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Department of Transportation v. Drury Displays

February 07, 2002

THE DEPARTMENT OF TRANSPORTATION, PLAINTIFF-APPELLANT AND CROSS-APPELLEE,
v.
DRURY DISPLAYS, INC., DEFENDANT-APPELLEE AND CROSS-APPELLANT, AND NATIONAL ADVERTISING COMPANY, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of St. Clair County. No. 94-ED-20 Honorable James M. Radcliffe III, Judge, presiding.

The opinion of the court was delivered by: Justice Welch

PUBLISHED

This case involves the extent of a taking in condemnation and the nature of compensation. The ultimate issue on appeal is whether the plaintiff, the Illinois Department of Transportation (the Department), an agency of the State, took the defendants' outdoor advertising signs in addition to the defendants' leasehold interests, to be used in a road construction project. The Department argues that it only condemned the defendants' leasehold interests. The defendants argue that their signs were also taken. A St. Clair County jury awarded defendant Drury Displays, Inc. (Drury), damages of $80,730 and defendant National Advertising Company (National) damages of $146,640. On March 17, 1999, the circuit court entered judgments on the verdicts. The Department appeals from the judgments, and Drury cross-appeals. For the following reasons, we affirm the judgments and deny the cross-appeal.

BACKGROUND

On July 13, 1994, CSX Transportation, Inc. (CSX), a railroad and the landowner, in exchange for $49,180, executed a quitclaim deed conveying approximately 4.2 of its 60 acres to the Department for highway construction. The Department acquired the property as a part of a project to construct two new right-hand exit lanes off westbound Interstate 55/70/64 onto the Illinois end of the Martin Luther King Bridge. On the subject property, Drury had leased space for a single billboard, and National had leased space for two billboards. *fn1 On August 31, 1994, the Department filed its complaint seeking to condemn Drury's and National's leasehold interests in the property. CSX was named but later was dismissed as a party.

The April 17, 1991, lease between CSX *fn2 and Drury allowed Drury to erect and maintain a sign on the property. The November 15, 1990, and November 15, 1993, leases between CSX and National permitted National to erect and maintain signs on the property. All the leases were terminable by either party upon 60 days' written notice.

According to the Drury lease, Drury was to pay CSX $19,000 per year or 25% of its gross advertising revenue, whichever was greater. The lease provided that any billboard erected on the property by Drury would remain Drury's property upon the termination of the lease. The lease also provided that if Drury failed or refused to remove its billboard within 30 days after the termination of the agreement, then the billboard would become CSX's or CSX could remove the billboard and bill Drury for the costs of the removal. Neither party could assign the lease without the written approval of the other.

According to the November 15, 1993, National lease, National was to pay CSX $8,400 per year or 25% of its gross advertising revenue, whichever was greater. The remaining terms were virtually identical to the Drury lease.

According to the November 15, 1990, National lease, National was to pay CSX $8,000 per year or 25% of its gross advertising revenue, whichever was greater. The remaining terms were similar to the Drury lease, except that CSX could assign its interest without National's consent. However, National could not assign its interest without CSX's consent.

We pause to note that the Department did not exercise any rights it might have possessed, as a successor in interest to CSX, against Drury or National. Instead, in the circuit court it filed a condemnation complaint to terminate the defendants' interests. Given this turn of events, we point out that the rights between condemnor and condemnee are different from the rights between landlord and tenant.

At the trial, evidence placed all three billboards quite close to the interstate roadway, making them highly visible prior to the construction of the new ramp. Traffic counts were very high and may have exceeded 120,000 cars per day. These outdoor advertising structures could not be disassembled and removed without damaging the integrity of the structures, and such structures could not be economically relocated.

Although there were 60-day-termination provisions in the leases, railroads rarely exercised such provisions, according to the testimony. Exercising such provisions would stop the income stream from the tenant billboard company on the land that the railroad had rented because it was not being used. The short-term nature of the termination provision, common in the outdoor-advertising industry, permitted railroads to lease without board-of-director approval.

The provision in each lease permitting the billboard to remain the property of the billboard company and permitting its removal by the billboard company upon the termination of the lease was present so that the railroad-lessor would not terminate the lease, acquire the billboard, and thereby become a competitor in the outdoor-advertising industry.

Neither Drury nor National possessed deeds for the real property, acquired title insurance, or paid real property taxes for the billboards. On the other hand, these billboards were made of steel, were attached to the real property in approximately 20 feet of concrete, and would last "forever" if regularly maintained. Billboards, in general, are custom-built in ...


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