Petition for a Writ of Certiorari — St. Regis Paper Co. v. United States

Office - Supreme Court,

FiLE COPY

——————_—

Supreme Court of the United States

Ocroser Tzrm, 1947

wo (74

ST. REGIS PAPER COMPANY,

P titioner,

v.

THE UNITED STATES,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF CLAIMS

\ Horace R. Lams,

Attorney for Petitioner.

Dated: June 2, 1948.

INDEX

PAGE

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Summary Statement of the Case................ sonbtithaechinahinaeiti 2

Relevant Parts of Statutes Involved... 6

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Specification of Error to Be Urged..........0.0......ccececeeee 14

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Table of Authorities Cited

Casks

Davis v. Mills, 194 U. S. 451 27

International Paper Company v. United States, 282

U. S. 399 17, 18, 19, 20, 21, 27, 28, 31, 32

Morrisdale Coal Co. v. United States, 55 C. Cls. 310,

cenETE Ec. Giier UMEY Snkcsissicsbaierstbihectnmasidibasbaapsadlinibiansestacntas 17, 21

Omnia Commercial Co. vy. United States, 261 U. S.

PERS ER ON SO TOM PORT en Be EEUU RATE REY 17,18

Portsmouth Harbor Land & Hotel Company v. United

BS I SRAM Ce reece Oe eee 23

Pumpelly v. Green Bay Company, 13 Wall. 166............ 24

Royal Holland Lloyd v. United States, 73 C. Cls. 772.. 21

— VT

PAGE

United States v. Causby, 328 U. S. 256.............. 17, 21, 22, 23,

24, 27, 32

United States v. General Motors Corporation, 323 U. S.

373 17, 21, 24, 32

United States v. Lynah, 188 U. 8S. 445 24

United States v. Welch, 217 U. S. 333 24

United States v. Powelson, 319 U. S. 266..........2............ 24

United States v. Dickinson, 331 U. S, 745-................ 25, 27, 32

Statutes

Fifth Amendment to the Federal Constitution.............. 6

Tueker Act (Judicial Code, Sec. 145, subdivision (1),

Act of March 3, 1911, C. 231, See. 145, 36 Stat.

1136; Act of June 10, 1921, C. 18, See. 304, 42 Stat.

24) 6

First War Powers Act of 1941 (Act of December 18,

1941, C. 593, 55 Stat. 838, 50 U. S. C. A. App. See.

601)

Second War Powers Act of 1942 Ser: of March 27,

1942, C. 199, 56 Stat. 176, 50 U. S. C. A. App. See.

632) 7,8

War and Defense Contract Acts (Act of June 28,

1940, C. 440, 54 Stat. 676, 50 U. S. C. A. App. See.

1152, subsection (a), subdivisions (1), (2) and

(8)) . 8,9

~]

ORDERS

War Production Board General Preference Order

M-251 (Fed. Reg. October 20, 1942, pp. 8424-8425,

Document 42-10,519) ..................---.---.--.--c--0++ 9, 10, 11, 12, 18

(The pertinent provisions of Schedule No. 1 to Gen-

eral Preference Order M-251 and the specific direc-

tives to petitioner thereunder are printed as ex-

hibits to the amended petition, R. 10 to 16.)

Supreme Court of the United States

Ocrosner TERM, 1947

No.

—

St. Recis Parrr Company, Petitioner,

v.

Tre Untrep States, Respondent.

—EE

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF CLAIMS

To: The Honorable the Chief Tustice and the Associate

Justices of the Supreme Court of the United States:

Petitioner, St. Regis Paper Company, prays that a

writ of certiorari issue herein to review the judgment of

the Court of Claims sustaining the respondent’s demurrer

to petitioner’s amended petition and dismissing the peti-

tion.

Opinion Below

The decision and opinion of the Court of Claims appears

at R. 24, and is reported unofficially in 76 F. Supp. at page

831.

Jurisdiction

The judgment of the Court of Claims was entered April

5, 1948 (R. 30). The jurisdiction of this Court is invoked

a

2

under Section 3(b) of the Act of February 13, 1925, as

amended by the Act of May 22, 1939, 28 U.S.C.A. Section

288(b).

Summary Statement of the Case

Petitioner, a New York corporation, sued in the Court

of Claims for just compensation under the Fifth Amend-

ment for the taking for a public use, for the period of 17

months from November 1, 1942 to April 1, 1944, of the

temporary use of petitioner’s pulp plant at Tacoma, Wash-

ington, and the petitioner’s inventory and supply of pulp-

wood located at such plant and to be used as the essential

raw material therein.

The petition alleges that the taking was the direct and

intended effect of the War Production Board’s General

Preference Order M-251, the Schedule No. 1 thereto and

seven specific directives thereunder issued to petitioner

in October, 1942, pursuant to which petitioner’s pulp

plant was shut down for such 17 months period (R. 2-9).

The Board’s order and the directives were issued pur-

suant to the provisions of the First War Powers Act

of 1941 (Act of December 18, 1941, C. 593, 55 Stat. 838,

50 U.S.C_A. App. Sec. 601); the Second War Powers

Act of 1942 (Act of March 27, 1942, C. 199, 56 Stat. 176,

50 U.S.C.A. App. Sec. 632) and the War and Defense

Contract Acts (Act of June 28, 1940, C. 440, 54 Stat.

676, 50 U.S.C.A. App. See. 1152, subsection (a), sub-

divisions (1), (2) and (8)).

In these statutes, particularly the Second War Powers

Act, 1942, Congress granted adequate power to the War

Production Board as the ‘“‘board authorized by the Presi-

dent’’ to acquire ‘‘any real property, temporary use

thereof, or other interest therein, together with any per-

_

3

sonal property located thereon or used therewith, that

shall be deemed necessary, for military, naval, or other

war purposes * * °,”’

At the time of the issuance of the Board’s order and

directives, and for many years prior thereto, petitioner

was engaged in the business of manufacturing and selling

bleached and unbleached kraft pulp, paper and other

paper products, and owned a large manufacturing plant

in Tacoma, Washington, with machinery, apparatus and

necessary facilities and equipment to manufacture from

pulp specie logs approximately 300 tons per day of

bleached and unbleached kraft pulp (R. 1, 2). Im October,

1942 the plant was operating at capacity and petitioner

had in inventory and under contract for delivery at its

pulp plant a supply of pulpwood logs for continued opera-

tion at capacity production. The right to consume and

process pulpwood is essential to the continued use and

operation of petitioner’s plant, and it is not adaptable to

any use other than the manufacture of pulp, except that

in a shutdown condition parts thereof are usable for

storage purposes (R. 1 to 2).

The Board’s General Preference Order No. M-251

(quoted in part in the petition below (R. 2-5) and printed

at length infra at pp. 9-14) provided, amenug other things,

that the Director General for Operations under such order

could specifically direct petitioner, as a person holding a

supply of pulpwood at its plant in the State of Wash-

ington (being in the designated erea of shortage), to hold

such supply ‘‘as a ‘Reserve Supply’, available for disposi-

tion by the Director General for Operations, from which

the Director General for Operations may from time to time

authorize or direct the delivery of specific quantities to

specific persons and/or the manufacture of specific quan-

tities into specific products’’. The Director General could

also ‘‘Direct that no person * * * may consume,

process, deliver or accept any delivery of pulpwood * * *

except upon specific authorization or direction by the

Director General for Operations * * *.’’ Further, he

could limit or prohibit particular uses of pulpwood, among

other things, ‘‘to insure the satisfaction of requirements,

direct or indirect, for the defense of the United States

* * *?? and give such directions ‘‘in consideration of the

possible dislocation of labor, the effect of the local shortage

on the national supply of products manufactured from

pulpwood and woodpulp, the problems of transporting such

products into and out of the area defined, and the necessity

of keeping a plant in operation so that it may be able to

fulfill war orders and essential requirements * * *,”

(See. 313.1(d) (2), (3) and (4)) (Italics supplied.)

It is the petitioner’s contention, as alleged in the petition

below, that General Preference Order M-251, Schedule No.

1 thereto and the specific directives issued to petitioner

thereunder, in effect, constituted a requisitioning by the

Government of the temporary use of petitioner’s pulp mill

and the complete control of petitioner’s inventory and

supply of pulpwood logs during the period November 1,

1942 to April 1, 1944.

The Schedule No. 1 (R. 10, Exhibit A to amended peti-

tion) and the specific directives issued to petitioner under

M-251 allowed petitioner to consume from its inventory

and supply of pulpwood sufficient pulpwood to operate its

mill for the balance of the month of October and directed

that for the period from November 1, 1942 to April 1, 194

no pulpwood be consumed or processed in petitioner’s mill

R. 12 to 16, Exhibits B to H, inclusive, and R. 5, 6 and 7,

paragraphs § to 10 and 13 of amended petition).

einai

5

In addition, Schedule No. 1 declared the Puget Sound

area (in which petitioner’s plant is located) a critical

area and contained provisions freezing pulpwood logs

in the hands of holders in such area (R. 10 to 12).

Furthermore, the specific directives issued to petitioner

diverted to other manufacturers in the area pulpwood

logs then held in petitioner’s inventory (R. 14 to 16,

Exhibits KE, F, G and H to amended petition).

Petitioner protested the order and determination of

the War Production Board and requested that it be per-

mitted to continue in the manufacture of nitrating pulps

or other pulps (R. 16, Exhibit I). Such protest was

rejected, and in its letter of rejection to petitioner the

Board’s representative stated, in part (R. 22):

‘‘We are confident that you realize that we re-

gard the closing down of the Tacoma mill as a

serious and regrettable action which we would not

have taken had we seen any reasonable alternative.

Under existing conditions, however, we must con-

firm our decision to deny authorization to your

Tacoma mill to consume any pulpwood logs during

November.’’ (R. 6, 7, 22, amended petition, para-

graphs 11, 12, and Exhibit J) (Italics supplied.)

The petition also shows that, as the direct, necessary

and intended effect of the War Production Board’s order

and directives, petitioner’s pulp plant at Tacoma was

completely shut down during all of the period from No-

vember 1, 1942 to April 1, 1944 (R. 7, paragraph 13).

The petition further alleges that petitioner’s right to

consume and process pulpwood and to use and operate its

plant during said period are property and property rights

within the meaning of the Fifth Amendment, and that by

reason of the War Production Board’s action, as afore-

—

said, petitioner’s property and rights were taken for a

public use for which the respondent became obligated to

make fair and reasonable compensation.

It is alleged, finally, that during the period November 1,

1942 to April 1, 1944 in the Puget Sound area there were

no sales or leases of the temporary use of a pulp mill of

the type and capacity of petitioner’s pulp plant, or of

the right to consume or process pulpwood therein; that

petitioner sustained out-of-pocket shutdown expenses of

$376,754.86 (after crediting amounts received during the

shutdown period as rent of storage space and other

income), deterioration and depreciation in the amount of

$228,173.14 and lost profits of $2,694,686.83, and that peti-

tioner, therefore, claims the total of said amounts as the

just compensation to which it is entitled (R. 8, 9).

Relevant Parts of Statutes Involved

Fifth Amendment to the Federal Constitution (last

clause):

‘** * * nor shall private property be taken

for public use, without just compensation.’’

Tucker Act (Judicial Code, See. 145, subdivision (1),

Act of March 3, 1911, C. 231, See. 145, 36 Stat. 1136; Act

of June 10, 1921, C. 18, See. 304, 42 Stat. 24):

**The Court of Claims shall have jurisdiction to

hear and determine the following matters:

**(1) Claims against United States. First. All

claims (except for pensions) founded upon the Con-

stitution of the United States or any law of Con-

gress, upon any regulation of an executive depart-

ment, upon any contract, express or implied, with

the Government of the United States, or for dam-

7

ages, liquidated or unliquidated, in cases not sound-

ing in tort, in respect of which claims the party

would be entitled to redress against the United

States either in a court of law, equity, or admiralty

if the United States were suable: * * *”’

First War Powers Act, 1941 (Act of December 18, 1941,

C. 593, 55 Stat. 838; 50 U.S.C.A. App. See. 601):

‘‘For the national security and defense, for the

successful prosecution of the war, for the support

and maintenance of the Army and Navy, for the

better .atilization of resources and industries, and

for the more effective exercise and more efficient

administration by the President of his powers as

Commander in Chief of the Army and Navy, the

President is hereby authorized to make such redis-

tribution of functions among executive agencies as

he may deem necessary, including any functions,

duties, and powers hitherto by law conferred upon

any executive department, commission, bureau,

agency, governmental corporation, office, or officer,

in such manner as in his judgment shall seem best

fitted to carry out the purposes of this title, and to

this end is authorized to make such regulafions

and to issue such orders as he may deem necessary,

which regulations and orders shall be in writing

and shall be published in accordance with the

Federal Register Act of 1935 * * *.”

Second War Powers Act, 1942 (Act of March 27, 1942,

C. 199, 56 Stat. 176; 50 U.S.C.A. App. See. 632) :

“The Act of July 2, 1917 (40 Stat. 241) entitled

‘An Act to authorize condemnation proceedings of

lands for military purposes’, as amended, is hereby

amended by adding at the end thereof the following

section :

II OEE

8

‘Sec. 2. The Secretary of War, the Secretary of

the Navy, or any other officer, board, commission,

or governmental corporation authorized by the

President, may acquire by purchase, donation, or

other means of transfer, or may cause proceedings

to be instituted in any court having jurisdiction of

such proceedings, to acquire by condemnation, any

real property, temporary use thereof, or other

interest therein, together with any personal prop-

erty located thereon or used therewith, that shall

be deemed necessary, for military, naval, or other

war purposes, such proceedings to be in accordance

with the Act of Avgust 1, 1888 (25 Stat. 357), or

any other applicable Federal statute, and may dis-

pose of such property or interest therein by sale,

lease, or otherwise, in accordance with section 1 (b)

of the Act of July 2, 1940 (54 Stat. 712). Upon or

after the filing of the condemnation petition,

immediate possession may be taken and the prop-

erty may be oceupied, used, and improved for the

purposes of this Act, notwithstanding any other

law. Property acquired by purchase, donation, or

other means of transfer may be occupied, used, and

improved, for the purposes of this section prior to

the approval of title by the Attorney General as

required by section 355 of the Revised Statutes, as

amended.’ ”’

War & Defense Contract Acts (Act of June 28, 1940,

C. 440, 54 Stat. 676; 50 U.S.C.A. App. See. 1152, sub-

division (a) (1)).

‘““Whenever deemed by the President of the

United States to be in the best interests of the

national defense during the national emergency de-

clared by the President on September 8, 1939, to

exist, the Secretary of the Navy is hereby author-

ized to negotiate contracts for the acquisition, con-

9

struction, repair, or alteration of complete naval

vessels or aircraft, or any portion thereof, including

plans, spare parts, and equipment therefor, that

have been or may be authorized, and also for.

machine tools and other similar equipment, with or

without advertising or competitive bidding upon

determination that the price is fair and reasonable.

Deliveries of material under all orders placed pur-

suant to the authority of this paragraph and all

other naval contracts or orders and deliveries of

material under all Army contracts or orders shall,

in the discretion of the President, take priority over

all deliveries for private account or for export:

* . *)>

* o -_ s

**(2) Material entitled to priority in delivery

° . . °

‘Deliveries under any contract or order specified

in this subsection (a) may be assigned priority over

deliveries under any other contract or order; * * *

. ° * °

**(8) Exercise of powers by President

The President may exercise any power, authority,

or discretion conferred on him by this subsection

(a), through such department, agency, or officer of

the Government as he may direct and in conformity

with any rules or regulations which he may pre-

scribe.”’

General Preference Order M-251 (Fed. Reg. October

20, 1942, pp. 8424-8425, Document 42-10,519).

‘‘The fulfillment of requirements for the defense

of the United States has created in certain areas

and is expected to create in other areas a shortage

in the supply for defense, for export and for private

account, of wood for pulp and lumber, and has

ae

ores

10

created a shortage in the supply for defense, for

export and for private account of various materials

and facilities required for the production of pulp-

wood; and the following order is deemed necessary

and appropriate in the public interest and to pro-

mote national defense:

**$3113.1 General Preference Order M-251—(a)

Applicability of priorities regulations. This order

and all transactions affected thereby are subject to

all applicable provisions of the priorities regula-

tions of the War Production Board, as amended

from time to time.

‘*(b) Definitions, For the purpose of this order:

**(1) ‘Person’ means any individual, partnership,

association, business trust, corporation, govern-

mental corporation or agency, or any organized

group of persons, whether incorporated or not.

**(2) ‘Pulpwood’ includes wood of any species

and in any form commonly delivered to a manufac-

turer of woodpulp for the manufacture of woodpulp,

except those species and forms defined in and sub-

ject to the following orders of the War Production

Board: M-186, M-228, M-229 and M-234.

**(3) A ‘holder of pulpwood’ is any person who

holds or accumulates pulpwood for manufacture by

himself into woodpulp.

_ **(4) To ‘hold’ or ‘accumulate’ pulpwood means

to have or obtain control of a supply of pulpwood

whether by production or purchase directly by the

holder, by production or purchase by an affiliate or

subsidiary or by one branch, division or section

of a single enterprise or by production or purchase

by any other person for delivery to or for the

account of the holder.

‘‘(e) Reports of receipts, consumption and inven-

tory of pulpwood. Each producer of woodpulp

ll

shall on or before the 5th day of each month (begin-

ning with the 5th day of November, 1942) file with

the Pulp and Paper Branch of the War Production

Board, Reference M-251, for each mill operated by

him located elsewhere in the United States than in

the states of Washington and Oregon, Form PD-656,

and for each mill operated by him located in the

state of Washington or the state of Oregon, Form

PD-661, showing the monthly receipts, consumption

and inventory of pulpwood at and for such mill,

according to the instructions accompanying such

form.

‘*(d) Control of pulpwood in areas of shortage.

Whenever the Director General for Operations

determines that there prevails in any area a short-

age in the supply of any type or types of pulpwood

required for the production of materials needed in

the public interest and for national defense, he may

issue a schedule defining such area and such type or

types of pulpwood, and may thereupon, according

to the degree of the shortage and the immediacy

of the need, and as specified in such schedule,

‘**(1) Allocate specific quantities of pulpwood of

the type or types defined held or accumulated in

such area from and to specific persons;

‘*(2) Direct holders of pulpwood in such area to

maintain in their holdings or accumulations of pulp-

wood of the type or types defined a stated quantity

or percentage, either uniform for all such holders

or particular for any, to be known as a ‘Reserve

Supply’, available for disposition by the Director

General for Operations, from which the Director

General for Operations may from time to time

authorize or direct the delivery of specific quantities

to specific persons and/or the manufacture of

specific quantities into the specific products, and the

Director General for Operations may in addition

eae. no

opera aR

12

from time to time allocate specific quantities of any

pulpwood of the type or types defined held or aceu-

mulated in such area, although not a part of such

‘Reserve Supply’, from and to specific persons;

and provide procedures for applying for and grant-

ing such authorizations, directions and allocations;

**(3) Direct that no person, or no person of a

specified class, may consume, process, deliver or

accept delivery of any pulpwood of the type or

types defined held or accumulated in such area

except upon specific authorization or direction by

the Director General for Operations, and provide

procedures for applying for and granting such

authorization or direction; and/or

**(4) Limit or prohibit particular uses of pulpwood

of the type or types defined held or accumulated in

such area. In any allocation, authorization or direc-

tion issued by the Director General for Operations

pursuant to clause (1), (2) or (3) of the foregoing

paragraph, the Director General for Operations

may require the person to whom such allocation,

authorization or direction is issued to manufacture,

from the pulpwood which is the subject thereof, par-

ticular types and quantities of woodpulp or other

wood product or impose upon the use of such pulp-

wood by such person any other conditions necessary

and appropriate in the public interest and for

national defense. Such allocations, authorizations

and directions and any conditions attached thereto,

and any limitations or prohibitions issued pursuant

to clause (4) of the foregoing paragraph, shall be

made to insure the satisfaction of requirements,

direct and indirect, for the defense of the United

States and for essential civilian supply, may be

made in consideration cf the possible dislocation of

labor, the effect of the local shortage on the national

supply of products manufactured from pulpwood

ee.

13

and woodpulp, the problems of transporting such

products into and out of the area defined, and the

necessity of keeping a plant in operation so that it

may be able to fulfill war orders and essential

requirements, and may be made in the discretion

of the Director General for Operations, without

regard to preference ratings.

‘‘(e) Miscellaneous provisions—(1) Records. All

persons affected by this order shall keep and pre-

serve, for not less than 2 years, complete records

concerning their receipts, inventories, and consump-

tion or other disposition of pulpwood.

‘©(2) Audit and inspection. All records required

to he kept by this order shall, upon request, be sub-

mitted to audit and inspection by duly authorized

representatives of the War Production Board.

‘*(3) Reports. All persons affected by this order

shall execute and file with the War Production

Board such reports and questionnaires as said

Board shall from time to time request.

‘©(4) Violations. Any person who wilfully vio-

lates any provision of this order, or who, in connec-

tion with this order, wilfully conceals a materia’ fact

or furnishes false information to any department or

agency of the United States, is guilty of a crime,

and upon conviction may be punished by fine or

imprisonment. In addition, any such person may

he prohibited from making or obtaining further

deliveries of or from processing or using material

under priority control and may be deprived of

priorities assistance.

‘©(5) Communications. All reports required to he

filed hereunder and all communications concerning

this order shall, unless otherwise directed, be

addressed to: Pulp and Paper Branch, War Produe-

tion Board, Washington, D. C., Ref.: M-251.

|

|

pene I EET TE OS

A AB AA EES

14

(P.D. Reg. 1, as amended, 6 F.R. 6680; W.P.B. Reg.

1, 7 F.R. 561; E.O. 9024, 7 F.R. 329; E.0. 9040, 7

F.R. 527; E.O. 9125, 7 F.R. 2719; see. 2(a), Pub.

Law 671, 76th Cong., as amended by Pub. Laws 89

and 507, 77th Cong.)

‘Issued this 19th day of October 1942.

Ernest Kanzer,

Director General for Operations.

[F. R. Doe. 42-10519; Filed, October 19, 1942; 11:37 a.m.]”’

Schedule No. 1 to General Preference Order M-251 and

the specific directives to petitioner are set forth in the

amended petition (paragraphs 7 ef seq. and Exhibits A,

B, C, D, E, F, G and H thereto).

Questions Presented

The ultimate question is whether the allegations of the

amended petition are sufficient to state a claim for just

compensation for the taking of petitioner’s private prop-

erty for a public use within the meaning of the Fifth

Amendment to the Constitution. More specifically, the

question is whether, under the circumstances alleged in the

amended petition, the effect of General Preference Order

M-251 and the specifie directives of the War Production

Board to the petitioner constituted a requisition of the

temporary use of petitioner’s pulp-mill and inventory of

pulpwood logs.

Specification of Error to be Urged

The Court of Claims erred:

(1) In holding that there was no exercise by the govern-

ment of proprietary rights over petitioner’s private prop-

——

15

erty. The opinion shows a failure on the part of the Court

to consider the following:

(a) The statutory power conferred upon the War Pro-

duction Board (as a ‘‘board’’ authorized by the president)

by the Second War Powers Act to acquire for war pur-

poses ‘‘the temporary use’’ of any real property ‘‘or other

interest therein, together with any personal property

located thereon or used therewith’’. In the opinion of the

Court there is no mention of this statutory power.

—(b) The purpose and provisions, as well as the scope

and effect, of the Board’s General Preference Order M-291,

Schedule No. 1 thereto and the specific directives issued

to petitioner thereunder. The provisions of the order and

directives are not discussed in any detail in the opinion.

Their effect was not limited, as stated in the Court’s opin-

ion (R. 24), to the ‘*freezing’’ of the sources from which

petitioner could procure pulpwood from November 1, 1942

to April 1, 1944. The petition makes no reference what-

svever to any source of supply of pulpwood or to the inter-

ference with any such source by reason of the Board’s

order and directives. The petition does allege, however,

that on October 23, 1942, petitioner ‘‘had in inventory at

said pulp plant and under contract for delivery to the pulp

plant a supply of pulpwood logs for the continued opera-

tion of said pulp plant at capacity production’’ (R. 2).

(c) The dominion and control which the War Production

Board acquired over petitioner’s inventory and supply of

essential raw material, pulpwood.

The Court of Claims erroneously suggests that the order

and directives of the Board permitted petitioner to con.

sume logs on hand in some kind of manufacture other than

~wexcune

dass neeee OER ones

16

that in which it was then (October 1942) engaged. In the

court’s opinion, it was said (R. 24):

‘*Plaintiff had some logs on hand, but it was not

permitted to consume these in the kind of manu-

facturing in which it was then engaged.’’

The court overlooked the alleged fact that the order and

directives of the War Production Board did not permit

the petitioner to consume any logs or to engage in any

type of manufacture in its ‘Tacoma mill.

(d) The direct and intended effect of such control upon

the use of petitioner’s plant and facilities in the processing

of pulpwood into pulp, which was the only use (other than

as storage space) to which petitioner’s property could be

put. The Board’s letter to the petitioner states ‘‘we re-

gard the closing down of the Tacoma mill as a serious and

regrettable action which we would not have taken had we

seen any reasonable alternative’’ (R. 22) (Italics sup-

plied). The purpose and effect of the Board’s action was

to deprive petitioner of the temporary use of its mill and

its entire inventory of logs so that its skilled employees

and essential raw material would thereupon become avail-

able for use by other milis designated by the Board; and

the petition so alleges (R. 7-8).

(2) In holding that the allegations of the petition are

insufficient ‘‘under the limitations set out and defined in

the decisions of the Supreme Court, this court [t.e., the

Court of Claims] and other courts of the country to estab-

lish such a taking’’? of private property for a_ public

purpose (R. 25).

The decisions cited in the opinion of the Court of

Claims do not, we respectfully submit, contain any ‘‘limi-

tations’’ which appear to preclude petitioner’s claim. The

—

17

/

recent decisions of this Court, such as United States v.

Causby, 328 U. S. 256; United States v. General Motors

Corporation, 323 U. 8. 373, and the earlier decisions upon

which those decisions rested, are not discussed in the

opinion of the Court of Claims. The principal decisions

upon which that court relied are cases of frustration of

contract, such as Omnia Commercial Co. v. United States,

961 U. S. 502, and Morrisdale Coal Co. v. United States,

55 C. Cls. 310, affd. 259 U. S. 188, none of which have any

application here.

More important, however, it is impossible, we believe,

to reconcile the holding below with the decision of

this Court in International Paper Company Vv. United

States, 282 U. S. 399. In that case the International

Paper Company’s right to the use of water power,

which was essential to the continued operation of its paper

mill at Niagara Falls, New York, was diverted by govern-

ment order to a privately owned and operated hydro-

electric power company to enable the power company to

increase its output and furnish additional electric power

to manufacturers, other than the Paper Company, having

plants at Niagara Falls and designated by the War De-

partment, for use by such other manufacturers in the man-

ufacture of products needed for national defense in World

War I. The effect of the diversion of the water power

was to cause the International Company’s paper mill at

Niagara Falls to be shut down.

The International Company claimed compensation in

the total amount of $590,732.20, of which $304,685.36 rep-

resented the out-of-pocket or direct overhead expenses on

aceount of the shutdown, and the balance of approxi-

mately $289,000 represented loss of profits which would

have been earned if the mill had operated during the shut-

18

down period. The International Company urged, among

other things:

‘e* * * In depriving the claimant of its | water]

rights, the United States took something more than

the water rights in vacuo; it caused the mill to shut

down completely, resulting in unavoidable expense

and prevented the realization of the profits which

the claimant would otherwise have enjoyed. For

this the claimant is entitled to be reimbursed.”’

(Claimant’s Request for Special Findings of Fact

and Brief, Court of Claims, at page 282)

After trial, and upon special findings of fact, the Court

of Claims determined, as a conclusion of law, that the

International Company was not entitled to recover com-

pensation and dismissed the petition. The dismissal was

upon the theory that the diversion of the water was, at

most, a frustration of a contract right for which there

was no compensation, citing Omnia Commercial Co. v.

United States, supra, 261 U. S. 502.

This Court (opinion by Holmes, J.) reversed the judg-

ment of the Court of Claims dismissing the petition and

held that the Paper Company was entitled to compensa-

tion of $304,685.36 as the Paper Company’s out-of-pocket

and overhead shutdown expense during the period while

the Government’s directive forced the closing of the

paper mill.

In the Court’s opinion, rejecting the argument of the

Government that there was no taking, it was said (at

page 407):

6c *

* It is true that petitioner did not come

within the scope of the Government’s written

promise [to the Power Company] to pay. But the

Government purported to be using its power of

19

eminent domain to acquire rights that did not be-

long to it and for which it was bound by the Con-

stitution to pay. It promised to pay for all the

power that the canal could generate. If it failed

to realize that the petitioner had a right to a part of

the power, its clear general purpose and undertak-

ing was to pay for the rights that it took when it

took the power (citing cases). Of course it does

not matter that by a subordinate arrangement it di-

rected the use of the power to companies that would

fulfil its purposes rather than to machinery of its

own. That arrangement it was able to make only

because it took the power. * * *

‘‘We perceive no difficulty arising from the case

of Omnia Commercial Co. v. United States, 261

U. S. 502. There the taking of the whole product of

a company went no further than to make it practi-

cally impossible for that company to keep a collat-

eral contract to deliver a certain amount of steel

to the appellant. But here the Government took

the property that the petitioner owned as fully as

the Power Company owned the residue of the water

power in the canal. Our conclusion upon the whole

matter is that the Government intended to take and

did take the use of all the water power in the canal;

that it relied upon and exercised its power of emi-

nent domain to that end; that, purporting to act

under that power and no other, it promised to pay

the owners of that power, and that it did not make

the taking any less a taking for public use by its

logically subsequent direction that the power should

he delivered to private companies for work deemed

more useful than the manufacture of paper for the

exigencies of the national security and defence.

* * *))

It appears that the International Company’s proof of

loss of profits as a result of the shutdown of the paper

20

mill was not considered satisfactory and, upon the appeal,

that element of the claim for compensation was aban-

doned. It is significant, however, that in sustaining the

claim for compensation neither the claimant nor this

Court attempted to measure the compensation by the

value of the water power, as such. This Court accepted

the claimant’s view that the taking of the water rights

caused the mill to shut down completely, and that the

shutdown resulted in unavoidable expense to the claimant

for which the claimant was entitled to reimbursement.

In the course of the opinion of the Court it was expressly

stated (282 U. S. 399, at page 406):

“* * * On February 7, 1918 its [petitioner’s]

use of the water ceased and was not resumed until

midnight November 30, 1918, when the order of

December 28 [diverting petitioner’s water for

power purposes] was abrogated. The Court of

Claims found that the shutting off of the water

from the petitioner’s mill cost it $304,685.36, direct

overhead expense, but gave judgment that the peti

tion be dismissed.”’

In reversing the judgment of the Court of Claims,

therefore, this Court upheld the right to compensation

for the deprivation of the use of the paper mill which

was the direct and necessary result of the taking of the

International Paper Company’s water power right.

In the instant case the Government’s directives to this

petitioner to maintain its holdings of pulp as a ‘‘ ‘Reserve

Supply’ available for disposition by the War Production

Board,’’ and the actual diversion of portions of petition-

er’s inventory of logs to other manufacturers, deprived

this petitioner of the temporary use of its pulp plant as

effectively and completely as did the War Department’s

21

directive in the /niernalional Paper Company case, which,

for a temporary period, diverted the Paper Company’s

water power to a privately owned and operated power

company. The fair compensation for the deprivation of

petitioner’s private property may be measured here, as it

was in the /nternational Paper Company case, by the out-

of-pocket shutdown expenses of the petitioner's pulp mill

and the provable lost profits of this petitioner.

We respectfully submit, therefore, that the decision of

this Court in /nternational Paper Company v. United

States, supra, is a controlling precedent and that the deci-

sion of the Court of Claims in the instant case, dismissing

the petition, is in conflict therewith.

The Court of Claims has relied primarily on prior deci-

sions of the Court of Claims (Royal Holland Lloyd v.

United States, 73 C. Cls. 772 and Morrisdale Coal Co. v.

United States, supra, 55 C. Cls. 310, affd. 259 U. S. 188),

all of which appear to be clearly distinguishable. More-

over, the Court of Claims has not applied the proper legal

tests for determining whether private property has been

taken by the Government for a public purpose, as stated

by this Court in a number of prior decisions, including,

among others, United States v. Causby, supra, 328 U. S.

256; United States v. General Motors Corporation, supra,

323 U.S. 373.

In Untted States v. Causby, supra, this Court said:

““* * * It is the owner’s loss, not the taker’s

gain, which is the measure of the value of the prop-

erty taken. United States v. Miller, 317 U. S. 369.

Market value fairly determined is the normal meas-

ure of the recovery. Jd. And that value may re-

flect the use to which the land could readily be

converted, as well as the existing use. United

oe

ene 9

22

States v. Powelson, 319 U. S. 266, 275, and cases

cited. If, by reason of the frequency and altitude of

the flights [of government airplanes over respon-

dent’s chicken farm lands], respondents could not

use this land for any purpose, their loss would be

complete. It would be as complete as if the United

States had entered upon the surface of the land

and taken exclusive possession of it.’’

The opinion goes on to point out that an easement,

either temporary or permanent, might be taken by flights

of Government airplanes over respondent’s farm land, say-

ing (at page 262):

‘«“* * * Tt would be a definite exercise of com-

plete dominion and control over the surface of the

land. The fact that the planes never touched the

surface would be as irrelevant as the absence in this

day of the feudal livery of seisin on the transfer

of real estate. The owner’s right to possess and

exploit the land—that is to say, his beneficial owner-

ship of it—would be destroyed. It would not be a

ease of incidental damages arising from a legalized

nuisance * * * the land is appropriated as di-

rectly and completely as if it were used for the

runways themselves. * * * enjoyment and use

of the land are not completely destroyed. But that

does not seem to us to be controlling. The path of

glide for airplanes might reduce a valuable factory

site to grazing land, an orchard to a vegetable

patch, a residential section to a wheat field. Some

value would remain. But the use of airspace imme-

diately above the land would limit the utility of the

land and cause a diminution in its value. * * *”

The opinion also recognized that the air space above

the chicken farm of respondent, Causby, was a public high-

way and that respondent owned as much of the space

eee

23

above the ground as he could use in connection with the

land, and said further (at page 264) :

«* * * The fact that he does not occupy it in

a physical sense—by the erection of buildings and

the like—is not material. As we have said, the

flight of airplanes, which skim the surface but do

not touch it, is as much an appropriation of the use

of the land as a more conventional entry upon it.

* * * The reason is that there would be an in-

trusion so immediate and direct as to subtract from

the owner’s full enjoyment of the property and to

limit his exploitation of it. * * *”

This Court adopted the philosophy of Portsmouth Har-

bor Land & Hotel Company v. United States, 260 U.S.

327, saying (at page 265):

‘‘In this case, as in Portsmouth Company v.

United States, supra, the damages were not merely

consequential. They were the product of a direct

invasion of respondents’ domain. As stated in

United States v. Cress, 243 U. S. 316, 328,‘* * *

it is the character of the invasion, not the amount

of damage resulting from it, so long as the damage

is substantial, that determines the question whether

it is a taking.’ ”’

We respectfully submit that, by parity reasoning, the

Court is warranted in holding that the character of the

Government’s intrusion or invasion of petitioner’s right

to the use of its pulp mill during the period from Novem-

her 1, 1942 to April 1, 1944 was such that there was a tak-

ing of petitioner’s private property for a public purpose

which is compensatory under the Fifth Amendment.

In the Causby case it was also noted (page 261, footnote

6) ‘*That destruction of all uses of the property’’ has

been held to constitute a taking of private property, citing

NO CE LLL ELEN

24

Pumpelly v. Green Bay Company, 13 Wall. 166; United

States v. Lynah, 188 U. S. 445; United States v. Welch,

217 U. S. 333.

(3) In holding that there was no taking of private prop-

erty because the pulp mill in a shutdown condition ‘‘was

left in the hands of the plaintiff’’.

This holding, we respectfully submit, is in conflict with

the long established rule that it is the private owner’s

loss, not the taker’s gain, which is to be compensated

(United States v. Causby, supra; United States v. Powel-

son, 319 U.S. 266, 281 and cases cited) and that ‘‘Govern-

mental action short of acquisition of title or oeeupancy

has been held, if its effeets are so complete as to deprive

the owner of all or most of his interest in the subject mat-

ter, to amount to a taking’’ (United States v. General

Motors Corporation, supra, 323 U. S. 373, 378 and cases

cited).

It cannot be doubted that as between private parties, for

example, petitioner and a competitor, the acquisition by the

competitor of the temporary use of petitioner’s plant in

order to shut it down so that the competitor’s plants

in the same area may continue in operation at full

capacity in the manufacture of defense goods, and for that

purpose have the right to take over petitioner’s skilled

employees and to consume petitioner’s inventory and

supply of essential raw material, would clearly be regarded

as the acquisition of private property rights by the peti-

tioner’s competitor who would thereby become legally

bound to pay petitioner fair compensation therefor. In

effect, the order and directives of the War Production

Board to petitioner constituted an acquisition by the Gov-

ernment of precisely the same private property rights

which, in the supposed ease, would have heen aequired by

=

25

petitioner’s competitor. The acquisition by the Govern-

ment was for a public purpose, namely, the defense of the

United States. The petition shows that the taking of

petitioner’s private property was intentional and that

petitioner suffered substantial damages. On the facts

alleged in the petition, therefore, we respectfully submit

that a valid claim for compensation for the taking of

private property for a public use has been sufficiently

stated.

The recent case of United States v. Dickinson, 331 U. S.

745, decided June 16, 1947, was a suit unier the Tucker

Act to recover judgments for the value of easements taken

by flooding land, for damages.by erosion to parts of land

and for an easement for intermittent flooding of parts

of land. The Government objected that the claims were

outlawed by the statute of limitations. This Court sus-

tained a judgment allowing the claims and overruling the

Government’s objections, saying, among other things (at

page 748):

‘‘Property is taken in the constitutional sense

when inroads are made upon an owner’s use of it

to an extent that, as between private parties, a

servitude has been acquired either by agreement

or in course of time. The Fifth Amendment ex-

presses a principle of fairness and not a tech-

nical rule of procedure enshrining old or new

niceties regarding ‘causes of action’—when they

are born, whether they proliferate and when they

die. - 7 #9)

It is respectfully submitted that the ‘tinroads’’ made

by the Government upon petitioner’s use of its pulp mill

in the instant case constituted a ‘‘taking’’ in the consti-

tutional sense.

26

(4) In holding that the petition ‘‘does not purport to so

charge that it was the [War Production] Board’s objective

to shut down plaintiff’s plant. * * * Its [the Board’s]

rejection of plaintiff’s request to be permitted to convert

{its mill] to the manufacture of nitrating pulp was directed

neither toward the gaining of any control of plaintiff’s

plant nor toward the destruction of its ability to operate

profitably, though it may have been aware that this latter

would follow as a necessary consequence of its action.”’

(R. 29, 30)

We respectfully submit that upon a fair reading of the

petition as a whole it is clearly alleged that it was the

purpose and intention of the Board to secure dominion

and control over petitioner’s pulpwood inventory as a

‘*Reserve Supply’’ available for disposition by the War

Production Board and to shut down petitioner’s plant for

the defense of the United States. The petition shows that

in rejecting petitioner’s protest the War Production Board

admitted in writing to petitioner: ‘‘we regard the closing

down of the Tacoma mill as a serious and regrettable action

which we would not have taken had we seen any reason-

able alternative.’’ (R. 22). Adequate evidence of an inten-

tion of the Board to take petitioner’s private property is

further found in the specific directives to petitioner (R. 12

to 20, Exhibits B, C, D, KE, F, G, H, I, and J annexed to the

amended petition). The directives also show that the

purpose of the War Production Board was to require

petitioner’s plant to be shut down so that the manufacture

of nitrating and other pulps in the Puget Sound area could

be concentrated in other plants designated by the Board.

Thus, the allegations of the petition plainly negative the

holding of the Court of Claims.

| sian ict ae ca haat rapes it

27

In passing upon the sufficiency of the allegations of

the amended petition here and considering the legal effect

of the drastic character of the order and directives of the

War Production Board to this petitioner, we respectfully

suggest that the allegations are to be weighed in relation

to the purposes to be served by the Fifth Amendment. and

by having in mind the conditions under which modern

total warfare is carried on. It is common knowledge that

modern war involves a far greater use by the Government

for public purposes than ever before of privately-owned

manufacturing facilities. In considering this petition for

a writ of certiorari, therefore, we believe it proper to

invoke the doctrine stated by an eminent Justice of this

Court that ‘‘Constitutions are intended to preserve prac-

tical and substantial rights, not to maintain theories’’

(Opinion of Holmes, J., in Davis v. Mills, 194 U. 8. 451,

457, and recently cited in United States v. Dickinson,

supra, 331 U. S. 745, at page 748).

(5) That the shutdown out-of-pocket expense and the

loss of profits during the shutdown period was an inci-

dental consequence of the respondent’s acts for which

there is no liability.

This holding appears to be in direct conflict with the

views expressed by this Court-that damages are direct

and not merely consequential where the ‘‘intrusion’’ by

the Government in the property rights of a private owner

is ‘*so immediate and direct as to subtract from the own-

er’s full enjoyment of the property and to limit his

exploitation of it.’’ (United States v. Causby, supra, page

265.) Here, as in Jnternational Paper Company v. United

States, supra, the shutdown expense and the provable loss

of profits are claimed as the measure of the fair value of

28

the property taken. No claim is made here for the taking

of a business separate and apart from the special value

of the temporary use of the petitioner’s pulp plant and

log inventory. Shutdown out-of-pocket expenses and loss

of profits (if capable of proof) are proper elements in

determining the just compensation for the taking of a

privately owned mill property for a public use in a similar

situation (International Paper Company v. United States,

supra).

Reasons for the Petition

The writ of certiorari prayed for should be allowed

for the following reasons:

(1) In sustaining the demurrer to the petition the

Court of Claims has decided an issue in the instant case

which is of great public importance. So far as we know,

there has been no decision by this Court construing

the broad powers granted by Congress under the pro-

visions of the Second War Powers Act, 1942 which were

invoked by the War Production Board in the situation

alleged in the petition. Moreover, so far as we know, this

Court has not previously had occasion to consider the

effect of an order of the War Production Board of the

character shown here.

Published records now available plainly indicate that the

authorized representatives of the Government who were

responsible for the issuance of General Preference Order

M-251 and the specific directives thereunder entertained

the view that the shutdown of petitioner’s pulp mill would

give rise to a claim for compensation.

The former General Counsel and Assistant General

Counsel of the War Production Board have published

ae

29

their views that the ‘‘M’’ series of orders of the Board

were of such a drastic character in controlling the

use of private properties and materials that they could

have the effect of putting private companies out of busi-

ness and present questions of the taking of private prop-

erty for public use under the Fifth Amendment of the

Constitution (see ‘‘The War Production Board Adminis-

trative Policies and Procedures’’ by John Lord O’Brian

and Manly Fleischmann, 13 George Washington Law

Review, December, 1944, No. 1, at page 29). It appears

to have been the theory of the Board that private property

would not be taken if the Board’s order did not prohibit

manufacture entirely and the use of a substitute material

was permitted. In the instant case it clearly appears from

the allegations of the petition that all manufacture at the

petitioner’s plant was prohibited and that no substitute

material eould be used. The instant case, therefore, pre-

sents the important question whether the actual applica-

tion of the Board’s order and its specific directives to the

petitioner did not, in effect, accomplish the acquisition or

requisition by the Government for war purposes of the

temporary use of the petitioner’s mill property and the

personal property thereon and used therewith, as was

permitted by the express provisions of the Second War

Powers Act, 1942.

A public record prepared under the supervision of |

James W. Fesler, War Production Board Historian,

entitled ‘‘Historical Reports on War Administration, War

Production Board, Special Study No. 7, Pulp and Paper

Policies of the War Production Board and Predecessor

Agencies, May 1940 to January 1944”’, pages 61 to 68,

shows that the Government action which resulted in the

shutdown of petitioner’s mill was initiated by the United

30

States War Manpower Commission at the instance of the

War and Navy Departments as a war measure; that

these Departments, by their spokesman, recommended

for the pulp and paper industry ‘‘a policy of concen-

tration in Washington and Oregon’’ in order that needed

highly skilled employees might be made available; that

in adopting such a policy the Director of the Office of

Civilian Supply and Chairman of the Committee on Con-

centration of Production recognized that such a plan of

necessity entailed ‘‘a scheme of compensation for the

concentrated mills’’ (page 64). That public record fur-

ther shows (at page 65) that three mills, including peti-

tioner’s, were proposed to be closed down; that peti-

tioner’s was the second largest scheduled for shutdown;

that representatives of the largest mill strenously objected

to a shutdown on the ground that ‘‘it would face bank-

ruptey by the closing down’’, and that the program was

revised to permit that mill to operate at 50% of capacity.

Thus, the public record shows that the petitioner’s mill

was the largest mill shut down pursuant to General

Preference Order M-251 and that 365 of petitioner’s

skilled employees were thereby released (page 65).

With regard to the ‘*compensation’’ which the con-

centration program involved, it is further to be noted that

in rejecting a suggestion of making the pulp mill shut-

down program a ‘‘two bite’’ instead of a ‘tone bite’’

program, the Historical Report states the following (at

page 66):

“e * * the WPB concentration officials pointed

out that since the concentration program involved

compensation a ‘two bite’ program would be too

difficult to handle. The ‘one bite’ program was

because of U. S. insistence, agreed upon, and Gen-

31

eral Preference Order M-251 was issued by the

Director General for Operations on October 26,

making possible control of pulpwood in the short-

age areas. * * *”’

Thus, the official historical record of the Government’s

acts which are the subject of the claim for compensation

in the instant case establish beyond doubt that at the very

time of the issuance of General Preference Order M-251

the Government officials responsible therefor recognized

that the program would involve the obligation of the

Government to make compensation to the mills affected

hy the shutdown order.

Admittedly, it would have heen proper for the Govern-

ment officials to have issued a requisition order expressly

taking over the ‘‘temporary use’’ of the petitioner’s pulp

plant at an agreed ‘‘compensation’’, or pursuant to a pro-

cedure for the determination of the fair compensation at

the time of the ‘‘taking’’. That, however, was not done

and the important issues of ‘‘taking’’ of petitioner’s pri-

vate property for a public use and of the ‘‘fair compen-

sation’? payable therefor are now before the courts in the

instant case for determination, as was apparently antici-

pated by the Government officials in charge of the matter

in October 1942.

We respectfully submit, therefore, that this Court should

allow the important question of law which the case presents

to be reviewed on certiorari.

(2) The Court of Claims decided the important federal

question under the Fifth Amendment to the federal Con-

stitution in a way which conflicts with the decision of this

Court in International Paper Company v. United States,

supra.

pCR I EIR A

32

(3) The Court of Claims decided the federal question

involved here in a way directly in conflict with other

applicable decisions of this Court, including (in addition

to International Paper Company v. United States, supra),

United States v. General Motors Corp., supra, United

States v. Causby, supra, United States v. Dickinson, 331

U. S. 745, and cases cited therein.

Conclusion

The questions now presented are of real importance

and the opinion and decision below appear to be in conflict

with the decision of this Court in International Paper

Company v. United States, supra. Accordingly, the peti-

tion for the writ of certiorari should be granted.

WuHueREFORE, your petitioner respectfully prays that a

writ of certiorari issue to the United States Court of

Claims and submits herewith a certified transcript of the

record in the Court below in support of this petition.

Respectfully submitted,

St. Reais Paper Company,

By Horace R. Lame,

Attorney for Petitioner,

Dated: June 2, 1948,