General Motors Corporation v. United States

• Decision Date: 11 February 1944
• Docket Number: No. 8331.,8331.
• Parties: GENERAL MOTORS CORPORATION v. UNITED STATES.
• Court: U.S. Court of Appeals — Seventh Circuit

140 F.2d 873 (1944)

GENERAL MOTORS CORPORATION v. UNITED STATES.

No. 8331.

Circuit Court of Appeals, Seventh Circuit.

February 11, 1944.

Harry S. Benjamin and Henry M. Hogan, both of Detroit, Mich., and Preston Boyden and Robert S. Hunter, both of Chicago, Ill., for appellant.

J. Albert Woll, U. S. Atty., of Chicago, Ill., Norman M. Littell and Wilma C. Martin, both of Washington, D. C., Clarence W. Beatty, Jr., Asst. U. S. Atty., of Chicago, Ill., and Vernon L. Wilkinson, of Washington, D. C., for appellee.

Before MAJOR, KERNER, and MINTON, Circuit Judges.

MAJOR, Circuit Judge.

This is an appeal from a condemnation judgment, entered February 12, 1943. The suit was commenced by the United States on June 8, 1942, to acquire the temporary use of a part of defendant's warehouses needed in connection with the establishment by the War Department of a Signal Corps depot in Chicago. On January 1, 1942, the government sub-leased about half of the warehouse from the defendant. There is involved in this proceeding the remainder of the warehouse, or 93,673 square feet.

The building involved is a single large, one-story building, located at the southwest corner of 65th Street and Lavergne Avenue in the Clearing district. The property condemned was being used by the defendant as its master warehouse for the storage and distribution of Buick, Oldsmobile, Pontiac and Chevrolet parts. Defendant had installed equipment on the premises costing approximately $101,000, consisting mostly of bins and other facilities for the necessary operation of its business. At the time of the taking, there was located on the premises an inventory of about $250,000 of parts and machinery. About one week after the suit was filed, defendant was notified by an agent of the government that it was trespassing upon government property and that if defendant did not vacate, soldiers would be called in and move defendant out on the street. The business was discontinued, and some five weeks were spent in moving the property and in preparing the space for the government's use. Much of the property could not be moved and was demolished. The expense incurred in preparing the property for the government's use was borne by the defendant. The use condemned was for a period of one year, out of an unexpired lease of approximately six years.¹

Authority for the condemnation is contained in Title II of the Second War Powers Act of March 27, 1942, 56 Stat. 177, 50 U.S.C.A.Appendix, § 632, which provides: "The Secretary of War * * * may cause proceedings to be instituted * * * to acquire by condemnation, any real property, temporary use thereof, or other interest therein * * * that shall be deemed necessary, for military * * * or other war purposes * * *." The petition for condemnation, in conformity with the provision just quoted, described a designated number of square feet of floor space and prayed for an order "condemning the temporary use in the real property herein described" for a term of years ending June 30, 1943.

The case was tried to a jury and the government there, consistent with its position here, proceeded on the theory that such compensation was limited to the fair market rental value of the floor space condemned. The trial court apparently accepted this theory and submitted the cause to the jury on this basis. The defendant offered certain proof, admission of which was denied by the court, as to the expense and damages attributable solely to the operation of demolition and moving necessitated by the government's taking. We do not understand defendant to contend that it was entitled to recover these expenditures as such, but that proof of the same was admissible as an element of the fair value of the property taken. Thus the sole issue is whether the defendant was entitled to offer proof as to the expense so incurred as an element of "just compensation" guaranteed by the Fifth Amendment of the Constitution of the United States.

After studying the numerous authorities called to our attention, as well as others, we are convinced that the question for decision is a difficult one. There is a scarcity of authorities dealing with a same or similar situation. We are of the view that the opposing contentions arise largely because of a failure to recognize the exact nature of the property of which defendant was deprived. The government's case is predicated upon the basis that the property taken was merely the use of naked floor space, without any consideration to the fact that defendant was in possession of and was using said space in its business as a going concern. Consistent with this theory, it is contended by the government that the measure of defendant's compensation is only the fair rental value of such space in its naked form. In other words, according to the government's theory, and it was so argued before this court, the measure of compensation in a case of this character is the same whether the floor space taken be occupied or vacant. This theory, no doubt, is consistent with the use procured by the government, but not that which was taken from the defendant. In this connection, it must be kept in mind that it was defendant's use which was condemned and not merely a one-year part of its term lease. This is so even though defendant's interest in the property stemmed from the lease. It may also be noted that defendant had something more than the right to use, as would be the case where the property of a lessee was unoccupied. Here, the right to use had been exercised and such right was merged in the actual and physical possession of the property. The pertinency of this discussion resides in the fact that compensation is to be measured by the condemnee's loss, that of which he is deprived, and not by the taker's gain, that which he acquires. United States ex rel. and for Use of T. V. A. v. Powelson, 319 U.S. 266, 281, 63 S.Ct. 1047, 87 L.Ed. 1390; United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53, 76, 33 S. Ct. 667, 57 L.Ed. 1063.

We agree with the lower court's characterization of the government's theory as "hard law." We go further and express the view that it should not be accepted in the absence of definite and controlling authority. The government cites many cases in support of principles usually applicable in condemnation suits. None of them, however, are based upon the unusual facts of the instant case, with the possible exception of Gershon Bros. Co. v. United States, 5 Cir., 284 F. 849. It would unduly prolong our discussion to analyze and distinguish such cases. We shall refer to only a few of the more important. Much stress is placed upon the recent case of United States v. Miller et al., 317 U.S. 369, 63 S. Ct. 276. It is true the court in that case applied the generally accepted concept of market value. In doing so, however, it appears to have recognized cases requiring a different test. On page 373 of 317 U.S. page 280 of 63 S.Ct., the court stated:

"It is conceivable that an owner's indemnity should be measured in various ways depending upon the circumstances of each case and that no general formula should be used for the purpose."

The court also, on the same page of 317 U.S., on page 279 of 63 S.Ct., in discussing the "just compensation" clause of the Constitution, said:

"Such compensation means the full and perfect equivalent in money of the property taken. The owner is to be put in as good position pecuniarily as he would have occupied if his property had not been taken."

In support of this statement, a number of cases are cited in the footnote, including Seaboard Airline R. Co. v. United States, 261 U.S. 299, 43 S.Ct. 354, 67 L.Ed. 664, and United States v. New River Collieries Co., 262 U.S. 341, 43 S.Ct. 565, 67 L.Ed. 1014. In the latter case, the government requisitioned bituminous coal for use in the Navy. The court, in discussing just compensation, on page 345 of 262 U.S. on page 567 of 43 S.Ct., said:

"The owner was entitled to what it lost by the taking. That loss is measured by the money equivalent of the coal requisitioned. * * * The owner had a right to sell in that market (export market), and it is clear that it could have obtained the prices there prevailing for export coal. It was entitled to these prices."

In the Seaboard case, 261 U.S. at page 304, 43 S.Ct. at page 356, 67 L.Ed. 664, the court, in stating the same general rule, said it was based on "equitable principles" and added:

"He (condemnee) is entitled to the damages inflicted by the taking. Northern Pacific R. Co. v. North American Tel. Co., 8 Cir., 230 F. 347, 144 C.C.A. 489, L.R.A. 1916E, 572."

In the Northern Pacific case, the Telegraph Company sought to take from the Railway Company the right to use the latter's right of way for a telegraph line. The court, after determining that there was no market value for such lease or use of the Railway Company's right of way, on page 352 of 230 F., stated:

"Now, where real property about to be taken by condemnation has no market value, the amount of rent, or of income it has produced, and is producing, and is capable of producing, and the opinions of men who have had experience in dealing in it and have knowledge of its value, are competent and material evidence to determine what is just compensation for its taking; in other words, what damages will be inflicted by that taking?"

Other cases where the fair market value rule has been applied are those of Olson v. United States, 292 U.S. 246, 255, 54 S. Ct. 704, 78 L.Ed. 1236, and United States v. Meyer, 7 Cir., 113 F.2d 387, 397, both of which recognize that the condemnee is entitled to be put in as good position pecuniarily as if his property had not been taken. Cases are also cited wherein it has been held expenses incurred by an owner in moving his personal property or business from the premises condemned are not compensable. Joslin Mfg. Co. v. Providence, 262 U.S. 668, 675, 43 S.Ct. 684, 67 L.Ed. 1167; Potomac Elec. Power Co. v....