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 international passenger 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. On November 12, they were ordered to “show cause why it should not be declared insolvent and a receiver appointed.”1 In December, a “petition for reorganization” was filed in Federal Court.2
What had happened to trigger this action?
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. The two- and three-day deliveries were flown and recorded by Veterans Air Captain Jack Stettner. 3
Both aircraft were to be outfitted to comply with safety requirements for trans-Pacific passenger flights. San Francisco Bay Area to Hawaii. 4 Pacific passengers were to be 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 initial and 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 seven or eight pages of “established constitutional basis,” a one sentence, final statement was issued that “needs no monotonous recital of authorities for its substantiation.” The preceding sentence to that, however, more clearly defines Matson’s conundrum: “…the lien claimed by the United States of America is senior to any claim established under the State Law affecting the same object.”5
Here’s why…
Matson filed two liens – on Government-owed property – not knowing the ramifications. Veterans Air did not 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 $122,187. Plus, Veterans Air owed Matson for work performed both before and after the filing for petition of reorganization. Approximately $147,600.
The Case that established Precedence for the Government
Court Case No. 6582a. Seven pages, this .pdf is 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, if you’re brave or curious enough, we’ve made it as easy as possible to read any portion of this document. Scroll over the page bottom and turn pages via the arrows.
Gaye Lyn
Final outcome…
“Court Directs Transfer of Craft to Matson Co.”
A November 2, 1948 news article lays out the trail of and the transfer details. 6 In order for Matson to get title to the ex-Veterans Air DC-4s, Matson had to:
- Pay off the War Assets Administration mortgage balance of $88,508.65
- Pay a purchase price for the aircraft – newspaper amount is illegible; 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, hopefully, there will be a follow up story about Matson or the DC-4s in their “next lives.” Stay tuned.
Gaye Lyn