1. In an action against the United States under § 10 of the
Lever Act, to recover just compensation for property requisitioned
for public use, the owner is entitled to judgment for the value of
the property as of the time of the taking and for so much in
addition as will produce a full equivalent of that value, paid
contemporaneously with the taking. P.
261 U. S.
304.
2. This additional amount may be measured by allowing interest
at a proper rate, and the legal rate in the state where the
property lies may be applied for this purpose, if fair and
reasonable. P.
261 U. S.
305.
3. The just compensation to which the owner is entitled depends
on the Constitution, and cannot be restricted by statute, and its
ascertainment is a judicial function. P.
261 U. S.
304.
4. The rule disallowing interest against the United States in
the absence of a stipulation or statute is inapplicable to an
action not based on contract or any mere claim or accounting
against the government, but which is part of a proceeding initiated
by the United States for the condemnation of property, and seeks
ascertainment and payment of just compensation for it. P.
261 U. S.
306.
280 F. 349 reversed.
Error to a judgment of the circuit court of appeals reversing a
judgment of the district court for the railway company in an action
under the Lever Act.
Page 261 U. S. 302
MR. JUSTICE BUTLER delivered the opinion of the Court.
The plaintiff in error, the Seaboard Air Line Railway Company,
was the owner of 2.6 acres of land at Charleston, South Carolina,
adjoining the Charleston Port Terminal, subject to a mortgage to
the Guaranty Trust Company and William C. Cox.{1} On May 23, 1919,
the United States, under authority of § 10 of the Lever Act,{2}
requisitioned and took possession of such land to provide storage
facilities for supplies necessary to the support of the army and
other uses connected with the public defense.
The President, through the War Department Board of Appraisers,
determined the compensation to be the sum
Page 261 U. S. 303
of $235.80, with interest thereon at the rate of six percent per
annum from the date of the taking to the date of voucher for final
payment. The amount was not satisfactory to the owner, and the
United States was so notified. Demand was made for seventy-five
percent of the award, but no part of the amount was paid. The owner
sued to recover such further sum as, when added to such
seventy-five percent, would amount to just compensation for the
property so taken.
The jury returned a verdict as follows:
"We find that the fair and reasonable value which would
constitute a just compensation to be paid for the taking for public
purposes on May 23, 1919, of the lands mentioned and described in
the petition, under the issue herein, to be six thousand
dollars."
Judgment was entered for $6,000, with interest from May 23,
1919, at the rate of seven percent per annum (the statutory rate in
South Carolina).
The United States objected to the interest allowed, and took the
case to the circuit court of appeals, and that court reversed the
judgment of the district court and awarded a new trial unless the
owner file a remittitur abating all interest. The owner refused,
and brought the case here on writ of error.
Did the district court err in allowing interest on the amount of
the verdict?
Page 261 U. S. 304
The rule is that, in the absence of a stipulation to pay
interest or a statute allowing it, none can be recovered against
the United States upon unpaid accounts or claims.
United States
v. Rogers, 255 U. S. 163,
255 U. S. 169;
United States v. North American Transportation & Trading
Co., 253 U. S. 330;
United States v. North Carolina, 136 U.
S. 211,
136 U. S. 216;
Angarica v. Bayard, 127 U. S. 251,
127 U. S. 260;
Harvey v. United States, 113 U. S. 243.
Section 10 of the Lever Act authorizes the taking of property
for the public use on payment of just compensation. There is no
provision in respect of interest. Just compensation is provided for
by the Constitution, and the right to it cannot be taken away by
statute. Its ascertainment is a judicial function.
Monongahela
Navigation Co. v. United States, 148 U.
S. 312,
148 U. S.
327.
The compensation to which the owner is entitled is the full and
perfect equivalent of the property taken.
Monongahela
Navigation Co. v. United States, 148 U.
S. 312,
148 U. S. 327.
It rests on equitable principles, and it means substantially that
the owner shall be put in as good position pecuniarily as he would
have been if his property had not been taken.
United States v.
Rogers et al., 257 F. 397, 400. He is entitled to the damages
inflicted by the taking.
Northern Pacific Ry. Co. v. North
American Telegraph Co., 230 F. 347, 352, and cases there
cited.
The United States, in effect, claims that the owner is entitled
to no more than the value of the land as of date of taking, to be
paid at a later time when ascertained. The owner has been deprived
of the land and its use since the taking, May 23, 1919. The value
of the property, as ascertained by the President, was $235.80, and
this was allowed with interest from date of taking. But, as
judicially determined later, the value when taken was $6,000.
The owner's right does not depend on contract, express or
implied. A promise to pay is not necessary. None is
Page 261 U. S. 305
alleged. This suit is a part of the authorized procedure
initiated by the United States for the condemnation of the land.
The owner was not satisfied with the amount fixed by the President
and sued. A necessary condition of the taking is the ascertainment
and payment of just compensation.
Monongahela Navigation Co. v.
United States, 148 U. S. 312,
148 U. S. 337;
Searl v. School District, Lake County, 133 U.
S. 553,
133 U. S. 562,
et seq.; United States v. Sargent, 162 F. 81, 83. It is
not suggested in this case that the provisions of § 10 of the Lever
Act do not meet the constitutional requirement. The only question
here is whether payment at a subsequent date of the value of the
land as of the date of taking possession is sufficient to
constitute just compensation.
In support of its contention, the government cites
United
States v. North American Transportation & Trading Co.,
253 U. S. 330.
That case does not sustain its contention. That was a suit in the
Court of Claims based on an implied promise of the United States to
pay for property appropriated by it. It was not a condemnation
case. The distinction between that case and a condemnation case is
pointed out in the opinion. It was there suggested, without so
deciding, that, in the case of condemnation of land, interest might
be collected even in the absence of state enactments allowing it
adopted by the conformity provisions.
The case of
United States v. Rogers, 255 U.
S. 163, is a condemnation case, and it was held that the
owner was entitled, as a part of the just compensation, to interest
on the confirmed award of the commissioners from the time when the
United States took possession. The land was situated in New Mexico,
and the proceedings were had under the Conformity Act of August 1,
1888, c. 728, 25 Stat. 357. Interest was allowed not by virtue of
state statute, but as constituting a part of the just compensation
safeguarded by the Constitution. Speaking for the
Page 261 U. S. 306
Court, Mr. Justice Day said:
"Having taken the lands of the defendants in error, it was the
duty of the government to make just compensation as of the time
when the owners were deprived of their property,"
citing
Monongahela Navigation Co. v. United States,
supra, 148 U. S.
341.
It is obvious that the owner's right to just compensation cannot
be made to depend upon state statutory provisions. The Constitution
safeguards the right, and § 10 of the Lever Act directs payment.
The rule above referred to -- that in the absence of agreement to
pay or statute allowing it, the United States will not be held
liable for interest on unpaid accounts and claims -- does not apply
here. The requirement that "just compensation" shall be paid is
comprehensive, and includes all elements, and no specific command
to include interest is necessary when interest or its equivalent is
a part of such compensation. Where the United States condemns and
takes possession of land before ascertaining or paying
compensation, the owner is not limited to the value of the property
at the time of the taking; he is entitled to such addition as will
produce the full equivalent of that value paid contemporaneously
with the taking. Interest at a proper rate is a good measure by
which to ascertain the amount so to be added. The legal rate of
interest, as established by the South Carolina statute, was applied
in this case. This was a
"palpably fair and reasonable method of performing the
indispensable condition to the exercise of the right of eminent
domain -- namely, of making 'just compensation' for the land as it
stands at the time of the taking."
United States v. Sargent (C.C.A. Eighth Circuit), 162
F. 81, 84.
The addition of interest allowed by the district court is
necessary in order that the owner shall not suffer loss and shall
have "just compensation" to which he is entitled.
The decree of the circuit court of appeals is reversed, and
that of the district court is affirmed.
For convenience, the railway company and mortgagees will be
referred to herein as "the owner."
Act of Congress approved August 10, 1917 (40 Stat. 276):
"Sec. 10. That the President is authorized, from time to time,
to requisition foods, feeds, fuels, and other supplies necessary to
the support of the army or the maintenance of the navy, or any
other public use connected with the common defense, and to
requisition or otherwise provide storage facilities for such
supplies, and he shall ascertain and pay a just compensation
therefor. If the compensation so determined be not satisfactory to
the person entitled to receive the same, such person shall be paid
seventy-five percentum of the amount so determined by the
President, and shall be entitled to sue the United States to
recover such further sum as, added to said seventy-five percentum,
will make up such amount as will be just compensation for such
necessaries or storage space, and jurisdiction is hereby conferred
on the United States district courts to hear and determine all such
controversies:
Provided, That nothing in this section or
in the section that follows shall be construed to require any
natural person to furnish to the government any necessaries held by
him and reasonably required for consumption or use by himself and
dependents, nor shall any person, firm, corporation, or association
be required to furnish to the government any seed necessary for the
seeding of land owned, leased, or cultivated by them."