Schreiner v. City of Chicago

• Decision Date: 22 March 1950
• Docket Number: No. 31300,31300
• Citation: 92 N.E.2d 133,406 Ill. 75
• Parties: SCHREINER v. CITY OF CHICAGO et al.
• Court: Illinois Supreme Court

Page 133

92 N.E.2d 133

406 Ill. 75

SCHREINER v. CITY OF CHICAGO et al.

No. 31300.

Supreme Court of Illinois.

March 22, 1950.

Rehearing Denied May 15, 1950.

Warren H. Orr, Thomas Tighe and Charles Liebman, all of Chicago, for appellant.

Benjamin S. Adamowski, Corporation Counsel, and Frank R. Schneberger, both of Chicago (Joseph F. Grossman and Philip H. Corboy, Chicago, of counsel), for appellees.

GUNN, Justice.

Edith M. Schreiner brought her suit in equity in the superior court of Cook County on behalf of herself and all other persons like situated, as holders of anticipation warrants drawn against the educational fund school tax of the city of Chicago for the year 1929. The suit is brought against the city of Chicago, a municipal corporation, and the board of education of the city of Chicago, a municipal corporation, but judgment prayed only against the city. The plaintiff was the owner of an anticipation warrant which she alleges has never been paid because of the action of the city in diverting money derived from the 1929 educational tax levy to an improper purpose, whereby she and others like situated were prevented from collecting the principal or interest on said warrants. A separate motion to strike was made by each defendant and sustained by the court, and the plaintiff's cause dismissed for want of equity. Plaintiff appeals directly to this court, and a motion to transfer has been made by the appellees.

It appears from the amended complaint, more fully set out hereafter, that the plaintiff directly charges that both defendants violated the constitution of the State of Illinois and the constitution of the United States in that said defendants used money, which should have been applied to the payment of plaintiff's tax warrant, and diverted it to other improper purposes, whereby the plaintiff has been deprived of her property without due process of law, and her money has been taken for public use without compensation, and that the actions of the defendants impaired the obligation of a contract existing between the plaintiff and the defendant board of education.

Inasmuch as the case was decided in the superior court upon a motion to strike, which admits all matters well pleaded, it becomes incumbent upon some court to determine whether there has been a violation of the constitution, or whether it is necessary to construe the constitution. In either event it is beyond the power of the Appellate Court to do this. It is not suggested that these particular points of constitutional law have been well settled or determined by previous decisions, and it is a rule that unless the question has been previously decided, a constitutional question must be decided by the Supreme Court., (Ill.Rev.Stat.1949, chap. 110, par. 199). Like questions were raised in Berwind, Inc., v. Chicago Park District, 393 Ill. 317, 65 N.E.2d 785, but not directly passed upon. It is not necessary for us to determine, in the first instance, that appellant it right in her construction of the constitution, but only, whether a constitutional question is presented. If so, it is our duty to take the case on direct appeal, although we may decide against the appellant on her constitutional points. Kowalczyk v. Swift & Co., 317 Ill. 312, 148 N.E. 59. Under the allegations of the complaint and the legal admissions made by a motion to strike, we are of the opinion that we have jurisdiction on direct appeal.

In view of the fact that the decree of the trial court was rendered upon motions to strike, it becomes necessary to set out in some detail the facts set out in the complaint. After the formal averments that plaintiff is the owner of certain tax anticipation warrants, and that there are other persons who own like warrants drawn against the same tax, who have not been paid, and the description of the corporate character of the two defendants, it alleges substantially as follows: That on December 6, 1928, pursuant to the requisite ordinances and resolutions, the city of Chicago, out of its surplus funds, purchased $2,000,000 of tax anticipation warrants drawn against the educational tax levy for the year 1928, said warrants being in the amount of $250,000 each, and numbered 124 to 131 inclusive. In like manner the complaint charges that on December 20, 1928, $2,000,000 more in warrants, viz., Nos. 132 to 139, inclusive, were purchased by the city, and on December 29, 1928, warrant No. 140 for $250,000, and on January 11, 1929, another warrant, No. 141, was also purchased, making a total purchase by the city of Chicago of anticipation warrants drawn against the 1928 school tax levy of $4,500,000. It is then alleged that no money was collected from the 1928 school taxes to apply upon said tax warrants until May 9, 1930; that in January, 1929, the appropriate ordinances and resolutions were enacted by the city, and passed by the board of education of the city of Chicago, to issue anticipation warrants against the educational taxes levied for the year 1929, to the extent of 75 per cent of the amount of such levy, and that in pursuance thereof there was sold by the board of education of the city of Chicago to the public, and to the city of Chicago, tax warrants drawn in anticipation of said 1929 educational taxes to the extent of $46,800,000; that on January 25, 1929, the city of Chicago purchased $1,700,000 of the 1929 educational tax warrants, Nos. 1 to 6 being in the amount of $250,000 each, and No. 7 in the amount of $200,000; and that in like manner, on February 8, 1929, the city of Chicago purchased warrants Nos. 8 to 14, inclusive, each for $250,000, aggregating $1,750,000, and that on the same date the educational income account received the additional sum of $4,500,000 from the sale of warrants Nos. 20 to 37, inclusive, each in the sum of $250,000, and that the total credits to the educational income account from the sales of 1929 educational anticipation warrants of the city of Chicago, as above itemized, amounted to $7,950,000.

It is next charged that on February 8, 1929, the city of Chicago received from the educational fund $4,500,000, and thereupon delivered to the board of education said 1928 anticipation warrants Nos. 124 to 141, inclusive, aggregating $4,500,000, and also, on the same date, the city received the accrued interest thereon amounting to $26,854.98. From the foregoing matters appearing from the books of account of the board of education it is charged that the payment of the 1928 warrants was made from the proceeds of the sale of the 1929 warrants, and was unlawful and constituted a diversion of money, and that the city of Chicago, by reason of its legal connection with the school system of the city of Chicago, was an express trustee, charged with the duty of seeing that the money obtained from the sale of the 1929 tax anticipation warrants was applied to the purpose for which the tax was levied, and that by its failure to do so a breach of trust was created by the diversion of such funds, which renders it liable to the unpaid holders of the 1929 educational tax warrants.

It is further alleged that tax warrants Nos. 1 to 6, inclusive, Nos. 8, 9, 13 and 14, and Nos. 20 to 24, inclusive, drawn against the 1929 educational taxes, and aggregating $4,500,000, were paid out of the 1929 tax levy on divers dates between May 5, 1931, and May 29, 1931, together with $509,970.64 accrued interest. But, it is then alleged in the alternative, that the amounts last above mentioned were illegally received by the city of Chicago because it was the owner of 1928 warrants, and was custodian of the funds received from the 1929 warrants, and was a fiscal agent of the board of education, and that said warrants were not in fact paid, but a book entry made and the account of the board of education charged with the sum required to pay the 1928 warrants above described, and that said last numbered 1929 warrants were issued by the board of education in exchange for the 1928 warrants, which brought about their redemption.

The charge is then made that this last sum of money so paid to the city of Chicago was illegal, and should be restored to the educational tax fund, and that, if said fund is restored, it, together with interest, would be sufficient to pay the warrants of the plaintiff and all of the other unpaid holders of 1929 tax anticipation warrants; that the payment of tax warrants Nos. 1 to 6, Nos. 8 to 14, and Nos. 20 to 24, all inclusive, drawn against the taxes of 1929 constituted a taking of the plaintiff's private property, and the private property of other warrant holders, for public use without compensation, contrary to section 13 of article 2 of the constitution of the State of Illinois; and that it also constituted an impairment of the obligations of a contract, in that the 1929 tax money was used contrary to the provisions of the ordinances and resolutions under which they were issued, and other constitutional grounds are alleged, and then follows a prayer for relief.

To the amended complaint motions to strike were made, raising a number of questions that go to the very heart of the case, and which wll be condensed for the sake of brevity. We take the objections from the motion of the city of Chicago, since no relief is prayed in the complaint against the board of education, although both sets of objections raise substantially the same questions. The gist of the objections of the city to the amended complaint is as follows: (1) There never was any trust relationship between the city of Chicago, as a city, and the board of education, or as to its funds, and, even though a constructive trust relationship could be inferred, there is no allegation of diversion of tax collections to an improper purpose. (2) That the plaintiff and those in the same position have recourse only to tax collections for the payment of their warrants, and have no claim whatsoever to the proceeds of the warrants purchased and paid for by the...