Cors v. United States

• Decision Date: 05 January 1948
• Docket Number: No. 46796.,46796.
• Citation: 75 F. Supp. 235,110 Ct. Cl. 66
• Parties: CORS v. UNITED STATES.
• Court: U.S. Claims Court

75 F. Supp. 235

110 Ct. Cl. 66

CORS v. UNITED STATES.

No. 46796.

Court of Claims.

January 5, 1948.

Frank C. Mason, of New York City (Harold A. Kertz and Charles B. McInnis, both of Washington, D. C., Mahar & Mason, of New York City, and Roberts & McInnis, of Washington, D. C., on the brief), for plaintiff.

Edgar T. Fell, of Baltimore, Md., and Herbert A. Bergson, Asst. Atty. Gen. (John B. Miller, of Washington, D. C., on the brief), for defendant.

William M. Aiken, of Washington, D. C. (John G. Laylin, Edward G. Howard, of New York City, and Covington, Burling, Rublee, Acheson & Shorb, of Washington, D. C., on the brief), amici curiæ.

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

WHITAKER, Judge.

On October 15, 1942, defendant requisitioned plaintiff's steamship MacArthur. The War Shipping Administration determined that $9,000 was just compensation. Upon plaintiff's rejection of this award there was paid to him the sum of $6,750, being 75 per cent of the amount of the award as required by the Merchant Marine Act of 1936, as amended, § 902, 53 Stat. 1254, 1255, 46 U.S.C.A. § 1242. He sues for what he says is just compensation.

The vessel was built in 1895 for the Coast Guard, and was operated by it until about March 19, 1942, when it was sold to the highest bidder for $2,875. Plaintiff, the purchaser, spent $5,699.78 on repairing it, doing much of the work himself at a considerable saving in cost.

After the vessel had been reconditioned, and a license for its operation had been secured on April 21, 1942, it was removed to New York City, where it was moored until it was requisitioned by the defendant on October 15, 1942.

The commissioner has found that $15,500 was its fair market value at the time of the taking. Plaintiff does not acquiesce in this, but we do not think a higher value can be justified. This, we think, represents its fair market value. It is almost twice as much as plaintiff's investment in the vessel.

Defendant admits that the boat could have been sold on the market for this amount, but it admits liability for only $10,500, because it says that $5,000 of the market value of the vessel was due to an enhancement in market value brought about by the Government's need for vessels which necessitated their taking. The defendant claims that the amount of such enhancement in value should be deducted from the fair market value of the vessel in determining just compensation. This is the principal issue in the case. In determining it, we have been much assisted not only by the briefs of the parties but also by a brief filed by Covington, Burling, Rublee, Acheson & Shorb as amicus curiæ.

We have found that the increase in the market value of this vessel was due, first, to the great increase in shipping and harbor traffic due to the war and, second, to the Government's need for vessels in the prosecution of the war, which necessitated the requisitioning of many of them.

It is not possible to allocate to the second cause a definite part of the increase in market value, but even if it were possible to do so, we do not think the defendant is entitled to a deduction from market value on this account. We do not think the Government should pay a property owner less than he could have secured for his property from someone else. If an owner has a vessel and there are people who are willing to pay him $15,500 for it, and he wants to sell it at this price, but the Government intervenes and takes his vessel, it is not just, ordinarily at least, that the Government should pay him for it any lesser amount. Except in rare circumstances, he has not been justly compensated for his property unless he secures from the condemner what he could have secured from others.

Fair market price, where there is a free market, has ever been the usual standard of just compensation. Boom Co. v. Patterson, 98 U.S. 403, 407, 25 L.Ed. 206; Monongahela Nav. Co. v. United States, 148 U.S. 312, 327, 13 S.Ct. 622, 37 L.Ed. 463; United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 80, 81, 33 S.Ct. 667, 57 L.Ed. 1063; Seaboard Air Line Ry. v. United States, 261 U.S. 299, 43 S.Ct. 354, 67 L.Ed. 664; Vogelstein v. United States, 262 U.S. 337, 43 S.Ct. 564, 67 L. Ed. 1012; United States v. New River Collieries, 262 U.S. 341, 43 S.Ct. 565, 67 L. Ed. 1014; Olson v. United States, 292 U.S. 246, 255, 54 S.Ct. 704, 78 L.Ed. 1236; United States v. Miller, 317 U.S. 369, 374, 63 S. Ct. 276, 87 L.Ed. 336, 147 A.L.R. 55.

Defendant says, however, that this rule does not apply where the Government is forced by the necessities of war to condemn property. In support of this statement it relies particularly on United States v. Miller, supra, and on Rule 4 laid down by the President's Advisory Board on Just Compensation, consisting of Judges Learned Hand, John J. Parker and Joseph C. Hutcheson, and also on section 902(a) of the Merchant Marine Act of 1936, as amended, 53 Stat. 1254, 1255.

We do not think the case of United States v. Miller, supra, supports defendant's position. That case reiterates the holding of the Supreme Court in Kerr v. South Park Com'rs, 117 U.S. 379, 6 S.Ct. 801, 29 L.Ed. 924, and Shoemaker v. United States, 147 U.S. 282, 13 S.Ct. 361, 37 L.Ed. 170 to wit, that a condemner is not liable for any increase in value due to its initiation of a project necessitating the taking of the property condemned. This rule is designed to prevent the owner from profiting from an increase in market value due to speculation as to the amount the condemner might be compelled to pay for the property. The Supreme Court in United States v. Miller, 317 U.S. at page 377, 63 S.Ct. at page 282, 87 L.Ed. 336, 147 A.L.R. 55, thus stated the reason for the rule:

"* * * If their lands were probably to be taken for public use, in order to complete the project in its entirety, any increase in value due to that fact could only arise from speculation by them, or by possible purchasers from them, as to what the Government would be compelled to pay as compensation."

This rule, however, is limited to property lying within the scope of the project. If a parcel of land, not within the limits of the original project, gained in value by reason of its proximity to the public improvement, and if later it was decided to enlarge the project and to condemn this additional land, the increase in value due to its proximity to the project is not to be excluded in determining just compensation. This is because its increase in market value was not due to speculation as to what the owner might be able to compel the Government to pay for it, but to a natural increase in the value of the property on account of its environment, apart from any prospect of its condemnation by the Government.

In short, before any part of the market value of a piece of property is to be eliminated,...