VESSEL REQUISITION PROCEDURE

The first four subsections of section 3 are designed to improve the administration of the requisition laws (sec. 902 of the Merchant Marine Act, 1936, and Public Law 101, 77th Cong.). This bill does not contain the amendment heretofore proposed by the Senate Commerce Committee in its report of December 4, 1942, on the bill H. R. 7424. This problem of just compensation and the enhancement clause has been left for separate consideration.

The first amendment (sec. 3 (a)) makes it clear that, confirming existing practice, partial deposits may be made with the Treasurer of the United States, on account of just compensation in order to facilitate the payment of valid claims against the requisitioned vessel other than the claim of the owner for just compensation.

Subsection (b) clarifies and prescribes standards to be followed in case of a requisition of title when it subsequently appears that the ownership of the vessel is not required by the United States. There are cases where title requisition has been necessary in order to get control of the vessel even though it later develops that use, and not ownership, is required. The cases have involved primarily small boat acquisition for auxiliary naval or military purposes and acquisition of vessels in foreign ports or for diplomatic or governmental reasons. Subsection (b) would require that any contemplated conversion of title requisition to use requisition be made prior to payment in full, or payment of 75 percent, of just compensation therefor, and would require that the determination be published in the Federal Register. It is also provided (as proposed by the Senate Commerce Committee by amendment to H. R. 7424, the predecessor bill) that no determination to change title requisition to use requisition be made in case of a vessel owned by a citizen of the United States, after 2 months following delivery of the vessel under title requisition, unless consent of the owner is had. The subsection also provides (as proposed by a further Senate Commerce Committee amendment to H. R. 7424), in accord with à suggestion of the State Department, that the War Shipping Administration, upon recommendation of the Secretary of State, may change title requisition to use requisition where a foreign vessel has been lost or destroyed or converted to military or naval use by the United States.

Subsection (c) of section 3 specifically makes it the duty of officers and agents of a court having possession of a requisitioned vessel, to comply with the order of requisitioning and transfer custody upon the filing of a certified copy of the requisition order with the court.

Subsection (d) of section 3, amending section 902 (d) of the Merchant Marine Act, 1936, by adding a paragraph, sets forth a procedure for the handling of valid liens and encumbrances against requisitioned American-owned vessels. This procedure is similar to that worked out by the Senate Commerce Committee in the case of foreign vessels under the Foreign Vessels Requisition Act (Public Law 101). Under this amendment deposits may be made with the Treasurer of the United States on account of just compensation for American-owned vessels, but only to the extent necessary to provide for the payment of valid liens and encumbrances existing at the time of the requisition.

IMPROVED INSURANCE ADMINISTRATION AND COVERAGE

The last seven subsections of section 3 contain various amendments to the War Risk Insurance Act and Public Law 101, Seventy-seventh Congress, designed to clarify the administration of the act and to cover some minor gaps in the insurance protection now provided thereunder.

The amendments in subsection (e) would permit more effective use of existing underwriting and adjustment facilities by permitting an allowance to an agent for servicing insurance written by the underwriting agent, and for services of an insurance carrier for handling reinsurance, such allowance, however, not to provide for payment by the agent or the carrier of commissions in excess of 5 percent of the premium.

Subsection (f) of section 3 would make it possible for Government agencies to procure, under the machinery provided in the War Risk Insurance Act, coverage for marine risks on vessels in which the United States has an interest, in accordance with the existing authority in section 10 of the Merchant Marine Act, 1920, as amended.

Subsection (g) of section 3 provides for interpleader proceedings in war-risk insurance litigation. The amendment provides machinery whereby all conflicting claimants would be brought into the litigation or, if necessary, litigation might be initiated through an action in the nature of a bill of interpleader. The provision is an adaptation of the procedure provided to meet a similar problem in the World War Veterans' Act, 1924, as amended.

Subsection (h) of section 3 would, for the purposes of the War Risk Insurance Act, define the term "risks of war" in such a manner as to clarify the authority to provide war-risk insurance for all risks arising out of the war which are not covered by marine insurance available commercially. If the private market narrows the scope of its insurance coverage, the Administration would be able to cover so much of the abandoned coverage as may be necessary to carry on needed shipping.

Subsection (i) of section 3 would authorize the War Shipping Administration to provide insurance or reinsurance protection against legal liabilities of companies performing services or providing facilities for vessels, public or private, especially in the case of ship repairs. Such protection would be afforded only when not available at reasonable rates and on reasonable conditions from existing American facilities, and would not be available to cover liabilities to employees with respect to employer's liability or workmen's compensation.

Subsection (j) of section 3 would make it clear beyond controversy that the War Risk Insurance Act includes authority to provide insurance protection for agent operators as well as owners or charterers of vessels. The recent determination of the Supreme Court of the United States in Margaret M. Brady v. Roosevelt Steamship Company, Inc. (No. 269, October term, 1942, January 18, 1943), hold that there is such an independent liability in certain cases.

Subsection (k) of section 3 would expressly extend the insurance powers of the Administration to cover all vessels owned or controlled by the War Shipping Administration, including not only vessels, requisitioned, chartered, or purchased under Public Law 101, Seventyseventh Congress, which are already expressly covered, but also vessels

requisitioned under the Merchant Marine Act, 1936, as well as vessels constructed by the Maritime Commission.

MISCELLANEOUS

SECTION 4

Section 4 of the bill would eliminate any doubt as to the right of the United States to all exemptions and to limit liability with respect to vessels owned by or chartered to the War Shipping Administrator or operated directly by him or for his account and would cover agent's liabilities under the Brady case above referred to.

SECTION 5

Section 5 sets forth the effective date of section 1 (a) of the bill and provides that it will terminate at the same time as title I of the First War Powers Act, 1941, which will be 6 months after the end of the war or such earlier date as the Congress by concurrent resolution or the President may designate. The last sentence of section 5 makes it clear that where certain former powers of the Maritime Commission are placed in the War Shipping Administration for the war period, such powers as modified by the bill shall be exercised by the War Shipping Administrator during the war period.

H. R. 133 IN RELATION TO H. R. 7424, SEVENTY-SEVENTH CONGRESS

The bill (H. R. 133) differs from the bill (H. R. 7424) as it was reported by this committee and as it passed the House in these substantial respects (omitting self-explanatory changes):

Page 2, lines 14 to 18: This language would make it clear that seamen covered by section 1 (a) of the bill are not to be included in the coverage of Public Law 784, Seventy-seventh Congress, which provides compensation for injury or death from war risk hazards to certain contract employees of the United States for services outside the United States. These seamen are already protected under the right to sue for indemnity or damages and under the war-risk insurance furnished seamen under the requirements of the Maritime War Emergency Board. This insurance coverage is comparable to the casualty compensation and detention benefits which would be provided under Public Law 784.

Page 4, line 3: At the end of this subsection there appeared in the bill (H. R. 7424) a provision vesting in the President the authority to extend to seamen, under certain conditions, benefits of the United States Employees Compensation Act. In view of certain objections expressed to this provision before the Senate Commerce Committee, it is omitted from this bill in order to permit further consideration of the matter involved.

Page 6, line 8, and page 8, line 19: Originally the provision with respect to determinations or findings of the War Shipping Administrator under the respective sections were not to be subject to review by any governmental agency. This limitation is omitted with accord of the Comptroller General in opposition to such provisions.

Page 7, lines 21 and 22: The words "or under the control" have been added in order to make it entirely clear that the authority of the War Shipping Administration to provide insurance under the subsection in

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question will be effective even though the vessel was not operated by or under the direction of the Maritime Commission or the War Shipping Administration so long as it was under the control thereo through ship warrants or otherwise.

Page 10, line 17, to page 11, line 4: The proviso and the last sentence of subsection (b) comprise the language of amendments proposed by the Senate Committee on Commerce to the bill, H. R. 7424, to meet certain problems in connection with the power to convert a requisition of title of a vessel to a requisition of use. The proviso limits the power of the Government to convert title requisition to use requisition so that such action cannot be taken after the expiration of a period of 2 months following the delivery of the vessel pursuant to title requisition. The sentence at the end of subsection (b) would authorize a determination by the War Shipping Administration to convert a requisition of title into a requisition of use, upon recommendation of the Secretary of State in the case of any vessel requisitioned pursuant to the Foreign Vessels Requisition Act of June 6, 1941, where such vessel is lost or destroyed or converted to military use by the United States.

Page 12, lines 2 and 3: The language "as may equal but not exceed the amount of such claims in respect of the vessel" is inserted to meet a possible interpretation that the language of H. R. 7424 calls for the deposit of the full amount of just compensation with the Treasurer of the United States, whereas the original provision is designed for the protection of lien holders and such protection will be accorded by depositing only that part of the compensation necessary to cover valid claims against the vessel by way of mortgage, maritime claim, or attachment lien.

Page 15, line 19 to page 16, line 2: This subsection (h) did not appear in the bill H. R. 7424. The new subsection would make it clear that the War Shipping Administration may provide war-risk insurance for all risks arising out of the war which are not at the time covered by prevailing commercial marine insurance. The object of this provision (which was proposed by the Senate Commerce Committee as an amendment in its report on the bill in the 77th Cong.) is to avoid any gap in insurance coverage necessary for the protection of shipping during the war. This provision does not change but merely clarifies existing insurance powers of the Administration.

Page 18, lines 1 to 7: This sentence is added to make it clear that the authority which is granted by amendments to existing law contained in the bill and referring to the Maritime Commission shall be exercised by the Administrator of the War Shipping Administration in accordance with the Executive order of February 7, 1942 (which transferred to the War Shipping Administration certain functions of the Maritime Commission for the period of the war).

The bill, H. R. 133, does not contain any amendment to section 902 (a) of the Merchant Marine Act, 1936, as was proposed by the Senate Committee in its Senate Report No. 1813 on H. R. 7424. The proposed amendment to section 902 (a) was designed to clarify the application of that section in payment of just compensation for requisitioned vessels, in view of a recent opinion of the Comptroller General with respect to the interpretation of the enhancement clause in that section. There was no such provision in the House bill as it passed the House and it is contemplated that the necessity for legislation on the subject will be considered by this committee as a separate

matter after full hearing permits adequate consideration of all pertinent factors.

For ready reference and for information, the report on the predecessor bill, H. R. 7424, is set out below.

[H. Rept. No. 2572, 77th Cong., 2d sess.]

The Committee on the Merchant Marine and Fisheries, to whom was referred the bill (H. R. 7424) to amend and clarify certain provisions of law relating to functions of the War Shipping Administration, and for other purposes, having considered the same, report favorably thereon with an amendment and recommend that the bill, as amended, do pass.

The amendment is as follows:

Strike out all after the enacting clause and insert in lieu thereof the following:

That (a) officers and members of crews (hereinafter referred to as "seamen") employed on United States or foreign-flag vessels as employees of the United States through the War Shipping Administration shall, with respect to (1) laws administered by the Public Health Service and the Social Security Act, as amended by subsection (b) (2) and (3) of this section; (2) death, injuries, illness, maintenance and cure, loss of effects, detention, or repatriation, or claims arising therefrom not covered by the foregoing clause (1); and (3) collection of wages and bonuses and making of allotments, have all of the rights, benefits, exemptions, privileges, and liabilities, under law applicable to citizens of the United States employed as seamen on privately owned and operated American vessels. Such seamen, because of the temporary wartime character of their employment by the War Shipping Administration, shall not be considered as officers or employees of the United States for the purposes of the United States Employees' Compensation Act, as amended; the Civil Service Retirement Act, as amended; or the Act of Congress approved March 7, 1942 (Public Law 490, Seventy-seventh Congress). Claims arising under clause (1) hereof shall be enforced in the same manner as such claims would be enforced if the seaman were employed on a privately owned and operated American vessel. Any claim referred to in clause (2) or (3) hereof shall, if administratively disallowed in whole or in part, be enforced pursuant to the provisions of the Suits in Admiralty Act, notwithstanding the vessel on which the seaman is employed is not a merchant vessel within the meaning of such Act. Any claim, right, or cause of action of or in respect of any such seaman accruing on or after October 1, 1941, and prior to the date of enactment of this section may be enforced, and upon the election of the seaman or his surviving dependent or beneficiary, or his legal representative to do so shall be governed, as if this section had been in effect when such claim, right, or cause of action accrued, such election to be made in accordance with rules and regulations prescribed by the Administrator, War Shipping Administration. Rights of any seaman under the Social Security Act, as amended by subsection (b) (2) and (3) and claims therefor shall be governed solely by the provisions of such Act, so amended. When used in this subsection the term "administratively disallowed" means a denial of a written claim in accordance with rules or regulations prescribed by the Administrator, War Shipping Administration. When used in this subsection the terms "War Shipping Administration" and "Administrator, War Shipping Administration"' shall be deemed to include the United States Maritime Commission with respect to the period beginning October 1, 1941, and ending February 11, 1942, and the term “seaman" shall be deemed to include any seaman employed as an employee of the United States through the War Shipping Administration on vessels made available to or subchartered to other agencies or departments of the United States. The President shall, whenever he finds that convenience of administration and the efficient prosecution of the war require, extend to seamen upon such terms and conditions as he finds fair and appropriate any and all the benefits of employees of the United States under the United States Employees' Compensation Act, as amended, and upon such event, the rights, benefits and privileges of such seamen herein provided for with respect to death. injury, illness, and maintenance and cure, shall cease to such extent as the President finds that the termination of such rights, benefits, and privileges is necessary to avoid duplication of payments on account of death, injury, illness, or maintenance and cure.