International Paper Co. v. United States

Background

The dispute involves a paper company that leased the right to draw water from a power canal above Niagara Falls. The paper company used part of the canal’s output to run its mill. In late December 1917 the Secretary of War ordered the power company to deliver the canal’s total output for national defense and promised compensation. The War Department arranged for that power to be sent to other companies and warned the paper company it would be cut off. The paper company’s mill stopped using the water on February 7, 1918, and did not resume until November 30, 1918. The Court of Claims found direct losses of $304,685.36 but dismissed the claim; the Supreme Court reviewed that dismissal.

Reasoning

The central question was whether the government’s wartime requisition was a taking of property that required payment. The Court said yes: by ordering the total output and directing where the power went, the government intended to and did take the use of the canal’s water power, including the portion the paper company had been using. The Court relied on wartime authority to make the requisition but held that authority did not excuse the obligation to pay for what was taken. The fact that the government routed the power through private companies did not make the taking any less for public use.

Real world impact

The decision means that when the government seizes or redirects privately used utility resources in wartime, affected businesses may recover compensation. Companies that depend on licensed water or power rights can claim damages if those rights are taken for public purposes. The ruling allows wartime requisitions to proceed but makes clear the United States must pay for the property it takes.

Dissents or concurrances

Three Justices would have left the lower court’s dismissal in place, disagreeing with the majority’s view that the government’s actions amounted to a compensable taking.