in the event of any increase in the cost of labor this increase will be added to the price of the vessels as set out in the contracts.

Are we correct in assuming that if the Labor Adjustment Board now in session increases the cost of labor on any of these vessels that your board will add to the price of the *29vessels as determined in the contract the added cost of labor so fixed by such board?

Yours very truly,

STANDARD SHIPBUILDING CORPORATION,

Gabriel Juve, *First Vice President.*

XIY. On October 16, 1917, the Emergency Fleet Corporation and the Standard Shipbuilding Corporation entered into an agreement, as follows:

United States Shipping Board

Emergency Fleet Corporation,

*2nd District, 115 Broadway,*

*New York City, October 16, 1917.*

Standard Shipbuilding Corporation,

*41f. Whitehall Street, Nexo York Oity.*

Gentlemen: Our representatives have examined your plant, have conferred with the representatives of the Guaranty Trust Company, the Equitable Trust Company, and the Columbia Trust Company in reference to amounts held by these companies in escrow guaranteeing the performance of your contracts with the parties who were the owners thereof prior to the issuance of the requisition order of August 3rd, 1917.

Under the arrangements evidenced by the letters which have heretofore passed between your company and our corporation, we agree to pay an amount equal to the total amount unpaid on your contracts with the former owners.

■We have ascertained from an examination of these contracts that the total sum provided to be paid was $13,552,-550.00. From your trial balance of September 29th, 1917, we ascertain that you have received payments on account of these contracts in the sum of $6,611,224.04. The difference between these two sums is $6,941,325.96. This total sum included, according to the statement of commissions which you have delivered to us, and which is dated September 25th, 1917, $170,988.80. This latter sum will be withheld from the total aboVe stated, so that the total net amount to be paid to you will be $6,770,338.00. As to the commissions or brokerage charges, we request you to make no further payments, and we agree to hold you harmless from any loss occasioned to you by reason of such action. This, of course, is upon the understanding that you will deliver to us_ all process served upon you by any of the persons claiming such commissions, that you will provide us with *30full information relating thereto upon our request, and that you will take no action in connection therewith which will in any way change the present conditions of the brokerage arrangements.

Fuller arrangements relating to this brokerage are to be worked out between counsel for your company and our corporation to the end that the claims of these brokers may be properly resisted.

The total net sum above stated, $6,770,338.00, is to be paid to you in the following manner:

1. We are to make a deposit in a special account in the Columbia Trust Company, in New York, of $500,000.00 in the name and to the credit of your company.

2. Sums of money are to be withdrawn from this deposit and the other sums to be placed therein, by the checks of your company, signed in the usual manner, but upon condition that there is first obtained from Mr. C. S. Bockwalter, or his representative, and from their or his successors, on approval in writing, on a separate memorandum, which memorandum after such signature by our representative, will be forwarded to the trust company, and the trust company will be under instructions to pay no checks unless they have first received this memorandum of approval. Upon Receipt by the trust company of such memorandum of approval, the trust company will be under instructions to pay the check in the usual course of business.

3. Such approval shall be given by our district officer, or his representative, upon submission to him of proper proof in the form of bill of lading for materials or other appropriate voucher, showing that expenses have been incurred and are due to be paid in connection with the ships which have been ordered completed by our former orders. Such expenses shall include overhead expenses, but included in such overhead expense items there shall be included only the salaries to officers which are being paid at the present time.

It is not our intention in making this provision to limit the number of your employees, either laborers or men drawing higher salaries.

4. The corporation will, from time to time, place other funds to the credit of this deposit, substantially a half million dollars.

5. It is understood that at this time steel for ship No. 14, to be built, and not commandeered, is beginning to arrive at the yards, and payment therefor must be made in the ordinary course of business. Arrangements will be made hereafter between your company and our corporation, to the end that these *payments*shall be in a manner mutually agreeable to both parties financed.

*31It is our intention to consider promptly the question of placing orders with you for other ships, for which you have purchased certain portions of the material, and, if mutually satisfactory, arrangements can be made as to these, and the foregoing plan will be altered to suit the circumstances.

The corporation will, of course, consent to the payment out of said sums so to be deposited the amount of all taxes which your company is required to pay. It is understood that no dividends shall be paid prior to June 80th, 1918. The approval of payment of dividends shall be conditioned upon your company showing that it will be financially able to complete the ships already ordered, upon receipt of the sum remaining unpaid on June 30th, 1918. •

It is understood that nothing provided herein shall preclude your company from extending its yards either by the increase of machinery, by other additions to the yard, or in the way of additional land or additional slips.

Nothing herein contained shall be understood as limiting your company in the exercise of statutory rights in the way of increasing its capitalization, either by increase of its stock or by the issue of bonds.

Very truly yours,

UNited States Shipping BoaRd Emergency Fleet Corporation,

(Signed) By C. S. Bookwalter,

*District Officer.*

Subject to approval of the general manager.

The foregoing plan is satisfactory to the officers of the Standard Shipbuilding Corporation, but subject to its ratification by its board of directors.

(Signed) J. Marimon, *President Standard Shipbuilding Corporation.*

This letter was subsequently approved by the general manager of the Fleet Corporation and by a resolution of the board of directors of the Standard Shipbuilding Corporation at a meeting thereof on October 18, 1917.

XY. Prior to August 3, 1917, installments numbered one to four had been paid by the plaintiff and its assignor, de Luca, to the Standard Shipbuilding Corporation, and the other installments were not due until the dates fixed by the contracts, which were subsequent to 'August 3, 1917. The plaintiff was able and willing to pay the remaining installments at all times up to and including the date on which the vessel was completed and delivered, having had sufficient credits established therefor in solvent banks in Italy.

*32XVI. Prior to August 3, 1917, the Standard Shipbuilding Corporation had placed orders for certain materials to be used in the construction of hulls Nos. 10 and 11, and included in such materials so ordered were plates both for hulls and boilers, steel shapes, stern frames, bronze propeller blades, tank-feed pumps, horizontal duplex-piston, evaporating feed pumps, horizontal duplex patent sanitary pumps, fresh-water pumps, ballast, fire, bilge, and service pumps, corrugated furnaces, valves, derricks, anchor chains, furnace fronts, lumber, stay bolts, rivets, forged steel for the axles, small castings, marine-engine castings.

Those materials were delivered to the Standard Shipbuilding Corporation after August 8, 1917, and used in the construction of hulls Nos. 10 and 11, and were purchased at prices lower than prices prevailing after August 3, 1917.

, XVII. Said hull No. 10 was 9.4 per cent completed on August 3, 1917, and hull No. 11 was 3.5 per cent completed on the same date, and the Standard Shipbuilding Corporation was able and willing to complete said vessels.

XVIII. The said vessels were completed in accordance with the plans and specifications attached to and made a part of the contracts of April 23,1917, with the modifications a,nd changes so far as practicable, stated in Finding IX.

The vessels were completed and delivered to the United States on January j.5, 1919, and February 18, 1919, respectively.

XIX. In accordance with- the provisions of the herein-before-recited act of June 15, 1917, the plaintiff filed its claim for the payment of just compensation with the United States Shipping Board Emergency Fleet Corporation for the property which had been requisitioned. The United States Shipping Board Emergency Fleet Corporation on July 23, 1920, awarded to the plaintiff as just compensation the sum of $816,651. The said sum of $816,651 so determined by the said Fleet Corporation to be just compensation was unsatisfactory to the plaintiff, and on August 27, 1920, pursuant to the provisions of said act, it received from the Government of the United States 75 per cent of said sum, being $612,488.25.

*33XX. On and before August 3, 1917, and afterwards the increased production of ships for the prosecution of the war was an urgent necessity.

In 1916 and 1917 contracts were made with American shipyards for construction of ships for citizens of the United States and citizens and subjects of other nations. Beginning early in 1916 and continuing until August 3, 1917, such contracts were the subject of free and ready sale and were frequently transferred from the original owners to assignees and by the first and later assignees to subsequent assignees. There was an active demand for such contracts.. The market value of these contracts continually rose during this period. The time of greatest market activity was in March and April, 1917.

Under the system of control of production and delivery of steel products, in securing the materials for war purposes, ships and ship materials were given preference over everything except munitions. Prior to August 3,1917, the market activity was not destroyed by fear that the restriction on materials might prevent delivery of materials or by inability of the shipyards to complete deliveries. After the requisition order of August 3, 1917, the Government in many cases authorized materials already ordered to be delivered under orders already placed, with a view to prompt completion of such ships, and cooperated with purchasers of material by encouraging the delivery of materials for ship construction.

XXI. While the Standard Shipbuilding Corporation was engaged in the construction of the 13 vessels affected by the requisition order of August 3, 1917, the Emergency Fleet Corporation entered into a contract with said shipbuilder for the construction of 10 steam cargo-carrying vessels of 7,433 tons dead-weight carrying capacity each, for the sum of $1,330,500 each, to be delivered at different dates beginning on or before January 15,1919, and ending on or before July 1, 1919. This contract was dated March 1, 1918, and was designated as No. 202.

The total cost of the construction of the two vessels, hulls Nos. 10 and 11, ivas the sum of $2,919,422.64, of which $506,854.12 was for overhead, the items of which do not *34appear. The two vessels cost $729,422.64 more than the contract price of $2,190,000. The Emergency Fleet Corporation in its settlement with the shipbuilder took credit for the sum of $788,400 paid by plaintiff and its assignor to the shipbuilder prior to August 3, 1917.

XXII. Just compensation to the plaintiff for its rights and contracts which were expropriated by the Government, being the sum that will put it in as good a position pecuni-arily as it would have been if its property had not been taken, and fixed as of the date of the taking August 3, 1917, is the sum of $1,226,400 with interest, and is shown as follows :

Just compensation as of August 3, 1917-$1, 226,400. 00

Interest thereon at 6 per cent per annum from Aug. 3, 1917, to Aug. 27, 1920_ 225,657.60

Total_ 1, 452, 057. 60

Less 75 per cent of award-paid Aug. 27, 1920_ 612,488.25

Balance_ 839, 569.35

Interest on balance at 6 per cent per annum from Aug. 27, 1920, to *Feb.*14, 1927_ 325, 612. 99

Total_ 1,165,182.34

In addition to the principal sum mentioned in Finding XXII, and interest thereon to date of judgment, the court allowed, as part of just compensation, interest on the principal sum from date of judgment until paid.

Moss, Judge,

delivered the opinion-of the court:

On April 23, 1917, one Carlo de Luca entered into two separate contracts with the Standard Shipbuilding Corporation for the construction of two cargo steamships according to plans, specifications, and conditions described, known as hull No. 10 and hull No. 11, of approximately 7,300 tons dead-weight capacity each, at an agreed price of $150 for each ton of dead-weight capacity, or $2,190,000 for both ships. Hull No. 10 was to be completed March 31, 1918, and hull No. 11 April 30, 1918. The said contracts were identical, except the vessels were therein respectively designated as hulls Nos. 10 and 11 and were to be completed on March 31,1918, and April 30, 1918, respectively.

*35On July 25, 1917, these contracts were duly assigned to plaintiff, Consorzio Yeneziano di Armamento e Navigazione.

On July 11, 1917, the President, by virtue of authority vested in him by the act of Congress of June 15, 1917 (40 Stat. 182, 183), delegated the powers conferred upon him by the said act to the United States Shipping Board Emergency Fleet Corporation, and under the authority so conferred the Shipping Board on August 3, 1917, served on the Standard Shipbuilding Corporation an order requisitioning “ all power-driven, cargo-carrying, and passenger ships above 2,500 tons d. w. capacity under construction in your yards, and certain materials, machinery, equipment, and outfit necessary for their completion are hereby requisitioned by the United States.” By said order the Standard Shipbuilding Corporation was also required to complete the construction of such vessels Avith all practical dispatch. Hull No. 10 and hull No. 11 were among the vessels in the yards of the Shipbuilding Corporation. Prior to August 3, 1917, the Shipbuilding Corporation had placed orders for all classes of materials necessary for the construction of ships of this type at prices lower than prices prevailing after August 3, 1917, and these materials, so ordered, were all delivered to the Shipbuilding Corporation, and were used in the completion of hulls No. 10 and No. 11. These two vessels, with certain changes and modifications set forth in- the findings, were completed and delivered to the United States on January 10, 1919, and March 12, 1919, respectively.

Prior to July 25, 1917, there had been paid by de Luca, plaintiff’s assignor, to the Standard Shipbuilding Corporation as provided in the contracts on account of the construction of said Aressels the first three installments amounting to $635,100. On July 31, 1917, plaintiff paid to the Shipbuilding Corporation the fourth installment due under the contracts amounting to $153,300. The total amount, therefore, paid on account of the contracts by plaintiff and his assignor prior to August 3, 1917, was $788,400.

In addition to the $153,300 (the fourth installment) paid by plaintiff to the Shipbuilding Corporation plaintiff paid to de Luca the amount which had been paid on the contracts by de Luca, $635,100; and it also paid de Luca for the assign*36ment of said contracts the sum of $1,000,000. It further expended in fees, commissions, taxes, and other charges growing out of the purchase of the contracts the sum of $491,131, making the total amount expended by plaintiff on account of these contracts $2,280,131.

Prior to August 3, 1911, the Standard Shipbuilding Corporation deposited in escrow with the Guaranty Trust Co. of New York for the faithful performance of the work as required by the tei’ms of the contracts the sum of $328,500. Thereupon the Guaranty Trust Co. procured from the Globe Indemnity Co. a bond dated July 23, 1911, in favor of the purchaser for the sum of $328,500, conditioned upon the construction and delivery of the said vessels by the shipbuilder in accordance with the terms of the contracts. Thereafter, because of said bond, the purchaser released said deposits and the Guaranty Trust Co. paid the same to the Standard Shipbuilding Corporation.

In accordance with the provisions of the act of June 15, 1917, plaintiff filed its claim for the payment of just compensation with the United States Shipping Board Emergency Fleet Corporation for the property which was taken under the requisition order of August 3, 1917, and was awarded as just compensation the sum of $816,651. The award was unsatisfactory to plaintiff, and on August 27, 1920, pursuant to the provisions of said act, it received from the Government $612,488.25, this amount being 75 per cent of the award. This action is for the recovery of the sum of $3,402,511.75, this amount being the difference between the .amount paid to plaintiff under the award and the amount claimed by plaintiff as the value of the property requisitioned.

The Government contends that said Requisition order applied only to ship materials and ships in process of construction, and did not embrace the contracts themselves.

Under the decision of the United States Supreme Court in the case of *Brooks-Scanlon Corporation*v. *United States*(265 U. S. 106), which involved a similar transaction and a contract in all essential respects similar to the contracts involved in this case, the court must hold that the contracts *37involved here were expropriated by the requisition order of August 3, 1917.

Just compensation according to the decision in the *Brooks-Scanlon case*is the “ value of the property taken at the time of the taking.” It should be such an amount as will place the owner “ in as good condition pecunarily as it would have been in if its property had not been taken.” The court further proceeded to specify certain factors which must be considered as the basis for the determination of just compensation, in the following language:

“ The value of such ships at the time of requisition, and the then probable value at the time fixed for delivery, the contract price, the payments made and to be made, the time to elapse before completion and delivery, the possibility that by reason of the Government’s action in control of materials, etc., the contractor might not be able to complete the ship at the date fixed for performance, the loss of use of money to be sustained, the amount of other expenditures to be made between the time of requisition and delivery, together with other pertinent facts, are to be taken into account and given proper weight to determine the amount claimant lost by taking * *

The record in this case abundantly establishes the existence of a demand for ship contracts during the years 1916 and 1917. Such contracts were in demand not only among domestic shipowners but with foreign governments as well. It arose by reason of the destruction of ships under the German submarine campaign, and it was immediate and urgent. Ships already in process of construction, or those merely under contract for which materials had been delivered or ordered, were preferred as offering the first promise of relief. Shipowners gave consideration not merely to the immediate needs pending the war but were influenced in making such purchases by the natural expectation of an -unusual demand for world tonnage after the war. Many ship contracts were purchased prior to the requisition date, and a few were purchased thereafter. It was an active and rising market, and reached its highest activity in March and April, 1917. Prices for ship contracts *38took a wide range, but in all such transactions the prices paid were in excess of the original contract prices.

We have given full consideration to the facts in this case and to the specific factors mentioned in the *Broohs-Scanlon*opinion herein above fully set forth, and it is the opinion of the court that just compensation to the plaintiff as of the date of the taking for the two contracts involved herein is $1,226,400. To this sum there should be added $225,657.60, which is interest at the rate of 6 per cent per annum from August 3, 1917, to the date of the payment of the award, August 27,1920, making a total of $1,452,057.60, from which there should be deducted the amount paid plaintiff on August 27, 1920, under the award, $612,488.25, leaving a balance of $839,569.35, which with interest at the rate of 6 per cent per annum from August 27, 1920, to date of judgment amounts to $1,165,182.34.

It is therefore the judgment of the court that plaintiff recover herein the sum of $1,165,182.34.

Geaham, *Judge;*Hal/,. *Judge;*Booth, *Judge;*and Campbell, *Chief*Justice, concur.