Court Opinion

ID: 9535395
Source: CourtListenerOpinion
Date Created: 2023-08-07 04:48:51.645745+00
Date Added: 2024-06-11T13:33:14.228414
License: Public Domain

YETKA, Justice
(dissenting).
I dissent. I disagree with the majority’s conclusion that the petitioners did not have a property interest in the gas service lines that entitles them to due process and just compensation. The majority rationalizes this conclusion by relying on a remark snatched from oblivion by the court of appeals out of a 1903 Kansas case, Asher v. Hutchinson Water, Light & Power Co., 66 Kan. 496, 71 P. 813 (1903), as authority for the proposition that a landowner has no *315vested interest in any manner of utility service. See Smith v. City of Owatonna, 439 N.W.2d 36, 40 (Minn.App.1989). This case is not about the manner in which utility service is provided; it is about the manner in which a local government may force citizens to bear public burdens.
Although the majority characterizes the city’s action as an exercise of police power, all the evidence leads to the conclusion that the city was acting solely to up-grade the gas delivery system in order to provide a generalized benefit to the Owatonna Public Utilities Commission1 as an enterprise. In Lachtman v. Houghton, 134 Minn. 226, 229, 158 N.W. 1017, 1018 (1916), this court defined the term “police power” as the power to impose restrictions on private rights as are necessary to prevent the infliction of public injury. In discussing the limits of the police power, we said:
The police power of the state is very broad, but not without limits. * * ⅜ when the legislative power attempts to forbid the owner from making a use of his property which is not harmful to the public and does not interfere with the rightful use and enjoyment of their own property by others, it invades property rights secured to the owner by both the state and federal Constitutions. Only such use of property as may produce injurious consequences, or infringe the lawful rights of others, can be prohibited without violating the constitutional provisions that the owner shall not be deprived of his property without due process of law nor without compensation therefor first paid or secured.
Id. at 237, 158 N.W. at 1021-22.
There was no specific safety, health, or welfare concern present in this case. This was not police power action; it was merely the city acting as an enterprise. In Johnson v. City of Plymouth, 263 N.W.2d 603 (Minn.1978), we recognized that a police power regulation can also effect a taking and that ending the analysis after labeling a city’s action as police power is merely a convenient way to avoid the real issues in these cases. See id. at 606-08. That is what the majority is doing here.
In the instant case, the individual property owners in the City of Owatonna had historically been responsible for maintenance and repair of the service lines running from the gas main to their buildings. Where a property owner has not paid for a benefit provided by the city, he probably does not have a right to complain when it is taken away without compensation. See J. Sackman, 2 Nichols’ The Law of Eminent Domain, § 6.13 (3d ed.1989) (citing Stanwood v. Malden, 157 Mass. 17, 18, 31 N.E. 702, 703 (1892) (Holmes, J.)). When, however, a landowner is assessed for the improvement when a gasline is first installed or forced to pay for maintenance or repairs during its useful life, the landowner has a legitimate complaint when the line is rendered useless by city action and landowner is not allowed to recover any part of the money the landowner has been compelled to pay. This is especially true where, as in this case, the trial court found that there was no direct benefit conferred to the petitioners. If, for example, the City of Owatonna now decides to install another “new and improved” gas main and again orders the petitioners to remove and replace, at their own expense, the gaslines they paid to have installed in 1985, it is easy to see that they would be deprived of a property interest, namely, the equitable interest they acquired when they bought and paid for the installation of the lines in 1985. As noted by the majority, everyone seems to agree that petitioners owned the old service lines. Given that the petitioners have some sort of ownership interest in the lines, the only remaining questions are whether they are entitled to (1) just compensation for a “taking;” or (2) due process.
(1) Just Compensation for a “Taking”
This court has recognized less tangible property rights in the analogous situation of highway access. The early highway access cases denied compensation on the Ash-*316er-like theory that “a property owner ha's no vested interest in the continued flow of the main stream of through traffic.” See Hendrickson v. State, 267 Minn. 436, 442, 127 N.W.2d 165, 170 (1964). In Hendrickson, however, we rejected this outdated approach as to abutting owners and reasoned that a property right to access should be recognized because of a number of sound factors, including the fact that, in some cases, the roadway was built with taxes and assessments paid by the abutting owners. Mat442-43,127N.W.2dat 170-71. In Hendrickson, we also resisted the temptation to avoid the taking issue by characterizing the government’s decision to impair the plaintiffs access to the highway as a police action. See Hendrickson, 267 Minn, at 441-42, 127 N.W.2d at 170. In Alevizos v. Metropolitan Airport Commission of Minneapolis and St. Paul, 298 Minn. 471, 216 N.W.2d 651 (1974), we said:
Any statement of what constitutes “property” can only be nebulous at best. * * * Property is more than the physical thing — it involves the group of rights inhering in a citizen’s relation to the physical thing. Traditionally, that group of rights has included the rights to possess, use, and dispose of property.
Id. at 485, 216 N.W.2d at 661 (footnote omitted).
In a climate such as Minnesota’s, access to natural gas for heating is as essential to the reasonable use of commercial property as access to a highway. By depriving a property owner access to the municipal gas mains, a city effectively deprives the property owner of the right to use his or her property. Accordingly, we should recognize that the petitioners have a compensa-ble property interest in the gaslines that were, in effect, taken when the city decided to switch to a high pressure gas main on the portion of Main Street which abutted the petitioners’ land.
The majority suggests that, even if the old lines were taken, the petitioners suffered no legally cognizable damage when the old lines were rendered useless by the installation of the high pressure main. The measure of damages in a case like this is the difference between the market value of the property before and after the taking. Alevizos, 298 Minn, at 487-88, 216 N.W.2d at 662; see also Hendrickson, 267 Minn, at 446, 127 N.W.2d at 173. The valuation of property which has been taken must be calculated as of the time of the taking. First English Evangelical Lutheran Church of Glendale v. Los Angeles County, 482 U.S. 304, 320, 107 S.Ct. 2378, 2388, 96 L.Ed.2d 250 (1987). A hypothetical sale scenario makes it is easy to see that the value of petitioners’ property was diminished. Suppose that, instead of making the required expenditures under protest as they did, petitioners had decided to sell their property. If one of the parcels was worth $100,000 with a functioning natural gasline, it is logical to conclude that it would be worth less with a disconnected gasline. If it were known that the gas service could be restored by paying $1,500 for new gaslines, surely, a hypothetical buyer would discount his or her purchase offer by at least that amount. The fact that the petitioners attempted to mitigate their damages by paying, under protest, for the required improvements does not change this analysis. The issue of waiver was litigated below, and the trial court obviously concluded there was no waiver. The record contains no evidence that this conclusion was erroneous. Consequently, I would hold that the petitioners are entitled to the damages awarded by the trial court.
(2) Due Process Analysis
In order to establish a right to due process, petitioners must prove that they have a “legitimate claim of entitlement” to a property interest.2 Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). These property interests are determined by state law. See Memphis Light, Gas & Water Division v. Craft, 436 U.S. 1, 9, 98 S.Ct. 1554, *3171560, 56 L.Ed.2d 30 (1978). In the recent case of Freeman v. Hayek, 635 F.Supp. 178 (D.Minn.1986), the court articulated sound reasons why we should recognize such a property interest in a right to continued utility service. Id. at 182-83. In the present case, the city threatened to and did shut off the gas. The petitioners only avoided a complete deprivation of gas service by paying the contested charges under protest. Amazingly, at oral argument before this court, counsel for the City of Owatonna asserted that petitioners would have received due process if they had simply refused to comply with the city’s order. The city’s counsel conceded that if the petitioners had refused to comply, the city would have ordered and paid for the improvements and commenced special assessment or similar proceedings in order to recover the charges. The notion that a person who pays a contested charge under protest is somehow less entitled to be heard than a person who simply refuses to pay is obviously absurd. I believe the city should have conducted some type of special assessment hearing before ordering the petitioners to install the new service lines at their own expense.
Even if the petitioners did not have a legally cognizable property interest in the lines, they unquestionably had a legally cognizable property interest in the money of which they were deprived when they were forced to pay for the new service lines. The fifth amendment’s just compensation provision is “designed to bar Government from forcing some people alone to bear public burdens which, in all fairness and justice, should be borne by the public as a whole.” First English, 482 U.S. at 318-19 (quoting Armstrong v. United States, 364 U.S. 40, 49, 80 S.Ct. 1563, 1569, 4 L.Ed.2d 1554 (1960)).
A special assessment is a taking to the extent that the amount assessed exceeds the special benefit conferred upon the property. E. McQuillin, 14 Municipal Corporations § 38.02 (3d ed.1987). In this case, the trial court found that there was no special benefit conferred upon petitioners’ property; therefore, this was a taking. I believe the city’s action in this case amounts to a de facto special assessment and, as such, should be subject to the procedural mandates of Minn.Stat. ch. 429 (1988) (local improvements, special assessments).
It is unclear as to where the city got the authority to order the petitioners to install the new lines. As noted above, this is not police power because this was a city-wide project, and there was no specific health or safety concern. A municipality, absent an express or implied grant of power from the legislature or the constitution, does not have the power to levy special assessments for local improvements. E. McQuillin, 14 Municipal Corporations § 38.06 (3d ed. 1987). Minn.Stat. ch. 453A (1988) (municipal gas distribution) authorizes certain cities to acquire private property by condemnation and the exercise of the power of eminent domain in accordance with Minn. Stat. ch. 117 (1988). See Minn.Stat. §§ 453A.02, subd. 3, 453A.06. In this case, the city did not act in accordance with chapter 117. Although Minn.Stat. ch. 429 does not explicitly authorize the type of action taken by the city in this case, it may be considered an implied grant of such authority. If the city’s action is not deemed to be a special assessment, it should be invalidated altogether as ultra vires.
Due process requires that a property owner be given reasonable notice and hearing before his property is subjected to the lien of a special assessment. Meadow-brook Manor, Inc. v. City of St. Louis Park, 258 Minn. 266, 270, 104 N.W.2d 540, 543 (1960). In the present case, the petitioners should have been given an opportunity to question the validity of the city’s action before being required to install new gaslines under the threat of having their gas disconnected. If the city would have held a public hearing like that mandated by Minn.Stat. § 429.031 (1988), it is likely that it would have encountered at the outset the opposition that ultimately persuaded it to install everyone’s new service line at city expense. In so doing, the city would have avoided not only the present litigation, but also the appearance of impropriety and un*318fairness that occurred when it forced some property owners to pay for the new lines, but then later changed its “policy” in the middle of the project.
The majority suggests that to give petitioners due process in this situation Would “interfere with the government’s ability to efficiently provide utility services.” It is important to put this claim in perspective. What we are talking about here is a citywide public improvement project that conferred no particular benefit on the petitioners. All that due process requires is some sort of notice and a public hearing at which the preliminary plans would be revealed and the public’s questions of who would pay and how much would be answered. Granted, this procedure could slow down the project; but, at least, the process would be open and fair. Efficiency is not everything. In the present case, the majority’s decision, coming as it does at the expense of fundamental fairness, over-emphasizes the constitutional value of efficiency.
(3) Equal Protection Analysis
The fourteenth amendment to the United States Constitution requires that, for purposes of economic regulation, governments must treat similarly situated persons alike unless a rational basis exists for distinguishing them. See Little Earth of United Tribes, Inc. v. County of Hennepin, 384 N.W.2d 435, 441 (Minn.1986). For the reasons set forth by Judge Schumacher in his dissent at the court of appeals, I believe that the city had no rational basis for requiring some, but not all, property owners to install their own gaslines and pressure regulators. See Smith v. City of Owatonna, 439 N.W.2d 36, 43-44 (Minn.App.1989) (Schumacher J., dissenting). I also believe that this case does not involve six projects as outlined by the court of appeals, id. at 41-42, but one city-wide project. Moreover, Mr. Martin testified at trial, without explanation, that the old low pressure system was replaced with a new low pressure system along a section of Main Street about two blocks from petitioner Smith’s property, thus eliminating the additional expense of a pressure regulator for those property owners. The majority can point to no rational basis for this disparate treatment because none exists. I believe that this dissimilar treatment of property owners on the same street, as well as the other dubious distinctions made by the city, establishes the arbitrary and, therefore, unconstitutional nature of the city’s actions beyond a reasonable doubt.
For all of the above reasons, I believe that the petitioners were deprived of a legitimate property interest such that they are entitled to due process and just compensation. In addition, I believe that the petitioners were denied equal protection under the law. Accordingly, I would reverse the court of appeals and reinstate the decision of the trial court.
POPOVICH, Chief Justice (dissenting).
I join the dissent of Justice YETKA.

. The Owatonna Public Utilities Commission (OPUC) is a city-owned and operated entity; accordingly, the actions of the OPUC are hereinafter referred to as actions of the City of Owa-tonna itself.

. There is no question in this case that the city acted under color of state law and is, therefore, subject to 42 U.S.C. § 1983.