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City of Belleville v. Fraternal Oder of Police Labor Council, No. 5-99-0416

5th District, 28 March 2000

JUSTICE KUEHN delivered the opinion of the court:

The City of Belleville, Illinois ("City"), brought suit seeking to void an addendum to its police-employee collectivebargaining agreement. The addendum was allegedly entered into between the City's former mayor and the Illinois FraternalOrder of Police Labor Council ("Union"). The Union appeals from a summary judgment entered in the City's favor. Weaffirm.

The Union and the City entered into the collective bargaining agreement for the period of May 1, 1996, through April 30,1999. This agreement was approved by the city council. On April 10, 1997, the former mayor, allegedly on behalf of theCity, agreed to enter into a side letter to the collective bargaining agreement ("addendum"). It stated:

"It is the understanding of the parties[] that the $1.00 per hour for 125 days of unused sick leave benefit at retirementand five weeks of vacation during the final work year has [sic] been negotiated away in favor of the after twenty-yearlongevity step.

If[,] for some reason in the future, the longevity step is excluded from the collective bargaining agreement, for anyreason, the original benefits shall be reinstated."

The former mayor signed this addendum eight days after he was defeated for reelection and 20 days before his last day ofoffice. He neglected to submit it to the city council for approval. There was no appropriation of funds to cover the City'sincreased financial burden under the addendum.

Shortly thereafter, the city treasurer discovered the addendum, wrote the Illinois Department of Insurance, and inquired intothe addendum's legality. On April 28, 1997, the Illinois Department of Insurance informed the treasurer that the addendum'sprovisions were illegal under the pension code. The city treasurer then notified the Union that the City was not going tohonor it.

On October 5, 1998, the City filed suit against the Union, seeking declaratory relief. On June 7, 1999, the trial court ruled infavor of the City on cross-motions for summary judgment.

A summary judgment should be granted when there are no genuine issues of material fact to be tried and the movant isentitled to a judgment as a matter of law. See Batson v. Pickneyville Elementary School Dist. #50, 294 Ill. App. 3d 832,834, 690 N.E.2d 1077, 1078 (1998). In determining the appropriateness of a summary judgment, the trial court strictlyconstrues all evidence in the record against the movant and liberally in favor of the opponent. See Purtill v. Hess, 111 Ill. 2d229, 240, 489 N.E.2d 867, 871 (1986). On appeal, we review summary judgment orders de novo. See Batson, 294 Ill. App.3d at 834, 690 N.E.2d at 1079.

Only corporate authorities have the power to bind the city in a contract unless that power is delegated to another. SeeChicago Food Management, Inc. v. City of Chicago, 163 Ill. App. 3d 638, 643, 516 N.E.2d 880, 884 (1987). The generalrule is that when an employee of a municipal corporation purports to bind the corporation by contract without priorapproval, in violation of an applicable statute, such a contract is utterly void. See D.C. Consulting Engineers, Inc. v.Batavia Park District, 143 Ill. App. 3d 60, 63, 492 N.E.2d 1000, 1002 (1986). One who deals with a municipal corporationis presumed to know the extent of its power to contract. See D.C. Consulting Engineers, Inc., 143 Ill. App. 3d at 63, 492N.E.2d at 1002.

Two provisions of the Municipal Code (the Code) come into play. Section 8-1-7(a) provides:

"Except as provided otherwise in this Section, no contract shall be made by the corporate authorities, or by anycommittee or member thereof, and no expense shall be incurred by any of the officers or departments of anymunicipality, whether the object of the expenditure has been ordered by the corporate authorities or not, unless anappropriation has been previously made concerning that contract or expense. Any contract made, or any expenseotherwise incurred, in violation of the provisions of this section shall be null and void as to the municipality, and nomoney belonging thereto shall be paid on account thereof ***." 65 ILCS 5/8-1-7(a) (West 1994).

In addition, section 3.1-40-40 of the Code provides that the passage of any ordinance or resolution to create liability againsta city for the expenditure or appropriation of its money requires the approval of a majority of all members holding office onthe city council. 65 ILCS 5/3.1-40-40 (West 1994).

The record shows that the addendum was entered into without a prior appropriation of funds to cover the obligationsincurred under it. It further shows that the addendum did not have the city council's approval. We think it clear that theaddendum is void.

The Union contends that its side letter with the former mayor does not implicate the statutory provisions we rely upon toreach our conclusion. The Union argues that the City is not bound by the constraints of the Code. Its argument rests uponthe decision reached in City of Burbank v. Illinois State Labor Relations Board, 185 Ill. App. 3d 997, 541 N.E.2d 1259(1989). Our examination of the City of Burbank case leads us to conclude that it misstates the law.

In City of Burbank, a city attorney entered into a final settlement agreement with a union. See City of Burbank, 185 Ill. App.3d at 1000, 541 N.E.2d at 1262. The city argued that it was not bound by the terms of the settlement agreement because theagreement was not approved by a majority vote of the city council as required by the Code. See City of Burbank, 185 Ill.App. 2d at 1004, 541 N.E.2d at 1264. The court held that a city may exercise its home-rule authority by approving asettlement agreement without a majority vote of the city council making a prior appropriation for the contract. See City ofBurbank, 185 Ill. App. 3d at 1005, 541 N.E.2d at 1265.

At first blush, the decision seems to square with the Union's position. Based upon City of Burbank and its interpretation ofhome-rule powers, the Union argues that the City's former mayor had the necessary authority and did not need a majorityvote of the city council in order to validly execute the addendum.

City of Burbank clearly holds that a home-rule unit can exercise its authority without a majority vote of the city council. SeeCity of Burbank, 185 Ill. App. 3d at 1005, 541 N.E.2d at 1265. Even if the reasoning that underlies its holding was valid,which we do not believe it is, we would not apply the holding to support what happened in our case.

We are presented with circumstances far removed from those addressed by the City of Burbank court. Members ofBurbank's city council, its mayor, and its city administrator were all significantly involved in the negotiation of thesettlement agreement. See City of Burbank, 185 Ill. App. 3d at 1000-01, 541 N.E.2d at 1261-62. More importantly, thecity's knowledge of the agreement was evident from its compliance with the terms of the agreement. See City of Burbank,185 Ill. App. 3d at 1004, 541 N.E.2d at 1264. Based upon these circumstances, the court felt that Burbank was bound by theagreement entered into on its behalf by the city attorney. See City of Burbank, 185 Ill. App. 3d at 1004, 541 N.E.2d at 1264.

In our case, the City had no idea that the former mayor had entered into an addendum with the Union. No one other than theformer mayor had any knowledge of the addendum's existence, much less its contents. Here, a defeated candidate forreelection, soon to leave the City's employ, attempted to expand the City's legal obligations and bind it to enlargedemployee benefits far in excess of those negotiated and approved by the city council under the collective bargainingagreement. Unlike the situation in City of Burbank, the City of Belleville was kept in the dark. It was impossible for theCity to ratify the addendum without knowledge of its existence. Moreover, once the city treasurer discovered the addendum,the Union was promptly notified that the City was not going to honor it. There was no authority to bind the City to theaddendum, and the City did nothing to indicate its ratification.

The City points us to Neilsen-Massey Vanillas, Inc. v. Waukegan, 276 Ill. App. 3d 146, 657 N.E.2d 1201 (1995), and arguesthat the addendum is void because the City did not have an ordinance in place to authorize mayoral contracting without citycouncil approval.

In Neilsen-Massey Vanillas, Inc., the court confronted the holding in City of Burbank. The court observed:

"[W]e find that the court's analysis in reaching that conclusion was seriously flawed. In stating that home rule unitsare not bound by the requirements of the Illinois Municipal Code, [the court in Burbank] cited the Illinois SupremeCourt cases of Stryker v. Village of Oak Park (1976), 62 Ill. 2d 523, 343 N.E.2d 919, and Clarke v. Village ofArlington Heights (1974), 57 Ill. 2d 50, 309 N.E.2d 576.

However, it is clear from a reading of those cases that the supreme court actually held that a referendum passed or anordinance enacted under the grant of power found in section 6 of the article VII of the Constitution of 1970 (Ill.Const. 1970, art. VII,