No. 3--01--0950

	_________________________________________________________________

	IN THE APPELLATE COURT OF ILLINOIS

	THIRD DISTRICT

	A.D., 2002

ILLINOIS-AMERICAN WATER		)	Appeal from the Circuit Court

COMPANY,					)	for the 10th Judicial Circuit,

 	Plaintiff-Appellant,	)	Peoria County, Illinois

						)

	v.					)	No. 00 CH 248 

						)

THE CITY OF PEORIA and		)	Honorable

PEORIA AREA ADVANCEMENT 		)	Donald C. Courson

GROUP, L.L.C.,				)	Judge Presiding

	Defendants-Appellees.	)	

						)	

_________________________________________________________________

	JUSTICE BRESLIN delivered the opinion of the court:

_________________________________________________________________

	In this declaratory judgment action, plaintiff Illinois- American Water Company (company) appeals the trial court's decision

upholding the validity of a 113-year-old purchase option in an

agreement between its predecessor and the City of Peoria for the

sale of a water works.  The company also appeals the trial court's

decision that it lacked standing to bring an action against

defendant Peoria Area Advancement Group, L.L.C. (PAAG), for

providing financing to the city for this litigation.  Under the facts of this case, we affirm and hold as follows: (1) the city had

the authority to include the purchase option in the agreement; (2)

the purchase option is not perpetual in duration but continues

throughout the life of the city; (3) the option was not terminable

at will; (4) the purchase option was not preempted and superceded

by the Public Utilities Act (Act) (220 ILCS 5/1-101 et seq. (West 2000)); (5) the purchase option is not unenforceable due to the

doctrines of commercial frustration or impossibility of

performance; and (6) the company did not have standing to contest

the agreement between the city and PAAG.

FACTS

	In 1889, the city and the company's predecessor entered into an agreement whereby the predecessor agreed to supply water to the

citizens of the city at an agreed-upon rate.  In consideration for

these services, the predecessor received from the city the existing

water treatment facilities and mains.  The agreement was amended

several times until it reached its present form, which has been in

effect since 1906.  The parties reaffirmed the agreement in 1940.

	Section 4 of the agreement provides the company the right to

use the public streets for a term of 30 years from the date of sale

and delivery of the system.  Section 5 states that "[t]his

Ordinance shall be in force and effect from and after its passage

and publication and *** shall extend to all grantees, their

successors and assigns."  Section 17 states:

	"At the expiration of ten years from the date of the

passage of this ordinance, or of any, except the second,

five year period thereafter, the City of Peoria, as a

municipal corporation, shall have the right to purchase

the water works of the grantees, and all things

pertaining thereto, as herein provided, 	***

	***

	*** [T]he said City shall then have the right to exercise the option of purchasing or refusing to purchase the said water works at the price so fixed, excluding all distributing pipes, hydrants,

etc., used for supplying water to consumers outside of the City

limits.  PROVIDED, that nothing herein shall be so construed as to

prevent the City purchasing the main pipes, reservoirs, machinery,

pumping stations and supply wells and ground, etc., whether the

same may be located within or without the limits of said City."

	Section 18 of the agreement is entitled "Water for Fire

Protection - Payments - How Made" and provides, in pertinent part,

as follows:

	"[T]he franchise and license hereby granted to and vested

in the grantees shall remain in full force and effect

during the term of thirty years from and after the sale

and delivery of the present water works, but subject to

the right of purchase as herein provided and to the other

conditions herein imposed, but in the event of a failure

to purchase said water works, as herein provided, on or

before the expiration of said thirty years, said

franchise and license shall then continue in full force

and effect until such time as said city may purchase said

works ***."

	In October of 1998, the city council of Peoria voted to adopt

a plan to acquire the water works.  Pursuant thereto, the city

entered into a loan agreement with PAAG whereby PAAG was to loan

the city money to finance its acquisition attempts, attorney fees

and costs.  The company filed this action against the city and PAAG

requesting a declaration that the agreement was outmoded, obsolete, and had been superseded or implicitly repealed by the Public

Utilities Act (220 ILCS 5/1-101 et seq. (West 2000)), and that the purchase option had expired and was repealed by the Eminent Domain

Act (735 ILCS 5/7-101 et seq. (West 2000)).  The company also claimed that the city and PAAG conspired against it and that the

agreement was illegal and against public policy.

	The company and the city filed cross-motions for summary

judgment on the declaratory judgment issues.  The trial court

granted the city's motion and denied the company's motion.  Based

on its determination that the company lacked standing, the court

dismissed the conspiracy and illegal contract claims against the

city and PAAG pursuant to section 2-619 of the Code of Civil

Procedure (Code) (735 ILCS 5/2-619 (West 2000)).  The company appealed.

	Additional facts will be presented as they become pertinent to

the analysis.

ANALYSIS

	The issues on appeal are whether the trial court's decisions

to grant summary judgment on the declaratory judgment claims and to

dismiss the illegal contract and conspiracy claims (735 ILCS 5/2-

619 (West 2000)) were proper.  This court uses a de novo standard when reviewing a trial court's grant of summary judgment and

dismissal pursuant to section 2-619. Grot v. First Bank of Schaumburg, 292 Ill. App. 3d 88, 684 N.E.2d 1016 (1997); Denault v. Cote, 319 Ill. App. 3d 886, 746 N.E.2d 765 (2001).

	The company's first argument is that the city did not have the authority to include the option provision in the agreement when the

agreement was entered into in 1889.  Because no statute expressly

granted the city the authority to include the option, the company

claims that the option is ultra vires, void, and unenforceable.

	When interpreting a statute, the court's primary objective is to ascertain and give effect to the intent of the legislature. In re Marriage of Burgess, 189 Ill. 2d 270, 725 N.E.2d 1266 (2000).  When determining legislative intent, the court must construe the

language of the statute according to its plain and ordinary

meaning. In re C.M., 282 Ill. App. 3d 990, 669 N.E.2d 707 (1996).  If the statutory language is clear and unambiguous, the statute's

plain meaning will be given effect. People v. Whitney, 188 Ill. 2d 91, 720 N.E.2d 225 (1999).

	Section 3 of "An Act authorizing cities, *** to construct and

maintain water works" provides that "[f]or the purpose of erecting, constructing, locating, maintaining or supplying such water works,

any such city *** may go beyond its territorial limits, and may

take, hold and acquire property and real estate, by purchase or

otherwise ***." Ill. Rev. Stat. 1889, ch. 24, par. 256.  

	Based on a plain reading of this language, we conclude that

the city had broad powers to acquire a water works system by

purchase or otherwise.  In our view, the language of section 3 is broad enough to include a purchase option agreement.  Because an ordinary construction of the language of section 3 allows for the

inclusion of the purchase option in the agreement, we affirm.  See West v. Kirkham, 147 Ill. 2d 1, 588 N.E.2d 1104 (1992) (finding that where the language of a statutory provision is clear, the

statute must be given effect). 

	The company's second argument is that the agreement and purchase option were limited to 30 years.  In the alternative, it argues that the option was terminated at will by the company when

it resisted the city's past attempts to exercise the option, that

the option was not exercised within a reasonable period after the

30-year term had expired, and/or that the option expired in 1988 at

the end of the 99-year corporate life of the original grantee (the

company's predecessor).  The city responds that the agreement was

not limited to 30 or 99 years and that the company cannot now

complain that the option was terminable at will or had to be

exercised within a reasonable period because it failed to make

those arguments in the trial court.

	Provisions as to the duration of a contract are to be

construed to effectuate the intention of the parties as evidenced

by the language employed. Rooks v. Plavec, 40 Ill. App. 2d 298, 188 N.E.2d 251 (1963).  If a contract is unambiguous in its expression

of duration, the contract is not subject to judicial construction. Donahue v. Rockford Showcase & Fixture Co., 87 Ill. App. 2d 47, 230 N.E.2d 278 (1967).  A contract that fails to provide any

recognizable basis for termination is ordinarily perpetual in

duration and terminable at will by the parties.  See Jespersen v. Minnesota Mining & Manufacturing Co., 288 Ill. App. 3d 889, 681 N.E.2d 67 (1997).  Nevertheless, when a municipality grants a public service corporation the right to use its streets and no time is fixed as to when such rights should cease, the rights to use the

streets do not exist in perpetuity but end when the municipality

granting the right ceases to exist. See Venner v. Chicago City Ry. Co., 236 Ill. 349, 86 N.E.266 (1908).

	We conclude that the trial court did not err when it

determined that the option to purchase was not limited to a 30-year

period.  Section 18 provides that, after the expiration of 30

years, the agreement "shall continue in full force and effect until

such time that the city may purchase the [water] works."  This language is clear, unambiguous and provides the city with the opportunity to purchase the water works beyond the 30-year period. 

As the language does not fix a time in which the city must exercise

the option, the option continues so long as the city remains in

existence.  Therefore, the option provision is not perpetual in

duration and is not terminable at will by the parties.  See People ex rel. City of Chicago v. Chicago Telephone Co., 220 Ill. 238, 77 N.E. 245 (1906) (providing that a municipal grant to a corporation

to use its streets in order to supply telephone service to it

citizens was not perpetual and continued throughout the life of the

municipality).

	The company contends that the agreement is limited to 30 years based on section 1 of "An Act to enable cities, *** to contract for

a water supply for public use ***" (Ill. Rev. Stat. 1889, ch. 24,

par. 266), which provides that cities, incorporated towns and

villages may make contracts "for a supply of water for public use

for a period not exceeding thirty years" (Ill. Rev. Stat. 1889, ch. 24, par. 266).  We do not agree with this contention.  Section 1

does not apply to this case because the city was not purchasing a supply of water but instead was selling its water works to the

company with the agreement that the company would be supplying

water directly to the citizens at an agreed -upon rate.

	We also disagree with the company's assertion that the agreement and option expired in 1988 at the end of the ninety-nine99- year

corporate life of the original grantee.  In Village of West City v. Illinois Commercial Telephone Co., 372 Ill. 493, 24 N.@WE.  2d 352 (1939),2 our supreme court stated that "[a] grant to a corporation

of a right to use public streets which fixes no definite time for

the continuation of the right is construed, in the absence of anything to show a contrary intention, as a license for the life of the grantee corporation." (Emphasis added.) 372 Ill. 493,at 496, 24

N.E.2d 352at,  353.  (1939) (emphasis added)..  

	As stated previously, when read together, sections 17 and 18 indicate a clear intention that the option will continue until the

city purchases the water works.  Therefore, we hold that the option

is not restricted to the corporate life of the original grantee. 

See St. Clair County Turnpike Co. v. Illinois, 96 U.S. 63, 24 L. Ed 651 (1878) (providing that a grant of a franchise to a corporation

is not limited to the legal duration of the corporation if there is

a clear expression to the contrary).

	Based on our decision that the option provision is not

perpetual or terminable at will by the parties and that the option did not expire at the end of the 99-year corporate life of the original grantee, we need not address the company's claim that the

option was not exercised within a reasonable time period.

	The company's third argument is that the agreement and purchase option were preempted and superceded by the Public

Utilities Act (Act) (220 ILCS 5/1-101 et seq. (West 2000)) and were thus ineffective.  The city responds that the Act did not affect

the contractual provisions of the agreement but only the regulatory

powers which were given to the state.

	The Act (220 ILCS 5/1-101 et seq. (West 2000)) was passed by the General Assembly in its exercise of its police power. Illinois Commerce Comm’n ex rel. Illinois Traction, Inc. v. Omphghent Township, 326 Ill. 65, 156 N.E. 766 (1927).  The purpose of the Act was to give the public control over

property used by the public for a common good. City of Chicago v. Alton R.R. Co., 355 Ill. 65, 188 N.E. 831 (1933).  When the Act grants to the state a specific right or power that conflicts with

a similar right or power held by a municipality, the Act will

prevail as a repeal by implication of the rights vested in the

municipality. City of Geneseo v. Illinois Northern Utilities Co., 378 Ill. 506, 39 N.E.2d 26 (1941).  Although the Act is in

derogation of the common law and is to be strictly construed in

favor of those sought to be subjected to its operation, the Act

will not be extended any further than what the language of the

statute absolutely requires by its express terms or by clear

implication. Tucker v. Illinois Power Co., 232 Ill. App. 3d 15, 597 N.E.2d 220 (1992).

	We hold that the trial court correctly determined that the Act does not preempt or supercede the purchase option in the agreement

in this case.  The purchase option grants to the city the right to

repurchase the water works, and we find no language in the Act,

express or implied, giving the state the power or authority to

prohibit the inclusion of the option provision.  Although the

regulatory powers granted to the state by the Act may preempt the

regulatory provisions of the agreement (Omphghent, 326 Ill. at 70, 156 N.E.2 at 768), we determine that the purchase option in no way conflicts with the Act.  See, e.g., Geneseo v. Illinois Northern Utilities Co., 378 Ill. at 523, 39 N.E.2d at 35 (providing that the power vested in cities to permit or refuse a license or franchise

to a public utility has not been repealed by the provisions of the

Act).

	The company's fourth argument is that the purchase option is

unenforceable due to commercial frustration and impossibility of

performance.  The company asserts that unforeseen changes in the

law, such as the enactment of the Public Utilities Act (220 ILCS

5/1-101 et seq. (West 2000)), and subsequent case law have rendered the substantive provisions of the agreement null.  As a result,  it

claims that the city's authority over public utilities as provided

in the agreement has been significantly reduced and eliminated. 

The company also asserts that the city is permitted to purchase those portions of the distribution system that are used to supply

water to city residents only, and not those that supply water to

nonresidents.  Because the water system is now an integrated,

regional system, it claims the purchase option is impossible to enforce as the parties intended.

	The doctrine of commercial frustration will render a contract

unenforceable if a party's performance under the contract is

rendered meaningless due to an unforeseen change in circumstances. Smith v. Roberts, 54 Ill. App. 3d 910, 370 N.E.2d 271 (1977).  In order to apply the doctrine of commercial frustration, there must

be a frustrating event not reasonably foreseeable and the value of

the parties' performance must be totally or almost totally

destroyed by the frustrating cause. Smith, 54 Ill. App. 3d at 913, 370 N.E.2d at 273.  Similarly, the doctrine of impossibility of performance will be applied if there is an unanticipated

circumstance that has made the performance of the promise vitally

different from what should reasonably have been within the

contemplation of the parties when the contract was entered. Fisher v. United States Fidelity & Guaranty Co., 313 Ill. App. 66, 39 N.E.2d 67 (1942).  The doctrine of impossibility of performance

requires that the circumstances creating the impossibility were not

and could not have been anticipated by the parties, that the party

asserting the doctrine did not contribute to the circumstances, and

that the party demonstrate that it has tried all practical

alternatives available to permit performance. Farm Credit Bank of St. Louis v. Dorr, 250 Ill. App. 3d 1, 620 N.E.2d 549 (1993). 

	We disagree with the company's assertion that either of the

doctrines should be applied in this case.  Regarding the commercial

frustration claim, the company failed to present any evidence that

the enactment of the Public Utilities Act was not foreseeable by the parties when the contract was entered into in 1889.  The

company also failed to present sufficient evidence that there was

a frustrating event that destroyed the value of the parties'

performance.  Although the company asserts that the value of the city's performance under the agreement was destroyed by subsequent

changes in the law, we have previously determined that the Public

Utilities Act did not render the purchase option void.  See

American National Bank in DeKalb v. Richoz, 189 Ill. App. 3d 775, 545 N.E.2d 550 (1989) (finding that the doctrine of commercial

frustration is not to be applied liberally).

	We also do not agree with the company's claim that the

doctrine of impossibility of performance should apply.  The company failed to present sufficient evidence to show that performance,

even if difficult, is impossible.  In addition, although the

company asserts that the current regional water system was not the

system contemplated by the parties, section 17 of the agreement

states that "nothing herein shall be so construed as to prevent the

City purchasing the main pipes, reservoirs, machinery, pumping

stations and supply wells and grounds, etc., whether the same may

be located within or without the limits of said City." (Emphasis added.)  Because this language seems to recognize that nonresidents

would be using the water system, both the company and the city had

notice that the option could apply even if the system supplied

water to nonresidents.  See Felbinger & Co. v. Traiforos, 76 Ill. App. 3d 725, 394 N.E.2d 1283 (1979) (finding that if a party has

knowledge that subsequent circumstances could render a contract impossible to perform, the doctrine of impossibility is not

available).

	Finally, the company argues that the trial court improperly determined that it did not have standing to contest the agreement

between the city and PAAG regarding the financing for this

litigation.  The company contends that the agreement was illegal

and that the city and PAAG conspired against it to facilitate the

illegal acquisition of the water works without the necessity of a

referendum or compliance with the Eminent Domain Act (735 ILCS 5/7-

101 et seq. (West 2000)).

	The purpose of the standing requirement is to preclude a

person having no interest in a controversy from bringing suit.

Brockett v. Davis, 325 Ill. App. 3d 727, 762 N.E.2d 513 (2001).  In order for a party to have standing, the party must suffer some

injury in fact to a legally cognizable interest and must have

sustained, or be in immediate danger of sustaining, a direct injury

as a result of the complained-of conduct. Brockett, 325 Ill. App. 3d at 730, 762 N.E.2d at 516.  That a party may suffer in some abstract way will not suffice; there must be a direct injury to his

property or rights. Brockett, 325 Ill. App. 3d at 730-31, 762 N.E.2d at 516.

	Based on our review of the complaint, we hold that the trial

court did not err when it dismissed the company's claims against

PAAG based on lack of standing.  The company failed to plead

sufficient facts in the complaint to show that it suffered a direct

injury to a legally cognizable interest as a result of the contract between the city and PAAG.  The contract attached to the complaint

stated that PAAG will provide funding to the city for its efforts

to purchase the water system.  The company failed to allege, however, that it was either a party to that contract or a third-

party beneficiary of it.  Although the company did allege that it

will be harmed financially if the city succeeds in purchasing the

water system, it did not allege facts which demonstrate that the

harm is a direct result of the city's contract with PAAG. 

Accordingly, we affirm the decision of the trial court dismissing the action against PAAG.

	For the foregoing reasons, the judgment of the circuit court of Peoria County is affirmed.

	Affirmed.

	HOMER 		and SLATER,  JJ., concur.