City of Joliet v. Alexander
| Decision Date | 21 February 1902 |
| Citation | 62 N.E. 861,194 Ill. 457 |
| Parties | CITY OF JOLIET et al. v. ALEXANDER. |
| Court | Illinois Supreme Court |
OPINION TEXT STARTS HERE
Appeal from circuit court, Will county; Dorrence Dibbell, Judge.
Action by Henry Alexander against the city of Joliet and others. From a judgment in favor of plaintiff, defendants appeal. Affirmed.Louis Lagger and Wood & Oakley, for appellants.
Hill, Haven & Hill, for appellee.
The city of Joliet owns and operates a system of waterworks for the purpose of supplying the city and its inhabitants with water, and derives therefrom a net annual income of about $10,000. The city is indebted largely in excess of 5 per centum of the value of the taxable property therein. On January 7, 1901, an ordinance of said city was passed providing for the extension and enlargement of the existing system of waterworks, for which water-fund certificates were to be issued to an amount not exceeding $240,000, bearing interest at a rate not exceeding 6 per cent. per annum, to be paid as provided by an act of the legislature entitled ‘An act authorizing cities, towns and villages to build, purchase or extend water-works systems for public and domestic use, and to provide for the cost thereof,’ in force July 1, 1899. Laws 1899, p. 104. The ordinance provides that the entire proceeds of the waterworks system shall be paid into a water fund; that no money shall be paid out of said fund except for the necessary operating expenses of the waterworks system, and the payment of the certificates and interest until they are fully paid; that the certificates shall be secured by a mortgage or deed of trust on the waterworks system and appurtenances now owned by the city, and also the extensions constructed under the ordinance, together with all the lands, buildings, machinery, and appurtenances of every kind in connection therewith. The city being about to proceed, under the ordinance to contract for the extension provided for, and to issue, sell, and deliver water-fund certificates to the amount of $240,000, and to secure the same by mortgage or deed of trust on the waterworks system, as provided in the ordinance, the appellee, a resident and taxpayer of the city, filed his bill in this case in the circuit court of Will county against the appellants, the city of Joliet and the mayor and city clerk thereof, to restrain them from entering into such contract, and executing and delivering said water certificates, and the mortgage or deed of trust securing the same. The foregoing facts were alleged in the bill, and admitted by general demurrer of the defendants. The demurrer was overruled, and the defendants elected to stand by it. The bill was then taken for confessed, and a decree was entered in accordance with its prayer.
The question to be decided is whether the execution of a contract and the issue of the proposed certificates, secured by a mortgage on the existing waterworks system and the extension, will create a debt of the city. If the city will thereby become indebted, the proposed action is prohibited by section 12 of article 9 of the constitution, limiting municipal indebtedness, in the aggregate, to 5 per centum on the taxable property of the city. The act of the legislature under which the ordinance was passed provides that a city may build a waterworks system, or enlarge or extend an existing system, and issue certificates of indebtedness therefor; that the entire proceeds arising from the operation of the waterworks system of the city shall be paid into a fund known as the ‘Water Fund,’ out of which the certificates are to be paid, and to which they are limited; that the city may convey, by way of mortgage or deed of trust, the waterworks system acquired or enlarged, to secure the payment of the certificates; that whenever default is made in the payment of certificates, and the default shall continue for the space of 90 days, the mortgagee or trustee may declare the whole of the principal and interest at once due and payable, and proceed to foreclose; and that the waterworks system shall be sold for a term of years, not exceeding 50, to satisfy the decree, and the purchaser be let into the use, occupation, and enjoyment of the same during the term of years for which it was sold. It is claimed that the certificates issued and secured upon property of the city under this act and the ordinance will not constitute a debt, and that no indebtedness will be thereby incurred, because the holder of certificates cannot enforce their payment out of general funds of the city, and the only effect of the mortgage will be to insure that the waterworks will earn the money to pay for the extension. It is true that no action can be maintained against the city on the certificates, other than to compel it to appropriate the water fund to their payment, and to make the city defendant in a foreclosure suit by which its property is taken and applied to such payment. But it is not essential that there should be a right of action on the certificates against the city in order to constitute a debt, where its money or property can be taken in payment. Where one party occupies the position of...
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