Opinion
No. 45990.
June 4, 1945.
Glenn Thomas Cousins, of Clinton, Iowa (Miller, Miller Cousins, of Clinton, Iowa, on the brief), for plaintiff.
Kendall M. Barnes, of New York City, and Francis M. Shea, Asst. Atty. Gen., for defendant.
Before WHALEY, Chief Justice, and LITTLETON, WHITAKER, JONES, and MADDEN, Judges.
Proceedings on the claim of Alfred Oscar Schaffer against the United States for compensation for the value of automobiles and parts requisitioned by the government from claimant's automobile graveyard.
Judgment for claimant in accordance with opinion.
This case having been heard by the Court of Claims, the court, upon the evidence and the report of a commissioner, makes the following special findings of fact:
1. Plaintiff, on June 17, 1942, was a citizen of the United States and a resident of Clinton, Iowa, where he was engaged in the business of operating what is Commonly called an automobile and truck "graveyard." He bought used and damaged automobiles and trucks from which he disconnected and sold used "parts," tires and tubes, the remainder of the automobiles or trucks being eventually sold as scrap or junk. Occasionally he bought and held for resale an entire used automobile or truck.
2. Plaintiff's "graveyard" covered several acres of open land on which there was a shed and two small buildings. The used and damaged cars and trucks which plaintiff had purchased and still had on hand at the time of the requisition hereinafter dealt with were scattered about the premises and plaintiff had taken many of the "parts" from them and had sold the parts. In getting to many of the parts which plaintiff had sold he had been compelled to remove from the cars and trucks many other parts which he had left inside, under, or near the cars or trucks — sometimes putting the hoods of the cars or trucks under the parts to better preserve them. Some parts which plaintiff had removed from the cars or trucks had been taken into and stored in the shed and buildings to protect them from the weather, but in the main plaintiff had left the parts on, in, under or near the cars or trucks. Some of them were being damaged by exposure to the weather. Plaintiff had removed many of the tires from the cars and had stored the better ones inside the shed but had left others outside the shed. Other tires had been left on the cars or trucks. Plaintiff had stored many tubes to protect them from the weather.
At the time of the requisition there were, in all, 177 cars or trucks or hulks of cars or trucks on the yard, of which plaintiff was holding four with the hope of selling them as used cars or trucks.
3. On May 2, 1942, after plaintiff had learned that his property would probably be requisitioned by the defendant, as it later was, he wrote to Mr. Donald Nelson, Chairman of the War Production Board, as follows:
"Correspondence received by me from the Chicago office of the War Production Board leads me to believe that that Chicago office shall soon recommend you to requisition the contents of the auto graveyard which I operate at the above address, compensation to me for all merchandise so taken to be at junk prices.
"Such requisition at junk prices is unfair to me in the extreme. I believe that such a procedure is taken by the governmental agencies without a thorough understanding of the business of operating an `auto graveyard' or `used parts lots.' We who operate such a business seldom buy a used car for resale as a used car and seldom buy a used car for junk exclusively but rather the great majority of our purchases are of aged used cars from which we take usable parts for resale and junk the remainder of the car. Such purchases are made at a price greater than junk prices. Also after such purchases we do not remove those usable parts until called for by a customer; thus avoiding running up a huge labor bill incurred by removing large numbers of parts, only a fraction of which would ordinarily be sold in the regular course of our business. Therefore, compliance on our part with a governmental order to remove all usable parts at once and junk the remainder of our merchandise would result in a heavy financial loss to us for we would incur a tremendous labor bill removing many parts which would never be sold as `parts.'
"I am fully cognizant of my duty as an American to aid in our common cause at this critical hour and accordingly make no complaint about losing my business which I now have well established after four years of hard work and many sacrifices. But I do not believe it fair to take all the property that I have accumulated during those years of work, the present contents of my said auto graveyard, at junk prices.
"I will sell, willingly, all the contents of my said business at a price set by impartial appraisers, the value to be determined by the price which can be obtained by one in my business in this locality when such merchandise is handled as we in our business do in the ordinary course of our business. I do not desire a profit but merely wish to save my life's earnings, if possible, and to receive reasonable value for property taken from me by my government.
"May I hear from you respecting the above at your earliest convenience?"
4. Under date of May 8, 1942, Mr. Merrill Stubbs, Deputy Chief Automobile Graveyard Section, Bureau of Industrial Conservation of the War Production Board, replied to plaintiff's letter of May 2, 1942, as follows:
"Mr. Nelson has asked me to acknowledge your letter of May 2. I think it is in point to quote fully the letter which Mr. Nelson addressed to all graveyard owners:
"`Iron and Steel are vitally needed to make the weapons of war and this material in your junk cars can be of great assistance if made available now. We know that you will cooperate with your Government in our great effort. The War Production Board has asked the iron and steel industry to see to it that fair offers are made to you by the agents of the industry, scrap material dealers, and others. The Office of Price Administration requires these autos to be so priced that the resultant prepared scrap will not exceed the ceiling prices delivered to the mills. If you deal in used parts you may retain a reasonable supply, bearing in mind that excessive inventories are forbidden.
"`If you reject an offer the Government will examine as to its fairness and in those cases where fair offers have been rejected the Government will, if advisable, requisition the entire yard, including parts. The Government is faced with the responsibility of seeing to it that the steel mills and foundries are kept at maximum production.'
"We hope that the requisite procedure is not too inconvenient, but must insist that it be followed. In the case of requisition, if you feel that you have not received fair compensation for the contents of your yard, you may request relief from the Court of Claims."
5. On June 17, 1942, the defendant, acting pursuant to the powers conferred by the Act of October 16, 1941 ( 55 Stat. 742), as amended, requisitioned and, with the exception of a few items which it overlooked, took possession of all of plaintiff's property mentioned in findings 1 and 2, the property being described in the requisition as follows:
"All scrap metals, including used automobiles and parts thereof, and all scrap rubber, including used tires and tubes, owned by A.O. Schaffer, 1501 Lincoln Highway, Clinton, Iowa."
The defendant, with blow torches, cut up all the automobiles and trucks and hulks thereof on the yard, including the four which plaintiff was holding for resale, and, after some separating of the metals and parts thus obtained, hauled them away to the scales. The defendant also took and hauled away all parts, tires, and tubes, the only property left on the yard being a few items which were overlooked by the defendant. At or before the weighing everything was classified into the various kinds of scrap materials mentioned in finding 6. Nothing was classified as a saleable part, tire, or tube, i. e., as an article which could be used by a purchaser for the purpose for which it had been made.
6. On October 14, 1942, the defendant, acting through the War Production Board, made a preliminary determination of value of the property which it had requisitioned and taken from plaintiff. This preliminary determination set a value of $4,157.80, and was computed on the basis that all of the property was "scrap." The scrap price applied to each class of material, in setting that value, was as follows:
#2 Heavy Melting Steel (prepared) ............ $14.56 a gross ton. #2 Heavy Melting Steel (unprepared) .......... $11.20 a gross ton. #2 Bundles (body and fender scrap) ......... $5.60 a gross ton. Motor Blocks ............ $18.48 a gross ton. Unstripped Motor Blocks (unprepared cast) .................. $16.24 a gross ton. Brass ................... 4 1/2 cents a pound. Radiators ............... 6 1/2 cents a pound. Aluminum ................ 8 cents a pound. Breakage ................ 2 cents a pound. Generators and Starters . 2 cents a pound. Batteries ............... 2.39 cents a pound. Tubes ................... 4 cents a pound. Tires ................... $23.00 a net ton.
If the property had in fact been all scrap, these prices would have been fair and adequate.
7. On November 21, 1942, the defendant, acting through the War Production Board, made an award of compensation in the amount of $4,157.80 for plaintiff's property requisitioned and taken by defendant, but plaintiff being unwilling to accept that sum as full compensation, the defendant, on January 5, 1943, pursuant to the Act of October 16, 1941 ( 53 Stat. 742), paid plaintiff $2,078.90, which was 50 percent of the amount of the award.
8. With a few minor exceptions which, at plaintiff's valuations, reduce the total from $13,057.32 to $12,263.84, plaintiff had on hand the property listed in Exhibit B to his petition, and this was the property taken by the defendant under the requisition. The values attributed to the property by plaintiff in Exhibit B are too high, as is shown in finding 9.
Plaintiff's total claim is $12,263.84 and is arrived at by listing the tires and tubes at the prices at which plaintiff asserts that he expected to sell them for use by his customers, and deducting therefrom 20 percent, and by listing the automobiles and trucks and parts thereof at the prices at which plaintiff asserts that he expected to sell them for use by his customers and deducting therefrom 33 1/3 percent. The 20 percent and 33 1/3 percent deductions are made by plaintiff on the theory that the requisition amounted in effect to a bulk sale.
9. Of the property which the defendant requisitioned and took from plaintiff and for which it made an award at only scrap prices, plaintiff could reasonably have expected to dispose of about 20 to 30 percent thereof to customers for use on automobiles, and at retail prices for each article somewhere near the prices on which plaintiff bases his claim, from which prices he has deducted the discounts for bulk disposition, as shown in finding 8.
By deducting those percentages from the scrap price award of $4,157.80 and adding to the remainder similar percentages of the bulk sale calculation of $12,263.84, the following sums are obtained:
Calculation at 20%
Award (scrap prices) .......... $4,157.80 Less 20% of (scrap price) award ..................... 831.56 --------- 3,326.24 Add 20% of (bulk sale price) $12,263.84 claim ......... 2,452.77 --------- Value resulting from calculation ............... 5,779.01
Calculation at 25%
Award (scrap prices) .......... $4,157.80 Less 25% of (scrap price) award ..................... 1,039.45 --------- 3,118.35 Add 25% of (bulk sale price) $12,263.84 claim ......... 3,065.96 --------- Value resulting from calculation ............... 6,184.31
Calculation at 30%
Award (scrap prices) .......... $4,157.80 Less 30% of (scrap price) award ..................... 1,247.34 --------- 2,910.46 Add 30% of (bulk sale price) $12,263.84 claim ......... 3,679.15 --------- Value resulting from calculation ............... 6,589.61
10. Plaintiff's net sales during the 18 months next preceding the requisition, as shown by his Iowa State retail sales tax returns, amounted to about $23,000, and in operating his business he generally had a fairly complete stock turn-over about every seven or eight months. On the basis of his stock being worth, in bulk, approximately two-thirds of the net prices at which he sold it and a complete stock turnover about every seven or eight months, his stock on hand at the time of the requisition would have a value of about $6,000 to $6,500.
11. Fair and just compensation to plaintiff for the property requisitioned and taken from him by the defendant would be $6,250. He has been paid $2,078.90.
The plaintiff operated an automobile "graveyard" at Clinton, Iowa. He bought old or wrecked cars and placed them on his several acres of land. His purpose was to obtain from them usable parts which he could sell at retail, and to sell for scrap the hulks of the cars including such parts as he did not succeed in retailing for further use. In June of 1942 the plaintiff had 177 cars or trucks, or the hulks of them, on his premises. There being at that time a great need for scrap steel, as well as for non-ferrous metals such as aluminum, copper, and brass, for war production, the Government tried to get a great deal of the metal, which was in the thousands of automobile graveyards throughout the country, moved to the steel and other metal producing plants.
The Act of October 16, 1941, 55 Stat. 742, 50 U.S.C.A. Appendix § 721 et seq. authorized the President to requisition, inter alia, "materials necessary for the manufacture, servicing, or operation of such equipment, supplies, or munitions * * * needed for the defense of the United States." Correspondence, quoted in findings 3 and 4, between the plaintiff and the War Production Board, which was acting for the President, shows that the Board attempted to get the plaintiff to sell the contents of his yard at scrap or junk prices. The plaintiff, asserting that such prices would not include the value of usable parts which the plaintiff expected to get from the cars in his yard, refused, and, on June 17, 1942 the Government requisitioned and caused to be taken away all the cars, trucks, parts, tires and tubes in the plaintiff's yard and buildings. The materials were weighed and the plaintiff was offered $4,157.80 which was the right price of the materials as scrap. He refused to settle for this amount, and, under the terms of the requisition statute, accepted one-half the amount, or $2,078.90, without prejudice to his right to recover more, if he was entitled to it, in this court.
We think the Government's offer to pay only scrap prices for the plaintiff's materials was too low. If they were worth no more than that, there would be no point in any automobile graveyard enterprise, since the scrap value could be obtained immediately upon the automobiles being brought into the yard. There are thousands of these enterprises in the country, and have been for many years, so there must be a profit to be made by detaching and selling, for further use, parts, including tires and tubes, from old and wrecked cars. The plaintiff is, therefore, entitled to more than he was offered.
The question of how much the plaintiff's stock was worth is difficult, and cannot be determined with much precision. The plaintiff made an inventory at the time the Government was taking the materials away, in which he listed all the parts, of the kind usually saleable, whether they were still incorporated in a hulk of a car, were lying in or under or beside it, where they had been placed when other parts were taken from the car, or had been laid away in a shed, as some parts of kinds most sensitive to the weather, such as motors and generators, and tires and tubes, had been. He valued each part at its retail sale price as a used part, then discounted the totals for tires and tubes by 20 percent, and the totals for other parts by 33 1/3 percent, the discount being on the theory that the Government's bulk requisition relieved him of the necessity of retail handling, and hence the price should be a bulk sale price. The total given by the plaintiff's figures is $12,263.84. The prices of individual parts shown in the plaintiff's inventory are approximately correct in the sense that if a customer came along who happened to need and want to buy any one of the parts, that would have been the price he would have paid. But we do not think the plaintiff had any reasonable prospect of selling at retail more than a fraction of the potentially saleable parts in his yard. As we understand the automobile graveyard business, the customers' wants are highly particularized. For example, his 1933 Chevrolet has a cracked cylinder head. He could buy a new one, but its costs would be large in comparison with the value of his car, so he may go to an auto graveyard to see if he can get one there. There might be one or several 1933 Chevrolets there, and one or more of them might have a usable cylinder head. If so, a sale will result. But every sale is, to a considerable extent, a chance meeting of a highly particularized demand, out of a supply which must be of considerable variety if it is to have any prospect of meeting such a demand. From any particular car in stock, only a few out of the many potentially saleable parts may ever be asked for by customers. The result, as we understand it, is that a large portion of the potential supply must ultimately go for scrap, as the models in the yard become older and fewer cars of the kind that might need such parts are running.
We think, therefore, that the plaintiff's asserted values which are based, in general, on an assumption that every potentially saleable part would have been sold, are far too high. We have, on the basis of the highly conflicting testimony, come to the conclusion that, considering the plaintiff's stock of tires and tubes as well as his stock of potentially saleable parts, and the four cars that were potentially saleable intact, he had a reasonable prospect of re-selling for further use about one-fourth of his inventory. We therefore think he should have been paid $6,250. He was offered $4,157.80 and was paid $2,078.90. He may recover $4,171.10, with interest at 4 percent per annum, as a part of just compensation, from June 17, 1942.
It is so ordered.
WHALEY, Chief Justice, and LITTLETON, WHITAKER, and MADDEN, Judges, concur.
JONES, Judge, took no part in the decision of this case.