Bd. of Educ. of City of Chicago v. Upham

• Decision Date: 31 July 1934
• Docket Number: No. 22632.,22632.
• Citation: 357 Ill. 263,191 N.E. 876
• Parties: BOARD OF EDUCATION OF CITY OF CHICAGO v. UPHAM, City Comptroller.
• Court: Illinois Supreme Court

357 Ill. 263

191 N.E. 876

BOARD OF EDUCATION OF CITY OF CHICAGO

v.UPHAM, CityComptroller.

No. 22632.

Supreme Court of Illinois.

July 31, 1934.

Original petition in the Supreme Court by the Board of Education of the City of Chicago against R. B. Upham, City Comptroller, for a writ of mandamus to compel the defendant to sign certain bonds directed to be issued by the petitioner.

Writ awarded.

Richard S. Folsom, of Chicago (Frank S. Righeimer, Ralph W. Condee, and Frank R. Schneberger, all of Chicago, of counsel), for petitioner.

William H. Sexton, Corp.Counsel, of Chicago, for defendant.

JONES, Chief Justice.

An original petition for mandamus was filed in this court on behalf of the board of education of the city of Chicago and against R. B. Upham, as city comptroller of the city of Chicago.The petition alleged that the board of education was authorized by law to issue its negotiable bonds in the aggregate amount of $25,000,000 to augment the working cash fund and mortgage certain school lands to secure the payment of the bonds; that the board of education, in full compliance with all statutory provisions, had directed the issuance of said bonds and the execution of the mortgage; that it became the duty of the president and secretary of the board of education to sign them and of the mayor of the city and the city comptroller to countersign them; that the president and secretary of the board and the mayor have agreed and consented to sign them, but the defendant, Upham, as city comptroller, has refused, and now refuses, to sign them; that his refusal is predicated on three grounds, to wit: (1) The board of education is not a body politic separate and distinct from the city of Chicago; that the bonded indebtedness, if created, would not be an indebtedness of the board of education but would be an indebtedness of the city of Chicago, and that the city of Chicago is already indebted beyond its constitutional limit and is inhibited by section 12 of article 9 of the state Constitution from becoming further indebted; (2) the issuance of said bonds would permit the accumulation of a working cash fund in excess of the necessary requirements of the educational fund for the current year; and (3) the board of education has no right to mortgage school lands.The defendant filed an answer, which admits all of the material facts alleged in the petition but controverts the legal conclusions stated therein.

The following facts are necessary to an understanding of the questions involved: The revenues of the board of education have been greatly diminished since 1928 on account of the nonpayment and delay in the collection of taxes as well as the lowering of assessments of property values.As a result, the board has been unable to pay in full the salaries of its school teachers and other necessary expenses.Unpaid salaries of teachers and other employees amount to $25,600,000.For the current year 1934 the board has obligations for teachers' salaries and educational expenses in the sum of $25,000.000.There are past-due claims amounting to $3,800,000, making a total of $54,400,000.There is no money in the treasury with which to meet these obligations.In 1930 the General Assembly (Laws 1930, 1st Sp. Sess., p. 95), recognizing the credit impairment of certain municipalities and the necessity for raising cash to pay current liabilities, enacted a law which provided for the creation of a revolving fund out of the proceeds of the sale of bonds in the sum of $25,000,000.The board of education of said city availed itself of that law.In the long duration of the depression the fund so created became exhausted, and in 1933the Legislature added section 134 3/4 to the School Act.Smith-HurdRev. St. 1933, c. 122, § 157b, Cahill'sRev. St. 1933, c. 122, par. 158(2.)This added section provides that in all cases where the board of education in cities having a population exceeding 500,000 inhabitants shall have heretofore created a working cash fund pursuant to section 134 1/2 of the act(Smith-HurdRev. St. 1933, c. 122, § 157a) it may incur an indebtedness for the purpose of increasing such fund and issue bonds therefor in an amount not to exceed $40,000,000.Under conditions and limitations specifically set forth, the proceeds from the sale of the bonds are to be placed in that fund, and are not subject to appropriation or budget expense.The board may, however, by resolution direct the transfer of money from that fund to the educational purposes fund.Provision is made for the restoration of the working cash fund from taxes and other revenues, when collected.

In support of defendant's contention that the board of education is not a distinct corporate entity and that it has no bonding power, it is said that the statute makes the boundaries of the school district here involved coterminous with those of the city of Chicago; that the city treasurer is made the ex officio treasurer of the school district; that the city council is required to make the tax levy for school purposes, and that the bonds are required to be countersigned by the mayor and comptroller.

The power of the Legislature in this state to create public corporations is practically unlimited.It may create any conceivable kind of corporation it sees fit for the more efficient administration of public affairs, and endow such corporation and its officers with such powers and functions as it deems necessary and proper for the administration of the corporate affairs.People v. Bowman, 247 Ill. 276, 93 N. E. 244;Perkins v. Board of Com'rs of Cook County, 271 Ill. 449,11 N. E. 580, Ann. Cas. 1917A, 27.The...