Anderson v. Chesapeake Ferry Co

• Decision Date: 09 June 1947
• Citation: 43 S.E.2d 10,186 Va. 481
• Parties: ANDERSON. v. CHESAPEAKE FERRY CO.
• Court: Virginia Supreme Court

43 S.E.2d 10

186 Va. 481

ANDERSON.

v.CHESAPEAKE FERRY CO.

Supreme Court of Appeals of Virginia.

June 9, 1947.

Rehearing Denied Sept. 11, 1947.

Appeal from Circuit Court of City of Norfolk; Clyde H. Jacobs, Judge.

Suit by Chesapeake Ferry Company against J. A. Anderson, state highway commissioner, for a determination of reasonable compensation to which plaintiff was entitled upon the temporary seizure of its properties by defendant under the power of eminent domain when complainant was unable to operate ferries by reason of labor difficulties. From an adverse decree, commissioner appeals.

Reversed and remanded with directions.

Before HOLT, C. J., and HUDGINS, EGGLESTON, SPRATLEY and BUCHANAN, JJ.

Abram P. Staples, Atty. Gen., and Walter E. Rogers, Asst. Atty. Gen., for appellant.

Tazewell Taylor and John B. Jenkins, Jr., both of Norfolk, for appellee.

BUCHANAN, Justice.

This suit presents a question as to the proper measure of compensation for the use of the Chesapeake Ferry Company's properties which were taken over and operated by the State Highway Commissioner under an Act of the General Assembly, approved February 22, 1946, Acts 1946, ch. 39, p. 59, Code 1946 Supplement (Michie), sec. 2072 (33), which is copied in the margin.¹

At the time of the passage of this Act the ferry company was the owner of twoferries across Hampton Roads, one from Willoughby Spit, in Norfolk, to Old Point Comfort, and the other from Pine Beach, in Norfolk, to Newport News. It had been operating these ferries for several years, but their operation had been suspended for some two weeks prior to February 22, 1946, due to a strike by its employees. These ferries constituted important links in the State Highway System, and this suspension of operation had naturally resulted in inconvenience and hardship to the public. To prevent this public inconvenience and hardship during the period of such labor disputes, the Act was passed authorizing the State Highway Commissioner, with the approval of the Governor, to exercise the power of eminent domain and acquire for temporary use and operation any ferries, with their facilities and equipment, when the owners or operators were unable or unwilling to operate them.

February 22, 1946, the day the Act was approved, the State Highway Commissioner filed his petition alleging that for two weeks or longer the operation of said ferries had been suspended because of the inability or unwillingness of the ferry company to operate them, and that such suspension constituted a serious obstruction to the use and operation of the State Highway System, as well as serious inconvenience to the general public; that the Commissioner had so notified the ferry com pany and, with the approval of the Governor, and under the authority of the said Act, had requested the delivery to him and his agents of possession of said ferries and the' facilities and equipment used in connection with their operation, but the ferry company had failed and refused to comply with said request. The petition asked for a rule against the ferry company to show cause why said properties should not be delivered as requested.

The rule was issued, the ferry company filed its answer admitting the allegations of the petition, and on February 25, 1946, the court entered its order, finding, among other things, that the operation of the two ferry lines had been suspended for two weeks or longer by the inability or unwillingness of the ferry company to operate them, resulting in serious obstruction to the use and operation of the State Highway System, and decreeing that the ferry company deliver possession of said ferries, with all facilities and equipment, docks, wharves and the property necessary or proper in connection with the operation of same. The Commissioner was ordered, in conjunction with the ferry company, to make a complete inventory of all such property with a brief description of its then condition, and give the ferry company receipt therefor on receiving possession.

The order further directed that the Commissioner and the ferry company, withinthirty days, agree on a "reasonable, proper, and lawful compensation" (the language of the Act) for the use of said ferries and other property, and if they failed to agree, either party might file a petition to have the question judicially determined.

October 14, 1946, nearly eight months later, the ferry company filed its petition stating that it and the Commissioner had made several bona fide efforts to agree on compensation, but had been unable to do so, and asked the court to determine the question in accordance with the contention of the ferry company, that the compensation contemplated and provided for by the Act was the net profits of the operation, ascertained by deducting from gross revenues the cost of operation and maintenance and reasonable overhead charges. The petition prayed that the court proceed, without a jury, to hear evidence and argument and render judgment as to the basis of past and future compensation, and to fix the amount, if necessary, or refer to a commissioner such questions as considered proper, as in chancery proceedings, as provided by the Act.

October 17, 1946, the Commissioner filed his answer admitting the allegations of the petition as to what had occurred, but taking issue on the method of compensation contended for by the ferry company, and averring that when he took possession of the ferries the ferry company had not operated them for a period of approximately three weeks, due to labor disputes with its employees, and that during that time the properties were idle and productive of no revenue to the ferry company, but a burden to it because of administrative and maintenance expenses; that under the provisions of the Act the ferry company was entitled to the return of the possession of its properties at any time it was able and willing to resume their operation, but that due to said labor disputes the ferry company had at all times been, and still was, unable to assume its lawful duty and obligation of rendering such ferry service, and that if the Commissioner had not, in the exercise of the power of eminent domain, operated said properties, the ferry company would not have received any return therefrom, but would have suffered material loss on account of the maintenance cost and the expense of protecting the properties.

The answer further stated that in operating the ferries the State had assumed, and was still being subjected to, risks of loss from liabilities arising under the State Workmen's Compensation Law and from physical damage to the ferry properties as the result of hazards incident to their operation; that the revenues from the operation of the ferries by the Commissioner had produced funds over and above operating and maintenance costs which would be far in excess of a reasonable, proper and lawful compensation for the use of the ferries and other properties; and that such reasonable, proper and lawful compensation for the use of the ferries and other properties could be determined only by allowing a fair rental charge, not to exceed six per centum interest upon the value of the properties, plus a proper allowance for wear and tear resulting from the use of said properties.

No evidence was introduced but the matter was heard October 26, 1946, on the petition of the ferry company, the answer of the Commissioner and argument of counsel, and the court then entered a decree adopting the contention of the ferry company and adjudicating that the compensation contemplated and provided for by said Act "is to be determined, both as to past and future compensation, by an accounting between the parties hereto in which the gross revenues resulting from the operation of said ferries by the State Highway Commissioner shall be stated and from which there shall be deducted the reasonable and proper costs of operation and maintenance, including therein any reasonable out-of-pocket expenditures made on account of said operation and maintenance by said Commissioner, together with any reasonable overhead charges incurred or paid by him and allocable to said operation, and that after deducting said amounts from said revenue, the balance remaining shall constitute a reasonable, proper and lawful compensation for the use of the petitioner's ferries and other properties by the State Highway Commissioner, pursuant to said Act and the provisions of the Constitution of the State of Virginia and of the United States in this and similar cases."

In other words, the court held that the profits made by the taker on the property, taken under eminent domain, were the measure of just compensation for the taking. In our view, that holding is contrary to the principles long established and used in ascertaining the just compensation required by the Fifth Amendment to the Federal Constitution and section 58 of the Constitution of Virginia to be paid when private property is taken for public use; and works a result that was not intended by the Act, and that is inequitable under the circumstances shown by the record.

No constitutional question is involved and we are concerned only with the construction or application of the Act, the validity of which is in no wise assailed or drawn in question.

It is to be remembered that the ferry company was not a going concern at the time of the taking. The ferries were then producing nothing for their owner, had not done so for more than two weeks, and would not and could not earn anything for the ferry company so long as the strike continued.

The profits that have been made by the Highway Commissioner do not represent money that has been taken away from the ferry company. It is money that has been made by the Highway Commissioner by using the power of the State to quicken into action an idle enterprise. It would have remained idle and without any capacity to earn for its owner except for the exercise of the State's authority. That authority should...