Clarendon Associates v. Korzen

Decision Date01 October 1973
Docket Number45567,Nos. 45561,s. 45561
Citation306 N.E.2d 299,56 Ill.2d 101
PartiesCLARENDON ASSOCIATES, Appellee, v. Bernard J. KORZEN, County Collector, et al., Appellants. LaSALLE NATIONAL BANK AND TRUST COMPANY OF CHICAGO, Trustee, Appellee, v. P. J. CULLERTON, County Assessor, et al., Appellants.
CourtIllinois Supreme Court

Rehearing Denied Jan. 29, 1974.

Bernard Carey, State's Atty., Chicago (Henry A. Hauser, Asst. State's Atty., of counsel), for appellants.

Sonnenschein, Levinson, Carlin, Nath & Rosenthal, Chicago (Frederic S. Lane, Roger C. Siske, and Steven W. Swibel, Chicago, of counsel), for appellee Clarendon Associates.

Kirkland & Ellis, Chicago (Don H. Reuben, Edward G. Proctor, and Lawrence Gunnels, Chicago, of counsel), for appellee LaSalle National Bank and Trust Co. of Chicago.

RYAN, Justice:

We here consider two cases which have been consolidated on appeal from the circuit court of Cook County. The plaintiffs instituted separate actions against the county collector and assessment officials praying that the court declare the 1971 assessed valuations placed on their respective parcels of real estate constructively fraudulent and void. The complaints prayed for injunctive relief restraining the collection of taxes based upon the 1971 assessments in excess of the amount of taxes the plaintiffs have paid on their property. These amounts have been computed by the plaintiffs on what they felt were fair assessed valuations. The plaintiffs also asked for preliminary injunctions restraining the collection of taxes pending the outcome of the litigation. The defendants filed motions to dismiss the complaints, charging that equity lacked jurisdiction to restrain the collection of taxes since there is an existing adequate remedy at law. That remedy at law, they contend, is found in section 194 of the Revenue Act of 1939 (Ill.Rev.Stat.1971, ch. 120, par. 675), which provides for the payment of taxes under protest, and in section 235 (par. 716), which provides that following the payment of taxes under protest persons objecting to the application for judgment may offer defenses thereto and, if they are entitled to refunds, the court may enter judgment accordingly.

The court denied the defendants' motions to dismiss the complaints and entered temporary orders enjoining the county collector from collecting the 1971 taxes based on the challenged assessments. In lieu of filing injunction bonds, the plaintiffs were ordered to pay to the county collector the balance of their taxes. The amount of taxes which the court considered to be based on the excessive assessments, it ordered the county collector to hold in separate interest-bearing accounts subject to a refund of all or a part of these accounts to the plaintiffs as finally determined by the court. Thus, the plaintiffs have paid their 1971 taxes in full.

We are not concerned with the details of the particular assessments. The trial court considered that the allegations of the verified complaints set forth facts which, if proved, would sustain the charge that the assessments were constructively fraudulent. Based on these allegations the court below entered orders for the issuance of preliminary injunctions, and interlocutory appeals were taken (50 Ill.2d R. 307) to the appellate court. The appeals were transferred to this court under Rule 302(b). (50 Ill.2d R. 302(b).) The appeals were consolidated in this court. Involved in the complaints were allegations of excessive over-valuations, assessments disproportionately higher than those of other similar property and valuations arrived at through a disregard of accepted rules of assessments. The question presented to this court is whether, under the circumstances of these cases, equity can enjoin the collection of taxes based on constructively fraudulent assessments.

The usual vehicle through which judicial relief from such assessments is sought and gained is the legal remedy provided by statute for paying taxes under protest and filing objections to the application for judgment. (Ill.Rev.Stat.1971, ch. 120, pars. 675 and 716.) In administering the legal remedy, however, the courts must presume, in the absence of evidence to the contrary, that the assessing officials performed their duty, and the court will not set aside an assessment merely because of a difference of opinion as to value. (People ex rel. Nordlund v. S.B.A. Co., 34 Ill.2d 373, 215 N.E.2d 233.) It is only where the valuation has been fraudulently made that it is subject to judicial review. (People ex rel. Callahan v. Gulf, Mobile and Ohio R.R. Co., 8 Ill.2d 66, 69, 132 N.E.2d 544.) Over-valuation may be so excessive, under some circumstances, as to justify the conclusion that it was not honestly made and is thus constructively fraudulent. (People ex rel. Paschen v. Hendrickson Pontiac, Inc., 12 Ill.2d 477, 147 N.E.2d 29; People ex rel. Callahan v. Gulf, Mobile and Ohio R.R. Co., 8 Ill.2d 66, 69--70, 132 N.E.2d 544.) Similarly, when property is assessed disproportionately higher than other similar property (People ex rel. County Collector v. American Refrigerator Transit Co., 33 Ill.2d 501, 211 N.E.2d 694) or the assessed value is reached under circumstances showing either a lack of knowledge of known values or a deliberate fixing of values contrary to known value, fraud will be inferred. (People ex rel. Nordlund v. Lans, 31 Ill.2d 477, 479, 202 N.E.2d 543.) In such cases courts will grant relief.

In the field of taxation the general rule applies that equity will not assume jurisdiction to grant relief where an adequate remedy at law exists. (White v. City of Ottawa, 318 Ill. 463, 471, 149 N.E. 521; 7 I.L.P. Chancery, sec. 31.) This general rule has been held by this court to be subject to two exceptions. A taxpayer need not look to the remedy at law but may seek relief by way of injunction where the tax is unauthorized by law or where it is levied upon property exempt from taxation. These two situations constitute independent grounds for equitable relief and in such cases it is not necessary that the remedy at law be inadequate. (Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 256, 52 N.E.2d 177; Moline Water Power Co. v. Cox, 252 Ill. 348, 359, 96 N.E. 1044; Lackey v. Pulaski Drainage Dist., 4 Ill.2d 72, at 74, 122 N.E.2d 257.) In cases involving the two exceptions the remedy provided by statute is not exclusive, but the two remedies, that is, the statutory remedy and the remedy of injunction, are cumulative and the taxpayer may elect to pursue either one. Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 255, 52 N.E.2d 177; Sanitary Dist. of Chicago v. Young, 285 Ill. 351, 370, 120 N.E. 818.

In several cases, however, this court has held that in addition to the two exceptions discussed above equity will enjoin the collection of taxes when there has been a fraudulent assessment of property. (Chicago, Burlington and Quincy R.R. Co. v. Cole, 75 Ill. 591; Porter v. Rockford, Rock Island and St. Louis R.R. Co., 76 Ill. 561, 596; Pacific Hotel Co. v. Lieb, 83 Ill. 602, 612; Bates v. Parker, 227 Ill. 120, 126, 81 N.E. 334; Calumet and Chicago Canal and Dock Co. v. O'Connell, 265 Ill. 106, 106 N.E. 452; People's Gas Light and Coke Co. v. Stuckart, 286 Ill. 164, 176, 121 N.E. 629; Aldrich v. Harding, 340 Ill. 354, 361, 172 N.E. 772; Ames v. Schlaeger, 386 Ill. 160, 162, 53 N.E.2d 937.) These cases all relate to decisions rendered prior to the 1933 amendment to the Revenue Act.

Prior to 1933 a taxpayer had no means of recovering a tax which had not been paid under duress. There was also no requirement that the tax be paid before an objection to the application for judgment could be made. We learn from People ex rel. Sweitzer v. Orrington Co., 360 Ill. 289, 293, 195 N.E. 642, that during the financial depression of those years taxpayers, in order to delay payment of real estate taxes, would not pay their taxes and would file objections to the application for judgment. The great number of taxpayers following this procedure delayed adjudication of the objections and severely impaired the collection of taxes and thus the functions of governmental units. By amendments to sections 191 and 162 of the Revenue Act of 1872 the legislature authorized payments under protest of at least 75% Of the tax due and required such a payment as a condition precedent to the filing of an objection to the application for judgment. Upon a determination of the merits of the objection the court was authorized to order a refund of the tax if one was due. As stated above, prior to that time there was no provision for recovering taxes that had been voluntarily paid. Thus, the amendments protected the taxpayer by affording him a statutory remedy for the recovery of a tax wrongfully levied against his property. It also assured the taxing units that there would not be a protracted delay in the collection of the taxes.

Subsequent to the amendments of 1933, this court has held in some cases that the 1933 amendments have provided an adequate remedy at law which the taxpayer must pursue in all cases except where the tax is unauthorized by law or where it is levied upon property exempt from taxation. Lakefront Realty Corp. v. Lorenz, 19 Ill.2d 415, 167 N.E.2d 236; Goodyear Tire and Rubber Co. v. Tierney, 411 Ill. 421, 104 N.E.2d 222; Ames v. Schlaeger, 386 Ill. 160, 53 N.E.2d 937; Lackey v. Pulaski Drainage Dist., 4 Ill.2d 72, 122 N.E.2d 257.

However, in other cases decided subsequent to the 193...

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