Village of Glenview v. Northfield Woods Water & Utility Co., Inc.

• Decision Date: 20 June 1991
• Docket Number: No. 1-89-2523,1-89-2523
• Citation: 159 Ill.Dec. 569,216 Ill.App.3d 40,576 N.E.2d 238
• Court: United States Appellate Court of Illinois
• Parties: , 159 Ill.Dec. 569 VILLAGE OF GLENVIEW, an Illinois municipal corporation, Plaintiff-Appellee and Counterdefendant-Appellee, v. NORTHFIELD WOODS WATER & UTILITY CO., INC., an Illinois corporation, Defendant-Appellant and Counterplaintiff-Appellant, and Third-Party Plaintiff-Appellant (Citizens Utilities Company of Illinois, an Illinois corporation, Third-Party Defendant-Appellee).

Page 238

576 N.E.2d 238

216 Ill.App.3d 40, 159 Ill.Dec. 569

VILLAGE OF GLENVIEW, an Illinois municipal corporation Plaintiff-Appellee and Counterdefendant-Appellee, v. NORTHFIELD WOODS WATER & UTILITY CO., INC., an Illinois corporation, Defendant-Appellant and Counterplaintiff-Appellant, and Third-Party Plaintiff-Appellant (Citizens Utilities Company of Illinois an Illinois corporation, Third-Party Defendant-Appellee).

No. 1-89-2523.

Appellate Court of Illinois,

First District, Fourth Division.

June 20, 1991.

Ronald Gertzman, Chicago, for defendant-appellant and counterplaintiff-appellant and third-party plaintiff-appellant.

Jeffrey M. Randall; Randall, Gayle & Patt, Glenview, for plaintiff-appellee Village of Glenview.

None for Third-Party Appellee Citizens Utilities Company of Illinois.

Justice JOHNSON delivered the opinion of the court:

Plaintiff, the Village of Glenview, sought a declaratory judgment in the circuit court of Cook County that defendant, Northfield Woods Water and Utility Co., Inc. (hereinafter Northfield), was not entitled to a water connection fee pursuant to the contract between the parties. Defendant answered plaintiff's complaint and filed a counterclaim alleging an entitlement to an accounting for water connection fees. Plaintiff made a motion for summary judgment. The trial court granted the motion and entered a declaratory judgment order in favor of plaintiff.

On appeal, the issues for review are (1) whether the threshold requirements for summary judgment were met; (2) whether the trial court properly interpreted and construed the term "extension" in the contract between the parties and whether the proper construction of this term renders the trial court's grant of summary judgment erroneous; and (3) whether a party to a contract may introduce opinions from states other than the state whose law governs the contract in order to interpret the contract.

We affirm.

Prior to 1977, defendant owned and operated a well water distribution system pursuant to a certificate of convenience and necessity issued by the Illinois Commerce Commission in a geographic area known as the Northfield Certified Area and located adjacent to plaintiff's municipal boundaries. The source of the well water supply for defendant was located within the Northfield Certified Area.

During the same period of time, plaintiff operated a municipal water distribution system which served a substantial portion of its residents with Lake Michigan water purchased from the Village of Wilmette for resale. However, plaintiff's citizens who resided in its western portion were supplied with well water by defendant and the Illinois Municipal Company. The Illinois Municipal Company operated pursuant to a certificate of convenience and necessity issued by the Illinois Commerce Commission in a certified geographical area adjacent to the Northfield Certified Area.

In or around June of 1977, plaintiff entered into an agreement with defendant for the purchase of Northfield's well water distribution system, which included, but was not limited to, real estate, wells, well pump and discharge systems, water mains, and other physical properties, for the price of $2,200,000. In October of 1977, both parties signed a contract for the sale and purchase of the water distribution system (hereinafter purchase agreement). In recognition that there were undeveloped areas within the Northfield Certified Area at the time the purchase agreement was signed, paragraph 5 of the purchase agreement provided for additional compensation to be paid by plaintiff to defendant for a 15-year period for connections made to Northfield's water main system. Paragraph 5 of the purchase agreement provides as follows:

"5. Future Participation by Company. The Village and the Company agree that in addition to that purchase price determined in paragraph 4, the Company shall receive payment from the Village from time to time for connections made within the present service area as identified and outlined on the map, Exhibit "C" attached hereto, and for connections made in territory outside the [Northfield Certified Area] that may be hereafter serviced by the Village through Sellers' [sic ] present water main system or any extension thereof. The connection charge to be paid by the Village to the Company shall be $350 per residential customer or customer equivalent. Such connection charges shall be paid by the Village to the Company within 30 days after any such connections have been made. A residential customer includes such single family dwelling and the connection fee for each multiple family structure shall be $350 times the number of dwelling units contained therein. The connection charge due the Company for a non-residential user shall be calculated by estimating (such estimates to be submitted by the proposed use) the total number of gallons of water that will pass through the water meter(s) during the first twelve months of water use, and dividing such total by 150,000 with the resulting decimal amount (rounded to the nearest 1/100 of 1%) to be multiplied by $350."

Subsequently, plaintiff converted the system's source of supply from well water to Lake Michigan water by constructing and connecting a 30-inch water transmission main to a water transmission main owned by the Village of Wilmette located at the intersection of Wilmette Avenue and Laramie Avenue in Glenview. The Village of Wilmette, which is located directly east of Glenview, obtains water directly from Lake Michigan. Plaintiff's water transmission main runs westerly from the Village of Wilmette to a location near the Chicago and Northwestern Freight Line on East Lake Avenue in Glenview. At that location, the 30-inch water main narrows in size and connects to a 24-inch water main which runs west to the Portage Run Reservoir located in the former Northfield Certified Area.

In March of 1984, plaintiff entered into an agreement with the Citizens Utilities Company of Illinois (hereinafter Citizens) to sell Lake Michigan water to Citizens for resale by Citizens to its customers in the Village of Mount Prospect and the City of Prospect Heights. Citizens is an Illinois public utility regulated by the Illinois Commerce Commission. In 1984, Citizens entered into a contract (hereinafter Glenview/Citizens Contract) with plaintiff to purchase water from Glenview.

Three conditions precedent were made a part of the Glenview/Citizens Contract. Two of the three conditions were satisfied and are not the subject of this appeal. However, the remaining condition requires plaintiff to seek a declaratory judgment mandating that it is not required to pay a connection fee to Northfield pursuant to paragraph 5 of the purchase agreement as a result of the Glenview/Citizens Contract. If the declaratory judgment in favor of plaintiff is affirmed by this court, the third condition precedent specified in the Glenview/Citizens Contract will be satisfied.

The Glenview/Citizens Contract provides for the construction of a 20-inch water transmission main to connect to the Citizens' water main system at the intersection of Joy Lane and East Lake Avenue in Glenview. Water from Lake Michigan will flow through the Village of Wilmette, which draws its water from Lake Michigan, and on through the aforementioned 30-inch water transmission main until the 24-inch water transmission main connects to the contemplated 20-inch water transmission main by means of a T-valve connector. At the T-valve connection point, the water will continue to flow in a westerly direction to the Citizens' water main system.

On March 18, 1987, plaintiff filed an action for a declaratory judgment in accordance with the Glenview/Citizens Contract. Plaintiff sought a judgment declaring that the term used in the purchase agreement requiring connection fees for the extension of the Northfield water main system was inapplicable.

Defendant answered the complaint and filed a counterclaim alleging an entitlement to an accounting for water connection fees for connections made for which monies were not properly paid by plaintiff to defendant.

In response, plaintiff filed a motion for summary judgment supported by affidavits. Plaintiff alleged its entitlement to a favorable ruling from the trial court by asserting that there were no genuine issues of material fact.

During the hearing on the motion, defendant contended that the term, "extension," as applied in the purchase agreement, raised a genuine issue of material fact. Defendant maintained that the meaning of the term, extension included all water mains as part of the Northfield water main system for connection fee purposes. Defendant also requested that the trial court conduct a hearing concerning the meaning of the term. After extensive colloquy with defendant regarding the meaning of the term, the trial court declined to conduct an evidentiary hearing.

On April 24, 1989, the trial court entered a declaratory judgment order in favor of plaintiff. The court made the following findings: (1) That there were no genuine issues of material fact, and that the language of paragraph 5 of the purchase agreement was not ambiguous and could be interpreted by the court as a matter of law; (2) that subsequent to the acquisition of the Northfield water distribution system, Glenview converted the system from a well water source of supply to a Lake Michigan source of supply by means of constructing a 30-inch water transmission main which reduces to a 24-inch water transmission main for the delivery of Lake Michigan water from the Village of Wilmette to a reservoir located within the Northfield Certified Area; (3) that the extension of the 30-inch and 24-inch water transmission mains was an extension of Glenview's water main system; and (4) that the point of connection between Glenview's 24-inch water transmission main and the contemplated 20-inch water transmission main is outside of the Northfield Certified Area...