Redevelopment Authority of City of Philadelphia v. Lieberman

• Citation: 336 A.2d 249,461 Pa. 208
• Parties: REDEVELOPMENT AUTHORITY OF the CITY OF PHILADELPHIA v. Irwin LIEBERMAN t/a Hide-Away Bar, Appellants-Condemnees.
• Decision Date: 18 March 1975
• Court: United States State Supreme Court of Pennsylvania

Page 249

336 A.2d 249

461 Pa. 208

REDEVELOPMENT AUTHORITY OF the CITY OF PHILADELPHIA v. Irwin LIEBERMAN t/a Hide-Away Bar, Appellants-Condemnees.

Supreme Court of Pennsylvania.

March 18, 1975.

Rehearing Denied May 2, 1975.

Austin Norris, Norris, Hutton & Wells, Philadelphia, for appellants.

Francis J. Moran, Philadelphia, for appellee, Redevelopment Authority, Philadelphia.

Before EAGEN, O'BRIEN, ROBERTS, POMEROY, NIX and MANDERINO, JJ.

OPINION

MANDERINO, Justice.

In this appeal we must decide whether, in an eminent domain proceeding, a condemnee whose retail liquor license loses value as a result of the condemnation of the premises for which the license was issued, is entitled to have such loss considered in the award of just compensation to be paid by the condemnor.

Irwin Lieberman (condemnee) leased premises at 2--4 South Hicks Street, Philadelphia, in which he operated a licensed retail liquor establishment. The business had been operated at the same location by Leberman and his father for thirty-five years. On January 30, 1969, the Redevelopment Authority of the City of Philadelphia (condemnor) condemned the premises. The condemnee, who was evicted from the premises on June 1, 1969, found it impossible to find a suitable new building for his bar business in any business area, shopping center, or residential district. He also unsuccessfully tried to sell the liquor license through several license brokers. The condemnee was therefore required to return the license to the Liquor Control Board. Subsequently, the license was cancelled.

On March 25, 1972, the Court of Common Pleas awarded damages of $35,000 for the value of the condemnee's machinery, equipment, fixtures, and liquor license. It also awarded $5,000 business dislocation damages. The total damages were $40,000. The Commonwealth Court disagreed with the trial court's conclusion that one element to be considered was the compensation due the condemnee for the loss in value of his liquor license sustained as a result of the condemnation, and held that the loss of value in the liquor license was not compensable. The trial court's order was therefore reversed and the case remanded for a new trial. This Court then granted the condemnee's petition for allowance of appeal.

The parties in this appeal do not disagree as to the constitutional standards applicable to this appeal. Under the federal constitution that standard is as follows:

'The Fifth Amendment provides that private property shall not be taken for public use without 'just compensation.' 'And 'just compensation' means the full monetary equivalent of the property taken. The owner is to be put in the same position monetarily as he would have occupied if his property had not been taken.' (Citations omitted.)

Almota Farmers E. & W. Co. v. United States, 409 U.S. 470, 473--74, 93 S.Ct. 791, 794, 35 L.Ed.2d 1, 7 (1973).

The Pennsylvania Constitution requires the same standard. See Article I, Section 10 and Article X, Section 4 of the Pennsylvania Constitution, P.S.; Pgh. Rwys. Co. v. Port of Alleg. Co. Auth., 415 Pa. 177, 202 A.2d 816 (1964); Miller v. Beaver Falls, 368 Pa. 189, 82 A.2d 34 (1951).

The parties disagree, however, as to what constitutes 'property' as that term is used in the constitutional provisions mandating that property shall not be taken for public use without just compensation.

'Property' has been used over the years to describe both the physical object which is the subject of ownership, and to describe the aggregate of rights which an owner possesses in or with respect to the physical object. Nichols, in his treatise on Eminent Domain, quotes from authorities who have attempted to deal with the definition of property:

'Both with lawyers and with layman this term has no definite or stable connotation. Sometimes it is employed to indicate the physical object to which various legal rights, privileges, etc., relate; Then again--with far greater discrimination and accuracy--the word is used to denote the legal interest (aggregate of legal relations) appertaining to such physical object. Frequently there is a rapid and falacious shift from the one meaning to the other. At times, also, the term is used in such a blended sense as to convey no definite meaning whatever.' (Emphasis added.) (quoting from Hohfeld, Fundamental Legal Conceptions as Applied in Judicial Reasoning (1923), n. 1 at page 28.)

'The integral or entire right of property includes four particulars: (1) Right of occupation. (2) Right of excluding others. (3) Right of disposition, or the right of transfering the integral right to other persons. (4) Right of transmission, in virtue of which the integral right is often transmitted after the death of the provider, without any disposition on his part, to those in whose possession he would have wished to place it.' (quoting from 3 Bentham's Works 1893 ed. pg. 182.)

Nichols, The Law of Eminent Domain, Vol. 2, § 5.1(1) (1970).

Nichols then points out that according to Bentham's concept, the physicial object (subject of property) is, when coupled with possession, merely the visible manifestation of invisible rights. 'Property' is then composed of the rights of use, enjoyment, and disposition of such an object to the exclusion of all others. It consists not of unrestricted dominion, but of an aggregate of qualified privileges.

In his article 'Legal Concepts in Cases of Eminent Domain' 41 Yale L.J. 221 (1931--32), Cormack said the following about these two uses of the word 'property:'

'The usage first referred to may be described as the use of a physical concept, the latter of a mental. The one may be described as a concept of property as consisting of tangible physical objects, with which certain human beings are more or less intimately connected; the other is a concept of property as consisting of legal relation between human beings, some of which relations to a greater or less degree involve control over certain physical objects. In the use of the former concept the lawyer's mind is directed primarily toward things, in the latter toward human beings. The one deals with material substances, the other with abstract conceptions. The one is objective, the other subjective.' Id. at 223.

Cormack points out that 'to take' means simply to acquire possession or custody when 'property' is viewed from the physical object concept. When 'property' is viewed from the standpoint of the mental or abstract concept, the meaning of 'to take' is that expressed by Shakespeare, when, after the judgment of the court, the Merchant of Venice says:

'You take my house when you do take the prop

That doth sustain by house; you take my life

When you do take the means whereby I live.'

(The Merchant of Venice, Act IV, Scene 1, line 375.)

The condemnee in this appeal expressed the same sentiments when testifying about his liquor license:

'The value of the liquor license represented to me the ability to do business there. Without it there was nothing there at all. So that the value of the liquor license became the amount of money I could get for the sale of the business less whatever equipment was worth.'

The purpose of any eminent domain proceedings is to distribute throughout the community the loss inflicted upon an individual when the state takes his property for public use. The ideal to be sought therefore, is to award compensation that will put the injured party in as good a condition as he would have been if the condemnation proceedings had not occurred. The use of either concept of property would be adequate if it produced results consonant with that purpose. Early in the development of this country the physical concept of property proved adequate. As the years passed, however, the failure of cases applying this physical property concept to adequately compensate for serious losses produced a revolt against its use. Movement away from the physical conception came slowly at first, but by 1872 the decision of the Supreme Court of New Hampshire, in Eaton v. B.C. and M.R.R., 51 N.H. 504 (1872), had treated the eminent domain process as one of interference with valuable legal relations rather than strictly the taking of a physical piece of property. By 1874, the same court had applied the Eaton doctrine to a water overflow case saying:

'Property in land must be considered, for many purposes, not as an absolute, unrestricted dominion, but as an Aggregation of qualified privileges, the limits of which are prescribed by the equality of rights, and the correlation of rights and obligations necessary for the highest enjoyment of land by the entire community of proprietors. . . . Property is taken when any one of those proprietary rights is taken, of which property consists.' (Emphasis added.)

Thompson v. Androscoggin Company, 54 N.H. 545, 551--552 (1874).

Thus it was that New Hampshire early recognized the social policy to be effected through eminent domain proceeding. When awarding compensation in eminent domain proceedings, the property rights of an individual as against the public are the same as his rights against other individuals. Implicit in the nature of such proceedings is the notion that society desires to purchase from a condemnee the identical property rights which a legal system designed to adjust the condemnee's relations with private individuals would recognize. the only difference that should exist between a sale to society and one to a private individual is that the former may acquire property that the latter could not buy. See Cormack, supra, page 240.

United States v. General Motors Corp., 323 U.S. 373, 377--378, 65 S.Ct. 357, 359, 89 L.Ed. 311, 318 (1945) recognized that two views as to the meaning of property are possible, but said that the broader view is the proper one to use when defining the rights of a person whose property is taken pursuant to the power of eminent domain. There the Court said:

'The correctness of the decision of the court below depends upon...