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Ross v. City of Geneva





APPEAL from the Circuit Court of Kane County; the Hon. JAMES BOYLE, Judge, presiding.


From 1960 to June 1973, there was in effect in the City of Geneva an ordinance under which the plaintiff and other commercial users of electricity (produced by Geneva in its capacity as a public utility) were charged an additional fee of 10% above the price of the kilowatt hours of electricity used. The money thus collected was designated by ordinance as a special parking fund and was earmarked to finance meter-free parking areas for the downtown business area of the City of Geneva. On June 22, 1973, for the first time since the defendant instituted the above 10% charge, it was specifically segregated on commercial user's bills and noted as a "misc." charge thereon. Upon receiving his June 22 billing, plaintiff Ross made immediate inquiry and objections regarding the parking surcharge, henceforth paid the surcharge portion separately with a check indicating payment was made under protest, and filed this action within the month against the City of Geneva in its capacity as a public utility. By his action plaintiff sought, on behalf of himself and the 1100 other past and present commercial customers similarly situated, a judgment declaring the 10% surcharge to be void and sought restitution to the class of all amounts so collected (approximately $353,000) since 1960 pursuant thereto. Notice of the pendancy of this suit, purporting to be a class suit and advising the class members of the possibility they would be bound by the results (although subject to no personal liability on account thereof) was given by individual mailings to the 1100 class members and by repeated publication prior to trial.

The trial court invalidated the ordinances involved and enjoined their future enforcement on the basis that they were without statutory authority. The court did not reach the constitutional issue that the ordinance was invalid as discriminatory. Judgment was entered for the named plaintiff in the amount paid by him (about $1100). The court, however, denied the class action on the basis that there was insufficient commonality of interest between the named plaintiff and the class he sought to represent and under Hansberry v. Lee (1940), 311 U.S. 32, 85 L.Ed. 22, 61 S.Ct. 115, held the class members would be denied due process.

Plaintiff appeals the denial of the class action and asks that reasonable attorneys' fees be awarded his attorneys. Defendant cross-appeals the order voiding its parking surcharge ordinances.

We first consider the issue raised by the cross-appellee — the validity of the parking surcharge ordinances. Defendant argues that under the Illinois Municipal Code, section 11-117-12 (Ill. Rev. Stat. 1973, ch. 24, par. 11-117-12), and previously under section 49-12 of the Revised Cities and Villages Act (Ill. Rev. Stat. 1959, ch. 24, par. 49-12), the city is authorized to fix charges for the products supplied "sufficient at least" to bear all cost of maintenance and operation; that this statutory language authorizes the municipal utility to operate at a profit; that profits may be used to defray general costs of government; that the establishment and maintenance of parking facilities is a proper corporate purpose; therefore there was statutory authority for the collection of the parking fund surcharge. This entire line of reasoning fails because, on examination of the subject parking fund ordinances, we find that monies derived therefrom do not have the essential characteristics of profit for they accrue whether or not expenses for operating and maintaining the utility have been first met. Instead, under the ordinance, the surcharge herein accrues and is set aside for parking even if the utility operates "in the red." *fn1 We therefore find the authorities cited for the proposition that a municipal utility may operate at a profit wholly inapposite to the issue at hand. This is not a case of the city government appropriating funds from utility profits for general corporate purposes. It is rather a case of a city utilizing its municipally owned electric utility to exact a fee from a limited class of customers for the isolated unrelated purpose of establishing municipal parking facilities.

• 1 The utility is used here not merely, as suggested by defendant, as a convenient point of contact for billing purposes between the City and the commercial users who are said to derive most directly the benefits of the parking program. Rather, the charge made of each commercial user is, with minor variations in the formula, directly linked to the amount of electricity used by the commercial customer. The narrow question presented by this case is, therefore, whether a municipally owned utility has the authority to charge its commercial electric customers a fee, based on their electrical consumption, to be used solely for city parking facilities. This court has stated, "It is horn-book law that Illinois municipalities are creatures of the legislature and therefore have only delegated powers." (Norwick v. Village of Winfield (1967), 81 Ill. App.2d 197, 199, appeal denied, 36 Ill.2d 631 (1967).) Statutes granting power to a municipal corporation are construed strictly against the municipality which claims the right to exercise the power. (City of Chicago Heights v. Western Union Telegraph Co. (1950), 406 Ill. 428, 432-33.) In the Norwick case, this court held the municipality acted without statutory authority when it attempted to charge a "sewer property charge" and "treatment plant charge" in addition to the fee for sewer installation. These additional charges were held to be invalidity imposed because they were not made for sewer connections or use, but for future sewer improvements and extensions. The court noted that "the charge in question is not for actual use of the sewer or for even a proposed use. It is rather a charge for construction of a sewer system at some future time to serve someone else. * * * Charges not relating to the actual use * * * are therefore invalid." (Winfield, at 201-203.) In Winfield the applicable statutory grants of power read:

"A municipality owning, acquiring, or constructing and providing for the operation of a combined water works and sewerage system may improve and extend that system, and may impose and collect charges or rates for the use of that system * * *." (Section 11-139-2, Illinois Municipal Code, Ill. Rev. Stat. 1965, ch. 24, par. 11-139-2.)

"The * * * municipality * * * may * * * charge the inhabitants thereof a reasonable compensation for the use and service of the combined water works and sewerage system and to [sic] establish rates for that purpose * * *. These rates * * * shall be sufficient at all times to (1) pay the cost of operation and maintenance of the combined water works and sewerage system, (2) provide an adequate depreciation fund, and (3) pay the principal of and interest upon all revenue bonds issued under this Division." (Section 11-139-8, Illinois Municipal Code, Ill. Rev. Stat. 1965, ch. 24, par. 11-139-8.) (Emphasis added.)

The special sewerage fees charged in the Winfield case were held by the trial and appellate courts to be "isolated" funds for building of a future sewerage system, unrelated to the use and service of the existing sewer system, and therefore without statutory authorization.

The relevant statutes in the case at bar, and their predecessor under whose authority the ordinances in question were allegedly passed, provided that a municipality has the power to acquire, construct, own and operate a public utility. (Section 49-1 of the Revised Cities and Villages Act, Ill. Rev. Stat. 1959, ch. 24, par. 49-1; Illinois Municipal Code, section 11-117-1, Ill. Rev. Stat. 1973, ch. 24, par. 11-117-1.) "Public utility" is defined to mean property used in connection with transportation, telephone or telegraph, services in furnishing cold, heat, light, power, water; or conveying oil or gas or acting as a wharfinger. Section 49-2 of the Revised Cities and Villages Act, Ill. Rev. Stat. 1959, ch. 24, par. 49-2; section 11-117-2 of the Illinois Municipal Code, Ill. Rev. Stat. 1973, ch. 24, par. 11-117-2.

The charging for services was formerly governed by section 49-12 of the Revised Cities and Villages Act (Ill. Rev. Stat. 1959, ch. 24, par. 49-12) which has been succeeded by section 11-117-2 of the Illinois Municipal Code (Ill. Rev. Stat. 1973, ch. 24, par. 11-117-12). Both sections contain the following language:

"The charges fixed for the product supplied or the service rendered by any municipality shall be sufficient at least to bear all costs of maintenance and operation, to meet interest charges on the bonds and certificates issued on account thereof, and to permit the accumulation of a surplus or sinking fund to meet all unpaid bonds or certificates at maturity." (Emphasis added.)

• 2 We find no statutory authority whatever therein to charge fees for the creation of an isolated fund unrelated to the cost of the products supplied or the services rendered. The parking fund in this case is just such an unrelated, isolated fund. The trial court correctly found the ordinances purporting to create it void for want of statutory authority.

Plaintiff Ross urges that as all the 1100 commercial customers whom he purports to represent were wrongly charged the illegal 10% surcharge, they should be entitled, as plaintiff was entitled by the trial court, to restitution of a portion of the $353,000 fund collected without legal authority from the class. (It was stipulated at trial that the ...

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