US v. CORNELL STEAMBOAT CO , 267 U.S. 281 (1925)

[267 U.S. 281, 282]   Mr. J. Frank Staley, of Washington, D. C., and the Attorney General, for the United States.

[267 U.S. 281, 283]   Mr. Robert S. Erskine, of New York City, for appellee.

[267 U.S. 281, 285]  

Mr. Justice McREYNOLDS delivered the opinion of the Court.

This proceeding was instituted to recover the sum of deductions made by the United States from monthly bills rendered by appellee for the hire of tugs.

During 1917 and 1918, under informal charters evidenced by letters, appellee hired twelve tugs to the United States for use in and about New York Harbor. The specified price was 'for each and every day of the charter period,' and the owner agreed 'to furnish everything for these tugs with the exception of coal and water which you are to furnish.'

The vessels reported for service in accordance with the several contracts and the plaintiff rendered monthly bills [267 U.S. 281, 286]   at the per dim rate stated therein. Those for December, 1917, were paid as rendered. Thereafter deductions were made which amounted in all to $24,822. 48. They were based upon the vessels' logs, kept by their captains and engineers as directed by the Army Transport Service, and were entered if a boat reported with a short crew, or not in condition to perform the service required, or if too long a time was consumed in taking on supplies. The owner saved its right through proper claims and protests.

While in the service of the United States the Ira M. Hedges sank. It was raised and repaired by and at the expense of the owner, and was subsequently used by them. One of the challenged deductions was for loss of time incident to this accident.

'During the time when the tugs hereinbefore mentioned were in the service of the government, the Army Transport Service had the entire use of the tugs and they were subject at all times to the orders and directions of the officers of the government, and at no time during the period did the plaintiff have the use of and [it] did not in any way interfere with or direct the operations of the said tugs.'

The United States maintain that the owner did not part with possession, command and navigation during the charter periods; that the charter was for service, and not a demise; and that consequently they rightly made deductions for the time the vessels were not at their disposal.

Relying upon the doctrine approved in United States v. Shea, 152 U.S. 178 , 14 S. Ct. 519, the Court of Claims concluded that the charter amounted to a demise and that the deductions were not permissible. It accordingly sustained the claim of the owner, appellee here. Accepting the facts as found, we agree with that conclusion and affirm the judgment.