People ex rel. Callahan v. Gulf, M. & O.R. Co.

• Decision Date: 19 January 1956
• Docket Number: No. 33634,33634
• Citation: 8 Ill.2d 66,132 N.E.2d 544
• Parties: The PEOPLE ex rel. James T. CALLAHAN, County Collector, Appellee, v. GULF, MOBILE AND OHIO RAILROAD COMPANY, Appellant.
• Court: Illinois Supreme Court

Page 544

132 N.E.2d 544

8 Ill.2d 66

The PEOPLE ex rel. James T. CALLAHAN, County Collector, Appellee, v. GULF, MOBILE AND OHIO RAILROAD COMPANY, Appellant.

No. 33634.

Supreme Court of Illinois.

Jan. 19, 1956.

As Modified on Denial of Rehearing March 19, 1956.

Gillespie, Burke & Gillespie, Louis F. Gillespie and Hugh J. Dobbs, Springfield (J. N. Ogden, Mobile, Ala., and W. H. Thomas, Alton, of counsel), for appellant.

Fred P. Schuman, State's Atty., Edwardsville (Kenneth F. Kelly, Edwardsville, of counsel), for appellee.

DAILY, Justice.

Appellant, the Gulf, Mobile and Ohio Railroad Company, filed objections in the county court of Madison County to the county collector's application for judgment and order of sale of real estate, delinquent for nonpayment of taxes for the year 1951. A motion by the collector to strike the objections was sustained and, thereafter, the court entered judgment against appellant for $18,578.38, the amount of tax paid under protest and embraced by the objections. The revenue being involved, appellant has perfected a direct appeal to review both the order striking its objections and the subsequent judgment.

The parties agree, as indeed they must, that the Revenue Act requires all valuations upon which tax rates are developed and extended to be at full, fair cash value. (Ill.Rev.Stat.1951, chap. 120, pars. 501, 502.) By its stricken objections, appellant, whose property was assessed at State level along with other railroads, alleged that its own property has been assessed at full, fair cash value but that it had been excessively and illegally taxed when locally assessed property in the county was fraudulently and intentionally undervalued at less than full, fair cash value. The objections further alleged that the fraud was brought about when the county assessor knowingly assessed local property 'upon a valuation not to exceed 10.2 per cent of the full, fair cash value;' when the county board of review knowingly closed and certified the tax lists and books without revising the general level of assessments; and when the Department of Revenue, which section 146 of the Revenue Act, charges with the duty of lowering or raising the total assessed value of property certified by any county so that property will be assessed at its full, fair cash value, knowingly and intentionally fixed an equalization rate, or multiplier, at 'a percent which would produce a debased equalized and assessed valuation of not to exceed 60% of the full, fair cash value of locally assessed property.' Appellant objected against paying taxes on rates higher than would have been developed if locally assessed property had been at one hundred percent full, fair cash value in the taxing formula by which rates were computed. Translated into figures, it is appellant's contention that because locally assessed property was fraudulently and intentionally valued at less than full, fair cash value, the resulting increase in rates caused its tax bill of $45,017.81 to be excessive by $18,578.38.

Some question is raised as to whether appellant, who admits that its own property was correctly assessed, has pursued the proper remedy. We find, however, that this court has observed on several occasions that since valuations must be the result of honest judgment and not of mere will, it follows that an assessment may be impeached both when fraudulently made at too high a rate, and when fraudulently made at too low a rate. People's Gas Light & Coke Co. v. Stuckart, 286 Ill. 164, 174, 121 N.E. 629; Chicago Burlington & Quincy Railroad Co. v. Cole, 75 Ill. 591, 594. Further, in a long line of cases, it has been held that the question of discrimination in assessments may properly be raised on an application for judgment for delinquent taxes. See: People ex rel. Ross v. Chicago, Milwaukee, St. Paul & Pacific Railroad Co., 381 Ill. 58, 61, 44 N.E.2d 566, and cases there cited. Here the essence of appellant's objections is that there was a fraudulent discrimination resulting from the undervaluation of locally assessed property which had the effect of denying appellant equal protection of the Revenue Act, and of subjecting it to taxation lacking in both constitutional and statutory uniformity. We conclude that a proper remedy has been pursued.

Under section 1 of article IX of the Illinois constitution, S.H.A., the courts, in the absence of fraud, have no power to review or determine the value of property fixed for purposes of taxation by the administrative officers to whom such function has been delegated. People ex rel. Tedrick v. Allied Oil Corporation, 388 Ill. 219, 57 N.E.2d 859; Keokuk & Hamilton Bridge Co. v. People, 145 Ill. 596, 34 N.E. 482; Spencer v. People, 68 Ill. 510. It is only when the valuation has been fraudulently made that it is subject to judicial review. Kinderman v. Harding, 345 Ill. 237, 178 N.E. 71; People's Gas Light & Coke Co. v. Sthukart, 286 Ill. 164, 121 N.E. 629. In the latter regard, we have held that error in the exercise of honest judgment will not invalidate the tax, that fraud is never presumed, and that mere overvaluation is not sufficient to establish fraud. People ex rel. Miller v. Chicago, Burlington & Quincy Railroad Co., 300 Ill. 399, 133 N.E. 325; Keokuk & Hamilton Bridge Co. v. People, 161 Ill. 514, 44 N.E. 206. On the other hand, it is held that overvaluation may be so excessive, under some circumstances, as to justify the conclusion that it was not honestly made and that it was known to be excessive. In such cases courts will intervene to prevent a constructive fraud. People ex rel. Rhodes v. Turk, 391 Ill. 424, 63 N.E.2d 513; Pacific Hotel Co. v. Lieb, 83 Ill. 602. Where an assessment is sought to be impeached for fraud, the burden is on the objector to show either actual fraud by clear and sufficient evidence, or to show that an assessment is so grossly excessive as to amount to evidence of fraud and an indication that the taxing authorities, in making the same, wilfully and intentionally discriminated against the said objector. People ex rel. Tedrick v. Allied Oil Corporation, 388 Ill. 219, 57 N.E.2d 589; People ex rel. Johnson v. Robison, 406 Ill. 280, 94 N.E.2d 151. Although the foregoing cases speak only in terms of fraudulent overvaluation of property, we are of the opinion that logic and justice require that the same established principles apply where an assessment is sought to be impeached on the grounds of fraudulent undervaluation. Cf. Coulter v. Louisville & Nashville Railroad Co., 196 U.S. 599, 25 S.Ct. 342, 49 L.Ed. 615; Sunday Lake Iron Co. v. Township of Wakefield, 247 U.S. 350, 38 S.Ct. 495, 62 L.Ed. 1154; Sioux City Bridge Co. v. Dakota County, 260 U.S. 441, 43 S.Ct. 190, 67 L.Ed. 340.

The first question which presents itself is whether, in light of the principles enunciated in the cited cases, appellant's objections sufficiently charged either actual or constructive fraud. Insofar as actual fraud is concerned it is elementary that it devolves upon the party claiming it to state the facts relied upon as constituting it. Sterling Gas Co. v. Higby, 134 Ill. 557, 25 N.E. 660; Sanitary District of Chicago v. Gifford, 257 Ill. 424, 100 N.E. 953; Anderson v. Anderson, 339...