Caltex v. United States, 48324

• Decision Date: 06 November 1951
• Docket Number: 48265,No. 48324,48319.,48324
• Citation: 100 F. Supp. 970
• Parties: CALTEX (PHILIPPINES), Inc. v. UNITED STATES. SHELL CO. OF PHILIPPINE ISLANDS, Ltd. v. UNITED STATES. STANDARD-VACUUM OIL CO. v. UNITED STATES.
• Court: U.S. Claims Court

100 F. Supp. 970

CALTEX (PHILIPPINES), Inc. v. UNITED STATES.

SHELL CO. OF PHILIPPINE ISLANDS, Ltd. v. UNITED STATES.

STANDARD-VACUUM OIL CO. v. UNITED STATES.

Nos. 48324, 48265, 48319.

United States Court of Claims.

Decided November 6, 1951.

Leo T. Kissam and Albert R. Connelly, New York City (Cravath, Swaine & Moore, New York City, on the briefs), for the plaintiffs.

Kendall M. Barnes, Washington, D. C., Newell A. Clapp, New York City, Acting Asst. Atty. Gen. (Holmes Baldridge, Asst. Atty. Gen., on the brief), for the defendant.

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

HOWELL, Judge.

Plaintiffs in these three suits, which have been consolidated, are The Shell Company of Philippine Islands, Ltd., Standard-Vacuum Oil Company, and Caltex (Philippines), Inc., hereinafter referred to as Shell, Standard, and Caltex, respectively. All are corporate entities which, at the time this cause arose, were engaged in the commercial distribution of petroleum products in the Philippine Islands area. Each of the plaintiffs maintained storage and terminal facilities in the Pandacan District of Manila, P. I., and on the Island of Cebu.

All three oil companies are suing for just compensation for the taking of their terminal facilities at Pandacan (Findings 1 through 33).

Standard makes an additional claim for just compensation for petroleum products which were in its terminal at Cebu at the time the terminal was taken on December 8, 1941, by the depot commander in the name of USAFFE, and which were destroyed along with Standard's terminal on April 10, 1942. Standard is not making any claim for just compensation for the taking of its terminal facilities on Cebu (Findings 36 through 41).

Shell is suing for $3,943.20 for 131.44 metric tons of Diesel fuel oil sold and delivered by Shell, on or about April 3, 1942, to defendant at Cebu for use on United States Navy submarines. Defendant promised and agreed to pay the amount claimed but has not done so (Findings 34 and 35).

Pandacan Claim

For several years prior to the outbreak of war with Japan, the United States Army had maintained detailed plans for the defense of the Philippine Islands. These plans recognized the need for large quantities of petroleum supplies in an extended defense effort. The Army did not possess adequate storage facilities of its own to carry on a full scale war effort. Rather, it procured its day-to-day petroleum requirements from the commercial oil companies and planned to rely upon their stored supplies in the case of an emergency. The oil companies were aware of and acquiesced in this plan, cooperating with the Army by maintaining certain stock levels so that the Army might be assured of adequate supply in case of sudden mobilization.

On December 7, 1941, war between the United States and Japan commenced at Pearl Harbor. Simultaneously, the Japanese attack on the Philippines got under way. The Army immediately commandeered quantities of motor transport, including vehicles belonging to the plaintiffs. On December 12, 1941, the Army took control of the operation of supply and disposition of petroleum products from the stocks on hand of the oil companies at their Pandacan terminals to the troops in the field. In the exercise of this control the Army used the land, buildings, fixed installations, equipment, containers, rolling stock, and personnel of the oil companies' Pandacan terminals (Finding 29). Army authorities kept track of the amount of petroleum products going to military users and organized the movements of petroleum to the field. It was understood that the Army would pay for all the petroleum taken for its own use. The Army also screened orders from civilian sources, allowing sales only to essential users such as the fire department, ambulances, etc. Measures were taken to safeguard the facilities by the use of troops, and the personnel of the oil companies remained on the job taking instructions from Army personnel.

An effort was made by the Army to negotiate temporary leases with the oil companies of their terminal facilities, but the press of the Japanese invasion did not allow time for the completion of such agreements before it became necessary to abandon Manila (Finding 20).

Until December 27, 1941, no officer in the Quartermaster Corps, United States Army, possessed authority, except to the extent that it was delegated to him by the commanding general, to commandeer or requisition the use or title of the stocks of the petroleum products, the land, fixed installations, equipment, supplies, or rolling stock of the oil companies on Pandacan. Such authority was not delegated by the commanding general to officers of the Quartermaster Corps on Pandacan except as described in Findings 13 to 20.

Between December 25 and 27, 1941, the oil companies were notified that their remaining stocks together with all terminal facilities were to be requisitioned and that whatever part could not be transported to the Army in the field was to be destroyed. Officials of the oil companies were reluctant to take the responsibility for destruction because of the imminent necessity of answering to the Japanese, and the Army agreed to take care of the demolition. On December 27, 1941, the Army requisitioned all remaining petroleum stocks and all storage and handling facilities at the Pandacan terminals of the oil companies, and on December 31, 1941, in fulfillment of planned military policy, the terminal facilities and all products remaining therein were demolished by the Army for the purpose of denying their use to the Japanese.

The United States has paid plaintiffs for rolling stock requisitioned and for such of the petroleum stocks in the Pandacan terminals as were used by the Army. The United States also paid plaintiffs for the petroleum stocks which were in the terminals and were destroyed at the time of demolition. Defendant has refused to compensate plaintiffs for the loss of terminal facilities at Pandacan on the ground that these properties were taken on December 27, 1941, for the sole purpose of destruction in order to prevent their use by the enemy. The Government contends that such a taking is not compensable under the Fifth Amendment.

Plaintiffs base their claims for just compensation for the Pandacan terminal facilities upon the Requisition of Military Materials Act of October 16, 1941, 55 Stat. 742-43, as amended, 50 U.S.C.A.Appendix, §§ 721-724, and upon the Fifth Amendment to the Constitution, contending (1) that the terminals were taken for public use by the United States on December 12, 1941, and were used by the Government until destroyed on December 27, 1941, and (2) that if taken for the first time on December 27, 1941, and solely for the purpose of destruction to keep the terminals from the enemy, such a taking is compensable.

Inasmuch as this court must render a judgment for just compensation where there has been a taking by the United States of private property for public use on the basis of the constitutional requirement alone, no purpose is served in a discussion of the applicability of the statute in this instance, particularly as it is apparent that no effort was made to comply with that Act. The question of damages has been separated from that of liability under Rule 39(b) (1949 Reprint),¹ and accordingly the only question before the court is whether or not there was a taking of plaintiffs' terminal facilities on Pandacan² for public use for which the Government is required to make just compensation.

The plaintiffs contend that the Army's act of taking over the control of operation of supply and distribution on December 12, 1941, amounted to a "taking" of the terminal properties for use on that date and that such use continued until the moment of destruction on December 31, 1941.

From the record it appears that the officers in the Quartermaster Corps did not have authority to take title to plaintiffs' terminal facilities on Pandacan prior to December 27, 1941, and that no formal act of requisition took place until that date. Regarding the substance of the Army's acts as related in detail in the findings, and in the light of the situation known to exist, we do not believe that the control exercised by the Army between December 12, 1941, and December 27, 1941, amounted to a taking of plaintiffs' terminal facilities on Pandacan for public use. The Army control in this instance, all circumstances considered, seems no more complete to us than that exercised by Army meat inspectors in the Safeway³ case. In that case it appeared that the Army representatives enforced Government set-aside orders, inspected and rejected meat at the slaughter-house, regulated shipments, etc. Besides that, the Government, through other agencies, controlled the amount of beef slaughtered, the cuts prepared, and the prices charged. Later, the Government required Safeway to deliver to it certain portions of the beef set aside. We held the product to have been taken for public use, but it was never contended that the slaughterhouse itself was taken. In that case, as in this,⁴ the facility itself was subjected to regulations permissible under the Government's police and war powers, but was not taken for public use.⁵ We have no doubt that the petroleum set aside for the use of the Army in the instant case was taken for public use. However, as the Government has paid plaintiffs in full for all the petroleum used and destroyed on Pandacan, this problem does not confront us.

We conclude that the Government's actions with respect to plaintiff's Pandacan terminal facilities between December 12, 1941, and December 27, 1941, did not amount to a taking of those facilities.

On December 27, 1941, the Government formally requisitioned the Pandacan terminals for destruction. By this date it was apparent that the area would have to be yielded to the enemy, and it had been determined that the terminals and their contents...