#### JOHN M. CONNELLY STEAMSHIP CO. AND CONTINENTAL TRANSPORTATION & OIL CO. v. THE UNITED STATES

[No. A-48]

*On the Proofs*

*Expropriation of contract; requisition under act of June 15, 1911; vessels under construction.*— See *Consorzio Veneciano di Arma-mento e Navitfazione v. United States, ante,*p. 11. See also similar cases, pp. 59, 80, 98, 119.

*The Reporter's*statement of the case:

*Mr. Challen B. Ellis*for the plaintiffs. *Mr. Wade H. Ellis*and *Frueauff, Robinson ds Sloan*were on the briefs.

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

*39Decided February 14, 1927.

Motion for new trial overruled December 5, 1927.

The court made special findings of fact, as follows:

I. The Continental Transportation & Oil Co. is a corporation duly organized and existing under the laws of the State of Delaware. The John M. Connelly Steamship Co. (Inc.) is a corporation duly organized and existing under the laws of the State of Delaware. The latter company was incorporated on the 16th day of July, 1917, under the name of “United States Navigation Co. (Inc.),” and thereafter on the 1st day of September, 1917, the name of the said corporation was duly changed to *“*The John M. Connelly Steamship Co. (Inc.).” The Pennsylvania Shipbuilding Co. was prior to and on and after the 25th day of June, 1916, a corporation organized and existing under the laws of the State of Delaware.

II. On June 25, 1916, a contract in writing was entered into between the Pennsylvania Shipbuilding Co. and Cornelius Bull, residing in Christiana, Norway, whereby the said Pennsylvania Shipbuilding Co. agreed to construct in its yard at Gloucester, N. J., a certain steamship of 7,000 tons dead-weight capacity, according to the plans, specifications, and conditions described, being a part of said contract, and as consideration to the builder the said Cornelius Bull agreed to pay the sum of $930,000, lawful money of the United States, in certain installments set forth in said contract, and the builder agreed to complete and deliver the said vessel ready for sea in 12 months from date of said agreement, namely, on June 25, 1917. The said contract also provided that every facility for inspection of workmanship and material and classification of the vessel should be provided for the contractor by the builder. The said contract also provided that the said vessel should at all times be the property of the purchaser in all stages of construction, and that all material purchased and delivered in the yard for said vessel or appropriated to the construction of said vessel should become the property of the purchaser by such delivery or appropriation, subject to a lien in favor of the builder for any unpaid installments of the purchase price *40and for work done, labor, and materials furnished. A copy of said contract is attached to these findings as Appendix A.

III. On October 14, 1916, the said contract between the Pennsylvania Shipbuilding Co. and Cornelius Bull was by the said Bull duly assigned in writing to Falch Bros., a copartnership of Bergen, Norway, and thereafter and prior to January 25, 1917, the said Falch Bros, in writing duly assigned the said contract to Christoffer Hannevig. A copy of the assignment is attached to the contract ox June 25, 1916, Appendix A.

IV. On January 25, 1917, a contract in writing was entered into between Christoffer Hannevig and Continental Transportation & Oil Co. whereby the said Christoffer Han-nevig transferred, assigned, and sold to said Continental Transportation & Oil Co. all his rights to the said steamship then being built at the yard of the Pennsylvania Shipbuilding Co. at Gloucester, N. J., and all his right to have the ship built and completed under the original contract between said Pennsylvania Shipbuilding Co. and Cornelius Bull, the said steamship being then known as hull No. C-2, and afterwards as the steamship *John M.*Connelly, and being the same vessel which said Pennsylvania Shipbuilding Co. had agreed to build for Cornelius Bull. The said Christoffer Hannevig, in consideration to him of $1,260,000, lawful money of the United States, to be paid in certain installments set forth in said contract, agreed to have the said steamship completed and ready for delivery, afloat at the shipyard of said shipbuilding company at Gloucester, N. J., on June 25, 1917, ready for use. The said contract between said Hannevig and Continental Transportation & Oil Co. also provided that every facility for inspection of workmanship and material and classification of said vessel should be provided for the said Continental Transportation *&*Oil Co., and the said Pennsylvania Shipbuilding Co. acknowledged and consented to and confirmed said transfer to the Continental Transportation *&*Oil Co. A copy of the contract is attached to plaintiffs’ petition as Exhibit A and is made part hereof by reference.

The plans and specifications of the contract of June 25, 1916, became part of the contract of January 25, 1917, and *41except for minor changes, the said hull C-2 was constructed in accordance with said plans and specifications.

On February 15, 1917, the Pennsylvania Shipbuilding Co. affirmed the right of Christoffer Hannevig to enter into the contract of January 25, 1917, with the Continental Transportation & Oil Co., and stated that upon that date all installments of the contract price had been paid and that the company would complete the contract for seven installments to thereafter become due, amounting to $561,000.

Y. At the time the contract of January 25, 1917, described in Finding IY was entered into Henry L. Doherty & Co. agreed with the Continental Transportation & Oil Co. to finance the purchase of said steamship and guarantee the performance of said contract, and it was also agreed that a new corporation would be organized to own and operate said steamship, then known as hull No. C-2, and that in the meantime the Continental Transportation & Oil Co. should take and hold the title to said steamship and the said contract of January 25, 1917. The title to said contract and hull No. C-2 were taken in the name of the Continental Transportation & Oil Co. for convenience until the organization of the new corporation, when all of its interests therein would pass to the new corporation. The new company was incorporated and organized under the name of the “ United States Navigation Co.” on July 16, 1917, and on September 1,1917, the name of said company was changed to “ The John M. Connelly Steamship Co. (Inc.).”

At the end of the contract of January 25, 1917, “ Exhibit A” to plaintiffs’ petition, is the following:

“ In consideration of one dollar and other good and valuable consideration the performance of the within contract is guaranteed by the undersigned.

“ HENRY L. DOHERTY & COMPANY.

“ O. D. Duncan.”

YI. On September 4, 1917, the Continental Transportation & Oil Co. made the following assignment:

In consideration of one dollar, and other good and valuable consideration, the receipt whereof is hereby acknowledged, the undersigned, Continental Transportation & Oil Company, a corporation organized and existing under the laws of the State of Delaware, does hereby sell, assign, trans*42fer, and set over unto the John M. Connelly Steamship Company (Inc.), a corporation organized and existing under the laws of the State of Delaware, its successors and assigns, all its right, title, and interest in and to a certain contract dated January 25, 1917, hereto annexed, made between Christoffer Hannevig and Continental Transportation & Oil Company for the building of a certain bulk-oil steamer of about seven thousand (7,000) tons dead-weight capacity, said steamer being known as *No. C-H*at the shipyard at Gloucester, New Jersey, where said steamer is being built, at the yard of the Pennsylvania Ship Building Company and which steamer is of about 865 feet length between perpendiculars, of beam about 50 feet 9 inches, moulded depth of about 31 feet 3 inches.

On the same day the Continental Transportation & Oil Co. executed the following bill of sale:

Know ye, that Continental Transportation & Oil Company, a corporation organized and existing under the laws of the State of Delaware, sole owner of a certain steamer of about seven thousand (7,000) tons dead-weight capacity, and of about 365 feet length between perpendiculars, and of beam about 50 feet 9 inches, and moulded depth of about 31 feet 3 inches, and known as steamer *No. G-Ü*at the yard of the Pennsylvania Ship Building Company at Gloucester,-New Jersey, where said steamer is now in process of construction under a contract between Christoffer Hannevig and Continental Transportation & Oil Company dated January 25, 1917, which contract has been assigned to the John M. Con-nelly Steamship Company (Inc.), a Delaware corporation, for and in consideration of the sum of one dollar and other good and valuable consideration to it in hand paid before the ensealing and delivery of these presents by said the John M. Connelly Steamship Company (Inc.), the receipt whereof it does hereby acknowledge, and is therewith fully satisfied, contented, and paid, has bargained, sold, and delivered, and by these presents does bargain, sell, and deliver unto the said the John M. Connelly Steamship Company (Inc.), its successors and assigns, all its right, title, and interest in and to said steamer known as *No. (J-t*at the yard of the builders, in so far as the same is completed, together with all materials, fittings, appurtenances, and accessories to said steamer belonging or in any wise appertaining, to have and to hold said steamer known as steamer *No.*together with all the materials, fittings, appurtenances, and accessories aforesaid unto the said the John M. Connelly Steamship Company (Inc.), its successors and assigns, to the sole and only proper use, benefit, and behoof of the said the John M. Connelly *43Steamship Company (Inc.), its successors and assigns, forever; and the said Continental Transportation & Oil Company for itself, its successors, and assigns, does hereby further guarantee that the said steamer known as steamer *No.*together with all its materials, fittings, appurtenances, and accessories aforesaid, are free from all mortgages, liens, obligations, liabilities, and claims of any character whatever, excepting only any liens of the builder.

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 said act to the United States Shipping Board Emergency Fleet Corporation.. Under the authority so conferred upon it the Shipping Board Emergency Fleet Corporation on August 3, 1917, issued and served on Pennsylvania Shipbuilding Co. notice and order of requisition by telegram and letter, as follows:

U, S. SHIPPING BOARD,

Washington, *August 3,1917.*

Pennsylvania Shipbuilding Company,

Gloucester, *N. J.:*

By virtue of an act approved June 15, 1917, and authority delegated to Emergency Fleet Corporation by Executive order of July 11, 1917, all power-driven cargo-carrying and passenger vessels above twenty-five hundred tons deadweight capacity under construction in your yards and materials, 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 Momager.*

United States Shipping Board

Emergency Fleet Corporation,

Washington, *August 3,1917.*

To Pennsylvania Shipbuilding Company,

Gloucester, *N. J. :*

By virtue of an act1 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 *44July 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, outfit, and commitments for 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 hereafter 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 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 whether1 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 Corporation.*

Among the vessels and contracts included within the above requisition order was the contract for construction and the ship then under construction at the yards of the Pennsylvania Shipbuilding Co. at Gloucester, N. J., known as hull C-2, afterwards named the *John M. Cormelly.*

VIII. On August 18, 1817, the Emergency Fleet Corporation sent to the Continental Transportation & Oil Co. the following letter:

UNited States ShippiNG Boaed

EMERGENCY FLEET CORPORATION,

Washington, *August 18, 1917.*

Continental Trans. & Oil Co.,

*c/o H. L. Doherty db (Jo.,*

*60 Wall*Street, *New York, N. Y.*

Dear Sirs: On August 3, 1917, the United States Emergency Fleet Corporation issued to the Pennsylvania Shipbuilding Company the notice or requisition set forth in enclosure marked (a).

*45In response to this communication Pennsylvania Shipbuilding Company, 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. ton Date of contract

2 Oil tanker 7,000 1-25-17

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. G. R. McDermott, at room 302,. 1319 F Street NW., Washington, D. C., 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 the 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 elate 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 officers of your company.

It 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 a 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 representatives 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.

*46The consummation of the orders herein and heretofore transmitted will be made the subject of later appropriate corporate action.

Very truly yours,

W. L. Capps, *General Manager.*

Enclosure (1).

Enclosed with said letter was a copy of the following notice addressed to the Continental Transportation & Oil Co.:

Enclosure “A”

United States Shipping BoaRd

EMERGENCY FLEET CORPORATION,

*Washington, August 18, 1917.*

To: Continental Trans. & Oil Company.

Be: Pennsylvania Shipbuilding Company.

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, outfit, and commitments for 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 hereafter 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 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 *47commitments with respect to merchant tonnage without express authority from this corporation.

(Signed) W. L. Capes,

*General Manager United States 'Skipping Board*

*Emergency Fleet Corporation.*

WashiNgtoN, D. C., *August 8, 1917.*

IX. On September 17, 1917, the Continental Transportation & Oil Co. forwarded to the Emergency Fleet Corporation a copy of the contract between Christoffer Hannevig and the Continental Transportation & Oil Co., with, plans and specifications and data pertaining thereto.

On or about February 17, 1917, the Continental Trans-' portation & Oil Co. employed one C. E. Burney as inspector, who entered upon his duties and made periodical reports for the said company, and, after the requisition order, continued in the same capacity. In accordance with the contract provision by which the vessel was to be constructed according to the requirements of the British Lloyds and under their supervision, William Booth, representative of the British Lloyds in the United States, entered upon the duties ordinarily performed by an inspector of a classification bureau, under arrangements with the owner and as the owner’s representative. His services began in June, 1917, and continued throughout the period of construction. After the requisition the services were continued as before. The record does not show the amount paid Lloyds before August 3, 1917.

X. On August 22, 1917, the following letter with enclosure was received by the Pennsylvania Shipbuilding Co.:

Disteict Oeeice No. 3,

WasTvington, *D.*(7., *August 22nd, 1917.*

Pennsylvania Shipbuilding Company,

Gloucester, *N. J.*

Gentlemen : Enclosed please find copy of letter addressed to me by Admiral W. L. Capps, general manager of the Emergency Fleet Corporation. Will you kindly read this ' carefully and govern yourself accordingly?

Promptness in. reply will be much appreciated.

Yours faithfully,

Geo. E. McDermott,

*District Officer.*

*48United States Shipping Boaed

Emergency Fleet Corporation,

*Washington, August 22, 1917.*

Mr. G. R. McDermott,

*Boom 302,1319 F Street NW.,*

*Washington, D. C.*

Dear Sir: Referring to the vessels under construction in the yard of the Pennsylvania Shipbuilding Co., Gloucester, N. J., requisitioned under the corporation’s order of August 3d, 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 corporation, to proceed in the work of completion heretofore ordered in conformity with the requirements of the contract, plans, and specifications under which construction proceeded prior to the requisition of August 3, 1917, in so far as the said contract described the ship, the materials, 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 provisions for the benefit and protection of the person with whom the contract was made, but not otherwise.

All work will proceed under the 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 heretofore and herein ordered the corporation will pay to you amounts equal to payments set forth in the contract and not yet paid; provided that on acceptance in writing of this order you agree that 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 order applies only to vessels actually under construction, and in accepting" it the corporation expects you to *49inform 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.

Please furnish a copy of this to Pennsylvania Shipbuild-

ing Co., and ask for an early reply.

Yery truly yours,

W. L. Capps, *General Manager.*

XI. On October 2, 1917, the Pennsylvania Shipbuilding Co. wrote the following letter to George P. McDermott, district officer, Emergency Fleet Corporation:

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.

OCTOBER 2, 1917.

Mr. George K. McDermott,

*District Officer, Emergency Fleet Corf oration,*

*Lexington Building, Baltimore, Md.*

Dear Sir : We beg to refer to your letter of August 22nd, with which you enclosed a circular letter from General Manager W. C. Capps, referring to vessels under construction at our yards.

In conformity with the fourth paragraph of this letter, we hereby accept the conditions stipulated and agree that on final acceptance of each vessel now under construction we will give you a bill of sale in form satisfactory to you and convey all our right, title, and interest in each vessel, together with a 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.

For the information requested under the fifth paragraph of the letter, regarding the actual stage of construction, we beg to refer to information handed to Mr. McDermott in person and by letter under date of August 13, 1917, and in conformity with which we claim that eighteen ships are actually under construction, fourteen of which are under contract and the last four of which were being constructed for our own account.

Yours respectfully,

Pennsylvania Shipbuilding Company, George S. Hoell, *Secy. & Treas.*

*50XII. On May 1,1918, the plaintiffs caused to be furnished to the Emergency Fleet Corporation a certified statement of all payments made on account of the hull C-2, as required under the terms of the contract between Christoffer Hanne-vig and the Continental Transportation & Oil Co. of January 25, 1917, which statement showed all payments made to Hannevig and the Pennsylvania Shipbuilding Co. on account of the contract under which the said vessel was being constructed, together with additional incidental expenditures. The contract p*ice in said contract of January 25, 1917, for building was $1,260,000. There were expenditures by plaintiffs under the agreement of January 25, 1917, as follows: Paid to Christoffer Hannevig the first two payments amounting to $609,000, of which $330,000, profits of his under said contract, were retained by him and $279,000 were paid to the Pennsylvania Shipbuilding Co.; there were paid by plaintiffs directly to the shipbuilder two payments amounting to $186,000, a total of $465,000 to the shipbuilder. The total amount paid by plaintiffs on the contract price of $1,260,000 was $795,000, leaving five payments of the contract price amounting to $465,000 unpaid. There was also paid by plaintiffs to said Hannevig the discount on a note given for the second payment amounting to $1,236.55, and there were costs of inspection and miscellaneous expenses incurred by plaintiffs amounting to $60,225.76, amounting in all to $856,462.31.

XIII. The plaintiffs were not in default in the performance of their contracts of June 25, 1916, and January 25, 1917, the faithful performance of which had been guaranteed by Henry L. Doherty & Co. The Pennsylvania Shipbuilding Co. was ready, willing, and abl'e to perform all the requirements of said contracts on its part, and accepted from the owners of said contracts payments of all installments due and paid to the said shipbuilder by them or on their behalf.

XIY. Under the terms of the contract of the Pennsylvania Shipbuilding Co. and Cornelius Bull, assigned to Christoffer Hannevig, title to the hull C-2 and all material and equipment at any time on hand for the construction and completion thereof was in the said Hannevig and was *51by him assigned to the Continental Transportation & Oil Co. on January 25. 1917. Substantially all the material necessary for the completion of the said hull C-2 was, on the date of requisition, either on hand at the shipyard or manufactured and ready for delivery, and all material and equipment for the completion of the said vessel according to the contract, plans, and specifications had been ordered, committed for, and appropriated for, and such material and equipment were used for the completion of said vessel. After August 3, 1917, no further materials were purchased except such as were necessary for the military protection of the vessel and such as were necessary for the changes ordered by the Fleet Corporation. At the date of the requisition the contract owned by the plaintiffs as aforesaid for the construction of the vessel known as the *John M.*Gonnelly, according to the terms and conditions of said contract, was about 66% per cent completed, and the construction work, including assembling and erecting all materials was about 66% per cent complete.

The Pennsylvania Shipbuilding Co. was required to inform the Fleet Corporation of the facts as to the stage of construction, and representatives of the Fleet Corporation were so infoTmed.

XY. The contract required the ship to be built according to Lloyd’s specifications; the work was inspected periodically by Lloyd’s; the vessel was substantially completed according to the contract and upon completion a certificate was issued classifying the vessel in the highest class; the vessel was launched on or about November 10, 1917, and was delivered to the United States on or about May 7, 1918.

The plans and specifications described in and made a part of the said contracts of June 25, 1916, and January 25, 1917, were used aftei August 3, 1917, for the benefit of the Emergency Fleet Corporation in the construction and completion of said ship. The Emergency Fleet Corporation proceeded with the construction of the vessel under the provisions of said contracts.

The said steamship, hull No. C-2, afterwards called the *John M. Connelly,*being constructed at the shipyard of the *52Pennsylvania Shipbuilding Co., at Gloucester, N. J., on August 3, 1917, was a two-deck, single-screw steamer, classed by Lloyd’s to carry liquid cargo in bulk, with a length over all of 380 feet, and of 7,000 tons dead-weight capacity, and was being built according to the hull specifications and the machinery specifications made part of the contract between Hannevig and the Continental Transportation & Oil Co.

XYI. In accordance with the provisions of the act of June 15, 1917, the plaintiffs filed their claim for the payment of just compensation with the Emergency Fleet Corporation for the property which they alleged the said corporation had requisitioned on August 3, 1917. On September 6, 1919, the Emergency Fleet Corporation awarded to the plaintiffs as just compensation the sum of $873,248. The plaintiffs being dissatisfied with this award refused to accept the same and so notified the Emergency Fleet Corporation, and on January 21, 1920, the defendant paid to the plaintiffs the sum of $654,936, that sum being 75 per cent of said award.

XVII. On or 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 the construction of ships of citizens of the United States and citizens and subjects of other nations. Beginning early in 1916 and continuing, such contracts were the subject of 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 such contracts rose during this period. The time of greatest market activity in such assignments of contracts 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 had not been destroyed by fear that the re*53striction on materials might prevent delivery of materials oi by inability of the shipyards to complete déliveries. 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.

On October 12, 1917, all existing cargo ships of not less than 2,500 tons dead weight and passenger steamers of not less than 2,500 gross tons were commandeered by the Shipping Board.

Vessels for the carrying of liquid cargo in bulk, commonly called tankers, are of superior type, and the cost of construction of such vessels is greater than that of ordinary cargo-carrying ships. On August 3, 1917, and for some time prior thereto, there was a scarcity of tankers, and there was a corresponding demand for such tankers. Because of the scarcity in the supply of tankers and in contracts for their construction, such vessels and contracts had a higher value than ordinary cargo-carrying vessels and contracts for the construction and delivery of ordinary cargo-carrying vessels.

XVIII. The total cost of the construction of the tanker, hull No. C-2, was $1,378,035.93. Included in this cost was the sum of $279,156.24, charged as overhead, the items of which are not shown. The cost of the vessel was $448,035.93 in excess of the contract price of $930,000. In its settlement with the shipbuilder for the cost of the construction of hull No. C-2 the Emergency Fleet Corporation took credit for the sum of $465,000 paid to the shipbuilder for the construction of said vessel by the plaintiffs and their assignors.

XIX. Just compensation to the plaintiffs for their rights and contracts which were expropriated by the Government, being the sum that will put them in as good position pecuni-arily as they would have been in if their property had not been taken, fixed as of the date of the taking, August 3, 1917, is the sum of $1,200,660.00, with interest, and shown as follows:

*54Just compensation as of Aug. 3, 1917_$1, 200, 660.00

Interest thereon at 6 per cent per annum from Aug. 3, 1917, to Jan. 21, 1920 (see Finding XYI)_ 177,697.68

Total_ 1, 378, 357. 68

Less 75 per cent of award of Sept. 6, 1919_ 654, 936. 00

Balance_ 723,421. 68

Interest on balance at 6 per cent per annum from Jan. 21, 1920, to Feb. 14, 1927_ 306, 010.22

Total_ 1, 030, 031. 90

APPENDIX A

THE JOHN M. CONNELLY STEAMSHIP CO. (INC.) AND CONTINENTAL TRANSPORTATION & OIL CO.

Agreement entered into this 25th day of June, 1916, by and between Cornelius Bull, residing in Christiania, Norway (hereinafter called the “ purchaser ”), party of the first part, and the Pennsylvania Shipbuilding Company, a cor-portation organized, acting, and existing under the laws of the State of Delaware, having yards at Gloucester, New Jersey (hereinafter called the “builders”), party of the second part, is as follows:

First: The builders, for and in consideration of the sum to be paid to them by the purchaser, as hereinafter set forth, agree to build and deliver complete in all respects and ready for sea to the purchaser at the yards of the builders at Gloucester, New Jersey, in twelve months from the date of this agreement, subject to delays due to causes beyond the control of the builders, or to delays in receipt of materials by the builders, to fires, or to strikes, or other labor disturbances, free of and from all claims, liens, and encumbrances, a single-screw steel bulk-oil steamship of a dead-weight capacity of 7,000 tons on Lloyd’s summer freeboard, built to the plans and the specifications hereto annexed, which are hereby made a part of this contract.

The dimensions of the vessel shall be as follows: 365 feet (Lloyd’s) by 50 feet 9 inches, by 31 feet 3 inches, mean draft about 24 feet 3 inches.

The said vessel shall be constructed according to the requirements of British Lloyd’s and under their supervision to class 100-A-l for ocean-going vessels “ carrying petroleum in bulk,” and, further, shall be constructed and equipped in accordance with the requirements of the United States steamboat inspection laws in force on date of contract.

*55The builders guarantee tbat tbe vessel shall have a speed of 11 knots per hour loaded with 7,000 tons total dead weight, including cargo, fuel, stores, water, crew, and effects, the speed to be determined as specified in the hull specifications hereto attached. If the vessel fails to meet the requirements of the test specified, the builders will be permitted to take her and alter her so that she will meet the requirements.

It is the intent of this contract to cover the construction and equipment of a single-screw steel bulk-oil steamship and ready for service, including all equipment as per specifications for going to sea, excluding stores, fuel, and perishable supplies. Every reasonable care will be taken in the execution of this contract to produce and use reliable material, and good workmanship throughout, and the builders further guarantee the vessel with its machinery, auxiliaries, and all other parts furnished by them to be in accordance with the specifications aforesaid and this contract, and shall make good any defective workmanship,- or materials which shall be discovered within three (3) months after date of delivery of the vessel, at the most convenient port for the ships, at the builder’s cost, such cost not to exceed the cost of such work at Gloucester: provided always that the builders shall not be required to make good any failure or damage which shall result from or be owing to, or be caused by wear or tear, dangers of the sea, rivers or navigations, fire or inefficient mismanagement, misconduct or neglect of the purchaser, or his servants, and provided further that the builders’ liability shall not extend beyond the actual replacement op remedy of the defective part or parts. After the expiration of three (3) months all liabilties of the builders shall cease. The builders have the right under this agreement, should they so elect, to appoint the chief engineer during the period of the guarantees of workmanship and materials and at the cost of the purchaser, but only at the prevailing rate of wages.

Second: The purchaser shall have the right to make any additions to or deductions from the plans and specifications not substantially affecting the subject matter of this contract on giving due notice in writing to the builders, provided that the cost of any such changes shall be added to or deducted from the contract price, according to a fair valuation thereof, and the increased cost resulting from such changes shall be adjusted and agreed to in writing before any change shall be made. In any case in which the agreement to make or the making of any alterations will, in the judgment of the builders, necessarily delay the completion of the vessel, the time for completion and delivery shall be *56extended proportionately, such extension of time to be adjusted and agreed to in writing before any change shall be made.

The builders further guarantee that the steamships will carry a dead weight of 7,000 long tons, including cargo, fuel, stores, water, crew, and effects, on a draft not to exceed maximum draft allowed by Lloyd’s, as shown by a displacement and dead-weight scale to be furnished by the builders.

Third: The builders agree to insure the vessel against any and all damage by fire, launching, settling, or accident of any kind during the process of construction until the vessel is delivered for an amount at least equal to the payments then made by the purchaser, increasing the insurance from time to time as payments are made. The loss, if any, shall be made payable to the purchaser or the builders, as their interest may appear.

As it may be difficult to ascertain what damages the purchaser will suffer if the said steamship is not completed within the time above stipulated, it is agreed that the damage so suffered shall be liquidated at, and be held to be, the sum of five hundred dollars ($500) per day for each day of delay, if any there shall be, provided always that any delay caused by changes or alterations made under paragraph or section “ Second ” hereof or due to causes beyond the builders’ control or to delays in receipt of materials by the builders, to fires or to strikes, or other labor disturbances, all as hereinbefore referred to shall not be deemed to give the purchaser the right to claim damages hereunder; provided further, that any delay thus caused shall be deemed to work an extension of time under this agreement of as many days as such delay may cause. In such case the terms hereof as to completion of work and damage for delay shall apply to the time thus extended.

It is further understood and agreed that for every day the vessel is delivered before the time specified or extended for causes hereinbefore referred to, the purchaser will pay to the builder the sum of one thousand dollars ($1,000) for each day of anticipated delivery.

Fourth. The purchaser agrees to pay to the builders for the said vessel constructed and delivered, nine hundred and thirty thousand dollars ($930,000) in lawful money of the United States of America, said sum to be payable as follows :

10% of contract price on signing contract.

10% of contract price when the keel is laid.

10% of contract price when one-half of the bottom plating and framing is erected and being riveted.

*5710% of contract price when one-half of the side plating and framing is erected and being riveted.

10% of contract price when the after end is erected and being riveted.

10% of contract price when the forward end is erected and being riveted.

10% of contract price when vessel is launched.

10% of contract price when engines and boilers are in the ship.

10% of contract price when dock trial is made.

10% of contract price on delivery of ship.

Each of the above instalments of 10% of contract price shall be paid when the respective stage of the work on said vessel is reached as above provided, irrespective of the order in which the same may occur.

All extras if accepted in writing shall be paid for as installed.

It is hereby agreed that this vessel shall at all times be the property of the purchaser in all stages of construction, and that all material purchased and delivered in the yard for her or appropriated to the construction of her shall become his property by such delivery or appropriation subject to a lien by the builders for any unpaid instalments of the purchase price and for work done, labor and materials furnished.

The purchaser shall have the right to inspect the steamer1 and material used thereon at all times during the continuance of the work. The purchaser shall appoint a representative who shall be acceptable to the builders and said representative shall have access to all shops of the builders, with full liberty to examine both material and workmanship.

It is agreed that the builders are to furnish the purchaser with a first-class surety bond amounting to 25% of the purchase sum.

Receipt of payment of the first instalment of 10% of contract price, or ninety-three thousand dollars ($93,000) is hereby acknowledged oy the builders.

This agreement shall be binding not only upon the parties hereunto but as well upon their heirs, successors, and assigns.

Christiania, the twenty-fifth day of June, one thousand nine hundred and sixteen.

CoeNelius Bull,

Pennsylvania Shipbuilding Company,

Christofeer Hannevig,

*According to power of attorney dated 1st June, 1916.*

*58Herved overdrages overstaande kontract til herrn brodere Falch Bergen efter en pris av kr. 4,200,000 contant-P $837.00 —a 3.64 der gjenstaar til byggene.

Chra., 14/10/16.

Coenelius Bull.

This contract is hereby assigned to Christoffer Hannevig without any responsibility on our part.

Pr. pr. Bkodr. Falch,

Einae Falch.

In addition to the principal sum mentioned in Finding XIX, 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.

Graham, *Judge,*

delivered the opinion of the court:

The plaintiffs seek to recover just compensation for the value of their interest in a contract for the construction of a vessel which they claim was requisitioned under the requisition order of August 3, 1917, said order being in terms identical' with the order involved in the case of *Brooks-Scanlon Corporation*v. *United*States, 265 U. S. 106, there relied upon. That case is conclusive, and this case is decided in conformity with the principles laid down in that case.

It is not necessary to enter into a review of the facts of this case, which are fully stated in the findings.

After due consideration of all the facts of the case and the elements enumerated in the *Brooks-Scanlon*case, which are proper to- be considered in ascertaining just compensation, we conclude that just compensation to the plaintiffs is the sum of $1,200,660.00, with interest as set out in Finding XIX; and making a deduction of $654,936.00, paid to plaintiffs, which is 75% of the award made by the Shipping Board, a balance remains of $1,030,031.90, for which judgment should be entered in favor of the plaintiff, the John M. Connelly Steamship Co. (Inc.), and it is so ordered.

Moss, *Judge;*Hay, *Judge;*Booth, *Judge;*and Campbell, *Ghief*Justice, concur.