City of Shakopee v. MINN. VALLEY ELEC. CO-OP.

• Decision Date: 20 February 1981
• Docket Number: No. 50873.,50873.
• Citation: 303 NW 2d 58
• Parties: The CITY OF SHAKOPEE, Petitioner, Respondent, v. MINNESOTA VALLEY ELECTRIC COOPERATIVE, Appellant, National Rural Utilities Cooperative Finance Corporation et al, Defendants.
• Court: Minnesota Supreme Court

303 N.W.2d 58 (1981)

The CITY OF SHAKOPEE, Petitioner, Respondent, v. MINNESOTA VALLEY ELECTRIC COOPERATIVE, Appellant National Rural Utilities Cooperative Finance Corporation et al, Defendants.

No. 50873.

Supreme Court of Minnesota.

February 20, 1981.

LeVander, Gillen, Miller & Magnuson and Harold LeVander, Jr., So. St. Paul, for appellant.

Krass, Meyer & Kanning and Phillip R. Krass, Shakopee, for City of Shakopee.

Considered and decided by the court en banc without oral argument.

SIMONETT, Justice.

The City of Shakopee petitioned for the condemnation of all service contracts for customers of Minnesota Valley Electric Cooperative located within the Shakopee city limits and of all property and distribution facilities belonging to Minnesota Valley devoted to serving those customers. After a hearing, during which the cooperative moved for dismissal of the petition, the trial court approved the condemnation. Minnesota Valley now appeals the court's order denying its motion to dismiss and granting the city's petition. We affirm.

Minnesota Valley is an electric cooperative association. Of its over 10,000 customers, approximately 300 are located within the city limits of Shakopee. This service area was allocated to the cooperative by the Minnesota Public Service Commission under Minn.Stat. §§ 216B.37 and 216B.39 (1980).¹ Aside from Minnesota Valley's area, virtually the entire city is served by the Shakopee municipal utility. Profits from the municipal utility go directly into the city general fund. The utility also operates and maintains street lights, the value of which, together with revenue from profits, accounts for 15% of the city budget. Acquiring the cooperative's property would augment this revenue and, contend city officials, improve service to the city's current customers in rural areas adjacent to the cooperative's service area.

In its motion to dismiss, Minnesota Valley argued Shakopee lacked statutory authority for the condemnation and failed to prove the taking was necessary. The district court held Minn.Stat. § 465.01 (1980) gives Shakopee the power to condemn what it may purchase and Minn.Stat. § 216B.45 (1980) permits the city to purchase what it here seeks to condemn. On appeal, the cooperative contends the court erred in relying upon § 465.01 because that statute grants only a general power of eminent domain. The petition in issue, appellant continues, requires specific authorization either expressly or impliedly granted by statute. The cooperative goes on to analyze Minn.Stat. §§ 412.211, 412.321 and 216B.47 (1980) to demonstrate the lack of any such specific authorization.

We agree the exercise of eminent domain power over property already devoted to public use requires specific statutory authorization when the use planned for the property by the condemner is inconsistent with its current use. City of Shakopee v. Clark, 295 N.W.2d 495, 499 (Minn.1980); 1 P. Nichols, Nichols on Eminent Domain § 2.2 (3d ed. 1980). However, in these circumstances, where the city intends to use the cooperative's property in a manner identical to its current use — supplying electricity to customers in the cooperative's service area — the applicable rule has been stated as follows:

If * * * the purpose of such acquisition is to transfer the ownership and operation of such property from a public service corporation (which, although a quasi-public entity, is nevertheless a private corporation organized for profit) to a municipality or other purely public corporation, it has been held that the greater public use and increased public benefit which result from governmental operation justify such acquisition.

1 P. Nichols, Nichols on Eminent Domain § 2.29 (1979); see also Duck River Electric v. City of Manchester, 529 S.W.2d 202 (Tenn.1975); 11 E. McQuillin, Municipal Corporations § 32.67 (3d ed. 1977). We hold, therefore, that a city possessing a general power to condemn may acquire the property and service area of an electric cooperative association if a consistent use of the property is intended.

Minn.Stat. § 465.01 (1980) confers on Shakopee, a charter city, a general power of condemnation:

All cities may exercise the right of eminent domain for the purpose of acquiring private property within or without the corporate limits thereof for any purpose for which it is authorized by law to take or hold the same by purchase or gift * * *.

(Emphasis added.) Under Minn.Stat. § 216B.45 (1980), "Any public utility operating in a municipality under a license, permit, right or franchise shall be deemed to have consented to the purchase by the municipality, for just compensation, of its property operated in the municipality under such license, permit, right or franchise." Since Shakopee may purchase the cooperative's property, it may condemn it.

Minnesota Valley argues the word "purchase" in § 216B.45 is not used in its conventional sense, pointing out the section goes on to describe a "particularized scheme" for notice and a hearing, amounting to a "forced sale";² and that the following section, 216B.46, requires a public hearing and referendum before any determination to purchase is effective.³ Even assuming § 216B.45 should give a power to purchase, the cooperative argues, the purchase is not "authorized by law" (as required in § 465.01) until at least the public hearing and referendum have been successfully held.

These arguments misconceive the rationale of § 465.01, which focuses not on how or when a utility may be purchased, but on why. The section grants Shakopee the power to acquire property by condemnation "for any purpose for which it is authorized by law to take * * * by purchase" (emphasis added). Eminent domain may only be asserted for a public purpose; similarly, municipalities may only acquire property through purchase or gift for a public purpose. See Visina v. Freeman, 252 Minn. 177, 89 N.W.2d 635 (1958). Section 465.01 thus provides that where a city has the power to acquire certain property by purchase, sufficient public purpose exists to acquire it by condemnation.

We have long held that it is within the province of the legislature to declare public purpose and that such a determination will not be overruled unless manifestly arbitrary or unreasonable. Metropolitan Sewer Board v. Thiss, 294 Minn. 228, 200 N.W.2d 396 (1972); Asch v. Housing and Redevelopment Authority of City of St. Paul, 256 Minn. 146, 97 N.W.2d 656 (1959). The provisions of § 216B.45, authorizing either a conventional purchase or a forced sale, constitute a declaration that establishes municipal ownership of a utility as a valid public purpose. That these provisions can amount to a forced sale, as the cooperative observes, illustrates this legislative finding, since a statutory forced conveyance is in the nature of eminent domain and must be justified by a public purpose. Bolin Lumber Co. v. Chicago & North Western Ry. Co., 270 Minn. 516, 522, 134 N.W.2d 312, 317 (1965).

We conclude, then, that while a referendum and, in some circumstances, a public hearing are preconditions to purchasing a utility under §§ 216B.45 and 216B.46, they are not required for exercising eminent domain. It is unnecessary for the voters to approve an acquisition by purchase for the city to acquire the property by condemnation; it is enough for eminent domain that a purchase is authorized by law if certain procedures are followed without having to follow those procedures. Thus the next section in chapter 216B commands, "Nothing in Laws 1974,...