UNITED STATES v. CERTAIN LANDS IN CITY OF LOUISVILLE, JEFFERSON COUNTY, KY., et al., 78 F.2d 684

MOORMAN, Circuit Judge. This is an appeal from a judgment of the District Court for the Western District of Kentucky dismissing the petition in a suit filed by the United States to condemn four city blocks within the city of Louisville for the construction of a low-cost housing and slum-clearance project under the provisions of title 2 of the National Industrial Recovery Act (48 Stat. 195).

The petition alleged that the action was brought at the request of the Federal Emergency Administrator of Public Works, who, pursuant to and acting under authority vested in him by the National Industrial Recovery Act, had prepared a program of public works which included the construction of a low-cost housing and slum-clearance project in the city of Louisville, known as the Louisville housing project; that by virtue of the authority vested in him by the act the Administrator had found it necessary and advantageous to acquire an estate in fee simple in the lands described in the petition for the purpose of constructing a low-cost housing and slum-clearance project thereon; that acting through the Administrator pursuant to the provisions of the act the United States proposed to construct, erect, and build such a project on the lands; and that they were needed for a public use and purpose.

Subsequent to the filing of the action, the government filed a written motion for the appointment of commissioners to assess the damage to the owners of the property sought to be condemned, but before commissioners were appointed one of the owners, Gernert, filed a demurrer to the petition. The trial court sustained the demurrer, and, upon the failure of the government to plead further, dismissed the petition on the ground that it was not within the power of the government to condemn the property for the purposes for which it was designed. (D. C.) 9 F. Supp.

Section 201 (

a) of title 2 of the National Industrial Recovery Act (40 USCA § 401 (

a) authorizes the President to create a Federal Emergency Administration of Public Works and to appoint a Federal Emergency Administrator.

Section 202 (40 USCA § 402) authorizes the Administrator to prepare a comprehensive program of public works to include, among other things, “construction, reconstruction', alteration, or repair under public regulation or control of low-cost housing and slum-clearance projects.”

Section 203 (a), 40 USCA § 403 (a),, quoted in the margin, authorizes the President, through the Administrator or through such other agencies as he may designate, to acquire, by the exercise of the power of eminent domain, any real or personal property in connection with the construction of any low-cost housing or slum-clearance project, and to sell any property so acquired, or to lease such property, with or without the privilege of purchase.

Section 220 (40 USCA § 411) authorizes an appropriation of $3,300,000,000 to carry out the purposes of the act. By the Fourth Deficiency Act passed the same day (48 Stat. 274), Congress made the appropriation to carry into effect the provisions of the act. There is nothing in the act under which the appellant is proceeding to serve as a guide to the President in exercising the powers conferred upon him; no requirement that his actions be conditioned upon findings of fact made by himself or the administrator; no standards supplied with reference to low-cost houses and slum-clearance projects.

Nothing is said as to what shall be deemed a slum or a low-cost house or housing project. There is no designation of the cities or counties or states in which such projects shall be established, nor any standards fixed by which the administrator is to determine where they are to be established. Neither is there any limitation or requirement imposed upon the administrator with reference to the spending of the money appropriated for these purposes. All of this is left to the unfettered discretion or choice of the President through his administrator without any standards by which he is to act.

It is argued for the appellee, with much force and persuasiveness, that this unlimited power given to the President or his administrator to determine such matters without the aid of congressional standards is an illegal delegation of legislative authority under the rulings of the Supreme Court in Panama Refining Co. v. Ryan, 293 U. S. 388, 55 S. Ct. 241, 79 L. Ed. 446, and A. L. A. Schechter Poultry Corporation v. United States, 55 S. Ct. 837, 79 L. Ed. -, decided May 27, 1935.

We place our decision upon the second objection to the proceeding, viz., the lack of right in the government to exercise the power of eminent domain for the purposes contemplated by the act. The government of the United States is one of delegated powers. There is no constitutional provision expressly authorizing it to exercise the power of eminent domain. It is nevertheless well settled that this power belongs to the government as an attribute of its sovereignty. Kohl v. United States, 91 U. S. 367, 23 L. Ed. 449; Shoemaker v. United States, 147 U. S. 282, 299, 13 S. Ct. 361, 37 L. Ed. 170; Chappell v.

United States, 160 U. S. 499, 509, 510, 16 S. Ct. 397, 40 L. Ed. 510. Equally well settled is it that the right can only be exercised where the property is to be taken for a public use. The contention of the government is that the property here sought to be condemned is to be devoted to a public use because, first, the construction of the project will relieve unemployment during the period of construction, and, secondly, the leasing or selling of the new buildings at reasonable prices will give to persons of low incomes an opportunity to improve their living conditions.

We do not think the first of these purposes, if made effective, could be said to -constitute the use to which the property is to be put. While the act purports to authorize the construction with the view of relieving unemployment, it provides that the property when taken and after the project is constructed is to be leased or sold.

The assertion that the taking of property to relieve unemployment and to improve living conditions among low-salaried workers is a taking for a public use rests upon the view that any taking which will advance the interest or well-being of a selected group of citizens will result in a benefit or advantage to larger groups or the entire community and must be regarded as a taking for a public use.

It is argued that the right to take the property is conferred by clause 1, § 8, art. 1 of the Constitution which gives Congress the power “to lay and collect Taxes, * * * to pay the Debts and provide for the common Defence and general Welfare of the United States.” The contention is that under this clause of the Constitution the power of Congress to levy taxes and appropriate the receipts therefrom to such purposes as it may deem in the interest of the public welfare is practically unlimited, and that this power carries with it the right to acquire property by condemnation upon which Congress may expend tax funds.

We need not inquire into the extent of the taxing powers of Congress under this clause of the Constitution — whether it may levy and collect taxes and make appropriations ad libitum, or cannot use its powers thereunder beyond those subjects over which it is elsewhere given express authority by the Constitution. It has been thought by many students of the Constitution that the authority of Congress, both as to levying taxes and spending the proceeds thereof, is limited to the purposes neces-* sary to the exercise of the other enumerated powers delegated to it in the Constitution.

Story on Constitution, vol. 1, p; 703; 4 Jefferson’s Correspondence, 524; 17 Congressional Record,

part 2, p. 1439.' So far as we know, there is no Supreme Court case which undertakes to say how far this authority extends. An attempt to have it determined with respect to the Maternity Act (42 Stat. 224 [42 USCA §§ 161-174]•) was unsuccessful. Commonwealth of Massachusetts v. Mellon, 262 U. S. 447, 43 S. Ct. 597, 67 L. Ed. 1078. It is true, as stated by the government in ar-* gument, that Congress has established many bureaus and agencies and made appropriations of tax funds to support them for purposes which'in its judgment would promote the general welfare.

It is not to be inferred from these activities, however, that there is authority for the act here in question, for constitutional authority cannot be created by congressional act or purpose to aid beneficently established governmental bureaus and other agencies. It may be that the constitutional power of. Congress goes far enough to justify donations of federal tax funds to a state, bureau,, or other agency to use for the purposes-which are said to be those of this proceeding. That question is not before us, and' we, of course, do not undertake to decide-it.

Whatever its extent in that respect may be, in our opinion it does not carry with it the power here claimed, to condemn private property to the end that appropriations of tax funds may be made for purposes deemed by Congress to be for the public welfare. The term "public use,” as applied. to-the federal government’s power of eminent domain, is not susceptible of precise* definition under the Supreme Court decisions. It includes, of course, property needed for use by the public through its officers and agents in performing their governmental duties. Chappell v. United States, supra.

The trial court was of opinion that it means use by the government in carrying out its legitimate governmental functions, or a use in relation thereto open to all the public though practically available only to a part of it. The government contends that it means any use which will promote the general welfare through benefits or advantages conferred upon a considerable number of residents of the community. It points to statements in the authorities to the effect that use by the general public is not a universal test of the term. Strickley v. Highland Boy Mining Co., 200 U. S. 527, 531, 26 S. Ct. 301, 50 L.

Ed. 581, 4 Ann. Cas. 1174. Reference is also made to decisions holding that it is not a fatal objection to the taking that the use is to be limited to a small group or to a single person. Fallbrook Irrigation District v. Bradley, 164 U. S. 112, 161, 17 S. Ct. 56, 41 L. Ed. 369; Mt. Vernon-Woodberry Cotton Co. v. Alabama Power Co., 240 U. S. 30, 32, 36 S. Ct. 234, 60 L. Ed. 507; Rindge Co. v. Los Angeles County, 262 U. S. 700, 707, 43 S. Ct. 689, 67 L. Ed. 1186. The proceedings in these cases were instituted, however, under state statutes passed to effectuate the purposes of a declared public policy of the state.

What the cases hold is that there is nothing in the Fourteenth Amendment to prevent a state from exercising the power of eminent domain to carry into effect a public policy which, in the light of the needs and exigencies of the state, may be regarded as promotive of the public interest. This was the ground of decision in Clark v. Nash, 198 U. S. 361, 25 S. Ct. 676, 49 L. Ed. 1085, 4 Ann. Cas. 1171, and Green v. Frazier, 253 U. S. 233, 40 S. Ct. 499, 503, 64 L. Ed. 878.

In the latter case, the court upheld state legislation authorizing the state to organize á bank and operate it, to establish elevators, warehouses, and flour mills, and to engage in the businesses of manufacturing and marketing, and the building of homes for residents of the state.

The court said: “If the state sees fit to enter upon such enterprises as are here involved, with the sanction of its Constitution, its Legislature and its people, we are not prepared to say that it is within the authority of this court, in enforcing the observance of the Fourteenth Amendment, to set aside such action by judicial decision.” Decisions dealing with condemnation proceedings are to be considered in the light of the powers possessed by the sovereign seeking to exercise the right. What is a public use under one sovereign may not be a public use under another. Clark v. Nash, supra.

The state and federal governments are distinct sovereignties, each independent of the other and each restricted to its own sphere. Kohl v. United States, supra. Neither can invade or usurp the rightful powers or authority of the other. Hammer v. Dagenhart, 247 U. S. 251, 275, 276, 38 S. Ct. 529, 62 L. Ed. 1101, 3 A. L. R. 649, Ann. Cas. 1918E, 724; Child Labor Tax Case, 259 U. S. 20, 37, 42 S. Ct. 449, 66 L. Ed. 817, 21 A. L. R. 1432. Tn the exercise of its police power a state may do those things which benefit the health, morals, and welfare of its people.

The federal government has no such power within the states. Green v. Frazier, supra, and Jones v. City of Portland, 245 U. S. 217, 224, 38 S. Ct. 112, 114, 62 L. Ed. 252, L. R. A. 1918C, 765, Ann. Cas. 1918E, 660, dealt with State legislation enacted pursuant to this power.

In the latter case the court pointed out that it was not its function, under authority of the Fourteenth Amendment, “to supervise the legislation of the states in the exercise of the police power beyond protecting against exertions of such authority in the enactment and enforcement of laws of an arbitrary character.” Thus in these and other cases involving state action the court dealt with the subject of public use as it pertained to the powers of the sovereign claiming the right to take. It must be similarly dealt with in the case at bar.

As so considered with reference to the federal government, it does not, in our opinion, include the relief of unemployment as an end in itself or the construction of sanitary houses to sell or lease to low-salaried workers or residents of slum districts. The tearing down of the old buildings and the construction of new ones on the land here sought to be taken would create] it is true, a new resource for the employment of labor and capital.

It is likewise true that the erection of new sanitary dwellings upon the property and the leasing or the selling of them at low prices would enable many residents of the community to improve their living conditions. It may be, too, that these group benefits, so far as they might affect the general public, would be beneficial. If, however, such a result thus attained is to be considered a public use for which the government may condemn private property, there would seem to be no reason why it could not condemn any private property which it could employ to an advantage to the public.

There are perhaps many properties that the government could use for the benefit of selected groups. It might be, indeed, that by acquiring large sections of the farming parts of the country and leasing the land or selling it at low prices it could advance the interest of many citizens of the country, or that it could take over factories and other businesses and operate them upon plans more beneficial to the employees or the public, or even operate or sell them at a profit to the government to the relief of the taxpayers.

The public interest that would thus be served, however, cannot, we think, be held to be a public use for which the government, in the exercise of its governmental functions, can take private property. The taking of one citizen’s property for the purpose of improving it and selling or leasing it to another, or for the purpose of reducing unemployment, is not, in our opinion, within the scope of the powers of the federal government.

The judgment is affirmed. “With a view to increasing employment quickly (while reasonably securing any loans made by the United States) the President is authorized and empowered, through the Administrator or through such other agencies as he may designate or create, (

I) to construct, finance, or aid in the construction or financing of any public-works project included in the program prepared pursuant to

section 200 [section 402]; (2) upon such terms as the President shall prescribe, to make grants to States, municipalities, or other public bodies for the construction, repair, or improvement of any such project, but no such grant shall be in excess of 30' per centum of the cost of the labor and materials employed upon such project; (3) to acquire by purchase, or by exercise of the power of eminent domain, any real dr personal property in connection with the construction of any such project, and to sell any security acquired or any property so constructed or acquired or to lease any such property with or without the privilege of purchase. * * * ”