Paper Supply Co. v. City of Chicago, 46540
Decision Date | 01 July 1974 |
Docket Number | No. 46540,46540 |
Parties | PAPER SUPPLY CO. et al., Appellants and Cross-Appellees, v. The CITY OF CHICAGO et al., Appellees and Cross-Appellants. |
Court | Illinois Supreme Court |
Neistein, Richman, Hauslinger & Young, Ltd., Chicago (Harry A. Young, Jr., Chicago, of counsel), for appellant Paper Supply Co., and others.
Prins, Flamm & Susman, Ltd., Chicago (Arnold M. Flamm and Arthur T. Susman, Chicago, of counsel), for appellant Amalgamated Ins. Agency Services, Inc., and others.
Hackbert, Rooks, Pitts, Fullagar & Poust, Chicago (Henry L. Pitts, William W. Fullagar, Alan S. Ganz, and James J. Breen, Chicago, of counsel), for appellants Federal Life Ins. Co. (Mutual and United State's Steel Corp.).
Arnstein, Gluck, Weitzenfeld & Minow, Chicago (Burton Y. Weitzenfeld, Theodore Berger, Robert I. Ury, Stanley M. Lipnick, and Ralph S. Eads, Chicago, of counsel), for appellants Heyman Corps., Goldblatt Bros., Inc., Montgomery Ward & Co., Inc., Nabisco Inc., Sears, Roebuck and Co.
O'Keefe, Ashenden, O'Brien, Hanson & Lyons, Chicago (Thomas G. Lyons and James F. Ashenden, Jr., Chicago, of counsel), for appellants Jewel Companies, Inc., Osco Drug, Inc., Republic Steel Corp.
Richard L. Curry, Corp. Counsel, Chicago (William R. Quinlan, Daniel Pascale, Lee J. Schwartz, and Jerome A. Siegan, Asst. Corp. Counsels, Chicago, of counsel), for appellees.
O. Keith Stoutner, Michael S. Virgil, and Ronald J. Hoenig, Lewis, Overbeck & Furman, Chicago, for amici curiae Andy Frain, Inc. and Andy Frain Security Services, Inc.
In four separate actions filed in the circuit court of Cook County the plaintiffs sought declaratory judgments holding invalid the Chicago Employers' Expense Tax Ordinance (Municipal Code of Chicago, ch. 200.3) and injunctive relief. Two suits were brought by multiple plaintiffs and in each of the other two the named plaintiff purports to sue in its own behalf and in behalf of a class of taxpayers similarly situated. The defendants in each action are the City of Chicago, its treasurer and the director of its department of revenue.
The circuit court ordered the four suits consolidated and allowed a petition to intervene filed on behalf of a number of parties alleged to be employers affected by the ordinance. Defendants moved to dismiss, and following consideration of memoranda and oral argument, the circuit court dismissed the complaints of the plaintiffs and the intervenors and entered judgment holding that with the exception of a portion of the definition of 'full-time employee' the ordinance was valid. Plaintiffs appealed, defendants cross-appealed, and we allowed motions filed under Rule 302(b) and ordered that the appeal be taken directly to this court.
In pertinent part the ordinance provides:
Arguing that the ordinance imposes a tax 'upon occupations' plaintiffs contend that it was enacted in violation of section 6(e) of article VII of the 1970 Constitution, which provides:
'(e) A home rule unit shall have only the power that the General Assembly may provide by law * * * (2) to license for revenue or impose taxes upon or measured by income or earnings or upon occupations.'
Defendants contend that under section 6(a) of article VII of the 1970 Constitution the defendant city is empowered to enact the ordinance, that the tax imposed is not a tax 'upon occupations' within the contemplation of, and does not violate, section 6(e)(2) of article VII.
Much of the argument contained in plaintiffs' briefs is devoted to review and analysis of the debates of the constitutional convention (Record of Proceedings, Sixth Illinois Constitutional Convention (hereafter Proceedings)) concerning the limitation contained in section 6(e)(2) upon the power of a home-rule unit to impose taxes 'upon occupations.' In People ex rel. Keenan v. McGuane, 13 Ill.2d 520, 527, 150 N.E.2d 168, this court stated: 'While in construing the constitution the true inquiry concerns the understanding of the meaning of its provisions by the voters who adopted it, still the practice of consulting the debates of the members of the convention which framed the constitution has long been indulged in by courts in determining the meaning of provisions which are thought to be doubtful.' An examination of the Proceedings shows that section 6(e) of article VII was originally paragraph 4.4 of the Majority Proposal of the Committee on Local Government and provided:
'Units of local government shall not impose taxes based upon or measured by income, earnings, or occupation except as authorized by general law.' 7 Proceedings 1579.
In its explanation of the proposed section, the Committee said:
'1. Explanation and Purpose.
This paragraph is intended to permit local governments to impose income and occupation taxes, but only if approved by the General Assembly and subject to control and supervision by the General Assembly.' 7 Proceedings 1670.
In its discussion it said:
'The crux of this paragraph is its treatment of the income tax.' 7 Proceedings 1670.
It then discussed the reasons for withholding authority from home-rule units of local governments to impose income taxes without legislative authority and in a concluding paragraph stated:
7 Proceedings 1673.
The most extensive debates on this proposed subsection (then 4.4) were held on July 24, 1970. Delegate Borek moved for the approval of the section and explained in substantially the same language as is found in the Committee report that the inclusion of the reference to occupation taxes was to prevent the imposition of a local income or earnings tax and would also prevent the proliferation of various business and occupation taxes at the local level. (4 Proceedings 3150--3151.) A discussion then ensued as to the differences between an occupation tax and licensing an occupation for revenue. (4 Proceedings 3151--3153.) Delegate Borek during this discussion stated:
4 Proceedings 3152.
The discussion then shifted to the effect on a local sales tax or retailers' occupation tax of the prohibition against taxing occupations. (4 Proceedings 3153--3154.) Delegate Borek during this discussion stated:
4 Proceedings 3154.
Delegate Friedrich then asked if there were not ways local government could evade the purpose of the proposed section. (4 Proceedings 3154.) During this discussion Delegate Kelleghan asked Delegate Borek or Delegate Parkhurst, the chairman of the Local Government Committee, to explain how the language of the proposed section would prevent a court from saying an occupation tax is not an income tax as was done in Colorado. (4 Proceedings 3156.) This comment made reference to the case of City and County of Denver v. Duffy Storage and Moving Co., 168 Colo. 91, 450 P.2d 339. Duffy involved the validity of three revenue ordinances (Nos. 232, 233 and 234) enacted by the city of Denver under its broad home-rule powers. Ordinance No. 234 imposed an 'Earnings Tax' which the city conceded was an income tax and invalid under the Colorado court's holding in City and County of Denver v. Sweet, 138 Colo. 41, 329 P.2d 441, then Denver did not have constitutional authority to impose an income tax. The city urged the court to overrule the Sweet case. Applying the doctrine of Stare decisis the court refused to overrule Sweet and declared Ordinance No. 234 unconstitutional.
Denver Ordinance No. 232 imposed a 'Business Occupational Privilege Tax.' The tax applied to persons 'engaged in any business, trade, occupation, profession or calling of any kind having a fixed or transitory situs within Denver, for any period of time in a calendar month within Denver.' The rate of tax imposed was $2 per month measured by the number of owners, partners and employees...
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