Annexation after incorporation satisfied the “rule of reason”

by Rachel Greifenkamp and Gary Taylor

Michael H. Ries v. Village of Bristol
(Wisconsin Court of Appeals, April 17, 2014)

In 2008, the Town of Bristol in Kenosha, WI petitioned to incorporate a portion of the town as a village.  After a failed attempt at incorporating  an area of 18 square miles (a majority of the land area of the Town), a revised petition to incorporate 9.2 square miles was submitted to the Wisconsin board on incorporation, which approved  a referendum after determining that the standards for incorporation were met. The incorporation referendum was held and passed. Soon after, the new Village of Bristol petitioned the circuit court to allow a referendum on whether to annex the entire remainder of the Town to the Village.  The court granted the petition, an annexation referendum was held and passed, and the Village enacted an ordinance annexing the entire remainder of the Town into the Village.

Michael H. Ries, M.D., and Ries Partners, Limited Partnership (Ries) challenged the annexation by referendum of the former Town of Bristol into the Village of Bristol. Ries sought a declaration that the annexation of the Town to the Village was invalid because it did not satisfy the rule of reason. The circuit court concluded that the annexation satisfied the rule of reason and dismissed the complaint. Ries appealed to the Wisconsin Court of Appeals

The rule of reason is a judicially created doctrine that “is applied by the courts to ascertain whether the power delegated to the cities and villages has been abused in a given case.” An annexation satisfies the rule of reason when three requirements are met: (1) exclusions and irregularities in boundary lines are not the result of arbitrariness; (2) there is a reasonable present or demonstrable future need for the annexed territory; and (3) no other factors exist that constitute an abuse of discretion on the part of the annexing municipality. Ries challenged whether the second and third requirements were met. Because the challenger to an annexation bears the burden of showing that the annexation violates the rule of reason, Ries must prove that the second and third requirements have not been met.

Future need for annexed territory.  The Court stated that “as long as the annexing authority shows any reasonable need for the annexation, the courts must respect the legislative decision to annex.”  “Need” may be demonstrated by a need for services the Town cannot provide, or a need to extend police, fire, sewer and other services to a substantial number of residents of adjacent areas.  According to the record from the circuit court, the village provided the annexed territory fire and emergency services, public works. and administrative services.  Ries countered that “the annexation was not necessary to extend services from the Village to the Town because even without the annexation, residents of the Town were receiving all of the same services as residents of the Village.” The Court of Appeals noted the circuit court’s findings that the only reason Town residents were receiving services was because they had contracted with the Village for them.  The Village was under no obligation to continue to provide services to the Town, and without the contract the Town, in fact, would not be able to provide them.  The Court dismissed this line of argument.

Abuse of discretion by annexing municipality.  Ries first argued that the village annexed the Town as a means of circumventing the requirements of the incorporation statutes, essentially making an “end run” around the incorporation requirements.  The Court rejected this argument, stating that there is no provision in the annexation or incorporation statutes that makes it unlawful to follow the process that the Village did; i.e., to incorporate, then annex the territory that would not meet the requirements for incorporation.

Ries’s second argument was that the Wisconsin Constitution prohibits annexation of territory that lacks the essential characteristics of a village.  Noting that the “essential characteristics of a village” is a reference to the court’s “village-in-fact” test established in State ex rel. Town of Holland v. Lammers. The Court dismissed this argument as well because the village-in-fact test applies to incorporations, not annexations.

Ultimately, the Court of Appeals analyzed and systematically dismissed each of Ries’ arguments and concluded that the annexation satisfied the rule of reason and the the court’s evidentiary ruling was not an erroneous exercise of discretion. The Court of Appeals affirmed the Circuit Court’s decision.

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