22/23
Property Law
chapter two
The gratuity principle. Government largess has often been considered a “gratuity” furnished
by the state. Hence it is said that the state can withhold, grant, or revoke the largess at its
pleasure. Under this theory, government is considered to be in somewhat the same position as a
private giver.
The whole and the parts. Related to the gratuity theory is the idea that, since government may
completely withhold a benefit, it may grant it subject to any terms or conditions whatever. This
theory is essentially an exercise in logic: the whole power must include all of its parts.
Internal management. Particularly in relation to its own contracts, government has been
permitted extensive power on the theory that it should have control over its own housekeeping or
internal management functions. Under this theory, government is treated like a private business.
In its dealings with outsiders it is permitted much of the freedom to grant contracts and licenses
that a private business would have. . . .
[p*157]
In all of the cases concerning individual rights in largess the exact nature of the government
action which precipitates the controversy makes a great difference. A controversy over
government largess may arise from such diverse situations as denial of the right to apply, denial
of an application, attaching of conditions to a grant, modification of a grant already made,
suspension or revocation of a grant, or some other sanction. In general, courts tend to afford the
greatest measure of protection in revocation or suspension cases. The theory seems to be that here
some sort of rights have “vested” which may not be taken away without proper procedure. On the
other hand, an applicant for largess is thought to have less at stake, and is therefore entitled to less
protection. The mere fact that a particular form of largess is protected in one context does not
mean that it will be protected in all others.
,While individual interests in largess have developed along the lines of procedural protection
and restraint upon arbitrary official action, substantive rights to possess and use largess have
remained very limited. In the first place, largess does not “vest” in a recipient; it almost always
remains revocable. . . . Forfeiture may take place because the public interest demands it, despite
the absence of any fault in the holder. In a recent case the Civil Aeronautics Board took the
position that “the public interest” would be furthered by cancelling the certificate of the most
successful of four competing air carriers in order to help the others, which needed government
subsidies. When the public interest demands that the government take over “property,” the
Constitution requires that just compensation be paid to the owner. But when largess is revoked in
the public interest, the holder ordinarily receives no compensation. For example, if a television
station’s license were revoked, not for bad behavior on the part of the operator, but in order to
provide a channel in another locality, or to provide an outlet for educational television, the holder
would not be compensated for its loss. This principle applies to largess of all types.
In addition to being revocable without compensation, most forms of largess are subject to
considerable limitations on their use. Social Security cannot be sold or transferred. A television
license can be transferred only with FCC permission. The possessor of a grazing permit has no
right to change, improve, or destroy the landscape. And use of most largess is limited to specified
purposes. Some welfare grants, for example, must be applied to support dependent children. On
the other hand, holders of government wealth usually do have a power to exclude others, and to
realize income.
The most significant limitation on use is more subtle. To some extent, at least, the holder of
government largess is expected to act as the agent of “the public interest” rather than solely in the
service of his own self-interest. The theory of broadcast licensing is that the channels belong to
the public and should be used for the public’s benefit, but that a variety of private operators are
likely to perform this function more successfully than government; the holder of a radio or
Sec. 2 THE PERSONALITY THEORY S633
television license is therefore expected to broadcast in “the public interest.” The opportunity for
private profit is intended to serve as a lure to make private operators serve the public.
, The “mix” of public and private, and the degree to which the possessor acts as the
government’s agent, varies from situation to situation. The government contractor is explicitly the
agent of the government in what he does; in theory he could equally well be the manager of a
government-owned [p*158] factory. Only his right to profits and his control over how the job is
done distinguish his private status. The taxi driver performs the public service of transportation
(which the government might otherwise perform) subject to regulation but with more freedom
than the contractor. The doctor serves the public with still greater freedom. The mother of a child
entitled to public aid acts as the state’s agent in supporting the child with the funds thus provided,
but her freedom is even greater and the responsibility of her agency still less defined.
The result of all of this is a breaking down of distinctions between public and private and a
resultant blurring or fusing of public and private. Many of the functions of government are
performed by private persons; much private activity is carried on in a way that is no longer
private. . . .
IV. Property and the Public Interest: An Old Debate Revisited
The public interest state, as visualized above, represents in one sense the triumph of society
over private property. This triumph is the end point of a great and necessary movement for
reform. But somehow the result is different from what the reformers wanted. Somehow the
idealistic concept of the public interest has summoned up a doctrine monstrous and oppressive. It
is time to take another look at private property, and at the “public interest” philosophy that
dominates its modern substitute, the largess of government.
A. Property and Liberty
Property is a legal institution the essence of which is the creation and protection of certain
private rights in wealth of any kind. The institution performs many different functions. One of
these functions is to draw a boundary between public and private power. Property draws a circle
around the activities of each private individual or organization. Within that circle, the owner has a
greater degree of freedom than without. Outside, he must justify or explain his actions, and show
his authority. Within, he is master, and the state must explain and justify any interference. It is as
if property shifted the burden of proof; outside, the individual has the burden; inside, the burden
Property Law
chapter two
The gratuity principle. Government largess has often been considered a “gratuity” furnished
by the state. Hence it is said that the state can withhold, grant, or revoke the largess at its
pleasure. Under this theory, government is considered to be in somewhat the same position as a
private giver.
The whole and the parts. Related to the gratuity theory is the idea that, since government may
completely withhold a benefit, it may grant it subject to any terms or conditions whatever. This
theory is essentially an exercise in logic: the whole power must include all of its parts.
Internal management. Particularly in relation to its own contracts, government has been
permitted extensive power on the theory that it should have control over its own housekeeping or
internal management functions. Under this theory, government is treated like a private business.
In its dealings with outsiders it is permitted much of the freedom to grant contracts and licenses
that a private business would have. . . .
[p*157]
In all of the cases concerning individual rights in largess the exact nature of the government
action which precipitates the controversy makes a great difference. A controversy over
government largess may arise from such diverse situations as denial of the right to apply, denial
of an application, attaching of conditions to a grant, modification of a grant already made,
suspension or revocation of a grant, or some other sanction. In general, courts tend to afford the
greatest measure of protection in revocation or suspension cases. The theory seems to be that here
some sort of rights have “vested” which may not be taken away without proper procedure. On the
other hand, an applicant for largess is thought to have less at stake, and is therefore entitled to less
protection. The mere fact that a particular form of largess is protected in one context does not
mean that it will be protected in all others.
,While individual interests in largess have developed along the lines of procedural protection
and restraint upon arbitrary official action, substantive rights to possess and use largess have
remained very limited. In the first place, largess does not “vest” in a recipient; it almost always
remains revocable. . . . Forfeiture may take place because the public interest demands it, despite
the absence of any fault in the holder. In a recent case the Civil Aeronautics Board took the
position that “the public interest” would be furthered by cancelling the certificate of the most
successful of four competing air carriers in order to help the others, which needed government
subsidies. When the public interest demands that the government take over “property,” the
Constitution requires that just compensation be paid to the owner. But when largess is revoked in
the public interest, the holder ordinarily receives no compensation. For example, if a television
station’s license were revoked, not for bad behavior on the part of the operator, but in order to
provide a channel in another locality, or to provide an outlet for educational television, the holder
would not be compensated for its loss. This principle applies to largess of all types.
In addition to being revocable without compensation, most forms of largess are subject to
considerable limitations on their use. Social Security cannot be sold or transferred. A television
license can be transferred only with FCC permission. The possessor of a grazing permit has no
right to change, improve, or destroy the landscape. And use of most largess is limited to specified
purposes. Some welfare grants, for example, must be applied to support dependent children. On
the other hand, holders of government wealth usually do have a power to exclude others, and to
realize income.
The most significant limitation on use is more subtle. To some extent, at least, the holder of
government largess is expected to act as the agent of “the public interest” rather than solely in the
service of his own self-interest. The theory of broadcast licensing is that the channels belong to
the public and should be used for the public’s benefit, but that a variety of private operators are
likely to perform this function more successfully than government; the holder of a radio or
Sec. 2 THE PERSONALITY THEORY S633
television license is therefore expected to broadcast in “the public interest.” The opportunity for
private profit is intended to serve as a lure to make private operators serve the public.
, The “mix” of public and private, and the degree to which the possessor acts as the
government’s agent, varies from situation to situation. The government contractor is explicitly the
agent of the government in what he does; in theory he could equally well be the manager of a
government-owned [p*158] factory. Only his right to profits and his control over how the job is
done distinguish his private status. The taxi driver performs the public service of transportation
(which the government might otherwise perform) subject to regulation but with more freedom
than the contractor. The doctor serves the public with still greater freedom. The mother of a child
entitled to public aid acts as the state’s agent in supporting the child with the funds thus provided,
but her freedom is even greater and the responsibility of her agency still less defined.
The result of all of this is a breaking down of distinctions between public and private and a
resultant blurring or fusing of public and private. Many of the functions of government are
performed by private persons; much private activity is carried on in a way that is no longer
private. . . .
IV. Property and the Public Interest: An Old Debate Revisited
The public interest state, as visualized above, represents in one sense the triumph of society
over private property. This triumph is the end point of a great and necessary movement for
reform. But somehow the result is different from what the reformers wanted. Somehow the
idealistic concept of the public interest has summoned up a doctrine monstrous and oppressive. It
is time to take another look at private property, and at the “public interest” philosophy that
dominates its modern substitute, the largess of government.
A. Property and Liberty
Property is a legal institution the essence of which is the creation and protection of certain
private rights in wealth of any kind. The institution performs many different functions. One of
these functions is to draw a boundary between public and private power. Property draws a circle
around the activities of each private individual or organization. Within that circle, the owner has a
greater degree of freedom than without. Outside, he must justify or explain his actions, and show
his authority. Within, he is master, and the state must explain and justify any interference. It is as
if property shifted the burden of proof; outside, the individual has the burden; inside, the burden
