Merchants Loan & Trust Co. v. City of Chicago , 1913 Ill. App. LEXIS 428 ( 1913 )

Mr. Justice Brown

delivered the opinion of the court.

The attack in this court upon the judgment of the Circuit Court in this cause is twofold. It is insisted, first, that the evidence below failed to show any liability of the City on the certificate sued on, because of the lack of necessary elements to fix a municipal liability, and, secondly, that the court gave a wrong construction to the certificate and to the ordinance under which it was apparently issued, in holding that interest should be computed on the amount of the certificate from two years after its date instead of holding, as maintained by the City, that interest should be computed only from two years after the “survey,” the results of which showed the certificate to be due. The objections made to the sufficiency of the proof of the liability are again divided. Some are made against the admissibility of the certificate in evidence and against its competency, when supplemented only by that which appears in the record, to prove a liability against the City at any time, and others against the adequacy of the evidence tending to prove the instrument due according to its terms.

The objection last mentioned is concerned with the evidence introduced by the plaintiff that “upon a proper survey it was shown that a revenue from frontage water rates of ten cents per lineal foot per annum was being derived from said pipe.”

We think the evidence was sufficient. It is true that the ordinances constituting section 1669 of the Code of 1897, section 1906 of the Code of 1905 and section 2128 of the Code of 1911 make it the condition of repayment that a proper survey shall show that a permanent annual revenue of ten cents per lineal foot is being derived from the mains, but neither the instrument itself nor the ordinance of May 16, 1892, under which it may be presumed to have been issued, contains the word “permanent.” The condition of repayment in each is a showing that a revenue of ten cents “is being derived.”

But .if the word “permanent” were in both instrument and ordinance, we do not see that it would alter the case. There is no way of assuring absolute “permanence” in this world and the term must be given a relative and practical meaning. The memorandum of “survey” from the files of the City in connection with the testimony of Byrne, the chief water assessor of Chicago, showed that a revenue of more than ten cents per foot was derived from permanent improvements. The certificate was plainly due, therefore, according to its terms.

As to all other objections to the finding that the City was liable on the certificate produced in evidence, it seems to us sufficient to say that there is no sufficient pleading by the City under which they can be considered. Where, as in this case, the receipt of the money, its borrowing, that is, by the City from the holder of the certificate, was within the City’s charter powers, the burden is upon the City to prove any defense, if any such defense exists, based on the illegality or irregularity of the loan which its formal written admission acknowledged and promises to repay. And not only is the burden on the city to prove such a defense, but it must plead it. City of Chicago v. Peck, 196 Ill. 260.

That the borrowing and using of the money mentioned in the certificate for the extension of its water supply system was within the charter powers of the City is not explicitly, at least, denied by it. There can be no reasonable doubt of it in view of the various statutory provisions of Illinois concerning the construction and maintenance of water works by municipalities.

Nor are the pleadings in any such condition that it is open to the defendant to contend that the certificate shows no obligation of the City because the authority of the signers of the certificate containing the admission of the loan and the promise to repay is not shown extraneously. The certificate, by all proper canons of interpretation, purports to be issued as the act of the City of Chicago, its admission and promise combined, and what the Supreme Court, speaking through Mr. Justice Vickers, said of a contract in Schuyler County v. Missouri Bridge & Iron Co., 256 Ill. 348, is in point:

“The execution of this contract was not denied by a verified plea, and appellant was therefore in no position to question the authority of the agents who signed it, on the trial. This rule applies to a municipal corporation as well as to an individual, and where an instrument purports to have been executed by a municipal corporation, if -it is such an instrument as the municipality could, under any circumstances, issue, and its execution is not denied by a verified plea, then it is not necessary to prove the authority of the agent who signed the same on behalf of such municipality.”

It is not necessary, in our view, to consider whether, under any form of pleadings, the defendant would have been allowed to attempt to show such want of authority on the part of its officers or to urge any other of the objections made to the validity of the certificate, after placing its refusal to pay it before litigation solely on the allegation that the interest demanded was not within the terms of the instrument; but it may be noted in passing that expressions of the Supreme Court of Illinois in this same case of Schuyler County v. Missouri Bridge & Iron Co., supra, and in Gibson v. Brown, 214 Ill. 330, and of the Supreme Court of the United States in Ohio & M. R. Co. v. McCarthy 96 U. S. 258, certainly seem to deny any right to do so.

For the contention that interest on the certificate in question should be allowed only after two years from the date of the survey establishing the “ten cent revenue,” we see no tenable basis. The language of the ordinance and of the certificate alike seems to us plain and unambiguous, and the construction put on it by the court below is that which the City for many years placed on it. The money on the certificate is not to be repaid by the City until a survey has shown the required revenue. If that showing and repayment are within two years from the date of the certificate, the repayment shall be without interest; if more than two years from that date, interest shall be allowed from the expiration of the two years to the date of repayment.

It is not material in this controversy that a municipal corporation in Illinois is not, except by express agreement, liable for interest on money not unlawfully received and held, because here the agreement is express. Nor if it were true would it be material, in face of the definite action of the city council, that it would be more just to the City that the interest should begin to run on these advances only from a date two years subsequent to the survey. Emphasis seems to be given to this argument by counsel for the City, but it is beside the question. However, the injustice of the actual provision is not apparent to us. If the required revenue should accrue within one year of the advances, the City, if the survey and the money were not demanded until the expiration of the two years, would have the use of the money for more than a year without interest. If the revenue was not shown for three years, the City would pay interest for a year, perhaps, on an investment which was at most only partially remunerative to it, but the council may be presumed to have thought that the gains to the City would on the whole equal the loss in the arrangement thus provided, and there is no evidence that it does not. As interest rates on the City’s ordinary obligations have declined, the council has provided for a less rate on these special loans.

The judgment of the Circuit Court of Cook county is affirmed.

Affirmed.