*1 v. Board Appellant, Development, Inc., Glendale of Wisconsin others, Respondents.*
November 1 December 1960. * costs, denied, rehearing February Motion without on 1961. *5 Immell, Herró, For the there were briefs by appellant Madison, and Jack Buehner & oral argument by DeWitt Herró. R. DeWitt and Norman C. Board of
For the respondent Resh, the cause was Warren H. argued Wisconsin with whom on the brief was assistant attorney general, Stroud, joined John Reynolds, attorney general, W. Kelab, Madison, for the Stebbins & Stroud of respondents Inc., Inc., Hilldale, R. and oral Donald argument by Stroud. The issue raised on the demurrer inter-
Dieterich, J. whether the state of the state of Wisconsin is posed to a determination of is necessary party proper Wisconsin the rights parties. is in accord with the general proposition
The plaintiff from in the absence of con- that the is immune suit law state 262.10, however, contends, that under sec. sent. Plaintiff state be made may party. Stats. Stats., 262.10, provides:
Sec. The state be made may judgment. ; on state “Service action to title under the quiet defendant any provi- a party *6 sions of sec. 281.01 or between other when parties, necessary to the determination of their The summons rights. proper with a the shall be served by delivering of copy complaint it at his in the attorney leaving or office copy capitol general clerk. set
with his assistant or The shall complaint forth with the nature of the interest or lien of particularity the the state. But no for of or judgment recovery money costs be in or shall rendered such personal property any action the state.” against 36.03, Stats.,
Sec. provides: The Board of Regents board; “Powers of officers. in and their successors office shall constitute a body corporate Wisconsin,’ name the of ‘The of the of by Regents and shall all the or convenient to possess necessary powers the and the duties accomplish objects by perform prescribed law, books, records, shall the custody and have of build- and all other of said . . university. .” ings, property For the of this we shall refer purposes opinion as “Board of Regents.”
The relief asked for in its is the by plaintiff complaint aside of the sale lands Board of setting Regents state of Wisconsin. statute,
The Board of is authorized to sell Regents, by and lease lands. Stats.,
Sec. 36.34(1), provides: agricultural and “Sale relocation lands. (1) that, Policy. because of finds and determines legislature hereby from the problems resulting (a) development of Madison around certain lands city agricultural the state university; (b) desirability consolidating instruction, research, lands used for and exten- agricultural sion purposes; desirability (c) disposing agri- cultural lands no needed and longer university; (d) the need for land of better and of quality greater quantity purpose improving agricultural expanding research, it is in the interest for the public Regents time, lease, to sell from time or in whole or thereon owned lands and improvements the agricultural part, by other in . . . and to located purchase said Regents area and the Madison urban lands outside of agricultural buildings improvements. thereon the necessary construct refer- is made without determination policy foregoing which powers intention of limiting ence to or have.” may otherwise suit matter of this subject is the
The real estate which All inter- Board of Regents. owned exclusively was title. v. Aberg to its are subordinate the property ests *7 349, 359, 224 132. N. W. 198 (1929), Wis. Moe and the sale set aside and should prevail If plaintiff in the Board Regents, real estate revested title to the Wisconsin, affect the state of would no way actions such without be to plaintiff relief could granted and complete state of Wiscon- be act to performed to resorting any not a necessary party if the state is that sin. It appears a an action is not certainly party then conveyance, the conveyance. cancellation of to compel set forth in its Furthermore, complaint has not the plaintiff of the state and hence interest or lien of the nature Stats., 262.10, that statute since requires sec. on cannot rely a the state as Under party. the mere naming than more that had determine the state state we law of this settled here. v. Aberg lands in in the question se per interest no Moe, supra. a is not necessary state of Wisconsin
Accordingly, of the of the rights parties, determination proper party be must affirmed. the demurrer sustaining judgment and the laches, the defense of have interposed The defendants has been a project since the shopping-center claiming a is over year, plaintiff estopped record for of public matter this action. maintaining from facts and circumstances of the all the
An examination lax as that the was so plaintiff disclose fails to case instant to bar its right it seeks. remedy Foote v. Harrison 588, 291; 137 Wis. (1909), 119 N. W. Zlindra Zlindra v. 606, (1948), Wis. 656; 32 W. Leuch (2d) N. v. Egel 255 Wis. (1949), 1; 38 N. W. (2d) Pugnier hoff v. Ramharter 275 Wis. (1957), 81 N. W. 38. (2d) pleadings affidavits supporting of the respective motions for disclose summary judgment facts: following
The Board of of the University Wisconsin owns various tracts of land in the of the vicinity city Madison, a Farms, tract known as including Hill part which is bounded on the north by University avenue and its eastern boundary in a running south- extending erly direction on Midvale Madison, boulevard in the city of 33.83 acres. consisting Because of its location this land much-more valuable for commercial than purposes as farm- land. Various tracts from the Hill Farms have been sold Board Regents to various and for persons different acre, prices per several at less acre than price per in the case at bar. Smith,
The affidavit of Clarke secretary Board of has three exhibits Regents, attached to it. Exhibit 1 ais copy resolution of the Board of Regents of the *8 of Wisconsin under University 3, 1958, date of May author- the sale the lands in izing question subject to the approval of the attorney as to general and the legality approval of the commission, state building the use of authorizing anony- for a mous-gift-fund moneys of the gift purchase to price the nonprofit corporation the land. purchasing
Exhibit is a of the Hill copy University Farms sug- gested center, for the plan development which shopping was reference in plan incorporated the by May resolution. Regent
Exhibit 3 is a of the official copy opinion the attorney general approving legality proposed conveyance. of ade- subject Mr. affidavit also into Smith’s goes other out and among things points of consideration quacy size in the same that land value and tracts of of comparable acre $2,750 area been for per by Regents. have sold out that de- Mr. affidavit both corporate Smith’s points friends of the univer- fendants are formed and controlled by in with the are to development who sity position proceed that with standards in a will be consistent high-quality way and the and more university so as to benefit public, in with that the is development keeping particularly proposed administrators, whereby in by university change thinking lands is handled sale of or of university disposition uni- in a so as result in income to the to continuing way from such lands which are no needed for longer versity example pointed university purposes. most-conspicuous Mr. is the lands university Smith handling a leas- in Seattle pursuant University Washington to the millions of dollars university ing arrangement netting in to come. He out and for past years points years has been the same University doing State Michigan scale, on a more-modest and that although apparently thing has to the Purdue resorted University nonprofit corporation lands such and for holding shopping-center or foundation development. out that the
The affiant concludes pointing have had the benefit of of Wisconsin the administrative officers of other and advice of experience decision not to sell the lands reaching universities promoters. private question Stats., that the sale or lease of 36.34 (3), provides
Sec. the state subject lands of agricultural the state commission. building approval Rothermel, as the state secretary affidavit Mr. commission, the minutes of the state shows building building *9 10, 1958, commission under date of December whereby commission the sale of the land approved university ato for a consideration nonprofit corporation $6,000 of acre for as a per development center. shopping defendant, Kelab, Inc., nonstock, The ais nonprofit corpo- ration under Wisconsin statutes organized friends of the is university. purpose stated in corporation its articles as follows:
“The or for which the purpose purposes corporation charitable, are organized educational and as exclusively follows: To aid the of Wisconsin University by solicitation for the benefit said of real gifts property collect, both; or gifts, bequests, or personal property and receive accept devises, hold, or of value and to ad- things minister, use, or distribute same for the benefit of the University of Wisconsin. members, “The shall have corporation no and no part inure,
the net income shall in whole or in to the benefit part, individual, nor shall any of its activities be any part directed influence or legislation by other- propaganda wise.” income, nor members all
There are no stockholders net seventh of the in- as in the articles of paragraph provided shall be paid University corporation, in case and that also dissolution of the of Wisconsin its assets shall be transferred to the corporation, Wisconsin, further, seven of its articles paragraph provides:
“The of this article with reference to the dis- provisions net income and of the corporation position assets of dissolution shall not be upon sub- corporation amendment.” ject defendant, Hilldale, Inc., is Wisconsin business friends of the formed its stock university,
corporation by University owned of Wisconsin Founda- entirely being *10 as an of Founda- University tion investment. The Wisconsin nonstock, organized tion also being nonprofit corporation the of Wisconsin. All and to aid University profits operated Hilldale, Inc., be the of made will to paid University the in turn will same Wisconsin Foundation which pay Hilldale, The articles of the of Wisconsin. University to Inc., in the event the dissolution of further that of provide assets, Foundation, the the of Wisconsin prop- University the after dis- and estate of or payment erty, corporation, liabilities, debts, and shall be its obligations, charge of Wisconsin. transferred to the Regents University Peterson, The of A. W. vice-president affidavit acting matters charge relating of Wisconsin finance, 1 a has attached to as Exhibit to business and 23, 1943, anof offer of anonymous-gift copy September that the offer out university. two friends of points that it remain condition of is gift completely only and in the addendum to the offer it anonymous, forever have discretion at shall Regents complete that the stipulated time time to dispose time and from to manage any as an owner. or thereof as absolute freely fund any part time that of the further states to prior Mr. Peterson Kelab, Inc., he obtained the personally land purchase by for the use anonymous donors consent and approval Kelab, Inc., in money making pur- of part gift chase from the Regents. Kelab, Inc., the sum of of Regents gave, Board fund for
$300,000 purpose anonymous-donor from acres, $95,000 and invested said sum the 33.83 of buying Plilldale, known as corporation the proposed in debentures of center. Inc., This was money given to develop shopping heretofore referred funds to. the anonymous-gift from Kelab, Inc., said 33.83 acres from the then purchased acre, $6,000 a little therefor per paying Board $205,000. less than The deed recites the consideration at $202,980.
Kelab, Inc., ITilldale, Inc., then leased said land to for a term of for the thirty fifty years purpose developing center with shopping that all proper provisions net rentals from said lease were to be paid said Board of Regents. Hilldale, The lease Inc., provided is to construct all buildings provide necessary equipment for the shop- *11 center. ping
The Board of will receive all Regents rentals received Kelab, Inc., rental by land, for of the and University Foundation, Inc., Wisconsin ITilldale, sole owner of will all receive dividends Hilldale, Inc., declared or paid by and at Hilldale, Inc., the dissolution of or its for discontinuing reason, any other all and buildings well equipment (as as the 33.83 will revert to the acres) Board of Regents. affidavits estimated that the to profits University Board of and hence the Regents, will university, amount ato very sum large of money.
The mechanics of the of the development center shopping as set forth the affidavits are as follows: by The bare land is to be leased for a Kelab, to thirty-five term fifty-year by Inc., ITilldale, to Inc. There will be a minimum or guaranteed annual rental a plus graduated percentage Hilldale’s gross income from the shopping-center Hilldale’s buildings. gross- income will be derived from the shopping-center buildings to various by leasing space retail stores private and businesses with these leases for a minimum annual calling rental a plus of the sales. percentage gross All Hilldale, Inc., stock outstanding capital taxable business fully is corporation, owned by Univer- of Wisconsin Foundation as an sity investment. The presi- dent of the Hilldale, Foundation also president Inc. The nonstock, is a Foundation nonprofit corporation organized Wisconsin, to aid the operated University Hilldale, Inc., dividends which stockholder, to its pays Foundation, will be utilized it to aid the by university. Hilldale, Inc., Kelab, rent ground Inc., paid by will in turn be paid directly
in accordance with Kelab’s articles of incorporation.
Hilldale, Inc., has substantial expended amounts of money in the of architects employment engineers plan center and proposed shopping has further sub- expended stantial sums of in the money installation of sewer laterals land, for etc. The affidavit Mr. grading Kuech- Hugo Hilldale, Inc., enmeister states that has made commitments to construct the center and lease shopping space to various retail concerns such as F. W. Woolworth Ed. Company, Inc., Yost’s-Kessenich’s, Schuster & Company, Ed Schmitz Sons, & Atlantic Great Pacific Tea & Company.
The affidavits and documents filed all plaintiff relate to the sales of other price of this parcels tract to other purchasers 1958 and during years 1959.
The base set price for sale legislature of 30 acres state commission building state office building *12 $2,750 was acre in 1957. Sec. per 36.34 Stats. (6), As a to whether debt was public contracted violation 4, of sec. art. VIII of the constitution, Wisconsin the plaintiff contends that the violates the proposed plan Wisconsin con- stitution in the That following respects: the state is engaged in the work of internal improvements; that the state con- tracted an unauthorized debt public 4, contrary to sec. art. constitution, VIII of the which provides: “The state shall never contract any debt public except the cases and manner herein provided.”
This court has nonstock, held that repeatedly nonprofit corporations organized by friends of the for its university benefit, could do which neither the things state nor the could do such directly, an corporation not
134 the state in not engage arm of the state and does or agency a Loomis create state debt. internal or work of improvement 518, 816; 220 State 196 N. W. v. Wis. Callahan (1928), Bareis v. Corp. (1950), ex rel. Wisconsin Bldg. 259; 497, ex rel. Thomson 44 N. W. State 257 Wis. (2d) 873; 185, N. W. State 60 (2d) v. Wis. (1953), Giessel 331, 65 N. W. 267 Wis. ex rel. Thomson v. Giessel (1954), 529; Thomson v. Giessel (1955), and State ex rel. (2d) debt, a state 577. As to creating 72 N. W. (2d) Wis. 271 Wis. rel. Thomson v. Giessel (1955), see State ex 577. 72 N. W. (2d) as were mechanics of that transaction
In that case the first conveyed The commission follows: state building for Public Building Corporation land to the Wisconsin State $125,000 authority to pursuant granted a consideration of simultaneously Stats. corporation sec. 14.89 (1) (a), an on to Allstate Insurance Company the land mortgaged the maximum draw down of permitting open-end mortgage to used corporation were $4,600,000. proceeds of the office- the cost of construction the land and pay to the retire indebtedness unit as well as to previous building to foreclose on right fund. Allstate had state insurance At the same time corpora- the land and improvements. the state build- to building the land and proposed tion leased The lease years. a term of thirty commission for ing if the re-entry corporation reserved right expressly lease, was made and the lease under defaulted commission con- Also the commission building subject mortgage. the commission’s corporation sented to pledge there was a sale valuable rentals. Here obligation pay not which or may may a consideration land for state-owned Moreover, the sale market value. the fair reflect reasonably its own money the corporation’s using without was made *13 It was con- seriously it had none. as make the purchase,
135 tended other that the over-all effect of the among things was transaction to loan the credit of the state to corpo- 3, ration to sec. art. VIII of the Wisconsin contrary con- stitution, transaction, the entire in form of although back, a sale land and lease was actually contract for the and that a state purchase debt was building thereby 4, 6, 7, VIII, created to secs. art. This contrary Const. created, claim that a court state debt was rejected stated, 50 at of 271 Wis.: page
“Under these decisions it is that since the build- apparent state, not an its ing corporation agency obligations state, are not enforceable to tax against despite any right exemption.”
This court has heretofore held that no state debt is created unless the state itself is under a enforceable legally obliga tion. ex State rel. Development Wisconsin v. Authority Dammann 228 Wis. (1938), N. W.
N. W. 698. the state from in a plan prevent engaging private business has been enterprise effectively It in- accomplished. sulates the state from debt and insulates it from the business conducted. being also contends that plaintiff was public property given private to law. This purpose contrary goes
sufficiency consideration received for' Regents Kelab, Inc., the land sold to and also the from the gift Kelab, Inc., anonymous donation of the used money land. making purchase Stats.,
Sec. 36.34 authorizes the sell or (1), Regents lease lands of the the so-called Hill Farms. affidavits, attached,
It is established with amply exhibits Rothermel, of Clarke and R. Smith as secretaries Jr., J. Board University Wisconsin and *14 136 commission, that the sale was
state building respectively, to law. In authorized consummated pursuant properly sale, has that one order set aside such our court held so fraud, or must establish clear illegality, (2) (3) asking (1) in the sale. Newell v. Kenosha abuse of discretion making 516, N. 96 W. and Hermann (2d) Wis. (1959), (2d) Lake Mills 275 Wis. 82 N. 167. v. W. (1957), (2d) has been heretofore considered. Fraud illegality Alleged nor claimed This leaves by was neither alleged plaintiff. clear abuse of discretion on the of of only question part in sale for the the Board of considera- making Regents be received. tion received and to show that cash parties The affidavits both received for the acre the Board of land sold the case by Regents per with received for other tracts at bar was comparable much Hill Farms and than for some tracts. out of the higher 33.83 acres would sell for less naturally A tract of per large tract; or and no doubt the fact that a than a small lot acre in the neighborhood center was enabled probable shopping lots at a than to sell other higher price the board would such a had there been no probability have received shop- center. ping as in- affidavits produced plaintiff
The only the cash value of the the consideration relate to adequacy to the is many advantages, No consideration given land. otherwise, to the virtue university by accruing financial center. shopping the creation and operation such a con- has further and sustained This gone court cash consideration but where there was no where veyance considerations by way obliga- there were other adequate State ex rel. State Historical grantee. tions on part 6, 51 N. W. 723. 261 Wis. (2d) v. Carroll Society (1952), defendants, from experts, were produced Affidavits ven- as to the great probability their opinion giving ture’s from huge producing profits center, land rental of the and the operation shopping much than the cash value received profits greater for the land in the first instance. Plaintiff states that there assurance the no shopping- will show center affidavits profitable. project prove *15 success, at ac- in all it will be a least that probability great know, as of who should cording judgment experts in their affidavits. shown a a man men is by'
In investment made or there every stock, a matter of chance. When one bond or no buys factor look, assurance that how it there no absolute may good One, investing, investment will turn out so satisfactorily. the his a use can but exercise wise discretion and nothing do the when it best So with Board of Regents, ap- judgment. con- voted sell the land and for project, proved indicated and use of anonymous-gift siderations part did, hands, it its wisest in its as it no doubt exercised fund is the same discretion and best This judgment. discretion its it and in all of has used is using making and judgment it took all investments. In the land selling pre- other law. This judgment and proceedings required by cautions the state commission composed was concurred building fine executives are as businessmen and of men who known sound judgment. men of integrity acted, funds it as the anonymous-gift In some of using believed, and as benefit of ultimate of the instrument creating gift the terms provided by the Board Regents. now, this so exer- court in its review of discretion
Can building also state the Board of Regents (and cised an abuse of was guilty that board say commission) merely not usually implies Abuse discretion discretion? will, but passion, prejudice, judgment perversity error of v. Har- Grayson County delinquency. or or moral partiality 138
rell Civ. (Tex. 1918), 160; 202 App. S. W. Deeds v. Deeds 770, 108 (1921), 1109; Kan. 196 Pac. Citizens Street R. Co. v. Heath 395, 107; 29 Ind. 62 N. (1902), App. E. v. New People York Central R. Co. 418; 29 N. Y. (1864), Williams v. Board Education Parsons City (1908), 202, 216, 79 Kan. 99 Pac. 584; L. R. A. (N. S.) other many cases cited in 1 Words and Phrases ed.), (perm, Discretion, Abuse of 179. p. None of such elements are to exist here. alleged
In v. Buhl Co. Optical 276 Mich. (1936), Seifert N. W. that court held that to be an abuse of discretion the abuse to be ought so consideration plain upon facts an can unprejudiced person there was say justifica- no tion or excuse for the action taken.
We have held that where there are affidavits conflicting as to the value of the but the consideration property consists of benefits to the part cash, other than public, motion will be taxpayer’s denied but that in such a case *16 motion for summary judgment by the defendant would be State ex rel. proper. Evjue v. Seyberth 9 Wis. (1960), 118; 101 N. (2d) Mills, W. Hermann v. (2d) Lake supra, Kenosha, and Newell v. supra.
In the case at bar it is the judgment Board of and not that of the court that Regents should evaluate these undetermined considerations.
There is no doubt but that the anonymous donors of the money to Board of Regents desired that it be should used in Board by Regents manner and any legitimate discretion, in its so as it was for the benefit of long university.
There can be no that the doubt donors terms of their and later their gift consent desired the Board of to its use discretion as to Regents how the was be money to as it so was for the benefit of spent long the work of the fantastic, and all argues any Counsel university. Likewise, it must be fostered. might illegitimate enterprises intended only be written into this that the donors lawful gift, would be for the bene- not legitimate enterprises—others fit of the university. sense, in a
While the funds were funds public general they as Board of were funds earmarked for such purposes discretion, so as in its deemed long they Regents, proper, were the benefit of the university. for for are various
Many university purposes gifts given course, same. are and are earmarked for the Of they public sense, in but cer- funds to belonging public general are to be used for the Here the given. tainly purposes The were the discretion of Regents. placed purposes receive from university many gifts corpora- Regents individuals, be used for a All tions and to given purpose. must be used in the manner such when accepted pro- gifts the articles donation. vided the Board of was spent by The money properly Inc., Kelab, circumstances it under the when advanced no way for the under the plan. plan purposes other clause or any provision the due-process violates or the state constitution. constitution United States bar, is not taken for private at public property In the case which seemed sold considerations use. The land was and the as in its discretion adequate of Regents the Board Inc., for the bene- Kelab, used was properly money given and best judgment the discretion within fit of of Regents. Board decision memorandum court’s written learned trial *17 in- relative to questions study reflects an exhaustive ex- ato case, great have incorporated in and we this volved in this opinion. his tent memorandum the trial court the demurrer judgment sustaining is affirmed and the trial court judgment dismissing is affirmed. plaintiffs complaint affirmed. By Judgment Court.— the univer- (dissenting). Very probably Fairchild, J. will benefit sity from the under consideration. arrangement therefore, I that I cannot in regret, join conscientiously approval.
There are a number of serious raised facets questions this Their and the arrangement. multiplicity, accompany- with all facets at once is a tribute ing difficulty dealing I will ingenuity only discuss the ob- designer. that the have jection to make the state a Regents sought in aon work of internal for- party carrying improvement, VIII, sec. art. bidden Const. must bear in mind that
We of the land disposition has been effected under the question authority Regents to sell land. The or lease has no legislature given more to enter into the authority which specific arrangement has been made. Thus the method of particular disposition does not come before the court with the employed presump- tion of which would if constitutionality tend to support it. had authorized legislature expressly that if
It must also be conceded had directly state or state funds dedicated to make property possible center, construction of commercial the constitu- shopping internal tional works of prohibition against improvement would have been violated. State ex rel. Martin v. Giessel 363, 371, 252 Wis. N. W. (1948), (2d) holding state funds to local invalid authorities to grant housing veterans’ aid construction of housing projects. a similar result end be means here accomplished by Can ? employed *18 not that were concluded evidently they
The Kelab, Inc., without con- the land to authorized deed sideration, make a but that were free to they gift legally Thus, Kelab, Inc., the the funds. disposi- of “anonymous” of a sale for has been the tion of state land given appearance funds, the the a cash As a result of of gift consideration. sale, which not at may funds succeeded apparent all the restrictions as to manner start have been subject are subject, state funds and of use to which other purpose character of state funds. now have unqualified that conclusion the correctness Assuming Regents’ character of their because of special possession funds, land, funds, the state such unlike could “anonymous” a be to make the construction of shopping dedicated possible center, money it has not been established that amount of Kelab, Inc., from to the value of land. equal collected amount It claimed that the can be adequate is apparently that in their and discre- Regents, without being equal; tion, the ultimate treat the of enjoyment could anticipation Kelab, Inc., the net and Hill- profits dale, Inc., as a sufficient any- insufficiency offset against the price. here without summary
The matter is now upon judgment, trial, determination, the issue of fact as to the suf- a must, as we at this Assuming, stage, ficiency price. tried, issue were plaintiff prevail, that if that might not $6,000, $25,000 the land was but show that the value of follow, acre, that state it would my opinion, property, per difference, has been dedicated extent center, that there has been a creation of shopping the state’s the constitutional prohibition against violation of a work internal on carrying improvement. being party in the deal majority relied upon opinion decisions friendly with for the construction by corpo- plans primarily functions rate entities facilities for the on of the carrying of such of state and hold debts government, corporate state, are that those there- entities not debts of the plans debt, state sec. fore do not violate the against *19 prohibition were, VIII, art. Const. Those for the most part, plans plans have activities which the state could legally financing if it It has never been de- had sufficient funds. performed cided that state be to one of these may conveyed property a fair that it can build entities at less than so friendly price a commercial establishment.
In the issue as to the value of the land dis- my opinion, resolved trial. If it were deter- of should have been posed less than the fair market mined that the received was price land, be value of the transaction would illegality established. If it were determined was suf- price ficient, issues, such as whether the were free other funds to the to dedicate the donated construction shop- need to be resolved. center would ping