Court Opinion

ID: 8595901
Source: CourtListenerOpinion
Date Created: 2022-11-23 16:03:05.476084+00
Date Added: 2024-06-11T16:54:56.022764
License: Public Domain

Bennett, Judge,
concurring:
I join in the court’s opinion but think it appropriate to add a few comments on the issue of delay compensation. The court today establishes for all future cases rates of simple interest for given periods to be awarded for delay in receipt of payment for property taken by the Government, as part of the just compensation mandated by the fifth amendment. Seaboard Air Line Ry. v. United States, 261 U.S. 299 (1923); King v. United States, 205 Ct. Cl. 512, 504 F. 2d 1138 (1974). In dissent Judge Skelton takes the court to task on its power to fix a rate of interest for delay compensation in cases not presently before it. Pointing to such enactments as the so-called Declaration of Taking Act, 40 U.S.C. § 258a (1970), Judge Skelton concludes that "[tjhese statutes demonstrate that if a fixed inflexible rate of interest is to be established in condemnation cases, it must be done by Congress and cannot be done by this court by way of judicial legislation.” The dissent errs, I think, by failing to take into account the history of delay compensation law.
Though Congress has from time to time established by statute the rate of interest for delayed compensation in certain situations and geographic areas, the norm is for the court to be without explicit statutory guidance in setting the interest rate. Early decisions of the Supreme Court in United States v. North American Transp. & Trading Co., *276253 U.S. 330 (1920), and Seaboard Air Line Ry. v. United States, supra, denied the availability of relief in the Court of Claims in inverse condemnation situations on a theory other than implied contract, thus ruling out the payment of delay compensation under the fifth amendment obtainable in district court eminent domain actions. By the late 1920’s, however, this court was allowing interest in its judgments, as additional sums to compensate for delay in receipt of payment, in cases where the Government had expressly and clearly exercised its condemnation power. Vandiver v. United States, 67 Ct. Cl. 125 (1929) (taking of part of Aberdeen Proving Grounds); Schroth v. United States, 65 Ct. Cl. 49 (1928), 67 Ct. Cl. 382 (1929). In 1938, in a patent case referred by Congress, Barlow v. United States, the court observed, 87 Ct. Cl. 281, 286, that it was "unaware of any established precedent which fixes the rate of interest to be allowed in eminent domain cases as a part of just compensation,” citing Shoshone Indians v. United States, 85 Ct. Cl. 331 (1937), aff’d, 304 U.S. 111 (1938). The court had stated in the latter case that the rate of interest allowed as part of just compensation is to be derived from the economic circumstances of the times intervening the taking and payment dates, as they affect the party whose property is taken:
The field for investment by an Indian tribe was and is limited in the absence of an agreement to a deposit of the amount due the Indians in the Treasury of the United States and the payment thereon by the government of interest at the rate of 5 percent. The field for investment by citizens [sic] of funds received for property taken, and paid contemporaneously with the taking, is unlimited, and he is in a position and capable of taking full advantage of the local rate of interest. If, therefore, his money is not paid at the time of the taking, but later, the courts add to the value of his property at the time of taking an additional amount measured by interest, usually at 6 percent per annum, and, in some cases, a higher rate which he probably would have earned with his capital to the date of payment. * * *. [85 Ct. Cl. at 380.]
By 1946 it was clear that recovery on an inverse condemnation action brought in the Court of Claims could be founded on the fifth amendment, United States v. *277Causby, 328 U.S. 256, permitting the allowance of interest as part of the judgment for just compensation. Fonalledas v. United States, 123 Ct. Cl. 483, 107 F. Supp. 1019 (1952). Also in 1946, in an eminent domain case founded on a statute, this court repeated the Barlow observation that "there is no statute or rule fixing any particular rate [of delay compensation interest] to be allowed,” confirmed that since the determination of fifth amendment compensation is exclusively a judicial function "it is for the Court to fix upon the rate it will allow,” and noted that the allowance of a "uniform rate does in fact avoid discrimination among litigants,” a discrimination that presumably would be present if the interest rate allowed depended upon the state of proof or the legal rate in the plaintiffs locality. Arkansas Valley Ry. v. United States, 107 Ct. Cl. 240, 259, 68 F. Supp. 727, 730 (1946), cert. denied, 330 U.S. 811 (1947). Thereafter, in a case citing Arkansas Valley Ry., the court rejected proposed variations in the rate of just compensation interest used in a large number of previous taking cases, noting the lack of a controlling statute or rule but asserting the prudence of uniformity. Carlstrom v. United States, 147 Ct. Cl. 297, 306, 177 F. Supp. 245, 250 (1959). Later opinions adhered to these thoughts. Confederated Salish & Kootenai Tribes v. United States, 193 Ct. Cl. 801, 825-26, 437 F. 2d 458, 472 (1971); Drakes Bay Land Co. v. United States, 198 Ct. Cl. 506, 520-21, 459 F. 2d 504, 511-12 (1972).
Not until King v. United States, supra, did the court approve a variance from the then standard 4-percent rate. The difference in King was that the parties stipulated to the use of interest rates more nearly akin to long-term Government bond interest rates paid during the period of delay in compensation. In Pitcairn v. United States, Ct. Cl. No. 50328, 212 Ct. Cl. 168, 547 F. 2d 1106 (1976), investment return rates found as facts by the trial judge were employed to measure the plaintiffs delay compensation due. However, the use of neither the stipulation nor the fact-finding to adjust the interest rate, during a period when the prevailing market rate obviously had jumped to a higher plateau than was true in the preceding several decades since the Great Depression, precluded the court *278from "fix[ing] upon the rate it will allow” and keeping this rate "uniform” over a given period of time. Arkansas Valley Ry. v. United States, supra.
A brief review of selected cases from this court since the demise of the "implied contract” theory of inverse condemnation reveals that the constitutionally appropriate rate of delay compensation interest has been periodically ascertained by the court and then held constant over a span of time. Moreover, this has occurred quite without the direction of the statute that the dissent thinks necessary. For non-Indian claims, which Shoshone Indians v. United States, supra, sets apart from Indian claims, the court allowed 6 percent from taking dates in 1917 and 1918, respectively, in Vandiver v. United States, supra, and Schroth v. United States, supra. A 5-percent rate was allowed in several cases whose taking dates preceded the foregoing, but whose judgments came down substantially after the cases. Marconi Wireless Tel. Co. v. United States, 99 Ct. Cl. 1 (1942), rev’d in part on other grounds, 320 U.S. 1 (1943) (taking dates ranged from 1911 to 1919); National Elec. Signaling Co. v. United States, 99 Ct. Cl. 621 and 646, 49 F. Supp. 754 and 768 (1943) (two cases — taking dates of 1918 and 1914, respectively). The rate in Barlow v. United States, supra, the taking in which occurred in 1919, was also fixed at 5 percent. Then, with the advent of the Great Depression, the general market rate diminished somewhat, and so did the delay compensation rate allowed. In Willow River Power Co. v. United States, 101 Ct. Cl. 222 (1944), rev’d on other grounds, 324 U.S. 499 (1945), the rate was set at 4.5 percent from the taking date in 1938 to the date of payment. Thereafter, the 4-percent rate became entrenched in the case law, and came to be applied almost automatically until the King decision. See Atwater v. United States, 106 Ct. Cl. 196 (1946) (taking in 1941); Schaffer v. United States, 104 Ct. Cl. 229, 60 F. Supp. 760 (1945) (wartime property requisition, 1942); Arkansas Valley Ry. v. United States, supra; Turney v. United States, 126 Ct. Cl. 202, 115 F. Supp. 457 (1953) (taking in 1947); Miller v. United States, 135 Ct. Cl. 1, 140 F. Supp. 789 (1956) (1948 seizure of airplanes for security reasons); Carlstrom v. United States, supra; A.J. Hodges Indus., Inc. *279v. United States, 174 Ct. Cl. 259, 355 F. 2d 592 (1966) (avigation easement, 1958); Drakes Bay Land Co. v. United States, supra. For Indian taking claims, 5 percent was generally allowed until 1934, when the rate changed to 4 percent. Shoshone Indians v. United States, supra (5 percent allowed from 1878 to date of payment, judgment in 1937); Uintah & White River Bands of Ute Indians v. United States, 139 Ct. Cl. 1, 11-12, 152 F. Supp. 953, 958 (1957) (5 percent from 1905 to 1934, 4 percent thereafter); Confederated Salish & Kootenai Tribes v. United States, supra (5 percent from 1912, 4 percent from 1934).
As I think the foregoing demonstrates, the court’s exercise of its power today in fixing past period interest rates for future cases is neither extraordinary, without historical foundation, nor ill advised. The Arkansas Valley Ry. rationale of avoiding discrimination among diverse taking claimants is as valid today as it was when first stated. Today’s decision will place less of a burden on the litigating parties and the court, by exercise of power well grounded in the court’s past, and yet take account of financial market realities too long ignored in the eminent domain, inverse condemnation, and patent decisions of this and other courts. For these reasons, I concur in the court’s opinion.