175 Ct. Cl. 496 | Ct. Cl. | 1966
delivered the opinion of the court:
In late 1942 and early 1943 the plaintiff purchased seven ships from the United States Maritime Commission.
Plaintiff’s refund was not immediately forthcoming, however. It took six years at the administrative level to arrive at a so-called “section 9 agreement” which entitled plaintiff to a total refund of $1,809,536.53 for the seven ships. Under
The petition in the present case was filed on August 24, 1962. It asserted a claim for income taxes allegedly overpaid in 1946. The claim was based on the depreciation deduction for the seven ships involved in Ct. Cl. No. 118-56. In an amended answer, defendant asserted the same counterclaim it had asked leave to file in the prior litigation. Plaintiff moved for summary judgment on the tax claim; we deferred decision on this motion to await final action of the Supreme Court in Waterman Steamship Corp. v. United States, 381 U.S. 252 (decided May 17, 1965), rehearing denied, 382 U.S. 873 (October 11, 1965). In an order issued
Plaintiff argues that both the Merchant Ship Sales Act and the agreement between the parties require the retroactive application of the section 9 price adjustment on the seven ships against the mortgage indebtedness on the three mortgaged ships. Defendant strenuously urges the contrary. We offer no opinion on the merits of this dispute because we are persuaded by plaintiff’s second argument that the counterclaim was a compulsory counterclaim in the prior litigation.
In the Federal courts, the compulsory counterclaim rule is court-made. Section 2071 of 28 U.S.C. (1964 Ed.) gives inferior courts a broad discretion to “prescribe rules for the conduct of their business,” all such rules to be consistent with acts of Congress and rules established by the Supreme Court. Section 2072 authorizes the Supreme Court to prescribe rules of civil procedure for the District Courts. Under this authorization, the Court in 1938 promulgated the Federal Pules of Civil Procedure, Pule 13(a) of which provided for compulsory counterclaims. 28 U.S.C. App. pp. 6094-6095 (1964 Ed.). This rule was substantially the same as the former Equity Pule 30, and like the prior rule spoke in positive terms — i.e., “[a] pleading shall state as a counterclaim * * The Advisory Committee on the Pules noted that “if the action proceeds to judgment without the interposition of a counterclaim as required by subdivision (a) of this rule, the counterclaim is barred.” 28 U.S.C. App. p. 6095. In this manner, the rule is enforced. See American Mills Co. v. American Surety Co., 260 U.S. 360 (1922). Our rules are predicated on the District Court rules. Thus, our prior
In United States v. Eastport Steamship Corp., 255 F. 2d 795 (2d Cir. 1958), the Second Circuit had occasion to consider the applicability of our Rule 17 (a). There, the government sued the Eastport Steamship Corporation in the Southern District of New York to recover charter hire under a contract. 142 F. Supp. 375 (1956). As one of its defenses, Eastport asserted that the claim was barred because it should have been pleaded as a counterclaim in a prior action in the Court of Claims.
The opinion is most instructive in its discussion of the dimensions of a cause of action. It compares our Rule 17(a) with Rule 13 (a) of the Federal Rules, noting that both look to “transaction or occurrence,” and discusses some of the authorities that have given meaning to these terms. For the Second Circuit, at least, the Eastport opinion gives notice that the “transaction or occurrence” test will be applied broadly, so that an absolute identity of factual background for the two claims will not be required; a logical relationship will suffice. 255 F. 2d, at 804. See Moore v. N.Y. Cotton Exchange, 270 U.S. 593, 609-610 (1926); United Artists Corp. v. Masterpiece Productions, Inc., 221 F. 2d 213, 216 (2d Cir. 1955). We agree with the Second Circuit that our compulsory counterclaim rule uses the same approach as Rule 13(a) and that the approach is flexible. We emphasize, however, that there is no automatic test to gauge whether a claim should be barred for failure to assert it in a prior ¡action. In each case, inquiry will have to be directed to the particular “transaction or occurrence” and to the policy of the compulsory counterclaim rule. The policy inquiry is particularly important, because the rule is a court-made rule designed to promote the effective administration of justice. See Rule 21(e).
In the present case, we have no difficulty applying the rule. The counterclaim alleges that the Maritime Administrator erroneously applied the section 9 refund to retroactively reduce ship mortgages and interest. The claim in the prior action related to the section 9 agreement’s treatment of the “desirable features.” The section 9 agreement is the “transaction or occurrence” common to both claims. The policy of the compulsory counterclaim rule is carried out by barring defendant’s claim now. The proper time for resolving all questions relating to the section 9 agreement was in 1961. Defendant did move to file the present counterclaim in the
The plaintiff is not entitled to recover and its petition is dismissed. Plaintiff’s motion for summary judgment on defendant’s first counterclaim is granted, and defendant’s first counterclaim is dismissed. Defendant’s cross-motion for summary judgment on its first counterclaim is denied.
The united States Maritime Commission administered the Merchant Ship Sales Act of 1946, ch. 82, 60 Stat. 41, as amended, 50 U.S.C. App. §§ 1735-1746 (1952 Ed.), until May 24, 1950 when its functions were transferred to the Department of Commerce, Federal Maritime Board, pursuant to Reorganization Plan No. 21 of 1950, 64 Stat. 1273.
At the end of the war, the American merchant marine totalled about 58 million dead-weight tons. In June 1945, it was estimated that postwar shipping needs would be in the range of 15 million tons. H. Rep. No. 831, 79th Cong., 2d Sess. (1945).
For a full discussion of the need for legislation, see the House Report cited in n. 2, supra.
The date on which all credits were completed.
Following is the allocation of the section 9 credits to the outstanding mortgage indebtedness:
Vessel Acquisition date Adjusted mortgages Mar. 8,1946 Section 9 credits
MORMACHAWIC.. Dec. 14,1942 $272,591.24
MORMACWREN.. Dec. 26,1942 278,894.97
MORMACTERN— Dec. 29,1942 287,318.02
MORMACREED— Eeb. 9,1943 242,993.94
Subtotal, 4 non-mortgaged vessels. 1,081,798.17
MORMACWAVE.. Eeb. 13,1943 $960,547.50 216,858.85
MORMACDOVE-Dec. 31,1942 691,469.25 281,601.90
MORMACLARK-Eeb. 4,1943 688,881.75 229,277.61
Subtotal, 3 mortgaged vessels.. 2,340,898.50 727,738.36
Total, 7 vessels__ 2,340,898.50 1,809,536.53
The text of Rule 21(a) is as follows :
“(a) Compulsory Counterclaim: The answer shall state as a counterclaim any claim which, at the time of serving the answer, the defendant has against any plaintiff, if it arises out of the transaction or occurrence that is the subject matter of the petition and does not require for its adjudication the presence of third parties of whom the court cannot acquire jurisdiction: Provided, That such a claim need not be so stated if at the time the action was commenced the claim was the subject of another pending action.”
During the period that Ct. Cl. No. 118-56 was before us, Court of Claims Rule 17(a) was the compulsory counterclaim rule. Rule 17(a) wag the same except that it had an additional proviso as follows: “* * * and except that in any case, where the hearing in the first instance is limited to the issues of fact and law relating to the right of plaintiff to recover, defendant may plead such a counterclaim within 60 days after the Court shall have rendered judgment determining that plaintiff has a right to recover.” No suggestion has been made by defendant that this proviso excepted it from the requirement of filing the counterclaim with the answer in the prior case.
Eastport Steamship Corporation v. United States, 128 Ct. Cl. 778 (1954) (ordering judgment for plaintiff on stipulation of the parties) ; 131 Ct. Cl. 210, 130 F. Supp. 333 (1955) (On defendant’s motion to dismiss plaintiff’s claim for the amount of the judgment withheld by defendant as an offset) ; 135 Ct. Cl. 175, 140 F. Supp. 773 (1956) (On plaintiff’s motion to strike defendant’s answer and for other relief). See 255 F. 2d 795, 798 for a full discussion of the proceedings in this court.
See Court of Claims Rule 21(e) (formerly 17(e)) and Rule 13(f) of the ¡Federal Rules for the effect of mitigating circumstances.