*1 UNITED TORONTO, STATES v. HAMILTON &
BUFFALO NAVIGATION CO. Argued No. 39. November 1949. Decided December *2 Sweeney Paul A. argued the cause for the United States. With him on the brief were Solicitor General Perlman Attorney Assistant General Morison. E. Dwyer argued respondent.
Gerald the cause for With him on the brief were Frederick L. Wheeler and C. Austin White. the Court. opinion delivered the
Mr. Justice Clark again We are faced with questions elusive valuation in determining whether States the United “just compensation” awarded under the Fifth Amend- respondent’s ferry, ment when it took the car the Mait- authority land No. of 902 under the of the Merchant § 1, Marine 1936, amended, 1254, 1255, Act of 53 Stat. 46 as requisitioned U. S. C. 1242. The Government § ves- 1942, fair In $72,500. sel determined its value as respondent option exercised its 75 1943, accept per action award, brought
cent of the $711,753 additional Court of Claims to recover compensation. Court, The necessary just amount fair value of held that judges dissenting, two Govern- $161,833.72, than twice the Maitland was 81 F. Cl. original determination. Ct. ment’s certiorari, 336 here on Supp. brought 237. We the case difficulty and presents problems it U. S. because general practical importance application in the just compensation. standard of They Claims. Court of The facts were found must some detail. be stated steel-hull, conventional, No. was The Maitland cars, built two-stacker, ferry for railroad twin-screw plied across Lake Erie 1916. Until she *3 Maitland, was Ashtabula, Ohio, Canada. She and Port route, principal her respondent’s only that and ship on Hamilton, a in Ontario. cargo coal for company was steel respondent’s connecting rail line side, On Canadian a in to destination Hamilton. But moved the coal a decline sharp Ontario caused convenient route Lake And in 1928. when respondent’s beginning traffic On- Lake and Lake “new Canal” between Erie Welland load opened larger ships and carried the tario was respondent to abandoned the directly Hamilton, line. up her dock From 1932 1935 Maitland was laid at in Ohio. 29, 1935, respondent ship
On November chartered the rate unspecified company ferrying freight at an across and for the of the Michigan, thereafter, Lake convenience con- parties, Michigan title was transferred to the Lake The transfer recited total consideration of cern. a “recapture” included clause. On $166,000 and De- pay- this and 15, 1937, right upon cember was exercised $92,894.80 Maitland wаs ment of returned to Ashta- requisitioned in lay August, where until 1942. bula she Cost, 2. value, book and scrap upkeep and earnings of Maitland. —The Maitland was built 1916 at a cost of $362,800. Respondent, a wholly subsidiary owned New York Central and Canadian Railways, Pacific ac- quired her from respondent’s own president year, that paying $394,560. From 1917 1930, respondent spent $38,115.46 for “additions and betterments to the vessel.” Repairs from 1922 to 1932 $20,329.11 amounted to per Lay-up expenses annum. from 1938 to 1942—there is no evidеnce for earlier years averaged $2,700 per year, — including repairs. It would have cost the Government $35,000 place some ship in operating condition Her insured valuation in 1942 $100,000; scrap was her $13,500. value We do not reproduction know the at cost time. Book value, figured at original cost less de- preciation per at one cent for years each of the first three and per four per cent annum for remaining period $75,509.51. was The earnings varied during years operated she by respondent. was annual average The operating net through income 31, 1920, December was $17,216.28; both 1921 1922 operations a deficit, found years while for the next profit five net at highest level, averaging $129,893.92 per annum. progressively
were years bad and the next two one- half years averaging $15,417.82 per year. showed losses In June 1932 poor the traffic was so the vessel was *4 docked operation and her never resumed. The Court of averаge Claims found that the annual profit net for the period operation, of in ending 1932, $42,816.36, entire was a amounting per of 10.41 annum per return cent on the original investment.
3. Sales other vessels like class on Great Lakes.— of of After 1930, ships of Maitland type were obsolete and not demand as railroad car on ferries the Great Lakes. Construction of the “outer belt” railroad around Chi- all- made and a rate differential
cago yards abolition of larger and mоre on transportation, rail or movement ferries, practical shippers. for modern a num- in 1942 “there But Court found that were a demand for for which of uses the vessel secondary ber Lakes. Con- that for on the Great did exist at time” use and eco- relatively simple was ferry to automobile version of similar three sales nomical; and the Court found that for use. The from 1936 to 1940 that vessels had occurred and $25,000 $65,000, but conversion prices ranged from and main- age repаir greater were because of costs of tenance record the vessels. plans from same
Two that built other vessels were Lakes for use on Great as Maitland were sold pulpwood. bulk for as carriers and conversion respectively. prices $24,000 $37,724.04, were Sale repair however, in the vessels, of these was state Neither the other One had been built of Maitland. on At- ferrying class car 4. Sales vessels like for “1942, a finding was that lantic Coast.—While there as the Maitland No. there was demand vessel such Cuba,” Florida and there ferry use a car itself in had reflected finding was no that this “demand” equipped was Lakes The Maitland not the Great market. “not have less operate in water and it would cost salt Florida, not her to $115,000 equip than” so to move for ocean service. necessary strengthening including would have been able respondent finding There is no Florida, nor transported had it vessel been to sell the operation possible. was there that successful predicated to have been The Florida seems “demand” 1941 and 1945. of four vessels between upon five sales Haven, sold while Only ship, the Grand was one was until ended Lakes, after hostilities Great than war. She smaller but faster in the last
401 Maitland, brought $50,000 and price. She was floated down Mississippi to the Gulf at ex- “considerable pense.” We know neither amount nor the amount this repairs. for needed
The other four sales very werе similar to the vessels Maitland, built 1920; but, between and unlike the Maitland, Grand Haven and the operat- these ferries were ing originally on the Atlantic coast and constructed were for ocean prices $100,000 travel. The sale were Henry M. $170,000 vessel, $332,- for one Flagler,1 for required each the two others.2 The latter two $20,000 about for All repairs. each three vessels were “purchased” by requisition. United States after
The Court of Claims, finding that “the con- “unique, peculiarly demned” was . . . situated” comparison Lakes, without relative on the Great con- the Maitland was worth cluded that than re- “the an ferry,” requiring sidual value of car thus resort obsolete conjunction “a in earnings , consideration of the ... in contemporaneous with transactions vessels of close a fair similarity determining value.” It called “the ferry” of an obsolete car average mean residual value Maitland,” $50,000; “attributing this value to the comparable an capitаlized value of annual income ending in 1932 of Maitland years sixteen to actuarial figure $389,767.15, “according per- deducted the tables The court then evidence.” of the vessel expectancy life centage difference of conversion to fresh and salt water the cost (20%), necessary sailing Florida, it to and the salt water and May party had there private 1941 to a who The first sale was repairs. sale was on spent $63,820 necessary The second after July 28, 1941, by Shipping Administration. requisition, the War Palma, were vessels, Joseph and the Estrada These R. Parrott June, Shipping Administration requisitioned the War *6 fair $161,833.72 the formula, this repairs. Under profitable use and most highest “for its available value taking.” at adaptable of its it the time for which was repeated than has been more that Perhaps warning no inex- of value cannot be reduced the determination say that the balance orable rules. Suffice to struck, has and the claimant’s loss been public’s need claimant the mone- cases, by awarding in most United property taken. See tary “market value” of Usually Miller, (1943). S. U. States v. approaches standard; usually that practical that ais Fifth Amendment. “just” compensation demanded may however, make times, peculiar At circumstances value.” There a “market impossible it determine prop- of similar been, example, for few sales may have so that predict any erty that we with assurance cannot in we repeated the sale prices would have been paid say We then that there postulate property taken. in But that question. “no is market” bearing hand the which the scattered put not out of does purchaser an would may on what ordinary sales have simply We must paid property.3 have claimant’s than weight less give sparse sales wary be we these into consideration “market” and take price, we accord which would other sales special those circumstances here And it is hypothetical buyer. our not have affected may have measuring rele- value that other means bearing prospec- as what course, only, vance —but paid. purchaser would have tive in this Claims that case the Court of agree We with sense discussed Lakes “market” no Great there was five sales of dissimilar ves hardly think that We above. might rulings in case if the affect our this which Considerations jury us here. need concern were tried to a cause sels require finding any one of varying prices would repeated have been had the Maitland been offered And for sale. agreement so we are basic with the court below that other measures of value be relevant.
But there are few of these substitute standards which are in fact of assistance assessing the value of the Maitland. Original cost is well termed the “false stand- past” where, here, present ard of the market value way reproduction no reflects that cost. So with cost, when no one think reproducing would the property.5 And past earnings significant only are they when tend to *7 reflect future returns.6 We see no relevance Maitland’s earnings between 1916 and 1932 on the issue capacity of 1942, to earn after on the Great or Lakes On they elsewhere. this record entirely are too remote to bear on the vessel’s value when taken. It follows that Court uрon of Claims’ earnings reliance was error.
We have said price that the absence of “market” does facto, not, ipso contemporaneous rid isolated sales of all relevance. None of the upon evidence which the findings below were based us, likely is before but it seems Schmalenbach, Finanzierungen, (3d
4 E. pp. ed., Leipzig, 1922), 4-6 quoted Bonbright, Property (1937). in 1 147, Valuation of n. 9 “It is property protected by and not the cost of it that is the Fifth Corp. States, 106, Amеndment.” Brooks-Scanlon v. United 265 U. S. (1924). Bonbright, supra, 123 see ch. But VIII. 5 Report Proceedings Advisory See 1 of the Board on Just Com (United pensation Commission, Shipping 170 States Maritime War 1943). Administration, mimeographed, Oil Co. v. Cf. Standard Hisko, Co., (1925); 54 Southern 146 The F. 2d 268 U. S. Pacific (1931). 540 6 (1936); Orgel, Domain, Valuation ch. XIV See Under Eminent (2d White, Nichols, 1917); 2 The I. C. Domain 446 ed. Eminent § 593, 595, (1924). separation which must be 295 F. 596 As to the made, any case, property and the value between the value of the Laundry Co. v. skill, see Kimball the claimant’s own business (1949). States, 1 United 338 U. S.
404 on ships sold the Maitland
the differences may be calcu- and 1942 1936 Lakes between Great And the circum- accuracy. degree lated with some Maitland’s of the the relevance indicate stances on Advisory Board 3, Rule See valuation. insurance 1444. But cf. 1443, A. M. C. Compensation, Just Comm’n, 293 Public Service C. & C. Co. v. Westmoreland of Pro- Report 867, (1928); 142 A. 326, 331, Pa. 152-153. pp. Advisory Board, supra, ceedings of the given to what weight to consider yet have We ques- “demand.” The Florida called the Court of Claims at may be considered all prices Florida tion is whether was taken when the Maitland determining value the Great Lakes. involving requisition Court, in this both
Two cases “private where the rule that have stated coal, price pre- market and there is a public use, is taken for taking, price place at the time vailing Col- v. New River United States just compensation.” is v. Coal Davis Newton lieries, (1923); 262 U. S. supplied.) (Emphasis Co., (1925). U. S. was no “market” in this case there held that We have is in terms quoted rule and so Lakes; on the Great market be es- a Florida inapplicable. But neither can *8 And have re- us. we evidence before tablished on the individual it consider minded the court below they bearing Lakes for what on the Great sales for use upon Maitland’s value. may have of readily in the salable it that valuation We take is, at taking nearest price at the market articles, thumb, rule of and case, practical usual least in the in the likely place the claimant is most one that occupied taking. before the Such pecuniary position he underlie a similar result seem to considerations damages. Thus, law of sales, general in the law of and (1874), Wall. 471 Phillips, v. 23 Tower Co. Grand
405
plaintiff
planned
had
to sell the defendant’s coal
at the best available market on
Mississippi
Cairo
New Orleans. Yet
the defendant’s breach
plaintiff
contract
to sell to
a “more
brought
direct”
measurement of damages:
the nearest available market.
See
v.
Co.,
Harris
Panama R.
But we do not think a similar
practical
rule
or fair in
requisition
of property which most owners
if
would,
possible, sell without geographic restriction.
doubt,
We
for example,
that owners of ocean' liners
under
would,
ordinary circumstances, fail
negotiate beyond
port
in which the
lay
vessels
or not ocean liners are
—whether
“goods”
subject
to the law of sales.7
markеt
Were
normal,8
conditions
hardly
we could
call an
“just
award
compensation” unless relevant foreign sales, in available
markets, were considered. See Supplementary
1
Rules
3, Advisory
Board on Just
1945
Compensation,
A.
1382, 1383;
Cabot,
C.
Glaspy v.
The question is of course one of degree, and we do not mean to foreclose the upon consideration of each case States, facts. Olson v. United 292 246, U. S. 255 (1934), upon relied below, makes this clear. This Court there statеd that the “highest profitable and most use for which the property adaptable is and needed or likely be needed the reasonably near future con- is be sidered, not necessarily as measure of value, but to the full prospect extent that of demand for such use
7 Co., See Rivara v. Stewart 259, 264, & N. Y. 149 N. E. K. B. 649. Cf. (Stamp But see (1925), per Cardozo, J.; Act). Report Meering Proceedings v. Duke, Behnke v. Bede 6 L. J. Advisory (o. s.) Shipping Board, (K. Co. B. [1927] note 1828) supra, pp. 64-71. *9 is privately value while the
affects the market had warned that the Mr. Justice Holmes held.” earlier far the may “only be so prospective use considered public it”; price the was not would have considered purchaser a at a date think a “what tribunal later be Sage, York v. give.” have been wise to New would (1915). U. S. before the of Claims was us,
On record Court weight to Florida values. according error in Whether profitable use or problem simply is one more price port, in a advantageous a more distant the burden likely pro- it a the claimant9 to show that is is on buyer investigated have spective Florida would the Great ship a like the Lakes market and considered Maitland Ohio or that or- dock; while it moored Lakes would dinary undergone Great owner have ship expense necessary trouble and send his to Florida possible sale; or, finally, pos- for a that either of these had on had price sibilities would have an effect the Mait- is question sold Lakes. And the land been on Great do, ordinary businessman the trade would what do; contrary he would rule not what owner claims perjury, invite and would smack kind would special ordi- value which would not be considered Phillips, nary purchaser. supra. Tower Co. v. See Grand reciting sales, A bare record five three to the United on use— States, but one the Great Lakes for Florida and that after the war’s end —does not meet the claimant’s question open burden. But we leave final for further not consideration below. We do mean foreclosе us, before finding, substantial evidence now probabilities were in Florida in 1942 sufficient there sale fixing to warrant of demand consideration there Powelson, rel. T. V. A. v. United States ex 319 U. S. (1943).
value of the may Maitland. We add that is Court clearly not bound accept any geographic price range to at full value. record, however, justifies
This neither of the valuation adopted measures judgment below. The reversed and is light the cause remanded proceedings further of opinion. this
It is so ordered. Douglas Mr. part took no the consideration Justice or decision of this case.
Mr. Justice Frankfurter, concurring. though join I opinion
Even the Court’s general direction, subject the treacherous nature of the matter a appropriate separate makes of statement views. to for ascertaining
Resort the conventional formulas just compensation property rarely bought for the of taking sold, having value, no recognized therefore market yield fruitful does results. The variables are too many permit judgment. to an anything except informed Everything, therefore, process judgment turns on that judgment to the end be not based on standards too application difficult of for solid or evidence too tenuous inference. appli-
It down duty lay is this Court’s standards cation the lower courts. But we concerned since are with values, ascertainment of rather elusive those whose primary it duty ought is make these estimates not to be cramped by If rigid rules are too and too artificial. questions presented particular Court in this case turn, here, do really they as relevance of data and reasonableness of the drawn from inferences them just in arriving compensation, training expe- at important. of the fact-finders rience become area within which jury If a is make the valuation large things may nature of roam at speculation Kimball narrowly possible. confined See be as should Co. States, But when Laundry v. United 338 U. S. the tribunal valuer is court and particularly fairly be attributed the judges to whom consists dealing with the expertness frequent that comes from it desirable for problems value, seems elusive freedom allow tribunal considerable this Court to such *11 determining in what data are hard and fast rules from from them. drawn significance and what be relevant in criteria, obviously wrong findings or baseless Barring with empiricism dealing proof, experience counsels sailing close problems. empiricism suggests And as these thus possible. Only a particular as to the record of case to distort pronouncements bound avoid abstract shall we case-by-case adjudicatory process by the or to distorted be of this nature. problems especially appropriate deci- be such formulas while lip-service paid Either will for- them, outside or in considerations sions are rooted will achieve fitting circumstances practical mulas not impractical results. the case before light general approach
In of this down to this: Court comes by Court computation starting point The for the to be awarded Govern- amount
of Claims of its of the Maitland capitalization was taking ment’s While do not have 1916 and 1932. we earnings between below, findings before the court evidence that was earnings between such no relation disclose reasonable tаking, year the value the vessel waters. in Florida Lakes or for the Great whether use springboard judg- such data to serve permit To specu- temptation for unbridled too much ment is to leave judges. experienced by lation even 2. In days these of quick both mobility persons and property it would be an rule unjustifiably artificial to confine the worth of mobile property, as was the Mait- land, place value. Of if course there was an active market for property to be condemned at about the time place taking, special evidence of demand for uses, or at places, other would helpful be in seeking general value of the property as against some unusual salability of the unusual property, either reason of location or as a matter of use. atypical Such evidence of demand should be excluded not logical because it has no relevance but practical because such significance as it is already has prices. reflected current market But here it found there was fact no market on the Maitland, Great Lakes for vessels like and, since what got the United States had to be translated into dollars cents, is no reason in there sense and therefore none in law for excluding from consideration that there was a demand for vessels such as the Maitland for use as car ferry between Florida and Cuba.
3. But such evidence critically must be It used. is one *12 thing to exclude such evidence of demand aat distant place to which the quite transferable and another to assume that finding a in 1942 there was proof such a demand is positive that would the Maitland have found market in Florida and base valuation on to assumption. such Particularly true when court is this below found that it would have cost at least to $115,000 transport the Maitland to Florida waters and to outfit it for salt-water use. The amount of this exрenditure is than the arithmetic of the difference measure value between vessel located Florida and one on a profitable Great The risk to Lakes. venture that $115,000 expenditure implies casts doubt on the likelihood of the Maitland’s use the Florida trade. For the opportunities of the impact the smaller
greater risk is that matter The market. short distant not should Court of Claims valuing task of difficult its of the Florida rejection or acceptance to be confined either it is toto. in the law problems Like most demand degree. a matter beyond indicating the go not should This Court Claims, by the adjudication Court
broad lines experi- appropriate to discretion to that court leaving the facts standards to the indicated applying ence in be fitted we have outlined must analysis it. The before therefore prepared I am not us.1 facts now before logically number of of law what specify as a matter claimant's burden. meet the do or do not relevant sales findings made additional Claims has After the Court of enough it will be time decision light this Court's in the are tenuous before it too the data consider whether forth from set them, inferences permit solid which the weight findings, regarding appropriate demand. to the Florida of Claims accord Court *13 The evidence this case could course have been included in brought May 22, 1939, the record here under the Act of 53 Stat. 752, amending (b) February Act 43 Stat. § 936, 939. 41 of this See also Rule Court.