PEWEE COAL COMPANY v. United States

• Citation: 142 Ct. Cl. 796,161 F. Supp. 952
• Decision Date: 04 June 1958
• Docket Number: 50140.,No. 49351,49351
• Parties: PEWEE COAL COMPANY, Incorporated, v. UNITED STATES.
• Court: U.S. Claims Court

161 F. Supp. 952

142 Ct. Cl. 796

PEWEE COAL COMPANY, Incorporated, v. UNITED STATES.

Nos. 49351, 50140.

United States Court of Claims.

June 4, 1958.

Lewis W. Evans, Washington, D. C., for plaintiff. Samuel T. Ansell, Jr., and Ansell & Ansell, Washington, D. C., were on the brief.

William A. Stern, II, Washington, D. C., with whom was Asst. Atty. Gen. George Cochran Doub, for defendant.

PER CURIAM.

The Trial Commissioner, Mastin G. White, to whom these cases were referred, has submitted an opinion in support of his recommendation for the conclusion of law to be entered in these cases, which, in the main, we adopt as the opinion of the court. His opinion, as amended by us, follows:

These cases arose under the clause in the Fifth Amendment to the Constitution of the United States which provides as follows:

"* * * nor shall private property be taken for public use, without just compensation."

A joint trial was conducted with the consent of the parties.

The plaintiff has been engaged in the business of mining and marketing bituminous coal for a number of years. In carrying on this business, it is the lessee of approximately 1,465 acres of coalbearing lands located in a mountainous section of Campbell County, Tennessee. The leased area consists of three tracts of land. Two of the tracts, aggregating approximately 1,149 acres, are owned by the Coal Creek Mining & Manufacturing Company. The third tract, which is situated between the other two tracts and adjoins each of them, includes approximately 316 acres and is owned by the East Tennessee Iron & Coal Company.

The three tracts of land mentioned in the preceding paragraph are held by the plaintiff under a lease which the land-owners jointly issued to the plaintiff on November 28, 1939. The lease is for a term of 40 years, and it grants the plaintiff an option to renew it for an additional period of 30 years upon the expiration of the primary 40-year term. Under the lease, the plaintiff has the exclusive right to mine coal from the seams lying above a specified depth in the leased lands. The plaintiff is required by the lease to pay the lessors a royalty of 10 cents per ton on the coal produced under the lease, payment on a minimum production of 100,000 tons per year being guaranteed. The lease prohibits the plaintiff from assigning or transferring it, or from subletting the leased property, without the written consent of both lessors.

The plaintiff opened a coal mine on the leased lands, and began the production of coal from the mine in January 1941. Although the quality, quantity, and availability of the coal made the plaintiff's leasehold potentially valuable, the plaintiff's mining operations were conducted at a financial loss each year down to and including the year 1949 (that being the last year as to which there is evidence in the record concerning the plaintiff's profit or loss experience). These losses were due principally to inadequate equipment and other causes.

On November 1, 1943, on April 10, 1945, and again on May 22, 1946, there were widespread labor difficulties and strikes at the bituminous coal mines of the country. The plaintiff's mine was among those affected by the strikes and resulting work stoppages, which, in the first two instances, threatened the national security (as the Nation was then engaged in the prosecution of World War II) and, in the third instance, threatened the national economy during the period of postwar conversion from war to peace.

On each of the dates mentioned in the preceding paragraph, the President issued an Executive order authorizing and directing the Secretary of the Interior to take "possession" of any and all coal mines affected by the strikes and to operate or arrange for the operation of such mines. Each Executive order declared (among other things) that the Secretary should permit the existing managers of the mines to continue their "managerial functions to the maximum degree possible consistent with the aims of this order". Executive Order 9393 (8 F.R. 14877), U.S.Code Cong.Service 1943, p. 5.90; Executive Order 9536 (10 F.R. 3939), U.S.Code Cong.Service 1945, p. 1227; Executive Order 9728 (11 F.R. 5593), U.S.Code Cong.Service 1946, p. 1803.

The Secretary of the Interior took action under each of the Executive orders mentioned above by issuing on the same day an order declaring (among other things) that "I * * * take possession of each and all of such coal mines", that "The President of each of the mining companies * * * is hereby, and until further notice, designated operating manager for the United States for each" mine affected by the order, and that "As operating manager for the United States, he is authorized and directed * * * to do all things necessary and appropriate for the operation of such mines and for the production, distribution and sale of their products". Order No. 1888 (8 F.R. 15199); Order No. 2044 (10 F.R. 3983); Order No. 2200 (11 F.R. 5603).

The plaintiff's mine was one of those covered by the Secretarial orders referred to above. Possession (in a technical sense) of the plaintiff's mine under the first of these orders continued from November 1, 1943 until June 21, 1944, inclusive; possession under the second order continued from April 10, 1945 until June 13, 1945, inclusive; and possession under the third order continued from May 22, 1946 until June 30, 1947, inclusive.

Because of the actions of the Government in taking possession of the plaintiff's mine on the occasions mentioned above, the strikes and work stoppages which had previously existed at the plaintiff's mine came to an end, and mining operations were conducted at the mine during the periods of possession by the Government under the several Secretarial orders (except that the mine was shut down for approximately five months during the third period because of a fire).

As provided in the respective Executive and Secretarial orders, the plaintiff's president acted as operating manager of the plaintiff's mine for the United States during the three periods with which we are concerned. Except for directives from the Government requiring that the flag of the United States be flown at the mine, that a notice relative to Government possession be displayed conspicuously at the mine, and that certain additional "fringe" benefits be provided for the plaintiff's employees during the first and third periods, the Government left the plaintiff's president free, generally speaking, to exercise his discretion in the conduct of the plaintiff's affairs during the periods of Government possession of the mine.

The additional "fringe" benefits which the plaintiff was required by the Government to provide for its employees increased the plaintiff's costs in the amount of $1,080 during the first period of Government possession, and in the amount of $3,065.48 during the third period of Government possession, or in the total amount of $4,145.48.

The plaintiff's consistent history of financial losses continued during the three periods of Government possession of the plaintiff's mine that are involved in the present litigation. During the period November 1, 1943-June 21, 1944, the plaintiff suffered a net financial loss in the amount of $4,365.14. The plaintiff's net loss amounted to $3,077.14 during the period April 10, 1945-June 13, 1945. Finally, the plaintiff suffered a net financial loss of $64,298.02 during the period May 22, 1946-June 30, 1947. (As previously stated, the mine was shut down for approximately five months during the third period because of a fire.) Therefore, the plaintiff's aggregate loss during the three periods with which we are concerned amounted to $71,740.30.

There are two cases before the court. In case No. 49351, the plaintiff seeks a judgment with respect to the period November 1, 1943-June 21, 1944. Case No. 50140 covers the periods April 10, 1945-June 13, 1945 and May 22, 1946-June 30, 1947.

It is settled law that a leasehold is "property" and, accordingly, that if realty under lease is taken by the Government for public use, just compensation must be paid to the leaseholder. United States v. Petty Motor Co., 1946, 327 U.S. 372, 66 S.Ct. 596, 90 L.Ed. 729.

Moreover, it is plain that the degree of control which the Government exercised or could have exercised over the plaintiff's mine during the three periods with which we are concerned amounted to a "taking" of the plaintiff's mine for public use. With regard to this point, the facts in the two present cases are similar in all substantial respects to the facts in the earlier case of Pewee Coal Co., Inc., v. United States, 1950, 88 F.Supp. 426, 115 Ct.Cl. 626, affirmed 1951, 341 U.S. 114, 71 S.Ct. 670, 95 L.Ed. 809. The several cases merely involve different periods during which the Government was in possession (at least technically) of the plaintiff's mine for the purpose of ending strikes and restoring the production of coal in the national interest. Therefore, the unanimous view of the members of the Supreme Court in the first Pewee case, 341 U.S. at pages 115, 119, 121, 71 S.Ct. at pages 671, 672, 674, that there had been a "taking" of the plaintiff's mine for the period that was involved in that case (May 1-October 12, 1943) is determinative of the question whether there was a "taking" of the plaintiff's mine for the subsequent periods that are involved in the present litigation.

That leaves for determination in the present cases the problem of "just compensation".

In the absence of any definition of "just compensation" in the Constitution, the courts have adopted and applied the principle that just compensation is the value of the interest taken. The term "value" is ordinarily used in the sense of "market value" or "fair market value", i. e., "market value fairly determined". United States v. Miller, 1943, 317 U.S. 369, 374, 63 S.Ct. 276, 280, 87 L.Ed. 336; General Motors Corporation v. United States, 1945, 323 U.S. 373, 379, 65 S.Ct. 357, 89...