Bednarski v. City of West Hammond

Mr. Presiding Justice Brown delivered the opinion of the court. The two points made in favor of the issuance of the injunction in this case were: First, that the action of the defendants in making the contract enjoined was illegal because carrying the indebtedness of the City of West Hammond beyond the constitutional limit; and, second, that it was the incurring of an obligation payable within the fiscal year, for which no appropriation had or could now legally be made by the proper municipal body. In this appeal the defendants, who are seeking the dissolution of the injunction by the reversal of the order of the Superior Court, deny both these assertions. They say that the debt limit has not been reached and will not be exceeded by the addition of such obligations as the proposed contract will make, and that an appropriation has been made under which expenditures can legally and properly be made to meet said obligations. But they take also another position, which they contend is fatal to the complainant’s case. It involves the right of the complainant to maintain his suit. If that fails, the injunctional order, immediately attacked by the appeal, of course must fall with it. Except for this last contention our decision might well rest on one division or detail of the appellee’s argument alone, but as we understand we have been especially requested to express our views on all the matters involved in the cause, for the guidance of a public body and public officers, presumably desirous only of properly executing their trust, we shall discuss them all and not merely the questions on which our final decision must turn. First. The Constitution of Illinois provides, Article 9, Section 12, that: “No county, city, township, school district or other municipal corporation shall be allowed to become indebted in any manner or for any purpose to an amount including existing indebtedness in the aggregate exceeding five per centum on the value of the taxable property therein, to be ascertained by the last assessment for state and county taxes previous to the incurring of such indebtedness.” It is charged in the bill and is admitted in the answer that the last assessment of the taxable property in West Hammond before the making of the contract involved was $643,052. This makes the constitutional limit of indebtedness $32,152.60. It is conceded that the making of the contract will be the incurring of a new indebtedness to the amount of $18,997.27. This concession is inevitable in view of the decision in Evans v. Holman, 244 Ill. 602, although the contract provides for successive annual payments instead of a lump sum. If from the constitutional limit of $32,152.60 we deduct $18,997.27, there is left $13,154.33. The question, therefore, in this branch of the case is whether the City of West Hammond is now indebted to a greater or less amount than $13,154.33. If it is so indebted to, a greater amount, the contract cannot be legally entered into. If it is not, it may be. The complainant in his bill on information and belief alleges that on August 5, 1911, and since, the City was and is indebted in the sum of $41,335. The defendants in their answer deny that.the City was and is.indebted in that sum, and further make the general allegation that the entire indebtedness of the City “does not now and will not after the issuance of the bonds provided for in the contract with the Inter-State Electric Company exceed the amount allowed by the constitution of the State of Illinois.” In their argument, based upon the affidavits and other evidence submitted at the hearing, they assert that this indebtedness is $11,543.28. A tabulated parallel column statement of the computations of the respective parties will show the items included by the complainant and rejected by the defendant, out of which this difference of almost $30,000 arises. Amount of indebtedness as stated by Bill of Complaint. 1. Municipal Bonds outstanding and unpaid issued by the Village of West Hammond in the sum of approximately.. .$6,000 2. Electric Light Bonds approximately .................$1,000 3. Refunding Water Bonds approximately ............$2,000 4. Pumping Station Bonds approximately ............$2,335 Total bonded indebtedness $11,335 Amount of Indebtedness admitted by the defendants, with notes of their contentions as to items included by the complainant, but denied by them. 1. Municipal Bonds (as reported on May 3, 1911, by an auditing firm, no bonds having been since issued), ................$5,000 2. Electric Light Bonds (reported as above) ...............$500 3. Refunding Water Bonds (reported as above), ......$1,500 4. Pumping Station Bonds.$2,335 Total bonded indebtedness. ,$9;335. Up to this point the difference of $2,000 shown is between the statements (admitted to be only approximate computations) of the complainant and the affidavit of the Treasurer of West Hammond. We may properly, therefore, take as proven fact that the bonded indebtedness to be considered amounted to $9,335, instead of the larger sum stated by the complainant. But as to the other items, listed below, there will be seen to be irreconcilable differences in the positions of the parties litigant. 5. Warrants drawn against the Treasurer outstanding and unpaid for lack of funds, approximately ................$12,000 5. Warrants drawn against the Treasurer outstanding, which there is not money in the treasury to pay ..........$2,208.28 As to this item in which there is a difference of nearly $10,000 between the computations of the parties, much more than sufficient to be decisive as to the illegality of the proposed contract if the position of the complainant is justified, there are several contentions. It is said by the complainant, first, that there is nothing in the affidavits of Zimmerman and of Hessler (who, on this point, merely says that he has read Zimmerman’s affidavit and that it is true) which overcomes the statement of the bill made and sworn to on information and belief, that there were on August 5, 1911, when the contract was made, and August 8, 1911, when the bill was filed, approximately $12,000 of warrants drawn against the Treasurer outstanding unpaid, and which there were no funds to pay. Treasurer Zimmerman’s affidavit shows only the condition on May 1st, 1911, and payments made since that date. On May 1st, 1911, he says there were outstanding warrants on the Treasury amounting to $13,-152.47, and that between May 1st, 1911, and August 17, 1911, (when he made his affidavit) he had paid of these $4,944.19, and on August 17, 1911, had on hand 1 ‘ over $6,000 to meet the same whenever they were presented for payment.” Non constat, it is said that the situation was not entirely different as to the aggregate amount of the warrants outstanding on May 1st, 1911, or on August 17, 1911, from that on August 5th or August 8th, and different as to the cash on hand to meet them on August 5th or 8th and on August 17th. Therefore the statement of the bill is in no respect overborne. The argument is plausible but, we do not think, sound. The bill purports to state the amount very generally and only approximately, and to be wholly on information and belief. It is brought to prevent municipal action within the usual power of its officers, and the right to prevent it should be strictly made out. It appears from one of the affidavits of Hessler that the fiscal year of the municipality begins on May 1st and ends on April 30th. It appears from Zimmerman’s affidavit that an audit was made of the accounts of the municipality on May 1, 1911, and by fair inference it appears that for that reason that date was taken as the one on which the exact showing or figures of the outstanding warrants was given. It certainly would have been more satisfactory had a later date been taken to show the figures, but considering the indefinite statement of the bill, and the fact that the affidavits of Zimmerman and Hessler were prepared for and read at the hearing of this application, and as contravening the bill, and that no attempt was made by complainant to contradict their natural import, that they were treating substantially of the situation at the time the impugned contract was made, and considering further that the burden was strictly on the complainant to prove the illegality of the contract, we cannot give the narrow effect to them insisted on by complainant. We regard, therefore, as established, for the purposes of this case, that the outstanding warrants to be considered were, at the time of the contract $13,152.47, less $4,944.19—that is $8,208.28,—and that the Treasurer’s affidavit imports that he then had $6,000 to meet them. But the further contention is made by complainant that the possession of this $6,000 did not in any event reduce the amount of indebtedness of the City. The warrants were indebtedness of the City, it is maintained, irrespective of the amount of cash in the treasury. To this proposition there is cited the opinion in McDonald v. The City of Chicago, 176 Ill. 404, but the warrants there mentioned were time warrants, and the decision does not apply to warrants issued, as the ones here involved seem to have been, as checks or orders upon the Municipal Treasury. In a sense in common speech they may be called evidences of municipal indebtedness, but they are not such indebtedness or evidence of it within the meaning of the constitutional limitation, if there be money in the Treasury to meet them. It has been so decided by the Supreme Court. Stone v. City of Chicago, 207 Ill. 492. And indeed, notwithstanding the contention of complainant in argument, this would seem to be conceded in his bill, for the warrants listed as a part of the indebtedness are said to be “unpaid for lack of funds.” It is, however, further contended that the affidavits do not show that there is any money in the treasury available to meet the $8,208.28 warrants admitted by the affidavits to be outstanding, and indeed that it appears affirmatively that there was not. This position contradicts the express language of the Treasurer’s affidavit, which is that “he now has on hand to meet said warrants that have been issued, over $6,000 whenever the same are presented for payment. ’ ’ The argument of complainant, however, is that the affidavit must be taken in connection with Hessler’s concerning the appropriation bill for the fiscal year, beginning May 1, 1911, as meaning only that the Treasury contains that amount of money, of which only $3,055.81 is available to meet the warrants, leaving $5,142.47 of indebtedness on this item, instead of $2,208.28 only, as maintained by the defendants. This is material, for while $2,208.28 added to the bonded indebtedness still leaves a margin of constitutional ability sufficient to include the proposed contract, $5,142.47 so added carries the indebtedness beyond the $13,154.33 which we have above noted as the limit which leaves such a margin. The computation of complainant is made as follows: An affidavit of Hessler shows the appropriation for the fiscal year from May 1st, 1911, to April 30, 1912, “for paying unpaid village warrants” to be $8,000. The affidavit of Zimmerman states that since the first day of May, 1911, he has paid on outstanding warrants $4,944.19. Therefore only $3,055.81 of this appropriation or of the City’s money remains available to pay on the warrants, and can be “on hand to meet them.’’ The vice of this reasoning seems to us to be that it assumes that the payment of $4,944.19 was made altogether from the appropriation for the fiscal year—1911-12. This does not appear from the affidavits, and no justifiable inference seems to us possible from them to overcome the Treasurer’s statement that he has the $6,000 he mentions “on hand to meet said warrants that have been issued whenever the same are presented for payment.” The payments, or a portion of them, spoken of may well have been made from the appropriation of the fiscal year 1910-11. We therefore conclude that the complainant has not shown that by the bonded indebtedness and the warrants the indebtedness has been carried to a point forbidding the contract enjoined. But complainant insists that it is so carried beyond this point by many thousands of dollars by the sixth item listed in his bill. The contentions as to this item are as follows: 6. Final judgments outstanding against said Village and City of West Hammond, aggregating, approximately .........$18,000 6. Judgments against the said City and Village......Nothing The affidavits presented at the hearing contain on this point only the statement of the Treasurer, Zimmerman, that “he does not know of any judgment that has ever been rendered in any court against the Village of West Hammond or City of West Hammond for any sum whatever, that he is informed and believes that there are some special assessments for local improvements, in which some portion has been assessed against the Village of West Hammond, but that the same are not due and will not be for a considerable period of time.” But two orders of the County Court of Cook County entered July 10, 1911, one in special assessment of West Hammond No. 45, and one in special assessment of West Hammond No. 46, were presented as evidence of the judgments alleged. The material matters contained in them are that they recite that the Village of West Hammond, through its Board of Local Improvements has applied for approval of its certificates “filed in compliance with Section 84, Chapter 24, ’Revised Statutes of Illinois,” (by which incorrect description it may be presumed is meant Section 84 of “An Act concerning Local Improvements, Approved June 14, 1897,” as amended by Act approved May 14, 1903), for the paving of certain streets and alleys in said village; that objections thereto have come to be heard; that the contractors for the work and the holders of bonds issued by the Village of West Hammond, anticipating the collection of the assessment and the Village of West Hammond and the objectors are before the Court; that the Court finds in each case that if the work “has” been constructed as therein provided there would be a rebate coming to each of the property owners of 20 per cent, of the total amount of the assessment made against his property; and that they then decree that the assessment as confirmed to each item of property shall be reduced 20 per cent., and that (it appearing that the first installment of said assessment is in the hands of the collector) the reduc-' tion of the total amount of the assessment shall be spread over the installments from the 2nd to the 10th inclusive; that in detail the reductions shall be made as set forth in the order as to the 280 lots named which were assessed; and that (it appearing that some of the property owners in said assessment have paid all of the said assessments levied against their said property in full) upon exhibition of receipt of any payment on said assessment by any property owner, the Village authorities of West Hammond shall immediately pay to said property owners 20 per cent, of the amount of the assessment originally confirmed against the said property, that (it appearing that certain sums were expended by the Board of Local Improvements and the Trustees of the Village of West Hammond, and 'by the Trustees of the Village of West Hammond in relation to the construction of the local improvement involved and improperly charged against the property assessed in said roll, but that the expenditure of said sums was authorized by the Board of Local Improvements, and that the Village of West Hammond is liable therefor;) the deficiency of twenty per cent is made a charge against the Village of West Hammond; that said .Village is decreed to pay the legal holders of any bonds that have been issued, and, if bonds have not been issued, to the contractor who did the work 20 per cent of the assessment as confirmed, and that judgment be and is entered against the Village of West Hammond in the sum of $8510.65/100 divided into nine yearly installments of $851.85 each in special assessment 45 and of $9036.72/100 divided into nine yearly instalments of $1004.08/100 each in special assessment 46—to meet said deficiency, and that as modified “the petition of the petitioner, together with cost of improvement” (the certificate of the Board of Local Improvements f) be “approved and confirmed.” There is also in the record an affidavit of Mankowski, the City Clerk, showing that for the Improvement 45 Special assessment bonds and contractors’ vouchers had been issued to various persons amounting to $29807.55, and for Improvement 46 similar bonds and vouchers to the amount of $30209.89. On the face of the record there certainly appears to be judgment indebtedness against the City of West Hammond to the amount of $17547.37, far more than enough, added to the other admitted indebtedness, to make the contract liability involved in this case illegal and inadmissible. The defendants, however, maintain that under the authority of Jacksonville Railway Company v. City of Jacksonville, 114 Ill. 562, and of Stone v. City of Chicago, 207 Ill. 492, these judgments, because for public improvement and connected with a special assessment for such improvement, are not to be considered in computing the constitutional limit. ■ We are unable to assent to this view. Neither of the cases cited is like the present. The implications of the Jacksonville case rather tend against than in favor of the contention, as we think, and in the Stone case •no such proceeding or judgment as is involved here existed. As we construe the judgment orders of the County Court, the situation in West Hammond was this: Through its Board of Local Improvements it had constructed an improvement under an ordinance, duly passed. A special assessment had been levied and confirmed. Vouchers payable from the first instalment and bonds from subsequent ones had been issued to contractors. The improvement had been completed. Under Section 84 of the “Act concerning Local Improvements,” the Board of Local Improvements filed a certificate as required, with the County Court, stating that the said improvement conformed substantially to the requirement of the ordinance, and made “application to the court to determine whether or not the facts stated in said certificate were true. ” Objections were filed; the Court, under the provision of the Section that it shall “hear and determine the same in a summary manner and enter an order according to the fact, ’ ’ determined that the Village, by its Trustees and Board of Local Improvements had charged in the assessment sums which they had spent, hut had no right so to charge; that the Village was liable for those sums either as represented in the bonds or vouchers or otherwise, and that if any property owner had paid his proportion of them to the Village he had a claim for a rebate from it; and a formal judgment was entered against the Village in favor of the bond holders and voucher holders and in favor of any property owner entitled to such a cash rebate. Whether all this was regular and authorized under Section 84 aforesaid, is not a question before us. Not even a collateral attack is made on these judgments; they are merely alleged not to be evidence of indebtedness under the constitutional provision. But a collateral attack ‘we could not consider here if it were made. It seems to us that these judgments are even more clearly indebtedness to be considered than was that discussed in The People v. Chicago & Alton Railway Company, 253 Ill. 191 (an opinion handed down by the Supreme Court since this case was argued before us), where the improvement bonds themselves, issued for the construction against the amount due from the municipality and unreduced to any judgment, were held indebtedness under the constitutional provision; the Jacksonville and Stone cases being carefully distinguished in the same sense that the argument of complainant distinguishes them here. Because of the indebtedness evidenced by these judgments, therefore, we hold that the constitutional limit had been passed by the City of West Hammond before the contract in question was made, and.that the making of said contract was illegal. This holding renders it, as we have before indicated superfluous to discuss the question whether, a legal appropriation was made by the legislative body of the municipality in apt time, to which the expenditures under the proposed contract to be made in the fiscal year 1911-12 could be charged. We will content ourselves, therefore, with saying that we are of opinion there was not. Neither the appropriation of $2000 “for cleaning and repairing of sewers, ’ ’ nor the general appropriation of $4000 “for expenses not otherwise provided for” seems to us sufficient. Certainly they do not meet the purpose stated in Railway Co. v. The People, 225 Ill. 463, to be the chief one of the statutory provision of Section 2 of Article 7 of the City and Village Act, namely “to apprise the tax payers and all others interested as to what the public funds are to be used for.” Holding, as we do, that the contract enjoined in this case was one clearly without the power of the defendants to make, we should deem, it rather unfortunate than otherwise if we were compelled to the conclusion on the record before us that the complainant herein has no standing to maintain this bill. However, while we do not think it necessary to discuss the contention involved at length, we have given it much consideration. The affidavit of John Hessler clearly enough, shows, if it is to be taken as establishing the facts sufficiently for a final decree, a strong motive for an attempt by the Northern Indiana Gras and Electric Company to prevent the performance of the contract sought to be enjoined. It also shows a public saving of a very considerable amount which would come to the municipality of West Hammond by its execution and performance. It shows also a very trifling interest in the taxes of West Hammond and the expenditure of the money of West Hammond' on the part of the complainant (a fact which by itself would be no bar to his maintaining his bill), and asserts that this affiant is informed and believes that the complainant has no personal interest in this case, and that he is merely a dummy for the Northern Indiana Gras & Electric Company. The affidavit also lends further color to the correctness of this belief by the included statement that the “notice of motion for injunction in this case was served upon affiant by John Kamradt, who claims to be assistant manager of the Northern Indiana Gas & Electric Company, that at that time the affiant told said Kamradt that Bednarski would find it difficult to give a bond on an injunction, and that Kamradt told affiant, ‘You know the Gas Company can give a bond.’ ” The affidavit, if to be taken as establishing the fact for a final adjudication, also shows that the Northern Indiana G-as & Electric Company would not have such “clean hands” as would enable it, in pursuance of the motive indicated by the affidavit, even were it itself a tax payer of West Hammond, to maintain this bill in its own name. It seems, as viewed in the light of the allegations of the affidavit we are discussing, to be itself engaged in a contract for lighting the municipality forbidden both to it and to the municipality. We are not prepared to assent to the sweeping proposition of the complainant that if all this matter urged by the defendants were taken as established, it would be no defense. For this position he relies on the authority of the City of Rock Island v. Huesing, 25 Ill. App. 600. Apart from the consideration that an appellate court decision in another district is for us authority only in a very limited sense, we think that the distinction pointed out by the defendants between their contention and that of the defendants in the Huesing case is well taken. The contention in this case is based on the position that the real mover of the litigation, for which the complainant is but a name, is without standing to maintain this bill; that of the defendants in the Huesing case contained, so far as can be seen, no such element. We think that as a general- proposition it is true that a court of equity can look through shadows to substance and through a party who is a dummy to the real party in interest, and decide whether the real party can be allowed relief. For this, we think that The People v. The General Electric Company, 172 Ill. 129, and many other well considered cases in various jurisdictions, are authority. But neither are we prepared to assent to the position that in an appeal from an interlocutory injunction pendente lite, on an ex parte affidavit made on information and belief as to one material matter, and involving in other respects material matter of record, of which it cannot, by the nature of things, be the best evidence,—we should, by holding untrue the sworn statement of the complainant’s bill that he brings the bill in behalf “of himself and all other residents, cit-zens and taxpayers” of the municipality similarly situated, practically finally decide the litigation on contested questions of fact. The interlocutory injunction seems to us to have been properly allowed, and the order of the Superior Court is affirmed. Affirmed.