Hart v. City of Detroit

Fitzgerald, C.J.,

and Williams, Coleman, and Ryan, JJ. This opinion was written by Justice Blair Moody, Jr., prior to his death on November 26, 1982. We concur in this opinion and adopt it as our own.

The original complaint in this inverse condemnation class action was filed May 9, 1974. Proper notice was given to all eligible class members. Owners of 42 parcels of land joined the class. On August 18, 1978, the trial court granted defendant’s motion for accelerated judgment on the ground that all but seven of the plaintiffs’ claims were barred by the three-year statute of limitations pertaining to damages for injuries to persons and property.

The Court of Appeals affirmed the trial court’s decision, holding that the three-year statute of limitations was the proper statute to employ. 97 Mich App 697; 296 NW2d 151 (1980). This Court granted leave to appeal to determine whether the three-year statute of limitations for "injuries to persons and property” applies to inverse condemnation actions and, if not, what limitations period, if any, is applicable. Furthermore, if we find that a statute of limitations is applicable, we are asked to determine when the limitation period would begin to run as to the properties in this case.

*493Facts

The Court of Appeals decision succinctly set forth the pertinent facts as follows:

"This appeal is submitted on a stipulated statement of facts. The statement indicates that the parcels of realty in question are located within the boundaries of defendant’s Elmwood Park Urban Rehabilitation Project No. 3 (Elmwood 3). A part of Elmwood Park,2 the affected area contains approximately 1,400 separate parcels of land. Elmwood 3 was originally conceived by city planners in the mid-to-late 1950’s. As part of its urban renewal efforts, defendant City of Detroit has acquired and demolished the structures upon virtually every parcel within Elmwood Park in order to facilitate redevelopment.
"All parties have stipulated that the actions of defendant in the Elmwood 3 project resulted in a de facto taking of plaintiffs’ property without just compensation therefor. However, in each instance the subject properties were either directly or indirectly acquired by defendant as a result of nonpayment of taxes.3 This occurred after the de facto takings but well prior to the commencement of any formal condemnation proceedings by defendant. The plaintiffs now appealing were not joined as parties to any of 12 formal condemnation proceedings filed by defendant from August 3, 1971, to November 27, 1972.
"On May 9, 1974, the within action was instituted, well after all the parcels involved in this controversy were conveyed for nonpayment of taxes, and more than three years after the right of equity of redemption had expired with respect to every parcel.
"Because this right had expired with respect to the parcels formerly owned by the plaintiffs on appeal, the lower court concluded that each plaintiff’s cause of action accrued, at the latest, on the date of expiration of their right to redeem. Applying (as noted hereinbe-fore) the three-year statute of limitations found in MCL 600.5805(7); MSA 27A.5805(7), the trial court held that the claims of the plaintiffs now appealing were barred *494thereby because their claims accrued, at the latest, more than three years prior to the institution of the class action suit, and were thus without the statute of limitations.”

Hart, supra, 97 Mich App 700-701.

I

Inverse condemnation is a taking of private property for a public use without the commencement of condemnation proceedings. Under the Michigan1 and United States2a Constitutions, a victim of such a taking is entitled to just compensation for the value of the property taken.3a

The parties agree that the real property involved here was de facto taken but not paid for by the City of Detroit pursuant to In re Urban Renewal, Elmwood Park Project, 376 Mich 311; 136 NW2d 896 (1965), and Foster v Detroit, 405 F2d 138 (CA 6, 1968). The disputed issue is whether this action is barred by a statute of limitations.

Plaintiffs first contend that due process rights guaranteed by the state and federal constitutions cannot be cut off by any statute. Since the issue is one of first impression in this state, plaintiffs primarily rely on Ackerman v Port of Seattle, 55 *495Wash 2d 400; 348 P2d 664 (1960), to support this proposition.

The Ackerman court did state that an action for compensation predicated on a constitutional taking would not be barred by any statute of limitations. However, this would only apply when the individual still held an interest in the property. If the individual lost this interest by adverse possession, such an action would be barred. The court stated:

"We have held that an action for constitutional taking is not barred by any statute of limitations and may be brought at any time before title to the property taken is acquired by prescription.” (Emphasis added.) 55 Wash 2d 405.

This point was further clarified in City of Sno-homish v Joslin, 9 Wash App 495; 513 P2d 293 (1973), where the court denied plaintiff’s claim for compensation regarding property which the city had acquired by prescription. The court upheld the Ackerman rule as quoted above but stated:

"We recognize anomaly inherent in the statement of the rule. Acquisition of title by way of prescription is the result of the barring of an action by a statute of limitation.” 9 Wash App 497.

Therefore, it is not totally accurate to state that in Washington an inverse condemnation action is not barred by any statute of limitations. Under these cases, a plaintiff’s constitutional right to compensation would expire whenever title to the property was lost by prescription; such a loss of title is predicated on the expiration of a statute of limitations.

*496Additionally, plaintiffs’ contention that no statute of limitations can bar a constitutional right is not supported by pertinent holdings of the United States Supreme Court. In United States v Dickinson, 331 US 745; 67 S Ct 1382; 91 L Ed 1789 (1947), a leading case on the applicability of statutes of limitations in inverse condemnation cases, a six-year federal statute of limitation period established for claims founded upon the United States Constitution was applied.4 Because the plaintiff’s claim was founded on the Fifth Amendment provision that private property shall not be taken for public use without just compensation, the Court held that the applicable statute of limitations was six years. See, also, Soriano v United States, 352 US 270; 77 S Ct 269; 1 L Ed 2d 306 (1957); Loesch v United States, 227 Ct Cl 34; 645 F2d 905 (1981).

In view of the context of these determinations, we are not persuaded by plaintiff’s claim that no statute of limitations should apply in this case. In determining which limitation period is applicable, three Michigan statutes are relevant:

MCL 600.5801; MSA 27A.5801:

"No person may bring or maintain any action for the recovery or possession of any lands or make any entry upon any lands unless, after the claim or right to make the entry first accrued to himself or to someone through whom he claims, he commences the action or makes the entry within the periods of time prescribed by this section.
"(4) In all other cases under this section, the period of limitations is 15 years.”

MCL 600.5805(7); MSA 27A.5805(7):5

*497"The period of limitations is 3 years for all other actions to recover damages for injuries to persons and property.”

MCL 600.5813; MSA 27A.5813:

"All other personal actions shall be commenced within the period of 6 years after the claims accrue and not afterwards unless a different period is stated in the statutes.”

Plaintiffs contend that if a statute of limitations must apply, the one most closely analogous to an inverse condemnation action is the 15-year limitation which applies to adverse possession actions. On the facts of this case, however, the analogy falls short.

It is well-established in Michigan that adverse possession must be actual, visible, open, notorious, exclusive, continuous, under cover of claim of right and uninterrupted for the statutory period. Burns v Foster, 348 Mich 8; 81 NW2d 386 (1957); Rose v Fuller, 21 Mich App 172; 175 NW2d 344 (1970); Whitehall Leather Co v Capek, 4 Mich App 52; 143 NW2d 779 (1966). If the party alleging title by adverse possession does not prove it by clear and positive proof, then the original owner regains possession of the property. Burns and Rose, supra.

In contrast, a party who institutes an inverse condemnation action usually concedes that the condemnor has taken the property indirectly by its actions preceding formal institution of condemnation proceedings. It would be unusual for the condemnor’s acts to be of such a degree as to satisfy the strict test for adverse possession. Plain*498tiffs do not allege that the city’s actions here would satisfy this test. Neither would the stipulated facts support such a claim.

Furthermore, the plaintiff in an inverse condemnation suit does not ordinarily seek repossession of his property, but rather, just compensation for the value of the property taken. Tamulion v State Waterways Comm, 50 Mich App 60, 66; 212 NW2d 828 (1973). This is again unlike the adverse possession case where, if title to the property is secured by the adverse possessor, the original owner is not entitled to payment.

We do recognize that in actions such as the present one compensation to the original owner, as a substitute for the property itself, is the only viable alternative. The eminent domain power of the condemnor leaves the property owner with no option other than to seek compensation. Accordingly, these differences do not necessarily cause us to reject the 15-year adverse possession limitation period. Nevertheless, a final fatal flaw exists in plaintiffs’ analogy with respect to this case.

The concept of adverse possession rests upon an interest in title to property. Plaintiffs point out that Texas, California, and Nebraska have adopted the adverse possession statutes of limitations (ten, five, and ten years, respectively) for inverse condemnation actions.6 However, the rationale for applying the adverse possession limitation period rests on the owner’s present interest in the property. This was explained in Frustuck v City of Fairfax, 212 Cal App 2d 345, 374; 28 Cal Rptr 357 (1963), where the court stated:_

*499"The rationale of these latter cases is that the owner’s right of recovery is founded upon and grows out of his title to land and that until such title is lost by adverse possession the owner should have the right to maintain an action to recover that which represents the property itself.” (Emphasis added.)

However, plaintiffs here lost all title and interest to the properties upon the expiration of the period of redemption following the sale of the properties for nonpayment of taxes. Rosin v State Land Office Board, 314 Mich 482, 486; 22 NW2d 833 (1946). When the present action was commenced, plaintiffs had no ownership rights in the properties, legal or equitable. Under such circumstances, there is no foundation to apply a 15-year limitation period that is predicated upon the plaintiff having continual ownership rights.

We do not foreclose the possibility that on the proper facts, where a plaintiff retains ownership rights in the property when suit is brought, the analogy to adverse possession may be applied. However, on the facts of this inverse condemnation action, we decline to adopt the adverse possession statute of limitations.

Defendant contends that the Court of Appeals was correct in upholding the trial court’s finding that the three-year limitation period for "injury to persons and property” should be employed. Defendant claims there is ample authority for the proposition that the three-year limitation period applies to this case, citing Foster v Detroit, 405 F2d 138, 145 (CA 6, 1968), and Silverstein v Detroit, 335 F Supp 1306,1308 (ED Mich, 1971).

In both Foster and Silverstein, the City of Detroit asserted the three-year statute as an affirmative defense. Yet, the question of whether the three-year period was the proper limitation period *500was not directly contested or addressed. Although both federal courts assumed that the three-year limitation period would apply, in neither case was the plaintiff’s cause held to be barred by the statute. Defendant points to no prior Michigan case in which recovery in an inverse condemnation suit was barred by application of the three-year statute of limitations.

In response to the claim that the three-year statute is applicable, plaintiffs contend that the three-year statute applies only to injury to property and not to the taking of property. Defendant agrees with plaintiffs that, because of the language of the Michigan Constitution, Michigan is a "taking” state rather than a "taking or damaging” state.7 However, defendant maintains that "damage” and "injury” to property are synonymous with a "taking” of property in an inverse condemnation action and that, therefore, the three-year limitation period for "injury to property” should apply.

We agree that a "taking” of property may be the end result of serious injury to and diminution in the value of real property. Thom v State Highway Comm’r, 376 Mich 608; 138 NW2d 322 (1965). "Taking” is a term of art with respect to the constitutional right to just compensation and does not necessarily mean the actual and total conversion of the property. Whether a "taking” occurs for which compensation is due depends on the facts and circumstances of each case. Thom, supra; Heinrich v Detroit, 90 Mich App 692; 282 NW2d 448 (1979).

Both an injury to property and an absolute *501conversion of property may result in a taking in the constitutional sense. While each situation could result in a finding that a constitutional "taking” of property has occurred for which just compensation is due, there is a recognizable distinction between the two situations.8

The owner who suffers injury to his property, less than a total conversion, may remain in possession and continue using his property. His claim is for diminution in value and interference with the use and enjoyment of his property. On the other hand, the owner who suffers a conversion of his property is left with nothing. His claim is for the value of the entire piece of realty.

It might appear that the injury to property situation, less than a total conversion, is analogous to the "injury to property” cases in which the three-year statute of limitations is applicable. However, the test to prove injury is not the same. In an inverse condemnation action, it is not enough for the owner to prove injury to his property by the defendant with resultant damages. Rather, plaintiff must prove that the condemnor’s actions were of such a degree that a taking occurred. This issue is decided by the trier of fact. If the plaintiff cannot prove that the condemnor has taken his property, other causes of action are still available to him, e.g., trespass, nuisance, and negligence, with their attendant statutes of limitations.

In situations where the plaintiff alleges that a total conversion of his property has occurred, the analogy to the injury to property statute is even less satisfactory. A plaintiff in such a situation *502claims a complete loss of his realty by the condem-nor’s actions. He seeks recovery for the total value of his property which has been taken by the condemnor. He does not retain the value of possession and use of his property.

Although we recognize a distinction between the two types of "taking” to establish an inverse condemnation cause of action, the plaintiff in each situation must prove that a taking in the sense of conversion has occurred, not merely that he has suffered injury to his property. Accordingly, we find that the three-year statute of limitations for "injuries to persons and property” is not applicable to inverse condemnation actions.

The final statute of limitations to be considered is the general six-year period for "personal actions”. The Court of Appeals majority rejected this limitation period by stating that personal claims do not include claims based upon real property rights. 97 Mich App 702. However, this rationale ignores cases in which the six-year period has been applied to personal actions which arose in connection with interests in real property. Weeks v Sla-vik Builders, Inc, 384 Mich 257; 181 NW2d 271 (1970) (action for breach of implied warranty of roof on new home); Sweet v Shreve, 262 Mich 432; 247 NW 711 (1933) (action for fraud in exchange of real estate); Borman’s, Inc v Lake State Development Co, 60 Mich App 175; 230 NW2d 363 (1975) (action by tenant against landlord and general contractor for negligent construction of drainage system); George v City of Petoskey, 55 Mich App 433; 223 NW2d 6 (1974) (action for damages to financial expectations and economic benefit arising from property ownership).

Thus, even though the present plaintiffs’ personal action arises out of their property interests, *503it does not make the six-year statute of limitations for personal actions automatically inapplicable. There is no dispute that the present plaintiffs no longer have any right to regain possession of the subject property, since the redemption periods following the tax sales have expired. Rosin, supra. Accordingly, it may be recognized that plaintiffs assert personal claims arising out of their former property ownership and based on their constitutional right to just compensation.

We are cognizant that the instant action has not been clearly provided for in any specific statute of limitations.9 Neither do the facts of this case come within the confines of either the 15- or 3-year statute by analogy. As the plaintiffs are not seeking recovery of their lands but compensation for a taking by the sovereign, this cause of action may be logically conceptualized as a personal action which arises in relation to a former interest in real property. We thus conclude that the general six-year statute of limitations applies to this action. See Schreiber v Lowe’s, Inc, 147 F Supp 319, 322 (WD Mich, 1957).

II

Plaintiffs also contend that the trial court and the Court of Appeals erred in determining that their cause of action accrued on the last day of the redemption period, thereby triggering the running of the statute of limitations. We concur with the trial court and the Court of Appeals on this point.

The time of “taking” in an inverse condemna*504tion action is not necessarily coincidental with the time plaintiffs cause of action accrues. Foster and Silverstein. It is common for such actions to involve a continuous wrong by the condemnor rather than a single act. In an inverse condemnation action such as the present one, in which plaintiffs claim a continuous wrong by the condemnor, it is well-settled that the statute of limitations does not begin to run until the consequences of the condem-nor’s actions have stabilized. Dickinson and Silver-stein. The precise point in time when the running of the limitation period is triggered is determined by the facts and circumstances of each case. Foster and Silverstein.

The parties to the instant action have stipulated that there was a de facto taking of the property prior to the date of the tax sales. It is for the trier of fact to determine whether a continuous wrong was involved here and, if so, when the consequences of this wrong had stabilized, thus triggering the statute of limitations. If the trier of fact finds that the condition had stabilized prior to the expiration of the redemption period, then that is the date when the limitation period would begin to run. However, if the trier of fact finds that the condition had not yet stabilized, then the latest point in time that plaintiffs’ cause of action could have accrued was the last date on which plaintiffs held any interest in the subject property — the day the right of redemption expired. Silverstein, supra, 335 F Supp 1309-1310. It is on this date that the limitation period would begin to run. Clearly, if instead' of the tax sales plaintiffs had voluntarily sold their property to third parties, they could not claim damages which had accrued after the sale.

Accordingly, those claims in which the redemp*505tion period had expired more than six years prior to the filing of this action are barred by operation of the statute of limitations.

Conclusion

The proper limitation period to employ in this inverse condemnation action is the general six-year period for personal actions. MCL 600.5813; MSA 27A.5813. On the facts of this case, the latest date on which the limitation period could begin to run was on the day the right of redemption expired. Affirmed in part. Reversed in part. No costs, a public question being involved.

Fitzgerald, C.J., and Williams, Coleman, and Ryan, JJ., concurred.

"2 Elmwood Park, an area on the lower east side of Detroit, not far removed from downtown, also includes Elmwood 1 and 2, Urban Renewal Areas as well, which abut Elmwood 3.

"3 The parcels were conveyed via tax deeds. Those acquired indirectly were purchased by defendant from the State of Michigan for a nominal consideration of $1 per parcel.”

Const 1963, art 10, § 2.

US Const, Am V.

See, generally, 30 CJS, Eminent Domain, § 399, p 475; 27 Am Jur 2d, Eminent Domain, § 478, p 408.

See 28 USC 2401.

After the accelerated judgment was granted in this case, 1978 PA *497495 renumbered this section MCL 600.5805(8); MSA 27A.5805(8), and made stylistic changes and minor substantive changes not here relevant.

Brazos River Authority v City of Graham, 163 Tex 167; 354 SW2d 99 (1961); Frustuck v City of Fairfax, 212 Cal App 2d 345; 28 Cal Rptr 357 (1963); Krambeck v City of Gretna, 198 Neb 608; 254 NW2d 691 (1977).

Const 1963, art 10, § 2 provides:

"Private property shall not be taken for public use without just compensation therefor being first made or secured in a manner prescribed by law.”

This distinction was also recognized by the Washington and California courts in Ackerman, 55 Wash 2d 406, and Frustuck, 212 Cal App 2d 374.

Although recognizing the inverse condemnation cause of action, the Legislature did not specify a limitation period in its recently enacted Uniform Condemnation Procedures Act, 1980 PA 87, MCL 213.51 et seq.; MSA 8.265(1) et seq.