Cremer v. Peoria Hous. Auth.

• Decision Date: 18 March 1948
• Docket Number: No. 30514.,30514.
• Citation: 78 N.E.2d 276,399 Ill. 579
• Parties: CREMER et al. v. PEORIA HOUSING AUTHORITY et al.
• Court: Illinois Supreme Court

399 Ill. 579

78 N.E.2d 276

CREMER et al.

v.PEORIA HOUSING AUTHORITY et al.

No. 30514.

Supreme Court of Illinois.

March 18, 1948.

Appeal from Circuit Court, Peoria County; Joseph E. Daily, judge.

Action by Charles F. Cremer and another against Peoria Housing Authority and others to set aside a real estate contract and other instruments, and to restrain defendants from performing or executing similar contracts. From a decree dismissing the cause, plaintiffs appeal.

Affirmed.

Verle W. Safford, of Peoria, for appellants.

Willard B. Gaskins, of Peoria, and Werner W. Schroeder, Rubin G. Cohn and Concannon, Dillon, Snook & Arthur, all of Chicago, for appellees.

WILSON, Justice.

The plaintiffs, Charles F. Cremer and Alvyn C. Boldon, qualified taxpayers, brought an action in the circuit court of Peoria County against the defendants, Peoria Housing Authority, illinois Valley Homes, Inc., Nettleson-Baldwin-Anderson, Inc., and Mercantile Mortgage Corporation, seeking to set aside a real-estate contract between the two first named defendants and all deeds, mortgages and agreements arising therefrom, and to restrain all defendants from performing existing contracts or executing new ones of a similar character. Basically, the action is an attack upon the constitutionality of an act entitled, ‘An Act to facilitate the development and construction of housing, to provide governmental assistance therefor, and to repeal an Act herein named,’ otherwise known and herein referred to as the 1947 State Grant Act. (Ill.Rev.Stat.1947, chap. 67 1/2, pars. 53-62.) The act repealed, the 1945 State Grant Act, is also involved. (Laws of 1945, pp. 946-9.) By their joint answer, Peoria Housing Authority and Illinois Valley Homes, Inc., admitted the facts alleged in the complaint but denied that the 1945 and 1947 State Grant acts were unconstitutional. Separate motions by the other defendants to strike the complaint were taken with the case. After a hearing on the merits, the chancellor found that all acts and threatened acts of defendants were valid and legal, and dismissed the cause for the want of equity. The constitutionality of legislative enactments being at issue, plaintiffs have prosecuted a direct appeal to this court.

The principal defendant, Peoria Housing Authority, is a municipal corporation created pursuant to the provisions of the Housing Authorities Act of 1934. (Ill.Rev.Stat.1947, chap. 67 1/2, pars. 1-27d.) In addition to establishing a State Housing Board, the Housing Authorities Act provides for the creation of local housing authorities upon application made by any city having over 25,000 inhabitants, or any county, regardless of size. Certificates of incorporation are issued by the State Housing Board upon a finding that there exists within the geographical limits of the applicant either unsafe or unsanitary inhabited dwellings or overcrowding of safe and sanitary dwellings by persons unable to afford adequate housing accommodations. Each city and county authority is composed of five unsalaried commissioners, appointed locally, and such assistants and employees as may be selected by the commissioners. Designated as bodies both corporate and politic exercising essential governmental functions, authorities are endowed with all powers necessary and appropriate to engage in low-rent housing and slum-clearance projects. Specifically, local authorities are empowered to conduct hearings and investigate housing conditions, to acquire property to purchase, lease or eminent domain, to construct, manage and operate housing projects, and to sell, exchange or lease real and personal property. Without the power to levy taxes, funds for commencing operations can be acquired only by the sale of bonds or by gift or grant from the Federal, State or municipal governments, or any agent or instrumentality thereof. Co-operation with the Federal government is encouraged by special grants of power and the creation of housing authorities has been made more acceptable to local communities by adding a provision requiring that, in the absence of an agreement as to a greater or lesser sum, five per cent of gross income from shelter rentals of housing projects shall be paid as a service charge to the city or county for which the authority was created. Subject to a many-pronged attack on constitutional grounds, the validity of the Housing Authorities Act of 1934, as amended, was confirmed in Krause v. Peoria Housing Authority, 370 Ill. 356, 19 N.E.2d 193.

The Housing Cooperation Law of 1937 provides assistance to housing authorities by declaring that it is a proper public and corporate purpose for any local governmental body to aid any housing authority operating within its boundaries. (Ill.Rev.Stat.1947, chap. 67 1/2, pars. 28-35.) In particular, municipal governments are authorized to sell, lease or dedicate land to housing authorities, to establish recreational facilities, to furnish improvements, to supply office space and loan employees, to purchase housing authority bonds and, finally, to lend money and make donations.

Housing authorities continued to be supported by local governmental and agencies instrumentalities of the Federal government until the passage of the first State Grant Act in 1945. (Laws of 1945, pp. 946-9.) By this enactment, $10,000,000 was appropriated to the State Housing Board for the purpose of rendering direct financial assistance to local housing authorities, the amount of the grants to be determined on the basis of the ratio of population between the local authority and the State as a whole. In 1945, slum clearance was still the paramount legislative intent. Grants for the construction of low-rent housing were conditioned upon agreements providing for the clearance or rehabilitation of slum dwelling substantially equal in number to the low-rent dwellings to be constructed. Only in the event of a housing shortage in the particular locality could the slum-clearance project be postponed. In addition, the 1945 State Grant Act provided for the creation of land clearance commissions, municipal corporations having powers coextensive with housing authorities with the single exception that the authority to build or operate housing was denied. Further provision was made empowering both housing authorities and land commissions to exchange, sell or lease real property acquired with grants to housing corporations, neighborhood redevelopment corporations, insurance companies, and any individual or corporation presenting an adequate plan for the development of the property together with a substantial bond conditioned on the completion of the project.

The comprehensive program of housing legislation enacted by the General Assembly in 1947 necessitated the repeal of the 1945 State Grant Act. Land clearance commissions were placed under a separate statute, known as the Blighted Areas Redevelopment Act of 1947, (Ill.Rev.Stat.1947, chap. 67 1/2, pars. 63-91,) and the sum of $10,000,000 was appropriated for grants in aid to them, conditioned on matching contributions from the local governmental body. Parenthetically, it may be noted that slum property so acquired must be cleared and sold to private interests at its use value, rather than the potentially higher acquisition cost, and that purchasers are not limited to redevelopment by construction of low-rent housing. The 1947 State Grant Act repeals the 1945 act, makes a showing of a need and a statement of proposed uses the only prerequisites to the allocation of further grants to housing authorities and land commissions, provides for ths distribution of funds on the basis of population without the requirement of matching funds from local governments, and broadens the uses and purposes for which the grants may be used by local authorities. (Ill.Rev.Stat.1947, chap. 67 1/2, pars. 53-62.) The appropriation to the State Housing Board for grants to local authorities under the 1947 act amounted to $6,567,000. The remaining housing legislation enacted into law in 1947 relates to the rehousing of persons of low income residing in redeveloped slum areas. (Ill.Rev.Stat.1947, chap. 67 1/2, pars. 92-95.) Housing authorities desiring to construct low-rent housing projects primarily for the occupancy of persons displaced by slum-clearance programs are eligible to grants in aid from a fund of $3,333,000 established for the purpose, the principal proviso being that local governments must make matching contributions.

Pursuant to the 1945 and 1947 State Grant acts, the Peoria Housing Authority, upon application to the State Housing Board, received funds derived from the general revenues of the State in the amounts of $133,070 and $87,386, respectively.Thereafter, at some undisclosed date, the housing authority purchased certain vacant lands in the city of Peoria. Admittedly, the property thus acquired is not located in a blighted or slum area. The purchase money, together with further sums expended for the installation of streets and sewers, aggregated approximately $72,106, all derived from the funds allocated to the authority, pursuant to the State Grant acts.

In October 1947, the Peoria Housing Authority offered the property for sale, but no bids were received. Subsequently, the defendant, illinois Valley Homes, Inc., a nonprofit corporation, offered to purchase the property for $72,106, to be paid by a long-term note for this sum, secured by a mortgage junior and subordinate to a contemplated construction mortgage. With the offer, the nonprofit corporation submitted a plan for the development of the property by the construction and rental of 25 two-story apartment buildings containing 136 dwelling units. Following the approval of the offer and plan by the State Housing Board, the Peoria Housing Authority passed an ordinance accepting the proposal. On November 20, the housing authority executed a conveyance to the nonprofit corporation and received the grantee's note for $72,106, due...