Nordine v. Illinois Power Co.

• Decision Date: 18 March 1965
• Docket Number: No. 38774,38774
• Citation: 206 N.E.2d 709,32 Ill.2d 421
• Parties: Fritz V. NORDINE et al., Appellees, v. ILLINOIS POWER COMPANY et al., Appellants.
• Court: Illinois Supreme Court

Page 709

206 N.E.2d 709

32 Ill.2d 421

Fritz V. NORDINE et al., Appellees, v. ILLINOIS POWER COMPANY et al., Appellants.

No. 38774.

Supreme Court of Illinois.

March 18, 1965.

Rehearing Denied May 19, 1965.

James R. DePew, Corporation Counsel, Joseph W. DePew, Livingston, Barger & Brandt, Bloomington, and Mayer, Friedlich, Spiess, tierney, Brown & Platt, and Schiff, Hardin, Waite, Dorschel & Britton, Chicago (Herbert M. Livingston, Bloomington, Robert L. Stern, and William T. Hart, Chicago, of counsel), for appellants.

Robinson, Foreman, Rammelkamp, Bradney & Hall, Jacksonville, and Yoder & Yoder, Bloomington (Orville N. Goreman, Jacksonville, Walter A. Yoder, Bloomington, Theodore C. Rammelkamp, Jacksonville, and James W. Yoder, Bloomington, of counsel), for appellees.

Chapman & Cutler, Isham, Lincoln & Beale, Chicago, O'Hern, Alloy, O'Hern & Wombacher, Peoria, and Stevens, Herndon, Nafziger & Mohan, Springfield (John N. Vander Vries, Richard G. Ferguson, Chicago, Charles V. O'Hern, Peoria, and Elmer Nafziger, Springfield, of counsel), for amicus curiac.

HOUSE, Justice:

This is an equitable action against Illinois Power Company, the city of Bloomington, and others, to restrain the sale to Illinois Power of certain personal property and real estate making up the physical properties (with minor exceptions) of the city's electric utility system. Plaintiffs are taxpayers of the city and consumers of electric energy of the system. The circuit court of McLean County allowed a motion to strike the complaint and entered judgment against the plaintiffs. The Appellate Court, Fourth Judicial District, reversed (48 Ill.App.2d 424, 199 N.E.2d 34), and we granted leave to appeal.

Illinois Power made a preliminary proposal dated August 13, 1962, for the purchase of the entire physical properties of the city's municipally-owned electric utility for $2,500,000 and assumption of $500,000 to $525,000 in outstanding revenue bonds. The city thereafter adopted an ordinance reciting that Illinois Power had indicated a willingness to purchase the personal property of the utility for $2,250,000. The ordinance set forth the terms of a contract of sale whereby the city was to sell the physical personal property for the latter amount upon assumption of payment of $540,000 outstanding revenue bonds. A second ordinance was also adopted providing for the taking of bids and sale of the real estate upon which the generating plant was located. The city sold the personal property upon the terms recited and sold the utility real estate to Illinois Power upon its bid of $250,000.

The physical personalty of the utility was sold under section 11-76-4 of the Illinois Municipal Code, (Ill.Rev.Stat.1963, chap. 24, par. 11-76-4,) which provides in part: 'Whenever a city * * * owns any personal property which in the opinion of three-fourths of all the corporate authorities, is no longer necessary or useful to, or for the best interests of the city or village, such a majority of all the corporate authorities, * * * by ordinance may authorize the sale of that personal property in such manner as they may designate, with or without advertising the sale, * * *.' The real estate was sold under section 11-76-1 of the Code (chap. 24, par. 11-76-1), which authorizes the sale of any real estate held by a city when in the opinion of 3/4 of the corporate authorities it 'is no longer necessary, appropriate, required for the use of, profitable to, or for the best interests of the city * * *.' The section also provides that the real estate must be advertised for bids, and while a majority of the corporate authorities is empowered to reject all bids, a bid may be accepted only by a vote of 3/4. There was literal compliance with both of the foregoing sections in the consummation of the sale.

The original statute granting to a city the power to sell any real or personal property acquired or held by it for any purpose whatsoever was enacted in 1899 in substantially the form of present section 11-76-1, and was amended in 1917, placing the sale of personal property in a separate section wherein the need for competitive bidding was eliminated. The description of property which may be sold has always been very broad. In the case of personal property (sec. 11-76-4) the statute now reads, 'any personal property' and as to real estate (sec. 11-76-1) it covers 'any real estate (held) for any purpose whatsoever'. While conceding that this language is clear, various reasons are assigned why these broad general powers of sale are inapplicable to the sales in question.

The essence of plaintiffs' position is that when a municipality enters into the electric utility field after authorization by a referendum, it is powerless to discontinue operation and divest itself of ownership. It is argued that separate sales of the personal and real estate making up the physical property of the utility were without statutory authority and were, therefore void. It is conceded by all parties that while there is no specific statutory provision for discontinuance of service or sale of such a utility, there is likewise no specific statutory provision prohibiting discontinuance or sale.

We are in accord with the view of the Appellate Court that because the acquisition and operation of a municipal utility must receive the approval of the electorate through referendum, it does not follow that a referendum is likewise required before discontinuance and sale. Such a referendum would be directory only. We disagree however with its adoption, at least in substantial part, of the limiting effect attributable by plaintiffs to totally unrelated portions of the Municipal Code in arriving at legislative intent.

In some instances the legislature has granted a power to a municipality to commence and carry on a municipal function, subject to approval by referendum, and has provided that discontinuance of the function must likewise be subject to approval by the electorate; for example, a tuberculosis sanatarium, (Ill.Rev.Stat.1963, chap. 24, par. 11-29-14,) a municipal band (par. 11-45-5) and public health boards (par. 11-17-9). On the other hand, the construction and operation of other facilities have been authorized subject to a referendum, but without either setting up any requirement for a referendum or providing specific authority to sell. (See e. g. community buildings and gymnasiums, Ill.Rev.Stat.1963, chap. 24, par. 11-63-1 et seq.; coliseums par. 11-66-1 et seq.; stadiums and athletic fields, par. 11-68-1 et seq.; swimming pools, par. 11-94-1 et seq.; airports, par. 11-101-1 et seq.; and municipal heating systems, par. 11-118-1 et seq.) The unrelated statutes thus far referred to, each found in a separate division of the Municipal Code, seem to illustrate that no fixed pattern has been adopted for discontinuance and sale of municipal facilities and contradict plaintiffs' position. In fact, several of these statutory provisions carry a definite implication of the power to sell. In the case of a coliseum a transfer of funds is authorized one year after 'a municipal coliseum has been sold by the municipality'. and with respect to swimming pools the municipalities 'shall not sell' until either payment or provision for payment of all outstanding revenue bonds has been made. Since there was no specific power to sell within those statutes, the intent can be gathered that the general sale powers of division 76 of article 11 are applicable.

Plaintiffs direct attention to the similarity of the Municipal Ownership Act, under which this and other utilities are acquired and operated, and an act authorizing acquisition and operation of street railways by cities. The Street Railways Act, (now included in the Municipal Code as division 122 of article 11) was enacted in 1903, while the Municipal Ownership Act (now in the Code as division 117 of article 11) was adopted in 1913. Their similarity is sufficient to justify plaintiffs' statement that the latter was modeled on the former. Each provided for acquisition and operation, with the proviso that the question should first be submitted to a referendum, and neither specifically provided for discontinuance or sale. In 1933 the Street Railways Act was amended to prvide for discontinuance of operation and 'for the sale or disposal, in such manner as the city council may determine', but subject to approval of the electorate by referendum.

Plaintiffs argue that by the amendment the legislature determined not only that the Street Railways Act contained within itself no power to discontinue operation and sell but also thereby...