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592 United States v. Cors, 337 U.S. 325 (1949). And see United States v. Toronto Navigation Co., 338 U.S. 396 (1949). 593 Almota Farmers Elevator & Warehouse Co. v. United States, 409 U.S. 470 (1973). The dissent argued that since upon expiration of the lease only salvage value of the improvements could be claimed by the lessee, just compensation should be limited to that salvage value. Id. at 480. culated, resort must be had to other data which will yield a fair compensation. 589 However, the Court is resistant to alternative standards, having repudiated reliance on the cost of substitute facilities. 590 Just compensation is especially difficult to compute in wartime, when enormous disruptions in supply and governmentally imposed price ceilings totally skew market conditions. Holding that the reasons which underlie the rule of market value when a free market exists apply as well where value is measured by a government- fixed ceiling price, the Court permitted owners of cured pork and black pepper to recover only the ceiling price for the commodities, despite findings by the Court of Claims that the replacement cost of the meat exceeded its ceiling price and that the pepper had a ‘‘retention value’’ in excess of that price. 591 By a five-to-four decision, the Court ruled that the Government was not obliged to pay the present market value of a tug when the value had been greatly enhanced as a consequence of the Government’s wartime needs. 592 Illustrative of the difficulties in applying the fair market standard of just compensation are two cases decided by five-to-four votes, one in which compensation was awarded and one in which it was denied. Held entitled to compensation for the value of improvements on leased property for the life of the improvements and not simply for the remainder of the term of the lease was a company that, while its lease had no renewal option, had occupied the land for nearly 50 years and had every expectancy of continued occupancy under a new lease. Just compensation, the Court said, required taking into account the possibility that the lease would be renewed, inasmuch as a willing buyer and a willing seller would certainly have placed a value on the possibility. 593 However, when the Federal Government condemned privately owned grazing land of a rancher who had leased adjacent federally owned grazing land, VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00108 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 AMENDMENT 5—RIGHTS OF PERSONS 1469 594 United States v. Fuller, 409 U.S. 488 (1973). The dissent argued that the principle denying compensation for governmentally created value should apply only when the Government was in fact acting in the use of its own property; here the Government was acting only as a condemnor. Id. at 494. 595 Danforth v. United States, 308 U.S. 271, 284 (1939); Kirby Forest Industries v. United States, 467 U.S. 1 (1984) (no interest due in straight condemnation action for period between filing of notice of lis pendens and date of taking). 596 United States v. Klamath Indians, 304 U.S. 119, 123 (1938); Jacobs v. United States, 290 U.S. 13, 17 (1933); Kirby Forest Industries v. United States, 467 U.S. 1 (1984) (substantial delay between valuation and payment necessitates procedure for modifying award to reflect value at time of payment). 597 Albrecht v. United States, 329 U.S. 599 (1947). 598 Henkels v. Sutherland, 271 U.S. 298 (1926); see also Phelps v. United States, 274 U.S. 341 (1927). 599 United States v. Welch, 217 U.S. 333 (1910). 600 United States v. General Motors, 323 U.S. 373 (1945). 601 Bauman v. Ross, 167 U.S. 548 (1897); Sharp v. United States, 191 U.S. 341, 351–52, 354 (1903). Where the taking of a strip of land across a farm closed a priit was held that the compensation owed need not include the value attributable to the proximity to the federal land. The result would have been different if the adjacent grazing land had been privately owned, but the general rule is that government need not pay for value that it itself creates. 594 Interest.—Ordinarily, property is taken under a condemnation suit upon the payment of the money award by the condemner, and no interest accrues. 595 If, however, the property is taken in fact before payment is made, just compensation includes an increment which, to avoid use of the term ‘‘interest,’’ the Court has called ‘‘an amount sufficient to produce the full equivalent of that value paid contemporaneously with the taking.’’ 596 If the owner and the Government enter into a contract which stipulates the purchase price for lands to be taken, with no provision for interest, the Fifth Amendment is inapplicable and the landowner cannot recover interest even though payment of the purchase price is delayed. 597 Where property of a citizen has been mistakenly seized by the Government and it is converted into money which is invested, the owner is entitled in recovering compensation to an allowance for the use of his property. 598 Rights for Which Compensation Must Be Made.—If real property is condemned the market value of that property must be paid to the owner. But there are many kinds of property and many uses of property which cause problems in computing just compensation. It is not only the full fee simple interest in land that is compensable ‘‘property,’’ but also such lesser interests as easements 599 and leaseholds. 600 If only a portion of a tract is taken, the owner’s compensation includes any element of value arising out of the relation of the part taken to the entire tract. 601 On the other hand, if VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00109 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 1470 AMENDMENT 5—RIGHTS OF PERSONS vate right-of-way, an allowance was properly made for the value of the easement. United States v. Welch, 217 U.S. 333 (1910). 602 Bauman v. Ross, 167 U.S. 548 (1897). 603 Monongahela Navigation Co. v. United States, 148 U.S. 312, 326 (1893). 604 Reichelderfer v. Quinn, 287 U.S. 315, 318 (1932). 605 Lynch v. United States, 292 U.S. 571, 579 (1934); Omnia Commercial Corp. v. United States, 261 U.S. 502, 508 (1923). 606 James v. Campbell, 104 U.S. 356, 358 (1882). See also Hollister v. Benedict Mfg. Co., 113 U.S. 59, 67 (1885). 607 Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). 608 Monongahela Navigation Co. v. United States, 148 U.S. 312, 345 (1983). 609 Omnia Commercial Co. v. United States, 261 U.S. 502 (1923). 610 International Paper Co. v. United States, 282 U.S. 399 (1931). 611 Armstrong v. United States, 364 U.S. 40, 50 (1960). 612 Duke Power Co. v. Carolina Envtl. Study Group, 438 U.S. 59, 88 n.32 (1978). the taking has in fact benefitted the owner, the benefit may be set off against the value of the land condemned, 602 although any supposed benefit which the owner may receive in common with all from the public use to which the property is appropriated may not be set off. 603 When certain lands were condemned for park purposes, with resulting benefits set off against the value of the property taken, the subsequent erection of a fire station on the property instead was held not to have deprived the owner of any part of his just compensation. 604 Interests in intangible as well as tangible property are subject to protection under the Taking Clause. Thus compensation must be paid for the taking of contract rights, 605 patent rights, 606 and trade secrets. 607 So too, the franchise of a private corporation is property that cannot be taken for public use without compensation. Upon condemnation of a lock and dam belonging to a navigation company, the Government was required to pay for the franchise to take tolls as well as for the tangible property. 608 The frustration of a private contract by the requisitioning of the entire output of a steel manufacturer is not a taking for which compensation is required, 609 but government requisitioning from a power company of all the electric power which could be produced by use of the water diverted through its intake canal, thereby cutting off the supply of a lessee which had a right, amounting to a corporeal hereditament under state law, to draw a portion of that water, entitles the lessee to compensation for the rights taken. 610 When, upon default of a ship-builder, the Government, pursuant to contract with him, took title to uncompleted boats, the material men, whose liens under state laws had attached when they supplied the shipbuilder, had a compensable interest equal to whatever value these liens had when the Government ‘‘took’’ or destroyed them in perfecting its title. 611 As a general matter, there is no property interest in the continuation of a rule of law. 612 And, even though state participa- VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00110 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 AMENDMENT 5—RIGHTS OF PERSONS 1471 613 Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41 (1986). 614 ‘‘Congress is not, by virtue of having instituted a social welfare program, bound to continue it at all, much less at the same benefit level.’’ Bowen v. Gilliard, 483 U.S. 587, 604 (1987). 615 Mitchell v. United States, 267 U.S. 341 (1925); United States ex rel. TVA v. Powelson, 319 U.S. 266 (1943); United States v. Petty Motor Co., 327 U.S. 372 (1946). For consideration of the problem of fair compensation in government-supervised bankruptcy reorganization proceedings, see New Haven Inclusion Cases, 399 U.S. 392, 489–95 (1970). 616 United States v. General Motors Corp., 323 U.S. 373, 382 (1945). 617 United States v. General Motors Corp., 323 U.S. 373 (1945). In Kimball Laundry Co. v. United States, 338 U.S. 1 (1949), the Government seized the tenant’s plant for the duration of the war, which turned out to be less than the full duration of the lease, and, having no other means of serving its customers, the laundry suspended business for the period of military occupancy; the Court narrowly held that the Government must compensate for the loss in value of the business attributable to the destruction of its ‘‘trade routes,’’ that is, for the loss of customers built up over the years and for the continued hold of the laundry upon their patronage. See also United States v. Pewee Coal Co., 341 U.S. 114 (1951) (in temporary seizure, Government must compensate for losses attributable to increased wage payments by the Government). tion in the social security system was originally voluntary, a state had no property interest in its right to withdraw from the program when Congress had expressly reserved the right to amend the law and the agreement with the state. 613 Similarly, there is no right to the continuation of governmental welfare benefits. 614 Consequential Damages.—The Fifth Amendment requires compensation for the taking of ‘‘property,’’ hence does not require payment for losses or expenses incurred by property owners or tenants incidental to or as a consequence of the taking of real property, if they are not reflected in the market value of the property taken. 615 ‘‘Whatever of property the citizen has the Government may take. When it takes the property, that is, the fee, the lease, whatever, he may own, terminating altogether his interest, under the established law it must pay him for what is taken, not more; and he must stand whatever indirect or remote injuries are properly comprehended within the meaning of ‘consequential damage’ as that conception has been defined in such cases. Even so the consequences often are harsh. For these whatever remedy may exist lies with Congress.’’ 616 An exception to the general principle has been established by the Court where only a temporary occupancy is assumed; then the taking body must pay the value which a hypothetical long-term tenant in possession would require when leasing to a temporary occupier requiring his removal, including in the market value of the interest the reasonable cost of moving out the personal property stored in the premises, the cost of storage of goods against their sale, and the cost of returning the property to the premises. 617 Another exception to the general rule occurs with VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00111 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 1472 AMENDMENT 5—RIGHTS OF PERSONS 618 United States v. Miller, 317 U.S. 369, 375–76 (1943). ‘‘On the other hand,’’ the Court added, ‘‘if the taking has in fact benefitted the remainder, the benefit may be set off against the value of the land taken.’’ Id. 619 United States v. Jones, 109 U.S. 513 (1883); Bragg v. Weaver, 251 U.S. 57 (1919). 620 28 U.S.C. § 1403. On the other hand, inverse condemnation actions (claims that the United States has taken property without compensation) are governed by the Tucker Act, 28 U.S.C. § 1491(a)(1), which vests the Court of Federal Claims (formerly the Claims Court) with jurisdiction over claims against the United States ‘‘founded . . . upon the Constitution.’’ See Preseault v. ICC, 494 U.S. 1 (1990). 621 Bauman v. Ross, 167 U.S. 548 (1897). Even when a jury is provided to determine the amount of compensation, it is the rule at least in federal court that the trial judge is to instruct the jury with regard to the criteria and this includes determination of ‘‘all issues’’ other than the precise issue of the amount of compensation, so that the judge decides those matters relating to what is computed in making the calculation. United States v. Reynolds, 397 U.S. 14 (1970). 622 Rule 71A(h), Fed. R. Civ. P. These commissions have the same powers as a court-appointed master. 623 Monongahela Navigation Co. v. United States, 148 U.S. 312, 327 (1893). 624 Long Island Water Supply Co. v. Brooklyn, 166 U.S. 685 (1897). In federal courts, reports of Rule 71A commissions are to be accepted by the court unless ‘‘clearly erroneous.’’ Fed. R. Civ. P. 53(e)(2). 625 Backus v. Fort Street Union Depot Co., 169 U.S. 557, 569 (1898). a partial taking, in which the government takes less than the entire parcel of land and leaves the owner with a portion of what he had before; in such a case compensation includes any diminished value of the remaining portion (‘‘severance damages’’) as well as the value of the taken portion. 618 Enforcement of Right to Compensation.—The nature and character of the tribunal to determine compensation is in the discretion of the legislature, and may be a regular court, a special legislative court, a commission, or an administrative body. 619 Proceedings to condemn land for the benefit of the United States are brought in the federal district court for the district in which the land is located. 620 The estimate of just compensation is not required to be made by a jury but may be made by a judge or entrusted to a commission or other body. 621 Federal courts may appoint a commission in condemnation actions to resolve the compensation issue. 622 If a body other than a court is designated to determine just compensation, its decision must be subject to judicial review, 623 although the scope of review may be limited by the legislature. 624 When the judgment of a state court with regard to the amount of compensation is questioned, the Court’s review is restricted. ‘‘All that is essential is that in some appropriate way, before some properly constituted tribunal, inquiry shall be made as to the amount of compensation, and when this has been provided there is that due process of law which is required by the Federal Constitution.’’ 625 ‘‘[T]here must be something more than an ordinary honest mistake of law in the proceedings for compensation be- VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00112 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 AMENDMENT 5—RIGHTS OF PERSONS 1473 626 McGovern v. City of New York, 229 U.S. 363, 370–71 (1913). 627 229 U.S. at 371. And see Provo Bench Canal Co. v. Tanner, 239 U.S. 323 (1915); Appleby v. City of Buffalo, 221 U.S. 524 (1911). 628 Legal Tender Cases, 79 U.S. (12 Wall.) 457, 551 (1871). The Fifth Amendment ‘‘has never been supposed to have any bearing upon, or to inhibit laws that indirectly work harm and loss to individuals,’’ the Court explained. 629 Meyer v. City of Richmond, 172 U.S. 82 (1898). 630 Sauer v. City of New York, 206 U.S. 536 (1907). But see the litigation in the state courts cited by Justice Cardozo in Roberts v. City of New York, 295 U.S. 264, 278–82 (1935). 631 Chicago, B. & Q. R.R. v. City of Chicago, 166 U.S. 226 (1897). 632 Manigault v. Springs, 199 U.S. 473 (1905). fore a party can make out that the State has deprived him of his property unconstitutionally.’’ 626 Unless, by its rulings of law, the state court prevented a complainant from obtaining substantially any compensation, its findings as to the amount of damages will not be overturned on appeal, even though as a consequence of error therein the property owner received less than he was entitled to. 627 When Property Is Taken The issue whether one’s property has been ‘‘taken’’ with the consequent requirement of just compensation can hardly arise when government institutes condemnation proceedings directed to it. Where, however, physical damage results to property because of government action, or where regulatory action limits activity on the property or otherwise deprives it of value, whether there has been a taking in the Fifth Amendment sense becomes critical. Government Activity Not Directed at the Property.—The older cases proceeded on the basis that the requirement of just compensation for property taken for public use referred only to ‘‘direct appropriation, and not to consequential injuries resulting from the exercise of lawful power.’’ 628 Accordingly, a variety of consequential injuries were held not to constitute takings: damage to abutting property resulting from the authorization of a railroad to erect tracts, sheds, and fences over a street; 629 similar deprivations, lessening the circulation of light and air and impairing access to premises, resulting from the erection of an elevated viaduct over a street, or resulting from the changing of a grade in the street. 630 Nor was government held liable for the extra expense which the property owner must obligate in order to ward off the consequence of the governmental action, such as the expenses incurred by a railroad in planking an area condemned for a crossing, constructing gates, and posting gatemen, 631 or by a landowner in raising the height of the dikes around his land to prevent their partial flooding consequent to private construction of a dam under public licensing. 632 VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00113 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 1474 AMENDMENT 5—RIGHTS OF PERSONS 633 Pumpelly v. Green Bay Co., 80 U.S. (13 Wall.) 166, 177–78 (1872). 634 United States v. Dickinson, 331 U.S. 745, 748 (1947). 635 Portsmouth Harbor Land & Hotel Co. v. United States, 260 U.S. 327 (1922). Cf. Portsmouth Harbor Land & Hotel Co. v. United States, 250 U.S. 1 (1919); Peabody v. United States, 231 U.S. 530 (1913). 636 United States v. Causby, 328 U.S. 256 (1946); Griggs v. Allegheny County, 369 U.S. 84 (1962). A corporation chartered by Congress to construct a tunnel and operate railway trains therein was held liable for damages in a suit by one whose property was so injured by smoke and gas forced from the tunnel as to amount to a taking. Richards v. Washington Terminal Co., 233 U.S. 546 (1914). 637 ‘‘The phrase ‘inverse condemnation’ generally describes a cause of action against a government defendant in which a landowner may recover just compensation for a ‘taking’ of his property under the Fifth Amendment, even though formal condemnation proceedings in exercise of the sovereign’s power of eminent domain have not been instituted by the government entity.’’ San Diego Gas & Electric Co. v. City of San Diego, 450 U.S. 621, 638 n.2 (1981) (Justice Brennan dissenting). See also United States v. Clarke, 445 U.S. 253, 257 (1980); Agins v. City of Tiburon, 447 U.S. 255, 258 n.2 (1980). 638 Gibson v. United States, 166 U.S. 269 (1897); Lewis Blue Point Oyster Co. v. Briggs, 229 U.S. 82 (1913); United States v. Chandler-Dunbar Water Power Co., 229 U.S. 53 (1913); United States v. Appalachian Power Co., 311 U.S. 377 (1940); But the Court also decided long ago that land can be ‘‘taken’’ in the constitutional sense by physical invasion or occupation by the government, as occurs when government floods land. 633 A later formulation was that ‘‘[p]roperty is taken in the constitutional sense when inroads are made upon an owner’s use of it to an extent that, as between private parties, a servitude has been acquired either by agreement or in course of time.’’ 634 It was thus held that the government had imposed a servitude for which it must compensate the owner on land adjoining its fort when it repeatedly fired the guns at the fort across the land and had established a fire control service there. 635 In two major cases, the Court held that the lessees or operators of airports were required to compensate the owners of adjacent land when the noise, glare, and fear of injury occasioned by the low altitude overflights during takeoffs and landings made the land unfit for the use to which the owners had applied it. 636 Eventually, the term ‘‘inverse condemnation’’ came to be used to refer to such cases where the government has not instituted formal condemnation proceedings, but instead the property owner has sued for just compensation, claiming that governmental action or regulation has ‘‘taken’’ his property. 637 Navigable Waters.—The repeated holdings that riparian ownership is subject to the power of Congress to regulate commerce constitute an important reservation to the developing law of liability in the taking area. When damage results consequentially from an improvement to a river’s navigable capacity, or from an improvement on a nonnavigable river designed to affect navigability elsewhere, it is generally not a taking of property but merely an exercise of a servitude to which the property is always subject. 638 VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00114 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 AMENDMENT 5—RIGHTS OF PERSONS 1475 United States v. Commodore Park, Inc., 324 U.S. 386 (1945); United States v. Willow River Power Co., 324 U.S. 499 (1945); United States v. Twin City Power Co., 350 U.S. 222 (1956); United States v. Rands, 389 U.S. 121 (1967). 639 United States v. Virginia Elec. & Power Co., 365 U.S. 624, 628 (1961). 640 United States v. Lynah, 188 U.S. 445 (1903); United States v. Cress, 243 U.S. 316 (1917); Jacobs v. United States, 290 U.S. 13 (1933); United States v. Dickinson, 331 U.S. 745 (1947); United States v. Kansas City Ins. Co., 339 U.S. 799 (1950); United States v. Virginia Electric & Power Co., 365 U.S. 624 (1961). 641 Kaiser Aetna v. United States, 444 U.S. 164 (1979); Vaughn v. Vermillion Corp., 444 U.S. 206 (1979). 642 Mugler v. Kansas, 123 U.S. 623, 668–69 (1887). See also The Legal Tender Cases, 79 U.S. (12 Wall.) 457, 551 (1871); Chicago, B. & Q. R.R. v. City of Chicago, 166 U.S. 226, 255 (1897); Omnia Commercial Co. v. United States, 261 U.S. 502 (1923); Norman v. Baltimore & Ohio R.R., 294 U.S. 240 (1935). 643 1 NICHOLS’ THE LAW OF EMINENT DOMAIN § 1.42 (J. Sackman, 3d rev. ed. 1973). 644 E.g., Hadacheck v. Sebastian, 239 U.S. 394 (1915) (ordinance upheld restricting owner of brick factory from continuing his use after residential growth surrounding factory made use noxious, even though value of property was reduced by more than 90%); Miller v. Schoene, 276 U.S. 272 (1928) (no compensation due owner’s loss of red cedar trees ordered destroyed because they were infected with rust that threatened contamination of neighboring apple orchards: preferment of public interest in saving cash crop to property interest in ornamental trees was rational). This exception does not apply to lands above the ordinary highwater mark of a stream, 639 hence is inapplicable to the damage the Government may do to such ‘‘fast lands’’ by causing overflows, by erosion, and otherwise, consequent on erection of dams or other improvements. 640 And, when previously nonnavigable waters are made navigable by private investment, government may not, without paying compensation, simply assert a navigation servitude and direct the property owners to afford public access. 641 Regulatory Takings.—While it is established that government may take private property, with compensation, to promote the public interest, that interest also may be served by regulation of property use pursuant to the police power, and for years there was broad dicta that no one may claim damages due to a police regulation designed to secure the common welfare, especially in the area of health and safety regulations. 642 ‘‘The distinguishing characteristic between eminent domain and the police power is that the former involves the taking of property because of its need for the public use while the latter involves the regulation of such property to prevent the use thereof in a manner that is detrimental to the public interest.’’ 643 But regulation may deprive an owner of most or all beneficial use of his property and may destroy the values of the property for the purposes to which it is suited. 644 The older cases flatly denied the possibility of compensation for this diminu- VerDate May<19>2004 12:55 May 20, 2004 Jkt 077500 PO 00000 Frm 00115 Fmt 8222 Sfmt 8222 C:\CONAN\CON030.SGM PRFM99 PsN: CON030 1476 AMENDMENT 5—RIGHTS OF PERSONS 645 Mugler v. Kansas, 123 U.S. 623, 668–69 (1887) (ban on manufacture of liquor greatly devalued plaintiff’s plant and machinery; no taking possible simply because of legislation deeming a use injurious to public health and welfare). 646 Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 415 (1922). See also Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992) (a regulation that deprives a property owner of all beneficial use of his property requires compensation, unless the owner’s propose

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