Open main menu

Propeller Company v. United States

Court Documents

United States Supreme Court

81 U.S. 670

Propeller Company  v.  United States

APPEAL from the Court of Claims; the case being this:

The New Bedford and New York Propeller Company, by a charter-party dated the 5th of April, 1864, chartered a steamer to the United States at $150 per day. The charterparty contained these clauses:

'The war risk is to be borne by the United States, the marine risk by the owner, for a period of thirty days, and as much longer as the services of the vessel may be required to be employed in such service as the United States may direct.

'The vessel is valued at $40,000, and should she be retained so long in the service of the United States that the money paid and due on account of the charter (deducting therefrom the actual cost of running and keeping in repair the said vessel during the said time, together with a net profit of 33 per cent. per annum on said appraised value) shall be equal to said appraised value, then the said vessel shall become the property of the United States without further payment, except such sum as may then be due on account of the services of said vessel, rendered under the said vessel-charter.

'And, further, if at any time during the continuance of this charter the United States shall elect to purchase the vessel, then they shall have the right to take her at the appraised value at the date of charter, and all money then already paid and due on account of said charter (deducting therefrom the actual cost of running and keeping in repair the said vessel during the said time, together with a net profit of 33 per cent. per annum on the original appraised value) shall apply on account of the said purchase.'

The steamer remained in the military service of the government until the 4th of March, 1865, when she was sunk in the Cape Fear River by the explosion of a torpedo placed there by the enemy. The owners presented to the government a claim for $40,000 for the loss of said steamer. This claim being transmitted to the proper officer, he made out an account thus:


By valuation as per charter, $40,000 00

By 33 per cent. per annum, from 12 M., April 5th,

1864, to 4 P.M., March 4th, 1865, 10 27-3' 4-24

months,11,996 11

By running expenses, 11 months, at $2100 per month, 23,100 00

$75.096 11


To amount received from United States for services

from 12 M., April 5th, 1864, to March 4th, 1866,

4 P.M., being 333 6-24 days, at $150, $49,975 00

Less 23 5-24 days lost 3,481 25

$46,493 75

Balance due, $28,602 36

The amount so found due and no further sum was paid to and rec eived by the owners of the vessel.

In this state of the case the owners filed a petition in the Court of Claims—

Claiming as still due, $11,397 64

In addition to the sum received, viz. 28,602 36

So as to give the whole valuation, $40,000 00

The Court of Claims found that the steamer was worth $40,000; that the United States never at any time notified to the owners their election to purchase her or to take her under the accruing or purchase clauses of the charter-party above quoted.

And held that 'the United States, under such a charter-party, became the equitable owner of the vessel to the extent of the sum earned over and above the expenses and profits stipulated for, and that to the extent of such sum the owners had received so much payment on the price of the vessel, and that whether she was taken by the United States under the option given to purchase at any time, or perished by one of the perils against which the United States engaged to insure, this accruing clause was equally applicable.' The court accordingly decreed that it was only the balance due on the price of the vessel which the original owner could claim, and not the amount of the valuation.

The owners appealed.

Messrs. N. P. Chipman and T. J. Durant, with whom was Mr. C. F. Peck, for the appellants:

The government could purchase only during the continuance of the charter-party; but at the time of the alleged purchase, the charter-party had come to an end by the destruction of the vessel. In addition to this, the steamer did not exist; the circumstance of a sale could not be predicated of it; it had ceased to be the subject of such a contract; the owner then had no property to transfer. There can be no valid sale when the subject of the intended sale has no existence.

Even if this were not all plainly true the Court of Claims has committed error. According to its reasoning the United States became joint owners day by day, and while the petitioner would be paying the defendants' (if owner) portion of the expenses of crew and provisions, and of ordinary repairs, defendants (if owner) would be paying petitioner hire for their own (in part) steamer. This is inconsistent with the terms of the contract and the meaning of the parties, and the premises which give rise to such conclusions must necessarily be false.

The contract gives the right of purchase to the United States on the happening of a future and uncertain event; they are not bound to purchase; they might decline to do so; but the petitioner on the happening of the event could not compel the United States to take the vessel.

The obligation was in its nature indivisible, and could not be executed in part; the happening of the event of the net earnings being equal to $40,000, was an entirety; and the clause makes no mention of fractions, so that the obligation is indivisible by the contract and by its nature. [*]

The contract made by the parties is not to be changed under notions of equity. Such a contract as the court below made for them might have been a better one, perhaps, than the one they made, but it is the province of courts to enforce such contracts as are presented, and not to make new ones.

Mr. G. H. Williams, Attorney-General, contra.

Mr. Justice STRONG delivered the opinion of the court.


^*  Parsons on Contracts, vol. 2, p. 520, edition 1866.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).