COMPENSATION, a term applied in English law to a number of different forms of legal reparation; e.g., under the Forfeiture Act 187o (s.4), for loss of property caused by felony, or—under the Riot (Damages) Act 1886—to persons whose property has been stolen, destroyed, or injured by rioters (see RIOT). It is due, under the Agricultural Holdings Act 1883-1906, for agricultural improvements (see LANDLORD AND TENANT ; cf. also ALLOTMENTS and SMALL HOLDINGS) ; under the Workmen's Compensation Act 1906 to workmen, in respect of accidents in the course of their employment (see EMPLOYERS' LIABILITY).
Under the Licensing Act 1904, it is payable on the extinction of licences to sell intoxicants; under the Government Obligations Acts 1914 to 1916, for damage to property resulting from hostile action; under the Workmen's Compensation (Illegal Employ ment) Act 1918, for injuries which have been sustained by work men in certain cases of illegal employment (see WORKMEN'S COMPENSATION) ; under the Allotments Act 1922, to tenants for growing crops; and under the Landlord and Tenant Act 1927, for improvements and goodwill to tenants of business premises. Compensation, in its most familiar sense, is a legal term for the reparation or satisfaction made to the owners of property which is taken by the State or by local authorities or by the promoters of public utilities under statutory authority.
The right of individual ownership had, up to quite recent times, one exception, viz., slavery. Men were free or unfree. The latter, in law, had no rights, but the former could dispose freely of their persons and of their property. This right of individual ownership has recently been challenged in Russia, which has abolished the right to private property, and has expropriated it for alleged public purposes without compensation. To a large extent, however, the U.S.S.R. has been compelled to reverse this policy and to recognize the right of individual ownership. Its example was followed by most of the Succession States which arose as a result of the World War. Influenced by the wave of communism which almost overwhelmed them, these States in the name of agrarian reform have expropriated private landowners either with inadequate compensation or with none at all. It is alleged that although individual ownership is one of the funda mental rights according to natural law or morality, it possesses no juridical basis. It may, however, be stated with confidence that the inviolability of private property is recognized in (r) the municipal law of the great majority of civilized states; (2) international law (a) in time of peace and (b) in time of war; and (3) the Peace Treaties following the World War.
In England it used to be said that the Crown is entitled by its prerogative to take the property of the subject without com pensation; but this is not borne out either by the judicial decisions or by the practice of the executive. By Magna Carta, ch. 39, "no freeman shall be deprived of his freehold"; by the Petition of Right, "the ancient and undoubted right of every freeman is that he hath a full and absolute property in his goods and estate"; and by the Bill of Rights, "whereas by the common law and statutes every freeman hath a proprietie in his goods and estate." In the Case of the King's Prerogative in Saltpetre (16°6), al though it was held that the king might dig for saltpetre in land of a subject for the defence of the realm, nothing was said about compensation. In X's Petition of Right (1915) 3 K.B. 649, Avory J. held that the king by virtue of his prerogative was entitled to take possession of land for the defence of the realm without compensation. This decision was affirmed by the Court of Appeal, but in De Keyser's Royal Hotel, Ltd. v. The King (192o) A.C. 5o8, where the Crown claimed to take property for administrative purposes without compensation, the Court of Appeal ordered an examination of the records to be made, from which it appeared that from a very early period—r492—to modern times the Crown had never taken a subject's land without paying for it, and that there was no trace of any claim by the Crown to such a prerogative. It was further held that where a matter within the prerogative is provided for by statute the pre rogative is merged in the Crown, and that by the Defence Act 1842 provision is made for payment of compensation "either for the absolute purchase thereof or for the possession of the use thereof during such time as the exigence of the public service shall require." This decision was affirmed by the House of Lords, which held, inter alia, that the Crown had no power to take possession of the premisessin right of its prerogative simp/iciter, and that the suppliants were entitled to compensation under the Act of 1842. In the later case of France, Fenzvick & Co., Ltd. v. The King (1926) 43 T.L.R. 18, Wright J. said, "I shall assume that the Crown has no right at common law to take a subject's property for reasons of State without paying compensation." Thus it is a well established principle of English law that when the Crown takes the property of a subject the dispossessed owner is, as of right, entitled to full compensation. Where land is taken by the Crown, by local authorities, or by promoters of under takings under statutory authority the amount of compensation is determined by agreement or by arbitration under the provisions of the Land Clauses Act 1845 and the Land Clauses Consolidation Act 186o. Similar Acts have been enacted in Scotland, India, and most of the Colonies. Compensation is also payable for land com pulsorily acquired under numerous statutes, e.g., Acquisition of Land (Assessment of Compensation) Acts 1919; Housing Act 1923; Public Health Act 1925; Town Planning Act 1925, and Housing Act 1925.
It is a general rule of international law that private rights and private property to whomsoever belonging are not affected by the conquest, annexation, or cession of the territory in which they are situate. This fundamental right has been judicially affirmed in the United States in numerous cases, e.g., U.S. v. Percheman, 7 Peters 51 (1883). Apart from treaties it has long been recog nized, first that a State is entitled to protect its subjects in an other State from injury to their property resulting from measures in the application of which there is discrimination between them and the subjects of such other State; and secondly, that a State is entitled to protect its subjects in another State from injustice at the hands of such other State even though the measure com plained of is applied equally to the subjects of such State. "A sovereign," said the American secretary of state, Frelinghuysen, in 1885, "who departs from the principles of public law cannot find excuse therefore in his own municipal code." It is probably true to say that down to the end of the r6th century all enemy property, public or private, found by a belliger ent within his territory at or after the outbreak of hostilities was liable to seizure and confiscation. Private property of immediate use in war is still liable to seizure, but is now subject to an obligation of restitution or, if it has been destroyed or con sumed, of payment of its value. With regard to private property of other kinds there has in practice been gradual mitigation of confiscation, until all property, whether land or goods, and choses in action, such as debts and credits, enjoyed immunity from confiscation. Since the beginning of the r9th century we find only two instances of confiscation. One was the confiscation of property of British subjects found in Denmark in 1807—for which there had been no precedent for more than a century— and the other the decree issued in 1861 by the Southern Con federacy during the American Civil War confiscating all property of whatsoever kind except public stocks and securities held by alien enemies. According to the Continental theory immunity is obligatory, subject only to such qualifications as may be imposed by military necessity or public emergency; whilst the Anglo American theory recognizes a right of confiscation, subject to a general policy of immunity. In their practical application each would permit confiscation in exceptional circumstances, such as public necessity or by way of reprisal, whilst, apart from such exceptions, each would recognize immunity. See Brown v. United States, 8 Cranch, I IO (1814) ; In re Ferdinand Ex-Tsar of Bul garia (1921), 1 Ch. Ion. Upon the outbreak of the World War none of the belligerents attempted to confiscate enemy private property. On the contrary measures were adopted by all of them for its safe custody.
Treaties.—The principle of the inviolability of private prop erty was embodied in the Peace Treaties concluded during and after the World War. Thus the Brest-Litovsk Peace Treaty of March 3, 1918, declared that it was not permissible to expro priate property rights without adequate compensation. This prin ciple was expressly recognized in the Peace Treaties of Versailles, St. Germain-en-Laye, Trianon and Neuilly. It is true that liquidation of enemy private property within their own territories was granted to the Allied and Associated Powers. The property, however, was not confiscated, but its value credited to the repara tion account of the conquered State. There was no intention to confiscate, although as a rule confiscation resulted, through the failure of the conquered States to compensate their own nationals in accordance with the terms of the Treaties. Further the property rights and interests of former enemy nationals in the Succession States are protected by express provisions in the treaties. If such rights and interests are expropriated or interfered with, the amount of compensation or damages is to be determined by the Mixed Arbitral Tribunals which have been established by the treaties (see the Vienna Report, International Law Association, 1927). (H. H. L. B.) United States.—The fifth amendment to the U.S. Consti tution provides that "no person shall be . . . deprived of life, liberty or property without due process of law; nor shall private property be taken for public use without just compensation." This amendment is construed as limiting the power of the Federal Government alone. The 14th amendment, however, applies to the States, and while it contains no clause specifically requiring just compensation when property is taken for a public use, such a requirement is none the less assumed to be implied in the clause that no State shall "deprive any person of life, liberty or property without due process of law." Property rights, however, are not "inviolable" in any absolute sense. The Supreme Court said, in sustaining the emergency rent laws of the District of Columbia in 192I-"The fact that tangible property is also visible tends to give rigidity to our conception of our rights in it that we do not attach to others less concretely clothed. But the notion that the former are exempt from the legislative modification required from time to time in civilized life is contradicted not only by the doctrine of eminent domain, under which what is taken is paid for, but by that of the police power in its proper sense, under which property rights may be cut down, and to that extent taken, without pay. Under the police power the right to erect buildings in a certain quarter of a city may be limited to from eighty to one hundred feet. Welch v. Swasey, 214 U.S. 91. Safe pillars may be required in coal mines. Plymouth Coal Co. v. Pennsyl vania, 232 U.S. 53r. Billboards in cities may be regulated. St. Louis Poster Advertising Co. v. St. Louis, 249 U.S. 269. Water sheds in the country may be kept clear. Perley v. North Carolina, 249 U.S. 511. These cases are enough to establish that a public exigency will justify the legislature in restricting property rights in land to a certain extent without compensation. ... The only matter that seems to us open to debate is whether the statute goes too far. For just as there comes a point at which the police power ceases and leaves only that of eminent domain, it may be conceded that regulations of the present sort pressed to a certain height might amount to a taking without due process of law . . ." (Block v. Hirsh, 256 U.S. 135). Where eminent domain (q.v.) is the power used, money compensation must be given, equiva lent in general to what the owner loses. The concept is at times ambiguous and is generally said to call for the market value of the property, although that, too, is at times ambiguous and it may sometimes fail to protect the expropriated owner from loss, as in Banner Milling Co. v. State (24o N.Y. 533, certiorari denied, 269 U.S. 582, 1925), where compensation did not include loss due to the cost of moving the business or interrupting its good will.
(R. L. HA.)