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02/10/88 Richard Mueller, On Behalf v. the City of Highland Park

February 10, 1988

RICHARD MUELLER, ON BEHALF OF HIMSELF AND ALL OTHER PERSONS AND ENTITIES SIMILARLY SITUATED, PLAINTIFF-APPELLEE

v.

THE CITY OF HIGHLAND PARK, DEFENDANT (THE VILLAGE OF DEERFIELD, DEFENDANT-APPELLANT)



APPELLATE COURT OF ILLINOIS, SECOND DISTRICT

519 N.E.2d 712, 166 Ill. App. 3d 114, 116 Ill. Dec. 644 1988.IL.168

Appeal from the Circuit Court of Lake County; the Hon. John L. Hughes and the Hon. Charles F. Scott, Judges, presiding.

APPELLATE Judges:

JUSTICE REINHARD delivered the opinion of the court. WOODWARD and NASH, JJ., concur.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE REINHARD

Defendant, the Village of Deerfield (Deerfield), appeals the judgment of the circuit court of Lake County ordering it to pay $212,184.37 to the City of Highland Park (Highland Park). Plaintiff, Richard Mueller, a taxpayer of Highland Park, initiated a class action suit naming both Deerfield and Highland Park as defendants. His four-count complaint alleged: (1) breach of contract and unjust enrichment on the part of Deerfield; (2) breach of fiduciary duty by Highland Park; (3) negligence by Highland Park; and (4) a declaration of the parties' rights, injunctive relief, and an accounting. Just prior to trial, plaintiff added a fifth count to his complaint seeking to declare a written agreement, entered into by Deerfield and Highland Park after the suit had been commenced, null and void. Following a bench trial, the trial court found that there was an implied contract in law between Deerfield and Highland Park and that Deerfield was obligated to pay Highland Park.

The issues raised in this appeal are: (1) whether the plaintiff has standing, as a taxpayer of Highland Park, to bring suit; (2) whether there was an implied contract in law between Deerfield and Highland Park for the sale of water; and (3) whether there was a valid written contract between Deerfield and Highland Park for the sale of water.

Deerfield purchased water from Highland Park under a 25-year written contract which expired on April 30, 1985. From May 1, 1985, to June 30, 1985, Deerfield continued to receive water at a mutually agreed upon rate of $ .67 per 100 cubic feet. Plaintiff does not challenge the $ .67 rate for that period.

Beginning in April 1985, Deerfield and Highland Park entered into negotiations for a new water contract. Highland Park sought a rate of $ .99 per 100 cubic feet, while Deerfield suggested a rate of $ .67 per 100 cubic feet. During the period beginning July 1, 1985, and continuing through March 1986, when the two municipalities reached an agreement as to the rate, Highland Park supplied water to Deerfield and billed it at a rate of $ .99 per 100 cubic feet. Deerfield received and used the water but only paid at a rate of $ .67 per 100 cubic feet.

On February 5, 1986, plaintiff filed his class action suit. He alleged, inter alia, that as a taxpayer and citizen of Highland Park, he had an equitable interest in the money due and owing Highland Park for the water it distributed to Deerfield from July 1, 1985, to the time of the suit. He further alleged that Deerfield expressly agreed to pay for the water at the $ .99 rate. Alternatively, he claimed that there was an implied contract in law arising out of Highland Park's providing and Deerfield's accepting the water and, therefore, Deerfield was obligated to pay the $ .99 rate as the reasonable value of such water.

In March 1986, Deerfield and Highland Park entered into a written agreement for the sale of water. The agreement's price terms set the rate, beginning January 1, 1986, at $ .99 per 100 cubic feet and also provided for future rate adjustments. Additionally, it established the rate for the July 1, 1985, to December 31, 1985, period at $ .67 per 100 cubic feet.

After the municipalities entered into the agreement, several events occurred. First, Deerfield paid a sum to Highland Park for the period between January 1, 1986, and the effective date of the new agreement which was based on the difference between the $ .99 rate and the $ .67 rate Deerfield had already paid for that period. Second, Highland Park adjusted its accounts whereby the difference between the $ .99 rate which was billed and the $ .67 rate which was paid for the period of July 1, 1985, to December 31, 1985, would be eliminated as an outstanding debt. Finally, Deerfield began and has continued to pay at the new rates provided in the agreement.

At trial, plaintiff was allowed to add count V to his complaint. This count alleged that the March 10, 1986, agreement was beyond the authority of Highland Park because it was contrary to the public interest of the residents and taxpayers of Highland Park, it constituted an unlawful diversion of municipal funds, and it deprived the taxpayers of due process and equal protection under the Federal and State Constitutions. The count further alleged that the contract was executed in violation of section 3-11-17 of the Illinois Municipal Code (Ill. Rev. Stat. 1985, ch. 24, par. 3-11-17) and the Highland Park municipal code. Plaintiff asked the court to declare the entire agreement null and void or, in the alternative, declare the agreement null and void insofar as it retroactively set the rate for the July 1 to December 31, 1985, period at $ .67 per 100 cubic feet.

At trial, proofs were introduced relevant to the issue of whether an implied contract in law existed between the two municipalities. Between April 1985 and the time the two municipalities finally reached an agreement, there were several letters sent between the city manager of Highland Park and the village manager of Deerfield in an attempt to arrive at a mutually acceptable rate. The respective mayors of both municipalities also exchanged correspondence as to the appropriate rate. Additionally, there were at least two informal ...


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