City of Center Line v. Michigan Bell Telephone Co.

196 N.W.2d 144, 387 Mich. 260, 1972 Mich. LEXIS 162

Opinions

T. Gr. Kavanagh, J.

This suit involves the question of a public utility’s right to reimbursement costs in relocating its equipment in connection with an urban renewal project.

The City of Center Line began condemnation proceedings to acquire property for urban renewal pursant to the provisions of MOLA 125.71 et seq.; MSA 5.3501 et seq. the rehabilitation of blighted areas (NBA) act. Michigan Bell’s petition to intervene in the proceedings was denied by the trial judge, but the Court of Appeals reversed

* and remanded for determination of Michigan Bell’s damages.

Because the precise question was a matter of first impression we granted leave to speak to the issue.

The claim of Michigan Bell is that by virtue of its franchise it has an irrevocable contract right to use the highways of the state which may not be impaired under the provisions of US Const, art I, § 10, and Const 1963, art 1, § 10 nor taken away without payment of just compensation under the provisions of the US Const, Am XIV, § 1 and Const 1963, art 1, § 17, and art 10, § 2.

The City of Center Line maintains that whatever property rights Michigan Bell may have in the affected city streets, they are subject to the regulation by the city under the police power of the state, and that no taking is involved here which entitles Michigan Bell to reimbursement.

The Court of Appeals noted the “multitude of decisions from other jurisdictions” holding a utility company had no compensable right under facts similar to those presented here. It cited:

“County of Santa Barbara v. United States (CD Cal, 1967), 269 F Supp 855; City of Wichita v. Kansas Gas & Electric Company (1970), 204 Kan 546, 464 P2d 196; Consolidated Edison of New York v. John Lindsay as Mayor (1964), 24 NY2d 309 (300 NYS 2d 321); New York Telephone Company v. City of Binghamton (1966), 18 NY2d 152 (272 NYS2d 359 (219 NE2d 184); State Highway Commission v. Clackamas Water District (1967), 247 Ore 216, 428 P2d 395; Western Union Telegraph Company v. Tarrant County (Tex Civ App, 1970), 450 SW2d 763.”

The Court held, however, that for two reasons Michigan Bell is entitled to reimbursement: 1) the development of the property acquired would be by a private developer who would otherwise benefit by the utility company’s loss, and 2) since urban renewal is a “socially orientated program operating under the guise of the police power” the burden of its costs should be borne by the general taxpaying public, and unless the utility be reimbursed by the condemning authority, the rate paying users of the utility will ultimately bear the cost.

We are not persuaded by the first reason.

In In re Slum Clearance, 331 Mich 714 (1951), it was claimed that the condemnation proceedings for slum clearance was unconstitutional because the real estate, while taken for a public use, is, after objectionable buildings are razed, to be sold for redevelopment by private persons and that, considering the purposes of the condemnation as a whole, the proposed action is improper and unconstitutional, as condemning the lands of one private person to be devoted to the uses and purposes of another.

This Court held the slum clearance act constitutional saying (p 720):

“It seems to us that the public purpose of slum clearance is in any event the one controlling purpose of the condemnation. The jury were not asked to decide any necessity to condemn the parcels involved for any purpose of resale, but only for slum clearanee. * * *

“In the instant case, the resale [abating part of the cost of clearance] is not a primary purpose and is incidental and ancillary to the primary and real purpose of clearance. Reconstruction was asked for in the petition and resale is necessary for such purpose, but the resale is not for the purpose of enabling the city nor any private owner to make a profit.” (Emphasis supplied.)

The same reasoning applies here. The controlling purpose of the city’s plan is to rehabilitate a blighted area. The property is acquired, not for the purpose of redevelopment at a profit to the city or any private developer, but to protect the health, safety, morals and general welfare of the municipality.

Since the controlling purpose is a public use, the circumstance of a private developer’s benefit would not change its character.

The second reason is sound, although its expression may be unfelicitous. Whether it is “inappropriate” for the rate payers to pay these costs or whether they “should” be borne by the general taxpaying public are legislative rather than judicial judgments.

The conclusion that the legislature did so determine however, is inescapable from a fair reading of the RBA act.

The whole tenor of the act is for the city to acquire private interests through purchase. The inclusion in the definition or real property in section 2(e) of “every estate, interest, privilege, easement” and the direction to the city to acquire such real property in section 5 obviates the constitutional question of whether it is necessary to reimburse a utility for relocation costs when a public use entails the removal and relocation of equipment. (Emphasis added.)

We hold that the KB A act requires that the city reimburse a utility for costs for removal and relocation of its equipment necessitated by the implementation of an urban renewal plan under the act.

No costs, a public question.

T. M. Kavanagh, C. J., and T. E. Brennan and Williams, JJ., concurred with T. Gr. Kavanagh, J.

Center Line v Michigan Sell Telephone Co, 26 Mich App 659 (1970).