Appeal from the Circuit Court of Rock Island county; the Hon.
A.J. SCHEINEMAN, Judge, presiding. Judgment affirmed.
JUSTICE EOVALDI DELIVERED THE OPINION OF THE COURT.
JUSTICE WRIGHT delivered opinion on rehearing.
This is an action at law to recover $36,022.26, with interest from August 19, 1953, for services which the complaint alleges the plaintiff rendered the defendant as the engineer designing a water works system. The city answered the complaint, alleging, among other things, that there was no appropriation ever made for the payment of the amount claimed as being due the plaintiff under his contract out of the general corporate funds of the city, and therefore the city was not liable.
The facts as set forth in the pleadings are that the city had adopted an ordinance providing for water work expenses and improvements, the entire cost of which, including the engineering expense, was to be paid out of funds derived from the sale of revenue bonds, which bonds were to be a lien against the water revenues only and not a general obligation of the city. A contract was entered into between the city and the plaintiff for engineering services and some work was performed. The city abandoned the project, repealed the ordinance, no revenue bonds were issued, and no funds are available with which to pay the plaintiff.
The issues made by the pleadings were submitted to the trial court without a jury, resulting in a judgment in favor of the city and against the plaintiff in bar of the action and the plaintiff appeals.
The defendant relies upon two points to sustain the judgment of the circuit court. These are: (1) That under the provisions of chapter 24, section 15-3, of the Cities and Villages Act [Ill. Rev. Stats. 1955, ch. 24, § 15-3], the contract sued upon by plaintiff is null and void for want of a prior appropriation, and no money belonging to the defendant municipality may be paid on account thereof; and, (2) That plaintiff at the time of the making of the contract in question was not the holder of a certificate of registration issued by the State of Illinois as a registered structural engineer; that the work called for in said agreement could only be done and performed by a registered structural engineer, and not by an architect or professional engineer and that by reason thereof the plaintiff could not lawfully enter into said contract, as he was prohibited by law from practicing or attempting to practice structural engineering. (Ill. Rev. Stat., 1953, chap. 131 1/2, sections 1 and 2.)
The plaintiff's theory is, (1) that because the contract provided payment of plaintiff's fees from the special fund raised by the sale of water revenue bonds, the statute does not apply; (2) that when the contract was made it was not contemplated that any payment under it would come from the city's general funds; (3) that the making of the contract did not create the liability for which plaintiff is suing; (4) that the liability for which plaintiff is suing was later created by defendant city when it decided to terminate the contract; and, (5) it was the act of the defendant city in repealing the bond ordinance and not continuing with plaintiff in the project that prevented the special fund from coming into existence.
The applicable statute is chapter 24, sec. 15-3, Ill. Rev. Stat., the Cities and Villages Act, which provides as follows:
"No contract shall be made by the corporate authorities, or by any committee or member thereof, and no expense shall be incurred by any of the officers or departments of any municipality, whether the object of the expenditure has been ordered by the corporate authorities or not, unless an appropriation has been previously made concerning that contract or expense. Any contract made, or any expense otherwise incurred, in violation of the provisions of this section shall be null and void as to the municipality, and no money belonging thereto shall be paid on account thereof. . . ."
The leading case supporting the ruling of the trial court is that of DeKam v. City of Streator, 316 Ill. 123. In that case the plaintiff and fifteen others, taxpayers of the city of Streator, filed a bill in equity to restrain the city officials from paying one G.L. Clausen, an engineer, further sums of money in accordance with certain contracts entered into between the city and Clausen whereby he undertook to design a sewer system for the city. The circuit court entered a decree granting relief to complainants in accordance with the prayer of their bill. On appeal the Appellate Court decided the matter on the merits, reversed the decree and remanded the cause. A certificate of importance having been granted, the cause was reviewed by the Supreme Court. Clausen's final bill for services amounted to $34,263 upon which he had been paid $3,000. He completed his work some time prior to March 8, 1920. On May 17, 1920 the annual appropriation ordinance was passed which contained the following items: "Special fund for new sewer system engineer, $5,000." That amount was then paid to Clausen. The statute applied by the court was the same statute upon which the defendant in the instant case relies. On page 128 of the opinion the court said: "The contract was void because it was prohibited by law." On page 129 of the opinion the court said:
"A contract expressly prohibited by a valid statute is void. This proposition has no exception, for the law cannot at the same time prohibit a contract and enforce it. The prohibition of the legislature cannot be disregarded by the courts."
On page 132 the court said:
"Since no appropriation of money had been made for the new sewer system the contract of February 14, 1919, was void, and not only is everyone presumed to have known that the city and all of its officers were prohibited from making the contract, but the writing itself shows that the parties to it had this prohibition actually in mind at the time, for the writing expressly mentions the inability of the city to enter into a contract. This instrument was confessedly void, and being void was incapable of ratification."
On page 133 the court said:
"In the absence of an appropriation there was no liability, and if it should be held that there was a liability, the provision which the statute intended for the protection of tax-payers would be nugatory and of no avail."
It was also contended by the engineer in that case that the defendant city of Streator and its officers were estopped to question the legality of the contracts. The court answered this contention as follows (p. 136):
"However, the question of estoppel does not enter into the case. The city cannot be estopped to dispute the validity of a contract which it had no power to make, for the reason that it has received the consideration. `Everyone is presumed to know the extent of the powers of a municipal corporation, and it cannot be estopped to aver its incapacity, which would amount to conferring power to do unauthorized acts simply because it has done them and received the consideration stipulated for' (citing cases)."
The DeKam case was followed by that of Simpson v. City of Highwood, 372 Ill. 212, cited and relied on by both parties which also dealt with the question of prior appropriations being necessary in order to give validity to contracts or expenditures incurred by municipalities. Plaintiffs there filed a representative suit against the city, the engineers, and others praying that an ordinance providing for a water project, bond issue and all contracts thereon be declared null and void. The defendants answered and upon a hearing a decree was entered dismissing the amended complaint for want of equity. The circuit court certified that the validity of a municipal ordinance was involved and the plaintiffs appealed directly to the Supreme Court where the decree was affirmed.
One of the contentions for a reversal of the decree was that the expenditures of the bonds and the contracts for such expenditures were unlawful because there was no prior appropriation for the expense of construction, engineering services, or purchase of ground. The defendants there claimed that an appropriation was not necessary and with this contention the court agreed for in that case the bonds had been sold and the suit was to restrain the use of the special fund thus raised. There was no contention by the plaintiffs there that the city was about to pay out general funds without an appropriation. At page 220, the court said: "It is not claimed the contracts are payable out of any fund other than the special fund derived from the sale of the bonds." The court said, at page 219:
"We have never held that contracts for or the expenses of constructing the portion of a local improvement which are not to be paid from general funds of a ...