City of Detroit v. Michigan Bell Tel. Co.

• Decision Date: 02 February 1965
• Docket Number: No. 69,69
• Parties: In the Matter of the Petition of the City of Detroit, a municipal corporation of the State of Michigan, for the vacation of certain plats, streets and alleys. CITY OF DETROIT, Petitioner-Appellant, v. MICHIGAN BELL TELEPHONE COMPANY and The Detroit Edison Company, Respondents-Appellees.
• Court: Michigan Supreme Court

Page 660

132 N.W.2d 660

374 Mich. 543

In the Matter of the Petition of the City of Detroit, a

municipal corporation of the State of Michigan,

for the vacation of certain plats,

streets and alleys.

CITY OF DETROIT, Petitioner-Appellant, v. MICHIGAN BELL TELEPHONE COMPANY and The Detroit Edison

Company, Respondents-Appellees.

No. 69.

Supreme Court of Michigan.

Feb. 2, 1965.

Robert Reese, Corp. Counsel, Edward M. Welch, John H. Witherspoon, Robert D. McClear, William Dietrich, Asst. Corp. Counsel, Detroit, for petitioner-appellant.

Butzel, Eaman, Long, Gust & Kennedy, and James M. Smith, Jack H. Shuler, Donald E. Brown, Detroit, for respondent-appellee, Michigan Bell Tel. Co.

Fischer, Sprague, Franklin & Ford, Detroit, for respondent-appellee, Detroit Edison Co.

William A. Ewart, City Atty. of Pontiac, Thomas E. Hunter, Deputy City Atty. of Pontiac, Ralph B. Guy, Jr., Corp. Counsel, City of Dearborn, Allan G. Hertler, City Atty. of Royal Oak, Louis C. Andrews, Jr., Atty. Michigan Municipal League, Ann Arbor, for Michigan Ass'n of Municipal Attorneys, amicus curiae.

Before the Entire Bench.

O'HARA, Justice.

The question presented in this case is whether a city which vacates dedicated streets and alleys in which private utilities have previously been granted the right to maintain their facilities and requires the removal thereof and reinstallation in other streets and alleys, has exercised its reasonable right of regulation under its police power or has taken private property without compensation.

The trial court in a considered and fully documented opinion held:

'This court holds that the action of the city in directing the removal of the respondents' utility installations without compensation, under the circumstances in this case, exceeds the city's authority to exercise its police power and is a violation of the constitutional guarantees of the respondents. It is beyond the scope of regulation. It is an actual taking of private property for which just compensation must be paid. The decision on these issues being controlling, it is unnecessary to discuss the others raised by the parties.'

The city appealed. Exhaustive briefs were filed and forceful argument advanced on behalf of the parties. An amicus curiae brief on behalf of the Michigan Association of Municipal Attorneys is acknowledged.

The facilities in question have in fact been removed and reinstalled, but under an express reservation of the right of the utilities to be compensated for the stipulated nonbetterment cost of removal and reinstallation. The facts as well as statements of position have been stipulated. The trial court succinctly set forth the factual background and we quote from his opinion:

'The issues in this case are framed from an agreed stipulation of facts. They are as follows:

'Undertaking to redevelop an area within its corporate boundaries designated as 'West Side Industrial Project, UR Mich 1-4,' the city of Detroit hereinafter referred to as the city, on July 9, 1957, through its common council and pursuant to the provisions of Act 344 of P.A. 1945 as amended by CL 1948, 125.71 et seq., which authorizes the rehabilitation of blighted areas and prescribes the method of accomplishment, adopted and approved a redevelopment plan and directed the institution of the necessary condemnation proceedings. The estimated net costs of the project after deduction of the estimated proceeds from the private sale of some of the land was $5,221,000. On November 14, 1957 the city entered into a loan and grant contract with the United States government pursuant to Title I of the Federal Housing Act of 1949 whereby the government would assist in financing the project by contributing two-thirds of the net cost of the city's one-third. It is pertinent to note the federal regulations, Urban Renewal Manual, Book I, Section 11-1-2 provides 'Removal or relocation of utility lines owned by a rpivate utility company will not be allowed as a project expenditure unless compensation to the company is required under applicable State and local law. If the L.P.A. (Local Public Agency--in this case the city) is required to compensate the utility company for proposed changes, the necessity for making the changes and the basis used in computing the estimated amount of such compensation shall be described. A legal opinion as to the obligations of the L.P.A. to provide the compensation indicated shall be provided with Part I of the application for loan and grant.' The removal or relocation costs of the utility lines of private utilities was not included in the application although such costs for municipally owned utilities (public lighting and water) were included. The development plan of rehabilitation called for, among other things, the vacation of certain plats, streets and alleys, and the rerouting of certain utilities to other streets and alleys. The respondents, Michigan Bell Telephone Company, hereinafter referred to as Bell, and the Detroit Edison Company, hereinafter referred to as Edison, maintained installations in certain of the streets and alleys which were to be vacated. The city successfully completed its condemnation proceedings to which neither Bell nor Edison were named as parties. On February 20, 1959 the instant vacation proceedings were instituted in accordance with the provisions of the Plat Act, Act 172 PA 1929 as amended by CL 1948, 560.1 to 560.79 inclusive, which provides for the altering and vacating of plats and among other things, the reservation of easements for utilities in vacated streets and alleys. Both Bell and Edison appeared and objected insofar as the proposed vacations affected streets and alleys in which their installations were located, unless easements were reserved for them in these same streets and alleys or unless the city agreed to bear the cost of the removal and relocation of their installations to the new areas to be designated in the redevelopment plan. It should be noted that although the installations of each utility were differently located, the legal principles involved are the same. A controversy developed and on June 18, 1959 pursuant to an understanding between the parties which recognized and preserved the right to further judicial determination, an order of vacation was entered by the Hon. Robert M. Toms, this Court's predecessor, which contained the following provisions: 'Provided, however, that there is hereby reserved in the streets and alleys above described, for the use of public utilities, easements for the maintenance of the utility poles, wires and equipment as presently located; provided always that this paragraph of this order is interlocutory and is subject to further final order, to be entered after proofs and arguments.' Following the entry of this order the facilities of both Bell and Edison were removed by agreement. Bell has maintained installations in this area since 1907 pursuant to Act 129, PA 1883 as amended by CL 1948, § 484.1 to 484.10 inclusive, which provides further that its installations serve not only this area but the areas beyond. Similarly Edison has maintained facilities serving this area and areas beyond as authorized and required by the properly and legally adopted ordinances of the city of Detroit. The development plan for rehabilitation involves some 73 acres of land containing some 424 structures, which land has to be acquired and the structures demolished. It provides for street widening and paving, installation of walks, sewers and water mains, creation of a public park, rezoning, vacation of certain plats, streets and alleys, rerouting of utilities and the sale of large portions of the land to private persons and corporations for light industrial and commercial uses. It is agreed that the nonprofit, nonbetterment costs of removal and relocation amounts to $11,305 in the case of Bell and $1,746.36 in the case of Edison. The city contends that the utilities pay these costs. The utilities contend that the city should pay.' ¹

While the 2 utilities acquired their rights to use the streets and alleys of appellant-city by different means, it is stipulated their rights for the purpose of this case are identical.

In arriving at his conclusion the trial judge postulated 4 propositions. First that the city was here engaged in a governmental as distinguished from a proprietary function. While we do not consider the proposition essential to decision, we agree. The statute ² under which the city condemned the property involved declares the purpose to be accomplished 'a public purpose and a public use.' For us to hold otherwise we would have to declare the statute unconstitutional. Urban renewal has been declared a function of government by the legislature and the power to accomplish it has been properly delegated to the city. We find no merit in the distinction here urged by appellees. Incident to this claim it is also contended by appellees that because part of the land condemned by the city and otherwise acquired by it to be subdivided and resold, the project loses its governmental character. The claim is not tenable. This precise point is controlled by our prior holding in In re Slum Clearance, 331 Mich. 714, at p. 721, 50 N.W.2d 340 at. p. 343:

'To remove health, crime and fire hazards by slum clearance, is clearly a proper and reasonable exercise of the police power. * * * the fact that under the subsequent rehabilitation or restoration, the cleared area * * * passes into private hands to private property is an incident which does not change the nature of the slum clearance * * *.'

This rule in our jurisprudence is amply supported by other holdings, State and Federal.

The second proposition held by the trial court as controlling is that upon acquisition and exercise by a utility a franchise becomes a vested property right, in the nature of a contractual right protected by Federal and State constitutional guarantee. So it does. The proposition is well...