356 Findings of Fact 44. The Tagalam. In early 1951, plaintiff purchased the tanker Tagalam, in a private transaction not involving Maritime. 45. Subsequent United States-flag operations. Plaintiff has remained in the shipping business to the present time. In August 1958, it built the 35,000 ton Atlas for operation under the United States flag. It is now building a 45,000 ton tanker for United States-flag operation. 46. Plaintiff's intent. American flag vessels are inappropriate for speculative purchase, because of the narrow market for such vessels, owing to their relatively high cost of operation as compared with world operating costs. When plaintiff was acquiring the Sea Trader, Blackwater, and Wiegand, about 2,500 war-built ships were available for purchase on credit terms (with a 25 percent cash down payment and a 32 percent 20-year mortgage) for operation under foreign flag; plaintiff could have acquired such vessels. 47. Plaintiff did not acquire the ex-German ships for purposes of speculation: it has had a long standing interest in American flag vessels other than the ex-German ships, including the Herman Winter, the Queenston Heights, the Newberry Victory, the San Angelo Victory, the Clifford E. Ashby, the Tagalam, the Atlas and the 45,000 deadweight ton tanker now under construction; American flag vessels were not suitable objects of speculation; and war-built ships were available to plaintiff for foreign-flag operation on liberal credit terms at the time plaintiff was acquiring the ex-German ships for cash. B. PLAINTIFF'S CITIZENSHIP 48. Stockholders, Directors, and Officers. When plaintiff submitted its bid for the Sea Trader and the Blackwater, when Marangos, Carlip, and Poll submitted their bids for the Wiegand, Haussa and Ramapo, when these bids were accepted, when Maritime transferred title to the vessels to plaintiff, Carlip, Marangos, and Poll, respectively, when these men transferred title to plaintiff, when plaintiff applied for and was granted approval of the transfer of the four ex-German vessels to foreign ownership and flag, and when plaintiff's subsidiaries acquired the Newberry Victory, 649-081-63-26 Findings of Fact 152 Ct. Cl. the San Angelo Victory, and the Clifford E. Ashby, plaintiff's president, Aristides Bistis, and all the members of its board of directors were citizens of the United States. Plaintiff at all times had authorized and outstanding one class of stock consisting of 200 shares of voting common stock, a majority of which was owned by citizens of the United States. There existed no contract or understanding whereby the voting power in the corporation was conferred on an alien; there was no trust conferring beneficial ownership upon an alien; and there was no voting trust, pooling agreement, proxy, or other arrangement whereby voting power was conferred upon an alien. Louis Marangos, Philip Carlip, and James Poll were at all times citizens of the United States. 49. From 1942 until April 1949, a 34 percent minority interest in the stock of plaintiff was held by Manuel E. Kulukundis, who was then a Greek national. His family had been in the shipping business for over a hundred years; he himself had been in the shipping business since 1921, as a member of a group known as Rethymnis & Kulukundis, which had owned many ships before World War II. During World War II, he was the representative of the United Greek Ship Owners Corporation before the War Shipping Administration, in which capacity he operated 17 Liberty ships during the war. In 1946 he represented Greek ship owners in acquiring from Maritime some 100 ships to replace Greek ships lost during the war. Mr. Kulukundis became a citizen of the United States in 1955. 50. Until January 24, 1947, four days before plaintiff submitted its bid for the Sea Trader and the Blackwater, Mr. Kulukundis had been treasurer and a member of the Board of Directors of plaintiff. On that date, on the advice of counsel, he resigned as director, remaining treasurer, in order to eliminate doubt as to whether plaintiff qualified as a citizen of the United States within the meaning of Section 2 of the Shipping Act, 1916. 51. Mr. Kulukundis retained his position as treasurer of, and his 34 percent stock interest in, plaintiff until April 7, 1949. At that time, he conveyed 28 shares, representing a 14 percent interest, to Aristides Bistis and George Mav 356 Findings of Fact roleon, in order to qualify the plaintiff would qualify to charter the Queenston Heights for operation in coastwise trade. Following his naturalization in 1955, Mr. Kulukundis acquired 10 shares, representing 5 percent, from Mr. Anthony Mavroleon for $3,500, the stated value of the shares; he now owns 25 percent of the stock in the plaintiff. 52. Financing. Plaintiff began business in 1942 with a paid-in capital of $70,000, and purchased the Herman Winter for $55,000, retaining $15,000 for expenses and working capital. In 1947, when plaintiff was preparing to bid on the ex-German ships, Mr. Kulukundis purchased plaintiff's claim for just compensation for the taking of the Herman Winter for $70,000. Mr. Kulukundis eventually realized $77,000 from the claim, the major portion of which was not paid until 1951. 53. When plaintiff decided to bid on the ex-German ships, it planned to finance the transaction by a loan from the Chase National Bank secured by a mortgage on the ships, and to interest a group of investors including Mr. Thodosius Mitrou, Mr. Bistis, and Mr. George Mavroleon. These men were American citizens and each had the means to invest substantial capital in the venture. However, Chase refused to make a loan on the security of the ships because they were undocumented and did not have charters. When it appeared that documentation would be much more costly than originally anticipated, plaintiff could not induce the prospective investors to advance their capital, and Mr. Kulukundis undertook to finance the purchase of the ex-German ships personally. 54. Mr. Kulukundis advanced plaintiff the $223,000 cash purchase price of the Sea Trader; the $126,000 cash purchase price of the Blackwater; the $91,350 cash purchase price of the Dr. Heinrich Wiegand, which plaintiff in turn advanced to Marangos; and a portion of the $305,928.98 invested by it in the alteration and conversion of the Sea Trader for documentation under the United States flag. 55. The remaining portion of the latter sum, as well as the revolving fund used in operating the Sea Trader, was advanced by Mar Trade Corporation, which was plaintiff's operating agent. On March 16, 1948, more than a year after Findings of Fact 152 Ct. Cl. plaintiff and Marangos had bid on the Sea Trader, Blackwater and Wiegand, Mr. Kulukundis became a 10 percent stockholder in Mar Trade Corporation. On July 6, 1949, Mr. Kulukundis became a 45 percent stockholder in Mar Trade Corporation. As of December 31, 1947, Mr. Kulukundis had advanced Seatrade Corporation the net sum of $530,300, which was carried on the books of plaintiff as a loan payable to him on open account. On the same date, Mar Trade Corporation had made net advances to plaintiff of $381,320.74. 56. In 1948, Mr. Kulukundis advanced plaintiff approximately $81,100 for the acquisition of the Haussa; $126,300, for the purchase price of the Ramapo, and $91,575, for repairs on the Ramapo. In 1948 and early 1949 he paid five notes aggregating $346,807.24, for repairs on the Ramapo. As of December 31, 1948, he had advanced a cumulative sum of $960,154.83, which was carried on the books of plaintiff as a loan payable on open account. On the same date Mar Trade's net advances to plaintiff aggregated $455,423.20. 57. In April 1949, plaintiff purchased the Queenston Heights for $1,700,000. The purchase was financed as follows: two loans from the Chase National Bank, one for $1,300,000 and one for $200,000, aggregating $1,500,000 (the $200,000 loan was a short term loan, because plaintiff intended to repay this amount from the proceeds of the prospective sale of the Sea Trader, Blackwater and Wiegand); a loan of $75,000 from American and Overseas Chartering Corporation, the ship broker; and advances of $125,000 from Mr. Kulukundis. The principal security for the bank loan was the charter hire from a profitable bareboat charter of the ship to Standard Oil Company. Mr. Kulukundis gave his personal guarantee for the $1,500,000 bank loan; he also pledged securities owned by him as collateral for the $200,000 portion of the bank loan and for the American Overseas loan and subordinated plaintiff's debt to him to the bank loan. 58. When plaintiff needed funds to meet Maritime's exactions as a condition of its approval of the transfers foreign of the Sea Trader, Blackwater, and Wiegand, Mr. Kulukundis advanced plaintiff $50,000 on June 6, 1949, and $150,000 on August 31, 1949. Another portion of the exactions was sup 356 Findings of Fact plied by a loan from the Chase National Bank to plaintiff for $300,000 on August 12, 1949, for which Mr. Kulukundis pledged securities as collateral, guaranteed the loan, and again agreed to subordinate his claims against plaintiff. In connection with both Chase National Bank loans, Mar Trade Corporation also subordinated its claims against plaintiff. At the end of 1949, Mr. Kulukundis's advances to plaintiff aggregated $1,498,909.05, which were carried on the books of plaintiff as a loan payable on open account. On the same date, Mar Trade's advances to plaintiff aggregated $457,461.35. 59. On December 12, 1949, pursuant to a separate agreement between Mr. Kulukundis and one Arthur Caplan under which Mr. Kulukundis had agreed to guarantee the purchase price of certain shares held by Caplan in a corporation known as Tramp Shipping and Oil Transportation Corporation, plaintiff paid Mr. Caplan $15,000, which was the book value of the shares agreed to be purchased, and received in return 1,700 shares of common stock of the par value of $17,000 and 330 shares of preferred stock of the par value of $33,000 of that corporation; the remaining $35,000 of the $50,000 guaranty price was paid by Mr. Kulukundis. 60. In June 1950, pursuant to a guaranty arrangement between Mr. Kulukundis and certain stockholders of a corporation known as Philadelphia Marine Corporation, plaintiff acquired a number of shares of that corporation for $8,000, which was their book value; Mr. Kulukundis paid the sellers $22,000 in accordance with his agreement to guarantee them a price of $30,000. On June 25, 1950, Mr. Kulukundis sold shares of Philadelphia Marine Corporation of the par value of $60,000 to plaintiff, giving plaintiff an option to resell the shares to him at any time within one year at par value. The purchase price was credited to Mr. Kulukundis's account on the books of plaintiff. 61. In order to meet Maritime's financial requirements for the purchase of the Newberry Victory and San Angelo Victory, plaintiff borrowed $450,000 from the Chase National Bank in November 1950; Mr. Kulukundis guaranteed the loan. At the end of 1950 Mr. Kulukundis's advances to |