Port Authority of City of St. Paul v. Fisher

• Decision Date: 11 September 1964
• Docket Number: No. 39411,39411
• Citation: 269 Minn. 276,132 N.W.2d 183
• Parties: PORT AUTHORITY OF CITY OF SAINT PAUL and Richard C. Radman, et al., as its Commissioners, Respondents, American Hoist & Derrick Company, Respondent, v. Fred W. FISHER as Commissioner and as President of said Port Authority, Appellant.
• Court: Minnesota Supreme Court

Page 183

132 N.W.2d 183

269 Minn. 276

PORT AUTHORITY OF CITY OF SAINT PAUL and Richard C. Radman et al., as its Commissioners, Respondents American Hoist & Derrick Company, Respondent, v. Fred W. FISHER as Commissioner and as President of said Port Authority, Appellant.

No. 39411.

Supreme Court of Minnesota.

Sept. 11, 1964.

Rehearing Denied Oct. 20, 1964.

Syllabus by the Court

1. The state or its municipal subdivisions or agencies may expend public money only for a public purpose.

2. A public purpose is such activity as will serve as a benefit to the community as a body and which, at the same time, is directly related to the functions of government.

3. The mere fact that some private interests may derive an incidental benefit from the activity does not deprive the activity of its public nature if its primary purpose is public. If, however, the primary object is to promote some private end, the expenditure is illegal, although it may incidentally also serve some public purpose.

4. The rule in this state is that taxes may be levied, or public money spent, only for a public purpose.

5. It is the rule in this state that a justiciable controversy must exist before the courts have jurisdiction to render a declaratory judgment regarding the constitutionality of a statute.

6. While ordinarily a public officer, in the absence of prejudice to a personal right, may not, as a defense for the nonperformance of a ministerial duty imposed by statute, assail the constitutionality of the statute; he may do so if a question affected with the public interest is involved. Such a public interest is involved in the case at bar. The proposed execution and delivery of the contract and the issuance pursuant thereto of Port Authority revenue bonds involves a matter of public interest and likewise gives rise to a justiciable controversy.

7. The rule is well settled in this state that the legislature is powerless to authorize the expenditure of public funds by a municipal subdivision of the state except for a public purpose.

8. No testimony was presented at the trial court in the litigation of fact issues, judgment being entered upon motion for summary judgment. This was error. It is well settled that a motion for summary judgment should be granted only when there is no genuine issue as to a material fact.

9. Genuine issues of unlitigated facts exist herein, leaving the record devoid of facts which are material to determining whether the contemplated purpose is, in actuality, a public one. Necessity for public rather than private financing of improvements must be shown by producing testimony on that issue.

Dorsey, Owen, Marquart, Windhorst & West, DeForest Spencer, Jr., Minneapolis, for appellant.

Donald L. Lais, Corp. Counsel, Louis P. Sheahan, Director of Law, Walter F. Mondale, Atty. Gen., Norman E. Biorn, St. Paul, for respondents.

NELSON, Justice.

This suit was brought in the District Court of Ramsey County by Port Authority of the City of Saint Paul, a body politic and corporate and a governmental subdivision; Richard C. Radman, Bernard T. Holland, Neil Griebenow, Robert E. Peterson, H. William Blake and John Rendall, commissioners of said port authority; and American Hoist & Derrick Company, a Minnesota corporation, against Fred W. Fisher, commissioner and president of said port authority. A declaratory judgment was sought adjudging and declaring that a proposed public contract denominated 'Lease,' together with its provisions, terms, and conditions, is in conformity with and duly authorized by Minn.St. c. 458; that said statute, in so far as it authorizes the proposed public contract and the issuance and sale of revenue bonds pursuant to it, is valid and constitutional; that such bond issue and the proposed expenditure of proceeds of the same to defray improvement construction costs incurred by said Authority pursuant to the proposed public contract are valid under the provisions of c. 458; that by virtue of said c. 458 the commissioners are granted authority and power to approve and authorize the execution and delivery by said Authority of said proposed public contract and to validly adopt Resolution No. 229 and motion approving and authorizing such action as adopted at a special meeting on June 20, 1963; that defendant is duly authorized and empowered to execute and deliver the proposed public contract in the name and on behalf of said Authority; and that said defendant has the duty, in his capacity as president, to so execute and deliver the same; that defendant, as president of the Authority, subject to the execution and delivery of said proposed public contract by and between the said parties thereto, will be authorized and empowered to execute and deliver said revenue bonds of the Authority, pursuant to its terms and provisions; that any and all such revenue bonds which may be issued and sold pursuant thereto and subsequent to the execution and delivery of said proposed public contract will be deemed valid and enforcible according to their tenor.

The defendant, Fred W. Fisher, refused to execute the lease agreement on the ground that the proposed contract and revenue bond issue are neither constitutional nor lawful under the provisions of c. 458. The district court ordered judgment in favor of their validity. This appeal by defendant is from the judgment entered.

Under the proposed contract denominated 'Lease' the Port Authority would lease certain real property owned by it to the American Hoist & Derrick Company together with certain buildings and structures to be erected thereon which are intended to be suitable for use as an office building, an engineering research center, a manufacturing facility, a restaurant, an automobile parking lot, and a tunnel which will lead to other property presently owned or leased by the company on an adjacent block. The estimated cost of the improvements to be paid by the Authority from the proceeds of the sale of its revenue bonds would be $1,200,000.

The Port Authority is a governmental subdivision authorized to exercise all of its powers and duties within the boundaries of the city of Saint Paul. It consists of seven commissioners, six of whom were plaintiffs herein. Originally a port authority's powers and duties were generally confined to promoting the welfare of the port district, developing commerce within the district, and providing bulkheads, jetties, piers, wharves, docks, landing places, warehouses, and other transportation facilities. ¹ By L.1957, c. 812, a port authority was empowered to create industrial development districts. Minn.St. 458.191, subd. 1, provides:

'The port authority * * * may * * * create industrial development districts within the port district and define the boundaries thereof if it finds that the creation of such development district or districts is proper and desirable in establishing and developing a system of harbor and river improvements and industrial developments in each port district.

Section 458.191, subd. 2, provides in part:

'It is hereby declared to be the public policy of the legislature of the State of Minnesota that it is in the public interest to empower the port authority to employ the power of eminent domain, and for such port authority to advance and expend public moneys for the purposes contained in L.1957, chapter 812, and to provide for means by which marginal area properties may be developed or redeveloped in accordance with the legislative policies hereinafter stated.'

Section 458.191, subd. 2, in stating the legislative policies, declares in effect that the development and redevelopment of marginal area properties is necessary to the economic security and general welfare of the inhabitants of the port district; that such development and redevelopment cannot be accomplished by private enterprise alone without public assistance; that when such development and redevelopment cannot be accomplished by private enterprise alone it is in the public interest to employ the power of eminent domain and advance or expend public moneys for such purpose; that such development and redevelopment are public uses and purposes for which public moneys may be advanced or expended and private property acquired, and are governmental functions and of state concern in the interest of health, safety, and welfare of the peoples of the state and the communities in which such areas exist; that the necessity in the public interest is a matter of legislative determination. It is further declared that marginal lands are a serious menace which is injurious to the health, safety, and welfare of the people of the state and the communities in which such areas exist; that such marginal lands cannot be remedied solely by regulatory processes of the police power; that such marginal lands contribute substantially and increasingly to the incidence of crime and juvenile delinquency, and necessitate disproportionate expenditures for crime prevention, correction, prosecution, and punishment, and for maintenance of adequate police, fire, and accident protection, and other public facilities and services; that the benefits resulting from remedying marginal lands will accrue to all the inhabitants and property owners in the communities in which such lands exist; that while marginal property remains unchanged the owner of neighboring property lacks incentive and ability to improve his land with the result that such conditions then toward further obsolescence, deterioration, and disuse; that such deterioration of marginal land frequently can be halted only by redeveloping the entire area or substantial portions thereof; that private assembly of areas for redevelopment is uneconomic and practically impossible in many instances due to the legal power and excessive expenditures necessary to the acquisition of marginal lands which are subdivided into small parcels and held in scattered ownerships under frequently defective titles; that the sale or...