Lakefront Realty Corp. v. Lorenz

• Decision Date: 18 May 1960
• Docket Number: No. 35626,35626
• Citation: 167 N.E.2d 236,19 Ill.2d 415
• Parties: , 88 A.L.R.2d 816 LAKEFRONT REALTY CORPORATION, Appellant, v. Francis S. LORENZ, County Treasurer, Appellee.
• Court: Illinois Supreme Court

Page 236

167 N.E.2d 236

19 Ill.2d 415, 88 A.L.R.2d 816

LAKEFRONT REALTY CORPORATION, Appellant, v. Francis S. LORENZ, County Treasurer, Appellee.

No. 35626.

Supreme Court of Illinois.

May 18, 1960.

Adelbert Brown and McDonald & Schmidt, Chicago, for appellant.

Benjamin S. Adamowski, State's Atty., Chicago (Francis X. Riley and Edward J. Hladis, Asst. State's Attys., Chicago, of counsel), for appellee.

DAILY, Justice.

Plaintiff, the Lakefound Realty Corporation, prosecutes this appeal from a decree of the circuit court of Cook County which, on the ground of lack of jurisdiction, dismissed an amended complaint whereby it was sought to enjoin defendant, the county treasurer, from apportioning or disbursing allegedly excessive 1958 taxes totalling $3,069,442 collected for the county corporate fund. The revenue is involved giving us jurisdiction on direct appeal. Lackey v. Pulaski Drainage Dist., 4 Ill.2d 72, 122 N.E.2d 257.

On June 22, 1959, as soon as the 1958 tax was extended, plaintiff filed a complaint alleging that .022% of the total county rate of .282% had been levied to produce revenue for the corporate fund in excess of its appropriate needs and prayed that its collection be enjoined on the grounds that the excess was an unauthorized tax, and that plaintiff was without an adequate remedy at law. Before issue could be joined under this complaint the 1958 taxes became due and went into collection, whereupon plaintiff paid its taxes in full, under protest, and filed an amended complaint in this cause. The latter pleading, purporting to be for a class, repeated the allegations of an unauthorized tax and inadequate remedy at law, alleged the plaintiff and countless other persons had been incorrectly compelled to pay the unauthorized tax under pressure of severe statutory penalties, and prayed that defendant be enjoined from apportioning or disbursing such tax. Additionally, the amended complaint contained a general prayer for equitable relief under which it is claimed that equity, in the exercise of its traditional powers, may order a refund of the unauthorized tax. Defendant filed an answer to the amended complaint, after with the chancellor, on plaintiff's motion, entered an order directing defendant to impound until further order $1,000,000 of the 1958 taxes collected for the corporate fund. When the cause came on for trial plaintiff introduced evidence and rested its case, at which time defendant moved to dismiss the suit for lack of jurisdiction. The chancellor granted the motion and entered the decree of dismissal from which plaintiff appeals, but continued in force, pending appeal, the impounding order he had previously entered. Defendant took a cross appeal from the latter part of the decree but has not pursued it in his brief or argument to this court.

In light of the decree of dismissal, the single issue before us is the extent to which equitable relief may be obtained in matters involving the public revenue. Numerous decisions of this court have developed a sharply defined doctrine in this area in preservation of the principle that equity will not, under the guise of enjoining the collection of an illegal tax, usurp the jurisdiction belonging to the county court in matters concerning the collection and objection to taxes. Except where a tax is unauthorized by law, or where the taxation is by officials without authority to act, or where a tax is levied upon exempt property, it has become the general rule that equity will not assume jurisdiction to enjoin the collection of tax or assessment unless special grounds for equitable jurisdiction exist, such as fraud, irreparable injury and cloud upon title, or unless the plaintiff does not have an adequate remedy at law. Lackey v. Pulaski Drainage, Dist., 4 Ill.2d 72, 122 N.E.2d 257; Budberg v. County of Sangamon, 4 Ill.2d 518, 123 N.E.2d 479; Ames v. Schlaeger, 38l Ill. 160, 53 N.E.2d 937; Owens-Illinois Glass Co. v. McKibbin, 385 Ill. 245, 52 N.E.2d 177. The same rule, and the exceptions thereto, have application where injunction is sought against the collection of additional taxes, or where, as here, equitable relief is sought to prevent the expenditure of tax money already collected. Herschbach v. Kaskaskia Island Sanitary & Levee Dist., 265 Ill. 388, 106 N.E. 942; Brown v. Jacobs, 367 Ill. 545, 12 N.E.2d 10. On the other hand, if the taxing power is wholly present, but has been exercised in an irregular or erroneous manner, it gives rise merely to an irregular or erroneous tax which will not be enjoined in equity, as distinguished from one that is wholly unauthorized by law. Ames v. Schlaeger, 386 Ill. 160, 53 N.E.2d 937.

To bring the present case within the jurisdiction of equity plaintiff contends, first, that the alleged excess tax complained of is an unauthorized tax and, second, that its remedy at law is neither speedy nor efficient and is thus inadequate. Defendant, for his part, defends the adequacy of the legal remedy and asserts that equitable jurisdiction was properly refused because there is involved here only an erroneous or irregular tax, as distinguished from one that is unauthorized and void.

Facts essential to a better understanding of plaintiff's position center around revenue estimated to be received from nontax sources, but which has a direct effect upon the amount of taxes that may be levied. In preparing the 1958 budget and appropriation bill, the county officials listed among the resources available to meet the obligations of the corporate fund the sum of $16,952,000, representing the estimated revenue to be received from fee offices during 1958, and the sum of $450,000, representing an estimate of 1958 collections of taxes more than two years delinquent.

The gist of plaintiff's claim to an unauthorized tax is that the county officials levied taxes in excess of the needs of the corporate fund and created an unnecessary surplus therein by deliberately underestimating the amount of revenue from the two nontax sources referred to above. In other words, it is plaintiff's contention that by underestimating income from the nontax sources, the county officials caused a higher levy and collection of taxes than was needed and created a corresponding unnecessary accumulation in the corporate fund. By subtracting the estimated figures for 1958 from the average annual income from these two sources for the five years preceding, it is claimed that the underestimate in 1958 caused an excess tax and an unnecessary accumulation of $3,069,442. Bottomed on the premise that taxing officials have authority to raise by taxation only such sums of money as may be necessary to defray all necessary expenses and liabilities, and looking to the decisions of this court which have sustained objections to taxes found to result in an unnecessary accumulation of public funds, plaintiff concludes that, to the extent of the excess noted above, the 1958 tax was levied without warrant of law and is thus an unauthorized and void tax which permits the jurisdiction of equity to be invoked. Stated differently, it is plaintiff's claim that the corporate fund tax produces $3,069,442 in excess of the amount necessary to satisfy the appropriated needs and that such tax, to the extent of this unnecessary amount, is unauthorized and levied without warrant or authority of law.

While it may be conceded that the end product of a levy that produces taxes palpably in excess of need has at times been variously described as a 'void' tax (People ex rel. Toman v. 110 South Dearborn Street Building Corp., 372 Ill. 459, 24 N.E.2d 373) or as an 'illegal' tax (People ex rel. Brenza v. Fleetwood, 413 Ill. 530, 109 N.E.2d 741), it does not necessarily follow that equity will or must intervene. While not conclusive, doubt is immediately raised by the observation in Ames v. Schlaeger, 386 Ill. 160, at page 165, 53 N.E.2d 937, at page 939, to the effect that no case has been found where equity has assumed jurisdiction to adjudicate the proper rate at which a tax should have been extended, it appearing rather that the protection of equity has been extended to restrain the collection of a tax alleged to be void and unauthorized, only where the validity of the entire tax item is in issue. Here, plaintiff concedes the validity of the greater portion of the corporate fund levy and is objecting only to a small part thereof. Moreover, the portion of any tax to which a successful objection is made is in a sense void, illegal or unauthorized and to say that equity will assume jurisdiction to determine such partial validity would usurp completely the jurisdiction given to the county court over such tax matters.

However, quite apart from any consideration of the limits of equity jurisdiction suggested by the language of the Ames case, defendant asserts, and we think correctly so, that the issue here concerns an irregular or erroneous tax, in that the only question for determination is, not the lack of authority, but whether the...