Often referred to as the Just Compensation Clause, the final clause of the Fifth Amendment provides that private property should not be taken for public use without just compensation[i]. It applies to the states as well as the federal government.
Accordingly, the Fifth Amendment of the U.S constitution protects private property rights. A government can take private property for a public use upon payment of just compensation.
In an acquisition, there is a contractual obligation to pay compensation or damages. To exercise the power of eminent domain, a government must prove the four elements set forth in the Fifth Amendment. They are:
- Acquisition is of private property;
- Property must be acquired;
- Acquisition must be for public use; and
- Just compensation must be awarded.
Just compensation is such which puts the injured party in a good condition as s/he would have been, if the injury had not been inflicted. It includes the value of the land, or the amount to which the value of the property from which it is taken has depreciated.
Generally, the property owner is not entitled to compensation before the government takes possession of his/her land. The constitution does not require that compensation be actually paid in advance of the occupancy of the land. However, the owner is entitled to reasonable, certain, and adequate provision for obtaining compensation before his/her occupancy is disturbed[ii].
In Delaware, L. & W. R. Co. v. Morristown, 276 U.S. 182 (U.S. 1928), the court held that the taking of private property for public use is deemed to be against the common right and authority to do so must be clearly expressed.
Property subject to acquisition includes not only real property but also personal property. Generally, intangible properties like right to business damages do not constitute property in the constitutional sense[iii]. Easements are property interests subject to the just compensation[iv].
Also, patent rights are property protected by the constitutional guarantees. When patent rights are appropriated for public use, adequate compensation must be given. Loss of visibility is compensable where the diminished visibility results from changes on the property taken from the landowner. However, loss of visibility is not compensable where it occurs due to changes on the property of another[v].
Similarly, a property occupied by a railroad or other public-service corporation is private property and cannot be taken or entered upon and applied to a different public use except upon payment of compensation.
A riparian right cannot be arbitrarily or capriciously destroyed or impaired, except in accordance with law. If necessary, a riparian right can be taken for the public good upon due compensation[vi].
The acquisition by the public of an easement in land for the construction of a public highway gives no right and easement. When the use is granted by proper authority and does not constitute an additional burden, the owner cannot claim compensation[vii].
To award an owner less than the value of the property taken would be unjust to him/her. Also, to award him/her more than the property’s value will be unjust to the public[viii].
The U.S. exercising power of eminent domain can acquire property in two ways:
- the government can enter into physical possession of property without authority of a court order; or
- the government can institute condemnation proceedings.
In physical seizure, the property owner is provided a remedy under the Tucker Act to recover just compensation. In condemnation proceedings, compensation is given through court[ix].
When a government opts for the physical seizure method, acquisition occurs at the moment of seizure, even though title does not pass until compensation is actually paid. From the beginning of acquisition proceedings, the government’s possession is lawful and an owner’s title represents only his/her claim for compensation.
In an eminent domain proceeding, an interlocutory judgment fixing the compensation payable to a condemnee can be awarded. Such an order has the characteristics of a money judgment in an ordinary civil action.
Just compensation is the full indemnity for the loss or damage sustained by the owner of property taken under the power of eminent domain. Just compensation includes a recovery for all damages, past, present, and prospective. The damages analysis is not limited to the time of the alleged taking.
When property is taken under eminent domain, the measure of just compensation is the fair market value of the property to be ascertained as of the date of taking. It is determined by assessing a price a willing buyer and a willing seller would agree to. Fair market value is that value assigned by parties freely negotiating under normal market conditions based on all surrounding circumstances at the time of the taking[x].
When a delay in payment occurs, something more than damages is to be awarded. This additional element of compensation is reasonable interest. Just compensation in the constitutional sense is fair market value at the time of taking plus interest from that date to the date of payment.
[i] Tahoe-Sierra Pres. Council v. Tahoe Reg’l Planning Agency, 535 U.S. 302 (U.S. 2002).
[ii] Stringer v. United States, 471 F.2d 381 (5th Cir. Miss. 1973).
[iii] Texaco, Inc. v. Department of Transp., 537 So. 2d 92 (Fla. 1989).
[iv] Bormann v. Bd. of Supervisors, 584 N.W.2d 309 (Iowa 1998).
[v] Utah DOT v. Ivers, 2005 UT App 519, P23 (Utah Ct. App. 2005).
[vi] Thiesen v. Gulf, F. & A. R. Co., 75 Fla. 28, 77 (Fla. 1917).
[vii] Lay v. State Rural Electrification Authority, 182 S.C. 32 (S.C. 1936).
[viii] United States v. Certain Lands in Highlands, 82 F. Supp. 363, 365 (D.N.Y. 1942).
[ix] Stringer v. United States, 471 F.2d 381, 384 (5th Cir. Miss. 1973).
[x] State by Com’r of Transp. v. Hope Road Associates, 266 N.J. Super. 633 (App.Div. 1993).