Illinois Cities Water Co. v. City of Mt. Vernon

• Decision Date: 23 May 1957
• Docket Number: No. 34289,34289
• Citation: 144 N.E.2d 729,11 Ill.2d 547,68 A.L.R.2d 384
• Parties: , 68 A.L.R.2d 384 ILLINOIS CITIES WATER COMPANY, Appellee, v. The CITY OF MT. VERNON et al., Appellants.
• Court: Illinois Supreme Court

Page 729

144 N.E.2d 729

11 Ill.2d 547, 68 A.L.R.2d 384

ILLINOIS CITIES WATER COMPANY, Appellee, v. The CITY OF MT. VERNON et al., Appellants.

No. 34289.

Supreme Court of Illinois.

May 23, 1957.

As Modified on Denial of Rehearing Sept. 16, 1957.

August L. Fowler, Marion and Alvin Lacy Williams, Mt. Vernon, for appellants.

John A. Kirk and Hill & Dolan, Mt. Vernon (W. Joe Hill, Mt. Vernon, of counsel), for appellee.

DAILY, Justice.

Appellants, who are the city of Mt. Vernon and certain of its officers, here appeal from a decree of the circuit court of Jefferson County granting injunctive relief of appellee, Illinois Cities Water Company, an Illinois corporation, which owns the waterworks system serving the city.

On August 1, 1955, while the parties were involved in litigation before the Illinois Commerce Commission concerning proposed rate increases, the Mt. Vernon city council passed an ordinance which authorized condemnation proceedings to acquire the Mr. Vernon water properties of appellee, and some two weeks later a petition for condemnation was filed in the circuit court of Jefferson County. Appellee moved for dismissal of the petition on the grounds that the eminent domain statute provides no suitable method for the valuation of a waterworks company, that the city had failed to fulfill all necessary statutory requirements before proceeding by condemnation, and that for the court to assume jurisdiction would violate the due-process and eminent domain provisions of the Illinois constitution. Before this motion was ever acted upon, however, appellee filed the present suit in the same court against the city, its mayor and councilmen, to enjoin the further prosecution of the condemnation action for reasons similar to those advanced in its motion to dismiss. After a hearing the court entered a decree that the condemnation action violated the constitutional rights of appellee and enjoined appellants from prosecuting any suit to condemn the waterworks system. This appeal by the city has followed.

Appellee is a public utility engaged in the business of supplying water to residents of the community under a 30-year franchise granted in 1942 by the city of Mt. Vernon and a certificate of convenience and necessity issued by the Illinois Commerce Commission. In addition it operates waterworks systems in four other southern Illinois communities under similar authority. Its Mt. Vernon system is comprised of some 5600 industrial and domestic customers; approximately 4700 are residents of the city itself and the remaining 900 live outside the corporate limits. At the time the condemnation action was filed, appellee's total assets were worth between $4,000,000 and $8,000,000; the Mt. Vernon system was valued at $2,000,000 to $4,000,000; about 85 per cent of the property sought to be condemned consisted of tangible and intangible personal property including trucks, tools, office furniture, and maintenance equipment; and the Mt. Vernon property was encumbered by a mortgage to the City National Bank and Trust Company of Chicago which required all condemnation proceeds to be used to immediately reduce the outstanding indebtedness in such a manner that bondholders would gain, and appellee lose, a premium ranging from 3 to 6 per cent. In support of its claim for injunctive relief appellee points out that the value of condemned property is fixed as of the date the condemnation petition is filed, but that being a public utility it is required by the Illinois Commerce Commission to expend thousands of dollars for extending and improving its service subsequent to said filing date. From this appellee argues that although the Revised Cities and Villages Act (Ill.Rev.Stat.1955, chap. 24, pars. 1-1 to 87-5), provides for condemnation of a waterworks by a municipality, it furnishes no means by which this 'after-acquired property' may be valued; that the statutory authority thus remains dormant until such time as it is implemented by additional legislation; and that any proceedings based thereon before the enactment of such additional authority constitute a taking of private property without due process of law. Appellee also contends the city has made no provision to finance the purchase of said waterworks and that great expense would result from the defense of such litigation. On the other hand, the appellants argue that the Eminent Domain Act (Ill.Rev.Stat.1955, chap. 47), provides an orderly and constitutional procedure by which a waterworks may be taken for public use and that injunctive relief was unwarranted in the instant case.

In order to determine the propriety of the present injunction, we must first examine the provisions of the statute involved. Section 1 of he Eminent Domain Act (Ill.Rev.Stat.1955, chap. 47, par. 1), provides that no private property shall be taken or damaged for public use without just compensation, and with the exception of actions brought by the State, the amount of compensation must be ascertained by a jury. Although the taking of property under the right of eminent Domain is in derogation of individual rights and must be strictly construed (Illinois Central Railroad Co. v. City of Chicago, 138 Ill. 453, 28 N.E. 740,) it encompasses property of every kind and character, whether real, personal, tangible, or intangible. South Park Commissioners v. Montgomery Ward & Co., 248 Ill. 299, 93 N.E. 910; City of Edwardsville v. County of Madison, 251 Ill. 265, 96 N.E 238, 37 L.R.A.,N.S., 101; Leonard v. Autocar Sales & Service Co., 392 Ill. 182, 64 N.E.2d 477, 163 A.L.R. 670; Department of Public Works & Bldgs. v. Kirkendall, 415 Ill. 214, 112 N.E.2d 611; United States v. 19.86 Acres of Land in East St. Louis, 7 Cir., 141 F.2d 344. The general rule is that just compensation must be measured by the property's fair cash market value for its highest and best use at the time the condemnation petition is filed; (Braun v. Metropplitan West Side Elevated Railroad Co., 166 Ill. 434, 46 N.E. 974; City of Chicago v. Collin, 302 Ill. 270, 134 N.E. 751; Chicago & State Line Railway Co. v. Mines, 221 Ill. 448, 77 N.E. 898; South Park Commissioners v. Dunlevy, 91 Ill. 49;) and this rule in most instances provides a yardstick by which fair compensation may be awarded without penalizing the comdemning authority for the inflated prices which usually attend such a project. Sanitary District of Chicago v. Chapin, 226 Ill. 499, 80 N.E. 1017; City of Chicago v. Farwell, 286 Ill. 415, 121 N.E. 795. The whole purpose of the condemnation proceeding is to satisfy the constitutional and statutory requirements that property not be taken without due process of law and that just compensation be awarded therefor. Const. of 1870, art. II, secs. 2 and 13, S.H.A.; United States v. Jones, 109 U.S. 513, 3 S.Ct. 346, 27 L.Ed. 1015; Backus v. Fort Street Union Depot Co., 169 U.S. 557, 18 S.Ct. 44, 42 L.Ed. 853. As long as rules of law meet these constitutional tests they are of value and should be sustained, but this does not mean they are without exception. In commenting upon the valuation rule in Metropolitan West Side Elevated Railroad Co. v. Siegel, 161 Ill. 638, at page 647, 4 N.E. 27, at page 28 the court said: 'This court and many others have often said that the measure of damages is the market value of the property condemned, and that in arriving at such value it is competent to prove any use, the highest and best use, for which it is adapted; and this is undoubtedly the general rule, but this court has never held that the rule is without exception, and that cases may not arise where a proper observance of the constitutional provision that private property shall not be taken or damaged for public use without just compensation may not require the payment of damages actually sustained, other than those measured by the value of property taken.' In that case the court allowed the cost of removing machinery from the premises as a proper element of damage. In Braun v. Metropolitan West Side Elevated Railroad Co., 166 Ill. 434, 46 N.E. 974, the court in commenting upon its earlier decision stated that in exceptional cases matters not ordinarily included in arriving at just compensation may be considered so as to aid the jury and the court in determining the fair cash value of the property, in view of its present use. Sanitary District of Chicago v. Chapin, 226 Ill. 499, 80 N.E. 1017, is another instance in which the court refused to follow the general rule where injustice would result from its application.

We believe the present situation is exceptional and that the value of all waterworks property, including that necessarily added subsequent to the date the condemnation petition is filed, may be determined in an eminent domain proceeding. Here we are not dealing solely with real estate which may be accurately described and inventoried at the time the petition is filed but largely with machinery, trucks, supplies, equipment, and other personal property, the number and description of which will change until such time as the transfer of ownership is accomplished. We must consider too that in order to comply with its certificate of convenience and necessity, appellee must constantly extend its service to those who need it. Because of these circumstances the ordinary rules of valuation must also change so as to put the appellee in as good a financial condition after the transfer as it was before. Nothing short of such an amount conforms to the constitutional requirement of just compensation. City of Chicago v. Koff, 341 Ill....