United States v. Eastport Steamship Corp.

216 F. Supp. 649, 1963 U.S. Dist. LEXIS 7819
CourtDistrict Court, E.D. New York
DecidedApril 8, 1963
StatusPublished
Cited by2 cases

This text of 216 F. Supp. 649 (United States v. Eastport Steamship Corp.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Eastport Steamship Corp., 216 F. Supp. 649, 1963 U.S. Dist. LEXIS 7819 (E.D.N.Y. 1963).

Opinion

LEVET, District Judge.

This libel by the United States seeks $17,777.68 allegedly due as “additional charter hire” under a bareboat charter of SS Denison Victory from The Maritime Administration, as owner, to the respondent Eastport Steamship Corporation (Eastport), as charterer.1

The controversy centers about the charter hire provisions contained in Part I Clause E and Part II Clauses 12 and 13 of Charter No. MA-31, dated February 26, 1951, a standard bareboat charter contract of the Maritime Commission.

At a hearing held March 12, 1963, the parties stipulated that the trial record consist of those matters previously submitted to the court on the respondent’s motion for summary judgment. After considering this record as stipulated to by the parties, the court makes the following Findings of Fact and Conclusions of Law:

FINDINGS OF FACT

1. The court has jurisdiction of the parties and the subject matter of this action.

2. On February 26,1951, Eastport entered into Contract MA-31 with the Maritime Administration for the bare-boat charter from the United States to Eastport of the SS Denison Victory, a type VC2-S-AP2 dry-cargo victory ship. (Rothchild Aff. p. 1; Res. Ex. 22) Contract MA-31 was a standard form bare-boat charter, denominated “Shipsales-demise 303.” The vessel was allocated to Eastport, upon its application for a bareboat charter by a telegram from the Maritime Administration to Eastport dated February 23, 1951. (Res. Ex. 23)

3. The vessel was delivered to East-port under the charter on March 5, 1951. Eastport operated the Denison Victory upon three voyages under two subchar-[651]*651ters to the United States Department of Agriculture as agent for the Economic Cooperative Administration. The first subcharter, dated February 27, 1951, provided for a single voyage for the carriage of grain from New York to Trieste, Yugoslavia. (Res. Ex. 24) The second subcharter, dated March 3, 1951, provided for two consecutive voyages for the carriage of grain from North Atlantic ports in the United States to Adriatic sea ports.

4. The Denison Victory was redelivered to the Maritime Administration on August 20,1951 for a total charter of 168 days.

5. The charter provided for hire in the following clauses:

“PART I

“Clause E. Rate of Basic-Hire. Unless otherwise specifically agreed, basic hire shall be paid at the rate appearing opposite the name of each Vessel listed in Clause C(l) 2 and such addenda as may be executed.

“PART II

“Clause 12. Basic Charter Hire. The charterer shall pay to the Owner the basic charter hire at the monthly rate provided for in Part I hereof from the day and hour of delivery of the Vessels until and including the day and hour of redelivery to the Owner pursuant to the terms of this Agreement; or if known, or if the time of loss be uncertain then up to and including the time last heard from. Payment of such basic charter hire shall be made to the Owner at Washington, D. C., on delivery of each Vessel for the remainder of the calendar month in which delivery is made, and thereafter monthly in advance on the first day of each month.”

“Clause 13. Additional Charter Hire. If at the end of the calendar year 1951, or any subsequent calendar year or at the termination of this Agreement, the cumulative net voyage profit (after the payment of the basic charter hire hereinabove specified and payment of the Charterer’s fair and reasonable overhead expenses applicable to operations of the Vessels) shall exceed 10 per centum per annum on the Charterer’s capital necessarily employed in the business of the Vessels (all as-hereinafter defined), the Charterer shall pay over to the Owner at Washington, D. C., within 30 days after the end of such year or other period, as additional charter hire for such year or other period, an amount equal to the percentage of such cumulative net voyage profit in excess of 10 per centum per annum on such capital computed in accordance with the following table (but such cumulative net profit so accounted for shall not be included in any calculation of cumulative net profit in any subsequent year or period);

“Cumulative net voyage profit (in excess 10% per annum on capital necessarily employed) not in excess of $100 per day — 50%.

“Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) in excess of $100 per day but not in excess of $300 per day — 75% on such excess over $100 per day.

“Cumulative net voyage profit (in excess of 10% per annum on capital necessarily employed) in excess of $300 per day — 90% on such excess over $300 per day.

“The Charterer agrees to make preliminary payments to the Owner on account of such additional charter hire at such times and In such manner and amounts as may be required by the Owner; provided, however, that such payment of additional charter hire shall be deemed to be preliminary and subject to adjustment either at the time of the rendition of preliminary statements or upon the completion of each final [652]*652audit by the Owner, at which times such payments will be made to the Owner as such preliminary statements or final audit may show to be due, or such overpayments refunded to the Charterer as may be required.” (Res. Ex. 22)

6. Maritime’s “final accounting” of Eastport’s operations, dated January 29, 1954, showed profits of $88,472.37 and calculating additional charter hire due in the amount of $67,865.13, of which $17,777.68 remains unpaid. (Res. Ex. 27)

DISCUSSION

The charter established the hire as the sum of a fixed monthly rate called “basic charter hire” and a percentage of the charterer’s profits, called “additional charter hire.” The “basic charter hire” was set at a monthly rate equal to 15 per cent per annum of the statutory sales price, the minimum amount required by Section 5(b). The “additional charter hire” was established at 50, 75 and 90 per cent of the charterer’s net voyage profit in excess of 10 % return on capital necessarily employed.

Eastport has paid the basic charter hire and concedes its obligation to pay 50 per cent of its total profits as additional charter hire. It denies the libel-lant’s claim for the amount in excess of 50 per cent of its profits, contending that these provisions in the charter are without statutory authority.

The charter was executed under Section 5 of The Merchant Ship Sales Act of 1946, 60 Stat. 41, 50 U.S.C.App. § 1738 governing the “Charter of War-Built Vessels to Citizens.” 3 Subsection (c) of Section 5 incorporates certain provisions of The Merchant Marine Act of 1936, 49 Stat. 1985, as amended, 46 U.S.C. §§ 1101-1294, the most pertinent provision of which is Section 709(a).4 By Section 5(b), Congress authorized the Commission to establish charter hii*e “at such rate as the Commission determines to be consistent with the policies [653]*653of [the 1946] Act.” The Commission was limited to the extent that it could not establish a charter hire at less than “15 per centum per annum of the statutory sales price,” except upon the affirmative vote of four members of the Commission.

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Bluebook (online)
216 F. Supp. 649, 1963 U.S. Dist. LEXIS 7819, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-eastport-steamship-corp-nyed-1963.