Wisconsin Supreme Court Decides
Two Cases Involving Municipalities
February 21, 2020

  Wisconsin Supreme Court Upholds Annexation
In an important decision affirming municipal annexation authority, the Wisconsin Supreme Court unanimously upheld the City of Sheboygan’s (City) annexation of 247 acres owned by Kohler Co., which sought annexation so it could develop its property into a world championship golf course.  The League participated as amicus curiae, filing a joint brief with NAIOP Wisconsin.

 In Town of Wilson v. City of Sheboygan , 2020 WI 16, the major issues addressed by the Court were whether the annexed territory met the statutory requirement of contiguity and whether the annexation violated the rule of reason, a judicially-created doctrine designed to determine whether the annexation power designated to cities and villages has been abused under the facts and circumstances of a particular case. Under the rule of reason, an annexation must satisfy three requirements to pass muster: (1) exclusions and irregularities in boundary lines must not be the result of arbitrariness; (2) some reasonable present or demonstrable future need for the annexed property must be shown; and (3) no other factors must exist which would constitute an abuse of discretion on the part of the municipality. Failure to satisfy any one of the prongs renders an annexation arbitrary, capricious and invalid.

In 2014, Kohler Co. applied to the Town of Wilson (Town) for a conditional use permit to develop 247 acres of undeveloped land it owned abutting Lake Michigan as a world championship golf course. Town residents opposed the development based on environmental concerns, deforestation and perceived impacts to residential wells. By 2015, it was known that three members of the Town’s five-member board were opposed to the plan. Because of town opposition and concerns about the Town’s ability to provide adequate water and fire services to the proposed development, Kohler Co. approached the City about possibly annexing the property. The City’s 2011 Comprehensive Plan targeted land within the annexation area as land for future city expansion, development and economic growth. A substantial need for housing was stunting the City’s economic growth. It was determined annexation would be mutually beneficial. Annexation would allow the City to address its housing needs by developing the land adjacent to Kohler Co’s property and would allow Kohler to develop its land into a golf course. 

Kohler independently designed the boundaries of the annexation without City assistance. To increase the size and shape of the territory, Kohler included a large amount of state land in its proposal, and also purchased several properties located within the territory. The border between the City and the first parcel of the territory is approximately 650 feet in width. The territory proceeds in a southeasterly direction and varies in size from 1450 feet wide at certain points to 190 feet wide before expanding to the proposed golf course development.

The Town of Wilson sought a declaratory judgment that the City’s annexation of the territory was “arbitrary, capricious, non-contiguous, an abuse of discretion,” and non-compliant with statutory annexation requirements and existing case law. After a bench trial, the circuit court concluded that the annexation satisfied both the contiguity requirement and rule of reason as well as the statutory procedural requirements and dismissed the action. The Town appealed. The Supreme Court granted a petition allowing the case to bypass the court of appeals, and affirmed the circuit court. 

The Town claimed the annexation was “virtually identical” to an annexation invalidated in a 1964 case, Town of Mt. Pleasant v. City of Racine , in which the Court first adopted the rule of reason. In Mount Pleasant , the person seeking annexation sought to connect its land to the city limits by a corridor approximately 1,705 feet long, varying in width from approximately 152 to 306 feet and only physically touching the city limits at the southwest corner by a 153-foot-wide corridor. The Supreme Court disagreed that the annexations were similar, noting a much greater degree of physical contact in Sheboygan’s annexation. A majority of the Court also observed that the Mount Pleasant decision “blurred” the statutory contiguity and rule of reason analyses, causing confusion and “conflation of the statutory contiguity requirement with the first prong of the rule of reason. The Court stated, “We clarify that contiguity is a legislative mandate discrete from the first prong of the judicially created rule of reason ….” 2020 WI 16 at ¶ 23.

Justice R. Bradley, joined by Justice Kelly, agreed the annexation satisfied all statutory requirements but wrote a separate concurrence explaining they would overturn Town of Mt. Pleasant v. City of Racine and abolish the rule of reason. Justice Hagedorn also wrote a concurring opinion saying he agreed that the rule of reason was “judicial policy-making pretending to be law,” but he did not believe it should be abolished yet because the parties had not asked the Court to discard the rule of reason and at oral argument specifically had asked the court not to do so. Since eliminating the rule of reason would be a significant change in doctrine, he believed it should only be done after adversarial briefing and argument.

Court Notes Distinction Between
Municipal Court Competency and Subject Matter Jurisdiction

In City of Cedarburg v. Hansen, 2020 WI 11, the Wisconsin Supreme Court held that a municipal court’s lack of knowledge regarding a [defendant’s] prior out-of-state OWI conviction, which was factually a first offense, does not invalidate the municipal court’s subject matter jurisdiction in a subsequent, in-state OWI conviction in violation of a city ordinance. Rather, only the municipal court’s competence is affected.

In 2005, the defendant, Hansen, was arrested and convicted of a first-offense OWI in violation of Cedarburg’s ordinance; at the time, the municipal court was unaware that Hansen had a 2003 OWI conviction in Florida. Hansen was arrested for another in-state OWI offense in 2016. This time, the arresting officer was aware of Hansen’s out-of-state conviction and Hansen was charged with a third-offense OWI. In connection with the new OWI offense, Hansen moved the circuit court to vacate his 2005 OWI conviction on the basis that it was factually his second offense and, therefore, was a criminal charge and not within municipal court’s subject matter jurisdiction which extends only to actions for municipal ordinance violations.

Ultimately, the Court concluded that a failure to follow the statutory progression for OWI offenses (i.e., adjudicating Hansen’s second-offense OWI as a first-offense OWI) does not negate a municipal court’s subject matter jurisdiction. Instead, it could only affect a court’s competency which “presupposes a court has subject matter jurisdiction and is about a court’s ability to exercise its jurisdiction in an individual case.” Hansen , ¶ 49. The Court also noted that a lack of competency may result in an erroneous or invalid judgment but does not mean the matter is void for lack of subject matter jurisdiction. Id . Furthermore, the Court noted that an objection to a municipal court’s competence may be waived if not timely raised. Id. , ¶ The Court concluded that Hansen, waiting 11 years to object, had forfeited any potential competency objection. Id.