STATEMENT OF JAMES W. ELY, JR., PROFESSOR OF LAW AND HISTORY, VANDERBILT UNIVERSITY SCHOOL OF LAW

Mr. ELY. Thank you, Mr. Chairman. I appreciate this opportunity to be here and to draw upon two areas of my academic background: legal history and property law. I am, in fact, one of those unfortunate individuals who was described in the previous testimony of having to make first-year property interesting to incoming law students. And I must say that some of the recent developments in the takings area have helped a good deal in that regard.

The belief that property ownership was essential to the enjoyment of liberty has long been an essential tenet

Mr. CANADY. Use the microphone.

Mr. ELY [continuing]. Has long been an essential tenet of AngloAmerican constitutional thought. Historically, property ownership was viewed as establishing the economic basis for freedom from arbitrary government and for the exercise of individual liberty. This solicitude for the rights of individual property owners was, in part, embodied in the takings clause of the fifth amendment.

The intellectual origins of the takings clause can be traced to the precepts of natural law as well as to the English common law tradition. The principle of just compensation when private property was taken for public use was closely linked with the concept of natural law. Indeed, it was a central premise of natural law that the State was under a duty to protect the rights of personal liberty and private property.

By the time of the American Revolution, it was also well-settled that under English common law property owners were entitled to an indemnity when their property was taken for the benefit of the community as a whole. Moreover, the just compensation principle was widely recognized and applied in Colonial America.

Certainly by the eve of the Revolution, the just compensation principle had become the norm in the Colonial world. Early State constitutions, as well as the Northwest Ordinance, provided for the right of compensation and were the immediate precursors of the takings clause.

Protection of private property was a central feature of political thought when the Constitution was adopted. As is well-known, the framers assigned a high standing to the rights of property owners. It bears emphasis that the framers did not distinguish between property ownership and other individual rights. On the contrary, to the framers property rights were essential because property ownership was closely associated with the preservation of individual liberty.

The structure of the fifth amendment is revealing as to this point. The placement of property rights provisions next to criminal justice protections in the same amendment underscored the close affinity of property and personal liberties.

The purpose served by the takings clause is straightforward and compelling the financial burden of public policy should not be unfairly placed on individual property owners, but rather shared by the society as a whole. In other words, the takings clause should be understood as a bar to singling out certain individuals to carry the cost of implementing public policy.

The most vexing problem in modern takings jurisprudence is whether governmental actions short of formal condemnation or physical intrusion effectuate a taking for which compensation is required.

Consistent with the spirit of the takings clause, both courts and legislatures should guard against situations in which the Government proceeds by indirection and accomplishes through regulation what is the equivalent of outright physical seizure of private property. Given the confused state of takings law today, a legislative response seems entirely proper.

The proposed act is fully congruent with the values implicit in the takings clause and the vision of the Framers of the Constitution. The proposal strengthens the vital place of private property in our constitutional polity and extends protection to individual owners who have scant realistic prospect of gaining redress through the political process. Thank you.

[The prepared statement of Mr. Ely follows:]

PREPARED STATEMENT OF JAMES W. ELY, JR., PROFESSOR OF LAW AND HISTORY, VANDERBILT UNIVERSITY SCHOOL OF LAW

Mr. Chairman, and Members of the Subcommittee, I am James W. Ely, Jr., Professor of Law and History at Vanderbilt University, Nashville, Tennessee. I am most appreciative of your invitation to testify on pending legislation to protect the owners of private property from regulatory takings.

My testimony is drawn from my areas of academic expertise American legal history and property law. In particular, I have conducted research and published a number of books and articles that examine the history and development of property rights in the United States. I have been asked to address my remarks primarily to the origins and purpose of the takings clause of the Fifth Amendment.

The belief that property ownership is essential to the enjoyment of liberty has long been a tenet of Anglo-American constitutional thought. Historically, property ownership was viewed as establishing the economic basis for freedom from governmental coercion and the exercise of individual liberty. Protection of the rights of property owners, therefore, was fully consistent with one major theme of American constitutionalism-the restraint of government power over individuals.1 Leading jurists and commentators have stressed the vital importance of property rights in the constitutional order. Joseph Story, distinguished Justice of the Supreme Court and scholar, aptly observed:

[I]n a free government almost all other rights would become utterly worthless if the government possessed an uncontrolled power over the private fortune of every citizen. One of the fundamental objects of every good government must be the due administration of justice; and how vain it would be to speak of such an administration, when all property is subject to the will or caprice of the legislature and the rulers.2

Likewise, Justice John M. Harlan stated: "Due protection of the rights of property has been regarded as a vital principle of republican institutions." 3

This testimony examines the history of property rights from the settlement of America to the ratification of the Bill of Rights in 1791. It focuses primarily on the constitutional issues implicit in taking private property for public use, and emphasizes that solicitude for the rights of individual property owners was embodied in the takings clause of the Fifth Amendment. It is important to recognize, of course, that many provisions of the Constitution and the Bill of Rights pertain to property interests. But the origins and purpose of the takings clause is the subject of this testimony.

1This theme is developed in James W. Ely, Jr., The Guardian of Every Other Right: A Constitutional History of Property Rights (New York, 1992).

2 Joseph Story, Commentaries on the Constitution of the United States, 2nd ed., vol. II (Boston, 1851), 534-535.

3 Chicago, Burlington, and Quincy Railroad Company v. Chicago, 166 U.S. 226, 235 (1897).

To understand the antecedents of the takings clause one must consider both the intellectual sources of the just compensation principle as well as the actual practice of the colonial governments when property was taken for public projects.

INTELLECTUAL BACKGROUND

American thinking about just compensation was shaped by the broad intellectual currents of the 17th and 18th centuries. The principle of just compensation was closely linked with the concept of natural law. Natural law rested on the premise that any governmental system worthy of obedience had to affirm certain basic principles inherent in the natural order of the universe. Under natural law theory, personal liberty and private property existed before the formation of organized government and were not mere creations of the state. Indeed, natural law theorists, such as John Locke, maintained that it was the duty of the state to protect the previously existing rights of liberty and property. The just compensation principle fit neatly within this natural law framework. Thus, in 1672 the prominent natural law jurist Samuel Pufendorf declared that "natural equity" mandated compensation when one property owner was called upon to bear a greater burden than others. One can hardly overemphasize the influence of natural law theory on the American colonists in the years preceding the Revolution. Natural law principles were articulated in both the Declaration of Independence and the first state constitutions. As a continuing legacy of that era, several state constitutions presently contain language associating liberty and property, and affirming the freedom to obtain property. Consider, for instance, language in the constitution of New Hampshire: "All men have certain, natural, essential, and inherent rights; among which are-the enjoying and defending life and liberty-acquiring, possessing and protecting property-and in a word, of seeking and obtaining happiness."6

The central point is that natural law doctrine emphasized limitations on governmental power, and treated property ownership as among the eternal natural rights which the state was bound to safeguard. As the prominent antebellum judge James Kent explained: "A provision for compensation is a necessary attendant on the due and constitutional exercise of the power of the lawgiver to deprive an individual of his property without his consent; and this principle in American constitutional jurisprudence, is founded in natural equity, and is laid down by jurists as an acknowledged principle of universal law." The origins of the takings clause, therefore, can be traced in part to natural law roots.

The English common law tradition also undergirded the just compensation principle. The right to an indemnity when private property was taken found early expression in Magna Carta (1215). Although Magna Carta only restricted the prerogatives of the Crown, Parliament likewise recognized the compensation principle when utilizing the power of eminent domain. By the 17th century compensation was a standard feature of Parliamentary legislation. In his influential Commentaries on the Laws of England (1765–1769) William Blackstone treated compensation as an established principle of the common law. After observing that "[t]he laws of England are therefore, in point of honor and justice, watchful in ascertaining and protecting" the rights of property owners; Blackstone amplified his views with respect to governmental taking of property:

So great moreover is the regard of the law for private property, that it will not authorize the least violation of it; no, not even for the general good of the whole community. If a new road, for instance, were to be made through the grounds of a private person, it might perhaps be extensively beneficial to the public; but the law permits no man, or set of men, to do this without the consent of the owner of the land. In vain it may be urged, that the good of the individual ought to yield to that of the community; for

James W. Ely, Jr., "that due satisfaction may be made:' the Fifth Amendment and the Origins of the Compensation Principle," 36 American Journal of Legal History 1, 16 (1992). "Samuel Pufendorf, De Jure Natural Et Gentium Libri Octo (1672) (C.H. Old father and W.A. Old father translation, London, 1934), 1285.

Constitution of New Hampshire, Article 2. For similar language see Constitution of Ohio, Article I, sec. 1; Constitution of Pennsylvania, Article I, sec. 1. Courts also recognized the importance of natural law as a basis for guarding property rights. Vanhorne's Leesee v. Dorrance, 2 Dallas 304, 309 (Cir. Ct. 1795) (noting that "the right of acquiring and possessing property, and having it protected, is one of the natural, inherent and inalienable rights of man"). 7James Kent, Commentaries on American Law, vol. II (New York, 1827), 275–276.

See A.E. Dick Howard, The Road from Runnymeade: Magna Carta and Constitutionalism in America (Charlottesville, Va., 1968), 332-340.

William B. Stoebuck, "A General Theory of Eminent Domain," 47 Washington Law Review 553, 579 (1972).

it would be dangerous to allow any private man, or even any public tribunal, to be the judge of this common good, and to decide whether it be expedient or not. Besides, the public is in nothing more essentially interested, than in the protection of every individual's private rights, as model led by the municipal law. In this, and similar cases the legislature alone can, and indeed frequently does, interpose and compel the individual to acquiesce. But how does it interpose and compel? Not by absolutely stripping the subject of his property in an arbitrary manner; but by giving him a full indemnification and equivalent for the injury thereby sustained.10

COLONIAL PRACTICE

The just compensation principle was widely accepted in colonial America. 11 By modern standards the colonial governments made limited use of eminent domain. Colonial statutes, however, demonstrate that officials were regularly authorized to compel owners to transfer their real or personal property for a variety of public projects. Where private property was taken for the construction of public buildingscourthouses, forts, powder magazine a-colonial lawmakers invariably required an award of compensation to the property owners. Improvement projects in colonial cities, such as the construction of streets and wharves also necessitated taking property. Here too lawmakers adhered to the compensation principle.

Another reason for taking private land during the colonial era was the building of public roads. The colonies did not follow a consistent pattern with respect to the payment of compensation for highways. One group of states provided compensation when any land was taken for road construction. Another cluster of colonies granted compensation only when improved or enclosed land was seized for road building. The practice in other colonies changed over time, making generalization difficult. At first glance the custom in some colonies of taking unimproved land for roads without payment can be viewed as a partial breach of the compensation principle. Yet this practice did not contradict the general right of indemnity. Among other considerations, unimproved land was plentiful. The colonists may well have reasoned that such land was of insignificant monetary value. After all, the economic advantages of a roadway would more than offset the loss of a small amount of unimproved land by the owner. The completed road represented an implicit in-kind compensation. Moreover, as the colonies matured, and underdeveloped land became more valuable, lawmakers increasingly acknowledged the right of landowners to receive compensation when the government took land for roads. By the eve of the Revolution, then, the just compensation principle was well established in practice.

TOWARD THE TAKINGS CLAUSE

The American Revolution set the stage for a great deal of constitutional experimentation at both the state and federal level. A hallmark of American constitutionalism was its insistence on written restraints upon governmental power. Not surprisingly, the initial state constitutions contained guarantees relating to the rights of property owners. More particularly, several states elevated the common law compensation requirement as applied during the colonial era to constitutional status. The Vermont Constitution of 1777 was the first to adopt the compensation principle. The influential Massachusetts Constitution of 1780 followed suit, mandating that "whenever the public exigencies require that the property of any individual should be appropriated to public use, he shall receive a reasonable compensation therefore."12 These just compensation provisions were clearly precursors of the takings clause of the Fifth Amendment. Moreover, even when the state constitution did not expressly provide for payment, state courts reasoned that just compensation must be made under the principles of common law or natural justice. For example, a New York court declared in 1816 that payment of "a fair compensations" was an indispensable qualification on the authority of the state to take property by eminent domain. 13

The takings clause was also foreshadowed by legislation at the national level. Congress, under the Articles of Confederation, enacted the Northwest Ordinance in 1787. This measure established a system of government for the territory north of

10 William Blackstone, Commentaries on the Laws of England, vol. I (Oxford, 1765, facsimile reprint, 1979), 134–135.

11 The colonial experience with just compensation is examined in Ely, "That due satisfaction may be made': The Fifth Amendment and Origins of the Compensation Principle," supra note 4. 12 Massachusetts Constitution of 1780, Part I, Article X.

13 Gardner v. Village of Newburgh, 2 Johns. Ch. (New York, 1816).

the Ohio River, and furnished an important model for constitution drafting. The Ordinance provided that if a person's property was taken for public use "full compensation shall be made for the same." The right of compensation was among the numerous provisions of the Ordinance which later found acceptance in the Constitution and Bill of Rights.14

Protection of private property was a central feature of political thought when the Constitution was adopted. As a prominent historian has observed: "Perhaps the most important value of the Founding Fathers of the American Constitutional period was their belief in the necessity of securing property rights." 15 The framers undoubtedly assigned a high standing to the rights of property owners. It bears emphasis that the framers did not distinguish between personal and property rights. On the contrary, in their minds property rights were essential because property ownership was closely associated with liberty. The framers saw property ownership as a buffer which safeguarded political freedom by limiting governmental authority over individuals.16

As is well known, James Madison, then a representative from Virginia, took the lead in preparing a bill of rights. Not surprisingly, Madison included protection for property owners in the proposed bill of rights. As finally adopted, the Fifth Amendment contains two important property guarantees the due process clause and the takings clause along with procedural safeguards governing criminal trials. The structure of the Fifth Amendment is revealing. The decision by Madison and his colleagues to place property rights provisions next to criminal justice protections, such as the prohibitions against double jeopardy and self-incrimination, underscored the close affinity of property and personal liberty. The framers equated arbitrary punishment and deprivation of property, and sought to prevent both types of injustice.

PURPOSE AND SCOPE OF TAKINGS CLAUSE

The rationale behind the takings clause 18 both straightforward and compelling― the financial burden of public policy should not be unfairly placed on individual property owners but shared by society as a whole. In other words, the takings clause should be understood as a bar to singling out a few individuals to bear the cost of governmental programs.17 This purpose was recognized from the earliest days of the new nation. In 1795, for example, Justice William Patterson, who had been a member of the constitutional convention, declared that "no one can be called upon to surrender or sacrifice his whole property, real or personal, for the good of the community, without receiving a recompense in value. This would be laying a burden upon an individual, which ought to be sustained by the society at large." 18

The takings clause does not immunize private property from governmental interference. Although the Constitution makes no express mention of eminent domain, such power has long been regarded as an incident of sovereignty. It was well understood that circumstances might arise which would compel the government to seize property for public use. But the takings clause places a significant limit on the exercise of eminent domain by requiring the payment of just compensation.

As further evidence of the importance of the takings clause, it should be noted that the just compensation rule became in effect the first provision of the Bill of Rights to be applied to the states. The Supreme Court held in 1897 that the payment of compensation when private property was taken for public use constituted an essential element of due process as guaranteed by the Fourteenth Amendment.19 Living in an era before the emergence of modern land use regulations, the framers likely conceived of a taking of property in terms of either outright appropriation of title or physical invasion. Nonetheless, shortly after ratification of the Bill of Rights, Madison raised the possibility that a regulation might also amount to a taking. In a 1791 essay he addressed the question of taking private property for public use. Stressing "the inviolability of property," he noted that property could not be "directly" taken without compensation. Madison further declared that a government "which indirectly violates their property, in their actual possessions. . . is not a

14 Robert M. Taylor, Jr., ed., The Northwest Ordinance 1787: A Bicentennial Handbook (Indianapolis, 1987), 59–61.

16 Stuart Bruchey, "The Impact of Concern for the Security of Property Rights on the Legal System of the Early American Republic," 1980 Wisconsin Law Review 1135, 1136.

16 Ely, The Guardian of Every Other Right, 43.

17 E.g., Monogahela Navigation Company v. United States, 148 U.S. 312, 325 (1893); Armstrong v. United States, 364 U.S. 40, 49 (1960).

18 Vanhorne's Lessee v. Dorrance, 2 Dallas 304, 309 (Cir. Ct. 1795).

19 Chicago, Burlington and Quincy Railroad Company v. Chicago, 166 U.S. 226 (1897). See also James W. Ely, Jr., The Chief Justiceship of Melville W. Fuller, 1888-1910 (Columbia, S.C., 1995), 109.