GPSolo Magazine - September 2006

Real Estate Law
Kelo: A Setback for Property Owners

The framers of the Constitution and Bill of Rights believed that property rights and individual liberty were inseparable, and they included various provisions designed to secure property from legislative infringement. Noteworthy for our purposes, they limited the exercise of eminent domain by inserting the “public use” and “just compensation” requirements in the Fifth Amendment. Since the triumph of statist liberalism during the New Deal era, however, the Supreme Court has largely discounted the importance of private property in the polity and narrowed the construction of the property clauses of the Constitution and Bill of Rights to accommodate the expanding regulatory regime. Claims of individual property rights were seen as obstacles to regulatory and redistributionist goals. The decision in Kelo v. City of London, 125 S. Ct. 2655 (2005) is yet another step down this road.

To be sure, the “public use” clause of the Fifth Amendment had been largely drained of vitality before Kelo. In Berman v. Parker, 348 U.S. 26 (1954) and Hawaii Housing Authority v. Midkiff, 467 U.S. 229 (1984), the Court sustained far-reaching exercises of eminent domain and insisted that the judicial role in such cases was very limited. The ruling in Kelo could be seen as simply putting flowers on the “public use” corpse. Nonetheless, this decision is profoundly disquieting because of its flawed reasoning and dismissive attitude toward the constitutional rights of property owners. It represents a new high-water mark of governmental authority over private property and underscores the Supreme Court’s persistent refusal to treat the rights property of owners seriously.

The majority opinion by Justice John Paul Stevens presented an inadequate historical analysis of the “public use” clause. Stevens gave no attention to the views of the framers or to the wording and protective function of the clause. Instead, Stevens just invoked Supreme Court decisions that purported to adopt a broad reading of “public use” as meaning public purpose. He gave a slapdash glance at some Court opinions from the late-nineteenth and twentieth centuries, focusing on expansive language plucked from context rather than looking at the circumstances of those cases. Suffice it to say that the Court of that era never endorsed the view that legislative determinations of “public use” were entitled to supine deference, nor did it ever approve such a sweeping use of eminent domain as that presented in Kelo.

Nor did Stevens come to grips with the long-standing rule that the issue of “public use” is a matter for the judiciary. “It is well established,” the Court declared in 1930, “that . . . the question [of] what is a public use is a judicial one.” The “public use” requirement is a constitutional standard that is an integral part of the Bill of Rights. It should not be erased in the guise of deference to legislative determinations.

Indeed, the question of judicial deference regarding “public use” warrants a fresh look. The Supreme Court does not defer to legislative decisions on criminal justice procedures or the exercise of free speech. Among all the guarantees of the Bill of Rights, only the “public use” limitation is singled out for heavy deference to legislatures. It is highly improbable that the framers envisioned such an anomalous result, especially given their desire to safeguard private property.

It is instructive to compare the Supreme Court’s unwillingness to supervise the “public use” clause with its handling of the other constitutional checks on eminent domain, the “just compensation” requirement. Federal courts have long insisted that the determination of the amount of compensation for a taking of property was a judicial, not a legislative, responsibility. Justice David J. Brewer clearly expressed this view in the leading case of Monongahela Navigation Co. v. United States, 148 U.S. 312, 327 (1893):

It does not rest with the public, taking the property, through Congress or the legislature, its representative, to say what compensation shall be paid, or even what shall be the rule of compensation. The Constitution has declared that just compensation shall be paid, and the ascertainment of that is a judicial inquiry.

Why is there a distinction in the judicial treatment of “public use” and “just compensation”? Both are constitutional standards designed to limit the exercise of eminent domain.

The same level of judicial review is merited for justifying the taking of property as for determining the amount of compensation to be paid. Otherwise, all property is held at the pleasure of the legislature, a result fundamentally inconsistent with the purpose of the framers of the Constitution and Bill of Rights to secure property rights. Admittedly, there is no precise test to decide whether a particular exercise of eminent domain is for a “public use,” but the language of the clause at the very least dictates that any taking of property must be for a predominately public, not private, advantage.

The unhappy outcome in Kelo, the forced displacement of residents from their homes to facilitate essentially private economic development, also demonstrates that a principled respect for individual property rights often serves to safeguard the weak and vulnerable. Reflecting the lingering influence of the Progressive movement and the New Deal, many scholars are prone to disparage judicial solicitude for economic rights as favoritism to the wealthy and business interests. The Kelo decision puts the lie to this canard. By eviscerating the “public use” limitation, the Court majority has paved the way for powerful corporations and developers, in league with local government, to condemn private property for any vague developmental purpose. Kelo sustained a redistributive scheme that operated, as Justices Sandra Day O’Connor and Clarence Thomas perceived in their dissenting opinions, in favor of developers at the expense of politically weak individual homeowners. This is a classic example of why the framers saw constitutional protection of property as a barrier against arbitrary and excessive government.

Where do we go from here? It is somewhat heartening that four justices were prepared to rein in the freewheeling use of eminent domain. Still, short of a change of mind by the Court majority, homeowners must look to Congress or the states for relief. The Kelo decision aroused a firestorm of criticism across political party lines, in large part because ordinary people realized for the first time that their homes and businesses were susceptible to aggressive exercise of eminent domain for economic development projects. The majority opinion invited public debate, and Kelo appears to have triggered a national dialogue on eminent domain. In an extraordinary move, the House of Representatives, by a vote of 365 to 33, adopted a resolution expressing its disapproval of the majority opinion in Kelo and asserting that the decision “effectively negate[s] the public use requirement of the takings clause. . . .” Both the House and Senate have passed an amendment to an appropriations measure barring the use of federal funds to support any project that uses the power of eminent domain for private economic development purposes. Some states in fact already bar the exercise of eminent domain to transfer property to private parties for economic development schemes. Proposals are also pending in many state legislatures to curb economic development condemnations. But these efforts, however welcome, are not a substitute for a Supreme Court that will enforce the “public use” clause of the Fifth Amendment.

 

James W. Ely Jr. is the Milton R. Underwood Professor of Law and a professor of history at Vanderbilt University. He can be reached at james.ely@vanderbilt.edu.

For More Information about the Real Property, Probate and Trust Law Section

- This article is an abridged and edited version of one that originally appeared on page 14 of Property & Probate, January/Februrary 2006 (20:1).

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Real Property: The Sublease and Assignment Deskbook; Real Estate Lore; Telecommunication Agreements for Commercial Buildings; Environmental Aspects of Real Estate and Commercial Transactions, 3d ed.; The Commercial Lease Formbook; Title Insurance, 2d ed.; A Practical Guide to Commercial Real Estate Transactions; Land Use Regulation, 2d ed.

 

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