City of Danville v. Danville Water Co.

Mr. Justice Boggs delivered the opinion of the court: There is no force in the position the title to the act of June 6, 1891, which act is relied upon to confer upon the city council authority to adopt the ordinance set forth in pleas Nos. 1 and 2, does not express the subject embraced in the act. The defendant in error is a corporation engaged in an enterprise essentially public in its nature. Its property and its efforts are devoted to a use in which the public has an interest. It was granted corporate existence to enable it to serve the public. It is not a private corporation, but is quasi public. The duty devolves upon it to furnish water for reasonable compensation and without unjust discrimination, and the power resides in the State, acting in its sovereign capacity, to enforce the performance of this duty. (Rogers Park Water Co. v. Fergus, 178 Ill. 571; City of Danville v. Danville Water Co. 178 id. 299.) The State, by the enactment of June 6, 1891, (Hurd’s Stat. 1897, p. 305, par. 267f,) selected the corporate authorities of all incorporated cities, towns and villages as agencies of the State to exercise, by delegation, the power possessed by the State to secure observance and performance of this duty on the part of any corporation having power and authority to supply water to such municipalities or the inhabitants thereof. The act is not amendatory of the charter of the plaintiff in error city or the defendant in error company. It added nothing to the chartered powers of the former and detracted nothing from such powers of the latter. It merely clothed the city with authority, as the representative of the State, to exercise a governmental power by delegation,—a power which the State could have lawfully exercised directly had the legislative department deemed that the better course. The purposes of the act are fully embraced within the title, which is: “An act to enable cities, towns and villages incorporated under any general or special law of this State to fix the rates and charges for the suppty of water furnished by any individual, company or corporation to any such city, town or village and the inhabitants thereof.” In the case of this plaintiff in error, as appellant, against this defendant in error, as appellee, (178 Ill. 299,) the parties presented to this court the question of the legal sufficiency of two pleas identical in every respect with special pleas Nos. 1 and 2 involved in this record. We then ruled the pleas were not obnoxious to demurrer, but presented legal and sufficient grounds of defense. The principles of law there involved and the material facts set forth in those pleas being the same as presented in this record, we must hold, upon the authority of the decision rendered in that case, the court erred in sustaining the demurrer to the said special pleas Nos. 1 and 2. It appears from the declaration the city of Danville, by an ordinance adopted in June, 1894, and but about seven months prior to the adoption of the ordinance of January 19, 1895, and relied upon in the pleas, ordered additional hydrants, fixed reduced rates therefor as compared with the rates established by prior existing ordinances for other hydrants, and provided that the ordinance should not be construed to affect in any way the rates fixed by such prior ordinances for said other hydrants. Counsel argue this ordinance of June, 1894, recognized that the rates fixed for the rental of hydrants by such prior ordinances were reasonable and acceptable to the city, and that the enactment of the ordinance of January, 1895, within but seven months thereafter, reducing the rentals as fixed by such prior ordinances, and also reducing the rentals as to a portion of the hydrants authorized to be supplied by the ordinance of June, 1894, is an unreasonable and capricious’exercise of any power and authority possessed by the council. Observations of this court in Rogers Park Water Co. v. Fergus, supra, (at p. 579,) are here in point: “A rate or price reasonable and just when fixed may, in the future, become so unreasonably high that the exaction of such rate or price is but an extortion. The duty of the corporation does not, however, change, but remains the same,—/that is, to exact only reasonable compensation. The power of the State to enforce that duty is not exhausted by its exercise in the first or any subsequent instance, but is continuous, and may be exerted from time to time, whenever necessary to prevent extortion by the agency created by the State to serve the public. Whenever the evil of extortion exists the power to eradicate it may be successfully invoked. In the exercise of that power by the State, * * * there is no admixture whatever of any contractual element, nor does the corporation against whom the power is exercised obtain any vested property interest or property right in the scale of rates deemed at any particular time to be reasonable maximum prices for the article to be supplied by the corporation.” Moreover, the act investing the city with the power exercised in the adoption of the ordinance of January, 1895, expressly provides the scale of rates and charges fixed by ordinance, if deemed unreasonable by the water company affected thereby, may be reviewed and determined by the circuit court of the county in which the city or town is situate. It may also be remarked the ordinance of January, 1895, provided the rates therein specified should not g'o into effect until the first day of May, 1895, and also, that if the water company desired to submit to the circuit court the question of the reasonableness of the rates as reduced, the corporation counsel of the city should enter the appearance of the city to any such application on the part of the water company, and should join in submitting' the question to the circuit court at the February term thereof. The court correctly ruled the demurrer to the fourth special plea was well taken. The obligation of a city, under an ordinance fixing the reasonable rate of annual rental to be paid for water hydrants, does not create that character of indebtedness contemplated by section 12 of article 9 of the constitution of 1870, to pay which that section requires a direct annual tax shall be provided at the timé of incurring the indebtedness. Said section of the constitution, in the respect under consideration, has reference to indebtedness the amount whereof has become fixed and absolute and the payment thereof deferred to a stated period in the future. (Town of Kankakee v. McGrew, 178 Ill. 74.) Ordinances enacted for the purpose of regulating’ the maximum sums to be paid annually for a supply of water do not, within themselves, create any indebtedness, but merely establish, subject to review by the courts, that a greater sum than the rate fixed cannot be lawfully exacted for that commodity. The demurrer to the fifth special plea was also properly sustained. Section 4 of article 7 of chapter 24 of the Revised Statutes, entitled “Cities,” etc., invoked by the plea as forbidding the enactment of the ordinances involved in the pleadings, must be considered in connection with the preceding sections of the article. So construed, it is manifest its provisions do not operate to prohibit the incurring’ of expenses or the making of contracts in all cases unless an appropriation shall have been previously made concerning such expenses. Section 1 of the article establishes the beginning of the fiscal year of the municipality. Section 2 makes it the duty of the city council to pass a general annual appropriation bill within the first quarter of such fiscal year. The passage of such annual appropriation bill at any time within the first quarter of the fiscal year answers the demands of the statute. Within that period of first quarter of the fiscal year which may ensue prior to the passage of an annual appropriation bill or ordinance, the city council may enter into any contract and incur any expense not otherwise unlawful without an appropriation therefor having been previously made, but may include the appropriation therefor in the general appropriation bill to be thereafter enacted within the said first quarter of the fiscal year. Section 4 has the effect to prohibit the incurring of liability or expense during the fiscal year after the passage of the annual appropriation bill unless the object of the expenditure or liability shall have been included within the annual appropriation ordinance, except as to expenditures the necessity whereof is caused by some casualty or accident, within the meaning of the proviso to section 3 of the act. Though denominated rental of hydrants, that for which the compensation here sought to be recovered was to be made was the water taken from the hydrants during annual periods and used during the year. The amount of such compensation constituted a necessary annual expense of the city. As to such expenditures it is only necessary one appropriation therefor shall be included in the annual appropriation bill. The ordinance adopted in January, 1895, expressly provided the reduction in the rentals of the hydrants should take effect May 1, 1895. As the fiscal year of the plaintiff in error city, so far as this record discloses, began at the date established by law for the annual election of city officers, viz., the third Tuesday in April, the reduced rates related only to the prices to be paid for water taken during the succeeding fiscal year, and the city council had had ample time during the first quarter of such fiscal year to which the ordinance had reference, to make an appropriation to cover the cost of the water to be supplied under the terms of that ordinance. Kimble v. City of Peoria, 140 Ill. 157. It was error to include an award of interest in the judgment. “A municipal corporation, under the uniform ruling of this court, is not chargeable with interest on claims against it, in the absence of express agreement therefor, the only exception being where money is wrongfully obtained and illegally withheld by it.—See Vider v. City of Chicago, 164 Ill. 354, citing City of Pekin v. Reynolds, 31 Ill. 529, and City of Chicago v. People, 56 id. 327.” (City of Peoria v. Construction Co. 169 Ill. 36.) For the reasons indicated the judgment is reversed and the cause remanded. „ , , , , Reversed and remanded. Cartwright, C. J., and Craig and Phillips, JJ., dissenting.