1. Where the taking (if any) of a railroad, under the Federal
Control Act was purely technical, resulting from the generality of
the President's proclamation, etc., and the Director General did
not in fact take over its possession or control or deal with it
specifically in any way, so that it continued to be operated by the
owner company as theretofore, without interference, the company
could not maintain an action for "just compensation" under § 3 of
the Act, since nothing of value was taken from it, it was subjected
to no pecuniary loss by the government, and nominal damages are not
recoverable in the Court of Claims. P.
270 U. S.
282.
2. The Federal Control Act, in authorizing the President to
agree with any carrier of whose railroad he took possession and
control that it should
"receive as just compensation an annual sum . . . for each year,
and
pro rata for any fractional year of such federal
control, not exceeding a sum equivalent as nearly as may be to its
average annual railway operating income for the three years ending
June thirtieth, nineteen hundred and seventeen"
(§ 1), did not establish a rule of compensation applicable when
there was no agreement, but relegated the carrier in that case to
proceedings for the ascertainment of just compensation (§ 3), in
which the burden was on the carrier of proving the value of the use
taken from it, or the damage suffered by it under rules ordinarily
applicable to takings by eminent domain. P.
270 U. S.
283.
3. Although § 3 of the Federal Control Act declares that, in
such proceedings, the report of a board of referees appointed by
the Interstate Commerce Commission shall be
prima facie
evidence of the amount of just compensation and the facts stated
therein, a report which, by its face and by the findings of the
Court of Claims, is shown to have been based upon mere assumptions,
without evidence of loss or damage, has no evidential value. P.
270 U. S.
285.
60 Ct.Cls. 230 affirmed.
Appeal from a judgment of the Court of Claims rejecting a claim
for compensation for the alleged taking of the petitioner's short
line railway.
Page 270 U. S. 281
MR. JUSTICE BRANDEIS delivered the opinion of the Court.
The Marion & Rye Valley Railway Company, a short line
railroad, brought this suit in the Court of Claims to recover
$14,425.94 as compensation for the alleged taking possession and
use by the United States of its railroad during the period
beginning December 28, 1917, and ending June 29, 1918. That sum is
the amount which, on September 30, 1922, a board of referees
appointed by the Interstate Commerce Commission, pursuant to § 3 of
the Federal Control Act, March 21, 1918, c. 25, 40 Stat. 451, 454,
found to be just. The application for the appointment of the board
was made after the Director General had refused to pay the company
any compensation. [
Footnote 1]
The suit was begun after he had refused to accept the report as a
basis for settlement. The case was heard upon a stipulation of the
facts which the court adopted as its findings. The government
denied liability. It contended that there was not a legal taking,
because the President did
Page 270 U. S. 282
not take actual possession of the railroad, did not operate it,
and did not otherwise exercise control. It contended also that,
even if there was a technical taking of possession, the plaintiff
was not entitled to any compensation, because it suffered no
pecuniary loss. Both contentions were sustained by the court, and
judgment was entered for the defendant on January 26, 1925. 60
Ct.Cls. 230. The appeal was duly taken under § 242 of the Judicial
Code. We have no occasion to determine whether, in law, the
President took possession and assumed control of the Marion &
Rye Valley Railway. For, even if there was technically a taking,
the judgment for defendant was right. Nothing was recoverable as
just compensation, because nothing of value was taken from the
company, and it was not subjected by the government to pecuniary
loss. Nominal damages are not recoverable in the Court of Claims.
Grant v. United
States, 7 Wall. 331,
74 U. S. 338.
Power to take possession and assume control of any railroad on
account of the war emergency had been conferred upon the President
by Act of August 29, 1916, c. 418, 39 Stat. 619, 645.
See
Northern Pacific Ry. Co. v. North Dakota, 250 U.
S. 135,
250 U. S.
142-147;
Missouri Pacific R. Co. v. Ault,
256 U. S. 554,
256 U. S.
556-557;
St. Louis, Kennett & Southeastern R.
Co. v. United States, 267 U. S. 346. The
President issued, on December 26, 1917, a proclamation which
recited that
"[I] do hereby . . . take possession and assume control at 12
o'clock noon on the twenty-eighth day of December, 1917, of each
and every system of transportation . . . consisting of railroads, .
. ."
and a Director General was appointed. 40 Stat. 1733. Some
general notices or orders by the Director General were received by
the Marion & Rye Railway Company shortly after the issue of the
proclamation, but no order dealing specifically with that railroad
was given by him. He did not at any time take over the actual
possession or operation of the railroad,
Page 270 U. S. 283
did not at any time give any specific direction as to its
management or operation, and did not at any time interfere in any
way with its conduct or activities. The company retained possession
and continued in the operation of its railroad throughout the
period in question. The railroad was operated during the period
exactly as it had been before, without change in the manner,
method, or purpose of operation. The railroad did not serve any
military camp, nor did it transport troops or munitions. The
character of the traffic remained the same. Nothing appears to have
been done by the Director General which could have affected the
volume or profitableness of the traffic or have increased the
requirements for maintenance or depreciation, and apparently it
retained its earnings, expended the same as it saw fit, and,
without accounting to the government, devoted the net operating
income to the company's use.
The company urges that the claim sought to be enforced rests
upon a statutory right to the just compensation specifically
defined in § 1 of the Federal Control Act; that the compensation
there prescribed is for the rental value at the rate of the average
annual railway operating income for the three years ended June 30,
1917; that, by the taking, although technical, the government
agreed to pay the compensation defined in the statute; that the
function of the board of referees, acting under the statute, was to
find that sum "as nearly as may be;" and that, by its report, it
had done so. It is true that, in this case the claim, is founded
upon "a law of Congress," not upon a "contract, express or
implied." Judicial Code, § 145, par. First. Recovery cannot be
sought upon the contract implied in fact which, in view of the
constitutional obligation justly to compensate for property taken
by eminent domain, ordinarily arises on a taking of private
property by the government pursuant to law, where no provision is
made by statute for ascertaining the amount
Page 270 U. S. 284
of compensation or for enforcing payment.
Compare United
States v. Great Falls Manufacturing Co., 112 U.
S. 645;
Great Falls Mfg. Co. v. Garland,
124 U. S. 581;
Tempel v. United States, 248 U. S. 121,
248 U. S. 129.
Here both the method of determining the amount and the means of
enforcing payment are prescribed by statute.
Compare William
Cramp & Sons, etc., Co. v. International Curtis Marine Turbine
Co., 246 U. S. 28. But
the question remains what is the amount recoverable. D id the
Federal Control Act merely confer authority upon the President to
enter into an agreement to pay as much as the so-called "standard
return," or did it also direct him, if such an agreement was not
reached, to make payment on the basis of the "standard return"?
Congress has power to recognize moral obligations.
United
States v. Realty Co., 163 U. S. 427,
163 U. S.
441-443. Hence, it could have provided for payment on
the basis of the standard return, even where there was no damage
according to the rules of law ordinarily applicable to takings by
eminent domain. Congress did not, however, direct the President to
make such payment. It merely authorized him to agree with any
carrier of whose railroad he took possession and control that it
should
"receive as just compensation an annual sum . . . for each year
and
pro rata for any fractional year of such federal
control, not exceeding a sum equivalent as nearly as may be to its
average annual railway operating income for the three years ended
June thirtieth, nineteen hundred and seventeen."
The provision did not establish a rule of compensation. The
President was not permitted to agree to pay more, but he was left
free to refuse to pay that sum. The carrier was left free to reject
any offer that might be made. Where no agreement was reached, the
carrier was relegated by § 3 to proceedings for ascertaining the
amount of just compensation. The question thus becomes one of
determining the "just compensation" for the use taken or damage
done. If Congress had intended
Page 270 U. S. 285
that the "standard return" should be taken as the measure of
just compensation, in any event, there would have been no occasion
for a hearing before a board of referees. The amount so payable
could have been determined by calculation from the "average" annual
railway operating income which, by § 1 of the Federal Control Act,
p. 452, the Interstate Commerce Commission itself was required to
ascertain and to certify to the President.
Thus, the fact that the right to recover compensation is a
statutory one did not relieve the railroad from the burden of
proving the value of the use taken from the company or the damage
suffered by it under rules ordinarily applicable to takings by
eminent domain.
Compare Mitchell v. United States,
267 U. S. 341,
267 U. S. 345.
Nor did the report of the board of referees supply the necessary
evidence. It is true that § 3 of the Federal Control Act makes the
report of the referees
prima facie evidence of the amount
of just compensation and of the facts therein stated. But the legal
effect of evidence is a question of law. The presumption otherwise
attaching to a finding of the board was overcome by the facts
stated in the report and in the findings of the Court of Claims.
The board was required to "consider all the facts and
circumstances," and to "report as soon as practicable in each case
to the President the just compensation" so ascertained. Its report
discloses that it did not consider "the facts and circumstances."
Its finding of just compensation rests wholly upon assumptions. It
was assumed that compensation for the use of the company's property
should be calculated upon the basis of an implied lease and
agreement by the government to pay a fair rental, although, as the
report states, there was "no evidence as to the amount for which
the railroad could have been rented, and there is no likelihood
that there was any market for its rental." It was assumed further
that the assumed lease must be deemed to have been made
Page 270 U. S. 286
for an indeterminate period, because the duration of federal
control could not be foretold on December 28, 1917; that this
rental value should be ascertained as of the date of the
commencement of federal control, and should be measured not upon
the then immediate outlook for business for the first six months of
1918, but by the then probable earnings for a period of years, and
finally that the amount should be fixed at one-half of the average
annual operating income for the three years prior to January 1,
1918, and not at the smaller amount actually shown to have been
earned during the six months' period and retained by the company.
In other words, the board simply adopted as its measure the
so-called "standard return" of the Federal Control Act. No evidence
was introduced before it to show that the alleged taking had
subjected the company to any pecuniary loss or had deprived it of
anything of pecuniary value, although the hearing before the board
was commenced long after the period of alleged possession and
control had expired. [
Footnote
2] The report was therefore without evidential value.
The opinion of the Court of Claims discloses, pp. 253-255, that
the company claimed there that, if it was not entitled to recover
under the Federal Control Act, it was entitled to recover under §
204 of the Transportation Act of 1920. This contention, overruled
below, was not renewed here.
Affirmed.
[
Footnote 1]
The board entered upon the hearing and made its report despite
objection by the Director General that it was without jurisdiction,
because the proceeding was commenced after Transportation Act Feb.
28, 1920, c. 91, 41 Stat. 456, 460, had provided by § 204 another
and exclusive remedy for carriers which, like the plaintiff, had
operated their own railroads throughout the period for which
compensation was claimed.
[
Footnote 2]
On or before July 4, 1918, the plaintiff received from John
Barton Payne, General Counsel for the Director General, the
following notice:
June 24, 1918
"Dear Sir: It is not clear whether the Marion & Rye Valley
Railway Company has at any time been under federal control. To
remove any possible question, this order is issued definitely
relinquishing same."
"Very truly yours,"
John Barton Payne
"T. S. Ambler, Gen. Mgr. Marion & Rye Valley Ry. Co."