Respondent is a coal mine operator whose property was seized and
operated by the United States during a temporary period in 1943 to
avert a nationwide strike of miners. Respondent sued in the Court
of Claims to recover under the Fifth Amendment for the total
operating losses sustained during that period. The Court of Claims
awarded respondent judgment for only that portion of the operating
loss (
viz., increased wage payments made in accordance
with a War Labor Board order) which the court found was
attributable to government operation of the mine. Respondent did
not seek review here; certiorari was granted on the petition of the
Government.
Held:
1. Under the circumstances, there was a "taking" of respondent's
property, which entitled respondent to recover compensation under
the Fifth Amendment. Pp.
341 U. S.
115-117.
2. The judgment of the Court of Claims awarding compensation for
that portion of the operating loss which it found attributable to
government operation is affirmed. Pp.
341 U. S.
117-119.
115 Ct.Cl. 626, 88 F. Supp. 426, affirmed.
In a suit by respondent to recover compensation for an alleged
taking of its property, the Court of Claims awarded judgment for
respondent, but in less than the amount claimed. 115 Ct.Cl. 626, 88
F. Supp. 426. On the petition of the Government, this Court granted
certiorari. 340 U.S. 808.
Affirmed, p.
341 U. S.
119.
Page 341 U. S. 115
MR. JUSTICE BLACK delivered the judgment of the Court and an
opinion in which MR. JUSTICE FRANKFURTER, MR. JUSTICE DOUGLAS, and
MR. JUSTICE JACKSON joined.
Respondent, Pewee Coal Co., Inc., is a coal mine operator whose
property was allegedly possessed and operated by the United States
from May 1 to October 12, 1943, to avert a nationwide strike of
miners. Pewee brought this action in the Court of Claims to recover
under the Fifth Amendment [
Footnote
1] for the total operating losses sustained during that period.
After considering the evidence, the court held that there had been
a "taking" entitling Pewee to compensation. It found the total
operating loss to be $36,128.96, but rendered judgment for only
$2,241.26, this amount being the portion of the operating loss
which the court found attributable to Government operation of the
mine. 115 Ct.Cl. 626, 88 F. Supp. 426. Pewee did not seek review
here. We granted the Government's petition for certiorari,
[
Footnote 2] in which two
questions are presented: (1) was there such a taking of Powee's
property as to justify compensation under the Fifth Amendment? (2)
If there was, does the record support the award of $2,241.26?
First. We agree with the Court of Claims that there was
a "taking" requiring the Government to pay Pewee. The facts upon
which this conclusion rests are set out in the findings and opinion
below, and need not be repeated in detail here.
See 115
Ct.Cl. 626, 88 F. Supp. 426. The following are sufficient to show
the general picture: on May 1, 1943, the President issued Executive
Order 9340, 8 Fed.Reg. 5695, directing the Secretary of
Interior
". . . to take immediate possession, so far as may be
necessary
Page 341 U. S. 116
or desirable, of any and all mines producing coal in which a
strike or stoppage has occurred or is threatened, . . . and to
operate or arrange for the operation of such mines. . . ."
On the same day, the Secretary issued an "Order for Taking
Possession" of most of the Nation's mines, including Pewee's. 8
Fed.Reg. 5767. To convince the operators, miners, and public that
the United States was taking possession for the
bona fide
purpose of operating the mines, the Government formally and
ceremoniously proclaimed that such was its intention. It required
mine officials to agree to conduct operations as agents for the
Government; required the American flag to be flown at every mine;
required placards reading "United States Property," to be posted on
the premises, and appealed to the miners to dig coal for the United
States as a public duty. Under these circumstances, and in view of
the other facts which were found, it should not and will not be
assumed that the seizure of the mines was a mere sham or pretense
to accomplish some unexpressed governmental purpose instead of
being the proclaimed actual taking of possession and control. In
United States v. United Mine Workers, 330 U.
S. 258, there had been a government seizure of the mines
under presidential and secretarial orders which, insofar as here
material, were substantially the same as those issued in the
present case. We rejected the contention of the mine workers
that
"the Government's role in administering the bituminous coal
mines [was] for the most part fictional and for the remainder
nominal only. [
Footnote 3]"
We treated that seizure as making the mines governmental
facilities "in as complete a sense as if the Government held full
title and ownership."
Id. at
330 U. S.
284-285. It follows almost as
Page 341 U. S. 117
a matter of course from our holding in
United Mine
Workers that the Government here "took" Pewee's property and
became engaged in the mining business. [
Footnote 4]
Second. Having taken Pewee's property, the United
States became liable under the Constitution to pay just
compensation. Ordinarily, fair compensation for a temporary
possession of a business enterprise is the reasonable value of the
property's use.
See Kimball Laundry Co. v. United States,
338 U. S. 1;
United States v. General Motors Co., 323 U.
S. 373. But, in the present case, there is no need to
consider the difficult problems inherent in fixing the value of the
use of a going concern, because Pewee neither claimed such
compensation nor proved the amount. It proceeded on the ground that
the Fifth Amendment requires the United States to bear operating
losses incurred during the period the Government operates private
property in the name of the public without the owner's consent. We
believe that this contention expresses a correct general principle,
which, under the circumstances of this case, supports the judgment
for $2,241.26.
Like any private person or corporation, the United States
normally is entitled to the profits from, and must bear the losses
of, business operations which it conducts. When a private business
is possessed and operated for public use, no reason appears to
justify imposition of
Page 341 U. S. 118
losses sustained on the person from whom the property was
seized. This is conceptually distinct from the Government's
obligation to pay fair compensation for property taken, although,
in cases raising the issue, the Government's profit and loss
experience may well be one factor involved in computing reasonable
compensation for a temporary taking. Of course, there might be an
express or implied agreement between the parties that the
Government should not receive operating profits nor bear the
losses, in which event the general principle would be inapplicable.
But the possibility that such an agreement existed in the present
case may be disposed of quickly. Pewee's failure to seek review
here makes it unnecessary to consider whether the company consented
to bear the disallowed and major portion of the losses sustained
during the period of governmental control. And there is no
indication that Pewee expressly or impliedly agreed to assume the
loss of.$2,241.26 which the court found mainly attributable to
increased wage payments made to comply with a War Labor Board
decision.
Where losses resulting from operation of property taken must be
borne by the Government, it makes no difference that the losses are
caused in whole or in part by compliance with administrative
regulations requiring additional wages to be paid. With or without
a War Labor Board order, when the Government increased the wages of
the miners whom it employed, it thereby incurred the expense.
Moreover, it is immaterial that governmental operation resulted in
a smaller loss than Pewee would have sustained if there had been no
seizure of the mines. Whatever might have been Pewee's losses had
it been left free to exercise its own business judgment, the
crucial fact is that the Government chose to intervene by taking
possession and operating control. By doing so, it became the
proprietor and, in the absence of contrary
Page 341 U. S. 119
arrangements, was entitled to the benefits and subject to the
liabilities which that status involves.
The judgment of the Court of Claims is
Affirmed.
[
Footnote 1]
" . . . nor shall private property be taken for public use,
without just compensation." U.S.Const., Amend. V.
[
Footnote 2]
340 U.S. 808.
[
Footnote 3]
Brief for United Mine Workers of America and John L. Lewis, p.
32,
United States v. United Mine Workers, 330 U.
S. 258.
[
Footnote 4]
The case of
Marion & Rye Valley R. Co. v. United
States, 270 U. S. 280, is
cited by the Government as supporting its view that there was no
"taking" here. In that case, however, the Court had "no occasion to
determine whether, in law the President took possession and assumed
control" of a railroad. Instead, it dealt with the problem on the
assumption that there was a "taking," and proceeded to decision on
the finding that the railroad "was not subjected by the Government
to pecuniary loss." This decision cannot be accepted as controlling
the present case, since whether there is a "taking" must be
determined in light of the particular facts and circumstances
involved.
MR. JUSTICE REED, concurring.
I agree that, in this case, there was a "taking" by eminent
domain that requires the Government to pay just compensation to the
owner of the property for its use. However, it is impossible for me
to accept the view that the "taking" in this case requires the
United States to bear all operating losses during the period it
controls the property without the owner's consent or agreement.
Such a view would lead to disastrous consequences where properties
necessarily taken for the benefit of the Nation have a long record
of operating losses,
e.g., certain railroads, coal mines,
or television broadcasting stations. The question of who bears such
losses is not, I think, "conceptually distinct" from the question
of just compensation. Losses or profits on the temporary operation
after the declaration or judgment of taking are factors to be taken
into consideration in determining what is just compensation to the
owner.
This is a temporary taking. The relatively new technique of
temporary taking by eminent domain is a most useful administrative
device: many properties, such as laundries, or coal mines, or
railroads, may be subjected to public operation only for a short
time to meet war or emergency needs, and can then be returned to
their owners. However, the use of the temporary taking has spawned
a host of difficult problems,
e.g., United States v. General
Motors Corp., 323 U. S. 373;
United States v. Petty Motor Co., 327 U.
S. 372;
Kimball Laundry Co. v. United States,
338 U. S. 1,
especially in the fixing of the just compensation. Market value,
despite its difficulties, provides a fairly acceptable test for
just compensation when the property is taken absolutely.
See
Page 341 U. S. 120
United States v. Miller, 317 U.
S. 369;
United States v. John F. Felin &
Co., 334 U. S. 624;
United States v. Toronto H. & B. Navigation Co.,
338 U. S. 396;
United States v. Commodities Trading Corp., 339 U.
S. 121. But, in the temporary taking of operating
properties,
e.g., Marion & Rye Valley R. Co. v. United
States, 270 U. S. 280;
United States v. United Mine Workers of America,
330 U. S. 258,
market value is too uncertain a measure to have any practical
significance. The rental value for a fully functioning railroad for
an uncertain period is an unknowable quantity. This led to a
government guarantee of earnings in the First World War, 40 Stat.
451.
Cf. United States v. Westinghouse Electric & Mfg.
Co., 339 U. S. 261. The
most reasonable solution is to award compensation to the owner as
determined by a court under all the circumstances of the particular
case.
Temporary takings can assume various forms. There may be a
taking in which the owners are ousted from operation, their
business suspended, and the property devoted to new uses.
United States v. General Motors Corp., 323 U.
S. 373;
United States v. Petty Motor Co.,
327 U. S. 372;
Kimball Laundry Co. v. United States, 338 U. S.
1. A second kind of taking is where, as here, the
Government, for public safety or the protection of the public
welfare, "takes" the property in the sense of assuming the
responsibility of its direction and employment for national
purposes, leaving the actual operations in the hands of its owners
as government officials appointed to conduct its affairs with the
assets and equipment of the controlled company. Examples are the
operation of railroads, motor carriers, or coal mines.
Marion
& Rye Valley R. Co. v. United States, 270 U.
S. 280;
United States v. United Mine Workers of
America, 330 U. S. 258.
When, in a temporary taking, no agreement is reached with the
owners, the courts must determine what payments
Page 341 U. S. 121
the Government must make. Whatever the nature of the "taking,"
the test should be the constitutional requirement of "just
compensation." However, there is no inflexible requirement that the
same incidents must be used in each application of the test.
So far as the second kind of temporary "taking" is concerned,
the Government's supervision of a losing business for a temporary
emergency ought not to place upon the Government the burden of the
losses incurred during that supervision unless the losses were
incurred by governmental acts,
e.g., if the business would
not have been conducted at all but for the Government, or if extra
losses over what would have been otherwise sustained were
occasioned by Government operations. Where the owner's losses are
what they would have been without the "taking," the owner has
suffered no loss or damage for which compensation is due.
Cf.
Marion & Rye Valley R. Co. v. United States, 270 U.
S. 280. The measure of just compensation has always been
the loss to the owner, not the loss or gain to the Government.
Boston Chamber of Commerce v. Boston, 217 U.
S. 189,
217 U. S.
195.
Here, the Court of Claims has correctly applied these principles
in a case of a losing operation in a temporary taking. It has found
that a certain sum was expended without legal or business necessity
so to do. This sum was the extra allowance paid at the direction of
the United States under a certain War Labor Board recommendation
that had no legal sanction. 50 U.S.C. App. ยง 1507; E.O. 9017, 3 CFR
Cum.Supp. 1075. I would not overturn its finding in this case and
would therefore affirm.
MR. JUSTICE BURTON, with whom THE CHIEF JUSTICE, MR. JUSTICE
CLARK and MR. JUSTICE MINTON concur, dissenting.
I agree that there was a "taking" of the mining property from
May 1 to October 12, 1943, but I find no
Page 341 U. S. 122
ground for allowing the respondent to recover the sum here
sought as compensation for such taking.
This case is within the principle stated in
Marion & Rye
Valley R. Co. v. United States, 270 U.
S. 280,
270 U. S. 282,
as follows:
"[E]ven 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."
Here, there is no showing by the company of any rental value due
it as compensation for the Government's possession of its
properties. There is no showing that anything of compensable value
was taken by the Government from the company, or that the
Government subjected the company to any pecuniary loss. The
dissenting judge in the Court of Claims pointed out that
"This extra expense consisted of an increased vacation allowance
to the plaintiff's workmen, and the refund to them of occupational
charges like rentals on mine lamps. The court has not found that
the plaintiff [company] could have operated its mine without making
the concessions directed by the War Labor Board, nor has it found
what the losses to the plaintiff would have been if the Government
had not intervened and the strike had continued. I think that the
court is not justified in awarding the plaintiff the amount of
these expenditures when it does not and, I think, could not, find
that the plaintiff was in fact financially harmed by the
Government's acts."
115 Ct.Cl. at 678-679,
88 F. Supp.
at 431.
Accordingly, I would reverse the judgment of the Court of Claims
and allow no recovery by the respondent.