Redevelopment Agency v. Gilmore ( 1985 )

MOSK, J.

I concur.

The majority abandon the statutory rate of interest in eminent domain taking, on a theory that the constitutional requirement of just compensation necessarily demands an interest rate higher than that arbitrarily established by law. I agree that the majority reach the proper result in today’s inflationary economy.

Inflation, however is not an immutable fact of life. Economists tell us money and its value are subject to cyclical swings. As John Kenneth Galbraith wrote, “nothing, not even inflation, is permanent.” (Galbraith, Money (1975) p. 3.)

If the statutory rate of interest does not apply when the market rate is higher, does it apply when the market rate dips below the figure prescribed by law? The majority, in footnote 13, deliberately sidestep that issue. Since we are declaring a new rule, I believe we have a duty to discuss its general applicability.

A condemnee is entitled to just compensation. (Cal. Const., art. I, § 19.) That means not less than the current market value of money. It also means not more. Indeed, to assess more than just compensation runs the risk of violating the prohibition against making a gift of public funds. (Art. XVI, §6.)

Until recent United States Supreme Court decisions discussed in the majority opinion, it was assumed that the legal rate of interest was necessarily just compensation. Now that we are holding the statutory rate is no longer a valid determinant of the value of money, the rule that trial courts must ascertain the actual market value of money applies whether the current interest rate is higher or lower than the statutory figure. In other words, interest travels on a two-way street. Just as the value of the property to be condemned rises or falls in accordance with current economic conditions, so must the rate of interest to which the property owner is entitled.

With that understanding, I concur in the majority opinion.

Bird, C. J., and Agliano, J.,^* concurred.

* Assigned by the Chairperson of the Judicial Council.