California Law Review
Volume 31 | Issue 3
Article 3
June 1943
Rationing as a Proper Wartime Governmental
Function
Perry H. Taft
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Recommended Citation
Perry H. Taft, Rationing as a Proper Wartime Governmental Function, 31 Cal. L. Rev. 270 (1943).
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Rationing as a Proper Wartime
Governmental Functiont
PerryH. Taft*
INTRODUCTION
T
.HE
magnitude of the present global conflict has already outstripped the scope of all past wars. As a result of this, the public
is being inconvenienced in various and sundry ways and is likely to
be more than merely inconvenienced before the existing war is terminated. Against this somber backdrop of a rather foreboding future,
the trials and tribulations of the last World War seem insignificant
by comparison. Two things seem to have contributed to insuring that
the inconveniences of the present war will develop into hardships of
major importance, involving every segment of our civilian population. First, our enemies have acquired territories which contain substantial sources of supply of some of our basic raw materials. Second,
the scope of unrestricted submarine warfare by our enemies has
imposed severe shipping limitations upon certain imported consumer
commodities. It has therefore been necessary for our Government to
impose controls to prevent the reduction of existing stocks of materials below a point which might endanger this country's ability to
successfully prosecute the present war.
Certainly it has been necessary to'husband drastically this country's basic critical materials so that its war production can be properly geared to full and complete utilization. War production control
has thus been essentially a problem of coirdination of the element
of time so that the more important war plants can get first call on
the most critical materials. On the other hand, so far as consumer's
necessary goods are concerned, the problem is one primarily of an
equitable distribution of the available stockpile. The priorities system is therefore used to effect war production control while an equitable apportionment of consumer's goods is obtained through the
medium of rationing.'
this article represents the views of the author only.
*Deputy Attorney General, State of California; Member of the California Bar.
HISTORY 3x THE WAR (1941) 47, 59. It should be noted
I See BARucH, A _mECAN
that the Priorities System has now been supplanted by the Controlled Materials Plan.
19431
RATIONING AS A GOVERNMENTAL FUNCTION
271
Since rationing will inevitably lead to hardships and inconveniences, a natural resistance on the part of those affected is bound to
occur. This resistance will usually diminish to a large extent because
of patriotism and understanding, but a case of extreme hardship is
very likely to result in litigation. A recent case2 is therefore of interest because it not only involved some elements of hardship but also
because it involved a challenge of the validity of the first consumer
rationing program of the present war. The defendant in that case
refused to observe the tire rationing regulations3 which grew out of
the tire freezing order' as well as the order prohibiting sales of tires
except upon the presentation of a proper certificate.' When the Price
Administrator sought to enjoin the disposal of new tires by defendant,
contrary to these regulations, he contended that they were unconstitutional because they "effected a taking of property without due
process of law or just compensation therefor". The case is of added
interest because it involved the ever perplexing problems of war
power and delegation of legislative power.
RATIONING AS A PROPER INCIDENT OF THE WAR POWER
Under our Federal Constitution, Congress has the power to declare war, provide for the common defense and to make all laws
necessary and proper for the carrying on of war.6 Since the express
power to declare war and to make laws necessary to the carrying out
of war exists, it is evident that il includes the implied power to wage
war with all the force necessary to make -it effective.' The immense
scope of the present conflict would appear to permit a wide latitude
to Congress in the exercise of its war power under present day circumstances, since the laws necessary to the carrying on of war would
necessarily depend upon the size of the job to be done by our armed
forces. Allocating of scarce and critical materials, as provided for in
2
Henderson v. Bryan (1942) 46 Fed. Supp. 682. See also Henderson v. SmithDouglass Co. (1942) 44 Fed. Supp. 681.
3 O.PYA. Tire Ration Regs., effective Dec. 30, 1941, 7 FED. REG. (Jan. 3, 1942) 72,
amended by 7 FED. REG. (Feb. 17, 1942) 1027.
4
0.PM. Supp. Order No. M-15-b, effective Dec. 10, 1941, 6 FED. REG. (Dec. 13,
1941) 6406, amended by Amendment No. 1, effective Dec. 19, 1941, 6 FED. REG. (Dec.
23, 1941) 6644.
5 O.P.M. Supp. Order No. M-15-c, effective Dec. 27, 1941, 6 FED. REG. (Dec. 28,
1941) 6792.
OU. S. CONST., Art. I, §8.
7 Stewart v. Kahn (1871) 78 U. S. (11 Wall.) 493.
CALIFORNIA LAW REVIEW
[Vol, 31
the Priorities and Allocation Act,' when considered in the light of
the mechanized nature of our present war effort, would seem to be a
proper incident of Congressional exercise of war power. As the Court
so aptly stated in United States v. Macintosh:
"To the end that war may not result in defeat, freedom of speech
may, by act of Congress, be curtailed or denied so that the morale
of the people and the spirit of the army may not be broken by seditious utterances; freedom of the press curtailed to preserve our military plans and movements from the knowledge of the enemy; deserters' and spies put to death without indictment or trial by jury;
ships and supplies requisitioned; property of alien enemies, theretofore under the protection of the Constitution seized without due
process of law in the ordinary sense of the term; prices of food and
other necessities of life fixed or regulated; railways taken over and
operated by the government; and the other drastic powers, wholly
inadmissible in time of peace, exercised to meet the emergencies of
war." 9
It must therefore be conceded that in its determination of what
measures are proper to promote our national war efficiency, Congress
can, of the necessity borne of the times, exercise a wide discretion 0
wholly unfettered by the normal peacetime restraints. To bear this
out, one has only to recall the litigation that arose from legislation
in the last war which seriously impeded and hampered the exercise
of normal civilian activities. Some of the more illustrative examples
were the prohibition of the manufacture and sale of alcoholic beverages," the regulation of prices of certain commodities,' 2 the taking
over and operation of railroads, 18 as well as the taking over and operation of telephone and telegraph lines. 4 In each instance, the courts
gave judicial approval of what were considered to be proper and
necessary means of effectively waging war.
Even in peace times, where a proper relationship to this country's
ability to wage war is established, war legislation can be enacted since
it implements the power which must be exercised in case this country
8Pub. Law 671, 76th Cong., 3d Sess., as amended by Pub. Law 89, 77th Cong., 1st
Sess. [54 STAT. (1940) 676, as amended by 55 STAT. (1941) 2362.
9
United States v. Macintosh (1931) 283 U.S. 605, 622.
10 Ex parte Milligan (1866) 71 U.S. (4 Wall.) 2; Hamilton v. Kentucky Distilleries
& Warehouse Co. (1919) 251 U.S. 146.
" Hamilton v. Kentucky, ibid.
12 Highland v. Russell Car &Snow Plow Co. (1929) 279 U. S. 253.
13 Northern Pac. R. Co. v. North Dakota (1919) 250 U.S. 135; Dupont de Nemours
& Co. v. Davis (1924) 264 U.S. 456.
14 Dakota Central Tel. Co. v. South Dakota (1919) 250 U.S. 163.
1943]
RATIONING AS A GOVERNMENTAL FUNCTION
273
is called upon to defend itself. Thus legislation having the effect of
creating a reverence for one's country 5 has a proper connection with
the general war power of the constitution. The suspension of the
operation of the statute of limitations' 6 also has a close and definite
relation to the proper exercise of war power. Preparation of fighting
men 7 while a country is still at peace also has a direct and proper
relation to the Congressional war power, since the existence of a
fighting force is necessary to the ability of the country to be prepared in case of attack. It can thus be observed that legislation is
proper as war power legislation even though it be admitted that its
relation to the actual waging of war is somewhat remote at the time
of its enactment.
Somewhat similar is the problem involved in legislation creating
instrumentalities for war purposes, even though the country may not
actually be engaged in a war at the time of their creation. Thus the
creation of government corporations for the manufacture of merchant vessels,18 production of aircraft, 9 as well as the creation of
power for the manufacture of explosivesP0 bear a direct and substantial relation to the waging of war, whether or not at the time of their
creation the country is actually at war, so that their propriety cannot
be disputed.
What then, may we ask, can be said regarding the Priorities and
Allocation Act? Restriction upon normal sources of supply of certain
consumer commodities combined with the difficulty of effecting substitutes for replacement appeaf to make a strong case for the validity
and desirability of such legislation. The wisdom of such legislation
is apparent when it is remembered that sources of supply of such
commodities have been cut off in increasing numbers, and when we
observe that many of those commodities have a material relation to
the health and morale of this country. In addition, the Act is not
without some precedent, in that legislation was enacted during the
last war which was designed to restrict the availability to consumers
of necessary civilian commodities.' Since the maintenance of the efficiency, health and morale of our civilian population has a substan25 United States v. Gettysburg Elec. R. Co. (1896) 160 U. S. 668.
16 Stewart v. Kahn, supra note 7.
17United States v. Lambert (C. C.A.3d, 1941) 123 F. (2d) 395.
18 Sloan's Shipyards v. United States Fleet Corp. (1922) 258 U.S. 549.
19 Clallam County v. United States (1923) 263 U. S.' 341.
2
0 Ashwander v. T.VNA. (1936) 297 U. S. 288.
2
Highland v. Russell, supra note 12.
CALIFORNIA LAW REVIEW
[Vol. 31
tial relation to this country's ability to successfully prosecute its war
effort, and in view of the ability of legislation of this character to
accomplish these ends, at least in part, it would seem that Congress
has in this Act, enacted a proper and necessary measure pursuant
to the exercise of its war power.
RATIONING REGULATIONS AS A PROPER DELEGATION
OF LEGISLATIVE WAR POWER
Since our entry into World War II, rationing of quite a few consumer commodities has already been effected.22 The rationing regulations issued by the Office of Price Administration, which have executed this rationing program, illustrate a high point in an ever increasing trend toward delegation of its power by our legislative
branch of government. A review of the historical background of such
legislative delegation reveals that it gathers added momentum in
time of stress, particularly in wartimes. The past several years, therefore, has seen an accelerated operational pace of our federal government, in which more and more our legislative branch has entrusted
its powers with the executive so that the complex and varied problems raised by the pressure of the times could be swiftly and capably
" 2 Tires-O.P.A. Rationing Order No. 1, effective Feb. 19, 1942, 7 FED. RFe. (Feb.
17, 1942) 1027.
Automobiles-O.P.A. Rationing Order No. 2, effective Feb. 2, 1942, 7 FFD. REG.
(Feb. 4, 1942) 667.
Sugar-O.P.A. Rationing Order No. 2, effective April 20, 1942, 7 FED. REo.
(April 22, 1942) 2966.
Typewriters-O.P.A. Rationing Order No. 4, effective March 13, 1942, 7 Fm. RE;.
(March 14, 1942) 2003.
Gasoline-O.P.A. Rationing Order No. 5, effective May 12, 1942, 7 FED. REo.
(May 12, 1942) 3482.
Rubber Boots and Shoes-O.PA. Rationing Order No. 6, effective Sept. 29, 1942,
7 FED. RFG. (Sept. 30, 1942) 7749.
Bicycles-O.P.A. Rationing Order No. 7, effective May 15, 1942, 7 FED. Rao.
(May 12, 1942) 3666, reprinted as amended July 1, 1942, effective July 9, 1942,
7 FED. REG. (July 3, 1942) 5062.
Heating Stoves-O.P.A. Rationing Order No. 9, effective Dec. 19, 1942, 7 FED.
Ran. (Dec. 22, 1942) 10720.
Fuel Oil-O.P.A. Rationing Order No. 11, effective Oct. 22, 1942, 7 FaD. Ra.
(Oct. 21, 1942) 8480.
Coffee-O.P.A. Rationing Order No. 12, effective Nov. 21, 1942, 7 FED. Ran.
(Nov. 24,1942) 9710.
Processed Foods-O.P.A. Rationing Order No. 13, effective Mar. 1, 1943, 8 FED.
Ran. (Feb. 11, 1943) 1840.
Shoes-O.PA. Rationing Order No. 17, effective Feb. 7, 1943, 8 FED. Ra . (Feb.
9, 1943) 1727.
19431
RATIONING AS A GOVERNMENTAL FUNCTION
275
dealt with. The rationing regulations of the present war are based
upon the broad legislative grant of power of the Priorities and Allocation Act already referred to. This Act contains a specific clause
which provides the basis for the authority in the executive to ration,'
and it would appear that the prime question of importance with respect to this clause is a determination of whether or not it establishes
sufficiently definite and intelligible standards. This is important because of the well known constitutional requirement that delegated
power must provide a standard which will permit the proper exercise
of that power upon the part of the executive branch.' Otherwise Congress will be considered to have abdicated its legislative functions.
Normally, when the demands of war do not exist, the tendency
of the courts is toward stricter interpretation of legislative delegation of power. Therefore, in normal times, a legislative grant which
establishes a primary standard and places in the executive the "power
to fill in the details ' has been held valid, whereas legislation permitting an administrative official to exercise a modification of that
legislation would be an improper delegation. 6 The difference between
these two grants would seem to rest upon the question of whether
the executive is given the power to legislate rather than administer,
and the latter certainly would not include the ability to "exercise unfettered discretion to make whatever regulations one thinks may be
needed or advisable for the rehabilitation of industry".21 Even in
peace times, however, where the power granted is that to act in the
field of international affairs, a different measuring stick is used by
2355 STAT. (1941) 236, 41 U.S.C. (1943) §2(a)(2) prec. §1. ". . . Whenever the
President is satisfied that the fulfillment of requirements for the defense of the United
States will result in a shortage in the supply of any material for defense or for private
account or for export, the President may allocate such material in such manner and to
such extent as he shall deem necessary or appropriate in the public interest and to promote the national defense." In the instant case, it was contended in court by defendants
that the word "allocate" could not be interpreted to include the term "ration" within
its context. The court, speaking from the bench, when granting a temporary injunction,
did not sustain this contention.
24
New York Central Securities Corp. v, United States (1932) 287 U.S. 12; Currin
v. Wallace (1939) 306 U.S. 1; Mulford v. Smith (1939) 307 U.S. 38; United States v.
Rock-Royal Corp. (1939) 307 U. S. 533; Sunshine Coal Co. v. Adkins (1940) 310 U. S.
381;
Opp Cotton Mills v. Administrator (1941) 312 U.S. 126.
2z United States v. Shreveport Grain & Elevator Co. (1932)
287 U.S. 77. See also
Kay v. United States (1937) 303 U.S. 1.
26Morrill v. Jones (1883) 106 U.S. 466; Williamson v. United States (1908) 207
U.S. 425. But cf. United States v. Antikamnia Co. (1914) 231 U.S. 654.
27
Schechter Poultry Corp. v. United States (1935) 295 U. S. 495. See also Panama
Refining Co. v. Ryan (1934) 293 U. S. 388.
CALIFORNIA LAW REVIEW
[Vol. 331
the courts in determining the propriety of the legislative grant. As
was stated in the Curtiss-Wright case:
"Practically every volume of the United States Statutes contains
one or more acts or joint resolutions of Congress authorizing action
by the President in respect of subjects affecting foreign relations,
which either leave the exercise of the power to his unrestricted judgment, or provide a standard far more general than that which has
'
always been considered requisite with regard to domestic affairs." 8
Since a wider latitude of legislative grant is inherent in the international field, as distinguished from the domestic, little doubt can
be raised against an even broader grant in times of war, if the grant
is an incident of the war power of Congress. This principle is well
stated by the Supreme Court in its decision upon the validity of legislation authorizing the President to take over the telephone and telegraph systems of the country, when it said:
"That under its war power Congress possessed the right to confef
upon the President the authority which it gave him we think needs
nothing here but statement, as we have disposed of that subject in
the North Dakota Railroad Rate Case. And the completeness of the
war power under which the authority was exerted and by which completeness its exercise is to be tested suffices, we think, to dispose of
the many other contentions urged as to the want of power in Congress to confer upon the President the authority which it gave him."'
Thus, in effect, the Court sustained this far reaching delegation of
power in the last war as it also did in the instance of legislation giving broad discretion to the executive in dealing with alien enemy
property.3 Certainly, the great magnitude of the present war would
lend support to the argument that the Priorities and Allocation Act
not only is encompassed within the class of legislation sustained in
the last war, but.in addition, the complex and constantly changing
character of this war lends emphasis to the need for legislation of
this character so that the executive can be insured of the ability to
meet any and all contingencies which might suddenly arise. In addition, an examination of the rationing clause in this Act reveals that
very definite and specific standards have been set forth for the exer2 United States v. Curtiss-Wright Export Corp. (1936) 299 U.S. 304, 324.
2 9
Supra note 14, at 183.
30 United States v. Chemical Foundation, Inc. (1926) 272 U.S. 1.
1943]
RATIONING AS A GOVERNMENTAL FUNCTION
277
cise of executive action,"' which would add weight to the argument
that it is a valid legislative grant.
The sub-delegative process by which the rationing orders were
effected provides an interesting historical review of administrative
governmental action. The Priorities and Allocation Act itself be-
came law on May 31, 1941, as an amendment to the National Defense Act of June 28, 1940.32 Pursuant to the broad grant of the Act
before this amendment, the President on January 7, 1941, created
the Office of Production Management 33 invested with the responsibility of allocating deliveries of materials. 34 On April 11, 1941, the
Chief Executive created the Office of Price Administration and Civilian Supply 5 to assist in the making of studies with respect to price
spiraling and rationing.30 Pursuant to the Act as amended, the Director of the Priorities Division of the Office of Production Management issued an order designed to conserve our rubber stockpile3 7 on
June 20, 1941. On August 28, 1941, the President changed the title
of the Office of Price Administration and Civilian Supply to that of
the Office of Price Administration and at the same time abolished the
Priorities Board3 8 and placed in the Office of Production Management the responsibility for performing the power granted by the Act
as amended." Thus a foundation was laid for the issuance by the
Office of Production Management of an order placing in the Director
of the Priorities Division, the delegated authority which had been
3
'1Supranote 23. §2(a) (2) is amended by the Second War Powers Act, 55 STAT.
(1942) 841, 50 U. S. C. (1943) to include "facilities" as well as "materials."
32
Supra note S.
33 E. 0. 8629, 6 FED. REG. (Jan. 9, 1941) 191.
34 Ibid. at 192. "Section 5 .... The Priorities Board shall ...make recommendations
with respect to ...the allocation of deliveries and other related matters. In making its
findings and recommendations, the Priorities Board shall take into account general
social and economic considerations and the effect the proposed actions would have upon
the civilian population."
3
5E. 0. 8734, 6 Fau. RGo. (April 11, 1941) 1917.
36 Ibid. Section 2a (4). ". . . after the satisfaction of military defense needs, to provide, through the determination of policies and the formulation of plans and programs,
for the equitable distribution of the residual supply of such materials and commodities
among competing civilian demands."
37 O.P.M. Gen. Pref. Order No. M-15, 6 FaD. Rw. (June 20, 1941) 3060.
38 E. 0. 8875, 6 FED. REG. (Aug. 28, 1941) 4483.
89 Ibid. at 4483, Section lb. "The Office of Production Management ... is directed
to ... perform the functions and exercise all the power, authority, and discretion conferred upon the President by Public No. 89, 77th Cong., 1st Sess., entitled 'An Act to
amend the Act approved June 28, 1940, entitled "An Act to expedite the national defense, and for other purposes", in order to extend the power to establish priorities and
allocate material', approved May 31, 1941."
CALIFORNIA LAW REVIEW
[Vol. 31
placed in the Office of Production Management. 0 The Director of
the Priorities Division then issued the tire freezing order of December 10, 1941,1 and the tire certificate sales order of December 27,
1941,1 which also granted to the Office of Price Administration the
authority to exercise the powers of the Office of Production Management in this respect. On December 30, 1941, the Office of Price Administration issued its first tire rationing regulations,4 the violation
of which resulted in the injunction proceedings by the Office of Price
Administration in the Bryan case.4
It is obvious that an extensive series of sub-delegations occurred
which at first blush might appear to be too broad in its nature. However, it is clear that even in the absence of express legislative authorization, the executive may sub-delegate his authority where it is difficult or impossible for him to exercise all the power granted to him.4
In the instant situation, we have the added factor of the Act as
amended specifically providing for the exercise by the President of
his power through his designated official' and it is well settled that
in such a case proper delegation has occurred.47 It may possibly be
contended that rationing involves bureaucratic possibilities and yet
the many and varied responsibilities placed upon the President in
connection with its institution and enforcement give force to the conclusion that the basic Congressional intent with respect to rationing
has been carried out in a manner commensurate with the circumstances. It is advanced, therefore, that proper delegation is present
in the rationing regulations When a full and complete consideration
is given to all the factors contributing to their establishment.
40 O.P.M. Reg. No. 3, effective March 8, 1941, 6 FED. Ra. (March 25, 1941) 1996,
as amended September 12, 1941, 6 FED. REG. (Sept. 24, 1941) 4865.
41
Supra note 4.
42
Supra note 5.
43
Supra note 3.
44
Supra note 2.
Williams v. United States (1843) 42 U. S. (1 How.) 290; Lloyd Royal Beige
Societe Anonyme v. Elting (C. C.A. 2d, 1932) 61 F. (2d) 745, cerl. den. (1932) 289
U. S. 730; Nolde & Horst Co. v. Helvering (D. C. 1941) 122 F. (2d) 41.
45
46 Supra note 23. ".... The President may exercise any power, authority or discrecretion conferred on him by this section, through such department, agency or officer of
the Government as he may direct and in conformity with any rules and regulations
which he may prescribe."
47
Stoehr v. Wallace (1921) 255 U.S. 239.
19433
RATIONING AS A GOVERNMENTAL FUNCTION
279
RATIONING REGULATIONS AND "JUST COMPENSATION"
Of particular interest in the Bryan case was the argument that
the tire rationing regulations effected a taking of property without
due process of law and without just or any compensation, contrary
to the Fifth Amendment. It was the contention of the defendants
that the regulations placed them in the position of being at first unable to dispose of their stocks of tires and later of being permitted
to make only a few sales under certificates even though during the
entire period of time, liability for the ordinary incidents of their
business such as rent, labor and utilities continued in force. Thus,
they argued, the government in effect "had taken" their property
and no compensation had been made to them for such "taking".
It is well settled that the right of eminent domain is an incident
of sovereigty,' so that the clause in the Fifth Amendment providing for just compensation for property taken is merely a limitation
upon the use of that power. 49 It is well to remember, however, that
the extent of the exercise of the power of eminent domain is a matter
for the legislature to determine, with the proviso that just compensation be paid.' ° Not only is private property, real and personal, sub5"
ject to this right of eminent domain,"1 but so also are franchises,
patentsO as well as contracts." However, when an appropriation has
occurred, it must be attended by compensation, unless it be shown
that a consequential injury incident to frustration has occurred rather
than a direct taking.5 5 Just as in the case of a direct taking, the Government is under the obligation of making just compensation if the
existence of an implied contract on its part can be established. As
was stated in the Lynak case:
"Whenever in the exercise of its governmental rights it takes property, the ownership of which it concedes to be in an individual, it
impliedly promises to pay therefor." 5 6
48
Searl v. School Dist. No. 2 (1890) 133 U. S.553.
United States v. Jones (1883) 109 U.S. 513.
50
Shoemaker v. United States (1893) 147 U. S.282.
51 See Phelps v. United States (1927) 274 U. S. 341.
52Wilmington & W. R. Co. v. Reid (1872) 80 U. S. (13 Wall.) 264.
53 James v. Campbell (1882) 104 U. S.356. See also Hollister v. Benedict & B. Mfg.
49
Co. (1885) 113 U. S. 59.
54
Omnia Commercial Co. v. United States (1923) 261 U.S. 502.
55 Norman v. Baltimore & 0. R. Co. (1935) 294 U.S. 240.
56 United States v. Lynah (1903) 188 U.S. 445 at 465.
CALIFORNIA LAW REVIEW
[Vol. 31
Thus the rendering of agricultural land as unfit by the construction
of a government dam is compensable as in the Lynah case, whereas
damage to riparian rights by similar activity on the part of the government would be considered as only incidental."
The existence of war cannot change the guarantees provided for
in the Fifth Amendment' and therefore all war legislation must be
considered in the light of whether or not just compensation is warranted by the circumstances of its exercise. Therefore an actual taking of private property by the Government in the exercise of its war
power creates an obligation to reimburse proper compensation 9 as
is also the case with respect to the implied c6ntract doctrine unless
the injury be shown to be purely consequential.'o As was so clearly
stated in the Legal Tender cases:
"Closely allied to the objection we have just been considering is
the argument pressed upon us that the legal tender acts were prohibited by the spirit of the fifth amendment, which forbids taking private property for public use without just compensation or due process
of law. That provision has always been understood as referring only
to a direct appropriation, and not to consequential injuries resulting
from the exercise of lawful power. It has never been supposed to have
any bearing upon, or to inhibit laws that indirectly work harm and
loss to individuals. A new tariff, an embargo, a draft, or a war may
inevitably bring upon individuals great losses; may, indeed, render
valuable property almost valueless. They may destroy the worth of
contract. But whoever supposed that, because of this, a tariff could
not be changed, or a non-intercourse act, or an embargo be enacted,
or a war be declared?"' 61
A review of the cases reveals a strikingly apparent hardship involved
when individuals' rights have crossed the path of military necessity.
A lessening of value rather than an appropriation has been found to
exist in the instance of an alcoholic beverage manufacturer who was
seriously affected by legislation forbidding the sale of his products. 62
The rendering impossible of the performance on a contract by the
requisitioning of the plant's production was held to be merely frus57
Gibson v. United States (1897) 166 U.S. 269.
58 United States v. L. Cohen Groc. Co. (1920) 255 U. S. 81.
59
United States v. Russell (1871) 80 U.S. (13 Wall.) 623. See also Mitchell v.
Harmony (1852) 54 U.S. (13 How.) 115.
60 Becker Steel Co. of America v. Cummings (1935) 296 U.S. 74. But cf. Cummings v. Deutsche Bank Und Discontogesellschaft (1937) 300 U. . 115.
61 Knox v. Lee (1871) 79 U. S. (12 Wall.) 457, 551.
62
Jacob Ruppert v. Caffey (1919) 251 U.S. 264.
1943]
RATIONING AS A GOVERNMENTAL FUNCTION
281
tration and not an appropriation.s3 A maximum price imposed upon
goods previously contracted for sale at a higher price was held to be
incidentally connected." On the other hand, where a contract for
the construction of a ship was already partially completed 5 and a
contract for the providing of generated power through a designated
canal' ° were terminated by governmental action, just compensation
was accorded. Factors which appear to lend weight to the right of
compensation in the latter cases as distinguished from the former
would seem to lie in the existence of near tangible rights combined
with the exercise of power amounting to a practical requisitioning in
the latter cases, while in the former we have intangible contract rights
affected by government action having only an incidental relation at
most to those rights.
How then do the facts in the Bryan case fit into this picture? At
most, it would appear there has been a possible loss of business incident to an exercise of lawful power by the government pursuant
to an act under the war power of Congress. Even if it be said that
an actual appropriation be shown, it is established that damages resulting from the loss of business incident to a taking by the government are not recoverable as part of the compensation for the taking.°7 Here, however, no appropriation has been shown, and as stated
so well by Judge Harrison:
"Here, it is to be observed, no tires, tubes, or any other properties
have been taken from Bryan. He still has (or would have if he had
not sold them in defiance of the regulations) all of his tires, less those
which he may have sold in obedience to the regulations and for which
he received rationing certificates. In fact, under the law there has
been no taking of defendants' property, simply a regulation for its
disposition."68
The decision in the instant case, therefore, reaffirms the doctrine of
"consequential injury" and extends the application of that theory to
the broad exercise of rationing power.
63 Supra note 54.
64
Morrisdale Coal Co. v. United States (1922) 259 U.S. 188.
65 Brooks Scanlon Corp. v. United States (1924) 265 U.S. 106.
66
lnternational Paper Co. v. United States (1931) 282 U.S. 399.
57 Mitchell v. United States (1925) 267 U.S. 341,
68 Italics added. Sutpra note 2, at 685.
CALIFORNIA LAW REVIEW
[Vol. 31
CONCLUSION
In attempting to categorize injuries attendant to the exercise of
rationing authority, it would be well to keep several points in mind.
It is well established that an interference with private rights, contract or otherwise, which results only in "consequential injury" will
normally not create liability for compensation on the part of the
government, even in war times. The test to be applied, seems to be
dependent upon the degree of tangibility of the right, with the near
tangible rights creating an implied contract on the part of the government to make just compensation. At the same time, the exercise
of requisitioning power by the government is attended by an obligation to compensate therefor. In any event, however, a regulation for
disposition, as in the instant case, is not a taking, since it merely
imposes a restriction upon the manner in which commodities may be
sold, and does not involve an actual appropriation of those commodities by the government. The Bryan case can therefore be considered of value in this respect, when we consider that the present
rationing programs may be only a prelude to what may be found
necessary before the war is over.