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Klopf v. Commerce Commission

OPINION FILED NOVEMBER 15, 1977.

EDWARD L. KLOPF, JR., ET AL., PLAINTIFFS-APPELLEES,

v.

THE ILLINOIS COMMERCE COMMISSION ET AL., DEFENDANTS-APPELLANTS.



APPEAL from the Circuit Court of Jo Daviess County; the Hon. JOHN L. MOORE, Judge, presiding.

MR. JUSTICE NASH DELIVERED THE OPINION OF THE COURT:

This appeal is concerned with the disposition of 32 miles of former right-of-way owned by the Chicago and North Western Transportation Company, a railroad public utility. After hearings, the Illinois Commerce Commission determined that the purported sale of the property to representatives of landowners adjoining it without prior Commission approval was void. The Commission refused to approve that sale and, further, authorized the Illinois Department of Conservation to seek to acquire a portion of the property by purchase or condemnation. On appeal to the circuit court the decision of the Commission was reversed and this appeal followed.

Defendants-appellants are the Commerce Commission and the Illinois Department of Conservation. Plaintiffs-appellees are Edward L. Klopf, Jr., Haldor Schap, Gordon Hatfield, Galena State Bank & Trust Company and C.N.A. Abandonment Limited, all of whom are or represent the adjoining landowners of the disputed property. A brief amicus curiae has been filed by Chicago and North Western Transportation Company as owners of the property.

The common interest of these parties and the subject of this litigation is the acquisition of 32 miles of former railroad right-of-way owned by North Western but no longer required by it for its railroad purposes. The Department of Conservation seeks to acquire approximately 19 miles of the property located in Jo Daviess County for public use as a nature trail and for related activities. Plaintiffs seek to acquire all 32 miles of the property to add to the present holdings of the adjoining landowners or for sale to other interested persons.

In 1972 the Interstate Commerce Commission authorized North Western to abandon railway operations by it on approximately 83 miles of right-of-way extending generally from Byron in Ogle County, Illinois, to Dubuque, Iowa. The 32-mile strip of property some 100 feet in width, with which this case is concerned, is located in Jo Daviess County, Illinois, running approximately between Woodbine and Galena Junction. Upon learning of the abandonment, adjacent landowners of the property organized, calling themselves C.N.A. Abandonment, Ltd., and sought to purchase the property from North Western. The Department of Conservation also expressed some early interest in 1972 in acquiring the land and North Western did then give the Department priority in making an offer to purchase extending to March 14, 1973. The Department did not within that period submit to North Western any offer to purchase the property.

In February 1973, however, C.N.A. did submit to North Western its offer to purchase the 92 parcels of land comprising the 32-mile stretch of right-of-way in Jo Daviess County for the sum of $123,625. The offer stipulated that the seller would be permitted to reserve an easement in the land for the construction and maintenance of pipelines below the surface of the ground over the length of the property. This offer was also conditioned upon the approval of the sale by the Illinois Commerce Commission and on that basis was accepted by North Western on March 15, 1973, at an adjusted price of $121,625 for the abandoned right-of-way. Subsequently, North Western filed a petition with the Commission requesting it consent to and approve the proposed sale to C.N.A. on behalf of the adjoining landowners.

On September 7, 1973, while the petition was pending for hearings before the Commission, the Department of Conservation announced its renewed interest in acquiring 19 miles of the right-of-way to convert to a nature trail for use by the public. Thereupon, on September 20, 1973, at the direction of C.N.A., the Galena State Trust & Savings Bank paid over the agreed purchase price to North Western and North Western executed a single deed for the 92 parcels of land to one Larry R. Kramer of Galena, a nominee of C.N.A. In November 1973 Mr. Kramer conveyed all of the property to the Galena State Bank, as trustee, by a single deed and the bank-trustee on November 13, 1973, began to deed parcels of the property out to the adjoining landowners, and others, at the direction of C.N.A. representatives.

On November 15, 1973, the Department of Conservation submitted a written offer to North Western to purchase the fee title in 19 miles of the right-of-way in Jo Daviess County for $132,500. Upon being then informed by North Western that it could not entertain the offer because it had already sold the property to C.N.A., subject to Commission approval of that sale, the Department filed its petition with the Commission requesting permission to institute condemnation proceedings against North Western as is required by the Eminent Domain Act (Ill. Rev. Stat. 1973, ch. 47, par. 2) before such action may be commenced against a railroad or other public utility. Hearings were conducted by the Commission on the Department's petition and North Western's earlier petition and they were consolidated for decision. The Commission entered its order on May 15, 1975, finding that the sale of the land by North Western to the nominee of C.N.A. without prior Commission approval was void and denied approval of the proposed sale. It further granted the petition of the Department and authorized it to acquire by purchase or condemnation title to the 19 miles of abandoned right-of-way desired by it for public use.

On appeal by plaintiffs the Circuit Court of Jo Daviess County reversed the orders of the Commission finding that the conclusions of the Commission were against the manifest weight of the evidence and contrary to law. This appeal by the Commission and the Department of Conservation followed.

The issues requiring resolution are: (1) was the sale of the railway property described herein subject to the approval of the Commerce Commission or had it been waived; (2) did the Commission exceed its authority in granting the Department of Conservation permission to condemn the property for public use rather than approving the sale of the land for private use; and (3) has private property of the adjoining landowners been taken for public use or damaged without just compensation.

Section 27 of the Public Utilities Act (Ill. Rev. Stat. 1973, ch. 111 2/3, par. 27) provides that the sale of property of a public utility is void "[u]nless the consent and approval of the Commission is first obtained or unless such approval is waived by the Commission * * *." The Act further provides that the Commission may by general rule waive the necessity of securing its approval for the sale of property involving a consideration of not more than $50,000 and the record of this case demonstrates the Commission has adopted such a waiver rule. Plaintiffs contend the sale of North Western's right-of-way shown in this case was actually multiple sales of the 92 parcels of land for sums not exceeding $7,000 each and, therefore, did not require Commission approval.

As plaintiffs suggest, the adjoining landowners were the initial intended beneficiaries of C.N.A. Abandonment, Ltd., and the trust established in the Galena State Bank which acquired title to the property through this organization. Plaintiffs caused to be paid to North Western the $121,625 purchase price for the land and their nominee took title to all of it by a single deed. Title ultimately was placed with the trustee which then conveyed at least 70 parcels of the land to certain adjacent property owners and others in early November 1973. Plaintiffs urge that it be understood the transaction was handled in this manner solely for the benefit and at the insistence of the railroad so that North Western would not have to deal with the adjoining owners of all 92 parcels of property with the attendant expenditure of time and costs.

• 1 We do not agree, however, with the conclusion drawn by plaintiffs that the Commission approval mandated by the statute may be avoided in these circumstances and find that the Commission correctly determined there was an attempted sale exceeding the statutory jurisdictional amount and, therefore, subject to its approval. Certainly, both North Western and plaintiffs were initially aware that their contemplated transaction required Commission approval. The record establishes that plaintiffs were informed at an early stage, before commencing any of the activities we have described, that prior approval of the Commission was not only necessary, but that a sale without such approval was void. Their concern over losing the land when the acquisition plans of the Department of Conservation were announced apparently precipitated plaintiffs' actions. North Western, of course, entertained few doubts on this score; it promptly filed its petition with the Commission requesting approval of the sale to plaintiffs as it knew it must do.

We are also mindful that the evidence discloses that persons other than those described as adjoining landowners have acquired parcels of the disputed land from the trustee. Under the initial arrangement made by those who organized C.N.A. it appears there were four persons from among them who were given limitation, over the actions of the trustee towards the property. There was testimony by the trustee that not all conveyances were made to the adjoining landowners; he estimated that 90% were so sold but that the remainder of the sales were to other persons who were not in the original category. The record does not disclose what interest these purchasers had in acquiring a portion of the railway right-of-way. This factor simply suggests the original ...


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