Armstrong v. United States
Headline: Court rules that when the federal government acquires unfinished contract-built boats it must pay material suppliers if the acquisition destroys their state liens, improving unpaid suppliers’ chances to recover compensation.
Holding: The Court held that the United States’ acquisition of unfinished contract property that destroyed state material suppliers' liens was a Fifth Amendment taking, and just compensation is due to the unpaid suppliers.
- Entitles unpaid material suppliers to compensation when federal acquisition destroys state liens.
- Requires the Government to pay for the value of liens lost by contract-based acquisitions.
Summary
Background
Petitioners are material suppliers who furnished parts and materials to a private shipbuilder contracted to build navy boats. After the builder defaulted, the United States required transfer of ten unfinished hulls and manufacturing materials to the Government. The suppliers had not been paid and claimed liens under Maine law on the hulls and on unused materials; the Court of Claims held there was no enforceable lien against the Government, and the suppliers appealed.
Reasoning
The core question was whether the Government’s acquisition, which made state-created liens unenforceable because of sovereign immunity, amounted to a taking that requires payment. The Court found that title had remained with the builder when the suppliers furnished materials and that the suppliers therefore had valid, compensable liens under state law before transfer. When the Government took the hulls and materials and those liens became unenforceable, the Court held that the destruction of the liens’ value was a taking under the Fifth Amendment. The Supreme Court reversed the Court of Claims and remanded to determine the amount of just compensation.
Real world impact
Unpaid suppliers and subcontractors whose state liens are defeated by federal acquisition can seek compensation for the value of those lost rights. The ruling affects how federal contracts, progress payments, and title-transfer clauses operate in practice. The case returns to the lower court to decide the monetary value of the suppliers’ lost liens.
Dissents or concurrances
Justice Harlan (joined by two Justices) agreed the liens were compensable but dissented on the taking issue, arguing that the Government’s contract-based acquisition and sovereign immunity should not automatically be deemed a constitutional taking.
Opinions in this case:
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