paid the claimants the sum of $7,221,993.30; that prior to June 30, 1919, claim was made to the United States Shipping Board for the amount due claimants by reason of their transfer of the aforesaid ships to the United States.

"Wherefore, the claimants ask for relief under the aforesaid act of Congress of March 2, 1919" (Ct. Cls., Tr. 441).

The War Department Claims Board stated in its decision the bases of the claim as follows:

"There are two issues presented by claimants' petition, as amended, viz: (1) That as a part of the transaction by which the Government acquired the seven steamships from claimants, it was agreed and understood that claimants should have the operation of the vessels at the price then prevailing between shipowners and ship operators, Mr. Carden testifying that he understood the price of operation to be coextensive with the lives of the ships; that the Government had wholly failed or refused, after repeated requests by claimants, to give them the operation of the ships for any period whatever, and had thereby breached the contract, and claimants had elected to so treat it; and (2) that the ships were transferred by claimants to the United States at the request of its duly authorized officers and agents, and that they were used largely for War Department purposes and purposes in connection with the prosecution of the war, and that thereby an implied agreement arose prior to November 12, 1918, by which the United States became obligated to reimburse claimants the fair and reasonable value of the ships, claimants acknowledging receipt from the Government of $6,778,006.70 and claiming a balance of the fair value of $7,521,993.30."

The War Department Claims Board, after making extensive findings upon the merits of the claim, concluded that throughout the entire history of the transaction and in the various negotiations relative to the ships the thing uppermost in the minds of Messrs. Carden and Herd was the operation of the vessels; that they turned the ships over to the Government with the distinct understanding that operation of the ships by them was part of the consideration; and that, therefore, as a matter of law, an implied agreement resulted under which they were entitled to just compensation measured by the difference between what they had received and the fair market value of the ships at the time of their delivery to the United States. The Board denied relief solely on the ground that it did not conclusively appear that the ships were acquired for War Department purposes (Ct. Cls., R. 24–58).

Secretary of War. The claimants then appealed to President Wilson, under whose authority the negotiations for the acquisition of the ships had been conducted. A detailed statement of their understanding of the transaction was submitted by the claimants to the President. The President forwarded this statement to the Secretary of War, Mr. Baker, on February 19, 1921, with a recommendation that the claim be paid (Ct. Cls., R. 70).

Secretary Baker's term expired before he had an opportunity to act on the matter. On July 16, 1821, his successor, Secretary Weeks, awarded the claimants $550,000. This amount was paid solely in satisfaction of the claim for the out-of-pocket loss which they had sustained by reason of the rescission of the contract with the syndicate-which was the limit of the Secretary's jurisdiction under the Dent Act (Ct. Cls., R. 70-71).

Committees of Congress.-The claimants thereafter appealed to Congress. Their claims were presented to this committee and to the Committee on Claims of the Senate. Hearings were held before this committee on January 20, 1931 (hearings before the Committee on the Judiciary, 71st Cong., 3d sess., on H. R. 16203). In 1934 both committees unanimously recommended the enactment of a special jurisdictional act conferring jurisdiction on the Court of Claims to hear and determine the claim (H. Rept. 979, 73d Cong., 2d sess.; S. Rept. 420, 73d Cong., 2d sess.). As a result, the Congress enacted the special jurisdictional act of June 13, 1934, authorizing suit in the Court of Claims. Court of Claims.-Following the enactment of the special jurisdictional act, the claimants filed a petition in the Court of Claims on August 3, 1934. In accordance with the practice before that court, the case was referred to a commissioner of the court for a report on the facts. Both parties had an adequate opportunity to present all the evidence with respect to the acquisition of the ships by the United States. The facts were then argued fully before the commissioner, both orally and on written request for specific findings. Upon a consideration of all the evidence, the commissioner found substantially the same facts as had been presented to this committee and to the Committee on Claims of the Senate. The commissioner thereupon concluded:

"The preponderance of the evidence establishes that there was a mutual misunderstanding as to an essential element of the agreement, to wit, the operation of the ships" (Ct. Cls., R. 66).

From the facts as found by the commissioner, the law implies an obligation on the part of the United States to pay claimants the difference between the amount which they had received and the fair market value of the ships as of the date of the acquisition thereof.

In spite of the foregoing, the Court of Claims disregarded the findings of the commissioner, and the mandate of the Congress, dismissing the claim on certain technical grounds which will be discussed herein.

THE POSITION OF THE CLAIMANTS

I. The pending bill merely awards the claimants, Messrs. Carden and Herd, the just compensation to which they are entitled on account of the acquisition of the ships by the United States.

II. The syndicate has no interest in the claim of Messrs. Carden and Herd for the difference between what they have received and the fair market value of the ships.

III. The brief filed on behalf of the syndicate is based upon misstatements of fact, which are in direct conflict with all the evidence in this case.

STATEMENT ON BEHALF OF THE CLAIMANTS

I. The pending bill merely awards the claimants the just compensation to which they are entitled on account of the acquisition of the ships by the United States

The purpose of the pending bill is to remedy a patent error on the part of the Court of Claims which cannot be remedied by a review by the Supreme Court. As will be pointed out herein, the Court of Claims flatly disregarded important and basic facts found by its commissioner. No justification for its action in this respect is found in its opinion, and the report of the Department of Justice upon this bill is similarly silent. Unfortunately, under the existing law, findings of fact by the Court of Claims are final. Accordingly, there is no judicial procedure under which errors of fact can be corrected, and the claimants must come to the Congress a second time to obtain the relief to which they are clearly entitled.

In the enactment of the special jurisdictional act of June 13, 1934, the Congress unquestionably intended that the claimants should recover if the established facts conformed to the facts presented to the House Committee on the Judiciary and to the Senate Committee on Claims. Every official and agency of the United States which had considered the claim reached the conclusion that, on the basis of such facts, they were entitled to recover: President Wilson, who reviewed the entire claim, stated: "I am myself convinced that the claim is a just one. * My own wish would be that the claim could be paid"; Mr. Baruch, who negotiated the deal; the War Department Claims Board, which heard the entire case, rendered an exhaustive opinion in favor of the claimants, but was forced to deny the claim upon a technical ground of lack of jurisdiction; Secretary of War Weeks, who rendered a partial award to cover out-of-pocket losses and expenses; the Committee on Claims of the Senate; the Committee on the Judiciary of the House of Representatives, and the Congress in the enactment of the act of June 13, 1934.

A review of the report of the commissioner of the Court of Claims will demonstrate that the facts found by him are in every respect identical with the facts presented to these officials and agencies. Nevertheless, the court dismissed the claimants' petition upon two technical grounds:

The court held, as a matter of law, that

(1) A complete contract between the claimants and the United States was set forth in a document called memorandum of closing, executed by the agent of the Austrian owners, the claimants, and William Denman, chairman of the United States Shipping Board, as a step in the transfer of title to the United States; and

(2) The award of the Secretary of War, under the Dent Act, of certain outof-pocket losses and expenses, was a bar to recovery.

The first ground for dismissing the claimants' petition is in direct violation of the established facts, and the second ground is in direct violation of the clear intent of Congress as set out in the special jurisdictional act.

Memorandum of closing.-The memorandum of closing was fully considered by the Senate Committee on Claims and the House Committee on the Judiciary prior to the enactment of the act of June 13, 1934. It had previously been considered by President Wilson, Mr. Baruch, the War Department Claims Board, and the Secretary of War. All were of the firm opinion that it was of no legal effect whatsoever.

It is not necessary at this time to review all the errors of fact in the decision of the Court of Claims. A brief outline of the more important errors is sufficient for present purposes to demonstrate that the court's determination that the memorandum of closing constituted a complete and definite contract in writing beween the parties is in direct conflict with the record:

(1) The court found that President Wilson authorized both Mr. Baruch and Mr. Denman to get the ships (finding 5, Ct. Cls., R. 338); whereas the commissioner found that the President authorized Mr. Baruch alone to get the ships; and that Mr. Denman was authorized only to get certain restrictions on the use of the ships removed (finding 10, Ct. Cls., R. 64). There is no evidence to support the court's finding, and all the evidence supports the commissioner's finding. The importance of this fact can be readily appreciated. The basis of the claim is found upon the negotiations with Mr. Baruch and the mutual misunderstanding resulting therefrom. The claimants understood that Mr. Baruch had accepted their proposition-that they were to receive a cash payment equal to the cost of the ships to them plus cerain out-of-pocket expenses plus the right to operate the ships on the basis then prevailing between shipowners and ship operators (i. e., a commission of 5 percent of the gross freight receipts). Mr. Baruch agreed that they were to get the operation of the ships, but did not think that he had entered into a "copper bound" contract to this effect. Had the Court of Claims adopted the commissioner's findings, its subsequent errors doubtless would have been avoided.

(2) The Court of Claims failed to adopt the finding of the commissioner (finding 12, Ct. Cls., R. 65):

"On the basis of the negotiations between Baruch and plaintiffs, the plaintiffs believed that they had a binding agreement with Baruch under which they were to have the operation of the seven ships for the respective lives thereof at the going rate (which at the time was 5 percent of the gross freight receipts) and to receive $6,778,006.70, representing the original cost of the ships to them and the allowance of $301,933.70 for expenses."

(3) The Court of Claims failed to adopt the finding of the commissioner (finding 12, Ct. Cls., R. 65):

"Except for the understanding of plaintiffs that the agreement between them and Baruch included the operation of the ships in addition to the cash consideration, the plaintiffs would not have transferred the ships to the defendant." (4) The Court of Claims failed to adopt the Commissioner's finding (finding 13, Ct. Cls., R. 66) that Denman told the plaintiffs that "they were to have the operation of the ships at the going rate."

(5) The Court of Claims failed to adopt the finding of the commissioner (finding 11, Ct. Cls., R. 65):

"Plaintiffs suggested to Baruch * * * that if they complied with the President's desire, they, in order to offset loss from thus turning the ships over to defendant, should have the operation of the ships on the basis then prevailing between shipowners and ship operators, to which Baruch replied, 'Nothing could be fairer than that."

(6) The Court of Claims failed to adopt the finding of the commissioner (finding 15, Ct. C'ls., R. 66):

"The substance of Baruch's testimony is that the discussion on the operation of the ships was contemporaneous with the discussion on the transfer of the ships, that he agreed that the plaintiffs should have the operation of the ships, but that he did not think that the operation of the ships was a part of the consideration of the contract to transfer the ships."

(7) The Court of Claims failed to adopt the finding of the commissioner (finding 16, Ct. Cls., R. 66):

"The record taken as a whole supports the contention that plaintiffs understood that the operation of the ships was a part of the agreement to transfer the ships. On the other hand, it also appears that Baruch understood that the operation of the ships was not a part of the agreement to transfer the ships. * *

"The preponderance of the evidence establishes that there was a mutual misunderstanding as to an essential element of the agreement, to wit, the operation of the ships."

It is clear that had the Court of Claims not disregarded the above findings of fact by its commissioner-as to all of which Government counsel either made no exception or gave no substantial basis for an exception-the court could not have dismissed the claimants' petition on this first ground. The error of the Court of Claims is revealed by a consideration of a few fundamental facts:

(1) The record is conclusive that whatever "agreement" was entered into was entered into between Mr. Baruch and the claimants-not between Mr. Denman and the claimants. Both Mr. Baruch and the claimants thought that they had entered into a contract. But the mutual misunderstanding with respect to the operation of the ships prevented these negotiations from culminating in a contract.

(2) The memorandum of closing is merely what it says it is. It was not, and was not intended to be, a reduction to writing of the supposed contract between Mr. Baruch and the claimants. It was merely a document such as is customarily prepared in all transactions involving transfers of title. In form it lacks all the essentials of a contract. In its terms it merely sets out what each of the parties (i. e., the Austrian owners, the claimants, and the United States) was to do to carry out the supposed contract negotiated by Mr. Baruch-to transfer title to the ships to the United States and to place the Unted States in possession of the ships. (3) What has just been stated with respect to the memorandum of closing cannot be successfully controverted. But even assuming that the memorandum was an attempt to reduce to writing the apparent agreement with Mr. Baruch, the law is very clear, by reason of its wording, that it may be fully explained by other testimony. For example, it refers specifically to the "original contract"— admittedly referring to the contract between Mr. Baruch and the claimants. References of this nature have been frequently relied upon in deciding that a writing did not and was not intended to embody all the terms of an agreement. (Ohio Crane Co. v. Hicks (110 Ohio St. 168, 143 N. E. 388); J. I. Case Threshing Machine Co. v. Buick Motor Co. (39 F. (2) 305); Harding v. Taubel (1 F. (2d) 614).) Accordingly, the "original contract" may be, and was, proved. But the Court of Claims closed its eyes to the surrounding circumstances and to the terms of the "original contract” embodied in the facts found by its commissioner. Otherwise the court would not have reached the conclusion that the memorandum of closing "constituted a complete and definite agreement" and that "there unquestionably was a written contract."

In summary, the position taken by the Court of Claims cannot be supported: (1) The operation of the ships was an essential factor in the negotiations-the commissioner of the Court of Claims specifically so found, and the record permits of no other conclusion;

(2) The supposed contract was entered into with Mr. Baruch and not with Mr. Denman-the evidence is undisputed on this point; and

(3) The parol evidence rule does not prohibit an explanation of the memorandum of closing and proof of the contract referred to therein-the decisions are practically unanimous to this effect.

The award of the Secretary of War.-The second ground upon which the Court of Claims denied the claim and dismissed the claimants' petition was that the award made by Secretary of War Weeks constituted a complete bar to recovery. The court's error in this respect is even more obvious.

The facts with respect to the award were fully considered by the Senate Committee on Claims and the House Committee on the Judiciary at the time of the enactment of the act of June 13, 1934. They are fully set forth in the report of this committee, confirmed by the findings of the commissioner of the Court of Claims.

At that time both committees took the position that-

(1) The award of the Secretary of War was intended to cover only certain out-of-pocket losses and expenses, resulting from the cancelation of the claimants' contract with the syndicate and the transfer of the ships to the United States.

(2) The obligation of the United States to the claimants rests upon a contract implied in law, over which the Secretary of War had no jurisdiction under the Dent Act. Accordingly, the Secretary of War did not attempt to meet the claim for just compensation, and properly confined the award to the above items.

(3) The act of June 13, 1934, disposes completely of whatever legal effect the award might have had as a bar to recovery. That act specifically provides that the Court of Claims is merely to deduct from the amount of the judg ment the "amount heretofore awarded the claimants" (first proviso). And

quite as conclusively, the last proviso of the act provides that the award of the Secretary of War should have been given legal effect only if the Court of Claims concluded as a matter of law (and which it did not do) that there was an express contract between the claimants and the United States covering the right to the operation of the ships. The act should have been interpreted and applied by the court exactly as it reads and was intended. There is no ambiguity in its terms.

The original act of June 13, 1934, conferring jurisdiction upon the Court of Claims, was based upon the following well-defined policies of the Congress, fully set out in the reports of the Senate Committee on Claims and of the House Committee on the Judiciary:

(1) Upon the basis of the facts presented to the committees (both of which carefully reviewed the record before the War Department Claims Board and the testimony of witnesses before the Committee on the Judiciary of the House of Representatives, as well as the reports from the various departments and agencies), the United States is under a legal obligation to the claimants.

(2) If there was an express contract including the right to operation, that contract was violated by the United States, and the claimants are entitled to damages for its breach.

(3) If there was no contract, by reason of a lack of mutual meeting of the minds, the United States, under a contract implied in law, should have paid the claimants the fair value of their ships on the date on which they were transferred to the United States.

(4) The claimants should not be penalized for their patriotism and their willingness to cooperate and comply promptly with the request of President Wilson. Had they refused to cooperate and refused for a period of 6 weeks to transfer the ships to the United States, then the provisions of the Emergency Shipping Act (the Urgent Deficiencies Appropriation Act of June 15, 1917, 40 Stat. 182), would have been applicable; and they would have received, either by award from the President or by a judgment from the courts, the full amount now due them.

(5) The claimants are entitled to the treatment accorded other persons whose ships or ship contracts were taken by the United States after the enactment of the Emergency Shipping Act, i. e., to receive just compensation therefor, determined in accordance with the decisions of the Supreme Court of the United States. In every case which has come before the courts involving ships or contracts for the construction thereof taken over by the United States during the war, the courts have awarded the owners full value of the ship or the use thereof or of the contract, whichever might have been the nature of the property taken. (See Brooks-Scanlon v. United States (265 U. S. 106, 64 Ct. Cls. 80); Conzorzio Veneziano, etc. v. United States (64 Ct. Cls. 11); John M. Connelly 8. S. Co. v. United States (64 Ct. Cls. 38); Luckenbach S. S. Co. v. United States (64 Ct. Cls. 59); Ocean S. S. Co. v. United States (64 Ct. Cls. 98); Cie. Grale, Transatlantique v. United States (64 Ct. Cls. 119); Hudson Navigation Co. v. United States (57 Ct. Cls. 411); Gulf Refining Co. v. United States (58 Ct. Cls. 559); DeLuca v. United States (84 Ct. Cls. 217); Thompson v. United States (62 Ct. Cls. 517) ; Spreckels v. United States (63 Ct. Cls. 64).) (6) The claimants are entitled to have their claim passed upon on the merits by a judicial tribunal-not dismissed on two technicalities, neither of which can be supported.

(7) The claimants are the only owners of ships or of ship contracts within the knowledge of the committees who have not received full compensation— and upon both legal and moral grounds, claimants are most certainly entitled to receive as fair treatment as all other ship owners and contractors. Even enemy owners whose ships were acquired by the United States have been treated more fairly than these claimants. The Settlement of War Claims Act (45 Stat. 254) provided for an arbiter whose duty it was to hear the claims of German nationals and to determine and award them fair compensation with respect to any merchant vessel which was taken by or on behalf of the United States under the authority of the joint resolution of May 12, 1917, together with interest thereon at the rate of 5 percent per annum. In other words, enemy owners of ships were afforded an opportunity to present their claims before an impartial tribunal having authority to determine "fair compensation" and to award them such compensation with interest.

The purposes of the special jurisdictional act may similarly be summarized as follows: