Anoka County v. City of St. Paul
| Decision Date | 07 June 1935 |
| Docket Number | No. 30200.,No. 30210.,No. 30206.,No. 30202.,No. 30203.,No. 30207.,No. 30205.,No. 30211.,No. 30201.,No. 30208.,No. 30198.,No. 30209.,No. 30204.,No. 30199.,30198.,30199.,30200.,30201.,30202.,30203.,30204.,30205.,30206.,30207.,30208.,30209.,30210.,30211. |
| Citation | 261 N.W. 588,194 Minn. 554 |
| Parties | ANOKA COUNTY v. CITY OF ST. PAUL et al. |
| Court | Minnesota Supreme Court |
Appeal from District Court, Anoka County; Arthur E. Giddings, Judge.
Proceeding by Anoka County against the City of St. Paul and others. From the judgment, Anoka County, the City of St. Paul, and others appeal.
Affirmed.
Leeds H. Cutter, Co. Atty., of Anoka, and Hallam & Hendricks, of St. Paul, for appellant Anoka County.
John L. Connolly, Louis P. Sheahan, and Lewis L. Anderson, all of St. Paul, for appellant City of St. Paul.
This is a proceeding to enforce payment of delinquent taxes for the year 1926. The city of St. Paul, Minn. (hereinafter called the city), is located entirely in Ramsey county. Many years prior to 1926, the city purchased some 1,525.61 acres of land situated in Anoka county, Minn. On this land the city built and constructed a municipal waterworks for the purpose of supplying water to its inhabitants and building and maintaining sewers, extinguishing fires, cleaning and sprinkling streets, etc. The city also supplied water from this municipal waterworks to the cities of West St. Paul and South St. Paul, Minn. Both of these cities were and are separate municipalities not included within the limits of St. Paul.
The land in question contained several lakes and artesian wells and was used largely as a catchment basin. In the year 1926, approximately 1,488.32 acres thereof were used for impounding waters, 12.67 acres for station grounds, and 24.62 acres for conduits and canals. In 1926, 352.99 acres were, and for many years prior thereto had been, leased by the city to various private parties who used such for agricultural purposes. On this leased portion of the land the city had paid taxes regularly until the year 1926.
Prior to December 1, 1924, the city erected at Fridley, Minn., another waterworks. This second plant is entirely apart from the one aforementioned. By means of this second plant, the city thereafter derived its water supply from the Mississippi river. Consequently the original plant has not been actively operated since some time prior to 1926, though it is still maintained and has never been abandoned. The finding is to the effect that this is now a reserve plant held in readiness but not used.
Article 9, section 1, of the Minnesota Constitution exempts from taxation "public property used exclusively for any public purpose." Mason's Minn. St. 1927, § 1975 (7), enacted pursuant to this constitutional provision, exempts from taxation "all public property exclusively used for any public purpose." Under these provisions the city contends that the entire 1,525.61 acres of property situated in Anoka county is exempt from taxation. The county of Anoka contends that none of such property is exempt. The court found that the 352.99 acres of land owned by the city but leased to private parties for agricultural purposes was not exempt from taxation; that the remaining 1,172.62 acres was public property used exclusively for a public purpose and so was exempt from taxation; and that the sale of water from the waterworks on this land to the cities of South St. Paul and West St. Paul was quite incidental to the operation of the entire municipal waterworks and of no controlling importance to a determination of the issue in the case. The county of Anoka appealed from the entire judgment entered pursuant to these findings and the city appealed from that part of the judgment providing for enforcement and collection of taxes against the 352.99 acres of the land owned by the city but leased to private parties.
Four questions are presented: (1) Did the court err in concluding that the 352.99 acres owned by the city and leased to private parties for agricultural purposes was not exempt from taxation? (2) Did the court err in holding that the remaining 1,172.62 acres owned by the city and used as a part of the waterworks was exempt from taxation? (3) Is it material to a decision of these issues that the city sold water from this municipal waterworks to the cities of South St. Paul, West St. Paul, and other consumers outside the city and derived a revenue therefrom? (4) Is the decision of these questions in any way affected by the fact that the waterworks located on the land in question was not in active operation in 1926 and has not been in active operation since that time?
1. We think the court was correct in its holding that the 352.99 acres of land owned by the city but leased to private parties for agricultural purposes was subject to taxation. The entire 1,525.61 acres of property here involved is "public property." That fact does not admit of doubt. Any property owned by the state or by any of its subdivisions, such as counties, municipalities, etc., is "public property" within article 9, section 1, of the Minnesota Constitution. The fact that property may be "public property" even though not owned by the state or one of its subdivisions (see State v. Cooley, 62 Minn. 183, 186, 64 N. W. 379, 29 L. R. A. 777; State v. Browning, 192 Minn. 25, 28, 255 N. W. 254) is of no concern here. Whatever else may be "public property" within article 9, section 1, of the Minnesota Constitution, no one questions but that the property here involved which is owned by the city of St. Paul is "public property."
But the Constitution exempts from taxation "public property" only when "used exclusively for any public purpose." Consequently the determinative consideration here is the use to which the city put this acreage which it owns in Anoka county. If the city used and is using this land for a nonpublic purpose, then the land is not tax exempt. If, on the other hand, the city is using this land in its capacity as an agency of government for a public purpose, then it is tax exempt. It cannot be said that the city is acting in its governmental capacity when it purchases land and leases the same to private parties for a stipulated rental. Though the city has an undisputed right to do this, in so doing it acts in its proprietary capacity. The city was not incorporated for the purpose of engaging in the business of leasing farm land. This activity is completely divorced from any governmental activity. Consequently, when the city bought 352.99 acres of land in Anoka county and leased the same to private parties, it was not using the land for a "public purpose" within article 9, section 1, of the Constitution. It is no answer to the conclusion here reached to point out that the revenue derived from the rental of this land accrued to the city and was used by it to help defray the cost of operating the waterworks. The actual use to which these acres of land were devoted was not a public or governmental one. Consequently, it is immaterial what the city did with, or how it used, the rent money. Of note here are the cases of State v. Bishop Seabury Mission, 90 Minn. 92, 95 N. W. 882; State v. St. Barnabas Hospital, 95 Minn. 489, 104 N. W. 551; State v. Carleton College, 154 Minn. 280, 191 N. W. 400, wherein it was held that real property owned by an institution entitled to exemption was subject to taxation even though the income derived from such property went into the fund to support the tax exempt institution.
What the result might have been in this case had the city shown a necessity for owning and controlling these leased acres in order to maintain a suitable catchment basin we do not decide. There is nothing in the record indicating that it was necessary for the city to own and control the flow of water upon these lands in order to maintain a suitable catchment basin. The burden of establishing such fact as might have entitled the city to an exemption on this portion of the land rested on the city. It did not meet this burden.
2. In our opinion the court properly held that the remaining 1,172.62 acres of Anoka county property was exempt from taxation. It is contended first that this land owned by the city and located in Anoka county is not "used exclusively for any public purpose," but is used by the city in its proprietary capacity and not for a public use. We cannot follow this reasoning. The city of St. Paul was authorized by acts of the state Legislature to establish and maintain a municipal waterworks. Special Laws 1881, c. 188; Special Laws 1883, c. 75; Special Laws 1885, c. 110; Special Laws 1889, c. 123; Special Laws 1891, c. 9. By virtue of these and other acts the city was authorized to establish a suitable waterworks in a proper location. We have no difficulty in holding that the city is and was engaged in a municipal or governmental undertaking in so doing. In our opinion the city is engaged in its governmental capacity when it manages or operates any public utility such as a waterworks, an electric power plant, a sewage disposal plant, etc., where the entire citizenry benefits thereby and the health and welfare of the community make such action expedient or necessary. In a previous decision this court has referred to the board of water commissioners of St. Paul, the board engaged in managing the waterworks involved in the case at bar. State ex rel. Feist v. Foot, 151 Minn. 130, at page 132, 186 N. W. 230. The court said:
No intelligent person would question the fact that the inhabitants of a city as large as St. Paul must be continuously supplied with pure water. The city, when it undertakes to do this, acts in its governmental capacity, not in its proprietary capacity. Hence it follows that as much of the land in question as is necessary for the maintenance and operation of the waterworks is property used...
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