fore authorizing payment. In other words, of credit and acted upon it by making the they evidently expect that you will surrender shipment of goods therein mentioned; that the documents to us for forwarding to our this letter of credit, when issued by the deChicago correspondents, and that your cus- fendant and accepted by the plaintiffs, contomers are to have the privilege of examining tained no expiration date. There was ample these documents before authorizing payment. Awaiting an expression of your views on this evidence to sustain these findings. subject, we remain

"Yours very truly,

"[Signed] H. L. Sparks,

"Assistant Cashier."

The plaintiffs answered on August 31, 1920: "August 31st, 1920. "Credit Department. "National Park Bank, 214 Broadway, New York City-Gentlemen: With regard to your confirmed letter of credit No. 13840, which you advised was issued in accordance with instructions received by you from Greenebaum Sons' Bank & Trust Company, Chicago, Ill., in our favor, covering a purchase from us by Brodsky Gross & Co., Chicago, Ill., of 1500 bags of Java white sugar 10 per cent. more or less at 22¢ per lb., less 2 per cent. duty paid, f. o. b. cars Philadelphia, Pa., landed weights, shipment during August or September, 1920, from Java, which shipping point you confirmed to us under date of June 11, 1920, as it is our intention to comply fully with all of the terms and conditions of the contract covered by this letter of credit barring unforeseen circumstances which form part of the contract, we will under no circumstances agree to either the suspension of payment or the cancellation of this letter of credit. As this letter of credit shows no definite date of expiration, and as the sugar was sold the consignee on the basis of f. o. b. cars Philadelphia, Pa., landed weights, shipment from Java during August or September, 1920, we will look to you for payment of our sight drafts when accompanied by invoices, landed weight certificate and railroad bills of lading blank indorsed.

We think that the defendant's letter of credit gave the plaintiffs a reasonable time within which to present their sight draft and papers, and that the plaintiffs have fully complied with all the terms and conditions entitling them to payment.

For the reasons here stated, the judgment appealed from should be affirmed, with costs.

BANNER MILLING CO. v. STATE. (Court of Appeals of New York. July 15, 1925.)

1. Appeal and error 1094(3)—On unanimous affirmance by Appellate Division of judgment of Court of Claims, review is limited to findIngs of fact made by Court of Claims.

On unanimous affirmance by Appellate Division of judgment of Court of Claims allowing compensation for property taken by eminent domain, review by Court of Appeals is limited to findings of fact made by Court of Claims, and it cannot go behind such findings to determine what such court considered and did not consider in making up its judgment.

2. Eminent domain 107-State is not required to pay loss from compelling owner of land taken by eminent domain to remove business to some other place.

State, on taking land for public use is not required to pay owner for expense of removing business to some other place, or for damage from interruption of business and good will.

3. Eminent domain 107-Legislature may authorize recovery for loss of profits in business or for damages to good will of going concern caused by appropriation of land. If, however, there be any question of fact of profits in business or for damages to good Legislature may authorize recovery for loss gathered from all the circumstances and cor-will of going concern caused by appropriation of respondence as to what the letter of credit land for state or its agencies, as it did by Water did mean and as to the intention of the par- Supply Acts (Laws 1905, c. 724, as amended by ties, if there be different inferences which Laws 1906, c. 314). might be drawn from the correspondence, the facts were all before the trial justice, who made his findings after hearing the case, and on them based his conclusions of law. He found as a fact that on May 5, 1920, the defendant for a valuable consideration mov

4. Eminent domain 107-Statute held not to give grounds of payment for loss of good will through appropriation of site of business; "compensation;" "damages;" "other property."

ing to it issued and delivered to the plain- claims for compensation or damages because of Laws 1918, c. 606, extending time for filing tiffs a confirmed irrevocable letter of credit appropriation of lands, or other property for in words and figures as contained in the let- Barge Canal, did not authorize payment for inter of May 5th, and that thereupon and there-terruption to good will of milling business after the plaintiffs accepted this said letter whose site was appropriated; words "com

(148 N.E.)

pensation" and "damages," as used therein, being synonymous, and meaning compensation allowed by law for taking of property, and words "other property" not extending to right of recovery beyond compensation for property appropriated according to previous law.

[Ed. Note. For other definitions, see Words

and Phrases, First and Second Series, Compensation; Damage-Damages; Other.]

5. Eminent domain 134—Measure of damages for appropriation of flour mill property, stated.

In appropriation of mill site and property under Barge Canal Terminal Act, it was com

petent to prove all use that could be made of
it, value of it as live, going flour mill, increased
value, if any, which structure so used had giv-
en to land, and all valuable appurtenances and
availabilities of property.
6. Eminent domain

126(1)-Sum allowed for property appropriated need not equal sum of cost of various items in production thereof as going business concern, but such items should be considered.

Claim by the Banner Milling Company against the State of New York. From a judgment of the Appellate Division (210 App. Div. 812, 205 N. Y. S. 911), affirming a judgment of the Court of Claims (117 Misc. Rep. 33, 191 N. Y. S. 143), awarding compensation for property taken for Barge Canal purposes, claimant appeals. Affirmed.

Henry W. Hill, of Buffalo (Alfred W. Gray, of Niagara Falls, of counsel), for appellant. Albert Ottinger, Atty. Gen. (Edward J. Mone, of Albany, of counsel), for the State. Martin Conboy, of Riverdale-on-Hudson (John Jay McKelvey and Harry B. Chambers, both of New York City, of counsel), for Isaac G. Johnson & Co., amicus curiæ.

CRANE, J. Pursuant to chapter 746 of the Laws of 1911, known as the Barge Canal Terminal Act, and its amendments, the state appropriated appellant's property in the city of Buffalo, used by it for a flour mill. The property had been used for the manufacture In estimating value of property appropri- of flour since 1887, and for the past 10 years ated, sum allowed need not equal sum of cost the business had produced for the claimant of various items in production of property, averaged earnings of over $50,000 annually. though, to estimate fair market value of mill The state did not appropriate the business, site appropriated under Barge Canal Terminal or intend to carry on the business. It sought Act, court should have considered, not only the land and its appurtenances for Barge cost of production, but cost necessarily or reasonably expended in bringing mill or factory Canal purposes. All fixtures, as far as posinto efficient working condition, such as archi-sible, were to be removed by the owner. tect's fees in making or revising plans, and compensation for engineers to carry out plans or to arrange factory so as to produce appropriate results, but sum allowed need not necessarily be equal to total of all such various items. 7. Eminent domain 107-Refusal of Court of Claims, in fixing value of mill site appropriated to allow for expenses of preliminary construction, held not to invalidate award.

Refusal of Court of Claims, in fixing compensation for mill site appropriated under Barge Canal Terminal Act, to allow recovery of preliminary construction expenses, held not to invalidate award; the claimant being entitled only to have such expenses considered in fixing value of plant as going concern.

8. Appeal and error 1091(1)—On unanimous affirmance by Appellate Division of Court of Claims' allowance for appropriation of property, it must be assumed that award includes all elements of value, except on showing to contrary.

The Court of Claims, pursuant to the procedure in such cases, allowed the claimant for the lands appropriated $235,000, made up as follows: For the lands appropriated, $90,000; for the value of the structures appropriated, $90,000; for the value of the power plant appropriated, $8,317.62; and for damages to the machinery and fixtures not appropriated, $46,682.38.

Both the state and the claimant appealed from the judgment of the Court of Claims to the Appellate Division, where the judgment was unanimously affirmed, with the exception that paragraph 7 thereof was stricken out. This paragraph stated the reason why the court had made no allowance for damages to the good will of the business. The claimant is in this court by the certification of the Appellate Division that there is a question of law involved, which ought to be reviewed by us.

On unanimous affirmance by Appellate Di- appellant seeks to present two questions of [1] On the argument and in its brief the vision of allowance by Court of Claims for appropriation of mill site under Barge Canal Ter-law-one relating to the value of the mill as minal Act, it must be assumed that award includes every element of value to which claimant was entitled, unless contrary appears by some ruling or exception.

a going concern, and the other as to the good will, both of which it is claimed the court excluded in allowing damages or compensation. In my judgment, the state of the record presents the latter question only.

By reason of the unanimous affirmance we Appeal from Supreme Court, Appellate Di- are confined in our review to the findings of vision, Fourth Department. fact made by the Court of Claims. We can

1

not go behind these to determine what that The reason for this distinction is quite ap‐ court considered or did not consider in mak-parent. When the business of a public service ing up its judgment. That it did not consider corporation is taken, the corporation goes good will is evident from the face of these findings. At the request of the claimant the court found:

"That the earnings of claimant over a period of 10 years averaged upwards of fifty-five thousand dollars ($55,000) annually, which, after deducting the interest on the value of the tangible assets, establishes the value of the going business or good will of the company at upwards of two hundred and fifty thousand dollars ($250,000)."

Finding 11 reads:

"That the state of New York did not take, appropriate, interrupt, damage, or destroy the good will of the flour-manufacturing business theretofore carried on on the said premises by

the claimant."

Subsequently this finding was amended so as to read:

"That, while the state of New York did not take, appropriate, or destroy the good will of the flour-manufacturing business theretofore carried on upon said premises by the claimant, it did interrupt and damage the same. To what extent it was damaged it is unnecessary for us to find, because such good will was not property for which the claimant was entitled to compensation by reason of this appropriation, as we have found in the seventh conclusion of law hereafter set forth."

The seventh conclusion of law reads: "That the good will of claimant's said business is not property for which the claimant is entitled to any compensation in this proceeding, nor is it entitled to any damages for injury thereto, or for any interruption thereof by reason of the appropriation herein."

out of business, so far as conducting that branch of it is concerned. The business changes ownership from private to public control. The good will and all that goes with it is taken over by the state, as well as the tangible property. This is not so with the condemnation of land for public purposes. Here the good will may be damaged by inconvenience and removal of the business, but it is not taken. The owner of the business may remove to another place, establish his business, and carry his good will with him. sists in the brand of goods manufactured, or Especially is this so where the good will conin the personality of the manufacturer, as distinguished from the mere place of doing business. While it may be, as in this case, that removal from one place to another may cause some loss, yet the elements making up that loss are so highly speculative that the courts have not considered it an appropriation or damage for which the state should pay as commanded by the Constitution. Matter of Gilroy, 26 App. Div. 314, 49 N. Y. S. 798. Cullen, J.; Sawyer v. Commonwealth, 182 Mass. 245, 65 N. E. 52, 59 L. R. A. 726, Holmes, C. J.; Nichols on Eminent Domain (2d Ed.) sect. 124; City of Oakland v. Pacific Coast Lumber & Mill Co., 171 Cal. 392, 398, 153 P. 705; Becker v. Phila. & Reading T. R. Co., 177 Pa. 252, 35 A. 617, 35 L. R. A. 583; Ranlet v. Concord Railroad Corporation, 62 N. H. 561; Hunter's Adm'r v. C. & O. R. Co., 107 Va. 158, 59 S. E. 415, 17 L. R. A. (N. S.) 124; U. S. v. Inlots, 26 Fed. Cas. 482, 489.

[3] The rule is different in the rate cases, where good will is an element of property which must be considered in estimating the investment or the rate upon which to figure income. People ex rel. Kings County Lighting Co. v. Willcox, 210 N. Y. 479, 104 N. E. 911, 51 L. R. A. (N. S.) 1; Des Moines Gas Co. v. City of Des Moines, 238 U. S. 153, 35 S. Ct. 811, 59 L. Ed. 1244. The Legislature may, however, authorize a recovery for the loss of profits in a business or for the damages done to the good will of a going concern caused by the appropriation of land by the state or its agencies. Such were the provisions of the Water Supply Acts (Laws 1905, c. 724, as amended by Laws 1906, c. 314). People ex rel. Burhans v. City of New York, 198 N. Y. 439, 92 N. E. 18.

[2] The appellant insists that, as its good will was interrupted and damaged to some extent, it was entitled to compensation for this interruption or damage. Such, however, is not the law. There is a marked distinction between the instances where the state appropriates a public service corporation and all its business and good will as a going concern, intending to continue its operations as a public enterprise (City and County of Denver v. Denver Union Water Co., 246 U. S. 178, 38 S. Ct. 278, 62 L. Ed. 649; City of Omaha v. Omaha Water Co., 218 U. S. 180, 30 S. Ct. 615, 54 L. Ed. 991, 48 L. R. A. [N. S.] 1084), and those instances where the state desires the land and not the business. Taking the [4] The appellant's counsel apparently recland may cause the owner inconvenience and ognizes this general rule that damage done loss, by compelling him to remove his busi- to the good will cannot be figured in the comness to some other place. Such loss, how-pensation, where the good will is not approever, is not recognized as part of the damage priated, because he now claims that the Leg or compensation which the state must pay islature has amended the Barge Canal Act, for the land taken. giving jurisdiction to the Court of Claims

(148 N.E.)

to make allowance for such damages. Chap-, claims. I am therefore convinced that the ter 606 of the Laws of 1918 contains but one Court of Claims was right in ruling as it did regarding the good will of the claimant's bussection. It is entitled: iness.

"An act to extend the time for filing existing claims against the state for compensation or damages for or on account of the appropriation of property in connection with the construction of improved canals and canal terminals, and giving the Court of Claims jurisdiction."

It reads:

The other branch of this case deals with

the rule which the Court of Claims adopted in fixing the value of the property appropriated or the compensation to be paid therefor. The court, it is said, adopted the right rule, and then refused to apply it. Apparently some confusion has arisen in the use of the words "going concern value" and "good will." "The Court of Claims shall have jurisdiction In its brief the appellant at times uses these of and may hear and determine any claim words interchangeably. In dealing with the against the state, heretofore accrued, which shall be filed within one year after this act subject of good will, the reports and texttakes effect, for compensation or damages for books use the words "going concern value," or on account of the appropriation by the state and the one generally includes the other to some extent. In considering the present of any lands, structures, waters, franchises, or other property in connection with the improve-point made by the appellant, we must be care* canals, ment of the * ** notwith-ful to exclude the "good will" meaning of standing the lapse of time since the accrual of the words "going concern value." the claim." Section 1.

*

That this statute merely extends the time to file a claim, where the time had expired under existing laws, is quite evident from the reading. It cannot be that it was the intention to create a favored class for those who Discrimhad delayed in presenting claims. ination is not favored, even though it be legal. Matter of City of New York, 190 N. Y. 350, 83 N. E. 299, 16 L. R. A. (N. S.) 335. Nor was it the intention to reopen cases already settled, and for which allowances had been made. The words "compensation or damages for or on account of the appropriation" mean no more than compensation or the amount allowed by law for the taking of the property. Damages and compensation, as used in this statute, are synonymous. If it were the intention of the Legislature to add to the words of the original statute (Laws 1911, c. 746) damages to the good will of a business conducted on the property taken, the title and the body of the act should have been more specific. A modification of the general rule would have called for some such wording as that above referred to in the Water Supply Acts. Neither do the words "other property," read in connection with "lands, structures, waters," etc., extend the right of recovery beyond compensation for property appropriated according to the previous law.

The learned opinion of the Court of Claims calls attention to the fact that the original bill, which became chapter 606 of the Laws of 1918, contained in it the words "good will, established business, or other property," and that, as finally passed, the words "good will and established business" were stricken out. This amendment of 1918 did no more than extend the time within which to present

[5] As I understand the appellant, it claims that certain elements of construction and cost in building up the plant and the flour mill were not considered or allowed for by the Court of Claims, although the general rule of valuation would include such proof. In establishing the value of the flour mill property appropriated, it was competent to prove all the uses that could be made of the property, the value of the plant as a live, going flour mill, the increased value, if any, which the structure so used had given to the land, and all the valuable appurtenances and availabilities of the property.

[6] To estimate the fair market value, the court no doubt should have considered, not only the cost of production, but also the cost necessarily or reasonably expended in bringing the mill or factory into efficient working condition-what has been called the synchronizing of its parts. Architect's fees in making or revising plans, compensation for engineers to carry out the plans, or to arrange the factory so as to produce appropriate manufacturing results, are all elements which should be considered in estimating the market value. These are things which a seller and a purchaser would consider on a sale. This does not mean, however, that the cost of these various items, considered alone and by themselves, must be allowed for, or that the sum total of all these expenses make up the owner's compensation. The cost of production or of reproduction need not of necessity be taken part by part, and the total accepted as the amount of the award. These items like other items of cost in production or reproduction, are to be considered and weighed with the other evidence of value.

[7] This I understand was the rule applied It was by the Court of Claims in this case. stated in the briefs that the court stated the