STRUGGLE OVER THE PUBLIC USE CLAUSE: SURVEY OF HOLDINGS AND TRENDS, 1986-2003, THE

Real Property, Probate and Trust Journal, Summer 2004 by Wilk, Corey J

Editors' Synopsis: This Article examines the Public Use Clause and analyzes recent judicial trends in the interpretation and application of the Clause. The author replicates Thomas Merrill's The Economics of Public Use study with a survey of recent state and federal public use cases. Based on his findings, the author predicts that future public use analysis in the courts will result in a heightened protection of property.

Randy Bailey's family had owned and operated Bailey's Brake Service, a small brake repair shop in Mesa, Arizona, for 31 years.1 The City of Mesa shocked many when, in November 2001, it announced plans to condemn Bailey's land through its eminent domain power and subsequently transfer the land to an Ace Hardware store that was seeking a better location.2 Bailey immediately challenged the proposed condemnation, pointing to an Arizona State Constitution clause that reads in part: "Private property shall not be taken for private use. . . ."3 To a non-lawyer like Bailey, the clause seemed plainly to cover the case. However, Arizona case law has classified the taking of private property for redevelopment purposes with sale to another private person or entity for operation of a public or private business as a public use.4 The trial court relied on liberal case law and permitted the condemnation5 The Arizona Court of Appeals interpreted the constitutional text narrowly and, finding that the developers and other private parties would be the primary beneficiaries rather than the public, ruled in Bailey's favor.6

Bailey's case presented the Arizona courts with an increasingly common set of facts, where a very sympathetic condemnee was pitted against a city's perceived need to expand its tax base. The legal issue the courts faced was one that courts around the country repeatedly confront: whether a proposed exercise of eminent domain will serve a public use, is one that courts around the country confront repeatedly. In a striking number of cases, the courts will find a public use. This leaves property owners, real estate businessmen, constitutional scholars, and concerned citizens with their own question: Why would a court in any jurisdiction with a constitutional public use requirement interpret the Constitution to permit a governmental authority to acquire from one private citizen property that will then be used for the benefit of other private citizens?

In an article in the Cornell Law Review in 1986,7 Thomas Merrill attempted to answer this question by offering a theory to explain existing judicial treatment of the question, and surveying public use cases to see if the theory matched reality. Ultimately, Merrill concluded that courts, particularly at the federal level, habitually ignore the Public Use Clause,8 but that courts do make "efficient" decisions, rejecting condemnations when a functioning market for the property exists and allowing condemnations where an imperfect market would give one party an unfair advantage.9

This Article aims to update Merrill's work. Are courts still interpreting the Public Use Clause in a similar fashion to what they did up to 1986? Are any notable trends emerging? This Article will provide the answers and advise someone in a future situation similar to Bailey's whether he might expect to keep his home or business, or to get "fair market value" and forced relocation.

I. THE ORIGINS OF MODERN PUBLIC USE DOCTRINE

Though binding on the Federal Government since 1791 (and later incorporated and made applicable to the States through the Fourteenth Amendment, adopted in 1868), the Supreme Court provided an expansive interpretation of the Public Use Clause with its 1954 decision Berman v. Parker.w Without Berman and its progeny, there probably would be no need for this Article.

The Fifth Amendment to the U.S. Constitution states, in part: "[N]or shall private property be taken for public use, without just compensation." This could have been interpreted to impose no public use requirement at all: "The phrase does not read 'shall not be taken except for public use. . . .'"12 Nevertheless, the Supreme Court has consistently read the Public Use Clause to mandate that privately-owned real property cannot be seized by a governmental authority unless for a public use. In defining public use, early opinions referred to the Federal Government's "power to appropriate lands or other property within the States for its own uses, and to enable it to perform its proper functions."14 In other words, a privately-owned Ace Hardware store would not have been able to get the government's help in acquiring a choice location. But as the size and power of government expanded, the initially narrow interpretation of public use expanded as well.15

In 1954, Berman v. Parker gave impetus to this liberalizing trend. The case involved the District of Columbia Redevelopment Act of 1945,16 which established an agency authorized by Congress to designate blighted areas for urban redevelopment.17 In order to revitalize these neighborhoods, the Act granted the agency eminent domain power.18 The petitioners, owners of a small department store, challenged the constitutionality of the Act's condemnation power as applied to their property.19 They assumed that the Public Use Clause would not permit the public appropriation of their private property for transfer to a private agency for private redevelopment purposes.20 Justice Douglas, however, writing for the majority, rejected the petitioners' public use challenge, holding slum elimination to be an acceptable public purpose.21 The Court reasoned, "If those who govern the District of Columbia decide that the Nation's Capital should be beautiful as well as sanitary, there is nothing in the Fifth Amendment that stands in the way."22