People ex rel. Toman v. Advance Heating Co.

• Citation: 33 N.E.2d 206,376 Ill. 158
• Decision Date: 08 April 1941
• Docket Number: No. 25870.,25870.
• Parties: PEOPLE ex rel. TOMAN, County Collector, v. ADVANCE HEATING CO.
• Court: Supreme Court of Illinois

376 Ill. 158

33 N.E.2d 206

PEOPLE ex rel. TOMAN, County Collector,

v.ADVANCE HEATING CO.

No. 25870.

Supreme Court of Illinois.

Feb. 14, 1941.

Rehearing Denied April 8, 1941.

Proceeding by the People, on the relation of John Toman, County Collector, against the Advance Heating Company for a judgment and order for sale of realty for nonpayment of certain taxes. From a judgment for the defendant, relator appeals.

Affirmed in part, and in part reversed and remanded with directions.Appeal from Cook County Court, Edmund K. Jarecki, Judge.

Thomas J. Courtney, State's Atty., and Barnet Hodes, Corp. Counsel, both of Chicago (Joseph F. Grossman, Otho S. Fasig, J. Herzl Segal, and Norman N. Eiger, all of Chicago, of counsel), for appellant.

Adelbert Brown, Robert N. Holt, and Pomeroy Sinnock, all of Chicago, for appellee.

WILSON, Justice.

A judgment of the county court of Cook county sustained the objections of the defendant, the Advance Heating Company, to an application of the county collector for a judgment against and an order for the sale of real estate for the non-payment of certain taxes for the year 1937 levied by the city of Chicago. The county collector prosecutes this appeal.

Included in the 1937 appropriation bill were items for estimated amounts of 1937 taxes for the non-payment of which real estate will be forfeited, and estimated amounts of such taxes which will be abated. These items appear in the corporate fund, the library fund, the library building fund, and the municipal tuberculosis sanitarium fund. The specific amounts are not important here.

The appropriations in controversy were made pursuant to section 2a of article 7 of the Cities and Villages act, Smith-Hurd Stats. c. 24, § 102, State Bar Stat.1935, chap. 24, par. 93, p. 354, which, among other things, provides that the annual appropriation bill shall set forth estimates, by classes, of all current assets, and liabilities of each fund as of the beginning of the fiscal year, the amounts of such assets available for appropriation in such year, either for expenditures or charges to be made or incurred or for liabilities unpaid at the beginning of the year; that estimates of taxes to be received from prior years shall be net, after deducting amounts estimated to be sufficient to cover loss and cost of collection, forfeitures and abatements in the amount of such taxes extended or to be extended. It further provides that the appropriation ordinance shall specify the objects and purposes for which appropriations are made and the amount appropriated for each object or purpose, and shall include, among other enumerated items: ‘(e) an amount or amounts estimated to be sufficient to cover the loss and cost of collecting taxes to be levied for such fiscal year and also the amounts of taxes so levied for the non-payment of which real estate shall be forfeited to the State and abatements in the amounts of such taxes as extended upon the collectors' books.’

The items in controversy come squarely within the terms of the statute. The claims of the defendant are that abated taxes are illegal taxes and, accordingly, cannot be made up by a levy on other taxpayers; that the appropriation for forfeitures was to replace taxes which should be paid by others; that taxes for these items are, therefore, not for a corporate purpose, and they violate section 9 of article 9 of the constitution of this State, Smith-Hurd Stats., which restricts legislation delegating taxing powers to the levy of taxes for corporate purposes; that such taxes also violate the due process clauses of the Federal and State constitutions, U.S.Const.Amend. 14; Smith-Hurd Stats.Const. art. 2, § 2, and that, as the appropriations are not for a corporate purpose, the statute, to the extent that it authorizes them, is invalid, and the tax is illegal. Violation of these particular constitutional provisions is the only issue involved.

Defendant concedes that deductions for forfeitures and abatements in the taxes of prior years are proper as a ‘reserve,’ but contends that such appropriations for a current year are quite distinct from the reserve or diminution of assets in prior years, and that there is no co-relationship between them. We fail to observe any such distinction. The amounts included in the appropriation bill or the levy for forfeitures and abatements, in either case, represent taxes which it is estimated will not be collected during the current year. The taxes for a forfeiture of prior years are as likely to be paid during the current year as is the tax for a forfeiture occurring during the current year. Which is the more likely to happen cannot be foretold, and, for this reason, an estimate is provided for, applicable to either case. It is well known that tax levies are not collected in full during any current year, and if there are any abatements the full amount of the taxes is never collected. The manifest purpose of the provision for taking into consideration estimates of loss and cost of collection, forfeitures and abatements is, that if a municipality needs a certain sum for certain expenses of a current year, it may so appropriate and levy taxes that the amount received during the particular year will equal the required sum, provided, of course, the levy is within the statutory limit. Otherwise, the municipality could never meet its obligations on time, but would be constantly behind, and would be obliged to include the deficit in the levy of the succeeding year, the effect of which upon the taxpayer would be the same as if the levy for a current year produced the amount needed for that year. This applies with equal force to forfeitures and abatements in a current year as it does to forfeitures and abatements of prior years.

Obviously, an appropriation and levy for estimated forfeitures and abatements is not a double levy of such amounts to be expended by the municipality. On the contrary, such levies contemplate they will merely operate to collect the full amount of the levy to which they apply, and prevent a deficit they would otherwise occasion. This keeps the levy in balance.

So far as appropriations and levies are concerned, the essential difference between forfeitures on the one hand, and loss and cost of collection and abatements on the other, is that the latter two classes constitute funds which will never be collected, while, because taxes on forfeited lands may later be paid, they cannot be classified as losses. We held in People v. Schweitzer, 366 Ill. 568, 10 N.E.2d 337, and People v. Sandberg Co., 282 Ill. 245, 118 N.E. 469, that they cannot be included in a loss and cost item. But, in principle, so far as the current year is concerned, each of the three classes represents an amount that will not be collected during, and is lost to, that year. In People v. Schweitzer, supra [366 Ill. 568, 10 N.E.2d 338], where an item for ‘loss and cost of collection, abatements, etc.,’ occurred in the appropriation but not in the levy, we held that it was not for money to be expended, and was merely a balancing item, citing the parallel case of People v. Diversey Hotel Corp., 364 Ill. 298, 4 N.E.2d 365. By an abatement or forfeiture in a current year, there is no disadvantage to the taxpayer who pays his taxes in full and no discrimination between him and the taxpayer who procures an abatement. The latter must still pay on the actual value of his property at the same rate levied upon the property of the taxpayer who pays the full amount levied. The result is the same as if the property on which the tax is abated had been subjected in the first place to the rate on its actual value.

The case at bar bears no relation to cases of double taxation cited by defendant. Double taxation means taxing twice, for the same purpose, in the same year, some of the property in the territory in which the tax is laid, without taxing all of it a second time. Cooley on Taxation, (4th ed.) sec. 223; Peninsula Transit Corp. v. Commonwealth, 165 Va. 614, 183 S.E. 446. Only one levy was made in this case, and it...