Phelps v. United States

Background

A pair of partners leased Pier No. 7 at Bush Terminal in New York Harbor. In late 1917, the federal government, acting under wartime authority, requisitioned the pier and occupied it until May 1919. A board of appraisers calculated payments; the partners accepted part of that award and later sued for more, seeking the full value of the property’s use while it was taken.

Reasoning

The Court addressed whether the owners were entitled to an added sum that would put them in the same financial position as if the use had been paid for at the time it occurred. The Justices explained that when the United States takes property for public use it has an implied obligation—like a contract—to provide just compensation under the Fifth Amendment. The Court held that the statutory rule barring interest on claims until judgment did not bar awarding the additional amount that equates to contemporaneous payment for the use. For those reasons, the Court reversed the lower judgment and allowed the owners to recover the extra sum needed to make them whole.

Real world impact

The decision means owners whose land or leases are temporarily taken for government use can obtain compensation that reflects the value at the time of the taking, not just later judgment values. It affects people whose property was seized for wartime or other federal needs and limits the reach of a statute that might otherwise block full recovery. The ruling requires additional payment to achieve fair compensation when contemporaneous payment was not made.