Is Municipal Corporation That Wrongfully Exacts Money Liable for Interest Payments ?
In City of Chicago v. Northwestern Mutual Life Insurance Co., 218 Ill. 40, 75 N.E. 803 (1905), the city exacted back water rates from a property owner.
The back rates were not liens on the premises.
Asserting that the back rates were accrued by the former owners, the new owner paid under protest to prevent the city from shutting off the water supply.
The supreme court noted that the parties:
"Did not stand upon the same footing, as the city had the power and means to deprive the property owner of its water supply, and had threatened to exercise this power, and had in some instances actually shut off the water.
The various pieces of property were occupied as residences and stores, which required water, and to shut the water off from them would entail great damage to the property owner, as it had no other means of supplying them." Northwestern, 218 Ill. at 43.
The court held that the payments were made under duress and that the owner was entitled to recover its money. Northwestern, 218 Ill. at 44.
As to interest, the court upheld the circuit court's interest award, noting that the city wrongfully took money from the property owner. Northwestern, 218 Ill. at 44.
Without further analysis, the court recited the general rule that a municipal corporation that wrongfully exacts money and holds it without just right or claim is liable for interest on the same. Northwestern, 218 Ill. at 44.