Waterman Steamship Corporation v. United States

PETITIONER: Waterman Steamship Corporation
RESPONDENT: United States
LOCATION: United States Post Office and Courthouse

DOCKET NO.: 245
DECIDED BY: Warren Court (1962-1965)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 381 US 252 (1965)
ARGUED: Apr 26, 1965 / Apr 27, 1965
DECIDED: May 17, 1965

Facts of the case

Question

Media for Waterman Steamship Corporation v. United States

Audio Transcription for Oral Argument - April 27, 1965 in Waterman Steamship Corporation v. United States

Audio Transcription for Oral Argument - April 26, 1965 in Waterman Steamship Corporation v. United States

Earl Warren:

Number 245, Waterman Steamship Corporation, Petitioner, versus United States.

Mr. Solicitor General?

Archibald Cox, Jr.:

Mr. Chief Justice, may it please the Court.

I move the admission of Paul Bender, Esquire, one of the assistants in my office for the purpose of arguing the next case.

Earl Warren:

The motion is granted.

Archibald Cox, Jr.:

Thank you.

Earl Warren:

Mr. McConnell?

John W. McConnell, Jr.:

Mr. Chief Justice, may it please the Court.

As one of the counsel of record for the petitioner here, Waterman Steamship Corporation, we feel that we have a case with a very limited yet clear issue and result.

We ought to emphasize the issue because if the issue is kept in proper perspective, we believe then that the result will fall as contended by the petitioner.

This is a tax case and we maintain that it concerns the application of the usual rules on the Internal Revenue Code and the 1939 code is the one that controls this case by determining the cost or the tax basis of property, the original price of which property was adjusted downward in pursuant to a statute passed by Congress, which had a limited purpose and which did not have anything in the statute specifying the tax effect which is the issue before this Court.

It is not concerned with a tax statute per se, but rather with a general statute with rather limited applications, but with no specified tax effects.

However, like any other general statute, it may have tax effects and did have tax effects, but again, it's concerned as we see it, not having specific or specified tax effects in the statute that it is then to be determined and controlled by the usual rules of determining cost under the 1939 code.

We do not think that it is concerned with statutory construction.

We think the statute is rather clear and explicit.

It does not, we think, involve or need a study of the legislative history or legislative environment again because of the face of the statute the meaning and effect is clear.

There are two statutes involved in general.

One, the Merchant Ship Sales Act of 1946 which was enacted or came into effect on March 8, 1946, after a study over about a 2-year period in Congress.

The statute in general related to the disposition after the war, of the vessels that had been constructed and most of them owned by the government during the war.

Now a subsidiary question arose and that was, what would be done to those persons or those corporations that had purchased vessels during the war at the war time cost and that these vessels that were going to be sold after the war were going to be sold at less than war time cost, what adjustment would be made to those individuals who had purchased during the war at a higher price?

Earl Warren:

To accomplish what purpose?

John W. McConnell, Jr.:

To accomplish the purpose Your Honor was to get private shipping or to get shipping back into the private industry in a sense that the conclusion of war most of it would have been owned and in the hands of the government.

Now the question was, what would be the price at which these vessels would be sold to any prospective purchaser?

Keeping in mind in our case Your Honor, Waterman had purchased 18 of these vessels from the Government during the war and purchased them at their cost during the war.

Earl Warren:

Yes.

John W. McConnell, Jr.:

After the war, the so-called statutory sales price as set out in the act, would be a lower price than the cost of construction during the war.

Now --

Earl Warren:

But was it -- my point was this, was it to equate the price of those ships that were purchased during the war with those that were purchased after wards?

John W. McConnell, Jr.:

It was taken to consideration, Your Honor, the fact that the ones purchased in the war had been purchased at a higher price.

Earl Warren:

Yes.