The contract clause relates to legislative, not to judicial,
action impairing obligation of contracts.
In an action for damages to abutting property due to
construction, maintenance, and operation of an elevated railroad in
a street of which the fee was in the public, the state court held
that recovery depended upon the effect on market value in
determining which increase of such value arising from increase of
travel should be considered and treated as a special benefit,
though enjoyed also by other neighboring property.
Held
that there was no basis for invoking the equal protection clause,
and that the ruling did not deprive of property without due process
of law.
Where private property is taken for public purposes, the
fundamental right guaranteed by the Fourteenth Amendment is that
the owner shall not be deprived of the market value under a rule of
law which makes it impossible for him to obtain just compensation.
There is no guarantee that the rule adopted by the state shall be
the one best supported by reason or authority, or against mere
errors in the course of the trial.
It is almost universally held that, in arriving at the amount of
damages to property not taken, allowance should be made for
peculiar and individual benefits conferred upon it, and it cannot
be said that extension of the rule to include increase of market
value resulting directly from the public improvement where all
property in the neighborhood is similarly benefited deprives of the
fundamental right protected by the Amendment.
271 Ill. 490 affirmed.
The case is stated in the opinion.
Page 247 U. S. 355
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
William A. McCoy, testator of plaintiffs in error, owned a hotel
situated at the northwest corner of Clark and Van Buren Streets,
Chicago. During 1897, defendants, constructed along the latter
street and in front of the building an elevated passenger railroad
of the ordinary type, and have continued to maintain and operate
it. Charging that construction, maintenance, and operation of the
railroad had caused and would continue to cause injury to the
property by noise, smoke, dirt, shutting off air and light,
disturbing privacy, and impairing the freedom of ingress and
egress, and that its market value had been greatly reduced, McCoy
brought a common law action (September, 1902) in a state court to
recover the entire damage.
The declaration does not allege plaintiff's ownership of the fee
in the street, but asserts his interest in the lot and right to the
"easements and privileges which legally appertain and rightfully
belong to property abutting public streets" in Chicago, including
the right of light, air, access, privacy, view, etc. Trial to a
jury upon plea of not guilty during February, 1914, resulted in
verdict for defendants, and judgment thereon was affirmed by the
supreme court, a writ of error having been sued out by McCoy's
executors. 271 Ill. 490. That court's statement of facts
follows:
"During the years 1896 and 1897, what is generally known as the
'loop' was constructed, under authority conferred by ordinances of
the City of Chicago, for the joint use of the three systems above
mentioned and another
Page 247 U. S. 356
elevated system then in course of construction. The loop
consists of an elevated structure in the streets encircling the
central portion of the business district of the city, upon which
are laid tracks for the passage of the elevated trains of all of
the defendant companies completely around the central portion of
the business district. Before the construction of the loop, the
elevated trains of the defendant companies stopped at their
respective terminals. The structure forming the south side of the
loop was placed in that portion of Van Buren Street extending from
Wabash Avenue on the east to Fifth Avenue on the west, Clark Street
being one of the streets intersecting Van Buren Street between
these two avenues. Stations to permit passengers to board and leave
the elevated trains were established at intervals around the loop,
and stairways were constructed leading from each station to the
surface of the street. One of these stations in Van Buren Street
was established at La Salle Street, about 100 feet west from the
McCoy Hotel, and another was established at Dearborn Street, about
300 feet east from the hotel. The elevated structure in Van Buren
Street obstructed the passage of light to the storerooms in McCoy's
building, and the noise from the passage of trains over the
structure and the fact that passing trains were on a level with the
windows of the second floor of the building rendered the rooms on
the south side of the second and third floors of the building less
desirable for hotel purposes. Large upright columns supporting the
elevated structure were placed just inside the curb in front of the
premises and rendered the premises less accessible from the
street."
"There is no material controversy over the facts in the case.
The witnesses all agree that the matters above mentioned, when
considered by themselves, would be detrimental to the premises.
They also agree that there was a steady increase of from five to
ten percent per year
Page 247 U. S. 357
in the value of the premises from the construction of the loop
until 1905. It also appears from the evidence that the rents from
the storerooms on the ground floor constantly increased after 1897.
The plaintiff called but one real estate expert as a witness. He
testified that the damages to the property from the construction of
the elevated structure, and the operation of the trains thereon,
amounted to $81,999, being fifteen percent of the value which the
witness placed upon the interest of McCoy in the premises. He
admitted that there had been a continuous increase in the value of
the premises since the completion of the loop, and that a port on
of that increase, which he said it was impossible to estimate, was
due to the increased travel brought to the premises by the elevated
railroad, but that he did not take that into consideration in
fixing the damages. The real estate experts called by the
defendants, on the other hand, testified that at least one-half of
the increase in the value of the premises was due to the increased
travel in front of the premises resulting from the operation of the
elevated railroad in Van Buren Street as a part of the loop. In
support of the testimony of these witnesses, defendants proved that
the number of persons boarding the elevated trains at the La Salle
Street station, in Van Buren Street, during the three months of the
year 1897 in which trains were operated around the loop, was
161,763, and that the number constantly increased until, in 1905,
there were 3,659,583 persons who boarded the trains at that
station. It was also shown that, during the period in 1897 above
mentioned, 194,904 persons boarded the elevated trains at the
Dearborn Street station, in Van Buren Street, and that the number
constantly increased each year until, in 1905, there were 2,558,976
persons who boarded the trains at that station."
During the trial, over plaintiff's objections, questions
concerning evidence were determined in accordance with
Page 247 U. S. 358
repeated rulings by the Illinois Supreme Court that the effect
of construction, maintenance, and operation of an elevated road
upon market value was the point for determination, and that
increase in such value caused by the improvement itself should be
considered and treated as a special benefit, although enjoyed by
other neighborhood property.
Among others, plaintiff requested the following
instructions:
"The jury are instructed that the constitution of this state
provides that 'private property shall not be taken or damaged for
public use without just compensation.' This action is brought by
plaintiff for an alleged damage to the property of plaintiff
arising from the construction [maintenance and operation] of the
structure in the abutting street for elevated railroad purposes.
Such damages in the eye of the law can only be a loss in the market
value of the property arising from the said construction
[maintenance and operation] for the purposes aforesaid. Whether the
premises in question have in fact been so damaged is for the jury
to find from the evidence, according to the method and within the
limitations of other instructions given you."
"The court instructs the jury that 'benefits' and 'damages'
spoken of in the instruction mean benefits and damages to the
market value thereof, and that, by the term 'market value' of
property, as used in these instructions, is meant the price at
which the owner, if desirous of selling, would under ordinary
circumstances surrounding the sales of property have sold the
property for, and what a person desirous as purchaser would have
paid for it under the same circumstances."
"The jury are instructed that, in considering the question of
whether the premises in question were or were not damaged by the
construction of the structure in the abutting street for elevated
railroad purposes,
Page 247 U. S. 359
they are to exclude from consideration all benefit which accrued
to the said premises or to the owners thereof by reason of improved
travel facilities furnished by said elevated railroad."
The words "maintenance and operation" were inserted in the first
of these requests, and, as thus amended, it was given; the others
were refused.
The following instructions were also given:
"The court instructs the jury that benefits and damages spoken
of in these instructions mean benefits and damages to the fair cash
market value thereof, and that, by the term 'fair cash market value
of the property,' as used in these instructions, is meant its value
as determined by what it would sell for in the market for cash in
the due course of business. This does not mean the price at which
it would sell under special circumstances, but its value as sold in
the market under ordinary circumstances for cash, and not on time,
and assuming that the owner is willing and not compelled to sell,
and the purchaser is willing and under no compulsion to
purchase."
"The jury is instructed that, if you believe from the evidence
that plaintiff's premises have been increased in their fair cash
market value by the construction, maintenance, and operation of
defendants' said railroad, and if you also believe from the
evidence that other property in the neighborhood of the plaintiff's
premises not abutting upon the defendants' railroad have been
likewise increased in their fair cash market value by the
construction, maintenance, and operation of said railroad, but to a
greater extent than the plaintiff's said premises, you have no
right from that fact to find that the plaintiff's premises have
been damaged."
"Special benefits are such benefits as are special or peculiar
to a particular piece of property, and which beneficially affect
its fair cash market value, as distinguished from those benefits
which are common to the
Page 247 U. S. 360
public at large, and which are termed general benefits, and you
are instructed that, in determining the effect of the construction,
maintenance, and operation of defendants' elevated railroad upon
the fair cash market value of plaintiff's said premises, you are
not to take into consideration any general benefits which you may
believe from the evidence to have arisen out of the construction,
maintenance, and operation of said elevated railroad, but you
should take into consideration special benefits, if any, shown by
the evidence to plaintiff's said premises from the construction,
maintenance, and operation of defendants' said elevated
railroad."
"The jury is instructed that, if you believe from the evidence
that the property of the plaintiff described in the declaration of
this case was enhanced in its fair cash market value by reason of
the construction, maintenance, and operation of the elevated
railroad of the defendant, such increase in market value is a
special benefit to the property of the plaintiff, and not a general
benefit, notwithstanding you may believe from the evidence that the
other property in the vicinity of plaintiff's property also was
enhanced in fair cash market value to a greater or less degree by
reason of the construction, maintenance, and operation of
defendants' said elevated railroad."
"The jury is instructed that the measure of damages in a case of
this kind is the difference between the fair cash market value of
the premises with the elevated railroad constructed, maintained,
and operated in the street in front of it and what the fair cash
market value of said premises would have been had not said elevated
railroad been so constructed, maintained, and operated. If you
believe from the evidence that the fair cash market value of the
plaintiff's premises with the railroad constructed, maintained, and
operated in Van Buren Street has not been diminished below what you
believe
Page 247 U. S. 361
from the evidence the fair cash market value of said premises
would have been if the said elevated railroad had not been
constructed, maintained, and operated in said street, then said
plaintiff's premises have not been damaged by the construction,
maintenance, and operation of defendants' elevated railroad."
The supreme court said:
"The contention made by plaintiffs in error upon which most of
the assignments of error depend is that the benefits to the
premises by reason of the increased travel in front of the premises
resulting from the operation of the elevated railroad in Van Buren
Street as a part of the loop cannot be considered in determining
whether the premises have been damaged by the construction of the
elevated structure and the operation of trains thereon: first,
because such benefits are general benefits, common to all the
property in the vicinity, and second because such benefits are
conjectural and speculative. The same contention was made in
Brand v. Union Elevated Railroad Co., 258 Ill. 133;
Geohegan v. Union Elevated Railroad Co., 258 Ill. 352, and
Geohegan v. Union Elevated Railroad Co., 266 Ill. 482, and
in each of those cases we held that such benefits should be
considered in determining whether premises abutting on a public
street have been damaged by the construction and operation of an
elevated railroad in such street. The reasons for such holding were
fully set forth in the opinions filed in the cases above mentioned,
and it would serve no useful purpose to repeat them here. It is
sufficient to say that we adhere to the views expressed in the
former cases involving the same question as is here presented. . .
. Complaint is made of the action of the court in giving certain
instructions on behalf of defendants in error and in refusing or
modifying certain instructions submitted by plaintiff. . . .
Moreover, the evidence in this case would not have sustained a
verdict in favor of the plaintiff,
Page 247 U. S. 362
and any error committed by the trial court in giving, refusing,
or modifying instructions was therefore harmless."
In their brief here, counsel for plaintiffs in error
declare:
"Plaintiff presented his case, therefore, upon the basis that
his damage was to be estimated:"
"(1) By taking the market value of the premises immediately
before the advent of the loop; then"
"(2) To consider how the structure in question, placed in the
block upon which his premises abutted (which defined the 'physical'
scope of his property or rights),
forever dedicated to railroad
uses and to be operated therefor, would actually interfere
with the
actual use and enjoyment of the premises, and
then"
"(3) To estimate to what extent such structure, put or dedicated
to such use, would reduce that market value. That is, to
capitalize the permanent
interference --
i.e., damage (as laid down in Lewis, 3d ed., § 693)."
"In the trial court, the main conflict was waged over the
question as to whether or not the court should admit on behalf of
defendants evidence of 'general' or 'travel' benefits occurring
from the establishment of the loop in its
entirety, or
whether the evidence should be held down to the issue of 'direct,
proximate, and physical effect.' Said court, following the late
ruling of the Illinois Supreme Court in
Brand v. Union Elev. R.
Co., 258 Ill. 133 (a review of which was asked in this Court
in
238 U. S. 238 U.S. 586, same
title), tried the case upon the basis of allowing this special
damage to be offset or reduced by, or considered in connection
with, the estimated amount of market benefit that accrued to the
premises from 'travel benefits.'"
And they now maintain that the judgment below is erroneous
because it: (1) impairs the contract which their testator made when
he purchased the property contrary to § 10, Article I, federal
Constitution; (2) denies to them
Page 247 U. S. 363
the equal protection of the law, and (3) deprives them of
property without due process of law in violation of the Fourteenth
Amendment. The first claim is clearly untenable; the contract
clause prohibits legislative, not judicial, action.
Ross v.
Oregon, 227 U. S. 150,
227 U. S. 161,
227 U. S. 164;
Moore-Mansfield Co. v. Electrical Co., 234 U.
S. 619,
234 U. S.
623-624;
Frank v. Mangum, 237 U.
S. 309,
237 U. S. 344.
Nothing in the record affords support for the second claim. The
third demands consideration.
We may examine proceedings in state courts for appropriation of
private property to public purposes so far as to inquire whether a
rule of law was adopted in absolute disregard of the owner's right
to just compensation. If the necessary result was to deprive him of
property without such compensation, then due process of law was
denied him, contrary to Fourteenth Amendment.
Chicago,
Burlington & Quincy R. Co. v. Chicago, 166 U.
S. 226,
166 U. S. 246;
Backus v. Fort Street Union Depot Co., 169 U.
S. 557,
169 U. S. 565;
Fayerweather v. Ritch, 195 U. S. 276,
195 U. S. 298.
Our concern is not to ascertain whether the rule adopted by the
state is the one best supported by reason or authority nor with
mere errors in course of trial, but with denial of a fundamental
right.
Appleby v. Buffalo, 221 U.
S. 524,
221 U. S. 532.
And see McGovern v. New York, 229 U.
S. 363,
229 U. S. 371.
And here it must be noted that the claim is for damages to property
not actually taken from the owner's dominion.
The Illinois Constitution provides: "private property shall not
be taken or damaged for public use without just compensation." In
Peoria, Bloomington & Champaign Traction Co. v. Vance,
225 Ill. 270, 272, where the owner sought damages to the balance of
his farm resulting from taking a right of way for an electric road,
the court pointed out the applicable doctrine long established in
the state. It said:
"Since the adoption of the constitution of 1870, it has
Page 247 U. S. 364
been uniformly held by this court in such cases as this that the
measure of damages to land not taken is 'the difference in the fair
cash market value of the land before and after the construction of
the railroad,' or 'the amount, if any, which lands not taken will
be depreciated in their fair cash market value by the construction
and operation of the proposed road.' . . . Under the rule adopted
in this state for determining whether or in what amount property
not taken will be damaged by the construction and operation of a
railroad, any benefits which are not conjectural or speculative,
and which actually enhance the market value of such property, are
to be considered as special benefits, and not as general benefits,
within the meaning of the rule that general benefits cannot be
considered in determining whether, or in what amount, property not
taken will be damaged. Special benefits do not become general
benefits because the benefits are common to other property in the
vicinity. The fact that other property in the vicinity of the
proposed railroad will also be increased in value by reason of the
construction and operation thereof furnishes no excuse for
excluding the consideration of special benefits to the particular
property in determining whether it has been damaged, and, if it
has, the extent of the depreciation in value."
This doctrine was again expressly affirmed in
Brand v. Union
Elevated R. Co., 258 Ill. 133, a proceeding, like the present
one, to recover damages caused by constructing, maintaining, and
operating an elevated railroad along the street. The trial court
below accepted and applied the approved rule, and we are now asked
to declare that it absolutely disregards the owner's fundamental
right to just compensation; that it necessarily deprives him of
such compensation.
How far benefits must be considered in determining damages to
property when claimed on account of a public improvement is a vexed
question which has given occasion
Page 247 U. S. 365
for numberless decisions in different states, as well as much
legislation. The matter is elaborately treated and the cases
collected in Lewis on Eminent Domain and Nichols on Eminent Domain.
In the former, § 687, 3d ed., it is said:
"The decisions may be divided into five classes, according as
they maintain one or the other of the following propositions:
First. Benefits cannot be considered at all. Second. Special
benefits may be set off against damages to the remainder, but not
against the value of the part taken. Third. Benefits, whether
general or special, may be set off as in the last proposition.
Fourth. Special benefits may be set off against both damages to the
remainder or the value of the part taken. Fifth. Both general and
special benefits may be set off as in the last proposition."
The latter work, at § 256, 2d ed., says:
"It is universally recognized that, when there is no taking, the
damages to a tract of land from the construction of a public work
cannot be correctly ascertained without determining whether the
tract has been depreciated in value, and to determine this, all the
effects of the public work, beneficial or injurious, must be
considered. Strictly speaking, it is said, it is not a question of
benefits at all, except that proof of benefits might be one way of
showing that there had been no injury. The real question is, had
the property in question been decreased in market value by the
construction of the public improvement, and the amount of damage is
the decrease in such value. In most states, however, it is only
special benefits that can be set off; but in the states which allow
the set-off of general benefits to remaining land when part of a
tract is taken, the same latitude is given in awarding damages when
no land is taken."
The fundamental right guaranteed by the Fourteenth Amendment is
that the owner shall not be deprived of the market value of his
property under a rule of law which makes it impossible for him to
obtain just compensation.
Page 247 U. S. 366
There is no guaranty that he shall derive a positive pecuniary
advantage from a public work whenever a neighbor does. It is almost
universally held that, in arriving at the amount of damage to
property not taken, allowance should be made for peculiar and
individual benefits conferred upon it; compensation to the owner in
that form is permissible. And we are unable to say that he suffers
deprivation of any fundamental right when a state goes one step
further and permits consideration of actual benefits -- enhancement
in market value -- flowing directly from a public work, although
all in the neighborhood receive like advantages. In such case, the
owner really loses nothing which he had before, and it may be said,
with reason, there has been no real injury.
This subject was much discussed in
Bauman v. Ross,
167 U. S. 548,
167 U. S. 574,
167 U. S. 584.
Through Mr. Justice Gray, we there said:
"The just compensation required by the Constitution to be made
to the owner is to be measured by the loss caused to him by the
appropriation. He is entitled to receive the value of what he has
been deprived of, and no more. To award him less would be unjust to
him; to award him more would be unjust to the public. Consequently,
when part only of a parcel of land is taken for a highway, the
value of that part is not the sole measure of the compensation or
damages to be paid to the owner, but the incidental injury or
benefit to the part not taken is also to be considered. When the
part not taken is left in such shape or condition, as to be, in
itself, of less value than before, the owner is entitled to
additional damages on that account. When, on the other hand, the
part which he retains is specially and directly increased in value
by the public improvement, the damages to the whole parcel by the
appropriation of part of it are lessened. . . . The Constitution of
the United States contains no express prohibition against
considering benefits in estimating the just compensation to be paid
for private
Page 247 U. S. 367
property taken for the public use, and, for the reasons and upon
the authorities above stated, no such prohibition can be implied,
and it is therefore within the authority of Congress, in the
exercise of the right of eminent domain, to direct that, when part
of a parcel of land is appropriated to the public use for a highway
in the District of Columbia, the tribunal vested by law with the
duty of assessing the compensation or damages due to the owner,
whether for the value of the part taken, or for any injury to the
rest, shall take into consideration, by way of lessening the whole
or either part of the sum due him, and special and direct benefits,
capable of present estimate and reasonable computation, caused by
the establishment of the highway to the part not taken."
See Martin v. District of Columbia, 205 U.
S. 135.
The judgment below is
Affirmed.