Material Service Corp. v. Hollingsworth

• Decision Date: 20 May 1953
• Docket Number: 32796,Nos. 32795,s. 32795
• Citation: 112 N.E.2d 703,415 Ill. 284
• Parties: MATERIAL SERVICE CORP. et al. v. HOLLINGSWORTH et al. CHICAGO FIRE BRICK CO. et al. v. HOLLINGSWORTH et al.
• Court: Illinois Supreme Court

Page 703

112 N.E.2d 703

415 Ill. 284

MATERIAL SERVICE CORP. et al. v. HOLLINGSWORTH et al.

CHICAGO FIRE BRICK CO. et al. v. HOLLINGSWORTH et al.

Nos. 32795, 32796.

Supreme Court of Illinois.

May 20, 1953.

Latham Castle, Atty. Gen., (Willian C. Wines, Raymond S. Sarnow, Chicago, Richard L. Cooper, Springfield, and A. Zola lants.

Schradzke, Gould, Ratner & Burton, Chicago (Benjamin Z. Gould and Gerald Ratner, Chicago, of counsel), for appellees Material Service Corp. et al.

Turner, Hunt & DeBolt, Chicago (Murray B. Woolley, Chicago, of counsel), for appellees Chicago Fire Brick Co. et al.

David, Fainman & Abrahams, Chicago, (Sigmund W. David and James J. Glassner, Chicago, of counsel), for other appellees.

Sidley, Austin, Burgess & Smith, Wilson & McIlvaine and Knapp, Cushing, Hershberger & Stevenson, all of Chicago (William H. Avery, Jr., R. Corwine Stevenson, Clarence E. Fox, Emerson T. Chandler, and Kent Chandler, Jr., all of the Chicago, of counsel), amici curice.

SCHAEFER, Chief Justice.

The principal question in each of these cases concerns the applicability of the retailers' occupation tax to persons selling building supplies and materials to contractors who retransfer such property as an incident to the services the render, and is controlled by our decision in Burrows Co. v. Hollingsworth, 112 N.E.2d 706.

These appeals are from two orders of the circuit court of Cook County, denying motions to vacate decrees which enjoined the collection of the disputed taxes from the plaintiffs. In the Material Service case, the injunction was entered in the first instance by the circuit court in 1941, and was sustained by this court in Material Service Corp. v. McKibbin, 380 Ill. 226, 43 N.E.2d 939. In the Chicago Fire Brick case no appeal was taken from the injunction which was entered by the circuit court in 1944.

Only a brief sketch of the facts is necessary here. A complete statement may be found in the Material Service case, 380 Ill. 226, 43 N.E.2d 939, where it was held that the act was applicable neither to those selling building materials to contractors, nor to the contractors. The plaintiffs are materialmen and supply houses who sell building materials and supplies to contractors. The contractors install or incorporate these products into structures and buildings constructed for others.

In Material Service Corp. v. McKibbin, 380 Ill. 226, 43 N.E.2d 939, 946, it was held that vendors of building supplies selling to contractors were not subject to the tax because their sales were not 'for use or consumption' within the meaning of the act. Confronted with an amendment enacted in 1941, expressly extending the meaning of 'use or consumption' to include the employment of tangible personal property by persons engaged in service occupations where the property is retransferred as an incident to the services rendered, more than one hundred materialmen, many of whom were also plaintiffs in the Material Service case, commenced the Chicago Fire Brick action. Prior to the decision in that case, the critical 1941 amendment was held invalid in Stolze Lumber Co. v. Stratton, 386 Ill. 334, 54 N.E.2d 554. Relying on the Stolze case, the circuit court entered its injunctive decree in 1944. From that time until after our decision in Modern Dairy Co. v. Department of Revenue, 413 Ill. 55, 108 N.E.2d 8, no further action was taken with respect to the final decrees in the two cases now before us.

The Director of the Department of Revenue, reading the Modern Dairy Co. case as authority for the taxability of plaintiffs in their sales to contractors, promulgated Bulletin No. 11, to that effect. Then, on January 28, 1953, defendants filed motions in each of these cases, seeking to vacate the injunctions, on the basis of Modern Dairy Co. The court denied the motions to vacate, and defendants appeal.

Certain of the parties in the Material Service case argue that the circuit court 'no longer had the power, authority or jurisdiction in 1953 to entertain the motion of appellants (defendants) to vacate the decrees entered in 1941 and 1944.' The jurisdiction of the trial court to modify its injunction was conceded by the plaintiffs in Burrows Co. v. Hollingsworth, 112 N.E.2d 706, and other parties to the appeal in this case have not seen fit to question it.

The inherent power of a court rendering a permanent injunction to modify or revoke that injunction for equitable reasons is generally recognized. See cases collected, 136 A.L.R. 765. These plaintiffs do not dispute the existence of that power 'where there has been a change in the facts, and perhaps also where there has been a change of statutory law,' but they insist that the court 'does not have such power upon a change only in decisional law arising from a subsequent decision in another case.' They rely primarily upon National Popsicle Corp. v. Hughes, D.C., 32 F.Supp. 397, and Pacific Telephone & Telegraph Co. v. Henneford, 199 Wash. 462, 92 P.2d 214, 216. As to the first of these cases, its deviation from the weight of authority has been pointed out. 136 A.L.R. at 769. As we read the second case, the court denied authority to vacate only because the power to vacate a judgment was statutory, and 'None of the statutory grounds for the vacation of a judgment covers * * * the case at bar.' See: Note 7 U. of Chi.L.Rev. 180.

Our courts are not so limited. Our dicisions recognize a broad, inherent power to modify injunctions in the light of changing conditions. Illinois Central Railroad Co. v. Commerce Commission, 387 Ill. 256, 56 N.E.2d 432; Vulcan Detinning Co. v. St. Clair, 315 Ill. 40, 145 N.E. 657. As Mr. Justice Cardozo put it in United States v. Swift & Co., 286 U.S. 106, 114, 52 S.Ct. 460, 462, 76 L.Ed. 999, 'A continuing decree of injunction directed to events to come is subject always to adaptation as events may shape the need.' The power to modify is essential, for without it an injunction awarded by a court of equity might itself become an instrument of inequity. We see no reason why that power should be curtailed because the change in relevant circumstances is by judicial decision rather than by legislation. In Santa Rita Oil & Gas Co. v. State Board of Equalization, 112 Mont. 359, 116 P.2d 1012, 1017, 136 A.L.R. 757, an injunction restraining the collection of taxes was vacated when it appeared that there had been a change in applicable law as announced by the Supreme Court of the United...