Supreme Court and land law - History of Business in the U.S.
Definition: Decisions by the nation’s highest court regarding the interpretation and constitutionality of laws regarding public lands and private ownership of real estate
Significance: The Supreme Court, in upholding the U.S. Constitution’s strong protections for the rights of private property and ownership of land, contributed to a stable economic environment that has allowed for the flourishing of American business.
The early rise to prominence of the U.S. Supreme Court was in part prompted by its concern for creating a stable business environment as expressed in its early property and land law decisions. After a relatively quiet first decade of the Supreme Court, John Marshall became chief justice of the United States in 1801. Marshall led the Court to become a strong branch of the federal government, equal in stature to the executive and legislative branches.
Marshall and Property Rights
Chief Justice Marshall believed in a strong federal government, able to maintain order and security and to take an active hand in developing the American continent. He believed the rule of law to be a necessary precondition for exploiting America’s vast natural resources, expanding the country’s manufacturing sector, and developing American business. Central to Marshall’s conception of the rule of law was the security and protection of private property and the ownership of land.
In Ogden v. Saunders (1827), Marshall wrote in his dissenting opinion of the right of every man “to acquire property, to dispose of that property according to his own judgment, and to pledge himself for a future act.” In other words, Marshall held that property, even property in land, could be a commercial instrument in a dynamic economy. This view of property and land law was at odds with that of traditional English jurisprudence, in which the courts were inclined to safeguard the great landed estates that had been handed down from the days of William the Conqueror. These estates represented the bedrock and strength of the English aristocracy. English land law, through such devices as primogeniture (inheritance by the oldest son) and the fee tail (restricting conveyances of land), did not allow for the estates to be divided or disturbed.
Marshall and his Supreme Court, in contrast, espoused a philosophy of property law that saw land as unrestricted, freely alienable, freely divisible, and freely mortgageable. Without legal restrictions, land could be treated as another commodity to be bargained for, exchanged, speculated on, and collaterized. Above all, the justices saw land as a flexible instrument in the cultivation of the great American expanse and the prospering of the American economy. Rather than being preserved immobile through centuries, American land was divided by all the sons of each generation, contributing to an egalitarian sense of land ownership.
Marshall’s colleague on the bench, the scholarly Joseph Story, shared the chief justice’s conception of a vigorous national government oriented toward property rights and the rapid development of the nation’s farming and business potential. Like Marshall, Story helped oversee the transformation of American land law froman agrarian to a business basis. Bernard Schwartz in A History of the Supreme Court (1995) finds Story’s opinion in Van Ness v. Pacard (1829) to be a dramatic example “where the traditional land law was adapted to meet the needs of the new mobile business economy rather than a static agricultural one.” Under English common law, landlords owned all fixtures and permanent improvements that tenants made to their property. Story’s decision in Van Ness greatly modified this rule, thereby encouraging tenants to make profitable improvements to land and property, as they could retain a larger share of the increased value.
Crucial to the opening of the great American land frontiers for economic development and business growth was the question of Native American lands. American law had been wrestling with conflicting claims between American Indians and European settlers from its colonial beginnings—almost always to the settlers’ advantage. The issue was definitively raised before the Supreme Court for the first time in the historic case of Johnson v. M’Intosh (1823).
Tuscarora tribe members show their opposition to having a power plant located on their reservation in Niagara County, New York. Although their case went to the Supreme Court, the tribe lost. (AP/Wide World Photos)
Johnson v. M’Intosh was a dispute over a vast tract of land in Illinois. The plaintiff had purchased the land from the Piankashaw during the 1770’s. The defendant had purchased the same land from the U.S. government in 1818. In holding for the defendant, despite the fact that he made his purchase subsequent to the plaintiff’s, Marshall declared that the sale from the Piankashaw had no legal force. Ultimate title to lands occupied by Indians was vested in the U.S. government, which alone had dominion over them. Thus the Court put into jurisprudence the reality of land competition between settlers and Native Americans.
As a result of the Johnson decision, the vast frontiers stretching before America’s settlers were laid open to be cultivated, farmed, and developed as federal law allowed; Native Americans were unable to assert any legal claim. This was a principle of land law that the Court would continue to uphold over the next two centuries in such cases as Cherokee Nation v. Georgia (1831),Worcester v. Georgia (1832), Lone Wolf v. Hitchcock (1903), Tee-Hit-Ton Indians v. United States (1955), and United States v. Sioux Nation of Indians (1980).
By the completion of Marshall’s tenure as chief justice in 1835, the Supreme Court had already put a decisive stamp on its jurisprudence of land law and its relation to American business. The Supreme Court gave the greatest respect to rights in private property and land and thus helped create a stable financial regime that allowed business ventures to flourish. Property rights were conceived in their most fluid form, by a Court that saw land as essentially no different from money, commodities, natural resources, and other items freely exchanged, bartered, and negotiated in a contractual economy. Neither English notions of primogeniture nor the claims of the Native Americans as prior occupants of the land could be allowed to stand in the way of the rapid amalgamation of American land and business.
The remainder of the nineteenth century saw much quieter developments in Supreme Court land jurisprudence. Beginning with Daly’s Lessee v. James (1823), the Court adjudicated numerous cases involving the inheritance of landed estates. In Walker v. Parker (1839), Daniel v. Whartenby (1873), and Hardenbergh v. Ray (1894), the Court interpreted the terms of the inherited estates in a most flexible manner, despite the traditional English emphasis on the rigidity of common law estates. In Jenkins v. Collard (1892), the Court allowed for the conveyance of real estate that had been forfeited by a Confederate soldier, who had since received a general pardon. In Ely v. New Mexico and A. R. Co. (1889) and Sharon v. Tucker (1892), the Supreme Court upheld the doctrine of adverse possession. This doctrine, which allows for an occupier of neglected land eventually to assert legal title to that land, supports a dynamic, business-oriented view of land law. It punishes landowners who leave their lands fallow and unproductive and rewards intruders who make profitable, cultivated use of the land.
The Law of Zoning and Takings
At the beginning of the twentieth century, the Supreme Court found itself once more in the thick of vital questions concerning land that carried implications for the development of American business. Zoning law (which segregates land according to its permissible uses) began in New York City in 1916, with government ordinances establishing restrictions and controls on the development and use of land. Real estate developers and boards of real estate agents saw zoning as a threat to their business and attacked its constitutionality. In Village of Euclid v. Ambler Realty Co. (1926), the Supreme Court upheld the constitutionality of zoning ordinances against the claim that such regulations deprived property owners of the economic value of their property without due process of law or just compensation.
The Supreme Court upheld zoning as a legitimate exercise of the state’s power to enact legislation to promote the public welfare. Subsequently, the Court upheld land controls and zoning legislation that were aimed at urban redevelopment (Berman v. Parker, 1954) and at ensuring family and urban amenities (Village of Belle Terre v. Boraas, 1974, andWard v. Rock Against Racism, 1989). It invalidated zoning ordinances that were found to be arbitrary and unreasonable (Nectow v. City of Cambridge, 1928), violated homeowners’ rights to free speech by prohibiting lawn signs (Linmark Associates Inc. v. Willingboro, 1977, and City Ladue v. Gilleo, 1994), or discriminated against racial or other minorities (Buchanan v. Warley, 1917, and City of Edmonds v. Oxford House, 1995). Probably no other development in land law has done more to shape American residential and commercial patterns—and hence American business—than the law of zoning, a development encouraged by the Supreme Court with its doctrine of extreme deference to the legislative process in this area of law.
Closely related to the question of zoning is that of the takings clause of the Fifth Amendment, prohibiting government from taking private property for “public use,” except in return for “just compensation” (a process known as eminent domain). The Court held that zoning did not violate this clause, even if it aggressively aimed at the prohibition of health nuisances (Hadacheck v. Sebastian, 1915), preservation of historic landmarks (Penn Central Transportation Co. v. City of New York, 1978), or a reduction in the concentration of large landed estates (Hawaii Housing Authority v. Midkiff, 1984). In Loretto v. Teleprompter Manhattan CATV Corp. (1982), however, the Court found that installation of cable facilities was a permanent occupation of property and therefore was a regulatory taking, regardless of whether the action achieved a public benefit or had minimal effect on the landowner. If land regulations went too far in diminishing the value of the property of a landowner, however, the Court ruled that they would constitute a taking for which the government had to provide just compensation.
In cases such as Pennsylvania Coal Co. v. Mahon (1922), Nollan v. California Coastal Commission (1987), Lucas v. South Carolina Coastal Council (1992), and Palazzolo v. Rhode Island (2001), the Court has been careful to protect the rights of property owners to just compensation when government legislation reduced the ability of landowners to derive economic or other value from their property. Nevertheless, in the much-controverted case of Kelo v. City of New London (2005), the Supreme Court continued to uphold the broadest possible power of the government to exercise eminent domain. Reaffirming its jurisprudence over the preceding fifty years, the Court held in Kelo that any rational government plan for land use constitutes a legitimate “public use.” Although some critics have claimed that this decision represents an assault on the rights of private property, others have applauded the Kelo decision, claiming that a broad reading of the “public use” requirement allows flexibility for governments to promote business and economic redevelopment in their land policies.
With the rise of the Civil Rights movement, the Supreme Court became active in trying to eliminate discrimination in American housing and land use. In Shelley v. Kraemer (1948), the Court refused to enforce restrictive covenants that had been placed on properties so that they could not be sold to nonwhites. Such restrictive covenants, as acts of private discrimination, were directly banned in the Federal Fair Housing Act of 1968, which prohibits discrimination in housing on the basis of race, religion, sex, family status, or disability. In cases such as Trafficante v. Metropolitan Life Insurance (1972), Shaare Tefila Congregation v. Cobb (1987), United States v. Starrett City Associates (1988), and Meyer v. Holley (2003), the Court has tended to a broad reading of the Fair Housing Act. These decisions have been lauded by some scholars, who claim they have assisted in the integration of all segments of American society into the residential and business life of the nation.
Ely, JamesW., Jr. The Guardian of Every Other Right: A Constitutional History of Property Rights. 3d ed. New York: Oxford University Press, 2008. Scholarly history of property rights under the Constitution and their interpretation by the Supreme Court.
Friedman, Lawrence. A History of American Law. 3d ed. New York: Touchstone, 2005. Emphasizes social aspects of American legal history; incisively written, with penetrating insights.
Johnson, Herbert. The Chief Justiceship of John Marshall, 1801-1835. Columbia: University of South Carolina Press, 1997. Leading Marshall scholar surveys his life and tenure on the Court.
Klarman, Michael J. From Jim Crow to Civil Rights: The Supreme Court and the Struggle for Racial Equality. New York: Oxford University Press, 2006. History of Supreme Court decisions on race relations, many of which related to land law.
Schwartz, Bernard. A History of the Supreme Court. New York: Oxford University Press, 1995. Concise, balanced history of the Supreme Court from its creation, with an emphasis on its four most historic decisions.
Urofsky, Melvin I., and Paul Finkelman. A March of Liberty: A Constitutional History of the United States. 2d ed. 2 vols. New York: Oxford University Press, 2004. Comprehensive textbook on the history of the Constitution and leading Supreme Court cases.
See also: U.S. Congress; Land laws; U.S. Presidency; Supreme Court and banking law; Supreme Court and commerce; Supreme Court and contract law; Supreme Court and labor law; commercial zoning.