Petitioners chartered ships from the Maritime Commission under a
contract providing for payment which included a share of excess
profits under a sliding scale of 50 to 90 percent. Section 5 (b) of
the Merchant Ship Sales Act of 1946 directed the Commission to fix
charter hire at rates which "shall not be less than 15 percentum
per annum of the statutory sales price," and shall be consistent
with the Act's policy to sell, rather than charter, ships to
private owners. The provisions of § 709(a) of the Merchant Marine
Act, 1936, which were made applicable to charters under the 1946
Act by § 5(c) of the latter statute, stipulated that every charter
shall provide that,
"whenever, at the end of any calendar year . . . the cumulative
net voyage profits . . . shall exceed 10 percentum per annum on the
charterer's capital necessarily employed in the business of such
chartered vessels, the charterer shall pay over to the Commission,
as additional charter hire, one-half of such cumulative net voyage
profit in excess of 10 percentum per annum. . . ."
Pursuant to a charter clause permitting termination of the
contract, the Commission notified petitioners of its intention to
cancel the charter, but advised that the vessels could continue to
be used under new terms, to which petitioners agreed, providing
that excess profits would be computed for each voyage separately
after September 1, 1947. Petitioners' contentions that the
Commission was limited under § 709(a) to 50 percent of the excess
profits, and that it exceeded its authority by dividing the
calendar year 1947 into separate periods through the threat of
cancellation, were rejected by the lower courts.
Held:
1. The Commission had authority under § 5(b) of the Merchant
Ship Sales Act of 1946 to utilize a sliding scale of excess
profits. Pp.
377 U. S.
241-250.
(a) The 50 percent provisions in § 709(a) of the Merchant Marine
Act, 1936, established, in the context of the 1946 Act, a minimum,
but not a maximum, rate. Pp.
377 U. S.
243-245.
Page 377 U. S. 236
(b) The use of a sliding scale was authorized by § 5(b) and the
failure of the Commission to indicate the specific source of its
authority had no legal significance. Pp.
377 U. S.
245-248.
2. There was no limitation of the Commission's power to
terminate the existing charter. Pp.
377 U. S.
250-251.
(a) The provisions in § 709(a) calling for computation of
additional charter hire "at the end of any calendar year" did not
impose such a restriction. Pp.
377 U. S.
250-251.
(b) Notification of termination was not a mere threat for an
improper purpose; the Commission could terminate all existing
charters and then recharter the vessels to accomplish its goals. P.
377 U. S.
251.
312 F.2d 214, affirmed.
MR. JUSTICE HARLAN delivered the opinion of the Court.
This case presents the claim that the Maritime Commission
exceeded its statutory authority under § 5 of the Merchant Ship
Sales Act of 1946, 60 Stat. 43, as amended, 50 U.S.C.App. § 1738,
by
"(1) including in its contract with petitioners [
Footnote 1] for the bareboat charter of ships
a sliding scale that required payment to the Government of more
than 50% of certain excess profits, and"
"(2) using the threat of termination of the character
arrangement to compel agreement to divide the calendar year 1947
into separate periods for the purpose of computing such profits.
"
Page 377 U. S. 237
Because a considerable number of suits are pending in the lower
courts which will turn on resolution of these issues, and because
of a conflict among the circuits as to the first issue, [
Footnote 2] we brought the case here.
375 U.S. 809. For reasons to follow, we affirm the judgment below
upholding the power of the Commission to act as it did.
I
The Merchant Marine Act, 1936, 49 Stat. 1985, as amended, 46
U.S.C. §§ 1101-1294, provided for the charter of government vessels
by the Maritime Commission to private enterprise. Section 709(a) of
that Act, 49 Stat. 2010, incorporated by reference in the 1946 Act,
§ 5(c), 60 Stat. 43, provided:
"Every charter made by the Commission pursuant to the provisions
of this title shall provide that whenever at the end of any
calendar year subsequent to the execution of such charter, the
cumulative net voyage profits (after payment of the charter hire
reserved in the charter and payment of the charterer's fair and
reasonable overhead expenses applicable to operation of the
chartered vessels) shall exceed 10 percentum per annum on the
charterer's capital necessarily employed in the business of such
chartered vessels, the charterer shall pay over to the Commission,
as additional charter hire, one-half of such cumulative net voyage
profit in excess of 10 percentum per annum:
Provided, That
the cumulative net profit so accounted for shall not be
included
Page 377 U. S. 238
in any calculation of cumulative net profit in subsequent
years."
During World War II, operations of the private merchant marine
were disrupted and its fleets reduced by losses and requisition.
Meanwhile, many vessels were constructed for government operations.
Congress, by means of the Merchant Ship Sales Act of 1946,
supra, sought to ensure post-war rehabilitation of the
private merchant marine by having the Maritime Commission sell or
charter surplus war-built government vessels. The Commission was
instructed "so far as practicable, and consistent with the policies
of this Act, [to] give preference to . . . applicants to purchase"
over applicants to charter. [
Footnote 3] Section 5(b), 60 Stat. 43, of the Act set out
standards for the Commission to follow in chartering vessels:
"The charter hire for any vessel chartered under the provisions
of this section shall be fixed by the Commission at such rate as
the Commission determines to be consistent with the policies of
this Act, but, except upon the affirmative vote of not less than
four members of the Commission, such rate shall not be less than 15
percentum per annum of the statutory sales price (computed as of
the date of charter). . . . [R]ates of charter hire fixed by the
Commission on any war-built vessel which differ from the rate
specified in this subsection shall not be less than the prevailing
world market charter rates for similar vessels for similar use as
determined by the Commission."
As already indicated, § 5(c) made the provisions of § 709(a) of
the Merchant Marine Act applicable to charters under the 1946
Act.
Page 377 U. S. 239
Prior to the Commission's exercising of its authority under the
1946 Act, the War Shipping Administration chartered ships to
private interests on an interim basis; it followed the lines of the
1946 Act, specifying a "basic charter hire" which equaled 15% per
annum of the statutory sales price and an "additional charter hire"
of one-half of any net profits in excess of a 10% annual return on
the charterer's capital employed in the operation of the chartered
vessels. During this period, a Special Charter Committee considered
the best way to implement the provisions of the 1946 Act. Existing
rentals were believed to be too low, and higher rentals were
thought necessary to promote the statutory policy of encouraging
sales, rather than charters. A majority of the Committee preferred
a higher profit-sharing rate than that provided in § 709(a) to any
additional firm rental, since the former would permit both the
Commission and charterers to adapt to a fluctuating world market,
without imposing a greater risk of loss on the charterers. The
Maritime Commission adopted this basic suggestion, and decided to
charge, in addition to the firm rental of 15% of the sales price,
50% of the average net voyage profits in excess of 10% of the
charterer's capital necessarily employed up to the first $100 of
profits per day, 75% of the next $200 per day, and 90% of such
profits above $300 per day.
The Commission adopted a standard Ship Sales Act charter
("SHIPSALESDEMISE 303") incorporating these provisions, and Eastern
chartered 10 vessels under such a contract dated October 1, 1946.
Market conditions allowed high profits to be earned in the first
eight months of 1947. The Commission decided to terminate existing
charters, as it was privileged to do under the contract on 15 days'
notice, but agreed not to terminate if a charterer accepted an
Addendum to its contract providing, among other things, for a
separate calculation of profit-sharing
Page 377 U. S. 240
rentals for the period commencing September 1, 1947. Eastern
signed such an Addendum, and was not able, as a result, to offset
losses incurred in the latter part of 1947 against the excess
profits earned before September 1.
Eastern did not attempt to litigate its rights under the 1946
Act until it had completed all the payments required by the charter
agreement. In 1955, it filed this
in personam libel for
recovery of money paid pursuant to the profits-sharing provisions
and the 1947 "Foreign Trade Addendum." It asserted that § 709(a)
sets a maximum, as well as a minimum, rate of profit-sharing, and
precluded the Commission from altering that rate under § 5(b). It
claimed further that, even if such power existed, the Commission's
apparent reliance on § 709(a), rather than § 5(b), renders these
charter provisions nugatory. Finally, it argued that the 1947
Addendum conflicted with the statutory mandate of § 709(a) for
calendar year accounting of statutory profits, and that the
Commission abused its termination privilege by threatening to
terminate the charter agreements of those refusing to accept the
split-year profit-sharing arrangement. All of these contentions
were rejected by the lower court, the Court of Appeals affirming
the District Court, 202 F. Supp. 297; 210 F. Supp. 822, in a
thorough opinion, 312 F.2d 214.
Preliminarily, we observe that, in the view we take of that
case, we find it unnecessary to consider the Government's
alternative ground for affirmance: that the doctrine of waiver
precludes Eastern from challenging the terms of its charter
agreement because, once having signed the agreement and benefited
from the charter, Eastern cannot seek to overturn provisions of the
contract that it regards as unfavorable. [
Footnote 4]
Page 377 U. S. 241
II
The basic statutory question is whether the Commission, in light
of § 709(a), had authority under § 5(b) to impose the sliding scale
of additional hire, and, if so, whether its failure to articulate
the particular statutory basis for its action vitiates the validity
of the profit-sharing terms of the rate set. We approach this
problem with three general interpretative guides, all of which
point in the Government's favor. Some weight is due to the
consistent interpretation of the Maritime Commission, the agency
entrusted with administration of the statute.
See, e.g., United
States v. Zucca, 351 U. S. 91,
351 U. S. 96;
Kern River Co. v. United States, 257 U.
S. 147,
257 U. S.
153-154. The successive extensions by Congress of the
Commission's authority to charter vessels, [
Footnote 5] in the face of the Commission's
sliding-scale practice, are certainly not controlling, particularly
since it does not appear that Congress ever advertently addressed
itself to the claim of invalidity of the sliding scale; they do,
however, strengthen to some extent the Commission's conclusions
regarding its chartering powers. In 1947, following subcommittee
hearings, [
Footnote 6] the
House Committee on Merchant Marine and Fisheries, H.R.Rep. No. 725,
80th Cong., 1st Sess. (1947), recommended an extension,
subsequently enacted, 61 Stat. 190, 191, of the Commission's
chartering authority
"with the understanding that the basic rates for the
Page 377 U. S. 242
charter of dry-cargo vessels and recapture rates will be
immediately increased, thus encouraging the purchase, rather than
charter, of these ships."
P. 2. Congressional reports prior to another extension, H.R.Rep.
No. 60, 81st Cong., 1st Sess., 2 (1949); S.Rep. No. 55, 81st Cong.,
1st Sess., 2 (1949), stated:
"It is contemplated that the Maritime Commission will continue
to sell, charter, and operate ships in accordance with existing
procedures and without (according to the House Report) any change
in its present policy."
(The Senate Report reads "any changes in policies now
effective.")
Further, in light of the congressional policy to encourage the
sale of ships, contained in § 7(a) of the 1946 Act,
supra,
there is an initial presumption that Congress intended that the
Commission should have power to establish chartering terms
commensurate with making more attractive purchase, instead of
charter, of government vessels by private shipowners. Needless to
say, these "interpretative aids," neither singly nor in
conjunction, could lead to an affirmance here if it were clear that
the Commission's action contradicted the requirements of the
Merchant Ship Sales Act of 1946. However, they are consistent with,
and lend support to, what we believe to be the most sensible view
of the statutory framework.
According to § 709(a) of the 1936 Act, as adopted by the 1946
statute:
"The charterer
shall pay over to the Commission, as
additional charter hire, one-half of such cumulative net voyage
profit in excess of 10 percentum per annum. . . ."
(Emphasis added.)
Section 5(b) of the 1946 Act provides:
"The charter hire . . . shall be fixed by the Commission at such
rate as the Commission determines to be consistent with the
policies of this Act, but, . . . such rate shall not be less than
15 percentum per annum of the statutory sales price. . . . "
Page 377 U. S. 243
Eastern makes the contention that the language of § 5(b) itself
limits the Commission's power under that section to a fixed annual
charter rate. It argues that a profit-sharing arrangement is not a
"rate" of charter hire in the normal sense, nor is it "fixed." The
short answer is that it is perfectly reasonable to speak of a
"rate" which is based on percentage of profits, and there is no
problem in "fixing" a contingent rate. Certainly the reference to
the minimum rate of 15% (subject to an exception not relevant here)
of the statutory sales price in no way reflects an intent to
preclude the Commission from developing other types of rate
patterns. We find nothing in § 5(b) itself to justify
strait-jacketing, by proscribing any approach not based on a
percentage of the sales price, the Commission's development of rate
patterns best serving the policies of the Act.
The position that § 709(a) is the exclusive profit-sharing
provision, that it prohibits what might otherwise be sustained as a
proper exercise of power under § 5(b), is somewhat more arguable.
Eastern asserts that § 709(a) was written as a maximum, as well as
minimum, standard for the Commission's share of excess profits, and
that its import was not altered by its adoption in the 1946 Act.
Significance is placed on Congress' use of the word "shall," rather
than a phrase such as "not less than," in fixing the charterer's
obligation to pay 50% of its excess profits.
However, when § 709(a) was passed, rates of charter hire were
determined in most situations under § 707(a), 49 Stat. 2009, by
competitive bidding in individual cases. [
Footnote 7]
Page 377 U. S. 244
Since the firm rental offered could afford the only basis for
assessing "the highest monthly charter hire," individual bidders
did not propose profit-sharing arrangements. Under such a system,
the primary reliance against rates unreasonably favorable to
charterers was the bidding system. In that context, it could
plausibly be urged that the Commission had no authority to raise
its share of excess profits. Indeed, the Government does not argue
that, at that time, or after the 1946 Act, § 709(a),
ex proprio
vigore, conferred power on the Commission to raise the rates
beyond the prescribed 50%. The relevant question, therefore, is
whether as carried into the 1946 Act the section set a maximum, as
well as minimum, rate of profit-sharing for the statute as a
whole.
First, it may be noted that "shall" plainly denotes a minimum;
one cannot pay 50% and at the same time pay less than 50%. On the
other hand, the word does not, of linguistic necessity, denote a
maximum; one can pay 50% and also pay 25% more. While, in
recognizing this, we do not mean to suggest that, standing alone,
the 50% standard of § 709(a) would not be read as establishing a
maximum, as well as a minimum, it is significant that the section's
language is not inconsistent with a conclusion that higher
percentages are permissible. Congress cannot be expected always to
be absolutely precise in its statutory formulations. When it brings
forward into a new enactment provisions drafted in a different
statutory context and in response to other circumstances and
policies, the likelihood of imprecision is increased. In light of
the great breadth of discretion apparently given to the Commission
under § 5(b) and the expressed concern of Congress that charter
rates not
Page 377 U. S. 245
be too low to discourage sales, we should be very slow to fetter
the flexibility of the Commission to implement, in the most
effective way, the policies of the Act. Viewing the 1946 Act as an
integrated whole, we refuse to inhibit the Commission under § 5(b)
by resort to an interpretation of § 709(a) which could be
characterized only as arid literalism. [
Footnote 8]
We conclude, therefore, that the Commission had the power under
§ 5(b) to impose the sliding scale, and that § 709(a) does not
negate that authority. In passing, it may be noted that, in
addition to the courts below, four other lower courts have reached
or assumed the same conclusion.
See Dichman, Wright & Pugh,
Inc. v. United States, 144 F.
Supp. 922, 926;
United States v. East Harbor Trading
Corp., 190 F.
Supp. 245, 249;
American Mail Line, Ltd. v. United
States, 213 F.
Supp. 152, 163;
United States v. Eastport Steamship
Corp., 216 F. Supp. 649, 653-654.
But see American
President Lines, Ltd. v. United States, 224 F. Supp. 187,
190-191.
See also American Export Lines, Inc. v. United
States, 290 F.2d 925, 930, 153 Ct. l. 201, 208-209.
We next turn to the question whether § 5(b) suffices to support
the sliding scale for profit-sharing rentals adopted by the
Commission, in the face of the assertion
Page 377 U. S. 246
that the Commission did not purport to act under that section,
but apparently relied on § 709 alone. Eastern notes that the added
obligation respecting excess profits was imposed as a part of
"additional charter hire" under clause 13 of the charter agreement
("Form 303"), which included the 50% charge on excess profits less
than $100 per day. Under "Form 203", the standard charter employed
pending implementation of the 1946 Act, the unembellished 50% rate
of § 709(a) had also been characterized as "additional charter
hire," and appeared in clause 13 of that form. In both "Form 203"
and "Form 303" provision for the "basic charter hire" -- the
relevant percent of the sales price -- was provided for in clauses
E, C(1), and 12. Eastern accordingly concludes that the Commission
equated "basic charter hire" with hire under § 5(b), and
"additional charter hire" with that imposed under § 709(a). Citing
a number of cases holding that grounds not relied on by a
government agency cannot be invoked to validate an exercise of
administrative discretion which has in fact been based on
insufficient grounds or reached without requisite procedural
safeguards,
see, e.g., Securities & Exchange Comm'n v.
Chenery Corp., 332 U. S. 194,
332 U. S. 196;
Bell v. United States, 366 U. S. 393,
366 U. S.
412-413;
Burlington Truck Lines, Inc. v. United
States, 371 U. S. 156,
371 U. S.
167-168, Eastern asserts that the failure of the
Commission to indicate the statutory basis of its sliding scale for
profit sharing renders that aspect of its charter agreements void.
It is not entirely clear what the Commission believed the source of
its power to be, and it is at least arguable that inclusion of the
sliding rates within the additional hire clause was not necessarily
inconsistent with a supposition of authority under § 5(b). We find
it unnecessary, however, to deal with this question, since we agree
with the courts below that the intent of the Commission in this
regard is irrelevant.
Page 377 U. S. 247
The District Court determined that there is not
"the slightest ground for assuming that if the Commission had
been apprized of the correct source of its authority, the
Commission or the other party would have made a contract different
in substance, as distinguished from wording."
202 F. Supp. 297, 305. Eastern does not seriously challenge this
determination. Although it alleges that the Commission hesitated to
act under § 5(b) to raise the fixed 15% rate, because such an
increase would have been passed on to other government agencies as
a result of contractual provisions for subcharter, Eastern does not
assert that a contingent profit-sharing rate of more than 50% would
likewise have been passed on even if the Commission had explicitly
referred to § 5(b) as its source of authority. The subcharter
clause appearing in the record indicates that only an increase in
the 15% fixed rate would have been passed on.
No doubt is cast on the conclusion of the District Court by
anything in § 5(b) or § 709(a). Section 5(b) does not require a
hearing or any particular kind of procedure (except when the rate
is set below 15% of the sales price). Since § 709(a) does not
itself authorize deviations from the 50% rate on excess profits,
that section provides, of course, no criteria for assessing the
propriety of any such deviation. Section 5(b) rates are supposed to
be fixed "consistent with the policies of this Act" and (at least
if lower than 15% of the statutory sales price) are not to be set
at less than the prevailing world market charter rates. Since it is
plain that the Commission instituted rates it believed to be
consistent with the policies of the 1946 Act, it seems patently
clear that its determination would have in no way varied had it
paid particular attention to § 5(b) in establishing the sliding
scale.
In light of these factors, we find inapposite here cases
refusing to validate an exercise of administrative discretion
Page 377 U. S. 248
because it could have been supported by principles or facts not
considered, or procedures not undertaken, by the responsible body.
These cases are aimed at assuring that initial administrative
determinations are made with relevant criteria in mind. and in a
proper procedural manner; when a mistake of the administrative body
is one that clearly had no bearing on the procedure used or the
substance of decision reached, as in this instance (assuming there
was such a mistake), the sought extension of the cases cited would
not advance the purpose they were intended to serve. The imposition
of the sliding scale of additional charter hire was authorized by §
5(b), and the Commission's failure to indicate explicitly or
implicitly that that section was the source of its power is without
legal significance.
Eastern claims that, if the sliding-scale charge is proper under
§ 5(b), the Commission has not followed the statutory scheme for
accounting. Section 709(a) provides for equal division of profits
after payment of the "charter hire reserved in the charter. . . ."
Eastern equates this language with the "charter hire . . . fixed by
the Commission" under § 5(b). Without attempting the impossible
task of reading into the charter contract the following method of
accounting, Eastern argues that this procedure is required by the
statute: in addition to the required percent of the statutory sales
price, the "charter hire reserved in the charter" includes any
charge above 50% of profits; after these charges are computed, the
Commission is entitled to 50% of remaining excess profits. How this
method would work is most easily seen if we hypothesize an attempt
by the Commission to acquire 100% of all excess profits. Instead of
achieving this goal, the Commission would have to compute the fixed
hire plus 50% of the profits (the amount of charge above the 50%
set by § 709(a)). The Commission would then receive 50% of the
remaining profits; as a consequence, the
Page 377 U. S. 249
charterer would retain 25% of the total excess profits. The
effect of this method of accounting, therefore, would be to turn §
709(a) into a provision limiting under profit-sharing arrangements
effected pursuant to § 5(b), the Government's share of profits over
10% of capital necessarily employed; the maximum government share
would be 75% (instead of the 50% that would result it § 709(a) were
read to prohibit completely any profit-sharing arrangement under §
5(b)).
We are not compelled to accept this anomalous result. It is not
necessary to read the reference in § 709(a) to "charter hire
reserved in the charter" as synonymous with "charter hire . . .
fixed by the Commission" in § 5(b). It is highly doubtful that the
draftsmen intended such a result, particularly since § 709(a) was
brought forward without any attempt to spell out carefully its
relationship to § 5(b). A reading which does greater justice to the
whole statutory framework is to limit "charter hire reserved in the
charter" to any firm, rather than contingent hire, regardless of
whether § 5(b) is the source for imposing the hire. Even if
Eastern's interpretation of the language were acceptable, however,
we see no reason why the Commission cannot reach under § 5(b) what
it would otherwise be paid under § 709(a). If the sliding scale
requires 90% of certain profits to be turned over to the
Commission, it makes better sense to say that the Commission can
take the full 90% under § 5(b), thus rendering § 709(a)
superfluous, than to conclude that the Commission's authority under
§ 5(b) extends only to the incremental amount. According to
Eastern's argument, § 709(a) performs a dual function -- it
allocates that percent of profits which may be reached as "charter
hire . . . fixed by the Commission," and it distributes the
remaining profits. We think it clear that it was not intended in
the context of the 1946 Act to perform the former role; therefore,
even were any rate set under
Page 377 U. S. 250
§ 5(b) taken to be "charter hire reserved in the charter," no
statutory impediment would preclude the Commission from taking the
full 75% and 90% of excess profits. A contrary conclusion would
require a strained reading of the language of the Act, and would
conflict with the policies enunciated therein.
III
Because of the discouragement of sales resulting from the high
profits earned by charterers in the first part of 1947, the
Commission sent telegrams to Eastern and other charterers on August
15 informing them of the Commission's intention to terminate the
charter contracts, a privilege given to both parties under clause
14. The telegrams stated that the charterers would be able to
continue use of the vessels if they agreed to new terms and
conditions. On August 20, the Commission set out the new terms,
including a provision that payment of additional charter hire under
clause 13 be computed separately for voyages commencing after
September 1. Eastern agreed to the terms; since it suffered losses
for its post-August voyages, it was required to pay to the
Commission a greater amount than would have been the case had 1947
been treated as a unit for accounting purposes. Eastern claims that
the "Foreign Trade Addendum" to its charter was invalid insofar as
it purported to divide 1947 into two accounting periods. It argues
that § 709(a) required calendar year accounting, that agreement to
the Addendum was insufficient to create a new charter contract, and
that the Commission could not use its termination power to
accomplish an improper result.
We find this position untenable. There was no explicit
limitation on the Commission's power to terminate existing
charters, nor do we read § 709(a), which provides for computation
of additional charter hire "at the end of any calendar year," as
indirectly imposing such
Page 377 U. S. 251
a restriction. The Commission could, therefore, have terminated
all existing charters and rechartered the vessels to accomplish the
end it sought. That the notification of termination was not a
disingenuous threat to achieve an otherwise improper purpose is
evidenced by the number of contracts which were, in fact,
terminated subsequent to August 15. The Addendum states that it is
to be "treated for accounting purposes as if it constituted a
separate charter. . . ." We will not refuse to accord it
significance simply because the Commission did not require the
charterer to to through the formalities of the execution of a new
contract.
Affirmed.
[
Footnote 1]
Hereafter "Eastern."
[
Footnote 2]
Compare the opinion below, 312 F.2d 214,
and United
States v. Eastport Steamship Corp., 216 F. Supp. 649,
with
American Export Lines, Inc. v. United States, 290 F.2d 925,
153 Ct.Cl. 201;
Dichman, Wright & Pugh, Inc. v. United
States, 144 F.
Supp. 922;
American Mail Line, Ltd. v. United
States, 213 F.
Supp. 152;
American President Lines, Ltd. v. United
States, 224 F. Supp. 187.
[
Footnote 3]
§ 7(b), 60 Stat. 44, 50 U.S.C.App. § 1740.
[
Footnote 4]
The Government does not press the claims here that Eastern
cannot recover because of the running of the statute of
limitations, or because of voluntary payments made to the
Commission. It asserts that these defenses were pleaded below, but
were not considered during the hearing; it reserves the right to
raise them on remand in the event of a reversal.
[
Footnote 5]
See 61 Stat. 190, 191; 62 Stat. 38; 63 Stat. 9; 63
Stat. 349. In 1950, Congress abolished the Maritime Commission, and
the function of chartering ships was transferred to the Secretary
of Commerce, 64 Stat. 308; 64 Stat. 1276, 1277.
[
Footnote 6]
Hearings before the Subcommittee on Ship Sales, Charters, and
Lay-ups, House Committee on Merchant Marine and Fisheries, 80th
Cong., 1st Sess. (1947).
[
Footnote 7]
Section 714 of the 1936 Act, 49 Stat. 2011, as amended, 46
U.S.C. § 1204, does provide for negotiated rates of charter hire if
essential trade routes cannot otherwise be successfully developed.
It contains a firm minimum rate. Had this been the primary method
of chartering envisioned in 1936, the section's similarity to §
5(b) of the 1946 Act would have considerable bearing on any
interpretation of the relevance of § 709(a) in the later Act. The
exception this provision makes to competitive bidding, however,
does not alter the fact that the basic method of rate setting was
entirely different under the 1936 Act from that contemplated in
1946. We intimate no view as to the relationship between § 714 and
§ 709(a) under the 1936 Act.
[
Footnote 8]
Eastern's contention that the legislative history of the 1946
Act confirms its position is not well taken. That Congress did not
disapprove of charters, and that it provided separate safeguards to
encourage sales, does not undermine the plainly expressed
preference of sales to charters and the concern that charter rates
not be so low as to make purchase less profitable than hire. That
some legislators believed the 15% rate of § 5(b) to be high is
irrelevant, since the Commission's power to raise rates under §
5(b) is undisputed, and the issue here concerns only the kind of
rate structure permissible. Finally, the circumscription of
Commission discretion, which Eastern believes was intended by
Congress, had to do with the desirability of having set rates
instead of individually negotiated charters, rather than with the
kinds of rates that might be set.