B-136961, JUNE 27, 1960, 39 COMP. GEN. 883

B-136961, JUNE 27, 1960, 39 COMP. GEN. 883

VESSEL SALES - STATUTORY CONSTRUCTION - AMBIGUITY BETWEEN STATEMENTS MADE DURING CONGRESSIONAL CONSIDERATION OF BILLS IN THE DETERMINATION OF THE SALES PRICE FOR CERTAIN VESSELS AUTHORIZED TO BE SOLD TO A FOREIGN COUNTRY, PURSUANT TO THE ACT OF MAY 14, 1960, P.L. 86 -473, 73 STAT. 143, THE DEPRECIATION ALLOWANCE GIVEN TO THE PURCHASERS IS FOR COMPUTATION ON THE STATUTORY SALES PRICE BEFORE SUCH SALES PRICE IS REDUCED BY PRIOR PAYMENTS IN ACCORDANCE WITH THE EXPLANATION GIVEN BY A MEMBER OF THE CONFERENCE COMMITTEE WHEN THE CONFERENCE REPORT ON THE BILL, WHICH BECAME THE ACT OF MAY 14, 1960, WAS BEING CONSIDERED, WHICH EXPLANATION IS REGARDED AS HAVING MORE WEIGHT THAN AN EARLIER STATEMENT MADE, AT THE TIME OF ITS PASSAGE BY THE SENATE, BY THE CHAIRMAN OF THE LEGISLATIVE COMMITTEE WHICH REPORTED THE BILL, TO THE EFFECT THAT THE DEPRECIATION ALLOWANCE WAS TO BE COMPUTED ON THE SALES PRICE AFTER REDUCTION OF THE CONTRACT PAYMENTS.

TO THE ACTING ADMINISTRATOR, MARITIME ADMINISTRATION, JUNE 27, 1960:

REFERENCE IS MADE TO YOUR LETTER OF MAY 27, 1960, REQUESTING OUR OPINION AS TO THE AMOUNT ON WHICH DEPRECIATION IS TO BE COMPUTED IN DETERMINING THE SALES PRICE OF VESSELS UNDER PUBLIC LAW 473, 86TH CONGRESS, 2D SESSION, 74 STAT. 143. THAT PORTION OF THE STATUTE WHICH GIVES RISE TO YOUR QUESTION READS AS FOLLOWS:

THE SALE PRICE OF THE VESSELS SHALL BE THE STATUTORY SALES PRICE, LESS PAYMENTS HERETOFORE MADE FROM 1948 TO 1951 ON ACCOUNT OF THE PURCHASE OF THE FOUR NAMED VESSELS, AND LESS DEPRECIATION COMPUTED AT THE RATE OF 3 1/2 PERCENTUM PER ANNUM FROM THE DATE OF DEFAULT UNDER THE ORIGINAL CONTRACT TO THE DATE OF SALE UNDER THIS ACT. ( ITALICS SUPPLIED)

THE CLAUSE ITALICIZED ABOVE WAS INSERTED AS AN AMENDMENT BY THE SENATE INTERSTATE AND FOREIGN COMMERCE COMMITTEE, WHICH FAVORABLY REPORTED THE BILL TO THE SENATE ON MARCH 4, 1960.

WHILE THE FOREGOING AMENDMENT IS NOT ENTIRELY FREE FROM AMBIGUITY, WE WOULD BE INCLINED TO THE VIEW THAT A STRICT CONSTRUCTION OF THE LANGUAGE USED WOULD LEAD TO THE CONCLUSION THAT THE AMOUNT ON WHICH THE DEPRECIATION IS TO BE COMPUTED WOULD BE THE STATUTORY SALES PRICE BEFORE IT IS REDUCED BY THE PAYMENTS. IT APPEARS THAT YOU SHARE THE SAME VIEW; HOWEVER, BECAUSE OF THE OBVIOUS CONFLICT BETWEEN THE TWO EXPLANATIONS SET FORTH BELOW, FIRST, BY THE CHAIRMAN OF THE LEGISLATIVE COMMITTEE AT THE TIME THE AMENDMENT WAS REPORTED ON THE SENATE FLOOR, AND LATER BY ONE OF THE MANAGERS ON THE PART OF THE SENATE ON THE CONFERENCE COMMITTEE, YOU FEEL THAT THE MATTER IS NOT FREE FROM DOUBT AS TO THE BASE UPON WHICH THE DEPRECIATION IS INTENDED TO BE COMPUTED. HENCE, YOU REQUEST WHETHER WE CONCUR IN YOUR VIEW.

A BRIEF REVIEW OF THE RELEVANT LEGISLATIVE BACKGROUND, AS SET FORTH IN YOUR SUBMISSION, IS AS FOLLOWS:

DURING CONSIDERATION OF THE BILL ON THE SENATE FLOOR, SENATOR MAGNUSON, CHAIRMAN OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, UPON INQUIRY FROM SENATOR WILLIAMS, EXPLAINED THAT, ACCORDING TO HIS STAFF, THE AMENDMENT WOULD PROVIDE THAT THE DEPRECIATION WOULD BE COMPUTED ON THE STATUTORY SALES PRICE AS REDUCED BY THE PAYMENTS WHICH WERE MADE UNDER THE ORIGINAL CONTRACT. SEE 106 CONG. REC. 6179 ( MARCH 28, 1960). SUBSEQUENTLY, HOWEVER, UPON PRESENTING THE CONFERENCE REPORT TO THE SENATE, WHEREIN THE HOUSE RECEDED FROM ITS DISAGREEMENT FROM THE SENATE AMENDMENT, SENATOR BARTLETT, ONE OF THE MANAGERS ON THE PART OF THE SENATE, EXPLAINED IN PERTINENT PART AS FOLLOWS:

* * * SUCH DEPRECIATION, THE CONFERENCE AGREED, WOULD BE COMPUTED ON THE STATUTORY SALES PRICE BEFORE THE STATUTORY SALES PRICE IS REDUCED BY PAYMENTS THE PURCHASER HAS ALREADY MADE. ( ITALICS SUPPLIED). SEE 106 CONG. REC. 9431 ( MAY 12, 1960).

AS YOU KNOW, THE COURTS HAVE EXCEPTED FROM THE GENERAL RULE EXCLUDING THE USE OF STATEMENTS IN DEBATE OF INDIVIDUAL LEGISLATORS AS TO THE MEANING OF THE BILL, THE STATEMENTS OF THE MEMBER OF THE COMMITTEE IN CHARGE OF THE BILL. HIS REMARKS UPON PRESENTING THE BILL AND THE ANSWERS MADE BY HIM TO QUESTIONS ASKED BY MEMBERS WILL BE CONSIDERED BY THE COURTS IN CONSTRUING PROVISIONS OF THE BILL SUBSEQUENTLY ENACTED INTO LAW. SEE SECTION 5007, SUTHERLAND ON STATUTORY CONSTRUCTION. IT HAS BEEN HELD THAT THESE STATEMENTS ARE IN THE NATURE OF SUPPLEMENTAL COMMITTEE REPORTS AND ARE ENTITLED TO THE SAME WEIGHT ACCORDED FORMAL COMMITTEE REPORTS.

THUS, BY APPLICATION OF THE FOREGOING RULE, THE COMMENTS OF SENATOR MAGNUSON, STANDING ALONE, MANIFESTLY SHOULD BE GIVEN SERIOUS CONSIDERATION IN DETERMINING THE LEGISLATIVE INTENT OF THE LANGUAGE INVOLVED. BUT THE COURTS HAVE LIKEWISE ADOPTED THE SAME ATTITUDE TOWARD STATEMENTS OF THE MEMBER OF THE CONFERENCE COMMITTEE WHO EXPLAINS TO THE BODY THE ACTION HIS COMMITTEE HAS TAKEN IN ELIMINATING THE DIFFERENCES BETWEEN IT AND THE OTHER HOUSE OF THE LEGISLATURE. SUTHERLAND ON STATUTORY CONSTRUCTION, SECTION 5011.

IT APPEARS SIGNIFICANT TO OBSERVE THAT UPON THE BILL BEING REFERRED TO CONFERENCE, SENATOR MAGNUSON WAS ONE OF THE THREE MANAGERS ON THE PART OF THE SENATE. FURTHERMORE, THE PRIMARY PURPOSE OF THE CONFERENCE WAS TO RESOLVE THE ONE AND ONLY DIFFERENCE BETWEEN THE LEGISLATIVE BODIES, I. E., THE SENATE AMENDMENT PROVIDING FOR THE SUBJECT DEPRECIATION. HENCE, IT WOULD APPEAR LOGICAL TO ASSUME THAT THE EXPLANATORY REMARKS BY SENATOR BARTLETT, ONE OF THE OTHER MANAGERS, THAT THE DEPRECIATION WOULD BE COMPUTED ON THE STATUTORY SALES PRICE BEFORE ITS REDUCTION BY PRIOR PAYMENTS, MUST HAVE BEEN CONCURRED IN BY SENATOR MAGNUSON. IN ANY EVENT, THERE APPEARS TO HAVE BEEN NO OBJECTION TO THE EXPLANATION GIVEN, AS EVIDENCED BY THE IMMEDIATE ADOPTION OF THE CONFERENCE REPORT. THEREFORE, UPON GIVING EFFECT TO THE LAPSE OF TIME BETWEEN THE INTRODUCTION OF THE AMENDMENT UPON THE SENATE FLOOR AND THE PRESENTATION OF THE CONFERENCE REPORT, TOGETHER WITH THE INTERVENING DELIBERATION OF THE MATTER IN CONFERENCE, WE WOULD BE INCLINED TO THE VIEW THAT THE EXPLANATION GIVEN BY A MEMBER OF THE CONFERENCE COMMITTEE PROPERLY SHOULD SUPERSEDE ANY COMMENTS THERETOFORE MADE.

AS FURTHER EVIDENCE OF THE INTENT OF THE BILL, WE BELIEVE IT APPROPRIATE TO REFER TO HOUSE REPORT NO. 1050, 86TH CONGRESS, ST SESSION, ACCOMPANYING THE SUBJECT BILL, WHEREIN IT IS EXPLAINED THAT AS ORIGINALLY INTRODUCED H.R. 8042 PROVIDED THAT THE SALE PRICE OF THE VESSELS WOULD BE THE GREATER OF (1) THE STATUTORY SALES PRICE OF THE VESSELS UNDER SECTION 3 (D) OF THE MERCHANT SHIP SALES ACT OF 1946, 41 U.S.C. 1736 (D), EXCEPT THAT ADDITIONAL DEPRECIATION AT A RATE TO BE DETERMINED BY THE SECRETARY OF COMMERCE WOULD BE DEDUCTED FROM THAT PRICE FOR THE PERIOD FROM THE TIME WHEN THE FLOOR PRICE UNDER THE ACT WAS REACHED TO THE DATE THE SALE CONTRACT IS ENTERED INTO, OR (2) THE PRESENT FAIR MARKET VALUE OF THE VESSELS AS DETERMINED BY THE SECRETARY OF COMMERCE. THE REPORT POINTED OUT THAT THE SALE PRICE THUS OBTAINED WOULD BE FURTHER REDUCED BY THE DOWNPAYMENT AND INSTALLMENTS OF PRINCIPAL PAID UNDER THE ORIGINAL SALES CONTRACT. UPON REACHING THE SENATE, THE BILL WAS AMENDED BY THE SENATE COMMITTEE, APPARENTLY UPON RECOMMENDATION OF THE DEPARTMENT OF STATE, TO PROVIDE FOR THE AFOREMENTIONED DEPRECIATION. SEE SENATE REPORT NO. 1156, 86TH CONGRESS, 2D SESSION. IN ITS LETTER OF FEBRUARY 15, 1960, THE DEPARTMENT OF STATE ADVISED THE COMMITTEE THAT IT HAD BEEN INFORMED BY THE CHINESE EMBASSY AND BY SHIPPING OFFICIALS IN THE REPUBLIC OF CHINA THAT "IT WOULD BE WILLING TO TAKE THE VESSELS IF AN ALLOWANCE FOR DEPRECIATION OF 3 1/2 PERCENT IS PERMITTED TO REDUCE THE PRICE OF THE VESSELS.' ALSO, IN A STATEMENT TO THE COMMITTEE BY THE CHAIRMAN OF THE BOARD OF DIRECTORS OF THE CHINA MERCHANTS STEAMSHIP NAVIGATION COMPANY, HE EMPHASIZED THAT "IT WOULD BE OUR HOPE THAT AN AMENDMENT ALLOWING 3 1/2 PERCENT ANNUAL DEPRECIATION FROM 1948, THE TIME OF THE ORIGINAL SALE OF THE SHIPS TO CHINA CAN BE INSERTED IN THE PRESENT BILL.'

IN THE LIGHT OF THE FOREGOING, WE FIND NO REASON TO DISAGREE WITH YOUR OPINION THAT THE CONGRESS INTENDED THE AMOUNT ON WHICH DEPRECIATION IS TO BE COMPUTED IN DETERMINING THE SALES PRICE OF VESSELS TO BE THE STATUTORY SALES PRICE BEFORE IT IS REDUCED BY AMOUNTS PAID BETWEEN 1948 AND 1951.