Source: https://www.law.cornell.edu/supremecourt/text/377/235
Timestamp: 2016-12-04 22:39:17
Document Index: 373260838

Matched Legal Cases: ['§ 5', '§ 709', '§ 5', '§ 709', '§ 707', '§ 709', '§ 709', '§ 5', '§ 5', '§ 709', '§ 5', '§ 709', '§ 5', '§ 709', '§ 709', '§ 5', '§ 709', '§ 5', '§ 5', '§ 709', '§ 714', '§ 709']

MASSACHUSETTS TRUSTEES OF EASTERN GAS AND FUEL ASSOCIATES, Petitioners, v. UNITED STATES. | US Law | LII / Legal Information Institute
Supreme Court aboutsearch liibulletin subscribe previews MASSACHUSETTS TRUSTEES OF EASTERN GAS AND FUEL ASSOCIATES, Petitioners, v. UNITED STATES.
377 U.S. 235 (84 S.Ct. 1236, 12 L.Ed.2d 268)
[HTML] J. Franklin Fort, Washington, D.C., for petitioner.
we brought the case here. 375 U.S. 809, 84 S.Ct. 46, 11 L.Ed.2d 47. For reasons to follow, we affirm the judgment below upholding the power of the Commission to act as it did.
The Merchant Marine Act, 1936, 49 Stat. 1985, as amended, 46 U.S.C. 11011294, provided for the charter of government vessels by the Maritime Commission to private enterprise. Section 709(a) of that Act, 49 Stat. 2010, incorporated by reference in the 1946 Act, § 5(c), 60 Stat. 43, provided:
During World War II, operations of the private merchant marine were disrupted and its fleets reduced by losses and requisition. Meanwhile many vessels were constructed for government operations. Congress by means of the Merchant Ship Sales Act of 1946, supra, sought to ensure post war rehabilitation of the private merchant marine by having the Maritime Commission sell or charter surplus war-built government vessels. The Commission was instructed 'so far as practicable and consistent with the policies of this Act (to), give preference to * * * applicants to purchase' over applicants to charter.
Section 5(b), 60 Stat. 43, of the Act set out standards for the Commission to follow in chartering vessels:
The basic statutory question is whether the Commission, in light of § 709(a), had authority under § 5(b) to impose the sliding scale of additional hire, and if, so, whether its failure to articulate the particular statutory basis for its action vitiates the validity of the profit-sharing terms of the rate set. We approach this problem with three general interpretative guides, all of which point in the Government's favor. Some weight is due to the consistent interpretation of the Maritime Commission, the agency entrusted with administration of the statute. See, e.g., United States v. Zucca, 351 U.S. 91, 96, 76 S.Ct. 671, 100 L.Ed. 964; Kern River Co. v. United States, 257 U.S. 147, 153154, 42 S.Ct. 60, 66 L.Ed. 175. The successive extensions by Congress of the Commission's authority to charter vessels,
the House Committee on Merchant Marine and Fisheries, H.R.Rep. No. 725, 80th Cong., 1st Sess. (1947), recommended an extension, subsequently enacted, 61 Stat. 190, 191, of the Commission's chartering authority 'with the understanding that the basic rates for the charter of dry-cargo vessels and recapture rates will be immediately increased, thus encouraging the purchase rather than charter of these ships.' P. 2. Congressional reports prior to another extension, H.R.Rep. No. 60, 81st Cong., 1st Sess., 2 (1949); S.Rep. No. 55, 81st Cong., 1st Sess., 2 (1949), stated: 'It is contemplat d that the Maritime Commission will continue to sell, charter, and operate ships in accordance with existing procedures and without (according to the House Report) any change in its present policy.' (The Senate Report reads 'any changes in policies now effective.')
However, when § 709(a) was passed, rates of charter hire were determined in most situations, under § 707(a), 49 Stat. 2009, by competitive bidding in individual cases.
Since the firm rental offered could afford the only basis for assessing 'the highest monthly charter hire,' individual bidders did not propose profit-sharing arrangements. Under such a system, the primary reliance against rates unreasonably favorable to charterers was the bidding system. In that context, it could plausibly be urged that the Commission had no authority to raise its share of excess profits. Indeed, the Government does not argue hat at that time, or after the 1946 Act, § 709(a) ex proprio vigore conferred power on the Commission to raise the rates beyond the prescribed 50%. The relevant question, therefore, is whether as carried into the 1946 Act the section set a maximum as well as minimum rate of profit sharing for the statute as a whole.
First, it may be noted that 'shall' plainly denotes a minimum; one cannot pay 50% and at the same time pay less than 50%. On the other hand, the word does not of linguistic necessity denote a maximum; one can pay 50% and also pay 25% more. While, in recognizing this, we do not mean to suggest that standing alone the 50% standard of § 709(a) would not be read as establishing a maximum as well as a minimum, it is significant that the section's language is not inconsistent with a conclusion that higher percentages are permissible. Congress cannot be expected always to be absolutely precise in its statutory formulations. When it brings forward into a new enactment provisions drafted in a different statutory context and in response to other circumstances and policies, the likelihood of imprecision is increased. In light of the great breadth of discretion apparently given to the Commission under § 5(b) and the expressed concern of Congress that charter rates not be too low to discourage sales, we should be very slow to fetter the flexibility of the Commission to implement, in the most effective way, the policies of the Act. Viewing the 1946 Act as an integrated whole, we refuse to inhibit the Commission under § 5(b) by resort to an interpretation of § 709(a) which could be characterized only as arid literalism.
We conclude, therefore, that the Commission had the power under § 5(b) to impose the sliding scale and that § 709(a) does not negate that authority. In passing, it may be noted that in addition to the courts below, four other lower courts have reached or assumed the same conclusion. See Dichman, Wright & Pugh, Inc., v. United States, D.C.N.Y., 144 F.Supp. 922, 926; United States v. East Harbor Trading Corp., D.C.N.Y., 190 F.Supp. 245, 249; American Mail Line, Ltd., v. United States, D.C.Wash., 213 F.Supp. 152, 163; United States v. Eastport Steamship Corp., D.C.N.Y., 216 F.Supp. 649, 653654. But see American President Lines, Ltd., v. United States, D.C.Cal., 224 F.Supp. 187, 190191. See also American Export Lines, Inc., v. United States, 290 F.2d 925, 930, 153 Ct. l. 201, 208209.
We next turn to the question whether § 5(b) suffices to support the sliding scale for profit-sharing rentals adopted by the Commission, in the face of the assertion that the Commission did not purport to act under that section but apparently relied on § 709 alone. Eastern notes that the added obligation respecting excess profits was imposed as a part of 'additional charter hire' under clause 13 of the charter agreement ('Form 303'), which included the 50% charge on excess profits less than $100 per day. Under 'Form 203', the standard charter employed pending implementation of the 1946 Act, the unembellished 50% rate of § 709(a) had also been characterized as 'additional charter hire' and appeared in clause 13 of that form. In both 'Form 203' and 'Form 303' provision for the 'basic charter hire'the relevant percent of the sales pricewas provided for in clauses E, C(1), and 12. Eastern accordingly concludes that the Commission equated 'basic charter hire' with hire under § 5(b) and 'additional charter hire' with that imposed under § 709(a). Citing a number of cases holding that grounds not relied on by a government agency cannot be invoked to validate an exercise of administrative discretion which has in fact been based on insufficient grounds or reached without requisite procedural safeguards, see, e.g., Securities & Exchange Comm'n v. Chenery Corp., 332 U.S. 194, 196, 67 S.Ct. 1575, 1760, 91 L.Ed. 1995; Bell v. United States, 366 U.S. 393, 412413, 81 S.Ct. 1230, 6 L.Ed.2d 365; Burlington Truck Lines, Inc. v. United States, 371 U.S. 156, 167168, 83 S.Ct. 239, 9 L.Ed.2d 207, Eastern asserts that the failure of the Commission to indicate the statutory basis of its sliding scale for profit sharing renders that aspect of its charter agreements void. It is not entirely clear what the Commission believed the source of its power to be and it is at least arguable that inclusion of the sliding rates within the additional hire clause was not necessarily inconsistent with a supposition of authority under § 5(b). We find it unnecessary, however, to deal with this question since we agree with the courts below that the intent of the Commission in this regard is irrelevant.
Section 714 of the 1936 Act, 49 Stat. 2011, as amended, 46 U.S.C. 1204, does provide for negotiated rates of charter hire if essential trade routes cannot otherwise be successfully developed. It contains a firm minimum rate. Had this been the primary method of chartering envisioned in 1936, the section's similarity to § 5(b) of the 1946 Act would have considerable bearing on any interpretation of the relevance of § 709(a) in the later Act. The exception this provision makes to competitive bidding, however, does not alter the fact that the basic method of rate setting was entirely different under the 1936 Act from that contemplated in 1946. We intimate no view as to the relationship between § 714 and § 709(a) under the 1936 Act.