Edward P. Stahel & Co. v. United States

• Decision Date: 28 June 1948
• Docket Number: 46556,No. 46498-46504,46557.,46498-46504
• Citation: 111 Ct. Cl. 682,78 F. Supp. 800
• Parties: EDWARD P. STAHEL & CO., Inc., v. UNITED STATES (and eight other cases.)
• Court: U.S. Claims Court

78 F. Supp. 800

111 Ct. Cl. 682

EDWARD P. STAHEL & CO., Inc., v. UNITED STATES (and eight other cases.)

Nos. 46498-46504, 46556, 46557.

Court of Claims.

June 28, 1948.

William A. Roberts, of Washington, D. C. (Irene Kennedy, Warren Woods, and Roberts & McInnis, all of Washington, D. C., on the brief), for plaintiffs.

Kendall M. Barnes, of New York City, and H. G. Morison, Asst. Atty. Gen., for defendant.

Before JONES, Chief Justice, and LITTLETON, WHITAKER, MADDEN, and HOWELL, Judges.

MADDEN, Judge.

The plaintiffs in these nine cases sue for additional compensation for raw silk acquired from them by the Government in transactions described fully in our findings and briefly hereinafter in this opinion. They urge that the Government "took" their silk for public use within the meaning of the Fifth Amendment to the Constitution of the United States and that the price which it paid them for it was less than the just compensation provided in the Constitution. We have concluded that the amount which the Government paid them was, so far as concerned the principal amounts paid to each of the plaintiffs, just compensation in the constitutional sense. This conclusion would relieve us of the task of deciding whether the events which occurred amounted to a taking in the constitutional sense, were it not for the fact that the payments made by the Government were made some months later than the time of the asserted taking, hence, if there was a taking, the plaintiffs are entitled to interest as a part of the just compensation, for the period between taking and payment.

On July 25, 1941, each of the plaintiffs was the owner of a quantity of raw silk. In the afternoon of that day the President announced at a press conference that he intended to take action "freezing" Japanese assets in this country. On July 26 he issued Executive Order No. 8832, 12 U.S.C.A. § 95a note, making illegal all financial payment or transfers of money, credit or property to or for the account of Japan or any national of Japan, unless the transaction was licensed as provided in the order. The order had the effect of terminating all commercial transactions in raw silk with Japanese nationals. Japan had been the source of supply for practically all the raw silk used in this country.

On July 26, the same day that the President's Executive Order was issued, the Office of Production Management issued General Preference Order M-22, the full text of which is given in finding 9. This order prohibited the delivery or acceptance of raw silk without the specific authorization of the Director of Priorities, and prohibited all persons from processing thrown silk at a rate greater than the rate at which each person had processed it during the week ending July 26, 1941. Also on the same day, July 26, Mr. Henderson, the Administrator of the Office of Price Administration and Civilian Supply, sent a telegram to the Commodity Exchange, the only market in New York for the purchase and sale of future contracts in raw silk, saying that he believed it important in the public interest that trading in silk on the Commodity Exchange be suspended "until situation clarifies." The Exchange did suspend trading in silk, and such trading was not resumed until 1945. Also on July 26, Mr. Henderson announced that within a few days his office would impose a price ceiling on raw silk at approximately the price at which it had sold in the markets on July 21. On August 2, a price ceiling of $3.08 per pound for "base grade" 13/15 denier Japan white silk, grade D-78, was imposed, with corresponding prices for other grades. This decision to impose a price ceiling, and the determination of the figure at which the ceiling was placed, were made in the Office of Price Administration, without consultation with other Government agencies as to the policy which would be served by such action.

Also on August 2, the Office of Production Management amended its previous preference order and forbade all processing of raw silk unless specifically authorized by the Director of Priorities. On August 12 the order was again amended to permit deliveries of raw silk to Defense Supplies Corporation, a Government agency, or pursuant to its instructions.

On October 16 the Office of Production Management rewrote its preference order relating to raw silk. The full text of the new order appears in our finding 14. Its effect was to require any owner of raw silk to accept an order from and sell his silk to any person who intended to use it to fulfill his contract to manufacture parachutes for the Government, or to accept an order for and sell his silk to the Defense Supplies Corporation, a Government agency. In an amendment of this order made on October 28, each owner of raw silk was required to make a report in writing to the Office of Production Management of the raw silk that he had on hand.

About September 1, 1941, Defense Supplies Corporation sent to various holders of raw silk a form of purchase contract known as "D. S. C. Silk No. 1," with a letter offering to purchase silk at the ceiling prices. These letters and contracts made no mention of priority orders. Some silk was obtained as a result of these letters. About December 22 the Defense Supplies Corporation adopted a new form of contract, "D. S. C. Silk No. 3," which contained a specific reference to the October 16 amendment to the General Preference Order making acceptance mandatory. Copies of this form were sent on December 23 to all known holders of raw silk with a letter saying that the form was an order for all silk then owned by the recipient, that the order bore a preference rating of A — 10, and that its acceptance was mandatory. See finding 20.

Using form "D. S. C. Silk No. 3," the Defense Supplies Corporation purchased some 30,000 bales of silk in January and February 1942, and some 2,200 bales during the last ten months of that year. Ceiling prices were paid for all this silk. In January 1942, the Defense Supplies Corporation began selling silk, disposing of most of its stock in 1942, and of smaller quantities in 1943, 1944, and 1945. All its sales were made at the $3.08 price which had, as we have seen, been fixed as the ceiling price, although the price schedule fixing this ceiling had been revoked on February 18, 1942, for the stated reason that "substantially all stocks of silk in the country have been acquired by the United States Government, through agencies thereof, or are presently in the hands of manufacturers fabricating materials in fulfillment of Government contracts."

On February 10, 1942, the War Production Board, pursuant to the Act of October 16, 1941, 55 Stat. 742, Title 50 U.S. C.A.Appendix, § 721, requisitioned and took over some 13,511 bales of raw silk then located in nine warehouses. On the same day it amended its preference order to prevent the sale or delivery of raw silk to or the purchase and receipt of raw silk from any one other than Defense Supplies Corporation.

On November 24, 1941, the law firm of Roberts and McInnis, who represent the plaintiffs in these cases, filed with the Office of Production Management and the Office of Price Administration a petition on behalf of eighteen members of the silk industry, including six of the plaintiffs in these cases, requesting an increase in the ceiling price of raw silk from $3.08 to $3.70 per pound. This petition was not granted. On January 8, 1942, the same lawyers acting for twelve holders of raw silk, including four of the plaintiffs in these cases, requested permission from the Defense Supplies Corporation to add to the contract, "D. S. C. Silk No. 3" which had been sent them, provisions which would have given them the benefit of any higher price for silk subsequently fixed by the Government, and which would have prevented their execution of the offered contracts from being waivers of "any right to seek hereafter adjustment of the consideration." These requests were denied.

On January 14 the same lawyers wrote the Defense Supplies Corporation that their clients would comply with the orders for silk placed with them, but that they did not hereby waive their right to "seek hereafter an equitable adjustment of the consideration." Another letter to similar effect was written April 10, 1942, to the interested Government agencies.

Four of the nine present plaintiffs were parties to all of the protests described above. Two were listed in the letters of November 24 and April 10. Three were not parties to any of the protests. The facts relating to the protests appear in finding 26.

Our findings 29-50 show that in December 1941 or January 1942, except for some six pounds of silk mentioned in finding 50, the plaintiffs executed contracts pursuant to orders for silk received by them from the Defense Supplies Corporation. The orders accepted were all on form "D. S. C. Silk No. 3" except two, which are mentioned in findings 30 and 43. All the sales were made at least two months after the October 16 order of the Office of Production Management had been promulgated, which required owners to sell their silk, upon request, to Government contractors for parachutes, or to the Defense Supplies Corporation, and forbade owners to use their silk unless specifically authorized by the Director of Priorities. For the silk acquired from the plaintiffs by the Government and here sued for, the Government paid them at the ceiling price rate of $3.08 per pound for standard-grade silk. The last sale of such silk on the last day that there was a free market for it, July 25, 1941, was at the price of $3.57 per pound.

The plaintiffs say that the President's order of July 26, 1941, forbidding transactions with Japan and Japanese nationals, and the price fixing and priority orders of the next few days, constituted a taking of their silk for Government use, within the meaning of the Fifth Amendment. They apparently fix upon the approximate date of July 26 in order to bring the asserted...