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Chicago Union Station Co. v. Korzen

OPINION FILED MAY 21, 1981.

THE CHICAGO UNION STATION COMPANY ET AL., PLAINTIFFS-APPELLANTS,

v.

BERNARD J. KORZEN ET AL., DEFENDANTS-APPELLEES. — (EDWARD J. ROSEWELL ET AL., DEFENDANTS-APPELLEES.) — IN RE APPLICATION OF THE COOK COUNTY COLLECTOR. — (THE CHICAGO UNION STATION COMPANY, OBJECTOR-APPELLANT.) — IN RE APPLICATION OF THE COOK COUNTY TREASURER AND EX-OFFICIO COUNTY COLLECTOR. — (THE CHICAGO UNION STATION COMPANY ET AL., OBJECTORS-APPELLANTS.)



APPEAL from the Circuit Court of Cook County; the Hon. ROBERT J. DEMPSEY, Judge, presiding.

MR. PRESIDING JUSTICE ROMITI DELIVERED THE OPINION OF THE COURT:

The plaintiffs, Chicago Union Station Company and certain other railroad companies, leased their air rights over railroad rights-of-way, which Cook County then taxed. The appellants sought a refund of the taxes paid for years 1972-1976 contending that: (1) the assessor was without power or authority to assess air rights situated on the railroad rights-of-way; and (2) the land portion of the assessment resulted in double assessment and taxation of the same properties.

The trial court denied the refund. We affirm.

Plaintiffs, owners of railroad property, sought and obtained permission to lease the "airspace over a parcel of land" to Tishman Realty & Construction Co. Inc., pursuant to "An Act to Increase the Powers of Railroad, Union Depot and Terminal Companies" (Ill. Rev. Stat. 1963, ch. 114, par. 174a) which provides:

"That whenever any railroad, union depot or terminal company is the owner, in fee of real estate susceptible of other than railroad uses without abandonment of such railroad uses, or different levels or parts of different levels of which real estate may be devoted to such other uses without unreasonable impairment of the use of the remainder for railroad purposes, or the part of said real estate above or under the part thereof needed in such company's railroad operations (with reasonable use of the surface and subsurface of said real estate for foundation and other incidental uses) may be utilized or developed for buildings or other structures to be used in other than railroad business, such railroad, union depot or terminal company may improve, utilize and develop the part of such real estate so susceptible of such other use or uses or the parts of which may be so separated for other uses, so as to obtain the benefit thereof and may subdivide the separate level or levels susceptible of such other uses into lots and blocks, construct elevated streets, walks and other appurtenances and facilities proper to such development; and may sell, convey and transfer to purchasers any separable part or parts (singly or combined) of such real estate, at, above or below the natural surface of the ground, susceptible of such other uses, or may lease to others such part or parts thereof as said company may at any time elect; Provided, that the plan of such development, improvement, utilization or other use (and any subsequent modification thereof), and the conveyance, transfer or lease proposed is in each instance first approved by the Illinois Commerce Commission and said Commission finds that the use of such part of said land or lands so susceptible of or separable for other uses will not unreasonably impair the use of the remainder of said real estate for railroad purposes."

This lease was later assigned, the same year, with the commission's approval to Tishman-Gateway Inc. and LaSalle National Bank. The legal description of the property leased included:

"All that parcel of land, being that portion above the excepted space, hereinafter defined, of that certain parcel of land in the County of Cook, State of Illinois, together with the buildings and improvements thereon, including the columns, foundations, gussets and supports thereof to be constructed within the excepted space bounded and described as follows."

The lease further provided that the term "demised area" consisted of the portion of the property of the lessor over and above the limiting planes and elevations and the portions of excepted space leased pursuant to paragraph 6, and that the excepted space was the space lying below or beneath the limiting plans and elevations. Paragraph 6 gave lessee the right to construct and maintain adequate columns, foundations, and other supports in the excepted space. It was expressly provided in the lease that the excepted space would be occupied and used by the lessor and various railroads for railroad purposes.

Valuable office buildings were built in the leased property. The lessees agreed to pay any taxes levied on the demised area.

Tracks and other operating property of a railroad are assessed and taxed by the Department of Local Government Affairs (DLGA) presumably at a lower rate. Property listed by the carrier as noncarrier real estate is, however, taxed not by the DLGA but by the county (Ill. Rev. Stat. 1971, ch. 120, par. 564), the DLGA simply certifying and forwarding the list to the local county assessment official for an assessment of the noncarrier real estate.

The plaintiffs listed the air rights involved as noncarrier real estate. Accordingly the DLGA forwarded the schedule to the Cook County Assessor. The operative railroad property bulk classification cards prepared by that office give the same legal description set forth in the schedule. Above the descriptions are the letters "(Ex R/W)" which mean except right-of-way. Furthermore, the legal descriptions, both in the schedule and on the cards referred to the "leasehold interest as shown in the document recorded in the recorder's office September 18, 1963." This document, as already noted, excluded (except for supports) the railroad right-of-way. At the bottom of the card was the notation "Land Valuation 90,591 sq. feet" — followed by the actual computation; the assessed valuations were set forth in boxes labelled in printing "land" and "building." There was no printed box for air rights nor was there space to add such a box.

As already stated the plaintiffs sought a refund of the taxes paid on the air rights, contending both that the assessment was unauthorized and that they were taxed twice on the same property. After considering the evidence, including certain depositions submitted by the parties, the court entered summary judgment for the defendants in a well reasoned opinion in which it made the following findings:

"3. That for each of the years involved in these cases, Plaintiffs made a return to the Department of Local Government Affairs of their `non-carrier real estate' as required by Ch. 120 Ill. Rev. Stats., Sec. 564. That for each year the description furnished by Plaintiffs to the Department indicated that the return covered air rights and Plaintiffs' leasehold interest in the premises involved herein under the various recorded leases. That for each year the Department transmitted to the Assessor of Cook County the list of `non-carrier real estate' furnished to the Department by Plaintiffs, and that for each year the Assessor made an assessment of the property included on the list furnished him by the Department, all as provided by statute.

4. That air rights above the operating property of railroads are severable from the operating property and may be sold or leased by railroads as a separate estate with the approval of the Illinois Commerce Commission under the provisions of Ch. 114, Ill. Rev. Stats., Sec. 174a. That by reason of this statute, such air rights, when severed, have all of the characteristics of real estate, such as the capability of being sold, ...


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