In Re Condemnation by the City of Minneapolis of Certain Lands

632 N.W.2d 586, 2001 Minn. LEXIS 490, 2001 WL 923428

Opinions

OPINION

RUSSELL A. ANDERSON, Justice.

In this eminent domain action, the City of Minneapolis (City) acquired title to and possession of property belonging to Joseph E. Commers Limited Partnership (respondent) through a statutory quick take procedure. We are asked to determine if the City owes interest at the rate set for judgments (judgment interest) to respondent on funds the City deposited with the court incidental to its quick take of respondent’s property. The district court denied respondent’s request for judgment interest because it found that the deposited funds, although not requested by respondent, were available to respondent. The court of appeals reversed the district court concluding that the deposited funds were not available to respondent until the district court issued its order for their disbursement. We reverse the court of appeals and hold that the district court need not order disbursement of funds for those funds to be considered available for purposes of the rule allowing judgment interest until the funds become available to the property owner. We also hold that the district court’s finding that the funds were available to respondent when deposited with the court is not clearly erroneous.

The City acquired respondent’s property through statutory quick take procedures, which allow a condemning authority to acquire immediate title to and possession of property even before damages for the taking are determined. Minn.Stat. § 117.042 (2000). To effect a quick take, the condemning authority must pay the owner directly or deposit in court an amount equal to the condemning authority’s approved appraisal of value for the property. Id. If payment is deposited with the court, the condemning authority may apply to the court for an order transferring title and possession of the property from the owner to the condemning authority. Id. Amounts deposited with the court are to be paid out under the direction of the court. Id. If the property owner contests the condemning authority’s approved appraisal of value for the property, court-appointed commissioners determine the damage a property owner has sustained on account of the taking, Minn.Stat. §§ 117.075 (2000), 117.042, and any party may appeal to the district court from the commissioners’ award of damages. MinmStat. § 117.145 (2000).

The eminent domain statute refers to two types of interest. One type of interest derives from the court administrator’s statutory obligation to deposit into an interest-bearing account amounts deposited with the court pursuant to the quick take procedure. Minn.Stat. § 117.042(b) (2000). The court administrator is required to pay the interest earned to the ultimate recipients) of the amount deposited. Id. The other type of interest is on an award of damages and is at the statutory rate of interest on judgments established in Minn. Stat. § 549.09 (2000). Minn.Stat. § 117.195, subd. 1 (2000). This interest is paid by the condemning authority. See id. We deal here only with a claim pursuant to Minn.Stat. § 117.195 for judgment interest pursuant to Minn.Stat. § 549.09 and not court administrator interest.

On November 3, 1998, the City deposited with the court quick take funds of $425,000 and acquired title to and possession of respondent’s property. Respondent did not seek disbursement of the funds at that time. Court-appointed commissioners subsequently appraised damages for the City’s taking of respondent’s property at $520,000, and on May 17, 1999, the City deposited with the court an additional $95,000, the difference between the commissioners’ award of $520,000 and the City’s earlier quick take deposit of $425,000. The City also deposited with the court $2,180.75, which represents judgment interest on the $95,000 from November 8, 1998, the date of the City’s quick take of the property, to May 17, 1999, the date of its deposit of $95,000 with the court. See MinmStat. § 117.195, subd. 1.

On May 27, 1999, almost 7 months after deposit of the initial $425,000, respondent petitioned the court to withdraw all of the deposited funds. The City interposed no objection, and the court ordered disbursement of the funds to respondent.

On August 11, 1999, respondent by motion requested that the court order the City to pay judgment interest to respondent on the $520,000 from November 4, 1998, the day after the City took possession of the property, to June 10, 1999, the date of hearing on respondent’s petition to withdraw the funds.¹ The district court denied respondent’s motion because it found that the funds were available to respondent during that time.

The court of appeals reversed the district court concluding that the City owed judgment interest on the deposited funds from the date the property was taken by the City to the date the district court ordered disbursement of the funds to respondent. In re Condemnation by the City of Minneapolis, 609 N.W.2d 923, 926 (Minn.App.2000). According to the court of appeals, the funds were not available to respondent until the district court issued an order for their disbursement because (1) the City could have paid the funds directly to respondent rather than depositing them with the court; (2) to withdraw the funds, respondent had to file a motion, incur expenses, and “overcome legal obstacles”; and (3) it was speculative as to whether an earlier motion to disburse the funds would have been granted. Id.

We first address the legal issue of whether a district court must order disbursement of deposited quick take funds for those funds to be considered available for purposes of the constitutional requirement that just compensation, for the taking of private property must include judgment interest until the funds are available to the property owner. See Ford Motor Co. v. City of Minneapolis, 143 Minn. 392, 395, 173 N.W. 713, 715 (1919). We then address whether the evidence supports the district court’s finding that the funds were available to respondent.

I.

The proper interpretation of the quick take statute in conjunction with the rule set forth in Ford presents a question of law, which we review de novo. In re Estate of Janecek, 610 N.W.2d 638, 641 (Minn.2000).

The federal and state constitutions mandate that just compensation be paid before the government takes private property under the power of eminent domain. U.S. Const, amend. V; Minn. Const, art. I, § 13. More than 80 years ago we held that just compensation includes interest on a condemnation award from the time of an award, which was also when the property was deemed taken by the condemning authority, until payment becomes available to the property owner. Ford, 143 Minn. at 395, 173 N.W. at 715 (“The just compensation required by the Constitution includes not only the amount of the final award but also the interest thereon from the date of the original award until the money becomes available to the landowner.”).² Ford predated the quick take statute and did not involve a deposit of funds with the court. However, it is the Ford rule requiring interest as part of just compensation that is at issue in this case, specifically whether deposited quick take funds are available to the property owner for purposes of the Ford rule.

We considered whether a condemning authority must pay judgment interest on deposited quick take funds in Fine v. City of Minneapolis, 391 N.W.2d 853 (Minn.1986). In Fine, the district court directed the transfer of title to and possession of private property to the condemning authority under quick take proceedings. Id. at 854. The property owner, who remained in possession of the property, subsequently entered into a written agreement with the condemning authority. Id. The agreement continued the condemnation proceeding, reserved to both parties the right to appeal from any subsequent commissioners’ award, allowed the property owner to continue in possession of the property upon payment of monthly rent to the condemning authority, and provided that the property owner was entitled to immediate receipt of the deposited quick take funds. Id. The district court approved the agreement and the property owner received payment of the quick take funds. Id. Later, the property owner brought an independent action seeking judgment interest from the date the district court directed the transfer of title and possession to the condemning authority to the date the funds were disbursed to the property owner. Id. at 854-55. We concluded that the award of interest was obviated by the property owner’s immediate entitlement to the deposited funds. Id. at 856.

Respondent argues that our decision in Fine was based solely upon the written agreement between the parties that provided for the property owner’s immediate entitlement to deposited funds. We disagree. We stated in Fine that, “As a practical matter, the deposit by the city of the $55,000 approved appraisal value and the owners’ immediate entitlement to those funds obviates an award of interest on the deposited monies.” Id. We did not say in Fine, nor did we imply, that the only basis for determining that deposited funds were available to the property owner was the written agreement. However, in Fine we also did not hold explicitly that the quick take funds became immediately available because they were deposited with the court. Thus, the question remains³ whether deposited quick take funds are available for purposes of the Ford rule. 143 Minn. at 395, 173 N.W. at 715.

Because the process for payment for a quick take is governed by chapter 117, we look there for guidance on when deposited quick take funds become available to the landowner. The quick take statute states only that funds deposited with the court are paid out under the direction of the court. Minn.Stat. § 117.042. However, chapter 117 does address entitlement to judgment interest on commissioners’ awards and amounts deposited with the court, which we construe in accord with the constitutional entitlement to judgment interest articulated in Ford. See Minn.Stat. §§ 117.155 (2000) (governing payments and partial payments pending appeal), 645.17(3) (2000) (establishing the presumption in ascertaining legislative intent that the legislature does not intend to violate the U.S. Constitution or state constitution).

Respondent argues that Minn.Stat. § 117.195 entitles him to judgment interest on the deposited quick take funds. The statute provides in part: “[a]ll damages allowed under this chapter, whether by the commissioners or upon appeal, shall bear interest from the time of the filing of the commissioners’ report or from the date of the petitioner’s possession whichever occurs first.” Minn.Stat. § 117.195, subd. 1. Respondent argues that because the City had possession on November 3, 1998, it owed judgment interest from that day forward.

We do not find the statute so clear. First, the phrase, “damages ⅞ * * whether by the commissioners or on appeal,” suggests that this provision applies only to amounts determined to be payable by the condemning authority through the com missioners’ award or district court appeal. In contrast, the legislature elsewhere in chapter 117 specifically refers to “amounts deposited,” which, although they may be encompassed within a final award of damages, are addressed separately. See, e.g., Minn.Stat. § 117.155 (providing full or partial payment on an award pending appeal shall not draw judgment interest from date of “payment or deposit” and that “dam ages” shall be reduced by the amount of the payment);⁴ Minn.Stat. § 117.042 (stating on quick take proceeding “amounts deposited,” with court (not damages) paid out under the direction of the court). In Fine, we stated, “The [quick take] deposit does not represent an award of damages for the taking but only the condemnor’s valuation of the property.” 391 N.W.2d at 855. When the legislature meant to refer to amounts deposited in court, it did so explicitly using the term “amounts deposited” rather than “damages.” Provisions in a statute must be interpreted in light of each other, and “the legislature must be presumed to have understood the effect of its words and intended the entire statute to be effective and certain.” Van Asperen v. Darling Olds, Inc., 254 Minn. 62, 73-74, 93 N.W.2d 690, 698 (1958). The choice to refer specifically to “damages” in Minn. Stat. § 117.195, while not determinative, suggests that provision may not apply to amounts deposited with the court.

As noted, our decision in Ford requires just compensation “from the date of the original award until the money becomes available to the landowner.” 143 Minn. at 395, 173 N.W. at 715. Respondent claims that funds are never available until the owner petitions for and obtains a court order disbursing the funds, citing a court of appeals decision, In re Condemnation by the Minneapolis Cmty. Dev. Agency, 447 N.W.2d 891 (Minn.App.1989) (“MCDA”), rev. denied, (Minn. Jan. 12, 1990). In MCDA the condemning authority deposited quick take funds with the district court and the court ordered the court administrator to pay from the deposit any encumbrances on the property as of the transfer date. Id. at 892-93. The property owner promptly petitioned for disbursement of the funds but the district court denied the petition because of uncertainty regarding obligations associated with the property and ordered the funds transferred to a certificate of deposit. Id. at 893. Six months later, the court approved disbursement of the funds. Id.

On appeal, the court of appeals determined that the owner was entitled to judgment interest on the quick take funds from the date of the quick take deposit to the date the district court ordered disbursement of the funds to the property owner. Id. at 894. Drawing upon our analysis in Fine, the court of appeals concluded that the decisive factor in determining entitlement to judgment interest is availability of the funds, not the date of deposit. Id. at 893-94. Because the property owner’s petition for disbursement of the funds had been initially denied by the district court, the funds were not available until the court granted the property owner’s petition to disburse the funds. Id. at 893-94.

It does not follow, however, that funds are never available until a court orders disbursement. Rather, as the court of appeals stated in MCDA if the funds are available and earning only court administrator interest, it is the landowner’s responsibility to request them and then reinvest them at a higher rate. Id. at 894. In Ford we stated that just compensation includes interest until payment becomes available, not interest until the funds were received by the property owner. 143 Minn. at 395, 173 N.W. at 715. To allow judgment interest to accrue after deposit with the court allows a property owner to collect interest at public expense on depos ited funds that are available to the property owner but simply not requested, as is the case here. A property owner cannot wait indefinitely, at public expense, to claim deposited funds. We hold that for purposes of determining whether the condemning authority must pay judgment interest on deposited quick take funds under Ford, those funds do not become available only when the district court orders disbursement.

II.

Finally, we consider whether the district court’s factual finding that the funds were available upon deposit was clearly erroneous. We will not set aside a district court’s findings of fact unless clearly erroneous. Plath v. Plath, 428 N.W.2d 392, 393 (Minn.1988).

The City made quick take deposits on nine parcels in the condemnation project, including respondent’s property. Six of the property owners promptly moved the court to withdraw the funds. The City did not object to any of these motions and the court granted the motions. The City also did not object when respondent finally moved the court to disburse deposited funds for his property. A court likely would not abuse its discretion in awarding judgment interest for the period between notice of the taking and a timely motion for disbursement of the funds. Likewise, under particular circumstances a court may determine, without abusing its discretion, that funds did not truly become available after a timely petition until the court ordered the funds disbursed. However, because respondent did not timely petition the court for disbursement of the funds, those facts are not here present.

Instead respondent waited almost 7 months before seeking disbursement of the funds. There is no explanation in the record as to why respondent failed to promptly seek disbursement. In addition, respondent has presented no evidence that the court would have denied disbursement of the funds if requested earlier, as in MCDA, where judgment interest was awarded after a timely request for release of the funds was denied. 447 N.W.2d at 893-94. In fact, respondent states that at all times relevant he had “sole, exclusive, and unclouded” interest in the property, suggesting that there would have been no question as to his entitlement to the deposit. The absence of any record evidence suggesting funds would not be disbursed, coupled with respondent’s claim to “sole, exclusive and unclouded interest” leaves us unable to conclude, as the court of appeals did, that earlier disbursement was speculative. See In re Condemnation, 609 N.W.2d at 926. The prompt disbursement of deposits for six similarly situated property owners and respondent’s failure to demonstrate that the funds would not have been available if requested earlier leads us to conclude that the district court’s factual finding was not clearly erroneous.⁵

We hold that a district court need not order disbursement of deposited quick take funds for those funds to be considered available for purposes of the Ford rule allowing judgment interest until the funds become available to the property owner. We also hold that the district court did not clearly err in finding that the funds were available to the property owner. Accordingly, the district court properly denied respondent’s motion for interest and we reverse the court of appeals.

Reversed.

Footnotes

1

. Thus, respondent argued that in addition to the $2,180 in judgment interest on the $95,000 that the city had already paid, he was entitled to an amount representing judgment interest on the $95,000 from the date of the deposit (May 17, 1999) to the date of the hearing on respondent’s petition to withdraw the funds (June 10, 1999).

2

. The dissent dismisses the court’s statement in Ford that interest should not be required for funds available to the landowner. As authority for the statement in Ford regarding availability we referred to cases including Warren v. First Div. St. Paul & Pac. R.R. Co., 21 Minn. 424 (1875). In that case (not a quick take), we held that interest was payable from the date of filing the original commissioners’ award “to the entry of judgment.” Id at 427. While in both Warren and Ford the narrow question presented was when interest began to accrue and not when accrual ended, in both cases we were required to instruct the district courts on remand how to compute the interest. In Ford, interest ceased accruing when the funds became available. 143 Minn. at 395, 173 N.W. at 715. In Warren, interest ceased accruing when judgment was entered. 21 Minn. at 427. Thus, disbursing payment to the property owner was not necessary for interest to cease accruing.

3

. The statement in Fine relied upon by the dissent of Justice Gilbert does not support the dissent's conclusion that interest is owing on quick take deposited funds. Describing what would have happened in Fine in the absence of a settlement of all issues, the court stated, “[i]f the condemnation proceedings continued to a commissioners’ award, interest was or should have been calculated according to section 117.195 and an award of interest on the deposit would represent a duplication, in whole or in part, of the interest factor in 'just compensation.’ ” 391 N.W.2d at 856. In this case, the condemnation proceedings did continue to a commissioners' award, and the judgment interest on that $95,000 award was calculated according to section 117.195. We see no conflict with the procedures used here and our discussion in Fine.

4

. We do not suggest, as the dissent claims, that section 117.155 dictates that interest not be paid on any deposited funds. We recognize that the provision above applies only to deposits or payments of funds refused by the property owner, and cite section 117.155 only to illustrate the distinction the legislature made in describing damages and deposited amounts.

5

. Our conclusion encompasses the determination that the $95,000 in additional funds paid by the City after the commissioners' award was available to respondent as of the date of the deposit. See supra note 1.