Petition — Toledo, Peoria & Western Railroad v. Department of Transportation of Illinois

Supreme Court brief1979

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wae ve Court, U, g

AUG Z8 1979

Aa ROBAK, JR. CLERR

IN THE

Supreme Court of the Auited States

OCTOBER TERM, 1979

No. 69-322

TOLEDO, PEORIA & WESTERN RAILROAD COMPANY,

a Delaware Corporation,

Petitioner,

vs.

THE DEPARTMENT OF TRANSPORTATION OF THE

STATE OF ILLINOIS, FoR AND IN BEHALF OF THE

PEOPLE OF THE STATE OF ILLINOIS,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF ILLINOIS

JOHN E. CAssipDy, JR.,

Cassipy, CASSIDY, MUELLER

& PRICE,

800 Lehmann Building,

Peoria, Illinois 61602,

Telephone: 309/676-0591,

Attorney for Petitioner.

August 28, 1979.

Gunthorp-Warren Printing Company, Chicago e Financial 6-6565

INDEX TO PETITION FOR CERTIORARI

PAGE

i Aaa eee CR eRe bac bee ¥.ocaseseegeses 1

EE Ee ee ee 2

EE en eee eee 2

Constitutional Provisions Involved..............+.... 2

EEE LS SSO ee eee 3

Reasons for Granting the Writ..............-...005. 7

The Decision Below Contradicts Federal Constitu-

tional Principles Declared in Relevant Decisions by

the Supreme Court of the United States........... 7

The Federal Question Is Substantial and Should Be

Resolved by the Supreme Court of the United States.. 8

Ce eae use ean et eoresece 9

INDEX OF CITATIONS

Cases

Chicago B & Q Ry. Co. v. Chicago, 166 U.S. 226 (1896) 7

Malloy v. Hogan, 378 U.S. 1 (1964)................ 7

Monongahela Navigs*‘on Co. v. United States, 148 U.S.

EE Se SUPE e ee rec barn b esses Trees ccuass 8

United States v. Miller, 317 U.S. 369 (1942).......... 7

INDEX TO APPENDIX

Department of Transportation v. Toledo, Peoria & Western

Railroad Co., 75 Ill. 2d 436, 389 N. E. 2d 546....... Al

Department of Transportation v. Toledo, Peoria & Western

Railroad Co., 59 Ill. App. 3d 886, 374 N. E. 2d 88... A6

Notice of denial of Petition for Rehearing from Supreme

sc ef ere ere reer ree ee Al13

IN THB

Supreme Court of the United States

OCTOBER TERM, 1979

TOLEDO, PEORIA & WESTERN RAILROAD COMPANY,

a Delaware Corporation,

Petitioner,

vs.

THE DEPARTMENT OF TRANSPORTATION OF THE

STATE OF ILLINOIS, For AND IN BEHALF OF THE

PEOPLE OF THE STATE OF ILLINOIS,

Respondent.

PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF ILLINOIS

The Petitioner, Toledo, Peoria and Western Railroad Com-

pany [called petitioner or TP&W], prays that a writ of certiorari

issue to review the judgment and opinion of the Supreme Court

of Illinois entered in April 3, 1979."

OPINIONS BELOW

The opinion of the Illinois Supreme Court is reported as

Department of Transportation v. Toledo, Peoria & Western

Railroad Company, 75 Ill. 2d 436, 389 N. E. 2d 546, and the

opinion of Illinois’ intermediate Appellate Court is reported

1. Rehearing denied May 30, 1979.

under the same title at 59 Ill. App. 3d 886, 376 N. E. 2d 88.

These opinions are Appendices A and B hereto.”

JURISDICTION

This is a condemnation case which, in present posture, in-

volves the Just Compensation and Due Process Clauses of the

Fifth and Fourteenth Amendments to the Constitutions of the

United States.

The judgment of the Court below was entered on April 3,

1979 and the petitioner filed a timely petition for rehearing

which was denied on May 30, 1979. This petition for certiorari

is filed on, or before, August 28, 1979.

Jurisdiction is vested under 28 U. S. C. §§ 1257(3), 2101 (c).

QUESTION PRESENTED

The condemnation of petitioner’s property was not within the

scope of the original project and its purpose was to obtain fill

material for construction of that project for less than its market

value. The decision on review holds that the market value of the

fill material cannot be considered in determining just compensa-

tion for its taking and the question is:

Does the decision below violate petitioner’s rights under the

Just Compensation and Due Process Clauses of the Fifth

and Fourteenth Amendments to the Constitution of the

United States?

CONSTITUTIONAL PROVISIONS INVOLVED

United States Constitution, Amendment V:

. +> nor shall private property be taken for public use,

without just compensation.

2. Appendix C is the notification from the Illinois Supreme Court

that petition for rehearing was denied on May 30, 1979.

United States Constitution, Amendment XIV:

No State shall . . . deprive any person of . . . property,

without due process of law; .. .

STATEMENT OF THE CASE

Respondent, Illinois Department of Transportation [called

respondent or State] is a Code Department of the State of Illinois

with jurisdiction over the construction and operation of the

Illinois highway system including the construction of Federal

Aid Interstate Route No. 474 over the Illinois River from

Bartonville through Creve Coeur, Illinois. The petitioner owned

42.6 acres of submerged land which was not part of the highway

project but which was in near proximity thereto.

Respondent was fully and finally committed to the highway

project on, or before November 15, 1965 and the taking of

petitioner’s 42.6 acres was not a part thereof. [R. C6, C41 and

C62]. Moreover, the original project contemplated that all labor

and materials (including fill material) for construction of the

highway would be obtained through private contractors under

competitive bidding procedures. [R. C226 through C235].

Prior to 1971 the State did in fact purchase fill material

from private contractors who in turn purchased from petitioner’s

42.6 acre submerged tract at 12¢ a cubic yard [R. C416 through

C425]. When proprietary bids were requested for that part of

the project over the Illinois River, petitioner again agreed to

sell fill material from its submerged land at 12¢ a cubic yard

but after the bids were submitted, they were rejected by respond-

ent who then decided it could save from $2 to $2.50 per yard

by condemning petitioner’s 42.6 acre tract for a “just compen-

sation” of $1,000. [R. C234 through C245, C436 through

C444].

On February 3, 1971, respondent filed its petition for au-

thority to condemn with the Illinois Commerce Commission*®

and stated that it needed such authorization because “approxi-

mately 1,700,000 cubic yards of river bottom material, includ-

ing sand, will be required for construction of the highway road

bed.” [R. C9, C65 and C479].

The petition for condemnation was filed in the Circuit Court

of Peoria County on June 17, 1971* and alleged that the taking

was “for the purpose of removing and taking full and complete

title to 1,200,000 cubic yards of suitable fill material.” !R. C39].

Thereafter, respondent requested an immediate vesting of

title (‘quicktitle (‘quick-tkae’) under III. Rev. Stat., Chap. 47

§§ 2.1-2.3.5 After evidentiary hearing, the trial court orally

declared “that th economic advantages to the state and to the

saving of the taxpayer make this property subject to taking

by a public body for public use, then that is a proper subject

of Eminent Domain.” [R. C332]. With regard to its preliminary

determination of just compensation the trial court verbally

stated that “the TP&W has a merchantable item in the form of

sand and gravel on its property and that it is the merchantable

item being taken” and further found:

[W]here you have merchantable material which is going

to be removed within the next 3 to 5 months, it’s apparent

to me that the rule which is usually applicable is not

applicable here and that the state should fairly pay for

3. Ill. Rev. Stat., Chap. 47 § 2.1 provides that “no land...

owned ... by ... any common carrier engaged in interstate com-

merce shall be taken . . . hereunder . . . without first securing the

approval of the (Illinois Commerce) Commission.”

4. Under Illinois Jaw, just compensation is to be determined by

reference to valuation factors as of the date the petition is filed.

5. There are no issues concerning the interlocutory nature of the

appeal nor concerning any of the procedures followed below. But by

way of explanation, the Illinois statutes permit immediate vesting of

title after a hearing which determines the propriety of the taking and

makes a preliminary finding of just compensation which must be

deposited in court pending later determination in a final adjudicatory

jury trial.

the fair cash market value of the materials which it intends

to remove and use in its highway. . . . It has a known

market value of recent origin and date which was formed

between parties dealing at arm’s length, that is an inde-

pendant contractor and the TP&W . . . I would direct that

a deposit in the amount of $100,000 be made as I feel

this is the approximate value of the merchantable material

which the state is acquiring of this 42.6 acres.® [R. C333].

Prior to the jury trial for final determination, respondent filed

a “Motion In Limine’’ seeking to exclude from the trial evidence

regarding the prior sale of fill to independent contractors in

connection with interstate 474 and regarding the cubic yards

of fill already taken by the State. [App. B, A-7]. The motion

was denied and “The trial court found: (a) the proper measure

of damages to be submitted to the jury is the value of the land

including the mineral content thereof; (b) the jury is entitled

to know that the sole purpose of acquiring the land was to

obtain the minerals; (c) there had previously been a contract

arrived at in an arm’s length transaction with a subcontractor

for these materials.” [App. B, A-7].°

6. Throughout, respondent has contended that as submerged

river land petitioner’s property has but a nominal value of $1,000

and that was the substance of its expert’s testimony at the “quick-

take” hearing. [R. C275 through C278].

7. Under Illinois procedures a “Motion in Limine” is a civil

motion like a motion to quash in order to keep certain evidence from

being heard by the jury.

8. The specific findings are quoted in the opinion of the Illinois

Supreme Court [App. 3, A-2] including the following:

It is apparent from the pleadings and the evidence taken at the

‘quick take’ hearing that the plans for Interstate By-Pass 474

called for a bridge across the Illinois River and across some

lowlands near the property subject to this Petition for Condem-

nation. After the bridge was partially constructed, contracts

were let to obtain fill material for a dike road inasmuch as a

portion of the land is subject to flooding. In connection with

these contracts, a subcontractor did purchase from the (TP&W)

certain quantities of fill material from the area presently subject

to this condemnation suit at an arm’s length contract on the

open market for 12 cents per cubic yard. Thereafter the state

(Footnote continued on next page.)

A proper interlocutory appeal was taken by the respondent

to the Illinois Appellate Court. Focusing on the abstract rule

“that it is the loss to the condemnee and not the gain to the

condemnor which is to be considered in determining the value of

condemned lands” [App. B, A-10] that court declared that

“consideration of the market demand created by the contractors

herein would be improper” [App. B, A-10], that “the introduc-

tion of testimony regarding the minerals already taken is clearly

improper” [App. B, A-11] and then reversed.

Thereafter, petitioner’s petition for leave to appeal under

Rule 315 of the Rules of the Illinois Supreme Court [Ill. Rev.

Stat., Chap. 110A § 315] was granted and that court affirmed

both the ruling and the reasoning of the intermediate appellate

court, [App. A, A-l1—A-6], viz:

To permit proof of the market value for the fill material

created by (State’s) construction project would result in

the land being valued not as land, but as a source of fill

material. [A-5].

The same objection would arise to proof of a prior agree-

ment to purchase the fill material of 12 cents per cubic

yard. That transaction resulted not from the value of the

land as land, but from the fortuitous circumstance that by

reason of its proximity to the bridge project, fill material

had that value at that particular time and place. [A-S—

A-6].

In both its brief [pp. 8, 18-21] and its petition for rehearing

[pp. 2-4], petitioner raised and preserved the federal constitu-

tional question, in sum, as follows:

If the decision on review is correct as a matter of Illinois

law, then it violates the Just Compensation and Due Process

Clauses of the Fifth and Fourteenth Amendments to the

Constitution of the United States.

(Footnote continued from preceding page.)

sought to condemn the subject property and filed this Petition,

the only use to be made of this property being the extraction of

the fill material for the nearby right-of-way roadbed.

REASONS FOR GRANTING THE WRIT

The Decision Below Contradicts Federal Constitutional Prin-

ciples Declared in Relevant Decisions by the Supreme Court

of the United States.

“The Fifth Amendment of the Constitution of the United

States provides that private property shall not be taken for public

use without just compensation. Such compensation means the

full and perfect equivalent in money of the property taken.

(Citation omitted). The owner is to be put in as good position

pecuniarily as he would have occupied if his property had not

been taken. (Citations omitted).” [United States v. Miller, 317

U.S. 369, 373 (1942)]. And at pages 376-377 of the Miller

case, supra, this Court declared:

If a distinct tract is condemned in whole or in part, other

lands in the neighborhood may increase in market value

due to the proximity of the public improvement erected on

the land taken. Should the Government, at a later date,

determine to take these other lands it must pay their market

value as enhanced by this factor of proximity.® [Emphasis

added.]

It has long been the rule that federal standards under the

Just Compensation Clause of the Fifth Amendment are binding

upon the states under the Due Process Clause of the Fourteenth

Amendment. [See: Malloy v. Hogan, 378 U.S. 1, 4 (1964)

citing Chicago B & Q Ry. Co. v. Chicago, 166 U.S. 226

(1896)]. As stated by the Court in Chicago B & Q Ry. Co. v.

Chicago, supra, at 241: “a judgment of a state court, even if it

9. The Illinois Supreme Court’s ruling that “That transaction

resulted not from the value of the land as land, but from the for-

tuitous circumstance that by reason of its proximity to the bridge

project, fill material had that value at that particular time and

0 gaa 9] is patently at war with this federal constitutional

principle.

be authorized by statute, whereby private property is taken for

the state or under its direction for public use without compen-

sation made or secured to the owner, is upon principle and

authority wanting in due process of law required by the 14th

Amendment to the Constitution of the United States and the

affirmance of such judgment by the highest court of the state is

a denial by that state of a right secured to the owner by that

instrument.”

Here, it was not the title to the land that was taken but it was

the title to the fill material located on that land'® and it is

conceded by all concerned that the taking was neither within nor

contemplated by the scope of the original project. Under Illinois

law just compensation must be determined in light of relevant

factors as they existed when the condemnation was filed on

June 17, 1971. On, and prior to that date, the property being

taken had a value of 12 cents a cubic yard to the petitioner and

on June 18, 1971, it had precisely the same value to the

respondent.

Fairly read, the decision on review holds that even though the

identical element of value exists both before and after the taking,

it somehow disappears at the moment of taking. In a similar

context, this Court has stated: “Surely, reasoning which leads

to such a result must have some vice, at least the vice of

injustice.” [Monongahela Navigation Co. v. United States, 148

U.S. 312, 338 (1893)].

Il.

The Federal Question Is Substantial and Should Be Resolved

by the Supreme Court of the United States.

Under Illinois law “economic advantage to the state and to

the . . . taxpayer” constitute a public purpose sufficient to

10. Indeed, the original condemnation petition alleged that

respondent “seeks an easement . . . for a period of 3 years for the

purpose of removing and taking full and complete title to 1,200,000

cubic yards of suitable fill material.” [R. C39].

support the power of Eminent Domain [ante, 6]. Thus, the

federal constitutional issue must be tested against that back-

ground in terms of “just compensation”.

The thing that is involved here is not the acquisition of land

for right-of-way purposes and the rule “that it is the loss to the

condemnee and not the gain to the condemnor which is to be

considered in determining the value of condemned lands” [ante,

8-9] isn’t even relevant. The thing that is involved here is the

condemnation of fill material for 2 nominal sum of $1,000 when

and where there was an existing market having a value of more

than $100,000. When one taxpayer must sacrifice $100,000 so

that all others can be economically advantaged to the same

extent, there is, we think, an invidious discrimination which is

constitutionally impermissible. Present-day efforts to satisfy tax-

payers as a class clearly indicate that the decisions below will

lead other governments to soon follow suit!

CONCLUSION

For the foregoing reasons, and for others implicit therein, a

writ of certiorari should issue to review the judgment and

opinion of the Sunreme Court of Illinois.

Respectfully submitted,

JOHN E. Cassipy, Jr.,

Cassipy, CASSIDY, MUELLER

& PRICE,

800 Lehmann Building,

Peoria, Illinois 61602,

Telephone: 309/676-0591,

Attorney for Petitioner.

——_—_

APPENDIX A

(No. 50929.—Judgment affirmed. )

THE DEPARTMENT OF TRANSPORTATION, Appellee, v. TOLEDO,

PeorIA & WESTERN RAILROAD COMPANY, Appellant.

Opinion filed April 3, 1979.—Rehearing denied May 30, 1979.

Mr. CHIEF JUSTICE GOLDENHERSH delivered the opinion of

the court:

Petitioner, the Illinois Department of Transportation, for-

merly the Department of Public Works and Buildings, filed an

action in the circuit court of Peoria County to condemn 42.6

acres of land owned by respondent, Toledo, Peoria & Western

Railroad Company. Petitioner moved that it be immediately

vested with fee simple title (Ill. Rev. Stat. 1971, ch. 47, par.

2.1 et seq.), the court made a preliminary finding of just com-

pensation, and funds in the required amount were deposited by

petitioner and withdrawn by respondent. Subsequently, peti-

tioner filed a motion in limine to exclude certain evidence at the

trial to determine just compensation. The circuit court denied

the motion and included in its order the findings requisite to an

application for leave to appeal. (Supreme Court Rule 308 (58

Ill. 2d R. 308).) The appellate court allowed petitioner’s appli-

cation for leave to appeal and reversed the order of the circuit

court (59 Ill. App. 3d 886). We allowed respondent’s petition

for leave to appeal.

In stating the issues presented, and announcing its rulings, the

circuit court said:

“It is apparent from the pleadings and the evidence taken

at the ‘quick take’ hearing that the plans for Interstate

By-Pass 474 called for a bridge across the Illinois River

and across some lowlands near the property subject to this

Petition for Condemnation. After the bridge was partially

constructed, contracts were let to obtain fill material for a

dike road inasmuch as a portion of the land is subject to

flooding. In connection with these contracts, a subcontrac-

tor did purchase from the defendant, Toledo, Peoria &

Western Railroad, certain quantities of fill material from

the area presently subject to this condemnation suit at an

arm’s length contract on the open market for 12 cents per

cubic yard. Thereafter the state sought to condemn the

subject property and filed this Petition, the only use to be

made of the property being the extraction of fill material

for the nearby right-of-way roadbed.

It is the ruling of this Court that the proper measure of

damages to be submitted to the jury is the value of the land

including the mineral content thereof; that the jury is

entitled to know that the sole purpose of acquiring the land

was to obtain minerals; that there had previously been a

contract arrived at at arm’s length by subcontractor for

these minerals for this purpose a short period prior to the

filing of this Petition, because each of these facts would

have been considered by a willing buyer and a willing

seller in determining what market price might be estab-

lished for this property at the time of the filing of the

Petition for Condemnation.”

The circuit court certified the following questions for inter-

locutory appeal:

“In determining the amount of damages for land taken,

where the purpose of the taking is not for right of way but

solely to acquire fill from nearby land:

(a) Is the proper measure of damages the value of

the land, considering but not limited to the value of

the fill material to be extracted?

(b) May evidence be introduced that the improve-

ment is creating a ‘one time’ market for the fill

material which a willing buyer and seller would con-

sider in arriving at a fair cash market value at the

time of the filing of the petition?

stages of the improvement a contractor in an arm’s

length purchase paid to owner $.12 per cubic yard

for fill material for the improvement?

(d) May the actual amount of fill material taken

after a ‘quick take’ and before trial be admitted into

evidence?”

The appellate court held that the land taken was to be valuea

at its fair cash market value, as a whole, for its highest and best

use; that the land included all the minerals, improvements and

appurtenances connected therewith, all of which may be con-

sidered as factors in the determination of the fair cash market

value “but under no circumstances is the fair cash market value

to be the sum of such factors.” (59 Ill. App. 3d 886, 890.) It

held the evidence to which questions (b), (c) and (d) refer

to be inadmissible.

Respondent contends that to be justly compensated for the

taking it must be paid a sum computed by multiplying the num-

ber of cubic yards of fill material removed by 12 cents per yard,

and that anything less would violate the provisions of the fifth

amendment to the Constitution of the United States. The People

contend that just compensation for the taking must be deter-

mined on the basis of the land as land, and not on the basis of

determining the cubic yards of fill material removed.

In Department of Public Works & Buildings v. Oberlaender

(1969), 42 Ill. 2d 410, petitioner sought to condemn approxi-

mately 44 acres of a tract of land which for many years had

been used as a sand quarry. Witnesses for the landowner had

considered the worth of the sand deposits separately in deter-

mining their opinions as to the value of the land.

The court said:

“It is not questioned here that the measure of compensa-

tion for land taken in a condemnation proceeding is the

fair cash market value of the property for its highest and

best use. Fair market value can be defined as the price for

which the property would sell under ordinary circumstances

surrounding the sales of property, assuming both an owner

willing to sell and a purchaser willing, but under no com-

pulsion, to buy. (Forest Preserve Dist. v. Ilahn, 341 Ml.

599, 602; see, Department of Public Works and Buildings

v. Filkins, 411 Ill. 304, 307.) Concerning the fair market

value of land containing mineral deposits this court has

stated that: ‘The rule is that compensation must be esti--

mated for the land as land, with all its capabilities, and

if there is timber on it, or coal, oil or other minerals under

the surface, they are to be considered so far as they affect

the value of the land but they cannot be valued separately.’

(Forest Preserve Dist. v. Caraher, 299 Ill. 11, 17; accord,

Department of Public Works and Buildings -v. Hubbard,

363 Ill. 99, 102; see also City of Chicago v. Central Na-

tional Bank, 5 Ill. 2d 164, 175; Chicago Land Clearance

Com. v. Darrow, 12 Ill. 2d 365, 372.) Putting it somewhat

differently, where, as here, the property is not taken for

the purpose of obtaining the minerals or a going business

(see City of Chicago v. Farwell, 286 Ill. 415, 423; 29A

C. J. S. Eminent Domain, sec. 174, p. 737, note 87), it is

improper to appraise separately the mineral deposit and

add its value to the value of the land without the deposits

(4 Nichols on Eminent Domain 13.22; 1 Orgel, Valuation

under the Law of Eminent Domain, 2d ed. sec. 165, p.

672; Jahr, Law of Eminent Domain—Valuation and

Procedure, sec. 151; see Department of Public Works and

Buildings v. Lotta, 27 Tl. 2d 455, 456.) It is proper how-

ever, for the owner to establish the existence of valuable

mineral deposits on the real estate being valued and in

doing this to show the character of the deposit(s) and to

what extent it enhances the land’s market value. Forest

Preserve Dist. v. Caraher, 299 Ill. 11, 17-18; Forest Pre-

serve Dist. v. Kercher, 394 Ill. 11, 23.” (42 Ill. 2d 410,

415-16.)

Citing Oberlaender, respondent argues “that where, as in this

case, the property is taken solely for the purpose of obtaining

the minerals, it is not only proper, but constitutionally required,

that the mineral deposit be valued separately at its per unit

market value and the trial court has twice found that the fill

material “has a known market value of recent origin and date

which was formed between parties dealing are arm’s length’ at

12 cents a cubic yard.” It argues too that the value of the prop-

erty taken was 12 cents per cubic yard even though it was the

proximity of the original public improvement which created the

market and the enhanced value. In support of this position it

contends that the original petition sought to condemn only the

fill material and the taking of the 42.6-acre tract was not within

the scope of the original project, and that when the petitioner

decided to take the land the per cubic yard market value had

already been established. It argues that it follows from this that

the value can be determined by multiplying the number of cubic

yards taken by the unit price of 12 cents per cubic yard.

We agree with the circuit and appellate courts that the proper

measure of damages is the value of the land taken, considering

all the factors enumerated in Oberlaender. To permit proof of

the market for the fill material created by petitioner’s construc-

tion project would result in the land being valued not as land,

but as a source of fill material. This is contrary to the rule

enunciated in Department of Public Works & Buildings v.

Oberlaender.

The same obejction would arise to proof of a prior agreement

to purchase the fill material at a price of 12 cents per cubic

yard. That transaction resulted not from the value of the land as

land, but from the fortuitous circumstances that, by reason of

its proximity to the bridge project, fill material had that value

at that particular time and place. Such proof would clearly be

violative of the long-established requirement that in fixing the

value of land all the factors be considered, and that it not result

from a totaling of the various factors.

The evidence concerning the amount of fill material actually

taken from the land would be inadmissible. It is well established

that the valuation must be fixed as of the date of the taking, and

as of the date of taking there was no way to determine the

amount of fill material which would be excavated from the land

condemned. Evidence of what occurred subsequent to the valua-

tion date may not be considered.

For the reasons stated, the judgment of the appellate court is

affirmed.

Judgment affirmed.

APPENDIX B

THE DEPARTMENT OF TRANSPORTATION, Petitioner-Appellant,

v. TOLEDO, PEORIA & WESTERN RAILROAD COMPANY, Respond-

ent-Appellee.

Third District No. 77-305

Reversed and remanded.

Opinion filed May 15, 1978.

Mr. JusTICcE Scott delivered the opinion of the court:

This is an interlocutory appeal from the Circuit Court of

Peoria County. The purpose of this appeal is to determine certain

evidentiary matters which are to be introduced at a subsequent

trial to determine just compensation for the taking of property by

eminent domain.

On June 17, 1971, the Department of Public Works and

Buildings of the State of Illinois (hereinafter called the State)

filed a petition for condemnation against the Toledo, Peoria &

Western Railroad (hereinafter called the Railroad) and thereby

sought to remove material for a period of three years from a

50-acre tract belonging to the Railroad. On August 31, 1971,

leave was granted to file an amended petition for condemnation

which sought fee title to 42.6 acres. The land involved is located

beneath the Illinois River. The material to be taken would be

used in the construction of Interstate Highway 474. It must be

clearly understood that the land sought will not be used for classic

road building purposes, but rather minerals will be removed

from the land and used in the road construction.

On December 28 and 29, 1971, a hearing was held on the

vesting of title pursuant to section 2.1 of the Eminent Domain

Act (Ill. Rev. Stat. 1977, ch. 47, par. 2.1). The trial court found

that the eminent domain procedure was proper and that the

preliminary just compensation was $100,000. The required

amount was deposited and on April 25, 1972, title to the 42.6-

acre parcel was vested in the State. The State has already begun

to remove fill material.

On June 11, 1975, the State filed a motion in limine seeking

to exclude certain evidence from trial: (a) regarding the cubic

yards of fill already taken in connection with the Interstate 474,

and (b) regarding a prior sale to a contractor in connection with

Interstate 474.

The matter was then set for trial.

The Railroad filed a motion for partial summary judgment

and also opposed the motion in limine. On May 9, 1977, the trial

court denied the motion for partial summary judgment and the

motion in limine. The trial court found: (a) the proper measure

of damages to be submitted to the jury is the value of the land

including the mineral content thereof; (b) the jury is entitled

to know that the sole purpose of acquiring the land was to obtain

the minerals; (c) there had previously been a contract arrived

at in an arm’s length transaction with a subcontractor for these

materials to be used for this purpose a short period prior to filing

of the petition.

This last part of the order is in dispute.

On June 29, 1977, an order was entered certifying questions

for interlocutory appeal.

The first issue presented on appeal is whether the value of the

fill material to be extracted should be a consideration in arriving

at the fair cash market value of the land taken.

The State argues that land must be valued as a whole and not

as the sum of its parts. It also argues that any mineral content

on the land cannot be valued separate from the land, but must

be considered as part of the value of the land. Therefore, the

value of fill material to be extracted from the land should not

be considered in determining the fair cash market value of

the land.

The Railroad argues that while the State is correct when

speaking of land per se, other rules must apply for the taking

of fungible property.

The land sought here is not land in the usual sense. It is part

of the bed of the Illinois River. The Railroad is not using the

land as part of its roadbed, for a switch yard, terminal, or other

structure, or for income purposes. The Railroad argues that the

minerals deposited by the river on that part of the river bed

may be extracted and used as levee materials in developing an

industrial park along the rail line. The record does not show that

this is presently being done.

The Railroad further argues that if the taking of the land for

the minerals was the only purpose of the taking and the sole

reason for the taking was the economic advantage to be gained

thereby, then the minerals should be valued separately from the

land because the State does not want the land and considers it

incidental to the minerals.

valued as a whole for its highest and best use and that land

includes all the minerals, improvements and appurtenances con-

nected with the land. The proper measure of the value of land

is its fair cash market value. (Department of Public Works

& Buildings v. Oberlaender (1969), 42 Ill. 2d 410, 247 N. E. 2d

888; City of Chicago v. Central National Bank (1955), 5 Til.

2d 164, 125 N.E. 2d 94.) No factor connected with the land

is to be valued separately. Department of Public Works & Build-

ings V. Oberlaender (1969), 42 Ill. 2d 410, 247 N. E. 2d 888;

Forest Preserve District vy. Caraher (1921), 299 Ill. 11, 132

N. E. 211; Department of Public Works & Buildings v. Lotta

(1963), 27 Ill. 2d 455, 189 N. E. 2d 238.

We have carefully reviewed the Railroad’s argument that the

State seeks to condemn personalty rather than realty and there-

fore a different rule should apply. The Railroad has proffered

several cases as authority for its position: Mackie v. Fegin

(1966), 2 Mich. App. 698, 141 N. W. 2d 312; Board of County

Commissioners v. Good (1940), 44 N. M. 495, 105 P. 2d 470;

Michigan State Highway Com. v. McLaughlin (1969), 16

Mich. App. 22, 167 N. W. 2d 468; Board of County Commis-

sioners Vv. Vargus (1966), 76 N. M. 369, 415 P. 2d 57; Michi-

gan State Highway Com. v. Hahn (1966), 4 Mich. App. 225,

144 N. W. 2d 643. These cases hold that when minerals are

condemned in place, a per unit valuation (number of units

multiplied by price per unit, i.e., 50 cu. yd. x 3¢) is proper in

fixing damage.

The Michigan cases are based in part on a Michigan statute

(Mich. Comp. Laws § 213.171(b) (1948) (Mich. Stat. Ann.

§ 8.171(b) (1958))), which requires that the highway depart-

ment must condemn materials as personalty. (Mackie v. Fegin

(1966), 2 Mich. App. 698, 141 N. W. 2d 312.) The Michigan

Court of Appeals in the Mackie case read that section of the

statute in conjunction with other sections and found that the

highway department could take whatever interest best suited its

purpose. In the Michigan cases cited, that interest was in land

and not in personality. Thus consideration of minerals as

personalty is not the established rule in Michigan.

The New Mexico cases do adopt a per unit valuation rule.

However, that rule has not been followed in other States and we

find no compelling reason to follow that rule in Illinois.

We believe that a per unit valuation in Illinois would confuse

the jury. It would result in inflated land values and valuation

based upon speculation. It would ignore completely the cost

factors which are affected by management. It would force con-

sideration of the need of the condemnor rather than the loss of

the condemnee. We believe that this is undesirable and therefore

we will not adopt the per unit valuation rule in Illinois.

This does not mean, however, that an appraiser cannot con-

sider that minerals exist on the land and that there is a market

for those minerals in determining the fair cash market value of

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the land, as a whole, for its highest and best use. Department of

Public Works & Buildings v. Bohne (1953), 415 Ill. 253, 113

N. E. 2d 319.

Both the State and the Railroad have cited Department of

Public Works & Buildings v. Oberlaender (1969), 42 Ill. 2d

410, 247 N. E. 2d 888. The State argues that this case reaffirms

the rule that land must be valued as a whole and that timber,

minerals, and other elements are factors to be considered in the

value of the land as a whole but may not in themselves be

valued separately. The Railroad argues that this case is authority

for the separate valuation of minerals when the right to take

the minerals is condemned. We have carefully studied the

Oberlaender case. We are most particularly aware of the factual

situation and the reasoning of that decision. We believe that if

minerals are being extracted from land as part of a business

operation with an established market and a demonstrable cost

accounting procedure, there may be some justification for

valuing the minerals separate from the land. In every other case,

there is no such justification.

¢ 3-6 We believe the proper rule to be that land is to be valued

as a whole including all minerals, timber, improvements and

appurtenances, The measure of the value of the land is the fair

cash market value for its highest and best use, that is, the

amount which a purchaser, willing but not obligated to buy,

will pay to a seller, willing but not obliged to sell. The minerals,

timber, improvements and appurtenances may be considered as

factors in the determination of the fair cash market value, but

under no circumstances is the fair cash market value to be the

sum of such factors.

The second issue presented on appeal is whether it is improper

to consider evidence in establishing market value which is based

on the very public improvement for which the condemnation is

concerned, even if it is on a “one-time” basis.

The State argues that the market created by the Interstate 474

project should not be considered in determining the fair cash

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market value of the land sought. It further argues that the

minerals here had not been sold by the Railroad prior to sale to

a contractor working on the Interstate 474 project.

The Railroad argues that it had a real need for the minerals

for its own purposes in constructing levees to aid in development

of an industrial park, It also argues that the condemnation of its

land was not contemplated until after purchases had been made

from it by contractors using the minerals for the construction of

the Interstate 474 and after unsatisfactory bids for more minerals

had been received.

and in other jurisdictions that it is the loss to the condemnee

and not the gain to the condemnor which is to be considered in

determining the value of condemned lands. (Peoples Gas Light

& Coke Co. v. Buckles (1962), 24 Ill. 2d 520, 182 N. E. 2d

169.) When land is taken as part of a project, any enhance-

ment in the value of that land because of project cannot be

considered.

¢9 Here, the only true market for the minerals was caused by

the need for the minerals in the construction of the Interstate

474 project. The need of the Railroad for the materials did not

create a market. Thus, consideration of the market demand

created by the contractors herein would be improper.

The third issue presented on appeal is whether the $.12 per

cubic yard price which was paid to the Railroad by a contractor

working on the Interstate 474 project is admissible.

The State argues that valuation is a matter of judgment based

upon the numerous factors dependent upon the type of property

sought. The income approach of valuation can be used in special

use situations, but there is no special use here.

The Railroad argues that if it is to be allowed to show an

existing market for the minerals it must be allowed to show the

unit price.

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introduce evidence regarding the unit price would encourage the

jury to think that a market for the minerals exists. It would not

be a true indication of fair cash market value, Since we are

unwilling to adopt the Railroad’s theory regarding fair cash

market value, we will not permit introduction of the per unit

value.

The fourth point raised on appeal is whether the amount of

fill removed following the quick-take and prior to trial is relevant

and therefore admissible.

The State argues that such introduction invites the jury to

multiply the gross amount of fill by the price per cubic yard and

thereby arrive at the fair cash market value. This defeats the

valuation of land as a whole. This also would lead to speculation

and conjecture.

The Railroad argues that while the exact amount of minerals

on the land is a matter of opinion, a minimum figure could be

determined by establishing the amount already extracted.

lation is undesirable and improper. The introduction of testi-

mony regarding the minerals already taken is clearly improper.

We do not wish to set minimum figures. The proper value of the

land is the fair cash market value, no more and no less.

The order of the Circuit Court of Peoria County is reversed

and this cause is remanded for continuance of the trial in accord-

ance with the views set forth in this opinion.

Reversed and remanded.

ALLoy, P. J., and STENGEL, J., concur.

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APPENDIX C

ILLINOIS SUPREME COURT

Clell L. Woods, Clerk

Supreme Court Building

Springfield, Ill. 62706

(217) 782-2035

May 30, 1979

Received May 31, 1979

Cassidy, Cassidy, Mueller

Mr. John E. Cassidy, Jr.

Attorney at Law

Cassidy, Cassidy, Mueller & Price

800 Lehmann Building

Peoria, IL 61602

No. 50929—The Department of Transportation of the State of

Illinois, etc., appellee, vs. Toledo, Peoria & West-

ern Railroad Company, a Delaware Corporation,

appellant. Appeal, Appellate Court, Third District.

The Supreme Court today denied the petition for rehearing in

the above entitled cause.

Very truly yours,

/s/ CLELL L. Woops

Clerk of the Supreme Court

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.