Seaboard Air Line Railway Co. v. United States

Background

A railroad company owned 2.6 acres next to the Charleston Port Terminal. On May 23, 1919, the United States requisitioned the land under the Lever Act to provide storage for Army supplies. The President’s appraisers set compensation at $235.80, but the owner sued for a higher amount. A jury later found the fair value to be $6,000. The District Court entered judgment for $6,000 plus interest at South Carolina’s statutory rate from the date of taking. The Government objected to the award of interest, and the Court of Appeals ordered a new trial unless the owner waived interest; the owner appealed to the Supreme Court.

Reasoning

The central question was whether paying the land’s value at a later date is enough, or whether the owner must receive something more to make him whole for the time he was deprived of the land. The Court explained that the Constitution’s guarantee of “just compensation” requires making the owner financially whole as of the date of taking. Interest is a proper method to measure the addition needed to restore the owner’s position. The Court distinguished cases about ordinary claims against the Government and relied on condemnation principles that allow interest as part of just compensation. Applying South Carolina’s legal interest rate, the Court concluded the District Court’s award was correct and reversed the Court of Appeals.

Real world impact

This decision means owners whose land is taken and paid for later can recover interest as part of their compensation, so they are compensated from the date possession began. Federal requisitions that delay payment must account for that financial loss.