Source: https://supreme.justia.com/cases/federal/us/467/229/
Timestamp: 2019-04-19 11:06:35+00:00

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The public use requirement of a taking by the state is satisfied when it transfers title in land from landlords to tenants in order to reduce the concentration of fee ownership in the state.
In the history of Hawaii, land ownership was restricted to the state and federal governments, which owned about half of the land, and a small group of landholders. The Hawaii legislature determined that this concentration of land harmed the state's well-being because it inflated land prices, so it created the Land Reform Act. Under this law, the Hawaii Housing Authority was established and endowed with the authority to seize fee titles when a sufficient number of tenants in any given development tract asked the HHA to seize a fee title.
Once the HHA took the titles and paid the landowners for them, it could sell the titles for the tenants while lending them up to 90 percent of the land's purchase price. This meant that the state was using its sovereign power to transfer land ownership from landlords to tenants. The landlords argued in federal court that this system violated the Public Use Clause of the Fifth Amendment.
The Public Use Clause should be broadly interpreted such that it covers everything covered by the state police power, including in the eminent domain context. As a result, a taking does not violate the Clause if the state's use of the eminent domain power is rationally related to a conceivable public purpose, and the government provides just compensation. The state's effort to mitigate the harm caused by a land oligopoly is a rational exercise of the police power, so this is not a taking for purely private use. It is logical to use the condemnation power in furtherance of the state's purpose.
It is a legitimate public purpose to remedy a limited concentration of ownership that inflates prices in the real estate market. The state thus could use eminent domain to redistribute land, even though it did not take ownership of the land.
the remainder of the Act constitutional under the Public Use Clause of the Fifth Amendment, made applicable to the States under the Fourteenth Amendment. After deciding that the District Court had properly not abstained from exercising its jurisdiction, the Court of Appeals reversed, holding that the Act violates the "public use" requirement of the Fifth Amendment.
1. The District Court was not required to abstain from exercising its jurisdiction. Pp. 467 U. S. 236-239.
(a) Abstention under Railroad Comm'n v. Pullman Co., 312 U. S. 496, is unnecessary. Pullman abstention is limited to uncertain questions of state law, and here there is no uncertain question of state law, since the Act unambiguously provides that the power to condemn is "for a public use and purpose." Thus, the question, uncomplicated by ambiguous language, is whether the Act, on its face, is unconstitutional. Pp. 467 U. S. 236-237.
(b) Nor is abstention required under Younger v. Harris, 401 U. S. 37. Younger abstention is required only when state court proceedings are initiated before any proceedings of substance on the merits have occurred in federal court. Here, state judicial proceedings had not been initiated at the time proceedings of substance took place in the District Court, the District Court having issued a preliminary injunction before HHA filed its first state eminent domain suit in state court. And the fact that HHA's administrative proceedings occurred before the federal suit was filed did not require abstention, since the Act clearly states that those proceedings are not part of, or are not themselves, a judicial proceeding. Pp. 467 U. S. 237-239.
2. The Act does not violate the "public use" requirement of the Fifth Amendment. Pp. 467 U. S. 239-244.
(a) That requirement is coterminous with the scope of a sovereign's police powers. This Court will not substitute its judgment for a legislature's judgment as to what constitutes "public use" unless the use is palpably without reasonable foundation. Where the exercise of the eminent domain power is rationally related to a conceivable public purpose, a compensated taking is not prohibited by the Public Use Clause. Here, regulating oligopoly and the evils associated with it is a classic exercise of a State's police powers, and redistribution of fees simple to reduce such evils is a rational exercise of the eminent domain power. Pp. 467 U. S. 239-243.
the Public Use Clause. And the fact that a state legislature, and not Congress, made the public use determination does not mean that judicial deference is less appropriate. Pp. 467 U. S. 243-244.
702 F.2d 788, reversed and remanded.
O'CONNOR, J., delivered the opinion of the Court, in which all other Members joined, except MARSHALL, J., who took no part in the consideration or decision of the cases.
lessors and transferring it to lessees in order to reduce the concentration of ownership of fees simple in the State. We conclude that it does not.
The Hawaiian Islands were originally settled by Polynesian immigrants from the western Pacific. These settlers developed an economy around a feudal land tenure system in which one island high chief, the ali'i nui, controlled the land and assigned it for development to certain subchiefs. The subchiefs would then reassign the land to other lower ranking chiefs, who would administer the land and govern the farmers and other tenants working it. All land was held at the will of the ali'i nui and eventually had to be returned to his trust. There was no private ownership of land. See generally Brief for Office of Hawaiian Affairs as Amicus Curiae 3-5.
Beginning in the early 1800's, Hawaiian leaders and American settlers repeatedly attempted to divide the lands of the kingdom among the crown, the chiefs, and the common people. These efforts proved largely unsuccessful, however, and the land remained in the hands of a few. In the mid-1960's, after extensive hearings, the Hawaii Legislature discovered that, while the State and Federal Governments owned almost 49% of the State's land, another 47% was in the hands of only 72 private landowners. See Brief for the Hou Hawaiians and Maui Loa, Chief of the Hou Hawaiians, as Amici Curiae 32. The legislature further found that 18 landholders, with tracts of 21,000 acres or more, owned more than 40% of this land and that on Oahu, the most urbanized of the islands, 22 landowners owned 72.5% of the fee simple titles. Id. at 32-33. The legislature concluded that concentrated land ownership was responsible for skewing the State's residential fee simple market, inflating land prices, and injuring the public tranquility and welfare.
To redress these problems, the legislature decided to compel the large landowners to break up their estates. The legislature considered requiring large landowners to sell lands which they were leasing to homeowners. However, the landowners strongly resisted this scheme, pointing out the significant federal tax liabilities they would incur. Indeed, the landowners claimed that the federal tax laws were the primary reason they previously had chosen to lease, and not sell, their lands. Therefore, to accommodate the needs of both lessors and lessees, the Hawaii Legislature enacted the Land Reform Act of 1967 (Act), Haw.Rev.Stat., ch. 516, which created a mechanism for condemning residential tracts and for transferring ownership of the condemned fees simple to existing lessees. By condemning the land in question, the Hawaii Legislature intended to make the land sales involuntary, thereby making the federal tax consequences less severe while still facilitating the redistribution of fees simple. See Brief for Appellants in Nos. 83-141 and 83-283, pp. 3-4, and nn. 6-8.
to designate some or all of the lots in the tract for acquisition. It then acquires, at prices set either by condemnation trial or by negotiation between lessors and lessees, [Footnote 2] the former fee owners' full "right, title, and interest" in the land. § 516-25.
After compensation has been set, HHA may sell the land titles to tenants who have applied for fee simple ownership. HHA is authorized to lend these tenants up to 90% of the purchase price, and it may condition final transfer on a right of first refusal for the first 10 years following sale. §§ 516-30, 516-34, 516-35. If HHA does not sell the lot to the tenant residing there, it may lease the lot or sell it to someone else, provided that public notice has been given. § 516-28. However, HHA may not sell to any one purchaser, or lease to any one tenant, more than one lot, and it may not operate for profit. §§ 516-28, 516-32. In practice, funds to satisfy the condemnation awards have been supplied entirely by lessees. See App. 164. While the Act authorizes HHA to issue bonds and appropriate funds for acquisition, no bonds have issued and HHA has not supplied any funds for condemned lots. See ibid.
In April 1977, HHA held a public hearing concerning the proposed acquisition of some of appellees' lands. HHA made the statutorily required finding that acquisition of appellees' lands would effectuate the public purposes of the Act. Then, in October, 1978, it directed appellees to negotiate with certain lessees concerning the sale of the designated properties. Those negotiations failed, and HHA subsequently ordered appellees to submit to compulsory arbitration.
Court, asking that the Act be declared unconstitutional and that its enforcement be enjoined. The District Court temporarily restrained the State from proceeding against appellees' estates. Three months later, while declaring the compulsory arbitration and compensation formulae provisions of the Act unconstitutional, [Footnote 3] the District Court refused preliminarily to enjoin appellants from conducting the statutory designation and condemnation proceedings. Finally, in December, 1979, it granted partial summary judgment to appellants, holding the remaining portion of the Act constitutional under the Public Use Clause. See 483 F.Supp. 62 (Haw.1979). The District Court found that the Act's goals were within the bounds of the State's police powers and that the means the legislature had chosen to serve those goals were not arbitrary, capricious, or selected in bad faith.
"a naked attempt on the part of the state of Hawaii to take the private property of A and transfer it to B solely for B's private use and benefit."
Id. at 798. One judge dissented.
On applications of HHA and certain private appellants who had intervened below, this Court noted probable jurisdiction. 464 U.S. 932 (1983). We now reverse.
We begin with the question whether the District Court abused its discretion in not abstaining from the exercise of its jurisdiction. The appellants have suggested as one alternative that perhaps abstention was required under the standards announced in Railroad Comm'n v. Pullman Co., 312 U. S. 496 (1941), and Younger v. Harris, 401 U. S. 37 (1971). We do not believe that abstention was required.
In Railroad Comm'n v. Pullman Co., supra, this Court held that federal courts should abstain from decision when difficult and unsettled questions of state law must be resolved before a substantial federal constitutional question can be decided. By abstaining in such cases, federal courts will avoid both unnecessary adjudication of federal questions and "needless friction with state policies. . . ." Id. at 312 U. S. 500. However, federal courts need not abstain on Pullman grounds when a state statute is not "fairly subject to an interpretation which will render unnecessary" adjudication of the federal constitutional question. See Harman v. Forssenius, 380 U. S. 528, 380 U. S. 535 (1965). Pullman abstention is limited to uncertain questions of state law because "[a]bstention from the exercise of federal jurisdiction is the exception, not the rule." Colorado River Water Conservation Dist. v. United States, 424 U. S. 800, 424 U. S. 813 (1976).
§ 516-83(a)(12) does not mean exactly what it says. Since "the naked question, uncomplicated by [ambiguous language], is whether the Act, on its face, is unconstitutional," Wisconsin v. Constantineau, 400 U. S. 433, 400 U. S. 439 (1971), abstention from federal jurisdiction is not required.
"[w]e have frequently emphasized that abstention is not to be ordered unless the statute is of an uncertain nature, and is obviously susceptible of a limiting construction."
important state interests. See Middlesex Ethics Committee v. Garden State Bar Assn., 457 U. S. 423, 457 U. S. 432-437 (1982). Younger abstention is required, however, only when state court proceedings are initiated "before any proceedings of substance on the merits have taken place in the federal court." Hicks v. Miranda, 422 U. S. 332, 422 U. S. 349 (1975). In other cases, federal courts must normally fulfill their duty to adjudicate federal questions properly brought before them.
In these cases, state judicial proceedings had not been initiated at the time proceedings of substance took place in federal court. Appellees filed their federal court complaint in February, 1979, asking for temporary and permanent relief. The District Court temporarily restrained HHA from proceeding against appellees' estates. At that time, no state judicial proceedings were in process. Indeed, in June, 1979, when the District Court granted, in part, appellees' motion for a preliminary injunction, state court proceedings still had not been initiated. Rather, HHA filed its first eminent domain lawsuit after the parties had begun filing motions for summary judgment in the District Court -- in September, 1979. Whether issuance of the February temporary restraining order was a substantial federal court action or not, issuance of the June preliminary injunction certainly was. See Doran v. Salem Inn, Inc., 422 U. S. 922, 422 U. S. 929-931 (1975). A federal court action in which a preliminary injunction is granted has proceeded well beyond the "embryonic stage," id. at 422 U. S. 929, and considerations of economy, equity, and federalism counsel against Younger abstention at that point.
bar to federal court action when state judicial proceedings have not themselves commenced, see Middlesex County Ethics Committee v. Garden State Bar Assn., supra, at 457 U. S. 433; Fair Assessment in Real Estate Assn., Inc. v. McNary, 454 U. S. 100, 454 U. S. 112-113 (1981), abstention for HHA's administrative proceedings was not required.
The majority of the Court of Appeals next determined that the Act violates the "public use" requirement of the Fifth and Fourteenth Amendments. On this argument, however, we find ourselves in agreement with the dissenting judge in the Court of Appeals.
be Congress legislating concerning the District of Columbia . . . or the States legislating concerning local affairs. . . . This principle admits of no exception merely because the power of eminent domain is involved. . . ."
"Once the object is within the authority of Congress, the right to realize it through the exercise of eminent domain is clear. For the power of eminent domain is merely the means to the end. . . . Once the object is within the authority of Congress, the means by which it will be attained is also for Congress to determine. Here one of the means chosen is the use of private enterprise for redevelopment of the area. Appellants argue that this makes the project a taking from one businessman for the benefit of another businessman. But the means of executing the project are for Congress and Congress alone to determine, once the public purpose has been established."
Id. at 348 U. S. 33. The "public use" requirement is thus coterminous with the scope of a sovereign's police powers.
on that question at the moment of decision, a practice which has proved impracticable in other fields."
In short, the Court has made clear that it will not substitute its judgment for a legislature's judgment as to what constitutes a public use "unless the use be palpably without reasonable foundation." United States v. Gettysburg Electric R. Co., 160 U. S. 668, 160 U. S. 680 (1896).
"one person's property may not be taken for the benefit of another private person without a justifying public purpose, even though compensation be paid."
"order in question was not, and was not claimed to be, . . . a taking of private property for a public use under the right of eminent domain,"
id. at 164 U. S. 416 (emphasis added), the Court invalidated a compensated taking of property for lack of a justifying public purpose. But where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause. See Berman v. Parker, supra; Rindge Co. v. Los Angeles, 262 U. S. 700 (1923); Block v. Hirsh, 256 U. S. 135 (1921); cf. Thompson v. Consolidated Gas Corp., supra, (invalidating an uncompensated taking).
land oligopoly traceable to their monarchs. The land oligopoly has, according to the Hawaii Legislature, created artificial deterrents to the normal functioning of the State's residential land market and forced thousands of individual homeowners to lease, rather than buy, the land underneath their homes. Regulating oligopoly and the evils associated with it is a classic exercise of a State's police powers. See Exxon Corp. v. Governor of Maryland, 437 U. S. 117 (1978); Block v. Hirsh, supra; see also People of Puerto Rico v. Eastern Sugar Associates, 156 F.2d 316 (CA1), cert. denied, 329 U.S. 772 (1946). We cannot disapprove of Hawaii's exercise of this power.
Nor can we condemn as irrational the Act's approach to correcting the land oligopoly problem. The Act presumes that, when a sufficiently large number of persons declare that they are willing but unable to buy lots at fair prices, the land market is malfunctioning. When such a malfunction is signaled, the Act authorizes HHA to condemn lots in the relevant tract. The Act limits the number of lots any one tenant can purchase, and authorizes HHA to use public funds to ensure that the market dilution goals will be achieved. This is a comprehensive and rational approach to identifying and correcting market failure.
"whether in fact the provision will accomplish its objectives is not the question: the [constitutional requirement] is satisfied if . . . the . . . [state] Legislature rationally could have believed that the [Act] would promote its objective."
"the review of . . . congressional determination[s] that there was a public use, not the review of . . . state legislative determination[s]."
Id. at 798 (emphasis in original). Because state legislative determinations are involved in the instant cases, the Court of Appeals decided that more rigorous judicial scrutiny of the public use determinations was appropriate. The court concluded that the Hawaii Legislature's professed purposes were mere "statutory rationalizations." Ibid. We disagree with the Court of Appeals' analysis.
purpose. The Court long ago rejected any literal requirement that condemned property be put into use for the general public.
"It is not essential that the entire community, nor even any considerable portion, . . . directly enjoy or participate in any improvement in order [for it] to constitute a public use."
Rindge Co. v. Los Angeles, 262 U.S. at 262 U. S. 707. "[W]hat in its immediate aspect [is] only a private transaction may . . . be raised by its class or character to a public affair." Block v. Hirsh, 256 U.S. at 256 U. S. 155. As the unique way titles were held in Hawaii skewed the land market, exercise of the power of eminent domain was justified. The Act advances its purposes without the State's taking actual possession of the land. In such cases, government does not itself have to use property to legitimate the taking; it is only the taking's purpose, and not its mechanics, that must pass scrutiny under the Public Use Clause.
Similarly, the fact that a state legislature, and not the Congress, made the public use determination does not mean that judicial deference is less appropriate. [Footnote 7] Judicial deference is required because, in our system of government, legislatures are better able to assess what public purposes should be advanced by an exercise of the taking power. State legislatures are as capable as Congress of making such determinations within their respective spheres of authority. See Berman v. Parker, 348 U.S. at 348 U. S. 32. Thus, if a legislature, state or federal, determines there are substantial reasons for an exercise of the taking power, courts must defer to its determination that the taking will serve a public use.
The State of Hawaii has never denied that the Constitution forbids even a compensated taking of property when executed for no reason other than to confer a private benefit on a particular private party. A purely private taking could not withstand the scrutiny of the public use requirement; it would serve no legitimate purpose of government, and would thus be void. But no purely private taking is involved in these cases. The Hawaii Legislature enacted its Land Reform Act not to benefit a particular class of identifiable individuals, but to attack certain perceived evils of concentrated property ownership in Hawaii -- a legitimate public purpose. Use of the condemnation power to achieve this purpose is not irrational. Since we assume for purposes of these appeals that the weighty demand of just compensation has been met, the requirements of the Fifth and Fourteenth Amendments have been satisfied. Accordingly, we reverse the judgment of the Court of Appeals, and remand these cases for further proceedings in conformity with this opinion.
JUSTICE MARSHALL took no part in the consideration or decision of these cases.
* Together with No. 83-236, Portlock Community Association (Maunalua Beach) et al. v. Midkiff et al.; and No. 83-283, Kahala Community Association, Inc., et al. v. Midkiff et al., also on appeal from the same court.
See § 516-56 (Supp.1983). In either case, compensation must equal the fair market value of the owner's leased fee interest. § 516-1(14). The adequacy of compensation is not before us.
As originally enacted, lessor and lessee had to commence compulsory arbitration if they could not agree on a price for the fee simple title. Statutory formulae were provided for the determination of compensation. The District Court declared both the compulsory arbitration provision and the compensation formulae unconstitutional. No appeal was taken from these rulings, and the Hawaii Legislature subsequently amended the statute to provide only for mandatory negotiation and for advisory compensation formulae. These issues are not before us.
The dissenting judge's suggestion that Pullman abstention was required because interpretation of the State Constitution may have obviated resolution of the federal constitutional question is equally faulty. Hawaii's Constitution has only a parallel requirement that a taking be for a public use. See Haw. Const., Art. I, § 20. The Court has previously determined that abstention is not required for interpretation of parallel state constitutional provisions. See Examining Board v. Flores de Otero, 426 U. S. 572, 426 U. S. 598 (1976); see also Wisconsin v. Constantineau, 400 U. S. 433 (1971).
After the American Revolution, the colonists in several States took steps to eradicate the feudal incidents with which large proprietors had encumbered land in the Colonies. See, e.g., Act of May 1779, 10 Henning's Statutes At Large 64, ch. 13, § 6 (1822) (Virginia statute); Divesting Act of 1779, 1775-1781 Pa. Acts 258, ch. 139 (1782) (Pennsylvania statute). Courts have never doubted that such statutes served a public purpose. See, e.g., Wilson v. Iseminger, 185 U. S. 55, 185 U. S. 60-61 (1902); Stewart v. Gorter, 70 Md. 242, 244-245, 16 A. 644, 645 (1889).
We similarly find no merit in appellees' Due Process and Contract Clause arguments. The argument that due process prohibits allowing lessees to initiate the taking process was essentially rejected by this Court in New Motor Vehicle Board v. Fox Co., 439 U. S. 96, 439 U. S. 108-109 (1978). Similarly, the Contract Clause has never been thought to protect against the exercise of the power of eminent domain. See United States Trust Co. v. New Jersey, 431 U. S. 1, 431 U. S. 19, and n. 16 (1977).
It is worth noting that the Fourteenth Amendment does not itself contain an independent "public use" requirement. Rather, that requirement is made binding on the States only by incorporation of the Fifth Amendment's Eminent Domain Clause through the Fourteenth Amendment's Due Process Clause. See Chicago, B. & Q. R. Co. v. Chicago, 166 U. S. 226 (1897). It would be ironic to find that state legislation is subject to greater scrutiny under the incorporated "public use" requirement than is congressional legislation under the express mandate of the Fifth Amendment.

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