City of Jamestown v. Leevers Supermarkets, Inc.

• Decision Date: 18 July 1996
• Docket Number: 950366,Nos. 950328,s. 950328
• Citation: 552 N.W.2d 365
• Parties: CITY OF JAMESTOWN, a Municipal Corporation, Plaintiff and Appellee, v. LEEVERS SUPERMARKETS, INC., and J and B Partnership, Defendants and Appellants (Two Cases). Civil
• Court: North Dakota Supreme Court

Page 365

552 N.W.2d 365

CITY OF JAMESTOWN, a Municipal Corporation, Plaintiff and Appellee, v. LEEVERS SUPERMARKETS, INC., and J and B Partnership Defendants and Appellants (Two Cases).

Civil Nos. 950328, 950366.

Supreme Court of North Dakota.

July 18, 1996.

Kenneth L. Dalsted, City Attorney, Jamestown, for plaintiff and appellee.

Thomas E. Rutten, of Traynor, Rutten & Traynor, Devils Lake, for defendants and appellants.

SANDSTROM, Justice.

Leevers Supermarkets, Inc. (Leevers), and J and B Partnership (JB) appeal from a judgment granting the City of Jamestown the authority to exercise the power of eminent domain under N.D.C.C. Chapter 32-15 and the Urban Renewal Law, N.D.C.C. Chapter 40-58, to take their interests in commercial property located in downtown Jamestown. Leevers and JB also appeal from a subsequent judgment requiring them to pay the fees and expenses for the City's expert appraiser. In this consolidated appeal, we conclude the City did not abuse its discretion in finding the taking of the disputed property is necessary in the interests of the public economy, health and welfare of its residents. However, because the trial court did not decide whether the primary object of the development project was for the economic welfare of downtown Jamestown and its residents rather than for the primary benefit of private interests, we reverse the judgment granting the City rights to the disputed property and remand to the trial court to make that required finding. We also conclude the trial court had no authority in this eminent domain proceeding to order Leevers and JB to pay the fees and expenses of the City's expert appraiser, and we reverse that judgment.

I

On March 1, 1993, the Jamestown City Council, after a public hearing, adopted a resolution designating a two-square-block development area for commercial properties in downtown Jamestown. The proposed development was for the construction and operation of a retail food store. The designated area included several occupied businesses and residences. Leevers owned and JB leased property in the development area which they used as parking lots. Leevers and JB have common owners and operate the only two full-service grocery stores in Jamestown. Neither store is located near the development area.

On January 15, 1993, Northern Plains Investment, Inc. (Northern), the project developer, requested the City to begin eminent domain proceedings because Northern was "encountering serious problems with some of the landowners and/or lessees[ ] in the proposed project area." Except for the property of Leevers and JB, Northern was able to purchase the remainder of the property from the other owners.

Northern agreed to pay all costs incurred by the City in acquiring by eminent domain any property the developer was unable to purchase through good faith negotiations. In turn, the City agreed to convey to Northern title by quit claim deed to the property it acquired. Northern waived and released all claims against the City "should a court determine the City lacks the authority to acquire project property as contemplated by this agreement pursuant to Chapter 40-58, NDCC, relative to the City's eminent domain powers."

Northern, Leevers, and JB agreed on a purchase price for the property, but Leevers' and JB's acceptance was contingent on there being no tax dollars involved in the development project. Because Northern and the City did not agree to this condition, the City brought this eminent domain proceeding. ¹

The trial court ruled in favor of the City, holding the taking was necessary and awarding Leevers $42,000 and JB $9,964.48 as "fair and just compensation" for the taking. After judgment was entered, the trial court entered another judgment holding the City must pay Leevers' and JB's attorney fees and expenses, less the cost of the City's appraiser fees and expenses.

The trial court had jurisdiction under N.D. Const. Art. VI, §§ 1 and 8, and N.D.C.C. § 27-05-06. Both appeals by Leevers and JB were timely under N.D.R.App.P. 4(a). This Court has jurisdiction under N.D. Const. Art. VI, §§ 1 and 2, and N.D.C.C. § 28-27-01.

II

Leevers and JB assert the City's taking of their property is invalid because the trial court refused to consider whether a public use was established and because the City did not make a proper finding of necessity.

A

In 1989, the Legislature amended the Urban Renewal Law, N.D.C.C. Chapter 40-58, to permit a municipal government to use its eminent domain power to develop unused or underutilized industrial or commercial property within the municipality even if that property is not in a slum or blighted area. See 1989 N.D. Sess. Laws Ch. 499. As N.D.C.C. § 40-58-02(2) and (3) indicate, the purpose of the amendments was to permit municipalities to act in furtherance of economic development:

"2. It is further found and declared that there exist in municipalities of the state conditions of unemployment, underemployment, and joblessness detrimental to the economic growth of the state economy; that it is appropriate to implement economic development programs both desirable and necessary to eliminate the causes of unemployment, underemployment, and joblessness for the benefit of the state economy; and that tax increment financing is an economic development program designed to facilitate projects that create economic growth and development.

"3. It is further found and declared that the powers conferred by this chapter are for public uses and purposes for which public money may be expended and the power of eminent domain exercised; and that the necessity in the public interest for the provisions herein enacted is hereby declared as a matter of legislative determination."

Because the Legislature had specifically declared economic development a public use and purpose, the trial court ruled it was not a question subject to judicial review. Leevers and JB correctly argue the trial court erred in treating the Legislature's declaration as unreviewable.

This Court held almost a century ago "courts can always inquire into the nature of the use for which the property is to be condemned for the purpose of determining whether such is, in fact, a public use." Bigelow v. Draper, 6 N.D. 152, 69 N.W. 570, 574 (1896). See also Northern Pacific Ry. Co. v. Kreszeszewski, 17 N.D. 203, 115 N.W. 679, 681 (1908) ("mere legislative fiat cannot make that a public use which is clearly not such use"). Courts can inquire because a use must be public before private property can be taken by eminent domain under N.D. Const. Art. I, § 16 and U.S. Const. amend. V. See Square Butte Elec. Coop. v. Hilken, 244 N.W.2d 519, 523 (N.D.1976). This well-settled principle is explained in 2A J. Sackman and P. Rohan, Nichols on Eminent Domain § 7.03[b], at pp. 7-96--7-99 (Rev. 3rd ed.1995) (footnotes omitted) (Nichols ):

"The presumption is that a use is public when the legislature has declared it to be. The legislature's decision must be treated with the consideration due to a coordinate department of the government of the state. However, this declaration is not binding upon the courts. If, after giving due respect to a legislative declaration, a court considers the purpose not to be reasonable or connected to a valid public use, it is the duty of the court to declare the act[ ] authorizing the taking as unconstitutional."

In this case, the trial court's refusal to consider whether economic development is a valid public use or purpose is not reversible error. We will not set aside a correct result merely because the trial court assigned an incorrect reason if the result is the same under the correct law and reasoning. See Thompson v. Danner, 507 N.W.2d 550, 557 (N.D.1993). Economic development is generally recognized as a valid public use or purpose. See, e.g., Wright v. City of Palmer, 468 P.2d 326, 330-331 (Alaska 1970); People ex rel. City of Urbana v. Paley, 68 Ill.2d 62, 11 Ill.Dec. 307, 368 N.E.2d 915, 921 (1977); Green v. City of Mt. Pleasant, 256 Iowa 1184, 131 N.W.2d 5, 17 (1964); Common Cause v. State, 455 A.2d 1, 24 (Me.1983); City of Frostburg v. Jenkins, 215 Md. 9, 136 A.2d 852, 856 (1957); City of Pipestone v. Madsen, 287 Minn. 357, 178 N.W.2d 594, 600 (1970); Maready v. City of Winston-Salem, 342 N.C. 708, 467 S.E.2d 615, 626 (1996); McKinney v. City of Greenville, 262 S.C. 227, 203 S.E.2d 680, 690 (1974). As the court noted in Faulconer v. City of Danville, 313 Ky. 468, 232 S.W.2d 80, 83 (1950):

"The consensus of modern legislative and judicial thinking is to broaden the scope of activities which may be classed as involving a public purpose.... It reaches perhaps its broadest extent under the view that economic welfare is one of the main concerns of the city, state and the federal governments."

We conclude the stimulation of commercial growth and removal of economic stagnation sought by N.D.C.C. Chapter 40-58 are objectives satisfying the public use and purpose requirement of N.D. Const. Art. I, § 16 and U.S. Const. Amend. V.

B

Under N.D.C.C. § 40-58-05(2), a municipality may not exercise any of the powers conferred until its governing body adopts a resolution finding "[t]he development, rehabilitation, conservation, or redevelopment, or a combination thereof, of the area or properties is necessary in the interest of the public economy, health, safety, morals, or welfare of the residents of the municipality."

In its March 1, 1993, resolution, the City Council found the proposed development property was "unused or under utilized ... zoned or ... used as an industrial or commercial site" and "[t]here exists conditions within the City ... of unemployment or underemployment and joblessness which are in fact detrimental to the economic growth of the state economy and the economy of the City...." The City Council found "[i]t is appropriate and desirable to implement economic development programs in the City ... to eliminate causes of underemployment, unemployment,...