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601 W. 81st St. Corp. v. City of Chicago







Appeal from the Circuit Court of Cook County; the Hon. Anthony J. Scotillo and the Hon. James C. Murray, Judges, presiding.


This is a consolidated appeal of a suit against the city of Chicago for rent (No. 83-0853) and a condemnation suit by the city as to a portion of the same property (No. 84-0666).

In the suit for rent, judgment was entered in favor of plaintiff-lessor 601 West 81st Street Corporation (601 West) and against defendant-lessee city of Chicago (the city) for $223,234.74 consisting of (a) $233,352.00 for rent for 56 months, (b) interest at 5% for vexatious and unreasonable delay, amounting to $27,092.94, and (c) less a setoff for nonpayment of real estate taxes by the lessor for the years 1972 through 1977 in the amount of $37,210.20. The city appeals, seeking reversal of the judgment; 601 West cross-appeals from the setoff of $37,210.20.

In the condemnation suit, the city appeals from the judgment entered against it in favor of Chicago City Bank & Trust Company (City Bank) in the amount of $125,000 for damages to the remainder. It does not appeal from the judgment of $625,000 for the taking.

The record shows that Miles Management Corporation (Miles) was the beneficiary of Chicago City Bank & Trust Company land trust No. 7449. The real estate in that land trust was approximately 13 acres located in the 600 block of West 83rd Street in Chicago. On December 15, 1971, Miles leased 9.64 acres of that property (600-608 West 83rd Street) to the city for five years for use as an automobile pound at a rental of $4,167 per month. On or about January 5, 1979, Miles directed City Bank to convey title to 601 West, a subsidiary corporation. Conveyance of title was made subject to the lease, and 601 West so accepted the title. The city paid the monthly rental through July of 1978. It has paid no rental since then, but still continues to use the property as a car pound. It refused to pay on the ground that the lessor had failed to pay certain real estate taxes on the property due the county of Cook as required by the lease which provided in part: "Lessor [Miles] shall pay real estate taxes and any possible leasehold taxes."

Miles failed to pay the real estate taxes on the property for the years 1972 through 1977. Ultimately, after a scavenger tax sale in October 1979, 601 West redeemed the property for the amount bid at the scavenger sale. The 1978 taxes were paid by 601 West in 1981. No tax payments have been made since then because 601 West was unable to pay the taxes for 1979, 1980 and 1981. Its annual gross revenue from all its real estate was approximately $15,000. 601 West has made demands on the city for the rent for the remainder of 1978 and for the subsequent years up to the filing of its suit March 19, 1982.

The city's annual budgets have an account for the rental of two car pounds. The 1982 appropriation was sufficient to include rent for the 83rd Street auto pound; the 1981 appropriation was not, although funds could be spent without an appropriation with proper approval.

On March 19, 1982, 601 West and Miles filed suit against the city for rent and other relief.

On April 7, 1982, the city filed a condemnation suit to acquire the same 9.64 acres it had leased from 601 West. The suit named as defendants Chicago City Bank & Trust Company, as trustee under trust No. 7449, Ivan Himmel, Miles Management Corporation, 601 West 81st Street Corporation and unknown owners. On September 8, 1982, the city reduced its taking to 7.8262 acres.

On March 11, 1983, after a hearing in the suit for rent, the trial court found that (a) 601 West was entitled to 56 months' rental at $4,167 per month; (b) the city's failure to pay rent in a timely fashion was vexatious and unreasonable, for which 601 West was entitled to 5% interest in the amount of $27,092.94; (c) the real estate taxes for the years 1972 through 1977 were not paid by Miles except by redemption by 601 West after a scavenger tax sale in October 1979; and (d) the city is entitled to an equitable setoff in an amount equal to the sum total of tax dollars from the property that would have inured to the city between 1972 and 1977. That amount was found to be $37,210.20. Judgment was entered against the city for $223,234.74.

On May 27, 1983, defendants in the condemnation proceeding filed a petition to compel the city to make rental payments. The petition alleged that the city had used the premises as an auto pound under the 1971 lease, but had not tendered rent since July 1978. It further alleged that defendants on March 11, 1983, had obtained a judgment for that back rent in the cause which is the appeal in No. 83-0853, but that the city has continued to occupy the property without paying rent. Defendants asked for the lease rental payments of $4,267 per month. In response to this petition, the parties executed an agreement entitled "stipulation" in which the city agreed to pay defendants $36,000 as back rent from March 11, 1983, to December 11, 1983.

On September 26, 1983, the city further amended its petition to condemn to increase its taking to 8.9768 acres. On the same day, 601 West filed a cross-petition alleging damages to the remainder of its property. By agreement the court ordered:

"1. Leave is granted to amend the taking in accordance with petition.

2. The cross-petition of the defendant is allowed.

3. The valuation date in this matter shall be September 26, 1983.

4. The trial is set for October 27, at 10 a.m."

On October 3, 1983, the city moved to vacate that part of the order which set the valuation date of September 26, 1983. After a hearing that motion was denied.

Jury trial in the condemnation suit commenced on November 29, 1983. On December 2, 1983, the jury returned a verdict for $625,000 for acquisition of the fee title to the property condemned and for $125,000 for damages to the land not taken. On the same day judgment was entered on the jury's verdict and the city was directed to deposit within 120 days with the treasurer of Cook County the sum of $750,000 plus statutory interest. In addition, the order retained jurisdiction for the purpose of awarding a writ or writs of assistance to put the city in possession and also provided:

"It is further ordered that the terms and conditions of this judgment order shall apply to the stipulation of the parties previously made a part of the record herein and attached hereto and made a part hereof as Exhibit A."

The stipulation stated:

"IT IS HEREBY STIPULATED by mutual agreement of the parties that there is due and owing to the defendants in this cause, the lessors of the subject property, the amount of $36,000 representing delinquent rent heretofore not paid by the City of Chicago. The court finds, by agreement of the parties, that this amount ...

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