Hoffman v. Nustra

• Citation: 492 N.E.2d 981,143 Ill.App.3d 259,97 Ill.Dec. 322
• Decision Date: 05 May 1986
• Docket Number: 2-85-0032 and 2-85-0036,Nos. 2-85-0012,No. 7718,7718,s. 2-85-0012
• Parties: , 97 Ill.Dec. 322 Robert HOFFMAN, and Barbara Hoffman, beneficiaries under a Trust Known as Trust, and Michael W. Gantar, as Trustee under Trust individually and on behalf of a class of taxpayers similarly situated, Plaintiffs-Appellants, and Portia Kern, Petitioner-Appellant, v. Frank J. NUSTRA, Recorder of Deeds of Lake County, Illinois; Jack Anderson, Treasurer of Lake County, Illinois; and the County of Lake, a body politic, Defendants-Appellees. State of Illinois and the Illinois Department of Revenue, Intervenor-Plaintiffs-Appellees.
• Court: United States Appellate Court of Illinois

Page 981

492 N.E.2d 981

143 Ill.App.3d 259, 97 Ill.Dec. 322

Robert HOFFMAN, and Barbara Hoffman, beneficiaries under a Trust Known as Trust No. 7718, and Michael W. Gantar, as Trustee under Trust No. 7718 individually and on behalf of a class of taxpayers similarly situated, Plaintiffs-Appellants and Portia Kern, Petitioner-Appellant, v. Frank J. NUSTRA, Recorder of Deeds of Lake County, Illinois Jack Anderson, Treasurer of Lake County Illinois; and the County of Lake, a body politic, Defendants-Appellees State of Illinois and the Illinois Department of Revenue, Intervenor-Plaintiffs-Appellees.

Nos. 2-85-0012, 2-85-0032 and 2-85-0036.

Appellate Court of Illinois, Second District.

May 5, 1986.

Joseph Susman & Myers, Michael P. Myers, Arthur T. Susman, Judith N. Kolman, Plotkin & Jacobs, Ltd., Robert D. Allison, Chicago, Wasneski & Biondi, Richard J. Biondi, Waukegan, for plaintiffs-appellants.

Neil F. Hartigan, Atty. Gen., Jill Wine-Banks, Gabriel Rodriguez, Chicago, Fred L. Foreman, State's Atty., Bruce A. Slivnick, John W. Bartels, Waukegan, for defendants-appellees.

Justice UNVERZAGT delivered the opinion of the court:

This class action was filed by Lake County taxpayers to challenge the Real Estate Transfer Tax Act collections by Lake County officials from August 7, 1978, through May 16, 1979, as provided in section 3 of that statute, as amended by Public Act 80-1334. (Ill.Rev.Stat., 1978 Supp., ch. 120, par. 1003.) Plaintiffs, Robert Hoffman and Barbara Hoffman, beneficiaries under trust agreement No. 7718, and Michael W. Gantar, as trustee under Trust No. 7718, acting individually and on behalf of taxpayers who had paid the real estate transfer tax (HOFFMANS), brought this suit against defendants Frank J. Nustra as the recorder of deeds of Lake County, Jack Anderson as the treasurer of Lake County, and the County of Lake as a body politic (COUNTY). Portia Kern later sought leave to intervene as a class representative of all Illinois taxpayers (KERN), and Attorney General Neil Hartigan sought leave to intervene on behalf of the State of Illinois and the Department of Revenue (STATE).

The circuit court initially denied the county's motion to dismiss and for summary judgment, and ruled for the Hoffmans, granting summary judgment on the primary issue of the constitutionality of the Real Estate Transfer Tax Act, insofar as it allowed counties to retain 25 cents of the 50 cents per each $500 of value which was taxed upon transfer of real estate. The court also agreed to certify as members of the plaintiff class all persons who paid the real estate transfer tax in Lake County between August 7, 1978, and May 17, 1979, but the proposed written order which was prepared by the Hoffmans was never entered. The county filed a direct appeal to the Illinois Supreme Court from the court's orders denying their motion for summary judgment and granting the Hoffmans' motion for summary judgment and for class certification.

The county's appeal to the Illinois Supreme Court was consolidated there with a Cook County case, Schlessinger v. Olsen (Circuit Court of Cook County), No. 78 CH 8524, memorandum opinion filed April 6, 1983, since each case involved the disposition of tax moneys collected under the Real Estate Transfer Tax Act during that same time period. In its memorandum opinion in the Cook County case, the circuit court declared that section 3 of the Real Estate Transfer Tax Act was unconstitutional in its entirety, and concluded that the individuals who paid the transfer tax were entitled to the moneys unlawfully retained by the county. The Illinois Supreme Court reversed and remanded the Cook County case, finding that the State, rather than the individuals who had paid the transfer tax, was entitled to the tax revenues unlawfully retained. (Schlessinger v. Olsen (1984), 102 Ill.2d 497, 82 Ill.Dec. 378, 468 N.E.2d 1158 (Schlessinger IV ).) Noting, however, that the legislature had passed a statute, Public Act 83-57, effective August 15, 1983 (Ill.Ann.Stat., ch. 120, par. 1001 (Smith-Hurd Supp.1985) (the "forgiveness statute"), allowing the counties to retain the unconstitutional collections for the reasons set forth in the statute, the supreme court directed the funds in controversy be delivered to the appropriate Cook County officers. (102 Ill.2d 497, 503, 82 Ill.Dec. 378, 468 N.E.2d 1158.) The appeal of the instant cause in that court was dismissed as premature since the court's judgment disposed of fewer than all the claims presented, and no finding pursuant to Supreme Court Rule 304(a) had been made. 87 Ill.2d R. 304(a).

In light of the Supreme Court's modification of its opinion on denial of petition for rehearing on September 28, 1984, which directed the funds be delivered to the appropriate Cook County officials, the county here moved on October 2, 1984, that the court reconsider and vacate its prior partial summary judgment order in the Hoffmans' favor, and reconsider its denial of the county's motions for summary judgment and for dismissal. The basis for the county's motion to dismiss the cause with prejudice was the Schlessinger IV holding that the funds collected by Cook County and in controversy in that case were to be delivered to Cook County. On October 22, the court allowed the State's petition to intervene and denied Kern's petition to intervene. The Hoffmans were allowed time to respond to the county's motion to reconsider, and the county was allowed time to reply to same. The Hoffmans' response was comprised of their motion for leave to amend their complaint, for summary judgment on the amended complaint, and for appointment of a trustee. In essence, Hoffmans' motion sought to change the relief requested from taxpayer repayment to a declaratory judgment, an accounting, and a disgorgement to the State. They also sought summary judgment on their amended complaint on the basis the forgiveness statute was unconstitutional as violative of article VII, section 9 and article I, section 16 of the Illinois Constitution. (Ill. Const. 1970, art. VII, § 9; art. I, § 16.) Thereafter, Portia Kern filed her motion to reconsider denial of her petition to intervene and to amend her complaint to include the allegation that the forgiveness statute was violative of article I, section 16, article VII, section 9, and article VIII, section 2 of the Illinois Constitution. Ill. Const. 1970, art. I, § 16, art. VII, § 9 and art. VIII, § 2. The county filed its objections to the Hoffmans' motions.

On November 28, 1984, the court denied Kern's motion to reconsider, and on December 12 granted the county's motion to dismiss with prejudice, and denied the Hoffmans' motion to amend their complaint and for summary judgment. On December 13, the county filed its answer to the State's complaint, and moved for summary judgment. On December 19, the court denied with prejudice the State's claim that the transfer tax funds retained by the county should be paid into the general revenue fund of the State treasury. Kern filed her appeal from the court's October 22 and November 28 orders denying her leave to intervene and to reconsider that denial. Kern also appealed the court's December 19 order, except insofar as it found section 3 of the Real Estate Transfer Tax Act as amended by Public Act 80-1334 unconstitutional. The Hoffmans filed their notice of appeal from the court's December 12 order and from its December 19 order, except insofar as it found section 3 of the Real Estate Transfer Tax Act as amended by Public Act 80-1334 unconstitutional.

The parties present these issues for review: (1) whether Public Act No. 83-57, the forgiveness statute, is unconstitutional; (2) whether Hoffmans' and Kern's proposed constitutional challenges and prayers for disgorgement are barred by the holding of Schlessinger IV, res judicata, equitable considerations, or mitigating factors; (3) whether the court abused its discretion in denying the Hoffmans' motions for leave to amend their complaint to challenge the constitutionality of the forgiveness statute and for summary judgment; and (4) whether the court abused its discretion in denying Kern's petition to intervene.

Prior to oral argument, Kern and the Hoffmans jointly moved to strike the State's brief, and the motion was ordered taken with the case. They argue, with no citation of authority, that the State has waived its right to address the constitutionality of the forgiveness statute, since it failed to respond, plead, or object to various aspects of the proceedings below in which the constitutionality of the statute was placed at issue, or to appeal the court's granting of the county's motion for summary judgment against it.

The State was allowed to intervene in the cause and, as such, is a party of record. In Rosenthal v. First National Bank (1970), 127 Ill.App.2d 371, 375-76, 262 N.E.2d 262, the term "appellee" was defined to include in its meaning a party "who has an interest adverse to setting aside or reversing the judgment." The Attorney General is the legal officer of the State, and has not only those duties and powers prescribed by law but also common-law authority traditionally held by the Attorney General. (Newberg-Krug-Brighton v. Illinois State Toll Highway Authority (1978), 63 Ill.App.3d 780, 20 Ill.Dec. 820, 380 N.E.2d 1029.) The Attorney General was concerned, by common law and statute, with impairment of State revenues, diminution of public charities, and misconduct of public officers. People ex rel. Scott v. Illinois Racing Board (1973), 54 Ill.2d 569, 301 N.E.2d 285.

In the original slip opinion of the Illinois Supreme Court in Schlessinger IV, the Supreme Court held that the tax revenues unlawfully retained by Cook County should be deposited in the general revenue fund of the State treasury. (Schlessinger v. Olsen Docket Nos. 58581, 59169 (cons.), May 25, 1984, slip op., p. 4.) After issuance of the slip opinion, the State filed its petition to...