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Southwestern Illinois Development Authority v. National City Environmental

April 29, 1999


Appeal from the Circuit Court of St. Clair County. No. 98-ED-6 Honorable John M. Goodwin, Judge, presiding.

The opinion of the court was delivered by: Justice Chapman


National City Environmental, L.L.C. (NCE), and St. Louis Auto Shredding Company (St. Louis Auto) appeal from the circuit court's decision that approved an eminent-domain quick-take action brought by Southwestern Illinois Development Authority (SWIDA). NCE and St. Louis Auto raise five arguments on appeal: (1) SWIDA lacks the constitutional authority to take NCE's land and convey it to a private party for private profit, (2) the circuit court erred in allowing SWIDA to use its quick-take powers without obtaining the approval of East St. Louis, (3) the court erred in failing to dismiss SWIDA's condemnation complaint because SWIDA failed to give 60 days' notice to NCE, (4) the court erred in ruling that quick-take was appropriate without a showing of immediate need, and (5) SWIDA failed to make a good-faith attempt to negotiate. SWIDA questions this court's jurisdiction over these issues. We reverse.

The jurisdictional issue must be addressed first. This case arises from an interlocutory appeal pursuant to Supreme Court Rule 307(a)(7) (166 Ill. 2d R. 307(a)(7)) and section 7-104(b) of the Eminent Domain Act (735 ILCS 5/7-104(b) (West 1996)). Southwestern Development Authority v. Vollman, 235 Ill. App. 3d 32, 600 N.E.2d 926 (1992), held that, in an interlocutory appeal pursuant to Supreme Court Rule 307(a)(7) and section 7-104(b) of the Eminent Domain Act, only three issues could be raised: (1) whether the plaintiff has the authority to exercise the right of eminent domain, (2) whether the property taken is subject to the exercise of such right, and (3) whether the right is being properly exercised in the proceeding. Thus, defendants' interlocutory appeal in this case is limited to the three issues described in section 7-104(b). In this case, that would include defendants' issues (1), (2), and (3). Issues (4) and (5) are appealable at the Conclusion of the eminent-domain proceeding. See Vollman, 235 Ill. App. 3d 32, 600 N.E.2d 926.

NCE operates a metal-recycling center located in what, until recently, was National City, Illinois. NCE has been at its present location since 1975 and employs 80 to 100 people full time. NCE's factory shreds cars and appliances and separates the reusable metals. It disposes of nearly 100,000 cars per year. The nonrecyclable by-products are referred to as "fluff." Fluff is deposited into NCE's landfill, which is located to the east of its recycling center. When this landfill reaches capacity, NCE plans to expand its landfill operations onto a 148.5-acre tract of land NCE owns to the east of the current landfill. NCE currently uses the clay and dirt from the 148.5-acre tract to cover the fluff in the existing landfill.

In 1987, the Illinois General Assembly passed the Southwestern Illinois Development Authority Act (Ill. Rev. Stat. 1987, ch. 85, par. 6151 et seq.; now see 70 ILCS 520/1 et seq. (West 1996)), which created SWIDA. SWIDA has the authority to take land by eminent domain, via its quick-take powers (see 735 ILCS 5/7-103 (West 1996)). The legislature set forth the following policy reasons for SWIDA's existence:

"(c) That the State has a responsibility to help create a favorable climate for new and improved job opportunities for its citizens by encouraging the development of commercial and service businesses and industrial and manufacturing plants within the southwestern part of the State;

(f) That in order to foster civic and neighborhood pride, citizens require access to *** entertainment and sports ***; [and]

(g) That the main purpose of this Act is to promote industrial, commercial, residential, service, transportation[,] and recreational activities and facilities, thereby reducing the evils attendant upon unemployment and enhancing the public health, safety, morals, happiness[,] and general welfare of this State." 70 ILCS 520/2 (West 1996). SWIDA advertises that, in exchange for fees and expenses, it will condemn land at the request of private developers to assist in advancing these policies.

Gateway International Raceway, a motorsports raceway, is located adjacent to NCE. In 1994, Grand Prix Association of Long Beach, Inc. (GPALB), a California corporation, decided to purchase Gateway International Raceway and to replace its existing facility with a new raceway. In June 1996, SWIDA issued $21.5 million in taxable sport-facility revenue bonds and loaned the proceeds to GPALB. GPALB used these funds to acquire Gateway International Raceway and to transform it into a facility capable of hosting major stock-car races.

In early 1998, GPALB (hereinafter referred to as Gateway) sought to expand its parking capacity, and it attempted to discuss the purchase of NCE's land with NCE's owner, but NCE would not discuss the matter. Gateway made no offers to NCE for its property. Instead, Gateway asked SWIDA to exercise its quick-take powers to take NCE's 148.5-acre tract and convey it to Gateway. In its February 20, 1998, application to SWIDA, Gateway stated that it wanted to use NCE's land as a parking lot for the purpose of further increasing the value of Gateway's racetrack. In March 1998, Gateway president Rod Wolter met with former United States Senator Alan Dixon, SWIDA's executive director Alan Ortbals, and a representative from NCE to discuss the purchase of NCE's property. At that time, Gateway offered $1 million to NCE's representative, and NCE declined it. On March 20, 1998, SWIDA made the same offer to NCE and advised NCE that SWIDA would initiate condemnation proceedings to take NCE's land if NCE did not accept the offer.

NCE refused the offer and SWIDA filed a quick-take proceeding. On April 27, 1998, the trial court ruled in SWIDA's favor, fixed the value of the land at $900,000, and on April 30, 1998, conveyed it to SWIDA. On April 30, 1998, SWIDA conveyed the land to Gateway.

The controlling question in this case is whether SWIDA had constitutional authority to take NCE's land and convey it to Gateway for private profit. SWIDA argues that the issue is not the proper subject of an interlocutory appeal under Rule 307(a)(7). We disagree. Defendants are not questioning the constitutionality of SWIDA's eminent-domain authority. Rather, defendants challenge the constitutionality of SWIDA's conduct in this case.

NCE concedes that SWIDA has the authority to exercise the right of eminent domain and that NCE's property is subject to the exercise of such right. However, NCE insists that the acquisition of land by eminent-domain proceedings must be for a public purpose and that land may not be condemned for private use. See City of Chicago v. Barnes, 30 Ill. 2d 255, 257, 195 N.E.2d 629, 631 (1964). Moreover, in Illinois it is well settled that the courts have a right to render the final decision on whether land sought to be condemned is to be used for a public purpose or a private purpose. Zurn v. City of Chicago, 389 Ill. 114, 59 N.E.2d 18 (1945).

Eminent domain refers to the power of the state to take private property. E. Meidinger, The "Public Uses" of Eminent Domain: History & Policy, 11 Envtl. L. 1, 2 (1980). Every private owner of property holds her title subject to the lawful exercise of the sovereign power of eminent domain. Deerfield Park District v. Progress Development Corp., 22 Ill. 2d 132, 137, 174 N.E.2d 850, 853 (1961); City of Chicago v. Boulevard Bank National Ass'n, 293 Ill. App. 3d 767, 688 N.E.2d 844 (1997). Article I, section 15, of the 1970 Illinois Constitution and the fifth amendment to the United States Constitution prohibit the taking of private property for public use without just compensation. The federal guarantee that private property shall not be taken for public use without just compensation is applicable to the states through the fourteenth amendment. Chicago, Burlington & Quincy R.R. Co. v. City of Chicago, 166 U.S. 226, 233-34, 41 L. Ed. 2d 979, 983-84, 17 S. Ct. 581, 583-84 (1897).

In America, the first constitutions to use the words "public use" were those of Virginia and Pennsylvania in 1776. L. Berger, The Public Use Requirement in Eminent Domain, 57 Or. L. Rev. 203, 204 (1978). In the four decades following the adoption of the United States Constitution, there were two major kinds of activities for which the power to condemn was used: building roads and milldams. See P. Nichols, The Meaning of Public Use in the Law of Eminent Domain, 20 B.U.L. Rev. 617 (1940). Roads are clearly used by the public. States authorized the erection of dams for gristmills, although the dams flooded land, because, as the mills were required by law to grind the grain of all comers, they were regarded as public utilities. 20 B.U.L. Rev. at 619.

The uses of eminent domain expanded as the economy expanded. In the 1840s and 1850s, eminent domain was used to condemn property for the construction of railroads. The surge in industrial growth created a major drive to exploit western resources and open western markets. 11 Envtl. L. at 29. In the 20th century, the public-use clause has enabled governing bodies to further economic development, including the use of eminent domain to alleviate economic malaise. See People ex rel. City of Urbana v. Paley, 68 Ill. 2d 62, 368 N.E.2d 915 (1977); City of Chicago v. Barnes, 30 Ill. 2d 255, 195 N.E.2d 629 (1964).

Early on, the supreme court recognized that no specific formula exists for determining what is or is not a public use. In 1946, the supreme court stated in People ex rel. Tuohy v. City of Chicago, 394 Ill. 477, 481-82, 68 N.E.2d 761, 764 (1946), as follows: "While from time to time, the courts have attempted to define public use, there is much disagreement as to its meaning. ***

*** The purpose may be highly beneficial to the public as well as to private interests; and, on the other hand, the use put to land acquired by private interests by eminent domain may be highly beneficial to the public, without giving the latter any control over the property taken.

The problem is rendered more complex by development arising since the adoption of the constitution, such as needs for acquiring property for social, medical[,] or health purposes, as well as for the application of new inventions which may be adapted to public use. Uses for purposes not contemplated at the time may be, and frequently are, declared by the legislature to be public uses for which the power of eminent domain may be properly used."

In Tuohy, 394 Ill. 477, 68 N.E.2d 761, the supreme court upheld a city ordinance that approved the condemnation and sale of land for the redevelopment of blighted or slum areas. Although the court recognized that the city cannot go into the real estate business under the guise of relieving slum conditions, the court held that acquiring land for the purpose of demolition and private sale is a public use and not a private one. The court held that the use of the power of eminent domain was amply justified under the circumstances. Tuohy, 394 Ill. at 487, 68 N.E.2d at 766-67. In reaching its decision, Tuohy discussed the criteria to be used in determining a public use. These criteria were: (1) the use should affect a community as distinguished from an individual, (2) the law should control the use to be made of the property, (3) the title so taken should not be invested in a person or corporation as private property to be used and controlled as private property, and (4) the public should reap the benefit of public possession and use and no one should exercise control except the municipality. Tuohy, 394 Ill. at 485, 68 N.E.2d at 766; see Poole v. City of Kankakee, 406 Ill. 521, 94 N.E.2d 416, 419 (1950) (discussing Tuohy).

The supreme court, applying similar criteria, has upheld the exercise of eminent-domain power for many purposes: for off-street parking (Poole v. City of Kankakee, 406 Ill. 521, 94 N.E.2d 416 (1950)); for park purposes (Deerfield Park District v. Progress Development Corp., 26 Ill. 2d 296, 186 N.E.2d 360 (1962)); to clear a slum and blighted area for redevelopment by private enterprise (City of Chicago v. Paley, 68 Ill. 2d 62, 368 N.E.2d 915 (1977); City of Chicago v. Barnes, 30 Ill. 2d 255, 195 N.E.2d 629 (1964)); for the creation of a local service drive to provide access to freeways (Department of Public Works & Buildings v. Farina, 29 Ill. 2d 474, 194 N.E.2d 209 (1963)); and for an auto service station and restaurant to be located adjacent to a toll highway (Illinois State Toll Highway Comm'n v. Eden Cemetery Ass'n, 16 Ill. 2d 539, 158 N.E.2d 766 (1959)). In addition, a public use or purpose has been recognized in actions taking property for: school purposes (Scheller v. Trustees of Schools of Township 41 North, Range 12 East of the Third Principal Meridian, 67 Ill. App. 3d 857, 384 N.E.2d 971 (1978)); the construction and installation of a cable television system (Lake Louise Improvement Ass'n v. Multimedia Cablevision of Oak Lawn, Inc., 157 Ill. App. 3d 713, 510 N.E.2d 982 (1987)), and the preservation of the natural beauty of areas through which state highways are constructed (Department of Public Works & Buildings v. Keller, 22 Ill. App. 3d 54, 316 N.E.2d 794 (1974), aff'd, 61 Ill. 2d 320, 335 N.E.2d 443 (1975)).

As disparate as these purposes are, it should be noted that none of them involve the taking of property from one private party and the immediate transfer of it to another private party, whose interest in the property is solely to earn greater profits. It is clear that each of the listed takings served a public purpose, which is at the heart of Locke's principle that governments were instituted to protect every person's property against the ...

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