Banner Milling Co. v. State

• Decision Date: 15 July 1925
• Parties: BANNER MILLING CO. v. STATE.
• Court: New York Court of Appeals Court of Appeals

240 N.Y. 533

148 N.E. 668

BANNER MILLING CO.

v.STATE.

Court of Appeals of New York.

July 15, 1925.

Claim by the Banner Milling Company against the State of New York. From a judgment of the Appellate Division (210 App. Div. 812, 205 N. Y. S. 911), affirming a judgment of the Court of Claims (117 Misc. Rep. 33, 191 N. Y. S. 143), awarding compensation for property taken for Barge Canal purposes, claimant appeals.

Affirmed.Appeal from Supreme Court, Appellate Division, Fourth Department.

Henry W. Hill, of Buffalo (Alfred W. Gray, of Niagara Falls, of counsel), for appellant.

Albert Ottinger, Atty. Gen. (Edward J. Mone, of Albany, of counsel), for the State.

Martin Conboy, of Riverdale-on-Hudson (John Jay McKelvey and Harry B. Chambers, both of New York City, of counsel), for Isaac G. Johnson & Co., amicus curiae.

CRANE, J.

Pursuant to chapter 746 of the Laws of 1911, known as the Barge Canal Terminal Act, and its amendments, the state appropriated appellant's property in the city of Buffalo, used by it for a flour mill. The property had been used for the manufacture of flour since 1887, and for the past 10 years the business had produced for the claimant averaged earnings of over $50,000 annually. The state did not appropriate the business, or intend to carry on the business. It sought the land and its appurtenances for Barge Canal purposes. All fixtures, as far as possible, were to be removed by the owner.

The Court of Claims, pursuant to the procedure in such cases, allowed the claimant for the lands appropriated $235,000, made up as follows: For the lands appropriated, $90,000; for the value of the structures appropriated, $90,000; for the value of the power plant appropriated, $8,317.62; and for damages to the machinery and fixtures not appropriated, $46,682.38.

Both the state and the claimant appealed from the judgment of the Court of Claims to the Appellate Division, where the judgment was unanimously affirmed, with the exception that paragraph 7 thereof was stricken out. This paragraph stated the reason why the court had made no allowance for damages to the good will of the business. The claimant is in this court by the certification of the Appellate Division that there is a question of law involved, which ought to be reviewed by us.

[1] On the argument and in its brief the appellant seeks to present two questions of law-one relating to the value of the mill as a going concern, and the other as to the good will, both of which it is claimed the court excluded in allowing damages or compensation. In my judgment, the state of the record presents the latter question only.

By reason of the unanimous affirmance we are confined in our review to the findings of fact made by the Court of Claims. We cannotgo behind these to determine what that court considered or did not consider in making up its judgment. That it did not consider good will is evident from the face of these findings. At the request of the claimant the court found:

‘That the earnings of claimant over a period of 10 years averaged upwards of fifty-five thousand dollars ($55,000) annually, which, after deducting the interest on the value of the tangible assets, establishes the value of the going business or good will of the company at upwards of two hundred and fifty thousand dollars ($250,000).’

Finding 11 reads:

‘That the state of New York did not take, appropriate, interrupt, damage, or destroy the good will of the flour-manufacturing business theretofore carried on on the said premises by the claimant.’

Subsequently this finding was amended so as to read:

‘That, while the state of New York did not take, appropriate, or destroy the good will of the flour-manufacturing business theretofore carried on upon said premises by the claimant, it did interrupt and damage the same. To what extent it was damaged it is unnecessary for us to find, because such good will was not property for which the claimant was entitled to compensation by reason of this appropriation, as we have found in the seventh conclusion of law hereafter set forth.’

The seventh conclusion of law reads:

‘That the good will of claimant's said business is not property for which the claimant is entitled to any compensation in this proceeding, nor is it entitled to any damages for injury thereto, or for any interruption thereof by reason of the appropriation herein.’

[2] The appellant insists that, as its good will was interrupted and damaged to some extent, it was entitled to compensation for this interruption or damage. Such, however, is not the law. There is a marked distinction between the instances where the state appropriates a public service corporation and all its business and good will as a going concern, intending to continue its operations as a public enterprise (City and County of Denver v. Denver Union Water Co., 246 U. S. 178, 38 S. Ct. 278, 62 L. Ed. 649;City of Omaha v. Omaha Water Co., 218 U. S. 180, 30 S. Ct. 615, 54 L. Ed. 991,48 L. R. A. [N. S.] 1084), and those instances where the state desires the land and not the business. Taking the land may cause the owner inconvenience and loss, by compelling him to remove his business to some other place. Such loss, however, is not recognized as part of the damage or compensation which the state must pay for the land taken.

The reason for this distinction is quite apparent. When the business of a public service corporation is taken, the corporation goes out of business, so far as conducting that branch of it is concerned. The business changes ownership from private to public control. The good will and all that goes with it is taken over by the state, as well as the tangible property. This is not so with the condemnation of land for public purposes. Here the good will may be damaged by inconvenience and removal of the business, but it is not taken. The owner of the business may remove to another place, establish his business, and carry his good will with him. Especially is this so where the good will consists in the brand of goods manufactured, or in the personality of the manufacturer, as distinguished from the mere place of doing business. While it may be, as in this case, that removal from one place to another may cause some loss, yet the elements making up that loss are so highly speculative that the courts have not considered it an appropriation or damage for which the state should pay as commanded by the Constitution. Matter of Gilroy, 26 App. Div. 314, 49 N. Y. S. 798, Cullen, J.; Sawyer v. Commonwealth, 182 Mass. 245, 65 N. E. 52,59 L. R. A. 726, Holmes, C. J.; Nichols on Eminent Domain (2d Ed.) sect. 124; City of Oakland v. Pacific Coast Lumber & Mill Co., 171 Cal. 392, 398, 153 P. 705;Beckeer v. Phila. & Reading T. R. Co., 177 Pa. 252, 35 A. 617,35 L. R. A. 583;Ranlet v. Concord Railroad Corporation, 62 N. H. 561;Hunter's Adm'r v. C. & O. R. Co., 107 Va. 158, 59 S. E. 415,17 L. R. A. (N. S.) 124;U. S. v. Inlots, 26 Fed. Cas. 482, 489.

[3] The rule is different in the rate cases, where good will is an element of property which must be considered in estimating the investment or the rate upon which to figure income. People ex. rel. Kings County Lighting Co. v. Willcox, 210 N. Y. 479, 104 N. E. 911,51 L. R. A. (N. S.) 1;Des Moines Gas Co. v. City of Des Moines, 238 U. S. 153, 35 S. Ct. 811, 59 L. Ed. 1244. The Legislature may, however, authorize a recovery for the loss of profits in a business or for the damages done to the good will of a going concern caused by the appropriation of land by the state or its agencies. Such were the provisions of the Water Supply Acts (Laws 1905, c. 724, as amended by Laws 1906, c. 314). People ex rel. Burhans v. City of New York, 198 N. Y. 439, 92 N. E. 18.

[4] The appellant's counsel apparently recognizes this general rule that damage done to the good will cannot be figured in the compensation, where the good will is not appropriated, because he now claims that the Legislature has amended the Barge Canal Act, giving jurisdiction to the Court of Claims to make allowance for such damages. Chapter 606 of the Laws of 1918 contains but one section. It is entitled:

‘An act to extend the time for filing existing claims against the state for compensation or damages for or on account of the appropriation of property in connection with the construction of improved canals and canal terminals, and giving the Court of Claims jurisdiction.’

It reads:

‘The Court of Claims shall have jurisdiction of and may hear and determine any claim against the state, heretofore accrued, which shall be filed within one year after this act takes effect, for compensation or damages for or on account of the appropriation by the state of any lands, structures, waters, franchises, or other property in connection with the improvement of the * * * canals, * * * notwithstanding the lapse of time since the accrual of the claim.’ Section 1.

That this statute merely extends the time to file a claim, where the time had expired under existing laws, is quite evident from the reading. It cannot be that it was the intention to create a favored class for those who had delayed in presenting claims. Discrimination is not favored, even though it be legal. Matter of City of New York, 190 N. Y. 350, 83 N. E. 299,16 L. R. A. (N. S.) 335. Nor was it the intention to reopen cases already settled, and for which allowances had been made. The words ‘compensation or damages for or on account of the appropriation’ mean no more than compensation or the amount...