1. Under § 10 of the Lever Act and the Fifth Amendment, the
owner of property requisitioned by the United States is entitled to
the full money equivalent of the property taken, and the
ascertainment of this just compensation is a judicial function. P.
262 U. S.
343.
2. Where private property is taken for public use and there is a
market price prevailing at the time and place of the taking, that
price is just compensation. P.
262 U. S.
344.
3. Evidence of the cost of production and of what would be a
reasonable profit, to the owner is inadmissible when market prices,
prevailing at the time and place of the taking have been
established beyond controversy. P.
262 U. S.
344.
4. Evidence of prices of coal for future delivery current at the
time and place of taking has no weight against market prices then
and there current for immediate delivery, nor any tendency to prove
what they were. P.
262 U. S.
344.
5. An owner of coal who, at the time and place of its taking by
the government, could clearly have sold it for a higher export
market price, and had the right to do so, is not justly compensated
by payment of a lower domestic market price current there at the
same time. P.
262 U. S.
345.
276 F. 690 affirmed.
Error to a judgment of the circuit court of appeals which
affirmed a judgment for the Collieries Company in the district
court in an action to recover a balance due as compensation for
coal requisitioned by the United States.
Page 262 U. S. 342
MR. JUSTICE BUTLER delivered the opinion of the Court.
On various dates between September 17, 1919, and February 1,
1921 at Hampton Roads, Virginia, the United States requisitioned
from defendant in error upwards of 60,000 tons of bituminous coal
for use of the Navy. The taking was under § 10 of the Lever Act. 40
Stat. 276. The President, acting through the Navy Department, fixed
certain prices as just compensation. These were not satisfactory to
the owner. The United States paid 75 percent of the amount fixed,
or, under stipulation of the parties, is to be considered as having
paid it, in accordance with the act. The owner sued in the United
States District Court for the District of New Jersey for a sum
which added to the 75% would make just compensation. Three actions
were consolidated and tried as one. There was no controversy as to
the quantity or quality of the coal taken. Judgment was entered in
accordance with the verdict of a jury, fixing prices in excess of
those allowed by the President. The government took the case to the
circuit court of appeals, and to review its judgment, affirming
that of the district court, brings the case here on writ of
error.
When the coal was taken, there was at Hampton Roads a market for
coal for export and also a domestic market. The business of the
defendant in error was chiefly in the export trade. During the
period in question, it produced about 907,000 tons and sold nearly
two-thirds of it for export. Many producers shipped coal there,
which, with the coal of defendant in error, went into a common
pool. There was a strong demand for export coal. There
Page 262 U. S. 343
were many buyers, and export prices fluctuated. About 36,000,000
tons were sold in the open market. Supply and demand were
controlling factors, affecting market prices which prevailed in
both the export and domestic markets. The prices for export coal
were considerably higher than for domestic coal. If the coal had
not been taken by the United States, it could have been sold by the
owner at export market prices. The market prices for export coal
were shown by a number of witnesses of long experience and familiar
with the market, by excerpts from leading trade journals, and by a
statement of prices actually received by defendant in error for
export coal during that period. On that point, the United States
offered no opposing evidence. The court held market prices for
export coal constituted just compensation, and left to the jury the
ascertainment thereof.
The United States contends that the court erred in refusing,
under the circumstances disclosed, to allow it to introduce
evidence of the "real" value of the coal, as distinguished from its
market value, and in holding that spot export prices controlled in
determining just compensation, and further that, even if such
market prices are taken, it was error to exclude evidence of
domestic prices.
Section 10 of the Lever Act, in obedience to the Fifth
Amendment, provides for just compensation. The war, or the
conditions which followed it, did not suspend or affect these
provisions.
United States v. L. Cohen Grocery Co.,
255 U. S. 81,
255 U. S. 88.
[
Footnote 1] The owner was
entitled to the full money equivalent of the property taken, and
thereby to be put in as good position pecuniarily as it would have
occupied if its property had not been taken.
Seaboard Air Line
Railway Co. v. United States, 261 U.
S. 299, and cases cited. The ascertainment of
compensation is a
Page 262 U. S. 344
judicial function, and no power exists in any other department
of the government to declare what the compensation shall be or to
prescribe any binding rule in that regard.
Monongahela
Navigation Co. v. United States, 148 U.
S. 312,
148 U. S. 327.
Where private property is taken for public use, and there is a
market price prevailing at the time and place of the taking, that
price is just compensation.
L. Vogelstein & Co., Inc. v.
United States, ante, 262 U. S. 337;
United States v. Chandler-Dunbar Co., 229 U. S.
53,
229 U. S. 80-81;
Boom Co. v. Patterson, 98 U. S. 403,
98 U. S. 407.
More would be unjust to the United States, and less would deny the
owner what he is entitled to.
The United States admits that market value is usually the basis
for ascertaining the pecuniary equivalent, but suggests that
sometimes an article has no market price, and that, in such case,
"proof of real value" is admissible, and that therefore "market
value" and "just compensation" are not necessarily synonymous. The
court below excluded evidence offered by the United States to show
the owner's cost of production and a reasonable profit. This ruling
was right, because it was shown beyond controversy that there were
market prices prevailing when and where the coal was taken. The
United States had the right to take the coal on payment of these
prices; the owner was not entitled to more, and could not be
required to take less. The owner's cost, profit, or loss did not
tend to prove market price or value at the time of taking, and was
therefore immaterial.
The United States offered evidence of prices specified for
domestic coal in contracts for future deliveries (current at the
time of the taking), as distinguished from prices for spot coal --
i.e., coal for immediate delivery. These contract prices
were rightly excluded. They could be given no weight as against
current market prices, and would have no tendency to prove what
such market prices were.
Page 262 U. S. 345
The facts bring this case within the rule stated by the circuit
court of appeals (276 F. 690 at p. 692):
"If it be an article commonly traded in on a market, and it is
shown that, at the time and place it was taken, there was a market
in which like articles in volume were openly bought and sold, the
prices current in such a market will be regarded as its fair market
value, and likewise the measure of just compensation for its
requisition."
The lower courts rightly held that market prices prevailing at
the times and place of the taking constitute just compensation.
Nor was it error to exclude evidence of the market prices of
coal for domestic use, and to hold that market prices for export
coal controlled. The owner cannot be required to suffer pecuniary
loss. Upon an examination of the record, we agree with the
statement of the circuit court of appeals (276 F. 690, 691) that,
if the coal had not been taken by the United States, it could have
been sold at the market price for export coal prevailing for spot
deliveries at the time of the taking.
The owner was entitled to what it lost by the taking. That loss
is measured by the money equivalent of the coal requisitioned. It
is shown by the evidence that every day, representatives of foreign
firms were purchasing, or trying to purchase, export coal.
Transactions were numerous, and large quantities were sold. Export
prices for spot coal were controlled by the supply and demand.
These facts indicate a free market. The owner had a right to sell
in that market, and it is clear that it could have obtained the
prices there prevailing for export coal. It was entitled to these
prices. [
Footnote 2]
The judgment of the circuit court of appeals is
affirmed.
[
Footnote 1]
See also C. G. Blake Co. v. United States, 275 F.
861.
[
Footnote 2]
Cf. Boston Chamber of Commerce v. Boston, 217 U.
S. 189,
217 U. S. 195;
Monongahela Navigation Co. v. United States, 148 U.
S. 312,
148 U. S. 326;
Five Tracts of Land v. United States, 101 F. 661, 665;
New York v. Sage, 239 U. S. 57,
239 U. S.
61.