''Kimball Laundry Co. v. United States'', 338 U.S. 1 (1949), affirmed the principle set forth in ''The West River Bridge Company v. Dix et al.'', ; that is, that
intangible property
Intangible property, also known as incorporeal property, is something that a person or corporation can have ownership of and can transfer ownership to another person or corporation, but has no physical substance, for example brand identity or ...
rights are condemnable via the
eminent domain
Eminent domain (United States, Philippines), land acquisition (India, Malaysia, Singapore), compulsory purchase/acquisition (Australia, New Zealand, Ireland, United Kingdom), resumption (Hong Kong, Uganda), resumption/compulsory acquisition (Austr ...
power, and that
just compensation
Just compensation is a right enshrined in the Fifth Amendment to the U.S. Constitution (and counterpart state constitutions), which is invoked whenever private property is taken (also in some states damaged) by the government. Usually, the gove ...
must be given to the owners of such rights.
In this case, the United States filed a petition in the
United States District Court for the District of Nebraska
The United States District Court for the District of Nebraska (in case citations, D. Neb.) is the federal district court whose jurisdiction is the state of Nebraska. Court offices are in Omaha and Lincoln.
Appeals from the District of Nebraska ...
to condemn the plant of the Kimball Laundry Company in
Omaha, Nebraska
Omaha ( ) is the largest city in the U.S. state of Nebraska and the county seat of Douglas County. Omaha is in the Midwestern United States on the Missouri River, about north of the mouth of the Platte River. The nation's 39th-largest cit ...
, for use by the
Army
An army (from Old French ''armee'', itself derived from the Latin verb ''armāre'', meaning "to arm", and related to the Latin noun ''arma'', meaning "arms" or "weapons"), ground force or land force is a fighting force that fights primarily on ...
. After the District Court granted the United States immediate possession of the facilities of the company for the requested period, the owner of the family business claimed that he had been denied just compensation, and contended that the award should have included some allowance for diminution in the value of the business due to the destruction of its customer base.
Supreme Court Decision
This litigation began after the United States took over a laundry's facilities to do washing for the army. The laundry, having no other means of serving its customers, suspended business for the duration of the army's occupation. The company was given the rental value of the facilities for the period the army used the premises, but no award for the loss of customers and resultant diminution in going
business value In management, business value is an informal term that includes all forms of value that determine the health and well-being of the firm in the long run. Business value expands concept of value of the firm beyond economic value (also known as econom ...
, which was claimed by the company and recognized as probable by the appraisers.
[''D. Michael Risinger, Direct Damages: The Lost Key To Constitutional Just Compensation When Business Premises Are Condemned, 15 Seton Hall L. Rev. 483 (1985).'']
The Court, through
Justice Frankfurter
Felix Frankfurter (November 15, 1882 – February 22, 1965) was an Austrian-American jurist who served as an Associate Justice of the Supreme Court of the United States from 1939 until 1962, during which period he was a noted advocate of judi ...
, made the government pay the diminution in the going concern value of the business. In reaching this conclusion, Justice Frankfurter first observed that the loss in
going concern
A going concern is a business that is assumed will meet its financial obligations when they become due. It functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months or the spec ...
value, though related in part to intangibles, is property capable of being destroyed by the government so as to give rise to an obligation of just compensation under the Fifth Amendment.
In his opinion, Frankfurter posed the question: "When do such circumstances occur?" Justice Frankfurter conceded,
arguendo, that such circumstances do not arise in the normal taking of a fee interest. This, he said, could only be justifiable because the intangible parts of the value of the business are normally transferable. Note that he did not say that there can never be a fee condemnation situation giving rise to an obligation to give full going business value as just compensation. In fact, he illustrated that obligation by cases involving the taking of the land and buildings of a public utility. Frankfurter concluded:
:''But the public utility cases plainly cannot be explained by the fact that the taker received the benefit of the utility's
going concern
A going concern is a business that is assumed will meet its financial obligations when they become due. It functions without the threat of liquidation for the foreseeable future, which is usually regarded as at least the next 12 months or the spec ...
value. If benefit to the taker were made the measure of compensation, it would be difficult to justify higher compensation for farm land taken as a firing range than for swamp or sandy waste equally suited to the purpose. It would be equally difficult to deny compensation for value to the taker in excess of value to owner. The rationale of the public utility cases, as opposed to those in which circumstances have brought about a diminution of going concern value although the owner remained free to transfer it, must therefore be that an exercise of the power of eminent domain which has the inevitable effect of depriving the owner of the going concern value of his business is a compensable "taking" of property.''
[''Kimball Laundry Co. v. United States'']
Thus, the Court reasoned that “the intangible acquires a value . . . no different from the value of the business’ physical property,” and concluded that intangibles such as trade routes of a laundry service were condemnable, upon payment of just compensation, when properly taken for a public use.
Concurring Opinion
Justice Rutledge understood the majority opinion to stand for the proposition that short-term takings of property entail considerations not present where complete title has been taken, and agreed with at least this much of the decision. However, he cautioned against a formulation of theoretical rules defining their nature or prescribing their measurement (for purposes of compensation), and noted that what seems theoretically sound may prove unworkable for judicial administration. He concluded:
:''But I do not understand the opinion of the Court to do more than indicate possible approaches to the compensation of such interests. Since remand of the case will permit the empirical testing of these approaches, I join in the Court's opinion.''
Dissenting Opinion
Justice Douglas, with whom Justices
Black
Black is a color which results from the absence or complete absorption of visible light. It is an achromatic color, without hue, like white and grey. It is often used symbolically or figuratively to represent darkness. Black and white ...
,
Vinson
VINSON is a family of voice encryption devices used by U.S. and allied military and law enforcement, based on the NSA's classified Suite A SAVILLE encryption algorithm and 16 kbit/s CVSD audio compression. It replaces the Vietnam War-era N ...
, and
Reed
Reed or Reeds may refer to:
Science, technology, biology, and medicine
* Reed bird (disambiguation)
* Reed pen, writing implement in use since ancient times
* Reed (plant), one of several tall, grass-like wetland plants of the order Poales
* ...
concurred, dissented from the majority decision, and asserted that the majority decision forced the United States to pay not for what it gets, but for what the owner loses. Warning that the majority decision "forged new constitutional doctrine," the dissent argued that government was only required to pay just compensation for the property that it actually receives. That the trade routes were of no use to the government was particularly persuasive to the dissenting Justices, and they argued that if the business was destroyed, the destruction was an unintended incident of the taking of land, and thus not compensable.
See also
*
List of United States Supreme Court cases, volume 338
References
External links
*
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Takings Clause case law
United States Supreme Court cases
1949 in United States case law
History of Omaha, Nebraska
United States Supreme Court cases of the Vinson Court