Saturday, October 22, 2005

Baylor Looking for Property Prof

Baylor is looking for an entry-level professor to teach first-year property and related courses.  Info is available here.

Ben Barros

October 22, 2005 in Help Wanted | Permalink | TrackBack (0)

Friday, October 21, 2005

Weekly Top 10

Holy cow!  Michael Lewyn comes out of nowhere to take the top three spots on this week's Top 10.  I have to say I'm a little embarrassed by #8 -- I put it up on SSRN because I thought it was worth sharing, but it's not really in the same league as an article.  But I just post what I get from SSRN

1. (236)  How City Hall Causes Sprawl: A Case Study, Michael Lewyn (George Washington University Law School)
2. (189)  Suburban Sprawl, Jewish Law, and Jewish Values, Michael Lewyn (George Washington University Law School)
3. (166)  Sprawl, Growth Boundaries and the Rehnquist Court, Michael Lewyn (George Washington University Law School)
4. (117)  A Freedom-Promoting Approach to Property: A Renewed Tradition for New Debates, Jedediah S. Purdy (Duke University - School of Law)
5. (95)  At Last, Some Clarity: The Potential Long-Term Impact of Lingle v. Chevron and the Separation of Takings and Substantive Due Process, Benjamin Barros (Widener University - School of Law)
6. (74)  Efficient Trespass: The Case for 'Bad Faith' Adverse Possession, Lee Anne Fennell (University of Illinois College of Law)
7.  (73)  Home as a Legal Concept, Benjamin Barros (Widener University - School of Law)
8.  (70)  Testimony Before Pennsylvania House of Representatives State Government Committee Re: Eminent Domain, Benjamin Barros (Widener University - School of Law)
9.  (60)  Private Property, Development and Freedom: On Taking Our Own Advice, Steven J. Eagle (George Mason University - School of Law)
10. (56)  Unsubsidizing Suburbia, Nicole Stelle Garnett (Notre Dame Law School)

Ben Barros

October 21, 2005 in Recent Scholarship | Permalink | TrackBack (0)

Interest Only Mortgages: The Next Class Action Goldmine for Plaintiffs' Lawyers?

This may be more of a business law post than a property post, though it does involve mortgages.  In addition to my public persona as a property geek, I have a secret identity as a business organizations professor and former corporate litigator.  I usually leave business law commentary to Professor Bainbridge, the good folks over at The Conglomerate, the Business Law Prof Blog, and the Corporate Compliance Prof Blog, but I might occasionally dabble in it here.

I've seen a lot on the web lately about interest-only mortgages, which are the latest home financing craze.  As their name implies, the monthly payments on interest-only mortgages only cover the interest on the loan; no principal is paid off.  Most interest-only mortgages sold today are interest-only for the first ten years of the loan period, after which the borrower starts paying principal.  Many interest-only mortgages also are ARMs, where the interest rate on the loan will increase as interest rate benchmarks increase.

I should say at the outset that interest-only mortgages can make sense for certain types of borrowers, especially those with short time horizons.  I had one when I lived in New York, and it made a lot of sense for me at the time.  But many financial institutions seem to be marketing interest-only mortgages as some kind of new wonder-product that allows ordinary consumers to save money on mortgage payments.  As this post explains, however, interest-only mortgages are both expensive and risky for ordinary investors.

I want to focus here one potential consequence of the default and interest rate risks inherent in the current species of ARM interest-only mortgages.  Imagine a person buying a $500,000 home, financing 80% with a 4.5% interest-only mortgage that is a 1 year ARM (that is, the interest rate is fixed for only one year).  Say the initial monthly payments are $2,000 per month.  Now imagine that housing prices decline dramatically and interest rates rise -- a not unrealistic scenario right now.  Two years after closing, the person might have a house worth $400,000 (still the value of the outstanding loan principal) or less and a mortgage interest rate of 8.5% (remember not that long ago when that seemed like a good rate).  So the person has no equity and payments of $3,000 per month.  If the person can't make the higher payment, there goes the house.  (As a side note, the last time interest-only mortgages were popular was in the 1920s.  Hmmmm, I wonder what happened next.)

Now think back about what happened when the loan was first issued.  The person was probably shown a schedule of payments based on the 4.5% interest rate and a truth-in-lending statement.  Maybe the loan officer fully explained all of the risks involved and showed the person a schedule of payments based on an 8.5% interest rate.  Then again, maybe not.  One of the things that makes interest-only mortgages such a marketer's dream is that they allow a person to buy a big house with small payments.  Who wants to rain on the sales parade by talking about falling housing prices and rising interest rates?  I might be wrong, but some of the sales pitches that I've seen on the internet make me think that risks are not being adequately disclosed by at least some lenders.

Unless the lending institution has papered up this and other similar transactions very well, they are now exposed to a consumer fraud class action.  In fact, this potential problem with interest-only mortgages reminds me of some life insurance sales-practices class actions I worked on early in my litigation career.  Traditional whole-life insurance policies accumulate interest at a rate tied to the insurance company's rate of return on investments.  In the early 1980s, interest rates were incredibly high and many people thought that rates would stay high.  During this era, many insurance companies started marketing "vanishing premium" life insurance policies.  The idea was that you would pay premiums for, say, seven years.  At that point, enough money would have accumulated in the policy that at a high interest rate would be sufficient to cover the premiums for the rest of the life of the policy.  Guess what?  Interest rates went down.  Insurance companies made less money on their investments (mostly bonds), so they started paying less on their policies.  Premiums returned.  Class actions ensued.

The key to the vanishing premium problem from a litigation standpoint was what the policyholder was shown at the time of purchase.  Many policyholders bought based on "illustrations" that showed premiums based on the current interest rate continuing into the future.  Some illustrations contained disclosure of the interest rate risk.  Some did not.  Mediocre disclosure is not going to protect a corporation of any sort in a consumer class action.

Life insurance companies paid out hundreds of millions in dollars (actually, probably a few billion) in settlements in the vanishing premium cases.  These cases would be very small potatoes compared to the potential amounts at issue in litigation over interest-only mortgages.  There is a nice symmetry between vanishing premium life insurance policies and interest-only mortgages.  The former projected high returns in a high interest rate environment.  The later project low payments in a low interest rate environment.  Both assume that a historically-unusual interest rate environment will last forever.  The fundamental disclosure issues are basically the same.

There is one big difference between the vanishing premium cases and interest-only mortgages.  Federal Truth-In-Lending laws require a certain amount of disclosure of interest rate risk.  They also may preempt many state-law consumer fraud claims.  I'm not sure, though, that the currently-required disclosures would be sufficient to protect lenders from the added risks of interest-only mortgages.  I'm also not sure that even if the Truth-In-Lending laws protected lenders from problems with interest rate disclosure that they would protect them from other sales practices that could be construed as misleading.  Maybe they would -- if you have an opinion on this, please leave a comment.

If I was the general counsel or compliance officer of a financial institution that sells interest-only mortgages, the first thing I'd do is call a lawyer who litigated vanishing premium cases in the late-1990s and talk about mortgage sales practices (among others, pretty much any litigator at Debevoise & Plimpton would know about this stuff).  And while I was at it, I'd also think about whether my disclosure statements adequately covered the risk of massive defaults if property values crash or interest rates spike.

If I was a plaintiffs' class action lawyer right now, I'd start polishing up a form complaint.

Ben Barros

[Comments are open, but will not post until I have a chance to review them, so there might be a delay]

October 21, 2005 in Real Estate Transactions | Permalink | Comments (3) | TrackBack (0)

Thursday, October 20, 2005

The Changing Paradigm in Public Legal Education

Over on TaxProf Blog, Paul Caron has an interesting post on Denis Binder's paper The Changing Paradigm in Public Legal Education.  Binder concludes in part:

Public law schools face major challenges in shifting from a low tuition, heavily state supported model to one of high tuition with variable state support. The challenges can best be viewed as risks, which if not properly handled, will result in long term damage to public legal education. If the public law schools increasingly mirror their private counter-parts, their ethos, their basis for existence, as a public institution will cease.

Ben Barros

October 20, 2005 in Teaching | Permalink | Comments (0) | TrackBack (0)

Baron on Property and 'No Property'

Jane Baron (Temple University School of Law) has posted Property and 'No Property' on SSRN.  Here's the abstract:

This essay addresses the vexing question of whether property enhances freedom. Contemporary property debates tend to focus on what might be called the affirmative side of property rights - what they give (or ought to give) to owners vis a vis others and vis a vis the government. But if, as the Realists long ago suggested, property is social, involving relations between people, and if property involves politics, the exercise of power by some over others, then it makes sense to think about the negative side of property rights, the effects of not having any property to speak of. Persons owning very few things inhabit a realm of severe social and legal vulnerability, susceptible to the power of many (and, of course, the government) without having (m)any reciprocal power(s) over others. I call this situation "no property."

This paper seeks to describe the legal category "no property." Rather than enumerate its iterative disabilities, I enlist a recent novel, Valerie Martin's Property, in the hopes of describing "no property" imaginatively. The novel illustrates the ways in which legal states that deprive persons of the ability to own or to control property - slavery and coverture - render persons susceptible to the power of others. Notwithstanding enactment of Married Women's Property Acts and the end of slavery, many today - such as the homeless and the extremely poor–remain in a position of comparable legal and social vulnerability. For persons so situated, the freedom-enhancing aspects of property are more or less beside the point. What they experience as a legal matter is, to recur to some older terms, duties, no-rights, liabilities and disabilities. These iterative negatives together constitute a status, a status in which it becomes possible for them to be seen as, essentially, objects, not subjects.

Effective regulatory schemes take existing schemes of property rights into account. "No property" is such a scheme. Because it consists so largely of negatives, of rights and powers that people do not have, it is difficult to recognize it as such. But it is as serious a constraint on regulatory possibility as, say, the ownership rights of those affected by limitations on the cutting of old growth forests or by required reductions in factory emissions. If we want to "do something" about the poor and the homeless - whether it be banishing them to special "zones" or targeting services to them - we will need to understand the legal situation in which we find them. For this reason, I argue, we must continue to seek to understand and define the legal category of "no property."

Ben Barros

October 20, 2005 in Recent Scholarship | Permalink | TrackBack (0)

Wednesday, October 19, 2005

Curse You Ann Althouse

Like most bloggers, I spend a lot of time reading other blogs.  In fact, I got into blogging in part because I figured that since I spend so much time reading blogs, I might as well write one (this very well might be a blogging cliche; I think I've heard it before, though I'm not sure).

So I was checking in at Althouse this morning, and came across this post on how often bloggers check Site Meter.  I'm new to blogging, so all I knew about Site Meter was that it tracked the number of visitors to this site.  Sadly, Althouse opened my eyes to the true procrastination potential of Site Meter.  I can check where people visiting the site are geographically located.  Even better, I can have this info posted on a map of the world!  Someone from France visited yesterday!  I can check if they were guided to the site by another site.  Said person from France appeared to have arrived here from a Google search, and probably left unsatisfied.  And I can learn all sorts of other fascinating but generally useless info.  It's like crack -- I can't stop.

Add this to Technorati, which I learned about from the diabolical Dan Solove over at Concurring Opinions, and now I'm not getting anything done.

But I am having fun!

Ben Barros

October 19, 2005 in Miscellaneous | Permalink | Comments (0) | TrackBack (0)

Oregon Judge Rules Measure 37 Is Unconstitutional

Marion County Circuit Judge Mary James ruled last week that Measure 37, a regulatory takings ballot initiative that was approved by Oregon voters last year, violates both the Oregon and United States Constitutions.  The opinion is available here.  Proponents of Measure 37 will appeal.  I'm really not up on ballot initiative law, so I don't have a view either way about whether the judge was correct.

Ben Barros

October 19, 2005 in Takings | Permalink | Comments (1) | TrackBack (0)

Property in the Body

My Property Theory seminar this semester included a three-class unit on property in the human body.  Most of our discussion focused on issues of alienability and commodification -- should it be okay to sell organs?  To sell parental rights to a child (aka "baby selling")?  To enforce surrogacy contracts?  Etc.  At the end of the unit, the students voted on each issue.  I'm not sure what to take from the results, but I thought I'd share them:

Should a person be able to donate or sell the following body parts during life?

Blood or other things that regenerate?

Donate:  16 Yes, 0 No.     Sell:  16 Yes, 0 No.

Tissue or organ where removal not likely to cause harm? 

Donate:  16 Yes, 0 No.     Sell:  16 Yes, 0 No.

Tissue or organ where removal may cause harm?

Donate:  16 Yes, 0 No.     Sell:  11 Yes, 5 No.

Tissue or organ where removal likely to cause harm?

Donate:  14 Yes, 2 No.     Sell:  8 Yes, 8 No.

Tissue or organ where removal will be fatal?

Donate:  5 Yes, 11 No.     Sell:  5 Yes, 11 No.

Issues Relating to Donation of Organs After Death

Should we allow payment during life to people to agree to donate organs after death?

If revocable:  14 Yes, 2 No.

If irrevocable:  9 Yes, 7 No.

Do you favor a government regulation presuming intent to donate?

5 Yes, 11 No.

Do you favor a government regulation requiring harvest of organs regardless of deceased's intent?

0 Yes, 16 No.

In absence of evidence of intent of deceased, should the next of kin be able to "donate" in return for a fee paid to the estate?

6 Yes, 10 No.

Issues Relating to Procreation

Should parents be able to give children up for adoption?

16 Yes, 0 No.

Should parents be able to receive a fee as part of the adoption process?  In other words, should parents be able to sell their babies?

8 Yes, 8 No.

Should parents be able to sell fertilized human eggs to another person so that person can have children?

15 Yes, 1 No.

Should parents be able to sell frozen embryos to the highest bidder regardless of intended use?

10 Yes, 6 No.

Should surrogacy contracts be enforceable in the following situations:

Child conceived with surrogate's egg, donated sperm?

8 Yes, 8 No.

Child conceived with surrogate's egg, "adoptive" father's sperm?

14 Yes, 2 No.

Child conceived with "adoptive" mother's egg, "adoptive" father's sperm?

16 Yes, 0 No.

Should prostitution be legal?

13 Yes, 3 No.

Some of the votes may seem shocking taken out of the context of our class discussion.  For example, our discussion of allowing people to donate or sell organs where the removal would be fatal was done in the context of a hypothetical about whether a parent could rationally make that type of decision to save the life of a child.  If nothing else, the votes show that on a number of issues, a group of law students educated in property theory hold some views outside of the mainstream.  I think that's a good thing; others may disagree.

Ben Barros

October 19, 2005 in Property Theory | Permalink | Comments (0) | TrackBack (0)

Pocket Part on Property and Federalism

The Pocket Part is a new on-line feature of The Yale Law Journal:

As members of the legal community know, legal publications often contain "pocket part" supplements with up-to-date information and commentary. The Pocket Part plays an analogous role. It features op-ed length versions of Journal articles and responses from leading practitioners, policymakers, and scholars. The Pocket Part also serves as a forum for our readers and authors to discuss legal scholarship.

Abraham Bell and Gideon Parchomovsky currently have a post up on The Pocket Part on their recent article Of Property and Federalism.  Here's an excerpt:

We suggest expanding owners’ flexibility by using a registry system similar to that used in corporate law. Property owners should be allowed to choose the state property law that will apply to any given asset, but will be required to register the fact in a publicly available registry. A California couple—or a couple from any other state for that matter—should be able to buy a car in New York and register that car as community property under California law, even if they never plan on returning west.

Under our proposed regime, whenever a new property right is created or acquired, the parties may choose to define the property right according to the full menu of property laws available throughout the country.

There are also comments by Robert Ellickson and Stephen Williams, and some interesting comments on the discussion board.

Ben Barros

October 19, 2005 in Recent Scholarship | Permalink | Comments (0) | TrackBack (1)

Tuesday, October 18, 2005

Bell and Parchomovsky on Bargaining for Takings Compensation

Abraham Bell (Bar Ilan University - Faculty of Law; Fordham University - School of Law) and Gideon Parchomovsky (University of Pennsylvania - School of Law) have posted Bargaining for Takings Compensation on SSRN.  Here's the abstract:

Efficiency and fairness require paying full compensation to property owners when their property is taken by eminent domain. Yet, to date, the evidentiary challenge of proving subjective value has proved insurmountable, and current law requires condemnees to settle for fair market value. This Article proposes a self-assessment mechanism that can make full compensation at subjective value practical. Under our proposal, property owners must be given the opportunity to state the value of the property designated for condemnation. Once property owners name their price, the government can take the property only at that price. However, if the government chooses not to take and pay, the property will become subject to two restrictions. First, for seventy years, the property cannot be sold for less than the self-assessed price; if the property is transferred for less, the owner will have to pay the difference to the government. Second, the self-assessed price - discounted to take account of the peculiarities of property tax assessments - will become the benchmark for the owner's property tax liability. These dual burdens of partial inalienability and enhanced tax liability will induce honest reporting by owners, while reducing the transaction costs created by the compensation process. The Article sketches several refinements of and limitations on this mechanism in order to improve its accuracy and prevent both the government and property owners from abusing it. We demonstrate that, properly used, our self-assessment mechanism can dramatically enhance the efficiency and fairness of eminent domain proceedings, and may even be extended to regulatory takings.

Ben Barros

October 18, 2005 in Recent Scholarship, Takings | Permalink | TrackBack (0)

Monday, October 17, 2005

Nothing Errant About It: The Berman v. Parker Conference Notes

UPDATE:  I have expanded the content of this post into an essay that is available here.

This is the second in a series of posts on the Supreme Court's takings conference notes.  My first post discussed the Court's conference notes in Hawaii Housing Authority v. Midkiff and their significance to the Court's recent decision in Kelo v. New London.  All of the caveats noted in that post apply here as well.

This post is about Berman v. Parker, 348 U.S. 26 (1954), a blight-clearance case that established the legality of broad urban-renewal schemes.  As suggested in my last post, Berman articulated a broad conception of public use and deference to the legislature that was very influential in shaping the Court's analysis in Midkiff and Kelo.  For example, the Court wrote in Berman that:

Subject to specific constitutional limitations, when the legislature has spoken, the public interest has been declared in terms well-nigh conclusive.  In such cases, the legislature, not the judiciary, is the main guardian of the public needs to be served by social legislation . . . . This principle admits of no exception merely because the power of eminent domain is involved.  The role of the judiciary in determining whether that power is being exercised for a public purpose is an extremely narrow one.

As I noted in my prior post on Midkiff, similarly broad language in that case was surprising in light of the remarks of some of the justices in conference that Midkiff was a narrow case and that the Court's opinion needed to be written carefully.  In contrast, the conference notes for Berman indicate that the Court's broad language was deliberate and intended to repudiate the narrower conception of public use articulated in the opinion appealed to the Court.

The opinion that offended the Court was written by E. Barrett Prettyman, a respected D.C. Circuit judge sitting as part of a special three-member district court convened to hear a challenge to the constitutionality of the District of Columbia Redevelopment Act.  As a side note of trivia, the D.C. Circuit now sits in a courthouse named after Judge Prettyman.  Prior to reading the Berman conference notes, I had never read Judge Prettyman's opinion, though I had read Berman itself many times.  I have to say that from a post-Kelo perspective, Prettyman's opinion comes as something of a revelation.  It is thorough, thoughtful, and takes the concept of public use seriously.  If you are interested in Kelo and the public use issue, it is well worth reading the opinion in its entirety.  It is reported as Schneider v. District of Columbia, 117 F. Supp. 705 (D.D.C. 1953).

The key issue in Berman was the scope of government power to take property to clear blight and transfer the taken property to private developers.  The plaintiffs in the case owned commercial property that was not itself blighted, but that was located in an area that contained a substantial amount of blighted property.  Prettyman divided the issue into thee parts:

1. First, there is the slum. A slum is made up of houses (or substitutes for houses), the appurtenances thereto, and people. The houses and appurtenances are such that the people live in filth and breed disease and crime. A slum can be eliminated by tearing down the houses, destroying the appurtenances, and either building new housing on the spot for the people or moving the people away.

2. Second, there is the land upon which a slum exist. The land itself neither contributes to nor detracts from a slum. It is the same whether a slum or a model building exists upon it. The land cannot be destroyed or moved. Only its ownership and its use can be changed. If cleared, the land upon which a slum presently exists would have no harmful effects upon the public. Neither does naked ownership of land, apart from use, have any harmful public effects. A slum and the legal title to the naked land upon which it exists are separate things.

3. Third, there are sections of cities which are not at the present time used to their fullest economic possibility, or are not arranged to fit current ideas of city development. An outstanding example is Trinity Church and its surrounding cemetery at the corner of Wall Street and Broadway in New York City. Old streets are not so wide as new ones would be. Apartment houses would be more economically efficient than are single dwellings. Phrases used to describe this situation are 'inadequate planning of the area', 'excessive land coverage by the buildings thereon', 'defective design and arrangement of the buildings thereon', 'faulty street or lot layout', 'economically or socially undesirable land uses'. The statutes dealing with these areas are usually called 'urban redevelopment' laws. The areas are frequently called 'blighted'. They are in no sense slums, or similar to slums; they are out-of-date. They do not breed disease or crime; they fail to measure up to their maximum potential use in terms of economic, social, architectural, or civic desirability. These three distinct factual situations present three distinct sets of legal questions.

Prettyman had no difficulty with the first issue of whether the government could use eminent domain to clear slum property.  Slum clearance could be seen as abatement of a public nuisance.  "Since the Government can condemn such property without compensation under the police power, a fortiori it can condemn and pay reasonable compensation."

The power to clear the blighted property itself, however, left the second issue open:  "Can the government seize title to land from which a slum has been or could be cleared, and sell it to a private person for private uses?"  After all, once the blight is removed, what justifies taking the land?  Prettyman eventually came to the conclusion that the government could take the underlying land, "provided (1) that the seizure of the title is necessary to the elimination of the slum or (2) that the proposed disposition of the title may reasonably be expected to prevent the otherwise probably development of a slum."  He clearly stated, however, that "[o]rdinarily the seizure of the fee title to land would seem to be neither necessary nor reasonably incidental to the clearance of a slum."  Prettyman also was clearly uncomfortable with the changing definition of public use embodied in the result of allowing fee title to be taken at all, noting that the "extensions of the concept of eminent domain, to encompass public purpose apart from public use, are potentially dangerous to basic principles of our system of government."  And for Prettyman, the boundaries of the Constitutional scope of public use were for the courts to determine:

Whether the taking of a certain piece of property is necessary for a certain public use or purpose is initially and almost wholly a legislative question.  But like every other legislative determination it is subject to the Constitution.  Congress itself could not deprive a person of his property without due process of law.  It is the duty of the courts, when a legislative act is challenged as violative of the Constitution, to determine that issue.

Prettyman then turned to the third issue:  "the problem of the area which is not a slum but which is out-of-date, called by the Government 'blighted' or 'deteriorated'."  Prettyman clearly stated that this type of taking would be unconstitutional, but read the Redevelopment Act narrowly as not permitting this type of taking.  In light of Kelo, it is worth quoting from Prettyman's analysis at some length:

The hypothesis in the first phase of this consideration is an urban area which does not breed disease or crime, is not a slum.  Its fault is that is fails to meet what are called modern standards.  Let us suppose that it is backward, stagnant, not properly laid out, economically Eighteenth Century -- anything except detrimental to the health, safety or morals.  Suppose its owners and occupants like it that way.  Suppose they are often old-fashioned, prefer single-family dwellings, like small flower gardens, believe that a plot of ground is the place to rear children, prefer fresh to conditioned air, sun to fluorescent light.  In many circles, all such views are considered 'backward and stagnant'.  Are those who hold them 'therefore blighted'?  Can they not, nevertheless, own property? . . .

Is a modern apartment house a better breeder of men than is the detached or row-house?  Is the local corner grocer a less desirable community asset than the absentee stockholder in the national chain or the wage-paid manager?  Are such questions as these to be decided by the Government?  And, if the decisions be adverse to the erstwhile owners and occupants, is their entire right to own the property thereby destroyed? . . .

The terms 'public use' and 'public purpose' have never been defined with precision, and cannot be.  Localities, customs and times change, and with them the needs of the public may change.  But even the most liberal courts have put boundaries upon the meanings. . . .

We are of the opinion that Congress, in legislating for the District of Columbia, has no power to authorize the seizure by eminent domain of property for the sole purpose of redeveloping the area according to its, or its agents', judgment of what a well-developed, well-balanced neighborhood would be . . . .

Finally, Prettyman rejected the Government's argument that "if slums exist the Government may seize, redevelop and sell all the property in any area it may select as appropriate, so long as the area includes the slum area."  This, Prettyman said, "amounts to a claim on the part of the authorities for unreviewable power to seize and sell whole sections of the city," and could not withstand Constitutional review.

All of this said, Prettyman construed the statute narrowly to avoid Constitutional problems, and granted the government's motion to dismiss with leave to the plaintiffs to amend.  Thus, as the case came to the Supreme Court, the Redevelopment Act had been held to be Constitutional, but on narrow grounds.

The conference notes show that the Supreme Court wanted nothing to do with Prettyman's restrictive view of public use.  Justice Douglas' notes have Chief Justice Warren's position as: "project is within the statute + is constitutional -- what they [the District of Columbia] did was reasonable -- he [the Chief Justice] would go further than the Ct. of Appeal [i.e., Prettyman sitting as part of the district court panel] which unduly restricted the Act -- affirm on broader ground than the ct of appeal."  Justice Burton's notes also have Warren's position as "go beyond Court of Appeals."  There are no remarks for any of the other justices beyond "agree with CJ" or "affirm and modify" in either Burton's or Douglas' notes.

The opinion in Berman was assigned to Douglas.  A handwritten note dated November 12, 1954 from Burton to Douglas shows that Burton apparently felt that Douglas' first circulated draft did not go far enough in repudiating Prettyman's position:

Dear Bill,

While I believe I agree with the statements you make in the Redevelopment case it seems to me that the specific interpretations made by Prettyman will cause much trouble and confusion unless treated more specifically.  Therefore, unless you or someone else does it, I shall probably want to attempt it in a concurrence.  This means some delay.


Another memorandum indicates that Douglas' next draft was more to Burton's liking:

Dear Bill:

I appreciate the modifications in the recirculated opinion and see no adequate reason for me to write anything.  Please include me in your "Court."


And indeed, Douglas' opinion for a unanimous court clearly and specifically repudiates Prettyman's views.  For example, Douglas wrote:

It is not for the courts to oversee the choice of the boundary line nor to sit in review on the size of a particular project area.  Once the question of the public purpose has been decided, the amount and character of land to be taken for the project and the need for a particular tract to complete the integrated plan rests in the discretion of the legislative branch. . . .

The District Court indicated grave doubts concerning the Agency's right to take full title to the land as distinguished from the objectionable buildings located on it.  We do not share those doubts.

The only concession to potential limits on legislative power was made in response to a suggestion by Chief Justice Warren, who asked Douglas to add "Subject to specific constitutional limitations" to the sentence quoted above that in the final opinion continues "when the legislature has spoken, public interest has been declared in terms well nigh conclusive."  Obviously, the Court did not consider the public use clause to be a specific constitutional limitation.

As I mentioned in my last post on Midkiff, Justice O'Connor stated in her Kelo dissent that "There is a sense in which this troubling result follows from errant language in Berman and Midkiff", and O'Connor argued that the Court's broad language in Berman was not necessary to the result in that case.  It is true that the Court did not need to use broad language in Berman.  But there is nothing errant about the language.  The Court in Berman was well aware of what it was doing:  clearly and firmly getting the courts out of the business of reviewing issues of public use.  Kelo is the logical consequence.

[Comments are open; comments need to be approved before they post, so there may be some delay]

Ben Barros

October 17, 2005 in Takings | Permalink | Comments (0) | TrackBack (1)