Property
Class Notes
We’re
talking about eminent domain and in particular about a particular clause in the
Fifth Amendment: “nor shall private
property be taken for public use, without just compensation”.
Just compensation
Why
do we have just compensation? Here’s a
guy from Poletown who is quite unhappy. He wanted $15 million for his house as his
just compensation.
But
why give him squat? Who drafted the Constitution? In a sense, this is an anti-democratic
provision. It’s designed to frustrate—at
least in certain circumstances—the will of the majority. The minority have certain rights no matter
how unpopular they are.
There
is very little written and almost no debate about this provision. It was the least discussed provision of the
Bill of Rights. Most people believe,
however, that this provision was put into the Constitution to prevent radical
redistributions of wealth from the large landowners to the majority.
It
becomes sort of a wash: if a majority of the people want
to take farms in
Another
reason for just compensation is that taking people’s property is in some sense
demoralizing. It not only makes them
unhappy and seems unfair but also is demoralizing in the sense that if your
property is subject to being taken without just compensation, there is little
incentive to improve the property. It
would be foolish to invent a lot of money in property if it could be taken by
the government at any time without compensation.
Public use or purpose
Here’s
a question: why isn’t just compensation enough?
Why do we combine “just compensation” with the “public purpose” or “public
use” requirement? We may consider land
unique and thus, in some sense, irreplaceable.
The
government cannot go taking land whenever it wants, partly because there is a
risk that the private property owner will be undercompensated. So you can’t just take whatever you want, but
rather it must be taken for a public use.
This may be an anti-democratic view, but we provide protections to the
minority.
Why
would an economist say that the government should pay just compensation? Think about it in terms of the
government. What if the government didn’t
have to pay compensation? What would
they do? Wouldn’t it be in their
interest to take all the land?
If
you require the government to pay fair market value for the land, the government
must make a determination that whatever the public purpose they’re seeking is
worth more than the private value of the land.
For example, is building an interstate highway worth more than the cost
of buying up each parcel of land in private hands? Does the land have more value in the government’s
hands than in private individuals’ hands?
From
a social perspective, our goal is to maximize the wealth of society as a
whole. If the government is taking land
and using it for less productive purposes, we have decreased the wealth of
society rather than increased it.
Two kinds of takings
In Poletown,
the government simply comes in and takes the property and acquires title to
it. There is no question that a “taking”
has occurred and that compensation is due.
The
other kind of taking is when the government doesn’t actually acquire title to
property, but regulates the property in such a way that it has less value or no value to the owner. Say
the government came in and said “it’s unlawful to build any structure on this
property”. Thus, the land would have to
be vacant, though it would still be held by a private individual. The government can regulate property to such
an extent that it’s worthless to the private owner. This is sometimes called “inverse
condemnation” or a “regulatory take”.
This is the more vexing kind of taking we’ll look at.
When
the government starts taking title to land, the government files a lawsuit
against the owner. The reason the
regulatory takes are called “inverse condemnation” is because the landowner
must commence the lawsuit to argue that the government has, in effect, taken
away the landowner’s property.
Hawaii
Housing Authority et al. v. Midkiff et al.
Can
the state of
What’s
the public purpose here? It used to be
that the chief owned all the land and doled it out as he saw fit. This led to a system where very few people
own a lot of land. The government isn’t
trying to redistribute wealth, but rather they’re trying to break up the land
oligarchy.
The
Court looks at the precedent of Berman. The Court says that when the Constitution
says “public use”, it doesn’t really mean public use. If it meant “public use”, the government’s
power of eminent domain would be rather severely limited. You could build parks and highways and stuff
that are open to the public.
But
the Court says that’s not what it means.
It’s enough that the takings further a public purpose even if the land will not be made open to the public.
The
Court says that its power of review over the lawfulness of takings is very
limited. They’re not going to step in
unless the use is clearly without
reasonable foundation.
Braunstein
will argue that this is not a substantive
protection, but rather a procedural
protection. The government just seems to
have to come up with a reason for the
taking. If there is any plausible
connection, that’s good enough. If you’re
clever, there’s “always a connection between everything”. Braunstein thinks it’s almost entirely a procedural requirement. The legislature must come up with a
rationale, and courts won’t look behind it.
They’ll say it’s good enough. The
Court basically says that this is a legislative function rather than a judicial
function.
It
seems there’s not much left of the public use requirement: (1) it is taken to mean
public purpose rather than merely
public use, and (2) if the legislature
just states that they’re taking
property for the public safety and welfare and gives a reason, that’s enough.
Keep
in mind that the legislature is elected.
If they act in ways that aggravate too many people, they might get bounced
from office.
What
about a situation where the purpose is to gentrify a neighborhood, in other
words make a poor neighborhood into a rich neighborhood? Take Campus Partners for example. They took a lot of people’s property and
assembled it into a large bloc so they could build a new, upscale
neighborhood. Is that a public purpose?
Braunstein
thinks the way this started was when a student was raped and killed. People got up in arms and they wanted to make
a safer neighborhood. Campus Partners
was formed to create a new, safer developments for
students and visitors. Clearly, that’s a public purpose. Were there easier and cheaper ways to achieve
the same goal? Obviously
yes. Does that mean that because
they selected eminent domain over cheaper alternatives that there isn’t a
public purpose? No. If the goal (here, public safety) is a
legitimate one, then that’s enough.
Public use means public
purpose and public purpose means any plausible connection to a legitimate goal
of public health and welfare that the government seeks to achieve.
Poletown
Neighborhood Council v. City of Detroit
How
is this different from Midkiff?
Poletown was an ethnic neighborhood where lots of Polish immigrants lived. It looks like a nice, middle-class
neighborhood. Now there’s a Cadillac
plant there.
What’s
the public purpose in taking Poletown to build this
plant? How is the public purpose here
different than in Midkiff? Is this a harder or an easier case, and
why? In this case, we’re transferring
property from a large group of people to a single individual. This case generated a tremendous amount of
controversy at the time it was going on both among legal commentators and
people in the community.
The
Supreme Court of Michigan says we don’t need a public use, but rather just a
public purpose. What’s the public
purpose? If GM moves away, they’ll lose
jobs and taxes in the city of
Don’t
forget this is a
The
court says that there is increased scrutiny when there’s a taking that results
in a transfer from one private individual to another. There may be some slight increased protection
in
The
question for next time is this: has the Ohio Supreme Court gone off on a
tangent? Is the Preschool decision consistent with the United States Constitution? Braunstein thinks the cases are inconsistent
and that the