Board of Trustees of Community College Dist. No. 508 v. Rosewell, 1-88-3024

• Decision Date: 04 December 1992
• Docket Number: No. 1-88-3024,1-88-3024
• Citation: 200 Ill.Dec. 74,635 N.E.2d 413,262 Ill.App.3d 938
• Parties: , 200 Ill.Dec. 74 BOARD OF TRUSTEES OF COMMUNITY COLLEGE DISTRICT NO. 508, a body politic and corporate, on its own behalf and on behalf of all taxing districts similarly situated within Cook County, Plaintiffs-Appellants, v. Edward J. ROSEWELL, as County Treasurer and Ex-Officio County Collector of Cook County, Illinois, and the County of Cook, a body politic and corporate, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 413

635 N.E.2d 413 262 Ill.App.3d 938, 200 Ill.Dec. 74 BOARD OF TRUSTEES OF COMMUNITY COLLEGE DISTRICT NO. 508, a
body politic and corporate, on its own behalf and on behalf
of all taxing districts similarly situated within Cook
County, Plaintiffs-Appellants,
v.
Edward J. ROSEWELL, as County Treasurer and Ex-Officio
County Collector of Cook County, Illinois, and the
County of Cook, a body politic and
corporate, Defendants-Appellees. No. 1-88-3024. Appellate Court of Illinois,
First District, Fifth Division. Dec. 4, 1992.

Page 417

[200 Ill.Dec. 78] [262 Ill.App.3d 939] Jack O'Malley, State's Atty. of Cook County, Chicago (Joan Cherry, Susan Condon, Mark Chester, of counsel), for plaintiffs-appellants.

Arvey, Hodes, Costello & Burman, Chicago (Roger Fein, Joel Siegel, of counsel),

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[200 Ill.Dec. 79] Moss and Bloomberg, Ltd., Bolingbrook (Barry Moss, George Marchetti, of counsel), for defendants-appellees.

[262 Ill.App.3d 940] Justice GORDON delivered the opinion of the court:

Plaintiffs, representing all similarly situated taxing districts located within Cook County, filed a class action suit against Cook County and Edward J. Rosewell, in his capacity as Cook County Treasurer, seeking to recover interest earned from the investment of certain taxes which defendants collected on behalf of plaintiffs. Circuit Court Judge Anthony J. Scotillo ruled the practice of having Cook County retain the interest earned on the taxes violated section 9(a) of article VII of the Illinois Constitution (Ill. Const.1970, art. VII, § 9(a)) and ordered defendants to turn over the interest earned on the taxes after May 27, 1983.

In 1985, plaintiffs filed two turnover petitions seeking interest from escrows established in three additional cases pending before other circuit court judges in which plaintiffs were not joined as parties. Judge Scotillo denied these petitions on the grounds that he lacked authority over those funds. In 1986, plaintiffs filed two additional turnover petitions, including one seeking interest on various personal property tax escrows pending before other judges and one for interest accruing on Cook County's illegal rate reserve fund. Judge Scotillo denied these petitions without giving reasons. On appeal, plaintiffs ask this court to reverse Judge Scotillo's orders denying each of these turnover petitions. Defendants moved to dismiss the appeal for lack of jurisdiction and cross-appealed from Judge Scotillo's orders awarding attorney fees to plaintiffs' counsel and denying defendants' motion for the release of a particular escrow fund.

FACTS

In 1981, the Board of Commissioners of the Chicago Ridge Park District filed a class action suit against Cook County and Edward Rosewell in his capacity as Cook County Treasurer seeking injunctive relief and the interest earned from the investment of taxes collected by the Treasurer on behalf of the plaintiff class. The Treasurer had been depositing the interest earned on the collected taxes in the county's general corporate fund.

This class action was subsequently consolidated with another class action filed in October 1982 by the Board of Trustees of Community College District No. 508; both class actions sought similar relief. The plaintiff class was certified as "all taxing districts as defined in Section 1(12) of the Revenue Act of 1939 [citation] located within Cook County, Illinois," with the exception of Cook County.

[262 Ill.App.3d 941] In October 1982, the trial court issued a preliminary injunction in the class action suit enjoining Rosewell from distributing the interest earnings received from the investment of real estate and personal property tax collections before those taxes were distributed to the taxing districts. This money was to be kept in a segregated fund. In November 1983, the court appointed a trustee to collect and manage the fund established by the injunction.

On December 14, 1984, Judge Scotillo entered a judgment in favor of plaintiffs pursuant to the Illinois Supreme Court's decision in Board of Commissioners of the Wood Dale Public Library v. County of Du Page (Wood Dale I ) (1983), 96 Ill.2d 378, 70 Ill.Dec. 859, 450 N.E.2d 332. Judge Scotillo found that the plaintiff class was entitled to the interest earned on the invested taxes after May 27, 1983, the effective date of Wood Dale I which was determined to apply only prospectively in Board of Commissioners of the Wood Dale Public Library v. County of Du Page (Wood Dale II ) (1984), 103 Ill.2d 422, 83 Ill.Dec. 224, 469 N.E.2d 1370. Consonant with Wood Dale I, Judge Scotillo found that defendants' practice of retaining the interest on revenues collected for other taxing bodies in the county violated section 9(a) of article VII of the Illinois Constitution (Ill. Const.1970, art. VII, § 9(a)) which prohibits the use of collected fees to compensate local government employees or to pay for office expenses. The judge determined that the Public Funds Act (Ill.Rev.Stat.1981, ch. 85, par. 902) mandated the award of the interest to plaintiffs.

Judge Scotillo appointed an impartial auditor to examine the relevant accountings and report to the court whether all plaintiffs'

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[200 Ill.Dec. 80] interest was properly accounted for by defendants. The auditor's reports of February 25, 1985, and April 2, 1985, indicated that escrows had been established in three separate lawsuits: Illinois Central Gulf R.R. Co. v. Department of Local Government Affairs (Cir.Ct.Cook Co.), Nos. 79 L 7854 and 71 CH 6257 (Illinois Central); Amoco Oil Company v. Rosewell (Cir.Ct.Cook Co.), No. 81 CH 8365 (Amoco Oil); and People of the State of Illinois v. Illinois Bell Telephone Co. (Cir.Ct.Cook Co.), No. 80 L 60002 (Illinois Bell). These cases involved questions of taxpayer liability wherein the taxpayer paid the disputed taxes into an escrow. None of the plaintiffs here, either as a class or individually, were joined therein as parties nor was an issue raised in those cases concerning entitlement of any taxing districts to the interest earned on the escrowed funds. Final judgments in those cases were entered in favor of Cook County by circuit court judges other than Judge Scotillo and pursuant thereto the interest from these escrowed funds was ultimately paid over to the county.

[262 Ill.App.3d 942] In April and June of 1985, plaintiffs filed two petitions before Judge Scotillo in the class action suit seeking the turnover of the escrow interest earned on the deposited funds in those three cases. In their turnover petitions, plaintiffs contended that the interest earned on the escrowed funds fell within the scope of Judge Scotillo's December 14, 1984, order in the class action suit.

The first of these "turnover petitions" was filed on April 9, 1985, and sought interest earned on challenged real estate taxes in two cases, Illinois Central and Amoco Oil. In Illinois Central, which was pending before Judge Earl Arkiss, the dispositive issue was whether the railroad property in question was subject to assessment and taxation by the county. In that case, the Railroad paid the amount in dispute into an escrow account pending the ultimate disposition of its case. The interest on the deposited funds amounted to $3,390,111 according to the auditor appointed by Judge Scotillo. On November 15, 1983, Judge Arkiss entered a judgment against Illinois Central and, consistent with the preexisting practice in Cook County, ordered the money in escrow to be paid to the county. The order provided that the Treasurer was to pay all the interest accrued on the escrow accounts into the general corporate fund of Cook County in accordance with section 224 "in full payment and satisfaction of all penalties that have or may have accrued thereunder, and all other penalties whatsoever." Ill.Rev.Stat.1989, ch. 120, par. 705.

Amoco Oil, which was then pending before Judge Joseph M. Wosik, concerned the taxpayer's potential liability for back-taxes on four highway oases it leased from the Toll Highway Authority. On October 27, 1981, the taxpayer placed the disputed amount in an escrow. In June 1983, the trial court in Amoco Oil ordered that the escrow be dissolved and the principal portion of the fund be disbursed in part to the Illinois State Toll Highway Authority and in part to the County Collector to be distributed according to law. The interest earned on the escrow account would be distributed in part to the Illinois State Toll Highway Authority, in part to the County Collector, and in part returned to the taxpayer. Specifically, the order provided that $153,884 of the interest was to be "distributed by the Collector pursuant to law." In the order, the court retained jurisdiction for the purpose of interpreting and enforcing its order.

The auditor appointed by Judge Scotillo determined that "most of the $153,884" in Amoco Oil was earned before May 27, 1983, the effective date of Wood Dale I which, as previously noted, was established in Judge Scotillo's order as the cut-off date for determining which interest was to be paid to the plaintiff class. This interest was recorded by the Treasurer as having been earned on undistributed [262 Ill.App.3d 943] tax accounts and was subsequently turned over by the Treasurer to the Trustee in this class action suit. Defendants claim that the turnover of this interest to Judge Scotillo's trustee was made mistakenly.

The second turnover petition, filed before Judge Scotillo on June 10, 1985, sought interest earned from challenged taxes contained in an escrow account in Illinois Bell which was also presided over by Judge Arkiss. This was a consolidation of 1,300 cases involving 1978 contested personal property taxes

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[200 Ill.Dec. 81] assessed and extended against the personal property of Illinois Bell. On October 25, 1982, Judge Arkiss ordered Illinois Bell to turnover a total of $26,311,934.90 to the county. The amount represented approximately $18,000,000 in delinquent taxes...