818 N.W.2d 684
N.D.2012Background
- Hale filed suit in Aug. 2010 challenging 60+ statutes authorizing state and local economic development programs as violating N.D. Const. art. X, § 18 and related due process, equal protection, and takings provisions.
- Plaintiff sought declarations that gift clause prohibits direct/indirect public disbursements to private entities for non-poor purposes, plus injunctions and attorney fees.
- MADC and Minot defendants operated MAGIC Fund under city laws, with public funds disbursed via loans, grants, and incentives to private parties.
- District court granted state entities’ 12(b)(6) dismissal and Minot defendants’ summary judgment, holding statutes constitutional and programs for public purpose.
- Hale appealed; the court treated the memorandum decision as a final order and retained jurisdiction on appeal.
- Court affirmed, holding statutory economic development programs constitute an enterprise for a public purpose under art. X, § 18 and are facially constitutional.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Do statutes authorizing economic development programs violate the gift clause? | Hale asserts statutes violate art. X, § 18 by enabling gift/credit to private entities. | State entities argue statutes authorize an enterprise for a public purpose and do not violate § 18. | Statutes authorize an enterprise and satisfy public purpose; facially constitutional. |
| Whether economic development programs constitute an enterprise under art. X, § 18 | Hale contends programs do not constitute a direct enterprise. | Statutes authorize government-led programs (enterprise) engaging in public purpose. | Programs constitute an enterprise under the gift clause. |
| Whether the challenged programs are unconstitutional as applied due to lack of accountability or takings/equal protection concerns | Hale argues disbursements lack accountability and violate due process/equal protection and takings. | Allegations are conclusory; no specific improper disbursement proven under authorized programs. | No material factual disputes shown; claims fail as applied. |
| Is MADC within the gift clause's reach and are Minot/MADC properly bound by the same analysis? | Hale treats MADC and Minot as subject to § 18. | MADC is either private or an agency of Minot; analysis mirrors Minot. | Statutory analysis applies to MADC and Minot; court upholds as within enterprise framework. |
Key Cases Cited
- Haugland v. City of Bismarck, 2012 ND 123 (ND 2012) (gift clause allows enterprise for public purpose; urban renewal example)
- Gripentrog v. City of Wahpeton, 126 N.W.2d 237 (ND 1964) (public purpose and enterprise concepts under gift clause)
- Wentz v. City of Fargo, 103 N.W.2d 245 (ND 1960) (construction of gift clause language and public purpose)
- Kelly v. Guy, 133 N.W.2d 853 (ND 1965) (public purpose analysis under related constitutional context)
- Leevers Supermarkets, Inc. v. City of Jamestown, 552 N.W.2d 365 (ND 1996) (public purpose in takings context; economic development benefits)