Louisville Flying Service v. United States

• Decision Date: 20 July 1945
• Docket Number: 755.,No. 754,754
• Citation: 64 F. Supp. 938
• Parties: LOUISVILLE FLYING SERVICE, Inc., v. UNITED STATES (two cases).
• Court: U.S. District Court — Western District of Kentucky

64 F. Supp. 938

LOUISVILLE FLYING SERVICE, Inc., v. UNITED STATES (two cases).

Nos. 754, 755.

District Court, W. D. Kentucky, Louisville Division.

July 20, 1945.

E. J. Wells, of Louisville, Ky., for plaintiff.

Marvin C. Taylor, Atty., Dept. of Justice, and Rawlings Ragland, Acting Head, Claims Division, both of Washington, D. C., and David C. Walls, U. S. Atty., of Louisville, Ky., for defendant.

MILLER, District Judge.

These two actions, which were heard together by the Court without a jury, were filed by the plaintiff Louisville Flying Service, Inc., under the Act of October 16, 1941, 55 Stat. 742, Section 721, 50 U.S.C.A.Appendix, to recover compensation for two Stinson Aircraft which were taken over by the United States of America on May 13, 1943 for use in its war program. The parties were unable to agree upon the amount of compensation to be paid, and that issue is the only one involved in these actions.

Findings of Fact.

The plaintiff, Louisville Flying Service, Inc., is a Kentucky corporation with its principal office in Jefferson County, Kentucky. Prior to May 13, 1943 it had entered into a contract with the Department of Commerce Civil Aeronautics Corporation of Washington, D. C., to give flight instructions for the United States Army and was engaged in this work on that date. It owned among other assets one Stinson Aircraft, Model SR-9 B NC 17122, hereinafter referred to as plane No. 1, and one Stinson Aircraft model SR-9 CM NC 18435, hereinafter referred to as plane No. 2, both of which planes were being used by it in the course of instruction to students as required under its contract. On or about April 7, 1943 it was notified by the Defense Plant Corporation and the War Production Board that the two planes were needed for the defense of the United States, and that such need was immediate and impending and such as would not admit a delay or resort to any other source of supply. On May 13, 1943 the Defense Plant Corporation, acting under the authority of the Act of October 16, 1941 as amended and the Executive Orders issued thereunder, seized these planes for the use of the United States. An appraisal of the two planes was made at that time on behalf of the Government by P. S. Bloom, district maintenance supervisor, which appraisal gave to plane No. 1 a fair market value of $9,076.41, and to plane No. 2 a fair market value of $10,248.31. The planes were immediately removed from the premises of the plaintiff and sent to Rochester, Minnesota, where they were used for pilot training. In accordance with the provisions of the Act the plaintiff on or about May 29, 1943 filed its proof of claim with the requisitioning branch of the War Production Board, Washington, D. C., claiming that the fair and just compensation of the planes was $9,076.41 for plane No. 1 and $10,248.31 for plane No. 2.

Under date of July 6, 1943 the plaintiff was notified by the Washington office of the War Production Board that the appraisal value of plane No. 1 had been reduced from $9,076.41 to $7,171.42, and that the appraisal value of plane No. 2 had been reduced from $10,248.31 to $8,568.86. On October 6, 1943 the plaintiff was advised by the Acting Chief of the Requisitioning Branch of the War Production Board that the appraisal value of plane No. 1 was further reduced to the value of $6,621.11, and that the appraisal value of plane No. 2 was further reduced to the value of $8,115.57. The plaintiff notified the War Production Board that these appraisals of October 6, 1943 did not represent fair and just compensation for the property so seized, that it was not willing to accept said amounts as such compensation, but as provided by the Act it would accept 50% of such amount with the right to bring suit to determine the fair value of the planes so taken. Under date of January 18, 1944 the plaintiff was paid the sum of $3,310.56 for plane No. 1 and the sum of $4,057.79 for plane No. 2, being in each instance one-half of the last appraisal made by the War Production Board. These actions, with respect to plane No. 1 and plane No. 2, respectively, were thereafter instituted by the plaintiff, in which it claimed a fair market value of not less than $9,076.41 for plane No. 1 and a fair market value of not less than $10,248.31 for plane No. 2, subject to the credits for the amounts already received in each instance.

The war defense program of the Government included basic training of aviators for the Army and Navy which required the use of a large number of airplanes, many of which had to be obtained from private owners. The task of acquiring these necessary planes was assumed by the Civil Aeronautics Administration in conjunction with the War Production Board and the Defense Plant Corporation. The program contemplated the acquisition of the planes by voluntary purchase wherever possible and a resort to requisitioning under the Act of October 16, 1941 in those cases where the owners would not or could not sell their planes voluntarily. Because of the urgency of the training program the War Production Board on January 26, 1943 issued its General Limitation Order L-262 which provided that no single engine aircraft of 500 horse power or less should thereafter be sold except pursuant to specific authorization of the Director General for Operations. Under the authority of this Order representatives of the Army, Navy, War Production Board, Civil Aeronautics Administration and civilian owners worked out a formula for determining the fair market value of planes to be acquired. All clearances for sales thereafter were given on condition that the sale price would be determined by the application of the formula. The formula started the appraisal of the plane with the list price of the plane on October 1, 1941, although in many instances, including the purchase of the two planes herein involved, the purchaser obtained in a sale made prior to 1943 a dealer's discount of 20% or more. Extra equipment on the plane which was not included in the list price was appraised at its installed list price. Equipment which was added subsequent to the original purchase was classified as "special equipment" and was also appraised at its installed list price. The plane and extra equipment were depreciated from the date of manufacture to the date of appraisal. "Special Equipment" was depreciated from the date of its installation. The depreciated rate in all cases was 8% per annum. Good and customary flying practice required that airplane engines be completely overhauled at the end of each 500 hours of flying time. The formula set up brackets according to horsepower and adopted the known cost of overhauling within each bracket, and made a deduction from the appraisal figure of 1/500 of this amount for each hour of flying time since the last major overhauling. The formula also called for deduction for missing standard equipment included in the list price used in the appraisal, and the cost of the materials...