McFarlane v. Hotz

• Citation: 82 N.E.2d 650,401 Ill. 506
• Decision Date: 18 November 1948
• Docket Number: No. 30727.,30727.
• Parties: McFARLANE et al. v. HOTZ, County Clerk, et al.
• Court: Illinois Supreme Court

401 Ill. 506

82 N.E.2d 650

McFARLANE et al.

v.HOTZ, County Clerk, et al.

No. 30727.

Supreme Court of Illinois.

Nov. 18, 1948.

Appeal from Circuit Court, Madison County; Edward F. Bareis, judge.

Action by Sara Taylor McFarlane, acting Recorder of Deeds for Madison County, and others, against Eulalia Hotz, County Clerk, and the Count Treasurer, to enjoin defendants from complying with the Municipal Retirement Fund Act, in which the board of trustees elected under the act and others were made parties defendant. From a decree dismissing the complaint, complainants appeal.

Affirmed.

O'Neill & Davey, of Alton, for appellants.

George F. Barrett, Atty. Gen. (Murray F. Milne, of Springfield, of counsel), for appellees.

DAILY, Justice.

On January 27, 1947, Sara Taylor McFarlane, the acting recorder of deeds for Madison County, together with fourteen other employees of county offices, filed a complaint in the circuit court of Madison County, by which they sought to enjoin the county clerk and county treasurer from complying with the provisions of the act which created the Illinois municipal retirement fund (Ill.Rev.Stat.1945, chap. 24, pars. 1175 to 1201, incl.), on the ground that said act was unconstitutional for reasons alleged. The original defendants filed an answer admitting the allegations of the complaint and offered no defense to the action. Upon application showing their interest and by leave of court, the board of trustees elected under the act were made parties defendant, and filed an answer denying that the act was invalid, or that the complainants were entitled to the injunctive relief sought. Subsequently leave to join as defendants was granted to twenty-four counties, twenty-seven cities and villages, three forest preserve districts, ten park districts, and certain school districts which had adopted the act and were participating in the municipal retirement fund system. Similarly the Illinois League of Municipal Employees, and some individual employees of Madison County, became parties defendant. All of the above filed answers which conformed substantially to that of the trustees. An amended complaint and amended answers were subsequently filed, and the cause was heard by the trial court on such pleadings, together with a stipulation by which it was agreed that the complainant Sara Taylor McFarlane was holding her office by virtue of an appointment to fill a vacancy; that the remaining complainants were employees of various county offices of Madison County; and that the compensation of the county officers of Madison County is fixed by the board of supervisors at one sum and that a separate amount is fixed for the expense of such offices, including deputy and clerk hire. The trial court found that the act did not violate the constitution as alleged and dismissed the complaint for want of equity. The complainants, hereinafter referred to as appellants, now seek direct review by this court.

The Illinois Municipal Retirement Fund Act (Ill.Rev.Stat.1945, chap. 24, pars. 1175 to 1201, incl.), the validity of which is challenged by this appeal, was enacted in 1939. It was designed to afford a means by which, after a favorable vote of the people therein, certain municipal corporations and political subdivisions might provide an annuity and benefit system for their officers and employees. Certain governmental units, including Cook County, are excluded from participation in the system. Elective officials are not required to participate unless they choose to do so. However, the act mandatorily applies to all other eligible employees of governmental units that adopt it. In 1945 the act was amended to permit county employees who received earnings payable from fees of county offices to participate in the system. House Bill No. 343, Laws of 1945, p. 452. Under the provisions of section 4 of the act (IllRev.Stat.1945, chap. 24, par. 1178), it has no application to any governmental unit eligible to participate, unless and until a majority of the electors of the unit voting have voted to include such unit within the provisions of the act.

Funds for the administration and operation of the system are obtained by deducting 3 1/2 per cent from the salaries of the eligible employees of participating units, and from contributions of the units themselves which, among other things, is in proportion to the amount of salaries paid to its eligible employees; the amount of prior service credit the corporation chooses to allow to its employees; and its equal share of the costs of administering the found. The contributions of the unit are to be paid out of the fund from which the corresponding employee earnings are paid, and if such fund is insufficient, the unit is authorized, as it deems necessary, to levy a special tax for all or any part of its contribution. The act provides specific limitations on the amount of tax each eligible type unit can levy; in the case of a county the tax is not to exceed .025 per cent of the full, fair cash value of its assessed property. Ill.Rev.Stat.1945, chap. 24, par. 1198.

The contributions of both employees and units are paid to a board of trustees, selected under the act, whose duty it is to administer them. The contributions made by each unit participating are credited to the accounts of such units only. The act does not create a general benefit fund for all participating units, but in effect creates a system which, in its operation, is the same as if each participating unit had its own annuity and benefit system, except that the several funds are administered by one board of trustees for all participating units. Ill.Rev.Stat.1945, chap. 24, par. 1194. An employee who leaves the service of the governmental unit before qualifying for retirement benefits is entitled to a return of all the amounts which have been deducted from his salary. Ill.Rev.Stat.1945, chap. 24, par. 1189.

The board of trustees is selected from the officers and employees of participating units, and its election is accomplished through annual nomination and election and each of its participating employees and each of its participating employees may cast a ballot. Ill.Rev.Stat.1945, chap. 24, par. 1191. The powers and duties of the board are expressly set forth in the act, as is a description of the annuities and benefits payable to participating employees. However, in view of the questions raised by this appeal, it would serve no useful purpose to further detail such provisions at this time. The complaint filed by appellants, as amended, alleged that at the general election of November 5, 1946, a majority of the voters of Madison County voting on the proposition voted favorably for the inclusion of that county within the provisions of the act; that because of said election and the terms of the act the county clerk and treasurer had no option other than to comply with its terms. There followed allegations that said act was unconstitutional for various reasons, which shall be discussed later herein, and a prayer that the act be declared invalid and the county treasurer and county clerk be enjoined from deducting 3 1/2 per cent of appellants' wages and from making the contributions required of the county.

The first objection raised in this court against the validity of the act is that it vests the power of taxation in persons other than corporate authorities, in contravention to section 9 of article IX of the Illinois constitution, Smith-Hurd Stats. In making this point appellants rely entirely on our decision in the case of People ex rel. Gallenbach v. Franklin, 388 Ill. 560, 58 N.E.2d 555, wherein the act which created the Firemen's Annuity and Benefit System was held invalid for that reason. In that case the firemen's fund was to be administered by a State Supervisory Board which was elected at an annual convention of representatives of firemen from cities subject to the act. This board was empowered to determine the amount of contribution to be made by both employees and participating cities, without limitation by the act. From such powers, the opinion in the Franklin case determined, first, that the State Supervisory Board was given the power to tax, and also the power to create corporate debt to be discharged by taxation, the equivalent of the power to tax. It was next determined that the Supervisory Board was not a corporate authority of the persons to be taxed, and thus had been wrongfully given the power to tax. Appellants have seized upon the similarity of the composition of the board of trustees here with that of the Supervisory Board in the Franklin case, and conclude that the provisions of the Municipal Retirement Fund Act are subject to the same objection. This conclusion does not follow, for under the terms of the Retirement Fund Act, the board of trustees is not given the power to levy a tax or to create debt as was the Supervisory Board. The tax provided for by the Retirement Fund Act is to be levied by the authorities of the participating municipalities (Ill.Rev.Stat.1945, chap. 24, par. 1198), and the extent to which the tax may be levied has been limited by the legislature. The only function of the board of trustees is to certify to the municipality the amount due the fund under the terms of the act; it has no power to create debt for which the municipality will be liable. Its duties are ministerial only, and in noway usurp or supplant the power of the corporate authorities of the participating municipality to levy the tax. Sommers v. Patton, 399 Ill. 540, 78 N.E.2d 313;People ex rel. Tuohy v. City of Chicago, 399 Ill. 551, 78 N.E.2d 285.

Even if it were to be conceded that the board of trustees was empowered to levy taxes, this constitutional objection would not lie. Corporate authorities within the purview of section 9 of article IX of the constitution have been defined in decisions of this court as those officers who are either directly elected by the population to be taxed or are...