Cain v. City of Wyoming
104 Ill. App. 538
Ill. App. Ct.
1902
Check Treatment
Mr. Presiding Justice Brown

delivered the opinion of the court.

The complainants, as residents and taxpayers of the city of Wyoming, Stark county, filed their bill in the Circuit Court of said county to enjoin the city, its officials, and S. V. Deem and E. W. Houghton, from proceeding under a waterworks ordinance of said city, and from executing any cоntract thereunder or expending any money on account thereof. A temporary injunction was granted by the master in chancery, in the absence of a circuit judge from the county. Answers and replications were filed. A motion to dissolve the injunction was made before one of the judges, of said court in chambers, in Peoria, in vacation, before the June term, 1902, of the Circuit Court of Stark county, where the case was then pending. The motion was not determined until the June term of said court, when an order was enterеd in term time dissolving the injunction, dismissing the bill for want of equity upon its face, and reserving the assessment of damages for future consideration. From the order dismissing the bill this appeal is prosecuted.

The questions presented by the record, and in argument, for our determination аre: First. Does the appeal involve a franchise, and thereby oust this court of appellate jurisdiction? Second. Was the order dismissing the bill in fact a vacation proceeding which the judge had no authority to enter? Third.' Did the ordinance create an indebtedness against the city in excess of five per cent of the assessed valuation of the taxable property of the city ? Fourth. Was an appropriation ordinance necessary? Fifth. Was a purchase of a lot by the city-, as a site for thе water works, and a gift thereof to Deem, ultra vires?

We will consider the questions in the above order. The ordinance granted to Deem the right to construct, maintain and operate a system of waterworks within the city; it gave him authority to use the' streets for the purpose of installing and operating the plant; it provided the maximum rates to be charged the city and citizens for water supply; it stipulated the terms by which the city might lease or purchase the plant. The quéstion is, does this create a franchise? If it does, we arе without jurisdiction to consider the case, as the appeal should have been taken to the Supreme Court.

Appellees, who raise the question here, quoting from Blackstone, define a franchise as follows:

“A royal privilege or branch of the king’s prerogative, subsisting in the hands of a subject. Being, therefore, derived from the crown, it must ‍​‌​‌‌​‌​‌​‌‌‌‌​​‌​​​‌​​‌​‌‌​​‌​‌‌​‌‌​‌‌‌​‌‌‌​‌‌‌‍arise from the king’s grant; or, in some cases, may be held by prescription, which, as has been frequently said, presupposes a grant.”

They assert that the foregoing definition was apрroved in Belleville v. Citizens’ Horse Railway Company, 152 Ill. 185. They also quote from Chancellor Kent and other authorities to the effect that a franchise is a privilege conferred by grant from the government and vested in individuals. The Belleville case above refеrred to, after giving the foregoing definition of a franchise, proceeds as follows:

“In Chicago City Railway Company v. People ex rel., 73 Ill. 541, this court said that corporate franchises in the American States emanate from the government or. the sovereign power, owe their existence to a grant, оr, as at common law, to prescription, which presupposes a grant, and are vested in individuals or a body politic. The proposition which is the foundation of appellees’ claim was expressly decided, and decided adversely to suck сlaim, in the case last cited. It was there held, that where a street railway company is incorporated under an act of the legislature, with power to construct, maintain and operate a railroad in a city, upon the consent of the city, and in such manner and upon such conditions as the city may impose, and the city by ordinance grants the privilege of constructing and operating the same upon a certain street, the grant by the city is a mere license, and not a franchise. To the same effect are the subsequent cases of Board of Trade v. People ex rel., 91 Ill. 80; Chicago and Western Indiana Railroad Company v. Dunbar, 95 Id. 571; City of Quincy v. Bull, 106 Id. 327; and Chicago Municipal Gas Light Co. v. Town of Lake, 130 Id. 42.”

And in the later case of Lasher v. The People, 183 Ill. 233, the court says: “A franchise must be granted by the. legislature, and a municiрal body can not confer a franchise.” We therefore hold that the ordinance in ‍​‌​‌‌​‌​‌​‌‌‌‌​​‌​​​‌​​‌​‌‌​​‌​‌‌​‌‌​‌‌‌​‌‌‌​‌‌‌‍question did not create a franchise. It follows that the contention that this court is without authority to determine the issues presented, is without merit.

The second contention is that thp motion to dissolve the injunction and the order dismissing the bill for want of equity upon its face were proceedings in vacation, and that the order of dismissal exceeded .the authority of the judge and was reversible error. The judge had undoubted authority to hear and determine the motion to dissolve in vacation. It is equally certain that he had no authority to dismiss the bill, except in term time. However, the record discloses the fact that the orders dissolving the injunction and dismissing the bill were both entered in term time. It was the order of the court, not the judge. The power to dismiss the bill therefore existed. The correctness of the action of the court in dismissing the bill presents another and different question, elsewhere considered in this opinion.

The third proposition is that the ordinance, together with its аcceptance by Deem, created a municipal indebtedness prohibited by the constitutional limitation. Section 12, article 9, of the constitution, provides that no city or other municipal corporation shall become indebted in any manner or for any purpose, to an amount, including existing indebtedness, exceeding, in the aggregate, five per cent of the taxable property therein, to be ascertained by the last assessment for state and county taxes, previous to incurring such indebtedness^ By this test the limit of the city of Wyoming to create additional indebtedness at the time of the passage and acceptance of the ordinance was $3,858.15. The ordinance provides that the city shall rent twenty-six hydrants at an annual rental of $60 each, or $1,560 pеr year, and' that the city may rent the plant at an annual rental of $2,400, or purchase it at its cost price, which is not to exceed $28,000. The provisions of the ordinance relating to leasing or purchasing the plant, are mere options which the city may, or. may not, exercise. Until exercised they, create no indebtedness. The bill contains no averment of either effort or intention' to execute them. The real contention is in relation to the portion of the ordinance providing for hydrant rentals at $1,560 рer year for twenty years. Appellants argue that this is the creation of a present indebtedness of $31,200, which would bring the case within the constitutional prohibition. This necessitates the consideration of two questions: First, does the ordinance create an indеbtedness against the city for hydrant rentals of $1,560 per year? Second, if so, can the annual amounts be aggregated so as to make the total exceed the indebtedness the city is authorized to incur?

A corporation organized under'the general law to operate a system of waterworks is a quasi-public corporation and owes the duty of furnishing water at reasonable rates, compliance with such duty being enforcible by the state, acting through its chosen agencies. The act of June 6, 1891, (Laws of 1891, p. 85,) is not an amendment'of the charters of municipal corporations, nor a restriction upon the right of corporations organized to furnish water supply, but merely delegates to municipal corporations authority to exercise a governmentаl power which the legislature could have exercised directly. The power delegated to municipal corporations to regulate rates for water supplied by a corporation is not exhausted by the first or any subsequent exercise thereof, but is a continuing one, which may be exercised when needed to prevent extortion. 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 merеly establish, subject to review by the courts, that a greater sum can not lawfully be exacted for that commodity. The City of Danville v. The Danville Water Company, 180 Ill. 235. Where a city enters into a contract for lighting its streets for a term of thirty years, the agreed price thеrefor to be paid monthly, which sum' for any one year is not in excess of the limitation in section 12 of article 9 of the constitution, but, taken for the whole term, is in excess of the debt it is authorized to incur, it is held that the contract is not prohibited by the constitutional provision, but is legal and binding, there being created no present indebtedness for the whole sum, but only as the gas should be supplied from month to month. The City of East St. Louis v. The East St. Louis Gas Light and Coke Company, 98 Ill. 415. In Carlyle Water, Light & Power Company v. The City of Carlyle, 31 Ill. App. 325, the court says: “ There is no merit in the plea that the indebtedness creatеd by the contract exceeded the constitutional limit, the amount being ‍​‌​‌‌​‌​‌​‌‌‌‌​​‌​​​‌​​‌​‌‌​​‌​‌‌​‌‌​‌‌‌​‌‌‌​‌‌‌‍figured on the assumption that the rental of hydrants for twenty-one years was a present indebtedness.” In Saleno v. The City of Neosho, 127 Mo. 627, the court holds that a contract by a city to pay a fixеd price annually for twenty years for furnishing water, such payments to be contingent on the water being supplied, does not create an indebtedness on the part of the city within the meaning of the constitution, article 10, section 12, fixing the limit of municipal indebtedness; and that among the authorities which hold that the word “indebted,” as used in state constitutions, as in section 12, article 10, of the constitution of Missouri, does not include contracts for the annual supply of municipalities with such necessaries as light and water and of a similar сharacter, and contracts for the payment thereof do not create a debt for the aggregate amount which may become due upon a compliance with the terms of the contract, may be cited the following: Dively v. Cedar Falls, 27 Iowa, 227; Grant v. Davenport, 36 Iowa, 401; Budd v. Budd, 59 Fed. Rеp. 735; Water Co. v. Walla Walla, 60 Fed. Rep. 957; State v. McCauley, 15 Cal. 429; Koppikus v. State Capitol Com’rs, 16 Cal. 248; People v. Pacheco, 27 Cal. 207; Carlyle Water,etc., Co. v. Carlyle, 31 Ill. App. 339; S. C., 140 Ill. 445; Crowder v. Sullivan, 28 N. E. Rep. 94; Valparaiso v. Gardner, 97 Ind.. 1; Weston v. Syracuse, 17 N. Y. 110; Utica Waterworks Co. v. Utica, 31 Hun, 430; Smith v. Dedham, 144 Mass. 179; see also, 1 Dillon on Munic. Corp. (4th Ed.) Sec. 135.

We therefore hold that the Deem ordinance did not create an indebtedness in excess of the limitation of section 12 of artiсle 9 of the constitution.

The fourth proposition is that it was necessary to have passed an appropriation ordinance prior to the passage ‍​‌​‌‌​‌​‌​‌‌‌‌​​‌​​​‌​​‌​‌‌​​‌​‌‌​‌‌​‌‌‌​‌‌‌​‌‌‌‍of the Deem waterworks ordinance in order to have made the latter valid in any event. Carlyle Witter, Light & Power Company v. The City of Carlyle, 31 Ill. App. 325, Kankakee v. McGrew, 178 Ill. 74, and The City of Danville v. The Danville Water Company, 180 Ill. 235, hold that an appropriation ordinance was unnecessary prior to the passage of the waterworks ordinance.

The fifth proposition relates to the purchase by the city of a certain lot described in the bill of comрlaint and a donation of it or its use to Deem as a site or location for the waterworks plant. This plant and waterworks system are not installed or owned by the city. They are the' private property of Deem, subject to certain regulations by the city. Hаd the city been possessed of sufficient financial ability to install and own the plant it would have had the undoubted right, under the statute, to have acquired the lot by purchase or condemnation as a site for a plant of its own. But'such isnpt the case. The ordinanсe clearly demonstrates that the city is proceeding under the provisions of the statute authorizing it to grant a license to a water company to supply water to the city and its inhabitants. Under such circumstances the city was without authority to either acquire the lot for the purpose stated or to give it or its use to Deem for his private use or gain, Ligare v. City of Chicago, 139 Ill. 46; Washingtonian Home v. Chicago, 157 Ill. 414.

It is not a sufficient reply to say that the answer denies any such purpose or intention on the part of the city. There was no hearing of thе cause, but the bill was dismissed for want of equity upon its face, and we must look to the bill alone to determine whether the complainant is entitled to equitable relief. We are of the opinion and hold that the bill shows that the city had no authority to purchase thе lot for the purpose stated, or to give it or its use to Deem as a site or location for the waterworks plant. It was, therefore, error to dismiss the bill for want of equity upon its face.

The allegations of^ the bill relating to the repeal of the sinking fund ordinanсe of 1899 and the attempted re-appropriation of such funds were not argued in this court by the appellants, and are therefore treated as abandoned.

For the reasons indicated we affirm the order dissolving the injunction, except that part of the injunction relating to the lot; and ‍​‌​‌‌​‌​‌​‌‌‌‌​​‌​​​‌​​‌​‌‌​​‌​‌‌​‌‌​‌‌‌​‌‌‌​‌‌‌‍as to the lot we reverse the order, and we reverse the decree dismissing the bill and remand the cause for further proceedings.

Affirmed in part, reversed in part, and remanded.