In 1944, the War Department requisitioned a quantity of whole
black pepper, as to which a ceiling price had been established by
the Office of Price Administration under authority of the Emergency
Price Control Act. In a suit by the owner to recover just
compensation, the Court of Claims fixed as just compensation a
price in excess of the ceiling price.
on the record in this case, the ceiling price of
the pepper at the time it was requisitioned was the proper measure
of just compensation. Pp. 339 U. S.
1. The congressional purpose and the necessities of a wartime
economy require that ceiling prices be accepted as the measure of
just compensation, so far as that can be done consistently with the
objectives of the Fifth Amendment. Pp. 339 U. S.
2. Neither the Fifth Amendment nor the Emergency Price Control
Act's provision that the Act shall not be construed to compel an
owner to sell his property requires that, in determining the amount
of just compensation, there be added to the ceiling price a
"retention value" -- i.e.,
an allowance for the price the
owner could have obtained had he been permitted to hold the
commodity until after price restrictions had been removed. Pp.
339 U. S.
3. The owner failed to sustain the burden of proving special
conditions and hardships peculiarly applicable to it; wherefore the
ceiling price of the pepper, fair and just to the trade generally,
must be accepted as the maximum measure of compensation for the
taking. Pp. 339 U. S.
(a) The fact that the owner was an "investor" in pepper, rather
than a "trader," did not entitle it to "retention value," a value
based on speculation concerning the price it might have obtained
for pepper after the war and after price controls were removed. Pp.
339 U. S.
(b) The fact that the particular pepper delivered to the
Government cost the owner more than the ceiling price is no
Page 339 U. S. 122
for excepting the owner from application of the ceiling price as
the proper measure of just compensation. Pp. 339 U. S.
(c) The Fifth Amendment does not require the Government to
compensate an owner of requisitioned goods for potential profits
lost because of war and the consequent price controls. P.
339 U. S.
11 Ct.Cl. 244, 83 F. Supp. 356, reversed.
In a suit to recover just compensation for a quantity of whole
black pepper requisitioned in 1944 by the War Department, the Court
of Claims awarded an amount in excess of the OPA ceiling price, but
less than the amount claimed. 113 Ct.Cl. 244, 83 F. Supp. 356. This
Court granted cross-petitions for certiorari. 338 U.S. 857.
Reversed and remanded,
p. 339 U. S.
MR. JUSTICE BLACK delivered the opinion of the Court.
Commodities Trading Corporation brought this suit in the Court
of Claims to recover "just compensation" for about 760,000 pounds
of whole black pepper requisitioned by the War Department in 1944
from Commodities' stock of 17,000,000 pounds. The United States
contended that the OPA ceiling price of 6.63 cents per pound was
just compensation. Commodities denied this, claiming 22 cents per
pound. It argued that Congress did not and could not
constitutionally fix the ceiling price as a measure for determining
what is just compensation under the Constitution. Commodities also
contended that, for reasons peculiar to its own situation,
application of the ceiling price in this instance would be
particularly unjust. The Court of Claims fixed "just
Page 339 U. S. 123
compensation" at 15 cents per pound. In so doing, that court
took into consideration what it terms "retention value," explained
as an allowance for the price Commodities "undoubtedly could have
secured for its pepper had it been permitted to hold it until after
restrictions had been removed. . . ." The court also considered how
much the precise pepper requisitioned cost Commodities, the prices
at which that company sold pepper after the government requisition,
subsequent OPA ceiling prices, and the average price of pepper for
the past 75 years. 113 Ct.Cl. 244, 83 F. Supp. 356, 358. We granted
the petitions of both parties for certiorari. 338 U.S. 857.
The questions presented are controlled by the
clause of the Fifth Amendment providing that private property shall
not be "taken for public use, without just compensation." This
Court has never attempted to prescribe a rigid rule for determining
what is "just compensation" under all circumstances and in all
cases. Fair market value has normally been accepted as a just
standard. But when market value has been too difficult to find, or
when its application would result in manifest injustice to owner or
public, courts have fashioned and applied other standards.
] Since the market
value standard was developed in the context of a market largely
free from government controls, prices rigidly fixed by law raise
questions concerning whether a "market value" so fixed can be a
measure of "just compensation." United States v. John J. Felin
& Co., 334 U. S. 624
Whatever the circumstances under which such constitutional
questions arise, the dominant consideration always remains the
same: what compensation is "just" both to an owner whose property
is taken and to the public that must pay the bill?
Page 339 U. S. 124
The word "just" in the Fifth Amendment evokes ideas of
"fairness" and "equity," and these were the primary standards
prescribed for ceiling prices under the Emergency Price Control
Act. [Footnote 2
] As assurance
that prices fixed under its authority by the administrative agency
would be "generally fair and equitable," Congress provided that
price regulations could be subjected to judicial review. All
legitimate purchases and sales had to be made at or below ceiling
prices. And most businessmen were compelled to sell because, for
example, their goods were perishable or their businesses depended
on continuous sales. Thus, ceiling prices of commodities held for
sale represented not only market value, but, in fact, the only
value that could be realized by most owners. Under these
circumstances, they cannot properly be ignored in deciding what is
The extent to which ceiling prices should govern courts in such
a decision is another matter. Congress did not expressly provide
that prices fixed under the Price Control Act should constitute the
measure of just compensation for property taken under the Fifth
Amendment. [Footnote 3
] And §
4(d) provides that the Act shall not be construed as requiring any
person to sell. But § 1(a) declared the Act's purposes "to assure
that defense appropriations are not dissipated by excessive prices"
and to "prevent hardships . . . to the Federal, State, and local
governments which would result from abnormal increases in prices. .
. ." Congress thus plainly contemplated that these governments
should be able to buy goods
Page 339 U. S. 125
fulfilling their wartime needs at the prices fixed for other
purchasers. The crucial importance of this in the congressional
plan for a stabilized war economy to limit inflation and prevent
profiteering is shown by the fact that, during the war,
approximately one-half of the nation's output of goods and services
went to federal, state and local governments. [Footnote 4
] And should judicial awards of just
compensation be uniformly greater in amount than ceiling prices,
expectations of pecuniary gains from condemnations might prompt
many owners to withhold essential materials until the Government
requisitioned them. We think the congressional purpose and the
necessities of a wartime economy require that ceiling prices be
accepted as the measure of just compensation so far as that can be
done consistently with the objectives of the Fifth Amendment.
It is contended that acceptance of ceiling
prices as just compensation would be inconsistent with the Fifth
Amendment because such prices fail to take into account a factor
designated by the Court of Claims as "retention value." This
concept stems largely from the Emergency Price Control Act's
provision that the Act shall not be construed as compelling an
owner to sell his property against his will. Translating the
provision as conferring on an owner the "right to hold his property
until he can get for it whatever anyone is willing to pay," the
Court of Claims held that it gave rise to a "retention value" which
must be added to the ceiling price in order to meet the
constitutional requirement of "just compensation." [Footnote 5
Page 339 U. S. 126
In enacting that provision, Congress merely refused to take from
owners their long existing "right to hold" until they wanted to
sell. It did not create a new "right to hold" as against a
constitution Government taking, or engraft added values of any kind
on property which happens to be requisitioned at a time when prices
are fixed by law. We cannot justifiably stretch this provision into
a command that the Government pay owners a "retention value" for
Nor can we construe the Fifth Amendment as supporting the Court
of Claims "retention value" rule. In peacetime, when prices are not
fixed, the normal measure of just compensation has been current
market value; retention value has never been treated as a separate
and essential factor. True, current market value may sometimes be
higher because a buyer anticipates future rises in prices. And
exceptional circumstances can be conceived which would justify
resort to evidential forecasts of potential future values in order
to determine present market value. But the general constitutional
rule declared and applied by the Court of Claims did not rest on
A persuasive reason against the general rule declared by the
Court of Claims is the highly speculative nature of proof to show
possible future prices on which "retention value" must depend. In
this case, for instance, no one
Page 339 U. S. 127
knew how long the war would last, nor how long economic
conditions due to war might lead Congress to continue price-fixing
legislation. Predictions on these subjects were guesses, not
informed forecasts. And even if such predictions were reasonably
certain, there remained other unknowns. How much more than the
ceiling price would a speculative purchaser have paid for property
at the time of seizure? To what extent, if at all, would the
lifting of war controls raise prices above the controlled ceilings?
And as of what date should future value be estimated? The Court of
Claims opinion indicates how haphazard such calculations must be:
its figure of 15 cents per pound appears to be a rough judicial
compromise between the ceiling price and the 22 cents claimed, not
a weighted average drawn from the varied assortment of doubtful
factors considered by the court. Moreover, that figure seems
completely divorced from the conjectured post-war price, a factor
crucially significant in the court's "retention value" concept.
An equally forceful objection to the "retention value" rule is
the discrimination it would breed. Only a limited group of owners
could take advantage of the rule: those who have nonperishable
products so essential for war purposes that refusal to sell would
result in governmental requisition. And many of these would be
financially unable to withhold their goods on such a gamble. Thus,
owners able to hold essential nonperishable goods until requisition
would become a favored class at the expense of other owners not so
fortunate. Moreover, even within that favored class, the "retention
value" rule would create discrimination against owners impelled by
a sense of duty to sell their goods to the Government at ceiling
prices without waiting for requisition. A premium would be placed
on recalcitrance in time of war.
A rule so difficult to apply and leading to such discriminatory
and unjust results cannot be required by
Page 339 U. S. 128
the Fifth Amendment's command for payment of "just
While there is no constitutional obstacle to
treating "generally fair and equitable" ceiling prices as the
normal measure of just compensation for commodities held for sale,
there must be room for special exceptions to such a general rule.
For unfair hardship may be inflicted on a particular dealer by
valid ceiling prices which are "generally" fair. Bowles v.
Willingham, 321 U. S. 503
321 U. S.
-518. But the ceiling price of pepper, fair and just
to the trade generally, should be accepted as the maximum measure
of compensation unless Commodities has sustained the burden of
proving special conditions and hardships peculiarly applicable to
it. [Footnote 6
] Cf. Marion
& Rye Valley R. Co. v. United States, 270 U.
, 270 U. S.
Commodities contends that it proved the existence of such
conditions. It points to the statement of the Court of Claims that
the "so-called retention value' is particularly applicable in
this case" because Commodities was an "investor" in pepper, rather
than a "trader." The company accumulated its large supply at
intervals during the 1933-1941 period, expecting to hold it to sell
when the price went up. The court found that Commodities could
reasonably expect this rise: the nature of production was such that
periods of abundance and scarcity were bound to alternate, and
during the preceding 75 years, the price of pepper had shown marked
fluctuations in fairly regular cycles. Most of Commodities' pepper
was bought when prices were low. It is argued that, as an
"investor," Commodities should not be deprived of the
Page 339 U. S.
pecuniary benefits which future high prices would have
afforded but for the Government's taking.
Under this state of facts, the situation of Commodities differed
only in degree, if at all, from that of myriad other commodity
owners who quite naturally wished to hold their goods for higher
prices. Postwar inflationary influences are common, and generally
expected. Price cycles, seasonal and otherwise, are also well
recognized economic phenomena. Doubtless owners of steel, textiles,
foodstuffs, and other goods could produce evidence similar to that
offered in regard to pepper to show cyclical fluctuations in their
prices. Nor would there be much difficulty in showing that a great
many owners had bought, produced, or manufactured their various
merchandise with the idea of withholding from markets to await
expected higher prices. Many lost anticipated profits due to price
control or requisition. Sacrifices of this kind and others far
greater are the lot of a people engaged in war. That a war calls
for sacrifices is, of course, no reason why an unfair and
disproportionate burden should be borne by Commodities. But the
facts here show no such burden on Commodities. Commodities, just
like other traders in pepper and other products, bought pepper with
the intention of ultimately selling on the market. No more than any
other owner is Commodities entitled to "retention value," a value
based on speculation concerning the price it might have obtained
for pepper after the war and after price controls were removed.
Another contention is that the particular pepper turned over to
the Government cost Commodities more than the ceiling price, and
that this is a special circumstance sufficient to preclude use of
the ceiling price here. The Court of Claims did find that the
average cost to Commodities of the precise pepper taken, including
labor costs, storage, interest, insurance, taxes and other
Page 339 U. S. 130
was 12.7 cents per pound. The Government challenges these
findings, and also claims that Commodities selected its high-cost
pepper for delivery under the requisition. Pointing out that pepper
is fungible, and that only relevant cost figure is the average cost
to Commodities of all its pepper, the Government asserts that this
average cost was less than the ceiling price.
We do not consider these contentions of the Government, because
we think that the cost of the pepper delivered provides no
sufficient basis for specially excluding Commodities from
application of the ceiling price. The general rule has been that
the Government pays current market value for property taken, the
price which could be obtained in a negotiated sale, whether the
property had cost the owner more or less than that price.
Vogelstein & Co. v. United States, 262 U.
, 262 U. S. 340
The reasons underlying the rule in cases where no
government-controlled prices are involved also support its
application where value is measured by a ceiling price. In neither
instance should the Government be required to make good any losses
caused by the fact that the owner purchased goods at a price higher
than market value on the date of taking. Especially is this true
where the resulting loophole in wartime regulation would be
available only to dealers in essential nonperishable commodities
who have enough funds and storage space to withhold goods until the
Government is forced to requisition them.
We have considered all other contentions of Commodities, and
find that none of them presents reasons sufficient to justify
awarding Commodities an amount in excess of ceiling prices. In the
final analysis, all its arguments rest on the principle that the
Government must pay Commodities for potential profits lost because
of war and the consequent price controls. We cannot hold that the
Fifth Amendment requires the Government to give owners of
requisitioned goods such a special benefit.
Page 339 U. S. 131
The judgment of the Court of Claims is reversed, and the cause
is remanded with directions to enter an appropriate judgment based
on the maximum ceiling price of the pepper at the time it was
It is so ordered.
MR. CHIEF JUSTICE VINSON and MR. JUSTICE DOUGLAS took no part in
the consideration or decision of this case.
* Together with No. 163, Commodities Trading Corp. et al. v.
also on certiorari to the same court.
See, e.g., United States v. Miller, 317 U.
; Olson v. United States, 292 U.
56 Stat. 23, 50 U.S.C.Appendix, § 901 et seq.
Had Congress prescribed a rule that prices fixed under the Act
should constitute the measure of constitutional "just
compensation," courts upon proper challenges would have been faced
with responsibility of determining whether that rule satisfied the
requirements of the Fifth Amendment. Marbury v.
1 Cranch 137. Compare Monongahela
Navigation Co. v. United States, 148 U.
, 148 U. S.
Eighth Report of the Director of War Mobilization and
Reconversion, October 1, 1946, H.R.Doc. 45, 80th Cong., 1st Sess.
Pertinent parts of the Court of Claims discussion of "retention
"We have several times held that, in determining just
compensation, we must take into account the plaintiff's right to
hold its property until restrictions on its disposition are
removed. Seven-Up Bottling Co. of Los Angeles v. United
107 Ct.Cl. 402; Kaiser v. United States,
Ct.Cl. 47; Adler Metal Products Corp. v. United States,
108 Ct.Cl. 102; Pantex Pressing Machine Co. v. United
108 Ct.Cl. 735."
"The Government, in time of war, has the undoubted right to say
to the citizen, if you want to sell your property, you must not
sell it for more than a certain price; but the Government has no
right to take the property and pay for it no more than this fixed
price, unless that price justly compensates the owner, taking into
consideration his right to hold his property until he can get for
it whatever anyone is willing to pay."
113 Ct.Cl. 259-260, 83 F. Supp. 357.
Commodities had petitioned the Price Administrator in 1943 to
amend the applicable regulation so as to permit higher prices for
pepper by allowances for storage expenses. This petition was
denied. Nothing in the record indicates that the Emergency Court of
Appeals was ever asked to consider ceiling prices for pepper.
MR. JUSTICE FRANKFURTER, dissenting in part.
In 1933, Commodities Trading Corporation began to accumulate an
inventory of black pepper, not as a trader in pepper, but as an
investor in a nonperishable commodity. It based this investment
policy on the fairly regular cyclical fluctuations of pepper prices
over a period of about seventy-five years. This regularity was due
to the fact that pepper plantings in Sumatra, French Indo-China,
and India, which supplied almost all of it, fluctuated with the
price of pepper in the world market. Neglect of their crops by the
native growers in periods of depressed prices lowered supply;
thereby prices were raised, and this, in turn, stimulated new
plantings. Since it takes the pepper plant about four years to
bear, prices would normally maintain their high level for about
that period. The operations of Commodities were based on the
expectation that it would profitably adjust the sale of its
holdings to the cyclical movement.
By 1938, Commodities had accumulated 25,000,000 pounds; by
December, 1941, it had disposed of about 8,000,000 pounds. The rest
it withheld from the market until the requisition here in
controversy was made by the War Department, in May, 1944. December,
1941, is a significant date because a ceiling price on pepper was
then established. The price at which it was pegged -- 6.75 cents
per pound, amended shortly thereafter to 6.50 cents plus limited
carrying charges -- approximated the
Page 339 U. S. 132
market price at the time the free market in pepper came to an
end. This free market price was responsive to the then unusually
large inventory of pepper in the country, amounting to from
78,000,000 to 100,000,000 pounds, a three-year supply. The
Government forbade importation of high-priced pepper from India,
and the other sources of supply were cut off by the Japanese
invasion. As a result, stocks rapidly declined, the fall being
accelerated after the imposition of ceiling prices by a desire on
the part of many importers to avoid additional carrying charges. By
September, 1943, only about 28,000,000 pounds were in the hands of
importers. Of this, Commodities held, as we have seen, 17,000,000.
From about the middle of 1942, activity had steadily shrunk, and,
by early 1944, pepper was not for sale.
In May, 1944, the War Department requisitioned from Commodities
about 760,000 pounds of black pepper. Commodities rejected the
Government's offer of compensation at the ceiling price, and this
suit to recover "just compensation" followed.
On the basis of its "special findings of fact," the Court of
Claims held that the ceiling price was not the measure of just
compensation for the requisitioned pepper. It deemed the right to
withhold from sale nonperishable goods until after price control
terminated a value of substance to be included in ascertaining just
compensation. The inclusion of this "retention value" in the
present circumstances was especially appropriate, so the Court of
Claims reasoned, because Commodities was not a trader, but a
long-term investor. After the controls were removed in 1946, pepper
sold at 50 to 60 cents a pound and upward, and the Court of Claims
deemed these free market values relevant in determining the just
compensation for the pepper requisitioned in 1944. In giving an
award above the ceiling price, that court was further influenced by
the fact that the cost of the pepper it attributed to
Page 339 U. S. 133
Commodities -- 12.7 cents per pound -- exceeded the ceiling.
Taking all the factors it deemed relevant into account, 15 cents
per pound was found by that court to be just compensation for the
I. The "just compensation" required by the Bill of Rights when
"private property [is] taken for public use" has a way of
attracting far-flung contentions. So here, extreme positions are
taken regarding the relevance of ceiling prices to "just
compensation." On the one hand, it is urged that ceiling prices are
to be treated as though they represent value determined by a free
market. On the other hand, it is insisted that, since it would be
unjust for the Government itself to fix the compensation for what
it takes, ceiling prices should be ignored. I agree with what I
understand to be the Court's view in rejecting both these
War conditions drastically change the economic environment in
which a free market has its justification. The purpose of
government controls is to terminate such a distorted free market.
Since ceiling prices are required by law to be "generally fair and
equitable,"* and govern voluntary sales of property, they are not
irrelevant in assessing just compensation. The value of private
property is not immutable; especially is it not immune from the
consequences of governmental policies. In the exercise of its
constitutional powers, Congress, by general enactments, may in
diverse ways cause even appreciable pecuniary loss without
"Government hardly could go on if to some extent values incident
to property could not be diminished without paying for every such
change in the general law. . . . When [the diminution] reaches a
certain magnitude, in most if not in all cases there must be an
exercise of eminent domain
Page 339 U. S. 134
and compensation to sustain the act. So the question depends
upon the particular facts."
Pennsylvania Coal Co. v. Mahon, 260 U.
, 260 U. S. 413
See also Hudson County Water Co. v. McCarter, 209 U.
, 209 U. S. 355
Pipeline Cases, 234 U. S. 548
234 U. S. 561
Jackman v. Rosenbaum Co., 260 U. S.
, 260 U. S.
It does not follow that controlled prices automatically meet the
requirements for just compensation in the forcible taking of
property simply because they replaced free market prices which
could no longer be relied on to reflect the normal play of free
economic forces. A system of price controls which is "generally
fair and equitable" may give rise to individual instances of
hardship in the requisitioning of property no matter how
conscientiously and competently administered. See Bowles v.
Willingham, 321 U. S. 503
321 U. S.
-518. The hardship may reach such magnitude in an
individual instance as to make a taking by the public at a ceiling
price unjust compensation. Of course, war means burdens, and there
is no calculus by which they can be fairly distributed. From any
point of view, the ultimate sacrifices are uncompensable. But these
considerations are not relevant in carrying out the Fifth
Amendment. When there is a taking of property for public use,
whether, in war or in peace, the burden of the taking is the
community's burden. The owner should be requited by that which
satisfies prevailing standards of justice. This limitation upon the
power of eminent domain has throughout our history been left for
judicial application. We would be faced with a new problem had
Congress specified that the ceiling prices should be the limit of
just compensation. Such a statute would call for the usual respect
to be accorded to the judgment of Congress in passing on the
validity of legislation when the power of Congress to legislate is
limited by broad standards, and not by restrictions almost
technical in their nature. We are relieved from a consideration
Page 339 U. S. 135
of any such question because Congress chose not to make ceiling
price the measure of "just compensation." It is therefore an
inescapable judicial duty to explore the elements relevant to just
compensation even for the taking of property which, as to voluntary
transactions, is subject to price control. The standard of just
compensation is not mechanically to be replaced by ceiling
It takes us some distance neither wholly to accept nor wholly to
reject price ceilings as just compensation. The complications
introduced by the displacement of free market prices by controlled
prices serve to intensify the usual wariness against undue
generalizations in ascertaining the value of specific property
taken for public purposes. Cautious empiricism is the most
promising attitude in dealing with problems of this sort. This
means hugging as closely as possible the shore of the circumstances
of the particular case.
On the present record, only two issues need to be faced. In
arriving at just compensation, did the Court of Claims properly
take into account (1) a "retention value" and (2) the cost of the
pepper to Commodities.
II. The Court of Claims appears to have recognized as a
component of just compensation the right of a property owner to
withhold his property for some future opportunity of enhanced
realization, even though he be in the same boat with all other
owners for whom the ceiling price is a fair measure. In its bearing
upon our immediate problem, recognition of such a "retention value"
as part of the contemporaneous value of what was taken would have
required the power to "divine prophetically" the war's end and the
lifting of controls by Congress as well as the state of the pepper
market thereafter. This is "to exact gifts that mankind does not
possess." International Harvester Co. v. Kentucky,
234 U. S. 216
234 U. S.
-224. To allow such wild imagination to enter into
the practical determination of what is just
Page 339 U. S. 136
compensation would merely sanction unbridled drafts on the
Treasury. It would encourage every property owner to hold his goods
off the market and to force the Government to requisition, rather
than purchase. That, by such retention, profits might be realized
in the distant future is not an interest which the Constitution
The diffused loss of profit throughout the nation's economy must
be borne as a part of the common lot. Of a different order of loss
would be a taking of the pepper at ceiling prices, if the ceiling
price was far below the cost of the pepper to Commodities and such
cost was incurred in the normal course of long-term holding
operations. This might present a situation whereby the owner of the
requisitioned property would be asked to bear more than its fair
share of the just economic burden of the war.
III. The Court of Claims found that the cost to Commodities of
the requisitioned pepper was 12.7 cents per pound, compared with
the ceiling price of 6.5 cents. The Government challenges the cost
figures. It points out that Commodities kept its cost records on
the basis of specific bags of pepper, each bag being recorded at
its invoice cost and the applicable carrying charges. Commodities
selected the bags of pepper delivered to the Government. Apparently
it chose the bags which had the highest invoice cost and the
greatest carrying charges, the pepper bought in 1933-1936. Assuming
that costs higher than ceiling prices may affect just compensation,
the Court of Claims should have considered whether the high cost of
the pepper turned over to the Government was due to Commodities'
accounting system. Since pepper is fungible, and does not have age
value, for all that appears Commodities' method of computing costs
may have been unfair to the Government. "Just compensation" is not
a function of a seller's theory of accounting.
The Court's opinion, however, holds that, whatever the costs,
they are irrelevant in assessing just compensation.
Page 339 U. S. 137
Thereby the Court disregards in the concrete the principle which
it avows in the abstract -- namely, that ceiling prices are not to
be deemed as though they were values arrived at in a free market,
and that individual instances of hardship may properly receive
individual consideration. The Court urges that high costs would be
irrelevant in peacetime when an uncontrolled market determines
value. Compare Vogelstein & Co. v. United States,
262 U. S. 337
a controlled market is not an uncontrolled market. Only by treating
a controlled market as the equivalent of an uncontrolled market can
ceiling prices be made the equivalent of market value, and thereby
the measure of just compensation.
Since "just compensation" is not easily reduced to quantitative
determination, the price which is arrived at through the haggling
of the market is the accepted norm in determining just
compensation. The law sensibly recognizes that market price
reflects fair dealing by men who are freely engaged in it. But the
psychological basis for the norm is gone when the area of fair
dealing is eliminated. The replacement of the free jostling of the
desires of buyers and sellers by government edict is no doubt due
to the realization that, under the abnormal circumstances of war, a
free market, in the sense of being uncontrolled, is not a fair
market. But such price regulation is the imposition of the will of
outsiders, and not the distillation of freely directed wills guided
by self-interest. The norm of price-fixing by government is thus
very different from the usual price-fixing by free exchange.
Governmental price-fixing carries its own valid titles for respect
by the courts. But it does not carry that title of
self-determination, as it were, which is implied by a free market
price. Want of a free market value does not require us to embrace
automatically the ceiling price in disregard of other relevant
circumstances bearing on justice in a particular case.
Page 339 U. S. 138
Costs, unlike "retention value," do not yield inherently
speculative results. Including costs in computing just compensation
does not give the condemnee a "war profit," nor make inroads on the
system of price controls. Such inclusion is a safeguard against
discriminating hardships resulting from a formula which is
generally fair, but which, by its nature, cannot be fair to each
individual. By the terms of the Price Control Act, the only
standard which Congress laid down for price-fixing was that the
ceiling price be "generally fair and equitable." The Act itself
made no provision for individual relief from the general price. The
administrative discretion for enforcing the Act vested in the Price
Administrator no doubt authorized him to qualify the prices he
fixed by procedure for individual relief therefrom. As to many
commodities, the maximum price schedules did include such
provisions. The price regulation regarding the pepper requisitioned
from Commodities contained no such provision. There was no way,
therefore, by which Commodities could have had relief from any
unfairness of the maximum price affecting its pepper by reason of
the high cost which, on the basis of legitimate business
considerations, it paid.
It is significant that Congress provided in § 4(d) of the
Emergency Price Control Act that "Nothing in this Act shall be
construed to require any person to sell any commodity. . . ." 56
Stat. 28, 50 U.S.Appendix, § 904(d). This protective provision is
peculiarly applicable to sellers who had acquired nonperishable
property by way of reasonable investment at costs above the ceiling
price. Under § 4(d), they were not required to take a loss. But
today's decision withdraws that statutory protection from those
subjected to the exercise of the Government's power of
condemnation. It may be that, despite § 4(d), certain sellers with
high costs would have had to sell in the private market because of
economic factors. There is considerable difference, however,
Page 339 U. S. 139
hardships resulting from the impersonal workings of a general
regulation and the personal operation of the power of eminent
domain, under which Government officials have complete discretion
to select the individual who shall give up his property at a loss
for the public good.
We need not decide whether costs exceeding the ceiling price are
always relevant to just compensation, or the extent to which they
may qualify the ceiling price. It is enough to hold that, if
Commodities' costs, fairly measured, were greater than the ceiling
price for pepper, it is fair to take them into account. We are not
dealing here with a hoarder, or with one who bought property at
recklessly high costs in the expectation that, in any event, the
Government would reimburse him. Commodities did not suddenly shift
from "seller" to "holder" upon imposition of controls in 1941;
while it reduced its total stocks between 1938 and 1941, the Court
of Claims found that it was essentially a "holder" from 1933 on.
Nor did Commodities make substantial sales to private persons at
the ceiling price, and hold out against the Government. It merely
exercised its statutory right to refuse to sell, a decision
ethically justified if, by selling it would incur an honest
IV. The error of the Court of Claims in applying the doctrine of
"retention value" requires reversal of its judgment. That court
should reexamine Commodities' costs, and if, under a fair
accounting theory, those costs prove to be higher than ceiling,
they should be considered in the computation of just
* Emergency Price Control Act § 2(a), 56 Stat. 24, 50
U.S.C.Appendix, § 902(a).
MR. JUSTICE JACKSON, dissenting.
When Congress enacted the Emergency Price Control Act, it
provided that "Nothing in this Act shall be construed to require
any person to sell any commodity. . . ." 56 Stat. 28, § 4(d), 50
U.S.C.Appendix, § 904(d). Of course, Congress did not thereby
surrender the Government's
Page 339 U. S. 140
right to requisition any goods it might want under the usual
eminent domain powers and for "just compensation." Why then this
It seems obvious that the purpose was to avoid just what the
Court does today -- making ceiling prices for voluntary sales the
measure of compensation for compulsory sales. This separation was
not made as a favor to profiteers. In United States v. John J.
Felin & Co., 334 U. S. 624
334 U. S. 650
writing in dissent for MR. JUSTICE DOUGLAS and myself, I set forth
considerations which weighed heavily upon those proponents of price
controls who wanted the controls to operate smoothly and
expeditiously and also to avoid constitutional litigation, or at
least adverse decisions. I said there:
"It is hard to see how just compensation can be the legal
equivalent of a controlled price unless a controlled price is also
always required to equal just compensation. It never has been held
that, in regulating a commodity price, the Government is bound to
fix one that is adequately compensatory in the constitutional
sense, so long as the owner is free to keep his property or to put
it on the market as he chooses. If the Government were required to
do so, the task of price regulation would be considerably, if not
disastrously, complicated and retarded. It seems quite
indispensable to the Government itself, for the long-range success
of price controls, that fixed prices for voluntary sales be not
identified with the just compensation due under the Constitution to
one who is compelled to part with his property."
334 U.S. at 334 U. S.
The Court today nullifies the congressional policy that no one
is compelled to sell under the Act by using the condemnation power
to compel the sale and this Act to fix the price. It also makes the
constitutional provision for just compensation meaningless, since
Page 339 U. S. 141
may first fix the price as if no sales were compelled, and then
compel the sales at the prices so fixed. I think the constitutional
power to fix prices for voluntary sale in interstate commerce is
much less confined than the power to fix prices for taking
property. But hereafter, the price fixed may have to be tested by
whether it would be just compensation for a compulsory sale.
I agree that the court below erred in its theory of "retention
value." It did so by making the same basic error this Court is
making: that of combining two separate systems -- price-fixing and
condemnation. It considered that, because the Emergency Price
Control Act said a claimant was not required to sell under the Act,
he might retain his property for some future rise in market. But it
is not that Act which makes him sell. It is under the power of
eminent domain that the Government expropriates this pepper. And,
under that power, he has no right of delay, and hence no retention
value. He must part with his property on demand, and the issue is
what is just compensation at that time.
At the time of this expropriation, there was, insofar as market
price were concerned, a controlled market in the United States
controlled by the Government that was doing the expropriating.
There was also a world market, with far higher market prices, to
which the Government would have had recourse had not these parties
earlier imported a large supply. Moreover, while the ceiling price
on whole pepper was kept at a low figure, the price on ground
pepper to the public showed what seems to be an unaccountably large
spread. The problem of combining all relevant considerations that
go to a valuation is a difficult one.
I concur in the reversal, but would return the case for
redetermination of the value at the date of requisition, without
allowance for "retention value." I should not direct that the
ceiling price be used as the sole measure of just compensation.