W. U. Tel. Co. v. Lewis

• Decision Date: 30 August 1972
• Docket Number: No. 11645,11645
• Citation: 287 N.E.2d 169,7 Ill.App.3d 285
• Parties: The WESTERN UNION TELEGRAPH COMPANY (a New York corporation), Plaintiff-Appellee and Cross-Appellant, v. John W. LEWIS, as Secretary of State of the State of Illinois, et al., Defendants-Appellants and Cross-Appellees.
• Court: United States Appellate Court of Illinois

Page 169

287 N.E.2d 169

7 Ill.App.3d 285

The WESTERN UNION TELEGRAPH COMPANY (a New York

corporation), Plaintiff-Appellee and Cross-Appellant, v. John W. LEWIS, as Secretary of State of the State of

Illinois, et al., Defendants-Appellants and Cross-Appellees.

No. 11645.

Appellate Court of Illinois, Fourth District.

Aug. 30, 1972.

William J. Scott, Atty. Gen., Chicago, Francis T. Crowe, A. Zola Groves, Samuel E. Hirsch, Asst. Attys. Gen., for defendants-appellants.

Brown, Hay & Stephens, Springfield, for plaintiff-appellee; Edward J. Cunningham, Springfield, of counsel.

SIMKINS, Justice.

Plaintiff-Appellee, The Western Union Telegraph Company filed a complaint in chancery against Defendant-Appellant John W. Lewis, as Secretary of State, et al., seeking to recover franchise taxes, license fee and penalties assessed against plaintiff upon an incorrect, and later amended, annual corporate return filed by plaintiff. The trial court found that plaintiff was entitled to refund of taxes in the amount of $10,449.08 from which defendant appeals. The trial court assessed penalties against plaintiff in the sum of $1079.74 from which the plaintiff has filed a cross-appeal.

We summarize the pertinent facts. On February 28, 1968, plaintiff filed with the Secretary of State a 'tentative annual report' setting out a stated capital of $425,532,926.00 and a paid-in surplus of $6,597,464.00 for a total capitalization of $432,130,390.00. This report was erroneous in that, as a result of clerical error, earned surplus of $127,472,114.00 was included in the stated capital figure. Prior to June 25, 1968, plaintiff filed a supplemental annual report. This report repeated the same error of the first report and again overstated the stated capital by $127,472,114.00, and also understated the property in Illinois. On June 25, 1968, the Secretary of State, on the basis of the incorrect figures contained in the supplemental report, invoiced plaintiff for franchise tax of $25,255.86 and additional license fee of $3,188.92 and demanded payment of $28,444.78, and advised plaintiff it had 10 days in which to object to the assessment. By letter dated July 16, 1968, the Secretary again demanded payment of the sum of $28,444.78.

Upon receipt of the Secretary's letter of July 16th, plaintiff discovered that the paid-in surplus figure should have been $6,597,464.00 rather than $134,069,578.00 the resulting error thus being in the sum of $127,472,114.00.

Plaintiff then prepared and filed, on July 24, 1968, an amended annual report which corrected the error and enclosed its check in the amount of $17,995.70, which, the parties agree was the correct amount of the tax due to the State of Illinois based upon the correct figures contained in the amended report. The Secretary of State returned the amended report and the check stating that in order for him to accept them it would be necessary to assess a 10% Penalty for '....the late filing of the report plus an additional 5% Penalty for the issuance of the adjusted statement plus an additional 1% Penalty per month for failure to pay the franchise tax on the required statutory date.' The statute fixes July 1st of each year as the date on which all annual franchise taxes and all penalties for failure to file annual reports are due and payable, Chapter 32, Section 157.143, Ill.Rev.Stat.1967. Plaintiff then paid to the Secretary of State, on August 20, 1968, the sum of $28,697.34, the total tax assessed on the last incorrect return filed by it, of this sum $10,449.08 was paid under protest. On September 18, 1968, plaintiff filed its suit in chancery which terminated by the decree as above noted.

The defendant urges that plaintiff had a right to correct the errors in its report on or before June 25th but not thereafter, citing Chapter 32, Section 157.100 Ill.Rev.Stat.1969, and arguing that the statute provides 'for an adjustment of franchise tax June 25 of the year in which the tax is due....', but that plaintiff was precluded, by this language, from amending the report After June 25th. This argument is not persuasive when the section in question is read in its entirety. It provides further that 'If a corporation fails to apply to the Secretary of State for an adjustment of franchise tax by June 25th of the year in which the tax is due, an additional penalty of 5% Shall be added to the amount of the franchise tax otherwise due...