Monongahela Navigation Co. v. United States
148 U.S. 312, 1893 U.S. LEXIS 2234, 13 S. Ct. 622 (1893)
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Rule of Law:
Under the Fifth Amendment's Takings Clause, when the federal government condemns private property for public use, it must provide just compensation for the full value of the property, including intangible assets such as a state-granted franchise to collect tolls.
Facts:
- The Monongahela Navigation Company, under a charter from the State of Pennsylvania, expended large sums to build locks and dams on the Monongahela River to improve its navigability.
- The state charter granted the company a franchise, which is the right to collect tolls from vessels using the improvements.
- These improvements transformed the river, allowing for extensive commerce via large steamboats at all times of the year.
- One specific lock and dam was constructed not only with state authority but also at the suggestion of the United States government.
- Congress subsequently passed legislation to condemn and appropriate this lock and dam for public use.
- The federal legislation authorizing the taking explicitly stated that the franchise to collect tolls was not to be considered in estimating the compensation sum.
Procedural Posture:
- The United States initiated condemnation proceedings in a federal trial court (U.S. Circuit Court) to take a lock and dam from the Monongahela Navigation Company.
- The trial court, following the instructions in the congressional act, awarded compensation for the tangible property but excluded any value for the company's franchise to collect tolls.
- The Monongahela Navigation Company appealed the compensation judgment to the Supreme Court of the United States, arguing the amount was not 'just' as required by the Fifth Amendment.
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Issue:
Does the Fifth Amendment's requirement of 'just compensation' for a public taking of private property require the government to compensate the owner for the value of a state-granted franchise to collect tolls, in addition to the value of the physical property itself?
Opinions:
Majority - Mr. Justice Brewer
Yes. When the government takes private property, the Fifth Amendment requires just compensation, which must be a full and perfect equivalent for the property taken, including the value of any associated franchise. The franchise to take tolls is a vested property right, and its value cannot be legislatively excluded from the compensation calculation. The determination of just compensation is a judicial, not a legislative, function. While Congress has supreme power to regulate commerce and take property for that purpose, this power is limited by the Fifth Amendment's mandate for just compensation. The value of the property is determined by what the owner loses, which includes the income-generating capacity of the franchise, not merely by the value of the tangible assets to the government.
Analysis:
This decision is a cornerstone of Takings Clause jurisprudence, firmly establishing that 'property' encompasses more than just tangible assets. It clarifies that intangible rights, such as franchises, contracts, and other income-producing legal entitlements, are compensable property interests. The case significantly limits Congress's ability to define the scope of just compensation, affirming that this determination is a judicial inquiry. This precedent ensures that when the government condemns a business or income-generating property, the valuation must account for its going-concern value and profitability, not just its physical components.
