Court Opinion

ID: 6972855
Source: CourtListenerOpinion
Date Created: 2022-07-24 02:05:41.631641+00
Date Added: 2024-06-11T16:08:51.812634
License: Public Domain

Mr. Justice Wilkin, dissenting: The holding of this court has always been that a municipal corporation which has reached the constitutional limit of its power to create indebtedness may, when a tax is levied but not yet collected, draw warrants against the fund already levied, thus appropriating and virtually assigning the amount specified in the warrant, which, when collected, the holder will.have the right to receive, and when it is thus sought to apply the fund created by the levy of taxes in anticipation of their collection to meet lawful appropriations, contracts for that purpose, payable exclusively out of such appropriations when the revenue shall be collected, are not regarded as contracting indebtedness against the municipality. (Lazo v. People, 87 Ill. 385; Puller v. Heath, 89 id. 296; City of Springfield v. Edwards, 84 id. 626.) None of the cased cited are, however, directly in point here, and, so far as I have been able to discover, the exact question now before us for decision has never been decided by a court of last resort, unless it be in the case of Winston v. City of Spokane, 41 Pac. Rep. 888. There the Supreme Court of Washington had before it for review a case similar to this. The constitution of the State of Washington as to the limitation of municipal indebtedness is, so far as I am informed, similar to, if not identical with, ours. The city of Spokane attempted to build a system of water-works and make the bonds payable out of the water-works fund. It was already indebted to the amount limited by the constitution, and the question before the court was whether the bonds created an additional indebtedness against the city, and it was said, after stating the facts: “This being so, we are of the opinion that neither the ordinance, the contract, nor the obligations to be issued by the city in pursuance thereof, do or will constitute a debt of the city within the constitutional definition. The only obligation assumed on the part of the city is to pay out of the special fund, and it is in no manner otherwise liable to the beneficiary under the contract. The general credit of the city is in no manner pledged, except for the performance of its duty in the creation of such special fund. The transaction, therefore, is no more the incurring of an indebtedness on the part of the city than is the issue of warrants payable out of a special fund created by an assessment upon the property to be benefited by a local improvement.” This, in my opinion, is the proper construction to be placed upon the statute here in question and the ordinance passed thereunder. The village of East Moline had no system of water-works. Bonds to the extent of $35,000 were to be issued and sold. Out of this fund a system of waterworks was to be erected. The bonds to be issued must specifically state upon their face that they are to be paid out of the special tax levy and the net revenue of the water-works system, and out of no other fund. The general credit of the village was not to be pledged to the payment of the bonds. The only security which the bondholders will have for their payment will be the revenue derived from the institution built by the money obtained from the bondholders. In an action to enforce the payment of the bonds, the remedy would be against the water-works and the water-works fund to compel the municipal authorities to so manage them that they would produce a sufficient fund out of which the indebtedness could be paid. If the village had sought to pledge the fund derived from dram-shop licenses, or licenses from hackmen, peddlers, theaters or amusements, or any other funds of the city, it would have created an indebtedness prohibited by the constitution. (City of Joliet v. Alexander, 194 Ill. 457.) But in view of the fact that it was attempting to encumber the property which was to be paid for out of the funds derived' from the property itself, after which it was to become the property of the village, it was not attempting to create an indebtedness prohibited by the constitution. To hold otherwise would, in effect, render invalid all bonds issued for special assessments. Such bonds are issued by the municipal authorities and are payable solely out of the funds derived from the special assessments for which they are levied. The municipality is in no way responsible for them, except to use every effort to see that the money is collected when it becomes due. If special assessment bonds were construed as an indebtedness within the constitutional limitation, very few, if any, public improvements could be made. I am of the opinion that the bonds about to be issued would not create an indebtedness against the village in violation of the constitution so long as they pledged only the funds derived from the system of water-works authorized by the statute.