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From Almshouses to Townhouses

The power of eminent domain isn't what it used to be

June 1, 2006


Arthur J. Rolnick Senior Vice President and Director of Research, 1985-2010
Phil Davies Senior Writer
From Almshouses to Townhouses

The boundaries of eminent domain—under what circumstances government can take private property—have shifted along with those of the nation and its economy as farms gave way to cities and new technologies such as the steam engine and telephone transformed American society. First under state constitutions, then federal law, courts have progressively broadened the concept of public use.

In the first decades after independence, local government had little occasion to exercise the power of eminent domain, handed down from English common law. There was no shortage of land for urban expansion; in most cases, cities and townships could buy property for public projects on the open market. When condemnation did occur, it was usually for land needed to carry on governmental functions or to promote social welfare. Forcibly acquiring property for town halls, capitols, courthouses, schools, lighthouses, almshouses and other public facilities was regarded as legitimate under the takings clauses of state constitutions.1 These takings were in keeping with the narrow definition of public use; the facilities built on condemned land were open to the general public, and the benefits accrued to the community at large.

But there were early exceptions to this tight, literal reading of public use. In the Colonial period, local authorities had condemned land for private roads and gristmills, and after the Revolution, the practice of taking property for demonstrably private uses continued. Cities and townships allowed landlocked owners to condemn rights-of-way, at their own expense, across their neighbors' property to connect to public highways. And communities enacted laws allowing the owners of water-driven gristmills to condemn the property of upstream owners flooded by dams, rather than openly negotiate payment for that land. In granting the power of eminent domain to private road builders and mill owners, local governments reasoned that improving rural mobility and fostering the development of mills to serve farmers contributed to the common good. In these instances, public use had broadened to include an indirect benefit to the public—a notion that courts would later recognize as public purpose.

Making way for industry

In the 19th century, the concept of public use expanded even further to allow takings for burgeoning industries that were seen as engines of economic and social progress. Courts were willing to relax property rights in return for the fruits of technological innovation.

In many instances, state legislatures approved the use of eminent domain for development that bestowed significant benefits on the public. Railroads, for example, which dominated transportation as urban development spread west, received special condemnation powers as "public service corporations" bound to carry all passengers and freight at reasonable rates. As such, they were generally immune from nuisance, trespass and damage suits filed by property owners along the tracks.2 In similar fashion, condemnations for toll roads and barge canals conferred public benefits, although private entities also profited from the takings.

In other cases, eminent domain was used for purposes that would be recognized today as commercial enterprises devoted to private gain. State courts extended the eminent domain privileges of gristmills to other facilities that depended upon water power: sawmills, cotton mills, pulp mills and foundries. In 1832, owners of property on the Delaware River in New Jersey challenged the condemnation of their land for a string of industrial mills. The Chancery Court of New Jersey upheld the takings, noting the changing "situation and wants of the community" and implying that the general public would benefit from mill construction.3

Some 19th century courts stuck to an actual-use definition of public use, striking down attempts to condemn property for textile mills, railroads and other private or quasi-public industrial uses. Thomas Cooley, the eminent Michigan jurist, argued against takings of private property "on vague grounds of public benefit to spring from a more profitable use" of that property.4 But Cooley and other champions of a narrow view of public use were swimming against the tide. By the late 1800s, court-approved takings for telephone lines, gas and electric utilities, irrigation ditches and other uses that arguably provide an incidental benefit to the public had become commonplace.

The Supreme Court embraces "public purpose"

In 1896, the U.S. Supreme Court declared that the Fifth Amendment takings clause applied to the states through the due process clause of the 14th Amendment. From then on all eminent domain cases turned on the federal public use requirement, which was interpreted with increasing latitude by successive high courts. The Court under Chief Justice Melville W. Fuller set the tone early, ruling in Fallbrook Irrigation Dist. v. Bradley5 that land could be taken for an irrigation project, even though the water would financially benefit specific landowners. "It is not essential that the entire community, or even any considerable portion thereof, should directly enjoy or participate in an improvement in order to constitute a public use," the Court said.

Ten years later, Justice Oliver Wendell Holmes Jr. went further, rejecting the actual-use reading of the takings clause and interpreting it to require only that a condemnation serve a "public purpose."6 In a 1925 case, the Holmes Court said that the judiciary should defer to legislatures on the question of what constitutes a public use.7

After World War II, the Supreme Court largely abdicated its authority to define appropriate public use, consistently finding that Congress and state legislatures were in the best position to decide what types of takings served a public purpose. In the 1950s, big cities found legitimate public purpose in slum clearance, facilitated by federal loans and grants for urban renewal projects. In exercising their powers of eminent domain, cities argued that razing blighted areas and rebuilding them (sometimes by selling condemned land to private developers) served the public interest by eliminating squalor and crime. In the seminal case of Berman v. Parker,8 the Court agreed, rejecting the appeal of a department store owner in Washington, D.C., whose nonblighted property was slated for condemnation and demolition. A unanimous Court ruled that clearing slums fulfilled a public purpose and that the government enjoyed broad discretion in pursuing public objectives. "[W]hen the legislature has spoken, the public interest has been declared in terms well-nigh conclusive," Justice William O. Douglas wrote.

Thirty years later, the state of Hawaii made its case that achieving a socially equitable distribution of property served a public purpose. In Hawaii Housing Authority v. Midkiff 9 the Supreme Court ruled that the state had the right to condemn the property of big landowners and resell it to their tenants at a nominal price. Declaring the public use requirement "coterminous with the scope of a sovereign's police powers," the Court again deferred to state lawmakers on the question of what constitutes public purpose. Midkiff sent a message to local officials and real estate developers that almost any taking by government, including those involving transfers of property from one private entity to another, qualifies as a bona fide public use under the Constitution.


1 Errol E. Meidinger. 1980. The "Public Uses" of Eminent Domain: History and Policy. Environmental Law 11 (Fall): 18-19.

2 Meidinger, 27.

3 Scudder v. Trenton Delaware Falls Co., 1 N.J. Eq. 694 (1832).

4 Thomas Cooley. 1868. A Treatise on the Constitutional Limitations which Rest Upon the Legislative Power of the States of the American Union 654.

5 164 U.S. 112 (1896).

6 Mt. Vernon-Woodberry Cotton Duck Co. v. Alabama Interstate Power Co., 240 U.S. 30, 32 (1916) (Holmes, J.).

7 Old Dominion v. United States, 269 U.S. 55, 66 (1925) (Holmes, J.).

8 348 U.S. 26 (1954).

9 467 U.S. 229 (1984).

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