By DAVID MOON, Moon Capital
August 22, 2004
With little fanfare for national publicity, the Supreme Court in the state of
Michigan recently made a powerful statement about the protections associated
with the ownership of assets. The court took the only position that was
morally defensible, and in so doing created a unique alliance among two groups
that are often at odds with one another: real estate developers and historic
Wayne County, Michigan was trying to acquire 1,300 acres to build a new
industrial park, the centerpiece of which would be a new General Motors
plant. Most of the property owners agreed to sell. But a few ornery
owners refused to part with their property – and these parcels were crucial to
the proposed project. The county government attempted to use its eminent domain
powers to acquire the remaining two percent of the land, citing the huge public
benefit of the new plant. The landowners sued.
In a unanimous decision, the court overturned a lower court finding and ruled
against Wayne County.
A primary proper function of government is to safeguard the rights of
minorities. The most important minority in a society is a minority of one;
a society that does not protect the rights of any individual places at risk the
rights of every individual.
Developers and other business types often espouse the economic community
benefit associated with retail, commercial or residential development – even if
it requires the condemnation of someone’s real estate. A developer may
want to use someone else’s property in a way that is contrary to the current
owner’s intended use. That a developer’s planned use might economically,
aesthetically or culturally benefit the entire community is really immaterial –
at least according to the Michigan court. If a developer can’t acquire
ownership of land in a private transaction, he ought not to be able to decide
how it’s used – even with the help of a willing governmental accomplice.
Historic preservationists and developers occasionally (frequently?) find
themselves quarreling over property uses. But they often share an ironic
goal: they want the benefit or use of someone else’s asset. (Developers
almost always pay for these assets, however, even if it requires’ the “help” of
government.) Preservation activists often seek to restrict the use of an
individual’s property because of some perceived public benefit that might be
gained through that restriction. (In this sense, an industrial park and an
old building are similar.) But there is a difference between public
benefit (like an architecturally unique private residence) and public use (like
When pressure or legal maneuvering prevents a landowner from deciding what to
do – or not do – with his property, it amounts to social larceny. This is
no different than if someone’s property was taken in order to build a gas
station. (Preservationist will adamantly disagree with that analogy,
pointing out that historically significant architecture and a crass commercial
venture are not comparable. But beauty is in the eye of the beholder.)
Michigan is a surprising bastion of conservative judicial interpretists, not
activists. I hope the trend spreads.
David Moon is president of Moon Capital Management, a
Knoxville-based investment management firm. This article
originally appeared in the News Sentinel (Knoxville, TN).