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City of Chicago v. Harris Trust and Savings Bank

February 11, 2004

THE CITY OF CHICAGO, A MUNICIPAL CORPORATION, PLAINTIFF-APPELLEE,
v.
HARRIS TRUST AND SAVINGS BANK, T/U/T 38310, PRUDENTIAL INSURANCE COMPANY OF AMERICA, A NEW JERSEY CORPORATION, AS MORTGAGEE, WALGREEN COMPANY; LASALLE NATIONAL BANK, SUCCESSOR TRUSTEE TO EXCHANGE NATIONAL BANK OF CHICAGO, T/U/T 22872, MIDWEST NEWSREEL THEATER, INC.; JUST CLASS, INC., LEONARD SEARCY, INDIVIDUALLY AND D/B/A POPEYE'S FAMOUS FRIED CHICKEN; AETNA LIFE INSURANCE COMPANY; WABASH RANDOLPH PARTNERSHIP; HELGA M. DOBBS, INDIVIDUALLY AND AS TRUSTEE OF GEORGE R. DOBBS, TRUST; MISERICORDIA HOME D/B/A HEART OF MERCY; AKTIEN VEREIN, DES ZOOLOGISHEN GARTENS, A FOREIGN CORPORATION, COLE TAYLOR BANK, T/U/T 38310, DEAN E. PARKER, MORT COOPER, LTD., AN ILLINOIS CORPORATION, COMMONWEALTH TRADING, INC., A DELAWARE CORPORATION, D/B/A HIT OR MISS; SUNG KIM, INDIVIDUALLY, AND D/B/A WIG FASHIONS OF CHICAGO; STATE-RANDOLPH CURRENCY EXCHANGE; DESMOND'S FORMAL WEAR, INC.; WORLD'S MONEY EXCHANGE, INC., DMS HAIR DESIGN, INC., MURPHY'S CAP AND GOWN COMPANY, PAMELA KEITH, D/B/A GLORIOUS HAIR; AND UNKNOWN OTHERS, DEFENDANTS
(WHITECO OUTDOOR ADVERTISING, A DIVISION OF WHITECO INDUSTRIES, INC., SUCCESSOR ASSIGNEE OF ALL-SIGN CORPORATION, ASSIGNEE OF DIAMOND VISION, INC., DEFENDANT-APPELLANT).



Appeal from the Circuit Court of Cook County. Honorable Alexander P. White, Judge Presiding.

The opinion of the court was delivered by: Presiding Justice Quinn

PUBLISHED

This appeal arises from a declaration and motion to abandon filed by plaintiff, City of Chicago (the City), seeking to abandon its taking of a leasehold interest in an outdoor billboard sign utilized by defendant, Whiteco Outdoor Advertising, now known as Lamar Advertising Company (Whiteco). *fn1 Whiteco sells space on its billboards to third parties in order to convey commercial and non-commercial advertisements to the public. The circuit court approved the declaration, granted the City's motion to abandon and ordered the City to pay the reasonable expenses incurred by Whiteco. Whiteco appeals. For the following reasons, we affirm.

BACKGROUND

On July 13, 1999, the City instituted condemnation proceedings to acquire property located at the northeast corner of Randolph and State Streets (subject premises) as part of the Central Loop Tax Increment Financing Redevelopment Project (the project). The subject premises consist of an improved, two-story and basement commercial building with an outdoor, roof-top advertising sign. The then-legal owner of the subject premises was Harris Trust and Savings Bank, as trustee under trust number 38310, the beneficiary of which is Helga M. Dobbs, individually and as trustee of the George R. Dobbs Trust (collectively,the owner). The owner leased to 11 tenants, including 10 retail spaces within the building and Whiteco, which utilized the outdoor advertising sign on the roof. All the tenants, except Whiteco and Walgreen Company (Walgreens), had leases that contained condemnation clauses.

On March 2, 2000, pursuant to an agreed partial judgment, the City agreed to pay the owner compensation in the amount of $7.9 million for all right, title and interest in the subject premises, with the exception of the leasehold interests of tenants Whiteco and Walgreens. Whiteco's lease expired on November 20, 2001, while Walgreens' lease terminates on October 31, 2009.

The lease under which Whiteco maintained its billboard originally was executed between the owner and Diamond Vision, Inc. (Diamond), for a term of seven years, from December 1, 1984, until November 30, 1991 (subject lease). The subject lease provided that the lessee, Diamond, had the right to erect and maintain advertising signs and further stated that such signs were to remain the personal property of the lessee and were to be removed by the lessee upon termination of the lease. In addition, the subject lease stated that the lessor had the right to terminate the lease "to demolish or add to the Building by the erection of an additional floor or floors above the existing roof level," provided that the lessee is given 365 days' notice.

On June 8, 1988, Diamond assigned the subject lease and conveyed the billboard to All-Sign Corporation (All-Sign). All-Sign entered into an agreement with the owner on August 23, 1988, extending the termination date of the subject lease to November 30, 1996. In March 1995, the owner and All-Sign executed a lease amendment and extension agreement to extend the termination date to November 30, 2001. The lease amendment provided, inter alia, that the lessee was required to remove its trade fixtures within seven days prior to the expiration of the lease.

On April 16, 1996, Whiteco paid All-Sign $225,000 for the assignment of the subject lease and conveyance of the billboard.

Thereafter, on February 7, 1999, the city council (the Council) adopted an ordinance approving the project and defining the project area, which included the subject premises. On May 1, 2000, the City deposited $7.9 million into the Cook County treasury pursuant to the March 2, 2000, agreed partial judgment. On August 30, 2000, the Council enacted the ordinance, which authorized acquisition of all interests in the subject premises on or before October 15, 2000.

On October 12, 2000, in order to facilitate the existing schedule of the project, the City sought to acquire Walgreens' and Whiteco's leasehold interests by a quick-take proceeding, pursuant to section 7-103 (735 ILCS 5/7-103 (West 2002)) of the Code of Civil Procedure (Code). Following a hearing, the circuit court determined the preliminary just compensation for Whiteco's leasehold interest totaled $92,400 and ordered the City to deposit that sum with the Cook County treasurer. The City deposited the funds with the treasurer on February 6, 2001.

On February 15, 2001, the circuit court entered an order vesting title to Whiteco's leasehold interests in the City and requiring that Whiteco vacate the subject premises and tender possession to the City on or before June 15, 2001. The court entered a similar order with respect to Walgreens after determining the preliminary just compensation for Walgreens' leasehold and ordering the City to deposit that sum with the Cook County treasurer.

On April 6, 2001, Whiteco filed a petition for withdrawal of award of preliminary just compensation to obtain the $92,400 deposited with the Cook County treasurer. The City then moved to abandon its taking of Whiteco's leasehold interest on April 10, 2001, arguing that a condemnor may abandon a taking at any time until it has taken both title and possession of the property to be acquired. The City explained in its motion that the redevelopment project for which the City required title and possession of the subject leasehold had experienced a significant delay, thereby permitting continued possession by Walgreens and Whiteco of their leasehold premises beyond June 15, 2001, and beyond the November 30, 2001, termination date of Whiteco's lease. The City sought the return of the $92,400 preliminary just compensation it had deposited with the Cook County treasurer and asked the circuit court to determine the reasonable attorney fees, costs and expenses incurred by Whiteco in defending the condemnation proceeding. Whiteco objected to the abandonment, asserting the City is not authorized to abandon after it had acquired title of Whiteco's leasehold.

On May 21, 2002, the circuit court conducted an evidentiary hearing on the economic impact of the taking upon Whiteco. Both parties presented evidence regarding the value of Whiteco's leasehold interest. Rodolfo Aguilar, a real estate appraiser, testified on behalf of Whiteco that the fair market cash value of the billboard is $753,000. Aguilar's opinion was unclear with respect to whether he based his findings on the assumption that Whiteco's lease would have been extended indefinitely. Fred R. Tadrowski, a real estate appraiser, testified on behalf of the City that the value of the billboard on the date of the taking was $92,400 and that the depreciated value of the billboard on the subject lease's termination date was $31,600.

On May 29, 2002, the parties stipulated that Whiteco could continue its possession of the leasehold premises under the terms of the subject lease pending 30 days' written notice of termination by either party. The parties further agreed that the stipulation could not be considered as evidence in connection with the existing dispute between the parties relative to the propriety of the City's abandonment of its acquisition of the leasehold, or its valuation. On September 19, 2002, the circuit court entered a memorandum decision and judgment, which included numerous findings regarding the City's motion to abandon. With respect to the issue of whether the City took possession of Whiteco's leasehold interest, the court found that the City "did not take possession of the leasehold interest when it condemned the fee. The Order Vesting Title reserved transfer of possession to June 15, 2001. The City abandoned the acquisition of [Whiteco's] interest on April 10, 2001, prior to the June 15, 2001 transfer date." Although the court agreed that the billboard is a trade fixture, it disagreed that the City had taken possession. The court noted that Whiteco presently has possession and control of the billboard and the advertisements of its clients, which have appeared without interruption. According to the court, under the express terms of the subject lease, Whiteco has the right and obligation to remove the billboard at its own expense when the lease terminates, but that right and obligation did not vest until termination of the lease. The court noted that payment of rent to the management company designated by the City and use of the billboard with advertising provided by a Whiteco client are evidence that the subject lease was not terminated.

In addition, the circuit court ruled that the City had the authority to abandon the taking of Whiteco's leasehold after it ...


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