Don’t worry, you didn’t miss the U.S. Supreme Court issuing a major eminent domain case. Today’s post is about a decidedly older decision, Danforth v. United States, 308 U.S. 271 (1939). 

The reason we’re posting this decision now, eighty years after it was issued, is that a colleague recently passed on a note with a cite to the case. So we dusted off the opinion and read it (again). And when we did, this quote stuck out:

“Condemnation is a means by which the sovereign may find out what any piece of property will cost.”

Id. at 284.

The case involved a straight taking (not quick take). The question was when the “taking” actually takes place in such a case, and whether interest is due if the condemnor pays 100% of the adjudicated compensation when it is owed. The Court held:

Unless a taking has occurred previously in actuality or by a statutory provision, which fixes the time of taking by an event such as the filing of an action,’ we are of the view that the taking in a condemnation suit under this statute takes place upon the payment of the money award by the condemnor.

Id. (footnote omitted). In other words, a straight taking lawsuit exercising the power of eminent domain is only to determine the price the condemnor must offer if it wants to obtain the property interest. That’s the current state of the law. (Whether that remains a good idea is a separate question.)

Pretty standard stuff, no?

But condemnation lawyers take note: we’re guessing that 90% of the judges not hearing eminent domain cases on a regular basis don’t really understand this fundamental point, unless you educate them often: in a straight taking, the condemnor can walk away, and generally speaking, the property isn’t “taken” until the court adjudicates the price, the condemnor exercises its option to pay that price, and then actually pays. We’re guessing that many judges mostly assume that once a condemnation lawsuit is instituted, that it’s game over

Exhibit “A” for our belief is the U.S. Courts of Appeals. Those courts have — with the exception of the Seventh Circuit — held that a private condemnor under the Natural Gas Act may take property before any of that process by obtaining a preliminary injunction. As we wrote in our amicus brief in support of the cert petition in the latest case, these injunctions seem based on the courts’ mistaken assumption that, once instituted, the taking is all but inevitable, so why not give the condemnor possession now. 

We won’t belabor the point (you can read our earlier posts on that topic) and will end on this thought: if courts award possession of the property by preliminary injunction, why isn’t that a “judicial taking?” After all, it is a physical invasion by a pipeline that interferes with the property owner’s present use and enjoyment of their private land. No title transfer has taken place, and indeed, as Danforth recognizes, may never take place. Compensation is not “reasonable, certain, and adequate,” because the condemnor has the choice whether to walk away.

We know the courts don’t like dealing with judicial takings cases, but why isn’t this the situation that PruneYard combined with Preseault anticipated? Should property owners subject to these NGA preliminary injunctions file CFC takings claims against the feds? 

Danforth v. United States, 308 U.S. 271 (1939)