United States v. Willow River Power Co.

The Supreme Court, in an opinion by Justice Jackson, reversed. The Fifth Amendment to the U.S. Constitution requires just compensation when private property is taken for public use. It thus “undertakes to redistribute certain economic losses inflicted by public improvements so that they will fall upon the public, rather than wholly upon those who happen to lie in the path of the project.” The Fifth Amendment does not, however, “socialize all losses, but those only which result from a taking of property.” Other damages that result from government conduct are absorbed by the public, if at all, only when Congress passes a law providing for compensation. In this case, no such law exists, so that unless this case represents an instance of a “taking” of “property,” the power company is without redress for its $25,000 loss.[4]

The Court then stated the issue before it, in terms similar to those of the Euthyphro dilemma:

[N]ot all economic interests are "property rights;" only those economic advantages are "rights" which have the law back of them, and only when they are so recognized may courts compel others to forbear from interfering with them or to compensate for their invasion. The law long has recognized that the right of ownership in land may carry with it a legal right to enjoy some benefits from adjacent waters. But that a closed catalogue of abstract and absolute "property rights" in water hovers over a given piece of shore land good against all the world is not, in this day, a permissible assumption. We cannot start the process of decision by calling such a claim as we have here a "property right;" whether it is a property right is really the question to be answered. Such economic uses are rights only when they are legally protected interests.[5]

After considering precedents governing rights to a head of water when the tailrace was in a navigable stream or a non-navigable stream, the Court concluded that no prior case had dealt with precisely the situation (present here) where the top of the tailrace was at a non-navigable stream and its base was at a navigable stream. Accordingly, there was no recognized legal right to have water flow away from a tailrace into a navigable stream. The Court therefore ruled:

We hold that claimant's interest or advantage in the high water level of the St. Croix River as a run-off for tail waters to maintain its power head is not a right protected by law, and that the award below based exclusively on the loss in value thereof must be reversed.[6]

Justice Roberts (joined by the Chief Justice) dissented on the ground that state law recognized a property interest in having a head of water undisturbed.

It appears that the Court (majority) resolved its version of the Euthyphro dilemma by ruling that property rights exist if courts recognize and protect them, rather than holding that property rights pre-exist and courts merely perceive them. The dissenters, however, considered that property rights existed a priori and dictated the conclusion that courts should (therefore) enforce them.