# Brief for the US — Kimball Laundry Co. v. United States > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386406_0179%3A4 ## Record - **Collection:** Supreme Court brief - **Document type:** Brief for the US - **Published:** January 1, 1949 - **Citation:** 338 U.S. 1 ## Text a a arm sy eaten Gael at Le : cs Page IEW Sls olin 5 Re he By ee os erg canes le irisdietion. —__. a a oe prevest ¢ckacenete 1 uestions preainted : ce pul Saen own whan Salado 2 atute involved — . j St ae bicae heen Oe SONU gs ee eee bia dn Sono ba greed- ” s . ? \ e - t } , . ® ' ¢ ¢ P : : , =a 5? . - . cam E a of “ ° ° e ‘ . i ¢ - e Soe “ f , e A © Stsegiedetef eed Sa = Oc ‘TOBER Tr RM, ‘1918. => U ) No. 63 '-Kimpatt Lavxpry Company, “4 ]CORPORATION- * on aE ONER eee need We eta a ae ve) > \ Uxrivep STATES OF ADERIC. ON WRIT OF CERTIORARI YO THE UNNED STATES COURT OF APPEALS FOR THE FIGHTH CIRCU IT oe. ts". Lil . . ? a . “BRIEF FOR THE UNITED STATES ; Ree Weiss aia ta ae eee is OPINION BELOW 7 The opinion of the C ourt. of Appes us ¢R. 3-14, vol. IV) is reported in 166 °F. 2d 856. The .dis- trict:court did not write an opinion. - | JURISDICTION 7 | _ The judgment of the Court of Appeals’ was _ entered on March 11, 1948 (R. 15, vol. IV). The “Petition for.a writ of certiorari was. filed on May 28, ‘1948, ‘and: was “gr: mted en Octal er | ae 1948, a —— of thisy C ourt rests on - 28.U: 1 ~, ‘: imei tens oe ao raed a and —— as of, November Dy . . , normual dep rechation, the latter due to the hey _ / S42, awas. $273.8 39 and as of N November’ 1945 ps $120,699.79, lesZing’ a differe nee he value he- fore and sia = taking of $15 I 131. (D. ‘Ex, ‘StS: I4T-251, BIBI; 258-260). inh : On | helialf of. ve Yur did. States two witnesses testified as to the fair annual rental or ‘Suse, yalue”’ of the property taken, including damages - inet urred during | the, Government’s use of ‘the _ property. Cornelius G, Wi ber, an engineer and appr aiser exper enced in'v alaing industrial plants ete eee 12 for contingene ies and: uncertainities reg garding ex- piration. of, thé ‘tern, making: a vound total ‘ $70,000 per year or $252,000 for 3.6 yeas ‘9 730-733). . These -figures were adjusted later In’ the light of certain information obtained subse- quent to the making of the appraisal-and Weber gave as’ his final estimate of value for the terms iy! taken, including restoration and repair costs; the .- sum of $257,000 (R. 733-735; Govt.-Ex. 22, R.. 735-737).: On cross-examination, Weber stated that the reproduction cost new of: the eritire plant ayithout allowing for.depreciation due fo wear and + tear or functional obsolescence, would be $642,- 925.28 (R. 744-746; see also Govt. Ex. .23,-R:. 751-752). 2 a: hey ) ‘Lewis’ ©. Sholes, a_ real estate man ia ap- praiser with many | Years of ° ‘experience, had examined and appraised . the property shortly before it was taken by the United States, had. observed it during ‘the’ Government’ Ss occupancy and had examined and age it in the latter part. of 1945 (R. 760-76 sy TER, 773, 784). He testified ‘that the fair and sneii rental Aalue of the property including damages heer rom the use RY. the Army. was - $65,663 per year (R. 771) or a total of $253, 066.80 for the 3 years . 7 months’ period including cost .of repairs put not including the cost of mov ing back y¢ertain machinery and equipment Which had: not been used by the Government but had: beer remoyed © 13 ‘and stored at For Omaha (R. 772-776 ; “Govt. » Ex. 24, R. TTi1-178}, Satoles’ estimate of value was’ made wp as follows: a return on investment «of 5% of the ‘value ot the land, and . building, or “$10, 380 per year, and 7% of the value of machinery and equipme nt, or “19, 813 per. year, $23,220 per ‘year for normal depreciation on the “building, mace hinery and équipment, $4,500 ‘per year for taxes, $750" per year for msurance, “$2,000 per. year for the owner’ for: management and #€9,000 “per year for abnormal use’ of the - property hy. the United States, making a total 7 of $236,356. 80 = (Ik. 769-772). To this figure, ‘Wholes added! $16,680 fox “pestor: ition and repair costs not. included? in his: “gstimate of .$9,000 per year. for abnormal lise, ma ‘king a final total of $253,066.80 - for the taking (R. 772-776, . Govt. Ex. 24.° R. 777-7178). On°* eross examination, Sholes stated that in determining the total value of the property he liad estimated reproduction cost new . prior. -to. deducting | depreciation at Q $660, 474.36 (R. 783-784). Appellant objected ta the aplicalixes of these witnesses to give their opinions ‘of. value and to their testimony as to rental value on the \ ground, that there was no showing that a laundry 4 Shoes’ value of the entire property after allowing for — depreciation was as follows: land, $17.600 (R..767), building; . $190,000 (R. 767-768), power plant, $12,500 (R. 768), other 815504~ 46° -—— 2 . Cae ordinary wear ‘arid tear excepted. The present case was tried in- “accordasice Ww ith these prin- ciples which have emerged from long experience _ as fair’ and just guides for the determination of -— the | governmental obligations * flowing from -an - eu? Ley “exercise of the power of eminent ‘Amnith: Peti- - tioner apparent argues that. its compensation should be determined either by. the full f ee value -- ‘e of the property or by the difference between such © value at the time the. property was. taken and the time of its return to petitioner. ‘But .sinee the United States, did not take the property ab- -solutely, petitioner «plainly is not, entitled to re- coyer: its fee value. Petitioner’s s advocacy of the -° “‘hefore and after”? measure: of just compensa- -* tion is: put: forward in the instant case only as.. a means of inclusion in the judgment of an award for the alleged taking of its “trade routes”. We shall show in: point II that the ‘courts below pr operly excluded evidence relat- ; ing to the trade routes. In any’ event, ‘petitioner’s ‘“‘hefore and after” theory” of valuation would make: compensation depend on fluctuations in’ the market whieh, very. often, would have’ no rela- . tion whatever to the value of the use taken. i "Petitioner's real contention is that its trade routes, i. @., the patronage - of its customers, were © '.. taken and the: value thereof should have been- included in the award. The: evidence which: was excluded. by, the: trial court .was offered to sup- | port this elaim. The courts below were correct. in holding that this eonstituted.-simply an at- tempt to recover for a business loss which is ‘not oat allowable. in am proceeding. See eee - aa ceainaaealll £m ei 14 * : : nae aN -o" | spec ulation as to conditions at the tinte of re turn of the prope ity. C. The fact that in the instant case the. prop- erty, was:.taken temporarily, rather than per-~ manently ‘does not change .this result. In United States’ v,. Ge neral Motors Corp., 323 U. 8.3 373, this Court . while holding “that when a part of a ‘condemnee’s s. interest is taken, the necessary. cost of ’ moving, storing, and _Jefurning personal _ property located in. the building ‘taken- tempo- - rarily might be.considered, in the. peculiar cir- | cumstances of: that casg, in determining market Nee f bbe Sats, 4.4208: “* 2 - ‘it “¢€ peculiar” to the oWher, suchas the value of ge ; * = a price | for the tempor ary oecupaney, also held thi as in’ thy case of: fee takings, proof of. valjre will or: of injury to ‘the condeinnee’s* businéss, must be excluded. There? is tie wasrant for the allow ance of such brsiness’ losses” in a condehma- ‘tion proceeding. The value ofa business ss or its good twill - is attrilnitable te many varying and speculative factors, suc ‘ho as skill of management, the nature amd @xtent of competition. and gen- ‘al business conditions, among othr things: --Suieh yalue is “highly _spee ative and should have no pert in the — of the value of what was actually taken, i. e., the “physic: ul property. In the instant. case, titipee? was. permitted . to introduce all relevant, evidence relating - to value of” its: plant and the fact that i had profitable’ business located on the property: ah elaim for loss of trade rputes constituted ‘simply an attempt to recover. for infury to good | will -or, business loss and was properly. rejected.” ve D. The ev iden®e rélating te -petitioner’s geod will value (**trade routes’’) reflects the typica ally “spec lative nature of such value. - ae eas : ik . “PS a : ~~, Other allege “i evrors specified: as grounds for reversal are without merit. ud, A. Whe, qualitie: ition of witnesses to EXpress an -opinion of valle is 2 matter’ within the ise re tion of the trial court and ‘its decision is cone tlusive — uiless there. has been “an abuse of 26° ‘« discretion. No abuse of dinebitiin can be shown here. mony’ is a matter within the discretion of the trial’ court, and its decision will not ke reversed in the absence & a clear abuse of #discretion. There was no abuse of dis cretion here. ) Cé When property is taken prior to. pay ment therefor, interest is allowed as part of -just compensation from the.date of the taking until payment. Here, the preperty was taken for a specified term with the option to renew the term for additional yearly periods. The option ras exercised from time-to time thus extending _ the taking . “the . term from year to year. Sine _ yas * dne~ of . yearly periods and, sMmee the jury aw arded compereation on a-yearlx basis, interest was properly compuited’ on. the sui allowed’ for - inning pt the period £ T Compensation ‘for each period: from the: b until paid. The Declaration not require a different. result. the failure to return property taken temporarily - in the same ,condition as when ‘taken, ordinary weaf- and. tear excepted, is not due until the DB. Admiation or exclusion ‘of rebuttal a : king’ Act does: aS ‘property is returned: Interest (on the sum, ~ awarded for that purpose does not begin to run until: the. date of return. Since interest is not allowable when «just compensation is fixed by agreement of the parties, petitioner's claim to interest -with. regard ; ‘to certain supplies: was.- properly disallowed, ee ¥% ws oe) .e ee ‘ARGUMENT . oi | I eo / / oe eae OTHE PETITIONER HAS RECEIVED FULL AND ‘ADEQUATE ; / : ; ‘ COMPENSATION FOR THE TEMPORA RY USE OF THE PROPERTY, UNDER ESTABLISHED RULES PROPERLY APPLIED BY THE BISTRICT COURT * By every: objective test, petitioner has re- ceived fair and adequate compensation ‘Tt has obtained, after the three years. nd seven months of use of its plant by the United States, a sum almost. half the total market. value of. the fee title (according to” petitioner’s “own: estimates) — “plus the return of the-entire property. The ‘award was based onthe market rental value of the plant. (including equipment), plus an allow- ance to restore the property to its original condi- tion, and was thus. — ‘in aecord with | established authority.” It has long been held that the measure of compensation for the taking of a -temporary interest in property such as was taken here is market rental ae - United: States .. Petty Motor ‘Co., 327 Up.8. 372, 377-378; ee States v..General ane. oe p:, 323 U. S: 373,.382, 383; Phelps v. United States, 274 U. S. - 341, 342-3428; Kansas City Southern Ry. Co: v. Commissioner of Internal Re venue, 52 F. 2d 372, 379-380, 381 (C.-C. A.8), certiorari denied, 284 -U. S. 6765 Tn. re Condemnation of Lands for Military C amp, 950 Fed. 314 (E. Dp. Ark.) ; ~ Johnson v. United States, 2 C. Cis. 391, 415-416, . ~- Le) ’ on! 419 Johnson v. United States, 4. C. Cis. 248, 251; Pope v. United States, 26 C. Cls. 1, Bs. Such a measure has been applied almost unive srsally by the district courts in the many. reeent cases arising «during the war where. the Government condemned only the temporary use of property which, would not be needed theréafter. United States v.. 14.4756. Acres° of Land in Christiana Hundred, 71 F. Supp. 1005 (1D. Del.) ; United. ° States Vv. 5,901.77 Acres of Land in Marin County, 65 F..Supp.. 454 (N. D. Cal.); United States v. 7.41 Acres of Land in Camden, 63°F. Supp.. 43, (D. N.VU.); United States v. 40.558 Acres of Land, in New Castle County, 62 ¥. Supp. 98 (D, Del.); Uiniled States v. Certain Parcels of Land in Baltimor e, 95 F. Supp. 257, 264 (D. Md.) ; United Staves Vv. 16.747 Acres of Land in Dela: ware, 50. ¥. Supp. 389, 391 (D. Del.) ; United States v. Entire Fifth Floer in Butterick Bldq., 54 F. Supp. 258, 261 (S. D. N.Y.) ; United States — ‘Ve STAY Acres of Land tn Flushing & Arde : Bulova, 5d F. Supp. 147% 148 (BE. D. N. AS ee The sii cases foiand 1 in which the. courts: have a from the standard of market rental valué are cases 4 ed upon by petitioner (Br. 123-124). United States v. 9. D4 Acres of Land in. City of Charleston, AF Supp. 478 (E. D. 3. he stands alone against the great weight ‘of autherity and its reasoniég has been specifically rejec ted in subsequent eée-” as cisions, FE. g. Viited Ntates Vv. a prin Parcels of Land in paltimore, 55 F.Supp. 257. 264 (D. Mad.). In United States v. Bauman, 56 F. = 10g" o Ore’), alsorelied upon hy petitioner (Pet. 59: Br. 124). he Cnited States filed a peti- tion in 194 dis sottieue at terta ye three years wi ith the right to éancel at the end of any year. ‘The court merely held that - og . a o ip “Thevalue of a tempora ry interest is Re variously. spoken of as ‘‘the market. rental value 6f ‘the - temporary occupancy taken,’ United States vy. “General Motors Corp, 823 Us 8.373, 382-2383, “the fair market value of the use,” Unite d Statés— : 14.4756 Acres of Land in Christiana. Hundred, “ F. Supp. 1005, 1008 (D. Del.)..or more fre- quently the couvenient designation/ of. “fair annual rental!” is cused. United States v. Certain Parcels of Land “in Baltimore, 55 .F. Supp. 257, 264 (D. Md.) ; United States. v. 16.747 Acres of’ Land . in Delaware, 50 F. Supp. 389 (D. Del). Th’ temporary takings, as well as in fee takings, there is sonietimes "no ‘market ” for-the property taken. Cf iU nited, States. v. Pe tty Motor - Co, 327 U. S. 372, -378, But’ “where Tor any reason, property has no market, eae must be chad tovother data to ascertain its value * * °*,77 Umited States v. Miller, 317 U.S. 369, 374. As the court said in United States v. 16.747. Acres ‘of Land in Delaware, 50 F. Supp. : 389, 391 | (D. Del.), Certainly an. expert appraiser can determine the United States could not amend its petition and file a declaration of taking to acquire aterm for one year with a right to renew for additional yearly periods for the dura- - tion of the national emergeney without inelhiding compen- _Sation in its deposit, for the value of the right of renewal. In 1/000 Acres of “Land in irae County, Tero: United States, 152-F, 2d 566 Sf of A. 5), certiorari! denied, 328 UL S.8385 {see Br. 123), me court recognized abd fallowed the veneral rule.in valuing the fee owner’s interest. but he-. cause of the peculiar nature of‘an oil andyas lease, held that a different measure myst be applied to determine compensa- tion for the lessee’s interest. $15504—48 5 a 4 * = #99 " : > . ; 30 , ~ ; . : a fair annual rental, ‘determined as though ~. the government had rented the. property for a year with an option to renew. from year to year .’ Thus, as will be. shown, infra, pp. 32-34, expert witnesses in the present case gave ’, their opinions as to the value of the use ‘of the property or the fair ‘annual rental: and ‘other data’? was admitted as bearing on the value af « the temporary interest taken. : In addition to the market rental value of the property “during the period of the teniporary taking, the award in such cases must include an allowance to enable the return of the property in as good condition as when the United. States took. possession, ordinary wear and. tear excepted.’ This principle, whieh was followed by the courts below, iS well established. ‘ S a oF ~~. - ee , . “4 = ** + determine for the use 6f the property per annum alee q . cand (2) its to the compensation payable for | fail- 7) .* ure-to return the property in the condition: it was e ~ g on November 22, 142y 3 | Puan q Thus, it appears that eve Die Was admitted g : and the jury Was instructed ine avcordanee with .prine iples generatly. applicable Yer takings of this 3 & Ss ‘trial court's charge was not a model of coneisériess ny 4) one a atk Le ne VD oz value of the Use of the prope rty for the pe ‘riod vA kind. Altheugh the court below obséPyed that the ‘ re 4g eS ‘er accuracy, it is submitted that, as that-comrt said (R. 11, vol. IV): i Taking“ the charge “asca whole + a adequately apprised thé jury of the applicable law and the considerations upon whieh a verdict could jawfully be’ based, and did not nullify the pertinent evidence admitted. . Moreover, after listening for. two weeks to contheting:> estimates and opinions as to fair rental value and as to - damages to‘and. deterioration of the plant and ‘machinery. attributable, to the Gov- ernment’s use, the jury vould hardly have had any illusions as: to the issues of fact . Which were presented by the’ evidence. So far as the record shows, no attempt, was made by the Government, during the trial, to minimize the usefulness or capacity of the laundry: or to show that. it was not completely equipped and in \profitable Op- .eration when taken over by, the Govern- ment. It insisted; however, that the Com- pany was not entitled to have! ‘loss of trade routes and customers, expenses of litiga- tion, and other consequential damages, considered in deteriiining just COMpeENsa- tion for the tse and ocenpancy of the’ laundry. Pee .* * ad oe . But we belie ‘ve that : a fair distillation of. peti- tioner’s thirty-two points relied upon for reversal (Br. 34-108) is its contention that itis entitled to the inclusion in the. award of the value’ of * 5 . 37 i | ” .) ” \, its trade routes, i. e., the patronage. of its CUS. tomers. While it) makes cand > coyld make no. - contention that the! Government has taken its. “eMSTOMers, Pe titioner does eohtend that they have "& been: lost te it and that that loss should tie com pensated, ‘We. deal direetty with that contention in Point: PL of our Argument, infra, pp. 41-46.~ ° But hecanse peice _ in the course of making that argument, appears to re ject the rental valug of; the use of its facilities as the applicable: meas | tire. of oe (Br.. 30-31, Pt. ‘XV; Br. V16-117, par. 13; Br. 123-128), We have endeav- ered to show chat petitioner, has ‘hee sa fully com- _ pensated under that Settled rute of compensation, a rule whie ‘h has grown out of and survived the test of experiéne e in cases’ of thiis sort. On this: phase of the ease, petitione Pr states ‘tat its Inunidry plant) was ‘totalky Aken” on No- ¥e miber 91, 1942 (Br. 2: ef. Br. 125), and that the plant was dec ‘lared he and abandoned on March 22, 1946 (Br. 2, 5-6, 125), The argu- ment apparently «1 made is fe the measure of © compensation: 1S either the full ‘fee’ v: ahie of the. property or the “difference between the fee value return -ta oe laundry COMMpany (R.- 2T-3l, 91-93, vol. LV; p." Br. 27, Pt. VILL: Br. 31-02, Pt. XVI; Br. Az — oo at the time of the taking. and at the tinie of its. G 38 ; In making these conte ntions, petitione re n- ; deavors to rely upon the Act of October 16, 1941, 55. Stat. 742, as amended by T ithe VE of the Nee- ond War Powers ‘Act of Marchi 27, 1942, 5G Stat. es 176; 181, secs, 601-602, as ame nded; | YOULS. ( App. (1940 ed.) Supp. V,: sees 721-722 (Br. 3, 32-33, 124; App. pp. .8-13).. That Act authorized the President to requisition personalty for military. or naval purposes (i. e., equipment, supplies or munitions and machinery,.tools or material neces- sary, to manufacture, service or operate, such : equipment, supplies or munitions ). It provided the means for determining the just compensation to be paid forthe property requisitioned and fur= ther provided for: the return of the property io ‘the former owner if he desired it. upon payment - of its fair value as of the date of the return. That statute has no application here, and could hardly \. justify the: ‘petitioner’s s contentions even if it had. The authority ‘to acquire “real ‘property together with personal property loeated therean or used" therew ith is found in. Title If of the Second War Powers Act of March 2 27, 1942, 56 Stat. 177, see. 201, 50 U.S.C. (1940 ed. ) Supp. -V, see. 171a. It was under the Second. War Powers Act that the present proceeding . was: instituted at thé re- quest of the Secret ary of War (R.-1). -By that ~ Act, Congress exp! essly autharized the taking of -temporary- occupancy rather than the: fee title. . . — _- t Hu Since: the adtninistr: tive déte rmination’ fo lo so “was Hot arbitrary or capric ious it is binding petitioner. United States v. Carmack, 329.-U. * 230. Obviously ue justification. ean be iven bee “egnpelling the United States tospay the fee v atue cof the. prope ry whep it hax only taken that . limited interest and, thereafter, returned the prope rty to the owner—property which, ace cording» to petitioner's own estiinates, was worth $400,000 -on the date of return (R. 315-316). It is rather prea aidoxieal that petitioner makes / the alternative contention - -that the me: asure of compensation is the difference Imtween the valife of the property at the time of taking and at the time of its return. Under. such a formula: he a owner -Wwhase: property Is taken tempor arily might property were veturned in much the same condi- we rece ive ne compensation. for its use. Thus, if the tion as when it was taken and the market re ae stable one, lre could ‘ebne veivably ‘be entitied only to” depreciation. Tnsofar-as the ‘before and after formula depends upon maiket fluc tuations rather | than. depreciation’ of the, property it: wall: make the award for temporary Vv use depend upon what may often be a ‘wholly irrelev ‘ant factor. Indeed, in the insti ant case ‘the “before and after” theory, “advocated by petitioner, if applied with’ proper chy Set revard to the items which are ‘compensable, would * result in a lesser award than the.verdict.. Peti- ¢ 40) . tioner- contends that its lass ik SHOT CBr. 12): But this computation tmlindes an award of 340,516.8 ) for loss of trade routes, an itym Whic “7 is. not compe nsable- (see pois, Il. nts [’: 41). If this item is exe ‘uded the total awiertl DY peti- tioner’s theory, and based von its own figures, would be $252,050.19 as opposed | to the verdict of $297, 776.03 or $45,725. 84 less: than the amount awarded. It is ‘thus apparent that petitioner here’ advocates the before and ‘after theory only asa device to’ include thie alle wed joss: of tr ade v routes in the award. ets 4 Petitioner also-asserts from time to time tha ‘the trial court allowed it to recover onky ‘‘inter- est?” on the appraised value of: the property. (Br, 2, 14,17, 277 30, 121-123; see also R: 7, vol. IV): As pointed out above (pp. 32= 33), one of theitems considered by ‘witnesses for both the owner ‘and: : ‘the Government: in computing compensation for the use of the property or fair annual rental was’ a fair return om the value of the property - * For purposes of ike iMustration, we have t tken thie fig ures set out in.the petitioner's brief (jy, LZ). In factethe offer of prdof of “before and after value” alleged 9 total loss of $561,316.04 (R. 316) rather than $502,567, O4 stated in the brief. This difference of $31,251.00 is due to the fact that the comput: ations in the brief aré based on various bits of evi- dence, many of them exchuded rebuttal testimony, from which petitioner arrives at a value on date of veturn of S395057.25, rather than the $426,208.28. stated in the offer of proof. Tak tng the figures of the offer of proof but excluding loss. of trade routes, petitioner's loss would be S76, O76, st Tess than the amount ‘awarded, . BS eae Brae a. Ms Beet ai ak te ee eae POR, 332+ SEB, 17, 730. 7335, SRG This. thee court sh its ch ayn referns et O “gnterest’” on thevcyalue of the }? rope rty tis oie woe the virstick tort 4 on side red yo arriving. aut aun aquuial renitel (R.- 159): This’ ae 4, ardstiek’” was not’ only ; used by ' petiti@mer *s Witnesses, but petitioner did not ob “? jeet to the use of the tern, in the: instructions. - De = — Rather it objecte al to the se. of the: term “rental” Ps in the ‘charge (see R.. 16: 5-166). @ Here ‘ageir under: ‘the CIKE jumstanees of the trial of this ease, | there could have been no misunderst: uiding hy ‘ -the jury: ; 7 ; : | 2 it oe rid - -; THE PETITIONER, HAVING. BEEN FULLY COMPENSATED ° FOR THE TEMPORARY TRING (OF EPS PROTERTS., IS NOE ENTITLED TOA PURTHER AWARD FOR Loss OF GOOD WILL OR TRADE ROUTES, © THE GOVERN - ar MENT DID NOT TAKE PE TITIONER'S GOOD WILL On ie TPS TRADE ROUTES, AND THE COURTS BELOW DID . ; NOT ERR IN HOLDING, THAT. EVIDENCE OF VALUE: i OF THE TRADE ROUTES WAS IN ADMISSIBLE Petitioner's contention is that the courts below ‘ erred in not permitting. it to reéover. for the 2. ) “alleged -destraction of its trade routes (Br. .25- 1 (C26). Pet rtiener asserts that it was “driven from . Aa business” (Br. 2,25) and that its trade routes w ere. ; tot ally destroye dd? (Br. 9, 2 >). Petitioner S pro- : ' ; tests, here: and below, that this is nota claim for 2 Joss of profits, damage. to good. will or injury to, o its business (Br.-9-10, 134) ‘amount to nothing x y - “* ¥ HAR At Qe mars than a quibble as to the eee ee ‘Terns, $ ; At the tiatl petitioner Sout te have AES Jacobliger testify to the value af **the Kimball soreen Laundry: Company.” before nu) after the, tak.. | ‘ing CR; 315-316). As the offer of proof gan un the testimony thus sought to be introdneed® Was. the “hefore and after’ ‘value: i the Tand, Tul - ine, machinery, cquipment anid the trade routes, the latter being ‘evaluated by numbers of eus:.. bi = tomers of different kinds’? at) $340,516, 58 (R.- pee O16). Thasimuc h-as the “be fore and after’? values of all items ine Juded in the offer of “proof, with’ \ the exception of the trade> rites, were admitted ou behalf of petitioner elsewhere an the course of the trial CR. 260, 264, 275, 306, 830), + if appers that in computing the ‘total ‘iiterenes hetween 27 the value of the laundry company before nid after: the’. taking, Mr. Jacibbe peer allowed for. thé complete destruction of thetvalue of the trade routes (see supra, pp. 10-11, W7-18, and Br, 18). Pe titione r also offered to prove, this same value of the th ale routes by an exhibit prepared by Harty : Judd, : a certified public accountant, who, it was said, rg ~ would testify that he arrived at the conclusions wet valare shown on the exhibit in. aceordaane e with the, standard method. used by, laundries in evalu- \ ating custome rr nid Yi ade Poites and approved, Ne . Fralies supplied. ee . . > : ie ee i . 6, by iis Boatd of Pax. Ap ‘als, CD. Es zs; 34, R 368— 370). It is contended that the. tri! court erred: a excluding: this and other revidence he aring on! the value of the trade routes and ia refusing te instruct the. jury to consider their vialire (see, e, £5 Br..23-26, 113, 120-123,127)2.},’ ye Busine ss losses are nal compu usthle. under thie Fifth. Amendment tt is. well settled -in’ thie federal cgurts that Business injuries,. suc ‘hh. its lds, of profits and diiuage 5 rood will, like other consequential JOSse8 yesnlting from the taking - oof) private property for public use, are not compensabbe. ‘under the Fifth. Amendment. oF nited Sfates Vv: Pelty Motor se a27:U. 8” (372, 377-378 -- Wieled States v.. General Motors ¥ arte Corp., 323° U “8. 373. 39-30, ne United Slates gg eth FOV. AL v. Powelson, 319 U. S. 266, ie 281 IS? Milehell v. Uurted. States, 267 U.S. odd, : a 345: Joslin oe: ¥. Providence, 262° x S. G68, 676; | 0. * Bothwell v. United States, 254 US. 231; United ; ie States v. Beckbold Co., 429° FB, 2d. 173, di6 by. (C0 @. AL 8); Batple vo Hagen, 93 BF; 2d 68, 70-74 eae (App. 1D. Co); Stephenson Brick Co. v. United i ’ » “Statés, 110 F. 2d 360 (C. C. A.D) 2 In re Post : = | Ofiice Siten Borough of The Bionz, 210 Fed. 832 : CC. CG. A. 3): United. States v. Meyers, A90 Fed. 688 (D, Conn.): Lehigh Valley Coal Co. v.. Chicago, 26 Fed. 415, 417 (N. Dy sdll) As this | Court suid in the Powelson: case, supra, at ite : SS SS eo. ew 4 . % , ky 4 there was no obligation on the part-of the United 44 281-282: “There are numerous business losses which’ result’ from condemnation of properties: but which are’ not vompensable under the Fifth Amendment. *° * * It is a well settled rule ‘that while it is. the owne r’s loss, not the taker’s vain. which is the measure of compensation for: the property taken fered by the « o; are compensable under ‘the Fifth Amendment. In- absence: of a. statutory mandate * *. * for w hat, it takes, not for opportunities which the owner may lose.” Accordingly, i in the Mitchell the sovereign’ must pay only pase, supra, the owner Was denied compensation for the destruction of his-business which resutted ‘rom the taking of his land even though the busi- ness could not. be re- established elsewhere. | And in the Bothwell case; supra, the court held that _ States to pay. the loss due to a férced sale of cattle at prices below their fair market value or not all losses suf-_ . for destruction ‘of. the business restting from " the taking. : . This Court has ‘recogiiized, as Was pointed out in United States v. Petty Motor Co., 327 U.S. 372, 377, that by the denial of recovery for busi- ness and. other: consequential losses the owner often receives less than the | value of the property to him or for. his. particular: purposes, but as was also pointed out in that case, the just ‘compensa- ‘ BIEN EDEN fc , PNG Pa ser AP ees ae ae ta et SERIA I es SEKAI IS haere eens 4 ira pier F ee Pere ae PtH CA ESE ARS TAA ae igh fe Soe AE ERVIN SRO bass = & Se a ey ws 45 thon cuarantecd by theeWorstitution is Rovertne: less Himited to “the vi ilue of the inte rest taken.’ This settled rule supplies a sti indard of objectiv- ity essential je governmental: administration ino this field. ane . B. Petttioner’s. bUstiess has not been taken- “Odntr: ry to: petitioner's contentions, the fact that the value of petitioner’s trade routes (business: relationships) may have been. injured, or. ever — destroyed, ' does not mean. that they hi ive been “taken! de 80 as to give Vise to a right to’ compen- sation therefor. Mullen Be nevolent Corp. \. — United States, 290 U. S. 89-94; Omnia Co. Vv. United States, 261 0. S. 502. “Destruction of, or injury to, property is frequently accomplished without a Basak in the constitutional sense.’ Omnia Co. v. United. States; supra, at page 9508. In the’ aan ‘ase, the claimant was the owner of: a contract toe acquire. Steel plate at a price’ under the market. - ‘Phe United, States requisi- ‘tioned the steel, thus destroying the value of the contract, but it was held that the contract had not been {aken and that the owner was not entitled to. be compensated for jgs loss. This Court said - (p. 510) that oe * © * © for consequential loss. or injury -yesulting from lawful governmental action, the law affords no remedy. The. char- acter of the power exercised is net material. i under any power, a contract or 815504 48 4 46 other: property. is taken for, publie use, the Gov- ernnigagits is liable; but if injured or destroyed | -. : hy Jawful action, withont a taking, the Govern- ment is not liable” Again, at page 513, the Court said: ‘The Governme nt took. over during’ the war railroads steel mills, ship yards, ‘tele- phone and:te legraph lines, the capacity output: of ‘factories and other producing activities. If ap- ~pellant’s contenti@n’ is sound the Government thereby teok and beeame Hable to pay for an appalling number of existing contracts for future - - service or delivery, the performance of. which” its action made impossible. This is madmissible. Frustration and appropriation. are essentially different-things.”? Similarly, in Mitchell v. United States, 267 U.S. 341, 345, it was held that the | destruction of (a business: caused by taking’ the land on whieh it: Was carried on Was hot a “tak- ing”’ of the business. Cases like Brooks-Seanlon Corp. v. United . States, 265 U.S. 106, and Mouongahela Nawga-. tion Cor. ve U wited States, 148 U. S..312, relied. upon by petitioner (see Br. 109-1173; do not establish a contrary rule. In the Broa s-Scanlon vase, supra, the United Sti ites took -a contract for the construction of: a ship. As the Coutt said —(p.2120), it “put itself in the shoes of claimant and teek from claimant and appropriated to the use ,of the United States all the rights and ad- vantages that an assignee of the e@ntract would \ ae | tivasten. Mee. PP Fee We SRE TOR a | Rr wR et oe * ae ae have had.” Conseqacutly, it was.held (pp. T2o- ~ 424) that the mee vstpre af compensation was “the cum whieh,’ considering all the ciretimstanees ee nicertainties of the war and the rest- “probe ably could jiave heen obtaine for an assignme nt. od the contract and claimant? s Tights the rennder 2 *.*™ Thethe Monongahelis CHSe, supra, ‘the U nited States took a jock and dani eonst he te “ft a the invitation of the United States ane under a fr: anchise froin the State of Pennsivivania. Ag . this Court hi as SIce pointed out, it was there held that the frane chise was “an integral. part’? of the property: so that it was. taken when the eee was taken and its value was required to. be ir clided iy ‘the compensation: pine See Omaia Cavs mi nited Slates, 201 U. S. 502, 513." Here, the United’ States did not rie petitioner ‘sta: ade routes. It took the laundry company property. lit to-go into the laundry business in Omi aha, lout merely ‘to perform: a, necessary function ii the ~ cern Seana EE . ’ Moreover, asthas been porte “bout in muibsequent cases, the peace ron re sted prin warily oh estop ype. Onna Cay. lyats : Nfates, x prs sat pp. 14: a nited Ntates or rh TV. | Powelson, Bitha. s: 266: vs, footnote L2. The fhe reached in the, Mononge oy Jo case appenrs highly questionable, und in any eve mat Should not be extended fo the instant situ- ation. “ hi che 1s ceariv listings shable. id nited Ntates f- Vs Byeooklyn Linion Gas Co, 16s F.2d gai (C. €. A. DY), rehed pon by the petitioner (Br. 100, 1167, follows the view that there was a taking of a public utility's frane hise and hence the taking © { pre 2prenin Peggy): ich com pensation piust be paid. anid. like Monongqahela_is, readily dint! thtishable. is . . t ————— © mae > s ie he prosecution of the war, that of providin latridrs ind dry-cleaning se rvices for the me nibe rs Of the Bite forces. Tt dict hot put. itself in the =the i t the Kimball Laundry Comipany, ner hid it at tempt to take advantage of that: COMPany Ss 1 nde | routes by serving ‘its customers. AS the court below said ( R. 8, vol. LV ys ; oe The Government took exact!* what it purported to take, namely, the tertt® porary use. and eccupaney of the Come - pany’s laundry.” The Government did aot. take or intend to take, and obviously could - not use, the. Company's business, trade routes, or customers. “No doubt ‘the Goy- ernment’ S oce upation of the plant dis- rupted and damaged the Company's busi- | ness, although it could hardly have de- stroved the demand for lanndry service in - the- city of Omaha or disabled the Com- pany from ever re-establishing its busi-. “hess. ee OF : This statement ‘of the court below. may, in- | deéd, reflect an overly generous appraisal of the petitioner’s evidence. Petitioner offered to prove that .the taking in 1942 disabled it from serving its customers (R. 437-438). Also, it offered.eom- putations by an accountant prepared in 1943 rép-° _ resenting operating. loss for the three years *feom- mencing from date plant was taken to ‘re-establish condition existing November 21, 1942" ete 370- 382). -But as the court below pointed out, the ° a ’ 49 Governinent * eceupation did not diss ible the Come pany from, re-esti ablishing its busiuess awhen the property was returned ia 1946. A cannot he as: ~ sumed that the de mane. fer laundny service in Omaha avas any less in 1946 than it was i bode. a} x Any extra expense, whieh might he incurred in see uring the renurn cf petitione ys old cnstomie rs Ot. MELROSE 3 Ha . orcof securing new customers would de pe md on - many factors such as the popul: ition of Omaha, gener al business conditions, the price situation, the ability of the pe srsonnel of the Company and many ‘Similar factors which might indeed -yesult - in a better business situation ina short time after return. Thus, a conclusion that petitioner has heen injured by loss of patronage of its custome 1S could rot be based upon any factual evidence proffered by petitioner but purely on spec ‘ulation as to various factors relating to its Inisiness: pros- ~ a in 1946. | . This case prese nis noe ‘eree ption ‘to the rule is business losses ag vat compe sable —W hile petitioner appare ‘ntly ‘contended in its petition for, certiorarl hy el. 22) that becatise it was the fee. owner of a laundry’ which was a going business and because the ‘Gove yriment took only a tempo- 2 i ee use, the ‘foregoing we ‘-esti ablished principles: m do ‘not apply and that «a novel question Is prer © sented, petitioner now seems ta éoptend that the sainie _principles apply whether the Goyernmeni takes a temporary) use or 7 alisohuty fee ‘tithe ; = : ; al oer ee on, cae ree | eae Se ar, 111). and that the que Stioth pResented is whether the Governtuent TRY caveid payment af competisation for tits trac’ foutes wit aking femporary are rather than the feo CB ST6-117, ge6 also Lt. 11). Whaters P. the -pree ehse nature of the question sought to be prresenit ted, pou tite he ‘* contentions were answered ity v sited Stoles \. General Motors € Or p, ye | U, Ss. roe fy that case, “this C ourt said (p. B82) . eee — . = * * Here the ise of a wareliouse lorva short time was taken. The property - -tinieht have been the Genes al Motors’ fac. tory. Or several plants. Or a modest sstore or home. Whatever of prope ry thes citizen “has the’ Goverment may ‘take, \ When. it takes the property, that-is, the fee, — the lease, whatever he may wi, ‘terminat- Ing altogether Iris interest, under the estab: lished ‘law it must pay him for what. is taken, not more; and he must stand ‘what- ever indirect or remote injuries are prop- erly comprehended within the meaning of “consequential damage’ as that. concep. tiom has been defined in Such cases. Even so the’ consequences often aire hi Fh. For * | these whatever remedy may exist les with , (' ONZTESS. . ar ea ye Continuing (py. 382), this: Court said that it was - ‘altogether atiother matter when the Government does not. take the citizens entire interest. but by the forin of its ‘proceeding chops it-into bits” aun held that in the CASE, uf ten porary takings Cert: ° ° °. : 5 ss —— s .« - “. ¢ : ; HeCESSALY costs mew red dys the certichetreies », Sen rt eS the cost a Pere; il of pe peered property; its starivge and return, should bye considvred iy ale rer mining the hiaeker price for the a A. aualt ae it was further held. 3S). | that ‘ Preaf oof -such costs is os ath value ts to be dts tinguished from. proof of value pecull ur Ter. the. respondent, or the value ‘of ecoa: . will or ot TRY te thre business of the 2 ly responde nt J which, i this ease, asin the case cat tie conde “friniat- thet. ola tee. rust be exclude “al froin the reckoning. c “Thats, althoush. the result of the Gene rq! Motors ease Wis toa How compe hsation for items Previously rewarded as ven compensable, the holding wits am exeocdinely Harrew one (United States \. Petty Molor Co., 327 U. S.: 3722, and the Court expressly preserved: the- rile prohibiting compensation for consequent i: iL damage, and in partic ‘ular in respect | of business losses. anid a; nage to good: will. ‘ eti- toner Zeeks to extend: the result of the Ge neral Motors ease to inelide the. Ve ry things. whic hh the Court Spee itieally stated cofild hot be inchided. ‘The HeCESSALY expETISES neurred tes a restilt of having to remove ‘personal property from “the premises and _ sidbsequently return it represent an -actual” ont iy of money due te the. temporary taking of the building im which tt was located, — Ever °se, “the Court did net allow these expenses as such, but only as reflected in the rental jules cleo. s «@ « 9 he i eee hee 8 m ae to ais able. Moreover. while the ascertainment “saben: of such expenditires hay involv sutb- le te re their stantial diffieulty, thes. may ovdinarily Ie niined with some degvee of accuracy? and a > “ ° x : os reasonableness verified, * Cood will. on the: other hand, represents an imtangible asset . the, valne of whicli depends upon many varving and specitative factors. Inasmuch as the value of good will” Tas never, so faras is known, been aw arded as part of just compensation for the taking of property under thie power of eminent domain, no criterion for measuring its value is found in the eminent domain cases. Hyowever,¢ turning “to other’ fields. where good | will. must sometimes be valued, we obtain some indiedtion of the elusive and complex problem -presented _ and can see liow remote such value is frém the , valug of what was taken; i. e., the physical prop- erty, and jiow dependent it is upon speculative” - eleme ats whieh should Have no part \in deter- mining | just compensation for ° ‘the. physical property. The value of .the good an of a business in- cladés the full vahie of the cilerprise i extess of ‘the value placed on the tangible property... IT Bon-- bright, Valuation of Property (1937), pp. 727- O34, 756. ‘Although, as Bonbright poitits out (pp. Ne will be shown, dafya, poo, the value of petitioner's trade routes is the same as the value of * ‘good will” witch in turn is synonymous with the value of the business as dis- tinguished ‘from the value of the physical property: : nea Bo Mr SOIT te Oo wate Ge TENE RE aI Se, EN BR Ly Ser yt Orme MRR ERT eA S ee Ce A c <> re f ay & : , $8. F2T-728,, “geod will may propevly he given a restricted meaning; 1. ¢., that. it is “the proba- bility that old ‘customers will return to the on " stand,” it. I generally thought of as **the whole Le _ complex of intangifies- —the. attitude ail eCONOTHE condition of old and new custome rs, ihe-re lations, . legal ‘and nonlegal: to employees and sources: of - supply, the quality. of management, the ability of ‘the organization to produce and market efficiently, the existence. and character of competition, gen- eral business conditidius and prospeéets,: sometimes, . franchises, patent rights, ete.—which will enable ee the ‘going concern to yield high earnugs. *. All of these spec sulative elements enter into the value of the good will of the Kimball Laundry Company as-an enterprise at the date of he, taking of the physical plant: 3 — But the enterprise Was not ‘taken. The Com- pany kept its name; its books.and its lists of eus- eg toniers. As the couct below said (R. 8, vol. TV), ‘the taking: ‘could hardly have ‘destroyed: the de- - mand for laundry service .in the City of Omaha r disabled the company from ever re-establish- Ing’ its business. The time it would take to re- build its. patronage aiid the extent to whieh protits . ane would be towered during that time would depend ia upon, the dernand for. laundry service in, Omaha, the economic conditions,” the kind and amount of . competition, the skill of the managers and ‘per- sonnel, ete, Clearly, none of thése-influences on - ‘tak ins by the Governmend. See supra, p. 49. thes alue: of-thes onte rprise, wheties favey able or unfavorable ,coutd be attributed to the te ein porary a ' Petitioner has been paid for the use of its prop: erty during. the temporary oceupanes and, they property has heen returned, together with pays’ ment of the amount necessary to restore thie prop: erty to the same condition it was in when the Gov- ernment acquired it, The amount. allowed— market rental value—iieludés an objective allow- agce for the income-making potentialities of the property in the form ef a fair return on-the value | of the property. Anything additional would be unjustified, There isno more reason to Compen- sate. petitioner for any specific business dosses which may be suffered while it're-est: tblishes its enterprise - than there is to compensate the fee owner whose entire property interest-is taken and Who must, acquire new premises .and re-establish ‘his business elsewhere or who must start up a new busitiess. if; as in Mitchell v. U7 nited States, 267 Bite? 541, 843, the same business cannot he ye- establishéd elsewhere. In fact, the allowance of the Kimball Lanndry Company's claim in this case Would be demonstrably unjust. On the basis of the company's. own estimates of value, ibaweuld have been entitled te recover only #400,000 to st)! 90,000" CR: 423- 124, 457) if the Govérmment had taken a fee simp le estate and would have recovere «| noth “Ing for any business losses. “Since the “Govern. ES NE Ae WP a Be ee ae, es : ie ~~ eet ae o \ — . anent took oily ry temporary usecof thie’ property the jury awitrded the . company approximately $300,000, of which $252 | 1 ees perty during the (iov- DOO represents compensa’ tion for the nse of ernme Hts veeM PRNCEY CR, 95-96). This suum, conn puted at the rite of $70,000.00 per vear, (RL 96) ismoe than the net income of the laundry for ws year in the past 19 aia with the exe ption #1930 (see Def. Ex. 4, col. 2. Ry 204); “In fact’ it is almost twice: the company *s average net in: come for the laste 5 complete years of: operation’ _prigie to the faking (1937-1941). The’ property, has been returned to the company, together with payment for damages caused by the Government's |. cause, While petitioner may not agree with the mount awarded by the jury: for the latter item, Bd re presents the sui which the py found would place.it in the same position so far as the physical: prope ty is concerned as when the Government took possession. Yet, petitioner claims an addi- tional em of £540, 516.85. A(R, 316; Br. 12) for. allege “| dest ruetion of the value of its trade routes, which when add ed'to the $2: 22, 000 awarded for the use of, the propebty amounts to $592,516 aid is the Appreximate eqnivple nt of the fee value of. its property when it still, has the property (w hich ac- peording fo: petitioner's own figures: (R. ‘3I6) nae worth ove 4F4C00,000 when, “returned ), to ‘do with as it Wishes, either to se ‘ll it or to. go hack into the laundry, business. Re’ ._ # of Apparently on the theory that taking part of: the oWners-estate is similis into ts aking part of the traet of land, petitioner also, reties upon the se. _ ealled “severance damage ciises ( Br. 117-121). The ride laid down in that line of eases Was. re -c@ntly- summarized as follows in Uuited States y, Miller, 317 U. S. 369, 376: a 8} only a portion ofa "single tract is taken, the ow ner’s compensation for that taking includes any ele ‘ment of value arising’ out of the relation of the part taken to the entire tract. “Such: damage iss often, “though somewhat loosely, spoken of as severance damage.’ Tlie ‘severance damage” theory cannot be used as a ‘device , to recover business losses. ty As we have’ és shown isu ph ‘a, pp. 45-46, the i ‘act that a. taking of the owner “SY property “results in a destruction of his | Business does not give rise to A.right to compensa- tion for the business. This rule is applicable not only where all of the property is taken but also where part has been taken. Thus, in Ralph vy. Hazen, 93 FB. 2a 68, 70271 (App. D.-€2), where part of a tract om which was located. a garage was taken, it was held that damages to the garage -biisiness could not be included in determining the compensation tebe paid. Similarly, in Sfiephen- , Son Brick Covx. United States, 10-F, 2d 360 (C. C. AL 5Y, it was Jield that when part of a tract of land nsed for a brick manufacturing plant Was taken, the fact-that the plant was making money could “be considered, but the business was net to . r ; rs » 1 . ~~. . . oe be valued iis such, her Was any ‘loss ad profits te PT cae he compensated: for.” See also, Bueljer v. Cited Pes States, Wo BL 2d 391, BOM), (e. © AY I iz ae, henge d, cs} ‘8. ae yas €. Coated Stutes ¥.-7 7936.6 Aeres of Land, 69 F. Supp. 828, 3320502. hy Petitioner's reliance: { LI. 11 i-| 18) on és hale ted Stales ¥. Chicago, Bod QR. Con pany, ee DaeTE| IgE -(C. C24. 8), certiorari denied, 208 US. 689, is misplaced.’ Whatever the merits of that de cision, it is clear-that the court af appeals suc: vestion i that case that cases like @thyow +. U nited States, 166 U.S. 269, have been overmiled + 1 Petitioner relies (Bro UIT. 119. 221) upon, Conited States ¥. PRO fe. 2d", 5 i4- I. 7 D, and that’ the: words OF dnziiaged” sane now been added to the word “taken” in the Fifth. Amendment (82 F.2d at.” 139 cannot ‘stand in the ight of this Court Ss res! ee he sions, See, e. g., Wnated States v. Willow Rive r Co. S24 U. 8.499, 502, 510, ‘The opinion i the. General Motors: cG ase, in Lany event, itself panei suffic ‘lent answer ‘to petitioner’ s areu- ‘ mnent: It was there said (323.0. S. at 879-380) : ~The sovei reign, ordinarily takes the fee. — The. rule in’suclea ease is that compensa- ‘tion for”. that ‘interest does “not inelade ‘future loss of profits, the expense of imev-> ‘+ ing removable fixtures and personal prop- ~ erty from the premises, the loss. of goed- will which inheres in‘the lecation. of the. land, or. other ‘like consequential, losses” ~ whie hi would ensue the sale of the proper ty\ ‘to. someone other than the sover CAEN. CS eee See Even where, state . constitutions .~ redheniae use, assmany do, it has generally.beei held _that that whieh is taken of damaged is the ; a | we ~ group of tights, which the so-called, owner _ exercises in his dominion ‘of, the: physical thing, and that damiage to those rights of ownership does not inelude losses to his ~_- “business er other éonse quential daniage. Ww bile’ it-is¢ leaPpas. pointed out aboves pp. “41-43, that in, attempting to recover’ for. the alle ed de. struction of itsttrade 1 routes, ‘petitioner seeks to Re Peer os _ command that -comperisation be made for ~ a property “taken or damaged?’ for. publié —* | } reeover a business si Its binek (pp. § WO, 122) confuses the’ Issue by i that at seeks to recover for good, will, Juss "profit and loss of further busine SS ous Tt did TL oe trial court “(see " R: 31 5). Its theory seems to hb that: the value - of trade routes does eit represcit “good will prof: its or other business valne and that it is admis- sible as part cof -the composite value of the plant as a going concern (Br. 111, 114). } “However, the very cases relied upon by peti- tioner as justifying the method used by its wit-. ness Judd in valuing the “rade routes (R:‘ 368- 370) show that. the value which it was sought to have the jury consider was the value of ‘good - will.’ Dr both Appeal of. Metropolitan Laundry | Co, 2B. 'T. A. 1062, and Pioneer Laundry Co, -” v.- Commisstoner, 5 B. T. AL 821, it: was he ld. that the value of good will acquired by the core pore ite taxpayer when it purchased another Jaun-_ dry should have been included in. the computa- tion of its statutary invested capital for income and profits-tax purposes. As pial in the opin- ions,, good. will consisted of the ralue ‘of the . drivers’ routes’ and igsiea as igh: Petitioner. emphasizes throughout, that its laun- “dry” was a “going” business andl attempts to dis-. \ tinguish certain of the ¢ ‘ASCS folding that damages “tq a business are not compensable on the ground ‘tliat they: did not invelve ‘a “going”? business * (Pet. 35-31; ;see Br, 113-114). ° Petitioner's éaim,, 6 br 6 which ‘is: f for ae recovery of the value of its good will or the business, is to be distinguished | a from * gOhig concern’ value Whie li nude roce rtsain cireunist nées may be ti aken, int} consider ation in. : valning the prope ty on the baits of re production cost. ~ Banaer Milling: Co. v. State of. New York, 24h) N. - 33, 148 N. Ez 6b, certiorarl demed, 269 UT, S. 582: Bee - Orgel, Valuation. under Emu hent cae (19: 1G), See, 191 In the Banner Milling C omipairy case; supra, the property taken had heen used fora flour mill, It was lie ld? that | the plant Was “to be’ valued ‘as a live, going flour mill? and, therefore, . th it. ins determining fair market value it was proper “to consider, not onky the cost, of reproduc ing the physical plant, “Hut also the cost necessarily of ue ok pended. in bringing the mill or factory into: effi- eient working condition, which has been called so: the synchronizing. of its. parts. Conse ‘quently, _arehitect’s’ fees in making and » revising. plaris and: compensation for enginee rs to carr y-out the plans or. to arrange ‘the factory so as to produce appropriate mamifacturing results, were held to be elements which should he considered in esti- mi iting the market value.” However, ees ele- + ments were’ careftilly distinguished from the value of gead will whieh, it’ was held, could not: >. « be taken into - conside ration. \, Similarly, in Chicago x . Farwell, 286 MM, 415, 121 N. E795 the court he Id tht value based Upen the profits” * * s fom eee t 6) derived from the Gperation of a Soap factory ould mot de ree veered union ~ the rihine of “eft creney or “eon? value. 7 All the evidene offered hy petitiones as to the reproduction or. re pLcanient cost of the dynild- ane, machinery, dud. equipment was admitted (CK.-2 N20, atid, IT2-9F3), The trial court aise: admitted much testimeny as te the location, erowth and expansion ‘of the plant and its eapae- ity (see R. 229-232, 265-266, 27-278, BS6-3S88, ——* 390-391), including the amount of laundry wapk. done eae h vear from: 1932 through 1941) CR. 279+ 2:3), the gross rece tyits fromthe various types of laundry and dry- learning SErVICes rendered from 1936 through +1942 CR. Be9-235, 238 S242). the: - prices. being charged for such *serviees under O. PL A. ceilings in November 1429 RK. 295-297 5, cand, the total number, of customers beg served on November 21, 1942 (R. 235-237). Thus, while the trial-court properly exeluded evidence of the value of the business as such, it permitied peti-* wonet to show how : tii such business it had and that The tyne cindtaited” of machinery ‘and equipment on ne date of taking as shown on appellant's exhibits was based on the cost of replacing it with like machinery in the same condition and included installing it ready for Operation (R. 246, 240; 270, 308). . Ttmay also be noted that in spite of-the Goveriment’s objec- tion, re} pradivetion cost of the building was admitted without requiring any deduction for depreciation (R. 262-1 263) 815504--48—- 5 os i 2 a it was successful. Ct. Stepacnson. Brick Co. v. United States, WO F. 2d a6 (C. CL A, a Having admitted evidence of vross meonie and the like, itavas proper for the court to mstruct tee Jury that) such evigletice was admitted only to “show that it was a going Goncert (RL 155, see giso R. 229, 24-258, 236). : Moreover, “Haris Jacobher ver, one of jr metity roner s Withesses whe ihe asked on cross-exainin tion) What. elements he had included in valuyag the use of the property, had said that he included ‘nothing but the nerital ot-a business” and that the fioure he had testified to Was based on ‘the value that plant had’ te as as a- going concern’’ CR, 426427 . Sinee it appeared that the witness, as petitioner does here, included the business yatue to petitioner within his defini tion of “going Goncern’’ value, the trial court properly instructed the jury THyaat the Bolng-con- —————— * In titis.connection, it should be noted that the trial court, “in exgluding Def. Ex. 7 showing the gross incenje of thecom- | pany from 4924 throu@h. 1942, stated that the éxhibit would - be admitted if there were attached. a statement of net earn- ings (1, e. after deduction of all expense of operation, salaries, ete.) (R.219-221). No offer of proof inh ‘compli: anee with this Suggestion Was ever made. - Petitioner's suggestion (R. 220) at its s proflered. Ex. 4 HLA ans}. would suflice for that ne Zontained other items w hic h “should not be in they” (R etary ‘consequences, will he wor pletely wupredict- _ able. Be fowe faking a particular piece of property the Government would be Folreed “to analyze in detail the ‘past business history of the ‘property owner——as well as. any expenses that he might con- wider necessary to ineur at some future date when the property has heen retuimed | to him. Se Petitioner's proffered evidence of -2 ray od wall value in support of ‘its claim to ap peaiely £340,000, in addition te the anieunt AW: drded i -should be’ “considered mM conjunet lon. with — ay guialysis. of a Own figures as tor its: actual net * income. Thys INeamne figures are het suttic iently . detailed oF pointed to. pe rut an entire ‘ly re ‘hable éonelusion : astoa fair capitalization of the \ alue of petitioner 's business. But, they. do Nise. Serious doubts ae to thes ralidite of pe ‘titione r’s ood will. Valne figures, and the iNcensistene y of results serves. - compensation inadmissible,” a. . cd . . o ; to buttress the established view that geno will value ; Is ser sspeculitive: as to. make j its ine ‘lust bagi in just This, defendant's Exhibit 4 (1. 204) shows that for the last-five years OLY: S9- LOFT) “preceding. the taking, the average net income of the Kimball “Laundry Company before deducting depreciation and Jnaone tax was S30375.50 per year - Lsee “Colum 2. Lt ahis smi is capitabized at SIX perce hit. the vane. of the: entire enterprise, ineluding the plivsteal property aid the busiess es» ory good will would be $656,256.50, whieh is sss thie fee viitue of the plysieal plant. ‘is & haianead: peritrorre fr tere fe ode we don Oby lousty, 1 "the phiystea property has the value. eltitned hy 4 pet ener, a Het return af only i nercent on that value “leaves he Koon for any ae . additional value for good: yal. dfon the other hand, it is assumed: thi” the company. had the - 7 - good, will whieh petitioner Claims OS340.516.85 ) The fitcr that value haxed onthe income ine }udes” “the. value of the Bosinessfor'good sil which are attributable to Hitinerous speculative @lements so has the skill of saaiawe. ment, the mature of conripert ron and grener: ‘al IHistness cond) “tions is the primary renson for excluding évidence of income ’ for the ‘pirpose of: -showing the fee value of property con- demned: Set Orgel. Valnatian Under Eniment Domain, sees. Ia. PS. IGT, PTE? Nichols, Eninerit Doniain (td ed. 17), pe LL: heeonerte Nenaltg € WOE, Fon a4 tu; ttt? piety: Matt rofd Wty of Rac he xfer J Smith Af, Bridge) ). tf Ajypp. Div. OSs. OST oth Dept. $+ Sewer ~The Mayor 4! Ay p. ; Div. fem, IS Lt Wept.): : (handle yt EF. R. Ce. ve Cantley, 84 WIV IS: eatso,. Win. Boston & Providence Rail- ‘ roel, Is Mass. Ay) r re, “7 then alte as that claimed by petitioner but would be the physical property could have he such ap proxin itely €315.739.65. Thus, it ean bee argued ri ‘on the basis, of petitions Ms own figures. either i that the compan Hi: iil ne food will « r that _ . tioner is atte Inpting ie recover for it twiess i. a by, ameTuding it in its, estimates of the. ae ‘alue- a ‘of the physical property: cand: then adding it as i. separate iteni te arrive at an alle ged value of” cover S900,000 foro the entire enterprise. Moreover, in computing the rental value of the property, pe titioner’s, Witnesses” felt: that a% re urn of TO percent or 864,000 should he allowed “on the value whieh they placed on the physical prope rts alone (RO3382 457). 1F.10 per cent is cowsilered a proper. return and petitioner "s -estl- ‘mate of the xqluc of the physical property is: - accepted, the laundry compady: Was not even: making what wold? be considered ¢ fair return on its property alone and thre are TO additional earnings repre senting. wi return oon intangible assets such as rood. will.’ "The cofrect ness of petitioner's = chiain that i its w itness fol- -lowed the method-of viluing good will approved i im. 1 ppe al ‘of - M. tropofitan 1 Laundy ‘yl, ae 1. T. A. 10@2 and Pioneer Fr Lianied ry sé oe. ¥;¢ Ce eeNsione ree B. T. AL s21vis doubtful. In —_——- - those cyses, the value Was computed by multiplying the weekly receipts by the gourd will eur attributed fo each dol. lar of receipts. But petitioners witness, instead of using weekly receipts as a factor, saibstituted merely the tot: il Nut ber of-customers (R. ane This prov ‘ess would seem to omit an essential elgmetits a. e.. the amount of receipts and ‘profits » for which each ¢ ustomer might ‘be apenas. ry > . fA aa * We are not to be taken as contending that petitioner's enterprises possessed ne “good will 1 the ordinary Sense, ‘The above. is offered, as we have saids. simply to indicate the difficulties and doubts inherent in any attenipt te evaluate good willin a conde manation case of this characte r, It has already been pointed out Csupra, p. 61) that the allowance for rental vatue awarded the _ petitioner in) this cage includes and -retlects the fact that the property taken was used by a going _ concern, Tie gene rous-extent of the award is isulionind by the fact that a rental of $70,000 a year was ‘allotted to the petitione ras contrasted with the previous net annual average income of Bese 39 referred to above. Petitioner has also “ “received an award t@ store the premises to their or ‘iginal’ condition, Under the Constitution, no “more is required. oe 1. vee _-OFHER” ALLEGED. ERRORS SPECIFIED AS GROUNDS FOR REVERSAL ARE WITHOUT MERIT a A. The trial court did not err in ruling that the Governine nt’s witnesses were qualified to testify. =e Petitioner states *th: it certain of the Government's witnesses were 1 lot qui ilified to testify ( Br. 26-27; see alse Br. 16-18). These Witnesses were CR. ‘Crowder, an engmeér in the ‘mee ‘hanieal and elec- trical section of the United States - -Engineers Office in Omaha, who had had a great deal of experience in supervising and preparing estimates of the cost of constructing lavndries and installing e - oO Se r. 69° : and repairing laundry equipment, including the restgration - -of government-leased: laundries else- Where (Re GU9-610, GHo8—H61, 715); Cornelius G. > Weber, an engineer. and appraiser of wide experi. © ence, having bee ‘MI associated with the American — ; Appraisal Company for 24 years and having ap- praised many industrial plants, ingliding. inun- — dries (R: 722- 23): and Lewis “‘Sholes, a lifetime resident. of’ Sea wha had been. in the real estate business for 46 iesidabetbcs in the appraising: business for: the last 20 or 25 years and who had’ * appraise ‘d six other laundry plants in recent years CR. 760-761 ). ‘Clearly, these w itnesses, as, the court beJow “held (R. 12, Vol. IV) were qualified to estimate the rental vee of the laundry, ‘the damage to machinery and equipmett and the cost — of repairing and replacing it. Moreover, whether an expert avitness. is qualified ‘to, testify is. pri- marily a question: for the trial judge whose deter- mination can be upset only for an abuse of. dis- °° cretion (R..12, Vol. EV). Montana Railway Co. v. Warre n, 137 ULS. 348,354; Chapman v. United States, 169 F. 2d 641, 645°(E) CG. A. 10), certiorari “denied, No. 3*5, this ‘Term: Love v. United States, 141 F.2d 981, 983 (C..C. AL 5). No: abuse of discretion can be shown here. Under Crowder a ~xnpervision, Denton J. LaTurner and Ross 1.. Néweom, two engineers connected with rei Deal z ean Laundry Machine Coinpany CR. 546, 5 i, GOL) and A. a. Pargytt, acconstruction engineer err ployed” in the U tlited: | Hitates Engineers Offic ee ace 8 ~ ati 70 2 . ’ i 7 , 523) examined the machinery aud equipment and jointly prepared exhibits showing the eost of re pairing, replacing and relocating it. (see RL STL S72, SS85-DS84, 587-588, 599-601, 6LO-G11, 619,622, G0- 631). Each of these wi nesses, ‘Inechidinge Crowd- . , testified as to items whieh they had personally spite’ and Crowder gave the total of all tenis testified to (see RR. (31:3 4, 647-H48y. Sholes to- | gether with petitioner’ Ss Withess Goodwin ex- camined the property in 1942. before. the tuking - and made an-inventory ahd appraisidl at thint time and also i in 1945 CR, 246, 251, 771, 782-783). His inventory and « appraisal: were available to. other Covernme nit Witnesses whe had not seen the pwop-. . \erty-at the date of ti king ¢R. 725 .. The former. master mechanic. of ee hed Sueded Cols ~ pany. accompanied. Weber on his examination of: the property and deseribed the changes whieh tad » “taken place nN the condition ‘of the: machine ry’ h.. rer, (25). Itoor plans showing the location of equip- ment at the: time of taking and. Lsts* of items moved out: of the building by: the Government we re inspected by the Witnesses (Gov't. Exo 9, R. 620- 622, 634, 725). "Phus, as the court helow said CR. 12, Vols TV), **The fact that m: my of the Govern ment’s “experts on value or on damage to equip ment and machine ry had not seen the laundry in 1942 did tiot disqualify them to testify to their estimates of its value at that time Ter had | heard the eéndition of the plant. anid ka see in ry fully dese wibed, and assumed that it w a el her « ’ cae in Bea | >» - e 71. aS —. s wood. or fiest-class : eererencdics the time the fiove ernment took over. ; ' ‘ Ie inatly. although petitioner States its alijection to the testimony of Sholes and Weber in thé fron ‘of ain objection te therr qualifieationss, the hist af the complaint is not their qualitic ations, but their method. of, valuatién. That ‘complaint is “dealt. with in Points T amd 1, supra. : | B. The trial court did not-err int reluding \rs buttal testimony. Certain evidence offered DS . petitions v.to rebut the Government ‘site stiniony its to Ry cost cof restoring the Inrilding and some of the Tiiyghinery to ats. fornier condition Was &N- eluded bythe trial court on the ground that it was pari of the’ Mompany’s main -case “(R.-A827-830, 833-838, - S468 Pe, ef. Br. I sy: The order of. proof oma trials kirgely in the digeretion of the trial eourt. Philadelphia & Trenton Railroad Co. vy. Stimpson, 14 Pet. 448, 462-163: VMeClelian ve." Hein, 6 Neh, 600,77 N. W. 120. - As, the court. below stited, ‘ticre ‘ Was uo abuse of that disere- tion in this case R. 13 ; Vol. IV). Petitrone y's witnesses hag already testified in the case in. chief “as to. the cost of igus the building (R. 506, 408, 12-415 », 419). ‘ Rebuttal testimony as td the ; cost of repairing, the laundry and dry cleaning equipment was admitted - (R. 809-812, S14; Def. Exs. 48. 49, 50, R. 822-823).° The only item of nie ‘Hiinery vepair offered on. rebuttal whieh was excluded was the cost-of replacing: il boiler valued by petitioner in 1942 at $8,921. 2%) Re." 1272).° As ‘mae « 7% fo eae é Ja aS Oe ae . te this item, petitioner’ s atic on ‘its case in Lae soa “chief was, tlat it was damaged; Yond vse-and : ig aa oh ‘4 a .--thierefory an’ alléwance for. its fullivalue was inade ate tt “GR, bea aeeR, 847) 5 Ww reas, the ) foyernmient's \ " aang Soni for #5, 817.50 me 639 : see 'R: 849). tet we _ Thus, ‘the rebut I te: stimony rejected by the trial ie Reus fy Re :Segurt pertained - to. matters which ‘not only. could, Sak iy . PRES have been, but had been, gone into’ on petitioner’ s eee eee ; ‘ a 7}: ease in chief, and was, therefore, properly excluded. ae ee ttle) oh EN United ‘Stabes Vv. Prettyman, 42. F: a: gel UCB A ES i | +64 vs a sl 1 Bene Ree CG. The trial, court awarde d the ‘proper ‘amount Bae ele as ‘inte rest-'The térm taken in ‘this ease wis one fo a : _egi wing November 22, 1942 2, and ending June hi Sean | 1943, ith, the: right to renew, the tekm ‘for, ats Ps Spe fe ro ne a | addition | yearly Periods for the. “duration ithe - ee \ emerge encys( Re. -2).° Ag: the’ time. of, t| “term chad’ | “extended to Jie 30,. 1946. CR. . yas he 88-85): Conseqquc ntly,. ‘the’ questi of ¢ompen-* A EL oes “sation. for the Whole term. thus far taketi a A ae a a 7 _subm tted: 4, the jury, us well as gee amount of; et es damages: resulting: fron the use. of the property Te ee A. up. to, the. time of the trial. Although? ‘the: jury: ens Goofs: e? hy ies instructed. ‘to’ return a genefal verdict: for | eee ae the total cor@bensation- to. which ‘petitioner’ was: en ae trial’ tbe: ‘das Bs - found to’ ‘be entitled, it. was also instructed to’ ane a teu . fatline of the United St: ites to return. the prop- ve: y° “? pipe Si. cae te é . eae » - . % eo Ae te a - .- 8 Pee s eR ey ae Sseeayor sal asl . x aw RIN, ante) ten Ayes ’ PEN ake AS : i : matter of acquiring the items mentioned and pay- ‘ing for. them was handled entirely outside the. con- Aeration - proceedings ‘and is «no part ‘of the proceedings. Muoreovet, the sum was p; a as the resujt of an ae reement between the Ufited States sant the Kimball Laundry Company. Interest is not: allow able wheny just: compensation ix fixed by angreement of the parties. Albrecht y. United : States, 3: 29 U, 8.599, G02-GO4 (1947). . Fe Sl Oe bree . i) a Sa ae is a) . -° ; « 7 tf - : ¢ : ie . war . vat ir : “ coNCLUBION Po oe Box the fore sting reasons, 1f is res Mhetfully : geben’. thyit there is’ yo reve rsjble error in the. rulings of? the trial court and that’ the judgment : _. of the Court of “Appeals should be affirme = 3 } Purr BP EREMAN, £O a ae eae =a , Loaeoe Solicitor General: eee “Gronce T. Wasnincron, \ . , Assistant Solicitor General. aS epee es ety a c ee “Assistant Atto Mey, General, see eeg ; Roger P.. Mareuis, eo: 72 > Ways 6. M ARTIN, : “ef ‘ Attorneys, Department of, Justice “Dec MBER 194 eB nee e ; is ao ss ? oe ee eee eae 5 2 a ick ee : ai | \ °. i ; od : a: " 4 . és s a of . . @- ee Je - \ ae. * ; : ; pe btn ) ¢ --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386406_0179%3A4. Public record. Not legal advice.