Union Trust Co. v. Bd. of Educ. of City of Chicago

• Decision Date: 23 April 1932
• Docket Number: Nos. 20779-20786,20836.,s. 20779-20786
• Citation: 348 Ill. 256,180 N.E. 819
• Parties: UNION TRUST CO. et al. v. BOARD OF EDUCATION OF CITY OF CHICAGO.
• Court: Illinois Supreme Court

348 Ill. 256

180 N.E. 819

UNION TRUST CO. et al.

v.BOARD OF EDUCATION OF CITY OF CHICAGO.

Nos. 20779-20786, 20836.

Supreme Court of Illinois.

April 23, 1932.

Suit by the Union Trust Company and others against the Board of Education of the City of Chicago. Decree for defendant, and complainants appeal.

Affirmed in part and reversed in part and remanded, with directions.Appeals from Superior Court, Cook County; Denis E. Sullivan, judge.

Shannon & Morrill, Schuyler, Dunbar & Weinfeld, Winston, Strawn & Shaw, Sonnenschein, Berkson, Lautmann, Levinson & Morse Ryan, Condon & Livingston, and Butler, Pope, Ballard & Elting, all of Chicago (Angus Roy Shannon, W. C. Graves, Duane T. McNabb, Irvin I. Livingston, Allan J. Carter, and Isaac E. Ferguson, all of Chicago, of counsel), for appellants.

Thomas V. Sullivan and Frank S. Righeimer, both of Chicago (Edward R. Johnston, of Chicago, of counsel), for appellee.

ORR, J.

Nine cases have been consolidated in this appeal, all being actions in equity to enjoin the board of education of the city of Chicago from enforcing the 1925 appraisement of school land, on the ground that the appraisals were not made in accordance with the terms of the original and supplemental leases. Substantially the same allegations are contained in each of the nine bills of complaint, and the answers filed to each by appellee were in substance the same. Seven of these appeals involve leaseholds in the block bounded by State, Madison, Dearborn, and Monroe streets, in the heart of Chicago's main retail business district; another involves a lot on Jackson boulevard, across the street (south) from the Union Station; and another involves a number of lots on the east side of Halsted street between Madison and Monroe streets. Appellants are the lessees, or assignees of lessess, and under leases originally made in 1880, each for a term of fifty years. All the leases and supplemental leases are identical in form. The leases of 1880 provided that for the purpose of ascertaining the rent to be paid an appraisement should be made each five years, beginning May 8, 1885, by three appraisers to be appointed by the board of education. These appraisers were to determine the true cash value of the premises at the time of such appraisal, not taking into consideration the improvements thereon. The appraisals of 1885 were not satisfactory to the lessees, who filed a bill in the superior court of Cook county to enjoin their enforcement. After litigation lasting some years a compromise was effected which resulted in the execution of the supplemental leases of 1888. By these supplemental leases the revaluation period was changed from five to ten years, and the time when the leases were to expire was extended ninety-seven years, to May 8, 1985. All leases and supplemental leases are identical in form. As a result of these supplemental leases of 1888 appraisals were made in 1895, 1905, 1915, and 1925. Drastic advances in rentals were required by the 1925 appraisals. For instance, lots 9, 10, and 11 in block 142 on which is situated the McVicker Theater building, were increased in value from $1,100,226.24 in 1915 to $2,330,720 in 1925. The rentals were fixed at 6 per cent. of the land values, and this increase had the effect on the property described of raising the annual rent from $60,073.57 to $122,023.20 per year. Objections were filed to the report of the appraisers in 1925 and each of the lessees tendered rent due on the basis of the 1915 appraisal, claiming that in default of a valid 1925 appraisal the rent due for the ensuing period remained unchanged. These tenders were refused by the board of education, and notices of forfeiture in case of nonpayment of the rent, together with demand for 25 per cent. penalty, were served on appellants. On July 27, 1925, the bills of complaint in these cases were filed in the superior court of Cook county, and preliminary injunctions were granted restraining the board of education from attempting to collect any greater sum as rent for the several leaseholds than the quarterly rent due under the 1915 appraisal, and providing further that none of the rights of any of the parties would in any manner be waived or prejudiced either by the payment or acceptance of rent at the 1915 rate during the pendency of these cases. The nine cases were heard together by a master in chancery, who recommended that a decree be entered upholding the validity of the 1925 appraisal but without enforcing the 25 per cent. penalty of additional rent or the cancellation or forfeiture of the leases. Objections were filed to the master's report, which stood as exceptions before the chancellor. These exceptions were overruled and decrees were entered by the court in conformity with the master's conclusions and recommendations. It was from these decrees that the present appeals were taken.

[1] In behalf of the appellant lessees it is first urged that the 1925 appraisal is void because Paul Steinbrecher, one of the three appraisers, was appointed by three judges holding the District Court of the United States for the Northern District of Illinois for the time being and not by ‘any judge holding the Circuit Court of the United States' for such district. The fourth provision of the supplemental lease of 1888 provided the method of appointing appraisers, as follows: ‘The board of education of the city of Chicago, any judge holding the Circuit Court of the United States in and for the Northern District of Illinois for the time being, and the judge of the probate court of Cook county, Illinois, or the successor of said court having probate jurisdiction, for the time being, shall each appoint one discreet male resident of the city of Chicago not interested as lessee or mortgagee of school property in said city, to determine, under oath first duly taken, the true cash value of said demised land at the time of such appraisal, exclusive of the improvements thereon.’ Twenty-three years after these supplemental leases of 1888 were made, Circuit Courts of the United States were abolished by an Act of Congress of March 3, 1911 (Judicial Code, c. 13, §§ 289-291, 36 Stat. 1167, 28 USCA § 431 note). By section 291 of this act the powers and duties of the Circuit Courts were conferred upon District Courts in the following language: ‘Wherever, in any law not embraced within this Act, any reference is made to, or any power or duty is conferred or imposed upon, the circuit courts, such reference shall, upon the taking effect of this Act, be deemed and held to refer to, and to confer such power and impose such duty upon, the district courts.’ The Act of Congress March 3, 1911, did not abolish the jurisdiction or restrict the powers formerly existing in the Circuit Courts. It merely conferred the powers, jurisdiction, and functions of that court upon the District Court. As stated by the Supreme Court of the United States in the case of Ex parte United States, 226 U. S. 420, 423, 33 S. Ct. 170, 172, 57 L. Ed. 281: ‘It is also undoubted that by that act the district courts provided for were made the successors of both the circuit and district courts which had theretofore existed, and were in a general sense endowed with the jurisdiction and power theretofore vested in such prior courts.’

In the case of Nashville Interurban Railway v. Barnum, 212 F. 634, 638, the Circuit Court of Appeals for the Second Circuit gave this same interpretation to the act. There the court was called upon to consider the effect of a trial in the District Court of the United States where a jury was waived after the effective date of sections 289-291 of the Judicial Code. The District Courts originally had no jurisdictionof such cases. The Circuit Courts had such jurisdiction, and the Circuit Court of Appeals held that these enlarged powers passed to the District Court, in the following language: ‘Although in form the Judicial Code abolished the Circuit Courts and turned their business over to the District Courts, it seems to us that what Congress intended was a merger of the Circuit Courts into the District Courts, and that in transferring to the District Courts the business of the Circuit Courts, there was given to to the District Courts, under the section of the Judicial Code above quoted, all the machinery for disposing of its business which the Circuit Courts possessed. We are unable to understand that section in any other way. It is also illuminative of this intent that Congress did not repeal the particular section which provided for trial by the Circuit Courts under written stipulation. If the intention had been that thereafter all cases tried in the District Courts, whether original or transferred, should be tried only under the old District Court system, the section became obsolete and was without any reason for its retention. We are therefore forced to the conclusion that the present case must be treated by us precisely as it would have been treated had the trial taken place in the old Circuit Court under the practice which Congress had once approved for that court and which it has never disapproved.’

It will thus be seen that after January 1, 1912, when the act creating the District Court became effective, a federal court was in existence which possessed all of the jurisdiction and powers of the Circuit Court, with such added powers as were formerly exercised by the District Court alone. The only differences after January 1, 1912, were, that the name of the court was changed from ‘circuit’ to ‘district’ and its powers enlarged. The reference in the supplemental leases to the appointment of one of the three appraisers by ‘any judge holding the Circuit Court of the United States for the Northern District of Illinois for the time being’ was only for the purpose of identifying the individuals who were to be the donees of the appointive power. The change in the name of the court and in its powers is not a material change so far as the...