Wade v. East Side Levee & Sanitary Dist.

• Decision Date: 09 April 1926
• Docket Number: No. 17081.,17081.
• Citation: 320 Ill. 396,151 N.E. 260
• Court: Illinois Supreme Court
• Parties: WADE et al. v. EAST SIDE LEVEE & SANITARY DIST. et al.

320 Ill. 396

151 N.E. 260

WADE et al.

v.EAST SIDE LEVEE & SANITARY DIST. et al.

No. 17081.

Supreme Court of Illinois.

Feb. 18, 1926.

Rehearing Denied April 9, 1926.

Suit by J. A. Wade and others against the East Side Levee and Sanitary District, the East Side Construction Company, and others. Decree for plaintiffs, and the defendant last named appeals.

Reversed in part and remanded, with directions.Appeal from Circuit Court, St. Clair County; George A. Crow, judge.

Kramer, Kramer & Campbell, of East St. Louis, for appellant.

Preston K. Johnson, of Belleville, for appellees.

FARMER, J.

The East Side levee and sanitary district (hereafter referred to as the district) is a municipal corporation organized in 1909 under authority of an act of the Legislature relative to the creation of sanitary districts comprising lands situated in two counties, approved May 17, 1907. Smith-Hurd Rev. St. 1925, c. 42, § 247 et seq. p. 1058. The district contains lands near the Mississippi river and located in Madison and St. Clair counties. Prior to and during the year 1920 the district had carried on a large amount of work for sanitary purposes and had become extensively obligated by the issuance of bonds and by other forms of indebtedness. In May, 1920, the board of trustees of the district passed an ordinance providing in detail for the construction of sections 1, 2, and 3 of an improvement known as its project 12. This work was to consist generally of a large ditch about 10 miles long, with a bottom width of 50 feet and a levee on each side, for the purpose of draining the waters coming from the bluffs upon the low lands surrounding East St. Louis directly into the Mississippi river. Detailed plans and specifications for the work were prepared by the district's engineer and these were filed with the district board. Sealed bids were received on a certain date pursuant to an advertised call therefor, and the bidders were required to bid unit prices in accordance with the engineer's estimate of each item or quanitity and not a definite lump sum for the work. Each contractor submitting a proposal was required to present therewith his certified check for 5 per cent. of his total bid. The trustees of the district on August 7, 1920, awarded to A. V. Wills & Sons and H. J. Sternberg, a contracting firm, the contracts for the work in sections 1 and 2 and reserved the right to let the work in section 3 at a later time. On the same date two contracts, one for each improvement in sections 1 and 2, were entered into between the contracting firm and the district, and contractor's bonds were given in each instance. The contracts provided for payments to be made on monthly estimates prepared by the district's engineer as the work progressed; 90 per cent. of such estimates to be paid to the contractor, and 10 per cent. thereof retained until the completion of the work and its acceptance by the district. The estimated quantities of excavation and levee work were given in detail for the improvements contemplated in each of said sections. After the letting of these contracts the contracting firm proceeded to operate under the terms of the two agreements, and at the time of the commencement of this litigation that firm or its successor had performed, as stated in appellant's brief, approximately 60 per cent. of the work to be done in section 1 and 40 per cent. of the work under the improvement contract in section 2. It appears that in April, 1923, the East Side Construction Company, with the consent of the district, took over from A. V. Wills & Sons and H. J. Sternberg, the original contracting firm, the two contracts here involved and continued thereafter to perform the work under those contracts. It also appears that during October, 1921, the board of trustees of the district passed an ordinance providing for the abandonment of the work in project 12 and the repeal of the ordinance authorizing that improvement. This ordinance, however, was vetoed by the president of the board of trustees. It further appears that there were two different suits commenced during the summer of 1923 by the city of East St. Louis seeking to enjoin the district and contracting firm from proceeding further under the two contracts. In February, 1924, the record shows the books and accounts of the district were examined by a certified public accountant for the purpose of ascertaining the financial condition of the district, particularly as to its status on the date the two contracts here in question were entered into.

The original bill in this case was filed in April, 1924, by some 90 residents and taxpayers of the sanitary district, and an amended bill was filed in June, 1924, whereby it was sought to enjoin further work and expenditure of money under the two contracts entered into on August 7, 1920, for the reaon that the sanitary district had become indebted to an amount in excess of 5 per cent. of the value of the taxable property therein as ascertained by the last assessment previous to the incurring of such indebtedness. The amended bill alleged, among other things, that on August 7, 1920, the district was indebted to the amount of $2,010,194.84, and set out under 20 separate and distinct items, the respective amounts aggregating the sum total mentioned; that the total assessed valuation of the district on that date was $40,597,383.11; that 5 per cent. thereof was the sum of $2,029,869.16, and therefore the district could not legally contract additional indebtedness in excess of $19,674.32, that nevertheless the two contracts for work in sections 1 and 2 of project 12 were entered into, whereby the district agreed to pay for the performance of the work in section 1 the sum of $552,165 and the sum of $367,630 in section 2; that within 2 months after the contracts were made the district paid out under said contracts more than $19,674.32 (the legal excess permissible), and has since paid out $500,000 for work under said contracts; and that the district will unlawfully expend $450,000 additional for the completion of the work unless restrained and enjoined from so doing.

The district and the East Side Construction Company filed separate answers, denying most of the material allegations of the bill relative to the items of indebtedness, and alleging that the district had full power to enter into said agreement, and by so doing did not become indebted for a sum in excess of the 5 per cent. limit within the meaning of the Constitution; that large sums of money had been paid by the district to various parties for lands, right of way for the improvement, construction of bridges, etc.; that if the work under the contracts were prevented great loss would result to the contractor for equipment purchased and money expended preparatory to the completion of the two contracts; and that all money spent would be wasted and lost to the taxpayers of the district, because the ditches would be useless if left in an unfinished condition. The answers also alleged work had progressed under the two contracts for about 3 1/2 years, and that complainants were guilty of delay and laches in asserting their rights, if any such ever existed.

The prayer of the bill was, in substance, that the indebtedness of the district on August 7, 1920, be ascertained; that the two contracts of that date be declared illegal and void, in so far as they purported to bind the district to expend money and incur obligations in excess of the 5 per cent. limit provided by law; and that further work or expenditure of money under the two contracts be perpetually enjoined. The pleadings are lengthy and we have only attempted to set out the substance of their contents. A stipulation was also filed by counsel for the parties, setting out some facts concerning the bonded indebtedness of the district, interest, dates thereof, tax money collected and received during 1920 after August 7, amounting to $155,044.92, cash in the treasury on said date amounting to $185,943.68, and the assessed valuation of the district. The cause was heard by the court on oral and documentary evidence submitted, and a decree was entered finding that the district was on August 7, 1920, indebted to the amount of $1,925,195.34; that the district could then incur a legal indebtedness of $104,673.82; that the contracts for sections 1 and 2 incurred an indebtedness of $552,165 and $367,630, respectively; that the district had paid the contractor under the two contracts $529,416.23; and that all amounts paid in excess of $104,673.82 were illegal. The decree found the contracts void and illegal at all times, in so far as obligating the district in any sum in excess of the last amount mentioned, and enjoined further work or expenditure of money under the contracts. A joint and several appeal was allowed, and the East Side Construction Company has prosecuted an appeal to this court.

It was conceded by counsel for appellees, and the decree found, that the district was not indebted in excess of the constitutional limit at the time of the execution of the two improvement contracts here involved.

It is contended by appellant that the two contracts are so uncertain and indefinite as not to create a fixed indebtedness, within the meaning of section 12 of article 9 of the Constitution, in that there is no certain and specific amount of dirt to be moved and no specific sum is agreed to be paid except a certain amount per cubic yard. The case of City of Chicago v. Galpin, 55 N. E. 731, 183 Ill. 399, is relied upon in support of that contention. The court was there considering a bill to enjoin the city officials from paying any money under two contracts for gasoline lights entered into by the city in 1897 with a certain company, whereby the latter was to furnish to the city each night over a period of one year, with privilege of a renewal or extension of time, 2,800, more or less, and 7,000, more or less, lighted lamps, at the rate of $11.48 per...