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Peoples Gas Lt. Co. v. City of Chicago





APPEAL from the Circuit Court of Cook County; the Hon. HARRY M. FISHER, Judge, presiding.


Rehearing denied January 19, 1953.

Appellant, The Peoples Gas Light and Coke Company, a corporation, filed its complaint in the circuit court of Cook County on June 20, 1944, seeking to recover from appellee, the city of Chicago, damages, expenses and costs alleged to have been incurred by the company in connection with the protection, removal and relocation of its mains, structures and facilities made necessary by reason of the construction by the city of an initial system of subways, particularly those in State and Dearborn streets in the city. The complaint was amended several times. Finally, on September 12, 1951, the court entered its order allowing appellee's motion to dismiss, theretofore filed, to stand as the motion to dismiss the amended complaint as further amended, and sustained the motion. The appellant elected to stand on its complaint as amended and refused to plead further. The court entered its order dismissing the complaint at appellant's costs. From this final order appellant has brought its appeal directly to this court upon certificate by the trial judge that the validity of a municipal ordinance is involved and that the public interest requires that the appeal be taken here.

The leading facts, as disclosed by the amended complaint and the exhibits attached thereto, for purpose of this appeal may be stated as follows: Appellant is an Illinois corporation engaged in the business of producing, purchasing, distributing and selling gas for light and fuel purposes to the general public in the city of Chicago. It operates under a franchise given by ordinance of the city council passed on August 30, 1858. It is the only company now engaged in such business in the city of Chicago. Pursuant to its franchise, and with the consent of the city council from time to time, the company has constructed, operated and maintained public utility structures and appliances in and along the streets and alleys of the city for over ninety years. The company is a public utility subject to the jurisdiction of the Illinois Commerce Commission. As such utility it is obligated to maintain its structures and facilities in such condition as to enable it to render continuous service. The first section of the original franchise ordinance provides that permission and authority is given the company to lay its mains and pipes in the streets, alleys, public parks and squares of the city "subject at all times, however, to the resolutions and ordinances of the Common Council of said City."

On November 3, 1938, the city, acting under the authority of the Subways and Tunnels Act (Laws of 1929, p. 268,) afterward incorporated in the Revised Cities and Villages Act, (Ill. Rev. Stat. 1951, chap. 24, pars. 70-1 et seq.,) passed an ordinance for the construction of the subways in question. This ordinance recites that the "Initial System of Subways" to be built is intended to form an integral and convenient part of the local transportation system of the city; that the term "subway" as therein used includes "tunnels, entrances, exits, passageways, connections, approaches, inclines, elevators, stations and other structures appropriate to a system of subways for local transportation purposes." It is provided that the subways shall be and remain the property of the city; that the initial system shall consist of tunnels or ways constructed in the city beneath the surface of streets, alleys, public places and other lands. The routes of the Dearborn and State streets subways are then particularly described and designated. Section 8 of the same ordinance provides that all persons owning or operating public utility structures and appliances in the streets, alleys or public places of the city in which the subways are to be constructed shall remove them and relocate them in such places in the streets, alleys and public places as the city council might thereafter designate. The ordinance contains no provisions for reimbursing a public utility for any expense incurred in the removal or relocation of its facilities.

The city began construction of the subways on or about December 15, 1938. As the work progressed the city requested the company from time to time to protect, remove and relocate certain of its mains and structures. This was done by the company at a total cost in excess of $1,000,000. It was agreed both orally and in writing that expenses incurred by the company would be without prejudice to its right to claim reimbursement from the city and that the city, in requesting the changes, was doing so without prejudice to its right to deny that it was obligated.

On December 21, 1939, the city passed an ordinance creating an executive department of the city, to be known as the Department of Subways and Superhighways, headed by a commissioner. The commissioner, among other things, was empowered to prepare plans and specifications, to supervise and control construction and maintenance and secure rights of way for subways for local transportation purposes constructed by the city under authority of the Subways and Tunnels Act. On May 29, 1941, an additional ordinance was passed authorizing the commissioner to acquire, construct and install certain transportation equipment in the subways and on inclined structures connecting it with the elevated railroad structures of the Rapid Transit System. The complaint alleges that the subway was constructed and designed to permit the operation therein of electrically propelled passenger cars on standard gauge tracks; that the subway as constructed is not adaptable or available to the public for general highway purposes but is by design suited exclusively for the commercial operation of electric trains as part of the local Rapid Transit System.

The construction of the subway was financed in part by a grant from the Federal government. The remainder of the cost was borne by the city out of the city's traction fund, which was an accumulation of franchise money paid by the Chicago Surface Lines and was expendable only for construction and improvement of local transportation facilities. Part of this fund was used by the city to protect, remove and relocate city-owned water mains, sewers and electric conduits incident to subway construction.

The city has never owned or operated any trains or other transportation facilities in the subway. By ordinance of August 5, 1942, the city authorized the temporary use of the subway by the trustees in bankruptcy of the Chicago Rapid Transit Company and Union Consolidated Elevated Railway Company. By the ordinance the trustees were to provide the cars or trains of cars and operate and maintain them. Route One of the system (State Street) was delivered to the trustees on October 16, 1943, and used by them for the operation of trains until October 1, 1947.

By act of the Illinois legislature approved April 12, 1945, the Chicago Transit Authority was created with power to acquire and operate the several properties then furnishing local transportation service in the city and contiguous territory. The city, on April 23, 1945, passed an ordinance granting to the Transit Authority the exclusive right, for a period of fifty years, to use the subway, the streets and other public places to operate facilities for local transportation. On or about October 1, 1947, the Transit Authority took possession and began the operation of the properties furnishing local transportation service. At the same time possession of the State Street subway, known as Route One, was delivered by the city to the Authority. Upon its completion in 1951, the Dearborn subway, known as Route Two, was also delivered. The Transit Authority now uses the subway system in which to operate trains as an integral part of its system. The subway is available for use only by the fare paying passengers. The Authority pays the city a percentage of its gross receipts as compensation for the use of the subway and the streets, alleys and other public places within the city in which it operates its trains.

Appellant's complaint contains two counts. By count I the alleged liability of the city is predicated upon the existence of a common-law duty as well as a cause of action under the constitutions of the State of Illinois and of the United States. Count II seeks recovery under the provisions of the Subways and Tunnels Act, particularly section 7 of that statute. Since the complaint was stricken in its entirety, the question before us is whether the complaint, in either count, states a cause of action.

Appellant's theory under count I is bottomed on the proposition that in constructing the subways the city was acting in its proprietary capacity; that the city is subject under the common law to the same liability for the dislocation of the company's structures as any private individual or company engaged in the same activity; that by seeking to compel the company to remove and relocate its structures without compensation the city is violating the company's constitutional property rights. Appellant also contends that, by the passage of an ordinance to compel the company to make the changes at its own expense, contract rights of the company as protected by both the State and the Federal constitutions are impaired. The city contends that in constructing the subways it was acting in its governmental capacity; that since it acted in that capacity the immunity of the sovereign attaches to its acts and no liability exists either at common law or under the constitutions. Counsel for the city say that the subways were merely an extension of the streets and highways of the city at lower levels. Both parties concede that the answer to the question whether the city was acting in its governmental or proprietary capacity is decisive of the issues under count I of the complaint.

Appellant admits that the construction and maintenance of streets by a municipality in the sense of ways open to the general public for ordinary travel on foot and in their own vehicles is a governmental function as distinguished from a proprietary activity, but contends that in constructing a subway below the street surface adaptable for the installation of tracks and equipment for the operation of electric railroad cars, the city embarked on a purely proprietary venture. The city takes the position that the subways in question are merely additional highways at lower levels built by the city to further the public health, safety, morals and convenience; that they have been built in the interest of the entire public and were, therefore, built by the city as an agency of the sovereign State in furtherance of its proper governmental functions.

This court has long recognized the principle that, so far as the streets of a municipality are concerned, the public has a real interest in their proper construction, maintenance and use, and by "public" we mean not only the citizens of the city itself but the entire public of which the sovereign State, through the arm of the legislature, is the representative. So far as its streets are concerned, a city is only an agency of the State, and whether it has the fee or only an easement in the streets it holds them in trust for the people of the entire State. So far as their use for street purposes is concerned, every citizen of the State has an equal right. (City of Alton v. Illinois Transportation Co. 12 Ill. 38; County of McLean v. City of Bloomington, 106 Ill. 209; Sears v. City of Chicago, 247 Ill. 204; Chicago Railways Co. v. City of Chicago, 292 Ill. 190.) This right of the people in the streets and highways of the State, whether inside or outside the municipalities thereof, is a paramount right. The municipality cannot lawfully perform any acts itself nor permit others to do or perform anything in derogation ...

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