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American Nat. B. & T. Co. v. City of Chicago

APRIL 15, 1974.

AMERICAN NATIONAL BANK AND TRUST COMPANY OF CHICAGO, AS TRUSTEE, ET AL., PETITIONERS-APPELLEES,

v.

THE CITY OF CHICAGO ET AL., RESPONDENTS-APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. F. EMMETT MORRISSEY, Judge, presiding. MR. JUSTICE BURKE DELIVERED THE OPINION OF THE COURT:

This action arose as a petition for a writ of mandamus to order the Building Commissioner of the City of Chicago to issue a permit for construction of a 44-story building at 555 East Illinois Street in Chicago. The trial court found that the petitioners were entitled to the permit and ordered that a peremptory writ of mandamus issue directing the respondents to issue the permit. This appeal followed.

The respondents contend that the petitioners have no right to a permit for a project which would violate a comprehensive lakefront land use ordinance publicly announced prior to application for the permit. The petitioners claim they acquired a vested right to issuance of the permit.

The petitioner, Centex Homes Corporation (hereinafter called Centex), is the beneficial owner of real property held in trust by the petitioner, American National Bank and Trust Company of Chicago. The property is commonly known as 555 East Illinois Street in Chicago. Centex purchased the property on October 31, 1972, at a cost of $4,472,500. At the time of purchase, the property was zoned to permit construction of multiple-family, high-rise buildings. Mr. James Blaeser, regional vice-president of Centex, testified that Centex was aware of the zoning classification of the property prior to purchase, that Centex relied on that classification and would not have purchased the property had it not been so classified.

In November, 1972, the petitioners entered contracts for the preparation of surveys and architects' plans for the construction of a condominium project on the subject property. In December, 1972, a contract was entered for soil tests on the property. In January, 1973, a contract with a structural engineering firm was entered to provide working drawings and specifications for the project's construction. Also in that month, contracts for engineering and survey services and for mechanical drawings and typed specifications for the project were entered. Testimony established that payments totaling over $200,000 had been made on these contracts by the time of trial. On June 1, 1973, the same day the architects' plans were delivered to them, the petitioners applied for a building permit for the proposed project. The application was accompanied by the required information and the necessary fees were proffered. On or about June 15, 1973, the petitioners sent certified letters to the Chicago building commissioner and the Commissioner of Development and Planning, demanding that a permit issue or that reasons be given for non-issuance. The letters described the expenditures to date on the project and apprised the officials of the economic hardship which would ensue should the permit be denied. There was no response to these letters. The petitioners brought the instant action to force issuance of the requested permit, alleging that there was no discretion in the building commissioner to withhold the permit.

The respondents filed an answer, admitting that the zoning in effect on the subject property would permit construction of a multi-story building. They stated that the building commissioner was not required to issue the permit requested by the petitioners, since at the date trial began there was pending before the Chicago City Council a lakefront study ordinance, which was introduced to the Council on June 6, 1973. A copy of "The Lakefront Plan of Chicago", upon which the proposed ordinance was based, is part of the record in this case. It is dated December, 1972; it was released on May 23, 1973. The policy for development of the lakefront, as outlined in the plan, was adopted by the City Council on October 24, 1973, the same day the lakefront protection ordinance was enacted. The lakefront plan recommended that no further private development be permitted east of Lake Shore Drive and the lakefront protection ordinance was meant to implement the plan. Since the petitioners' property is east of Lake Shore Drive, their projected multi-unit building is not a permitted use under present law.

The respondents' answer also alleged that widespread publicity attended the proposed zoning amendment, with the result that "every person has received actual notice of a likelihood of change in the law." The answer alleged that the petitioners have not substantially changed their position "prior to or during the time that the municipality is in the orderly process of enacting a comprehensive zoning ordinance amendment."

A hearing was held and the court found that the petitioners were entitled to the permit. A peremptory writ of mandamus was ordered, requiring the respondents to issue the requested permit.

We are obliged to determine this appeal on the basis of the law now in existence, in spite of the fact that at trial the ordinance which would prohibit the petitioners' project was not in effect. (Fallon v. Illinois Commerce Com., 402 Ill. 516, 84 N.E.2d 641.) The respondents argue that the lakefront protection ordinance, which is now the law, applies to bar the petitioners' project. They contend that the city had a right to delay issuance of the permit while the ordinance was pending before the City Council. The respondents rely on what we term the Palatine rule, which has been expressed as follows:

"* * * a municipality may properly refuse to issue a permit for construction which is permitted under existing zoning classifications if the municipality has already begun statutorily prescribed amendatory procedures (such as public hearings on planning commission recommendations for ordinance amendments) which would prohibit the proposed building development (Chicago Title & Trust Co. v. Palatine, 22 Ill. App.2d 264, 268, 160 N.E.2d 699); * * *." First National Bank of Skokie v. Village of Skokie, 85 Ill. App.2d 326, 332, 229 N.E.2d 378, 382.

The petitioners counter with the argument that they acquired a vested right to issuance of the permit under a well-established exception to the retroactive application of a change in the law. This exception, called the Deer Park rule (Deer Park Civic Association v. City of Chicago, 347 Ill. App. 346, 106 N.E.2d 823), has been approved by the Illinois Supreme Court:

"* * * 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." Fifteen Fifty North State Building Corp. v. Chicago, 15 Ill.2d 408, 416, 155 N.E.2d 97, 101.

• 1 Where both the Palatine rule and the Deer Park rule are raised, the Deer Park exception may still prevail. That is, even if it is proper for a municipality to delay action on a permit while legislation is pending, the applicant may present evidence to establish a vested right to issuance of the permit, although the legislation enacted after application would bar the proposed project. (People v. City of Calumet City, 101 Ill. App.2d 8, 241 N.E.2d 512.) Palatine was decided on the narrow issue of whether the applicant's right to a permit crystalized at the time of application, a time when the intended use was permitted. The court held that no vested right accrued as a result of the fortuitous timing of the application. Legislation to change the uses permitted on the applicant's property was pending at the time application was made. The question of whether the applicant had substantially changed position, etc., in reliance on existing zoning was not discussed. Chicago Title & Trust Co. v. Village of Palatine, 22 Ill. App.2d 264, 160 N.E.2d 697.

• 2 The respondents contend that the vested right theory of Deer Park should not be applied in this case, since the Deer Park exception is directed at spot zoning of property in response to a permit application for an unwanted use. We find no merit in this contention. The vested right theory has been applied in cases other than those involving spot zoning. (See, for example, People ex rel. Skokie Town House Builders, Inc. v. Village of Morton Grove, 16 Ill.2d 183, 157 N.E.2d 33.) Moreover, the present case certainly raises the question of spot zoning. The law now forbids any private development east of Lake Shore Drive. The respondents state in their brief: "[t]he parcel of land in question is the last private vacant area on Chicago's lakefront." Hence, only the petitioners are affected by this prohibition against private development. The fact that this prohibition was but a part of a comprehensive lakefront plan does not foreclose the possibility of a part or parts of the plan amounting to spot zoning.

The respondents also contend that the vested rights theory has been appled in Illinois "only to situations where the permit application itself was the impetus for the proposed zoning change or where the landowner in question has already begun construction." We find no reason why the vested right theory should not be applied in the instant case. There is nothing in the Deer Park rule or in cases applying it requiring that the application precipitate a proposed change in the law. The timing of and motivation behind a proposed change in the law are not relevant to application of the rule as it is stated in Illinois. As a practical matter, of course, a proposed amendment may counter the applicant's argument of reliance on the probability a permit would issue, such that a ...


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