Schlessinger v. Olsen

• Decision Date: 25 May 1984
• Docket Number: Nos. 58581,59169,s. 58581
• Citation: 82 Ill.Dec. 378,468 N.E.2d 1158,102 Ill.2d 497
• Parties: , 82 Ill.Dec. 378 Shirley SCHLESSINGER et al., Appellees, v. Sidney R. OLSEN, Recorder of Deeds, et al., Appellants. Robert HOFFMAN et al., Appellees, v. Frank J. NUSTRA, Recorder of Deeds, et al., Appellants.
• Court: Illinois Supreme Court

Page 1158

468 N.E.2d 1158

102 Ill.2d 497, 82 Ill.Dec. 378

Shirley SCHLESSINGER et al., Appellees, v. Sidney R. OLSEN, Recorder of Deeds, et al., Appellants.

Robert HOFFMAN et al., Appellees, v. Frank J. NUSTRA, Recorder of Deeds, et al., Appellants.

Nos. 58581, 59169.

Supreme Court of Illinois.

May 25, 1984.

As Modified on Denial of Rehearing

Sept. 28, 1984.

Bilandic, Neistein, Richman, Hauslinger & Young, Ltd., Chicago, for appellee Shirley Schlessinger; Harry A. Young, Jr., Norman D. Finkel, Chicago, of counsel.

Arthur T. Susman, Prins, Flamm & Susman, Ltd., Chicago, for Portia Kern, appellant.

Richard J. Biondi, Waukegan, and Robert D. Allison, Chicago, for plaintiffs-appellees Robert Hoffman, et al.

Fred L. Foreman, State's Atty., Gary Neddenriep, Deputy State's Atty., and Margaret Mullen, Asst. State's Atty., Waukegan, for defendants-appellants Frank J. Nustra, Recorder of Deeds, et al.

Richard M. Daley, State's Atty. of Cook County, Jane Clark Casey, Deputy State's Atty., Chief, Civil Actions Bureau, Christopher Kerns, Asst. State's Atty., Chicago, appellants.

Neil F. Hartigan, Atty. Gen., State of Ill., Chicago, for intervenors-appellants; Michael T. Mullen, Asst. Atty. Gen., Chicago, of counsel.

UNDERWOOD, Justice:

We have reconsidered our earlier denial of a motion to consolidate these appeals and now dispose of both in this opinion. While cause No. 59169 also involves a jurisdictional question, which we find dispositive, each case involves the disposition of tax monies collected under the following State statute which was in effect from August 7, 1978, to May 17, 1979, and provided in pertinent part:

"A tax is imposed on the privilege of transferring title to real estate, as represented by the deed that is filed for recordation, at the rate of 50 cents for each $500 of value or fraction thereof stated in the declaration provided for in this Section. * * *

Such tax shall be collected by the recorder of deeds or registrar of titles of the several counties through the sale of revenue stamps whose design, denominations and form shall be prescribed by the Department. The revenue stamps shall be sold by the Department to such recorder of deeds or registrar of titles who shall cause them to be sold for the purposes prescribed. The Department shall charge at a rate of 25 cents per $500 of value in units of not less than $500. The proceeds from such sale by the Department shall be deposited in the General Revenue Fund of the State Treasury. The recorder of deeds or registrar of titles of the several counties shall sell the revenue stamps at a rate of 50 cents per $500 of value or fraction thereof. The net proceeds from such sale by the recorder of deeds or registrar of titles shall be treated as the distribution of the tax which is herein authorized to be charged and collected." (Ill.Rev.Stat., 1978 Supp., ch. 120, par. 1003.)

The retention by the counties, as a "distribution of the tax," of 50% of the real estate transfer taxes imposed by this statute was declared unconstitutional in Schlessinger v. Olsen (1982), 107 Ill.App.3d 302, 63 Ill.Dec. 119, 437 N.E.2d 768 (hereinafter Schlessinger III), and no appeal was sought. The section has since been amended, and the basic issue now before us is whether the unlawfully retained monies collected during the August '78-May '79 period prior to amendment should be transferred to the General Revenue Fund of the State treasury or refunded to those individuals who actually paid the tax.

Cause No. 58581 involves a six-count complaint filed in the circuit court of Cook County, naming as defendants the county and its recorder of deeds and treasurer, and challenging the constitutionality of that portion of the real estate transfer tax retained by the recorder. Three counts of the complaint were brought by Shirley Schlessinger on behalf of all persons who had paid the transfer tax in Cook County, and sought a return of some $2,407,582 to the class members. The remaining three counts were brought by Schlessinger and Portia Kern on behalf of all Illinois taxpayers and sought transfer of the funds to the State treasury. Plaintiffs, who were jointly represented originally, are now represented by separate counsel. The circuit court found the statute valid and dismissed the complaint on the motion of defendants. The appellate court reversed that dismissal because it believed that the issue of class certification had to be resolved before a ruling on the merits (Schlessinger v. Olsen (1980), 89 Ill.App.3d 583, 44 Ill.Dec. 873, 411 N.E.2d 1239 (Schlessinger I)). This court allowed a petition for leave to appeal and reversed, holding that a motion to dismiss on the merits could be granted by the trial court before deciding the question of class certification. The cause was remanded to the appellate court for further proceedings. Schlessinger v. Olsen (1981), 86 Ill.2d 314, 56 Ill.Dec. 42, 427 N.E.2d 122 (Schlessinger II).

That court thereafter reversed the dismissal of plaintiffs' complaint, this time on the ground that "the retention of the funds by the county officer for his role in the collection of State monies [was] a violation of the constitutional prohibition against fee offices." (107 Ill.App.3d 302, 309, 63 Ill.Dec. 119, 437 N.E.2d 768.) The cause was remanded to the circuit court to decide the question of class certification and to grant appropriate relief. Upon remand the circuit court allowed the State of Illinois and the Department of Revenue leave to intervene and granted Schlessinger's motion for class certification. That court declared the statute unconstitutional in its entirety and concluded in its memorandum opinion that the individuals who paid the transfer tax were entitled to the monies unlawfully retained. We allowed direct appeal to this court pursuant to our Rule 302(a). 87 Ill.2d R. 302(a).

Counsel for plaintiff Kern vigorously disputes the timeliness of the State's intervention since it did not join these proceedings until four years after the suit was initiated. However, since the case had been dismissed for over three of those years and the petition to intervene was filed before the circuit court made any substantive rulings on the issue now before us, we cannot say that the granting of the petition was an abuse of discretion. (Continental Illinois National Bank & Trust Co. v. Sever (1946), 393 Ill. 81, 92, 65 N.E.2d 385.) Nor can it be argued that the State and its taxpayers lack standing to pursue their claim that the misapplied tax revenues belong to the State treasury. Saltiel v. Olsen (1979), 77 Ill.2d 23, 31 Ill.Dec. 820, 394 N.E.2d 1197; Snow v. Dixon (1977), 66 Ill.2d 443, 6 Ill.Dec. 230, 362 N.E.2d 1052; City of Joliet v. Bosworth (1976), 64 Ill.2d 516, 1 Ill.Dec. 355, 356 N.E.2d 543; 74 Am.Jur.2d Taxpayers' Actions secs. 2, 16 (1974).

In determining the disposition of the funds in question, we have considered the two differing lines of authority relied on by the parties. Plaintiff Schlessinger emphasizes the general proposition that only those who have borne the burden of an unconstitutional tax may seek a refund (Estate of Carey v. Village of Stickney (1980), 81 Ill.2d 406, 413, 44 Ill.Dec. 240, 411 N.E.2d 209; Consolidated Distilled Products, Inc. v. Mahin (1973), 56 Ill.2d 110, 116, 306 N.E.2d 465; Fiorito v. Jones (1970), 45 Ill.2d 15, 17, 256 N.E.2d 833.) The State stresses the opinions in what are sometimes referred to as the "skimming" or "diversion" cases, in which this court has held that unlawfully diverted tax revenues must be returned to the governmental entity which imposed the tax (Saltiel v. Olsen (1979), 77 Ill.2d 23, 31 Ill.Dec. 820, 394 N.E.2d 1197; Goldstein v. Rosewell (1976), 65 Ill.2d 325, 2 Ill.Dec. 714, 357 N.E.2d 1157; City of Joliet v. Bosworth (1976), 64...