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City of Peoria v. Peoria City Lines





APPEAL from the Circuit Court of Peoria County; the Hon. HOWARD WHITE, Judge, presiding.


Rehearing denied May 23, 1962.

This is a direct appeal by defendant Peoria City Lines, Inc., from a summary judgment entered by the circuit court of Peoria County requiring defendant to pay $98,103.97 to the city of Peoria under a franchise ordinance. The cause presents essentially the issues of whether the doctrines of res judicata or estoppel by verdict bar consideration of the validity of the franchise ordinance as an exercise of the city's regulatory power, and the propriety of imposing interest for failure to pay the sums specified in the ordinance.

The chronology of events appearing in the pleadings, affidavits, and counteraffidavits commenced on April 2, 1946, when the city of Peoria adopted an ordinance granting an exclusive franchise to the Peoria Transportation Company, its successors and assigns, to operate a motor bus system on the streets of Peoria. The ordinance was amended on October 8, 1946, and both the ordinance and amendment were accepted in writing by the Peoria Transportation Company. The ordinance set forth certain contractual undertakings on the part of the city, and required the transportation company to pay a percentage of the gross receipts from fares as consideration for the exclusive franchise and use of the streets.

On April 14, 1955, Tisco, Inc., was incorporated in Illinois. Several days later, an agreement was entered between its shareholders and those of the transportation company, then known as Peoria Transit Lines, Inc., whereby the latter would sell its capital stock to Tisco for $1,500,000; that upon consummation of the sale the transportation company would transfer to Tisco all of its assets, including the franchise, and its liabilities, in exchange for the cancellation of its capital stock purchased by Tisco; and that thereafter Peoria Transit Lines, Inc., should be dissolved.

On May 3, 1955, the Illinois Commerce Commission approved the joint petition of both companies for dissolution of Peoria Transit Lines, Inc., and for the sale and distribution of its assets, including the franchise, and liabilities to Tisco.

On May 4, 1955, articles of dissolution of Peoria Transit Lines were filed in the office of the Secretary of State, and that same day Tisco changed its corporate name to Peoria City Lines, Inc. Pursuant to the agreement and the order of the Illinois Commerce Commission, the franchise was assigned to Peoria City Lines, Inc., the defendant herein, and the latter assumed all liabilities of the Peoria Transit Lines.

Prior to the transfer of the assets of Peoria Transit Lines and on August 16, 1954, the present plaintiff, the city of Peoria, had instituted a suit against the Peoria Transit Lines to recover payments due under the franchise. Thereafter, on July 15, 1955, a supplemental complaint was filed by the city of Peoria alleging the transfer of the assets and liabilities of Peoria Transit Lines to Peoria City Lines. Subsequent to the filing of the supplemental complaint the suit was defended by the Peoria City Lines. In that prior action a summary judgment was entered on July 14, 1956, awarding the plaintiff the amount due and interest thereon. On appeal this court affirmed that judgment in May, 1957, (City of Peoria v. Peoria Transit Lines, Inc., 11 Ill.2d 520,) and the judgment was satisfied on April 21, 1958. It is this prior litigation that plaintiff relies upon as barring further consideration of the validity of the franchise ordinance on the grounds of res judicata or estoppel by verdict.

Shortly after our decision, defendant, on July 12, 1957, sought an increase in fares from the Illinois Commerce Commission, listing as an operating expense the franchise fee due the city of Peoria. In February, 1958, defendant requested the Peoria city council to appoint a citizens committee to make recommendations with regard to modifying the franchise fee in the light of defendant's financial condition. The committee, however, recommended that there be no change in fees.

It appears further from the affidavit of the Peoria corporation counsel and the depositions of the supervisor of parking, the police captain, the traffic engineer, and the director of streets and sewers, that plaintiff sustained certain losses of revenue and incurred expenses as a result of defendant's operations under the franchise. The removal of 100 parking meters from the loop area to provide bus stops at the time the ordinance was adopted resulted in a loss of revenue of approximately $18,000, and the removal of some 28 more meters in 1949 resulted in further losses. At the same time the city had to erect bus-stop signs, police these bus stops and loading zones, establish bus lanes, paint and maintain additional stripes on main arteries traversed by the buses, make certain traffic studies in connection with establishing bus routes, and participate in other fact-finding activities. Furthermore, since defendant's buses operated over 40 miles of paved city streets and travelled approximately two million bus miles per year over those 40 miles of pavement, it was estimated on the basis of a proportion of the city's total street repair costs that some $20,000 a year was expended for the repair of streets over which the buses operated. Defendant objected to the mode of computing repair costs and insisted that many of these costs were not costs of regulation and had no bearing on the reasonableness of the franchise fee.

On the basis of the pleadings and depositions which were stipulated to serve as counteraffidavits, the circuit court entered a summary judgment requiring defendant to pay plaintiff $86,647.44 under the franchise ordinance for the period from May 1, 1955 through December 31, 1958, and $11,456.53 as interest thereon.

On this direct appeal by defendant we shall determine first whether defendant's attack on the ordinance as an arbitrary exercise of plaintiff's regulatory power is barred by either the doctrine of res judicata or estoppel by verdict, and then consider the issues relating to the propriety of the summary judgment and allowance of interest.

Our law is replete with analyses of the scope and distinction between the doctrines of res judicata and estoppel by verdict, which are both designed to prevent relitigation. (City of Elmhurst v. Kegerreis, 392 Ill. 195; Chicago Historical Society v. Paschen, 9 Ill.2d 378; Harding Co. v. Harding, 352 Ill. 417.) Under the doctrine of res judicata, which is applicable only where the former suit was between the same parties or their privies and involved the same cause of action, the former judgment is conclusive not only as to all questions actually decided, but all questions which might properly have been litigated and determined in that action. Where the prior cause of action was different, the doctrine of estoppel by verdict applies, and it bars only those questions actually decided in the prior suit.

In determining the applicability of either of these doctrines to the case at bar we must examine first our prior decision in 11 Ill.2d 520. There we affirmed a judgment allowing plaintiff to recover from Peoria Transit Lines the sums due under the same franchise ordinance involved herein, for the period from January 1, 1954 to May 4, 1955, plus interest, on the ground that the ordinance was a valid exercise of the city's power to regulate the use of its streets. We rejected defendant's challenge of the ...

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