Private Property

Private property has been a building block of western society for millennia. From Locke’s Labor Theory of Property upon which much of Capitalism is based, to the Labor Theory of Value which has influenced communal ownership ideologies, property has formed a central role in the development of the western world. Early in our history, private property became the basis for economic wealth and political freedom. The early case of Corfield v. Coryell affirmed the right “to take, hold and dispose of property, either real or personal.” While the decision of Vanhorne’s Lessee v. Dorrance eloquently states:

The right of acquiring…property, and having it protected, is one of the natural, inherent, and unalienable rights of man. Men have a sense of property: Property is necessary to their subsistence, and correspondent to their natural wants and desires; its security was one of the objects that induced them to unite in society. No man would become a member of a community, in which he could not enjoy the fruits of his honest labor and industry. The preservation of property then is a primary object of the social compact, and, by the late constitution of Pennsylvania, was made a fundamental law.

A man could effect the government, use property as collateral for business and be given a zone of exclusion to be used for advancing his own purposes. As the availability of property extended beyond white men, so too did prosperity extend to newer groups.
The Constitution has, in many places, clauses protecting private property. The 4th amendment, discussed last week, here, protects us from unwarranted intrusions, the 5th amendment limits the federal government taking property, while the 14th amendment extends these protections to limit the states. The Privileges and Immunities clause, though weakened after the Civil War, was summarized by Campbell v. Morris, stating “one of the great objects [of the clause] was the enabling [of] the citizens of the several States to acquire and hold real property in any of the States.”

The Takings Clause

This week, we will be discussing the Takings Clause of the 5th Amendment which states:
“…nor shall private property be taken for public use, without just compensation.”
There are two parts of the clause, "public use" and "just compensation." “Public use” may seem ordinary, but legal meanings often aren’t the ordinary meanings. What balance must be struck? Must it be 100% for public use? 75%? 5%? Where is the line?
In 1888 Congress passed an act clarifying "Public Use" under Section 728 which stated private companies may be the beneficiaries of eminent domain so long as they put it to public use. This was challenged in U.S. v. Gettysburg Electric Railway Co., 160 U.S. 668 (1896), where private land was given to a private rail company. The court upheld this definition of public use as the railroad would serve the general public. This narrow definition of eminent domain (ED) for private use lasted for 109 years.
Just compensation has been defined to be measured by "the market value of the property at the time of the taking contemporaneously paid in money" (US v. 50 acres of land 469 U.S. 24 (1984)), and is only deviated from "when market value has been too difficult to find, or when its application would result in manifest injustice to owner or public." (United States v. Commodities Trading Corp., 339 U.S. 121, 123 (1950))
The clause is implicated in two ways, Regulatory and Eminent Domain or Condemnation Takings:
Regulatory Takings are the most common:
• After years somewhat confusing and abstract rules like “goes too far,” conceptual severance, reasonable investment backed expectations, and reciprocity of advantage laid out in cases like Penn Coal v. Mahon, 260 U.S. 393 (1922), and Penn Central Station v. NYC, 438 U.S. 104 (1978), regulatory takings underwent a huge shift in 1992.
• In 1992, the USSC decided Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992). There, a developer bought land on a barrier island to build residences there. Soon thereafter, the state passed a law prohibiting building on the islands. The developer sued, but the regulation was upheld because it was not a “total taking” as discussed below.
• These changes incorporated some of the earlier doctrines but simplified and condensed their application. “Bright-lining” is a favored hobby of the court, streamlining the analysis. While swift and easy application is often beneficial to individuals and the courts these changes weakened the ability of property owners to defend against Takings.
• Framework now:

(1) Perm. Physical Occupation by 3rd party is a taking where it interferes with an owner’s bundle of rights, such as exclusion, etc. For example, a NY Law which required cable companies to install permanent boxes in all apartments was considered a taking since landlords couldn’t stop cable providers from entering and installing, where as a law which required landlords to install smoke detectors was not since the landlord could install him/herself.
(2) Total Takings are where regulation denies all economically beneficial or productive use of the land unless proscribed use interests not owned by P. Regardless of any purpose, the regulation is only a taking where there is 100% diminution in value of the property. For Example, *Lucas could still exclude, alienate, sell, and use his property for purposes other than what was forbidden. He could have turned it into a campsite the court said.
(3) Common Law Nuisance is not a taking. For example, regulations requiring reduction of the output of harmful chemicals from a factory that is harming neighboring residents.

Eminent Domain is less common but far more destructive to property rights:
As discussed in the public use section, Eminent Domain rules remained largely the same until the 2005 case of Kelo v. The City of New London, Connecticut 545 U.S. 469 (2005). Here, the court once more grappled with finding a balance between public and private benefit. In this case, the City condemned large residential sections of the city to create parks, waterfront access, private commercial buildings and strip malls as well as a large section to be given for development of a new corporate headquarters by the pharmaceutical company Pfizer (who ironically didn't move operations there in the end).
Reluctant to define the scope of public use, the court now gives deference to local communities who are better able to assess their needs. The court extended public use to include public purpose, meaning the land need not actually be used by the public at large, like a railroad, but can be used for example, a new corporate headquarters which would provide jobs to people in the surrounding area as well as tax revenue for the city. The only limits spelled out say that the sole purpose cannot be for the benefit of the private property (often justified by creating jobs), and transfer to a private person cannot benefit a class of identifiable individuals, though this is not dispositive, think low-income housing for poor families.
Pros to the decision:
• Private entities can provide things government can’t.
• Government doesn’t know what’s best for the market.
Cons:
• Destabilizes private property ownership by making it more vulnerable to loss, less attractive to perspective purchasers and less valuable as a result.
• Once the door is opened, private entities can use their power and sway to influence government, i.e. threatening to move operations to another area unless the government takes and gives them an attractive piece of land.
• Limiting to development of blighted areas will displace higher number of poor people and minorities.
• Upends community demographics by making an area more expensive, forcing old residents to move and bringing in new class of residents.
In response to the Majority Opinion, Justice Sandra Day O’Connor’s dissent in the case stated:

“Any property may now be taken for the benefit of another private party, but the fallout from this decision will not be random. The beneficiaries are likely to be those citizens with disproportionate influence and power in the political process, including large corporations and development firms … The Founders cannot have intended this perverse result.”

Famous instances of Donald Trump’s Use of Eminent Domain

Infamous case of Vera Coking:
• Lived near the boardwalk for more than thirty years.
• Trump built Plaza Casino nearby and in the mid-1990’s wanted to build a limousine parking lot.
• Trump purchased surrounding lots, but three owners refused. Trump turned to the Casino Reinvestment Development Authority (CRDA) to take, who offered less than market value before proceeding with a court ordered Taking.
• Coking and the others fought for several years and in 1998 the court rejected CRDA’s demand because there was no guarantee he would use for that purpose.
Expansion of Trump Plaza:
• The Sabatini’s owned an Italian restaurant near the Plaza Hotel. They received $1MM offers from Sands, in the late 1980’s. Trump wanted to expand Plaza so got CRDA to offer $700,000 in 1993 while Trump offered to build them a new restaurant with a monthly lease of $150,000 in the same location once he owned it.
• Upon refusal, CRDA commenced an action to enjoin the taking but the Sabatini’s won, and 12 years later forced Trump to triple his price to purchase the restaurant.
1994 – Bridgeport, Connecticut:
• Attempted but failed to use city’s condemnation powers to take and then repurchase land owned by 5 businesses to create a “world class” $350m office and entertainment complex on the waterfront and turn the city into a “a national tourist destination.”
Trump on ED:
• "I've done a lot of out parcels. Most of the time they just want money," he said. "It's very rarely that they say, 'I love my house. It's the greatest thing.' Because these people buy a house now that's five times bigger in a better location, so eminent domain when it comes to jobs, roads, the public good -- I think it's a wonderful thing."
Trump on Kelo:
• “I happen to agree with it 100%. If you have a person living in an area that’s not even necessarily a good area, and … government wants to build a tremendous economic development, where a lot of people are going to be put to work and … create thousands upon thousands of jobs and beautification and lots of other things, I think it happens to be good.”
Trump clarifies stance:
• “I'm Only For Eminent Domain When It's Used To Create Jobs”

Rand Paul on ED, Keystone Pipeline and Trump’s History

• Keystone XL pipeline bill: [1], [2]
• "Donald Trump's been a big fan of this [eminent domain]… he used it in his business model and has really shown no consideration for small private property owners.”
• Eminent Domain stance and Trump: [1], [2]

Sources not listed or referenced:

• https://en.wikipedia.org/wiki/Fifth_Amendment_to_the_United_States_Constitution#Text
• http://www.nytimes.com/2010/05/01/nyregion/01sabatini.html
• http://www.nytimes.com/1994/10/04/nyregion/our-towns-one-person-s-public-good-is-another-s-squeeze-play.html
• http://www.theguardian.com/commentisfree/2015/aug/19/donald-trumps-eminent-domain-nearly-cost-widow-house
• https://en.wikipedia.org/wiki/Vera_Coking
• https://www.youtube.com/watch?v=lZ6gVJW1ziE
• http://www.breitbart.com/big-government/2015/01/23/sen-rand-paul-democrat-amendment-on-property-rights-key-step-in-reversing-kelo/
• http://www.cbsnews.com/news/donald-trump-eminent-domain-is-a-wonderful-thing/
• http://www.cbsnews.com/news/rand-paul-hits-donald-trump-on-eminent-d