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City of Chicago v. Loitz





Appeal from the Appellate Court for the First District; heard in that court on appeal from the Circuit Court of Cook County; the Hon. Paul E. Elward, Judge, presiding.


In a demolition suit filed by the City of Chicago for the removal of two deteriorated buildings from their property, Charles Loitz, Murray Loitz and Freida Loitz (counterplaintiffs) filed a counterclaim alleging that certain precondemnation activities of the City constituted a "taking" of the property obligating the City to pay counterplaintiffs the full value of the real estate. The circuit court of Cook County granted the motion of the City to dismiss a second amended counterclaim for failure to state a cause of action. The Appellate Court for the First District affirmed the dismissal (11 Ill. App.3d 42), and we granted leave to appeal.

Essential to a determination of this cause is a detailed analysis of the counterclaim, the well pleaded facts of which are admitted by the motion to dismiss. (Acorn Auto Driving School, Inc. v. Board of Education (1963), 27 Ill.2d 93.) On July 11, 1966, the Chicago city council passed an ordinance authorizing realignment of East 76th Street and South Greenwood Avenue at the point of their intersection, which was the location of counterplaintiffs' property. One of their buildings was utilized as a gasoline service station while the other was apparently leased for commercial purposes. Four parcels of land, including that of counterplaintiffs, were required for the project. The Commissioner of Public Works was authorized to negotiate with the property owners for the purchase of their property and, if agreement was reached, to purchase it for the agreed price, subject to the approval of the city council. If agreement could not be reached, the corporation counsel of the City of Chicago was authorized to institute condemnation proceedings for the purpose of acquiring title to the four parcels under the City's power of eminent domain.

On December 23, 1966, the Commissioner of Public Works sent a letter to counterplaintiffs advising them of the project and offering them $70,000 for their property. The letter stated that a failure to reply within 10 days would be treated as a rejection of the offer, necessitating the institution of condemnation proceedings to acquire the property. Upon receipt of the letter, counterplaintiffs entered negotiations with the City, resulting in a higher offer of $82,000 on or about March 7, 1967. This offer apparently was made orally, the pleadings alleging only that it was made by authorized agents of the City. Through their attorney, counterplaintiffs accepted the $82,000 offer in a letter to the Bureau of Engineering dated March 7, 1967.

The City acquired or filed condemnation proceedings to acquire the other three parcels, but took no further action with reference to preparing a contract to purchase counterplaintiffs' property. Nor were condemnation proceedings ever commenced, apparently because the project was abandoned, although that is not entirely clear from the record, and no notice of abandonment was given.

Counterplaintiffs were originally engaged in negotiations with their gasoline supplier for funds to remodel their gasoline station. Since the proposed street-realignment project was common knowledge among land owners, tenants, businessmen and realtors in the area, the gasoline supplier not only terminated those negotiations but also refused to continue supplying counterplaintiffs with gasoline for resale at their station.

After alleging the foregoing facts, the counterclaim states:

"16. The above-described acts of counterdefendant caused counterplaintiffs' tenant to leave the property, caused the destruction of counterplaintiffs' business thereon, caused the property to become unoccupied and unsalable and resulted in destruction of the improvements on the property by vandals.

17. By or before March 31, 1967, the aforesaid acts by or on behalf of counterdefendant City of Chicago constituted a taking of plaintiffs' above-described property." (Emphasis added.)

Counterplaintiffs then alleged the March 31 property value to have been $83,500, the failure of the City to compensate them as required by both the Federal and State constitutions and prayed for judgment in the amount of $83,500 plus interest from March 31, 1967.

The demolition action, out of which the counterclaim arose, was filed by the City in 1969, apparently after counterplaintiffs had failed to correct numerous building code violations caused by vandalism to the buildings on the property. As a result of the action, the buildings have in fact been demolished.

Since condemnation proceedings were never instituted and a de jure "taking" could not have occurred, the counterclaim states a cause of action only if the City's actions prior to April 1, 1967, constituted a de facto "taking" of the property. Although counterplaintiffs' precise theory of this case is somewhat difficult to ascertain, it is at least clear from their reply brief that the existence of the alleged price agreement with the City is the crucial factor in their argument that a de facto "taking" occurred. They state that the "facts of this case go substantially beyond the stages of governmental planning, open discussions of proposed public improvements, formal adoption of planned improvements, and even publication and dissemination of an adopted plan," conceding that "those sorts of precondemnation activities [do not] yield any liability on the part of a condemning agency." They concede that a "formal written contract independently valid at common law was not executed in this case because the City reserved to itself a right of prior approval of any such contract," but urge that the price agreement itself is sufficient to constitute a "taking" and that it was at that point that liability arose.

We do not agree, for, although the Illinois Eminent Domain Act (Ill. Rev. Stat. 1973, ch. 47, par. 2) contemplates that property should be taken by agreement if possible, it contains no suggestion that the law of contract should be altered to render enforceable a price agreement which has not been reduced to the form of a written contract for the sale of land. What occurred here regarding the property sale represented only the result of price negotiations preliminary to the execution of a formal agreement. There is no allegation that other aspects of a purchase, such as the date upon which possession would be surrendered, or liability for property taxes, etc., normally included in a final contract, had been agreed upon. Clearly, agreement upon price alone constitutes neither an enforceable contract nor a "taking" indirectly compensable in the manner here attempted. Nor do we believe the totality of the City's activities constituted a "taking" as that term is used in the Constitution.

It is apparent, of course, that property values may be, and frequently are, affected by preliminary planning of public improvement projects. It is not uncommon that proposed projects for various reasons are abandoned prior to the institution of condemnation proceedings. In such cases the value of property which would have been affected by the proposed project may have been adversely affected by the pendency of the project, as was the property of counterplaintiffs in this case. While it is not entirely clear that counterplaintiffs did all that might have been done to protect and preserve the value of their property, appealing arguments can be presented for compensation by the owners of property, the value of which is lessened as a result of proposed and subsequently abandoned public improvement projects. There are, however, persuasive countervailing considerations, many of which are stated in the City's brief. They include the fact that imposition of liability for precondemnation activities would tend to inhibit free and open discussion of proposed public improvements; that such activities provide notice to those in the area that their future plans may be affected; that the absence of liability for the ordinary precondemnation activities promotes flexibility in public planning and recognizes the ...

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