APPEAL FROM THE CIRCUIT COURT OF COOK COUNTY. HONORABLE EDWIN M. BERMAN, JUDGE PRESIDING.
Released for Publication April 19, 1994. Petition for Leave to Appeal Denied June 2, 1994.
McNAMARA, Rakowski, Giannis
The opinion of the court was delivered by: Mcnamara
JUSTICE McNAMARA delivered the opinion of the court:
Plaintiff, Patrick Media Group, Inc. ("PMG") filed a complaint against defendants, DuPage Water Commission ("Commission") and its general manager, James J. Holzwart, seeking damages and equitable relief for the alleged "taking" of three of its billboards. The billboards were situated on a parcel of land formerly owned by B&O Railroad Company and acquired by the Commission as part of a project to supply Lake Michigan water to the residents of DuPage County. After the Commission acquired the property, it eventually terminated the two leases and one license (also referred to as "billboard agreements") governing the billboards and requested that PMG remove them from the land. PMG refused, claiming that the Commission's purchase of the land was tantamount to a constitutional taking, for which the Railroad and PMG, as owner of the billboards, were owed just compensation. In its complaint, PMG sought compensation for the taking of the billboards only, and not for the taking of the leaseholds and license or for the termination of these interests.
The Commission filed a counterclaim seeking recovery for unpaid fees under one of the billboard agreements and for the costs incurred in removing another billboard from the property after PMG refused to do so.
Following a bench trial, the trial court entered judgment in favor of the Commission and against PMG on both PMG's complaint and the Commission's counterclaim. The court held that the Commission's acquisition of the subject property was not a taking, but was, rather, a good-faith purchase from the Railroad following extensive arms-length negotiations. The court found that the Commission had rightfully assumed the position of landlord by virtue of having acquired the land "subject to all existing occupancies, leases, licenses and limitations," which encumbrances included the billboard agreements, and further found that the Commission had properly exercised its right as landlord to terminate the billboard agreements pursuant to their terms.
As to the counterclaim, the trial court determined that PMG owed the Commission $6,197.58 in unpaid license fees and was responsible as well for the $9,186.24 costs the Commission incurredin removing one of the billboards. Accordingly, the court entered judgment in favor of the Commission in the amount of $15,383.82.
On appeal, PMG contends that the trial court erred in holding that the Commission's acquisition of the subject property was not a taking. PMG argues that in so holding, the trial court wrongfully deprived it of its right to be justly compensated for the value of its billboards, which the Commission took when it acquired the Railroad's property. PMG further contends that, even if no taking occurred, the Railroad's assignment of PMG's leases and license to the Commission was ineffective. (PMG also raises a number of other contentions pertaining to the valuation of its billboards which we shall need to address if we agree with PMG that a taking of its billboards occurred.)
PMG is in the business of outdoor advertising. It owns or leases property on which it constructs billboards, and then leases the space on the billboards to third parties. In September 1986, PMG purchased the assets of Foster & Kleiser (F&K), a division of Metromedia, Inc., which assets included the subject billboards. The land on which the billboards were located was owned by CSX, the successor to B&O Railroad, until November 20, 1987, when it deeded title of the land to the Commission.
The Commission was created by and operates pursuant to, inter alia, the Water Commission Act of 1985, Ill. Rev. Stat. 1985, ch. 111 2/3, pars. 251 et seq. The stated purpose of the Commission is to provide the DuPage County area with a sufficient supply of Lake Michigan water in light of the legislature's finding that the health, safety and welfare of the residents is threatened by an ever-increasing shortage of water. (Ill. Rev. Stat. 1985, ch. 111 2/3, par. 251.) The Commission possesses the same powers as a municipal water commission under sections 11-135-1 et seq. of the Illinois Municipal Code (Ill. Rev. Stat. 1987, ch. 24, pars. 11-135-1 et seq.), including the power to acquire, sell, lease as lessor or lessee, transfer or dispose of real or personal property, or its interest therein, and to condemn private property. (Ill. Rev. Stat. 1987, ch. 24, par. 11-135-6.) It is undisputed that the Commission required the subject property in order to construct and maintain a pipeline and interconnection facility to transport the Lake Michigan water to DuPage County residents.
On October 2, 1986, the Commission began negotiations with the Railroad regarding the purchase of the land. The land and applicable easements which the Commission needed for a 12-foot tunnel were appraised at approximately $259,000. Subsequently, the Commission offered to purchase from the Railroad the land and easements attheir appraised value. On October 27, 1986, the Railroad responded to the offer by stating that it was procuring its own appraisals. Thereafter, the Commission and the Railroad continued the negotiations in an effort to clarify the scope of the lands to be acquired and the specific conditions of the purchase. During these negotiations, the Railroad informed the Commission that several billboard agreements encumbered the Railroad's land, and that the sale would be subject to these agreements. Further negotiations resulted in an agreed purchase price of $360,000.
In July 1987, the Commission, by resolution, formally approved a written offer to the Railroad of $360,000 for the subject properties. The offer provided that the Railroad would convey approximately four acres of property plus certain easements to the Commission by quitclaim deed, and the conveyance would be "subject to all existing occupancies, leases, licenses or limitations." The Railroad accepted the Commission's offer on August 31, 1987. In December of that year, the Commission received the Railroad's quitclaim deed, dated November 1, 1987. Langdon Neal, special counsel for the Commission, testified at trial that the Commission never initiated or threatened to initiate a formal eminent domain proceeding against the Railroad to acquire the land, nor did the Commission regard itself as proceeding under the laws which gave it the right to exercise the power of eminent domain.
On January 26, 1988, the Railroad formally assigned PMG's leases and license to the Commission. These agreements expressly permitted termination and required PMG to remove the billboards in the event of such termination. ...