McNulty v. Illinois State Toll Highway Authority
| Decision Date | 25 September 1992 |
| Docket Number | No. 1-91-3490,1-91-3490 |
| Citation | 601 N.E.2d 1252,235 Ill.App.3d 569 |
| Parties | , 176 Ill.Dec. 554 Mary Ann F. McNULTY, Eugene H. Dupee, Jr., Stephen Graham, Stuart K. Jones, and Michael J. Hoesley and Richard T. Hough, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. The ILLINOIS STATE TOLL HIGHWAY AUTHORITY, Myron F. Weil, as Chairman of the Board of The Illinois State Toll Highway Authority, Thomas H. Morsch, Jr., as Executive Director of The Illinois State Toll Highway Authority, and Jerry Cosentino, Treasurer of the State of Illinois, Custodian and Treasurer ex officio of the funds of the Illinois State Toll Highway Authority, Defendants-Appellees. |
| Court | United States Appellate Court of Illinois |
Ronald L. Futterman, Futterman & Howard, Chtd., Chicago, Robert J. Meyers, Winnetka, for plaintiffs-appellants.
Dan K. Webb, Lawrence R. Desideri, Sp. Asst. Attys. Gen., Winston & Strawn, Roland W. Burris, Atty. Gen., Gary M. Griffin, Asst. Atty. Gen., Chicago, Frank M. Howard, Chief Counsel of Illinois State Toll Highway Authority and Sp. Asst. Atty. Gen., Oak Brook, for defendants-appellees.
Plaintiffs, Mary Ann F. McNulty, Eugene F. Dupee, Jr., Stephen Graham, Stuart K. Jones, Michael J. Hoesley, and Richard T. Hough, brought a class action suit on behalf of certain users of the Northern Illinois Toll Highway ("NITH") against defendants, the Illinois State Toll Highway Authority (the "Authority") and Myron F. Weil, chairman of the board of directors, Thomas H. Morsch, Jr., executive director, and Jerry Cosentino, Treasurer of the State of Illinois. (The case was never certified to proceed as a class action.) Plaintiffs' complaint alleged that the Authority failed to fix and adjust tolls at the lowest possible rate thereby unlawfully accumulating and withholding a surplus fund of $74 million; that the Authority wrongfully diverted and misappropriated the NITH surplus to pay construction costs on a new and separate tollway, (the "North-South"); and also violated plaintiffs' civil rights under 42 U.S.C. § 1983. Plaintiffs appeal the trial court's dismissal of counts I, II and VI of the second amended complaint for failure to state a cause of action.
We adduce the following background from the affidavits, pleadings and documents filed. In 1953, the Illinois State Toll Highway Commission ("Commission") was established to provide for the construction, regulation, and maintenance of a toll highway or a system of toll highways to accommodate the travelling public through and within the State of Illinois. At the time the NITH commenced operations in 1958, it consisted of three toll highways, which included the Tri-State, the Northwest, and the East-West toll highways. These three toll highways total 256 miles, and are connected by interchanges so that vehicles can travel on the various highways without leaving the system.
In order to finance the construction of the NITH, revenue bonds were sold in a total amount of $415,000,000. The Illinois Toll Highways Act ("Act") () empowered the Commission to fix and revise tolls or charges for the privilege of using the toll highway. The tolls were to be fixed and adjusted to provide a fund at least sufficient to pay the cost of: (1) maintaining, repairing, regulating and operating the toll highway, and (2) the bonds and interest thereof and all sinking fund requirements. (Emphasis added.) The original Act contemplated that when the bonds were paid off and funds escrowed for future maintenance, the NITH would be operated free of tolls and the Commission would be dissolved.
On August 5, 1969, section 15 (currently section 19) of the Act was amended to provide that "tolls shall be fixed and adjusted at the lowest possible rate " to provide funds sufficient to pay the cost of maintaining, repairing, regulating and operating the toll highway, including only the necessary expenses of the Commission, the bonds and interest thereof and all sinking fund requirements. Ill.Rev.Stat.1983, ch. 121, par. 100-19. (Emphasis added.)
In July 1984 the Illinois Senate issued a joint resolution authorizing the Authority to expand the Illinois toll highway system to include a North-South toll highway, which consisted of a 17-mile road between Army Trail Road and Bolingbrook. The legislature concurrently amended several provisions of the Act. That portion of section 100-32 which had previously disallowed the Authority from pledging the revenues produced by the present toll highways for any purpose in relation to any other toll highway was deleted from the Act. Section 21 of the Act was amended to provided that only when all bonds and "all interest" are paid does the toll highway become part of the State highway system. (Previously, the Act provided that the toll highways in existence prior to 1977 would become part of the State highway system when all bonds and interest on only those toll highways were paid.) Consequently, toll revenues collected after August 15, 1984 could be used to pay principal and interest on bonds issued for any purpose with respect to the NITH bonds as well as the bonds issued to construct the North-South toll highway.
The North-South toll highway was financed through the sale of $400,825,000 of revenue bonds sold on October 1, 1986. The new highway was constructed, substantially paid for and began operating on December 27, 1989.
On September 27, 1989, the Illinois Auditor General ("Auditor") published an audit for the year ending December 31, 1988. In the report, the Auditor found that the Authority "may not be charging the lowest possible toll rate as statutorily required" and that named authorized uses do not include new construction on the North-South toll highway.
On December 15, 1989, plaintiffs filed a one-count complaint, alleging that the Authority was violating the Act by using revenues from the first three toll highways to pay for the new construction on the North-South toll highway. The complaint was subsequently amended with two new counts not at issue in this appeal. Defendant filed a motion to dismiss plaintiffs' complaint. During the pendency of that motion, the legislature again amended section 19(c) of the Act on August 10, 1990 to provide that:
Plaintiffs filed a second amended complaint containing six counts. In count I, plaintiffs alleged that defendants violated the Act prior to August 15, 1984 by accumulating and withholding a fund of surplus NITH toll revenues which totaled at least $74 million, failed to apply the fund toward a reduction of the NITH toll rates and to fix and adjust tolls on the NITH at the lowest possible rate. Plaintiffs sought the following relief: a declaration that the fund of surplus NITH tolls be held in a constructive trust for the benefit of plaintiffs and the class; an account for surplus tolls illegally withheld and/or subsequently diverted; and that defendants reduce the NITH rate schedule.
In count II, plaintiffs contended that defendant violated the Act between August 15, 1984 and August 10, 1990 by wrongfully diverting surplus NITH toll revenues collected prior to August 10, 1990 (at least $81 million) to pay construction costs on the North-South toll highway. In count VI, plaintiffs alleged that they were deprived of their property rights to the lowest possible rate without due process, in violation of 42 U.S.C. § 1983.
The trial court dismissed plaintiffs' complaint, finding the unlawful diversion of funds allegation to be illogical, and because it would ultimately increase the costs of toll roads to all users. The judge determined that the North-South extension must be viewed as an "integral part of the total system of toll roads and not as a collection of individual roads with individual groups of users" because the total system approach most accurately reflected legislative intent. Further, the court found that the Authority's use of funds from the surplus rather than a series of bond issues contributed to lower toll rates by virtue of the fact that the Commission need not be subject to the vagaries of the financial bond market. The trial court dismissed counts I and II. (Count VI was premised upon violations of counts I and II; as such, plaintiffs concede that it is no longer viable if counts I and II are dismissed.)
It is well-established that a cause of action should be dismissed on the pleadings only if it is clearly apparent that no set of facts can be proved which will entitle the plaintiff to recover. (DiBenedetto v. Flora Township (1991), 219 Ill.App.3d 1091, 162 Ill.Dec. 684, 580 N.E.2d 647.) When the legal sufficiency of a complaint is challenged by a section 2-615 motion to strike or dismiss, all well-pleaded facts in the complaint must be taken as true, and "a reviewing court must determine whether the allegations of the complaint, when interpreted in the light most favorable to the plaintiff, are sufficient to set forth a cause of action upon which relief may be granted." Burdinie v. Village of Glendale Heights (1990), 139 Ill.2d 501, 152 Ill.Dec. 121, 565 N.E.2d 654.
Plaintiffs first contend that the trial court erred in dismissing count I, since after section 19 was amended in August 1969, the...
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