Opinion
John G. Turnbull, of New York City (Louis O. Bergh, of New York City, on the brief), for plaintiff.
Frank Staley, of Washington, D. C., and John F. Sonnett, Asst. Atty. Gen. (James McCandless, of Pittsburgh, Pa., and William A. Mellon, of Washington, D. C., on the brief), for defendant.
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
This case having been heard by the Court of Claims, the court, upon the evidence and the report of a commissioner, makes the following special findings of fact:
1. Plaintiff is a Delaware corporation which was organized in July 1938.
2. April 7, 1939, plaintiff became the owner of the vessel Governor Cobb by acquisition from George T. Ellis at a cost of $75,000 which was paid in cash in the amount of $21,000 and preferred stock in the company of par value of $54,000. In connection with the financing of the acquisition of the vessel, plaintiff sold preferred stock for cash at par and no preferred stock was sold at any other price. Plaintiff continued to be the owner of the Governor Cobb until she was requisitioned by the War Shipping Board as hereinafter shown.
3. June 5, 1942, the War Shipping Administration (acting pursuant to authority vested in it by the Merchant Marine Act of 1936, as amended, 46 U.S.C.A. § 1101 et seq.) requisitioned the use of the Governor Cobb and took possession of the vessel and all stores aboard her. July 25, 1942, while the Governor Cobb was in possession and under the control of the War Shipping Administration, the War Shipping Administration requisitioned title to that vessel. The War Shipping Administration at all times since July 25, 1942, has retained the ownership of the vessel.
4. In or about May 1943, pursuant to the provisions of the Merchant Marine Act of 1936, as amended, the War Shipping Administration fixed the sum of $100,000 as just compensation for (a) the use of the Governor Cobb from June 5, 1942, to July 25, 1942, as well as (b) title to the vessel including the value of appurtenances and stores thereto belonging.
5. In May 1943, plaintiff notified the War Shipping Administration, pursuant to Section 902(d) of the Merchant Marine Act of 1936, as amended, that the amount determined by the War Shipping Administration to be just compensation was unsatisfactory to plaintiff, and that plaintiff elected to receive 75 percent of the amount awarded and to reserve the right to sue the defendant to recover such further sum as added to such 75 percent will make up such amount as will be just compensation for (a) the use of the vessel from June 5 to July 25, 1942, as well as (b) title to the vessel including the value of appurtenances thereto belonging. June 2, 1943, the defendant paid plaintiff the sum of $75,000, such amount being 75 percent of the amount determined by the War Shipping Administration to be just compensation for such use and taking, and has paid plaintiff no further sum on that account. In the meantime on May 18, 1943, plaintiff transferred title in the vessel to the defendant.
6. The Governor Cobb was built in 1906 at Chester, Pennsylvania, for the Eastern Steamship Company at a cost of $646,924.37, including furnishings. She was 289.1 feet in length and had a beam of 54 feet. She drew approximately 14 1/2 feet of water and had a cruising speed of 18 knots. Her gross tonnage was 2,522 and net 1,556. She had an iron hull, and wooden superstructure above the main deck. Her motive power consisted of three Parsons turbines and six marine type Scotch boilers, such turbines and boilers having been installed in 1906. She had an estimated shaft horsepower of approximately 5,000. Her original source for generating power was coal but about 1920 there was a conversion to oil. She had 175 staterooms with sleeping accommodations for two or three persons in a room and had steerage quarters below deck for steerage passengers. What freight capacity she had, in addition to the facilities for passenger service, is not shown by the record. She was a limited ocean-going and coastwise vessel for operations not over 200 miles offshore.
7. The Governor Cobb was a special type passenger and freight vessel though primarily adapted for and used as a passenger vessel. She was built for service between Boston, Massachusetts, and Canadian ports, where she operated until about 1920. During that period she was chartered at times for service during the winter months between Tampa, Key West, and Havana. About 1920 she was purchased for $600,000 by the Peninsular and Occidental Steamship Company who employed her in passenger and freight traffic between Florida and Cuban ports. In the off-seasons, about 1930, she was used as a relief vessel for two other vessels which were being operated by that company in the area just mentioned. From about 1934 or 1935 to 1937, she was taken out of service and laid up in Florida until acquired by Ellis in 1937, as shown below.
8. In March 1937, the Governor Cobb was acquired by George T. Ellis for a cash consideration of $16,000. Ellis acquired the vessel primarily for use between Boston and Provincetown, Massachusetts, in the passenger summer excursion business and for night and evening excursions. Upon acquisition, Ellis proceeded with the work of repairing, reconditioning, and making improvements on the vessel. Some work was done on the vessel in Florida and still further work while she was being towed from Florida to New York City. Upon arrival at the latter place she was placed in a drydock where additional work was done. July 4, 1937, she proceeded to Boston on her own power. She received a temporary certificate to proceed to Boston and at the latter place received a certificate to operate for one year.
July 11, 1937, Ellis placed the vessel in operation between Boston and Provincetown, where she was engaged successfully in evening charter trips and excursions until the Sunday following Labor Day of the same year. She was permitted to carry 2,500 passengers. Whatever freight deck she had was removed or reconstructed by Ellis in the work referred to above in order to adapt the vessel to passenger-excursion service.
No records were available of any of the amounts expended by Ellis in the work on repairs, improvements, and reconditioning referred to above. The principal evidence presented in regard thereto was the testimony of Ellis who presented a statement of his best recollection of the amounts expended for various items. The total amount so given was in excess of $100,000, but even as an estimate it is not possible to segregate satisfactorily improvements from this total. A reasonable conclusion from the record is that a substantial amount was expended by Ellis on this vessel between March and July 1937, inclusive, and that some of the expenditures could properly be classified as improvements to the vessel.
9. Ellis did not operate the Governor Cobb after operations described in the preceding finding as terminating in September 1937. The operating license which she then had expired without renewal and no further operating license was ever thereafter obtained. From September 1937 until about April 1939 the vessel was laid up in Boston. During the fall of 1938 plaintiff entered into negotiations with Ellis for the acquisition of the vessel for a purpose more fully explained below, which negotiations culminated in the acquisition of the vessel by and the transfer of title to plaintiff on April 7, 1939, for the consideration shown in finding 2. Upon acquisition plaintiff had the vessel towed to Philadelphia, Pennsylvania, where she remained tied up at a wharf until requisitioned by the defendant in 1942 as heretofore shown.
10. Plaintiff acquired the Governor Cobb for the purpose of converting her into a vessel for an overnight operation between Providence, Rhode Isalnd, and New York, in which trucks or trailers would be loaded on the vessel in the evening at one of these points for delivery at the other point the following morning. As a part of the same operation plaintiff acquired at or about the same time another vessel, City of Lowell, which it was contemplated would travel between the same points at the same time but in the opposite direction. The proposed project was of an experimental nature but was never carried out as shown below.
After acquisition of the Governor Cobb, plaintiff had specifications prepared for her conversion into a trailership and, after she had been towed to Philadelphia, entered into a contract with the Philadelphia Shipbuilding Company for carrying out the work called for by the specifications for a stated consideration of $61,992. However, plaintiff was not in a financial position at the time to proceed with the work and before it was able to make the necessary financial arrangements the waters where the vessel would have been operated were closed to navigation during hours of darkness about 1940 or 1941 on account of war conditions. The conversion contract, referred to above, was never carried out. In addition, plaintiff received an estimate of $68,600 from another concern to carry out the same work but no contract was entered into with that concern. No work was done on the vessel looking to its conversion for use as a trailership or for any other purpose prior to its requisition by the defendant. The other ship involved in the project, City of Lowell, was sold by plaintiff in 1941.
In view of the experimental nature of the project, its indefinite status at the time of requisition of the Governor Cobb, and other factors of an indeterminate and/or speculative nature, the anticipated earnings submitted do not afford a reasonable basis for arriving at just compensation for the vessel at the date of requisition.
11. The Governor Cobb remained at the wharf in Philadelphia from 1939, when she was towed to that place from Boston, until requisitioned by the defendant in 1942. During substantially all that time she had a caretaker aboard who did some painting and minor repair and maintenance work. The caretaker was paid from $100 to $150 per month. The caretaker was assisted by two or three men for about three or four months.
12. On or about April 1942, plaintiff entered into negotiations with the National Sugar Refining Company in connection with the proposed chartering by the latter company of the Governor Cobb for a series of trips for the carrying of sugar from Cuba to Florida. April 28, 1942, that company wrote a letter to plaintiff whereby it confirmed arrangements made by the War Shipping Administration wherein the National Sugar Refining Company would charter the Governor Cobb for a series of such trips commencing about June 1, 1942, and continuing until September 30, 1942. On May 6, 1942, the War Shipping Administration advised plaintiff in part as follows with respect to the period when the vessel might be used in that operation:
'We refer to letter of April 28, addressed to you by the National Sugar Refining Company, confirming arrangements made to charter your vessel for a series of trips from one port on the Northside of Cuba to one port in Florida. This letter provided that your vessel would be chartered for all trips which could be completed prior to September 30, 1942. 'We confirm our advices to you that this date was set as the maximum date in view of the fact that the War Production Board have only allotted sugar to the refiners for a nine-month period. There seems to be, however, little doubt that the War Production Board will continue to allot sugar to the refiners on the present basis for the duration of the emergency. This belief is substantiated by the fact that the Defense Supplies Corporation has already purchased the entire Cuban crop for the year 1942 and is now in negotiation for the purchase of the 1943 crop as well. 'The writer therefore believes it is safe to say that unless your vessel should prove entirely unsuitable for transportation of raw sugar, we can continuously employ her in this service. Insofar as the suitability of the vessel is concerned, we feel that if the alterations projected by you are made and if special attention is given as you intend to the loading and discharging of the sugar, the steamer can be successfully operated in the trade.'
The Governor Cobb was not then in a seaworthy condition, and the execution of the charter party was conditioned upon the vessel being made ready for the service contemplated. In order to make the vessel ready for such service, plaintiff secured an estimate from the Elizabeth City Shipyard, dated May 1, 1942, which read in part as follows:
'With reference to our several interviews regarding cost of reconditioning and recommissioning above mentioned vessel it is our judgment that the vessel can be made ready for business with American Bureau of Shipping load line approved and by having the vessel certified by the Bureau of Navigation at a cost of $50,000.00, 10%, more or less. 'We cannot accept the job on a fixed contract basis, but subject to the approval of the Navy Department, we are prepared to enter into a contract with you on a cost plus 10% basis. Our average labor cost today is $0.82 per man-hour. Our overhead cost is 44%.'
However, before any contract was executed on the basis of the estimate, the vessel was requisitioned by the defendant, and no work of the character contemplated to place her in condition for charter for the sugar venture was ever carried out.
In view of the many uncertainties and indeterminate factors connected with carrying out this operation at that time, the evidence submitted as to prospective earnings, which was general in character, is too speculative to be considered in determining the value of the vessel beyond saying that if the vessel had been made ready for that use and had been employed in that manner it was reasonable to expect that such operations would have been profitable.
13. As heretofore shown, the original cost of construction of the Governor Cobb in 1906 was $646,924.37. Her reproduction cost new in 1942 was approximately $1,850,000. At that time the vessel had a remaining economic useful life of approximately four years.
14. At the time of requisition substantially all of the Governor Cobb's movable equipment and furnishings and stores had been removed, the value of that which remained being $1,155.07.
15. At the time of requisition plaintiff was carrying port risk insurance on the Governor Cobb in the amount of $175,000.
16. In August 1942, shortly after requisition of the vessel and prior to the carrying out of the repair and reconstruction work thereon, the War Shipping Administration caused a detailed examination to be made of the vessel's hull and machinery. As the result of this examination detailed specifications were prepared concurrently therewith, on the basis of which the necessary repairs and replacements were made to place the vessel in a seaworthy condition. This examination was made in much more detail than the various other examinations or surveys heretofore referred to which were for the purpose of making estimates and for furnishing bids on repairs and reconstruction work for the vessel. In this examination all parts of the machinery and hull were either opened up or inspected in such a manner as to determine their true condition and what repairs were necessary to place the vessel in a seaworthy condition, whereas in the other examinations or surveys many parts of the machinery were not opened up and defects existing therein and parts requiring replacement were not revealed.
While the repair, reconditioning and replacement work called for by the specifications, based upon the August 1942 examination referred to above, was carried out, satisfactory evidence was not presented of the reasonable cost of such work. However, a fair conclusion from the record is that the reasonable cost of placing the vessel in a seaworthy condition at the time of her requisition by the defendant was substantially in excess of any of the estimates theretofore received by plaintiff and submitted as evidence in this case.
17. Upon requisition, the defendant proceeded with the repair, improvement and reconditioning work necessary to convert the vessel for use as a convoy leader by the U.S. Coast Guard. The defendant expended in that work approximately $2,000,000, exclusive of the cost of armament but inclusive of the cost of repairs and replacements referred to in the preceding finding.
18. The fair and reasonable value of the Governor Cobb on June 5, 1942, and July 25, 1942, including the value of stores and movable equipment and furnishings aboard, was $125,000.
JONES, Judge.
The plaintiff became the owner, by purchase, of the vessel Governor Cobb, on April 7, 1939. The price paid was $75,000, of which $21,000 was paid in cash and the balance in preferred stock of the plaintiff company of the par value of $54,000.
On June 5, 1942, the War Shipping Administration, pursuant to the Merchant Marine Act of 1936, as amended, 46 U.S.C.A. § 1101 et seq., requisitioned the use of the vessel and stores aboard, and on July 25, 1942, requisitioned title.
In May 1943 the War Shipping Administration fixed the sum of $100,000 as just compensation for the use, title, appurtenances and stores of the vessel. In the same month the plaintiff notified the War Shipping Administration that the amount was unsatisfactory and that, pursuant to the Merchant Marine Act of 1936, as amended, it elected to receive 75 percent of the amount awarded and to sue for a sufficient balance for the two items to amount to what it regarded as just compensation.
Sec. 902(d), Merchant Marine Act of 1936, as amended, 53 Stat. 1256, 46 U.S.C.A. § 1242(d).
The issues are whether the plaintiff is entitled to recover more than the $25,000 that is admittedly a part of the amount fixed, and whether interest should be allowed, and, if so, the time and rate, as a part of just compensation.
The vessel was built in 1906 at a cost of $646,924.37. Her length was 289.1 feet, the beam 54 feet, the cruising speed 18 knots, the hull was iron with wooden superstructure. She was equipped with three Parsons turbines and six marine type Scotch boilers. There were 175 staterooms as well as steerage quarters. She was a special type passenger and freight vessel primarily adapted to passenger service and suited to operating not more than 200 miles from shore, built for service between Boston and Canadian ports, in which capacity she was used until 1920. At times before that date she was chartered for service during the winter months in Florida and Cuban waters.
From about 1934 until early 1937 the vessel was taken out of service and laid up in Florida. In March 1937 she was purchased by George T. Ellis for a cash consideration of $16,000, repaired, reconditioned and equipped for summer passenger excursions in New England waters. The amount expended for such reconditioning and equipment is not shown in complete detail, but was estimated to be in excess of $100,000. The operating license expired in September 1937 and was not renewed, the vessel remaining in Boston until purchased by plaintiff April 7, 1939.
The ship was towed to Philadelphia in 1939 where it remained at the wharf until requisitioned by the defendant in 1942.
During the month of April 1942, however negotiations were entered into with the National Sugar Refining Company in connection with a proposal for a chartering of the Governor Cobb by the latter company for a series of trips for the purpose of transporting sugar from Cuba to Florida. Some progress had been made in these negotiations, contingent upon the vessel's being made seaworthy.
Estimates were made by a shipyards company as to the cost of reconditioning but before any contract was made the vessel was requisitioned by defendant on June 5, 1942.
It is difficult to determine the true value of the Governor Cobb at the time of the taking. There is no doubt that she was almost venerable with age. In the language of the livestock country, she was not exactly spavined, but she was not in good flesh. Time had taken its inevitable toll. Had conditions remained normal it is doubtful if the Governor Cobb would ever have been used again for regular transportation purposes, though she might have been used seasonally or as a relief ship.
But the times were not normal. Submarine sinkings were taking an enormous toll. Transportation became a problem on both land and sea. Box cars that had been on the railway sidings for twenty years were repaired and pressed into service to meet the vast demands of increased traffic. This increased traffic plus the loss of shipping facilities gave some value to anything that would float.
The defendant found that the cost of repairs and reconditioning exceeded any of the estimates. About $2,000,000 was spent on repairs, reconditioning and improvements.
The experts differed widely as to the value of the Governor Cobb at the time of the taking, ranging all the way from a small value for junk or scrap to some $600,000.
Despite the obsolescent condition of her superstructure and the outmoded condition of much of her machinery and equipment, the vessel concededly had a fine quality iron hull.
Taking all the facts and circumstances into account, we find that the fair and reasonable value of the Governor Cobb, including the use and title and the stores, equipment and furnishings aboard was $125,000 at the time of the requisition. Olson v. United States, 292 U.S. 246, 256, 257, 54 S.Ct. 704, 78 L.Ed. 1236.
The plaintiff is entitled to recover the sum of $50,000, with interest thereon from June 5, 1942, at the rate of 4 percent per annum, plus interest on $75,000 from June 5, 1942, to June 2, 1943 (the time of the partial payment), at the rate of 4 percent per annum. Brooks-Scanlon Corp. v. United States, 265 U.S. 106, 123, 44 S.Ct. 471, 68 L.Ed. 934.
It is so ordered.
WHALEY, Chief Justice, and WHITAKER and LITTLETON, Judges, concur.
MADDEN, Judge, took no part in the decision of this case.