APPEAL from the Circuit Court of Cook County; the Hon. WILLIAM
J. TUOHY, Judge, presiding.
MR. JUSTICE HERSHEY DELIVERED THE OPINION OF THE COURT:
Plaintiff, The People of the State of Illinois, here appeal from a judgment of the circuit court of Cook County, dismissing an information in the nature of quo warrantor, brought by Benjamin S. Adamowski, State's Attorney of Cook County. The information challenged the validity and constitutionality of amendments to section 9 of "An Act to create sanitary districts and to remove obstructions in the DesPlaines and Illinois rivers," providing for the establishment of a corporate working cash fund and a construction working cash fund by the issuance of bonds without referendum. Ill. Rev. Stat. 1957, chap. 42, par. 328.
The Metropolitan Sanitary District of Greater Chicago was organized pursuant to the aforesaid act, enacted May 29, 1889, as amended. Section 9 of the act, at the time of this district's organization, provided the district could borrow money for corporate purposes, and issue bonds therefor, but should not become indebted in an amount exceeding five per centum of the valuation of the taxable property within the district, and in no case exceeding the sum of $15,000,000. This section was amended on numerous occasions. The defendant district is authorized to issue and sell tax anticipation warrants not exceeding 75 per cent of the tax levied for corporate purposes for any year (Ill. Rev. Stat. 1957, chap. 146 1/2, par. 2); to use a corporate pegged levy, and to appropriate for corporate purposes a sum not to exceed 75 per cent of the tax levied for corporate purposes. Ill. Rev. Stat. 1957, chap. 42, pars. 332 and 324m.
On May 28, 1957, the General Assembly enacted Senate Bill No. 324, amending section 9 of the act providing that bonds issued for the purpose of establishing a "corporate working cash fund as is provided by Section 9b of this Act" need not be submitted to the voters of the district for approval, and adding section 9b to the act, providing that the corporate authorities might by ordinance establish a "corporate working cash fund" by issuing bonds in an amount not to exceed $10,000,000, at interest not to exceed 6 per centum per annum, maturing within 20 years from date of issuance of the first bond. The corporate authorities need only adopt an ordinance designating the purpose and fixing the date and amount of the bonds to be issued, the maturity date, the interest rate, place of payment and denomination, and providing for the levy and collection of a direct annual tax upon all taxable property in the district sufficient to pay the principal and interest as it falls due. The monies derived from such bonds may be disbursed from the fund in anticipation of taxes for corporate purposes, and the taxes when collected shall be first applied to the payment of any warrants and then to the reimbursement of the working cash fund. Tax anticipation warrants and disbursements from the working cash fund in aggregate for any one year shall not exceed 75 per cent of the amount of taxes extended for that purpose. It is further provided that when monies are available in the corporate working cash fund they shall be transferred to the corporate fund and disbursed for payment of salaries and other corporate expenses "so as to avoid, or reduce in amount, whenever possible, the issuance of tax anticipation warrants."
Also on May 28, 1957, the General Assembly enacted Senate Bill No. 322 amending section 9 of the act providing that bonds issued for the purpose of establishing a "construction working cash fund as provided by Section 9c of this Act" need not be submitted to the voters of the district for approval, and adding section 9c to the act, providing that the corporate authorities might by ordinance, establish a "construction working cash fund" by issuing bonds in an amount not to exceed $5,000,000, bearing interest not to exceed 6 per cent per annum, maturing in 20 years, and to be used for paying costs incurred for construction purposes as described therein, and otherwise providing for the establishment, administration and use of such fund in exactly the same manner and in the same terms and provisions as the "corporate working cash fund" provided in section 9b of the act.
On June 24, 1957, the General Assembly enacted House Bill No. 482, also amending section 9 of the act in other particulars not in issue here, and failing to incorporate in the amending bill the amendments to section 9 enacted May 28, 1957.
On April 2, 1958, the district trustees adopted two ordinances, authorizing the issuance of $5,000,000 construction working cash fund bonds and $10,000,000 corporate working cash fund bonds. The issuance was not submitted to the voters of the district for approval. The bonds are dated August 1, 1958, and contain the provision that "For the prompt payment of this bond, both principal and interest, as the same become due, and for the levy of taxes sufficient therefor, the full faith, credit and resources of the Metropolitan Sanitary District of Greater Chicago are hereby irrevocably pledged."
This information alleged that the two amendments adding sections 9b and 9c and amending section 9 are unconstitutional, illegal and void for the reasons that (1) they violate section 9 of article IX of the Illinois constitution in that the tax provided is not for a corporate purpose, (2) they violate section 1 of article IX of the Illinois constitution in that the tax provided therein is not needful, (3) they violate section 9 of article IX, section 2 of article II of the Illinois constitution, and the fourteenth amendment to the constitution of the United States in that the issuance of the bonds and the levy and collection of taxes to pay the bonds was not submitted to the legal voters, (4) that the said amendments were repealed by House Bill 482 and (5) the ordinances are null and void in that they irrevocably pledge the resources of the district without authority. The defendant district moved to strike the information, and upon hearing the motion was allowed. The plaintiff elected to stand upon the information and an order was entered dismissing the information. Plaintiff, thereupon, appealed to this court, a constitutional question being involved, alleging the issues raised in the information.
Plaintiff first contends that these two amendatory acts purport to vest the district with authority to levy a tax which violates section 1 of article IX of the Illinois constitution which provides that the General Assembly shall provide such revenue as may be "needful," that they violate the provisions of section 9 of article IX of the Illinois constitution providing that the General Assembly may vest all municipal corporations with power to assess and collect taxes for "corporate purposes." Plaintiff asserts that these amendments, considered with the other statutory fiscal powers of the district, permit it to obtain revenues that are not needful, and to accumulate them unlawfully, rather than use them for current corporate purposes. Thus, plaintiff says that the people are deprived of their property without due process of law in violation of section 2 of article II of the Illinois constitution and the fourteenth amendment to the Federal constitution.
Relying upon the cases of Mathews v. City of Chicago, 342 Ill. 120, and People ex rel. Brenza v. Gebbie, 5 Ill.2d 565, the plaintiff objects that the working cash funds provided by these amendments are created by the statute "so as to avoid, or reduce in amount, whenever possible, the issuance of tax anticipation warrants," instead of replacing entirely the use of tax anticipation warrants, thus permitting the district, if it so wishes, to accumulate a working cash fund which is not used or needed, and which fails to meet the required standard of a working cash fund by replacing tax anticipation warrants.
Working cash funds, as such, are approved as a proper method of municipal finance in the case of Mathews v. City of Chicago, 342 Ill. 120. The statutes there involved provided that working cash funds might be raised by bond issue and used "so as to avoid, whenever possible, the issuance of tax anticipation warrants." The court there found that the assessment of taxes to establish and maintain such fund was "needful" as providing a method for current financing of corporate expenses, thus eliminating the disabilities encountered by the fact that taxes are collected some sixteen months after they are levied for the current year, and they look toward the eventual elimination of tax anticipation warrants and the consequent interest charge incurred by the municipal corporations.
The present amendments provide for working cash funds for corporate purposes limited to $10,000,000 and for construction purposes limited to $5,000,000, whereas the pegged levy is considerably higher. Hence the plaintiff objects that these funds can never look to the elimination of tax anticipation warrants, as in the Mathews case. Plaintiff insists that such elimination of tax anticipation warrants is a necessary requirement to validity of such funds. The funds here in question are sufficient to meet at least five and ten millions of the current construction and corporate expenses, and to that extent can eliminate at least a part of the tax anticipation warrant load, thus saving some interest charges. These funds are thus needful in the same manner as those funds approved in the Mathews case. Moreover neither the Mathews case nor the case of People ex rel. Brenza v. Gebbie, 5 Ill.2d 565, required that tax anticipation warrants must be eliminated entirely by such funds, but rather recognized that such would be the end result in the Mathews case. Neither case held that both methods of current financing could not be employed. The Gebbie case at page 574 of 5 Ill.2d states "It is to be noted also that even in the Mathews case, the court recognized that tax warrants would have to be issued in conjunction with the `working cash fund' plan until the fund became fully operative, yet found no constitutional barrier to the co-existence of the two methods."
Plaintiff additionally complains that the establishment of such working cash funds, together with the district's other statutory fiscal powers, would permit the district to unlawfully accumulate monies without using them for a corporate purpose, thus violating the designated constitutional provisions. It is true that the unnecessary accumulation of money in public treasuries is unlawful, as depriving the people of the use of their money, and constitutes a temptation to expend public funds recklessly and needlessly. Plaintiff contends that since these acts only require these funds to be used to "avoid, or reduce in amount, whenever possible, the issuance of tax anticipation warrants," the district authorities could reduce the tax anticipation warrants in only a small degree, thus complying with the statute, and accumulate the remainder. However, the same paragraph provides that when monies are available in the corporate (construction) working cash fund "they shall be transferred" to the corporate (or construction) fund and disbursed for salaries and other corporate (or construction) expenses "so as to avoid, or reduce in amount, whenever possible, the issuance of tax anticipation warrants." Certainly this provision is mandatory, and requires the district authorities to so act, and thus prevent unlawful accumulation. Where a constitutional construction is apparent, we must adopt that theory which is consonant with constitutional validity. (People ex rel. Gregg v. Tauchen, 415 Ill. 91.) Were the municipal authority to proceed in such manner as is suggested by plaintiff, its action might be subject to attack, or the tax levied for any current year for that purpose might be held invalid, but that question is not presented here for our determination. The acts themselves provide severe penalties against any trustee, officer, or other person holding a position of trust or employment in the district, for wilful violation of the provisions of the acts.
The acts in the Mathews case only required that the monies in the working cash fund shall be transferred to the proper fund to meet corporate expenses, so as "to avoid, whenever possible" the issuance of tax anticipation warrants. The current acts are the same, except that they recognize the fact that these funds are not of such a size as to ...