UNITED STATES
v.
CORNELL STEAMBOAT COMPANY
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The United States contracted to hire twelve tugboats from Cornell Steamboat Company during 1917 and 1918 at a specified per diem rate, and subsequently deducted $24,822.48 from monthly bills for periods when the vessels were allegedly unavailable or in poor condition. The Supreme Court affirmed the lower court's judgment that the charter constituted a demise (full transfer of possession and control) rather than a service contract, and therefore the government could not make deductions for downtime, as the owner had fully relinquished command of the vessels to the United States during the charter period.
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Mr. Justice McReynolds delivered the opinion j>f 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 evir denced 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 %ugs 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 at the per diem 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 w,as consumed in taking on supplies. The owner saved its rights 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 in-. cident to this accident.
“ During the time when the tugs hereinbéfore 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.” i
The United States1 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 deduc-’ tions for the time the vessels were not at their disposal.
Relying upon the doctrine approved in United States v. Shea, 152 U. S. 178, 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, wé agree with that conclusion and affirm, the judgment.
Affirmed.
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Dampskibsselskabet Dannebrog v. Signal OIL & GAS Co. of Cal., 310 U.S. 268 (U.S. 1940)…navigation or failure in maintenance. The mere' fact that the owners furnished the master and crew cannot be regarded as decisive of the question before us. See United States v. Shea, 152 U. S. 178, 190, 191; United States v. Cornell Steamboat Co., 267 U. S. 281. Aside from the navigation of the vessels, they were placed under the control of the [*279] charterers and the master and crew were under their directions. The vessels by the terms of the charters were delivered to the charterers, and where the vess…
Authorities Cited
- United States v. Shea, 152 U.S. 178 (U.S. 1894)
- Leary v. United States, 14 Wall. 607 (U.S. 1871)
- Reed v. United States, 11 Wall. 591 (U.S. 1870)
- New Orleans-Belize Royal Mail & Cent. Am. S.S. Co. v. United States, 239 U.S. 202 (U.S. 1915)