Wheelock Bros. v. United States (88 F. Supp. 278, 1950)

WHITAKER, Judge.

The plaintiff, a motor truck common carrier, sues to recover just compensation for the alleged temporary taking by the Government of its property and business during the period from August 11, 1944, to July 24, 1945. The action of the Government, which is claimed by the plaintiff to have amounted to a taking, was done pursuant to Executive Order No. 9462, August 11, 1944, 9 F.R. 10071.

The plaintiff, a Missouri corporation, operates its trucks over routes between Kansas City and Chicago, and Kansas City and Denver, serving also some intermediate points in Missouri, Illinois, Kansas, and Colorado. It operates under certificates of convenience and necessity issued by the Interstate Commerce Commission. It was one of 112 motor carriers who comprised the Midwest Operators Association which conducted collective bargaining negotiations for its members with the union of over-the-road drivers. An impasse occurred in the negotiation of a new agreement, and on October 31, 1943, the Secretary of Labor certified the dispute to the National War Labor Board pursuant to the War Labor Disputes Act. Act of June 25, 1943, 57 Stat. 163, 50 U.S.C.A.Appendix, §§ 1501-1511.

On February 7, 1944, the National War Labor Board held that the wages should be increased by 7 cents per hour and 2.5 mills per mile, retroactive to November 16, 1943. On July 12, 1944, the Chairman of that Board made a report to the President, a part of which report is quoted in Finding 4. He said that 103 of the operators, members of the Midwest Operators Association, had refused to acquiesce in the Board’s determination; that the union had voted to strike on June 30; that the Board had intervened and averted that strike, but that at a compliance hearing the operators refused to comply; that some 70 percent of the annual tonnage of 4,720,000 tons carried by the noncompíying carriers was immediately related to the war effort; and that the dispute was “a labor disturbance which threatens to interrupt the flow of goods essential to the effective prosecution of the war.” The Board therefore reported the case to the President for such action as he might deem appropriate.

On August 4, 1944 the drivers of the 103 noncomplying operators struck to compel the operators to pay the wage increases determined by the War Labor Board. The trucks of these operators, of whom the plaintiff was one, ceased to operate. On August 11, 1944 the President issued Executive Order No. 9462, supra, a part of the text of which is printed in Finding 6. The plaintiff was included in the list of 103 motor carriers attached to the Executive order. The order authorized and directed the Director of the Office of Defense Transportation: “* * * to take possession and assume control of, and to operate, or arrange for the operation of, the motor carrier transportation systems of the motor carriers named in the list * * * including all real and personal property and other assets, wherever -situated, used or useful in connection with the operation of such systems, in such manner as he may deem necessary for the successful prosecution of the war; and to do anything that he may deem necessary to carry out the provisions and purposes of this order.”

On the same day that the President issued his Executive order the Director of the Office of Defense Transportation sent to the plaintiff a telegram advising it that, by order of the President, “ * * * I have today issued an order taking possession and control as of 12:01 A.M. on August 12, 1944, of your motor carrier transportation system and all property used or useful in the operation thereof. Pending receipt of operations orders placed in the mail today, you should continue to manage and operate or resume operation, if possible, in the usual manner. Operations orders will contain further directions. Ellis T. Longenecker has been appointed Federal Manager in charge of operation of systems taken over. On behalf of the Government and the Armed Forces I bespeak the full and hearty cooperation of both management and labor in the continuance or resumption of transportation service so sorely needed at this time to avoid imperiling ah earlier conclusion of this war.”

Also on the same day, August 11, 1944, the Director of the Office of Defense Transportation sent to the plaintiff and the other 102 carriers a Notice and Order appointing Ellis T. Longenecker Federal Manager of the systems and properties “taken hereunder” with “full authority, subject to my direction”: “(A) To possess,, control, and operate, or arrange for the operation of, each of the systems and properties taken hereunder * * *.”

The notice said, in its paragraph 4: “4^ A copy of this Notice and Order shall be-posted by each carrier in the principal place of business or headquarters of its. transportation system and in each terminal, maintained in connection with its operation.”

The Director of the Office of Defense Transportation, hereafter referred to as, ODT, appointed a Federal Manager to operate the transportation systems taken 'over,. The Federal Manager issued an order directing plaintiff and other carriers: “To, resume or continue the operation of your motor carrier transportation system in the usual and ordinary manner and course of business, as a going enterprise, in your present corporate, partnership, individual or trade name, as the case may foe, * * * as fully as if possession and control had not been taken and assumed by the United States, subject, however, to the terms of said Executive Order and to all general orders, rules, regulations, and directions, which may be issued thereunder” (Italics ours.)

These things, in our opinion, constitute a definite and unequivocal taking of plaintiff’s property. Plaintiff no longer had any fight to manage and control its business except to the extent the Director of ODT permitted. Plaintiff was given an amount of discretion in the management of :ifs business, but this was only by permission of the sovereignty which had taken over its business.

It was even provided in the Executive Order that “no attachment by mesne process, garnishment, execution, or otherwise shall be levied on or against any of the real or personal property or other assets, tangible or intangible, in the possession of the Director hereunder.” This provision of the Executive Order was valid only because the property was the property of the United States Government and, therefore, not subject to execution or attachment. The President was without power to issue such an order if the property was still plaintiff’s property.

Although the defendant did not exercise complete control over plaintiff’s business, it very definitely did so in several very important respects.

It required plaintiff to pay the increased wages which the War Labor Board had found its employees were entitled to. Plaintiff had been unwilling to pay these wages, but the defendant, by virtue of its taking of plaintiff’s property, as the temporary owner of such property, directed that these increased wages be paid. It had no right to direct that they be paid except by virtue of its ownership of the property.

Secondly, defendant directed that plaintiff increase its rates for the carriage of freight. It had no right to do this except by virtue of its temporary ownership of the property.

Defendant further directed that plaintiff keep its books so as to separate transactions during Government possession and control from prior transactions. It was directed that “revenues represented by freight bills dated prior to 12:01 a. m. August 12, 1944, for shipments delivered after that date shall be equitably apportioned to the prior and subsequent periods * * It was also ordered that “new ledger accounts shall be opened for the purpose of entering the transactions applicable to the period subsequent” to 12:01 a. m. August 12, 1944. (For further instructions relative to the keeping of accounts see finding 12.)

Plaintiff was also required to furnish the Federal Manager with various items of information, including, among others, the following: (1) the approximate number of gallons of motor fuel necessary for the continuous and economical operation of its system from October 1, 1944, to October 1, 1945; (2) locations where motor fuel should be delivered; (3) the unit price the carrier was paying for motor fuel; (4) the estimated number of new truck tires and tubes necessary for operation during the period; (5) the price being paid for tires and tubes, and the location where new tires and tubes should be delivered; (6) the number of new motor trucks which would be needed, and the price payable for them, and the place where they should be delivered.

A number of other orders and directions were issued.

Its assumption of possession and control of plaintiff’s property was, therefore, more than nominal. It was actual possession and control. Defendant not only asserted possession and control; it exercised it; and, as the owner, it required plaintiff to do things which plaintiff theretofore had been unwilling to do.

Plaintiff was permitted to continue to manage its business only so long as it obeyed such directions as were issued by the Federal Manager. As the findings show, plaintiff repeatedly objected to orders issued by the Federal Manager, but was required to obey them or be ousted from management.

In the case of truck lines which did not obey the Federal Manager’s directions, the management of those lines was actually ousted, and was replaced by persons designated by the Federal Manager.

Under these circumstances we think it is impossible to say that the defendant did not take actual possession and control of plaintiff’s property within the meaning of the Fifth Amendment.

In the case of United States v. United Mine Workers, 330 U.S. 258, 67 S.Ct. 677, 91 L.Ed. 884, it was contended that miners working in mines that had been seized by the Government were Federal employees and that, therefore, the prohibition against injunctions in labor disputes contained in the Norris-LaGuardia Act, 29 U.S.'C.A. § 101 et seq., did not apply. The court said 330 U.S. at p. 284, 67 S.Ct. at page 691 that Congress, in passing the War Labor Disputes Act, “intended that by virtue of Government seizure, a mine should become, for purposes of production and operation, a Government facility in as complete a sense as if the Government held full title and ownership.” The court pointed to the agreement entered into between the United Mine Workers and the Secretary of the Interior providing for wages and operating conditions, and then said 330 U.S. at page 288, 67 S.Ct. at page 693: “The defendants, however, point to the fact that the private managers of the mines have been retained by the Government in the role of operating managers with substantially the same functions and authority. It is true that the regulations for the operations of the mines issued by the Coal Mines Administrator provide for the retention of the private managers to assist in the realization of the objects of Government seizure and operation. The regulations, however, also provide for the removal of such operating managers at the discretion of the Coal Mines Administrator. Thus the Government though utilizing the services of the private managers, has nevertheless retained ultimate control.”

The court concluded: “We hold that