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10/27/94 ILLINOIS STATE TOLL HIGHWAY AUTHORITY v.

October 27, 1994

THE ILLINOIS STATE TOLL HIGHWAY AUTHORITY, APPELLANT,
v.
AMERICAN NATIONAL BANK & TRUST COMPANY OF CHICAGO, AS TRUSTEE UNDER TRUST AGREEMENT DATED MARCH 1, 1985, AND KNOWN AS TRUST NO. 63551, ET AL., APPELLEES. -- THE ILLINOIS STATE TOLL HIGHWAY AUTHORITY, APPELLEE, V. BANK OF RAVENSWOOD, AS TRUSTEE UNDER TRUST AGREEMENT DATED DECEMBER 31, 1984 AND KNOWN AS TRUST NO. 25-6886, ET AL., APPELLANTS. -- THE ILLINOIS DEPARTMENT OF TRANSPORTATION, APPELLEE, V. CARRIAGE HILLS KENNELS, INC., APPELLANT.



Harrison, Nickels, Bilandic, McMORROW

The opinion of the court was delivered by: Harrison

JUSTICE HARRISON delivered the opinion of the court:

Before us are three consolidated appeals involving quick-take condemnation actions brought by agencies of the State of Illinois under the Eminent Domain Act (Ill. Rev. Stat. 1991, ch. 110, par. 7-101 et seq.). The common issue these cases present is whether the interest due on the difference between the jury's final compensation award and the amount of compensation preliminarily found by the court should be determined by the jury or the trial Judge. Also presented for our review are (1) whether the circuit court erred in one of the actions when it excluded evidence of special benefits that the landowners would receive as a result of the public improvement for which the condemnation proceedings were instituted, and (2) whether the circuit erred in another of the actions when it awarded the landowners their attorney fees.

We first consider cause Nos. 74738 and 74798, where the Illinois State Toll Highway Authority (the Highway Authority) sought to acquire various parcels of land owned by land trusts for which the American National Bank and Trust Company of Chicago and the Bank of Ravenswood served as trustees. The record shows that these landowners held 21 out of 22 parcels of land in a certain subdivided block in unincorporated Du Page County. The 21 parcels covered an area of just over 100,000 square feet. They were vacant and had no water or sewer service.

The Highway Authority initiated two separate condemnation proceedings to acquire 13 of the 21 parcels by right of eminent domain. The first action sought lots 10, 11, and 12. The second sought lots 9, 13, 15, 16, 17, 18, 19, 20, 21, and 22. The Highway Authority wanted to acquire these parcels for highway purposes, specifically, the North-South Tollway project. All 13 lots were located on the west side of the North-SouthTollway, between Du Page Boulevard and Roosevelt Road. Most of the land was needed by the Highway Authority as a place to construct new or "compensatory" wetlands required by the United States Army Corps of Engineers to replace preexisting wetlands destroyed during construction of the tollway. The remaining lots were needed by the Highway Authority to provide access to an existing utility easement.

The Highway Authority moved to take title to lots 10, 11, and 12 immediately pursuant to the quick-take provision of the Eminent Domain Act (Ill. Rev. Stat. 1991, ch. 110, par. 7-103.) Following a hearing, the circuit court entered an order on September 23, 1987, granting the motion and making a preliminary finding of just compensation in the amount of $51,300. (Ill. Rev. Stat. 1991, ch. 110, par. 7-104.) After the Highway Authority deposited that sum with the county treasurer (Ill. Rev. Stat. 1991, ch. 110, par. 7-105), the court entered an order on October 8, 1987, vesting title to the three lots in the Highway Authority. It also ordered the county treasurer to pay the owners, or their attorneys, the $51,300 deposited by the Highway Authority. Ill. Rev. Stat. 1991, ch. 110, par. 7-106.

The Highway Authority subsequently followed the same quick-take procedure with respect to the remaining 10 lots. In that proceeding, the court made a preliminary finding of just compensation on February 8, 1988, in the amount of $125,000. The Highway Authority duly deposited that sum with the county treasurer, and on March 8, 1988, the court entered an order vesting title to the 10 lots in the Highway Authority.

The circuit court subsequently consolidated the two condemnation proceedings. A jury trial was then held to obtain a final determination of the amount of just compensation for the 13 lots that were taken and to determine whether the Highway Authority owed damagesfor injury to the eight lots that remained in the land trusts.

At the outset of the trial, the landowners filed a motion in limine to bar the Highway Authority from presenting any evidence or making any argument concerning special benefits that might inure to the owners as a result of the tollway. That motion was granted, and the matter proceeded to a trial on the merits. The jury ultimately returned a verdict that awarded the owners $603,571 as just compensation for the taking of the 13 lots and $176,673 as damages for harm to the lots that remained.

The circuit court entered judgment on the verdict on September 6, 1988. In that judgment, the court allowed interest on both the just compensation and damage awards. Interest on the damage award was set at an annual rate of 6% for the period beginning on December 1, 1987, andcontinuing until the Highway Authority deposited the funds with the Du Page County treasurer. The court selected the December 1 date because it fell midway between the dates of the two quick-take orders on the 13 lots lost in the condemnation. The court reasoned that this was an appropriate beginning date because the damage to the remaining lots resulted from the loss of frontage and the diminution in size of the owners holdings caused by those takings.

With respect to the lots that were taken, the interest calculation was more complex. To lots 10, 11, and 12, which were the subject of the first quick-take, the court allocated $111,208.59 of the $603,571 final verdict. It subtracted from that sum the preliminary compensation of $51,300, leaving a difference of $59,908.59. The court then assessed interest on that amount at the rate of 8.7%, beginning on September 23, 1987, the date of the first preliminary finding of just compensation, and continuing until the Highway Authority deposited the funds with the county treasurer.

The court followed the same formula with respect to the other 10 lots. From the $492,362.41 balance of the final verdict it subtracted the preliminary compensation award of $125,000, leaving a difference of $367,362.41. On this amount the court assessed interest at the rate of 9%, commencing February 10, 1988, the date of the second preliminary finding of just compensation, and continuing until the funds were deposited with the county treasurer.

Following denial of its post-trial motion, the Highway Authority appealed. On that appeal, the appellate court rejected the Authority's argument that the circuit court erred in excluding evidence that benefits had inured to the landowners as a result of the tollway's construction. The only fault found by the appellate court was with the circuit court's interest calculations. It held that the circuit court should not have required the Authority to pay interest at a rate in excess of the 6% statutory rate fixed by the Eminent Domain Act (Ill. Rev. Stat. 1991, ch. 110, par. 7-108) on the difference between the amounts paid in the quick-take proceedings and the sum awarded by the jury. It therefore affirmed all aspects of the judgment except for the amount of interest. On that issue it reversed and remanded with instructions to recalculate the award based on the 6% statutory rate. 236 Ill. App. 3d 696.

In ruling as it did, the appellate court did not question the proposition that the interest allowable in a condemnation action could exceed the statutory rate. The basis for its decision was waiver. The court held that the landowners entitlement to additional interest was a question for the jury's determination. In this case, however, the owners had failed to make a timely request for the jury to award a higher rate of interest. They did not ask for additional interest until after the verdicthad been returned. The court therefore concluded that the landowners were precluded from receiving anything above the statutory rate. 236 Ill. App. 3d at 704.

Both the Highway Authority and the landowners petitioned for leave to appeal (134 Ill. 2d R. 315), and we granted their respective petitions. In their appeal to this court, the landowners first challenge the appellate court's holding that the question of additional interest is a matter for the jury's determination. They assert that the matter is for the trial Judge to decide after the verdict has been returned. Because the circuit court did make the decision here, the owners urge us to reinstate that court's judgment in full and to set aside that portion of the appellate court's judgment dealing with the interest question.

Where, as here, the government takes possession of property in a quick-take proceeding, an interest award must be made on the difference between the amount of just compensation finally adjudicated and the amount preliminarily found by the court to be just compensation. This is a statutory requirement (Ill. Rev. Stat. 1991, ch. 110, par. 7-108(1)), but it is more than that. The payment of interest where the government takes possession before making full payment is mandated by the takings clause of the fifth amendment to the United States Constitution (U.S. Const., amend. V; Seaboard Air Line Ry. Co. v. United States (1923), 261 U.S. 299, 305-06, 67 L. Ed. 664, 669, 43 S. Ct. 354, 356; United States v. 50.50 Acres of Land (9th Cir. 1991), 931 F.2d 1349, 1355), which is applicable to the States through the fourteenth amendment ( Dolan v. City of Tigard (June 24, 1994), No. 93-518, 129 L. Ed. 2d 304, 62 USLW 4576, 4578, 114 S. Ct. 2309). It is also compelled by the just compensation provision in article I, section 15, of the 1970 Illinois Constitution (Ill. Const. 1970, art. I, § 15). Department of Conservation v. Jones (1979), 75 Ill. 2d 557, 564, 27 Ill. Dec. 789, 389 N.E.2d 1197.

The constitutional requirement for interest iscodified in section 7-108 of the Eminent Domain Act (Ill. Rev. Stat. 1991, ch. 110, par. 7-108). Although that statute purports to set an interest rate at 6% per year on the difference between the preliminary compensation amount found by the court in the quick-take proceedings and the sum finally awarded by the jury, the 6% rate is not binding. The United States Supreme Court has held that the ascertainment of just compensation under the fifth amendment is a matter for the courts rather than the legislature. ( Monongahela Navigation Co. v. United States (1893), 148 U.S. 312, 327, 37 L. Ed. 463, 468, 13 S. Ct. 622, 626.) Because just compensation embraces the interest due where the court's preliminary award falls short of the jury's final award, that interest is likewise a matter for judicial, rather than legislative determination. Accordingly, statutory directives that purport to fix the rate of interest in such cases are outside the bounds of legislative authority. See United States v. 50.50 Acres of Land (9th Cir. 1991), 931 F.2d 1349, 1354-55.

It is true that the interest rate set by a statute can be applied to a claim for just compensation if the rate is reasonable and judicially acceptable. The Federal courts have held, however, that such rates do not operate as a ceiling on the amount that may be awarded. Rather, the rate statutes must be construed as doing nothing more than establishing a floor on the rate allowable for compensation under the fifth amendment. ( United States v. 50.50 Acres of Land (9th Cir. 1991), 931 F.2d 1349, 1354-55; United States v. 125.2 Acres of Land (1st Cir. 1984), 732 F.2d 239, 244-45; Washington Metropolitan Area Transit Authority v. One Parcel of Land (4th Cir. 1983), 706 F.2d 1312, 1322; Miller v. United States (Ct. Cl. 1980), 223 Ct. Cl. 352, 620 F.2d 812, 837; United States v. Blankinship (9th Cir. 1976), 543 F.2d 1272, 1276.) This construction is necessary in order to avoid having to declare thestatute invalid in those cases where the specified rate is constitutionally inadequate given the factual circumstances of the case. It honors the principle that we have a duty to construe acts of the legislature so as to affirm their constitutionality whenever we can reasonably do so. See Miller, 620 F.2d at 837-38.

Our appellate court has followed these principles ( Department of Transportation v. Rasmussen (1982), 108 Ill. App. 3d 615, 628-29, 64 Ill. Dec. 119, 439 N.E.2d 48), and the parties before us do not contest their validity. The question we are asked today is whether the appropriate rate of interest should be decided by the trial Judge or the jury.

Federal law provides no guidance on this question. Under the Federal constitution there is no right to a jury trial in an eminent domain proceeding. In Federal court, the distribution of responsibilities between Judge and jury is governed by Rule 71A(h) of the Federal Rules of Civil Procedure ( United States v. 320.0 Acres of Land (5th Cir. 1979), 605 F.2d 762, 807), which is inapplicable to State court proceedings.

In Illinois, the matter is controlled by article I, section 15, of our constitution (Ill. Const. 1970, art. I, § 15). That provision specifically states that just compensation for private property taken or damaged for public use "shall be determined by a jury as provided by law." (Ill. Const. 1970, art. I, § 15.) Because interest on the difference between the preliminary compensation amount found by the court in the quick-take proceedings and the sum finally awarded by the jury is an element of just compensation ( Jones, 75 Ill. 2d at 564), the appropriate rate of interest must likewise "be determined by a jury as provided by law." To ...


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