Landmark Supreme Court Case: Pennsylvania Coal Co. v. Mahon (1922)
Pennsylvania Coal Co. v. Mahon (1922) is the 45th landmark Supreme Court case, the nineteenth in the Economics module, featured in the KTB Prep American Government and Civics Series designed to acquaint users with the origins, concepts, organizations, and policies of the United States government and political system. The goal is greater familiarization with the rights and obligations of citizenship at the local, state, national, and global levels and the history of our nation as a democracy. While there is overlap, these landmark cases are separated into cases addressing:
- Foreign Policy
- Science & Technology
- Public Safety
- Death Penalty
- Speech, Press, and Protest
- Criminal Justice
- Politics, Society, Freedom, and Equality
The Supreme Court
The Supreme Court is the highest court in the United States. Article III of the U.S. Constitution created the Supreme Court and authorized Congress to pass laws establishing a system of lower courts. The Constitution elaborated neither the exact powers and prerogatives of the Supreme Court nor the organization of the Judicial Branch as a whole. Thus, it has been left to Congress and to the Justices of the Court through their decisions to develop the Federal Judiciary and a body of Federal law.
The number of Justices on the Supreme Court changed six times before settling at the present total of nine in 1869. Since the formation of the Court in 1790, there have been only 17 Chief Justices* and 102 Associate Justices, with Justices serving for an average of 16 years. On average a new Justice joins the Court almost every two years.
The Supreme Court of the United States hears about 100 to 150 appeals of the more than 7,000 cases it is asked to review every year. That means the decisions made by the 12 Circuit Courts of Appeals across the country and the Federal Circuit Court are the last word in thousands of cases.
Court of Appeals
In the federal court system’s present form, 94 district level trial courts and 13 courts of appeals sit below the Supreme Court. The 94 federal judicial districts are organized into 12 regional circuits, each of which has a court of appeals. The appellate court’s task is to determine whether or not the law was applied correctly in the trial court. Appeals courts consist of three judges and do not use a jury.
The appellate courts do not retry cases or hear new evidence. They do not hear witnesses testify. There is no jury. Appellate courts review the procedures and the decisions in the trial court to make sure that the proceedings were fair and that the proper law was applied correctly.
A court of appeals hears challenges to district court decisions from courts located within its circuit, as well as appeals from decisions of federal administrative agencies. In addition, the Court of Appeals for the Federal Circuit has nationwide jurisdiction to hear appeals in specialized cases, such as those involving patent laws, and cases decided by the U.S. Court of International Trade and the U.S. Court of Federal Claims.
The nation’s 94 trial courts are called U.S. District Courts. At a trial in a U.S. District Court, witnesses give testimony and a judge or jury decides who is guilty or not guilty — or who is liable or not liable. District courts resolve disputes by determining the facts and applying legal principles to decide who is right.
Trial courts include the district judge who tries the case and a jury that decides the case. Magistrate judges assist district judges in preparing cases for trial. They may also conduct trials in misdemeanor cases.
There is at least one district court in each state, and the District of Columbia. Each district includes a U.S. bankruptcy court as a unit of the district court.
Federal courts have exclusive jurisdiction over bankruptcy cases involving personal, business, or farm bankruptcy. This means a bankruptcy case cannot be filed in state court. Bankruptcy Appellate Panels (BAPs) are 3-judge panels authorized to hear appeals of bankruptcy court decisions. These panels are a unit of the federal courts of appeals, and must be established by that circuit. Five circuits have established panels: First Circuit, Sixth Circuit, Eighth Circuit, Ninth Circuit, and Tenth Circuit.
Pennsylvania Coal Co. v. Mahon (1922)
Pennsylvania Coal Facts:
In an 1878 deed, the Pennsylvania Coal Co. granted to H.J. Mahon the surface rights to a parcel of land, but retained the mining rights to the land, and Mahon accepted any risk from, and waived all claim for damages resulting from, mining below the property. In 1921 the Commonwealth of Pennsylvania passed the Kohler Act, which prohibited the mining of anthracite coal in such way as to cause the subsidence of, among other things, any structure used as a human habitation.
Prior Pennsylvania law had recognized that such pillars of coal necessary to support the land surface were an estate in land (a “support estate”), separate from the rights in removable coal. Pennsylvania Coal provided notice to Mahon that it planned to mine for coal under the Mahon’s habitation and Mahon brought suit to prevent Pennsylvania Coal from mining under his land pursuant to the Kohler Act.
The court denied his suit but the Supreme Court of Pennsylvania reversed and allowed the ban on mining. Pennsylvania Coal contended that the Takings Clause of the Fifth Amendment protected its contractual rights to the coal.
Q: Did the Kohler Act restrict coal mining to an extent that violated the Takings Clause of the Fifth Amendment by depriving mine owners of coal without compensation?
A: Yes. The Kohler Act violated the Takings Clause of the Fifth Amendment.
Pennsylvania Coal Conclusion
8-1 decision ruling whether a regulatory act constitutes a taking requiring compensation depends on the extent of diminution in the value of the property. The decision started the doctrine of regulatory taking.
The Kohler Act as applied to the property in question constitutes an exercise of eminent domain, requiring compensation. The damage done by the activity prohibited by the act is a private, not a public nuisance; there is no public safety justification for the statute, as notice before mining would suffice to protect public safety. On the other hand, the damage done by the statute is significant, insofar as it abolishes an estate in land and a binding contract.
The Kohler act in general constitutes an exercise of eminent domain. The statute, in general, purports to extinguish the mining rights to valuable properties under surfaces owned by the public and the government. The statute makes prohibitively expensive the mining of coal in these areas, and thereby effectively destroys the right, after all owning coal is not worth anything if the coal cannot be mined.
The state exceeded its police powers by significantly diminishing the value of the land estates without having a strong public interest reason to do so. The Court reasoned that “so far as private persons or communities have seen fit to take the risk of acquiring only surface rights, we cannot see that the fact that their risk has become a danger warrants the giving to them greater rights than they bought.”
Pennsylvania Coal also established the diminution-of-value test, in contrast to other tests, such as the permanent physical occupations test of Loretto v. Teleprompter Manhattan CATV Corp. (1982), and the total takings test of Lucas v. South Carolina Coastal Council (1992). Additionally, the case was one of the first to address the denominator problem with regard to regulatory taking. Today, the Supreme Court quotes Pennsylvania Coal for the recognition of the invalidity of a government regulation that so severely burdens private property that it constitutes a taking under the Fifth Amendment.
Next Economics Case: Bailey v. Drexel Furniture Co. (1922)
Previous Economics Case: Hammer v. Dagenhart (1918)
Previous Case: Abrams v. U.S. (1919)