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Fifteen Fifty State St. v. Chicago





APPEAL from the Circuit Court of Cook County; the Hon. DANIEL A. ROBERTS, Judge, presiding.


Rehearing denied January 22, 1959.

This case involves the validity of a 1956 amendment to the Chicago zoning ordinance which rezoned certain property now owned by Cosmopolitan National Bank, as trustee, from Volume 3 to Volume 4 residential usage. The action was commenced in the circuit court of Cook County by Fifteen Fifty North State Building Corporation on June 21, 1956, as a suit for injunction and declaratory judgment. The city of Chicago, George L. Ramsey, its building commissioner, Juliette Altman, the former owner of the rezoned property, and the Cosmopolitan National Bank were named as parties defendant. Juliette Altman was later dismissed from the proceedings and a neighboring property owner, James L. Henry, trustee, was permitted to intervene. The court found that the amendatory ordinance constituted an unreasonable exercise of the police powers, declared the ordinance void, and enjoined both the city and the bank from taking any action in reliance thereon. Direct appeal has now been prosecuted to this court.

The property in question is a rectangular tract located at the southeasterly corner of North Avenue and North Dearborn Parkway in the city of Chicago. It fronts upon these streets for distances of 132 feet and 50 feet, respectively. North Avenue, an east-west street, lies one block north of Burton Place and serves as the southerly boundary of Lincoln Park from Clark Street easterly to the vicinity of Astor Street. North Dearborn Parkway is a north-south street lying one block east of Clark Street and one, two, and three blocks west of North State Parkway, Astor, and Lake Shore Drive, respectively. Adjoining defendant's tract on the east is a 16-foot alley which separates it from that owned by the original plaintiff. The latter tract is situated upon the southwest corner of North Avenue and North State Parkway, is known as 1550 North State Parkway, and consists of several lots having a total frontage on each parkway of 132 feet and 133 1/2 feet respectively. Plaintiff's property is improved with a 12-story luxury apartment building which was originally constructed about 1912 with each floor of 20 rooms and 7 baths being occupied as a single apartment. In 1944, however, the building was remodeled by plaintiff so as to generally convert each floor into four smaller apartments with the result that the structure now houses 20 six-room, 10 five-room, and 10 four-room apartments. Immediately to the south of this building, at 1544 North State Parkway, is a three-story annex acquired by plaintiff about 1929 and used for servants' quarters and storage until it was converted into three separate apartments in 1955. Continuing south along the west side of North State Parkway there is located a 16-story apartment building owned by James Henry, the intervening plaintiff, at 1540 North State Parkway; a 17-story apartment house at 1530 North State Parkway; a smaller apartment building at 1516 North State Parkway; the Italian Consulate at 1512; another apartment house at 1508 North State; and a private residence upon the northwest corner of Burton and North State Parkway. At the southeast corner of North State Parkway and Burton there is presently a 28-story apartment building under construction, and directly east across North State Parkway from plaintiff's property is the residence of the Catholic Bishop of Chicago.

Across North Avenue to the north of the plaintiff's tract lie the wide expanses of Lincoln Park. Adjacent to the subject parcel on the south is an old residence which has been converted into nine one-room apartments and four more with a bedroom attached. Proceeding south along the east side of North Dearborn Parkway there is another converted apartment house, the Latin School, and then apartment buildings, rooming houses, and private residences down to Burton Place. On the west side of North Dearborn starting at Burton there is first a rooming house, then a hotel type apartment building, more apartment houses, a rooming house, and a private residence. At the southwest corner of North Dearborn Parkway and North Avenue there is the Eleanor Club, a residence for 123 single girls, which is just across Dearborn from the bank property. Proceeding westerly from the Eleanor Club along the south side of North Avenue there is first the Plaza Apartments, then the Plaza Hotel with its 443 apartments, and finally two other buildings running up to Clark Street.

The property in this general area was first zoned as a Volume 4 residential district in 1923, at which time the 12-story apartment building was located at 1550 North State and a private residence was situated upon that which is now the defendant bank's property. Some years later, in 1942, a comprehensive zoning ordinance was adopted by the city of Chicago under which all lots in this locality from the center of North State Parkway west past Clark Street were placed in a Volume 3 residential district, this being a more restrictive classification than the property had previously enjoyed. All the property from North State east to Lake Michigan retained its Volume 4 classification. The Fifteen Fifty Building premises exceeded a Volume 3 usage and became a legal nonconforming use, since it was in existence upon that date.

The Cosmopolitan Bank trust beneficiaries became interested in the subject tract some time prior to January, 1956, at which time they engaged an architect to advise them as to its utility. Thereafter negotiations were had with Juliette Altmann for the purchase of the property and a purchase agreement subsequently executed. The purchase was made contingent, however, upon the property being rezoned to a Volume 4 classification. To this end a petition to rezone the property was filed with the appropriate municipal authorities and after a public hearing the Chicago city council on June 6, 1956, rezoned the parcel to a Volume 4 classification, the ordinance becoming effective on June 28, 1956. Meantime, on June 12, 1956, the Cosmopolitan Bank trust was created and the sales instruments escrowed with Chicago Title and Trust pending a final settlement. A deed for the property was executed and placed in escrow on June 18, 1956. Two days later the Cosmopolitan Bank entered into a $105,000 architectural contract for the construction of a 25-story apartment building on the premises. The building was to include two penthouses, 44 bedroom and 66 efficiency apartments. The present proceedings were commenced on June 21, 1956, and about July 8, 1956, the Altman sale was consummated with the purchase price of $87,500 being then paid to the vendor. Thereafter, the defendant bank proceeded with the building plans, expending $100 for an alley bond, $500 for a street bond, $1,700 for wrecking the old residence then on the premises, $2,400 for a city sprinkler permit, and $400 to $500 for various soil tests. Upon the bank's application, a building permit for the new apartment house was issued on February 27, 1957, but before any substantial construction work was commenced, the permit was revoked by letter of May 20, 1957. The only reason assigned therefor was the pendency of the present action. About this same time a new comprehensive zoning ordinance was approved by the municipal authorities, to become effective July 8, 1957. Under this ordinance all property in the general area between Dearborn and Astor was placed in an R-7 residential district. The lots lying east of Astor to Lake Michigan received an R-8 classification, the least restrictive residential area. On June 5, 1957, hearings were commenced in these proceedings.

At the trial George F. Nixon, president and controlling shareholder of the plaintiff corporation, spoke of conditions as they existed in 1944 when he remodeled the 12-story apartment building. According to his testimony the area was then devoted solely to apartment and residential use. The west side of State between North and Burton was all single family residences except for 1530 North State Parkway upon which was located a 16-story apartment building, and on the east side of Dearborn in this same block all were private residences except for the Latin School. Between 1944 and June, 1956, he observed that a 16-story apartment building was erected at 1540 North State Parkway, the Eleanor Club was constructed, and several residences in the block were converted to apartments. He further pointed out that his building has accommodations for only 12 automobiles, that most of his tenants are wealthy people, that he was satisfied with his nonconforming use status and did not want a Volume 4 classification. He stated that he was afraid some of his tenants would move if the proposed building were constructed.

Four expert witnesses testified upon behalf of the plaintiff. Their consensus was that the proposed structure would depreciate the Fifteen Fifty Building Corporation property from $50,000 to $100,000 by reason of increased traffic and parking problems, obstruction of light and air to plaintiff's building, greater noise, incompatibility of the proposed structure, and the character of tenants who occupy efficiency apartments. They did admit, however, that recent changes had been made in the locality, including the construction of the Eleanor Club, the new multi-story apartment houses at 1540 and 1530 North State Parkway and the conversion of older residences into apartments and rooming houses. They were also agreed that even under a Volume 3 classification the proposed structure could have been built to a height of 12 stories.

Milton Schwartz, the architect employed by the defendant bank, described in some detail the plans for the proposed apartment building. It would be 25 stories tall, contain both apartments with separate bedrooms and the so-called "efficiency apartments" with folding beds, accommodate 54 automobiles in its basement garage, and have horizontal ground measurements of 38 by 98 feet. He explained that all apartments would face Lincoln Park, that the proposed building could be constructed only in a Volume 4 residential zone, and that the R-7 classification awarded by the 1957 zoning ordinance would not allow such improvement.

Harry F. Chaddick, director of rezoning for the city of Chicago and for Cook County, testified upon behalf of the defendants that his staff processed the application to rezone the subject property from Volume 3 to Volume 4 and recommended its approval to the city council. This was done, he said, because it would be uneconomical to build such a structure under a Volume 3 classification, because of adjacent Volume 4 property, and because it fronted upon Lincoln Park. He went on to explain that all the lots east of State were zoned Volume 4, that the Fifteen Fifty Corporation premises, although being a legal nonconforming use, were being utilized as Volume 4 property, and that therefore the rezoning of the subject parcel was merely an extension of this district along the open area of Lincoln Park. He further stated the whole philosophy of zoning was to place the greatest density of population adjacent to parks, lakes, and other open spaces, and that the Fifteen Fifty Building Corporation property would also have been given a Volume 4 classification had they requested it.

Three experts testified for the defense. They agreed that the highest and best use of the subject property was for the proposed 25-story structure and that such improvement would not adversely affect the surrounding property, but would rather aid in building the area up from its current declining economic status. In their opinion the new apartment building would not materially affect the traffic and congestion already caused by the proximity of Dearborn Street and Lincoln Park nor cause any material curtailment of light, air and privacy to the plaintiff's land. The majority of properties in the area were judged to be at least 40 years old and, because of the adjoining Lincoln Park, it was thought that the maximum residential density should extend all the way from Lake Shore Drive to Dearborn and not stop at either Astor or State.

Before considering the validity of the 1956 ordinance we must first determine what effect, if any, the 1957 ordinance has upon the use of the subject property, for should it be applicable and controlling, any dispute in regard to prior classifications would be rendered moot. The general rule in Illinois concerning the retroactive effect of zoning ordinances is stated in Deer Park Civic Ass'n v. City of Chicago, 347 Ill. App. 346, (petition for leave to appeal denied, 412 Ill. 629,) where the court held that any substantial change of position, expenditures, or incurrence of obligations occurring under a building permit or in reliance upon the probability of its issuance is sufficient to create a right in the permittee and entitles him to complete the construction and use the premises for the purposes originally authorized irrespective of a subsequent zoning or change in zoning classification. Such holding is in accordance with the majority views expressed in other jurisdiction. (Pelham View Apartments v. Switzer, (1927) 130 Misc. 545, 224 N.Y.S. 56; Wasilewski v. Biedrzycki, (1923) 180 Wis. 633, 192 N.W. 989; Rosenberg v. Village of Whitefish Bay, (1929) 199 Wis. 214, 225 N.W. 838; 138 A.L.R. 501.) Here, the purchase of the property was made contingent upon the Volume 4 rezoning, payment of consideration therefor in the amount of $87,500 was held in abeyance until the amendatory ordinance became effective; a $105,000 architectural contract was executed preparatory to actual construction; sums in excess of $3,400 were spent for bonds, permits, and soil tests; and the former residence upon the tract was razed at a cost of $1,700. Although some of these obligations were incurred prior to the date the building permit was issued, all were made subsequent to the June 6, 1956, amendatory ordinance ...

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