Port Authority of City of St. Paul v. Groppoli, 43507

• Citation: 295 Minn. 1,202 N.W.2d 371
• Decision Date: 17 November 1972
• Docket Number: No. 43507,43507
• Parties: PORT AUTHORITY OF the CITY OF ST. PAUL, Respondent, v. Michael P. GROPPOLI, et al., Appellants.
• Court: Supreme Court of Minnesota (US)

Page 371

202 N.W.2d 371

295 Minn. 1

PORT AUTHORITY OF the CITY OF ST. PAUL, Respondent, v. Michael P. GROPPOLI, et al., Appellants.

No. 43507.

Supreme Court of Minnesota.

Nov. 17, 1972.

Syllabus by the Court

Great weight is given to a condemning authority's determination that a public purpose is involved in taking property. However, courts retain the power to prevent an abuse of discretion in those cases where an owner's constitutional rights are threatened by a proposed taking for a private purpose rather than a public purpose.

Held, under the circumstances of this case, the taking of the instant parcel is an unconstitutional taking of private property for a private use.

Reversed.

Robins, Davis & Lyons, Elliot S. Kaplan and James R. Safley, Minneapolis, for appellants.

Kenneth J. Fitzpatrick, City Atty., R. Scott Davies, Asst. City Atty., St. Paul, for respondent.

Heard and considered en banc.

MacLAUGHLIN, Justice.

An action was commenced by the Port Authority of the City of St. Paul in January 1971 to condemn certain property owned by respondents. Respondents asserted that the petition for condemnation should be denied because the taking was not for a public purpose. The trial court found that the taking was for a public purpose and issued an order granting the petition. We granted respondents' request for a discretionary review of the order of the trial court. The order is reversed.

The issue is whether the taking of respondents' property by the Port Authority is for a public purpose. The Port Authority of the City of St. Paul is a municipal corporation organized and existing under Minn.St. c. 458, and is authorized by law to acquire by condemnation any property in the port district which may be needed by it for a public purpose. Minn.St. 458.17. On August 9, 1960, the Authority formally established within the port district the Riverview Industrial Park. In Port Authority of City of St. Paul v. Fisher, 269 Minn. 276, 132 N.W.2d 183 (1964), we determined that the lands constituting Riverview Industrial Park were blighted or marginal and that the creation of the Park satisfied the prerequisites of c. 458. The parcel of property involved here is within the Park.

The property is improved with a building which is more than 40 years old and which has been used by respondents since 1960 or 1961 to warehouse and distribute beer. The warehousing use conforms to the plan of development for the Park, but there was evidence that the physical characteristics of the building were not compatible with the overall plan of development because they do not meet the Park's restrictive covenants and are not completely consistent with the expected aesthetic standards.

On August 29, 1961, and again on February 20, 1962, the Authority authorized its staff to acquire the subject property. On December 28, 1961, a representative of American Hoist & Derrick Company (hereafter Hoist) wrote a letter to the Authority which contained this language:

'We wish to be on record that our company should be considered the No. 1 prospect for the acquisition and proper usage of any area cleared for the industrial development program on the riverside of Fillmore Street and, as a minimum, between Robert Street and State Street. Should any of these parcels be offered to anyone else without first giving American Hoist & Derrick Company the right of refusal we would consider it an unfriendly act and not in the best interests of American Hoist & Derrick Company and the City of St. Paul.'

The subject parcel is located in the area described in the letter. Respondents attempted to introduce the letter into evidence at the trial, but a hearsay objection to the letter was sustained.

Negotiations began between the Authority and respondents for the purchase of the property. Respondents were informed that the building was to be demolished and that the land would be transferred to Hoist for uses connected with its business operations. Subsequently, respondents learned from the president of Hoist that the building was not going to be demolished but would be used 'as is' by Hoist. Continuing negotiations failed to lead to an agreement of sale by respondents to the Authority, and no further action was taken for some time by the Authority. In 1968, respondents purchased adjacent properties, and their property then satisfied the Park's required land-to-building ratio. The Authority made no objections to the purchase.

In March 1969, Hoist brought a declaratory judgment proceeding against the Authority to, among other things, compel the Authority to lease respondents' property to Hoist after it was acquired, pursuant to an alleged agreement between Hoist and the Authority. ¹ The Authority's answer to that action contained the following as one of its defenses:

'In the event there is an agreement as alleged by the plaintiff, said agreement is illegal and unenforceable since it constitutes the taking of property for the exclusive benefit of the plaintiff and not for the benefit of the Port District or the citizens thereof, all contrary to the Constitution and Laws of the State of Minnesota and the United States of America.'

Respondents attempted to introduce the Authority's answer in the Hoist lawsuit into evidence, but it was not admitted.

On February 24, 1970, the Authority, by formal resolution, approved a settlement of the Hoist lawsuit. The settlement, among other things, required the Authority to proceed to condemn the subject property. The approved stipulation of settlement also requires the Authority to lease the land and building to Hoist in an 'as is' condition after it has been acquired. The petition for condemnation was then served and filed, with the subsequent trial and order leading to this appeal.

1. Respondents argue that the letter of December 28, 1961, from Hoist to the Authority and the answer interposed by the Authority in the Hoist lawsuit should have been admitted into evidence. It is not necessary to consider these contentions because we are satisfied on other grounds that the taking was not for a public purpose.

2. The trial court made the following finding:

'That Petitioner has orally agreed to allow a private industrial interest to use the parcel named herein and the buildings thereon in an 'as is' condition for a period not to exceed five (5) years; that such use is not unreasonable in light of the overall time period required for development of the Riverview Industrial Park.'

This finding is apparently based on testimony at the trial by Frank D. Marzitelli, executive vice president of the Authority. Part of this testimony was as follows:

'Q Thank you. Mr. Marzitelli, one other question, just so it's clear in the record. At any time during which you were negotiating or discussing this property with either American Hoist & Derrick or Capitol City Distributing Company, did you ever reach an accord on the issue of whether or not the building would be used for a period of more than five years by the proposed new lessee, American Hoist & Derrick?

'A We reached no formal agreement. We had discussions on the question; and, to the best of my knowledge, and on the basis of the record which I located late last night, the five years that I insisted was the maximum period that the company would be remaining in the building, if they were in fact permitted to lease the building, is the period that we discussed. No period longer than five years was ever discussed. And there was no agreement even reached on that. This is merely a proposal.'

However, attached to the stipulation of settlement of the Hoist lawsuit against Authority is a copy of the lease which the Authority agreed to enter with Hoist. That lease states:

'TO HAVE AND TO HOLD (the subject premises), with quiet and undisturbed possession for a term commencing on the _ _ day of _ _, 19_ _, and ending thirty (30) years thereafter * * *.'

It further states that the lease can be terminated during its term only for the standard reasons; e.g., misuse of the property, failure to comply with the terms of the lease.

The stipulation and all attached exhibits, including the lease, were specifically approved by the Board of Commissioners of the Port Authority in its resolution in February 1970. Marzitelli admitted that although he makes recommendations to the commissioners, they are the 'supreme body' in finally approving or disapproving any agreement. From its plain and unambiguous language, the lease which the...