APPEAL from the Circuit Court of Cook County; the Hon. THOMAS
E. KLUCZYNSKI, Judge, presiding.
MR. JUSTICE HOUSE DELIVERED THE OPINION OF THE COURT:
Rehearing denied September 15, 1958.
Plaintiffs, (Kellogg Fairbank, original plaintiff, later joined by additional plaintiff Ferre C. Watkins,) as taxpayers, seek to enjoin the purchase by the State Treasurer of a $25,000,000 revenue bond issue of the Metropolitan Fair and Exposition Authority. They further attempt to restrain the Authority from expending funds to reclaim submerged lands under a lease from the Chicago Park District. The defendants are William G. Stratton and Elmer G. Hoffman, as Governor and Treasurer, respectively, of the State of Illinois, and the Metropolitan Fair and Exposition Authority and the individual members of its board. The circuit court of Cook County, after a hearing dismissed the cause and entered a decree for the defendants. The plaintiffs perfected separate appeals to this court.
The Metropolitan Fair and Exposition Authority Act (Ill. Rev. Stat. 1957, chap. 34, pars. 155g1 et seq.:) created the Metropolitan Fair and Exposition Authority, a municipal corporation. The Authority is empowered thereunder to acquire, construct and maintain fair and exposition grounds and facilities, to issue revenue bonds and to charge for the use of such facilities when built. It also is given the right to accept from Chicago Park Fair any funds theretofore received from the Fair and Exposition Fund (Ill. Rev. Stat. 1957, chap. 127, pars. 142i and 164,) and to receive such additional sums as may be distributed to it from that fund in the future.
The Authority proposes to build an exposition building and auditorium upon a tract of 32.37 acres in Burnham Park at Twenty-third Street in the city of Chicago. Under the terms of the lease from the Chicago Park District, 6.49 acres of the demised tract, which is presently submerged, must be filled by the Authority in order to perfect its lease. The cost of reclamation and construction is to be financed by the issuance and sale of revenue bonds in the principal sum of $25,000,000, to be amortized over a period of 33 years from revenues derived from operation of the facilities. The Authority is authorized to service such bond issue in part with distributions from the State Fair and Exposition Fund and may accept funds derived from sources other than operational revenues.
The Authority offered the bonds for sale to the public, the offer providing that bids would be received until 11 o'clock of the morning of February 3, 1958. This action was commenced 10 days prior to the last day for taking bids, and there were no bids tendered.
While there is no firm commitment or contract, the State Treasurer contemplated the purchase of this issue of bonds with public funds in his custody, by and with the consent of the Governor. He could go no further than express an intention, since this litigation was instituted prior to the date of sale. The proposed purchase is the primary target of the original plaintiff's attack based upon the assertion that the bonds are practically worthless and unmarketable, and so unsafe as to constitute an improper and imprudent investment of public funds. The bulk of the evidence was on this point, although some testimony involved collateral issues which are primarily questions of law.
The hearing below took approximately six weeks with a resultant extremely long record. Much evidence, both oral and documentary, was introduced on the question of the accuracy and reliability of the projection of revenues which might be expected from the operation of the facilities and the amount which could be expected from the Fair and Exposition Fund. Changes have been made in the plans from time to time to increase the floor space available for rental purposes. From the evidence plaintiffs draw the conclusion that the bonds are unsecured and unmarketable, that they involve a speculative risk in a venture having no past history, and that these bonds are per se an improper investment by the State Treasurer.
The Treasurer is a constitutional officer, and neither the legislature nor the courts can deprive him of his constitutional powers, nor can they relieve him of his responsibilities. (American Legion Post No. 279 v. Barrett, 371 Ill. 78; People ex rel. Nelson v. West Englewood Trust and Savings Bank, 353 Ill. 451.) Plaintiffs assert that the proposed purchase would constitute speculation with public funds and be in violation of the Treasurer's constitutional duty of safekeeping public funds. It is rightly contended that the Treasurer is a fiduciary and, as such, an insurer or trustee of the public funds in his custody. His duty stems from the constitution and the nature of the office of Treasurer provided for therein. (American Legion Post No. 279 v. Barrett, 371 Ill. 78.) On the other hand, he is a constitutional officer with discretionary powers and cannot be deprived of his stewardship. (People ex rel. Nelson v. West Englewood Trust and Savings Bank, 353 Ill. 451.) In the absence of fraud, corruption, oppression or gross injustice, and none has been charged or shown in this case, the courts will not interfere to control the discretionary powers of the Treasurer. Boyden v. Department of Public Works, 349 Ill. 363; Stewart v. Department of Public Works, 336 Ill. 513.
At this point it seems appropriate to consider whether there exists statutory authority for the proposed purchase. Defendants rely upon two provisions of the statute. The first is section 22 1/2 of the Deposit of State Moneys Act (Ill. Rev. Stat. 1957, chap. 130, par. 41a) which defines acceptable investments of surplus funds. The last paragraph of the section, added by amendment in 1955, reads in part as follows: "The State Treasurer may, with the approval of the Governor, invest or reinvest * * * any State money in the treasury which is not needed for current expenditures due or about to become due * * * in bonds issued by counties or municipal corporations of the State of Illinois."
The other is contained in the Metropolitan Fair and Exposition Authority Act. Section 12 thereof (Ill. Rev. Stat. 1957, chap. 34, par. 155g12) reads in part: "The State * * * banks, bankers, trust companies, savings banks and institutions * * * and all executors, administrators, guardians, trustees and other fiduciaries may legally invest any sinking funds, moneys or other funds belonging to them or within their control in any bonds issued pursuant to this Act, it being the purpose of this section to authorize the investment in such bonds of all sinking, insurance, retirement, compensation, pension and trust funds, whether owned or controlled by private or public persons or officers; provided, however, that nothing contained in this section may be construed as relieving any person from any duty of exercising reasonable care in selecting securities for purchase or investment."
In our opinion there is ample statutory authority to purchase this type of bond. Section 12 of the Authority Act makes lawful the investment of State funds in bonds issued under such act, the only qualification being that the purchaser is not relieved of any duty of exercising reasonable care in the selection of securities. This qualification really adds nothing new since, as we pointed out above, the legislature cannot relieve the Treasurer of responsibility for funds coming into his hands, nor can it force the Treasurer to purchase any given issue of bonds. There can be no doubt of the legislative intent to permit the purchase of revenue bonds of this particular municipal corporation since section 12 specifically declares the Authority's bonds to be a legal investment for State and fiduciary funds, and the only type of securities it is authorized to issue is revenue bonds. It is unnecessary to pass upon the question of whether section 22 1/2 (Ill. Rev. Stat. 1957, chap. 130, par. 41a) authorizes the purchase of revenue bonds in view of the provisions of section 12 of the Authority Act.
Plaintiffs interpret the "reasonable care" duty of section 12 to nullify the investment authority given therein, and assert that the fiduciary standard existing before its enactment must be met. They then develop the argument that the amplification-of-purpose clause in section 12 limits the investment to sinking and trust funds and the like, and, therefore, there is no authorization for the contemplated purchase. We cannot subscribe to this theory. The only reasonable interpretation of section 12 is that the General Assembly intended to emphasize the ...