Armstrong v. United States
The Supreme Court ruled that materials suppliers who had unpaid liens on boat hulls being built for the Navy were entitled to compensation after the government took over the unfinished boats and made the liens impossible to enforce.
The decision means the government cannot use its own immunity from lawsuits to wipe out someone's property rights for free — if government action destroys the value of a valid lien, the Constitution requires payment, even without a formal condemnation.
“The Fifth Amendment's guarantee that private property shall not be taken for a public use without just compensation was designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.”
The Court's statement of the core purpose behind the Fifth Amendment's Takings Clause.
How it got here: The Court of Claims ruled for the United States, finding no valid liens existed; the suppliers sought and received Supreme Court review.
The Case in Depth
What happened
A shipbuilding company under contract to build Navy boats defaulted, and several materials suppliers had furnished parts and supplies without being paid. Under Maine law they held liens on the unfinished hulls and materials. When the company defaulted, the government took over the boats and materials and shipped them out of state, leaving the suppliers with liens they could no longer enforce because the property now belonged to the immune federal government.
The question before the Court
When the government forced a bankrupt shipbuilder to hand over unfinished boat hulls and materials, did that wipe out suppliers' unpaid liens in a way the government must pay for?
Why it matters
Suppliers and subcontractors who extend credit on government-linked projects gain assurance that their liens are real property rights, not empty promises that vanish whenever the government asserts sovereign immunity. The ruling shapes how contractors, lenders, and materialmen assess risk when supplying goods to companies working under federal contracts.
What changes now
The case goes back to the Court of Claims, which must now determine how much the suppliers' destroyed liens were actually worth and award compensation accordingly. This is a final ruling on the legal question of whether a taking occurred; only the dollar amount of compensation remains to be worked out on remand.
What this does not decide
The Court left open exactly how much the destroyed liens were worth, sending that valuation question back to the lower court. It also did not decide whether the government's lien technically "merged" into its title once it took ownership.
Concurrences and dissents
Dissent — Justice Harlan
“It seems to me that a Court which, having established this immunity, then declares that the Government must pay for exercising it, is effectively negativing it.”Harlan's objection that requiring payment undermines the point of sovereign immunity.
Justice Harlan agreed the suppliers had valid, compensable liens but disagreed that a constitutional 'taking' occurred. He argued the government never exercised its eminent domain power or intentionally extinguished the liens — it simply exercised its ordinary power to contract for the property, and the liens became unenforceable only as a side effect of the separate, long-standing doctrine of sovereign immunity. He would have ruled that requiring payment here effectively cancels out sovereign immunity itself, and would have affirmed for the government.
How the Court got there
The legal reasoning, step by step
- The Court first rejected the government's theory that it held 'inchoate title' to the materials from the start of the contract, explaining that sovereign immunity from private liens only protects property the government actually owns, not property it merely expects to own someday.
- Examining the contract's terms, the Court found title remained with the shipbuilder during construction, since the agreement required the builder to insure the property, discharge liens, and only transfer title if the government later chose to exercise that option after default.
- The Court then asked whether the suppliers' liens counted as compensable property under the Fifth Amendment, and concluded they did, drawing on a precedent holding that a bank's foreclosure rights on a mortgage were compensable property even though enforcement required a lawsuit.
- The Court rejected the government's argument that its own paramount lien for progress payments made the suppliers' liens worthless, noting the shipbuilder had spent more on the boats than the government had paid, leaving potential value for the suppliers.
- Finally, the Court held that a 'taking' occurred: before the transfer the liens were valid and enforceable, and immediately after the transfer they were worthless because sovereign immunity blocked any suit — a total, government-caused destruction of value that the Fifth Amendment's core purpose (spreading public burdens fairly rather than dumping them on a few) requires the government to pay for.
Doctrinal impact
Cases affected by this decision
Distinguishes United States v. Ansonia Brass & Copper Co. (218 U.S. 452)
The Court said Ansonia never addressed whether suppliers deserved compensation before the government took title, so it did not control this case.
Reaffirms Louisville Bank v. Radford (295 U.S. 555)
The Court relied on Radford to hold that a lien enforceable only through legal process is still compensable property.