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Ross v. City of Geneva





Appeal from the Appellate Court for the Second District; heard in that court on appeal from the Circuit Court of Kane County, the Hon. James Boyle, Judge, presiding.


Rehearing denied March 30, 1978.

Plaintiff, R. Herbert Ross, filed this action in the circuit court of Kane County against the defendant, the city of Geneva, "on behalf of himself and others similarly situated" seeking a declaratory judgment that certain of defendant's ordinances "be declared unlawful, invalid, void and beyond the [defendant's] statutory authority * * * and in violation of Plaintiffs' [constitutional] rights," the recovery of money paid defendant under the provisions of the allegedly invalid ordinances, and other relief. The circuit court held the ordinances invalid, enjoined defendant from further collections thereunder and entered judgment in favor of plaintiff in the amount of $1,154. It held that the case could not be brought as a class action. Plaintiff appealed from that portion of the judgment holding that the cause was not properly brought as a class action, and defendant cross-appealed. The appellate court affirmed the judgment insofar as it held the ordinances invalid and enjoined further collections thereunder, but reversed the denial of the class action. (43 Ill. App.3d 976.) We allowed defendant's petition for leave to appeal. The facts are adequately stated, and the provisions of the ordinances are set forth in the opinion of the appellate court, and will be repeated only to the extent necessary to discuss the issues.

As authorized by division 117 of article 11 of the Illinois Municipal Code (Ill. Rev. Stat. 1961, ch. 24, par. 11-117-1 et seq.) defendant supplies electricity as a public utility. Under ordinances effective January 18, 1960, defendant established a commercial electric rate (Ordinance 60-1) and created a "Special Parking Improvement and Facilities Fund" (Ordinance 60-2). Ordinance 60-2 imposed a 10% surcharge on the electric bill of each commercial user and earmarked that surcharge for the parking fund to "be used for the purpose of acquiring parking facilities and improvements and the improvements and maintenance of present parking facilities and parking improvements." These same provisions were included in defendant's Municipal Code adopted May 7, 1962. On June 22, 1973, for the first time, the 10% surcharge was specifically shown on commercial users' bills and noted as a "misc." charge. Immediately upon receiving his June 22 bill, plaintiff made inquiry and objected to the surcharge. This action was filed on July 19, 1973. He paid the surcharge portion separately and indicated on the check that the payment was made under protest. Both the circuit and appellate courts held that there was no statutory authority for the imposition of the surcharge and that the provisions of the ordinances were invalid.

Contending that the ordinances were within the powers granted by the General Assembly, defendant argues that under the provisions of section 11-117-12 of the Illinois Municipal Code it may structure its charges for utility services to produce a profit and may use that profit to defray the general cost of government. It argues that pursuant to section 11-71-1 of the Illinois Municipal Code, it had authority to finance parking facilities in the manner provided by Ordinance 60-2, and may use "particular methods of funding in certain situations described by the State legislature."

Defendant is not a home-rule unit (Ill. Const. 1970, art. VII, sec. 6) and is subject to the rule that the "powers of a municipal corporation are derived by it from the General Assembly. It has no inherent power. Legislation by a municipal corporation is valid only when it is authorized by statute, and statutes granting power to a municipal corporation are construed strictly against the municipality which claims the right to exercise the power. City of Chicago v. Moore, 351 Ill. 510." (City of Chicago Heights v. Western Union Telegraph Co., 406 Ill. 428, 433.) Defendant's authority to operate a public utility was granted it by section 11-117-1 of the Illinois Municipal Code, and its power to fix charges for the services provided was conferred by section 11-117-12, which in pertinent part provided:

"Sec. 11-117-12. The charges fixed for the product supplied or the service rendered by any municipality shall be sufficient at least to bear all 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." (Ill. Rev. Stat. 1961, ch. 24, par. 11-117-12.)

Its powers concerning the financing for the acquisition and maintenance of off-street parking facilities were conferred by division 71 of article 11 of the Illinois Municipal Code (ch. 24, par. 11-71-1 et seq.), which, with respect to financing, provided:

"Any municipality is hereby authorized to:

(e) Finance the acquisition, construction, maintenance and/or operation of such parking facilities by means of general tax funds, special assessments, special taxation, revenue bonds, parking fees, special charges, rents or by any combination of such methods; * * *." (Ill. Rev. Stat. 1963, ch. 24, par. 11-71-1.)

Defendant argues that the provisions of section 11-71-1(e) are "merely a grant of power rather than a limitation" and that the "absence of limiting language" in this and other sections cited authorizes it to operate its utility at a profit, use the profit to meet the general expenses of government, and that the ownership and operation of parking lots is a legitimate corporate purpose for which such profits may be expended.

We have considered the many issues raised and argued by the parties and conclude that it is not necessary to further discuss most of them. This record does not present the question whether defendant may operate a utility at a profit and expend the profits for general corporate purposes; it presents the very narrow question whether, within the ambit of the relevant statutes, defendant was authorized to levy a surcharge on commercial users of the electric services provided by its utility and use those funds for the construction and maintenance of parking lots. Ordinance 60-2, either as originally enacted or as presently codified, makes no reference to profits of the utility; the surcharge, as noted by the appellate court, is to be deposited in the Special Parking Improvement and Facilities Fund and used for the purpose of acquiring parking facilities and improvements without regard to whether profits are derived from the utility operations. We have examined the many cases cited by defendant and do not discuss them for the reason that they are not relevant to the question presented. We agree with the appellate and the circuit courts that under the statutes defendant was not empowered to assess the surcharge on commercial users for the purpose provided in the ordinances and that the ordinances are therefore invalid. Because we have concluded that defendant was without statutory authority to enact the ordinances, we do not consider the constitutional issues raised by the parties.

We consider next defendant's contention that plaintiff's payments of the surcharge were voluntarily made and may not be recovered in this action. It is not disputed that any payment made by plaintiff subsequent to becoming aware of the existence of the surcharge was made "under protest." The record shows that it was defendant's policy to terminate service to users in the event of nonpayment of imposed charges and that in many instances such service had in fact been terminated. It is also apparent that there was no statutory procedure for the payment under protest. In Allison Co. v. Village of Dolton, 24 Ill.2d 233, plaintiff sought to recover money allegedly paid under duress to the defendant village for license and inspection fees under an ordinance which plaintiff alleged was either invalid or inapplicable to him. Relying upon Benzoline Motor Fuel Co. v. Bollinger, 353 Ill. 600, and People ex rel. Carpentier v. Arthur Morgan Trucking Co., 16 Ill.2d 313, the court held that payments made to avoid "disastrous effects to ...

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