Savvy New Yorkers will mark the decison of Michigan’s Supreme Court to strike a blow for property rights on Friday. The Wolverine wise men overturned their own landmark 1981 decision in Poletown Neighborhood Council v. City of Detroit. That decision allowed the Detroit Economic Development Corporation to condemn and bulldoze an entire town — including more than 1,600 homes, businesses, and churches — to give the land to General Motors to build an auto plant. The rationale was that the General Motors plant, by providing jobs and economic development, was such a benefit to the public that it justified the use of the city’s eminent domain powers.

Poletown was the country’s first major decision that said a government could seize property and transfer it to private businesses. State courts around the country cited the precedent to support the use of eminent domain for “economic development” purposes. In doing so, the courts sacrificed individual rights for the sake of business interests. An April 2003 study called “Public Power, Private Gain,”authored by attorney Dana Berliner of the Institute for Justice, found that between 1998 and 2002 more than 10,000 properties were condemned or threatened with condemnation for some private business purpose.

Among the examples Ms. Berliner found was a middle-class black neighborhood in Atlantic City that was destroyed in order to build a tunnel to a casino. Four elderly siblings in Bristol, Conn., were evicted from their home of 60 years to make way for a new industrial park.

“New York is perhaps the worst state in the country for eminent domain abuse,” Ms. Berliner wrote. “Just in the past five years, it has condemned small businesses for the New York Stock Exchange, The New York Times, Costco, and Stop & Shop. New York cities also have condemned the future home of an inner-city church for commercial development and forced the closure of a family furniture-making business in favor of a Home Depot.” Between 1998 and 2002,at least 14 private use projects in New York state shut down at least 57 businesses.

The problem with the Poletown rationale is that the Michigan constitution — just like the New York Constitution and the United States Constitution — permits governments to take property only for a “public use,” such as a highway or a prison, not for the private benefit of a business enterprise. That’s the commonsense understanding of “public use” that the Michigan Supreme Court reclaimed last week with a unanimous decision in County of Wayne v. Hathcock. The court called Poletown “a radical departure from fundamental constitutional principles.”

It’s true that in the ruling just issued, the court’s jurisdiction is limited to the state of Michigan. But it’s hard to understate the symbolic importance of the Hathcock decision. The case will send “shockwaves throughout the law and throughout the country,” Ms. Berliner, who coauthored an amicus brief in the case, told us.

Poletown has not only served as a precedent for other state courts. It has also become a staple of every legal education and appears in every textbook on property law. Now that it’s no longer good law, courts across the country will have to think twice when a government wants to seize someone’s home to give to someone else who the politicians think will be more economically productive or who is really just politically better-connected.