People ex rel. Reconstruction Finance Corp. v. Bd. of Educ. of City of Chicago

• Decision Date: 11 May 1944
• Docket Number: No. 27497.,27497.
• Citation: 54 N.E.2d 508,386 Ill. 522
• Parties: PEOPLE ex rel. RECONSTRUCTION FINANCE CORPORATION et al. v. BOARD OF EDUCATION OF CITY OF CHICAGO et al.
• Court: Illinois Supreme Court

386 Ill. 522

54 N.E.2d 508

PEOPLE ex rel. RECONSTRUCTION FINANCE CORPORATION et al.

v.BOARD OF EDUCATION OF CITY OF CHICAGO et al.

No. 27497.

Supreme Court of Illinois.

March 21, 1944.

Rehearing Denied May 11, 1944.

Mandamus proceeding by the People, on the relation of Reconstruction Finance Corporation and others, against the Board of Education of the City of Chicago and others to compel respondents to adopt a budget sufficient to pay judgments held by relators. From a judgment for respondents, relators appeal.

Affirmed.Appeal from Circuit Court, Cook County; Benjamin P. Epstein, judge.

Lee Walker, M. O. Hoel, Poppenhusen, Johnston, Thompson & Raymond, Rathje, Hinckley, Kulp & Sabel, and Urion, Bishop & Sladkey, all of Chicago (Floyd E. Thompson and Albert E. Jenner, Jr., both of Chicago, of counsel), for appellants.

Richard S. Folsom, of Chicago (Frank S. Righeimer, Frank R. Schneberger, and James W. Coffey, all of Chicago, of counsel), for appellees.

GUNN, Justice.

On November 13, 1942, the People of the State of Illinois upon the relation of Reconstruction Finance Corporation and some three hundred fifty other persons, hereinafter referred to as relators, filed a verified petition for writ of mandamus in the circuit court of Cook county against the board of education of the city of Chicago and the members and president thereof, hereinafter referred to as the board, alleging substantially as follows: That the relators were the owners of judgments against the board, all of which were fully described in the petition; that the respondent is a school district constituted by law as a body politic and corporate, charged with the establishment, support, maintenance, supervision and control of free schools for the area within the city of Chicago, Illinois; that said board is required to adopt a budget within the first sixty days of each fiscal year to appropriate such sums of money as may be necessary to defray all necessary expenses and liabilities of the board, to be paid or incurred during the fiscal year; that it is required by statute that the estimates of the expenses of said budget shall include final judgments accruing against the board, and that upon adoption the annual school budget becomes the appropriation bill, and constitutes an appropriation of the funds and moneys to be used for the purposes therein set forth.

In the year 1939 the relator Reconstruction Finance Corporation commenced a certain cause in equity in Cook county against the board, and in response to process duly served the board appeared and defended the cause, and April 28, 1939, a final decree was entered in favor of Reconstruction Finance Corporation. Other allegations are contained showing that all of the several relators obtained judgments against the board in like proceedings, and upon a like basis, and that although such judgments stood unmodified and in full force and effect and unpaid at the beginning of the fiscal year of January 1, 1940, no provision for payment of said judgments was made in the annual school budget.

A description of the time of filing and obtaining decrees in the other cases is set forth and like allegations made that no provision was made for payment thereof in the annual school budget. Some of the judgments have been assigned and the names of the assignees set forth. The relators also charge that since the entry of the judgment they have made demands upon the board, and the members and president thereof, that said judgments be paid, and that respondents bring about the payment of said judgments with interest, and that respondents have failed and refused to pay any of such judgments, or to include them in the annual school budget, or make appropriation for the payment thereof, and that they now threaten to fail to include them in the annual school budget beginning January 1, 1943, the relators pray for a writ of mandamus requiring the board, when it adopts its annual school budget, to include an appropriation for the payment of such judgments so they may become a part of the appropriation for the payment of which a levy of taxes may be made by the board. A copy of the judgment decree in each of said cases is attached to the petition as an exhibit, and will be referred to later.

On June 7, 1943, an amendment to the petition for mandamus was filed, setting forth that, while said cases were pending, a cause had been decided in the United States district court holding the board liable to holders of outstanding unpaid 1929 tax anticipation warrants for their prorata share of the proceeds of the collection of such taxes, and that the General Assembly had enacted a statute authorizing the board of education of any school district constituted by law in any city having a population exceeding 500,000 inhabitants to issue bonds to pay judgment indebtedness, which enabled the board of education to issue such bonds to pay the indebtedness of the relators, and prayed as alternative relief that the board be required to do every act and thing necessary under said statute authorizing bonds to provide funds necessary to pay the several judgments owned by the relators, together with accrued interest. Ill.Rev.Stat.1943, c. 122, § 327.62 et seq.

The answer of respondents admits such judgments were entered; denies they are valid; denies that they have been in no way impeached; but on the other hand alleges that the decision of this court in Leviton v. Board of Education, 374 Ill. 594, 30 N.E.2d 497, holds that said judgments are either based upon the 1929 tax anticipation warrants of the school board, or a breach of trust upon the part of the members of the board, and, as such, do not constitute a liability under the constitution. The answer also sets forth that, subsequent to the filing of the petition for mandamus, motions to vacate the judgments against the board were made and denied by the trial court, and that appeals from such orders are being prosecuted; admits that no part of said alleged judgments has been paid, and no provision made in the annual school budget to pay them, but denies any obligation upon its part to pay such judgments, or to include them in its annual budget.

The answer then proceeds to set forth the proceedings under which it had attempted to comply with the act authorizing the issuance of bonds to pay judgments, and the litigation resulting, and described in Leviton v. Board of Education, 374 Ill. 594, 30 N.E.2d 497, together with certain conclusions the answer draws as to the effect of the judgment in said cause.

The answer further admits that the judgments described in the petition were entered against the board of education after a hearing in open court, but alleges that the respective courts, in entering the same, exceeded their jurisdiction and transgressed the law, and did not have jurisdiction to enter the same in any of the said respective causes, and that said judgments are void. It also admits that there was a statute enacted by the General Assembly, such as set forth in the amendment to the petition, but alleges that said statute was held void in Leviton v. Board of Education, 374 Ill. 594, 30 N.E.2d 497, to the extent that it authorizes bonds to be issued and sold to discharge judgments based upon liability arising out of unpaid tax anticipation warrants, and that if the prayer of the petition for mandamus is granted it will require the respondents to violate section 9 of article IX of the constitution of the State of Illinois, Smith-Hurd Stats.

The answer also alleges that the cases in which the judgments were entered are still pending in the courts, and that as a part of the decrees the courts retained the jurisdiction of the causes for the purpose of affording other relief. The respondents further allege that, under the constitution of Illinois, the board is required to provide a thorough and efficient system of free schools, and that if it is required to make appropriations for the payment of the alleged judgments it will not have sufficient income to pay said judgments or any part thereof, and also to continue to comply with its requirement to provide proper schools for children in the Chicago school district, and that it would be compelled to so reduce and curtail the school system and educational facilities that such children would not receive the common-school education guaranteed by the constitution. It then sets forth the limit to which it can raise taxes, together with its resources and liabilities and anticipated school expenses, and shows there is no other money that can be raised other than necessary to defray the necessary expenses of the school system, and that it has no excess revenue, and that it is impossible to raise funds to maintain the school system and to pay the alleged judgments, which amount to more than ten million dollars. A motion to strike the answer and for judgment against the board was made by the petitioners. The motion to strike was denied and, the petitioners electing to stand by their motion to strike, judgment was entered in favor of the respondents,and petitioners appeal to this court.

At the outset, appellants contend that the only contested issue is the validity of the judgments, and that such depends upon whether the record shows jurisdiction of the parties and the subject matter in the several cases in which judgments were entered. Appellees counter with the proposition that a writ of mandamus is not a writ of right, and that its issuance would require the board to violate the constitution of the State of Illinois; that the several courts entering the judgments exceeded their jurisdiction and transgressed the law in that respect.

In support of its contention, appellants cite the long and uniform line of authorities holding that jurisdiction of the parties and the subject matter of a suit make a judgment unassailable in a collateral proceeding, and the appellees, on the other hand, among other things, claim that the decision...