Rudin v. City of Harvey

• Decision Date: 18 November 1941
• Docket Number: No. 26307.,26307.
• Citation: 37 N.E.2d 340,377 Ill. 595
• Parties: RUDIN v. CITY OF HARVEY et al.
• Court: Illinois Supreme Court

377 Ill. 595

37 N.E.2d 340

RUDIN

v.CITY OF HARVEY et al.

No. 26307.

Supreme Court of Illinois.

Sept. 17, 1941.

Rehearing Denied Nov. 18, 1941.

Mandamus proceeding by John Rudin against the City of Harvey and others, to compel payment of matured interest on municipal waterworks certificates. From a judgment awarding the writ of mandamus, defendants appeal.

Affirmed.Appeal from Superior Court, Cook County; Francis B. Allegretti, judge.

John J. Dowdle, of Chicago (Willard C. Walters and Albert O. Hoffman, both of Chicago, of counsel), for appellants.

Walter W. Duft, of Chicago, for appellee.

MURPHY, Chief Justice.

Prior to the sale herein referred to, the Public Service Company of Northern Illinois owned and operated a waterworks system in the city of Harvey. An ordinance of the city, No. 852, approved August 4, 1924, provided for the purchase of the entire system and the payment of the purchase price $200,000 by the issuance of interest bearing certificates of indebtedness. The ordinance provided that all the earnings should go into a water fund and the certificates and interest were payable exclusively from such fund. They were to mature serially from September 15, 1925, to September 15, 1944, and were secured by a mortgage upon the system.

In September, 1926, ordinance No. 954 was enacted, approving plans and specifications for the construction of what the ordinance termed to be an extension to the former system, the same to be known as waterworks system No. 2. Another ordinance, No. 976, was enacted January 31, 1927, authorizing the issuance of interest bearing certificates of indebtedness in the amount of $350,000, the cost of system No. 2. The earnings of this system were to go into fund No. 2 and the certificates and interest were payable from it. They matured serially from February 1, 1932, to February 1, 1956, and were secured by mortgage on the extension system.

The ordinances provided a means for ascertaining the earnings of the respective systems and directed an allocation. This was apportioned upon the water supplied by each system as determined by the intake meters at the points where each of said systems received the supply of water from the city of Chicago. At the time of the enactment of the ordinances in reference to the construction of system No. 2 there were outstanding certificates for system No. 1 to the amount of $190,000. This had been reduced to $129,000 when this suit was started in April, 1941.

Plaintiff John Rudin, the owner of certain certificates issued for system No. 2, instituted this mandamus suit in the superior court of Cook county against the city and its commissioners to compel the payment of the matured interest on his certificates. The principal of the certificates was not due at the time of the beginning of his suit. The defense interposed was that the ordinances which provided for the construction and payment of system No. 2 were void. The trial court overruled such contentions and entered a judgment awarding the writ, commanding the payment of $1,320, the amount stipulated to be due as interest upon plaintiff's certificates. The defendants appealed directly to this court on the trial judge's certification that the validity of an ordinance was involved and the public interest required a direct appeal.

The ordinance enacted for the acquisition of system No. 1 and those enacted for the construction of system No. 2 were pursuant to an act in force July 1, 1899, entitled ‘An Act authorizing cities, towns and villages to build, purchase or extend water works systems for public an domestic use and to provide for the cost thereof.’ Laws of 1899, p. 104. The title of the act and some of its sections have been materially changed. Ill.Rev.Stat.1939, chap. 24, pars. 440-446. It is not necessary, however, to consider the changes made by the amendments as the inquiry must be directed to the provisions of the act as of the time of the enactment of the ordinances.

Appellants contend that the act limited the power of the city to the acquisition of one waterworks system and having purchased a system in 1924, payment of which was authorized by the issuance of certificates under ordinance No. 852, it thereby expended all the power given by statute and the construction of system No. 2 and the enactment of ordinances No. 954 and No. 976 were without legislative authority and therefore void.

Section 1 of the act provided, that every city, incorporated town and village in this State is hereby authorized to acquire waterworks for supplying water for public use and for domestic use of its inhabitants by building or purchasing a waterworks system or enlarging or extending an existingsystem. In payment for such building, purchase or enlargement any such municipality may issue certificates of indebtedness limited in their payment solely to the water funds hereinafter provided for, such certificates to bear interest. Section 2 provided that any such municipality desiring to avail itself of the provisions of the act should first pass an ordinance fixing in a general way the capacity of the waterworks system it was proposed to acquire and referring to the plans and specifications therefor, which ordinance should fix the rates at which water was to be supplied for all private purposes and said rates when so fixed could not thereafter be reduced until the certificates issued for acquiring or enlarging the waterworks and the interest on the certificates were fully paid.

Section 3 was that whenever any municipality should avail itself of the provisions of the act ‘the entire proceeds arising from the operation of the waterworks system thereof shall be paid into a fund known as the ‘water fund’ and which fund shall be and remain inviolate until the certificates issued under the terms hereof and the interest thereon is fully paid, and the treasurer of such municipality shall not pay any warrants drawn on said fund unless the same be drawn in payment of the necessary operating expenses of such waterworks system, or in payment of the certificates issued hereunder or the interest thereon.'

Section 4 authorized the execution of a mortgage or deed of trust by the municipality upon its waterworks system to secure the payments of the certificates and section 5 authorized foreclosure under certain conditions in event there was default in payment of the certificates of interest. Section 6 referred to the rights of the purchaser at the foreclosure sale and section 7 directed a...