Can the Government Take My Personal Property for Public Use Without Paying Me Compensation?

In general, the law distinguishes between real property and personal property. Basically, real property is land and buildings attached to land like your home. Personal property is basically everything else like your automobile.

Under the power of eminent domain, governments can take land -- real property -- for public use as long as the government pays "just compensation." This is a requirement of the Fifth Amendment to the United States Constitution. Just compensation is generally defined as the fair market value of the land taken. A similar legal and constitutional principle applies to state governments. Thus, if North Carolina takes your land for public use, North Carolina must pay just compensation.

If the government takes my personal property for public use, does the government have to pay just compensation? The answer is a bit complicated, but in general, the government must pay just compensation if personal property is taken via use of eminent domain. This was held by the United States Supreme Court in Horne v. Department of Agriculture, 135 S.Ct. 2419 (US Supreme Court 2015). The case involved raisin crops.

As described in the case, by statute passed in 1937, the US Department of Agriculture is authorized to issue regulations designed to stabilize markets for particular agricultural products. The regulations for raisins requires growers to give a percentage of their crop to the federal government without payment. As examples, in 2002-2003, raisin growers were required to turn over 47% of their crop and in 2003-2004, they were required to run over -- without payment -- 30%.

As described by the court, the process involves the following:

"Growers generally ship their raisins to a raisin "handler," who physically separates the raisins due the Government (called "reserve raisins"), pays the growers only for the remainder ("free-tonnage raisins"), and packs and sells the free-tonnage raisins. The Raisin Committee acquires title to the reserve raisins that have been set aside, and decides how to dispose of them in its discretion. It sells them in noncompetitive markets, for example to exporters, federal agencies, or foreign governments; donates them to charitable causes; releases them to growers who agree to reduce their raisin production; or disposes of them by "any other means" consistent with the purposes of the raisin program."

Raisin growers retain some right to the monies generated by the sale of reserve raisins. In most years, the money paid is less than the cost of growing the raisins and in some years the money paid is zero.

In this particular case, in 2002, the Hornes refused to set aside any raisins for the government. In response, the Department of Agriculture sent trucks to the Hornes' facility at eight o'clock one morning to pick up the raisins. The Hornes refused entry. The Department then assessed against the Hornes a fine equal to the market value of the missing raisins—some $480,000—as well as an additional civil penalty of just over $200,000 for disobeying the order to turn them over.

The Hornes then sued claiming, among other things, that the reserve requirement was an unconstitutional taking of their property under the Fifth Amendment without payment of just compensation and that the fines imposed were unlawful.

The legal issues were whether these actions were "takings" under the power of eminent domain and whether the "just compensation" requirement of the Fifth Amendment applied. The Supreme Court answered both questions with a "yes." The court stated:

"Nothing in the text or history of the Takings Clause, or our precedents, suggests that the rule is any different when it comes to appropriation of personal property. The Government has a categorical duty to pay just compensation when it takes your car, just as when it takes your home. The Takings Clause provides: "[N]or shall private property be taken for public use, without just compensation." U. S. Const., Amdt. 5. It protects "private property" without any distinction between different types."

The court noted that the Hornes agreed that the federal government might enact laws and issue regulations that might prohibit the sale of raisins. But the court noted that, in this case, there was an attempt to actually physically take the raisins. For the court, that was an important difference since the Constitution "... is concerned with means as well as ends." The means used by the federal government in exercising its powers must be consistent with the letter and spirit of the Constitution.

Since the Hornes' raisins had not actually been seized in this case, there was no need to determine just compensation. Rather, the fines were dismissed.

There are no court decisions like this in North Carolina. But, in general, eminent domain cases decided by the United States Supreme Court are binding on the courts in the various states. Thus, likely, the rule announced in Horne would apply here in North Carolina.

For more information, and to schedule a confidential consultation with experienced and dedicated eminent domain and condemnation attorneys in Charlotte, contact Arnold & Smith, PLLC. Use our “Contact” page or give us a call at 704-370-2828. We handle land use, zoning, and condemnation legal matters in federal court, in Mecklenburg County and elsewhere in North Carolina. We have offices in Charlotte, Lake Norman, and Union County.