Brooks Inv. Co. v. City of Bloomington

• Decision Date: 05 September 1975
• Docket Number: No. 45321,45321
• Citation: 232 N.W.2d 911,305 Minn. 305
• Parties: BROOKS INVESTMENT COMPANY, et al., Respondents, v. CITY OF BLOOMINGTON, Defendant and Third-Party Plaintiff, Appellant, v. Lester L. BERGLUND and Patricia J. Berglund, Husband and Wife, et al., Third-Party Defendants.
• Court: Minnesota Supreme Court

Page 911

232 N.W.2d 911

305 Minn. 305

BROOKS INVESTMENT COMPANY, et al., Respondents, v. CITY OF BLOOMINGTON, Defendant and Third-Party Plaintiff, Appellant, v. Lester L. BERGLUND and Patricia J. Berglund, Husband and Wife, et al., Third-Party Defendants.

No. 45321.

Supreme Court of Minnesota.

Sept. 5, 1975.

Syllabus by the Court

Where a city, acting without an easement or other legal right, constructs a street across a parcel of land which is thereafter sold by its original owner to another person before formal condemnation proceedings are commenced by the city, the original owner, and not his vendee, is entitled to the condemnation award.

Gary Gandrud, City Atty., Cynthia Hovden Albright and Eric R. Berg, Asst. City Attys., Bloomington, for City of Bloomington.

Dorsey, Marquart, Windhorst, West & Halladay and David A. Ranheim and Peter Hendrixson, Minneapolis, for respondents.

Heard before PETERSON, TODD, and KNUTSON, JJ., and considered and decided by the court en banc.

KNUTSON, Justice. ^*

This is an appeal by the city of Bloomington (hereafter referred to as the city) from a summary judgment entered in Hennepin County District Court in favor of Brooks Investmet Company.

Brooks Investment Company, a partnership composed of Harry Brooks, Dora Brooks, and Sheldon Brooks, (hereafter referred to as Brooks) commenced this action seeking to recover compensation for property taken by the city for street purposes. The city joined Lester L. Berglund, Patricia J. Berglund, William T. Kenney, and Dorothy K. Kenney (hereafter collectively referred to as Berglund) as third-party defendants, apparently seeking to recover from Berglund the amount it had paid to them in the event it was required to pay Brooks. By agreement of counsel, the third-party action against Berglund by the city was separated pursuant to Rule 42.02, Rules of Civil Procedure, for trial after disposition of the case now before us. Thus, the only claim involved in this appeal is that of Brooks against the city.

There is little serious dispute between the parties as to the facts. In approximately 1965, Berglund purchased for the sum of $12,000 property located in the city and legally described as follows:

'Lots 1 and 2 except the North 125 feet of the East 100 feet of Lot 1, Sabin Lyndale Garden Lots, according to the map or plat thereof on file or of record in the Office of the Register of Deeds in and for Hennepin County, Minnesota.'

During the period from 1965 to June 1967, Berglund made plans for development of this property. As a condition to approving a conditional-use permit and subdivision sought by Berglund, the city required that an easement over the west 30 feet of the two lots be dedicated to the city for a portion of Aldrich Avenue South, which the city then contemplated building. The city attempted to have Berglund sign a deed granting it an easement, but this was never accomplished. In late 1967, without such easement, the city began laying sewer and water lines in the vicinity of what was to become Aldrich Avenue South, including the land involved here.

In April 1968, Berglund agreed to sell the two lots to Brooks for the sum of $24,000, plus $2,000 for sale of Berglund's development plans if Brooks wished to buy them. During April 1968, this purchase agreement was canceled due to Berglund's failure to perform all of its contingencies.

During the summer of 1968, the city proceeded with the construction of Aldrich Avenue South, including the portion over the lots in question, completing the project on September 3, 1968. At that time, no subdivision plat had been filed dedicating the strip in question for use as part of the street, and the city had taken no action to acquire title to the property by condemnation.

In May 1968, Berglund learned that owners of neighboring properties on Aldrich Avenue South had received compensation for the street easement taken. He then began negotiations with the city to be compensated for the strip across the two lots involved in this action.

On December 10, 1968, Berglund entered into a purchase agreement with Brooks under which he later conveyed the lots in question on June 26, 1969, by warranty deed. The deed was recorded with the register of deeds of Hennepin County on June 30, 1969. The legal description in this deed was as follows:

'Lots 1 and 2 except the North 125 feet of the East 100 feet of Lot 1, Sabin Lyndale Garden Lots, according to the map or plat thereof on file or of record in the office of the Register of Deeds in and for Hennepin County, Minnesota.

'Subject to existing streets.

'Subject to restrictions, reservations and easements of record, if any.'

The consideration for this conveyance was $20,000, with no provision similar to that for the sale of development plans which had been included in the original purchase agreement. Apparently Berglund and Brooks never discussed the status of the 30-foot strip nor the rights of the parties to any possible condemnation award.

The development which had been planned for the property was never completed and the project was abandoned in January 1970. As a result, no subdivision plat dedicating the west 30 feet of the lots to the city for Aldrich Avenue South was filed.

Having discovered that others had been paid for easements over their land to build Aldrich Avenue South, Berglund on or about June 29, 1970, commenced a mandamus action against the city, seeking to compel inverse condemnation of the strip across these two lots on which Aldrich Avenue South was constructed and asking for compensation in the sum of $8,500. In his pleadings, Berglund claimed that he was the owner of the west 30 feet of Lots 1 and 2, notwithstanding the June 26, 1969, conveyance of the lots to Brooks.

The city thereafter decided to proceed with the condemnation voluntarily. It filed an amended petition for condemnation of the strip across these two lots on August 13, 1970. The property it sought to condemn was:

'A permanent easement for street purposes over and across the Westerly 30 feet of Lots 1 and 2, except the North 125 feet of the East 100 feet of Lot 1, Sabin Lyndale Garden Lots, Hennepin County, Minnesota.' (Italics supplied.)

After commencement of this condemnation proceeding, Berglund abandoned his mandamus action. The city stated in its petition to condemn that to the best of its knowledge the owners of the property were 'Lester L. Berglund and Patricia J. Berglund, husband and wife.' Although Brooks' ownership had been a matter of record since June 30, 1969, the city named the Berglunds as the 'owners' of this property in the condemnation documents and served no notice of the condemnation proceedings on Brooks.

At the condemnation hearing, Lester Berglund testified that he was the owner of the property. The condemnation proceeded and on December 22, 1970, the city issued a check payable to Berglund, his wife, and his attorneys in the amount of $8,700. At approximately the same time, the city sought to obtain Brooks' signature on a warranty deed conveying the strip to the city. Brooks then, for the first time, learned of the condemnation proceeding and refused to execute the deed. Instead, he suggested that payment of the city's check to Berglund be stopped, but by that time Berglund had cashed the check and divided the proceeds. Before trial of the present action, both parties moved for summary judgment. The court entered findings of fact, conclusions of law, and order for summary judgment in favor of Brooks, requiring the city to pay Brooks $8,500 with interest, substantially the amount it had earlier paid Berglund. This appeal followed.

Essentially, the only question we need decide is: Who is entitled to the condemnation award--Berglund, who owned the property at the time the city proceeded to construct the street, or Brooks, who owned it by virtue of the conveyance from Berglund at the time the condemnation proceeding was completed? Putting it more precisely, we might state the question thus: Where a city constructs a street across a parcel of land which is thereafter sold by its original owner to another person prior to formal condemnation proceedings, is the original owner or his vendee entitled to the condemnation award?

The trial court held that Brooks was the owner of the property at the time of the taking and was thus entitled to the condemnation award. ¹ The trial court also held that the city was directly liable to Brooks for paying the award to Berglund because it had a statutory duty to give Brooks as record owner of the fee notice of the condemnation proceedings under Minn.St. 1969, §§ 117.05 and 117.20, subd. 8(a). ² On the other hand, it is the position of the city on this appeal that, notwithstanding any wrongful failure to serve Brooks with notice, it is not liable to him because Berglund as a matter of law was entitled to the award and thus Brooks has not been injured by failure to receive notice. Both parties apparently proceed on the theory that the decisive question is the time when the 'taking' occurred. Both parties appear to agree that the owner at the time of the taking is entitled to the condemnation award. The city contends that a taking occurs under Minnesota law either when title to the property is vested in the condemnor or when the property is injured. The city argues that it is the earlier of these two events, if both occur, that determines the time of taking. It is apparent that at the time the property was injured, that is, at the time the city proceeded to build Aldrich Avenue South without any easement or other right, Berglund was the record owner. Brooks, on the other hand, contends that under Minnesota law a taking neve occurs until compensation is paid or secured. At the time the compensation was paid in this case, Brooks was the record owner of the property.

Neither party distinguishes between a lawful and an unlawful taking. The city relies on Minn.St. 1969, § 117.02, subd. 2, for...