#### LUCKENBACH STEAMSHIP CO., LUCKENBACH COMPANY, AND EDGAR F. LUCKENBACH v. THE UNITED STATES 1

[No. C-934]

*On the Proofs*

*Expropriation of contract -under act of June 15, 1917; vessels con-traded for.*— Plaintiffs liad a contract witli a shipbuilder, subject to delay on account of commandeering by the Government, for the construction of certain power-driven cargo-carrying ships and before construction had begun the Government served upon plaintiffs and the shipbuilder identical orders under the act of June 15, 1917, requisitioning all ships of that description under construction in their respective yards. The shipbuilder refused to build the agreed ships according to the terms of the requisition, but an understanding was reached by it with the Government whereby the construction would go forward until an express contract for the price to be paid should be entered into. The said express contract was thereafter entered into between the shipbuilder and the Government fixing the price which was finally paid upon completion of the ships and their delivery to the Government. *Held,*that there was an expropriation of plaintiffs’ rights and contract by the Government, for which they are entitled to just compensation under the rule laid down in *Broohs-8 canton*,v. *United, States,*265 U. S. 106. See eases, pp. 11, 38, 80, 98, 119.

*The Reporters*statement of the case:

*Mr. William B. King*for the plaintiffs. *Mr. George A. King*and *King c& King*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.

Decided February 14, 1927.

Motion for new trial overruled December 5, 1927.

The court made special findings of fact, as follows:

I. The plaintiff, Luckenbach Steamship Company (Inc.), is a corporation created by and existing under the laws of *60the State of Delaware, with its principal office in the city of New York. It has continuously operated since before the year 1917 a fleet of cargo-carrying steamships upon the high seas.

On September 23, 1918, Luckenbach Company (Inc.) was merged with Luckenbach Steamship Company (Inc.) by a merger agreement.

Edgar F. Luckenbach is a citizen of the United States. He was at the times hereinafter set forth president of both of the corporations aforesaid and owner of all save a few of the shares of the capital stock of the two companies.

II. On October 2, 1916, plaintiffs, Luckenbach Steamship Company (Inc.) and Luckenbach Company (Inc.), entered into a contract with Sun Shipbuilding Company, owning and operating a shipyard at Chester, Pa., for the construction of two twin-screw steel cargo steamships. The contract providing for the delivery of said vessels is made a part of these findings by reference, and in part provided as follows:

“ Builder agrees to deliver said steamships complete and ready for ocean service to the owner at Chester, Pennsylvania, on or before March first, 1918, unless actually prevented by strikes, fire, flood, war in, by, or with the United States of America, or commandeering thereby, or acts of God, or by delay or failure in delivery to builder of turbines or boilers complete; and if for any other reason than those stated above completion and delivery of said steamships shall be delayed beyond the period or beyond the period for which said completion and delivery may be extended by the consent in writing of the owner, signed by its president, as hereinbe-fore provided, the builder shall pay to the owner as liquidated damages, and not as a penalty, the sum of one thousand dollars ($1,000) per ship for each day during which completion and delivery shall be delayed; it being further agreed between the parties hereto that for each day prior to March first, 1918, that said vessels shall be completed and ready for delivery to the owner, that the owner shall pay to the builder a like sum of one thousand dollars ($1,000) per ship each day, being liquidated compensation and agreed amount for any additional work done or expenditure made to secure this earlier delivery.”

Said contract was guaranteed on the part of said Lucken-bach Steamship Company (Inc.) and Luckenbach Company *61(Inc.), by Edgar F. Luckenbach, and on behalf of Sun Shipbuilding Company by Sun Company. Said contract appears as “ Exhibit B ” to plaintiff’s petition, and is made a part hereof by reference.

On December 21, 1916, plaintiffs, Luckenbach Steamship Company (Inc.) and Luckenbach Company (Inc.), entered into a contract with Sun Shipbuilding Company, owning and operating a shipyard at Chester, Pa., for the construction of two twin-screw steel cargo steamships. The contract provided for the delivery of said vessels as follows:

“ Builder agrees to deliver the said steamships complete and ready for ocean service to the owner at Chester, Pennsylvania-, as soon as they can be properly completed and are ready for delivery and with the guarantee that the two steamers shall be hulls numbers 9 and 10, respectively, and shall follow in natural course the construction and completion of steamers, hulls numbers 1 to 8, inclusive, contracts for which have been executed and are in effect, said steamers, hulls numbers 9 and 10, to be delivered, respectively, seventy (10) days and one hundred (100) days after the completion of said steamer, hull number 8, it being understood. and agreed that no delay in such completion of said steamers, hulls numbers 9 and 10, is allowed unless such delay is occasioned by strikes, fire, flood, war in, by, or with the United States of America, or commandeering thereby, or acts of God, or, as to said steamers, hulls numbers 9 and 10, by delay or failure in delivering to builder of turbines or boilers complete, and for each day by which the builder shall fail to deliver either of the steamships provided for in this contract according to the above-described schedule the builder agrees to pay to the owner as liquidated damages, and not as a penalty, the sum of one thousand dollars ($1,000) per ship, and for each day by which the builder shall anticipate delivery of either of the steamships provided for in this contract, according to the above-described schedule, the owner agrees to pay to the builder the sum of two hundred and fifty dollars ($250) per ship, being liquidated compensation and agreed amount for any additional work done and expenditure made to secure this earlier delivery.”

Said contract was guaranteed on the part of said Lucken-bach Steamship Company (Inc.) and Luckenbach Company (Inc.) by Edgar F. Luckenbach and on behalf of Sun Shipbuilding Company by Sun Company. Said contract appears as “ Exhibit C ” to plaintiffs’ petition, and is made a part hereof by reference.

*62The original contract price for each of the vessels under the contract of October 2, 1916, was $1,390,000, or a total of $2,780,000. Under the contract of December 21, 1916, the original price for each vessel was $1,400,000 or a total of $2,800,000.

III. Various modifications of said contracts were made from time to time whereby the original contract and prices of said vessels were increased in the total sum of $116,668.

IV. On August 3, 1917, a telegram as follows was sent by the general manager, United States Shipping Board Emergency Fleet Corporation, to Sun Shipbuilding Company:

“ 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 dead-weight 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 Mcmag&rP*

On August 3, 1917, the following letter was sent to Sun Shipbuilding Company, signed by general manager of the United States Shipping Board Emergency Fleet Corporation:

UNited States Shipping BoaRd

EMERGENCY FLEET CORPORATION,

*Washington.*

Sun 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 con*63struction oí 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 particular's as to owner, date of completion, payments made to date, amounts still due, and any other inxormation necessary to a fair and just determination of the obligations of the Emergency Fleet Corporation in taking oyer these ships and contracts.

You will report immediately whether any additional contracts are under consideration and their1 character and extent, and will not enter into any additional contracts or commitments with respect to merchant tonnage without express authority from this corporation.

W. L. Capps,

*General Manager United States Shopping Board*

*Emergency Fleet 0orporation.*

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

Y. On August 16, 1917, the following letter was sent by the general manager of the Emergency Fleet Corporation to plaintiff Luckenbach Steamship Company (Inc.) :

United States Shipping Board

EMERGENCY FLEET CORPORATION,

Washington, *August*16, *1917.*Luckenbach Steamship Company,

*O. Whitehall*Street, *New Tor7e, N. T.*

Dear Sirs: On August 5, 1917, the United States Emergency Fleet Corporation issued to the Sun Shipbuilding Company the notice of requisition set forth in enclosure marked (a).

In response to this communication Sun Shipbuilding-Company, the shipbuilders, informed us that you, as owner's, or representatives of owners, had entered into a contract with them for the vessels listed below:

Hull number Type Deadweight tons Date contract Owner

10 Cargo boat., .do_ .do_. _do_. 12,000 12,000 12,000 12,000 Oct. 1,1916 _do. Dec. 21,1916 -do. Luckenbach S. S. Co. Do. Do. Do.

*64The 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. It. McDermott, at Interstate Building, 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 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, 191T. 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.

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 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.

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

Yery truly yours,

W. L. Caffs,- *Q&mraL Manager.*

*65Attached to this letter was a copy addressed to said Luck-enbach Steamship Company of the requisition order of August 3, 1917, set forth in the preceding finding.

VI. On August 16, 1917, a letter was sent by the general manager aforesaid to Sun Shipbuilding Company, which is as follows, so far as material:

TJNIted States Shipping BoaRd

EMERGENCY FLEET CORPORATION,

*Washington, August 16, 1917.*

Sun Shipbuilding Company, *Chester, Pa.*

Gentlemen: Referring to general order under date of August 3, requisitioning ships over 2,500 tons dead-weight 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:

(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;

*<*c) For changes that will insure the safety of the vessel;

(d) For omissions 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:

$ $ * * *

[List of items omitted.]

*66For the intended overseas service, in view of the military requirements 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 addition be made:

[List of additions omitted.]

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,

W. L. Capps.

VII. On August 22, 1917, a letter was sent by the general manager of the Emergency Fleet Corporation to George R. McDermott, district manager of the United States Shipping Board Emergency Fleet Corporation for the district including Chester, Pa., to Sun Shipbuilding Company as follows:

United States ShippiNG Boakd

Emergency Fleet CorpoeatioN,

*"Washington, August 22, 1917.*

Mr. G. R. McDermott,

*Boom 302, 1319 F. St. NW.,*Washington, *D. G.*

Dear Sir: Referring to the vessels under construction in the yard of Sun Shipbuilding Company, Chester, Pa., 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 oyer 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, clas-*67sifieation, 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 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 Sun Shipbuilding Co. and ask for an early reply.

Very truly yours,

W. L. Capps, *General Manager.,*

The foregoing letter was transmitted by George It. Mc-Dermott to the Sun Shipbuilding Company. In reply to the> above letter the Sun Shipbuilding Company, in a letter dated! September 24, 1917, called the attention of the Fleet Corporation to a provision of the contracts wherein the company-claimed that the plaintiff was the owner of the vessels as= they progressed towards completion, and not the Shipbuilding Company, and that in the opinion of the company the; requisition order should be addressed to the plaintiff and! *68not to the contractor, expressing an opinion given by its legal department, that compliance by the Shipbuilding Company with the terms of the requisition order would render it liable to the plaintiffs for breach of contract. Extensive correspondence was carried on between the Shipbuilding Company and the Fleet Corporation, the former insisting on an express indemnification from the latter against any contractual rights of the owner. The Sun Shipbuilding Company never did accede to the terms of the proposal or conditions of construction of the Fleet Corporation as contained in the Fleet Corporation’s notices of requisition. No payments were made by the Fleet Corporation to the Shipbuilding Company, as provided in the contracts between the plaintiffs and the Shipbuilding Company, the Shipbuilding Company and the Fleet Corporation finally reaching an understanding that the company would go forward with the construction of the vessels and receive therefor cost of materials, labor, and reasonable overhead as the work progressed until the parties could conclude an express agreement. On November 12, 1918, the final contract between the Shipbuilding Company and the Fleet Corporation was consummated. By the terms of this contract the Fleet Corporation agreed to pay the Shipbuilding Company all cost of construction and a profit of $15 per dead-weight ton. The vessels were paid for by the Fleet Corporation in accord with the contract of November 12, 1918, No. 5 was completed with modifications as a cargo vessel, Numbers 6, 9, and 10 were changed and completed as combined cargo and transport vessels.

VIII. The foregoing communications set forth in Findings IY to YII were sent generally to the various shipyards and shipowners having relations to vessels of the description mentioned.

IX. On August *7, 1917,*the district officer of the Emergency Fleet Corporation notified Sun Shipbuilding Company to suspend putting into operation any change or departure from the general plan of the vessels now under construction.

■On August *7,*1917, Edgar F. Luckenbach wrote the Emergency Fleet Corporation inquiring what is meant by the term “ requisition,” saying that he was willing that the *69Government should operate the vessels during the war period but would not consider any proposal involving a change in title or transfer of ownership.

On August 20, 1917, the Fleet Corporation notified Luck-enbach that the term “ requisition ” means that the Fleet Corporation has taken title to vessels under construction and of materials and machinery pertaining to them and the shipbuilders have been directed to complete them as rapidly as possible.

On August 28, 1917, the Fleet Corporation notified Luck-enbach that the title to the vessels under contract with him at the yard of the Sun Shipbuilding Company had been since August 3, 1917, in the United States, and he was directed not to give any instructions in regard to them or to interfere with their progress or to exercise any other act of ownership.

Similar instructions were given on August 28, 1917, to said Luckenbach in a letter from the chairman of the United States Shipping Board.

On September 1, 1917, said Luckenbach was directed by the Fleet- Corporation to desist in making future tenders of payment relating to requisitioned ships, to withdraw request that bills be sent to him, and to desist from exercising any right of pretended ownership over these ships.

The letter from the Shipping Board was acknowledged by said Luckenbach on September 1, who said that he had certain legal rights which it was necessary for him to protect.

On October 3, 1917, the Fleet Corporation wrote said Luckenbach, saying that—

“ * * * the following additional information and cooperation on your part is desired in order to expedite the completion of these hulls:

“ Copies of orders, contracts, specifications, if any — purchasing of outfit, stores, main or auxiliary machinery, or articles as your contract with the builder required or contemplated you to furnish for the vessel to- complete the ship ready and equipped for sea.

*“*Should any of this outfit, machinery, or auxiliary machinery have been completed or be in the process of being completed it is requested that you arrange for its delivery *70in the yard where the vessel for which it is intended is being completed. The corporation will authorize the builder to receive the same and to reimburse you for actual payments made by you on account of same, which were due or became due since August 3, 1917. Full information as to payments is requested in your reply.”

X. On August 3, 1917, plaintiffs had paid to Sun Shipbuilding Company under the contract of October 2, 1916, the sum of $166,800, as provided in said contract.

On August 3,1917, plaintiffs had paid to Sun Shipbuilding Company under the contract of December 21, 1916, the sum of $168,000, and $4,800 for extras, as provided in said contract, a .total of $339,600, leaving a balance due and unpaid on the contract of $5,357,068.

XI. Soon after the execution of the contracts involved the Sun Shipbuilding Company ordered material for the construction of the ships covered by the contracts. On August 3, 1917, under the contract of October 2, 1916, material to the extent of $295,072.87 had been delivered and was on the ground. Material to the extent of $156,357.66 under the contract of December 21, 1916, had also been delivered and was in the company’s yards.

The market value of material had increased in cost between the dates of its purchase and delivery.

Under the contracts material purchased to complete the vessels was the property of the contractor, the plaintiffs acquiring ownership therein as the work progressed to the extent of payments made by the plaintiffs under the contracts.

The ordering- and delivery of materials were to some advantage to the contractor and owner. This advantage prior to August 3, 1917, consisted in obtaining the materials at the market price prior to the above date, and enabled the contractor to use the same without the delays incident to war conditions. The material essential after August 3, 1917, was procurable through the War Industries Board and other governmental instrumentalities at prices fixed by said boards.

XII. On August 3, 1917, the following progress had been made in carrying out the contracts aforesaid:

*71Plans and specifications had been prepared.

Materials had been contracted for, ordered, and in part delivered.

Work had been going on in the drawing office and mold loft, but no keel had yet been laid.

The hulls had been numbered 5 and 6 under the first contract and 9 and 10 under the second contract.

Inspectors had been employed by plaintiffs who were subsequently retained by the Government.

XIII. On August 3, 1917, Luckenbach Steamship Company (Inc.) was in sound financial condition, carrying on' a large and profitable business, and was financially able to complete all payments required by the contracts aforesaid according to their terms.'

XIV. On August 3, 1917, Sun Shipbuilding Company had a large shipyard capable of completing the vessels aforesaid, and Sun Shipbuilding Company and Sun Company, its guarantor, were financially able to complete the vessels aforesaid under normal conditions in accord with the contracts.

XV. On November 29, 1919, the requisition claims committee of the Emergency Fleet Corporation made an award of just compensation to Luckenbach Steamship Company (Inc.) of $383,090.80.

This award was approved by the Emergency Fleet Corporation on March 5, 1920.

The plaintiffs, being dissatisfied with the award, refused to accept the same and so notified the Emergency Fleet Corporation, and on January 3, 1923, the defendant gave plaintiffs credit for the sum of $287,318.10, that being 75 per cent of said award.

XVI. The vessels provided for in the contracts set forth in Finding II were completed under the direction and control of the Emergency Fleet Corporation with numerous changes required by said Fleet Corporation to fit the vessels for use as troop transports and at an extra cost over and above the contract price to the Government of $6,636,832.47. Vessel No. 5 was completed and delivered on March 7, 1919; vessel No. 6 was completed and delivered on May 21, 1919; vessel No. 9 was completed and delivered on July 18, 1919; *72and vessel No. 10 was completed and delivered on July 7, 1919. Completion and delivery upon these dates were accomplished by the employment of an extra number of laborers in daily, overtime, and holiday work.

XVII. The dead-weight tonnage of the vessels contracted for as aforesaid, if completed in accordance with the original plans and specifications, was 12,180 tons for each of the aforesaid vessels, or a total of 48,720 dead-weight tons for the four vessels.

. XVIII. On January 8, 1923, an agreement was entered into between the United States Shipping Board and Lucken-bach Steamship Company (Inc.), as set forth in Exhibit H to plaintiffs’ petition, which is made a part hereof by reference.

XIX. From before August 3, 1917, until the close of the war the increased production of ships for the prosecution of the war was an urgent necessity. The requisition order of August 3, 1917, was one of the steps adopted to secure increased production of ships by requiring the completion of ships then under construction. The result of the policy of completing the ships under construction on August 3, 1917, was to produce ships more rapidly than if no further work had been done on ships under construction. The extent to which the ordering and delivery of materials contributed to this result was dependent upon the quantity of material delivered and on hand on the date of requisition.

In 1916 and 1917 contracts were made with American shipyards on the Atlantic and Pacific and on the Lakes for construction of ships for citizens of the United States and citizens and subjects of other nations, particularly from Norwegians. Beginning early in 1916, such contracts were the subject of free and ready sale and were frequently transferred from the original owner to assignees and by the first and' later assignees to subsequent assignees, and many such assignments were made. 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, *73ships and ship materials were given preference over everything except munitions. 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 for ships through encouraging and stimulating the delivery of materials for ship construction.

The market values of such contracts were affected by the delivery dates of such ships fixed in the contracts and by the condition of progress of construction. The effect of the contract delivery date upon the prices paid by private purchases prior to August 3, 1917, was lessened by the belief that such ships when completed would be retained by the United States until the conclusion of the war and would then become available to the purchasers when unusually high freight rates were expected, freed from Government regulation.

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.

XX. Just 'compensation to the plaintiff for its rights and contract which were expropriated by the Government, being the sum that will put it in as good position pecuniarily as it would have been in if its property had not been taken, and fixed as of the date of taking, August 3, 1917, is the sum of $800,000 with interest, and shown as follows:

Just compensation_$800, 000. 00

Interest thereon at 6 per cent per annum from Aug. 3, 1017, to Mar. 5, 1920_ 124,266.07

Total_-_ 924,266. 67

Less 75 per cent of award Mar. 5, 1920- 287, 318.10

Balance._ 686,948. 57

Interest on this balance at 6 per cent per annum from Mar. 5, 1920, to Feb. 14, 1927_ 265,289.08

Total_ 902,237. 65

In addition to the principal sum mentioned in Finding XX, and interest thereon to date of judgment, the court *74allowed, as part of just compensation, interest on the principal sum from date of judgment until paid.

1

 Certiorari denied.

Booth, Judge,

delivered the opinion of the court:

This is one of a group of cases wherein the plaintiffs sue for just compensation for the expropriation of ship construction contracts. The cases were argued and submitted at the same time. The plaintiffs rests the right of recovery on the *Brooks-Scanlon*case, 265 U. S. 106. The claim is for an award of $23,093,448.65. The defendant, in addition to the defense raised in the *Brooks-Scanlon case*now before the court on remand, interposes herein a defense predicated upon a contention that under the facts in this case the plaintiffs’ contracts were not expropriated, and even so, they were without value.

The plaintiff steamship company is a Delaware corporation. Its shipping interests are large. On October 2, 1916, it entered into two written contracts with the Sun Shipbuilding Company, of Philadelphia, Pa., to construct for it two twin-screw steel cargo steamships identified as Numbers 5 and 6 of an estimated gross tonnage of ten thousand tons each, at a cost of $1,390,000 for each vessel. On February 20, 1917, the contracts were modified so as to cover changes made in the original design, and the costs of the two vessels increased, comprehending in the end a final outlay of $2,808,-554 for the vessels. Payments were to be made by the owner to the contractor in installments as the work on the vessels progressed. The vessels were to be completed on or before March 1,1918, and in the event of a default in this respect a liquidated damage clause imposed upon the contractor the payment of $1,000 for each day of delay, provided that in case the delay exceeded 10 days beyond the contract period the sum of $10,000 would be remitted from any demurrage claimed, and in the event of a performance of the contract prior to the completion date fixed therein, the contractor was.to receive a premium of $1,000 per day for each day the work was so advanced. The contract among other important provisions contained the following stipulations:

> “Builder agrees to deliver said steamships complete and ready for ocean service to the Owner at Chester, Pennsyl*75vania, on or before March first, 1918, unless actually prevented by strikes, fire, flood, war in, by, or with the United States of America, or commandeering thereby, or acts of God, or by delay or failure in delivery to Builder of Turbines or Boiler's complete. * * *

> “ It is hereby convenanted and agreed that the vessels and all materials, fittings, etc., delivered, bought, or ordered for the said vessels, shall forthwith as the work progresses, become the sole property of the Owner, to extent of payments made, and subject to Builder’s Lien (common Jaw and statutory) for the unpaid purchase money, and also subject to the right of Builder as against the vessels, materials, fittings, etc., and not merely personally as against Owner, to full indemnification against any loss resulting from default by Owner in carrying out the conditions of its part of this contract.”

On December 21,1916, the plaintiffs again contracted with the Sun Shipbuilding Company to construct two additional vessels of substantially the same design and under similar contractual terms and conditions, identified as vessels Nos. 9 and 10. The contract price in this instance, including changes made, was $2,888,114 for the two vessels. Payments were to be made in installments, and the date of delivery was contingent upon the completion of prior contract work then in course of performance in the company’s plant.

On August 8, 1917, the Emergency Fleet Corporation transmitted to the Sun Shipbuilding Company the telegram set out in Finding IY. This was followed by the Fleet Corporation’s letter of the same date, as appears in the same finding. Subsequently the letter1 to Mr. G. R. McDermott, set out in Finding VII, reached the Shipbuilding Company, and thereafter ensued an extensive correspondence between the Shipbuilding Company and the Fleet Corporation. The Shipbuilding Company, disavowing reluctance to aid the Government in time of war, was exceedingly loathe to give its unqualified assent to the proceedings. It steadfastly insisted upon an express indemnification against liability to the owner of the contracts requisitioned and at no time yielded to the -propositions embraced in the orders of the Fleet Corporation as originally formulated. On the contrary, negotiations were carried on be*76tween the company and the Fleet Corporation until a date when the Fleet Corporation directed the company to proceed with construction of the vessels and payments would be made in accord with the cost of materials, labor, and reasonable overhead. This the company did until finally, on November 12, 1918, a written agreement was executed by the parties, wherein the Fleet Corporation agreed to pay for the vessels cost plus $15 per dead-weight ton. As a result of the attitude of the Shipbuilding Company and the Fleet Corporation the four vessels covered by the contracts cost the Government $6,636,832.47 more than the original contract price. The vessels were completed in the following order: No. 5, March 7, 1919; No. 6, May 21, 1919; No. 9, July 18, 1919; and No. 10, July 7, 1919. Completion of the vessels on the dates mentioned was accomplished by the employment of overtime and holiday labor at an enhanced cost; No. 5 was completed as a cargo vessel in substantial accord with the original contract to build the same; Nos. 6, 9, and 10 were diverted from the original design to combined cargo and transport vessels.

On the date of requisition, August 3, 1917, the plaintiffs had paid to the Shipbuilding Company the comparatively small sum of $339,600, so that their title to and interest in assembled materials were not extensive. Nothing whatever so far as actual structural work was concerned had been done. Plans and specifications for construction work were in process and near completion. The keel of none of the vessels had been laid and the most that can be said for the conditions- obtaining is' that a comparatively insignificant quantity of material was on hand. Orders had been placed for’ more, but not a nail had been driven or material placed to bring into being the vessels contracted for. All that had been done was the usual and customary preliminaries to actual construction work. The Fleet Corporation, as before observed, succeeded in finishing the vessels a little over a year after the contract period by the employment of large forces of labor in daily, overtime, and holiday work, at a tremendously increased price over the one specified .in the contract.

*77The defendant, in view of these facts, first insists that because of the unwillingness of the Shipbuilding Company to agree to the terms and conditions of the Fleet Corporation’s letter of August 22, 1917, an independent agreement arose between the parties as to the construction of the vessels, and the contract between the plaintiffs and the Shipbuilding Company was ignored. No advantage was taken of its existence; no benefit accrued to the Government because of its terms; and the plans and specifications of the owners were not followed in constructing the vessels. However, when compared with the facts in the *Brooks-Scanlon case*and the opinion of the Supreme Court in that case it is difficult to discover any variance sufficiently vital to take this case out of the principles announced in that case. What transpired between the Shipbuilding Company and the Fleet Corporation, to which the plaintiffs were not a party, may not determine the plaintiffs’ rights. As a matter of fact, vessel No. 5 was completed substantially in accord with the original design, and while Nos. 6, 9, and 10 were materially changed, the contract provided for changes, and what was done was done by the Fleet Corporation to meet the existing emergency. What the Shipbuilding Company and the Fleet Corporation did subsequent to the requisition orders of August 3, 1917, is readily available, to ascertain the intention of the parties in entering into the relationship they did consummate, and may be worth something as showing that the Fleet Corporation did not then intend to requisition the plaintiffs’ contract, but the Supreme Court, with a similar state of facts in all important particulars before it, said: “ The direct and immediate result of the requisition orders and acts of the Fleet Corporation was to take from claimant its contract and its rights thereunder.” So the defense in this respect must seemingly fail, the Supreme Court giving effect to what was done to the exclusion of assertions to the contrary. In the *Brooks-Scanlon case*a subsequent contract was made for extra compensation, and in that case, as in this, credit was taken by the Fleet Corporation for advance payments made by the owner to the contractor prior to the date of requisition..

*78The plaintiffs were the owners tracts. The Shipbuilding Company, under normal conditions, was in a position to fulfill its obligations. Therefore, it is not to be said, in view of the decision of the Supreme Court in the *Brooks-Scanlon case,*that these contracts were without value. What concerns us most is what sum from the record amounts to just compensation for their expropriation. The proofs disclose beyond contradiction that on August 3, 1917, all the preliminary work preceding actual construction of the vessels had not been completed. Materials and machinery for the completion of the four vessels had been ordered but not delivered; a comparatively insignificant amount was on the ground and no machinery was available. No construction work had progressed, the keels were not laid, and not a nail had been driven. The plaintiffs had paid but $339,600 towards the materials then on hand out of a total price to be paid of $5,297,068. There was not the remotest possibility of the vessels being completed within the contract period or the contract price. The vessels themselves existed only in drawings and specifications and the delivered material.

The purchaser of these contracts would have under these circumstances procured the right to have the vessels constructed by paying the deferred payments to the amount of at least $4,957,468 and securing the vessels, not on the contract date for completion but at some time then indefinite after the close of the war, the contracts expressly absolving the contractor from delays incident to war and Government expropriation. We say this advisedly because the fact is clearly demonstrated by what was done by the Shipbuilding Company and the Fleet Corporation to complete the vessels. The Shipbuilding Company, aided through the Fleet Corporation by the War Industries Board and other governmental instrumentalities, was unable to complete the vessels for more than a year after the contract date for completion, notwithstanding the fact that the Shipbuilding Company -employed additional forces of labor and kept them at work continuously overtime and on holidays, and this condition ■caused the expenditure of enormous sums of money.

*79The necessity for doing what the Shipbuilding Company did was known alike to both prospective purchasers of ship-construction contracts and the owners thereof. The record does establish sales of ship construction contracts. They were extensively dealt in prior to June 15, 1917, and to some extent thereafter. We need not advert to a condition which everybody knows. However, one must have something to sell, for we may not close our eyes to the fact that a purchaser of a ship-construction contract on August 3, 1917, would look to the situation respecting the contract to be purchased and take into consideration the value of the con-' tract under existing conditions. The Supreme Court in the *Brooks-Scanlon case*enumerates with precision some of the factors going into the value and points out the factors a prudent purchaser would notice and observe before investing. Obviously a purchaser would be willing to pay more for a vessel partly or nearly completed than for one which existed on paper alone. What the owner had to sell in this case was an executory contract, a right which existed on paper, the performance of which depended absolutely upon contemporaneous and future conditions. We do not mean to say that the right and property of the owners were valueless. They did possess a substantial value. The Supreme Court, in the *Brooks-Scanlon case,*in pointing out certain express factors among others to be recognized in ascertaining just compensation for the expropriation of that right and property, justly recognizes that the contract right is not to be measured by the terms of the contract itself and the benefits therein conferred upon the owner but by all this and the state of affairs existing at the time of expropriation, which in the very nature of things must inevitably affect the procurement of that right.

Analyzing the facts in this case upon the rule laid down in the *Brooks-Scanlon case,*and giving full effect to the proof respecting values, we believe these contracts would have brought, in a fair negotiation between an owner willing to sell and a purchaser willing to buy, the sum of $800,000. To this amount must be added interest at the rate of 6 per cent, not as interest but as part of just compensation, making *80up a sum sufficient to make the owner whole. The judgment is for the sum of $902,237.65, including interest to February-14, 1927. It is so ordered.

Moss, Judgey Graham, *Judge;*and Hat, Judge, concur.