Case: EASTPORT STEAMSHIP CORPORATION v. THE UNITED STATES
Abbreviation: Eastport Steamship Corp. v. United States
Decision Date: 1967-02-17
Docket Number: No. 74-55
Citation: 178 Ct. Cl. 599
Volume: 178
Reporter: United States Court of Claims Reports
Court: United States Court of Claims
Jurisdiction: United States
Parties: EASTPORT STEAMSHIP CORPORATION v. THE UNITED STATES
Judges: Before CoweN, Chief Judge, Laramore, Burpee, Davis, ColliNS, SkeltoN and Nichols, Judges.
Pages: 599–630

Head Matter:
372 F. 2d 1002
EASTPORT STEAMSHIP CORPORATION v. THE UNITED STATES
[No. 74-55.
Decided February 17, 1967]
T. B. L. Perlman for plaintiff; J. Franhlin Fort, attorney of record. Michael Joseph, of counsel.
Anthony W. Gross, with whom was Assistant Attorney General Barefoot Banders, for defendant.
Before CoweN, Chief Judge, Laramore, Burpee, Davis, ColliNS, SkeltoN and Nichols, Judges.

Opinion:
Davis, Judge,
delivered the opinion of the court:
In 1946, in the train of World War II, the United States was offered some former German merchant vessels as part of reparations. Despite some initial misgivings that the Maritime Commission already had enough American-built surplus vessels to dispose of, the Commission ultimately agreed with the Department of State to accept thirteen of these ex-German ships on the understanding that they would be used by American operators under the American flag and would not be sold on the world market. Eleven vessels were offered for sale, including the Empire Boding (which came to plaintiff and was renamed the Eastport). The Commission's invitation for bids, as modified, provided that the purchasers would be barred from selling the ships or operating them prior to documentation under the American flag. Plaintiff's president specifically inquired whether there would be any restriction on a later sale foreign. The Commission's reply was that any application for such a sale would have to be considered under Sections 9 and 37 of the Shipping Act and that no prior assurance could be given.
Five bids were received for the Empire Boding. The high bidder (offering $425,000) conditioned its bid on the Commission's agreeing to a transfer to the Danish flag immediately after American documentation. This qualification was unacceptable and the bid was rej ected. The next highest bidder, which did not wish to accept more than two of the four vessels on which it bid, was allocated two other ships and its proffer of $190,300 for the Empire Boding was set aside. Plaintiff then became the higher offeror and received the vessel in April 1947 for $130,750 in cash.
At considerable cost the ship was altered and converted to meet the requirements of American documentation. She was then put to sea and pursued a disastrous career until plaintiff finally gave up in June 1949 and placed her in lay-up awaiting sale. From May 1948, when it realized she was a "lemon", plaintiff made strenuous but unsuccessful efforts to sell her domestically. In June 1948 the company turned to the foreign market.
Sale alien, plaintiff knew, would require the Commission's permission, and preliminary conferences were held with the agency's staff to sound out the possibilities. Other purchasers of the ex-German vessels were having comparable difficulties, and the problem of this group of ships had been mooted before the Commission. In the first part of 1948 it had denied some applications to transfer formerly German ships to Panamanian registry and flag without change in American ownership. In October 1948, the Commission rejected a similar recommendation of its staff as to three other such ships. On February 18, 1949, at the request of some of the owners, the Commission held an open hearing on the subject of whether to permit the foreign sale of this ex-German group.
One week before this hearing (i.e. on February 11, 1949), plaintiff concluded a contract for the sale of the Eastport to a Danish buyer for $560,000, conditioned upon the seller's obtaining Commission approval within three months. The application for approval was filed on February 24, 1949. When the three-month period neared its close without Commission action, plaintiff made efforts to have its request disposed of within the time limit, and also obtained, as a last resort, a two-week extension from the Danish purchaser (from May 11 to May 25, 1949). The extended deadline passed without affirmative action by the Commission and the Danish firm canceled the contract.
Months later, at the end of December 1949, after a sharp fall in the world market price, plaintiff contracted to sell the Eastport to an Israeli corporation for the lower price of $375,000 (and also subject to Commission approval of the foreign transfer). In March 1950 the Commission approved this application upon payment by plaintiff of "the sum of $10,000 as consideration for the release of the Eastport from United States flag operation." This condition was imposed under a policy, first formally adopted by the Commission in June 1949, of requiring owners of ex-German vessels to pay a monetary sum (differing with the individual ship) for the release of the vessels from the requirement of restricted operation.
In a series of cases this court has held that monetary conditions, such as these, for permission to transfer a vessel are unlawful and beyond the Commission's authority under Section 9 of the Shipping Act. Clapp v. United States, 127 Ct. Cl. 505, 117 F. Supp. 576 (1954), cert. denied, 348 U.S. 834; Suwannee S.S. v. United States, 150 Ct. Cl. 331, 279 F. 2d 874 (1960); Seatrade Corp. v. United States, 152 Ct. Cl. 356, 285 F. 2d 448 (1961). Those claimants were allowed to recover the amounts illegally exacted.
Plaintiff's petition in this court sought (in count II) return of the $10,000 it was required to pay upon the approval of its sale to the Israeli company. In count I plaintiff sought damages for the Commission's earlier failure to approve the potential sale to the Danish buyer. After the decisions in the three cases referred to above, plaintiff moved for summary judgment. On June 6, 1962, we granted the motion as to count. II, gave judgment for $10,000 on the authority of the prior decisions, but denied the motion as to count I, returning the case to the trial commissioner for further proceedings. Eastport S.S. v. United States, 157 Ct. Cl. 802. We are now concerned, after a trial, with the claim for damages, as set forth in count I.
The gist of that grievance is that in the spring of 1949 the Commission deliberately withheld its consent to the foreign sale and transfer of the Eastport to the Danish buyer while the agency was secretly formulating an illegal policy of selling such approvals for money, and that this conduct gives rise to an action for damages, cognizable in this court, for loss of the Danish contract which expired for lack of Commission consent in May 1949.
The trial commissioner examined at length the factual underpinning of this claim and made several findings favorable to plaintiff (although he ultimately decided against recovery). These findings are vigorously contested by defendant all along the line. We do not determine these factual issues because we believe that, even if the facts are assumed for present purposes to be with plaintiff, it does not state a cause of action upon which this court can grant any further relief.
I
Section 1491 of Title 28 of the United States Code allows the Court of Claims to entertain claims against the United States "founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort". But it is not every claim involving or invoking the Constitution, a federal statute, or a regulation which is cognizable here. The claim must, of course, be for money. Within that sphere, the non-contractual claims we consider under Section 1491 can be divided into two somewhat overlapping classes — those in which the plaintiff has paid money over to the Government, directly or in effect, and seeks return of all or part of that sum; and those demands in which money has not been paid but the plaintiff asserts that he is nevertheless entitled to a payment from the treasury. In the first group (where money or property has been paid or taken), the claim must assert that the value sued for was improperly paid, exacted, or taken from the claimant in contravention of the Constitution, a statute, or a regulation. In the second group, where no such payment has been made, the allegation must be that the particular provision of law relied upon grants the claimant, expressly or by implication, a right to be paid a certain sum. See South Puerto Rico Sugar Co. Trading Corp. v. United States, 167 Ct. Cl. 236, 244-45, 334 F. 2d 622, 626-27 (1964), cert. denied, 379 U.S. 964 (1965).
In the former class fall, among many others, tax refund suits and the claims by purchasers of ex-German vessels for the sums exacted by the Maritime Commission which were returned in Clapp v. United States, supra, and in the first decision in this case (Eastport S.S. v. United States, supra). We have referred to these cases as those in which "the Government has the citizen's money in its pocket" and the claim is "to recover 'an illegal exaction made by officials of the Government, which exaction is based upon a power supposedly conferred by a statute" (Clapp v. United States, supra, 127 Ct. Cl. at 512, 513, 117 F. Supp. at 580) (see, also, Pan, American World Airways, Inc. v. United States, supra, 129 Ct. Cl. at 55, 122 F. Supp. at 683); and we have held that "suit can be brought in this court to recover [such] exactions said to have been illegally imposed by federal officials (except where Congress has expressly placed jurisdiction elsewhere)." South Puerto Rico Sugar Trading Corp. v. United States, supra, 167 Ct. Cl. at 244, 334 F. 2d at 626.
The second category includes the varied litigations in which we are urged to hold that some specific provision of law embodies a command to the United States to pay the plaintiff some money, upon proof of conditions which he is said to meet. Familiar examples are inverse eminent domain by a taking without formal proceedings (United States v. Causby, 328 U.S. 256 (1946)); a suit by a separated reserve officer for disability retired pay (Lemly v. United States, 109 Ct. Cl. 760, 75 F. Supp. 248 (1948)); an action for hack pay occasioned by a wrongful dismissal from the civil service (Elchibegoff v. United States, 106 Ct. Cl. 541 (1946), cert. granted, 329 U.S. 704 (1946), cert. dismissed, 329 U.S. 694 (1947)); or a claim for compensation for flood damage authorized by statute (United States v. Gerlach Live Stock Co., 339 U.S. 725 (1950)). See, also, United States v. Central Eureka Mining Co., 357 U.S. 155, 162-65, 169-79 (1958) ; Bell v. United States, 366 U.S. 393 (1961). In this type of case, we have held, "a claimant who says that he is entitled to money from the United States because a statute or a regulation [or the Constitution] grants him that right, in terms or by implication, can properly come to the Court of Claims, at least if his claim is not frivolous but arguable." Ralston Steel Corp. v. United States, 169 Ct. Cl. 119, 125, 340 F. 2d 663, 667 (1965), cert. denied, 381 U.S. 950.
Monetary claims which cannot be brought within these limits are beyond this court's jurisdiction, even though they may intimately involve the Constitution, an Act of Congress, or an executive regulation. This is the reverse of saying that this court is not concerned with any and all pecuniary claims against the Federal Government, simply because they rely upon (and in that sense are "founded upon") an aspect of federal, constitutional, statutory or regulatory law. Where the claimant is not suing for money improperly exacted or retained (the first class defined above), the historical boundaries of our competence have excluded those instances in which the basis of the federal claim — be it the Constitution, a statute, or a regulation — cannot be held to command, in itself and as correctly interpreted, the payment of money to the claimant, but in which some other principle of damages has to be invoked for recovery. A federal criminal defendant, for instance, who has been invalidly convicted or deprived of his liberty because of a violation of the Constitution or an Act of Congress cannot obtain compensation under 28 U.S.C. § 1491 for his loss (although remedies may occasionally be available under the unjust conviction sections (28 U.S.C. § 1495, 2513) or some parts of the civil rights legislation). The provisions which void the conviction do not direct the payment of damages for the consequences of the illegality. Under Section 1491 what one must always ask is whether the constitutional clause or the legislation which the claimant cites can fairly be interpreted as mandating compensation by the Federal Government for the damage sustained. If not, this court cannot give relief under Section 1491, although some separate general principle — arising, for example, from tort law — might lead to a remedy in another forum or under some special relief provision.
Since plaintiff has already recovered the money $10,000) illegally exacted, its present claim must be that Section 9 of the Shipping Act, on which it primarily rests its case, grants it compensation for the business loss it incurred. On its face the section is simply a regulatory measure (comparable to many another permission or license-granting statute) forbidding foreign sale of a vessel purchased from the Maritime Commission — unless the Commission sanctions the sale — and requiring Commission authorization for any foreign transfer. There is not a word in the text suggesting that the United States will compensate an applicant who suffers a business loss because of the Commission's improper failure to grant the request. Nor are we pointed to anything in the Act's legislative history hinting at that result. There is no decision of this or any other federal court holding or intimating that the United States will be liable under the Tucker Act for such a commercial injury resulting from a failure or wrong done in the course of the regulatory process. We would have to break entirely new and treacherous ground to find in Section 9 an implied • directive to allow such compensation.
We decline to take that giant step. In its relevant aspects Section 9 does.not differ from the licensing or permission-granting authority of numerous other federal agencies — the Atomic Energy Commission, Civil Aeronautics Board, Civil-Service Commission, Comptroller of the Currency, Federal Aviation Agency, Federal Communications. Commission, Federal Home Loan Bank Board, Federal Power Commission, Federal Beserve Board, Interstate Commerce Commission, Securities and Exchange Commission and the Tariff Commission. If we were to infer from Section 9 an unexpressed summons to compensate plaintiff for its business loss, we would necessarily have to open the doors to similar claims by other applicants who suffer commercial damage from a wrongful denial of a license or permission by these other agencies (or as a result of the agency's improper refusal to' act).. More than that, we would be hard put to give a preferential reading to these license-authorizing statutes— implying compensation for this particular type of business injury — over the mass of other regulatory and prohibitory activities of the Federal Government (including criminal prosecutions) which can and do cause pecuniary loss if improperly conducted — personal, property, and business loss which up to now has not been redressed through this or the district courts. The same principles to which the present claimant appeals would also call for a drastic extension of federal liability to all of these fields. A wholly new ground of obligation would be summarily created by mere implication from statutes which say nothing to suggest such pecuniary responsibility.
Yet Congress has thus far been very careful, whenever it has dealt with the regulatory area, not to go that far. Not only is the mass of regulatory legislation (including Section 9) entirely silent on the subject of compensation for loss due to erroneous or wrongful regulation. Congress has always withheld from this court and from the Tucker Act original jurisdiction over tort claims against the Government (Gibbons v. United States, 75 U.S. (8 Wall.) 269, 274-75 (1868); Langford v. United States, 101 U.S. 341 (1879); Bigby v. United States, 188 U.S. 400 (1903); J. Ribas y Hijo v. Unitd States, 194 U.S. 315, 323 (1904)); and liability for damages occasioned by wrongful regulatory action smacks more of tort than of non-tortious obligation.
Above all, when the Federal Tort Claims Act ( now 28 U.S.C. § 1346, 2680) was passed, Congress specifically exempted injuries traceable to performance of a "discretionary function". Section 2680(a) excepts from coverage:
Any claim based upon an act or omission of an employee of the Government, exercising due care, in the execution of a statute or regulation, whether or not such statute or regulation be valid, or based upon the exercise or performance or tbe failure to exercise or perform a discretionary function or duty on tbe part of a federal agency or an employee of tbe Government, wbetber or not the discretion involved be abused.
Dalehite v. United States, 346 U.S. 15, 26-30, 32-34, 35-38 (1953), makes it absolutely plain that tbe Maritime Commission's function in acting under Section 9 was discretionary and that there would be no liability under tbe Tort Claims Act even if the agency abused its discretion (as plaintiff asserts). Tbe discretion protected by §2680(a) "is tbe discretion of tbe executive or tbe administrator to act according to one's judgment of tbe best course, a concept of substantial historical ancestry in American law." Id. at 34. "Where there is room for policy judgment and decision there is discretion." Id. at 36. And "it is clear that tbe clause as to abuse connotes both negligence and wrongful acts in the exercise of tbe discretion . The exercise of discretion could not be abused without negligence or a wrongful act." Id. at 33. Tbe legislative history of tbe Tort Claims Act fully and specifically supports these holdings. Id. at 27-30. The House Committee, for example, said over and over again that the "discretionary function" exception was "also designed to preclude application of the bill to a claim against a regulatory agency, such as the Federal Trade Commission or the Securities and Exchange Commission, based upon an alleged abuse of discretionary authority by an officer or employee, whether or not negligence is alleged to have been involved." Id. at 29 n.21.
In the face of this persistent refusal by the federal legislature to permit damage claims against the United States resulting from wrongful regulatory activity, we cannot read into Section 9 of the Shipping Act any implied direction to compensate plaintiff. To do so, we would be supported neither by the text of the section, nor by its context, legislative background, or past-enactment history. At the same time we would be ignoring tlie uniformly stony face Congress has turned toward a judicial remedy for this kind of business injury. If plaintiff bad sued under tbe Tort Claims Act, its action would undoubtedly have fallen afoul of Section 2680 (a), tbe "discretionary function" exception. If the suit in this court bad asserted, without relying directly on Section 9 as tbe basis of tbe claim, a wrongful refusal by tbe Maritime Commission to approve tbe transfer, tbe petition would clearly bave to be dismissed as a demand, founded in tort, for business damages due to misconduct. See Part II, infra. We cannot evade these barriers by incorporating into Section 9 something which is not there, either in terms or by fair implication — a mandate for compensation. Rather, we must follow the admonition of tbe Supreme Court, almost a century ago, "to be cautious that we do not permit tbe decisions of this court to become authority for tbe righting, in the Court of Claims, of all wrongs done to individuals by tbe officers of tbe General Government, though they may bave been committed while serving that government, and in tbe belief that it was for its interest. In such cases, where it is proper for tbe nation to furnish a remedy, Congress has wisely reserved the matter for its own determination. It certainly has not conferred it on the Court of Claims." Gibbons v. United States, supra, 75 U.S. (8 Wall.) at 275-76.
II
Secondarily, plaintiff bases its claim on the Constitution, on the existence of an actual contract to consider its application for foreign transfer, on a novel variant of the doctrine of "pendent jurisdiction", and on the clause of 28 U.S.C. § 1491 referring to damages not sounding in tort. We find these grounds equally without merit.
There was no taking requiring compensation under the Fifth Amendment. Neither the plaintiff's ship nor its contract with the Danish buyer was appropriated. Omnia Commercial Co. v. United States, 261 U.S. 502 (1923). The Commission's role was simply part of a pre-existing regulatory process known to plaintiff from the time it purchased the Eastport, and the Commission's failure to give its approval within the necessary time took no property from plaintiff any more than a comparable failure by the Federal Trade Commission, the Securities and. Exchange Commission, or the Federal Power Commission, in their administrative processes, would amount to a taking. Cf. United States v. Central Eureka Mining Co., supra, 357 U.S. at 165-66, 168-69.
Nor has plaintiff proved the breach of a contract with the United States which it alleged in its motion for summary judgment in 1961. We agree with the trial commissioner when he said: "Plaintiff, it will 'be recalled, inquired of Maritime, before submitting its bid, whether the sale would carry a restriction against foreign transfer or sale at some later time, and Maritime replied, in effect, that there would be no restriction other than the consideration normally applied to section 9 applications. Plaintiff would ascribe to this exchange of telegrams a significant role in the negotiation of the contract of sale. It is not so entitled, in my opinion, since the essence of Maritime's reply was only that it would Obey the law in relation to applications for section 9 approvals. Whatever may have been plaintiff's need for reassurance on this point, the assurance when given was only what plaintiff had a right to assume in the first place and was not a part of the contract negotiations." There was no contract with the Commission with respect to a sale alien, but merely an ordinary declaration by the agency .that it would consider suchi an application under the law, as it had to do.
Plaintiff also invokes Hurn v. Oursler, 289 U.S. 238 (1933), and the uncertain doctrine of "pendent jurisdiction". See, also, United Mine Workers v. Gibbs, 383 U.S. 715, 722 ff. (1966). The argument is that, since the court has already entertained and granted the claim for the return of the $10,000 exaction, we ought also to consider and decide the present claim (even though we would not otherwise consider it) because it stems, in plaintiff's view, from the same illegal determination of the Commission to exact a money payment as a condition to any foreign sale of the EasPport. Whatever the role "pendent jurisdiction" may play for this court (cf. Marine Transport Lines, Inc. v. United States, 135 Ct. d. 874, 139 F. Supp. 301 (1956), cert. denied, 352 U.S. 935), it is clear that the two separate counts in the plaintiff's petition did not involve "the violation of a single right" (289 U.S. at 246) or "arise out of the same transaction" (135 Ct. Cl. at 876, 139 F. Supp. at 302). The $10,000 payment was connected with the sale to the Israeli buyer in late 1949 and early 1950, while the present claim stems from the aborted contract with, the Danish firm in the spring of 1949. These were "two separate and distinct canses of action" (289 U.S. at 246), and did not have to be resolved in the same proceeding. Moreover, it is hard to see how "pendent jurisdiction" could lead this court to decide a case which no court, state or federal, could entertain. On this phase of its argument plaintiff must assume that its claim is founded in tort; but Congress has withheld this hind of tort action from all federal courts, and state courts would obviously be powerless. For us to consider the cause of action would not be to save time or trouble, or to eliminate duplicate litigation, but to decide a claim, under the camouflage of "pendent jurisdiction", which no court has the right to decide.
It is also said, finally, that this is a claim "for liquidated or unliquidated damages in cases not sounding in tort" (28 U.S.C. § 1491). We need not now explore the full shape of that still-amorphous and unfamiliar part of our jurisdiction, for plaintiff's present claim — if it is not validated by a statute, the Constitution, or a contract (as we have already held in this opinion) — must be tortious. What is asserted is wrongful conduct by the Maritime Commission, breaching its legal duty to plaintiff, which led to a business loss through failure of the Danish contract. This could be called interference with plaintiff's rights under the Danish contract, or a breach of legal duty independent of any agreement between plaintiff and the Commission, or unjustified conduct (negligent or intentional) causing injury under the prima facie theory. Whatever the characterization, the gravamen of the cause of action, under normal legal theory, would be tortious as between private parties. We must apply the same standards. The whole history of federal consent-to-sue on tort claims, as well as the structure of the Tort Claims Act (especially the exceptions (28 U.S.C. § 2680 (a)-(n)), demonstrates that Congress has thought of cases "sotmding in tort" as those which would be tort-grounded as between private persons.
Ill
Even if we were to decide (contrary to our holdings in Parts I and II, supra) that plaintiff could maintain in this court a claim for loss due to the Commission's withholding of approval under Section 9 while it was formulating an illegal policy of exacting money as a condition of approval, we could not grant judgment to plaintiff on this record. One reason is that the Commission was under no obligation to pass upon plaintiff's application within the three months allowed by the Danish contract. In the realm of administrative determination, that is a relatively short period; it would not foe unreasonable or unprecedented for the Commission to take more time. We cannot say, no matter what the considerations flowing through the Commission's collective mind, that it breached any duty to plaintiff when it failed to act upon the application within the short time allowed by the Danish contract. See Seatrade Corp. v. United States, supra, 152 Ct. Cl. at 360, 285 F. 2d at 450 (four month delay). Even if, as the trial commissioner thought, the delay here was founded upon a determination to consummate an illegal exaction from the shipowners, the agency would not commit an abuse of discretion, or violate a duty owed to plaintiff, until it sustained its refusal to act for a period which could objectively be deemed unusually long — and three months would not be such. It is the length of the delay, not the Commission's secret motivation alone, which makes the difference.
A separate ground for refusing recovery — the basis on which the trial commissioner ultimately rested — is that we cannot say that the Commission would have granted approval even if it had not been improperly motivated. The Commission had not obtained the views of the other interested departments and agencies as to the effect of the pending Danish sale upon the national defense, the foreign policy, or the commerce of the United States, nor had the Commission made any determination as to the need for the Eastport in the United States merchant marine. Not even a preliminary survey had been made; the whole matter still lay within the agency's broad discretion. Cf. Panama Canal Co. v. Grace Line, Inc., 356 U.S. 309, 317—18 (1958). The trial commissioner was unable to say that approval would have been granted if the illegal factor had been excised — and we agree. It may be that approval would have been denied outright, or the Commission might have imposed legal conditions which would be unacceptable to plaintiff or its customer. These were not mere theoretical possibilities, but live alternatives. There is too much speculation and conjecture in making the necessary judgment that approval would have been given flatly or on tolerable terms.
For these reasons, plaintiff is not entitled to prevail on count I of its petition and that count is dismissed.
FINDINGS OF FACT
The court, having considered the evidence, the report of Trial Commissioner W. Ney Evans, and the briefs and arguments of counsel, makes findings of fact as follows:
1. (a) In August 1945, upon the cessation of hostilities, the number of cargo ships in the possession and under the control of the United States exceeded the needs of American peacetime commerce, while the merchant fleets of many of the Allied nations were seriously depleted.
(b) Most of the surplus American ships were owned by the United States, being the remnants of the war-built fleet of merchant tonnage. Ownership was in the United States Maritime Commission, which was charged with the responsibility for disposing of the ships to private ownership and operation.
2. (a) The Maritime Commission was then an independent agency. There were five Commissioners, one of whom was chairman. The staff was allocated to various divisions. Matters for ultimate decision by the Commission were assigned to appropriate divisions for review and analysis, and for submission of specific recommendations for action by division chiefs, transmitted to the Commission through the Secretary whose duty it was to place agenda before the Commission for action by majority vote, three Commissioners constituting a quorum.
3. (a) Early in 1946, the Inter-Allied Reparations Agency offered to the United States, through the Department of State, several former German vessels. Responsible officers of the State Department were lukewarm toward acceptance of the offer, because of the known imbalance between the merchant fleets of the United States and its Allies. The offer was nevertheless transmitted to the Maritime Commission, for its views. The members of that agency were less than lukewarm toward acceptance of the reparations offer, because of the burdensome chore already on hand of disposing of so many surplus American-built vessels.
(b) Among the ex-German vessels were a dozen or more relatively small ships, of 5,000 deadweight tons and less. The surplus ships already on hand were Liberty- and Victory-type ships of 10,000 deadweight tons. Several American flag operators of merchant ships, upon learning of the availability of the ex-German vessels, believed the smaller, "handy-sized" ships would prove profitable in coast-wise and nearby foreign commerce, under the American flag, and urged the Maritime Commission to accept them for sale to American flag operators.
(c) The Commission yielded to the importunities of the interested shipping companies and agreed to accept the ex-German vessels. In so doing, it limited the number of vessels for acceptance to the number of operators known to be interested.
(d) The Maritime Commission and the Department of State agreed, in substance, that the United States would accept reparations vessels only for use by American operators under the American flag and that none of the vessels would be sold on the world market. This condition, agreeable to the Maritime Commission, was passed on to the Inter-Allied Reparations Agency with the concurrence of the Department of State.
(e) Thirteen ex-German vessels were accordingly delivered to the United States by the Reparations Agency. The Maritime Commission decided against operation of any of them on its own account and offered 11 of them for sale.
4. (a) In the course of refining the offer of sale (the invitation for bids), a question arose in the Maritime Commission as to the proper method of expressing the restriction to which it had agreed, i.e., that the sales would be limited to American citizens for operation of the vessels under the American flag. The question was given emphasis by a telegram from plaintiff's president, on December 16, 1946, asking specifically whether there would be any restriction in the bill of sale or otherwise that the vessel could not later be sold foreign.
(b) On December 19, 1946, the Director of Large Vessel Sales submitted the question to the Commission in a memorandum wherein he stated:
Numerous inquiries are being received from prospective bidders for the sale of the eleven ex-German vessels regarding whether these vessels may be transferred to foreign registry and flag. It has been pointed out that [the outstanding invitation for bids] PD-X-262 did not contain any provision that these vessels be operated under U.S. flag. This was done intentionally at the time of preparing this bid for the reason that a bid advertisement could not bind in perpetuity the actions of the Commission relating to transfer of registry. Instead, the position of the Commission was set forth in a press release issued concomitantly with the bid advertisement, which indicated that the vessels were being sold for U.S. flag operation.
(c) The Commission thereupon approved the recommendation of the Director of Large Vessel Sales for "the issuance of a bid addendum which in a form approved by the General Counsel provides that purchasers of these vessels will be precluded from selling them or operating them prior to documentation under the American flag."
(d) On December 23, 1946, the Director of Large Vessel Sales replied to plaintiff's president's telegraphic inquiry of December 16 with the advice that "approval for transfer to foreign registry and flag is subject to consideration by the Commission of formal application' pursuant to section 9 and 37 of Shipping Act. No assurance can be given that such approval will be granted prior to receipt and consideration of such application by Commission." The responding telegram further advised that a forthcoming addendum to the invitation for bids would provide that "vessels must be documented under U.S. flag prior to operation and prior to any resale." The addendum was duly issued and a copy was received by plaintiff.
5. (a) The requirement of documentation prior to operation or resale presented no obstacle to plaintiff, whose purpose in bidding was to acquire one of the ex-German vessels for operation under the American flag. The purpose of the inquiry of December 16, 1946, was to ascertain whether or not there was any restriction on sale alien at a later time. Plaintiff's president, who sent the telegram and who submitted plaintiff's bid, understood the response to his inquiry to mean that there would be no restriction on a sale alien at some later time other than was inherent in consideration by the Commission under the terms of section 9 of the Shipping Act of 1916.
(b) Plaintiff's president has repeatedly asserted the validity as well as the genuineness of his reliance upon the inference he drew from the response to his inquiry and both must be accepted as established. Without more than appears in plaintiff's president's telegraphic inquiry and Maritime's response, including the addendum to the invitation for bids and the simultaneous press release, the conclusion is warranted that an application for sale alien, made after documentation of an ex-German vessel, would receive consideration in due course under the standards usually governing section 9 applications.
(c) For a delineation of the standards usually applied by the Maritime Commission in its consideration of section 9 applications, plaintiff cites the following excerpt from a letter, dated April 26, 1949 (while plaintiff's request for approval of the sale to the Danish buyer was pending), transmitted by the Commission to the chairman of the Committee on Merchant Marine and Fisheries of the House of Representatives :
The Maritime Commission, in its administration of section 9, considers as to the particular vessel involved, its value to the merchant fleet for national defense needs, the possibility of retaining the vessel in operation under American ownership and nag, the advantages to the merchant marine of retaining such vessel, and the overall effect of the proposed transaction on the merchant marine, including the possibility of obtaining replacement through the construction of new tonnage. All these factors are considered in their relation to the declared national merchant marine policy as expressed in the 1916 Act and in subsequent merchant mame legislation.
The Commission in the past has held to the position that a withholding of its consent to the transfer or sale for reasons not involved in these considerations would exceed the authority intended to be delegated to it by the Congress. The Commission's administration of these sections has covered periods of rapidly changing circumstances, both as to the needs of our merchant marine and as to national defense considerations. It is the belief of the Commission that this requirement of Commission approval has permitted administration of control with a degree of flexibility to meet changing conditions, which would not have been possible under a more restrictive statute. At the same time, the Commission believes that its administration of the law has been such as not to prejudice unduly the rights of any segment of the maritime industry m relation to the whole problem.
6. (a) In response to its invitation for bids, the Commission received bids for one or more of the 11 vessels from 10 operators, from whom bids were accepted for 8 of the vessels. Five bids were received for the Empire Boding (which became the Eastport) as follows:
Bidder Amount
West Coast Line, Inc_ $425, 000
Seatrade Corporation_ 190,300
Eastport Steamship Corporation- ISO, 750
Constable Hook Shipyards, Inc- 54,175
Northern Metal Company_ 9,550
(b) The bid of West Coast Line, Inc., was qualified by the condition "that the Commission will consent to sale of the vessel alien and transfer to Danish flag " after documentation under the American flag. Since the condition was unacceptable to the Commission, the bid was rejected. Seatrade's bid offered to accept any one but not more than two of the four vessels upon which it bid. Upon the allocation of two other vessels to Seatrade, plaintiff became the high bidder for the Empire Boding.
(c) Plaintiff paid cash for the vessel and took possession of it on April 9,1947.
7. (a) The Empire Boding^ renamed Eastport, was a coal-burning steam turbine dry cargo vessel built in Germany in 1937, of approximately 5,200 deadweight tons and 295,000 feet bale cubic capacity, with a speed of 12 knots. Substantial repairs and conversion were necessary to meet the requirements of the Coast Guard and the American Bureau of Shipping for documentation under the laws of the United States. The work took approximately 6 months and cost just under $325,000. It included conversion of the power plant from coal to oil, reconstruction of the crew's quarters, and overhaul of the cargo gear. Upon completion, plaintiff's investment in the vessel exceeded $455,000.
(b) Operation of the Eastport was begun on October 9, 1947. During the next 20 months, extending to June 22, 1949, the vessel made 8 voyages, interspersed with 3 idle periods and followed by a fourth idle period extending from June 23, 1949, to April 24, 1950, when she was delivered to the Israeli buyer.
(c) On her first voyage her machinery broke down off of Brazil, and she had to put into port for repairs. After two more voyages, during which the engines did not work properly, she was laid up in Philadelphia for 47 days undergoing a complete engine overhaul. On the fourth voyage she broke down at Genoa and had to go off-hire for repairs, as a result of which the charterer canceled the charter. Sometime later another breakdown occurred at Rotterdam. At the conclusion of the eighth voyage, on June 22, 1949, plaintiff gave up efforts to operate tbe Eastporb and placed her in lay-up pending sale. Operating losses by that time had exceeded $130,000.
8. (a) After the first 7 months of operation, in May 1948, plaintiff had concluded that the Eastport was a "lemon," whereupon the vessel was offered for sale on the domestic market. Extensive solicitation through brokers, a circular letter to 100 shipowners, and newspaper advertising produced no offers from any American source. Plaintiff then turned to the foreign market in search of a buyer. This was in June 1948.
(b) "Well aware of the statutory restriction upon a sale alien without the prior approval of the Maritime Commission, plaintiff dispatched its New York attorney to Washington to make inquiry concerning a foreign sale. Having learned something of the role of Mr. Huntington Morse of the Commission's staff in relation to the ex-German ships, plaintiff's attorney prepared a memorandum for submission to him and subsequently had conferences with him.
(c) Mr. Morse pointed out to plaintiff's attorney, in effect, that if the Commission had been willing to permit the vessel to be sold foreign, it could have accepted the bid of the West Coast Line and thereby would have received three times the amount plaintiff paid for it; and that under the circumstances he did not see how he could recommend approval of a transfer foreign.
(d) Further conferences between plaintiff's attorney and the general counsel of the Commission, interspersed with conferences between the general counsel and Mr. Morse, were inconclusive, although the general counsel did indicate to plaintiff's attorney that "while it will be difficult to obtain the approval of the Commission, [plaintiff] should not feel hopeless." These conferences ended in July 1948.
9. (a) Meanwhile, difficulties beset other purchasers of the ex-German vessels, because of high costs of conversion, operation, and repairs. By the end of September 1948, six of the vessels were lying idle, two for lack of class work requisite to documentation, one for extensive repairs, and three in lay-up. Six, including the Eastport, were in operation and all six were incurring substantial operating losses.
(b) In October 1948, a joint memorandum from Mr. Morse, as Special Assistant to the Commission, and the Chief, Bureau of Government Aids, laid before the Commission a detailed review of the history and status of the ex-German vessels. The memorandum listed the 12 small ex-German vessels by name and deadweight tonnage, together with the names of their several purchasers (there were 10 of them, 2 purchasers having received 2 vessels each) and the prices received by the Commission. Note was made of the fact that some months earlier the Commission had considered and denied the applications of the owners of two of the vessels (being the two which had not been placed in class for documentation) to transfer to Panamanian registry and flag without change in the American ownership. The memorandum also contained some discussion of the problem of the ex-German ships and of the Commission's prior actions.
(c) There were at the time pending in the Bureau of Government Aids, the memorandum reported, applications for permission to sell to Danish interests for registration under the Danish flag three of the ex-German vessels (being two in operation and one lying idle for extensive repairs). These applications were presented to the Commission for action by the memorandum. After some discussion, the memorandum "suggested that the basic purposes of the Commission would be served by allowing the present owners of these vessels to place such vessels under Panamanian or Honduran registry and flag, the title to be retained by United States citizens " on certain stated conditions, and recommended accordingly.
(d) The minutes of the Commission show that, by the "nay" votes of the three Commissioners present, the Commission disapproved the recommendations of the memorandum. No record was made of the discussion, if any, or of the reasons of the Commissioners for voting as they did.
10. (a) Plaintiff's contract for the sale of the Eastport to the Danish buyer, Dansk-Franske, was executed on February 11,1949. The 3-months' limitation on plaintiff's time to obtain the approval of the Maritime Commission extended, accordingly, to May 11, 1949. Plaintiff's application for such approval was forwarded 'by its Washington attorney to the Commission on February 24, 1949. A copy of the contract of sale was attached to the application, which was accompanied by a 10-page letter in support thereof. The application itself set forth the "owner's reason for desiring to effect said sale " as:
Continued operation of this vessel under the American flag is economically impossible because of her small size and, consequently, high operating cost; abnormal expense due to "bastard" propulsion equipment and lack of personnel sufficiently skilled in operation thereof; recurrent engine breakdowns and lack of readily available replacement parts; .
(b) On February 18, 1949, at the request of the Seatrade Corporation and other owners of ex-German vessels, the Maritime Commission held an open hearing on the subject, at which various owners presented their reasons for seeking approvals of transfer. Plaintiff was represented at the hearing.
(c) On March 9, 1949, plaintiff submitted to the Commission its application to purchase a dry cargo Liberty ship, for operation by it as a substitute for the Eastport, if the sale of the Eastport could be consummated.
11. (a) Ten weeks after the filing of plaintiff's application, in late April 1949, and with the expiration date of May 11, 1949, only 2 more weeks away, plaintiff's president went to Denmark to try to obtain an extension of time from the Danish buyer. On May 2, 1949, he telegraphed one of the Commissioners, the Chief, Bureau of Government Aids, and the Secretary of the Commission:
Approval is necessary prior to May 11. Extension of time by buyer very doubtful . Request favorable action prior that date.
The secretary still did not place the application on the Commission agenda prior to May ll.
(b) On May 18, 1949, the Commission considered a memorandum from the Chief, Bureau of Government Aids, to which was attached a copy of the joint memorandum of October 1948 referred to above. The new memorandum listed five instances wherein the Commission had, during the year 1948, denied section 9 applications for transfer of registry or sale alien, referred to the open hearing of February 18, 1949, noted that "up to this writing the Commission has not rendered any decision as to its policy with respect to these ex-German vessels," called attention to the pending application of plaintiff (noting that formal submission had been withheld pending an overall policy decision), and concluded:
The questions which should be resolved in the event of favorable consideration being given to foreign transfers of these vessels would include determinations as to capital gain resulting from the sale, and, in the event of commitment for purchase of war-built vessels, a requirement for the deposit of the net proceeds in a special reserve fund for that purpose.
(c) The Commission directed the Chief, Bureau of Government Aids, "to submit a factual memorandum as to each company which purchased ex-German vessels and now desires to sell or transfer foreign."
12. (a) On May 20, 1949, Seatrade Corporation applied to the Commission for approval of the sale of three of the ex-German vessels to Danish buyers.
(b) Plaintiff's extended deadline date of May 25, 1949, passed without action by the Commission on plaintiff's application, and the Danish buyer canceled the contract.
(c) On June 14, 1949, according to the minutes of the Maritime Commission:
Commissioner Mellen reported on conferences had with [the] attorney representing the Seatrade Corporation, concerning that Company's application for transfer foreign of three ex-German vessels. Commissioner Mellen had informed [the attorney] that if the Commission had offered these vessels for sale foreign in the first instance a much greater financial return would have inured to the benefit of the Government. He further stated that an arrangement was tentatively agreed upon whereby the Company would pay to the Commission the sum of $450,000. in consideration of the transfer of these vessels to foreign flag and registry.
Seatrade Corporation, it was reported, had taken the matter under consideration, whereupon the chairman (Commissioner Fleming) observed that "the Company should be informed that the responsibility for further delay was entirely a matter of the Company." The Commission thereupon referred "the entire matter relating to the application of Seatrade Corporation" to the General Manager for a report.
(d) Ten days later, on June 24, 1949, at a special meeting, the Commission considered the factual report on "each company which purchased ex-German vessels and now desires to sell or transfer foreign" which it had directed the Chief, Bureau of Government Aids, on May 18, to prepare. The summary of this factual report stated that —
in the judgment of the undersigned, the Commission would be warranted in giving some relief to those companies which would make replacements with newer, war-built vessels. This, however, and particularly the scope of that relief appears to be entirely a matter of policy for Commission determination.
(e) The factual report continued:
The following are the courses of action which may be taken, although some may not be free from legal objection :
(1) Deny approval
(2) Grant approval unconditionally
(3) Grant approval on condition that any capital gains be utilized for the purchase of new vessels in the case of those companies agreeing to make replacements. In the case of those companies which do not so agree, such capital gains to be paid over to the Commission.
(4) Grant approval in all cases on condition that there shall be paid to the Commission as a consideration for the release of the vessels from the requirement for restricted operation, a sum to be determined by the Commission .
(f) The memorandum (factual report) under discussion set forth, as the Commission had directed, reviews of each of the companies desiring to sell or transfer foreign, and noted that the Commission then had pending before it section 9 applications from Seatrade Corporation and Eastport Steamship Corporation (plaintiff herein), whereas two other companies (Atwacoal Transportation Company and Alaska Transportation Company) did not have applications pending, although they were known to be interested in section 9 relief.
(g) The minutes of the special meeting of the Maritime Commission on June 24,1949, recite that after discussion the Commission approved the sale and transfer to Danish registry and flag of three vessels owned by Seatrade Corporation.
(h) The minutes further recite that Seatrade's application was approved—
upon condition that, prior to issuance for formal transfer orders evidencing said approval, the Sea-trade Corporation will (1) pay to the Maritime Commission the sum of $450,000 and (2) purchase from the Commission three Liberty vessels on a credit basis on terms satisfactory to the Commission .
(i) The circumstances warrant the conclusion that, if plaintiff's application for section 9 approval had come before the Commission for a vote prior to the consummation of an arrangement satisfactory to the Commission as between it and Seatrade Corporation, plaintiff's application would have been denied.
13. (a) By the time of the expiration of Dansk-Franske's offer to purchase the Eastport (May 25, 1949), the world market for ships was falling, as were freight rates. The decline in the world market continued, augmented by the crisis in pound sterling, a devaluation of which occurred on September 18, 1949. Against this background plaintiff renewed and continued its efforts to find another buyer for the Eastport. Months later, on December 28, 1949, Zim Navigation Company, an Israeli corporation, entered into a contract to purchase the vessel, "subject to the vendor's obtaining the approval of the Maritime Commission to the sale and transfer to Israeli registry within three months
(b) Plaintiff filed its section 9 application for approval of the sale and transfer to Israeli registry on January 16, 1950. On March 6, 1950, plaintiff telegraphed the Commission that it "must be aware that our continued existence and solvency depend on completion of this sale contract Plaintiff had advised the Commission that it was no longer in position to buy replacement tonnage, but promised to use "the entire proceeds to pay off the current indebtedness of the company and keep our other steamer in continued operation."
(c) On March 8, 1950, plaintiff's application was presented to the Commission in a memorandum from the Chief, Bureau of Government Aids, wherein he observed that—
Notwithstanding the company's weak financial condition, when it is considered that the vessel was sold by the Maritime Commission to a United States citizen for $130,750 under restricted bidding (despite the fact that an offer of $425,000 subject to transfer of flag was received), we feel that the Commission would be fully warranted in requiring a lump sum payment in consideration for release of the vessel from United States flag operation and in addition, a provision covering the payment of the mortgage note due on the Westport in April 1950. Inasmuch as no capital gain will result from the foreign sale it is believed that only a relatively small payment for the release of the vessel from United States flag operation is justified.
(d)The memorandum's recommendation, which the Commission approved, was that—
the Maritime Commission will approve the sale with transfer to Israeli registry and flag, when Eastport Steamship Corporation shall have:
1) paid to the Commission the sum of $10,000 as consideration for the release of the Eastport from United States flag operation; and
2) set aside, from the proceeds of sale, sufficient funds to meet the mortgage and interest payment due April 12, 1950 on the Westport,
(e) Plaintiff was advised of the Commission's action on March 9, 1950. One month later, on April 11, 1950, plaintiff paid the amount dne on the Westport mortgage (and interest) , and on April 13, 1950, forwarded to the Commission a certified check for $10,000 "in compliance with condition number 1 Formal approval of the sale and transfer of the Eastport to Zim Navigation was issued by the Commission on April 19, and the physical transfer was made on April 24, 1950.
14. One month later, on May 24, 1950, the Maritime Commission was abolished and its functions (as far as here relevant) were transferred to the Maritime Administrator, in the Department of Commerce. For some time thereafter the Administrator followed the example set by the Commission and exacted payments for section 9 approvals in consideration of the release of ex-German vessels from operation under the American flag.
15. (a) Seatrade Corporation paid to the Maritime Commission the exaction demanded of it as consideration for release from restrictions, and then sued in this court to recover it. By that time, other owners who had paid similar exactions had likewise sued.
(b) The present plaintiff also sued in this court to recover the $10,000 exacted of it. When Seatrade's petition was filed, a few months later, by the same attorneys, the present case was put over in the belief that the decision of Seatrade's case would control the disposition of the instant case. Sea-trade was decided on January 18, 1961. On September 8, 1961, the instant plaintiff filed its motion for summary judgment. In a per curiam opinion, of June 6, 1962, the court granted plaintiff's motion on Count II of the petition, rendering judgment for plaintiff in the sum of $10,000. The motion was denied as to Count I, and the case was returned to the trial commissioner for further proceedings.
16. During the pendency of plaintiff's section 9 application for approval of its sale to Dansk-Franske (from February 24 to May 25, 1949), no action was taken by tbe Commission to obtain the clearances customarily sought in connection with section 9 applications and no determination was made with respect to the essentiality or nonessentiality of the Eastport to the United States merchant marine.
Conclusion oe Law
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes as a matter of law that the plaintiff is not entitled to recover on count I of the petition and that count is therefore dismissed.
We are indebted to Trial Commissioner W. Ney Evans for his opinion, prepared at the direction of the court. We reach the same harbor but primarily through a different channel.
The pertinent part of Section 9, as amended, as it currently appears in 46 U.S.C. | 808 (1965 Supp.) is as follows:
"Every vessel purchased, chartered, or leased from the Secretary shall, unless otherwise authorized by the Secretary, be operated only under such registry or enrollment and license. Such vessels while employed solely as merchant vessels shall be subject to all laws, regulations, and liabilities governing merchant vessels, whether the united States be interested therein as owner, in whole or in part, or hold any mortgage, lien, or other interest therein.
"Except as provided in section 1181 of this title, it shall be unlawful, without the approval of the Secretary of Commerce, to sell, mortgage, lease, charter, deliver, or in any manner transfer, or agree to sell, mortgage, lease, charter, deliver, or in any manner transfer, to any person not a citizen of the United States, or transfer or place under foreign registry or flag, any vessel or any Interest therein owned in whole or in part by a citizen of the united States and documented under the laws of the United States, or the last documentation of which was under the laws of the United States."
Section 37, 46 U.S.C. § 835 (1964), provides as follows in pertinent part: "When the United States is at war or during any national emergency, the existence of which is declared by proclamation of the President, it shall be unlawful, without first obtaining the approval of the Secretary of Commerce:
"(a) To transfer to or place under any foreign registry or flag any vessel owned in whole or in part by any person a citizen of the United States or by a corporation organized under the laws of the United States, or of any State, Territory, District, or possession thereof; or
"(b) To sell, mortgage, lease, charter, deliver, or in any manner transfer, or agree to sell, mortgage, lease, charter, deliver, or in any manner transfer, to any person not a citizen of the United States, (1) any such vessel or any interest therein, or (2) any vessel documented under the laws of the United States, or any interest therein, or (3) any shipyard, dry dock, shipbuilding or ship-repairing plant or facilities, or any interest therein; "
The quoted sections are substantially identical with those appearing in the 1946 edition of the U.S. Code.
On May 18th the Commission directed its staff to submit a factual memorandum as to each company -which had purchased ex-German vessels and desired to sell or transfer foreign.
Suit was begun here In 1955. Wben the petition in Seatrade Corp. v. United States, Ct. Cl. No. 245-55, was filed a few months later, by the same attorneys, the present case was put over in the belief that the decision In Seatrade would control the disposition of the instant case. Seatrade was decided January 18, 1961. See 152 Ct. Cl. 366. On September 8, 1961, plaintiff filed its motion for summary judgment.
Pretrial proceedings were initiated in August 1962. Difficulties, due to lack of understanding, ensued in obtaining compliance with pretrial orders pertaining to examination and audit of voyage accounting. Many months were consumed in the effort to avoid the necessity for an audit of voyage accounting in the course of trial. The trial itself, in 1964, required months to complete (although days only were required to record the testimony).
We put to one side the possible applicability of the Declaratory Judgment Act, 28 U.S.C. § 2201.
Other such cases are A. H. Bull S.S. v. United States, 123 Ct. Cl. 520, 108 F. Supp. 95 (1952) ; Pan American World Airways, Inc. v. United States, 129 Ct. Cl. 53, 122 F. Supp. 682 (1954) ; Gmo. Niehaus & Co. v. United States, 139 Ct. Cl. 605, 612, 153 F. Supp. 428, 432 (1957) ; Zavodny v. United States, 139 Ct. Cl. 533, 152 F. Supp. 432 (1957) ; and Rough Diamond Co. v. United States, 173 Ct. Cl. 15, 351 P. 2d 636 (1965), cert. denied, 383 U.S. 957 (1966). There are many others. Contrast Catalina Properties, Inc. v. United States, 143 Ct. Cl. 657, 166 P. Supp. 763 (1958).
And which do not fall under another head of jurisdiction, such as a contract with the united States.
On this phase of the case, Clapp, Suwannee, Seatrade, and the earlier Mast-port decision are beside the point. The issue there was the recovery of sums illegally exacted. Here the question is the plaintiff's right to compensation for business damage suffered because of its inability to follow through on the Danish transaction.
Section 9, as applied here, does not differ In any meaningful way from the other license-type provisions. Plaintiff says it is significant that the Commission's wrongful conduct was part of an effort to extract money. But the money has already been recovered, and we fail to see how the fact that the wrong was of that nature can affect the separate claim for damages for a business loss which could just as well have occurred if the Commission's failure to approve the Danish sale had stemmed from some other improper motive or condition. The important factor is the existence of administrative error or wrong leading to injury, not the specific character of the particular defect. Plaintiff has also said that Congress has established special statutory methods for correcting the errors of other agencies, hot not those made by the Commission under Section 9. The premise Is not wholly accurate, but even so these statutory methods of review do not deal with monetary compensation but merely allow correction of the error in precisely the same way that our 1962 decision in this case corrected the Commission's error by returning the ?10,000 exacted from plaintiff for the Israeli sale.
I.e., damages other than recovery from the Government of the claimant's money or property which has been Improperly taken or retained.
In this respect Dalehite has not been modified or qualified by any subsequent decision of tbhe Supreme Court.
"The naming of certain exceptions in [the Tort Claims Act] does not serve to confer on this court jurisdiction of tbe exceptions unless those exceptions are such that the court would have jurisdiction of the subject matter by virtue of 28 U.S.C. 1491." Hacker v. United States, 124 Ct. Cl. 261, 265, 109 F. Supp. 392, 395 (1953).
In its motion for summary judgment filed in 1961, but not in its current presentation, plaintiff cited the Administrative Procedure Act as a statute on which its present claim is founded. The considerations we have discussed with respect to Section 9 apply as well to the Procedure Act. That legislation has never been considered as according monetary compensation to persons who have been hurt by a failure to follow its prescriptions, and, just as with Section 9, to imply such liability would thrust an unintended burden on the Federal Government which Congress has not yet agreed to assume.
Since plaintiff's claim that Section 9 grants it the right to compensation is not frivolous, we hold, not that the court is without jurisdiction, but that on the merits the statutory argument is erroneous. Cf. Ralston Steel Corp. v. United States, supra, 169 Ct. Cl. at 123-28, 340 F. 2d at 666-69.
It is noteworthy that in its earlier per curiam opinion in this case, 157 Ct. Cl. 802, 803 (1962), denying the motion as to count I and remanding that claim for further proceedings, the court characterized count I as seeking "judgment for damages of $283,950 for alleged breach by defendant of a contract to consider plaintiff's application for the transfer of its ship SS Bastport from American to foreign ownership and flag."
We also agree in general with the trial commissioner's statement:
"Neither does misrepresentation, or something akin to breach of warranty by Maritime, based upon its failure when the time came to obey the law [as the trial commissioner found, but which the court does not reach] afford a base for alleged breach of duty under the facts as found. When Maritime advised plaintiff that there would be no restriction against foreign transfer or sale at some later time other than considerations normally applied to section 9 applications, it did not state the whole case. At that time (December 1946) the Commission considered itself morally bound by the commitment that had been given to the Reparations Agency to require operation of the ex-German vessels under the American flag and not to permit them to find their way into the world market. The first applications for section 9 approvals pertaining to these vessels were denied on this ground. Maritime's position in this respect was not made known to plaintiff until June 1948, more than a year after plaintiff acquired the ship. At that time, it did represent an exception withheld by Maritime in December 1946, ostensibly in the belief that plaintiff already knew of it, which plaintiff did not.
"Eight months later, in February 1949, when plaintiff found a foreign buyer, the situation had changed and the Commission was no longer basing its position with respect to section 9 applications upon the commitment to the Reparations Agency. By that time, Maritime was engrossed with the problem of what relief to grant and upon whgt terms, under such circumstances, any semblance of misrepresentation by the Commission in failing to apprise plaintiff of its position in relation to the reparations commitment had lost its relevancy. Absent a material misrepresentation, Maritime's subsequent failure to perform its duty under the law [see above]! warrants a characterization other than breach of warranty."
Assuming, of course, that in fact it was moved, while plaintiff's application was pending, by the illegal desire to obtain a money payment.
The two surviving commissioners testified at the trial, in substance, that if plaintiff's application had come to a vote before June 1949 they would have voted to deny it. From April 11, 1949 to June 6, 1949 there were only four commissioners in office. The trial commissioner found (and we concur) that, if plaintiff's application had come before the Commission for a vote prior to the consummation of an arrangement satisfactory to the Commission as between it and Seatrade Corporation, plaintiff's application would have been denied. The agreement with Seatrade was not fully approved until June 24, 1949, about a month after plaintiff's Danish contract finally expired.
The vessels were to be received from the Reparations Agency by tbe Department of State, which was to declare them surplus and deliver them to the Maritime Commission for operation or sale.
The text of the addendum follows: "The buyer shall not sell (except for scrapping) and shall not operate or cause or permit to be operated (except for removal from the place of delivery) any of the vessels purchased by it prior to documentation under the American flag."
This statutory provision (for which see 46 U.S.C. § 808 (1946)) made it unlawful, without the approval of the Maritime Commission, to sell or transfer or place under foreign registry or flag, any vessel owned by a citizen of the united States and documented under the laws of the united States.
The statutory floor price of a Liberty ship with twice the deadweight capacity and equal speed, was then $336,000, subject to 25 percent down, the balance on terms.
This was 1 week after plaintiff made its contract with Dansk-Franske and 1 week before its application for section 9 approval was filed.
Prior to May 11, Dansk-Franske reluctantly agreed to an extension of 2 weeks, to May 25, 1949.
The Chief, Bureau of Government Aids did, however, transmit copies of the telegram to each of the Commissioners, and notified plaintiff on May 11, 1949, that he had done so.
The report of the General Manager on Seatrade Corporation, requested by the Commission on June 14, was incorporated in the memorandum.
Reorganization Plan No. 21 of 1950, 15 F.R. 3178, 64 Stat. 1273, 46 U.S.C. 11111, note (1964).
Clapp v. United States, 127 Ct. Cl. 595, 117 F. Supp. 576, cert. denied, 348 U.S. 834 (1954) ; Suwannee Steamship Co. v. United States, 150 Ct. Cl. 331, 279 F. 2d 874 (1960); Seatrade Corporation v. United States, 152 Ct. Cl. 356, 285 F. 2d 448 (1961).
Tie filing date was February 23, 1955.
Eastport Steamship Corporation v. United States, 157 Ct. Cl. 802 (1962).