The evolution of eminent domain: a remedy for market failure or an effort to limit government power and government failure?

Author:Benson, Bruce L.

As Lopez and Totah note, "The U. S. Supreme Court's 5-4 decision in the property-rights case Kelo v. City of New London ignited more controversy than any issue decided during the court's 2004-2005 term" (2007, 397). Virtually contemporaneously with that decision, I explained (Benson 2005) that although the "holdout problem" cited as the primary economic justification for eminent-domain powers may be a significant problem for government purchase of contiguous parcels of land, it is much less significant for private purchases for development, such as those involved in the Kelo situation, and government takings powers, including eminent domain, actually result in substantial government failure. Thus, even if market failure arising from the holdout problem does prevent some potentially desirable (efficient?) property transfers, it does not follow that eminent domain is justified. In the present article, I reinforce these points by demonstrating that even if holdout is a serious problem for government, it does not explain why eminent-domain powers actually developed. This market-failure argument is actually an ex post rationalization for eminent domain rather than an ex ante explanation or justification for government's possession of this power. (1) To see evidence for my claim, we need only consider the historical evolution of the government's power to confiscate property and the resulting demand that compensation be paid for such seizures.

The legal positivists maintain that eminent domain is "a peculiarly American branch of law" because of the takings clause of the Fifth Amendment, but the roots of this law go back, as does much of American law, to England (Stoebuck 1977, 4, 7-9). (2) Indeed, eminent domain reflects the feudal underpinnings of English property law (Paul 1988, 8-9). In the discussion here, I deal first with the historical development of and resistance to takings powers in England and with efforts to constrain it. I then turn to colonial America and the efforts to limit government powers to confiscate property in the U.S. Constitution.

Condemnation and Compensation in England

In 1066, William the Conqueror seized virtually all the lands of England. Although he retained control of many large estates, he also granted fiefs of land to Norman vassals, some Anglo-Saxon supporters, and important officials in the church in exchange for various payments and services. The king retained absolute authority over the use and disposition of land, however, so landholders controlled land only as long as they performed the required duties and paid the required fees. The primary payments were "aids" (paid when the king's eldest son was knighted, his eldest daughter was married, or the king was captured and held for ransom) and "incidents" (paid supposedly by the vassal's heir, but frequently by the highest bidder when a vassal died and the king regranted the fief). The vassals or barons performed various administrative functions for the king, but the most important services were military. Each fief provided a quota of knights, castle guards, or sergeant's services. In sum, landholders were "stewards" for the king, rather than landholders free to determine how the land should be used or disposed of.

William Rufus, William the Conqueror's successor, "was greedy, hateful, revengeful, inconstant in purpose, unfaithful to all, impious and a despoiler of the church, and highly irregular in his private life.... His whole reign is characterized by the extortion of money from persons, private or corporate" (Lyon 1980, 120). Not surprisingly, William Rufus had to put down open revolt by a group of Norman barons in 1088. He prevailed with support obtained by promising major reforms, including better justice. He kept none of his promises, however, and another group of barons revolted in 1095. William Rufus again prevailed, and various rebels were punished by "heavy fines, confiscations of lands, exile, beating, blinding, castration, and hanging" (120).

Henry I's reign began in 1100. In his coronation charter, Henry promised to end his predecessor's injustices and to establish a "government in accordance with the principles of justice and the established laws of England," but he did not actually intend to fulfill all the charter promises, and he never did. "The charter only represented a bid for support" (Lyon 1980, 122). Another baronial revolt followed in 1101, but it was suppressed. The revolting barons were exiled, and their lands confiscated.

Successes in putting down rebellions by groups of powerful landholders (barons) tended to strengthen the feudal property-rights arrangement, with the king as the ultimate landowner and other landholders serving only as stewards. The kings were not all-powerful rulers, of course; the barons probably would not have revolted unless they thought they could win. Moreover, the kings also faced institutional constraints, one of which, the Curia Regis, deserves recognition here.

One of the services that vassals were obliged to render in exchange for privileges associated with being tenants-in-chief on large tracts of lands (along with other benefits) was attendance at court to consider and advise on matters of law, war, and justice. Such obligations were owed by the barons; by the archbishops, bishops, and abbots of the church (who, like the barons, received fiefs of land from the king); and by members of the royal household. This group, the Curia Regis, gathered regularly during the great festivals of Easter, Whitsuntide, and Christmas and when summoned by the king. The members served primarily as a sounding board, reflecting the opinions of the most powerful elements of Anglo-Norman society, and as a source of backing for the king in his relations with the pope and other foreign powers. The Curia Regis had some independence...

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