Snyderman v. Isaacs

• Decision Date: 20 May 1964
• Docket Number: No. 38099,38099
• Citation: 201 N.E.2d 106,31 Ill.2d 192
• Parties: Perry J. SNYDERMAN et al., Appellants, v. Theodore J. ISAACS, Director of Revenue, Appellee.
• Court: Illinois Supreme Court

Page 106

201 N.E.2d 106

31 Ill.2d 192

Perry J. SNYDERMAN et al., Appellants, v. Theodore J. ISAACS, Director of Revenue, Appellee.

No. 38099.

Supreme Court of Illinois.

May 20, 1964.

Rehearing Denied Sept. 25, 1964.

Michael M. Phillips, Chicago, for appellants.

William G. Clark, Atty. Gen., Springfield (William C. Wines, Edward A. Berman, Asst. Attys. Gen., of counsel), for appellee.

SCHAEFER, Justice.

In 1961 the Retailers' Occupation Tax Act and the Use Tax Act were amended to apply to the rental of personal property and the use of rented personal property. In International Business Machines Corp. v. Department of Revenue, 25 Ill.2d 503, 185 N.E.2d 257, these amendments were held invalid because they violated section 13 of article IV of the constitution, S.H.A. In the present case the circuit court of Cook County dismissed upon motion the complaint of a lessee who sought to obtain credit for the amount of tax that he paid under the invalid amendments and the plaintiff has appealed directly to this court. The revenue is involved. Agricultural Transportation Ass'n v. Carpentier, 2 Ill.2d 19, 116 N.E.2d 863.

The complaint alleges that on an unspecified date during the period that the invalid tax was being collected, the plaintiff, Perry J. Snyderman, rented a motor vehicle and was billed 'a leasing tax in addition to the rental charge. Plaintiff paid said leasing tax and bore the burden thereof.' The amount that he paid and seeks to recover is not stated. The complaint asserts that the action is brought on behalf of the plaintiff and those similarly situated, to compel the defendant, as Director of Revenue, to issue credit memoranda or refund certificates as reimbursement for taxes paid under the invalid amendments. It is alleged that the statutory 'remedy by way of claim is questionable and is neither as practical, plain, complete nor as reasonable in expense' as the alternative methods of affording equitable relief proposed by the plaintiff in his complaint.

By way of relief the plaintiff asked that the court order the Director of Revenue to identify the members of the class that the plaintiff seeks to represent through an examination of the books and records of the retailers of Illinois, and to prepare, execute and deliver, to a trustee to be named by the court, credit memoranda or refund certificates in the amounts found due. Alternatively, the complaint prayed that the defendant be required to identify only the lessors who remitted the tax to the Department, and that the trustee be directed to ascertain the members of the class. The plaintiff also asked that the trustee be directed to disburse the appropriate sums to members of the class 'after deducting the reasonable costs and expenses of this litigation * * *, including reasonable Attorney's fees.'

The principal issues presented to this court are whether under the facts alleged a lessee may maintain an action directly against the Director of Revenue to recover tax payments made through his lessor, whether a class action is proper, and whether the lessors are necessary parties.

As to the first of these issues, both parties agree that 'in the absence of an authoritative statute, taxes voluntarily, though erroneously, paid, cannot be recovered', (People ex rel. Eitel v. Lindheimer, 371 Ill. 367, 371, 21 N.E.2d 318, 320, 124 A.L.R. 1472) and that this rule applies to relief in the form of either cash (LeFevre v. County of Lee, 353 Ill. 30, 186 N.E. 536) or credit. (People ex rel. City of Highland Park v. McKibbin, 380 Ill. 447, 44 N.E.2d 449) The complaint does not allege payment under protest, and it contains no factual allegations to support a theory of legal duress. The plaintiff argues that payments of the tax should be deemed to have been involuntary because the lessors would have been subject to statutory penalties if they had failed to remit, and because the amount paid by each lessee was too small to warrant resistance to the imposition of the tax. But penalty provisions are common to most taxing statutes, and frequently the sum paid by the taxpayer is small. Without more, neither the existence of a penalty clause, (Standard Oil Co. v. Bollinger, 348 Ill. 82, 91, 180 N.E. 396) nor the nominal character of the tax, (cf. Richardson Lubricating Co. v. Kinney, 337 Ill. 122, 168 N.E. 886) is sufficient to render payment involuntary. If the plaintiff is to prevail, therefore, authority for allowing recovery of his voluntary payment must be found in the refund provisions of the statutes.

The pattern of the taxing statutes contemplated that in the usual case the lessee would not himself remit the tax directly to the State, but would instead pay the amount of the tax to his lessor as use tax, and the lessor would remit the money to the State as retailers' occupation tax. (Crane Construction Co. v. Symons Clamp & Mfg. Co., 25 Ill.2d 521, 185 N.E.2d 139) The refund of a tax erroneously paid in such an indirect manner carries...