
    CATZ-AMERICAN COMPANY, INC. v. THE UNITED STATES
    [No. 49633.
    Decided December 2, 1952]
    
      Mr. Edward L. Blackman for plaintiff.
    
      Mr. Kendall M. Barnes, with whom was Mr. Assistant Attorney General Holmes Baldridge, for the defendant.
   Whitaker, Judge,

delivered the opinion of the court:

Plaintiff in this case sues for just compensation for 151,-129.72 pounds of whole pepper requisitioned by the defendant on May 29, 1944. On August 7, 1944, defendant made a preliminary determination of just compensation in the amount of $10,100.22, and on September 26 it made a formal award of this amount to plaintiff. One-half thereof was paid on November 5,1945.

The award was based upon an average rate of 6.68 cents per pound. Plaintiff claims not less than 10 cents a pound.

Immediately after the outbreak of the war with Japan, to wit, on December 11,1941, the Office of Price Administration froze the price of whole pepper at its then current market value of 6.75 cents a pound. On February 3,1942, this price was reduced to 6y2 cents a pound, and this was the ceiling price in effect at the time the pepper was requisitioned. The excess awarded plaintiff over the 6y2 cents a pound was to take care of labor and storage charges.

The defendant says that the decision of the Supreme Court in United States v. Commodities Trading Corporation, 339 U. S. 121, controls this case.

There are some differences between the case at bar and the Commodities Trading Corporation case. In the latter case the plaintiff was not a dealer in pepper but an investor therein. It had bought its pepper to hold for a favorable market. On the other hand, the present plaintiff was a dealer in pepper, and other spices and foodstuffs.. In the years 1942 and 1943 it bought 9,894,162 pounds of whole pepper, and it sold in these years 7,876,197 pounds on the domestic market and 3,608,686 on the export market. Its dealings in pepper constituted the major portion of its. business.

It sold its pepper to grinders of pepper, who, in turn, sold the ground pepper. Plaintiff had never sold ground pepper prior to May 29,1944, the date of the requisition.

Strange to say, the ceiling price of whole pepper was 6% cents a pound, but the ceiling price of ground black pepper was 12% cents a pound, nearly twice as much. Plaintiff claims that it is entitled to what it could have secured for its pepper had it ground it.

In just compensation cases “the owner must be compensated for what is taken from him, but that is done when he is paid its fair market value for all available uses and purposes.” [Italics ours.] United States v. Chandler-Dunbar Co., 229 U. S. 53, 81, and cases there cited. See also Minnesota Bate Cases, 230 U. S. 352, 451; Olson v. United States, 292 U. S. 246, 258; United States v. Miller, 317 U. S. 369, 375.

The rule, was stated with the following qualification in United States ex rel. T. V. A. v. Powelson, 319 U. S. 266, 275:

An owner of lands sought to be condemned is entitled to their “market value fairly determined.” United States v. Miller, 317 U. S. 369, 374. That value may reflect not only the use to which the property is presently devoted but also that use to which it may be readily converted. * * * But in order for that special adaptability to be considered, there must be a reasonable probability of the lands [being converted to some other use] * * * in the reasonably near future. * * * In absence of such a showing, the chance of their being united for that special use is regarded “as too remote and speculative to have any legitimate effect upon the valuation.” [Italics ours.]

According to this rule, plaintiff would be entitled to the ceiling price for ground black pepper if this market was available to it, and there was a reasonable probability that it would go into this market.

Under the facts of this case, we conclude that this market was not available to it.

Plaintiff had never sold any ground pepper prior to the time of the requisition. Its customers were dealers in ground pepper and they bought whole pepper from plaintiff for the purpose of grinding it and selling it to their customers. As a matter of business, plaintiff could hardly afford to compete with its customers. So long as it sold whole pepper to grinders of pepper, it could hardly enter the ground pepper market itself; at any rate, it had never done so prior to the date of the requisition.

It is true that after the requisition and for a period of about three months it sold 309,594 pounds of ground pepper at a price of 12 cents a pound. These sales, however, were only a fraction of its normal sales of whole pepper for such a period, and, of more importance, they came after the date of the requisition. What we are undertaking to determine, of course, is just compensation for the most profitable use plaintiff could make of its pepper prior to and on the date of requisition. Apparently it was not profitable for it at that time to sell ground pepper. Never before had it sold anything but whole pepper.

We must conclude, therefore, that plaintiff is not entitled to recover the price of ground pepper, less the cost of grinding and packaging.

Plaintiff mentions, in passing, its sales of decorticated pepper at 10.4 cents a pound from April to September 1944, but its reliance is not on these sales, but on its alleged right to grind its pepper and to secure for it ground pepper prices. As stated above, we do not think this plaintiff is entitled to recover these prices.

Plaintiff says that in determining just compensation we must take into consideration “retention value.” The Supreme Court rejected this in the Commodities case. The reasons for taking this value into consideration were much stronger in the Commodities case than in this.

Plaintiff is entitled to recover the balance of the award which has not been paid to it.

Howell, Judge; Madden, Judge/ and Littleton, Judge; concur.

J ones, Chief Judge, took no part in the decision of this case.

conclusion of law

For the foregoing reasons and upon the basis of the following special findings of fact, which are made a part of the judgment herein, and upon the briefs and argument of counsel, the court concludes that as a matter of law the plaintiff is entitled to recover, and it is therefore adjudged and ordered that plaintiff will recover of and from the United States five thousand three hundred eight dollars and seventy-nine cents ($5,308.79).

findings of fact

The findings of fact, based upon the report of Commissioner C. Murray Bernhardt, the exceptions thereto, and upon the evidence, are as follows:

1. Plaintiff is a New York corporation domiciled principally in New York City.

2. On May 23, 1944, the Secretary of War issued “War Department Requisition No. 195,” pursuant to the Act of October 16, 1941 (55 Stat. 742), as amended, directing the seizure of “not in excess of 151,959 pounds of pepper, black, Type I, whole,” owned by plaintiff and held in storage in Brooklyn, New York.

3. On May 29, 1944, defendant seized 151,129.72 pounds of plaintiff’s pepper as described in and pursuant to the requisition.

4. Plaintiff filed timely notice with defendant of its ownership of the requisitioned pepper and claimed compensation therefor.

5. By letter dated August 7,1944, defendant notified plaintiff of its preliminary determination of just compensation for the requisitioned pepper in the amount of $10,100.22, to which plaintiff filed its objections and rejection on August 29,1944.

6. On September 26, 1945, defendant overruled plaintiff’s objections and formally awarded compensation to plaintiff in the amount of its preliminary determination. On November 5, 1945, defendant paid plaintiff one-half of the amount of such award, or $5,308.79, at the average rate of 6.68 cents per pound of pepper seized. The price paid in excess of 6.5 cents per pound represented labor and warehouse storage charges.

7. On December 11, 1941, the Office of Price Administration issued Price Schedule No. 52, and froze the price of whole black pepper at its then market price, which established a maximum price for it of 6.75 cents a pound ex dock or warehouse in New York City.

8. On February 3,1942, the Office of Price Administration amended this price schedule, reissuing it on that date as Revised Price Schedule No. 52, setting the ceiling price on whole black pepper at 6.50 cents per pound, plus labor charges paid the warehouse for putting the pepper in storage and taking it out, and plus warehouse storage charges for not more than 30 days. In October 1944 this ceiling price was raised to 10 cents per pound; in March 1946 it was raised to 16 cents per pound; and in August 1946 the ceiling price was removed.

9. The maximum price for pepper sold for export during 1944 was allowed to exceed the domestic price by no more than ten percent.

10. During 1944 the ceiling price on domestic sales of ground black pepper was 12y2 cents per pound.

11. Whole black pepper is not perishable and will last unimpaired in quality for several decades. Ground black pepper loses its strength gradually.

12. The domestic demand for whole black pepper and ground black pepper in the United States in 1944 exceeded the supply. No evidence was offered as to whether the export demand for black pepper in any form exceeded the supply available for export.

13. Plaintiff was an importer and exporter, principally of foodstuffs, including the purchase and sale of spices. Whole black pepper was the principal spice in which plaintiff dealt. Plaintiff sold the following quantities of whole black pepper during 1942, 1943, and the first five months of 1944, at prices indicated:

During this period it also sold in the export market 3,608,-686 pounds. These sales were made within O. P. A. ceiling prices, the average excess shown representing storage, packaging and handling charges.

14. Plaintiff’s pepper business consisted predominantly of the purchase and sale of whole black pepper. Its customers were grinders of pepper. It made no sales of ground black pepper prior to May 29,1944, the date of the seizure. From June 22, 1944, through October 3, 1944, it sold a total of 309,594 pounds of ground black pepper at a price of 12 cents per pound. Of these sales, 95,485 pounds were sold to purchasers who had facilities for grinding pepper, and plaintiff in such cases gave a credit of 1.6 cents per pound as an allowance for grinding, packaging, and loss in grinding. Although advised of plaintiff’s intention, neither the War Food Administration nor the Office of Price Administration objected to plaintiff’s grinding and selling part of its stock of whole black pepper.

15. On May 5, 1944, plaintiff offered to sell defendant specified quantities of ground black pepper ranging in price from 11.25 cents per pound to 16.05 cents per pound, the price variations being attributable to different modes of packing. The offer was not accepted.

16. From April 1944 to September 1944 plaintiff sold 678,738 pounds of decorticated pepper at a net price (after deducting expenses of decorticating) of $70,689.48, or at an average net price of 10.4 cents per pound.

There is no evidence that there was any further demand for decorticated pepper.

17. On May 29, 1944, the ceiling price of:

a. 151,129.72 pounds of whole black pepper was $10,100.22.

b. 148,107.13 pounds of ground black pepper (151,129.72 pounds of whole black pepper less 2% loss in grinding) was $15,717.49.

c. 151,129.72 pounds of decorticated black pepper was $15,717.49.  