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05/18/87 the Illinois Commerce v. the Illinois Commerce

May 18, 1987




509 N.E.2d 542, 156 Ill. App. 3d 297, 108 Ill. Dec. 846 1987.IL.635

Appeal from the Circuit Court of Cook County; the Hon. Arthur L. Dunne, Judge, presiding.


PRESIDING JUSTICE QUINLAN delivered the opinion of the court. CAMPBELL and BUCKLEY, JJ., concur.


This is an appeal from a judgment of the circuit court of Cook County reversing an order entered by the Illinois Commerce Commission (Commission) that had approved a proposed sale of certain real estate owned by Commonwealth Edison Company (Edison) to Transamerica Transportation Services, Inc. (Transamerica).

The issue presented on appeal is whether the Commissioner's findings were, as determined by the circuit court, against the manifest weight of the evidence and, hence, properly reversed by the trial court. For the reasons set forth below, we find that they were not and, therefore, reverse the judgment of the circuit court.

The subject matter of this appeal is Edison's Crawford terminal site, approximately 37.5 acres of real estate, located near the intersection of 35th Street and Pulaski Road in Chicago, Illinois. Edison originally purchased the property in 1972 for its future needs. In 1982, Edison determined that it did not need the property, declaring it to be "excess." Pursuant to a lease agreement, X-L-Company, Inc., a subsidiary of XTRA Corporation , occupied 15 acres of the property. Subsequent to declaring the land to be excess, Edison began to look for a potential buyer. Edison offered to sell the 37.5 acres to XTRA for $3.025 million. XTRA expressed interest in the property, specifically the 15 acres currently leased, but rejected Edison's offer. Edison also placed two ads in an industrial journal and sent letters to occupiers of nearby properties indicating that the property was for sale with an asking price of $3.28 million.

In early 1983, Edison told XTRA that no third parties were interested in the property. In February of 1983, Edison offered to sell 21 acres to XTRA for $1.8 million; the 21 acres contained the 15 acres currently

In January of 1984, Edison and XTRA commenced negotiations to renew the lease for the 15 acres. In addition to a rent increase, the final agreement contained a new provision which would permit either party to terminate the lease upon 90 days' written notice. A copy of the new lease was executed by XTRA on May 15, 1984. Pursuant to section 27 of the Public Utilities Act (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 27), Edison filed a petition with the Commission seeking approval of the new lease with XTRA.

In March of 1984, Edison met with Transamerica regarding Transamerica's possible purchase of the 37.5 acres. Transamerica is XTRA's competitor. On March 21, Transamerica verbally agreed to purchase the property for Edison's asking price of $2.75 million. This agreement was conditioned upon the results of soil and engineering tests, approval by Transamerica's board of directors, and approval by the Commission. Additionally, despite this tentative agreement with Transamerica, Edison continued to negotiate the terms of the new lease with XTRA, and Edison's representatives were instructed not to inform XTRA during the lease negotiations of the proposed sale to Transamerica. Edison and Transamerica then executed a written sale agreement on May 29.

In June of 1984, XTRA was informed by Edison's in-house counsel of the May 29 agreement between Edison and its competitor. XTRA then submitted an offer to purchase the 37.5 acres for $2.85 million with a $50,000 cashier's check as earnest money. This offer surpassed Transamerica's offer by $100,000. Edison rejected XTRA's offer based upon its agreement with Transamerica and, on July 3, filed a second section 27 petition with the Commission seeking approval of the proposed sale to Transamerica. XTRA then renewed its offer, sending Edison a new contract and a new $50,000 cashier's check. Thereafter, XTRA filed a petition pursuant to section 27.01 (Ill. Rev. Stat. 1983, ch. 111 2/3, par. 27.01) for relief and seeking approval of its offer to purchase the property for $2.85 million.

The three petitions were consolidated and, subsequent to a hearing, a majority of the Commission gave the Commission's consent and approval to the proposed Transamerica sale and the XTRA lease after finding that the sale and lease were reasonable, were in the public interest, and would convenience the public. After reviewing the record here, the majority of the Commission was of the opinion that XTRA's rights and equities under section 27.01 were not violated in light of XTRA's numerous opportunities to purchase the property. The majority also specifically approved an Edison accounting procedure that required that the minor loss from the proposed sale be recorded in Edison's books so as not to affect Edison's rates. While the Commission also observed, in its written opinion, that it naturally desired that Edison maximize the proceeds from the sale, it stated that it would not upset one transaction to encourage another for a relatively comparable amount of money. One Commissioner, while Concurring with the order, stated in a separate opinion that in his judgment XTRA was guilty of extremely poor business judgment in losing a valuable piece of property, but that the "good faith" normally accompanying real estate transactions was also lacking here, and that Edison sacrificed its sense of fair dealing in order to generate income from the 37.5-acre site. Two Commissioners Dissented, claiming that the majority had erred by failing to give due weight and consideration to the most fundamental reason for denying Edison's position, i.e., that "Edison simply did not receive the 'best possible price' for the parcel giving due consideration to a higher competitive bid." XTRA filed this action in the circuit court of Cook County seeking

In reviewing the action taken by the Commission, the circuit court is limited to considering "'whether the Commission acted within the scope of its authority, whether it made [proper] findings . . . and whether constitutional rights have been infringed by the decision.'" (Citizens Utilities Co. v. Illinois Commerce Com. (1971), 50 Ill. 2d 35, 39, 276 N.E.2d 330, 332, quoting Produce Terminal Corp. v. Illinois Commerce Com. (1953), 414 Ill. 582, 589, 112 N.E.2d 141, 144.) Additionally, under section 68 of the Public Utilities Act:

"The findings and Conclusions of the Commission on questions of fact shall be held prima facie to be true and as found by the Commission; and a rule, regulation, order or decision of the Commission shall not be set aside unless it clearly appears that the finding of the Commission was against the manifest weight of the evidence ...

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