Ward v. City of Chicago
| Decision Date | 18 December 1930 |
| Docket Number | No. 20304.,20304. |
| Citation | 173 N.E. 810,342 Ill. 167 |
| Parties | WARD v. CITY OF CHICAGO et al. |
| Court | Illinois Supreme Court |
Suit by Frank J. Ward against the City of Chicago and Others. Decree of dismissal, and complainant appeals.
Affirmed.
Appeal from Superior Court, Cook County; William J. Lindsay, judge.
Thomas D. Nash and Michael J. Ahern, both of Chicago, for appellant.
Samuel A. Ettelson, Corp. Counsel, of Chicago (Edward C. Higgins, Leonard Ettelsen, Herbert Decker, and Albert H. Veeder, all of Chicago, of counsel), for appellees.
Appellant, Frank J. Ward, a taxpayer, elector, and resident of the city of Chicago, filed his bill in the superior court of Cook county to enjoin the city of Chicago and its mayor and comptroller, appellees, from issuing certain certificates of indebtedness. Appellees demurred to the bill and their demurrer was sustained. This appeal is from the resulting decree, which dismissed the bill for want of equity.
The bill sets forth the ordinance adopted by the city council of Chicago under which it is proposed to issue the certificates in question. By its terms the mayor and comptroller are authorized, in accordance with the provisions of a statute of the state of Illinois entitled, ‘An act authorizing cities having a population of 500,000 or more, and owning or operating a water works system to issue certificates of indebtedness, payable solely from revenue derived from the operation thereof, for the purpose of improving and extending such water-works system.’ (Cahill's Rev. St. 1929, c. 24, pars. 1093(14) to 1093(18), to execute and issue, in behalf of the city of Chicago, waterworks certificates of indebtedness for a total aggregate principal sum of $12,000,000. The ordinance prescribes the form of the proposed certificates, which state on their face that they are to be paid solely from revenues derived from the waterworks system of the city of Chicago, that they are for the purpose of paying the cost of improving and extending the waterworks system, and that they do not constitute an indebtedness of the city within any constitutional or statutory limitation. The ordinance describes the improvements and extensions which it is proposed to make from the proceeds of the certificates, and provides that upon and after its passage the entire revenue received from the operation of the waterworks system of the city shall be deposited in a separate fund designated as the ‘water fund of the city of Chicago,’ which fund shall be used only in paying the cost of maintenance and operation of such system, obligations of the city heretofore issued that are payable by their terms from such revenue, whether in the form of certificates, bonds, or otherwise, and the certificates issued under the ordinance. The bill alleges that the statute above referredto, pursuant to which the ordinance was passed, violates the provisions of section 12 of article 9 of the Constitution of the State of Illinois because the water certificates are a corporate indebtedness, and the General Assembly exceeded its power in providing in said statute (par. 1093(15) that ‘certificates of indebtedness issued under the provisions of this statute shall be payable solely from the revenues derived from such waterworks system,’ and that ‘such certificates shall not in any event constitute an indebtedness of such municipality within the meaning of the constitutional provisions or limitations'; that the ordinance is consequently invalid, and that by reason of the invalidity of the statute and ordinance the certificates of indebtedness are not valid obligations of the city of Chicago and their sale or negotiation should be enjoined. It is alleged upon information that the city of Chicago was not at the time of the enactment of the statute, and is not now, indebted in any manner or for any purpose to an amount, including existing indebtedness and the amount of the proposed certificates, in the aggregate exceeding 5 per cent. of the value of the taxable property therein ascertained by the last assessment for state and county taxes, and that the indebtedness of the city of Chicago is a great deal less than a sum equivalent to 5 per cent. of the value of the taxable property therein ascertained by the last assessment for state and county taxes. The bill further alleges that the ordinance and the enabling act are void because the certificates are an indebtedness within the constitutional limitation, yet nevertheless neither the enabling act nor the ordinance provides for the collection of a direct annual tax, in accordance with the provision of section 12 of article 9 of the Constitution.
Would the proposed certificates create an indebtedness against the city of Chicago within the meaning of the constitutional provision invoked by appellant? This court recently considered that provision in Maffit v. City of Decatur, 322 Ill. 82, 152 N. E. 602, 606. In that case a taxpayer filed a bill praying that a certain contract between the city of Decatur and the Decatur Water Supply Company, a corporation, might be declared void. The city of Decatur, already owning a water supply system worth approximately $1,000,000 and comprising a pumping station, filtration plant, water mains, and a dam in the Sangamon river by which water was stored for the city's use, was forced to construct, at a cost of $807,683.56, a larger dam in order to impound sufficient water to meet the growing needs of the city. The completed dam, it was discovered, would impound water to such a height that 3,300 acres of land would be inundated, and a considerable portion of the land would have to be cleared before it could be used for a reservoir. Unless the city acquired the right to inundate this land and make certain changes and improvements, the dam could not be made effective. Construction of this larger dam had, however, exhausted the city's debt-incurring power. A domestic corporation, the Decatur Water Supply Company, was formed, having for its objects, among others, to acquire land for a reservoir for the storage of water, to construct and maintain such a reservoir, to operate a system of waterworks, and to supply water for the city of Decatur. The city of Decatur and this water company then entered into the contract against which the bill was directed. By the terms of this contract the water company agreed to acquire either...
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