De Laval Steam Turbine Co v. United States

• Decision Date: 23 November 1931
• Docket Number: No. 6,6
• Citation: 52 S.Ct. 78,284 U.S. 61,76 L.Ed. 168
• Parties: DE LAVAL STEAM TURBINE CO. v. UNITED STATES
• Court: U.S. Supreme Court

284 U.S. 61

52 S.Ct. 78

76 L.Ed. 168

DE LAVAL STEAM TURBINE CO.

v UNITED STATES.

No. 6.

Argued Oct. 16, 1931.

Decided Nov. 23, 1931.

Messrs. John Spalding Flannery, of Washington, D. C., and George C. Holton, of New York City, for petitioner.

[Argument of Counsel from pages 61-65 intentionally omitted] The Attorney General and Mr. Charles B.Rugg, Asst. Atty. Gen., for respondent.

[Argument of Counsel from pages 65-67 intentionally omitted] Mr. Justice SUTHERLAND delivered the opinion of the court.

Petitioner, a manufacturer of marine steam turbines, prior to January 12, 1918, had entered into thirteen written contracts with various firms and corporations for the manufacture of steam turbine propulsion units for ships. In the early part of 1918, after petitioner had commenced work under the contracts, the United States, acting through the Emergency Fleet Corporation, requisitioned these contracts, and advised the parties that it would make just compensation for the turbine equipment which the petitioner was required to complete, and that the Emergency Fleet Corporation would assume the responsibility of the contracts, and make payment to petitioner.

The present controversy concerns three of these contracts (the other ten having been fully performed), the first for the construction of four marine turbine sets at the contract price of $150,000, the second for the construction of ten marine turbine sets at the contract price of $735,000, and the third for the construction of four marine turbine sets at the contract price of $216,000. Petitioner continued to perform its obligations under these contracts as directed by the Fleet Corporation, for about a year, at which time, following the signing of the Armistice, it became necessary in the public interest to suspend op- erations under the contracts; and upon the several orders of the Fleet Corporation, petitioner suspended operations, stored the materials on hand, which had been assembled for the performance of the contracts, until January 14, 1920, when, by agreement, they were released from the effect of the requisition, and were taken over by petitioner at an agreed salvage value.

The Fleet Corporation awarded compensation to petitioner, but the latter thought the award insufficient and sought by this suit in the Court of Claims to have the amount of just compensation determined. The Court of Claims gave judgment in favor of petitioner for its actual costs and expenditures over the cash payments received, amounting to $116,231.66, together with $30,000 damages for extraordinary expenses resulting from the stopping of work, and $15,000 for expenses and rental incident to the storing of materials during the period after the order to stop work. From the total of these items, certain deductions, including a payment by the Fleet Corporation of 75 per cent. of the amount which it had awarded, were made, resulting in an award of $84,074.34, with interest thereon from August 17, 1920. To this award the court added $8,500, with interest from March 17, 1919, as the value of the three contracts at the time of their cancellation, and the loss sustained by the petitioner by reason thereof. According to the findings, the petitioner, if it had been allowed to complete the performance of the three contracts, would have realized a profit of over $300,000. But the court below declined to include any amount for anticipated profits. 70 Ct. Cl. 51.

The sole question presented for our determination is whether petitioner was entitled to an allowance of the amount, or any part of the amount, of these anticipated profits as a part of the just compensation.

In Russell Motor Car Co. v. United States, 261 U. S. 514, 43 S. Ct. 428, 67 L. Ed. 778, the contract involved had been made directly with the government for the manufacture of certain war supplies. Following the Armistice, and while the contract was in process of being performed, the Secretary of the Navy directed its cancellation. Suit was brought in the Court of Claims to recover just compensation. That court found that if the manufacturer had been permitted to complete the contract according to its terms, a very large amount would have been earned as profits, but refused to include in its award any part of these anticipated profits. We affirmed this determination and held that the statute (Act June 15, 1917, § 1, 40 Stat. 182) which empowered the President '(b) To modify, suspend, cancel, or requisition any existing or future contract for the building, production, or purchase of ships or material,' applied to the government's own contracts as well as to private contracts, and that just compensation for the cancellation of such contracts should include 'the value of the contract at the time of its cancellation, not what it would have produced by way of profits for the Car Company, if it had been fully performed.'

A distinction is sought to be drawn between the Russell Motor Car Company Case and the present case, on the ground that there the contract was made directly with the government, and here they were made between private parties. The question, therefore, is whether this circumstance alters the rule in respect of just compensation. In determining that question, the cardinal point to be borne in mind is that whether the contract requisitioned or canceled be one with the government or one between private individuals, the person whose property rights are taken or destroyed is entitled to receive just compensation, not damages as for a breach. A sufficient ground for the distinction lies in the fact that in the one case the requisition or cancellation is a lawful act under the power of eminent domain, while in the other the act constituting the breach is unlawful.

In the present case, the government requisitioned the purchasers' rights in the contracts, not for the purpose of putting an end to the...