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Hammerman v. Ill. State Toll Hwy. Auth.

OPINION FILED SEPTEMBER 26, 1986.

ALLEN HAMMERMAN ET AL., PLAINTIFFS-APPELLANTS,

v.

THE ILLINOIS STATE TOLL HIGHWAY AUTHORITY ET AL., DEFENDANTS-APPELLEES (ACME BARREL COMPANY, INTERVENOR-APPELLANT).



Appeal from the Circuit Court of Cook County; the Hon. David Shields, Judge, presiding.

PRESIDING JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

This is an appeal from the dismissal of complaints for declaratory judgment, injunctive relief and damages in an action involving alleged misconduct in the administration of the Illinois tollway system.

Plaintiff, Allen Hammerman (Hammerman) filed a four-count class action complaint on behalf of himself and all other holders of revenue bonds (bondholders) issued pursuant to the Illinois State Toll Highway Authority Bond Resolution of 1955 (resolution) against defendants, the Illinois State Toll Highway Authority (Authority) and its directors, claiming that they breached the contract created by the resolution, violated the statutory duties imposed upon them by the Illinois State Toll Highway Authority Act (Authority Act) (Ill. Rev. Stat. 1981, ch. 121, par. 100-1 et seq.), and denied the bondholders due process and equal protection. The complaint alleged, essentially, that the Motor Fuel Tax Law (Ill. Rev. Stat. 1983, ch. 120, par. 417 et seq.), (a) requires operators of motor vehicles to pay a tax on fuel for the privilege of operating their vehicles on the public highways of Illinois (Ill. Rev. Stat. 1983, ch. 120, par. 418), and (b) directs that revenues derived therefrom be placed in the Motor Fuel Tax Fund and used in accordance with the Illinois Highway Code (Ill. Rev. Stat. 1983, ch. 121, par. 1-101 et seq.), for the repair and maintenance of those highways; that although tollways are highways qualifying for receipt of tax revenues from the fund, defendants have failed to obtain or attempt to obtain any of those monies but, instead, have relied exclusively on toll revenues to pay tollway repair and maintenance costs; that their actions constitute an illegal expenditure of sums properly belonging in the "sinking fund" — reserve fund — which is to be applied solely to the retirement of bonds, and has resulted in the otherwise unnecessary increase of toll rates.

Thereafter, following the granting of its petition to intervene, Acme Barrel Company (Acme) filed an amended intervening class action complaint on behalf of all motorists who use the Illinois tollways (users). Acme's complaint adopted that of Hammerman's to the extent the two were not inconsistent, and further alleged, in summary, that because, in addition to tolls, users must pay motor fuel taxes on the fuel consumed by their vehicles on the tollways, they are unconstitutionally charged twice for the privilege of using the public highways of Illinois, and that due to defendants' refusal to obtain for tollway purposes that portion of available motor fuel tax revenues paid by them — to which tollways, as public highways, are entitled — the toll-rate structure is and has been "illegally and invalidity excessive." Acme sought a declaration that defendants' conduct is violative of the constitutional prohibition against special legislation (Ill. Const. 1970, art. IV, sec. 13), and denies them due process and equal protection, and that the toll rate is illegally excessive; an accounting and refund of all excess tolls collected by defendants during the previous 10 years; and an injunction directing them to "do all things necessary to acquire motor fuel taxes for the future repair and maintenance of the tollways."

Defendants filed a motion to dismiss both complaints which, after argument by counsel, *fn1 was granted by the trial court in an order finding that (a) the legislature intended the tollway system to be a "self-sustaining operation" which uses revenues derived form tolls for its repair and maintenance; (b) there is no statutory authority requiring defendants to obtain motor fuel taxes for repair and maintenance costs; and (c) determinations regarding toll rates are within the discretion of the Authority. This appeal followed.

OPINION

In the interim between the filing of this appeal and oral argument on it, defendants filed a motion to dismiss Hammerman's portion of the appeal on the ground that his claims as a bondholder have been rendered moot by an agreed settlement order entered in the circuit court on November 20, 1985, in the case of Clarage v. Illinois State Toll Highway Authority (No. 84 CH 6781) (hereinafter Clarage), a class action suit brought on behalf of all bondholders in which it was alleged that the Authority had violated the terms of the resolution by failing to properly allocate certain funds to various accounts in the manner prescribed therein. It appears from the documents filed by defendants in support of dismissal that the class in Clarage was certified on December 28, 1984, *fn2 to "include all holders of bonds issued by the Authority or its predecessor, the Illinois State Toll Highway Commission," and the notice given thereafter stated that members of the class "will be bound by a judgment in this action and have no right to be excluded from [it]," but that they could enter an appearance on or before February 15, 1985. On November 4, 1985, the trial court approved (a) a proposed stipulation of settlement entered into by the parties on November 2, 1985, subject to the rights of the class members to file objections thereto by November 18, 1985, and (b) the form of notice of the proposed settlement submitted therewith, which called for a mailing to all registered bondholders and publication in the Daily Bond Buyer once each week for two successive weeks. No objections having been filed, on November 20, 1985, the Clarage court entered a final judgment order approving the agreed settlement and dismissing plaintiffs' complaints with prejudice "in full and final discharge of any and all claims and causes of action against defendants with respect to all transactions, matters, causes or things asserted or which could have been asserted in the above-captioned matter." Pursuant to the terms of the settlement, defendants subsequently carried out an advance refunding bond sale, as permitted by section 20.1 of the Authority Act (Ill. Rev. Stat. 1983, ch. 121, par. 100-20.1), and deposited the proceeds therefrom into an irrevocable trust account held by Continental Bank & Trust Company, as trustee, to retire all then-outstanding bonds. Some of those proceeds were used to conduct an extraordinary redemption, on January 21, 1976, of a portion of the bonds chosen by random drawing, and the balance was retained in trust for the refunding of the remaining bonds according to a specified schedule.

In response to defendants' motion to dismiss his appeal, Hammerman argues that the final order in Clarage discharging all bondholder claims against the Authority is not binding upon him because he was not given (a) adequate notice of either the class action or the proposed settlement or (b) the right to opt out of the class.

We note, however, and Hammerman concedes, that the orders entered by the Clarage court, determining that persons coming within the definition of the class had no right to be excluded from the action, and that adequate notice had been given both of the action and the proposed settlement, have not been challenged by either a motion to vacate in the trial court or an appeal; thus the question of their propriety is not properly before us and will not be considered.

In any event, section 20.1, as amended prior to the settlement in Clarage, provides:

"(a) The Authority is hereby authorized, by resolution, to provide for the issuance, * * * of refunding or advance refunding bonds for the purpose of refunding any bonds then outstanding at maturity or on any redemption date * * * which shall have been issued by the Authority or its predecessor, the Illinois State Toll Highway Commission.

(b) The proceeds of any such refunding bonds may be used for any one or more of the following purposes:

(5) To make deposits into an irrevocable trust in accordance with subsection (f) of this Section 20.1 * * * [which provides:]

(f) Upon * * * the deposit of the proceeds of the refunding bonds in an irrevocable trust pursuant to a trust agreement with a trustee requiring the trustee to satisfy the obligations of the Authority to timely pay at maturity or upon prior redemption the outstanding bonds for which the proceeds of the refunding bonds * * * are deposited, in an amount sufficient to satisfy the obligations of the Authority to timely pay at maturity or upon prior redemption such outstanding bonds, * * * such outstanding bonds shall be deemed paid and no longer be deemed to be outstanding for purposes of such resolution * * * and all rights and obligations under any such prior resolution * * * shall be deemed discharged * * * provided, however, that the holders of such outstanding bonds shall have an irrevocable and ...


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