United States v. John J. Felin & Co.

Mr. Justice Reed, with whom Mr. Justice Black and Mr. Justice Murphy join,

concurring in the judgment.

I agree with the disposition of this case made by Justice Frankfurter’s opinion. However, I cannot concur in the reasoning by which that result is reached. That opinion holds that the respondent is not entitled to recover *643as “just compensation” anything in addition to the ceiling price unless it can “establish a loss based on its total operations during the period relevant to the slaughtering of the hogs from which the requisitioned products were processed” and “determine by reasonable allocations the portion of the loss properly attributable to the goods seized by the Government.” Why'a loss on total operations must be established in order to show the loss on the hog products requisitioned by the Government is not clear to me. It is the market value of any product that is the basis for “just compensation.” If there is no real market value, cost may be an element in the determination of value. Under the circumstances of this case, any other value than the ceiling price is illusory. Consequently I believe that whenever perishable property is taken for public use under controlled-market conditions, the constitutionally established maximum price is the only proper standard of “just compensation.”

Five members of this Court express their agreement that replacement cost, if relevant, has been properly found by the Court of Claims. If replacement cost, determined by any accounting system, is a factor, the evidence on which the Court of Claims based its findings of that cost is not before us, and therefore those findings cannot be properly regarded as unsatisfactory. Even if we assume that the evidence offered did not properly allocate costs, the Government raised no such issue by its petition for certiorari or in its brief. The record does show a finding of replacement cost based upon some evidence. In the absence of that evidence from the record, it must be assumed that it would support the findings. If we assume that replacement cost is relevant, to say that a manufacturer who proves that cost by the results of his own system of cost accounting may not retain his award because a more accurate accounting system exists, though not offered in evidence, disregards the salutary rule that *644litigants in civil matters must be allowed to frame their issues and prove their cases in trial courts as each desires. This principle includes the introduction of such relevant evidence as each wishes to introduce. Often proof of value or damages is difficult. Courts then reach conclusions from the relevant evidence presented. Palmer v. Connecticut Railway & Lighting Co., 311 U. S. 544; Bigelow v. RKO Radio Pictures, 327 U. S. 251. Findings are properly made on the basis of the relevant evidence heard and are not subject to attack because other available evidence might have been produced. The suggestion of Justice Frankfurter's opinion as to a better method for determining replacement cost is futile, since it furnishes a rule, rejected by the majority of this Court, for the Court of Claims to use in determining just compensation. The approval of the method of determining replacement cost used by the Court of Claims by a majority of this Court logically requires a decision on whether or not the ceiling price represents “just compensation.”

It may be assumed that the respondent cannot replace the requisitioned hog products at the ceiling price. If respondent was impelled to replace the requisitioned products in its stock, its reasons for so doing lay in the realm of business judgment. There was no legal compulsion. It acted to keep its line of goods complete, to serve its customers and to preserve its good will. Any additional cost to the respondent caused by replacing the products was a consequential damage for which compensation is not given in federal condemnation proceedings. United States v. Petty Motor Co., 327 U. S. 372, 378. See United States v. General Motors Corp., 323 U. S. 373, 382.

It has been long established that in a free market the market price is the proper criterion for determining “just compensation.” Olson v. United States, 292 U. S. 246, 255; Brooks-Scanlon Corp. v. United States, 265 U. S. *645106, 123. In Vogelstein & Co. v. United States, 262 U. S. 337, this Court held that the prevailing price in a controlled market was “just compensation.” The Vogelstein Company was a wholesaler of refined copper. Between September 28, 1917, and February 1, 1918, the United States requisitioned from the Company 12,542,857 pounds of copper for which it paid 23.5$ per pound. But this price was not the result of the interplay of supply and demand on a free and open market; it was a price fixed by an agreement made by the War Industries Board with copper producers and approved by the President on September 21, 1917. Vogelstein Company, although not a producer, had apparently cooperated with the producers in the establishment and maintenance of the 23.5$ price. The Company argued that it was entitled to 26.8$ per pound — the average cost to it of the copper requisitioned by the United States. This Court concluded that paying the fixed 23.50 was correct. “The market price was paid. The market value of the copper taken at the time it was taken measures the owner’s compensation.” 262 U. S. at 340. Consequently, the judgment of the Court of Claims dismissing the company’s petition was affirmed. This acceptance of the fixed price as the market value closely approaches the situation now presented.

It would be anomalous to hold that Congress can constitutionally require persons in the position of the respondent to sell their perishable property to the general public at a fixed price or not to sell to anyone1 and later to hold that the Government must pay a higher price than the general public where it requisitions the perishable property because of a replacement cost, greater than the fixed price. It is true that the United States by exercising its power of requisitioning compelled the respondent to *646sell to it; but the compulsion to sell to the general public at ceiling prices was hardly less severe. The choice was between sales at the fixed price or, at the best, economic hibernation and, at the worst, economic extinction. The two situations are so parallel that the constitutionally established maximum price may, under the circumstances here, be properly taken as the measure of “just compensation.” That lawfully fixed market price determines what the perishable article can be sold for or its market value in any real sense. It gives to the condemnee any profit for increased value in his hands and takes nothing from him that he could lawfully obtain since consequential damages for loss of good will cannot be obtained. Such maximum price is “just compensation.” 2

If the Government fixed prices with the predominant purpose of acquiring property affected by its order, a different situation would be presented. Here we have price regulation of meat products on a national scale with judicial review of those regulations. The Government sought for itself no unique opportunity to purchase.

The respondent, as Justice Frankfurter's opinion points out, filed several protests against the Maximum Price Regulations controlling the ceiling prices of hog products. These protests were rejected by the Administrator and review by the Emergency Court of Appeals was not sought. It was during the course of these proceedings that evidence of the profit and loss of the industry and of the replacement cost of pork products could properly be introduced. However, once the maximum price had been set and had not been set aside by direct attack, that price became the only relevant measure of just compensation. Whether normally admissible or not,3 the replacement cost of perishable articles then subject to price control, bought to maintain the good will of a business, *647cannot be an element in the determination of value to fix just compensation. Therefore, evidence of replacement cost in condemnation proceedings such as that before the Court today is irrelevant and should not be admitted.

See Yakus v. United States, 321 U. S. 414; Bowles v. Willingham, 321 U. S. 503.

Cf. Nortz v. United States, 294 U. S. 317, 328-29.

See Orgel, Valuation Under Eminent Domain (1936) 586.