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Urs Corp. v. Ash





APPEAL from the Circuit Court of Edgar County; the Hon. RALPH S. PEARMAN, Judge, presiding.


This appeal concerns a series of easements acquired for the underground storage of natural gas in Edgar County by Peoples Gas Light and Coke Company (Peoples). All of the easements were conveyed by Peoples to the plaintiff by a special warranty deed. Certain owners of the underlying fees refused to recognize the conveyance and the plaintiff thereupon filed in the circuit court of Edgar County a 23-count complaint for declaratory judgment (Ill. Rev. Stat. 1979, ch. 110, par. 57.1) seeking a declaration of its rights in the easements. Each count related to a separate easement.

Nearly all of the counts were settled, but six of them were not, and those six are the subject of this litigation. As to four of them, the trial court entered summary judgment in favor of the plaintiff after striking seven of the defendants' nine affirmative defenses. As to the remaining two, the trial court, after a brief bench trial, entered judgment in favor of the plaintiff. This appeal followed.

A brief background statement is first in order. Further recitation of facts will appear throughout this opinion as necessary for clarity in discussing the issues raised. Peoples embarked upon a project to store natural gas underground in connection with sales to its customers in the Chicago area. In pursuit of the project, it began acquiring easements in 1972 and in April and July of 1973 it obtained certificates of convenience and necessity from the Illinois Commerce Commission (Commission) under the provisions of section 50 and 55 of the Public Utilities Act (Ill. Rev. Stat. 1971, ch. 111 2/3, pars. 50, 56) which included powers of eminent domain under the provisions of "An Act concerning the use of eminent domain in connection with the transportation, distribution, or storage of gas, and granting rights for the storage of gas in property of the State of Illinois and political subdivisions, municipal corporations and quasi-municipal corporations therein" (Ill. Rev. Stat. 1971, ch. 104, par. 104 et seq., now Ill. Rev. Stat. 1979, ch. 96 1/2, par. 5501 et seq.) (Gas Storage Act).

After investing over $3 million in the project, Peoples arrived at the decision that it was no longer feasible in view of an existing surplus of natural gas and therefore sought to dispose of the easements which it had acquired. It approached several other natural gas distributing companies without success and ultimately arrived at an agreement with the plaintiff which agreed to purchase the easements for $385,000. Plaintiff's purpose for the use of the easements is to store compressed air as a part of its experimental project for the generation of electrical power.

Since the issues and the bases of our decision are somewhat different as to the easements upon which the trial court entered summary judgment (Taylor easements) and the ones upon which judgment after bench trial was entered (Porter easements), we must discuss them separately.

All of the Taylor easements were executed on a preprinted form supplied by Peoples which in pertinent part is read as follows:

"For and in consideration of the payment of $5.00 per acre, the receipt of which is hereby acknowledged, Owner hereby GRANTS, CONVEYS and WARRANTS unto THE PEOPLES GAS LIGHT AND COKE COMPANY (hereinafter referred to as "Company"), its successors and assigns, the exclusive right and easement to conduct geological surveys in, under and upon said land; to construct, develop, operate and maintain a gas storage project under and upon said land; to inject natural gas or other gases or vapors (all hereinafter referred to as "gas") into any geological strata, 500 feet or more below the surface of said land, not containing oil and gas in commercial quantities (all such strata being hereinafter referred to as the "Storage Reservoir"); to rework and/or plug existing or plugged or abandoned wells penetrating the storage reservoir; to store gas in the Storage Reservoir and to retain possession of the gas so stored as personal property; to withdraw the gas (with all substances absorbed) from the Storage Reservoir; to drill, install, operate, maintain, renew, move, remove and/or abandon in place, at locations selected by Company, wells, pipelines, roads, cathodic protection, electric lines and all other surface or subsurface facilities as Company deems necessary or desirable for the geological survey or a gas storage project, with the right of ingress and egress on said land and the right to do and perform all such other acts and things as may be necessary for the geological surveys, and the construction, development, operation, and maintenance of a gas storage project. Owner hereby expressly releases and waives any right of homestead."

The Porter easements were typewritten and in pertinent part are read as follows:

"The grantors * * * convey * * * to Peoples Gas Light & Coke Co. * * *, grantee, the exclusive right, privilege and easement to introduce and store gas in all formations at depths in excess of 500 feet below the surface of the real estate * * * and to retain possession of gas so stored as personal property, and to remove gas so stored together with any absorbed water vapor and to maintain the integrity of the cap-rock formation overlying each storage formation and to do and perform such acts as may be necessary or convenient for all of the foregoing purposes."

In addition, the Porter easements contained a clause not found in the Taylor easements. This clause provides, "In the event grantee shall permanently discontinue the storage of gas under the real estate in question, grantee shall prepare and place of record an instrument releasing the rights herein granted."

The epicenter of the controversy among the parties is the affirmative defenses and their striking as a matter of law by the trial court. There were nine of them in all; seven of them applied to all the easements; the eighth is not appealed; and the ninth applied only to the Porter easements. As previously indicated, summary judgment was entered as to the Taylor easements in favor of the plaintiff after the seven were struck, and the trial court after hearing held in favor of the plaintiff as to the Porter easements.

Without detailing each of the seven concerned with the Taylor easements, we may group them into three principal categories: (1) abandonment of the easements, (2) scope of the easements, and (3) eminent domain consequences. As will be seen from our discussion of them, each impinges on the other to a certain extent, the defense of scope being the most determinative.

As to scope, defendants claimed that the easements by their own terms were limited to natural gas and that air was not included within the meaning of gas. As a subsidiary argument, they further maintained that the Commerce Commission orders referred only to natural gas, and not air, and that the plaintiff was not subject to Commission regulation, thus depriving them of the protections afforded by the orders issued to Peoples. Plaintiff maintains that the language of the easements, "natural gas or other gases or vapors," is broad enough to ...

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