The U.S. Supreme Court outlined the sources of law defining and limiting the bundle of inherent property rights. The Lucas Court held that there is no taking where the state action merely asserts a restriction that already inheres in the title by way of the state's common-law nuisance principles. The Court under the facts of the case focused on nuisance law in discussing the kinds of restrictions inherent in a property owner's title.
Lucas has been read narrowly in the past to mean that restrictions on the bundle of private property rights can only be restricted by states' nuisance laws. See, e.g., K&K Constr., Inc. v. Department of Natural Resources, 551 N.W.2d 413, (Mich. Ct. App. 1996) (specifically stating that statutory law should not be considered in the analysis of those restrictions).
Thus, after Soon Duck Kim it is clear that purchasers must look to the law in force, whether it be statutory or common law, at the time they obtain title to the land. Owners will be considered on constructive notice of any of the rights and restrictions inhering in that property. Thus a takings inquiry is not necessary when the government enforces rights previously reserved by statute because that particular right will not be part of the "bundle of rights" possessed by the owner.
The court concurrently upheld enforcement of preexisting property statutes as not being takings. Gazza v. New York State Dep't of Envtl. Conservation, 1997 NY Int. 25, (N.Y. 1997); Anello v. Zoning Bd. of Appeals of Dobbs Ferry, 1997 NY Int. 24, (N.Y. 1997).
This analysis is fundamentally different from the majority's, which asks the threshold question whether, under Lucas, Plaintiffs ever owned a property right before deciding whether the City's physical action would be considered a taking. The majority firsts asks whether Plaintiffs had a right which was then invaded, while the dissent assumes the invasion was a taking and then looks to the common law and the statutes for a "justification" for the invasion.
The analytical difference explains how both majority and dissent cite the same for cases to support different propositions. Thus the dissent cites Lucas as well as Haverstraw as supporting its position, cases the majority relies on as well. While the majority cites the Lucas analysis as necessary to determine if there has even "been" a taking. Id. at Majority para. 24 (quoting Lucas, 505 U.S. at 1031-32) ("plaintiffs never owned the property interest they claim was taken"). The dissent considers the Lucas analysis as coming into play after a determination has been made that there has been a physical taking. Id. at Dissent para 18. (quoting Lucas, 505 U.S. at 1031) ("Accordingly, under the guidance of Lucas, the circumstances presented here may only be validated without compensation if respondent can show that a "pre-existing limitation" upon plaintiffs' title may be found in state law").
The majority and dissent both look to the applicable common law and statutes in determining whether Plaintiffs ever held the property right they claim the City took. While the majority and dissent agree that Plaintiffs had constructive notice of the legal grade, the dissent distinguishes the effect of this notice. It argues that although they were under constructive notice that their property was below the legal grade, this knowledge does not automatically obligate them to act affirmatively to meet the lateral support obligation, especially since College Point Boulevard was itself below the legal grade. Id. at Dissent para. 2-6. The dissent's interpretation limits Plaintiffs' obligation. In other words, Plaintiffs "may not" actively take any step which will cause deterioration to the existing lateral support. 1997 N.Y. Int. 23 at Dissent paras. 27-32. The dissent would not read the statutes as requiring that Plaintiffs "must" maintain the legal grade where the roadway was below legal grade or where the city by enactment raises that grade.
The dissent also disagrees with the majority's interpretation of the underlying common law lateral support duty. The majority finds that even if there were not a basis in the City charter for the existence of such an easement, the common law recognizes the proposition that Plaintiffs had an "obligation to preserve and maintain the legal grade." Id. at Majority para. 14 (citing Village of Haverstraw v. Eckerson, 192 N.Y. 54 (N.Y. 1908)). The dissent also cites Haverstraw, but focuses on its holding that a municipality may restrain a landowner's continuance of actions which "menace the condition of a highway in a direct mannerr, or indirectly , by so digging or excavating . . . as to affect the lateral support." Id. at Dissent para. 31 (citing Haverstraw, 192 N.Y. at 60). Thus, conceptually, the dissent sees the duty imposed upon Plaintiffs' property (under either common or statutory law) as a negative easement, one forbidding them from any action altering the requisite lateral support. Therefore, the dissent contends that if Plaintiffs had no obligation to affirmatively act to raise their property, no pre-existing limitation existed. And as a result, if no pre-existing limitation existed, the city had no "authorization" to invade the property under Lucas. Id. at Dissent paras. 18 - 19.
The dissent analogizes the present facts to the invasion addressed by the U.S. Supreme Court in Loretto. 1997 N.Y. Int. 23 at Dissent paras. 11-12. And it distinguishes the support obligation from the kind of regulations the Loretto court discussed in favorable terms, charaterizing it as one which dedicates Plaintiffs property "to the public benefit without regard to plaintiffs' property interests." Id. at Dissent para. 12. By contrast the hypothetical regulations discussed in Loretto were "directed toward the public safety and health of those persons invited to the landowner's property by the landowner." Id. In the present case, the dissent viewed the city's actions as indeed dedicated solely to the public benefit.
The court also hints that the purchaser paid a reduced price for the property precisely because of the City's limiting interest, but this analysis implies that the seller received a correspondingly lower price. In any similar situation, the regulation in question will have to begin during some owner's tenure, so that at some point in time an owner will not be given notice prior to the purchase of the property . Will future owners in this position be able to recover from the City by characterizing the diminution in property value as a regulatory taking? The answer seems to be "probably not," given the United States Supreme Court's reluctance to sanction such claims. See Penn Cent. Transp. Company, 438 U.S. 104, at 131 (1978) (holding that land restriction resulting in diminished property value not a taking).
However, the court does note that the present ruling does not extend to the situation where the legal grade requirement is instituted or changed after purchase. For example, the court does not answer the question that would have been raised if an owner had purchased property meeting the legal grade and the city then changed that legal level. (See Soon Duck Kim, 1997 N.Y. Int. 23 at Majority n. 7 (N.Y. 1997)). Would it matter if the property did not meet the legal grade before the city raised it? For example, if an owner had purchased the property in question with notice that it was five feet below the published legal grade and the city then raised that legal grade another two feet, would that additional two feet be a taking even though the first five would not? Forced compliance with a newly instituted legal grade may present a case of physical taking while promulgation alone might not present a case of regulatory taking. Note, however, that the court has recognized a common law duty to lateral support of public roadways; thus, the court may still refuse to find a taking in the former situation.
At trial, Plaintiffs argued that the previous owners willfully failed to disclose the City's intention to raise the legal grade. The Court of Appeals notes that this argument is irrelevant to Plaintiffs' claim against the City of New York and suggests that this claim should be brought against those involved in the transaction. Id. at Majority n. 9. This leaves open the question whether Plaintiffs could have prevailed had they brought their action against the seller of the property for damages or rescission of the purchase. Since Soon Duck Kim forecloses parties similarly situated to Plaintiffs from prevailing against a municipality, it remains to be seen whether those parties would be more successful bringing suit against the sellers of such encumbered property.
Generally, one of the public rights in a highway is that of changing the grade as public necessity and convenience may periodically require. A municipality's power to further grade and improve streets is continuing, and because municipalities hold streets in trust for the public, changes to the grade should be contemplated. Bennett v. Winston-Salem South-Bend Ry. Co., 87 S.E. 133 (N.C. 1915). See also Thompson v. Seaboard Air Line R.R. Co., 104 S.E.2d 181 (N.C. 1958).
Stemming from these principles is the general rule that the owner of property abutting a street cannot recover damage to property caused by a change in the grade of the street under proper municipal authority. Any damage resulting from such a change is considered damnum absque injuria, loss without injury. Compare Smith, 126 S.E.2d at 87; and Bennett, 87 S.E. at 133; and Thompson, 104 S.E.2d at 181; and Ganote v. Commonwealth of Kentucky, Dep't of Highways, 409 S.W.2d 165 (Ky. Ct. App. 1966); and Baltimore & O.R. Co. v. Kane, 92 A 532 (Md. 1914). In the above cited cases except Thompson, the increases in grade of the relevant streets did not amount to a taking of a private owner's property right for which compensation was due. In Thompson, however, a railroad company that raised the elevation of a street was not cloaked with governmental immunity and therefore liable to individuals whose property was damaged by the change.
In regard to the issue of taking in the face of state or local statutes, case law supports the holding in Soon Duck Kim. It has been held that the "bundle of rights" to property does not include the right to use land contrary to statutory law in force when the owner acquired title. Owners purchase real property subject to existing statutory restrictions. Hunziker v. Iowa, 519 N.W.2d 367 (Iowa, 1994) (holding that there was no taking without just compensation when the state prohibited disinterment of human bones on private property). See also Grant v. South Carolina Coastal Council, 461 S.E.2d 388 (S.C. 1995) (holding that a statute forbidding property owners from filling "critical areas" of their property after a hurricane does not constitute a taking requiring compensation).