Buchanan versus Samuels, round 2

I mentioned in my previous post that I would revisit the controversial case of Miller et al. v. Schoene, the case that sparked the legendary exchange between James Buchanan and Warren Samuels. (See Buchanan & Samuels, On some fundamental issues in political economy: an exchange of correspondence, Journal of Economic Issues, Vol. 9, No. 1 (1975), pp. 15-38.) In summary, this old case illustrates what Ronald Coase once called the problem of harmful effects in his much-cited social cost paper (see here) — or what mainstream economists refer to as negative externalities, i.e. when the activity of one firm creates spillover effects or imposes costs on third parties. For further reference, below I describe the parties to the case, the facts, the main legal issues, as well as the court’s holding and rationale:

Parties:

The plaintiffs (“Miller et al.“) were a group of landowners in Shenandoah County, Virginia, who were ordered by a government official representing the State of Virginia to cut down a large number of ornamental red cedar trees on their respective properties in Shenandoah County. The defendant, Fred P. Schoene, was the Virginia State Entomologist who had ordered the plaintiffs to cut down the red cedar trees on their land because those trees were infected with a plant disease (cedar rust) that could spread and harm neighboring apple orchards.

Facts:

The facts in this case were not in dispute. The State of Virginia had enacted a law in 1914 known as the Cedar Rust Act of Virginia. Here is how the Supreme Court of the United States described this law (emphasis added; ellipses in original):

The Virginia statute presents a comprehensive scheme for the condemnation and destruction of red cedar trees infected by cedar rust. By section 1 it is declared to be unlawful for any person to “own, plant or keep alive and standing” on his premises any red cedar tree which is or may be the source or “host plant” of the communicable plant disease known as cedar rust, and any such tree growing within a certain radius of any apple orchard is declared to be a public nuisance, subject to destruction. Section 2 makes it the duty of the state entomologist, “upon the request in writing of ten or more reputable freeholders of any county or magisterial district, to make a preliminary investigation of the locality … to ascertain if any cedar tree or trees … are the source of, harbor or constitute the host plant for the said disease … and constitute a menace to the health of any apple orchard in said locality, and that said cedar tree or trees exist within a radius of two miles of any apple orchard in said locality.” If affirmative findings are so made, he is required to direct the owner in writing to destroy the trees and, in his notice, to furnish a statement of the “fact found to exist whereby it is deemed necessary or proper to destroy” the trees and to call attention to the law under which it is proposed to destroy them. Section 5 authorizes the state entomologist to destroy the trees if the owner, after being notified, fails to do so. Section 7 furnishes a mode of appealing from the order of the entomologist to the circuit court of the county, which is authorized to “hear the objections” and “pass upon all questions involved,” the procedure followed in the present case.

The most important feature of this law, however, is what it did not do: it did not provide the owners of infected cedar trees any compensation for the value of their red cedar trees or for the decrease in the market value of their real properties caused by the destruction of their trees.

Issue:

Although the facts in this case (see above) were not in dispute, the law was. In brief, this case presented at least two legal issues. The main issue was whether Schoene’s order or the Cedar Rust Act itself constituted a “taking”. The other issue, which the Supreme Court decided to avoid, was whether the infected cedars constitute a common law nuisance.

Holding:

In a unanimous decision — an appalling and dangerous decision that deserves to live in infamy — the Supreme Court of the United States held that the State of Virginia had the constitutional authority to enact the Cedar Rust Act and to order the destruction of the infected cedar trees. In practical effect, the Supreme Court created a “police power” exception to the Constitution’s Takings Clause: when a State legislature enacts a law under the guise of protecting public health, public safety, or the general welfare (in other words, any time a State law is enacted!), that law is not a taking.

Rationale:

The Supreme Court invoked the doctrine of necessity in support of its decision:

On the evidence we may accept the conclusion of the Supreme Court of Appeals that the state was under the necessity of making a choice between the preservation of one class of property and that of the other wherever both existed in dangerous proximity. It would have been none the less a choice if, instead of enacting the present statute, the state, by doing nothing, had permitted serious injury to the apple orchards within its borders to go on unchecked. When forced to such a choice the state does not exceed its constitutional powers by deciding upon the destruction of one class of property in order to save another which, in the judgment of the legislature, is of greater value to the public. It will not do to say that the case is merely one of a conflict of two private interests and that the misfortune of apple growers may not be shifted to cedar owners by ordering the destruction of their property; for it is obvious that there may be, and that here there is, a preponderant public concern in the preservation of the one interest over the other.

In my next few posts, I will explain why Buchanan and Samuels took such a deep interest in this old case and pinpoint the underlying source of their disagreement over how this case was decided.