United States v. Cors

Background

A private owner of the steam tug Mac Arthur sued the United States after the Government requisitioned the tug in October 1942. The War Shipping Administration had awarded $9,000; the owner rejected that amount, was paid 75 percent, and sued under the Merchant Marine Act to recover the balance. The Court of Claims found a fair market value of $15,500 and awarded that amount less prior payment; the Government admitted liability for only $10,500, saying $5,000 of the value came from wartime price increases caused by its own need for ships.

Reasoning

The Court addressed whether increases in market price that come from the Government’s special wartime demand must be excluded when computing “just compensation” under Section 902(a). The majority, writing for the Court, explained that market value can be inflated by a seller’s ability to exact higher prices from the Government in an emergency and that such enhancement is not a fair market measure. The Court held that value caused by the Government’s special demand should be excluded and that this exclusion can reach increases that occurred before or after formal emergency dates. Because the record did not detail how much of the tug’s price rise was due to government-created demand in that particular market, the Court reversed and sent the case back for clearer findings.

Real world impact

The decision affects owners of vessels and other property taken for wartime use: owners may not recover price increases created by the Government’s own emergency demand. The opinion requires fact-specific findings to separate ordinary market value from government-driven inflation, so final awards may change after further proceedings.

Dissents or concurrances

There were written dissents. Chief Justice Vinson dissented, and Justice Frankfurter filed a dissent joined by Justices Jackson and Burton, disagreeing with the majority’s approach.