Pewee Coal Co. v. United States

• Citation: 88 F. Supp. 426
• Decision Date: 06 February 1950
• Docket Number: No. 46541.,46541.
• Parties: PEWEE COAL CO., Inc. v. UNITED STATES.
• Court: Court of Federal Claims

88 F. Supp. 426

PEWEE COAL CO., Inc. v. UNITED STATES.

No. 46541.

United States Court of Claims.

February 6, 1950.

Burr Tracy Ansell, Washington, D. C., for plaintiff.

Robert E. Mitchell, Washington, D. C., and H. G. Morison, Asst. Atty. Gen., for defendant.

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

WHITAKER, Judge.

Plaintiff, the operator of a coal mine, sues to recover its operating loss during the time the Government was in possession of its mine from May 1, 1943, to October 12, 1943.

When the Government took possession it appointed plaintiff's president as the Operating Manager of the business and instructed him to continue to operate the mine and to sell coal as theretofore, unless otherwise directed. Plaintiff continued operations without any interference on the part of the Government, except in one respect, to be mentioned later. Plaintiff determined the method of operation, determined whether to continue operations in this place or that, or to discontinue them altogether. Plaintiff sold its coal to whom it pleased and at whatever price it could get for it. It collected for coal sold and put the money in its own treasury.

It did all this without let or hindrance from the Government. It operated its business precisely as it had before the Government took possession of it, except in the one instance referred to above. However, it was at all times subject to Government control and direction.

Plaintiff says that at the Government's direction it continued operations beyond the time it believed it advisable to do so, but the proof does not support this contention. As the findings show, plaintiff made its own determination as to whether to continue or discontinue operations, and this without any direction from the defendant or even without any consultation with it.

The Government seized coal mines throughout the country, including plaintiff's, in an effort to end a strike of the United Mine Workers that threatened to seriously cripple our prosecution of the war. Notwithstanding the disastrous consequences of their action, the United Mine Workers could not be induced to work for the mine owners unless their demands were met, and the owners would not meet their demands. In this extremity the Government decided it would seize the mines, in the belief that while the miners would not work for the owners, they would work for the Government. Accordingly, the President issued an order on May 1, 1943, directing the Secretary of the Interior to take immediate possession of all mines in which there was a strike, insofar as this was necessary in the judgment of the Secretary. He was directed to take possession of "all real and personal property, franchises, rights, facilities, funds and other assets used in connection with the operation of such mines, and to operate or arrange for the operation of such mines in such manner as he deems necessary for the successful prosecution of the war. * * *"

In carrying out the order he was directed to act through "such public or private instrumentalities or persons as he may designate." It was further ordered: "He shall permit the management to continue its managerial functions to the maximum degree possible consistent with the aims of this order."

On the same day, the Secretary of the Interior issued an order taking possession of most of the mines, including plaintiff's. This order read in part:

"I * * * therefore take possession of each such mine including any and all real and personal property, franchises, rights, facilities, funds and other assets used in connection with the operation of such mine * * *.

"The president of each company (or its chief executive officer) specified in Appendix A attached hereto, is hereby and until further notice designated Operating Manager for the United States for such mine and is authorized and directed, subject to such supervision as I may prescribe, and in accordance with regulations to be promulgated by me, to operate such mine and to do all things necessary and appropriate for the operation of the mine, and for the distribution and sale of the product thereof.

"All the officers and employees of the company are serving the Government of the United States and shall proceed forthwith to perform their usual functions and duties in connection with the operation of the mine and the distribution and sale of the product thereof, and shall conduct themselves with full regard for their obligations to the Government of the United States.

* * * * * *

"The Operating Manager for the United States shall forthwith fly the flag of the United States upon the mining premises, post in a conspicuous place upon the premises on which such mine is located a notice of taking possession of the mine by the Secretary of the Interior, and furnish a copy of such notice to all persons in possession of funds and properties due and owing to the company."

By a subsequent order the Secretary of the Interior appointed 11 Regional Managers, who were given "full powers of supervision and direction of the operation of all coal mines in their territorial jurisdiction during the period in which possession has been taken and continues under the authority of the Executive Order." Where necessary, they were authorized "to issue * * * specific directions as to the production, sale and distribution of coal by the mines subject to their supervision, and as to all operating and financial arrangements of such mines." Paragraph 6 of this order read: "The Operating Managers for the United States appointed by me to operate the several mines, possession of which has been taken by me, as well as all other officers, mine workers and employees, shall serve on behalf of the United States, shall act in recognition of the resulting responsibilities and obligations, and shall be subject to the supervision and directions of the Regional Bituminous Coal Managers but shall not be officers or employees of the United States".

Plaintiff's president accepted appointment as Operating Manager, and, in accordance with the Secretary's direction, he took the following oath: "I solemnly undertake to serve the United States and devote myself to the task of producing coal so that the work of winning the war may not falter. I am flying the flag of the United States on the mining premises to show that property is being operated exclusively for the United States and that all employees, including myself, who serve the mine are serving their country. The mine I am operating for the United States is known as the Peewee Coal Company."

The Operating Manager was directed to proceed so far as practicable in accordance with previously prevailing policies, but he was directed to "set books up so as to keep separate the period of Government operation."

Upon receipt of the oath the Secretary issued to plaintiff's president a certificate of appointment as Operating Manager for the United States.

Paragraph 5, 6 and 7 of this certificate read as follows:

"(5) The Operating Manager, in respect to all ordinary transactions, shall proceed, so far as practicable, in accordance with the customary procedures and policies of the company previously operating the mines, and shall continue to discharge specific arrangements, contractual or otherwise, entered into by the company and to incur obligations and to enter into contracts.

"(6) The Operating Manager shall enter into such financial transactions, either by way of receipt or expenditure, as are necessary to the continuation of the operation as a going enterprise, utilizing for this purpose any or all funds or properties due or owing or belonging to the company previously operating the mines, and shall draw upon the funds and accounts of the company, utilizing customary sources of credit or funds, and make all necessary disbursements.

"(7) The Operating Manager shall inform banks, creditors, debtors, and other persons having funds or properties due and owing or belonging to the company previously operating the mine that the rights to the funds or properties are now in the possession of the Government of the United States and that the operation of the company's mines will until further notice be conducted for the Government."

But, while the defendant thus asserted the complete right to...