In re Condemnation by City of Minneapolis, C5-99-1996.

• Decision Date: 16 August 2001
• Docket Number: No. C5-99-1996.,C5-99-1996.
• Citation: 632 N.W.2d 586
• Parties: In the Matter of CONDEMNATION BY THE CITY OF MINNEAPOLIS OF CERTAIN LANDS IN THE CITY OF MINNEAPOLIS for the Lyn/Lake Municipal Parking Lot Project.
• Court: Minnesota Supreme Court

632 N.W.2d 586

In the Matter of CONDEMNATION BY THE CITY OF MINNEAPOLIS OF CERTAIN LANDS IN THE CITY OF MINNEAPOLIS for the Lyn/Lake Municipal Parking Lot Project.

No. C5-99-1996.

Supreme Court of Minnesota.

August 16, 2001.

Jeffrey R. Brauchle, Sherry Davis White, Jeffrey R. Brauchle, P.A., for appellant, City of Minneapolis.

Sherman Winthrop, Thomas H. Boyd, Winthrop & Weinstine, P.A., for respondent, Joseph E. Commers Limited, Partnership.

Louis K. Robards, Jeffrey S. Thompson, Assistant Attorneys General, for Commissioner of Transportation, amicus curiae.

Heard, considered, and decided by the court en banc.

OPINION

RUSSELL A. ANDERSON, Justice.

In this eminent domain action, the City of Minneapolis (City) acquired title to and possession of property belonging to Joseph E. Commers Limited Partnership (respondent) through a statutory quick take procedure. We are asked to determine if the City owes interest at the rate set for judgments (judgment interest) to respondent on funds the City deposited with the court incidental to its quick take of respondent's property. The district court denied respondent's request for judgment interest because it found that the deposited funds, although not requested by respondent, were available to respondent. The court of appeals reversed the district court concluding that the deposited funds were not available to respondent until the district court issued its order for their disbursement. We reverse the court of appeals and hold that the district court need not order disbursement of funds for those funds to be considered available for purposes of the rule allowing judgment interest until the funds become available to the property owner. We also hold that the district court's finding that the funds were available to respondent when deposited with the court is not clearly erroneous.

The City acquired respondent's property through statutory quick take procedures, which allow a condemning authority to acquire immediate title to and possession of property even before damages for the taking are determined. Minn.Stat. § 117.042 (2000). To effect a quick take, the condemning authority must pay the owner directly or deposit in court an amount equal to the condemning authority's approved appraisal of value for the property. Id. If payment is deposited with the court, the condemning authority may apply to the court for an order transferring title and possession of the property from the owner to the condemning authority. Id. Amounts deposited with the court are to be paid out under the direction of the court. Id. If the property owner contests the condemning authority's approved appraisal of value for the property, court-appointed commissioners determine the damage a property owner has sustained on account of the taking, Minn.Stat. §§ 117.075 (2000), 117.042, and any party may appeal to the district court from the commissioners' award of damages. Minn.Stat. § 117.145 (2000).

The eminent domain statute refers to two types of interest. One type of interest derives from the court administrator's statutory obligation to deposit into an interest-bearing account amounts deposited with the court pursuant to the quick take procedure. Minn.Stat. § 117.042(b) (2000). The court administrator is required to pay the interest earned to the ultimate recipient(s) of the amount deposited. Id. The other type of interest is on an award of damages and is at the statutory rate of interest on judgments established in Minn.Stat. § 549.09 (2000). Minn.Stat. § 117.195, subd. 1 (2000). This interest is paid by the condemning authority. See id. We deal here only with a claim pursuant to Minn.Stat. § 117.195 for judgment interest pursuant to Minn.Stat. § 549.09 and not court administrator interest.

On November 3, 1998, the City deposited with the court quick take funds of $425,000 and acquired title to and possession of respondent's property. Respondent did not seek disbursement of the funds at that time. Court-appointed commissioners subsequently appraised damages for the City's taking of respondent's property at $520,000, and on May 17, 1999, the City deposited with the court an additional $95,000, the difference between the commissioners' award of $520,000 and the City's earlier quick take deposit of $425,000. The City also deposited with the court $2,180.75, which represents judgment interest on the $95,000 from November 3, 1998, the date of the City's quick take of the property, to May 17, 1999, the date of its deposit of $95,000 with the court. See Minn.Stat. § 117.195, subd. 1.

On May 27, 1999, almost 7 months after deposit of the initial $425,000, respondent petitioned the court to withdraw all of the deposited funds. The City interposed no objection, and the court ordered disbursement of the funds to respondent.

On August 11, 1999, respondent by motion requested that the court order the City to pay judgment interest to respondent on the $520,000 from November 4, 1998, the day after the City took possession of the property, to June 10, 1999, the date of hearing on respondent's petition to withdraw the funds.¹ The district court denied respondent's motion because it found that the funds were available to respondent during that time.

The court of appeals reversed the district court concluding that the City owed judgment interest on the deposited funds from the date the property was taken by the City to the date the district court ordered disbursement of the funds to respondent. In re Condemnation by the City of Minneapolis, 609 N.W.2d 923, 926 (Minn.App.2000). According to the court of appeals, the funds were not available to respondent until the district court issued an order for their disbursement because (1) the City could have paid the funds directly to respondent rather than depositing them with the court; (2) to withdraw the funds, respondent had to file a motion, incur expenses, and "overcome legal obstacles"; and (3) it was speculative as to whether an earlier motion to disburse the funds would have been granted. Id.

We first address the legal issue of whether a district court must order disbursement of deposited quick take funds for those funds to be considered available for purposes of the constitutional requirement that just compensation for the taking of private property must include judgment interest until the funds are available to the property owner. See Ford Motor Co. v. City of Minneapolis, 143 Minn. 392, 395, 173 N.W. 713, 715 (1919). We then address whether the evidence supports the district court's finding that the funds were available to respondent.

I.

The proper interpretation of the quick take statute in conjunction with the rule set forth in Ford presents a question of law, which we review de novo. In re Estate of Janecek, 610 N.W.2d 638, 641 (Minn.2000).

The federal and state constitutions mandate that just compensation be paid before the government takes private property under the power of eminent domain. U.S. Const. amend. V; Minn. Const. art. I, § 13. More than 80 years ago we held that just compensation includes interest on a condemnation award from the time of an award, which was also when the property was deemed taken by the condemning authority, until payment becomes available to the property owner. Ford, 143 Minn. at 395, 173 N.W. at 715 ("The just compensation required by the Constitution includes not only the amount of the final award but also the interest thereon from the date of the original award until the money becomes available to the landowner.").² Ford predated the quick take statute and did not involve a deposit of funds with the court. However, it is the Ford rule requiring interest as part of just compensation that is at issue in this case, specifically whether deposited quick take funds are available to the property owner for purposes of the Ford rule.

We considered whether a condemning authority must pay judgment interest on deposited quick take funds in Fine v. City of Minneapolis, 391 N.W.2d 853 (Minn.1986). In Fine, the district court directed the transfer of title to and possession of private property to the condemning authority under quick take proceedings. Id. at 854. The property owner, who remained in possession of the property, subsequently entered into a written agreement with the condemning authority. Id. The agreement continued the condemnation proceeding, reserved to both parties the right to appeal from any subsequent commissioners' award, allowed the property owner to continue in possession of the property upon payment of monthly rent to the condemning authority, and provided that the property owner was entitled to immediate receipt of the deposited quick take funds. Id. The district court approved the agreement and the property owner received payment of the quick take funds. Id. Later, the property owner brought an independent action seeking judgment interest from the date the district court directed the transfer of title and possession to the condemning authority to the date the funds were disbursed to the property owner. Id. at 854-55. We concluded that the award of interest was obviated by the property owner's immediate entitlement to the deposited funds. Id. at 856.

Respondent argues that our decision in Fine was based solely upon the written agreement between the parties that provided for the property owner's immediate entitlement to deposited funds. We disagree. We stated in Fine that, "As a practical matter, the deposit by the city of the $55,000 approved appraisal value and the owners' immediate entitlement to those funds obviates an award of interest on the deposited monies." Id. We did not say in Fine, nor did we imply, that the only basis for determining that deposited funds were available to the property owner was the written agreement. However, in Fine we also did not hold explicitly that the quick take funds became immediately available because they were deposited with the court. Thus, the question...