Snow v. Dixon, 48694

• Decision Date: 05 April 1977
• Docket Number: No. 48694,48694
• Citation: 362 N.E.2d 1052,6 Ill.Dec. 230,66 Ill.2d 443
• Parties: , 6 Ill.Dec. 230 Robert H. SNOW, Appellee, v. Alan J. DIXON, State Treasurer, et al., Appellants. (Marvin E. Schatzman etal., Appellees.)
• Court: Illinois Supreme Court

Page 1052

362 N.E.2d 1052

66 Ill.2d 443, 6 Ill.Dec. 230

Robert H. SNOW, Appellee, v. Alan J. DIXON, State Treasurer, et al., Appellants. (Marvin E. Schatzman etal., Appellees.)

No. 48694.

Supreme Court of Illinois.

April 5, 1977.

Rehearing Denied May 27, 1977.

William J. Scott, Atty. Gen., Chicago (Herbert Lee Caplan and Gerald T. Rohrer, Asst. Attys. Gen., Chicago, of counsel), for State defendants-appellants, Dixon, Lindberg, Allphin and Kirk.

Barnet Hodes, J. Herzl Segal, and Malcolm S. Kamin, Arvey, Hodes, Costello & Burman, Chicago, for appellant Illinois Central Gulf R. Co.

Bernard Carey, State's Atty., Chicago (Paul P. Biebel, Jr. and Dorothy Kirie Kinnaird, Asst. State's Attys., Chicago, of counsel), for appellees Cook County, Edward J. Rosewell, and Stanley T. Kusper, Jr.

Harry A. Young, Jr., and Ronald G. Silbert, Neistein, Richman, Hauslinger & Young, Ltd., Chicago, for appellee Robert H. Snow.

Gerald W. Shea, Berwyn, for cross-appellee Marvin E. Schatzman.

THOMAS J. MORAN, Justice:

In 1851, by 'An Act to incorporate the Illinois Central Railroad company' (1851 Private Laws of Illinois 61, hereinafter, the charter), the Illinois General Assembly authorized construction of a railroad line between Chicago and Cairo with a branch to the Mississippi Riber via Galena, and granted for that purpose a 200-foot right-of-way and approximately 2.6 million additional acres along that right-of-way. Most of this land derived from Federal land grants of the prior year. The line constructed pursuant to this charter (the charter line) includes 705.5 miles of main line. This, in addition to 1,820 miles of non-charter-line track, was operated by the Illinois Central (IC) until August 10, 1972, when, pursuant to a plan of reorganization (Plan) approved by the Interstate Commerce Commission (Commission), the IC sold and conveyed all of its assets to the defendant, Illinois Central Gulf Railroad Company (Gulf), a newly formed Delaware corporation, in exchange for stock. The IC distributed this stock to its shareholders and purportedly dissolved. Gulf has since owned and operated the IC's former charter line and the noncharter lines, as well as the former Gulf, Mobile & Ohio Railroad lines. In the same manner as the IC before it, Gulf has paid the 7% Gross revenue tax imposed on IC's charter line. This tax, under sections 18 [66 Ill.2d 449] and 22 of the charter (which may be found, as modified, in Ill.Rev.Stat.1975, ch. 120, pars. 373, 374), was imposed on IC in lieu of ordinary taxes. Gulf, likewise, has paid it in lieu of other taxes, and it has been thus accepted for the years 1972 through 1975 without challenge by the defendant State of Illinois officials (State).

The instant dispute arises from the claim of Robert H. Snow, an Illinois taxpayer, that State funds are being disbursed to effect the collection from Gulf of the illegal 7% Tax on charter properties. He brings this action under 'An Act in relation to suits to restrain and enjoin the disbursement of public moneys by officers of the state' (Ill.Rev.Stat.1975, ch. 102, par. 11 Et seq.) (the Public Monies Act). The essence of the action is that this 7% Tax was an exemption personal to IC, not applicable to Gulf, and is being illegally collected in lieu of other taxes which would ordinarily be due from the charter line. Marvin E. Schatzman (as a Cook County taxpayer, Edward J. Rosewell (as Cook County treasurer) and Stanley T. Kusper, Jr. (as Cook County clerk,) intervened. On cross motions, the circuit court rendered summary judgment for the plaintiff on May 17, 1976, finding that under the plan of reorganization the tax on the charter line did not become an obligation of Gulf, and Gulf did not acquire IC's special tax exemption. The chancellor decreed IC dissolved, enjoined the State from continuing to collect the charter tax from Gulf and from expending public funds in connection therewith, and ordered the Director of the Department of Local Government Affairs, effective August 10, 1972, to 'assess the Charter Property in the same manner as he assesses the property of other railroads in the State' and to 'transmit the lists and information to the various proper taxing authorities of the Illinois counties in which Charter Property is located.'

On appeal, Gulf urges that the charter property tax obligation and corresponding immunity from other tax were contract rights passed to Gulf by virtue of the Commission's approval of its plan of reorganization. Gulf further urges that, should this court disagree with this proposition, the trial court's order requiring Gulf's charter line to be assessed in the same manner as other Illinois railroads should be applied prospectively only.

The State agrees with Gulf that the 7% Charter tax is due and owing, but contends it is due from IC; that the contract rights created in the charter between IC and the State may not be unilaterally abrogated by the IC or by the powers of the Commission to approve the Plan. Additionally, the State asserts that Snow lacks standing to attack the voluntary payment of a tax by another, and that administrative review, rather than suit under the Public Monies Act, is the proper vehicle for this action.

With reference to the question of standing and appropriateness of this action under the Public Monies Act, the State asserts that the amounts collected by the 7% Tax total over $5,6 million per year, whereas the $41,400 expended in auditor's salary for its collection are De minimis, and that therefore Snow and the other taxpayers he represents have no interest in preventing the token expenditure. The State ignores the fact evidenced by the record that the time of literally hundreds of State employees is devoted in some part to the assessment and collection of this tax. Furthermore, there is no requirement that a taxpayer's individual interest in a suit under the Public Monies Act be substantial. In the case of Krebs v. Thompson (1944), 387 Ill. 471, 475--76, 56 N.E.2d 761, 764, the court acknowledged that, '(u)nder the settled rule in this State, every taxpayer is injured by the misapplication of public funds, whether the amount be great or small. Such injury is not prevented by the fact that the State may thereafter receive fees under an unconstitutional statute in excess of the cost of its administration.' Long before the enactment of the Public Monies Act, the citizens and taxpayers of this State have been permitted to sue to enjoin the misuse of public funds. (See Barco Manufacturing Co. v. Wright (1956), 10 Ill.2d 157, 160, 139 N.E.2d 227, and Fergus v. Russel (1915), 270 Ill. 304, 314, 110 N.E. 130, and cases cited therein. See also Cusack v. Howlett (1969), 44 Ill.2d 233, 236, 254 N.E.2d 506.) Furthermore, a taxpayer may bring suit to enjoin the misuse of public funds in administering an illegal legislative act even though the taxpayer is not subject to the provisions of that act. (Mansfield v. Carpentier (1955), 6 Ill.2d 455, 460--61, 129 N.E.2d 166; Bode v. Barrett (1952), 412 Ill. 204, 233--34, 106 N.E.2d 521; Krebs v. Thompson (1944), 387 Ill. 471, 474, 56 N.E.2d 761.) The case of Droste v. Kerner (1966), 34 Ill.2d 495, 217 N.E.2d 73, cited by the State for the proposition that the taxpayers have no standing to sue because the public funds allegedly disbursed illegally were De minimis, was a consolidated appeal from two actions: one attacking a legislative enactment conveying State lands brought under the Public Monies Act; another attacking the same enactment on a theory of public trust. The court found that the Public Monies Act did not give the plaintiffs standing to maintain the first action, for conveyance of public lands was not the improper 'disbursement' of public 'funds' contemplated by the Act. In the second action, under the public trust doctrine, the plaintiff alleged that certain State funds would be expended for land surveys, title reports and the like to carry out the protested act. The court reviewed these allegations as 'no more than speculative conclusions' and then determined that 'in any event, the expenditures which plaintiff alleges are De minimis for purposes of standing to sue as a taxpayer.' (Droste v. Kerner (1966), 34 Ill.2d 495, 505, 217 N.E.2d 73, 79.) The court's statement regarding De minimis expenditures specifically referred to standing to sue under the public trust doctrine rather than under the Public Monies Act. Furthermore, this aspect of Droste was overruled in Paepcke v. Public Building Com. (1970), 46 Ill.2d 330, 341, 263 N.E.2d 11. Droste is clearly irrelevant to the issue of standing in the case at hand. Other cases which the State cites to demonstrate that the Public Monies Act is an inappropriate vehicle for this suit are not on point. Daly v. County of Madison (1941), 378 Ill. 357, 361, 38 N.E.2d 160, brought by taxpayers to enjoin an election, was characterized by the court as an action involving a political question which the courts of equity have no power to resolve. The case of People ex rel. Morse v. Chambliss (1948), 399 Ill. 151, 77 N.E.2d 191, was not brought under the Public Monies Act. The plaintiff taxpayer there sued the property owner to enforce a tax lien of about $13,500 against defendant's property, which lien he claimed to have arisen as a result of taxing officials' unauthorized acceptance of $14,500 as full satisfaction for back taxes of $28,000. The court in Chambliss observed that '(t)here can be no question but that the suit is for the collection of taxes alleged to be due and owing' (399 Ill. 151, 153, 77 N.E.2d 191, 193), that the taxing body must direct the bringing of such suit, and that an individual taxpayer has no right to bring suit for the collection of taxes. The case Sub judice is clearly distinguishable. It is designed to prevent the continued acceptance of an allegedly unlawful tax in lieu of all other taxes, when the appropriate taxing authorities have declined, and still...