United States v. Point Hotel Co

• Decision Date: 20 January 1947
• Docket Number: No. 106,THAYER-WEST,106
• Parties: UNITED STATES v. POINT HOTEL CO
• Court: U.S. Supreme Court

329 U.S. 585

67 S.Ct. 398

91 L.Ed. 521

UNITED STATES

v THAYER-WEST POINT HOTEL CO.

No. 106.

Argued Dec. 20, 1946.

Decided Jan. 20, 1947.

Mr.

Oscar H. Davis, of Washington, D.C., for petitioner.

Mr.E. J. Ellenwood, of New York City, for respondent.

Mr. Justice MURPHY delivered the opinion of the Court.

The decision here turns upon the power of the Court of Claims, in light of § 177(a) of the Judicial Code,¹ to include interest in its award of 'just compensation' to a lessee for the construction of a hotel and other buildings pursuant to the provisions of the Act of March 30, 1920.²

The act of March 30, 1920, authorizes the Secretary of War to lease land on the United States Military Reservation at West Point, N.Y., to any person for a term not exceeding 50 years upon which to erect a hotel and other necessary buildings in connection therewith. The lease is to contain such conditions, terms, reservations and covenants as may be agreed upon and is to provide 'for just compensation to the lessees for the construction of said hotel, appurtenances, and equipments, to be paid to said lessees at the termination of said lease.'

On October 17, 1924, the Secretary of War duly made a lease under this Act to one Williams for a period of 50 years. The lease provided, among other things, that it might be cancelled at any time by the Secretary if the lessee should fail to observe all the covenants and conditions in the lease. One of the covenants was that the lessee was to 'keep the said hotel open for business every day during the continuance of this lease, except at such times as permission to close may be given in writing by the Superintendent, U.S.M.A.' Upon a cancellation of the lease, 'just compensation' was to be paid to the lessee for the construction of the hotel, appurtenances and equipment, and title thereto was to pass at once to the United States. Similar provisions were made in connection with the termination of the lease on the expiration of the 50-year term. The lease also set forth numerous restrictions and requirements as to the operation of the hotel—such restrictions and requirements being primarily for the benefit of the Military Academy.

The lease was assigned to a corporation and a hotel and other buildings were subsequently erected. Through a series of events which need not be detailed here, the respondent took over the leasehold and the hotel properties in 1930 with the approval of the Superintendent of the Military Academy. Respondent began operating the hotel on January 1, 1931, and continued under the terms of the lease until March 10, 1943.

On January 5, 1943, respondent wrote to the Secretary of War that conditions then existing made continued operation of the hotel impossible and that to avoid a curtailment of operations or a closing down of the hotel 'the properties should be owned and operated by the Government.' It was accordingly suggested that the Secretary declare the lease forfeited upon the closing of the hotel by respondent, a default contemplated by the lease. The Secretary agreed to this proposal. The respondent then gave notice of its intention to close the hotel on the morning of March 10, 1943. The agents of the Secretary immediately took over the possession, management and operation of the hotel on March 10 and shortly thereafter the Secretary declared the lease annulled.

The parties were unable to agree on the amount of 'just compensation' due under the lease. Respondent then brought this suit in the Court of Claims, praying for a judgment in the sum of $1,932.000. That court found that the 'total of just compensation to the plaintiff for construction of the hotel, its appurtenances, and equipments, is therefore $867,682, as of March 10, 1943.' 64 F.Supp. 565, 568. The court then added interest at the rate of 4% per annum from March 10, 1943, to the date of payment as 'additional allowance to make compensation a just one as of the date of payment.' The sole question before us concerns the propriety of adding the 4% interest from March 10, 1943.

The pertinent part of § 177(a) of the Judicial Code provides that 'No interest shall be allowed on any claim up to the time of the rendition of judgment by the Court of Claims, unless upon a contract expressly stipulating for the phyment of interest, * * *.' Section 177(a) thus embodies the traditional rule that interest cannot be recovered against the United States upon unpaid accounts or claims in the absence of an express provision to the contrary in a relevant statute or contract. Tillson v. United States, 100 U.S. 43, 47, 25 L.Ed. 543; United States v. North American Transportation & Trading Co., 253 U.S. 30, 336, 40 S.Ct. 518, 521, 64 L.Ed. 935; United States v. Goltra, 312 U.S. 203, 207, 61 S.Ct. 487, 490, 85 L.Ed. 776. This rule is inapplicable, however, where the United States takes property under its power of eminent domain; in such cases it has consistently been held that the Fifth Amendment's reference to 'just compensation' entitles the property owner to receive interest from the date of the taking to the date of payment as a part of his just compensation. Seaboard Air Line Ry. Co. v. United States, 261 U.S. 299, 306, 43 S.Ct. 354, 356, 67 L.Ed. 664; Brooks-Scanlon Corporation v. United States, 265 U.S. 106, 123, 44 S.Ct. 471, 474, 68 L.Ed. 934; Phelps v. United States, 274 U.S. 341, 344, 47 S.Ct. 611, 612, 71 L.Ed. 1083.

Since it is clear in the instant case that the United States did not exercise its power of eminent domain and that there was no taking of the hotel properties in the legal sense, we can put to one side the eminent domain situation. There is nothing more here than an ordinary contractual relationship between the United States and the respondent. That relationship was voluntarily entered into by respondent's predecessor and was severed at respondent's suggestion. The Government's liability to pay for the construction of the hotel properties was fixed by the Act of March 30, 1920,...