In City of Missoula v Mountain Water Co., No. DA-15-0365 (Aug. 2, 2016), a sharply divided Montana Supreme Court upheld the City of Missoula's exercise of eminent domain to take a private water system. We've been following the case (see our oral argument notes here). The court's majority concluded that the takings clause of the Montana Constitution isn't really any impediment to a government takeover of property, even when it will use the property in exactly the same way as the former owner.
The court addressed eight issues, with issues 6-8 being the most interesting to us, because they consider the meaning of the phrase "more necessary public use" in Montana Code Annotated § 70-30-111, and and what kind of proof is necessary to support such a claim. The city of Missoula is condemning Mountain Water Company, a private company which supplies municipal water to the city. The company (and its employees) objected, arguing that the public use supporting the taking was not more necessary than the existing use, which was also a public use.
The court first rejected the employees' argument that their jobs are protected from condemnation in the same way that they are protected by the law of wrongful discharge, and thus they must be made whole in the eminent domain action: "There is simply no legal authority supporting the Employees' position." Slip op. at 32. Compensation in eminent domain is paid to the owner of the property taken, and is the value of the property plus severance. It isn't things like lower wage jobs and other economic consequences, especially when the damages are suffered by those who don't own the condemned property.
On the big issue -- whether it is "more necessary" for the public to own the water system than a private entity -- the court's constitutional analysis focused on the government's power of eminent domain, and rejected the idea that the protection of private property rights is any sort of limitation. The Montana takings clause is there only to protect owners in the event their property is taken, and isn't a substantive limitation on government power"
Although our constitution and statues provide certain protections to private property owners, the Defendants provided no legal authority in support of their contention that the private property right is elevated in the constitution above the right of eminent domain, nor has this Court located any such authority. ... Rather, the constitutional right of eminent domain presumes the existence of private property and provides protections to private property owners in the event of a taking.
Slip op. at 38-39.
The trial court bought the city's argument that public ownership of the water company is "more necessary" than private ownership, and in this order upheld the condemnation. The company appealed, and the Supreme Court narrowed the issue to the meaning of the statutory requirement that "[b]efore property can be taken, the condemnor shall show by a preponderance of the evidence that the public interest requires the taking based on the following findings: ... if already being used for a public use, that the public use for which the property is proposed to be used is a more necessary public use." The court also asked for argument about the effect of its earlier opinion in City of Missoula v. Mountain Water Co., 228 Mont. 404, 743 P.2d 590 (1987), which considered the same city attempting to take the same utility. (As you can see by the date of the opinion, this controversy has been going on for some time.)
The city argued (and the trial court agreed, as did the Supreme Court) that public ownership itself is enough to show a "more necessary" public use, while the water company asserted that the city needed to have shown that it would actually be more beneficial to the public to have the city own it.
The Supreme Court dodged the legal issue by painting this as a question of fact. Its analysis focused on the "necessary" part of the "more necessary" requirement, and concluded that "[o]ur case law further established that determining whether one use is a more necessary public use than another involves consideration of a wide range of factors, the relevance of which varies depending on the property and uses in question." Slip op. at 42. And when those "factors" include things like "the owners' profit motive" and "the consequences of out-of-state ownership," you know where this one is headed. The majority rejected the dissent's view that the lack of any difference between the "before" use and the "after" use was sufficient to show a lack of "more" necessity.
More here ("Montana Supreme Court clears way for city's Mountain Water purchase") from the Missoulian.