Culbertson v. City of Fulton

• Decision Date: 15 November 1888
• Citation: 127 Ill. 30,18 N.E. 781
• Parties: CULBERTSON et al. v. CITY OF FULTON et al.
• Court: Illinois Supreme Court

127 Ill. 30

18 N.E. 781

CULBERTSON et al.

v.CITY OF FULTON et al.

Supreme Court of Illinois.

November 15, 1888.

Appeal from circuit court, Whiteside county; JULIUS S. GRINNELL, Judge.

Bill for injunction, brought by William P. Culbertson, Bradstreet Robinson, and Henry C. Fellows against the city of Fulton, the Eclipse Wind-Engine Company, and the town tax collector. The bill was dismissed upon the hearing. Complainants appeal.

James McCoy and W. & W. D. Barge, for appellants.

Bennett & Green, for City of Fulton.

Charles F. White, for Eclipse Wind-Engine Co.

MAGRUDER, J.

This is a bill filed on December 16, 1887, in the circuit court of Whiteside county, by appellants, who are tax-payers in the city of Fulton, against the city of Fulton, the Eclipse Wind-Engine Company, and the town collector of the town of Fulton, who are the appellees herein. The bill alleges that a contract was made by the engine company with the city for the construction of a system of water-works, to furnish a supply of water for domestic uses and fire purposes; that the city therein agreed to pay a certain sum for the water-works; that the company has constructed the water-works, and claims the balance due on the contract; that the city proposes to pay the excess of the contract price over $10,000 out of the taxes hereinafter mentioned, when collected, and to issue and deliver to the company bonds to the amount of $10,000; that the indebtedness and the tax proposed to be collected to pay the excess over $10,000 are illegal, for the reasons hereinafter stated, etc. The prayer of the bill is for an injunction restraining the city from accepting the water-works and issuing the bonds, and restraining the collector from collecting the tax, and for a decree that the said taxes may be declared illegal and void, etc. The defendants answered. Replications were filed. After hearing, the circuit judge dissolved the injunction, and dismissed the bill.

The city of Fulton was incorporated under a special law, approved February 24, 1859, and amended March 9, 1869, (Priv. Laws 1859, p. 150; 1 Priv. Laws 1869, p. 917.) On June 9, 1887, the city council passed an ordinance providing for the borrowing of $10,000 for the purpose of constructing a system of water-works, and that bonds drawing 5 per cent. interest be issued therefor in denominations of $500 each, to be negotiated by the mayor at public or private sale, and the avails thereof to be paid into the city treasury for said purpose, etc. At a special election held in the city on July 1, 1887, this ordinance was approved by a vote of the people, as required by the charter. Under its charter and the laws of the state, and by virtue of the ordinance and vote aforesaid, the city unquestionably had the power to borrow the money to build the water-works. Dutton v. City of Aurora, 114 Ill. 138. The contract between the city and the engine company was executed on August 15, 1887, and, by its terms the system of water-works was to be completed within 90 days from that date. The contract provided that, when certain parts of the work should be completed to the satisfaction of the council, the contractor might, at his option, receive 50 per cent. of the cost of such parts; the remainder of the contract price to be paid when the work should be completed, and accepted by the city. The city, on its part, therein agreed to pay the engine company $11,619, at or during the completion of the work, as provided in the contract, and upon its acceptance by the council. On August 25, 1887, the city council passed an ordinance ordaining that a tax of $3,000 be and was thereby levied on all the property subject to taxation within the corporate limits, as assessed and equalized for state and county purposes for the year 1887; ‘$1,700.00 for the completion of the payment of the contract price for the construction of a system of water-works, $500 for the payment of interest on city bonds known as ‘Water-Works Bonds,’ $500 for a sinking fund to provide for the payment of the principal of water-works bonds, $300 for revenue purposes, known as the ‘City Fund.” A motion was filed on February 7, 1888, by the defendants below, to dissolve the preliminary injunction that had been granted in the case. This motion was heard on February 27, 1888, upon bill, answers, and affidavits. It appears from the affidavits that the city council, on November 17, 1887, accepted the system of water-works as completed, except the engine-house, which was alleged to have certain defects. It furthermore appears that by February 4, 1888, the engine-house had been repaired to the satisfaction of the city, and that on that day the whole system was in good running order, and ready for acceptance by the city.

1. Appellants claim that by the issuance of the bonds to the amount of $10,000 the city will ‘become indebted * * * 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,’ contrary to the prohibition of the constitution, as contained in section 12 of article 9. It is proven that when the contract was made, and also at the time of filing the bill, the city was not indebted in any amount whatever, except for the water-works in question. By entering into the contract on August 15, 1887, the city ‘became indebted.’ The obligations entered into by the terms of the contract constituted such an indebtedness as is contemplated by the language of the constitution. It cannot be said that the indebtedness did not come into being until the work was completed and accepted by the city. The city bound itself to pay for the work when it should be completed, and could be compelled to do so if the work should be done according to the contract. We said in City of Springfield v. Edwards, 84 Ill. 626:‘A debt payable in the future is obviously no less a debt than if payable presently; and a debt payable upon a contingency, such as the rendering of some service, or the delivery of property, etc., is some kind of a debt, and therefore within the prohibition. If a contract or undertaking contemplates, in any contingency, a liability to pay when the contingency occurs, the liability is absolute,-the debt exists, and it differs from a present unqualified promise to pay only in the manner by which the indebtedness was incurred.’ The constitution provides that the value of the taxable property must be ascertained by ‘the last assessment for state and county taxes previous to the incurring of such indebtedness.’ INASMUCH AS THE INDEBTEDNESS MUST BE REGarDed as having been incurred at the date of the contract,-that is to say, August 15, 1887,-we must ascertain the value of the taxable property for the purposes of this case from the assessment for state and county taxes for the year 1886, and not for the year 1887. This is so for the reason that the equalized value of the assessable property in the city of Fulton for the year 1887 was not arrived at by the action of the state board of equalization until the 1st day of October, 1887. It is the assessment as fixed by the state board which must govern, and the state board did not fix such assessment until after August 15th, the date of the incurring of the indebtedness. The value of the taxable property in the city, as assessed and equalized for the state and county taxes of 1886, was $209,061. Five per cent. of this amount is $10,453.05. The contract price, to-wit, $11,619, exceeds $10,453.05 by $1,165.95. This sum of $1,165.95 is the amount of the excess of the indebtedness over the constitutional limit. Counsel for both sides treat the $10,000 to be raised by the sale of the bonds, and $10,000 of the amount agreed to be paid to the engine company, as one and the same debt, because the object of raising the $10,000 on the bonds is to pay $10,000 of the price named in the contract. As it thus seems to...