De Facto Takings
De Facto Takings
1979
Recommended Citation
Thomas S. Szatkowski, De Facto Takings and the Pursuit of Just Compensation, 48 Fordham L. Rev. 334 (1979).
Available at: http://ir.lawnet.fordham.edu/flr/vol48/iss3/4
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NOTES
DE FACTO TAKINGS AND THE PURSUIT OF JUST COMPENSATION
INTRODUCTION
When urban renewal or other public land use projects are announced and
preparations begin, predictable changes occur in the affected property and in
the surrounding areas. The property owner may be forbidden to make
improvements and the property inevitably begins to deteriorate. Tenants
move and businesses disintegrate. Mortgage money disappears and insurance
rates soar. Accordingly, the value of the property diminishes rapidly. I In
these circumstances, controversial legal issues arise concerning whether gov-
ernment action commenced for the public benefit results in an appropriation
of private property without just compensation in violation of the fifth
amendment. 2 Specifically, during the course of formal eminent domain pro-
ceedings, an aggrieved property owner may attempt to establish a de facto
taking by demonstrating that governmental activity in furtherance of an
impending condemnation has altered the character of the property and
interfered with the owner's use to the extent there has been a confiscation by
the government prior to actual passage of title. 3 In addition, a claim that a de
facto taking has occurred may arise when there has been no initiation of
eminent domain proceedings, but the operation of a statute, regulation, or
some other governmental activity has so restricted the use of property and
reduced its value that the private property is rendered unsuitable for any
economically beneficial purpose. 4
1. See, e.g., Richmond Elks Hall Ass'n v. Richmond Redev. Agency, 561 F.2d 1327 (9th Cir.
1977); Amen v. City of Dearborn, 363 F. Supp. 1267 (E.D. Mich. 1973), rev'd on other grounds,
532 F.2d 554 (6th Cir. 1976); Madison Realty Co. v. City of Detroit, 315 F. Supp. 367 (ED.
Mich. 1970); Foster v. City of Detroit, 254 F. Supp. 655 (E.D. Mich. 1966), qffd, 405 F.2d 138
(6th Cir. 1968); City of Detroit v. Cassese, 376 Mich. 311, 136 N.W.2d 896 (1965); City of Buffalo
v. J.W. Clement Co., 28 N.Y.2d 241, 269 N.E.2d 895, 321 N.Y.S.2d 345 (1971).
2. "No person shall ... be deprived of life, liberty, or property, without due process of law;
nor shall private property be taken for public use, without just compensation." U.S. Const.
amend. V.
3. Vesting of title may occur at different times depending upon the statutory scheme
established by the particular jurisdiction. For example, New York requires that the condemning
authority conduct a public hearing prior to acquisition. N.Y. Em. Domain Proc. Law § 201
(McKinney 1979). After the hearing, the condemning authority may acquire title to the property
by filing an acquisition map in the county clerk or registrar's office of the county in which the
property is located. Id. § 402. The acquisition is complete and title is vested in the state as of the
filing of the acquisition map. Id. § 402(A)(3). Michigan. on the other hand, uses two different
procedures. First, the condemnor may file a petition in court describing the land to be taken and
the person or persons having an interest in the land. Mich. Comp. Laws Ann. § 213.2 (1967). A
hearing is then held and a jury determines the compensation that is to be awarded to the
condemnee. Id. § 213.3. The court then enters a judgment vesting title in the state. Id. § 213.4.
The second procedure, called a "quick take," permits the condemnor to file a declaration of
taking. Id. § 213.367. If the condemnee does not make a motion to review the petition, title
immediately vests in the condemnor and the right to just compensation vests in the condemnee.
Id. § 213.369.
4. See Nectow v. City of Cambridge, 277 U.S. 183 (1928) (residential zoning ordinance);
DE FACTO TAKINGS
Miller v. Schoene, 276 U.S. 272 (1928) (statute); Village of Euclid v. Ambler Realty Co., 272 U.S.
365 (1926) (zoning ordinance); notes 91-93 infra and accompanying text.
5. The police power is the sovereign power of the states, not surrendered to the federal
government, to enact legislation and promulgate regulations to promote the general welfare of the
public. E. Freund, The Police Power § 3, at 3 (1904); L. Tribe, American Constitutional Law 323
(1978). Thus, the police power is capable of change as social, economic, and political conditions
evolve. "[Tihe range of public interests comprehended by the public welfare is exceedingly
broad." Sixth Camden Corp. v. Township of Evesham, 420 F. Supp. 709, 723 (D.N.J. 1976).
"The values it represents are spiritual as well as physical, aesthetic as well as monetary. It is
within the power of the legislature to determine that the community should be beautiful as well as
healthy, spacious as well as clean, well-balanced as well as carefully patrolled." Berman v.
Parker, 348 U.S. 26, 33 (1954); accord, Village of Belle Terre v. Boraas, 416 U.S. 1, 9 (1974).
6. See, e.g., United States v. Fuller, 409 U.S. 488, 490-92 (1973); Almota Farmers Elevator &
Warehouse Co. v. United States, 409 U.S. 470, 473-74 (1973); United States v. Reynolds, 397
U.S. 14, 16-19 (1970).
7. City of Buffalo v. J.W. Clement Co., 28 N.Y.2d 241, 269 N.E.2d 895, 321 N.Y.S.2d 34S
(1971); see pt. U(A)-(B) infra.
8. City of Detroit v. Cassese, 376 Mich. 311, 136 N.W.2d 896 (1965); see pt. lMl infra and
accompanying text.
FORDHAM LAW REVIEW [Vol. 48
tures have generally ignored the problem, and courts have been reluctant to
complicate further the legal issues by 4incorporating economic evidence and
political attitudes into their analyses.'
Although its legislative foundations are not certain, the policy underlying
the taking clause is the necessity of protecting an individual's right to private
property from an uncompensated seizure by the government for public use.
Thus, any interpretation of the taking clause must accomodate both private
property interests and the necessity for public programs.Is Recognizing the
formidability of this task the Supreme Court has recently stated: "[T]his
Court, quite simply, has been unable to develop any 'set formula' for
determining when 'justice and fairness' require that economic injuries caused
by public action be compensated by the government, 16
rather than remain
disproportionately concentrated on a few persons."'
Despite its hesitance to define the precise constitutional meaning of the term
"taking," the Supreme Court has developed several approaches to determine
whether just compensation must be paid to an aggrieved property owner.
Most commonly used by the courts 17 are the "physical invasion" theory and
rights inhering in the citizen's relation to the physical thing, as the right to possess, use and
dispose of it." Id. at 378. One commentator suggested that property includes every species of
interest in land and things that an owner can transfer to another person. Stoebuck, supra note 10,
at 606. See also Cormack, Legal Concepts in Cases of Eminent Domain, 41 Yale L.J. 221, 240
(1931). The Supreme Court, however, has dismissed claims that alleged the occurrence of a taking
on the ground that the private interests interfered with by government action were not
"property." United States v. Willow River Power Co., 324 U.S. 499 (1945) (no property interest
in maintaining high water level); United States v. Chandler-Dunbar Water Power Co., 229 U.S.
53 (1913) (no private property interest can exist on navigable waters); see Kratovil & Harrison,
supra note 9, at 602-03; Sax, Takings, Private Property and Public Rights, 81 Yale L.J. 149, 152
& n.8 (1971) [hereinafter cited as Sax I]; Sax I, supra note 10, at 51-52.
14. See, e.g., Costonis, The disparity Issue: A Context for the Grand Central Terminal
Decision, 91 Harv. L. Rev. 402, 408-09 (1977); Costonis, supra note 9, at 1047-49.
15. "The law of eminent domain is fashioned out of the conflict between the people's interest
in public projects and the principle of indemnity to the landowner." United States ex rel TVA v.
Powelson, 319 U.S. 266, 280 (1943). While the government has paramount rights to appropriate
private property, the fifth amendment requires that just compensation be paid whenever this
right is exercised. United States v. Lynah, 188 U.S. 445, 465 (1903). Compensation must be
"just," however, "not merely to the individual whose property is taken, but to the public which is
to pay for it." Searl v. School Dist. No. 2, 133 U.S. 553, 562 (1890). "In a variety of ingenious
ways, courts have narrowed the principle of 'just compensation' in order to reduce the costs of
economic development with the effect of subsidizing growth." Miller v. United States, 583 F.2d
857, 862 (6th Cir. 1978).
16. Penn Cent. Transp. Co. v. New York City, 438 U.S. 104, 124 (1978); see Goldblatt v.
Town of Hempstead, 369 U.S. 590, 594 (1962); Armstrong v. United States, 364 U.S. 40, 49
(1960).
17. The "noxious use abatement" and "balancing social gains against private losses" theories
have also been suggested. The noxious use abatement theory focuses on "whether the claimant
has sustained any loss apart from restriction of his liberty to conduct some activity considered
harmful to other people." Michelman, supra note 9, at 1184; see, e.g., Goldblatt v. Town of
Hempstead, 369 U.S. 590 (1962); Village of Euclid v. Ambler Realty Co., 272 U.S. 365 (1926);
Hadacheck v. Sebastian, 239 U.S. 394 (1915); Reinman v. City of Little Rock, 237 U.S. 171
(1915); Bacon v. Walker, 204 U.S. 311 (1907). The rationale underlying the noxious use theory is
that compensation is not required "when the public simply requires one of its members to stop
FORDHAM LAW .REVIEW [Vol. 48
making a nuisance of himself." Michelman, supra note 9, at 1196. The theory originated In
Mugler v. Kansas, 123 U.S. 623 (1887), a case involving the validity of a statute that prohibited
the manufacture and sale of intoxicating liquor. Mugler complained that the prohibition on
the use of his brewery rendered it worthless and was, in effect, a taking of property for
public use without compensation and a deprivation of property without due process of law. Id. at
664. The Court disagreed, stating that: "[Tihe destruction of property which is itself a public
nuisance, or the prohibition of its use in a particular way, whereby its value becomes depreciated,
is very different from taking property for public use, or from depriving a person of his property
without due process of law. In the one case, a nuisance only is abated; in the other, unoffending
property is taken away from an innocent owner." Id. at 669. A shortcoming of the noxious use
theory is illustrated in Hadacheck v. Sebastian, 239 U.S. 394 (1915), in which the plaintiff's brick
factory was located on the outskirts of a city, but it later became surrounded by a residential
development. Because brick manufacturing involves the firing of the bricks in kilns which emit
fumes, gases, and soot detrimental to the health of those living in the vicinity, the city enacted an
ordinance prohibiting the manufacture of brick within the city limits. The plaintiff challenged the
validity of the ordinance under the fourteenth amendment. The Court upheld the ordinance on
the ground that it was directed merely to prevent a nuisance. Id. at 411. The owner of tile
brickyard, however, was free from any wrongdoing. His use of the property was not noxious
when he assumed ownership. Rather, the use became noxious as the residential community
developed. Thus, the problem is one of public policy, in choosing between two lawful uses of
land: manufacturing and residential. By characterizing brick manufacturing as noxious, however,
the test presupposes that the residential uses are to be preferred. Thus, the noxious use test
appears to encourage rigid characterization rather than analysis of the competing public policy.
See Sax I, supra note 10, at 49. The balancing test, on the other hand, is rarely used by the
courts. The key to determining the occurrence of a compensable taking according to this test is
"whether the claimant's loss is or is not outweighed by the public's concomitant gain." Michel-
man, supra note 9, at 1184; see Kratovil & Harrison, supra note 9, at 609, 626. If the individual's
losses are found to be "outweighed" by the social gains, there is no taking. See, e.g., Rochester
Business Inst. v. City of Rochester, 25 A.D.2d 97, 267 N.Y.S.2d 274 (4th Dep't 1966);
Comment, Balancing PrivateLoss Against Public Gain To Test ForA Violation of Due Process or
A Taking Without Just Compensation, 54 Wash. L. Rev. 315 (1979). The problem with such a
theory is the difficulty of weighing the individual's loss; and the public's gain. These interests
cannot be accurately defined, measured or compared on a standard scale. Michelman, supra note
9, at 1193-96.
18. Sax I, supra note 10, at 46; see Berger, A Policy Analysis of the Taking Problem, 49
N.Y.U. L. Rev. 165 (1974); Michelman, supra note 9, at 1191.
19. Michelman, supra note 9, at 1184; see, e.g., United States v. Pewee Coal Co., 341 U.S.
114 (1951); United States v. Kansas City Life Ins. Co., 339 U.S. 799 (1950); United States v.
Causby, 328 U.S. 256 (1946); United States v. Cress, 243 U.S. 316 (1917); United States v.
Welch, 217 U.S. 333 (1910); United States v. Lynah, 188 U.S. 445 (1903); Transportation Co. v.
Chicago, 99 U.S. 635 (1878); Pumpelly v. Green Bay Co., 80 U.S. (13 Wall.) 166 (1871).
20. 80 U.S. (13 Wall.) 166 (1871).
1979] DE FACTO TAKINGS
which the state authorized the construction of a dam which caused the
flooding of the plaintiff's land. The Court stated that "where real estate is
actually invaded by superinduced additions of water, earth, sand, or other
material, or by having any artificial structure placed on it, so as to effectually
destroy or impair
' 21
its usefulness, it is a taking, within the meaning of the
Constitution."
Although the Supreme Court recently expressed its preference for the
theory, stating that "[a] 'taking' may more readily be found when the
interference with property can be characterized as a physical invasion by
government, '22 the physical invasion requirement often depends upon a
"purely fortuitous circumstance. " 23 For example, in airplane overflight cases
in which the plaintiffs claim that frequent and regular flights by government
airplanes constitute a taking, courts applying the physical invasion theory
have held that only those owners whose property was located directly below
the flight path could receive compensation. 24 Thus, while the physical inva-
sion theory may furnish an expeditious standard for distinguishing between
compensable and noncompensable interferences with private property, recov-
ery can be dependent upon an inquiry "as irrelevant as whether the wing tip
of the aircraft passes through' 25
some fraction of an inch of the airspace directly
above the plaintiffs land.
Moreover, by making a tresspassory-type invasion the threshold for a taking,
a court applying the physical invasion test does not take into account the
deleterious effects on property value caused by government action involving
adjacent property. For example, in Transportation Co. v. Chicago,2 6 the
government's construction of a tunnel left the plaintiff's property landlocked
so that boats were unable to approach its docks. In addition, excavation of an
adjacent street blocked the doors of the plaintiff's warehouse. Utilizing the
physical invasion test, the Supreme Court refused to award the plaintiff
compensation because government acts "not directly encroaching upon pri-
vate property, though their consequences may impair its use, are ... not...
a taking within the meaning of the constitutional provision." 2 7 Thus, under
the physical invasion test, government activities that occur outside the
boundaries of private property may be insufficient to constitute a taking
despite the substantial losses suffered by the private owner.
C. De Jure Takings
De jure taking refers to government acquisition of legal title to property or
property rights during a formal condemnation proceeding. The power of
eminent domain permits the government to effect a de jure taking of private
property for public use despite protest by the owner. 39 The fifth amendment's
taking clause, however, limits the eminent domain power by requiring the
payment of just compensation whenever there is a formalized transfer of title
to the government. 40 Because the state legislature prescribes the procedures
for exercises of eminent domain, only two constitutional problems must be
resolved during condemnation proceedings: first, a determination of whether
35. Michelman, supra note 9, at 1229-34; Sax I, supra note 10, at 50, 60; Comment, De Facto
Taking and Municipal Clearance Projects: City Plan or City Scheme?, 9 Urb. L. Ann. 317, 320
(1975).
36. See, e.g., Goldblatt v. Town of Hempstead, 369 U.S. 590 (1962); Village of Euclid v.
Ambler Realty Co., 272 U.S. 365 (1926); Hadacheck v. Sebastian, 239 U.S. 394 (1915); Reinman
v. City of Little Rock, 237 U.S. 171 (1915). These cases applied the noxious use prevention
theory. Prof. Michelman suggests that the diminution in value theory is used only in cases
involving neither a physical invasion nor a restriction of the noxious use. Michelman, supra note
9, at 1191.
37. Magavern, The Evolution and Extension of the New York Law of Inverse Condemnation,
24 Buffalo L. Rev. 273, 275 (1974); see Penn Cent. Transp. Co. v. New York City, 438 U.S. 104,
123-24 (1977); Armstrong v. United States, 364 U.S. 40, 48 (1960); United States v. Caltex, Inc.,
344 U.S. 149, 156 (1952).
38. West v. Chesapeake & Potomac Tel. Co., 295 U.S. 662, 671 (1935); Chicago B. & Q.
RR. v. Chicago, 166 U.S. 226, 239 (1897).
39. See N.Y. Em. Domain Proc. Law § 101 (McKinney 1979); 1 P. Nichols, The Law of
Eminent Domain § 1.11, at 1-5 (rev. 3d ed. J. Sackman 1974).
40. U.S. Const. amends. V, XIV; Mich. Const. art. 10, § 2; N.Y. Const. art. I, § 7. The
eminent domain power is an inherent and necessary power of government to guard its indepen-
dent existence and to promote the welfare of the public. See United States v. Jones, 109 U.S. S13
(1883); Boom Co. v. Patterson, 98 U.S. 403 (1878); Kohl v. United States, 91 U.S. 367 (1875); 1
P. Nichols, supra note 39, § 1.3 at 1-78; Kratovil & Harrison, supra note 9, at 596; Stoebuck,
supra note 10, at 556, 568.
FORDHAM LAW .REVIEW [Vol. 48
the government has appropriated the property for "public use,"'4 1 and second, a
computation of the owner's "just compensation" as of the date of transfer of
title to the government. 4 2
The determination of just compensation is often difficult because govern-
ment action in connection with an impending condemnation may adversely
affect property values. 43 To prevent the government from taking advantage
of such adverse effects by acquiring the property at a depreciated price, the
41. The "public use" requirement of the fifth amendment has been considered a limitation on
the power of eminent domain. See Nichols, The Meaning of Public Use in the Law of Eminent
Domain, 20 B.U. L. Rev. 615 (1940). However, in United States ex relTVA v. Welch, 327 U'S.
546 (1946), and Berman v. Parker, 348 U.S. 26 (1954), the Supreme Court appears to have
repudiated a strict application of the doctrine of public use. See, e.g., Dunham, supra note 9, at
65-71; Glaves, Date of Valuation in Eminent Domain: irreverancefor UnconstitutionalPractice,
30 U. Chi. L. Rev. 319, 320 (1963); Stoebuck, supra note 10, at 588-99; Comment, The Public
Use Limitation on Eminent Domain: An Advance Requiem, 58 Yale L.J. 599, 611-14 (1949).
42. The definition of the term "just compensation" has also been the subject of debate. See,
e.g., Kanner, supra note 9, at 778-785; Kratovil & Harrison, supra note 9, at 615-20; Comment,
Eminent Domain Valuations in an Age of Redevelopment: Incidental Losses, 67 Yale L.J. 61
(1957). Two approaches to providing just compensation are the "indemnity" or "owner's loss"
theory and the "taker's gain" theory. Under the indemnity theory, the owner is entitled to be put In
as good a position as he would have been if his property had not been taken, United States cx rel
TVA v. Powelson, 319 U.S. 266, 281 (1943); see United States v. Miller, 317 U.S. 369, 373
(1943). Under the taker's gain theory, the government must pay only for that property which Is
acquired, and the individual is not compensated for incidental losses proximately caused by the
taking, such as business losses or moving expenses. Mitchell v. United States, 267 U.S. 341, 345
(1925). The rationale of the taker's gain theory is that forcing the public to pay for more than It
actually acquires would unduly increase the cost of the public project for which the property has
been taken. It is incorrect, however, to say that the total cost of the project is decreased when
certain of the owner's losses are not compensated. Denial of compensation does not reduce tile
cost of the acquisition. Rather, the total cost remains the same, but is redistributed so that a
greater proportion falls on the owner. Kanner, supra note 9, at 784-85; see Van Alstyne, Just
Compensation of Intangible Detriment: Criteriafor Legislative Modifications in California, 16
U.C.L.A. L. Rev. 491, 543-44 (1969). New York follows the indemnity theory. Rose v. State, 24
N.Y.2d 80, 87, 246 N.E.2d 735, 739, 298 N.Y.S.2d 968, 975 (1969); See Marraro v. State, 12
N.Y.2d 285, 292-93, 189 N.E.2d 606, 609-11, 239 N.Y.S.2d 105, 109-10 (1963); In re Board of
Water Supply, 277 N.Y. 452, 14 N.E.2d 789 (1938); Banner Milling Co. v. State, 240 N.Y. 533,
148 N.E. 668 (1925); New York, Ont. & W. Ry. v. Livingston, 238 N.Y. 300, 144 N.E. 589
(1924). Michigan also follows the indemnity theory. State Highway Comm'r v. Ellender, 362
Mich. 697, 108 N.W.2d 755 (1961); In re John C. Lodge Highway, 340 Mich. 254, 65 N.W.2d
820 (1954); City of Detroit v. Yellen, 28 Mich. App. 529, 184 N.W.2d 563 (1970).
43. The Supreme Court has "recognized that the 'market value' of property condemned can
be affected, adversely or favorably, by the imminence of the very public project that makes the
condemnation necessary." United States v. Reynolds, 397 U.S. 14, 16 (1970); United States v.
Miller, 317 U.S. 369, 376-77 (1943); Shoemaker v. United States, 147 U.S. 282, 304-05 (1893).
The subject of computation of fair market value is nct within the scope of this Note. For a
discussion of this subject, see Am. Inst. of Real Estate Appraisers of the Nat'l Ass'n of Realtors, 1
Readings in Real Property Valuation Principles (1977); 4 P. Nichols, supra note 39, §§ 12.1-.35,
at 12-4 to -235; 1 L. Orgel, Valuation Under the Law of Eminent Domain (1953); E. Rams,
Valuation for Eminent Domain (1973); Bigham, "FairMarket Value," "Just Compensation," and
the Constitution:A Critical View, 24 Vand. L. Rev. 63 (1970); Hershman, Compensation--Just
and Unjust, 21 Bus. Law. 285 (1966).
19791 DE FACTO TAKINGS
ing that a de facto taking occurred prior to the date of the de jure taking, the
condemnee is entitled to recover: (1) the market value of the property as of the
date of the earlier de facto taking; (2) the difference between the income or
benefits he received from his use or occupation of the property prior to the de
facto taking, and the income derived during the interim until the de jure
taking, plus the taxes, insurance, and maintenance costs that he expended
during that time; and, (3) interest on the award measured from the earlier
date of the de facto taking."5 Thus, the condemnee's total compensation is
considerably greater than that afforded under the condemnation blight theory.
A claim that a de facto taking has occurred may also be established during
an inverse condemnation proceeding in which a private property owner
asserts that the government has taken his property without paying just
compensation.- 6 Thus, in either an inverse condemnation proceeding or a
formal eminent domain proceeding, the courts must decide the extent of
governmental activity that constitutes a taking. Failure to establish the
occurrence of a de facto taking in an inverse condemnation action, however,
deprives the owner of just compensation and leaves the property in private
ownership even though its value has been reduced and its use substantially
impaired.5 7 To protect private owners from such loss, and yet to avoid
55. City of Detroit v. Cassese, 376 Mich. 311, 318-19, 136 N.W.2d 896, 900-01 (1965). For
cases establishing market value as of the date of de facto taking, see In re City of N.Y., 43
N.Y.2d 512, 373 N.E.2d 984, 402 N.Y.S.2d 804 (1978); Kravec v. State, 40 N.Y.2d 1060, 360
N.E.2d 925, 392 N.Y.S.2d 246 (1976); Wolfe v. State, 22 N.Y.2d 292, 239 N.E.2d S17, 292
N.Y.S.2d 635 (1968); Kahlen v. State, 223 N.Y. 383, 119 N.E. 883 (1918); Amsterdam Urban
Renewal Agency v. Johnson, 60 A.D.2d 661, 400 N.Y.S.2d 213 (3d Dep't 1977) (mem.); Lambert
v. State, 30 A.D.2d 582, 290 N.Y.S.2d 412 (3d Dep't 1968). For a case holding that the
condemnee is entitled to recover the fair rental value of its property from the date of the de facto
appropriation, see Mastic Acres, Inc. v. State, 46 Misc. 2d 660, 260 N.Y.S.2d 532 (CL Cl. 1965).
For cases establishing the award of interest from the date of de facto taking, see Van Wagoner v.
Morrison, 279 Mich. 285, 271 N.W. 760 (1937); Campau v. City of Detroit, 225 Mich. 519, 196
N.W. 527 (1923); Michigan State Highway Comm'n v. Great Lakes Express Co., 50 Mich. App.
170, 183, 213 N.W.2d 239, 245 (1973); In re City of N.Y., 43 N.Y.2d 512, 518, 373 N.E.2d 984,
987, 402 N.Y.S. 804, 807 (1978); Leeds v. State, 20 N.Y.2d 701, 229 N.E.2d 446, 282 N.Y.S.2d
767 (1967); Ley v. State, 28 A.D.2d 943, 281 N.Y.S.2d 685 (3d Dep't 1967), aff'd, 25 N.Y.2d 876,
250 N.E.2d 878, 303 N.Y.S.2d 887 (1969); Rymkevitch v. State, 42 Misc. 2d 1021, 249 N.Y.S.2d
514 (Ct. Cl. 1964).
56. Balken v. Town of Brookhaven, 70 A.D.2d 579, 416 N.Y.S.2d 51 (2d Dep't 1979);
Gengarelly v. Glen Cove Urban Renewal Agency, 69 A.D.2d 524, 418 N.Y.S.2d 790 (2d Dep't
1979); Pum Realty Corp. v. State, 67 A.D.2d 1014, 413 N.Y.S.2d 252 (3d Dep't 1979); Hudson
Valley Sand & Stone Co. v. State, 57 A.D.2d 344, 395 N.Y.S.2d 507 (3d Dep't 1977); O'Brien v.
City of Syracuse, 54 A.D.2d 186, 388 N.Y.S.2d 866 (4th Dep't 1976); Tobin v. Ford, 49 A.D.2d
83, 371 N.Y.S.2d 721 (3d Dep't 1975); Department of Public Works v. Town of Horellsille, 41
A.D.2d 685, 342 N.Y.S.2d 632 (4th Dep't 1973); Evans v. City of Johnstown, 96 Misc. 2d 755,
410 N.Y.S.2d 199 (Sup. Ct. 1978).
57. See, e.g., Ton-Da-Lay, Ltd. v. State, 70 A.D.2d 742, 416 N.Y.S.2d 895 (3d Dep't 1979);
Pum Realty Corp. v. State, 67 A.D.2d 1014, 413 N.Y.S.2d 252 (3d Dep't 1979); Fisher v. City of
Syracuse, 46 A.D.2d 216, 361 N.Y.2d 773 (4th Dep't 1974), appeal denied, 36 N.Y.2d 642, 368
N.Y.S.2d 1025, cert. denied, 423 U.S. 833 (1975); Beaux Arts Props., Inc. v. United Nations
Dev. Corp., 68 Misc. 2d 785, 328 N.Y.S.2d 16 (Sup. CL), aff'd mem., 39 A.D.2d 844, 332
N.Y.S.2d 1008 (Ist Dep't 1972); Horizon Adirondack Corp. v. State, 88 Misc. 2d 619, 388
N.Y.S.2d 235 (Ct. Cl. 1976).
FORDHAM LAW REVIEW [Vol. 48
66. City of Buffalo v. J.W. Clement Co., 34 A.D.2d 24, 26, 311 N.Y.S.2d 98, 101 (4th Dep't
1970), modified, 28 N.Y.2d 241, 269 N.E.2d 895, 321 N.Y.S.2d 345 (1971). The city argued that
even if its actions caused Clement to lose the use of its property, such a loss is merely a
consequence of the condemnation which must be accepted by any citizen whose property is
condemned. 34 A.D.2d at 28, 311 N. Y.S.2d at 103.
67. The appellate division affirmed the trial court's finding of fact, id., and conclusion that a
taking had occurred, id. at 31, 311 N.Y.S.2d at 106, but modified the judgment by increasing the
award to compensate Clement for the removal of its machinery and by deleting an award for
machinery left on the premises. Id. at 37, 311 N.Y.S.2d at 112.
68. Id. at 32, 311 N.Y.S.2d at 106. Justice Gabrielli dissented, characterizing the city's
actions as merely an expression of an intent to appropriate and arguing that such action neither
"directly or indirectly ... or even inferentially," served to deprive Clement of its possession,
enjoyment or use of the property. Id. at 37-38, 311 N.Y.S.2d at 112-13 (Gabrielli, J., dissenting).
The dissent concluded that the impending condemnation was not the sole motivation for the
move, indicating that Clement had been anticipating a move for several years because it was
outgrowing its present location. Id. at 38, 311 N.Y.S.2d at 113. Thus, the dissent refused to
agree that a de facto taking had occurred, finding no evidence of actions on the part of the city
"which could possibly be translated into dominion or control over the propprt'." Id. at 37, 311
N.Y.S.2d at 113.
69. City of Buffalo v. J.W. Clement Co., 28 N.Y.2d 241, 247-48, 253, 269 N.E.2d 895, 899,
902, 321 N.Y.S.2d 345, 351, 356 (1971).
70. Id. at 254-55, 269 N.E.2d at 902-03, 321 N.Y.S.2d at 356-57.
71. Id. at 253, 269 N.E.2d at 902, 321 N.Y.S.2d at 356. The court commented that "to hold
that there can be a de facto appropriation absent a physical invasion or direct legal restraint
would, needless to say, be to do violence to a workable rule of law. It is our view that only the
most obvious injustice compels such a result." Id. Ostensibly, the court did not find that Clement
was the victim of an "obvious injustice." The court did not, however, define the situation
warranting such a characterization.
72. Id. at 258, 269 N.E.2d at 905, 321 N.Y.S.2d at 360. The court, however, did not define
the type of government action that would constitute " 'affirmative value-depressing acts' "
thereby requiting invocation of the condemnation blight concept. See 72 Colum. L. Rev. 772, 779
FORDHAM LAW REVIEW [Vol. 48
'73
tion of property. Thus, the court of appeals hesitated to adopt the lower
courts' more flexible definition of de facto taking because it would allow all
aggrieved property owners "to seek refuge under the broader umbrella of de
facto appropriation,17 4 and would "impose' an 'oppressive' and 'unwarranted'
burden upon the condemning authority." "5
To avoid formulation of a test that would require both consideration of the
extent of the governmental activity and emphasis on the effect of such activity
upon the value of the property, the court of appeals attempted to further
delineate the scope of the test of de facto taking. 7 6 To establish a de facto
taking, a property owner must show that the governmental activity amounted
to "an assertion of dominion and control" over the property. 7 7 Exemplary of
such governmental activities, according to the court, are "a physical entry by
the condemnor, a physical ouster of the owner, a legal interference with the
physical use, possession or enjoyment of the property or a legal interference
with the owner's power of disposition of the property.' 8 Thus, a "mere
announcement" of an impending condemnation, even if it is coupled with
substantial delay7 9and property damage, as in Clement, does not constitute a
de facto taking.
(1972). Moreover, the court failed to distinguish adequately the acts of appropriation that would
result in a finding of de facto taking and the " 'affirmative value-depressing acts' " that would
require utilizing the concept of condemnation blight. See 3 St. Mary's L.J. 339, 345-47 (1971).
73. 28 N.Y.2d at 254, 269 N.E.2d at 903, 321 N.Y.S.2d at 356.
74. Id. at 251, 269 N.E.2d at 901, 321 N.Y.S.2d at 353.
75. Id. at 256, 269 N.E.2d at 904, 321 N.Y.S.2d at 358. The appellate division noted the
"marked distinction between (1) those cases which by reason of the cloud of condemnation,
resulting in so-called condemnation blight, permit the claimant to establish his true damage for
the de jure taking by proving its value at an earlier time before the debilitating threat of
condemnation . . . has depressed its value . . . and (2) those cases which go to the extent of
declaring that the acts of the condemnor constitute a de facto taking long before the de jure
taking. The application of such principles must depend not only upon the acts of the condemnor
but upon the effect upon the condemnee, and the court must be guided by the further principle
that its object is to achieve substantial justice between the condemning public and the private
owner." 34 A.D.2d at 32, 311 N.Y.S.2d at 107 (citations omitted); see pt. III infra.
76. 28 N.Y.2d at 255,269 N.E.2d at 903, 321 N.Y.S.2d at 357.
77. Id. One commentator speculated whether an activity that falls short of physical entry or
ouster could constitute an "assertion of dominion and control" and thus permit the finding of a de
facto taking. Magavern, supra note 37, at 294. While the court's formulation of the definition
would appear to indicate that such activity does not constitute a taking, the commentator queried
whether the court intended to overrule Weismantle v. State, 210 A.D. 608, 206 N.Y.S. 570 (4th
Dep't 1924). In that case, a landowner received compensation when the government caused
erosion of his land, even though the government's actions could not have been characterized as a
physical entry or ouster. Magavern, supra note 37, at 294-95.
78. 28 N.Y.2d at 255,269 N.E.2d at 903, 321 N.Y.S.2d at 357.
79. Id. at 257, 269 N.E.2d at 904, 321 N.Y.S.2d at 359. Applying its definition of de facto
taking to the facts of Clement, the court characterized the city's activities as simply a "manifesta-
tion of an intent to condemn," which did not amount to a deprivation of possession, enjoyment or
use of Clement's property. Id. at 255, 269 N.E.2d at 903, 321 N.Y.S.2d at 357. This
characterization of the activity, however, represents a departure from the court's previous
description of the government's activity as a "pattern of continuous agitation." Id. at 249, 269
N.E.2d at 900, 321 N.Y.S.2d at 352. In addition, the court did not consider that the city hiad
been denying all applications for building permits by owners in the area. Id. Moreover, by
1979] DE FACTO TAKINGS
concluding that the governmental activity did not deprive Clement of its possession, the court
appears to have given little weight to the finding of fact, affirmed by the appellate division, that
Clement had been forced, by the city's threat of condemnation, to move its business operation,
and that the city's acts rendered the property unsuitable for the proper functioning of Clement's
business. Id. at 252, 269 N.E.2d at 901-02, 321 N.Y.S.2d at 354-55.
80. Rose v. State, 24 N.Y.2d 80, 87, 246 N.E.2d 735, 739, 298 N.Y.S.2d 968, 975 (1969); see
Marraro v. State, 12 N.Y.2d 285, 292-93, 189 N.E.2d 606, 609-11, 239 N.Y.S.2d 105, 109-10
(1963). See also In re Board of Water Supply, 277 N.Y. 452, 14 N.E.2d 789 (1938); Banner
Milling Co. v. State, 240 N.Y. 533, 148 N.E. 668 (1925); New York, Ont. & W. Ry. v.
Livingston, 238 N.Y. 300, 144 N.E. 589 (1924).
81. City of Buffalo v. J.W. Clement Co., 28 N.Y.2d 241, 249, 269 N.E.2d 895, 900, 321
N.Y.S.2d 345, 352 (1971); see In re Incorporated Village of Lynbrook, 75 Misc. 2d 678, 348
N.Y.S.2d 115 (Sup. Ct. 1973).
82. The interest award on a finding of de facto taking would have amounted to $459,603.86.
City of Buffalo v. J.W. Clement Co., 28 N.Y.2d 241, 254, 269 N.E.2d 895, 903, 321 N.Y.S.2d
345, 356-57 (1971). While the sum is substantial, it should be noted that condemnation awards, in
general, are not based upon prevailing bank interest rates. See In re Incorporated Village of
Lynbrook, 75 Misc. 2d 678, 680, 348 N.Y.S.2d 115, 118 (Sup. CL 1973). Admittedly, recovery of
interest, even at a lower rate, is preferable to a complete lack of recovery.
83. Commentators have suggested that the refusal of the courts to find de facto takings places
an even heavier burden on a private homeowner, whose real property represents a major
investment. In view of the necessity of adequate housing, and in reliance upon the official
representations that the condemnation will occur quite rapidly, such homeowners are compelled
to acquire other homes. Typically, they cannot afford to maintain two properties and may suffer
if the condemnation is allowed to drag on interminably. See Kanner, supra note 9, at 806-07; 72
FORDHAM LAW REVIEW [Vol. 48
tionality of the zoning ordinance and claimed that the restriction on the use of
the land constituted a taking for which compensation must be paid. 109 The
French court held that the ordinance was void because it exceeded the limits
of the police power, but did not warrant just compensation for a taking. I 0
Distinguishing an invalid police power regulation from a compensable
taking, the court of appeals noted that a state regulation on property that
deprives "the owner of the reasonable income productive or other private use
of his property" and "thus destroys its economic value, or all but a bare
residue of its value," violates due process of law,"' but does not generally
result in a taking for which compensation must be paid. 112 Applying the rules
of Clement, the French court held that a compensable taking occurs only
when there is "actual appropriation" by physical invasion or by governmental
assumption of control or management, even though the113owner may be
deprived of many of the economic benefits of ownership.
Thus, the French court clarified and limited the broad direct legal restraint
test formulated in Clement. Regulations on use, such as zoning ordinances,
which are valid exercises of the police power, are excluded from the category.
In addition, regulations that exceed the permissible limits of the police power
do not result in compensable de facto takings unless the measure contemplates
eventual acquisition, or causes physical encroachment by the government. 114
The recent court of appeals decision in Spears v. Berle" 5 represents the
continuing efforts of the New York Court of Appeals since Clement to
narrow issue presented was whether a village sewer ordinance was being applied to his property
unconstitutionally. The remedy, if such were the case, would be to invalidate the regulation, not
to award temporary or permanent damages. Id. at 330-31, 360 N.E.2d at 1303-04, 392 N.Y.S.2d
at 603-04. The court reasoned that "absent a taking of property, the courts may not impose
liability damages [for misjudgment or indiscretion by municipal officials] particularly when the
imposition appears to be more punitive than compensatory. The courts should not use the threat
of money sanctions to whip government into providing municipal improvements." Id. at 332, 360
N.E.2d at 1305, 392 N.Y.S.2d at 605.
125. See Magavern, supra note 37, at 294-95. "Almost any zoning ordinance and many other
police power measures would fall within the literal scope of the language used." Id. at 295.
126. See Charles v. Diamond, 41 N.Y.2d 318, 329-32, 360 N.E,2d 1295, 1303-05, 392
N.Y.S.2d 594, 603-05 (1977); Fred F. French Investing Co. v. City of N.Y., 39 N.Y.2d 587, 597,
350 N.E.2d 381, 387, 385 N.Y.S.2d 5, 11, cert. denied, 429 U.S. 990 (1976).
127. See Spears v. Berle, No. 373, (N.Y. Oct. 18, 1979); cases cited at note 94 supra. But see
Keystone Assocs. v. State, 33 N.Y.2d 848, 307 N.E.2d 254, 352 N.Y.S.2d 194 (1973) (mem.),
aff'g, 39 A.D.2d 176, 333 N.Y.S.2d 27 (3d Dep't 1972). Although the Keystone decisions have
been characterized as "bedrock law," the court of appeals refused to extend it to situations not
involving government trespass. Charles v. Diamond, 41 N.Y.2d 318, 331, 360 N.E.2d 1295,
1305, 392 N.Y.S.2d 594, 604 (1977); see note 93 supra and accompanying text.
128. 39 N.Y.2d at 600, 350 N.E.2d at 389, 385 N.Y.S.2d at 13. It has been suggested that
one way to deal with this problem would be an amendment to the state constitution to provide
compensation for property "taken or damaged." Fisher Y. City of Syracuse, 46 A.D.2d 216, 219,
361 N.Y.S.2d 773, 776 (4th Dep't 1974) (Goldman, J., concurring), appeal denied, 36 N.Y.2d
642, 368 N.Y.S.2d 1025, cert. denied, 423 U.S. 833 (1975). The following 26 state constitutions
already allow compensation for property damaged as well as property that is taken: Ala. Const.
art. XII, § 235; Alaska Const. art. I, § 18; Ariz. Const. art. 2 § 17; Ark. Const. art. 2, § 22; Cal.
Const. art. 1 § 14; Colo. Const. art. II, § 15; Ga. Const. art. I, § In, 1; Ill. Const. art. 1, § 15;
Ky. Const. § 242; La. Const. art. 1, § 2; Minn. Const. art. 1, § 13; Miss. Coast. art. 3, § 17; Mo.
Const. art. 1, § 26; Mont. Const. art. III, § 14; Neb. Const. art. I, § 21; N.M. Const. art. II, § 20;
N.D. Const. art. I, § 14; Okla. Const. art. 2, § 24; Pa. Const. art. 1, § 10; S.D. Const. art. VI, §
13; Tex. Const. art. 1, § 17; Utah Const. art. I, § 22; Va. Const. art. I, § 11; Wash. Const. art. 1,
§ 16; W. Va. Const. art. 3, § 9; and Wyo. Const. art. 1, § 33. In addition, Prof. Costonis has
suggested a "middle way" that provides for "fair comp.nsation" of the property owner for the
adverse economic or aesthetic effects of government regulation without paying for a total
1979] DE FACTO TAKINGS
that the eminent domain/police power dichotomy is unfair and unrealistic and
that this "all29 or nothing approach" to just compensation should be rejected
1
altogether.
Second, the direct legal restraint test as now formulated does not recognize
that less formal legal actions such as denial of building permits, 1 30 strict
enforcement of uilding codes, 13 1 and inclusion of property within an official
street map, 132 can "directly or indirectly" interfere with the use, enjoyment,
and possession of property and result in extreme hardship for the property
owner. Nevertheless, because these actions do not amount to "avowed taking
statutes," the landowners are without remedy unless eminent domain proceed-
ings are instituted,
133
and even then would be unable to prevail on a de facto
taking claim.
Finally, the New York approach to de facto takings now depends upon
physical invasion of private property because the direct legal restraint test has
been narrowly limited to appropriation statutes. There are, however, sig-
nificant problems with the New York physical invasion test as well.
D. The Physical Invasion Test
According to Clement, a de facto taking by physical invasion requires "a
physical entry by the condemnor [or] a physical ouster of the owner" that
amounts to an "assertion of dominion and control" over the private proper-
ty. 13 4 It is submitted that these categories of governmental activity are too
narrow to encompass the range of government actions that can effectively
deprive private owners of the reasonable and beneficial uses of their property.
appropriation of property. Costonis, The Disparity Issue: A Context for the Grand Central
Terminal Decision, 91 Harv. L. Rev. 402, 405-09 (1977). See also Tomain, supra note 9. The
recent Supreme Court decision in Penn Cent. Transp. Co. v. New York City, 438 U.S. 104
(1978), is an example of an accomodation between the police power and eminent domain power.
In Penn Central, the Supreme Court denied the owner of Grand Central Terminal the right to
build a modern office building over the terminal, but awarded it development rights that could be
transferred to other parcels of property. "While these rights may well not have constituted 'just
compensation' if a 'taking' had occurred, the rights nevertheless undoubtedly mitigate whatever
financial burdens the law has imposed on [the property owners] and, for that reason, are to be
taken into account in considering the impact of regulation." 438 U.S. at 137. Prof. Costonis
suggests that such programs overcome the deficiencies of the eminent domain/police power
dichotomy by joining legitimate police power regulations with some form of compensation that
affords an equitable return on the affected property. Costonis, supra, at 403.
129. See Berger, supra note 18, at 165; Costonis, supra note 9, at 1022; Michelman, supra
note 9, at 1167; Sax I, supra note 10, at 61-64; Sax II, supra note 13, at 149-51; Tomain, supra
note 9, at 309.
130. See, e.g., City of Buffalo v. J.W. Clement Co., 28 N.Y.2d 241, 253, 269 N.E.2d 895,
902, 321 N.Y.S.2d 345, 356 (1971); Ton-Da-Lay, Ltd. v. State, 70 A.D.2d 742, 416 N.Y.S.2d
895 (3d Dep't 1979).
131. See, e.g., 76 Crown St. Corp. v. City of N.Y., 35 A.D.2d 1005, 317 N.Y.S.2d 978 (2d
Dep't 1970).
132. See, e.g., Jensen v. City of N.Y., 42 N.Y.2d 1079, 369 N.E.2d 1179, 399 N.Y.S.2d 645
(1977) (mem.).
133. See Fisher v. City of Syracuse, 46 A.D.2d 216, 361 N.Y.S.2d 773 (4th Dep't 1974),
appeal denied, 36 N.Y.2d 642, 368 N.Y.S.2d 1025, cert. denied, 423 U.S. 833 (1975).
134. 28 N.Y.2d at 255, 269 N.E.2d at 903, 321 N.Y.S.2d at 357.
FORDHAM LAW REVIEW [Vol. 48
Moreover, the physical invasion test is based on vague property law notions
which do
5
not adequately reflect the reality of contemporary land use situa-
13
tions.
1. Physical Entry
The essential criterion of the physical entry test is that the entry be
permanent or continuous. 136 For example, when a state contractor entered an
owner's land without permission and constructed a drainage ditch, the court
found a de facto taking because 137 the ditch constituted an invasion of a
permanent and continuous nature.
In contrast, a physical entry that amounts only to a temporary intrusion is
not sufficient to constitute a de facto taking.138 When government surveyors
temporarily entered land for the purpose of making a survey, for example, 39
and the entry caused only incidental damage, there was no de facto taking.'
Similarly, when the government temporarily piled construction materials from
an adjacent construction site against an owner's building, there was no de
facto taking. 140 In each of these cases, the government's physical14 entry lacked
the "degree of dominion and control indicative of a taking.'
1
135. Prof. Michelman suggests that "only those trespassory acts which are implicitly assertive
of ownership-in the sense necessary to ground an action of ejectment or to start running the
statutory period for acquisition of title by adverse possession-amount to such physical invasions
as automatically, without further inquiry, require a compensation payment." Michelman, supra
note 9, at 1228, n.110. Prof. Dunham suggests that a "taking occurs when interference with tile
owner's use has occurred to such an extent that an easement by prescription will rise by lapse of
time." Dunham, supra note 9, at 87. See also National Institute of Law Enforcement & Criminal
Justice, Law Enforcement Asst. Admin., U.S. Dep't of Justice, Corruplion in Land Use &
Building Regulation at v (vol. I 1979) (land use "regulations to be enforced lag far behind the
state of the art."). In short, most concepts and procedures associated with eminent domain were
developed in an agrarian society that do not apply readily in an urban society with an
increasingly complex economy. See Costonis, supra note 9, at 1038 & n.69.
136. See Hylan Flying Serv., Inc. v. State, 54 A.D.2d 278, 388 N.Y.S.2d 444 (4th Dep't
1976); O'Brien v. City of Syracuse, 54 A.D.2d 186, 388 N.Y.S.2d 866 (4th Dep't 1976); New
York State Elec. & Gas Corp. v. Meredith, 63 Misc. 2d .319, 313 N.Y.S.2d 216 (Sup. Ct. 1970).
137. Hylan Flying Serv., Inc. v. State, 54 A.D.2d 278, 388 N.Y.S.2d 444 (4th Dep't 1976).
Similarly, when the state paved a parcel of land which was adjacent to a public highway to
widen the road, a de facto taking was found because the state took permanent possession of that
property. Rochford v. State, 153 Misc. 239, 274 N.Y.S. 656 (Ct. Cl. 1934), aff'd, 245 A.D. 794,
282 N.Y.S. 254 (3d Dep't 1935). In addition, when the government entered land to construct a
canal, Utley v. Hayden, 6 Hill 359 (Sup. Ct. 1844), or a highway, Leeds v. State, 20 N.Y.2d 701,
229 N.E.2d 446, 282 N.Y.S.2d 767 (1967); Lambert v. State, 30 A.D.2d 582, 290 N.Y.S.2d 412
(3d Dep't 1968) (mem.); Kahn v. State, 27 A.D.2d 476, 280 N.Y.S.2d 268 (3d Dep't 1967), de
facto takings were found to have occurred.
138. O'Brien v. City of Syracuse, 54 A.D.2d 186, 388 N.Y.S.2d 866 (4th Dep't 1976).
139. King v. Power Auth., 44 A.D.2d 74, 353 N.Y.S.2d 547 (3d Dep't 1974); Edwards v.
Law, 63 A.D. 451, 71 N.Y.S. 1097 (2d Dep't 1901); New York State Envir. Facilities Corp. v.
Young, 66 Misc. 2d 299, 320 N.Y.S.2d 821 (Sup. Ct. 1971). However, if the surveyors cut a path
through the forest for the purpose of establishing a permanent base line, then the entry and
occupation would constitute a de facto taking. Litchfield v. Bond, 186 N.Y. 66, 79, 78 N.E. 719,
724 (1906).
140. O'Brien v. City of Syracuse, 54 A.D.2d 186, 388 N.Y.S.2d 866 (4th Dep't 1970).
141. Id. at 189, 388 N.Y.S.2d at 869. The landowner, however, is not necessarily remedliess.
19791 DE FACTO TAKINGS
2. Physical Ouster
As in the case of physical entry, not every instance of "physical ouster"14 2 of
the owner constitutes a de facto taking. For example, when the state acquired
an easement across a portion of an owner's property and thereby blocked
14 3
access to the remainder, a de facto taking of the remainder was found.
However, when some continuous, albeit limited, access was available, the
ouster was not complete, and a de facto taking of the remainder was not
found. 14 The essential criterion, therefore, is that the owner be completely
deprived of possession by the actions of the government.
Thus, New York courts define a de facto taking from the perspective of the
specific government action that is challenged, rather than from a considera-
tion of the effects of the government action on the private property. There are
instances, however, in which governmental activity, although falling short of
physical invasion, amounts to an "assertion of dominion and control over the
property," by causing substantial decreases in the value of property and
interference with its use. ' 45 It is submitted that by focusing on the extent of
physical invasion and by insufficiently emphasizing the effect of governmental
activity on property values and uses, the New York approach unjustly forces
a private owner to bear losses that should be shared by the public. The
unfairness of the New York approach is typified by Fisher v. City of
Syracuse. 146
In the Fisher case, although more than ten years had passed since the
commencement of an urban renewal plan, the plaintiff's property located
within the area of the plan, had not yet been condemned.t 4 7 Some of the
buildings in the area had already been condemned by the city, and were
demolished or boarded up. The plaintiff alleged that as a result of the city's
activities, his tenants moved, he lost substantial rental income, and the value
of his property drastically declined. 148 Accordingly, the plaintiff sought
Even though the unauthorized entry lacks the degree of permanence or continuity to constitute a
de facto taking, the landowner may obtain compensation for damages in an action for trespass.
Id. at 188, 388 N.Y.S.2d at 869.
142. "Ouster" is defined as "[a] species of injuries to things real, by which the wrong-doer
gains actual occupation of the land, and compels the rightful owner to seek his legal remedy in
order to gain possession. Black's Law Dictionary 1253 (rev. 4th ed. 1957). "Actual ouster" does
not require "a physical eviction, but a possession attended with such circumstances as to evince a
claim of exclusive right and title, and a denial of the right of [others] to participate in the profits."
Id. It is unclear which definition is followed by the New York courts.
143. Kravec v. State, 40 N.Y.2d 1060, 360 N.E.2d 925, 392 N.Y.S.2d 246 (1976); Lorig v.
State, 58 A.D.2d 734, 396 N.Y.S.2d 122 (4th Dep't 1977); Clark v. State, 20 A.D.2d 182, 245
N.Y.S.2d 787 (4th Dep't 1964), aff'd, 15 N.Y.2d 990, 207 N.E.2d 606, 260 N.Y.S.2d 10 (1965);
Jafco Realty Corp. v. State, 18 A.D.2d 74, 238 N.Y.S.2d 66 (4th Dep't 1963), aff'd, 14 N.Y.2d
556, 198 N.E.2d 39, 248 N.Y.S.2d 651 (1964).
144. Burns v. State, 63 A.D.2d 848, 405 N.Y.S.2d 853 (4th Dep't 1978).
145. See Department of Public Works v. Town of Hornelsville, 41 A.D.2d 685, 342
N.Y.S.2d 632 (4th Dep't 1973).
146. 78 Misc. 2d 124, 355 N.Y.S.2d 239 (Sup. Ct.), aff'd, 46 A.D.2d 216, 361 N.Y.S.2d 773
(4th Dep't 1974), appeal denied, 36 N.Y.2d 642, 368 N.Y.S.2d 1025, cert. denied, 423 U.S. 833
(1975).
147. Id. at 126, 355 N.Y.S.2d at 240-41.
148. Id. at 127, 355 N.Y.S.2d at 242.
FORDHAM LAW REVIEW [Vol. 48
damages for the lost income, diminution in property value, and increased
insurance and maintenance expenses, alleging that the city's actions violated
the due process and equal protection clauses of the state and federal constitu-
tions. 149 The trial court held that the plaintiff was not entitled to be
compensated for damages absent a de jure or de facto taking and dismissed
the complaint for failure to state a cause of action. 1o
Under the New York approach, the court could not find a de facto taking
of Fisher's property although there was an intention to condemn, because the
government had neither physically entered the property or ousted the owner
from possession, nor had it engaged in any activity amounting to an assertion
of dominion and control. Thus, Fisher could not prevail in an inverse
condemnation action; nor could he recover damages in a trespass action.
Furthermore, he could not recover condemnation blight damages because the
city never completed formal condemnation proceedings, 1'5 and even in that
event, Fisher could not have recovered the lost rentals, increased mainte-
nance, or taxes paid during the ten-year period the urban renewal project
dragged on. 1-2 The inequity of this result was expressed by Justice Goldman
who concurred in the appellate division's dismissal of Fisher's complaint:
It is of little comfort to tell these [property owners] that, . . . 'you have been damaged
but that damage is without wrong. True, your properties are now in a vast waste land,
without tenants, neither desirable for residential nor commercial use, deteriorating
daily but, unfortunately, under the present state of the law you have no recourse,"P1"
The long range implications of Fisher are even more disconcerting than its
immediate result. The New York courts' denial of a remedy to landowners
such as Fisher, may leave them with no other recourse but to stop paying
taxes and abandon their property to the government. S4 This reaction to
inordinate governmental delay and inefficiency appears to be justified from
the point of view of the property owner: he is receiving no rental income from
the property, but insurance and maintenance costs are rising; if he awaits
formal condemnation, his losses will be greater because the best he can do is
149. Id.
150. Id. at 129, 130, 355 N.Y.S.2d at 243, 245. The judgment of the trial court was affirmed
by the appellate division. Fisher v. City of Syracuse, 46 A.D.2d 216, 361 N.Y.S.2d 773 (4th
Dep't 1974), appeal denied, 36 N.Y.2d 642, 368 N.Y.S.2d 1025, cert. denied, 423 U.S. 833
(1975).
151. "[C]ondemnation blight is not a cause of action." Id. at 128, 355 N.Y.S.2d at 243.
152. See In re Incorporated Village of Lynbrook, 75 Misc. 2d 678, 348 N.Y.S.2d 115 (Sup.
Ct. 1973); notes 43-51 supra and accompanying text.
153. Fisher v. City of Syracuse, 46 A.D.2d 216, 219, 361 N.Y.S.2d 773, 776 (4th Dep't 1974),
appeal denied, 36 N.Y.2d 642, 368 N.Y.S.2d 1025, cert, denied, 423 U.S. 833 (1975).
154. See, e.g., Archer Gardens, Ltd. v. Brooklyn Center Dev. Corp., 468 F. Supp. 609
(S.D.N.Y. 1979); Kanner, supra note 9, at 798. In Archer Gardens, owners of property In an area
designated for urban renewal, alleged that the city conspired and misused condemnation powers to
delay the date of acquisition in order to acquire the property through tax foreclosure sales at
lower prices, rather than by condemnation proceedings. The claimants asserted that the continu-
ing threat of condemnation rendered them unable to generate income from their property by sale
or lease, and thus, they were unable to meet their tax obligations. 468 F. Supp. at 611. The
district court held that the allegations "must be construed to state a claim of taking without just
compensation in violation of the Constitution." Id. at 613.
1979] DE FACTO TAKINGS
162. See Thorn v. State Highway Comm'r, 376 Mich. 608, 628, 138 N.W.2d 322, 331 (1965);
City of Detroit v. Cassese, 376 Mich. 311, 317, 136 N.W.2d 896, 900 (1965); Heinrich v. City of
Detroit, 90 Mich. App. 692, 699, 282 N.W.2d 448, 451-52 (1979); Detroit Bd. of Educ. v. Clarke, 89
Mich. App. 504, 508, 280 N.W.2d 574, 576 (1979); City of Muskegon v. DeVries, 59 Mich. App.
415, 419, 229 N.W.2d 479, 483 (1975).
163. See, e.g., Rogoski v. City of Muskegon, 550 F.2d 1075, 1076 (6th Cir. 1977); City of
Detroit v. Cassese, 376 Mich. 311, 136 N.W.2d 896 (1965); Detroit Bd. of Educ. v. Clarke, 89
Mich. App. 504, 280 N.W.2d 574 (1979); City of Detroit v. Barak, 50 Mich. App. 164, 212
N.W.2d 780 (1973).
164. See, e.g., Hill v. State Highway Comm'n, 382 Mich. 398, 170 N.W.2d 18 (1969); Thorn
v. State Highway Comm'r, 376 Mich. 608, 138 N.W.2d 322 (1965); Heinrich v. City of Detroit,
90 Mich. App. 699, 282 N.W.2d 448 (1979); Biff's Grills, Inc. v. State Highway Comm'n, 75
Mich. App. 154, 254 N.W.2d 824 (1977); Tamulion v. State Waterways Comm'n, 50 Mich. App.
60, 212 N.W.2d 828 (1973); Holloway Citizens Comm. v. Genesee County, 38 Mich. App. 317,
196 N.W.2d 484 (1972).
165. City of Detroit v. Cassese, 376 Mich. 311, 318-20, 136 N.W.2d 896, 900.01 (1965);
Detroit Bd. of Educ. v. Clarke, 89 Mich. App. 504, 280 N.W.2d 574 (1979); City of Detroit v.
Sherman, 68 Mich. App. 494, 242 N.W.2d 818 (1976); City of Detroit v. Barak, 50 Mich. App.
164, 212 N.W.2d 780 (1973).
166. City of Detroit v. Cassese, 376 Mich. 311, 318-19, 136 N.W.2d 896,.900-01 (1965).
167. Id. at 311, 319 & n.4, 136 N.W.2d 896, 901 & n. 3 (1965); In re State Highway Comm'r,
279 Mich. 285, 271 N.W. 760 (1937) (interest allowed from the date of actual appropriation, even
though that was years before the condemnation award was confirmed); Campau v. City of
Detroit, 225 Mich. 519, 196 N.W. 527 (1923) (interest allowed to accrue on a condemnation
award even though there had been no physical taking as of the date of the award); State Highway
Comm'n v. Great Lakes Express Co., 50 Mich. App. 170, 181-83, 213 N.W.2d 239, 245-46 (1973)
(the purpose of interest on a condemnation award is to give the condemnee just compensation
from the date of actual or constructive taking.).
168. "[Tjhe Court of Claims is the proper forum in which to seek relief where a plaintiff
alleges an already accomplished inverse condemnation by the State of Michigan." Biff's Grills,
Inc. v. State Highway Comm'n, 75 Mich. App. 154, 158, 254 N.W.2d 824, 826 (1977) (footnote
omitted).
FORDHAM LAW REVIEW [Vol, 48
169. Detroit & M. Ry. v. Sioux City Seed & Nursery Co., 168 Mich. 668, 134 N.W. 1103
(1912); Keyser v. Lake Shore & M. S. Ry., 142 Mich. 143, 105 N.W. 143 (1905); Taylor v. Bay
City St. Ry., 101 Mich. 140, 59 N.W. 447 (1894); Grand Rapids & Ind. R.R. v. Helsel, 47 Mich.
393, 11 N.W. 212 (1882); see Gordon v. City of Warren, 579 F.2d 386 (6th Cir. 1978); Hill v.
State Highway Comm'n, 382 Mich. 398, 170 N.W.2d 18 (1969); Thorn v. State Highway
Comm'r, 376 Mich. 608, 138 N.W.2d 322 (1965); Biff's Grills, Inc. v. State Highway Comm'n, 75
Mich. App. 154, 254 N.W.2d 824 (1977); Tamulion v. State Waterways Comm'n, 50 Mich. App.
60, 212 N.W.2d 828 (1973); Standen v. Alpena County, 22 Mich. App. 416, 177 N.W.2d 657
(1970).
170. 376 Mich. 311, 136 N.W.2d 896 (1965).
171. Id. at 317, 136 N.W.2d at 900.
172. Id. at 313, 136 N.W.2d at 898.
173. Id. at 313-14, 136 N.W.2d at 898.
174. Id. at 316-17, 136 N.W.2d at 899-900.
175. In 1950 this parcel was worth at least $3200.41, the amount owing to the owner on a
sales contract. In 1959 the city directed the owner to tear down a building which had been
vandalized. When the second condemnation action wa,. instituted in 1962 the city valued the
property as a vacant lot worth $525. Id. at 314, 136 N.W.2d at 898.
19791 DE FACTO TAKINGS
de facto taking in New York because none of these activities fall within the
narrow definitions of "physical invasion" or "direct legal restraint." The
Michigan courts, in contrast, do not confine the definition of de facto taking to
amorphous concepts such as "ouster" and "dominion and control." The
emphasis on the actual impact of governmental activity is certainly more
realistic from the perspective of the aggrieved property owner to whom it is
of little consequence whether the value of private property is damaged or
destroyed by the operation of a statute or by less formal government pro-
nouncements.
B. Diminution in Value
Although Michigan courts require the actions of the government to cause a
"substantial" or "significant" reduction in the value of private property in
order to find a de facto taking,2 01 the extent of diminution that is necessary is
not definitely ascertainable. This assessment must depend on a consideration
of the burden upon government that will result if the government is compelled
to pay just compensation to every property owner whose land is adversely
affected by governmental activity. To inhibit the progress of urban renewal
and land development is not in the public interest; nevertheless, the costs of
government inefficiency and inability to formulate coherent land use plans
should not unduly burden the individual property owner. The Michigan
courts evidently balance these factors by finding that a de facto taking may be
effectuated by the government when its deliberate actions cause unwarranted
damage or destruction of private property.
Although Michigan has not devised a rigid test, analysis of the cases
indicateg that a decrease in property value of approximately 60%, accom-
panied by deliberate government actions, is sufficient to warrant just compen-
sation for a de facto taking. 202 Admittedly, the New York courts do not
completely ignore the reductions in property value that may result from
physical invasion or direct legal restraints. The condemnation blight concept
is an attempt to minimize the economic distress that may result from
governmental activity, but even substantial condemnation blight cannot be
the basis of a de facto taking in New York. Furthermore, as has been
demonstrated, consideration of condemnation blight to value property more
realistically during eminent domain proceedings, does not adequately com-
pensate the property owner for all of his losses. 20 3 The Michigan approach,
however, permits significant condemnation blight to support an independent
cause of action for a de facto taking; it also provides just compensation when
200. Fisher v. City of Syracuse, 78 Misc. 2d 124, 355 N.Y.S.2d 239, aff'd, 46 A.D.2d 216,
361 N.Y.S.2d 773 (4th Dep't 1974), appeal denied, 36 N.Y.2d 642, 368 N.Y.S.2d 1025, cert.
denied, 423 U.S. 833 (1975); Cinco v. City of N.Y., 58 Misc. 2d 828, 296 N.Y.S,2d 26 (Sup. Ct.
1968).
201. Thorn v. State Highway Comm'r, 376 Mich. 608, 628, 138 N.W.2d 322, 331 (1965);
Heinrich v. City of Detroit, 90 Mich. App. 692, 282 N.W.2d 448 (1979).
202. In Cassese, the decrease in value of the property was at least 80%. 376 Mich. at 314, 136
N.W.2d at 898; see notes 170-181 supra and accompanying text. In Madison Realty Co. v. City of
Detroit, 315 F. Supp. 367 (E.D. Mich. 1970), the decrease in the value of the claimant's property
was about 40%. Id. at 369.
203. See notes 43-51 supra and accompanying text.
1979] DE FACTO TAKINGS
government improvements for the public benefit diminish the value of private
property. This approach recognizes that government interferences with
private property that render it unsuitable for private use should result in a
compensable taking. Moreover, it diminishes the possibility that the govern-
ment can benefit from its own misconduct to the detriment of the private
citizen.
IV. CONCLUSION
204. Fred F. French Investing Co. v. City of N.Y., 39 N.Y.2d 587, 600, 350 N.E.2d 381,
389, 385 N.Y.S.2d 5, 12, cert. denied, 429 U.S. 990 (1976).