Toronto, Hamilton & Buffalo Nav. Co. v. United States

• Decision Date: 06 December 1948
• Docket Number: No. 46435.,46435.
• Citation: Toronto, Hamilton & Buffalo Nav. Co. v. United States, 112 Ct.Cl. 240, 81 F. Supp. 237 (Fed. Cl. 1948)
• Parties: TORONTO, HAMILTON & BUFFALO NAV. CO. v. UNITED STATES.
• Court: U.S. Claims Court

81 F. Supp. 237

TORONTO, HAMILTON & BUFFALO NAV. CO. v. UNITED STATES.

No. 46435.

United States Court of Claims.

December 6, 1948.

Frank J. Mahony, of New York City (Frederick L. Wheeler and C. Austin White, both of New York City, on the brief), for plaintiff.

Kendall M. Barnes, of Washington, D. C., and H. G. Morison, Acting Asst. Atty. Gen., for defendant.

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

HOWELL, Judge.

This is an action to recover just compensation, pursuant to the Fifth Amendment to the Constitution, for the Great Lakes car ferry Maitland No. 1, requisitioned by the War Shipping Administration of the United States on August 20, 1942.

The only question presented in this case relates to the value of the Maitland No. 1. Plaintiff contends that its value is somewhere between a minimum of $332,500 and a maximum of $458,689.89, while it is the defendant's position that the value does not exceed $72,500. The Commissioner of the Court reported a value of $182,900. The difference between the various figures results entirely from differences in the elements considered in computing the value of the vessel and the weight to be given to those various elements.

This vessel was requisitioned pursuant to Section 902 of the Merchant Marine Act of 1936, as amended, 46 U.S.C.A. § 1242. Subdivisions (a) and (d) of this section, which are the only ones here pertinent, read as follows:

"(a) Whenever the President shall proclaim that the security of the national defense makes it advisable or during any national emergency declared by proclamation of the President, it shall be lawful for the Commission to requisition or purchase any vessel or other watercraft owned by citizens of the United States, or under construction within the United States, or for any period during such emergency, to requisition or charter the use of any such property. The termination of any emergency so declared shall be announced by a further proclamation by the President. When any such property or the use thereof is so requisitioned, the owner thereof shall be paid just compensation for the property taken or for the use of such property, but in no case shall the value of the property taken or used be deemed enhanced by the causes necessitating the taking or use. If any property is taken and used under authority of this section, but the ownership thereof is not required by the United States, such property shall be restored to the owner in a condition at least as good as when taken, less ordinary wear and tear, or the owner shall be paid an amount for reconditioning sufficient to place the property in such condition. The owner shall not be paid for any consequential damages arising from a taking or use of property under authority of this section.

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"(d) In all cases, the just compensation authorized by this section shall be determined and paid by the Commission as soon as practicable, but if the amount of just compensation determined by the Commission is unsatisfactory to the person entitled thereto, such person shall be paid 75 per centum of the amount so determined and shall be entitled to sue the United States to recover such further sum as, added to said 75 per centum will make up such amount as will be just compensation therefor, in the manner provided for by section 24, paragraph 20, and section 145 of the Judicial Code (U.S.C.1934 edition, title 28, secs. 41, 250)."

The Maitland No. 1 was designed and built by the Great Lakes Engineering Works in 1916. It was a conventional, steel hull, two masted, two stacker, twin screw, car ferry with extra weight of steel to make it suitable for winter ice-breaking operation. The vessel was 350 feet in length, 56 feet beam, 20 feet 6 inches molded depth to the car deck, with a clearance between the car and the spar decks of 17 feet 7 inches. Its gross tonnage was 2,757 tons and it was powered by two triple expansion reciprocating engines driven by four Scotch boilers, fired by coal under a forced draft to operate at a maximum pressure of 175 pounds. The hold was divided into eight compartments housing the engines, boilers, steering engine, coal bunkers, ballast and shaft alley. The coal bunkers had a capacity of 332 net tons. Four railroad tracks were installed on the car deck and they had a capacity of 30 box cars of the short conventional size weighing loaded, 70 tons, or 26 cars of the larger, modern type.

The Maitland No. 1 was constructed for Mr. L. N. Beckley, who was the president of plaintiff. The approximate cost of constructing the vessel was $362,800. In August 1916 the plaintiff acquired the Maitland No. 1 from Mr. Beckley at a cost of $394,560, a mark-up of about 8.75 percent over cost of construction.

From 1917 to 1930 plaintiff expended $38,115.46 for equipment and betterments to the vessel.

From October 1916 to June 1932, plaintiff operated the Maitland No. 1 on Lake Erie, between the ports of Ashtabula, Ohio, and Port Maitland, Canada, a distance of 91 miles. The vessel was capable of making three round trips every two days, and carried commodities loaded in freight cars moving between points in the Pittsburgh area, served by the New York Central Railroad, and points in Canada, served by the Toronto, Hamilton and Buffalo Railway Company. From the date of its organization to about February 10, 1936, all of plaintiff's capital stock was owned by the latter company, a subsidiary of the New York Central Railroad. On or about the latter date, the Toronto, Hamilton and Buffalo Railway Company distributed plaintiff's stock to its stockholders, the New York Central and the Canadian Pacific.

The Maitland No. 1 was the only vessel owned and operated by plaintiff on its car ferry line. Plaintiff's chief source of revenue was derived from the transportation of bituminous coal to Canada, and its annual income over the sixteen and one-half year period of operation fluctuated with the tonnage of coal carried by the car ferry. For the first four and one-half years (August 12, 1916, to January 1, 1921), the average annual net operating income from the Maitland No. 1 was $17,216.28. In 1921 and 1922 the car ferry was operated at a net loss, the average loss for the two years being $14,461.90. During the next five years (1923 to 1927, inclusive), the net operating income from the Maitland No. 1 was at its highest level during the entire period the car ferry was in use, averaging $129,893.92 per annum. Beginning in 1928, the net operating income declined sharply below the 1927 earnings. This downward trend continued in 1929, the average net income for the two years being $22,950.42. The vessel was operated at a net loss in 1930, 1931 and the first six months of 1932, the average annual loss being $15,417.82. For the entire period from August 12, 1916, to June 30, 1932, plaintiff's annual average net income from the Maitland No. 1, before Federal income taxes, was $42,816.36. This amounted to 10.41 percent of plaintiff's investment.

The sharp decline in plaintiff's net operating income in 1928 and 1929 was contrary to the trend of earnings of Class I railroads in this country during the same period. In 1928 and 1929 the freight revenues of Class I railroads of the United States were in excess of their 1927 revenues. Also, the exports of bituminous coal from the Ohio Customs District to Canada were greater in 1928 and 1929 than in 1927.

The reasons for this reduction in revenue, which began in 1928 and ultimately resulted in the discontinuance of operations in 1932, were set out in an application which plaintiff filed with the Interstate Commerce Commission on February 11, 1943, for leave to abandon its car ferry line. This application was filed after the defendant had requisitioned the Maitland No. 1, and the first reason stated for abandonment was that the only vessel owned by plaintiff had been requisitioned by the War Shipping Administration. The second ground for abandonment, as stated by plaintiff in this petition, was: Since June 1932, when the vessel operation ceased there has been insufficient traffic available to justify the operation. Cross-lake traffic to Canadian rail heads dropped off upon the opening of the new Welland Canal in 1932 because larger vessels could take cargoes directly from Lake Erie to Lake Ontario ports. Traffic handled over the route moves on a slower schedule than if handled all-rail through Buffalo, New York. Identical rates are applicable over the two routes.

In its Reply to Questionnaire filed with the Interstate Commerce Commission in the same proceeding, plaintiff expanded on this matter, stating:

15A. The traffic over the line decreased to such an extent that service was suspended on June 28, 1932. Prior to 1928 the bulk of the traffic handled consisted of bituminous coal for movement to the Steel Company of Canada at Hamilton, Ontario. In August 1928, this traffic was diverted to Sodus Point, New York, for movement across Lake Ontario to Hamilton. When the new Welland Canal was opened in August 1932, most of the remaining traffic was lost since vessels formerly unable to navigate the old Canal were enabled to take shipments directly to Lake Ontario points, by-passing Port Maitland without using the facilities of the applicant or its connecting rail line in Canada.

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17A. No effort has been made to dispose of the line so as to insure continued operation since traffic is not available in sufficient quantities to warrant continued operation, even if a suitable car ferry were available. The all-rail routes are adequate and convenient.

As noted above, the Maitland No. 1 was laid up at her dock at Ashtabula, Ohio, on June 30, 1932. After that date it was never operated by plaintiff, and was never operated as a car ferry. On November 29, 1935, plaintiff did charter the Maitland No. 1 to Nicholson Universal Steamship Company, which covered the tracks on the car deck with planking and used the...