United States v. Commodities Trading Corp.

1950-05-01

Headline: Wartime price controls upheld as the normal measure of compensation, limiting payouts to commodity holders and blocking speculative retention‑value claims when the Government requisitions goods.

Holding: The Court held that wartime OPA ceiling prices generally serve as the measure of just compensation for requisitioned goods, rejected broad "retention value" awards, and ordered judgment based on the applicable ceiling price.

Real World Impact:

Limits compensation to government-set ceiling prices for requisitioned commodities.
Makes it harder for investors holding nonperishable goods to claim future profit losses.
Permits limited exceptions when a seller proves special hardship or higher costs.

Topics: government takings, price controls, compensation for requisitioned goods, commodity markets

Summary

Background

Commodities Trading Corporation, a company that invested in large stocks of black pepper, sued after the War Department requisitioned about 760,000 pounds from its 17,000,000-pound holding in 1944. The Government said the OPA ceiling price (about 6.63 cents per pound) was the appropriate payment; the company sought 22 cents per pound. The Court of Claims awarded 15 cents, using a "retention value" idea and the company's reported costs.

Reasoning

The Court examined the Fifth Amendment requirement of "just compensation" and concluded that wartime ceiling prices normally represent the fair measure because they were the only realizable value for many sellers and Congress intended governments to buy at those controlled rates. The majority rejected a general "retention value" rule as speculative and likely to favor a few owners able to withhold goods. The Court left room for narrow exceptions if a seller proves special hardship but found Commodities did not meet that burden and declined to let its cost figures override the ceiling price.

Real world impact

The ruling means owners of nonperishable commodities requisitioned during price controls will usually receive the government-set ceiling price, not speculative future profits. It reduces incentives to withhold essential materials to force higher government payments. The case was reversed and remanded with instructions to enter judgment based on the applicable ceiling price at the time of taking.

Dissents or concurrances

Justices Frankfurter and Jackson agreed retention value was improper but urged that a party's actual costs could matter; they would have the lower court reexamine cost accounting rather than simply treat ceilings as the only measure.