City of Chicago v. Midland Smelting Co.

Sixth Division
September 30, 2008
No. 1-07-3200
THE CITY OF CHICAGO, a Municipal ) Appeal from
Corporation, ) the Circuit Court
) of Cook County
Plaintiff-Appellee, )
)
v. )
) 04 L 050520
MIDLAND SMELTING COMPANY., d/b/a )
Midland Industries, Inc., an Illinois Corporation, )
and UNKNOWN OWNERS, ) Honorable
) Sheldon Gardner,
Defendants-Appellants. ) Judge Presiding.
JUSTICE McBRIDE delivered the opinion of the court:
The present action involves a parcel of property owned by defendant, Midland Smelting
Company (Midland). In a prior lawsuit, plaintiff, the City of Chicago (the City), attempted to
acquire the property through the use of its power of eminent domain. That action was dismissed
by the circuit court as an excessive taking. The City thereafter filed the present condemnation
action seeking to acquire approximately half of the property that it had sought in the original
action. The trial court denied Midland’s traverse and motion to dismiss and then certified the
following questions for interlocutory appeal pursuant to Supreme Court Rule 308(a) (155 Ill. 2d
R. 308(a)):
1. Whether the judgment entered in the original condemnation action bars the present
action under the doctrine of res judicata; and
2. Whether the City’s proposed taking of Midland’s property is a proper exercise of the
City’s power of eminent domain.
We granted Midland’s petition for leave to appeal.
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The present case centers on three pieces of property located within the City of Chicago.
Midland owns a manufacturing plant on North Halsted Street in Chicago, Illinois, and also owns
an approximately 25,000-square-foot parking lot located immediately north of the plant at 1316-
1328 North Halsted Street (the Midland Property). Located directly across Halsted Street from
the Midland Property is an 80,000-square-foot parcel of property commonly known as 1331
North Halsted (the 1331 property). Located directly to the north of the Midland Property is the
property commonly known as 1332 North Halsted Street (the 1332 property).
The record establishes that in the 1960s, the Chicago city council designated the
Clybourn-Ogden Redevelopment Area (the Redevelopment Area) as slum and blighted; approved
the Clybourn-Ogden Redevelopment Plan (the Redevelopment Plan); and authorized the City to
acquire land in the area for redevelopment by purchase, lease, gift, or eminent domain. The
Redevelopment Area is triangular in shape and generally bound on the north by West North
Avenue, on the east by North Ogden Avenue, and on the west by North Branch Canal. The
Redevelopment Plan’s objectives are to remove structurally unsound buildings in the
Redevelopment Area and to allow existing structures to be redeveloped for residential, retail,
commercial, and light industrial use. All three of the properties involved in this case are located
within the Redevelopment Area.
In 1988, title to the 1332 property was placed in a land trust, No. 105006-01, with the
1332 Halsted Building Partnership (the 1332 Partnership) as the beneficial owner of the trust and
American National Bank and Trust Co. (ANB) as the trustee. In 1988 and 1989, the 1332
Partnership sought to redevelop the 1332 property in accordance with the Redevelopment Plan
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by converting the existing building on the property from an industrial use to a four-story loft-
office building (the 1332 building) to be used for commercial purposes. The property, however,
lacked adequate space for on-site employee parking that was required by City zoning laws. To
supply the requisite parking and therefore facilitate that commercial development, the city
council authorized the sale of the City-owned 1331 property to the owner of the 1332 property.
After that sale, on November 1, 1988, title to the 1331 property was placed in a land trust, No.
106845-04, with the 1332 Partnership as the beneficial owner of the trust and ANB as the trustee.
The owner of the 1332 property thereafter entered into a Redevelopment Agreement with
the City that required construction of a commercial off-street parking facility at the northern end
of the 1331 property and provided the option of constructing a commercial/industrial complex
south of the parking facility. In 1989, the City’s Zoning Board of Appeals granted the 1332
Partnership two special use permits. The first permit allowed the 1332 building to be used for a
commercial purpose even though it was zoned as a general manufacturing district. The second
permit allowed for the establishment of an off-site parking facility on the 1331 property to satisfy
the on-site parking requirements for the commercial use of the 1332 building. The second permit
also required the 1332 Partnership to “maintain the property continuously in conformance with
the provisions and standards hereby established under this order and §5.8-5 of the zoning
ordinance,” which provides:
“In cases where parking facilities are permitted on land other than
the zoning lot on which the building or use served is located, such
facilities shall be in the same possession as the zoning lot occupied
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by the building or use to which the parking facilities are accessory.
Such possession may be either by deed or long term lease ***. ***
The requisite parking facilities are required at all times; otherwise
the Zoning Administrator can recommend action through the
Corporation Counsel to have the use discontinued.” Chicago
Municipal Code ch. 194A, §5.8-5 (1988).
In 1998, the City sought to further improve the Redevelopment Area by encouraging the
private development of additional mixed-income housing in the area pursuant to the Near North
Redevelopment Initiative. The Near North Redevelopment Initiative recommended demolishing
an existing Chicago Housing Authority (CHA) public housing complex known as Cabrini-Green
and replacing it with a mixed-income and mixed-use community. The new mixed-income
housing was to be developed upon five acres of City-owned land that surrounded the 1331
property to the north, east, and south. However, the City-owned land created an irregularly
shaped development site and the City determined that incorporating the 1331 property into the
development would create a nearly rectangular parcel more suitable to development.
Additionally, the 1331 property had not been fully developed in that the 1332 Partnership had not
exercised its option of constructing a commercial/industrial complex south of its parking facility
on the 1331 property. At the time, the 1331 property was zoned for industrial uses and the City
intended to rezone the property to “Residential and Related Uses.” Therefore, the City solicited
proposals for development of the City-owned land into the mixed-income housing and also
encouraged those submitting proposals to incorporate the 1331 property into the development.
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The City ultimately selected North Town Village to develop the desired housing, which included
261 units of housing, approximately half of which were units to be made available to low-income
families (the North Town Village Project). The North Town Village proposal included the 1331
property and therefore the City’s Community Development Commission (Commission)
recommended acquisition of the 1331 property for redevelopment “in furtherance of the
Clybourn-Ogden Redevelopment Plan.” According to the Commission, acquisition of the 1331
property would allow for completion of the desired mixed-income housing, strengthen the area,
and allow the 1331 property to be used in a manner consistent with the Redevelopment Plan.
The city council subsequently approved the Commission’s recommendation and passed an
ordinance authorizing the City’s corporation counsel to negotiate for the purchase of the 1331
property and, if unsuccessful, to initiate condemnation proceedings to acquire title to the
property. The City was unable to negotiate for the purchase of the 1331 property and therefore
sought to acquire it by filing a condemnation action against ANB on July 15, 1999 (the 1331
litigation).
During the pendency of the 1331 litigation, a problem arose in that acquisition of the
1331 property would have left the 1332 building without its required off-site parking. The City
determined it was necessary to replace that parking because it had facilitated the commercial
redevelopment of the 1332 building and because, in order to continue that commercial use, City
zoning laws and the special use permits required the 1332 building to maintain its accessory
parking. The Commission ultimately concluded that the most appropriate substitute property was
the Midland Property, located immediately south of the 1332 building. The Midland Property
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was selected because of its proximity to the 1332 building and because switching the parking
location for the 1332 building from the east to the west side of Halsted Street would help
separate commercial uses from residential uses. The Commission also noted that the Midland
Property was currently being used as a commercial parking lot and was zoned M2-5 “General
Manufacturing District,” that the City was in the process of amending the land use to
“Residential and Parking1,” and that providing for parking on the Midland Property would
therefore be consistent with the proposed land uses of property in the Redevelopment Area. The
Commission further noted that acquisition of the Midland Property would meet the design
objectives of the Redevelopment Plan and would allow for the existing parking lot used by the
1332 building to be redeveloped as part of the North Town Village Project, thereby fulfilling the
objectives of the Near North Redevelopment Initiative.
The parties in the 1331 litigation ultimately reached an agreement regarding
compensation for the City’s acquisition of the 1331 property, which they presented to the circuit
court in a stipulation for judgment. That stipulation was reflected in a judgment order entered by
the court on January 24, 2000, in which the court ordered the City to pay $2,793,322 as just
compensation for the taking of the 1331 property. The order also contained provisions reflecting
the parties’ agreement that acquisition of the 1331 property would damage the 1332 building by
eliminating its off-site parking facility. The court ordered the City, as compensation for the lost
parking, to acquire the northern 12,500 square feet of the Midland Property upon the City taking
possession of the 1331 property, to rezone that property to conform to the zoning of the 1332
1
The city council passed the amendment regarding the land use on November 3, 1999.
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building, to deliver the parking lot in full code compliance, and then, within 24 months of the
date of the court’s order, to convey that property to ANB. The order also required the City to
make all reasonable efforts to acquire the southern 12,500 square feet of the Midland Property
and gave ANB the option to purchase that property. Finally, the court ordered ANB to deliver
possession of the 1331 property, except for the 10,500 square feet currently used for parking (the
parking site), to the City by February 1, 2000, and to deliver possession of the parking site upon
execution of the lease for the northern 12,500 square feet of Midland’s property.
On April 18, 2000, the circuit court entered an agreed amended judgment order. The
amended order required the City to acquire the Midland Property and convey it to ANB “in order
to mitigate damages to the remainder including lost parking.” The order further specified that the
northern 12,500 square feet of Midland’s property would be acquired and conveyed to ANB as
set forth in the court’s order dated January 24, 2000, and that the southern 12,400 square feet of
Midland’s property would be acquired by January 24, 2002. The order further required ANB to
deliver possession of the parking site to the City by April 18, 2000. The City was required to
provide valet parking for the tenants and clients of the 1332 building from April 17, 2000, until
May 1, 2000. Finally, the order provided that effective May 1, 2000, the City would rent 30
parking spaces to ANB in the parking lot located on the northern portion of the Midland Property
in lieu of its obligations to lease the northern 12,500 square feet of that property. This rental
arrangement was to continue until January 24, 2002, or until the City conveyed the Midland
Property to ANB, whichever was earlier.
The City and Midland subsequently entered into a lease from April 2000 through March
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31, 2002, under which Midland provided 30 parking spaces to the City in the northern portion of
the Midland Property. The lease ran from April 2000 through March 2002 and provided that any
holdover by the tenant created a month-to-month tenancy. After entering that lease, the City
subleased the parking spaces to the owner of the 1332 building.
Meanwhile, in 1999 and 2001, the city council passed ordinances authorizing the City to
acquire the Midland Property. The ordinances provided that the Midland Property was to be
acquired in order to further the Redevelopment Plan by eradicating blight and by allowing
underutilized land to be redeveloped for residential uses. The ordinances further provided that
the City had previously acquired the 1331 property in order to construct a mixed-income
residential development known as the North Town Village Project, that a portion of that property
had previously been used, pursuant to a special use permit, as off-site parking for the 1332
building, and that the judgment orders entered in the 1331 litigation obligated the City to acquire
Midland’s property as a replacement parking site in mitigation of damages to the owner of the
1332 building and to then convey that property to the owner of 1332 building by January 24,
2002. The ordinances also recited that the acquisition and conveyance of the Midland Property
was for a public purpose “consistent with those public purposes set forth in the Redevelopment
Plan” such that the acquisition of the Midland Property was “in furtherance of the commercial
and business redevelopment of the Redevelopment Area.”
On January 2, 2002, the City filed a complaint to condemn the Midland Property.
Midland responded by filing a traverse and motion to dismiss, arguing, among other things, that
the condemnation was an unnecessary and excessive taking of property for private use.
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On July 21, 2003, the circuit court, after hearing witness testimony and reviewing the
documents submitted into evidence by the parties, granted Midland’s traverse and motion to
dismiss.2 The court began its order by stating that “[d]espite the City’s attempt to amend its
Complaint to conform to the pleadings, this Court finds the City has failed to do so in its entirety.
However, since this is a matter the City can correct, the Court will continue with its decision
based on the testimony and documents presented at the hearing.” The court then found that the
City had not abused its discretion in determining that it was necessary to acquire the Midland
Property and that, under the facts of the case, the use of substitute condemnation was appropriate.
The court noted that the evidence established that taking the northern portion of Midland’s
property was substitute property for the parking loss to the 1332 building, that substitute
condemnation was the best method of making the 1332 building whole, and that acquiring that
portion of Midland’s property was closely connected with the acquisition of the 1331 property
for the mixed-income residential development and was necessary to allow the City to carry out
the public project. The court also found, however, that the City abused its authority by seeking to
condemn all of the Midland Property because only the northern 12,500 square feet were
necessary to replace the 30 parking spaces lost by the 1332 building and taking the southern
24,000 square feet was excessive and would benefit only the private owner of the 1332 building.
For these reasons, the court dismissed the action.
On August 14, 2003, the City filed a motion requesting that the circuit court, rather than
2
Although the circuit court’s order indicates that the court heard testimony on Midland’s
traverse and motion to dismiss, and the parties’ pleadings indicate that the court held evidentiary
hearings on the motion, the record does not contain a transcript of those proceedings.
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dismiss the action, modify its judgment to reflect that acquisition of the northern portion of the
Midland Property was proper and could proceed. The court denied the City’s motion without
comment.
In response to the court’s ruling, on December 17, 2003, the city council passed an
ordinance authorizing the City to acquire the northern portion of the Midland Property located at
1324 to 1328 North Halsted. The ordinance stated that in the previous action seeking to acquire
the Midland Property the circuit court found that the acquisition was within the City’s authority
except that the taking was excessive and that it was therefore “necessary to enact a technical
correction to the authority to condemn in order to conform the taking to the findings of the
court.” The ordinance also recited that it remained useful, necessary and desirable to acquire the
Midland Property for the same reasons set forth in the previous ordinances authorizing
acquisition of that property. The ordinance further provided that the city council found it
necessary for the City to establish and continue its right to have vehicles park on the Midland
Property, that the right to have vehicles park on the Midland Property was uncertain because the
lease permitting the City to do so had expired, and that it was necessary and in the best interests
of the City to secure “said right to park immediately.”
The City was unsuccessful in its attempt to acquire the northern portion of the Midland
Property by agreement and therefore filed the present condemnation action on May 19, 2004.3
Midland responded by filing a traverse and motion to dismiss, arguing that the condemnation was
3
The initial action seeking to condemn the Midland Property was assigned to Judge
Joanne L. Lanigan. The present condemnation action seeking to acquire the northern portion of
the Midland Property was assigned to Judge Sheldon Gardner.
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barred by res judicata because the City could have sought to acquire only the northern portion of
the Midland Property in the prior lawsuit. Midland also argued that the taking was improper
because it was intended solely to benefit the private owner of the 1332 building. Midland further
asserted that the taking was unnecessary because no declared public purpose was involved,
because the 1332 building’s parking need was being satisfied by use of the northen portion of the
Midland property under sublease from the City, and because other parking lots were available.
The circuit court decided to initially resolve the issues of res judicata and collateral
estoppel and issued its order on November 8, 2006.4 The court began by noting that the previous
action seeking to condemn the Midland Property had been dismissed as an excessive taking and
that the City had refiled the action with a reduction in the amount of property sought to “address
the defect this Court previously found.” The court also noted that because Midland had again
filed a traverse and motion to dismiss, the court was “now left with the unenviable task of
interpreting the previous rulings of Judge Lanigan.” The court then made the following ruling
regarding the issue of res judicata:
“1. Implicit in this Court’s previous rulings under Judge
Lanigan was the right of the City to cure its defect of an excessive
taking by reducing the amount of property to be acquired.
4
On May 1, 2006, the court entered an order stating that it had heard arguments on the
issues of collateral estoppel and res judicata and that the court’s opinion would be available on
June 8, 2006. No transcripts from that hearing are included in the record. A subsequent court
order, dated July 25, 2006, states that additional arguments on res judicata would be heard on
August 1, 2006. There is no indication if those arguments were held and no transcript of those
proceedings is included in the record.
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2. The City has complied with this Court’s previous ruling
and reduced the amount of land to be acquired through the passing
of a new ordinance.
3. Midland challenges the new ordinance on the basis of
res judicata. This Court finds that the amount of land to be taken
is different from the first suit, and that the initial ordinance is an
irregular exercise of existing power and did not have to do with the
City lacking the power to pass the ordinance. Thus, this Court
concludes as Judge Lanigan indicated throughout her order that the
City retained the right to cure the defect in its initial ordinance and
res judicata does not apply.”
The court heard additional arguments on the issue of collateral estoppel and subsequently
ruled that the doctrine did not apply because it would have been inequitable for Midland to have
ultimately prevailed on the earlier motion to dismiss and yet have lost all of its rights to appeal
the issues decided against it in that motion.
The parties submitted additional memoranda on the remaining issues raised in Midland’s
traverse and motion to dismiss, and the court issued its judgment on September 20, 2007. The
court began by noting that the prior action was dismissed on the grounds that the taking was
excessive and that, “[i]nstead of allowing the City to amend its complaint and cure its defect, the
City was forced to file a new condemnation action concerning the exact same subject matter that
is at issue before this Court minus the defect.” The court then found that the City had established
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a prima facie case of the authority, purpose and necessity for the acquisition of the Midland
Property. Accordingly, the court noted that the burden shifted to Midland to show that there was
an abuse of discretion by the City. According to the court, the primary issue was whether
Midland’s property was being taken for a valid public use through the use of substitute
condemnation. The court noted that under the United States Supreme Court’s decision in Brown
v. United States, 263 U.S. 78, 68 L. Ed. 171, 44 S. Ct. 92 (1923), a condemning authority may
condemn private property from third persons in order to compensate an owner whose property is
taken for a public project so long as the substitute property fulfills a public purpose, and that the
relevant inquiry is whether the substitute land is “closely connected to the acquisition of the
district *** and *** necessary to carrying out the project.” The court found that the acquisition
of Midland’s property for the mixed-income residential development was closely connected and
necessary to allow the City to carry out a public project, noting that the evidence established that
Midland’s property would be taken as substitute property for the parking lost by the 1332
building when the City acquired the 1331 property as part of the North Town Village Project.
For these reasons, the court found that “the City has the authority, proper public use and purpose,
and necessity to acquire the subject property by eminent domain” and therefore denied Midland’s
traverse and motion to dismiss.
On November 8, 2007, the circuit court made a finding pursuant to supreme court rule
308(a) (155 Ill. 2d R. 308(a)) that its order denying Midland’s traverse and motion to dismiss
involved two questions of law as to which there were substantial grounds for difference of
opinion and that an immediate appeal might materially advance the ultimate termination of this
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litigation. The court certified the following questions: (1) whether the present action is barred by
res judicata based upon the judgment entered in the previous action seeking to condemn the
Midland Property; and (2) whether the City’s proposed taking of Midland’s property is a proper
exercise of the City’s power of eminent domain. On November 21, 2007, Midland filed a
petition for leave to appeal pursuant to Rule 308(a) and a motion to stay the trial court
proceedings pending resolution of that appeal. On December 12, 2007, this court granted
Midland’s petition for leave to appeal.
Because this appeal involves two questions of law certified by the trial court pursuant to
Supreme Court Rule 308, our review of each question is de novo. In re M.M.D., 213 Ill. 2d 105,
113 (2004). De novo review is also warranted because the trial court did not hear testimony in
this case and answered each question based solely on documentary evidence and because, on
appeal, the material facts are not in dispute. See Townsend v. Sears, Roebuck & Co., 227 Ill. 2d
147, 154 (2007); Department of Transportation v. Hunziker, 342 Ill. App. 3d 588, 593 (2003).
The first issue is whether the present action is barred by res judicata.
“The doctrine of res judicata provides that a final judgment on the merits rendered by a
court of competent jurisdiction bars any subsequent actions between the same parties or their
privies on the same cause of action.” Hudson v. City of Chicago, 228 Ill. 2d 462, 467 (2008).
Res judicata acts as a bar to litigation of all issues that were actually decided and of all issues that
could have been raised and decided in the earlier action. Arvia v. Madigan, 209 Ill. 2d 520, 533
(2004). The essential elements of res judicata are: (1) a final judgment on the merits rendered by
a court of competent jurisdiction; (2) an identity of causes of action; and (3) an identity of parties
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or their privies. Hudson, 228 Ill. 2d at 467.
In this case, the parties agree that there was a final judgment on the merits rendered by a
court of competent jurisdiction in the original condemnation action and that there is an identity of
parties in that action and the present one. The issue is whether the two cases involve the same
cause of action.
In order to resolve this issue, it is necessary to understand the nature of the dismissal of
the prior lawsuit in which the City sought to acquire all of the Midland Property. To do so, we
must interpret the court’s order dismissing that lawsuit as well as the court’s subsequent denial of
the City’s posttrial motion. We note that the trial court in this case interpreted those orders to
mean that implicit in the court’s dismissal of the prior action was the right of the City to cure the
defect in its initial ordinance by reducing the amount of property to be acquired.
In the judgment dismissing the prior lawsuit, the court began by stating that “[d]espite the
City’s attempt to amend its complaint to conform to the pleadings, this Court finds the City has
failed to do so in its entirety. However, since this is a matter the City can correct, the Court will
continue with its decision based upon the testimony and documentation presented at the hearing.”
The court then considered Midland’s arguments that the taking was excessive and not for a
public use.5 The court found that the use of substitute condemnation was appropriate under the
unique facts of the case. The court stated that acquiring the northern portion of the Midland
Property was the best method of making the 1332 building whole by providing it with substitute
5
According to the court, Midland’s argument that the taking was not for a public purpose
was based on testimony provided by the City which established that the public would not be
entitled to use the Midland Property after the taking.
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property for the parking loss that the building incurred. The court further stated that acquiring
the northern portion of the Midland Property was closely connected to the acquisition of the 1331
property for the mixed-income residential development and was necessary to allow the City to
carry out the public project. The court, however, ultimately dismissed the action because the
City was attempting to acquire all of the Midland Property and, according to the court, acquiring
the southern portion of that property was excessive and benefitted only the private owner of the
1332 building.6 The trial court’s ruling was later summarized in a memorandum dated
November 12, 2003, from Alicia Berg, commissioner of the Department of Planning, to Joan
Cogan, assistant to the mayor, Jeffrey Levine, chief assistant corporation counsel, and Russell
Carlso, first deputy budget director. According to the memorandum, the trial court dismissed the
taking because the area to be taken accommodated approximately 60 vehicles while only an area
with a capacity to accommodate 30 vehicles was needed. The memorandum further states that
when the City sought to limit the taking to 30 vehicles, the court determined that the authority
granted by the city council ordinances did not permit it to do so because the ordinances
authorized the acquisition of the whole parcel and not a smaller portion of the whole.
Based upon the court’s statement regarding the “City’s attempt to amend its complaint to
conform to the pleadings,” it is clear that the City sought to amend its complaint to conform to
the proofs prior to the court entering its judgment dismissing the case. Based upon the record, it
is reasonable to infer that the City sought to amend its complaint in order to acquire only the
6
The court relied on testimony establishing that the northern portion of the Midland
Property could accommodate the 30 parking spaces which the 1332 building required prior to the
acquisition of the 1331 property.
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northern portion of the Midland Property, which the court found was necessary to replace the
parking lost by the 1332 building. It is also reasonable to infer that the court found that the City
could not seek only that amount of land without a new ordinance because the ordinances passed
by the city council at that time only authorized the City to acquire all of the Midland Property.
Finally, based upon the court’s statement that it would continue with its ruling because the City
could “correct” that “matter,” it is reasonable to infer that the court denied the City’s request to
amend its complaint and ultimately dismissed the case with the intention of reserving the City’s
right to file a complaint for half of the Midland Property after it had obtained an ordinance
allowing it to do so.7 Having so interpreted the court’s order dismissing the prior lawsuit, we
now consider whether the two cases involve the same cause of action.
Illinois courts apply the “transactional test” to determine whether there is an identity of
causes of action. River Park, Inc. v. City of Highland Park, 184 Ill. 2d 290, 309 (1998). Under
this test, “separate claims will be considered the same cause of action for purposes of res
judicata if they arise from a single group of operative facts, regardless of whether they assert
different theories of relief.” River Park, 184 Ill. 2d at 311. Thus, in determining whether two
suits constitute the same cause of action under res judicata, the court considers the facts that
gave rise to the claim for relief and not simply to the facts which support the judgment in the first
action. Stillo v. State Retirement Systems, 366 Ill. App. 3d 660, 663 (2006), citing River Park,
184 Ill. 2d at 309-10.
7
We also note that the City subsequently filed a posttrial motion asking the court to
amend its judgment to allow the City to proceed with acquiring half of the Midland Property.
The court denied the motion and the record does not reveal the basis for this denial.
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Our research has revealed few cases in which the applicability of res judicata has been
considered in context of the factual situation that is present in this case. Nevertheless, several
courts have considered issues similar to the one present in this case.
For example, in County of Wabash v. Partee, 241 Ill. App. 3d 59 (1993), the court was
required to decide whether two attempts to acquire the same piece of property involved the same
cause of action for purposes of determining whether the case was barred by res judicata. In that
case, the City of Mt. Carmel, in a prior lawsuit, had sought to condemn land outside of its city
limits for highway purposes so that traffic could exit the highway and travel directly to a nearby
college. County of Wabash, 241 Ill. App. 3d at 62. The supreme court affirmed the dismissal of
that action because, contrary to the requirements of the Illinois Municipal Code, the property to
be taken was not substantially adjacent and contiguous to the incorporated parts of the city.
County of Wabash, 241 Ill. App. 3d at 62, 64. Subsequently, the city and Wabash County entered
into an intergovernmental agreement whereby the city and the county exchanged jurisdiction of
certain property so that the county could proceed to complete a county highway. The property
involved in the intergovernmental agreement was the same property involved in the former
lawsuit. County of Wabash, 241 Ill. App. 3d at 62. On appeal, the court then noted that 10 years
had passed since the first action and that circumstances had changed in that a distinct and
separate entity was seeking to condemn property under an entirely different ordinance. County of
Wabash, 241 Ill. App. 3d at 65. The court further noted that in that case, unlike in the previous
lawsuit, neither the jurisdiction of the city nor the location of the property in relation to the city
was at issue and that the only commonality between the two cases was the respondents and the
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property. County of Wabash, 241 Ill. App. 3d at 65-66. The court therefore concluded that res
judicata did not apply.
In Oakes Municipal Airport Authority v. Wiese, 265 N.W.2d 697 (N.D. 1978), the
plaintiff filed a condemnation to acquire approximately 74 acres of defendant’s property to
construct an airport. The circuit court dismissed the action because the plaintiff had failed to
establish the public use, public necessity, and proper selection of the property. Approximately
eight months after the case was dismissed, the plaintiff filed another condemnation action
seeking to acquire approximately 37 acres of defendant’s property for the airport. The district
court found that the second condemnation action was barred by res judicata and dismissed the
case.
On appeal, the Supreme Court of North Dakota began by discussing the difficulty
applying res judicata to successive condemnation actions seeking to acquire a portion of the
same land:
“Although the doctrine of res judicata applies to
condemnation actions, the doctrine is not readily applicable to
those cases in which a condemning authority seeks to bring a
second condemnation action to acquire a part of the same land for
which the courts in a prior condemnation action against the same
party determined that the condemning authority had failed to prove
a public use or public necessity. Those cases possess a unique
character to which the doctrine is not readily applied in that, as
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time passes from the entry of the judgment in a condemnation
action, changes may occur which would add new and important
factors to be considered in a determination of whether a proposed
taking in a subsequent action is for a public purpose and whether
the particular land sought is necessary for that public purpose. The
change in circumstances may present an entirely new case for
determination even though the same issues involving public use
and public necessity had been determined in a prior condemnation
action between the same parties involving the same land.” Oakes
Municipal Airport Authority, 265 N.W.2d at 700.
The court noted that although there was little case law regarding the applicability of res
judicata to the facts before it, existing authorities indicated an adherence to the following rule:
“A prior unsuccessful attempt to acquire property for a public purpose should not bar the
commencement of a subsequent action to acquire the same land providing the court is satisfied
that the subsequent action was brought in good faith and that there has been a change in
circumstances such that the action is not merely an attempt to relitigate identical issues based
upon identical factors for consideration.” Oakes Municipal Airport Authority, 265 N.W.2d at
701. The court stated that the land being sought in the second action was approximately half of
that sought in the first action and that the reduction in the amount of land sought could have a
decisive impact on a redetermination of whether the taking was necessary. Oakes Municipal
Airport Authority, 265 N.W.2d at 701. The court further noted that the second action was
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brought eight months after entry of judgment in the first action and that, from that mere passage
of time, changes in the use and requirements of an airport facility could occur which would affect
the determination of whether the proposed taking was necessary. Oakes Municipal Airport
Authority, 265 N.W.2d at 701. The court concluded that res judicata did not apply to the second
action and that allowing that action to proceed would not compromise the public policy of
precluding the relitigation of settled issues. Oakes Municipal Airport Authority, 265 N.W.2d at
701.
Similarly, in City of Charlotte v. Rousso, 82 N.C. App. 588, 346 S.E.2d 693 (1986), the
North Carolina Court of Appeals considered whether res judicata applied to bar the City of
Charlotte’s attempt to condemn the defendants’ property for a public park. The defendant argued
that the lawsuit was barred by res judicata based upon a judgment which dismissed a prior suit
by the city to condemn that same land. The court found, however, that the case was not barred by
res judicata because it was not based upon the same facts as was the prior suit. City of Charlotte,
82 N.C. App. at 589, 346 S.E.2d at 694. The court noted that the first proceeding was based
upon a plan to lease some of the condemned land to private parties for use in retail business and
that the trial court had correctly dismissed that action because it lacked a public purpose. City of
Charlotte, 82 N.C. App. at 589, 346 S.E.2d at 694. The court then found that the basis for the
case before it was different because after the prior action was dismissed, the city’s governing
body rescinded the resolution that it was based upon and adopted a new condemnation resolution
that was “free of the illegal taint that caused the earlier case to fail.” City of Charlotte, 82 N.C.
App. at 589, 346 S.E.2d at 694. The court concluded that the prior judgment operated as a bar
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only as to the facts in existence when the judgment was rendered and therefore held that the prior
action barred the city’s attempt to condemn the defendants’ land for commercial or business
purposes but that the prior action did not bar the city from condemning the land for the sole
purpose of using it as a park. City of Charlotte, 82 N.C. App. at 589, 346 S.E.2d at 694.
While these cases do not involve precisely the same factual situation that is present in this
case, they nevertheless suggest the difficulty in apply res judicata to successive eminent domain
proceedings in which a governing body seeks to acquire a portion of the same land that it had
sought in a prior proceeding. Moreover, we believe the authorities discussed above strongly
suggest that res judicata does not act as a bar to the present condemnation action.
In this case, as in those discussed above, we find that the two lawsuits do not involve the
same cause of action because they are each based on a different set of facts. Initially, the two
cases were brought pursuant to different ordinances. The first lawsuit against Midland was
brought pursuant to a city council ordinance which authorized the City to acquire approximately
25,000 square feet of land, or all of the Midland Property. After that action was dismissed as an
excessive taking, the city council passed a new ordinance which authorized the City to acquire
only 12,500 square feet of land, or approximately half of the Midland Property. Thus, the two
cases are based upon substantively different ordinances and the ordinance giving rise to the
present case is an additional fact that did not exist at the time of the initial lawsuit. See Altair
Corp. v. Grand Premier Trust & Investment, Inc., 318 Ill. App. 3d 57, 62 (2000) (noting that the
facts as they exist at the time of judgment determine whether res judicata bars a subsequent
action); City of Charlotte, 82 N.C. App. at 589, 346 S.E.2d at 694. Moreover, although the two
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actions involve the same piece of land, the requested taking in the second action is only for
approximately half of the amount of land sought in the first action. Given that the initial action
was dismissed as an excessive taking, this reduction in the amount of land sought is a changed
circumstance that could have a decisive impact on the trial court’s redetermination of whether the
taking was necessary. See Oakes Municipal Airport Authority, 265 N.W.2d at 701. Finally, an
additional issue that was critical to the court’s dismissal of the prior lawsuit is not present in this
case. When the City sought to limit its taking in the prior lawsuit, the court did not rule that the
City had failed to establish the necessity and public purpose for acquiring half of the Midland
Property in order to provide the 1332 building with substitute parking. Rather, the court found
that the City could not seek to acquire that amount of property at the time because the ordinance
passed by the city council authorized the City only to acquire all of the Midland Property. The
issue of the City’s authority, however, is not present in this case because the City obtained an
ordinance authorizing it to acquire half of Midland’s property. See County of Wabash, 241 Ill.
App. 3d at 65-66. For all of these reasons, we conclude that an identity does not exist between
the causes of action asserted in the two proceedings and, accordingly, res judicata does not bar
the present case.
Midland nevertheless argues that the present action is an impermissible collateral attack
on a prior judgment. Specifically, Midland claims that it was only after the trial court dismissed
the initial action that the City attempted to have that judgment amended to allow it to acquire half
of the Midland Property. Midland then points to the trial court’s statement in this case, made in
its order denying Midland’s motion to dismiss, that “[i]nstead of allowing the City to amend its
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complaint and cure its defect, the City was forced to file a new condemnation action concerning
the exact same subject matter that is at issue before this Court minus the defect.” Midland argues
that the court’s refusal to amend its judgment in the initial action did not “force” the City to bring
the present action and that the City could have appealed the judgment entered against it, which
would have included the denial of its motion for leave to amend the judgment. Midland
concludes that, by failing to appeal, the City waived its right to challenge the court’s denial of its
motion for leave to amend and that the present action is therefore a collateral attack on the
judgment dismissing the prior condemnation action. We find this argument unpersuasive.
We initially note that, contrary to Midland’s argument, the record suggests that the City’s
attempt to amend its complaint was distinct from its posttrial motion. In its judgment dismissing
the initial action, the court referred to the “City’s attempt to amend its complaint to conform to
the pleadings.” The City’s posttrial motion, however, did not seek to amend its complaint but,
rather, requested that the court amend its judgment to reflect that the City’s acquisition of the
northern portion of the property was proper and could proceed. Moreover, the judgment
dismissing the initial action, in which the court made the statement regarding the City’s attempt
to amend its complaint, was entered on July 21, 2003, approximately three weeks before the City
filed its posttrial motion on August 14, 2003, requesting that the court amend its judgment.
Regardless, the present case is not a collateral attack on the judgment entered in the prior
lawsuit. “A collateral attack on a judgment is an attempt to impeach that judgment in an action
other than that in which it was rendered.” Thomas v. Sklodowski, 303 Ill. App. 3d 1028, 1033
(1999).
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By arguing that the trial court’s refusal to amend its judgment in the first lawsuit did not
force the City to bring the second action because the City could have appealed the denial of its
motion for leave to amend, Midland assumes that the court’s reason for denying the City’s
motion was incorrect and that the City could have obtained relief in the appellate court.
However, no such relief would have been available. Although the trial court in the first lawsuit
did not articulate its basis for denying the City’s motion, it is reasonable to assume, consistent
with the court’s reason for denying the City’s request to amend its complaint, that the court did
so because the City lacked an ordinance authorizing it to acquire only half of the Midland
Property. Thus, the court believed that the City could only seek to acquire the amount of land
authorized by the ordinance. We find no error in the trial court’s judgment in this respect.
A public body generally manifests its intention to exercise the power of eminent domain
by an enabling ordinance or resolution. Forest Preserve District of DuPage County v. Miller,
339 Ill. App. 3d 244, 253-54 (2003). The enabling ordinance must reasonably describe the
property to be taken, and the failure to so describe the property is fatal to the petition to condemn.
Illinois State Toll Highway Authority v. DiBendetto, 275 Ill. App. 3d 400, 405 (1995); see also
City of Rockford v. Rockford Insurance Co., 16 Ill. 2d 287, 289 (1959) (rejecting argument that
enabling ordinance need not describe the property to be taken and noting that the record did not
show that prior to filing the eminent domain petition, the city council determined, by ordinance
or resolution, what land was to be taken or “delegated, or attempted to delegate, to anyone else
the power to make that determination”); Forest Preserve District of DuPage County, 339 Ill.
App. 3d at 255 (noting that the decision in City of Rockford “suggests that stringent standards
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should be applied to the requirement of an enabling ordinance that describes the property to be
condemned”). Additionally, ordinances enabling the appropriation of private property are in
derogation of the common law and thus must be strictly construed. Forest Preserve District of
DuPage County, 339 Ill. App. 3d at 255.
In this case, the enabling ordinance specifically authorized the City’s Corporation
Counsel to acquire all of the Midland Property. Nothing in the ordinance could reasonably be
construed as giving the Corporation Counsel discretion or authority to seek less than that amount
of land. Given the specific language of the enabling ordinance, requesting that the court award
the City half of the Midland property was essentially asking the court to amend and add language
to the ordinance passed by the City Council. Under these principles, we cannot presume that
legislative authorization for a more extensive taking under eminent domain implicitly authorizes
a lesser taking so as to obviate the need for a new ordinance or resolution. In point of fact, the
purpose for and impact of the exercise of eminent domain may change with a decrease as much
as with an increase so as to require new legislative evaluation and authorization. Midland has
cited to no case law, nor are we aware of any, which suggests that the court would have had the
authority to permit such an amendment to the ordinance or to otherwise allow the City to seek
less than the amount of land that the ordinance authorized it to acquire. Under these
circumstances, we would not have reversed the trial court’s denial of the City’s posttrial motion
and allowed the City to proceed with acquiring half of the Midland property in the first lawsuit.
Accordingly, we find no error in the trial court’s statement in this case that the court’s refusal to
amend its judgment necessitated the City obtaining a new ordinance and filing the present
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condemnation action.
Moreover, although Midland argues that the City waived its right to challenge the court’s
denial of its motion for leave to amend in the first lawsuit, the record shows that the present
lawsuit was not filed in an attempt to challenge that denial but instead was actually brought
pursuant to the court’s judgment in the prior lawsuit. As noted, in the prior lawsuit the City
originally sought to acquire all of the Midland Property and then sought to limit the taking to half
of that property. The trial court ruled, however, that the City lacked an ordinance authorizing it
to acquire that amount of land and dismissed the action with the intention of reserving the City’s
right to obtain a new ordinance and file a complaint for half of the Midland Property. The
present case is therefore not an attempt by the City to “impeach” the court’s judgment in the first
action but, rather, was filed specifically pursuant to that judgment.
For all of these reasons, we find that the present action is not an impermissible collateral
attack on the judgment entered in the first lawsuit and that res judicata does not apply to the
present case.
Moreover, even if we were to find that an identity exists between the causes of action
asserted in the two proceedings and that the threshold requirements of res judicata were therefore
met, it is well settled that res judicata is an equitable doctrine that should only be applied as
fairness and justice require. Murneigh v. Gainer, 177 Ill. 2d 287, 299 (1997); Yorulmazoglu v.
Lake Forest Hospital, 359 Ill. App. 3d 554, 563 (2005). The doctrine is designed to prevent a
multiplicity of lawsuits between the same parties where the facts and issues are the same.
Murneigh, 177 Ill. 2d at 299. “Res judicata promotes judicial economy by preventing repetitive
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litigation and [additionally] protects parties from being forced to bear the unjust burden of
relitigating essentially the same case.” Arvia, 209 Ill. 2d at 533. Equity dictates that the doctrine
of res judicata should not be technically applied if to do so would be fundamentally unfair or
would create inequitable or unjust results. Nowak v. St. Rita High School, 197 Ill. 2d 381, 390
(2001); Best Coin-Op, Inc. v. Paul F. Ilg Supply Co., 189 Ill. App. 3d 638, 650 (1989).
Moreover, res judicata does not bar a subsequent action where the court in the earlier action
expressly reserved the plaintiff’s right to maintain the second action. Rein v. David A. Noyes &
Co., 172 Ill. 2d 325, 341 (1996); Nowak, 197 Ill. 2d at 392-93; Restatement (Second) of
Judgments §26(1)(b) (1982).
Given the unique facts and procedural history of this case, we believe it would be
fundamentally unfair to apply res judicata as a bar to the City’s attempt to acquire the northern
portion of the Midland Property. Midland’s primary argument as to why res judicata should
apply is that the City could have sought to acquire the northern portion of its property in the
initial condemnation action. However, the City clearly attempted to do so in its posttrial motion
and, as previously noted, it is reasonable to infer the City also sought to do so when it attempted
to amend its complaint to conform to the proofs. The court, however, did not permit the City to
do so because, while the City had established the necessity and public purpose for acquiring half
of the Midland Property, the court found that the City lacked an ordinance authorizing it to
acquire less than all of the Midland Property. The court thus dismissed the action with the
intention of allowing the City to obtain a new ordinance and file a complaint for half of the
Midland Property. The record thus establishes that this is not a case in which the City has filed a
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multiplicity of lawsuits or simply refiled the same lawsuit that was previously dismissed in hopes
of obtaining a different result. Rather, the record establishes that the City brought the present
action in good faith and specifically pursuant to the court’s order dismissing the prior lawsuit.
To apply res judicata under these circumstances would be to ignore that the City sought to
acquire half of Midland’s property in the initial action and would effectively punish the City for
its reliance upon the court’s ruling. This would be an unjust and technical application of the
doctrine of res judicata and we therefore decline to apply it to this case.
The second issue on appeal is whether the present action is a proper exercise of the City’s
power of eminent domain.
Both the Illinois Constitution and the fifth amendment of the United States Constitution
prohibit the taking of private property for a public purpose without payment of just
compensation. Ill. Const. 1970, art. I, §15; U.S. Const., amend. V. Additionally, section 7-101
of the Code of Civil Procedure provides, “[p]rivate property shall not be taken or damaged for
public use without
just compensation.” 735 ILCS 5/7-101 (West 2004).8
Midland challenges the City’s attempt to acquire its property on the ground that the taking
is unnecessary. Midland first asserts that the taking is unnecessary because there are other means
by which the City can provide the necessary parking for the 1332 building. Midland specifically
8
The citation given is to the version of the Eminent Domain Act that was in effect at the
time this action was litigated. Since then, the entire Act has been repealed (Pub. Act 94-1055,
eff. January 1, 2007) and subsequently reenacted and recodified (see 735 ILCS 30/1-1-1 et seq.
(West 2006)).
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claims that since 2000 it has been leasing the northern portion of its property to the City, which
has in turn subleased that property to the owner of the 1332 building and that this arrangement
replaced the parking lost when the 1331 building was developed. Midland further claims that it
has offered to make parking on its land available to the 1332 building for so long as Midland
owns the property. Accordingly, Midland concludes that there is a “far less drastic alternative”
available than condemning its property and that the City’s attempt to acquire its property is
therefore unnecessary.
When a condemnation action is filed, a landowner may challenge it by filing a traverse
and motion to dismiss. Village of Cary v. Trout Valley Ass’n, 282 Ill. App. 3d 165, 169 (1996).
When such a motion is filed, the condemning authority bears the initial burden of establishing a
prima facie case as to any disputed allegations. City of Chicago v. First Bank of Oak Park, 178
Ill. App. 3d 321, 327 (1988); Village of Round Lake v. Amann, 311 Ill. App. 3d 705, 712 (2000).
However, the introduction into evidence of a valid ordinance reciting the necessity for taking
private property for a public purpose establishes a prima facie case authorizing the acquisition of
the property in question, making it the burden of the party challenging the condemnation to come
forward with evidence that the condemnor abused its discretion with respect to its decision
concerning the necessity of the taking. Trustees of Schools of Township No. 37 v. First National
Bank of Blue Island, 49 Ill. 2d 408, 414 (1971); City of Chicago v. Walker, 50 Ill. 2d 69, 71
(1971); Alsip Park District v. D & M Partnership, 252 Ill. App. 3d 277, 284 (1993).
Moreover, the determination of necessity is a legislative function that is entitled to great
deference by the trial and reviewing courts. City of Chicago v. Boulevard Bank National Ass’n,
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293 Ill. App. 3d 767, 779 (1997). As our supreme court has stated, “[t]he general rule is that
where the legislature has delegated to a corporation the authority to exercise the power of
eminent domain, the corporation has also the authority to decide on the necessity for exercising
the right, and its decision will be conclusive in the absence of a clear abuse of the power
granted.” City of Chicago v. Vaccarro, 408 Ill. 587, 597 (1951). Likewise, in Department of
Public Works & Buildings v. Keller, 61 Ill. 2d 320, 325 (1975), our supreme court held:
“[W]hether the exercise of the power of eminent domain is
necessary or expedient to accomplish an authorized purpose is not
a question within the province of the court to determine. The
agency on which the power has been conferred also has the
authority to decide the necessity for its exercise. In the absence of
a clear abuse of this authority the courts will not inquire into the
necessity or the propriety of its exercise.”
See also Alsip Park District, 252 Ill. App. 3d at 284 (“In Illinois, the issue of whether the
exercise of the power of eminent domain is necessary and sufficient to justify the taking of
private property for a public purpose is not a judicial question, but instead constitutes a
legislative determination that is within a condemnor’s discretion”).
In this case, Midland has failed to establish that the City abused its discretion with respect
to its determination that it was necessary to acquire Midland’s property. The City introduced
ordinances passed by the city council which authorized it to acquire the northern portion of the
Midland Property. The ordinances recited that it was necessary to acquire the Midland Property
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pursuant to the judgment entered in the 1331 litigation and that it was necessary to acquire the
property for the public purpose of furthering the Redevelopment Plan by eradicating blight and
redeveloping underutilized land in the Redevelopment Area for residential, commercial, and
business uses. The ordinances further recited that it was necessary for the City to establish and
continue its right to have vehicles park on the Midland Property, that the right to have vehicles
park on the Midland Property was uncertain because the lease permitting the City to do so had
expired, and that it was necessary and in the best interests of the City to secure “said right to park
immediately.” The introduction of these ordinances was sufficient to establish a prima facie
case of the necessity of acquiring Midland’s property. See Walker, 50 Ill. 2d at 71; Alsip Park
District, 252 Ill. App. 3d at 285.
After the City established its prima facie case, the burden then shifted to Midland to show
that the City abused its discretion on the basis that there were other, less drastic means of
providing the necessary parking. To sustain this burden, Midland relies primarily upon the
affidavit of its president, Laurence Spector. In that affidavit, Spector stated that on September 1,
2000, Midland leased 30 parking spaces to the City and that, as of March 19, 2007, that lease
remained in effect. The affidavit further states that on November 19, 2004, Midland offered to
extend the existing lease for so long as Midland owned the property but that the City refused that
offer. Attached to affidavit was a copy of the lease and Midland’s written offer to the City to
extend the lease.
Despite this affidavit, we find that Midland failed to meet its burden of proof. The term
“necessary,” when used in condemnation proceedings, is subject to a different definition than the
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term is subject to in common usage. Boulevard Bank National Ass’n, 293 Ill. App. 3d at 778.
The Illinois Supreme Court has defined necessity with respect to the exercise of the power of
eminent domain as meaning “ ‘expedient,’ ‘reasonably convenient,’ or ‘useful to the public,’ and
[not] limited to an absolute physical necessity. [Citations.] Conversely, the word ‘necessary’
does not mean ‘indispensable’ *** or ‘an absolute necessity.’ ” Department of Public Works &
Building v. Lewis, 411 Ill. 242, 245-46 (1952); see also Alsip Park District, 252 Ill. App. 3d at
287. In light of that definition, we do not believe that Midland’s offer to continue leasing the
property was sufficient to rebut the City’s prima facie case. At the time the city council passed
the ordinance authorizing the taking of the northern portion of the Midland Property, the two-
year term of lease for the 30 parking spaces had expired and the parties were operating on a
month-to-month tenancy. Midland’s offer, made after the City filed the present lawsuit, would
not have prevented it from selling the property to another party at a later time, in which case the
City would again be required to obtain substitute parking. Moreover, that substitute parking may
not be located on or near the Midland Property, which was specifically chosen, in part, due to its
unique location adjacent to the 1332 building. Under these circumstances, we cannot say that the
City abused its discretion by determining that it was necessary to secure its right to have vehicles
park on the Midland Property.
Midland also challenges the City’s attempt to acquire its property on the ground that the
taking is not for a public use. Midland claims that private property can only be taken for a public
use, which requires that all persons must have an equal right to the use, and that in this case, if its
property is taken, the new owner would not be required to make parking on the land available to
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the public. Accordingly, Midland concludes that the proposed taking of its property contravenes
the Illinois and United States Constitutions. Midland relies primarily on our supreme court’s
decision in Southwestern Illinois Development Authority v. National City Environmental, L.L.C.,
199 Ill. 2d 225 (2002) (hereafter SWIDA), in support of its claim.
The City, on the other hand, claims that the present case is a proper use of substitute
condemnation. The City argues that the taking of the 1331 property, which gave rise to its
agreement to acquire the Midland Property, was for the valid public purpose of facilitating the
North Town Village Project and that, because that public purpose is so closely connected with
the taking of Midland’s property, the present action is a constitutional exercise of the City’s
power of eminent domain. The City relies primarily upon the Supreme Court’s decisions in
Brown v. United States, 263 U.S. 78, 68 L. Ed. 171, 44 S. Ct. 92 (1923), and Dohany v. Rogers,
281 U.S. 362, 74 L. Ed. 904, 50 S. Ct. 299 (1930).
In order to properly resolve this issue, it is necessary and helpful to understand the unique
nature of what is known as “substitute condemnation.” As a general rule, the just compensation
required to be given when property is acquired through eminent domain proceedings takes the
form of money. However, a situation occasionally arises in which the condemning authority
takes land under an agreement to compensate the owner with land taken from a third person
instead of money, proceeding then to condemn the third person’s land. Such a transaction is
called “substitute condemnation” and is generally used in rare circumstances where the owner of
land taken for a public use can adequately be compensated only by receiving other adjacent
property in exchange. L. Bradshaw, Substitute Condemnation: Power to Condemn Property or
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Interest Therein to Replace Other Property Taken for Public Use, 20 A.L.R. 3d 862 §2[a] (1968).
The quintessential example of substitute condemnation is the United States Supreme
Court’s decision in Brown. In that case, Congress proposed to create a reservoir that would flood
three-fourths of a town and authorized the condemnation of adjacent land to which the flooded
section of the town could be moved to be united with the remaining one-quarter of the old town.
Brown, 263 U.S. at 80, 68 L. Ed. at 180, 44 S. Ct. at 93. The plaintiffs were the owners of land
that was the object of the condemnation, and they argued that the power of eminent domain did
not extend to the taking of one person’s property to sell it to another, that such an object could
not be regarded as for a public use of the property, and that, without this, the proposed
condemnation could not be constitutionally valid. Brown, 263 U.S. at 81, 68 L. Ed. at 180, 44 S.
Ct. at 93. The Court disagreed, finding that acquisition of the town site was so closely connected
with the acquisition of the district to be flooded, and so necessary to the carrying out of the
project, that the public use of the reservoir covered the taking of the town site. Brown, 263 U.S.
at 81, 68 L. Ed. at 180, 44 S. Ct. at 93. The Court pointed out that it would be difficult to fix a
proper value of houses in a town to be destroyed where the owners would be unable to find
similarly situated in another part of the same town and that if three-quarters of a town, which is a
business center and a unit, were destroyed, then all property owners would be injured. Brown,
263 U.S. at 81-82, 68 L. Ed. at 180, 44 S. Ct. at 93-94. The Court concluded that it was a natural
and proper part of the construction of a dam to provide a substitute town as near as possible to
the old town, that compensation by substitution was the “best means of making the parties
whole,” and that the power of condemnation was necessary to such a substitution. Brown, 263
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U.S. at 82-83, 68 L. Ed. at 180-81, 44 S. Ct. at 93-94.
The Supreme Court relied upon Brown to find that substitute condemnation was proper in
Dohany. In that case, the state highway commissioner, while engaged in a project to construct
and expand a state highway, agreed to include in the highway an adjacent railroad right of way.
Dohany, 281 U.S. at 364, 74 L. Ed. at 909, 50 S. Ct. at 300-01. To accomplish the inclusion of
the railway, the commissioner entered into a contract with the railroad company under which the
railway was to be relocated onto land owned by a private party that the commissioner agreed to
acquire by purchase or eminent domain. Dohany, 281 U.S. at 364, 74 L. Ed. at 909, 50 S. Ct. at
300-01. The plaintiff, who owned the private land upon which the railway was to be relocated,
challenged the taking as a violation of due process on the ground that the taking of his land for
the purpose of exchange with the railway company was for a private and not a public purpose.
Dohany, 281 U.S. at 365, 74 L. Ed. at 910, 50 S. Ct. at 301. The Court rejected that argument,
finding that it was sufficient that, although the land was to be used as a right of way for a
railroad, its acquisition was “so essentially a part of the project for improving a public highway
as to be for a public use.” Dohany, 281 U.S. at 366, 74 L. Ed. at 910, 50 S. Ct. at 301, citing
Brown, 263 U.S. 78, 68 L. Ed. 171, 44 S. Ct. 92.
Illinois courts have also allowed substitute condemnation. For example, in Department
of Public Works & Buildings v. Bozarth, 101 Ill. App. 2d 99 (1968), the construction of an
interstate was to cause a parcel of property owned by a bank to lose access to a road and thereby
become landlocked. Bozarth, 101 Ill. App. 2d at 100. The State sought to take a piece of private
property from the defendant, an adjacent landowner, in order to provide the land owned by the
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bank with access to the same road that served its property prior to the interstate construction.
Bozarth, 101 Ill. App. 2d at 100-01. The defendant filed a traverse and motion to dismiss,
arguing that the taking of his property was not for a public use but instead only to aid another
private landowner. Bozarth, 101 Ill. App. 2d at 100. The court found that, although the
acquisition of the property would benefit a private landowner, the taking was nevertheless for a
public use because the proposed easement would serve the property for the use of the public just
as the public was served by the road leading to the property prior to construction of the interstate.
Bozarth, 101 Ill. App. 2d at 102. In reaching that conclusion, the court noted that it had
considered a similar issue in Department of Public Works & Buildings v. Koch, 62 Ill. App. 2d
182 (1965), and that it had observed in that case that it was the right of the public to use, not its
exercise of the right, that constituted a valid public purpose. Bozarth, 101 Ill. App. 2d at 101.
Despite these authorities, Midland claims that the City’s attempt to acquire its property
must be declared unconstitutional under our supreme court’s decision in SWIDA. In that case,
SWIDA was a political entity and a municipal corporation whose purpose was to promote
economic development in Madison and St. Clair Counties. SWIDA, 199 Ill. 2d at 22-28. To that
end, SWIDA was empowered to acquire property through the use of eminent domain. In 1996,
SWIDA issued $21.5 million in bonds and loaned the proceeds to Gateway to build a racetrack.
Due to the racetrack’s success, Gateway soon needed additional parking for its customers and
thereafter unsuccessfully attempted to negotiate for the purchase of an adjacent tract of land
owned by National City Environmental (NCE). SWIDA, 199 Ill. 2d at 228-29. Gateway then
asked SWIDA to exercise its eminent domain powers to acquire NCE’s land and transfer it to
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Gateway. SWIDA, 199 Ill. 2d at 229-30. SWIDA agreed, citing the numerous benefits to the
public health, safety, and general welfare that would come to the region from successful
expansion of the racetrack. SWIDA, 199 Ill. 2d at 230. SWIDA thereafter acquired the property
through quick-take proceedings in the circuit court, but the acquisition was overturned by the
appellate court, which found that SWIDA had exceeded its constitutional authority. SWIDA, 199
Ill. 2d at 234.
On appeal to the supreme court, SWIDA argued that taking NCE’s property was
sustainable because it served the public purpose of fostering economic development, promoting
public safety, and eliminating blight, and that, in light of these benefits, possessory use by the
public was not an indispensable prerequisite to the lawful exercise of the power of eminent
domain. SWIDA, 199 Ill. 2d at 237. The supreme court disagreed. The court noted that the right
of a sovereign to acquire property is limited to takings for a public use, but that the subsequent
transfer of property after a taking to private ownership does not by itself defeat the public
purpose. SWIDA, 199 Ill. 2d at 235. The court further noted that the term “public purpose” was
not a static concept but instead was flexible and capable of expansion, but also that this
flexibility did not equate to unfettered ability to use eminent domain and that a purely private
taking could not withstand the scrutiny of the public use requirement. SWIDA, 199 Ill. 2d at 237-
38. The court then looked to the true intentions behind the condemnation and to its intended
beneficiaries. The court noted that the public was not allowed to use the race track “by right”
because a fee was required to be paid to park on the property, and that Gateway could have built
the parking on its own property but instead used “SWIDA as its agent to take NCE’s property”
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because that was the “easier and less expensive avenue.” SWIDA, 199 Ill. 2d at 241. The court
then stated that while the expansion might reduce parking lines and thereby increase public
safety, this was insufficient to satisfy the public use requirement, particularly in light of evidence
that Gateway could have built the parking garage on its own property. SWIDA, 199 Ill. 2d at 238-
39. The court further stated that “[w]hile the activities here were undertaken in the guise of
carrying out its legislated mission, SWIDA’s true intentions were not clothed in independent,
legitimate governmental decision to further a planned public use.” SWIDA, 199 Ill. 2d at 240.
Noting that SWIDA had not studied the parking situation at Gateway and that it had advertised
that, for a fee, it would condemn land at the request of private developers for their private use,
the court opined:
“Clearly, the foundation of this taking is rooted not in the
economic and planning process with which SWIDA has been
charged. Rather, this action was undertaken solely in response to
Gateway’s expansion goals and its failure to accomplish those
goals through purchasing NCE’s land at an acceptable negotiated
price. It appears SWIDA’s true intentions were to act as a default
broker of land for Gateway’s proposed parking plan.” SWIDA, 199
Ill. 2d at 240-41.
Finally, noting that the expansion would increase Gateway’s revenue and thereby bring
additional revenue to the region, the court found that “[u]sing the power of the government for
purely private purposes to allow Gateway to avoid the open real estate market and expand its
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facilities in a more cost-efficient manner, and thus maximizing corporate profits, is a misuse of
the power [of eminent domain].” SWIDA, 199 Ill. 2d at 241. Thus, the court found that SWIDA
had exceeded its constitutional authority in taking NCE’s land by eminent domain. SWIDA, 199
Ill. 2d at 242.
Midland claims that in this case, as in SWIDA, a private party is the primary beneficiary
of the taking and that any public benefit which might result is purely incidental. Midland asserts
that pursuant to SWIDA and similar cases, the public must have the right to use the property taken
and that, because the new owner of its property would not be required to open the parking to the
public or even devote the property’s use to parking, “the public would gain nothing from this
taking.”
Contrary to Midland’s argument, we do not believe that the focus of the court’s decision
in SWIDA was on the quantitative measure of the degree to which the public would be entitled to
use the property. Rather, we believe the court’s decision focused on the motives behind the
taking and whether the taking was in fact intended to benefit the public or, rather, to benefit
purely private interests. The court ultimately did not believe that SWIDA’s motives in acquiring
NCE’s property were consistent with or based upon its legislated purpose under which it
purported to acquire the property. For example, the court noted that “private persons may
ultimately acquire ownership of property arising out of a taking and the subsequent transfer to
private ownership does not by itself defeat the public purpose.” SWIDA, 199 Ill. 2d at 235-36,
quoting Hawaii Housing Authority v. Midkiff, 467 U.S. 229, 243-44, 81 L. Ed. 2d 186, 199, 104
S. Ct. 2321, 2331 (1984). The court further noted, however, that the issue in SWIDA was “not
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*** the ultimate transfer of property to a private party,” but rather “whether SWIDA exceeded
the boundaries of constitutional principles and its authority by transferring the property to a
private party for a profit when the property is not put to a public use.” SWIDA, 199 Ill. 2d at 236.
Similarly, the court noted that “the taking of slums and blighted areas is permitted for the
purposes of clearance and redevelopment, regardless of the subsequent use of the property,” but
that in that case the court was “not dealing with a taking for the purposes of eliminating slums or
blight.” SWIDA, 199 Ill. 2d at 238. Moreover, as evidence that SWIDA’s true motives were to
make a profit and to act as a “broker” for Gateway’s expansion goals, the court noted that
SWIDA had agreed to acquire whatever land Gateway desired for a fee and that Gateway elected
to have SWIDA acquire the property because that was the “easier and less expensive” option.
SWIDA, 199 Ill. 2d at 240-41.
We also do not believe that the decision in SWIDA established a bright-line rule regarding
the public use requirement. As the court itself noted:
“We do not require a bright-line test to find that this taking
bestows a purely private benefit and lacks a substantial showing of
a supporting legislative purpose. As was the case in Limits
Industrial, members of the public are not the primary intended
beneficiaries of the taking. [citation]. This condemnation clearly
was intended to assist Gateway in accomplishing their goals in a
swift, economical, and profitable manner.” SWIDA, 199 Ill. 2d at
240.
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It is true that in SWIDA our supreme court cited to is previous holding in Gaylord v. Sanitary
District, 204 Ill. 576, 584 (1903), that: “[t]he public must be to some extent entitled to use or
enjoy the property, not as a mere favor or by permission of the owner, but by right.” The court
also cited to Gaylord as having “expressed the long-standing rule that ‘to constitute a public use,
something more than a mere benefit to the public must flow from the contemplated
improvement.’” SWIDA, 199 Ill. 2d at 239, quoting Gaylord, 204 Ill. at 584. However, our
supreme court has qualified and explained the statements made in cases such as Gaylord:
“The sweeping expressions [in Gaylord], however, have
been restricted to the particular factual situations there involved
***. Numerous decisions of this court clearly demonstrate that
possessory use by the public is not an indispensable prerequisite to
the lawful exercise of the power of eminent domain. In discussing
a similar contention advanced in an attack upon the validity of the
Neighborhood Redevelopment Corporation Law, the court said:
‘When such areas have been reclaimed and the redevelopment
achieved, the public purpose has been fully accomplished. The
fact that the act does not thereafter vouchsafe the continued use of
the property acquired for public purposes, does not in any way
affect the purposes of the act or render the taking of the property a
taking for a use or purpose which is not public. The achievement
of the redevelopment of slum and blight areas *** constitutes a
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public use and a public purpose, regardless of the use to which may
be made of the property after the redevelopment has been
achieved.’ ” People ex rel. Gutknecht v. City of Chicago, 3 Ill. 2d
539, 544-45 (1954), quoting Zurn v. City of Chicago, 389 Ill. 114,
129 (1945).
In SWIDA, the court itself acknowledged the difficulty in drawing a bright-line test as to
what constitutes a public purpose and that such a determination could vary from case to case:
“It may be impossible to clearly delineate the boundary
between what constitutes a legitimate public purpose and a private
benefit with no sufficient, legitimate public purpose to support it.
‘We deal, in other words, with what traditionally has been known
as the police power. An attempt to define its reach or trace its
outer limits is fruitless, for each case must turn on its own facts.’ ”
SWIDA, 199 Ill. 2d at 236, quoting Berman v. Parker, 348 U.S. 26,
31-32, 99 L. Ed. 27, 37, 75 S. Ct. 98, 102 (1954).
After carefully considering the authorities relied upon by each party, we conclude that the
present case involves a proper use of substitute condemnation and therefore a constitutional
exercise of the City’s power of eminent domain. The purpose of the Clybourn-Ogden
Redevelopment Plan was to eliminate blight and promote economic redevelopment of the area.
There is no dispute that these are valid public purposes under which property may be acquired by
the use of eminent domain, regardless of the use which may be made of the property after the
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redevelopment has been achieved. See SWIDA, 199 Ill. 2d at 238-39; Gutknecht, 3 Ill. 2d at 545.
Pursuant to the Redevelopment Plan, the City promoted the commercial redevelopment of the
1332 building. In order to be used for commercial purposes, however, the 1332 building was
required to maintain a certain amount of parking. Because the 1332 building did not have
adequate space for that parking on its property, the City facilitated the commercial
redevelopment and provided the necessary parking by conveying the 1331 property to the 1332
building owner. The City later sought to acquire the 1331 property for another valid public
purpose, the North Town Village Project, which included mixed-income residential homes and
was in furtherance of the redevelopment plan for the area. That taking, however, would have
eliminated the 1332 building’s parking and, because the City had facilitated the commercial
redevelopment of that building pursuant to the plan and because the 1332 building was required
by zoning laws to maintain its parking in order to continue its commercial use, the City
determined that it was necessary to provide the 1332 building substitute parking. The City’s
Community Development Commission ultimately determined that the northern portion of
Midland’s land was the most appropriate substitute property due to its proximity to the 1332
building and because switching the 1332 building’s parking from the east to the west side of
Halsted street would separate commercial from residential uses. The agreement to provide the
1332 building with Midland’s land as substitute parking was reflected in the judgment orders
entered by the court which allowed the City to acquire the 1331 property by paying monetary
compensation to the 1332 building owner and by providing the 1332 building with substitute
parking.
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The record thus demonstrates that the City’s agreement to provide Midland’s land as
substitute property allowed the City to acquire and incorporate the 1331 property into the North
Town Village Project. That project, itself a valid public purpose, in turn promoted the valid
public purposes reflected in the Redevelopment Plan. Under these circumstances, we conclude
that the acquisition of Midland’s land is so closely connected with the acquisition of the 1331
property, and so necessary to the carrying out of the North Town Village Project, that the public
use and purpose of the project covers the taking of Midland’s land.
We also find that this case is distinguishable from the decision in SWIDA. Initially,
SWIDA did not involve substitute condemnation and therefore the court did not have occasion to
consider the unique issue before this court. Moreover, SWIDA established that each case must
turn upon its own set of facts and that the proper focus of courts should be on whether the taking
at issue is intended to benefit the public or, instead, purely private interests. The record in this
case establishes that the taking of Midland’s land was necessary to provide substitute parking and
thereby facilitate a valid public purpose and that the public, rather than a private party, is the
intended beneficiary of this taking.
Midland claims that the public will derive nothing from this taking because the 1332
building owner is not required to allow the public to park on the property and is not even
required to use the property for parking. However, the 1332 building is required pursuant to
zoning laws to maintain its accessory parking in order to continue its commercial use. Moreover,
the record shows that the purpose of taking Midland’s land is to provide the 1332 building owner
with substitute parking facilities in order to maintain that commercial use. Midland also points
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to the City’s agreement in the judgment in the 1331 litigation that it would acquire Midland’s
land and rezone it to conform to the zoning of the 1332 building. Midland claims that its land is
already zoned for parking and would therefore not need to be rezoned if the City’s true intention
was to provide substitute parking. However, at the time the parties in the 1331 litigation agreed
to the provision regarding rezoning, Midland’s land was zoned as a “General Manufacturing
District” and the City was in the process of amending the land use to “Residential and Parking.”
Therefore, this provision could be a reference to that rezoning and does not establish that the City
does not intend to provide a substitute parking facility for the 1332 building. Finally, Midland’s
argument that no public purpose is served because the 1332 building is not required to allow the
public to use the parking facility ignores the fact that this taking arises under substitute
condemnation. This case should therefore not be viewed in the context of a typical taking of
private property by the government in order to give that property to another private enterprise.
To do so would be to view the case too narrowly and to ignore its unique nature. This case must
instead be viewed in the larger context in which it has arisen and, when viewed as such, we
believe the City’s acquisition of the Midland Property passes constitutional scrutiny.
Midland nevertheless argues that this case does not fall within the “very narrow
circumstances” under which substitute condemnation is allowed. Midland claims that courts
have sanctioned substitute condemnation to take land, but only if the land being taken is
conveyed to those who lost land due to government action. Midland points to the fact the 1331
and 1332 properties were held in separate land trusts and asserts that, because under Illinois law
land trusts hold equitable and legal title, the two properties were owned by separate entities.
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Thus, Midland concludes that the owner of the 1332 building did not lose any property that it
owned when the City acquired the 1331 property and that the 1332 building owner would be
unduly enriched if it were to acquire Midland’s land. However, a brief review of the law
pertaining to Illinois land trusts convinces us that Midland’s claim is without merit.
Both the 1332 building and the 1331 property are held in separate land trusts. In both
instances, ANB is the trustee and the 1332 partnership, comprised of four members, is the
beneficial owner of the trust. Illinois land trusts have been explained as follows:
“ ‘An Illinois land trust is a unique creature of Illinois law whereby
real estate is conveyed to a trustee under an arrangement reserving
to the beneficiaries the full management and control of the
property. “The trustee executes deeds, mortgages or otherwise
deals with the property at the written direction of the beneficiaries.
The beneficiaries collect rents, improve and operate the property
and exercise all rights of ownership other than holding or dealing
with the legal title.... While legal title to the real estate is held by
the trustee, the beneficiaries retain “the power of direction” to deal
with the title, to manage and control the property, to receive
proceeds from sales or mortgages and all rentals and avails on the
property. The trustee agrees to deal with the res of the trust only
upon written direction of the beneficiaries....***[Citation.]’ ” In re
Marriage of Gross, 324 Ill. App. 3d 872, 875 (2001).
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Thus, it has been recognized that the trustee “is a mere vessel of title” who “exercises no control
over the property and only acts according to the beneficiaries’ directions.” In re Marriage of
Gross, 324 Ill. App. 3d at 875. We also note that a similar issue was addressed by the court in
Department of Conservation v. Franzen, 43 Ill. App. 3d 374 (1976). In that case, the court was
confronted with the issue of whether beneficiaries under separate land trusts to certain parcels
were precluded from recovery of severance to their remainders because of an alleged lack of
unity of title. The court held that even though the beneficiaries did not hold legal title, they each
possessed a beneficial interest in the property condemned and, therefore, unity of ownership or
interest was satisfied and the beneficiaries had standing to seek severance damages to their
property. Department of Conservation v. Franzen, 43 Ill. App. 3d at 384. The court concluded
that “the paramount constitutional requirement of just compensation must be allowed to prevail
over the niceties of legal title advanced by the State.” Department of Conservation v. Franzen,
43 Ill. App. 3d at 384.
Although the present case does not involve the issue of standing to seek damages, we
believe that the above caselaw illustrates that there is no issue in this case as to whether the
owner of the 1332 building was damaged when the City acquired the 1331 property. The 1332
partnership was the beneficial owner of each property. Thus, the partnership reaped all of the
economic benefits resulting from both properties, including rents collected from and
improvements to either property. Conversely, the partnership also incurred any economic losses
resulting from both properties, including those losses resulting from any damage to those
properties. Therefore, the 1332 partnership was injured as a result of the City’s acquisition of the
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1331 property and, accordingly, by conveying Midland’s land to be used as substitute parking by
the 1332 building, the land taken is being conveyed to those who lost land due to government
action. Accordingly, Midland’s contention to the contrary is without merit.
Midland argues in the alternative that, even if the 1332 and 1331 properties were owned
together, then conveying Midland’s land to the owner of the 1332 building would be a “gift.”
Midland claims that, in the 1331 litigation, the 1332 building owner was fully compensated for
the loss of the 1331 property by the $2.8 million paid to it by the City, and that to also give the
1332 building owner Midland’s land would be to compensate it twice for its lost parking.
Midland, however, misunderstands the nature of agreement reached in the 1331 litigation. The
1332 building owner owned the 1331 property but used only the northern portion of that property
for parking. When the City acquired the 1331 property, it agreed to compensate the 1332
building owner with both $2.8 million and the northern portion of the Midland property. The
$2.8 million thus represented the monetary compensation provided by the City and the northern
portion of Midland’s land represented compensation for the parking that the 1332 building lost,
which, because that parking was required to be maintained, could not be compensated for by
giving the 1332 building owner money. Accordingly, the 1332 building owner is not being
compensated twice for its lost property but, rather, is receiving the compensation the City agreed
to provide it in order to acquire the property.
Midland further argues that this case is not proper substitute compensation because
substitute compensation only sanctions replacing what is lost and here, the City is seeking to
improve the position of the 1332 building owner. This argument again assumes that the 1332
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building owner did not own the 1331 property at the time it used that property for parking.
However, as discussed above, the 1332 partnership was the beneficiary of each land trust which
held the two properties and therefore the 1332 building owner’s position would not be improved
by providing it with Midland’s land.
Midland also claims that substitute condemnation is only allowed when there is no other
reasonable alternative and that, in this case, Midland has offered to continue making its land
available as parking for the 1332 building for so long as Midland owns that land. However,
Midland points to no authority stating that substitute condemnation is allowed only when there is
no other alternative. Moreover, as discussed above, the City’s decision to acquire Midland’s land
was not made arbitrarily but instead was made based upon the conclusion that acquiring
Midland’s land was the best means to secure its right to available parking and that Midland’s
land was the best location for that parking.
Midland additionally claims that the City is seeking to acquire its property to save money
and to use in lieu of cash in order to compensate the 1332 building owner. However, as
discussed above, the 1332 building owner could not be fully compensated for its lost parking by
money and instead had to be also given substitute property so that it could maintain the parking
required in order to continue its commercial use. Therefore, Midland’s claim is without merit.
Finally, Midland warns that the consequences of our decision could be “staggering” and
could result in abuses of the power of eminent domain. We recognize the inherent danger and
potential for abuse in the use of the power of eminent domain. However, the taking in this case
is authorized and constitutional and the “[l]egitimate use of governmental power is not prohibited
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because of the possibility that the power may be abused.” Gutknecht, 3 Ill. 2d at 545.
For the foregoing reasons, we affirm the judgment of the circuit court of Cook County.
Affirmed.
O’MALLEY, P.J., and J. GORDON, J., concur.
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