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Eminent Domain

A turnpike, canal, or railroad corporation traversed property owned by private individuals. In doing so they exhibited one of the fundamental changes in thinking about property: its value derived from wealth that could be created by using it rather than the social status that accrued from its mere possession. This dynamic view of property was especially important in the case of franchise corporations whose activities were justified because they served the public interest. The idea of vested property rights collided with the commonwealth notion that state government had to take an active role in promoting the rights of the public. Antebellum legislatures attempted to balance these tensions of security in property and the public's right to economic growth through eminent domain law.

Eminent domain means the power of government to take private property for a

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public purpose, subject to reasonable compensation. It emerged only after the Revolution, and in the new republican nation it was a power to be jealously guarded. The colonial practice had been to seize property with compensation provided at the discretion of the legislature. The notion that the public had certain rights that exceeded those of individual property holders was widely accepted, and the framers of the Constitution in the Fifth Amendment added the doctrine of just compensation, although only by the 1830s did this provision become a familiar part of state public law.

The major developments in the antebellum law of eminent domain came through the actions of courts, but state legislatures played an important part in two ways. First, they established through statutes the basis on which the eminent domain power could be exercised. Second, they gradually granted this power through special charters to franchise corporations, such as canals and railroads, as a means of subsidizing their expansion.

The Milldam Acts were the earliest examples of state legislatures interfering through their police powers with vested property rights. Falling water was crucial to both agriculture and nascent manufacturing because it provided the energy by which to turn a turbine to mill grain or spin cotton into cloth. As late as 1870, falling water generated about one-half of the power for American industry.

Beginning in the late 1790s, state legislatures enacted statutes that allowed a mill operator to flood land that he did not own. They designated mills as quasi-public businesses that the state had an interest in promoting. Legislatures reversed the common law rule that flooding the land of a neighbor created an injury and that the dam itself was a nuisance. Most acts granted to affected property owners a right to sue, but only for statutory damages (those damages specified in the statute). If a landowner adjacent to a mill incurred a loss greater than the statute covered, he had no basis on which to seek additional damages. The Milldam Acts not only granted a special privilege to a few persons to operate mills, but they fixed for them the costs of a significant risk.



The Milldam Acts introduced the basic features of public expropriations for public purposes into U.S. law. State legislatures elaborated on the practice by permitting franchise corporations to exercise the power. They did so for practical reasons. The corporations were better suited to make efficient economic decisions about the course to be followed by a railroad or canal than was the state legislature. Eminent domain power was also an inducement to private individuals to invest in public improvements. Canal, turnpike, and railroad companies, for example, could take the land that promised the maximum return on invested capital. In return, they were compelled to submit to some minimal public scrutiny, through initial hearings about granting a franchise and subsequently through regulation by a commission or a legislative committee.

Antebellum legislatures embraced eminent domain because it was a means of protecting venturing capitalists who could achieve a public purpose through private profit. The public purpose doctrine, in this respect, complemented the belief that the state should encourage the development of property over an older view of property that stressed its quiet enjoyment. These same eminent domain provisions in the charters of antebellum franchise corporations produced innumerable lawsuits as property holders pressed courts to define their rights and the meaning of just compensation. The responsibility of balancing the inherent tension between private and public rights fell to courts, and the result was a luxuriant growth of eminent domain law.

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Date: 2015-01-29; view: 802


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