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Amalgamated T. & Sav. Bk. v. Vil. of Glenview





APPEAL from the Circuit Court of Cook County; the Hon. RICHARD L. CURRY, Judge, presiding.


Plaintiffs, Amalgamated Trust and Savings Bank (Amalgamated Trust) and Terrecom Development Group, Inc. (Terrecom), who are nonresidents of defendant, Village of Glenview (Glenview), brought an action against Glenview to compel it to supply water service to them through a water company which the Village purchased. Injunctive relief was also sought against defendants, Illinois Department of Transportation (IDOT) and John D. Kramer, Secretary of the Illinois Department of Transportation, to prevent them from allocating water to Glenview until water was made available to plaintiffs on the same terms and conditions as required of Glenview residents. The trial court dismissed plaintiffs' complaint for its failure to state a cause of action.

Plaintiffs appeal, and raise the following issues: (1) Glenview assumed the obligation to supply water to plaintiffs when it purchased a water company then serving customers located within the company's certificated area of convenience and necessity, a portion of which included plaintiffs' property; (2) Glenview is estopped from denying its obligation to provide plaintiffs with water by virtue of misrepresentation made to IDOT at a public hearing to receive an allocation of water; (3) Glenview's conduct in requiring plaintiffs to annex to the municipality as a condition to receiving water service violates State antitrust law (Ill. Rev. Stat. 1977, ch. 38, par. 60-3); and (4) the trial court erred in finding that plaintiffs' action against IDOT was an improper attempt to collaterally attack its allocation order.

Plaintiffs' five-count complaint reveals the following. Amalgamated Trust, as trustee, is the owner of about 36 acres of property in unincorporated Northfield Township, Cook County, Illinois. Terrecom is both a contract purchaser and contract lessee of the property. On July 26, 1960, the Illinois Commerce Commission granted to Northfield Woods Water and Utility Company, Inc. (Northfield), a Certificate of Convenience and Necessity authorizing it to operate a public water supply system in an area which included plaintiffs' property. Subsequently, Glenview petitioned IDOT, the agency responsible for apportioning Lake Michigan water, for a supply of water. On August 6, 1975, Glenview represented to IDOT at a public hearing that it was in the process of acquiring Northfield, and that it would be responsible for providing water to the certificated area.

On April 15, 1977, IDOT issued an opinion and order allocating water to Glenview, but the order did not include a quantity for the Northfield system. Glenview then petitioned IDOT for a rehearing, stating that the allocation given it was insufficient to meet the projected needs of its expanded system as a result of the anticipated acquisition of Northfield and another private company. The petition was denied, but Glenview was permitted to file a petition for modification of the order.

On April 4, 1978, IDOT held hearings for emergency allocations and granted Glenview the requested water supply.

Glenview adopted an ordinance on July 17, 1978, which provided that water service would not be provided to property beyond its corporate limits unless those desirous of the service petitioned to annex to Glenview and conformed to its land-use plans. Plaintiffs wished to utilize Glenview's water system without annexing, and sought to develop their property in a manner inconsistent with Glenview's ordinance. In reliance upon water supply from Northfield, however, Terrecom entered into substantial contractual relations with Amalgamated Trust, and expended large amounts of money for the development of the subject property. Glenview refused to furnish water to plaintiffs' property in the absence of compliance with its ordinance and comprehensive land use requirements. Persistence in this refusal would require installation of a separate and independent water supply system by plaintiffs at a cost of over $900,000.

Count I of the complaint sought a declaratory judgment that plaintiffs are entitled to water service from Glenview and that the latter's ordinance restricting this supply is invalid. Count II requested a mandatory injunction restraining Glenview from enforcing the ordinance and directing it to supply water to plaintiffs. Count III asked for IDOT to be enjoined from allocating additional water to Glenview and the area previously certificated to Northfield unless water was made available to them without the stated condition. Count IV prayed for money damages against Glenview in the amount of $900,000. Count V requested damages in an amount of $2,700,000 for Glenview's violations of Illinois antitrust law (Ill. Rev. Stat. 1977, ch. 38, par. 60-3) in limiting the supply of water to nonresidents and thereby establishing a monopoly in the water supply business.


Plaintiffs first contend that Glenview, a municipality, had a duty to provide them with water. This obligation allegedly arose upon Glenview's purchase of Northfield, the private water company previously serving customers under a certificate of convenience and necessity (Ill. Rev. Stat. 1977, ch. 111 2/3, par. 56) in the area which included plaintiffs' property. It is argued that Northfield had an absolute duty to serve all the property in the area designated under the certificate of convenience and necessity, and that this obligation was necessarily assumed by Glenview.

It is undisputed that plaintiffs' property is located beyond the corporate limits of Glenview. Generally, in Illinois, a municipality has no duty to provide water service beyond its boundaries. (Ill. Rev. Stat. 1977, ch. 24, par. 11-149-1.) The Illinois Municipal Code provides in section 11-149-1 that such service is discretionary and that, "[t]he corporate authorities * * * may provide by ordinance for the extension and maintenance of municipal sewers and water mains, or both, in specified areas outside the corporate limits." (Emphasis added.) Ill. Rev. Stat. 1977, ch. 24, par. 11-149-1.

In Exchange National Bank v. Behrel (1972), 9 Ill. App.3d 338, 292 N.E.2d 164, the First District of the Illinois Appellate Court interpreted the word "may" in section 11-149-1 of the Municipal Code to mean that a municipality's grant of authority to supply water to nonresidents is discretionary. The court further found that nonresidents can only compel service if they are able to plead a legal right to it. In Exchange, the City of Des Plaines contracted with Rand, a nonresident, to supply water to homes located within Rand's subdivision. Subsequently, Kiwanis, which was located outside the subdivision, paid Rand for the right to tap into the water main. Permission was granted by the City of Des Plaines, and the connection was made. Plaintiff purchased Kiwanis' property a few years later, and paid Rand $1,800 to use the water. Then, the City of Des Plaines annexed the Rand subdivision and attempted to include plaintiff's property. Plaintiff resisted the City's attempt to annex its property, since plaintiff planned to erect multiple dwelling units which conformed with the county ordinances, but would have been in violation of the applicable Des Plaines Zoning Ordinance. Des Plaines refused plaintiff's request for water service, causing the latter to bring suit. The appellate court, citing Rehm v. City of Batavia (1955), 5 Ill. App.2d 442, 125 N.E.2d 831, found that Des Plaines had no duty to supply water to plaintiff, and stated:

"`It is well established that a municipality is under no duty to furnish a water supply to nonresidents in the absence of contractual relationship obligating it so to do.' [Citation.]" (9 Ill. App.3d 338, 341, 292 N.E.2d 164, 167.)

The court reasoned that Kiwanis was supplied with water gratuitously by Des Plaines rather than by contractual duty and that the City's annexation attempt did not abrogate a duty to plaintiff, since such a duty never existed. Despite acquiescing in Kiwanis' use of its water supply, Des Plaines was not required to provide service to plaintiff's land, "especially in view of the fact that plaintiff's contemplated development of its property would envision a substantial increase in the use ...

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