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B-30613, NOVEMBER 28, 1942, 22 COMP. GEN. 497

B-30613 Nov 28, 1942
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" IT IS TO BE CONSIDERED THAT THE CONDITIONS NECESSARY FOR A LAWFUL TAKING OR USE OF SUCH VESSELS EXISTED AS OF SEPTEMBER 8. DOES NOT CONTEMPLATE THAT INCREASED COSTS SINCE THAT DATE BE NOT TAKEN INTO CONSIDERATION IN FIXING THE COMPENSATION TO BE PAID FOR VESSELS WHICH HAVE BEEN CONSTRUCTED. EVEN THOUGH THE OWNER OF SUCH VESSEL MAY HAVE PURCHASED IT SUBSEQUENT TO THAT DATE AT A PRICE IN EXCESS OF THAT EXISTING ON SAID DATE. NOTWITHSTANDING THE FACT THAT SUBSEQUENT TO THAT DATE A HIGHER VALUATION MAY HAVE BEEN PLACED ON THE VESSEL IN GENERAL AVERAGE PROCEEDINGS. IN CASES WHERE THE USE OF A VESSEL IS REQUISITIONED. IT IS FOUND THAT. - THE ESTIMATED VALUE OF SUCH VESSEL OR VESSELS MAY BE USED IF IT IS POSSIBLE TO ESTIMATE WHAT THE VALUE OF SUCH VESSEL OR CLASS OF VESSELS WOULD HAVE BEEN HAD SUCH EXTRAORDINARY CONDITIONS NOT EXISTED.

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B-30613, NOVEMBER 28, 1942, 22 COMP. GEN. 497

COMPENSATION FOR VESSELS REQUISITIONED UNDER SECTION 902 (A), MERCHANT MARINE ACT OF 1936, AS AMENDED UNDER SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, PROVIDING FOR THE REQUISITIONING OF PRIVATE VESSELS BY THE UNITED STATES WHENEVER THE PRESIDENT SHALL PROCLAIM THE SECURITY OF THE NATIONAL DEFENSE MAKES IT ADVISABLE, OR DURING ANY NATIONAL EMERGENCY DECLARED BY PROCLAMATION OF THE PRESIDENT, AND THAT "IN NO CASE SHALL THE VALUE OF PROPERTY TAKEN OR USED BE DEEMED ENHANCED BY THE CAUSES NECESSITATING THE TAKING OR USE," IT IS TO BE CONSIDERED THAT THE CONDITIONS NECESSARY FOR A LAWFUL TAKING OR USE OF SUCH VESSELS EXISTED AS OF SEPTEMBER 8, 1939--- THE DATE OF THE PRESIDENT'S PROCLAMATION OF A "LIMITED NATIONAL EMERGENCY.' SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, RELATING TO THE COMPENSATION TO BE PAID OWNERS OF PRIVATE VESSELS REQUISITIONED BY THE UNITED STATES DURING THE EXISTENCE OF A NATIONAL EMERGENCY, AND PROVIDING THAT "IN NO CASE SHALL THE VALUE OF THE PROPERTY TAKEN OR USED BE DEEMED ENHANCED BY THE CAUSES NECESSITATING THE TAKING OR USE," OPERATES TO PROHIBIT THE PAYMENT OF COMPENSATION FOR SUCH VESSELS BASED ON VALUES IN EXCESS OF THOSE EXISTING ON SEPTEMBER 8, 1939--- THE DATE OF THE PRESIDENT'S PROCLAMATION OF A "LIMITED NATIONAL EMERGENCY"--- PROVIDED THE EXCESS BE DETERMINED AS DUE TO ECONOMIC CONDITIONS DIRECTLY CAUSED BY THE NATIONAL EMERGENCY. THE REQUIREMENT THAT COMPENSATION FOR THE TAKING OR USE OF VESSELS REQUISITIONED BY THE UNITED STATES PURSUANT TO SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, DURING THE PRESENT NATIONAL EMERGENCY BE BASED ON VALUES EXISTING ON SEPTEMBER 8, 1939, DOES NOT CONTEMPLATE THAT INCREASED COSTS SINCE THAT DATE BE NOT TAKEN INTO CONSIDERATION IN FIXING THE COMPENSATION TO BE PAID FOR VESSELS WHICH HAVE BEEN CONSTRUCTED, RECONSTRUCTED, OR REPAIRED AFTER SEPTEMBER 8, 1939, AT COSTS IN EXCESS OF THOSE PREVAILING ON SAID DATE. IN FIXING THE COMPENSATION TO BE PAID THE OWNER OF A PRIVATE VESSEL REQUISITIONED BY THE UNITED STATES PURSUANT TO SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, DURING THE PRESENT NATIONAL EMERGENCY, THE VALUE THEREOF MUST BE DETERMINED ON THE BASIS OF VALUES EXISTING ON SEPTEMBER 8, 1939, EVEN THOUGH THE OWNER OF SUCH VESSEL MAY HAVE PURCHASED IT SUBSEQUENT TO THAT DATE AT A PRICE IN EXCESS OF THAT EXISTING ON SAID DATE. IN DETERMINING THE COMPENSATION TO BE PAID THE OWNER OF A PRIVATE VESSEL REQUISITIONED BY THE UNITED STATES PURSUANT TO SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, DURING THE PRESENT NATIONAL EMERGENCY, THE VALUE THEREOF MUST BE BASED ON VALUES EXISTING ON SEPTEMBER 8, 1939, NOTWITHSTANDING THE FACT THAT SUBSEQUENT TO THAT DATE A HIGHER VALUATION MAY HAVE BEEN PLACED ON THE VESSEL IN GENERAL AVERAGE PROCEEDINGS, BY COMPETENT REGULATORY BODIES FOR RATE MAKING PURPOSES, OR IN JUDICIAL PROCEEDINGS INVOLVING SALE, ETC. IN FIXING THE COMPENSATION TO BE PAID THE OWNER OF A PRIVATE VESSEL REQUISITIONED BY THE UNITED STATES PURSUANT TO SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, DURING THE PRESENT NATIONAL EMERGENCY, THE VALUE THEREOF MUST BE DETERMINED ON THE BASIS OF VALUES EXISTING ON SEPTEMBER 8, 1939, EVEN THOUGH SUBSEQUENT TO THAT DATE THE VESSEL HAS BEEN ENCUMBERED BY LIENS REPRESENTING ADVANCES BY CREDITORS OR OTHERS AT VALUES IN EXCESS OF THOSE PREVAILING ON SEPTEMBER 8, 1939. THE LIMITATION IN SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, UPON THE COMPENSATION THAT MAY BE PAID BY THE UNITED STATES FOR VESSELS REQUISITIONED FOR TITLE OR USE DURING ANY NATIONAL EMERGENCY, PROHIBITS ANY INCREASE IN COMPENSATION BY REASON OF AN "ENHANCEMENT" IN VALUE OF THE VESSEL FROM CAUSES NECESSITATING THE TAKING OR USE, AND HAS NO APPLICATION TO INCREASED COSTS OF OPERATION, ETC., IN CASES WHERE THE USE OF A VESSEL IS REQUISITIONED. WHERE, IN FIXING THE COMPENSATION TO BE PAID THE OWNERS OF PRIVATE VESSELS REQUISITIONED BY THE UNITED STATES PURSUANT TO SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, IT IS FOUND THAT, DUE TO TEMPORARY AND UNUSUAL CONDITIONS, AN ABNORMAL VALUE FOR A PARTICULAR VESSEL OR CLASS OF VESSELS EXISTED ON SEPTEMBER 8, 1939--- THE DATE AS OF WHICH THE VALUE OF VESSELS REQUISITIONED DURING THE PRESENT NATIONAL EMERGENCY MUST BE DETERMINED--- THE ESTIMATED VALUE OF SUCH VESSEL OR VESSELS MAY BE USED IF IT IS POSSIBLE TO ESTIMATE WHAT THE VALUE OF SUCH VESSEL OR CLASS OF VESSELS WOULD HAVE BEEN HAD SUCH EXTRAORDINARY CONDITIONS NOT EXISTED. THE QUESTION OF WHETHER CLAIMS OF THE GOVERNMENT ARISING OUT OF MARINE CASUALTIES INVOLVING VESSELS REQUISITIONED PURSUANT TO SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, DURING THE PRESENT NATIONAL EMERGENCY SHOULD BE ADJUSTED ON THE BASIS OF THE VALUE OF THE VESSELS ON SEPTEMBER 8, 1939--- THE DATE AS OF WHICH THE VALUE OF VESSEL REQUISITIONED DURING THE PRESENT EMERGENCY IS TO BE DETERMINED IN FIX THE COMPENSATION TO BE PAID OWNERS--- OR WHETHER ADJUSTMENT SHOULD BE ON THE BASIS OF HIGHER VALUATIONS EXISTING ON THE DATE OF THE CASUALTY, IS FOR DETERMINATION BY THE COURTS, BUT, IN ORDER FULLY TO PROTECT THE GOVERNMENT'S INTEREST IN SUCH MATTERS, CLAIMS SHOULD BE ASSERTED WITHOUT REGARD TO THE COMPENSATION PAID OWNERS. WHERE PAYMENTS ARE TO BE MADE ADMINISTRATIVELY, WITHOUT JUDICIAL DETERMINATION, THEY SHOULD BE IN FULL ACCORD WITH THE INTENT AND PURPOSE OF THE APPLICABLE STATUTE, REGARDLESS OF ANY PERSONAL OPINIONS THAT MAY BE ENTERTAINED AS TO ITS CONSTITUTIONALITY.

COMPTROLLER GENERAL WARREN TO THE ADMINISTRATOR, WAR SHIPPING ADMINISTRATION, NOVEMBER 28, 1942:

I HAVE YOUR LETTER OF NOVEMBER 24, 1942, IN WHICH YOU REFER TO SECTION 902 OF THE MERCHANT MARINE ACT OF 1936 AND REQUEST DECISION OF CERTAIN QUESTIONS PRESENTED AS FOLLOWS:

(1) IS IT YOUR OPINION THAT THE ENHANCEMENT CLAUSE IN SECTION 902 REQUIRES THE ADMINISTRATOR TO FIX VALUES FOR ALL VESSELS INCLUDING PASSENGER SHIPS, FREIGHT SHIPS, FISHING VESSELS, TUGS, BARGES, SMALL CRAFT AND OTHER WATER CRAFT AS OF A SPECIFIC CALENDAR DATE OR MAY THE ADMINISTRATOR FIX SUCH VALUATION UNDER THE ORDINARY RULES OF LAW APPLICABLE TO THE SUBJECT OF VALUATIONS AFTER DEDUCTING ALL "ENHANCEMENTS" WHICH HE FINDS TO HAVE BEEN PROXIMATELY CAUSED BY THE NECESSITY OF THE TAKING OR USE?

(2) IF IT IS YOUR OPINION THAT VALUES MUST BE BASED ON A SPECIFIC CALENDAR DATE, IS THE ADMINISTRATOR IN A POSITION TO REACH HIS OWN DETERMINATION AS TO THE APPROPRIATE DATE OR IS IT MANDATORY UNDER THE LAW FOR HIM TO PICK A SPECIFIC DATE SUCH AS THE DATE OF THE PRESIDENT'S PROCLAMATION OF THE LIMITED EMERGENCY OR THE DATE OF THE UNLIMITED EMERGENCY.

(3) IF IN YOUR OPINION THE ADMINISTRATOR IS REQUIRED TO FIX VALUES AS OF A SPECIFIC DATE, PLEASE ADVISE AS TO THE DATE WHICH IN YOUR OPINION THE ADMINISTRATION IS REQUIRED BY LAW TO ADOPT FOR THIS PURPOSE.

(4) IF IT IS YOUR OPINION THAT A SPECIFIC DATE MUST BE SELECTED, IS IT LIKEWISE YOUR OPINION THAT VALUES SO FIXED MUST BE APPLIED TO VESSELS BUILT SUBSEQUENTLY AT HIGHER PRICES?

(5) IF YOU FIND THAT A SPECIFIC DATE MUST BE TAKEN, WOULD YOU APPLY THE VALUATION DETERMINED BY THIS METHOD IN CASES OF VESSELS PURCHASED BY BONA FIDE PURCHASES SUBSEQUENT TO THAT DATE AT HIGHER PRICES WHICH REFLECTED THE THEN PREVAILING REASONABLE MARKET PRICE?

(6) IF YOU FIND THAT A SPECIFIC DATE VALUATION MUST BE APPLIED, HOW WOULD YOU TREAT VESSELS WHICH HAVE BEEN RECONSTRUCTED OR EXTENSIVELY REPAIRED AFTER THAT DATE WITH A RESULTING BONA FIDE REASONABLE COST TO THE OWNER SUBSTANTIALLY IN EXCESS OF SUCH VALUE.

(7) IF YOU ARE OF THE OPINION THAT THE SPECIFIC DATE MUST BE ADOPTED, WOULD YOU INSIST ON APPLYING SUCH VALUATION TO VESSELS VALUED BY COMPETENT REGULATORY BODIES AT A LATER DATE AT SUBSTANTIALLY HIGHER VALUATIONS REFLECTING APPROPRIATE STANDARDS FOR RATE MAKING PURPOSES?

(8) IF YOU ARE OF THE OPINION THAT THE SPECIFIC DATE THEORY MUST BE APPLIED, IS THE ADMINISTRATOR REQUIRED TO INSIST UPON APPLYING THIS VALUATION IN CASES OF VESSELS SUBJECT TO BONA FIDE JUDICIAL VALUATIONS IN CONNECTION WITH JUDICIAL SALES OR IN FIXING OF UP-SET PRICES OR IN OTHER JUDICIAL PROCEEDINGS?

(9) IF YOU ARE OF THE OPINION THAT THE SPECIFIC DATE THEORY MUST BE APPLIED, WILL YOU INSIST ON APPLYING THIS THEORY IN SITUATIONS WHERE THE VESSEL WAS INVOLVED IN GENERAL AVERAGE PROCEEDING SUBSEQUENT TO THAT DATE IN CONNECTION WITH WHICH THE VALUATION OF THE VESSEL WAS FIXED IN ACCORDANCE WITH THE MARKET VALUE AT A SUBSTANTIALLY HIGHER PRICE.

(10) IF YOU FEEL THAT THE SPECIFIC DATE THEORY MUST BE APPLIED WOULD YOU INSIST UPON ITS APPLICATION TO CASES WHERE VESSELS ARE ENCUMBERED BY LIENS REPRESENTING ADVANCES BY CREDITORS OR OTHER INTERESTS AT VALUES IN EXCESS OF SUCH VALUE BUT NOT IN EXCESS OF REASONABLE MARKET VALUE.

(11) IF THE SPECIFIC DATE THEORY MUST BE APPLIED, IS IT YOUR OPINION THAT THE ADMINISTRATOR MUST APPLY SUCH VALUATION IN CONNECTION WITH FIXING HIRE FOR THE USE OF VESSELS ON A TIME CHARTER BASIS NOTWITHSTANDING THE GREATLY INCREASED COSTS AND RISKS OF OPERATION WHICH HAVE DEVELOPED SINCE THAT DATE.

(12) IF THE SPECIFIC VALUE THEORY MUST BE ADOPTED, MUST IT BE APPLIED TO ANY VESSELS OR CLASS OF VESSELS IF DEMONSTRATED TO THE SATISFACTION OF THE ADMINISTRATOR THAT THE VALUE OF SUCH VESSELS OR CLASS OF VESSELS WAS ABNORMALLY DEPRESSED OR ENHANCED ON THAT DATE BY REASON OF EXTRAORDINARY BUSINESS CIRCUMSTANCES?

(13) IF THE SPECIFIC DATE THEORY MUST BE APPLIED MUST THE ADMINISTRATOR'S CLAIMS ARISING OUT OF MARINE CASUALTIES BE LIMITED TO THE VALUE OF THE VESSEL AS UNDER SUCH DATE NOTWITHSTANDING THE HIGHER MARKET VALUE AS OF THE DATE OF THE CASUALTY?

(14) CAN THE ADMINISTRATOR PROPERLY DETERMINE VALUES ON THE BASIS OF THE MOST FAVORABLE RESULTS TO THE UNITED STATES GOVERNMENT USING THE ENHANCEMENT CLAUSE AMBIGUITIES TO REDUCE THE MARKET VALUES DRASTICALLY WITH CONCURRENCE OF THE SUBSTANTIAL SEGMENT OF THE INDUSTRY SO AS TO TAKE ADVANTAGE OF VOGELSTEIN VS. UNITED STATES, 262 U.S. 337, OR IS THE ADMINISTRATOR REQUIRED TO INSIST UPON THE MOST EXTREME INTERPRETATION OF THE LAW EVEN THOUGH IN HIS OPINION THIS INTERPRETATION WILL NOT BE SUSTAINED BY THE COURTS AND WOULD ULTIMATELY RESULT IN SUBSTANTIALLY INCREASED COSTS TO THE UNITED STATES?

(15) IS IT YOUR OPINION THAT THE ENHANCEMENT CLAUSE HAS NOT BEEN SATISFIED BY A PROGRAM WHICH HAS RESULTED IN SLASHING CHARTER RATES BY OVER 50 PERCENT AND VALUATIONS OF SHIPS BY FROM 30 TO 50 PERCENT OVER 1941 RATES AND BY AN EVEN GREATER REDUCTION OVER THE RATES OF WORLD WAR NO. 1?

SECTION 902 (A) OF THE MERCHANT MARINE ACT OF 1936, AS AMENDED, 53 STAT. 1254, 1255, PROVIDES, IN PERTINENT PART, AS FOLLOWS:

WHENEVER THE PRESIDENT SHALL PROCLAIM THAT THE SECURITY OF THE NATIONAL DEFENSE MAKES IT ADVISABLE OR DURING ANY NATIONAL EMERGENCY DECLARED BY PROCLAMATION OF THE PRESIDENT, IT SHALL BE LAWFUL FOR THE COMMISSION TO REQUISITION OR PURCHASE ANY VESSEL OR OTHER WATERCRAFT OWNED BY CITIZENS OF THE UNITED STATES, OR UNDER CONSTRUCTION WITHIN THE UNITED STATES, OR FOR ANY PERIOD DURING SUCH EMERGENCY, TO REQUISITION OR CHARTER THE USE OF ANY SUCH PROPERTY. THE TERMINATION OF ANY EMERGENCY SO DECLARED SHALL BE ANNOUNCED BY A FURTHER PROCLAMATION BY THE PRESIDENT. WHEN ANY SUCH PROPERTY OR THE USE THEREOF IS SO REQUISITIONED, THE OWNER THEREOF SHALL BE PAID JUST COMPENSATION FOR THE PROPERTY TAKEN OR FOR THE USE OF SUCH PROPERTY, BUT IN NO CASE SHALL THE VALUE OF THE PROPERTY TAKEN OR USED BE DEEMED ENHANCED BY THE CAUSES NECESSITATING THE TAKING OR USE. * * * ( ITALICS SUPPLIED.) IT IS UNDERSTOOD THAT THE ITALICIZED PORTION OF SAID SECTION IS ,THE ENHANCEMENT CLAUSE" REFERRED TO IN YOUR LETTER, SUPRA.

IT IS AT ONCE APPARENT THAT THE CONGRESS IN USING SUCH LANGUAGE CONTEMPLATED THAT THE COMPENSATION TO BE PAID A PRIVATE OWNER WHOSE VESSEL HAD BEEN REQUISITIONED BY THE UNITED STATES UNDER THE STRESS OF DANGER TO THE NATIONAL SECURITY SHOULD BE MEASURED BY STANDARDS PREVAILING AT A TIME WHEN VARIOUS FACTORS ORDINARILY ATTENDING SUCH A STATE OF AFFAIRS WERE NOT OPERATIVE TO ENHANCE THE VALUE OF VESSELS.

THERE ARE CERTAIN FUNDAMENTAL TRUTHS--- OF WHICH IT IS TO BE PRESUMED THAT CONGRESS WAS COGNIZANT--- WHICH WOULD APPEAR TO UNDERLIE THE PROVISION IN QUESTION. WAR--- OR THE THREAT OF WAR--- EXERCISES A TREMENDOUS INFLUENCE ON COMMODITY PRICES, PARTICULARLY THOSE DIRECTLY CONNECTED WITH THE WAR EFFORT. THE EQUALIZING INFLUENCE WHICH THE FORCES OF SUPPLY AND DEMAND EXERCISE UPON SUCH PRICES UNDER NORMAL TIMES AND CONDITIONS IS WEAKENED BY THE INABILITY OF SUPPLIES TO KEEP PACE WITH THE INCREASED NEEDS. THE VITAL IMPORTANCE OF SHIPPING TO THE PROSECUTION OF WAR OR TO STRENGTHENING OF THE NATIONAL DEFENSE IN TIMES WHEN THE SECURITY OF THE NATION HAS BEEN IMPERILED PLACES VESSELS AND VARIOUS OTHER WATERCRAFT DIRECTLY AND IMMEDIATELY IN THE PATH OF WHATEVER ABNORMAL INFLUENCES SUCH TIMES PRODUCE.

THE POWER LAWFULLY TO REQUISITION VESSELS OF PRIVATE OWNERS WAS, BY THE EXPRESS TERMS OF SECTION 902 (A), AUTHORIZED TO BE EXERCISED WHENEVER THE PRESIDENT SHALL PROCLAIM THAT "THE SECURITY OF THE NATIONAL DEFENSE MAKES IT ADVISABLE OR DURING ANY NATIONAL EMERGENCY DECLARED BY PROCLAMATION OF THE PRESIDENT.' ON SEPTEMBER 8, 1939, THE PRESIDENT ISSUED THE FOLLOWING PROCLAMATION:

WHEREAS A PROCLAMATION ISSUED BY ME ON SEPTEMBER 5, 1939, PROCLAIMED THE NEUTRALITY OF THE UNITED STATES IN THE WAR NOW UNHAPPILY EXISTING BETWEEN CERTAIN NATIONS; AND

WHEREAS THIS STATE OF WAR IMPOSES ON THE UNITED STATES CERTAIN DUTIES WITH RESPECT TO THE PROPER OBSERVANCE, SAFEGUARDING, AND ENFORCEMENT OF SUCH NEUTRALITY, AND THE STRENGTHENING OF THE NATIONAL DEFENSE WITHIN THE LIMITS OF PEACETIME AUTHORIZATIONS; AND

WHEREAS MEASURES REQUIRED AT THIS TIME CALL FOR THE EXERCISE OF ONLY A LIMITED NUMBER OF THE POWERS GRANTED IN A NATIONAL EMERGENCY:

NOW, THEREFORE, I, FRANKLIN D. ROOSEVELT, PRESIDENT OF THE UNITED STATES OF AMERICA, DO PROCLAIM THAT A NATIONAL EMERGENCY EXISTS IN CONNECTION WITH AND TO THE EXTENT NECESSARY FOR THE PROPER OBSERVANCE, SAFEGUARDING, AND ENFORCING OF THE NEUTRALITY OF THE UNITED STATES AND THE STRENGTHENING OF OUR NATIONAL DEFENSE WITHIN THE LIMITS OF PEACETIME AUTHORIZATIONS. SPECIFIC DIRECTIONS AND AUTHORIZATIONS WILL BE GIVEN FROM TIME TO TIME FOR CARRYING OUT THESE TWO PURPOSES.

THIS PROCLAMATION IS COMMONLY KNOWN AND SPOKEN OF AS THE "PROCLAMATION OF A LIMITED NATIONAL EMERGENCY.' HOWEVER, IT WOULD SEEM THAT, ALTHOUGH FOR SOME PURPOSES AND IN OTHER CONNECTIONS THE EMERGENCY MIGHT HAVE BEEN A "LIMITED" ONE, ONLY, IT CERTAINLY WAS SUCH A STATE AS WAS CONTEMPLATED BY SAID SECTION 902 (A) WITH RESPECT TO THE REQUISITIONING OF VESSELS. HENCE, IT WOULD SEEM THAT THE CONDITIONS SET OUT IN SAID SECTION 902 (A) AS NECESSARY FOR THE LAWFUL TAKING OF A PRIVATE VESSEL EXISTED AS OF SEPTEMBER 8, 1939.

WHAT ARE THE CAUSES THAT NECESSITATE THE TAKING OR USE BY THE GOVERNMENT OF A PRIVATE VESSEL? THERE WOULD APPEAR TO BE BUT ONE ANSWER TO THAT QUESTION: THE PREVALENCE OF A DANGER OR THREAT TO THE NATION. IN OTHER WORDS, IT WOULD SEEM THAT THE CONDITIONS UNDER WHICH THE POWER TO REQUISITION WAS TO BE EXERCISED AND THE REASON OR CAUSE WHICH NECESSITATED SUCH EXERCISE OF POWER ARE BUT ONE AND THE SAME. CONSEQUENTLY IT SEEMS BUT A LOGICAL STEP TO CONCLUDE THAT THE DATE UPON WHICH SUCH CONDITIONS CAME INTO BEING MUST LIKEWISE BE CONSIDERED THE DATE WHEN "THE CAUSES NECESSITATING THE TAKING OR USE" BEGAN TO EXERCISE THEIR INFLUENCE ON THE MARKET VALUE OF VESSELS.

FURTHERMORE, UNLESS A CERTAIN AND FIXED DATE BE RECOGNIZED AS CONTROLLING IN THIS CONNECTION, IT WOULD APPEAR DIFFICULT--- IF NOT IMPOSSIBLE--- TO GIVE FULL EFFECT TO THE INTENT OF THE CONGRESS IN FIXING THE BASIS ON WHICH COMPENSATION TO BE PAID OWNERS OF PRIVATE VESSELS TAKEN OVER BY THE GOVERNMENT IS TO BE DETERMINED. HENCE, IT WOULD APPEAR REASONABLE TO CONCLUDE THAT THE ENHANCEMENT CLAUSE IN SAID SECTION 902 (A) PROHIBITS THE PAYMENT OF COMPENSATION FOR SUCH VESSELS TO THE EXTENT THAT IT MAY BE BASED UPON VALUES IN EXCESS OF THE VALUES EXISTING ON SEPTEMBER 8, 1939, PROVIDED SUCH EXCESS BE DETERMINED AS DUE TO ECONOMIC CONDITIONS DIRECTLY CAUSED BY THE NATIONAL EMERGENCY. QUESTIONS (1), (2), AND (3) ARE ANSWERED ACCORDINGLY.

THE REMAINING QUESTIONS WILL BE ANSWERED SPECIFICALLY IN THE ORDER GIVEN.

(4) NO. WHILE, UNQUESTIONABLY, THE CONSTRUCTION COST OF VESSELS HAS INCREASED SINCE SEPTEMBER 8, 1939, DUE--- IN ALL LIKELIHOOD--- TO THE SAME CAUSES THAT HAVE ENHANCED THE VALUES OF VESSELS, THE PROVISION REASONABLY MAY NOT BE CONSTRUED AS REQUIRING THE ELIMINATION OF SUCH ACTUAL INCREASES IN THE COST OF CONSTRUCTION OF VESSELS AND OTHER WATERCRAFT CONSTRUCTED AFTER SUCH DATE IN DETERMINING THE JUST COMPENSATION TO BE PAID THEREFOR.

(5) YES. TO MAKE EXCEPTION IN SUCH CASES--- WHERE NO EXCEPTION HAS BEEN MADE BY THE CONGRESS--- NOT ONLY WOULD BE GOING BEYOND THE SPHERE OF STATUTORY INTERPRETATION BUT WOULD BE PROVIDING A MEANS BY WHICH THE LIMITATIONS OF SAID SECTION 902 (A) SUCCESSFULLY MIGHT BE AVOIDED BY UNSCRUPULOUS SHIPOWNERS FEIGNING CIRCUMSTANCES WHICH WELL MIGHT CLOUD THE LACK OF BONA FIDES OF A PARTICULAR TRANSACTION. FURTHERMORE, SAID SECTION 902 (A) HAS BEEN THE LAW OF THE LAND THROUGHOUT THE PRESENT EMERGENCY--- OF WHICH LAW EVERYONE IS PRESUMED TO HAVE HAD KNOWLEDGE--- SO THAT PURCHASERS OF VESSELS SINCE SEPTEMBER 8, 1939, MUST BE DEEMED VOLUNTARILY TO HAVE ASSUMED THE RISK CREATED BY THE PRESENCE OF SAID LAW ON THE STATUTE BOOKS THAT THE VESSEL PURCHASED SUBSEQUENTLY MIGHT BE REQUISITIONED BY THE GOVERNMENT AND COMPENSATION THEREFOR FIXED IN ACCORDANCE WITH THE EXPRESS TERMS OF SAID LAW.

(6) THIS SITUATION IS MORE OR LESS ANALOGOUS TO THAT PRESENTED IN QUESTION (4). IN SUCH CASES THE VALUE OF THE VESSEL HAS BEEN ENHANCED BY REASON OF THE IMPROVEMENTS OR REPAIRS EFFECTED THEREON BY THE OWNER. JUDGED BY STANDARDS EXISTING AS OF SEPTEMBER 8, 1939, THE VALUE OF THE WORK DONE MAY NOT EQUAL THE ACTUAL COST THEREOF JUST AS IN THE CASE OF THE CONSTRUCTION OF AN ENTIRE VESSEL. THE VARIANCE REPRESENTS, OF COURSE, THE INFLATED COST OF LABOR AND MATERIALS WHICH, IN TURN, IS CAUSED BY THE EMERGENCY. HOWEVER, IN VIEW OF THE OBVIOUS HARDSHIPS THAT WOULD RESULT WERE THE LIMITATION TO BE APPLIED IN SUCH CASES, IT MAY BE CONCLUDED THAT THE CONGRESS DID NOT INTEND TO LIMIT THE COMPENSATION INSOFAR AS SUCH INDIRECT ELEMENTS OF THE VALUE OF A VESSEL ARE CONCERNED. (7) YES. THE LANGUAGE OF SECTION 902 (A) IS CLEAR AND COMPREHENSIVE IN PROVIDING THAT THE ENHANCEMENT PROHIBITION IS TO BE APPLIED "WHEN ANY SUCH PROPERTY IS SO REQUISITIONED.' IT WOULD APPEAR THAT ANY "APPROPRIATE STANDARDS FOR RATE MAKING PURPOSES" MUST BE REGARDED--- INSOFAR AS THE REQUISITIONING OF VESSELS UNDER SECTION 902 (A) IS CONCERNED AS SUBJECT TO THE LIMITATIONS IMPOSED BY THE ENHANCEMENT CLAUSE OF SAID SECTION.

(8) YES. AS POINTED OUT IN ANSWER TO QUESTION (7) THE STATUTE MAKES NO EXCEPTIONS--- EITHER SPECIFICALLY OR BY NECESSARY IMPLICATION- - WITH RESPECT TO THE OPERATION OF THE ENHANCEMENT CLAUSE. (9) YES. SEE ANSWER TO QUESTION (8).

(10) YES. THE SITUATION HERE IS VERY SIMILAR, IN THEORY AT LEAST, TO THAT PRESENTED BY QUESTION (5), AND THE AFFIRMATIVE ANSWER IS BASED ON THE SAME REASONS.

(11) NO. THE EFFECT OF THE STATUTE--- WITH RESPECT TO INSTANCES IN WHICH THE USE OF A VESSEL IS REQUISITIONED--- WOULD APPEAR TO BE ONLY THAT THE COMPENSATION UNDER THE CHARTER SHOULD NOT BE INCREASED BY REASON OF AN ENHANCEMENT IN THE VALUE OF THE VESSEL FROM THE CAUSES SPECIFIED. WOULD APPEAR TO HAVE NO APPLICATION TO INCREASED COSTS OF OPERATIONS, ETC.

(12) PRESUMABLY, THIS QUESTION HAS REFERENCE TO A SITUATION WHERE IT IS FOUND THAT AN ABNORMAL VALUE OF A TEMPORARY AND UNUSUAL NATURE EXISTED AS OF SEPTEMBER 8, 1939, WITH RESPECT TO A PARTICULAR VESSEL OR CLASS OF VESSELS, BUT WHERE IT IS POSSIBLE WITH A FAIR DEGREE OF ACCURACY TO ESTIMATE WHAT THE VALUE OF SUCH VESSEL OR CLASS OF VESSELS WOULD HAVE BEEN HAD SUCH EXTRAORDINARY CIRCUMSTANCES NOT EXISTED. UNDER SUCH CIRCUMSTANCES, IT WOULD APPEAR THAT THE PURPOSES OF THE ENHANCEMENT PROVISION WOULD BE FULLY ACCOMPLISHED BY THE USE OF SUCH ESTIMATED VALUE OR VALUES.

(13) NO. IT WOULD APPEAR THAT THE AMOUNT TO WHICH THE GOVERNMENT IS ENTITLED UNDER SUCH CLAIMS MAY OR MAY NOT BE AFFECTED BY THE VALUE OF THE VESSEL ON SEPTEMBER 8, 1939. THIS QUESTION PROPERLY IS FOR ADJUDICATION BY A COURT OF COMPETENT JURISDICTION AND, IN ORDER FULLY TO PROTECT THE INTEREST OF THE UNITED STATES IN SUCH MATTERS, THE CLAIMS OF THE ADMINISTRATOR ARISING OUT OF MARINE CASUALTIES SHOULD NOT BE LIMITED TO THE COMPENSATION PAID UPON THE REQUISITIONING OF SUCH VESSELS.

(14) THERE IS NOT UNDERSTOOD UNDER WHAT AUTHORITY THE HEAD OF AN ADMINISTRATIVE DEPARTMENT OF THE GOVERNMENT IS ENTITLED TO DISREGARD--- OR GIVE ANYTHING LESS THAN FULL FORCE AND EFFECT TO--- A STATUTE BECAUSE OF ANY PERSONAL OPINIONS THAT MAY BE ENTERTAINED AS TO ITS CONSTITUTIONALITY. SUCH QUESTIONS PROPERLY ARE FOR DETERMINATION BY THE JUDICIAL BRANCH OF THE GOVERNMENT. WHERE PAYMENTS ARE TO BE MADE ADMINISTRATIVELY, WITHOUT JUDICIAL DETERMINATION, THEY SHOULD BE IN FULL ACCORD WITH THE INTENT AND PURPOSES OF SAID STATUTE.

(15) IT IS MY OPINION THAT THE ENHANCEMENT CLAUSE OF SAID SECTION 902 (A) HAS NOT BEEN SATISFIED UNLESS THE COMPENSATION PAID FOR VESSELS REQUISITIONED THEREUNDER HAS BEEN AND IS BEING DETERMINED IN ACCORDANCE WITH ITS TERMS AS HEREIN CONSTRUED.

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