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City of Chicago v. L.j. Sheridan & Co.

JUNE 4, 1958.




Appeal from the Municipal Court of Chicago; the Hon. CECIL CORBETT SMITH, Judge, presiding. Judgment reversed, and cause remanded with directions.


The City of Chicago filed a complaint against L.J. Sheridan & Company, Inc., managing agent of the State-Madison Building, for failure to install exit, fire escape, stairway and directional signs, and a system of standard inside standpipes in the building, in alleged violation of certain provisions of the Municipal Code of Chicago. Defendant answered, and after trial by the court, judgment was entered finding the issues for defendant and discharging it. The city appeals.

The building, seventeen floors in height, is located at the northwest corner of State and Madison streets in Chicago and was formerly known as the Boston Store. It was erected in various sections between 1910-1917; the present Building Code of the City of Chicago was not adopted until 1948. L.J. Sheridan & Company, Inc., took over management in 1948, and the Boston Store left the building in 1949.

At the time the Sheridan corporation assumed management of the building, floors thirteen to seventeen, both inclusive, were occupied by the Veterans Administration, an agency of the United States Government, under a lease made November 14, 1946 between the Boston Store and the United States Government. The terms of the Veterans Administration lease began January 15, 1947 and ran until January 14, 1952, and from year to year thereafter, with the right of termination in the Government, but in no event was the term to extend beyond June 30, 1957. The lease provided for extensive alterations in the demised premises such as the installation of new elevators to the Government space, and a first-floor lobby.

We quote from two provisions of the lease, the import of which will be discussed later:

"23. The Lessor will comply with all building and fire codes and ordinances pertaining to the exterior of said building, including structural portions, heating plant, roofs, windows, fire escapes, stairways, sprinkler systems, and also pertaining to all portions of the building other than the interior of the premises demised herein. The Government likewise will comply with all building and fire codes and ordinances pertaining to the maintenance of the interior of the demised premises occupied by it and to any and all work to be done and be performed by it in the building whether on the demised premises or elsewhere.

"25. The lessor will at its own expense maintain the exteriors of the premises, including roofs, stairways, structural portions, windows, fire escapes, heating plant, sprinkler systems, and also including all portions of the building, other than the interior of the premises demised herein. The Government will maintain the interior of the premises occupied by it at its own expense."

When the Veterans Administration moved out, the Internal Revenue Service took over and presently occupies the space. All remodeling to adapt the premises for use by the Internal Revenue Service was done by it with its own architect. The Federal Government still has its own elevators, its own entrances and exits, and provides its own internal security, cleaning and other maintenance and decorating. All improvements in the space have been provided by the Government.

The remainder of the Government space, now also occupied by the Internal Revenue Service, consists of the tenth, part of the eleventh, the twelfth and the thirteenth floors, and is covered by a lease dated May 1, 1950. The thirteenth floor was transferred to this lease from the November 14, 1946 lease. The present lease began July 1, 1950 and ended June 30, 1955, with right of renewal by the Government from year to year thereafter to June 30, 1960. It provided that certain alterations in the leased premises should be made at lessor's expense, and that the Government should operate the ventilating system, install fluorescent lighting, maintain all janitorial services, and wash the windows in the demised premises. Under section 21 of the lease the lessor, as a part of the rental consideration, "agrees to comply with all codes and ordinances applicable to the operation of the building in which the leased space is situated." Neither of the two leases contains any right of re-entry by the lessor for condition broken or for nonpayment of rent by the lessee. Both leases give the lessor the right of inspection of the demised premises.

With respect to its failure to install standard and approved internally illuminated exit, stairway, fire escape and directional signs as required by section 67-18.1 of the Municipal Code of Chicago, defendant contends that such violations occurred on space occupied by the Federal Government pursuant to the terms of a lease which gave the Government exclusive jurisdiction and control over the space. The question presented is whether this so-called exclusive jurisdiction, ipso facto, precludes the city from exercising its police power over the premises occupied by the government.

In Mason Co. v. Tax Commission of State of Washington, 302 U.S. 186, the question arose as to whether the United States had acquired exclusive legislative authority so as to debar the State from exercising any legislative authority, including its taxing and police power, in relation to the property and activities of individuals and corporations within the territory. The contracts there under consideration were executed in connection with the Grand Coulee Dam project; the court pointed out that they had been made in full appreciation of the inevitable creation, through the carrying out of the project, of a large local community within an area acquired by the United States, with residents whose needs could be suitably served by the administration of the laws of the State without interfering in any way with the execution of the Federal plan; such services supplied by the local authorities included school facilities and police protection. The contracts assumed, the court held, that State jurisdiction would extend to activities of the contractors who were to obtain all required licenses and permits; that compensation insurance under the laws of the State was to be provided for their employees; that State building regulations were to be obeyed; and that the rules of the local department of health were to be observed with respect to discharge of sewage into the river. In discussing and passing upon the questions presented, the court said: "Not only do we find no violence done to federal right or frustration of federal intent by the State's construction of its statute, but the evidence is clear that the Federal Government contemplated the continued existence of State jurisdiction consistent with federal functions and invited the co-operation of the State in providing an appropriate exercise of local authority over the territory. . . . We have frequently said that our system of government is a practical adjustment by which the national authority may be maintained in its full scope without unnecessary loss of local efficiency. In acquiring property, the federal function in view may be performed without disturbing the local administration in matters which may still appropriately pertain to state authority. In our opinion in James v. Dravo Contr. Co., 302 U.S. 134 . . . we observed that the possible importance of reserving to the State jurisdiction for local purposes which involve no interference with the performance of governmental functions is becoming more and more clear as the activities of the Government expand and large areas within the States are acquired. And we added that there appeared to be no reason why the United States should be compelled to accept exclusive jurisdiction or the State be compelled to grant it in giving its consent to purchases. . . . We are at a loss to understand how the continued jurisdiction of the State without conflicting with federal operations could have been more fully recognized, or the assumption of exclusive legislative authority by the United States more effectively disclaimed, than by the action of Congress in ratifying the provisions of these contracts."

In Howard v. Commissioners of Sinking Fund of City of Louisville, 344 U.S. 624, the court sustained the State's right to legislate even in an area under Federal jurisdiction, saying: "The fiction of a state within a state can have no validity to prevent the state from exercising its power over the federal area within its boundaries, so long as there is no interference with the jurisdiction asserted by the Federal Government. The sovereign rights in this dual relationship are not antagonistic. Accommodation and cooperation are their aim. It is friction, not fiction, to which we must give heed." To like effect see Chicago, R.I. & P. Ry. Co. v. McGlinn, 114 U.S. 542; Stewart & Co. v. Sadrakula, 309 U.S. 94; and Mayor and City Council of Baltimore v. Linthicum, 170 Md. 245, 183 A. 531.

In the case at bar the city did not yield jurisdiction of the space occupied by the Government, nor did the Government take exclusive jurisdiction, as is disclosed by terms and conditions of the lease itself; neither is there any attempt on the part of the city to interfere with Federal governmental functions in the building. Here the city is attempting to do no more than to secure protection from a fire hazard for its residents, and the record discloses an intention on the part of the Federal Government to co-operate to that end.

Defendant relies on cases such as Miller, Inc. v. Arkansas, 352 U.S. 187, involving a contract under the Armed Services Procurement Act. The contractor was convicted under an Arkansas statute for submitting a bid, executing a contract, and commencing work as a contractor in the State of Arkansas without having obtained a license for such activities from the State Contractors Licensing Board. The United States Supreme Court held that the State statute was in conflict with the Federal statute and the regulations thereunder, and that the State statute could not constitutionally be applied to the contractor. Defendant also relies on Arizona v. California, 283 U.S. 423, wherein the alleged wrong against which redress was sought by the plaintiff State was the threatened invasion of its quasi-sovereignty by the Federal Government in undertaking construction projects without first securing approval ...

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