Ferries Co. v. United States

Background

The city of Portsmouth and Norfolk County leased the Norfolk ferry system to a private operator for a ten-year term beginning in 1909. The lease required an inventory and appraisal at the start and another appraisal at the end to compare values. The lessee accepted the property (except land) under a 1909 appraisal of $152,274.40. In 1918 the United States, through the Bureau of Industrial Housing and Transportation, took over operation and the parties agreed the lease appraisal procedure would apply at takeover.

Reasoning

The core question was whether the final appraisal had to use much higher wartime prices in late 1918. The appraisers produced a 1918 valuation of about $164,928.68; the Court of Claims noted wartime-based valuations of $289,575.80 and a claimed figure of $343,702.16. The Court concluded the parties meant the appraisal to be made “as if” the lease had ended and on the same basis as the original appraisal, not by applying wartime unit prices. It found no government seizure that entitled the operator to extra compensation and saw no legal basis to set aside the agreed appraisal.

Real world impact

The ruling leaves the negotiated appraisal mechanism in place and denies the operator’s claim for large wartime-price gains. It affirms the Court of Claims’ dismissal and holds that parties who contract valuation rules cannot later demand windfall increases from market spikes. This decision resolves this contract dispute but does not create a broad new rule about government takings outside similarly worded agreements.