Vill. of Westchester v. Holmes

• Decision Date: 13 September 1945
• Docket Number: Nos. 28522-28524.,s. 28522-28524.
• Citation: 62 N.E.2d 410,390 Ill. 436
• Parties: VILLAGE OF WESTCHESTER et al. v. HOLMES et al.
• Court: Illinois Supreme Court

390 Ill. 436

62 N.E.2d 410

VILLAGE OF WESTCHESTER et al.

v.HOLMES et al.

Nos. 28522-28524.

Supreme Court of Illinois.

May 23, 1945.

Rehearing Denied Sept. 13, 1945.

Appeal from Cook County Court; Russell W. Keeney, Judge.

Proceedings by the Village of Westchester to extend and refund certain special assessments, in which Fred E. Holmes and others filed objections. From a judgment sustaining the objections and dismissing the petition, petitioner and the Chicago Title & Trust Company, as trustee for one Loewenthal, and others, appeal.

Affirmed.Kinne, Scovel, Robson & Murphy, of Chicago (Harold F. Scovel, of Chicago, of counsel), for appellant Village of Westchester.

Markman, Donovan & Sullivan, of Chicago (Henry O. Nickel, of Chicago, of counsel), for other appellants.

Bluford, Krinsley, Schultz & Voorheis and Cummings & Wyman, all of Chicago (Raymond Harkrider and Austin L. Wyman, both of Chicago, of counsel), for appellees.

GUNN, Justice.

May 9, 1944, the village of Westchester passes three ordinances, and on May 11, 1944, filed three petitions in the county court of Cook county to extend and refund certain special assessments, the same being assessments Nos. 15, 23 and 38 of said village. This was not done voluntarily, but under compulsion by writ of mandamus issued by the circuit court of Cook county and affirmed by the Appellate Court for the First District. Hardin v. Village of Westchester, 321 Ill.App. 644, 53 N.E.2d 493. For convenience the village of Westchester will be referred to as the ‘village,’ the Chicago Title & Trust Company, as trustee for Loewenthal et al., the ‘trustee,’ Fred E. Holmes et al., as the ‘Holmes objectors,’ and Knight Blanchard et al. as the ‘Blanchard objectors.’

The trustee is the holder and owner of many bonds issued in said assessment proceedings as trustee for divers individuals, and is interested in compelling the extension and refunding of said assessments under section 86a of the Local Improvement Act. (Ill.Rev.Stat.1943, chap. 24, par. 84-86a.) Appellees, the Holmes objectors and the Blanchard objectors, are purchasers of lots included in said assessments 15, 23 and 38 under tax foreclosure of general taxes and special assessments, or owners of lots included in said assessments, or are involved in said assessments or foreclosure proceedings, or otherwise, as bondholders or holders of anticipation warrants. The record shows that appellant trustee was active in compelling the village to adopt refunding ordinances, and in filing the proceedings in the county court, and that appellees were active in objecting to an order being entered by the county court for the purpose of refunding and extending such assessments. The county court sustained the objections of appellees, and, among other reasons, held that to grant the petition would give to the refunding provision an unconstitutional effect.

Under the conditions presented here the trial court necessarily passed upon the validity of the statute in question so far as it purposed to authorize extension and refunding of special assessments, and also construed the constitution of the State of Illinois as applying to the right of the court to grant the petition, thus giving us jurisdiction of a direct appeal to this court.

The facts are somewhat complex. It appears that the village of Westchester, located in Cook county, was organized in 1925, and had been subdivided into more than eight thousand parcels for real estate taxes and special assessment purposes. Commencing in 1926 the village made various local improvements, some seventy in number, costing in the aggregate approximately $4,500,000. The assessments involved in this case were included among that number. Bonds were issued payable in installments ranging from two to ten in number, bearing six per cent interest. Prior to May, 1932, the village had issued in all these proceedings installment vouchers, special assessment bonds and general vouchers of over $4,400,000. Substantial amounts of the principal of bonds and interest and general taxes were unpaid and became delinquent. The trustee represents bondholders holding bonds payable out of assessments 15, 23 and 38, which constitute approximately six per cent of the total Westchester special assessment securities outstanding.

Between 1928 and 1930 the real property of the village began to depreciate in value. The taxes and assessments on a large percentage of the lots in Westchester for the year 1928 and subsequent years became delinquent to the extent that the principal of unpaid real-estate taxes with accrued interest and penalties, and the principal of special assessments with interest and penalties, aggregated over $5,700,000, so that the average amount of delinquency on each lot for general taxes amounted to $220, and for special assessments something over $700.

After a conference with the local corporate authorities the People of the State of Illinois in May, 1941, by its State's Attorney, filed a number of complaints to foreclose the delinquent general real-estate taxes for 1928 and subsequent years. This included the property subject to the lien of the assessments here in controversy. The village, through its attorney, filed answers and counterclaims, alleging that the liens of the special assessments were equal and coextensive with the liens of the general real-estate taxes, and prayed for an accounting and foreclosure of the liens of the special assessments, including those here involved, and for a prorata share of the money derived from such sale.

The trustee, representing bondholders in assessments 15, 23 and 38, July 23, 1940, filed with the village three refunding petitions relating to said assessments and asked that the unpaid interest thereon aggregating over seventy per cent be added to the principal, and the resulting amount be divided into ten installments payable in the future, with six per cent interest per annum. These petitions were based upon the act of the general legislature of 1935 adding section 86a to the Local Improvement Act, Ill.Rev.Stats.1939, c. 24, s 792a, which authorized any municipality, upon the petition of seventy-five per cent of holders of securities out of any special assessment, to pass the necessary ordinance and institute the necessary court proceedings for the purpose of obtaining the judgment of the court as to whether the special assessment involved should or should not be extended and refunded.

The village and its corporate officers declined to take any action pursuant to the refunding petition, and thereupon the trustee commenced mandamus proceedings in the circuit court of Cook county against the village and its officials, which was dismissed upon motion. Upon appeal to the Appellate Court for the First District the judgment of the circuit court in the mandamus proceedings was reversed. Chicago Title & Trust Co. v. Village of Westchester, 310 Ill.App. 498, 34 N.E.2d 744. Later a petition was filed in this court to compel the Appellate Court to expunge such orders and transfer the case to this court. This we denied November 24, 1941. People ex rel. Village of Westchester v. O'Connor, 378 Ill. 249, 38 N.E.2d 157. Thereafter the mandamus case was tried in the circuit court and an order entered allowing the writ, which was appealed to this court and transferred to the Appellate Court (Hardin v. Village of Westchester, 383 Ill. 624, 50 N.E.2d 689), and thereafter affirmed by the Appellate Court. 321 Ill.App. 644, 53 N.E.2d 493.

The question involved in this case therefore is the correctness of the judgment of the county court denying the petition of the village to extend and refund the delinquent special assessments Nos. 15, 23 and 38, filed in accordance with the writ of mandamus.

It further appears that in the interval between the filing of the tax foreclosure suits upon behalf of the People and the filing of the petitions for refunding by the village, foreclosure sales for defaulted general taxes and special assessments have been made and confirmed in tax foreclosure cases, in which over three thousand lots or parcels of land have been sold to various purchasers for amounts aggregating more than $645,000; that all of the lots or parcels had been sold free of the liens of all the Westchester special assessments, including special assessments 15, 23 and 38, and that over four hundred parcels out of the parcels in said three special assessments, which the trustee sought to have refunded and extended in the county court, had been sold at the tax foreclosure sales to various purchasers, free and clear of said special assessments.

The appellants contend that they has the absolute legal right, upon complaince with the provisions and conditions of section 86a of the Local Improvement Act, to have said special assessments extended and refunded. On the other hand, the appellees contend that if said assessments were extended and refunder it would give an unconstitutional effect to section 86a, in that if refunding bonds were issued for such assessments they would be given a preferred position to that of the holders of other tax liens upon the property for which assessments had been extended and refunded. Appellees further contend that, since the special assessments had been in default for several years prior to the enactment of section 86a, to so construe it as to place the holders of refunded special assessments in a better relative position than the holders of other tax liens would also give it an unconstitutional effect. The refunding petition, as indicated above, was denied.

At the outset, we may observe that while the village of Westchester appears as one of the appellants it has nevertheless filed a brief in which it states it believes the order of the county court is in all respects proper and correct, and desires it affirmed. Counsel give as their reason that in all of the proceedings prior to the granting of the writ of mandamus they had actively resisted...