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July 5, 2005 – June 27, 2005, will likely
go down in U. S. history as the day when the American People
lost one of the unalienable rights bestowed upon us by our
Founding Fathers. For to our detriment, it was on that fateful
day that the Supreme Court of the United States expanded
its interpretation of a major tenet of the Fifth Amendment
to the Constitution.
Eminent domain is defined by my Webster’s
Dictionary as “the power of the state to take private
property for public use with payment of compensation to
the owner”. This is granted by the Fifth Amendment.
Prior to last Monday, this power was relatively sparingly
utilized by various local, state and federal governments.
When a property was condemned under eminent
domain, it was typically done to acquire land along the
right of way for building a railroad or roadway, supplying
water, or for the construction of a government facility
such as a post office or a prison. Additionally, urban renewal
and the destruction and replacement of slums with low cost
housing, was effected by various governments working in
conjunction with private enterprises. In all of these earlier
limited instances, from the founding of our nation, each
eminent domain “taking” was done to benefit
some direct need of the American People at large.
Unfortunately, the recently handed down Supreme
Court ruling has expanded the Fifth Amendment’s scope.
Never before did a private entity directly benefit from
the “taking” of the property of others through
eminent domain. This ruling sets the stage for abuse. It
has the potential to harm a yet unnamed number of ordinary
citizens to primarily increase government tax revenues,
and for the benefit of a few private enterprises and individuals.
The Supreme Court’s finding was the
final decision in the case of Kelo vs. New London, Connecticut.
The city of New London desired to condemn a number of well-maintained
residences along its waterfront, and transfer their title
to a private company. The sixteen homes were to be torn
to the ground. In there place was to be built a series of
buildings including a hotel, condominiums, and office space.
The Supreme Court for the first time found that this eminent
domain transfer to a private entity fit within the meaning
of the Fifth Amendment.
Justice John Paul Stevens wrote the opinion
for the majority of Justices. His vote in favor was joined
by Justices Anthony Kennedy, David H. Souter, Ruth Bader
Ginsburg and Stephen G. Breyer. The dissenters were Justices
Sandra Day O’Connor, Antonin Scalia, Clarence Thomas
and Chief Justice William H. Rehnquist. In rendering the
opinion of the majority of Justices, Stevens stated in part
that “The city has carefully formulated an economic
development plan that it believes will provide appreciable
benefits to the community, including – but by no means
limited to –new jobs and increased tax revenues”.
He went on to state that, “...To effectuate this plan,
the city has invoked a state statute that specifically authorizes
the use of eminent domain to promote economic development.
Because this plan unquestionably serves a public purpose,
the takings challenged here satisfy the public use requirement
of the Fifth Amendment”.
The future of countless Americans will now
be exposed to suffering in the name of “serving a
public purpose” in a potential myriad of new fashions.
This, while simultaneously enhancing the wealth of some
private enterprises and individuals.
The day after the decision was handed down
I turned first to the New York Times for additional information.
Surprisingly, although the Times’ front page listed
what they called major Supreme Court decisions on the “Ten
Commandments”, “File Sharing”, “Revealing
Sources” and “Domestic Violence”, and
devoted substantial first page space to three of them, not
a single word discussed Kelo vs. New London. This was surprising
because the New York Times doesn’t normally devote
extended coverage to Supreme Court decisions. Yet, in my
opinion, they omitted any mention of the most important
ruling while highlighting others of lesser merit.
Later that week a local newspaper, the Atlanticville,
ran the headline, “High Court Ruling A Blow To Residents”.
The Atlanticville described the potential ramifications
to a number of local residents who were involved in a similar
case. Their three-block neighborhood on Marine Terrace,
Ocean Terrace, and Seaview Avenue in Long Branch, NJ, was
involved in a similar eminent domain lawsuit. If they lose
the case, which is now likely due to the Supreme Court’s
decision, the 36 property owners will be forced to sell
and vacate their homes. Their dwellings will then be “razed
and replaced by upscale townhouses and condominiums.”
Upon learning of the Court’s decision a local resident
stated “It is a decision that invites corruption.
It puts more power into the affluent and politically connected”.
There are numerous other similar cases pending
across the nation that will be affected by this high court
decision! And, there are will likely be countless more to
follow.
When Eminent Domain was earlier utilized
the compensation for those who lost their property was often
at below market prices. The offer was typically presented
by the governing body involved. Frequently, the affected
individuals could not afford proper legal representation
and thus were forced to take whatever was offered. Others,
who had sufficient capital to protect themselves, at least
could fight for their just compensation. This situation
will not likely change in the future, and those who do not
have adequate funds to protect their rights may suffer similar
fates. As is often the case, those who will be the most
damaged have the least ability to defend themselves.
Tragically, this decision opens the door
for many people to be legally forced from their homes. They
now stand to suffer financially whenever government officials
determine that the “public good” will be better
served if their property is transferred into the hands of
others.
Sandra Day O’Connor wrote the Court’s
dissenting opinion. In part she stated that, “Any
property may now be taken for the benefit of another private
party, but the fallout from this decision will not be random.
The beneficiaries are likely to be those citizens with disproportionate
influence and power in the political process, including
large corporations and development firms”.
One has to wonder if Ms. O’Connor’s
surprise announcement a few short days later, of her retirement
from the Supreme Court after 24 years on the bench, was
not motivated by the direction that this decision is destined
to take the country. From her own words she must have been
deeply disturbed by this decision. For with it, the United
States eliminated the ability of the average American to
protect him or herself while it sanctioned another group
of “citizens with disproportionate influence and power
in the political process” to take their property away
from them.
It is impossible to foretell how this unprecedented
interpretation of the Fifth Amendment will affect all of
us. However, it is likely that as time passes eminent domain
will become more widely utilized to displace honest, law-abiding
Americans from their homes and property.
*******
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It is my desire for my subscribers to purchase their stock
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FINANCIAL INSIGHTS is written and published by Dr. Richard
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It is in your best interest to contact any company in which
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