Michigan Bell Tel. Co. v. City of Detroit

• Decision Date: 03 June 1981
• Docket Number: Docket No. 45515
• Citation: 308 N.W.2d 608,106 Mich.App. 690
• Parties: MICHIGAN BELL TELEPHONE COMPANY, a Michigan Corporation, Plaintiff-Appellee, v. CITY OF DETROIT, a municipal corporation, Defendant-Appellant. 106 Mich.App. 690, 308 N.W.2d 608
• Court: Court of Appeal of Michigan — District of US

Page 608

308 N.W.2d 608

MICHIGAN BELL TELEPHONE COMPANY, a Michigan Corporation Plaintiff-Appellee, v. CITY OF DETROIT, a municipal corporation Defendant-Appellant.

Docket No. 45515.

106 Mich.App. 690, 308 N.W.2d 608

Court of Appeals of Michigan.

June 3, 1981.

Released for Publication Aug. 5, 1981.

[106 MICHAPP 691] Hilda H. Hirata, Detroit, for defendant-appellant.

George E. Ward, Detroit, for plaintiff-appellee.

Before T. M. BURNS, P. J., and MAHER and RILEY, JJ.

T. M. BURNS, Presiding Judge.

The defendant City of Detroit comes before this Court appealing an April 27, 1979, lower court order granting summary judgment in favor of plaintiff on stipulated damages of $276,126.45. We reverse.

On September 4, 1970, and July 13, 1973, the Detroit Common Council passed two resolutions [106 MICHAPP 692] that vacated certain streets in the City of Detroit for construction of a sewage treatment facility. On the streets and alleys that were to be vacated pursuant to these resolutions, plaintiff, Michigan Bell, owned several facilities.

On May 26, 1974, plaintiff filed a complaint in the Wayne County Circuit Court and claimed that defendant had to condemn and compensate Bell for the easements that it owned on the vacated streets and alleys. The damages as stated were later stipulated by defendant. In a May 28, 1978, relocation agreement, plaintiff agreed to move its facilities but without prejudice to its suit for reimbursement from the defendant for the cost of doing so.

On April 13, 1979, the Wayne County Circuit Court ruled that plaintiff did have a vested property right in the easements that it owned on the vacated streets and alleys. It was further found that plaintiff had not only a property right in these easements for its facilities, but that it also had a contractual right which defendant could not abridge. The lower court found that defendant was obligated to pay just compensation for condemning plaintiff's easements. Damages were awarded in the amount of those previously stipulated.

The defendant city now appeals, and we reverse.

Under the Michigan telephone act, M.C.L. § 484.1 et seq.; M.S.A. § 22.1411 et seq., telephone companies are given the authority to construct telephone lines along public streets. Upon acquisition of the franchise from the state, a telephone utility's easement becomes a vested right. City of Niles v. Michigan Gas & Electric Co., 273 Mich. 255, 262 N.W. 900 (1935). This franchise from the state Legislature is separate from, and in addition to, any franchise granted by the local municipality in which the [106 MICHAPP 693] utility operates. City of Lansing v. Michigan Power Co., 183 Mich. 400, 150 N.W. 250 (1914). Once the utility accepts the right to operate the franchise, it becomes a contractual right protected by the 14th Amendment for the life of the utility corporation. Id.

The dispute in the present case is a simple one. Defendant contends that its police powers permit it to require plaintiff to move its facilities from one street to another for the purpose of making way for a public improvement. Plaintiff, on the other hand, contends that because its easements are vested, it may not be required to relocate its facilities without reimbursement from defendant, as would be the case in any condemnation proceeding.

Local governments have no inherent power to regulate public utilities. Detroit v. Michigan Public Utilities Comm., 288 Mich. 267, 286 N.W. 368 (1939). The power to do so must be expressly granted in the state constitution, statutes, or municipal charter in order for a municipality to be able to exercise such power. Traverse City v. Consumers Power Co., 340 Mich. 85, 64 N.W.2d 894 (1954); Public Utilities Comm., supra. As a general proposition, regulation of a public utility by a local government is valid and constitutional if it is authorized, reasonable, and related to public health, safety, or general welfare. Kalamazoo v. Kalamazoo Circuit Judge, 200 Mich. 146, 166 N.W. 998 (1918).

Thus, even though a utility has a valid franchise from the local municipality, it may be subject to all regulation by that governmental unit which is reasonably necessary to protect public welfare. Consumers Power Co., supra, Detroit v. Fort Wayne & E. R. Co., 90 Mich. 646, 51 N.W. 688 (1892). [106 MICHAPP 694] Further, even where the public utility is possessed of a franchise from the state, local units of government are not thereby divested of power to regulate the utility in such ways as are necessary to reasonably protect the general welfare of the community. Consumers Power Co., supra.

In Center Line v. Michigan Bell Telephone Co., 26 Mich.App. 659, 182 N.W.2d 769 (1970), this Court held that where a telephone utility company was forced to relocate its equipment to make way for an urban renewal project, the burden of the relocation had to be born by the taxpayers, not the utility. However, the Court narrowed its holding to the specific case of urban renewal because the Court found that in that situation the Legislature exempted utilities from the common law principle that subordinated their rights to those of the municipality to exercise the police powers. The Court noted:

"Nothing in this opinion should be construed as an attempt to alter the common law right of the city to subordinate the utility's interest to an exercise of police power in any other setting than urban renewal." Id., 664, 182 N.W.2d 769.

Although our state Supreme Court has held that a school district was not empowered by the Legislature to require a public utility to relocate its facilities without compensation, Detroit Board of Education v. Michigan Bell Telephone Co., 395 Mich. 1, 232 N.W.2d 633 (1975), the Court left unanswered the question of whether relocation without compensation can be required by a governmental authority in other circumstances, such as those of the case at bar.

The authority of a municipality to exercise police powers for the common good and regulate a [106 MICHAPP 695] utility was made evident in Fort Wayne & E. R. Co., supra, 654, 51 N.W. 688:

"The charter of the city of Detroit commits the regulation, supervision, and control of its streets to the common council. It empowers the council to improve the same and to determine the nature and details of such improvement. It gives to the common council the power to control prescribe and regulate the manner in which the streets shall be used and enjoyed. These powers are held in trust for the public benefit. They cannot be surrendered or delegated to private pa...