Loretto v. Teleprompter Manhattan CATV Corp.

LORETTO v. TELEPROMPTER MANHATTAN CATV CORP. ET AL.

Appeal from the Court of Appeals of New York.

No. 81-244. Argued March 30, 1982 — Decided June 30, 1982.

53 N. Y. 2d 124, 423 N. E. 2d 320, reversed and remanded.

Marshall, J., delivered the opinion of the Court, in which Burger, C. J., and Powell, Rehnquist, Stevens, and O'Connor, JJ., joined. Blackmun, J., filed a dissenting opinion, in which Brennan and White, JJ., joined, post, p. 442.

Michael S. Gruen argued the cause and filed briefs for appellant. Erwin N. Griswold argued the cause for appellees; with him on the brief for appellees Teleprompter Manhattan CATV Corp. et al. was Michael Lesch. Frederick A. O. Schwarz, Jr., and Leonard Koerner filed a brief for appellee City of New York.

The report occupies pages 419 through 456 of volume 458 of the United States Reports. The opinion of the Court ends at page 441; the dissenting opinion of Justice Blackmun begins at page 442 (post, p. 442) and the report closes at page 456.

[458 U.S. 419] “A New York statute provides that a landlord must permit a cable television (CATV) company to install its CATV facilities upon his property and may not demand payment from the company in excess of the amount determined by a State Commission to be reasonable. Pursuant to the statute, the Commission ruled that a one-time $1 payment was a reasonable fee. After purchasing a five-story apartment building in New York City, appellant landlord discovered that appellee CATV companies had installed cables on the building, both ‘crossovers’ for serving other buildings and ‘noncrossovers’ for serving appellant's tenants. Appellant then brought a class action for damages and injunctive relief in a New York state court, alleging, inter alia, that installation of the cables insofar as appellee companies relied on the New York statute constituted a taking without just compensation. Appellee New York City, which had granted the companies an exclusive franchise to provide CATV within certain areas of the city, intervened. Upholding the New York statute, the trial court granted summary judgment to appellees. The Appellate Division of the New York Supreme Court affirmed, and on further appeal the New York Court of Appeals also upheld the statute, holding that it serves the legitimate police power purpose of eliminating landlord fees and conditions that inhibit the development of CATV, which has important educational and community benefits. Rejecting appellant's argument that a physical occupation authorized by government is necessarily a taking, the court further held that the statute did not have an excessive economic impact upon appellant when measured against her aggregate property rights, did not interfere with any reasonable investment-backed expectations, and accordingly did not work a taking of appellant's property.”

[458 U.S. 419] “Held: The New York statute works a taking of a portion of appellant's property for which she is entitled to just compensation under the Fifth Amendment, as made applicable to the States by the Fourteenth Amendment. Pp. 425-441.”

[458 U.S. 419] “(a) When the ‘character of the governmental action,’ Penn Central Transportation Co. v. New York City, 438 U. S. 104, 124, is a permanent physical occupation of real property, there is a taking to the extent [458 U.S. 420] of the occupation without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner. Pp. 426-435.”

[458 U.S. 420] “(b) To the extent that the government permanently occupies physical property, it effectively destroys the owner's rights to possess, use, and dispose of the property. Moreover, the owner suffers a special kind of injury when a stranger invades and occupies the owner's property. Such an invasion is qualitatively more severe than a regulation of the use of property, since the owner may have no control over the timing, extent, or nature of the invasion. And constitutional protection for the rights of private property cannot be made to depend on the size of the area permanently occupied. Pp. 435-438.”

[458 U.S. 420] “(c) Here, the cable installation on appellant's building constituted a taking under the traditional physical occupation test, since it involved a direct physical attachment of plates, boxes, wires, bolts, and screws to the building, completely occupying space immediately above and upon the roof and along the building's exterior wall. There is no constitutional difference between a crossover and noncrossover installation, since portions of the installation necessary for both types of installation permanently appropriated appellant's property. The fact that the New York statute applies only to buildings used as rental property does not make it simply a regulation of the use of real property. Physical occupation of one type of property but not another is no less a physical occupation. The New York statute does not purport to give the tenant any enforceable property rights with respect to CATV installation, and thus cannot be construed as merely granting a tenant a property right as an appurtenance to his leasehold. Application of the physical occupation rule in this case will not have dire consequences for the government's power to adjust landlord-tenant relationships, since it in no way alters the usual analysis governing a State's power to require landlords to comply with building codes. Pp. 438-440.”

[458 U.S. 421] “This case presents the question whether a minor but permanent physical occupation of an owner's property authorized by government constitutes a ‘taking’ of property for which just compensation is due under the Fifth and Fourteenth Amendments of the Constitution.”

[458 U.S. 426] “We conclude that a permanent physical occupation authorized by government is a taking without regard to the public interests that it may serve. Our constitutional history confirms the rule, recent cases do not question it, and the purposes of the Takings Clause compel its retention.”

Part II-A reviewed Penn Central Transportation Co. v. New York City, 438 U. S. 104 (1978), and the older line of physical-invasion decisions, concluding that a permanent physical occupation is a taking to the extent of the occupation whether or not the measure achieves an important public benefit or has only minimal economic impact on the owner.

[458 U.S. 435] “The historical rule that a permanent physical occupation of another's property is a taking has more than tradition to commend it. Such an appropriation is perhaps the most serious form of invasion of an owner's property interests. To borrow a metaphor, cf. Andrus v. Allard, 444 U. S. 51, 65-66 (1979), the government does not simply take a single ‘strand’ from the ‘bundle’ of property rights: it chops through the bundle, taking a slice of every strand.”

[458 U.S. 435] “Property rights in a physical thing have been described as the rights ‘to possess, use and dispose of it.’ United States v. General Motors Corp., 323 U. S. 373, 378 (1945). To the extent that the government permanently occupies physical property, it effectively destroys each of these rights. First, the owner has no right to possess the occupied space himself, and also has no power to exclude the occupier from possession and use of the space. The power to exclude has traditionally been considered one of the most treasured strands in an owner's bundle of property rights.”

[458 U.S. 436] “Second, the permanent physical occupation of property forever denies the owner any power to control the use of the property; he not only cannot exclude others, but can make no nonpossessory use of the property. . . . Finally, even though the owner may retain the bare legal right to dispose of the occupied space by transfer or sale, the permanent occupation of that space by a stranger will ordinarily empty the right of any value, since the purchaser will also be unable to make any use of the property.”

[458 U.S. 436] “Moreover, an owner suffers a special kind of injury when a stranger directly invades and occupies the owner's property.”

[458 U.S. 435 n. 12] “The permanence and absolute exclusivity of a physical occupation distinguish it from temporary limitations on the right to exclude. Not every physical invasion is a taking. As PruneYard Shopping Center v. Robins, 447 U. S. 74 (1980), Kaiser Aetna v. United States, 444 U. S. 164 (1979), and the intermittent flooding cases reveal, such temporary limitations are subject to a more complex balancing process to determine whether they are a taking. The rationale is evident: they do not absolutely dispossess the owner of his rights to use, and exclude others from, his property.”

[458 U.S. 437] “Finally, whether a permanent physical occupation has occurred presents relatively few problems of proof. The placement of a fixed structure on land or real property is an obvious fact that will rarely be subject to dispute. Once the fact of occupation is shown, of course, a court should consider the extent of the occupation as one relevant factor in determining the compensation due.”

Applying the rule, the Court held that the installation was a taking under the traditional physical-occupation test: the equipment was directly attached to the building by plates, boxes, wires, bolts, and screws, occupying space upon and immediately above the roof and along the exterior wall. It found no constitutional difference between crossover and noncrossover cable, and rejected the contentions that a statute confined to rental buildings is merely a use regulation and that the tenant, rather than the cable company, held the resulting right.

[458 U.S. 440] “In none of these cases, however, did the government authorize the permanent occupation of the landlord's property by a third party. Consequently, our holding today in no way alters the analysis governing the State's power to require landlords to comply with building codes and provide utility connections, mailboxes, smoke detectors, fire extinguishers, and the like in the common area of a building. So long as these regulations do not require the landlord to suffer the physical occupation of a portion of his building by a third party, they will be analyzed under the multifactor inquiry generally applicable to nonpossessory governmental activity.”

[458 U.S. 441] “Our holding today is very narrow. We affirm the traditional rule that a permanent physical occupation of property is a taking. In such a case, the property owner entertains a historically rooted expectation of compensation, and the character of the invasion is qualitatively more intrusive than perhaps any other category of property regulation. We do not, however, question the equally substantial authority upholding a State's broad power to impose appropriate restrictions upon an owner's use of his property.”

[458 U.S. 441] “Furthermore, our conclusion that § 828 works a taking of a portion of appellant's property does not presuppose that the fee which many landlords had obtained from Teleprompter prior to the law's enactment is a proper measure of the value of the property taken. The issue of the amount of compensation that is due, on which we express no opinion, is a matter for the state courts to consider on remand.”

[458 U.S. 441] “The judgment of the New York Court of Appeals is reversed, and the case is remanded for further proceedings not inconsistent with this opinion. It is so ordered.”

Editorial note. The dissent, beginning at page 442, objected that the Court had constructed a rigid per se takings rule on the strength of historical dicta, and that the distinction drawn between temporary physical invasions and permanent physical occupations would not always be clear in application.

Editorial note. The separate opinion argued that the modern takings decisions had avoided per se rules resting on outmoded distinctions, that the phrase “permanent physical occupation” would itself require case-by-case elaboration, and that the New York statute should have been sustained under the multifactor inquiry, given the trivial economic burden and the legitimate purpose of removing landlord obstacles to cable service.

Editorial note. This record is a research edition, not a substitute for the official reporter. It reproduces the Reporter of Decisions apparatus in full and reproduces the Court's own text in extended verbatim passages arranged under the Court's own divisions, each bracketed with the official United States Reports page on which the passage appears. Passages set without quotation marks are Society prose describing the Court's reasoning; every quotation mark in this record encloses the Court's or the Reporter's words.

Editorial note. The Court-authored sections of this record are SELECTED EXCERPTS, not complete opinions. Each such section is headed accordingly, and no section of this record represents a judicial opinion as reproduced in full. Where a separate opinion is described rather than quoted, it is presented as a Real Law Society editorial summary and is not judicial text.

Editorial note. Three limitations are declared. First, the numbered footnotes are not reproduced except for footnote 12 of the opinion of the Court, which states the boundary of the rule and is reproduced with its page. Second, Part I of the opinion of the Court, Parts II-A and II-D in part, and the dissenting opinion are summarised rather than quoted at length. Third, obvious typographic and scanning defects in the digitised bound volume have been silently corrected against the surrounding text; no substantive word has been altered, modernised, or paraphrased inside a quotation.

Editorial note. For any purpose requiring the complete official text, including the footnotes and the full dissenting opinion at pages 442 through 456, consult the bound volume through the canonical source recorded with this authority.

Editorial note. Section 828 of the New York Executive Law required a landlord to permit a cable television company to install its facilities on the landlord's property and forbade demanding payment beyond the amount a state commission found reasonable; the commission had set a one-time fee of one dollar. After purchasing a five-story apartment building in New York City, the appellant discovered that the cable company had installed cable along the roof and exterior wall and had placed directional taps and boxes on the building, some serving her own tenants and some crossing over to serve adjoining buildings. She brought a class action for damages and injunctive relief, contending that the installation was a taking without just compensation. The City of New York, which had granted the company an exclusive franchise, intervened.

Editorial note. The trial court granted summary judgment for the defendants; the Appellate Division affirmed; and the New York Court of Appeals upheld the statute as a legitimate exercise of the police power, holding that the installation had no excessive economic impact and disturbed no reasonable investment-backed expectation. The Supreme Court reversed and remanded, leaving the adequacy of the one-dollar fee for the state courts.

Editorial note. The issue was whether a minor but permanent physical occupation of an owner's property authorised by statute is a taking. The Court held that it is. When the character of the government action is a permanent physical occupation, there is a taking to the extent of the occupation without regard to whether the action achieves an important public benefit or has only minimal economic impact on the owner. The rule that follows is categorical: permanent physical occupation is a per se taking, and the constitutional inquiry shifts from liability to the measure of just compensation.

Editorial note. Justice Marshall reasoned from the historical distinction between physical invasion and mere regulation of use. A permanent occupation destroys each of the owner's rights in the space occupied: the rights to possess, use, and dispose of it, and above all the right to exclude. That is qualitatively different from a regulation that merely restricts use, which is assessed under the multifactor analysis of Penn Central. The Court accordingly declined to weigh the public purpose of promoting cable service or the trivial economic loss, and distinguished ordinary landlord-tenant regulation, such as compulsory compliance with building codes, on the ground that such requirements do not authorise a stranger to occupy the premises.

Editorial note. The Court was careful to mark the limits of the rule. Temporary invasions and limitations on the right to exclude that fall short of absolute dispossession remain subject to balancing, and the opinion expressly describes the holding as very narrow, leaving the State's broad power to restrict the use of property untouched.

Editorial note. Loretto establishes the first of the categorical takings rules and gives the right to exclude its central place in the constitutional law of property. For the treatise it marks the boundary between physical takings and regulatory takings, and it explains why later cases turn so heavily on whether the challenged measure appropriates an interest in land or merely restricts the owner's use of it.

Editorial note. Followed and applied. Lucas v. South Carolina Coastal Council, 505 U.S. 1003 (1992), treated Loretto as one of two categorical rules; Horne v. Department of Agriculture, 576 U.S. 350 (2015), extended the physical-appropriation analysis to personal property; and Cedar Point Nursery v. Hassid, 594 U.S. 139 (2021), applied it to a regulation granting third parties a right of access, holding that the appropriation need not be continuous in time to be a per se taking.

Editorial note. Read with U.S. Const. amend. V (Takings Clause) and the treatise chapters on regulatory takings and landlord and tenant.