Department of Natural Resources v. Brauer , 339 Ill. App. 3d 723 ( 2003 )

PRESIDING JUSTICE McDADE

delivered the opinion of the court:

This appeal arises out of a condemnation proceeding initiated against property owned by the defendants. During the 2½ years between the filing of the complaint and the adjudication of fair compensation and entry of judgment, the defendants sold utility easement rights on the property. After judgment, the State filed a motion for a setoff against the compensation award equal to the $35,000 the defendants received for the sale of the easements. The trial court granted the motion, and the defendants appeal. For the reasons that follow, we reverse.

FACTS

The defendants owned a 10.25-mile-long strip of land that was formerly a railroad right-of-way in Will County, Illinois. The parcel is 100 feet wide and runs from Joliet, south past the Village of Manhattan, to the Joliet Arsenal. All told, the abandoned railway consists of 128.25 acres. The defendants were in the business of salvaging the railroad ties and tracks from the old railway fine and also made money selling easements to utility companies and municipalities. •

With the intent of turning the right-of-way into a conservation and recreation trail, the Illinois Department of Natural Resources (IDNR) filed an action to condemn the property. A trial was held, and on July 23, 2001, the jury found the defendants were entitled to just compensation in the amount of $1,154,250. The judgment on this verdict was entered on October 11, 2001.

Between the filing of the complaint on January 7, 1999, and the jury verdict on July 23, 2001, the defendants granted a series of easements on the property. The City of Joliet purchased an easement for public utilities. The defendants also granted easements to the Village of Manhattan and three private utilities so those companies could provide services to the village. At no time did the State seek an injunction to prevent the sale of the easements, for which defendants were paid $35,000.

The IDNR filed a motion to set off this $35,000 from the judgment. In response, the defendants argued that IDNR’s motion was not timely filed; that they were free to do what they wished with the property until title was actually vested in the State of Illinois; that IDNR had not shown that the new easements decreased the value of the property; and that the setoff resulted in an unconstitutional taking. The trial court heard argument on the motion and ruled in favor of the State.

The defendants appeal. They raise five arguments: first, that by granting IDNR the setoff, the trial court essentially changed the valuation date of the property; second, that they had the right to deal with the property as they pleased until title actually vested in the State or until they were enjoined from doing so by the court; third, that the setoff was a modification of judgment that the court lacked jurisdiction to grant because the motion was filed more than 30 days after the judgment; fourth, that the value of the property did not decrease as a result of the easements being granted and there is, therefore, no basis for a setoff; and, fifth, that the State can file for ejectment of the easement holders and can thereby recoup the property rights that were sold by the defendants.

ANALYSIS

We are asked to determine whether the court erred in granting the setoff. Whether the State is entitled to the setoff is a question of law, which we review de novo. Woods v. Cole, 181 Ill. 2d 512, 516, 693 N.E.2d 333, 335 (1998).

We first consider whether the trial court had jurisdiction to award the setoff. The record shows that the order setting fair compensation was filed on October 11, 2001. Since the State’s October 3, 2001, motion for setoff was filed prior to the judgment, the court had jurisdiction to hear the motion. We reject the defendants’ claim of untimeliness.

We next turn to the merits of defendants’ claims on appeal. When the State filed its action for condemnation, its rights to the property became fixed. Board of Junior College District 504 v. Carey, 43 Ill. 2d 82, 85, 250 N.E.2d 644, 646 (1969). Also fixed at that time was the value of the property, which serves as the basis for the jury award of just compensation. Carey, 43 Ill. 2d at 85, 250 N.E.2d at 646. Title does not vest, however, until the determination and payment of just compensation. Carey, 43 Ill. 2d at 84, 250 N.E.2d at 646. Just compensation is equal to the fair cash market value of the property for its highest and best use. Department of Public Works & Buildings v. Oberlaender, 42 Ill. 2d 410, 415, 247 N.E.2d 888, 892 (1969). The fair cash market value of the property is the price for which the land would sell under ordinary circumstances; that is, if there were a willing seller and buyer who were under no compulsion to engage in the transaction. 735 ILCS 5/7—121 (West 2002).

The State has produced no law that establishes a right to the requested setoff. In condemnation proceedings, it is the State’s burden to prove the fair market value of the property. Department of Transportation v. White, 264 Ill. App. 3d 145, 150, 636 N.E.2d 1204, 1208 (1994). Here, since the State is the party seeking to reduce the jury’s compensation award, it should also have the burden of proving a decrease in value due to the easement sales.

The State has presented no evidence that indicates that the value of the property for its intended use decreased due to the granting of the easements. Nor has the State shown that the existence of the easements is relevant to the valuation of the property. We believe it was improper for the trial court to grant the setoff in the amount of $35,000. Although the defendants were able to sell the easements for that amount, it does not follow and, more importantly, has not been demonstrated that the value of the property decreased accordingly.

The State argues, however, that whether there is or is not a change in value of the property is irrelevant to the determination of whether it is entitled to a setoff, claiming that the relevant fact is that it has been denied property rights to which it was entitled. The State has produced no case law in support of this proposition, nor offered any compelling argument for ignoring the plain language of the statute, which measures compensation in terms of value. 735 ILCS 5/7—121 (West 2002).

The dissent tries to bolster the State, contending that, “the sale of an easement can lessen the value of the land.” (Emphasis added.) 339 Ill. App. 3d at 730. While true, the statement only acquires legal significance if the claim of a reduction in value is supported by evidence. As we have noted, there is no such evidence in the record.

The dissent also discusses the allocation of the risk of loss as between condemnor and condemnee, citing section 1009 of the Model Eminent Domain Code (Model Eminent Domain Code § 1009, 13 U.L.A. 100 (2002)), to show that the condemnee (defendant) has the risk of loss “due to damage, destruction, or unauthorized removal of improvements or crops situated upon the property.” 13 U.L.A. 100 (2002). Defendants’ sale of the easements is characterized as “deliberate” and “unauthorized.” “Without leave of court or the DNR’s authorization,” the dissent reports, “the defendants sold valuable rights in the property.” 339 Ill. App. 3d at 732. The problem with this argument is that the Model Eminent Domain Code does not require leave or authorization to sell easements; defendant may use the property for any lawful purpose “[ujnless the court otherwise directs.” 13 U.L.A. 100 (2002). The State did not seek and the court did not enter an order barring defendants from selling easements, even though that had been a part of their ongoing use of the property.

The State also argues that it possesses “the right to obtain title to the land according to the state of title as of [the date of valuation] and at the valuation of the land at that time, and interests which may be acquired thereafter in the land by another are subject to the pending proceedings and are to be considered subordinate to the rights of the condemnor.” Carey, 43 Ill. 2d at 85, 250 N.E.2d at 646. While it is true that the rights of the purchasers of the easements are subordinate to those of the State, it is also irrelevant. This rule only describes the relationship between the State and the easement purchasers and has nothing to do with the relationship between the State and the Brauers. Whether or not the State can, or will want to, extinguish the rights of the easement holders is irrelevant to the question of whether the State is entitled to a setoff for the price of the easements.

Finally, the State argues that the Brauers would be unjustly enriched if they were allowed to keep the proceeds from the sale of the easements in addition to the entire compensation award. The State claims that this is improper under Illinois law because it constitutes double compensation for a single injury. Klier v. Siegel, 200 Ill. App. 3d 121, 127, 558 N.E.2d 583, 588 (1990). The State has not, however, established that the Brauers are receiving double compensation. Compensation is based on the value of the property. If the value of the property had been decreased by the granting of the easement, the State might have an argument for unjust enrichment. In fact, there is no indication that the value of the property itself has changed at all.

Lastly, we note that the State was free to abandon the condemnation at any time and for any reason prior to the vesting of title. 735 ILCS 5/7—123 (West 2000); Department of Transportation v. Veach Oil Co., 22 Ill. App. 3d 229, 231, 317 N.E.2d 404, 405 (1974). If we were to adopt the rule the State urges, the owner of a property being condemned would be prevented from gainfully using the property from the time of the filing of the action until the payment of compensation. At the same time, the owner would have no assurances that the transaction would be completed and compensation would ever be forthcoming. That would place the defendants in the uncomfortable and unfair position of passing up valuable business opportunities because of the uncertainty created by the condemnation proceeding. In this case, it was 2½ years between the filing of the action and the jury award. The condemnees should not be prevented from continuing to make a living on the land during that time so long as their activities do not diminish the intrinsic value of the land for its proposed purpose. Justice seems to dictate such a conclusion since the State remains free to abandon the take at any time prior to vesting.

CONCLUSION

The State has produced no law to support its position that it was entitled to the setoff granted by the trial court in its favor. The law of eminent domain requires that just compensation for a taking equal the fair cash value of the property. Since compensation is tied to valuation, the State must show a decrease in value to warrant a setoff against the compensation award. We do not find that it has done so. The granting of the setoff, without proof of a decrease in value was improper, and we therefore reverse the trial court’s order awarding the State the $35,000 setoff.

Reversed.

SLATER, J., concurs.