Wilson v. Department of Revenue

• Decision Date: 15 February 1996
• Docket Number: No. 77708,77708
• Citation: 169 Ill.2d 306,662 N.E.2d 415,214 Ill.Dec. 849
• Parties: , 214 Ill.Dec. 849 Keith Robert WILSON, Appellee, v. The DEPARTMENT OF REVENUE et al., Appellants.
• Court: Illinois Supreme Court

Page 415

662 N.E.2d 415

169 Ill.2d 306, 214 Ill.Dec. 849

Keith Robert WILSON, Appellee, v. The DEPARTMENT OF REVENUE et al., Appellants.

No. 77708.

Supreme Court of Illinois.

Feb. 15, 1996.

Appeal, Circuit Court (Champaign); Harold L. Jensen, Judge; TR91C748.

Roland W. Burris, Attorney General, Civil Appeals Div., Chicago, James E. Ryan, Atty. Gen., Springfield, A.G. Kaplan (Barbara A. Preiner, Solicitor General and Susan Frederick Rhodes, Assistant Attorney General, Chicago, of counsel), for Department of Revenue.

George F. Taseff, Bloomington, for Keith Robert Wilson.

Justice HARRISON delivered the opinion of the court:

In this appeal we are again asked to consider whether the Cannabis and Controlled Substances Tax Act (Ill.Rev.Stat.1989, ch. 120, par. 2151 et seq.) violates the double jeopardy provisions of the fifth amendment to the United States Constitution (U.S. Const., amend. V) and article I, section 10, of the Illinois Constitution of 1970 (Ill. Const.1970, art. I, § 10). Although we rejected a claim that the Act is unconstitutional in Rehg v. Illinois Department of Revenue (1992), 152 Ill.2d 504, 178 Ill.Dec. 731, 605 N.E.2d 525, the circuit court in this case concluded that a contrary conclusion is now mandated by the United States Supreme Court's recent opinion in Department of Revenue v. Kurth Ranch (1994), 511 U.S. 767, 114 S.Ct. 1937, 128 L.Ed.2d 767. Accordingly, the circuit court declared that the statute is invalid and cannot be applied where, as here, the party from whom the tax is sought has already been convicted and sentenced on criminal charges involving the same contraband. The Department of Revenue now appeals directly to our court. (134 Ill.2d R. 302(a)(1).) We affirm.

The controversy before us began in January of 1991, when Keith Wilson was indicted by a grand jury on three counts of unlawful possession of a controlled substance with intent to deliver (Ill.Rev.Stat.1989, ch. 56 1/2, par. 1401) and one count of unlawful manufacture of cannabis (Ill.Rev.Stat.1989. ch. 56 1/2, par. 705(d)). Immediately after the indictments were handed down, the Department of Revenue determined that Wilson was subject to liability under the Cannabis and Controlled Substances Tax Act (Ill.Rev.Stat.1989, ch. 120, par. 2151 et seq.), which provides:

"No dealer may possess any cannabis or controlled substance upon which a tax is imposed by this Act unless the tax has been paid on the cannabis or controlled substance as evidenced by a stamp or other official indicia issued by the Department." (Ill.Rev.Stat.1989, ch. 120, par. 2155.)

Under the Act, a "dealer" is defined as

"a person who in violation of the Illinois Controlled Substances Act or the Cannabis Control Act manufactures, produces, ships, transports, imports, sells or transfers or possesses with intent to deliver to another person more than 30 grams of cannabis or more than 5 grams of any controlled substance or 5 or more dosage units of a controlled substance." Ill.Rev.Stat.1989, ch. 120, par. 2152.

According to the Department, Wilson's liability amounted to a total of $54,385 in taxes, $217,540 in penalties and $2,039.46 in interest. The basic tax liability was computed based on the statutory rate of $5 a gram in tax for 277 grams of cannabis, $250 a gram in tax for 7 grams of cocaine and LSD, and $250 a gram in tax for 205 grams of psilocybin. (Ill.Rev.Stat.1989, ch. 120, par. 2159.) The penalty was set, by statute, at an amount equal to four times the amount of the tax. Ill.Rev.Stat.1989, ch. 120, par. 2160.

Notice of the assessment was served on Wilson on January 24, 1991, pursuant to section 16 of the Act (Ill.Rev.Stat.1989, ch. 120, par. 2166), along with notice of the Department's intention to seize Wilson's assets if he failed to make full payment within 10 days (Ill.Rev.Stat.1989, ch. 120, par. 2173). Wilson promptly filed a protest with the Department and requested a hearing, to which he was entitled by statute. (Ill.Rev.Stat.1989, ch. 120, par. 2166(c).) Thereafter, he pleaded guilty to the criminal charges under a superseding indictment and was sentenced to a term of probation of 24 months, a fine of $1,000, court costs, and 80 hours of community service.

When the Department proceeded to levy upon Wilson's property pursuant to section 23 of the Act (Ill.Rev.Stat.1989, ch. 120, par. 2173) without affording him the hearing he had requested, Wilson commenced this action for declaratory and injunctive relief in the circuit court of Champaign County. The basis for Wilson's claim was that the Act could not be enforced against him because, inter alia, subjecting him to liability under the Act after he had already been prosecuted and sentenced on the criminal charges violated State and Federal constitutional prohibitions against double jeopardy.

Once this action was commenced, Wilson obtained a preliminary injunction barring the Department from taking any further action to collect the monies it was claiming from him until after the case was resolved. Discovery was then conducted, after which Wilson moved for summary judgment. That motion was granted, following a hearing, and the circuit court declared that under the United States Supreme Court's recent opinion in Department of Revenue v. Kurth Ranch (1994), 511 U.S. 767, 114 S.Ct. 1937, 128 L.Ed.2d 767, imposition of a tax under the Act would violate the double jeopardy clause's prohibition against successive punishments for the same offense. Accordingly, the court granted judgment in Wilson's favor and ordered the Department to return all of the assets it had seized from him. The Department has now appealed.

This court reviews de novo a trial court's finding with respect to the constitutionality of a statute. We presume statutes to be constitutional and must construe enactments by the legislature so as to uphold their validity whenever it is reasonably possible to do so. (People v. R.L. (1994), 158 Ill.2d 432, 437, 199 Ill.Dec. 680, 634 N.E.2d 733.) Where a statute is unconstitutional, however, our duty is to declare it invalid no matter how desirable or beneficial its purposes might be. People v. P.H. (1991), 145 Ill.2d 209, 221, 164 Ill.Dec. 137, 582 N.E.2d 700.

The Cannabis and Controlled Substances Tax Act (Ill.Rev.Stat.1989, ch. 120, par. 2151 et seq.), which is before us today, was previously examined by our court in Rehg v. Illinois Department of Revenue (1992), 152 Ill.2d 504, 178 Ill.Dec. 731, 605 N.E.2d 525. In Rehg, the Department of Revenue attempted to assess $213,675 in tax, penalties and interest under the Act against an individual who had pleaded guilty and been sentenced for manufacture or delivery of a controlled substance (Ill.Rev.Stat.1989, ch. 56 1/2, par. 1401(c)) after stealing approximately $300 worth of prescription drugs from his father's pharmacy. The individual blocked the assessment by obtaining a declaratory judgment from the circuit court that the Act was invalid because it violated the double jeopardy provisions of the fifth amendment to the United States Constitution (U.S. Const., amend. V) and article I, section 10, of the Illinois Constitution of 1970 (Ill. Const.1970, art. I, § 10). There, as here, the Department brought a direct appeal pursuant to Supreme Court Rule 302(a)(1) (134 Ill.2d R. 302(a)(1)).

In reviewing whether the monetary sanctions imposed under the Act constituted a second punishment prohibited by the double jeopardy provisions of the Federal and State Constitutions, our court concluded in Rehg that the tax and penalties imposed by the statute were not, in the abstract, so severe as to render the sanction criminal rather than civil in nature. Accordingly, the court reasoned that the Act did not trigger the constitutional protections afforded to a criminal defendant and was not unconstitutional on its face for failing to provide the constitutional safeguards that ordinarily accompany a criminal trial. (Rehg, 152 Ill.2d at 513-20, 178 Ill.Dec. 731, 605 N.E.2d 525.) Because the sanction was civil rather than criminal, the court further concluded that proceedings to collect the tax and penalty did not offend the double jeopardy clause's prohibition against multiple prosecutions for the same offense. Rehg, 152 Ill.2d at 521, 178 Ill.Dec. 731, 605 N.E.2d 525.

Although the court declined to find the Act facially invalid, it held that the Act might nevertheless be unconstitutional as applied in particular circumstances. The court based its analysis on United States v. Halper (1989), 490 U.S. 435, 109 S.Ct. 1892, 104 L.Ed.2d 487, where the Federal government brought a criminal prosecution against a defendant for fraudulently overcharging Medicare in the amount of $585, and, after the defendant had been convicted and sentenced to prison and fined $5,000, it instituted a civil suit against him under the False Claims Act to obtain a civil sanction of more than $130,000. Based solely on the facts established by the defendant's criminal conviction, the trial court granted summary judgment in favor of the government in the civil proceeding. The court held, however, that because the penalty authorized by law had no rational relation to the government's actual loss plus costs in investigating and prosecuting the false Medicare claims, imposition of the full amount of the penalty would violate the double jeopardy clause of the fifth amendment. Accordingly, the court awarded the government only $16,000, a sum approximating the amount required to make it whole.

On direct appeal, the United States Supreme Court agreed with the trial court's approach. It held that a defendant who has already been punished in a criminal trial may not be subjected to an additional civil sanction to the extent that the second sanction may not be fairly characterized as remedial, but only as a deterrent or retribution. (Halper, 490 U.S. at 448-49, 109 S.Ct. at 1902, 104 L.Ed.2d at 502.) The Court opined that where a defendant has previously been subject...