Vested Rights and Eminent Domain

In the antebellum period no state constitution affirmatively granted the eminent domain power. Instead, the federal Constitution and most revised state constitutions after 1820 placed limitations on its exercise. The Fifth Amendment, for example, read: "[N]or shall property be taken for public use without just compensation." ³⁷ Although the federal amendment was adjudged in Barron v. Baltimore ( 1833) not to apply against the states, state courts regularly invoked it along with clauses in their own constitutions to restrict the power of eminent domain. State court judges developed two important limitations that protected property rights: first, that property might be taken only for a "public purpose"; and second, that the owner had to be given fair, or just, compensation.

Judges, however, also adopted a utilitarian perspective on vested rights by interpreting the power of eminent domain in such a way as to foster economic growth. ³⁸ First, judges gave wide play to the coercive feature of the power of eminent domain. They accepted, for example, the practice of offsetting. Numerous legislatures mandated that the calculation of the presumed benefits to an individual attributable to construction of a canal, road, or railroad be used to "offset" the value of losses suffered as a result of having property taken.

Second, judges agreed that franchise corporations could exercise the power of eminent domain as long as they did so for a public purpose. Lacking sufficient fiscal resources from taxation to meet all the demands of their citizenry for improved communication, the state legislatures chartered franchise corporations to raise capital to operate public enterprises. Eminent domain became an indirect subsidy without which promoters of public developments would have been left at the mercy of any single property owner who "decided to hold out for an extortionate price." ³⁹ The public had certain rights to economic development and prosperity that judges were required to enforce.

The worst fears of the proponents of vested property rights were given national expression in the 1836-1837 case of the Charles River Bridge. Chief Justice Roger B.

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Taney, a Jacksonian Democrat recently appointed to the Court, endorsed the new pragmatic attitude that vested rights had to give way before new technological advances that promised economic growth.

Charles River Bridge involved the application of the Contract Clause of the federal Constitution to an action taken by the Massachusetts legislature. In 1828 it chartered the Warren Bridge Company to build a new bridge to satisfy the needs of commercial traffic between Boston and Charlestown. The new toll-free bridge was only a few yards from an older, less technologically advanced toll bridge chartered by the legislature in 1785. Beneath these prosaic actions a political, legal, and economic storm raged. The Jacksonian-controlled state legislature was pitted against the Supreme Court in a contest in which "[c]apitalism itself was at issue: what it meant and who would set economic policy." ⁴⁰

Daniel Webster, appearing for the old bridge company, argued that, if legislators went back on their promises to investors, no one would invest in future improvements. Property rights had to be strictly protected or economic development would collapse.

Justice Taney, however, offered for the Jacksonian majority on the Court a different vision of how to achieve economic progress. He held on the narrow legal issue that, contrary to Dartmouth College, no monopoly or other power should be viewed as implied in a corporate charter. But the opinion was even more important for the dictum (a judicial statement without legal precedent) that Taney added. Only by preventing established capital from entrenching itself could economic growth based on new corporate development occur. While private property was still to be "sacredly guarded," Taney also argued that "the community also have rights," and the "happiness and well-being of every citizen depends on their faithful preservation." Recognizing that. the Charles River Bridge Company had an implied monopoly over bridge building on the Charles River would be bad economic policy. The chief justice concluded by warning that "modern science" would be throttled and transportation would be set back a century, if such monopoly powers were recognized. ⁴¹ Taney, through his judicial office, struck a blow for democratic capitalism. Justice Story argued in dissent not only that Taney was wrong on the law, but that his decision would "arrest all public improvements, found[ed] on private capital and enterprise" by jeopardizing the security of all such investments. ⁴²

The vested-rights position that Webster and Story advocated failed to persuade most antebellum judges. The authority of the state to provide for the public interest expanded, and eminent domain was one example. The justices in West River Bridge v. Dix ( 1848), in which Webster once again asserted his view of vested property rights, spoke in sweeping terms, finding that eminent domain was "the single power, under which . . . the whole policy of the country, relative to roads, mills, bridges, and canals rests." ⁴³

Date: 2015-01-29; view: 842