Amicus Curiae Brief — Geraldine Tyler, Petitioner v. Hennepin County, Minnesota, et al.

No. 22-166

In the Supreme Court of the United States

__________

GERALDINE TYLER, on behalf of herself and all others similarly situated,

Petitioner,

v.

HENNEPIN COUNTY, and MARK V. CHAPIN, Auditor-Treasurer, in his official capacity,

Respondents.

__________

On Petition for a Writ of Certiorari to the

United States Court of Appeals for the Eighth Circuit

__________

BRIEF OF THE CATO INSTITUTE

AS AMICUS CURIAE IN SUPPORT OF

PETITIONER

__________

Clark M. Neily III

Counsel of Record

Trevor Burrus

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, DC 20001

(202) 425-7499

cneily@cato.org

October 20, 2022

i

QUESTION PRESENTED

Whether taking and selling a home to satisfy a debt

to the government, and keeping the surplus value as a

windfall, violates the Takings Clause?

ii

TABLE OF CONTENTS

QUESTION PRESENTED ........................................... i

TABLE OF AUTHORITIES ....................................... iii

INTEREST OF AMICUS CURIAE ............................. 1

SUMMARY OF ARGUMENT ..................................... 1

ARGUMENT ................................................................ 5

HOME EQUITY IS HISTORICALLY A PRIVATE

PROPERTY RIGHT AT MINNESOTA COMMON

LAW, SO THIS COURT SHOULD CLARIFY HOW

AND WHEN A LEGISLATURE CAN CHANGE

LONG-STANDING RULES AND CONFISCATE

VESTED EQUITY IN REAL PROPERTY ............ 5

A. Home Equity Is the Private Property of

the Homeowner Under Common Law .............. 5

B. The Minnesota Legislature Gradually

Removed the Homeowner’s Right to

Recover the Equity ............................................ 9

C. This Case Is an Opportunity to Clarify

When a Legislature Can Remove a

Common-Law Property Right Without

Just Compensation ......................................... 10

CONCLUSION .......................................................... 19

iii

TABLE OF AUTHORITIES

Page(s)

Cases

Ayer v. Stewart, 14 Minn. 97 (1869) ........................ 3, 7

Bailey v. Merritt, 7 Minn. 159 (1862) .......................... 7

Cedar Point v. Hassid, 141 S. Ct. 2063 (2021)

............................................................................ 4, 11

Duke Power Co. v. Carolina Env’t Study Grp.,

Inc., 438 U.S. 59 (1978) .......................................... 13

Fair v. Continental Resources, No. 22-160

(Aug. 18, 2022) ......................................................... 3

Farnham v. Jones, 19 N.W. 83 (Minn. 1884) .. 3, 6, 7, 9

Fowler v. Johnson, 26 Minn. 338 (1880) ..................... 7

Hall v. Meisner, No. 21-1700, slip op. (6th Cir.

Oct. 13, 2022)............................................ 6, 9, 11, 18

Hollingsworth v. Kaler (In re Hollingsworth),

331 B.R. 399 (B.A.P. 8th Cir. 2005)......................... 8

Horne v. Dep’t of Agric., 576 U.S. 351 (2015).............. 5

Hughes v. Washington, 389 U.S. 290 (1967) ....... 15, 17

In re Marriage of Nelson, No. A18-1104, 2019

Minn. App. Unpub. LEXIS 603 (July 1,

2019) ......................................................................... 8

Koontz v. St. Johns River Water Mgmt. Dist.,

570 U.S. 595 (2013) ................................................ 17

Labor v. McCarthy, 24 Minn. 417 (1878) .................... 7

Lucas v. S.C. Coastal Council, 505 U.S. 1003

(1992) ...................................................... 5, 15, 16, 17

Martin v. Snowden, 59 Va. 100 (1868) ........................ 6

iv

Minn. Debenture Co. v. Scott, 106 Minn. 32

(1908) ...................................................................... 10

Mugler v. Kansas, 123 U.S. 623 (1887) ..................... 10

Munn v. Illinois, 94 U.S. 113 (1876) ....... 12, 13, 14, 16

N.Y. Central R. Co. v. White, 243 U.S. 188

(1917) ...................................................................... 13

Palazzolo v. Rhode Island, 533 U.S. 606

(2001) ........................................................................ 9

Parking Ass’n of Ga., Inc. v. City of Atlanta,

515 U.S. 1116 (1995) .............................................. 11

Phillips v. Wash. Legal Found., 524 U.S. 156

(1998) ................................................................ 10, 18

Pruneyard Shopping Center. v. Robins, 447

U.S. 74 (1980) ................................................... 13, 14

Silver v. Silver, 280 U.S. 117 (1929) ......................... 13

Stop the Beach Renourishment, Inc. v. Fla.

Dep’t of Env’t Prot., 560 U.S. 702 (2010) ........... 5, 10

Stromberg v. Lindberg, 25 Minn. 513 (1879) .......... 3, 7

Tallage Lincoln, LLC v. Williams, 485 Mass.

449 (2020) ................................................................. 4

Taylor v. Burgess, 26 Minn. 547 (1880) ...................... 7

Tyler v. Hennepin Cty., 26 F.4th 789 (8th Cir.

2022) ................................................................... 8, 18

United States v. Causby, 328 U.S. 256 (1946) .......... 14

Webb’s Fabulous Pharmacies, Inc., v.

Beckwith, 449 U.S. 155 (1980) ..................... 9, 11, 15

v

Statutes

11 U.S.C. § 726(a)(6) .................................................... 8

1858 Minn. Laws 645 .................................................. 7

1881 Minn. Laws 176 .................................................. 9

Minn. Stat. § 1576 (1891) ............................................ 9

Minn. Stat. § 1617 (1894) ............................................ 9

Minn. Stat. § 280.29 (2021) ......................................... 3

Minn. Stat. § 939 (1905) .............................................. 9

Other Authorities

2 William Blackstone, Commentaries *453. ............... 6

Dan McCaleb, Michigan Woman Sues County

Over “Home Equity Theft,” The Center

Square (July 9, 2019). .............................................. 4

Denise Johnson, Reflections on the Bundle of

Rights, 32 Ver. L. Rev. 247 (2007) ........................... 5

Luke 3:12 ...................................................................... 2

Luke 3:13 ...................................................................... 2

Vincent R. Johnson, The Ancient Magna

Carta and the Modern Rule of Law: 1215 to

2015, 47 St. Mary’s L.J. 1 (2015) ............................. 6

1

INTEREST OF AMICUS CURIAE1

The Cato Institute is a nonpartisan public policy

research foundation founded in 1977 and dedicated to

advancing the principles of individual liberty, free

markets, and limited government. Cato’s Robert A.

Levy Center for Constitutional Studies helps restore

the principles of constitutional government that are

the foundation of liberty. Toward those ends, Cato

publishes books and studies, files amicus briefs, conducts conferences, and produces the annual Cato Supreme Court Review.

This case interests amicus because the right to just

compensation when property is taken is fundamental.

Home equity is private property, so the government

cannot simply take any that remains after the proceeds from a foreclosure sale satisfy a tax debt.

SUMMARY OF ARGUMENT

In 1194 A.D., near Yorkshire, England, a nobleman

turned fugitive named Robin of Locksley legendarily

stood up against theft dressed as taxes. The Sheriff of

Nottingham levied exorbitant and capricious taxes on

the people of Sherwood Forest, filling the coffers of

King John, who was then the regent ruler in his

brother’s absence. Robin Hood was the champion of the

people, defending them from abusive government

power that viewed the people as sources of revenue rather than subjects to be protected.

Today, when local governments seize all the equity

in a home after confiscating the home to pay for de

1 Rule 37 statement: All parties were timely notified and con-

sented to the filing of this brief. No part of this brief was authored

by any party’s counsel, and no person or entity other than amicus

funded its preparation or submission.

2

minimis tax bills, one wonders what Robin Hood would

have thought. These seizures of equity largely target

poorer communities—and often the elderly—who own

their homes but have no disposable income to pay their

taxes, much less to pay lawyers to fight on their behalf.

The government will take the home and sell it to pay

off the tax debt, which can sometimes be a legitimate

government taking. While most states return any surplus proceeds from the sale to the owner, some states

allow the government to take the surplus funds above

the tax deficiency, leaving those hard-up families destitute. This practice literally steals from the poor to fill

the coffers of the rich, which is precisely what Robin

Hood fought against.

One of the reasons the story of Robin Hood is so

iconic in our culture is that we recognize there is something evil about taking more in taxes than is required

by law for the government’s own profit. Robin Hood is

treated as a hero because he stood up for the poor who

were stolen from in the name of taxation. Even John

the Baptist told tax collectors to only take what was

required to fulfill the tax. Luke 3:12–13. Justice demands that tax collection be limited to the amount

needed to pay the tax, and no more.

Yet this practice is not only unjust but unconstitutional. The Fifth Amendment guarantees that private

property shall not be taken except for public use and

with just compensation. This protection applies not

only to real property but also to intangible property interests, such as an owner’s equity in her home. Since

Magna Carta, English and American common law has

3

required authorities to return any surplus from property taken to pay tax debts.

But 14 states have gone astray from the common

law to allow local authorities to seize the surplus and

deposit it in state treasuries. Two states in particular,

Nebraska and Minnesota, took legislative action to

change the state’s law and created a tax-debt recovery

scheme that allows the state government to keep any

surplus from the property taken to pay off the debt.2

In Minnesota, 93-year-old Geraldine Tyler owed

$2,300 in taxes on a condominium worth around

$40,000. Pet. at 5. However, she was unable to pay her

property taxes, and she accumulated almost $12,700

in fees and interest. Id. Hennepin County seized her

home, sold it for $40,000, paid off her tax debt, and

then kept the $25,000 in remaining equity. Id.

In both the contexts of satisfying unpaid tax debt

and mortgage payments, the Minnesota Supreme

Court had held that homeowners possess a right to the

surplus home equity of their homes. Farnham v. Jones,

19 N.W. 83, 85 (Minn. 1884) (taxes); Ayer v. Stewart,

14 Minn. 97, 98 (1869) (mortgages); Stromberg v. Lindberg, 25 Minn. 513, 514–16 (1879) (same). But the Minnesota legislature changed the rules, codifying a predatory tax scheme that permits the state to keep any

surplus from the property taken to pay off the debt.

Minn. Stat. § 280.29 (2021).

When Minnesota’s legislature decided that a delinquent taxpayer’s remaining equity would go to the government’s treasuries rather than back to the mulcted

2 The case out of Nebraska is the subject of another cert peti-

tion that was docketed the day before this case, Fair v. Continental Resources, No. 22-160 (Aug. 18, 2022). Fair presents

equally valid claims.

4

homeowner, the state committed a legislative taking

under this Court’s precedents.

As discussed in the petition, Pet. at 3, Minnesota is

one of 14 states that allow the state to take title and

“any equity [the owner] has accrued in the property,

no matter how small the amount of taxes due or how

large the amount of equity.” Tallage Lincoln, LLC v.

Williams, 485 Mass. 449, 453 (2020). Stories of clear

injustices are becoming common. In Michigan, a family underpaid their property taxes by $144, spurring

Wayne County to take two homes and sell them for

$108,000, with the county pocketing $107,498.55. Dan

McCaleb, Michigan Woman Sues County Over “Home

Equity Theft,” The Center Square (July 9, 2019).3

All takings that are legitimately for a public purpose require just compensation under the Fifth

Amendment. As this Court recently recognized in Cedar Point v. Hassid, 141 S. Ct. 2063 (2021), the takings

analysis considers whether a property interest has

been completely seized or merely restricted. Here, the

state legislature seized all the remaining equity in Ms.

Tyler’s home, leaving her nothing. This taking without

compensation is unconstitutional and contrary to the

English and American common-law tradition. Because

this taking violates the Fifth Amendment and contravenes basic property principles, this Court should

grant certiorari.

3 Available at https://bit.ly/3xFISpT.

5

ARGUMENT

HOME EQUITY IS HISTORICALLY A PRIVATE

PROPERTY RIGHT AT MINNESOTA COMMON

LAW, SO THIS COURT SHOULD CLARIFY HOW

AND WHEN A LEGISLATURE CAN CHANGE

LONG-STANDING RULES AND CONFISCATE

VESTED EQUITY IN REAL PROPERTY

This Court’s precedents have sent mixed signals

about the relationship between legislatures and property rights that existed at common law. This case is a

good vehicle for the Court to clarify this cloudy area of

law.

A. Home Equity Is the Private Property of the

Homeowner Under Common Law

The common law is the main source of traditional

property rights. See Denise Johnson, Reflections on the

Bundle of Rights, 32 Ver. L. Rev. 247, 248 (2007). Private property rights primarily flow from the English

common law, including Magna Carta, and those rights

ramified into American common law. See Horne v.

Dep’t of Agric., 576 U.S. 351, 358 (2015); Johnson, supra, at 248. To determine whether a property right exists, courts look back to the common law and “background principles” of property. Lucas v. S.C. Coastal

Council, 505 U.S. 1003, 1029–32 (1992). Common law

is not the only source of property rights, but it is sufficient to create them. See Stop the Beach Renourishment, Inc. v. Fla. Dep’t of Env’t Prot., 560 U.S. 702, 733

n.12 (2010) (Scalia, J.) (plurality) (“[W]hether the

source of a property right is the common law or a statute makes no difference, so long as the property owner

continues to have what he previously had.”).

6

Since at least Magna Carta, there has been a long

common-law tradition of the remaining value of the

home or estate being treated as private property after

a tax debt is satisfied. Magna Carta Clause 26 states

that when selling a deceased man’s estate to pay off

his tax debt, the “residue shall be given over to the executors to carry out the dead man’s will.” See also Hall

v. Meisner, No. 21-1700, slip op. at 11 (6th Cir. Oct. 13,

2022); Vincent R. Johnson, The Ancient Magna Carta

and the Modern Rule of Law: 1215 to 2015, 47 St.

Mary’s L.J. 1, 46–47 (2015). Later, Blackstone explained that creditors or officials who seize goods to

pay a debt or tax must give the property back upon

payment, or, if the debtor or taxpayer did not pay the

debt, must “render back the overplus” after satisfying

the debt from the property. 2 William Blackstone,

Commentaries *453. That principle carried over into

the colonies, where land could not be taken to pay a

tax until all other property had been sold to satisfy the

tax. Martin v. Snowden, 59 Va. 100, 137–40 (1868). If

the government could keep surplus property, there

would be no purpose in forbidding the taking of land

before satisfying the debt in the seizure of goods. See

id.

Minnesota common law similarly historically recognized home equity as a property right. In Farnham

v. Jones, the Minnesota Supreme Court interpreted an

1881 Minnesota statute detailing procedures for the

sale and redemption of property after a tax lien sale.

19 N.W. at 84–85. The court emphatically concluded

that once the state’s tax lien has been satisfied, “any

surplus . . . must revert to the owner” and “the claim

of the land-owner to the balance remains unimpaired.”

Id. at 85. Although the court did not explain the source

of this right, it clarified that the right to the surplus

7

“exists independently of [any] statutory provision.” Id.

In Farnham, the court continued the centuries long

common-law recognition of the right to the surplus.

Minnesota has also traditionally upheld equity as

a property in the mortgage foreclosure context. The

legislature guaranteed the mortgagor “any surplus

money, after satisfying the mortgage on which such

real estate was sold.” 1858 Minn. Laws 645. The Minnesota Supreme Court affirmed this statute many

times over in the next few decades. Bailey v. Merritt, 7

Minn. 159, 162, 165–66 (1862) (mortgagor could sue

for the surplus paid at a foreclosure auction); Ayer, 14

Minn. at 98 (mortgagor is entitled to the surplus);

Fowler v. Johnson, 26 Minn. 338, 343 (1880) (mortgagor is to receive the surplus in a foreclosure on an

instalment contract after the future-due remainder of

the entire mortgage was satisfied); Taylor v. Burgess,

26 Minn. 547, 552 (1880) (property surplus belonged to

the mortgagor by right).

Moreover, Minnesota courts have implied that any

remaining home equity is the property of the homeowner, regardless of any statutory right. In Labor v.

McCarthy, the court explained that lien holders only

wished for the foreclosure sale proceeds to be sufficient

to cover their liens, but the mortgagor wanted the surplus proceeds to be as large as possible. 24 Minn. 417,

419 (1878). This assumes that the surplus is returned

to the mortgagor. Id. And in Stromberg v. Lindberg,

the court rejected a mortgagee’s attempt to claim some

of the surplus proceeds. 25 Minn. at 514–16. Instead,

the surplus was to be returned to the mortgagor, and

the mortgagee could only receive the funds necessary

to satisfy the mortgage. Id. at 515–16. This was not a

statutory rule—rather, the court simply presupposed

this basic principle. Id.

8

Finally, it is a basic principle that if a debtor’s property is seized and liquidated to pay the debts, the

debtor is entitled to any remainder left after the debts

are paid. For example, in the bankruptcy context, after

the assets are liquidated and all creditors are paid, the

debtor receives any remaining funds. 11 U.S.C. §

726(a)(6). The Eighth Circuit and the Minnesota Court

of Appeals have both applied this statute accordingly.

Hollingsworth v. Kaler (In re Hollingsworth), 331 B.R.

399, 401 (B.A.P. 8th Cir. 2005) (“In fact, the estate had

sufficient funds to pay all creditors in full and to return

excess funds to the Debtor in accordance with 11

U.S.C. § 726(a)(6).”); In re Marriage of Nelson, No.

A18-1104, 2019 Minn. App. Unpub. LEXIS 603, at *8

(July 1, 2019) (“And in fact, 11 U.S.C. § 726 (a)(6)

(2012) explicitly provides that once assets are collected

into the bankruptcy estate and all creditors are paid

what they are owed, any remaining assets of the estate

are to be paid back to the debtor.”). But the Eighth Circuit’s opinion below stands in stark contradiction. The

court in this case assumes—wrongly—that there is no

property interest in the equity because the government is the creditor, and so denies Ms. Tyler the surplus equity in her home to which she would ordinarily

be entitled. See Tyler v. Hennepin Cty., 26 F.4th 789,

792–93 (8th Cir. 2022).

Citizens would be rightly appalled if private creditors could take more assets than needed to satisfy the

debt. Yet the rule that a creditor cannot obtain more

than necessary to satisfy a debt should apply more to

governments, which are not only constitutionally prohibited from taking property without paying just compensation, but are able to self-deal through the taking

of property. This Court has held that the government

cannot take property to “secure a windfall for itself.”

9

Palazzolo v. Rhode Island, 533 U.S. 606, 627–28

(2001); see also Hall, slip op. at 14 (explaining that “the

equities” prevent the government from profiting from

the surplus). Nor can government “transform private

property into public property” for its own profit.

Webb’s, 449 U.S. at 164. “This is the very kind of thing

that the Takings Clause of the Fifth Amendment was

meant to prevent.” Id. So just as the surplus of a private debt must be returned to the debtor, the surplus

after a tax lien belongs to the homeowner, not the government. This Court should grant certiorari to redress

the inapposite decision below.

B. The Minnesota Legislature Gradually Removed the Homeowner’s Right to Recover

the Equity

Although the Minnesota common law declared a

property right in home equity, the legislature began

gradually eroding this property right in tax sales. Initially, in 1881 the statute was silent regarding the surplus. 1881 Minn. Laws 176–77; Farnham, 19 N.W. at

85 (explaining that the right to surplus came from a

non-statutory source). In 1891, the statute directed

that all proceeds be channeled to the state tax funds,

and since the statute explained what to do when the

proceeds were insufficient but not when there was a

surplus, this statute implied that any surplus was

treated like normal tax proceeds. Minn. Stat. § 1576

(1891). In 1894, any proceeds exceeding the required

amount were distributed as normal tax monies. Minn.

Stat. § 1617 (1894). And finally, in 1905, the statute

directed that “the excess, if any, above the taxes, penalties, interest, and costs . . . be paid in like manner for

the benefit of the state.” Minn. Stat. § 939 (1905). Thus

by 1905 the legislature had completely done away with

the mortgagor’s property right in the surplus. See id.;

10

Minn. Debenture Co. v. Scott, 106 Minn. 32, 35–36

(1908).

In this way, even though Minnesota common law

and statutes recognized home equity as a property

right, the legislature over time stripped away the

homeowner’s right to any remaining surplus after a

tax lien sale. This series of legislative acts raises the

question of whether this was a legislative taking.

C. This Case Is an Opportunity to Clarify

When a Legislature Can Remove a Common-Law Property Right Without Just

Compensation

This Court’s precedents unambiguously provide

that legislatures may commit Fifth Amendment takings. Unfortunately, other statements from this Court

muddy the standards for determining when a legislature can change a common-law property right without

paying compensation. This case allows the Court to

provide much needed guidance.

The Court has long held that it is up to the judiciary

to protect property rights against legislative incursion:

“If, therefore, a statute . . . is a palpable invasion of

rights secured by the fundamental law, it is the duty

of the courts to so adjudge, and thereby give effect to

the Constitution.” Mugler v. Kansas, 123 U.S. 623, 661

(1887). And when a legislature changes a property interest from private to public, it can commit a compensable taking. Stop the Beach, 560 U.S. at 715 (Scalia,

J., plurality op.) (“If a legislature . . . declares that

what was once an established right of private property

no longer exists, it has taken that property, no less

than if the State had physically appropriated it or destroyed its value by regulation.”); Phillips v. Wash. Legal Found., 524 U.S. 156, 167 (1998) (“‘[A] State

11

by ipse dixit, may not transform private property into

public property without compensation’ simply by legislatively abrogating the traditional rule . . . .”) (quoting Webb’s Fabulous Pharmacies, Inc., v. Beckwith,

449 U.S. 155, 164 (1980)); see also Hall, slip op. at 5–6

(“But the Takings Clause would be a dead letter if a

state could simply exclude from its definition of property any interest that the state wished to take.”) (deciding that a state statute allowing government to take

surplus after a tax lien sale is unconstitutional).

This Court recently affirmed the need for courts to

protect property against legislative as well as executive action. In Cedar Point Nursery v. Hassid, the

Court explained that it does not ask which branch of

government impinged the property interest but instead “whether the government has physically taken

property for itself or someone else[.]” 141 S. Ct. at

2072. Members of this Court have similarly opined

that there is no constitutional difference between a

taking via legislative act and a particularized ad hoc

administrative taking. See, e.g., Parking Ass’n of Ga.,

Inc. v. City of Atlanta, 515 U.S. 1116, 1118 (1995)

(Thomas, J., dissenting). Thus, the legislature is just

as capable of committing a taking as administrative

agencies of the executive branch.

That said, legislatures are not entirely foreclosed

from altering common-law property interests. But

when and why such legislation may be permitted is unclear from this Court’s precedents, and this case offers

a good chance to clarify that question.

On one hand, multiple cases explain that legislatures can change property interests, even as these

cases wrestle with the extent and nature of the permissible changes. In Munn v. Illinois, this Court

12

looked at whether a statutory limit on the prices a

warehouse could charge for grain storage represented

a deprivation of property under the Due Process

Clause. 94 U.S. 113, 123 (1876). The Court held that it

did not, even though there was a general common-law

right for sellers to price products and services at their

own discretion. Id. at 133–34. The Court was clear that

a legislature can be almost whimsical in its abrogation

of common-law rights, as long as it comports with the

Constitution: “Rights of property which have been created by the common law cannot be taken away without

due process; but the law itself, as a rule of conduct,

may be changed at the will, or even at the whim, of the

legislature, unless prevented by constitutional limitations.” Id. at 134. The unanswered question, of course,

is what those constitutional limitations are.

One of those limitations is that the analysis in

Munn applies to statutes that modify rather than terminate common law rights. The Munn Court described

a law to “limit the rate of charge for services rendered

in a public employment” as “only changing a regulation which existed before,” whether at common law or

via statute. Id. Such rate regulation is part of the common law, where the rule “requires the charge to be reasonable,” which “is itself a regulation as to price.” Id.

Thus, the statute “establishe[d] no new principle in the

law, but only [gave] a new effect to an old one.” Id. The

common law wasn’t supplanted, only updated, because

“the great office of statutes is to remedy defects in the

common law as they are developed, and to adapt it to

the changes of time and circumstances.” Id. The

Court’s decision was thus limited to statutes updating

common-law rules, and the Court did not address the

constitutionality of statutes categorically terminating

such rights, as the home equity rule does here.

13

One line in Munn—a “person has no property, no

vested interest in any rule of the common law,” id.—

has also been quoted to hold that the legislative removal of common-law remedies is not a taking. See,

e.g., N.Y. Central R. Co. v. White, 243 U.S. 188, 201

(1917); Silver v. Silver, 280 U.S. 117, 122 (1929); Duke

Power Co. v. Carolina Env’t Study Grp., Inc., 438 U.S.

59, 88 n.32 (1978). In these cases, again, the Court has

looked to whether a common-law right was substituted

for by a statute rather than terminated altogether. In

Duke Power, this Court decided there was not a due

process violation in the removal of a statutory remedy

because a reasonable remedy was substituted. 438

U.S. at 88. But the Court noted that it was an open

question whether “the Due Process Clause in fact requires that a legislatively enacted compensation

scheme either duplicate the recovery at common law

or provide a reasonable substitute remedy.” Id.; see

also White, 243 U.S. at 201 (questioning if all commonlaw liability rules could be set aside by statute if not

replaced with a similarly suitable remedy).

In the takings context, the confusion over the

Munn rule persists. In PruneYard Shopping Center v.

Robins, Justice Marshall concurred and cited Munn in

support of requiring a landowner to give up his right

to exclude and allow leafleteers on his property. 447

U.S. 74, 91–94 (1980) (Marshall, J., concurring). Because that decision was based on state law, the federal

constitutional issues were not resolved, but Justice

Marshall pointed out that “[q]uite serious constitutional questions might be raised if a legislature attempted to abolish certain categories of common-law

rights in some general way.” Id. at 93–94. Justice Marshall surmised that the common-law rights against

14

trespass may be one of those rights that cannot be

abolished by statute. Id. at 94.

Outside of the context of Munn’s rule, in another

takings case, this Court explained that Congress could

properly “take” certain common-law physical property

rights. United States v. Causby, 328 U.S. 256, 260–61

(1946). Traditionally, the airspace—all the way up to

the “periphery of the universe”—had been viewed as

the property of the owner of the physical land below it,

but Congress declared that area to be a public highway. Id.4

Thus, even among cases affirming that the legislature can change a property interest, there is a sizable

gray area. From Munn, we know that the right to

charge whatever price one wishes for one’s goods is not

within those “certain categories” of common-law rights

that cannot be altered by the legislature. See Munn, 94

U.S. at 123. But, per Justice Marshall, there would be

serious concerns if certain common-law rights were

abolished “in some general way.” PruneYard, 447 U.S.

at 95 (Marshall, J., concurring). And Congress can remove certain attenuated property rights without compensation, like airspace. Causby, 328 U.S. at 260–61.

At what point a property interest crosses the line on

the “property interest-property right” continuum is

still unclear.

4 Although this Court recognized that the common-law property right to the airspace no longer existed, the use of the airspace

above the property could still be a compensable taking if the land

itself became uninhabitable due to the nuisance of the flights.

Causby, 328 U.S. at 261. This analysis separated the legislative

taking of the common-law right to possess airspace (no taking)

from the nuisance-driven taking of the physical land (a taking).

15

At the other side of the property-rights spectrum,

this Court has stated that legislatures “by ipse dixit,

may not transform private property into public property without compensation[.]” Webb’s, 449 U.S. at 164.

Webb’s involved interest from a private trust fund operated temporarily by the county court registry that

the court attempted to take as its own. Id. at 155. Per

traditional, common-law trust rules, the interest follows the trust; therefore, because the trust was private

property, the interest was as well. Id. at 162. Neither

the legislature nor the court could recharacterize private property as public property to fill its coffers. Id. at

164.

A few years earlier, Justice Stewart had come to

the same conclusion in Hughes v. Washington: “For a

State cannot be permitted to defeat the constitutional

prohibition against taking property without due process of law by the simple device of asserting retroactively that the property it has taken never existed at

all.” 389 U.S. 290, 296–97 (1967) (Stewart, J, concurring). Although that case asked whether a state court

opinion interpreting a state constitutional provision

was a taking, the analysis is nonetheless applicable to

when any branch of government strips a previously

held right. See id. Justice Stewart articulated the requisite test for determining if subsequent state action

takes a property interest as whether the action created

an “unpredictable change in state law.” Id. at 297.

More recently, this Court looked at the relationship

between common law and legislation in defining property rights in Lucas v. S.C. Coastal Council. The issue

in Lucas was whether a statute prohibiting new construction close to the tidal line on the beach “took” the

Lucas’s property since the property was left without

any economic use. 505 U.S. at 1006. But Justice Scalia

16

emphasized that “[a]ny limitation so severe cannot be

newly legislated or decreed (without compensation),

but must inhere in the title itself, in the restrictions

that background principles of the State’s law of property and nuisance already place upon land ownership.”

Id. at 1029.

Justice Stevens dissented, raising concerns that

the Court had cabined legislative freedom, binding legislatures to long-held common-law rules. Id. at 1068–

69 (Stevens, J., dissenting). He quoted Munn, arguing

that the Court had abandoned the prior rule that legislatures could alter “the law governing the rights and

uses of property.” Id.

But the Lucas majority never addressed Munn, so

the relationship between Lucas and Munn’s continuum is unclear. Whether the requirement that legislative action be based in common-law “background principles” applies only to “rights of property” or also to

“rule[s] of conduct” has not been explained. See id. at

1029–31; Munn, 94 U.S. at 134.

This overview of this Court’s decisions about legislatures’ taking property rights or changing remedies

demonstrates the need for clarity. While some precedents trend towards protecting common-law property

rights from legislative restrictions not based in traditional property principles, see Lucas, 505 U.S. at 1029,

this Court should take this opportunity to clearly explain whether a legislative act that categorically removes a property right previously deeply rooted in the

common law is a compensable taking under the Fifth

Amendment.

And this case tees up that issue nicely, as Ms. Tyler

had a common-law property right in the equity of her

home, established both in the “background principles”

17

of property law stemming from Magna Carta, as well

as Minnesota common law. See Lucas, 505 U.S. at

1031; Farnham, 19 N.W. at 85.

The forced transfer here also would likely be a taking under Justice Stewart’s analysis, since the legislature created an “unpredictable change in state law” by

changing the law over fifteen years to give the state

the authority to seize the remaining equity, even

though the common law established that belonged to

the homeowner. See Hughes, 389 U.S. at 296–97

(Stewart, J., concurring).

And, as in Webb’s, the property here is an intangible monetary asset, which the Court has recognized as

property under the Fifth Amendment. See Koontz v.

St. Johns River Water Mgmt. Dist., 570 U.S. 595, 613–

14 (2013). These similarities in facts and legal issues

to the Court’s prior precedents provide an opportunity

to clarify whether a legislative action that removes a

property interest long held in “background principles,”

such that the statute creates an “unpredictable change

in state law,” takes the property.

Further, this is a complete, categorical legislative

taking: property is not just being limited or regulated—it is being completely taken. It would be no less

a complete taking than if the Minnesota legislature

turned every fee simple into a life estate and transferred the future interests to the state. Ms. Tyler

owned $40,000 in equity and owed $12,700 in taxes,

interest, and fees. Hennepin County then took her

property, sold it to pay the taxes, and kept the remaining $25,000 for its own benefit, all via statutory authority. As a result, the only asset left to her—the surplus home equity—was completely taken by statute.

The government should not be allowed to perpetrate

18

this manifest injustice simply because it came from a

legislatively enacted statute.

This is also a good opportunity to resolve a circuit

split that the decision below catalyzed. Here, the

Eighth Circuit upheld a statute that “abrogated any

common-law rule” giving homeowners a property interest in the surplus equity. Tyler, 26 F.4th at 793. But

the Sixth Circuit recently declared a similar statute

unconstitutional and contrary to English and American common law. Hall, slip op. at 12. (“Thus—by that

ipse dixit—the Act ‘sidestep[ped] the Takings Clause

by disavowing traditional property interests long recognized under state law.’”) (quoting Phillips, 524 U.S.

at 167). Thus, this issue divides the circuits, and this

case provides an excellent opportunity to resolve this

split.

As discussed above, Magna Carta provided protections for tax-debt surplus, requiring it to be returned

to the estate, and Magna Carta was introduced to curb

the tyrannical abuses of King John. Robin Hood attempted to defend poor people from King John and the

Sheriff of Nottingham’s onerous taxes that filled royal

coffers. It is not unreasonable to speculate that Robin

Hood may have protected people from this very

thing—having one’s home-value surplus seized after

the sheriff’s tax was satisfied. But would Robin Hood

have been any less justified if, instead of emanating

from executive action (Sheriff of Nottingham via King

John’s instruction) the taking was effected via a statute enforced by the sheriff? That is what the state below claimed.

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CONCLUSION

The taking of home equity is unconstitutional and

unjust.

For the foregoing reasons, and those described by

the Petitioner, this Court should grant the petition.

..................................................................................

Respectfully submitted,

/s/ Clark M. Neily III

Counsel of Record

Trevor Burrus

CATO INSTITUTE

1000 Mass. Ave., N.W.

Washington, DC 20001

(202) 425-7499

cneily@cato.org

October 20, 2022