Request By:
Mr. Buckner Hinkle, President
Hinkle Contracting Corporation
Post Office Box 200
Paris, Kentucky 40361
Opinion
Opinion By: Steven L. Beshear, Attorney General; By: Nancy M. Collins, Assistant Attorney General
This is in response to your question concerning the constitutionality of an excerpt from "Legal Questions Concerning Purchasing Real Estate in the United States," published August, 1979, by the German American Chamber of Commerce, Inc. This excerpt purports to state the Kentucky law concerning the ownership of land in Kentucky by persons not citizens of the United States.
The statutes in question, KRS 381.290-381.340, are as follows:
KRS 381.290.
"After declaring his intention to become a citizen of the United States, according to the forms required by law, any alien, not an enemy, may recover, inherit, hold, and pass by descent, devise or otherwise, any interest in real or personal property, in the same manner as if he were a citizen of this state."
KRS 381.300.
"(1) Except as otherwise provided in this chapter, the real estate of an alien may be escheated to the state at any time after the expiration of eight years after the time he acquires title thereto.
"(2) Any alien who has purchased, or contracted to purchase, any real estate, or who holds or has title thereto, and who becomes a citizen of the United States before the property is escheated, and any purchaser, lessee, heir, or devisee, from him, if a citizen of the United States, who becomes the owner thereof by purchase or inheritance before the property is escheated, shall take and hold the property free and released from any right or claim of the state by reason of such person's having been an alien. "
KRS 381.310.
"Any person whose spouse is a citizen of the United States, and any person whose father or mother, at the time of his birth, was a citizen thereof, although born out of the United States, may take and hold real or personal estate by devise, purchase, descent, or distribution."
KRS 381.320.
"Any alien, not an enemy, may take and hold any personal property except chattels real. If such alien resides within this state he may take and hold any lands for the purposes of residence, or of occupation by him or his servants, or for the purpose of any business, trade, or manufacture, for a term not exceeding twenty-one years. An alien so taking and holding shall have like rights, remedies and exemptions concerning such property as if he were a citizen of the United States."
KRS 381.330.
"If real estate passes to a nonresident alien by descent or devise, such property may be held and alienated by such nonresident alien for eight years after the final settlement of the decedent's estate from which it was acquired. If such heir or devisee is a minor, the real estate may be held for his benefit by a guardian or curator, and may be sold by proper proceeding had in conformity with the laws regulating sales of infant's real estate, if commenced within such eight years."
KRS 381.340.
"If a nonresident alien obtains possession of real estate by descent or devise, and dies before the expiration of the period limiting his right of enjoyment or sale, the right thus acquired shall pass by descent or devise. If such heir or devisee is a nonresident alien, the property of the deceased nonresident alien shall be held or disposed of within the period applicable to such alien as provided in KRS 381.290 to 381.330."
While the decision on the constitutionality of a statute must ultimately be determined by a court of law, we are of the opinion that KRS 381.290-381.340 are constitutional.
At common law, an alien could take land by act of party (purchase) but not by act of law (descent) .
Hunt v. Warnicke's Heirs, 3 Ky. 66, Hardin 71 (1806);
White v. White, 59 Ky. 185, 2 Metc. 185 (1859). Land so purchased could be held until the alien was divested of title by inquest of office. In February, 1874, the Kentucky General Assembly enacted a statute which provided that "an alien shall have the same right to recover, inherit, hold and pass by descent, devise or otherwise, real or personal property in this state that is given to the citizens of Kentucky by the laws of the government of which such alien is or was a citizen or subject."
Commonwealth v. Newcomb, 109 Ky. 18, 58 S.W. 445 (1900). This statute was held constitutional by the former Court of Appeals of Kentucky. Id.
In 1892, the previously cited statute was superseded by KS 334-339, essentially the same as KRS 381.290-381.340. These statutes were frequently utilized to prevent aliens from holding land obtained by devise. See, e.g.,
Ripley v. Von Zedtwitz, 201 Ky. 513, 256 S.W. 1106 (1924). In
Commonwealth v. Von Zedtwitz, 215 Ky. 413, 285 S.W. 224 (1926), certiorari denied 273 U.S. 735, 47 S. Ct. 243, 71 L. Ed. 866, the former Court of Appeals determined that the Commonwealth had the power to escheat alien lands held by the Alien Property Custodian pursuant to the Trading with the Enemy
Act. Finally, in Commonwealth v. Tamer, 293 Ky. 357, 169 S.W.2d 19 (1943), the former Court of Appeals of Kentucky held that a county board of education may institute suit through the Attorney General to escheat an alien's land for the use and benefit of the schools of that district. None of the aforementioned cases squarely addressed the constitutionality of the statutes in question.
In
Terrace v. Thompson, 263 U.S. 197, 44 S. Ct. 15, 68 L. Ed. 255 (1923), the United States Supreme Court addressed the constitutionality of a provision of the Washington state constitution which precluded the ownership of land by an alien unless such alien had declared his intention to become a citizen of the United States. The Court held that, absent a treaty provision to the contrary, each state may enact laws prohibiting aliens from owning land within its borders. This was within the police power of the state in that "the quality and allegiance of those who own, occupy, and use the farm lands within its borders are matters of highest importance, and affect the safety and power of the state itself." 263 U.S. at 221. Such legislation comports with constitutional guarantees if it applies
"alike and equally to all aliens, withholding from them the right to own land, [it] cannot be said to be capricious or to amount to an arbitrary deprivation of liberty or property or to transgress the due process clause.
* * *
"[The equal protection clause] does not forbid every distinction in the law of a state between citizens and aliens resident therein." 263 U.S. at 218.
See also
Porterfield v. Webb, 263 U.S. 225, 44 S. Ct. 21, 68 L. Ed. 278 (1923);
Webb v. O'Brien, 263 U.S. 313, 44 S. Ct. 112, 68 L. Ed. 318 (1923). A state may also constitutionally forbid indirect ownership of agricultural land, as by a corporation where the majority of stockholders are aliens.
Frick v. Webb, 263 U.S. 326, 44 S. Ct. 115, 68 L. Ed. 323 (1923). While we recognize that the foregoing cases were decided long ago, a similar decision would likely be reached at the present time. See
Foley v. Connelie, 435 U.S. 291, 98 S. Ct. 1067, 55 L. Ed. 2d 287 (1978).
In Kentucky, escheat provisions similar to those found in KRS 381.290-381.340 have been upheld as constitutional as long as the state provides the property owner an opportunity to be heard.
Louisville School Board v. King, 127 Ky. 824. 107 S.W. 247 (1908);
Anderson National Bank v. Reeves, 294 Ky. 674, 172 S.W.2d 575 (1943), affirmed
Anderson National Bank v. Luckett, 321 U.S. 233, 64 S. Ct. 599, 88 L. Ed. 692. Similarly, the statutes in question provide the alien an opportunity to be heard via the escheat proceedings.
The enclosed excerpt from "Legal Questions Concerning Purchasing Real Estate in the United States" additionally addresses the ownership of land by companies, stating that there are "some restrictions." This is incorrect if the company is incorporated in the United States. See OAG 79-163, a copy of which is enclosed. Real property owned by a company incorporated in the United States, the shares of which are owned partially or wholly by aliens, is not subject to the escheat provisions in KRS 381.290-381.340 and may be indefinitely held by the corporation. In this situation, the alien does not own real property but owns personal property (stock) as permitted by KRS 381.320.
Finally, the enclosed excerpt is misleading insofar as it states that the escheated property is auctioned by the state with the state retaining the proceeds therefrom. The Attorney General, upon request by a local board of education, may institute the escheat proceedings. The proceeds from the sale of the land are applied for the use and benefit of the public schools in the district in which the property is located. KRS 162.040;
Commonwealth v. Tamer, supra.
In summary, KRS 381.290 through KRS 381.340 are constitutional unless contrary to treaty with the government of which such alien is a citizen or subject.