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The Social Origins of Property

  • Joseph William Singer and Jack M. Beermann
Extract

It was easier to make a revolution than to write 600 to 800 laws to create a market economy.

Jiri Dienstbier, Foreign Minister of Czechoslovakia (1990)

[I]t would be as absurd to argue that the distribution of property must never be modified by law as it would be to argue that the distribution of political power must never bechanged.

Morris Cohen (1927)

The takings clause of the United States Constitution requires government to pay compensation when private property is taken for public use. When government regulates, but does not physically seize, property, the Supreme Court of the United States has had trouble defining when individuals have been deprived of property rights so as to give them a right to compensation. The takings clause serves “to bar Government from forcing some people alone to bear public burdens that, in all fairness and justice, should be borne by the public as a whole.” To determine when a regulation amounts to a “taking” of property requiring compensation, the Court has rightly stated that the ultimate question is whether the burden of regulation has been unfairly placed on a small class of individuals rather than the public at large. To answer this question, the Court has identified a variety of factors to consider, including the character of the governmental action, (whether the regulation effects a permanent physical invasion, destroys a core property right, or is intended to prevent public harm), whether the regulation interferes with reasonable investment-backed expectations, and the extent of the diminution in value of the property (particularly whether the regulation deprives the owner of any economically viable use of the property).

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© 1993 Joseph William Singer and Jack M. Beermann. All rights reserved.

Thanks and affection go to Martha Minow, Betsy Foote, David Seipp, Avi Soifer, Manuel Utset, Larry Yackle, and the participants at the Boston University School of Law Workshop, at which anearlier version of this paper was presented. Barbara Melamed provided valuable research assistance.

1. Echikson, WilliamEuphoria Dies Down in Czechoslovakia” (September 18, 1990) The Wall Street J. A26.

2. Cohen, MorrisProperty and Sovereignty” (1927) 13 Cornell L.Q. 8 at 16.

3. The fifth amendment to the United States Constitution provides: “[N]or shall private property be taken for public use, without just compensation.” U.S. Const, amend. V. This provision has been held applicable to the state governments through the due process clause of the fourteenth amendment. Chicago, B. & Q. R. Co. v. Chicago, 166 U.S. 226 (1897).

4. Armstrong v. United States, 364 U.S. 40, 49 (1960).

5. See Monongahela Navigation Co. v. United States, 148 U.S. 312, 325 (1893); Keystone Bituminous Coal Ass’n v. DeBenedictis, 480 U.S. 470, 506–21 (1987) (Rehnquist, J. dissenting).

6. See Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419 (1982) (holding that a permanent physical invasion of property is a per se taking); Hodel v. Irving, 481 U.S. 704 (1987) (holding that deprivation of any right to pass on property at death by either inheritance or bequest constitutes a per se taking of property); Mugler v. Kansas, 123 U.S. 623 (1887); Keystone Bituminous Coal Ass’n v. DeBenedictis, ibid, (both holding that regulations intended to protect the public from harm are highly unlikely to be characterized as takings of property).

7. See Kaiser Aetna v. United States, 444 U.S. 164, 175 (1979).

8. See Agins v. Tiburon, 447 U.S. 255 (1980); Penn Cent. Transp. Co. v. New York, 438 U.S. 104 (1977).

9. Sunstein, CassLochner’s Legacy” (1987) 87 Colum. L. Rev. 873.

10. This solicitude is evident in some majority opinions, such as First English Evangelical Lutheran Church v. County of Los Angeles, 482 U.S. 304 (1987); Hodel v. Irving, supra, at note 6; and Notion v. California Coastal Comm’n, 483 U.S. 825 (1987); and in a significant number of dissenting opinions, see, e.g., Keystone Bituminous Coal Ass’n v. DeBenedictis, supra, note 5, (Rehnquist, C.J., dissenting, joined by Justices Powell, O’Connor, and Scalia); Pennell v. City of San Jose, 485 U.S. 1,15-24 (1988) (Scalia, J., concurring in part and dissenting in part, joined by Justice O’Connor).

11. See Reich, CharlesThe New Property” (1964) 73 Yale L.J. 733.

12. The conceptual force behind the lack of protection for new property interests is the notion that government benefits are gratuities and are thus unlike traditional property interests which are vested rights.

13. Sax, JosephTakings, Private Property and Public Rights” (1971) 81 Yale L.J. 149.

14. Pennsylvania Coal Co. v. Mahon, 260 U.S. 393 (1922).

15. See Keystone Bituminous Coal Assoc, v. DeBenedicrus, supra, note 5 at 495, citing Kaiser Aetna v. United States, supra, note 7.

16. Paul, JeremyThe Hidden Structure of Takings Law” (1991) 64 S. Cal. L. Rev. 1393.

17. Radin, Margaret JaneThe Liberal Conception of Property: Cross Currents in the Jurisprudence of Takings” (1988) 88 Colum. L. Rev. 1667 at 1676.

18. But see Prune Yard Shopping Center v. Robins, 447 U.S. 74 (1980) (upholding a state law requiring shopping center owners to allow leafletting); Yee v. City ofEscondido, 112 S. Ct. 1522 (1992) (upholding an anti-eviction statute).

19. Supra, note 7.

20. Supra, note 10.

21. See Radin, supra, note 17 at 1671-78. The examples in the text are Radin’s, although we have recharacterized them somewhat.

22. Singer, Joseph WilliamLegal Realism Now” (1988) 76 Calif. L. Rev. 465 at 496–503, 516–17.

23. See, e.g., Lucas v. South Carolina Coastal Council, 112 S. Ct. 2886 (1992).

24. See Nedelsky, Jennifer Pnvate Property and the Limits of American Constitutionalism: The Madisonian Framework and Its Legacy (Chicago: University of Chicago Press, 1990).

25. Michelman, FrankTakings, 1987” (1988) 88 Colum. L. Rev. 1600.

26. See, e.g., Loretto v. Teleprompter Manhattan CATV Corp., supra, note 6; Nollan v. California Coastal Comm’n, supra, note 10 at 831-32, 833 n.2.

27. Model v. Irving, supra, note 6.

28. Kaiser Aetna v. United States, supra, note 7 at 179-80.

29. Agins v. Tiburon, supra, note 8 at 260; Lucas, supra, note 23.

30. Supra, note 6.

31. Paul, supra, note 16 at 1416-23.

32. Supra, note 18.

33. See also Heart of Atlanta Motel, Inc. v. United States, 379 U.S. 241 (1964) (upholding federal public accommodations statute against a takings challenge).

34. 256 U.S. 135(1921).

35. The Court has noted that it is an open question whether a permanent physical invasion results from rent control ordinances that do not allow the property to be taken out of the rental market. See Federal Communications Commission v. Florida Power Co., 480 U.S. 245, 253 (1987). Permanent physical invasion was found in such a situation in Hall v. City of Santa Barbara, 833 F.2d 1270, 1276 (9th Cir. 1986); cert, denied, 485 U.S. 940 (1988); but the same claim was rejected in Yee v. City of Escondido, 224 Cal. App. 3d 1349, 1355-56 (1991), affirmed, supra, note 18.

36. See Federal Communications Commission v. Florida Power Co., ibid, at 252-53.

37. It also differed because the property in Prune Yard had been open to the public, unlike the single family house at issue in Nollan. However, if this is the key factor, then the important consideration is not the fact that the statute required a permanent, physical invasion, but the extent to which private property has been devoted to “public” uses. This issue is extremely controversial. State and federal courts disagree about whether citizens have free speech rights to enter shopping centers for communicative purposes. Moreover, federal and state civil rights laws regulate “public accommodations”, requiring nondiscriminatory public rights of access to “private” property which is open to the public.

38. At the same time, rent control legislation may have prevented the conversion of the property to nonresidential use. Yet the Court specifically approved such legislation, including the anti-eviction element of it, in Block v. Hirsh. Moreover, the Court never adequately explained why the rule requiring landlords to provide access to cable television differed from building code regulations requiring the landlords to provide a toilet, a mailbox, and telephone, for their tenants. It might be argued that the cable box and wires are owned by the cable television company while these other items are owned by the landlord. Yet it is not clear that this should make a difference. The Court would probably uphold a land use regulation that conditioned development of property on the developer providing for hook-up of residences to water and sewer facilities, even if ownership of the water and sewer pipes was retained by the utility companies. Such a condition on development would likely be upheld as reasonable and satisfy the close “nexus” test established by Nollan v. California Coastal Comm’n, supra, note 10.

39. See also Nollan v. California Coastal Comm’n, Ibid. In Nollan, a regulation that arguably coerced owners to grant an easement to the public was held to be an impermissible permanent invasion.

40. Moreover, the regulation in Block v. Hirsh applied retroactively; it therefore forced the landlord to transfer to the tenant a substantial portion of the landlord’s reversionary rights against the landlord’s will and without prior notice. Given that the Court is certain to view the reversionary interest as a separable property interest protected by the Constitution, this is as if an owner of two houses sold one of them and the state subsequently announced that since the owner had sold one of her houses to this buyer, she was obligated to sell the other as well. The stranger/contractual partner distinction is not a persuasive basis for explaining the disparate results in these cases.

41. See Paul, “Hidden Structure,” supra, note 16.

42. Supra, note 7.

43. On baseline analysis, see Beermann, Jack M. & Singer, Joseph WilliamBaseline Questions in Legal Reasoning: The Example of Property in Jobs” (1989) 23 Ga. L. Rev. 911; Paul, JeremySearching for the Status Quo” (1986) 7 Cardozo L. Rev. 743; Sunstein, supra, note 9.

44. Illinois Central R.R. Co. v. Illinois, 146 U.S. 387 (1892).

45. See Gion v. City of Santa Cruz, 465 P.2d 50 (Cal. 1970); Matthews v. Bay Head Improvement Association, 471 A.2d 355 (N.J. 1984); cert, denied, 469 U.S. 821 (1984); Opinion of the Justices, 313 N.E.2d 561 (Mass. 1974); State ex ret. Thornton v. Hay, 462 P.2d 671 (Or. 1969).

46. See, e.g., State v. Shack, 277 A.2d 369 (1971); Uston v. Resorts Int’l, 445 A.2d 370 (1982); (both holding that property owners have no common law right to exclude non-owners from the property in a variety of circumstances).

47. See Ferdinand Protzman, “Growth Seen For Eastern Germany,” (Oct. 22, 1991) N.Y. Times at D6.

48. Most tribes denied that they “owned” the land because they thought of it as spiritual, and one would no more say that one owned land than one would say that one owned God or one’s mother. This spiritual relation with the land was used as an excuse for claiming the land was unowned. However, the Indians’ failure to claim “ownership” did not represent a less close connection to the land than claimed by non-Indians, but rather represented a closer connection to the land, precisely because of its spiritual and community importance.

49. Compare Richard Epstein’s claim that in the United States, property rights originate from below (society) rather than from above (from the state), by “homesteading, and not from state grant.” Richard Epstein, “No New Property” (1990) 56 Brooklyn L. Rev. 747 at 749-50. Where, exactly, did the homesteaders’ titles come from, if not from state grant? His argument, typically, ignores the myriad public policy decisions that had to be made in determining how much property to give away, whether to give it away for free or to sell it, what price at which to sell, whether to give preferences for buyers who would develop it in certain ways (like schools and railroads), and how much property to force American Indian nations to cede, at the price of how much war.

50. See Tee-Hit-Ton Indians v. United States, 348 U.S. 272, 280 (1955); (“The soil, to which the crown originally claimed title, being no longer occupied by its ancient inhabitants, was parcelled out according to the will of the sovereign power, and taken possession of by persons who claimed immediately from the crown, or mediately, through its grantees or deputies.”) (emphasis added.)

51. Williams, Robert A. Jr., The American Indian in Western Legal Thought: The Discourses of Conquest (New York: Oxford University Press, 1990).

52. Tee-Hit-Ton Indians v. United States, supra, note 50. We do not mean to argue that this case was rightly decided. The question of whether American Indian nations had legitimate claims to the lands they occupied should be addressed, in the first instance, by reference to tribal law rather than federal law. Looked at from the perspective of the Indians, there is no question that the United States wrongfully invaded and forcibly appropriated Indian lands over which they had rightful possession.

53. See Atkins v. Parker, 472 U.S. 115, 129 (1985); Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41 (1986). See also Lyng v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, 485 U.S. 360, 368 (1988) (characterizing food stamps as a subsidy); Wyman v. James, 400 U.S. 309 (1971) (receipt of welfare benefits may be conditioned on consent to official visit of recipient’s home since refusal of visit does not result in any liability on part of recipient, merely loss of aid).

54. Ibid.

55. The applicant in Nollan wanted a permit to build a bigger house on the beachfront parcel.

56. See Michelman, supra, note 25 at 1610.

57. Nollan, supra, note 10.

58. Ibid.

59. See, e.g., Euclid v. Amber Realty Co., 272 U.S. 365 (1926).

60. 483 U.S. 587 (1987).

61. For an excellent discussion of this case, and an enlightening treatment of poverty law issues generally, see Thomas Ross, “The Rhetoric of Poverty: Their Immorality, Our Helplessness” (1991) 79 Georgetown L.J. 1499, at 1528-32. Professor Ross notes specifically the marginalization of the property interest in receipt and use of child support benefits and generally the Court’s ill-treatment of the interests of the poor.

62. For example, imagine a child whose support was so high that her income alone placed the household above the line for benefits.The only way that the child could avoid use of her support for the benefit of the rest of the household would be to move out. If the child stayed in the household, the absence of benefits would presumably lead to the use of the child support for the benefit of the entire household. Alternatively, imagine a child granted enough support to attend a special school because she is gifted intellectually. That child likewise could not remain in the household and still use the support for that purpose if the household also wanted to receive AFDC benefits because the other children could not obtain child support from their noncustodial parent. These two situations might arise if the custodial parent had children with more than one partner, if the custodial parent had little or no income and if the economic situations of the noncustodial parents varied substantially. The court found unimportant the interference in family relationships.

63. In addition to the discussion above, see Lyng v. International Union, United Automobile, Aerospace and Agricultural Implement Workers of America, supra, note 53,366-69. (excluding strikers’ families from food stamp program insofar as loss of income due to strike creates need for food stamps does not coerce strikers to either give up strike or leave household).

64. See Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984).

65. See Monsanto, ibid, at 990-97 (discussing provisions of the Federal Insecticide, Fungicide and Rodenticide Act).

66. See Monsanto, ibid, at 1007.

67. See Monsanto, ibid, at 1008-09.

68. In fact, since the condition that the easement be granted existed at the time that Nollan bought the property, Nollan was on the same sort of notice as Monsanto. The Court, however, rejected this argument on the ground that the California law would have taken the prior owner's property without compensation, and that Nollan succeeded to the rights of the prior owner. See Nollan, supra, note 10. But presumably the price Nollan paid would have reflected whatever restrictions existed at the time of purchase, so Nollan would have no investment backed expectation that the property could be developed without an easement being granted.

69. Cf. Agins v. Tiburon, supra, note 8 (recognizing legitimacy of local interest in protecting residents from "the ill effects of urbanization").

70. See Wyman, supra, note 54.

71. See Lyng, supra, note 53; Bowen, 483 U.S. 587 (1987).

72. Ibid.

73. See Lyng, ibid.; County of Riversides. McLaughlin, 111 S. Ct. 1661 (1991). We have oversimplified somewhat in attributing all of the various disparities in treatment to a perceived distinction between interests in government benefits and interests in real property. After all, the Court did not jump to protect the sanctity of the home in Wyman v. James. Further, the trade secrets in Monsanto were not government benefits. The disparities appear to run on a few different axes. The most highly protected rights involve the right to develop and exclude others from land. Other property interests, such as trade secrets, receive protection but only to the extent that government interferes with expectations that are legally wellfounded. When, however, government uses the threat of termination of welfare benefits to compel the surrender of other rights, including the right to exclude government officials from real property, the view that government benefits are a matter of grace supersedes protection of the interest in real property.

74. Connecticut v. Doehr, 111 S. Ct. 2105 (1991).

75. There was disagreement over whether hearings were provided for promptly, but for purposes of its decision, the Court assumed that a prompt post-deprivation hearing was available. See ibid, at 2114 n.5.

76. Ibid, at 2117 n. 8.

77. The Court noted that attachment “clouds title; impairs the ability to…alienate the property; taints any credit rating;reduces the chance of obtaining a home equity loan or additional mortgage; and can even place an existing mortgage in technical default where there is an insecurity clause.” Ibid, at 2113.

78. lll S.Ct. 1661 (1991).

79. The Court seemed much less concerned about the potential consequences of a couple of days in jail, such as loss of a job or physical and psychological injury at the hands of fellow inmates. Further, the consequences of temporary imprisonment may be very similar to temporary attachment of real property. Suppose, for example, that the arrestee had a real estate closing scheduled for the time period that he was in jail or a rent payment due during this period. The inability to alienate property during that time, or to safeguard existing property interests might mirror or exceed the disability in Doehr, especially in light of the State’s argument, and the Court’s assumption, that the post-attachment hearing was available immediately after the attachment.

80. Supra, note 23.

81. See Mugler v. Kansas, supra, note 6 (holding that prohibiting the operation of a brewery did not constitute a taking even though property was rendered valueless because the operation of a brewery was found by the legislature to cause harm).

82. This assumption was questioned and treated as implausible by Justices Kennedy, Blackmun, Stevens and Souter.

83. Recent cases in the United States Claims Court have found takings of property requiring compensation in the case of wetlands regulations which prevented the owner from filling in the land and therefore prevented development. The claims court specifically found that wetlands regulations did not prevent the owner from unreasonably harming neighboring property owners. Lucas gives the Claims Court a green light to continue deciding cases in this fashion. See, e.g., Florida Rock Industries v. United States, 21 CI. Ct.. 161(1990); Formanek v. United States, 26 CI. Ct. 332 (1992); Love Ladies Harbor v. United States, 15 CI. Ct. 381 (1988), 21 CI. Ct. 153 (1990).

84. Lucas, supra, note 23.

85. As noted above, Mugler v. Kansas held that destroying the value of a brewery was not a taking. The Lucas Court distinguished Mugler on the basis that uses other than as a brewery were still allowed, ibid. n. 13. But that is true in Lucas as well, and there is no mention in Lucas of the fact of the destruction of value in Mugler.

86. Lucas, supra, note 23.

87. The Court held that for South Carolina to prevail on remand it “must identify background principles of nuisance and property law that prohibit the uses [Lucas] now intends in the circumstances in which the property is presently found.” Ibid.

88. Note, in this regard, the Court’s reference to “background principles of nuisance and property law” rather than a reference to pre-existing specific rules. See ibid.

89. Pennell v. City of San Jose, supra, note 10, at 22-24; (Scalia, J., concurring in part and dissenting in part, joined by Justice O'Connor).

90. We owe this point to Betsy Foote.

91. See Sunstein, CassLegal Interference with Private Preferences,” (1986) 53 U. Chi. L. Rev. 1129

92. John Kenneth Galbraith reports that Professor Robert Montgomery, an economist at the University of Texas, was unpopular with the Texas legislature because of his liberal views. When asked whether he favored private property, he replied, “I do—so strongly that I want everyone in Texas to have some.” Fadiman, Clifton ed., The Little, Brown Book of Anecdotes, (1985) at 395.

93. See also the Hawaii Land Reform Act of 1967, Haw. Rev. Stat. ch. 516, discussed in Hawaii Housing Authority v. Midkiff. The Act forced the sale of land in Hawaii from a small group of owners to a much larger group of homeowners whose homes stood on leased land. The statute was passed because concentrated land ownership was thought to “inflate land prices, and injur[e] the public tranquility and welfare.” Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 232 (1984).

94. 42U.S.C. 3601 et seq.

95. See, e.g., Nedelsky, supra, note 24 at 273; Gould, Carol Rethinking Democracy (Cambridge: Cambridge University Press, 1988).

96. Pennell v. City of San Jose, supra, note 10 at 15-24 (1988) (Scalia, J., concurring in part and dissenting in part).

97. See generally Sax, supra, note 13.

98. Ibid, at 150.

99. The importance of Lucas may be narrowed somewhat by the fact that the regulation at issue prohibited all development on the beachfront property. The Court has been much less likely to find a taking when the owner can still earn a reasonable return on the investment in the property. See, e.g. Penn Cent. Transp. Co. v. New York City, supra, note 8. However, insofar as some regulatory goals may require that large pieces of land be kept out of development, for example to protect wetlands, Lucas may pose a significant threat to effective regulation. See “National Body Fears Wide Damage to Aquatic Ecosystems,” (Dec. 12,1991) The Boston Globe at 1, p. 10 (discussing report of the National Resource Council of the National Academy of Sciences that advocated, inter alia, restoration of 10 million acres of wetlands by the year 2010).

100. Such restrictions are less likely to be placed on more powerful groups. For example, it is unlikely that continued enjoyment of one’s license to practice law will be conditioned on surprise home and office visits so the state can be sure that no activity, such as fraud, drug or alcohol abuse or gambling, poses a threat to the security of clients or the sanctity of the legal system.

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