United States v. Commodities Trading Corporation Commodities Trading Corporation v. United States

• Decision Date: 27 March 1950
• Docket Number: Nos. 156,163,s. 156
• Citation: 70 S.Ct. 547,94 L.Ed. 707,339 U.S. 121
• Parties: UNITED STATES v. COMMODITIES TRADING CORPORATION et al. COMMODITIES TRADING CORPORATION et al. v. UNITED STATES
• Court: U.S. Supreme Court

339 U.S. 121

70 S.Ct. 547

94 L.Ed. 707

UNITED STATES

v COMMODITIES TRADING CORPORATION et al.

COMMODITIES TRADING CORPORATION et al.

v. UNITED STATES.

Nos. 156, 163.

Argued Jan. 10, 11, 1950.

Decided March 27, 1950.

Rehearing Denied May 1, 1950.

See 339 U.S. 950, 70 S.Ct. 800.

Mr. Oscar H. Davis, Washington, D.C., for The United States.

Mr. Edward L. Blackman, New York City, for Commodities Trading Corporation et al.

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 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. 83 F.Supp. 356, 358, 113 Ct.Cl. 244. We granted the petitions of both parties for certiorari. 338 U.S. 857, 70 S.Ct. 98, 99.

First. 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.¹ 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, 68 S.Ct. 1238, 92 L.Ed. 1614. 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?

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.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 just compensation.

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.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 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.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.

Second. 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.'⁵

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 property taken.

Nor can we construe the Fifth Amendment as supporting the Court of Claims 'retention value' rule. In peace-time 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 exceptional circumstances.

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 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 postwar 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 the Fifth Amendment's command for payment of 'just compensation.'

Third. 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, 516—518, 64...