A gleeful obituary for Poletown Neighborhood Council v. Detroit.

• Author: Sandefur, Timothy

The Michigan Supreme Court's decision in Wayne County v. Hathcock, (1) overruling the infamous decision in Poletown Neighborhood Council v. Detroit, (2) represents a major victory for property owners not only in that state, but, indirectly, throughout the United States. The earlier decision greatly broadened the scope of the eminent domain power, enabling government to seize land for the benefit of private corporations such as General Motors, instead of for "public use," as the text of the state constitution required. In the years following Poletown, many state and federal courts embraced a similar theory of the "public use" clause, holding that any use the legislature declared to be a public benefit qualified as a public use. (3) The result has been a rash of condemnations benefiting private parties.

The Hathcock court's decision to overrule Poletown vindicates an important legal principle to protect people from what the founding fathers called "the mischiefs of faction." (4) It sends a clear message to other courts that the abuse of eminent domain must be stopped, and that the government's power to seize property must be limited by effective constitutional restraints. As the United States Supreme Court considers the subject of eminent domain this term, an examination of this most famous of eminent domain cases is especially timely. (5) This article discusses the background and importance of Hathcock, and some of the important matters that must be addressed to further rein in the extreme government power of eminent domain. Part I describes the history of Poletown and its demise. Part II discusses Hathcock and its effect. Part III suggests the next steps that must be taken to restore the public use limitation as an effective brake on the condemnation power.

1. THE STORY OF POLETOWN V. DETROIT

   1. The Litigation of Poletown

      In the early 1980s, high oil prices, inflation, and government regulation brought on a severe recession, which hit Michigan's automobile manufacturers especially hard. As Americans turned to cheaper and more efficient Japanese imports, the state's unemployment rate rose from 7 percent in March of 1979, to 9.9 percent a year later; 12.2 percent in March, 1981, and peaked at 16.3 percent in November, 1982. (6) The Detroit property tax base fell by $100 million. (7) Government attempts to resolve such problems included major subsidies to domestic businesses both at the state and federal levels. (8) In particular, Michigan sought to relieve the ailing General Motors Corporation. In 1980, GM informed the city of Detroit that it would be willing to construct a new factory in a region of the city known as Poletown (due to the large number of Polish immigrants living there). The company had already threatened to close a factory which would have cost the community 6,000 jobs, and, as Justice James L. Ryan would later note, the city felt severe pressure from GM's "immense political and economic power." (9)

      The Poletown neighborhood was "a rare commodity in an urban environment: a stable, integrated area that in many ways harkened back to the close-knit ethnic communities that characterized Detroit's past." (10) The GM project meant condemning over 1,000 properties and the homes of 3,438 people. (11) And although it was deteriorating in the 1980s, many residents cherished their neighborhood, where milkmen still made their rounds, (12) local policemen regularly lunched at Carl Fisher's Famous Bar-B-Q Restaurant, (13) and where, one resident recalled, "[p]eople watched out for one another.... In the suburbs, it's keep up with the Joneses.' Over here, nobody cared. You were neighbors." (14) As Jean Wylie explains in her history of the Poletown case, "even as late as 1980, the community was known for its sound housing stock, its low rents, its good access to shops and services, and its tolerance for divergent ethnic groups and religious denominations. ... [A] study done by the University of Michigan in 1980 suggested that 'this area may be one of the most continuously racially integrated areas in Michigan.'" (15)

      The destruction of Poletown was remarkably swift. GM presented its plan to the city in July of 1980. On September 30, the city's Economic Development Corporation approved the plan. On October 8, GM chairman Thomas Murphy wrote to Detroit Mayor Coleman Young and to the chairman of the Detroit Economic Development Corporation, strongly urging them to adopt the plan: "I firmly believe the prospect of retaining some 6,000 jobs, and the attendant revitalization of these communities is a tremendous challenge," he wrote. "But it also is an opportunity and a responsibility which none of us can ignore." (16) This letter and GM's other maneuvers, wrote dissenting Justice Ryan, "suggest the withering economic clout of the country's largest auto firm." (17) Detroit was more than eager to do GM's bidding. An Environmental Impact Statement was approved on October 15, and on the 29th the Detroit Community and Economic Development Department recommended approval of the project. On October 31, the city council followed that recommendation, and Mayor Coleman Young signed his final approval on November 3.

      Action in the courts moved just as quickly. Homeowners immediately filed for an injunction, and trial began November 17. On December 9, the court dismissed the complaint. Bypassing the Court of Appeals, the residents sought review by the state Supreme Court, which was granted on January 29, 1981. Oral arguments were heard March 3, and the final decision, upholding the condemnation, was issued only ten days later. (18)

   2. The Historical Background of Michigan's "Public Use" Limitation

      Although Poletown has been characterized as a major break with Michigan's constitutional history, (19) the case was, in many ways, a continuation of a trend lasting at least a half-century. (20)

      Early cases held that the public use limitation prohibited government from taking property for a private use. (21) But the line between public and private uses became increasingly blurred with the industrial age. Two historical events are responsible for this blurring: the invention of the railroad and the privatization of the corporation. (22)

      Railroads grew at a fantastic rate in the 19th century. Although only about 3,000 miles of track existed in America in 1840, by 1850, there were 9,000 miles, and by 1860, there were 30,000 miles, the largest railroad network in the world. (23) To the legal minds of the time, railroads were much like highways, and highways were usually constructed by private companies with a government charter. (24) Such charters were issued on the premise that providing roads was a government prerogative, which could be delegated to a group of private citizens via a monopolistic charter granted by government. A group receiving such a charter was called a corporation. (25)

      But at the same time, the nature of corporations was changing drastically. In the eighteenth century, the term was practically interchangeable with "monopoly," (26) meaning an exclusive trading privilege enjoyed by government bequest; "corporations" in this sense were essentially government agencies--indeed, in the nineteenth century, city governments were routinely referred to as corporations. (27) During the Nineteenth century, however, the corporation evolved into its present form--an entirely private enterprise chartered not by special legislative act but by a routine ministerial certification process, and granted to any applicant. (28) Today's corporation bears little resemblance to its pre-19th century ancestor. But at the time that railroads were being laid out, the difference was much less clear. Since eminent domain had long been used to build toll roads in previous ages and in England, early American courts held that the government could give the eminent domain power to railroad companies notwithstanding the fact that they were privately run for profit. The first court to face this problem was the New York Chancery Court. In Beekman v. Saratoga & Schenectady Railroad, (29) and Bloodgood v. Mohawk & Hudson Railroad, (30) Chancellor Walworth upheld the use of eminent domain by private companies. A dissenting judge argued that "eminent domain ... [does] not authorize the government to take the property of one citizen for the mere purpose of transferring it to another, even for a full compensation, where the public was not interested in such transfer," (31) but the court upheld the taking because "[t]he Legislature ... came to the conclusion that the public required the use of a railroad ... deemed it inexpedient to construct it at the public expense, and adopted the policy of having a Co. construct it at its own expense and risk, having the money expended refunded by way of tolls or fare.... Because the Legislature permitted the Co. to remunerate itself for the expense of constructing the road, from those who should travel upon it, its private character is not established." (32)

      By the middle of the nineteenth century, the use of eminent domain by private railroad companies presented a serious problem for American courts and legislatures. Reformers had begun protesting the subsidies and other benefits the railroads derived from government, and the Populist movement pitted farmers and small landowners against the railroad/government complex which was likened to a giant octopus, grasping everything in sight. (33) When delegates at the 1879 California Constitutional Convention proposed to extend the condemnation power to allow farmers to take neighboring land for irrigating their fields, some protested that this violated the public use clause. "It is true," one delegate replied, that eminent domain was "originally used only for governments, but it has been perverted to corporations, and we propose here to extend it further, and to allow it to be used for private individuals." (34)

      Many judges tried to justify the extension of the...