Scharping v. Johnson

• Decision Date: 01 November 1966
• Citation: 32 Wis.2d 383,145 N.W.2d 691
• Parties: Roland A. SCHARPING, Statutory Representative for Petitioners etc., Appellant, v. Walter K. JOHNSON, Director etc., Dept. of Resource Development et al., Respondents.
• Court: Wisconsin Supreme Court

Page 691

145 N.W.2d 691

32 Wis.2d 383

Roland A. SCHARPING, Statutory Representative for Petitioners etc., Appellant, v. Walter K. JOHNSON, Director etc., Dept. of Resource Development et al., Respondents.

Supreme Court of Wisconsin.

Nov. 1, 1966.

Schloemer Law Offices, West Bend, for appellant.

Bronson C. La Follette, Atty. Gen., Albert Harriman, Asst. Atty. Gen., Madison, for respondents.

HEFFERNAN, Justice.

The creation of municipal corporations is peculiarly within the province of the legislature. A unit of local government is a creature of the legislature. It owes its existence to legislative fiat and its life may be snuffed out by appropriate legislative action. It is a matter of hornbook law ¹ that:

'The exercise of the legislative function of creating municipal corporations is wholly within the discretion of the legislature, and is not subject to the control of the judicial power.'

'Subject to state constitutional limitations, the power of the state legislature over municipal corporations is complete, and it may create, change, divide, and even abolish them, at pleasure, as at deems in the public good.' ²

In Madison Metropolitan Sewerage Dist. v. Committee on Water Pollution (1951), 260 Wis. 229, 50 N.W.2d 424, we pointed out the broad scope of legislative control over local government. Quoting earlier cases, this court said:

"Municipal corporations are political subdivisions of the state, created as convenient agencies for exercising such of the governmental powers of the state as may be intrusted to them. * * * The state, therefore, at its pleasure, may * * * expand or contract the territorial area, unite the whole or a part of it with another municipality, repeal the charter and destroy the corporation. All this may be done, conditionally or unconditionally, with or without the consent of the citizens, or even against their protest. In all these respects the state is supreme, and its legislative body, conforming its action to the state Constitution, may do as it will * * *."

What the appellants would have us review is, therefore, the exercise of a legislative function that has been delegated to the state department of resource development. Sec. 66.017(2), Stats., makes the decision of the director reviewable under the terms of ch. 227, Stats. The objections raised by the appellant must be tested by sec. 227.20(1)(d) and (e). Sec. 227.20 provides that the decision of the agency may be reversed or modified by the circuit court:

'(I)f the substantial rights of the appellant have been prejudiced as a result of the administrative findings, inferences, conclusions or decisions being:

'(d) Unsupported by substantial evidence in view of the entire record as submitted; or

'(e) Arbitrary or capricious.'

We conclude the scope of our review to be identical to that given to the circuit court by sec. 227.20 Stats.

The appellant contends that the action of the director was arbitrary or capricious and, hence, violative of the standards imposed by sec. 227.20(1)(e), Stats. A review of the record, however, makes it clear that the director's action was neither arbitrary nor capricious. The capricious use of administrative power is described as follows:

'It is, in general, the most flagrant violations of the scope of delegated discretionary powers which are described as capricious. In common usage, the term refers to a whimsical, unreasoning departure from established norms or standards; it describes action which is mercurial, unstable, inconstant, or fickle. In legal usage, a decision is capricious if it is so unreasonable as to 'shock the sense of justice and indicate lack of fair and careful consideration.'

'Typical of the cases in which the epithet capricious may properly be applied are those where an agency has given different treatment to two respondents in identical circumstances, or has exhibited an irrational unfairness which suggests malice or discrimination.' Cooper, State Administrative Law, Vol. 2 (1965), p. 761.

This court has stated:

'Arbitrary or capricious action * * * occurs when it can be said that such action is unreasonable or does not have a rational basis. * * * Arbitrary action is the result of an unconsidered, wilful and irrational choice of conduct and not the result of the 'winnowing and sifting' process.' Olson v. Rothwell (1965), 28 Wis.2d 233, 239, 137 N.W.2d 86, 89.

Obviously, there is no basis in this record for denominating the conduct of the director either as arbitrary or capricious in light of the above definitions. The real question is whether the findings are supported by substantial evidence in light of the record as a whole. The test to be used is that enunciated in Ashwaubenon v. State Highway Comm. (1962), 17 Wis.2d 120, 131, 115 N.W.2d 498, 504, where we stated:

'(W)hen the 'substantial evidence' rule of sec. 227.20(1)(d), Stats., is applied to a legislative-type decision, the test is whether reasonable minds

could arrive at the same conclusion reached by the

commission.' Is there substantial evidence to

support the director's determination?

The director applied the standards of sec. 66.016, Stats., to the petition and considered the application to be for the incorporation of an isolated village ³ and determined the petition must be dismissed. To qualify for incorporation, the area must meet the requirements of both sec. 66.016(1)(a), pertaining to the characteristics of the territory, and sec. 66.016(1)(b), in reference to territory beyond the core. It must also be determined to be in the public interest, after giving consideration to the guidelines of sec. 66.016(2).

The director found that:

'Section 66.016(1)(a), Wis. Stats., states that the area to be incorporated must be reasonably homogeneous and compact. In fact, the area outside of the core is largely rural. Being rural, with sizeable individual land holdings, the requirement of compactness is not met.' ⁴

There is evidence in the record showing considerable disparity in the population of the sections within the proposed incorporation. The disparity of population ranges from 298 to 29. We conclude that the requirement of homogeneity is not met because of this diversity. We do, however, question the director's interpretation of the standard of 'compactness.' In view of legislative concern over attenuated annexations and gerrymandered 'shoestring' shaped districts, we conceive that the requirement of 'compactness' is addressed primarily to the regularity of the shape of the proposed annexation. Taking notice of the map, made a part of the record, it is apparent that the incorporation does not offend in that respect.

The director also found:

'Also of concern is the requirement that the area have a reasonably developed community center which is the focal point for the common social, economic and cultural ties that bind the community. It is the opinion of the Director that the cross-roads facilities heretofore enumerated do not constitute a reasonably developed community center. The fact that the only church in the core is now empty and unused would suggest that community activities occur elsewhere. There is no facility for public gatherings, no park, no town square or municipal center, no bank, no telephone exchange. The crossroads development which exists is too limited in facilities to function effectively as a community center.'

The evidence from which the director might reasonably make this finding is undisputed. The record ⁵ shows that the core area contains the following establishments:

'Post Office * * * warehouse, unused church, general store, service station, feed store, two taverns, machine shop, print shop, paint shop, two-room school, a subdivision with nine houses, railroad, natural gas, telephone service, public sewer, no public water supply. * * * Area children attend highschool in the Village of Germantown. Shoppers patronize the local merchants, but there are a lot of things that can't be gotten there, so they go to West Bend, Menomonee Falls, and Cedarburg.'

Hence, it appears that there is substantial evidence to support the findings of the director that the proposed incorporation does not meet the test of sec. 66.016(1)(a), Stats. Since this is a mandatory requirement, this deficiency alone supports the decision to dismiss the petition.

It is equally apparent that the director could reasonably have determined that the area did not satisfy sec. 66.016(1)(b), which requires that in the territory beyond the most densely populated square mile, in an isolated municipality (which by the definitions of sec. 66.013(2)(e) includes an isolated village), there shall be an average of 30 housing units per quarter section or an assessed value for real estate tax purposes of which more than 25 percent is attributable to mercantile, manufacturing, or public utility uses. It is undisputed that not one quarter section beyond the core meets this requirement. The highest number of dwelling units in any quarter section is 10. The director also found that the area did not qualify under the alternative based on assessed valuation. He applied his expert judgment to the assessment rolls and concluded that less than 10 percent of the assessed valuation is attributable to existing mercantile or manufacturing uses. He also found that there was no significant potential for growth indicating that these figures would change drastically. This evidence is uncontradicted in the record. It is apparent that these findings are also supported by substantial evidence. ⁶

Nor can the petitioner controvert the finding of the director that the incorporation was not in the public interest. In re Incorporation of Village of North Milwaukee (1896), 93 Wis. 616, 624, 67 N.W. 1033, 1036, this court held that it was beyond the judicial power to determine the legislative question of whether the public interest would be promoted by the incorporation of a village. We stated:

'The question as to whether incorporation is for...