A reargument was ordered because of doubts arising as to the correctness of the decision holding that the damages awarded for the taking of a strip of ground for a street could not be offset or paid by the special benefits the remaining tract received from the improvement, insofar as the same included opening and grading.
McKusick v. City of Stillwater was held applicable and controlling. It is true, in the syllabus and opinion of that case, the charter provision there in question, which permitted an offset of benefits for grading against damages for taking plaintiff's property for the slopes needed for the grading, was said to be unconstitutional. The decision, without citing any authorities, declared that: "Nothing can be better settled." The announcement of that doctrine was not necessary for the decision, for the judgment granting plaintiff an injunction was reversed upon the sole ground that she was not in position to successfully question the validity of the condemnation and assessment had under a charter which permitted the city in one proceeding to widen and grade a street and offset *Page 232 special benefits accruing to that part of the lot not taken against the damages awarded for the part taken. The decision, therefore, really being obiter on the question now before us, we do not consider binding as a precedent, being convinced that it is unsound, and leads to unjust and impractical results.
Section 13, article 1, of the Constitution forbids the taking of private property for public use without just compensation first paid or secured. It does not demand the compensation be made in cash. As early as in W. St. P.R. Co. v. Denman,10 Minn. 208 (267), this was held. The question, however, related more to compensation for injury or damage to the remainder of the tract of which a part was taken, but the right of set-off for benefits was used without objection without being confined to special damages. Although the then Chief Justice concurred in that opinion, he vigorously dissented when the question again came up in W. St. P.R. Co. v. Waldron, 11 Minn. 392 (515), 88 Am. Dec. 100, and it was directly held that special damages could be offset against the damages for the taking, and that such offset was equivalent to payment pro tanto. The principle, therefore, was adopted upon mature consideration, and never since has it been questioned. In re M. Ry. Tr. Co. v. Slingerland,101 Minn. 488, 112 N.W. 1033, 11 L.R.A. (N.S.) 277,118 Am. St. 647.
There can be no distinction, constitutional or otherwise, between special benefits to property from the widening of a contiguous street and from the grading or otherwise improving the same. Nor can there be any constitutional objection to a municipality requiring the owner of property specially benefited by an improvement to pay the whole amount at once. Were that done in a proceeding of this sort, the propriety of offsetting the damages against the special benefits, or vice versa, would be palpable. The landowner should not complain if, where the benefits exceed the damages, he is given time on the balance.
The proceeding before us was instituted under the charter which adopted and incorporated chapter 185, p. 229, Laws of 1911, as amended by chapter 345, p. 488, Laws of 1913, the so-called Elwell *Page 233 Act. Section 6 of chapter 185, amended by the later act, reads in part: "Any existing street or parkway may be improved and the expense thereof assessed and raised in the manner provided by this chapter, including any or all of the following improvements, to-wit: widening, grading, pavement, sidewalks, curb and gutter, sewers and water mains." The street opposite appellant's land was 40 feet wide. The improvement herein consists of taking a strip 40 feet off from appellant's tract so as to make the street of the uniform width of 80 feet and opening and grading the same. There can be no question of the right of the city to assess the remainder of appellant's tract for the special benefits received from both the widening and the grading. If those benefits exceed the damages, there seems no good reason to say that the latter may not be paid at once by offsetting against the benefits, the balance only to be assessed.
It is said the damages belong to the owner personally, the special benefits may only be a charge upon the land. However, the proceeding is in rem and the right to receive the damages for the appropriation proceeds from the ownership of the res, and only the owner is interested in paying the assessments for special benefits fixed against the part not taken. Nor would there be anything unconstitutional, so far as we can see, in assessing special benefits against the owner personally. The offsetting of the one against the other, both being lawful claims, the one in favor of the city and the other in favor of the owner, does not in any manner deprive the owner of his rights.
In a drainage case, Little Tarkio Drainage District, No. 1 v. Richardson, 237 Mo. 49, 85, 139 S.W. 576, the court aptly says: "The landowner whose lands are taken or damaged for the use of the improvement is not, under this statute, paying his assessment in advance, either in law or fact, but under the requirements thereof, and in pursuance to the mandate of the Constitution, he receives just compensation for the land taken and damaged thereby, by the commissioners deducting the value thereof from the total benefits assessed against his other lands and the remaining benefits *Page 234 assessed, if any, he must pay, just as all other landowners in the district must pay their assessments." Under section 5 of chapter 185 as amended by section 4 of chapter 345, L. 1913, the owner has the option of paying the whole assessment at any time or in instalments over a period of years.
It may be claimed that, after the offset is made, the grading or opening may be delayed indefinitely and, therefore, it is unjust to offset. The assessment for the special benefits is concurrent with the award of damages in the same proceeding and, unless abandoned by the city within the time fixed by the charter, the courts are open not only to recover the damages but, no doubt, also to compel the construction of the improvement or cancel the assessment if the improvement is not made within a reasonable time. When a county or city is charged with the duty of paying for property appropriated for public use by assessing benefited property or by taxation, compensation is secured within the constitutional provision referred to, State v. Messenger,27 Minn. 119, 6 N.W. 457; State ex rel. v. Otis, 53 Minn. 318,55 N.W. 143; Johnson v. Clontarf, 98 Minn. 281, 108 N.W. 521; State ex rel. v. District Court, 128 Minn. 432, 151 N.W. 144. Section 10 of the act as amended by section 5 of chapter 345, L. 1913, makes it obligatory upon the city by assessments or bonds to provide the necessary funds not only to pay damages but to make the improvement.
Appellant cites Vanderburgh v. City of Minneapolis, 98 Minn. 329,108 N.W. 480, 6 L.R.A. (N.S.) 741, and Austin v. Village of Tonka Bay, 130 Minn. 359, 153 N.W. 738, as to the right to recover consequential damages, where an improvement can be made without taking any of the property injured, and hence the owner is not a necessary party thereto, and may resort directly to the courts for redress. Those cases are not in point here.
The contention of the city that the validity of the drainage law and the Elwell Highway Law (chapter 254, p. 352, L. 1911), are at stake, is unfounded. For the drainage law as amended by section 5, chapter 384, p. 540, L. 1911, requires the damages to be paid at once. Cunningham v. County of Big Stone, 122 Minn. 392, *Page 235
142 N.W. 802. Hence there can be no set-off. But section 2, chapter 185, p. 229, L. 1911, the provision here controlling, authorizes such set-off.
To the extent indicated the former opinion is altered. We adhere to the rule therein expressed that the commissioners should separately determine and state the amount of damages and the total amount of special benefits to each tract of land involved. The offset may then be made understandingly.
The order confirming the award is reversed and the proceeding remanded for further action in harmony with this opinion.
STONE, J., took no part.