Maxey v. Redevelopment Authority of Racine
| Decision Date | 04 March 1980 |
| Docket Number | Nos. 77-112,78-689,s. 77-112 |
| Citation | 288 N.W.2d 794,94 Wis.2d 375 |
| Parties | Louis T. MAXEY, Plaintiff-Appellant, v. REDEVELOPMENT AUTHORITY OF RACINE, Wisconsin, a Municipal Corporation of Racine County, Wisconsin, City of Racine, Wisconsin, a Municipal Corporation of Racine County, Wisconsin, Continental Bank & Trust Company, a Banking Corporation, James R. Hammes, James R. Fish, Jane Howard Namtvedt, Ernst William Schoenrene, Juliet A. Baker and Ethel Ann Richards, Defendants-Respondents. The REDEVELOPMENT AUTHORITY OF the CITY OF RACINE, Condemnor, v. James R. FISH, Ernst William Schoen-Rene, Juliet A. Baker, Jane Howard Namtvedt, Joan Richards Pratt, Nancy Richards Norment and Robert Baker Richards, Jr., Condemnees-Respondents, Louis T. Maxey, Continental Bank & Trust Company and James R. Hammes, Condemnees-Appellants. |
| Court | Wisconsin Supreme Court |
Ronald L. Wallenfang and Bruce R. Bauer (argued), John W. Daniels, James C. McNeely, and Quarles & Brady, Milwaukee, on brief, for Louis T. Maxey.
Joseph E. Boyle, City Atty., Racine, for defendant-respondent Redevelopment Authority of the City of Racine.
Emery B. Benson (argued) and Benson, Butchart & Haley, Racine, on brief, for defendants-respondents James R. Fish, et al.
John W. Foley (argued), Garth R. Seehawer and Foley, Foley & Seehawer, S. C., Racine, on brief, for James R. Hammes.
Stanley F. Hack, Milwaukee, for Continental Bank & Trust Company.
These appeals are from orders entered in separate actions in respect to condemnation proceedings concerning the same property and involving substantially identical parties. Case No. 77-112 is an appeal from an order of the Circuit Court for Racine County which dismissed the action for inverse condemnation commenced by Louis T. Maxey, the owner of a ninety-nine-year lease in the subject property. Case No. 78-689 is an appeal by Louis T. Maxey and the mortgagees of his leasehold interest from an order of the court in the subsequent direct condemnation action which excluded them from a share in the condemnation proceeds.
Louis T. Maxey is the lessee of a building located in Racine which the Redevelopment Authority of Racine sought to condemn as a part of an urban renewal project. Continental Bank & Trust Company and James R. Hammes are mortgagees of Maxey's interest as lessee.
On September 21, 1976, Maxey filed a petition for inverse condemnation pursuant to sec. 32.10, Stats. (1975). 1 The circuit court with which Maxey filed his petition for inverse condemnation dismissed Maxey's action because the court concluded that the condemnor, Redevelopment Authority of Racine, and the City of Racine had exercised their power of condemnation. It is from this order of dismissal that Maxey appeals in Case No. 77-112.
On September 24, 1976, three days after Maxey filed his petition for inverse condemnation, the Redevelopment Authority filed its petition in the same court for direct condemnation of the same property pursuant to sec. 32.06(7), Stats. (1975), 2 and on the same day, it filed a lis pendens. After dismissal of Maxey's action for inverse condemnation, the condemnor's direct action was transferred to the Racine County Condemnation Commission for processing in accordance with the procedures set forth in sec. 32.06(7). Following those procedures, the Condemnation Commission made a total compensation award of $350,000 to the persons having an interest in the property. Insofar as the record reveals, this included Maxey, the two mortgagees of his leasehold interest, and the seven lessors who were owners of the fee. Of the $350,000 awarded, $40,087 was used to pay delinquent taxes on the property. The balance was deposited with the Clerk of Circuit Courts to await final disposition of the action.
The exact nature of the Condemnation Commission's award does not appear in the record. On appeal to the Circuit Court, however, the sole issue was the allocation of the condemnation award. The Circuit Court found that, because of provisions in the lease between Maxey and the lessors, Maxey's interest in the lease terminated upon the taking of the property; and, accordingly, neither he nor his mortgagees were entitled to share in the proceeds. Additionally, the Circuit Court concluded that, because Maxey had defaulted in his lease agreement by the nonpayment of rent and the nonpayment of taxes prior to the taking, his leasehold interest had automatically terminated prior thereto and, for that additional reason, he had no interest in the leasehold premises. The Circuit Court held that Maxey and his mortgagees were excluded from receiving any portion of the condemnation proceeds. An appeal was taken by Maxey and his mortgagees from the Circuit Court order to the Court of Appeals.
The order dismissing Maxey's inverse condemnation case was dated November 9, 1976. At that time, the only court to which an appeal could be taken was the Supreme Court of Wisconsin. The inverse condemnation appeal was entered on the Supreme Court's docket as Case No. 77-112. The Circuit Court's order of October 12, 1978, in respect to the direct condemnation was appealed to the newly created Court of Appeals, which commenced exercising its jurisdiction on August 1, 1978.
Because this court was aware of the related case pending in the Court of Appeals, pursuant to sec. 809.61, Stats., we directed a bypass of the Court of Appeals and ordered that Maxey's appeal filed there be heard in conjunction with the appeal pending in the Supreme Court.
It is apparent from the recitation of these procedural facts that, if the Circuit Court erred in dismissing the inverse condemnation, there was no jurisdiction in the Condemnation Commission or in the Circuit Court to hear the Redevelopment Authority's direct condemnation action. We conclude that the Circuit Court erred in dismissing the inverse condemnation action. We reverse that order and direct that the cause be remanded for further inverse condemnation proceedings, as provided by law.
Because we conclude that the direct condemnation action was erroneously carried forward, we order that the action be dismissed.
We first determine whether the court erred in dismissing Maxey's action for inverse condemnation. The record shows that Maxey was the owner of a ninety-nine-year lease on real property known as the Baker Block Building. Maxey is the successor in interest to the original lessees, and his leasehold interest is subject to mortgages held by Continental Bank & Trust Company and James R. Hammes. Approximately forty years were yet to run on Maxey's leasehold interest.
The Redevelopment Authority of Racine, the condemnor, was created by the Racine Common Council on March 6, 1974, pursuant to sec. 66.431, Stats. The Redevelopment Authority formulated a plan known as Redevelopment Plan for the Monument Square East Urban Renewal Area. The plan was approved by the Racine Common Council's resolution on April 7, 1976. The Baker Block Building, the property involved in these condemnation proceedings, was within the boundaries of the redevelopment plan. During 1975, the Authority made an appraisal of the Baker Block Building and commenced negotiations with Maxey and with the fee simple owner-lessors. The lessors accepted the jurisdictional offer, but Maxey and the two mortgagees of his leasehold interest rejected it.
It was stipulated by the parties that, while the redevelopment plan was being formulated, the Common Council of Racine, on June 5, 1973, by resolution placed a moratorium on the issuance of theater licenses in the central business section of Racine. The area covered by the moratorium included the Baker Block Building, which housed a theater then licensed by the city. On August 20, 1974, pursuant to the previously passed moratorium, the Racine Common Council by resolution refused the application of the theater operator for a renewal license for the theater.
The Redevelopment Authority and the City, after June of 1973, by their agents made statements which were published in the press to the effect that the Baker Block Building "would be taken" through eminent domain proceedings. In addition, the City and the Redevelopment Authority contacted tenants in the Baker Block Building and told them that the property would be condemned and "encouraged and/or caused tenants to vacate the premises." In December of 1975, the City of Racine had the Baker Block Building property removed from the City's tax rolls.
On July 15, 1976, the Redevelopment Authority made a jurisdictional offer for the purchase of Maxey's interest. This offer was declined. On September 21, 1976, Maxey filed the petition for inverse condemnation pursuant to sec. 32.10, Stats. Three days later, while the inverse condemnation action was pending, the Redevelopment Authority, in accordance with sec. 32.06, filed its petition for direct condemnation and filed a lis pendens.
In Maxey's action for inverse condemnation, the Circuit Court, following the directions of sec. 32.10, found that Maxey was the owner of the property for the purpose of condemnation proceedings and that, in the posture of the case, the City of Racine and the Redevelopment Authority were responsible for each other's acts in regard to the acquisition and purported condemnation of the Baker Block Building. The court also found that the property had been taken by the condemning authority when, by governmental action of the City of Racine as a part of the Urban Renewal Project, it refused to issue a theater license for the Baker Block Building upon the application made by the tenant. It found that the taking had occurred on that date, August 20, 1974.
It ruled as a matter of law, however, that the inverse condemnation could not go forward because the condemnor had exercised its powers of condemnation or had begun exercising its condemnation powers when it made its jurisdictional offer on July 15, 1976. Sec. 32.10,...
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