75TH CONGRESS HOUSE OF REPRESENTATIVES 3d Session { REPORT No. 2321 SETTLEMENT OF OCEAN MAIL CONTRACT CLAIMS MAY 10, 1938.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed Mr. BLAND, from the Committee on Merchant Marine and Fisheries, submitted the following REPORT [To accompany H. R. 9577] The Committee on Merchant Marine and Fisheries, to whom was referred the bill (H. R. 9577) to amend section 402 of the Merchant Marine Act, 1936, to further provide for the settlement of ocean mail contract claims, having had the same under consideration, report the bill back with sundry amendments and, as so amended, recommend that the bill do pass. The amendments proposed by your committee are as follows: (1) Page 2, line 1, strike out the figures "239" and insert in lieu thereof the figures "446". (2) Page 2, line 1, strike out the word "and" and insert in lieu thereof "May 14, 1935 (49 U. S. Stat. L. 239), and". These are amendments referring to correct citations and suggested in the letter of the Acting Comptroller General copied below. (3) Page 2, line 4, strike out the word "shall" and insert in lieu thereof a comma and the following: "in its discretion, may". Page 3, lines 13 and 14, strike out the words: "from any funds controlled by the Commission or hereafter appropriated for that purpose" and insert the following in lieu of the words stricken out: out of such appropriation as the Congress may hereafter provide for this purpose from funds controlled by the Commission or from the general funds of the Treasury. This amendment gives the Congress control over and an opportunity to check against whatever compromise settlement, if any, as may be effected. (4) Page 4, line 6, change the period to a colon and insert the following: Provided further, That nothing herein shall be construed to affect any right or defense of any party in any suit pending in the Court of Claims: And provided further, That the enactment of this legislation shall not be considered or construed by the Commission or by any court as a legislative interpretation in favor of the validity or legality of any alleged contract involved in, or the basis of, any controversy or litigation, adjustment of which is permitted by this subsection. The first proviso in this amendment would preserve to all parties their rights or defenses and may appear to include the second proviso, but as the Acting Comptroller General in this letter appended below questioned the validity or legality of the contract, the proposed amendment preserves all benefit of that defense if a settlement should not be made, and avoids the possibility that legislation authorizing efforts to compromise may be used as an argument that Congress recognized the validity or legality of the claim. Your committee submits that as safeguarded there can be no prejudice of any kind to the Government in the effort to settle finally all claims arising out of the termination of ocean-mail contracts. The bill as amended contains all of the amendments recommended by the Department of Justice, by the United States Maritime Commission, and by the Acting Comptroller General. Letters from these officials are shown below, from which it will appear that the bill is favorably recommended by the Department of Justice and the United States Maritime Commission. As amended by your committee, it meets the only objection which can be found in the letter of the Acting Comptroller General. In addition, as pointed out in the Senate bill which, however, does not contain amendment No. 3 or the last proviso in amendment No. 4, the Comptroller General has never reported to Congress that the contract entered into by the Postmaster General with Sea Train Lines, Inc., on October 31, 1931, or the agreement of January 9-11, 1933, was illegal. The bill does not make adjustment mandatory; it is expressly permissive as amended by your committee; it merely permits the Commission, "in its discretion," to proceed to attempt to adjust all differences with the holder of the contract, and provides that in adjusting such differences and claims the Commission shall not take into consideration any prospective or speculative future profits, but shall consider any and all payments theretofore made by the United States pursuant to such mail contract and the profits realized as a result thereof, and the interest paid and the interest due according to law on construction loans, and all other facts deemed pertinent. Ample safeguards are afforded in the way of (1) review by the Attorney General, with nullification of the agreement of settlement, if not satisfactory to him, and (2) practical approval by the Congress since the Congress must affirmatively provide for the payment of the claim. It is believed by some attorneys that without this legislation the Attorney General has authority to compromise the suit just as he has authority to compromise other claims in litigation, but the Attorney General's office is in doubt that he has the authority to compromise the Seatrain claim because of the provisions in the acts making appropriations which are referred to in the bill. It is desired to place the authority to compromise beyond any doubt. There follow the letter of the Attorney General to the chairman of your committee dated January 25, 1938, letter of Robert H. Jackson of March 22, 1938 to the chairman of your committee (the reference to letter of January 2, 1938, evidently should be January 25), letter 1 of the Acting Comptroller General of the United States to the chairman of your committee dated April 1, 1938, enclosing copy of letter of said Acting Comptroller General to Hon. Royal S. Copeland, chairman of Committee on Commerce, United States Senate, dated March 30, 1938, and letter of Admiral E. S. Land, Chairman of the United States Maritime Commission, dated April 18, 1938, to the chairman of your committee: Hon. S. O. BLAND, OFFICE OF THE ATTORNEY General, Chairman, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D. C. MY DEAR CONGRESSMAN BLAND: I have your letter of December 16, 1937, with enclosures, which has reference to amending section 402 of the Merchant Marine Act of 1936 which is designed to authorize the United States Maritime Commission, with my approval, to adjust the claim, if any, of the Seatrain Lines, Inc., arising out of the breach of its ocean mail contract. The facts of the present litigation pending in the Court of Claims is reviewed by the letter of counsel to you dated December 14, 1937. I see no objection to the enactment of the proposed legislation, as the proposed legislation, if enacted, will permit the adjustment of the ocean mail contract of the Seatrain Lines, Inc., in the same manner as the other mail contracts. In discussing the form of the proposed legislation with the office of the General Counsel of the Maritime Commission, it has been agreed that the proposed amendment should be redrafted to read as follows: "That section 402 of the Merchant Marine Act, 1936, be hereby amended by adding thereto a new subsection (d) to read as follows: "(d) Notwithstanding the provisions of the Acts making appropriation for the Treasury and Post Office Departments for the fiscal years ending June 30, 1934, June 30, 1935, June 30, 1936, and June 30, 1937, which were approved respectively March 3, 1933 (47 U. S. Stat. L., p. 1510), March 15, 1934 (48 U. S. Stat. L., p. 239), and June 23, 1936 (49 U. S. Stat. L., p. 1850), as soon as practicable after the enactment of this subsection, and within six months after its enactment, the Commission shall proceed to attempt to adjust all differences with the holder of any contract alleged to have been made by the Postmaster General pursuant to the provisions of the Merchant Marine Act of 1928 for the carriage of mail, in cases where a suit, pending in the Court of Claims at the time of the enactment of this subsection and based upon the alleged termination or breach of such contract, had been filed by such contractor prior to July 1, 1937, including any claims of the contractor against the United States and any claims of the United States against such contractor, arising out of said contract. In adjusting such differences and claims the Commission shall not take into consideration any prospective or speculative future profits, but shall consider any and all payments theretofore made by the United States pursuant to such mail contract, and the profits realized as a result thereof, and the interest paid and the interest due according to law on construction loans, and all other facts deemed pertinent. If the contractor shall be willing to accept such determination and receive payment for the amount determined by the Commission to be a fair adjustment of such differences, the Commission is authorized and directed, concurrently with the dismissal of any suit based upon the alleged termination or breach of such contract filed by such contractor with prejudice and without costs, to enter into and execute a settlement agreement with such contractor, wherein such contractor shall release the United States from any and all claims arising from such contractor's mail contract: Provided, That the Attorney General of the United States shall review such settlement agreement, and if he is dissatisfied with such finding shall notify the Commission and the contractor in writing within sixty days, and upon such notice the settlement agreement shall become null and void; otherwise the contractor shall be paid any sum of money due him under such settlement agreement from any funds controlled by the Commission or hereafter appropriated for that purpose: Provided further, That if any sum of money is payable to the contractor under the terms of any settlement agreement made pursuant to this subsection, such sum shall be applied (a) as a credit upon any amount owing by the contractor to the United States on any loan agreement entered into under section 11 of the Merchant Marine Act of 1920, as amended, or upon unpaid ship sales mortgage notes, (b) Federal taxes of the contractor due or to become due for the taxable year in which the settlement is made, and (c) on any other indebtedness of the contractor to the United States. If any such sums are applied as a credit as aforesaid, then the Comptroller General of the United States shall execute a discharge of the amount of such debts satisfied thereby. Nothing herein shall affect any right which such contractor may now have to maintain a suit arising out of such contract against the United States in the Court of Claims unless such suit is dismissed as provided herein." With kindest regards, The Attorney General. Hon. SCHUYLER OTIS BLAND, OFFICE OF THE ATTORNEY GENERAL, Chairman, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D. C. MY DEAR MR. CHAIRMAN: This acknowledges your request of March 17, for my views relative to a bill (H. R. 9577) to amend section 402 of the Merchant Marine Act. The bill proposes to amend section 402 of the Merchant Marine Act of 1936, so as to authorize the United States Maritime Commission, with the approval of the Attorney General, to adjust the claim, if any, of the Seatrain Lines, Inc., arising out of the breach of its ocean-mail contract. In my letter of January 2, 1938, relative to this matter, I approved the enactment of the proposed legislation, which has been embodied in the bill under discussion. I suggest that the bill be amended by adding thereto the following provision: "Provided further, That nothing herein shall be construed to affect any right or defense of any party in any suit pending in the Court of Claims." Sincerely yours, ROBERT H. JACKSON, COMPTROLLER General of the United States, Hon. SCHUYLER OTIS BLAND, House of Representatives. MY DEAR MR. CHAIRMAN: There has been brought to my attention H. R. 9577, Seventy-fifth Congress, entitled "A bill to amend section 402 of the Merchant Marine Act, 1936, to further provide for the settlement of ocean-mail contract claims," pending before your committee. As of possible aid to you in consideration of said H. R. 9577, there is transmitted herewith a copy of my report of March 30, 1938, to the Honorable Royal S. Copeland, chairman, Committee on Commerce, United States Senate, on S. 3596, Seventy-fifth Congress, the provisions of which are identical to H. R. 9577. Sincerely yours, R. N. ELLIOTT, Acting Comptroller General of the United States. (Enclosure.) COMPTROLLER GENERAL OF THE UNITED STATES, Hon. ROYAL S. COPELAND, Chairman, Committee on Commerce, United States Senate. MY DEAR MR. CHAIRMAN: Further reference is made to your letter of March 4, 1938, acknowledged March 7, requesting a report on S. 3596, Seventy-fifth Congress, third session, entitled "A bill to amend section 402 of the Merchant Marine Act, 1936, to further provide for the settlement of ocean-mail-contract claims," which bill provides as follows: "That section 402 of the Merchant Marine Act, 1936, be hereby amended by adding thereto a new subsection (d) to read as follows: "" (d) Notwithstanding the provisions of the acts making appropriation for the Treasury and Post Office Departments for the fiscal years ending June 30, 1934, June 30, 1935, June 30, 1936, and June 30, 1937, which were approved, respectively, March 3, 1933 (47 U. S. Stat. L. 1510), March 15, 1934 (48 U. S. Stat. L. 239), and June 23, 1936 (49 U. S. Stat. L. 1850), as soon as practicable after the enactment of this subsection and within 6 months after its enactment, the Commission shall proceed to attempt to adjust all differences with the holder of any contract alleged to have been made by the Postmaster General pursuant to the provisions of the Merchant Marine Act of 1928 for the carriage of mail, in cases where a suit, pending in the Court of Claims at the time of the enactment of this subsection and based upon the alleged termination or breach of such contract, had been filed by such contractor prior to July 1, 1937, including any claims of the contractor against the United States and any claims of the United States against such contractor, arising out of said contract. In adjusting such differences and claims the Commission shall not take into consideration any prospective or speculative future profits, but shall consider any and all payments theretofore made by the United States pursuant to such mail contract, and the profits realized as a result thereof, and the interest paid and the interest due according to law on construction loans, and all other facts deemed pertinent. If the contractor shall be willing to accept such determination and receive payment for the amount determined by the Commission to be a fair adjustment of such differences, the Commission is authorized and directed, concurrently with the dismissal of any suit based upon the alleged termination or breach of such contract filed by such contractor with prejudice and without costs, to enter into and execute a settlement agreement with such contractor, wherein such contractor shall release the United States from any and all claims arising from such contractor's mail contract: Provided, That the Attorney General of the United States shall review such settlement agreement, and if he is dissatisfied with such finding shall notify the Commission and the contractor in writing within 60 days and upon such notice the settlement agreement shall become null and void; otherwise the contractor shall be paid any sum of money due him under such settlement agreement from any funds controlled by the Commission or hereafter appropriated for that purpose: Provided, That if any sum of money is payable to the contractor under the terms of any settlement agreement made pursuant to this subsection, such sums shall be applied (a) as a credit upon any amount owing by the contractor to the United States on any loan agreement entered into under section 11 of the Merchant Marine Act of 1920, as amended, or upon unpaid ship-sales mortgage notes, (b) Federal taxes of the contractor due or to become due for the taxable year in which the settlement is made, and (c) on any other indebtedness of the contractor to the United States. If any such sums are applied as a credit as aforesaid, then the Comptroller General of the United States shall execute a discharge of the amount of such debts satisfied thereby. Nothing herein shall affect any right which such contractor may now have to maintain a suit arising out of such contract against the United States in the Court of Claims unless such suit is dismissed as provided herein. Section 402 (a) of the Merchant Marine Act, 1936, authorizes the holder of any mail contract terminated under section 401 thereof to file application with the United States Maritime Commission "to adjust and settle all the rights of the parties under such contract and to substitute in whole or in part therefor a contract or contracts authorized in titles V and VI of this act * * *." The proposed amendment authorizes the Commission to attempt to adjust all differences with the holder of any contract "alleged to have been made" by the Postmaster General pursuant to the Merchant Marine Act of 1928 for the carriage of mail "in cases where a suit, pending in the Court of Claims at the time of the enactment of this subsection and based upon the alleged termination or breach of such contract, had been filed by such contractor prior to July 1, 1937, Under section 402 (b) of said Merchant Marine Act, 1936, the Commission was authorized to "proceed to attempt to adjust all differences with such contractor" and if the contractor "shall be willing to accept" the determination thus made "the Commission is authorized and directed to enter into and execute a settlement agreement with such contractor," provided, that the Attorney General of the United States might if dissatisfied "with such finding, appeal the same to the Court of Claims within a period of 60 days" and within 60 days from rendition of final judgment by the courts, the "contractor shall be paid any sum of money due him under such judgment, from any funds controlled by the Commission or hereafter appropriated for that purpose." Under the proposed amendment, the Commission is authorized to attempt to adjust all differences with the H. Repts., 75-3, vol. 2-72 |