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OMNIA COMMERCIAL COMPANY v. UNITED STATES.

decided: April 9, 1923.

OMNIA COMMERCIAL COMPANY, INC
v.
UNITED STATES.



APPEAL FROM THE COURT OF CLAIMS.

Author: Sutherland

[ 261 U.S. Page 507]

 MR. JUSTICE SUTHERLAND delivered the opinion of the Court.

The appellant, on May 19, 1917, by assignment, became the owner of a contract, by which it acquired the right to purchase a large quantity of steel plate from the Allegheny Steel Company, of Pittsburgh, at a price under the market. The contract was of great value and if carried out would have produced large profits.

In October, 1917, before any deliveries had been made, the United States Government requisitioned the Steel Company's entire production of steel plate for the year 1918, and directed that company not to comply with the terms of appellant's contract, declaring that if an attempt was made to do so the entire plant of the Steel Company would be taken over and operated for the public use.

Appellant brought an action in the Court of Claims alleging, in addition to the foregoing, that by the orders

[ 261 U.S. Page 508]

     of the Government the performance of the contract by the Steel Company had been rendered unlawful and impossible; that the effect was to take for the public use appellant's right of priority to the steel plate expected to be produced by the Steel Company and thereby appropriate for public use appellant's property in the contract. As a result it alleged that it had incurred losses in a large sum which it sought to recover, as just compensation, by virtue of Article V of the Constitution. To this petition the United States interposed a demurrer, which was sustained and the petition dismissed. From this judgment the case comes here by appeal.

A question is raised as to the statutory authority of the officer, who made the order of requisition and gave the directions respecting non-compliance with the contract, to bind the Government, but, for the purposes of the case, we assume he was authorized, as he could have been under 39 Stat. 1193, c. 180; or 40 Stat. 182-183, c. 29. We also pass, without deciding, a contention challenging the sufficiency of the complaint and come to the case on the merits.

The contract in question was property within the meaning of the Fifth Amendment, Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685, 690; Cincinnati v. Louisville & Nashville R.R. Co., 223 U.S. 390, 400, and if taken for public use the Government would be liable. But destruction of, or injury to, property is frequently accomplished without a "taking" in the constitutional sense. To prevent the spreading of a fire, property may be destroyed without compensation to the owner, Bowditch v. Boston, 101 U.S. 16, 18; a doctrine perhaps to some extent resting on tradition. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393. There are many laws and governmental operations which injuriously affect the value of or destroy property -- for example, restrictions upon the height or character of buildings, destruction of diseased

[ 261 U.S. Page 509]

     cattle, trees, etc., to prevent contagion -- but for which no remedy is afforded. Contracts in this respect do not differ from other kinds of property. See Calhoun v. Massie, 253 U.S. 170, where an act of Congress invalidating contracts made with attorneys for compensation exceeding a certain percentage for the prosecution of claims against the Government, was sustained, although it had the effect of putting an end to an existing contract. This Court said (pp. 175-176):

"An appropriate exercise by a State of its police power is consistent with the Fourteenth Amendment, although it results in serious depreciation of property values; and the United States may, consistently with the Fifth Amendment, impose for a permitted purpose, restrictions upon property which produce like results. Lottery Case, 188 U.S. 321, 357; Hipolite Egg Co. v. United States, 220 U.S. 45, 58; Hoke v. United States, 227 U.S. 308, 323; Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146. The sovereign right of the Government is not less because the property affected happens to be a contract. Louisville & Nashville R.R. Co. v. Mottley, 219 U.S. 467, 484; Union Dry Goods Co. v. Georgia Public Service Corporation, 248 U.S. 372."

In Louisville & Nashville R.R. Co. v. Mottley, 219 U.S. 467, it was held that an act of Congress, prohibiting the issuance of free transportation by interstate common carriers which invalidated a contract for transportation previously entered into and valid when made, did not have the effect of taking private property ...


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