United States v. Central Eureka Mining Company/Opinion of the Court

United States Supreme Court

357 U.S. 155

United States  v.  Central Eureka Mining Company

 Argued: Jan. 7, 1958. --- Decided: June 16, 1958

In the interest of national defense, the War Production Board, in 1942, issued its Limitation Order L-208 ^[1] ordering nonessential gold mines to close down. This litigation was instituted in the Court of Claims to recover compensation from the United States for its alleged taking, under such order, of respondents' rights to operate their respective gold mines. Two issues are now presented. First, whether the Act of July 14, 1952, ^[2] granting jurisdiction to the Court of Claims to entertain the claims arising out of L-208, was a mandate to that court to award compensation for whatever losses were suffered as a result of L-208, or whether it amounted merely to a waiver by the United States of defenses based on the passage of time. For the reasons hereafter stated, we hold that it was the latter. We, therefore, reach the second question-whether L-208 constituted a taking of private property for public use within the meaning of the Fifth Amendment. ^[3] For the reasons hereafter stated, we hold that it did not.

Early in 1941, it became apparent to those in charge of the Nation's defense mobilization that we faced a critical shortage of nonferrous metals, notably copper, and a comparable shortage of machinery and supplies to produce them. Responsive to this situation, the Office of Production Management (OPM) and its successor, the War Production Board (WPB), issued a series of Preference Orders. These gave the producers of mining machinery and supplies relatively high priorities for the acquisition of needed materials. They also gave to those mines, which were deemed important from the standpoint of defense or essential civilian needs, a high priority in the acquisition of such machinery. Gold mines were classified as nonessential and eventually were relegated to the lowest priority rating. These orders prevented the mines operated by respondents from acquiring new machinery or supplies so that, by March of 1942, respondents were reduced to using only the machinery and supplies which they had on hand.

Soon thereafter, a severe shortage of skilled labor developed in the nonferrous metal mines. This was due in part to the expanding need for nonferrous metals, and in part to a depletion of mining manpower as a result of the military draft and the attraction of higher wages paid by other industries. It became apparent that the only reservoir of skilled mining labor was that which remained in the gold mines. Pressure was brought to bear on the WPB to close down the gold mines with the expectation that many gold miners would thus be attracted to the nonferrous mines.

As a part of this conservation program, WPB, on October 8, 1942, issued Limitation Order L-208 ^[4] now before us. That order was addressed exclusively to the gold mining industry which it classified as nonessential. It directed each operator of a gold mine to take steps immediately to close down its operations and, after seven days, not to acquire, use or consume any material or equipment in development work. The order directed that, within 60 days, all operations should cease, excepting only the minimum activity necessary to maintain mine buildings, machinery and equipment, and to keep the workings safe and accessible. Applications to the WPB were permitted to meet special needs and several exceptions were made under that authority. Small mines were defined and exempted from the order. The WPB did not take physical possession of the gold mines. It did not require the mine owners to dispose of any of their machinery or equipment.

On November 19, 1942, Order L-208 was amended to prohibit the disposition of certain types of machinery or supplies without the permission of an officer of the WPB. Each mine operator was required to submit an itemized list of all such equipment held in inventory and to indicate which items he would be willing to sell or rent. ^[5] On August 31, 1943, L-208 was further amended to permit disposition of equipment, without approval of the WPB, to persons holding certain preference ratings. ^[6] The order, thus amended, remained in effect until revoked on June 30, 1945. ^[7]

The first legal action against the Government arising out of L-208 was brought in the Court of Claims in 1950. It was there alleged that the order had amounted to a taking of the complainant's right to mine gold during the life of the order. The Government demurred, taking its present position that the order was merely a lawful regulation of short supplies relevant to the war effort. The court sustained the demurrer, holding that the damages were not compensable. Oro Fina Consolidated Mines, Inc., v. United States, 92 F.Supp. 1016, 118 Ct.Cl. 18. Accord, Alaska-Pacific Consolidated Mining Co. v. United States, 120 Ct.Cl. 307. Somewhat later, the instant action was brought in the Court of Claims by the Idaho Maryland Mines Corporation. Relying on the Oro Fina decision, the Government again demurred. This time, however, the court overruled the demurrer on the ground that this complaint contained detailed allegations which, if true, in its opinion demonstrated that L-208 was an arbitrary order without rational connection with the war effort. On that basis, the court authorized a commissioner to hear this case and several similar ones, solely to determine the Government's liability, leaving determination of the amount of recovery, if any, to further proceedings. Idaho Maryland Mines Corp. v. U.S., 104 F.Supp. 576, 122 Ct.Cl. 670. ^[8] The commissioner heard the cases and filed his report. The Court of Claims, with two judges dissenting, held that the six respondents now before us were entitled to just compensation. 138 F.Supp. 281, 310, 312, 134 Ct.Cl. 1, 53, 56. ^[9] A new trial was denied. 146 F.Supp. 476, 134 Ct.Cl. 130. We granted the Government's petition for certiorari in order to consider the important constitutional issue presented. 352 U.S. 964, 77 S.Ct. 354, 1 L.Ed.2d 320.

Before reaching the merits, we face the suggestion of respondents that the Special Jurisdictional Act of July 14, 1952, 66 Stat. 605, did more than waive the statute of limitations and the defense of laches. Respondents contend that this Act was a congressional mandate to the Court of Claims to award compensation to such of the respondents as established any loss which was, in fact, caused by L-208. We conclude that the language of the Act and its legislative history demonstrate that it was no more than a waiver of defenses based on the passage of time.

'Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the United States Court of Claims be, and hereby is, given jurisdiction to hear, determine, and render judgment, notwithstanding any statute of limitations, laches, or lapse of time, on the claim of any owner or operator of a gold mine or gold placer operation for losses incurred allegedly because of the closing or curtailment or prevention of operations of such mine or placer operation as a result of the restrictions imposed by War Production Board Limitation Order L-208 during the effective life thereof: Provided, That actions on such claims shall be brought within one year from the date this Act becomes effective.'

The Act thus contains no language prejudging the validity of the claims on their merits. On the other hand, it expressly permits the filing of actions, based on L-208, within one year from the taking effect of the Act, 'notwithstanding any statute of limitations, laches, or lapse of time * * *.' (Emphasis supplied.) That this was the motivating purpose of Congress is further indicated by the fact that the statute of limitations had recently run against many of these claims by the time the Court of Claims, in the instant case, upheld the claim on the pleadings of the Idaho Maryland Mines Corporation, 104 F.Supp. 576, 122 Ct.Cl. 670. This was explained to Congress as follows in the House Report recommending passage of the bill:

'At the present time many other claimants who may have as good a right for an adjudication of their claims as does the Idaho Maryland Mines Corp. may not prosecute such claims due to the running of the statute of limitations. Many of the claimants after the ruling in the Oro Fina case undoubtedly felt that to file in the Court of Claims would be useless and, therefore, allowed the statute to run against them.' H.R.Rep.No. 2220, 82d Cong., 2d Sess. 2. See also, S.Rep.No. 1605, 82d Cong., 2d Sess. 2.

The legislative history also discloses repeated failures to induce Congress to act upon the merits of the claims. ^[10] In view of such history, it is hard to believe that the successful passage of this Act of July 14, 1952, would have taken place, as it did, without opposition ^[11] had it included a concession of liability. On the other hand, as explained in the above-quoted House Committee Report, its passage is readily understood if it merely granted an extension, for one year, of the time within which to file an action to recover a claim, the merits of which would be determined by the Court of Claims. For these reasons, we hold that this Jurisdictional Act is fairly interpreted as amounting only to a waiver of defenses based on the passage of time.

Turning to the merits, it is clear from the record that the Government did not occupy, use, or in any manner take physical possession of the gold mines or of the equipment connected with them. Cf. United States v. Pewee Coal Co., 341 U.S. 114, 71 S.Ct. 670, 95 L.Ed. 809. All that the Government sought was the cessation of the consumption of mining equipment and manpower in the gold mines and the conservation of such equipment and manpower for more essential was uses. The Government had no need for the gold or the gold mines. The mere fact that L-208 was in the form of an express prohibition of the operation of the mines, rather than a prohibition of the use of the scarce equipment in the mines, did not convert the order into a 'taking' of a right to operate the mines. Obviously, if the use of equipment were prohibited, the mines would close and it did not make that order a 'taking' merely because the order was, in form, a direction to close down the mines. The record shows that the WPB expected that L-208 would release substantial amounts of scarce mining equipment for use in essential industries, and also that experienced gold miners would transfer to other mines whose product was in gravely short supply. The purpose of L-208 was to encourage voluntary real-location of scarce resources from the unessential to the essential.

Respondents contend that L-208 was arbitrary and without rational connection with the war effort. ^[12] They contend that, if it were arbitrary, there is no distinction in law between this case and one where the Government consciously exercises its power to take for public use. Respondents base their assertion of arbitrariness on several circumstances. For example, they urge that the preamble to L-208 recited as its sole purpose the conservation of scarce materials. If that alone were the purpose, they contend, it had already been achieved by priority orders which prevented the gold mines from obtaining any scarce equipment. Order L-208 did more than merely prohibit the acquisition of scarce equipment-it also prohibited the use of equipment previously acquired. The fact that L-208 did not require the mine owners to sell their inventory of scarce equipment to essential users was a reasonable course of action. The WPB could properly rely on the profit motive to induce the mine owners to liquidate their inventories, and it was thought that the people who would be interested in purchasing used mining equipment probably would be the owners of essential mines. In any event, L 208 was soon amended to prohibit sales to nonessential users. ^[13]

Respondents also urge that the record shows that the shortage of experienced miners was the dominant, if not the sole, consideration for the issuance of L-208. They contend that the WPB had no authority to compel gold miners to transfer to other mines. The record shows that a dominating consideration in the issuance of L-208 was the expectation that it would release experienced miners for work in the nonferrous mines, but the record does not support a finding that such was the sole purpose of the order. It was lawful for the WPB to consider the impact of its material orders on the manpower situation. Order L-208 did not draft gold miners into government service as copper miners. It sought only to make the gold miners available for more essential work if they chose to move. Although the record indicates that the number of gold miners who transferred to nonferrous mines was disappointingly small, yet there were some who did, and others moved to other essential wartime services. The record shows a careful official consideration of the subject and a well-considered decision to accomplish a proper result. There is no suggestion that any of the officials who were responsible for the order were motivated by anything other than appropriate concern for the war effort.

Thus the WPB made a reasoned decision that, under existing circumstances, the Nation's need was such that the unrestricted use of mining equipment and manpower in gold mines was so wasteful of wartime resources that it must be temporarily suspended. Traditionally, we have treated the issue as to whether a particular governmental restriction amounted to a constitutional taking as being a question properly turning upon the particular circumstances of each case. See Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 416, 43 S.Ct. 158, 160, 67 L.Ed. 322. In doing so, we have recognized that action in the form of regulation can so diminish the value of property as to constitute a taking. E.g., United States v. Kansas City Life Ins. Co., 339 U.S. 799, 70 S.Ct. 885, 94 L.Ed. 1277; United States v. Causby, 328 U.S. 256, 66 S.Ct. 1062, 90 L.Ed. 1206. However, the mere fact that the regulation deprives the property owner of the most profitable use of his property is not necessarily enough to establish the owner's right to compensation. See Mugler v. State of Kansas, 123 U.S. 623, 664, 668, 669, 8 S.Ct. 273, 298, 300, 301, 31 L.Ed. 205. In the context of war, we have been reluctant to find that degree of regulation which, without saying so, requires compensation to be paid for resulting losses of income. E.g., Hamilton v. Kentucky Distilleries & Warehouse Co., 251 U.S. 146, 40 S.Ct. 106, 64 L.Ed. 194; Jacob Ruppert, Inc., v. Caffey, 251 U.S. 264, 40 S.Ct. 141, 64 L.Ed. 260; Bowles v. Willingham, 321 U.S. 503, 64 S.Ct. 641, 88 L.Ed. 892; and see United States v. Caltex (Philippines), Inc., 344 U.S. 149, 73 S.Ct. 200, 97 L.Ed. 157. The reasons are plain. War, particularly in modern times, demands the strict regulation of nearly all resources. It makes demands which otherwise would be insufferable. But wartime economic restrictions, temporary in character, are insignificant when compared to the widespread uncompensated loss of life and freedom of action which war traditionally demands.

We do not find in the temporary restrictions here placed on the operation of gold mines a taking of private property that would justify a departure from the trend of the above decisions. The WPB here sought, by reasonable regulation, to conserve the limited supply of equipment used by the mines and it hoped that its order would divert available miners to more essential work. Both purposes were proper objectives; both matters were subject to regulation to the extent of the order. L-208 did not order any disposal of property or transfer of men. Accordingly, since the damage to the mine owners was incidental to the Government's lawful regulation of matters reasonably deemed essential to the war effort, the judgment is reversed.

Reversed.

Mr. Justice FRANKFURTER, dissenting.

Notes

1. Issued October 8, 1942, 7 Fed.Reg. 7992-7993. Amended, November 19, 1942, 7 Fed.Reg. 9613-9614; November 25, 1942, 7 Fed.Reg. 9810-9811; and August 31, 1943, 8 Fed.Reg. 12007-12008. Revoked, June 30, 1945, 10 Fed.Reg. 8110. For text of the order as issued October 8, 1942, see note 4, infra.
2. The Act is set forth in the text of this opinion 78 S.Ct. 1101, infra.
3. 'No person shall be * * * deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.' U.S.Const. Amend. V.
4. War Production Board Limitation Order L-208, 7 Fed.Reg. 7992-7993, provided as follows:
5. Section 6(e), added to the original order on November 19, 1942, 7 Fed.Reg. 9613, provided:
6. 8 Fed.Reg. 12007-12008.
7. 10 Fed.Reg. 8110.
8. See also, Homestake Mining Co. v. United States, 122 Ct.Cl. 690, and Central Eureka Mining Co. v. United States, 122 Ct.Cl. 691.
9. The Court of Claims concluded that respondents had shown not only that L-208 was arbitrary, but also that they had a sufficient inventory of machinery and supplies so that they would have been able to operate had it not been for the order. However, as to the following companies, it ordered their petitions dismissed on the ground that they had not shown that they would have been able to continue operations, thus failing to show that L 208 was the proximate cause of their loss: Alabama-California Gold Mines Co., Consolidated Chollar Gould & Savage Mining Co., and Oro Fino Consolidated Mines, Inc., 138 F.Supp. at page 310, 134 Ct.Cl. at page 53.
10. Bills were first introduced in the 78th Congress, 1st Session (1943), for the relief of the owners and operators of gold mines. Early efforts were directed at recision of L-208. H.R. 3009, 89 Cong.Rec. 6181, was referred to the House Committee on Banking and Currency and never reported out; H.R. 3682, 89 Cong.Rec. 9653, was referred to the House Committee on the Judiciary and never reported out.
11. The Special Jurisdictional Act was passed on the Consent Calendar. 98 Cong.Rec. 6322-6323, 8931. The seriousness of a concession of liability is evidenced by the Government's recent estimate that its potential liability, if respondents prevail, can be measured in 'terms of thirty to sixty million dollars.'
12. Ordinarily the remedy for arbitrary governmental action is an injunction, rather than an action for just compensation. Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579, 72 S.Ct. 863, 96 L.Ed. 1153. Our view of the case makes it unnecessary to reach that question.
13. See 357 U.S. 160, 78 S.Ct. 1100, supra.