Kimball Laundry Co. v. United States
Headline: Temporary government seizure of a business can require payment for lost customers and business value; Court allows compensation and sends the case back to calculate exact damages for affected businesses.
Holding: The Court held that when the government temporarily takes business premises and thereby effectively preempts customer lists or trade routes, the owner may be paid for transferable going-concern value, and the case was sent back to fix the amount.
- Lets businesses claim compensation for lost customers when government temporarily seizes premises.
- Requires the government to pay for transferable going-concern value it effectively preempts.
- Remands the case to calculate damages using evidence like past earnings and solicitation expenses.
Summary
Background
The Kimball Laundry Company in Omaha had its plant taken by the United States for use as an Army laundry beginning with a petition filed November 21, 1942, and the property was returned March 23, 1946 after several extensions. The Army ran the plant, most employees stayed, and the Laundry suspended its business. A jury awarded annual rental totaling $252,000 and $45,776.03 for damage to machinery; the trial court excluded evidence of lost customers (“trade routes”).
Reasoning
The Court faced whether the owner could be paid for loss of customer lists or other “going‑concern” value when the taking was temporary. The majority said the Fifth Amendment covers only transferable value — what a buyer would pay — and that temporary occupancy is normally measured by probable rental. But when the government’s use effectively preempts the owner’s customer base, that transferable going‑concern value can be taken and must be paid. The Court sent the case back to decide how much that value was worth, and said interest on rental is due from each rental period’s start.
Real world impact
The ruling means businesses whose premises are temporarily seized may be able to recover for lost customers or goodwill if the government’s use effectively monopolizes that business opportunity. Calculating such awards requires solid proof, like past earnings or spending to build customers. This decision is not a final dollar award here; it instructs a lower court to decide the amount under the Court’s guidance.
Dissents or concurrances
Justice Rutledge agreed but warned against rigid valuation rules. Justice Douglas (joined by three others) dissented, arguing the government never used the customer lists and that requiring payment is a new and unexpected rule.
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