United States Supreme Court Requires Payment of Just Compensation for Taking of Personal Property

This past week, the United States Supreme Court ("SCOTUS") rendered a decision in Horne v Department of Agriculture, 576 US ____ (2015). Horne recognized that a Department of Agriculture ("USDA") order requiring raisin producers to convey a portion of their crop to the USDA in exchange for a contingent interest in a portion of the value of the raisins constituted a taking requiring payment of just compensation pursuant to the Fifth Amendment of the United States Constitution. The fact that the Hornes arguably benefitted from the USDA's regulation of the raisin market was irrelevant. The holding refused to countenance government activity that results in the actual transfer of ownership of personal property. "[A]n appropriation [of private property] is a per se taking that requires just compensation." Horne confirms that the same standards apply to takings of real and personal property. "The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home." Horne also rejected applying the higher threshold for finding a taking in regulatory circumstances to actual appropriations of property. Whatever "reasonable expectations with regard to regulations, people still do not expect their property, real or personal, to be actually occupied or taken away." Finally, the government generally cannot condition participation in a commercial marketplace upon conveying property to the government. "[A] governmental mandate to relinquish specific, identifiable property as a 'condition' on permission to engage in commerce effects a per se taking."

Horne is important because it reaffirms and expands upon a fundamental takings principle. Regardless of the government's ability to reduce the value of private property through regulations, if it appropriates title to property, whether real or personal, either directly or as a condition to participating in a commercial endeavor, it must pay just compensation. While Horne addresses takings under the Fifth Amendment of United States Constitution, it applies equally to the states. While states may enact constitutions or other laws that grant more rights than are required by the federal constitution, they must abide by the minimum requirements found in federal law.

Stephon B. Bagne is a member based in Clark Hill's Detroit office who specializes in representing property owners in all manners of condemnation cases. He has handled cases acquiring total or partial interests in vacant and improved properties of all classes including commercial, industrial and residential. If you have any questions, please contact Stephon at sbagne@clarkhill.com | (313) 965-8897.