#18 Fall 1996
l TAFOL PRESIDENT
SCORES VICTORY FOR
l TAFOL VICE PRESIDENT APPEARS
PEIKOFF RADIO SHOW
l TAFOL PANEL AT SECOND
l TAFOL DIRECTOR LECTURES AT SECOND
RENAISSANCE CONFERENCE, APPEARS
PEIKOFF RADIO SHOW
l RECENT CONTRIBUTORS TO TAFOL
l ESSAY CONTEST WINNER
l WINNING ESSAY
1996 Page 1
TAFOL PRESIDENT SCORES VICTORY
FOR PROPERTY RIGHTS
TAFOL President Michael J. Mazzone emerged victorious as both
a Plaintiff and a participating lawyer recently when the U.S.
Court of Appeals for the Fifth Circuit dealt a potentially fatal
setback to programs that siphon money from lawyers' bank accounts
to fund liberal legal causes.
In the case of Washington
Legal Foundation, et al. v. Texas Equal Access to Justice
Foundation, decided on September 12,
1996, the Fifth Circuit held that clients have a property right
in the interest that accrues on their funds held in lawyers'
trust accounts. In this one stroke, the Court cut the legs out
from under a Texas program that finances liberal lawsuits by
skimming the interest off the trust accounts that lawyers establish
to hold their clients' funds.
of this program is IOLTA, which stands for "Interest
on Lawyer Trust Accounts." Such programs are active not
only in Texas but in virtually every state in the Union. All
IOLTA programs rest on one basic premise, which the Fifth Circuit
ruling smashed to pieces---the premise that clients have no property
rights in the interest that their money earns while sitting in
a lawyer's trust account.
XI of the State Bar Rules, Texas lawyers are required to maintain
IOLTA accounts for all client funds that are "nominal
in amount or are reasonably anticipated to be held for a short
period of time." The interest earned
on these accounts is then paid to the Texas Equal Access
to Justice Foundation ("TEAJF"), which in turn pays
money to organizations who are supposed to provide legal services
to the poor in civil matters.
On its face, the idea that a money holder has no right to the
interest on his money is preposterous. But for many years, the
courts have held just that, placing great weight on the fact
that the amount of interest accruing to any one client is normally
so small as to be negligible. When the interest is pooled together,
however, it totals in the millions. Texas IOLTA revenues have
climbed as high as $9 million in a year, although falling interest
rates have reduced the flow of funds in recent years.
Circuit case began in 1994 when Mazzone, who is a Texas lawyer,
one of his clients, along with the Washington
Legal Foundation, sued the Texas Supreme Court and the TEAJF,
claiming that Texas’ mandatory IOLTA program violates the
First and Fifth Amendments of the U.S. Constitution. Mazzone
donated many hours of professional effort to the cause, while
TAFOL funded his expenses at the trial and appellate levels.
Circuit reversed the district court's judgment, which had upheld
the constitutionality of
1996 Page 2
IOLTA program. The appellate court also remanded the case to
the trial court for a determination of whether
interest income was taken against their will.
Circuit rejected the State's argument that IOLTA is "modern
day alchemy," that property can be created from nothing.
The court refused to base property rights on anomalies in banking
regulations and the "fickle" tax code, which the State
relied upon to support its arguments. "This short-sighted
view of property renders it unacceptable," the Court said.
The Fifth Circuit's decision should end mandatory IOLTA in Texas
and perhaps other states in the Fifth Circuit. However, the Court's
decision conflicts with decisions of the First and Eleventh Circuits,
both of which held that clients have no property rights in the
interest earned on their funds held in IOLTA accounts, that IOLTA
interest belongs to no one, and that, therefore, the state can
take the interest. This important matter may very well be headed
to the Supreme Court. If so, Mazzone intends to continue acting
as a spokesman for the constitutional protection of property
rights, and TAFOL will continue
to support him.
In his brief to the trial court, after many pages of closely
reasoned legal argumentation, Mazzone asserted that the only
moral purpose of government is to protect individual rights.
He then included the following quotation from Ayn Rand:
It was the
concept of individual rights that had given birth to a free
It [is] with the destruction of individual
rights that the destruction of freedom
[has] to begin. A. Rand, "Man's
Rights," The Virtue of Selfishness 95 (1964).
The Fifth Circuit's opinion can be found and downloaded on the
Internet at: http://www.law.utexas.edu/us5th/us5th.html
* * *
planning to file an amicus brief with the U. S. Supreme Court
in Hopwood v. Texas, but the Court let stand the Fifth Circuit
had struck down the University of Texas Law School's affirmative action
program. This deprived TAFOL of the opportunity to submit an
amicus brief. However,
affirmative action in education is not dead, and the Fifth Circuit's decision
applies only to states within that judicial circuit. So, further court
challenges are virtually certain.
TAFOL VICE PRESIDENT APPEARS ON PEIKOFF RADIO SHOW
Getman, Vice President of TAFOL, recently spoke on the Leonard
Peikoff radio show, discussing the insanity defense.
Getman supported the common law M'Naghten test as an objective
test based on cognitive disorder: did the accused know what he
did and, if so, whether it was wrong. This test determines whether
a person is out of his mind, out of touch with reality, and unable
to exercise volition. Criminally, we punish intentional, willful
acts (or those one can know to be so reckless as to be equivalent).
Getman reasoned that the burden of proof should be high and should
rest on the accused. He also distinguished between insanity brought
about by the accused (e.g., through drug use or a history of
abusing one's own mind) that should not eliminate punishment
and insanity by involuntary causes (e.g., mental illness caused
by a brain tumor) that may mitigate or eliminate punishment.
Getman criticized, as prime examples of non-objective law, the
insanity tests used in one state (simply let the jury decide
without any particular
instruction) and for a time in Washington D.C. (simply
asking if the crime was the "product" of a "mental
disease or defect"). A tape of the show may be obtained
through Second Renaissance Books.
1996 Page 3
TAFOL PANEL AT SECOND RENAISSANCE CONFERENCE
On July 7, 1996, TAFOL continued its tradition of making presentations
at Objectivist conferences. Last year, at the Lyceum International
Conference in San Francisco, a panel consisting of former TAFOL
presidents Arline Mann and Stephen Plafker joined with philosopher
Gary Hull in answering questions from the audience about Objectivism
and the law. This year, a panel at the Second Renaissance Conference
in McLean, Virginia consisted of Gary Hull and TAFOL's Board
of Directors: Thomas A. Bowden, Stephen Plafker, and Robert S.
Getman. Questions and comments from the audience were entertained.
The most controversial question was whether a criminal defense
lawyer who knows his client to be guilty may ethically point
out to a jury the prosecution's failure to establish guilt beyond
a reasonable doubt.
TAFOL DIRECTOR LECTURES AT SECOND RENAISSANCE CONFERENCE, APPEARS
ON PEIKOFF RADIO SHOW
Bowden, a member of TAFOL's Board of Directors, gave a course
entitled "Concretizing the Principles of Objective
Law" at the 1996 Second Renaissance Conference, "Ideas
for the Rational Mind, " in McLean, Virginia. After a theoretical
introduction, the lectures employed a variety of actual court
cases to demonstrate that law must be objectively derived, formulated,
enacted, applied, and enforced. Each of the cases, which were
chosen for their unusual and memorable facts, illustrated a certain
aspect of legal objectivity. The four one-hour lectures were
taped for distribution through Second Renaissance Books and should
be available early in 1997.
Bowden also appeared on the Leonard Peikoff radio show on Columbus
Day, October 14, 1996. Guest Host Gary Hull led the discussion,
in which Bowden addressed Columbus' historical significance and
praised him for bringing Western civilization to a savage wilderness.
RECENT CONTRIBUTORS TO TAFOL
The following individuals have recently provided welcome financial
support to TAFOL through their contributions: Curtis Weidler,
Peter J. Marsala, Mark A. Nikitman, Julie Repass, Dana Landrum,
Robert Prince, Brigid McMenamin, Joseph Giblin, Lisa A. Williams,
Magaly Spector, and Paul L. Svitenko.
ESSAY CONTEST WINNER
of TAFOL's Second Annual Essay Contest is Donald Kochan of
Cornell Law School, whose winning essay---written in
the form of an appellate court opinion applying Objectivist principles---is
reproduced below. The second place winner was Dana Maloch Landrum
of the University of California, Hastings College of Law, and
the third place winner was Curtis Weidler of the University of
Michigan Law School.
1996 Page 4
is a comparison of the result and reasoning of City of
Oakland v. Oakland Raiders, 32 Cal. 3d 60, 183 Cal. Rptr.
673, 646 P. 2d 835 (1982), with the result and reasoning had
the case been decided on the principles stated by Ayn Rand in "Man's
Rights" and "The Nature of Government." To facilitate
this comparison, this essay will be in the format of a fictional
dissent to the actual opinion by the Supreme Court of California
from a justice with views paralleling those of Ayn Rand.]
* * *
Oakland v. Oakland Raiders
Justice Narragansett, dissenting
The City of Oakland appeals from a summary judgment dismissing
its action to acquire by eminent domain the property rights associated
with Oakland Raiders' ownership and franchise of a professional
football team. Because the nature of government restrains the
City of Oakland from using the force of eminent domain unless
it is acting as an objective agent facilitating retaliatory force,
I respectfully dissent. I conclude that the trial court was correct
in granting summary judgment and would vote to affirm that ruling.
In 1980, contract negotiations between the Raiders and the Oakland-Alameda
County Coliseum, Inc. broke down and the Raiders announced its
intention to move the football
team to Los Angeles. The City of Oakland commenced
an action in eminent domain to condemn the "property" in
the Raiders franchise in order to retain the team in the City.
insists that it has the power of eminent domain and that what
to condemn is "property" which is
subject to that power. The Raiders argue that the law of eminent
domain does not permit the taking of intangible property thereby
rendering impossible City's condemnation of the football franchise
which respondents describe as a "network of intangible contractual
rights." Further, respondents claim that the taking contemplated
by the City cannot as a matter of law be for any "public
these specific issues, two preliminary inquiries must be made:
(I) whether eminent domain is a protected power
found within the scope of legitimate government action; and (II)
whether the exercise of eminent domain furthers the legitimate
aims of government, or whether it actually frustrates them.
The power of eminent domain is contrary to the principles underlying
the nature of government and man's rights and, therefore, void.
Eminent domain goes beyond the powers inherent in the nature
of a legitimate government which respects man's nature, is violative
of those individual rights in property which must be protected
by a legitimate government, and, in this case, is contrary to
the individual rights to contract necessary to a capitalist society.
would remand this case for a determination on whether the City
satisfied the requirement of "public use." This
remand is unnecessary, however, because the government does not
have the power of eminent domain and may not take property for
any purpose other than as retaliatory punishment. The noted philosopher
Ayn Rand emphasizes the necessity for prohibiting the government
from having powers such as eminent domain:
holds a monopoly on the legal use of force. It has to hold
a monopoly, since it is the agent of restraining
and combating the use of force;
and for that very same reason,
its actions have to be rigidly defined, delimited,
no touch of whim or caprice
1996 Page 5
be permitted in its performance; it should be an impersonal
robot, with the
laws as its only motive power. If a society
is to be free, its government has to
be controlled." [Ayn Rand,
THE VIRTUE OF SELFISHNESS 109 (New
a free society, the City's powers must be controlled and, consequently,
the exercise of eminent
domain cannot be upheld.
recognizes that we have held, "The power of
eminent domain is an inherent attribute of sovereignty," and
claims that this premise is universally accepted and necessary
to the existence of government.1 The ability to condemn land
to public use, however, is neither a necessary nor a legitimate
function of the state and the notion that eminent domain is an
inherent attribute of sovereignty is false.
is incorrect in stating that there can be "changing
conceptions of the scope and functions of government."2
There is, indeed, only one permanent and defined function of
government: "A government is the means of placing the
retaliatory use of physical force under objective control---i.e., under objectively
defined laws." [Rand at 109] Force is understood to be any
intrusion upon a man's rights. Protecting man's rights through
an objective system for punishing wrongs and resolving disputes
is exhaustive of the powers allowable to any government in a
free society. This concept of government is embraced by our Founding
and should guide our decision making. Rand states:
"The Declaration of Independence laid down the principle
that 'to secure these
rights, governments are instituted among
men.' This provided the only valid
justification of a government
and defined its only proper purpose: to protect
by protecting him from physical violence." [Rand at 95]
The taking of property through eminent domain can, therefore,
only be justified if it is found to be an exercise of force in
response to a wrong or to protect the rights of individuals.
private property to put it to "public use" is
not within the scope of this power. Exercising eminent domain
means exercising force against man's rights in property, but
the end of government is to limit the use of force. Force is
only justified to combat force. "[G]overnment . . . may
use force only in retaliation and
only against those who initiate its use." [Rand at 95] It
follows that government may exercise the force of seizing
property only to proportionately retaliate against another who
has first initiated force.
When a landowner uses his land in a noxious manner so as to
invade the rights of his neighbors, the government is justified,
through, e.g., the tort system, in forcing that owner to compensate
those he has violated. In that case, the judgment against the
owner is merely a retaliation for the force first exerted by
the owner---that is, in defense of a prior wrong. In this case,
there is no showing that the owners of the Raiders have violated
or intruded upon the rights of any individual.
relocation may have an economic impact on the citizens of Oakland,
cannot be defined as the initiation of a punishable
wrong for two reasons: First, the government lacks the power
to preempt individual action on speculation that it may impact
someone's rights in the future. It may only punish actual wrongs
after they have been committed, relying on the deterrent effect
of such punishment to persuasively prevent the commission of
wrongs. Second, the economic impact of relocation is not a deprivation
of any right held by the citizens of Oakland. They are not entitled
to benefit from the use of another's property. If the state grants
the citizens such an entitlement, it is violating a fundamental
principle of freedom. Rand states that, "If some men are
entitled by right to the products of the work of others, it means
that those others are deprived of rights and condemned to slave
labor." [Rand at 96]
of Oakland is not asking for the power to retaliate against
any wrong; instead it is asking to
1996 Page 6
monopoly on power to gain an unearned benefit for itself. For
this reason, eminent domain cannot be an attribute
sovereign in a free society. It is beyond the scope and nature
of government for an authority to have such a power.
domain is not only outside the scope of legitimate government
action, it also is a violation upon those rights
of man that
government has both an obligation to protect and refrain
from intruding upon. Our judicial power must be guided by
of individual rights. As Rand states, "The United
States held that man's life is his by right (which means:
principle and by his nature), that a right is the property
of an individual, that society as such has no rights, and
that the only moral purpose of a
government is the protection of individual rights." [Rand at 93] When man consents to be governed, he surrenders
only his right to physical self-defense, and no others.
in property cannot be overridden by a government's desire to
in the name of the public. In fact,
there is no real concept of "the public", for society
is only a collection of individuals. [Rand at 92] Individuals
must be the focal point of every analysis of a governmental action,
for the Bill of Rights is "an explicit declaration that
individual rights supersede any public or social power." [Rand
Ayn Rand defines the nature of property rights as a corollary
to the fundamental right to life:
"The right to life is the source of all rights---and the
right to property is their
only implementation. Without property
rights, no other rights are possible.
Since man has to sustain
his life by his own effort, the man who has no right
to the product
of his effort has no means to sustain his life. The man who
while others dispose of his product, is a slave. Bear in mind
right to property is a right to action, like all the
others: it is not the right to an
object, but to the action and
the consequences of producing or earning that
object. It is not
a guarantee that a man will earn any property, but only a guarantee
that he will own it if he earns it. It is the right to gain,
to keep, to use and to
dispose of material values." [Emphasis
added; Rand at 94]
Property rights are inherent in man's nature. Eminent domain,
however, presumes that property rights are merely objects conferred,
and revocable, by the state. Given that this notion is contradictory
to the premise that an individual may keep that which is his
own, it cannot be sustained by this court.
the Raiders must be allowed to dispose of, or transfer, their
in property. Rand explains that, "A private
individual may do anything except that which is legally forbidden;
a government official may do nothing except that which is legally
permitted. " [Rand at 109-110] Given that property is connected
with the individual, the rights to that property must retain
mobility. Hence, the Raiders are not forbidden from relocating
the team to Los Angeles, for it is merely carrying its property
with its person from one location to another.
the government's function is to secure man's r
ights, any action it takes to disturb the sanctity of property
rights cannot withstand judicial scrutiny. When the sovereign
retains a power to seize property at any moment, man lacks the
security and stability in his rights necessary to productively
exist. "Man has to project his goals and achieve them across
a span of time; he has to calculate his actions and plan his
life long-range." [Rand at 111] If the government instead
contributes to the insecurity of those rights, the ability to
plan one's life and the incentives to engage in productive behavior
disappear. One cannot, under such a system, be confident that
his efforts will be worthwhile.
is that eminent domain is criminal behavior masked behind the
power of the state. A government conducts unprovoked
thievery when it chooses to punish a landowner by seizing his
property in a non-retaliatory action. Even if the government
compensates the owner for a taking, it is still exercising illegitimate
theft. A private individual cannot enter your home and steal
a prized painting and go unpunished
1996 Page 7
because he left behind the value of the painting in cash. This
is no less theft than had the burglar taken the
without leaving behind "compensation." Government cannot
be seen as fulfilling its duty to protect men from criminals
when it acts as a criminal itself.
we assume that eminent domain could be exercised as a proper
power held by the government, the extension
power to the facts of this case cannot be justified. My
brother, Chief Justice Bird, is correct when he states that "the
potential for abuse of such a great power is boundless," and
when he describes the majority's decision as an "unprecedented
application of eminent domain law."3 Yet, somehow, he
fails to invalidate what he calls an "aspect of creeping
have moved us to accept, though wrongfully, the power of eminent
domain over real property. The majority reads
the California statute as extending that power to intangible
property rights, such as those interests in a professional football
team. Such an extension allows the state to seize the property
interests individuals have in all of their rights. James Madison
recognized this threat when he wrote, "[A]s a man is said
to have a right to his property, he may be equally said to have
a property in his rights. Where an excess of power
prevails, property of no sort is duly respected. No man is
safe in his opinions, his person, his faculties, or his possessions." [James
Madison, 14 THE PAPERS OF JAME MADISON 266 (Rutland ed., 1983)
(from an essay entitled "Property" published March
27, 1792 in The National Gazette)] I fear that the precedent
set by today's majority threatens the sanctity of every aspect
of man's freedom. At the very least, our prior decisions upholding
eminent domain over real property must not be extended to intangible
the statutory interpretation is reasonable, the statute itself
upheld. "Since the protection of individual
rights is the only proper purpose of a government, it is the
only proper subject of legislation: all laws must be based on
individual rights and aimed at their protection." [Rand
at 110] This law seeks not to protect but to defeat property
rights, and thus, is invalid.
Because eminent domain itself is invalid, it is unnecessary
to discuss whether the operation of a football franchise constitutes
a public use. A brief discussion of this, however, may be appropriate.
If, under our current law, a public use can include the ownership
of an enterprise like a football franchise, the state's powers
increase dramatically. If we hold that part of the city's function
is to seize and run private businesses, we have upheld the state
control of industry. Such a concept is both in excess of the
government's legitimate authority and contrary to capitalism.
of Oakland's actions are also violative of the right to contract.
The Raiders persuasively argue that the City's
actions infringe upon a network of contracts, affecting
many individuals outside of the City's jurisdiction. More important
than the jurisdictional question, however, is the need
refrain from infringing the freedom of contract. Protection
right is a necessary condition for capitalism; and capitalism
is the only system that can support a free society.4 [Rand
at 92] It is for this reason that the U.S. Constitution
codifies that protection by stating that, "No State shall . . .
pass any . . . Law impairing the Obligation of Contracts." [U.S.
Const., Article I, Sec. 1 0(l)] The protection of these voluntary
relations is necessary both to protect the rights of man and
to ensure the productivity necessary for a self-sustaining
illustrated the duty to constrain the powers of
government when she wrote:
A complex legal system, based on objectively valid principles,
is required to make
a society free and to keep it free---a
system that does not depend on the
the moral character or the
1996 Page 8
of any given official, a system that leaves no opportunity,
loophole for the development of tyranny.
[Rand at 114]
the government from exercising eminent domain is necessary
to close up a loophole
that has allowed itself to invade
our system of governance. When this "power" is eliminated,
the opportunity for tyranny will be dealt a much needed blow.
struggles to find authority to invalidate this exercise of
and finds none. It asks, "[I]f
the city fathers of Oakland in their collective wisdom elect
to seek the ownership of a professional football franchise are
we to say them nay? And, if so, on what legal ground?"5
The answer is clear. Fundamental principles of government and
man's rights. I cannot, with good conscience, uphold a power
that runs contrary to these principles.
domain is outside of those limited powers in the nature of
It exercises force without combating force, violates
the rights of those who have not violated another's rights, and
infringes upon the freedom of contract necessary to sustain a
free society. "A government is the most dangerous threat
to man's rights: it holds a legal monopoly on the use of physical
force against legally disarmed victims. When unlimited and unrestricted
by individual rights, a government is men's deadliest enemy." [Rand
at 98] It is our duty to protect men from the expansion of government.
This duty can only be fulfilled by holding invalid the City's
power of eminent domain. For these reasons, I would affirm the
grant of summary judgment in favor of the Oakland Raiders.
1. City of Oakland v. Oakland Raiders, 32 Cal.3d 60, 64, 183 Cal.Rptr.
673, 676, 646 P.2d 835, 837-8 (1982).
2. 32 Cal.3d
60, 72; 183 Cal.Rptr. 673, 680; 646 P.2d 835, 842.
32 Cal.3d 60, 76; 183 Cal.Rptr. 673, 683; 646 P.2d 835, 845.
states, at 92: "If one wishes to advocate a free
society---that is, capitalism---one must realize that its
indispensable foundation is the principle of individual
rights. If one wishes to uphold individual rights, one
that capitalism is the only system
that can uphold
and protect them."
5. 32 Cal.3d
60, 73; 183 Cal.Rptr. 673, 681; 646 P.2d 835, 843.
Copyright © 1996
The Association for Objective Law. All rights reserved. The
Association for Objective Law is a Missouri
non-profit corporation whose purpose is to advance Objectivism,
the philosophy of Ayn Rand, as the basis of a proper legal system.