Court Opinion

ID: 5760469
Source: CourtListenerOpinion
Date Created: 2022-01-12 17:13:40.304885+00
Date Added: 2024-06-11T08:41:32.395424
License: Public Domain

Steuer, J. (concurring).
I concur not only in the result but also in the implicit findings of the majority opinion and the reasoning that produced the conclusions. That opinion, probably very wisely, does not advert to an argument which, though never advanced by the claimants, I believe to be inherent in their contentions and, in fact, the only substantial argument that could be advanced in support of their claim for additional compensation.
That argument is this: When a utility company performs a necessary public service, which some branch of the government will have to perform if the utility goes out of business, it has a potential customer for its business and the market value of its property is what the branch of government would pay for it. A more conclusory statement of the same argument would be that the franchise to supply an essential service is a compensable asset regardless of whether the service is or can be profitable to the company rendering it. It should be understood that the circumstance that this underlying argument is stated in more precise terms than counsel deemed advisable to incorporate in their briefs, means merely that it is recognized but not that its validity is accepted.
It cannot be disputed that there is no constitutional or legal obligation on any branch of government to supply the service previously supplied by the claimant. The fact that a governmental agency, was empowered so to do does not indicate the existence of any such duty. The stockholders were never in a position to confront any government or governmental agency and say, in -effect: We are no longer able to maintain the property with which this service is supplied, so you must supply the service, and the most economical way of so doing is to buy our installation. So that the possibility of government operation never constituted an enforcible right which might either *53be sold or relied on as a guarantee of receiving a sale price which reflected the operation of a business. Nor does the fact that railroads in many instances have received subsidies in one form or another establish any right or provide any basis for calculating the income of the road as if such a subsidy had been granted. The implications embraced in the concept of a right to subsidies involve basic and radical changes in our whole economic and social structure. To premise that such subsidies are to be considered in lieu of income is therefore impermissible. So, consequently, a conclusion that this railroad would be a profitable enterprise if subsidized is not even to be considered, much less assumed.
Even if it be assumed that it was a reasonable expectation that the governmental authorities would not allow the service to cease (that is, they would perform it themselves if no private person would), this expectation would not be a compensable asset. It is not necessary to repeat here the uncontested facts in the record, ably and amply set out in the majority opinion, that the1 prospect facing the stockholders of the claimant was complete loss of their investment as a result of the continuing losses from operation. This is what happened to those who were stockholders prior to the reorganization, and that it would be the fate of the present stockholders, absent condemnation, is virtually inevitable. How can it be assumed that the governmental authorities would intervene to preserve the service for those using the service, at any time prior to the final bankruptcy? No authority stepped in before the earlier stockholders were wiped out. Had the authorities waited, the plant could have been acquired at scrap value and the realization of this sum before it was entirely dissipated is all that the stockholders could reasonably expect. So under no theory of economics or accounting that has been called to our attention can the possibility of governmental acquisition be deemed an asset.
The application of the cost of an alternate method of supplying the service, that is, transporting the persons using the tubes, ties in with the above. This would be a maximum or ceiling recovery based on the theory that the condemning authority would not be obligated to pay more than that for supplying the service. But before this method of compensation could be invoked it would be necessary to show that there was an obligation to continue the service, and that the cost was less than what the facilities of the claimant could command in eminent domain proceedings. That is on the theory that the condemning authority would be entitled to perform the service *54enforced upon it by the most economical method. In any event, as the measure of compensation is the loss to the claimant, it is doubtful whether this method of compensation would have application in any situation except where the claimant utility was obligated to cease operations for other than financial reasons. Therefore, any such figure could not be significant here, as it could only be used if a proper award for the claimant’s plant exceeded the cost of the substitute facility. That is not the claim here.
The dissenting opinion and the reluctance expressed in Judge Breitel’s concurring opinion appear to draw their inspiration from an idea that confining claimant’s award to liquidation value works a hardship on claimant and constitutes a windfall to the Authority, with the consequence that the result is unfair. Such a conclusion loses sight of the realities. The beneficiaries of the award, after payment of the corporate debts, will be the stockholders of the railroad. By virtue of the reorganizations through which the corporation has passed these are not the people whose investment built the road, but rather the various classes of creditors whose claims were converted into stock and people who bought stock from them for speculation. The record shows that the value of the stock on the market was $16,400,000 before condemnation was announced and fluctuated thereafter with the progress of the litigation, reaching a high of $27,100,000 when condemnation became a certainty. Instead of a value of $27,100,000, the dissent would provide a fund in excess of $61,800,000 or a windfall of over $34,000,000 to those speculators as a reward for their perspicacity and a corresponding penalty to the Authority for undertaking the performance of a service which will be a continuous drain on its resources but will relieve the stockholders from the loss of their investment. Though it is inevitable, at times, that the established rules for determination of just compensation will provide a somewhat more fortunate result to the holder of its property taken than the ordinary commercial course would lead one to expect, it is difficult to understand why these rules should be abrogated or changed to produce the result contended for.