APPEAL from the Circuit Court of Cook County; the Hon. JEROME
LERNER, Judge, presiding.
MR. JUSTICE MCNAMARA DELIVERED THE OPINION OF THE COURT:
Plaintiff, Richard Jensen, brought this action in the circuit court of Cook County against defendant, Chicago and Western Indiana Railroad Company, to recover compensatory and punitive damages for the alleged conversion of certain steam locomotive engines, railroad cars, parts, and tools stored on defendant's premises. The jury returned a verdict in favor of plaintiff and against defendant, and awarded plaintiff compensatory damages in the amount of $707,302 and punitive damages in the amount of $1,000,000. The trial court entered judgment on the jury verdict, and later denied defendant's post-trial motion for a new trial or judgment notwithstanding the verdict. Defendant appeals from the judgment and denial of its post-trial motion. Plaintiff cross-appeals from the trial court's denial of his motion seeking interest on the compensatory award from the date of conversion to the date of judgment.
Plaintiff is a transportation contractor engaged in the business of owning, operating, repairing, and restoring antique steam locomotives for display at museums and excursion trips. Defendant is a common carrier by rail. Between 1960 and 1969, plaintiff acquired two steam locomotives (No. 5632 and No. 4963), eight additional railroad cars, and various railroad parts, tools and appurtenance items. In 1969, this railroad equipment was situated on defendant's property pursuant to lease agreement and subsequent amendments executed by the parties. On September 25, 1969, defendant sold plaintiff's equipment to a scrap dealer, Luria Steel & Trading Corporation (Erman-Howell), for $5,800. In 1973, plaintiff filed suit alleging, in part, that in violation of lease agreements and certain statutory provisions, defendant wilfully and wrongfully sold and converted plaintiff's property; that as a direct and proximate result, plaintiff was deprived of goods having substantial value; and that such wrongful conversion was committed by defendant "willfully, wantonly and in reckless disregard" for plaintiff's rights. Defendant filed an answer denying the material allegations in plaintiff's complaint. Thereafter, trial commenced and the following evidence was adduced.
In 1964, plaintiff visited Robert E. McMillen, defendant's vice-president and general manager at the time, to request storage space for the No. 5629 locomotive and tender, and suggested that they use an agreement he had entered into with another railroad as their format. This was agreed to and, on July 16, 1964, the parties executed a lease agreement whereby plaintiff leased storage space in defendant's 49th-51st Street roundhouse area. Pertinent paragraphs of the agreement provided:
"6. Either party may terminate this lease at any time by giving not less than ten (10) days' notice in writing sent by registered mail to the other party, * * *.
7. Within thirty (30) days after the date of termination of this lease, Lessee shall remove all property belonging to it from the demised premises and restore the premises to their original condition to the satisfaction of Railroad, * * *. If Lessee shall fail to remove such property and restore the premises to their original condition within the specified period, Railroad, may, without notice to Lessee, perform such removal and restoration at the expense of Lessee, or take title to all property on the premises."
Subsequent amendments incorporated the provisions of the original agreement and increased storage space to accommodate additional items acquired by plaintiff.
On February 27, 1969, defendant, through its land and tax commissioner, Daniel J. Murray, wrote plaintiff a letter that defendant intended to close its 51st Street yard and demolish the buildings as soon as possible and requesting plaintiff to remove all his equipment immediately. Plaintiff began making plans to remove his equipment from defendant's property.
Thereafter, on March 10, 1969, the parties executed a final amendment authorizing plaintiff to bring a locomotive owned by a third party onto defendant's property for repair and overhaul within 30 days. Murray wrote plaintiff on May 7, 1969, acknowledging that plaintiff had been granted an additional 30 days to overhaul the No. 207 locomotive. Murray noted that the overhaul had not begun and warned that plaintiff either take steps to vacate or defendant would be forced to consider sale of the equipment for scrap. Plaintiff next received a registered letter, dated May 15, 1969, which recited that it was a final notice of cancellation of plaintiff's lease, effective May 31, 1969. It stated that demolition of the roundhouse was imminent and that on June 1, 1969, any property remaining would belong to defendant.
At this point, some conflict in the testimony arises. Plaintiff related that a few days after receipt of the letter, he discussed the removal of his equipment with Robert E. Dowdy, then defendant's president. Plaintiff told Dowdy that if defendant wished to hold him to the 30-day removal provision, he would have to be furnished with boxcars in which to load his equipment. Plaintiff preferred to purchase his own cars for loading and removal. Dowdy replied that he would give plaintiff time to bring in his own railroad cars and to complete the removal. No specific date was set. Plaintiff informed Dowdy that several cars were ready for movement, but Dowdy wanted all the equipment to be shipped at one time. By the end of May, plaintiff had purchased three empty railroad cars on which to load his equipment. One car was misdirected and did not arrive at defendant's yard until August. Dowdy reassured plaintiff, however, that defendant would wait until his cars were loaded and could be shipped at one time. In the last week of August 1969, plaintiff finished loading his inventory onto the railroad cars.
Robert H. Snyder, defendant's superintendent of the operating department, observed plaintiff loading his equipment and advised plaintiff that he was overloading the cars. Snyder explained that without defendant's assistance and cooperation, plaintiff could not move any rolling stock off defendant's property.
Contrary to plaintiff's testimony, Dowdy, testifying as a hostile witness pursuant to Supreme Court Rule 238, stated that he did not allow plaintiff any extension of time after the May 15 letter nor did he direct anyone to grant such extension. He further testified that he had no knowledge that plaintiff was making efforts to move his equipment in May and June, 1969.
Plaintiff made plans to ship his stock to a railroad museum in Union, Illinois. He made alternate arrangements in August with James E. Rice, president of the Chicago, West Pullman and Southern Railroad. Rice testified that he agreed to store plaintiff's equipment on CWP&S property provided it was delivered to the railroad's interchange point at 104th Street. To reach CWP&S, plaintiff's cars would have to move over track belonging to the Belt Railway of Chicago. Rice explained that it was common to accommodate "special moves" of railroad equipment. He indicated that special moves do not require all rolling stock to be in compliance with railroad interchange clearance requirements. Interchange involves the transfer of care and control of cars from one railroad to another.
Ronald F. Diehl, then defendant's freight or shipping agent, testified that, in early September, plaintiff stated that he wished to ship his 10 pieces of rolling stock, fully loaded, to the museum, or alternatively to CWP&S. Diehl conditionally accepted the equipment for shipment, subject to obtaining clearances for movement to the proposed destinations. Diehl prepared bills of lading and undertook the responsibility to obtain the inspection and clearances. Diehl informed plaintiff that he would be assessed a storage fee while awaiting the necessary clearances. Diehl contacted the connecting railroads involved in the planned move, Chicago and Northwestern Railroad and Belt, and requested mechanical inspections of plaintiff's equipment. Dowdy stated he had no knowledge that plaintiff's equipment was tendered to Diehl for shipment.
On September 19, 1969, representatives of the connecting railroads conducted a joint inspection of plaintiff's railroad cars at defendant's 51st Street yard. Plaintiff was present, and Diehl promised to notify him when the results of the inspection were received.
Donald F. Dilgard, assistant superintendent of the car department of C&NW, testified that he had to conduct an inspection to ensure that the equipment was mechanically sound and properly maintained. He explained that old locomotives do not have to meet Federal regulations and could be transported as a "special move." Such moves were uncommon. At the inspection, Dilgard gave conditional approval for movement of three cars, with special handling, at a slow speed, but refused to move the other cars. He observed that the No. 5629 tender had no coupler or air brakes. The baggage, gondola and flat cars were badly overloaded, in decayed condition, or improperly repaired. The two locomotives were partially disassembled and in various states of disrepair. When Dilgard informed plaintiff that he could not move the badly overloaded cars, plaintiff responded, "You have to move them, otherwise they are going to junk them * * *."
Plaintiff testified that he learned from Dilgard that some of the cars had been rejected, but that Dilgard informed him a final report would be forwarded. Dilgard submitted his report to Edward A. Burkhardt, general superintendent of transportation of CN&W. Neither Dilgard nor Burkhardt had any conversations with defendant's personnel concerning the report. Diehl never received a copy of any report, but was informed by plaintiff that several pieces of stock did not pass.
Immediately following the inspection, defendant coupled nine cars belonging to plaintiff, which were fully loaded, and with the use of its own switching engine, pulled the stock from its 51st Street yard to operating tracks at its 83rd Street yard; the remaining car was moved the next day. The cars were transported as a special move at 5 m.p.h. At 83rd Street, the stock was placed in hold status inasmuch as it was received without any further instructions for its disposition. Dowdy testified that, to his knowledge, defendant had no storage space for plaintiff's stock at 83rd Street.
Meanwhile, on September 15, 1969, Dowdy instructed Joseph B. Gergets, defendant's purchasing agent, to dispose of plaintiff's property as soon as possible and to obtain the best price for the equipment. Gergets telephone six brokers and scrap dealers, and received three responses. He accepted bids only on an "all or nothing" basis. Erman-Howell, the closest scrap yard to defendant, was the ultimate purchaser, and Gergets notified it that plaintiff was the owner but that defendant had a legal right to dispose of the equipment. Gergets did not advise plaintiff that defendant was attempting to sell the equipment. Gergets did not contact railway museums or historical foundations because a sale to such institutions would require delivery and movement of the stock by interchange and plaintiff's equipment was not in good running condition. Since defendant had no scale on its property, Gergets made no attempt to weigh the equipment. Gergets also testified to several conversations with plaintiff between June and September 1969, in which he inquired about plaintiff's arrangements for removal. He informed plaintiff that the equipment would be disposed of if not removed. The gist of plaintiff's replies was that he did not believe Dowdy would sell the equipment.
Following an examination of the lease agreement and correspondence sent to plaintiff, John H. Park, then vice-president and general counsel for defendant, advised Dowdy that defendant had a right to sell the equipment. It was also disclosed that three cars involved in the sale to Erman-Howell were not mentioned in the original lease agreement or any subsequent amendment.
On September 25, 1969, plaintiff received a telegram from Dowdy, sent at 11:31 a.m. on September 24, 1969, which provided:
"Regarding our many conversations and communications demanding that you remove your equipment from Western Indiana premises. For your repeated failures to do so, effective at 12:01 p.m. September 25, 1969, CST, Western Indiana plans to sell as scrap to Erman-Howell Division of Luria Steel and Trading Corp. the two steam locomotives with tender, three tenders, one baggage car, one gondola car, two flat cars and one tool box car including all their contents which you brought upon the premises of Western Indiana. The proceeds of sale will be tendered to you. Therefore, if you do not yourself arrange for disposition of the foregoing equipment, prior to 12 Noon on September 25, together with definite and approved routing instructions, and assured route clearances, the sale as scrap will be made as planned."
On September 25, 1969, defendant sold plaintiff's equipment to Erman-Howell.
Plaintiff believed that he had complied with the telegram's request inasmuch as the rolling stock had been moved to defendant's 83rd Street yard. After receiving the telegram, plaintiff inquired of Diehl about the inspection report; Diehl replied that he had received none. When plaintiff asked Dowdy why the equipment was sold during inspection procedures, Dowdy answered, "I just decided to do that."
Robert H. Rodeck, superintendent of Belt's car department, inspected plaintiff's equipment at defendant's 83rd Street yard for the move to Erman-Howell. Erman-Howell is located one block from Belt's 87th Street yard. Rodeck observed that the locomotives were in various stages of dismantling, and that other railroad cars were overloaded, in poor condition, and defective. He recommended that the equipment be moved at 1 m.p.h. On October 2, 1969, defendant moved the equipment to Belt's 87th Street yard; Belt then moved it to Erman-Howell.
Demolition work in the 51st Street area began in August 1969. Demolition of the roundhouse was completed on September 12, and the railroad tracks and ties were subsequently removed.
Plaintiff later attempted, unsuccessfully, to reacquire his property from Erman-Howell. Defendant tendered the proceeds of the sale, $5,800, to plaintiff; after a considerable period of time, plaintiff returned the check.
Testifying to the purchase and condition of his locomotives, plaintiff indicated that both the No. 5632 and No. 4963 were brought to defendant's property "dead in train." When plaintiff acquired the No. 5632 from the Chicago Burlington & Quincy Railroad Company in 1966 the locomotive was not operational and was in the process of overhaul. The restoration work was two-thirds to three-quarters completed. Most appurtenance items had been removed. Spare parts and appurtenance items purchased with the No. 5632 were bought by lot on a price per ton basis. Some of the parts were brand new items which CB&Q had obtained for the rebuilding process. The No. 4963 was purchased in 1967.
Glen H. Thompson, an employee of CB&Q, testified that he had been assigned to overhaul the 5632 locomotive which had been used for excursions and display. The restoring project had been abandoned after CB&Q performed seven or eight months of work, completed 75% of the task, and spent $100,000 on material alone. One or two months after the restoration work ended, plaintiff made the purchase.
Robert McMillen stated that when plaintiff purchased the No. 5632 locomotive the engine was completely disassembled and restoration work had been halted. Between summer 1966 and November 1966, the No. 5632 remained gutted of operational parts. Similarly, Joseph Hola, defendant's master mechanic, recalled that when the No. 5632 arrived on defendant's property, the boiler was stripped, the engine was gutted, and the appurtenance items were removed; this condition remained unchanged. The No. 4963 locomotive was more intact, but its engine was retired.
Plaintiff stated that his inventory of parts included spare rods for both locomotives. Rods are reciprocal components of a locomotive which operate to connect the wheels in motion. His inventory also contained appurtenance items such as headlight, bell, whistle, pipes, and gauges. He asserted that as a result of the sale of the rods and appurtenance items in his inventory, plaintiff was unable to make operational a locomotive (No. 965) remaining on the premises of a third party.
Plaintiff further testified that the loss of the locomotives and other equipment hampered his excursion business. Between 1966 and 1969, plaintiff conducted several excursions for fare paying passengers principally with the No. 5629 locomotive. (That locomotive had been removed from defendant's property before the sale and is not involved here.) Plaintiff had not conducted any excursions since the sale because mechanical departments of railroads were uncertain whether he could maintain his locomotives in compliance with Federal regulation in view of his loss of equipment. In 1974, plaintiff was offered $100,000 to supply and operate the No. 5632 locomotive for two years to pull the bicentennial "Freedom Train." Since this locomotive had been sold for scrap, plaintiff declined the offer. On cross-examination, plaintiff revealed that a cost of $20,000 would be incurred in preparing the locomotive for the requirements of such a trip; the cost of operation would range from $5,000 to $50,000.
Robert Dillon, a railroad machinist, testified to his familiarity with parts and equipment for steam locomotives. Having assisted plaintiff for several years with the overhaul of the No. 5632 locomotive, Dillon was familiar with the various tools and parts in plaintiff's inventory in September 1969. He testified that all of the tools and parts were valuable to the extent they could be used for steam engine repair.
Both sides produced expert witnesses who rendered opinions as to the value of plaintiff's locomotives ...