Sat. May 25th, 2024

Property Rights and the Constitution

Lochner v. New York The general right to make a contract in relation to his business is part of the liberty protected by the Fourteenth Amendment, and this includes the right to purchase and sell labor, except as controlled by the State in the legitimate exercise of its police power.Lochner v. New York The general right to make a contract in relation to his business is part of the liberty protected by the Fourteenth Amendment, and this includes the right to purchase and sell labor, except as controlled by the State in the legitimate exercise of its police power.

Right of protecting property, declared inalienable by constitution, is not mere right to protect it by individual force, but right to protect it by law of land, and force of body politic.” Billings v. Hall (1857), 7 C. 1.

“Constitution of this state declares, among inalienable rights of each citizen, that of acquiring, possessing and protecting property.  This is one of primary objects of government, is guaranteed by constitution, and cannot be impaired by legislation.”  Billings v. Hall (1857), 7 C. 1.

Amdt14.S1.5.3 Property Deprivations and Due Process

Fourteenth Amendment, Section 1:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside. No State shall make or enforce any law which shall abridge the privileges or immunities of citizens of the United States; nor shall any State deprive any person of life, liberty, or property, without due process of law; nor deny to any person within its jurisdiction the equal protection of the laws.

Like the liberty interest,1 the concept of property rights has expanded beyond its common law roots, reflecting the Supreme Court’s recognition that certain interests that fall short of traditional property rights are nonetheless important parts of people’s economic well-being. For instance, in a case where household goods were sold under an installment contract and the seller retained title, the Court deemed the possessory interest of the buyer sufficiently important to require procedural due process before repossession could occur.2 In another case, the Court held that the loss of the use of garnished wages between the time of garnishment and final resolution of the underlying suit was a sufficient property interest to require some form of determination that the garnisher was likely to prevail.3 The Court has also ruled that the continued possession of a driver’s license, which may be essential to one’s livelihood, is a protected property interest.4

A more fundamental shift in the concept of property occurred with recognition of society’s growing economic reliance on government benefits, employment, and contracts.5 Another relevant factor was the decline of the distinction between rights and privileges. Justice Oliver Wendell Holmes summarized the distinction in dismissing a suit by a policeman who had been fired from his job for political activities: The petitioner may have a constitutional right to talk politics, but he has no constitutional right to be a policeman.6 Under that theory, a finding that a litigant had no vested property interest in government employment,7 or that some form of public assistance was only a privilege rather than a right,8 meant that no procedural due process was required before depriving a person of that interest.9 The reasoning was that, if the government was under no obligation to provide some benefit, it could choose to provide that benefit subject to whatever conditions or procedures it deemed appropriate.

There was some tension between the position that the government was free to attach conditions to benefits and another line of cases holding that the government could not require the diminution of constitutional rights as a condition for receiving benefits. That line of thought, referred to as the unconstitutional conditions doctrine, held that, even though a person has no ‘right’ to a valuable government benefit and even though the government may deny him the benefit for any number of reasons, it may not do so on a basis that infringes his constitutionally protected interests—especially, his interest in freedom of speech.10 Nonetheless, the two doctrines coexisted in an unstable relationship until the 1960s, when Court largely abandoned the right-privilege distinction.11 By 1972, the Court declared that it had fully and finally rejected the wooden distinction between ‘rights’ and ‘privileges’ that once seemed to govern the applicability of procedural due process rights.12

Concurrently with the decline of the right-privilege distinction, the Court embraced a mode of analysis known as the entitlement doctrine, under which the Court erected procedural protections against erroneous deprivation of benefits the government had granted on a discretionary basis.13 Previously, the Court had limited due process protections to constitutional rights, traditional rights, common law rights, and natural rights. Under a new positivist approach, the Court might find a protected property or liberty interest based on any positive statute or governmental practice that gave rise to a legitimate expectation. This positivist doctrine can be seen in the 1970 case Goldberg v. Kelly, where the Court held that the government must provide an evidentiary hearing before terminating welfare benefits because such termination may deprive an eligible recipient of the means of livelihood.14 In reaching that conclusion, the Court found that welfare benefits are a matter of statutory entitlement for persons qualified to receive them.15 Thus, where the loss or reduction of a benefit or privilege was conditioned upon specified grounds, the Court found that the recipient had a property interest entitling him to proper procedure before termination or revocation.

At first, the Court’s emphasis on the importance of statutory rights to the claimant led some lower courts to apply the Due Process Clause by weighing the interests involved and the harm done to a person deprived of a benefit. However, the Court held that this approach was inappropriate. It explained, [W]e must look not to the ‘weight’ but to the nature of the interest at stake. . . . We must look to see if the interest is within the Fourteenth Amendment’s protection of liberty and property.16 To have a property interest in the constitutional sense, the Court held, it was not enough for a person to have an abstract need or desire for a benefit or a unilateral expectation. He must rather have a legitimate claim of entitlement to the benefit.17 The Court further explained that property interests are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law—rules or understandings that secure certain benefits and that support claims of entitlement to those benefits.18

Consequently, in Board of Regents v. Roth, the Court held that a public university’s refusal to renew a teacher’s contract upon expiration of his one-year term implicated no due process values because there was nothing in the university’s contract, regulations, or policies that created any legitimate claim to reemployment.19 By contrast, in Perry v. Sindermann, a professor employed for several years at a public college was found to have a protected interest, even though his employment contract had no tenure provision and there was no statutory assurance of it.20 The Court deemed existing rules or understandings to have the characteristics of tenure, and thus to provide a legitimate expectation independent of any contract provision.21

The Court has also found legitimate entitlements in situations besides employment. In Goss v. Lopez, an Ohio statute provided for free education to all residents between five and twenty-one years of age and required school attendance; thus, the Court held that the state had obligated itself to provide students some due process hearing rights prior to suspending them.22 The Court explained, Having chosen to extend the right to an education to people of appellees’ class generally, Ohio may not withdraw that right on grounds of misconduct, absent fundamentally fair procedures to determine whether the misconduct has occurred.23 The Court is highly deferential, however, to school dismissal decisions based on academic grounds.24

The more an interest differs from the traditional understanding of property, the more difficult it is to establish a due process claim based on entitlements. In Town of Castle Rock v. Gonzales, the Court considered whether police officers violated a constitutionally protected property interest by failing to enforce a restraining order an estranged wife obtained against her husband, despite having probable cause to believe the order had been violated.25 While noting statutory language that required that officers either use every reasonable means to enforce [the] restraining order or seek a warrant for the arrest of the restrained person, the Court resisted equating this language with the creation of an enforceable right, noting a long-standing tradition of police discretion coexisting with apparently mandatory arrest statutes.26 The Court also questioned whether finding that the statute contained mandatory language would have created a property right, as the wife, with no criminal enforcement authority herself, was merely an indirect recipient of the benefits of the governmental enforcement scheme.27

In Arnett v. Kennedy, a majority of the Court rebuffed an attempt to limit the expansion of due process with respect to entitlements.28 The case involved a federal law that provided that employees could not be discharged except for cause. A minority of three Justices acknowledged that due process rights could be created through statutory grants of entitlements, but observed that the statute at issue specifically withheld the procedural protections the employee sought. Because the property interest which appellee had in his employment was itself conditioned by the procedural limitations which had accompanied the grant of that interest,29 the employee would have to take the bitter with the sweet.30 Thus, the minority would have held that Congress (and by analogy state legislatures) could qualify the conferral of an interest by limiting the process that might otherwise be required. The other six Justices, although disagreeing among themselves in other respects, rejected that reasoning. This view misconceives the origin of the right to procedural due process, Justice Lewis Powell wrote. That right is conferred not by legislative grace, but by constitutional guarantee. While the legislature may elect not to confer a property interest in federal employment, it may not constitutionally authorize the deprivation of such an interest, once conferred, without appropriate procedural safeguards.31

By contrast, in Bishop v. Wood, the Court accepted a district court’s finding that a policeman held his position at will, despite language setting forth conditions for discharge.32 Although the majority opinion was couched in terms of statutory construction, the majority appeared to come close to adopting the three-Justice Arnett position, and the dissenters accused the majority of having repudiated the majority position of the six Justices in Arnett.

Subsequently, however, the Court held that, because minimum [procedural] requirements [are] a matter of federal law, they are not diminished by the fact that the State may have specified its own procedures that it may deem adequate for determining the preconditions to adverse action.33 The Court applied this analysis in Logan v. Zimmerman Brush Co., in which a state anti-discrimination law required the enforcing agency to convene a fact-finding conference within 120 days of the filing of the complaint.34 The commission inadvertently scheduled the hearing after the expiration of the 120 days, and the state courts held the requirement to be jurisdictional, requiring dismissal of the complaint. The Supreme Court noted that various older cases had clearly established that causes of action were property, and, in any event, the claim at issue was an entitlement grounded in state law and thus could only be removed for cause. That property interest existed independently of the 120-day period and could not be taken away by agency action or inaction.35

Footnotes

  1. Jump to essay-1See S1.5.2 Liberty Deprivations and Due Process.
  2. Jump to essay-2Fuentes v. Shevin, 407 U.S. 67 (1972) (invalidating replevin statutes which authorized the authorities to seize goods simply upon the filing of an ex parte application and the posting of bond).
  3. Jump to essay-3Sniadach v. Family Fin. Corp., 395 U.S. 337, 342 (1969) (Harlan, J., concurring).
  4. Jump to essay-4Bell v. Burson, 402 U.S. 535 (1971) (holding that a license should not be suspended after an accident for failure to post a security for the amount of damages claimed by an injured party without affording the driver an opportunity to raise the issue of liability). Compare Dixon v. Love, 431 U.S. 105 (1977)with Mackey v. Montrym, 443 U.S. 1 (1979)But see  Mfrs. Mut. Ins. Co. v. Sullivan, 526 U.S. 40 (1999) (no liberty interest in worker’s compensation claim where reasonableness and necessity of particular treatment had not yet been resolved).
  5. Jump to essay-5See Laurence Tribe, American Constitutional Law 685 (2d. ed) (1988).
  6. Jump to essay-6McAuliffe v. Mayor of New Bedford, 155 Mass. 216, 220, 29 N.E.2d 517, 522 (1892).
  7. Jump to essay-7Bailey v. Richardson, 182 F.2d 46 (D.C. Cir. 1950)aff’d by an equally divided court, 314 U.S. 918 (1951); Adler v. Bd. of Educ., 342 U.S. 485 (1952).
  8. Jump to essay-8Flemming v. Nestor, 363 U.S. 603 (1960).
  9. Jump to essay-9Barsky v. Bd. of Regents, 347 U.S. 442 (1954).
  10. Jump to essay-10Perry v. Sindermann, 408 U.S. 593, 597 (1972)SeeSpeiser v. Randall, 357 U.S. 513 (1958).
  11. Jump to essay-11SeeWilliam Van Alstyne, The Demise of the Right-Privilege Distinction in Constitutional Law, 81 Harv. L. Rev. 1439 (1968). A number of early cases involved the imposition of conditions on admitting corporations into a state.  W. & S. Life Ins. Co. v. State Bd. of Equalization, 451 U.S. 648, 656–68 (1981)) (reviewing the cases). Some more recent cases have continued to apply the right-privilege distinction. See Buckley v. Valeo, 424 U.S. 1, 108–09 (1976) (sustaining as qualification for public financing of campaign agreement to abide by expenditure limitations otherwise unconstitutional); Wyman v. James, 400 U.S. 309 (1971).
  12. Jump to essay-12 of Regents v. Roth, 408 U.S. 564, 571 (1972).
  13. Jump to essay-13The limitations were procedural and not substantive, meaning that Congress or a state legislature could still simply take away part or all of the benefit. Richardson v. Belcher, 404 U.S. 78 (1971)S. R.R. Retirement Bd. v. Fritz, 449 U.S. 166, 174 (1980)Logan v. Zimmerman Brush Co., 455 U.S. 422, 432–33 (1982).
  14. Jump to essay-14397 U.S. 254 (1970).
  15. Jump to essay-15at 261–62. See also Mathews v. Eldridge, 424 U.S. 319 (1976) (Social Security benefits).
  16. Jump to essay-16 of Regents v. Roth, 408 U.S. 564, 569–71 (1972).
  17. Jump to essay-17at 577.
  18. Jump to essay-18
  19. Jump to essay-19at 576–78.
  20. Jump to essay-20408 U.S. 593 (1972)SeeLeis v. Flynt, 439 U.S. 438 (1979) (finding no practice or mutually explicit understanding creating interest).
  21. Jump to essay-21at 601.
  22. Jump to essay-22419 U.S. 565 (1975)Carey v. Piphus, 435 U.S. 247 (1978) (measure of damages for violation of procedural due process in school suspension context). See also Bd. of Curators v. Horowitz, 435 U.S. 78 (1978) (whether liberty or property interest implicated in academic dismissals and discipline, as contrasted to disciplinary actions).
  23. Jump to essay-23at 574. See also Barry v. Barchi, 443 U.S. 55 (1979) (horse trainer’s license); O’Bannon v. Town Ct. Nursing Ctr., 447 U.S. 773 (1980) (statutory entitlement of nursing home residents protecting them in the enjoyment of assistance and care).
  24. Jump to essay-24Regents of the Univ. of Mich. v. Ewing, 474 U.S. 214 (1985). Although the Court assume[d] the existence of a constitutionally protectible property interest in . . . continued enrollment in a state university, it held that right is violated only by a showing that dismissal resulted from such a substantial departure from accepted academic norms as to demonstrate that the person or committee responsible did not actually exercise professional judgment. at 225.
  25. Jump to essay-25545 U.S. 748 (2005).
  26. Jump to essay-26at 759. The Court also noted that the law did not specify the precise means of enforcement required; nor did it guarantee that, if a warrant were sought, it would be issued. The Court stated that such indeterminacy is not the hallmark of a duty that is mandatory. Id. at 763.
  27. Jump to essay-27at 764–65.
  28. Jump to essay-28416 U.S. 134 (1974).
  29. Jump to essay-29at 155 (Rehnquist and Stewart, JJ., and Burger, C.J.).
  30. Jump to essay-30at 154.
  31. Jump to essay-31at 167 (Powell, J., and Blackmun, J., concurring). See id. at 177 (White, J., concurring and dissenting); id. at 203 (Douglas, J., dissenting); id. at 206 (Marshall, Douglas, and Brennan, JJ., dissenting).
  32. Jump to essay-32426 U.S. 341 (1976).
  33. Jump to essay-33Vitek v. Jones, 445 U.S. 480, 491 (1980)See alsoCleveland Bd. of Educ. v. Loudermill, 470 U.S. 532 (1985).
  34. Jump to essay-34455 U.S. 422 (1982).
  35. Jump to essay-35at 428–33. A different majority of the Court also found a denial of equal protection. Id. at 438.

https://constitution.congress.gov/browse/essay/amdt14-S1-5-3/ALDE_00013749/#:~:text=No%20State%20shall%20make%20or,equal%20protection%20of%20the%20laws

America’s Founders understood clearly that private property is the foundation not only of prosperity but of freedom itself. Thus, through the common law, state law, and the Constitution, they protected property rights — the rights of people to acquire, use, and dispose of property freely. With the growth of modern government, however, those rights have been seriously compromised. Unfortunately, the Supreme Court has yet to develop a principled, much less comprehensive, theory for remedying those violations. That failure has led to the birth of the property rights movement in state after state. It is time now for Congress to step in — to correct the federal government’s own violations and to set out a standard that courts might notice as they adjudicate complaints about state violations.

The Constitution protects property rights through the Fifth and Fourteenth Amendments’ Due Process Clauses and, more directly, through the Fifth Amendment’s Takings Clause: “nor shall private property be taken for public use without just compensation.” There are two basic ways government can take property: (1) outright, by condemning the property and taking title; and (2) through regulations that take uses, leaving the title with the owner — so‐​called regulatory takings. In the first case, the title is all too often taken not for a public but for a private use; and rarely is the compensation received by the owner just. In the second case, the owner is often not compensated at all for his losses; and when he is, the compensation is again inadequate.

Over the past three decades, the Supreme Court has chipped away at the problem of uncompensated regulatory takings, requiring compensation in some cases; but its decisions were largely ad hoc, leaving most owners to bear the losses themselves. Thus, owners today can get compensation when the title is actually taken, as just noted; when the property is physically invaded by government order, either permanently or temporarily; when regulation for other than health or safety reasons takes all or nearly all of the value of the property; and when government attaches conditions to permits that are unreasonable, disproportionate, or unrelated to the purpose behind the permit requirement. But despite those modest advances, toward the end of its October 2004 term, the Court decided three property rights cases in which the owners had legitimate complaints, and in all three, the owners lost. One of those cases was Kelo v. City of New London, in which the city condemned Ms. Kelo’s property only to transfer it to another private party that the city believed could make better use of it. In so doing, the Court simply brushed aside the “public use” restraint on the power of government to take private property. The upshot, however, was a public outcry across the nation and the introduction of reforms in over 40 states. But those reforms varied substantially, and nearly all leave unaddressed the far more common problem of regulatory takings.

At bottom, then, the Court has yet to develop a principled and comprehensive theory of property rights, much less a comprehensive solution to the problem of government takings. For that, Congress (or the Court) is going to have to turn to first principles, much as the old common law judges did. We need to begin, then, not with the public law of the Constitution as presently interpreted, but with the private law of property.

Property: The Foundation of All Rights

It is no accident that a nation conceived in liberty and dedicated to justice for all protects property rights. Property is the foundation of every right we have, including the right to be free. Every right claim, after all, is a claim to some thing — either a defensive claim to keep what one is holding or an offensive claim to something someone else is holding. John Locke, the philosophical father of the American Revolution and the inspiration for Thomas Jefferson when he drafted the Declaration of Independence, stated the issue simply: “Lives, Liberties, and Estates, which I call by the general Name, Property.” And James Madison, the principal author of the Constitution, echoed those thoughts when he wrote, “as a man is said to have a right to his property, he may be equally said to have a property in his rights.”

Much moral and legal confusion would be avoided if we understood that all of our rights — all of the things to which we are “entitled” — can be reduced to property. That would enable us to separate genuine rights — things to which we hold title — from specious “rights” — things to which other people hold title, which we may want for ourselves. It was the genius of the old common law, grounded in reason and custom, that it grasped that point. And the common law judges understood a pair of corollaries as well: property, broadly conceived, separates one individual from another; and individuals are independent or free to the extent that they have sole or exclusive dominion over what they hold. Indeed, Americans go to work every day to acquire property just so they can be independent.

It would be to no avail, however, if property, once acquired, could not be used and enjoyed — if rights of acquisition, enjoyment, and disposal were not legally protected. Thus, common law judges, charged with settling disputes between neighbors, drew on principles of reason, efficiency, and custom to craft a law of property that by and large respected the equal rights of all.

In a nutshell, the basic rights they recognized, beyond acquisition and disposal, were the right of sole dominion — variously described as a right to exclude others, a right against trespass, or a right of quiet enjoyment, which all can exercise equally at the same time and in the same respect — and the right of active use, at least to the point where such use violates the rights of others to quiet enjoyment. Just where that point is will vary with the facts, of course, and that is the business of courts to determine, although legislatures can draw the broad outlines. Given our modern permitting regime, however, the point to be noticed here is that the presumption of the common law was ordinarily on the side of free use. People were not required to obtain a permit before using their property, that is, just as people today are not required to obtain a permit before speaking. Rather, the burden was on those who objected to a given use to show how it violated a right of theirs. That amounts to having to show that their neighbor’s use takes something they own free and clear. If they failed in that, the use could continue.

Thus, the common law limits the right of free use only when a use encroaches on the property rights of others, as in the classic law of nuisance and risk. The implications of that limit should not go unnoticed, however, especially in the context of modern environmental protection. Indeed, the belief, common today, that property rights are opposed to environmental protection is so far from the case as to be just the opposite: the right against environmental degradation is a property right. Under common law, properly applied, people cannot use their property in ways that damage their neighbors’ property — defined, again, as taking things those neighbors hold free and clear. Properly conceived and applied, then, property rights are self‐​limiting: they constitute a judicially crafted and enforced regulatory scheme in which rights of active use end when they encroach on the property rights of others.

The Police Power and the Power of Eminent Domain

But if the common law of property defines and protects private rights — the rights of owners with respect to each other — it also serves as a guide for the proper scope and limits of public law — defining the rights of owners and the public with respect to each other. For public law, at least at the federal level, flows from the Constitution; and the Constitution flows from the principles articulated in the Declaration of Independence; and those reflect, largely, the common law. The justification of public law begins, then, with our rights, as the Declaration makes clear. Government then follows, not to give us rights through positive law but to recognize and secure the rights we already have through natural law. Thus, to be morally legitimate, the powers of government must be derived from and consistent with those rights.

The two public powers most often at issue in the property rights context are the police power — the power of government mainly to secure rights — and the power of eminent domain — the power to take property for public use upon payment of just compensation, as set forth, by implication, in the Fifth Amendment’s Takings Clause.

The general police power — the fundamental power of government — is derived from what Locke called the Executive Power, the power each of us has in the state of nature to secure our rights. Thus, as such, this legal power is legitimate since it is nothing more than the public law version of a moral power we already have, by right, which we gave to government to exercise on our behalf when we constituted ourselves as a nation. But its exercise is legitimate only insofar as it is used to secure rights and to provide certain “public goods” like national defense and clean air — narrowly defined as economists do, citing free‐​rider problems, nonexcludability, and nonrivalrous consumption — and only insofar as its use respects the rights of others. Thus, while our rights give rise to the police power, they also limit it. We cannot use the police power for non‐​police‐​power purposes. It is a power mainly to secure rights through restraints or sanctions, not some general power to provide the public with goods and services more broadly defined.

A complication arises in the case of the federal government, however, because there is no general federal police power. Rather, the Constitution establishes a government of delegated, enumerated, and thus limited powers, leaving most powers, including the general police power, with the states or the people, as the Tenth Amendment makes clear. Consistent with constitutional principle, then, whatever power the federal government has to secure rights is limited to federal territory, is incidental to one of its enumerated powers, or is entailed mainly through the amendments. (See Chapter 15 for greater detail on this point.)

But if the police power is thus limited, then any effort to provide the public with goods and services more broadly must be accomplished under some other power, such as those, in the case of the federal government, that are enumerated in Article I, Section 8 of the Constitution. Yet that effort will be constrained by the Takings Clause, which requires that private property taken in pursuit of such ends — whether in whole or in part is irrelevant — must be accompanied by just compensation for the owner of the property. Otherwise the costs of the benefit to the public would fall entirely on the owner. Not to put too fine a point on it, that would amount to theft. Indeed, it was to prohibit that kind of thing that the Framers wrote the Takings Clause in the first place.

Thus, the power of eminent domain — which is not enumerated in the Constitution but is implicit in the Takings Clause — is an instrumental power: It affords a means that enables government, acting under some other power, to pursue other ends — building roads, for example, or saving wildlife. Moreover, unlike the police power, the eminent domain power is not inherently legitimate: Indeed, in a state of nature, prior to the creation of government, none of us would have a right to condemn a neighbor’s property, however worthy our purpose, however much we compensated him. Thus, it is not for nothing that eminent domain was known in the 17th and 18th centuries as “the despotic power.” It arises from practical considerations alone — to enable public projects to go forward without being held hostage to holdouts seeking to exploit the situation by extracting far more than just compensation. As for its justification, the best that can be said for eminent domain is this: the power was ratified by those in the original position; and it is “Pareto superior,” as economists say, meaning that at least one party (the public) is made better off by its use, as evidenced by its willingness to pay, while no one is made worse off, assuming the owner receives just compensation.

When Is Compensation Required?

We come then to the basic question: When do owners have to be compensated as a result of government actions? In general, there are four scenarios to consider.

First, when government actions incidentally reduce property values, but no rights are violated because nothing that belongs free and clear to the owner is taken, no compensation is due. If the government closes a military base or a neighborhood school, for example, or builds a new highway distant from the old one with its commercial enterprises, property values may decline as a result — but nothing was taken. We own our property and all the legitimate uses that go with it, not the value in our property, which is a function of many ever‐​changing factors.

Second, when government acts, under its police power, to secure rights — when it stops someone from polluting, for example, or from excessively endangering others — the restricted owner is not entitled to compensation, whatever his financial losses, because the uses prohibited or “taken” were wrong to begin with. Since there is no right to pollute, no right was taken. Thus, we do not have to pay polluters not to pollute. Here again the question is not whether value was taken but whether a right was taken. Proper uses of the police power take no rights. They protect rights.

Third, when government acts not to secure rights but to provide the public with goods like wildlife habitat, scenic views, or historic preservation, and in so doing prohibits or “takes” some otherwise rightful use, then it is acting, in part, under the eminent domain power and does have to compensate the owner for any losses he may suffer. The principle here is quite simple: the public has to pay for the goods it wants, just like any private person would have to. Bad enough that the public can take what it wants by condemnation; at least it should pay for what it takes rather than ask the owner to bear the full cost of its appetite. It is here, of course, that modern regulatory takings abuses are most common, as governments at all levels try to provide the public with all manner of amenities, especially environmental amenities, “off budget.” As noted above, there is an old‐​fashioned word for that practice — “theft” — and no amount of rationalization about “good reasons” will change that. Even thieves, after all, have “good reasons” for what they do.

Finally, when government, through full condemnation, takes for public use not simply some or all of the owner’s uses but the entire estate, including the title, compensation is clearly due.

Some Implications of a Principled Approach

Starting from first principles, then, we see that there is no difference in principle between the full use of eminent domain just described and a regulatory taking — between taking full title and taking only uses. Thus, the oft‐​heard claim that the Takings Clause requires compensation only for “full” takings will not withstand scrutiny. Giving the clause a natural reading, it speaks simply of “private property.” As Madison wrote (above), “property” denotes all the uses or rights that can rightly be made of a holding. It does not denote simply the underlying estate. In fact, in every area of property law except regulatory takings, we speak of property as being a “bundle of sticks,” any one of which can be bought, sold, rented, bequeathed, what have you. Yet, to enable government to provide the public with goods “off budget” and thus “on the cheap,” takings law has clung to the idea that only if the entire bundle is taken does government have to pay compensation.

That view enables government to extinguish nearly all uses through regulation — and hence to regulate nearly all value out of property — yet escape the compensation requirement because the all‐​but‐​empty title remains with the owner. And it would allow a government to take 90 percent of the value in year one, then come back a year later and take title for a dime on the dollar. Not only is that wrong, it is unconstitutional. It cannot be what the Takings Clause stands for. The principle, rather, is that property is indeed a bundle of sticks, a bundle of rights: take one of those sticks and you take something that belongs to the owner. The only question then is how much his loss is worth.

Thus, when the Court in 1992 in Lucas v. South Carolina Coastal Council crafted what is effectively a 100 percent rule, whereby owners are entitled to compensation only if regulations restrict uses to a point where all value is lost, it went about the matter backward. It measured the loss to determine whether there was a taking. As a matter of first principle, the Court should have determined first whether there was a taking — whether otherwise legitimate uses were prohibited by the regulation — and only then should it have measured the loss. That addresses the principle of the matter. It then remains simply to measure the loss in value and hence the compensation that is due. In Lucas, since all uses were effectively taken, full compensation was due. The place to start, in short, is with the first stick, not the last dollar. That is especially so since most regulatory takings take only some uses, thus reducing the value of the property by less than its full value.

More generally, the principled approach to takings requires that the Court have a basic understanding of the theory of the matter and a basic grasp of how to resolve conflicting claims about use in a way that respects the equal rights of all. That is hardly a daunting task, as the old common law judges demonstrated, although the application of those principles in particular cases can be complicated, to be sure. But in general, as already noted, the presumption is on the side of active use until some plaintiff demonstrates that such use takes the quiet enjoyment that is his by right (and the defendant’s right as well). At that point the burden shifts to the defendant to justify his use: absent some defense like the prior consent of the plaintiff, the defendant may have to cease his use — or, if his activity is worth it, offer to buy an easement or buy out the plaintiff. Thus, a principled approach respects equal rights of quiet enjoyment — and hence environmental protection. But it also enables active uses to go forward — though not at the expense of private or public rights. Users can be as active as they wish, provided they handle the “externalities” they create in a way that respects the rights of others.

What Congress Should Do

As already noted, the application of these principles is often fact dependent and so is best done by courts. But until our courts, and the Supreme Court in particular, craft a more principled and systematic approach to takings, Congress can assist by drawing at least the broad outlines of such an approach as a guide both for the courts and, more directly, for federal agencies.

In this last connection, however, Congress should recognize that the regulatory takings problem begins with regulation. Doubtless the Founders did not anticipate the modern regulatory state, so they did not specify that regulatory takings are takings too and thus are subject to the Just Compensation Clause. They did not envision our obsession with regulating every human activity and our insistence that such activities — residential, business, what have you — take place only after a grant of official permission. In some areas of business today, we have almost reached the point at which everything that is not permitted is prohibited. That reverses our Founding principle: everything that is not prohibited is permitted — that is, “freely allowed,” not allowed only after obtaining a government permit.

Homeowners, developers, farmers and ranchers, mining and timber companies, firms large and small, profit seeking and not for profit, all have horror stories about regulatory hurdles they confront when they want to do something, particularly with real property. Many of those regulations are legitimate, of course, especially if they aim, preemptively, at securing genuine rights. But many more are aimed at providing some citizens with benefits at the expense of other citizens. They take rights from some to benefit others. At the federal level, such transfers are not likely to find authorization under any enumerated power. But even if constitutionally authorized, they need to be undertaken in conformity with the Takings Clause. Some endangered species, to take a prominent modern example, may indeed be worth saving, even if the authority for doing so belongs to states, and even if the impetus comes from a relatively small group. We should not expect a few property owners to bear all the costs of that undertaking, however. If the public truly wants the habitat for such species left undisturbed, let it buy that habitat or, failing that, pay the costs to the relevant owners of leaving their property unused.

In general, then, Congress should review the many federal regulations affecting private property to determine which are and are not authorized by the Constitution. If not authorized, they should be rescinded, which would end quickly a large body of regulatory takings now in place. But if authorized under some constitutionally enumerated power of Congress, the costs now imposed on particular owners, for benefits conferred on the public generally, should be placed “on budget.” Critics of doing that are often heard to say that if those goods did go on budget, we couldn’t afford them. What they are really saying, of course, is that taxpayers would be unwilling to pay for all the things the critics want. Indeed, the great fear of those who oppose taking a principled approach to regulatory takings is that once the public has to pay for the benefits it now receives “free,” it will demand fewer of them. It should hardly surprise that when people have to pay for something they demand less of it.

It is sheer pretense, of course, to suppose that such benefits are now free, that they are not already being paid for. Isolated owners are paying for them, not the public. As a matter of simple justice, Congress needs to shift the burden to the public that is enjoying the benefits. Once we have an honest, public accounting, we will be in a better position to determine whether the benefits thus produced are worth the costs. Today, we have no idea about that because all the costs are hidden. When regulatory benefits are thus “free,” the demand for them, as we see, is all but infinite.

But in addition to eliminating, reducing, or correcting its own regulatory takings — in addition to getting its own house in order — Congress needs to enact general legislation on the subject of takings that might help to restore respect for property rights and reorient the nation toward its own first principles. To that end, Congress should do the following.

Enact Legislation That Specifies the Constitutional Rights of Property Owners under the Fifth Amendment’s Takings Clause

As already noted, legislation of the kind recommended here would be unnecessary if the courts were reading and applying the Takings Clause properly. Because they are not, it falls to Congress to step in. Still, there is a certain anomaly in asking Congress to do the job. Under our system, after all, the political branches and the states represent and pursue the interests of the people within the constraints established by the Constitution; and it falls to the courts, and the Supreme Court in particular, to ensure that those constraints are respected. To do that, the Court interprets and applies the Constitution as it decides cases brought before it — often against the political branches or a state when an owner seeks either to enjoin a government action on the ground that it violates his rights or to obtain compensation under the Takings Clause, or both. Thus, it is somewhat anomalous to ask or expect Congress to right wrongs that Congress itself may be perpetrating. Is not Congress, in carrying out the public’s will, simply doing its job?

Yes, that is part of its job. But members of Congress swear to uphold the Constitution, which requires them to exercise independent judgment about the meaning of its terms. And in that connection, they need to recognize that we do not live in anything like a pure democracy. The Constitution sets powerful and far‐​reaching restraints on the powers of all three branches of the federal government and, especially since ratification of the Civil War Amendments, on the states as well. Thus, the idea that Congress simply enacts whatever some transient majority of the population wants enacted, leaving it to the courts to determine the constitutionality of its acts, must be resisted. The oath of office is taken on behalf of the people, to be sure, but through and in conformity with the Constitution. Even if the courts fail to secure the liberties of the people, therefore, nothing in the Constitution prevents Congress from exercising the duties entailed by the oath of office. In fact, that oath requires Congress to step into the breach.

There is no guarantee, of course, that Congress will do a better job of interpreting the Constitution than the Court has done. In fact, given that Congress is one of the political branches and thus an “interested” party, it could very well do a worse job. That is why the Framers placed “the judicial Power” — entailing, presumably, the power ultimately to say what the law is — with the Court, the nonpolitical branch. But that is no reason for Congress to ignore its responsibility to make its judgment known, especially when the Court is clearly wrong, as it is here. Although nonpolitical in principle, the Court does not operate in a political vacuum — as it demonstrated in 1937, unfortunately, after Franklin Roosevelt’s notorious Court‐​packing threat. If the Court can be persuaded to undo the centerpiece of the Constitution, the doctrine of enumerated powers, as it did after that extraordinary and unconscionable political interference, one imagines it can be persuaded by Congress to restore property rights to their proper constitutional status.

Thus, to start, Congress should revisit and rescind or correct legislation that results in uncompensated regulatory takings — and enact no such legislation in future. In addition, however, Congress should enact a more general statute that specifies the constitutional rights of property owners under the Fifth Amendment’s Takings Clause, drawing on common law principles to do so.

Follow the Traditional Common Law in Defining “Private Property,” “Public Use,” and “Just Compensation”

As we saw above, property rights are not protected by the Fifth Amendment’s Takings Clause alone — that is, by positive constitutional law. Indeed, during the more than two years between the time the Constitution was ratified and took effect and the time the Bill of Rights was ratified, it was the common law that protected property rights against both private and public invasion. Thus, the Takings Clause simply made explicit, against the new federal government, the guarantees that were already recognized under the common law. (Constitutional protection was implicit during that time, of course, through the doctrine of enumerated powers, for no uncompensated takings were authorized under the new Constitution.) And with the ratification of the Civil War Amendments — the Fourteenth Amendment’s Privileges or Immunities Clause, in particular — the common law guarantees against the states were constitutionalized as well. Thus, because the Takings Clause takes its inspiration and meaning from the common law of property, it is there that we must look to understand its terms.

“Private property.” The first of those terms is “private property”: “nor shall private property be taken for public use without just compensation.” As every first‐​year law student learns, “private property” means far more than a parcel of real estate. Were that not the case, property law would indeed be an impoverished subject. Instead, the common law reveals the many significations of the concept “property” and the rich variety of arrangements that human imagination and enterprise have made of the basic idea of private ownership. As outlined above, however, those arrangements all come down to three basic ideas — acquisition, exclusive use, and disposal, the three basic rights we have in property, from which more specifically described rights may be derived.

With regard to regulatory takings, however, the crucial thing to notice is that, absent contractual arrangements to the contrary, the right to acquire and hold property entails the right to use it as well. As Madison wrote, people have “a property” in their rights, including in their rights of use. If the right to property did not entail rights of use, it would be an empty promise. People acquire property, after all, only because doing so enables them to use it, which is what gives it its value. Indeed, the fundamental complaint about uncompensated regulatory takings is that, by thus eliminating some or all of the uses owners may make of their property, government makes the title they retain that much less valuable — even worthless in extreme cases. Who would buy property that cannot be used?

The very concept of “property” therefore, entails and denotes all the legitimate uses that can be made of the underlying estate, giving it value. And the uses that are legitimate are those that can be exercised consistent with the rights of others, private and public alike, as defined by the traditional common law. As outlined above, however, the rights of others that limit an owner’s uses depend often on the facts. Thus, legislation can state only the principle of the matter, not its application in specific contexts. Still, the broad outlines should be made clear in any congressional enactment. In particular, the term “private property” should be defined to include all the uses that can be made of property consistent with the common law rights of others. The only grounds that justify restricting uses without compensation are (1) to protect the rights of others; and (2) to provide narrowly defined “public goods,” where owners receive public benefits equivalent to the losses incurred by regulation. By contrast, when a particular owner’s uses are restricted to provide the general public with goods more broadly defined, the resulting loss in value should be compensated.

“Public use.” Turning now from regulatory takings to the full use of eminent domain, here the government condemns the entire property and takes title in order to give the property a “public use” — a military base, for example, or a public school or highway. Unfortunately, governments today too often use eminent domain for much broader purposes, and courts have sanctioned such condemnations by reading “public use” as “public benefit.” That has led to private‐​public collusion against private rights as governments condemn private property for the benefit of other private users, either directly or by delegating their condemnation power to a quasi‐​public or even a private entity. Those are rank abuses of the eminent domain power, amounting often to implicit grants of private eminent domain and to invitations to public graft and corruption. Typically, when a large private entity wants to expand, it goes to the relevant public agency and asks that a nearby property be condemned and title transferred to it, arguing that the expansion will benefit the public through increased jobs, business, taxes, what have you. No longer needing to bargain with the owners of the target properties in an effort to buy them, the entity simply asks or even pays the agency to condemn the properties “for the public good.”

Because eminent domain is a “despotic power,” it should be used rarely and only for genuinely public uses. That means uses that are broadly enjoyed by the public, rather than by some narrow part of the public; and in the case of the federal government, it means a constitutionally authorized use. In defining “public use,” however, facts matter, and sometimes there is no bright line. Nevertheless, certain general considerations can be noted. To begin, if the compensation is just, then no problem arises when title is transferred to the public for a genuine public use such as those mentioned above. Nor is there a problem when title is transferred to a private party — for example, to avoid the holdout situation that might arise with laying cable or telephone lines — provided the subsequent use is open to all on a nondiscriminatory basis, often to be regulated in the public interest. In such cases, were eminent domain available only when the public kept the title, the public would be deprived of the relative efficiencies of private ownership.

Beyond such cases, however, the public use restriction on employing eminent domain looms ever larger. Thus, condemnation for “blight reduction,” often a ruse for transferring title to a private developer, sweeps too broadly. If the “blighted” property constitutes an actual nuisance, it can be condemned under the police power, after all, without transferring title to another owner. A close cousin to the blight reduction rationale is the “economic development” rationale used in the infamous Kelo case and often used for the erection of privately owned sports stadiums; this rationale should never be allowed, whatever the claimed public benefit. Private economic development nearly always generates spillover benefits for the public, but that is no justification for using eminent domain. since private markets provide ample opportunities for obtaining the property needed for development the right way, by voluntary agreement. To avoid abuse and the potential for corruption, therefore, Congress needs to define “public use” rigorously, with reference to titles, use, and control.

“Just compensation.” Finally, Congress should define “just compensation” with an eye to its function: it is a remedy for the wrong of taking someone’s property. That the Constitution implicitly authorizes that wrong does not change the character of the act, of course. As discussed above, the rationale for this despotic power, even when properly used, is problematic. Given that, the least the public can do is make the victim of its use whole. That too will be a fact‐​dependent determination, but Congress should at least make it clear that for compensation to be “just” and hence to make the owner whole, he must receive more than the “market value” of his property, the normal standard today. After all, the simple fact that the owner does not have his property on the market indicates that its value to him is greater than the market price. Moreover, his compensation should reflect the fact that his loss arises not by mere accident, as with torts, but from a deliberate decision by the public to force him to give up his property.

In the case of regulatory takings, however, it should be noted that not every such taking will require compensation for an owner. Minimal losses, for example, may be difficult to prove and not worth the effort. Moreover, some regulatory restrictions may actually enhance the value of property — say, if an entire neighborhood is declared “historic.” Finally, that portion of “just compensation” that concerns market value should reflect value before, and with no anticipation of, regulatory restrictions. Thus, in determining compensation, government should not benefit from reductions in value its regulations bring about. Given the modern penchant for regulation, that may not always be easy. But in general, given the nature of condemnation as a forced taking, any doubt should be resolved to the benefit of the owner forced to give up his property.

If Congress enacts general legislation that outlines the constitutional rights of property owners by following the common law in defining the terms of the Takings Clause, it will abolish, in effect, any real distinction between partial and full takings. Nevertheless, Congress should be explicit about what it is doing.

Treat Property Taken through Regulation the Same As Property Taken through Physical Seizure

The importance of enacting a unified and uniform takings law cannot be overstated. Today, we have one law for “full takings,” “physical seizures,” “condemnations” — call them what you will — and another for “partial takings,” “regulatory seizures,” or “condemnations of uses.” Yet there is overlap, too. Thus, as noted above, the Court has said that if regulations take all uses, compensation is due — perhaps because eliminating all uses comes to the same thing, in effect, as a “physical seizure,” whereas eliminating most but not all uses seems not to come to the same thing.

That appearance is deceptive, of course. In fact, the truth is much simpler — but only if we go about discovering it from first principles. If “property” signifies not only the underlying estate but all legitimate uses that by right can be made of it, then any government action that takes any one of those uses or rights is, by definition, a taking — requiring compensation for any financial losses the owner may suffer as a result. The issue is really no more complicated than that. There is no need to distinguish “full” and “partial” takings: every condemnation, whether full or partial, is a taking. Indeed, the use taken is taken “in full.” Imagine that the property were converted to dollars — 100 dollars, say. Would we say that if the government took all 100 dollars there was a taking, but if it took only 50 of the 100 dollars there was not a taking? Of course not. Yet that is what we say under the Court’s modern regulatory takings doctrine: as one justice put it, “takings law is full of these ‘all‐​or‐​nothing’ situations.”

That confusion must end. Through legislation specifying the rights of property owners, Congress needs to make it clear that compensation is required whenever government eliminates common law property rights and an owner suffers a financial loss as a result — whether the elimination results from regulation or from outright condemnation.

Provide a Single Forum in Which Property Owners May Seek Injunctive Relief and Just Compensation Promptly

The promise of the common law and the Constitution will be realized, however, only through procedures that enable aggrieved parties to press their complaints. Some of the greatest abuses today are taking place because owners are frustrated at every turn in their efforts to reach the merits of their claims. Accordingly, Congress should provide a single forum for owners to press their claims.

In its 1998 term, the Supreme Court decided a takings case that began 17 years earlier, in 1981, when owners applied to a local planning commission for permission to develop their land. After submitting numerous proposals over this period, each rejected, even though each satisfied the commission’s previous recommendation, the owners finally sued, at which point they faced the hurdles the courts put before them. Most owners, of course, cannot afford to go through such a long and expensive process, at the end of which the odds are still against them. But that process confronts property owners across the nation today as they seek to enjoy and then to vindicate their rights. If it were speech or voting or any number of other rights, the path to vindication would be smooth by comparison. But property rights have been relegated to a kind of second‐​class status.

The first problem is the modern permitting regime. We would not stand for speech or religion or most other rights to be enjoyed only by permit. Yet that is what we do with property rights, which places enormous, often arbitrary, power in the hands of federal, state, and local “planners.” Driven by political goals and considerations, planning commissions open the application forum not only to those whose rights might be at stake but to those with interests in the matter. Thus is the common law distinction between rights and interests blurred and eventually lost. Thus is the matter transformed from one of protecting rights to one of deciding whose “interests” should prevail. Thus are property rights effectively politicized. And that is the end of the matter for most owners because that is as far as they can afford to take it.

When an owner does take it further, however, he finds the courts are often no more inclined to hear his complaint than was the planning commission. Federal courts routinely abstain from hearing federal claims brought against state and local governments, requiring owners to litigate their claims in state courts before they can even set foot in a federal court on their federal claims. Moreover, the Supreme Court has held that an owner’s claim is not ripe for adjudication unless (1) he obtains a final, definitive agency decision regarding the application of the regulation in question, and (2) he exhausts all available state compensation remedies.

Needless to say, planners, disinclined to approve applications to begin with, treat those standards as invitations to stall until the “problem” goes away. Then, if an owner does spend years and extraordinary expense jumping through those hoops and he gets into federal court at last, he faces the res judicata restriction of the federal Full Faith and Credit Act: the court will say that the case has already been adjudicated by the state courts. Finally, if the claim is against the federal government, the owner faces the so‐​called Tucker Act Shuffle: he cannot get injunctive relief and compensation from the same court but must go to a district court for an injunction and to the Court of Federal Claims for compensation, each waiting upon the other to act.

The 105th and 106th Congresses tried to address those procedural hurdles through several measures, none of which passed both houses. Those or similar measures must be revived and enacted if the unconscionable way we treat owners — who are simply trying to vindicate their constitutional rights — is to be brought to an end. This is not an “intrusion” on state and local governments. Under the Fourteenth Amendment, properly understood and applied, those governments have no more right to violate the constitutional rights of citizens than the federal government has to intrude on the legitimate powers of state and local governments. Federalism is not a shield for local tyranny. It is a brake on tyranny, whatever its source.

Conclusion

The Founders would be appalled to see what we have done to property rights over the course of the 20th century. One would never know today that their status in the Bill of Rights was equal to that of any other right. The time has come to restore respect for these most basic of rights, the foundation of all of our rights. Indeed, despotic governments have long understood that if you control property, you control the media, the churches, the political process itself. We are not, of course, at that point yet. But if regulations that provide the public with benefits continue to grow, unchecked by the need to compensate those who bear the costs, we will gradually slide to that point — and in the process we will pay an increasingly heavy price for the uncertainty and inefficiency we create. The most important price, however, will be to our system of law and justice. Owners are asking simply that their government obey the law — both the common law and the law of the Constitution. Reduced to its essence, they are saying simply this: stop stealing our property; if you must take it, do it the right way — pay for it. That hardly seems too much to ask.


PROPERTY RIGHTS, HOUSING, AND THE AMERICAN CONSTITUTION: THE SOCIAL BENEFITS OF PROPERTY RIGHTS PROTECTION, GOVERNMENT INTERVENTIONS, AND THE EUROPEAN COURT ON HUMAN RIGHTS’ HUTTENCZAPSKA DECISION*

  1. INTRODUCTION

The U.S. Constitution provides protection for private property owners when the government intervenes through official regulations restricting an owner’s rights in land or housing. When the government acts through regulatory intervention that restricts the private use of land and housing, the property rights of affected owners are protected under the Fourteenth Amendment and the Takings Clause of the Fifth Amendment of the U.S. Constitution. These provisions apply regardless of the personal status or income of the affected private owner.

Government intervention by police power regulation of land and housing in the United States is constrained by judicial interpretation of the constitutional protection afforded private owners of property. The Fifth Amendment of the U.S. Constitution provides that “[n]o person shall be . . . deprived of life, liberty or property without due process of law; nor shall private property be taken for public use, without just compensation.” The next section of this Article discusses the legal protection afforded private housing and landowners by the U.S. Constitution’s Takings Clause and the court decisions interpreting this provision.

Court on Human Rights’ Hutten-Czapska decision, which involved rent controls imposed on apartment housing in Poland.6 The European Court ruled that rent controls violated the right to property in the European Convention on Human Rights. Over time, rent controls denied a housing owner any economically viable use of his property, which amounted to a disproportionate and impermissible benefit extraction of the owner’s interest in the property. The rationale of the Court’s decision closely parallels the U.S. Supreme Court’s analysis of the protection of private property under the U.S. Constitution.

The constitutional protection of private property rights in the United States is thought to promote economic prosperity and efficiency, as well as basic fairness and individual liberty.

https://mckinneylaw.iu.edu/iiclr/pdf/vol21p25.pdf


The General Nature of Property Rights

LEARNING OBJECTIVES

  1. Understand the elastic and evolving boundaries of what the law recognizes as property that can be bought or sold on the market.
  2. Distinguish real property from personal property.

Definition of Property

Property, which seems like a commonsense concept, is difficult to define in an intelligible way; philosophers have been striving to define it for the past 2,500 years. To say that “property is what we own” is to beg the question—that is, to substitute a synonym for the word we are trying to define. Blackstone’s famous definition is somewhat wordy:

“The right of property is that sole and despotic dominion which one man claims and exercises over the external things of the world, in total exclusion of the right of any other individual in the universe. It consists in the free use, enjoyment, and disposal of all a person’s acquisitions, without any control or diminution save only by the laws of the land.” A more concise definition, but perhaps too broad, comes from the Restatement of the Law of Property, which defines property as the “legal relationship between persons with respect to a thing.”

The Restatement’s definition makes an important point: property is a legal relationship, the power of one person to use objects in ways that affect others, to exclude others from the property, and to acquire and transfer property. Still, this definition does not contain a specific list of those nonhuman “objects” that could be in such a relationship. We all know that we can own personal objects like iPods and DVDs, and even more complex objects like homes and minerals under the ground. Property also embraces objects whose worth is representative or symbolic: ownership of stock in a corporation is valued not for the piece of paper called a stock certificate but for dividends, the power to vote for directors, and the right to sell the stock on the open market. Wholly intangible things or objects like copyrights and patents and bank accounts are capable of being owned as property. But the list of things that can be property is not fixed, for our concept of property continues to evolve. Collateralized debt obligations (CDOs) and structured investment vehicles (SIVs), prime players in the subprime mortgage crisis, were not on anyone’s list of possible property even fifteen years ago.

The Economist’s View

Property is not just a legal concept, of course, and different disciplines express different philosophies about the purpose of property and the nature of property rights. To the jurist, property rights should be protected because it is just to do so. To an economist, the legal protection of property rights functions to create incentives to use resources efficiently. For a truly efficient system of property rights, some economists would require universality (everything is owned), exclusivity (the owners of each thing may exclude all others from using it), and transferability (owners may exchange their property). Together, these aspects of property would lead, under an appropriate economic model, to efficient production and distribution of goods. But the law of property does not entirely conform to the economic conception of the ownership of productive property by private parties; there remain many kinds of property that are not privately owned and some parts of the earth that are considered part of “the commons.” For example, large areas of the earth’s oceans are not “owned” by any one person or nation-state, and certain land areas (e.g., Yellowstone National Park) are not in private hands.

Classification of Property

Property can be classified in various ways, including tangible versus intangible, private versus public, and personal versus real. Tangible property is that which physically exists, like a building, a popsicle stand, a hair dryer, or a steamroller. Intangible property is something without physical reality that entitles the owner to certain benefits; stocks, bonds, and intellectual property would be common examples. Public property is that which is owned by any branch of government; private property is that which is owned by anyone else, including a corporation.

Perhaps the most important distinction is between real and personal property. Essentially, real property is immovable; personal property is movable. At common law, personal property has been referred to as “chattels.” When chattels become affixed to real property in a certain manner, they are called fixtures and are treated as real property. (For example, a bathroom cabinet purchased at Home Depot and screwed into the bathroom wall may be converted to part of the real property when it is affixed.) Fixtures are discussed in Section 9.3 “Fixtures” of this chapter.

Importance of the Distinction between Real and Personal Property

In our legal system, the distinction between real and personal property is significant in several ways. For example, the sale of personal property, but not real property, is governed by Article 2 of the Uniform Commercial Code (UCC). Real estate transactions, by contrast, are governed by the general law of contracts. Suppose goods are exchanged for realty. Section 2-304 of the UCC says that the transfer of the goods and the seller’s obligations with reference to them are subject to Article 2, but not the transfer of the interests in realty nor the transferor’s obligations in connection with them.

The form of transfer depends on whether the property is real or personal. Real property is normally transferred by a deed, which must meet formal requirements dictated by state law. By contrast, transfer of personal property often can take place without any documents at all.

Another difference can be found in the law that governs the transfer of property on death. A person’s heirs depend on the law of the state for distribution of his property if he dies intestate—that is, without a will. Who the heirs are and what their share of the property will be may depend on whether the property is real or personal. For example, widows may be entitled to a different percentage of real property than personal property when their husbands die intestate.

Tax laws also differ in their approach to real and personal property. In particular, the rules of valuation, depreciation, and enforcement depend on the character of the property. Thus real property depreciates more slowly than personal property, and real property owners generally have a longer time than personal property owners to make good unpaid taxes before the state seizes the property.

KEY TAKEAWAY

Property is difficult to define conclusively, and there are many different classifications of property. There can be public property as well as private property, tangible property as well as intangible property, and, most importantly, real property as well as personal property. These are important distinctions, with many legal consequences. source


What Are Property Rights, and Why Do They Matter?

What Are Property Rights?

Property rights define the theoretical and legal ownership of resources and how they can be used. These resources can be both tangible or intangible and can be owned by individuals, businesses, and governments.

In many countries, including the United States, individuals generally exercise private property rights or the rights of private persons to accumulate, hold, delegate, rent, or sell their property.

In economics, property rights form the basis for all market exchange, and the allocation of property rights in a society affects the efficiency of resource use.

Acquiring Rights to a Property

Individuals in a private property rights regime acquire and transfer in mutually agreed-upon transfers, or else through homesteading. Mutual transfers include rents, sales, voluntary sharing, inheritances, gambling, and charity.

Homesteading is the unique case; an individual may acquire a previously unowned resource by mixing his labor with the resource over a period of time. Examples of homesteading acts include plowing a field, carving stone, and domesticating a wild animal.

In areas where property rights don’t exist, the ownership and use of resources are allocated by force, normally by the government. That means these resources are allocated by political ends rather than economic ones. Such governments determine who may interact with, can be excluded from, or may benefit from the use of the property.

In the case of open-access property, no one owns or manages it such as waterways.

Private Property Rights

Private property rights are one of the pillars of capitalist economies, as well as many legal systems, and moral philosophies. Within a private property rights regime, individuals need the ability to exclude others from the uses and benefits of their property.

All privately owned resources are rivalrous, meaning only a single user may possess the title and legal claim to the property. Private property owners also have the exclusive right to use and benefit from the services or products. Private property owners may exchange the resource on a voluntary basis.

Special Considerations

Private Property Rights and Market Prices

Every market price in a voluntary, capitalist society originates through transfers of private property. Each transaction takes place between one property owner and someone interested in acquiring the property. The value at which the property exchanges depends on how valuable it is to each party.

KEY TAKEAWAYS

  • Property rights define the theoretical and legal ownership of resources and how they can be used.
  • Property can be owned by individuals, businesses, and governments.
  • These rights define the benefits associated with ownership of the property.

Suppose an investor purchases $1,000 in shares of stock in Apple. In this case, Apple values owning the $1,000 more than the stock. The investor has the opposite preference, and values ownership of Apple stock more than $1,000.

source


The Framers’ Understanding of “Property”

The Framers of the American Constitution venerated the right to property, both for its own sake and as a means of guaranteeing personal independence. Property was one with liberty and was a guarantee of people’s legal rights. The Supreme Court of the United States treats property as deserving far less protection than life or liberty currently receives, but the Framers believed that neither liberty nor property could exist without the other. The Supreme Court has forgotten the status that property had for the Framers. Reminding the Court of the Framers’ understanding can help to lift property out of the basement to which it has been relegated by contemporary American constitutional law.

KEY TAKEAWAYS

  • The Framers of the U.S. Constitution put a high value on an individual’s right to own property.
  • They believed that the right to property was both a guarantee of people’s legal rights and essential to liberty.
  • The U.S. Supreme Court has failed to give the right to property the same legal weight in modern times and needs to be reminded of its constitutional significance.

The Framers’ understanding of the concept of “property” is an evergreen subject, but it is of particular importance now. For the past few years, some Members of Congress and presidential candidates have lectured us about the alleged virtues of “socialism” or “democratic socialism,”1

The latter is how U.S. Senator Bernie Sanders (I–VT) and U.S. Representative Alexandria Ocasio-Cortez (D–NY) describe their philosophy. See, e.g., That Berning Feeling: What Does Bernie Sanders’s Political Revolution Hope to Accomplish?, Economist, Feb. 29, 2020, https://www.economist.com/united-states/2020/02/29/what-does-bernie-sanderss-political-revolution-hope-to-accomplish; The Bernie Manifesto: How Much of a Socialist Is Sanders?, Economist, Feb. 1, 2016, https://www.economist.com/democracy-in-america/2016/02/01/how-much-of-a-socialist-is-sanders; Shane Croucher, Alexandria Ocasio-Cortez Explains Socialism During Instagram Live Stream: “It Does Not Mean Government Owns Everything,” Newsweek, June 18, 2019, https://www.newsweek.com/ocasio-cortez-instagram-live-explains-socialism-aoc-1444534.

Representative Ocasio-Cortez used that term during an interview to describe the pre-COVID status of the American economic system. See Briahna Gray, Alexandria Ocasio Cortez and the New Left, The Intercept, Mar. 9, 2019, https://theintercept.com/2019/03/09/alexandria-ocasio-cortez-aoc-sxsw/: “I’ll never forget this one older woman who came to me and said, ‘You know, I always voted Democrat because growing up, my dad told me that Democrats were the people that fight for the working man.’ And we stopped. And the working man and woman and people is the majority of this country. So what I think we saw, was now both parties, frankly, abdicated their responsibility and it was just no one was fighting for working people who were struggling…. So when someone is talking about our core, it’s like, ‘Oh this is radical.’ But this isn’t radical, this is what we’ve always been. It’s just that now we’ve strayed so far away from what has really made us powerful and just and good and equitable and productive. And so, I think all of these things sound radical compared to where we are. But where we are is not a good thing. This idea of 10 percent better from garbage shouldn’t be what we settle for. It feels like moderate is not a stance, it’s just an attitude toward life of like, ‘meh.’”

The intent of this Legal Memorandum is to add to the ongoing discussion by examining how the Framers of our Constitution viewed the concept of property and then assessing where we stand today. Specifically, we need to answer three questions:

  • How did the Framers view private property?
  • Where are we today?
  • Since we are not in the position that the Framers intended, how do we remedy that problem?

How Did the Framers View Private Property?

How did the colonists view private property?3

See Paul J. Larkin, Jr., The Original Understanding of “Property” in the Constitution, 100 Marq. L. Rev. 1, 4–7, 21–55 (2016).

In the 18th century, most Americans owned and lived off their own land.4

See,e.g., James W. Ely, Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights 16 (3d ed. 2008) (“By 1750 a largely middle-class society had emerged in colonial North America. Most of the colonists owned land, and 80 percent of the population derived their living from agriculture.”); Forrest McDonald, Novus Ordo Seclorum: The Intellectual Origins of the Constitution 93 (1985) (the vast majority of Americans held “a comfortable amount of land”); Edmund S. Morgan, The Birth of the Republic, 1763–89, at 8 (4th ed. 2013) (“This widespread ownership of property is perhaps the most important single fact about the Americans of the Revolutionary period.”); Samuel Eliot Morison, The Oxford History of the American People 236 (1965); Edwin J. Perkins, The Economy of Colonial America 57 (2d ed. 1988) (“The size of the typical colonial farm was generous, often above 100 acres, and families consistently grew and harvested surpluses.”); Alan Taylor, American Colonies 311 (2001) (“Most colonists lived on farm households that produced most of their own food, fuel, and homespun cloth.”).

Agriculture was the principal industry. In fact, the opportunity to acquire land and live off of it was the main reason why colonists left England as well as other nations to come to the United States. The land here was ample, and it was available in fee simple, the type of land entitlement that gave the colonists complete and full ownership of the property, unlike what they could have had in England where all the fee simple title was in the crown and they would at best live at the sufferance of the king and, later, parliament. The opportunity to come and live off the land and in vast amounts was a tremendous attraction and a great value to the people who came here.

The best-known forms of property were, not surprisingly, personalty and realty, as well as incorporeal or future interests such as easements, remainders, and reversions.5

See, e.g., Wynehamer v. People, 13 N.Y. 378, 396 (1856) (“Material objects, therefore, are property in the true sense, because they are impressed by the laws and usages of society with certain qualities, among which are, fundamentally, the right of the occupant or owner to use and enjoy them exclusively, and his absolute power to sell and dispose of them; and as property consists in the artificial impression of these qualities upon material things, so, whatever removes the impression destroys the notion of property, although the things themselves may remain physically untouched.”) (Opinion of Comstock, J.); 2 William Blackstone, Commentaries *20–43; Gregory S. Alexander, Time and Property in the American Republican Legal Culture, 66 N.Y.U. L. Rev. 273, 333–34 (1991); Eric T. Freyfogle, Book Review, Land Use and the Study of Early American History, 94 Yale L.J. 717, 718–29 (1985) (describing the transition in 16th to 17th century New England from an almost communal understanding of property to an individual-ownership, commodity theory).

But it was not limited to those sorts of traditional forms that students learn about in the early part of a course on property law in their first year of law school. Some colonists worked as self-employed artisans or shop owners, writers or inventors, and merchants or financiers in a thriving colonial economy.6

See, e.g., Stuart Banner, American Property: A History of How, Why, and What We Own 24–25 (2011) (“Patents and copyrights were established features of the English legal system long before the independence of the United States…. After the Revolution all the states but Delaware enacted general copyright laws protecting all applicants who met certain minimal criteria…. Patents remained discretionary a bit longer…. [S]tate legislatures granted or denied patents on a case-by-case basis, to one applicant at a time.”); William B. Scott, In Pursuit of Happiness: American Conceptions of Property from the Seventeenth to the Twentieth Century 14 (1977) (“[I]n the large seaports most men ran their own shops and owned their own homes.”).

The shortage of hard currency in the colonies, in fact, forced merchants to rely on commercial paper in order to engage in trade. The result was that early Americans understood the value of items such as book credit, promissory notes, bills of exchange, mortgages, securities, loan certificates, maritime insurance, monetized public debt, and the Lex Moratoria (or law merchant).7

See, e.g., Stuart Banner, Anglo–American Securities Regulation: Cultural and Political Roots, 1690–1860 (2002); Lawrence M. Friedman, A History of American Law 41 (3d ed. 2005).

Accordingly, the Founders’ generation understood that property included the right to possess, use, enjoy, and dispose of land, commodities, currency, or their equivalents.8

Seegenerally Friedman, supra note 7, at 42, 171.

Our Founding generation also believed that “property” embraced goods earned by the sweat of one’s brow. The term included what “men have in their persons,” which meant the right to the fruits of one’s labors.9

See John Locke, The Second Treatise of Government § 27, at 15 (3d J.W. Gough ed. 1966) (1689) (“[E]very man has a property in his own person; this nobody has any right to but himself. The labour of his body and the work of his hands we may say are properly his. Whatsoever, then, he removes out of the state that nature hath provided and left it in, he hath mixed his labor with, and joined to it something that is his own, and thereby makes it his property.”); see Paschal Larkin, Property in the Eighteenth Century 1–2 (1930).

The prominent English jurist Sir William Blackstone, whose work was well known by all the Framers of our Constitution,10

See, e.g., Alden v. Maine, 527 U.S.706, 715 (1999).

concluded, for example, that “[e]very man might use what trade he pleased.”11

William Blackstone, Commentaries on the Laws of England *3, *428; see also John Lilburne et al., An Agreement of the Free People of England art. XVIII (1649) (“That it shall not be in their power to continue to make any Laws to abridge or hinder any person or persons, from trading or merchandising into any place beyond the Seas, where any of this Nation are free to Trade.”).

The English philosopher John Locke, whose works were equally well known and influential, argued that every man had a property right in whatever he acquired or produced through his own labor.12

See supra note 9.

Adam Smith, as well as Judge and Lord Edward Coke, believed that the right to pursue a lawful occupation was an essential element of the right to property,13

See Adam Smith, An Inquiry into the Nature and Causes of the Wealth of Nations bk. 1, ch. 10, pt. 2 (Modern Library ed. 1937) (1776) (“The patrimony of a…man lies in the strength and dexterity of his hands; and to hinder him from employing this strength and dexterity of his hands; and to hinder him from employing this strength and dexterity in what manner he thinks proper without injury to his neighbour is a plain violation of [his] most sacred property.”); see also 2 Cato’s Letters: or, Essays on Liberty, Civil and Religious, and Other Important Subjects 245 (1995) (1720) [hereinafter Cato’s Letters] (“By Liberty, I understand the Power which every Man has over his own Actions, and his Right to enjoy the Fruit of his Labour, Art, and Industry, as far as by it he hurts not the Society, or any Member of it, by taking from any Member, or by hindering him from enjoying what he himself enjoys. The Fruits of a Man’s honest Industry are the just Rewards of it, ascertained to him by natural and eternal Equity, as is his Title to use them in the manner which he thinks fit: And thus, with the above Limitations, every Man is sole Lord and Arbiter of his own private Actions and Property.”); Lilburne et al., supra note 11, at art. XVIII (“That it shall not be in their power to continue to make any Laws to abridge or hinder any person or persons, from trading or merchandising into any place beyond the Seas, where any of this Nation are free to trade.”).

which could explain why English law disfavored monopolies.14

See Allen v. Tooley, 80 Eng. Rep. 1055 (K.B. 1614); Darcy v. Allen, 77 Eng. Rep. 1260 (The Case of Monopolies), (K.B. 1603); see also, e.g., Butchers’ Union Slaughter-House & Live-Stock Landing Co. v. Crescent City Live-Stock Landing & Slaughter-House Co., 111 U.S. 746, 761 (1884) (Bradley, J., concurring) (“I hold it to be an incontrovertible proposition of both English and American public law, that all mere monopolies are odious and against common right.”) (emphasis in original); John Fortescue, De Laudibus Legum Angliae 143–45 (Francis Gregor trans., Robert & Clarke Co. 1874) (1545); 4 Edward Holdsworth, A History of English Law 344 & n.6 (3d ed. 1945); Steven G. Calabresi & Larissa C. Leibowitz, Monopolies and the Constitution: A History of Crony Capitalism, 36 Harv. J. L. & Pub. Pol’y 983, 989–1008, 1055 (2013); see Larkin, supra note 3, at 21 (“In language foreshadowing the Fifth Amendment’s Due Process Clause, Coke emphasized that a man’s trade is his life, and ‘therefore the monopolist that taketh away a man’s trade, taketh away his life.’ As Coke put it, ‘Generally all monopolies are against this great Charter’—viz., Magna Carta—‘because they are against the liberty and freedome of the Subject, and against the Law of the Land.’”) (quoting Frederick Mark Gedicks, An Originalist Defense of Substantive Due Process: Magna Carta, Higher-Law Constitutionalism, and the Fifth Amendment, 58 Emory L.J. 585, 608 (2009), which in turn quoted Edward Coke, The Third Part of the Institutes of the Laws of England: Concerning High Treason, and Other Pleas of the Crown and Criminal Causes 181 (Lawbook Exchange 2002) (1644))).

What is more, the Founders believed in natural law and saw it, as well as the unwritten customs of the people, as the source of law’s legitimacy and a feature of “the shared heritage of the English” people.15

Larkin, supra note 3, at 22.

The result was that, as one contemporary scholar described it, “Liberty itself was property possessed.”16

John Philip Reid, The Concept of Liberty in the Age of the American Revolution 72 (1988) (footnote omitted).

Knowledgeable about “William Blackstone’s postulate” that every Englishman had the absolute right to “security, liberty, and property,”17

See 1 Blackstone, supra note 11, at *9, *11, *124–26, *134.

which they considered part of their heritage as Englishmen, the Framers’ generation believed that the purpose of the law was to protect those guarantees,18

See, e.g., Bernard Bailyn, Faces of Revolution: Personalities and Themes in the Struggle for American Independence 69 (1990); Pauline Maier, American Scripture: Making the Declaration of Independence 29 (1990); Jack N. Rakove, Original Meanings: Politics and Ideas in the Making of the Constitution 3 (1996); Larkin, supra note 3, at 23–24.

which “included the ability to acquire and own property.”19

Larkin, supra note 3, at 24.

The Founders’ generation saw the protection of property as vital to civil society.20

See,e.g., Ely, supra note 4, at 10–27; Richard A. Epstein, Takings: Private Property and the Power of Eminent Domain 17 (1985) (“The classical liberal tradition of the founding generation prized the protection of liberty and private property under a system of limited government.”); Arthur Lee, An Appeal to the Justice and Interests of the People of Great Britain, in the Present Disputes with America 29 (1775) (“The right of property is the guardian of every other right, and to deprive a people of this, is in fact to deprive them of their liberty.”); Scott, supra note 6, at 2 (“In time Americans came to believe that all men should own land, and that widespread ownership of land was characteristic of a virtuous society.”); see generally David Schultz, Political Theory and Legal History: Conflicting Depictions of Property in the American Political Founding, 37 Am. J. Legal. Hist. 464, 475–77 (1993) (“Property was clearly an important concept in America and was well discussed by many individuals. James Madison described property broadly to include even one’s opinions and beliefs. He argued that property as well as personal rights are an ‘essential object of the laws’ necessary to the promotion of free government. Alexander Hamilton stated that the preservation of private property was essential to liberty and republican government. Thomas Jefferson depicted property as a ‘natural right’ of mankind and linked ownership to public virtue and republican government. John Adams described a proper balance of property in society as important to maintaining republican government and connected property ownership to moral worth. Thomas Paine felt that the state was instituted to protect the natural right of property, and Daniel Webster would later link property to virtue, freedom, and power. Numerous Anti-Federalists described a society as free when it protected property rights or equalized property distributions. For example, Samuel Bryan, in his ‘Letters of Centinel,’ argued that a ‘republican, or free government, can only exist where the body of the people are virtuous, and where property is pretty equally divided.’ Hence, many colonial American readings of Locke’s theory of property also noted the connection between personal political liberty and property ownership, and agreed with Locke that property rights deserved a somewhat absolute protection against government regulation. Additionally, others followed Harrington and articulated the importance of property divisions in preserving state republican governments. Still others cited Blackstone to defend more absolutist conceptions of property. Clearly there were many early Americans who described property as the end of society, as absolute, as linked to other important political rights, or as natural. Conversely, threats to property were considered destructive to freedom and republican government.”) (footnotes omitted).

For example, the Virginia Declaration of Rights, written by George Mason a month before Thomas Jefferson penned the Declaration of Independence, made that point quite clearly. It provided that:

All men have certain inherent natural rights of which they cannot, by any compact, deprive or divest their posterity, among which are the enjoyment of life and liberty, with the means of acquiring and possessing property, and pursuing and obtaining happiness and safety.

That belief (among others) explains why the American Revolution was not comparable to the French or Russian Revolutions, ones in which “cake-eaters”21

Remember Marie Antoinette’s mistaken belief about the cuisine available to most people in France.

or the “proletariat” sought to “jettison a privileged, class-based system in favor of a new legal, social, and economic order.”22

Larkin, supra note 3, at 23; see Bailyn, supra note 18, at 81 (“The American Revolution was not the result of intolerable social or economic conditions. The colonies were prosperous communities whose economic condition, recovering from the dislocations of the Seven Years’ War, improved during the years when the controversy with England rose in intensity. Nor was the Revolution deliberately undertaken to recast the social order, to destroy the last remnants of the ancient régime such as they were in America.”); Friedman, supra note 7, at 6 (“[U]nlike the Russian Revolution, or the French Revolution, there was no total social upheaval, at the end of the war.”); Michael P. Zuckert, Launching Liberalism, On Lockean Political Philosophy 288–89 (2002).

Nor was the Revolution “a capitalist junta” that “sought to adopt ‘rule by a leisured patriciate.’”23

Larkin, supra note 3, at 23 (quoting Bailyn, supra note 18, at xii).

Finally, in contrast to the 1989 toppling of the Berlin Wall, “the Revolution did not signify the end of a long period in which the government had denied the public any opportunity to enjoy liberty and private property.”24

Id. at 23.

On the contrary, “the Colonists had enjoyed both under English law and believed that English constitutional government was the freest in the world.”25

Id. (citing Willi Paul Adams, The First American Constitutions: Republican Ideology and the Making of the State Constitutions 150 (Expanded ed., Rita & Robert Kimber trans., Rowman & Littlefield 2001) (1973)) [hereafter Willi Paul Adams].

The American Revolution was “an ideological, constitutional, political struggle and not primarily a controversy between social groups undertaken to force changes in the organization of the society or the economy.”26

Id. at 24 (quoting Bernard Bailyn, The Ideological Origins of the American Revolution 67-68 (enlarged ed. 1992

As the author has written elsewhere:

There was no economic class warfare in the Colonies. Land was plentiful, and labor, especially in the form of skilled artisans, was scarce, allowing every free adult male an opportunity to succeed financially. Anyone who wanted his own land could find it in the western portions of the Colonies or in the unsettled territories across the Appalachian Mountains. Plus, everyone, whether landowners, merchants, or artisans, recognized the economic and social value, including independence, that property ownership bestowed. Indeed, property was “the one great unifying value” existing throughout the colonies. Finally, the leaders of the Revolution did not impose their own radical economic theories on an unwilling populace. “American political leaders did not develop new ideas about private property. They merely demanded that the concept of property long since canonized by the English Whigs also apply in the colonies.”27

Id. at 25 (footnotes omitted).

Consider what James Madison, the author of our Constitution, thought about property. To him, the term included not only realty and personalty, but also anything of value, including a person’s legal rights.28

See Laura S. Underkuffler, On Property: An Essay, 100 Yale L.J. 127, 136 (1990).

“Conscience is the most sacred of all property,” he wrote, “with other property depending in part on positive law, the exercise of that being a natural and inalienable right.”29

James Madison: Writings 516 (1999) (quoting National Gazette, Mar. 29, 1792).

“That is not a just government, nor is property secure under it,” Madison explained, “where the property which a man has in his personal safety and personal liberty is violated by arbitrary seizures of one class of [persons] for the services of the rest.”30

Id.

Madison also went on to criticize a government that imposed “arbitrary restrictions, exemptions, and monopolies to deny to part of its citizens the free use of their faculties and free choice of their occupations, which not only constitute property in the general sense of the word, but are the means of acquiring property.”31

Id.

Madison explained in detail his view that property was, in his words, a human right. He made that point in a 1792 essay published by the National Gazette:

The term property in its particular application means that dominion which one man claims and exercises over the external things of the world, in the exclusion of every other individual. In its larger and more just meaning, it embraces everything to which a man may attach a value and has a right and which leaves everyone else like advantage. In the former sense, a man’s land or merchandise or money is called his property. In the latter sense, a man has property in his opinions and free communication of them. He has a property of particular value in his religious opinions, and in the profession and practice dictated by them. He has a property very dear to him in the safety and liberty of his person. He has an equal property in the free use of his faculties and free choice of the objects on which to employ them. In a word, as a man is said to have a right to his property, he may be equally said to have a property in his rights.32

Madison, supra note 29, at 515–17 (quoting National Gazette, Mar. 29, 1792); see James A. Dorn, Judicial Protection of Economic Liberties, in Economic Liberties and the Judiciary, 3–4 (James A. Dorn & Henry G. Manne eds., 1987); see also, e.g., Willi Paul Adams, supra note 25, at 192 (the Founding fathers saw “the acquisition of property” and “the pursuit of happiness” as synonyms); id. at 188 (“The twin theme of threatened liberty and property therefore recurred in hundreds of public statements made between 1764 and 1776.”); id. at 194 (“The first state constitutions thus clearly emphasized the individual’s claim to legal protection of his property. The self-imposed limits on sovereign power that the constitutions articulated derived from a desire to guarantee not only freedom of expression and of religious exercise but also the freedom to acquire property.”); Samuel Johnson, A Dictionary of the English Language (1768) (“property” means, inter alia, “3. Right of possession… 5. Thing possessed.”); Leonard W. Levy, Origins of the Bill of Rights 252 (1999) (describing Madison’s belief that property is “a human right”); Schultz, supra note 20, at 475 (“James Madison described property broadly to include even one’s opinions and beliefs.”).

 

The Founders also believed that liberty and property were “inextricably related” and equally valuable.33

Levy, supra note 32, at 251; see also Steven M. Dworetz, The Unvarnished Doctrine: Locke, Liberalism, and the American Revolution 74–75 (1990) (“In Revolutionary political thought the term ‘property’ denoted a relationship between an individual and some object, not the object itself. That is, X becomes my property—or, I have property in X—only if I alone control the disposal of X. This control over the disposal of X can be called my liberty (or right or power) to dispose of X as I please, and in this sense liberty itself is involved in the definition of property. The right of disposal constitutes the defining condition of property and, indeed, the ‘substance of liberty.’”). See generally Larkin, supra note 3, at 36–37.

Property was “the guardian of every other right,” and protection of property was “critical to the enjoyment of individual liberty”34

Ely, supra note 4, at 26; Lee, supra note 20, at 29.

and “central to the new American social and political order.”35

Willi Paul Adams, supra note 25, at 215 n.103; see also, e.g., Bernard H. Siegan, Property and Freedom: The Constitution, the Courts, and Land-use Regulation 15 (1997); Andrew S. Gold, Regulatory Takings and Original Intent: The Direct, Physical Takings Thesis “Goes Too Far”, 49 Am. U. L. Rev. 181, 195–98 (1999); Schultz, supra note 20, at 475–78 (stating that Madison, John Adams, Jefferson, Alexander Hamilton, and Gouverneur Morris held that view).

Professor Gordon Wood, perhaps the dean of early American legal history, has put it this way:

Eighteenth-century Whiggism had made no rigid distinction between people and property. Property had been defined not simply as material possessions but, following Locke, as the attributes of a man’s personality that gave him a political character: “that estate or substance which a man has and possesses, exclusive of the right and power of all the world besides.” It had been thought of generally in political terms, as an individual dominion—a dominion possessed by all politically significant men, the “people” of society. Property was not set in opposition to individual rights but was of a piece with them.36

Gordon S. Wood, The Creation of the American Republic, 1776–1787, at 219 (1998).

 

As one scholar has noted, “Anyone who studies the revolution must notice at once the attachment of all articulate Americans to property. Liberty and property was their cry, not liberty and democracy.”37

Edmund S. Morgan, The Challenge of the American Revolution 54–55 (1976); see also, e.g., Ely, supra note 4, at 25 (“Significantly, the cry ‘Liberty and Property’ became the motto of the revolutionary movement.”); Levy, supra note 32, at 252.

That point was heard throughout the colonies before the Revolution. The twin theme of threatened liberty and property therefore recurred in hundreds of political statements made between 1764 and 1776, and the cry “liberty and property” became the motto of the revolutionary movement. In the minds of the Framers, property rights were indispensable to the success of the new enterprise, given its close association with liberty, and liberty supplied the means to collect property to obtain the rights, and the property in those rights, and the rights to property that men enjoyed.

John Adams, for example, believed that “[p]roperty must be secured or liberty cannot exist.”38

6 John Adams, The Works of John Adams 280 (Charles Francis Adams ed., 1851); id. at 8–9 (“Property is surely a right of mankind as really as liberty…. The moment the idea is admitted into society, that property is not as sacred as the laws of God, and that there is not a force of law and public justice to protect it, anarchy and tyranny commence.”); see Willi Paul Adams, supra note 25, at 154 (referring to the Massachusetts Constitution of 1780: “[i]n the clause that guaranteed an independent judiciary Adams used the classical Lockean triad in the singular version of ‘life, liberty, property.’”).

Laws that threaten the security of property were, for him, subversive of the end for which men prefer society to the state of nature and so subversive of society itself. James Madison, as noted, was a particularly vocal advocate for the value of private property. Writing in The Federalist, Madison stated, “Government is instituted no less for the protection of property than the persons of individuals.”39

The Federalist No. 54, at 336 (James Madison) (Clinton Rossiter ed., 1961); see id. No. 10, at 73 (James Madison) (“The diversity in the faculties of men, from which the rights of property originate, is not less an insuperable obstacle to a uniformity of interests. The protection of these faculties is the first object of government.”).

He reiterated that point at the Constitutional Convention of 1787, saying, “The primary objects of civil society are the security of property and public safety.”40

1 Records of the Federal Convention of 1787, at 147 (James Madison) (Max Farrand ed., 1966) [hereinafter 1 Farrand]; see also Madison, supra note 29, at 515 (“Government is instituted to protect property of every sort; as well that which lies in the various rights of individuals, as that which the term particularly expresses. This being the end of government, that alone is a just government, which impartially secures to every man, whatever is his own.”) (quoting National Gazette, Mar. 29, 1792) (emphasis in original).

Madison did not stand alone. John Adams and Alexander Hamilton agreed with him.41

See supra note 35; 1 Farrand, supra note 40, at 302 (Alexander Hamilton) (“[The] one great obj[ect] of Gov[ernment] is personal protection and the security of Property.”).

Gouverneur Morris, a member of the Convention of 1787, agreed with Madison, Hamilton, and Adams. As he remarked in Philadelphia, “Life and liberty are generally said to be more valuable than property. An accurate view of the matter, however, would nevertheless prove that property is the main object of society.”42

1 Farrand, supra note 40, at 533.

St. George Tucker, publisher of the first American analysis of Blackstone’s Commentaries, wrote that “[t]he rights of property must be sacred and must be protected. Otherwise, there could be no exertion of either ingenuity or industry, and consequently, nothing but extreme poverty, misery and brutal ignorance.” 43

St. George Tucker, View of the Constitution of the United States 41 (Liberty Fund, Inc. 1999) (1803).

Prosperity has been possible, he concluded, “only in free states where men could enjoy the fruits of their labor, art and initiative.”44

Id. In that regard, The Heritage Foundation’s annual analysis of economic and political freedom shows that we are continuing on that same path. Where there is economic freedom, there will be political freedom. Where you lack the one, you will see an absence of the other.

The bottom line is this: The Framers deemed property inherently valuable and critical to civil society and successful government. Stanford University Professor Jack Rakove has summarized the early Americans’ attachment to property as a commonly shared value:

For property was one of the strongest words in the Anglo-American political vocabulary. John Locke had grounded an entire theory of government and the right to resist tyranny on that concept of property, which he did in his second treatise of government. But Locke only gave philosophical rigor to a belief that already permeated Anglo-American law and politics.

For Locke, as for his American readers, the concept of property encompassed not only the objects that a person owned, but also the ability, indeed, the right to acquire them. Just as men had a right to their property, so too they held a property in their rights. Men did not merely claim their rights but also owned them, and their title to liberty was as sound as their title to the land or to the tools with which they earned their livelihood. Furthermore, property was a birthright, a legal entitlement, a material legacy that one industrious generation transmitted to another.45

Jack Rakove, Revolutionaries: A New History of the Invention of America 78–79 (2010).

How Do We View Private Property Today?

Where are we today? The concept of property has grown over time. The concept of property originally embraced real, personal, and financial property as well as the interest that people have in the law. Those interests are still deemed property today. We have also seen the Supreme Court of the United States add to the list of property such items as welfare benefits, academic tenure, and other items created by positive law that would have been unknown to the Framers.46

See, e.g., Memphis Light, Gas & Water Div. v. Craft, 436 U.S. 1, 9–12 (1978) (ruling that public utility service is property); Mathews v. Eldridge, 424 U.S. 319, 333–34 (1976) (same, disability benefits); Goss v. Lopez, 419 U.S. 565, 573–74 (1975) (same, public school attendance); Perry v. Sindermann, 408 U.S. 593, 602 (1972) (ruling that a state university professor may have a “property” interest in his job based on “an unwritten ‘common law’ in a particular university that certain employees shall have the equivalent of tenure”); Bell v. Burson, 402 U.S. 535 (1971) (same, a state-issued driver’s license); Goldberg v. Kelly, 397 U.S. 254 (1970) (same, welfare benefits); Slochower v. Board of Educ., 350 U.S. 551 (1956) (same, tenure at a state college). For the seminal argument in favor of treating government benefits as “property,” see Charles A. Reich, The New Property, 73 Yale L.J. 733 (1964).

Yet there is a major difference between the Framers’ understanding of property and ours. The difference stems from the fact that life, liberty, and property are no longer deemed to have a common origin. The Framers believed that, like life and liberty, property was a natural right that every man possessed, not by virtue of positive law, but as a gift from God. That understanding of property has now vanished.

Today, property is seen as merely a creature of positive law. That positive law, by the way, does not include the Constitution itself, even though that document prominently uses the term “property.” As the Supreme Court explained in 1972 in Board of Regents of State Colleges v. Roth, “[p]roperty interests, of course, are not created by the Constitution.”47

U.S. 564, 577 (1972).

Perhaps the Court used the phrase “of course” as a way of trying not to explain why property interests—a term that shows up in the Fifth and Fourteenth Amendments (along with intellectual property rights protected by the Copyright and Patent Clause48

U.S. Const. art. I, § 8, cl. 8 (“[The Congress shall have Power] To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries.”).

)—do not have a source in the Constitution itself.

What is the result of that? The result is that the state may redefine property interests. Sometimes in the case of the pursuit of honest labor, the government can define that right almost out of existence through occupational licensing laws.49

See Paul J. Larkin, Jr., Public Choice Theory and Occupational Licensing, 39 Harv. J.L. & Pub. Pol’y 209 (2016).

Our different contemporary understandings of property and liberty are therefore of considerable importance to public policy because constitutional law now treats them in materially different ways. The government may restrict the exercise of some liberty interests, at least to some extent and at least temporarily, as long as it has a legitimate justification, which it must prove in court.50

Larkin, supra note 3, at 11.

In other cases, the government is quite limited in the regulations it can impose. In those instances, the government may restrict a liberty interest only to serve public goals of the highest order, and even then only to a limited extent and perhaps just for a limited time if at all.51

Id. at 11–12.

By contrast, since the New Deal, the Supreme Court has permitted the government to regulate private property for reasons and in ways that would have astonished the Framers.

  • The government can prohibit individual farmers from growing wheat for their own home personal consumption;
  • The government can require a person to have a license to engage in a host of occupations that do not threaten the public health, safety, or welfare; and
  • The government can use its eminent domain power to transfer land, including any homes atop that land, from one person to another simply because the new owner might develop the land in a manner that allegedly might more greatly benefit the community.

Because property rights trace their source only to some positive law, the government can regulate and often nullify those interests by a different positive law for almost whatever reason the government sees fit. The result has been to devalue the constitutional status of property and to construe the Due Process Clauses in a quite one-sided, bifurcated manner.52

Id. at 12–13.

How Do We Return to the Framers View of Private Property?

How do we remedy this state of affairs? We start by returning to the text of the Constitution. That text hardly compels the current dichotomy between higher-level “liberty” and lower-level “property.” On the contrary, the text places property on a par with liberty and assumes that government officials, including judges, would afford them the same respect.

That text has not changed since 1791. All that has changed is the value that the Supreme Court and the academy have placed on property. Their interpretations, however, have a relatively recent origin. Property did not lose its original understanding until the 20th century, while liberty did not begin its current ascent until the 1960s. Since then, the haut monde of American political, legal, and intellectual society have often felt that the Framers’ concern with the protection of property was, to quote American history scholar Edmund Morgan of Yale (who was critical of the notion), “a rather shabby thing” and that the constitutional principles for property discussed from 1776 to 1787 were invented “to hide [property] under a more attractive cloak.”53

Morgan, supra note 37, at 55. See generally Larkin, supra note 3, at 13.

That belief mistakenly seeks to impose 20th century redistributive economic policies on an 18th century document by denigrating any concern for property as being little more than the desire to constitutionalize protection for greed. The Framers, however, were classically educated men who knew that Western civilization had highly valued property since Roman times. The Supreme Court should not deem itself free to ignore the Framers’ interest in protecting property simply because the economy and society have materially changed over time.54

Larkin, supra note 3, at 13–14.

We do not follow that approach elsewhere in the law. We do not abandon the Copyright Clause’s protection against plagiarism of the written word55

See, e.g., the Statute of Anne, 8 Ann. c. 21 (Copyright Act 1709); Wheaton v. Peters, 33 U.S. (8 Pet.) 591, 657 (1834).

just because the clause also protects photographs and films.56

See, e.g., Burrow-Giles Lithographic Co. v. Sarony, 111 U.S. 53, 56 (1884).

We do not abandon the Free Speech Clause’s concern with prior restraints57

See, e.g., Near v. Minn. ex rel. Olson, 283 U.S. 697 (1931).

just because that clause also reaches after-the-fact damages.58

See, e.g., New York Times Co. v. Sullivan, 376 U.S. 254 (1964).

Nor do we abandon that clause’s protection for political speech59

See, e.g., Citizens United v. FEC, 558 U.S. 310 (2010).

just because it also includes violent video games.60

See, e.g., Brown v. Entm’t Merchants Ass’n, 131 S. Ct. 2729 (2011).

We do not abandon the Fourth Amendment’s protection against law enforcement officers rummaging through our homes without justification or restraint61

See, e.g., Boyd v. United States, 116 U.S. 616 (1886); Entick v. Carrington, 19 Howell St. Tr. 1029 (1765); Wilkes v. Wood, 19 Howell St. Tr. 1153, 1167 (1763); Anthony G. Amsterdam, Perspectives on the Fourth Amendment, 58 Minn. L. Rev. 349, 450–51 & n.168 (1974) (collecting sources discussing the Fourth Amendment’s history).

just because the amendment now also protects against the government rummaging through our cell phones in the same manner.62

See Riley v. California, 134 S. Ct. 2473 (2014).

And we do not abandon the Cruel and Unusual Punishment Clause’s protection against hideously painful criminal sanctions63

See, e.g., Wilkerson v. Utah, 99 U.S. 130, 135–36 (1878).

just because it also prevents the government from imposing an otherwise lawful penalty on a particular category of offenders, such as juveniles.64

See, e.g., Roper v. Simmons, 543 U.S. 551 (2005).

In other words, it is difficult to articulate a “neutral principle” of constitutional law65

See, e.g., Herbert Wechsler, Toward Neutral Principles of Constitutional Law, 73 Harv. L. Rev. 1 (1959).

that justifies disregarding the original understanding of some constitutional guarantees but not all of them.66

See, e.g., Richard H. Fallon, Jr., A Constructivist Coherence Theory of Constitutional Interpretation, 100 Harv. L. Rev. 1189, 1244 (1987) (“I know of no constitutional case in which the Supreme Court has held that, although the framers’ intent would require one result, another must be upheld on some other ground.”); Henry P. Monaghan, Our Perfect Constitution, 56 N.Y.U. L. Rev. 353, 375 n.132 (1981) (“Reliance upon original intent occurs even in opinions whose actual holdings seem wholly at variance with original intent.”). But see Fallon, supra, at 1255 n.256 (suggesting that Reynolds v. Sims, 377 U.S. 533 (1964), which adopted the “one person, one vote” rule, might be an exception but was unacknowledged as being one by the Supreme Court).

Conclusion

President Donald Trump was absolutely correct when he said that this country has never been socialist and has never been infected with the ills that socialism would bring. Private property is built into the American ethic, into the American dream, into the American DNA, and is an integral component of our national charter. History reveals that the Framers venerated the right to property, both for its own sake and as a means of guaranteeing personal independence. Property was not simply realty or personalty; it was one with liberty and was a guarantee of the protection of the legal rights that people had.

The Supreme Court needs to relearn American history. The Court treats property as “a poor relation”67

Dolan v. Tigard, 512 U.S. 374, 392 (1994).

deserving of far less protection than life or liberty currently receive. The Framers did not see it that way. They believed that neither liberty nor property could exist without the other. That belief, moreover, was nothing new to any 18th century English subject, whether he lived in London or in Williamsburg. Anglo–American traditions, customs, and law held that property was an essential ingredient of the liberty that the Colonists had come to enjoy from Massachusetts through Georgia and must be protected against arbitrary government interference.

The Supreme Court has forgotten the status that property had for the Framers. Reminding the Court may help lift property out of the basement to which it has been relegated by contemporary American constitutional law.

Paul J. Larkin, Jr., is the John, Barbara, and Victoria Rumpel Senior Legal Research Fellow in the Edwin Meese III Center for Legal and Judicial Studies, of the Institute for Constitutional Government, at The Heritage Foundation. This Legal Memorandum is adapted from a speech delivered by the author on March 19, 2019, as part of a Heritage Foundation series on “Free Markets: The Ethical Economic Choice” and an article written by the author and published in the Marquette Law Review. source

 

ELLIS ACT

The Ellis Act is a provision in California Law that provides landlords in California with a legal way to “go out of business” short of selling the property to another landlord. The Ellis Act “was adopted by the California Legislature in 1985 after the California Supreme Court ruled that landlords do not have the right to evict tenants to go out of the business of being a landlord”.

Municipalities can regulate the Ellis Act eviction process to some extent. Those that do typically restrict the property from use as a rental property for a period of time and require that it go back under rent control provisions if it is returned to the rental market.

Learn More about property and your rights below:

Property Rights and the Constitution – The General Nature of Property Rights

Landlord’s Right to Entry in California

Rules and Regulations Governing California Landlord – Tenant Laws – California Landlord / Tenant Laws

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