United States District Court for the Eastern District of New York, a notice and petition in condemnation (at the request of the Secretary of War and also under the authority of the Attorney General of the United States) of 55 acres, more or less, situated in the Borough of Richmond, county of Richmond, State of New York. An order for immediate possession was signed and filed in the above court on the same day. In November 1942 the court ordered, adjudged, and decreed that the use and occupancy for a term of 2 years, and as extended thereafter, from and including the 7th day of February 1942, of said lands vested on the 7th day of February in the United States, including the rights and easements and all the buildings and structures thereon which are part of the realty, except removable fixtures. The order further directed that just compensation be paid by the United States to the owners of said property. Prior to the commencement of said condemnation proceedings, and since 1937, at which time the zone was established, claimants, at the invitation of the city of New York, became lessees of said property, and as such occupied a large amount of space on pier 15, Staten Island, foreign trade zone No. 1. But for the acts of the United States, claimants would have been permitted to and would have continued to occupy the premises leased to them, on the same terms and conditions for the entire period during which the United States took and will hold possession. As a result of the taking of said property by the United States, claimants were forced to move therefrom, to obtain new locations, to remove their machinery, their merchandise and equipment, at a large cost and damage to them, which would not have accrued except for said acts of the United States. The costs and damages paid and suffered by claimants are as follows: II. The Corporacion Argentina de Productores de Carnes (organized (a) Cost of unremovable improvements and fixtures installed Transferring gas unit heaters and installing air duct. Total. (b) Lighterage charges... 278.00 512.00 132. 00 922.00 (c) Cases, cartons, and other packing supplies, to repack Total damages. 14, 421. 29 9, 704. 26 13, 682. 48 38, 730. 03 III Herman M. Gidden: (a) Labor in dismantling plant, making packing cases, packing (e) Extra customs charges. (f) Merchandise and machinery in transit.. (g) Extra handling charges.. (h) Temporary storage charges... Total... IV. The Overseas Metal & Ore Corp.: (a) Transferring ore stored at the New York Foreign Trade Zone, to another storage. $989.00 22.00 61. 92 567. 12 44. 25 20. 25 391. 36 483. 19 2, 579. 09 180. 60 Although the United States could have stipulated in the condemnation proceedings where the leasehold was taken that the costs of removal and other expenses be included in the measure of damages (National Laboratory and Supply Co. v. U. S., 275 Fed. 218), it refused such equitable relief for these claimants; therefore, on advice of counsel and with leave of the court, they were constrained to withdraw from the condemnation proceedings and to look to Congress for relief under this bill for just compensation as guaranteed by the fifth amendment to the Constitution. The inflexible provisions of the Federal condemnation statutes and numerous decisions by the courts preclude recovery of damages other than the difference, if any, between the bare market value of the leasehold and the rental actually paid at the time of the taking. Thus, recoupment of out-of-pocket costs and damages incidental to the taking cannot be had. Due to some early Federal decisions, the Army and the Department of Justice have as a rule denied claims for losses and damages suffered similar to those outlined above, although it has recognized the injustice and has favored proposed legislation correcting such injustice which would give claimants a legal claim for their damages. In United States v. General Motors Corporation decided on January 8, 1945, and cited above, the Supreme Court of the United States said. (323 U. S. 373): Whatever of property the citizen has the Government may take. When it takes the property, that is, the fee, the lease, whatever he may own, terminating altogether his interest, under the established law it must pay him for what is taken, not more; and he must stand whatever indirect or remote injuries are properly comprehended within the meaning of "consequential damage" as that conception has been defined in such cases. Even so the consequences often are harsh. For these whatever remedy may exist lies with Congress. [Italics supplied.] It is to be noted that these claimants do not seek compensation for the difference between the leasehold market value and rental paid by them, but ask only to be reimbursed for the out-of-pocket expenses or "consequential damages" incidental to the taking of their property rights. These are not recoverable in an action at law. CONGRESS May afford EQUITABLE RELIEF Even though no relief at law is available to claimants, they are entitled to equitable and moral relief, and "just compensation." Congress has on numerous occasions afforded equitable relief on a moral obligation, which the United States was in honor bound to pay, such as claimants are entitled to here. A few of the many cases follow: In House of Representatives Reports No. 127 and 192 (citing 75 C. Cls. 569), Seventy-eighth Congress, first session, page 3, reference is made to Court of Claims decisions to the effect that, it was now settled law that the use of property can be taken, as well as title to the property, and for such use just compensation must be paid; but that "moving costs and other expenses" incidental thereto could not be allowed as part of just compensation for the taking of the leased premises. The facts in these cases were essentially similar to those in the instant case. On the basis of these reports Private Laws 26 and 27, Seventy-eighth Congress, first session, were enacted into law by the Congress and afforded equitable relief to the claimants, the William Wrigley, Jr. Co., and the R. S. Howard Co. In regard to the question whether the facts existing in any given case bring it within the description of that class of claims which Congress can and ought to recognize as founded upon equitable and moral considerations and grounded upon principles of right and justice, we think that generally such question must in its nature be one for Congress to decide for itself. (U. S. v. Realty Co., 163 U. S 427, 444.) * * * Congress regarded the controversy as over and that the time for reparation had arrived and, that it might be quick and complete, referred the matter to that officer (the Secretary of Treasury) who could best state the balance due and pay it. (U. S. ex rel. Parish v. Macveagh, 214 U. S. 124, 136, 138.) [Italics supplied.] * * * the loss sustained in this transaction by the plaintiff constituted & moral obligation, which the United States was in honor bound to pay. The passage of the resolution was the expression by Congress of that belief. * * Congress, itself, after an exhaustive inquiry into the facts, by proper committees, determined the moral character and worthiness of the claim on which the direction to take over the transaction was founded (U. S. Sugar Eq. Bd. v. P. De Ronde & Co., 2 F. 2d 981, 985.) The old line of cases refused to allow damages except for property actually taken. Damages resulting from the taking, as a rule, were excluded. The modern trend, however, is to the contrary, as shown below, and although the Federal courts have accepted the rule they have not applied it by holding that where the leasehold is taken the costs of removal and other expenses should be included in the measure of damages. In U. S. v. Chicago, etc. Co. (82 F. 2d 131), the court in following the modern trend, and in refusing to take the narrow view, said: As already forecast, to the word "taking" there has now been added by almost unanimous decision, bottomed on changes in the organic law, or by statutes, or by judicial interpretation in the later cases, the words "or damaged." This modern trend, which clearly comports with fairness and justice and without which that just compensation guaranteed by the Constitution cannot be accomplished, is plainly referred to and conceded by the Supreme Court in the very late case of Jacob v. U. S. (290 U. S. 13, at p. 18) * * *, wherein it is said: "Suits brought to enforce the constitutional right to just compensation are governed by the later decisions which are directly in point." [Italics supplied.] Congress passed the Foreign Trade Zone Act for the purpose of inducing foreign concerns to bring their merchandise to this country and to establish good will with their countries. Claimants, as the result of this act, the establishment of the New York foreign trade zone, and the inducement by the city of New York, became lessees and brought into the zone a large stock of merchandise which has aided our war effort and also installed machinery on the leased property, believing that they would be protected by the United States and that they would not be disposed from their leaseholds by the United States; that they would be at last compensated for the damages they suffered and paid if forced to remove to other locations. As pointed out in 1 Thompson on Corporations (3d Ed., sec. 361, pp. 454, 456): even where the United States has reserved the right to amend, alter or repeal a franchise (or lease), it should not do so without paying for the damage created To hold otherwise would permit the Government to evict claimants the next day after they had gone to the huge expense of installing machinery and merchandise on the leased premises. Here, no such reservations were incorporated in the lease nor were expenditures made with any such reservations in mind. The Secretary of War opposes this bill because he claims that— 1. At law the costs of moving are not compensable; that the attorneys for claimants withdrew their claims in the condemnation proceedings and, therefore, had their day in court. Claimants withdrew their claim and have appealed to Congress because of the rule of law stated above, and they, therefore, must depend upon equitable relief for compensation for their loss. 2. That the costs of moving are merely incidental to the taking and form no part of the fair market value of the premises. It is true that the courts do follow the above rule as to moving costs even though it is in conflict with the modern trend, in cases awarding damages for the flooding of land by the Government or for the costs of preventing the flooding of land not taken by the Government as in U.S. v. Chicago etc. Co. (82 F. 2d 131). In the instant case, however, such costs were incurred as the direct result of the acts of the Government, and are the only true measure of the damages suffered and paid by claimants. 3. That should such expenses be generally allowed, the courts would be overburdened with the task of determining the extent to which the speculative costs should be assumed by the Government. If the above argument were correct, it would apply to all suits against the Government and all condemnation proceedings. Certainly the out-of-pocket cost of moving, such as here, is easily determined-much more easily than determining the value of a lease or the fair value of the property. Cases may and do arise where the cost of removal of personal property of the owner or lessee of the premises taken would exceed the value of the property taken and he should be entitled to his total loss. In a recent case petitioner's claim was rejected by the Court of Claims. Congress subsequent thereto by a special act, directed the Court of Claims to render judgment on the claim. The Court of Claims held that it did not have jurisdiction to do so. The Supreme Court in overruling the Court of Claims stated: The Constitutional power of Congress to provide for the payment of the debts of the United States is not restricted to payment of these obligations which are legally binding on the Government, but extend to the creation of such obligations in recognition of claims which are merely moral or honorary (Pope v. U. S., 89 L. ed 5). WAR DEPARTMENT, Hon. DAN R. MCGEHEE, Chairman, Committee on Claims, Washington, November 25, 1943. House of Representatives, Washington, D. C. DEAR MR. MCGEHEE: The War Department is opposed to the enactment of H. R. 3036, a bill for the relief of the Bunge-North American Grain Corp., the Corporacion Argentina de Productores de Carnes, Herman M. Gidden, and the Overseas Metal & Ore Corp. This bill authorizes and directs the Treasurer of the United States to make full and complete examinations into the claims of the foregoing parties against the United States for the sums alleged to be due them as a result of costs, losses, or damages consequential, incidental, or otherwise, which the claimants have sustained by reason of the condemnation in 1942 by the War Department, of certain property known as the New York foreign free trade zone, situated in the Borough of Richmond, city and State of New York. In January 1942, it was determined that a military necessity existed for the acquisition of certain pier and storage facilities at Staten Island, N. Y., known as the foreign free trade zone. Accordingly, the Attorney General was requested to institute proceedings for the condemnation for a term of 2 years. The area comprises approximately 55 acres and has been utilized by the War Department for the establishment of pier facilities for the storage and shipment of military supplies. The four parties mentioned in this bill were occupying space in the free-trade zone at the time the Government took the facilities over and consequently were forced to move to new premises. Although the claimants appeared in the condemnation proceeding and asserted claims for damages, they were subsequently withdrawn by their attorneys in open court. None of the claimants occupied their quarters under leases but had merely entered into warehouse agreements on a month-to-month basis with 30-day cancellation clauses. Under the circumstances, there can be no claim for the value of the unexpired portion of the leasehold. The losses allegedly suffered by the claimants arose primarily from moving costs incurred in vacating their original premises and moving to other warehouses in the vicinity. It is a cardinal principle of the law of eminent domain that such costs are not compensable, since they are merely incidental to the taking and form no part of the fair market value of the premises. While it is true that persons whose property is condemned for military purposes incur certain moving expenses, the practical disadvantages attendant upon the allowance of such items are so numerous that it is not feasible to enact legislation authorizing their payment. Many times the possibility of making such payments has been explored but no practicable solution to the problem has been found. Should such expenses be generally allowed, the courts would be overburdened with the task of determining the extent to which these costs should be assumed by the Government. For example, while it might be feasible for the Government to assume the burden of moving costs incident to moving from one location to another in the immediate neighborhood, it does not follow that the Government should pay all costs incurred by a person who moves from one portion of the country to an entirely different region, even though the Government's acquisition may have forced him to relocate in another part of the country. In interpreting the just compensation clause of the Constitution, the courts have found it necessary to base compensation on the fair market value of what is taken, considering that other factors of damage are too speculative and conjectural to provide a workable measure of compensation. The application of this rule works substantial justice in the vast majority of cases. Another practical objection to the allowance of moving expenses is the fact that some seventy-six thousand-odd tracts have been acquired to date in connection with the military land-acquisition program in accordance with accepted market value standards. To depart from these standards at this time by providing special treatment for a few would undoubtedly give rise to claims of discrimination and unfair treatment. Should such legislation become general, the administrative difficulties attendant upon locating these former owners or tenants and estimating the moving expenses to which they have been put would be praetically insurmountable. case. No reason is seen for departing from well-established principle in the instant To follow a contrary policy would establish a precedent for the payment of similar costs incurred by all of the persons who have been forced to vacate their premises as a result of Government acquisition. No such claims have been pre |