Morrisdale Coal Co. v. United States

Background

A coal company sued the United States after wartime regulators ordered it to divert coal and fixed the price for certain coal. The company had contracts promising more production for June through November 1918 at $4.50 per gross ton. The Fuel Administration, created during the war and acting under the President's authority, required the company to divert 12,823.89 tons and set the price for that coal at $3,304 per gross ton. The company says it lost $15,337.37 because it received the lower price and asked the Court of Claims for money. The Court of Claims dismissed the petition, and the company appealed.

Reasoning

The Court asked whether obeying the wartime price and distribution orders created a contract with the Government or amounted to a taking of property that requires compensation under the Fifth Amendment (a "taking" means the government has taken private property for public use). The Court relied on the statute authorizing the Fuel Administration to fix prices and manage coal distribution. It said making such rules is not itself a taking and that the law does not imply a promise to make whole businesses that suffer losses by following government orders. The Court also pointed out that the company did not claim the government-paid price was unfair, only that it would have made more without the regulation. That showing is not enough to imply a promise to indemnify. The Court cited related precedents and affirmed the dismissal.

Real world impact

The decision means companies who comply with wartime allocation or price orders cannot automatically recover lost profits from the government. To get compensation, a company must show a clear taking by the government or fit within a specific statute that provides a remedy. This ruling leaves the coal company’s stated loss uncompensated.