US SUPREME COURT DECISIONS

Upon default by a shipbuilder on its contract to construct certain boats for the United States, the Government, exercising an option under the contract, required the shipbuilder to transfer to the Government title to the uncompleted boats and the materials on hand for their construction. This made it impossible for petitioners to enforce their materialmen's liens which had attached under state law to the boats and materials when the materials were furnished to the shipbuilder. Petitioners sued in the Court of Claims for compensation for the taking of their liens by the Government.

Held: Petitioners are entitled to recover whatever value their liens had when the Government took title to the boats and materials. Pp. 364 U. S. 41-49.

(a) Under the terms of the contract here involved, title to the property was in the shipbuilder when the materials were furnished, and the mere fact that it was contemplated that title eventually would vest in the Government did not prevent the materialmen's liens from attaching. Pp. 364 U. S. 42-44.

(b) On the record in this case, petitioners had compensable property interests within the meaning of the Fifth Amendment in their liens on the boats and materials prior to transfer of title to the Government. Pp. 364 U. S. 44-46.

(c) Since the Government's action destroyed the value of petitioners' liens, there was, under the circumstances of this case, a "taking" of these liens by the Government, for which compensation is due under the Fifth Amendment. Pp. 364 U. S. 46-49.

___ Ct. Cl.___, 169 F. Supp. 259, reversed. chanrobles.com-red

Page 364 U. S. 41