1948 Legal Action drops the “Final Curtain.”

Court decision No. 6582a naming lawyers for petitioner Matson Nav Co, 
trustee for Veterans’ Air Express Co, and a slew of U.S. Attorneys and General Counsels for the Government. 
Dated March 19, 1948. Ironically, it was Saunie Gravely’s 25th Birthday.

Preparation for potential contract leads to unforeseen outcome.

Being a non-sked air line was not easy. The story was complicated – with many more than two sides.  Under-funding? Impact of government over-regulation? Timing? No question on all counts.  

Everything gathered into the perfect storm that grounded Veterans Air Express and Veterans Air Line late in 1946. They sought “reorganization” assistance from the Federal Court.  And, in December 1946 Veterans Air Express Co filed a petition in bankruptcy pursuant to the the National Bankruptcy Act.  

What had happened?

On 24 August 1946, DC-4 NX58003 landed at Matson Navigation maintenance base in Oakland, CA.  On 20 September, one month later, DC-4 NC57777 did likewise.

Both aircraft were to be outfitted to comply with safety requirements for trans-Pacific passenger flights. San Francisco Bay Area to Hawaii. Pacific passengers – a new business strategy.  Details remain sketchy; some evidence indicated passengers would be Matson customers being flown to Hawaii for their Steamship Cruises.

However, neither aircraft flew under Veterans Air Line livery ever again. The Company couldn’t pay incremental monies owed to Matson. So Matson sued Veterans Air. 

And then…

Then Uncle Sam got involved.  A multi-year court battle ensued – resulting in a Precedent Case that was “repeatedly cited in similar cases over many future years,” according to the Court. And, after eight pages of “established constitutional basis,” a one sentence, final statement was issued that “needs no monotonous recital of authorities for its substantiation.” [District Court, D. New Jersey Case No. 6582a]

Here’s why… 

Matson filed two liens – on Government-owed property – not knowing the ramifications.  Veterans Air did not yet own the DC-4s.  In April and May of 1946, they had been granted a “chattel mortgage in favor of the United States” from War Assets Administration. As such, the aircraft still belonged to Uncle Sam, with an unpaid obligation at that time of approximately $116,898. Plus, Veterans Air owed Matson for work performed. Approximately $147,000. 

The Case that established Precedence for the Government

Court Case No. 6582a. Eight pages highlighted in yellow, green and turquoise to help locate sections more-likely relevant to Matson.

Pages of legalese, of references to “established constitutional basis” and “a (Government) lien superior to any lien created by State Law.” The Case that would become Precedent.

Dear Reader, it would make it easier if you could “turn” the Case pages at the bottom, not top of its Page. But if you’re brave and curious enough to read it, scrolling up will not deter you, I’m sure!
Gaye Lyn

Final outcome..

“Court Directs Transfer of Craft to Matson Co.”

An article in Newark Evening News on November 2, 1948, lays out the transfer details.  In order for Matson to get title to the ex-Veterans Air DC-4s, Matson had to:

  • Pay off the War Assets Administration mortgage – $88,508.65
  • Pay a purchase price for the aircraft – newspaper amount is illegible; further research underway.
  • Cancel its two liens, taking a net loss of $51,663.07

Dear Reader, that’s all for today. This was a tough story to write.  But, in future, there’s bound to be a follow up story about Matson or the DC-4s in their “next lives.” 
Watch this space. Gaye Lyn

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