Owens-Illinois Glass Co. v. McKibbin

Decision Date12 January 1944
Docket NumberNo. 27159.,27159.
Citation385 Ill. 245,52 N.E.2d 177
PartiesOWENS-ILLINOIS GLASS CO. v. McKIBBIN, Director of Finance.
CourtIllinois Supreme Court


Action by the Owens-Illinois Glass Company against George B. McKibbin, Director of Finance, and the Department of Finance, to enjoin the levy or imposition and collection of a retailers' occupation tax. From a decree granting a permanent injunction, defendant director appeals.

Affirmed.Appeal from Circuit Court, LaSalle County; Robert E. Larkin, judge.

George F. Barrett, Atty. Gen. (Harry L. Arnold, or Rockford, of counsel), for appellant.

Ashcraft & Ashcraft, of Chicago (Carroll J. Lord, Rufus D. Beach, and Alan E. Ashcraft, Jr., all of Chicago, of counsel), for appellee.

GUNN, Justice.

Appellee, Owens-Illinois Glass Company, a corporation, filed its complaint for injunction in the circuit court of LaSalle county against George B. McKibbin, as Director of Finance, and the Department of Finance of the State of Illinois, to enjoin him from levying or imposing, collecting, or attempting to collect the retailers' occupation tax from plaintiff for sales of beer bottles, and also to enjoin the levying, imposing, collecting, or attempting to collect such tax from plaintiff upon sales of glass beer bottles to breweries in Illinois, when the latter, upon the sale to customers of beer in such bottles, charge a deposit upon the bottles separate from the contents. A temporary injunction was granted by the court. A motion was made to vacate the temporary injunction and to dismiss the complaint. The motion was denied and appellant elected to abide by his motion to dissolve the injunction and dismiss the complaint, whereupon a decree pro confesso was entered and a permanent injunction decreed by the court. The revenue is involved, and therefore the appeal comes directly to this court.

The complaint alleges plaintiff is an Ohio corporation licensed to do business in this State and engaged in the manufacture of glass bottles for sale to businesses and corporations operating breweries in Illinois; that a large portion of such bottles is purchased through contracts made in the State of Ohio, and others are manufactured by plaintiff in Illinois, and sold for resale to breweries located within the State of Illinois. The complaint then recites the several provisionsof the Retailers' Occupation Tax Act, including the power of the Director of Finance to make and promulgate rules and regulations, and sets forth at length paragraph 2 of rule 51, as follows: ‘Sellers of containers to purchasers who are engaged in the business of selling tangible personal property contained in such containers to other persons are deemed to make sales of such containers for resale if the purchasers of such containers are engaged in the business of selling tangible personal property contained in such containers and transfer the ownership of the containers to their customers together with the ownership of the tangible personal property contained there.’

The complaint further alleges that June 1, 1942, the Director issued a ruling by letter directed to the plaintiff, advising that: ‘Where deposits are charged for beer bottles transferred to customers, title to such bottles is retained by the person first making such charge, and the Owens-Illinois Glass Company, when it sells beer bottles to breweries which transfer such bottles to customers taking deposits therefor, is engaged in making retail sales of such bottles and incurs Retailers' Occupation Tax liability with respect to its gross receipts from such sales;’ that the Director has demanded the plaintiff produce its books for examination, so the Department may assess a tax against the plaintiff on account of sales of bottles to breweries in Illinois, which charge deposits on bottles transferred to customers, and that if plaintiff fails to make such returns and pay such tax the defendant will impose the penalties provided by the statute; and that such ruling of the Department is void both under the provisions of the Retailers' Occupation Tax Act and the rules and regulations now in force.

The complaint then sets forth in detail the means of doing business, and shows in substance that all beer bottles are sold to breweries to be filled with beer and resold; that used beer bottles are a general object of commerce; that certain breweries differentiate between the price of the beer sold and the price of the bottles containing it, and take deposits for bottles, agreeing to refund same when the bottles are returned empty to the brewery; that when customers purchase beer at retail, leaving a deposit for bottles, no record is kept of the bottles sold, or of the name of the customer, and that the latter may dispose of them in any way, or he may return them to the seller or any other seller, and receive a sum equal to the required deposit, and that when a brewery purchases new beer bottles from the plaintiff and fills and delivers them to the trade, it parts with possession and control over such bottles, and they become objects of commerce to be freely bartered and sold on the market; that the sale of bottles by the plaintiff to such breweries and disposal of them filled with beer is not a sale for use and consumption, but falls directly within the provisions of Rule 51, and imposes no liability upon the plaintiff to pay the retailers' occupation tax.

A supplement to the complaint was filed in which it was alleged that the defendant threatened to immediately instruct his agents to notify plaintiff of its failure to pay the tax required by the statute, and be subject to the penalties provided therein. The complaint and supplemental complaint show that complainant has over four hundred customers in Illinois, and that all of its books and accounts are kept in Toledo, Ohio; and recites in detail the inconveniences and hardships attendant upon compliance with the statute, when it is not liable for the payment of the tax.

The motion of appellant to the complaint and supplemental complaint sets out three grounds: (1) that the plaintiff has a full and adequate remedy at law for the determination of its tax liability under the provisions of the Retailers' Occupation Tax Act, and that such remedy should be pursued by the plaintiff; (2) that the plaintiff has a full and complete statutory remedy under the provisions of the statute relating to the payment of money to public officers under protest, Ill.Rev.Stat.1941, chap. 127, par. 172; and (3) that the complaint and supplemental complaint are substantially insufficient in that they fail to allege facts sufficient to warrant a court of equity to take jurisdiction.

It is stated in the briefs, and was urged upon oral argument, that the sole point raised in this appeal is the jurisdiction of a court of equity to enjoin the collection of the retailers' occupation tax. Before discussing the points raised by appellant going to the jurisdiction of the court to issue an injunction we will first give attention to the proposition urged in appellant's brief that the complaint and supplemental complaint fail to allege facts showing the plaintiff will suffer irreparable injury, and therefore fails to state a cause of action in equity. Appellant relies upon the well-settled rule that if there is a total failure to state a cause of action in a complaint its insufficiency can be raised at any time; and then contends the allegations contained in the present complaint and supplemental complaint bring the case within that rule.

There is a substantial and material difference between alleging a good cause of action in a defective manner and in stating no cause of action. Sargent Co. v. Baublis, 215 Ill. 428, 74 N.E. 455;Connett v. Winget, 374 Ill. 531, 30 N.E.2d 1. The first is good after judgment, and the second may be questioned at any time. In the present case the facts alleged and admitted by appellant's motion to be true show that the plaintiff is engaged in an occupation which, under rule 51, does not require it to pay the retailers' occupation tax under the statute; that the Director of Finance has made a ruling that it is a taxable occupation; that unless enjoined appellant will proceed to assess not only the tax, but the penalties provided by the statute.

The facts set forth in the complaint and supplemental complaint, considered in the light of the admissions made by the motion to dismiss, constitute the substance of a good cause of action, provided, of course, equity may enjoin an unauthorized tax. The objections under this point go to the particularity with which the facts in the complaint are alleged, especially the claim that the allegations constitute conclusions of law. We think there can be no question but what the complaint adequately shows facts which, if true, would exempt plaintiff from complying with the Retailers' Occupation Tax Act, since the allegations respecting the location of its office, the manner in which it does business, the practice with respect to the collection of deposits on bottles, and all similar statements are all allegations of fact. The mere circumstance the plaintiff charges that by reason thereof, as a legal conclusion it is not liable to pay the tax, does not invalidate the matters well pleaded.

We are of the view that if appellant was of the opinion the cause of action was defectively stated the point should have been raised in the trial court. The Civil Practice Act provides all defects in pleading, either in form or substance, not objected to in the trial court, shall be deemed waived. Ill.Rev.Stat.1941, chap. 110, par. 166, sec. 42, subsec. 3. It also provides that all objections to pleadings heretofore raised by demurrer shall be raised by motion, which shall point out specifically the defects complained of. Sec. 45, subsec. 1. And it likewise provides that where a pleading is objected to by motion to dismiss because it is substantially...

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