Bank & Trust Co. of Arlington Heights v. Cullerton

• Decision Date: 23 January 1975
• Docket Number: No. 59719,59719
• Citation: 324 N.E.2d 29,25 Ill.App.3d 721
• Court: United States Appellate Court of Illinois
• Parties: The BANK & TRUST COMPANY OF ARLINGTON HEIGHTS et al., Plaintiff-Appellants, v. P. J. CULLERTON et al., Defendants-Appellees.

Page 29

324 N.E.2d 29

25 Ill.App.3d 721

The BANK & TRUST COMPANY OF ARLINGTON HEIGHTS et al Plaintiff-Appellants, v. P. J. CULLERTON et al., Defendants-Appellees.

No. 59719.

Appellate Court of Illinois, First District, Third Division.

Jan. 23, 1975.

Weiner & Spak, Laurence J. Weiner, John D. Norcross, Michael Crane, Chicago, for plaintiff-appellants.

Bernard Carey, State's Atty., Sheldon Gardner, Paul P. Biebel and Edna Selan Epstein, Asst. State's Attys., Chicago, for defendants-appellees.

DEMPSEY, Justice.

The Bank & Trust Company of Arlington Heights sought a refund of the 1971 personal property taxes it has piad on shares of its stock, and declaratory and injunctive relief on behalf of itself and other state and national banking associations similarly situated. An amended complaint was dismissed and the bank was given leave to file a second amended complaint. Instead, it chose to stand on its amended complaint and appealed. Neither an abstract nor excerpts from the record have been filed as required by Rules 342(b) and 342(e). Ill.Rev.Stat., 1973, ch. 110A, pars. 342(b), 342(e).

The bank's original complaint alleged that the holders of its stock were taxed on the value of their shares in violation of section 76 of the Revenue Act (Ill.Rev.Stat., 1971, ch. 120, par. 557) and of the 1870 and 1970 Constitutions of Illinois, S.H.A. (Article IX-A (1870); Article IX, section 5(b) (1970)); that P. J. Cullerton, the Assessor of Cook County, assessed an ad valorem personal property tax of $17,358.48 upon these shares and that Bernard J. Korzen, the County Collector, demanded payment; that similar assessments and demands were made against other members of the class, and that the bank paid the tax and made repeated requests for a refund which were rejected. The complaint was amended to limit the refund demand to the taxes assessed upon the shares not held by individuals. This was done to conform to a currently filed Supreme Court opinion, Lake Shore Auto Parts Co. v. Korzen (1973), 54 Ill.2d 237, 296 N.E.2d 342 (cert denied 414 U.S. 1039, 94 S.Ct. 539, 38 L.Ed.2d 329), which stated that bank stock was exempt from ad valorem taxation only when owned by a natural person or by two or more natural persons as joint tenants or tenants in common.

The Constitution of 1870 as amended by Article IX-A, and the Constitution of 1970 prohibit the taxation by valuation of personal property owned by individuals. Section 76 of the Revenue Act states that shares of bank stock 'shall not be (taxed) at a greater rate than is assessed upon any other moneyed capital in the hands of individual citizens of this State . . ..' It is the bank's position that since individual citizens owning bank shares are no longer subject to a personal property tax, non-individuals should not be either, and it is therefore entitled to a refund of the 1971 personal property taxes it paid on behalf of holders of its shares who were not individuals.

The defendants' motion to strike and dismiss asserted, among the other reasons advanced for the dismissal, that the bank was not a proper party to bring the suit inasmuch as it was neither the actual taxpayer nor had it reimbursed the taxpayers. The defendants urge the same point in this court in support of the dismissal and, in addition, contend that no refund will lie to one making a tax payment unless it is paid under protest or duress and since the amended complaint failed so to plead, it was properly dismissed. The bank filed no brief in reply to this second contention.

Although the second contention was not presented to the trial court, any point may be relied upon to support a judgment as long as a basis for such a point was before the court. Shaw v. Lorenz (1969), 42 Ill.2d 246, 246 N.E.2d 285; Estate of Waitkevich, 323 N.E.2d 545 ( Ill.App.1975). We will, therefore, consider both of the defendants' contentions.

Section 76 of the Revenue Act requires that 'The stockholders of every kind of incorporated bank located within this State . . . shall be assessed and taxed upon the value of their shares of stock therein, in the taxing district where such bank . . . is located . . ..' Section 77 of the same Act imposes a duty on banks to keep a complete and correct list of the names and addresses of, and the number of shares held by its stockholders, and to retain dividends belonging to them equal to the tax assessed upon their shares until it appears to the bank or its managing officers or officer that the tax has been paid. Officers who authorize the payment of dividends without withholding funds equal to the assessments are liable for the tax.

It is customary in Illinois for banks to be billed for the personal property tax on the shares of their stock and for them to pay the tax on behalf of their stockholders. The primary liability for the tax, however, is on the stockholders and not on the bank. People v. First National Bank of LaGrange (1933), 351 Ill. 435, 184 N.E. 645; Chicago Title & Trust Co. v. Central Trust Co. of Illinois (1924), 312 Ill. 396, 144 N.E. 165. A collector of taxes cannot maintain an action against a bank or its officers for the tax unless there has been a failure to comply with section 77. The collector's right to maintain such an action is predicated upon dividends having been authorized by the bank's board of directors and paid under the officers' direction without the tax assessed against the shareholders having been paid. (People ex rel. County Collector of St. Clair County v. First National Bank of Marissa (1965), 33 Ill.2d 457, 211 N.E.2d 713.

In Lincoln National Bank v. P. J. Cullerton (1974), 18 Ill.App.3d 953, 310 N.E.2d 845, two banks sought refunds on behalf of themselves and all other banks similarly situated of 1971 personal property taxes they had paid on capital stock owned by their shareholders. They alleged that pursuant to longstanding custom, the assessor and collector of Cook County billed them for personal property taxes on the value of the outstanding shares of stock owned by their shareholders; they paid these taxes from their general funds; they did not withhold dividends for the payments of the taxes and they were not reimbursed for the payments by their shareholders but, despite demand, the County treasurer refused to refund the amount paid. A motion to dismiss was filed by the defendants which asserted that the banks were not the actual taxpayers and, therefore, were not liable for the taxes. The trial court dismissed the complaint on the grounds that natural persons are the only taxpayers entitled to refunds of personal property taxes and that the banks had paid the taxes as volunteers without legal obliation to do so. On appeal this court affirmed. Although the Lincoln National Bank case differs from the present one in two respects (the banks sought refunds of taxes on stock owned by individuals and the payments were made within the purview of section 195.01 of the Revenue Act, Ill.Rev.Stat., 1973, ch. 120, par. 676.01) the basic refund issue is substantially the same. Both the plaintiff and the defendants agreed that a refund should be made. They disagreed only as to the identity of the parties who should receive the refund. The question before the court, as in this case, was whether the County officials were obliged to make the refund to the banks who paid the taxes or to the actual owners of the property assessed. The court held that a refund to...