275 F. 855 | S.D.N.Y. | 1921
This case is brought under section 10 of the so-called Lever Act (Comp. St. 1918, Comp. St. Ann. Supp. 1919, § 31151/sii) to recover such sum as, added to 75 per cent, of the award made by the President, will constitute “just compensation” for 20,000 bags of Santos and Guatemala coffee commandeered by the Navy Department in November, 1918. For the purpose of this proceeding it is agreed that the coffee weighed 2,737,064 pounds, and consisted one-half of Santos and one-half of washed Guatemala of certain grades.
Section 10 of the act, supra, provided:
“That the President is authorized, from time to time, to requisition foods, feeds, fuels, and other supplies necessary to the support of the army or the maintenance of the navy, or any other public use connected with the common defense, and to requisition, or otherwise provide, storage facilities for such supplies; and he shall ascertain and pay a just compensation therefor. If the compensation so determined be not satisfactory to the person entitled to receive the same, such person shall be paid seventy-five per centum of the amount so determined by the President, and shall he entitled to sue the*857 United States to recover such further sum as, added to said seventy dive per centum will make up such amount as will be just compensation for such necessaries or storage space, and jurisdiction is hereby conferred on the United States District Courts to hear and determine all _ such controversies. * * * ”
The two main questions here presented are: (1) Whether plaintiff ran maintain this action as “the person entitled to receive” compensation; and (2) what is “just compensation”?
On November 21, 1918, the navy commandeered the coffee. On February 17, 1919, the government awarded the sum of $423,536.69 at the price of 15.29 cents per pound f. o. b. warehouse as compensation for the coffee. On July 5, 1919, the Bank notifie'd the government that the award was not satisfactory. The government on August 26, 1919, paid 75 per cent thereof—i. e., $313,356.77—to the hank; the debit balance in favor of the Bank being at that time $94,763.61. This debit balance was wiped out by the payment aforesaid, and on September 19, 1919, when this action was commenced, there was nothing due. the hank.
At the outset, it may be stated that the evidence clearly leads to the conclusion that the coffee was seized and that the award was made under the so-called Never Act, and not under other provisions of law. At. the time when the coffee was purchased by the Russian Company, the provisions of the Fever Act and the rules and regulations of the United States Food Administration had not been extended to coffee. On January 30, 1918, however, the President placed green coffee on the conservation list by a proclamation which read in part as follows (40 Stat. pt. 2, p. 1742) ;
“All persons, firms, corporations, and associations engaged in the business of importing or distributing green coffee are hereby required to procure a license on or before February 4, 1918.”
Clearly the Bank was not then engaged in the business either of importing or distributing coffee, and neither the proclamation nor the rules applied to it, and the Russian Company was not then engaged in the business of importing coffee. But it is claimed that the Russian ('ompany was engaged in the business of distributing. The coffee was purchased for export, and, had it been attempted to export the same,
No attempt was ever made either by the Bank or the Russian Company to distribute the coffee here. The Bolsheviki had cut off Archangel from the rest of Russia in April, 1918, and the Allies did not drive them out until August, 1918. Later, únder the Tchajkowsky government, one Danischewski, who was the managing director of the Russian Company, became a member of the Supply Committee of the Northern Region government, whose object was to supply Northern Russia with all kinds of food. He then sought to send the coffee and other food supplies to Archangel.
The coffee was intended for the use of the Northern District, under the control of the Archangel government. A large part of it was sold to the Northern Region Supply Company, which was organized by and under the control of that government. Danischewski was not in the United States between February and December, 1918. He was sent to the United States by the Supply Committee of the Northern Region Government, but he did not arrive here until March, 1919. Until his arrival here he had no knowledge of the American regulations in regard to dealing in coffee. He never made any contract to sell the coffee in America, and made no effort to do so until after he had heard that it had been commandeered by the government. The futile efforts of the Russian Company, per Danischewski, to supply coffee in Northern Russia, took the form of sales made there, and not here, in June, July, and September, 1918.
The proclamation of the President, supra, and the rules made thereunder, cannot be strained to cover attempted distribution in Russia by sales made in Russia, when there was no exporting, and hence no need for a license to export, and when the Russian Company was neither engaged in importing coffee here ñor distributing it here. This disposes, inter alia, of the contention that the Bank or. the Russian Company was hoarding, contrary to rule 5, because that rule applied only to licensees, and neither the Bank nor the Russian Company was required to be a licensee under the President’s proclamation.
It thus appears that on November 21, 1918, when the Navy Board commandeered this coffee, as it had the right to do, the Bank had the legal title to the coffee, and had its lien thereon, and' was holding the coffee lawfully, and that the Russian Company’s beneficial interest was lawfully held. At any time up to August 26, 1919, when the government paid 75 per cent, of the award, the Bank was clearly the “person entitled to receive compensation,” and was so recognized by the government. When the Bank received that compensation, it became a-trustee to pay over to the rightful owners the balance after retaining the amount due it. But its duty did not end there.
The warehouse receipts had all issued to the order of the Bank and were negotiable; hence they gave to the Bank the legal title to the coffee. New York General Business Law (Consol. Laws, c. 20) § 125. This section, which is a provision of the Uniform Warehouse Law, contains the following:
*859 “A person to whom a negotiable receipt lias been duly negotiated acquires thereby:
"(a) Such title to the goods as the person negotiating the receipt to him had or had ability to convey to a purchaser in good faith for value, and also such title to the goods as the depositor or person to whose order the goods were to be delivered by the terms of the receipt had or had ability to convey to a purchaser in good faith for value.”
In this case, the Bank itself, acting, however, for account ^ of the owners, was the depositor of the goods. Its act in depositing the goods in the warehouse was the act of the owners, who were, accordingly, under the provision of this section, the depositors of the coffee and had full power to convey the title to it. The Bank, under this section, had, by virtue of holding the negotiable warehouse receipts, the title to the coffee, in trust, however, for the owners.
The Bank still held the legal title after its advances had been paid, by virtue of the negotiable warehouse receipts; and it was still a trustee, and, as such, entitled to maintain the action. As trustee it could not stand by and see the property of its principals taken, even by authority of law, and yet make no effort to enforce the remedy accorded by the Lever Act to it as the “person entitled to receive the compensation,” Indeed, the attitude of the Bank has been commendable, and has evidenced appreciation of its duty; for the owners were in Russia, and in all the circumstances were unable to protect their rights.
It is plain that the owners, by their course of conduct, had made the Bank their trustee, and that the Bank still remains the trustee, and the government need have no fear that it will be subjected to a double recovery. The attempted sales in Russia in no manner changed the legal status of the Bank, and, for that matter, the legal effect of those sales is not disclosed by the evidence, and whether or not the vendees have title, as we understand that term, has obviously not been shown. It is held, therefore, that the Bank is the proper claimant or party plaintiff.
“The owner must be compensated for what is taken from him, but that is done when he is paid its fair market value for all available uses and purposes.”
Not only is market value the measure of just compensation, but it must be the value in a free market. Prices prevailing in a market which is not free are not the measure of just compensation. Muser v. Magone, 155 U. S. 240, 15 Sup. Ct. 77, 39 L. Ed. 135; Lawrence v. Boston, 119 Mass. 126; Lovejoy v. Michels, 88 Mich. 15, 49 N. W. 901, 13 L. R. A. 770.
It is well settled that a persbn whose property is taken is entitled to its market value for the most valuable use, although as matter of fact he did not devote it to that use, and for some reason or other could not do so. In such case, however, he would be free to sell it to-a person who could so use it. Matter of Gilroy, 85 Hun. 424-427, 32 N. Y. Supp. 891; Boom Co. v. Patterson, 98 U. S. 403, 409, 25 L. Ed. 206; Goodin v. Cincinnati, etc., Canal Co., 18 Ohio St. 169, 181, 98 Am. Dec. 95; Little Rock Junction Ry. Co. v. Woodruff, 49 Ark. 381-393, 5 S. W. 792, 4 Am. St. Rep. 51; San Diego, etc., Co. v. Neale, 78 Cal. 63, 68, 73, 20 Pac. 372, 3 L. R. A. 83.
The preamble of the Lever Act provided:
“That by reason of the existence of a state of war, it is essential to the-national security and, defense, for the successful prosecution of the war, and for the support and maintenance of the army and navy, to assure an adequate supply and equitable distribution, and to facilitate the movement, of foods, * * * hereafter in the act called necessaries; to prevent, locally or generally, scarcity, monopolization, boarding, injurious speculation, manipulations, and private controls, affecting such supply, distribution and movement; and' to establsh and maintain governmental control of such necessaries during the war. * * * The President is authorized to make such regulations and to*861 issue such orders as are essential effectively to carry out the provisions of this act.”
To carry out the purposes of the act, the President could make regulations in the way, inter alia, of fixing prices in ordinary trading or commercial transactions; but when the United States itself took foods —i. e., property—it was bound to award just compensation, and what is just compensation under the Constitution is determined by the same legal principles in war as in peace. Adopting the principles stated supra, the testimony shows clearly that there was a free market; not, it is true, a large or comprehensive market, but nevertheless a substantial trading sufficient to characterize a free market.
The Bank produced experienced coffee men, probably the best informed in this trade in respect of the prices of the coffee here under consideration. It is unnecessary to review their testimony in detail, because the data are clearly established. To award only cost plus 5 per cent, profit, as contended by the government, would not bé just compensation, constitutionally considered. In all litigations like this, principle must never be departed from. In the long run, the Constitution remains a safe guide, although worthy sentimental considerations, at times, offer temptations to go astray.
The prices, as matter of law, must be ascertained as of the free market of November, 1918. The exact figure to a cent is difficult of ascertainment; but, on the evidence, the market value of the coffee is found to be as follows; Santos, averaging prime, 20 cents; washed Guatemala, averaging prime, 20% cents. Counsel will make the necessary calculations to work out the exact figures, and judgment will be ordered accordingly.
Submit on five days’ notice.
30 Sup. Ct. 25, 60 L. Ed. 143.