Dep't of Finance v. Gold

• Decision Date: 17 October 1938
• Docket Number: No. 24735.,24735.
• Citation: 17 N.E.2d 13,369 Ill. 497
• Parties: DEPARTMENT OF FINANCE v. GOLD.
• Court: Illinois Supreme Court

369 Ill. 497

17 N.E.2d 13

DEPARTMENT OF FINANCE

v.GOLD.

No. 24735.

Supreme Court of Illinois.

Oct. 17, 1938.

Action in debt by the Department of Finance against Herman Gold to recover the sum of $2,080.46, assessed against defendant as a retailers' occupation tax. Judgment for plaintiff, and defendant appeals.

Affirmed.Appeal from Municipal Court of Chicago; J. H. McGarry, Judge.

Sol R. Friedman and I. S. Friedman, both of Chicago, for appellant.

Otto Kerner, Atty. Gen. (Montgomery S. Winning, of Springfield, and Mortimer Porges, of Chicago, of counsel), for appellee.

STONE, Justice.

This is an appeal from a judgment of the municipal court of Chicago in an action in debt to recover the sum of $2,080.46, assessed by the appellee, the Department of Finance, against appellant, as a retailers' occupation tax provided by an act of the General Assembly as in force at the time the judgment was entered. Smith-Hurd Stats. c. 120, § 440 et seq.; Ill.Rev.Stat.1935, chap. 120, p. 2705. As the matter involves the constitutionality of Section 8 of the act, and as the State revenues are involved, the appeal has been taken directly to this court.

It appears that appellant failed to make return or to pay the retailers' occupation tax as provided by the act, and the Department of Finance, after notice to the appellant and a hearing, assessed a tax which, with the penalty, amounted to the above named sum. The period covered by the tax assessed was from July, 1933, through March, 1936. After the assessment of the tax, appellee gave appellant notice of the tax found due, which was not paid, and no review by certiorari of the appellee's finding, as provided by the act, having been sought, this action in debt was brought to reduce to judgment the taxes and penalty.

Appellant filed an affidavit of defense denying indebtedness in any amount and alleging that appellee lacked cogent data upon which to base the assessment of the tax against him. This affidavit of defense was stricken on motion of the appellee. Appellant filed an amended affidavit realleging lack of indebtedness in any sum and, in addition, alleging that the act violated article 3 of the constitution of this State. Smith-Hurd Stats.Const. art. 3. This affidavit of defense was likewise stricken on motion, and appellant ordered to file a second amended affidavit of defense. This he did, realleging his lack of indebtedness in any sum and averring that he did not own or conduct a business of any kind during the period for which appellee was claiming the tax. On appellee's motion this defense was also stricken and judgment was entered against the appellant.

Appellant's assignments of error in his brief urge the following propositions: (1) Section 8 of the Retailers' Occupation Tas Act, as it then existed, delegates judicial power to the Department of Finance in violation of article 3 of the constitution; (2) the findings of the Department of Finance were merely prima facie correct and not conclusively so; (3) where the defendant denies any indebtedness for the tax, he states a valid defense to an action in debt by the department to recover the same; (4) the statute, in providing for review by certiorari, is merely an additional remedy, as it contains no negative, express or implied, of a remedy theretofore existing, and such new remedy is cumulative and not exclusive, and the party affected may elect which he shall pursue.

Section 5 of the Retailers' Occupation Tax Act provides that where any person engaged in the business of selling tangible personal property at retaile, fails to make a return, as required by the act, ‘the department, after notice to such person and a hearing thereon, shall determine the amount of such tax according to its best judgment and information, which amount so fixed by the department shall be prima facie correct, and such person so having failed to make such return shall, within ten (10) days after notice of the amount of said tax so fixed and computed by the department is mailed to such person, pay said tax, together with a penalty of twenty-five per cent (25%) on the amount of the tax.’ This section also provides for interest at the rate of one per cent per month if such tax and penalty are not paid within ten days. It further provides: ‘In any case of failure to pay the tax, or any portion thereof, or any penalty or interest provided for in this Act, when due, the department may recover the amount of such tax, penalty and interest in an action of debt. The collection of such tax, penalty and interest shall not be a bar to any prosecution under this Act.’

It is also provided by section 8 of the Retailers' Occupation Tax Act that, for the purpose of ascertaining the correctness of any return or determining the amount of tax due from any person engaged in the business of selling tangible personal property at retail, ‘the department or any officer or employee of the department designated, in writing, by the director thereof, may hold investigations and hearings concerning any matters covered by this Act and may examine any books, papers, records or memoranda bearing upon the sales of tangible personal property of any such person and may require the attendance of such person or any officer or employee of such person, or of any person having knowledge of such sales, and may take testimony and require proof for its information.’ It is also provided that no informality in proceedings or manner of taking testimony shall invalidate any order or decision made or approved or confirmed by the department. Power is given the department, or any such officer or employee thereof, to administer oaths.

Section 12 provides notice, and the method of giving same, and that the hearings shall be held in the county where the taxpayer resides or has his principal place of business. This section also provides: ‘The Circuit and Superior Court of the county wherein the taxpayer resides or has his principal place of business shall have power to review all questions of law and fact determined by the department in administering the provisions of this Act by writ of certiorari to the department.’ Such writ shall be issued by the clerk of the court and shall be served at least ten days before the return day thereof. The department is required to certify to the court the record of its proceedings if the taxpayer shall pay to it the sum of five cents per one hundred words of such record.

In support of appellant's contention that section 8 violates article 3 of the constitution, he insists that the act places the duty of determining the amount of any tax due from any person under the act in the hands of any employee of the department designated, in writing, by the director, without setting forth any qualificationsof such employee or rules for his procedure other than that he be an employee. His counsel rely on what was said by this court in Chicagoland Agencies, Inc., v. Palmer, 364 Ill. 13, 2 N.E.2d 910. The act under consideration there is here claimed to be, in this regard, analogous to section 8. In the Palmer Case the act considered delegated to an employee of the Department of Insurance, without requiring such employee to have any knowledge of the rudiments of the business of insurance agent or broker, and without setting forth rules by which he was to be governed, the authority to issue or deny the issuance of a license to an applicant as insurance agent or broker and to deny the renewal of such license or to revoke one already issued. This court there held that, because of this, the act was incomplete and amounted to an unconstitutional delegation of authority. In People v. Federal Surety Co., 336 Ill. 472, 168 N.E. 401, cited by appellant, section 23 of the Illinois Securities Act, Smith-Hurd Stats. c. 121 1/2, § 118 note, was held incomplete, as no one could tell from it the amount of the bond required for the issuance of a license to a dealer or broker in securities until the Secretary of State had announced such amount and the terms and conditions of any particular bond. The act was also silent as to rules to be followed in determining such matters.

It is the rule in this State that the legislative department cannot, under the constitution, vest in an administrative body discretion and power to determine and establish standards of duty not definitely found within the language of the act itself. Boshuizen v. Thompson & Taylor Co., 360 Ill. 160, 195 N.E. 625;People v. Beekman & Co., 347 Ill. 92, 179 N.E. 435. Section 8 of the Retailers' Occupation Tax Act is not open to this objection. The duty delegated to the Department of Finance or an employee thereof, involves no discretion such as that found in the cases cited, but the duty of the department is solely to ascertain, from the books, papers and records or memoranda bearing thereon, the sales of tangible personal property by such person, for the purpose of ascertaining the correctness of any return or for the purpose of determining the amount of the tax due, the rate of the tax being fixed in the act. Where no return in made it is the duty of the department, under section 5, where the department finds that one engaged in the business of selling tangible...