B-121114, APR. 10, 1956

B-121114, APR. 10, 1956

TO KIRLIN, CAMPBELL AND KEATING, ATTORNEYS AT LAW:

REFERENCE IS MADE TO YOUR MEMORANDUM OF NOVEMBER 16, 1955, AND PRIOR CORRESPONDENCE RELATIVE TO THE CLAIM OF SEATRADERS, INCORPORATED, FOR $212,000, AS UNLIQUIDATED DAMAGES RESULTING FROM THE ALLEGED BREACH BY THE DEPARTMENT OF AGRICULTURE, AS CHARTERER, OF A CHARTER PARTY AGREEMENT DATED NOVEMBER 30, 1951.

UNDER THE TERMS OF THE CHARTER PARTY,"A FULL AND COMPLETE CARGO" OF 9,000 TONS (SUBJECT TO 10 PERCENTUM VARIATION AT THE CHARTERER'S OPTION) OF HEAVY GRAIN IN BULK OR SHIP'S BAGS WAS TO BE FURNISHED BY THE CHARTERER FOR LOADING AT "ONE (1) SAFE PORT U.S. GULF OR ONE (1) SAFE PORT U.S. NORTH OF CAPE HATTERAS, AT CHARTERER'S OPTION" FOR SHIPMENT TO GREECE. CLAUSE "M" OF THE CHARTER PARTY PROVIDED FOR "FIVE (5) CONSECUTIVE VOYAGES IN DIRECT CONTINUATION" OF THE CHARTER PARTY. CLAUSE "S" PROVIDED THAT THE LOADING PORT "FOR ALL (5) CONSECUTIVE VOYAGES IN DIRECT CONTINUATION OF PRESENT CHARTER PARTY" WAS TO BE LIMITED TO "ONE (1) SAFE U.S. GULF, AT CHARTERER'S OPTION.' CLAUSE "Q" PROVIDED AS FOLLOWS:

"IN THE EVENT ECA DOES NOT MAKE FUNDS AVAILABLE FOR THE PURPOSE (PURCHASE) OF AND FOR THE TRANSPORTATION OF CARGO, OR IF, FOR ANY OTHER REASON, CARGO CANNOT BE MADE AVAILABLE, THE CHARTERERS HAVE THE RIGHT TO TERMINATE ANY VOYAGES UNDER THE COVERING CHARTER PARTY AND SHALL GIVE THE OWNER NOTICE IN WRITING TO THAT EFFECT AS SOON AS POSSIBLE, BUT NOT LATER THAN 10 DAYS BEFORE VESSEL IS READY TO ACCEPT CARGO ON HER NEXT VOYAGE.'

IN ITS REPORT ON THE CLAIM, THE DEPARTMENT OF AGRICULTURE STATED THAT CLAUSE "Q" WAS INSERTED IN THE CHARTER PARTY BECAUSE OF "THE UNCERTAINTY OF THE (MUTUAL SECURITY) PROGRAM AND WHETHER SIX VOYAGES MIGHT BE NEEDED AND, IN FACT, WHETHER ANY VOYAGES MIGHT BE UNDERTAKEN BEYOND THE FIRST VOYAGE.' THE REPORT FURTHER STATES, IN PERTINENT PART, AS FOLLOWS:

"AS NOTED IN THE OWNER'S STATEMENT OF HIS CLAIM, TWO VOYAGES HAD BEEN COMPLETED BY JUNE 1952, UNDER THE CHARTER. THE STATEMENT OF THE OWNER, HOWEVER, THAT THE DEPARTMENT OF AGRICULTURE, AFTER COMPLETION OF THESE VOYAGES AND BECAUSE CHARTER RATES HAD FALLEN,"BEGAN CASTING ABOUT FOR SOME WAY IN WHICH IT COULD AVOID CARRYING OUT THE REMAINDER OF ITS CONTRACT" IS NOT, IN OUR OPINION, A FAIR STATEMENT OF THE CASE.

"ON JUNE 18, 1952, IT BECAME APPARENT THAT THERE WOULD BE NO NEED FOR A THIRD VOYAGE BECAUSE OF LACK OF CARGO. ALL EXISTING REQUISITIONS FOR PURCHASE OF GRAIN FOR SHIPMENT TO GREECE HAD BEEN COMPLETED EXCEPT FOR REQUISITION NO. 40-0101-11-2042 * * *. THIS REQUISITION PROVIDED THAT NO SHIPMENTS WOULD BE MADE BEFORE SEPTEMBER 1, 1952, AND WAS LATER AMENDED TO PROVIDE THAT NO SHIPMENTS WOULD BE MADE PRIOR TO OCTOBER 1, 1952.

"A SCHEDULE OF SHIPMENTS MADE TO GREECE FROM GULF PORTS UNDER REQUISITION NO. 40-0101-11-2042 IS AS FOLLOWS: PORT L.T. DATE LOADED NAME OF VESSEL GALVESTON 9500 9/30/52

SUNION GALVESTON 3000 10/1 ORANIA NEW ORLEANS 3000 10/12 ZOELLA LYKES GALVESTON 4950 10/9 HELLENIC SKY HOUSTON 3994 10/9 JOHN LYKES GALVESTON 2017 10/24 GRIGORIOS C III GALVESTON 373 1/16 JOHN LYKES HOUSTON 5000 12/30 ORANIA HOUSTON 2700 1/5/53 GRIGORIOS C III PORT ARTHUR 5000 1/11 MARGARET LYKES HOUSTON 3000 1/14

ALCOA PEGASUS MOBILE 40001/23 SYLVIA LYKES HOUSTON 1667 1/26

LONG VIEW VICTORY PORT ARTHUR 3000 1/27 LONG VIEW VICTORY MOBILE 5000 2/28 HELLENIC BEACH HOUSTON 3500 3/6 REUBEN TIPTON GALVESTON 3500 3/16 HARRY GULBREATH MOBILE 4500 3/17 HELLENIC WAVE HOUSTON

4000 3/19 LONG VIEW VICTORY MOBILE 3500 3/27 JAMES MCKAY GALVESTON 3489 3/31 GENEVIEVE PETERKIN HOUSTON 4500 4/4 HELLENIC SKY MOBILE 4500 4/4 MARSDALE MOBILE 3000 4/29 EUGENE LYKES MOBILE 3577 5/25 HELLENIC BEACH

"THE CHARTER PARTY PROVIDED FOR SHIPMENT ON ANY VOYAGE OF 9000 LONG TONS WITH A TOLERANCE OF 10 PERCENT. FROM THE ABOVE SCHEDULE IT WILL BE OBSERVED THAT ON ONLY ONE DATE, NAMELY SEPTEMBER 30, 1952,WAS THERE SUFFICIENT TONNAGE AT ANY ONE GULF PORT TO COVER A FULL CARGO UNDER THE CHARTER PARTY.

"CARGO BEING UNAVAILABLE FOR THE THIRD VOYAGE, THE CONTRACTING OFFICER OF THE DEPARTMENT OF AGRICULTURE, ON JUNE 18, 1952, WROTE SEATRADERS, INC., THAT IT WAS TERMINATING THE CHARTER PARTY FOR ALL REMAINING VOYAGES. * * * SEATRADERS, INC. REPLIED THAT * * * IT COULD NOT RECOGNIZE CLAUSE Q AS A VALID GROUND FOR TERMINATING THE CHARTER PARTY AS TO ALL REMAINING VOYAGES. IT WAS SUGGESTED TO THIS DEPARTMENT THAT IF CARGO WAS NOT AVAILABLE FOR THE THIRD VOYAGE, A NOTICE OF TERMINATION WOULD BE ACCEPTABLE WHICH WOULD LIMIT THE TERMINATION TO THE THIRD VOYAGE. TO THIS PROPOSAL THE DEPARTMENT OF AGRICULTURE REPLIED BY LETTER DATED JULY 3, 1952, * * * REAFFIRMING ITS BASIS FOR TERMINATION, STATING ALSO A SECONDARY BASIS. THE OWNER IN HIS CLAIM REFERS TO THIS LETTER AS FOLLOWS: "APPARENTLY RECOGNIZING THE INSUFFICIENCY OF CLAUSE Q, THE DEPARTMENT CITED 31 U.S.C.A. 665 AS AN ADDITIONAL REASON FOR TERMINATION, ASSERTING THAT,"THE CONTRACTING OFFICER, IN ENTERING INTO THE CONTRACT, WAS WITHOUT AUTHORITY TO OBLIGATE THE UNITED STATES GOVERNMENT BEYOND THE FISCAL YEAR ENDING JUNE 30, 1952.'

"IN REFERRING TO THE FISCAL YEAR LIMITATION, THIS DEPARTMENT DID NOT, AS STATED BY THE OWNER, HAVE DOUBT AS TO THE SUFFICIENCY OF ITS FIRST BASIS FOR TERMINATION. THE DEPARTMENT DID NOT ABANDON THAT BASIS. IN ITS LETTER OF JULY 3, 1952, THE DEPARTMENT OF AGRICULTURE REAFFIRMED ITS RIGHT TO TERMINATE ALL REMAINING VOYAGES ON THE BASIS FIRST GIVEN, NAMELY THAT THE EXPRESS LANGUAGE OF CLAUSE Q AUTHORIZED TERMINATION OF THE CHARTER PARTY IF CARGO WAS NOT AVAILABLE FOR A VOYAGE.

"THE CLAUSE AS CONSTRUED BY THIS DEPARTMENT AUTHORIZED TERMINATION NOT ONLY WITH REGARD TO THE PARTICULAR VOYAGE FOR WHICH CARGO WAS NOT AVAILABLE BUT FOR "ANY VOYAGES UNDER THE COVERING CHARTER PARTY" INCLUDING, IF THE CHARTERER SO DESIRED, ALL REMAINING VOYAGES UNDER THE CHARTER PARTY. * * *"

THE ADMINISTRATIVE STATEMENT AGREES THAT THE SECONDARY BASIS STATED IN ITS LETTER OF JULY 3, 1952, FOR TERMINATION OF THE CHARTER PARTY,"WAS NOT WELL FOUNDED AND THAT THE ONLY BASIS FOR TERMINATION OF THE CHARTER PARTY WAS THE EXPRESS LANGUAGE OF CLAUSE "Q," BUT REITERATES ITS POSITION THAT--

"THE CHARTERER WAS AUTHORIZED (BY CLAUSE Q) TO TERMINATE THE CHARTER PARTY IF CARGO COULD NOT BE MADE AVAILABLE BY GIVING "THE OWNER NOTICE IN WRITING TO THAT EFFECT AS SOON AS POSSIBLE BUT NOT LATER THAN 10 DAYS BEFORE THE VESSEL IS READY TO ACCEPT CARGO ON HER NEXT VOYAGE.'"

SINCE THE TERMS OF THE CHARTER PARTY EXPRESSLY PROVIDE FOR "CONSECUTIVE VOYAGES (FROM ONE SAFE GULF PORT) IN DIRECT CONTINUATION" OF THE CHARTER PARTY, IT CAN HARDLY BE DOUBTED THAT THIS CONTEMPLATES AN UNBROKEN CHAIN OF VOYAGES. SEE "CONSECUTIVE," 8A W. AND P. 183.' A MISSING LINK (VOYAGE) NECESSARILY DESTROYED THE CHAIN.

IN VIEW OF ITS BROAD TERMS PERMITTING TERMINATION OF ANY VOYAGES IN THE EVENT OF THE NON-AVAILABILITY OF CARGO, CLAUSE "Q" REASONABLY MAY BE CONSTRUED AS GIVING THE GOVERNMENT THE RIGHT TO TERMINATE ALL REMAINING VOYAGES IF, AT THE TIME OF TERMINATION, CARGO IS IN FACT NOT AVAILABLE FOR THE NEXT VOYAGE. OF COURSE, SUCH RIGHT COULD NOT BE EXERCISED AT THE WHIM OR CAPRICE OF THE CHARTERERS, BUT THE LEGALITY OF SUCH ACTION WOULD APPEAR TO DEPEND UPON WHETHER IT WAS TAKEN IN GOOD FAITH IN THE LIGHT OF EXISTING CIRCUMSTANCES RELATING TO THE AVAILABILITY OF CARGO. IN THAT CONNECTION, THE SCHEDULE OF ACTUAL SHIPMENTS MADE UNDER THE ONLY REQUISITION UNCOMPLETED AS OF JUNE 18, 1952, FOR THE PURCHASE OF GRAIN FOR SHIPMENT TO GREECE DEMONSTRATES THAT THE CONTRACTING OFFICER ACTED IN GOOD FAITH IN TERMINATING THE CHARTER PARTY, AND THAT NO SHIPMENTS UNDER THAT REQUISITION WERE MADE BEFORE SEPTEMBER 30, 1952, OR APPROXIMATELY ONE AND ONE-HALF MONTHS AFTER THE VESSEL WOULD HAVE BEEN TENDERED FOR ITS THIRD VOYAGE. MOREOVER, NOT ONLY IS IT REPORTED THAT NO CARGO WAS AVAILABLE FOR THE THIRD VOYAGE BUT THE SCHEDULE ESTABLISHES THAT WITH THE EXCEPTION OF THE SHIPMENT ON SEPTEMBER 30, THERE WAS NOT THEREAFTER SUFFICIENT CARGO AT ANY ONE GULF PORT TO COVER A FULL CARGO UNDER THE INSTANT CHARTER PARTY.

IN THE COPY OF A LETTER DATED NOVEMBER 19, 1954, FROM SEATRADERS, INC., TO YOU, IT IS REPORTED THAT THE QUANTITIES OF GRAIN RECEIVED IN GREECE FROM THE UNITED STATES EACH MONTH FROM JULY 1952 TO APRIL 1953, WERE MORE THAN SUFFICIENT TO PROVIDE CARGO FOR THE CHARTERED VESSEL. HOWEVER, THAT LETTER ALSO FURNISHED INFORMATION AS TO THE NUMBER OF VESSELS USED IN SHIPPING THOSE QUANTITIES AND STATED,"FROM THE NUMBER OF VESSELS INVOLVED FOR THE COMPARATIVELY SMALL QUANTITIES SHIPPED, IT IS OBVIOUS THAT MOST SHIPMENTS WERE MADE ON LINERS IN SMALL PARCELS.' THUS, THE INFORMATION FURNISHED DOES NOT PURPORT TO REFUTE THE SCHEDULE OF SHIPMENTS AS REPORTED BY THE DEPARTMENT OF AGRICULTURE.

WHILE YOU DO NOT DISPUTE THE REPORTED FACTS, IT IS CONTENDED IN YOUR MEMORANDUM OF NOVEMBER 16, 1955, THAT THE GOVERNMENT'S OBLIGATION TO MAKE AVAILABLE THE NECESSARY CARGOES WAS ABSOLUTE IN THE ABSENCE OF SPECIFIC LANGUAGE TO THE CONTRARY. IT IS YOUR POSITION THAT CLAUSE "Q" PROVIDES NO EXCEPTION UNDER THE FACTS IN THIS CASE. YOU FURTHER CONTEND THAT NOTHING LESS THAN CONTINGENCIES SUCH AS A FORCE MAJEURE, FIRE, FLOOD, STRIKE, ETC., MAKING IT IMPOSSIBLE TO FURNISH A CARGO, WOULD RELIEVE THE GOVERNMENT OF ITS DUTY IN THAT REGARD. YOU ALSO MAKE CERTAIN ASSUMPTIONS AS TO THE AVAILABILITY OF GRAINS IN THE INTERIOR AND ASSERT, IN EFFECT, THAT IT WOULD BE NECESSARY FOR THE GOVERNMENT TO ESTABLISH THAT THERE WAS NO GRAIN AVAILABLE IN THE INTERIOR OF THE COUNTRY AND THAT, IF THERE WAS, THERE WERE NO FACILITIES AVAILABLE TO TRANSPORT IT TO AND STORE IT AT A PORT IN SUFFICIENT QUANTITIES TO PROVIDE FULL CARGOES ON EACH VOYAGE BEFORE IT CAN SUCCESSFULLY INVOKE THE SECOND PROVISION OF CLAUSE "Q.'

WE CANNOT AGREE THAT THE LEGAL PRINCIPLE URGED BY YOU OR THE CASES CITED IN SUPPORT THEREOF REQUIRE THE CONCLUSION THAT THE INSTANT CHARTER PARTY PLACES ANY SUCH ABSOLUTE DUTY UPON THE GOVERNMENT OR THAT CLAUSE "Q" MAY NOT BE INVOKED TO TERMINATE THE CHARTER PARTY (INCLUDING ANY REMAINING VOYAGES) IN THE CIRCUMSTANCES OF THIS CASE. ALL OF THE CASES CITED IN YOUR MEMORANDUM INVOLVE A CHARTER PARTY COVERING A SINGLE SPECIFIC VOYAGE PRESUMABLY TO BE UNDERTAKEN ALMOST IMMEDIATELY. THE STRICT OBLIGATION UPON THE CHARTERER TO PROVIDE THE ONE CARGO IN SUCH CASES DOES NOT APPEAR APPLICABLE TO A CHARTER PARTY COVERING A SERIES OF SIX VOYAGES EXTENDING OVER A PERIOD OF APPROXIMATELY 15 MONTHS, ESPECIALLY WHEN THE PARTIES TO THE CHARTER RECOGNIZED THE POSSIBILITY OF ITS EARLIER TERMINATION FOR WANT OF SUFFICIENT CARGOES TO REQUIRE THE UNBROKEN SERIES OF VOYAGES PROVIDED IN THE CHARTER PARTY.

AS IS TRUE IN ALL CONTRACTS, CHARTER PARTIES MUST BE CONSTRUED ACCORDING TO THE INTENT OF THE PARTIES AS MANIFESTED BY THE WHOLE INSTRUMENT. THE DRIESBERGEN, 60 F.2D 367. THUS, THE REAL QUESTION PRESENTED IS WHETHER CLAUSE "Q" REASONABLY MAY BE CONSTRUED AS EVIDENCING AN INTENTION ON THE PART OF THE GOVERNMENT AND OF THE OWNER THAT THE CHARTER PARTY COULD BE TERMINATED BY THE GOVERNMENT ONLY IN THE EVENT IT WAS IMPOSSIBLE FOR THE GOVERNMENT TO MAKE AVAILABLE FOR ANY ONE OF THE SUCCESSIVE VOYAGES A FULL CARGO AT ONE SAFE GULF PORT WHENEVER THE VESSEL WAS READY FOR ITS NEXT VOYAGE. IN VIEW OF THE DEPARTMENT'S STATEMENT OF ITS PURPOSE FOR INSERTING CLAUSE "Q," IT CANNOT BE CONCEDED THAT ITS INTENTION WAS TO COMMIT ITSELF TO AN ABSOLUTE DUTY TO DO EVERYTHING POSSIBLE TO PROVIDE CARGO BUT RATHER THAT THE PROVISION CONTEMPLATED CARGO BEING AVAILABLE FOR SHIPMENT IN THE REGULAR COURSE OF THE GOVERNMENT'S ACTIVITIES PURSUANT TO THE MUTUAL SECURITY PROGRAM. MOREOVER, IT IS NOT REASONABLE TO CONCLUDE THAT THE PARTIES TO THE CHARTER CONTEMPLATED THE REVISION OF THE DEPARTMENT'S PROGRAMMING OF THE SHIPMENT OF MILLIONS OF TONS OF GRAIN MERELY TO PROVIDE FULL CARGOES FOR A PARTICULAR VESSEL AT A GIVEN TIME AND PORT. CERTAINLY, WE CANNOT ACCEPT AS REASONABLE THE SUGGESTION THAT THE GOVERNMENT MANIPULATED THE ACQUISITION, DISTRIBUTION AND SHIPMENT OF MILLIONS OF TONS OF GRAIN IN ORDER TO AVOID ITS COMMITMENT UNDER ONE CHARTER PARTY WHICH WOULD, AT MOST, INVOLVE THE SHIPMENT OF LESS THAN 40 THOUSAND TONS IN THE REMAINING FOUR VOYAGES EXTENDING OVER A PERIOD OF APPROXIMATELY EIGHT MONTHS. IN FACT, ON THE BASIS OF THE SCHEDULE OF SHIPMENTS, THIS WOULD IMPLY THE DELIBERATE STOPPAGE OF ALL SHIPMENTS FROM GULF PORTS UNTIL SEPTEMBER 30, 1952. IN SUMMARY, SINCE THE ABSENCE OF A CARGO AS REQUIRED FOR THE VESSEL'S THIRD VOYAGE IS ESTABLISHED, AND CLAUSE "Q" IS CONSTRUED AS CONTEMPLATING THAT EVENTUALITY AS A PROPER BASIS FOR TERMINATION OF THE CHARTER (INCLUDING ANY REMAINING VOYAGES THEREUNDER), WE PERCEIVE NO PROPER LEGAL BASIS UPON WHICH THE CLAIM MAY BE ALLOWED.