Propeller Company v. Company v. United States
81 U.S. 670 (1871)

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U.S. Supreme Court

Propeller Company v. Company v. United States, 81 U.S. 14 Wall. 670 670 (1871)

Propeller Company v. Company v. United States

81 U.S. (14 Wall.) 670

Syllabus

A vessel was let by its owners to the United States for an indefinite period, not less than thirty days, and the government undertook to pay $150 for each day that she might be employed under the contract, and to bear the war risk. In addition to this the value of the vessel was fixed at $40,000, and it was agreed that should she be retained in the service of the United States until the money paid and due on account of the charter should be equal to such value, she should become the property of the United States without further payment, except of such sum as might then be due on account of her hire under the charter. It was further agreed that if at any time during the continuance of the charter the United States should elect to purchase her, they might take her at $40,000, in which case all money paid and due on account of the charter should be applied on account of the purchase. Held that this was not a mere affreightment; that transmission of the ownership of the vessel to the United States was also contemplated; that this transmission was to be at the option of the United States; that in no event were the owners to have more than $40,000 for her, and that this sum might be paid in full by the per diem hire, in which case the vessel was to become the property of the government so soon as the hire should equal in amount the price named, or at such earlier time as the United States might elect to take her at that price. The vessel having accordingly been lost by a war risk, after $11,397.64 had been paid on account of her hire, the

Page 81 U. S. 671

government was held bound to pay no more than the difference between that sum and $40,000; that is to say, bound to pay no more than $28,602.36.

The New Bedford and New York Propeller Company, by a charter party dated the 5th of April, 1864, chartered a steamer to the United States at $150 per day. The charter party contained these clauses:

"The war risk is to be borne by the United States, the marine risk by the owner, for a period of thirty days, and as much longer as the services of the vessel may be required to be employed in such service as the United States may direct."

"The vessel is valued at $40,000, and should she be retained so long in the service of the United States that the money paid and due on account of the charter (deducting therefrom the actual cost of running and keeping in repair the said vessel during the said time, together with a net profit of 33 percent per annum on said appraised value) shall be equal to said appraised value, then the said vessel shall become the property of the United States without further payment except such sum as may then be due on account of the services of said vessel, rendered under the said vessel charter."

"And, further, if at any time during the continuance of this charter the United States shall elect to purchase the vessel, then they shall have the right to take her at the appraised value at the date of charter, and all money then already paid and due on account of said charter (deducting therefrom the actual cost of running and keeping in repair the said vessel during the said time, together with a net profit of 33 percent per annum on the original appraised value) shall apply on account of the said purchase."

The steamer remained in the military service of the government until the 4th of March, 1865, when she was sunk in the Cape Fear River by the explosion of a torpedo placed there by the enemy. The owners presented to the government a claim for $40,000 for the loss of said steamer. This claim being transmitted to the proper officer, he made out an account thus:

Page 81 U. S. 672

DR.

By valuation as per charter . . . . . . . . . . . . $40,000.00

By 33 percent per annum, from 12 M., April 5,

1864, to 4 P.M., March 4, 1865, 10 27 -- 3'

4 -- 24 months . . . . . . . . . . . . . . . . . . 11,996.11

By running expenses, 11 months, at $2100 per month 23,100.00

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$75.096.11

CR.

To amount received from United States for

services from 12 M., April 5, 1864, to

March 4, 1866, 4 P.M., being 333 6-24

days, at $150 . . . . . . . . . . . . $49,975.00

Less 23 5-24 days lost. . . . . . . . . 3,481.25

--------- $46,493.75

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Balance due. . . . . . . . . . . . . . . $28,602.36

The amount so found due and no further sum was paid to and received by the owners of the vessel.

In this state of the case, the owners filed a petition in the Court of Claims:

Claiming as still due . . . . . . . . . . $11,397.64

In addition to the sum received, viz. . . 28,602.36

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So as to give the whole valuation. . . . . $40,000.00

The Court of Claims found that the steamer was worth $40,000; that the United States never at any time notified to the owners their election to purchase her or to take her under the accruing or purchase clauses of the charter party above quoted.

And held that

"the United States, under such a charter party, became the equitable owner of the vessel to the extent of the sum earned over and above the expenses and profits stipulated for, and that to the extent of such sum the owners had received so much payment on the price of the vessel, and that whether she was taken by the United States under the option given to purchase at any time, or perished by one of the perils against which the United States engaged to insure, this accruing clause was equally applicable."

The court accordingly decreed that it was only the balance due

Page 81 U. S. 673

on the price of the vessel which the original owner could claim, and not the amount of the valuation.

Page 81 U. S. 674

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