Rights for Which Compensation Must Be Made.
If real prop-erty 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,”651 but also such lesser interests as easements652 and leaseholds. 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.653 On the other hand, if the taking has in fact benefitted the owner, the benefit may be set off against the value of the land condemned,654 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.655 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.656
The Court has also held that the government has a “categorical duty to pay just compensation” when it physically takes personal property, just as when it takes real property.657 In Horne v. Department of Agriculture, the Court held that a raisin marketing order issued under a Depression-era statute requiring raisin growers to reserve a percentage of their total crop for the federal government to dispose of in its discretion constituted “a clear physical taking” because, even though the scheme was intended to benefit the growers by maintaining stable markets for raisins, the “[a]ctual raisins are transferred from the growers to the Government.”658 The Court further held the government could not avoid paying just compensation for this physical taking by providing for the return to the raisin growers of any net proceeds from the government’s sale of the reserve raisins.659 The majority also rejected the government’s argument that the reserve requirement was not a physical taking because raisin growers voluntarily participated in the raisin market.660 In so doing, the Court noted that selling produce in interstate commerce is not a “special government benefit that the Government may hold hostage, to be ransomed by the waiver of constitutional protection.”661 In addition, the Court determined that the value of the raisins for takings purposes was their fair market value, with no deduction for the offsetting benefits of the overall statutory scheme, which is intended to maintain stable markets for raisins.662
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,663 patent rights,664 and trade secrets.665 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.666 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,667 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.668 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.669 As a general matter, there is no property interest in the continuation of a rule of law.670 And, even though state participation 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.671 Similarly, there is no right to the continuation of governmental welfare benefits.672
- United States v. General Motors Corp., 323 U.S. 373 (1945).
- United States v. Welch, 217 U.S. 333 (1910).
- 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 private right-of-way, an allowance was properly made for the value of the easement. United States v. Welch, 217 U.S. 333 (1910).
- Bauman v. Ross, 167 U.S. 548 (1897).
- Monongahela Navigation Co. v. United States, 148 U.S. 312, 326 (1893).
- Reichelderfer v. Quinn, 287 U.S. 315, 318 (1932).
- See Horne v. Dep’t of Agric., 576 U.S. ___, No. 14–275, slip op. at 5 (2015). In deciding this case, the Court presumably intended to leave intact established exceptions when the government seizes personal property (e.g., confiscation of adulterated drugs). See, e.g., Bennis v. Michigan, 516 U.S. 442, 452 (1996) (“Petitioner also claims that the forfeiture in this case was a taking of private property for public use in violation of the Takings Clause of the Fifth Amendment, made applicable to the States by the Fourteenth Amendment. But if the forfeiture proceeding here in question did not violate the Fourteenth Amendment, the property in the automobile was transferred by virtue of that proceeding from petitioner to the State. The government may not be required to compensate an owner for property which it has already lawfully acquired under the exercise of governmental authority other than the power of eminent domain.”).
- Horne, slip op. at 8.
- Id. at 9–12.
- The government’s argument might have carried more weight had the marketing order been viewed as a regulatory taking. Tahoe-Sierra Pres. Council, Inc. v. Tahoe Reg’l Planning Agency, 535 U.S. 302, 321–22 (2002) (“The text of the Fifth Amendment itself provides a basis for drawing a distinction between physical takings and regulatory takings. Its plain language requires the payment of compensation whenever the government acquires private property for a public purpose, whether the acquisition is the result of a condemnation proceeding or a physical appropriation. But the Constitution contains no comparable reference to regulations that prohibit a property owner from making certain uses of her private property.”); Bowles v. Willingham, 321 U.S. 503, 519 (1944) (rent control cannot be a taking of premises if “[t]here is no requirement that the apartments be used for purposes which bring them under the [rent control] Act”).
- Horne, slip op. at 13. Here, the Court expressly rejected the argument that the raisin growers could avoid the physical taking of their property by growing different crops, or making different uses of their grapes, by quoting its earlier decision in Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 439 n.17 (1982) (“[A] landlord’s ability to rent his property may not be conditioned on his forfeiting the right to compensation for a physical occupation.”). The Court also distinguished the raisin reserve provisions from the requirement that companies manufacturing pesticides, fungicides, and rodenticides disclose trade secrets in order to sell those products at issue in Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984). It did so because the manufacturers in Ruckelshaus were seen to have taken part in a “voluntary exchange” of information that included their trade secrets, recognized as property under the Takings Clause, in exchange for a “valuable Government benefit” in the form of a license to sell dangerous chemicals. No such government benefit was seen to be involved with the raisin growers because they were making “basic and familiar uses” of their property.
- Horne, slip op. at 14–16.
- Lynch v. United States, 292 U.S. 571, 579 (1934); Omnia Commercial Corp. v. United States, 261 U.S. 502, 508 (1923).
- James v. Campbell, 104 U.S. 356, 358 (1882). See also Hollister v. Benedict Mfg. Co., 113 U.S. 59, 67 (1885).
- Ruckelshaus v. Monsanto Co., 467 U.S. 986 (1984).
- Monongahela Navigation Co. v. United States, 148 U.S. 312, 345 (1983).
- Omnia Commercial Co. v. United States, 261 U.S. 502 (1923).
- International Paper Co. v. United States, 282 U.S. 399 (1931).
- Armstrong v. United States, 364 U.S. 40, 50 (1960).
- Duke Power Co. v. Carolina Envtl. Study Group, 438 U.S. 59, 88 n.32 (1978).
- Bowen v. Public Agencies Opposed to Social Security Entrapment, 477 U.S. 41 (1986).
- “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).