City of Chicago v. Farwell

Mr. Justice Cartwright

delivered the opinion of the court :

The city of Chicago provided by ordinance for an improvement consisting of a thoroughfare with two levels extending north from East Randolph street along Michigan avenue over the Chicago river and thence north to the center line of East Chicago avenue, which is fully described in City of Chicago v. Farwell, 284 Ill. 491. The appellant, James S. Kirk & Co., owned about an acre and a half of ground of irregular shape adjoining the Chicago river on the north and it was necessary to acquire for the improvement about three-tenths of the tract on the west side. The whole of the land was improved with buildings and machinery for the manufacture of soap, and upon a jury trial there was a verdict fixing the compensation tó be paid for the portion taken at $433,096, on which judgment was entered. The record has been brought to this court by appeal.

The trial occupied thirteen weeks, making a record of nearly 1000 pages, and the briefs and arguments in this court cover about 400 pages. In the brief for the appellant the points relied upon for reversal are stated under seventeen headings, but the argument which follows in their support does not regard the points, either in their order or in form. In the brief for the appellee the points are stated under twenty headings and they are not followed in the argument. The court is better able to understand and consider the questions involved in the review of a record where there is a systematic arrangement of points and arguments, but in this case the questions involved are neither numerous nor complex, and it will be the endeavor of the court not to omit or overlook anything material to a decision.

The appellant offered to prove that the buildings on the property had advanced in market value $150,000 and the machinery $300,000 after the proceeding was begun, and insisted that the compensation was to be fixed as of the time of the trial. The court refused to adopt that view of the law and the evidence was not admitted. The constitution provides that private property shall not be taken or damaged for public use without just compensation, and it is always held that the compensation is to be determined as of the time of the taking. There is a diversity of rule in different jurisdictions as to the time when a taking for public use occurs, but in this State that question has passed beyond the stage of discussion and has become a fixed rule, which is, that the compensation is to be determined as of the date of filing the petition and not at the time of the trial. (South Park Comrs. v. Dunlevy, 91 Ill. 49; Dupuis v. Chicago and North Wisconsin Railway Co. 115 id. 97; Chicago, Evanston and Lake Superior Railroad Co. v. Catholic Bishop of Chicago, 119 id. 525; Lieberman v. Chicago and South Side Rapid Transit Railroad Co. 141 id. 140; Chicago and State Line Railway Co. v. Mines, 221 id. 448.) The rule so established was undisturbed by the decision in Sanitary District v. Chapin, 226 Ill. 499, but was there re-asserted, and the petition was dismissed for the simple reason that the settled rule is that compensation is to be fixed at the time of filing the petition. The sanitary district had filed a petition to condemn land and had made no attempt to prosecute the suit for more than four years and three months. There was a motion to dismiss the petition for want of prosecution, and the court was sustained in dismissing it for want of due diligence and the necessary unjust result. The rule adopted and enforced is not only in accordance with the one generally recognized but is the only feasible and practicable rule. Property may decrease in market value after a petition is filed, as in the Dunlevy case, or the projected improvement may cause a great enhancement of market values from general benefits affecting an entire community or a large portion of it, for which the public could not in justice be required to pay. The original petition of the city was filed on March 14, 1914, and the commissioners appointed by the court filed their report on July 15, 1915, and the separate trial as to this property began on October 2, 1917. The court adopted the time of filing the commissioners’ report as the date for fixing the compensation, and this was right, since section 18 of the Local Improvement act provides that the return and filing the report shall be deemed an application by the petitioner for judgment of condemnation of the property to be taken or damaged and for a confirmation of the assessment of benefits. By that statute the application for condemnation begins when the petitioner files the report of the commissioners.

The report awarded compensation and damages as to fifty-one pieces of property. Summons was issued the day the report was filed. Trial on legal objections occupied the court until January 19, 1917. Trials on awards and assessments began February 6, 1917, and there was no delay chargeable to any party. If it should be held that the constitution requires the compensation to be fixed when the money is paid and possession taken another trial would be necessary, since part of the money must come from special assessments, and payment could not have been made at the time of the trial.

The appellant called Walter H. McDonald, one of the commissioners who made the report, and proposed to examine him as to what elements of value he put in his award, and upon what basis it was made, and the court refused to allow the examination, which was correct. (Wright v. City of Chicago, 48 Ill. 285; Quick v. Village of River Forest, 130 id. 323; Washington Park Club v. City of Chicago, 219 id. 323; City of Belleville v. Mitchell, 273 id. 136.) The argument that a commissioner, like a juror, may be called to sustain what he has done does not apply here, since the manifest and only purpose was to impeach the report, which the appellant claimed did not award sufficient compensation.

The court fixed the market value of the property to be taken as the measure of compensation, and appellant contends that the question whether the property had a market value was one of fact, which' should have been submitted to the jury. The law is that market value is the measure of compensation. (Haslam v. Galena and Southern Wisconsin Railroad Co. 64 Ill. 353; Jacksonville and Southeastern Railway Co. v. Walsh, 106 id. 253; Chicago and Evanston Railroad Co. v. Jacobs, 110 id. 414; Kiernan v. Chicago, Santa Fe and California Railway Co. 123 id. 188 Chicago, Peoria and St. Louis Railway Co. v. Greiney, 137 id. 628.) What constitutes market value is a question of law, and is the price which the owner, if desirous of selling, would under ordinary circumstances surrounding the sales of property have sold the property for and what a person desirous of purchasing, but not compelled to purchase, would have paid for it. (Ligare v. Chicago, Madison and Northern Railroad Co. 166 Ill. 249.) There are a few exceptional cases in which market value cannot be the legal standard because the property is of such nature and applied to such special use that it cannot have a market value, such as a church, college, cemetery, club house or terminal of a railroad. (Lake Shore and Michigan Southern Railway Co. v. Chicago and Western Indiana Railroad Co. 100 Ill. 21; Chicago and Northwestern Railway Co. v. Chicago and Evanston Railroad Co. 112 id. 589; Sanitary District v. Pittsburgh, Ft. Wayne and Chicago Railway Co. 216 id. 575.) As to such property the law permits a resort to any evidence available to prove value, such as the amount of business done or the use made of the property, and the like. There was no evidence tending in any degree to bring the property of appellant within any exception so recognized. The development of an industry from the housewife’s ash-leach and soap-kettle in the back yard to the great soap factory, or from the smokehouse and annual butchering to the immense plant of the packer, or from the vinegar barrel to the factory, does not change the nature of things, and there is nothing about making soap which renders the business peculiar or different from any establishment where a household necessity is made. It requires no franchise to make soap, and a factory making large quantities of soap and established forty years is not different in its nature from a small one established yesterday. There being no evidence offered or available to bring the soap factory within an exception to the established rule of law, the court did not err in the holding.

The principal and substantial complaint is that the appellant did not receive just compensation for the property taken, and appellant’s counsel say that by its evidence the whole plant was worth, as a living plant, $2,315,961, and, excluding enhancement of value by the improvement of what will be left, it will be worth no more than $750,200, entailing a loss of $1,565,761; and, even applying the enhancement in value of the remainder by the improvement, the net loss would be $1,481,247.54, while the verdict is for only $433,096. This difference arises not so much from divergent opinions of witnesses concerning values as to a difference concerning what was taken for the public use and to be compensated for in money. The constitution requires that the owner of property taken for public use shall be compensated by substituting for the property an equivalent in cash, so that he will be as well off afterwards as before. (Phillips v. Town of Scales Mound, 195 Ill. 353.) This was conceded at the trial and is now conceded, and it is also admitted that in determining the value of the part taken it was to be treated and regarded as a part of the whole of the plant and its value estimated on that basis. The part not taken would be enhanced in value by the improvement, and the single question was what would be just compensation for the part taken for the public use. On that question, cases where compensation for land taken is awarded and injuries, inconvenience and damage will result in the use of the remainder, for business or otherwise, and a gross sum is allowed for both, are of little assistance, and rather tend to confuse issues which under the law must be kept separate and distinct.

The case of Jeffery v. Osborne, 145 Wis. 351, relied upon and quoted from by counsel for appellant, illustrates the want of application of those cases to the case in hand and their tendency to confuse different questions. The statute of Wisconsin authorizes an award in a single sum of the value of land taken and damages sustained by the owner by reason of the talcing. An electric railroad company filed its petition to condemn a strip 100 feet wide through the automobile plant of Thomas B. Jeffery at Kenosha, and there was a judgment for $125,000, which was reversed by the Supreme Court. (Jeffery v. Chicago and Milwaukee Electric Railroad Co. 138 Wis. 1.) On a second trial there was a judgment for $133,000, and on the second appeal the judgment was affirmed. One of the elements of damage claimed was inability to procure land for expansion of the plant, and the court refused to admit the tender of an option for adjoining land for that purpose. Witnesses were examined and questions submitted to the jury to determine the value of the land taken, considered as an integral part of the entire plant, and in what amount, if any, the market value of the real estate not taken was damaged by taking the strip. The Supreme Court decided that the exclusion of the option was right, but the examination of the witnesses and the questions to the jury above stated inevitably duplicated damages. On the second appeal the Supreme Court held the first decision (as to the option for expansion of the works by the expenditure of a comparatively insignificant sum of money) wrong, but said that the former opinion was conclusive so far as that particular case was concerned. As to the award of compensation the court said: “Since a very early day in this State it has been very well settled that in awarding damages for the taking of lands for railroad or highway purposes the strip taken is to be valued as part and parcel of the entire tract of which it formed a part; that the land owner is entitled to recover the difference between the fair market value of the whole property before the taking and the value of what remains after the taking.” Witnesses from Racine who knew nothing about the value of lands at Kenosha were permitted to testify as experts, and the Supreme Court justified the ruling and said that if the question at issue had been the question of the value of the strip as mere land the witnesses would not have been qualified; but that was not the question, and there being practically no dispute as to the value of the strip as mere land and the witnesses being experts in the manufacturing business, they were qualified to testify on the question of the value of the manufacturing property before and after the strip was taken. It was in determining the qualification of the witnesses, as experts, to give opinions on the value of the whole plant before and after the strip was taken that the court said the question was as to the value of the strip as part of the manufacturing plant conducted by the plaintiff, and that was the question upon which the witnesses testified.

The difference which developed on the trial in the case at bar was whether just compensation included what was called “efficiency” value of the plant from its capacity for earning profits as a soap manufactory. The witnesses for the appellant were intelligent, experienced and capable of giving an opinion as to what they called “going” value or “efficiency,” and one of them testified that such value was $360,000 and another that it was $500,000, based on the fact that an established business was carried on there and the amount of soap produced in a year and the expense of producing the soap. This value would be included in just ..compensation if the city were taking the business or depriving appellant of it, but the law is fixed in this State that whenever property has a market value, evidence of profits derived from it is not admissible nor a basis for fixing compensation. (Jacksonville and Southeastern Railway Co. v. Walsh, supra; Braun v. Metropolitan West Side Elevated Railroad Co. 166 Ill. 434; Cook & Rathborne Co. v. Sanitary District, 177 id. 599; West Chicago Park Comrs. v. Boal, 232 id. 248.) If the owner of land has devoted it to a special use, such as a track for training which will be destroyed, he is to be compensated for the loss of the land for that use, (St. Louis, Jerseyville and Springfield Railroad Co. v. Kirby, 104 Ill. 345,) but not for his ability or success as a trainer or the superiority of the horses he trains. If he has devoted his farm to the dairy business and for that use has built improvements that will be destroyed he is entitled to what the land is worth for that use to him or a^one else, (Chicago and Northwestern Railway Co. v. Chicago and Evanston Railroad Co. supra,) but not on the basis that his cows give large quantities of milk with a high percentage of butter fat. The value of land, with its adaptation to its highest and best use, is included and business profits are excluded. Cases where a plant and business are taken, which are relied upon, are quite different. One such case is Gloucester Water Supply Co. v. City of Gloucester, 179 Mass. 365. The statute authorized the water company to sell its plant to the city at an appraised value and the city could purchase the company’s property rights, including a franchise which was practically an exclusive one. The property included the business, which could not be carried on elsewhere, but in the case of this soap factory the business was not taken. When the appellant takes its departure from this place, which it is agreed will not be suitable for a soap, manufactory, the business will not be left behind. Neither are cases involving the fixing of rates for a public utility, where the question is whether the rate fixed is reasonable and compensatory, applicable in any way to the question here under consideration. DesMoines Gas Co. v. DesMoines, 238 U. S. 153, was a case of that kind. The gas company filed a bill to enjoin the enforcement of an ordinance fixing gas rates as confiscatory, and the going value of a long established and successful business was to be taken into account in determining the value of the gas company’s property for the purpose of testing the reasonableness of the rate. There can be no controversy about the justice of the rule applied in determining a rate which would be remunerative to the owners of the plant and business. There was nothing in the character of the real estate or the location of appellant essential to making soap, and there was no greater efficiency of the buildings or machinery because they had been employed in that business than the capacity of any other like buildings and machinery applied to the same use. No doubt the business of the appellant is property of great value because it has been established for a great many years, and .its products of American Family soap and Jap Rose soap have come into general use and have become great favorites with the users of soap. There was no evidence that can fairly be said to prove or tend to prove that the business carried on at the plant enhanced the value of the land, buildings or machinery, and what was called “efficiency" value was nothing but an estimated value of the established and successful business of the appellant and anticipated profits from carrying on the business in the future. The rule adopted by the court was the correct one.

Errors are assigned upon the giving of instructions, but they were in harmony with what has been already said, and the only one particularly objected to is the fifteenth, which defined the meaning of real estate as vacant land, together with all buildings and structures thereon, and fhe machinery, apparatus and equipment upon the land and in the buildings, with directions to consider the vacant land and such buildings, structures, machinery and equipment as a whole, and to determine from the evidence whether or not the buildings, structures, machinery or equipment enhanced the fair cash market value of the vacant land by the amount of the sound value of such buildings, structures, machinery or equipment. The definition of real estate was faultless and the instruction told the jury to consider the property as a whole. The rule adopted and enforced throughout the trial was that appellant was entitled to the highest cash market value of the part taken, considered as a part of the whole, for the best use to which it was adapted, and the examination of witnesses was upon that basis. The court instructed the jury to allow appellant the fair cash market value for its highest and best use of that part of the tract taken when considered in its relation to and as a part of the-entire tract, and not as a separate and distinct piece of real estate disconnected from the residue of the tract. The objection is that the instructions did not include the so-called “efficiency" value, which did not enhance the value of the real estate but was only an element of property which was not taken from the appellant. Regarding the instructions as a whole there is no valid objection to them. ■

Before the taking of evidence the jury visited and inspected the plant and property and after the evidence was concluded again made a personal examination, and that fact is to be given proper weight in determining whether the conclusion of the jury was a just and proper one. Eliminating the improper elements insisted upon by the appellant, the verdict was within the range of the evidence and can not be disturbed as contrary to it.

The judgment is affirmed. T , . ,

. , Judgment affirmed.