Stone v. City of Chicago

• Decision Date: 17 February 1904
• Parties: STONE v. CITY OF CHICAGO et al.
• Court: Illinois Supreme Court

207 Ill. 492

69 N.E. 970

STONE

v.CITY OF CHICAGO et al.

Supreme Court of Illinois.

Feb. 17, 1904.

Appeal from Circuit Court, Cook County; Lockwood Honoré, Judge.

Bill by Charles A. Stone against the city of Chicago and others. From a decree in favor of defendants, complainant appeals. Affirmed.Robert R. Baldwin, for appellant.

Edgar Bronson Tolman, Corp. Counsel (Colin C. H. Fyffe, of counsel), for appellees.

Pence & Carpenter, in support of refunding bond issue, by leave of court.

This was a bill in chancery filed by the appellant, a resident and taxpayer of the city of Chicago, in the circuit court of Cook county, against the city of Chicago, its mayor, Carter H. Harrison, and Lawrence E. McGann, its comptroller, to enjoin the issue and sale of $4,000,000 20-year 3 1/2 per cent. bonds of the city about to be issued and sold, the proceeds arising from the sale of which were to be used in paying an equal amount of judgments before that time rendered by the federal courts and the courts of record in the state of Illinois against the city of Chicago. An answer and replication were filed, and upon final hearing the bill was dismissed for want of equity, and the record has been brought to this court for review by appeal.

The appellant contends that the issue and sale of said bonds should be enjoined upon the following grounds: First, the city has no power to issue 20-year bonds, from the sale of which to obtain a fund with which to pay its judgment indebtedness; second, if the power of the city to issue 20-year bonds for the purpose of obtaining a fund from the sale thereof with which to pay its judgment indebtedness be conceded, nevertheless, as the indebtedness of the city, in the aggregate, exceeds 5 per centum of the value of its taxable property as ascertained by the last assessment for state and county taxes, the city is prohibited from issuing said bonds by virtue of the inhibition contained in section 12 of article 9 of the Constitution of 1870, which in part is as follows: ‘No county, city, township, school district, or other municipal corporation, shall be allowed to become indebted in any manner or for any purpose, to an amount, including existing indebtedness, in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes, previous to the incurring of such indebtedness.’

The record shows that at a regular meeting thereof on the 22d day of September, 1902, the city council of the city of Chicago duly passed an ordinance providing for the issue and sale of $4,000,000 20-year 3 1/2 per cent. bonds under the provisions of paragraph 5, § 1, art. 5, c. 24, Hurd's Rev. St. 1901, which reads as follows: ‘To borrow money on the credit of the corporation for corporate purposes, and issue bonds therefor, in such amounts and form, and on such conditions as it shall prescribe, but shall not become indebted in any manner or for any purpose to an amount, including existing indebtedness, in the aggregate to exceed five (5) per centum on the value of the taxable property therein, to be ascertained by the last assessment for the state and county taxes previous to the incurring of such indebtedness; and before or at the time of incurring any indebtedness, shall provide for the collection of a direct annual tax sufficient to pay the interest on such debt as it falls due, and also to pay and discharge the principal thereof within twenty years after contracting the same.’

The ordinance contained the following preamble: ‘Whereas, the city of Chicago is indebted to divers persons on account of judgments heretofore recovered against the city of Chicago, which said judgments the city of Chicago desires to pay, and to that end to issue negotiable bonds therefor and with the proceeds thereof to satisfy said judgments in full.’ And section 3 reads as follows: ‘Said bonds shall be sold by the comptroller of the city of Chicago at public or private sale, at a price not less than their face or par value, and the proceeds thereof shall be used for the exclusive purpose of cancelling and retiring the like amount of the indebtedness of the city of Chicago evidenced by judgments recovered against it in the federal courts and in the courts of record of the state of Illinois. Said bonds shall be issued and delivered simultaneously with the surrender, cancellation, satisfaction and release of a like amount of the judgment indebtedness which said bonds are issued to pay.’

It further appears that at a regular meeting of the city council of the city of Chicago held on the 16th day of March, 1903, there was presented to the city council a petition, signed by 10 legal voters of said city, askingthe corporate authorities of said city to submit to the voters of the city, at the general election to be held therein on the 7th day of April, 1903, the question of issuing $4,000,000 20-year 3 1/2 per cent. bonds for the purpose of raising a fund with which to pay and discharge the judgments theretofore rendered against said city in the federal courts and the courts of record in the state of Illinois; that upon the presentation of said petition the city council duly passed an ordinance for the issue and sale of $4,000,000 20-year 3 1/2 per cent. bonds, under the provisions of section 1 of an act entitled ‘An act to amend an act approved April 27, 1877, entitled ‘An act to amend an act entitled an act relating to county and city debts, and to provide for the payment thereof by taxation, in such counties and cities,’ approved February 13, 1865, and to amend the title thereof,' approved June 4, 1879, in force July 1, 1879 (Hurd's Rev. St. 1899, p. 1301, c. 113), which in part reads as follows: ‘That in all cases where any county, city, town, township, school district, or other municipal corporation, has issued bonds or other evidences of indebtedness, for money, or has contracted debts, which are the binding, subsisting legal obligations of such county, city, town, township, school district, or other municipal corporation, and the same, or any portion thereof, remain outstanding and unpaid, it shall be lawful for the proper corporate authorities of any such county, city, town, township, school district, or other municipal corporation, upon the surrender of any such bonds or other evidences of indebtedness, or any number or portion thereof, to issue, in lieu or place thereof, to the owners or holders of the same, new bonds prepared as hereinafter directed, and for such amounts, upon such time not exceeding twenty years, payable at such place, and bearing such rate of interest, not exceeding seven per centum per annum, as may be agreed upon with the owners or holders of such outstanding bonds or other evidences of indebtedness. * * * And it shall also be lawful for the proper corporate authorities of any such county, city, town, township, school district, or other municipal corporation, to cause to be thus issued, such new bonds, and sell the same to raise money to purchase or retire any or all of such outstanding bonds or other evidences of indebtedness; the proceeds of the sales of such new bonds to be expended, under the direction of the corporate authorities aforesaid, in the purchase or retiring of the outstanding bonds or other evidences of indebtedness of such county, city, town, township, school district, or other municipal corporation, and for no other purpose whatever.’

The ordinance contained the following preamble: ‘Whereas, the city of Chicago is indebted to divers persons on account of judgments heretofore recovered against the city of Chicago, which said judgments the city of Chicago desires to pay, and to that end to issue its negotiable bonds therefor pursuant to an act of the legislature of the state of Illinois approved February 13, 1865, and amendments thereto; and whereas, by a petition signed by ten (10) legal voters, resident therein, the corporate authorities of said city have been requested to submit to the voters thereof, at the next general election, the question of issuing such bonds to the amount of $4,000,000.’ Section 3 reads as follows: ‘Said bonds shall be sold by the comptroller of the city of Chicago at a price not less than their face or par value, and the proceeds thereof shall be used for the exclusive purpose of canceling and retiring the like amount of indebtedness of the city of Chicago evidenced by judgments recovered against it in the federal courts and in the courts of record of the state of Illinois. Said bonds shall be issued and delivered simultaneously with the surrender, cancellation, satisfaction and release of a like amount of the judgment indebtedness which said bonds are issued to pay.’

The election was held on April 7, 1903, and the majority of all the votes cast were in favor of the proposition to issue $4,000,000 20-year 3 1/2 per cent. bonds. It also appears that the value of the taxable property in the city of Chicago for the last assessment for state and county taxes was $402,495,131, 5 per cent. (the debt limit) of which was $20,124,756.

It is agreed that the judgments mentioned in the ordinance dated September 22, 1902, and the ordinance dated March 16, 1903, are the same judgments, and that the city does not intend to issue bonds in amount in excess of $4,000,000.

The following statement, made by Mark M. Foote, general accountant in the city comptroller's office, was introduced in evidence as defendant's ‘Exhibit 1’:

+----------------------------------------------------------------+
                ¦Statement of all Debts of City of Chicago Sept. 30,             ¦
                +----------------------------------------------------------------¦
                ¦1903:                                                           ¦
                +----------------------------------------------------------------¦
                ¦I. Bonds (general)               ¦$6,963,000 00  ¦              ¦
                +---------------------------------+---------------+--------------¦

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