Court Opinion

ID: 8591006
Source: CourtListenerOpinion
Date Created: 2022-11-23 15:48:33.951542+00
Date Added: 2024-06-11T16:54:27.794978
License: Public Domain

Jones, Chief Judge,
dissenting in part:
I think neither party is wholly responsible for the dilemma presented here. On the one hand, representatives of the defendant did not disclose the full facts in connection with the sale of the ship. On the other hand, the plaintiff was careless in signing a contract which clearly showed the sale was being made on an “as is, where is” basis, and that the amount of the deposit, in the event of default, should be treated as liquidated damages.
Clearly there is no legal liability, but in all the circumstances I think the ends of justice would be served if one-half of the deposit were returned.
I would recommend that plaintiff be paid $6,250 in full settlement of its claim.
Whitaker, Judge, joins in the foregoing dissent.
FINDINGS OE PACT
The court having considered the evidence, the briefs and argument of counsel, and the report of Commissioner W. Ney Evans, makes the following findings of fact:
1. H. E. 1580, 82d Congress, 1st Session, which passed the House of Eepresentatives on February 20, 1951, provides as follows (in pertinent part):
* * * the Secretary of the Treasury is authorized and directed to pay, out of any money in the Treasury not otherwise appropriated, to the Overseas Navigation Corporation of New York, New York, the sum of $12,500. The payment of such sum shall be in full settlement of all claims against the United States based on the fact that a deposit of $12,500 made by such corporation, in connection with a bid which it submitted to the United States Maritime Commission in 1946 for the purchase of the coastal tanker Blue Sünoco, was declared forfeit on March 17, 1947, after such corporation failed to take delivery * * *.
*792. Senate Resolution 193, 82d Congress, adopted August 27,1951, provides as follows:
Resolved, That the bill (H. R. 1580) for the relief of Overseas Navigation Corporation, now pending in the Senate, together with all the accompanying papers, is hereby referred to the Court of Claims; and the court shall proceed with the same in accordance with the provisions of sections 1492 and 2509 of title 28 of the United States Code and report to the Senate, at the earliest practicable date, giving such findings of fact and conclusions thereon as shall be sufficient to inform the Congress of the nature and character of the demand as a claim, legal or equitable, against the United States and the amount, if any, legally or equitably due from the United States to the claimant: Provided, however' That the passage of this resolution shall not be construed as an inference of liability on the part of the Government of the United States.
3. The Blue Sunoco was a tanker built in 1929 by the Sun Shipbuilding and Dry Dock Company. It had the following dimensions, characteristics, and equipment: hull, steel, riveted; length, 246' 6"; breadth, 43'; depth, 18' 6"; draft, 16'; propulsion, twin screw; power, two 6-cylinder diesel motors, generating 1,000 horsepower; speed, 9.3 knots; gross tons, 1,588; deadweight tons, 2,510.
4. On April 10,1942, the vessel was taken from the Sun Oil Company by the War Shipping Administration under a bare-boat charter and turned over to the Navy for use in the Hawaiian Islands during the war.
5. In May 1945, a Navy Inspection Board surveyed the Blue Sunoco (renamed the Halawa by the Navy) and found her to be in a general state of disrepair. The Board recommended that:
* * * this vessel be returned to the States and new main and auxiliary engines procured and installed. Such items of hull repair as are necessary should be performed at this time. In the event that new engines are not available, the vessel should be removed from service until such time as they are available.
Subsequently, on August 20, 1945, the War Shipping Administration was advised by the Navy as follows:
*80In its Keport of Material Inspection of the USS Halawa, (AOG 12) dated 81 May ’45, the Sub-Board of Inspection and Survey * * * recommended that this vessel “be returned to the United States and new main and auxiliary engines be procured and installed.” In the event that new engines were not available the Sub-Board recommended “removing the vessel from service.”
In reviewing this report, the President, Board of Inspection and Survey recommended on 19 July “that in view of her age and material condition the Halawa should not be repaired and that necessary steps should be taken to return her to her owners.”
Under date of 8 August, the Chief of the Bureau of Ships concurred in the last recommendation stating that replacement parts for existing main engines would require months to obtain so that proper overhaul would be uneconomical. Altho some surplus Maritime Atlas engines which develop 400 h. p. at 300 r. p. m. might be obtained, Bureau of Ships recommended against replacement of the main engines unless the Halawa was urgently needed.
Under present circumstances, the Navy does not require the services of this tanker as a naval auxiliary. It is requested therefore, that War Shipping Administration indicate as soon as practicable whether redelivery of this vessel, formerly named the Blue Sunoco and owned by Sun Oil Co., will be taken at Pearl where she is now located or at San Francisco where she can be towed.
The Blue Sunoco was thereafter returned to the West Coast, where it was delivered to the Maritime Commission laid-up fleet located at Suisun Bay, San Francisco, on September 10, 1945. On the same day the War Shipping Administration acquired title to the vessel for the United States.
6. In preparation for offering the vessel for sale the Maritime Commission adopted an upset price of $50,000, which was established in the following maimer: an estimate was made of the present day sound condition value, which was computed to be $210,000; the cost of repair, including replacement of the main engines, was estimated at $171,819; this cost of repair was deducted from the sound condition value, to arrive at a present day “as is” value of $88,181. The “as is” value was rounded off to $50,000 to obtain the minimum bid *81price, tlie extra $11,819 being considered potential profit from the sale of the vessel.
7. The Blue Sunoco was first offered for sale by the Maritime Commission in June 1946. The offer was contained in an invitation for bids, unrestricted as to use or nationality, on an “as is, where is” basis. No responsive bid was received.
The vessel was again offered for sale by Invitation for Bids No. PD-X-234, issued in October 1946, “* * * upon the terms and conditions * * * set forth in ‘information and instructions to bidders’,” excerpts from which follow:
The United States Maritime Commission is hereinafter referred to as the “Commission”, and the successful bidder for the purchase of the vessel is hereinafter referred to as the “Buyer”.
* * * Bids of less than $50,000 for the vessel will not be considered.
* * * The vessel is located in the Suisun Bay Laid-up Fleet, San Francisco, * * * and is a twin screw motor tanker, built in 1929 * * *, having a gross tonnage of 1588, and a deadweight tonnage of 2510. She is powered with two 6 cylinder Bessemer diesel engines developing a total of 1000 BHP. Her dimensions are 246' 6" length, 43' breadth, 18' 6" depth and 16' draft.
However, any description or other information furnished herein or otherwise concerning the vessel is solely for general information of bidders and its accuracy is not warranted. The vessel may be inspected upon application to * * *, Acting Fleet Superintendent, Suisun Bay Reserve Fleet, * * *. All inspections shall be at the risk of prospective bidders and without liability to the United States * * *. Prospective bidders are cautioned to inspect the vessel and are hereby notified that failure of any bidder to inspect the vessel or otherwise acquire full information as to its identity, physical condition or otherwise will in no event form the basis for the withdrawal of any bid or the return of any bid guaranty after the time fixed for opening bids, or for the rescission of any contract as a resnult of acceptance of a bid. Any bid submitted without such inspection or other information is solely at the risk of the bidder.
* * * Each bid * * * must be received before 2:15 p. m. * * * November 13, 1946. The bids will be publicly opened and read at 2:30 p. m. * * * on said date * * *. * * * no bid received thereafter will be considered * * *.
*82* * * The Commission reserves the right to reject any and all bids, call for new bids, waive any irregularity in any bid, and make such award as it may deem is most advantageous * * *.
* * * The vessel is offered for sale “as is, where is” at date of delivery, * * * without warranty, guaranty, or representation as to seaworthiness, condition, description, capacity, tonnage, or otherwise. However, the bill of sale conveying title in the vessel from the Commission to the Buyer will fully warrant title and freedom from all liens. * * *
* * * the Buyer must accept * * * delivery within 80 days from the date of receipt of notice of acceptance of bid. * * *
* * * The Buyer shall pay the full purchase price of the vessel in cash or by certified or cashier’s check at or before time of delivery. * * *
* * * No bid will be considered unless it is accompanied by a guaranty, satisfactory to the Commission, in a sum equal to at least twenty-five percent of the amount of such bid, to insure compliance with the terms of the bid. If the Buyer fails to make full payment of the purchase price and take delivery of the vessel, all within the time specified herein, the full amount of this Bid Guaranty shall be paid to the Commission as liquidated damages and not as a penalty. A bidder may, at its option, furnish, as such guaranty either a guaranty bond with surety or sureties satisfactory to the Commission, a certified check, or a cashier’s check. * * *
8. Attached to the Invitation for Bids was a Form of Bid and another blank form for the accompanying affidavit of nationality. Publicity was given to the offering by a press release on October 14,1946. Persons interested could obtain the invitation and attachments on request, by mail or in person.
The opening date, November 13,1946, specified in Invitation for Bids No. 234, passed, and no bid was received by the Maritime Commission.
9. Representatives of plaintiff, a New York corporation, were in Washington during the latter part of November 1946. The corporation had then been in existence only a short time. Its owners desired to obtain some ships from the Maritime Commission by or for charter. The representatives of plaintiff in Washington at this time included one *83officer (a vice president) and one employee (who subsequently became president) of the corporation, and an agent or employee who served as a Washington representative of plaintiff and other companies in a manner not described in detail by the evidence. This agent or employee is hereinafter referred to as plaintiff’s Washington representative.
During the latter part of November 1946 plaintiff’s representatives conferred with representatives of the Maritime Commission concerning the procurement of ships by plaintiff. The vice president of plaintiff understood from these conversations that plaintiff’s position in the procurement of vessels from the Maritime Commission would be improved if plaintiff could show the ownership of a vessel or vessels. Plaintiff’s Washington representative was told that, although the time stated in the invitation for bids for the Blue Sunoco had expired, the time could be extended by the Maritime Commission. Plaintiff’s vice president understood that the duration of the time extension for the submission of a bid on the Blue Sunoco was limited, and that plaintiff would have to act promptly. The Maritime Commission was obviously anxious to obtain a bid for the ship. Whether plaintiff’s vice president got this information from a Maritime Commission employee or from plaintiff’s Washington representative from his conversations at the Maritime Commission’s office is not clearly established by the evidence. At any rate, the record is sufficient to show that plaintiff was pressed to promptly submit its bid, if it intended to do so, and from ail the facts and circumstances we conclude as a fact that plaintiff was not allowed the 43 days’ time allowed prospective bidders in the second invitation for bids of October 1, 1946 (finding 7) within which to have an inspection made of the Blue Sunoco.
Somewhere along the line plaintiff’s vice president also got the impression that, in the opinion of one of the Maritime Commission representatives, the Blue Sunoco could be repaired for $35,000. It is not established by the evidence that such an opinion was expressed to any of plaintiff’s representatives by any of the representatives of the Maritime Commission.
*8410. On November 21, 1946, tbe Maritime Commission received from plaintiff tbe following communication, contained in tbe standard bid form attached to Invitation No. PD-X-234.
In response to your Invitation for Bids No. PD-X-234 dated Oct. 1, 1946, Information and Instructions to Bidders, * * * which by tbis ref erence are incorporated herein and made a part hereof, and subject to all tbe terms and conditions thereof, the undersigned hereby offers to purchase the tanker Blue Sunoco, Official No. 228,330, for the lump sum amount of $50,000.
Enclosed is security, as required, consisting of: Certified Check $12,500.
Enclosed, also, is the required Affidavit of Nationality of the undersigned.
The Maritime Commission accepted plaintiff’s bid on December 10,1946, and notified plaintiff of such acceptance two days later.
11. It is not established by the evidence that plaintiff inspected the vessel prior to the submission of its bid on November 21,1946. If any such inspection was made, it was cursory in nature.
After receipt of notification of the acceptance of its bid, plaintiff sent a marine surveyor to inspect the Blue Sunoco and to obtain estimates of the cost of making necessary repairs. By telegrams on December 18,19, and 28,1946, the surveyor advised plaintiff of the condition of the vessel. The telegram of December 28,1946, advised in pertinent part:
General Engineering calculating repairs 90/125,000 but refusing firm offer Stop Moore while still indicating maximum 90,000 now unwilling commit themselves view more information and still persistent rumors Stop Whether indicated manner payment possible only be decided after return vice president from sickness expected beginning next week Stop Conferred leading maritime man Standard Oil California not interested chartering stating small tankers headache suggesting contact Socony Vacuum Oil New York apparently buying tankers this size China Stop Will see Union Oil here Monday Stop After private conversation principal surveyor American Bureau knowing now more from official sources and view still existing undiscoverable uncertainties condition ship engines reluctantly must advise *85you withdraw bid and not run undue risk Stop Provided you still deciding take possession all preparatory work including drydocking for inspection drilling plates gas freing (sic) scaling cleaning tanks drawing tail shafts opening engines boiler calculated by Moore 20,000 excluding shifting vessel leaving 70,000 for necessary repairs but latter figure not binding Stop In such case absolutely necessary appoint Navy Surveyor Webb knowing ship and accessible all confidential documents Stop. * * *
12. On January 10, 1947, plaintiff wrote the following letter to the Maritime Commission:
Pursuant to our various endeavors to effect a complete inspection of the * * * vessel * * *, we are experiencing considerable difficulties in ascertaining the true condition of the vessel.
All the tanks are not accessible at the present time due to the fact that some of them have gas, and others are filled with water. Under these circumstances, it is impossible to properly survey and arrive at a definite conclusion as to the exact condition of this vessel.
Our surveyors have reported to us that due to damage sustained by the engines of this vessel, she was unable to proceed under her own power, so that she had to be towed.
We have endeavored to obtain the opportunity of examining the ship’s log, but to date, have not been successful. From the reports that we hear, the log book is in the possession of the U. S. Navy, and not accessible to us at the present time.
In view of the above contingencies which have prevented us from completing a thorough and intelligent inspection of this ship, prior to taking possession, we respectfully request * * * a 30 day extension of the date on which we are required to make final payment and take possession of this vessel.
13. On January 17, 1947, and again on February 6,1947, the Maritime Commission telegraphed plaintiff requesting advice regarding the payment of the balance of the purchase price and acceptance of delivery of the vessel.
14. On February 4, 1947, plaintiff wrote the Maritime Commission the following letter:
On November 21st, 1946, we submitted a bid for the “S. S. Blue Sunoco”, formerly known as the “Halawa” now berthed at the San Francisco bay, which bid was subsequently accepted. At the time of submission of *86said bid, we advised that we had made inspection of this vessel and entered into our contract in good faith. _ Our inspection covered the vessel insofar as was permitted. We were under the impression that we were purchasing a vessel which needed only minor repairs that would allow that vessel to obtain a bureau rating. The inspection on our behalf was made by a local surveyor employed for that purpose.
However, when our Marine Superintendent arrived in San Francisco to take over the vessel, he found that the vessel was economically worthless since the cost of repair would bring the actual cost of the vessel far beyond the worth of that vessel, after repairs would have been completed and the vessel put in class.
We have since been informed that a Navy report indicated this vessel to be beyond repair, and that the engines stopped 57 times in 21 days, and she finally had to be towed to port on its last trip.
We have gone to considerable effort and expense in an honest endeavor to relieve the Commission and us from the burden of this vessel. We endeavored to dispose of the vessel to a foreign national. The reaction of that proposed buyer to the vessel is very succinctly set forth in the cables quoted below:
“Blue Sunoco have received following report from others quote Blue Sunoco looks hopelessly crippled last Navy survey recommends new engines otherwise remove from service engine stopped 57 times during last 21 days voyage ship towed in Stop Rivets seems (sic) leaking throughout hull Stop Forward bulkheads and stiffeners tank bottoms cargo tank 6 and 7 badly caroted latter beyond repairs propeller damaged all pumps beyond economic repairs unquote This report is directly in contradiction to report from Storen San Francisco Stop Government has given currency license on the conditions Storens report is correct but if second report correct cannot get license ask Aronsen Norwegian Veritas San Francisco inspect vessel personally and report direct Stop Who are sellers.”
“View report telegraphed you twenty-fifth and Aron-sens last report owners camiot obtain currency, license purchase unless ship being offered in newclassed condition.”
We know that it was never the intention of the Commission to impose a burden upon anyone and that the Commission was acting in good faith; but, we feel that both the Commission and we were not fully apprised of the actual condition of the vessel or of the Navy’s report *87as to tbe condition of same. Under the circumstances, we feel that the Commission will agree with us that the parties should be restored to status quo.
We feel certain that had the Commission been apprised of the true condition of the vessel, the Commission would not have offered same for sale as a vessel but would have placed her in the scrap category.
We shall appreciate the Commission’s indulgence.
15. On February 17,1947, plaintiff again wrote the Maritime Commission:
Confirming our conversation of last week, with reference to the Blue Sunoco, you will please be advised that this letter supplements our letter of February 12th, wherein we requested return of our deposit. As we discussed at our meeting, we would appreciate it very much, if you would apply this $12,500.00 to the purchase of the Liberty Ship we intend purchasing, and as I explained to you the papers and so forth are being drawn now to submit our offer.
Your cooperation and suggestions to the Commission would be appreciated in this matter. * * *
16. (a) On March 12, 1947, one of the members of the Maritime Commission wrote plaintiff:
* * * your application for refund * * * is presently in the hands of our Legal Division, and once it has been cleared by them, it will be handled by our Purchase and Sales Department, to which the Commission has delegated the authority to dispose of matters of this nature.
If for any reason the decision reached by our Department of Purchase and Sales is unsatisfactory, you have of course the right to appeal direct to the Commission.
(b) On March 12, 1947, the Maritime Commission approved a staff recommendation that plaintiff’s deposit of $12,500 be retained as liquidated damages.
(c) On August 26,1947, the Maritime Commission notified plaintiff of this action.
17. On September 29, 1947, plaintiff wrote the Maritime Commission:
On August 26, 1947,1 received a letter * * * stating that a good faith deposit of $12,500 made by my company on the Tanker Blue Sunoco had been forfeited because my company had not consummated the purchase.
*88I am protesting this action * * * and requesting that this matter be reviewed by the Commission because I believe that if the matter is understood by the Commission, it will reverse this decision of its subordinates. * * *
* * * the basis of my appeal is that where the Government requires a citizen to evidence good faith by making a deposit, the citizen has a right to expect the same good faith on the part of its Government. The Government advertised the vessel at an up-set price of $50,000. Any prospective purchaser had the right to assume in this circumstance that the vessel had a minimum residual value equal to this amount. This in spite of the fact that the advertising of the vessel was on the basis of “as is, where is” and without warranty as to the condition of the vessel. My company made its offer without any inspection, depending on the representation of the Government that there was residual value in the vessel of $50,000. The fact remains that this residual value was not present in the vessel, as we found when we asked for bids on its repair.. I understand that Mr. Cornwall estimated the repairs would amount to not more than $50,000. All estimates that we received were in excess of $200,000. I also found that, at the time our offer was made, the Commission was contemplating offering the vessel for scrap only. This would indicate that the Commission, or at least certain of its employees, felt that the vessel had no value beyond its scrap value.
I would further point out that while our offer was made on P. D. X. 284, our bid was not responsive in that it was received two days after the closing of the bidding date, and, on this account, if for no other reason, the offer should have been rejected and the vessel readvertised.
If there is any doubt in the mind of any member of the Commission, as to the justice of my request, I would ask the opportunity of personally appearing before the Commission to make my presentation and to answer any questions that may be addressed to me.
18. Plaintiff’s vice president made a personal appearance before the Maritime Commission on October 29,1947.
Two years and four months later, on March 1, 1950, the Maritime Commission affirmed its previous action and ordered plaintiff’s deposit held as liquidated damages.
19. (a) In January or February 1948, the Maritime Commission authorized the issuance of invitations for bids on the Blue Sunoco “upon the following alternative bases”:
*89(1) For purposes of operation under U.S. flag.
(2) For complete scrapping with bidding restricted to United States citizens.
(b) Invitations for bids were issued accordingly, and on June 3,1948, the Commission accepted the bid of a Tacoma, Washington, tug company, in the amount of $32,596, under Condition 1. The Blue Sunoco was purchased by the tug company for conversion into a non-self-propelled barge.
20. On March 30, 1948, plaintiff wrote to the Maritime Commission:
* * * On November 21, 1946, you offered “SS Blue Sunoco” for sale on the bid #PD-X-234, dated October 1,1946, as an operating ship and placed the value thereon at $50,000.
We obtained, through your sales division, information as to the possible repairs required to put this ship in operation and was advised that approximately $35,000 would take care of the situation. The ship was lying at San Francisco and we sent our surveyor down to inspect it before making a bid. However, while the surveyor was still trying to make an intelligent inspection we were advised by the Maritime Commission, Sales Division, that we would have to send our check for $12,500 since the bids on this particular vessel had been opened two days before and could not be held any longer.
We, therefore, upon the strength of the worth of the vessel as stated by the U. S. Maritime Commission, forwarded our check of $12,500 and offered $50,000 for the vessel; the valuation determined by the U. S. Maritime Commission, and we were awarded the ship.
Upon closer inspection of the vessel we found that the engine had been so greatly damaged that she had to be towed in on her last voyage to port. The tanks were in such bad condition that they had to be replaced and we were advised by the shipyard that a conservative estimate for putting the ship in condition would be upwards of $275,000 and then they did not think that they could obtain the engine necessary since this type of engine was obsolete.
We made several attempts for the return of our $12,500 as “good faith” money without results. Recently we received invitations to bid on this same vessel, the “Blue Sunoco” under #PD-X-444, which indicated it as a scrap vessel. As this vessel has not been deteriorated *90since we bid on it, it has not depreciated in any respect and we are of the opinion that this vessel should never have been offered to the public as an operating vessel with such value of $50,000 placed upon it. It is our understanding that the $12,500 was retained to satisfy liquidated damages to the Maritime Commission.
I cannot see where the U. S. Maritime Commission or the TJ. S. Government has any proof that any liquidated damages has occurred in this matter. May 1 say, in conclusion, that having implicit confidence in the integrity of my government and its Maritime Commission we were prompted to accept, without question, their valuation of this vessel at $50,000 and made our good faith deposit upon their representation without making a thorough inspection of this vessel.
In view of the fact that it was necessary for us to submit our bid before we had the opportunity to make an exhaustive inspection, under the circumstances set forth previously in this letter that the bids had already been given and we could submit our bid contrary to this if it was done at once.
May I respectfully request the return by the U. S. Maritime Commission to us of our check of $12,500 in view of the circumstances surrounding the purchase of this vessel. We feel that we are entitled to this favorable consideration by the U. S. Maritime Commission. We feel sure that you will concur with us that the government suffered no liquidated damages regarding this transaction and we therefore urge the return of the $12,500 good faith deposit. * * *
21. (a) It is not established by the evidence that representatives of either plaintiff or the Maritime Commission were engaging in negotiations for the purchase and sale of the Blue Sunoco at the time of their conversations in November 1916 preceding the submission of plaintiff’s bid for the vessel.
(b) There is no evidence relating to the nature of the damages accruing to the Maritime Commission as a result of plaintiff’s failure to pay for and accept delivery of the vessel, other than the subsequent sale of the vessel for $32,506 and the retention of plaintiff’s deposit as liquidated damages in the terms of the invitation for bids.