Mathews v. City of Chicago

Decision Date18 December 1930
Docket NumberNos. 20391-20393.,s. 20391-20393.
Citation342 Ill. 120,174 N.E. 35
PartiesMATHEWS v. CITY OF CHICAGO et al. SAME v. COOK COUNTY et al. SAME v. BOARD OF EDUCATION OF CITY OF CHICAGO et al.
CourtIllinois Supreme Court

OPINION TEXT STARTS HERE

Suits by Erminnie C. Mathews, a taxpayer, in her own behalf and in behalf of such other taxpayers as might be similarly situated and chose to join in the suits, against the City of Chicago and others, against the County of Cook and others, and against the Board of Education of the City of Chicago and others. The bills were dismissed for want of equity, and complainant appeals. The appeals were consolidated and were argued together.

Affirmed.Appeal from Circuit Court, Cook County; G. Fred Rush, Judge.

Butler, Lamb, Foster & Pope, of Chicago (Rush C. Butler and Allan J. Carter, both of Chicago, of counsel), for appellant.

Samuel A. Ettelson, Corp. Counsel, John A. Swanson, State's Atty., John G. Drennan, Edward

C. Higgins, Gotthard A. Dahlberg, James Todd, Louis H. Geiman, Hayden N. Bell, William F. Struckmann, Dodd & Matheny, and Tolman Sexton & Chandler, all of Chicago (Silas H. Strawn, Edgar B. Tolman, and Walter F. Dodd, all of Chicago, of counsel), for appellees.

DUNN, C. J.

Erminnie C. Matthews, a tax payer of the city of Chicago and county of Cook, in her own behalf and in behalf of such other taxpayers of the city, county, and state as might be similarly situated and chose to join in the suits, filed three bills in the circuit court of Cook county attacking the constitutionality of three acts passed by the Fifth-Sixth General Assembly at its special session held in May and June, 1930, and praying for an injunction restraining the defendants in the respective cases from issuing and selling any bonds for the creation or maintenance of a ‘working cash fund’ under the supposed authority of the act involved in the particular case. In each case the bill was demurred to, the demurrer was sustained, the bill was dismissed for want of equity and the complainant appealed.

The defendants in No. 20391 were the city of Chicago, its mayor, comptroller, and city clerk; in No. 20392, the county of Cook, the president of its board of commissioners, and the county clerk; in No. 20393, the board of education of the city of Chicago, its president and secretary, the city of Chicago, and its mayor and comptroller. The questions involved in the three cases are substantially the same, and the appeals have therefore been consolidated and were argued together.

The three acts in question purport to authorize the creation, maintenance, and administration of a ‘working cash fund’ in cities having a population of 150,000 or more, in counties having a population of 500,000 or more, and in each school district constituted of a city exceeding 100,000 in population and under the charge of a board of education, being a body politic and corporate by the name of Board of Education of the city of _____.’ The working cash funds in cities and in counties are provided for by separate acts, the one applying to cities having the required population (Laws of 1930, Special Sess. p. 24), and the other to counties having the required population (Ibid., p. 49). The fund for boards of education is provided for by the addition of sections 134 1/2 and 189 1/4 to the General School Law (Ibid., pp. 98, 110). These enactments purport to authorize the issue, without a referendum, for the purpose of creating such working cash funds, of bonds to the amount of $12,000,000 by the city of Chicago, $6,500,000 by the county of Cook and $25,000,000, but not more than one-half in any calendar year, by the board of education of the city of Chicago, with the consent of the city council. It is alleged in each bill that the respective corporations have taken action for the issue and sale of bonds to the amount authorized.

It is unnecessary to describe in detail the condition of extreme financial need of the city of Chicago, the county of Cook, and the board of education of the city of Chicago which preceded the calling of the special session of the General Assembly in May, 1930, or the causes of such condition. All of these municipal corporations were largely indebted, their credit was greatly impaired, and the loss of revenue by the delayed collection of taxes, combined with other causes, made uncertain their ability to meet the current expenses of municipal operation. To meet this emergency for the present as well as to stabilize the finances of the municipalities for the future was the object of the special session. To raise the cash to pay the current liabilities of the municipalities, sales of bonds were necessary, and to stabilize the finances of the municipalities the Legislature adopted the plan of creating a revolving fund of the proceeds of the bonds authorized to be issued, which was denominated a ‘working cash fund,’ the money in which should not be regarded as current assets available for appropriation and should not be appropriated in the annual appropriation bill by the city council or the county board or in the annual school budget by the board of education. However, it is provided that money in the working cash fund may be transferred in whole or in part, in order to provide money for the payment of salaries and other corporate purposes, to the general corporate fund of the city or county to be disbursed therefrom for general corporate purposes, in anticipation of the collection of that part of the taxes levied for general corporate purposes which is in excess of the amount required to pay any warrants issued under the provisions of section 2 and 3 of the act ‘to provide for the manner of issuing warrants upon the Treasurer of the State or of any county, township, city, village or other municipal corporation and jurors' certificates,’ approved June 27, 1913 (Laws of 1913, p. 608), as amended (Laws of 1930, Special Sess. p. 113), and any notes issued under the provisions of an act concerning the anticipation of taxes, and obligations in respect thereof, in counties having more than 500,000 population, approved and in force May 22, 1929 (Laws 1929, p. 298). Upon the receipt by the treasurer of any taxes or other money in anticipation of the collection or receipt whereof moneys of such working cash fund have been so transferred for disbursement, such fund shall immediately be reimbursed therefrom until the full amount so transferred has been retransferred to such fund, and unless the taxes so received and applied to the reimbursement of the working cash fund prior to the first day of the seventh month in counties, or the eighth month in cities or school districts, following the month in which due and unpaid real property taxes by law begin to bear interest, shall be sufficient to effect a complete reimbursement of such fund for any moneys transferred therefrom in anticipation of the collection or receipt of such taxes or other moneys, such working cash fund shall be reimbursed for the amount of the deficiency therein from any other revenues accruing to said general corporate fund, and it shall be the duty of the city council or the county board to make provision for the immediate reimbursement of the amount of any such deficiency in its next resolution termed the ‘annual appropriation bill.’ In the case of the board of education the transfers from the working cash fund can be made only for salaries and other educational purposes to the educational purposes fund of the board of education and so disbursed therefrom in anticipation of the collection of any taxes lawfully levied for educational purposes, and the deficiency in reimbursement must be provided for by the board of education in its next annual school budget. Thus the working cash fund constitutes a revolving fund from which money may be transferred to other funds in anticipation of taxes to be collected for the purposes of such other funds, to be repaid later out of the taxes levied for such other funds when collected, and a method is provided enabling the municipality to do business on a cash basis by transferring money from the working cash fund to other funds during the time between the levy of taxes for such other funds and the collection of the taxes so levied.

From the money arising from the sale of the bonds authorized by these acts, transfers will be made by the municipalities to the various corporate funds which are in need of money and will then be disbursed only for the purposes specified in the annual appropriation bills or school budget. When the taxes levied for those purposes are collected several months later, the money will be returned to the working cash fund, to be again transferred to the various corporatefunds after the next year's levies for those funds have been made, and then to be again returned to the working cash fund from the collection of the taxes levied, and so on year by year, the working cash fund having money to its credit after the collection of taxes for each year, of which it will be depleted after the levies are made for the succeeding year and before the collection of the taxes so levied. It is further provided that transfers from the working cash fund to the general corporate fund of the municipality shall be made only by the city council by ordinance or the county board or board of education by resolution, setting forth the taxes in anticipation of whose collection the transfer is to be made and from which the working cash fund is to be reimbursed, the entire amount of taxes extended or estimated to be extended in anticipation of the extension of which such transfer is to be made, the amount of anticipation warrants issued against such taxes and interest accrued or estimated to accrue, and the amount theretofore transferred from the working cash fund to the general corporate fund. The amount directed to be transferred in anticipation of the collection of taxes levied in any year, together with the aggregate amount of anticipation warrants...

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