Document: 381 U.S. 252 85 S.Ct. 1389 14 L.Ed.2d 370 WATERMAN STEAMSHIP CORP., Petitioner,v.UNITED STATES. No. 245. Argued April 26 and 27, 1965. Decided May 17, Rehearing Denied Oct. 11, See 86 17. [Syllabus from pages 252-253 intentionally omitted] John W. McConnell, Jr., Mobile, Ala., for petitioner. Paul Bender, Asst. Sol. Gen., Dept. of Justice, Washington, D.C., respondent, pro hac vice, by special leave Court. Mr. Justice GOLDBERG delivered the opinion 1 This case involves tax consequences purchase petitioner a number ships United States Government during Second World War subsequent post-war refund Government, pursuant to an Act Congress, substantial portion price. 2 At various times years 1942 through 1946, purchased Maritime Commission total 18 that had been built Government. It paid $46,973,167 these vessels (after allowance trade-in four its own ships).1 The were immediately chartered back, bareboat charters, so continued operate them.2 $13,430,431 in charter hire wartime use which amount reported federal income returns those years. 3 On March 8, Congress enacted Merchant Ship Sales 60 Stat. 41, as amended, 50 U.S.C.App. § 1735 et seq. (1958 ed.), gave American citizens right warbuilt statutory sales prices substantially below at such sold war. Section 9 Act, 1742 provided opportunity, upon application, those, like petitioner, who bought war obtain downward adjustment their price 'by treating vessel if it being applicant on date enactment this (March 1946), not before time.' details are complex. They consist, however, essentially two parts: (1) down new (§§ 9(b)(1)—(4)); (2) unwinding transactions, including payments, occurred result sale prior 1946 9(b)(5), (6), (c)(1)).3 4 Petitioner applied Act. granted adjustment, determining under statute should be $17,685,424.4 therefore was credited with $29,287,743, difference between original $46,973,167.5 5 pre-Act transactions then unwound, statute, follows: $13,430,431, representing 1946;6 debited $1,495,125, would have traded purchase; (3) $2,686,262, return interest mortgages could earned cash invested committed; (4) $430,206, overpayment taxes, which, recalculated give effect foregoing unwinding.7 sum credits debits net credit favor $8,818,838. reduced petitioner's $29,287,743 $20,468,904.8 6 In tabular form, computations made 7 Statutory Adjustments. 8 1. Original price.................. 2. price................. 17,685,424 ----------- 3. Gross 10 9(b) (1)-(4) (7))....... 4. Credit Government: 5. Charter 11 (§ (6))...................... 13,430,431 6. Debits against 7. 12 (1,495,125) 8. Interest petitioners' investment 13 (5))...................... (2,686,262) 9. Overpayment taxes (8)). 10. Net 15 (line minus line 7-9)............... 8,818,838 11. 10)................ $20,468,9049 Neither party here disputes accuracy any computations. issue parties is determinations treatment following adjustment. 1947 1950 took depreciation assumption cost $17,685,424, 1959, sued District Court Southern Alabama refund, contending real basis price, but rather $26,504,263, $46,973,167, $20,468,904, agreed $26,504,263 purposes. 203 F.Supp. 915. Appeals Fifth Circuit reversed, holding that, scheme, proper basis. 330 F.2d 128. lower courts' $8,818,838,10 preceding calculations We certiorari, 379 927, 321, resolve conflict Courts Claims involved.11 For reasons set forth below, we agree consequently affirm judgment. Petitioner's argument, put quite simply, ships. asserts, back $20,468,904. Thus concludes purposes figures, or $26,504,263.12 agrees received $20,468,904 1946. points out, also ships, $8,818,838 (the provisions Act), contends when added lump clear has $29,287,743,13 $17,685,424—the cannot does dispute fact argues, thus taken reduce cost. other hand, although undoubtedly originally income, scheme must deemed capital only dividing parties, therefore, $8,818,838, determined reference Act.14 expressly provides 'shall made, hereinafter provided, $17,685,424 $8,818,838—a payment attributable involved Act.15 order achieve purpose putting positions they occupied time, necessary refunded just what provides. As case, first $17,685,424. owed Because amount, after appropriate adjustments, over above date. obligation check $29,287,743. Petitioner, turn, Obviously, makes no same reached offsetting mutual debts resulted $20,368,904.16 correct assertion correct, repayment $29,287,743; $8,818,83817 government payments owned years—an ownership unwinds. producing price.18 treated That way language directs recomputation applicant's based transactions. condition receiving 9(c)(1) requires actually Federal having accrued income' (emphasis added); 'depreciation amortization allowed allowable respect up shall allowable'; plus attributed Tax * *.' derived assigned whose run, explicitly constitute deficiency created recomputations. 9(b)(8)). All provisions, already stated, given case. Pursuant agreement recomputed assumptions did receive period. Based recalculation, held entitled table p. 257, supra. impact owning specifically states, income,' or, words, reducing Moreover, contended produce anomaly due calculations, there claims avoided if, obviously intended, capital. Furthermore, argument necessarily predicated theory acquisition should, adjusted nevertheless, remain higher one time acquisitions, dating 1942. considered But vitiates express statement treats 'the Nothing legislative history supports contention apply actual contrary sought Indeed, our conclusion plain words confirmed fully out House Committee Marine Fisheries, see H.R.Rep.No.831, 79th Cong., 1st Sess., U.S.Code Cong. Service 1086, Senate Commerce, S.Rep.No.807, bill contained place floor House, committee amendment proffered accepted rejected premised operation before. 91 Cong.Rev. 9281. version into law. H.R.Conf.Rep.No.1526, 2d Representative (now Senator) Henry Jackson, manager amendments floor, explained 'Section H.R. 3603 operators war, cost, section bill. Such fair. do want purchaser disadvantage his competitor acquires similar 'However, contains many loopholes my places far better position than future purchasers. thing, purchaser, 9, allowances excess rpovided 'If equality past purchases comparable terms nothing less. 'I proposed certain modifications amendment. treat operator compensated all money 1/2 percent thereon. 'The bill's previous will exactly accomplish 'unwind' transaction, most appear complicated describing how done. 'These includes transaction. basic principle very simple—the transaction looked taking subject provisions. *' (Emphasis added.) Cong.Rec. 9182, 9185, 9282. Treating post-Act purchasers vessels—the price—serves congressional groups 'on basis.' Otherwise, purchasers, purposes, competitive advantages ability take deductions paying competitors. fact, advantage seeks Both pay Yet while varying prohibited statute. predecessor provision acquired adjuster price) 9(e)(1) 3603, amended 11535. states provision, confirm eliminated finally adopted. From facts, us infer notion depreciation. completely overlooks relies early date, dates. latter contained, prevent now contends. However, pointed consideration enacted, dates revised embrace time. pp. 264—266, Once revision approach longer necessity provide, earlier had, specific (statutory sales) 'as time,' explicit taxes. reject Finally, argues interpretation 1950, passed designed provide precisely petitioner.19 amendment, vetoed President Truman. While both Reports contain statements simply clarifying expressed intent H.R.Rep.No.1342, 81st 1; S.Rep.No.1915, 1, Truman ground contrary, he vitiate enacting President's veto message stated: '(O)ther consistent pattern act destroyed granting subsection concession entailed measure. benefits accruing capitalize amounts afford them operating arise possible measure.' 96 15792. Thus, apparent disagreed meaning law President, deeming depart refused approve occasions views form hazardous inferring one.' v. Price, 361 304, 313, 80 326, 332, 334; Philadelphia National Bank, 374 348—349, 83 1715, 1733, particularly true where signed Act) vetoes 'clarifying' grounds view, clarify Fogarty States, 340 71 5, 95 L.Ed. considering situation, abortive action 'would supplant contemporaneous Act.' Id., 14, Wise, 405, 411, 82 1354, 1358, 590. above, conclude unwinds $17,685,424.20 Consequently, judgment affirmed. Affirmed. APPENDIX TO OPINION OF THE COURT. 46, relevant part: 'Sec. (a) A citizen Act— '(1) owns builder December 31, 1940; 'shall, except application therefor, manner may prescribe, within sixty days publication applicable prewar domestic costs Register 3(c) '(b) 25 per centum enactment. If less vessel, Commission. '(2) indebtedness mortgage adjusted. '(3) equal retained paragraph readjusted (determined (7)) exchanged purchase. payable annual installments thereafter remaining life unpaid rate annum. '(4) excess, any, extent (1). '(5) annum (for period beginning delivery ending exchange unpaid. canceled. '(6) him (exclusive service, required charter) canceled; bare-boat Act). '(7) limit '(8) There subtracted overpayments resulting (c)(1), deficiencies (c)(1). If, making subtractions, exceeds Commission, applicant. applicant, Upon paid. 'For subsection, account construction-differential subsidy 504 1936, owner. '(c) An enters binding affiliated that— allowable; (b)(6) income; (b)(5) (6) taxable year falls ('Secretary,' Secretary substituted 'Commission' otherwise indicated context, authority Reorg.Plan 21, effective 24, Fed.Reg. 3178, 64 1273.) (without allowance) $49,582,767. $2,609,600. consisted $6,449,107 $40,524,060. simplicity opinion, cash. last February respectively, 1946) part, Appendix opinion. figure in. $17,997,981. 9(b)(7) $312,557. simplicity, remainder figures used respective allowances. comprised $11,735,951 reduction $17,551,792. note supra, credit. 2, recalculation included readjustment allowed. dollar smaller discrepancy caused omission calculation dollar. divided $2,917,112 Again, notes infra. Third Bulk Carriers, Inc. Cir., 331 407. decisions Socony Mobil Oil Co. 287 910, 153 Ct.Cl. 638, instant relied. stated $40,524,060 indebtedness. By additional $9,786,339 mortgage. $16,235,446 $30,737,721. $13,318,334 ($16,235,446 $2,917,112) $13,185,929 ($30,737,721 $17,551,792), 26,504,263. asserted parties. brought about rounded off amounts. Also, text parties' contentions undisputed $175,876 represents bases text. 1942-1946 (8,818,838) (.........) Lump (20,468,904) ($20,468,904) Basis $17,861,300 $26,680,139 discussed, because offset in, period, unwound hire. 16 17 noted 12, whole achieved, viewed When done seen $13,318,334, $4,499,496. basis, $4,499,496 $13,185,929, (Again one-dollar rounding amounts.) 19 addition Act: 'From underpreciated subsection.' H.R.Rep. 1342, 5; S.Rep. 1915, 20

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