261 U.S. 502 (1923), 229, Omnia Commercial Company, Inc. v. United States

Docket Nº:No. 229
Citation:261 U.S. 502, 43 S.Ct. 437, 67 L.Ed. 773
Party Name:Omnia Commercial Company, Inc. v. United States
Case Date:April 09, 1923
Court:United States Supreme Court

Page 502

261 U.S. 502 (1923)

43 S.Ct. 437, 67 L.Ed. 773

Omnia Commercial Company, Inc.


United States

No. 229

United States Supreme Court

April 9, 1923

Argued March 1, 1923



1. A valuable contract right is property within the meaning of the Fifth Amendment, and, when taken for public use, must be paid for by the government; but when it is lost or injured as a consequence of lawful governmental action not a taking, the law affords no remedy. P. 508.

2. When the government, for war purposes, requisitioned the entire production of a steel manufacturer, rendering impossible and unlawful of performance an outstanding contract between the manufacturer and a customer, the customer's rights were not taken by the government, but frustrated by its lawful action. P. 511.

56 Ct.Clms. 392 affirmed.

Appeal from a judgment of the Court of Claims dismissing a petition on demurrer.

Page 507

SUTHERLAND, J., lead opinion

MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

The appellant, on May 19, 19 7, by assignment, became the owner of a contract by which it acquired the right to purchase a large quantity of steel plate from the Allegheny Steel Company, of Pittsburgh, at a price under the market. The contract was of great value, and, if carried out, would have produced large profits.

In October, 1917, before any deliveries had been made, the United States government requisitioned the steel company's entire production of steel plate for the year 1918, and directed that company not to comply with the terms of appellant's contract, declaring that, if an attempt was made to do so, the entire plant of the steel company would be taken over and operated for the public use.

Appellant brought an action in the Court of Claims, alleging, in addition to the foregoing, that, by the orders

Page 508

of the government, the performance of the contract by the steel company had been rendered unlawful and impossible; that the effect was to take for the public use appellant's right of priority to the steel plate expected to be produced by the steel company, and thereby appropriate for public use appellant's property in the contract. As a result, it alleged that it had incurred losses in a large sum which it sought to recover as just compensation by virtue of Article V of the Constitution. To this petition the United States interposed a demurrer, which was sustained, and the petition dismissed. From this judgment, the case comes here by appeal.

A question is raised as to the statutory authority of the officer who made the order of requisition and gave the directions respecting noncompliance with the contract to bind the government, but, for the purposes of the case, we assume he was authorized, as he could have been under 39 Stat. 1193, c. 180, or 40 Stat. 182, 183, c. 29. We also pass, without deciding, a contention challenging the sufficiency of the complaint, and come to the case on the merits.

The contract in question was property within the meaning of the Fifth Amendment, Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685, 690; Cincinnati v. Louisville & Nashville Ry. Co., 223 U.S. 390, 400, and, if taken for public use, the government would be liable. But destruction of, or injury to, property is frequently accomplished without a "taking" in the constitutional sense. To prevent the spreading of a fire, property may be destroyed without compensation to the owner, Bowditch v. Boston, 101 U.S. 16, 18, a doctrine perhaps to some extent resting on tradition. Pennsylvania Coal...

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